Alphas v Smith

Alphas v Smith2019 NY Slip Op 33427(U)

November 15, 2019Supreme Court, New York County

Docket Number: 155790/2015Judge: Lucy Billings

Cases posted with a "30000" identifier, i.e., 2013 NY SlipOp 30001(U), are republished from various New York

State and local government sources, including the NewYork State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for officialpublication.

FILED: NEW YORK COUNTY CLERK 11/20/2019 03:06 PM INDEX NO. 155790/2015

NYSCEF DOC. NO. 179 RECEIVED NYSCEF: 11/20/2019

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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: IAS PART 46 ----------~---------------------------x

PETER ALPHAS and ALPHAS COMPANY OF NY, INC. I

Plaintiffs

- against -

SCOTT SMITH and MCCORMICK & O'BRIEN LLP,

Defendants

--------------------------------------x

APPEARANCES:

For Plaintiff Robert Spinak Esq.

Index No. 155790/2015

DECISION AND ORDER

2 Crosfield Avenue, West Nyack, NY 10994

For Defendants Philip Furia Esq. Lewis Brisbois Bisgaard & Smith LLP 77 Wate~ Street, New York, NY 10005

LUCY BILLINGS, J.S.C.:

In plaintiffs' verified fourth amended complaint, Peter

Alphas and Alphas Company of NY, Inc., sue for legal malpractice

against attorney Scott Smith and his law firm McCormick & O'Brien

LLP. Alphas is currently the sole shareholder of Alphas Company

of NY, a proauce wholesaler. Defendants move to dismiss

plaintiffs' claims based on C.P.L.R. § 3211(a) (1), (3), and (7).

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i] I. THE FOURTH AMENDED COMPLAINT

I The current complaint alleges that plaintiffs retained

defendants on or about September 1, 2012, to represent plaintiffs

Alphas and Alphas Company of NY and a separate corporation,

Alphas Company, Inc., in several pending actions. Alphas is

currently the sole shareholder of Alphas Company of NY and a 50%

shareholder with his brother, Yanni Alphas, of Alphas Company,

Inc.,.based iri Boston, Massachusetts.

Plaintiffs claim they retained defendants' legal services

after being served with a complaint in an underlying action I

against Alphas Company of NY seeking $11,450.04 for its

delinquent contributions to its employees' union Pension Fund. A

letter dated September 20, 2012, from the Pension Fund to Yanni

Alphas, theniChief Executive Officer of Alphas Company of NY,

notified it of the Pension Fund's determination that it had

ceased contributions to the Pension Fund, thus effecting its

withdrawal from the Pension Fund for that year and incurring a

liability of $983,579.74 to the Pension Fund. The withdrawal

letter further notified Alphas Company of NY that this liability

was payable in 44 quarterly installments, that Alphas Company of

NY was entitled within 90 days to request the Pension Fund to

review its d$termination, and that the final avenue of relief was

arbitration. 29 U.S.C. § ·1399(b). The Pension Fund sent a copy

of this letter to Smith.

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Plaintiffs allege that defendants never informed plaintiffs

of the withdrawal letter and its consequences, let alone

addressed its contents on the clients' behalf. As a result,

plaintiffs neither paid the required installments nor sought

review or the ultimate remedy of arbitration within the specified

periods.

Consequently, the complaint in the underlying action was

amended February 13, 2013, to claim that Alphas Company bf NY

owed $14,312.55 for delinquent contributions, plus ~he withdrawal

liabil{ty of $983,579.7~. Plaintiffs allege that they never

received the.amended complaint, as no one authorized to accept

service on Alphas Company of NY's behalf matched the description

of the person served as an agent of Alphas Company of NY,

C.P.L.R. § 31l(a)'(l), but Smith· did receive notice of the amended

complaint. Plaintiffs further allege that they relied on

·defendants for all communications and updates regarding the

underlying litigation because, unlike Smith, plaintiffs were riot

registered with the court's electronic filing system. Yet

defendants never informed plaintiffs of the amended complaint nor

responded to it on Alphas Company of NY's behalf.

Consequ~ntly, the plaintiffs irt the underlying litigation

moved for a default judgment. Plaintiffs allege that Smith knew

of the hearing on the motion for a default judgment scheduled

April 26, 2013, but failed to appear at the hearing or inform

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plaintiffs of it, resulting in a default judgment against Alphas

Company of NY entered April 30, 2013. According to plaintiffs,

the judgment totaled $1,209,419.35: $14,312.55 for delinquent

contributions; $983,579.00 in withdrawal liability; $39,915.70 in

interest; $11,948.60 in attorney fees; and the remainder as

liquidated damages. Plaintiffs claim that Alphas Company of NY

never owed the original amount sought nor withdrew from the

Pension Fund, because Alphas Company of NY never permanently

ceased its operations covered by the Pension Fund, and therefore

would have prevailed in the underlying litigation. 29 u.s.c. §§

1381, 1383 (a).

Plaintiffs allege that they only learned, of the amended

complaint and default judgment from the plaintiffs' attorney in

the underlying action when they encountered him in other

litigation in May 2013. Plaintiffs then retained a new attorney

and in July 2013 moved to vacate the default judgment.

Plaintiffs allege that in the meantime they received multiple

loan offers totaling approximately $1,500,000.00 to keep Alphas

Company of NY viable and maintain its proprietary lease and

shar.es in the Hunts Point Terminal Produce Cooperative. Once the

prospective lenders learned of the outstanding $1,209,419.35

judgment against the prospective borrower, however, according to

plaintiffs the judgment caused those lenders to withdraw their

loan offers. Therefore Alphas Company of NY could not access the

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funds needed~to cure its default under its proprietary lease with

the. Cooperative and ultimately lost its shares in the Cooperative

and its spac~ at the Hunts Point Terminal Produce Market.

When Alphas Company of NY moved to vacate the default

judgment in the underlying action, the plaintiffs there claimed

that Alphas Company of NY had willfully failed to attend the

hearing on the motion for a default judgment and the assessment r .

of damages. To resolve this question, the court issued a

subpoena for Smith to appear. The hearing was not scheduled

until March 26, 2014. In the meantime, due to Alphas Company of

NY's financial condition, Alphas Company of NY petitioned for

bankruptcy March 4, 2014, disabling the corporation from

proceeding with the motion to vacate the default judgment. 11

U.S.C. § 362(a) (1). See Cardinal Holdings, Ltd. v. Indotronix

Intl. Corp., 73 A.D.3d 960, 962 (?d Dep't 2010); Corman v.

LaFountain, ~8 A.D.Jd 706, 708 (2d Dep't 2007); St. Paul Fire &

Mar. Ins. Co. v. PepsiCo, Inc., 884 F.2d 688, 697, 704 (2d Cir.

1989) .

Plaintiffs filed their fourth amended complaint January 29,

2019, claimihg defendants' professional negligen~e in the

underlying action. Plaintiffs claim defendants failed to:

inform plaintiffs of the withdrawal letter, advise plaintiffs of

its effects, ·challenge it within the required 90 days, demand

arbitration, 1 answer the amended complaint, oppose the motion for

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a default judgment, appear and defend Alphas Company of NY at the

hearing and assessment of damages, or seek to vacate the >

:r judgment. Alphas Company of NY's claimed damages include the

default judgment; the bankruptcy and forfeiture of cooperative

shares; approximately $1,400,000.00 paid by the Bankruptcy Estate

to the Bankr~ptcy Trustee and his agents; and approximately

$950,000.00 6wed for taxes on the sale of the cooperative shares.

Alphas's cla~med damages include his liability. for his guarantees

of Alphas Co~pany of NY's debts; loss of his license to conduct

business, income, and loans to Alphas, Company of NY; a lower

credit score; attorneys' fees to move to vacate the judgment and

'

to address his personal liabilities; and cancellation of

agreements for loans to and investments in the corporation. See

Alphas v. Smith, 147 A.D.3d 557, .558 (1st Dep't 2017)

II. DEFENDANTS' MOTION

Defendants base their motion to dismiss the fourth amended

complaint pursuant to C.P.L.R. § 32ll(a) (1), (3), and' (7) on four

main grounds. First, all claims by Alphas must be dismissed

because there was no attorney-client relationship between him and

defendants; it was only between Alphas Company of NY and

defendants, for litigation in which Alphas was not a party.

Second, Alphas Company of NY lacks capacity to sue because it

commenced its action against defendants during the bankruptcy

proceeding when only the Bankruptcy Trustee was authorized to

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commence an action on the bankrupt corporation's behalf. Third,

defendants owed no duty to represent plaintiffs' interests

related to the withdrawal letter dated September 20, 2012, even

to the extent that the withdrawal letter related to the

' underlying litigation, because the Letter of Engagement between

plaintiffs and defendants nowhere referred to the withdrawal

letter. Therefore the claimed legal malpractice was all outside

the scope of the agreed representation. Finally, defendants are

not liable as a matter of law for any damages related to the

default judgment, because plaintiffs' retention of a new attorney

to move to vacate the judgment and their petition for bankruptcy

constitute superseding causes of their damages, such that their

claimed legal malpractice is not the proximate cause of the

default judgment and its consequences.

III. ALPHAS'S CLAIM

A motion to dismiss claims based on documentary evidence

pursuant to C.P.L.R. § 3211(a) (1) will succeed only if admissible

documentary evidence completely refutes plaintiffs' factual . '

allegations, resolving all factual issues as a matter of law.

Nomura Home Equity Loan, Inc., Series 2006-FM2 v. Nomura Credit &

Capital, Inc., 30 N.Y.3d 572, 601 (2017); Goshen v. Mutual Life

Ins. Co. of NY, 98 N.Y.2d 314, 326 (2002); Calpo-Rivera v.

Siroka, 144 A.D.3d 568, 568 (1st Dep't 2016); Kolchins v.

Evolution Mkts., Inc., 128 A.D.3d 47, 58 (1st Dep't 2015).

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Defendants rely on Alphas's 2012 income tax return to establish

that he owned only ~0% of Alphas Company of NY's shares in 2012

and maintain that the Appellate Division allowed him to pursue an

individual claim for legal malpractice on the basis that he owned

100% of the corporation's shares. Alphas v. Smith, 147 A.D.3d at i

558; Good Old Days Tavern v. Zwirn, 259 A.D.2d 300, 300 (1st

Dep't 1999). Upon the principle that a party to litigation may

not take a position contrary to his sworn income tax return, ~

Mahoney-Buntzman v. Buntzman, 12 N.Y.3d 415, 422 (2009),

defendants insist that Alphas, as a mere 50% owner, may not

benefit from Alphas Company of NY's attorney-client relationship

with defendahts as required for him to sustain a legal

malpractice claim against them. Learning Annex, L.P. v. Blank

Rome LLP, 106 A.D.3d 663, 663 (1st Dep't 2013); Fortress Credit

Corp. v. Dechert LLP, 89 A.D.3d 663, 663 (1st Dep't 2011). I

Peter Alphas acknowledges that he was a 50% owner of Alphas

company of NY with his brother until his brother resigned from

his position1and assigned to Peter Alphas the brother's interest • I • (

in the corpo~ation October 23, 2012, eff~ctive August 30, 2012.

Nevertheless; defendants may rely on Peter Alphas's tax return

claiming a 50% ownership in 2012 to contradict his claim in this

action of a loo% ownership in the later months of that year. A

party's claim on a tax return estops the party from taking a

different po$ition in litigation and forecloses any factual

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dispute of the issue. Mahoney-Buntzman v. Buntzman, 12 N.Y~3d at

422; Goldwater v. Amicus Assoc. L.P., 168 A.D.3d 405, 405-406

(1st Dep't 2019); Ansonia Assoc. L.P. v. Unwin, 130 A.D.3d 453,

454 (1st Dep;t 2015). Even assuming that Peter Alphas was not a

100% shareholder until 2013, however, he demonstrates

circumstances entitling him to claim an attorney-client

relationship with defendants in two ways.

First, the Appellate Division held that Alphas was "allowed

to assert an individual malpractice claim, even though defendants

represented ?nly Alphas NY in the federal action in which they

allegedly committed malpractice." Alphas v. Smith, 147 A.D.3d at

558. Although the court recited the allegation that Alphas was

Alphas Company of NY's sole shareholder, the court did not limit

its holding to that single fact. Instead, the key fact on which

the court fo~used was that Alphas "derived his livelihood from

Alphas NY." Id. Defendants' documentary evidence does not

refute this ~act, nor do defendants even contend otherwise. The

only limitation the Appellate Division placed on Alphas's claim

was that his .. "damages are limited to those he suffered

individually~" Id.

Since this action is in the same "procedural posture .

(a CPLR 3211.! motion to dismiss)" as it was before the Appellate

Division, in1accordance with the law of the case, this court must

allow Alphas'to pursue an individ~al malpractice claim against

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defendants. - Id. Even if Alphas is not considered the sole

shareholder of Alphas Company of NY when he and defendants

executed the Letter of Engagement October 1, 2012, and is not

considered the sole shareholder until January 1, 2013, "special

circumstances" still permit him to pursue an individual legal

malpractice claim against defendants, at least at this stage of

the action. Good Old Days Tavern v. Zwirn, 259 A.D.2d at 300;

Town Line Plaza Assocs. v. Contemporary Props., 223 A.D.2d 420,

420 (1st Dep't 1996). See Alphas v. Smith, 147 A.D.3d at 558.

Second, while plaintiffs stipulate that the Letter of

Engagement is authenticated and admissible for the purpose of

determining defendants' motion, the letter's execution date does

not bar Alphas's legal malpractice claim against defendants

either. The execution date may commence the attorney-client

relationship, but is not the single determinative factor in

evaluating whether Alphas may claim legal malpractice against

defendants. Later dates during the attorney-client relationship

determine when his legal malpractice claim accrued: most

significantly, when the malpractice and injury occurred. Johnson ,

v. Proskauer Rose LLP, 129 A.D.3d 5~, 67 (1st Dep't 2015);

Cabrera v. Collazo, 115 A.D.3d 147, 150 (1st Dep't 2014); Goldman

v. Akin Gump Strauss Hauer & Feld LLP, 46 A.D.3d 481, 481 (1st

Dep't 2007). Plaintiffs allege that defendants' malpractice

occurred well into 2013, when Alphas undisputedly was the sole

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shareholder of Alphas Company of NY. Because there was an

attorney-Client relationship between Alphas and defendants based

on Alphas's sole ownership of Alphas Company of NY when the

:i alleged malp~actice occurred, Alphas may pursue an individtial

claim regardless whether he was less than a 100% owner in 2012.

j d b Johnson v. Proskauer Rose LLP, 129 A.D.3 at 67; Ca rera v.

Collazo, 115 A.D.3d at 150; Goldman v. Akin Gump Strauss Hauer &

Feld LLP, 46 A.D.3d at 481. \

For all these reasons, defendants' documentary evidence does

not resolve the issue whether Alphas.maintained an attorney-

client relationship with defendants when plaintiffs' legal

malpractice accrued, as a matter of law, and Alphas at minimum

raises a factual issue of such a relationship. Therefore the

court denies' defendants' motion to dismiss Alphas's action based

on documenta~y evidence. C.P.L.R. § 321l(a) (1).

IV. ALPHAS COMPANY OF NY'S CAPACITY TO SUE

Pursuant to C.P.L.R. § 3211(~) (3), defendants meet their

burden to establish that Alphas Company of NY lacked the capacity

to sue when the corporation commenced its independent action

April 18, 2016, before that action was consolidated with this

action, originally commenced only by Alphas in 2015. Since

Alphas Company of NY commenced a bankruptcy proceeding March 4,

2014, which still was pending April 18, 2016, only the

Bankruptcy Trustee was authorized to commence an action on the

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bankrupt corporation's behalf, and the corporation itself lacked , I .

the capacity to do so. 11 U.S.C. § 541(a); Barranco v. Cabrini

Med. Ctr., 50 A.D.3d 281, 282 (1st Dep't 2008); Williams v.

Stein, 6 A.D.3d 197, 198 ,(1st Dep't 2004); Cardinal Holdings,

I Ltd. v. Indotronix Intl. Corp., 73 A.D~3d at 962; Corman v.

LaFountain, jg A.D.3d at 708.

To defeat defendants' motion to dismiss the fourth amended

complaint on 1 this ground, Alphas Company of N~ must present

evidence that at least raises a factual question of this

plaintiff's capacity to sue. DLJ Mtge. Capital v. Mahadeo, 166

A.D.3d 512, 513 (1st Dep't 2018); Deutsche Bank Trust Co. Arns. v.

Vitellas, 131 A.D.3d 52, 59-60 (2d Dep't 2015); us Bank N.A. v.

Farugue, 120 A.D.3d 575, 578 (2d Dep't 2015). Plaintiffs

demonstrate that the Bankruptcy Trustee assigned the legal

malpractice claim to Alphas April 22, 2016. This assignment in

fact supports Alphas Company of NY's lack of capacity to sue both

on April 18, 2016, and afterward, but also demonstrates that

Alphas assumed the capacity to maintain Alphas Company of NY's

claims. The assignment also supports Alphas's own claim that he

was a real party in interest who maintained an attorney-client

relationship' with defendants and whose interests were injured by

their alleged legal malpractice, so as to sustain a malpractice

action by him against defendants.

Defendants, on the other hand. fail to demonstrate why, at

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minimum, when Alphas filed his third amended complaint March 23,

2017, when the court (Mendez, J.) consolidated Alphas Company of

NY's action with Alphas's action without opposition September 18,

2017, and when plaintiffs filed their fourth amended complaint

January 29, 2019, Alphas lacked the capacity to maintain Alphas

Company of NY's claims. Because Alphas Company of NY raises no

factual issue regarding its capacity to sue, the court grants

defendants' motion to dismiss Alphas Company of NY as a

plaintiff. Giuliano·v. Gawrylewski, 122 A.D .. 3d 477, 479 (1st

Dep't 2014); Ullman v. Hillyer, 106 A.D.3d 579, 579 (1st Dep't

2013); Williams v. Stein, 6 A.D.3d at 198. Because its claims

were assigned to Alphas, however, he maintains the claims

originally instituted by Alphas Company of NY and retained in the

fourth amended complaint. See Rodriguez v. River Val. Care Ctr.,

Inc., 175 A.D.3d 432, 433 (1st Dep't 2019).

V. THE SCOPE OF DEFENDANTS' REPRESENTATION OF PLAINTIFFS

Regarding defendants' duty to represent plaintiffs'

interests related to the withdrawal letter dated September 20,

2012, defendants rely on the Letter of Engagement between them

and plaintiffs as well as the withdrawal letter itself as

documentary evidehce supporting dismissal of plaintiffs'

allegations of malpractice related to the withdrawal letter.

C.P.L.R. § 3211(a} (1). The withdrawal ·letter was addressed to

Yanni Alphas as Chief Executive Officer of Alphas Company of NY

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before plaintiffs executed the Letter of Engagement October 1,

2012. The withdrawal letter notified Alphas Company of NY that

it had ceased contributions to, withdrawn from, and incurred a

liability of. $983,579.74 to the union Pension Fund; that the

liability was payable in installments; and that Alphas Company of

NY was entitled to request review and demand arbitration.

Because the Letter of Engagement between plaintiffs and

defendants, 19 days later, nowhere referred to the withdrawal

letter, defendants insist that any representation related to the

withdrawal letter exceeds the scope of the agreed representation.

First, defendants fail to show that plaintiffs ever received

the withdrawal letter before they executed the Letter of

Engagement. Defendants present no affidavit of service or other

evidence of plaintiffs' receipt qf the withdrawal letter. E.._,_g_,_,

Tower Ins. Co. of N.Y. v. Ray & Frank Liq. Store, Inc., 104

A.D.3d 482, 483 (1st Dep't 2013); Matter of State Farm Mut. Auto,

Ins . Co . ( Kankam) , 3 A . D . 3 d 418 , 419 ( 1st Dep' t 2 o o 4 ) ; 8112 - 2 4

18th Ave. Realty Corp. v. Aetna Cas. & Sur. Co., 240 A.D.2d 287,

288 (1st Dep't 1997); Gelbart v. Borglum, 195 A.D.2d 416, 416

(1st Dep't 1993).

In any event, the complaint's allegations unmistakably show

how the withdrawal letter related to the underlying litigation in

which defendants concede they had undertaken to represent Alphas

Company of NY, even before the Letter of Engagement. The court

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need only refer to the amended complaint in the .underlying

litigation t6 find that it sought the very'relief ~hae flowed

from the failure to respond to the withdrawal letter. Although

defendants attempt to use the withdrawal letter to absolve

themselves of any related representation, even to the extent that

the withdrawal letter related to the underlying litigatiqn, to

the contrary, the very fact that the withdrawal related to the

litigation incorporates the letter within the scope of the

representation undertaken. As plaintiffs' retained attorneys,

defendants owed a duty to represent all plaintiffs' interests

that in any way bore on the underlying litigation, even relating

to issues about which plaintiffs may have been unaware. Those

interests included the interests implicated-in the withdrawal

letter. Macquarie Capital (USA) Inc. v. Morrison & Foerster LLP,

157 A.D.3d 456, 457 (1st Dep't 2018).

In sum, defendants' attempt to exclude the withdrawal letter

or any part of the underlying litigation from the scope of

representation contradicts the very reason for· the attorney-

client relationship. According to the fourth amended complaint,

plaintiffs r~tained defendants to represent plaintiffs in several

pending actibns, including the underlying litigation at issue

here, and to' handle anything that affected plaintiffs' defense of

that litigation. It was the foundation of the attorney-client

relationship, the reason why plaintiffs retained defendants'

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legal services. Because neither the Letter of Engagement nor the ,,

withdrawal l~tter limits defendants' duty to represent

plaintiffs' interests related to the withdrawal letter or any

part of the underlying litigation, the court denies defendants'

motion to dismiss plaintiffs' claims of malpractice arising from

defendants' omissions in responding to the withdrawal letter or

any part of the underlying litigation. C.P.L.R. § 3211(a) (1).

VI. THE PRO!IMATE CAUSE OF PLAINTIFFS' DAMAGES

Upon a motion to dismiss claims pursuant to C.P.L.R. §

3211(a) (7), the court must accept plaintiffs' allegations in the

fourth amended complaint as true, liberally construe them, and

draw all reasonable inferences in plaintiffs' favor. JF Capital

Advisors, LLC v. Lightstone Group, LLC, 25 N.Y.3d 759, 764

(2015); Miglino v. Bally Total Fitness of Greater N.Y., Inc., 20

N.Y.3d 342, 351 (2013); ABN AMRO Bank, N.V. v. MBIA Inc., 17

N.Y.3d 208, 227 (2011); Drug Policy Alliance v. New York City Tax i

·;i Commn. , 131 A. D. 3d 815, 816 (1st Dep' t 2 015) . Dismissal is

warranted only if the complaint fails to allege facts that fit

within any cognizable legal theory. ABN AMRO Bank, N.V. v. MBIA

Inc., 17 N.Y.3d at 227; Lawrence v. Graubard Miller, 11 N.Y.3d

588, 595 (2008); Nonnon v. City of New York, 9 N.Y.3d 825, 827

(2007); Mill) Fin., LLC v. Gillett, 122 A.D.3d 98, 103 (1st Dep't

2014) .

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The fourth amended complaint alleges that plaintiffs hired a

new attorney who in July 2013 moved to vacate the default

judgment against plaintiffs in the underlying iitigation, but

plaintiffs then petitioned for bankruptcy before allowing their

new attorney~to succe~d in vacating the judgment. This new

attorney's opportunity to obtain a favorable result for

plaintiffs in the underlying litigation would sever the causal

connection b~tween defendants' legal malpractice and the default

judgment tha~ fhe malpractice originally caused, so that, despite

defendants' legal malpractice, Alphas Company of NY still would

have succeeded on the merits of that litigation. Davis v. Cohen

& Gresser; LtP, 160 A.D.3d 484, 487 (1st Dep't 2018); Maksimiak Ii

v. Schwartzapfel Novick Truhowsky Marcus, P.C., 82 A.D.3d 652, ,,

652 (1st Dep~t 2011).

Plaintiffs claim, however, that the default judgment

precipitated1the corporation's bankruptcy befo~e plaintiffs'

success6r atEorney "had sufficient time and opportunity" to

protect plaintiffs' rights. Id. Between April 2013., when the

default judgment was entered, and March 2014, when Alphas Company

of NY petitioned for bankruptcy, plaintiffs allege that, once the

prospective lenders learned of the unpaid judgment against the

prospective borrower, Alphas Company of NY lost multiple loan

offers totaling approximately $1,500,000.00. Those loans were

the funds Alphas Company of NY·needed to cure its default under j

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its proprietary lease with the Hunts Point Terminal Produce

Cooperative. Once the court in the Cooperative's eviction

proceeding against Alphas Company of NY lifted a stay on the

lessee's eviction in early 2014, its only recourse to protect the I

value of its principal asset, its shares in the Cooperative, was

to petition for bankruptcy.

The fair inference from the fourth amended complaint is that•

plaintiffs staved off the eviction and the bankruptcy as long as

/ possible and made every possible attempt to keep Alphas Company I

of NY's shares in the Cooperative and maintain its business, but

the default judgment impeded that effort. If plaintiffs had the

means to vacate the judgment in time to avert the bankruptcy,

they would have don~ so. Therefore plaintiffs' allegations

~emonstrate thati but for defendants' legal malpracti~e, Alphas

Company of NY would not have incurred the default judgment and

that it precipitated the corporation's bankruptcy; foreclosing

any opportunity to vacate the judgment. Roth v. Ostrer, 161

A.D.3d 433, 434 (1st Dep't 2018); Macquarie Capital (USA) Inc. v.

Morrison & F6erster LLP, 157 A.D.3d at 456-57; Garnett v. Fox,

Horan & Camerini, 82 A.D.3d 435, 435-36 (1st Dep't 2011) . . \

VII. CONCLUSION

For the reasons explained above, the court grants

defendants' motioh to the ·extent of dismissing Alphas Company of

NY as a plaintiff because it lacked the capacity· to sue.

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, i.

C.P.L.R. § 3211(a).(3). Plaintiff Alphas, however, maintains the

claims originally instituted by Alphas Company of NY and retained

in the fourth amended complaint. The court denies the remainder

of defendants' motion. C.P.L.R. § 3211(a) (1) and (7).

DATED: November 15, 2019

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LUCY BILLINGS, J.S.C.

LUCY BILLINGS J.S.C.

[* 19]

Documents

Alphas v Smith