FKB's Andrew Kowlowitz Obtains Dismissal of a Breach of Fiduciary Duty Claim Against Real Esate Attorney. 1/14/10

Furman Kornfeld & Brennan's client, a Long Island-based real estate attorney, represented the owner of commercial real property in connection with the drafting and negotiation of a commercial lease to a physician tenant. Previously, the defendant attorney had represented this same physician in connection with multiple other real estate-related transactions, including purchases, sales and leases.

After the execution of the lease and the physician tenant took possession of the premises, a dispute arose between the landlord and tenant concerning rent payments and various other lease provisions. When the dispute reached an impasse, the landlord commenced suit in the New York County Supreme Court to evict the tenant and obtain an award of damages. In response, the tenant filed a third-party action against the landlord's attorney (FKB's client) alleging that he had breached a fiduciary duty, as the tenant was under the impression that the defendant attorney would protect his interest as respects the lease negotiation given their preexisting relationship. The tenant further alleged that the defendant attorney engaged in a non-waivable conflict of interest and violated the Disciplinary Rules when he took a position adverse to his and agreed to represent the landlord.

In response to the third-party action, FKB filed a pre-answer motion to dismiss the pleading pursuant CPLR Section 3211 (a) (1) and (a) (7). Among other things, FKB argued that the tenant could not plead a claim for breach of fiduciary as the tenant could not establish privity as respects the transaction at issue. FKB argued that since the tenant could not prove the existence of an attorney-client relationship in connection with the lease negotiation, a claim for breach of fiduciary duty may not lie. FKB annexed documentary evidence to the motion papers which demonstrated that the defendant attorney disclosed that he was representing the landlord's interest in connection with the transaction.

On December 29, 2009, Hon. Martin Shulman, J.S.C. (NY County) granted the third-party defendant's motion to dismiss in its entirety finding that the tenant's failure to establish privity precluded him from pleading and proving a viable claim for breach of fiduciary. The Court further found that the tenant's claim for Disciplinary Rule violations could not stand in light of the failure to plead an actionable claim.

Please contact FKB's Mike Furman or Andrew Kowlowitz should you have any questions about the decision or this practice area in general.

Andrew Kowlowitz's bio / email | Mike Furman's bio / email

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