To Be Argued By:
Dr. Ralph Speken
New York County Clerk’s Index No.114722/02
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE DIVISION: FIRST DEPARTMENT
RALPH H. SPEKEN, M.D. and
STEPHANIE Z. SPEKEN, M.S.,
Plaintiffs-Appellants,
– against –
THOMAS R. MOORE, ESQ.,
Defendant-Respondent.
REPLY BRIEF OF PLAINTIFFS-APPELLANTS
RALPH H. SPEKEN, M.D.
STEPHANIE Z. SPEKEN, M.S.
Plaintiffs-Appellants Pro Se
81 Pondfield Road, No. 179
Bronxville, New York 10708
TABLE OF CONTENTS
TABLE OF AUTHORITIES………………………………………………………………………………3
PRELIMINARY STATEMENT…………………………………………………………………………………………………..4
POINT I
PLAINTIFFS’ LEGAL MALPRACTICE
COMPLAINT IS NOT BARRED BY THE
DOCTRINE OF RES JUDICATA SINCE
JUSTICE HEITLER’S FINDING THAT THERE
WAS NO EVIDENCE OF FRAUD BY DEFENDANT,
GRATUITOUS………………………………………………………………………………………………5
POINT II
PLAINTIFFS ARE ENTITLED TO PUNITIVE DAMAGES……………………………………………………………………………………………………. 27
CONCLUSION……………………………………………………………………………………………….30
TABLE OF AUTHORITIES
Bartkowski v. Friedman, 213 A.D. 2d 873, 623 N.Y.S. 2d 946
(3d Dep’t 1995)…………………………………………………………………………………………. 13, 18
Black v. White & Case, 280 A.D.2d 407, 721 N.Y.S.2d 44 (1st Dep’t 2001)………….. 15
Block v. Nelson, 71 A.D.2d, 509, 423 N.Y.S.2d 34 (1st Dep’t 1979)……………………… 22
Bo Young Choi v. Sei Young Choi, 167 A.D. 2d 217, 567 N.Y.S.2d 724
(1st Dep’t 1990)……………………………………………………………………………………………… 12
Broad v. Conway, 675 F. Supp. 768 (N.D.N.Y. 1987)………………………………………… 18
Genton v. Arpeggio Restaurant, Inc., 232 A.D. 2d 274, 648 N.Y.S. 2d 552
(1st Dep’t 1996)……………………………………………………………………………………………… 21
Hallock v. State, 64 N.Y.2d 224 (1984)……………………………………………………………. 6, 7
Jung v.Gemmette, 249 A.D. 2d 827, 671 N.Y.S. 2d 862 (3d Dep’t 1998)……………… 13
Rocanova v. Equitable Life Assurance Society, 83 N.Y.2d 603,
612 N.Y.S.2d 339 (1994)………………………………………………………………………………….. 28
Sanders v. Copley, 199 A.D.2d 152, 543 N.Y.S. 2d 67 (1st Dep’t 1989)……………….. 12
Schwarz v. Shapiro, 202 A.D. 2d 187, 608 N.Y.S. 2d 210 (1st Dep’t 1994)…………… 14
Sei Young Choi v. Dworkin, 230 A.D.2d 780, 646 N.Y.S.2d 531
(2d Dep’t 1996), appeal denied, 89 N.Y.2d 805, 658 N.Y.S.2d 918 (1996)……………. 11
Shalom Toy, Inc. v. Each And Every One, 239 A.D.2d 196,
658 N.Y.S. 2d 1 (1st Dep’t 1997)……………………………………………………………………… 22
Teichner v. Holsteins, Inc., 64 N.Y. 2d 977, 489 N.Y.S. 2d 36 (1985)…………………… 21
Vavolizza v. Krieger, 33 N.Y. 2d 351, 352 N.Y.S. 2d 919 (1974)………………………….. 16
PRELIMINARY STATEMENT
Plaintiffs-appellants Ralph H. Speken, M.D. and Stephanie Z. Speken, M.S. respectfully submit this reply brief in support of their appeal from the Order of Supreme Court, New York County (Tolub, J.), entered on April 23, 2003, which granted defendant’s pre-answer motion to dismiss the complaint, and in opposition to the brief of defendant-respondent.
POINT I
PLAINTIFFS’ LEGAL MALPRACTICE
COMPLAINT IS NOT BARRED BY THE
DOCTRINE OF RES JUDICATA SINCE
JUSTICE HEITLER’S FINDING THAT THERE
WAS NO EVIDENCE OF FRAUD BY DEFENDANT,
Was Gratuitous
The Oxford English Dictionary defines “gratuitous” as follows: “done, made, adapted or assumed without any good ground or reason; not required or warranted by the circumstances of the case; uncalled for; unjustifiable.”
The instant case hinges on this word, “gratuitous.” Justice Heitler’s comments on the issue of who was telling the truth on the matter – i.e., Moore’s claim that he did nothing wrong and our claim that in fact he was committing egregious acts against us – were not of a nature that can be described as a judicial decision on the matter. They were simply observations without evidence.
The following analysis will demonstrate why Justice Heitler’s comments on the issue of Moore’s unethical behavior towards us are purely gratuitous.
At the outset, defendant’s assertion that (Defendant’s Brief, at 34) Justice Heitler’s findings that defendant “did not coerce plaintiffs were fundamental to Supreme Court’s denial of plaintiffs’ motion”, and therefore not “gratuitous”, is incorrect.
To the contrary, the issue of defendant’s coercion had nothing to do with Justice Heitler’s refusal to vacate the stipulation. As set forth in her decision, Justice Heitler stated:
Here, plaintiffs do not claim that their agreement to settle this action was procured by fraud on the part of the Hospital or its attorney. Rather, plaintiffs contend that their own attorney made fraudulent representations to coerce them into entering the settlement. Hence, vacatur must be denied.
In other words, what Moore did was irrelevant to Justice Heitler’s decision. See, Hallock v. State, 64 NY2d, 224, 229 (1984). Justice Heitler’s gratuitous comments about the issue of Moore’s coercion had nothing to do with her refusal to vacate the stipulation.
In addition, Justice Heitler expressly stated that we can sue Moore. As shown in plaintiffs’ main brief, Justice Heitler stated that “…plaintiffs must bear responsibility for Moore’s alleged malfeasance in allegedly coercing them into the settlement, and are relegated to relief against him for any damages which his conduct may have caused them”.
So what can be made of Justice Klein-Heitler’s following comments:
[A] review of the record discloses no competent evidence of fraud, duress or other cause sufficient to invalidate this settlement.
Plaintiffs urge that Justice Heitler is simply referring to the obvious. In New York State, it is only the fraud, duress, or malfeasance of one’s adversary’s attorney that can lead to vacatur of a contract. Hallock v. State, supra, 64 N.Y.2d at 229. This has nothing to do with our charge against defendant.
Although we were “represented by counsel”, we had no way of knowing at that time the incredible fraud and malfeasance defendant was perpetrating. The fraud only first came to light after Richard Frank, Esq., submitted his Order to Show Cause to compel defendant to turn over his fee that defendant intended to withhold.
Defendant had convinced us that the “Judge is corrupt” and that she intended to do us great harm if we did not sign the agreement. Defendant convinced us that only he could “save” us from the Court. We were not “satisfied” with the agreement and our judgment was totally perverted by his evil activities. We had no way of knowing this at the time
All of Moore’s coercive statements were made in his office, on the cab ride to the Court, and in the ante-chambers of the Court. Of course, we had no tape recorder. It is simply a matter of whose word to believe. Moore’s or ours.
Defendant acted in the most reprehensible legal manner towards us. He preyed on our sense of depression and despair over our son’s death, and defrauded us into fearing the Court.
Defendant made an offer to help us to continue to speak about our case. He lied and coerced us. Our fear forced us to go against our conscience and we signed the General Release under oath. But this was not our wish – it was Moore’s wish.
In this statement on the Judge’s part, she is saying that she does not believe us and believes defendant. But on what grounds?
Although plaintiffs also contend that their fear that trial would begin immediately, spurred them to sign the General Release, a Court’s direction that the parties proceed to trial does not constitute coercion or duress, since courts have inherent power to control their calendars and the disposition of court business.
The fact is that defendant said he would resign were we not to sign. The Judge and the Hospital’s lawyer were demanding that the trial begin the next week. Defendant said that the Judge intended to dismiss the case were the trial not to start immediately. Defendant used this assertion to further coerce us.
In her decision, Justice Heitler stated that: “[p]laintiffs further allege that the deceptive actions of [defendant], designed for his own financial gain, constitute fraud. Plaintiffs’ claims of fraud, however, is insufficient for vacatur of this settlement…” . This comment is significant because it shows that Justice Heitler tacitly acknowledges that defendant was committing fraud.
Justice Heitler’s statement that “[p]laintiffs have not established that their agreement to settle this case was procured by fraud or coercion”, is also gratuitous. It is matter of who to believe. Justice Heitler obviously claims not to have believed us. But on what grounds? If it is claimed that she is making a decision here, then it is a decision about a disputed fact. This decision can only be made by a Jury. Judge Heitler never even had an evidentiary hearing.
In addition, as shown in plaintiffs’ main brief (Plaintiffs’ Brief, at 18), defendant had placed us in great fear of the Judge, and had convinced us that speaking out to the Judge would mean the end of our case. Moreover, defendant had convinced us that only he could “save” us from the Judge and preserve any right at all to continue to speak about our case. Thus, Justice Heitler’s statements that we had the opportunity to advise the court that we were under duress, and that we should have advised the court that defendant had threatened to resign if we did not accept the settlement, is also gratuitous.
In her long series of comments on our allegation that Moore had skillfully manipulated us and the situation in the most disgusting and unethical manner, Justice Heitler took the position of believing defendant and not us.
But on what grounds did she do so? Nearly all the evidence available to Justice Heitler about defendant pointed to the fact that he was lying as to what he said to us to coerce us into signing. This is evidence is as follows:
Judge Heitler recognized that defendant had defrauded his co-counsel, Clair Pare, Esq, into handling Dr. Speken’s so-called “defense.” When he realized that Columbia wanted to “settle”, he skillfully got rid of her and claimed her fee for himself. Judge Heitler recognized this too as unethical.
Finally, since defendant intended to withhold any money from his co-counsel, Richard Frank, Esq., Mr. Frank was required to submit an order to show cause to compel defendant to turn over to him the fees he was entitled to for the work he put in on the case (actually, defendant had done almost no work at all. Most of the work had been done by Mr. Frank). It was in reading Mr. Frank’s papers that we began to understand what defendant had done to us.
After discharging Ms. Pare, claiming that he was going to “handle Dr. Speken’s defense,” defendant never even obtained files from Ms. Pare that would have been needed at trial.
Therefore, in view of the foregoing, why would Justice Heitler have believed that we were lying about defendant.
Justice Heitler’s own words demonstrate that all her comments on this issue were merely “gratuitous.” For she said, “…I don’t know what Mr. Moore said to you or did not say to you about the court system.”
This is a stark, clear and convincing statement that in fact the Judge was not issuing a legal decision on the issue of what defendant did to us. Perhaps, in spite of the evidence, she thought defendant was telling the truth, but she clearly states, “…I don’t know…” What she was troubled by was that the case was “old” and she was concerned about moving her calendar along. She did not even hold an evidentiary hearing.
The authorities relied on by defendant to support its contention that”plaintiffs’ current allegations of fraud, coercion and duress against defendant were fully litigated and decided against them in their underlying action”, are misplaced. In Sei Young Choi v. Dworkin, 230 A.D.2d 780, 646 N.Y.S.2d 531 (2d Dep’t 1996), appeal denied, 89 N.Y.2d 805, 658 N.Y.S.2d 918 (1996), plaintiff was barred by collateral estoppel from bringing a malpractice action (years later) against his former attorney. Plaintiff sought to vacate a marital separation agreement signed years earlier based on the alleged misconduct of his attorney.
Plaintiff’s charges against his attorney were part of the initial case (Bo Young Choi v. Sei Young Choi, 167 A.D. 2d 217, 567 N.Y.S.2d 724 (1st Dep’t 1990)), and were dismissed by Justice Gangel-Jacob. No evidentiary hearing was held on the matter.
However, Choi is not on point since the findings therein as against the attorney were not gratuitous, but instead went to the very heart of the case. While there was no evidentiary hearing, there was ample evidence demonstrating that defendant Dworkin did nothing wrong, and that Choi himself had been engaged in substantial wrongful conduct. Moreover, the Court found that Dworkin had obtained a better settlement than his client even expected.
Interestingly, in Choi, Justice Gangel-Jacob refers to Sanders v. Copley, 199 A.D.2d 152, 543 N.Y.S. 2d 67 (1st Dep’t 1989). In that marital case, the wife sought to vacate a separation agreement that dealt with the distribution of property. She alleged that she had misunderstood the agreement and that her lawyer had been misled. Judge Baer did not vacate the settlement but ordered an evidentiary hearing to “…determine the circumstances under which it was executed.” The instant case is unlike Choi. Here, all the available evidence points to the fact that defendant is lying when he denies that he coerced us and that we are telling the truth. Although defendant negotiated a settlement of $500,000, he connived to take half of it for himself, and also sought to defraud the other two lawyers on the case.
Defendant’s reliance on Bartkowski v. Friedman, 213 A.D. 2d 873, 623 N.Y.S. 2d 946 (3d Dep’t 1995), is also misplaced. In the underlying action, the Family Court had held a detailed hearing from all parties. The plaintiff in Bartkowski did not allege she had been coerced into signing the adoption agreement. Rather, she contended that she only misunderstood its contents. There was no finding that the lawyer did any thing wrong.
How different this is from the instant case where there was no hearing over our most serious allegation that we had been forced into signing away our First Amendment Rights. And in which there is plenty of evidence that Moore was committing major wrongs. The most powerful comment Justice Heitler makes is: “I don’t know what Mr. Moore said to your or did not say to you abut the court system.” Well, he told us that the Court is corrupt and we better do exactly what he said! Jung v.Gemmette, 249 A.D. 2d 827, 671 N.Y.S. 2d 862 (3d Dep’t 1998) is also not on point. In Jung, plaintiff (himself a matrimonial lawyer), brought an action in malpractice against the lawyer who represented him in a divorce, based upon the attorney’s negligence in failing to include in the stipulation of settlement a provision that his maintenance obligation would cease upon his spouse’s remarriage.
The Third Department dismissed the complaint on the ground of collateral estoppel in that the issue of whether plaintiff understood the agreement had been previously decided. He could not then sue his lawyer because he did understand what he had signed.
Here, in contrast, there was no misunderstanding. Instead, it is all about fraud, coercion, and unethical behavior. Contrary to Jung, in which the plaintiff was himself a matrimonial lawyer, we are bereaved and grieving parents who were under the influence of a master litigator. Given this knowledge, Justice Heitler or course should have referred our allegations for a detailed evidentiary hearing. She did not. Her comments on the issue were gratuitous and in no way affect her fundamental decision that we are “…relegated to relief against [defendant].”
Schwarz v. Shapiro, 202 A.D. 2d 187, 608 N.Y.S. 2d 210 (1st Dep’t 1994), is also distinguishable. Plaintiff, who was described as a “sophisticated businessman”, ratified an agreement and accepted its benefits. He later tried to sue his lawyer, claiming he had “misunderstood” the whole agreement. This Court affirmed the IAS Court’s dismissal of the malpractice complaint. Here, in contrast, we never accepted “the benefit” of the settlement, and we were coerced into signing the General Release. Richard Frank submitted his Show Cause Order the following month. We immediately requested, and were successful, in having the proceedings stayed pending an investigation of the matter. It was after this that we realized we had been defrauded by Moore and skillfully coerced into signing. We have subsequently refused to accept the “benefit” of the money because the agreement forced us to lose something much more precious – our First Amendment Right to speak freely about our son’s death.
The fact is we had no way of knowing what Moore was doing to us (and to the other lawyers). An evidentiary hearing was, once again, a must.
Black v. White & Case, 280 A.D.2d 407, 721 N.Y.S.2d 44 (1st Dep’t 2001) represents how Judge Sol Wachtler’s dictum that collateral estoppel cannot be applied in a mechanical fashion must be observed. The exact specifics of a charge must be investigated in detail in a logically coherent fashion. How different the analysis of the plaintiff’s claim was in this case as compared to the instant case.
In Black, the plaintiff – with his own counsel – insists that a separation agreement with his estranged wife worked out by a legal firm used by both of them jointly in their marriage, be incorporated in a final divorce decree. He then sought to vacate this, years later, basically claiming he was “unaware” the former legal firm was representing his wife’s interests.
Analyzing the situation, the Court realized this position on the part of the client was not logical. After all, he had a separate lawyer advising him and it was at his insistence after reviewing the defendant’s separation papers that he wanted these conditions in the final agreement. How could he then turn around and believably state he was “unaware?” Of course, this finding should have prevented further litigation against the defendant.
But compare that case with the instant case. Nothing of what we have charged defendant is “inconsistent.”
No Evidentiary Hearing
Defendant mentions the case of Vavolizza v. Krieger, 33 N.Y. 2d 351, 352 N.Y.S. 2d 919 (1974).
This case is particularly instructive on the point we are making that Justice Heitler’s comments on the issue of our being coerced and defrauded can only be considered gratuitous.
In Vavolizza, the plaintiff attempted to sue his lawyer for allegedly coercing him into signing a guilty plea in a criminal matter. A hearing was denied him on the basis that his confession in the initial case collaterally estopped any subsequent action against his lawyer. However, given the seriousness of the charge against the lawyer, Court of Appeals detailed why the lack of a hearing was justified.
The Court stated, in pertinent part:
Aside from the fact that the gravamen of the complaint is that defendant “coerced” plaintiff, a fair reading of that passage, quoted above in the text leaves no doubt but that the Judge refused a hearing in which, presumably, plaintiff would have put himself and his affiants on the stand, for the reason that there was no way plaintiff could overcome what was already clearly on the record, i.e., that he had committed the acts charged and willingly complied with his attorney’s advice. The record, in other words, was replete with admissions that the guilty plea was the result of a calculated strategy, and these admissions were used by the Judge as evidence upon the vacatur motion, which overwhelmed plaintiff’s contrary assertions. Implicit in the Judge’s denial of the relief sought by plaintiff is that defendant’s advice was at least reasonable under the circumstances in that case, all of which were known to the Judge.
A hearing was not granted therein because Vavolizza was obviously guilty. But why was no hearing granted to the Spekens? Justice Heitler’s gratuitous reasoning states, in part, that Speken was not coerced and defrauded because he didn’t say so on the record. She totally ignores the fact that we had told her in great detail of the coercive and fraudulent statements defendant had made to us including the fact that we must not speak to her because “the Judge is corrupt.”
Contrary to defendant’s assertion, the mere fact that there was no evidentiary hearing does not put the Spekens within the ambit of Bartkowski, supra. In that case, the Family Court did hold a full hearing, complete with testimony, surrounding the plaintiff’s signing of the adoption agreement. It could be said that she did have a ‘full and fair opportunity’ to litigate.
That is not the case herein. There was no hearing, no testimony and cross examination, no discovery. Only Justice Heitler’s summary remarks that the Spekens could not have been coerced and defrauded because they didn’t complain to her. There was never a ‘full and fair’ hearing over the Spekens charges against defendant.
Plaintiffs’ Claims Are Not Barred By Waiver and Estoppel
There are similarities in the instant case with Broad v. Conway, 675 F. Supp. 768 (N. D.N.Y. 1987). There, as here, the plaintiffs accepted a settlement that they later claimed they were coerced into signing. The U.S. District Court found that plaintiffs waived their right to sue for malpractice, however, by the fact that their agreement to settle was voluntary. We too on questioning by Judge Klein-Heitler stated that we were essentially signing “voluntarily.”
But this is about all that is similar between the instant case and Broad. At the outset, it must be pointed out that there was no question of any malfeasance on the part of Conway and his co-counsel. Not so with defendant. The acts of malfeasance committed by defendant are noted in detail in plaintiffs’ main brief and above.
Moore’s actions towards us were criminal in nature. He defrauded us into believing that Judge Heitler was “against us.” He indicated that we would be “committing an auto da Fe” should we try to talk with her. That is, he stated that it was she who was forcing the settlement on us out of a need to protect Columbia Presbyterian Hospital and its doctors. “The Judge is Corrupt,” he said several times. “Just look at the Clinton mess.” It should be pointed out that at the time these comments were being made, the issue of corruption in Government surrounding the President was very much on everyone’s mind.
In short, we were in very great fear of Judge Heitler. Defendant had maneuvered us into a situation that we felt he was the one to be trusted and not the Judge.
To say that our action of signing the General Release, was “voluntary” is a misnomer. Essentially, the Court must consider us to have been like a victim of a crime. In this case, the victim of a highly skilled lawyer, adept at fraud.
Now to the second issue raised by Broad, that of the question as to how we were damaged. The damage we faced is the loss of our First Amendment Right to speak freely about the full details of just how and why our son died. This is what defendant’s fraud cost us. To us, it is more important than any amount of money.
But money is in fact involved because the Hospital was willing to pay us $500,000 for our silence.
After Judge Heitler put a stop to Moore’s attempt to claim nearly half the settlement for himself, we would be able to net around $350,000 were we to agree to remain silent.
So our “monetary damage” could be said to be this amount of money. Were defendant not to have committed fraud, he would have either proceeded to trial or obtained an agreement in which we retained our First Amendment Rights.
The Prior Judicial Determination Acknowledging
Defendant’s Entitlement to a Fee Does Not Bar Our
Claim For Legal Malpractice or Breach of Fiduciary Duty
Defendant’s contention that Justice Heitler’s determination acknowledging defendant’s entitlement to a fee bars our claim for malpractice, is without merit.
In October of 1999, Justice Heitler asked us on the record if we wanted to discharge defendant as our attorney. She stated that this was our right. We stated that we did and from that point on have operated on a Pro Se basis.
Justice Heitler’s granting defendant a fee must be reversed. No hearing was ever held over the issue of our charges that we had discharged defendant for cause. Her summary decision was done without a hearing and is against the available evidence that we had in fact been the victims of defendant’s fraud, coercion, deception, and malfeasance.
Teichner v. Holsteins, Inc., 64 N.Y. 2d 977, 489 N.Y.S. 2d 36 (1985) describes a remarkably similar situation to the instant case. In Teichner, the plaintiff discharged their trial counsel, Broder, alleging “misconduct and his extortionate demands for an increased fee. ..”. Broder, meanwhile, moved to discharge plaintiff’s attorneys and provide him with an increase in legal fees from 33 1/3% to 50% of the award.
The Court of Appeals, in reversing the award of 60% to Broder, stated:
A hearing is required to determine if he was discharged for cause or, if he was discharged without cause before completion of the services, for a determination of his fee on the quantum merit basis.
This same principle was also espoused by this Court in Genton v. Arpeggio Restaurant, Inc., 232 A.D.2d 274, 648 N.Y.S. 2d 552 (1st Dep’t 1996).
In Genton, plaintiff Chittur appealed from Supreme Court’s denial of his motion to discharge defendant Bell’s lien and fixed the legal fee at 30% of the settlement. This Court explained:
The motion court erred in summarily determining that respondent Bell was discharged without cause as plaintiffs’ counsel, effectively dismissing plaintiffs’ plausible allegations to the contrary.
On the record before us, a determination as a matter of law was improper, since the issues raised by the parties’ conflicting affidavits turn on the relative credibility of their assertions. Moreover, the credibility issue aside, plaintiffs’ proof appeared to be appeared to be much more cogent than Bell’s, which suffered from, among other things, inadequate explanations and inconsistencies with the documentary evidence.
Moreover, in Shalom Toy, Inc. v. Each And Every One, 239 A.D.2d 196, 658 N.Y.S. 2d, 1 (1st Dep’t 1997), this Court remanded for a hearing a matter in which a lawyer, seeking a contingency fee, was disputing that his discharge was without cause.
Why would her summary comments on our charges, issued without a hearing, deny us our right to seek compensation from defendant? After all, we charge that were it not for his illegal behavior we would have been able to receive compensation from the Hospital and not lose our First Amendment Right.
In fact, when Justice Heitler stated that she did not “know what Mr. Moore said or did not say to us…” she was acknowledging a factual issue that can only be decided by the trier of fact. Her one clear and defensible decision, however is that the Spekens are, “…relegated to relief against him for any damages which his conduct may have caused them”. On that basis alone, defendant’s motion should have been denied.
POINT II
PLAINTIFFS ARE ENTITLED
TO PUNITIVE DAMAGES
In the instant case, charges of fraud, coercion, and generally culpable behavior have been asserted against defendant. Judge Heitler dismissed these charges in a summary fashion, with no benefit of hearing, and in fact contrary to the available evidence.
Were there to have been a hearing, under examination, the defendant would have been asked about other legal proceedings brought against him on other cases. He would have had to discuss the other cases that had been brought before him before the New York State Court System Disciplinary Committee as well as tax matters he has been involved in.
One of Moore’s deceitful operations against us came when, shortly prior to the General Release he had duped us into signing, he informed us that he had a “Subpoena Duces Tecum” from Justice Heitler for our tax returns for the previous ten years. We gave him these only later to find out that there was no such subpoena.
Given the seriousness of our charges, the Court should remand for a hearing. For the purpose of completeness, set forth below is an in-depth analysis of the criminal tax matters defendant engaged in: Thomas & Margaret Moore Analysis of Petition Before NYS Division of Tax Appeals for Redetermination of 1993 Tax Assessment. Although not included in the Record on Appeal, they can nevertheless be considered by the Court. See, Block v. Nelson, 71 A.D.2d, 509, 423 N.Y.S.2d 34, (1stDep’t 1979).
The taxpayers, in their petition, were disputing a deficiency of $5,244.81 assessed by the New York State Department of Taxation and Finance. An analysis of the dispute follows:
The taxpayers reported the following on their 1993 federal income tax return:
Wages from Mrs. Moore’s employment at Cornell Medical Center -$63,621
Interest – 58
Dividends – 312
NYS tax refund – 5,646
Capital loss – (3,000)
Partnership income-four partnerships – 400,996
Other income-not described on return but later described by Mr. Moore as net income from his law practice in Paragraph 8 of the Determination 19,602
Keogh adjustment – ( 30,000)
Adjusted gross income – 457,235
The NYS Department of Taxation and Finance determined that income from Steinhardt Partners, one of the partnerships owned by Mrs. Moore and listed on the return was reported incorrectly. The information return from the partnership listed the following income:
Interest on U.S. obligations – $339,613
Other interest – 771,944
Dividends – 30,103
Other expenses – (202,658)
Sec 988 income (foreign currencies) – 1,083,003
Other income – 39,727
Long-term capital gain – 15,138
Short-term capital gain – 695,282
Sec. 1256 losses – (1,314)
——————— $2,770,838
Utilizing the above information, the Department recalculated the federal adjusted gross income from $457,235 to $2,739,094. It then computed a New York State tax in the amount of $172,527. New York source income was determined as follows:
Wages – $63,621
Other income-from law practice in New York – 19,603
Total – 83,224
This amount is 3.04% of the total adjusted gross income above of $2,739,094. Multiplying the New York State tax of 172,527 by 3.04% results in a tax due of $5,244.81 which is the amount of the deficiency assessment.
Mr. Moore contested the assessment by attempting to prove that the income from the law practice was incorrect and in fact was a loss. The amount of the loss claimed varied $91,814 in paragraph 8 of the Determination, $100,641 in paragraph 11, etc. Additional expenses were claimed or rent, legal expenses, office expenses, travel and entertainment, etc. All of these expenses were disallowed and the Determination upheld the original assessment of $5,244.81.
Final observations:
The amount of income under reported was substantial. Income was revised upwards from $457,235 to $2,739,094. In a federal audit, there would be considerable fines and penalties assessed, at the minimum.
In several instances in the Decision, auditors requested a copy of the federal Amended return. These were never produced with the explanation that they were in the process of completion. It is possible that these proceedings were actually a delaying tactic. The six years statute of limitations for 1993 returns timely filed would be April 15, 2000. The date of the New York State Determination is May 27, 1999. The income from the legal practice of $19,602 was entered as “Other Income.” The proper procedure for reporting this income would be to complete Schedule C listing individual items of income and expense. Also, it is possible that self employment taxes of 15.30% of practice income was not paid was well.
The Keogh deduction of $30,000 is the maximum allowable. It should not exceed the practice income of $19,602. Actually, most Keogh plans limit contributions to 25% of net income.
The date of Moore defrauding plaintiffs’ into signing the General Release, was July 8, 1999. This determination of Moore’s tax evasion was May 27,1999. Plaintiff may well have been able to obtain this information from discovery, were they to have been permitting a hearing.
This Court should remand the case for a hearing. Specifically, given the massive “under reporting” of income, Moore should be required to produce his Federal Tax Returns to see is he ever paid taxes on over $2,000,000 of income he did not report.
In his brief for defendant-respondent, defendant refers to the above issue as a “…tax matter.’ It is in fact much more than that. He seems to ascribe to the belief that “taxes are for the little people.” As stated in Rocanova v. Equitable Life Assurance Society, 83 N.Y.2d 603, 612 N.Y.S.2d 339 (1994), ” Where breach of contract involves fraud evincing high degree of moral turpitude and demonstrating such wanton dishonesty as to imply criminal indifference to Civil obligations, punitive damages are recoverable if conduct was aimed at public generally.”
Certainly this applies to defendant. As told to Dr. Speken in a private conversation, Dr. Gideon Panther (also defrauded by Moore) referred to him as a “dangerous predator.” He has shown “criminal indifference to Civil obligations” as shown by his “…tax matter.” Permitting a lawyer to get away with the type of behavior he exposed plaintiff’s to, without so much as a hearing, flashes a message to all lawyers that they can act similarly. This certainly represents an act that was “aimed at the public generally.”
CONCLUSION
FOR THE FOREGOING REASONS, THE ORDER
APPEALED FROM SHOULD BE REVERSED;
DEFENDANTS’ MOTION DENIED; AND PLAINTIFFS’
COMPLAINT AGAINST DEFENDANT REINSTATED
Dated: Bronxville, New York
February 12, 2004
______________________________________
RALPH H. SPEKEN, M.D.
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STEPHANIE Z. SPEKEN, M.S.
Plaintiffs-Appellants
81 Pondfield Road, No. 179
Bronxville, New York 10708