FKB’s Andrew S. Kowlowitz and Spencer A. Richards successfully obtain a decision from the New York Appellate Division First Department affirming a CPLR §3212 summary judgment dismissal in an action asserting legal malpractice, breach of contract, and breach of fiduciary duty claims related to a $1.75 million dollar rent-stabilized condominium unit overlooking Central Park, which was bought out by a developer.
FKB’s client was retained by the Home Owners Association for the condominiums to defend the tenants from an action commenced by the developer to evict all of the tenants in order to demolish the building and erect a new condominium building. Under the retainer agreement, the tenant signatories agreed that if the developer were to settle with the tenants, then each tenant would receive the same amount for their condominium unit despite the location of the condominium their particular unit in the building. FKB’s client negotiated with the developer and obtained a $1.75 million dollar settlement offer for each individual condominium unit. However, prior to the settlement offer, one of the tenants who had owned a double condominium unit unfortunately passed away. Against all odds, FKB’s client negotiated a $1.75 million dollar settlement for that tenant’s girlfriend even though she had no ownership interest in the condominium double unit and had no succession rights under the Rent Stabilization Law. The tenant’s girlfriend then commenced an action against FKB’s client in New York State Court asserting legal malpractice, breach of contract, and breach of fiduciary duty claims because she believed that the retainer agreement required all of the tenants to “pool” their settlement and that she was entitled to $3.5 million dollars for the double unit. The tenant’s estate separately commenced an action against FKB’s client because it also believed that the retainer agreement required all of the tenants to “pool” their settlement and that it was entitled to $3.5 million dollars for the double unit. New York State Court consolidated both actions.
On November 8, 2017, the New York State Court granted FKB’s CPLR §3212 summary judgment motion, dismissed the action, and agreed with FKB’s argument that the record established that FKB’s client’s retainer with the Home Owners Association did not include any pooling agreement. Specifically, the State Court agreed that, to the extent there was any ambiguity in the retainer itself, any such ambiguity was conclusively resolved by the unrefuted deposition testimony of the Home Owners Association President and the affidavits of the other tenants who had signed FKB’s client’s retainer. The tenant’s girlfriend and the tenant’s estate both appealed the decision to the Appellate Division First Department.
In its decision on December 6, 2018, affirming the dismissal of the action, the Appellate Division First Department agreed with FKB’s argument that extrinsic evidence submitted in support of the CPLR §3212 motion for summary judgment resolved any ambiguities and eliminated any factual issues. Specifically, the Appellate Division First Department agreed that the affidavits of several signatories to the retainer attested that the retainer did not require any of the tenants to “pool” settlement proceeds together and that each signatory intended to settle individually with the developer. The Appellate Division First Department further agreed with FKB that the evidence concerning the manner in which the retainer was intended to operate is entirely uncontradicted on the record. As to the tenant’s estate’s legal malpractice and breach of contract claims, the Appellate Division agreed with FKB’s argument that there was no issue of fact that FKB’s client could be liable for any breach. As to the tenant’s girlfriend’s legal malpractice, breach of contract, and breach of fiduciary duty claims, the Appellate Division First Department agreed with FKB’s argument that tenant’s girlfriend failed to establish proximate cause for any of her claims because she failed to establish that she was entitled to succession rights to the double condominium unit under the Rent Stabilization Law. Finally, the Appellate Division First Department agreed with FKB’s argument that “but for” FKB’s client’s representation of the tenant’s girlfriend, she would not have received any money under the retainer, and certainly not the amount she did receive from the developer to settle the matter.