12-4524-bk
DelGreco v. DLA Piper

                           UNITED STATES COURT OF APPEALS
                               FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH
THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING
A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.

        At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
25th day of September, two thousand thirteen.

Present:
           ROBERT A. KATZMANN,
                      Chief Judge,
           DENNIS JACOBS,
           ROSEMARY S. POOLER,
                      Circuit Judges.

________________________________________________

IN RE: JOSEPH DELGRECO & COMPANY, INC.,

         Debtor.
________________________________________________

JOSEPH DELGRECO & COMPANY, INC.,

           Plaintiff-Appellant,

                   v.                                                   No. 12-4524-bk

DLA PIPER L.L.P. (US),

         Defendant-Appellee.
_______________________________________________
For Plaintiff-Appellant:          HARTLEY TODD BERNSTEIN, Bernstein Cherney LLP, New
                                  York, NY

For Defendant-Appellee:           JAMES P. ULWICK, Kramon & Graham, P.A., Baltimore, MD
                                  (Jean E. Lewis, Kramon & Graham, P.A., Jeffrey Schreiber,
                                  Howard Davis, Meister Seelig & Fein LLP, New York, NY, on
                                  the brief)



      Appeal from the United States District Court for the Southern District of New York
(Engelmayer, J.).

       ON CONSIDERATION WHEREOF, it is hereby ORDERED, ADJUDGED, and

DECREED that the judgment of the district court be and hereby is AFFIRMED.

       Plaintiff-Appellant Joseph DelGreco & Co. (“JDG”) appeals from a judgment entered on

October 2, 2012 by the United States District Court for the Southern District of New York

(Engelmayer, J.). That judgment enforced a Memorandum and Order dated October 1, 2012,

which granted the motion of Defendant-Appellee DLA Piper L.L.P. (US) (“DLA Piper”) for

summary judgment on all of JDG’s claims for legal malpractice. See Joseph DelGreco & Co. v.

DLA Piper L.L.P. (U.S.), 899 F. Supp. 2d 268 (S.D.N.Y. 2012). On appeal, JDG argues that a

reasonable jury could have concluded that DLA Piper’s malpractice caused losses that JDG

suffered, that the district court erred by requiring JDG to support certain claims with expert

testimony, and that the district court ignored JDG’s claim that DLA Piper committed malpractice

by representing JDG despite conflicts of interest. We assume the parties’ familiarity with the

relevant facts, the procedural history, and the issues presented for review.

       “We review a district court’s grant of summary judgment de novo, construing the

evidence in the light most favorable to the non-moving party and drawing all reasonable

inferences in its favor.” Allianz Ins. Co. v. Lerner, 416 F.3d 109, 113 (2d Cir. 2005). “We will

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affirm the judgment only if there is no genuine issue as to any material fact, and if the moving

party is entitled to a judgment as a matter of law.” Id.

       “In a diversity action based on attorney malpractice, state substantive law, here that of

New York, applies.” Nordwind v. Rowland, 584 F.3d 420, 429 (2d Cir. 2009) (quoting Rubens v.

Mason, 527 F.3d 252, 254 (2d Cir. 2008)). “To prevail on a claim for legal malpractice under

New York law, a plaintiff must establish: ‘(1) attorney negligence; (2) which is the proximate

cause of a loss; and (3) actual damages.’” Id. (quoting Achtman v. Kirby, McInerney & Squire,

LLP, 464 F.3d 328, 337 (2d Cir. 2006) (emphasis omitted)). “To establish the elements of

proximate cause and damages, a plaintiff must show that but for the defendant’s negligence, he

or she would have prevailed in the underlying action or would not have sustained any damages.”

Allianz, 416 F.3d at 118 (quoting Aversa v. Safran, 757 N.Y.S.2d 573, 574 (2d Dep’t 2003)).

“The courts generally require malpractice plaintiffs to ‘proffer expert opinion evidence on the

duty of care to meet their burden of proof in opposition to a properly supported summary

judgment motion.’” Hatfield v. Herz, 109 F. Supp. 2d 174, 179 (S.D.N.Y. 2000) (quoting Estate

of Nevelson v. Carro, Spanbock, Kaster & Cuiffo, 686 N.Y.S.2d 404, 405-06 (1st Dep’t 1999)).

Nonetheless, “the requirement that plaintiff come forward with expert evidence on the

professional’s duty of care may be dispensed with where ordinary experience of the fact finder

provides sufficient basis for judging the adequacy of the professional service.” Id. at 179

(quoting Estate of Nevelson, 686 N.Y.S.2d at 405-06 (internal quotation marks omitted)).

       On appeal, JDG focuses entirely on three of its many allegations of malpractice: (1) the

claim that DLA Piper negligently failed to ensure that JDG made a $767 interest payment

required by a contract; (2) the claim that DLA Piper improperly withdrew as JDG’s counsel in a



                                                  3
later arbitration; and (3) the claim that DLA Piper committed malpractice by representing JDG in

the arbitration despite conflicts of interest. JDG provided expert testimony in support of only the

first claim. With respect to that claim, the district court correctly concluded that no reasonable

jury could find that JDG’s failure to make the $767 payment caused the damages it suffered at

arbitration.1 As the district court persuasively reasoned, JDG had, independently of DLA Piper’s

alleged negligence, committed “abundant other . . . and more momentous” breaches of the exact

same contract. Joseph DelGreco & Co., 899 F. Supp. 2d at 283. Specifically, the evidence

showed that JDG had diverted a shipment of goods from the contractually-specified warehouse,

had failed to pay over $200,000 in invoices due under the contract, had misrepresented the

registration status of its trademark, had improperly refused to permit analysis of its books and

records, and had belatedly made five other interest payments required by the contract without

paying the accompanying late fees.2 While JDG argues that it could have cured those other

breaches, and that its supplier had in fact accepted the five tardy interest payments, it has not

explained why, unlike the other interest payments, it could not have belatedly cured its failure to



        1
           Relying on Barnett v. Schwartz, 848 N.Y.S.2d 663 (2d Dep’t 2007), JDG initially claimed that
the district court erred by requiring it to show “but for” rather than “proximate” causation. However,
Barnett recognized that:

        In the main, the cases from the Court of Appeals, including the most recent, do not
        expressly require that the negligence be either “the” or “a” proximate cause of damages,
        but require proof that, “but for” the negligence of the defendant-attorney, the
        plaintiff-client would have prevailed in the underlying action (in a classic
        lawsuit-within-a-lawsuit scenario) or would not have incurred damages (in an action
        alleging negligent advice, etc.).

 Id. at 668. In any event, JDG conceded at oral argument that it was required to prove but-for causation.
        2
           While this conduct breached a variety of agreements between JDG and its supplier, the contract
at issue in this case permitted JDG’s supplier to declare default and accelerate any available remedies in
the event that JDG breached or terminated those other agreements.

                                                    4
make the interest payment on which it rests its malpractice claim—a payment of $767 in a

contract involving more than $1,000,000. Moreover, JDG ignores the fact that the arbitrator

apparently disregarded the $767 payment, instead finding that JDG, by litigating against rather

than cooperating with its supplier, had not cured its other breaches.3 Accordingly, we affirm the

district court’s decision.

        Turning to JDG’s claim based on DLA Piper’s withdrawal as counsel, we agree with the

district court that JDG could not prevail on this claim without providing expert testimony.

Evidence in the record shows that DLA Piper communicated with JDG about its failures to pay

attorney’s fees for months before withdrawing, that DLA Piper twice helped JDG apply, albeit

unsuccessfully, for litigation financing, that JDG owed DLA Piper $275,000 in fees at the time

of DLA Piper’s withdrawal, that the arbitration would have cost another $605,000, and that JDG

apparently consented to withdrawal. A juror’s ordinary experience would not permit her to

determine whether a lawyer must incur $605,000 in expenses by continuing to represent a client

who, after repeated discussions, has already failed to pay $275,000 in fees. Instead, such a

determination requires expert interpretation of complicated rules of professional conduct. See,

e.g., N.Y. Rules of Prof’l Conduct R. 1.16(c)(5) (permitting withdrawal where “the client

deliberately disregards an agreement or obligation to the lawyer as to expenses or fees”).

Accordingly, we affirm.

        3
           Specifically, the arbitrator awarded default interest beginning on September 5, 2008, nearly a
year after JDG failed to make the $767 payment, but only thirty days after JDG moved to compel its
supplier to arbitration. Under an agreement between JDG and its supplier, if a breach remained uncured
for thirty days, the supplier could terminate the agreement, thereby accelerating all remedies available
under any contract between the parties, including the right to default interest. Although JDG argues that
the arbitrator did not specify his reasoning, it offers no support for the dubious proposition that a
reasonable jury, and thus a court considering a motion for summary judgment, could not consider an
arbitrator’s conclusions, drawing the inferences that those conclusions compel. Indeed, because the
arbitration award is the central harm that JDG suffered, the question of what caused the arbitrator to make
that award is the primary factual issue in this case.

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        Finally, JDG argues that the district court ignored its claim that DLA Piper had

committed malpractice by representing JDG despite conflicts of interest. Our review of JDG’s

complaint reveals no such claim. But even assuming JDG had pleaded a claim based on DLA

Piper’s alleged conflicts of interest, it would have needed to produce expert testimony to

overcome a motion for summary judgment. See Hatfield, 109 F. Supp. 2d at 179; N.Y. Rules of

Prof’l Conduct R. 1.7(a)(2) (providing that an attorney may not represent a client when “there is

a significant risk that the lawyer’s professional judgment on behalf of a client will be adversely

affected by the lawyer’s own financial, business, property or other personal interests”). Because

JDG has produced no such testimony, we affirm. See Adirondack Transit Lines, Inc. v. United

Trans. Union, Local 1582, 305 F.3d 82, 88 (2d Cir. 2002) (“[W]e are entitled to affirm the

district court on any ground for which there is support in the record, even if not adopted by the

district court”).

        We have considered JDG’s remaining arguments and find them to be without merit. For

the reasons stated herein, the judgment of the district court is AFFIRMED.

                                          FOR THE COURT:
                                          CATHERINE O’HAGAN WOLFE, CLERK




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