New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

Trustees and Privity

Posted in Uncategorized

Trustees, just like regular prople, put their trust in attorneys.  After all, the attorney can be trusted to take care of the details, no?  Anyway, the attorney is sure to send a bill.  In this situation, the trust in the attorneys rigor was misplaced.

Ianiro v Bachman  2015 NY Slip Op 06709  Decided on September 2, 2015  Appellate Division, Second Department determines that trustees have privity to sue an attorney for work performed for the trust.

“The defendant, who is a lawyer, was retained by the plaintiff Lowell Babington and his wife, Toni Babington, to create and fund a trust of which the plaintiffs Carol Ianiro, Thomas Babington, and Margaret Onody serve as trustees (hereinafter collectively the trustee plaintiffs). The trust was funded with several policies which insured the lives of Lowell and Toni and which were previously owned by the trustee plaintiffs. The plaintiffs allege that the defendant allowed one of the policies on the life of Toni, who is now deceased, to lapse due to nonpayment. The plaintiffs commenced this legal malpractice action to recover the amount of the face value of the policy from the defendant. The defendant moved to dismiss the amended complaint pursuant to CPLR 3211(a), asserting, among other things, that the trustee plaintiffs lack legal standing to maintain this action. The Supreme Court, inter alia, denied that branch of the motion which was to dismiss the complaint insofar as asserted by the trustee plaintiffs as trustees and owners of the trust.

The Supreme Court properly denied that branch of the defendant’s motion which was pursuant to CPLR 3211(a)(7) to dismiss the amended complaint insofar as asserted by the trustee plaintiffs. As the court correctly found, the trustee plaintiffs stand in a position analogous to that of the personal representative of an estate, and therefore, possess the requisite privity, or a relationship sufficiently approaching privity, to maintain an action alleging legal malpractice against the defendant (see generally Estate of Schneider v Finmann, 15 NY3d 306).”

Professional Negligence in the Creative World

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Augustus Butera is a photographer whose work was handled by the former MCA Creative Services, which self-immolated some time back.  In Augustus Butera Photography, Inc. v MCA Creative Servs., Inc.2014 NY Slip Op 32974(U) October 21, 2014   Supreme Court, New York County  Docket Number: 651984/11  Judge Nancy M. Bannon gives a primer on the difference between professional negligence and breach of contract.  In this case it appears that Butera received compensation for the use of his photographs and came up short in the final accounting.  He sued for loss of compensation, punitive damages and other claims, and he referenced other law suits against MCA and its principals in support of his claim.

“In this breach of contract action, the plaintiff corporation, Augustus Butera Photography, Inc., seeks, inter alia, to recover unpaid professional fees from defendant MCA Creative Services, a/k/a Marge Casey Associates (“MCA”), its former agent. The complaint includes causes of action for conversion and unjust enrichment and seeks damages of $45,000, punitive damages, an accounting and judgment declaring that the parties had a valid contract which was breached by the defendant. The defendant, who had had a 13-year business relationship with the plaintiff’s principal, the photographer Augustus Butera, answered and asserted a cross-claim seeking damages for tortious interference with prospective business relations. In a third-party action, MCA seeks damages in excess of $150,000 from Augustus Butera, individually, upon the same theory as well as breach of contract for failure to pay contractual commissions. Butera answered and asserted several counterclaims approximating the claims in the complaint. The action was commenced in 2011 and discovery has been ongoing.”

“The plaintiff alleges that the defendant was negligent in its “billing, invoicing and licensing of photographic works” which resulted in a loss to him of professional fees totaling $45,000. To the extent that the plaintiff is attempting to assert a type of “professional malpractice” claim, it provides no factual support or legal authority for doing so and thus states no cognizable tort claim. See Clark-Fitzpatrick, Inc. v Long Island R.R. Co., 70 NY2d 382 (1987); Harrogate House Limited v Jovine, 2 AD3d 108 (1″ Dept. 2003). To the extent the plaintiff is alleging that the defendant failed to meet its obligations under the parties’ agreement, it is duplicative of the breach of contract claim. See Clark-Fitzpatrick Inc. v Long Island R.R. Co., supra; Sebastion Holdings, Inc. v Deutsche Bank, AG., 108 AD3d 433 (1’1 Dept. 2013). The defendant is entitled to summary dismissal of that claim. “

The Everpresent and Luring Fraud Shadow to a Legal Malpractice Claim

Posted in Legal Malpractice Cases

Fidelity Natl. Tit. Ins. Co. v Smith Buss & Jacobs, LLP   March 17, 2015  Appellate Division, First Department is a reminder that behind many legal malpractice cases there lurks the hint that this was all fraud and not merely a mistake.

“The complaint alleges that the sponsor of 16 apartment units in a condominium development, Empire Builders of New York Corp., and other parties defrauded the purchasers of the units by falsely representing that part of the purchase price would be used to satisfy portions of a blanket mortgage allocated proportionally to the units and by diverting the funds meant to satisfy the mortgage for their own use. Empire also allegedly failed to disclose that six of the units were encumbered by mortgages held by Al Perna. Plaintiff defended the purchaser’s title and mortgagee Wells Fargo Bank’s mortgage loan against foreclosures of the mortgages, pursuant to title insurance policies that its policy-issuing agent, Imagine Title, had allegedly fraudulently issued on its behalf. Proceeding individually and as subrogee of the purchasers and Wells Fargo, plaintiff asserts claims for fraud, aiding and abetting fraud, aiding and abetting conversion, and breach of fiduciary duty against Empire’s attorney, defendant Smith Buss & Jacobs, LLP (SBJ) and a breach of contract claim against defendant Blomberg for breaching instructions that Wells Fargo had given him by failing to ensure that all liens of record were satisfied before disbursing Wells Fargo’s funds from escrow.

[*2] The complaint alleges that SBJ misrepresented that the subject units would not be encumbered by the mortgages in the offering plan and closing statements it drafted and that it deviated from normal practice by failing to obtain the necessary payoff letters from New York Community Bank (NYCB), which had been assigned the mortgages, before preparing the closing statements (which typically set forth the payoff amounts) and by directing the purchasers to pay a party named Michael Lease, instead of NYCB. These allegations raise a reasonable inference of fraudulent intent on SBJ’s part and justifiable reliance by the purchasers, and therefore state a claim for fraud against SBJ (see Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559 [2009]).

The allegations of SBJ’s involvement are sufficient to establish its actual knowledge of the fraud scheme, as well as its substantial assistance therein, and thus state an aiding and abetting fraud claim (see Oster v Kirschner, 77 AD3d 51, 55-56 [1st Dept 2010]). These allegations also state a claim for aiding and abetting Imagine’s breach of fiduciary duty to Fidelity (see Kaufman v Cohen, 307 AD2d 113, 125-126 [1st Dept 2003]). In addition, they state a claim for aiding and abetting the conversion of funds by Empire and Imagine (see Weisman, Celler, Spett & Modlin v Chadbourne & Parke, 253 AD2d 721 [1st Dept 1998]).”

Aren’t You Working on that Appeal?

Posted in Legal Malpractice Cases

Further analysis of Sitomer v Goldweber Epstein, LLP  2015 NY Slip Op 31541(U)  August 14, 2015  Supreme Court, New York County  Docket Number: 158325/13  Judge: Barbara Jaffe continues today on the issue of whether it is legal malpractice not to take an appeal for the client.  The retainer agreement tends to serve as the deciding factor here.  Another issue is whether the law firm is billing by the hour or on a contingency.

“On April 1, 2005, plaintiff hired defendants to represent him in connection with an anticipated divorce action to be commenced against him. In signing the retainer agreement, plaintiff agreed, as pertinent here, that defendants would provide services in connection with [* 1] proceedings at the trial court level only. (NYSCEF 9). On April 11, 2005, plaintiffs ex-wife commenced the divorce action in New York County. (NYSCEF 10). At that time, in addition to his interest in ISI Ltd., plaintiff had an ownership interest in Blue Star Jets, LLC. (NYSCEF 8, 37). ”

“On September 20, 2010, the judgment of divorce was entered and served with notice of entry on September 21, 2010. The court directed the equitable distribution of plaintiffs ownership interests in Blue Star and ISI Ltd. in accordance with the December 2008 decision. (NYSCEF 20). By email dated October 5, 2010, Epstein alerted plaintiff that she would draft a notice of appeal to protect plaintiffs rights, and asked ifhe wanted “to proceed with an application before [the presidingjustice], as well?”(NYSCEF 22). By email dated November 29, 2010, defendants asked plaintiff, among other things, if he was “proceeding with the Appeal?” They also advised that there were deadlines to be met and a need to compile the record on appeal. (NYSCEF 25). By email dated April 13, 2010, Epstein reminded plaintiff of the approaching deadline, that she his decision as to whether he wanted to pursue the appeal, that it would cost between $20,000 and $30,000 for the record alone, and that a new retainer had to be signed by him for the appeal. She otherwise informed him that she had completed a motion for a downward modification but awaited his net worth statement. (NYSCEF 26). Later that same day, plaintiff inquired as to “where are our odds better??” Epstein replied that she did not believe an appeal would be successful, but advised him to obtain a second opinion. (NYSCEF 27). ”

“By email dated March 10, 2011, at 5:33 pm, Epstein advised plaintiff that she was “working on papers.” On the same day, at 5:35 pm, plaintiff emailed defendants, “Hi guys, what[‘]s doing with the appeal to [the presiding justice]?” (NYSCEF 46 [emphasis omitted]). By email dated June 7, 2011, defendants requested a $5,000 retainer fee to draft a prenuptial agreement in an unrelated matter and again alerted plaintiff of the deadline for filing the appeal, to which plaintiff replied that he “thought the appeal was well under way already.” Defendants promptly responded, “How can it be underway when we never got any funds for the record or to work drafting the appeal[.] I told you it would cost about $40,000 to get record and do briefl.] You need to pay up front[.]” (NYSCEF 28). On October 5, 2011, plaintiff obtained defendants’ consent to substitute counsel. (NYSCEF 29). ”

Generally, the Appellate Division is limited to reviewing the record on appeal and may not consider evidence dehors the record (Constantine v Premier Cab Corp., 295 AD2d 303, 304 [2d Dept 2002]), unless its accuracy is undisputed (Bravo v Terstiege, 196 AD2d 473, 476 [2d Dept 1993]). Here, the parties’ email exchanges reflect that defendants apprised plaintiff of his right to appeal, the deadline for pursuing it, and the attendant costs. Even if defendants’ March 10, 2011 email was written in reply to plaintiffs email, it only demonstrates that defendants were working on papers to be submitted to the trial court, not on an appeal from the judgment. And, if not sent in response to plaintiffs email, defendants’ email does not prove that defendants were working on an appeal of the judgment. Moreover, the correspondence reflects plaintiffs appreciation of the difference between relief at the trial court level and an appeal of the judgment. Even assuming that defendants failed to accede to plaintiffs request that they file an appeal of the judgment, the evidence on which plaintiff relies is dehors the record and inadmissible on appeal absent any evidence that it is undisputed. (See Gagen v Kipany Prods. Ltd., 289 AD2d 844, 846 [3d Dept 2001] [court did not consider arguments based on documents 20 [* 20] outside the record]). Thus, plaintiffs evidence is insufficient to establish that an appeal would have been successful, particularly where, as here, the trial court acted within its broad discretion in appraising his businesses. (See MacDonald v Guttman, 72 AD3d 1452, 1456 [3d Dept 2010] [notwithstanding plaintiffs claim of appeal’s likelihood of success based on her denial of evidentiary hearing, lower court had no obligation to hold such hearing and could accept or reject certain evidence on its own initiative]; Weiner v Hershman & Leicher, P.C., 248 AD2d 193, 193 [1st Dept 1998] [plaintiff failed to allege specific facts to show lower court had improperly resolved issues and thus an appeal would likely be successful]). For all of these reasons, defendants have satisfactorily demonstrated both the baselessness of plaintiffs allegation that they committed malpractice in failing to pursue an appeal, and that, in any event, there is no significant dispute that it would have been unsuccessful.”

More Issues in a Legal Malpractice Divorce Case

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We started discussing Sitomer v Goldweber Epstein, LLP  2015 NY Slip Op 31541(U)  August 14, 2015  Supreme Court, New York County
Docket Number: 158325/13  Judge: Barbara Jaffe on Tuesday.  Two witnesses were not called for plaintiff at the divorce trial.

“On September 25, 2007, the divorce trial commenced. (NYSCEF 37). By email dated October 11, 2007, defendants approached Gordon Wilde, a director of ISI Ltd., to testify “about the dilution of [plaintiffs] stock interest in [ISI Ltd.] from 100% to 50% and the call for infusion of capital into the [real estate development] project in the amount of $675,000 for [plaintiffs] share[s].” (NYSCEF 57). Defendants followed up by email on November 2 in order to meet with Wilde and prepare him for his testimony; Wilde responded shortly thereafter and directed defendants to review his fee and expenses. (NYSCEF 58). 2 [* 2] During the course of the trial, by letter dated November 7, 2007, counsel for the ISi Ltd. shareholders informed plaintiff that based on his failure to infuse capital into the company, they were “taking steps today to pay the sum of $575,000.00 into the Company’s account” and “to have the value of the shares professionally determined.” Annexed to the letter is a subscribed portion of a 2006 ISi Ltd. shareholder agreement, indicating that three entities, other than plaintiff, owned a combined 50 percent stake in ISi Ltd. (NYSCEF 45). On November 15, 2007, the Klein Liebman report was admitted in evidence. Defendant Epstein cross-examined Glenn Liebman, a Klein Liebman partner and coauthor of the report …”

Witness Vigna

“Absent a basis for refuting Klein Liebman’s valuation method, and given the court’s questioning and findings and the concern that calling Vigna would undermine plaintiffs credibility, defendants have demonstrated that their decision not to call Vigna as a witness constituted a matter of strategy that, as a matter of law, forms no basis for a finding of legal malpractice. (See O’Callaghan v Brunelle, 84 AD3d 581, 581-582 [l5t Dept 2011], Iv denied 18 NY3d 804 [2012] [prior NYSE and SEC decisions revealed that uncalled witness could not help plaintiff and thus plaintiff could not establish causation]; L.l C. Commercial Corp. v Rosenthal, 202 AD2d 644, 644-645 [2d Dept 1994], Iv dismissed 84 NY2d 841 [decision not to call witness strategic as potential testimony confusing and unfavorable to plaintiff]; see also A.H Harris & Sons v Burke, Cavalier, Lindy & Engel P.C., 202 AD2d 929, 930 [3d Dept 1994] [failure to call witness appropriate course of action absent allegation of how failure fell below attorney standard of care]). ”

Witness Wilde

For the reasons set forth (supra II.B.l.), plaintiffs allegation that defendants’ failure to call Wilde as a witness to corroborate his testimony resulted in an inflated ownership figure, states a cause of action for legal malpractice (see Iocovello v Weingrad & Weingrad, 262 AD2d 156, 157 [151 Dept 1999], abrogated on other grounds Brothers v Florence, 95 NY2d 290 [2000] [plaintiff sufficiently stated cause of action in legal malpractice whose gravaman was attorney’s failure, in personal injury action, to introduce certain documentary evidence that plaintiff had suffered “serious injury”]). Defendants’ evidence is too ambiguous to prove that Wilde decided on his own not to testify. Nor do they offer a strategic rationale for not calling him. (See Ackerman v Kesselman, 100 AD3d 577, 579 [2d Dept 2012] [defendants failed to offer reasonable strategic explanation for decision to subject plaintiff, a nonparty to a contract, to arbitration proceeding for breach of contract]).”

Failure to Use Good Evidence in a Legal Malpractice Setting

Posted in Uncategorized

Sitomer v Goldweber Epstein, LLP 2015 NY Slip Op 31541(U) August 14, 2015 Supreme Court, New York County Docket Number: 158325/13 Judge: Barbara Jaffe is a gold-mine of legal malpractice issues and decisions.  What happens if you have good evidence in favor of your client, but fail to use it?

“By letter dated May l, 2002, plaintiff, then married, signed a shareholder agreement whereby he transferred to several institutional investors 2,500 or his 5,000 shares in his holding company, International Star Investments Limited (ISi Ltd.) in exchange for capital contributions. (NYSCEF 44). On April 1, 2005, plaintiff hired defendants to represent him in connection with an anticipated divorce action to be commenced against him. In signing the retainer agreement, plaintiff agreed, as pertinent here, that defendants would provide services in connection with [* 1] proceedings at the trial court level only. (NYSCEF 9). On April 11, 2005, plaintiffs ex-wife commenced the divorce action in New York County. (NYSCEF 10). At that time, in addition to his interest in ISI Ltd., plaintiff had an ownership interest in Blue Star Jets, LLC. (NYSCEF 8, 37). Although plaintiff waived his answer and did not object to the grounds for divorce, he contested, inter alia, the distribution of marital assets. On August 15, 2005, the justice presiding in the matrimonial action so ordered the appointment of Klein Liebman & Gresen, LLC, a neutral valuation expert recommended by plaintiff and agreed to by his wife to appraise Blue Star. (NYSCEF 11). On July 16, 2007, Klein Liebman submitted its report, concluding that plaintiff owned a 45 percent interest in Blue Star valued at $4,829,000. (NYSCEF 15).”

“Defendants maintain that plaintiff’s allegation that they engaged in legal malpractice by failing to offer “appropriate evidence” at trial to establish that his interest in ISi Ltd. was only 50 percent is fatally conclusory and insufficient to state a claim for legal malpractice. (NYSCEF 8). According to plaintiff, the 2002 shareholder agreement, whereby half of ISi Ltd.’ s shares were transferred to three investors, conclusively establishes that at the time of valuation, plaintiff owned a 50 percent interest in the company. He blames defendants for failing to prove to the court’s satisfaction that he in fact owned only 50 percent, claiming that they possessed the agreement at the time of trial but negligently failed to introduce it in evidence, relying instead on 12 [* 12] plaintiffs testimony alone as to his percentage interest. Due to their failure, he argues, the court determined that he owned 60 percent, and that had they called to the court’s attention the November 2007 letter from ISi Ltd. shareholders notifying him that his interest would be further diluted, or the March 2008 letter, and offered Wilde’s testimony, the court would have found duly corroborated his claim of 50 percent ownership in ISi Ltd. (NYSCEF 37, 49). Defendants deny having possessed the 2002 shareholder agreement and 2007 and 2008 letters during the course ofrepresentation, and that in any event, the probative value of the agreement and letters is negligible. They observe that when questioned during trial about the existence of documents evidencing the sale of shares to investors, plaintiff denied any knowledge. (NYSCEF 55, 62). Although defendants initially arranged for Wilde to testify, copied plaintiff on their email correspondence with him, and sent him a check, he did not appear. In any event, they claim that plaintiff does not explain how calling Wilde would have altered the court’s decision. (Id.). B. Analysis 1. ISi Ltd. documents The 2002 shareholder agreement on which plaintiff relies establishes that 50 percent of the available shares of ISi Ltd. were transferred to investors, leaving plaintiff with, at most, a 50 percent interest before commencement of the action. Defendants’ contention that the document lacks probative value is controverted by the cover letter, in which counsel for the investors directed plaintiff to review and sign the agreement, and by the 2007 letter referencing the shareholder/investors’ then-50 percent interest. As the court described plaintiffs testimony regarding his ownership interest in ISi Ltd. as “vague” and lacking corroboration, it is reasonably 13 [* 13] inferred that the agreements would have altered the court’s final calculation (see Wahl v Wahl, 277 AD2d 445, 446 [2d 2000] [court overlooked documentary evidence revealing additional stock purchases before commencement of action and thus improperly calculated amount of IBM stock husband owed; matter remanded to trial court]), and thus plaintiff sufficiently states a cause of action in legal malpractice (see Pillard v Goodman, 82 AD3d 541, 541-542 [1st Dept 2011] [plaintiff stated cause of action in legal malpractice alleging that defendants failed to proffer documentary evidence that plaintiff was not president of company at time it was sued, which would have exonerated him from liability]; see also Biro v Roth, 121 AD3d 733, 734 [2d Dept 2014] [plaintiff stated cause of action alleging that defendants failed to incorporate certain documentation in disability application resulting in denial of benefits]). Defendants’ denial that they possessed this documentation during the trial does not entitle them to a dismissal of this claim as it does not establish that no significant dispute exists regarding this alleged fact. (See Weill v E. Sunset Park Realty, LLC, 101 AD3d 859, 860 [2d Dept 2012] [defendants’ denial of actual or constructive notice of plaintiffs’ mortgage interest insufficient to resolve issue beyond dispute and warrant dismissal under CPLR 321 l(a)(7)]; cf Fried v Tucker, 22 Misc 3d 1122[A], 2008 NY Slip Op 52656[U], *5 [Sup Ct, Kings County 2008] [plaintiffs challenge of defendant’s affirmative defense amounted to “bald and selfserving denial” warranting denial of summary dismissal of defense]). Moreover, defendants’ claim that plaintiff’s testimony reveals that he was unaware of documentation evidencing his interest in ISI Ltd. mischaracterizes his testimony, as plaintiff only denied recalling whether he had produced documentation pertaining to his receipt of the $200,000 cash distribution during the 2002 stock sale. “

A Host of Legal Malpractice Issues in a Divorce Setting

Posted in Legal Malpractice Cases

Plaintiff was a well-0ff husband facing an upcoming divorce.  He retained attorneys well in advance of the proceedings and was girded for war.  Then, things fell apart.  How did this happen, and are the attorneys to blame?

Sitomer v Goldweber Epstein, LLP  2015 NY Slip Op 31541(U)  August 14, 2015  Supreme Court, New York County  Docket Number: 158325/13
Judge: Barbara Jaffe tells us certain things.  One, if the retainer agreement says that the law firm is not required to perfect an appeal, then it will not likely be successfully sued for not taking an appeal.  The second is that if a lawfirm has evidence of diminution of value, it had better use the evidence in favor of its client.  The third is that strategic use/non-use of a witness may be subject to dismissal if the attorney can state any reason at all.

“By letter dated May l, 2002, plaintiff, then married, signed a shareholder agreement whereby he transferred to several institutional investors 2,500 or his 5,000 shares in his holding company, International Star Investments Limited (ISI Ltd.) in exchange for capital contributions. (NYSCEF 44). On April 1, 2005, plaintiff hired defendants to represent him in connection with an anticipated divorce action to be commenced against him. In signing the retainer agreement, plaintiff agreed, as pertinent here, that defendants would provide services in connection with proceedings at the trial court level only. (NYSCEF 9). On April 11, 2005, plaintiffs ex-wife commenced the divorce action in New York County. (NYSCEF 10). At that time, in addition to his interest in ISI Ltd., plaintiff had an ownership interest in Blue Star Jets, LLC. (NYSCEF 8, 37). Although plaintiff waived his answer and did not object to the grounds for divorce, he contested, inter alia, the distribution of marital assets. On August 15, 2005, the justice presiding in the matrimonial action so ordered the appointment of Klein Liebman & Gresen, LLC, a neutral valuation expert recommended by plaintiff and agreed to by his wife to appraise Blue Star. (NYSCEF 11). On July 16, 2007, Klein Liebman submitted its report, concluding that plaintiff owned a 45 percent interest in Blue Star valued at $4,829,000. (NYSCEF 15). Dissatisfied with the Klein Liebman report, defendants retained Robert Vigna, another valuation expert, to review it. By email dated September 24, 2007, Vigna sent defendants a list of “critical deficiencies” in the report, claiming that Klein Liebman wrongly relied on projected gross revenue figures instead of the lower actual figures, and that it applied “subjective and speculative” discounts to adjust for the disparity. (NYSCEF 16). On September 25, 2007, the divorce trial commenced. (NYSCEF 37). By email dated October 11, 2007, defendants approached Gordon Wilde, a director of ISI Ltd., to testify “about the dilution of [plaintiffs] stock interest in [ISI Ltd.] from 100% to 50% and the call for infusion of capital into the [real estate development] project in the amount of $675,000 for [plaintiffs] share[s].” (NYSCEF 57). Defendants followed up by email on November 2 in order to meet with Wilde and prepare him for his testimony; Wilde responded shortly thereafter and directed defendants to review his fee and expenses. (NYSCEF 58).”

Not calling a witness

” By letter dated November 20, 2007, defendants sent Wilde a $3,000 check covering his fee to testify. On a copy of the letter is a handwritten undated annotation: “Returned check to R Sitomer as Wilde not to be called at trial.” (NYSCEF 59). The trial concluded on December 7, 2007. Defendants did not call Vigna as a witness (NYSCEF 8, 37), nor did they offer in evidence the 2002 shareholder agreement or 2007 letter. ”

“Absent a basis for refuting Klein Liebman’s valuation method, and given the court’s questioning and findings and the concern that calling Vigna would undermine plaintiffs credibility, defendants have demonstrated that their decision not to call Vigna as a witness constituted a matter of strategy that, as a matter of law, forms no basis for a finding of legal malpractice. (See O’Callaghan v Brunelle, 84 AD3d 581, 581-582 [l5t Dept 2011], Iv denied 18 NY3d 804 [2012] [prior NYSE and SEC decisions revealed that uncalled witness could not help plaintiff and thus plaintiff could not establish causation]; L.l C. Commercial Corp. v Rosenthal, 202 AD2d 644, 644-645 [2d Dept 1994], Iv dismissed 84 NY2d 841 [decision not to call witness strategic as potential testimony confusing and unfavorable to plaintiff]; see also A.H Harris & Sons v Burke, Cavalier, Lindy & Engel P.C., 202 AD2d 929, 930 [3d Dept 1994] [failure to call witness appropriate course of action absent allegation of how failure fell below attorney standard of care]). Morever, as matters concerning the date of valuation of marital assets and whether to consider projected or past income figures are committed to the court’s discretion (see generally 11 [* 11] McSparron v McSparron, 87 NY2d 275, 287 [1995]), a determination that the attorney’s negligence resulted in a less favorable result is too speculative to provide a legal or factual basis for a finding of malpractice (see Grant v LaTrace, 119 AD3d 646, 647 [2d Dept 2014] [defendants’ alleged failure to remedy defects in service turned on court’s discretion in granting extension and thus required speculation as to whether different result would obtain absent attorney’s failure]; Bua v Purcell & Jngrao, P.C., 99 AD3d 843, 848 [2d Dept 2012], Iv denied 20 NY3d 857 [2013] [whether attorney’s failure to properly effect termination of contract for sale resulted in buyer later bringing action in specific performance was too speculative “inasmuch as it (was) premised on decision that were within the sole discretion of the buyer”]; see also Sierra Holdings, LLC v Phillips, Weiner, Quinn, Artura & Cox, 112 AD3d 909, 910 [2d Dept 2013] [whether attorney’s failure to notify clients of upcoming foreclosure sale resulted in their inability to recoup losses was too speculative to support claim for legal malpractice]). “

Can It Be Too Early for a Legal Malpractice Case?

Posted in Uncategorized

Kagan Lubic Lepper Findelstein & Gold LLP v 325  Fifth Ave. Condominium  2015 NY Slip Op 31470(U)  August 6, 2015  Supreme Court, New York County  Docket Number: 151878/15
Judge: Cynthia S. Kern is a goldmine of interesting writing on legal malpractice.  One question that frequently comes up is what to do when the statute of limitations is approaching yet the underlying case is still going on?

“The relevant facts according to the complaint are as follows. On or about February 25, 2015, Kagan Lubic filed its complaint against defendants seeking recovery of the attorney’s fees and expenses it allegedly incurred in its representation of defendants. Thereafter, defendants filed an answer to the complaint asserting various affirmative defenses and three counterclaims for legal malpractice, violation of Judiciary Law § 487 and a declaratory judgment that plaintiff committed legal malpractice and that plaintiff is not entitled to any legal fees for its representation of defendants.

Specifically, defendants’ answer alleges as follows. Defendants hired Kagan Lubic in October 2012 to represent them as general counsel and in an action against the sponsor of 325 Fifth and certain subcontractors arising from the defective design, construction, sale, marketing’ and management of the condominium building located at 325 Fifth Avenue, New York, New York (the “building”), which was allegedly plagued with defects from the outset. Defendants allege that Kagan Lubic failed to take even the most basic steps to secure remedies against those responsible for the defective design and construction of the Building and that for nearly two years, Kagan Lubic “churned the file” and generated enormous legal bills.through prolonged negotiations and other pre-litigation tactics that were time consuming, costly and entirely ineffective, including, inter alia, (i) retaining duplicative, superfluous experts which caused defendants to incur thousands of dollars in additional fees; (ii) engaging in futile settlement discussions for nearly eighteen months; (iii) generating enormous legal fees by spending countless hours addressing inconsequential maintenance issues in the building which, in many instances, cost Jess to remediate than the time spent addressing them; (iv) frustrating any progress toward reaching a settlement with the sponsor with respect to the maintenance issues by delaying nearly four months before responding to the sponsor’s offer to remediate certain conditions; (v) routinely raising additional maintenance issues which resulted in further delay and costs; and (vi) allowing nearly two years to lapse without filing a complaint in the action. Defendants further allege that “[b]ut for Kagan Lubic’s dilatory tactics, the defects in the Building would have been remediated by now, and the impaired value of the Condominium units in the Building resultingfrom the design and construction defects and ongoing litigation would have been restored.”

“Finally, plaintiffs assertion that defendants’ legal malpractice claim must be dismissed as premature on the ground that the underlying lawsuit in which the alleged negligent representation occurred is still ongoing is without merit. New York courts have routinely entertained malpractice actions prior to the resolution of the underlying claim which gave rise to the malpractice claim. See Rivas v. Raymond, Schwartzberg & Assoc., P LLC, 52 A.D.3d 40 (Dept 2008)(denying defendants’ motion to dismiss and allowing the legal malpractice claim to proceed “even though there has not been an adverse disposition of the action”); see also Johnston v. Raskin,  93 A.D.2d 786, 797 (2d Dept 1993)(reversing dismissal of legal malpractice claim on the basis that it was premature and holding that “contrary to the defendants’ assertions, the plaintiff could commence her action although her damages were, as yet, unconfirmed.”) Here, defendants’ counterclaim for legal malpractice is not premature notwithstanding the fact that defendants’ lawsuit against the sponsor is ongoing because defendants’ malpractice damages are not contingent on the resolution of the underlying action. “

Legal Malpractice as Self-Serving Lawyer Tactics

Posted in Uncategorized

What exactly is legal malpractice, and what is not is a constant theme for debate in this field.  Whether the attorney’s acts were strategy, departure, negligence, or merely an exaggerated version of otherwise proper attorney conduct is often a question on a CPLR 3211 motion. Kagan Lubic Lepper Findelstein & Gold LLP v 325  Fifth Ave. Condominium  2015 NY Slip Op   1470(U)
August 6, 2015  Supreme Court, New York County  Docket Number: 151878/15  Judge: Cynthia S. Kern is a case we will discuss today and on Monday.

“The relevant facts according to the complaint are as follows. On qr about February 25,
2015, Kagan Lubic filed its complaint against defendants seeking recovery of the attorney’s fees
and expenses it allegedly incurred in its representation of defendants. Thereafter, defendants filed an answer to the complaint asserting various affirmative defenses and three counterclaims for legal malpractice, violation of Judiciary Law § 487 and a declaratory judgment that plaintiffs committed legal malpractice and that plaintiff is not entitled to any legal  fees for its representation of defendants. Specifically, defendants’ answer alleges as follows. Defendants hired Kagan Lubic in October 2012 to represent them as general counsel and in an action against the sponsor of 325 Fifth and certain subcontractors arising from the defective design, construction, sale, marketing  and management of the condominium building located at 325 Fifth Avenue, New York, New York (the “building”), which was allegedly plagued with defects from the outset. Defendants allege that Kagan Lubic failed to take even the most basic steps to secure remedies against those responsible for the defective design and construction of the Building and that for nearly two  years, Kagan Lubic “churned the file” and generated enormous legal bills.through prolonged ‘ negotiations and other pre-litigation tactics that were time consuming, costly and entirely I ineffective, including, inter alia, (i) retaining duplicative, superfluous experts which caused I defendants to incur thousands of dollars in additional fees; (ii) engaging i~ futile settlement discussions for nearly eighteen months; (iii) generating enormous legal fees by spending countless hours addressing inconsequential maintenance issues in the building which, in many ‘ instances, cost Jess to remediate than the time spent addressing them; (iv) :frustrating any progress I toward reaching a settlement with the sponsor with respect to the maintenance issues by delaying nearly four months before responding to the sponsor’s offer to remediate certain conditions; (v) routinely raising additional maintenance issues which resulted in further delay and costs; and (vi) allowing nearly two years to lapse without filing a complaint in the action. Defendants further allege that “[b]ut for Kagan Lubic’s dilatory tactics, the defects in the Building would have been remediated by now, and the impaired value of the Condominium units in the Building resulting from the design and construction defects and ongoing litigation would have been restored.”

“In the instant action, defendants’ answer sufficiently states a claim for legal malpractice.
The first counterclaim alleges that plaintiff”committed legal malpractice.by failing to exercise the
skill and ability reasonably to be expected from a duly licensed attorney and/or law firm engaged in the practice of law within the State of New York by, among other things, engaging in self serving
dilatory tactics that were ineffective and designed to impede settlement discussions and untimely resolution of the dispute in order to generate enormous legal fees”and that as a result of
said breach, defendants have been damaged. Specifically, defendants’ answer alleges that
plaintiff negligently delayed the resolution of their claims against the sponsor and subcontractors
only to increase their legal fees and that as a result, defendants have sustained damages,
including, but not limited to, enormous legal fees and increased costs to investigate and address
the defective conditions throughout the building, which include expert fees and rental fees for
safety bridges and construction equipment. Additionally, defendants allege that as a direct result
of plaintiffs willful delay of the underlying claims, the building’s defects’ have yet to be
remediated and that the building’s value and defendants’ access to credit pnancing has been
impaired. It is well-settled that allegations that an attorney unreasonably: delayed the resolution
of his client’s claims are grounds for malpractice sufficient to defeat a motion to dismiss. See
Lappin v. Greenberg, 34 A.D.3d 277, 280 (I st Dept 2006)(“the complaint sufficiently asserts that
defendants’ inordinate delay … resulted in a loss of principal attributable to defendants’ lack of
professional diligence”); see also VDR Realty Corp. v. Mintz, 167 A.D.2d 986, 986-87 (4th Dept
1990)(“[factual allegations of the complaint to the effect that defendant attorney unreasonably
delayed the prosecution of a landlord-tenant holdover proceeding and engaged in dilatory tactics,
thereby increasing the attorney’s fee and causing other consequential damages, state a cause of
action for legal malpractice.”)
Plaintiffs assertion that the first counterclaim must be dismissed on the ground that its
pre-litigation tactics were a reasonable strategic decision and thus, may not constitute a claim for malpractice, is without merit. Defendants do not allege that the decision! to pursue certain pre-litigation tactics and settlement discussions with the sponsor was per se malpractice but rather that
it was the manner in which that decision was implemented and pursued that constituted malpractice. Indeed, it is well-settled that while the attorney judgment nile protects “an
attorney’s selection of one among several reasonable courses of action” from a claim for
malpractice, the immunity provided for reasonable strategic decisions does not extend to
incompetent or bad faith implementation of that decision. See Ackerman. v. Kesselman, 100
A.D.3d 577 (2d Dept 2012); see also Pillard v. Goodman, 82 A.D.3d 5411 (I st Dept 2011 ). “

A Lot of Legal Malpractice Activity over $ 15,000

Posted in Legal Malpractice Cases

The oft-repeated statement that legal fee actions invite counterclaims is amply demonstrated in Law Offs. of Ira H. Leibowitz v Landmark Ventures, Inc.  2015 NY Slip Op 06575
Decided on August 19, 2015  Appellate Division, Second Department where a lot of litigation, and an appeal has gone on regarding what appears to be a claim for $ 15,000 or so.

“The plaintiffs, Ira H. Leibowitz and his law offices, commenced this action to recover legal fees for services rendered on behalf of the defendant, Landmark Ventures, Inc. (hereinafter Landmark), in connection with two separate matters. The plaintiffs’ services on each matter were rendered pursuant to separate retainer agreements for each matter.

The Supreme Court properly granted that branch of the plaintiffs’ motion which was for summary judgment on the cause of action alleging breach of contract. “Construction of an unambiguous contract is a matter of law, and the intention of the parties may be gathered from the four corners of the instrument and should be enforced according to its terms” (Beal Sav. Bank v Sommer, 8 NY3d 318, 324; see Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475; A. Gugliotta Dev., Inc. v First Am. Tit. Ins. Co. of N.Y., 112 AD3d 559, 560). “A contract is unambiguous if the language it uses has a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion'” (Kasowitz, Benson, Torres & Friedman, LLP v Duane Reade, 98 AD3d 403, 406, affd 20 NY3d 1082, quoting Breed v Insurance Co. of N. Am., 46 NY2d 351, 355).

Here, the plaintiffs established, prima facie, their entitlement to judgment as a matter of law on the cause of action alleging breach of contract by submitting certain email exchanges between the parties, which demonstrated, “[b]y the plain language employed,” that the plaintiffs made an offer to represent Landmark in each matter for a certain fee, and that Landmark accepted that offer (Kasowitz, Benson, Torres & Friedman, LLP v Duane Reade, 98 AD3d at 405). In one matter, the parties agreed that the plaintiffs would represent Landmark at a rate of $350 per hour. The invoices documenting the number of hours worked and the amount of disbursements paid out demonstrated, prima facie, the plaintiffs’ entitlement to legal fees in the sum of $4,760 in connection with the services rendered for that matter. In the second matter, the agreement was for an initial retainer fee of $5,000, plus a 25% contingency fee with respect to any sums that Landmark ultimately recovered in that matter. Since it is undisputed that, shortly after the commencement of an action in connection with the second matter, Landmark entered into a stipulation of settlement whereby Landmark recovered $40,000, the plaintiffs established, prima facie, entitlement to their full fee of $5,000 plus a contingency fee of 25% of $40,000.

In opposition, Landmark failed to raise a triable issue of fact.

Landmark’s counterclaim, which alleged tortious interference with contract and tortious interference with prospective business relations, was premised upon the plaintiffs’ alleged contact with the third party with whom Landmark had entered into the stipulation of settlement in connection with the second matter. Specifically, Landmark alleged that, contrary to the terms of the stipulation, the plaintiffs requested that certain of the agreed-upon payments be made directly to them as Landmark’s counsel, rather than to Landmark. The ostensible purpose of this communication was to ensure that the plaintiffs would be able to deduct their legal fees from the settlement funds.”

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