New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

A Very Confusing Manhattan Real Estate Case

Posted in Uncategorized

We challenge you to make sense of this follie a deux.  Sanko v Roth  2016 NY Slip Op   30930(U)  May 17, 2016  Supreme Court, New York County  Docket Number: 650025/14
Judge: Gerald Lebovits.  The defendant is either plaintiff’s attorney or not.  He either started cases for plaintiff as his attorney or he did not.  We are genuinely puzzled.  However, note the names of the tennants-in-common

“Plaintiff is a tenant-in common who owns an undivided one:-third interest in the property located at 801 and 803 Greenwich Street in New York County. Defendant is an attorney who represented the other two co-owners in holdover and nonpayment proceedings in Housing Court: Mark Family Realty, LLC, and Selrob Family Limited Partnership. In 2006, defendant commenced a holdover proceeding against a tenant, Maggie Gyllenhaal (hereinafter the Gyllenhaal holdover proceeding). In 2011, defendant commenced a holdover proceeding and a nonpayment proceeding against tenants Annie Churchill Albert and Andrew Churchill Albert (hereinafter the Albert holdover and the Albert nonpayment proceedings, collectively the Albert proceedings). Plaintiff was a named petitioner in these proceedings.

Plaintiff brought this action against defendant alleging that defendant unlawfully commenced the above proceedings on plaintiff’s behalf without his authority by naming plaintiff as a petitioner. Plaintiff asserts ten causes of action: a declaratory judgment (first cause of action); a permanent injunction (second cause of action); aiding and abetting a breach of fiduciary duty (third cause of action); tortious interference with contract (fourth cause of action); abuse of process (fifth cause of action); forgery (sixth cause of action); prima facie tort (seventh cause of action); malicious prosecution (eighth cause of action); violation of the General Business Law Section § 349 (ninth cause of action); and legal malpractice (tenth cause of action).”

“The court grants that portion of the defendant’s motion to dismiss plaintiffs tenth cause of action for legal malpractice. Defendant contends that the tenth cause of action for legal malpractice must be dismissed because no attorney-client relationship exists between plaintiff and defendant. Plaintiff argues that defendant committed legal malpractice because defendant engaged in fraud and collusion. Plaintiffs cause of action for legal malpractice must be dismissed. To state a cause of action for legal malpractice, privity of contract is necessary. (Good Old Days Tavern v Zwirn, 259 AD2d 300, 300 (1st Dept 1999].) An exception exists: Liability may be extended to third parties when fraud, collusion, malicious acts, or other special circurristances are present. Absent privity, a legal malpractice claim must be pleaded with sufficient detail. (CPLR 3016 [b]; Hadar v Pierce, 111 AD3d 439, 440 [1st Dept 2013].) 9 [* 9] 11 of 14 Plaintiff and defendant agree that they never had an attorney-client relationship. Thus, the parties had no privity of contract. Plaintiffs allegations of fraud, however, are not pleaded with sufficient detail to fall within the exception-to-privity rule. Plaintiff fails to plead that defendant made an intentional misrepresentation to plaintiff himself that he was plaintiffs attorney. Nor does plaintiff plead that he relied on defendant’s misrepresentation that induced him to act to his detriment. Plaintiffs allegations of collusion are also insufficient to fall within the ambit of the exception. In conclusory fashion, plaintiff alleges that defendant colluded with the co-owners and defendant’s brother, Eric Roth, to gain advantage for one of the co-owners, Mark Family Realty, LLC, in its lawsuit against plaintiff. “

Sometimes It’s The Little Things

Posted in Legal Malpractice Cases

The name is arresting and the crusade is notable.  The entire case falls, once again, on a technicality.  What happens when a complaint but no summons starts the case off?  Dealy-Doe-Eyes Maddux v Schur  2016 NY Slip Op 03931  Decided on May 19, 2016  Appellate Division, Third Department tells us that:

“For more than a decade, plaintiff has pursued an ongoing course of litigation seeking to hold defendant liable for his alleged legal malpractice. One such action for legal malpractice proceeded to trial and was dismissed by Supreme Court upon defendant’s motion at the close of plaintiff’s proof [FN1]. Thereafter, defendant moved to dismiss this purported legal malpractice action on the ground that, among other things, plaintiff failed to file a summons or summons with notice.

Supreme Court granted defendant’s motion, and plaintiff now appeals.

We affirm. “An action is commenced by filing a summons and complaint or summons with notice in accordance with [CPLR 2102]” (CPLR 304 [a]). The failure to file the papers required to commence an action constitutes a nonwaivable, jurisdictional defect (see Matter of Miller v Waters, 51 AD3d 113, 116 [2008]; Sangiacomo v County of Albany, 302 AD2d 769, 771 [2003]), and such a defect is not subject to correction under CPLR 2001 (see Goldenberg v Westchester County Health Care Corp., 16 NY3d 323, 328 [2011]; Fox v City of Utica, 133 AD3d 1229, 1230 [2015]; DeJoy v Ehmann, 114 AD3d 1288, 1289 [2014], lv denied 23 NY3d 901 [2014]). Here, although plaintiff purchased an index number and filed a complaint, she never filed a summons or summons with notice. Given plaintiff’s failure, the purported action was a nullity, and Supreme Court properly dismissed it for want of subject matter jurisdiction (see O’Brien v Contreras, 126 AD3d 958, 958 [2015];Sangiacomo v County of Albany, 302 AD2d at 772). Moreover, to the extent that the complaint raised claims that were identical to those previously litigated and dismissed after a trial, such claims were barred by principles of res [*2]judicata (see Bluff Point Townhouse Owners Assn., Inc. v Kapsokefalos, 129 AD3d 1267, 1267-1268 [2015], lv denied 26 NY3d 910 [2015]; Wasson v Bond, 97 AD3d 1093, 1094 [2012]). Plaintiff’s remaining contentions have been examined and found to be without merit.”

If You Don’t Have a Viable Case, Mistakes Really Don’t Matter

Posted in Legal Malpractice Cases

In a stark example of the “but for” element of legal malpractice, Hoffman v Colleluori
2016 NY Slip Op 03850 Decided on May 18, 2016 Appellate Division, Second Department stands for the principal of “no-harm, no-foul.”  Put another way, if plaintiff could not have won the underlying case, mistakes matter not.

“In 2006, the plaintiff retained the defendants (hereinafter the law firm) to commence an action in the United States District Court for the Eastern District of New York (hereinafter the federal action) against the Nassau County Police Department and certain police officers, inter alia, to recover damages for false imprisonment pursuant to 42 USC § 1983. The complaint did not contain a cause of action to recover damages for malicious prosecution under 42 USC § 1983. The District Court granted the County’s motion to dismiss the complaint, finding, among other things, that the cause of action to recover damages for false imprisonment pursuant to 42 USC § 1983 was time-barred. Subsequently, in 2008, the law firm, on behalf of the plaintiff, commenced an action in the Supreme Court, Nassau County, against the County and the same police officers, asserting, inter alia, a cause of action to recover damages for malicious prosecution pursuant to 42 USC § 1983. The Supreme Court granted the County’s motion pursuant to CPLR 3211(a)(5) to dismiss the complaint on the ground that the causes of action were time-barred.

In 2010, the plaintiff commenced this action against the law firm to recover damages for legal malpractice, alleging, among other things, that it had failed to timely assert the cause of action to recover damages for malicious prosecution pursuant to 42 USC § 1983 in the federal action. After joinder of issue and discovery, the law firm moved for summary judgment dismissing the complaint, contending that the plaintiff would not have prevailed on his malicious prosecution claim under 42 USC § 1983 even if it had been timely asserted in the federal action. The Supreme Court granted the motion.”

“Here, the law firm established, prima facie, that even if it had timely asserted a cause of action to recover damages for malicious prosecution pursuant to 42 USC § 1983 in the federal action, the plaintiff would not have been successful on the merits, since the plaintiff’s conviction and a judicial determination of probable cause in the underlying criminal proceeding created a presumption of the existence of probable cause for that criminal proceeding (see Knox v County of Putnam, 2012 WL 4462011, *4, 2012 US Dist LEXIS 139586, *16 [SD NY, No. 10 Civ 1671 (ER)]; Passucci v Home Depot, Inc., 67 AD3d 1470, 1471; Goddard v Daly, 295 AD2d 314, 315; Gullo v Graham, 255 AD2d 975, 976; see also Hamoudeh v Mandel, 62 AD3d 948, 949). In opposition, the plaintiff failed to raise a triable issue of fact.”

Settlements and Their Memorialization

Posted in Archives

Settlements in “open court” are one thing.  They are enforceable just as they are.  Anything else requires a signature.  When the parties settled this matrimonial action using a court reporter in an attorney’s office they did not produce a document that was enforceable.  This might very well be legal malpractice says the Second Department.

Lieberman v Green  2016 NY Slip Op 03717  Decided on May 11, 2016  Appellate Division, Second Department reverses a decision of Supreme Court to dismiss the counterclaim for legal malpractice.

“The defendant retained the plaintiff law firm, Lieberman & LeBovit (hereinafter the law firm), to represent him in an underlying divorce action commenced against him by his now former wife (hereinafter the wife). On March 9, 2012, during the course of the divorce action, the parties agreed to resolve all matters in the action and a stipulation of settlement was read into the record by the plaintiff Mitchell Lieberman, a member of the plaintiff law firm, and transcribed by a court reporter who was present with the parties at the office of the wife’s counsel. According to the transcript, it was the parties’ intention to have the stipulation so-ordered by the Supreme Court at an appearance on March 15, 2012. However, the settlement was not so-ordered by the court on that date, or at any point thereafter. At some point, the wife repudiated the agreement.

In August 2012, the defendant discharged the plaintiffs and retained new counsel. On or about December 3, 2012, the plaintiffs commenced this action to recover unpaid legal fees. The defendant answered and asserted, inter alia, a counterclaim alleging that the plaintiffs committed legal malpractice in that they were negligent in failing to have a written stipulation of settlement signed by the parties and in failing to have the settlement so-ordered by the Supreme Court. The defendant claimed that, as a result, he incurred additional legal fees in having to continue litigating the divorce action. The plaintiffs moved, inter alia, to dismiss that counterclaim pursuant to CPLR 3211(a)(1) and (a)(7). The Supreme Court granted the plaintiffs’ motion. The defendant appeals from so much of the order as granted that branch of the plaintiffs’ motion which was to dismiss the counterclaim to recover damages for legal malpractice.

The Supreme Court improperly granted that branch of the plaintiffs’ motion which was to dismiss the counterclaim to recover damages for legal malpractice. On a motion to dismiss a pleading pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the pleading is afforded a liberal construction and the court must give the party “the benefit of every possible favorable inference, accept the facts alleged in the [pleading] as true, and determine only whether the facts as alleged fit within any cognizable legal theory” (High Tides, LLC v DeMichele, 88 AD3d 954, 956 [internal quotation marks omitted]; see McDonnell v Bradley, 109 AD3d 592, 593). “CPLR 3211(a)(7) dismissals merely address the adequacy of the [pleading], and do not reach the substantive merits of a [party’s] cause of action” (Hendrickson v Philbor Motors, Inc., 102 AD3d 251, 255). Therefore, whether the pleading will later survive a motion for summary judgment, or whether the party will ultimately prevail on the claims, is not relevant on a pre-discovery motion to dismiss (see Tooma v Grossbarth, 121 AD3d 1093, 1095-1096; Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin & Quartararo, 113 AD3d 587, 589; Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 38).”

“Here, construing the counterclaim liberally, accepting the facts alleged in the counterclaim as true, and according the defendant the benefit of every possible inference, the defendant has stated a cause of action alleging legal malpractice (see Leon v Martinez, 84 NY2d 83, 87-88; Tooma v Grossbarth, 121 AD3d at 1095). The counterclaim alleged that the plaintiffs were negligent in failing to ensure that the settlement was enforceable by having the parties sign a written stipulation of settlement or in having the settlement so-ordered by the Supreme Court, and that this negligence was a proximate cause of the defendant’s damages.”

 

It Would Be Wrong To Bring the Suit; Attorney Then Sued for Not Starting the Suit

Posted in Legal Malpractice Cases

In a startling and ironic turn, a legal malpractice law firm sues an attorney for not doing something wrong.  Wait, that sounds convoluted.  Here is the story.   Baer v Law Offs. of Moran & Gottlieb  2016 NY Slip Op 03799  Decided on May 12, 2016  Appellate Division, Third Department is about how an attorney took on a baby’s medical malpractice case and allowed the statute of limitations to pass for the parents.  He waited 4 years and then passed it on to a med-mal practitioner who started the case which eventually settled for the baby. Problem?  The parents had a derivative claim which was time barred.  When a law firm is sued, they turn around and sue the med-mal practitioner.  The AD says he was correct and ethical not to bring a time-barred suit.

“In December 2004, plaintiffs engaged defendants, a law firm and an individual attorney, to prosecute potential claims arising from the allegedly negligent medical care that their infant son received from March to April 2004. In 2008, defendant Steven Gottlieb, without having filed a complaint in connection with those claims, referred plaintiffs to third-party defendant, David J. Clegg, an attorney with experience in medical malpractice litigation. Clegg was formally retained in August 2008 and filed a complaint for plaintiffs’ son in February 2010. No derivative claims were pleaded on behalf of plaintiffs in the complaint that Clegg prepared. The medical malpractice action eventually settled and, thereafter, plaintiffs commenced the instant legal malpractice action against defendants, alleging that they negligently failed to assert [*2]plaintiffs’ derivative claims before the statute of limitations had expired thereon. Defendants impleaded, among others no longer involved in the action, Clegg, who then made a pre-answer motion to dismiss the third-party complaint, arguing that the statute of limitations on plaintiffs’ derivative claims had expired before he became involved in their son’s case. Supreme Court granted Clegg’s motion, and defendants now appeal.

We affirm. “An attorney sued for malpractice is entitled to commence a third-party claim for contribution [or indemnification] against a subsequent attorney whose negligence has contributed to or aggravated the plaintiff’s damages” (Hansen v Brognano, 137 AD2d 880, 881 [1988] [citation omitted]; see CPLR 1401; Schauer v Joyce, 54 NY2d 1, 5 [1981]; M & R Ginsburg, LLC v Segel, Goldman, Mazzotta & Siegel, P.C., 121 AD3d 1354, 1354-1355 [2014]; Soussis v Lazer, Aptheker, Rosella & Yedid, P.C., 66 AD3d 993, 995 [2009]). In that regard, where the limitations period applicable to a potential action is indisputable, an attorney’s “fail[ure] to commence [the] action within [that time frame] . . . f[alls] below the ordinary and reasonable skill and knowledge commonly possessed in the legal profession” and, absent countervailing considerations, constitutes negligence (Bergin v Grace, 39 AD3d 1017, 1018 [2007] [internal quotation marks and citation omitted]; see Wilk v Lewis & Lewis, P.C., 75 AD3d 1063, 1066 [2010]; compare Mignott v Kreidman, 65 AD3d 972, 972 [2009]).

As is relevant here, an action for medical malpractice “must be commenced within two years and six months of the act, omission or failure complained of or last treatment where there is continuous treatment for the same illness, injury or condition which gave rise to the said act, omission or failure” (CPLR 214-a; see Johanson v Sullivan, 68 AD3d 1303, 1304 [2009]; Cahill v Lat, 39 AD3d 1013, 1014 [2007]). Notwithstanding that time frame, an individual that is “under a disability because of infancy . . . at the time the cause of action accrues” is entitled to a 10-year toll of the limitations period (CPLR 208; see Henry v City of New York, 94 NY2d 275, 279-282 [1999]; Dugan v Troy Pediatrics LLP, 105 AD3d 1188, 1189 [2013]). However, “neither the infancy toll nor the continuous treatment toll applies to derivative claims” (Cahill v Lat, 39 AD3d at 1014; see Devadas v Niksarli, 120 AD3d 1000, 1008 [2014]; Chambers v Mirkinson, 68 AD3d 702, 706 [2009]; Boyle v Fox, 51 AD3d 1243, 1245 [2008], lv denied 11 NY3d 701 [2008]; Whipple v Goldsmith, 202 AD2d 834, 835 [1994]). Finally, on a motion to dismiss a third-party complaint for failure to state a cause of action pursuant to CPLR 3211 (a) (7), this Court must “accept the facts as alleged in the [third-party] complaint as true, accord [the third-party plaintiffs] the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory” (Slezak v Stewart’s Shops Corp., 133 AD3d 1179, 1179 [2015] [internal quotation marks and citation omitted]; see State of N.Y. Workers’ Compensation Bd. v 26-28 Maple Ave., Inc., 80 AD3d 1135, 1137 [2011]).”

A Settlement Unravels and Confidentiality is Forever Lost

Posted in Legal Malpractice Cases

Catsiapis v Giano   2016 NY Slip Op 30863(U)   May 11, 2016   Supreme Court,   Queens County Docket Number: 21642/2012   Judge: Denis J. Butler is an example of overreach and how it can eventually undermine the entire project.  Defendant attorneys almost always want a confidentiality clause, and will sometimes stretch out the negotiation on the basis that they want an ironclad agreement.  Sometimes it backfires.

“This is a legal malpractice action, which was settled on the record in open court before Special Referee, Elizabeth Yablon on June 1, 2015. The stipulation of settlement provided that “upon the presentation of the release as well as a hold-harmless agreement, and a non-disparagement slash confidentiality agreement in which the plaintiff agrees not to discuss this matter with anyone but governmental agencies, or upon a subpoena from – – or upon a subpoena that, as well as a hold-harmless agreement from the plaintiff as to any potential liens in this matter. . . . (sic)” When plaintiff was allocuted on the record, he answered in the affirmative when asked: “you understood that this settlement that is being paid to you by Peter Giano and Gordon and Gordon is a result of legal malpractice claim that bears index number 21642 of 12?” and “[y]ou understand that means that you cannot go after any of these individuals or entities again.” (Sic.) After asking these questions, plaintiff’s counsel began to state “[w]e had discussions concerning –-” whereupon the referee stated that “we are dealing with this case.” (Sic.) Plaintiff’s counsel indicated that he understood, but wanted it clear. After a discussion off the record, Peter Gordon was sworn in to be allocuted. At a later point on the record, attorneys for the Gordon defendants and for Giano wanted to make sure that confidentiality would be maintained. In accordance with the terms therein, plaintiff sent defendants Peter S. Gordon, Esq. and Gordon & Gordon, PC (collectively Gordon defendants) the release, hold harmless and confidentiality agreements. Gordon defendants refused to sign the documents stating that the terms of the written confidentiality agreement do not accurately reflect the parties oral agreement made in open court. Gordon defendants maintain that the agreement made in open court forbade plaintiff from discussing this matter except with limited circumstances. Plaintiff maintains that he agreed not to disclose the terms of the stipulation of settlement; however, he would be permitted to “generally describ[e] the claims in this action and the amount recovered as long as the parties are not named.” In effect, plaintiff sought to preserve its right to bring a legal malpractice action against the attorney who previously represented him in the underlying action for injuries resulting from an automobile accident.”

“Now plaintiff seeks to reform the stipulation of settlement and compel defendants to pay the agreed upon sums of money. Alternatively, plaintiff seeks to vacate the stipulation of settlement and restore this case to the trial calendar with a date certain for trial. Gordon defendants do not oppose the branch of the motion to vacate the stipulation and restore this case to the trial calendar as there was no meeting of the minds. In the cross motion, defendant Steve Giano, Esq. seeks to compel the Gordon defendants to sign the written drafts of the agreements prepared in accordance with the stipulation of settlement spread on the record. ”

“Considering the stipulation of settlement as a whole, there is ambiguity as to whether the parties intended the confidentiality of “this matter” to mean that only the terms of the stipulation of settlement are confidential, or the terms of the stipulation of settlement and all allegations forming the basis of the claim are 3 [* 3] confidential. This Court cannot reform the stipulation of settlement to conform to what it thinks is proper. Accordingly, the branches of the motion to reform the stipulation of settlement and compel payment and branch of the cross motion to compel execution of the agreements are denied. The branch of the motion to vacate the stipulation of settlement and schedule a trial date is granted. This action is restored to the trial calendar and the parties shall appear in the Trial Scheduling Part on June 27, 2016 at 9:30 a.m.”

What Happens When Your Agent Dooms You to Legal Malpractice?

Posted in Legal Malpractice Cases

There are several variants of potential legal malpractice in Butler v inSync Litig. Support, LLC
2016 NY Slip Op 50757(U)  Decided on May 4, 2016  Supreme Court, Nassau County  Brown, J.  The first is pled, the second is noted by the Court.  In short, Plaintiff retains Attorney.  More than one year, but less than three years later, attorney commences an action for Plaintiff, and gives the papers to a litigation support company to serve.  The papers are never served, and the statute lapses.  Is attorney liable?  Does the litigation support company have an out?

“Plaintiffs commenced this action with the electronic filing of a summons and complaint [*2]on December 18, 2015. The complaint alleges that Agulnick engaged InSync to serve a summons and complaint on behalf of Butler upon two of the defendants in Butler v the City of New York, Koledin, et. al., Supreme Court, Queens County, Index Number 703219/2014 (the underlying action). The complaint further alleges that inSync accepted the job, but failed to serve the papers as requested and never had any further communication with Agulnick. The complaint concludes that plaintiffs have been damaged because the underlying action could not be pursued due to the expiration of the statute of limitations after inSync failed to make service. The complaint asserts a cause of action for negligence and a cause of action for breach of contract.

Defendant contends that documentary evidence directly contradicts the allegations of plaintiffs’ complaint. A complaint may be dismissed based upon documentary evidence, pursuant to CPLR 3211(a)(1), only if the factual allegations contained in the complaint are definitively contradicted by the evidence submitted or if the evidence conclusively establishes a defense (Yew Prospect v Szulman, 305 AD2d 588 [2d Dept 2003]; Sta-Brite Servs., Inc. v Sutton, 17 AD3d 570 [2d Dept 2005]). The documentary evidence must utterly refute the factual allegations in the complaint, resolve all factual issues as a matter of law and conclusively dispose of the claims at issue (Yue Fung USA Enters., Inc. v Novelty Crystal Corp., 105 AD3d 840 [2d Dept 2013]).

In support of its motion to dismiss, inSync offers barely decipherable, self-generated records, which indicate that the papers in the underlying action were sent back to Agulnick when inSync was unable to make service on Michael Koledin, the individual defendant in the underlying action. Those documents fail to make any mention of whether inSync made any attempt to serve the City of New York in the underlying action, as requested by Agulnick.”

“inSync contends that plaintiffs fail to state a cause of action against it because Agulnick, as Butler’s lawyer in the underlying action, had a nondelegable duty to prosecute the case, monitor deadlines and meet the filing requirements. In making that argument, inSync relies upon Kleeman v Rheingold (81 NY2d 270 [1993]), in which the Court of Appeals found that an attorney may be held vicariously liable to his or her client for the negligence of a process server whom the attorney has hired on behalf of that client. While the Court of Appeals held that an attorney owes a nondelegable duty to his or her client to exercise care in the service of process, the Court specified that its decision did not consider the right of an attorney who has been held liable for the negligence of a retained process server to pursue whatever contractual or tort remedies that the attorney may have against the process server.

The fact that Agulnick owed a nondelegable duty to Butler to ensure that service of process in the underlying action was properly completed, does not preclude a claim against inSync for its alleged role in the failure to serve such process.[FN1] The cases cited by defendant in which a client’s initial counsel was granted summary judgment dismissing the legal malpractice claims against it when the client had hired subsequent counsel are inapposite herein.

To survive a motion to dismiss for failure to state a cause of action made pursuant to CPLR 3211(a)(7), plaintiffs need not demonstrate that they actually sustained damages, they need only plead allegations from which damages attributable to defendant’s conduct may reasonably be inferred (Fielding v Kupferman, 65 AD3d 437 [1st Dept 2009]; Mackey Reed Elec., Inc. v Morrone & Assoc., P.C., 125 AD3d 822 [2d Dept 2015]).

The complaint in the underlying action asserts causes of action for: (1) violation of 42 USC § 1983; (2) false arrest/imprisonment; (3) battery; (4) negligence; and (5) negligent hiring and retention. The court would note that since the acts which form the basis of the claims in the underlying action took place in January 2012, the causes of action for false arrest/imprisonment and battery were already time-barred by the applicable one year statute of limitations (CPLR 215[3]) when the underlying action was commenced on May 12, 2014.”

 

Failure to Look For Insurance Coverage May Be Legal Malpractice

Posted in Legal Malpractice Cases

Payment of attorney fees is a subject most solemn to attorneys, and a subject of great exasperation to clients.  What happens if you are sued, hire a set of attorneys to defend you and then discover that you had insurance which would have provided a free defense and the attorneys failed to discover or push you to use that insurance?

 Soni v Pryor  2016 NY Slip Op 03731  Decided on May 11, 2016  Appellate Division, Second Department provides a partial answer.  “In an action to recover damages for legal malpractice, the defendants Robert L. Pryor, A. Scott Mandelup, and Pryor & Mandelup, LLP, appeal, as limited by their brief, (1) from so much of an order of the Supreme Court, Nassau County (Brown, J.), dated March 3, 2014, as denied that branch of their motion, made jointly with the defendant Anthony F. Guiliano, which was for summary judgment dismissing the complaint insofar as asserted against them, and (2) from so much of an order of the same court entered June 4, 2014, as, upon reargument, adhered to its original determination in the order dated March 3, 2014, denying that branch of their motion, made jointly with the defendant Anthony F. Guiliano, which was for summary judgment dismissing the complaint insofar as asserted against them.”

“ORDERED that the ordered entered June 4, 2014, is affirmed insofar as appealed from;”

“The plaintiffs retained the defendants Robert L. Pryor, A. Scott Mandelup, and Pryor & Mandelup, LLP (hereinafter collectively the appellants), to represent them in an action commenced against them by CIT Healthcare, LLC (hereinafter the CIT action). The CIT action included allegations that the plaintiffs, as directors and officers of several corporations, aided and abetted the corporations in committing acts of fraud and conversion. After the appellants withdrew as counsel for the plaintiffs, the plaintiffs commenced this action, alleging that the appellants had committed legal malpractice by failing to advise them that they had coverage for the CIT action under a “Directors and Officers” coverage section of an insurance policy issued by National Union Fire Insurance Company of Pittsburgh, Pa. (hereinafter National Union) to one of the corporate entities the plaintiffs controlled.

The appellants moved, inter alia, for summary judgment dismissing the complaint insofar as asserted against them. They asserted, among other things, that any failure on their part to advise the plaintiffs of the existence of insurance coverage did not proximately cause the plaintiffs any damages because a policy exclusion would have barred coverage with respect to the CIT action. The Supreme Court denied that branch of the motion and, upon reargument, adhered to that determination.”

“Here, the Supreme Court correctly determined that the appellants failed to meet their prima facie burden of demonstrating that the plaintiffs could not prove the element of proximate cause due to a policy exclusion. “In construing policy provisions defining the scope of coverage pursuant to a policy of insurance, courts first look to the language of the policy, reading it in light of common speech and the reasonable expectations of a businessperson, and in a manner that leaves no provision without force and effect” (Yeshiva Viznitz v Church Mut. Ins. Co., 132 AD3d 853, 854 [internal quotation marks and citation omitted]; see Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383; Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 221-222; ABM Mgmt. Corp. v Harleysville Worcester Ins. Co., 112 AD3d 763, 764). ” To negate coverage by virtue of an exclusion, [it] must [be] establish[ed] that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case'” (Westview Assoc. v Guaranty Natl. Ins. Co., 95 NY2d 334, 340, quoting Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 652).”

A Different Approach to Legal Malpractice and Overbilling

Posted in Uncategorized

It’s the first time we have seen this approach. Plaintiff sues for a declaratory judgment that Defendant attorneys overbilled their client, as well as on claims of legal malpractice.  In Berardi v Phillips Nizer, LLP  2016 NY Slip Op 30860(U)  May 6, 2016  Supreme Court, New York County
Docket Number: 157690/2012  Judge: Nancy M. Bannon the Court writes: “In this legal malpractice action and action for a judgment declaring that the defendants overbilled the plaintiff for legal services, the defendants move pursuant to CPLR 3211 (a) (1), (5), and (7) to dismiss the amended complaint. The court denies the motion. “The second cause of action in the initial complaint alleged that the defendants overbilled the plaintiff by charging excessive and unreasonable attorneys’ fees. In her amended complaint, the plaintiff adds a specific allegations to the first cause of action that, in 2005, the husband’s counsel had provided a nonmatrimonial attorney at the firm with copies of the shareholder and member agreements referable to the business entities but, for at least two years, that attorney did not share that information with the defendant Elliot Wiener, an attorney with the firm who was the lead matrimonial lawyer assigned to the plaintiff’s case. The amended complaint further asserts that, during that period of time, the firm did not appraise the value of the business entities, did not analyze the consequences of the restrictions on sale and transfer of shares and interests articulated in those agreements, or the difference in value between an immediate buyout of the shares and the plaintiff’s retention of a minority interest in the business entities. The plaintiff alleges that, as a consequence of the nonmatrimonial attorney’s conduct, neither the firm nor Wiener had sufficient facts upon which to base their strategy in responding to the husband’s motion to set aside the postnuptial agreement. The plaintiff further asserts, in a newly added second cause of action, that the firm’s malpractice extended to its failure to properly supervise the nonmatrimonial attorney in connection with her conduct, as described in the first cause of action. The cause of action alleging overbilling was reiterated in the amended complaint as the third cause of action. ”

“On a motion to dismiss pursuant to CPLR 3211 (a) (7), the pleading is to be afforded a liberal construction (see, CPLR 3026). The facts as alleged in the complaint must be accepted as true, the plaintiffs accorded the benefit of every possible favorable inference, and the court must determine only whether the facts as alleged fit within any cognizable legal theory. See Leon v Martinez, 84 NY2d 83, 87~88 (1994); Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., supra, at 270-271. Nonetheless, a complaint must “be sufficiently particular to give the court and parties notice of the transactions, occurrences, or series of transactions” that form the basis of the complaint and “the material elements of each cause of action” (CPLR 3013). In assessing a motion under CPLR 32ll(a)(7), however, a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint. See Nonnon v City of New York, 9 NY3d 825, 827 (2007); Rovella v Orofino Realty Co., 40 NY2d 633, 635 ( 1976) . Where, as here, the movant submits evidence beyond the complaint in support, of a motion to dismiss pursuant to CPLR 3211(a) (7), the criterion is whether the proponent of the pleading has a cause of action, not whether he or she has stated one, but dismissal should not result unless “a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it.” Guggenheimer v Ginzburg, 43 NY2d 268, 275 (1977). The amended complaint states a cause of action to recover damages for legal malpractice, as the allegations, if proven, satisfy all of the elements of that cause of action. See Russo v Rozenholc, 130 AD3d 492 (1st Dept 2015). The amended complaint also states a cause of action sounding in negligent supervision, based, in part, on an alleged violation of Rule 5. 1 of the Rules of Professional Conduct, which may constitute evidence of tortious misconduct. See William Kaufman Organization, Ltd. v. Graham and James, LLP, 269 AD2d 171 (1st Dept 2000). Moreover, those causes of action satisfy the notice requirements of CPLR 3013. The cause of action for a judgment declaring that the defendants overbilled the plaintiff, while not necessarily independent of the legal malpractice cause of action, likewise states a cause of action. “‘A motion to dismiss a declaratory judgment action prior to the service of an answer presents for consideration only the issue of whether a cause of action for declaratory relief is set forth, not the question of whether the plaintiff is entitled to a favorable declaration'” Matter of Tilcon N.Y .. Inc. v Town of Poughkeepsie, 87 AD3d 1148, 1150 (2~ Dept 2011) , quoting Staver Co. v Skrobisch, 144 AD2d 449, 450 (2nd Dept 1988). “Thus, ‘where a cause of action is sufficient to invoke the court’s power to render a declaratory judgment . . as to the rights and other legal relations of the parties to a justiciable controversy, a motion to dismiss that cause of action should be denied'” (DiGiorgio v 1109-1113 Manhattan Ave. Partners. LLC, 102 AD3d 725, 728 (2nd Dept 2013), quoting Matter of Tilcon N. Y.. Inc. v Town of Poughkeepsie, supra, at 1150). Inasmuch as the defendants have not identified which allegations in the amended complaint that are asserted to be facts are not truly facts at all, and have not demonstrated that the purportedly nonfactual nature of any of the plaintiff’s allegations is indisputable, the plaintiff has also shown that she “has” causes of action to recover damages for legal malpractice and for negligent supervision, and for a judgment declaring that the defendants overbilled her by virtue of their malpractice. ”

A Familiar and Sad Story

Posted in Legal Malpractice Cases

Anderson v Armentano  2016 NY Slip Op 03690  Decided on May 11, 2016  Appellate Division, Second Department is another telling of a sad but familiar story in which a Workers’ Compensation attorney allows the client to think that it is handling all aspects of the personal injury case, but is only handling the WC portion.  Here, as in all versions of this story, the “third-party” action (against the landowner for example) is allowed to drift away.

“On September 17, 2010, the plaintiff allegedly was injured when he fell into a trench at the Hicksville Parking Facility, which was owned by the Town of Oyster Bay, while performing construction work for his employer. After the incident, the plaintiff sought legal representation from the defendant Grey and Grey, LLP (hereinafter G & G), and another attorney with respect to potential claims arising from the accident. On November 17, 2010, G & G and the plaintiff executed a New York State Workers’ Compensation Board “Notice of Retainer and Appearance-Additional Attorney,” which indicated that G & G had been retained to represent the plaintiff “in all proceedings concerning my claim.”

Neither G & G nor the other attorney filed a timely notice of claim against the Town. Although the plaintiff commenced a proceeding for leave to file a late notice of claim against the Town which the Supreme Court granted, this Court reversed the order granting the petition and dismissed the proceeding (see Matter of Anderson v Town of Oyster Bay, 101 AD3d 708).

The plaintiff then commenced this action to recover damages for legal malpractice against G & G and the other attorney. Prior to answering, G & G moved pursuant to CPLR 3211(a)(1) to dismiss the complaint insofar as asserted against it on the basis that documentary evidence established that it had been engaged by the plaintiff only with respect to his Workers’ Compensation claim. The Supreme Court denied G & G’s motion. G & G appeals.”

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