JONES LAW FIRM v. SYNERGY GREEN INC (2026)

Order, Supreme Court, New York County (Lyle E. Frank, J.), entered March 29, 2024, which denied the motion of plaintiff/third-party defendant and third-party defendant Tanner Jones (together, appellants) to dismiss defendants' claims against them, unanimously affirmed, without costs.  Appeal from order, same court and Justice, entered July 26, 2024, which denied the motion of plaintiff' and third-party defendant Jones to reargue their motion to dismiss, unanimously dismissed, without costs, as taken from a nonappealable order.

The court properly concluded that the counterclaims and third-party complaint state causes of action for fraud (see generally Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 151 A.D.3d 83, 85, 56 N.Y.S.3d 21 [1st Dept. 2017], affd 31 N.Y.3d 569, 81 N.Y.S.3d 816, 106 N.E.3d 1176 [2018]).  Defendants' causes of action allege that at the time defendants signed an engagement agreement with plaintiff in 2021, plaintiff failed to disclose the close relationship its principal, third-party defendant Tanner Jones, had with the arbitration forum chosen to handle fee disputes, third-party defendant Professional Arbitration and Mediation LLC (PAM).  Defendants allege that in the fee arbitration plaintiff instituted against them, they had no input in the selection of the arbitrator, third-party defendant David Treyster, Esq. After Treyster rendered a decision awarding plaintiff $118,796.04 without a hearing, defendants learned that Treyster had a prior relationship with Jones and had been represented by Jones, that Jones had an interest in PAM, and that plaintiff and PAM shared an address in New York. At this pleading stage, appellants have failed to establish that their misrepresentations or omissions were immaterial (see Roni LLC v. Arfa, 74 A.D.3d 442, 445, 903 N.Y.S.2d 352 [1st Dept. 2010], affd 18 N.Y.3d 846, 939 N.Y.S.2d 746, 963 N.E.2d 123 [2011];  cf.  Gaidon v. Guardian Life Ins. Co. of Am., 94 N.Y.2d 330, 350, 704 N.Y.S.2d 177, 725 N.E.2d 598 [1999]).

Defendants also adequately allege damages, insofar as it can be inferred from the counterclaims that, had they known the truth about the relationship, they would not have hired plaintiff (cf.  Connaughton v. Chipotle Mexican Grill, Inc., 135 A.D.3d 535, 538, 23 N.Y.S.3d 216 [1st Dept. 2016], affd 29 N.Y.3d 137, 53 N.Y.S.3d 598, 75 N.E.3d 1159 [2017]).  We have considered and rejected appellants' argument that defendants' claims constitute breach of contract damages (cf.  Mañas v. VMS Assoc., LLC, 53 A.D.3d 451, 454, 863 N.Y.S.2d 4 [1st Dept. 2008]).

Defendants also adequately alleged ascertainable damages in their malpractice claim by alleging that plaintiff's conduct with respect to actions in Nassau County and the Eastern District of New York, as well as in an earlier arbitration before JAMS, exposed them to fee-shifting and rendered them unable to prove damages, forcing them to settle the matters on unfavorable terms (see generally Dweck Law Firm v. Mann, 283 A.D.2d 292, 293, 727 N.Y.S.2d 58 [1st Dept. 2001]).  Whether plaintiff sought to remedy any defects in the arbitration is a question of fact not resolvable at this pleading stage.

Furthermore, defendants sufficiently alleged damages in their Judiciary Law § 487 claims (Amalfitano v. Rosenberg, 12 N.Y.3d 8, 13, 874 N.Y.S.2d 868, 903 N.E.2d 265 [2009];  Garanin v. Hiatt, 219 A.D.3d 958, 958–960, 195 N.Y.S.3d 511 [2d Dept. 2023]).  A claim under Judiciary Law § 487 must be supported by an allegation of damages proximately caused by an alleged false statement to the court (Saporito v. Branda, 213 A.D.3d 588, 589, 185 N.Y.S.3d 12 [1st Dept. 2023]).  Defendants specifically allege that they suffered damages in the form of legal fees incurred while defending the Article 75 summary proceeding which plaintiff initiated under false pretenses to confirm the PAM arbitration award obtained through plaintiff's deceitful conduct (Amalfitano, 12 N.Y.3d at 13, 874 N.Y.S.2d 868, 903 N.E.2d 265;  Garanin, 219 A.D.3d at 958–960, 195 N.Y.S.3d 511).

Defendants' collateral estoppel arguments fall outside the scope of the orders appealed from and do not concern the adequacy of their pleadings.  Finally, the order denying reargument is not reviewable, as it did not grant reargument or address the arguments on the merits (see Matter of Quinn, Emanuel, Urquhart & Sullivan, LLP v. AVRA Surgical Robotics, Inc., 224 A.D.3d 557, 558, 203 N.Y.S.3d 608 [1st Dept. 2024]).