[*1]
Country Club Partners, LLC v Goldman
2009 NY Slip Op 52844(U) [36 Misc 3d 1205(A)]
Decided on October 21, 2009
Supreme Court, Albany County
Platkin, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on October 21, 2009
Supreme Court, Albany County


Country Club Partners, LLC, Plaintiff,

against

Paul J. Goldman and Segel, Goldman, Mazzotta & Siegel, P.C., Defendants.




2370-09



Smith, Sovik, Kendrick & Sugnet, P.C.

Attorneys for Defendants

(Kevin E. Hulslander, of counsel)

250 South Clinton Street, Suite 600

Syracuse, New York 13202

Linnan & Fallon, LLP

Attorneys for Plaintiff

(Shawn T. May, of counsel)

61 Columbia Street, Suite 300

Albany, New York 12210

Richard M. Platkin, J.



Plaintiff Country Club Partners, LLC brings this action against defendants Paul J. Goldman and the law firm of Segel, Goldman, Mazzotta & Siegel, P.C. ("SGMS" or "the Law [*2]Firm") seeking to recover approximately $419,000 in damages. In its amended complaint, plaintiff alleges five causes of action, all premised on allegations that defendant Goldman, a partner with SGMS, engaged in improper self-dealing using confidential information obtained through the Law Firm's representation of plaintiff. Defendants now move for summary judgment seeking dismissal of the amended complaint on various grounds. Plaintiff opposes the motion.

BACKGROUND

In November 2004, the Colonie Country Club, Inc. ("the Club") was in fiscal distress, facing the prospect of foreclosure by its lender. Five members of the Club (collectively "the Members") decided to establish a New York limited liability company ("LLC") to acquire the Club's assets. As a result, Country Club Partners, LLC ("CC Partners" or "plaintiff") was formed.

CC Partners retained the Law Firm in connection with this acquisition. By letter dated November 24, 2004 ("Engagement Letter"), Kenneth B. Segal, a partner with the Law Firm, wrote to Jeffrey Sperber, one of plaintiff's founding members, to confirm the Law Firm's "agreement to provide legal advice and services to you and five other individuals in connection with the purchase of Colonie Country Club, Inc. and/or acquiring the CharterOne Bank mortgage." A subsequent letter from Attorney Segal to the Members, counter-signed by them, confirmed the Law Firm's representation of CC Partners with respect to this transaction. This letter, dated February 11, 2005, also advised the Members of the need to execute an operating agreement for the plaintiff LLC in connection with its asset purchase.

Plaintiff was successful in acquiring the note and mortgage from the Club's lender on a discounted basis and in obtaining the Club's assets for nominal consideration. In addition to the real property used by the Club and its facilities, plaintiff's purchase included an additional 55 acres of so-called excess property that was not used by the Club for its day-to-day activities ("Excess Property"). These transactions were completed in February 2005.

Plaintiff acknowledges that the Law Firm was retained for the foregoing purposes, but further alleges that another "express purpose" of the representation was "the creation of a subdivision of the property surrounding and abutting the Club" (Amended Complaint ¶ 5). Relatedly, plaintiff alleges that it continued to be represented by the Law Firm in connection with "the creation of a subdivision of the Property" surrounding and abutting the Club until or about August of 2006" (Amended Complaint ¶ 8).

The instant dispute arises out of real property owned by Marilyn S. Kime ("the Kime property") that abuts the Excess Property. According to plaintiff, in or about July 2006, it proffered a written contract to Ms. Kime offering to purchase six acres of her property for the sum of $400,000 in furtherance of its plan to establish a residential subdivision. Plaintiff alleges that defendant Goldman learned of Ms. Kime's interest in selling her property through confidential information acquired by the Law Firm in the course of its representation of CC Partners and engaged in improper self-dealing by ultimately purchasing the Kime property in August 2006.

For its first cause of action, plaintiff alleges that both Goldman and SGMS breached their fiduciary duties to plaintiff by misappropriating the opportunity to purchase Ms. Kime's property, resulting in $400,000 in damages. Second, plaintiff alleges that the Law Firm aided and abetted [*3]Goldman's breach of fiduciary duty, thereby entitling plaintiff to the return of $18,759.11 in compensation paid to the Law Firm during this alleged "period of disloyalty". Plaintiff's third and fourth causes of action allege that defendants' failure to disclose and obtain plaintiff's consent to the use of its confidential client information constitutes fraudulent concealment and constructive fraud. On these causes of action, plaintiff seeks an award of $400,000 in compensatory damages and $1,000,000 in punitive damages. Finally, plaintiff's fifth cause of action alleges legal malpractice and seeks the same $400,000 in compensatory damages.

Issue has been joined,[FN1] and defendants now move for summary judgment dismissing the amended complaint. In support of their motion, defendants contend, among other things, that: plaintiff's claims fall outside of the scope of representation set forth in the engagement letter; plaintiff's claims are barred by the applicable statute of limitations; plaintiff cannot establish an actionable misappropriation of a business opportunity or a misuse of confidential information; plaintiff's causes of action for intentional and constructive fraud are duplicative of its claim of legal malpractice; plaintiff cannot demonstrate a viable claim of legal malpractice; and plaintiff has not stated a claim against the Law Firm for aiding and abetting a breach of fiduciary duty. The Court will consider each of these contentions in the context of each asserted cause of action.

ANALYSIS

Summary judgment is a drastic remedy and should only be granted if there are no material issues of disputed fact (Sillman v. Twentieth Century Fox Film Corp., 3 NY2d 395 [1957]). In evaluating a motion for summary judgment, a court should simply determine whether material issues of disputed fact preclude the grant of judgment as a matter of law (S. J. Capelin Assoc. v. Globe Manufacturing Corp., 34 NY2d 338 [1974]). The party moving for summary judgment has the initial burden of coming forward with admissible evidence to support the motion, so as to warrant the Court directing judgment in movant's favor; the burden then shifts to the opposing party to demonstrate, by admissible evidence, the existence of any factual issue requiring a trial of the action (see Zuckerman v. City of New York, 49 NY2d 557 [1980]).

A.Legal Malpractice

Defendants argue that the Law Firm's representation of plaintiff pursuant to the Engagement Letter was complete no later than September 2005. On that basis, defendants contend that the cause of action alleging legal malpractice, which depends upon the existence of an attorney-client relationship between plaintiff and defendants, must be dismissed. Relatedly, defendants argue that this cause of action must be dismissed as time barred.

In support of this branch of their motion, defendants first rely upon the Engagement Letter, which describes the scope of engagement as the provision of legal services "in connection with the purchase of Colonie Country Club, Inc. and/or acquiring the CharterOne Bank mortgage." There is no dispute that these transactions closed in February 2005.

Following the closing, Mr. Segal avers that he did a small amount of work in assisting the Members formulate an operating agreement for the plaintiff LLC, despite his retirement from the [*4]full-time practice of law on March 31, 2005. According to Mr. Segal and the Law Firm billing records submitted by defendants, this work on the company's operating agreement ("Operating Agreement") was complete by June 12, 2005 and plaintiff paid its final bill on August 17, 2005. By letter dated September 16, 2005, Mr. Segal forwarded bound copies of the closing documents to each of the Members. This was the last date upon which he or anyone else at the Law Firm performed any work for plaintiff on this matter, according to Mr. Segal.

Relatedly, defendants assert that plaintiff retained different counsel, the law firm of O'Connell & Aronowitz, P.C. and Sarah Biscone, Esq., in connection with the development and commercialization of the Excess Property. This, defendants claim, demonstrates that the development of the Excess Property and any matters pertaining to abutting property were outside the scope of SGMS's engagement.

Finally, defendants observe that while plaintiff's operating agreement does refer to the Excess Property, it does not mention or contemplate the acquisition of any abutting or adjoining lands, including the Kine property. On the basis of this omission, as well as a broad merger clause included in the Operating Agreement, defendants argue that plaintiff is precluded from relying upon extrinsic evidence to expand the scope of representation beyond the company purposes set forth in the Operating Agreement.

The foregoing proof is sufficient to demonstrate, prima facie, that the Law Firm's representation of plaintiff pursuant to the Engagement Letter was limited to the purchase of the Club's assets and that such work was complete no later than September 2005.

The burden then shifts to plaintiff to come forward with proof in admissible form demonstrating that the Law Firm's engagement continued beyond such date. As noted above, plaintiff contends that the Law Firm's engagement continued up until at least August 2006.

In support of this contention, plaintiff first relies upon the fact that a formal policy of title insurance was transmitted from the Law Firm to one of plaintiff's members on August 10, 2006. However, the affidavit of Robert J. Sneeringer, president of the title insurer, establishes that coverage in favor of plaintiff was officially bound and became effective on February 24, 2005 following execution and delivery the marked title insurance certificate to the Law Firm. His affidavit further demonstrates that the title insurer's issuance and transmittal of final, typed title insurance policy was a ministerial act on its part. And there is no showing that any legal work was involved in the Law Firm's forwarding of the final, typed policy to plaintiff. Accordingly, there is no record basis upon which to conclude that the Law Firm's transmittal of the final policy to plaintiff was anything other than a ministerial action.

Plaintiff further contends that it was represented by the Law Firm on several other matters during this period. The record shows that one of these cases, the "Silent Butler" litigation, was undertaken on behalf of the Club, not plaintiff. The other two matters, involving Uri's Catering, LLC and the State Department of Taxation and Finance, were unrelated to the engagement at issue in this action and, in any event, concluded no later than September 26, 2005. Thus, these other legal matters do not help plaintiff's cause.

Plaintiff's remaining contentions require little discussion. The absence of a formal closing letter does not, without more, show that the Law Firm's representation of plaintiff continued beyond the date alleged by defendants. And while plaintiff claims that the Law Firm acted as its "general counsel", the record shows that any such relationship did not survive beyond [*5]Mr. Segal's retirement from the full-time practice of law at the end of March 2005.

Accordingly, for purposes of this motion, the Court concludes that defendants have demonstrated that their representation of plaintiff did not continue beyond September 2005. Further, defendants have shown that services the Law Firm performed for plaintiff pursuant to this engagement were limited to the acquisition of the assets of the County Club and did not include work on the subdivision of Excess Property or the acquisition of adjoining lands, including the Kime property.

The issue then becomes the legal consequences of the foregoing determinations. Defendants contend that since plaintiff's claim for legal malpractice arose out of its attempt to acquire lands adjacent to the Excess Property and to develop and subdivide such properties — work outside the scope of the Law Firm's engagement, both temporally and substantively — such a claim is not viable.

In addressing this contention, the Court is mindful that an attorney's duty to his former clients precludes him from using "any confidences or secrets of the former client except as permitted by [former DR 4-101 C)] or when the confidence or secret has become generally known" (former DR 5-108 [A] [in effect until April 1, 2009]; accord 22 NYCRR 1200.9 [c] [current rule]). And information provided to an attorney may be entitled to protection where it is offered in the course of the professional relationship for the purpose of facilitating the rendition of legal advice or services (CPLR 4503 [a]; see 4-101 [A]); 22 NYCRR 1200.6 [a]).

But even accepting plaintiff's contention that it disclosed confidential information to the Law Firm regarding its plans for purchasing abutting property in the course of the Law Firm's representation, a former law client may not pursue a claim for legal malpractice arising out of an attorney's alleged misuse of confidential information subsequent to the termination of the attorney-client relationship. To establish a cause of action for legal malpractice, a plaintiff must demonstrate that its attorney was negligent in representation and that such negligence proximately caused actual and ascertainable damages (see Bixby v. Somerville, 69 AD3d 1137 [3d Dept 2009]). The element of "negligen[ce] in representation" cannot be demonstrated where the attorney-client relationship had already terminated. Rather, "[t]o establish a claim for legal malpractice, it [is] necessary for defendants to establish the existence of an attorney-client relationship at the time of the alleged malpractice" (Tabner v. Drake, 9 AD3d 606, 609 [3d Dept 2004]; accord TVGA Eng'g, Surveying, P.C. v. Gallick, 45 AD3d 1252 [4th Dept 2007]). Here, the alleged misuse of the confidential information did not occur until August 2006, well after the Law Firm had ceased representing plaintiff in connection with the acquisition of the Club.

Moreover, the foregoing analysis demonstrates that plaintiff's claim of legal malpractice is barred by the applicable three-year statute of limitations (CPLR 214 [6]). The Law Firm's work pursuant to the Engagement Letter was complete no later than September 2005. Thus, plaintiff's cause of action for legal malpractice must have accrued by September 2005.[FN2] As this action was commenced on March 27, 2009, more than three years thereafter, the legal malpractice claim is time barred. [*6]

Accordingly, the claim for legal malpractice must be dismissed.[FN3]

B.Breach of Fiduciary Duty

Defendants make similar arguments in seeking dismissal of the claim for breach of fiduciary duty. However, the duty of a fiduciary not to use confidential information acquired from its principal extends beyond the termination of the relationship, particularly in the context of an attorney-client relationship (see Byrne v. Barrett, 268 NY 199, 206 [1935]; 22 NYCRR 1200.9 [c]). Thus, even accepting defendants' contentions regarding the limited scope and duration of the Law Firm's engagement, the record does not foreclose plaintiff's claim for breach of fiduciary duty based on its allegations that defendant Goldman learned of plaintiff's development plans through confidential information acquired by SGMS in the course of its representation of plaintiff and engaged in improper self-dealing by later using this information to plaintiff's alleged detriment.[FN4] Further, the Court rejects defendants' contention that the breach of fiduciary duty claim is duplicative of the legal malpractice claim under the circumstances presented here.

Nor does the Court find that plaintiff's breach of duty claim is barred by the statute of limitations. The Court of Appeals recently summarized the principles applicable to analyzing the timeliness of a breach of fiduciary duty claim:

New York law does not provide a single statute of limitations for breach of fiduciary duty claims. Rather, the choice of the applicable limitations period depends on the substantive remedy that the plaintiff seeks. Where the remedy sought is purely monetary in nature, courts construe the suit as alleging "injuries to property" within the meaning of CPLR 214 (4), which has a three-year limitations period. Where, however, the relief sought is equitable in nature, the six-year limitations period of CPLR 213 (1) applies. Moreover, where an allegation of fraud is essential to a breach of fiduciary duty claim, courts have applied a six-year statute of limitations under CPLR 213 (8).

***

We now turn to the question of when [a] breach of fiduciary duty claim accrue[s]. A tort [*7]claim accrues as soon as "the claim becomes enforceable, i.e., when all elements of the tort can be truthfully alleged in a complaint." As with other torts in which damage is an essential element, the claim is not enforceable until damages are sustained.

(IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 NY2d 132, 139-140 [2009] [internal citations and quotations omitted]).

Since plaintiff seeks only an award of monetary damages and its allegations of fraud are not essential to its claim that defendants breached a fiduciary duty through the disclosure of confidential information and self-dealing, this claim is entitled to only a three-year limitations period. With respect to accrual, the record shows that plaintiff's cause of action accrued no earlier than August 2006, when defendant Goldman allegedly misused confidential information and caused injury to plaintiff, and accrued no later than October 2006, when he acquired title to the Kime property. Thus, commencement of this action in March 2009 was timely as to the breach of fiduciary duty claim.

As to the merits, it is well established that the attorney-client relationship is one of "unique fiduciary reliance" that imposes upon attorneys "a set of special and unique duties, including maintaining confidentiality, avoiding conflicts of interest, operating competently, safeguarding client property and honoring the clients' interests over the lawyer's" (In re Cooperman, 83 NY2d 465, 472 [1994]). Thus, "a lawyer, as one in a confidential relationship and as any fiduciary, is charged with a high degree of undivided loyalty to his client" (Matter of Kelly, 23 NY2d 368, 375 [1968]).

To succeed in a claim for a breach of fiduciary duty against an attorney, the plaintiff must demonstrate a breach of a legally enforceable duty and that the actions of the attorney were the proximate cause of actual and ascertainable damages (see Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 6 [1st Dept 2008]). A claim against an attorney based upon a breach of fiduciary duty is subject to the same rigorous standards as one for professional malpractice (id.). Thus, plaintiff is required to meet the same "but-for" standard of causation applicable to a claim of legal malpractice(Weil, Gotshal & Manges, LLP v. Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 272 (1st Dept 2004]; see Ulico, supra).[FN5]

As the proponent of summary judgment, it is defendants' initial burden to establish that plaintiff is unable to prove at least one of the elements of its cause of action for breach of fiduciary duty (Tabner v. Drake, 9 AD3d 606, 609 [3d Dept 2004]). Here, defendants offer three principal arguments in an effort to defeat plaintiff's cause of action: (1) plaintiff cannot establish that defendants misappropriated a corporate opportunity, because such an opportunity ceased to exist upon Ms. Kime's refusal to negotiate with plaintiff regarding the transfer of her property; (2) plaintiff cannot demonstrate that its alleged damages would have been avoided but-for the alleged breach of duty; and (3) the alleged confidential information was public at the time of the alleged misappropriation. [*8]

Defendants' first argument is framed in terms of the "corporate opportunity" doctrine, which proscribes a fiduciary from diverting and exploiting for its own benefit an opportunity that should belong to its principal (see e.g. Alexander & Alexander of N Y v. Fritzen, 147 AD2d 241, 246 [1st Dept 1989]). It is defendants' contention that CC Partner's opportunity to purchase the Kime property does not rise to the level sufficient to constitute a misappropriation of a business opportunity under applicable case law.

The Court finds that this argument misses the mark. At the heart of this cause of action is plaintiff's contention that defendant Goldman exploited confidential information that it entrusted to the Law Firm, thereby causing pecuniary injury. Thus, it is not a question of whether plaintiff had a sufficiently tangible interest in acquiring the Kime property or whether the Kime property was essential to the success of plaintiff's real-estate development venture. Rather, the issue is whether plaintiff entrusted confidential information regarding its plans for the Kime property to its attorneys in the course of the attorney-client relationship and whether defendants improperly exploited this information and put their interests before plaintiff, thereby causing their former client to suffer actual and ascertainable damages.[FN6]

That said, lurking in defendants' "corporate opportunity" argument is a powerful causation argument: Ms. Kime's refusal to negotiate with plaintiff regarding the transfer of her property constitutes an intervening cause of the harm alleged by plaintiff: its inability to acquire her property. This ties in with defendants' second argument, which is framed more directly in terms of causation: even if defendant Goldman had not purchased the Kime property, it would have been acquired by Todd and Mary Britton, neighbors of Ms. Kime.

Here, the injury alleged by plaintiff is the loss of the opportunity to acquire property abutting the Club from Ms. Kime.[FN7] To establish proximate cause in a case such as this, plaintiff has the ultimate burden of demonstrating that but-for the alleged breach of duty, it would have been able to acquire the Kime property (see Weil, Gotshal, supra; Ulico, supra). In seeking to demonstrate that plaintiff cannot establish this essential element of its cause of action, defendants rely primarily on the affidavit of Ms. Kime, who avers, in pertinent part: [*9]

5.At one point, I spoke with Michael Gorden, an owner of the Colonie County Club regarding selling the back portion of my property. Mr. Gordon told me that he wanted an option to purchase the land. The option did not include any money down for the purchase, nor did it include any definite time period. I wanted to sell the land without any option. I told Mr. Gordon this. At some point, I also discussed with Mr. Gordon selling the entire parcel. Mr. Gordon was not ready to buy it. Mr. Gordon never made me an offer to purchase the entire property. After I told Mr. Gordon I did not want any type of option, I did not have any further negotiations with him or any other member of the Colonie Country Club.

6.After my conversations with Mr. Gordon were terminated, I was approached by several other people who were interested in buying the house. A young couple, Todd and Mary Britton lived across the street and had expressed an interest in buying it over a number of years. . . . Also, I recall another individual from Gloversville stopping by to discuss the sale of the property. I also was approached by several real estate agents.

7.Thereafter, I spoke with Mr. Amedore of Amedore Homes. . . . He also was interested in an option on the land but the option had no specifics and no money down. I told Mr. Amedore I did not want an option and I did not hear from him again.

8.After I decided to sell the entire property, I received two offers. One of the offers was from Todd and Mary Britton, the other offer was from GOMCC, LLC [an LLC formed by defendant Goldman]. . . . It was my intention that I would only accept purchase offers that were firm and non-contingent.

9.The first was a contract with GOMCC, LLC that had a purchase price of $435,000 with a down payment of $100,000 upon execution. Further, the contract with GOMCC, LLC was non-contingent . . . .

10.The other offer was from Todd and Mary Britton, who also put in a purchase offer of $435,000 with a $5,000 deposit check (the "Britton offer"). The Britton offer also was non-contingent but did not reflect the strength of GOMCC Contract which had a $100,000 deposit. In addition, I did not believe that the Britton offer was really strong since I knew [the Brittons] had to sell their house to raise the funds necessary . . . .

11.My attorney recommended I sign the GOMCC Contract and I agreed. I never had any contract or option to sell the entire property to anyone from the Colonie Country Club. The only discussions I had with them were with respect to an option to purchase a portion of the property. I did not want an option and I wanted to sell the entire property outright.

Ms. Kime's account is confirmed in all material respects by the affidavit of Samuel R. Whiting, the attorney who represented and advised her in connection with the sale of her property.

The foregoing provides a prima facie demonstration of the absence of but-for causation. Through the affidavit of Ms. Kime, defendants have shown that the harm of which plaintiff complains — the loss of the opportunity to acquire the Kime property — was the result of several [*10]causes unrelated to defendants, including Ms. Kime's rejection of a purchase option in favor of a firm sale of the entire property, plaintiff's failure to tender such an offer and Ms. Kime breaking off discussions with plaintiff. Further, her affidavit demonstrates that even in the absence of defendant Goldman's purchase offer, the property would not have been sold to plaintiff.

Accordingly, the burden then shifts to plaintiff to demonstrate a triable issue of fact as to causation. Michael Gordon, a member of the plaintiff LLC, avers as follows:

6.I was personally negotiating with Marilyn Kime on behalf of Country Club Partners, LLC for the purchase of her property.

7.. . . Ms. Kime initially presented to me that she wanted to keep her house, garage and barn and asked me if Country Club Partners would still interested in purchasing the real estate.

8.Country Club Partners, LLC offered Ms. Kime $400,000.00 for her property, including the house, garage and barn.

9.Negotiations had progressed to a point where Country Club Partners had counsel draft an option agreement for the purchase of the Kime property in July of 2007.

10.Marilyn Kime subsequently ended negotiations with Country Club Partners stating that she had found someone to purchase her property for cash.

Attached to plaintiff's papers is a copy of a draft option agreement for the purchase of six acres, which was contingent upon, inter alia, CC Partners obtaining subdivision approval. Further, Jeffrey Sperber avers that plaintiff's offer of $400,000 was merely an initial offer, and that plaintiff would have purchased the entirety of Ms. Kime's property for an additional $35,000. "[H]owever, due to Mr. Goldman's interference the negotiations did not get beyond our initial offer."

The Court concludes that the evidence put forward by plaintiff is insufficient to establish a triable issue of fact concerning causation. The bulk of the Gordon affidavit confirms Ms. Kime's account: that plaintiff's negotiations with Ms. Kime involved a purchase option, whereas she desired a firm contract for the sale of her entire property. Further, Mr. Gordon acknowledges that Ms. Kime broke off negotiations with plaintiff and that plaintiff never made a firm offer for the purchase of her property. And nothing in the Gordon affidavit speaks to the fact that Ms. Kime had received a second firm purchase offer from her neighbors. All of this supports defendants' contention that causes unrelated to defendants — including Ms. Kime's independent judgments regarding the disposition of her property, plaintiff's failure to make a firm purchase offer for such property, and Ms. Kime's decision to discontinue negotiations with plaintiff even before being approached by defendant Goldman — were responsible for the injury claimed by plaintiff (see Brooks v. Lewin, 21 AD3d 731 [1st Dept 2005]).

While Mr. Sperber now avers that plaintiff would have purchased the entirety of Ms. Kime's property for $435,000, plaintiff and Ms. Kime were no longer even in negotiations at the time of Goldman's purchase. And speculation and surmise about future events does not provide a sufficient basis for a finding of proximate cause (see id.). Moreover, plaintiff offers no explanation, much less proof, as to how defendant Goldman's alleged "interference" caused [*11]"negotiations [with Ms. Kime to] not get beyond [plaintiff's] initial offer."

Based on the foregoing, the Court concludes that plaintiff is unable to demonstrate that defendants' alleged breach of fiduciary duty was a proximate cause of the injury of which it complains. Accordingly, summary judgment on this claim must be granted to defendants.[FN8] Further, in the absence of any viable breach of fiduciary duty or legal malpractice claim, the Court sees no basis for plaintiff's effort to recoup the legal fees paid to the Law Firm in connection with the duties undertaken pursuant to the Engagement Letter.

C.Aiding and Abetting

A cause of action for aiding and abetting breach of fiduciary duty "requires a prima facie showing of a fiduciary duty owed to plaintiff, . . . a breach of that duty, and defendant's substantial assistance . . . in effecting the breach, together with resulting damages" (Ulico, supra). Having concluded that plaintiff is unable demonstrate that its claimed damages were caused by the alleged breach of fiduciary duty, the Court concludes that plaintiff's claim for aiding and abetting must also be dismissed. In any event, defendants' affidavits are sufficient to show that the Law Firm did not knowingly provide substantial assistance with respect to the claimed breach of duty, and nothing in plaintiff's opposition papers is sufficient to raise a triable issue of fact in this regard.

F.Fraud

Plaintiff's remaining claims sound in actual and constructive fraud. Both are founded upon allegations that defendants failed to disclose defendant Goldman's alleged self-dealing and misuse of confidential client information to plaintiff. It is well established that the mere failure to disclose malpractice does not give rise to a cause of action alleging fraud or deceit separate from the underlying malpractice cause of action. (see Weiss v Manfredi, 83 NY2d 974, 977 [1994]; Simcuski v Saeli, 44 NY2d 442 [1978]; White of Lake George v Bell, 251 AD2d 777 [1998]). Rather, in such cases, the fraud causes of action must be dismissed as duplicative of the underlying cause of action for malpractice. The same principles compel dismissal of the fraud claims here as duplicative of plaintiff's breach of fiduciary claim.[FN9]

[*12]CONCLUSION

Accordingly,[FN10] it is

ORDERED that plaintiff's amended complaint is dismissed in its entirety.

This constitutes the Decision & Order of the Court. The original Decision & Order is being transmitted to defendants' counsel. All motion papers are being sent to the County Clerk for filing. The signing of this Decision and Order shall not constitute entry or filing under CPLR Rule 2220, and Counsel is not relieved from the applicable provisions of that Rule respecting filing, entry and Notice of Entry.

Dated: Albany, New York

October 21, 2009

RICHARD M. PLATKIN

A.J.S.C.

Papers Considered:

Notice of Motion, dated August 11, 2009;

Affidavit of Kevin E. Hulslander, Esq., sworn to August 10, 2009, with attached exhibits A-Q;

Affidavit of Samuel R. Whiting, Esq., sworn to April 14, 2009;

Affidavit of Marilyn S. Kime, sworn to June 13, 2009;

Affidavit of Kenneth B. Segel, Esq., sworn to July 13, 2009;

Affidavit of Paul J. Goldman, Esq., sworn to August 11, 2009;

Affidavit of Robert J. Sneeringer, Esq., sworn to August 17, 2009;

Plaintiff's Memorandum of Law in Opposition to Summary Judgment, dated August 27, 2009;

Affidavit of Jeffrey Sperber, sworn to September 2, 2009;

Affidavit of Michael Gordon, sworn to September 8, 2009;

Affidavit of Peter Spitalny, sworn to September 8, 2009;

Affidavit of Barry Hollander, sworn to September 8, 2009;

Affirmation of Shawn T. May, Esq., sworn to September 9, 2009, with attached exhibits A-F;

Affidavit of Kenneth B. Segel, Esq., sworn to September 21, 2009;

Affidavit of Paul J. Goldman, Esq., sworn to September 22, 2009;

Memorandum of Law In Support of Summary Judgment, undated;

Reply Affidavit of Kevin E. Hulslander, Esq., sworn to September 22, 2009, with [*13]attached exhibits R-GG.
Footnotes


Footnote 1: It does not appear that the parties have engaged in pre-trial discovery. However, plaintiff has not submitted affidavits demonstrating that "facts essential to justify opposition [to this motion] may exist but cannot then be stated" (CPLR 3212 [f]).

Footnote 2: Plaintiff has not demonstrated a factual basis for application of the "continuous representation" doctrine.

Footnote 3: The Court notes that a contrary conclusion as to the duration or scope of representation would not alter its ultimate conclusions in any respect. While the claim for legal malpractice would not be time barred or precluded by the absence of an attorney-client relationship at the time of the alleged breach of duty, the same lack of proximate cause that it is fatal to the breach of fiduciary duty claim would compel dismissal of the legal malpractice claim. (And the breach of duty claim would be dismissed as duplicative of the more expansive malpractice claim).

Footnote 4: Cf. Doe v. Community Health Plan - Kaiser Corp., 268 AD2d 183, 187 (3d Dept 2000) ("duty not to disclose confidential personal information springs from the implied covenant of trust and confidence that is inherent in the physician patient relationship, the breach of which is actionable as a tort"); Harley v. Druzba, 169 AD2d 1001 (3d Dept 1991) (disclosure of client confidences by licensed social worker sounds in negligence and is subject to three-year statute of limitations).

Footnote 5: However, insofar as "a cause of action for breach of the fiduciary duty of an attorney extends both to current and former clients, [it] is broader in scope than a cause of action for legal malpractice" (TVGA Eng'g, Surveying, P.C. v. Gallick, 45 AD3d 1252, 1256 [4th Dept 2007]).

Footnote 6: For similar reasons, the Court rejects defendants' contention that plaintiff lacks standing to maintain this action "because it did not have any interest whatsoever in the Kime property . . . , much less any injury in fact" (Defendants' Memorandum of Law, at 13). Plaintiff alleges that it provided confidential information to its attorneys, one of whom is alleged to misappropriated this information and later used it to the company's pecuniary detriment. Thus, plaintiff alleges an injury in fact that is capable of judicial redress. No more is required to demonstrate standing in a case such as this. Contrary to defendants' contention, the standing issue does not require plaintiff to demonstrate an interest in the Kime property; it need only show an interest in the confidential information that it claims was misused (cf. Aiardo v. Town of E. Greenbush, 64 AD3d 849 [3d Dept 2009] [misappropriation of land in which plaintiff had no interest]).

Footnote 7: Plaintiff requests $400,000 in compensatory damages for this loss. As defendants note, the basis of this figure is unclear. It appears to be based on the amount that plaintiff offered to Ms. Kime to purchase her property, but that does not represent a cognizable measure of damages. However, in view of the conclusions set forth below, the Court need not delve into this issue.

Footnote 8: In view of this conclusion, it is unnecessary to address defendants' contentions that (1) the confidential information allegedly provided by plaintiff to the Law Firm was known to the public at the time of the alleged breach of duty; and (2) plaintiff has failed to demonstrate pecuniary damages resulting from the alleged breach.

Footnote 9: Defendants also contend that these claims are barred by CPLR 213 (8), which provides as follows: "[A]n action based upon fraud; the time within which the action must be commenced shall be the greater of six years from the date the cause of action accrued or two years from the time the plaintiff or the person under whom the plaintiff claims discovered the fraud, or could with reasonable diligence have discovered it." While defendants devote considerable verbiage to arguing that plaintiff is not entitled to the two-year discovery exception, it does not and cannot show that this action was not timely commenced within the generally applicable six-year period for fraud claims (see id.; Durazinski v. Chandler, 41 AD3d 918 [3d Dept 2007]). Since the fraudulent conduct alleged by plaintiff occurred well after March 27, 2003, six years prior to the commencement of this action, such claims are timely.

Footnote 10: The Court has considered the parties' remaining contentions and finds them unavailing or unnecessary to disposition of the pending motion.