Louie’s Seafood Rest., LLC v Brown  2021 NY Slip Op 06167  Decided on November 10, 2021 Appellate Division, Second Department is a novel defense to a claim of deceit.  Originally applicable to Anti-Trust litigation (where it excused certain litigation tactics), it is here applied (for the first time in state court legal malpractice claims) to a Judiciary Law § 487 claim.

“The plaintiffs commenced this action against the defendants seeking damages for aiding and abetting fraud, violation of Judiciary Law § 487, breach of contract, and fraud in the inducement. The causes of action to recover damages for aiding and abetting fraud and violation of Judiciary Law § 487 were predicated on allegations that, in the discrimination lawsuit, the plaintiff to that action had fabricated and disclosed during discovery certain diary entries, and that the defendants were aware of the fabrication and substantially assisted to advance the commission of fraud. The causes of action to recover damages for breach of contract and fraud in the inducement were predicated on allegations that, in the class action lawsuit, the defendants breached the settlement agreement by failing to hold the settlement proceeds in escrow until the court approved the settlement agreement and fraudulently induced the plaintiffs into entering the settlement [*2]agreement by misrepresenting that they were not representing any other employee or former employee of the plaintiffs in connection with an employment-related issue against them.

The defendants moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the aiding and abetting fraud causes of action and the cause of action alleging a violation of Judiciary Law § 487 on the ground, among others, that the defendants were protected by the Noerr-Pennington doctrine (see Mine Workers v Pennington, 381 US 657; Eastern Railroad Presidents Conference v Noerr Motor Freight, Inc., 365 US 127), and to dismiss the breach of contract and fraud in the inducement causes of action on the ground that the complaint failed to state those causes of action. The Supreme Court denied the motion. The defendants moved for leave to renew and reargue the motion. In an order entered September 12, 2016, the court, inter alia, upon renewal and reargument, granted the defendants’ prior motion and directed dismissal of the complaint. The plaintiffs appeal.

On a motion to dismiss a cause of action pursuant to CPLR 3211(a), the court must accept the facts as alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see CPLR 3026; Leon v Martinez, 84 NY2d 83, 87-88).

“The Noerr-Pennington doctrine protects the right under the First Amendment to the United States Constitution to petition the government for governmental action, including through litigation and activity incidental to litigation” (Matter of People v Northern Leasing Sys., Inc., 193 AD3d 67, 77 [citation omitted]; see Alfred Weissman Real Estate v Big V Supermarkets, 268 AD2d 101, 106-107). “There is a ‘sham’ exception to the Noerr-Pennington doctrine which applies in ‘situations in which persons use the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon'” (Singh v Sukhram, 56 AD3d 187, 192 [emphasis omitted], quoting Columbia v Omni Outdoor Advertising, Inc., 499 US 365, 380; see Alfred Weissman Real Estate v Big V Supermarkets, 268 AD2d at 107). There is also a “‘corruption’ exception, which applies only where a party has stepped beyond the bounds of zealous advocacy and engages in conduct alleged to be criminal, not just deceptive or unethical” (Alfred Weissman Real Estate v Big V Supermarkets, 268 AD2d at 110).

Here, the Supreme Court properly concluded that the causes of action alleging that the defendants aided and abetted fraud and violated Judiciary Law § 487 were barred by the Noerr-Pennington doctrine. The Noerr-Pennington doctrine applied to these causes of action insofar as they were based upon litigation and activities that were incidental to litigation, and the pertinent allegations did not fit within either the “sham” or the “corruption” exceptions to the Noerr-Pennington doctrine (cf. Matter of People v Northern Leasing Sys., Inc., 193 AD3d at 77-78; see generally Singh v Sukhram, 56 AD3d at 192; Alfred Weissman Real Estate v Big V Supermarkets, 268 AD2d at 109-110).”

Sometimes the AD thinks a case is pure speculation.  In Lindenwood Vil., Section C, Coop. Corp. v Denenberg  2021 NY Slip Op 02463 [193 AD3d 593] April 22, 2021 Appellate Division, First Department they spent little time affirming.

“This legal malpractice action was properly dismissed. There is no basis other than speculation to support the allegation that, had defendants attorneys, who represented plaintiff client in an underlying action, served notice of entry sooner, the adverse party would not have sought leave to appeal (see Levine v Lacher & Lovell-Taylor, 256 AD2d 147, 149 [1st Dept 1998]).”

Alpha/Omega Concrete Corp. v Ovation Risk Planners, Inc.  2021 NY Slip Op 05113  Decided on September 29, 2021  Appellate Division, Second Department is a textbook of causes of actions in insurance law and negligent underwiring.

“In July 2015, Alpha/Omega Building Consulting Corp. (hereinafter Consulting) was awarded a contract to perform concrete work on a construction project involving a residential high-rise apartment building being constructed in Long Island City. Before beginning work on the project, Consulting, via its principal, Anthony Frascone, contacted the second third-party defendant Michael Villano, the principal of the defendant/third-party plaintiff/second third-party defendant, Ovation Risk Planners, Inc., a retail insurance broker (hereinafter Ovation; together with Villano, the Ovation defendants), to obtain liability insurance for Consulting with respect to its work on the subject project. Villano, on behalf of Consulting, submitted a commercial insurance application to the defendant/third-party defendant/second third-party plaintiff, Scottish American Insurance General Agency, Inc. (hereinafter Scottish American), a wholesale insurance broker, which transmitted the application to nonparty Prime Specialty, Inc. (hereinafter Prime), for underwriting. Prime, in turn, placed the commercial general liability policy with the defendant State National Insurance Company (hereinafter SNIC), an insurance carrier. To pay for the policy, Consulting obtained a loan from nonparty Capital Premium Financing, Inc. (hereinafter CPF). The policy was to remain in effect from July 13, 2015, until the earlier of July 13, 2017, or the end of the project.”

“In general, “insurance brokers have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so” (AB Oil Servs., Ltd. v TCE Ins. Servs., Inc., 188 AD3d 624, 626 [internal quotation marks omitted]; see Murphy v Kuhn, 90 NY2d 266, 270; MAAD Constr., Inc. v Cavallino Risk Mgt., Inc., 178 AD3d 816, 818). The scope of the broker’s duty is “‘defined by the nature of the client’s request'” (Maxwell Plumb Mech. Corp. v Nationwide Prop. & Cas. Ins. Co., 116 AD3d 740, 741, quoting Loevner v Sullivan & Strauss Agency, Inc., 35 AD3d 392, 393). A claim of liability for a violation of this duty may sound in either contract or tort (see Broecker v Conklin Prop., LLC, 189 AD3d 751, 753; Gagliardi v Preferred Mut. Ins. Co., 102 AD3d 741, 741). To state a claim based upon violation of the insurance broker’s common-law duty, the client must demonstrate that the broker failed to discharge its duty either by breaching the agreement with the client by failing to obtain the requested coverage or by failing to exercise due care in obtaining insurance on the client’s behalf (see MAAD Constr., Inc. v Cavallino Risk Mgt., Inc., 178 AD3d at 818; Gagliardi v Preferred Mut. Ins. Co., 102 AD3d at 741).

Here, the Ovation defendants failed to establish, prima facie, that Ovation did not breach its common-law or contractual duty to Concrete. Even assuming that Campbell requested that Concrete be added to the existing policy, as the Ovation defendants argue, the deposition testimony submitted by the Ovation defendants in support of their motion demonstrated that Ovation agreed to obtain insurance for Concrete and then represented that it had done so without verifying this fact. In light of this evidence, the Ovation defendants failed to establish, prima facie, the absence of a triable issue of fact as to whether Ovation undertook a duty to Concrete which it then failed to discharge.

Whether Campbell had apparent authority to act on behalf of Consulting to request that Concrete be added to Consulting’s policy or requested a new policy for Concrete presents a triable issue of fact. However, it is a separate issue as to whether Ovation failed to verify that coverage on behalf of Concrete was in place before advising Campbell that it was. Moreover, the statement of Consulting’s principal that Campbell was “running the men, the job” for Consulting cannot be characterized as words which “[gave] rise to the appearance and belief that [Campbell] possesse[d] authority to enter into a transaction” on behalf of Consulting (Marshall v Marshall, 73 AD3d 870, 871 [internal quotation marks omitted]; see 150 Beach 120th St., Inc. v Washington Brooklyn Ltd. Partnership, 39 AD3d 722, 723). Likewise, Villano could not rely on Campbell’s own actions or statements since an agent “cannot by his [or her] own acts imbue himself [or herself] with apparent authority” (Marshall v Marshall, 73 AD3d at 871 [internal quotation marks omitted]; see 150 Beach 120th St., Inc. v Washington Brooklyn Ltd. Partnership, 39 AD3d at 723; Lexow & Jenkins v Hertz Commercial Leasing Corp., 122 AD2d 25, 26). Villano admitted that he never contacted Consulting’s principal to obtain authorization to add Concrete to Consulting’s policy or to confirm whether Campbell had authority to act on behalf of Consulting. Accordingly, the Supreme Court properly denied that branch of the Ovation defendants’ motion which was for summary judgment dismissing Concrete’s first cause of action, alleging breach of contract, regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).”

Real Estate entities, such as an apartment building will always have insurance against trip and falls.  However, that type of general liability insurance typically will not provide insurance against a claim of a person injured while working at the building, such as in a construction accident.  In Ruiz v 829 Realty LLC  2021 NY Slip Op 05834  Decided on October 26, 2021  Appellate Division, First Department the claim against the  attorneys is dismissed.

“Contrary to defendant/third-party plaintiff 829 Realty, LLC’s contentions, the documentary evidence submitted by Acceptance Indemnity Insurance Co. (Acceptance), 829 Realty’s insurer, utterly refuted 829 Realty’s allegations that disclaimer of coverage in the main personal injury action was improper (see generally CPLR 3211[a][1]; Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; Atlantic Mut. Ins. Co. v Terk Tech. Corp., 309 AD2d 22, 29 [1st Dept 2003]). The complaint in the main action, which was properly considered by the motion court, alleged that on January 25, 2018, plaintiff “fell from a height” at the premises owned by 829 Realty, while working for defendant Arsh Gen Construction Corp., which was hired by 829 Realty. Those allegations do not suggest a reasonable possibility of coverage in light of the relevant contractor’s exception, which excluded coverage for claims premised on personal injury sustained by an employee of an independent contractor while working on behalf of an insured, or on the job site but not working for an insured (see generally City of New York v Wausau Underwriters Ins. Co., 145 AD3d 614, 617 [1st Dept 2016]). The third-party complaint and the affidavit from 829 Realty’s member did not raise an issue of fact as to whether Acceptance had actual knowledge of facts establishing a reasonable possibility of coverage, because neither directly countered plaintiff’s factual allegations that he was working for a contractor at the premises when his accident occurred (id.).

829 Realty’s arguments regarding the dismissal of its claims as against Molod, Spitz & Desantis, its former counsel in the main action, are not persuasive because a client may not evade the pleading requirements applicable to a legal malpractice cause of action by framing allegations, which sound in malpractice, in terms of breach of fiduciary duty or breach of contract (see Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 10-11 [1st Dept 2008]; e.g. Cherry Hill Mkt. Corp. v Cozen O’Connor P.C., 118 AD3d 514, 514 [1st Dept 2014]; Boslow Family Ltd. Partnership v Kaplan & Kaplan, PLLC, 52 AD3d 417, 417 [1st Dept 2008], lv denied 11 NY3d 707 [2008]; Walter v Castrataro, 94 AD3d 872, 873 [2d Dept 2012]).”

It’s relatively rare to see an AD opinion which goes into the details of a trial, and makes such certain and minute decisions on evidentiary matters.  Disa Realty, Inc. v Rao  2021 NY Slip Op 05692 Decided on October 20, 2021 Appellate Division, Second Department involves a claim of Judiciary Law § 487 and is that case.  Conclusion first: “We find that the cumulative effect of the Supreme Court’s improvident rulings with respect to the continuance and the admissibility of the defendant’s evidence was to deprive the defendant of a fair trial (see Appleton v 205 E. 17th St., LLC, 101 AD3d at 772-773).”

“Here, the defendant demonstrated that both this action and the 107-07 action arise from similar transactions, concern the same parties, and involve common questions of law and fact (see Rhoe v Reid, 166 AD3d at 920). Indeed, the two actions are “based on substantially identical loan documents” (Disa Realty, Inc. v Rao, 168 AD3d at 1038). Nevertheless, the Supreme Court denied, without reaching its merits, that branch of the defendant’s motion which was to consolidate the actions, on the grounds that the court in the 107-07 action had already denied a similar motion, and a final judgment of foreclosure and sale already had been entered in that action. Under those circumstances, the 107-07 action was not a pending action which could be consolidated with the instant action pursuant to CPLR 602(a) (see IndyMac Bank, F.S.B. v Vincoli, 105 AD3d 704, 707). However, the denial, in the 107-07 action, of the motion to consolidate the two actions, and the judgment of foreclosure and sale entered in that action, were subsequently reversed by this Court (see Disa Realty, Inc. v Rao, 168 AD3d at 1037). Accordingly, in the instant action, that branch of the defendant’s motion which was to consolidate the two actions should not have been denied. In the interest of judicial economy, rather than remit the matter to the Supreme Court for consideration of the motion on the merits, we find that the defendant has established that consolidation is appropriate here, as “it will avoid unnecessary duplication of trials, save unnecessary costs and expense, and prevent an injustice which would result from divergent decisions based on the same facts” (Viafax Corp. v Citicorp Leasing, Inc., 54 AD3d 846, 850; see Rhoe v Reid, 166 AD3d at 921). Contrary to the plaintiff’s contention, it has not demonstrated that consolidation will cause it to suffer any prejudice to a substantial right (see U.S. Bank, N.A. v Westwood, LLC, 115 AD3d 935, 937-938; Viafax Corp. v Citicorp Leasing, Inc., 54 AD3d at 850).

“In reviewing a determination made after a nonjury trial, this Court’s power is as broad as that of the trial court, and this Court may render the judgment it finds warranted by the facts, taking into account that, in a close case, the trial court had the advantage of seeing and hearing [*3]the witnesses” (US Bank N.A. v Pierre, 189 AD3d 1309, 1310 [internal quotation marks omitted]; see Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499; Deutsche Bank Natl. Trust Co. v Bucicchia, 193 AD3d 682, 685). “An error in a ruling of the court shall be disregarded if a substantial right of a party is not prejudiced” (CPLR 2002).

The defendant testified that he had paid the plaintiff a total of $805,000 in cash and checks to Amarain and others, namely, relatives and associates of Amarain, some of whom the defendant did not know, for fictional services the defendant never received, all at the behest of Amarain, to be credited toward the mortgages on the subject property and the 107-07 property. He further testified that the purpose of the third-party payments was to enable the plaintiff to avoid paying taxes on the money. Critical to proving this defense were audio recordings, and transcriptions thereof, of conversations between the defendant and Amarain, and between the defendant and Amarain’s employee, Lakhram Indel, regarding the cash payments and checks to third parties and their purpose. The Supreme Court improvidently exercised its discretion multiple times in ruling that certain items of evidence, critical to the defense at issue on trial, were inadmissible on various grounds. “Moreover, the probative value of this evidence was not substantially outweighed by any danger that it would unfairly prejudice the respondent[ ]” (Appleton v 205 E. 17th St., LLC, 101 AD3d 772, 773). First, the court cited no statute or case law when it refused, in this action, to admit any document that had been marked for identification in the 107-07 action, and there does not appear to be any legal basis for such a ruling. Second, the court improvidently exercised its discretion in declining to consider certain documents created by the defendant’s dietary supplement business, bearing written notes to the effect that payment for dietary supplements purchased by Amarain and his wife would be credited toward the mortgages. Mistakenly concluding that the documents constituted medical records, the court returned them to the defendant, because they did not have “a proper authorization of the release of medical records,” and advised the defendant “to be very careful when it comes to people’s medical records.”

The Supreme Court also improvidently exercised its discretion in denying the defendant’s request, by motion filed on February 20, 2018, for “a first single adjournment of trial” so as to have “[t]ime to pay and call Experts crucial in this case for audio and forensic document examiners who submitted affidavits” (see Zysk v Bley, 24 AD3d 757, 758). Specifically, the defendant hired Paul Ginsberg, an audio expert, to “determine the authenticity” of 17 conversation segments that were on the recordings he received from the defendant. Ginsberg had prepared written transcripts of the conversations, transferred the recordings to CDs, and written a report with respect to the recorded evidence, in which he concluded, based on his examination of the recordings, that “[a]ll segments [were] continuous, with no observation of discontinuities,” and “[t]he recorded segments accurately reflect[ed] the words and conversation, as spoken at the time of recording.” The court first denied the defendant’s request for a continuance to arrange for Ginsberg to testify and provide a foundation for the recordings, and then ruled that the recordings were inadmissible, because, although the defendant had testified that they had left his custody and had been in the custody of Ginsberg, Ginsberg “was not [there] to testify as to [the recordings’] authenticity before [the court].”