Motion for Child Support in The Friedlander Organization Llc v. Jesse James Burke, Jesse James Burke, P.C.| Trellis.Law

On May 24, 2013 a Motion-Secondary was filed involving a dispute between The Friedlander Organization Llc, and Jesse James Burke, Jesse James Burke, P.C., for Other Matters - Contract Non-Commercial in the District Court of Nassau County.

Preview
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
X
THE FRIEDLANDER GROUP LLC, ECF CASE
(Hon. Stephen A. Bucaria)
Plaintiff, Index No. 6350/13

-against-

JESSE JAMES BURKE ANd
JESSE JAMES BURKE, P.C.,

Defendants.
X

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS'
MOTION F'OR SUMMARY MENT I

L' ABBATE, BRlraN, Colavlra
& CoNru, L,L.P.
At t or n ey s for D efendant s
1001 Franklin Avenue
Garden City, New York 11530
(s16) 294-8844
File No.: I69L-96039

Of Counsel:
Anthony P. Colavita, Esq.
James D. Spithogiannis, Esq

1 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

TABLB OF

TABLE OF'AUTHORII'IES l1

PRE,I,IMINARY STATEMH,NT .., I

S]'A'TEMENT OF'FACTS 5

ARGUMENT 11

POINT I

THE LEGAL MALPRACTICE CAUSE OF ACTION SHOULD BE
DISMISSE,D BECAUSE, EVEN IF THE FRIEDLANDER
ORGANIZATION HAD BEEN NAMED AS AN "ADDITIONAL
INSURED" LINDER THE POLICY, LIBERTY WOULD HAVE
SOUGHT TO RESCIND THE POLICY AND THE FRIEDLANDER
ORGANIZATION WOULD HAVE NEVERTHELESS INCURRED
LEGAT, FEES TO OBTAIN THIS COURT'S DETERMINATION TI_IAT
TI.{E POLICY WAS VALID AND COVERED ITS CLAIM 13

POINT II

THE FRIEDLANDER ORGANIZATION'S SECOND AND THIRD
CAUSES OF ACTION FOR BREACH OF FIDUCIARY DUTY AND
NEGLIGENT MISREPRESENTATION, RESPECTIVELY, SHOULD BE
DISMISSED BECAUSE THEY ARISE OUT OF THE SAME ALLEGATIONS
AS THE LEGAL MALPRACTICE CAUSE OF ACTION AND DO NOT
ALLEGE DISTINCT DAMAGES............... ..,....16

CONCLUSION 18

2 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

TABLE OF AUTHORITIES

State Cases Page

Admiral Ins. Co. v. J ov Contractors. Inc..
19 N.Y.3d 448,972N.E.2d 103, 948 N.Y.S.2d 862 (2012) 15, T6

Alvarez v. Prospect Ijosp.,
68 N.Y.2d 320,5U N.E.2d 572,508 N.Y.S.2d 923 (1986) 11

Barbieri v. Fishoff,
98 A.D.3d 703,950 N.Y.S.2d 384 (2d Dep't 2012) "..' I2

Dimond v. Kazmierczuk & McGrath,
15 A.D.3d 526,790 N.Y.S.2d 219 (2d Dep't 2005) t2

E. Dist. Dve Works. Inc. v. Trave lers Ins. Co..
234 N.Y, 447, 138 N.E. 40r (1923) .. 14

Felix v. Klee Woolf. LLP.
138 A.D.3d 920,30 N.Y.S.3d 220 (2d Dep't 2016) ... t2

Greco v. First Union Nat'l B Coro..
267 A.D.2d278,701N.Y.S.2d 93 (2d Dep't 1999) 11

Interboro Ins. Co. v. Fatmir.
89 A.D.3d 993,933 N.Y.S.2d 343 (2d Dep't 20ll) l4

Kassis v. Ohio Cas. Ins. Co.,
l2 N.Y.3d 595,913 N.E.2d 933, 885 N.Y.S.2d 241 (2009) 14, 15

Kem V &.
No. 600652112,2014 WL.344983 (Trial Order) (Sup. Ct. Nassau County Jan, 31,2014)'.'.'..12

Kornfeld v NRX Techs .Inc
62 N.Y.2d 686,465 N.E.2d 30,476 N.Y.S.2d 523 (1984) 11

v. NRX T s.- Inc..
93 A.D.2d772,461N.Y.S,2d 342 (lst Dep't 1983) 11

3 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

Kvetnaya v. 'fylo,
49 A.D.3d 608, 854 N.Y.S.2d 425 (2d Dep't 2008) 17

LLC v Ins. Co No. 114482010, 2013
WL 10931457 (Trial Order) (Sup. Ct. N.Y. County Jan' 11,2013) 15

Leon Petro LLC v. Carl S. Levine & Assocs.. P.C..
.
80 A.D.3d 573,914 N.Y.S.2d 661 (2d Dep't 20lI) .11

Meah v. A. Aleem Constr.. Inc.,
105 A.D.3d 1017,963 N,Y.S.2d l14 (2d Dep't 2013) 15

Pecker Iron orks of N.Y.. Inc. v. er's Ins. Co..
99 N.Y.2d 391,786 N,E.2d 863,756 N.Y.S.2d 822 (2003) 15

Precision Auto A cceqqnri es Inc. v. Utica F irqt Tns Co
52 A.D.3d 1198, 859 N.Y.S.2d 799 (4th Dep't 2008) 14

Corker &
8 N.Y.3d 438,867 N.E.2d 385, 835 N.Y.S,2d 534 (2007) 13

Sirius Am. Tnq Co v Burl ln Tnq Cn
81 A.D.3d 562,917 N.Y.S.2d 192 (1st Dep't 2011)'....' 15

Sitar v. Sitar
50 A.D.3d 667,854 N,Y.S.2d 536 (2d Dep't 2008) t7

on Prods
95 A.D.2d675,463 N.Y.S.2d 464 (Lst Dep't 1983)... 11

Sun Yau Ko v. L ncoln Sav. Bank.
99 A.D.2d943,473 N.Y.S.2d 397 (lst Dep't 1984) .. 11

v. Nationwide Co
239 A.D.2d876,659 N.Y.S.2d 646 (4th Dep't 1997) l4

Tvras v. Mount V Fire Ins. Co..
36 A.D.3d 609,828 N.Y.S.2d 448 (2dDep't 2007) l4

lll

4 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

Wray v. Mallilo & Grossman,
54 A.D.3d 328,863 N.Y.S.2d 228 (2d Dep't 2008) .. 12

Federal Cases

v. Marshall LLP
921 F. Supp.2d 1 1 1 (S.D.N.Y. 2013) 14

INA Underwriters Ins. Co. v. D.H. Forde & Co.. P.C,.
630 F. Supp. 76 (W.D.N.Y. 1985) 14

State Statutes

C.P.L.R. R,3212 1 8

N.Y. Ins. Law $ 3105(a).. .14

N.Y. Ins. Law $ 3105(b) 14

5 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

Preliminarv Statement

Defendants Jessie James Burke and Law Office of Jessie James Burke, P.C., sued herein

as Jesse James Burke and Jesse James Burke, P.C. (collectively "Butke"), submit this

Memorandum of Law in supporl of their motion for an Order, under C.P.L.R. R. 3212, granting

Burke summary judgment and dismissing the Verified Complaint (the "Complaint") in its

entirety, with prejudice. The legal malpractice cause of action should be dismissed because The

Friedlander Organization LLC (the "Friedlander Organtzation")' cannot prove that Burke's

allegecl negligence proximately caused it to sustain actual and ascertainable damages. The

causes of action for breach of fiduciary duty and negligent misrepresentation should also be

dismissed because they are duplicative of the legal malpractice cause of action,

Many lawsuits arose from a complex, bridge-loan transaction in which the Friedlander

Orgamzatron caused $2,100,000.00 to be wired to law firm and escrow agent Akin Ayorinde,

P.C. ("Ayorinde PC"), and Ayorinde PC breached that escrow agreement by failing to return

those funds. The Friedlander Organization sued Ayorinde PC and its plincipal Akintayo

Abimbola Ayorinde ("Ayorinde") and obtained summary judgment against them. When

Ayorinde failed to pay the resulting judgment, the Friedlander Organtzation brought a direct

action against Ayorinde's insurer Liberty Insurance Underwriters, Inc. ("Liberty"), seeking

payment of the judgment amount under Ayorinde PC's $2,000,000.00 Lawyers Professional

Liability Policy (the "Policy").

' 'lhe Cornplaint references the Friedlander Organization, but the Plaintiff named in the Complaint's caption is "The
Friedlander Group LLC." It is undisputed that Burke never represented "The Friedlander Group LLC," and "The
Friedlander Group LLC" was not a party to the subject bridge-ioan transaction.
1

6 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

Liberty commenced a separate action against the Friedlander Organization, Ayorinde PC,

and Ayorinde to rescind the Policy ab initio, and for a declaratory judgment that it had no duty to

indemnify Ayorinde PC or Ayorinde, on the ground that Ayorinde made material

misrepresentations on his insurance application. Liberty argued that, had it known that Ayorinde

made material misrepresentations on his application, it would not have issued the Policy.

Following substantial motion practice and appeal, this Courl ultimately granted the

Friedlander Organizati.on summary judgment, holding that the Policy is valid and covered the

Friedlander Organization's claim. 'fhereafler, the Friedlander Organization and Liberty reached

a settlement.

While the Friedlander Organization and Liberty were litigating, the Friedlander

Organtzation commenced the instant action against Burke, the Friedlander Organization's

counsel in connection with the bridge-loan tlansaction. The essence of the F'riedlander

Organizatton's purpoded legal malpractice cause of action is that the Friedlander Organizatton

could not recover under the Policy because Burke did not adhere to the Friedlander

Organization's direction to ensure that the $2,000,000.00 Policy named the Friedlander

Organization as an "additional insured." This Courl's decision that the Policy does, in fact,

cover the Friedlander Organization's claim against Ayorinde and Ayorinde PC extinguished any

malpractice claim relating to Burke's alleged failure to ensure that the Policy covered the

F-ri edl ande r O r ganrzatton.

7 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

Now, the Friedlander Organrzation ostensibly claims that, had Burke succeeded in

naming the Friedlander Organizatron as an "additional insured" under the Policy, Liberly would

have immediately paid the Friedlander Organrzation $2,000,000.00 when it made the insurance

claim, and the Friedlander Organization would not have incurred legal fees. This new argument

is unpled, has no basis in reality, and ignores insurance law and practice.

Under New York law, an insurer may rescind an insurance policy ab initio if the insured

procures it through material misrepresentations. If a policy is rendered votd ab initio, it is void

aslo all insureds, including those who are unaware of the misrepresentations. By definition, an

"additional insured" enjoys the same protection as the named insured. An "additional insured"

has no greater rights than the named insured. Thus, if a Court rescinds an insurance policy, an

"additional insured" cannot obtain coverage under that policy.

The Friedlander Organrzatton cannot demonstrate that, but for Burke's alleged failure to

ensure that Friedlander was named as an "additional insured" under the Policy, the Friedlander

Organiz.ation would have recovered $2,000,000.00 under the Policy without having to pay legal

fees, because the Friedlander Organization's entitlement to coverage under the Policy would

have nevertheless turned on whether the Policy was valid, Liberty declined to indemnify the

Friedlander Organization and brought an action to rescind the Policy ab initio because it claimed

that Ayorinde made material misrepresentations in his application for a professional liability

insurance policy. According to Liberty, the fact that the Policy was issued on the same date as

the escrow agreement relating to the bridge-loan transaction also showed that the Policy was

procured by fraud. Furthermore, Liberty claimed that Ayorinde's failure to return the funds to

the Friedlander Organrzation was an intentional act that is not covered under the Policy. Liberty
3

8 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

and the Friedlander Organizalion litigated until this Courl granted the Friedlander Organization

summary judgment, determinin g that the Policy was valid and did, in fact, cover the Friedlander

Organization's claim against Ayorinde and Ayorinde PC.

Ilven assuming that the Friedlander Organization had been named as an "additional

insured" under the Policy, Liberty would not have simply paid the Friedlander Organtzatron

$2,000,000.00. It would have sought rescission and made the same arguments because, under

the well-settled law, no one would have been covered under the Policy if Liberty succeeded.

Burke's expert witness Andrew L. Margulis, Esq., opines that Liberty, in keeping with insurance

company practice, would have nevertheless challenged the Policy's validity and embroiled the

Friedlander Organization in a coverage battle requiring legal fees. Accordingly, the Friedlander

Organizatron cannot prove proximate cause in its new, unpled claim for legal fees, and the Court

should grant Burke summary judgment and dismiss the legal malpractice cause of action.

The Courl should also grant Burke summary judgment on the Friedlander Organization's

second and third causes of action for breach of fiduciary and negligent misrepresentation,

respectively. Those causes of action are based upon the same allegations as the legal malpractice

cause of action and asseft the same damages. The breach of hduciary duty and negligent

misrepresentation causes of action should, therefore, be dismissed as being duplicative of the

legal malpractice cause of action.

9 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

STATEMENT OF FACTS

In its Complaint in this action, the Friedlander Organization alleges causes of action

against Burke for (1) legal malpractice; (2) breach of fiduciary duty; and (3) negligent

misrepresentation. A copy of the Complaint is annexed to the Affirmation of James D'
cc6.t'2
Spithogiannis dated August 8,2017 ("spithogiannis Aff."), as Exhibit

Burke served a Verified Answer to the Complaint on or about February 25,2014 (the

"Verified Answer"). A copy of the Verified Answer is annexed to the Spithogiannis Aff. as

Exhibit "8." In the Verified Answer, Burke denies the substantive allegations in the Complaint

and asserts affirmative defenses (See Exhibit "B").

As a result of Ayorinde's failure to return to the Friedlander Organization escrowed funds

in the amount of $2,100,000.00 under an Escrow Agreement entered into as of June 18,2008

(the "Escrow Agreement"), the Friedlander Organizatton commenced an action entitled, The

FriedlanrJer Organization, LLC v. Akintayo Abimbola Ayorinde, et al.,lndex No. 23081/08 (the

"2008 Action"), in the Supreme Courl of the State of New York, County of Nassau, to recover its

funds. A copy of the Escrow Agreement is annexed to the Spithogiannis Aff. as Exhibit "C." A

copy of the summons and verified complaint in the 2008 Action is annexed to the Spithogiannis

Aff. as Exhibit "D."

By Short Form Order dated March 23,2011 (the "20ll Order"), the I{onorable Thomas

A. Adams granted the Friedlander Organization summary judgment against Ayorinde and

Ayorinde PC. A copy of the 2011 Order is annexed to the Spithogiannis Aff. as Exhibit "E."

The Court found that, under the Escrow Agreement, Ayorinde "was obligated . . . to remit fthe

'A copy of the Summons with Notice and a copy of Burke's Demand for Complaint in this action are annexed to the
Spithogiannis Aff. as Exhibits "R" and "S", respectively.
5

10 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

$2,100,000.001 directly to Plaintiff Friedlander upon the failure of the relevant parlies to

complete their underlying transaction" (See Exhibit "8" at p. 3). By failing to deliver the
$2,100,000.00 to the Friedlander Organization, which "was unquestionably entitled to the
moneyf,]" Ayorinde "failed to comply with the binding agreement" (See Exhibit "E" at p. 3).

Justice Adams then issued a Judgment dated April i 8,2011, ordering that the Friedlander

Organization recover from Ayorinde and Ayorinde PC, joint and severally, the amount of

$2,100,000.00, with interest from July 17,2008 (See a copy of the April 18,2011 Judgment,

which is annexed to the Spithogiannis Aff. as Exhibit "F"). The Court issued an Amended

Judgment dated April 17, 2072. A copy of the Amended Judgment is annexed to the
Spithogiannis Aff, as Exhibit "G."

Even before Justice Adams granted the Friedlander Organizatton summary judgment and

issued a Judgment and Amended Judgment against Ayorinde and Ayorinde PC, Liberty, on or

about December 23, 2070, commenced an action against entitled, Liberty Insurance
(Jnderutriters, Inc. v. Akin Ayorinde and Akin Ayorinde, P.C.,Index No. 31295110, in the

Supreme Court of the State of New York, County of Kings (the "2010 Action"). In the 2010

Action, Liberly assefted causes of action (1) to rescind the Policy on the basis that Ayorinde

made a matertal misrepresentation in his insurance application; (2) for a judgment declaring to

Liberty has no coverage obligations for any claims asserted under the Policy; and (3) for the

return or reimbursement of all sums paid or which may be paid by Liberty in providing a defense

to Ayorinde and Ayorinde PC (See a copy of the complaint in the 2010 Action, which is annexed

to the Spithogiannis Aff. as Exhibit "H"). In the 2010 Action, I-iberty also asserted claims for

alternative relief (See Exhibit "FI").
6

11 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

The insurance application referenced in the complaint in the 2010 Action is a "Lawyers

Professional Liability Application - New York" (the "Application") that Ayorinde executed and

delivered to Liberly on June 5, 2008 (See a copy of the Application, which is annexed to the

Spithogiannis Aff. as Exhibit "I', atp.4).

Based on the Application, Libefty, on June 18, 2008, issued the Policy to Ayorinde. A

copy of the Policy is annexed to the Spithogiannis Aff. as Exhibit "J." Prior to effective date of

the Esorow Agreement, Burke obtained a copy of a Cerlificate of Insurance that purported to

prove that Ayorinde and Ayorinde PC had professional liability coverage in the amount of

$2,000,000,00 (See the Affidavit of Jessie James Burke sworn to on the 7th day of August, 2017

("Burke Affidavit") , at I 4). The Cerlificate of Insurance is incorporated as Schedule "C" to the

Escrow Agreement (See Exhibit"C" at FR 000461-000462).

in the section of the Application entitled, "7. Claims, Incidents & Disciplinary Actions,"

Ayorinde checked the "No" box in response to the question asking whether any lawyer to be

insured under the policy has "knowledge of any circumstance, act, effor, or omission that could

result in a professional liability claim?" (See Exhibit"I" at p. 3). Yet, on or about April 6,2070,

an Indictment (the "Indictment") was hled by the United States of America against Ayorinde,

alleging that Ayorinde participated in a morlgage fraud scheme from in or about January 2005

through May 2007 (See a copy of the Indictment, which is annexed to the Spithogiannis Aff. as

Exhibit "K"). On or about April 16, 2010, Ayorinde pleaded guilty to Count 1 of the Indictment

charging him with conspiracy to commit bank fraud and wire fraud (See a copy of the transcript

of Ayorinde's plea, which is annexed to the Spithogiannis Aff. as Exhibit "L"). Based on the

Indictment and the plea, Liberty concluded that Ayorinde, on June 5,2008, did, in fact, have
1

12 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

knowledge of circumstances, acts, errors, and omissions that could have resulted in a

professional liability claim. Liberty concluded that Ayorinde made a material misrepresentation

and non-disclosure in the Application and sought to rescind the Policy on that basis (See Exhibit

"H" at lTlT 16-23),

After Ayorinde failed to satisfy the Amended Judgment, the Friedlander Organization

commenced a direct action against Liberly in the Supreme Courl of the State of New York,

County of Nassau, entitled T'he Friedlander Organization, LLC v. Liberty Insurance

(Jnderwriters, Inc., bearing Index No. 1327612011 (the "2011. Action"), to recover under the

Policy. A copy of the Summons and Verified Complaint in the 2011 Action is annexed to the

Spithogiannis Aff. as Exhibit "M." The Friedlander Organtzation also intervened in the 2010

Action. The 2010 Action was transfened to the Supreme Court of the State of New York,

County of Nassau, under Index No. 614112. Both the 2010 Action and the 2011 Action came

before the Honorable Stephen A. Bucaria.

Liberty moved for summary judgment on its claims for rescission, for a judgment

declaring no coverage, and for reimbursement of fees, and to dismiss Friedlander's direct action.

By Shorl Form Order dated February 6,2014, Justice Bucaria denied Liberly's motion on the

ground that the question on the Application regarding "knowledge of a professional liability

claim is ambiguous in these circumstances" (See a copy of the February 6, 2014 Short Form

Order ("February 2014 Order"), which is annexed to the Spithogiannis Aff. as Exhibit "N," at p'

4). Liberly appealed from the February 2014 Oder, and the Appellate Division, Second

Department, affirmed (See a copy of the Second Department's September 16,2015 Opinion,

which is annexed to the Spithogiannis Aff. as Exhibit "O").
8

13 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

Liberly then moved to renew its summary judgment motion on the ground that

Ayorinde's misconduct as an escrow agent is not covered under the Policy, and his misconduct

also fell under the Policy exclusion for dishonest and deliberate acts. The Friedlander

Organrzatron moved for summary judgment on its direct claim based on Liberty's failure to pay

the Amended Judgment. A copy of Justice Bucaria's February 4, 2075 Short Form Order

("February 2015 Order") deciding the motions is annexed to the Spithogiannis Aff. as Exhibit

"P." Justice Bucaria denied both motions (See Exhibit "P").

The Friedlander Organization and Liberty both moved to renew and reargue their

summary judgment motions. Based on the afhdavits of Eric Friedlander and Ayorinde in the

2008 Action, Justice Bucaria, by Shorl Form Order dated October 7, 2015 ("October 2015

Order"), concluded that the Friedlander Organrzalion carried its burden "to establish prima facie

that Ayorinde's release of the esclowed funds was in good faith[,]" and, therefole, was covered

under the Policy (S_ee a copy of the October 2015 Order, which is annexed to the Spithogiannis

Aff. as Exhibit "Q," at p. 5). The burden then shifted "to l,iberty to offer evidence of a triable

issue as to whether Ayorinde acted in good faith" (See Exhibit "Q" at p. 5).

In evaluating Liberty's proof, the Court determined that "[t]he evidence submitted by

Liberty, namely that Ayorinde was convicted of unrelated criminal activity and that the policy

became effective on the same date as the escrow agreement, does not establish a triable issue as

to whether Ayorinde acted in good faith" (See Exhibit "Q" at p. 5). Accordingly, Justice Bucaria

held that the Policy covered the Friedlander Organization's claim and granted the Friedlander

Organrzation summary judgment against Liberty (See Exhibit "Q" at pp. 5-6). Liberty and the

Friedlande r Or ganization subsequently reached a settlement,
9

14 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

In the Complaint dated December 24, 2013, the F'riedlander Organizatron alleges that, as

a condition precedent to entering into the bridge-loan transaction, it "directed and instructed"

Burke to "ensure that Ayorinde and Ayorinde PC had secured a Lawyers Professional

Liability Policy with coverage in the amount of $2,000,000.00" that "specifically name[d]

plaintiff as an additional insured" (See Exhibit "A" at fl 9). According to the Complaint, Burke

failed to ensure that the Policy named the Friedlander Organization as an additional insured and,

as a result, the Policy did not cover the Friedlander Organization's loss (See Exhibit "A" at lffl

14,19).

The October 2015 Order mooted the Friedlander Organization's claim that Burke failed

to ensure $2,000,000.00 in coverage for the Friedlander Organization because Justice Bucaria

held that the Policy covers the Friedlander Organization's loss (See Exhibit "Q" at pp. 5-6).

'fhe Friedlander Organizatron did not amend its Complaint following the issuance of the

October 2015 Order. The Friedlander Organization, however, has ostensibly adjusted its

purported malpractice claim to contend that, had Burke ensured that the Friedlander

Organization was named in the Policy as an additional insured, (i) Liberty would have

immediately paid the Friedlander Organization $2,000,000.00 upon Ayorinde's failure to satisfy

the Amended Judgment; (ii) Liberly would not have challenged the Friedlander Organization's

right to the $2,000,000.00 Policy limit; and (iii) the Friedlander Organrzation would not have

incurred legal fees in the process.

15 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

ARGUMENT

To prevail on a summary judgment motion, the movant must make a prima facle showing

of entitlement to judgment as a matter of law, "tendering sufficient evidence to demonstrate the

absence of any material issues of fact." Alvarez v. Prospect Hosp., 68 N.Y.2d 320,324, 501

N.E.2d 572,574,508 N.Y.S.2d923,925 (1986) (citations omitted). Where, as here, there is no

triable issue of fact, and a plaintiff is unable to prove an essential element of its case, a grant of

sumrnary judgment is proper, See Kornfeld v. NRX Techs.. Inc., 62 N.Y.2d 686, 688, 465

N.E.2d 30, 31, 476 N.Y.S.2d 523,524 (1984); Greco v. First Union Nat'l Bank Corp., 267

A.D.2d 278,278-79,701N.Y.S.2d 93,94 (2d Dep't 1999); Qrrn Y q Ko v. Lincoln Sav Rnnk

99 A.D.2d 943,473 N.Y.S.2d 391 (lst Dep't 1984), aff d, 62 N.Y,2d 938,468 N.E.2d 51,479

N.Y,S.2d 2r3 (1984).

il'o defeat a motion for summary judgment, a party must "assemble and lay bare its

affirmative proof to demonstrate that genuine triable issues of fact exist. " Kornfeld v. NRX

'fechs.. Inc.,93 A.D.2d772,J73,461 N.Y.S.2d342,343 (Lst Dep't 1983), af?d,62N.Y.2d686,

465 N.E.2d 30,476 N.Y.S.2d 523 (1984). Moreover, "the issue must be shownto be real, not

feigned since a sham or frivolous issue will not preclude summary relief." Id. at 773, 46I

N.Y.S.2d at 343-44 (citations omitted). Thus, a pafiy opposing summary judgment cannot rest

on "[m]ere conclusory assertions, devoid of evidentiary facts" or upon "surmise, conjecture or

speculation." v. .Iohnson Prods 95 A.D.2d 675, 676,463 N.Y.S.2d 464, 466 (lst

Dep't 1983) (citations omitted)

16 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

"To recover damages for legal malpractice, a plaintiff must prove (1) that the defendant

attorney failed to exercise that degree of care, skill, and diligence commonly possessed by a

member of the legal community, (2)that the attorney's conduct was the proximate cause of the

loss sustained, (3) that the plaintiff sustained damages as a direct result of the attorney's actions,

and (4) that the plaintiff would have been successful in the underlying action had the attorney

exercised due care." Kazmierczuk & 15 A.D.3d 526, 527, 790 N.Y.S.2d

219,220 (2d Dep't 2005) (citations omitted)

In a legal malpractice action, "'[a] defendant moving for summary judgment . . . must . . .

establish prima facie that the plaintiff cannot prove at least one of the essential elements of the

malpractice claim."' KI & Woo LLP 138 A.D.3d 920, 92r, 30 N.Y.S.3 d 220, 223

(2d Dep't 2016) (quoting Wra), v. Mallilo & Grossman, 54 A.D.3d 328,329,863 N.Y.S.}d228,

229 (2d Dep't 2008)) (other citations omitted).

T'o satisfy the essential element of proximate cause, a pafty must establish that "but for"

the attorney's negligence, he or she would not have sustained any damages. Felix, 138 A.D.3d at

921,30 N.Y.S.3d at223 (citations omitted). "fM]ere speculation about a loss resulting from an

attorney's alleged omission is insufficient to sustain a prima facie case of legal malpractice."

Barbieri v. Fishoff, 98 A.D.3d 703, 105, 950 N.Y.S.2d 384, 385 (2d Dep't 2012) (internal

quotations omitted) (citations omitted) (granting defendant's motion to dismiss the complaint

where plaintiff s legal expert's affidavit merely presented a speculative and conclusory opinion).

See also, Kemp v. Frommer & Cerrato. LLP., No. 600652112,2014 WL 344983 (Trial Order), at

*2 (Sup. Ct. Nassau County Jan. 31,2014) (denying plaintiff pafiial summary judgment on the

issue of liability because "plaintiffls motion [wa]s silent with respect to addressing whether 'but
12

17 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

for' the defendants' negligence, he would have not sustained any damages") (citing Rudolf v.

Shavne. Dachs. Stantsct . Corker & Sauer. 8 N.Y.3d 438 , 867 N.E.2d 385, 835 N.Y.S.2d 534

(2007))

The Courl should grant Burke summary judgment because Burke did not proximately

cause the Friedlander Organtzalron to incur actual and ascertainable damages. Even if the

Friedlander Organization had been named as an "additional insured" under the Policy, Liberty

would have sought to rescind the Policy and would have compelled the Friedlander Organtzatron

to incur legal fees. Under the well-settled case law, a material misrepresentation on an insurance

application renders the insurance policy void ab initio, and none of the insureds, including

"additional insureds," can enjoy coverage under the policy. Thus, regardless of the Friedlander

Organizatton's status, I-iberly would have contended that the Policy is void. The Friedlander

Organrzalton's causes of action for breach of fiduciary duty and negligent misrepresentation

should also be dismissed because they are duplicative of the legal malpractice cause of action.

Accordingly, the Courl should dismiss the Complaint in its entirety, with prejudice.

POINT I
THE LEGAL MALPRACTICE CAUSE OF ACTION SHOULD
BE DISMISSED BECAUSE, EVEN IF THE FRIEDLANDER
ORGANIZATION HAD BEEN NAMED AS AN "ADDITIONAL
INSURED'' UNDER THE POLICY, LIBERTY WOULD HAVE
SOUGHT TO RESCIND THB POLICY, AND THE FRIEDLANDER
ORGANIZATION WOULD HAVE NBVERTHELESS INCURRED
LEGAL FEES TO OBTAIN THIS COURT'S DETERMINATION
THAT THE P ICY WAS VALID AND COVERED ITS CLAIM

In terms of representations by an insured to an insurer, "[a] misrepresentation is a false

representation, and the facts misrepresented are those facts which make the representation false'"

18 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

N.Y. Ins, Law $ 3 i 05(a). "A misrepresentation is material if the insurer would not have issued

the policy had it known the facts misrepresented." Interboro Ins. Co. v. Fatmir, 89 A,D.3d 993,

994,933 N.Y.S.2d 343,345 (2d Dep't 20lI) (citing N.Y. Ins. Law $ 3105(b)) (other citations

omitted).

In New York, it is well-settled that "material misrepresentations made in an application

for an insurance policy renders the policy void ad initio." INA Underwriters Ins. Co. v. D.H.

Forde & Co., P.C., 630 F. Su pp.76,77 (W.D.N.Y. 1985) (citing E. Dist, Piece Works. Inc

v. 'fravelers Ins. Co., 234 N.Y. 441,138 N.E. 401 (1923)) (other citations omitted)

"fW]hen an insurance policy is void ab initio based on material misrepresentations in the

application, it is as if the policy never came into existence, and an insured cannot create coverage

by relying on the terms of a policy that never existed." Precision Auto Accessories. Inc. v. Utica

First Ins. Co 52 A.D.3d 1198, 1201, 859 N.Y.S.2d 799,802 (4th Dep't 2008) (citing Taradena

v. Nationwide Mut. Ins. Co. ,239 A.D.2d 876, 877, 659 N.Y.S.2d 646, 647 (4th Dep't 1997));

see also, l'yras v. Mount Vernon Fire Ins. Co., 36 A,D.3d 609,670, 828 N.Y.S.2d 448,449 (2d

Dep't 2007).

"If a policy was procured through a material misrepresentation, the insurer may rescind

an insurance policy as to all insureds-even those insureds with no knowledge of any

misrepresentation." Cont'l Cas. Co. v. Marshall Graneer & Co.. LLP , 921 F. Supp.2d 1 I 1, 1 19-

120 (S.D.N .Y .2013) (emphasis added) (citations omitted).

An "additional insured" is "'an entity enjoying the same protection as the named
insured."' Kassis v. Ohio Cas. Ins. Co- 12 N.Y.3d 595 , 599-600,913 N.E.2d 933, 934, 885

19 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

N.Y.S.2d 241,242 (2009) (quoting Pecker Iron Works of N.Y.. inc. v. Traveler's Ins, Co.,99

N.Y.2d 391, 393,786 N.E.2d 863, 864,756 N.Y.S.2d 822, 823 (2003) (emphasis in Kassis )

Critically, "'additional' insureds, by definition, must exist in addition to something; namely, the

named insureds in a valid existing policy." Admiral Ins. Co. v. Jov Contractors. Inc,, l9 N.Y.3d

448,461,972N.F,.2d 103, 110,948 N.Y.S.2d 862,869 (2012) (emphasis in original).

If an insurer seeks rescission, and a Court rescinds the policy ab initio, there is no valid,

existing policy, and, accordingly, an additional insured cannot obtain coverage under the policy.

Meah v. A. Aleem Constr., Iqc., 105 A.D.3d 1017,1020, 963 N.Y.S.2d714,717 (2d Dep't 2013)

(citing Admiral Ins. Co., supra); see also, Siri rrs Am- Tns- Co. v Rrrrlinrrfnn Tns Co 8l A.D.3d

562, 563,917 N.Y.S .2d 192,193 (1st Dep't 20ll) (finding purported additional insured's claim

for coverage "unavailing" because "the policy was void ab initio on account of material

misrepresentations made . . . in the application process to procure insurance"); LBW Enters..

LLC v. Arch Speqlabll4ilQa., No. 114482010,2013 WL 10937457 (Trial Order), at *2 (Sup.

Ct. N.Y. County Jan. 11,2073) (holding that insurer was not required to cover party as additional

insured under the subject policy because the policy was void as a result of a material
misrepresentation that the insured made in its insurance application) (citing Admiral Ins. Co.,

supra).

In this case, the Friedlander Organization cannot demonstrate that, but for Burke's

conduct, the Friedlander Organization would not have incurred legal fees. Liberty sought to

rescind the Policy because it contended that Ayorinde made material misrepresentations on the

Application by failing to disclose his mortgage-fraud scheme (See Exhibits "FI," "I," "K," and

"L"). If Liberty succeeded on that argument, the Policy would have been rendered vord ab
l5

20 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 08/08/2017

initio, and no insured would have enjoyed coverage under the Policy. Even if the Friedlander

Organization had been named as an "additional insuted" under the Policy, Liber-ty would have

nevertheless sought to rescind the Policy because, had Liberty succeeded on its rescission

argument, the Friedlander Organization would have no rights under the Policy.

Andrew L. Margulis, Esq,, opines that Liberty, in keeping with insurance company

practice and the well-settled case law, would have declined to pay the Friedlander Organization's

claim under the Policy and would have sought to rescind the Policy either unilaterally or through

litigation, regardless of the Friedlander Organization's "additional-insured" status (See the

Affidavit of Andrew L. Margulis, Esq., sworn to on the 8th day August, 2017 ("Margulis Aff."),

at fl 6). The Friedlander Organizatron would have, therefore, been compelled to incur legal fees

to seek a determination that the Policy was not void ab initio and covered its claim against

Ayorinde and Ayorinde PC (See Margulis Aff. fl 6). Accordingly, the Friedlander Organrzatton

cannot prove the essential element of proximate cause on its new legal-fees claim, and,

accordingly, its legal malpractice cause of action should be dismissed.

POINT II
THE FRIEDLANDER ORGANIZATION'S SECOND AND
THIRD CAUSBS OF ACTION FOR BREACH OF FIDUCIARY DUTY
AND NEGLIGENT MISREPRESENTATION, RESPBCTIVELY,
SHOULD BE DISMISSED BECAUSE THBY ARISE OUT
OF THE SAME ALLEGATIONS AS THE LEGAL MALPRACTICE
CA T]SE OF ACTION AND DO NOT ALLEGE DISTINCT DAMAGES

The Friedlander Organrzatron's second and third causes of action are duplicative of the

Friedlander Organization's legal malpractice cause of action. The cause of action for breach of

fiduciary duty (see Exhibit 66,{" at flfl 20-23) and the cause of action for negligent

21 of 24
FILED: NASSAU COUNTY CLERK 08/08/2017 12:52 PM INDEX NO. 006350/2013
NYSCEF DOC. NO. 38

Case Info

Judge

Stephen Bucaria Track Judge’s New Case

Case No.

(Subscribe to View)

Document Filed Date

August 08, 2017

Case Filing Date

May 24, 2013

County

Parties

COLAVITA, ANTHONY P. Attorney for the Defendant
COLAVITA, ANTHONY P. Attorney for the Defendants
HIRSCHEL, DANIEL E Attorney for the Plaintiff
Jesse James Burke Defendant
JESSE JAMES BURKE, P.C. Defendant
SPITHOGIANNIS, JAMES DAVID Attorney for the Defendants
THE FRIEDLANDER ORGANIZATION LLC Plaintiff
CHAIM LIECHTUNG Attorneys for Plaintiffs
ANDREW MARGULIS Attorney
JESSIE BURKE Attorneys for Plaintiffs
EDWARD MCCABE Attorney
JOHN LEARY Attorney
AKINTAYO AYORINDE Attorney

For full print and download access, please subscribe at https://www.trellis.law/.

Motion-Secondary: The Friedlander Organization Llc v. Jesse James Burke, Jesse James Burke, P.C.

Preview

Case Info

Parties