Golub v Shalik, Morris & Co., LLP 2019 NY Slip Op 32589(U) September 3, 2019 Supreme Court, New York County Docket Number: 158055/2017
Judge: Barbara Jaffe is worth reading, simply for the long description of all the argument for/against malpractice, continuing representation, damages in a tax case, the application of future estate taxes and how a court reads this all.
The case is about a mistake in a trust set-up. “Some time before August 2012, ARG’s estate lawyer, Arlene Harris at Arnold & Porter Kaye Scholer LLP (Kaye Scholer) advised ARG to form a Qualified Personal Residence Trust (QPRT, or trust). ARG retained that firm to set up the recommended trust with his son as remainder beneficiary. On August 12, 2012, the firm completed the work in creating the trust. (NYSCEF 85).
On August 16, 2012, ARG transferred to the trust a gift of a 50 percent interest in a property in Southampton, New York. As of August 27, 2012, the entire property was appraised at $9 million. (NYSCEF 86).
By email dated May 9, 2013, Harris sent copies of the deed to the property, the first and final pages of the trust agreement, and an appraisal of the property’s fair market value to Steven Frushtick, ARG’s accountant at defendant Wiener Frushtick & Straub (WPS), stating that “only 50% of the house” had been transferred to the trust. (NYSCEF 79). By email to Harris dated May 20, 2013, Frushtick advised of the need for a discounted appraisal, that without it, the nondiscounted appraisal would be used, and that his tax attorney had informed him that the Internal Revenue Service (IRS) does not countenance the use ofresidential discounts for QPRTs.
In reply, Harris stated that it was ARG’ s decision as to whether he would pay for anotherappraisal to support a discount. ARG asked her how much a new appraisal would cost. Harris responded by asking ifhe wanted her to call about the cost. (NYSCEF 99).”
“To prevail on a claim based on professional malpractice, the plaintiff must establish that but for the alleged malpractice, the plaintiff “would not have sustained some actual ascertainable damages.” (Herbert H Post & Co. v Sidney Bitterman, Inc., 219 AD2d 214, 224 [1st Dept 1996],
quoting Franklin v Winard, 199 AD2d 220, 221 [1st Dept 1993]).
Speculative assertions that the defendant’s conduct caused the plaintiff’s damages do not suffice. (See e.g., Leff v Fulbright & aworski, L.L.P., 78 AD3d 531, 533 [1st Dept 2010], lv denied 17 NY3d 705 [2011] [damages in malpractice case “grossly speculative” where plaintiff could not establish what would have occurred but for defendants’ conduct]; Phillips-Smith Specialty Retail Grp. IL L.P. v Parker Chapin Flattau & Klimpl, LLP, 265 AD2d 208, 210 [1st Dept 1999], lv denied 94 NY2d 759 [2000] [allegations reliant on “hypothetical course of events on which any determination of damages would have to be based, involving the nature and timing of acts by plaintiffs themselves” too speculative to establish malpractice claim]; Sherwood Grp., Inc. v Dornbush, Mensch, Mandelstam & Silverman, 191AD2d292, 294 [1st Dept 1993] [allegations of damages “couched in terms of gross speculations on future events” insufficient]). “