Graubard Mollen Dannett & Horowitz v. Moskovitz

New York Court of Appeals · 1995 · Corporations

653 N.E.2d 1179 (1995)

Updated August 22, 2026

CorporationsPartnershipsLaw firm fiduciary dutiesClient solicitationContractsFraudfiduciary dutydeparting partner

Facts

According to the amended complaint, Moskovitz was a founding and formerly managing partner of plaintiff law firm and had brought in Roche as a major client whose billings exceeded $1 million per year. In 1982 the firm adopted a retirement program under which senior partners were expected not to impair firm relationships with existing clients and to integrate client relationships with other firm partners; plaintiff also alleged Moskovitz orally assured the juniors that the seniors would help secure the firm's future by institutionalizing key clients. Years later, while of counsel, Moskovitz secretly explored moving with Schiller and Young to LeBoeuf and, before announcing his resignation, discussed with Roche whether it would continue with him there and arranged contacts between Roche and LeBoeuf. After defendants announced their resignation, the firm sued, alleging that Moskovitz had improperly solicited Roche, breached the retirement agreement, and made earlier false promises without intent to perform.

Issue

Can a law firm state claims against a departing partner based on allegations that, before resigning, he solicited a firm client for his own benefit, failed to use promised efforts to integrate that client into the firm, and falsely promised to do so without intent to perform? More specifically, does public policy favoring client choice bar fiduciary-duty and contract claims of that kind, and can a false statement of present intention support fraud?

Rule

Preresignation surreptitious solicitation of firm clients by a departing law partner for personal gain is actionable as a breach of fiduciary duty. Client freedom of choice does not invalidate a contractual commitment requiring senior partners to use best efforts to integrate or institutionalize client relationships within the firm, so long as the provision does not restrict client choice or the lawyer's ability to practice. A false statement of present intention, made knowingly and relied on to another's injury, may support a fraud claim even when the statement relates to an agreement between the parties.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Elena Park is a partner at a 20-lawyer firm in Denver. Without telling the firm, she quietly interviews with two other firms and tours office space, but she does not contact any clients until after she gives notice of her resignation; then she tells several long-time clients that she is leaving and that they may remain with the old firm, follow her, or hire someone else.

If the old firm sues Elena for breach of fiduciary duty based only on this conduct, which is the strongest analysis?

Explanation. The majority described a spectrum. On the permissible end, a dissatisfied partner may confidentially take steps to locate alternative space and affiliations, and may inform clients with whom she has a prior professional relationship about an impending withdrawal and their freedom to choose counsel. The opinion emphasized that such conduct is not automatically a breach. Liability does not depend solely on whether clients later leave. (Derived from Graubard Mollen Dannett & Horowitz v. Moskovitz (1995).)