You’ve put together a nice sum of money, and now you want to buy that townhouse in Manhattan.  Surely, its the crown of real estate…unless you are unable to put a 5th story on top because the prior owners already sold the air rights.  So, you find out, and unfortunately, cancel the contract?  Not in this case, where the allegations are that the law firm negligently failed to tell the contractee that the air rights were already sold, and failed to tell him while he could still cancel the contract.

Saviano v Corniccelo  2015 NY Slip Op 31447(U)  August 3, 2015  Supreme Court, New York County  Docket Number: 153168/2014  Judge: Kelly A. O’Neill Levy tells us how the initial motion practice comes out.

“Plaintiffs allege in their complaint that in or around September 2010, Saviano identified a
four-story residential brownstone building located at 218 East 301 h Street, New York, New York (“the Building”), then owned by Dianova USA, Inc. (“Seller”), for purchase. Saviano intended to add a fifth floor to the Building, combining the fourth and fifth floors to create a duplex for himself and his family (“the Planned Duplex”). Saviano retained Defendants in connection with the purchase thereof. Saviano concedes that he did not sign a retainer agreement with Defendants. In November 2010, Saviano placed a formal bid on the Building, which the Seller accepted. On or about February 3; 2011, they entered into a Contract of Sale (“Contract”) to purchase the Building for $2.2 million. Prior to entering into the Contract, Saviano “specifically and explicitly” told Defendants he intended to create the Planned Duplex. (Amended Complaint, ,-i 20). Saviano told Defendants that he was a first-time buyer, inexperienced in real property matters, and was fully reliant on Defendants’ knowledge, experience and expertise. (Amended Complaint , 26). Defendants “promised” Saviano that there were “no legal impediments” to construction of the Planned Duplex. (Amended Complaint ,-21)”

In June of 2011 Defendants received a title report for the Building which showed that the air and development rights over the Building had already been sold, effectively preventing any upward construction. Plaintiffs allege that Defendants neither consulted the title report nor informed Saviano of the contents thereof prior to the closing. (Amended Complaint~ 26). On June 14, 2011, acting on the advice of the Defendants, Saviano assigned all rights and interests in the Contract to the LLC. Defendants told Saviano the assignment was “a nominal and ministerial act” designed to insulate Saviano from li~bility. (Amended Complaint~ 37)°. Saviano signed the Assignmen·t of Contract individually and as a managing member of the newly created LLC. Saviano did not sign a retainer agreement with Defendants on behalf of the LLC. The closing was held on June 21, 2011. In or around May 2012, during a “chance discussion with a neighbor,” Plaintiffs learned that the air and development rights over the Building had been sold, making it impossible to construct the Planned Duplex. (Amended Complaint ~ 40). Plaintiffs assert that they would not have entered into any agreement to purchase the Building had they been aware ofthe title report, and that, but for the Defendants’ assurances and promises that construction of the Planned Duplex was permissible, Saviano would have exercised the termination option in the Contractto mitigate his losses prior to closing. Based on these allegations, Plaintiffs assert causes of action for professional malpractice and breach of contract. They seek to recover $3 .million in monetary damages for each cause of action and attorneys’ fees.”

“Standing is a threshold determination that the plaintiff has “an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.” Caprer v Nussbaum, 36 AD3d 176, 182 (2d Dept 2006). “A plaintiff generally has standing only to assert claims on behalf of himself or herself.” Id. Under longstanding common law, a court has “no inherent power to right a wrong unless thereby the civil, property or personal rights of the plaintiff in the action or the petitioner in the proceeding are affected.” Socy. of Plastics Indus., Inc. v County of Suffolk, 77 NY2d 761, 772 (1991 )(internal citations omitted). In this regard, Defendants argue that Saviano, having assigned his rights and interests in the Contract to the LLC, never actually owned the Building, and as such cannot maintain any claims which flow “exclusively” from losses sustained by the LLC. (Defendants’ Memorandum of Law, dated Sept. 11, 2014, p. 14 ). The court disagrees. Defendants’ position interprets the standing issue too narrowly. The appropriate inquiry is whether Saviano has been aggrieved by Defendants’ actions such that he should be “allowed access to the courts to adjudicate the merits” of his individual claims. Caprer, 36 AD3d at 182. Assuming Defendants failed to advise Saviano of the air rights issue and the existence of the title report before the closing, and Saviano consequently lost the opportunity to exercise a termination clause in the Contract of Sale and the ability to live with his family in the Planned Duplex, there are sufficient facts to “cast [Saviano’s individual claims] in a form traditionally capable of judicial resolution” such that Saviano has standing to maintain them. Schlesinger v Reservists Comm. to Stop the War, 418 us 208, 220-221 (1974). ”

On Friday we started to talk about a case in which a construction worker suffered electrical shock and fell 150″ to his death.  The professionals in the case won dismissal, leaving the land owner and others to defend their actions.  Today, we look at the land owner in Mulhall v Archdiocese of N.Y.  2015 NY Slip Op 31378(U)  July 24, 2015  Supreme Court, New York County  Docket Number: 151656/12  Judge: Ellen M. Coin.

“On October 13, 201 l, Janusz Wojciech Zdybel (Zdybel) died while working for third-party
defendant West NY in a church on the upper west side. Along with his colleague, Ruslan
Brianyk (Brianyk), Zdybel was working from a ladder placed on a catwalk in the attic of the
church. Brianyk and Zdybel were installing safety equipment for a renovation job on the
church’s roof. More specifically, they each held one end of a bracket that they were trying to
drive through the roof (Brianyk dep at 115-118). A metallic sheathed electrical cable leaned
against the ladder as they worked (id. at 122, George Grenier aff, if 17). While Brianyk held
onto a beam next to the ladder with one hand and the bracket with the other, Zdybel held the
bracket with one hand and in the other he held a pipe that he used to hammer the bracket into
place (Brianyk dep. at 118). When Zdybel’s end of the bracket suddenly shifted into place, both
men received an electric shock (id. at 119). While Brianyk remained on the ladder, Zdybel was
convulsed, let go of everything, and fell to the floor 150 feet below (id. at 119 – 120, 142;
Complaint¶3 at 2 ). ”

“The roof renovation project that led to Zdybel’s death arose from an agreement between
the Church and West NY entitled “The Church of Saint Paul the Apostle Church Building, Phase
2, Roof Areas Restoration Project” (Ex W to the Affirmation of Cruz M. Williams dated Nov. 3,
2014). The Church owns the subject property. The Archdiocese, ABC, and the Finance Council
are affiliated with the Church. Old Structures provided structural engineering services to the
Church for exterior renovation. ”

“Labor Law § 200 “is a codification of the common-law duty imposed upon an owner or
general contractor to provide construction site workers with a safe place to work” (Comes v New York State Elec. & Gas Corp., 82 NY2d 876, 877 [ 1993 ]). Cases under Labor Law § 200 fall into two broad categories: those involving injury caused by a dangerous or defective condition at the worksite, and those caused by the manner or method by which the work is performed (Urban v No. 5 Times Sq. Dev., LLC, 62 AD3d 553, 556 [1st Dept 2009]).
Where, as here, the defect arises from a dangerous condition at the work site, instead of
the methods or materials used by plaintiff and his employer, an owner or contractor “is liable
under Labor Law§ 200 when [it] created the dangerous condition causing an injury or when [it] failed to remedy a dangerous or defective condition of which [it] had actual or constructive
notice” (Mendoza v Highpoint Assoc., IX, LLC, 83 AD3d 1, 9 [1st Dept 2011] [internal quotation marks and citation omitted]; see also Minorczyk v Dormitory Auth. of the State of NY, 74 AD3d 675, 675 [1st Dept 2010]). Constructive notice is generally found when the dangerous condition is visible and apparent, and exists for a sufficient period to afford a defendant an opportunity to discover and remedy the condition. A defendant demonstrates lack of constructive notice by producing evidence of its maintenance activities on the day
of the accident, and specifically that the dangerous condition did not exist when the area was last inspected or cleaned before plaintiff fell (Ross v Betty G. Reader Revocable Trust, 86 AD3d 419, 421 [1st Dept 2011] [citations omitted]).

Here, Zdybel’s accident arose from the Church’s faulty electrical system. The Church
argues for a narrow view of the defect; specifically, it contends that Zdybel’s accident arose from a defective light junction box that electrified a cable leaning against Zdybel’ s ladder.
If the defect is viewed broadly as the Church’s faulty electrical system, there is at least a
question of fact as to whether the Church had actual notice. In response to Stivale’s April 19,
2011 email expressing concerns about electrical problems in “vault areas” of the church,
Martinez, the pastor, referred to his own concern relating to the electrical system as a whole:
“Thank you for your comments about the electrical system. We have been aware of this problem for some time … A review of our electrical system is a very high priority for us in coming months” (Ex 2 to the Schacht Aff.). If the defect is viewed narrowly, as a defective light junction box, then the Church fails to make a prima facie showing that it did not have constructive notice of the defect. The Church fails to provide any evidence that it inspected the attic area where Zdybel was working and that, upon inspection, the defective light box was not apparent. Indeed, the Church fails to provide any evidence that it upheld its duty to inspect (see McLean v 405 Webster Ave. Assoc., 98 AD3d 1090, 1093 [2d Dept 2012] [“The owner’s duty to provide a safe place to work encompasses the duty to make reasonable inspections, and the question of whether the danger should have been apparent upon visual inspection is generally a question of fact”] [internal quotation marks and citation omitted]; see also Urban, 62 AD3d at 55 [holding that a property owner’s duty to provide a safe workplace “encompasses the duty to make reasonable inspections to detect unsafe conditions”]). In light of the failure of the Church defendants to make a prima facie showing of entitlement to judgment on this issue, the branch of their motion seeking dismissal of plaintiffs Labor Law § 200 and common-law negligence claims as against the Church is denied.

Plaintiff argues that the court, under CPLR 3212 (b ), should grant it summary judgment
as to liability under Labor Law § 241 ( 6) based on the violation of 12 NYC RR § 23-1.13 and 12
NYCRR § 23-1.21 (b) (7). Here, the applicability and violation of 12 NYCRR § 23-1.13 is so
clear as to warrant use of the court’s power under CPLR 3212 (b ). 12 NYCRR § 23-1.13 (b) ( 4),
“Electrical hazards, Protection of Employees,” provides, in a relevant part, that: No employer shall or permit an employee to work in such proximity to any part of an electric power circuit that he may contact such circuit in the course of his work unless the employee is protected against electric shock by de-energizing the circuit and grounding it or by guarding such circuit by effective insulation or other means.   12 NYCRR § 23-1.13 (b) ( 4) is sufficiently specific to serve as a predicate for liability under Labor Law § 241 (6) (De/Rosario v United Nations Fed. Credit Union, 104 AD3d 515, 516 [1st Dept 2013]). Moreover, it is plain that the Church violated this provision by failing to protect Zdybel from an electrical power circuit. While the Church defendants suggest that there may be an issue of fact as to comparative negligence, nothing in the record suggests that Zdybel was negligent. As such, plaintiff is entitled to summary judgment as to liability on his Labor Law § 241 ( 6) claim against the Church.”

When one looks back in retrospect, certain patterns might become clear.  Napoli Bern, a hugely successful mass torts firm has imploded.   Christine Simmons of the NYLJ writes:  “The feuding equity partners of Napoli Bern Ripka Shkolnik have engaged Mark Zauderer, a partner at Flemming Zulack Williamson Zauderer, to mediate their partnership dispute and adjourned a contempt hearing that was scheduled Wednesday.

Paul Napoli and Marc Bern, equity partners in Napoli Bern and several related firms, have filed breach of contract claims against each other, alleging that the other’s conduct has harmed the partnership. In November, Manhattan Supreme Court Justice Eileen Bransten appointed former Nassau County Justice Ira Warshawsky as temporary receiver to oversee finances for the Napoli Bern firms.”

Late last year, the fen-phen settlement fell apart when claims of deceit surfaced.  Appel-Hole v Wyeth-Ayerst Labs.  2014 NY Slip Op 33170(U)
November 21, 2014  Supreme Court, New York County  Docket Number: 105122/09  Judge: Charles E. Ramos describes some of the issues.

“In November 2001, the Original Action was settled, and the settlement approved by a predecessor court, by Justice Helen Freedman. At or around this time, the concern was raised that the settlement and disbursements obtained had been manipulated and misallocated by settling counsel, defendants herein, Napoli Bern & Kaiser, LLP (NKB), to clients other then those referred to by Parker & Waichman, LLP (P&W). At the time that P&W referred clients, NKB agreed to represent them and to share attorneys’ fees with P&W. Shortly after approval of the settlement, P&W commenced an action against NKB alleging misrepresentations in connection with that settlement, entitled P&W v Napoli, and bearing the index number 605388/01 (P&W Action) . This Court largely dismissed the action on the ground that P&W lacked standing to assert claims of breach of contract between the referred clients and NKB, and because it constituted a collateral attack on the settlement, which was affirmed (Parker & Waichman, 29 AD3d 396 [1st Dept 2006]). A claim for an accounting remains in the pending P&W Action. In 2003, P&W and 389 of its referred clients commenced another, closely related action entitled Abramova v Napoli, and bearing the index number 601332/03 (Abramova Action). This action is stayed while most of the referred clients pursue their claims in this action. In 2006, P&W and proposed intervenor plaintiffs sought the Court’s permission to commence this action against NKB and its three named partners, Paul Napoli, Gerald Kaiser, and Marc Bern, in order to assert claims for fraud and violation of Judiciary Law§ 487. ”

“For instance, the third amended intervenor complaint alleges that John Bagglio repeatedly expressed dissatisfaction with the settlement amount being offered via NKB, and requested that NKB renegotiate a better settlement offer. Nonetheless, in a series of communications with John Bagglio, NKB misrepresented that he “had no case,” that his case faced “serious consequences” if he did not return the release form and accept the settlement amount being offered, and that he would “get nothing” if his case went to court. NKB also allegedly misled him concerning the settlement procedure, how the settlement offer was arrived at, and falsely put him in fear of losing any potential recovery if he did not accept a lower settlement amount, which the complainant relied upon in accepting a low settlement amount. The allegations of the remaining intervenor plaintiffs which defendants maintain are insufficient contain either a greater or lesser level of detail, describing the manner in which the defendants misrepresented how each individual settlement was arrived at, and how plaintiffs were pressured into settling the case based on terms which were false. Taking the allegations in the light most favorable to the plaintiffs, the Court concludes that, under the circumstances, sufficient facts are alleged to permit a fact-finder to infer that the intervenor defendants falsely represented how each settlement was arrived at and the settlement process itself. True, with respect to many of the complainants, intervenor plaintiffs have not alleged specific details of each individual intervenor defendants’ conduct. Nonetheless, the third amended intervenor complaint alleges the basic facts to establish the elements of fraud, and adequately informs the defendants of the complained-of incidents (see Eurycleia Partners, L.P., Seward & Kissel, LLP, 12 NY3d 553, 559 [2009]). ”

Judiciary Law § 487 is a unique common law claim reserved solely for attorneys.  In general, real deceit, and lots of it, is required in order to succeed. Brady v Friedlander  2014 NYSlipOp 06677
October 2, 2014  Appellate Division, First Department  is an example of a claim that was not robust enough to survive a motion to dismiss.

“On or about September 30, 2009, defendant moved in Civil Court, New York County (Samuels, J.), to withdraw as counsel in the underlying nonpayment proceedings (see IGS Realty Co., L.P. v James Catering, Inc., 99 AD3d 528 [1st Dept 2012]). Over plaintiffs’ objection, the court granted the motion. Plaintiffs did not appeal from Civil Court’s order. With respect to the cause of action for a violation of Judiciary Law § 487, the instant complaint alleges that defendant provided fabricated grounds in support of his motion, to wit, a conflict with plaintiffs regarding strategy and a lack of trust in defendant’s representation, in order to conceal the true reason, which was an unfounded belief that plaintiffs could or would not pay future legal bills. However, while the parties’ communications as quoted in the complaint reflect that defendant was remarkably concerned with billing, which may have informed his decision to withdraw, the complaint also reflects that plaintiff Brady expressed disagreement with defendant as to strategy and questioned defendant’s honesty and competency, thus providing support for defendant’s stated grounds for the motion (cf. Palmieri v Biggiani, 108 AD3d 604 [2d Dept 2013]).

In granting the motion, over plaintiffs’ objection, Civil Court implicitly determined that defendant had shown “just cause” to be relieved. That issue may not be re-litigated via the instant misrepresentation claim (cf. Hass & Gottlieb v Sook Hi Lee, 11 AD3d 230 [1st Dept 2004]).”

Chambers v Weinstein     2014 NY Slip Op 51331(U) [44 Misc 3d 1224(A)]  Decided on August 22, 2014  Supreme Court, New York County  Sherwood, J. reads like a summer thriller.  Big money on the move…fraud lurking around every bend…the hero is in danger.  Will Proskauer Rose, LLP, which is billing a cool $1 Million as a non-refundable fee be kept in the case?

“The Complaint avers, among other things, that based on Schleider’s false representations that [*2]he would invest in certain investment transactions and take steps to protect those investments, Plaintiffs lent up to $6.7 million to defendant 148 Investment LLC (148), a company owned by Todd. Id., ¶¶ 30-31. Schleider engaged the KS Defendants to represent Plaintiffs in transactions with 148. Id., ¶ 32. In February and March of 2012, based on Schleider’s representation that Weinstein had access to large blocks of Facebook shares that they intended to purchase through 148 prior to an initial public offering (IPO) and then sell them at a substantially higher price, Plaintiffs lent a total of $3.025 million to 148 to purchase pre-IPO shares in three separate transactions. However, 148 purchased no Facebook shares and did not otherwise invest the money. Id., ¶¶ 35-50. Instead, Todd, Schlieder, Weinstein, Muschel and 148 engaged in self-dealings and used Plaintiffs’ money for their own personal expenses. Id., ¶ 51.

To further the fraudulent Facebook scheme, Todd represented to Plaintiffs that the transactions would be secured by collateral valued at $12 million, consisting of mortgages 148 held against a property known as 1741-1751 Park Avenue, New York (Park Avenue Property). Id., ¶ 75. The complaint avers that defendant 121 Park had made a $6 million mortgage to Kahal securing the Park Avenue Property and recorded same in March 2008.[FN1] Id., ¶ 76. In November 2011, Kahal assigned the mortgage to 148, which was recorded in June 2012. However, in or about March 2012, 148 reassigned the mortgage to Kahal. Both of the collateral assignments were performed without any consideration, but rather were made to deceive Plaintiffs. Id., ¶¶ 79-81, 88.

The Complaint also avers that in September 2011, Belle Glade Gardens Realty Group, LLC (BGG), a Florida company owned and controlled by Schleider, entered into an agreement with Prince of Belle Glade Gardens, LLC to purchase Belle Glade Gardens, a 384-unit apartment complex, for $16.4 million. Complaint, ¶¶ 118-120. Schleider retained defendant Greenberg to represent BGG in the transaction. Id. Although BGG deposited $120,000, Greenberg returned the down-payment to BGG in November 2011, thus terminating the purchase agreement. Id., ¶ 121-122. In February and April 2012, Schleider represented to Plaintiffs that the BGG transaction was still active and that he would be matching their investment therein. Id., ¶¶ 123. Based on the representation, Plaintiffs wired $2.5 million to Greenberg in February 2012, which was deposited into an escrow account for Schleider and a subaccount for BGG. Id., ¶¶ 124-125. Schleider subsequently directed Greenberg to wire $2.5 million to 148, but misrepresented to Plaintiffs that the $2.5 million was being held by Greenberg for the transaction. Id., ¶ 128. In April 2012, Schleider induced Plaintiffs to make an additional $330,000 investment, but later directed Greenberg to deduct its legal fees from the $330,000 wired by Plaintiffs, without disclosing that the BGG deal was no longer active. Id., ¶¶ 129-132. Schleider intended to and fraudulently turned over the BGG funds to 148 for use by Schleider, Todd, Weinstein and 148. Id., ¶ 133.

In 2011, Weinstein was prosecuted by the United States in the United States District Court of New Jersey (2011 Action). Proskauer represented Weinstein from December 31, 2012 to May 30, 2013 in the 2011 Action. Complaint, ¶ 226. As compensation for its services, Proskauer charged Weinstein $1 million as a minimum non-refundable fee. On December 20, 2012, Kahal paid the fee with a check containing a reference stating “Loan Return for 148 LLC.” Id., ¶¶ 227-228. The Complaint alleges that Proskauer did not perform adequate due diligence to insure that the retainer funds were not proceeds of Weinstein’s criminal activities, and that Proskauer had “actual knowledge” that Weinstein was prohibited by the government in the 2011 Action from engaging in financial transactions of more than $1,000. Id., ¶¶ 230-231. On January 3, 2012, Weinstein entered into a plea agreement whereby he admitted to committing wire fraud and money laundering. On May 20, 2013, Weinstein was charged by the United States with various criminal activities (2013 [*3]Action). The indictment alleges that Proskauer received $1 million. The Complaint alleges that Proskauer spent the $1 million within two weeks of its receipt from Kahal, and that Proskauer paid “an unknown portion of these funds to persons unknown” for the benefit of Weinstein, and “thereby intentionally engaged in a scheme to defraud Plaintiffs by agreeing to launder’ funds for Defendant Weinstein and prevent their recovery by Plaintiffs.” Id., ¶¶ 240-241. Proskauer moved to be relieved as Weinstein’s attorney in the 2011 Action, in light of the allegations in the 2013 Action. The motion was granted on May 30, 2013. Id., ¶¶ 236-237.”

“In this case, the parties do not dispute that Weinstein committed fraud prior to 2011 involving victims other than Plaintiffs. In fact, Weinstein was sentenced for fraud in the 2011 Action. The dispute in this case lies in whether fraud perpetrated against Plaintiffs in 2012 is adequately stated in the Complaint, and whether Proskauer had “actual knowledge” and gave “substantial assistance.” Notably, Plaintiffs’ allegations in the Complaint are primarily based on sworn statements, dated May 13, 2013, made by an FBI agent, Karl Ubellacker, in connection with the government’s complaint filed in the 2013 Action. A copy of Agent Ubellacker’s statement is annexed as exhibit B to Plaintiffs’ opposition to Proskauer’s motion to dismiss.

In opposition to the motion, Plaintiffs contend that Proskauer’s actual intent can be inferred from the following factual circumstances. Proskauer knew of the allegations against Weinstein in the 2011 Action because it served as his defense counsel. It knew that Weinstein was prohibited from engaging in transactions over $1,000 without the approval of the government’s special counsel. It knew that the $1 million retainer was “probably directly or indirectly” proceeds of the 2011 Action. Kahal paid Proskauer’s retainer with a check bearing a notation that it was a “Loan Return for 148 LLC.” Proskauer accordingly knew that the check never went to 148, but was diverted to pay [*4]Weinstein’s legal fees, just as he had diverted funds in the 2011 Action. Additionally, after learning that the government might try to seize the diverted funds, Proskauer was told by Weinstein to “minimally” inquire about the source of funds with Todd, who replied in a manner as directed by Weinstein. Lastly, Weinstein admitted that the fraudulent scheme in the 2011 and 2013 Actions “was a key component of both.” Plaintiffs’ opposition, ¶¶ 53-63.

Plaintiffs’ contentions are insufficient to defeat the motion. That a law firm represents a client accused of a prior fraud against certain victims does not support an inference that the firm knew about, much less aided and abetted, a subsequent fraud committed by the client against other victims. Here, the government’s complaints in the 2011 and 2013 Actions named different sets of victims and Plaintiffs were not named in the 2011 Action. Thus, Weinstein’s retention of Proskauer as defense counsel in connections with the 2011 Action does not support an inference that Proskauer knew of the subsequent fraud allegedly perpetrated against the Plaintiffs, which fraud was the subject of the 2013 Action. See National Westminister Bank v Weksel, 124 AD2d 144, 150 [1st Dept 1987] (while a law firm gains access to information in the course of representing a client, “the fact of legal representation, even as to transactions allegedly the subject of subsequent [fraud], does not itself support the inference of the high degree of scienter necessary to extend fraud liability [against the firm] on an aiding and abetting theory”).”