New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

A Building Fails…Was There Professional Malpractice?

Posted in Legal Malpractice Cases

American Sec. Ins. Co. v Church of God of St. Albans  2015 NY Slip Op 06699 [131 AD3d 903]  September 2, 2015  Appellate Division, Second Department explains the outer limits of professional responsibility for an architect.  Entering into a contract with the client does not necessarily give rise to general tort liability to others (similar to the privity requirement in legal malpractice), and in this case, the architect is not responsible to the next door neighbor.

“The plaintiff Michael R. Toppin was the owner of a building located at 223-05 Hempstead Avenue in Queens (hereinafter 223-05). The plaintiff Toppin & Toppin, Attorneys at Law, was a commercial tenant operating a law firm in the building at 223-05. The adjacent property, 223-07 Hempstead Avenue, was owned by the defendant Church of God of St. Albans (hereinafter the Church). In 2001, the Church hired the defendant Harold E. Gebhard as design architect for a project involving demolition of the portion of the existing building that belonged to the Church, and the construction of a new, two-story building at that site. Gebhard prepared plans for the excavation and construction of the new church building, which plans also called for excavating part of the adjacent property, at 223-05, and included drawings for the underpinning that was to go beneath the building on the adjacent property. The defendant Mike’s Contracting Building and Development Corp. (hereinafter Mike’s Contracting) was the contractor hired to implement the plans. Excavation of the site was performed in June or July of 2009, during the course of which the plaintiffs’ building at 223-05 sustained damage that rendered it unstable and at risk of collapse, and led to the issuance of a full vacate order by the New York City Department of Buildings, on September 25, 2009, directing the plaintiffs to vacate their property.

The plaintiffs commenced this action to recover damages for injury to property against the Church, Gebhard, and various contractors hired by the Church, alleging violations of New York City Building Code (Administrative Code of City of NY, tit 28, ch 7) § BC 3309.4 and alleging common-law negligence, among other things. The defendants asserted cross claims for indemnification and/or contribution.

Contrary to Gebhard’s contention, section 3309.4, like its predecessor Administrative Code § 27-1031 (b) (1), does impose absolute liability upon the “person who causes” an excavation to be made (492 Kings Realty, LLC v 506 Kings, LLC, 105 AD3d 991, 995 [2013]; see Yenem Corp. v 281 Broadway Holdings, 18 NY3d 481, 489 [2012]; Coronet Props. Co. v L/M Second Ave., 166 AD2d 242, 243 [1990]). However, we agree with Gebhard that the Supreme Court erred in finding him absolutely liable pursuant to section 3309.4. Gebhard made a prima facie showing that he could not be held liable pursuant to that section by establishing that he was neither the person who made the decision to excavate nor the contractor who carried out the physical excavation work (see Coronet Props. Co. v L/M Second Ave., 166 AD2d at 243; Rosenstock v Laue, 140 App Div 467, 470 [1910]; cf. 87 Chambers, LLC v 77 Reade, LLC, 122 AD3d 540 [2014]). In opposition to this prima facie showing, the plaintiffs failed to raise a triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557, 562 [1980]).

Gebhard also made a prima facie showing of his entitlement to summary judgment dismissing the negligence cause of action. Gebhard’s contractual obligations to the Church do not give rise to tort liability in favor of the plaintiffs, as his contract with the owner did not specifically impose any duties with respect to the excavation phase of the project and expressly stated that Gebhard did not have control over, and was not responsible for, the construction means and methods or the safety precautions taken in connection with the work (see 87 Chambers, LLC v 77 Reade, LLC, 122 AD3d 540, 541 [2014]). In opposition, the plaintiffs failed to raise a triable issue of fact, as Gebhard’s involvement in discussions related to the means and methods to be employed in the excavation, and his general responsibilities to visit the site during construction to monitor compliance with the contract, do not raise an issue of fact as to whether he entirely displaced the owner’s duty to maintain the premises (see id. at 541). The plaintiffs allege no other basis for imposing tort liability on Gebhard. Accordingly, the Supreme Court should have granted Gebhard’s motion for summary judgment dismissing the complaint insofar as asserted against him, and denied that branch of the plaintiffs’ motion which was for summary judgment on the issue of liability insofar as asserted against him.”

The Very Very Rare Case

Posted in Legal Malpractice Cases

It is theoretically possible for plaintiff to win summary judgment in a negligence case; theoretically possible but very very rare.  Benitez v United Homes of N.Y., LLC  2016 NY Slip Op 06153
Decided on September 27, 2016 Appellate Division, First Department is that rare case in which Plaintiff wins partial summary judgment against defendant-attorney on a legal malpractice cause of action.

“The bank made a prima facie showing that the law firm departed from the standard of care in connection with the closing of a residential real estate mortgage loan to plaintiff by, among other things, failing to advise that the subject property lacked a certificate of occupancy, failing to advise of the risk of funding the loan under these circumstances, and failing to confirm that plaintiff contributed 3% of her own funds toward closing, a condition of the loan (see generally AmBase Corp. v Davis, Polk & Wardwell, 8 NY3d 428, 434 [2007]). The motion court properly considered the affidavit of the bank’s legal expert concerning the duty of care an attorney owes to a mortgage-lender client (see Suppiah v Kalish, 76 AD3d 829, 832 [1st Dept 2010], appeal withdrawn 16 NY3d 796 [2011]; Merlin Biomed Asset Mgt., LLC v Wolf Block Schorr & Solis-Cohen LLP, 23 AD3d 243 [1st Dept 2005]). The bank’s closer, who was responsible for ensuring that the closing documents were in order, clearly had “knowledge of the facts” and therefore was qualified to submit an affidavit in support of the bank’s summary judgment motion (CPLR 3212[b]). The closer’s lack of knowledge concerning the underwriting process is irrelevant to the legal malpractice claim.

In opposition, the law firm, which did not rebut the expert’s opinion with an expert opinion of its own, failed to raise a triable issue of fact (see Cosmetics Plus Group, Ltd. v Traub, 105 AD3d 134, 141 [1st Dept 2013], lv denied 22 NY3d 855 [2013]).”

CPLR 205…The Saving Statute

Posted in Legal Malpractice Cases

ACE Sec. Corp., Home Equity Loan Trust, Series 2006-SL2 v DB Structured Prods., Inc.  2016 NY Slip Op 26105 [52 Misc 3d 343]  March 29, 2016  Friedman, J. is an extremely complicated residential mortgage-securities breach of contract case, the details of which are not particularly germane to legal malpractice considerations.  What is interesting, however, is the discussion of CPLR 205(a):

“CPLR 205 (a) provides:

“New action by plaintiff. If an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff, or, if the plaintiff dies, and the cause of action survives, his or her executor or administrator, may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period.”

From the decision:

Reliance Ins. Co. v PolyVision Corp. (9 NY3d 52 [2007]) provides the most comprehensive recent guidance by the Court of Appeals as to the circumstances in which a plaintiff may avail itself of CPLR 205 (a) to avoid the bar of the statute of limitations, where a different but related plaintiff filed the original action within the statute of limitations, and the action was dismissed due to a defect in the original plaintiff’s capacity or standing. In Reliance, the Court of Appeals answered the following certified question from the Second Circuit: “Does New York CPLR § 205(a) allow a corporation to refile an action within six months when a previous, timely-filed action has mistakenly been commenced in the name of a different, related corporate entity, and has been dismissed for naming the wrong plaintiff?” (Id. at 56.)

In holding that CPLR 205 (a) was unavailable to the parent corporation of the original plaintiff, the Court of Appeals endorsed the reasoning of the Federal District Court that

“ '[t]he common thread running through cases applying CPLR 205 in cases where the error in the dismissed action lies only in the “identity” of the plaintiff, is the fact that it is the same person or entity whose rights are sought to be vindicated in both actions.’ . . . ‘[T]he plaintiff in the new lawsuit may appear in a different capacity, such as a duly appointed administrator, but the identity of the individual on whose behalf redress is sought, [must] remain[ ] the same.’ ” (Id. at 57, quoting 390 F Supp 2d 269, 273 [ED NY 2005].)

Summarizing the text of CPLR 205 (a), the Reliance Court “note[d] that the benefit provided by the section is explicitly, and exclusively, bestowed on ‘the plaintiff’ who prosecuted the initial action.” (Id.) The Court also noted that George v Mt. Sinai Hosp. (47 NY2d 170, 179 [1979]) permitted a new action to proceed under CPLR 205 (a) where the new action was filed by an administrator after dismissal of a prior action that had been improperly commenced in a decedent’s name after her death. (Reliance, 9 NY3d at 57.) Distinguishing George, the{**52 Misc 3d at 348}Reliance Court stated: “Outside of this representative context, we have not read ‘the plaintiff’ to include an individual or entity other than the original plaintiff.” (Id.) As the Court of Appeals inGeorge explained and Reliance reaffirmed:

“Usually, of course, the fact that one party commenced an action which is subsequently dismissed, will not serve to justify application of [CPLR 205 (a)] so as to support a later action by a different claimant. Where, however, as here, the claim is the same, and the subsequent claimant is acting as the representative of the named plaintiff in the prior action,” 205 (a) is applicable. (George, 47 NY2d at 179; Reliance, 9 NY3d at 57 [quoting the statement from George that CPLR 205 (a) will not “usually” apply to an action commenced by a different party after dismissal of the first action].)”

Fraud in the Legal Malpractice Setting

Posted in Legal Malpractice Cases

Caravello v One Mgt. Group, LLC  2015 NY Slip Op 07000 [131 AD3d 1191]  September 30, 2015 Appellate Division, Second Department is the rare legal malpractice case that survives a CPLR 3211 attack on a fraud or an aiding and abetting fraud claim.  The decision is worthwhile reading for its definition of the elements of the two claims.

“The complaint alleges that the defendants acted in concert, as part of a mortgage foreclosure rescue scheme, to deprive the plaintiffs of the net proceeds of the sale of their home at a closing which took place in February 2008. The defendant Elena R. Gelman was the attorney who represented the plaintiffs at the closing. The plaintiffs asserted causes of action against Gelman alleging, inter alia, legal malpractice and fraud. Gelman moved, inter alia, pursuant to CPLR 3211 (a) (7) to dismiss the sixth cause of action, which alleged fraud, insofar as asserted against her, and so much of the seventh cause of action as alleged fraud insofar as asserted against her, or in the alternative, pursuant to CPLR 3212 for summary judgment dismissing the complaint insofar as asserted against her. The Supreme Court denied those branches of Gelman’s motion.”

“To state a cause of action sounding in fraud, a plaintiff must allege that “(1) the defendant made a representation or a material omission of fact which was false and the defendant knew to be false, (2) the misrepresentation was made for the purpose of inducing the plaintiff to rely [*2]upon it, (3) there was justifiable reliance on the misrepresentation or material omission, and (4) injury” (McDonnell v Bradley, 109 AD3d at 592-593 [internal quotation marks omitted]; see Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559 [2009]; Pace v Raisman & Assoc., Esqs., LLP, 95 AD3d 1185, 1188-1189 [2012]). To plead a cause of action to recover damages for aiding and abetting fraud, the complaint “must allege the existence of [the] underlying fraud, knowledge of the fraud by the aider and abettor, and substantial assistance by the aider and abettor in the achievement of the fraud” (Winkler v Battery Trading, Inc., 89 AD3d 1016, 1017 [2011]). Moreover, pursuant to CPLR 3016 (b), where a cause of action is based upon fraud or aiding and abetting fraud, the “circumstances constituting the wrong” must be “stated in detail.”


Long Gaps Notwithstanding, It’s Three Years

Posted in Legal Malpractice Cases

Plaintiff wanted to have an extension built and contacted with the architect.  Four years later the NYC Department of Buildings hoisted a red flag, and the architect worked on fixing the problem.  A lawsuit against others commenced and he was added later.  When did the statute of limitations commence and was the action timely?

Bronstein v Omega Constr. Group, Inc.  2016 NY Slip Op 02951 [138 AD3d 906]  April 20, 2016  Appellate Division, Second Department discusses how it all works.

“In 2006, the plaintiffs entered into a contract with the defendant architect, Michael T. Cetera, inter alia, to prepare and file plans for the construction of an extension to their residence. Cetera filed the plans, which were approved by the New York City Department of Buildings (hereinafter the DOB). Cetera subsequently advised the DOB in a letter dated May 28, 2008 that he was withdrawing responsibility for conducting controlled inspections for the project. Cetera allegedly had no further involvement with the project until the plaintiffs notified him in September 2010 that the DOB had audited the filed plans and had determined that certain errors had been made in the calculation of elevations and floor area. Cetera allegedly rendered additional services, including research and analysis of relevant zoning provisions, the performance of further calculations, and the proposal of possible solutions, in an effort to remedy the problems. There is no indication in the record that these alleged communications and corresponding efforts extended beyond November 2010. The plaintiffs subsequently commenced this action in connection with the project against various individuals and entities who had been involved in its construction. In August 2013, they moved for leave to amend their complaint to add Cetera as a defendant, alleging, inter alia, that he had committed professional negligence in the services he rendered under the parties’ contract. Following the granting of the motion for leave to amend, and the filing and service of the amended complaint, Cetera moved pursuant to CPLR 3211 (a) to dismiss the amended complaint insofar as asserted against him on the ground that it was time-barred under CPLR 214 (6). The Supreme Court denied the motion, finding that the parties’ submissions raised a question of fact regarding whether the applicable limitations period had been tolled pursuant to the doctrine of continuous representation.

Regardless of whether they are framed as claims sounding in contract or tort, [*2]allegations of professional malpractice, other than medical malpractice, are governed by a three-year statute of limitations (see CPLR 214 [6];”

“Contrary to Cetera’s contentions, in response to his prima facie showing that the action was commenced against him more than three years after his withdrawal, the plaintiffs succeeded in raising a question of fact as to whether the continuous representation doctrine is applicable so as to toll the running of the three-year statute of limitations. Under the circumstances, the evidence of continuing communications between the parties, and of efforts by Cetera to remedy the alleged errors or deficiencies in the filed plans, supported the denial of Cetera’s motion to dismiss the amended complaint insofar as asserted against him (see Regency Club at Wallkill, LLC v Appel Design Group, P.A., 112 AD3d 603, 607 [2013]; Pitta v William Leggio Architects, 259 AD2d 681 [1999]; Greater Johnstown City School Dist. v Cataldo & Waters, Architects, 159 AD2d 784, 786-787 [1990]). Mastro, J.P., Dillon, Hinds-Radix and Maltese, JJ., concur.”


“Am I My Brother’s Keeper” Plays Out in a Legal Malpractice Setting

Posted in Uncategorized

Supreme Court, Nassau County answered yes to the question.  This tragic story pits brother against brother, with the innocent and the guilty tormented alike.

From the decision in Galasso, Langione, & Botter, LLP v Galasso  2016 NY Slip Op 51308(U)
Decided on September 19, 2016  Supreme Court, Nassau County  DeStefano, J.:

“In 1993, the Firm hired Peter’s brother, Anthony Galasso (“Anthony”), as a “gofer”. Within a few years, Anthony became the Firm’s office manager and bookkeeper, “responsible for all accounting and financial aspects” therefor (Affidavit in Support at ¶ 4 [Motion Seq. No. 20]).”

“In or around 1990, the Firm started banking at EAB Bank. In 2001, EAB Bank “became” Citibank (Ex “17” at pp 32, 96 [Motion Seq. No. 21]). As office manager and bookkeeper, Anthony undertook certain banking duties for the Firm. He would go to the bank to make deposits, sign checks on the Firm’s operating accounts and attend to other banking matters.[FN3] As such, Anthony “got to know” Steve Reinhardt (“Reinhardt”), a bank Vice President, and his assistant, Annie Jeter (“Jeter”), and became the “face” of the Firm at the bank (Affidavit in Opposition at ¶ 6 [Motion Seq. No. 21]).

In February 2002, Reinhardt left Citibank and became a Senior Vice President and Group Director at Signature Bank (“Signature”).[FN4] He thereafter met with Peter and Anthony and asked the Firm to transfer its accounts from Citibank to Signature (Affidavit in Opposition at ¶ 8 [Motion Seq. No. 21]). In 2002, the Firm transferred its banking business from Citibank to Signature. Anthony was in favor of moving the Firm’s accounts because he thought Reinhardt was a “nice guy” and that it was “[m]ore of the loyalty that comes with just being friendly with somebody for 10 years” (Ex. “36” at p 67 [Motion Seq. No. 21]).”

“The account applications submitted by Anthony to Signature (not including the Botter accounts), designated Anthony as an authorized signatory on the Firm’s operating accounts but not on the IOLA account. Anthony was also designated as the “primary contact” for the Firm on the operating accounts but not the IOLA account (Exs. “18”, “19”, “22” [Motion Seq. No. 21]). Each of the account applications designated a post office box as the address in which Signature was to mail its monthly statements and, further, each application required the Firm to confirm that it had received a copy of, and agreed to certain terms and conditions of, the Signature Business Account Agreement and Disclosures with respect to the IOLA and operating accounts (Affirmation in Opposition to Motion at ¶ 14 [Motion Seq. No. 21]). This was indicated by a checkmark in the appropriate box on the accounts’ applications. In addition to the three authorized accounts, Anthony opened and maintained “sham” accounts at Signature Bank [*3]without the Firm’s authorization or knowledge.[FN5] Peter and Langione contend that they never signed any of the bank documents that were submitted to Signature for the authorized accounts and that they were forged by Anthony along with the sham account applications [FN6] (Affirmation in Opposition at ¶ 20 [Motion Seq. No. 20]).”

“According to Peter, both he and Langione executed the Baron escrow application in order to open the Baron escrow account because Anthony purportedly advised Peter that “Signature required that [Langione] be a designated signator on the Baron Escrow Account” (Affirmation in Support of Motion at ¶ 35 [Motion Seq. No. 6]).[FN10] The “original” Baron escrow account application was not produced in this litigation because it was supposedly destroyed by Anthony.[FN11] In its stead, Anthony allegedly substituted a forged Baron escrow account application. The allegedly forged application submitted to Signature allowed internet transfers, listed Post Office Box 721 in Mineola, New York as the address to where bank statements were to be mailed, and designated Anthony as an authorized signatory and primary contact on the account. Reinhardt, Signature’s Executive Vice President, testified that the Baron account application should have been rejected because it violated Signature’s rules that govern the establishment of attorney escrow accounts. Amongst other things, such rules prohibit non-attorneys from being authorized signatories on a law firm’s attorney escrow account (Affirmation in Support at ¶ 29 [Motion Seq. No. 21]).”

“The second cause of action asserts a claim of unjust enrichment against the Firm and individual Defendants Peter, Langione and Botter. The claim for unjust enrichment is predicated upon alleged misuse of the Baron escrow funds which the “escrow agents have either retained or [*43]disbursed” and “which said defendants refuse to pay to Plaintiffs, and which in equity and good conscience ought not to be retained” by the Firm (see discussion supra).

The branch of the motion seeking dismissal of the unjust enrichment claim, insofar as asserted against Peter, Langione, and the Firm, is denied given this court’s order granting judgment on the Barons’ unjust enrichment claim insofar as asserted against them (see discussion supra). The motion is also denied with respect to Botter inasmuch as the submissions of the Firm Defendants failed toprima facie establish that Botter did not receive, or benefit from, directly or indirectly, any funds stolen from the Baron escrow account.

The Firm seeks dismissal of the third cause of action (conspiracy) on the ground that the Barons cannot establish the elements of the underlying fraud claim. Peter Galasso’s affidavit submitted in support of the motion for summary judgment sets forth with specific detail the manner in which Anthony perpetrated the fraud as well as the fact that Peter, Langione and Botter were unaware of what was transpiring. Given the Firm Defendants’ unopposed assertions that they did not have knowledge of the fraud, and there being no evidence to the contrary, the conspiracy to commit fraud claim must be dismissed (see Nissan Motor Acceptance Corp. v Scialpi, 94 AD3d 1067 [2d Dept 2012]).

The branch of the Firm Defendants’ motion seeking dismissal of the fourth cause of action – the Barons’ claim for conversion, is denied with respect to the Firm, Peter, Langione and Anthony inasmuch as the court has granted judgment in favor of the Barons on their conversion claim against these Defendants (see discussion supra). It is also denied insofar as asserted against Botter inasmuch as the Firm Defendants’ submissions failed to prima facie establish that Botter did not receive and refuse to return upon demand any of the fraudulently transferred Baron escrow funds.

The branch of the Firm Defendants’ motion seeking summary judgment dismissing the fifth cause of action, predicated upon Peter’s gross negligence and malfeasance in hiring and retaining Anthony and clothing him with authority to exercise control over the Baron escrow funds, “without adequate supervision or control”, is denied (Dolphin Holdings, Ltd. v Gander & White Shipping, Inc., 122 AD3d 901[2d Dept 2014]; Internationale Nederlanden (U.S.) Capital Corp. v Bankers Trust Co., 261 AD2d 117 [1st Dept 1999]) (Ex “E” at ¶ 65 [Motion Seq. No. 6]).

Regarding the sixth cause of action sounding in legal malpractice, for a defendant to succeed on a motion for summary judgment, evidence must be presented in admissible form establishing that the plaintiff is unable to prove at least one of the essential elements (Verdi v Jacoby & Meyers, LLP, 92 AD3d 771, 772 [2d Dept 2012]). Here, the Firm’s submissions fail to make such a showing and, thus, the Firm’s motion with regard to the sixth cause of action is denied.”


It Was The Wrong Place To Start The Fight

Posted in Legal Malpractice Cases

OK…so you have a case with a good cause of action, perhaps a professional negligence case against an insurance broker who told you not to get flood insurance just before Superstorm Sandy.  You timely bring the action only to be faced with a motion to dismiss on the basis of lack of jurisdiction as well as forum non conveniens.  What does it all mean?

Corporate Jet Support, Inc. v Lobosco Ins. Group, L.L.C. 2015 NY Slip Op 32438(U)
October 7, 2015 Supreme Court, New York County Docket Number: 651976/2015  Judge: Cynthia S. Kern reminds us that NY may but is not required to hear all cases.

“Plaintiff commenced this professional malpractice action in NewYork alleging the defendant insurance broker deviated from accepted standards of practice by failing to procure flood insurance for the plaintiffs inventory located in the State of New Jersey. Defendant now ‘ moves for an Order pursuant to CPLR § 3211(a)(8) and/or§ 327 dismissing plaintiffs complaint with prejudice pursuant to the doctrine of forum non conveniens and lack of personal jurisdiction. For the reasons set forth below, this action is dismissed based on forum non conveniens. ”

“As an initial matter, defendant’s motion to dismiss this action on the ground that this court lacks personal jurisdiction over it is denied. It is well settled that a corporation’s  authorization to do business in the State and concomitant designation of the Secretary of State as its agent for service of process is consent to personal jurisdiction. See Doubet LLC v. Trustees of Columbia Univ. in the City of N. Y., 99 A.D.3d 433, 444-445 (1st Dept 2012); Augsbury Corp. v. Petrokey Corp., 97 A.D.2d 173, 175 (3rd Dept 1983). It is equally weil settled that New York’s assertion of personal jurisdiction over foreign entities that are registered to do business in the State is consistent with due process. Nearly a century ago, the Supreme Court concluded that a statute requiring a foreign corporation to consent to jurisdiction by’appointing an agent for service does “not deprive the defendant of due process of law even if it took the defendant by surprise.” Penn. Fire Ins. Co. v. Gold Issue Mining & Milling Co., 243 U.S. 93, 95 (1917); see also Augsbury, 97 A.D.2d at 176 (“We reject [defendant’s] argument that due process has been violated by the finding of personal jurisdiction solely on the basis of its registration to do business. The privilege of doing business in New York is accompanied by an automatic basis for personal jurisdiction.”). ”

“However, defendant’s motion to dismiss based on forum non conveniens is granted. Although nonresidents are permitted to litigate their cases in New York as a matter of comity,  New York courts are not required to entertain litigation which does not have any connection with the state. Islamic Republic of Iran v Pahlavi, 62 N.Y.2d 474, 478 (1984). Pursuant to the common law doctrine of forum non conveniens, which is also codified in CPLR § 327, a court may dismiss an action even though it is jurisdictionally sound where it would be better adjudicated elsewhere. Id. at 478-479. “The burden rests upon the defendant challenging the forum to demonstrate relevant private or public interest factors which militate against accepting the litigation.” Id. at 479. Among the factors to be considered “are the burden on the New York courts, the potential hardship to the defendant, and the unavailability of an alternative forum in which plaintiff may bring suit. The court may also consider that both parties to the action are nonresidents and that the transaction out of which the cause of action arose occurred primarily in a foreign jurisdiction.” Id. at 479. ”


A Host of Standards Defined in This Appellate Division Case

Posted in Legal Malpractice Cases

Katz v Beil  2016 NY Slip Op 05977  Decided on September 14, 2016  Appellate Division, Second Department is an unusually long Appellate Division case which is unusually full of discussion of the various standards for motions, amendments and summary judgment.  Read it as a primer on litigation standards.

1.”Contrary to the plaintiffs’ contention, the Supreme Court, in the order entered January 11, 2013, properly directed the dismissal of the cause of action to recover damages for accounting malpractice asserted against the Finkle defendants. In considering a motion to dismiss pursuant to CPLR 3211(a)(7), a court is required to accept the facts as alleged in the complaint as true, accord the plaintiffs the benefit of every favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d 83, 87-88). Applying that standard here, the amended complaint failed to adequately allege the existence of actual privity of contract between the plaintiffs and the Finkle defendants, or a relationship so close as to approach that of privity, sufficient to impose a professional duty upon the Finkle defendants for the benefit of the plaintiffs (see Credit Alliance Corp. v Arthur Andersen & Co., 65 NY2d 536, 551; Signature Bank v Holtz Rubenstein Reminick, LLP, 109 AD3d 465, 466-467; Ideal Steel Supply Corp. v Anza, 63 AD3d 884, 885). Inasmuch as the amended complaint failed to adequately allege the existence of a duty owed by the Finkle defendants to the plaintiffs, it failed to state a cause of action against [*3]the Finkle defendants for accounting malpractice.”

2.”The plaintiffs also contend that the Supreme Court, in the order entered November 4, 2013, should have granted those branches of their motion which were pursuant to CPLR 3025(b) for leave to amend the amended complaint to assert shareholders’ derivative causes of action on behalf of the Operating Corp., derivative causes of action on behalf of the Partnership, and causes of action against the individual defendants to recover damages for breach of a partnership agreement and for certain declaratory and injunctive relief. CPLR 3025(b) provides that leave to amend a pleading “shall be freely given.” Accordingly, “leave should be given where the amendment is neither palpably insufficient nor patently devoid of merit, and the delay in seeking amendment does not prejudice or surprise the opposing party” (US Bank, N.A. v Primiano, 140 AD3d 857, 857; see HSBC Bank v Picarelli, 110 AD3d 1031, 1032). “[T]he legal sufficiency or merits of a claim need not be examined unless such insufficiency or lack of merit is clear and free from doubt” (Edwards v 1234 Pac. Mgt., LLC, 139 AD3d 658, 659). “A determination whether to grant such leave is within the Supreme Court’s broad discretion, and the exercise of that discretion will not be lightly disturbed” (Gitlin v Chirinkin, 60 AD3d 901, 902; see Galanova v Safir, 127 AD3d 686, 687).”

3.”Contrary to the Supreme Court’s conclusion, the remaining proposed derivative causes of action, which were directed against the individual defendants, were not palpably insufficient nor patently devoid of merit (see Business Corporation Law § 626[a]; Partnership Law § 115; see also Bremond Houses, Inc. v Lemle & Wolfe, Inc., 129 AD3d 584, 584-585; Caprer v Nussbaum, 36 AD3d 176, 187-188; Benedict v Whitman Breed Abbott & Morgan, 282 AD2d 416, 418; Shea v Hambro Am., 200 AD2d 371, 371-372; Zacma Cleaners Corp. v Gimbel, 149 AD2d 585, 586; cf. Walsh v Wwebnet, Inc.,116 AD3d 845, 847-848). Furthermore, contrary to the contention of the individual defendants, the plaintiffs were not required to submit evidence to demonstrate the merit of their proposed causes of action since “[n]o evidentiary showing of merit is required under CPLR 3025(b)” (Lucido v Mancuso, 49 AD3d 220, 229; see Clarke v Laidlaw Tr., Inc., 125 AD3d 920, 922-923). If the defendants “wish[ ] to test the merits of the proposed added cause[s] of action . . . [they] may later move for summary judgment upon a proper showing” (Lucido v Mancuso, 49 AD3d at 229). In light of the individual defendants’ failure to establish that they were prejudiced or surprised by the plaintiffs’ delay in seeking these amendments, the court should have granted leave to amend the amended complaint to assert shareholders’ derivative causes of action on behalf of the Operating Corp. and derivative causes of action on behalf of the Partnership with respect to the first, third, fourth, fifth, sixth, seventh, and ninth proposed causes of action in the [*4]proposed second amended complaint against the individual defendants (see generally Blue Diamond Fuel Oil Corp. v Lev Mgt. Corp., 103 AD3d 675, 676).

4.”The plaintiffs next contend that the Supreme Court erred in granting the Finkle defendants’ motion for summary judgment dismissing the cause of action alleging aiding and abetting breach of fiduciary duty, which was asserted against the Finkle defendants by the plaintiffs in their individual capacities. “A claim for aiding and abetting a breach of fiduciary duty requires: (1) a breach by a fiduciary of obligations to another, (2) that the defendant knowingly induced or participated in the breach, and (3) that plaintiff suffered damage as a result of the breach” (Kaufman v Cohen, 307 AD2d 113, 125; see Ginsburg Dev. Cos., LLC v Carbone, 134 AD3d 890, 893-894; AHA Sales, Inc. v Creative Bath Prods., Inc., 58 AD3d 6, 23). Here, the Finkle defendants established, prima facie, their entitlement to judgment as a matter of law by submitting evidence which demonstrated that they did not knowingly induce or participate in the alleged breaches of fiduciary duty (see IDX Capital, LLC v Phoenix Partners Group LLC, 19 NY3d 850, 851-852; Parklex Assoc. v Royal Capital Mkts. Corp., 118 AD3d 972). In opposition, the plaintiffs failed to raise a triable issue of fact (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324). Accordingly, the court properly granted the Finkle defendants’ motion for summary judgment dismissing the cause of action alleging aiding and abetting breach of fiduciary duty. In light of our determination on this point, we need not reach the Finkle defendants’ contention that the court erred, in the order entered January 11, 2013, in declining to dismiss that cause of action pursuant to CPLR 3211(a).”

5.”The Supreme Court’s application of the summary judgment standard constituted legal error. In the context of this pretrial motion for summary judgment, the individual defendants, as the moving parties, had the initial burden of proof (see CPLR 3212[b]; Hecker v Liebgold, 130 AD3d 572, 573). Accordingly, “[w]hile the ultimate burden of proof at trial will fall upon the plaintiff[s], a defendant seeking summary judgment bears the initial burden of demonstrating its entitlement to judgment as a matter of law by submitting evidentiary proof in admissible form” (Collado v Jiacono, 126 AD3d 927, 928; see Zuckerman v City of New York, 49 NY2d 557, 562). “On a summary judgment motion, a moving defendant does not meet its burden of affirmatively establishing its entitlement to summary judgment by merely pointing to gaps in the plaintiff’s case; rather, it must affirmatively demonstrate the merit of its defense” (Vanderhurst v Nobile, 130 AD3d 716, 717; see Spota v Love, 140 AD3d 730, 730-731; Setter v Fire Is. Ferries, Inc., 139 AD3d 840; Vaughn v Veolia Transp., Inc., 138 AD3d 979, 981). “It is equally well established that the motion should not be granted where the facts are in dispute, where conflicting inferences may be drawn from the evidence, or where there are issues of credibility” (Scott v Long Is. Power Auth., 294 AD2d 348, 348; see Ruiz v Griffin, 71 AD3d 1112, 1115).”

What A Long Time To Wait

Posted in Legal Malpractice Cases

Professional negligence is not unlike legal malpractice…at least in the statute of limitations area.  There are strict rules, and waiting too long is fatal.  That’s what appeared to happen in Willis Ave Dev., LLC v Block 3400 Constr. Corp.  2016 NY Slip Op 05991  Decided on September 14,   2016 Appellate Division, Second Department.  This mix of professionals and non-professionals got into a fine mess, and years later is is not yet resolved.

“Sometime prior to 2001, the defendant Block 3400 Construction Corp. (hereinafter Block 3400) purchased a piece of undeveloped property located on Willis Avenue in Staten Island. The defendant Robert Arminante is Block 3400’s principal. The defendant Adam Krebushevski (hereinafter Adam), who is not a licensed professional, prepared a preliminary sketch for Arminante to illustrate what could be developed on the property. Subsequently, in about 2001, Arminante hired Adam’s son, the defendant Stanley Michael Krebushevski (hereinafter Stanley), who is an architect, to develop an architectural site plan for the property and to obtain approval of that plan by the New York City Department of Buildings (hereinafter the DOB). Stanley prepared the site plan and then subcontracted the job of obtaining approval of the site plan by the DOB to the defendant Edward Lauria, a licensed engineer, and his firm, the defendant Lauria Associates (hereinafter together Lauria). Lauria obtained the DOB’s approval of the site plan on February 4, 2004, and also obtained a building permit. On September 21, 2004, the plaintiff purchased the property from Block 3400 with the intent of developing it in accordance with the approved site plan. In October 2005, the building permit was revoked.

On August 20, 2007, the plaintiff commenced this action against Block 3400, Arminante, and Lauria, alleging that the site plan, upon which it had relied in purchasing the property, did not comply with zoning regulations. The plaintiff asserted causes of action against Lauria sounding in professional malpractice, negligent misrepresentation, and fraud. In an amended complaint dated August 20, 2009, the plaintiff added Stanley and Adam as defendants and asserted causes of action against them sounding in professional malpractice, negligent misrepresentation, and fraud. Stanley, Adam, and Lauria separately moved, inter alia, for summary judgment dismissing the amended complaint insofar as asserted against each of them. The Supreme Court granted those branches of the separate motions, and the plaintiff appeals.”

“A cause of action to recover damages against an architect for professional malpractice is governed by a three-year statute of limitations (see CPLR 214[6]; Matter of R.M. Kliment & Frances Halsband, Architects [McKinsey & Co., Inc.], 3 NY3d 538, 542; Vlahakis v Belcom Dev., LLC, 86 AD3d 567; Napoli v Moisan Architects, 77 AD3d 895). Such a cause of action accrues “upon the actual completion of the work to be performed and the consequent termination of the professional relationship” (Frank v Mazs Group, LLC, 30 AD3d 369, 370; see City School Dist. of City of Newburgh v Stubbins & Assoc., 85 NY2d 535, 538). However, “[t]he completion of an architect’s obligations must be viewed in light of the particular circumstances of the case” (Frank v Mazs Group, LLC, 30 AD3d at 370). Here, Stanley and Lauria established, prima facie, that the professional malpractice causes of action asserted against them accrued more than three years prior to commencement of the action (see Vlahakis v Belcom Dev., LLC, 86 AD3d at 568; Napoli v Moisan Architects, 77 AD3d at 895). Specifically, the causes of action against them accrued, at the latest, on February 4, 2004, when the site plan was approved by the DOB (see City School Dist. of City of Newburgh v Stubbins & Assoc., 85 NY2d at 538; Vlahakis v Belcom Dev., LLC, 86 AD3d at 568). Thus, Stanley and Lauria established their prima facie entitlement to judgment as a matter of law dismissing the professional malpractice causes of action asserted against them on the ground that those causes of action were time-barred. In opposition, the plaintiff failed to raise a triable issue of fact.

Since Adam was not a licensed professional, the cause of action sounding in professional malpractice asserted against him is governed by the three-year statute of limitations that is generally applicable to claims arising from injury to property (see CPLR 214[4]). “As a general principle, the statute of limitations begins to run when a cause of action accrues” (Hahn Automotive Warehouse, Inc. v American Zurich Ins. Co., 18 NY3d 765, 770). Here, the cause of action sounding in professional malpractice asserted against Adam accrued on September 21, 2004, the date of the closing of title, which is more than three years before he was added as a defendant. Accordingly, Adam established his prima facie entitlement to judgment as a matter of law dismissing the cause of action sounding in professional malpractice asserted against him on the ground that it was time-barred. In opposition, the plaintiff failed to raise a triable issue of fact.

Stanley, Adam, and Lauria also demonstrated their prima facie entitlement to judgment as a matter of law dismissing the negligent misrepresentation causes of action asserted against each of them (see Alvarez v Prospect Hosp., 68 NY2d 320, 324). These defendants submitted evidence establishing, prima facie, that the plaintiff was not a known party who relied upon the statements made in the architectural site plan (see Plaisir v Royal Home Sales, 81 AD3d 799, 801; Ford v Sivilli, 2 AD3d 773, 775). In opposition, the plaintiff failed to raise a triable issue of fact.

Moreover, Stanley, Adam, and Lauria established their prima facie entitlement to judgment as a matter of law dismissing the fraud cause of action insofar as asserted against each of them by demonstrating that the plaintiff did not justifiably rely on the alleged misrepresentations (see Danann Realty Corp. v Harris, 5 NY2d 317, 322; East End Cement & Stone, Inc. v Carnevale, 73 AD3d 974, 975; Urstadt Biddle Props., Inc. v Excelsior Realty Corp., 65 AD3d 1135, 1138). In opposition, the plaintiff failed to raise a triable issue of fact.”

Facebook Saga Ends With a Whimper

Posted in Legal Malpractice Cases

Practitioners in the Judiciary Law § 487 field expect that they will always be facing an uphill battle.  Facebook, Inc. v DLA Piper LLP (US) is an example of just how uphill it is. Supreme Court denied a motion to dismiss.  The Appellate Division reversed and yesterday, the Court of Appeals refused to consider the issue, ending the saga.

Consider the facts (taken from the Appellate Division decision at 134 AD3d 610):

“On April 28, 2003, Ceglia hired Zuckerberg to design a website for a company called Street Fax, Inc. Ceglia and Zuckerberg executed a two-page contract (the Street Fax Contract) and Zuckerberg performed some work under the contract, although he was not paid in full by Ceglia.

In December 2003, Zuckerberg conceived of Facebook, which he launched on February 4, 2004.

On June 30, 2010, Ceglia, through defendant attorney Paul Argentieri, filed a complaint in Allegheny County Supreme Court against Facebook and Zuckerberg (the Ceglia action), alleging that on April 28, 2003, Zuckerberg and Ceglia purportedly entered into a “Work For Hire Contract.” This purported contract allegedly reflected Ceglia’s agreement to pay Zuckerberg for developing the Street Fax website and a separate website with the working title of “The Face Book,” and Ceglia’s purported acquisition of a 50% interest in the software, programming language and business interests derived from any expansion of The Face Book, along with an additional 1% interest for each day the website was delayed beyond January 1, 2004. At the time they filed the complaint, Ceglia’s representatives obtained an ex parte temporary restraining order (TRO) from the court restraining Facebook from transferring, selling, or assigning any assets owned by [*2]it. The TRO was served on Facebook on July 6, 2010, and expired on or before July 23, 2010.

On July 9, 2010, the case was removed to federal court based on diversity jurisdiction. From the outset of the litigation, Zuckerberg took the position that the Work For Hire Contract was a forgery and the Ceglia action was fraudulent.

In early 2011, Ceglia and Argentieri offered a contingency fee arrangement to various law firms via a “Lawsuit Overview” document, which mapped out the strategy and bases of the lawsuit. Several law firms, including the DLA Piper and the Lippes defendants, as well as Kasowitz, Benson, Torres and Friedman, LLP (Kasowitz), agreed to represent Ceglia.

On March 30, 2011, a forensic e-discovery consultant working with Kasowitz discovered the original Street Fax Contract on Ceglia’s computer hard drive and concluded it had been altered to create the “Work For Hire Contract” by adding references to Facebook. Kasowitz notified Argentieri of these findings several times and immediately withdrew as Ceglia’s counsel.

On April 11, 2011, the DLA Piper and the Lippes defendants (DLA-Lippes) filed an amended complaint in the Ceglia action repeating Ceglia’s claims against Facebook based on the Work For Hire Contract, and quoting, but not attaching, purported emails between Zuckerberg and Ceglia discussing the development of Facebook.

On April 13, 2011, Kasowitz sent a letter to the DLA-Lippes defendants, informing them that on March 30, it had seen documents on Ceglia’s computer that established that the Work For Hire Contract was a forgery and that it had communicated these findings to Argentieri on March 30, April 4, and April 12. The letter further stated that Kasowitz would agree, pending an investigation that defendant Vacco of Lippes Mathias had promised to undertake, to refrain from reporting its findings to the Federal Court.[FN1] This investigation was indeed undertaken as discussed infra.

On June 2, the parties moved and cross-moved for expedited discovery concerning the Work For Hire Contract, complete with affidavits and expert evidence both for and against the authenticity of the contract. On June 29, on the eve of the hearing for expedited discovery, the DLA-Lippes defendants withdrew from the case without explanation.[FN2] The Federal Magistrate ordered expedited discovery into the authenticity of the Work For Hire Contract and the purported emails.

During the expedited discovery period, Ceglia hired the Milberg defendants, which first entered an appearance on March 5, 2012. They moved to withdraw from representing Ceglia on May 20, 2012.

On November 26, 2012, Ceglia was indicted for mail and wire fraud as a result of his scheme to defraud plaintiffs. He subsequently fled the jurisdiction and is currently a fugitive.

On March 26, 2013, following discovery, the Federal Magistrate recommended that the District Court dismiss the Ceglia action with prejudice, finding that the Work for Hire Contract and purported emails were all forgeries and that the lawsuit was a massive fraud on the court. This recommendation was adopted by the District Court on March 25, 2014, and the complaint was dismissed.

Based on these factual allegations, plaintiffs commenced the instant action, asserting claims for malicious prosecution and attorney deceit against defendants-appellants (defendants), among others, alleging that they initiated the Ceglia lawsuit without probable cause, and [*3]thereafter continued it even as they knew, or reasonably should have known, that it was fraudulent, without merit, and based on fabricated evidence from the moment the original complaint was filed and at all times while the action was pending.”

We turn now to the Judiciary Law claims. Relief under a cause of action based upon Judiciary Law § 487 “is not lightly given” (Chowaiki & Co. Fine Art Ltd. v Lacher, 115 AD3d 600, 601 [1st Dept 2014]) and requires a showing of “egregious conduct or a chronic and extreme pattern of behavior” on the part of the defendant attorneys that caused damages (Savitt v Greenberg Traurig, LLP, 126 AD3d 506, 507 [1st Dept 2015]). Allegations regarding an act of deceit or intent to deceive must be stated with particularity (see Armstrong v Blank Rome LLP, 126 AD3d 427, 427 [1st Dept 2015]); the claim will be dismissed if the allegations as to scienter are conclusory and factually insufficient (see Briarpatch Ltd., L.P. v Frankfurt Garbus Klein & Selz, P.C., 13 AD3d 296, 297-298 [1st Dept 2004], lv denied 4 NY3d 707 [2005]; Agostini v Sobol, 304 AD2d 395, 396 [1st Dept 2003]).

Here, the allegations that defendants knew of Ceglia’s fraud are conclusory and not supported by the record. Although plaintiffs allege that the DLA-Lippes defendants had been advised by Kasowitz that the Work For Hire Contract was a forgery prior to the filing of the amended complaint in the Ceglia action on April 11, the record unequivocally shows that the Kasowitz letter to that effect was dated April 13, two days after the amended complaint was filed. There is nothing to indicate that this information had been communicated to the defendants prior to the issuance of that letter. Moreover, plaintiffs offer no support for their claim that defendants had actual knowledge of the fraudulent nature of the claim based on statements made to them by Ceglia. In fact, the opposite is true.”