Black v. Schwartz et al
MEMORANDUM & ORDER granting in part and denying in part 65 Motion for Summary Judgment - For the foregoing reasons, Defendants' summary judgment motion is GRANTED IN PART and DENIED IN PART. Defendants' motion for attorneys' fees is DENIED. Going forward, the parties shall heed the directive in footnote two. So Ordered by Judge Joanna Seybert on 9/17/2012. C/ECF (Valle, Christine)
9/17/2012 1:57 pm
U.S. DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
LONG ISLAND OFFICE
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
MEMORANDUM & ORDER
JEFFREY S. SCHWARTZ and LAW OFFICE OF
JEFFREY S. SCHWARTZ,
Peter D. Baron, Esq.
Baron & Pagliughi, PLLC
85 Main Street, Suite A
Cold Spring Harbor, NY 11724
Douglas S. Langholz, Esq.
Morgan Melhuish Abrutyn
39 Broadway, Suite 1701
New York, NY 10006
SEYBERT, District Judge:
Jeffrey S. Schwartz and the Law Office of Jeffrey S. Schwartz
(together, “Defendants”) for legal malpractice arising out of
sanctions that Plaintiff was forced to pay in an earlier lawsuit
Pending before the Court are Defendants’ motions
relating to a discontinued portion of this suit (Docket Entry
Defendants’ motion for summary judgment is GRANTED IN PART
and DENIED IN PART.
Their motion for attorneys’ fees is DENIED.
In 2005, Plaintiff retained Defendants to pursue civil
defendants in a case arising out of a real estate deal gone bad.
The facts of that case, Black v. Del Webb Communities, Inc., No.
05-CV-8743 (C.D. Cal.) (the “California Action”), are set forth
in U.S. District Judge S. James Otero’s December 5, 2006 summary
judgment decision (Defs. Ex. M) and his March 27, 2007 decision
sanctioning Plaintiff for various litigation misconduct (Defs.
Ex. K (the “Sanction Order”)).
The Sanction Order also contains
a near-comprehensive discussion of the facts relevant to this
Briefly, though, the Court will provide a few background
facts to put the following analysis into context.
deal that didn’t pan out.
well for Plaintiff.
To put it mildly, the case did not go
He had sued the developer on the deal and
others, including Land America Financial Group (“Land America”).
Land America was the corporate grandparent of Lawyer’s Title of
Nevada, Inc. (“LTN”), the escrow agent for the project.
motion to dismiss stage, the court found that an arbitration
agreement covered most of Plaintiff’s case and dismissed all
defendants except for Land America.
Later, the court awarded
Land America summary judgment because, among other reasons, Land
America (as opposed to its subsidiary) had nothing to do with
sanctioned Plaintiff and ordered him to pay Land America the
attorneys’ fees it incurred in defending the case.
The misconduct underlying the fee award is detailed in
Plaintiff and Defendants--Plaintiff’s counsel in the California
Plaintiff paid the sanction and, in the instant action, is suing
Defendants in legal malpractice for repayment of that money.
summary judgment and then considers their motion for attorneys’
I. Summary Judgment
Defendants’ summary judgment motion is granted in part
and denied in part.
A. Legal Standard
Summary judgment is only appropriate where the moving
party can demonstrate that there is “no genuine dispute as to
any material fact” and that the moving party is entitled to
FED. R. CIV. P.
considering this question, the Court considers “the pleadings,
depositions, answers to interrogatories and admissions on file,
together with any other firsthand information including but not
limited to affidavits.”
Nnebe v. Daus, 644 F.3d 147, 156 (2d
Cir. 2011); see also Celotex Corp. v. Catrett, 477 U.S. 317,
322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986); McLee v.
Chrysler Corp., 109 F.3d 130, 134 (2d Cir. 1997); FED. R. CIV. P.
“In assessing the record to determine whether there is a
genuine issue to be tried . . . the court is required to resolve
all ambiguities and draw all permissible factual inferences in
favor of the party against whom summary judgment is sought.”
McLee, 109 F.3d at 134.
The burden of proving that there is no
genuine issue of material fact rests with the moving party.
Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1223
(2d Cir. 1994) (citing Heyman v. Commerce & Indus. Ins. Co., 524
F.2d 1317, 1320 (2d Cir. 1975)).
Once that burden is met, the
demonstrate that “the evidence is such that a reasonable jury
could return a verdict for the nonmoving party,” Anderson v.
Liberty Lobby, 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L.
Ed. 2d 202 (1986).
“Mere conclusory allegations or denials will
Williams v. Smith, 781 F.2d 319, 323 (2d Cir.
And “unsupported allegations do not create a material
issue of fact.”
Weinstock v. Columbia Univ., 224 F.3d 33, 41
(2d Cir. 2000).
California law1 are “(1) the duty of the attorney to use such
profession commonly possess and exercise; (2) a breach of that
duty; (3) a proximate causal connection between the breach and
the resulting injury; and (4) actual loss or damage resulting
from the attorney's negligence.”
Hall v. Kalfayan, 190 Cal.
App. 4th 927, 933, 118 Cal. Rptr. 3d 629, 632-33 (Cal. Ct. App.
2010) (quoting Coscia v. McKenna & Cuneo, 25 Cal. 4th 1194,
1199, 108 Cal. Rptr. 2d 471, 25 P.3d 670 (2001)).
addresses each in turn.
First, Defendants argue that Plaintiff
because the sanction was premised on discovery responses that
Plaintiff himself verified under penalty of perjury.
This argument is unpersuasive because it relies on too
described therein goes beyond discovery violations and includes
the filing of frivolous motions and the “reckless” decision to
sue Land America in the first place.
(Sanction Order 3.)
Second, Defendants argue that California law does not
permit parties who are hit with sanctions to recover the amount
The parties agree that California law governs this case.
of the sanctions from their lawyers.
(Defs. Br. 13.)
Bentley, 183 Cal. App. 4th 559, 107 Cal. Rptr. 3d 539 (Cal. Ct.
App. 2010) for the proposition “that an award for attorney fees
imposed by the Court a client [sic], individually, may not be
recovered as damages in a subsequent legal malpractice action.”
(Defs. Br. 13.)
Given the loose relationship Defendants’ brief
unsurprising that Jocer stands for no such thing.
recoverable under an equitable indemnification theory.
Rptr. 3d at 575.
It did not reach whether the plaintiffs stated
a claim under a legal malpractice theory because it concluded
that such a claim was time-barred.
Id. at 576.
Third, Defendants argue that Plaintiff’s injury was
really caused by his not having a factual basis to prevail on
the merits in the California Action.
This is a variation of
Defendants’ first argument, and it has at least two flaws.
it is premised on a flagrantly misleading characterization of
Plaintiff’s expert’s deposition.
Noting that Plaintiff’s expert
testified that Defendants may have had a colorable basis to sue
opinion into a finding that Defendant’s decision to sue Land
Plaintiff’s expert agreed hypothetically that there might have
been an arguable claim against LTN but he was clear that Land
America would not have been a proper target.
(Defs. Ex. M at
Defendants have the gall to make this argument
again in their reply (see Defs. Reply 4) even after Plaintiff
pointed out that it is based on an incorrect reading of the
expert’s deposition (Pl. Opp. 5-6).
the claimed injury in this case.
Two, this argument confuses
Plaintiff does not claim that
Defendants’ malpractice, he would not have been sanctioned for
entitled to recover the attorneys’ fees he incurs in pursuing
the present case.
(Defs. Br. 17.)
Plaintiff has not answered
this argument and, in any event, the Court is persuaded that he
may not recover his legal fees associated with this case.
Loube v. Loube, 64 Cal. App. 4th 421, 430, 74 Cal. Rptr. 2d 906
judgment motion is granted.
Fifth, Defendants argue that Plaintiff cannot prove
negligence arising out of their failure to advise him of their
attorneys’ fee motion in the California Action.
(Defs. Br. 18.)
notwithstanding Defendants’ alleged failure to advise Plaintiff
to consult independent counsel concerning the sanction motion,
Defendants litigated Land America’s fee request appropriately.
(See Defs. Ex. M at 117 (“Q: In [Schwartz’s] brief or in his
oral presentation or in his responses, anything that you can
point to that shows that he was negligent in representing Black
during that phase of the litigation? A. No.”).)
evidence entitles Defendants to summary judgment on this aspect
of Plaintiff’s claim.
In sum, although there remain difficult issues to try,
Their motion is granted insofar as Plaintiff may not (1) recover
his legal fees in this case or (2) recover on his theory that
Defendants’ failure to advise him of a conflict of interest
proximately caused the sanction.
It is denied in all other
II. Defendants’ Attorneys’ Fees Motion
pursuant to 28 U.S.C. § 1927 (“Section 1927”) and the Court’s
inherent power awarding them the legal fees they incurred in
defending a now-discontinued portion of this case.2
As an initial matter, the Court notes that Defendants’
citations to evidence in this motion are virtually
for the motion is essentially that Plaintiff’s now-discontinued
claim that Defendants were negligent in not successfully pursing
from the California Action because of the arbitration agreement
was a non-starter.
They argue that Plaintiff could have sought
California Action was dismissed and, further, the statute of
limitations had not run on Plaintiff’s arbitration rights until
well after he brought the present malpractice suit.
to Defendants, therefore, Plaintiff had no hope that he could
against the arbitration-eligible defendants.
As is relevant to this motion, the Court may impose
inherent power and against an attorney pursuant to Section 1927.
“An award of sanctions under the court’s inherent power requires
meaningless. The exhibits, which are referred to by letter
throughout Defendants’ papers, were not included with
Defendants’ courtesy copies to the Court (in violation of the
undersigned’s individual motion practices), and they are not
labeled by letter on ECF. More troublingly, citations to
Schwartz’s 167-page deposition do not contain page numbers (the
absence of page references was an issue in Defendants’ summary
judgment brief as well). In the future, all parties in this
action will provide the Court with courtesy copies of
evidentiary materials relied on in their papers and their briefs
will include specific record citations. See Amnesty Am. v. Town
of W. Hartford, 288 F.3d 467, 470-71 (2d Cir. 2002) (Sotomayor,
J.). The Court may refuse to consider future submissions that
do not comply with this Order.
both ‘clear evidence that the challenged actions are entirely
without color, and [are taken] for reasons of harassment or
delay or for other improper purposes[,] and a high degree of
specificity in the factual findings of [the] lower courts.’”
Revson v. Cinque & Cinque, P.C., 221 F.3d 71, 78 (2d Cir. 2000)
(quoting Oliveri v. Thompson, 803 F.2d 1265, 1272 (2d Cir. 1986)
(alterations in original) (emphasis omitted)).
award under Section 1927 “is proper when the attorney's actions
are so completely without merit as to require the conclusion
that they must have been undertaken for some improper purpose
Bad faith is the touchstone for an award
under either the Court’s inherent power or Section 1927.
Having considered the parties’ arguments against the
background of this case, the Court concludes that sanctions are
not appropriate for several reasons.
First, although it appears
defendants was thin (at best), Plaintiff withdrew this claim
before Defendants resorted to dispositive motion practice.3
be sure, this is not a controlling factor, and Defendants aver
Defendants moved to implead Plaintiff’s attorney prior to
Plaintiff’s withdrawing the discontinued claim.
that they expended resources preparing a summary judgment motion
on this claim.
Nevertheless, this consideration weighs against
somewhat, the idea that Plaintiff brought this claim for an
Second, on the current record, the Court
discontinued portion of this case versus how much they spent
defending the legal malpractice claim discussed in Section I.
Defendants’ attorney states that “roughly 90% to 95%” of his
formal breakdown to support this contention.
Finally, in light
of Defendants’ blatant mischaracterizations discussed above, the
Court is not inclined to find that either party has behaved
worse than the other.
Cf. Schlaifer Nance & Co., Inc. v. Estate
of Warhol, 194 F.3d 323, 341 (2d Cir. 1999) (“Although, in light
of our disposition of this appeal, we need not address whether
such unclean hands may preclude the imposition of sanctions, we
consider the equities involved before rendering a decision.”).
forward, the parties shall heed the directive in footnote two.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
September 17, 2012
Central Islip, New York
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