Philip S. Schwartzman, Inc. v Pliskin, Rubano, Baum & Vitulli 2023 NY Slip Op 01812
Decided on April 5, 2023 Appellate Division, Second Department is a legal malpractice case concerning, as do so many other famous legal malpractice cases, real estate in New York. Real estate is a driver of great financial gain in NY and its wide-spread nature is reflected in real estate litigation followed by frequent legal malpractice litigation.
“ORDERED that the order is modified, on the law, by deleting the provision thereof granting that branch of the motion of the defendants Pliskin, Rubano, Baum & Vitulli and Joseph D. Vitulli which was pursuant to CPLR 3211(a) to dismiss so much of the cause of action to recover damages for legal malpractice insofar as asserted by the plaintiff Philip S. Schwartzman, Inc., as alleged that those defendants exposed that plaintiff to excess tax liability by recording a sale price on certain tax documents that was higher than the true sale price of the subject commercial property, and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed insofar as appealed from, with one bill of costs payable by the defendants Pliskin, Rubano, Baum & Vitulli and Joseph D. Vitulli to the plaintiffs, and one bill of costs payable by the plaintiffs to the defendants Joseph Vitulli, as executor of the estate of Joseph Vitulli, Jr., JJ Realty of NY, LLC, and Linden Street Realty of NY, LLC.”
“In May 2018, the plaintiff Philip S. Schwartzman, Inc. (hereinafter PSSI), and PSSI’s sole shareholder and president, the plaintiff John Schwartzman, commenced this action, inter alia, to recover damages for legal malpractice relating to the sale of a parcel of commercial property located in Flushing that was owned by PSSI. The plaintiffs alleged in the complaint that after Schwartzman received an offer to purchase the property, he discussed the offer with the defendant [*2]Joseph D. Vitulli, PSSI’s attorney. Joseph D. Vitulli informed Schwartzman that his father, the defendant Joseph Vitulli, Jr., would be willing to make a better offer for the property. PSSI entered into a contract to sell the building to the defendant JJ Realty of NY, LLC (hereinafter JJ Realty), a corporation allegedly owned by Joseph D. Vitulli and Joseph Vitulli, Jr. The contract was then assigned to the defendant Linden Street Realty of NY, LLC (hereinafter Linden Street Realty). Schwartzman signed a disclosure agreement waiving any conflict of interest with regard to the transaction. PSSI ultimately sold the property to Linden Street Realty.
The plaintiffs alleged in the complaint that Joseph D. Vitulli misrepresented several facts related to the sale, and that he acted against PSSI’s interests by advising the plaintiffs to sell the building for far less than it was worth. In an order dated January 14, 2019, the Supreme Court, among other things, granted the motion of Joseph D. Vitulli and his law firm, the defendant Pliskin, Rubano, Baum & Vitulli, pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against them, and that branch of the separate motion of Joseph Vitulli, Jr., JJ Realty, and Linden Street Realty which was pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against them. The plaintiffs appeal. During the pendency of the appeal, Joseph Vitulli, Jr., died, and the executor of his estate was substituted for him.”
“”Under Judiciary Law § 487(1), an attorney who ‘[i]s guilty of any deceit or collusion, [*3]or consents to any deceit or collusion, with intent to deceive the court or any party’ is liable to the injured party for treble damages” (Altman v DiPreta, 204 AD3d 965, 968). “Since Judiciary Law § 487 authorizes an award of damages only to ‘the party injured,’ an injury to the plaintiff resulting from the alleged deceitful conduct of the defendant attorney is an essential element of a cause of action based on a violation of that statute” (Gumarova v Law Offs. of Paul A. Boronow, P.C., 129 AD3d 911, 911 [internal quotation marks omitted]). Here, the plaintiffs alleged that Joseph D. Vitulli deceived the court in a previous action in 2015 by having Schwartzman sign affidavits that misrepresented Joseph D. Vitulli’s stake in JJ Realty and his connection to Linden Street Realty. However, any suggestion that the court in that action would have ruled differently absent the alleged deceit is purely speculative, and the plaintiffs have thus failed to plead an essential element.”
“Here, the plaintiffs failed to state a cause of action alleging legal malpractice arising from Joseph D. Vitulli’s alleged misconduct in advising the plaintiffs to sell the commercial property to Joseph Vitulli, Jr., since any injury from that misconduct is speculative (see Janker v Silver, Forrester & Lesser, P.C., 135 AD3d 908, 910; Sierra Holdings, LLC v Phillips, Weiner, Quinn, Artura & Cox, 112 AD3d 909, 910; Plymouth Org., Inc. v Silverman, Collura & Chernis, P.C., 21 AD3d 464, 465). However, the complaint does set out a valid cause of action on behalf of PSSI to recover damages for legal malpractice against Joseph D. Vitulli and Pliskin, Rubano, Baum & Vitulli based on the allegations that Joseph D. Vitulli recorded an incorrect sale price on certain tax documents, exposing PSSI to higher taxes (see Randazzo v Nelson, 128 AD3d 935, 937). Those same allegations do not make out a valid cause of action on behalf of Schwartzman individually, since they do not allege that Joseph D. Vitulli “breached a duty owed to the shareholder independent of any duty owing to the corporation wronged” (Abrams v Donati, 66 NY2d 951, 953; see Kramer v Meridian Capital Group, LLC, 201 AD3d 909, 911; Jacobs v Cartalemi, 156 AD3d 605, 608; Patterson v Calogero, 150 AD3d 1131, 1133).”