alphas v smith
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Alphas v Smith2019 NY Slip Op 33427(U)
November 15, 2019Supreme Court, New York County
Docket Number: 155790/2015Judge: Lucy Billings
Cases posted with a "30000" identifier, i.e., 2013 NY SlipOp 30001(U), are republished from various New York
State and local government sources, including the NewYork State Unified Court System's eCourts Service.
This opinion is uncorrected and not selected for officialpublication.
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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: IAS PART 46 ----------~---------------------------x
PETER ALPHAS and ALPHAS COMPANY OF NY, INC. I
Plaintiffs
- against -
SCOTT SMITH and MCCORMICK & O'BRIEN LLP,
Defendants
--------------------------------------x
APPEARANCES:
For Plaintiff Robert Spinak Esq.
Index No. 155790/2015
DECISION AND ORDER
2 Crosfield Avenue, West Nyack, NY 10994
For Defendants Philip Furia Esq. Lewis Brisbois Bisgaard & Smith LLP 77 Wate~ Street, New York, NY 10005
LUCY BILLINGS, J.S.C.:
In plaintiffs' verified fourth amended complaint, Peter
Alphas and Alphas Company of NY, Inc., sue for legal malpractice
against attorney Scott Smith and his law firm McCormick & O'Brien
LLP. Alphas is currently the sole shareholder of Alphas Company
of NY, a proauce wholesaler. Defendants move to dismiss
plaintiffs' claims based on C.P.L.R. § 3211(a) (1), (3), and (7).
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i] I. THE FOURTH AMENDED COMPLAINT
I The current complaint alleges that plaintiffs retained
defendants on or about September 1, 2012, to represent plaintiffs
Alphas and Alphas Company of NY and a separate corporation,
Alphas Company, Inc., in several pending actions. Alphas is
currently the sole shareholder of Alphas Company of NY and a 50%
shareholder with his brother, Yanni Alphas, of Alphas Company,
Inc.,.based iri Boston, Massachusetts.
Plaintiffs claim they retained defendants' legal services
after being served with a complaint in an underlying action I
against Alphas Company of NY seeking $11,450.04 for its
delinquent contributions to its employees' union Pension Fund. A
letter dated September 20, 2012, from the Pension Fund to Yanni
Alphas, theniChief Executive Officer of Alphas Company of NY,
notified it of the Pension Fund's determination that it had
ceased contributions to the Pension Fund, thus effecting its
withdrawal from the Pension Fund for that year and incurring a
liability of $983,579.74 to the Pension Fund. The withdrawal
letter further notified Alphas Company of NY that this liability
was payable in 44 quarterly installments, that Alphas Company of
NY was entitled within 90 days to request the Pension Fund to
review its d$termination, and that the final avenue of relief was
arbitration. 29 U.S.C. § ·1399(b). The Pension Fund sent a copy
of this letter to Smith.
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Plaintiffs allege that defendants never informed plaintiffs
of the withdrawal letter and its consequences, let alone
addressed its contents on the clients' behalf. As a result,
plaintiffs neither paid the required installments nor sought
review or the ultimate remedy of arbitration within the specified
periods.
Consequently, the complaint in the underlying action was
amended February 13, 2013, to claim that Alphas Company bf NY
owed $14,312.55 for delinquent contributions, plus ~he withdrawal
liabil{ty of $983,579.7~. Plaintiffs allege that they never
received the.amended complaint, as no one authorized to accept
service on Alphas Company of NY's behalf matched the description
of the person served as an agent of Alphas Company of NY,
C.P.L.R. § 31l(a)'(l), but Smith· did receive notice of the amended
complaint. Plaintiffs further allege that they relied on
·defendants for all communications and updates regarding the
underlying litigation because, unlike Smith, plaintiffs were riot
registered with the court's electronic filing system. Yet
defendants never informed plaintiffs of the amended complaint nor
responded to it on Alphas Company of NY's behalf.
Consequ~ntly, the plaintiffs irt the underlying litigation
moved for a default judgment. Plaintiffs allege that Smith knew
of the hearing on the motion for a default judgment scheduled
April 26, 2013, but failed to appear at the hearing or inform
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plaintiffs of it, resulting in a default judgment against Alphas
Company of NY entered April 30, 2013. According to plaintiffs,
the judgment totaled $1,209,419.35: $14,312.55 for delinquent
contributions; $983,579.00 in withdrawal liability; $39,915.70 in
interest; $11,948.60 in attorney fees; and the remainder as
liquidated damages. Plaintiffs claim that Alphas Company of NY
never owed the original amount sought nor withdrew from the
Pension Fund, because Alphas Company of NY never permanently
ceased its operations covered by the Pension Fund, and therefore
would have prevailed in the underlying litigation. 29 u.s.c. §§
1381, 1383 (a).
Plaintiffs allege that they only learned, of the amended
complaint and default judgment from the plaintiffs' attorney in
the underlying action when they encountered him in other
litigation in May 2013. Plaintiffs then retained a new attorney
and in July 2013 moved to vacate the default judgment.
Plaintiffs allege that in the meantime they received multiple
loan offers totaling approximately $1,500,000.00 to keep Alphas
Company of NY viable and maintain its proprietary lease and
shar.es in the Hunts Point Terminal Produce Cooperative. Once the
prospective lenders learned of the outstanding $1,209,419.35
judgment against the prospective borrower, however, according to
plaintiffs the judgment caused those lenders to withdraw their
loan offers. Therefore Alphas Company of NY could not access the
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funds needed~to cure its default under its proprietary lease with
the. Cooperative and ultimately lost its shares in the Cooperative
and its spac~ at the Hunts Point Terminal Produce Market.
When Alphas Company of NY moved to vacate the default
judgment in the underlying action, the plaintiffs there claimed
that Alphas Company of NY had willfully failed to attend the
hearing on the motion for a default judgment and the assessment r .
of damages. To resolve this question, the court issued a
subpoena for Smith to appear. The hearing was not scheduled
until March 26, 2014. In the meantime, due to Alphas Company of
NY's financial condition, Alphas Company of NY petitioned for
bankruptcy March 4, 2014, disabling the corporation from
proceeding with the motion to vacate the default judgment. 11
U.S.C. § 362(a) (1). See Cardinal Holdings, Ltd. v. Indotronix
Intl. Corp., 73 A.D.3d 960, 962 (?d Dep't 2010); Corman v.
LaFountain, ~8 A.D.Jd 706, 708 (2d Dep't 2007); St. Paul Fire &
Mar. Ins. Co. v. PepsiCo, Inc., 884 F.2d 688, 697, 704 (2d Cir.
1989) .
Plaintiffs filed their fourth amended complaint January 29,
2019, claimihg defendants' professional negligen~e in the
underlying action. Plaintiffs claim defendants failed to:
inform plaintiffs of the withdrawal letter, advise plaintiffs of
its effects, ·challenge it within the required 90 days, demand
arbitration, 1 answer the amended complaint, oppose the motion for
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a default judgment, appear and defend Alphas Company of NY at the
hearing and assessment of damages, or seek to vacate the >
:r judgment. Alphas Company of NY's claimed damages include the
default judgment; the bankruptcy and forfeiture of cooperative
shares; approximately $1,400,000.00 paid by the Bankruptcy Estate
to the Bankr~ptcy Trustee and his agents; and approximately
$950,000.00 6wed for taxes on the sale of the cooperative shares.
Alphas's cla~med damages include his liability. for his guarantees
of Alphas Co~pany of NY's debts; loss of his license to conduct
business, income, and loans to Alphas, Company of NY; a lower
credit score; attorneys' fees to move to vacate the judgment and
'
to address his personal liabilities; and cancellation of
agreements for loans to and investments in the corporation. See
Alphas v. Smith, 147 A.D.3d 557, .558 (1st Dep't 2017)
II. DEFENDANTS' MOTION
Defendants base their motion to dismiss the fourth amended
complaint pursuant to C.P.L.R. § 32ll(a) (1), (3), and' (7) on four
main grounds. First, all claims by Alphas must be dismissed
because there was no attorney-client relationship between him and
defendants; it was only between Alphas Company of NY and
defendants, for litigation in which Alphas was not a party.
Second, Alphas Company of NY lacks capacity to sue because it
commenced its action against defendants during the bankruptcy
proceeding when only the Bankruptcy Trustee was authorized to
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commence an action on the bankrupt corporation's behalf. Third,
defendants owed no duty to represent plaintiffs' interests
related to the withdrawal letter dated September 20, 2012, even
to the extent that the withdrawal letter related to the
' underlying litigation, because the Letter of Engagement between
plaintiffs and defendants nowhere referred to the withdrawal
letter. Therefore the claimed legal malpractice was all outside
the scope of the agreed representation. Finally, defendants are
not liable as a matter of law for any damages related to the
default judgment, because plaintiffs' retention of a new attorney
to move to vacate the judgment and their petition for bankruptcy
constitute superseding causes of their damages, such that their
claimed legal malpractice is not the proximate cause of the
default judgment and its consequences.
III. ALPHAS'S CLAIM
A motion to dismiss claims based on documentary evidence
pursuant to C.P.L.R. § 3211(a) (1) will succeed only if admissible
documentary evidence completely refutes plaintiffs' factual . '
allegations, resolving all factual issues as a matter of law.
Nomura Home Equity Loan, Inc., Series 2006-FM2 v. Nomura Credit &
Capital, Inc., 30 N.Y.3d 572, 601 (2017); Goshen v. Mutual Life
Ins. Co. of NY, 98 N.Y.2d 314, 326 (2002); Calpo-Rivera v.
Siroka, 144 A.D.3d 568, 568 (1st Dep't 2016); Kolchins v.
Evolution Mkts., Inc., 128 A.D.3d 47, 58 (1st Dep't 2015).
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Defendants rely on Alphas's 2012 income tax return to establish
that he owned only ~0% of Alphas Company of NY's shares in 2012
and maintain that the Appellate Division allowed him to pursue an
individual claim for legal malpractice on the basis that he owned
100% of the corporation's shares. Alphas v. Smith, 147 A.D.3d at i
558; Good Old Days Tavern v. Zwirn, 259 A.D.2d 300, 300 (1st
Dep't 1999). Upon the principle that a party to litigation may
not take a position contrary to his sworn income tax return, ~
Mahoney-Buntzman v. Buntzman, 12 N.Y.3d 415, 422 (2009),
defendants insist that Alphas, as a mere 50% owner, may not
benefit from Alphas Company of NY's attorney-client relationship
with defendahts as required for him to sustain a legal
malpractice claim against them. Learning Annex, L.P. v. Blank
Rome LLP, 106 A.D.3d 663, 663 (1st Dep't 2013); Fortress Credit
Corp. v. Dechert LLP, 89 A.D.3d 663, 663 (1st Dep't 2011). I
Peter Alphas acknowledges that he was a 50% owner of Alphas
company of NY with his brother until his brother resigned from
his position1and assigned to Peter Alphas the brother's interest • I • (
in the corpo~ation October 23, 2012, eff~ctive August 30, 2012.
Nevertheless; defendants may rely on Peter Alphas's tax return
claiming a 50% ownership in 2012 to contradict his claim in this
action of a loo% ownership in the later months of that year. A
party's claim on a tax return estops the party from taking a
different po$ition in litigation and forecloses any factual
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dispute of the issue. Mahoney-Buntzman v. Buntzman, 12 N.Y~3d at
422; Goldwater v. Amicus Assoc. L.P., 168 A.D.3d 405, 405-406
(1st Dep't 2019); Ansonia Assoc. L.P. v. Unwin, 130 A.D.3d 453,
454 (1st Dep;t 2015). Even assuming that Peter Alphas was not a
100% shareholder until 2013, however, he demonstrates
circumstances entitling him to claim an attorney-client
relationship with defendants in two ways.
First, the Appellate Division held that Alphas was "allowed
to assert an individual malpractice claim, even though defendants
represented ?nly Alphas NY in the federal action in which they
allegedly committed malpractice." Alphas v. Smith, 147 A.D.3d at
558. Although the court recited the allegation that Alphas was
Alphas Company of NY's sole shareholder, the court did not limit
its holding to that single fact. Instead, the key fact on which
the court fo~used was that Alphas "derived his livelihood from
Alphas NY." Id. Defendants' documentary evidence does not
refute this ~act, nor do defendants even contend otherwise. The
only limitation the Appellate Division placed on Alphas's claim
was that his .. "damages are limited to those he suffered
individually~" Id.
Since this action is in the same "procedural posture .
(a CPLR 3211.! motion to dismiss)" as it was before the Appellate
Division, in1accordance with the law of the case, this court must
allow Alphas'to pursue an individ~al malpractice claim against
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defendants. - Id. Even if Alphas is not considered the sole
shareholder of Alphas Company of NY when he and defendants
executed the Letter of Engagement October 1, 2012, and is not
considered the sole shareholder until January 1, 2013, "special
circumstances" still permit him to pursue an individual legal
malpractice claim against defendants, at least at this stage of
the action. Good Old Days Tavern v. Zwirn, 259 A.D.2d at 300;
Town Line Plaza Assocs. v. Contemporary Props., 223 A.D.2d 420,
420 (1st Dep't 1996). See Alphas v. Smith, 147 A.D.3d at 558.
Second, while plaintiffs stipulate that the Letter of
Engagement is authenticated and admissible for the purpose of
determining defendants' motion, the letter's execution date does
not bar Alphas's legal malpractice claim against defendants
either. The execution date may commence the attorney-client
relationship, but is not the single determinative factor in
evaluating whether Alphas may claim legal malpractice against
defendants. Later dates during the attorney-client relationship
determine when his legal malpractice claim accrued: most
significantly, when the malpractice and injury occurred. Johnson ,
v. Proskauer Rose LLP, 129 A.D.3d 5~, 67 (1st Dep't 2015);
Cabrera v. Collazo, 115 A.D.3d 147, 150 (1st Dep't 2014); Goldman
v. Akin Gump Strauss Hauer & Feld LLP, 46 A.D.3d 481, 481 (1st
Dep't 2007). Plaintiffs allege that defendants' malpractice
occurred well into 2013, when Alphas undisputedly was the sole
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shareholder of Alphas Company of NY. Because there was an
attorney-Client relationship between Alphas and defendants based
on Alphas's sole ownership of Alphas Company of NY when the
:i alleged malp~actice occurred, Alphas may pursue an individtial
claim regardless whether he was less than a 100% owner in 2012.
j d b Johnson v. Proskauer Rose LLP, 129 A.D.3 at 67; Ca rera v.
Collazo, 115 A.D.3d at 150; Goldman v. Akin Gump Strauss Hauer &
Feld LLP, 46 A.D.3d at 481. \
For all these reasons, defendants' documentary evidence does
not resolve the issue whether Alphas.maintained an attorney-
client relationship with defendants when plaintiffs' legal
malpractice accrued, as a matter of law, and Alphas at minimum
raises a factual issue of such a relationship. Therefore the
court denies' defendants' motion to dismiss Alphas's action based
on documenta~y evidence. C.P.L.R. § 321l(a) (1).
IV. ALPHAS COMPANY OF NY'S CAPACITY TO SUE
Pursuant to C.P.L.R. § 3211(~) (3), defendants meet their
burden to establish that Alphas Company of NY lacked the capacity
to sue when the corporation commenced its independent action
April 18, 2016, before that action was consolidated with this
action, originally commenced only by Alphas in 2015. Since
Alphas Company of NY commenced a bankruptcy proceeding March 4,
2014, which still was pending April 18, 2016, only the
Bankruptcy Trustee was authorized to commence an action on the
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bankrupt corporation's behalf, and the corporation itself lacked , I .
the capacity to do so. 11 U.S.C. § 541(a); Barranco v. Cabrini
Med. Ctr., 50 A.D.3d 281, 282 (1st Dep't 2008); Williams v.
Stein, 6 A.D.3d 197, 198 ,(1st Dep't 2004); Cardinal Holdings,
I Ltd. v. Indotronix Intl. Corp., 73 A.D~3d at 962; Corman v.
LaFountain, jg A.D.3d at 708.
To defeat defendants' motion to dismiss the fourth amended
complaint on 1 this ground, Alphas Company of N~ must present
evidence that at least raises a factual question of this
plaintiff's capacity to sue. DLJ Mtge. Capital v. Mahadeo, 166
A.D.3d 512, 513 (1st Dep't 2018); Deutsche Bank Trust Co. Arns. v.
Vitellas, 131 A.D.3d 52, 59-60 (2d Dep't 2015); us Bank N.A. v.
Farugue, 120 A.D.3d 575, 578 (2d Dep't 2015). Plaintiffs
demonstrate that the Bankruptcy Trustee assigned the legal
malpractice claim to Alphas April 22, 2016. This assignment in
fact supports Alphas Company of NY's lack of capacity to sue both
on April 18, 2016, and afterward, but also demonstrates that
Alphas assumed the capacity to maintain Alphas Company of NY's
claims. The assignment also supports Alphas's own claim that he
was a real party in interest who maintained an attorney-client
relationship' with defendants and whose interests were injured by
their alleged legal malpractice, so as to sustain a malpractice
action by him against defendants.
Defendants, on the other hand. fail to demonstrate why, at
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minimum, when Alphas filed his third amended complaint March 23,
2017, when the court (Mendez, J.) consolidated Alphas Company of
NY's action with Alphas's action without opposition September 18,
2017, and when plaintiffs filed their fourth amended complaint
January 29, 2019, Alphas lacked the capacity to maintain Alphas
Company of NY's claims. Because Alphas Company of NY raises no
factual issue regarding its capacity to sue, the court grants
defendants' motion to dismiss Alphas Company of NY as a
plaintiff. Giuliano·v. Gawrylewski, 122 A.D .. 3d 477, 479 (1st
Dep't 2014); Ullman v. Hillyer, 106 A.D.3d 579, 579 (1st Dep't
2013); Williams v. Stein, 6 A.D.3d at 198. Because its claims
were assigned to Alphas, however, he maintains the claims
originally instituted by Alphas Company of NY and retained in the
fourth amended complaint. See Rodriguez v. River Val. Care Ctr.,
Inc., 175 A.D.3d 432, 433 (1st Dep't 2019).
V. THE SCOPE OF DEFENDANTS' REPRESENTATION OF PLAINTIFFS
Regarding defendants' duty to represent plaintiffs'
interests related to the withdrawal letter dated September 20,
2012, defendants rely on the Letter of Engagement between them
and plaintiffs as well as the withdrawal letter itself as
documentary evidehce supporting dismissal of plaintiffs'
allegations of malpractice related to the withdrawal letter.
C.P.L.R. § 3211(a} (1). The withdrawal ·letter was addressed to
Yanni Alphas as Chief Executive Officer of Alphas Company of NY
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before plaintiffs executed the Letter of Engagement October 1,
2012. The withdrawal letter notified Alphas Company of NY that
it had ceased contributions to, withdrawn from, and incurred a
liability of. $983,579.74 to the union Pension Fund; that the
liability was payable in installments; and that Alphas Company of
NY was entitled to request review and demand arbitration.
Because the Letter of Engagement between plaintiffs and
defendants, 19 days later, nowhere referred to the withdrawal
letter, defendants insist that any representation related to the
withdrawal letter exceeds the scope of the agreed representation.
First, defendants fail to show that plaintiffs ever received
the withdrawal letter before they executed the Letter of
Engagement. Defendants present no affidavit of service or other
evidence of plaintiffs' receipt qf the withdrawal letter. E.._,_g_,_,
Tower Ins. Co. of N.Y. v. Ray & Frank Liq. Store, Inc., 104
A.D.3d 482, 483 (1st Dep't 2013); Matter of State Farm Mut. Auto,
Ins . Co . ( Kankam) , 3 A . D . 3 d 418 , 419 ( 1st Dep' t 2 o o 4 ) ; 8112 - 2 4
18th Ave. Realty Corp. v. Aetna Cas. & Sur. Co., 240 A.D.2d 287,
288 (1st Dep't 1997); Gelbart v. Borglum, 195 A.D.2d 416, 416
(1st Dep't 1993).
In any event, the complaint's allegations unmistakably show
how the withdrawal letter related to the underlying litigation in
which defendants concede they had undertaken to represent Alphas
Company of NY, even before the Letter of Engagement. The court
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need only refer to the amended complaint in the .underlying
litigation t6 find that it sought the very'relief ~hae flowed
from the failure to respond to the withdrawal letter. Although
defendants attempt to use the withdrawal letter to absolve
themselves of any related representation, even to the extent that
the withdrawal letter related to the underlying litigatiqn, to
the contrary, the very fact that the withdrawal related to the
litigation incorporates the letter within the scope of the
representation undertaken. As plaintiffs' retained attorneys,
defendants owed a duty to represent all plaintiffs' interests
that in any way bore on the underlying litigation, even relating
to issues about which plaintiffs may have been unaware. Those
interests included the interests implicated-in the withdrawal
letter. Macquarie Capital (USA) Inc. v. Morrison & Foerster LLP,
157 A.D.3d 456, 457 (1st Dep't 2018).
In sum, defendants' attempt to exclude the withdrawal letter
or any part of the underlying litigation from the scope of
representation contradicts the very reason for· the attorney-
client relationship. According to the fourth amended complaint,
plaintiffs r~tained defendants to represent plaintiffs in several
pending actibns, including the underlying litigation at issue
here, and to' handle anything that affected plaintiffs' defense of
that litigation. It was the foundation of the attorney-client
relationship, the reason why plaintiffs retained defendants'
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legal services. Because neither the Letter of Engagement nor the ,,
withdrawal l~tter limits defendants' duty to represent
plaintiffs' interests related to the withdrawal letter or any
part of the underlying litigation, the court denies defendants'
motion to dismiss plaintiffs' claims of malpractice arising from
defendants' omissions in responding to the withdrawal letter or
any part of the underlying litigation. C.P.L.R. § 3211(a) (1).
VI. THE PRO!IMATE CAUSE OF PLAINTIFFS' DAMAGES
Upon a motion to dismiss claims pursuant to C.P.L.R. §
3211(a) (7), the court must accept plaintiffs' allegations in the
fourth amended complaint as true, liberally construe them, and
draw all reasonable inferences in plaintiffs' favor. JF Capital
Advisors, LLC v. Lightstone Group, LLC, 25 N.Y.3d 759, 764
(2015); Miglino v. Bally Total Fitness of Greater N.Y., Inc., 20
N.Y.3d 342, 351 (2013); ABN AMRO Bank, N.V. v. MBIA Inc., 17
N.Y.3d 208, 227 (2011); Drug Policy Alliance v. New York City Tax i
·;i Commn. , 131 A. D. 3d 815, 816 (1st Dep' t 2 015) . Dismissal is
warranted only if the complaint fails to allege facts that fit
within any cognizable legal theory. ABN AMRO Bank, N.V. v. MBIA
Inc., 17 N.Y.3d at 227; Lawrence v. Graubard Miller, 11 N.Y.3d
588, 595 (2008); Nonnon v. City of New York, 9 N.Y.3d 825, 827
(2007); Mill) Fin., LLC v. Gillett, 122 A.D.3d 98, 103 (1st Dep't
2014) .
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The fourth amended complaint alleges that plaintiffs hired a
new attorney who in July 2013 moved to vacate the default
judgment against plaintiffs in the underlying iitigation, but
plaintiffs then petitioned for bankruptcy before allowing their
new attorney~to succe~d in vacating the judgment. This new
attorney's opportunity to obtain a favorable result for
plaintiffs in the underlying litigation would sever the causal
connection b~tween defendants' legal malpractice and the default
judgment tha~ fhe malpractice originally caused, so that, despite
defendants' legal malpractice, Alphas Company of NY still would
have succeeded on the merits of that litigation. Davis v. Cohen
& Gresser; LtP, 160 A.D.3d 484, 487 (1st Dep't 2018); Maksimiak Ii
v. Schwartzapfel Novick Truhowsky Marcus, P.C., 82 A.D.3d 652, ,,
652 (1st Dep~t 2011).
Plaintiffs claim, however, that the default judgment
precipitated1the corporation's bankruptcy befo~e plaintiffs'
success6r atEorney "had sufficient time and opportunity" to
protect plaintiffs' rights. Id. Between April 2013., when the
default judgment was entered, and March 2014, when Alphas Company
of NY petitioned for bankruptcy, plaintiffs allege that, once the
prospective lenders learned of the unpaid judgment against the
prospective borrower, Alphas Company of NY lost multiple loan
offers totaling approximately $1,500,000.00. Those loans were
the funds Alphas Company of NY·needed to cure its default under j
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its proprietary lease with the Hunts Point Terminal Produce
Cooperative. Once the court in the Cooperative's eviction
proceeding against Alphas Company of NY lifted a stay on the
lessee's eviction in early 2014, its only recourse to protect the I
value of its principal asset, its shares in the Cooperative, was
to petition for bankruptcy.
The fair inference from the fourth amended complaint is that•
plaintiffs staved off the eviction and the bankruptcy as long as
/ possible and made every possible attempt to keep Alphas Company I
of NY's shares in the Cooperative and maintain its business, but
the default judgment impeded that effort. If plaintiffs had the
means to vacate the judgment in time to avert the bankruptcy,
they would have don~ so. Therefore plaintiffs' allegations
~emonstrate thati but for defendants' legal malpracti~e, Alphas
Company of NY would not have incurred the default judgment and
that it precipitated the corporation's bankruptcy; foreclosing
any opportunity to vacate the judgment. Roth v. Ostrer, 161
A.D.3d 433, 434 (1st Dep't 2018); Macquarie Capital (USA) Inc. v.
Morrison & F6erster LLP, 157 A.D.3d at 456-57; Garnett v. Fox,
Horan & Camerini, 82 A.D.3d 435, 435-36 (1st Dep't 2011) . . \
VII. CONCLUSION
For the reasons explained above, the court grants
defendants' motioh to the ·extent of dismissing Alphas Company of
NY as a plaintiff because it lacked the capacity· to sue.
alphasll19 18·
[* 18]
FILED: NEW YORK COUNTY CLERK 11/20/2019 03:06 PM INDEX NO. 155790/2015
NYSCEF DOC. NO. 179 RECEIVED NYSCEF: 11/20/2019
20 of 20
, i.
C.P.L.R. § 3211(a).(3). Plaintiff Alphas, however, maintains the
claims originally instituted by Alphas Company of NY and retained
in the fourth amended complaint. The court denies the remainder
of defendants' motion. C.P.L.R. § 3211(a) (1) and (7).
DATED: November 15, 2019
alphaslll9 19
LUCY BILLINGS, J.S.C.
LUCY BILLINGS J.S.C.
[* 19]
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