New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

A Prisioner’s Dilemma in the Legal Malpractice Sphere

Posted in Legal Malpractice Cases

Plaintiff is an inmate and commenced a legal malpractice action in connection with the attorneys’ handling of a federal civil rights trial.  In New York service of process is mired in ancient practice, and few really understand how to serve a summons and complaint.  Plaintiff appears not to have understood that service upon a defendant LLP could be accomplished by service upon the Secretary of State.  So, in Johnson v Neidl  2015 NY Slip Op 05726  Decided on July 2, 2015  Appellate Division, Third Department the appeal was dismissed, and apparently, defendant was not served.

“Plaintiff, a prison inmate, commenced this legal malpractice action in connection with defendant’s representation of him during a federal civil rights trial. Supreme Court denied plaintiff’s motion for a default judgment given plaintiff’s failure to properly effectuate service upon defendant and also denied his ex parte motion for an order directing service by mail or other alternative method. Plaintiff’s subsequent motion to

reargue and/or renew was denied. Thereafter, plaintiff filed another ex parte motion seeking an order directing an alternate method of service, which the court denied. Plaintiff appeals from the denial of his motion to reargue and/or renew, as well as his subsequent ex parte motion.

Initially, we note that any challenge with regard to the denial of plaintiff’s motion to reargue and/or renew is abandoned given his failure to raise any issues thereto in his brief (see Dunn v Northgate Ford, Inc., 16 AD3d 875, 876 n 2 [2005]). To the extent that plaintiff challenges the denial of his request for an order directing an alternate method of service of the summons and complaint, it is well settled that an appeal does not lie from an ex parte order (see CPLR 5701 [a] [2]; see also Sholes v Meagher, 100 NY2d 333, 335 [2003]; Matter of Barnes v Schroyer, 120 AD3d 1492, 1493 [2014]; Matter of Tyler v Selsky, 267 AD2d 522, 522 [1999]). Accordingly, the appeal from that order must be dismissed.”


More Fallout from Grace v. Law in a Legal Malpractice Case

Posted in Uncategorized

Harvey v Handelman, Witkowicz & Levitsky, LLP  2015 NY Slip Op 05794  Decided on July 2, 2015  Appellate Division, Fourth Department is a harbinger of legal malpractice issues to come.  Likelyhood of success on appeal will be a banner issue in almost all legal malpractice cases.

“Memorandum: Plaintiff commenced this legal malpractice action seeking damages for the alleged negligence of defendants in their representation of him in a personal injury action arising from a motor vehicle accident that occurred on March 27, 2007. In September 2007, defendants commenced the underlying personal injury action on plaintiff’s behalf against Nicole Gaulin, the owner and driver of the other vehicle involved in the accident. Subsequently, defendants, on plaintiff’s behalf, moved for permission to file a late notice of claim on Gaulin’s employer, the County of Orleans (County), and on the Kendall Central School District (District), the district to which Gaulin was providing services on behalf of the County. That motion was granted by Supreme Court, and the County and the District appealed. We modified the order by affirming that part of the order granting leave to file a notice of claim and by deleting that part of the order which added the County and the District as defendants to the action (Harvey v Gaulin [appeal No. 2], 68 AD3d 1789).

During the pendency of the prior appeal, a notice of claim was served on the County and the District, and an examination pursuant to General Municipal Law § 50-h was conducted. The amended complaint adding the County and the District as defendants was filed on March 4, 2010.

By order dated March 21, 2011, the court granted the motions of the County and the District to dismiss the amended complaint against them as time-barred. No appeal was taken from the March 21, 2011 order. On April 17, 2011, plaintiff filed a consent to change of attorney and defendants’ representation of plaintiff ceased.

By order dated November 7, 2011, the court granted the motion of Gaulin’s estate, substituted pursuant to CPLR 1015, for summary judgment dismissing the amended complaint against it for, inter alia, failure to serve Gaulin with a notice of claim. No appeal was taken from that order.”

“Here, we conclude that defendants failed to meet their burden to establish as a matter of law that any alleged negligence on their part resulting in the March 21, 2011 order dismissing of the amended complaint against the County was not a proximate cause of plaintiff’s damages (see Grace v Law, 108 AD3d 1173, 1176, affd 24 NY3d 203). Thus, the court erred in granting the motion with respect to plaintiff’s causes of action arising out of defendants’ handling of the underlying personal injury action against the County. In support of their motion for summary judgment, defendants’ own submissions established that the action against the County was commenced 51 days after the expiration of the limitations period. While the statute of limitations set forth in General Municipal Law § 50-i was tolled from the time plaintiff commenced the proceeding to obtain leave to file a late notice of claim until the order granting that relief went into effect (see Giblin v Nassau County Med. Ctr., 61 NY2d 67, 74), the order granting such leave was effective when entered (see Toro v City of New York, 271 AD2d 523, 523-524, lv denied 96 NY2d 705), and the appeal from that order provided no further toll (see Dublanica v Rome Hosp./Murphy Mem. Hosp., 126 AD2d 977, 977, lv denied 70 NY2d 605). Thus, the limitations period expired on December 10, 2008, and the amended complaint adding the County was not timely when filed on March 4, 2010 (see generally Ambrus v City of New York, 87 AD3d 341, 345). We therefore further conclude that an appeal from the order dismissing the action against the County on limitations grounds had no likelihood of success.

Plaintiff also contends that the court erroneously granted summary judgment to defendants because an appeal from the November 7, 2011 order granting Gaulin’s estate summary judgment based upon a failure to serve Gaulin with a notice of claim was not likely to succeed. We agree. The court dismissed the action against Gaulin’s estate on the ground that Gaulin was not served with a notice of claim in her official capacity as a County employee. However, defendants did not oppose the motion of Gaulin’s estate on that ground. Nonetheless, the court dismiThus, defendants failed to preserve for our review the issue for any possible appeal by plaintiff and/or his substitute counsel (see Antokol & Coffin v Myers, 30 AD3d 843, 845; Crawford v Windmere Corp., 262 AD2d 268, 269). We therefore conclude that any appeal of the dismissal on this issue was not likely to succeed, and “defendants failed to establish as a matter of law that any negligence on their part was not a proximate cause of plaintiff’s damages” (Grace, 108 AD3d at 1176). We further note that, in moving for summary judgment, defendants did not raise the issue whether an appeal from the dismissal of the amended complaint against Gaulin in her individual capacity would have been “likely to succeed.” ssed the complaint in its entirety. That too was error (see generally Kuhl v Piatelli, 31 AD3d 1038, 1039; Clarke v Davis, 277 AD2d 902, 902). We therefore modify the order by denying the motion insofar as it [*2]sought dismissal of plaintiff’s claims regarding defendants’ representation of plaintiff in the underlying personal injury action against the County and Gaulin, in both her official and individual capacities, and we reinstate the complaint to that extent.

The Statute of Limitations and the Cost of Waiting

Posted in Legal Malpractice Cases

Leonard Global Macro Fund LLC v North Am. Globex Fund, L.P.  2014 NY Slip Op 32393(U)  August 29, 2014  Sup Ct, New York County
Docket Number: 150346/13  Judge: Nancy M. Bannon illustrates the principal that standing by and waiting to sue may lead to a successful statute of limitations defense.  For the most part actions against attorneys, accountants, and other non-medical professionals are subject to a three year statute of limitations which commences at the time of the error.  There are few, if any, “discovery” statutes which might commence when the error is discovered.  This hedge-fund gone wrong case illustrates the dangers of waiting.

“The. ninth and tenth causes of action purport to assert negligence and malpractice claims against Kurcias Jaffe, Sofo, Madison Grey and Strategic. Each of the defendants moves for dismissal of these claims based on the expiration of the statute of limitations. A claim for negligent misrepresentation is subject to a three-year statute of limitations (United States Fire Ins. Co. v North Shore Risk Mgt., 114 AD3d 408, 410 [1st Dept 2014]). Plaintiff alleges that it received the PPM, the DDQ and other investment-related documents in 2007 and that it invested in the Fund in January 2008 in reliance on these documents, Northstar, Peister, Geantasio and the Fund’s auditors and outside administrators (see Am. Cmplt., iii! 45- 47). Thus, any claim based on negligent misrepresentation was time-barred as of January 2011. The sixth cause of action is dismissed as against Geantasio, Kurcias Jaffe and Sofo. Negligence is governed by a three-year statute oflimitations (CPLR 214 [4]). “A cause of action alleging professional malpractice, i.e., that a professional failed to perform services with due care and in accordance with the recognized and accepted practices of the profession, is governed by the three year Statute of Limitations applicable to negligence actions” (Fred Smith Plumbing & Heating Co. v Christensen, 233 AD2d 207, 208 [!st Dept 1996]). A claim alleging accountant malpractice accrues when the malpractice is committed, i.e., upon the receipt of the accountant’s work product (Williamson v.PricewaterhouseCoopers, LLP, 9 NY3d 1, 7-8 [2007]). On February 13, 2009, Kurcias Jaffe sent a the Fund, its partners and investors stating that it had resigned as the auditor of the Fund for the year ending December 31, 2007 21 [* 21] “because of our inability to complete the audit based upon the information provided by the Company” (Knopf Affirm., Ex. 3). The statute of limitations for negligence and/or malpractiCe claims by Kurcias Jaffe and Sofo expired on February 14, 2012. MadisonGrey was replaced as the outside auditor in June 2008 and Strategic resigned on January 13, 2009 (Am. Cmplt., ii 85; Carpenter Aff., Ex. J). Accordingly, the ninth and tenth causes of action are dismissed against Kurcias Jaffe, Sofo, MadisonGrey and Strategic, pursuant to CPLR 3211 (a) (5).”

Several Ways to Lose a Legal Malpractice Trial

Posted in Legal Malpractice Cases

Borges v Placeres  2014 NY Slip Op 08910 [123 AD3d 611]  December 23, 2014  Appellate Division, First Department is a description of how a legal malpractice trial was lost by the defendant attorney.  There are some rules unique to the legal malpractice sphere, and failure to utilize them can have substantial consequences.

“Defendant’s motions to amend his answer to assert a statute of limitations defense and for summary judgment dismissing the complaint, made on the eve of trial eight years after the answer was served, were properly denied for lack of any excuse for the delay (see Van Damme v Gelber, 111 AD3d 408, 409-410 [1st Dept 2013], lv denied 23 NY3d 904 [2014]). The motion for summary judgment did not seek relief against a party whose timely motion for summary judgment was returnable the same day, and therefore did not fall within the exception permitting a court to entertain an untimely summary judgment motion (see Kershaw v Hospital for Special Surgery, 114 AD3d 75, 87-89 [1st Dept 2013]; Genger v Genger, 120 AD3d 1102 [1st Dept 2014]).

The charge and verdict sheet appropriately required that defendant’s negligence in this attorney malpractice action be a substantial factor in causing plaintiff’s harm (see Barnett v Schwartz, 47 AD3d 197, 204-205 [2d Dept 2007]). Contrary to defendant’s contention, the gravamen of plaintiff’s claim is not that defendant’s departures caused plaintiff to be denied an adjusted immigration status, tantamount to losing a case, but that those departures resulted in a deportation order and the failure to vacate it due to bad advice. Defendant’s argument that the damages awarded for the harm resulting from plaintiff’s 14 months in detention constitute non-pecuniary damages that are not recoverable in a legal malpractice action is unpreserved.”

Transactional Work and the Statute of Limitations

Posted in Uncategorized

The statute of limitations for legal malpractice is 3 years, although it may be “tolled” by continuous representation.  The rules for continuous representation are complex, but in general there has to be a continuing understanding between attorney and client of a need for further work and there must be a continuing relationship of trust and confidence.  In transactional work calculating the statute of limitations is more difficult than in litigation.

Genesis Merchant Partners, LP v Gilbride, Tusa,  Last & Spellane LLC  2015 NY Slip Op 31080(U)   June 16, 2015  Supreme Court, New York County  Docket Number: 653145/2014  Judge: Nancy M. Bannon gives an interesting discussion of when transactional work is continuing or merely general representation.

“An action for legal malpractice must be commenced within three years of its accrual. See CPLR 214(6); McCoy v Feinman, 99 NY2d 295, 301 (2002). The claim accrues ‘”when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court.”‘ McCoy v Feinman, supra at 301, quoting Ackerman v Price Waterhouse, 84 NY2d 535, 541 (1994). That is, a claim accrues when the malpractice is committed, not when it is discovered. See McCoy v Feinman, supra; West Vil. Assoc. Ltd. Partnership v Balber Pickard Battistoni Maldonado & Ver Dan Tuin. PC, 49 AD3d 270 (1st Dept 2008). 3 [* 3] A cause of action for legal malpractice may be tolled by the continuous representation doctrine. See Glamm v Allen, 57 NY2d 87, 93 (1982).

The statute of limitations will be tolled by the continuous representation doctrine “only so long as the defendant continues to represent the plaintiff ‘in connection with the particular transaction which is the subject of the action and not merely during the continuation of a general professional relationship.”‘ Transport Workers Union of Am. Local 100 AFL-CIO v Schwartz, 32 AD3d 710, 713 (1st Dept. 2006) quoting Zaref v Berk & Michaels, 192 AD2d 346, 348 (1st Dept. 1993); see West Vil. Assoc. Ltd. Partnership v Balber Pickard Battistoni Maldonado & Ver Dan Tuin. PC, supra. In the present matter, Gilbride fails to establish that the legal malpractice claim accrued more than three years prior to the commencement of this action and is, therefore, time-barred. Genesis alleges in the complaint, filed in 2014, that the parties always anticipated Gilbride’s continuing oversight of the Loans through their maturity dates in June 2012. Indeed, Gilbride performed legal work on behalf of Genesis relating to the Loans through, at least, 2011. Specifically, Gilbride completed amendments to the Loans in 2010 and 2011, “crosscollateralized” Loan 4 with the Loans, and consolidated the Loans with Loan 4 in August 2011. Gilbride was responsible for reviewing and revising the Loan documents to ensure the perfection of the collateral for the Loans and using the presumably perfected Loan collateral to “cross-collateralize” with Loan 4. In addition, Gilbride represented Genesis in a suit in Connecticut against Progressive with regard to the Loans. Genesis and Progressive entered into a conditional settlement, drafted by Gilbride, in which Progressive was to pay the aggregate outstanding value of the Loans by June 2012, plus interim monthly payments commencing in January 2012. Such work was done in connection with the Loans and was not merely the continuation of a general professional relationship between the parties. See Transport Workers Union of Am. Local 100 AFL-CIO v Schwartz, supra. Further, some of the work done during this period, including recording a $1 million mortgage on property included as collateral on Loan 3 eighteen months after the closing, was performed to rectify the alleged act of malpractice, i.e. 4 [* 4] failing to secure the Loans. See Red Zone LLC v Cadwalader. Wickersham & Taft LLP, 118 AD3d 581 (1st Dept. 2014).

In support of its motion, Gilbride fails to demonstrate that its representation terminated at some time earlier than the maturity dates of the Loans. Gilbride avers that the Loans were nothing more than a series of distinct, unrelated transactions. However, Gilbride does not dispute that it completed amendments to the Loans, “cross-collateralized” them with Loan 4, consolidated them, and represented Genesis it a suit regarding the Loans, all after the closing dates of the loans in 2008 and 2009. It is notable that Gilbride does not submit or cite to the retainer agreement in support of its contention that its representation ceased with the closings. See Shumsky v Eisenstein, 96 NY2d 164 (2001 ). The complaint, therefore, is sufficient to establish that there was mutual understanding that Gilbride’s representation would continue after the closings of the Loans and the continuous representation doctrine applies. See Lytell v Lorusso, 74 AD3d 905 (2nd Dept. 2010); West Vil. Assoc. Ltd. Partnership v Balber Pickard Battistoni Maldonado & Ver Dan Tuin, PC, supra; cf. Scott v Fields, 85 AD3d 756 (2nd Dept. 2011 ). Contrary to Gilbride’s contention, its continuous representation of Genesis on the specific matter under dispute tolled the running of the statute of limitations on Genesis’ first cause of action for legal malpractice. See West Vil. Assoc. Ltd. Partnership v Balber Pickard Battistoni Maldonado & Ver Dan Tuin, PC, supra; Transport Workers Union of Am. Local 100 AFL-CIO v Schwartz, supra. Therefore, that branch of Gilbride’s motion to dismiss the first cause of action for legal malpractice pursuant to CPLR 3211 (a)(5) on the ground that it is bared by the statute of limitations is denied. ”


When A Mistake Really Makes No Difference in Legal Malpractice

Posted in Legal Malpractice Cases

Genesis Merchant Partners, LP v Gilbride, Tusa, Last & Spellane LLC    2015 NY Slip Op 31080(U)    June 16, 2015 Supreme Court, New York County    Docket Number: 653145/2014    Judge: Nancy M. Bannon is as good an example of the “but for” rule as one might ever read.  Here is the story.  Plaintiff makes loans to a debtor, and hires Defendant attorneys to do the transactional work on the loan.  The loan has a security interest in real property, and the law firm forgets to file a mortgage for 18 months.  During that delay, other lenders file their liens, and “jump in line” ahead of Plaintiff.  When the foreclosure sale takes place there is not enough money to go around.

Problem for plaintiff is that it always knew it would be in second position, for a bank already had a first mortgage at the time of plaintiff’s loan.  At the foreclosure sale, no one except the bank received any money.  So, the Court held that no matter whether Defendant filed the mortgage on the day of the loan or 18 months later, Plaintiff would not have obtained any payment, either way.

“Gilbride produces the order of the Court of Common Pleas of Lancaster County, Pennsylvania, entitled “Absolute Confirmation of Distribution of Surplus Sale Proceeds,” from the Pennsylvania tax sale of the Pennsylvania property, which indicates that, of the $325,619.42 collected in the sale, $2,345.00 went to the Pennsylvania Department of Revenue, and $323,274.42 went to satisfy Farmer Boy’s lien placed on the property seven months before the closing of Loan 3. No other entity, including the mortgagees ahead of Genesis, obtained any sale proceeds. Although Genesis alleges that it received nothing as a result of the sale due to Gilbride’s failure to record the mortgage on the Pennsylvania property for a period of eighteen months, the documentation submitted by Gilbride establishes that Genesis did not suffer any losses due to Gilbride’s negligence. Rather, its losses were the result of the existence of a lienor with a greater claim to the sales proceeds than Genesis. Even if the mortgage had been recorded immediately after the closing of Loan 3, and even if Genesis’ lien sat directly after Farmer Boy as a lienor, Genesis would not have obtained any sale proceeds.

Because the documentary evidence establishes that there is no “but for” proximate cause, that portion of the first cause of action for legal malpractice seeking damages for Gilbride’s failure to record the mortgage is dismissed. See O’Callaqhan v Brunelle, 84 AD3d 581 (1st Dept. 2011 ). “

How Could This Case Go To Trial?

Posted in Legal Malpractice Cases

A quick reading of KBL, LLP v Community Counseling & Mediation Servs.  2014 NY Slip Op 08581 [123 AD3d 488]  December 9, 2014
Appellate Division, First Department leads one to ask, what did plaintiffs intend to prove, and had they considered the question of “proximate cause?”

“Defendant is a not-for-profit organization that provides services funded in large part through government agencies. In 2005 and 2006, defendant applied for and obtained funding from the Administration for Children’s Services (ACS).

For 2007, defendant sought approximately $2.7 million in funding from ACS and hired plaintiff to perform an audit and prepare the audited financial statements for its fiscal year ending June 30, 2006, which were required for the application. In May 2007, plaintiff prepared the statements, which indicated twelve deficiencies in defendant’s financial reporting and practices. Defendant forwarded the statements to ACS, which denied the application five days later.”

“The jury found that plaintiff departed from good and accepted accounting standards and practice in the preparation of the audit report. However, it found that plaintiff’s malpractice was not a substantial factor in causing defendant money damages.”

“”[I]f you find that the accountant was negligent that negligence must be the cause of the damages that [defendant] claims, and [defendant] must establish beyond the point of speculation and conjecture that there was a causal connection between its losses and [plaintiff’s] actions.”

Viewed in this light, it can not be said the jury verdict was either contrary to the weight of the evidence or inconsistent. The sole question with regard to causation was why ACS declined to fund defendant for 2007. However, among other things, neither side called anyone from ACS to provide evidence of the reason for ACS’ s decision and testimony from defendant’s CEO downplayed the significance that ACS placed on the audit findings, with the CEO stating: “So there were 12 [audit] findings. They were very insignificant, petty and in a way outrageous that even the refunders, even the funders saw it that way. They could have really beaten us up on those 12. They didn’t.”

Thus, it was not utterly irrational for the jury to find that defendant did not establish “beyond the point of speculation and conjecture that there was a causal connection between its losses and [plaintiff’s] actions.” The jury could find that defendant failed to establish that but for plaintiff’s negligence, ACS would have provided the funding (see Cannonball Fund, Ltd. v Marcum & Kliegman, LLP, 110 AD3d 417 [1st Dept 2013]). Concur—Mazzarelli, J.P., Renwick, Andrias, Saxe and Kapnick, JJ.”

A Weak Shot at a Legal Malpractice Case

Posted in Legal Malpractice Cases

The social policy behind limitations on legal malpractice undoubtedly arises from the fear that after every litigation, whether commercial, personal injury, matrimonial or patent, there might be a legal malpractice case.  Only strict rules (goes the fear) will keep this epidemic in rein.  So, Courts routinely scrutinize legal malpractice cases more rigorously than they do for other cases.  Agosta v Kuharski, Levitz & Giovinazzo, Esqs.  2015 NY Slip Op 50946(U)  Decided on June 19, 2015  Supreme Court, Richmond County  Minardo, J. may be a poster child for this fear.

“Plaintiffs retained KUHARSKI to represent them in an action to recover damages for personal injuries that they received after being struck by a vehicle when they were pedestrians on a roadway in Beach Haven, New Jersey. At the time of the incident, the operator of the motor vehicle was intoxicated and subsequently pleaded guilty to a number of violations associated with the accident. The case was filed by KUHARSKI in New Jersey Superior Court, Ocean County, New Jersey.

Plaintiffs allege that KUHARSKI was negligent because of its failure to prosecute a[*2]”Dram Shop” cause of action against the restaurant where the driver operator was served alcoholic beverages; that the firm did not include a cause of action for punitive damages against the driver in the complaint; that they were compelled to settle[FN1] the matter (for an undisclosed sum) that was substantially less that would have been realized if the aforementioned claims had been included in the lawsuit; and that KUHARSKI allowed the time for pre-trial discovery to expire without conducting necessary discovery including the examination before trial of the operator.”

“It is clear that plaintiffs’ allegation that KUHARSKI failed to conduct pre-trial discovery in this case is baseless as KUHARSKI had, in fact, conducted the deposition of the operator of the vehicle on March 13, 2013 (A copy of the transcript of the examination before trial is attached to KUHARSKI’s moving papers). In their opposition to this motion, plaintiffs acknowledge that their contention that the deposition was not taken was “incorrect” without providing any explanation for this false allegation.

Also unfounded is plaintiff’s claim that a “punitive damages” cause of action against the operator of the vehicle should have been included in the complaint. In the State of New Jersey, in order “[T]o warrant a punitive award, the defendant’s conduct must have been wantonly reckless or malicious. There must be an intentional wrongdoing in the sense of an evil minded act’ or an act accompanied by a wanton and wilful disregard of the rights of another” (Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 NJ 37,49, 447 AD2d 1224 [1984]). Plaintiffs provide no information other than the operator had a Blood Alcohol Content of .12 at the time of the accident and that he subsequently pled guilty to driving while intoxicated. The operator testified that he stopped immediately after the accident; was not speeding; and was not drinking at the time of the accident. In addition, he testified as to the number of drinks that he had before the [*3]accident and when they were consumed. Plaintiffs fail to provide any evidence or other information to support any claim that the operator’s conduct was “wantonly reckless or malicious” as the mere fact that the operator was intoxicated is insufficient to support a punitive damages claim. In addition, plaintiffs neglect to provide any basis for their claim that a “Dram Act” cause of action should have been commenced against another proposed defendant.

Lastly, plaintiffs claim that they “were forced to settle for an amount far less than if the matter had been handled with the appropriate degree of professional competence”. Plaintiffs neglect to provide the Court with any information as to the injuries that they received from the accident and/or the amount that they received when the matter was settled. Although, plaintiffs are not required to establish that they actually sustained damages, they are required to plead allegations from which damages attributable to the defendant’s malpractice might be reasonably inferred (see Fielding v. Kupferman, supra.). As set forth above, plaintiffs have failed to establish that KUHARSKI failed to conduct pre-trial discovery or that KUHARSKI should have prosecuted a claim for punitive damages against the operator or a “Dram Shop” claim against the restaurant. As such, there is no basis for the Court to reasonably infer that plaintiffs were compelled to settle the action for less than fair value.

Accordingly, the motion of defendant KUHARSKI, LEVITZ & GIOVINAZZA, ESQS. to dismiss the complaint of plaintiffs JOSEPHINE AGOSTA and MICHAEL PIVARNICK, pursuant to CPLR 3211(a)(1) and (7), is granted.”

What is Really Going On Here?

Posted in Legal Malpractice Cases

Alksom Realty LLC v Baranik   2015 NY Slip Op 50869(U)  Decided on June 9, 2015  Supreme Court, Kings County  Demarest, J. is a case that touches two of the most relevant issues to a New Yorker, especially a Manhattanite, real estate and taxes.  Looking at this story, one asks, how could this happen?

Plaintiff has an apartment at 25 Columbus Circle which is the uber-premiere Times-Warner building.  He has an apartment on the 58th floor that is up for sale for $ 4.1 Million.  He signs a sales contract and accepts not 10% but rather 1% ($ 41,000) and then goes to the closing and transfers the property without receiving his $4.06 million.  He waits 4 years to sue the buyer?  How can this happen?

“In or about May 2007, Alksom contracted to sell apartment 58G at 25 Columbus Circle, New York, New York (the “Contract” and the “Apartment”, respectively) to Artique Multinational, LLC (“Artique”) for the purchase price of $4.1 million. Upon execution of the Contract, Artique paid $41,000 as a down payment to Alksom. At the closing of title, Artique did not pay the balance of the purchase price. Nevertheless, Alksom transferred title to the Apartment on September 10, 2007 based on the managing member of Artique, David Segal’s (“Segal”), assurances that payment of the balance was forthcoming. Plaintiffs claim that they were never paid the full purchase price. This chain of events gave rise to an action in New York County styled Komolov v Segal, Index No. 651626/2011, in which plaintiffs seek a money judgment for conversion of the Apartment (the “Segal Action”).

Based on Roman’s deposition testimony in the Segal Action, plaintiffs claim that Roman and Rom Bar committed accounting malpractice by reporting receipt of full consideration for the sale of the Apartment on Alksom’s 2007 Federal tax return (the “Original Return”), even though Alksom had never received the balance of the $4.1 million purchase price. Plaintiffs claim that Roman and Rom Bar impermissibly relied on representations from Segal that full consideration was paid to Alksom, as well as a single page facsimile from Segal that contained Segal’s recollection of the amount paid by Alksom when it first purchased the Apartment from Segal in 2005. Plaintiffs claim that Roman failed to collect any supporting documentation and did not have “closing statements” from either Alskom’s 2005 purchase of the Apartment or the September 2007 sale of the Apartment. Plaintiffs further claim that Roman and Rom Bar knew that no consideration was received in plaintiffs’ bank accounts because Roman had full access to these accounts. Plaintiffs assert that Roman and Rom Bar relied on incomplete information and failed to verify this information with the client before filing the Original Return. Plaintiffs further assert that although Roman and Rom Bar knew that the Original Return was inaccurate by the fall of 2010, Roman and Rom Bar waited until 2012 to file an amended tax return, even though the deadline to amend the Original Return would have been April 2011. Based on these allegations, plaintiffs assert causes of action for accountant malpractice, negligence, and gross negligence.”

Defendants argue that plaintiffs’ thirteenth through eighteenth causes of action must be dismissed as time-barred. CPLR § 214(6) sets forth a three-year statute of limitations for accounting malpractice. “A claim accrues when the malpractice is committed, not when the client discovers it” (Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 7-8 [2007]). Defendants claim that because the Original Return was filed on April 14, 2008, plaintiffs’ claims for accounting malpractice, negligence, and gross negligence are time-barred because this action was commenced on December 1, 2014, over three years from when plaintiffs’ cause of action accrued. However, plaintiffs correctly argue that the statute of limitations here is tolled because of the continuous representation doctrine.

“[U]nder the continuous treatment doctrine, when the course of treatment which includes the wrongful acts or omissions has run continuously and is related to the same original condition or complaint,’ the limitations period does not begin to run until the end of the treatment” (id. at 8, quoting Borgia v City of New York, 12 NY2d 151, 155 [1962]). Although the continuous representation doctrine originally derived from the continuous treatment concept in medical malpractice cases, it has been applied to other professionals, such as accountants (see Zaref v Berk & Michaels, P.C., 192 AD2d 346 [1st Dept 1993]). For the continuous representation doctrine to apply, plaintiff must “assert more than simply an extended general relationship between the professional and the client in that the facts are required to demonstrate continued representation in the specific matter directly under dispute” (id. at 348). After filing the Original Return in 2008, Roman filed an amended return in 2012[FN2] in order to correct the erroneous information in the Original Return. Here, plaintiff has demonstrated continuous representation by defendants relating to the specific matter of the inaccuracies reported by Roman and Rom Bar in the Original Return such that the statute of limitations is tolled. Accordingly, plaintiffs’ accounting malpractice claims are timely.”

Privity May Be The Most Important Element in Legal Malpractice

Posted in Legal Malpractice News

Legal Malpractice is an  attorney’s failure to use minimally adequate levels of care, skill or diligence in the performance of representation of the client, causing harm. In New York, attorney malpractice is defined as a deviation or departure from good and accepted legal practice, where the client has been proximately damaged by that deviation, but for which, there would have been a different, better or more positive outcome and which caused ascertainable damages.

The first element of a relationship between the client and the professional is that there was a contractual relationship between the attorney and the client.  An actual relationship is necessary.  The cases often set forth that a “subjective belief” that the attorney was representing them is insufficient.  The second element, deviation, is shown by evidence, not necessarily expert, which shows that the acts of the professional fell so below the good and accepted practice of law in New York, that a jury would be permitted to find that the acts below standard.

Expert testimony is necessary when the deviation is subtle; an example could be the failure to supply an affidavit of merits to restore a case marked off calendar, the failure to respond to a CPLR 3216 notice, or failures in response to a motion for summary judgment. Expert testimony is not always necessary however. None is needed to demonstrate the deviation in failing to file within the statute of limitations. Bad outcome do not necessarily equal a deviation. Furthermore, questions of judgment of strategic choice cannot serve as the basis of malpractice. An attorney is permitted the reasonable choice of strategy, if supported by acceptable reasoning. The strategic choice must be reasonable both objectively and subjectively. The difference between strategic choice and mistake are subtle, and create the most difficult cases.

The third element of proximate cause encompasses both the typical analysis that arises in all negligence litigation and the additional element of “but for.” The plaintiff must demonstrate not only that the deviation was a substantial cause of the poor outcome, but must additionally show that “but for” the deviation there would have been a different, better or more positive outcome. An example of this potential difficulty arises in an automobile accident. No matter how many deviations are shown, it may be that the maximum insurance for the other driver limits the recovery. If that is true, it will be impossible to show that “but for” the deviation, more than the policy limit was available and could have been recovered from the defendant.