Feinberg v Boros2010 NY Slip Op 30797(U)

April 6, 2010Supreme Court, New York County

Docket Number: 108498/03Judge: Emily Jane Goodman

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, ON41912010

FEINBERG, HERBERT vs . BOROS, JEROME S. SEQUENCE NUMBER : 012

SUMMARY JUDGMENT

SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY

PRESENT: :EMILY JANE GOODMAN * PART I Justice

I INDEX NO. Index Number 1 108498/2003

MOTION DATE

MOTION SEQ. NO.

MOTION CAL. NO.

. - ..

his motion t d f o r

PAPERS N U M B E R E D

Notice of Motion/ Order t o Show Cause - HIII---..-

Answering Affidavits - Exhibits

/ Replying Af fidavlt s .J

.libits ,..

\

Cross-Motion: Yes & 4 0

‘ p &uA-e.&- Upon the foregoing papers, it is ordered t h a t thls motion

I

Check one: FINAL DISPOSITION B/NON-FINAL DISPOSITION

Check if appropriate: 0 DO NOT POST 0 REFERENCE

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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 1 7 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ l _ _ _ _ _ _ l _ _ _ _ _ _ _ _ _ _ _ _ - X

HERBERT FEINBERG, Individually and As Assignee of I.A. ALLIANCE CORP.,

Plaintiff,

-against-

slLvEF _ _ _ _ _ _ _ _ _ _ _ - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ I _ _ _ _ _ _ 44p-X

JEROME S , BOROS, E S Q . , ROBINSON,

BRYAN CAVE, LLP, ' i PEARCE, ARONSOHN & BE-, LLP, and

Defendants. n

Index No.: 108498/03

Motion Sequence Number 012

DECISION AND ORDER

EMILY JANE GOODMAN, J . S . C . :

In this legal malpractice action, dants iferome S. Boros

( B o r o a ) , Robinson, Silverman, Berman, LLP, and

Bryan Cave, LLP (collectively, Defendants), move, for the third

time, for summary judgment dismissing the complaint of plaintiff

Herbert Feinberg (Feinberg), individually and as assignee of I.A.

v

Alliance Corp., formerly known as I. Appel Corporation (Appel).

The legal malpractice claim arose in connection with an

arbitration proceeding between Feinberg and his former business

partner, N o r m a n Katz (Katz), where Defendants acted as Feinberg's

party arbitrator, and later as counsel in his subsequent suit

against Mahoney Cohen Rashba & Pokart (Mahoney Cohen) , Appel's

former accountants. Specifically, the legal malpractice claim

alleges that Defendants failed to advise Feinberg as to the

collateral estoppel effect of the arbitration award upon his

subsequent suit against Mahoney Cohen for accounting malpractice,

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which could have been limited by his entry into a post-award

limiting agreement with Katz. Because of Defendants’ failure to

provide legal advice, which resulted in the dismissal of the

Mahoney Cohen suit based on the ground of collateral estoppel,

Feinberg asserts that Defendants have committed malpractice.

Feinberg opposes Defendants’ third summary judgment motion,

arguing that the motion should be dismissed because it does

point to any newly discovered factual evidence. Feinberg a

argues t h a t the motion should be denied, as a matter of law

because disputed material issues of fact preclude the entry

not

so

of

summary judgment. F o r the reasons stated herein, Defendants’

third motion f o r summary judgment is denied, and a trial on the

merits is required.

Applicable L e q a l Standard

In setting f o r t h the standards for granting or denying a

motion for summary judgment, the Court of Appeals, in Alvarez v

Prospect Hospital (68 NY2d 320, 324 [1986]), noted:

As we have stated frequently, the proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact. Failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers. Once this showing has been made, however, the burden shifts to the party opposing the motion for summary judgment to produce evidentiaTy proof in admissible form sufficient to establish the existence of

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material issues of fact which require a trial of the action [internal citations omitted].

The courts scrutinize motions for summary judgment, as well

as the f a c t s and circumstances of each case, to determine whether

relief may be granted. See e . g . Andre v Pomexoy, 35 NY2d 361,

364 (1974) (because entry of summary judgment "deprives the

litigant of his day in court it is considered a drastic remedy

which should only be employed when there is no doubt as to the

absence of triable issues"). Also, when considering a summary

judgment motion, "all of the evidence must be viewed in the light

most favorable to t he opponent of the motion.") People v Grasso,

5 0 AD3d 535, 544 (lat Dept 2008). However, mere conclusory

allegations that are unsupported by competent evidence are

insufficient to defeat a motion for summary judgment. A l v a r e z ,

68 NY2d at 3 2 4 - 3 2 5 . Successive motions for summary judgment are

disfavored, absent newly discovered evidence not available at the

time t h e motion is made (Kobre v United Jewish Appeal-Federation

of Jewish Philanthropies of N e w York, Inc. , 3 2 AD3d 218, 222 [lst

Dept 2 0 0 6 ] ) , or where circumstances have changed ( S a n t i n i v

A lexander Grant 6; Company, 2 7 2 AD2d 271, 2 7 2 [ I s t Dept 20001) , or

for other meritorious reasons, including the interest of judicial

economy ( C a r r e r a s v W e i n t r a u b , 3 3 AD3d 9 5 3 , 9 5 4 [2d D e p t 20061 )

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Discussions’

I. Deposition Testimonv Of Feinberq’s Leqal Expert

In defense of their filing of the third summary judgment

motion, Defendants argue that such filing is permissible because

it is based upon “newly discovered evidence.” Defendants argue

that because Feinberg’s legal expert, Patrick Connors (Connors),

was not available until more than one year after the prior

summary judgment motion was decided (by court decision dated

September 4, 2 0 0 7 ) , the general judicial policy that disfavors

the filing of multiple summary judgment motions does not apply.

Specifically, Defendants rely on certain deposition testimony of

Connors (as discussed below) to support their argument that “the

entire predicate for Feinberg’s [legal malpractice] claims - that

defendants should have advised him that a post-award limiting

agreement with N o r m a n Katz could have restricted Mahoney Cohen‘s

availability to assert collateral estoppel - has been shown to be

without merit.” Defendants‘ B r i e f Opposing Plaintiff’s Argument:

That The Summary Judgment Motion Should Be Stricken (Defendants’

Opposing Brief), at 2; see also Defendants’ Brief In Support Of

Summary Judgment Motion (Defendants’ Opening Brief), at 11.

The instant action has been pending since 2003, and many court decisions have been issued on t h e myriad issues raised by the parties. Hence, this decision does not repeat the background information that gave rise to this action, as that has been fully discussed in prior decisions. Instead, only facts relevant to the issues raised in this motion are discussed herein.

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Whether the testimony or legal opinion of an expert (who is

undisputedly not a fact witness) may constitute "newly discovered

not been briefed by the parties. Indeed, Defendants acknowledge

that they are \'not aware of any such authority." Defendants'

Opposing Brief, at 7. For the purpose herein, it is unnecessary

Q: Now, the question I would like to ask you is, hypothetically, if m y c l i e n t s [i. e . , Defendants] r e a d the cases i n January of 2 0 0 0 and ar r i ved a t an opinion d i f f e r e n t from youxs, and advised Mr. Feinberg that in their opinion, based on the case law, there was no possibility that a post-award limiting agreement between Feinberg and Katz would impair or diminish the rights of Mahoney Cohen, do you believe that my clients stating their opinion in that manner would be a breach of their duty of care?

A: No.

Deposition Testimony of Connors, a t 57 (emphasis added).

It is noteworthy t h a t the question raised by Defendants'

( i . e . f Defendants had read the case law in January 2000, but did

not; and they had advised Feinberg of their legal opinion, but

did not) and counsel conceded that Defendants' legal opinion

that the report prepared by Connors concluded that "the failure

Of defendants to promptly inform Feinberg of the possible

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arguments and alternatives for using a limiting agreement to

avoid the impact of collateral estoppel in a subsequent court

action [against Mahoney Cohen] constituted a departure from the

standard of care required of a New York lawyer." Connors's

Report, at 8 . More importantly, the record reflects that

Connors, immediately prior to answering the above question,

responded to the following question from Defendants' counsel:

Q: My question is, based on your knowledge on the state of the law as of January 2000, would it have been a breach of my client's duty of care to advise Mr. Feinberg that based on their knowledge of the law, there was no possibility that a post-award limiting agreement in their opinion would impair o r diminish the rights of Mahoney Cohen to assert collateral estoppel as a defense to claims by Feinberg o r Katz?

A: I would say that is a breach based upon the fact that that is an inaccurate state of t h e law as of 2 0 0 0 .

Deposition Testimony of Connors, at 5 6 .

From the foregoing, it is abundantly clear that Defendants

are selectively using an excerpt from Connors's testimony,

without discussing or displaying other highly relevant, but

unfavorable, testimony.2 It is equally apparent that, during

deposition, Defendants' counsel tried to elicit a different

response from Connors after they heard unfavorable testimony, and

used an inapposite hypothetical that is contrary to both the

' In fact, page 56 of Connors's testimony is missing from Defendants' exhibit, which skipped from pages 54 to 5 7 . See Frankel Affirmation in Support of Defendants' Summary Judgment Motion, Exhibit 1 . c (Excerpt of Connors's Deposition Testimony)

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facts and the law of the case. In Connors’s affirmation seeking

to explain or clarify his deposition testimony, he wrote:

I assume for purposes of this new [follow-up] question that defendants were asking me to assume hypothetically that the case law was somehow different and that cases definitively concluded that there was no possibility that a post arbitration award limiting agreement could be effective to limit the collateral estoppel effect of the award. Obviously, if that had been the law it would violate no duty to so state.

Connors’s Affirmation, at 4,

Connors‘s explanation is persuasive, particularly when

viewed from the perspective of his report and prior court

decisions. In his report, Connors opined that, based upon

caselaw (prior and then-current court decisions), “there was a

strong possibility that the court would have given effect to a

limiting agreement in the litigation against Mahoney Cohen.”

Connors’s Report, at 8 . Also, this court (Justice Richter), in

rejecting Defendants’ argument that they did not breach a duty of

care in not advising Feinberg to pursue a limiting agreement with

Katz, stated the following:

Defendants a l s o argue that in light of the state of the law at that time [year 2 0 0 0 1 , it was not negligent, as a matter of law, for Boros to fail to advise Feinberg to seek a limiting agreement, However, the Court rejected this very same argument in its earlier decision, which was affirmed by the Appellate Division, First Department . . . Finally, there is no merit to defendants’ contention that this case simply involves their failure to recommend or pursue one reasonable alternative over another. The evidence submitted by Feinberg shows that defendants did not provide any advice about the effects of collateral estoppel and the need”for a limiting agreement.

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Munves Affirmation, Exhibit A (decision of Justice Richter, dated

January 18, 2006, at 3-4); Exhibit E3 (decision of Appellate

Division, First Department, dated April 26, 2005, at 2 - 3 ) ( " I n

circumstances involving arbitration, the parties can formulate

their own contractual restrictions on the carry-over estoppel

effect . . . Accordingly, plaintiff's proposed amended complaint

sufficiently states a claim for l ega l malpractice"). Defendants

did not appeal these decisions, which are the "law of the case."

Importantly, the l e g a l argument that Defendants now raise in

their third summary judgment motion3 could well have been raised

in their second summary judgment motion, but they did not do so.

Characterizing such argument as "newly discovered evidence,"

simply because Defendants wish to attack the legal opinion of

plaintiff's expert that was given a f t e r court denial of their

second summary judgment motion, is unsound and impermissible.

Phoenix Four, Inc. v Albertini, 245 AD2d 166, 167 (lSt Dept 1997)

("Parties will not be permitted to make successive fragmentary

"It is now undisputed, however, that defendants had no duty to provide any such advice or recommendation and their failure to provide such advice was consistent with their duty of care." Defendants' Opening Brief, at 14. Similarly unavailing is the opinion of Defendants' legal expert, Peter Wang, who opined that a post-award limiting agreement would not succeed in limiting the collateral estoppel effect, and that no reasonable attorney would have advised that it be pursued. Such opinion not only fails to observe the law of the case, but also fails to heed Justice Richter's statement that this case is not simply about the failure to recommend a course of action, but a failure to provide any advice whatsoever about collateral estoppel effects.

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attacks upon a cause of action but must assert all available

grounds when moving for summary judgment.

reservation of any issue to be used upon any subsequent motion

for summary judgment") (citation omitted) ; Levitz v Robbins Music

C o r p . , 17 AD2d 801, 801 (lst Dept 1962) ("The denial of the

original motion for summary judgment established the law of the

case and required the denial of the subsequent motion").

Moreover, res judicata requires that when a cause of action has

been adjudicated on the merits, the parties are bound by the

court judgment and decision, and cannot relitigate the same cause

of action again. Sherman v Ansell, 207 ADZ^ 537 (2d Dept 1994).

Accordingly, that branch of Defendants' motion seeking

summary judgment dismissing Feinberg's amended complaint based on

the theory of newly discovered evidence (i-e., testimony given by

Feinberg's legal expert) is denied, as it is without merit.4

There can be no

11. Accountinq Malpractice Claims Aqainst Mahoney Cohen

Notwithstanding the foregoing, Defendants also contend that,

even if collateral estoppel had not barred Feinberg's claims

against Mahoney Cohen, he still could not have recovered damages

on those claims. These damages claims related to and included,

' The fact that the parties have entered into a stipulation permitting Defendants to file the instant motion is of no moment. As demonstrated above, this decision addresses t h e merit, or more aptly, the lack of merit, of Defendants' argument that the purported newly discovered evidence (as applied to the facts and law of this case) permits their filing of the instant motion.

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among others, Feinberg's purchase of Katz'a shares, repayment of

Katz's loans, advances/inveatments in Appel, and acquisition of

In support of the contention, Defendants argue, inter alia,

that Feinberg did not rely on Appel's 1995 financial statement

that was audited by Mahoney Cohen or on other allegedly negligent

representations of Mahoney Cohen.

because a legal malpractice claim requires a plaintiff to

establish that he or she would have prevailed in the underlying

Defendants further argue that,

action "but for" the attorney's negligence, and because Feinberg

could not have recovered in the underlying Mahoney Cohen action,

the legal malpractice action should be dismissed (i.e., the "case

within a case" analysis), AmBase Corp. v D a v i s Polk & Wardwell,

8 NY3d 428, 434 (2007) ("In order to sustain a claim for legal

practice, a plaintiff must establish . . . that the plaintiff would

the attorney's negligence") (internal citations omitted)

In the Mahoney Cohen litigation, this court (Justice Shafer)

granted defendant Mahoney Cohen's motion for summary judgment

dismissing Feinberg's complaint based on the doctrine of

collateral estoppel. The court found, in relevant part, that:

The plaintiffs are collaterally estopped from relitigating the issue of whether or not Herbert Feinberg relied upon the 1995 financial3 in connection with the purchase of Katz's share in [Appel] and the Val Mode transactions. The plaintiffs had a full and fair opportunity to contest this issue ih the prior

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arbitration proceeding [against Katz.] Additionally, this issue necessarily was decided against t h e plaintiffs in that prior proceeding, most of the present action _ _ . .

and is decisive of

dated March 20, 2001, at 4). The decision was upheld on appeal.

I. Appel Corp. v Mahoney Cohen & C o . , 294 AD2d 196, 1 9 7 (lmt Dept

2002)

full and fair opportunity to litigate the reliance issue” in the

arbitration). Thus, the reliance issue never received full

judicial review and scrutiny, as most of the claims against

Mahoney Claim related to this issue were dismissed based on the

(decision affirmed “since plaintiff has had an extensive,

effect of collateral estoppel.

In this third motion for summary judgment, Defendants allege

that certain facts (such as deposition testimony of Feinberg and

his attorneys in the Katz arbitration,

Report) reflect that Feinberg was aware of Appel’s financial

and t h e so-called ESBA

Statement inaccuracies, its inventory problems and its bleak

prospect for the future. Therefore, Defendants argue that

Feinberg‘s assertion that he had relied on the Appel financials

in his negotiations with Katz should be re jec ted . Defendants’

Opening Brief, at 15-22, and exhibit references therein.

Feinberg counters that, apart from the audited financials,

he also relied on the advice of Arnold Cohen, a Mahoney Cohen

principal who encouraged him in reversing his p r i o r decision not

torbuy out Katz’s interest in Appel , but to go forward with the

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Katz/Appel transactions along with the Val Mode acquisition.

Feinberg a l s o asserts that his reliance on Arnold Cohen’s advice

(which indicated that these transactions were a ’‘no bra iner”) in

reversing his earlier decision w a s corroborated by the testimony

of Seth Morris, one of the principals of Val Mode. Feinberg’s

Opposition Brief, at 17-23, and exhibit references therein.

Defendants have not put forth evidence opposing Feinberg’s

allegations (ostensibly supported by deposition testimony) that

he had relied on Arnold Cohen‘s advice. Instead, they argue that

Feinberg failed to present evidence to support his allegations

that “any such advice was negligent.” Defendants’ Reply, at 10,

footnote 5. However, in considering a summary judgment motion,

it is axiomatic that the evidence must be viewed in a light most:

favorable to the opponent of the motion. People v Gr-asso, 5 0

AD3d at 5 4 4 . 5 Defendants have not presented the court with

rebuttal evidence. Instead, they argue that this court (Justice

Shafer) had \‘rejected Feinberg’s contention that ‘Mahoney Cohen

and Arnold Cohen actively encouraged and advised [Appel] to enter

into both the buyout and the Val Mode transaction,‘ in light of

the Arbitrators’ finding that Feinberg did not rely on t h e 1995

financial statements.” Defendants‘ Reply, at 10, footnote 5 .

Defendants’ argument is somewhat misleading, because the quoted

’ ’ Moreover, Defendants indicated that “for purposes of this motion that as to any disputed facts, Feinberg’s allegations are correct.” Defendants’ Opening Brief, at 6, footnote 5.

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language was j u s t a p a r t of the court’s summary description of

Feinberg’s contention, rather than its “rejection” of his

contention, as alleged by Defendants.6

Also, even though the court dismissed Feinberg’s contention

that he had relied on the 1995 f i n a n r i a l s in purchasing Katz’s

Appel shares and in entering into the Val Mode transaction,

dismissal was based on collateral estoppel

In such regard, Defendants’ argument that Feinberg could not

recover damages in the Mahoney Cohen action, even if collateral

estoppel did not apply, is specious, because it debunks their own

assumption. In other words, while Defendants argue that they do

not require collateral estoppel to defeat Feinberg’s claims,

rely on prior court decisions based on collateral estoppel in

their attempt to defeat such claims.

fact as to whether Arnold Cohen‘s advice w a s negligent and

whether such advice proximately contributed to causing Feinberg’s

losses and claims, summary judgment cannot be entered in favor of

Defendants, as a matter of law, on this basis

the

(as explained above).

they

Because there are issues of

Specifically, Justice Shafer wrote: “In opposition to the motion to dismiss, the plaintiffs argue that Mahoney Cohen and Arnold Cohen actively encouraged and advised [Appel] to enter into both the buyout and the Val Mode transaction, even though they knew, or, with the exercise of due care, should have known, that both deals were, at best, imprudent based on [Appel’s] financial condition.” Frankel Affirmation, Exhibit 4, at 2.

” Defendants have asserted that the reason for their third summary judgment motion is due to the fact that none of the Mahoney Cohen accountants had been deposed at t h e time of their

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On the other hand, with respect to the narrow issue of

whether Feinberg’s more than $2 million damages claim could be

recovered against Mahoney Cohen due to its untimely issuance of

the Determination of Value (DOV) report, this court (Justice

Shafer) stated that: “[C]ontrary to the plaintiffs’ assertion,

the report’s untimeliness did not cause any damage.

the report’s timeliness or untimeliness was collateral to the

litigation.” Frankel Affirmation, Exhibit 8, at 3 ( c o u r t

decision dated July 24, 2 0 0 3 ) . In other words, the court’s

ruling that Feinberg could not recover such $ 2 million claim

against Mahoney Cohen was independent of the collateral estoppel

doctrine. Feinberg has no response to this narrow issue. Hence,

that portion of Feinberg‘s claims against Mahoney Cohen

to the legal fees he had expended in the arbitration proceeding

challenging the DOV report and its delay in issuance)

dismissed in the instant action against Defendants.’

The issue of

(related

is

In addition

prior summary judgment motion (in 2007). Frankel Affirmation In Support Of Defendants’ Opposing Brief, Exhibit 4 (email dated June 24, 2009). Also, Defendants have asserted that, since they have completed depositions, they are now “in a position to move f o r summary judgment on the ground that none of plaintiff’s damages could have been recovered in a suit against Mahoney Cohen, even if the arbitration award did not have collateral estoppel effect.” Id. See a l s o Defendants‘ Opening Brief, at 5. However, in their more than 50 pages of briefs and well over 80 exhibits, Defendants have not used any deposition testimony of the Mahoney Cohen accountants. Accordingly, there is no proper basis for the making of this third motion for summary judgment.

‘Although Defendants have no basis for the making of this third motion f o r summary judgment, given that the court has

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to the above issues, there is a dispute between the parties with

respect to the proximate causes of Feinberg's various claims and

losses

auditing standards), including, inter alia, the monies expended

by Feinberg in connection with the Val Mode acquisition and

settlement; the loans to or investments in Appel made by Feinberg

after he purchased Katz's shares; the decline in Appel's stock

value soon after the Katz/Appel transactions; and the ability of

Appel to continue to operate as a going concern in 1995-1996.

support of his damages claims, Feinberg retained James Ashe, an

expert who is a certified public accountant, to prepare a report

detailing Ashe's analysis of such claims (the Ashe Report). In

turn, Defendants retained David Tabak, an expert with a Ph.D

degree in economics, to review the damages analysis in the A s h e

Report, and to prepare a report explaining Tabak's opinion

regarding Ashe's analysis (the Tabak Report), Copies of the Ashe

Report and the Tabak Report are attached as Exhibits B and V,

respectively, to the Storch Affirmation.

(such as whether Mahoney Cohen violated generally accepted

In

Based on the conflicting Ashe Report and t h e Tabak Report,

there are disputed issues of fact as to whether, among other

things, Feinberg would have loaned money to Appel, and to pay

back the loans purportedly made by Katz while loaning money to

expended it resources in addressing this motion, this portion of the claim is dismissed.

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support Appel, had he known of Appel’s true financial condition.

The existence of material issues of fact precludes the entry of a

summary judgment in favor of Defendants as a matter of law.

Moreover, Defendants do not explain why they did not present the

affidavit of their expert on their prior motions for summary

judgment and therefore no basis exists f o r this third motion in

the first place.

Accordingly, it is

ORDERED that Defendants’ third motion for summary judgment

(Motion Sequence Number 12) seeking dismissal of the amended

complaint: is denied, but the portion of Feinberg’s damages claim

against Mahoney Cohen related to the legal fees he had expended

in the arbitration proceeding challenging the DOV report and its

delay in issuance is dismissed; and it is further

ORDERED that a trial on the merits is required and the

parties are directed to contact the court forthwith for a firm

trial date.

Dated: April 6, 2010

Y

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