New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

They Get You The Attorney…Is There Privity?

Posted in Legal Malpractice Cases

High-level employee is the subject of a state investigation along with the Hospital employer.  The investigation and litigation continue and eventually the hospital and the County succeed.  The employee, not so much.  Employee says that had the attorneys filed a certain appeal, he would have been exonerated.  May he sue the attorneys assigned to him, who also represented the County?

Spring v County of Monroe  2017 NY Slip Op 04645  Decided on June 9, 2017  Appellate Division, Fourth Department  says, “no.”

“Memorandum: In this action arising from plaintiff’s employment at defendant Monroe Community Hospital (MCH), plaintiff asserted three causes of action against various defendants. The first cause of action, for legal malpractice, was asserted against defendants Daniel M. DeLaus, Jr., Esq., William K. Taylor, Esq., Brett Granville, Esq., and Merideth H. Smith, Esq. (collectively, County attorneys). The second cause of action, for negligence, was asserted against MCH, the County attorneys, and defendants County of Monroe (County), and Maggie Brooks, as Monroe County Executive. The third cause of action, for defamation, was asserted against Brooks and defendant Karen Fabi. The County, MCH, Brooks, and the County attorneys (collectively, County defendants) and Fabi made separate motions to dismiss the complaint against them. The County defendants and Fabi now appeal from an order that denied the motions, and we modify the order by granting the County defendants’ motion in part and dismissing the first and second causes of action.

On these motions to dismiss, we accept the facts alleged in the complaint as true and accord plaintiff the benefit of every favorable inference (see Daley v County of Erie, 59 AD3d 1087, 1087-1088). According to plaintiff, he became employed by the County in 2001 and became the Executive Health Director/Chief Administrative Officer of MCH in 2004. In February or March 2013, “questions were raised” regarding the treatment of a patient of MCH and, in March 2013, an investigation was commenced by the New York State Department of [*2]Health (DOH) and the New York State Attorney General. The County provided plaintiff with legal representation by the County attorneys. Although plaintiff was assured that there was no conflict of interest, the County attorneys were also representing the County and other MCH staff members, whose interests were adverse to plaintiff. On March 29, 2013, the DOH issued a statement of deficiency that included accusations against plaintiff with respect to the treatment of a patient at MCH. In or around April 2013, the County hired an independent consultant to assist with a response to the statement of deficiencies and to contest DOH’s allegations by preparing and filing an “Informal Dispute Resolution” (IDR/appeal). The consultant invited plaintiff to provide her with any information, and she told plaintiff that she agreed with him that an IDR/appeal should be filed. The written IDR/appeal report was finalized on April 25, 2013 but, at the last minute, the County attorneys decided not to submit it. In plaintiff’s view, the filing of the IDR/appeal was in his best legal interests and would have protected his reputation, his license as a nursing home administrator, and his position as executive director of MCH. On May 8, 2013, plaintiff requested that he be represented by private counsel. The County defendants did not respond to that request and, on May 10, 2013, plaintiff was terminated.

We agree with the County attorneys that Supreme Court erred in denying that part of the motion of the County defendants seeking to dismiss the legal malpractice cause of action, and we therefore modify the order accordingly. It is well established that, “[t]o recover damages for legal malpractice, a plaintiff must prove, inter alia, the existence of an attorney-client relationship” (Moran v Hurst, 32 AD3d 909, 910; see Berry v Utica Natl. Ins. Group, 66 AD3d 1376, 1376; Rechberger v Scolaro, Shulman, Cohen, Fetter & Burstein, P.C., 45 AD3d 1453, 1453). In a prior appeal arising from the same incident as here, we determined that plaintiff did not have an attorney-client relationship with the County attorneys inasmuch as “[c]ounsel for the County represented [plaintiff] only in [plaintiff’s] capacity as a County employee” (Matter of Spring v County of Monroe, 141 AD3d 1151, 1152). Consequently, plaintiff is collaterally estopped from claiming here that the County attorneys represented him individually (see generally Buechel v Bain, 97 NY2d 295, 303-304, cert denied 535 US 1096). Thus, the legal malpractice cause of action must be dismissed because there was no attorney-client relationship between plaintiff and the County attorneys (see Berry, 66 AD3d at 1376; Moran, 32 AD3d at 911-912).”

Did They Actually Withdraw?

Posted in Uncategorized

Attorneys and client have a number of related cases arising out of a real estate transaction.  They are in and out of some of the transactions, and other eventually go sour.  How does the continuous representation doctrine play out in this setting?

In RJR Mech. Inc. v Ruvoldt 2017 NY Slip Op 31232(U)  June 8, 2017 Supreme Court, New York County Docket Number: 158764/2015  Judge Jeffrey K. Oing discusses the various principles and application of the continuous representation doctrine.

“On or about August 25, 2016, plaintiff filed a new complaint, which is the subject of this motion, wherein it alleges, again, claims for 1) legal malpractice, and 2) unjust enrichment stemming from defendants’ failure to inform it of the alleged proposed settlement offer as well as failure to prepare for trials and hearings (the “second action”) . As with the allegations in the first action, in this action, plaintiff alleges that in 2002 it retained Ruvoldt to represent it, as the plaintiff, in a mortgage foreclosure action, .which was originally commenced by the lender, but assumed by plaintiff after it had . . \ . acquired the lender’s interest in the mortgage for the Maspeth Property (Norwest Bank Minnesota,. N.A. v E.M.V. Realty Corp., Index No. 20159/200.2 [Sup Ct, Queens County] [the “Norwest Bank action”]) (Verified Complaint)”

“Plaintiff’s new allegations are as follows. Plaintiff alleges that not only did Ruvoldt represent it in the Norwest Bank action,.but he also represented it in another action commenced in 2004 against it and related to the Maspeth Property: EMV Realty Corp. v RJR Mechanical- Inc., ‘Index No. 14778/2004 (Sup Ct, Queens County) (the “EMV Realty actionn). Plaintiff alleges it retained Ruvoldt to represent it and one of its principalsj Roy Leibo~itz (“Leibowitzn) in the EMV Realty action (Verified Complaint, !! 14-15). The EMV Realty action has laid dormant since 2005, save for a single 2011 substitution of counsel (Elman Affirm., Ex. C). On February~ry 11, 2011, Kevin J. Espinosa (“Espinosan), an attorney at Hodgson Russ, sent an email to plaintiff’s representative, Randy Karpman (“Karpman), notifying plaintiff th~t an appeal for the Norwest Bank action needed to be perfected by March 23, 2011 .(Verified :Complaint, ! 22; Espinosa Affirm, Ex. A). In the email, Espinosa advised Karpman that if he did not hear from plaintiff by February 25, 2011 defendants would no longer be able to represent it on the appeal (Id.). In. this email, Espinosa did not mention anything about withdrawing from the EMV Realty action or from other aspects of the Norwest Bank action (Verified Complaint, ! 22; Espinosa Affirm., Ex. A). ”

“The continuous representation doctrine, which is the offspring of the continuous treatment doctrine, recognizes that a layperson seeking legal assistance “[h]as a right to repose confidence ~n the professional’s ability and good faith, and realistically cannot be expected to question and assess the techniques employed or the manner in which the services· are rendered” (Greene v Greene, 56 NY2d 86, 94 [1982]; Matter of Lawrence, 24 N~3d 320, 342-343 [2014]). “The continuous representation doctrine tolls a statute of limitations where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim” (Zorn v Gilbert, 8 NY3d 933, 934 [2007] [internal quotations and citations omitted]). The two prerequisites needed to invoke a continuous representation toll are 1) a claim of misconduct regarding the mann~r in which the profession~l services were performed,· and 2) the ongoing provision bf professional services.with respect to the contested matter or transaction (Matter of Lawrence, 24 NY3d at 342). The ongoing representation must be specifically related to the matter in which the attorney committed the alleged malpractice (Id.; Johnson v Proskauer Rose LLP, 129 AD3d 59, 68 [1st Dept 2015]). The continuous representation doctrine is inapplicable where “plaintiff’s allegations establish defendant[s’] failures within a continuing professional relationship, not a course of representation as to the particular problems (conditions) that gave rise to plaintiff’s malpractice claims” (Id. at 341-342 [internal quotations and citations·omitted]). Here, plaintiff cont’ends that prior to its decision to substitute defendants as counsel it was unaware that defendants no longer intended t6 represent·~t and that defendants’ letters were not indicative of such. Rather plaintiff asserts that defendants’. letters established that they would continue to represent it in the settlement of the Norwest Bank action and the EMV Realty aeration.

“Further, and more importantly, in order for a legal malpractice claim to be subject to the continuous representation toll, the ongoing representation must be directly linked to the alleged malpractice. Given that plaintiff has failed to plead with sufficiency that the EMV Realty action is related to the underlying allegations of legal malpractice, the continuous representation doctrine cannot be transferred to the second action based on the EMV Realty action. Based on the foregoing, plaintiff’s legal malpractice claim is time barred.”

A Huge Investment Loss, Much Litigation Follows

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After a multi-million dollar investment suffered some unexpected tax issues, litigation between some legal giants started.  Bloostein v Morrison Cohen LLP  2017 NY Slip Op 31238(U)  June 7, 2017  Supreme Court, New York County  Docket Number: 651242/2012  Judge: Anil C. Singh involves a state supreme court case and at least one arbitration.  The players include Morrison Cohen LLP, Brown Rudnick, LLP and Stroock & Stroock & Lavan LLP.  The case now revolves around the meaning of certain releases.

“The plaintiff investors commenced the main action against Morrison Cohen for, inter alia, legal malpractice. In the main action, the plaintiff investors allege that Morrison Cohen was negligent in failing to address the inclusion of a new provision in the documents that comprised the Transaction (the “Transaction Documents”) and as a direct result of this negligence, the investors incurred various damages, including having to pay significant capital gains taxes. The Transaction closed ©n September 26, 2007. ”

“On or about January 9, 2015, Morrison Cohen commenced the third-party action against Stonebridge and Brown Rudnick. In the Second Amended Third-Party Complaint (“Third-party Complaint”), Morrison Cohen alleges that Stonebridge retained two law firms to represent their interests in the Transaction, including Brown Rudnick. The terms of Stonebridge’s retention of Brown Rudnick are set forth in the March 16, 2006 Stonebridge/ Brown Rudnick engagement letter (“Engagement Letter”). The Third-party Complaint further alleges that Brown Rudnick was the primary drafter of the Transaction Documents. In addition to drafting the Transaction Documents, Brown Rudnick is also alleged to have issued a tax opinion letter to the plaintiff investors (the “Opinion Letter”). The Third-party Complaint states three causes of action: (1) indemnification and contribution as against Stonebridge (“First Cause of Action”) (2) indemnification and contribution as against Brown Rudnick concerning the Opinion Letter (“Second Cause of Action”); and (3) indemnification and contribution as against Brown Rudnick concerning the Transaction Documents (“Third Cause of Action”). Stonebridge and Brown Rudnick filed motions to dismiss by their respective counsel. ”

“Stroock argues that Brown Rudnick is precluded from seeking contribution because under the Settlement Agreement with Stonebridge it was released from all claims, asserted or that could have been asserted relating in any manner to [Stroock’s] representation of [Stonebridge] or any of [Stone bridge’s] current or former parents, subsidiaries, affiliates, successors, or assigns, and each of their current or former employees, principals, partners, members, ag~nts, advisors, representatives, or attorneys in the Transaction. (emphasis added). Paragraph 5 of the Settlement Agreement further provides that: [t]he Parties intend that the release of [Stroock] … be within the scope of New York General Obligations Law (‘GOL’) §15-108, and that [Stroock] be provided with, and [is] entitled to, a contribution bar to the fullest extent permitted by law. The Settlement Payment shall be deemed to be the monetary · consideration required to bring the release of [Stroock] within the scope of New York GOL § 15-108 … and in full satisfaction of all claims against [Stroock], including, but not limited to, any claims that have been or may be asserted in Bloostein v. Morrison Cohen LLP et al., Index No. 651242/12 (Sup. Ct. N.Y. Cnty.) … NY GOL § 15-108 states in relevant part that “[ w] hen a release or a covenant not to sue or not to enforce a judgment is given to one of two or more persons liable or claimed to be liable in tort for the same injury, … , it does not discharge any of the other tortfeasors from liability for the injury … unless its terms expressly so provide but … it reduces the claim of the releaser against the other tortfeasors.” (emphasis added). The Court of Appeals has held that GOL § 15-108 was designed precisely to allow “defendant[s] to settle a claim and obtain release without fear of being brought back into the action by a non-settling defendant seeking contribution.” Mitchell v. New York Hosp. 61 N.Y.2d209, 215 (1984). NY GOL § 15-108( d) also lays out the requirements for a release and covenant that fall within the scope of the provision 1 • Brown Rudnick does not dispute the validity of the release with respect to GOL §15-108(d). The gravamen of Brown Rudnick’s opposition is that GOL § 15-108(a) applies only to persons liable for “the same injury” and the injury in this action is not the same injury as in the Arbitration. ”

“Brown Rudnick argues that there are distinct injuries in the instant action and the Arbitration. It claims that the injuries in the Arbitration were “having to pay legal fees and disbursements to Stroock for the negligent legal services Stroock provided Stonebridge; deprivation of the full amount -of the loan fee Stonebridge was to recover had an Event of Default not occurred; (and) Stonebridge’s payment of c substantial fees to participants in the Transaction.” (NYSCEF No. 145 at p.4-5). Brown Rudnick contends that the injuries in this action are distinct as they concern “significant capital gains taxes; (and) legal fees and disbursements the (plaintiff investors) paid to Morrison Cohen in connection with the Transaction.” Id. This argument is without merit. Unlike Ackerman, the contribution claim brought in this action by Brown Rudnick against Stroock stems from the same Transaction, Qpinion Letter and losses as those addressed in the Arbitration. This action and the Arbitration is predicated upon legal malpractice. Both Brown Rudnick and Stroock may be held j~intly or severally culpable to the plaintiff investors for the same injury. Accordingly, GOL §15-108 and the release bars Brown Rudnick from seeking contribution from Stroock. “

Win at Trial, Lose on Appeal

Posted in Uncategorized

Gall v Colon-Sylvain  2017 NY Slip Op 04424  Decided on June 7, 2017  Appellate Division, Second Department is the story of a real estate case gone bad, a non-jury trial ending in success for plaintiff and a complete reversal at trial.  How can Supreme Court and the Appellate Division differ so, on the same set of facts?

“The plaintiff commenced this action against, among others, the defendant attorneys Anthony Michael Camisa and David M. Fish (hereinafter together the defendants), alleging that the defendants breached a duty to the plaintiff by failing to ascertain whether the signator on a deed of transfer had the authority to transfer on behalf of a corporation. The property at issue was a residential parcel owned by JJRG Enterprises, Inc. (hereinafter JJRG). The plaintiff was a 50% shareholder of JJRG and the other 50% was held by the defendant Joseph Grant. During the sales transaction, Grant represented himself to be the sole shareholder of JJRG. Camisa represented the purchaser-borrower and the lender on the transaction. Fish represented the seller, JJRG.

At the conclusion of a nonjury trial, the Supreme Court found in favor of the plaintiff. The court concluded that Fish, as attorney for JJRG, had an obligation to ascertain who had the authority to act on JJRG’s behalf. Fish failed to exercise due care in the discharge of that obligation by relying on, inter alia, Camisa’s determinations regarding Grant’s purported authority to bind JJRG to the transaction. As to Camisa, the court held that a fiduciary relationship was created between [*2]Camisa and the plaintiff because the evidence demonstrated that Camisa had de facto control and dominance over the real estate transaction due to, among other things, Fish’s reliance on Camisa’s expertise. In a judgment entered November 14, 2014, the Supreme Court awarded the plaintiff the principal sum of $100,000 against the defendants, jointly and severally. The defendants separately appeal from that judgment.”

“Here, the Supreme Court erred in concluding that the plaintiff satisfied his burden of proof with respect to the elements necessary to prove legal malpractice against Fish. Namely, the plaintiff failed to present evidence to establish that he would not have incurred any damages but for Fish’s negligence (see Nomura Asset Capital Corp. v Caldwalader, Wickersham & Taft LLP, 26 NY3d at 50; Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442). Although the plaintiff argues that but for Fish’s misconduct the plaintiff would not have lost his equity interest in the property, the plaintiff failed to present evidence as to the value of that interest. Contrary to the court’s conclusion, the plaintiff’s expectation that he would receive $100,000 through an agreement with Grant does not establish the fair market value of the plaintiff’s equity interest in the property.

To recover damages for a breach of a fiduciary duty, a plaintiff must establish (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendant’s misconduct (see Baumann v Hanover Community Bank, 100 AD3d 814, 817; Rut v Young Adult Inst., Inc., 74 AD3d 776, 777). “A fiduciary relationship exists between two persons when one of them is under a duty to act for or give advice for the benefit of another upon matters within the scope of the relation'” (Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d 47, 62, quoting EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19; see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d 146, 158). “Such a relationship may exist where one party reposes confidence in another and reasonably relies on the other’s superior expertise or knowledge, but an arms-length business relationship does not give rise to a fiduciary obligation'” (Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d at 62, quoting WIT Holding Corp. v Klein, 282 AD2d 527, 529). “The core of a fiduciary relationship is a higher level of trust than normally present in the marketplace between those involved in arm’s length business transactions'” (Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d at 62, quoting EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d at 19). Determining whether a fiduciary relationship exists is a fact-specific inquiry and the essential elements are reliance by one party, and de facto control and dominance by the other (see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d at 158).

Here, the Supreme Court erred in concluding that the plaintiff satisfied his burden of proof with respect to the elements necessary to prove a breach of fiduciary duty against Camisa. The evidence did not establish that Camisa, who was the attorney for the purchaser and the lender, had any duty to act or give advice for the benefit of the plaintiff (see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d at 158; EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d at 19; Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d at 61).”

First Chapter in the Big Queens Legal Malpractice Saga

Posted in Uncategorized

It’s a common enough scenario.  Home buyer (not a professional) wants to buy what looks like a bargain.  Home buyer goes to an attorney and the closing takes place.  Problem?  ECB as judgments against the property which don’t get taken care of, the neighbor has a right to use the driveway and there are structural problems.  Was it the obligation of the attorney to tell the buyer to get an inspection?  Did the attorney have to explain the title search results to the buyer?

Right now, in Bergwijn v Big Queens Rehab Inc.  2017 NY Slip Op 31227(U) June 1, 2017  Supreme Court, Kings County  Docket Number: 505174/16  Judge: Genine D. Edwards the title company is out, and there is to be more briefing for the attorney.

“Bergwijn commenced this action on April 5, 2016, regarding his January 9, 2012 purchase of the residential real property at 115 Miller Avenue in Brooklyn (Property) from defendant, Big Queens Rehab Inc. (Big Queens). In connection with the sale of the Property, DeGaetano was Bergwijn’s attorney and Old Republic issued Owner’s Policy Of Title Insurance No. OX-08524493 (Title Policy)

The complaint alleges that Big Queens and DeGaetano “advised Plaintiff that he did not need an inspection of the house” and, in reliance on that advice, Bergwijn did not have the Property inspected (complaint at iii! 14-15 and 18). Allegedly: (1) Bergwijn was not informed of Environmental Control Board (ECB) violations against the Property; (2) there was an illegal basement and a hidden bathroom at the Property; (3) the neighbor had an easement to use the common driveway at the Property; and (4) DeGaetano “encouraged” Bergwijn “to sign the closing documents without explaining what they meant” (id. atirif 19- 22). The complaint further alleges that the ECB violations “had been converted into Judgments totaling $66,000.00 [which] predate the Plaintiffs purchase of the Property” and “the Title Policy from Defendant Old Republic … did not alert Plaintiff to any of the liens, judgments or violations … ” (id. at iii! 25 and 26).  ”

“ORDERED that: (a) Bergwijn shall serve and file papers in opposition to DcGaetano’s motion for summary judgment within 45 days of service of a copy of this interim decision and order with notice of entry; (b) DeGaetano shall serve and file papers in opposition to Bergwijn’s cross-motion for summary judgment within 45 days of service of a copy of this interim decision and order with notice of entry; (c) DeGaetano shall serve and file reply papers in further support of his motion for summary judgment within 45 days of receipt of opposition papers; and ( d) Bergwijn shall serve and file reply papers in further support of his cross-motion for summary judgment within 45 days of receipt of opposition papers. “

This Is A Rare “Speculation” Case

Posted in Legal Malpractice Cases

When a legal malpractice claim requires that the Court decide how a non-party would have acted, th Court often calls this “speculation.”  Examples are:  what would the other side have done if a specific offer had been made?  How would a court have decided an issue which was never raised?  How much would another driver have paid for damages?

In Leggiadro, Ltd. v Winston & Strawn, LLP  2017 NY Slip Op 04361   Decided on June 1,  2017  Appellate Division, First Department the question is whether the landlord would have forked up another $ 400,000 had pressure been applied.  We would have expected the AD1 to say: “speculation!”  It did not.

“The court properly declined to dismiss the corporate plaintiff’s claim that it would not have accepted the landlord’s buyout offer of the remaining six years on its commercial lease if it had been properly advised by W & S of a $400,000 New York City corporate tax obligation it would have to pay on the buyout figure. Deposition testimony and affidavits offered from the corporate plaintiff’s principal assert that it was W & S’s responsibility to ensure that the negotiated buyout covered all of plaintiff’s anticipated relocation expenses and attendant tax obligations such that plaintiff would not be out of pocket financially when relocating to allow the nonparty landlord to undertake a major renovation of its building. Under the circumstances presented, triable issues exist as to whether, but for W & S’s failure to inform plaintiff of the corporate tax obligation, plaintiff would have declined the buyout offer, remained in its existing leasehold and avoided any damages associated with having to pay, out of pocket, a corporate tax on the buyout sum (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438 [2007]; Miuccio v Straci, 129 AD3d 515 [1st Dept 2015]).

Another branch of the malpractice claim alleged that but for counsel’s negligence in failing to raise the tax issue, the landlord would have offered a higher buyout figure to cover the New York City corporate tax obligation. This branch of the claim is also viable. Although the claim is founded upon a discretionary decision residing in another over whom the corporate plaintiff had no control, the circumstances support plaintiff’s contention that the landlord would have agreed to satisfy the tax liability. As we opined in sustaining the malpractice cause of action in the complaint on defendant’s motion to dismiss, plaintiff had a strong bargaining position because the amount of time left on the lease, as well as the importance of the leased space to the landlord’s conversion plans, would have pressured the landlord to acquiesce to plaintiff’s relatively minor request (see Leggiadro, Ltd. v Winston & Strawn, LLP, 119 AD3d 442, 442-443 [1st Dept 2014]; see also Campbell v Rogers & Wells, 218 AD2d 576, 580 [1st [*2]Dept 1995]; Khadem v Fischer & Kagan, 215 AD2d 441, 443 [2d Dept 1995]). W & S has not proffered any new probative evidence to counter this aspect of plaintiff’s legal malpractice claim.”

“A” Proximate Cause v. Sole Proximate Cause

Posted in Uncategorized

What, exactly, is the standard by which legal malpractice proximate cause is measured?  Remember, legal malpractice is the sole area of the law in which an additional burden is placed upon the plaintiff:  the “but for” requirement.  New York State Workers’ Compensation Bd. v Program Risk Mgt., Inc.  2017 NY Slip Op 04184  Decided on May 25, 2017  Appellate Division, Third Department gives an interesting take on the question.

“The Community Residence Insurance Savings Plan, a group self-insured trust, was formed in 1995 to provide workers’ compensation to the employees of the members of the trust (see Workers’ Compensation Law § 50 [3-a]; 12 NYCRR 317.2 [i]; 317.3). Defendants Janice Johnson, Antonia Lasicki, Thomas McKeown, John Lessard, Ann Hardiman, Vincent Sirangelo, Phillip Saperia, Steven Greenfield, Peter Pierri, Fred Apers, Peter Campanelli and Diana Antos-Arens (hereinafter collectively referred to as the trustee defendants), among others, each served as individual trustees. Shortly after the trust was formed, it contracted with defendant Program Risk Management, Inc. (hereinafter PRM) to administer the trust (see 12 NYCRR 317.2 [g]) and, in 2001, the trust contracted with defendant PRM Claims Services, Inc. (hereinafter PRMCS) to administer its claims (see 12 NYCRR 317.2 [d]). Defendants Thomas Arney, John M. Conroy, Edward A. Sorensen and Mark J. Crawford (hereinafter collectively referred to as the PRM individual defendants) are former or current officers of PRM and PRMCS and/or served in various corporate capacities. Defendant Thomas Gosdeck served as counsel to the trust and as qualifying officer to PRMCS.

In 2004, plaintiff began advising the trust that it was underfunded and required the execution of a number of consent agreements intended to preserve it. In 2010, plaintiff deemed the trust to be underfunded with a regulatory deficit of more than $7,900,000, and, when efforts to reduce this deficit failed, the trustees voted to stop providing workers’ compensation. After advising the trustees that the trust had “demonstrated an inability to properly administer its liabilities,” plaintiff assumed the administration of the trust, effective August 2011. A subsequent forensic audit determinated that, as of December 31, 2010, the trust was underfunded by more than $60,715,450.

In June 2013, plaintiff commenced this action in both its capacity as the governmental agency charged with administering the state’s workers’ compensation program and as the trust’s successor in interest. As relevant on this appeal, plaintiff seeks to recover damages for breach of contract against PRM, PRMCS and the PRM individual defendants (hereinafter collectively referred to as the PRM defendants) and the trustee defendants (first cause of action); breach of the duty of good faith and fair dealing against the PRM defendants and the trustee defendants (second cause of action); breach of fiduciary duty against PRM and the PRM individual defendants, the trustee defendants and Gosdeck (fourth, fifth and sixth causes of action); fraud against the PRM defendants (seventh cause of action); unjust enrichment against Gosdeck (ninth cause of action); negligent misrepresentation against the PRM defendants and Gosdeck (tenth cause of action); legal malpractice against Gosdeck (eleventh cause of action); contractual indemnification against the PRM defendants (sixteenth cause of action); and common-law indemnification against all defendants (eighteenth cause of action). Plaintiff also seeks a judgment declaring the PRM defendants to be alter egos (thirteenth cause of action) and an accounting from PRM and PRMCS (fifteenth cause of action). As relevant herein, the PRM defendants, the trustee defendants and Gosdeck each moved to dismiss the complaint against them.”

“Turning to Gosdeck’s cross appeal, we find that Supreme Court properly denied the motion to dismiss plaintiff’s claim for legal malpractice against him. Initially, we reject Gosdeck’s argument that plaintiff was required to allege that he was the sole proximate cause of alleged damages. Rather, “[i]n an action to recover damages for legal malpractice, a plaintiff must demonstrate 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” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007] [internal quotation marks and citation omitted]). “An attorney’s conduct or inaction is the proximate cause of a plaintiff’s damages if but for the attorney’s negligence the plaintiff . . . would not have sustained actual and ascertainable damages” (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 50 [2015] [internal quotation marks and citations omitted; emphasis added]; see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; Rodriguez v Jacoby & Meyers, LLP, 126 AD3d 1183, 1185-1186 [2015], lv denied 25 NY3d 912 [2015]). We agree with Supreme Court that, on this motion to dismiss a claim of legal malpractice that is based on negligent legal advice given over a period of time, the “but for” standard is not synonymous with sole proximate cause and that plaintiff’s burden is to prove that Gosdeck’s negligence was a proximate cause of damages (see Barnett v Schwartz, 47 AD3d 197, 205 [2007]; compare Dawson v Schoenberg, 129 AD3d 656, 658 [2015], lv denied 26 NY3d 919 [2016] [where legal malpractice arose during a criminal proceeding]).”

“Accepting these allegations to be true, as we must (see NYAHSA Servs., Inc., Self-Ins. Trust v Recco Home Care Servs., Inc., 141 AD3d at 794), we find that plaintiff adequately stated a cause of action for legal malpractice. Further, although plaintiff did not specify the damages, at this early stage plaintiff “need only plead allegations from which damages attributable to the defendant’s malpractice might be reasonably inferred” (Rock City Sound, Inc. v Bashian & Farber, LLP, 74 AD3d 1168, 1171 [2010], lv dismissed 16 NY3d 826 [2011]; see InKine Pharm. Co. v Coleman, 305 AD2d 151, 152 [2003]). Gosdeck’s claim that the audit report constituted documentary evidence warranting dismissal of the cause of action pursuant to CPLR 3211 (a) (1) is without merit, because the document expressing the auditors’ opinions fails to conclusively refute all of the claims asserted against him (see State of N.Y. Workers’ Compensation Bd. v Wang, 147 AD3d at 114).”

Some of the Dangers of Pro-Se Litigation

Posted in Legal Malpractice Cases

Litigation is a major-league sport.  It can be dangerous, and there can be injuries.  Even when a talented amateur gets involved, there can still be basic problems which remain unsolved.   DeMartino v Golden  2017 NY Slip Op 04253  Decided on May 31, 2017  Appellate Division, Second Department is an example where two intersecting problems caused dismissal.  The first problem was that of the owner-corporation retention problem.  Here the corporation retained an attorney, and the owner (who had no privity) tried to sue the attorney.  The second problem was that a corporation cannot appear without an attorney.  Its acts in Court, absent an attorney, can be a nullity.

“The Supreme Court properly granted that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted by the plaintiffs DeMartino Building Co., Inc., and 150 Centreville, LLC, and denied that branch of the plaintiffs’ cross motion which was to deem the summons and complaint to have been adopted by counsel they retained after the summons and complaint were filed and served. A corporation and limited liability company must be represented by an attorney and cannot proceed pro se (see CPLR 321[a]; Boente v Peter C. Kurth Off. of Architecture & Planning, P.C., 113 AD3d 803; Michael Reilly Design, Inc. v Houraney, 40 AD3d 592). Here, DeMartino Building Co., Inc., and 150 Centreville, LLC, did not appear by an attorney when the summons and complaint were filed and served. Accordingly, the complaint, insofar as asserted by them, was a nullity, and the action as to them was improperly commenced (see Hilton Apothecary v State of New York, 89 NY2d 1024; Boente v Peter C. Kurth Off. of Architecture & Planning, P.C., 113 AD3d 803; Cinderella Holding Corp v Calvert Ins. Co., 265 AD2d 444).

The Supreme Court also properly granted that branch of the defendants’ motion which was to dismiss the complaint insofar as asserted by the plaintiff Frank DeMartino. “Absent fraud, collusion, malicious acts, or other special circumstances, an attorney is not liable to third parties not in privity or near-privity for harm caused by professional negligence” (Fredriksen v Fredriksen, 30 AD3d 370, 372; see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 595). Affording the complaint a liberal construction, accepting the facts alleged therein as true, and according DeMartino the benefit of every possible favorable inference (see Leon v Martinez, 84 NY2d 83, 87-88), the complaint fails to plead specific facts from which it can be inferred that [*2]DeMartino was in an attorney-client or fiduciary relationship, privity, or a relationship that otherwise closely resembles privity with the defendants, who were retained to represent DeMartino Building Co., Inc., and 150 Centerville, LLC, in the underlying action. Accordingly, the court properly directed dismissal pursuant to CPLR 3211(a)(7) of the causes of action alleging legal malpractice and breach of fiduciary duty insofar as asserted by DeMartino (see Fredriksen v Fredriksen, 30 AD3d at 371; Conti v Polizzotto, 243 AD2d 672, 673).

The essential elements of a cause of action sounding in abuse of process are: “(1) regularly issued process, either civil or criminal, (2) an intent to do harm without excuse or justification, and (3) use of the process in a perverted manner to obtain a collateral objective” (Curiano v Suozzi, 63 NY2d 113, 116). Here, the Supreme Court properly directed dismissal pursuant to CPLR 3211(a)(7) of the cause of action alleging abuse of process insofar as asserted by DeMartino, as the facts alleged in the complaint failed to describe conduct on the defendants’ behalf constituting the second and third elements of a cause of action alleging abuse of process.

The Supreme Court also providently exercised its discretion in denying that branch of the plaintiffs’ cross motion which was for leave to amend the complaint. Although leave to amend should be freely given in the absence of prejudice or surprise to the opposing party (see CPLR 3025[b]), the motion should be denied where the proposed amendment is palpably insufficient or patently devoid of merit (see Scofield v DeGroodt, 54 AD3d 1017, 1018; Lucido v Mancuso, 49 AD3d 220, 222). “Whether to grant such leave is within the motion court’s discretion, the exercise of which will not be lightly disturbed” (Pergament v Roach, 41 AD3d 569, 572; see Zeleznik v MSI Constr., Inc., 50 AD3d 1024, 1025). Here, the proposed amendments were palpably insufficient.”

Both Sides Lose in a Real Estate – Legal Malpractice Case

Posted in Legal Malpractice Cases

An error is made at a closing, and the other side takes advantage of the error.  May the attorney say something like:  “Sure…I made a mistake, but the intervening event was the other side taking advantage” ?  Not in this case.

Ragunandan v Donado  2017 NY Slip Op 04306  Decided on May 31, 2017  Appellate Division, Second Department  denied summary judgment to both sides.

“The plaintiff commenced this action to recover damages for legal malpractice against, among others, the defendant Marco A. Lozada (hereinafter the defendant), an attorney who represented her at a real estate closing. After discovery was completed, the defendant moved for summary judgment dismissing the complaint insofar as asserted against him. The plaintiff cross-moved for summary judgment on the complaint. The Supreme Court granted the defendant’s motion and denied the plaintiff’s cross motion.

To recover damages for legal malpractice, a plaintiff must establish, first, that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and, second, that the defendant’s failure was a proximate cause of the plaintiff’s damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442; Atiencia v Pinczewski, 148 AD3d 860). In moving for summary judgment dismissing a complaint alleging legal malpractice, the defendant must establish, prima facie, the plaintiff’s inability to prove at least one of these elements (see Rojas v Paine, 125 AD3d 745, 746). If the defendant satisfies that burden, the burden then shifts to the plaintiff to rebut the defendant’s prima facie showing (see Montero v Cohen, 104 AD3d 654, 655; cf. Stukas v Streiter, 83 AD3d 18, 23-24).

Here, the defendant’s motion papers addressed only the second element of a legal malpractice cause of action, contending that any deficiency in his skill and knowledge was not a [*2]proximate cause of the plaintiff’s damages. The defendant failed to establish, prima facie, the absence of proximate cause. The fact that another person may have taken advantage of the defendant’s allegedly deficient performance to cause damages to the plaintiff did not, under the circumstances of this case, establish, prima facie, that the defendant’s alleged deficiencies were not also a proximate cause of her damages (see Overseas Shipholding Group, Inc. v Proskauer Rose, LLP, 130 AD3d 415, 415; Utica Cutlery Co. v Hiscock & Barclay, LLP, 109 AD3d 1161, 1162). In light of the defendant’s failure to satisfy his prima facie burden on his motion for summary judgment, the Supreme Court should have denied the motion without regard to the sufficiency of the plaintiff’s opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853; Rojas v Paine, 125 AD3d at 746).

The Supreme Court, however, properly denied the plaintiff’s cross motion for summary judgment on the complaint. The plaintiff failed to establish, prima facie, that the defendant failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession (see Schottland v Brown Harris Stevens Brooklyn, LLC, 137 AD3d 995, 996-997; Conklin v Owen, 72 AD3d 1006, 1007; Eisenberger v Septimus, 44 AD3d 994, 995). In light of the plaintiff’s failure to satisfy her prima facie burden, we need not consider the sufficiency of the defendant’s opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d at 853).”

The Off-Hand Comment Was Merely Dicta

Posted in Legal Malpractice Cases

Bringing a legal malpractice case based upon a badly handled legal malpractice case is a perilous situation.  Worse still if there is an ambiguous decision upon which it is all based.  So it was in 4777 Food Servs. Corp. v Anthony P. Gallo, P.C.  2017 NY Slip Op 04086  Decided on May 24, 2017 Appellate Division, Second Department where the judge in the underlying case precluded the use of certain evidence.  Did this lead to the loss, or was the evidence not good enough in any instance?

“In this action to recover damages for legal malpractice, the complaint alleges that the defendants, Anthony P. Gallo, P.C., and Anthony P. Gallo (hereinafter together Gallo), who represented the plaintiff in a prior legal malpractice action against the plaintiff’s former attorneys, Demartin & Rizzo, P.C., and Joseph N. Rizzo, Jr. (hereinafter together Rizzo), negligently failed to respond to certain discovery demands by Rizzo, which resulted in the Supreme Court (Gazzillo, J.) precluding the introduction of evidence in the plaintiff’s legal malpractice action against Rizzo (4777 Food Serv. Corp. v DeMartin & Rizzo, P.C., 2013 NY Slip Op 33007 [U] [Sup Ct, Nassau County]; hereinafter the Rizzo order). The complaint further alleges that, as a result of this evidence being precluded, the court which issued the Rizzo order found that the plaintiff had failed to meet its burden of proof as to the element of damages sustained as a result of Rizzo’s malpractice.

In this action, Gallo moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint, and relied in part on the Rizzo order. Gallo argued that the Rizzo order held that even if the subject evidence had not been precluded, the evidence would have been too speculative to support a damages award, and as a result, the complaint was subject to dismissal.

In the order appealed from, the Supreme Court (Asher, J.), relying on certain language in the Rizzo order, determined that Justice Gazzillo “expressly found” that the evidence, had it not been precluded, would have been too speculative to permit an award of damages, and granted Gallo’s motion pursuant to CPLR 3211(a) to dismiss. The plaintiff appeals, and we reverse.”

“Here, the Rizzo order does not utterly refute the allegations in the complaint, nor does it establish a defense as a matter of law. The order concludes, in part, that there was no proof of actual damages presented by the plaintiff, due to the plaintiff’s failure to respond to at least two of Rizzo’s discovery demands, which resulted in the preclusion of the damages evidence. The Rizzo order then states, referring to the precluded evidence, “[m]oreover, even if, arguendo the [c]ourt were to overlook that deficiency, its probative value is highly suspect” (4777 Food Serv. Corp. v DeMartin & Rizzo, P.C., 2013 NY Slip Op 33007 [U], *9). Contrary to the Supreme Court’s conclusion, this alternate holding, which constitutes dicta, was not a finding on the merits and did not utterly refute the allegations in the complaint against Gallo (see O’Connor v G & R Packing Co., 53 NY2d 278; Malloy v Trombley, 50 NY2d 46, 50; Pollicino v Roemer & Featherstonhaugh, 277 AD2d 666, 667-668). Accordingly, the Supreme Court should have denied Gallo’s motion pursuant to CPLR 3211(a) to dismiss the complaint.”

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