BLANK v. PETROSYANTS (2026)

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract and legal malpractice, the plaintiffs appeal, and the defendants Zhan Petrosyants and Robert Petrosyants cross-appeal, from an order of the Supreme Court, Kings County (Leon Ruchelsman, J.), dated November 1, 2023.  The order, insofar as appealed from, granted that branch of the motion of the defendant Akiva Ofshtein which was for summary judgment dismissing the cause of action alleging legal malpractice insofar as asserted against him by the plaintiff Vadim Shubaderov.  The order, insofar as cross-appealed from, denied those branches of the motion of the defendants Zhan Petrosyants and Robert Petrosyants which were for summary judgment dismissing the cause of action alleging fraud insofar as asserted by the plaintiffs Emil Blank and Vadim Shubaderov, the cause of action alleging promissory estoppel insofar as asserted by the plaintiff Vadim Shubaderov, and the cause of action alleging breach of contract insofar as asserted against the defendant Zhan Petrosyants by the plaintiffs Emilya Blank and Vadim Shubaderov.

ORDERED that the order is modified, on the law, by deleting the provision thereof denying that branch of the motion of the defendants Zhan Petrosyants and Robert Petrosyants which was for summary judgment dismissing the cause of action alleging breach of contract insofar as asserted against the defendant Zhan Petrosyants by the plaintiff Emilya Blank, and substituting therefor a provision granting that branch of the motion;  as so modified, the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

In August 2019, the plaintiffs Emil Blank, Vadim Shubaderov, and Oleg Egorov commenced this action against, among others, the defendants Zhan Petrosyants, Robert Petrosyants, and Akiva Ofshtein.  The complaint alleged that beginning in late 2013, at the behest of Zhan Petrosyants and Robert Petrosyants (hereinafter together the Petrosyants defendants), Emil Blank, Shubaderov, and Egorov invested monies in a catering venture known as Prime One Catering, Inc., but the monies were improperly diverted by the Petrosyants defendants to other sources in which Emil Blank, Shubaderov, and Egorov had no interest.  The complaint asserted, inter alia, causes of action alleging breach of contract, fraud, legal malpractice, and promissory estoppel.

In an order dated December 19, 2019, the Supreme Court, among other things, granted dismissal of a number of causes of action, including the cause of action alleging legal malpractice insofar as asserted against Ofshtein.  In an order dated June 17, 2020, the court, inter alia, granted those branches of the motion of Emil Blank, Shubaderov, and Egorov which were for leave to amend the complaint to add Emilya Blank as a plaintiff with respect to the surviving causes of action alleging fraud and promissory estoppel, which were asserted only against Robert Petrosyants, and the surviving cause of action alleging breach of contract insofar as asserted against Zhan Petrosyants.  Subsequently, in a decision and order dated March 2, 2022, this Court, among other things, modified the order dated December 19, 2019, so as to deny dismissal of the cause of action alleging legal malpractice insofar as asserted against Ofshtein by Shubaderov (see Blank v. Petrosyants, 203 A.D.3d 685, 685, 164 N.Y.S.3d 201).

Thereafter, Ofshtein moved, inter alia, for summary judgment dismissing the cause of action alleging legal malpractice insofar as asserted against him by Shubaderov.  The Petrosyants defendants moved, among other things, for summary judgment dismissing the cause of action alleging fraud insofar as asserted by Emil Blank and Shubaderov, the cause of action alleging promissory estoppel insofar as asserted by Shubaderov, and the cause of action alleging breach of contract insofar as asserted against Zhan Petrosyants by Emilya Blank and Shubaderov.  In an order dated November 1, 2023, the Supreme Court, inter alia, granted that branch of Ofshtein's motion and denied those branches of the Petrosyants defendants’ motion.  The plaintiffs appeal, and the Petrosyants defendants cross-appeal.

“The elements of a cause of action sounding in legal malpractice include the existence of an attorney-client relationship between the plaintiff and the defendant” (Lindsay v. Pasternack Tilker Ziegler Walsh Stanton & Romano LLP, 129 A.D.3d 790, 792, 12 N.Y.S.3d 124).  “An attorney-client relationship may exist in the absence of a retainer or fee” (Willoughby Rehabilitation & Health Care Ctr., LLC v. Webster, 190 A.D.3d 887, 889, 136 N.Y.S.3d 753).  “In determining the existence of an attorney-client relationship, a court must look to the actions of the parties to ascertain the existence of such a relationship” (Wei Cheng Chang v. Pi, 288 A.D.2d 378, 380, 733 N.Y.S.2d 471).  “[A] party's unilateral belief does not confer upon him or her the status of client.  Rather, to establish an attorney-client relationship, there must be an explicit undertaking to perform a specific task” (Willoughby Rehabilitation & Health Care Ctr., LLC v. Webster, 190 A.D.3d at 889, 136 N.Y.S.3d 753;  see Volpe v. Canfield, 237 A.D.2d 282, 283, 654 N.Y.S.2d 160).

Here, Ofshtein established, prima facie, that no attorney-client relationship existed between him and Shubaderov by submitting deposition testimony demonstrating that Shubaderov had only a unilateral belief that Ofshtein was his attorney (see Willoughby Rehabilitation & Health Care Ctr., LLC v. Webster, 190 A.D.3d at 889, 136 N.Y.S.3d 753;  Volpe v. Canfield, 237 A.D.2d at 283, 654 N.Y.S.2d 160) and a retainer agreement demonstrating that Ofshtein was the attorney for Prime One Catering, Inc., and not Shubaderov (see Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553, 562, 883 N.Y.S.2d 147, 910 N.E.2d 976;  Mann v. Sasson, 186 A.D.3d 823, 824, 127 N.Y.S.3d 791).  In opposition, the plaintiffs failed to raise a triable issue of fact.  Accordingly, the Supreme Court properly granted that branch of Ofshtein's motion which was for summary judgment dismissing the cause of action alleging legal malpractice insofar as asserted against him by Shubaderov.

“In an action to recover damages for fraud, the plaintiff must prove a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury” (Ginsburg Dev. Cos., LLC v. Carbone, 134 A.D.3d 890, 892, 22 N.Y.S.3d 485 [internal quotation marks omitted] ).  “To show reliance, a party must demonstrate that [it] was induced to act or refrain from acting to [its] detriment by virtue of the alleged misrepresentation or omission” (id. [internal quotation marks omitted] ).  “The plaintiff must show a belief in the truth of the representation and a change of position in reliance on that belief” (Nabatkhorian v. Nabatkhorian, 127 A.D.3d 1043, 1044, 7 N.Y.S.3d 479;  see Sammy v. Haupel, 170 A.D.3d 1224, 1226, 97 N.Y.S.3d 269).  Here, the Petrosyants defendants failed to establish, prima facie, that Robert Petrosyants did not misrepresent that he was an expert in the catering and restaurant industry.  Accordingly, the Supreme Court properly denied that branch of the Petrosyants defendants’ motion which was for summary judgment dismissing the cause of action alleging fraud insofar as asserted by Emil Blank and Shubaderov regardless of the sufficiency of the opposition papers (see Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642;  Wells Fargo Bank, N.A. v. Carrington, 221 A.D.3d 746, 749–750, 199 N.Y.S.3d 169).

“To establish promissory estoppel, a party must generally demonstrate (1) a clear and unambiguous promise, (2) reasonable and foreseeable reliance by the party to whom the promise is made, and (3) some injury sustained in reliance on that promise” (2261 Realty, LLC v. Cai Ping Wang, 242 A.D.3d 682, 685, 244 N.Y.S.3d 132;  see Delmaestro v. Marlin, 168 A.D.3d 813, 816, 92 N.Y.S.3d 312).  Here, the Petrosyants defendants failed to establish, prima facie, that Robert Petrosyants fulfilled his alleged promise to build out a catering company with the monies invested by Shubaderov.  Accordingly, the Supreme Court properly denied that branch of the Petrosyants defendants’ motion which was for summary judgment dismissing the cause of action alleging promissory estoppel insofar as asserted by Shubaderov regardless of the sufficiency of the opposition papers (see 2261 Realty, LLC v. Cai Ping Wang, 242 A.D.3d at 685, 244 N.Y.S.3d 132;  223 SAM, LLC v. 223 15th St., LLC, 210 A.D.3d 733, 735, 178 N.Y.S.3d 133).

“The essential elements of a cause of action to recover damages for breach of contract are the existence of a contract, the plaintiff's performance pursuant to the contract, the defendant's breach of its contractual obligations, and damages resulting from the breach” (223 SAM, LLC v. 223 15th St., LLC, 210 A.D.3d at 734–735, 178 N.Y.S.3d 133;  see Gawrych v. Astoria Fed. Sav. & Loan, 148 A.D.3d 681, 683, 48 N.Y.S.3d 450).  Here, the Petrosyants defendants established, prima facie, that even assuming that Zhan Petrosyants breached the shareholder agreement, Emilya Blank suffered no damages as a result of that breach.  In opposition, the plaintiffs failed to raise a triable issue of fact (see Carroccio v. Camia, 244 A.D.3d 1053, 249 N.Y.S.3d 106).  Accordingly, the Supreme Court should have granted that branch of the Petrosyants defendants’ motion which was for summary judgment dismissing the cause of action alleging breach of contract insofar as asserted against Zhan Petrosyants by Emilya Blank.

However, the Petrosyants defendants failed to establish, prima facie, that Zhan Petrosyants did not breach the escrow and shareholder agreements as to Shubaderov.  The Petrosyants defendants failed to submit any evidence that the companies paid by the escrow account at the behest of Zhan Petrosyants rendered any services in furtherance of “starting and developing” the catering business (see Rahmonov v. Purves Dev., LLC, 236 A.D.3d 941, 944, 229 N.Y.S.3d 613;  Crutch v. 421 Kent Dev., LLC, 192 A.D.3d 982, 984–985, 146 N.Y.S.3d 151).  Accordingly, the Supreme Court properly denied that branch of the Petrosyants defendants’ motion which was for summary judgment dismissing the cause of action alleging breach of contract insofar as asserted against Zhan Petrosyants by Shubaderov.

The parties’ remaining contentions need not be reached in light of our determination.

DILLON, J.P., CHAMBERS, WAN and LOVE, JJ., concur.