Two recurring doctrines in legal malpractice tend to cull out complicated claims on a regular basis. They are both seen in Rubin v Duncan, Fish & Vogel, L.L.P. 2017 NY Slip Op 01646 Decided on March 7, 2017 Appellate Division, First Department.
Failure to schedule legal malpractice claims in either a Chapter 7 or 11 filing will divest the petitioner of those claims. This happens over and over in legal malpractice cases. Secondly, the successor attorney principle holds that when a second attorney comes into the picture with time to fix a problem, generally the first attorney is out of the picture.
“The failure of the individual plaintiffs to schedule the instant claims as assets in their Chapter 11 bankruptcies bars their pursuit of those claims (Dynamics Corp. of Am. v Marine Midland Bank-N.Y., 69 NY2d 191 ). It is immaterial that the bankruptcy court had actual knowledge of the existence of the claims (see Donaldson, Lufkin & Jenrette Sec. Corp. v Mathiasen, 207 AD2d 280, 282 [1st Dept 1994]).
However, because the Marital Trust never filed for bankruptcy, it did not lose its claims. Further, contrary to defendants’ contention, cognizable damages are pleaded by the Marital Trust’s allegations that it incurred legal fees and that it lost any source of repayment for its loans to the other plaintiffs by virtue of defendants’ malpractice. Thus, the Marital Trust alone has standing to assert the claims in this action.”
“The complaint fails to state a cause of action for malpractice based on the “recap” of accounts and balances provided in the Utah action. While defendants arguably should have found the error in the recap, the error did not cause plaintiffs any harm. It was irrelevant to the Utah proceeding. In the judgment enforcement action in the U.S. District Court for the Southern District of New York, in which the transaction was expressly litigated, plaintiffs were represented by new counsel, and neither they nor counsel corrected the error.
The complaint states a cause of action for malpractice based on the deposition advice given to Margery Rubin. The doctrine of judicial estoppel does not preclude plaintiffs from arguing against counsel that counsel’s alleged advice as to giving perjurious testimony caused injury (see D & L Holdings v Goldman Co., 287 AD2d 65, 71 [1st Dept 2001], lv denied 97 NY2d 611 ). Margery Rubin did not prevail in the Utah action by virtue of her testimony. Moreover, the District Court for the Southern District of New York expressly relied on that testimony in finding certain transfers void and entering the turnover order.”