GRACE, JOHN W. v. LAW, MICHAEL R.

SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

625

CA 13-00036

PRESENT: SCUDDER, P.J., PERADOTTO, LINDLEY, SCONIERS, AND WHALEN, JJ.

JOHN W. GRACE, PLAINTIFF-RESPONDENT,

V MEMORANDUM AND ORDER

MICHAEL R. LAW, PHILLIPS LYTLE, LLP, ROBERT L.

BRENNA, JR., AND BRENNA, BRENNA & BOYCE, PLLC,

DEFENDANTS-APPELLANTS.

PHILLIPS LYTLE, LLP, BUFFALO (KEVIN J. ENGLISH OF COUNSEL), FOR

DEFENDANTS-APPELLANTS MICHAEL R. LAW AND PHILLIPS LYTLE, LLP.

SMITH, SOVIK, KENDRICK & SUGNET, P.C., SYRACUSE (GREGORY D. ERIKSEN OF

COUNSEL), FOR DEFENDANTS-APPELLANTS ROBERT L. BRENNA, JR. AND BRENNA,

BRENNA & BOYCE, PLLC.

LOTEMPIO & BROWN, P.C., BUFFALO (BRIAN J. BOGNER OF COUNSEL), FOR

PLAINTIFF-RESPONDENT.

Appeals from an order of the Supreme Court, Erie Court (Shirley

Troutman, J.), entered October 3, 2012. The order, insofar as

appealed from, denied the motion of defendants Robert L. Brenna, Jr.,

and Brenna, Brenna & Boyce, PLLC for summary judgment and denied that

part of the cross motion of defendants Michael R. Law and Phillips

Lytle, LLP seeking summary judgment.

It is hereby ORDERED that the order so appealed from is affirmed

without costs.

Memorandum: Plaintiff commenced this legal malpractice action

seeking damages for the alleged negligence of defendants in their

representation of him in a medical malpractice action arising from his

treatment for an eye condition at the Veterans Administration

Outpatient Clinic in Rochester. In August 2006, defendants Robert L.

Brenna, Jr. and Brenna, Brenna & Boyce, PLLC (hereafter, Brenna

defendants) commenced an administrative tort claim against the United

States on plaintiff’s behalf by filing an SF-95 form with the Veterans

Administration (hereafter, VA). After six months elapsed without a

response from the government, Brenna recommended that plaintiff retain

defendants Michael R. Law and Phillips Lytle, LLP (hereafter, Law

defendants) to pursue a medical malpractice claim in federal court.

Plaintiff retained the Law defendants in or about July 2007 and, on

January 3, 2008, the Law defendants filed a complaint in the United

States District Court for the Western District of New York against the

United States and the VA (collectively, government) under the Federal

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Tort Claims Act ([FTCA] 28 USC § 2671 et seq.). The complaint

alleged, inter alia, that the VA failed to monitor and/or treat

plaintiff’s eye condition in a proper and timely manner, thereby

resulting in the loss of vision in plaintiff’s right eye.

While preparing for the deposition of Dr. Shobha Boghani, the

physician who primarily treated plaintiff at the VA, the government

apparently discovered that Dr. Boghani was employed by the University

of Rochester (hereafter, U of R). As a result, in October 2008, the

government sought and was granted leave to file a third-party action

against Dr. Boghani and the U of R. The addition of the U of R

created a conflict for the Law defendants and, as a result, the Brenna

defendants assumed sole responsibility for the medical malpractice

action in December 2008. On May 22, 2009, Brenna filed an amended

complaint in federal court naming the U of R and Dr. Boghani as

defendants and asserting state-law claims for medical malpractice. By

order dated November 3, 2010, District Court granted the motion of the

U of R and Dr. Boghani for summary judgment dismissing the amended

complaint against them as time-barred. The court also granted the

government’s motion for summary judgment dismissing the FTCA claims

against it insofar as based upon the alleged negligence of the U of R

and Dr. Boghani, concluding that Dr. Boghani was an independent

contractor and not an employee of the VA. The only remaining claim in

the amended complaint was that the VA was negligent in failing to

reschedule an ophthalmology appointment after a July 2003 appointment

was cancelled.

Shortly thereafter, plaintiff directed the Brenna defendants to

discontinue the federal action and, on December 16, 2011, a

stipulation of discontinuance was entered in federal court. Plaintiff

then commenced this legal malpractice action alleging, inter alia,

that defendants were negligent in failing to name Dr. Boghani and the

U of R in the initial complaint in federal court. The Brenna

defendants subsequently moved for summary judgment dismissing the

complaint against them, and the Law defendants cross-moved for leave

to amend their answer to add a statute of limitations defense and for

summary judgment dismissing the complaint against them. Supreme Court

denied the Brenna defendants’ motion, granted that part of the Law

defendants’ cross motion seeking leave to amend their answer, and

denied that part of their cross motion for summary judgment dismissing

the complaint against them. We affirm.

“To establish a cause of action to recover damages for legal

malpractice, a plaintiff must prove that the defendant attorney failed

to exercise ‘the ordinary reasonable skill and knowledge commonly

possessed by a member of the legal community, and that the attorney’s

breach of [that] duty proximately caused plaintiff to sustain actual

and ascertainable damages’ ” (Velie v Ellis Law, P.C., 48 AD3d 674,

675). “To obtain summary judgment dismissing a complaint in an action

to recover damages for legal malpractice, a defendant must demonstrate

that the plaintiff is unable to prove at least one of the essential

elements of [his or her] legal malpractice cause of action” (Boglia v

Greenberg, 63 AD3d 973, 974; see Pignataro v Welsh, 38 AD3d 1320,

1320, lv denied 9 NY3d 849).

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Initially, we reject defendants’ contention that plaintiff waived

or abandoned his legal malpractice claim by voluntarily discontinuing

what remained of his medical malpractice action and failing to take an

appeal from District Court’s November 2010 order dismissing the bulk

of his claims. In support of that contention, defendants primarily

rely upon this Court’s decision in Rupert v Gates & Adams, P.C. (83

AD3d 1393, 1396), in which we concluded that the plaintiff waived his

right to raise certain allegations of legal malpractice in the context

of a matrimonial action based upon his execution of a settlement

agreement. Specifically, we concluded that, although certain

allegations of legal malpractice had merit, Supreme Court in that case

“did not err in granting defendants’ motion concerning those alleged

errors because they could have been corrected on an appeal from the

final judgment in the matrimonial action, and plaintiff consented to

the dismissal on the merits of any appeal in the matrimonial action as

part of the global settlement resolving a bankruptcy proceeding in

which he was involved. In so doing, plaintiff precluded pursuit of

the very means by which defendants’ representation of plaintiff in the

matrimonial action could have been vindicated . . . We therefore

conclude that plaintiff, by virtue of his global settlement, waived

the right to raise those shortcomings in this legal malpractice

action” (id. [emphasis added]).

Here, unlike in Rupert, plaintiff did not, as part of a

settlement agreement or otherwise, waive his right to raise the claim

that defendants committed malpractice in the underlying action by

failing to sue the appropriate parties before the expiration of the

applicable statute of limitations. Rather, plaintiff discontinued his

federal medical malpractice action, which the court had reduced to the

claim that employees of the VA were negligent in failing to reschedule

a cancelled ophthalmology appointment, and commenced this legal

malpractice action in state court. We reject defendants’ invitation

to extend the ruling in Rupert to a per se rule that a party who

voluntarily discontinues an underlying action and forgoes an appeal

thereby abandons his or her right to pursue a claim for legal

malpractice. Indeed, we noted in Rupert that, in determining that the

court erred in granting the defendants’ cross motion for summary

judgment dismissing the complaint in the context of a prior appeal

(Rupert v Gates & Adams, P.C., 48 AD3d 1221), we “necessarily rejected

the very premise upon which the court denied the instant motion for

summary judgment,” i.e., that “this legal malpractice action is barred

by [the] plaintiff’s failure to perfect an appeal from the judgment in

the matrimonial action” (id. at 1395).

Although the precise question presented herein appears to be an

issue of first impression in New York, we note that several of our

sister states have rejected the per se rule advanced by defendants

herein (see e.g. MB Indus., LLC v CNA Ins. Co., 74 So 3d 1173, 1176;

Hewitt v Allen, 118 Nev 216, 217-218, 43 P3d 345, 345-346; Eastman v

Flor-Ohio, Ltd., 744 So 2d 499, 502-504; Segall v Segall, 632 So 2d

76, 78). As has been noted, such a rule would force parties to

prosecute potentially meritless appeals to their judicial conclusion

in order to preserve their right to commence a malpractice action,

thereby increasing the costs of litigation and overburdening the court

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system (see Eastman, 744 So 2d at 504). The additional time spent to

pursue an unlikely appellate remedy could also result in expiration of

the statute of limitations on the legal malpractice claim (see MB

Indus., 74 So 3d at 1181). Further, requiring parties to exhaust the

appellate process prior to commencing a legal malpractice action would

discourage settlements and potentially conflict with an injured

party’s duty to mitigate damages (see Crestwood Cove Apts. Bus. Trust

v Turner, 164 P3d 1247, 1254; Eastman, 744 So 2d at 504).

Here, we conclude that defendants failed to establish as a matter

of law that any alleged negligence on their part was not a proximate

cause of plaintiff’s damages (see Wilk v Lewis & Lewis, P.C., 75 AD3d

1063, 1066; New Kayak Pool Corp. v Kavinoky Cook, LLP, 74 AD3d 1852,

1853; Andzel v Cosgrove, 56 AD3d 1226, 1227). Specifically,

defendants failed to establish that plaintiff was likely to succeed on

an appeal from the November 2010 order and, therefore, that their

alleged negligence was not a proximate cause of his damages (see

Crestwood Cove Apts. Bus. Trust, 164 P3d at 1252; Hewitt, 118 Nev at

222, 43 P3d at 348; see also Technical Packaging, Inc. v Hanchett, 992

So 2d 309, 316, review denied 6 So 3d 52; cf. Bradley v Davis, 777 So

2d 1189, 1190, dismissed 805 So 2d 804, cert denied 535 US 926).

Notably, the record before us does not include the full record from

the underlying action, i.e., the record that would have been before

the Second Circuit on an appeal (see Technical Packaging, Inc., 922 So

2d at 315). Thus, while defendants “may be able to show that [their]

representation of [plaintiff] did not preclude [him] from prevailing

in the [underlying] lawsuit [or upon appeal], [they have] not done so

at this time” (Lenahan v Russell L. Forkey, P.A., 702 So 2d 610, 612).

The Law defendants also contended in support of that part of

their cross motion for summary judgment dismissing the complaint

against them that the action was time-barred. Even assuming,

arguendo, that they met their initial burden on the cross motion in

that respect, we conclude that plaintiff raised a triable issue of

fact whether the continuous representation doctrine applied to toll

the statute of limitations (see Sobel v Ansanelli, 98 AD3d 1020, 1023;

International Electron Devices [USA] LLC v Menter, Rudin &

Trivelpiece, P.C., 71 AD3d 1512, 1512-1513).

All concur except WHALEN, J., who dissents and votes to reverse

the order insofar as appealed from in accordance with the following

Memorandum: I respectfully dissent because, in my view, plaintiff is

precluded as a matter of law from bringing this legal malpractice

action based upon his voluntary discontinuance of the underlying

federal action and failure to pursue a nonfrivolous appeal. It is

important to note that, if plaintiff had been successful in his appeal

in the underlying federal action, we would not have a subsequent legal

malpractice case.

In the underlying federal medical malpractice case, defendants

failed to name a certain physician as a defendant, which is the basis

of the subsequent legal malpractice claim. Defendants’ contention is

that the physician was a government employee and thus was not required

to be named individually as a defendant because the government was

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already a party. The federal trial court determined that the

physician was an independent contractor, not a government employee. I

conclude that defendants would have had a meritorious argument had

plaintiff taken an appeal from the federal order based upon case law

supporting defendants’ position that the physician was a government

employee as opposed to an independent contractor. Federal courts have

employed the “control test” to determine if an individual or other

entity equitably should be considered an “employee” of the federal

government for purposes of the Federal Tort Claims Act ([FTCA] 28 USC

§ 2671 et seq.) because the FTCA waives sovereign immunity for the

torts of employees of the government but not for those of its

independent contractors (see United States v Orleans, 425 US 807, 813-

814). “[I]t is well settled that the question whether one is an

employee of the United States is to be determined by federal law”

(Lurch v United States, 719 F2d 333, 337 [10th Cir 1983], cert denied

466 US 927). Courts look to factors such as which entity determined

the amount of the individual’s salary, who actually paid that sum,

whether the government exercised day-to-day control over the

individual, what entity determined the individual’s work hours and

provided for vacation leave, whether the government had the authority

to review the individual’s performance and any other factors relating

to the government’s exercise of control over the individual’s work

(see Leone v United States, 910 F2d 46, 50 [2d Cir 1990], cert denied

499 US 905; see also Tivoli v United States, 1996 WL 1056005, *3-5 [SD

NY], affd 164 F3d 619 [2d Cir 1998]; Lurch, 719 F2d at 336-337

[reciting test and determining that the individual was an independent

contractor based on the contract itself]).

In Tivoli, physicians employed by Georgetown University

(Georgetown) worked full-time at the National Institutes of Health

(NIH) (id. at *3). The contract specified the names of the physicians

who would serve as “key personnel,” and the government had to approve

those key personnel so that it could ensure quality physicians (id.).

Georgetown had no supervision over any of the physician’s day-to-day

activities (id.). The NIH set forth by contract the hours that the

physicians worked and provided all medical equipment and facilities

necessary for the physicians to complete their work (id.). In fact,

the only factor demonstrating that the physicians were Georgetown

employees was that they received their salaries from Georgetown (id.

at *4). The District Court found, based on the various factors, that

the physicians were under the control, direction and supervision of

the government and thus were employees of the government despite

language to the contrary in the contract. In the case before us now,

the physician was mentioned by name in the contract but it is unclear

whether this was because the Veterans Administration (VA) requested

her specifically or because the University of Rochester designated her

as an available physician for the VA. Had the VA specifically

designated the physician, that would be evidence of its having

exercised control and could weigh in favor of a finding that she was

an employee of the VA.

In Williams v United States (2007 WL 951382 [SD NY 2007]), the

District Court initially noted that, although the contract declared

that the physician was not to be considered a government employee for

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any reason, the court was not bound by the language of the contract in

determining whether the physician was a government employee for

purposes of the FTCA (see id. at *10). The court found that the

physician, by contract, was to “ ‘be under the direction of the Chief

[of Bronx VA]’ ” and was required to provide his services “ ‘in

accordance with VA policies and procedures,’ ” and that “ ‘personnel

assignments [by the contracting entity] were subject to the approval

of the Bronx VA Chief of Staff’ ” (id. at *11). Finally, the court

noted that the government “controlled not only [the physician’s] work

hours and vacation time . . . , but where he worked, who he saw, and

what he did during those hours” (id. at *12). In denying the

government’s motion for summary judgment dismissing the complaint, the

court determined that “a reasonable factfinder could conclude that

[the physician] qualifie[d] under the FTCA as an ‘employee’ of the

Bronx VA” (id.). In the case now before us, the physician was

required to work at the VA Outpatient Clinic six days per month.

Additionally, other physicians could only be substituted for the named

physician in the event that she became permanently or temporarily

unavailable due to vacation, illness, emergencies or termination of

employment. That is additional evidence weighing in favor of

classifying the physician as an employee of the VA.

The federal court in the underlying medical malpractice action

herein found that, “[w]hile the fact that the VA provided the place of

work, as well as the tools, for the most part, weighs in favor of

finding that [the physician] was the VA’s agent,” consideration of all

of the other factors favored a finding that the physician was an

independent contractor. An appellate court could disagree with the

District Court’s weighing of the various factors regarding whether the

physician was a government employee. Inasmuch as plaintiff’s

theoretical appeal to the Second Circuit would have been before a

panel for de novo review of whether there was a “genuine factual

dispute” for resolution by a jury, plaintiff may have succeeded on

appeal in at least a reversal of defendants’ respective motions for

summary judgment (Vermont Teddy Bear Co., Inc. v 1-800 Beargram Co.,

373 F3d 241, 244). Thus, plaintiff’s decision to direct defendants to

discontinue the federal action precluded defendants from being

vindicated should the appeal have resulted in reversal.

We have held that a plaintiff in a legal malpractice action

waived his right to raise certain allegations of malpractice in the

context of a matrimonial action based upon his execution of a

settlement agreement (Rupert v Gates & Adams, P.C., 83 AD3d 1393). We

concluded there that Supreme Court “did not err in granting

defendants’ motion concerning those alleged errors because they could

have been corrected on an appeal from the final judgment in the

matrimonial action, and plaintiff consented to the dismissal on the

merits of any appeal in the matrimonial action as part of the global

settlement resolving a bankruptcy proceeding in which he was involved.

In doing so, plaintiff precluded pursuit of the very means by which

defendants’ representation of plaintiff in the matrimonial action

could have been vindicated” (id. at 1396).

Our decision in Rupert was based upon sound policy and should be

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applied here for various reasons, the first being judicial economy.

The majority is concerned that forcing a party to pursue a potentially

meritless appeal will result in increased costs of litigation and

overburdening the court system. As stated previously, I do not view

the appeal as meritless here. I believe that allowing a plaintiff to

discontinue his or her underlying case in order to pursue a legal

malpractice action will result in the increased litigation costs and

overburdening of the court system that the majority seeks to avoid. A

legal malpractice case requires commencing a separate action that not

only involves litigating the legal malpractice action but also

involves litigating the underlying action. This may result in

additional expert witnesses being called and a more lengthy discovery

process because the parties are beginning the litigation of

essentially two separate cases in state court as opposed to one in

federal court. Importantly, the parties will have to litigate the

very issue that would have been decided on appeal in the underlying

action in order to resolve the legal malpractice case. This will

obviously result in additional costs, attorney fees and use of court

resources. However, should a litigant have to pursue an appeal that

may correct a potentially erroneous trial court decision in the

underlying litigation, a subsequent legal malpractice case may be

avoided, thus saving costs and the use of court resources.

Additionally, allowing a litigant to choose to forego the appeal

process and commence a legal malpractice action against his or her

attorney allows the litigant to select a new defendant that he or she

may feel is an easier target before a jury than a physician or

hospital would be. I cannot see the merit in allowing a litigant, who

does not give his or her attorney an opportunity to pursue a

potentially meritorious appeal, to abandon his or her underlying case

as a strategic decision in order to pursue a legal malpractice claim

against his or her attorney. The appellate review of disputed issues

is an integral part of our judicial system, allowing for review,

contemplation and determination of cases by a panel of justices or

judges as opposed to a single one. Requiring the litigant to seek

final determination of the disputed issue through the appellate

process should not be looked upon as onerous, as argued by plaintiff.

I also disagree with the majority that the additional time spent

pursuing an appeal could result in the expiration of the statute of

limitations on a legal malpractice claim. That issue is easily

remedied. Nothing prevents plaintiff from commencing a separate

malpractice action that may be stayed until the resolution of the

underlying action, which includes resolution of any issues on appeal.

Second, plaintiff may also obtain a waiver of the statute of

limitations from defendants so that a subsequent legal malpractice

action would not be time-barred.

I also disagree with the majority that requiring plaintiff to

exhaust his appellate remedies interferes with settlement and

potentially conflicts with an injured party’s duty to mitigate

damages. It is speculative to assume that a certain litigation

posture will interfere with settlement over another litigation

posture. Who is to say that a case is more difficult to settle when

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there are outstanding appellate issues that may result in the reversal

of the trial court’s decision versus when there is a legal malpractice

case that must resolve both legal malpractice issues and medical

malpractice issues, as well as appellate issues. One may easily

conclude that the latter interferes more with settlement than the

former. I also disagree with the majority that plaintiff’s pursuit of

an appeal here conflicts with his duty to mitigate damages. The

proper way to mitigate damages in this case would have been for

plaintiff to pursue his appeal and also to continue to litigate his

remaining cause of action, which may have resulted in an award of some

or all of his damages. In the event that he recovered all of his

damages, a subsequent legal malpractice case would be unnecessary. In

the event that he recovered partial damages, the issues and damages

recoverable in a subsequent legal malpractice case would be limited.

Plaintiff violated his duty to mitigate by discontinuing his remaining

cause of action and foregoing his appeal in the underlying action.

I therefore would reverse the order insofar as appealed from and

grant defendants’ motion and cross motion for summary judgment seeking

dismissal of the complaint.

Entered: July 19, 2013 Frances E. Cafarell

Clerk of the Court