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Member of Investment Committee
Counsel for the Individual Trustee
MASON TENDERS DISTRICT COUNCIL PENSION FUND, et al., Plaintiffs, - against - JAMES MESSERA, et al.,
For Estate of Carl Tunick, Defendant: EDWARD J. M. LITTLE, ESQ., JODY KASTEN, ESQ., Of Counsel, ZUCKERMAN, SPAEDER, GOLDSTEIN, TAYLOR & KOLKER, New York, NY. For the purposes of this motion, "Funds" shall include the Mason Tenders District Council Pension Fund ("Pension Fund") and the Mason Tenders District Council Welfare Fund ("Welfare Fund") (collectively, the "Funds") because the claims raised against Tunick relate to real estate investments made, and losses incurred, only by those two Funds. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n1 The Mason Tenders' District Council Trust Funds include the Pension, Welfare, Annuity, Asbestos Training, Industry, Legal Services, and Vacation Funds. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**3] After the initial filing of motion papers, on or about October 31, 1997, Tunick passed away.Tunick's reply brief in further support of the motion for summary judgment was submitted on behalf of Tunick's estate. Prior Proceedings The Funds are trust funds established under the auspices of the District Council which have provided benefit plans to the members of the Mason Tenders' local unions which are organized as part of LIUNA.The District Council, the governing body of the local unions, entered into a consent decree on December 27, 1994, in a civil action, U.S. v. Mason Tenders Dist.Council, 94 Civ.6487 (RWS), brought by the Government against it alleging violations of the Racketeer Influenced and Corrupt Organization Act ("RICO"), including certain improprieties with respect to the administration of the Funds. Tunick filed the instant motion for summary judgment on September [**5] 15, 1997.Oral argument was heard on March 12, 1998, at which time the motion was deemed fully submitted. After filing this motion, the parties stipulated and agreed to dismiss the ERISA breach of fiduciary claim against Tunick without prejudice.Accordingly, this opinion addresses the remaining claims against Tunick. Facts I. The Real Estate Transactions Plaintiffs allege that between November 1989 and February 1990, the Pension Fund purchased eight properties in Brooklyn, New York (the "Brooklyn Properties") based on "false and fraudulent real estate appraisals that grossly inflated the true value" of these properties.The Funds claim to have had an attorney-client relationship with Tunick when the above-described real estate purchases were made.The Minutes of the Regular Joint Meetings of the Board of Trustees of the Mason Tenders District Council Pension, Welfare and Annuity Funds (the "Minutes") [*297] contain no affirmative representation that Tunick represented the Funds during this period.Tunick was identified as counsel to the Union-Designated Trustees, which depending on the relevant time frame included Gasper Lupo, Frank Lupo, and/or James Lupo (the "Trustees").As the Trustees' personal attorney, [**10] Tunick accompanied them to Board of Trustees' meetings (between the years 1985 and 1994) to protect their individual interests and advised them on an as-needed and as-requested basis. According to Tunick, the Funds' Administrator, Ms. Audrey Hinkly-Tabor and her successors, instructed Tunick to send his bills for representing the Trustees directly to the Funds rather than requiring the Trustees to pay the bills in the first instance and thereafter obtain reimbursement from the Funds.Tunick followed those instructions throughout the period he served as counsel to the Trustees.While Ms. Hinkly-Tabor claims no recollection of discussing with Tunick whether he should send his bills directly to the Funds, she confirmed that the practice of billing the Funds directly had been in place for many years. At a Board of Trustees' meeting on September 26, 1989, Tunick was appointed counsel to the Industry Fund effective October 1, 1989.He undertook representation of the [**11] Legal Services Fund after the real estate transactions which are the subject of this motion.Neither the Industry or Legal Services Fund invested in the real estate transactions at issue.Tunick was also a member of Plaintiffs' Investment Committee, which dealt exclusively with Plaintiffs' portfolio of securities and not real estate investments.Real estate transactions were within the province of the Real Estate Committee.The Minutes do not reflect that Tunick ever acted as counsel to the Real Estate Committee. In an affidavit submitted by Plaintiffs, Cunningham, the attorney who prepared the various closing documents in connection with the 18th Street Building transactions, states that he had three meetings with Tunick at which the 18th Street Building transactions were discussed and at which he looked to Tunick, together with Frank Lupo and Arthur Blau, for guidance and advice.The first meeting was on January 24, 1990, the second was a phone conference on January 30, 1990, and the third was a meeting at a coffee shop on October 31, 1990.Tunick was present at all three meetings with his client, the Union-Designated Trustee Frank Lupo. The Complaint alleges three malpractice claims against Tunick, arising from the Funds' purchase of the Brooklyn Properties, the 18th Street Building, and the Indian Creek Property.The Fifty-sixth claim relates to the purchase of the Brooklyn Properties; the Sixty-second claim (the Sixty-first claim in the Second Amended Complaint) relates to the purchase of the 18th Street Building; and the Sixty-eighth claim (Sixty-sixth claim in the Second Amended Complaint) relates to the purchase of the Indian Creek Property.The Eighty-fourth claim (the Seventy-eighth in the Second Amended Complaint) seeks compensation from Tunick for ERISA violations for breach of fiduciary duty.As stated above, this claim has been dismissed by the parties. The malpractice claims against Tunick are essentially identical to the dismissed malpractice claims brought against the Albanese Defendants.Each malpractice claim alleges that there was a contractual relationship between the Funds and Tunick, pursuant to which Tunick agreed to provide legal services to the Funds; that the Funds paid Tunick for such legal services; that Tunick routinely attended meetings of the Boards of Trustees of the Funds, including [**13] meetings where the Investment Committee and Real Estate Committee presented reports and recommendations, and the Funds looked to Tunick for legal advice; that the parties' "attorney-client relationship" created a duty to represent the Funds with reasonable care; and [*298] that Tunick had a duty to advise the Funds that the purchase prices for properties in question were grossly inflated and that the Funds should have retained a Qualified Professional Asset Manager in connection with their purchases of the properties. Discussion I. Standard for Summary Judgment Rule 56(e) of the Federal Rules of Civil Procedure provides that a court shall grant a motion for summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits . . . show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.See Silver v. City University, 947 F.2d 1021, 1022 (2d Cir. 1991). An essential element of the Funds' malpractice claims against Tunick is an attorney-client [**15] relationship between Tunick and the Funds.According to Tunick, he served as counsel only to the Trustees, in their capacity as Fund trustees, and not the Funds themselves. In the Albanese Decision, this Court set the legal principles and standards governing the motion at bar.As per the decision, an attorney may not be held liable for negligence in the provision of professional services adversely affecting one with whom the attorney is not in contractual privity.See, e.g., National Westminster Bank USA v. Weksel, 124 A.D.2d 144, 146, 511 N.Y.S.2d 626, 628 (1st Dep't 1987); Compusort, Inc. v. Goldberg, 606 F. Supp.456, 457 (S.D.N.Y. 1985). This privity requirement is based upon basic ethical considerations.However, some agreement, based on contract principles, that Tunick and the Funds entered into an attorney-client relationship is required for the instant motion as it was in the Albanese Decision. The Funds point to First Hawaiian for a recitation of factors [**17] courts have considered in deciding the existence of such a relationship: 1) whether a fee arrangement was entered into or a fee paid; 2) whether a written contract or retainer agreement exists indicating that the attorney accepted representation; 3) whether there was an informal relationship whereby the attorney performed legal services gratuitously, 4) whether the attorney actually represented the individual in one aspect of the matter (e.g., at a deposition); . . . 6) whether the purported client believes that the attorney was representing him and whether this belief is reasonable. Id. (citations omitted).The Funds use these factors to demonstrate tha