Court Opinion

ID: 4082858
Source: CourtListenerOpinion
Date Created: 2016-10-07 23:38:44.719414+00
Date Added: 2024-06-11T14:32:36.646911
License: Public Domain

SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

1111
CA 13-02084
PRESENT: SCUDDER, P.J., FAHEY, LINDLEY, AND VALENTINO, JJ.

THE NEW KAYAK POOL CORPORATION,
NOW KNOWN AS KAYAK POOL CORPORATION
AND KAYAK KATALOGUE CORP.,
PLAINTIFFS-APPELLANTS,

                    V                             MEMORANDUM AND ORDER

KAVINOKY COOK LLP, AND HODGSON RUSS, LLP,
DEFENDANTS-RESPONDENTS.

PHILLIPS LYTLE LLP, BUFFALO (MICHAEL B. POWERS OF COUNSEL), FOR
PLAINTIFFS-APPELLANTS.

DAMON MOREY LLP, BUFFALO (MICHAEL J. WILLETT OF COUNSEL), FOR
DEFENDANT-RESPONDENT KAVINOKY COOK LLP.

HAGERTY & BRADY, BUFFALO (MICHAEL A. BRADY OF COUNSEL), FOR
DEFENDANT-RESPONDENT HODGSON RUSS, LLP.

     Appeal from an order of the Supreme Court, Erie County (John M.
Curran, J.), entered August 28, 2013. The order, among other things,
granted defendants’ motions for summary judgment.

     It is hereby ORDERED that the order so appealed from is affirmed
without costs.

     Memorandum: Plaintiffs commenced this legal malpractice action
against defendants, Kavinoky Cook LLP (Kavinoky) and Hodgson Russ, LLP
(Hodgson), each having represented plaintiff The New Kayak Pool
Corporation, now known as Kayak Pool Corporation (Kayak Pool) in a
federal trademark infringement action. Seven months after Hodgson was
substituted for Kavinoky as legal counsel for Kayak Pool, the federal
action settled, and Kayak Pool received, inter alia, injunctive relief
and $150,000 in full settlement of all its claims in that action. The
settlement check was issued by an insurance company, and plaintiffs
now allege that Kavinoky and Hodgson committed malpractice by failing
to inquire as to the federal defendants’ insurance coverage.
Plaintiffs further allege that, had Kayak Pool been aware that the
federal defendants had insurance coverage, Kayak Pool would not have
settled for only $150,000.

     Following discovery in this action, plaintiffs moved for partial
summary judgment on liability, and each of the defendants moved for
summary judgment dismissing the amended complaint and all cross claims
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                                                         CA 13-02084

asserted against them. We conclude that Supreme Court properly
granted defendants’ motions.

     As a preliminary matter, we note that Kavinoky previously moved
for summary judgment, and the order denying that motion was affirmed
by this Court (New Kayak Pool Corp. v Kavinoky Cook LLP, 74 AD3d 1852,
1852-1853). Contrary to plaintiffs’ contention, which is improperly
raised for the first time on appeal (see Glenshaw Glass Co. v Great
Atl. & Pac. Tea Co., 63 AD2d 893, 894), Kavinoky was not barred by the
doctrine of law of the case from filing a second motion for summary
judgment. Discovery was not completed at the time of the first
motion, and “[w]here, as here, the second motion is based upon new
information obtained during disclosure, the second motion is not
repetitive of the first and the court may rule on the merits of the
second motion” (Schriptek Mktg. v Columbus McKinnon Corp., 187 AD2d
800, 801-802, lv denied 81 NY2d 704; see Taillie v Rochester Gas &
Elec. Corp., 68 AD3d 1808, 1809-1810). In any event, “a subsequent
summary judgment motion may be properly entertained when it is
substantively valid and when the granting of the motion will further
the ends of justice while eliminating an unnecessary burden on the
resources of the courts” (Valley Natl. Bank v INI Holding, LLC, 95
AD3d 1108, 1108; see Town of Angelica v Smith, 89 AD3d 1547, 1549).

     Contrary to plaintiffs’ contention, the court properly granted
defendants’ motions because a necessary element of a cause of action
for legal malpractice is that the attorney’s negligence caused “a loss
that resulted in actual and ascertainable damages” (Lincoln Trust v
Spaziano, 118 AD3d 1399, 1401; see Oot v Arno, 275 AD2d 1023, 1023-
1024), and defendants established as a matter of law that plaintiffs’
claims of damages are entirely speculative. Thus, defendants are
entitled to summary judgment because they met their burden of
establishing that plaintiffs are “unable to prove at least one of the
essential elements of [their] legal malpractice cause of action”
(Boglia v Greenberg, 63 AD3d 973, 974 [emphasis added]; see Grace v
Law, 108 AD3d 1173, 1174-1175, affd 24 NY3d 203; Wilk v Lewis & Lewis,
P.C., 75 AD3d 1063, 1065). “Conclusory allegations of damages or
injuries predicated on speculation cannot suffice for a malpractice
action” (Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 848, lv denied 20
NY3d 857). Here, as in Lincoln Trust, plaintiffs’ theory of damages
“is too speculative to survive defendants’ motion[s] for summary
judgment” (Lincoln Trust, 118 AD3d at 1401), and plaintiffs “failed to
submit nonspeculative evidence in support of [their] damages claims”
in opposition to defendants’ motions (G & M Realty, L.P. v Masyr, 96
AD3d 689, 690). Indeed, defendants established that the damages
claimed by plaintiffs are “ ‘incapable of being proven with any
reasonable certainty’ ” (Zarin v Reid & Priest, 184 AD2d 385, 388
[emphasis added]).

     We understand the concern of our dissenting colleague that we are
awarding defendants summary judgment based on gaps in plaintiffs’
proof (see Val Tech Holdings, Inc. v Wilson Manifolds, Inc., 119 AD3d
1327, 1329) but, as noted, the inability of plaintiffs to establish
actual damages is a sufficient basis to grant summary judgment to
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                                                         CA 13-02084

defendants in this legal malpractice action (see e.g. Country Club
Partners, LLC v Goldman, 79 AD3d 1389, 1392; Charos v Esseks, Hefter &
Angel, 216 AD2d 511, 511).

     Contrary to plaintiffs’ contention with respect to Kavinoky, the
court properly determined that Kavinoky’s failure to determine the
existence of the federal defendants’ insurance coverage was not a
proximate cause of plaintiffs’ alleged damages, which is a necessary
element of a cause of action for legal malpractice (see Oot, 275 AD2d
at 1023). As noted by the court, “[i]t is undisputed that Kavinoky
was discharged as [Kayak Pool’s] counsel, and Hodgson was substituted
in as [Kayak Pool’s] counsel, prior to the time that any settlement
negotiations began and that Kavinoky had no role whatsoever in those
negotiations.” Moreover, although plaintiffs substituted Hodgson as
their legal counsel only after the attorney who had initially
represented plaintiffs left Kavinoky to join Hodgson (see New Kayak
Pool Corp., 74 AD3d at 1852-1853), Kavinoky established that a
different attorney at Hodgson overtook responsibility for representing
plaintiffs once Hodgson was substituted as counsel. Therefore,
despite the connection between the two law firms, there was no actual
continuity of legal representation. Even if we were to assume,
arguendo, that Kavinoky, through the actions of the first attorney,
was negligent in failing to investigate the matter of insurance
coverage, we note that Hodgson, through the newly assigned attorney,
had over seven months in which to conduct its own investigation before
settling the federal action on behalf of Kayak Pool. We thus conclude
that Kavinoky established as a matter of law “that its actions did not
proximately cause the plaintiffs’ alleged damages, and that subsequent
counsel had a sufficient opportunity to protect the plaintiffs’ rights
by pursuing any remedies it deemed appropriate on their behalf” (Katz
v Herzfeld & Rubin, P.C., 48 AD3d 640, 641; see e.g. Somma v Dansker &
Aspromonte Assoc., 44 AD3d 376, 377; Golden v Cascione, Chechanover &
Purcigliotti, 286 AD2d 281, 281; cf. Tooma v Grossbarth, 121 AD3d
1093, 1096-1097; Grant v LaTrace, 119 AD3d 646, 647), and plaintiffs
failed to raise a triable issue of fact (see generally Zuckerman v
City of New York, 49 NY2d 557, 562).

     All concur except FAHEY, J., who dissents and votes to modify in
accordance with the following Memorandum: I respectfully dissent and
would modify the order by denying the motions of defendants Kavinoky
Cook LLP (Kavinoky) and Hodgson Russ, LLP (Hodgson) for summary
judgment dismissing the amended complaint and all cross claims against
them. In my view, there are triable issues of fact whether Kavinoky’s
negligence was a proximate cause of the injuries complained of, and
whether plaintiffs suffered ascertainable damages as a result of the
alleged negligence of Kavinoky and Hodgson.

     Plaintiff was represented by defendants for approximately 4½
years. It is alleged that during that period neither defendant
determined the amount of insurance coverage available in the
underlying action.

     Turning first to Kavinoky’s motion, Kavinoky contends that there
is no link between its negligence in failing to determine whether the
                                 -4-                          1111
                                                         CA 13-02084

defendants in the federal trademark infringement action had insurance
coverage with respect to that action and the damages allegedly
sustained by plaintiff The New Kayak Pool Corporation, now known as
Kayak Pool Corporation (Kayak Pool) as a result of the settlement of
that lawsuit without knowledge of that insurance coverage. In that
vein, Kavinoky specifically contends that, because Hodgson succeeded
Kavinoky as the law firm representing Kayak Pool before that
settlement occurred, Kavinoky is disconnected from that failure to
investigate the insurance coverage available to the defendants in the
federal action. This issue essentially turns on the question whether
Hodgson “had sufficient time and opportunity to adequately protect
[the] rights” of Kayak Pool (Maksimiak v Schwartzapfel Novick
Truhowsky Marcus, P.C., 82 AD3d 652, 652 [emphasis added]). Put
differently, the operative question is whether Hodgson, as the
successor to Kavinoky, had sufficient time and opportunity to perform
the act, i.e., determining whether the defendants in the federal
action had insurance coverage, that Kavinoky was allegedly negligent
in failing to perform (cf. e.g. Alden v Brindisi, Murad, Brindisi,
Pearlman, Julian & Pertz [“The People’s Lawyer”], 91 AD3d 1311, 1311;
Perks v Lauto & Garabedian, 306 AD2d 261, 261-262). Indeed, Kavinoky
seeks to avoid liability for its negligence in failing to investigate
the insurance coverage question based on its theory that Hodgson’s
failure to engage in precisely the same activity interrupted the link
between Kavinoky’s negligence and the alleged injury of plaintiffs.
Such interruption, of course, may but does not automatically sever
such a causal link (see Maheshwari v City of New York, 2 NY3d 288,
295) and, “[a]s a general rule, issues of proximate cause[, including
superseding cause,] are for the trier of fact” (Hahn v Tops Mkts.,
LLC, 94 AD3d 1546, 1548 [internal quotation marks omitted]; see
generally Derdiarian v Felix Contr. Corp., 51 NY2d 308, 315, rearg
denied 52 NY2d 784, 829; Prystajko v Western N.Y. Pub. Broadcasting
Assn., 57 AD3d 1401, 1403).

     Here, in my view, the question whether Kavinoky’s negligence was
a cause of the injuries complained of is for a trier of fact. The
record establishes that in the 3½ years after this action was
commenced Kavinoky worked this matter so extensively as to bill
between $350,000 and approximately $770,000 in legal fees; that the
representation of Kayak Pool in the federal action was transferred to
Hodgson on June 20, 2003; and that the federal action ultimately
settled on February 5, 2004. The record, however, also contains
evidence that almost immediately after Hodgson began to represent
Kayak Pool in the federal action, and potentially even before, there
was an order for a settlement conference in that matter. Moreover,
the record contains evidence that, after receiving the settlement
conference notice, Kayak Pool instructed Hodgson to settle the matter
“at as little [further] cost as possible.” In view of that evidence,
whether Hodgson had sufficient time and opportunity to investigate the
issue of the insurance coverage available to the defendants in the
federal action is for a trier of fact to decide, along with which law
firm, if any, is responsible for the oversight.

     As to the damages question, I note that the analysis of this
issue applies equally to Kavinoky and Hodgson. To establish legal
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                                                         CA 13-02084

malpractice by defendants, plaintiffs “must demonstrate that
[defendants] failed to exercise the ordinary reasonable skill and
knowledge commonly possessed by a member of the legal profession and
that [defendants’] breach of this duty caused [plaintiffs] to sustain
actual and ascertainable damages” (Harris Beach PLLC v Eber Bros. Wine
& Liq. Corp., 121 AD3d 1524, 1525 [internal quotation marks omitted]).
“In the context of [these] motion[s] by [defendants] for . . . summary
judgment, the burden was on [defendants] to present evidence . . . in
admissible form establishing that [plaintiffs are] unable to prove at
least one of [the] essential elements of a malpractice cause of
action” (id. [internal quotation marks omitted] [emphasis added]).

     Regarding damages, Kavinoky relies on, inter alia, Sevey v
Friedlander (83 AD3d 1226, 1227, lv denied 17 NY3d 707), which stands
for the proposition that a defendant in a legal malpractice action
makes a prima facie showing that the plaintiff is unable to prove
damages by demonstrating that the settlement was favorable to the
plaintiff. Kavinoky relies on an expert’s affidavit, who contends
that, based on his review of the record, there was “no evidence to
indicate that [the defendants in the federal action], or [their]
insurer, would have made a different settlement offer if discovery on
insurance coverage had occurred in this case.” Hodgson’s appellate
attorney took a similar approach in arguing this appeal, noting that
plaintiffs “obtained no discovery from [the defendants in the federal
action, their insurer, or their attorney, and thus] presented nothing
more than their assumption [that Kayak Pool] would have received more
in [the] settlement [of the underlying action].”

     In my view, that approach is basically a “gaps in proof” tack by
which defendants cannot meet their initial burdens on their motions
for summary judgment (see Val Tech Holdings, Inc. v Wilson Manifolds,
Inc., 119 AD3d 1327, 1329; see also Harris Beach PLLC, 121 AD3d at
1525-1526). It is defendants’ burden to show that knowledge of
insurance coverage would not affect settlement, not plaintiffs’
burden.

     I also note that the reason for the absence of evidence on
damages is clear: although many hours were billed by Kavinoky before
the transfer to Hodgson, very little discovery had been done and,
apparently, none had been done on the issue of damages. Given the
absence of evidence as to the value of Kayak Pool’s claim and the
possibility that the threat of the bankruptcy of the defendants in the
federal action motivated the settlement, I cannot agree with Kavinoky
that the record establishes that Kayak Pool was well-disposed in that
action. To the extent Hodgson contends that the impetus for the
settlement was the injunctive relief and that Kayak Pool resolved the
underlying matter favorably by obtaining that injunctive relief, I
conclude that defendants still are not entitled to summary judgment
because there is at least a factual question as to whether the
injunctive relief drove the settlement, or whether the settlement was
motivated by the desire for injunctive relief and a collectible sum of
money designed to offset Kayak Pool’s legal fees in the underlying
matter.
                                 -6-                          1111
                                                         CA 13-02084

     Put more simply, and more bluntly, in the absence of discovery on
damages I question how defendants could meet their initial burden on
these parts of their motions by demonstrating that the settlement was
favorable to Kayak Pool. The absence of discovery on the damages
question in the federal action does not mean that defendants are
entitled to summary judgment here. Rather, it means that defendants
are responsible both for conducting that discovery in this action and
for affirmatively proving their present contention that plaintiffs did
not sustain ascertainable damages as a result of defendants’
negligence. Defendants have not met that burden, and thus I would
deny their respective motions for summary judgment (see generally
Zuckerman v City of New York, 49 NY2d 557, 562).

Entered:   February 6, 2015                     Frances E. Cafarell
                                                Clerk of the Court