New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

Mistakes ? Sure…So What?

Posted in Uncategorized

Bullock v Miller  2016 NY Slip Op 08268  Decided on December 8, 2016  Appellate Division, Third Department is a perfect example of how the “but for” portion of the legal malpractice world works, or alternatively, an example of how court tend to protect attorneys from their own mistakes.

Plaintiff demonstrates at least one statutory shortcoming where the attorney simply failed to argue that the child support statute required certain missing findings of fact.  That however is just not enough to avoid summary judgment.

“Plaintiff retained defendant Miller Mayer, LLP to represent her in a divorce action, with the legal work performed by defendant R. James Miller. Miller commenced an action for divorce on plaintiff’s behalf by filing a summons with notice in January 2009, but did not serve it, instead electing to prosecute a second action commenced in July 2009. Plaintiff and her husband appeared for trial on September 3, 2010, and counsel placed a stipulation on the record that resolved all outstanding issues. They stipulated as to the division of expenses relating to two children under the age of 21 and also agreed, in conclusory fashion, to waive any other child support obligation. Miller agreed to, but did not, submit a proposed judgment of divorce for signature by December 1, 2010. Supreme Court received and executed a judgment of divorce [*2]later that month, and executed an amended judgment of divorce in February 2011.

Plaintiff retained new counsel and made an unsuccessful motion in the divorce action to, among other things, reopen the issue of child support by vacating the relevant provisions of the stipulation. She then commenced action No. 2 and alleged that defendants had committed legal malpractice in their representation of her. Following joinder of issue and discovery, defendants moved, and plaintiff cross-moved, for summary judgment. Plaintiff appeals from the July 2014 order granting defendants’ motion and dismissing the complaint in action No. 2”

“Turning to the record that is before us, we affirm. In order to succeed on a claim for legal malpractice, a plaintiff must show “that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney’s breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages” (Arnold v Devane, 123 AD3d 1202, 1203-1204 [2014] [internal quotation marks, brackets and citations omitted]; see Dombrowski v Bulson, 19 NY3d 347, 350 [2012]). Defendants, as the proponents of a motion for summary judgment, bear the initial burden of “present[ing] evidence in admissible form establishing that plaintiff is unable to prove at least one of these elements” (Ehlinger v Ruberti, Girvin & Ferlazzo, 304 AD2d 925, 926 [2003]; accord Miazga v Assaf, 136 AD3d 1131, 1133-1134 [2016], lv dismissed 27 NY3d 1078 [2016]). Contrary to defendants’ contention, the “conclusory, self-serving statements” of Miller regarding the applicable standard of care did not constitute “expert . . . evidence which would tend to establish . . . that [defendants] did not” depart from it (Estate of Nevelson v Carro, Spanbock, Kaster & Cuiffo, 259 AD2d 282, 284 [1999]; see 400 E. 77th Owners, Inc. v New York Eng’g Assn., P.C., 122 AD3d 474, 475 [2014]; cf. Ehlinger v Ruberti, Girvin & Ferlazzo, 304 AD2d at 926). As a result, the issue “distills to whether defendant[s] met [their] threshold burden as to the element of either proximate cause or damages” (Arnold v Devane, 123 AD3d at 1204; see Schrowang v Biscone, 128 AD3d 1162, 1164 [2015]; Carey v Campbell, 93 AD2d 923, 923-924 [1983]).

Defendants met that initial burden by submitting competent proof — including the affidavit of Miller, his and plaintiff’s deposition testimony and documentary evidence — that any breach of duty on defendants’ part did not result in damages to plaintiff. Plaintiff and her husband both claimed to be the custodial parent of their children, and she asserted that Miller committed malpractice by failing to pursue an award of child support on her behalf. Miller explained that he did not do so because plaintiff would not have been found to be the custodial parent, a belief justified by the refusal of Supreme Court to order either party to pay temporary child support and an investigation that led Miller to believe that the children either lived on their own or spent the bulk of their time with the father. Miller therefore declined to do anything that could backfire and end in plaintiff paying child support, and instead negotiated a settlement in which neither party would pay child support. In response to this proof, plaintiff continued to assert that she was the custodial parent. She provided nothing to show that an application for [*3]child support would have succeeded, however, and did not raise a question of fact as to whether she was damaged by the failure to make one (see Miazga v Assaf, 136 AD3d at 1134; Sevey v Friedlander, 83 AD3d 1226, 1227 [2011], lv denied 17 NY3d 707 [2011]).

Plaintiff’s additional challenges to the actions of defendants do not demand extended discussion. She complained that defendants committed malpractice in not prosecuting the first divorce action commenced. That being said, defendants provided proof that she was benefitted by that delay, as settlement negotiations were underway prior to the commencement of the second divorce action and plaintiff received far more in voluntary spousal support during that period than she was entitled to (and subsequently received) in court-ordered maintenance. Lastly, while Miller admittedly failed to include necessary language in the stipulation regarding the presumptively correct basic child support obligation and the reasons for deviation from that amount (see Domestic Relations Law § 240

[1-b] [h]), as noted above, there is little to show that plaintiff was damaged by the failure to pursue the issue of child support more vigorously [FN2]. Her remaining contentions, to the extent that they are properly before us, have been considered and rejected.”

Courts Crave Finality

Posted in Legal Malpractice Cases

One way to look at how legal malpractice cases come out is by applying Occam’s razor.  Which result will more likely be final…now, not later?   Optical Communications Groups, Inc. v Rubin, Fiorella & Friedman, LLP  2016 NY Slip Op 08180  Decided on December 6, 2016  Appellate Division, First Department is a fine example.  The case came out badly for Plaintiff, a pre-requisite for the legal malpractice case.  Plaintiff says case came out badly because certain evidence was not obtained and certain evidence was not precluded.  Attorneys say the case came out just fine, and let’s just rely on  the 2d Circuit Court of Appeals decision.  Application of the hypothesis indicates that simply relying on the 2d Circuit is the simpler and more final method.  Voila!

“n this legal malpractice action, plaintiff Optical asserts that its former attorneys, Rubin, Fiorella and Friedman, mishandled the litigation of a maritime action in which it sought to recover damages caused when its submarine fiber optical cable was struck and destroyed by an anchor inadvertently released from a cargo vessel owned by Marbulk Canada, Inc. Rubin Fiorella, on behalf of Optical, brought a maritime action in federal court against the vessel and Marbulk. In the maritime action, Optical alleged that the vessel dropped its anchor in an area designated for laying cable, and that Marbulk was therefore liable. The parties agreed that Marbulk would be liable only if the vessel was located in the designated cable area when its anchor dropped.

Marbulk successfully moved for summary judgment dismissing the complaint in the maritime action. The district court found, inter alia, that sonar data evidence submitted by plaintiff Optical showed that the vessel was outside the boundaries of the designated cable area (Optical Communications Group, Inc. v M/V Ambassador, 938 F Supp 2d 449 [SD NY 2013] [Optical I], affd. 558 Fed Appx 94 [2d Cir 2014] [Optical II]). The conclusion was also supported by evidence submitted by Marbulk, specifically, a screen shot of Simplified Vessel Data Radar (SVDR) data that pinpointed the location of the vessel outside the boundaries of the cable area. As indicated, that decision was affirmed on appeal by the Second Circuit.

In the instant action, plaintiff alleges that, as noted by the Second Circuit in Optical II, Rubin Fiorella failed to preserve an objection to the SVDR data submitted by Marbulk in support of its motion, and also failed to renew a discovery motion that had been denied without prejudice to renewal. Optical alleges that but for these failures, it would have defeated the motion for summary judgment and ultimately prevailed in the maritime action.

The motion court properly found that the Second Circuit’s order in Optical II, affirming [*2]Optical I, is documentary evidence within the meaning of CPLR 3211(a)(1), and that its holding flatly contradicts the legal conclusions and factual allegations in the complaint (see Amsterdam Hospitality Group, LLC v Marshall-Alan Assoc., Inc., 120 AD3d 431, 432 [1st Dept 2014]; Morgenthow & Latham v Bank of N.Y. Co., 305 AD2d 74, 78 [1st Dept 2003], lv denied 100 NY2d 512 [2003]).

Even assuming that Rubin Fiorella had successfully challenged the admissibility and authenticity of the SVDR data proffered by Marbulk, the district court found that plaintiff Optical’s own sonar data evidence, submitted through its expert, indicated that the vessel was outside the cable field when it released its anchor. Thus, plaintiff’s evidence submitted in the maritime action refutes its allegations in this action that, but for Rubin Fiorella’s negligence, it would have prevailed in the maritime action (see e.g. Brooks v Lewin, 21 AD3d 731, 734 [1st Dept 2005], lv denied 6 NY3d 713 [2006]).

The district court’s decision also refutes Optical’s allegation that, but for Rubin Fiorella’s failure to conduct further discovery, it would have prevailed in the maritime action, since that court found that the record with respect to the location of the vessel was “immutable and complete” so that “further discovery will not recreate the events underlying the anchor drop or enhance the existent evidence in any meaningful way” (Optical I, 938 F Supp 2d at 464; see Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 81 [1st Dept 1999], affd 94 NY2d 659 [2000]).”

The Infrequent “Special Circumstances” Exception to the Privity Rule

Posted in Legal Malpractice Cases

The privity rule in legal malpractice is both a policy and a substantive nightmare for peripheral clients.  These include the beneficiary, the individual in a corporate setting and others.  The exception permits a law suit when there is fraud, collusion, malice or special circumstances.  The exception is rarely invoked, and the “special circumstances” portion even more rarely.  Thus, Deep Woods Holdings LLC v Pryor Cashman LLP,  2016 NY Slip Op 08156 .  Decided on December 6, 2016   Appellate Division, First Department is very unusual.

“Defendant Pryor Cashman LLP represented nonparty David Lichtenstein in a transaction in which Lichtenstein was to purchase $10 million worth of stock in nonparty Park Avenue Bank. Before the transaction could close, nonparty Savings Deposit Insurance Fund of the Republic of Turkey (SDIF) sued the holder of 99% of the bank’s shares and obtained a restraining order preventing any transfer of the shares (Deep Woods Holdings, L.L.C. v Savings Deposit Ins. Fund of the Republic of Turkey, 745 F3d 619, 621 [2d Cir 2014], cert denied __ US __, 135 S Ct 964 [2015]).

On June 22, 2004, Lichtenstein and SDIF entered into a stipulation, pursuant to which Lichtenstein had the right to exercise a call option to buy shares of stock in the bank for a specified sum, provided Lichtenstein exercised his right within 45 days after SDIF was able to deliver the shares. SDIF was able to deliver the shares on July 12, 2005, but Pryor Cashman did not exercise Lichtenstein’s call option until November 2, 2005 (Deep Woods, 745 F3d at 623), and SDIF then refused to honor it.

Thereafter, Pryor Cashman recommended to Lichtenstein that he, together with nonparties Donald Glascoff, chairman of the bank, and Charles Antonucci, form plaintiff Deep Woods Holdings LLC, and that Lichtenstein assign the call option to Deep Woods, which would then sue SDIF to exercise the call option. In or about 2007, Pryor Cashman organized Deep Woods, drafted the assignment, and insisted on acting as counsel for Deep Woods in the litigation against SDIF. The assignment read in its entirety: “In consideration of the issuance to David Lichtenstein (“Assignor”) of a 75% interest in Deep Woods Holdings LLC, a Delaware limited liability company (“Deep Woods”), as described in the Deep Woods Operating Agreement dated February 6, 2007, the Assignor hereby assigns, transfers and delivers to Deep Woods his entire right, title and interest in and to the option contained in Paragraph 8 of that certain Stipulation dated June 22, 2004 between the Assignor and [SDIF].” Pryor Cashman did [*2]not draft the assignment so as to specifically assign any tort claims Lichtenstein might have in connection with the exercise of the call option to Deep Woods.

According to Mr. Glascoff, when Pryor Cashman formed Deep Woods and prepared the assignment, it acted on behalf of Lichtenstein, the other members of Deep Woods, and Deep Woods itself. Mr. Glascoff further alleges that, during this process, Pryor Cashman was silent on the issue of whether the assignment transferred tort claims, but that it was Mr. Glasscoff’s understanding that it did, and, if he had understood that it did not, he would have insisted on adding any necessary language so that it did.

At the trial level, Deep Woods won $25.3 million in damages. However, the Second Circuit reversed, finding that the call option had not been not exercised in a timely manner (Deep Woods, 745 F3d at 620).”

“However, accepting plaintiff’s affidavit in opposition to defendants’ motion as true, we find that plaintiff sufficiently pleaded that defendants should be equitably estopped from arguing that the assignment did not assign tort claims. Contrary to defendants’ contention, estoppel can be based on silence as well as conduct (see e.g. Rothschild v Title Guar. & Trust Co., 204 NY 458, 462 [1912]). Under these circumstances, where defendants drafted the assignment at a time when it represented both Lichtenstein and plaintiff, and that interpreting the assignment to exclude tort claims would mean that neither the assignor nor plaintiff, the assignee, would be able to sue defendants for malpractice for failing to exercise the call option in a timely manner, we find that the “special circumstances” exception to the privity requirement applies (see [*3]generally Estate of Schneider v Finmann, 15 NY3d 306, 308-309 [2010]; Good Old Days Tavern v Zwirn, 259 AD2d 300 [1st Dept 1999]). To do otherwise might insulate defendants from liability for their alleged wrongdoing.”

Take The Work? Do The Work.

Posted in Legal Malpractice Cases

Real Estate in New York is always a hot topic.  Prices for apartments can reach $3000 per square foot in certain circumstances, and the value of landmarked real property cannot be overstated.  What happens when a building project goes badly wrong?  Litigation.

143 Bergen St., LLC v Ruderman  2016 NY Slip Op 07936  Decided on November 23, 2016
Appellate Division, Second Department is the story of an architect and his draftsman inexplicably losing focus.

“The plaintiffs, who are owners of a landmark building as defined by Administrative Code of the City of New York § 25-302, entered into an oral agreement with the defendant Herbert Ruderman. Pursuant thereto, Ruderman agreed to provide architectural services for construction on the plaintiffs’ building, including obtaining required approvals from the New York City Landmarks Preservation Commission (hereinafter LPC) and Department of Buildings (hereinafter DOB). Ruderman subsequently retained the services of the defendant George Restivo to complete the architectural drawings.

Ruderman and Restivo obtained approval from the LPC and the DOB for the initial construction. They subsequently submitted amended plans to the DOB to comply with various changes that the plaintiffs requested. However, they failed to submit the amended plans to the LPC or obtain approval from the LPC for the changes. When the construction was near completion, the LPC determined that the construction did not comply with the plans that it had approved. Ultimately, the LPC directed the plaintiffs to demolish aspects of the construction.

The plaintiffs commenced this action, inter alia, to recover damages for breach of contract against Ruderman and professional malpractice against both defendants. Ruderman asserted a counterclaim alleging that the plaintiffs had not paid the full contract price.

The Supreme Court granted the plaintiffs’ renewed motion for summary judgment on the first and second causes of action, which alleged breach of contract and professional malpractice, respectively, and dismissing Ruderman’s counterclaim.

Contrary to the defendants’ contentions, the Supreme Court properly granted that [*2]branch of the plaintiffs’ renewed motion which was for summary judgment on the first cause of action (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324). In the first cause of action, the plaintiffs sought to recover damages for breach of contract against Ruderman. The essential elements of a cause of action to recover damages for breach of contract are the existence of a contract, the plaintiff’s performance pursuant to the contract, the defendant’s breach of its contractual obligations, and damages resulting from the breach (see Tudor Ins. Co. v Unithree Inv. Corp., 137 AD3d 1259, 1260; Legum v Russo, 133 AD3d 638, 639). Here, the plaintiff made a prima facie showing that Ruderman entered into an oral contract with the plaintiffs and pursuant thereto, the plaintiffs paid Ruderman certain monies. The plaintiffs also established, prima facie, that Ruderman breached this contract by failing to obtain the required approval from the LPC, which caused them damages. In opposition, the defendants failed to raise a triable issue of fact.”


Privity is the Strongest Barrier in Legal Malpractice

Posted in Legal Malpractice Cases

He was my lawyer, why can’t I sue him?  Privity, or the direct contractual relationship between attorney and client is the bedrock of the legal malpractice system.  For policy reasons, (we think) this requirement is almost never excused.  The policy is most likely that of avoiding a legal malpractice case after each and every litigation.  If the opposing attorney could be sued easily, it is probable that every case would be followed by a legal malpractice case.

So, in Lewit v Fleishman  2016 NY Slip Op 32335(U)  November 28, 2016 Supreme Court, New York County  Docket Number: 152455/16  Judge: Barbara Jaffe we see how one participant in an estate proceeding that went sour lack the capacity to sue.

“This action arises from a Surrogate Court proceeding involving the probate of the estate and assets of plaintiffs mother and father. In March 2006, plaintiffs father, Robert Lewit, hired attorney Frank Julie to handle his estate and tax issues. After Robert died in 2007, plaintiff was appointed executor of his estate. Plaintiff commenced a proceeding in Queens County Surrogate’s Court, seeking to transfer all of the estate’s non-exempt assets to Robert’s surviving spouse, Mildred Lewit. In March 2007, soon after the decree issued authorizing the transfer to Mildred, she died intestate. Julie was retained to handle the probate of Mildred’s estate.

In November 2009, plaintiff and his siblings were appointed co-administrators of Mildred’s estate. In December 2009, plaintiff filed federal estate tax returns prepared by Julie, which plaintiff alleges, was untimely, thereby resulting in penalties and interest of approximately $170,000. Plaintiff also alleges that Julie failed to disclose that in 2008, the IRS denied his request for an extension of time to file (Id.).

In the fall of 2010, Julie began work on an estate accounting for Mildred’s estate. The accounting and stipulation settling the estate and distributing the assets were completed in early 2011. Plaintiffs siblings refused to agree to the stipulation and accounting, stopped communicating with him, retained counsel, and demanded copies of all relevant financial information. By then Julie had become unresponsive. (Id.).

On or about November 21, 2011, plaintiff, as executor of his father’s estate, hired defendant to perform legal services on behalf of his father’s and mother’s estates; plaintiff signed solely in his capacity as the executor of his father’s estate. (NYSCEF 6). Although plaintiff wanted to commence a malpractice action against Julie, he was unable to do so as the co-administrators of the Mildred’s estate refused to agree. Plaintiff asserts that he asked defendant to prepare a petition to either have the co-administrators removed or obtain permission from the Surrogate to proceed against Julie without the co-administrators’ participation, and that defendant agreed to prepare a removal petition. (NYSCEF 2).

Defendant never filed a petition for removal nor commenced a malpractice action against Julie. After defendant allegedly committed other acts constituting negligence, malpractice, and breach of contract, plaintiff terminated his services in May 2013.”

“An estate has standing to sue for malpractice an attorney hired to represent it. (Estate of Schneider v Finmann, 15 NY3d 306 [2010]; see also Russo v Rozenholc, 130 AD3d 492 [!51 Dept 2015] [estate had standing to sue law firm for malpractice as estate authorized firm to represent its interests under retainer agreement]). However, there is no authority permitting an executor or administrator of an estate to sue in his or her individual capacity where the alleged malpractice harmed the estate or where the attorney was retained by the estate. (See Estate of Schneider, 15 NY3d 306, 308-310 [while personal representative of estate may commence malpractice claim against attorney who allegedly caused harm to estate, he does so as representative of estate and not individually; “strict privity remains a bar against beneficiaries’ and other third-party individuals’ estate planning malpractice claims absent fraud or other circumstances.”]; 21A Carmody-Wait 2d § 129:87 [2016] [personal representative of estate has standing to sue, on behalf of estate, attorney for malpractice]). As the alleged malpractice was committed against the estate and not plaintiff in his individual capacity, and as the malpractice claim thus belonged to the estate and not plaintiff as an individual, he has no right or claim to damages resulting from the malpractice, and thus may not sue defendant here on his own behalf. (Compare Brown-Jodoin v Pirrotti, 138 AD3d 661 [2d Dept 2016] [plaintiff had standing to sue law firm for malpractice based on its alleged failure to properly probate her father’s will and finalize estate; evidence reflected that plaintiff as individual signed retainer agreement and paid retainer individually and that attorney had not billed her in her representative capacity, and plaintiff alleged that she had been personally harmed by defendants’ malpractice]; Newbach v Giaimo & Vreeburg, 209 AD2d 222 [!51 Dept 1994] [plaintiffs had viable claim for legal malpractice in capacity as representatives of decedent’s estate]). ”


But For, But For, But For…A Black Hole in Legal Malpractice

Posted in Legal Malpractice Cases

As we have discussed in the recent past, the element “that but for the departure of the attorney there would have been a better economic outcome for plaintiff” is a black hole of such magnitude that a vast portion of dismissed legal malpractice cases disappear there.  Put another way, while it is simple to show a mistake make by an attorney, showing that the client would have otherwise won the case is subject to a world of other issues.

Ingvarsdottir v Gaines, Gruner, Ponzini & Novick, LLP  2016 NY Slip Op 08049
Decided on November 30, 2016 Appellate Division, Second Department is a great example.  Plaintiff hired attorneys to defend her in a civil action where she was named as a defendant along with her employer.

“The plaintiff, a native of Iceland, allegedly worked as an employee of Datalink in the United States while on two H-1B nonimmigrant visas issued for the period of May 20, 2005, until May 15, 2011. The plaintiff informed the law firm parties that Datalink did not pay her any wages or a salary for her services, and they subsequently asserted a cross claim on her behalf in the civil action pursuant to Business Corporation Law § 630(a) against Datalink and Bedi to recover unpaid wages. On May 3, 2014, the plaintiff commenced this action against the law firm parties to recover damages for legal malpractice alleging, among other things, that they had mistakenly asserted in her cross claim for unpaid wages that her employment with Datalink had ended in 2009, when it had actually ended on a later date, and that they had failed to timely provide notice to Bedi that she intended to recover unpaid wages from him as required by Business Corporation Law § 630(a).”

“Thereafter, the law firm parties commenced a third-party action against the attorney who represented the plaintiff in connection with certain immigration matters both before and during the period that they represented her in the civil action. The third-party complaint alleged that the law firm parties were entitled to common-law indemnification or contribution from the third-party defendant if they were held liable for legal malpractice to the plaintiff because the third-party defendant was involved in the drafting of the plaintiff’s cross claim for unpaid wages against Bedi and Datalink, and owed a duty to her to provide notice to Bedi on her behalf pursuant to Business Corporation Law § 630(a).”

“Here, the plaintiff alleged in paragraph 51 of her complaint that she actually worked for Datalink and Bedi until November 4, 2010. Business Corporation Law § 630(a) requires that for any employee to assert a claim to, in effect, pierce the corporate veil and hold a shareholder of a corporation responsible for the “debts, wages or salaries due and owing to any of its . . . employees,” written notice of claim must be given to the shareholder within 180 days “after termination of [the employee’s] services” (Business Corporation Law § 630[a]; see Stuto v Kerber, 26 Misc 3d 535, 537 [Sup Ct, Albany County], affd 77 AD3d 1233, affd 18 NY3d 909). Therefore, the plaintiff was obligated to provide her Business Corporation Law § 630(a) notice to Bedi not later than May 4, 2011. A party’s failure to comply with the notice requirement of Business Corporation Law § 630(a) precludes an action against the shareholder (see Beam v Key Venture Capital Corp., 152 AD2d 825; Pope v Halloran,76 AD2d 770). Since the complaint also alleges that the law firm parties were retained to represent her in the civil action on May 19, 2011, the complaint fails as a [*3]matter of law to state a cause of action to recover damages for legal malpractice, as the 180-day notice period of Business Corporation Law § 630(a) had already expired by the time the attorney-client relationship was formed.”

“We further reject the plaintiff’s argument that even if the Business Corporation Law § 630(a) notice period is measured from November 4, 2010, the complaint states a cause of action based upon the insanity toll of CPLR 208 and the doctrine of equitable tolling. Specifically, the plaintiff argues that the mental abuse she received from Bedi was of such magnitude that she was under a psychiatric disability at the relevant times. However, the legal malpractice complaint failed to allege sufficient facts to support a finding that the plaintiff was unable to function in society, as is required for a toll under CPLR 208 (see Santo B. v Roman Catholic Archdioscese of N.Y., 51 AD3d 956; Simon v Bryski, 278 AD2d 224; Steo v Cucuzza, 213 AD2d 624, 625).”

A Look At Discovery in an Upstate Legal Malpractice Case

Posted in Legal Malpractice Cases

A commercial transaction (likely the sale of a business) leads to complications and eventually to a legal malpractice case.  What is the status of electronic stored information discovery upstate ?  In this Rochester case we see the parties battling over relatively small amounts of money in allocation of discovery costs.

Wade v McConville  2016 NY Slip Op 51686(U)  Decided on November 3, 2016  Supreme Court, Monroe County  Rosenbaum, J. primarily discusses the allocation of costs.

“Defendants, Michael F. McConville and McConville, Considine, Cooman & Morin, [*2]P.C., move for an order granting a protective order pursuant to CPLR 3103 conditioning the further production of ESI, if any, on Plaintiff’s payment of all costs associated with producing said information. Other motions between the parties were also pending but have been resolved by stipulation and agreement, with one exception. As to the subpoenas issued by Plaintiff, the parties seek guidance from the Court on the appropriate temporal scope of the requests covered by the subpoenas.

This action was commenced on December 30, 2015, alleging among other things, legal malpractice in connection with Defendants’ representation of Plaintiff with respect to a commercial transaction that allegedly closed on December 31, 2012. Defendants answered on February 2, 2016, generally denying the allegations. Significant discovery has been exchanged, including ESI. The parties have come before the Court previously on a discovery motion, and a decision was issued thereon.”

“On July 19, 2016, Plaintiff requested production of the “Case Management System Entries” and the remainder of the ESI for paragraph 9 of Plaintiff’s Notice to Produce (which requested Defendants’ calendar, docket, appointments, diary, and case management system entries from September 1, 2013 to January 7, 2013 as well as documents showing entries related to the representation of Plaintiff). Defense counsel advised on July 22, 2016 that steps were being taken to explore this ESI and that the issue could be addressed further at a court conference scheduled for July 26, 2016.

During the July 26, 2016 conference, defense counsel stated that they were working with a third-party software provider to determine the procedure to obtain further ESI from Defendants’ case management system that had not been previously produced, as well as the cost. Defense counsel suggested that Plaintiff might have to bear the burden of the cost for production.

On September 1, 2016, defense counsel informed Plaintiff that the ESI production would cost $9,000, and advised that due to the undue burden, Plaintiff would have to bear the cost if she wished to proceed. Plaintiff’s counsel disagreed about shifting the cost.

Defendants contend that they should not bear the $9,000 cost for the ESI extraction when Plaintiff has failed to specifically articulate what she is looking for with regard to Defendants’ case management system. If further production is required of Defendants, they request an order conditioning further production of ESI on Plaintiff’s complete payment of costs associated with that production.”

“At least one New York court held that the requesting party should bear the entire cost of searching for, retrieving, and producing discovery that includes ESI. See Lipco Elec. Corp. v. ASG Consulting Corp., 4 Misc 3d 1019(A) (Sup.Ct. Nassau Co. 2004). Other courts have found an exception to that where the cost of production is not significant and the ESI is readily available. See Waltzer v. Tradescape, LLC, 31 AD3d 302, 304 (1st Dept. 2006). See also, MBIA Ins. Corp. V. Countrywide Home Loans, Inc., 27 Misc 3d 1061, 1075 (Sup.Ct. NY Co. 2010) (While producing readily-available electronically-stored information. . . will not warrant cost-allocation, the retrieval of archived or deleted electronic information has been held to require such additional effort as to warrant cost allocation”). Where ESI costs are significant, some courts encourage adoption of the standards articulated by the United States District Court in Zubulake v. UBS Warburg, LLC, 217 F.R.D. 309, 317-18 (S.D.NY 2003), which places the costs of discovery, including searching for, retrieving and producing ESI, at least initially, on the producing party. See U.S. Bank Nat. Ass’n v. GreenPoint Mortgage Funding, Inc., 94 AD3d 58, 63-64 (1st Dept. 2012). To vary from this standard, a party must demonstrate why the costs should be shifted, assessing several factors: the extent the request is tailored to discover relevant information, the availability of the information from other sources, the cost of products compared to the amount in controversy, the cost of production compared to the party’s resources, the relative ability of each party to control costs and its incentive to do so, the importance of the issues at stake in the litigation, and the relative benefits to the parties obtaining the information. See Id. at 64, quoting Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 317-18 (SDNY 2003).

Defendants do not analyze this standard in arguing in favor of cost-shifting. Moreover, in making this motion for a protective order, Defendants have not proffered to the Court a copy of the $9,000 proposal, nor an affidavit from the Defendants or someone from Aderant.

Here, extracting the ESI requested will allegedly cost $9,000. Plaintiff has requested “Defendants’ calendar, docket, appointments, diary and case management system entries. . . both ESI and documents, showing entries related to the Representations of the Plaintiff.” The Court previously determined that this information was to be produced, and a timely motion to reargue was not made. Accordingly, to the extent it is sought, the Court declines Defendants’ invitation to revisit the issues raised in the previous motion.

Defendants’ motion for a protective order is denied. Defendants’ proffer on this motion is insufficient: they have not submitted a cost proposal or client affidavit on this issue. The Court further notes that Defendants have made no attempt to address the Zubulake factors. Defendants’ motion does not satisfy any burden in seeking to shift the costs of producing discovery to Plaintiff.”

The Reflexive Use of Judiciary Law 487

Posted in Legal Malpractice Cases

It is a frequent trope in the legal malpractice world that LM claims are made reflexively in order to avoid payment of attorney fees.  While that might actually happen, our anecdotal examination finds that most legal malpractice claims are well considered, and are generally meritorious. The same is not necessarily true of Judiciary Law 487 claims after the Court of Appeals decided Amalfitano v Rosenberg  12 NY3d 8,   February 12, 2009 Read, J.  Court of Appeals.  Lin Shi v Alexandratos
2016 NY Slip Op 01560 [137 AD3d 451]  March 3, 2016  Appellate Division, First Department provides an example.  This is a residential real estate sales contract which never closed.  The Court had to decide whether purchaser had waited too long to try to cancel.  In the swirl, purchaser asserted a claim for JL 487 against the escrow holder.  It was summarily dismissed.

“The residential contract of sale entered into between plaintiff and defendants Panagis Alexandratos and Carol Alexandratos provided that, if plaintiff did not receive a commitment for a first mortgage loan from an institutional lender on or before the “Commitment Date,” he “may cancel this contract by giving Notice to Seller within 5 business days after the Commitment Date.” It is undisputed that plaintiff failed to give the Alexandratoses notice of cancellation within five business days after the date on which the extension period he had requested and been granted expired. Plaintiff’s argument that the mortgage contingency clauses of the contract constituted a condition precedent to his purchase of the Alexandratoses’ house is belied by the contract language and by plaintiff’s own conduct in requesting an extension of the mortgage contingency date before the initial 60-day “Commitment Date” term expired (see Regal Realty Servs., LLC v 2590 Frisby, LLC, 62 AD3d 498 [1st Dept 2009]).

Plaintiff’s equitable restitution cause of action is barred by the existence of the contract of sale (see IIG Capital LLC v Archipelago, L.L.C., 36 AD3d 401, 404-405 [1st Dept 2007]).

Plaintiff’s causes of action against defendant Triades for breach of fiduciary duty and violation of Judiciary Law § 487 were correctly dismissed since documentary evidence established that Triades, as escrow agent, handled the down payment in accordance with the contract’s escrow terms (see Carter Fin. Corp. v Atlantic Med. Mgt., 268 AD2d 233 [1st Dept 2000], lv denied 94 NY2d 764 [2000]). We have considered plaintiff’s remaining arguments and find them unavailing. Concur—Tom, J.P., Saxe, Richter and Kapnick, JJ.”


The Account Stated Claim and A Defense

Posted in Legal Malpractice Cases

Attorney fee litigation takes up the larger part of all litigation involving attorneys as parties, and it almost always revolves around hourly billing.  There are few cases involving contingent fee cases.  Hourly rate billing principles include “account stated” which posits that regularly tendered invoices for services rendered to the client where the client either signed off on the invoices or failed to timely object to them constitutes “acceptance” of the invoices, and precludes an argument that they are in any fashion incorrect.

Wand, Powers & Goody, LLP v Yuliano  2016 NY Slip Op 07946  Decided on November 23, 2016  Appellate Division, Second Department shows us one defense to the “account stated” principle.  “The Supreme Court should have denied that branch of the plaintiff’s motion which was for summary judgment on the complaint. The plaintiff demonstrated its prima facie entitlement to judgment as a matter of law on the complaint by establishing that it regularly tendered invoices for services rendered to the defendant and that the defendant either signed off on the invoices or failed to timely object to them (see Landa v Blocker, 87 AD3d 719, 721). Nonetheless, in opposition, the defendant submitted an affidavit in which she asserted that she only signed the invoices because she was told that, if she did not sign, no work would be done on her case. This assertion was sufficient to raise a triable issue of fact as to whether the defendant acquiesced in the correctness of the invoices (see id. at 721).”

If the Law Firm is Out of The Case, Get Some Proof

Posted in Legal Malpractice Cases

The statute of limitations is a strong and almost impermeable defense…when there is adequate proof that the attorney-client relationship actually ended.  Here, in  Aqua-Trol Corp. v Wilentz, Goldman & Spitzer, P.A.  2016 NY Slip Op 07916  Decided on November 23, 2016  Appellate Division, Second Department the proof was lacking and the case goes on.

“The plaintiff and another entity, Land Settlement, LLC, retained the defendant law firm to represent them in their efforts to recover funds loaned to a real estate developer, which were secured by a mortgage on certain real property in New Jersey, after the developer defaulted in repaying the loan. Another mortgagee of the same property then commenced a foreclosure action against the developer in 2009, naming the plaintiff and Land Settlement, LLC, as junior lienors. The resulting judgment in the foreclosure action effectively extinguished the mortgage lien of the plaintiff and Land Settlement, LLC.

On September 11, 2014, the plaintiff commenced this legal malpractice action against the defendant to recover the loan amount, alleging that in an answer filed by the defendant on May 27, 2009, on behalf of the plaintiff and Land Settlement, LLC, in the foreclosure action, the defendant erroneously made certain concessions and failed to raise meritorious defenses to foreclosure. The defendant thereafter moved pursuant to CPLR 3211(a) to dismiss the complaint, contending, inter alia, that the action was time-barred by the three-year statute of limitations applicable to legal malpractice actions. The defendant contended that it continued to represent the plaintiff in the foreclosure matter only until August 18, 2011, when it sent a letter to an attorney and principal of Land Settlement, LLC, in which it turned over the litigation file in the foreclosure action [*2]to him and asked him to execute and file with the court a substitution of attorney in that action. The plaintiff opposed the motion by arguing that there was no indication that the August 18, 2011, correspondence was ever sent to it. Rather, the plaintiff maintained that the defendant’s legal representation of its interests continued until at least March 7, 2012, when the defendant wrote to the plaintiff’s president requesting that the plaintiff execute a substitution of attorney relieving it from representing the plaintiff in the foreclosure action.”

“A claim to recover damages for legal malpractice accrues at the time the malpractice is committed (see Shumsky v Eisenstein, 96 NY2d 164, 166; Farage v Ehrenberg, 124 AD3d 159, 164). However, pursuant to the doctrine of continuous representation, the time within which to sue on the claim is tolled until the attorney’s continuing representation of the client with regard to the particular matter terminates (see Farage v Ehrenberg, 124 AD3d at 164). Here, the defendant satisfied its initial burden on its motion to dismiss the complaint as time-barred by establishing that more than three years had elapsed between the commission of the alleged malpractice and the commencement of this action on September 11, 2014 (see Singh v Edelstein, 103 AD3d 873, 874; DeStaso v Condon Resnick, LLP, 90 AD3d 809, 812). The burden then shifted to the plaintiff to raise a question of fact, inter alia, as to whether the action was timely under the continuous representation doctrine. Contrary to the Supreme Court’s determination, the plaintiff satisfied this burden by raising a question of fact as to whether any notice of the defendant’s termination of the attorney-client relationship was communicated to it prior to March 7, 2012 (see generally Shumsky v Eisenstein, 96 NY2d at 171). Although the defendant contends that the parties’ relationship terminated at the time it sent the August 18, 2011, letter and the case file to another attorney, it submitted no affidavit from a person with personal knowledge or documentary evidence establishing that notice of the cessation of the attorney-client relationship was given to the plaintiff. Moreover, the letter dated March 7, 2012, sent by the defendant to the plaintiff requesting that the plaintiff execute a substitution of attorney relieving the defendant from representing it in the foreclosure action suggests that the legal representation continued until that date. Accordingly, the Supreme Court erred in dismissing the complaint as time-barred.”