Giaimo v. Smith

OPINION OF THE COURT Thompson, J. P. The plaintiff attorneys commenced the instant action alleging that the defendant, their former client, improperly discharged them based solely upon their race. The defendant, who is known professionally as "LL Cool J”, is black; the plaintiff attorneys, Giaimo & Vreeburg, are white. The amended verified complaint contains several causes of action, but those relevant to the instant appeal are the fourth, fifth, and sixth causes of action. The factual allegations pertinent to the foregoing causes of action assert, inter alia, that after a number of years, during which the plaintiffs represented the defendant and forged a close relationship with him, the defendant dismissed the plaintiffs as his attorneys in August 1989 because of his alleged "desire to employ as attorneys, accountants, business managers and other professionals, only members of the [black race]”. According to the plaintiffs’ complaint, the defendant’s discriminatory conduct violated, inter alia, the Federal Civil Rights Act (42 USC § 1981), Executive Law § 296 (1) (a), and Civil Rights Law § 40-c (2). The defendant subsequently moved to dismiss the fourth, fifth, and sixth causes of action pursuant to CPLR 3211 (a) (7) on the ground that they failed to state a cause of action. The Supreme Court granted the motion, finding, inter alia, that 42 USC § 1981 covered only the making and enforcement of contracts, and that the allegations of wrongful termination made by the plaintiffs were outside its scope. The court dismissed the fifth cause of action, alleging a violation of [43] Executive Law § 296, based upon its conclusion that Civil Rights Law § 40-c prohibited discriminatory discharges only within an employer-employee relationship, which did not apply to an attorney-client relationship. Lastly, the court ruled that the sixth cause of action alleging a violation of Civil Rights Law § 40-c was defectively pleaded, inasmuch as the complaint failed to allege that notice of the action was served upon the Attorney-General as required by Civil Rights Law § 40-d. We agree with the Supreme Court’s conclusion that the allegations set forth in the complaint fail to state a cognizable claim under 42 USC § 1981. The United States Supreme Court has clearly held that the protections of section 1981 extend only to the making and enforcement of contracts and that ”[w]here an alleged act of discrimination does not involve the impairment of one of these specific rights, § 1981 provides no relief’ (Patterson v McLean Credit Union, 491 US 164, 176). Further, the weight of authority is that under the Patterson rule, termination of a contract is not covered by section 1981 (see, Lavender v V & B Transmissions & Auto Repair, 897 F2d 805; Overby v Chevron USA, 884 F2d 470, 473; Long v AT & T Information Sys., 733 F Supp 188; Doffoney v Board of Trustees, 731 F Supp 781; Coleman v Domino’s Pizza, 728 F Supp 1528, 1531-1532, n 3; Alexander v New York Med. Coll., 721 F Supp 587; Rivera v AT & T Information Sys., 719 F Supp 962; Hall v County of Cook, 719 F Supp 721; Nolan’s Auto Body Shop v Allstate Ins. Co., 718 F Supp 721). Accordingly, and since the allegations of improper discrimination made here concern “postformation” conduct relating to the termination of the parties’ professional relationship, the plaintiffs’ claims fall outside the reach of the statute.* [44] Moreover, we are unpersuaded by the plaintiffs’ assertion that their complaint can be reasonably construed to allege covered "preformation” discrimination. The plaintiffs claim that each request for legal services made by the defendant constituted a separate and "new” contract, and that the defendant’s refusal to enter into a "new” contract for legal services actually constitutes "preformation” conduct to which the protections of section 1981 would attach. While the plaintiffs’ pleading must be construed liberally (see, Rovello v Orofino Realty Co., 40 NY2d 633), as the dissenter properly observes, "and be deemed to allege whatever can reasonably be implied from its statements, it must still allege the material elements of the cause of action” (Kohler v Ford Motor Credit Co., 93 AD2d 205, 207; cf., Lewis v Village of Deposit, 40 AD2d 730, affd 33 NY2d 532; Didier v Macfadden Publs., 299 NY 49, 53). Although the plaintiffs now suggest that their representation of the defendant was comprised of separately arising contracts corresponding to each request for legal services, the amended complaint characterizes the parties’ relationship in precisely the opposite fashion, since it emphasizes, among other things, that "beginning in or about July 1985, and until the time” (emphasis added) they were dismissed, the plaintiffs were employed by the defendant to act as his attorneys, that the plaintiffs’ firm was "continually” available to the defendant, 24 hours a day, and that it afforded him "unparalleled time and attention”, accepting "calls during the middle of the night and in the early morning hours”. If anything then, the reasonable inference to be drawn from the plaintiffs’ own complaint is that the parties’ relationship was ongoing and continuous rather than comprised of successively arising contracts. In any event, even if the complaint is interpreted as alleging that successive contracts for legal services arose and that the discrimination occurred upon the defendant’s refusal to renew the parties’ contractual relationship, dismissal would still be warranted. Significantly, in construing analogous cases, Federal courts have rejected attempts to circumvent the Patterson rule by the plaintiffs who have merely recast "postformation” claims as purported "preformation” discrimination, i.e., claims that an individual "is not only performing under an existing contract but also is constantly 'remaking’ a new contract so that whenever the employee is discriminatorily terminated, the employer has impaired his or her right to 'make’ a [45] contract in violation of § 1981” (Brereton v Communications Satellite Corp., 735 F Supp 1085, 1088). As the court in Brereton commented, "the great creativity of this argument is inversely proportional to the acceptance that it has garnered” (Brereton v Communications Satellite Corp., supra, at 1088; see also, Smith v Continental Ins. Corp., 747 F Supp 275, 281-282, affd 941 F2d 1203; Carter v O’Hare Hotel Investors, 736 F Supp 158, 160; Coleman v Domino’s Pizza, 728 F Supp 1528, 1531-1532, supra). It has been observed that if such a theory were accepted, discrimination plaintiffs could routinely "turn postformation conduct into preformation conduct simply by alleging that they sought a 'new’ contract reinstating the terms of a prior agreement” (Nolan’s Auto Body Shop v Allstate Ins. Co., 718 F Supp 721, 722, supra). Here, it is apparent that "although plaintiffs have attempted to present their § 1981 claim as charging discrimination in the making of a 'new’ contract, plaintiffs’ claim essentially is based on the discrimination which allegedly occurred in the termination of their prior agreement” (Nolan’s Auto Body Shop v Allstate Ins. Co., supra, at 722). In short, irrespective of whether the plaintiffs’ representation was comprised of just one contract or of successively arising contracts, the fact remains that the wrongful discrimination which allegedly occurred was simply the termination of the parties’ professional relationship in August 1989. Under these circumstances, the Supreme Court properly concluded that the complaint failed to state a cause of action under the Federal Civil Rights Act. Additionally, we find that the fifth cause of action, alleging discriminatory conduct in violation of Executive Law § 296, was properly dismissed. Executive Law § 296 (1) (a) prohibits, inter alia, discrimination in employment on racial grounds. However, the plain language of the statute limits its applicability to employees (see, Mehtani v New York Life Ins. Co., 145 AD2d 90, 93; cf., State Div. of Human Rights v GTE Corp., 109 AD2d 1082, 1083). Here, since the relationship between the plaintiffs and the defendant was clearly that of attorney and client, and not employer and employee, Executive Law § 296 is inapplicable. Lastly, the Supreme Court properly dismissed the sixth cause of action asserted under Civil Rights Law § 40-c inasmuch as the plaintiffs failed to allege compliance with the statutory requirement of notice to the Attorney-General, as [46] specifically mandated by Civil Rights Law § 40-d (see, Silver v Equitable Life Assur. Socy., 168 AD2d 367, 368). Footnotes [*] In 1991, Congress amended the Civil Rights Act of 1964 by extending its protections to the termination of a contract (see, Pub L 102-166, tit I, § 101, adding 42 USC § 1981 [b]). By its terms, however, the amended provision became effective on November 21, 1991, some two years after the alleged termination occurred in the instant case (42 USC § 1981 [b]). We note that the plaintiffs do not argue that they are entitled to retroactive application of section 1981 (b) (cf., Tong v National Broadcasting Co., 182 AD2d 354), and in any event, most Federal Circuit Courts have held that the amendment is not to be retroactively applied (see, Vance v Southern Bell Tel. & Tel. Co., 983 F2d 1573; Hicks v Brown Group, 982 F2d 295, 297-298; Luddington v Indiana Bell Tel. Co., 966 F2d 225; Rowe v Sullivan, 967 F2d 186; Holt v Michigan Dept. of Corrections, 974 F2d 771; Fray v Omaha World Herald Co., 960 F2d 1370; Vogel v City of Cincinnati, 959 F2d 594, 598, cert denied — US —, 113 S Ct 86).