Marcus & Co., LLP v. Abraham, 2009 NY Slip Op 32428(U) (N.Y. Sup. Ct. 10/6/2009)

Page 1

2009 NY Slip Op 32428(U)

MARCUS & COMPANY, LLP, Plaintiff/Counterclaim-Defendant, v. GIDEON ABRAHAM, Defendant/Counterclaim-Plaintiff.

No. 2864/09

Motion Sequence #1

Supreme Court, Nassau County.

October 6, 2009.

Wilson, Elser, Moskowitz, Edelman & Dicker LLP New York, NY, Attorneys for Plaintiff.

Nathan M Ferst, Esq, New York, NY, Attorney for Defendant.

WILLIAM R. LAMARCA, Judge.

Requested Relief

Counsel for plaintiff, MARCUS & COMPANY, LLP (hereinafter referred to as "MARCUS"), moves for an order, pursuant to CPLR §3211(a)(1)(5) and (7), dismissing defendant's counter-claim in its entirety. Counsel for defendant, GIDEON ABRAHAM, opposes the motion which is determined as follows:

Background

This litigation was commenced by MARCUS, on February 18, 2009 with the filing of the summons and verified complaint, and seeks to recover the sum of $39,481.75 for professional consulting and valuation services rendered to the defendant in connection with a matrimonial action, based upon breach of contract, unjust enrichment and an account stated. Moving counsel states that, in accordance with the February 20, 2006 Retainer, ABRAHAM agreed to pay MARCUS for the work, labor and services performed on an hourly basis, and to reimburse MARCUS for out of pocket expenses. By verified answer, dated April 3, 2009, ABRAHAM asserted a counter-claim for professional negligence. In essence, ABRAHAM alleged that MARCUS failed and neglected to perform his services in a proper and skillful manner and negligently failed to make known defendant's full liabilities in the divorce action, which resulted in a greater burden to defendant as a result of plaintiffs negligence. He claimed damages in the sum of $500,000.

Moving counsel alleges that the Retainer, in pertinent part, provided that "[a]ny action proceeding or claim by you arising out or in relation to this agreement or the services performed hereunder, must be brought, if at all, within twelve (12) months after the claim accrued or the termination of the firm's services, whichever shall sooner occur". Exhibit "C" to the moving papers ¶ 7.3. It is plaintiff's position that the counter-claim is untimely and that ABRAHAM is contractually barred from asserting same. It is alleged that MARCUS' representation of defendant terminated on September 4, 2007 and that any cause for professional malpractice had to have been commenced prior to September 4, 2008. The counter-claim herein was interposed on April 3, 2009.

Additionally, counsel for plaintiff claims that ABRAHAM has no standing to bring the counter-claim because he failed to disclose said "asset" in the bankruptcy proceeding that he commenced on September 20, 2007. It appears that ABRAHAM filed a voluntary petition for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court, Southern District, and listed his assets and liabilities as of September 20, 2007, which did not include a claim for professional negligence. Counsel for MARCUS asserts that the failure to list the malpractice claim as an asset deprived ABRAHAM of legal capacity to later pursue the malpractice action, citing Whelan v Longo, 7 NY3d 821, 822 NYS2d 751 (2006). Counsel points out that, while ABRAHAM listed MARCUS as a creditor in the bankruptcy proceeding, he failed to list any claim against MARCUS, despite the fact that the facts comprising the claim existed at the time of the bankruptcy petition. It is MARCUS' position that, despite the dismissal of the bankruptcy action in December 2008, the failure to disclose the malpractice claim on the bankruptcy petition, a sworn petition under the penalty of perjury, deprives him of a later right to sue on it.

Finally, counsel for MARCUS contends that the complaint fails to state a cause of action. Counsel states that claimant must plead and then prove how MARCUS departed from commonly accepted accounting standards and the manner in which the departure proximately caused the injuries, citing Herbert H. Post & Co. v Sidney Bitterman, Inc., 219 AD2d 214, 639 NYS2d 329 (1^st Dept. 1996); Hamilton Textiles v Estate of Mate, 269 AD2d 214, 703 NYS2d 451 (1^st Dept. 2000); Estate of Burke v Peter J. Repetti & Co., 255 AD2d 283, 680 NYS2d 645 (2^nd Dept. 1998). Counsel asserts that the counter-claim against MARCUS is so devoid of the necessary factual predicates for professional malpractice that the counter-claim must be dismissed.

In opposition to the motion to dismiss, ABRAHAM claims that he relied upon his matrimonial attorney in the selection of a forensic accountant, and that he was told that MARCUS was highly skilled and experienced in the field and that he signed the Retainer without reading it. He urges that MARCUS should be equitably estopped from asserting the statute of limitations or relying on the retainer letter. ABRAHAM contends that, contrary to plaintiffs claim that his services ended on September 4, 2007, the retainer required that a written letter be sent terminating services, which notice was never given. Next, ABRAHAM suggests that the filing of the Bankruptcy Petition stays all deadlines and, therefore, his year to assert a counter-claim commenced in December 2008 (when the Bankruptcy action was dismissed), and would have ended in December 2009 (one year statute of limitations), which makes his counter-claim of April 2009 timely. Further, ABRAHAM states that he is advised that the dismissal of the Bankruptcy Petition, re-vests all property and claims to him, which continue as if he never filed bankruptcy, including his claim against MARCUS. Finally, ABRAHAM asserts that the three (3) elements of negligence- a duty of care, an act comprising negligence and damages- can be found in his complaint. In his affidavit in opposition to the motion, not in the pleadings, he claims that he personally borrowed $400,000.00 from HSBC, which MARCUS failed to disclose as a liability to the Court appointed forensic accountant in the divorce proceeding. As a result, ABRAHAM states that the Court at trial refused to permit this liability to be introduced into evidence, resulting in a much larger judgment and ongoing liability to ABRAHAM, which he claims was MARCUS' fault. Also in his affidavit, ABRAHAM requests that, if the Court finds that the counter-claim is insufficiently plead, that he be granted leave to amend his counter-claim and plead same as an affirmative defense and counter-claim.

Afer a careful reading of the submissions herein, the Court rejects the arguments made by ABRAHAM in opposition to the motion. ABRAHAM does not contest that all services rendered by MARCUS ended in September 2007. As the retainer agreement provided that all claims against MARCUS had to be brought "within twelve (12 months after the claim accrued or the termination of the firm's services, whichever shall sooner occur" (emphasis supplied), the failure of MARCUS to send a termination of services letter is not...