Shad v. Zachter PLLC

Background

Riaz Ahmed Shad and Monroe Place Association alleged that a process server hired by their opponent’s law firm attempted to serve them at an address that did not exist. The process server allegedly signed a sworn affidavit stating that service had been completed. Plaintiffs alleged that this led to an improper default judgment in the earlier case and subsequent enforcement activity.

Plaintiffs sued the law firm, Zachter PLLC, its attorney Jeffrey Steven Zachter, and RPG Ocean Holdings, LLC, asserting claims for fraud, conversion, negligence, intentional infliction of emotional distress, civil conspiracy, unjust enrichment, and violation of New York Judiciary Law § 487. The order addresses the claims against the law firm and Zachter, PLLC’s attorney, referred to collectively as the Zachter Defendants.

Procedural History and Standard

On March 7, 2024, Magistrate Judge Aaron recommended granting the Zachter Defendants’ motion under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim. Plaintiffs objected. Judge Woods reviewed the challenged conclusions anew and adopted the Report and Recommendation in full.

Court’s Analysis

For fraud, the court held that Plaintiffs did not plead with the required detail that the Zachter Defendants knew the affidavit of service was false or intended to submit a false affidavit. The fact that they received the affidavit, received no communications from Shad, and obtained a default judgment did not adequately establish knowledge or fraudulent intent. The alleged error in the venue listed on a restraining notice also did not support a plausible fraud claim.

For conversion, Plaintiffs did not adequately allege that the Zachter Defendants controlled, interfered with, or held Plaintiffs’ property. The claim was based on the defendants’ preparation of judgment-enforcement paperwork and the allegation that they did not instruct RPG to return $11,884.14. The court found that Plaintiffs had not plausibly alleged that the Zachter Defendants held those funds.

For the claim under New York Judiciary Law § 487, the court held that Plaintiffs did not adequately plead that the Zachter Defendants acted with the intent to deceive required by the statute. The court also rejected Plaintiffs’ agency theory because they identified no authority making an attorney generally liable for the acts of an independent process server in these circumstances. The court explained that the allegations did not show that the Zachter Defendants knew the affidavit was faulty when they sought the default judgment.

The negligence claim failed because Plaintiffs did not adequately allege that the Zachter Defendants owed them a duty. The court found that the allegations of fraud, collusion, malice, or bad faith were conclusory and that relying on a sworn affidavit from a process server was not enough to plead negligence.

The intentional-infliction-of-emotional-distress claim failed because Plaintiffs did not adequately allege extreme or outrageous conduct by the Zachter Defendants, or the required intent. The civil-conspiracy claim failed because Plaintiffs had not adequately pleaded an underlying tort. The unjust-enrichment claim failed because Plaintiffs did not allege that the Zachter Defendants, rather than RPG, held Plaintiffs’ funds or were unjustly enriched under the theory presented.

Leave to Amend and Disposition

Although Plaintiffs had not requested leave to amend, the court determined that the identified pleading deficiencies might be curable. It therefore granted leave to amend to address the deficiencies identified in the Report and Recommendation and the opinion. Any amended complaint had to be filed within 14 days.

Judge Gregory H. Woods accepted and adopted Judge Aaron’s Report and Recommendation in full. The Zachter Defendants’ motion to dismiss Plaintiffs’ amended complaint was granted, without prejudice. The Clerk of Court was directed to terminate the motions listed at Docket Nos. 11, 12, and 13.