Davis v Farrell Fritz, P.C. 2022 NY Slip Op 00399 Decided on January 26, 2022 Appellate Division, Second Department deals with fraud in very big numbers.  Dismissal under CPLR 3211 was reversed.  Here are the facts for the second set of attorneys:

“In 2009, the plaintiffs’ decedent, Charles Robert Allen III (hereinafter Allen) through his son Luke Allen, as guardian for the property management of his father, commenced an action in federal district court against Christopher Devine, alleging, inter alia, that Devine fraudulently induced Allen to invest $70 million in a certain broadcast company and that Devine diverted such sum for his own personal use (hereinafter the Devine action). Following Allen’s death on March 9, 2011, Grace Allen was appointed executrix of his estate and substituted as the plaintiff in the action. The executrix then retained the defendants Farrell Fritz, P.C., and John R. Morken (hereinafter together the Farrell Fritz defendants) and the defendants Campolo, Middleton & McCormick, LLP, Joseph N. Campolo, and Patrick McCormick (hereinafter collectively the CMM defendants), and substituted them as counsel in the action in place of Cohen & Gresser LLP (hereinafter C & G). The Devine action later settled for $750,000. The settlement agreement also encompassed a related action against Devine commenced in the Supreme Court, New York County, by Excelsior Capital, LLC (hereinafter Excelsior), a commercial lender controlled by Richard Davis (hereinafter the Excelsior action), which had been awarded damages in excess of $20 million on its breach of contract cause of action against Devine.

Thereafter, Davis and Thaddeus Mack Allen (hereinafter Thaddeus), as co-administrators of Allen’s estate under limited letters of administration issued April 10, 2017, commenced the instant action against the Farrell Fritz defendants and the CMM defendants. The complaint alleged, inter alia, that the defendants committed legal malpractice by failing to assert causes of action against Devine’s alleged co-conspirator, attorney Robert E. Neiman, and Neiman’s law firm, Greenberg Traurig, LLP (hereinafter collectively the Neiman defendants), and against C & G for its failure to assert causes of action against Neiman. The Farrell Fritz defendants moved pursuant to CPLR 3211(a)(1), (5), and (7) to dismiss the amended complaint insofar as asserted against it, and the CMM defendants separately moved to dismiss the amended complaint insofar as asserted against it on similar grounds. In an order dated November 20, 2017, the Supreme Court granted the motions. Clerk’s judgments were later entered upon the order dismissing the amended complaint. The plaintiffs appeal from the clerk’s judgments.”

“”[A] legal malpractice defendant seeking dismissal pursuant to CPLR 3211(a)(1) must tender documentary evidence conclusively establishing that the scope of its representation did not include matters relating to the alleged malpractice” (Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 39). Here, the fourth and fifth causes of action asserted against the CMM defendants allege legal malpractice premised, respectively, on the CMM defendants’ failure to assert legal malpractice causes of action against C & G or to advise the executrix of the existence of legal malpractice causes of action against C & G, and to advise the executrix of the Farrell Fritz defendants’ legal malpractice in failing to recommend that a timely action be commenced against Neiman and his firm and/or C & G. Contrary to the plaintiffs’ contention, the CMM defendants’ documentary evidence demonstrates conclusively that the acts that they allegedly failed to perform, as asserted in the fourth and fifth causes of action, were beyond the scope of the retainer agreement, which limited the CMM defendants’ representation to prosecuting the Devine action. Accordingly, the retainer agreement utterly refutes the plaintiffs’ contention with respect to the scope of the CMM defendants’ representation in that regard (see CPLR 3211[a][1]; Turner v Irving Finkelstein & Meirowitz, LLP, 61 AD3d 849, 850), and the Supreme Court properly directed dismissal of the fourth and fifth causes of action.

However, the third cause of action was not subject to dismissal pursuant to CPLR 3211(a)(1). That cause of action, which alleged that the CMM defendants committed legal malpractice, inter alia, by failing to assert causes of action alleging fraud and breach of fiduciary duty based on fraud against Neiman and his firm “in the Devine action.” The subject retainer, standing alone, failed to resolve conclusively all questions of fact regarding the scope of the CMM defendants’ representation as to the subject matter of the third cause of action (see Cali v Maio, 189 AD3d 1337, 1338; Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d at 39).

The first and third causes of action allege, in part, that had the defendants advised the executrix that causes of action could have been asserted against Neiman and his firm, “the Executrix would have authorized the [ ] Defendants to pursue those claims.” There is no merit to the defendants’ contention that those causes of action should have been dismissed because the plaintiffs fail to plead the requisite “but for” causation since the damages are based on speculation as to whether the executrix would have authorized and funded such an action (cf. CPLR 3211[a][7]). While “[c]onclusory allegations of damages or injuries predicated on speculation cannot suffice for a malpractice action, and dismissal is warranted where the allegations in the complaint are merely conclusory and speculative” (Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 848 [citations omitted]; see Stafford v Reiner, 23 AD3d 372, 372), here, there is support in the record (cf. Stafford v Reiner, 23 AD3d at 372) for the allegation that the executrix would have authorized the pursuit of causes of action against Neiman.

The defendants’ contention that the action is barred by the prior dismissal of similar fraud allegations is without merit. Neiman was not a named defendant in the Excelsior action, and the defendants failed to demonstrate that Excelsior and the plaintiffs are in privity. Moreover, the defendants failed to demonstrate that any of the issues of fact necessarily decided in the prior litigation are identical to those issues which are critical to their defense in the present litigation (see RENP Corp. v Embassy Holding Co., 229 AD2d 381, 382-383). Accordingly, the Supreme Court erred in directing dismissal of the amended complaint, in effect, pursuant to CPLR 3211(a)(5).”