Martin v. Claude Castro & Assoc. PLLC

This is a legal-malpractice action. Defendants, Claude Castro and Associates PLLC, Claude Castro, Esq., and Daniel Paul Martin, Esq., represented plaintiffs, Steven and Jodee Martin, in multiple lawsuits in Housing Court and Supreme Court that arose from a carpet-beetle infestation in the Martins’ Manhattan apartments. The Housing Court proceeding, brought by plaintiffs’ landlord, was decided against them. The Supreme Court action, brought by plaintiffs, was voluntarily discontinued. Plaintiffs, dissatisfied with the outcomes of those lawsuits, and with defendants’ legal representation, later brought this action. Plaintiffs initially asserted several causes of action, of which the only one that remains is a legal-malpractice claim. Defendants now move for summary judgment dismissing the malpractice claim. Plaintiffs cross-move for summary judgment in their favor on that claim. Defendants’ motion is granted; plaintiffs’ cross-motion is denied. BACKGROUND In September 2009, plaintiffs discovered that their apartments were infested with carpet beetles. Plaintiffs informed their landlord of the infestation and asked the building manager to inspect the apartments and provide an exterminator. (NYSCEF No. 151 [plaintiffs and defendants' emails from November to December 2009].) The building manager refused to inspect the apartments and advised plaintiffs that the building’s exterminator was unavailable for a week. (NYSCEF No. 152 [plaintiffs and defendants' emails about the complaint in Supreme Court].) Landlord’s exterminator serviced the apartments about six weeks later. (NYSCEF No. 151.) But the infestation persisted. To combat the infestation, plaintiffs hired exterminators, cleaners, and an entomologist from the American Museum of Natural History. Plaintiffs also dry-cleaned their clothes more often and stayed in hotels twice, from October 26, 2009, to October 29, 2009, and from April 23, 2010, to April 26, 2010, because their apartment was uninhabitable. (NYSCEF No. 159 [plaintiffs' discovery and interrogatory response].) Plaintiffs contacted defendants in early November 2009, after receiving a referral from a friend. (NYSCEF No. 150 [plaintiffs' first email contact with defendants].) From November 2009 until February 3, 2010, defendants represented plaintiffs on a pro-bono basis in negotiations with their landlord. (NYSCEF No. 151.) During these negotiations, plaintiffs stopped paying rent to their landlord. Negotiations soured, and plaintiffs formally retained defendants on February 3, 2010, to sue their landlord. (NYSCEF No. 122.) On February 8, 2010, plaintiffs’ landlord began two summary proceedings against them in Housing Court for nonpayment of rent (one for each apartment plaintiffs rented). These two nonpayment proceedings were consolidated into one proceeding in March 2010. (NYSCEF Nos. 94, 123 [Housing Court complaint].) On February 19, 2010, defendants brought an action in Supreme Court on plaintiffs’ behalf against their landlord. (NYSCEF Nos. 122, 124.) The complaint alleged several causes of action, including a breach of the warranty of habitability, emotional distress, property damage, and a breach of the lease. The complaint sought damages and an injunction to compel landlord to abate the building’s beetle infestation. (Id.) On February 26, 2010, defendants filed an answer in Housing Court raising several affirmative defenses. The answer did not raise a defense related to a breach of the warranty of habitability. (See NYSCEF No. 125.) Defendants then moved in Supreme Court to stay the Housing Court proceedings and to consolidate the cases. In support of the motion, defendants argued that the claims in the Supreme Court action acted as defenses and set-offs to the claims raised by plaintiffs’ landlord in the Housing Court proceedings and that Housing Court lacked jurisdiction to adjudicate plaintiffs’ claims for injunctive relief, property damage, and damage for emotional distress. Defendants also argued that the nonpayment proceedings in Housing Court and the Supreme Court action had similar questions of fact and law, and that plaintiffs’ landlord had not established that it would be prejudiced by consolidation. In May 2010, Supreme Court (Louis B. York, J.) held that consolidating the Housing Court and Supreme Court cases was improper because no common questions of fact and law existed between the two disputes. The court noted that landlord-tenant matters would be more appropriately adjudicated in Housing Court. (NYSCEF No. 153 [reproducing decision].) Plaintiffs’ landlord then moved for summary judgment in Housing Court. Plaintiffs cross-moved to dismiss the nonpayment proceedings or, in the alternative, to amend their pleadings to assert a defense of a breach of warranty of habitability and constructive eviction. Housing Court (Brenda Spears, J.) denied defendants’ cross-motion to amend their pleadings. The court concluded, after reviewing the Supreme Court ruling denying consolidation, that “this court is constrained to deny respondent’s request to amend his answer to include warranty of habitability claims and defenses.” Housing Court also awarded plaintiffs’ landlord $46,520.00, plus attorney fees to be determined after a hearing. (NYSCEF No. 155 [reproducing decision].) After Supreme Court denied consolidation, the action continued in that court. On June 9, 2010, the court issued a preliminary-conference order to set a discovery schedule. The order provided, among other things, that plaintiffs had 30 days to respond to landlord’s request for a bill of particulars and to landlord’s interrogatories. (See NYSCEF No. 173 at 1-2 [conference orders in Supreme Court action].) Plaintiffs did not do so.¹ Over the remainder of 2010 and part of 2011, the court-ordered discovery deadlines were repeatedly extended. (See id. at 5-11.) Plaintiffs still did not provide the required discovery.² In April 2011, plaintiff Steven Martin emailed defendant Castro, telling him, “[l]et’s just see if we can settle this. I don’t think there is any stomach on the part of my wife to fight anymore. time killed that.” (NYSCEF No. 136.) In November 2011, landlord moved to dismiss the action under CPLR 3126 for failure to provide court-ordered discovery, or in the alternative to preclude plaintiffs from offering any evidence. (See NYSCEF No. 127 at 15-17 [attorney affirmation in support of motion].) After negotiations between Castro and landlord, the motion was withdrawn in exchange for plaintiffs’ discontinuing the action without prejudice.³ In March 2012, Housing Court (Laurie L. Lau, J.) awarded plaintiffs’ landlord $37,253.03 in attorney fees incurred in the Housing Court proceeding. (NYSCEF No. 156 [reproducing decision].) After Housing Court awarded fees, defendants tried, unsuccessfully, to negotiate a settlement offer with plaintiffs’ former landlord. (See NYSCEF No. 157.) Plaintiffs and defendants did not contact each other from 2012 until August 21, 2014. In 2014, plaintiffs brought this action, asserting six causes of action, including one for legal malpractice. This court granted defendants’ motion to dismiss five of those six causes of action, leaving only the legal-malpractice claim.⁴ (See Martin v. Claude Castro & Assoc. PLLC, 2016 NY Slip Op 31183[U], at *2 [Sup Ct, NY County June 24, 2016].) Defendants now move for summary judgment under CPLR 3212, seeking dismissal of that remaining malpractice cause of action. Plaintiffs cross-move for summary judgment in their favor on the malpractice claim. DISCUSSION A party bringing a motion for summary judgment “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.” (Alvarez v. Prospect Hosp., 68 NY2d 320, 324 [1986].) Once the movant establishes its prima facie entitlement, the opposing party must also tender evidence showing the existence of a triable factual issue, with inferences drawn in the nonmoving party’s favor. (See Zuckerman v. City of New York, 49 NY2d 557, 560 [1980].) To survive a motion for summary judgment on a legal-malpractice claim, plaintiffs must show that the defendants “failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that this failure caused the plaintiff to sustain actual and ascertainable damages.” (Brookwood Companies, Inc. v. Alston & Bird LLP, 146 AD3d 662,667 [1st Dept 2017].) An attorney’s conduct is the proximate cause of a plaintiff’s damages only if plaintiffs show that they would have succeeded on the merits of the underlying action but for the attorney’s negligence.⁵ (See e.g. Stawski v. Pasternack, Popish & Reif, P.C., 54 AD3d 619, 620 [1st Dept 2008].) I. Whether Defendants’ Decision not to Initially Raise the Warranty of Habitability in the Housing Court Proceedings Constitutes Actionable Malpractice. Under the attorney judgment rule “[a]n attorney’s selection of one among several reasonable courses of action does not constitute malpractice.” (Rosner v. Paley, 65 NY2d 736, 738 [1985].) Legal strategies with a reasonable basis are not actionable. Nor is a former client’s “hindsight criticism” of a legal strategy. (Brookwood Cos., Inc. v. Alston & Bird LLP, 146 AD3d 662, 667 [1st Dept 2017].) Plaintiffs argue that defendant Castro’s decision not to raise a breach of the warranty of habitability as an affirmative defense in the Housing Court answer constituted malpractice. In support, plaintiffs point to Justice York’s May 2010 decision, which noted that Housing Court would be the more appropriate forum for landlord-tenant matters. Plaintiffs also argue that Castro incorrectly believed he would be barred from raising a breach of the warranty of habitability as both an affirmative defense in Housing Court and a separate claim in Supreme Court. Plaintiffs argue that Castro’s choice not to raise the defense in his answer to the nonpayment proceedings caused plaintiffs to suffer damages in the form of judgments rendered against them. This court concludes that Castro’s decision to refrain initially from raising a warranty-of-habitability defense in his Housing Court answer, in favor of raising it as an affirmative claim in Supreme Court, was a reasonable strategic choice rather than actionable malpractice. An attorney may choose to bring an affirmative action for a breach of the warranty of habitability in Supreme Court. (See Fabricius v. 1150 Fifth Ave. Owners Corp, 2021 NY Slip Op 30215[U], at *2 [Sup Ct, NY County 2021]; Metro 765, Inc. v. Eighth Ave. Sky, LLC, 2017 NY Slip Op 30898[U], at *5 [Sup Ct, NY County 2017]; W. 189, LLC v. Louis-Jeune, 2016 NY Slip Op 31614[U], at *1 [Sup Ct, NY County 2016].) And Castro has provided valid and reasonable explanations for his choosing to litigate the warranty of habitability claim in the Supreme Court. For example, his clients would be entitled to discovery as of right in an action in Supreme Court; whereas discovery is available in a nonpayment summary proceeding in Housing Court only upon a showing of “ample need.” (New York Univ. v. Farkas, 121 Misc 2d 643, 646 [Civ Ct, NY County 1983].) And the Martins would not be able to assert in Housing Court claims for property or emotional distress that were grounded in a breach of the lease or the warranty of habitability, because “damages traditionally within the scope of tort liability…are more appropriately tried outside the limited sphere of landlord-tenant proceedings.” (390 W. End Associates v. Raiff, 166 Misc 2d 730, 734-735 [App Term, 1st Dept 1995]; see also NY City Civ Ct Act (CCA) §110 [a] [delineating scope of actions and proceedings to be heard in Housing Court]; 610 West 142nd St. Owners Corp. v. Braxton, 140 Misc 2d 826, 827 [App Term, 1st Dept 1988].) To be sure, Castro erred in believing that the Martins could not obtain an injunction in Housing Court compelling landlord to abate the insect infestation in the plaintiffs’ apartment and the building. (See Central Park Gardens, Inc. v. Klein, 107 Misc 2d 414, 415 [Civ Ct, NY County 1980] [holding that CCA §110 confers on Housing Court "the power to issue injunctions and restraining orders for the enforcement of housing standards promulgated under State and local laws"].) But even setting this (erroneous) reason aside, Castro’s other reasons for proceeding in Supreme Court rather than Housing Court are valid and reasonable justifications for that strategic choice. Castro also erred in his initial belief that he could not have both brought an affirmative warranty-of-habitability claim in Supreme Court and raised a warranty-of-habitability defense in Housing Court. (See Atherton v. 21 E. 92nd St. Corp., 149 AD2d 354, 355 [1st Dept 1989] ["[P]laintiff’s claim for breach of the implied warranty of habitability may be interposed as a defense to the Civil Court action for rent and has been raised affirmatively in the Supreme Court action.”) But the record of the Housing Court proceeding reflects that Castro attempted to correct this error by moving to amend the Martins’ answer in that proceeding to add a warranty-of-habitability defense.⁶ Castro persuasively argued in his papers on that motion that landlord would not be prejudiced by adding a warranty-of-habitability defense because landlord had been well aware of the carpet-beetle infestation before litigation began, and that a claim for the breach of the warranty of habitability arising from that infestation was pending in Supreme Court. And landlord conceded that it was aware of the substance of the proceedings in the Supreme Court. Housing Court nonetheless denied Castro’s motion to amend his pleadings, based on Supreme Court’s consolidation decision, which the court read as holding that plaintiffs’ warranty-of-habitability claim raised in the Supreme Court action was completely unrelated to their defenses in the Housing Court proceeding. (See NYSCEF No. 155 at 4-5.) It is not clear, though, why Housing Court should have viewed itself as bound by Supreme Court’s legal conclusion on that point; nor, for that matter, why it should matter for leave-to-amend purposes that plaintiffs’ warranty-of-habitability defense to landlord’s rent-nonpayment claims in Housing Court would rest on different facts from plaintiffs’ other defenses. That Housing Court perhaps erred in rejecting Castro’s proper arguments for permitting plaintiffs to amend their pleadings does not constitute malpractice on Castro’s part. Further, even if Castro’s decision not to raise the warranty of habitability in the initial Housing Court answer fell below reasonable professional standards, plaintiffs have not shown that a dispute of fact exists about whether that decision proximately caused them harm. It did not. The statute of limitations for a warranty-of-habitability claim is six years from accrual. (See CPLR 213 [2].) Here, the claim accrued no earlier than November 2009. Because the Supreme Court action was discontinued without prejudice, plaintiffs could, if they chose, have refiled a warranty-of-habitability claim (and thus recovered part of the rent awarded to their landlord in the Housing Court proceeding, plus attorney fees) until November 2015. Plaintiffs did not do so. Nor were they prevented from doing so by any act of defendants. II. Whether Defendants’ Handling of Plaintiffs’ Claims in the Supreme Court Action Constitutes Actionable Malpractice Plaintiffs also raise a series of challenges to defendants’ handling of the Supreme Court action. Plaintiffs contend that defendants (i) failed to litigate the action properly; (ii) unilaterally settled the action without plaintiffs’ consent; and (iii) then failed for three years to notify plaintiffs of the settlement. Defendants hotly defend the merits of their representation of plaintiffs in the Supreme Court action. Defendants contend, for example, that they were hampered in preparing filings in the action and producing discovery because plaintiffs failed to provide them any documents related to the claims in the action. With respect to the issue of settlement, defendants point to the email from Steven Martin to Castro in which he told Castro to “[l]et’s just see if we can settle this.”⁷ And defendants contend that they promptly informed plaintiffs that they had discontinued plaintiffs’ action. Defendants’ arguments that they met professional standards in representing plaintiffs have considerable force. Moreover, even if one were to credit plaintiffs’ version of the facts, defendants are correct to argue that plaintiffs have not shown that defendants’ actions harmed them with respect to their claims in the Supreme Court action, because plaintiffs had ample opportunity to relitigate those claims after defendants had settled the action. Defendants discontinued the Supreme Court action without prejudice, thus permitting the claims in that action to be reasserted later. And those claims were not barred by the statute of limitations. With respect to plaintiffs’ security-deposit/repairs claims, plaintiffs had alleged that those claims accrued in 2010. Because those claims arose from an alleged breach by landlord of the lease, they would have been subject to the six-year statute of limitations governing contract claims. (See CPLR 213 [2].) Thus, even assuming that Castro did not litigate the Supreme Court action properly, that Castro discontinued the action in 2011 without plaintiffs’ consent, and that Castro did not notify plaintiffs until 2014 that he had discontinued that suit, plaintiffs still then had another two years to recommence the action. They chose not to do so. With respect to plaintiffs’ property-damage claims, plaintiffs argue that those claims were subject to a three-year limitations period (rather than a six-year period), which had expired by 2014. This court disagrees. It is true that the statute of limitations on a property-damage claim is ordinarily three years. (See CPLR 214 [4].) But where a property-damage claim arises from a landlord-tenant relationship having “its genesis in contract, and the events giving rise to [the] action directly implicate[] the landlord-tenant relationship,” the claim is governed by the six-year statute of limitations for breach of contract. (Novita LLC v. 307 W. Rest. Corp., 35 AD3d 234, 234 [1st Dept 2006], citing Baratta v. Kozlowski, 94 AD2d 454, 463-464 [2d Dept 1983].) As a result, plaintiffs would have been able to assert their property-damage claim until November 2015 — a year after they had commenced this action.⁸ In short, plaintiffs’ choice to let lie the claims that they had asserted in the Supreme Court action breaks the chain of causation between defendants’ asserted failures of representation in that action and any related injuries that plaintiffs claim they suffered. Defendants are entitled to summary judgment on plaintiffs’ malpractice claims arising from the Supreme Court action.⁹ III. Whether Defendants’ Alleged Failure to Inform Plaintiffs of the Status of Their Housing Court Proceedings Constitutes Actionable Malpractice Plaintiffs allege that defendants failed to inform them of the judgments rendered against them in Housing Court. Plaintiffs argue that defendants’ failure to inform them of the housing court judgments constituted malpractice which deprived them of the opportunity to appeal the decisions and caused interest to accrue on the judgments. In his deposition, Castro testified that he informed plaintiffs of the Housing Court judgment against them during a phone call. (See NYSCEF No. 138 at Tr. 109 [Claude Castro deposition].) Defendant Castro also testified that he did file a notice of appeal on the judgment but chose not to perfect an appeal because plaintiffs instructed him to settle the suit. (Id. at 55.) The question whether a failure to inform one’s clients of judgments rendered against them constitutes legal malpractice is one of first impression. Although Rule 1.4 (a) (3) of the Rules of Professional Conduct provides that attorneys have a duty to keep their clients reasonably informed as to the status of their cases, “[t]he violation of a disciplinary rule does not, without more, generate a cause of action.” (Schwartz v. Olshan Grundman Frome & Rosenzweig, 302 AD2d 193, 199 [1st Dept 2003]; 22 NYCRR 1200.0; Matter of Blank, 110 AD3d 112, 115-116 [1st Dept 2013].) While the Appellate Division has not considered these exact issues, the Court has considered similar circumstances, in which it was alleged that an attorney failed to inform their client of a settlement offer. (Drasche v. Edelman & Edelman, 201 AD3d 434, 435 [1st Dept 2022]; see also Cannistra v. O’Connor, McGuinness, Conte, Doyle, Oleson & Collins, 286 AD2d 314, 315 [2d Dept 2001].) In these circumstances, the Court has held that the plaintiff must plead that “but for” the attorney’s negligence in communicating the offer, the plaintiff would have accepted the offer and thus would not have sustained damages. Plaintiffs thus must introduce evidence raising a material dispute of fact about whether, but for Castro’s alleged negligence in communicating with plaintiffs about the judgments, plaintiffs would have paid those judgments. Plaintiffs have not raised a factual dispute on this point. In fact, plaintiffs still have not paid the outstanding judgments against them.¹⁰ Accordingly, for the foregoing reasons, it is hereby ORDERED that plaintiffs’ cross-motion under CPLR 3212 for summary judgment in their favor is denied; and it is further ORDERED that defendants’ motion under CPLR 3212 for summary judgment dismissing the action is granted, and the action is dismissed, with costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs by defendants; and it is further ORDERED that defendants serve a copy of this order with notice of its entry on plaintiffs and on the office of the County Clerk, which shall enter judgment accordingly. Dated: February 9, 2023