New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

Plaintiff – Client Loses the “But For” Battle

Posted in Legal Malpractice News

Contrary to the belief of almost all attorneys, legal malpractice cases are rarely brought on a whim.  They are rarely brought on a reflex.  For the most part, everyone in the case, including the non-lawyer plaintiffs can identify a problem in the representation.  The actual, and often decisive battle is at the “but for” level.  The question to be answered there is whether there would have been a better economic outcome “but for” the mistake of the attorneys, or was it due to some other cause?

Rothman v McLaughlin & Stern, LLP  2015 NY Slip Op 03393  Decided on April 23, 2015 Appellate Division, First Department is a good example of how this question is resolved.  Was the money lost because the attorney did not perform due diligence or was the money lost because the attorney was told not to perform due diligence.  If it were the latter, then it cannot be said that there would have been a better outcome except for the attorney’s negligence.

“Defendants established their entitlement to judgment as a matter of law by submitting proof that plaintiff, an experienced investor, understood that the retainer agreement excluded due diligence from the scope of representation. Namely, the evidence demonstrates that plaintiff declined his accountant’s advice to conduct due diligence and that he advised defendants that none was needed because he trusted the companies’ owner and had engaged in numerous business transactions with her. Plaintiff’s statements that he did not want any due diligence conducted, set forth in affidavits by defendant Friedman and plaintiff’s accountant, are admissible as party admissions (see e.g. Delgado v Martinez Family Auto, 113 AD3d 426 [1st Dept 2014]).

Furthermore, plaintiff’s damages are not attributable to defendants. To the extent plaintiff sustained any non-speculative losses, the motion court correctly concluded that those losses were caused by the fraud committed by the owner of the companies and plaintiff’s own misjudgment of the business risks, not by defendants’ alleged conduct (see Garten v Shearman & Sterling LLP, 102 AD3d 436, 436-37 [1st Dept 2013], lv denied 21 NY3d 851 [2013]).”

Sure, that Pre-Nup is Repulsive, but Sue the Lawyer?

Posted in Legal Malpractice News

Lombardi v Lombardi  2015 NY Slip Op 03334  Decided on April 22, 2015  Appellate Division, Second Department is an example of a prenuptial agreement that is so overbearing to the wife that the Appellate Division reversed summary judgment and left it for the trial court to evaluate evidence.   However, it dismissed the wife’s claim against the husband’s lawyer.

“The defendants failed to meet their prima facie burden of demonstrating their entitlement to judgment as a matter of law dismissing the sixth and seventh causes of action, which were to set aside or rescind the agreement on the basis of duress, coercion, undue influence, and unconscionability. “An agreement between spouses or prospective spouses should be closely scrutinized, and may be set aside upon a showing that it is unconscionable, or the result of fraud, or where it is shown to be manifestly unfair to one spouse because of overreaching on the part of the other spouse” (Bibeau v Sudick, 122 AD3d 652, 654-655; see Matter of Fizzinoglia, 118 AD3d 994, 995, lv granted 24 NY3d 908).

The evidence submitted by the defendants and the pleadings demonstrated that there [*3]was a great financial disparity between the husband and the wife, who allegedly did not work and had no assets. The wife averred that the husband pressured her into signing the agreement, threatening that, if she did not sign, she, their son, and her child from a previous marriage would have to leave their home, and that the husband would not marry her. The wife further alleged that the husband made threats of violence against her.

In addition, the agreement provided that only property titled in the parties’ joint names would be “marital property,” and that such property would be distributed “in accordance with [the parties’] respective financial contributions to the acquisition or maintenance of such joint property.” As to the marital residence, the agreement provided that the wife would become entitled to 1/7 of 50% of the equity in the home in each of the first seven years of the parties’ marriage, and, thus, would become a 50% owner if the parties remained married for seven years. The husband and the wife waived the right to any maintenance, the right to any counsel fees, and all rights to the other’s estate, including the right of election. Additionally, as noted above, there are triable issues of fact as to whether the wife was represented by counsel with respect to the agreement.

Since the defendants’ submissions revealed the existence of triable issues of fact as to whether the agreement should be set aside (see Bibeau v Sudick, 122 AD3d 652; Petracca v Petracca, 101 AD3d 695), the Supreme Court should have denied those branches of the defendants’ cross motion which were for summary judgment dismissing the sixth and seventh causes of action, regardless of the sufficiency of the wife’s opposition papers.

The Supreme Court properly granted that branch of the defendants’ cross motion which was for summary judgment dismissing the tenth cause of action, which alleged legal malpractice against Courten. In order to recover damages for legal malpractice, an attorney-client relationship must exist between the plaintiff and the defendant attorney (Biberaj v Acocella, 120 AD3d 1285; Moran v Hurst, 32 AD3d 909). “To prove an attorney-client relationship, there must be an explicit undertaking to perform a specific task'” (Nelson v Roth, 69 AD3d 912, 913, quoting Terio v Spodek, 63 AD3d 719, 721). “The unilateral belief of a plaintiff alone does not confer upon him or her the status of a client” (Moran v Hurst, 32 AD3d at 911). Here, the defendants demonstrated, prima facie, that there was no attorney-client relationship between Courten and the wife. In opposition, the wife failed to raise a triable issue of fact.”

It’s The Opposite of Legal Malpractice

Posted in Legal Malpractice News

What happens when a plaintiff partnership sues and then loses?  Well, in Ernest & Maryanna Jeremias Family Partnership, L.P v Sadykov   2015 NY Slip Op 25100  Decided on April 7, 2015  Appellate Term, Second Department the next thing the plaintiff partnership does is realize that they were represented by a partner who was not an attorney.  So, with the greatest chutzpah, they ask for a new trial because they were not represented by an attorney.  (think:  Murder case, defendant orphan’s claim for leniency)

“On April 20, 2012, landlord, a limited partnership, served tenant with a notice of petition and petition alleging the nonpayment of rent totaling $5,421.66, due from November 2011 through January 2012 for a rent-stabilized apartment. Ernest Jeremias, a partner of landlord, verified the petition as landlord’s agent. On April 25, 2012, tenant filed an answer, asserting a general denial and a warranty-of-habitability defense. After a nonjury trial, the Civil Court found that tenant was entitled to a complete setoff and, among other things, dismissed the petition. On appeal, landlord principally argues that the entire proceeding is a nullity because landlord appeared by Mr. Jeremias, who is not an attorney, citing CPLR 321 (a), which requires that corporations and voluntary associations be represented by counsel in court proceedings.”

“Where it is the answering party that must be represented by an attorney, any action taken by a non-attorney representative of the party, who lacks standing to appear (Boente v Peter C. Kurth Off. of Architecture & Planning, P.C., 113 AD3d 803, 804 [2014]; People v Park Ave. Plastic Surgery, P.C., 48 AD3d 367, 367 [2008]; Bilello v Genesis Seafood, Inc., 12 AD3d 474, 474 [2004]; Mail Boxes Etc. USA v Higgins, 281 AD2d 176, 176 [2001]; Barretta Realty Skyline v Principal Land Abstract, LLC, 38 Misc 3d 146[A], 2013 NY Slip Op 50327[U], *1 [App Term, 2d, 11th & 13th Jud Dists 2013]), is a nullity (Boente, 113 AD3d at 804; Evans v Conley, 124 AD2d 981, 982 [1986]),and an adverse determination against such a defending party is deemed entered on default (Boente, 113 AD3d at 804; see e.g. Megan Holding LLC v Conason, 37 Misc 3d 135[A], 2012 NY Slip Op 52117[U], *1 [App Term, 1st Dept 2012] [dismissing landlord’s appeal from a final judgment against it because, landlord, having appeared without counsel, the final judgment must be deemed to have been entered on default]). Further, it is well settled that a defaulting party’s attempt to vacate its default on the ground that it had violated CPLR 321 (a) will be rejected “since the rule is not intended to penalize an adverse party for the . . . improper appearance” (Jimenez v Brenillee Corp., 48 AD3d 351, 352 [2008]; see also Lake George Park Commn. v Salvador, 245 AD2d 605, 607 [1997]; 130 Cedar St. Corp. v Ct. Press, Inc., 267 App Div 194, 197 [1943]). The failure of a plaintiff required to be represented by counsel to appear by counsel normally requires that its action be dismissed at the outset (Moran v Hurst, 32 AD3d 909, 910 [2006]; Cindarella Holding Corp. v Calvert Ins. Co., 265 AD2d 444, 444 [1999]). However, here, it is only after a trial of the merits resulting in an adverse determination that landlord seeks to have its action dismissed ab initio and without prejudice. We see no reason why the rule against penalizing an adverse party for the opposing party’s misconduct, essentially one of estoppel, should not likewise be applied to landlord, which improperly commenced the action without counsel. Consequently, landlord’s request to reverse the final judgment and to dismiss the petition is rejected.”

A Fee Claim, An Arbitration and Another Fee Claim

Posted in Legal Malpractice News

Jeffrey M. Rosenblum, P.C. v Casano   2014 NY Slip Op 51629(U) [45 Misc 3d 1218(A)]  Decided on November 19, 2014  District Court Of Nassau County, First District  Fairgrieve, J. is a perfect example of what all the CLEs tell attorneys not to do.  Don’t sue for small fees, because there will inevitably be a legal malpractice counterclaim.  This fee had to be less than $ 15,000 because it was first subject to a fee arbitration and then was brought in Nassau District Court.

What of the collateral estoppel problem after an arbitration?  Not here.  “Initially, plaintiff’s counsel presses two arguments for dismissal of the first four counterclaims. First, she argues that pursuant to CPLR 3211(a)(2), this court lacks subject matter jurisdiction because “the monetary jurisdictional limit of the District Court is $15,000,” which these counterclaims exceed (Affirmation in Support, ¶ 22). To the contrary, however, this court “shall have jurisdiction of counterclaims … for money only, without regard to amount” (UDCA §208[b]). Accordingly, plaintiff’s argument characterizing the amount sought by defendant’s counterclaims as exceeding statutory authority, is rejected. Therefore, its requests for dismissal on this basis are denied.

Plaintiff’s second argument for dismissal of the first four counterclaims is premised upon the notion that this court lacks the equitable jurisdiction necessary to entertain the same. However, it is clear from review of defendant’s Answer that the first two counterclaims are based upon a theory of “Breach of Contract” (Defendant’s Exhibit E), and that they address two (2) written contractual retainer agreements between the parties. Although plaintiff attempts to characterize said claims as equitable in nature, defendant has clearly pled a different, cognizable legal theory. Accordingly, plaintiff’s request for dismissal of the first two counterclaims, as based upon equity considerations, is denied.”

“Lastly, plaintiff seeks dismissal of the fifth and final counterclaim on two grounds. The first is res judicata and identity of issues with the earlier arbitration proceeding herein. In this regard, it is uncontroverted that this case was previously arbitrated pursuant to 22 NYCRR Part 137, that said arbitration resulted in a decision in defendant’s favor and that plaintiff timely commenced a trial de novopursuant to 22 NYCRR 137.8. Given same, the arguments proferred by plaintiff to dismiss defendant’s fifth counterclaim are inapplicable to the present case.

The cases cited by plaintiff, Wallenstein v Cohen, 45 AD3d 674 (2d Dept 2007) and Altamore v Friedman, 193 AD2d 240 (2d Dept 1993), involved different arbitration statutes. Moreover, the arbitration statute in Wallerstein was repealed on January 1, 2002, and the Altamore case was specifically premised upon the binding nature of the arbitration involved in that proceeding. Unlike either of these cases, the arbitration provision used herein, explicitly provides a non-prevailing party with the opportunity to elect to proceed to a trial de novo, and plaintiff having done so, defendant can pursue her counterclaim. Therefore, that portion of plaintiff’s motion seeking dismissal of defendant’s fifth counterclaim, on res judicata grounds, is denied.”

More On Accountant Negligence

Posted in Legal Malpractice News

We continue from Fridayh.   The facts in Hamadeh v Spaulding  2015 NY Slip Op 30027(U) January 8, 2015  Supreme Courty, New York County Docket Number: 114060/09  Judge: Marcy S. Friedman are relatively simple.  Accountant is asked how taxpayer can lessen his tax liability, a question we assume is regularly asked of CPAs.  He gives wrong advice about moving out of state while still coming to NY to earn money in NY.  His wrong advice is whether one must stay overnight in NY in order to trigger a day here under the 183 day tax rule.  What follows is a scholarly dissection of many issues regarding professional liability.

Second:  How does settlement of the tax liability affect the malpractice case?  “Moreover, the fact that plaintiffs settled the audit for tax years 2005 through 2007 (see “Stipulation for Discontinuance of Proceeding” [NYSCEF Doc. I 07]) does not bar the malpractice claim, as plaintiffs have shown that the settlement was “effectively compelled by the mistakes of counsel.” (See Angeles v Aronsky,  109 AD3d 720, 722 [1st Dept 2013].)

Third:  How to assess damages?   “The court turns to the parties’ claims with respect to damages and, specifically, to defendants’ contentions that certain damages were not proximately caused by Spaulding’s incorrect advice. Citrin claims that it should not be held liable for plaintiffs’ attorney’s fees in connection with the audit because plaintiffs obtained “a less favorable result” than was offered by the NYSDTF prior to their engagement of counsel. (Citrin Memo. In Support of Citrin Motion at 20.) In particular, although the settlement achieved a reduction of the principal amount initially assessed by the Department and the removal of penalties, Citrin contends that the interest assessment arose over the period the audit was contested, thus increasing plaintiffs’ liability by approximately $12,500. (Id.) Plaintiffs do not appear to dispute this contention. However, neither plaintiffs nor defendants submit New York legal authority on whether attorney’s fees in connection with an audit are available as an item of damages for accountant malpractice and, if so, what standards apply – e.g., prevailing party – in awarding such fees. 4 The court therefore cannot determine plaintiffs’ entitlement to attorney’s fees on this record. Assuming arguendo that attorney’s fees may be available, the court rejects Citrin’s further argument that it is not liable for attorney’s fees incurred by plaintiffs in connection with the audit, because the audit would have occurred in any event with respect to the 2005 and 2006 tax years before Spaulding began his employment with Citrin. (Citrin Memo. In Support of Citrin Motion at 19.) Citrin does not make any showing that the attorney’s fees cannot be apportioned, if appropriate, to tax years 2005, 2006, and 2007, individually. (See generally Ravo v Rogatnick, 70 NY2d 305, 310 [successive tortfeasor is ordinarily liable only for the separate injury or aggravation his conduct caused].) ”

Finally:  Is the interest charged by the IRS an element of damages?  “The parties similarly fail to submit reasonably comprehensive authority on whether, or to what extent, the interest to which plaintiffs agreed in the 2012 settlement of the audit is recoverable as an element of damages. Significantly, they fail to submit authority on the impact on plaintiffs’ entitlement to such interest of the facts that plaintiffs did not pay the interest accrued on the NYSDTF’s proposed assessment between the 2009 date of the proposed assessment and the 2012 settlement, and that, insofar as appears from the record, plaintiffs also had not paid the interest to which they agreed in the settlement, as of the date of filing of these motions. Put another way, the parties do not address whether the interest is an element of damages that was proximately caused by defendants’ tax advice. (See generally Penner v Hoffberg Oberfest Burger & Berger, 303 AD2d 249, 249 [I st Dept 2003] [holding that interest is not properly awarded in an accountant malpractice case where the “plaintiffs tax liability was not attributable to an act or omission on [defendant accountant’s] part”]; see also Alpert v Shea Gould Climenko & Casey, 160 AD2d 67, 71-72 [l st Dept 1990].) ”

 

Lots of Issues Decided in an Accounting Malpractice Case

Posted in Legal Malpractice News

The facts in Hamadeh v Spaulding  2015 NY Slip Op 30027(U) January 8, 2015  Supreme Courty, New York County
Docket Number: 114060/09  Judge: Marcy S. Friedman are relatively simple.  Accountant is asked how taxpayer can lessen his tax liability, a question we assume is regularly asked of CPAs.  He gives wrong advice about moving out of state while still coming to NY to earn money in NY.  His wrong advice is whether one must stay overnight in NY in order to trigger a day here under the 183 day tax rule.  What follows is a scholarly dissection of many issues regarding professional liability.

First:  How much proof is “proximate cause” ?  Does it require that all avenues be ruled out?  The answer is no.

“In arguing that plaintiffs cannot establish that they committed malpractice, both Spaulding and Citrin contend that plaintiffs must prove not only that plaintiffs could have avoided taxation as statutory residents if Spaulding had provided different advice about the number of days they could spend in New York, but also that they could have avoided taxation as non-domiciliaries. They further contend that plaintiffs cannot establish that they changed their domicile from New York to Pennsylvania, as evidenced by the finding in the Report of Audit to that effect, as well as by defendants’ analysis of plaintiffs’ failure to satisfy the elements necessary to establish a change of domicile. (See Spaulding Memo. In Opp. to Ps.’ Motion at 12-14; Citrin Memo. In Support of Citrin Motion at 13-17.) Put another way, defendants argue that because plaintiffs cannot show that they changed their domicile, they would have been subject to taxation as New York residents, regardless of whether the NYSDTF concluded that they were statutory residents. Spaulding concludes that plaintiffs cannot establish that his advice was the “proximate cause” of their increased tax liability. (Spaulding Memo. In Opp. to Ps.’ Motion at 14.) Citrin posits that plaintiffs’ failure to change their domicile from New York was an “independent cause” of their tax liability. (Citrin Memo. In Reply to Citrin Motion at 6.) Defendants both argue in effect that Spaulding’s incorrect advice on the statutory residency must have been the sole proximate cause of the NYSDTF’s assessment of deficiency and interest charges upon plaintiffs. Defendants do not cite any case law in the accountant malpractice context which holds that the malpractice must have been the sole proximate cause of the plaintiffs injury. As discussed above, cases in the accountant malpractice area have used the term “a proximate cause” in articulating the standard that the plaintiff must prove. In the legal malpractice context, an often-cited formulation of the standard of proof requires that three elements be established: “(I) the negligence of the attorney; (2) that the negligence was the proximate cause of the loss sustained; and (3) proof of actual damages. It requires the plaintiff to establish that counsel failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that ‘but for’ the attorney’s negligence, the plaintiff would have prevailed in the matter or would have avoided damages.” (Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, I 0 [I st Dept 2008] [internal quotation marks omitted, citing AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 (2007].) In other legal malpractice cases, however, the courts have held that the attorney’s malpractice must have been “a” proximate cause of the plaintiffs injury. (See 180 E. 88th St. Apt. Corp. v Law Off. of Robert Jay Gumenick, P.C., 2010 NY Slip Op 33848 [U], 2010 NY Misc Lexis 6878 [Sup Ct, NY County] [discussing varying formulations of attorney malpractice standard], affd 84 AD3d 582 (1st Dept 2011].) The Second Department has expressly held that these varying formulations of the proximate cause standard (“a” as opposed to “the” proximate cause) have “no substantive import,” and that the “but for” standard for attorney malpractice cases does not require proof that the defendant attorney’s negligence was the “sole proximate cause” of the plaintiffs losses. (Barnett v Schwartz, 4 7 AD3d 197, 203-205 (2d Dept 20071.) Although the First Department has not expressly so held, it recently approvingly cited the Second 6 [* 6] Department’s holding. (See Borges v Placeres, 2014 NY Slip Op 08910, 2014 NY App Div Lexis 8822 [Dec. 23, 2014] [citing Barnett in holding that the trial court’s jury charge appropriately provided that defendant attorney’s malpractice must be a “substantial factor in causing plaintiffs harm”].) 1 The court assumes that the “but for” standard from the legal malpractice context applies equally to accountant malpractice claims. For purposes of this motion, however, the court need not reconcile the differing interpretations of this standard because, even in its most rigorous application, the standard is clearly satisfied by the evidence in the record. The NYSDTF’s finding that plaintiffs were statutory residents was an independent basis, sufficient without more, on which tax liability could have been imposed on plaintiffs. “

So Many Legal Malpractice Cases Stem From Concerns About Fees

Posted in Legal Malpractice News

Case is brought, and after a period of time, the attorney seeks to withdraw.  Attorney is “remarkably concerned with billing…”  Was this why he chose to quit?  Problem for the attorney is that judges hearing these motions to be relieved often will not grant the relief on the mere claim that the client has not paid the bill.  So, there is often a resort to “conflicts about strategy” or “lack of communication.”  In Brady v Friedlander   2014 NYSlipOp 06677  October 2, 2014  Appellate Division, First Department  a later case for legal malpractice and Judiciary Law§ 487 was lost.

“On or about September 30, 2009, defendant moved in Civil Court, New York County (Samuels, J.), to withdraw as counsel in the underlying nonpayment proceedings (see IGS Realty Co., L.P. v James Catering, Inc., 99 AD3d 528 [1st Dept 2012]). Over plaintiffs’ objection, the court granted the motion. Plaintiffs did not appeal from Civil Court’s order. With respect to the cause of action for a violation of Judiciary Law § 487, the instant complaint alleges that defendant provided fabricated grounds in support of his motion, to wit, a conflict with plaintiffs regarding strategy and a lack of trust in defendant’s representation, in order to conceal the true reason, which was an unfounded belief that plaintiffs could or would not pay future legal bills. However, while the parties’ communications as quoted in the complaint reflect that defendant was remarkably concerned with billing, which may have informed his decision to withdraw, the complaint also reflects that plaintiff Brady expressed disagreement with defendant as to strategy and questioned defendant’s honesty and competency, thus providing support for defendant’s stated grounds for the motion (cf. Palmieri v Biggiani, 108 AD3d 604 [2d Dept 2013]).

In granting the motion, over plaintiffs’ objection, Civil Court implicitly determined that defendant had shown “just cause” to be relieved. That issue may not be re-litigated via the instant misrepresentation claim (cf. Hass & Gottlieb v Sook Hi Lee, 11 AD3d 230 [1st Dept 2004]).”

It’s A Short Statute of Limitations and Is Rarely Circumvented

Posted in Uncategorized

Plaintiffs attempted to bring a legal malpractice action after three years had elapsed, and relied upon pleadings which cited “fraud.”  The Appellate Division reminded all that there is no real circumvention of the statute of limitations, and that the fraud has to be extrinsic to the attorney-client relationship.

 

Hsu v Liu & Shields LLP   2015 NY Slip Op 03084  Decided on April 14, 2015  Appellate Division, First Department was affirmed.

“While the complaint alleges that “[t]his is an attorneys’ breach of agreement and malpractice case,” it does also contain some allegations of defendants’ fraudulent conduct. However, even affording the complaint a liberal construction and according plaintiffs the benefit of every possible favorable inference (Leon v Martinez, 84 NY2d 83, 87-88 [1994]), the fraud allegations in the complaint are duplicative of plaintiffs’ untimely legal malpractice claims (see Murray Hill Invs. v Parker Chapin Flattau & Klimpl, 305 AD2d 228, 228-229 [1st Dept 2003] [affirming dismissal of fraud claim as duplicative of the untimely legal malpractice claim, and noting that it was asserted in an attempt to circumvent the legal malpractice limitations period]; see also Penner v Hoffberg Oberfest Burger & Berger, 303 AD2d 249 [1st Dept 2003] [fraudulent concealment cause of action dismissed as duplicative of accounting malpractice claims]), and cannot be used by plaintiffs to circumvent the shorter statute of limitations for legal malpractice.

We reject plaintiffs’ due process arguments since the record indicates that plaintiffs submitted papers to the motion court in connection with the motions and, at oral argument,[*2]plaintiffs were given the opportunity to speak, but declined to do so.”

A Legal Malpractice Date Missed; A Legal Malpractice Case Lost

Posted in Legal Malpractice News

It’s ironic when a legal malpractice case, which alleges that the attorneys being sued departed from good and accepted practice is itself dismissed for technical reasons.  Risk Control Assoc. Ins. Group v Maloof, Lebowitz, Connahan & Oleske, P.C.  2015 NY Slip Op 03067  Decided on April 9, 2015  Appellate Division, First Department is one such example.  Here, the company which lost money was never a plaintiff, and when the rest of the plaintiffs tried to add the actual money loser, it was too late.

“Plaintiff, a claims administrator for an insurer, commenced this legal malpractice action against defendants, who were retained to represent the insurer’s policyholder in a personal injury action. In a previous appeal, plaintiff’s complaint was dismissed for its failure to allege that it had a “contractual obligation to pay for the loss in the personal injury action,” and to allege that it sustained actual damages because of this obligation” (Risk Control Assoc. Ins. Group v Maloof, Lebowitz, Connahan & Oleske, P.C., 113 AD3d 522, 522 [1st Dept 2014] [Risk Control I]).

After this Court handed down the decision affirming the dismissal of the complaint, plaintiff moved to amend its complaint by proposing to add several plaintiffs, alleging that all the plaintiffs provided insurance to the policyholder, and that all the plaintiffs retained defendants.

Here, no damages can be “reasonably inferred,” as plaintiff’s amended allegations are defeated by the documentary evidence it submitted. The affidavit submitted by the vice president of one of the proposed plaintiffs averred that plaintiffs were all claims administrators. Furthermore, the vice president attested that the loss, allegedly resulting from defendants’ malpractice, was paid by an entity who was not a party plaintiff, or proposed party plaintiff. Thus, plaintiff failed to allege either a “contractual obligation to pay for the loss,” or actual damages (Risk Control I at 522; Tenzer, Greenblatt at 45).

Moreover, plaintiff’s conclusory allegations of representation will not suffice in the absence of an attorney client relationship with defendants (see Denenberg v Rosen, 71 AD3d 187, 196 [1st Dept 2010], lv dismissed 14 NY3d 910 [2010]).

To the extent the motion sought to add the primary insurer as a plaintiff, defendants would be unduly prejudiced by the introduction of that new party plaintiff after the statute of limitations has expired (see Bellini v Gersalle Realty Corp., 120 AD2d 345 [1st Dept 1986]).”

An Explosion, A Fire, A Legal Malpractice Case

Posted in Uncategorized

Client owns a gas station.  A  dump truck and a fuel truck collide and explode.  The station is closed for 5 years while remediation of the fuel spill goes on.  They sue the trucks, and lose.  Was this legal malpractice?

This case appears to be the first application of Grace v. Law in which the question of not taking an appeal and then starting a subsequent legal malpractice case comes up.  The AD was not “persuaded that an appeal would have been likely to succeed.”

Levine v Horton  2015 NY Slip Op 03021  Decided on April 9, 2015  Appellate Division, Third Department holds that the legal malpractice case survives a motion for summary judgment.

“We cannot agree with Young’s argument that he is entitled to dismissal of the legal malpractice action. Legal malpractice is established by evidence that an attorney “‘failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff, and that the plaintiff would have succeeded on the merits of the underlying action “but for” the attorney’s negligence'” (Leder v Spiegel, 9 NY3d 836, 837 [2007], cert denied sub nom Spiegel v Rowland, 552 US 1257 [2008], quoting AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]; accord Hyman v Schwartz, 114 AD3d 1110, 1112 [2014], lv dismissed 24 NY3d 930 [2014]). In order to succeed on his motion for summary judgment, Young was required to establish the absence of negligence, or that any negligence on his part was not the cause of any actual or ascertainable damages to the owners (see Geraci v Munnelly, 85 AD3d 1361, 1362 [2011]; Guiles v Simser, 35 AD3d 1054, 1055 [2006]; Tabner v Drake, 9 AD3d 606, 610 [2004]).

In support of his motion, Young submitted an expert affidavit opining that he was not negligent because he had engaged the services of an expert who submitted a report suggesting that the spill site had not been completely remediated and the discovery schedule had not yet expired. Thus, Young argues, he was still in the process of obtaining additional proof of damages and had adequately opposed the fuel truck defendants’ motion. In opposition, plaintiff submitted an expert affidavit alleging that Young was negligent because he failed to conduct any relevant discovery prior to the motions being made, mistakenly limited the owners’ damages in their bill of particulars to the stigma associated with the property and failed to allege or establish the existence of the loss of revenue and property damages sustained by the owners. In view of the competing opinions regarding the adequacy of Young’s representation, we agree with Supreme Court that issues of fact exist requiring a trial (see M & R Ginsburg, LLC v Segal, Goldman, Mazzotta & Siegel, P.C., 90 AD3d 1208, 1209 [2011]; Maddux v Schur, 16 AD3d 873, 874 [2005]). Further, we cannot agree with Young’s contention that plaintiff’s failure to appeal the order dismissing the underlying action precluded plaintiff’s claim for legal malpractice, inasmuch as we are not persuaded that an appeal would have been likely to succeed (see Grace v Law, 24 NY3d 203, 210-211 [2014]).

Young also argues in the alternative that the owners did not sustain any damages as a result of the dismissal of their underlying action and, therefore, would not have succeeded on its merits “but for” his alleged negligence. In support of this argument, Young relies on the January 2007 appraisal reflecting that the value of the property was the same in January 2007 as it was prior to the fuel spill in November 2002, the fact that the Department of Environmental Conservation had closed its file on the spill, and that the owners had been reimbursed by their own insurer for all of the damages their adjuster had claimed to be caused by the accident. As we have noted, however, Young’s own expert called the remediation of the site into question. Moreover, the owners alleged that their damages included loss of revenue caused by the pumps not operating properly after the explosion, and Young himself testified at his deposition that he believed that the owners had been damaged above and beyond the amount that they had been paid by their insurer. Furthermore, plaintiff submitted an affidavit from a real estate appraiser opining that a stigma had indeed attached to the property as a result of the spill and that the accident had caused a decline in the gas station’s gross revenue. Although Young argues that a decline in gross revenue is insufficient to establish damage, that argument is countered by plaintiff’s contention that the owners’ prior revenue stream was able to cover their expenses and, with the decrease caused by the accident, they lost the ability to stay current on their mortgage, which led to the foreclosure on their property where both their business and their home were located. Under these circumstances, we agree with Supreme Court that issues of fact exist as to whether the owners were damaged by the alleged malpractice (see Lue v Finkelstein & Partners, LLP, 94 AD3d 1386, 1389 [2012]; M & R Ginsburg, LLC v Segal, Goldman, Mazzotta & Siegel, P.C., 90 AD3d at 1210-1211;Cramer v Englert, 262 AD2d 827, 831 [1999]). Given the existence of these questions of fact, we likewise find no basis for plaintiff’s request that we grant his cross motion for summary judgment.

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