MINTZ FRAADE LAW FIRM v. FEDERAL INSURANCE COMPANY (2021)

Order, Supreme Court, New York County (Melissa A. Crane, J.), entered January 9, 2020, which, to the extent appealed from as limited by the briefs, granted defendant's motion to dismiss the complaint in its entirety, unanimously affirmed, without costs.

Plaintiff law firm lacks standing to recover its legal fees under the insurance policy, to which it is not a named party (Miller & Wrubel, P.C. v. Todtman, Nachamie, Spizz & Johns, P.C., 106 A.D.3d 446, 965 N.Y.S.2d 408 [1st Dept. 2013]).  Plaintiff was merely an “incidental beneficiary to its client's malpractice insurance policy” (id.).  Thus, the motion court properly found that plaintiff's sole recourse was against the insured, its client, and not its client's insurance provider.

Plaintiff's argument that it had a direct contract with defendant on account of the various correspondence between itself and one of defendant's employees also fails.  Indeed, these letters merely confirm, consistent with the policy's requirement that the insurer's consent of the insured's choice of counsel not be “unreasonably withheld,” that defendant consented to the insured's continued retention of plaintiff.

The motion court also properly dismissed plaintiff's claim for unjust enrichment, which required a showing, among other things, that defendant was enriched (Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 182, 919 N.Y.S.2d 465, 944 N.E.2d 1104 [2011]).  It is undisputed that defendant will pay the full limit of the policy to reimburse the insured for its defense and settlement costs of the covered claims, regardless of whether those costs were incurred by plaintiff or the other lawyers that the insured retained.  Further, the retainer agreements between plaintiff and the insured govern this dispute, which provides a further basis for affirming the order (Clark–Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382, 388, 521 N.Y.S.2d 653, 516 N.E.2d 190 [1987]).

Plaintiff's tortious interference claims were also properly dismissed (AREP Fifty–Seventh, LLC v. PMGP Assoc., L.P., 115 A.D.3d 402, 981 N.Y.S.2d 406 [1st Dept. 2014]).  Plaintiff does not properly allege a breach of the retainer agreements by the insured as a client is always free to discharge its lawyer (Lowenbraun v. Garvey, 60 A.D.3d 916, 917, 876 N.Y.S.2d 441 [1st Dept. 2009]).  Nor does plaintiff sufficiently allege that defendant intentionally or improperly procured a breach of the retainer agreements or otherwise interfered with plaintiff's business relationship with the insured (NRT Metals, Inc. v. Laribee Wire, Inc., 102 A.D.2d 705, 706, 476 N.Y.S.2d 335 [1984], appeal dismissed 63 N.Y.2d 770 [1984];  see also Joan Hansen & Co. v. Everlast World's Boxing Headquarters Corp., 296 A.D.2d 103, 110–111, 744 N.Y.S.2d 384 [1st Dept. 2002]).  Plaintiff has failed to allege a cause of action for tortious interference with business relations, and we decline to read such a cause of action into the complaint.

Finally, plaintiff has failed to sufficiently allege a cause of action for a permanent injunction.  Plaintiff has failed to plead a viable theory of liability against defendant upon which to premise its claim for injunctive relief, and plaintiff cannot demonstrate irreparable injury where, as here, its alleged damages are “compensable in money and capable of calculation” (SportsChannel Am. Assoc. v. National Hockey League, 186 A.D.2d 417, 418, 589 N.Y.S.2d 2 [1st Dept. 1992]).