## Facts

- Loft tenants in a New York City building organized an effort to purchase the building from the owner.
- Carol Anne Herlihy, an attorney and fellow tenant, participated in the tenants’ acquisition effort, including negotiating with the seller and helping draft a proposed purchase contract.
- Shortly before the transaction, Herlihy withdrew from the tenants’ venture and arranged to purchase a one-half interest in the building for herself.
- The remaining tenants, with a different partner, purchased the other one-half interest.
- The tenants sued alleging Herlihy acted as their fiduciary (as attorney and coventurer) and diverted the purchase opportunity for her own benefit.
- Plaintiffs sought relief including a constructive trust on Herlihy’s one-half interest and related fiduciary-duty remedies.
- Defendants sought summary judgment dismissing fiduciary-duty and constructive-trust causes of action; plaintiffs cross-moved for partial summary judgment.
- The trial court denied defendants’ motion as to Herlihy and denied plaintiffs’ cross-motion; it did not dismiss the claims against Herlihy’s law firm.

## Issues

1. Whether the record raised triable issues that Herlihy, as an attorney and coventurer, owed and breached fiduciary duties by diverting the purchase opportunity, supporting a constructive trust remedy.
2. Whether plaintiffs alleged sufficient nonconclusory facts to maintain claims against Herlihy’s law firm on the same theories.

## Decision

- The Appellate Division modified the order to grant summary judgment dismissing the complaint against the law firm, Kellner, Chehebar & Deveney.
- The court otherwise affirmed, leaving the fiduciary-duty and constructive-trust claims against Herlihy for trial.
- The court affirmed denial of plaintiffs’ cross-motion for partial summary judgment.

## Legal Principles

- An attorney relationship and a joint-venture (coventurer) relationship are “jural” fiduciary relationships that do not require proof of dominance, unequal sophistication, or the exchange of confidences to establish fiduciary obligations.
- A party’s subjective belief that an attorney-client relationship exists is not dispositive; the relationship is evaluated from the parties’ objective dealings and conduct.
- Ending a fiduciary relationship does not shield a fiduciary from liability for misconduct occurring while fiduciary duties existed.
- Constructive trust may be available to address alleged self-dealing and unjust enrichment in real-property acquisition disputes when material facts about fiduciary breach and diversion remain disputed.
- Claims against nonprimary actors (such as a law firm) require fact-based, nonconclusory allegations of the entity’s own actionable misconduct; conclusory pleading is insufficient at summary judgment.

## Conclusion

The court held that factual disputes precluded summary judgment on the tenants’ fiduciary-duty and constructive-trust claims against the attorney coventurer who allegedly diverted the purchase opportunity, but dismissed the law firm from the case because the record did not contain sufficiently specific allegations tying the firm to actionable misconduct.


Weadick v. Herlihy, 16 A.D.3d 223, 792 N.Y.S.2d 25 (N.Y. App. Div. 1st Dep’t 2005)