From Gianoukas v. Campitiello, 2009 U.S. Dist. LEXIS 95354 (S.D.N.Y. Oct. 13, 2009):

Levy and Boonshoft are lawyers and officers of L&B, a New York professional services corporation. (Amended Complaint.... At times relevant to this action, Campitiello, who is also a lawyer, was a partner in, and employed by, L&B.... The Amended Complaint alleges five separate fraudulent transactions.... Throughout the Amended Complaint, Campitiello is portrayed as the architect of the fraudulent transactions which bilked Plaintiffs out of in excess of $400,000. He did this as an employee of L&B, and used L&B's escrow account to receive funds from the Plaintiffs and thereafter funds were disbursed from the account to consummate the fraud. The Amended Complaint does not allege that Levy and Boonshoft were involved in, or knew of, the fraud.....

The Amended Complaint is devoid of any allegation that Levy and Boonshoft were in contact with the Plaintiffs. ***

Placement of funds in the L&B IOLA account at Campitiello's direction does not mean that Levy and Boonshoft held those funds in a fiduciary capacity. Throughout the Amended Complaint Plaintiffs allege that the misappropriated funds were held in the "escrow account of the defendant law firm of Levy & Boonshoft." ... L&B, as a professional corporation, is a legal entity separate and distinct from Levy and Boonshoft as individuals. See Jacobs v. Life Ins. Co. of N. Am., 710 F. Supp. 521, 523 (S.D.N.Y 1989) ("Under New York law it is clear that a professional corporation must be regarded in the same fashion as any other corporation . . . [i]ts corporate identity is therefore statutorily separate from the identity of the individual."). Further, to the extent Plaintiffs argue that N.Y. JUD. LAW § 497(2-a) imposes a fiduciary duty on attorneys who "receive[]" funds, the argument does not apply to Levy and Boonshoft because they never received any funds from the Plaintiffs in their individual capacities. Placement of the funds in L&B's IOLA account does not alter the fact that Levy and Boonshoft never agreed to act as escrow agents for the Plaintiffs and therefore did not owe the Plaintiffs a fiduciary duty as escrow agents.

***Plaintiffs do not contend that they had an attorney-client relationship with Levy or Boonshoft.... As shown above, Levy and Boonshoft were not the Plaintiffs' escrow agents. Thus, to the extent Plaintiffs rely on DR 9-102 as the basis for their breach of fiduciary duty claim, the claim fails because "an alleged violation of a disciplinary rule 'does not, without more, generate a cause of action.'" ***

Plaintiffs rely on two cases to support their negligence theory of liability. Plaintiffs cite to Swift v. Choe, 242 A.D.2d 188, 674 N.Y.S.2d 17 (App. Div. 1st Dep't 1998) in support of their argument that violation of a disciplinary rule may constitute evidence of Levy and Boonshoft's negligence "with respect to the IOLA account and their negligence in connection with their failure to supervise [Campitiello]." ... But the court's conclusion in Swift that violation of a disciplinary rule does not shield an attorney from an otherwise viable claim is beside the point. Swift, 242 A.D.2d at 193, 674 N.Y.S.2d at 20. The Plaintiffs' sole basis for imposing a duty of care upon Levy and Boonshoft is DR 1-104, and, as noted by the court in Swift, "a violation of a disciplinary rule does not, in itself, generate a cause of action . . . ." Id. at 193, 674 N.Y.S.2d at 20. Swift’s statement that a violation of the disciplinary rules may constitute evidence of legal malpractice is dictum. Swift does not support Plaintiffs' negligence claim for the obvious reason that Plaintiffs do not asserts a legal malpractice claim against Levy and Boonshoft. Indeed, Plaintiffs could not assert such a claim against Levy and Boonshoft because in New York, "'[t]he general rule is that absent fraud, collusion, malicious acts or other special circumstances, an attorney is not liable to third parties, not in privity, for harm caused by professional negligence." Prudential Inc. Co. of Am. v. Dewey Ballantine, Bushby, Palmer & Wood, 170 A.D.2d 108, 118, 573 N.Y.S.2d 981, 988 (App. Div. 1st Dep't 1991); see also AG Capital Funding Partners, L.P. v. State Street Bank and Trust Co., 842 N.E.2d 471, 478, 5 N.Y.3d 582, 595, 808 N.Y.S.2d 573 (N.Y. 2005). Plaintiffs do not contend that they were in privity with Levy or Boonshoft, and the Amended Complaint does not set forth any "special circumstances" that would provide a basis for a claim of legal malpractice against them.Plaintiffs also rely on Rosenberg, Minc & Armstrong v. Mallilo & Grossman, 8 Misc. 3d 394, 798 N.Y.S.2d 322 (New York County Sup. Ct. 2005). But like Swift, Rosenberg is inapposite. Rosenberg involved claims for unjust enrichment and misappropriation against a law firm and one of its associates. Liability of the defendant law firm for the wrongful acts of the associate was upheld on appeal under the principles of respondeat superior and ratification. The plaintiff in Rosenberg did not, however, assert a claim against the partners of a law firm in their individual capacities. And unlike the defendant law firm in Rosenberg, Levy and Boonshoft were not Campitiello's employer; instead, L&B was. As explained above, as a professional corporation, L&B is a legal entity separate and distinct from Levy and Boonshoft. Further, Plaintiffs do not allege that Levy and Boonshoft ratified Campitiello's fraudulent conduct.

Plaintiffs' final attempt to impose liability on Levy and Boonshoft is based on N.Y. BUS. CORP. LAW § 1505(a), which states:

Each shareholder, employee or agent of a professional service corporation shall be personally and fully liable and accountable for any negligent or wrongful act or misconduct committed by him or by any person under his direct supervision and control while rendering professional services on behalf of such corporation.

The Court of Appeals of New York has explained that § 1505(a) is to be strictly construed "because the statute carves out a limited exception to a rule of broad and general application and imposes liability unknown at common law." We're Assocs. Co. v. Cohen, Stracher & Bloom, P.C., 480 N.E.2d 357, 359, 65 N.Y2d 148, 151, 490 N.Y.S.2d 743 (N.Y. 1985). This Court has previously recognized that "New York case law has held that this section [§ 1505(a)] does not replace the general rule that corporate shareholders are not personally liable for corporate actions. . . . Section 1505 is a slight modification of this general rule, reflecting that shareholders only may be held liable for those corporate actions in which they directly participate." Souki v. Merdinger, Fruchter, Rosen & Co., No. 02 Civ. 10040(NRB), 2003 U.S. Dist. LEXIS 10447, 2003 WL 21436222, at *1 (S.D.N.Y. June 19, 2003); see also Somer & Wand, P.C. v. Rotondi, 219 A.D.2d 340, 642 N.Y.S.2d 937, (App. Div. 2d Dep't 1996) (holding that under § 1505(a) "a shareholder is liable for those torts of the corporation in which he is a participant.").