Case Name: Art Capital Group, LLC, et al., Respondents, v. Beth Sara Neuhaus, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 2010-02-25
Citations: 70 A.D.3d 605
Docket Number: 
Parties: Art Capital Group, LLC, et al., Respondents, v Beth Sara Neuhaus, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 70
Pages: 605–611

Head Matter:
Art Capital Group, LLC, et al., Respondents, v Beth Sara Neuhaus, Appellant.
[896 NYS2d 35]—

Opinion:
Order, Supreme Court, New York County (Richard B. Lowe, III, J.), entered December 1, 2008, which denied defendant's motion to dismiss the complaint, reversed, on the law, with costs, and the motion granted. The Clerk is directed to enter judgment in defendant's favor.
Plaintiffs are in the business of providing financial and consulting services to art owners, for the purpose of enhancing the liquidity of works of art held by individual owners and art galleries. This action stems from the fact that plaintiffs' former employees, Christopher Krecke and Andrew Rose, now compete with plaintiffs through entities they have formed. Three years before this action was commenced, plaintiffs sued Krecke, Rose and their entities, alleging various torts plus claims for declaratory relief and an accounting. In that still pending action, it is alleged, among other things, that Krecke and Rose defrauded and engaged in unfair competition with plaintiffs. All of the instant complaint's seven causes of action, which include aiding and abetting breach of fiduciary duty, fraud and conspiracy to defraud, and aiding and abetting fraud are based upon defendant's role as an attorney retained by Rose for the purpose of starting his new business venture with Krecke. Plaintiffs allege that Krecke and Rose needed to secure the aid and assistance of legal counsel in order to carry out the conspiracy against them. Accordingly, defendant is alleged to have substantially facilitated and advanced the Krecke-Rose conspiracy to defraud and unfairly compete with plaintiffs.
The issue on this appeal is whether the complaint sets forth any basis for defendant's liability for the alleged conduct of Krecke and Rose. "In general, all who aid and abet the commission of a trespass are liable . . . But where one acts only in the execution of the duties of his calling or profession, and does not go beyond it, and does not actually participate in the trespass he is not liable, though what he does may aid another party in its commission." (Ford v Williams, 13 NY 577, 584 [1856].)
Moreover, it is recognized that public policy demands that attorneys, in the exercise of their proper functions as such, shall not be civilly liable for their acts when performed in good faith and for the honest purpose of protecting the interests of their clients (Hahn v Wylie, 54 AD2d 629 [1976]). As to defendant's specific conduct, plaintiffs allege that she gave Krecke and Rose indispensable legal advice and counsel, documented and negotiated loan transactions between their competing entities and plaintiffs' current and prospective clients, and provided legal services to secure office space for Krecke and Rose. Guided by Ford, we find that plaintiffs' causes of action are not viable because all of the aforementioned acts fall completely within the scope of defendant's duties as an attorney. The five quotes from the complaint cited by the dissent do not warrant a con trary conclusion inasmuch as they do not even suggest that defendant acted in any capacity other than as an attorney.
Even apart from Ford and Hahn, this Court has held that a viable tort claim against a professional requires the underlying relationship between the parties to be one of contract or the bond between them so close as to be the functional equivalent of contractual privity (Jacobs v Kay, 50 AD3d 526, 527 [2008], citing Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417 [1989]). The existence of such a relationship is not alleged here. Moreover, rule 1.2 (d) of the Rules of Professional Conduct (22 NYCRR 1200.0), also cited by the dissent, does not bear upon the sufficiency of plaintiffs' claims. Standing alone, an ethical violation will not create a duty giving rise to a cause of action that would otherwise not exist at law (Shapiro v McNeill, 92 NY2d 91, 97 [1998]).
Also, the dissent merely begs the question by invoking Judiciary Law § 487, authority plaintiffs do not cite. That statute provides for criminal and civil liability for an attorney who "[i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party." (Subd [1].) The "indication of fraud and collusion" discerned by the dissent falls short of an allegation that defendant tortiously acted outside the scope of her role as an attorney. By illustration, the tenor of the complaint is revealed by its following language: "In order to accomplish the aforementioned conspiracy, Krecke and Rose needed to secure the aid and assistance of legal counsel," and "Beth Neuhaus' legal advice and counsel was substantial and indispensable to Krecke and Rose." The "advice of counsel with respect to a client's course of conduct, even if pleaded as 'condonation', does not thereby and without more metamorphose into a cause of action by a third party against that counsel" (Pearl v 305 E. 92nd St. Corp., 156 AD2d 122, 122 [1989]). It is also of no moment that discovery has not been conducted. Plaintiffs have not asserted that facts essential to justify opposition to the motion may have existed but could not be stated (see CPLR 3211 [d]).
Plaintiffs' claims of fraud, conspiracy to defraud and aiding and abetting fraud are deficient for an additional reason. The elements of fraud are a material misrepresentation of fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff, and damages (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559 [2009]). In this case, plaintiffs do not allege that any misrepresentations were made to them. Concur—Andrias, J.P., Friedman, Buckley and DeGrasse, JJ.