Opinion ID: 790167
Heading Depth: 2
Heading Rank: 3

Heading: Walter, Conston's Summary Judgment Motion

Text: 78 We cannot, however, deal as summarily with Walter, Conston's summary judgment motion. For if New York law applies to this action, the question of whether Walter, Conston may be held liable for the acts of Schreiber presents important and unsettled questions of New York agency law that we certify to the New York Court of Appeals. 79 Stichting alleges that Walter, Conston is liable for Schreiber's asserted malpractice on the basis of apparent authority. Although the New York courts have not addressed the scope of the doctrine of apparent authority in the context of of-counsel agreements, the general contours of the doctrine are well-established. A principal may be bound by the actions of an agent on the basis of apparent authority only where it is shown that a third party—here Saybolt—reasonably relied upon the misrepresentation of the agent because of some misleading conduct on the part of the principal.  Hallock v. State, 64 N.Y.2d 224, 231, 485 N.Y.S.2d 510, 474 N.E.2d 1178 (1984) (emphasis added and internal quotation and citation omitted); see also Indosuez International Finance B.V. v. National Reserve Bank, 98 N.Y.2d 238, 245-46, 746 N.Y.S.2d 631, 774 N.E.2d 696 (2002). Thus, irrespective of the representations made by the agent—here, Schreiber—and relied upon by the third party—here, Saybolt—there must also be demonstrated some reliance nexus between the principal—Walter, Conston—and that third party. 80 It is undisputed that Walter, Conston never itself had direct contact with Saybolt or its employees, independently of Schreiber's activities. Nevertheless, Walter, Conston did have contact with the public at large, in the form of its advertisements, publications in legal directories, and other modes of communication, and through several of these media the firm did represent that it had an of counsel relationship with Schreiber. Additionally, Walter, Conston, in the Of Counsel Agreement, authorized Schreiber to establish an office in Fairfield, Connecticut, function... as ... the general counsel of a limited number of ... personal business clients, and do some legal work of a specific nature for such clients. Schreiber was also authorized by Walter, Conston to use the title `of counsel' . . . as it directly relates to ... [his] client development activity on behalf of [him]self. Thus, Walter, Conston not only held out Schreiber as affiliated with the firm, but it also may be said to have had at least a generalized knowledge that Schreiber would make use of this affiliation in the course of his personal legal and business dealings. 81 The harder question is whether there is any record evidence that Saybolt relied upon Walter, Conston's representations, as opposed to those of Schreiber, in the course of the events that are the subject of this action. There is some evidence in the record that the Saybolt board of directors made the decision to retain Schreiber, at least in part, on the basis of their understanding that he retained an affiliation with Walter, Conston. Notwithstanding Mead's deposition testimony that he knew that Schreiber maintained an independent practice that was separate from Walter, Conston, and evidence that Mead and others were aware that Saybolt compensated Schreiber at a rate that was lower than what Walter, Conston charged for Schreiber's services, Mead did testify that in recommending that Schreiber be hired as a director he placed a lot of weight on the relationship with Walter, Conston, and stated that he was under the impression that Schreiber consulted with his Walter, Conston colleagues on issues pertaining to Saybolt. And Schreiber himself testified that Mead and others came to the Walter, Conston offices for meetings, and also that at times they directed communication to Schreiber there. Whether this evidence is sufficient to raise a triable issue regarding Saybolt's reliance on Walter, Conston, depends in large part on the significance that New York law places upon the firm's public representations regarding its affiliation with Schreiber and the terms of its of-counsel arrangement with him. 82 The parties have pointed us to various decisions of non-New York courts that expressly address the issue of the degree of relationship required to be shown between a law firm and a client of an attorney of that firm who is affiliated only in an of counsel capacity. See, e.g., Hart v. Comerica Bank, 957 F.Supp. 958, 978-79 (E.D.Mich.1997) (holding that triable issues existed as to apparent authority given by law firm where, notwithstanding that it had no relationship to the plaintiff-client of an of counsel attorney, the attorney utilized firm letterhead, offices, and other resources in connection with representation of the plaintiff); Homa v. Friendly Mobile Manor, Inc., 93 Md.App. 337, 364, 612 A.2d 322 (1992) (holding that where there was no evidence that the law firm knew of the plaintiff-client, and no evidence that the plaintiff relied upon the relationship to the law firm in hiring the attorney, no triable issue existed as to apparent authority). 83 New York courts, however, seem never to have addressed squarely the issue of apparent authority in the context of the relationship between an of-counsel attorney and his or her firm—the sort of relationship that existed between Schreiber and Walter, Conston. The case closest to the point may be Bankers Trust Co. v. Cerrato, Sweeney, Cohn, Stahl & Vaccaro, 187 A.D.2d 384, 590 N.Y.S.2d 201 (1st Dep't 1992) (mem.). The Bankers Trust court stated that the firm may be chargeable with [the attorney's] knowledge if it clothed him with the apparent authority to act on its behalf, and noted that [e]vidence was presented that [the attorney] was listed as a member of the firm and then as `of counsel' during the period in question. Id. at 385, 590 N.Y.S.2d 201. But it is not clear whether it was the of-counsel relationship between the attorney and the firm, rather than evidence that the firm itself was actually aware of the negligent conduct of that attorney, that raised triable issues of fact in Bankers Trust. Id. Therefore, the case does not give us adequate guidance as to whether Walter, Conston's of-counsel affiliation with Schreiber suffices to give rise to the possibility of apparent authority. 84 Because this issue appears to be unaddressed by the New York courts, and also raises important concerns pertaining to New York state regulation of the legal profession, we deem it prudent to certify to the New York Court of Appeals the question of whether, if New York law applies to this action, triable issues of fact existed as to Walter, Conston's liability under a theory of apparent authority for the alleged malpractice of Schreiber. 85 In this regard, we underscore that whether New York law of apparent authority permits liability for Walter, Conston has a significant bearing on the choice of law issue as well. To the extent that material issues of fact exist as to Walter, Conston's liability for Schreiber's relationship with Saybolt, New York's interest in seeing its law, favoring assignability of legal malpractice actions, applied to this action is heightened. The interconnection in this case between choice of law and vicarious liability is an additional reason why we deem it appropriate to certify both issues to the New York Court of Appeals.