Cathedral Gardens Condo Assn. v 110th St.  Equities, LLC.  2018 NY Slip Op 32618(U)
October 15, 2018 Supreme Court, New York County Docket Number: 600175/2009
Judge: William Franc Perry stands for the principle that there can be either direct liability for a failure to provide professional services (tort) which brings “loss of asset” style damages, or there can be liability in contract with economic damages arising from the payments to the professional.

“Here, plaintiffs breach of contract claim against RKTB was dismissed with leave to replead, specifically because the court found that plaintiff did not sufficiently plead the element of third-party beneficiary to sustain its contract cause of action against RKTB.  The court however, did not dismiss the Sixth cause of action against RKTB which was for architectural malpractice, noting that the record was insufficient to determine the end date for completion of construction in order to ascertain the accrual date of the alleged professional malpractice. Specifically, the court held, “[t]here has been no discovery here, and plaintiff should have the opportunity to make a document request and depose Bafitis on the issue of when the work was completed.” (NYSCEF Doc. No. 169, p.18).

As such, the only cause of action that remains against RKTB is one for malpractice which led this court to conclude that RKTB “may be subject to tort liability for failure to exercise reasonable care, irrespective of [its] contractual duties” (Sommer v. Federal Signal Corp., 79 N.Y.2d 540, 551, 583 N.Y.S.2d 957, 593 N.E.Zd 1365 [1992] ), and the damages sought by plaintiffs here are not limited to the benefit of the bargain (see Tower Bldg. Restoration v. 20 E. 9th St. Apt. Corp., 295 A.D.2d 229, 229, 744 N.Y.S.2d 319 [2002] ).” (NYSCEF Doc. No. 255). Upon review of the papers and caselaw cited in support of Sideris’ motion to reargue, the Court finds it did not overlook any relevant facts or misapply controlling principles of law. “

The Client is deaf.  A settlement is reached in his case.  The attorneys translate the settlement proposal to American Sign Language and the settlement is sealed.  The client then says that the settlement amount is not that which was translated.  He says he is getting less than he was told in ASL.  What to do?

Client brings case in Federal District Court where his claims are rejected.  Can he successfully sue the attorney?  In this case, no.

“The court properly concluded that collateral estoppel barred plaintiff from relitigating his claims that defendants improperly translated to and from American Sign Language (ASL) the amount he was willing to accept in settlement and then settled for an amount that was unacceptable to him. The Federal District Court’s opinion clearly addressed and rejected these claims, and the Second Circuit properly reviewed the District Court’s findings de novo. The allegations of the complaint in this action and in the federal action are the same, although here plaintiff has asserted legal malpractice, rather than seeking to void the settlement. The fact that the issue arose in the context of a different type of action is not dispositive because the factual findings necessary to support the claims are identical (see D’Arata v New York Cent. Mut. Fire Ins. Co. , 76 NY2d 659, 664 [1990]).

Additionally, plaintiff has not cited new evidence not raised in the federal courts, and he chose not to retain new counsel in the prior action after he discovered the claimed error. He also failed to point to differences in the applicable law in the prior action and here.

Plaintiff asserts that he did not have a full and fair opportunity to litigate his claims because the federal court did not provide him with an ASL interpreter so that he could make a proper presentation in oral argument. However, he failed to point to any evidence he was unable to present to the federal courts. Moreover, the Second Circuit determined that there was no need to hear oral argument on the issue of whether he instructed his attorney to seek the settlement amount he allegedly sought, and it is unclear how plaintiff’s disability interfered with his ability to present his claim in written form or to retain counsel of his choosing. He was also free to hire a private ASL interpreter to communicate with counsel if he believed that it was necessary.”

We have often wondered at the quick demise of businesses that have spent a lot of money and time setting up a storefront, only to close 4 or 5 months later.  How could the owner invest so much and either mistake the customer base or make some other vast miscalculation?  Agatha LLC v Heller
2018 NY Slip Op 32636(U)  October 10, 2018  Supreme Court, New York County  Docket Number: 150619/2015 Judge: Debra A. James provides something of an example.  This was a theater in Times Square that went down in flames.

“Plaintiffs are Agatha LLC (Agatha) and a managing member, Catherine Russell. The essence of plaintiffs’ claims is that in challenging Agatha’s former landlord’s notices to terminate the
lease, Heller negligently failed to commence action and obtain a Yellowstone injunction, resulting in the termination of Agatha’s leasehold. ”

“In September 2013, Agatha rented space in a building in the Manhattan Times Square  neighborhood to create an Off-Broadway theater. The space “required substantial construction” before it could be opened to the public. Renovation was proceeding when, on August 15, 2014, the
landlord served Agatha with a 30-day notice of default, with a cure date of September 24, 2014, more than 30 days after the date of the notice. The 30-day notice stated that Agatha had failed to maintain the types and amounts of insurance required under the lease and had performed work and made alterations to the premises in violation of the lease. The notice stated that Agatha did not obtain the needed permits from the NYC Department of Buildings or the landlord’s prior written consent to change the premises. The notice listed alterations such as removing walls, flooring, ceilings, and lighting, and blocking windows. The notice further stated that the insurance defaults were incurable under the lease.”

“Both sides agree that the coverage reflected by Agatha’s insurance certificates did not comply with the insurance requirements in the lease. ”

“Heller alleges that he repeatedly and frequently told Russell that he did not do Supreme Court work, and that if the landlord did not agree to a resolution of the issues raised in the default notice, she would have to find another attorney who could go to the Supreme Court and obtain an injunction to renegotiate the insurance clause in the lease. He told Russell that she needed to get insurance that complied with the lease and that she would have a better chance of getting the
injunction if she did. He told her that she had 30 days from the date of the 30-day notice to get an injunction in Supreme Court. Heller further alleges that Russell understood that not getting the right insurance could mean loss of the lease.  Heller also says that he believed that Russell could not get the right insurance and that his job was to negotiate with the landlord to see if lower coverage was acceptable. ”

“Plaintiffs’ position is that, if Agatha had obtained a Yellowstone injunction, negotiations might have led to the
landlord agreeing that the tenant’s insurance did not have to be exactly what was called for in the lease. In the event the landlord did not agree, Agatha would cure the insurance defaults. Russell says that she could have obtained the correct amounts of insurance on a retroactive basis. ”

“Where an attorney’s motion to dismiss is premised on the argument that the client could not have succeeded on its underlying claim, the attorney must show that the plaintiff would have been unable to prove one of the essential elements of the claim (Burbige v Siben & Ferber, 152 AD3d 641, 642 [2d Dept 2017]; Velie v Ellis Law, P.C., 48 AD3d 674, 675 [2d Dept 2008]). ”

“Heller contends that Agatha either could not have qualified for a Yellowstone injunction and/or could not have cured the defaults. Thus, an essential element of the claim is absent as Agatha could not have prevailed over the landlord and avoided termination of the lease. The landlord’s notice advised Agatha that if the defaults were not cured by a certain date, the leasehold would be terminated. A Yellowstone injunction imposes a stay that prevents the landlord from terminating a leasehold by the cure date, thereby affording the tenant an opportunity to cure the
default specified in the landlord’s notice and avoid forfeiture of the leasehold (Universal Communications Network, Inc. v 229 W. 28th Owner, LLC, 85 AD3d 668, 669 [1st Dept 2011]; CC
Vending, Inc. v Berkeley Educ. Servs. of N.Y., Inc., 74 AD3d 559, 559 [1st Dept 2010]; Empire State Bldg. Assoc. v Trump Empire State Partners, 245 AD2d 225, 227 [1st Dept 1997]). If the tenant cannot cure the default, it loses its leasehold. To succeed on a motion for a Yellowstone injunction, the tenant must show “that it is prepared and has the ability to cure the alleged default [as specified in the notice] by any means short of vacating the premises” (CC Vending, 74 AD3d at 559). If the
default is not susceptible to cure, the Yellowstone application will be denied (see Zona, Inc. v Soho Centrale, 270 AD2d 12, 14 [1st Dept 2000]). ”

“Heller demonstrates that Agatha would not have prevailed in the case against the landlord.  Plaintiffs fail to show that there is an issue of fact in that regard. Additionally, nothing
is alleged here to show that Agatha would have gotten larger damages if a Yellowstone injunction had issued. Such claim is mere speculation.”

Spiegel v Ahearn  2018 NY Slip Op 32472(U)  October 1, 2018  Supreme Court, New York County
Docket Number: 101251/2016  Judge: Melissa A. Crane is a very unusual case.

“Between 2006 and 2012, plaintiff pro se Michael Spiegel and defendants Thomas Ahearn, Liridona Kastrat, Kristopher Kennington, and David Ortiz were employed by the Hotel Edison (“Hotel”), located on West 47th Street in Manhattan (see Spiegel’s verified complaint, dated August 8, 2016 [complaint], ii 8). The defendants later sued the Hotel and its managers, claiming that the Hotel and its managers engaged in wrongful conduct with respect to their employment and termination. Spiegel brings this action to recover damages from the defendants for allegedly breaching the contract they entered with him in connection with the prosecution of the defendants’ claims, versus the Hotel (id ii 31 et seq.). ”

“Spiegel asserts three causes of action in his complaint, for breach of contract, quantum meruit, and “Debt Owed,” each alleged to arise from the “Legal Agreement” he entered with Ahearn, Kastrat, Kennington, and Ortiz, dated October 31, 2012 (Legal Agreement) (exhibit 1 to the Deubert affirmation).

In the Legal Agreement, Spiegel promised to help Defendants and Ahearn and Ortiz in the civil lawsuit they were contemplating against the Hotel: “Spiegel agree[d], for his part, to secure a lawyer for this action, to give full and complete aid in counsel for the preparation and planning of this lawsuit, up to and including trial and any appeal, and to also front any money paid to the lawyer as
an advance or other purpose, plus to front any money to be paid as ‘out of pocket expenses … Spiegel also agree[ d] to give testimony at the trial, as necessary and appropriate” (id. at 1 ).

For their part, Defendants promised to cooperate with Spiegel in the prospective lawsuit, and to provide testimony in a lawsuit Spiegel planned to bring on his own behalf against the Hotel (id.). 3 Among other things, Defendants also agreed that they would pay Spiegel 25% of any money they received from the Hotel in the lawsuit, through settlement or an award after trial, after deduction of attorneys’ fees and “fronted expenses” (id. at 1-2). With Spiegel’s assistance, shortly after their execution of the Legal Agreement, Defendants, along with Ahearn and Ortiz hired Neil Frank, Esq. of Frank & Associates, P.C. to represent them in their suit against the Hotel. In their retainer agreement with Frank’s law firm,  dated November 5, 2012, Defendants and Ahearn and Ortiz agreed to pay the firm $500 each as an initial intake fee, plus 35% of any negotiated settlement, plus disbursements paid on their behalf (Deubert affirmation exhibit 9, at 1 ). If the suit went to trial, the law firm would be paid any fees and expenses the court awarded (id.).

Spiegel admits that, although he is not an attorney, he is a businessman with extensive experience in civil litigation (see Defendants’ Rule 19-A Statement of Material Facts [SMF], 2-3; transcript of Michael Spiegel deposition, dated September 5, 2017 [Tr.], 36:19 to 42:5). Spiegel’s experience includes his own lawsuit against the Hotel, several grievance arbitration proceedings concerning his termination by the Hotel, several proceedings before New York State’s Department of Labor concerning his claim for unemployment benefits arising from his termination by the Hotel, a complaint with the Occupational Safety and Health Administration concerning conditions at the Hotel, and a complaint with the New York Division of Licensing Services concerning security guards at the Hotel (SMF ~~ 3, 7-11). Spiegel states that he has helped at least three other former Hotel employees bring lawsuits against the Hotel and has a financial interest in the outcome of one such suit (id. ~~ 4-5; Tr. 19:23-22:25). ”

“Defendants allege that the Legal Agreement is unenforceable because it calls for Spiegel’s unauthorized practice of law, in violation of Judiciary Law Section 478, that states, in pertinent part:
It shall be unlawful for any natural person to practice or appear as an attorney-at-law or as an attorney and counselor-at-law for a person other than himself or herself in a court of record in this state, or to furnish attorneys or counsel or an attorney and counsel to render legal services, or to hold himself or herself out to the public as being entitled to practice law as aforesaid, or in any other manner, ..
without having first been duly and regularly licensed and admitted to practice law
in the courts of record of this state, and without having taken the constitutional
oath.

This statute is intended “to protect our citizens against the dangers of legal representation and advice given by persons not trained, examined and licensed for such work, whether they be laymen or lawyers from other jurisdictions” (Spivak v Sachs, 16 NY2d 163, 168 [1965]). A contract violating Section 4 78 is illegal “and under our settled rules [New York courts] refuse to aid in it but leave the parties where they are” (Spivak, 16 NY2d at 168, citing McConnell v Commonwealth Pictures Corp., 7 NY2d 465 [1960]; see also El Gamayel v Seaman, 72 NY2d 701, 705 [1988] [“As a matter of public policy, a contract to provide services in violation of [Judiciary Law§ 478] is unenforceable in our state courts”]). ”

“Here, Defendants make their prima facie showing that Spiegel’s “aid in counsel” was the rendering of unauthorized legal advice in violation of New York’s Judiciary Law Section 478. Spiegel fails to raise any bona fide issue to defeat Defendants’ motion or to support his own cross motion. Accordingly, the court grants Defendants’ motion for summary judgment, and denies Spiegel’s cross motion for summary judgment, with respect to his first cause of action for breach of contract. ”

The development of an apartment building in Manhattan is a mega-big thing.  Not only does it cost a lot, but there are a large number of difficult rules. W 106 Dev. LLC v Pilla  2018 NY Slip Op 32596(U)  October 10, 2018  Supreme Court, New York County  Docket Number: 654801/2016
Judge: Debra A. James  makes it clear that even pros can make mistakes.  However, there remains a difference in whether the wrong is addressed through tort or contract analysis.

“Plaintiff W 108 Development LLC (West 108), a real estate development corporation, is the owner of a building complex (the property} located at 324-326 West 108th Street in the County,
City and State of New York. In this .action, plaintiff alleges that defendants did not
carry out its obligations to develop the· property during the West 108 project.  In its complaint, West 108 first states that, on February 25,201s, it “engaged defendants, as architect . , to complete five separate phases of architectural work” as part of its development project. These comprised: 1) pre-design; 2) schematic design; 3) design development; 4) construction document; and 5} construction administration. Defendants note that there was never a formally executed’ contract.”

“West 108’S second cause of action asserts a claim of “professional malpractice” against both defendants. New York law treats architectural malpractice as a species of “‘professional negligence [which] requires proof that there was a departure from the accepted standards of practice and that the departure was a proximate cause of the injury.'” 143 Bergen St., LLC v Ruderman, 144 AD3d 1002, 1003 (2d Dept 2016), quoting Kung v Zheng, 73 AD3d 862, 863 (2d Dept 2010). Here~ the
complaint alleges that defendants committed four negligent departures from architectural standards, including misunderstanding and misapplication of: 1) the “Sliver Law” (New
York City Zoning Resolution§ 23-692); 2) the portion of the Zoning Resolution that governs parking in this neighborhood where the property is situated; 3) the Americans with Disabilities Act and 4) the portion of the New York City Building Code that governs egress requirements for renovated buildings. The complaint also alleges that these departures were the proximate cause of the financial injuries that West 108 consequently suffered. Id. As a result, the ‘court finds that the complaint
satisfies the legal pleading requirements for this cause of action. Defendants, nevertheless, raise two arguments for its dismissal. ”

” Defendants next argue that West 108’ s architectural malpractice claim should be dismissed against.both defendants because the claim is duplicative of West 108’s breach of contract claim. They cite the general rule, promulgated long ago by the Court of Appeals in Clark-Fitzpatrick, Inc. v Long Is. R.R. Co. (70 NY2d 382, 389 [1987]), that “a simple breach of contract is not ‘to be considered a tort unless a legal duty independent of the contract itself has been violated.” West 108
responds by citing the portion of CPLR 3014, which provide that “(c]auses of action or defenses may be stated alternatively or hypothetically,” and arguing that New York courts routinely interpret the statute as permitting an exception, at the pleading stage of litigation, to the general rule that tort based claims should be dismissed when they are duplicitive of the breach of contract claims. West 108’s statement of the law is correct. See .e.g. Citi Mgt. Group, Ltd. v Higbridge House
Ogden, LLC, 45 AD3d 487, 487 (1st Dept.2007). Furthermore, the instant complaint does contain t,he allegation that defendants committed professional malpractice, which certainly constitutes
the violation of a duty separate from a contractual obligation. ”

” However, a review of the complaint shows that as to such tort claim plaintiff seeks “only a benefit of the bargain recovery, viz, economic loss under the contract”, 17. Vista Fee Associates v Teachers Ins.  and Annuity Ass’ n of America, (259 AD2d 75, 83 [1st Dept. 1999]) as opposed to damages for personal injury or property loss. Therefore, the court accepts defendants’ second dismissal argument, and finds that their motion should be granted with respect to West 108’s
architectural malpractice claim.”