Heard: January 12, 2016.
action commenced in the Superior Court Department on January
motion to dismiss, a motion to strike, and a motion to compel
discovery were heard by Christine M. Roach, J.; the remaining
issues were heard by Janet L. Sanders, J., on motions for
summary judgment; and entry of separate and final judgment
was ordered by Kenneth W. Salinger, J.
Richard E. Briansky for the plaintiff.
Christopher R. O'Hara (Ian J. Pinta with him) for the
Present: Kafker, C.J., Cohen, & Blake, JJ.
plaintiff, ZVI Construction Company, LLC (ZVI), brought suit
against the defendants, Attorney Franklin Levy and the law
firm of Lawson & Weitzen, LLP (L & W), claiming that
they had engaged in misrepresentation and other wrongdoing in
connection with a mediated settlement between ZVI and the
defendants' clients: The Upper Crust, LLC, and its
affiliated entities (collectively, The Upper Crust), and two
of its principals, Brendan Higgins and Joshua Huggard. As a
result of orders entered by two different Superior Court
judges, all of ZVI's claims against the defendants were
dismissed, and ZVI filed a notice of appeal. Despite the fact
that ZVI's notice of appeal was filed before the entry of
a separate and final judgment and, hence, was premature, we
exercise our discretion to decide this matter. After
consideration of the arguments presented, we affirm.
where indicated, the following facts are not in dispute.
Brendan Higgins, Joshua Huggard, and Jordan Tobins were
members and managers of numerous limited liability companies
operating a small chain of pizzerias known as The Upper
Crust. On April 5, 2012, Higgins, Huggard, and The Upper
Crust, all of whom were represented by Levy and his firm, L
& W, filed a civil lawsuit against Tobins. In or around
July, 2012, a settlement was reached in that action and
documented in a memorandum of understanding (Tobins MOU). The
Tobins MOU provided, inter alia, as follows:
"Tobins will pay or cause to be paid, by cash,
bank check or wired funds $250, 000 to the Upper
Crust, said payment to be made no later than October 1,
2012 (the 'Closing Payment') and shall be made to an
account or payee as designated by the Upper Crust in
writing" (emphasis supplied).
on April 6, 2012, ZVI had filed its own lawsuit against The
Upper Crust, Higgins, Huggard, and Tobins, alleging that they
had failed to pay ZVI for construction work performed on The
Upper Crest restaurants (collection action). In the
collection action, Higgins, Huggard, and The Upper Crust
again were represented by Levy and L & W.
parties to the collection action subsequently agreed to
mediate their dispute. The mediation took place on September
6, 2012, at which time all parties to the collection action,
their respective legal counsel, and the mediator executed a
mediation agreement that provided, in pertinent part:
"The parties further agree that the mediation, including
all communications, documents and other materials, used
during said mediation, including all communications
between and among the parties and their counsel, shall be
confidential and shall not be used for any purpose other than
for said mediation" (emphasis supplied).
to the mediation, ZVI was aware that The Upper Crust had
limited assets and significant debt, was under government
investigation for unfair labor practices, and was dealing
with significant internal management issues. ZVI also had
been informed by The Upper Crust's legal counsel that The
Upper Crust might file for bankruptcy. At the mediation, the
parties to the collection action reached a settlement that
was memorialized in a written agreement (ZVI settlement),
which provided, among other things, that:
"On or before October 3, 2012, Upper Crust LLC shall
pay to the plaintiff [ZVI] the sum of $250, 000, which funds
are being paid by Jordan S. Tobins to Upper Crust LLC in
satisfaction of his obligation under his separate memorandum
of understanding with Huggard, Higgins and the Upper Crust
LLC. In the event that said Tobins fails to make the $250,
000 payment, this agreement shall be null and
void." (Emphasis supplied.)
settlement did not contain an escrow provision or otherwise
call for or obligate Levy or L & W to act as escrow
agents. Levy and L & W were never specifically asked, nor
did they expressly agree, to act as an escrow agent for
ZVI's benefit. They also were not parties or signatories
to the ZVI settlement.
present case, the central dispute concerns what occurred at
the mediation. ZVI alleges that prior to the execution of the
ZVI settlement, both Tobins and ZVI proposed that the $250,
000 due under the Tobins MOU be paid directly by Tobins to
ZVI; however, according to ZVI, Levy insisted that the money
be paid to The Upper Crust first and then delivered to ZVI.
ZVI further alleges that, in order to induce both Tobins and
ZVI to execute the settlement, Levy "represented that he
would pay the funds to ZVI." ZVI claims to have executed
the settlement in reliance upon this representation. Levy and
L & W deny all of the above allegations.
ten days after the mediation, on September 17, 2012,
Tobins's legal counsel sent Levy an electronic mail
message (e-mail), in which he set forth "a list of
issues that we'll need to address, " including the
following regarding the payment due under the Tobins MOU:
"Payment ($250k on or before October 1 -- to you to pay
ZVI)." The following day, Levy responded by e-mail and,
regarding that specific issue, wrote, "I will send you
my firm's escrow wire info."
on Friday, September 28, 2012, an entity named Ditmars, Ltd.,
acting on Tobins's behalf, wired the $250, 000 due under
the Tobins MOU to the Interest on Lawyers' Trust Account
(IOLTA account) maintained by L & W. Upon receipt of the
funds, Levy, who was in Hong Kong at the time, sent his
associate at L & W, Joshua Segal, an e-mail, directing
him to "make sure the money is held and we do not
release it to anyone until I give directions. Especially note
the money is not to be released to ZVI or [ZVI's legal
counsel Richard] Briansky or anyone. Very important.
Thanks." Both Levy and Segal testified that Levy was
concerned about having clear written instructions from his
client before the funds were released to anyone.
same day, September 28, 2012, Dan Hurley, The Upper
Crust's chief financial officer (CFO) and accountant,
sent Levy an e-mail directing as follows:
"[H]ere is how I would like the 250, 000 distributed
from your IOLTA account.
"Murphy and King $64, 644.00
"Lawson and Weitzen $21, 447.28
"DiNicola, Seligson & Upton, LLP $9, 246.26
"I will make sure your office has all the wire
information to make these ...