The following e-filed documents, listed by NYSCEF document number (Motion 002) 24, 25, 26, 27, 28, 29, 32, 33, 37, 38, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73 were read on this motion to/for DISMISSAL. DECISION ORDER ON MOTION The motion to dismiss by plaintiff to dismiss defendants’ counterclaim is granted. Background This attorneys’ fees case arises out of plaintiff’s representation of defendants. Plaintiff alleges that in February 2018, defendants hired plaintiff to represent them in a trademark infringement case in the Eastern District of New York. This case eventually settled on June 27, 2018. The parties offer wildly divergent views on the nature of the representation and the underlying disputes. Defendants claim that plaintiff was hired for two cases, the EDNY case and a rabbinical proceeding. Both involved the use and ownership of the name and logo “Biz Tank.” Although the counterclaim does not provide much detail about the nature of the alleged counterclaim, defendants submit the affidavit of defendant Rabbi Yitzchok Frankfurter who asserts that plaintiff informed him it could settle both disputes quickly. Rabbi Frankfurter complains about the amount of plaintiff’s legal fees and insists plaintiff did not produce any results. He claims that the terms of the settlement were not any better than the one negotiated by the prior counsel in the EDNY case. Rabbi Frankfurter insists that the terms were not satisfactory and that a provision waiving all defendants’ rights to Biz Tank was “devastating, yet we reluctantly agreed to do so as we could no longer afford the exorbitant fees plaintiff was charging” (NYSCEF Doc. No. 56). He claims defendants agreed to the settlement because they thought it would resolve both disputes and because they thought it only resolved the Biz Tank issue (apparently the adverse party purportedly owed defendants advertising fees). Rabbi Frankfurter maintains defendants had no intention to waive this approximately $7,000 amount. He claims that the settlement only resolved the EDNY action and that the rabbinical dispute remains pending. He also admits that they received a $2,500 check but maintains he was shocked by the assertion from the adverse party that the settlement (and the check) was not an act of forgiveness and that forgiveness would require a $1.5 million payment from defendants. Rabbi Frankfurter then asserts that he discovered that plaintiff filed the stipulation of dismissal without defendants’ permission and the check had been received without his knowledge. He observes that the issue of forgiveness is a crucial part of Jewish law and believed the adverse party’s statement to be an assertion that they did not intend to be bound by the agreement. Rabbi Frankfurter also insists that plaintiff told him the rabbinical dispute was settled despite the fact that it was not. He claims he has been told that the opposing party has plans to move forward in rabbinical court. Plaintiff emphasizes that defendants have not articulated any actual or potential damages. It claims that the entire basis of the counterclaim relies upon a statement from the Kleins (the opposing party in both disputes) that defendants would have to pay a significant fee if they wanted forgiveness. Plaintiff argues this statement has no legal impact and that more than three years has passed since the case settled and there is no pending claim or judgment against defendants. It insists that the Kleins have done nothing at all since then and defendants’ reliance on hearsay statements about what the Kleins might do cannot support the counterclaim. Plaintiff points out that the rabbinical proceeding involved the same exact dispute and so the mutual releases from the EDNY case, which contain broad language, resolved all disputes between the parties related to the Biz Tank issue. Plaintiff insists that the retainer agreement with defendants only mentioned litigation and so it did not apply to the rabbinical dispute; it emphasizes there is no reference to an arbitration or any religious tribunal. Plaintiff also argues that the advertising fee, if it is unrelated, is not precluded by the settlement agreement. With respect to filing the stipulation of dismissal, plaintiff points out that this was a provision of the settlement agreement — that document had to be filed upon defendants receiving the $2,500 payment. Discussion “On a motion to dismiss, the pleading is to be afforded a liberal construction. We accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory. Dismissal of the complaint is warranted if the plaintiff fails to assert facts in support of an element of the claim, or if the factual allegations and inferences to be drawn from them do not allow for an enforceable right of recovery” (Besen v. Farhadian, 195 AD3d 548, 549, 151 NYS3d 31 [1st Dept 2021] [internal quotations and citations omitted]). “An action for legal malpractice requires proof of three elements: (1) that the attorney was negligent; (2) that such negligence was a proximate cause of plaintiff’s losses; and (3) proof of actual damages” (Glob. Bus. Inst. v. Rivkin Radler LLP, 101 AD3d 651, 651, 958 NYS2d 41 [1st Dept 2012] [internal quotations and citation omitted]). Here, the Court finds that defendants’ numerous complaints about plaintiff’s representation fails to state a counterclaim for legal malpractice. As an initial matter, it is unclear exactly how plaintiff erred in its representation of defendants sufficient to state a counterclaim for legal malpractice. Defendants detail how they are upset with plaintiff’s representation but do not allege that they have suffered any actual damages as a result. The undisputed factual contentions are that plaintiff secured a settlement on defendants’ behalf and defendants received a $2,500 payment. It seems that defendants were understandably upset with the statement from Mr. Klein demanding $1.5 million in order to effectuate forgiveness. But that statement did not invalidate the EDNY settlement. Plus, defendants do not claim they did anything in the EDNY case to vacate the settlement (such as hiring a new lawyer to bring such a motion). They apparently moved on after expressing their frustration with the Kleins’ statement. Defendants do not allege that the Kleins refused to pay or that anything happened in the rabbinical proceeding. That the Kleins may do something in the future is not sufficient to state actual damages nor does it show that plaintiff was negligent (Kahan Jewelry Corp. v. Rosenfeld, 295 AD2d 261, 261, 744 NYS2d 664 (Mem) [1st Dept 2002] [finding that pending foreclosure actions meant plaintiffs had not yet sustained any actual damages]). Clearly, there was (and might still be) animosity between defendants and the Kleins. But, as plaintiff observes, there has not been any adverse action against defendants in the three years since the settlement relating to the Biz Tank litigation. With respect to the issue of plaintiff’s representation, the Court finds that plaintiff only represented defendants in the EDNY litigation. The engagement letter states that plaintiff would represent defendants in connection with the “Subject Matter,” defined as “all matters relating to the litigation involving Biztank, Inc. IMBC, Joel Klein and Leah Klein” (NYSCEF Doc. No. 58, 2). It adds that “You acknowledge that our acceptance of this engagement does not involve our representation with respect to any matter other than the Subject Matter” (id.). There is no mention of any rabbinical proceeding, an arbitration, or any reference to another dispute with the Kleins. Plus, as stated above, there is no allegation that defendants have suffered any damages from the alleged failure to resolve the rabbinical proceeding. Moreover, the release from the EDNY litigation would appear, at least on its face, to apply to the rabbinical proceeding (although the Court makes no finding about this issue). The Court also observes that defendants’ concerns about the approximately $7,000 allegedly due to defendants from the Kleins are unfounded. The settlement does not appear to apply to matters unrelated to the Biz Tank dispute and, more importantly, defendants do not assert that they tried to recover this amount and were unsuccessful because of the settlement. Speculating about what might happen is not a basis to satisfy a legal malpractice claim. And, of course, defendants read and signed the settlement agreement so they are bound by the terms of it (Beattie v. Brown & Wood, 243 AD2d 395, 395, 663 NYS2d 199 [1st Dept 1997] [finding that a client's claim that he was not properly advised by a law firm about a settlement agreement was without merit based on the agreement itself, the client's signature, the lack of a fraud claim and the client's competence to sign the agreement]). In the event that these fees are somehow covered by the settlement, defendants cannot evade the terms of the agreement they knowingly signed. To the extent that defendants complain about Leah Klein not signing the settlement agreement, that does not compel a different outcome. As plaintiff points out, Ms. Klein was not a party to the EDNY case and, critically, there is no allegation that defendants suffered damages based on the failure to obtain her signature. Summary The fact is that the EDNY case settled and defendants received a check from the Kleins along with a nasty note. Although defendants were upset with that note, they do not allege that they demanded or took any steps to formally back out of settling the EDNY case. Instead, it appears that they were concerned about how that note might affect an allegedly pending rabbinical proceeding and what might occur in the future. But nothing has happened in that proceeding since the EDNY case settled and defendants did not bring a separate legal malpractice lawsuit against plaintiff based upon the alleged misconduct from 2018 they now complaint about. Instead, only after plaintiff sought recovery for its unpaid legal bills did defendants suddenly insist that plaintiff committed legal malpractice. Unfortunately, mere unhappiness with what an opposing party says or with an attorney is not a basis for a legal malpractice counterclaim. There must be some identifiable negligence committed by the attorney that causes damage to the client. And, here, the Court is unable to identify what exactly plaintiff did wrong — plaintiff settled the EDNY case for defendants and defendants are simply unhappy with that the Kleins wrote a nasty note. The settlement agreement required that plaintiff file a stipulation of dismissal upon receipt of the settlement check and did not contain a provision allowing defendants to pause the settlement at that point. Even if plaintiff was supposed to take additional steps to settle the rabbinical proceeding (even assuming plaintiff actually represented defendants in that case), defendants did not sufficiently show that they suffered any damages as a result of this purported failure. Accordingly, it is hereby ORDERED that the motion by plaintiff to dismiss defendants’ counterclaim for legal malpractice is granted. Remote Conference: March 3, 2022 at 12:00 p.m. (NYSCEF Doc. No. 54). CHECK ONE: CASE DISPOSED X NON-FINAL DISPOSITION X GRANTED DENIED GRANTED IN PART OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE Dated: February 1, 2022
