Kaplan v Conway & Conway 2018 NY Slip Op 32178(U) September 4, 2018 Supreme Court, New York County Docket Number: /17 Judge: Frank P.
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1 Kaplan v Conway & Conway 2018 NY Slip Op 32178(U) September 4, 2018 Supreme Court, New York County Docket Number: /17 Judge: Frank P. Nervo Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's ecourts Service. This opinion is uncorrected and not selected for official publication.
2 [* FILED: 1] NEW YORK COUNTY CLERK 09/06/ :37 PM INDEX NO /2017 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: IAS PART ~ )( ADAM KAPLAN and DANIEL KAPLAN Plaintiffs, Index No CONWAY & CONWAY and KEVIN P. CONWAY Defendants, )( FRANK P. NERVO, J: Defendants Conway & Conway and Kevin P. Conway (Conway) move, pursuant to CPLR (a) (7), to dismiss the complaint. The complaint alleges legal malpractice. As a preliminary matter, CPLR 2106 authorizes an attorney, "who is not a party to an action," to submit an affirmation that will have "the same force and effect as an affidavit." See Baram v Person, 153 AD3d 1183, 1183 (1st Dept 2017). Conway, an attorney who is a party in this action, initially submitted an affirmation in support of defendants' motion. He has now ' submitted an affidavit, which incorporates and reasserts the factual allegations in his affirmation. CPLR 2001 authorizes a court to "permit a mistake, omission, defect or irregularity... to be corrected." Plaintiffs have suffered no prejudice, and the court grants leave to defendants to substitute Conway's affidavit for his mistakenly submitted affirmation. The complaint alleges that plaintiffs, stock brokers then-employed by non party Morgan Stanley, retained defendants to assist them in connection with an investigation commenced by Morgan Stanley, allegedly at the behest of plaintiffs' immediate superior, alleged to have been acting for unspecified retaliatory reasons. The complaint faults defendants for: (I) having -against of 6
3 [* FILED: 2] NEW YORK COUNTY CLERK 09/06/ :37 PM INDEX NO /2017 advised plaintiffs to resign from their positions, before the investigation was formally concluded; (2) failing to press for formal closure of the investigation; (3) failing to advocate for an investigation of plaintiffs' immediate superior; and (4) failing to deter Morgan Stanley from including what the complaint characterizes as false and defamatory statements on the Form U-5's that Morgan Stanley filed with the Financial Industry Regulatory Authority (FINRA). The complaint alleges two causes of action. The first alleges that, had defendants acted competently, no investigation of plaintiffs would have been reported on their Form U-5's, or, at least, "the U- 5's would have been filed with more favorable language than the language which eventually ended up in the U-5's." Complaint,~ 18. The second alleges that the specific matters investigated by Morgan Stanley all pertained to Adam Kaplan, and that defendants failed to treat Daniel Kaplan differently from Adam. The complaint fails to mention what Morgan Stanley was investigating in relation to Daniel, and paragraph 22 of the complaint, which pertains to Daniel alone, is in all relevant respects, identical to paragraph 18, quoted above, which pertains to both plaintiffs. Accordingly, the second cause of action is redundant, and it is dismissed. The complaint states that "The Kaplans did not need an expensive FINRA attorney to resign voluntarily nor to have the U-5's reflect this accurate fact." Complaint,~ I I. But plaintiffs did not resign until after they had retained defendants, and, elsewhere in their complaint, plaintiffs acknowledge that they "submitted voluntary resignations to Morgan Stanley, acting on the advice of the [ d]efendants." Complaint, ~ 7. The complaint also acknowledges that, at the time that plaintiffs retained defendants, they were in an untenable situation, because ~they were on administrative leave and unable to service their clients. "[T]hey were each bereft of any viable alternatives" to resignation. Complaint,~ 12. Accordingly, and because the 3-2- of 6
4 [* FILED: 3] NEW YORK COUNTY CLERK 09/06/ :37 PM INDEX NO /2017 complaint is silent as to how defendants could have persuaded Morgan Stanley to close the investigation while defendants remained on administrative leave, defendants cannot be faulted for having arranged for plaintiffs to resign at the time that they did. The U-5's that Morgan Stanley filed with FINRA, after plaintiffs had resigned, included the question, "Currently is, or at termination was, the individual under internal review for fraud or wrongful taking of property, or violating investment-related statutes, regulations, rules, or industry standards of conduct?" The complaint alleges that Morgan Stanley "falsely noted 'yes' to this query." Complaint,~ 12. The complaint fails to specify in what way the answer was false. Indeed, as noted above, plaintiffs complain that defendants did not bring Morgan Stanley's investigation to an end, prior to plaintiffs' resignations. In order to prevail on a claim of legal malpractice, a plaintiff must show that the attorney's "negligence was a proximate cause of the loss in question." The Barbara King Family Trust v Voluto Ventures LLC, 46 AD3d 423, 424 (I st Dept 2007). '"To establish causation, a plaintiff must show that he or she would not have incurred any damages but for the lawyer's negligence."' Pannone v Silberstein, 118 AD3d 413, 414 (1st Dept 2014) quoting Rudo(fv Shayne, Dachs, Stanisci. Corker & Sailer, 8 NY3d 438, 442 (2007). The damages that the complaint alleges are all alleged to have arisen from the explanatory entries that Morgan Stanley made on plaintiffs' U-5 forms. Those entries are as follows: "Concerns about candor in Firm review of whether the representative witnessed a husband sign client documents for his wife, of adherence to proper procedures in handling two other clients' forms, and of inaccurate changes to certain client telephone numbers." The complaint alleges that: -3-4 of 6
5 [* FILED: 4] NEW YORK COUNTY CLERK 09/06/ :37 PM INDEX NO /2017 "Had defendants offered a competent representation of the plaintiffs, there would have been no investigation against the Kaplans which was reported on the Kaplans' U-5's, or alternatively, the U-5's would have been filed with more favorable language than the language which eventually ended up in the U-5's." Complaint,~ 18. This claim, that plaintiffs would not have suffered damages, had defendants secured "more favorable language," is utterly vague, and the claim, that some other language, to which Morgan Stanley would have agreed, would have averted plaintiffs' damages, is speculative, and, therefore, insufficient to support a claim of legal malpractice. See Brill & Meisel v Brown, 113 AD3d 435, 436 (1st Dept 2014). Moreover, Conway avers that he drafted alternative language (see Conway affirmation, exhibits 4-6), but that plaintiffs ignored it in the short time that was available for possible changes, because they, and their parents, were pressing him to prefer charges against Morgan Stanley's attorney with the ethics committee of the New York State Bar Association. Conway also avers that he provided plaintiffs with language with which they could respond to Morgan Stanley's allegations on the U-5's, but that plaintiffs chose not to respond. Plaintiffs' contention, that defendants failed to take action against plaintiffs' immediate superior, also fails. Even if the letter of engagement that plaintiffs signed, which refers to "represent[ation]... in a matter related to your employment interview and investigation by Morgan Stanley" (Conway affirmation, exhibit 8 at 1) could be read broadly enough to encompass action against plaintiff's supervisor, the complaint does not suggest what such action might be. As between plaintiffs and their supervisor, all agents registered with FINRA, any legal action would have had to be an arbitration proceeding before a FINRA arbitrator. The letter of engagement explicitly "does not include any work in the courts, or FINRA arbitration" (id. At 2), -4-5 of 6
6 [* FILED: 5] NEW YORK COUNTY CLERK 09/06/ :37 PM INDEX NO /2017 and in any event, plaintiffs do not dispute that they discharged defendants before any proceeding could have been brought. Accordingly, it is hereby ORDERED that the motion of defendants Conway & Conway and Kevin P. Conway to dismiss the complaint is granted and the complaint is hereby dismissed with costs and disbursements as taxed by the Clerk of the Court upon the submission of an appropriate bill of costs. Dated: September 4, 2018 ENTER: -5-6 of 6
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