New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

Forum Shopping and Legal Malpractice

Posted in Legal Malpractice Cases

The scene was charged with energy.  A newly off-the-bench Federal District Judge was arguing in the First Department Appellate Division.  The issue was a situation in which a client had sued the law firm for legal malpractice in US District Court and the law firm had started a declaratory judgment action in state court seeking a declaration that it had done no wrong.  It was unusual to say the least.

The Appellate Division thought it odd too.  Their decision in Wachtell, Lipton, Rosen & Katz v CVR Energy, Inc.  2016 NY Slip Op 07091  Decided on October 27, 2016  Appellate Division, First Department, muted as it may be, speaks volumes.

“Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered October 2, 2014, which, to the extent appealed from, denied defendants’ motion to dismiss the claim for a declaratory judgment on the ground of another action pending, unanimously reversed, on the facts, with costs, and the motion granted. Order, same court and Justice, entered February 24, 2015, which granted plaintiff’s motion to dismiss defendant CVR Energy, Inc.’s counterclaim for legal malpractice, unanimously reversed, on the law, with costs, and the motion denied.

The court improvidently exercised its discretion in declining to dismiss the claim for a declaratory judgment against defendant CVR Energy, Inc., since there is another action pending between the parties for the same cause of action (CPLR 3211[a][4]; see Syncora Guar. Inc. v J.P. Morgan Sec. LLC, 110 AD3d 87, 95 [1st Dept 2013]). CVR’s choice of a federal forum for its earlier filed legal malpractice action against plaintiff (Wachtell) (see 28 USC § 1332 [diversity of citizenship]) is entitled to comity. Wachtell’s “use of a declaratory judgment action to determine the viability of [its] defense, or the existence of merit, to [CVR’s] legal malpractice claim” is an “unusual” practice (White & Case, LLP v Suez, SA, 12 AD3d 267, 268 [1st Dept 2004]), strongly suggestive of forum shopping, and does not warrant a deviation from the first-to-file rule (cf. National Union Fire Ins. Co. of Pittsburgh, Pa. v Jordache Enters., 205 AD2d 341, 344 [1st Dept 1994]).”

When May The Complaint Be Amended?

Posted in Legal Malpractice Cases

You might call this bootstrapping; Plaintiffs called it proper discovery.  Note that the claim was said to be late on earlier motions; now plaintiff gets to add claims for very old audits in this accounting malpractice action.

 In  Conway v Marcum & Kliegman LLP 2016 NY Slip Op 31933(U) October 11, 2016 Supreme Court, New York County Docket Number: 652236/2014  Judge Anil C. Singh notes the rules for amendment of a complaint.

“Under CPLR 3025, “[m]otions for leave to amend pleadings should be freely granted, absent prejudice or surprise resulting therefrom.” MBIA Ins. Corp. v. Greystone & Co., Inc., 74 A.D.3d 499, 500 (1st Dept 2010). While plaintiffs are not required to, establish the merits of proposed new allegations, the proposed amendments must not be “palpably insufficient or patently devoid of merit” Id. “A party opposing leave to amend must overcome a heavy presumption of validity in favor of peJ.’.mitting amendment.” McGhee v. Odell, 96 A.D.3d 449, 450 (1st Dept 2012) (internal quotations omitted}. Plaintiffs’ proposed amendments are not palpably insufficient or clearly devoid of merit. See Pier 59 Studios L.P. v. Chelsea Piers L.P., 40 A.D.3d 363, 366 (1st Dept 2007) (“Once a prima facie basis for the amendment has been established, ; that should end the inquiry.”) (citation omitted). The proposed amendments were ‘ supported by a sufficient showing of merit through the submission of an affirmation by counsel,· a redline of the proposed changes to the complaint, along with relevant ‘ documents including invoices produced by the Defendants related to the 2009 and 2010 audits’. In fact, Defendants do not contend, in their reply, that the proposed amendments are without merit.

Defendants contend that Plaintiffs motion should be denied because of undue delay. Defendants contend thatPlaintiffs should have brought this case in 2012, or even as early as 2011. However, this Court and the First Department have held that the original complaint was filed in a timely manner when this action was commenced in July 2014. Stokoe v. Marcum & Kliegman LLP, No. 6552236/2014, 2015 WL 1306995, at *5 (Sup. Ct. N.Y. Cty. Mar. 16, 2015), affd, 135 A.D.3d 645 (1st Dept 2016). Plaintiffs’ contend that the new information in the amended complaint relates to allegations concerning the 2009 and 2010 audits, which they assert they became aware of in February 2016. See AC i-fi-f 129-30, 151, 168, 217-18, 224-49 (new allegations concerning 2009 and 2010 Audits); Gross Reply Aff. i-fi-f 12-13; see also Gross Moving Aff., Exh. Z.”

“Consequently, Plaintiffs’ proposed amendments are not palpably insufficient nor do they impose undue prejudice or surprise. “

If You Can’t Prove the “But For” Portion, You Will Lose The Legal Malpractice Case

Posted in Legal Malpractice Basics

Aside from the fact that almost all of the parties to this transaction, as well as to the legal representation are dead, the point of this case is that courts will not allow speculation on what advice might have been given and how a specific person might have reacted to that advice, when there is no objective way of answering the question.

Gourary v Green  2016 NY Slip Op 06888  Decided on October 20, 2016  Appellate Division, First Department is the story of an elderly man’s disposition of a corporation and how it affected the next generation.

“Plaintiff, the administrator of the estate of his deceased father, Paul Gourary (Gourary), alleges that, in connection with the May 2006 sale of Gourary’s 50% share in a New York S-corporation to defendant Macomber, the son-in-law of the corporation’s other 50% shareholder, Oliver Laster (since deceased) (Laster), defendant Paul Green (since deceased) and his law firm, defendant Green & Ettinger, committed legal malpractice and fraud in connection with their representation of Gourary in the sale, enabling Macomber to purchase Gourary’s interest in the corporation at a steep discount.

The Green defendants established prima facie, through deposition testimony and two experts’ affidavits, that the sale was consistent with Gourary’s objectives, that Green did not represent Macomber before the deal was struck, and that the evidence did not support an inference that Green’s representation violated the ethics rules or was inconsistent with the standard of professional conduct (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]). Moreover, defendants established the absence of proximately caused damages; since “there is no way to know whether the advice not given . . . would have altered the [outcome],'” the claim of damages is speculative (id. at 436; see also Fielding v Kupferman, 104 AD3d 580 [1st Dept 2013], lv denied 21 NY3d 859 [2013]; Global Bus. Inst. v Rivkin Radler LLP, 101 AD3d 651, 652 [1st Dept 2012]).

Contrary to plaintiff’s contention, the Green defendants were not required to submit an expert opinion on the issue of causation. Unlike issues implicating “the byzantine world of immigration law” (see Suppiah v Kalish, 76 AD3d 829, 833 [1st Dept 2010], appeal withdrawn 16 NY3d 796 [2011]), the issue of causation in this case rests on the “discrete factual question” of how Gourary, a lay person, would have reacted to certain information (see Wo Yee Hing Realty Corp. v Stern, 99 AD3d 58, 63 [1st Dept 2012]).

In opposition, plaintiff failed to raise a triable issue of fact. There is no evidence that Green represented Macomber and Gourary dually in connection with the negotiations for the sale of Gourary’s share of the corporation. Before making an offer, Macomber had consulted a tax lawyer; later he retained separate counsel to provide services in connection with the transaction. Moreover, Green’s structuring of the transaction favored Gourary’s interests over those of Macomber. Plaintiff’s real estate law expert’s opinion concerning the alleged dual representation was made without the benefit of knowing what, if anything, Green and Gourary discussed with [*2]respect to the price of the sale, and assumes that there were either no such discussions or that, on Green’s side, the discussions failed to sufficiently promote Gourary’s interests. In contrast to Papaioannou v Lukas (170 AD2d 289 [1st Dept 1991]), relied upon by plaintiff, there are no questions here about the nature of advice Green provided Gourary. The nature of that advice is simply unknown.”

A Lot Going On Here Below The Surface

Posted in Legal Malpractice Cases

A New York legal malpractice case on top of a legal malpractice case on top of bad representation in a criminal case in Florida and California for a capital murder prosecution in Federal Court fairly shouts of desperation.  The fact that it was brought in New York rather than in California or Florida suggests the driving force is a grieving family member.  It all ends in dismissal.

Bloomgarden v Lanza 2016 NY Slip Op 06798 Decided on October 19, 2016  Appellate Division, Second Department is a primer on personal jurisdiction based upon the long arm statute.

” The plaintiffs commenced this action seeking damages for, inter alia, legal malpractice against the defendants, attorneys in California, who represented the plaintiffs in an action against certain Florida attorneys in Florida. The defendants moved, inter alia, pursuant to CPLR 3211(a)(8) to dismiss the complaint in this action for lack of personal jurisdiction, and the Supreme Court granted that branch of the motion. The plaintiffs appeal.

“Although the ultimate burden of proof regarding personal jurisdiction rests with the plaintiff, to defeat a CPLR 3211 (a) (8) motion to dismiss a complaint, the plaintiff need only make a prima facie showing that the defendant is subject to the personal jurisdiction of the court” (Whitecraft v Runyon, 123 AD3d 811, 812, citing Weitz v Weitz, 85 AD3d 1153 and Cornely v Dynamic HVAC Supply, LLC, 44 AD3d 986). Here, accepting as true the allegations set forth in the complaint and in the opposition to the motion, and according the plaintiffs the benefit of every favorable inference (see Whitecraft v Runyon, 123 AD3d at 812), we find that the plaintiffs failed to make a prima facie showing that the defendants were subject to personal jurisdiction in New York.”

“Here, the plaintiffs failed to show that the defendants actively projected themselves into New York to engage in a sustained and substantial transaction of business within New York, thereby purposefully availing themselves of the privilege of conducting activities in New York so as to subject them to long-arm jurisdiction pursuant to CPLR 302(a)(1) (see Paterno v Laser Spine Inst., 24 NY3d 370, 379). The defendants communicated from California with the plaintiffs in New York via mail, telephone, and email because the plaintiffs were New York domiciliaries, not because the defendants were actively participating in transactions in New York, and the communications with the plaintiffs in New York all concerned the services that the defendants were performing in Florida (see Liberatore v Calvino,293 AD2d 217, 220; Libra Global Tech. Serv. [UK] v Telemedia Intl., 279 AD2d 326; J.E.T. Adv. Assoc. v Lawn King, 84 AD2d 744, 745).

Nor did the plaintiffs establish that the defendants caused injury within New York that would subject them to long-arm jurisdiction pursuant to CPLR 302(a)(3). The residence of an injured party in New York is not sufficient to satisfy the clear statutory requirement of an “injury . . . within the state” (CPLR 302[a][3]; see McGowan v Smith, 52 NY2d 268, 274, 275). “The situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are subsequently felt by the plaintiff” (Hermann v Sharon Hosp., 135 AD2d 682, 683). Here, the alleged legal malpractice occurred in Florida.”


Parse the Facts As You Wish…The Statute is Running!

Posted in Legal Malpractice Basics

Gerschel v Christensen  2016 NY Slip Op 06794  Decided on October 18, 2016  Appellate Division, First Department brings up the inexplicable question of why plaintiffs wait so long to bring an action.  A trust dissolves, and plaintiffs don’t get their money.  They have either 3 or 6 years in which to sue.  However, nine years go by.  Why?

“The motion court providently exercised its discretion by accepting defense counsel’s excuse that he failed to make a timely motion to dismiss the amended complaint on behalf of defendants.

Except as to the tenth cause of action, defendants “set forth facts sufficient to make out a prima facie showing of a meritorious defense” (Bergen v 791 Park Ave. Corp., 162 AD2d 330, 331 [1st Dept 1990]). Plaintiffs’ claims for legal malpractice, negligence, conversion, unjust enrichment, and constructive trust accrued at the time of their injury; these claims are not subject to a discovery rule (see e.g. McCoy v Feinman, 99 NY2d 295, 301 [2002] [malpractice]; Playford v Phelps Mem. Hosp. Ctr., 254 AD2d 471, 471-472 [2d Dept 1998], lv denied 93 NY2d 806 [1999] [negligence]; Vigilant Ins. Co. of Am. v Housing Auth. of City of El Paso, Tex., 87 NY2d 36, 44 [1995] [conversion]; Kaufman v Cohen, 307 AD2d 113, 127 [1st Dept 2003] [unjust enrichment]; Knobel v Shaw, 90 AD3d 493, 496 [1st Dept 2011] [constructive trust]). The statute of limitations for malpractice, negligence, and conversion is three years (McCoy, 99 NY2d at 301; Playford, 254 AD2d at 471; Vigilant, 87 NY2d at 44); that for unjust enrichment and constructive trust is six years (Knobel, 90 AD3d at 495-496). Plaintiffs were injured in November 2001, when the Bella Meyer Trust and Francine Meyer de Camaret Trust were dissolved and plaintiffs failed to receive their share of the distributions therefrom. Thus, the statutes of limitation ran either in November 2004 or November 2007, depending on the cause of action. Plaintiffs did not sue until September 2010.”

“Where “an allegation of fraud is essential to a breach of fiduciary duty claim” (IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139 [2009]), the statute of limitations is six years (id.), and “[t]he discovery accrual rule … applies” (Kaufman, 307 AD2d at 122). Two of the plaintiffs submitted affidavits saying they did not know until early September 2008 that the trusts had been distributed in 2001. On the other hand, plaintiffs’ father submitted an affidavit [*2]saying that his sons were aware that distributions had been made by or before 2003. Where, as here, “[i]ssues of fact are created in the affidavits submitted on behalf of the opposing parties” (Bishop v Galasso, 67 AD2d 753 [3d Dept 1979]), a defendant can establish a meritorious defense and is entitled to have a default judgment vacated (id.).

When a plaintiff alleges fraud or constructive fraud (cf. Colon v Banco Popular N. Am., 59 AD3d 300, 301 [1st Dept 2009]), “[a] cause of action for negligent misrepresentation accrues on the date of the alleged misrepresentation which is relied upon by the plaintiff” (Fandy Corp. v Lung-Fong Chen, 262 AD2d 352, 353 [2d Dept 1999]). The complaint does not allege that defendants made any misrepresentation on which plaintiffs relied.”

Yes, There Are Ridiculous Legal Malpractice Suits

Posted in Legal Malpractice Cases

We read a lot of legal malpractice cases, and have heard a lot of legal malpractice dismissal motions, and some arguments are both common and predictable.  Counsel will argue that the case is ridiculous, or angrily state that it completely lacks merit, or that it was started only to avoid paying legal fees.  These arguments are usually untrue, yet, there are truly ridiculous cases that make their way into court.   For your consideration:  Peltier v Smith  2016 NY Slip Op 51476(U)  Decided on October 13, 2016  Supreme Court, Essex County  Muller, J.

“Briefly, plaintiff KarenMarie Adams (now known as KarenMarie Peltier) purchased commercial property on Front Street, Village of Keeseville, Essex County,[FN1] from Donald and Caroline Loreman in February 2003. She received funding for the transaction from the Village of Keeseville Revolving Loan Fund. She planned to operate a bed and breakfast, gift shop and/or tea room on the premises. Defendant Kathryn Wilson Smith entered into a partnership with plaintiff in the Fall of 2004 to do business together with her at the premises. Plaintiff fell behind on her payments to the Village and, by mid-2005, the Village had obtained summary judgment against plaintiff on a mortgage foreclosure action regarding the Front Street premises. In August 2005, plaintiff agreed to transfer the building to defendants Kathryn and Kenneth Smith (hereinafter referred to as the Smiths), generating funds to pay the past due amounts to the [*2]Village.[FN2] Plaintiff planned to remain in business at the premises with Kathryn Smith. Also in August 2005, an ongoing dispute between plaintiff and the prior owners (the Loremans) — who had remained as tenants operating a laundromat at the premises — escalated and resulted in an incident in which plaintiff and Kathryn Smith were charged with harassment. Defendant William Meconi, an attorney, appeared in Village Court in September 2005 and obtained an adjournment in contemplation of dismissal for plaintiff.

By December 2005, the relationship between plaintiff and Kathryn Smith had soured as plaintiff ostensibly continually neglected to make any financial contribution to the business. The business failed and the property ultimately ended up being transferred to the Smiths’ mortgagee. Believing that she had been deprived of property as a result of a multiple of wrongs by a host of individuals and entities, plaintiff commenced an action in Federal Court in 2007. She later commenced this action on November 15, 2010. In this action, plaintiff’s numerous contentions include that she had some items of personal property at the premises and she claims that, shortly after the business relationship broke down, the Smiths sold her personal property without her permission and kept the proceeds. She further contends that the Smiths together with Meconi (and others) engaged in, among other things, various coordinated efforts and nefarious conduct aimed at depriving her of her interest in the business and real property in the Village. She additionally asserts as to Meconi that, from mid-2009 through 2010, he represented an owner who evicted her from other premises located on Pulitzer Way in the Town of Jay, Essex County. She claims that this conduct by Meconi constituted, among other things, a conflict of interest.

The Smiths made a motion to dismiss this action pursuant to CPLR 3211, which the Court partially granted in October 2011 by dismissing all causes of action against the Smiths except for fraud and unjust enrichment.[FN3] Causes of action asserted against Meconi appear to include, among other things, malpractice, fraud, violation of civil rights, defamation, harassment and civil violation of the Racketeer Influenced and Corrupt Organizations Act (see 18 USC § 1961 et seq. [hereinafter RICO]). Disclosure has now been completed. Both the Smiths and Meconi have made motions for summary judgment and dismissal of the complaint.”

“Although it is difficult to discern the particular causes of action being alleged against Meconi, the Court initially finds that, to the extent plaintiff is alleging a civil rights violation and/or civil RICO claim, Meconi is entitled to summary judgment dismissing such causes of action for the reasons set forth in earlier decisions addressing similar assertions by plaintiff against others (see Decision & Order, Sup Ct, Essex County, Oct. 25, 2011, at 3-4; see also Adams v Smith, 2015 WL 4139686, 2015 US Dist Lexis 88873, supra; Adams v Smith, 2010 WL 3522310, 2010 US Dist Lexis 90729, supra). Further, “[w]ith regard to the alleged harassment, ‘New York does not recognize a common-law cause of action to recover damages for harassment'” (Wells v Town of Lenox, 110 AD3d 1192, 1193-1194 [2013], quoting Monreal v New York Dept. of Health, 38 AD3d 1118, 1119 [2007]). Turning to the apparent malpractice claim, the “[e]lements of a cause of action for legal malpractice include the existence of an attorney-client relationship, 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 plaintiff to sustain actual and ascertainable damages'” (McPhillips v Bauman, 133 AD3d 998, 999-1000 [2015], lv denied 27 NY3d 901 [2016], quotingDombrowski v Bulson, 19 NY3d 347, 350 [2012]). The elements for fraud are set forth above under the discussion of the Smiths’ motion. As for plaintiff’s defamation cause of action, “plaintiff must prove that [Meconi] made a false statement, published that statement to a third party without privilege, with fault measured by at least a negligence standard, and the statement caused special damages or constituted defamation per se” (Roche v Claverack Coop. Ins. Co., 59 AD3d 914, 916 [2009]; see Loch Sheldrake Beach & Tennis Inc. v Akulich, 141 AD3d 809, 815 [2016]).

Meconi submitted in support of his motion, among other things, his own affidavit. He states that he was retained by plaintiff in September 2005 regarding the criminal harassment charge resulting from plaintiff’s incident with the Loremans [Meconi affd.]. He made two appearances in Village Court. On September 13, 2005, he persuaded the court to lift an order of protection thus permitting plaintiff to have access to the Front Street property where her bed and breakfast (as well as Loremans’ laundromat) was located [Meconi affd.]. On September 20, 2005, he was able to get the harassment charged against plaintiff adjourned in contemplation of dismissal [Meconi affd.]. According to Meconi, his representation of plaintiff ended on September 20, 2005 and he thereafter never again represented her [Meconi affd.].

A little less four years after Meconi had represented plaintiff in Village Court, he was retained by an individual who owned a building in the Town of Jay, Essex County, where plaintiff was a tenant and she was behind on her rent [Meconi affd.]. After serving various notices, Meconi commenced an eviction proceeding against plaintiff and was eventually successful in having her evicted [Meconi affd.]. He states that no information gleaned from representing her in 2005 was relevant in any fashion when be brought the eviction proceeding against her in 2009 [Meconi affd.]. He further categorically denies conspiring with anyone regarding the Front Street property or engaging in any activity that could be considered fraudulent regarding plaintiff [Meconi affd.]. He denies defaming plaintiff and notes that the purported statements of his that she contends were defamatory are not even identified by plaintiff [Meconi affd.].

Meconi has met his burden of by producing competent proof establishing the merits of his [*5]motion. With respect to the alleged malpractice, he has shown that any representation ended in September 2005, there was no continuous representation so as to toll the statute of limitations (see e.g. Deep v Boies, 121 AD3d 1316, 1318 [2014], lv denied 25 NY3d 903 [2015]) and this action was not commenced within three years of September 2005 (see CPLR 214 [6]). Even if there was not a statute of limitations problem, Meconi’s representation produced a favorable result for plaintiff with respect to the harassment charge. During that representation, he did not obtain information which created a conflict as to the eviction proceeding that was commenced in 2009. He denies in his sworn statement conspiring with or acting in concert with anyone regarding plaintiff’s interest in the Front Street property. He has established that his conduct was neither fraudulent toward plaintiff nor did he defame her. Further, plaintiff has failed to set forth the allegedly specific defamatory words as required by law (see CPLR 3016 [a]; Matter of La Barbera v Town of Woodstock, 29 AD3d 1054, 1057 [2006], lv dismissed 7 NY3d 844 [2006]; Dillon v City of New York, 261 AD2d 34, 38 [1999]).

In opposition to Meconi’s motion, plaintiff submitted an unsworn document as she did in opposing the Smiths’ motion. This document does not have probative value and is inadequate to raise a factual issue within the context of a motion for summary judgment. Moreover, even if the Court was to consider plaintiff’s proof as competent, it fails to set forth sufficient factual allegations to defeat Meconi’s motion. Plaintiff’s submissions are — as with the Smiths’ motion — replete with conclusory comments, speculation, expressions of hope, characterizations of what she thinks witnesses would say (without producing affidavits from those witnesses), her personal opinion of the veracity of defendants and other unsubstantiated allegations. Although plaintiff is proceeding pro se and “courts will routinely afford pro se litigants some latitude, [nonetheless] a pro se litigant ‘acquires no greater right than any other litigant’ and will be held to the same standards of proof as those who are represented by counsel” (Duffen v State of New York, 245 AD2d 653, 653-654 [1997] [internal citations omitted], quoting Roundtree v Singh, 143 AD2d 995, 996 [1988]; see HSBC Bank USA N.A. v Pacyna, 112 AD3d 1246, 1247 [2013]).[FN4] Plaintiff has failed to raise a triable issue of fact and, accordingly, Meconi’s motion must also be granted.”


The Emotion of Attorney Fees

Posted in Legal Malpractice Basics

It is almost universally said at Legal Malpractice (or Professional Responsibility) CLEs that suing your clients for legal fees not paid is the surest source of a legal malpractice counterclaim.  Legal fee billing appears, anecdotally, to be the largest category of litigation involving attorneys. Exeter Law Group LLP v Immortalana Inc.  2016 NY Slip Op 31913(U)  October 11, 2016  Supreme Court, New York County  Docket Number: 161667/2014  Judge: Eileen A. Rakower  is a prime example.  From a preliminary glance, the parties have expended a couple of hundred hours of work on fees, and have barely ended the pleading stage.

“Plaintiff-counterclaim defendant The Exeter Law Group LLP (“Exeter”) brings suit to collect legal fees allegedly owed to it by Defendants. Exeter commenced this action against defendants Immortalana Inc. (“Immortalana”) and Robin Farias-Eisner (“Eisner”) by filing a Complaint on November 24, 2014 asserting six causes of action, including breach of contract (first cause of action), an account stated (second cause of action), unjust enrichment (third cause of action), quantum meruit (fourth cause of action), fraud (fifth cause of action), and tortious interference with contractual relations (sixth cause of action). On January 15, 2015, Immortalana and Eisner moved to dismiss portions of the complaint (Mot. Seq. #1) and, on June 30, 2015, the Court dismissed several of Exeter’s causes of action, including its second cause of action for an account stated, and directed Exeter to file an Amended Complaint. Exeter filed its Verified Amended Complaint on July 20, 2015. The Amended Complaint named Eisner and Immortalana as defendants, as well as Kelly Day (“Day”) and Salvaregen, Inc. (“Salvaregen”). Eisner and Day are individual defendants. Immortalana and Salvaregen are corporations in which Day and Eisner allegedly held shares and Exeter allegedly performed work on behalf of both companies. The Amended Complaint asserts the following claims: breach of contract as against Eisner and Day (first cause of action); account stated for the months of February 2013 through April 2013 as against Eisner and Day (second cause of action); unjust enrichment as against Immortalana and Salvaregen (third cause of action); quantum meruit as against Immortalana and Salvaregen (fourth cause of action); and account stated for the months of May 2012 through July 2013 as against Eisner and Day (fifth cause of action). ”

“Exeter claims that for approximately three years between 2011 and 2014, Day and Eisner, as the “clients,” engaged Exeter to represent them on two matters. On June 12, 2011, Day and Eisner executed an engagement letter engaging Exeter to provide advice “on patenting and regulatory strategy for the development of certain products that may be governed under [federal law].” On February 1, 2012, Day and Eisner executed a second engagement letter reengaging Exeter to “assist [Day and Eisner] in procuring counsel to enable Ms. Kelly Day to provide Five Hundred Thousand Dollars ($500,000.00) per year in financing from her personal funds toward the efforts of Dr. Robin Farias· Eisner to continue his research.” Exeter was to “identify and engage outside counsel” to complete the work if necessary. Exeter claims, “After uncovering irregularities and conflicts with the transactions, the Exeter Firm withdrew from the engagements.” Day and Eisner refused to pay the outstanding balance of Exeter’s invoices. Exeter commenced this action to recover those monies. ”

“As for Plaintiffs second and fifth causes of action, an account stated is “an account balanced and rendered, with an assent to the balance express or implied”. (Morrison Cohen Singer & Weinstein v. Janet L. N. Ackerman, 280 A.D.2d 355, 355-56 [1st Dep’t 2001]). ”

“Here, accepting Exeter’s allegations as true and drawing all inferences in favor of the non-moving party, the four comers of Exeter’s Amended Complaint adequately plead an account stated in the second cause of action. Turning to Exeter’s cross motion for summary judgment on the second cause of action for account stated, summary judgment, the proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law. ”

“Day’s affidavit attests to similar statements as set forth in Eisner’s affidavit. Attached to both are emails commencing August 25, 2014 between Wong, Eisner, and Day regarding billing issues. “

The Exercise of Ordinary Intelligence

Posted in Legal Malpractice Basics

The Appellate Division was shockingly clear in its enunciation of this standard, with which we were not familiar.  Plaintiffs created a unique investment strategy, and marketed it.  The IRS found fault, and assessed promoter penalty fines in excess of $7 Million.  Defendant law firm filed a bankruptcy petition, and the litigation started.  Unfortunately for Plaintiffs, Supreme Court and now the Appellate Division found it untimely.  In Hahn v Dewey & LeBoeuf Liquidation Trust
2016 NY Slip Op 06782 Decided on October 18, 2016 Appellate Division, First Department the AD used a term new to us.

“Supreme Court properly dismissed the complaint as time-barred under the three year statute of limitations applicable to professional malpractice claims (CPL 214[6]). “A legal malpractice claim accrues when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court'” (McCoy v Feinman, 99 NY2d 295, 301 [2002], quoting Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]). Here, defendants established that the causes of action alleging legal malpractice accrued in 2000-01, when they issued opinion letters and rendered advice that plaintiffs were not required to register a tax shelter (see Ackerman at 541-543; Landow v Snow Becker Krauss, P.C., 111 AD3d 795, 796 [2d Dept 2013]). Although plaintiffs claim not to have discovered that this advice was incorrect until years later, ” [w]hat is important is when the malpractice was committed, not when the client discovered it'” (McCoy v Feinman, 99 NY2d at 301, quoting Shumsky v Eisenstein, 96 NY2d 164, 166 [2001]). Therefore, since the plaintiffs did not commence this action until March 2014, more than three years after their claims for legal malpractice accrued, the complaint was properly dismissed as time-barred.

Contrary to plaintiffs’ argument, the special facts doctrine is inapplicable. The doctrine generally applies to claims of fraud in sales transactions (Jana L. v West 129th St. Realty Corp., 22 AD3d 274, 277 n2 [1st Dept 2005]). Further, at the time defendants rendered erroneous tax advice, neither the applicable statute of limitations nor precedent establishing the accrual date of [*2]malpractice claims (see Ackerman, supra) were peculiarly within defendants’ knowledge (Jana L. at 278), and that same information could have been discovered by plaintiffs through the exercise of ordinary intelligence (id.).”

The Difference Between Malpractice and Negligence

Posted in Legal Malpractice Basics

They’re the same, no?  Well, no.  Malpractice is the negligence of professionals, and simple negligence is the failure to use reasonable means.  However, Judge Mendez does a much better job of explaining in All Craft Fabricators, Inc. v Syska Hennessy Group, Inc.  2015 NY Slip Op 32239(U)  November 23, 2015  Supreme Court, New York County  Docket Number: 155408/2015 , Judge: Manuel J. Mendez.

“Plaintiff All Craft Fabricators, Inc. (herein “All Craft”) was hired by the construction manager – Skanska USA Buildings, Inc. (herein “Skanska”) – to do mill work for the refurbishment (herein “Project”) of the United Nations Headquarters (herein “UNH”), which included work on salvaged wood panels and doors within the offices of the UNH. All Craft shares offices with its affiliate, Donaldson Interiors, Inc. (herein “Donaldson” – collectively known herein as “Plaintiffs”). Plaintiffs claim the doors and panels contained toxic substances, specifically, asbestos, and that no notice of the defective condition was given to them. Plaintiffs allege that during the refurbishment of the doors and panels, due to the asbestos, they were forced to shut down their manufacturing facilities resulting in property damage, business interruption, loss of production, costs to remedy its facility, and costs to dispose of the asbestos. ”

“Plaintiffs claim that Defendant sent crates containing salvaged wood panels and doors from the UNH to perform millwork. The wood panels and doors contained asbestos. Plaintiffs contend that they were not given notice of the defective condition, [* 1] were forced to shut down their manufacturing facility, and incurred damages as a result (see Complaint, PP 12-21 ). The Complaint asserts a cause of action for negligence. Specifically, that Defendant “did not perform its work as a reasonably prudent company would under the circumstances;” did not “comply with applicable laws and regulations;” and that Defendant was “negligent” (see Complaint, PP. 29-31)”

“Defendant claims that this action is time-barred because the crates containing the toxic substance were delivered to Plaintiffs on January 23, 2013, and that Plaintiffs’ claim is for professional negligence and not simple negligence. Defendant argues that the statute of limitations on Plaintiffs’ professional negligence claim accrued on the date of delivery of the crates containing toxic substances and that the three-year statute of limitations period had expired four months prior to Plaintiffs commencing this action. “[M]alpractice in the statutory sense describes the negligence of a professional toward the person for whom he rendered a service, and that an action for malpractice springs from the correlative rights and duties assumed by the parties through the relationship. On the other hand, the wrongful conduct of the professional in rendering services to his client resulting in injury to a party outside the relationship is simple negligence” (Cubito v. Kreisberg, 69 A.D.2d 738, 742, 419 N.Y.S.2d 578, 580 [2″d Dept., 1979)). “A latent injury occurs at the time of exposure: the reason that the injury is latent is that the injury is concealed, and not visible or otherwise apparent (see Giordano v. Market Am., Inc., 15 N.Y.3d 590, 598, 915 N.Y.S.2d 884, 941 N.E.2d 727 (2010)), and the property damage results from the seepage or infiltration of a toxic foreign substance over time” (Suffolk County Water Authority v. Dow Chemical Co., 121 A.D.3d 509, 91 N.Y.S.2d 613, 620 [2″d Dept., 2014)). Plaintiffs were not in privity with Defendant. This action is based on simple negligence and CPLR 214-c applies here because the toxic condition of the doors and wood panels were a latent defect. The statute of limitations on Plaintiffs’ simple negligence accrued on June 7, 2012 when the Plaintiffs’ employees first opened the crates and sustained injuries. This action is timely. “