New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

Judiciary Law 487 Applies Only to Attorneys

Posted in Uncategorized

Albany, NY:  The Third Department considered a pro-se appeal, and found against plaintiff. Neroni v Follender 2016 NY Slip Op 01527  Decided on March 3, 2016  Appellate Division, Third Department.  All in all, things turned out poorly for plaintiff.

“In 2007, defendant Jonathan S. Follender (hereinafter Follender) and his law firm, defendant Jonathan S. Follender, P.C. (hereinafter the law firm), commenced a breach of contract action on behalf of clients of the law firm against clients of plaintiff [FN1]. The action culminated in a default judgment against plaintiff’s clients and an award of sanctions for frivolous conduct against plaintiff; both determinations were affirmed by this Court (M & C Bros., Inc. v Torum, 101 AD3d 1329, 1330 [2012], appeal dismissed 21 NY3d 898 [2013]). Plaintiff then commenced this action against Follender, the law firm and the law firm’s clients in the breach of contract action, alleging that Follender and the law firm committed fraud upon the court in that action and a subsequent special proceeding to enforce the judgment, that the clients colluded with Follender and the law firm to commit fraud, deceit and collusion in violation of Judicial Law § 487, and that defendants committed defamation. Defendants moved [*2]to dismiss the complaint and sought sanctions and an order to preclude plaintiff from bringing further litigation against them. In December 2013, after extensive motion practice and correspondence, Supreme Court dismissed plaintiff’s complaint with prejudice, sanctioned plaintiff in the amount of $2,000 for frivolous conduct and awarded injunctive relief to defendants, as well as counsel fees and costs. Plaintiff then moved for recusal and to renew and/or reargue the December 2013 order, and defendants cross-moved for, among other things, a determination of the amount of counsel fees and costs. In April 2014, the court denied plaintiff’s motion and partially granted the cross motion by, among other things, setting the amount of counsel fees and costs awarded in the December 2013 order at $8,470. Plaintiff appeals from both orders.”

“Supreme Court properly dismissed the fifth cause of action, which alleged in conclusory terms that the law firm’s clients acted in collusion with Follender and the law firm to commit fraud, collusion and deceit. As the court correctly determined, the complaint included no specific allegations whatsoever of any fraudulent statements or other wrongdoing on the clients’ part, and Judiciary Law § 487, by its terms, does not apply to non-attorneys. Finally, we agree with the court that the cause of action alleging defamation and defamation per se did not describe the alleged defamatory statements with the requisite specificity (see CPLR 3016 [a]; Martin v Hayes, 105 AD3d 1291, 1293 [2013]), that the claim was time-barred by the one-year statute of limitations as to all but one of the statements that apparently formed the basis of the allegations (see CPLR 215 [3]), and that the remaining statement was made in the course of the prior court proceeding and was therefore protected by an absolute privilege (see Black v Green Harbour Homeowners’ Assn., Inc., 19 AD3d 962, 963 [2005]). Plaintiff’s contention that the court should have granted leave to amend her complaint rather than dismissing it on the merits is unpreserved (see CPLR 5501 [a] [3]).”

 

The Statute of Limitations is a High Hurdle

Posted in Legal Malpractice Cases

Mineola, NY:   In an appeal from the decision and order of Supreme Court, Nassau County, the Second Department reminds all that the statute of limitations is an unforgiving obstacle.

Quinn v McCabe, Collins, McGeough & Fowler, LLP  2016 NY Slip Op 03153  Decided on April 27, 2016  Appellate Division, Second Department discusses the statute, continuous representation, tolling, and the requirements of trust and confidence.

“The statute of limitations for a cause of action alleging legal malpractice is three years (see CPLR 214[6];Farage v Ehrenberg, 124 AD3d 159, 163). “Accrual is measured from the commission of the alleged malpractice, when all facts necessary to the cause of action have occurred and the aggrieved party can obtain relief in court, regardless of when the operative facts are discovered by the plaintiff” (Farage v Ehrenberg, 124 AD3d at 164 [citations omitted]; see McCoy v Feinman, 99 NY2d 295, 301; St. Stephens Baptist Church, Inc. v Salzman, 37 AD3d 589, 590).

Causes of action alleging legal malpractice which would otherwise be barred by the statute of limitations are timely if the doctrine of continuous representation applies (see Glamm v Allen, 57 NY2d 87, 91-94; Farage v Ehrenberg, 124 AD3d at 164; see also Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d 733, 735). The continuous representation doctrine tolls the statute of limitations where there are clear indicia of “an ongoing, continuous, developing, and dependent relationship between the client and the attorney” (Aseel v Jonathan E. Kroll & Assoc., PLLC, 106 AD3d 1037, 1038 [internal quotation marks omitted]; see Farage v Ehrenberg, 124 AD3d at 164).

Here, the defendants Picciano & Scahill, P.C., and Sean Schaefer (hereinafter together the Picciano defendants) met their prima facie burden by establishing that the statute of limitations expired on March 28, 2009, three years after a consent to change attorney form was executed by the plaintiff, the Picciano defendants, and new counsel, and that they did not act on behalf of the plaintiff in the subject actions after the consent was signed (see Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 735). Therefore, the Picciano defendants met their prima facie burden of establishing that the three-year statute of limitations period for commencing an action alleging legal malpractice had expired at the time the plaintiff commenced this action on or about September 11, 2014 (see id. at 735-736; see generally Bullfrog, LLC v Nolan, 102 AD3d at 720).”

The Reflexive Legal Malpractice Counterclaim

Posted in Legal Malpractice Cases

It is often and disparagingly said that legal malpractice cases exist solely to get out of obligations to pay attorney fees.  Sometimes that appears to be true.   Popkin v Kopoulos  Decided on April 22, 2016  District Court Of Nassau County, First District  Fairgrieve, J. is the story of an attorney who prepared a retainer agreement for hourly rate work, performed some work, ran into non-payment, moved to be relieved, was relieved and then was awarded a charging lien.  When the attorney went to sue for the relatively small amount of fees, he was met with a counter-claim for legal malpractice.

“”[W]hen the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving practical interpretation to the language employed and the parties’ reasonable expectations. Thus, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms” (Dysal, Inc. v. Hub Props. Trust, 92 AD3d 826, 827 [2d Dept 2012]). Furthermore, “[i]nterpretation of an unambiguous contract provision is a function for the court, and matters extrinsic to the agreement may not be considered when the intent of the parties can be gleaned from the face of the instrument. A court should not imply a term which the parties themselves failed to include” (2632 Realty Dev. Corp. v. 299 Main St., LLC, 94 AD3d 743, 745 [2d Dept 2012]; see also Westchester County Correction Officers Benevolent Ass’n, Inc. v County of Westchester, 99 AD3d 998, 999 [2d Dept 2012]).

Here, the retainer agreement, which was signed by the defendant on July 10, 2014, is clear on its face. The interpretation the defendant suggests, to wit: that the fees were capped at $5,000.00 is in direct contradiction of the plain language of the agreement. Nor, does the court find persuasive the defendant’s claim that the plaintiff’s representation of him in the Supreme Court action was somehow deficient, which would forgive his obligation to pay legal fees. In fact, in connection with that representation, the Supreme Court awarded the plaintiff a charging lien for those outstanding fees, when plaintiff moved by Order to Show Cause to be relieved as counsel on the ground of defendant’s “refusal to acknowledge his obligations” of payment (see Plaintiff’s Exhibits C and E). Accordingly, and having raised no other grounds in opposition, the defendant has failed to raise an issue of fact for trial.

In view of the foregoing, the plaintiff’s motion for summary judgment is granted. Let judgment be entered in the sum of $10,214.50 with interest thereon from June 2, 2015, together with costs and disbursements.

The portion of the plaintiff’s motion which seeks to dismiss the defendant’s counterclaims, which assert causes of action for legal malpractice is granted. Said counterclaims are hereby dismissed.”

Vague Allegations of Damages Fail for Plaintiff

Posted in Legal Malpractice Cases

Plaintiff pled an adequate cause of action for himself, but could not plead adequately for his corporation.  This outcome is generally the opposite of what one might expect in a legal malpractice case in which the individual is often not in privity with the attorney while the corporation is.  Brion v Moreira  2016 NY Slip Op 03088  Decided on April 21, 2016  Appellate Division, First Department tells us:

“The individual plaintiff (Michael) has adequately alleged a privity relationship between him and defendants, an attorney and his law firm, and the documentary evidence does not conclusively refute those allegations (see generally AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 595 [2005]). In particular, the complaint adequately alleges that defendants, who handled estate matters for Michael’s father, now deceased, also agreed to represent both Michael and his father in formalizing an alleged oral agreement between them, which was largely to Michael’s benefit, and which involved transfer of the father’s ownership interests in corporations owned by both of them to Michael (see Nuzum v Field, 106 AD3d 541, 541 [1st Dept 2013], and Estate of Nevelson v Carro, Spanbock, Kaster & Cuiffo, 259 AD2d 282 [1st Dept 1999]). Although Basonas also adequately alleged a privity relationship that was not conclusively refuted by the documentary evidence, the vague allegation that it suffered unspecified lost profits as a result of defendants’ malpractice was insufficient to support a malpractice claim. Basonas failed to set forth factual allegations from which one could reasonably infer that lost profits were attributable to defendants’ alleged negligent conduct (see Leggiadro, Ltd. v Winston & Strawn, LLP, 119 AD3d 442, 442 [1st Dept 2014]).

The documentary evidence does not conclusively refute Michael’s allegation that the “Acknowledgment of Debt” drafted by defendants failed to memorialize the terms of the oral[*2]agreement between him and his father.”

Professional Malpractice is For Professionals

Posted in Uncategorized

Vista Food Exch., Inc. v BenefitMall  2016 NY Slip Op 02923  Decided on April 14, 2016 Appellate Division, First Department is an example of the tendency to apply a winning template to almost any situation.  The AD found the template inapplicable in this setting.

“Plaintiff alleges that it relied on defendants’ advice in outsourcing its human resources and benefits functions to a third party recommended by defendants. The third party allegedly accepted funds from plaintiff for the payment of its payroll taxes, but failed to make such payments to the taxing authorities before becoming insolvent.

First, the court correctly dismissed the breach of contract claims asserted in the amended complaint, because the amended complaint does not sufficiently allege that there was consideration to support the alleged oral contract. Consideration sufficient to create a contract “consists of either a benefit to the promisor or a detriment to the promisee” (Weiner v McGraw-Hill, Inc., 57 NY2d 458, 464 [1982]). Here, plaintiff, or the alleged promisee, claims that on the advice of defendants, it decided not to hire a different third-party company to perform its human resources and payroll services, and instead hired the company that defendants recommended. However, it is not alleged that this purported detriment was required by defendants as a condition of their promising to give advice, or was otherwise necessary to consummate the transaction, and, therefore, cannot serve as the requisite consideration needed to form a contract (22 NY Jur 2d, Contracts § 76). Similarly, there are no allegations that defendants, the alleged promisors, received a direct benefit, monetary or otherwise, in exchange for their promise to provide advice. To the extent defendants received payments from the recommended third party rather than from plaintiff directly, such payments provide a benefit that is too remote or indirect to constitute consideration (Trans Intl. Corp. v Clear View Tech., 278 AD2d 1, 1 [1st Dept 2000]).

Even if an enforceable contract had been formed between the parties here, plaintiff’s breach of contract claim would still fail because plaintiff has failed to properly plead general or special damages. Plaintiff’s alleged damages (namely, its potential incurment of tax penalties and other liabilities due to the third party’s failure to pay plaintiff’s taxes) do not directly flow from and are not the “natural and probable consequence” of defendants’ alleged breach, and, therefore, do not qualify as general damages (Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d 187, 192 [2008] [internal quotation marks omitted], rearg denied 10 NY3d 890 [*2][2008]). Moreover, the allegations in the amended complaint fail to allege special damages because there are no allegations that defendants foresaw, or should have foreseen, the alleged damages, prior to or at the time the alleged contract was made (id. at 192-193).

The motion court correctly dismissed plaintiff’s claim for breach of the implied covenant of good faith and fair dealing, because it cannot be used as a substitute for plaintiff’s nonviable breach of contract claim (Smile Train, Inc. v Ferris Consulting Corp., 117 AD3d 629, 630 [1st Dept 2014]).

Because plaintiff did not allege defendants’ violation of a legal duty independent of a contract, the motion court correctly dismissed the promissory estoppel claim in the amended complaint and the negligence/negligent misrepresentation claim in the original complaint (MatlinPatterson ATA Holdings LLC v Federal Express Corp., 87 AD3d 836, 842-843 [1st Dept 2011][promissory estoppel], lv denied 21 NY3d 853 [2013]; Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 389 [1987][negligence]). Further, plaintiff failed to support its negligent misrepresentation claim with sufficient allegations of “a special or privity-like relationship imposing a duty on the defendant[s] to impart correct information to the plaintiff,” or that the information imparted by defendants was incorrect (J.P. Morgan Sec. Inc. v Ader, 127 AD3d 506, 506 [1st Dept 2015][internal quotation marks omitted]).

To the extent plaintiff has not abandoned the issue on appeal, it failed to state a claim for professional malpractice because, under New York law, defendants are not professionals (see Chase Scientific Research v NIA Group, 96 NY2d 20, 29-30 [2001]). Further, plaintiff failed to state a claim for breach of fiduciary duty, since there are no allegations in the complaint that defendants misled plaintiff by making false misrepresentations (see Roni LLC v Arfa, 74 AD3d 442, 444 [1st Dept 2010], affd 18 NY3d 846 [2011]).

Account Stated is a Very Strong Doctrine

Posted in Uncategorized

A bill is sent, and a partial payment is made.  More bills are sent, and the client just stops paying. The case does not go well, and there is a dispute between client and attorney.  When the attorney sues for fees, what will be the outcome?

More often than not, the account stated principle comes into play and the attorney wins.  Wagner Davis P.C. v Brady  2016 NY Slip Op 50431(U)   Decided on March 30, 2016  Appellate Term, First Department is a recent example.

“A fair interpretation of the trial evidence supports the jury’s finding that plaintiff proved its claim for legal fees based on an account stated. The trial evidence showed that defendant James Brady Jr. retained plaintiff law firm (1) on his own behalf, to represent him in an appeal of a decision rendered in an action regarding air rights to his residential cooperative apartment and (2) as principal of the corporate defendants and on his own behalf, with respect to three commercial nonpayment proceedings commenced against defendants. The evidence also showed that defendants received and retained plaintiff’s invoices without proper objection for a reasonable time, and made partial payments on the sums due (see Brunelle & Hadjikow, P.C. v O’Callaghan, 126 AD3d 584 [2015], appeal dismissed 26 NY3d 975 [2015]; Moses & Singer v S & S Mach. Corp., 251 AD2d 271 [1998], lv denied 92 NY2d 1024 [1998]).

Defendants’ claim that the legal fees were unreasonable is unavailing; “it is not necessary to establish the reasonableness of the fee since the client’s act of holding the statement without objection will be construed as acquiescence as to its correctness” (Cohen Tauber Spievak & Wagner, LLP v Alnwick, 33 AD3d 562, 562—563 [2006] [internal quotation marks omitted], lv dismissed 8 NY3d 840 [2007]).

The trial court properly refused to charge the jury as to discharge “for cause.” There was [*2]insufficient evidence to support a finding that plaintiff engaged in misconduct, failed to prosecute defendants’ cases diligently, or otherwise improperly handled the cases or committed malpractice (see Coccia v Liotta, 70 AD3d 747, 757 [2010], lv dismissed 15 NY3d 767 [2010]). Defendants essentially pointed to so-called errors of counsel which were, in fact, strategic choices which cannot support a discharge for cause (see Doviak v Finkelstein & Partners, LLP, 90 AD3d 696, 699-700 [2011]). Defendants’ claim that attorneys other than Steven Wagner and Stuart Klein personally performed work in the two matters is unavailing, since the governing retainer agreements do not specify that any particular attorney will handle the cases; and defendants, who were aware from the itemized bills that other attorneys were working on the matter, regularly made payments (see Bixby v Somerville, 62 AD3d 1137, 1139 [2009]).

 

Couldn’t Sue the City, Couldn’t sue the Employer, No Malpractice

Posted in Uncategorized

You work for a landscaping company, and are working on a big job at Van Cortlandt Park.  You fall off a machine and get hurt.  You apply for Workers’ Compensation benefits, and they are paid. Some months later you are told that you need an attorney.  You hire the attorney and he works on the WC claim.  No one starts a personal injury case.  Is this legal malpractice?

Felix v Klee & Woolf, LLP  2016 NY Slip Op 02960  Decided on April 20, 2016  Appellate Division, Second Department shows the AD going into great detail on how the “but for” portion of legal malpractice is applied.

“To state a cause of action to recover damages for legal malpractice, a plaintiff must allege: (1) that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and (2) that the attorney’s breach of the duty [*2]proximately caused the plaintiff actual and ascertainable damages” (Marino v Lipsitz, Green, Fahringer, Roll, Salibury & Cambria, LLP, 87 AD3d 566, 566 [internal quotation marks omitted]; see Leder v Spiegel, 9 NY3d 836, 837; Wray v Mallilo & Grossman, 54 AD3d 328, 328-329). “To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the attorney’s negligence” (Wray v Mallilo & Grossman, 54 AD3d at 329;see Marino v Lipsitz, Green, Fahringer, Roll, Salibury & Cambria, LLP, 87 AD3d at 566).

Thus, “[a] defendant moving for summary judgment in a legal malpractice action must . . . establish prima facie that the plaintiff cannot prove at least one of the essential elements of the malpractice claim” (Wray v Mallilo & Grossman, 54 AD3d at 329; see Marino v Lipsitz, Green, Fahringer, Roll, Salibury & Cambria, LLP, 87 AD3d at 566). Contrary to the plaintiff’s contention, even if the defendant had successfully moved on the plaintiff’s behalf for leave to serve a late notice of claim against the City and the Parks Department, the plaintiff would not have prevailed in a subsequent personal injury action against them, as he had no viable common-law negligence or Labor Law claim.

“To make a prima facie showing of liability under Labor Law § 240(1), a plaintiff must establish that the statute was violated and that the violation was a proximate cause of his or her injuries” (Singh v City of New York, 113 AD3d 605, 606). Here, the defendant established that the plaintiff would not have been successful against the City or the Parks Department on a cause of action asserting a violation of Labor Law § 240(1), because the plaintiff would not have been able to show that the accident occurred in the context of “work performed on buildings or structures'” (Vargas v State of New York, 273 AD2d 460, 461, quoting Labor Law § 240[1]). Similarly, the plaintiff would not have been able to assert a viable cause of action pursuant to Labor Law § 241(6), since he was involved with seeding a cricket field, rather than in “construction, excavation or demolition work” (Labor Law § 241[6]). In opposition to the defendant’s prima facie showing, the plaintiff failed to raise a triable issue of fact with respect to whether the work he performed was covered by Labor Law § 240(1) or § 241(6).

“A cause of action alleging a violation of Labor Law § 200 or common-law negligence may arise from either dangerous or defective premises conditions at a work site or the manner in which the work is performed” (Rodriguez v Trades Constr. Servs. Corp., 121 AD3d 962, 964). Where, as here, the claim arises out of alleged defects or dangers in the methods or materials of the work, “recovery cannot be had under Labor Law § 200 unless it is shown that the party to be charged had the authority to supervise or control the performance of the work” (id. at 964; see Ortega v Puccia, 57 AD3d 54, 61). The defendant established, prima facie, that neither the City nor the Parks Department, as the owner of Van Cortlandt Park, could be held liable under Labor Law § 200 or for common-law negligence. Although the plaintiff argues that the City and the Parks Department had notice of the dangerous manner in which the seeding machine was being used at the work site, the record is clear that neither the City nor the Parks Department had any authority to supervise or control the performance of the plaintiff’s work (see Rizzuto v L.A. Wenger Contr. Co., 91 NY2d 343, 352; Russin v Louis N. Picciano & Son, 54 NY2d 311, 317; Gallello v MARJ Distribs., Inc., 50 AD3d 734, 735; Dooley v Peerless Importers, Inc., 42 AD3d 199, 204-205; Guerra v Port Auth. of N.Y. & N. J., 35 AD3d 810, 811; Perri v Gilbert Johnson Enters., Ltd., 14 AD3d 681, 683; Everitt v Nozkowski, 285 AD2d 442, 443; Reynolds v Brady & Co., 38 AD2d 746, 746-747). In opposition, the plaintiff failed to raise a triable issue of fact (see Pacheco v Halstead Communications, Ltd., 90 AD3d 877).

Accordingly, the Supreme Court properly granted that branch of the defendant’s motion which was for summary judgment dismissing the cause of action alleging legal malpractice.”

 

No One Gets Summary Judgment Here

Posted in Legal Malpractice Cases

Client is a big-time hedge fund earner, getting $5 and $6 million in bonuses over the years.  Suddently, the bottom falls out, and he is offered severeness of only $ 1.6 million.  He consults with defendants who tell him that they can help.  However, defendants divert from the contractually set-up appeal procedure and plaintiff ends up with nothing at all.  Negligence or judgment?

Garner v Liddle & Robinson, L.L.P.  2016 NY Slip Op 30659(U)  April 13, 2016  Supreme Court, New York County  Docket Number: 150058-2012  Judge: George J. Silver takes the view that there are sharp issues of fact to be determined by the jury.

“From 2001 through 2006, plaintiff, along with Alai, received an annual Bonus ranging from $5.1 million to approximately $9 million. Specifically, plaintiff and Alai each received, for the years 2001through2006, bonuses of $5.1 million, $7.25 million, $8.9 million, $8.3 million, $9 million, and $7.4 million respectively. Then, in June 2007, UBS closed Dillon Read, and on June 20, 2007, plaintiff and Alai each received a letter terminating his employment and detailing the terms of his termination and the UBS Separation Program (the “Separation Letter”). The Separation Letter offered to pay plaintiff severance under the UBS Global Management Separation Program (the “Separation Program”) consisting of (i) thirty nine (39) weeks of his base salary, and (ii) a Special payment of $1,850,000 (“Severance Offer”), for a total of $1,981,000.00. Alai received an identical termination letter. The Separation Letter explained that the Special Payment of $1,850,00 had been determined at the sole discretion of Dillon Read’s management and authorized under a supplement to the Separation Program for certain employees, and that in order to receive the Severance Offer, plaintiff was required to sign a Separation Agreement and General Release within forty five ( 45) days. Further, the Separation Letter explained that if plaintiff wished to challenge the Severance Offer or any aspect of the Separation Agreement, plaintiff was required to first consult with his Client Relationship Manager. The Separation Letter further stated that if plaintiff was unable to resolve the issues through such consultation, plaintiff had the right, within forty-five (45) days, to submit a written statement to a UBS committee (the “Committee”) through Kiku Taura, the UBS Executive Director/Human Resources at UBS Global Asset Management (Americas), Inc., describing the basis for his claim. Upon receiving the letter, plaintiff and Alali met with Liddle and Marc Susswein (“Susswein”) and retained L&R for the purpose of obtaining “guidance and advice concerning their rights under the Separation Agreement Letter, the Separation Program, their employment agreements, and prevailing employment and contract laws”, and ultimately, to obtain a higher Severance Offer. On May 2, 2008, plaintiff entered into a retainer agreement with defendants whereby plaintiff agreed to pay, in addition to retainer and contingency fees, disbursements and expenses. Plaintiff alleges that Liddle advised him that he and Alali were each entitled to receive a minimum of 3% of the net profits of the CRE for the period from January 1, 2007 until their termination – approximately $6 million each, a sum that more closely represented their historical bonuses of 3% during the years 2001-06 – as opposed to the Special Payment of $1.8 million. Further, plaintiff alleges that Liddle advised him that he would respond to the Separation Letter, and “expressed confidence that they would each receive at least $6 million based upon the prevailing law and his familiarity with UBS’ business practice and management, and that, in no event would they receive less than $2 million each.” On August 1, 2007, Liddle wrote to Rebecca White, Esq. (White), the Managing Director of UBS America’s Legal Employment Section, to discuss the terms of the Settlement Letter and the Severance Offer on behalf of plaintiff and Alali. The letter asks White to share its contents with certain specified “senior business executives within UBS.” Upon receipt of the letter, which had been forwarded to her as an email attachment by Susswein that same day, White emailed Susswein that she would forward the letter to “the UBS AM Severance Committee,” and suggested in the future he deal directly with Kiku Taura, “as set forth in the plan.” In response, Susswein told White, “Messrs. Garner and [redacted] are of the belief that given the substantial amounts that are at issue in their matter, that it is likely better addressed at a senior level outside of the UBS SM Severance Committee, which is why we have not submitted their letter directly to the committee.” White responded, “Just so it is clear, the severance packages offered to these employees will expire by their terms. As you requested, we will address the issues you have raised after we have had the opportunity to discuss them with the appropriate members of management.”

” In October of 2008, approximately six months after plaintiff turned down the increased offer of $2.6 million, defendants initiated an arbitration proceeding on behalf of plaintiff before the Honorable Stephen Crane at JAMS. Judge Crane dismissed the majority of plaintiffs claims, and specifically determined that “because he failed to comply with the Separation program’s appeal procedure, [plaintiffJ has failed to exhaust his administrative remedies.” As such, plaintiff was no longer entitled to the initial Severance Offer. Subsequently, on September 24, 20 I 0, defendants asked Judge Crane to restore the Severance Offer, which Judge Crane declined to do. Twelve days later, Judge Crane issued his Final Award, dismissing plaintiffs remaining claims. As a result, plaintiff received no severance payment from UBS, and now seeks to recover from defendants the amount originally offered by UBS in its June 20, 2007 Separation Letter, as well as legal fees. ”

“Neither party is entitled to summary judgment with respect to plaintiffs’ causes of action for legal malpractice. Based upon the record before the court it is for jury to determine whether defendants’ decision to attempt to negotiate a higher severance payment for plaintiff by means other than an appeal to the UBS AM Severance Committee, as called for in the Separation Agreement Letter, was a reasonable strategic decision which cannot serve as the basis of a malpractice claim (see Wagner Davis P.C. v Gargano, 116 AD3d 426 [l5t Dept 2014]) or was “so unreasonable at the inception as to have manifested professional incompetence” (Rodriguez v Fredericks, 213 AD2d 176 [1st Dept 1995]). There are also issues of fact as to whether defendants’ alleged negligence proximately caused plaintiff actual and ascertainable damages. Plaintiff contends that when he rejected UBS’ Revised Severance Offer of $2.6 million he did so under the belief that he was choosing between the Revised Severance Offer and original Severance Offer because he had never been advised that defendants, through the August 2007 correspondence with White, had not preserved his rights to the original Severance Off er. Plaintiff claims that had he known that he did not have the right to any severance payment from UBS unless UBS renewed its offer or a court or arbitrator awarded him the payment he would have viewed the Revised Severance Offer differently and would have accepted it without hesitation. Plaintiff also claims that the Revised Severance Offer was conditional in that both he and Alali had to accept it and that he rejected it in light of the advice provided to him by defendants that he was entitled to a $6 million severance, based upon his past bonuses, and that he would receive, at worst, approximately $2 million. Defendants argue that their representation of plaintiff was not a proximate cause of plaintiffs alleged loss because their representation of plaintiff resulted in the Revised Severance Offer that was $750,000 higher than the initial Severance Offer. Defendants argue that in the face of an increased severance offer there can be no legal malpractice. Plaintiffs claim that his rejection of the significantly higher Revised Severance Offer was compelled by defendants’ advice that plaintiffs rights to the Severance Offer had been preserved and that he that he was entitled to at most $6 million and at worst $2 million, in the face of defendants’ claim that no such advice was given, raises issues of fact and credibility that must be resolved by a jury and which necessitate denial of both the motion and cross-motion for summary judgment. “

Clearing the Brush Away from the Statute of Limitations in an Accounting Case

Posted in Legal Malpractice Cases

Weight v Day  2015 NY Slip Op 09093 [134 AD3d 806]  December 9, 2015  Appellate Division, Second Department is an accounting malpractice case with implications for the legal malpractice field.  The statute of limitations begins to run, the Second Department tells us, when there is a verifiable and concrete end to the representation.  The basics are that husband and wife hired defendant to run a steel business while they divorced.  The steel business did not go well, and it “closed.”  About a year later defendant tendered his resignation as trustee.  Does the statute run from the “closing” or the resignation?  It is the latter.

“On February 10, 2014, exactly three years after Day sent his resignation letter, the plaintiff commenced this action against the defendants, alleging, inter alia, accounting malpractice, breach of fiduciary duty, fraud, and breach of contract. The plaintiff alleged, among other things, that Day failed to properly manage Weight Steel, prevent her husband from needlessly using the company’s assets for his personal gain, deposit the company’s payments, and bill its customers. The plaintiff further alleged that Day irresponsibly ran up the company’s debt, intentionally concealed its dire financial situation, and denied her access to its records and facilities. The complaint included an allegation that Weight Steel “closed” on or about August 23, 2010.

[*2] Thereafter, the defendants moved pursuant to CPLR 3211 (a) (5) and (7) to dismiss the complaint. Among other things, they argued that the complaint was time-barred because it did not allege any errors, acts, or omissions that occurred after August 23, 2010, the date that Weight Steel allegedly closed. In addition, the defendants argued that all of the causes of action other than that alleging accounting malpractice should be dismissed as duplicative of the accounting malpractice cause of action. The Supreme Court granted the defendants’ motion to dismiss the complaint, concluding that the causes of action alleging accounting malpractice and breach of fiduciary duty were time-barred, and further concluding, in effect, that the remaining causes of action should be dismissed for failure to state a cause of action. The plaintiff appeals, and we modify.

In moving to dismiss a cause of action pursuant to CPLR 3211 (a) (5) as barred by the applicable statute of limitations, a defendant bears the initial burden of demonstrating, prima facie, that the time in which to sue has expired (see Jalayer v Stigliano, 94 AD3d 702, 703 [2012]; Fleetwood Agency, Inc. v Verde Elec. Corp., 85 AD3d 850, 850 [2011]). Contrary to the Supreme Court’s determination, the defendants failed to make a prima facie showing that the causes of action alleging accounting malpractice and breach of fiduciary duty were time-barred. A claim sounding in accounting malpractice is governed by a three-year statute of limitations (see CPLR 214 [6]), and, under the circumstances of this case, the plaintiff’s claim of breach of fiduciary duty is also governed by a three-year statute of limitations since, inter alia, the remedy sought is purely monetary in nature and it cannot be said that an allegation of fraud is essential to that claim (see IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139 [2009]; Loeuis v Grushin, 126 AD3d 761, 764 [2015]; McDonnell v Bradley, 109 AD3d 592, 594 [2013]; cf. Matter of R.M. Kliment & Frances Halsband, Architects [McKinsey & Co., Inc.], 3 NY3d 538, 541-542 [2004]; RGH Liquidating Trust v Deloitte & Touche LLP, 47 AD3d 516, 517 [2008]). Contrary to the court’s determination, the defendants failed to establish that these causes of action accrued on August 23, 2010, when Weight Steel allegedly “closed.” It is undisputed that Day did not resign as trustee of Weight Steel until February 10, 2011. Further, the defendants did not establish when they delivered to the plaintiff all the pertinent documents related to their accounting work and Day’s additional duties as trustee. Based upon the defendants’ submissions, including the complaint and the agreement outlining the terms of the trusteeship, the earliest possible accrual date with respect to the claims of accounting malpractice and breach of fiduciary duty was February 10, 2011, exactly three years prior to the commencement of this action (see IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d at 139; McCoy v Feinman, 99 NY2d 295, 301 [2002]; Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]). Thus, the defendants failed to meet their initial burden of demonstrating that those causes of action were time-barred. Accordingly, the court should have denied that branch of the defendants’ motion which was pursuant to CPLR 3211 (a) (5) to dismiss those causes of action. Moreover, contrary to the defendants’ contention, dismissal of the cause of action alleging breach of fiduciary duty is not warranted on the ground that it is duplicative of the cause of action alleging accounting malpractice (cf. Staffenberg v Fairfield Pagma Assoc., L.P., 95 AD3d 873, 874 [2012]).”

The Retainer Agreement and Legal Malpractice Litigation

Posted in Legal Malpractice Cases

Sure, there is a requirement that attorneys provide a retainer agreement or a letter setting forth the work to be performed and the costs.  However, the Appellate Division has ruled that an attorney can collect fees even in the absence of a retainer agreement in Seth Rubenstein v. Ganea.   So, what does it matter anyway?

Well, it can matter when the attorney wants to limit his exposure for not undertaking certain acts. Soubbotin v Joseph Potashnik & Assoc., PLLC
2016 NY Slip Op 02800  Decided on April 13, 2016  Appellate Division, Second Department  is an example.  Was the attorney required to engage in a hearing before the NYS Dept. of Labor?  It’s a question of fact, and one which could have been ruled out in the retainer agreement.

“The plaintiffs commenced this action alleging that the defendants committed legal malpractice by failing to timely request a hearing before an Administrative Law Judge to review certain determinations of the New York State Department of Labor regarding overpayment of unemployment insurance benefits.

The Supreme Court properly denied the defendants’ motion for summary judgment dismissing the complaint. Contrary to the defendants’ contention, they failed to demonstrate, prima facie, that the acts that they allegedly failed to perform were beyond the scope of the subject retainer agreement (cf. AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435;DeNatale v Santangelo, 65 AD3d 1006, 1007; Turner v Irving Finkelstein & Meirowitz, 61 AD3d 849, 850). Accordingly, the defendants failed to make a prima facie showing of entitlement to judgment as a matter of law. Thus, the motion was properly denied, regardless of the sufficiency of the opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).”

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