[*1]
Schorsch v Moses & Singer, LLP
2008 NY Slip Op 51804(U) [20 Misc 3d 1140(A)]
Decided on June 18, 2008
Supreme Court, New York County
Tolub, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected in part through April 1, 2009; it will not be published in the printed Official Reports.


Decided on June 18, 2008
Supreme Court, New York County


Margaret R. Schorsch and M.R.S. Antiques, Inc., d/b/a David A. Schorsch Company, Plaintiffs,

against

Moses & Singer, LLP, Defendant.




109573/05



for Plaintiffs:

Nicholas P. Guliano, Esq.

Bennett Giuliano McDonnell & Perrone, LLP

New York, NY

for Defendants

Lou G. Corsi, Esq.

Brian Oubre

Landman Corsi Ballaine & Ford PC

Walter B. Tolub, J.

This action for legal malpractice arises out of plaintiffs' claim that the defendant law firm failed to file suit against plaintiffs' insurer within the applicable statute of limitations. By this motion, defendant Moses and Singer, LLP ("Moses and Singer") moves for an order dismissing plaintiff's complaint. Summary judgment is sought in the alternative.

Background

Plaintiff Margaret R. Schorsch ("Mrs. Schorsch") is the president and sole shareholder of plaintiff M.R.S Antiques d/b/a David A. Schorsch Company ("M.R.S. Antiques" or "the company"), a family-owned business which sells art and antiques (Notice of [*2]Motion, Transcript of Margaret R. Schorsch, Exhibit F).[FN1] M.R.S. Antiques, at the time of its formation, was run by Mrs. Schorsch, her brother David, their mother, Marjorie H. Schorsch,[FN2] and two additional employees(id., Tr. p. 9).

In August of 1995, M.R.S. Antiques applied for, and was approved for an insurance policy (the "policy"). The policy was issued by Utica Mutual Insurance Company ("Utica"), through its' insurance broker, New England Brokerage Company ("New England Brokerage"). Although the policy was approved in August of 1995, a physical copy of the policy was not delivered to plaintiffs until December, 1995.

On September 23, 1995, M.R.S. Antiques' inventory, valued at an estimated $2 million dollars, was stolen. The theft was reported to the police, and in October, 1995, plaintiffs filed a claim of loss ("the insurance claim") with Utica. Mrs. Schorsch suspecting that her brother David was responsible for the theft (see, Affidavit in Opposition of Margaret R. Schorsch),[FN3] retained defendant to represent her interests and the interests of M.R.S. Antiques in a legal action commenced against her brother captioned, Margaret R. Schorsch and M.R.S. Antiques d/b/a David A. Schorsch Company v. David A. Schorsch (NY County Index No. 124872/1995) ("the 1995 action").

The 134 paragraph, second verified complaint in the 1995 action, drafted and filed by defendant, asserted a total of seventeen causes of action against Mrs. Schorsch's brother. The claims asserted against David Schorsch included breach of fiduciary duty as to Mrs. Schorsch and M.R.S. Antiques. More significantly, the 1995 action sought damages for the unauthorized removal of property from M.R.S. Antiques for which plaintiffs claimed a valued loss of $2 Million Dollars (Notice of Motion, Exhibit H, Seventh Cause of Action).

In addition to representing plaintiffs in the 1995 action, defendant began representing plaintiffs on other legal matters, [*3]including the Utica insurance claim arising out of the inventory theft. In 1997, Utica denied plaintiff's claim of loss,[FN4] predicated upon a violation of a "dishonest acts exclusion" contained within the policy issued to M.R.S. Antiques.[FN5] The [*4]content of the policy, particularly the language and inclusion of the "dishonest acts exclusion" provision, is disputed by plaintiffs.[FN6]

In 2003, plaintiffs, by stipulation, discontinued the 1995 action. Two years later, and eight years after the denial of plaintiffs' insurance claim, this action was commenced alleging legal malpractice for failure to file a lawsuit against Utica challenging the February 1997 disclaimer of coverage.[FN7] After a multitude of delays, this court now addresses these final outstanding motions.

Discussion

As a preliminary matter, irrespective of whether the instant motion is treated as one made pursuant to CPLR 3211 or CPLR 3212, one point is clear: success on a claim for legal malpractice requires a demonstration that (1) the attorney was negligent; (2) that the negligence was the proximate cause of the loss sustained; and (3) actual damages (Reibman v. Senie, 302 AD2d 290 [1st Dept 2003]; Between The Bread Realty Corp. v. Salans Hertzfeld Helibronn Christy & Viener, 290 AD2d 380 [1st Dept 2002], lv den. 98 NY2d 603 [2002]). The claim cannot stand in the absence of a demonstration that but for the negligence of the attorney, plaintiff would have prevailed (Reibman, 302 AD2d 290, 290-91; Senise v. Mackasek, 227 AD2d 184 [1st Dept 1996]), and, the failure to establish this proximate cause warrants dismissal of the claim (Tanel v. Krietzer & Vogelman, 291 AD2d 60 [1st Dept 2002]). [*5]

This court has reviewed the entire file in this case and determines that under either standard, plaintiff's claim for legal malpractice must fail because the requisite proximate cause demonstrating attorney negligence cannot be maintained.

Plaintiffs hired defendant to represent them in the 1995 action against David A. Schorsch. In the 1995 action, plaintiffs maintained, and defendant argued, that David, among other things, was an authorized representative of M.R.S. Antiques with de facto control of the Company bank account and had removed, without permission, over $2 Million Dollars in inventory from M.R.S. Antiques' gallery (Notice of Motion, Exhibit H). Notwithstanding plaintiffs' arguments in the instant action, the 1995 statements, all of which appear in a verified pleading, are the equivalent of a responsive affidavit for the purpose of a motion for summary judgment (see, Travis v. Allstate Insurance Co., 280 Add 394 [1st Dept 2000]). More significantly however, is that those statements made in the 1995 action also constitute party admissions (see, Liquidation of Union Indemnity Ins. Co. of New York v. American Centennial Ins. Co., 89 NY2d 94 [1996]).

The claim, as advanced by plaintiffs in the instant action, is that defendant failed to bring a timely suit against Utica challenging their disclaimer of coverage. Plaintiffs' supporting arguments demonstrating how they would have prevailed against Utica, focus on the inapplicability of the "dishonest acts exclusion" of the Policy. Specifically, plaintiff cites Utica's alleged failure to properly identify the policy provision and/or "forms on file" referenced in the Insurance Binder provided to plaintiffs by New England Brokerage in December, 1995 (see, Notice of Motion Exhibit C). Plaintiffs also claim, contrary to their position in 1995, that David Schorsch worked with M.R.S. Antiques, but was not on the company's payroll (Notice of Motion, Transcript of Margaret R. Schorsch, Exhibit F, p. 9), and therefore does not fall within the ambit of the exclusionary language.

Even affording plaintiffs the most reasonable of interpretations, the facts, as presented, do not appear to present a "cognizable legal theory" upon which plaintiffs may succeed (Leon v. Martinez, 84 NY2d 83, 87-88 [1994]; Campaign For Fiscal Equity, Inc. v. State of New York, 86 NY2d 307, 318 [1995]. See generally, Barr, Altman, Lipshie, and Gerstman; New York Civil Practice Before Trial [James Publishing 2007] §36.01 et seq.). To the contrary, the factual admissions made by defendant and by Mrs. Schorsch in the 1995 Complaint, which squarely place blame upon David Schorsch for the gallery theft, coupled with the statements made to Utica in the 1995 loss claim, again imputing liability upon David A. Schorsch, do more to undermine plaintiffs' claim that they would have prevailed against Utica than further their cause of action (see, Reibman v. [*6]Senie, 302 AD2d 290, 291 [1st Dept 2003](Plaintiff in a legal malpractice action is required to prove a "case within a case").

Were this court to convert this motion to that of one for summary judgment, the result is still not changed. Arguments offered by plaintiff attempting to elicit possible questions of fact with respect to whether the proper policy provision is referenced in the declination letter, and claimed issues arising out of the existence of additional insurance coverage for M.R.S. Antiques' inventory (See, Memorandum of Law in Opposition, p. 7; Schorsch Aff. ¶8) are unsupported with evidentiary proof, and, as such are insufficient to establish the existence of material issues of fact requiring trial (Zuckerman v. City of New York, 49 NY2d 557 [1980]; see also Sillman v. Twentieth Century Fox Film Corp., 3 NY2d 395 [1957]; Winegrad v. New York University Medical Center, 64 NY2d 851, 853 [1985]. See generally, Barr, Altman, Lipshie and Gerstman; New York Civil Practice Before Trial, §37:91-92).

As such, in the absence of these elements, it is

ORDERED defendant's motion to dismiss is granted and the complaint is dismissed with costs and disbursements as taxed by the Clerk of the Court; and it is further

ORDERED that the Clerk is directed to enter judgment accordingly.

This memorandum opinion constitutes the decision and order of the Court.

Dated:

____________________________

HON. WALTER B. TOLUB, J.S.C.

Footnotes


Footnote 1: Mrs. Schorsch claims that an earlier and similar family-owned business failed after incurring significant legal and financial liabilities at the hands of her brother, David A. Schorsch (id. Tr. at p. 9).

Footnote 2: The Schorsch family (Margaret Schorsch, David A. Schorsch, and Marjorie H. Schorsch) has operated art and antiques businesses in New York since 1984 (id.)

Footnote 3: David Schorsch neither admitted to stealing the inventory nor was prosecuted for it (Affidavit in Opposition of Margaret R. Schorsch).

Footnote 4: Utica's February 14, 2007 letter, reads as follows:

We have been retained on behalf of Utica Mutual Insurance Company in connection with the above referenced claim under policy number CULP 169259, for the period of August 6, 1995 to August 6, 1996.

Having conducted an investigation of your claim for the loss of numerous antique items, it has been determined that coverage is excluded under the terms and conditions of the above referenced policy. Accordingly, your claim herein is denied by Utica Mutual Insurance Company.

It is alleged by you that the items allegedly lost were taken by David M. Schorsch. Based upon your description of the circumstances of the loss, coverage is excluded under the following provision.

2. Dishonest or criminal act by you, any of your partners, employees, directors, trustees, authorized representatives or anyone to whom you entrust the property for any purpose:

(1) Acting alone or in collusion with others; or

(2) Whether or not occurring during the hours of employment.

This exclusion does not apply to acts of destruction by your employees; but theft by employees is not covered.

Utica Mutual Insurance Company has determined, based upon testimony in your examination under oath and their investigation, that David Schorsch falls into the category of a partner, employee, director, trustee, authorized representative or someone to whom you entrusted the property. If, in fact, David Schorsch has taken the property, as you allege, his taking of the property is excluded under the policy.

Accordingly, pursuant to this exclusion, your claim is herein denied.

(Notice of Motion Exhibit G).

Footnote 5: The "dishonest acts exclusion" provision, in pertinent part, reads:

C. Exclusions[...]

2. We will not pay for a "loss" caused by or resulting from any of the following [...]

c. Dishonest acts by you, anyone else with an interest in the property, your or their employees or authorized representatives or anyone entrusted with the property, whether or not acting alone or in collusion with other persons or occurring during the hours of employment [...]

(Notice of Motion, Exhibit D).

Footnote 6: Plaintiff's dispute with this provision stems in large part from the dishonest acts exclusion contained in the forms which defendant claims represent Utica's "forms on file" that were applicable to plaintiff's loss (compare, Notice of Motion, Exhibit E, p. 6; see also Plaintiff's Memorandum of Law in Opposition to the motion, p. 5-7).

Footnote 7: The court is uncertain as to why the defendants, who appear to have preserved a statute of limitations defense in their answer, have not acted upon it.