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Kristina L. MILLIAN and Joan C. Millian, Plaintiffs, v. HAFIF & ASSOCIATES, PLLC, Steven I. Hafif, and Sarah E. Martel, Defendants.
In this legal malpractice case, plaintiffs allege that defendants were negligent in their due diligence work in connection with plaintiffs' purchase of a condominium unit in Manhattan. The closing took place in May 2012. More specifically, they state that defendants did not inform them of the HVAC problems in the building which directly impacted their unit or of the fact that the ongoing assessments in the building would end before they purchased the unit. Plaintiffs claim, inter alia, that they incurred damages repairing the HVAC, that they lost income they would have obtained had they been able to rent the unit, and that they had to pay the unexpected assessments. They claim that they relied on defendants' representations as to the unit and the building, and that they would not have purchased the unit if defendants had performed their due diligence and notified them of these problems.
Currently, defendants move for summary judgment. They point out that a claim for legal malpractice must show negligence, proximate cause, and actual damages, and they assert that plaintiffs cannot satisfy this standard. They state their due diligence complied with the prevailing standards and they reviewed the building's October 4, 2011 board minutes, financial statements for the fiscal year ending May 31, 2010, and a March 26, 2012 letter from the building's management company stating the assessments would continue in April and May of 2012. They note that their due diligence report, which they provided to plaintiffs prior to the execution of the contract of sale, noted that there had been a leak in the unit and incorporated the management company's comments about the April and May assessments. They state that they could not have obtained copies of the April 4, 2012 board meeting minutes because they “would certainly not have been available to the Defendants while they were performing the due diligence at issue” (Defendants' Mem of Law, p 5). Thus, there is no negligence, they claim.
In addition, defendants argue that plaintiffs cannot satisfy the third element of a prima facie case as they suffered no damages. They point to the testimony of Victoria Vinokur, an independent real estate contractor at Halstead Property, who stated that the HVAC was now functioning properly and that there had been no reason to believe the assessments would continue. Defendants state plaintiffs' purported damages are based on the idea that the assessments would continue for 30 years, and therefore they are speculative. Furthermore, defendants state, plaintiffs have a duty to mitigate damages and they can do so by selling the unit. They point to Ms. Vinokur's statement that a comparable unit in the subject building would sell for $675,000, well over the $550,000 plaintiffs paid for it, and add that their retained appraiser, Heather Hassan, appraised the subject unit at $775,000. As plaintiffs can sell their unit at a profit, defendants claim, they have not been damaged.
Plaintiffs' opposition states that defendants were clearly negligent. The report, they contend, states that the leak in the unit they purchased resulted from a faulty pipe in another part of the building, and that the problem was fully remediated. Plaintiffs claim that, when Kristina Millian asked additional questions about the leak, defendant Ms. Martel, who had been responsible for the due diligence, indicated that she was not sure but that it did not matter because the problem had been resolved. Plaintiffs state that Ms. Martel further assured them that there would be no further assessments after May 2012. Plaintiffs state that, contrary to defendants' assertion, defendants did not provide plaintiffs with a copy of the March 26, 2012 letter, which intimates that an April or May meeting would determine whether the additional assessments in the March and April maintenance bills would continue in the future; 1 and, in addition, defendants did not include this information in their report or mention other pertinent facts about the assessment. The letter also alluded to a further discussion of the building's financial and physical concerns, and plaintiffs state that defendants should have informed plaintiffs of this fact. Additionally, according to plaintiffs, defendants should have obtained the minutes of the October 4, 2011 Board Meeting along with subsequent materials related to any problems with the HVAC, the unit at issue, and the assessments. Plaintiffs also cite to numerous other alleged deficiencies in the due diligence, including the failure to follow up with the management company about potential future expenditures. They contend that they learned of the HVAC problems and the ongoing assessments around May 18, 2012 — only days after the closing.
In addition, plaintiffs dispute defendants' contention that there were no damages. They cite to the permanent 40% increase in the common charge. Plaintiffs state that their renters complained about HVAC issues in September or October, at which point plaintiffs allegedly learned that there had been a huge problem with the HVAC throughout the building for years. They state that because of the problems and the ongoing work to repair the HVAC, plaintiffs reduced the rent on the unit. Among other things, plaintiffs also seek compensatory damages relating to the additional costs they incurred for the repair the HVAC problems, relating to the travel expenses they incurred when they were addressing the problem, relating to damage their unit sustained from the leaks, and the loss of additional rental money they might have obtained. They reject defendants' contentions that because they receive a decent rent for the unit now and they could sell the unit at a profit they have not sustained any loss — or that they can mitigate the loss completely. In addition to rejecting the argument on its own merit, plaintiffs claim that the appraisals defendants have provided are of questionable evidentiary value. Although they do not move for summary judgment, they argue that they are entitled to judgment on liability and a trial or hearing on damages.
For defendants to prevail in their motion, they must “make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact” (Nomura Asset Capital Corp. v. Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 49  [citations and internal quotation marks omitted], reargument denied, 27 NY3d 957  ). If defendants have made this showing, then plaintiffs must “establish the existence of material issues of fact which require a trial of the action” (id. [citations and internal quotation marks omitted] ). As this is a legal malpractice action, plaintiffs' prima facie case must show that defendants were negligent, that this negligence proximately caused plaintiff's injury, and that plaintiffs sustained actual, ascertainable damages (Excelsior Capital LLC v. K & L Gates LLP, 138 AD3d 492, 492 [1st Dept 2016] ). Therefore, in this motion, defendants must show that plaintiffs cannot satisfy all three prongs of this standard (see Carrasco v. Pena & Kahn, 48 AD3d 395 [2nd Dept 2008] ). Alternatively, if this court were to exercise its discretion under CPLR 3212 (b) and grant summary judgment to plaintiffs on the issue of liability, plaintiffs would have to show that it has established all three prongs of the legal malpractice standard and that defendants cannot raise a triable issue of fact in response.
One critical issue in this case, therefore, is negligence, without which there is no claim for malpractice. Negligence must be evaluated based on “the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession” (Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442  ). To show negligence in a legal malpractice case, a plaintiff must submit expert opinion evidence on the applicable standard (Estate of Nevelson v. Carro, Spanbock, Kater & Cuiffo, 259 AD2d 282, 283-84 [1st Dept 1999]; see Benitez v. United Homes of NY, LLC, 142 AD3d 867, 867 [1st Dept 2016] [where bank submitted affidavit of a legal expert to show that defendant deviated from the standard of care, and defendant law firm did not provide a legal expert with a contrary conclusion, summary judgment on liability was properly granted] ). In the context of a summary judgment motion, “the initial burden of coming forward with evidence establishing a prima facie right to judgment is on the movants” (id., 259 AD2d at 284). Moreover, “conclusory, self-serving statements with no expert or other evidence which would tend to establish, prima facie, that [defendant] did not deviate from the standard of care” is insufficient to satisfy this evidentiary burden (id.; see Glassman v. Weinberg, 154 AD3d 407, 409 [1st Dept 2017] [plaintiff's burden was not satisfied] ).
After careful consideration, the Court denies the motion and declines to award summary judgment on the issue of liability to plaintiffs. As noted, a prima facie case for legal malpractice requires proof that the attorneys did not provide services which satisfied the legal community's standards (see Ss Marks LLC v. Morrison Cohen LLP, 133 AD3d 441, 441 [1st Dept 2015], lv denied, 27 NY3d 901  ). Although litigation often turns on the issue of causation, courts must also consider the community standards. Here, neither party addresses this concern. Instead, defendants state, without support, that they adhered to the applicable standard and plaintiffs, without support, state there was a deviation. Without such evidence, it is impossible to reach a conclusion as a matter of law. In addition, the parties present conflicting versions of the facts. For example, they dispute whether Ms. Martel provided incorrect or insufficient information in response to Ms. Kristina Millian's questions, whether information about the assessments and the HVAC problems would have been ascertainable through ordinary care, and whether the answers to these questions, as were available at this time, would have made a difference to plaintiffs. In light of this, there are questions of fact best reserved for the factfinder.
The Court additionally concludes that plaintiffs have submitted evidence, such as the verified bill of particulars dated September 16, 2016 and the annexed documents, and the HVAC repair estimate, to raise an issue of fact as to damages. As such, a question of fact for the jury remains to determine which of these damages can be substantiated and are recoverable, as the parties have not provided a definitive resolution of these questions. The Court rejects defendants' position — for which they provide no support — that because the value of the unit increased, plaintiffs can mitigate their damages. Among other things, 1) the value of the unit is not related to either party's conduct, 2) mitigation should not require plaintiffs to sell their unit, and 3) plaintiffs still incurred expenses repairing the HVAC and still had to provide rent abatements and separate heating and air conditioning units while the HVAC repairs were ongoing. The Court has considered all the parties' arguments and they do not alter the conclusion that neither party has established a right to judgment at this time. Therefore, it is
ORDERED that the motion is denied.
1. Plaintiffs state that defendants ultimately provided the letter to them, but not until after the closing.
Carmen Victoria St. George, J.
Response sent, thank you
Docket No: 152705/2015
Decided: October 09, 2018
Court: Supreme Court, New York County, New York.
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