Taxi jumps a curb and strikes a person simply standing there.  Excuse by the licensed taxi driver is that he pushed the gas and brake at the same time. Injured Plaintiff is awarded partial summary judgment and negotiations start from there.  Eventually the case is settled well in excess of the policy limits. Is there a bad faith claim against the insurer and is there a legal malpractice claim against the defense law firm?  Will there eventually be a legal malpractice claim by the insurance company against their attorneys?

Jacal Hacking Corp. v American Tr. Ins. Co.  2017 NY Slip Op 30031(U)  January 6, 2017
Supreme Court, New York County  Docket Number: 154248/12  Judge: Joan A. Madden says there may be a bad faith claim but that there is no legal malpractice claim.  It does not address the third question.

“In this action, plaintiff Jacal Hacking seeks damages against American Transit for bad faith refusal to settle an action to recover damages for personal injuries entitled Jishan Ahmad v. Bivomi M. Alshorbagi and Jacal Hacking Corp (Index No. 115755/08, Supreme Court, New York County) (the “underlying action”). Jacal Hacking also seeks damages against the Baker firm for legal malpractice in connection with its representation of Jacal Hacking in the underlying action. The underlying action involved a motor vehicle accident that occurred on May 11, 2007.

Plaintiff in the underlying action, Ahmad, was standing on the sidewalk at LaGuardia Airport, near the taxi holding area, when a taxi owned by Jacal Hacking and driven by Alshorbagi, jumped the curb and struck him. According to the police accident report, Alshorbagi stated that he accidentally pressed the gas and brake pedals at the same time. Jacal Hacking was insured by American Transit under a policy providing liability insurance coverage with a limit of $100,000 per person and a maximum of $300,000 per accident. American Transit assigned the Baker firm to defend Jacal Hacking, and assigned separate counsel for Alshorbagi.

On April 7, 2010, the Hon. George J. Silver issued a decision and order awarding plaintiff Ahmad partial summary judgment on the issue of liability. The trial on damages commenced on February 16, 2011, and the jury returned a verdict in favor of Ahmad, awarding damages in the total amount of $800,000. Defendants appealed and by a stipulation dated January 24, 2012, the parties agreed to settle the action for $410,000, with American Transit paying Ahmad $250,000 ($100,000 on the policy and an additional $150,000) and the Sheriff $5,000, and Jacal Hacking paying Ahmad $150,000 and the Sheriff $5,000.”

“First, as to the claim against American Transit, it is “well settled that an insurer may be held liable for damages to its insured for the bad faith refusal of a settlement offer.” Smith v. General Accident Insurance Co, 91NY2d648, 652 (1998). ”

“”Bad faith is established only ‘where the liability is clear and the potential recovery far exceeds the insurance coverage.”‘ Id (quoting DiBlasi v. Aetna Life & Casualty Insurance Co, 147 AD 93, 98 (2″d Dept 1989). “The bad-faith equation must include consideration of all of the facts and circumstances relating to whether the insurer’s investigatory efforts prevented it from making an informed evaluation of the risks of refusing settlement.”

“Applying the foregoing standards, the issue of American Transit’s bad faith cannot be resolved as a matter of law. Contrary to Jacal Hacking’ s assertion, the record as a whole, as presented on the motions, does not clearly and conclusively establish bad faith as defined by the Court of Appeals, i.e. that American Transit engaged in a pattern of behavior evincing a conscious or knowing indifference to the probability that Jacal Hacking would be personally accountable for a large judgment if a settlement offer within the policy limits were not accepted. Pavia v. State Farm Mutual Insurance Automobile Insurance Co, supra. Although liability was clearly determined against Jacal Hacking in April 2010 when Ahmad was awarded partial summary judgment, the record is otherwise inconclusive as to other factors bearing on the issue of bad faith. Those factors include but are not limited to whether Ahmad would have actually accepted a settlement within the limits of the policy at some time before or during trial, whether it was “highly probable” that the nature of Ahmad’s injuries and the specific circumstances surrounding the accident would result in a large verdict in excess of the policy limits, and whether American Transit kept Jacal Hacking informed of the status of settlement offers and negotiations both before and during trial. See Smith v. General Accident Insurance Co, supra; Pavia v. State Farm Mutual Automobile Insurance Co, supra. ”

“In any event, even assuming without deciding that the Baker firm was negligent in failing to communicate directly and personally with Jacal Hacking as to the status of the settlement negotiations and trial, Jacal Hacking cannot establish that such negligence was a proximate cause of the loss sustained, i.e. that but for the attorney’s negligence, the underlying action would have settled for $75,000 and Jacal Hacking would not have sustained any damages. While Jacal Hacking asserts that it lost an opportunity to settle the underlying action for $75,0000, the undisputed record shows that American Transit was solely responsible for making the decisions as to the amounts offered in settlement and the timing of each settlement offer. Notably, Jacal Backing’s general manager, Natalia Sorkin, admits as much when she states that if they had 1 · known about the underlying action and the settlement offers and demands, “we would have demanded that American Transit meet the demands of plaintiff and settle at $75,000.” Under the circumstances presented, the alleged malpractice relates to allegations of bad faith on the part of the insurer. As noted above, an insurer’s failure to communicate with its insured and keep it informed of the status of settlement offers and negotiations can constitute some evidence of bad faith. See Smith v. General Accident Insurance Co, supra at 653. Thus, given the absence of causation, Jacal Hacking cannot maintain a claim for legal malpractice and the Baker firm is entitled to summary judgment. See Leder v. Spiegel, supra. “

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Andrew Lavoott Bluestone

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened…

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened his private law office and took his first legal malpractice case.

Since 1989, Bluestone has become a leader in the New York Plaintiff’s Legal Malpractice bar, handling a wide array of plaintiff’s legal malpractice cases arising from catastrophic personal injury, contracts, patents, commercial litigation, securities, matrimonial and custody issues, medical malpractice, insurance, product liability, real estate, landlord-tenant, foreclosures and has defended attorneys in a limited number of legal malpractice cases.

Bluestone also took an academic role in field, publishing the New York Attorney Malpractice Report from 2002-2004.  He started the “New York Attorney Malpractice Blog” in 2004, where he has published more than 4500 entries.

Mr. Bluestone has written 38 scholarly peer-reviewed articles concerning legal malpractice, many in the Outside Counsel column of the New York Law Journal. He has appeared as an Expert witness in multiple legal malpractice litigations.

Mr. Bluestone is an adjunct professor of law at St. John’s University College of Law, teaching Legal Malpractice.  Mr. Bluestone has argued legal malpractice cases in the Second Circuit, in the New York State Court of Appeals, each of the four New York Appellate Divisions, in all four of  the U.S. District Courts of New York and in Supreme Courts all over the state.  He has also been admitted pro haec vice in the states of Connecticut, New Jersey and Florida and was formally admitted to the US District Court of Connecticut and to its Bankruptcy Court all for legal malpractice matters. He has been retained by U.S. Trustees in legal malpractice cases from Bankruptcy Courts, and has represented municipalities, insurance companies, hedge funds, communications companies and international manufacturing firms. Mr. Bluestone regularly lectures in CLEs on legal malpractice.

Based upon his professional experience Bluestone was named a Diplomate and was Board Certified by the American Board of Professional Liability Attorneys in 2008 in Legal Malpractice. He remains Board Certified.  He was admitted to The Best Lawyers in America from 2012-2019.  He has been featured in Who’s Who in Law since 1993.

In the last years, Mr. Bluestone has been featured for two particularly noteworthy legal malpractice cases.  The first was a settlement of an $11.9 million dollar default legal malpractice case of Yeo v. Kasowitz, Benson, Torres & Friedman which was reported in the NYLJ on August 15, 2016. Most recently, Mr. Bluestone obtained a rare plaintiff’s verdict in a legal malpractice case on behalf of the City of White Plains v. Joseph Maria, reported in the NYLJ on February 14, 2017. It was the sole legal malpractice jury verdict in the State of New York for 2017.

Bluestone has been at the forefront of the development of legal malpractice principles and has contributed case law decisions, writing and lecturing which have been recognized by his peers.  He is regularly mentioned in academic writing, and his past cases are often cited in current legal malpractice decisions. He is recognized for his ample writings on Judiciary Law § 487, a 850 year old statute deriving from England which relates to attorney deceit.