A Substantial Verdict, Yet No Legal Malpractice

In automobile accident cases, injured parties are due no-fault coverage and payments.  Insurance companies have the right to refuse to pay for medical treatment which is unrelated to the accident, and often refuse to pay.  Sometimes, the insurance company is correct,and sometimes it is incorrect.  The injured party's remedy is a no-fault arbitration.  A no-fault arbitration has a hidden trap of collateral estoppel.  If the arbitration of a wrongful no-fault denial is lost, the entire personal injury case can be lost too.  Often, practitioners wait, resolve the personal injury case, and then arbitrate.

In Levy v Fischman  2014 NY Slip Op 51749(U)  decided on December 15, 2014  Appellate Term, First Department and Levy v Fischman  2014 NY Slip Op 51750(U)  Decided on December 15,   2014  Appellate Term, First Department we see the result.

"This legal malpractice action arises from defendants' representation of plaintiffs in connection with personal injury and insurance claims relating to an automobile accident. Insofar as relevant to this appeal, plaintiffs allege that defendants, a law firm and its principal, agreed to "handle all medical bills and payments, including No-fault insurance and personal health insurance claims that related" to the underlying accident.

Defendants demonstrated entitlement to partial summary judgment dismissing so much of plaintiffs' legal malpractice claim as alleged a failure by defendants to pursue arbitration of the denial of plaintiff Susan Levy's claim for first-party no-fault benefits. Defendants demonstrated that their decision to forgo arbitration represented a reasonable litigation strategy (see Rodriguez v. Lipsig, Shapey, Manus & Moverman, P.C., 81 AD3d 551 [2011]), explaining that had the arbitration been pursued, any negative finding made therein as to Susan's injury and/or condition could have negatively affected plaintiffs' then-pending personal injury action (see Clemens v Apple, 65 NY2d 746 [1985]). "Attorneys are free to select among reasonable courses of action in prosecuting clients' cases without thereby exposing themselves to liability for malpractice" (Iocovello v Weingrad v Weingrad, 4 AD3d 208 [2004]).

"

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I Could Have Done It, But I Didn't. Is That Malpractice?

Christine Simmons in the New York Law Journal reports today on Stock v Schnader Harrison Segal & Lewis LLP  2014 NY Slip Op 33171(U)  December 5, 2014  Supreme Court, New York County  Docket Number: 651250/13  Judge: Melvin L. Schweitzer.  The case raises a "novel" question of intra-law office attorney privilege, and whether the client is able to pierce communications which become "at issue."  The answer from Supreme Court is "Yes."

"The Court has reviewed letters from counsel for the parties regarding defendants' withholding of 24 documents listed on defendants' privilege log as attorney-client communications, and as to one document, attorney work product. Plaintiff argues that the documents are not privileged as to him because defendants were representing him at the time, the subject of the communications was that very representation, the participants did not consider the communications to be confidential as to plaintiff, and they were aware that the continued representation would be conflicted. Defendants oppose, arguing that the communications are protected by the in-house attorney-client privilege. The court finds that the attorney-client and work product privileges do not protect any of the documents. Stock is suing law firm Schnader Harrison Segal & Lewis LLP. (Schnader), and partner Christine Carty (Carty) for malpractice and breach of fiduciary duty. The lawsuit arises from
defendants' representation of Stock in connection with his departure from employment with
MasterCard International Incorporated (MasterCard) in 2008. Stock alleges that defendants
failed to advise him that his departure would accelerate the expiration date for his stock options
worth $5 Million from ten years to between ninety and one hundred and twenty days. "

"According to Stock, after his options expired, defendants advised him to assert claims against MasterCard and its options plan administrator Morgan Stanley Smith Barney (MSSB). during the ensuing arbitration, at which Schnader attorneys other than Carty represented Stock, MSSB's counsel notified Schnader that it planned to call Carty as a fact witness concerning whether Schnader's failures in its representation of Stock contributed to the monetary losses he was seeking from MSSB. Carty consulted with Schnader partner and General Counsel Wilbur Kipnes regarding her anticipated testimony, and possible ethical issues. She was prepared for the arbitration by Schnader attorney Cynthia Murray (Murray). Murray and Schnader attorney
Thomas Hecht (Hecht) were assigned to simultaneously represent Stock in the arbitration.
The deposition transcript excerpts, attorney notes, and additional exhibits submitted by
plaintiff show that when Carty, Kipnes, Hecht and Murray were communicating about Carty's
upcoming testimony, they did not expect their communications to be confidential as to their
current client, Stock. Carty testified at her deposition that: she understood that anything she
stated to Murray would be disclosed to Stock; and she had no expectation one way or the other
that Hecht would keep her forwarded e-mail with Kipnes confidential as to Stock."

"Finally, the documents fall under the "at issue" waiver, and defendants cannot selectively disclose self-serving documents regarding the same subject matter. The "at issue" waiver of the privilege occurs where a party affirmatively places the subject matter of its own privileged communication at issue in litigation, so that invasion of the privilege is required to determine the validity of a claim or defense of the party asserting the privilege, and application of the privilege 3 [* 3]would deprive the adversary of vital information. Credit Suisse First Boston v Utrecht-America Fin. Co., 27 AD3d 253, 254 (1st Dept 2006). "

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I Could Have Done It, But I Didn't. Is That Malpractice?

Christine Simmons in the New York Law Journal reports today on Stock v Schnader Harrison Segal & Lewis LLP  2014 NY Slip Op 33171(U)  December 5, 2014  Supreme Court, New York County  Docket Number: 651250/13  Judge: Melvin L. Schweitzer.  The case raises a "novel" question of intra-law office attorney privilege, and whether the client is able to pierce communications which become "at issue."  The answer from Supreme Court is "Yes."

"The Court has reviewed letters from counsel for the parties regarding defendants' withholding of 24 documents listed on defendants' privilege log as attorney-client communications, and as to one document, attorney work product. Plaintiff argues that the documents are not privileged as to him because defendants were representing him at the time, the subject of the communications was that very representation, the participants did not consider the communications to be confidential as to plaintiff, and they were aware that the continued representation would be conflicted. Defendants oppose, arguing that the communications are protected by the in-house attorney-client privilege. The court finds that the attorney-client and work product privileges do not protect any of the documents. Stock is suing law firm Schnader Harrison Segal & Lewis LLP. (Schnader), and partner Christine Carty (Carty) for malpractice and breach of fiduciary duty. The lawsuit arises from
defendants' representation of Stock in connection with his departure from employment with
MasterCard International Incorporated (MasterCard) in 2008. Stock alleges that defendants
failed to advise him that his departure would accelerate the expiration date for his stock options
worth $5 Million from ten years to between ninety and one hundred and twenty days. "

"According to Stock, after his options expired, defendants advised him to assert claims against MasterCard and its options plan administrator Morgan Stanley Smith Barney (MSSB). during the ensuing arbitration, at which Schnader attorneys other than Carty represented Stock, MSSB's counsel notified Schnader that it planned to call Carty as a fact witness concerning whether Schnader's failures in its representation of Stock contributed to the monetary losses he was seeking from MSSB. Carty consulted with Schnader partner and General Counsel Wilbur Kipnes regarding her anticipated testimony, and possible ethical issues. She was prepared for the arbitration by Schnader attorney Cynthia Murray (Murray). Murray and Schnader attorney
Thomas Hecht (Hecht) were assigned to simultaneously represent Stock in the arbitration.
The deposition transcript excerpts, attorney notes, and additional exhibits submitted by
plaintiff show that when Carty, Kipnes, Hecht and Murray were communicating about Carty's
upcoming testimony, they did not expect their communications to be confidential as to their
current client, Stock. Carty testified at her deposition that: she understood that anything she
stated to Murray would be disclosed to Stock; and she had no expectation one way or the other
that Hecht would keep her forwarded e-mail with Kipnes confidential as to Stock."

"Finally, the documents fall under the "at issue" waiver, and defendants cannot selectively disclose self-serving documents regarding the same subject matter. The "at issue" waiver of the privilege occurs where a party affirmatively places the subject matter of its own privileged communication at issue in litigation, so that invasion of the privilege is required to determine the validity of a claim or defense of the party asserting the privilege, and application of the privilege 3 [* 3]would deprive the adversary of vital information. Credit Suisse First Boston v Utrecht-America Fin. Co., 27 AD3d 253, 254 (1st Dept 2006). "

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Relatives and Legal Malpractice

This case illustrates the potential mess a law firm can get itself into when it allows employees and their families to do business with them.  This particular case, Rodolico v Rubin & Licatesi, P.C.
2014 NY Slip Op 01308 [114 AD3d 923]  February 26, 2014  Appellate Division, Second Department led to legal malpractice litigation, commercial litigation, and most likely, a change of employees at the law firm.

"The plaintiff's sister worked for the defendant law firm, in which the individual defendants are partners. During his sister's employment, the plaintiff came to learn of an investment opportunity being organized by the defendants, which involved providing high interest, short-term loans for the development of real estate. The plaintiff and his wife decided to participate. Two bank checks, one of which was purchased by the plaintiff's wife and bore only her name, were forwarded to the defendants for the purpose of making two loans. When these two loans were not repaid in full, the plaintiff commenced this action seeking to recover from the defendants the money that he was owed, claiming that the defendants effectively borrowed the money from him (first and second causes of action). In the alternative, the plaintiff sought damages for legal malpractice (third cause of action). "

"The Supreme Court also properly denied that branch of the defendants' cross motion which was to dismiss the complaint pursuant to CPLR 3211 (a) (1). A motion pursuant to CPLR 3211 (a) (1) to dismiss a complaint on the ground that a defense is founded on documentary evidence "may be appropriately granted only where the documentary evidence utterly refutes [the] plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; see Parkoff v Stavsky, 109 AD3d 646 [2013]; Benson v Deutsche Bank Natl. Trust, Inc., 109 AD3d 495 [2013]). Further, the evidence submitted in support of a motion pursuant to CPLR 3211 (a) (1) to dismiss a complaint on the ground that a defense is founded on documentary evidence "must be documentary or the motion must be denied" (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d 713, 714 [2012], quoting Fontanetta v John Doe 1, 73 AD3d 78, 84 [2010] [internal quotation marks omitted]; see Rodolico v Rubin & Licatesi, P.C., 112 AD3d at 610). " '[N]either affidavits, deposition testimony, nor letters are considered documentary evidence within the intendment of CPLR 3211 (a) (1)' " (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714, quoting Granada Condominium III Assn. v Palomino, 78 AD3d 996, 997 [2010]; see Rodolico v Rubin & Licatesi, P.C., 112 AD3d at 610; Suchmacher v Manana Grocery, 73 AD3d 1017 [2010]; Fontanetta v John Doe 1, 73 AD3d at 86)."

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Relatives and Legal Malpractice

This case illustrates the potential mess a law firm can get itself into when it allows employees and their families to do business with them.  This particular case, Rodolico v Rubin & Licatesi, P.C.
2014 NY Slip Op 01308 [114 AD3d 923]  February 26, 2014  Appellate Division, Second Department led to legal malpractice litigation, commercial litigation, and most likely, a change of employees at the law firm.

"The plaintiff's sister worked for the defendant law firm, in which the individual defendants are partners. During his sister's employment, the plaintiff came to learn of an investment opportunity being organized by the defendants, which involved providing high interest, short-term loans for the development of real estate. The plaintiff and his wife decided to participate. Two bank checks, one of which was purchased by the plaintiff's wife and bore only her name, were forwarded to the defendants for the purpose of making two loans. When these two loans were not repaid in full, the plaintiff commenced this action seeking to recover from the defendants the money that he was owed, claiming that the defendants effectively borrowed the money from him (first and second causes of action). In the alternative, the plaintiff sought damages for legal malpractice (third cause of action). "

"The Supreme Court also properly denied that branch of the defendants' cross motion which was to dismiss the complaint pursuant to CPLR 3211 (a) (1). A motion pursuant to CPLR 3211 (a) (1) to dismiss a complaint on the ground that a defense is founded on documentary evidence "may be appropriately granted only where the documentary evidence utterly refutes [the] plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; see Parkoff v Stavsky, 109 AD3d 646 [2013]; Benson v Deutsche Bank Natl. Trust, Inc., 109 AD3d 495 [2013]). Further, the evidence submitted in support of a motion pursuant to CPLR 3211 (a) (1) to dismiss a complaint on the ground that a defense is founded on documentary evidence "must be documentary or the motion must be denied" (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d 713, 714 [2012], quoting Fontanetta v John Doe 1, 73 AD3d 78, 84 [2010] [internal quotation marks omitted]; see Rodolico v Rubin & Licatesi, P.C., 112 AD3d at 610). " '[N]either affidavits, deposition testimony, nor letters are considered documentary evidence within the intendment of CPLR 3211 (a) (1)' " (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714, quoting Granada Condominium III Assn. v Palomino, 78 AD3d 996, 997 [2010]; see Rodolico v Rubin & Licatesi, P.C., 112 AD3d at 610; Suchmacher v Manana Grocery, 73 AD3d 1017 [2010]; Fontanetta v John Doe 1, 73 AD3d at 86)."

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Judiciary Law 487 Claim Survives Dismissal Motion

Many Judiciary Law 487 claims are challenged by motion before an answer is filed.  A high percentage of the motions are granted.  Mazel 315 W. 35th LLC v 315 W. 35th Assoc. LLC
2014 NY Slip Op 06252 [120 AD3d 1106]  September 23, 2014  Appellate Division, First   Department is one case in which the motion was denied.

"Defendant failed to demonstrate that the Judiciary Law § 487 cause of action has no merit. Plaintiff's evidence showing that defendant presented false assignment documents for recordation in the City Register and sent a letter to the justice stating falsely that his client was the true owner of the notes and mortgages establishes an egregious act of intentional deceit of the court sufficient to support the cause of action (see Kurman v Schnapp, 73 AD3d 435, 435 [1st Dept 2010]). Defendant denies that he was involved in the recordation of the false documents and asserts that he did not intend to deceive the court. These assertions are insufficient to warrant judgment as a matter of law in defendant's favor; they merely raise issues of fact. Moreover, the parties dispute many of the underlying facts of this matter, and no discovery has been conducted. Since defendant has not established that he had no intent to deceive, his contention that he is immune from liability because he was merely engaged in zealous advocacy is unavailing (see Lazich v Vittoria & Parker, 189 AD2d 753 [2d Dept 1993], appeal dismissed [*2]81 NY2d 1006 [1993]; Alliance Network, LLC v Sidley Austin LLP, 43 Misc 3d 848, 859-860 [Sup Ct, NY County 2014])."

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Suing Your Wife's Attorney is Very Difficult

In a textbook example of the reason for social policy. Tenore v Kantrowitz, Goldhamer & Graifman, P.C.  2014 NYSlipOp 06811 October 8, 2014 Appellate Division, Second Department shows why privity is an essential part of the legal malpractice world.  Were litigants able to sue their opponent's attorney, there would be a legal malpractice case after every regular case.

Courts are very conservative with Judiciary Law 487 claims for the same reason.  Were a 487 claim to depend merely upon a bad outcome, and a claim that the opponent's attorney was deceitful, there would be a separate docket of JL 487 cases in every county.  Hence, the short decision.

"The plaintiff commenced this action against the defendant law firm, which represented his former wife in a matrimonial action against him, alleging a violation of Judiciary Law § 487, fraud, and abuse of process. The plaintiff alleged, inter alia, that the defendant included in the underlying matrimonial action a cause of action to recover damages for assault that was without any factual basis, in an attempt to extract additional money from him in the course of that litigation. The defendant moved for summary judgment dismissing the complaint in the instant action, and the plaintiff cross-moved for leave to amend that complaint to add causes of action to recover damages for a violation of General Business Law § 349, prima facie tort, and malicious prosecution. The Supreme Court granted the defendant's motion and denied the plaintiff's cross motion.

The Supreme Court properly granted that branch of the defendant's motion which was for summary judgment dismissing the cause of action alleging a violation of Judiciary Law § 487. The defendant demonstrated its prima facie entitlement to judgment as a matter of law by establishing its lack of intent to deceive (see Dupree v Voorhees, 102 AD3d 912, 913 [2013]). In opposition, the plaintiff failed to raise a triable issue of fact."

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What is the Statute of Limitations for Judiciary Law 487?

There is now a formal split between the First and Second Departments on the appropriate statute of limitations for Judiciary Law 487.  The second department recently determined that if the JL 487 claim is made in a case with a legal malpractice claim, then the statute of limitaitons is 3 years pursuant to CPLR 214(6).  The First Department, citing Melcher v. Greenberg Traurig LLP, holds that it is 6 years, as did the Court of Appeals.  In McDonald v Edelman & Edelman, P.C.  2014 NY Slip Op 04560 [118 AD3d 562]  June 19, 2014  Appellate Division, First Department it wrote:

"The fourth cause of action, which alleges a violation of Judiciary Law § 487, is timely because it was asserted within six years of plaintiff's receipt of defendants' June 2008 letter (see CPLR 214 [2]; Melcher v Greenberg Traurig, LLP, 102 AD3d 497 [1st Dept 2013]). However, the complaint nevertheless fails to state a cause of action under the statute, since it does not allege that plaintiff suffered any injury proximately caused by any deceit or collusion on counsel's part, and no such injury can reasonably be inferred from the allegations (see Bohn v 176 W. 87th St. Owners Corp., 106 AD3d 598, 600 [1st Dept 2013], lv dismissed in part, denied in part 22 NY3d 909 [2013])."

So, which is it?

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If There Is Another Explanation, Then No Judiciary Law Violation

Police officer is out sick.  Police Department rule is that you must stay in your home, and they go to great lengths to check up on those officers.  In Pannone v Silberstein  2014 NY Slip Op 03944 [118 AD3d 413]  June 3, 2014  Appellate Division, First Department  the officer was subject to a disciplinary hearing and he was fired.  His remedy was an Article 78 challenging whether the decision was arbitrary and capricious.  That article 78 was lost because the attorney did not timely perfect.  Legal malpractice?  Violation of Judiciary Law 487?

No to both.  "To recover damages for legal malpractice, a [*2]plaintiff must demonstrate that the attorney defendant " '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" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]). "To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer's negligence" (id.). The court below granted defendants' motions for summary judgment, finding the "but for" element lacking because plaintiff would not have prevailed in the underlying article 78 proceeding. We agree.

The giving of false statements in the course of an official investigation has been upheld as a ground for dismissal from municipal employment (see Matter of Duncan v Kelly, 9 Misc 3d 1115[A], 2005 NY Slip Op 51558[U] [Sup Ct, NY County 2005] [also involved a GO-15 interview], affd 43 AD3d 297 [1st Dept 2007], affd 9 NY3d 1024 [2008]; see also Matter of Loscuito v Scoppetta, 50 AD3d 905 [2d Dept 2008], lv denied 13 NY3d 716 [2010]). There is no merit to plaintiff's argument that the state of the law in 2000, when the article 78 proceeding was brought, would have dictated a different result (see e.g. Matter of Swinton v Safir, 93 NY2d 758, 763 [1999] [dishonest statements to police department investigators constituted an independent basis for dismissal]).

The cause of action based on Judiciary Law § 487 was properly dismissed inasmuch as the record does not establish a "chronic and extreme pattern of legal delinquency" (Kinberg v Opinsky, 51 AD3d 548, 549 [1st Dept 2008] [internal quotation marks omitted]). The breach of contract cause of action, which is based on defendants' alleged failure to represent plaintiff in a professional manner, was also properly dismissed. A breach of contract claim premised on an attorney's failure to exercise due care or to abide by general professional standards is nothing more than a malpractice claim (Sage Realty Corp. v Proskauer Rose, 251 AD2d 35, 38-39 [1st Dept 1998]).

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Judiciary Law 487 is Truly Disliked and Disfavored

Courts are loathe to apply Judiciary Law 487, and when they do, the Appellate Division often reverses.  Here,Lifeline Funding, LLC v Ripka  2014 NY Slip Op 01106 [114 AD3d 507]
February 18, 2014  Appellate Division, First Department serves as an example.  Plaintiff succeeded in obtaining a misdemeanor conviction for the common law violation of Judiciary Law 487 along with treble damages.  This is an unheard of accomplishment. Unheard of! 

So, the Appellate Division reverses.  "This Court finds, however, that the motion court erred in finding that defendant violated Judiciary Law § 487. Defendant did not engage in the "extreme pattern of legal delinquency" [*2]required to violate the statute (Gonzalez v Gordon, 233 AD2d 191, 191 [1st Dept 1996], lv denied 90 NY2d 802 [1997] [internal quotation marks omitted] [defendant attorney's disbursement of $39,000 in escrow funds without plaintiff's authority did not support an award of treble damages]; Wiggin v Gordon, 115 Misc 2d 1071, 1077 [Civil Ct, Queens County 1982] [defendant attorney who repeatedly told plaintiff he would pay taxes on the estate, never did so and then defaulted on the Judiciary Law § 487 proceedings brought against him engaged in "chronic, extreme pattern of legal delinquency"]). Although we do not condone defendant's actions, his conduct does not constitute "an extreme case" of attorney misconduct (Wiggin, 115 Misc 2d at 1071)."

 

 

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Judiciary Law 487 in a Commercial Setting

Judiciary Law 487 is a powerful common law tool for use in legal malpractice and attorney deceit settings.  However, it can be overused.  Overuse dilutes its power, and causes judges to, in effect, roll their eyes at the mere mention. AQ Asset Mgt., LLC v Levine  2014 NY Slip Op 05244 [119  AD3d 457]  July 10, 2014  Appellate Division, First Department  is an example.

"By an amended stock purchase agreement (SPA) effective December 9, 2005, defendants Habsburg and Patrizzi (together the sellers) agreed to sell half of the shares in a group of companies (the Antiquorum entities) to Artist House Holdings, Inc. (Artist House), predecessor to plaintiff AQ Asset Management, LLC (AQ). [FN1]The Antiquorum entities included plaintiffs Antiquorum, S.A. (ASA) and Antiquorum USA, Inc. Defendant Michael Levine, an attorney, provided legal counsel to the sellers, drafted the SPA and other transaction documents, and served as the escrow agent for the deal. Plaintiff Evan Zimmermann, also an attorney, helped broker the  transaction and is alleged by the sellers to have been their legal counsel throughout.
The SPA provided that the sellers would receive $30 million in cash, as well as proceeds from the sale of certain inventory held by the Antiquorum entities. In order to pay the book value of the inventory, the SPA provided that ASA was to execute a promissory note obligating it to pay, to an unspecified third party, the sum of 16 million Swiss Francs (CHF) within six months of the SPA's execution date. The SPA further provided that, "[a]lternatively, Patrizzi may become personally responsible [for payment of the CHF 16 million] to any Stockholder which is entitled thereto."
The parties agreed that the CHF 16 million was to be paid from the sale of inventory on hand and owned by the Antiquorum entities as of the date of the SPA. The SPA also required Patrizzi to put the inventory up for sale before the due date of the promissory note, and provided that any funds received in excess of the CHF 16 million would belong to Patrizzi or his designees. According to the sellers, Habsburg was entitled to the first CHF 16 million in inventory sale proceeds and Patrizzi was entitled to the remainder. It is undisputed that ASA never executed a promissory note, and the sellers contend that they received no proceeds from the sale of inventory .

The motion court correctly dismissed the ninth and tenth causes of action in the fourth-party complaint alleging legal malpractice against Levine, and the seventeenth counterclaim alleging legal malpractice against Zimmermann, as barred by the three-year statute of limitations (see CPLR 214 [6]; Champlin v Pellegrin, 111 AD3d 411 [1st Dept 2013]). These claims accrued no later than August 2007, when the sellers became aware of Levine's and Zimmermann's alleged betrayal and any attorney-client relationship had come to an end. Since the claims were not brought until, at the earliest, December 2010, when this action was commenced, they are untimely.

Contrary to the sellers' contention, the statute of limitations was not tolled by alleged fraudulent concealment (see Simcuski v Saeli, 44 NY2d 442, 448-449 [1978]). Any improper collaboration between Levine and Zimmermann would have come to light no later than August 2007 and thus, there could be no tolling after that date. Nor was the limitations period tolled by continuous representation (see Matter of Merker, 18 AD3d 332, 332-333 [1st Dept 2005]). Communications dated after August 2007 do not demonstrate that Levine and Zimmermann continued to represent the sellers. In light of the dismissal of the malpractice claims against Levine, the motion court properly dismissed the eleventh cause of action in the fourth-party complaint seeking forfeiture of Levine's legal fees.

The sixth interpleader counterclaim and seventh cause of action in the fourth-party complaint, which allege that Levine violated Judiciary Law § 487 by bringing his interpleader claims without informing the court of his purported business relationship with Zimmermann, were properly dismissed. The absence of such information in Levine's interpleader pleading does not rise to the level of "withholding of crucial information from a court" or "conceal[ing] from a court . . . a fact . . . required by law to [be] disclose[d]" (see Melcher v Greenberg Traurig, LLP, 102 AD3d 497, 500 [1st Dept 2013], revd on other grounds 23 NY3d 10 [2014])."

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Wife's Case Dismissed; Husband's Case Survives in Legal Malpractice

Standing is a very important issue in legal malpractice.  The public policy reasoning behind this stiff standard is that every case, whether criminal or civil would be followed by a legal malpractice case if standing were not an issue.  So it is in Arnold v Devane  2014 NY Slip Op 08534  Decided on December 4, 2014  Appellate Division, Third Department

The wife's case: 
"Initially, we agree with defendant's assertion that Supreme Court should have dismissed Arnold's claims because there was no attorney-client relationship between her and defendant upon which a legal malpractice claim can be based. A legal malpractice claim requires the existence of an attorney-client relationship (see Huffner v Ziff, Weiermiller, Hayden & Mustico, LLP, 55 AD3d 1009, 1011 [2008]; Peak v Bartlett, Pontiff, Stewart & Rhodes, P.C., 28 AD3d [*2]1028, 1030 [2006]; Tabner v Drake, 9 AD3d 606, 609 [2004]). Here, the complaint alleges that plaintiff retained defendant to act as his attorney to defend him against the criminal charges. It does not allege an attorney-client relationship between Arnold and defendant; the entirety of Arnold's claim is derivative in nature. "

The Husband's cased:

"In a legal malpractice claim, proximate cause is established by demonstrating that "but for the attorney's negligence, [the plaintiff] would have prevailed in the underlying matter or would not have sustained any ascertainable damages" (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 115 AD3d 228, 236-237 [2014] [internal quotation marks and citation omitted]; accord Brooks v Lewin, 21 AD3d 731, 734 [2005], lv denied 6 NY3d 713 [2006]; see Tabner v Drake, 9 AD3d at 610; see also Gioeli v Vlachos, 89 AD3d 984, 985 [2011]; Bishop v Maurer, 33 AD3d 497, 498 [2006], affd 9 NY3d 910 [2007]). Stated differently, "[t]he test is whether a proper defense would have altered the result of the prior action" (Carmel v Lunney, 70 NY2d 169, 173 [1987] [internal quotation marks and citation omitted]) which, in the context of a criminal action, requires proof that the criminal defendant would not have been convicted (see Britt v Legal Aid Socy., 95 NY2d 443, 446 [2000]). Further, "[f]or malpractice actions arising from allegations of negligent representation in a criminal matter, the plaintiff must have at least a colorable claim of actual innocence" (Dombrowski v Bulson, 19 NY3d 347, 350-351 [2012]; see Britt v Legal Aid Socy., 95 NY2d at 446-447). We find that a colorable claim has been demonstrated here based upon plaintiff's expressed assertions of innocence, together with our reversal of the judgment of conviction, as well as the District Attorney's decision not to reprosecute plaintiff and the consequent dismissal of the indictment (see generally Carmel v Lunney, 70 NY2d at 173).

Although defendant acknowledges some errors in his representation of plaintiff and offers explanations for his trial strategies and failures, he argues nevertheless that none of his deficiencies caused plaintiff's conviction. We reject defendant's assertion that our previous determination that the conviction was in accord with the weight of the evidence precludes a finding that plaintiff would not have been convicted in the absence of defendant's alleged [*3]deficiencies. Our evaluation of the weight of the evidence was based upon the evidence as it was presented to the jury and does not resolve the question of whether plaintiff would have been convicted had counsel been effective. Similarly, defendant's argument that plaintiff's conviction was based on the jury's finding that the victim was credible, and not on his own failures, ignores the fact that this Court expressly found defendant's representation to be ineffective, in part, because he did not sufficiently challenge the victim's credibility or impeach the victim with her prior inconsistent statements — actions that were essential to mount an effective defense precisely because "the People's case rested almost entirely upon the credibility of the victim" (People v Arnold, 85 AD3d at 1333).

In addition, in reversing the judgment of conviction, we noted, among other things, defendant's "directionless and largely ineffective" questioning of plaintiff's own witnesses, as well as the fact that defendant elicited testimony from those witnesses which served to bolster the People's case (id. at 1334). Defendant's motion is devoid of competent proof establishing that plaintiff would have been convicted, even in the absence of the multiple deficiencies that were described. Thus, although we recognize that, inasmuch as plaintiff was not retried and acquitted it may be difficult for him to ultimately meet his burden of establishing at trial that he would not have been convicted in the absence of defendant's negligence (see Britt v Legal Aid Socy., 95 NY2d at 446-447), we find that defendant failed to meet his prima facie burden on this motion of establishing a lack of proximate cause (compare Bixby v Somerville, 62 AD3d 1137, 1139 [2009]). Therefore, the burden never shifted to plaintiff to demonstrate a triable issue of fact.

Nor has defendant met his initial burden of establishing plaintiff's inability to prove damages. Contrary to defendant's argument, plaintiff has sufficiently alleged pecuniary damages (see Dombrowski v Bulson, 19 NY3d at 350-351; Brownell v LeClaire, 96 AD3d 1336, 1338 [2012]), i.e., damages that "compensate the victim for the economic consequences of the injury" (Wilson v City of New York, 294 AD2d 290, 292 [2002] [internal quotation marks and citation omitted]). We have examined defendant's remaining contentions and find them to be lacking in merit."

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A Second Try Proves Ineffectual

The overwhelming effect of an attorney fee award on legal malpractice cannot be overstated.  The general understanding is that no fee may be awarded to an attorney if there has been malpractice, hence, if an award is made, there could have been no malpractice.  So, when the attorney gets his awarded fees, that wipes out the legal malpractice case. 

This principal was the basis of Raghavendra v Brill  2014 NY Slip Op 33035(U)  November 26, 2014 Supreme Court, New York County Docket Number: 600002/2011 Judge: Lucy Billings.

"Plaintiff seeks reargument, C.P.L.R. § 2221(d) (2), insisting he court erroneously held that the United States District Court's decision entitling defendants Stober and the Law Office of Louis D. Stober to attorneys' fees for representing plaintiff, Raghavendra v. Trustees of Columbia Univ., 686 F. Supp. 2d 332, 336 (S.D.N.Y. 2010), aff'd in part and vacated in part, 434 F. App'x 31 (2d Cir. 2011), barred his legal malpractice claims against the Stober defendants under the doctrine of res judicata.  C.P.L.R. § 3211{a) (5). Plaintiff seeks renewal, C.P.L.R. § 2221(e) (2), claiming new facts that constitute defendants' continuing violation of his rights. The only claims that the court dismissed in this action based on the applicable statute of limitations, C.P.L.R. §§ 215(3), 3211(a) (5), however, were plaintiff's claims of intentional infliction of emotional distress and abuse of judicial process by the Stober defendants, Spinale v. 10 West 66th St. Corp., 291 A.D.2d 234, 235 (1st Dep't 2002), and his claim of intentional wrongdoing, which the court construed as a claim for a prima facie tort. Casa de Meadows Inc. (Cayman Is.) v. Zaman, 76 A.D.3d 917, 921 (1st Dep't 2010).

Plaintiff's reiteration of a lack of opportunity to litigate the Stober defendants' misconduct and malpractice in the federal district court's adjudication of the parties' attorneys' fees dispute does not point to any facts that this court overlooked. Instead, he claims that the authority the court relied on, Finkel v. New York City Hous. Auth., 89 A.D.3d 492 (1st Dep't 2011); Bettis v. Kelly, 68 A.D.3d 578 (1st Dep't 2009).; Urlic v. Insurance Co. of State of Penn., 259 A.D.2d 1 (1st Dep't 1999);
and Uzamere v. Uzamere, 89 A.D.3d 1013 (2d Dep't 2011), was inapposite because the plaintiffs in those actions had an opportunity to litigate the merits of their claims in a prior action. See Bisk v. Manhattan Club Timeshare Ass'n, Inc., 118 A.D.3d 585, 585 (1st Dep't 2014). His argument completely ignores this court's analysis and determination that the federal district court's conclusion regarding the Stober defendants' entitlement to fees was on the merits and arose from the same transactions and occurrences as his malpractice claims in this action. RM 18 Corp v. Bank of N.Y. Mellon Trust Co., N.A.,  104 A.D.3d 752, 756 (2d Dep't 2013); Uzamere v. Uzamere, 89 A.D.3d at 1014. See Insurance Co. of State of Pa. v. HSBC Bank of USA, 10 N.Y.3d 32, 39 (2008). "

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Can Judiciary Law 487 Apply to Settlement Negotiations?

Judiciary Law 487, the attorney-deceit rule, applies when an attorney attempts or succeeds at deceit of the court or to a party. That broad rule was undercut in Wailes v Tel Networks USA, LLC, 2014 NY Slip Op 02861 [116 AD3d 625], April 24, 2014 Appellate Division, First Department which discounted any application of JL 487 to settlement negotiations

The allegations of Snyder's conduct in his representation of defendant Tel Networks USA, LLC during settlement discussions with plaintiff, which plaintiff characterizes as "overzealous and intimidating," do not state a cause of action under Judiciary Law § 487. The complaint alleges neither an intent to deceive nor "a chronic and extreme pattern of legal delinquency" that caused plaintiff a loss (Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 13 [1st Dept 2008] [internal quotation marks omitted], lv denied 12 NY3d 715 [2009] Nason v Fisher, 36 AD3d 486, 487 [1st Dept 2007]). Moreover, the only allegations of wrongdoing refer to a settlement discussion had after Tel Networks commenced a legal proceeding, and that communication is absolutely privileged (see Wiener v Weintraub, 22 NY2d 330 [1968] Mosesson v Jacob D. Fuchsberg Law Firm, 257 AD2d 381, 382 [1st Dept 1999], lv denied 93 NY2d 808 [1999]). Concur—Sweeny, J.P., Acosta, Saxe, Manzanet-Daniels and Clark, JJ.

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You Get One Chance in Legal Malpractice and Judiciary Law 487

Plaintiff was sued for fees and defended the case.  Plaintiff lost.  Plaintiff then sued the attorney and learned the lessons of res judicata and collateral estoppel. Both were employed in the dismissal of this second case.  Her one chance was to raise all of these defenses at the first trial, and now, in Robert v Stephanie R. Cooper, P.C. 2014 NY Slip Op 00741 [114 AD3d 456]
February 6, 2014 Appellate Division, First Department it was too late.

"At issue is the second of two actions between the parties stemming from a former attorney-client relationship. In the first action, plaintiff's attorney sued her for breach of contract and account stated, seeking attorneys' fees. In the second action, plaintiff asserts claims of fraud and a violation of Judiciary Law § 487, based on allegations that the underlying retainer agreement was fraudulent and forged, that fraudulent invoices were presented to the court and jury in the first action, that she was at times double-billed for legal services by defendants, and that her attorney committed perjury in the first action. Thus, plaintiff's claims arose from the same transaction as that underlying the first action. As the motion court noted, plaintiff's claims regarding the retainer agreement and invoices address the "core" of the litigation in the first action for attorney's fees and thus should have been raised in that action. They are thus barred by res judicata principles (see Matter of Josey v Goord, 9 NY3d 386, 389-390 [2007]; Marinelli Assoc. v Helmsley-Noyes Co., 265 AD2d 1, 5-6 [1st Dept 2000]; see also Smith v Russell Sage Coll., 54 NY2d 185, 192 [1981]).

Moreover, with the sole exception of the alleged forgery of one of the retainer agreements, which plaintiff had a full and fair opportunity to litigate but due to her own oversight did not litigate, the issue of fraud was litigated and was necessarily decided by the jury in reaching its damages calculation. Plaintiff is thus collaterally estopped to re-litigate those claims (Buechel v Bain, 97 NY2d 295, 303 [2001], cert denied 535 US 1096 [2002]).

While the trial in the first action was limited to damages, contrary to plaintiff's contentions, the jury's calculation was not merely "mathematical" in light of the evidence that she was permitted to present. In calculating the total damages, the jury necessarily had to consider and reject plaintiff's arguments that certain invoices were manufactured or altered and had to make a determination as to the credibility of her former attorney, defendant Stephanie [*2]Cooper, in connection with any perjury allegation.

While plaintiff claims that the court's in limine ruling at trial, which on its face prohibited her from impugning Cooper's character at trial or challenging her own liability to pay for the legal services rendered, the complaint in the second action belies her claim, since it contains no other allegations than those she fully litigated in the trial of the first action. Furthermore, the transcript makes clear that she was able to present extensive evidence of these claims in her defense.

Moreover, it is apparent that plaintiff's complaint stems entirely from fraud allegedly committed in connection with the first action, and thus amounts to an impermissible collateral attack on the first judgment (Matter of New York Diet Drug Litig., 47 AD3d 586 [1st Dept 2008]; Rivero v Ordman, 277 App Div 231 [1st Dept 1950]).

Contrary to plaintiff's assertions, the motion court cited and applied the correct standard of review, and properly rejected as incredible plaintiff's claims that she did not scrutinize the retainer agreement and discover the forgery and any related fraudulent conduct during the trial in the first action. As the court noted, that retainer agreement was the entire basis of the first action. Furthermore, plaintiff's claim that she did not scrutinize the agreement sooner due to her wholesale trust of Cooper, a former long-time friend, seems to us similarly incredible, given that plaintiff's purported long-time friend had by that time withdrawn as counsel from her case, had, by plaintiff's allegations, betrayed confidences in the underlying litigation, had sued plaintiff, and had affirmatively sought to prevent plaintiff from attacking her character. Concur—Sweeny, J.P., Andrias, Freedman, Richter and Clark, JJ."

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Doctor is Arrested...Was it Attorney Deceit?

Doctors get investigated by Medicare and the Office of Professional Conduct.  In Herschman v Kern, Augustine, Conroy & Schoppman  2014 NY Slip Op 00416 [113 AD3d 520] January 23, 2014 Appellate Division, First Department, they looked  into the licensure of his employee, Jerrold Levoritz, and his billing practices, and that these failures resulted in his arrest for grand larceny and insurance fraud.  The Doctor was indicted.  The AD found that  he "billed for services that were not rendered, and the record of his criminal conviction for grand larceny plainly contradicts the allegations in the complaint (see Bishop v Maurer, 33 AD3d 497 [1st Dept 2006], affd 9 NY3d 910 [2007]). Since plaintiff's own actions resulted in his arrest, he failed to show that any alleged malpractice on defendants' part proximately caused his damages, i.e., his arrest (see Minkow v Sanders, 82 AD3d 597 [1st Dept 2011]). This failure mandates the dismissal of his legal malpractice action regardless of whether defendants were negligent (Leder v Spiegel, 31 AD3d 266, 267-268 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008]).

In pleading his Judiciary Law § 487 claim, plaintiff failed to allege that defendants acted[*2]"with intent to deceive the court or any party" (id. § 487 [1]) or " 'a chronic and extreme pattern of legal delinquency' " (Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 13 [1st Dept 2008], lv denied 12 NY3d 715 [2009]). Concur—Mazzarelli, J.P., Friedman, Renwick, Moskowitz and Richter, JJ. [Prior Case History: 2012 NY Slip Op 31988(U).]"

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Attorney Disqualification in a Legal Malpractice Case

What happens when the Defendant-Attorney defends itself, and the main witness plaintiff seeks to call is that attorney?  The textbook answer is disqualification on the advocate-witness rule.  That's exactly what happened in Lauder v Goldhamer  2014 NY Slip Op 08321  Decided on November 26, 2014  Appellate Division, Second Department. 

"The disqualification of an attorney is a matter that rests within the sound discretion of the Supreme Court (see Nationscredit Fin. Servs. Corp. v Turcios, 41 AD3d 802, 802). Here, the Supreme Court did not improvidently exercise its discretion in granting that branch of the plaintiff's cross motion which was to disqualify Kantrowitz from representing the defendants pursuant to the advocate-witness rules (see Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.7). The allegations in the amended complaint and the plaintiff's affidavit established that the testimony of Kantrowitz, who was the only attorney involved in the plaintiff's execution of the retainer agreement and who the plaintiff alleged made certain misrepresentations that induced her to execute the agreement, would be necessary to resolve issues pertinent to the cause of action to set aside the retainer agreement (see Fuller v Collins, 114 AD3d 827; Falk v Gallo, 73 AD3d 685).

Accordingly, the Supreme Court properly denied those branches of the defendants' motion pursuant to CPLR 3211(a)(7) which were to dismiss the amended complaint insofar as asserted against the defendant Paul B. Goldhamer individually, and to dismiss the second, sixth, and seventh causes of action, and properly granted the plaintiffs' cross motion."

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Another Settlement Allocution Case in Legal Malpractice

 Rules are rules, no?  "A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel." In the First Department the case is Bernstein v. Oppenheim & Co., PC and in the Second Department the case is Tortura v. Sullivan Papain Block McGrath & Cannavo PC..  So, that's a pretty clear rule?

Not so.  In the First Department, cases have started to be dismissed on the grounds that at settlement the client stated that they were satisfied with the work of their attorney.  Today, in Katz v Essner
2014 NY Slip Op 32967(U)  November 18, 2014  Supreme Court, New York County  Docket Number: 154865/2013  Judge: Eileen A. Rakower dismissed on this ground.  It's the Katebi v. Fink line of cases. 

From Katz:

"A "claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel." Bernstein v. Oppenheim & Co., P. C., 160 A.D.2d 428, 429- 430 [1st Dept 1990]). "However, the First Department also makes clear that an allocution at settlement wherein the client states that she is satisfied with the attorney's performance constitutes documentary evidence that contradicts an allegation of legal malpractice." Harvey v. Greenberg, 2009 N.Y. Slip. Op. 32625(U)(NY Ct. 2009) (citing Katebi v. Fink, 51 A.D.3d 424, 425 [1st Dept 2008]). 
 
Defendants submit a copy of the transcript of the Proceedings held before
Judge Barone on June 14, 2010, at which the following was placed on the record:
THE COURT: Mr. Katz, please raise your right hand. Do you swear to tell the
truth, the whole truth and nothing but the truth, so help you god?
MR. KATZ: Yes.
THE COURT: Please listen to the stipulation that the attorneys will place on
the record, after which time you be asked some questions.
MR. KATZ: Yes.
***
MR. ESSNER: Do you understand that there is a settlement offer of $375,000
in full and final settlement of all claims and actions you may have against Jack
Stem, Seth Neubardt, and their related entities, correct?
MR. KATZ: Yes.
MR. ESSNER: You have come here today and are willing to settle this case for
the gross sum of $375,000?
MR. KATZ: Yes.
MR. ESSNER: You are making this settlement after careful consideration?
MR. KATZ: Yes.
MR. ESSNER: You do realize that, Mr. Katz, that once the case is settled it is
settled forever and there is no coming back to the Court no matter what change
in your condition you may experience or what other sequelae from the alleged
Injury may occur.
MR. KATZ: Yes.
MR. ESSNER: Sir, you have considered the services of your counsel; are you
satisfied that you been adequately represented?
MR. KATZ: Yes. "
 
"Thus, the transcript shows that on the record before Judge Barone in the Underlying Action, Katz stated the following: he was willing to settle the case for a gross sum of $375,000, that he was making the settlement after careful consideration, that he understood settlement would resolve the dispute in full with prejudice, and that he considered the services of his counsel and was satisfied that he was adequately represented. Therefore, the documentary evidence - Katz's allocution at settlement - flatly contradicts Katz's allegations that he was "forced" to settle the Underlying Action based on Defendants' alleged neglect.  "
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Documentary Evidence Ends a Judiciary Law 487 Case

 Judiciary Law 487, which was recently the subject of a Court of Appeals Case in Melcher,  is a difficult claim to prove.  It requires proof of an attorney's intent to deceive the Court or the parties, and is viewed with a very jaundiced eye by the Courts. Agai v Liberty Mut. Agency Corp.  2014 NY Slip Op 04455 [118 AD3d 830]  June 18, 2014  Appellate Division, Second Department is an example of a JL 487 claim lost on documentary grounds.

The instant action concerns a dispute regarding the disposition of the collateral for a bond that was posted in connection with an appeal from a judgment in a prior action between the parties. In the prior action (hereinafter the note action), the plaintiff, Jacob Agai, sought to recover on a promissory note that was issued in his favor by the defendants Dennis Mihalatos and Diontech Consulting, Inc. (hereinafter Diontech) in connection with a $500,000 loan. In the note action, the Supreme Court, in an order dated March 11, 2008, granted Agai's motion pursuant to CPLR 3213 for summary judgment in lieu of complaint, and judgment was entered thereon. Mihalatos and Diontech appealed, and this Court ultimately reversed the judgment and denied the motion for summary judgment (see Agai v Diontech Consulting, Inc., 64 AD3d 622 [2009]).

In connection with the appeal in the note action, Mihalatos and Diontech together [*2]filed a bond with the Supreme Court. The bond was guaranteed by Liberty Mutual Insurance Corporation, sued herein as Liberty Mutual Agency Corporation, doing business as Ohio Casualty Insurance Company (hereinafter Ohio Casualty). It is undisputed that, subsequent to this Court's determination in Agai v Diontech Consulting, Inc. (64 AD3d at 622), the attorney representing Mihalatos and Diontech in the note action, Peter Kutil of King & King, LLP, obtained, from Ohio Casualty, the return of the collateral for the bond.

Agai then commenced the instant action, inter alia, to recover damages pursuant to Judiciary Law § 487 against, among others, Ohio Casualty, Kutil, and King & King, LLP.

The Supreme Court also properly directed the dismissal of the complaint insofar as asserted against Kutil and King & King, LLP (hereinafter together the Kutil defendants), based on documentary evidence, which included the bond itself (see CPLR 3211 [a] [1]; Fontanetta v John Doe 1, 73 AD3d 78, 86 [2010]). Since the bond, by its terms, was an appeal bond obtained pursuant to CPLR 5519 (a) (2), and since the bond was extinguished upon this Court's determination of the appeal in the note action in favor of Mihalatos and Diontech, the Kutil defendants could not have acted with the "intent to deceive the court or any party" in violation of Judiciary Law § 487 (1) when they caused the collateral to be returned to Mihalatos and Diontech (see Dupree v Voorhees, 102 AD3d 912, 913 [2013]). Further, the Supreme Court properly directed the dismissal of the remaining causes of action, which were to recover damages based on violations of the Debtor and Creditor Law, unjust enrichment, pursuant to CPLR 5225, and on other equitable grounds, based upon the same documentary evidence (see Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182-183 [2011]; Federal Deposit Ins. Corp. v Porco, 75 NY2d 840, 842 [1990]; Nanomedicon, LLC v Research Found. of State Univ. of N.Y., 112 AD3d 594, 598 [2013]; D'Mel & Assoc. v Athco, Inc., 105 AD3d 451, 452 [2013]; Pesa v Dayan, 104 AD3d 662, 663-664 [2013]). Accordingly, the Supreme Court properly granted the Kutil defendants' motion to dismiss the entire complaint insofar as asserted against them, based on the [*3]documentary evidence."

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Legal Malpractice Case Against an Attorney's Estate Fails

Thomas Puccio captured the world's attention at the Abscam trial.  Think American Hustle.  He died in 2012.  A claim of legal malpractice, itself riddled with mistakes was recently dismissed.  Fundacion Fair Weather v Puccio    2014 NY Slip Op 32931(U)  November 13, 2014  Supreme Court, New York County  Docket Number: 65032/2013  Judge: Eileen A. Rakower.

"Plaintiff commenced this action on February 19, 2013, by summons with Notice. Plaintiff now  moves, by notice of motion dated October 2, 2014, for an Order, pursuant to CPLR § 3215, directing the entry of a default judgment as against Defendant on the basis of Defendant's nonappearance in this action. In support, Plaintiff submits the attorney affirmation of Maurice W. Heller; the affidavit of merit of Domecq, dated April 24, 2014; the affidavits of service of Plaintiffs initiatory papers upon Defendant and upon the Law Offices of Thomas P. Puccio on May 30, 2013, by personal delivery to a person of suitable age and discretion at Defendant's residence located at 61 Singing Oaks Drive, Weston, Connecticut; the affidavits of service of Plaintiffs initiatory papers upon Defendant
by first class mail, one for each of her capacities, enclosed in a post-paid wrapper, marked "Personal and Confidential" on May 14, 2013; the affidavit of additional mailing, pursuant to CPLR 3215(g)(3)(i), upon Defendant on November 6, 2013; a copy of the retainer agreement (the "Retainer Agreement"), dated August 11, 2008; a copy of a demand for arbitration, dated November 28, 2012; a copy of a letter,dated January 8, 2013, addressed to Decedent, referring Plaintiffs complaint to the Joint Committee on Fee Disputes and Conciliation; a copy of a NYCEF notification,
dated September 11, 2014. 

Here, Plaintiff concedes that Plaintiff filed the instant motion for default  judgment more than one year after default. Heller affirms that Defendant was in default as of July 17, 2013, and that Plaintiff filed the instant motion for a default 2 [* 2]judgment more than one year later, on October 2, 2014. However, Heller affirms that Plaintiff previously filed a timely application for default judgment with the Clerk, on May 6, 2014. Heller also affirms that, in November 2012, Plaintiff sought to arbitrate Plaintiffs claims before the Joint Committee on Fee Disputes and Conciliation of the New York County Lawyers Association (the "Comm ttee"), pursuant to an arbitration clause contained in the Retainer Agreement. Heller affirms that, by notice dated January 8, 2013, the Committee advised Decedent's Law Office that the matter was referred to arbitration, and that the Law Office did
not respond to the Committee's notices.

Here, even assuming that Plaintiff sufficiently demonstrates a reasonable excuse for its delay in filing the instant motion for a default judgment, Plaintiff does not provide sufficient allegations to establish the prima facie validity of its claim that Decedent is liable for $250,000 in damages resulting from Decedent's alleged legal malpractice, breach of contract, or fraud. Domecq does not state that Decedent failed to perform any legal services on Domecq's behalf, and Domecq's allegation that Decedent failed to obtain a specific outcome is insufficient, without more, to sustain
a claim that Decedent failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession. Moreover, to the extent that, "the granting of an application for transfer to a dual citizen, such as Domecq,is far less likely than had [Domecq] been solely a citizen of Spain", Plaintiff does not provide facts sufficient to support an inference that Domecq's application would have been granted "but for" Decedent's purported negligence. In addition, the Retainer Agreement does not contain any express promise respecting Domecq or Domecq's transfer. Indeed, the Retainer Agreement, which is addressed to "Fairboum, c/o Christina Domecq," and signed by Christina Domecq on behalf of "Fairboum", does not contain any reference whatsoever to Plaintiff, Domecq, the IPTP, or the IPTU. Plaintiff does not allege with particularity facts sufficient to establish the prima facie validity of Plaintiffs claim that Decedent
fraudulently induced Plaintiff to enter into the Retainer Agreement, and Domecq's allegation that Decedent did not intend to perform under the Retainer Agreement is not enough to give rise to a cause of action for fraud that is distinct from Plaintiff's breach of contract claim.
 

Accordingly, Plaintiff fails to provide the reviewing Court with sufficient allegations to establish a basis for Plaintiff's legal malpractice, breach of contract, or fraudulent inducement claims. "

 

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A Legal Malpractice Case Lost on Technical Grounds

It is unfortunate to see a legal malpractice case be dismissed on technical grounds.  Here,in Cullin v Spiess  2014 NY Slip Op 07975  Decided on November 19, 2014   the Appellate Division, Second Department found that Plaintiff's summary judgment motion lacked an affidavit of a person with knowledge, and that there was insufficient opposition to Defendant's motion.

"The plaintiff failed to demonstrate her prima facie entitlement to judgment as a matter of law on the complaint. The plaintiff failed to submit, with her moving papers, an affidavit by a person with knowledge of the facts (see CPLR 3212[b]; Currie v Wilhouski, 93 AD3d 816, 817; Menzel v Plotnick, 202 AD2d 558, 559). The affirmation of the plaintiff's attorney, who did not have personal knowledge of the facts, was without probative value, and the remaining exhibits were insufficient to support the motion for summary judgment (see Zuckerman v City of New York, 49 NY2d 557, 563; Rivers v Birnbaum, 102 AD3d 26; 1911 Richmond Ave. Assoc., LLC v G.L.G. Capital, LLC, 60 AD3d 1021, 1022; Menzel v Plotnick, 202 AD2d at 559).

In contrast, the defendant demonstrated his prima facie entitlement to judgment as a matter of law dismissing the fourth, sixth, eighth, and twelfth causes of action alleging that he violated Judiciary Law § 487, by establishing that there was no evidence of his alleged intent to deceive the plaintiff in connection with the settlement (see Dupree v Voorhees, 102 AD3d 912; [*2]Boglia v Greenberg, 63 AD3d 973, 975; Pui Sang Lai v Shuk Yim Lau, 50 AD3d 758; Knecht v Tusa, 15 AD3d 626, 627). In opposition, the plaintiff failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324).

Accordingly, the Supreme Court properly denied the plaintiff's motion for summary judgment on the complaint and properly granted the defendant's cross motion for summary judgment dismissing the fourth, sixth, eighth, and twelfth causes of action."

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A Fee Claim, An Arbitration, A Lawsuit, A Counterclaim for Legal Malpractice

 One piece of advice repeated endlessly at CLEs is that attorney fee cases created legal malpractice counterclaims.  In Jeffrey M. Rosenblum, P.C. v Casano  2014 NY Slip Op 51629(U)  Decided on November 19, 2014  District Court Of Nassau County, First District  Fairgrieve, J. we see a sterling example of this problem.  Attorney lost attorney fee arbitration and started a trial de novo, once again seeking the fees.  This time there was a counterclaim, which Plaintiff fails to get dismissed.

"In her Verified Answer with Counterclaims (Plaintiff's Exhibit B), defendant sets forth [*2]and classifies each of the five (5) counterclaims raised therein. They are designated as Breach of Contract (First and Second Counterclaims), Unjust Enrichment (Third Counterclaim), Declaratory Judgment (Fourth Counterclaim), and Attorney Malpractice (Fifth Counterclaim).

Initially, plaintiff's counsel presses two arguments for dismissal of the first four counterclaims. First, she argues that pursuant to CPLR 3211(a)(2), this court lacks subject matter jurisdiction because "the monetary jurisdictional limit of the District Court is $15,000," which these counterclaims exceed (Affirmation in Support, ¶ 22). To the contrary, however, this court "shall have jurisdiction of counterclaims ... for money only, without regard to amount" (UDCA §208[b]). Accordingly, plaintiff's argument characterizing the amount sought by defendant's counterclaims as exceeding statutory authority, is rejected. Therefore, its requests for dismissal on this basis are denied.

The third counterclaim is clearly marked as one seeking relief from plaintiff's unjust enrichment. " The theory of unjust enrichment lies as a quasi-contract claim'" and contemplates "an obligation imposed by equity to prevent injustice, in the absence of an actual agreement between the parties (IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 142, 879 NYS2d 355, 907 NE2d 268 [2009], quoting Goldman v Metropolitan Life Ins. Co., 5 NY3d 561, 572, 807 NYS2d 583, 841 NE2d 742 [2005])" (Georgia Malone & Co., Inc. v Rieder, 19 NY3d 511, 516 [2012]). "The essential inquiry in any action for unjust enrichment or restitution is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered" (Greenfield M.D., P.C. v Long Beach Imaging Holdings, LLC, 114 AD3d 888, 889, citing Paramount Film Distribution Corporation v State of New York, 30 NY2d 415, 421 [1972] [remainder of citation omitted]).

"Although a claim for unjust enrichment involves equitable considerations', it is essentially a claim for a money judgment which is covered within the jurisdictional boundaries contemplated for the Civil Court. A court, of course, has the inherent right to take equitable considerations into account (Dobbs, Remedies, § 2.1, p 28), and since they are merely reflections of fairness, no court, unless expressly limited by a statute, should deprive itself of the capacity to take them into account where the suit involves money damages only (Fiona Press, Inc. v Hewig & Marvic, Inc., 122 Misc 2d 680-681 [Civil Court, NY County 1984], emphasis added). Notably, "[t]he [New York City Civil Court Act ("NYCCCA")] is the original of the uniform acts. The second of them, also effective on September 1, 1963, is the Uniform District Court Act [*3](UDCA), which was modeled on and is in many instances identical to the NYCCCA" ( David D. Siegel, General Commentary on the Lower Court Acts (NYCCCA, UDCA, UCCA and UJCA) and Their Background, McKinney's Cons Laws of NY, Book 29A, p 9 [1989 ed])."

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Legal Malpractice and A Storybook Divorce

Reading between the lines,Manus v Flamm  2013 NY Slip Op 07683 [111 AD3d 525]  November 19, 2013  Appellate Division, First Department sounds like a 1930's romantic divorce movie.  Husband marries glamorous starlet, gives her beaucoup jewelery and then, The Divorce.  Starlet is caught between Husband and another woman.  His mother?  Anyway...

The complaint alleges that defendant committed legal malpractice while representing plaintiff in a replevin action brought against her in October 1998 by nonparty Family M. Foundation, Ltd., a Cayman Islands corporation formed by the late Allen Manus, plaintiff's former husband.

The first cause of action, which alleges that defendant was negligent in failing to assert certain defenses or move to dismiss the complaint in the replevin action, is belied by the seventh and eighth affirmative defenses, which assert that the loan agreement imposed no personal liability on plaintiff.

The second cause of action alleges that plaintiff "felt compelled" to sign the stipulation of settlement in the replevin action, which converted a $1,000,000 obligation from the corporation to her into a $400,000 obligation from her to the corporation. However, plaintiff's obligation arose in the context of the loan agreement she executed, not the stipulation of settlement. The stipulation did not impose personal liability on plaintiff for the debt created under the loan agreement; it merely directed that her shares in her cooperative apartment be substituted for her jewelry as collateral for the loan.

The third cause of action alleges that, but for defendant's insistence that the corporation's president and sole director, Elizabeth (Libby) Manus, had to execute the corporation's release of plaintiff's obligations to it and that Allen Manus's execution of the release would not be sufficient, Allen Manus would have signed the release and plaintiff would have been free of her obligations under the stipulation. However, this Court has found that the action by the corporation to enforce the stipulation upon plaintiff's default was properly maintained under Libby Manus's authority (see Family M. Found. Ltd. v Manus, 71 AD3d 598 [1st Dept 2010], lv dismissed 15 NY3d 819 [2010]). Even assuming that Allen Manus, who held a power of [*2]attorney for the corporation, was authorized to release plaintiff's obligations to the corporation, Libby Manus's refusal to sign the release would have revoked his authority (see Zaubler v Picone, 100 AD2d 620, 621 [2d Dept 1984]). Concur—Andrias, J.P., Friedman, Richter, Manzanet-Daniels and Feinman, JJ.

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False Answers on an Information Subpoena? Not Judiciary Law 487

Courts reserve the application of Judiciary Law 487, the Attorney Deceit Law to very few cases.  Put another way, courts are loathe to apply it.  In Kuruwa v 130E. 18 Owners Corp. 2014 NY Slip Op 06880 Decided on October 9, 2014  the Appellate Division, First Department merely sweeps the question away in a very short opinion.

"The IAS court correctly found that respondent bank's perfected, secured interest in the subject property has priority over petitioners' unsecured money judgment (see Chrysler Credit Corp. v Simchuk , 258 AD2d 349 [1st Dept 1999]). The bank's false answers to the information subpoena, in which it denied having a mortgage on the Meyers respondents' apartment, did not prejudice petitioners; nor do they point to any detrimental reliance upon the statements (cf. Leber-Krebs, Inc. v Capitol Records , 779 F2d 895, 896 [2d Cir 1985]).

The court also correctly held that there could be no judicial sale of the cooperative apartment. The Meyers defendants had purchased the co-op before they were married, and they concede that they originally owned it as tenants in common (see EPTL 6-2.2). They refinanced the purchase money mortgage after they were married, and the bank required a name change on a newly issued stock certificate and proprietary lease. The change in title, made by the cooperative corporation, after the parties were married effectively changed ownership from tenants in common to tenants by the entirety.

The legal arguments made by the bank's counsel and the Meyerses' counsel do not give rise to claims under Judiciary Law § 487."

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It's Almost Always the "But For" Part

Client buys some gas stations and believes that it was unfairly kept from sharing in some condemnation awards on the property that mostly (or all) went to seller.  Client sues attorneys for not obtaining the unpaid condemnation awards.  Defendants claim it was strategy.  Result?

In Leon Petroleum, LLC v Carl S. Levine & Assoc., P.C.  2014 NY Slip Op 07632  Decided on November 12, 2014  the Appellate Division, Second Department determined that this was strategy and not a simple mistake.  The standard?

"To establish a cause of action alleging legal malpractice, a plaintiff must show that the attorney failed to exercise the care, skill, and diligence commonly possessed and exercised by a member of the legal profession, and that such negligence was a proximate cause of the actual damages sustained (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442; Frederick v Meighan, 75 AD3d 528, 531). Under the attorney judgment rule, "selection of one among several reasonable courses of action does not constitute malpractice" (Rosner v Paley, 65 NY2d 736, 738; see Ackerman v Kesselman, 100 AD3d 577; Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 847). "To establish entitlement to the protection of the attorney judgment rule, an attorney must offer a reasonable strategic explanation' for the alleged negligence" (Ackerman v Kesselman, 100 AD3d at 579, quoting Pillard v Goodman, 82 AD3d 541, 542). "To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer's negligence" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; see Blanco v Polanco, 116 AD3d 892, 894).

Here, the defendants established their entitlement to judgment as a matter of law by demonstrating that the failure to draft clear, specific, and unambiguous language in an agreement for the purchase of assets, so as to provide that the subject assets included certain unpaid condemnation awards, was a reasonable strategic decision taken to avoid an increase in the purchase price, and that the drafting of more specific language would not have resulted in the inclusion of the condemnation awards in the sale without an increase in the purchase price. In opposition, the plaintiffs failed to raise a triable issue of fact with respect to either element of the legal malpractice cause of action (see Zuckerman v City of New York, 49 NY2d 557, 562). "A mere hope . . . that somehow or other on cross examination credibility of a witness . . . can be put in issue is not sufficient to resist a motion for summary judgment'" (Trails W. v Wolff, 32 NY2d 207, 221, quoting Hurley v Northwest Publ. Inc., 273 F Supp 967, 974 [D Minn], affd 398 F2d 346 [8th Cir]; see Angeles v Goldhirsch, 268 AD2d 217). Accordingly, the Supreme Court properly granted the defendants' motion for summary judgment dismissing the complaint (see Rodriguez v Lipsig, Shapey, Manus & Moverman, P.C., 81 AD3d 551, 552; Noone v Stieglitz, 59 AD3d 505, 507)."

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Attorney Fees Upon Termination and Judiciary Law 487

Here is the story of an attorney who is retained to commence an underinsured motorist arbitration against an auto insurance carrier.  Apparently he makes the claim for arbitration, becomes suspended from the practice of law, (later disbarred) and watches while another attorney settles the claim for the clients.  is he due a fee, and did the other attorney violate JL 487?

As to the JL 487 claim, there was no violation.  We cannot tell anything about the JL 487 claim because the AD's entire decision on this issue is:  "The Cassar defendants also showed that the plaintiff does not have a cause of action against them pursuant to Judiciary Law § 487 (see Judiciary Law § 487)."

As to attorney fees after termination, some explanation was given:

"In addition, the court properly determined that the plaintiff was not entitled to any attorney's fees from the Pogue defendants. A client has the right to discharge his or her attorney at any time (see Campagnola v Mulholland, Minion & Roe, 76 NY2d 38, 43; Schultz v Hughes, 109 AD3d 895, 896; Doviak v Finkelstein & Partners, LLP, 90 AD3d 696, 698). While an attorney who is discharged without cause before the completion of services may recover the reasonable value of his or her services in quantum meruit, an attorney who is discharged for cause is not entitled to any compensation or lien (see Campagnola v Mulholland, Minion & Roe, 76 NY2d at 44; Doviak v Finkelstein & Partners, LLP, 90 AD3d at 699; Callaghan v Callaghan, 48 AD3d 500, 500-501). Here, the court held a hearing pursuant to 22 NYCRR 603.13(b) with respect to the plaintiff's cross motion for attorney's fees. The court determined that the plaintiff was properly discharged for cause, and, therefore, was not entitled to recover in quantum meruit. The plaintiff does not argue that the evidence at the hearing was insufficient to support the court's determination. Thus, the evidence submitted by the Pogue defendants disproved the essential allegation of the complaint, i.e., that the plaintiff was not properly discharged for cause, and established that the plaintiff does not have a cause of action to recover attorney's fees from the Pogue defendants (see generally Campagnola v Mulholland, Minion & Roe, 76 NY2d 38; Schultz v Hughes, 109 AD3d 895; Doviak v Finkelstein & Partners, LLP, 90 AD3d 696). Therefore, the Supreme Court properly dismissed the complaint insofar as asserted against the Pogue defendants."

 

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Collateral Estoppel and Judiciary Law 487

A theme that is becoming somewhat popular is that of a Judiciary law 487 claim when counsel moves to be relieved.  Often, the attorney uses stock phrases (refusal to pay expenses, conflict over strategy, inability to communicate) while the plaintiff urges that the attorney is making this up in order to be rid of a troublesome case.  Attorneys have been held in Judiciary Law 487 cases on the basis that the client was actually up to date on payments. 

Here, in Brady v Friedlander  2014 NY Slip Op 06677  Decided on October 2, 2014  Appellate Division, First Department we see that Civil Court's decision to allow the attorney to withdraw guts the Judiciary law 487 claim. 

"On or about September 30, 2009, defendant moved in Civil Court, New York County (Samuels, J.), to withdraw as counsel in the underlying nonpayment proceedings (see IGS Realty Co., L.P. v James Catering, Inc., 99 AD3d 528 [1st Dept 2012]). Over plaintiffs' objection, the court granted the motion. Plaintiffs did not appeal from Civil Court's order. With respect to the cause of action for a violation of Judiciary Law § 487, the instant complaint alleges that defendant provided fabricated grounds in support of his motion, to wit, a conflict with plaintiffs regarding strategy and a lack of trust in defendant's representation, in order to conceal the true reason, which was an unfounded belief that plaintiffs could or would not pay future legal bills. However, while the parties' communications as quoted in the complaint reflect that defendant was remarkably concerned with billing, which may have informed his decision to withdraw, the complaint also reflects that plaintiff Brady expressed disagreement with defendant as to strategy and questioned defendant's honesty and competency, thus providing support for defendant's stated grounds for the motion (cf. Palmieri v Biggiani, 108 AD3d 604 [2d Dept 2013]).

In granting the motion, over plaintiffs' objection, Civil Court implicitly determined that defendant had shown "just cause" to be relieved. That issue may not be re-litigated via the instant misrepresentation claim (cf. Hass & Gottlieb v Sook Hi Lee, 11 AD3d 230 [1st Dept 2004]).

"

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Judiciary Law 487 and Matrimonial Allegations

One may not sue the opponent's attorney for legal malpractice, except for a very few and limited number of exceptions, yet the temptation to do so must be very high in matrimonial cases.  One tactic in custody proceedings is the false accusation of misconduct.  The wrongfully accused spouse would love to sue the other spouse's attorney.  Here, in Tenore v Kantrowitz, Goldhamer & Graifman, P.C2014 NY Slip Op 06811  Decided on October 8, 2014  Appellate Division, Second Department the case failed.

"The plaintiff commenced this action against the defendant law firm, which represented his former wife in a matrimonial action against him, alleging a violation of Judiciary Law § 487, fraud, and abuse of process. The plaintiff alleged, inter alia, that the defendant included in the underlying matrimonial action a cause of action to recover damages for assault that was without any factual basis, in an attempt to extract additional money from him in the course of that litigation. The defendant moved for summary judgment dismissing the complaint in the instant action, and the plaintiff cross-moved for leave to amend that complaint to add causes of action to recover damages for a violation of General Business Law § 349, prima facie tort, and malicious prosecution. The Supreme Court granted the defendant's motion and denied the plaintiff's cross motion.

The Supreme Court properly granted that branch of the defendant's motion which was for summary judgment dismissing the cause of action alleging a violation of Judiciary Law § 487. The defendant demonstrated its prima facie entitlement to judgment as a matter of law by establishing its lack of intent to deceive (see Dupree v Voorhees, 102 AD3d 912, 913). In opposition, the plaintiff failed to raise a triable issue of fact."

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Some But Not All of the Damages Remain in Play

Evedentaily, defendants made a well-intentioned but insufficient motion for summary judgment.  In this wrongful eviction case, the landlord turned to its attorney and made a legal malpractice claim.  Defendants moved to dismiss, but in Morad Assoc., LLC v Jay Sung Lee 2013 NY Slip Op 08204 [112 AD3d 463] December 10, 2013 Appellate Division, First Department  they could not convince the AD that all damages flowed from the landlord and none from the attorney.

"The evidence submitted by defendant attorney, while showing that he may not be liable for a large measure of the damages assessed against plaintiff, failed to establish as a matter of law that his alleged negligence was not the cause of at least some of those damages. In addition to the damage to the property of plaintiff's tenant, plaintiff was also assessed damages for wrongful eviction for which defendant may be held liable. We find no basis for holding defendant liable for any damages plaintiff incurred when its agents destroyed the tenant's property. Concur—Tom, J.P., Friedman, Acosta and Moskowitz, JJ."

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Duplication of Causes of Action and Election of Remedies

The typical triumvirate of claims in a legal malpractice setting is Legal Malpractice, Breach of Contract and Breach of Fiduciary Duty.  Defendants almost always move to dismiss the second and third claims on the basis that they duplicate the legal malpractice claim and must be dismissed as "duplicitive."

in Chowaiki & Co. Fine Art Ltd. v Lacher  2014 NY Slip Op 01992 [115 AD3d 600]  March 25, 2014
Appellate Division, First Department  we see the First Department noting that plaintiffs need not "elect their remedies."   As might be surmised, the two principals, duplication and election of remedies stand in stark contract to each other.

"In this action arising from defendant attorney and his law firm's representation of plaintiffs in an action brought against them by a former employee, plaintiffs allege that they were excessively billed for services rendered, and that they were harassed, threatened and coerced into paying the excessive and overinflated fees. The motion court properly dismissed plaintiffs' claim for breach of fiduciary duty as duplicative of the breach of contract claim, since the claims are premised upon the same facts and seek identical damages, return of the excessive fees paid (see CMMF, LLC v J.P. Morgan Inv. Mgt. Inc., 78 AD3d 562 [1st Dept 2010]; cf. Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1 [1st Dept 2008]). Although plaintiffs sufficiently allege an independent duty owed to them, arising from the attorney-client relationship, the fraud claim is similarly redundant of the breach of contract claim, since it also seeks the same damages (see Coppola v Applied Elec. Corp., 288 AD2d 41, 42 [1st Dept 2001]; Makastchian v Oxford Health Plans, 270 AD2d 25, 27 [1st Dept 2000]).

However, we find that, as a dispute exists as to the application of the retainer agreement as to defendant, plaintiffs need not elect their remedies and may pursue a quasi-contractual claim for unjust enrichment, as an alternative claim (see Wilmoth v Sandor, 259 AD2d 252, 254 [1st Dept 1999]).

 

Plaintiffs' claims of excessive billing and related conduct, which actions are not alleged to have adversely affected their claims or defenses in the underlying action, do not state a claim for legal malpractice (see e.g. AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007])."

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An Interesting Judiciary Law 487 Case

Judiciary Law 487 is a ancient attorney deceit statute which says, in essence, that it is a violation (and a misdemeanor) for an attorney to engage in deceit.  The statute is subject to the requirement to prove proximate cause as well as ascertainable damages. 

in Mizuno v Nunberg  2014 NY Slip Op 07481  Decided on November 5, 2014  Appellate Division, Second Department  the AD affirmed Supreme Court's dismissal of the case.

"In 1994, a nonparty bank commenced a mortgage foreclosure action against the plaintiff. The plaintiff thereafter filed several bankruptcy petitions in the United States Bankruptcy Court for the Eastern District of New York, which were ultimately unsuccessful in preventing the foreclosure sale of the plaintiff's real property, which was conducted in 2002. The plaintiff then commenced a legal malpractice action (hereinafter the first legal malpractice action) against the attorney and the law firm who represented him in his third bankruptcy proceeding. The plaintiff prevailed in the first legal malpractice action, and was awarded the relief he sought in the complaint, entitling him to recover the value of the equity he lost in the real property as a consequence of the foreclosure sale, as well as the legal fees he incurred in securing that recovery (see Mizuno v Fischoff & Assoc., 82 AD3d 849).

In August 2011, the plaintiff commenced an action against Shari Barak, the attorney who represented the bank in the foreclosure proceedings, who testified at the nonjury trial of the first legal malpractice action, as well as the law firm in which Barak is a partner (hereinafter the second legal malpractice action). The plaintiff alleged that Barak and her law firm violated Judiciary Law § 487 and committed fraud and legal malpractice in filing an allegedly false and misleading notice of default and an affidavit of noncompliance in the third bankruptcy proceeding, and in giving false testimony in the first legal malpractice action as to the plaintiff's default on mortgage payments. The defendants moved pursuant to CPLR 3211(a) to dismiss the complaint in the second legal malpractice action, and the Supreme Court granted the motion. We affirmed, determining, inter alia, that the plaintiff failed to state a cause of action (see Mizuno v Barak, 113 AD3d 825).

While the appeal in the second legal malpractice action was pending, the plaintiff commenced the instant action against Noah Nunberg, the attorney who represented the defendants in the first legal malpractice action, as well as Nunberg's law firm (hereinafter together the defendants). The plaintiff alleged that the defendants likewise violated Judiciary Law § 487 and [*2]committed fraud and legal malpractice in allowing Barak to give what they knew was false testimony during the first legal malpractice action, thereby suborning perjury. The defendants moved pursuant to CPLR 3211(a) to dismiss the complaint, and requested that a letter from the Grievance Committee for the Tenth Judicial District to the plaintiff, dated June 21, 2012 (hereinafter the Grievance Committee letter), responding to a complaint made by the plaintiff, be removed from the court's file. The Supreme Court granted the motion.

The plaintiff failed to state a cause of action against the defendants to recover damages for violation of Judiciary Law § 487, fraud, or legal malpractice. Accepting as true the facts alleged in the complaint, and according the plaintiff the benefit of every favorable inference (see Leon v Martinez, 84 NY2d 83, 87-88), he failed to " plead allegations from which damages attributable to the [defendants' conduct] might be reasonably inferred'" (Mizuno v Barak, 113 AD3d at 827, quoting Rock City Sound, Inc. v Bashian & Farber, LLP, 74 AD3d 1168, 1171; see Markel Ins. Co. v American Guar. & Liab. Ins. Co., 111 AD3d 678; Regina v Marotta, 67 AD3d 766). As we determined in Mizuno v Barak, the plaintiff obtained the relief to which he was entitled in the first legal malpractice action, despite Barak's alleged false testimony (see id. at 827). Moreover, the litigation costs associated with the first legal malpractice action cannot reasonably be attributed to any alleged false trial testimony given by Barak, or, by extension, by the defendants' conduct as counsel to the plaintiff's adversaries (see id.). Accordingly, the Supreme Court properly directed the dismissal of the complaint in the instant action."

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A Problem With Leaving it Up to the Attorney

We've noted that more legal malpractice cases seem to be dismissed on CPLR 3211 grounds than those in other fields of the law.  Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin & Quartararo  2014 NY Slip Op 00087 [113 AD3d 587]  January 8, 2014  Appellate Division, Second Department looks like on of them. 

In this straightforward claim, plaintiffs retained attorneys to manage a 1031 Like-Kind exchange of real property, which would defer capital gain taxes.  One must arrange for an uninvolved 3d party to receive the sale proceeds and withhold them until a purchase of new property.  This did not happen.  Instead, Plaintiffs were drawn into an unrelated bankruptcy and lost significant amounts of money.

"The plaintiff commenced this action to recover damages allegedly sustained as a result of the defendants' legal malpractice. As alleged in the complaint, the plaintiff retained the defendants to represent it in connection with the sale of certain real property and a related exchange of "like-kind property" pursuant to the Internal Revenue Code (see 26 USC § 1031). According to the allegations in the complaint, the plaintiff, based upon the defendants' advice, selected LandAmerica 1031 Exchange Services, Inc. (hereinafter LandAmerica), as the qualified intermediary to hold a portion of the sale proceeds, totaling $5.5 million, for the exchange of like-kind property pursuant to 26 USC § 1031. The complaint alleged, inter alia, that the defendants negligently represented the plaintiff inasmuch as they reviewed, and advised the plaintiff to execute, an agreement with LandAmerica, under which the exchange funds were to be held in a commingled [*2]account and not a qualified escrow account or trust. Soon after the sale proceeds were transferred to LandAmerica, its parent corporation, LandAmerica Financial Group, Inc., declared bankruptcy. According to the complaint, the plaintiff's funds were frozen for several years during the bankruptcy proceedings, and the plaintiff lost a portion of the funds because they were not held in a qualified escrow account or trust. The complaint further alleged that the plaintiff could not defer the taxes on the capital gains from the initial sale, as it did not have access to its funds to purchase a replacement property within the required 180-day period.

Prior to answering, the defendants moved to dismiss the complaint pursuant to CPLR 3211 (a) (1) based on documentary evidence, and pursuant to CPLR 3211 (a) (7) for failure to state a cause of action. The Supreme Court granted the defendants' motion to dismiss the complaint on both grounds.

The Supreme Court improperly granted the defendants' motion to dismiss the complaint based on documentary evidence. A motion to dismiss a complaint pursuant to CPLR 3211 (a) (1) may be granted only if the documentary evidence submitted by the moving party utterly refutes the factual allegations of the complaint, "conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]). Here, the retainer agreement submitted by the defendants did not conclusively establish a defense as a matter of law (see Harris v Barbera, 96 AD3d 904, 905-906 [2012]; Rietschel v Maimonides Med. Ctr., 83 AD3d 810, 811 [2011]; Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 38-39 [2006])."

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Evolving Forms of Legal Malpractice

We've said that legal malpractice issues are ubiquitous, and omnipresent.  That's just another way of saying that where there are lawyers, and where they practice their human crafts, there will be mistakes and shortcomings.  This was true before the Magna Carta and is true today. 

One example of the evolving nature of legal malpractice issues is the Internet. Predictable only in science fiction, the Internet has come to color every part of our lives.  Use of the Internet in the age-old practice of trial law has set new standards.  So reports Anthony E. Davis in the New York Law Journal.  While he discusses the ethical issue of how one might correctly research jurors now sitting at a trial, he raises the point that failure to investigate may be legal malpractice.

"Duty to Investigate
The first question to be addressed is whether lawyers are under any duty to conduct any investigation of jurors. City Bar 2012-2 looked at this in the second segment of the opinion, including the following observation:
Lawyers have even been chastised for not conducting such research on potential jurors. For example, in a recent Missouri case, a juror failed to disclose her prior litigation history in response to a voir dire question. After a verdict was rendered, plaintiff's counsel investigated the juror's civil litigation history using Missouri's automated case record service and found that the juror had failed to disclose that she was previously a defendant in several debt collection cases and a personal injury action. (Footnote omitted). Although the court upheld plaintiff's request for a new trial based on juror nondisclosure, the court noted that "in light of advances in technology allowing greater access to information that can inform a trial court about the past litigation history of venire members, it is appropriate to place a greater burden on the parties to bring such matters to the court's attention at an earlier stage." Johnson v. McCullough, 306 S.W.3d 551, 558-59 (Mo. 2010). The court also stated that "litigants should endeavour to prevent retrials by completing an early investigation." Id. at 559.
Earlier, in the introduction to the opinion, the city bar went even further, stating that: "Indeed, standards of competence and diligence may require doing everything reasonably possible to learn about the jurors who will sit in judgment on a case."
Notably, ABA 466 is in agreement with this proposition. In footnote 3, ABA 466 cites to this statement in City Bar 2012-2 and to other sources, including Comment [8] to Model Rule 1.1, to the Johnson v. McCullough decision (supra), and to N. H. Bar Ass'n, Op. 2012-13/05, which, in common with Comment 8 to Model Rule 1.1, addresses attorneys' obligation "to be aware of social media as a source of potentially useful information in litigation, to be competent to obtain that information directly or through an agent, and to know how to make effective use of that information in litigation."


 

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Pecuniary Loss is a Must in Legal Malpractice Case

Doctor is sued for medical malpractice, along with fellow doctor.  MLMIC, the largest insurer in the field settles the case for $ 3.2 Million.  Doctor's liability is covered by the Carrier.  She sues the carrier and its attorney, Carter Conboy in Kaufman v Medical Liab. Mut. Ins. Co. 2014 NY Slip Op 07398  Decided on October 30, 2014  Appellate Division, Third Department.

Doctor sues because of a "united front" defense, in which one law firm defends all the doctors, and minimizes any "finger-pointing."  Doctor loses the legal malpractice case.

"Elements that plaintiff must prove in a legal malpractice action include that her attorney was negligent, she would have succeeded on the merits "but for" her attorney's negligence and she sustained actual and ascertainable damages (see Dombrowski v Bulson, 19 NY3d 347, 350 [2012]; AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]; Country Club Partners, LLC v Goldman, 79 AD3d 1389, 1391 [2010]). On a motion for summary judgment, defendant has the initial burden of presenting evidence "establishing that plaintiff is unable to prove at least one of these elements" (Geraci v Munnelly, 85 AD3d 1361, 1362 [2011] [internal quotation marks and citation omitted]; see Guiles v Simser, 35 AD3d 1054, 1055 [2006]). "[I]f the movant is successful the opposing party must then submit proof in admissible form sufficient to create a question of fact requiring a trial" (Parmisani v Grasso, 218 AD2d 870, 871 [1995] [internal quotation marks and citation omitted]; see Country Club Partners, LLC v Goldman, 79 AD3d at 1391-1392). Supreme Court determined that defendant met its burden as to each of the elements of negligence, proximate cause and damages, and that plaintiff failed to submit sufficient proof to raise a triable issue as to all those elements.

Considering first the element of damages, the undisputed proof established that plaintiff did not have to pay any part of the verdict, which was covered in full by the insurer and hospital. Plaintiff's contention that she sustained non-pecuniary damages, such as a taint on her reputation resulting from media and other coverage of the Norton verdict, is unavailing since "the established rule limit[s] recovery in legal malpractice actions to pecuniary damages" (Dombrowski v Bulson, 19 NY3d at 352; see Guiles v Simser, 35 AD3d at 1056; Wilson v City of New York, 294 AD2d 290, 292 [2002]). Plaintiff continued working at the hospital after the Norton verdict and, as her contract was coming to an end about a year later, plaintiff was offered a new contract. Indeed, Nguyen, who had been assigned more culpability than plaintiff, had her contract renewed. Although plaintiff did not like some of the changes in the terms of the new contract, those same terms were also made mandatory for other physicians and plaintiff was not singled out in such regard because of the Norton verdict. Defendant produced proof that plaintiff took the position during contract negotiations that she desired to significantly scale back or eliminate the obstetrics part of her practice at the hospital, a move that was opposed by the hospital's other physicians. Plaintiff eventually elected to resign from the hospital rather than renew her contract. Her arguments that her difficulty in obtaining employment with comparable compensation and that subsequent potential increases in her malpractice premiums resulted directly from the Norton verdict are speculative and unsupported in this record (see generally Brodeur v Hayes, 18 AD3d 979, 981 [2005], lv dismissed and denied 5 NY3d 871 [2005]).

Defendant met its burden of establishing the absence of actual and ascertainable damages, and plaintiff failed to raise a triable issue on such element. Therefore, the legal malpractice claim was properly dismissed. It is not necessary to discuss the other elements of the legal malpractice claim found lacking by Supreme Court.

"

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The Court of Appeals Writes on "Continuous Representation"

The statute of limitations is an extraordinarily powerful concept.  After a specific period of time, it's just too late to sue, even though the defendant was totally and wholly wrong.  It's just too late!  Its a completely arbitrary period of time, too.

So, courts have ameliorated the hardship from time to time.  One way of mitigating the harsh rule is that of "continuous representation" in legal malpractice.  It basically says that the S/L does not start to run until the attorney has completed the work for the client.  Of course there are many intricacies, too. 

This week, Matter of Lawrence  2014 NY Slip Op 07291   was decided on October 28, 2014
by the New York Court of Appeals, with a decision by Read, J.  It is very, very important for the contingent fee world, and has much to say about continuous representation.

"There is a difference between an attorney's alleged malfeasance in the provision of professional services on his client's behalf, and a dispute between an attorney and his client over a financial transaction, such as legal fees or, in this case, a gift. Simply put, when an attorney engages in a financial transaction with a client, by charging a fee or, as in this case, accepting a gift, the attorney is not representing the client in that transaction at all, much less representing [*11]the client continuously with respect to "the particular problems (conditions) that gave rise to plaintiff's malpractice claims" against the attorney (id. at 11). The attorney and client are engaging in a transaction that is separate and distinct from the attorney's rendition of professional services on the client's behalf (see e.g. Woyciesjes, 151 AD2d at 1014-1015 [rejecting applicability of the continuous representation doctrine to the plaintiff's claim that his former attorney improperly charged him a fee of 50% rather than one-third]).

We have never endorsed continuous representation tolling for disputes between professionals and their clients over fees and the like, as opposed to claims of deficient performance where the professional continues to render services to the client with respect to the objected-to matter or transaction. Nor do the rationales underlying continuous representation tolling support its extension beyond current limits.

Two rationales inform the rule. First, a lay person "realistically cannot be expected to question and assess the techniques employed or the manner in which [professional] services are rendered"; specifically, a client cannot "be expected, in the normal course, to oversee or supervise the attorney's handling of the matter" (Greene v Greene, 56 NY2d 86, 94 [1982]). Thus, the client should not be burdened with the obligation to identify the professional's errors in the midst of the representation as "[t]he client is hardly in a position to know the intricacies of the practice or whether the necessary steps in the action have been taken" (Siegel v Kranis, 29 AD2d 477, 480 [2d Dept 1968]). Relatedly, a client cannot be "expected to jeopardize his pending case or his relationship with the attorney handling that case during the period that the attorney continues to represent the person" as to the matter giving rise to the malpractice claim (Glamm, 57 NY2d at 94). Second, a client who becomes aware of an error should not be required to sue immediately since that would only "interrupt corrective efforts" (Borgia v City of New York, 12 NY2d 151, 156 [1962] [establishing the continuous treatment rule for medical malpractice]).

When a client pays a lawyer or gives the lawyer a gift, the lawyer is not — in that transaction — "perform[ing] legal services on the [client's] behalf" (Greene, 56 NY2d at 95). As a result, requiring the client to dispute the payment or seek return of the gift within the ordinary limitations period does not force a lay person to undertake actions that he is ill-equipped to carry out; i.e., to "question and assess the techniques employed" by the professional, or evaluate "the manner in which the services are rendered" or "oversee or supervise the attorney's handling of the matter" (id. at 94). Notably, clients are obligated to review attorney's invoices on a timely basis, rather than wait until the representation ends before raising objections (see Whiteman, Osterman & Hanna, LLP v Oppitz, 105 AD3d 1162, 1163 [2013] [an attorney or law firm may recover on a cause of action for an account stated "with proof that a bill, even if unitemized, was issued to a client and held by the client without objection for an unreasonable period of time(, and) need not establish the reasonableness of the fee since the client's act of holding the statement without [*12]objection will be construed as acquiescence as to its correctness"] [internal quotation marks omitted])."

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The Successor Counsel Problem in Legal Malpractice

Client hires attorney and, let's say, the relationship sours.  Client moves on to attorney 2 and there is a bad outcome to the litigation.  Who is responsible (if anyone)?  Is it attorney 1 or attorney 2 or both?

Tooma v Grossbarth   2014 NY Slip Op 07347  Decided on October 29, 2014  Appellate Division, Second Department is the exploration of this question, from the opposite persepctive.  Can attorney 1 successfully dismiss the case on the theory that Attorney 2 should/could have fixed the problem, but didn't.  In this case attorney 1 fails, but others have succeeded.

"The defendants are an attorney and his law firm who represented the plaintiff in an underlying medical malpractice action that was commenced in December 2006. In the underlying action, the plaintiff alleged that he was injured as a result of medical malpractice arising from certain spinal surgery that he underwent on May 21, 2004, and the continuous "care and treatment" that he received until "at least June 18, 2004." In January 2012, while the underlying action was pending, it was brought to the attention of the Supreme Court in that action that the defendant Joel A. Grossbarth, the only practicing attorney associated with the defendant law firm Tognino & Grossbarth, LLP, was suspended from the practice of law. The Supreme Court stayed the underlying action until March 30, 2012, so that the plaintiff could retain new counsel. Thereafter, upon the motion of the defendants in the underlying action, the Supreme Court, in an order dated August 20, 2012, directed the dismissal of the complaint in the underlying action, based on the plaintiff's failure to proceed to trial."

"The plaintiff contends that the defendants failed to timely join proper parties in the underlying action. Accordingly, the fact that the Supreme Court dismissed the complaint in the underlying action, which was asserted solely against parties that were allegedly not culpable to the plaintiff for improper medical treatment, and was based solely on the failure to proceed to trial, does not dispose of the plaintiff's claim sounding in legal malpractice, since the order directing the dismissal of the complaint in the underlying action did not address the merits of the underlying action or the causes of action that the plaintiff may have had against the persons who were not joined as defendants in that action. Thus, the Supreme Court properly denied that branch of the defendants' motion which was pursuant to CPLR 3211(a)(1) to dismiss the complaint in this action."

"The defendants argue that, had the plaintiff retained successor counsel in the underlying action, that counsel could have remedied any alleged negligence that the defendants might have committed in their capacity as initial counsel, thus breaking any causal link between the negligence of initial counsel and the plaintiff's damages. We reject the defendants' contention. Unlike the instant action, the cases upon which the defendants rely arise from matters where the relief sought by a party was an absolute right, or where control of the outcome of litigation was wholly in the hands of successor counsel (see DiGiacomo v Levine, 76 AD3d 946; Volpe v Canfield, 237 AD2d 282; see also Katz v Herzfeld & Rubin, P.C., 48 AD3d 640, 641; Ramcharan v Pariser, 20 AD3d 556, 557; Perks v Lauto & Garabedian, 306 AD2d 261; Albin v Pearson, 289 AD2d 272; Kozmol v Law Firm of Allen L. Rothenberg, 241 AD2d 484). In order to remedy the negligence allegedly committed by the defendants in their capacity as the plaintiff's initial counsel in the underlying action, any subsequent counsel in that action would have needed far more than a [*3]reasonably sufficient period of time in which to litigate the issue of the nonjoinder of proper parties (see Grant v LaTrace, 119 AD3d 646). Rather, to remedy that alleged negligence, a substituted counsel, or the plaintiff pro se, would have had to successfully litigate a motion to join allegedly culpable parties as additional defendants in the underlying action approximately five years after the statute of limitations on the medical malpractice cause of action had expired (see CPLR 214-a, 203[b]). The record before us provides no evidence to support the defendants' contention that such a motion would have been successful (see Stevens v Winthrop S. Nassau Univ. Health Sys., Inc., 89 AD3d 835, 836; Matter of Murphy v Kirkland, 88 AD3d 267; Shapiro v Good Samaritan Regional Hosp. Med. Ctr., 42 AD3d 443, 444)."

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Conversion of Guardian Funds Sets Up a Tangled Web of Legal Malpractice Litigation

Many lawyers are disciplined, and some are disbarred over the conversion of their ward's funds.  Guardianships are necessary for those who cannot manage their own finances, and for the most part are beneficial to the wards.  Sometimes, however, the existence of money just sitting there can be too much of a temptation.  So it was in United States Fire Ins. Co. v Raia  2014 NY Slip Op 07146  Decided on October 22, 2014  Appellate Division, Second Department. 

"The defendant Camille A. Raia was appointed guardian of the property of Andrea S., an incapacitated person (hereinafter the IP). Raia obtained a guardianship bond through the plaintiff, United States Fire Insurance Company (hereinafter US Fire), as surety. Subsequently, Raia's law partner, the defendant Steven T. Rondos, began to handle the guardianship. During the course of the guardianship, Cavalcante & Company (hereinafter C & C), an accounting firm, was retained to prepare annual tax returns on behalf of the IP. Ultimately, Raia was removed as the guardian of the IP's property as a result of a criminal investigation into the wrongful conversion of funds by Rondos. The court accepted an account stated as Raia's final account for the period she acted as guardian of the IP's property, and surcharged her in a certain amount. US Fire and the IP, through a successor guardian, entered into a stipulation by which the IP released US Fire from further liability under the bond and assigned all rights and causes of action to it in exchange for a payment in the amount of $1,100,000.

US Fire, on its own behalf and as the IP's subrogee/assignee, commenced this action against, among others, Raia, Raia & Rondos, P.C., Rondos, and C & C. US Fire alleged, with respect to C & C, that it committed professional malpractice by failing to detect unlawful withdrawals made from the IP's investment account and to report the accounting regularities. In its answer, C & C asserted cross claims against Raia, Rondos, and Raia & Rondos, P.C., seeking contribution and common-law indemnification. US Fire settled with Raia, Rondos, and Raia & Rondos, P.C., and thereupon executed a release in favor of Raia, and a separate release in favor of Rondos and Raia & Rondos, P.C.

Raia moved, inter alia, for summary judgment dismissing C & C's cross claims insofar as asserted against her and pursuant to 22 NYCRR 130-1.1 for an award of attorney's fees. Rondos and Raia & Rondos, P.C., separately moved, inter alia, for summary judgment dismissing C & C's cross claims insofar as asserted against them. C & C opposed the motions and cross-moved for summary judgment on its cross claims insofar as asserted against Raia, Rondos, and Raia & Rondos, P.C. The Supreme Court, in effect, granted those branches of the motions and denied the cross motion.

Raia, Rondos and Raia & Rondos, P.C., demonstrated their prima facie entitlement to judgment as a matter of law on C & C's cross claim for contribution insofar as asserted against them. "A release given in good faith by the injured person to one tortfeasor as provided in [General Obligations Law § 15-108(a)] relieves him [or her] from liability to any other person for contribution as provided in article fourteen of the civil practice law and rules" (General Obligations Law § 15-108[b]). Here, US Fire, upon settling with Raia, Rondos and Raia & Rondos, P.C., executed a release in favor of Raia, and a separate release in favor of Rondos, and Raia & Rondos, P.C., and there is no evidence in the record indicating that the releases were not given in good faith. Thus, Raia, Rondos, and Raia & Rondos, P.C., established, prima facie, that they were released from liability to C & C for contribution (see Balkheimer v Spanton, 103 AD3d 603; Ziviello v Boyle, 90 AD3d 916, 917; Boeke v Our Lady of Pompei School, 73 AD3d 825, 826-827; Kagan v Jacobs, 260 AD2d 442, 442-443; Brown v Singh, 222 AD2d 392). In opposition, C & C failed to raise a triable issue of fact.

"

 

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What is a Plaintiff to Do?

Deep v Boies  2014 NY Slip Op 07215  Decided on October 23, 2014  Appellate Division, Third Department  is the story of a plaintiff who lost an early start-up web site/application called "Aimster."  His claim is that it was taken from him by his attorney, the very powerful David Boies. 

When Plaintiff sued Boies and the firm, litigation ensued over missing documents, many missing documents.  How is a plaintiff to prove that the law firm was representing him when they no longer have any of the necessary documents?

"As detailed in our prior decision in this matter (53 AD3d 948 [2008]), plaintiff commenced this action in October 2005 alleging that defendant David Boies, defendant Boies, Schiller & Flexner, LLP (hereinafter BSF) and defendant Straus & Boies LLP engaged in certain acts of legal malpractice. Pertinent here, plaintiff alleged that Boies, BSF and Straus & Boies (hereinafter collectively referred to as defendants) misappropriated plaintiff's file sharing software, known as Aimster, while serving as his counsel with regard to myriad transactions involving the different corporate entities established to develop and market the software. In our prior decision, we affirmed Supreme Court's rulings that the cause of action for malpractice based on the misappropriation was asserted outside of the applicable three-year statute of limitations (see CPLR 214 [6]), but questions of fact existed with regard to whether the time to commence the action was tolled by the continuous representation doctrine (53 AD3d at 952). We observed that "after appropriate discovery, the trial court [could] elect to order an immediate trial on this issue as it could expeditiously dispose of the entire action" (id. at 952). With the [*2]parties' consent, Supreme Court oversaw what became protracted discovery before scheduling a trial pursuant to CPLR 3212 (c). Following the trial, the court dismissed plaintiff's complaint and, thereafter, denied plaintiff's motions for a new trial and/or to renew or reargue (see CPLR 2221, 4404). This Court denied plaintiff's motion to vacate our July 2008 decision and for expedited consideration and sanctions. Plaintiff now appeals from the judgment dismissing his complaint, as well as from the order denying plaintiff's posttrial motions.[FN1]

Although we previously denied defendants' request for summary judgment because the scope of the legal relationship between the parties was unclear, there is no dispute that BSF represented plaintiff in the copyright litigation and that their legal relationship in that litigation had terminated by November 4, 2002. According to plaintiff, defendants misappropriated software, at the latest, on June 25, 2002 (53 AD3d at 950). Since this action was not commenced until October 28, 2005, outside of the three-year statute of limitations (see CPLR 214 [6]), plaintiff's burden of proof at trial was to establish that the copyright litigation was part of a "continuing, interconnected representation" (53 AD3d at 952) by defendants. If so, the statute would have been tolled through November 4, 2002 and the action would have been commenced on a timely basis.

"The continuous representation doctrine tolls the statute of limitations . . . where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim" (McCoy v Feinman, 99 NY2d 295, 306 [2002]). It requires more than a continuing, general, professional relationship; it "tolls the [s]tatute of [l]imitations only where the continuous representation pertains specifically to the matter in which the attorney committed the alleged malpractice" (Shumsky v Eisenstein, 96 NY2d 164, 168 [2001]). Plaintiff concedes that there was no retainer agreement or letter of engagement detailing the scope of the relationship between plaintiff and defendants. Rather, his claim of continuous representation stems from unsigned correspondence dated November 8, 2000, wherein an entity known as Datamine LLC, purportedly controlled by Boies and/or members of his family, outlined the advisory services it would provide to Buddy USA Inc., an entity controlled by plaintiff and created to market and develop the Aimster service, and correspondence dated November 15, 2000 from Boies addressed to plaintiff as chief executive officer of Buddy USA, wherein Boies stated that his son had agreed to serve on Buddy USA's board of directors to represent Datamine's 15% equity interest in the company. According to plaintiff, the November 15, 2000 letter confirmed an oral agreement reached between Boies, plaintiff and defendant William Duker during a meeting that they had in October 2000."

'We recognize that, although plaintiff claims that certain documents should exist, defendants produced more than 5,000 pages of documents during disclosure and have consistently maintained and affirmed that they do not possess any more documents responsive to plaintiff's demands. In this regard, plaintiff cannot show a clear abuse of discretion because Supreme Court could not compel defendants to produce documents that do not exist (see Mary Imogene Bassett Hosp. v Cannon Design, Inc., 97 AD3d 1030, 1032 [2012]). On this record, we find that Supreme Court properly exercised its discretion by accepting defendants' affirmation that they had produced all records related to their representation of plaintiff (see Matter of Scaccia, 66 AD3d 1247, 1249-1250 [2009]).

We also perceive no error by Supreme Court with regard to defendants' "lost" emails. When plaintiff first raised the issue, defendants affirmed that, even if the files could be restored, it would be at great expense. In March 2011, Supreme Court directed defendants to cooperate with an expert retained by plaintiff to investigate whether emails generated during 2000 and 2001 could be restored and produced. The court emphasized, without objection from plaintiff, that such investigation was to be done at plaintiff's expense. After plaintiff failed to conduct the permitted investigation, Supreme Court issued a letter order in June 2011 confirming that the parties would endeavor to find a computer forensics expert to examine the computer, again at plaintiff's expense [FN7]. Plaintiff chose not to avail himself of this opportunity, and we cannot conclude that Supreme Court abused its discretion by conducting the hearing without the "lost" emails.

We also reject plaintiff's claim that Supreme Court erred by conducting the hearing pursuant to CPLR 3212 (c) and that it should have conducted a trial on the merits of his misappropriation claim. Supreme Court could not decide the merits of plaintiff's claim until it resolved the statute of limitations issue (53 AD3d at 950). The record confirms that plaintiff repeatedly acknowledged this, and urged the court to conduct the immediate trial."

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The Judgment Rule in Complex Litigation

In a case with complex legal issues, are attorneys given an extended range in which to make "decisions" rather than "departures"?  It seems so.  What might be a "mistake" in another setting is a "judgment call" here.

M & R Ginsburg, LLC v Segel, Goldman, Mazzotta & Siegel, P.C.  2014 NY Slip Op 07227  Decided on October 23, 2014  Appellate Division, Third Department holds that a judgment call by third-party attorneys is not subject to legal malpractice.

"Third-party defendants moved to dismiss the third-party complaint, which was treated by the parties and Supreme Court as a motion for summary judgment (see Gregware v Key Bank of N.Y., 218 AD2d 859, 861 [1995], lv denied 87 NY2d 803 [1995])[FN1]. Supreme Court granted third-party defendants' motion and defendants appeal.

We affirm. Third-party defendants established with regard to the complex legal issue facing plaintiff that the legal course they recommended — after consulting with plaintiff and defendants — was "one among several reasonable courses of action [and did] not constitute malpractice" (Rosner v Paley, 65 NY2d 736, 738 [1985]; see Bixby v Somerville, 62 AD3d 1137, 1139 [2009]). Although defendants speculate that a different strategy might have ultimately led to a more beneficial result for plaintiff, such speculation as to other possible legal avenues is insufficient to implicate malpractice (see Rosner v Paley, 65 NY2d at 738). Defendants' allegations and proof regarding third-party defendants' representation of plaintiff did not raise a triable issue when measured by the applicable standard in a legal malpractice action (see Russo v Feder, Kaszovitz, Isaacson, Weber, Skala & Bass, LLP, 301 AD2d 63, 69 [2002]; Bassim v Halliday, 234 AD2d 628, 630 [1996], appeal dismissed 89 NY2d 1001 [1997]; Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1990])."

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The Inflexible Statute of Limitations in Legal Malpractice

It's THREE years, and not a day more.  In legal malpractice, no matter whether your claim is based on negligence or breach of contract CPLR 214(6) states that one has 3 years in which to bring the action.

Tsafatinos v Law Off. of Sanford F. Young, P.C.  2014 NY Slip Op 07145  Decided on October 22, 2014  Appellate Division, Second Department is one more example of this harsh, bright-line rule.

"On a motion to dismiss a cause of action pursuant to CPLR 3211(a)(5) as barred by the applicable statute of limitations, a defendant must establish, prima facie, that the time within which to sue has expired (see Bullfrog, LLC v Nolan, 102 AD3d 719, 719). Once that showing has been made, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations has been tolled, an exception to the limitations period is applicable, or the plaintiff actually commenced the action within the applicable limitations period (see id.).

Here, the defendants sustained their initial burden by demonstrating that the cause of action alleging legal malpractice accrued, at the latest, on April 22, 2008, a date more than three years before the commencement of this action (see CPLR 214[6]; Landow v Snow Becker Krauss, P.C., 111 AD3d 795, 796; Bullfrog, LLC v Nolan, 102 AD3d at 719). In opposition, the appellant failed to raise a question of fact (see Bullfrog, LLC v Nolan, 102 AD3d at 719; Daniels v Turco, 84 AD3d 858, 858-859; Piliero v Adler & Stavros, 282 AD2d 511, 511-512). Accordingly, the Supreme Court properly granted that branch of the defendants' motion which was to dismiss, as time-barred, the legal malpractice cause of action insofar as asserted by the appellant.

"

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Hedge Funds, Insurance Companies and Legal Malpractice

Legal malpractice cases come up in all kinds of settings.  It may be the individual personal injury plaintiff whose case was not started on time; it may be the car accident in which the doctor's reports failed to give the necessary descriptions of the injury and the case was dismissed, and sometimes it can be hedge funds complaining about loans gone bad because of faulty legal advice.  Here, in Genesis Merchant Partner v. Gilbride Tusa, 653145/2014 we see some of the big boys at play.

Christine Simmons, in today's New York Law Journal reports that: "Two investment funds have sued 20-attorney Gilbride, Tusa, Last & Spellane for malpractice, claiming the firm failed to perfect the funds' security interest in life insurance policies, leading to more than $84 million in damages.
"This is an open-and-shut case of legal malpractice and gross incompetence by Gilbride Tusa," the funds claim in Genesis Merchant Partner v. Gilbride Tusa, 653145/2014 (See Complaint).
But Gilbride Tusa in a statement called the suit's allegations "false, inaccurate and distorted versions of the events that seek to blame others for an unsuccessful loan of approximately $3 million made by the plaintiffs."


"Gilbride, Tusa, Last & Spellane denies these baseless allegations and anticipates being totally vindicated in court. In addition, we expect to obtain a judgment against the plaintiffs for the substantial unpaid legal fees owed to the Gilbride firm," said Joseph Francoeur and Thomas Leghorn, partners at Wilson Elser Moskowitz Edelman & Dicker who represent the firm.
The plaintiffs are investment funds Genesis Merchant Partners LP and Genesis Merchant Partners II LP, created by hedge fund Sands Brothers Asset Management. They are suing Gilbride Tusa, which has offices in New York and Connecticut, and Connecticut-based partners Jonathan Wells, Kenneth Gammill Jr. and Charles Tusa.


Genesis claims the funds paid Gilbride Tusa about $60,000 in legal fees to draft secured loan documents for about $4.4 million in loans to Progressive Capital Solutions LLC.
Progressive was a buyer of "life settlement" policies, which are life insurance policies that have been sold by their initial owners and are traded on a secondary market."

 

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A New Rule For Legal Malpractice and Appeals

Up to today, the rule in legal malpractice litigation has been that Plaintiff was not required to appeal from a decision in order to sue his attorney.  That all changed today with the Court of Appeals decision in Grace v Law  2014 NY Slip Op 07089  Decided on October 21, 2014  Court of Appeals
Abdus-Salaam, J.  The rule is now that "prior to commencing a legal malpractice action, a party who is likely to succeed on appeal of the underlying action should be required to press an appeal. However, if the client is not likely to succeed, he or she may bring a legal malpractice action without first pursuing an appeal of the underlying action."

From the decision:  "We are presented with an issue of first impression for this Court:

What effect does a client's failure to pursue an appeal in an underlying action have on his or her ability to maintain a legal malpractice lawsuit? We hold that the failure to appeal [*2]bars the legal malpractice action only where the client was likely to have succeeded on appeal in the underlying action.

While this Court has not had occasion to enunciate the appropriate standard for bringing legal malpractice lawsuits in the circumstances presented here, the Appellate Division Departments have examined similar circumstances (see Rupert v Gates & Adams, P.C., 83 AD3d 1393 [4th Dept 2011]; Rodriguez v Fredericks, 213 AD2d 176 [1st Dept 1995]). Those decisions — presented in the settlement context — generally stand for the proposition that an attorney should be given the opportunity to vindicate him or herself on appeal of an underlying action prior to being subjected to a legal malpractice suit.

Defendants contend that a plaintiff forfeits his or her opportunity to commence a legal malpractice action when he or she fails to pursue a nonfrivolous or meritorious appeal that a reasonable lawyer would pursue (see Sands v State of New York, 49 AD3d 444, 444 [1st Dept 2008]; see also MB Indus., LLC v CNA Ins. Co., 74 So 3d 1173 [LA 2011]; Rondeno v Law Office of William J. Vincent, 111 So 3d 515, 524 [LA 4th CCA 2013]). In contrast, plaintiff urges us to adopt a "likely to succeed" standard. Courts applying the "likely to succeed" standard analyze whether a client can commence a legal malpractice action without taking an appeal in the underlying action based upon the likelihood of success on that underlying appeal. In Hewitt v Allen (118 Nev 216 [Nev 2002]), the Supreme Court of Nevada held that the voluntary dismissal of an underlying appeal does not constitute abandonment where the appeal "would be fruitless or without merit" (id. at 216). The United States District Court for the District of Nevada interpreted Hewitt to mean that a defendant would have to show that the pending appeal was "likely" to succeed (U-Haul Co. of Nevada, Inc. v Gregory J. Kramer, Ltd., 2013 WL 4505800, at *2 [D. Nev. 2013]). Florida courts have held that "[w]here a party's loss results from judicial error occasioned by the attorney's curable, nonprejudicial mistake in the conduct of the litigation, and the error would most likely have been corrected on appeal, the cause of action for legal malpractice is abandoned if a final appellate decision is not obtained" (Segall v Segall, 632 So 2d 76, 78 [Fla 2d DCA 1993]; see Technical Packaging, Inc. v Hanchett, 990 So 2d 309, 316 [Fla 2d DCA 2008]; Eastman v Flor-Ohio, Ltd., 744 So 2d 499, 504 [Fla 5th DCA 1999]).

Defendants argue that the "likely to succeed" standard should not be adopted because it requires courts to speculate on the outcome of the underlying appeal. They posit, nevertheless, that even were we to adopt the "likely to succeed" standard, plaintiff could have succeeded on an appeal of the underlying action and, thus, should not be allowed to sue them for legal malpractice.

Here, the Appellate Division adopted the likely to succeed standard employed by [*5]our sister states with a proximate cause element [FN2]. We agree that this is the proper standard, and that prior to commencing a legal malpractice action, a party who is likely to succeed on appeal of the underlying action should be required to press an appeal. However, if the client is not likely to succeed, he or she may bring a legal malpractice action without first pursuing an appeal of the underlying action.

On balance, the likely to succeed standard is the most efficient and fair for all parties. This standard will obviate premature legal malpractice actions by allowing the appellate courts to correct any trial court error and allow attorneys to avoid unnecessary malpractice lawsuits by being given the opportunity to rectify their clients' unfavorable result. Contrary to defendants' assertion that this standard will require courts to speculate on the success of an appeal, courts engage in this type of analysis when deciding legal malpractice actions generally (see Davis v Klein, 88 NY2d 1008, 1009-1010 [1996] ["In order to establish a prima facie case of legal malpractice, a plaintiff must demonstrate that the plaintiff would have succeeded on the merits of the underlying action but for the attorney's negligence"]; see also Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442-443 [2007]; McKenna v Forsyth & Forsyth, 280 AD2d 79, 82 [4th Dept 2001]). We reject the nonfrivolous/meritorious appeal standard proposed by defendants as that would require virtually any client to pursue an appeal prior to suing for legal malpractice."

 

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Is It Partnership Fraud or Individual Fraud in this Legal Malpractice Case?

Attorneys represent individual client for a personal injury case.  The attorneys also represent two companies that are run by the individual.  The PI case settles and the attorneys want to apply the settlement monies against the bills for the company's commercial litigation.  It all goes wrong thereafter. 

Salazar v Sacco & Fillas, LLP  2014 NY Slip Op 00980 [114 AD3d 745]  February 13, 2014
Appellate Division, Second Department  discusses what happens when fraud is brought against various individual attorneys and the firm.

'To state a cause of action sounding in fraud, a plaintiff must allege that "(1) the defendant made a representation or a material omission of fact which was false and which the defendant knew to be false, (2) the misrepresentation was made for the purpose of inducing the plaintiff to rely upon it, (3) there was justifiable reliance on the misrepresentation or material omission, and (4) injury" (Selechnik v Law Off. of Howard R. Birnbach, 82 AD3d 1077, 1078 [2011]; see McDonnell v Bradley, 109 AD3d 592, 592-593 [2013]). In the instant matter, the complaint alleged that Fillas, one of the attorneys representing the plaintiff and the Always companies, made certain false statements, including, inter alia, misrepresenting the amount of past-due attorney's fees owed by the Always companies, and falsely stating, in effect, that he could sue the plaintiff personally for the sums allegedly owed by the Always companies. The complaint further alleged that these statements were known by Fillas to be false at the time they were made, and were intended to deceive, coerce, and induce the plaintiff into entering into the settlement agreement, and that the plaintiff relied on these statements to his detriment. Accordingly, these allegations were sufficient to state a cause of action alleging fraud against Fillas and the law firm (see Partnership Law §§ 24, 25, 26 [e]; Rabos v R&R Bagels & Bakery, Inc., 100 AD3d 849 [2012]).

However, the complaint fails to state a cause of action sounding in fraud against Sacco. As a general matter, Partnership Law § 26 (a) (1) imposes joint and several liability upon all individual partners in a partnership for all obligations chargeable to the partnership under Partnership Law §§ 24 and 25, which are referable to wrongful acts committed by one or more partners of the partnership acting in the ordinary course of partnership business. Partnership Law § 26 (b), however, immunizes from individual liability any partner in a partnership registered as a limited liability partnership who did not commit the underlying wrongful act, except to the extent that Partnership Law § 26 (c) imposes liability on that partner where he or she directly supervised the person who committed the wrongful act and Partnership Law § 26 (d) imposes liability on that partner where he or she had previously agreed to assume individual liability for wrongs committed by another partner. Although, at this stage of the litigation, the plaintiff " 'need only set forth sufficient information to apprise defendants of the alleged wrongs' " (Selechnik v Law Off. of Howard R. Birnbach, 82 AD3d at 1079, quoting DDJ Mgt., LLC v Rhone Group L.L.C., 78 AD3d 442, 443 [2010]), the complaint fails to allege facts apprising Sacco of the basis of his individual liability. The complaint does not allege that Sacco personally committed a fraudulent act. Nor does the complaint allege that the law firm is a general partnership or that, as such, Sacco may be held individually liable pursuant to Partnership Law § 26 (a) (1). Furthermore, the complaint does not allege that the law firm is a registered limited liability partnership, but that Sacco supervised Fillas in the commission of a fraudulent act, thus rendering Sacco individually liable pursuant to Partnership Law § 26 (c), or that Sacco had previously agreed to assume personal liability for fraudulent acts committed by Fillas, thus rendering Sacco individually liable pursuant to Partnership Law § 26 (d). The allegations in the complaint particularizing Fillas's fraudulent conduct, standing alone, are insufficient to state a cause of action sounding in fraud against Sacco (see Partnership Law § 26 [b], [d]; Selechnik v Law Off. of Howard R. Birnbach, 82 AD3d at 1079). Accordingly, the Supreme Court should have granted that branch of the defendants' motion which was to dismiss the fraud cause of action insofar as [*3]asserted against Sacco."

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You Did Well Enough, Now Go Home

Courts do not apply legal malpractice law in a vacuum.  Far more than in other areas of the law, Courts engage in finding ways to explain the attorney's conduct, or in finding explanations.  Fielding v Kupferman  2013 NY Slip Op 02008 [104 AD3d 580]  March 26, 2013  Appellate Division, First Department is no exception.  Plaintiff points out mistakes by the attorney.  The Court then tells plaintiff that he did well enough in the case, please stop pointing out other mistakes and be happy with what he got.

"Defendants established their entitlement to judgment as a matter of law in this action alleging legal malpractice. Defendants submitted evidence showing that the divorce settlement, in which plaintiff achieved his goal of retaining the parties' marital residence, was advantageous to plaintiff, and resulted in his receiving consideration that more than compensated him for the allegedly unforeseen tax consequences of liquidating his Keogh account (see e.g. Kluczka v Lecci, 63 AD3d 796, 798 [2d Dept 2009]). Defendants also submitted evidence demonstrating that the subject tax consequences were discussed with plaintiff during the course of the settlement negotiations.

In opposition, plaintiff failed to raise a triable issue of fact. His argument that if he had been properly advised on the tax consequences, he would have reached a better settlement or outcome after trial, is speculative (see Kluczka at 798). Plaintiff failed to take into account the benefits he received in the actual settlement, including buying out his wife's share of the marital residence based on an outdated appraisal that assigned a value that was significantly lower than the actual value at the time the agreement was executed. Moreover, plaintiff failed to provide proof of any ascertainable actual damages sustained as a result of the alleged negligence (see Lavanant v General Acc. Ins. Co. of Am., 212 AD2d 450 [1st Dept 1995]). [*2]

Under the circumstances presented, plaintiff's claim for disgorgement of legal fees already paid was properly dismissed (see Reisner v Litman & Litman, P.C., 95 AD3d 858 [2d Dept 2012]; compare Boglia v Greenberg, 63 AD3d 973, 976 [2d Dept 2009]). Concur—Gonzalez, P.J., Sweeny, Renwick, Manzanet-Daniels and Román, JJ. [Prior Case History: 2011 NY Slip Op 31983(U).]

"

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Try to Determine Why This Legal Malparctice Case Was Dismissed

Sure, the Second Department is busy, and there is a constant and steady stream of cases coming before it, 20 every day.  Nevertheless, a couple of facts in the decision might help practitioners in their everyday legal lives.

Barker v Amorini  2014 NY Slip Op 06931  Decided on October 15, 2014  Appellate Division, Second Department is an example of a decision that fails to illuminate the path.  Case is dismissed in Supreme Court on a CPLR 3211 motion, and modified by the Second Department. Why?  We have no clue.

"The defendants, among other things, moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the causes of action alleging conversion and legal malpractice. The Supreme Court, upon renewal, inter alia, granted those branches of the defendants' motion, concluding that the plaintiff was judicially estopped from asserting the cause of action alleging conversion and that, in any event, she failed to state a cause of action in that regard. The court also directed the dismissal of the cause of action alleging legal malpractice for failure to state a cause of action.

"On a pre-answer motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction and the plaintiff's allegations are accepted as true and accorded the benefit of every possible favorable inference" (Granada Condominium III Assn. v Palomino, 78 AD3d 996, 996; see Leon v Martinez, 84 NY2d 83, 87). However, on a motion to dismiss pursuant to CPLR 3211(a)(7), "bare legal conclusions are not presumed to be true" (Khan v MMCA Lease, Ltd., 100 AD3d 833, 833; see Goel v Ramachandran, 111 AD3d 783, 791-792). To prevail on a motion to dismiss a complaint pursuant to CPLR 3211(a)(1), the documentary evidence which forms the basis of the defense must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326; Parekh v Cain, 96 AD3d 812, 815).

The Supreme Court also properly directed the dismissal of the cause of action alleging legal malpractice. To recover damages in a legal malpractice action, a plaintiff must establish "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" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442, quoting McCoy v Feinman, 99 NY2d 295, 301; see Benishai v Epstein, 116 AD3d 726, 727). "To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer's negligence" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; see Benishai v Epstein, 116 AD3d at 727).

Here, affording the complaint a liberal construction, accepting all facts as alleged in the complaint to be true, and according the plaintiff the benefit of every possible favorable inference (see Leon v Martinez, 84 NY2d at 87-88), the complaint was insufficient to state a cause of action alleging legal malpractice. The plaintiff failed to specifically allege facts supporting a claim that, but [*2]for the defendants' alleged negligence, the plaintiff would not have incurred any damages (see Benishai v Epstein, 116 AD3d at 728; Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d 812; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083). Accordingly, the Supreme Court, upon renewal, properly granted that branch of the defendants' motion which was to dismiss the cause of action alleging legal malpractice, which was asserted by the plaintiff both in her individual capacity and derivatively on behalf of the LLC."

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Decision To Dismiss Unloved Legal Malpractice Case Reversed

Plaintiff hires attorneys to file a disability claim.  Claim is denied.  Plaintiff sues attorneys on the theory that they failed to file important proofs of his disability.  Attorneys move to dismiss.  Outcome?  Motion granted and then reversed on appeal.  Is this just another reflexive dismissal of an unloved legal malpractice case?

Biro v Roth  2014 NY Slip Op 06790  Decided on October 8, 2014  Appellate Division, Second Department is another example of the AD applying the rules to pre-discovery motions to dismiss legal malpractice cases.

"The plaintiff commenced this action against the defendants, alleging a single cause of action sounding in legal malpractice. The defendants represented the plaintiff in connection with an application by which he sought disability retirement benefits in connection with his employment as a corrections officer with the New York State Department of Correctional Services (now known as the New York State Department of Corrections and Community Supervision). The complaint alleged, inter alia, that the defendants failed to incorporate certain documentary evidence of his disability into his application, and that their failure to do so was the proximate cause of his failing to secure the benefits he sought. Prior to answering the complaint, the defendants moved to dismiss the complaint pursuant to CPLR 3211(a)(1) and (7). The Supreme Court denied that branch of the motion which was to dismiss the complaint pursuant to CPLR 3211(a)(7), determining that the plaintiff stated a cause of action, but granted that branch of the motion which was to dismiss the complaint pursuant to CPLR 3211(a)(1).

A motion to dismiss a complaint pursuant to CPLR 3211(a)(1) on the ground that a defense is founded on documentary evidence "may be appropriately granted only where the documentary evidence utterly refutes [the] plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326; see Rodolico v Rubin & Licatesi, P.C., 114 AD3d 923; Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin & Quartararo, 113 AD3d 587; Siracusa v Sager, 105 AD3d 937). Here, in their motion to dismiss, the defendants argued that they included all relevant documentation to support the plaintiff's application for disability retirement benefits. However, the evidence submitted by the defendants, including a doctor's report stating that the plaintiff was able to return to full duty, either did not constitute documentary evidence within the meaning of CPLR 3211(a)(1) or failed to utterly [*2]refute the plaintiff's allegations of malpractice or conclusively establish a defense as a matter of law (see Cives Corp. v George A. Fuller Co., Inc., 97 AD3d 713; Fontanetta v John Doe 1, 73 AD3d 78, 84-85). A party seeking relief pursuant to CPLR 3211(a)(1) on the ground that its defense is founded upon documentary evidence " has the burden of submitting documentary evidence that resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim'" (Flushing Sav. Bank, FSB v Siunykalimi, 94 AD3d 807, 808, quoting Mazur Bros. Realty, LLC v State of New York, 59 AD3d 401, 402; see Leon v Martinez, 84 NY2d 83, 88; Camisa v Papaleo, 93 AD3d 623; Makris v Darus-Salaam Masjid, N.Y., Inc., 91 AD3d 729). Here, the defendants failed to meet their burden. Accordingly, the Supreme Court should have denied that branch of the defendants' motion which was to dismiss the complaint pursuant CPLR 3211(a)(1)."

 

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A Professional Negligence Case Falls on Professional Negligence

Attorneys suing land surveyors and then getting sued by attorneys.  It's a circular story, which discusses contribution and indemnity.  In the end defendant cannot pass off the liability to a third-party, and must answer to the plaintiff. Alva v Gaines, Gruner, Ponzini & Novick, LLP  2014 NY Slip Op 06785  Decided on October 8, 2014  Appellate Division, Second Department is the story of finger-pointing gone bad.

"The plaintiffs, Geralyn Alva and James Alva (hereinafter together the Alvas), retained Atzl, Scatassa & Zigler, Land Surveyors, P.C. (hereinafter Atzl), to perform land surveying work on a vacant lot in Tomkins Cove, New York. The work was performed in November 2005. Due to an alleged error in the work, the Alvas withheld payment. Atzl returned to the Alvas' lot on April 13, 2006, and performed additional work. Atzl did not charge the Alvas for the work performed in April 2006, but continued to bill for the November 2005 work. In March 2008, the Alvas retained the defendant third-party plaintiff Gaines, Gruner, Ponzini & Novick, LLP, to represent them in connection with a claim to recover damages for injury to property that they allegedly sustained as a result of Atzl's negligence. On or about February 5, 2009, Gaines, Gruner, Ponzini & Novick, LLP, referred the Alvas' case to the third-party defendant Robert B. Marcus, P.C.

On February 20, 2009, the Alvas, represented by the third-party defendants Robert B. Marcus, P.C., and Robert Marcus (hereinafter together the Marcus attorneys), commenced an action against Atzl to recover damages for injury to property, based on professional malpractice (hereinafter the underlying action). The complaint alleged two separate causes of action, referable to the November 2005 work and the April 2006 work, respectively. Atzl moved to dismiss the first cause of action on the ground that it was barred by the applicable three-year statute of limitations. In opposing the motion, the Marcus attorneys argued on behalf of the Alvas that the parties engaged in a continuous professional relationship, and that continuous professional services were rendered in connection with the issue that was the subject of the underlying action. In an order dated August [*2]17, 2009, the Supreme Court granted Atzl's motion to dismiss the first cause of action in the underlying action.

Thereafter, the Alvas commenced the instant action against Gaines, Gruner, Ponzini & Novick, LLP, and Ted Alan Novick (hereinafter together the GGP & N defendants) to recover damages for legal malpractice, alleging that the GGP & N defendants failed to timely commence the underlying action against Atzl, and referred the case to outside counsel after the statute of limitations had already expired on the majority of the Alvas' claims. Subsequently, the GGP & N defendants commenced a third-party action against the Marcus attorneys for contribution and common-law indemnification. The Marcus attorneys moved to dismiss the third-party complaint pursuant to CPLR 3211(a)(1) and (7). The GGP & N defendants cross-moved for leave to amend the third-party complaint. The Supreme Court granted the Marcus attorneys' motion, and denied the cross motion. We affirm.

The Supreme Court properly determined that the GGP & N defendants failed to state a cause of action against the Marcus attorneys for contribution. The third-party complaint failed to allege sufficient facts which, if true, would establish that any legal malpractice committed by the Marcus attorneys proximately caused the Alvas to sustain actual damages, thus rendering the Marcus attorneys liable to the GGP & N defendants for contribution. The GGP & N defendants allegedly allowed the statute of limitations to run on the cause of action arising from Atzl's November 2005 work before referring the case to the Marcus attorneys. The GGP & N defendants alleged that the Marcus attorneys could have cured this error by including only one cause of action in the underlying action that would have encompassed all of Atzl's visits to the subject property in November 2005 and April 2006. The GGP & N defendants further asserted that such a cause of action would have been deemed timely and, thus, would have survived a motion to dismiss in the underlying action. However, this assertion is a bare legal conclusion, which we do not deem to be true on the instant motion pursuant to CPLR 3211(a) (see Aqua NY of Sea Cliff v Buckeye Pipeline Co., L.P., 119 AD3d 829)."

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A Reflexive Dismissal Reversed

We have noted in the past that legal malpractice cases are negatively viewed.  They are dismissed, either on a CPLR 3211 basis or a CPLR 3212 basis more often than other negligence cases, and often reflexively.  Harris Beach PLLC v Eber Bros. Wine & Liq. Corp.  2014 NY Slip Op 06704 
Decided on October 3, 2014  Appellate Division, Fourth Department is one example.  Here, Supreme Court granted summary judgment to the law firm for legal fees, dismissed all of the malpractice counterclaims, only to have the 4th Department summarily reverse.

"It is hereby ORDERED that the order so appealed from is unanimously reversed on the law without costs and the motion is denied in accordance with the following Memorandum: Plaintiff, the longtime general counsel for defendant, commenced this action seeking to recover approximately $750,000 in costs, disbursements, legal fees, and interest thereon for services rendered to defendant in the defense of a tort and breach of contract action in which defendant had been sued (underlying action). The underlying action was commenced on October 5, 2006, and, at that time, defendant was insured by Illinois National Insurance Company (Illinois National) pursuant to a policy of directors, officers and private company liability insurance (Illinois National policy) effective for the period from March 31, 2006 to March 31, 2007. The coverage under the Illinois National policy was limited to claims made and reported during the period in which that policy was effective, as was the coverage afforded defendant under a policy of directors, officers, and private company liability insurance issued by National Union Fire Insurance Company of Pittsburgh, Pa. (National Union) for the period from March 31, 2008 to March 31, 2009 (National Union policy). On August 7, 2008, i.e., approximately two years after the commencement of the underlying action, plaintiff wrote to M & T Insurance Agency, from which defendant had obtained the National Union policy, and, inter alia, tendered the defense of defendant in the underlying action pursuant to what the record reflects was the National Union policy. Both Illinois National and National Union are part of the AIG group of insurers, and by letter dated September 24, 2008, a claims analyst employed by AIG Domestic Claims, Inc. rejected plaintiff's tender on the ground that it was untimely.

In deciding this issue, we must examine the terms of the Illinois National policy, which was effective at the time of the commencement of the underlying action and pursuant to which plaintiff should have promptly tendered the defense and indemnification of defendant in the underlying action. That contract provides, inter alia, that Illinois National did not assume any duty to defend defendant, but that defendant had the option of either timely tendering its defense to Illinois National or seeking an advance of defense costs from Illinois National prior to the final disposition of the claim. If Illinois National advanced defense costs, it was entitled to recoupment of those costs to the extent that defendant was not entitled to payment of the loss in question under the terms of the Illinois National policy. The Illinois National policy also contains a clause requiring notice "as soon as practicable" and either "during the Policy Period or during the Discovery Period" as a condition precedent to coverage under that agreement.

In spite of that timely notice provision, plaintiff did not tender the defense of defendant to any insurer until August 7, 2008, and it appears from the record before us that plaintiff never tendered the defense of defendant or sought an advance of defense costs for defendant under the Illinois National policy. As a result of those omissions, plaintiff never asked Illinois National to take a position on coverage for defendant under the Illinois National policy, and thus the record is silent as to how Illinois National would have responded to such a tender. Indeed, this matter presents a question of claim handling, i.e., how Illinois National would have processed a request for coverage under the Illinois National policy. Consequently, we conclude that plaintiff did not meet its initial burden on the motion for partial summary judgment (see Utica Cutlery Co., 109 AD3d at 1162; see generally Zuckerman v City of New York, 49 NY2d 557, 562). We therefore reverse the order in its entirety, deny the motion for partial summary judgment, reinstate that part of defendant's counterclaim for professional negligence based on plaintiff's alleged failure to provide defendant's insurer with timely notice of the underlying claim, and reinstate defendant's fifth and sixth affirmative defenses. We decline to address defendant's remaining contention herein."

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Using the Correct Procedure Defeats a Judiciary Law 487 Claim

In the recent past, a claim that attorney lied in motion papers filed seeking to be relieved as attorney has survived motion practice. This decision likely prodded plaintiff to bring Brady v Friedlander  2014 NY Slip Op 06677  Decided on October 2, 2014  Appellate Division, First Department.  In this situation the First Department did not intervene, nor did it reverse.  The attorney made a proper motion to withdraw, and Civil Court's decision is not reviewable on a legal malpractice claim.

"On or about September 30, 2009, defendant moved in Civil Court, New York County (Samuels, J.), to withdraw as counsel in the underlying nonpayment proceedings (see IGS Realty Co., L.P. v James Catering, Inc., 99 AD3d 528 [1st Dept 2012]). Over plaintiffs' objection, the court granted the motion. Plaintiffs did not appeal from Civil Court's order. With respect to the cause of action for a violation of Judiciary Law § 487, the instant complaint alleges that defendant provided fabricated grounds in support of his motion, to wit, a conflict with plaintiffs regarding strategy and a lack of trust in defendant's representation, in order to conceal the true reason, which was an unfounded belief that plaintiffs could or would not pay future legal bills. However, while the parties' communications as quoted in the complaint reflect that defendant was remarkably concerned with billing, which may have informed his decision to withdraw, the complaint also reflects that plaintiff Brady expressed disagreement with defendant as to strategy and questioned defendant's honesty and competency, thus providing support for defendant's stated grounds for the motion (cf. Palmieri v Biggiani, 108 AD3d 604 [2d Dept 2013]).

In granting the motion, over plaintiffs' objection, Civil Court implicitly determined that defendant had shown "just cause" to be relieved. That issue may not be re-litigated via the instant misrepresentation claim (cf. Hass & Gottlieb v Sook Hi Lee, 11 AD3d 230 [1st Dept 2004])."

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Legal Malpractice and Surrogate's Court

Estate brings action against its attorneys, who successfully move to dismiss in Surrogate's Court on the basis that the action was not "brought during the administration of an estate."  Does this doom the legal malpractice and overbilling suit?  Is an overbilling suit duplicitive of the legal malpractice claims.  The answer is "no" in both instances.

Ullmann-Schneider v Lacher & Lovell-Taylor, P.C.  2014 NY Slip Op 06665  Decided on October 2, 2014  Appellate Division, First Department  tells us that when the case is timely brought in Surrogate's Court, it may be re-commenced in Supreme Court.

"In this action arising from defendants' legal representation of plaintiff's decedent, in connection with the estate accounting proceedings of decedent's deceased mother and a trust created under her will, the motion court properly found that, to the extent the claims herein are governed by a three-year statute of limitations, this action is timely, having been commenced within six months after termination of a timely commenced proceeding in Surrogate's Court (see CPLR 205[a]). Plaintiffs' commencement of the Surrogate's Court proceeding in connection with decedent's mother's estate, based on the same series of events involved here, was timely made within three years of decedent's death. We note that the prior proceeding was dismissed on the ground that it was not brought "during the administration of an estate" (SCPA 2110), "without prejudice to renewal in the appropriate forum." Since SCPA 2110 merely served as the attempted vehicle for plaintiffs to pursue their claims, and did not create those claims, the requirement that the petition be brought during an estate's administration was not a condition precedent affecting plaintiffs' right to bring the underlying claims in Supreme Court (see Matter of Morris Invs. v Commissioner of Fin. of City of N.Y., 69 NY2d 933, 935-936 [1987]).

As the motion court found, the breach of contract claim, which asserts, inter alia, that defendants overbilled them and performed unnecessary services, is not duplicative of the legal malpractice claim. The former claim, unlike the latter claim,does not speak to the quality of defendants' work (see Cherry Hill Mkt. Corp. v Cozen O'Connor P.C., 118 AD3d 514 [1st Dept 2014]). However, the claims for breach of the implied covenant [*2]of good faith and fair dealing, breach of fiduciary duty, and unjust enrichment, which are based on the same allegations and seek the same damages as the breach of contract and legal malpractice claims should have been dismissed as duplicative (see Chowaiki & Co. Fine Art Ltd. v Lacher, 115 AD3d 600 [1st Dept 2014])."

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Mismanaged Litigation and the Loss of a 6-Family Building

As is true of many other things, this story started with mismanaged money.  The original problem was exacerbated by mismanaged litigation.  in Gordon v Barrett  2014 NY Slip Op 51431(U)
Decided on September 30, 2014  Supreme Court, Kings County  Schmidt, J. plaintiff originally had money problems. 

"Plaintiff Gloria Gordon (plaintiff [FN1] ) maintains that, in 2002, she unwittingly and under false pretenses conveyed title to her six-family house at 646 East 96th Street in Brooklyn (Block 4755, Lot 69) (the property) to a Malco entity for a fraction of its value and became Malco's tenant under a lease which contained an option for her to buy back her property at a stated price, but that Malco refused to honor the option and sold her property in Oct. 2012 to defendant 646 East 96 Street Associates, LLC (Associates). As part of this action, she sought to file a notice of pendency, dated Oct. 3, 2013, against the property. The County Clerk initially declined to accept her notice for filing because of a previously expired and vacated notice of pendency (a lapsed notice of pendency) she filed in connection with her 2004 action against Malco under index No. 19828/04 for specific performance of the sale/leaseback agreement and for a declaration that she was the true owner of the property (the prior action). On Oct. 8, 2013, the County Clerk, in accordance with an unopposed order to show cause of the same date, accepted for filing plaintiff's notice of pendency, pending a hearing on plaintiff's motion in Seq. No. 2 to deem such notice valid and effective. In addition, presently before the Court are two pre-answer motions to dismiss, one in Seq. No. 4 served by Associates, and the other in Seq. No. 3 served by plaintiff's former counsel Clover Barrett, Esq. (Barrett [FN2] ) in the prior action.

Associates' fourth and final argument for dismissal is that plaintiff's complaint fails to state a cause of action against it under CPLR 3211 (a) (7). Associates posits that it is a bona fide purchaser for value because, when it recorded its deed to the property from Malco, the notice of pendency in the prior action had already lapsed and plaintiff's sale/leaseback agreement with Malco was never recorded. Associates' position raises a threshold question of whether, at the time of its purchase of the property, it was chargeable with constructive or inquiry notice of plaintiff's competing claim by virtue of her lapsed notice of pendency.

"At common law, the doctrine of lis pendens provided that any person who purchased real property that was the subject of litigation was presumed to have constructive notice of the dispute and was bound by the judgment in the action as if he or she were a party to it" (Kolel Damsek Eliezer, Inc. v Schlesinger, 90 AD3d 851, 855 [2d Dept 2011], lv dismissed 19 NY3d 919 [2012]). Thus, a search of all court records was required under the common-law lis pendens doctrine to determine whether real property in which a purchaser sought an interest was the subject of pending litigation (id.). Because this cumbersome process of searching through court records was seen as an intolerable burden effectively restraining alienation of real property, "the common-law lis pendens doctrine was replaced in most states by statutes requiring the filing of a notice of pendency before a would-be purchaser . . . would be charged with notice of the prior interest" (Matter of Sakow, 97 NY2d 436, 440-441 [2002] [internal citation omitted]).[FN3] This reduced the harshness of the former [*4]common-law rule because the notice of pendency is now filed with the records pertaining to the real property itself, and third persons are chargeable with knowledge only of what appears in the records filed in the central registry (see Kolel Damsek Eliezer, Inc., 90 AD3d at 855-856). The primary purpose of the notice of pendency procedure set forth in CPLR article 65 is to furnish a substitute for actual notice of pending litigation (see Da Silva, 76 NY2d at 442).

On the other hand, once a notice of pendency expires, or is vacated or canceled, it is considered to be a "nullity" — a "void" that cannot be filled (see Sakow, 97 NY2d at 442).[FN4] The authorities are nearly uniform in their conclusion that a lapsed notice of pendency in a subsisting action does not impart inquiry notice to a prospective purchaser despite his or her actual knowledge of the lapsed notice of pendency (see Polish Natl. Alliance of Brooklyn, U.S.A. v White Eagle Hall Co., 98 AD2d 400, 405 [2d Dept 1983] [a lapsed notice of pendency could not affect the rights of contract vendees who acquired their interest in the property after the notice lapsed]; Walter v State Bank of Albany, 73 AD2d 406, 408 [3d Dept 1980] [an expired notice of pendency had no effect as to the parties acquiring and/or perfecting an interest in real property after its expiration]; Bankers Trust Co. of Cal., N.A. v Bok, 26 Misc 3d 1203[A], 2009 NY Slip Op 52650[U] [Sup Ct, NY County] ["A Notice of Pendency . . . only serves as constructive notice while it is valid. . . . In the case at bar, there was only one Notice of Pendency, which . . . expired long before (the property buyer) obtained title."] [internal citations omitted]; but see Schoepp v State of NY, 69 AD2d 917, 917 [3d Dept 1979] [the defendant was responsible for determining the disposition of the action in which the lis pendens was filed but later expired]).

 

In conclusion, Barrett's motion can be quickly disposed. However denominated in the complaint, plaintiff's claims against Barrett sound in legal malpractice and, as such, are time-barred by the three-year statute of limitations, considering that Barrett's representation of plaintiff in the prior action ended no later than Feb. 27, 2009, when Barrett was relieved by court order entered on consent of plaintiff's successor counsel (see Biberaj v Acocella, 2014 NY Slip Op 06165 [2d Dept]).[FN10] Plaintiff's claims against Barrett are also barred by the doctrine of res judicata because in a separate action under index No. 4960/09 instituted by Barrett against her for unpaid legal fees arising from Barrett's representation of her in the prior action, the Appellate Division, Second Department (at 90 AD3d 973 [2011]), upheld Barrett's default judgment against her. "

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Buck Rogers and An Account Stated

Privity, schmivity.  The Appellate Division recently decided this legal malpractice case arising out of the intellectual property case involving the comic Buck Rogers.  Does it matter whether the Trust actually hired the law firm?  No.  The Trust is liable anyway.  Can the Trust sue for legal malpractice? No.  The claims are too speculative.

Fross, Zelnick, Lehrman & Zissu, P.C. v Geer  2014 NY Slip Op 06547  Decided on September 30, 2014  Appellate Division, First Department tells us that when a bill is sent, and no objection made, that's basically the end of the inquiry.

"The Dille Family Trust (the Trust), of which defendant is trustee, owned trademarks and copyrights for "Buck Rogers." Two of the Dille family members are beneficiaries of the trust; their grandfather's syndicate had obtained the Buck Rogers trademark and copyrights. The syndicate had hired Philip Nowlan to create comic strips based on the character, and his heirs started cancellation proceedings to terminate the syndicate's trademark rights and obtain the rights for themselves. The beneficiaries of the Trust retained plaintiff law firm to handle intellectual property matters, including the cancellation action.

Contrary to the motion court's conclusion, there was a valid fee agreement between plaintiff and the Trust. The better practice would have been to send the engagement letter to the trustee, rather than only to the beneficiaries. However, the record, including email exchanges between the trustee and plaintiff, shows that the trustee was well aware of and approved of the beneficiaries' authority to act on the Trust's behalf with regard to plaintiff's retainer and representation (see Granato v Granato, 75 AD3d 434 [1st Dept 2010]). It is irrelevant that the original engagement letter was not signed by the client (see 22 NYCRR 1215.1[a]).

Defendant's timely written objection to plaintiff's invoice dated August 25, 2009, for the period ending July 31, 2009, creates triable issues of fact as to the amount due under that invoice only. Defendant's oral and undocumented objections to the remaining bills do not suffice to create triable issues as to the remaining amount owed (see Brill & Meisel v Brown, 113 AD3d 435, 437 [1st Dept 2014]; see also Darby & Darby v VSI Intl., 95 NY2d 308, 315 [2000]). Moreover, the Trust made partial payments to plaintiff throughout plaintiff's representation (see [*2]Levisohn, Lerner, Berger & Langsam v Gottlieb, 309 AD2d 668 [1st Dept 2003], lv denied 1 NY3d 509 [2004]).

Regarding the legal malpractice counterclaim, assuming that plaintiff's conduct, in failing to complete a chain-of-title report or failing to resolve the underlying intellectual property disputes before withdrawing, amounts to negligence, the Trust failed to demonstrate causation. The Trust failed to show how it would have successfully opposed the underlying trademark cancellation proceeding, or would otherwise have protected its intellectual property rights, but for plaintiff's omissions (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428 [2007]; Leder v Spiegel, 31 AD3d 266 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008])."

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Continuous Representation Despite Bumps and Gaps

Town of Amherst hires attorneys to represent them in the termination of an employee. Time goes by  Things go wrong.  Attorneys are hired again (rehired?) to continue to represent the Town. Time goes by.  Attorneys are once again hired.  When the case is finally lost, the Town sues the attorneys.  Continuous representation?

Town of Amherst v Weiss  2014 NY Slip Op 06411  Decided on September 26, 2014  Appellate Division, Fourth Department  says, Yep!. 

"It is well settled that a cause of action for legal malpractice accrues on the date when the malpractice was committed, regardless of the date on which the malpractice is actually discovered (see Shumsky v Eisenstein, 96 NY2d 164, 166; Ackerman v Price Waterhouse, 84 NY2d 535, 541; Glamm v Allen, 57 NY2d 87, 94). The parties agree that the alleged malpractice was committed on June 26, 2001, the date the hearing began before the improperly appointed Hearing Officer. The statute of limitations for legal malpractice is three years (see CPLR 214 [6]) and, therefore, the statute expired on June 26, 2004 unless it was tolled. We conclude that [*2]defendants met their initial burden of establishing that the action was commenced after the statute of limitations had expired (see International Electron Devices [USA] LLC v Menter, Rudin & Trivelpiece, P.C., 71 AD3d 1512, 1512). "The burden then shifted to [the Town] to raise a triable issue of fact whether the statute of limitations was tolled by the continuous representation doctrine" (id.; see Priola v Fallon, 117 AD3d 1489, 1489-1490; but see 730 J & J, LLC v Polizzotto & Polizzotto, Esqs., 69 AD3d 704, 705).

We conclude that the Town raised a triable issue of fact whether there were "clear indicia of an ongoing, continuous, developing, and depend[e]nt relationship between the [Town] and [defendants,] which . . . include[d] an attempt by [defendants] to rectify an alleged act of malpractice" (Luk Lamellen U. Kupplungbau GmbH v Lerner, 166 AD2d 505, 506-507; see International Electron Devices [USA], LLC, 71 AD3d at 1512-1513). Contrary to defendants' contentions, the Town raised triable issues of fact whether the continuing representation "pertain[ed] specifically to the matter in which [defendants] committed the alleged malpractice" (Shumsky, 96 NY2d at 168; see International Electron Devices [USA], LLC, 71 AD3d at 1512-1513), and whether there was "a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim" (McCoy v Feinman, 99 NY2d 295, 306).

The Town first hired Weiss in early 2001 to investigate the possibility of Section 75 charges against one of the Town's employees. Weiss hired Gradl to assist him. From that point on, Weiss and Gradl performed legal work on behalf of the Town related to the Section 75 proceeding. They drafted the Section 75 charges and amended charges, presented evidence at the improperly commenced Section 75 hearing, prepared the resolution of the Town Board terminating the employee, and responded to the employee's legal challenge to the termination. When it appeared that a second hearing was required, the Town Board resolved to appoint Weiss "and associates . . . to prosecute" the Section 75 charges and amended charges against the employee, i.e., to correct the legal error resulting in the need to nullify the first hearing and the initial determination terminating the employee. Defendants performed legal work on behalf of the Town by prosecuting the Section 75 charges and amended charges at a second hearing and by preparing the second resolution of the Town Board terminating the employee. When the employee challenged that termination, the Town Board resolved to retain Weiss's firm to represent the Town at a potential hearing pursuant to General Municipal Law § 50-h and "to defend the Town Board's decision" in an anticipated CPLR article 78 proceeding to be brought by the terminated employee.

Although defendants contended that their representation was not continuous, as evidenced by the fact that there were three separate and distinct actions by the Town to retain them and numerous gaps in their representation of the Town, we conclude that the Town nevertheless raised triable issues of fact concerning continuous representation. It is well established that "[a]n attorney-client relationship may exist in the absence of a formal retainer agreement" (Swalg Dev. Corp. v Gaines, 274 AD2d 385, 386; see Terio v Spodek, 63 AD3d 719, 721). Instead, such a relationship is formed by "an explicit undertaking to perform a specific task" (Terio, 63 AD2d at 721). Here, while there were three separate and distinct retainer agreements, we conclude that there are triable issues of fact whether defendants were retained for separate and distinct legal proceedings or, rather, "ongoing and developing phases of the [same] litigation" (Muller v Sturman, 79 AD2d 482, 485, citing Siegel v Kranis, 29 AD2d 477, 480-481). We cannot say as a matter of law that all of defendants' acts "were not interrelated so that representation on [the second Section 75 hearing and the subsequent CPLR article 78 proceeding were] not part of a continuing, interconnected representation" to perform the specific task of terminating a Town employee (Deep v Boies, 53 AD3d 948, 952). Inasmuch as "[a] question of fact exists on this issue, . . . summary judgment is inappropriate" (id.).

We further conclude that there are triable issues of fact whether the gaps in the legal services that defendants performed for the Town were "merely . . . period[s] absent expectations, rather than . . . period[s] when representation formally ended" (Red Zone LLC v Cadwalader, Wickersham & Taft LLP, 2013 NY Slip Op 23468, affd 118 AD3d 581, 582). Here, as in Red Zone, the Town "immediately return[ed] to [defendants] . . . once an issue arising from [the alleged] malpractice [was] detected" (id.; see N & S Supply v Simmons, 305 AD2d 648, 649-650)"

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An Upstate Legal Malpractice Case Returns Upsate

A case arising in Erie County concerning activities in Syracuse, and all about a couple of law firms from Buffalo is being broken up and returned to Buffalo even after the New York County Commercial Division accepted the case.

Fidelity Natl. Tit. Ins. Co. v Altshuler Shaham Provident Funds Ltd.  2014 NY Slip Op 06371  Decided on September 25, 2014  Appellate Division, First Department arises from real estate and titile insurance proceedings in Syracuse.

"This action stems from a failed loan relating to commercial real estate in Syracuse, New York (see generally Altshuler Shaham Provident Funds, Ltd. V GML Tower, LLC, 21 NY3d 352 [2013]).

Fidelity National Title Insurance Company issued a policy to Altshuler. In the New York County action, plaintiff Fidelity seeks a declaration that it properly denied coverage to defendant Altshuler. In the amended third-party complaint against Jaeckle, Altshuler asserts that Jaeckle committed legal malpractice by failing to, among other things, obtain adequate title insurance. The amended third-party complaint should have been dismissed for failure to state a cause of action (CPLR 3211[a][7]), because Fidelity did not make a claim against Altshuler for which Jaeckle "is or may be liable" (CPLR 1007; see Merchants Mut. Ins. Co. v Valilis, 11 AD2d 324, 326 [1st Dept 1960]; Ainspan v City of Albany, 132 AD2d 911, 913 [3d Dept 1987]). Based on the foregoing determination, it is unnecessary to reach Jaeckle's other arguments in support of dismissal of the amended third-party complaint.

The motion court should have denied Altshuler's motion to consolidate the New York County and Erie County actions (see County of Westchester v White Plains Ave., LLC, 105 AD3d 690, 691 [2d Dept 2013]). As we are dismissing the amended third-party complaint in the New York County action, the two actions no longer present common questions of law or fact (see CPLR 602[a]). The issue in the New York County action is whether Fidelity properly disclaimed coverage; this will turn on the wording of the policy, not whether Jaeckle committed malpractice by obtaining the wrong type of policy.

"

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More On A Med-Mal-Legal-Mal Case

Gajek v Schwartzapfel, Novick, Truowski & Marcus, P.C. 2014 NY Slip Op 32418(U) September 8, 2014 Supreme Court, Suffolk County Docket Number: 12-2375 Judge: Ralph T. Gazzillo is an example of  what we believe is the most complicated  case to litigate. Last week we discussed the successor counsel problem.  Today, we look to this case for the use of experts in legal malpractice litigation.

"Schwartzapfel and Platt now move for summary judgment dismissing the complaint and all cross
claims against Platt. In support of their motion, the moving parties submit, among other things, the
pleadings, Platt's affidavit, and copies of the preliminary conference order and two compliance
conference orders issued in this action. The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issue of fact (see Alvarez v Prospect Hospital, 68 NY2d 320, 508 NYS2d 923 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 487 NYS2d 316 [1985]). The burden then shifts to the party opposing the motion which must produce evidentiary proof in admissible form sufficient to require a trial of the material issues of fact (Roth v Barreto, 289 AD2d 557, 735 NYS2d 197 [2d Dept 2001]; Rebecchi v Whitmore, 172 AD2d 600, 568 NYS2d 423 [2d Dept 1991]; O'Neill v Fishkill, 134 AD2d 487, 521 NYS2d 272 [2d Dept 1987]). Furthermore, the parties' competing interest must be viewed "in a light most favorable to the party opposing the motion" (Marine Midland Bank, N.A. v Dino & Artie's Automatic Transmission Co., 168 AD2d 610, 563 NYS2d 449 [2d Dept 1990]). However, mere conclusions and unsubstantiated allegations are insufficient to raise any triable issues of fact (see Zuckerman v City of New York, 49 NY2d 557, 427 NYS2d 595 [1980]; Perez v Grace Episcopal Church, 6 AD3d 596, 774 NYS2d 785 [2d Dept 2004]; Rebecchi v Whitmore, supra).

"his branch of the plaintiffs' motion seeks a determination that they have established the first of
four clements which they must prove to hold Schwartzapfel liable for legal malpractice. As set forth
above, a plaintiff must prove ( 1) that the defendant attorney failed to exercise that degree of care, skill, and diligence commonly possessed by a member of the legal community, (2) proximate cause, (3) damages, and ( 4) that the plaintiff would have been successful in the underlying action had the attorney exercised due care (citations omitted). Generally, the plaintiff in a legal malpractice action must submit expert testimony setting forth the appropriate standard of professional care which the defendant was required to meet under the circumstances (Healy v Finz & Finz, P.C., 82 AD3d 704, 918 NYS2d 500 [2d Dept 2011]; Northrop v Thorsen, 46 AD3d 780, 848 NYS2d 304 [2d Dept 2007]; Zasso v Maher, 226 AD2d 366, 640 NYS2d 243 [2d Dept 1996]). However, there is an exception to that principle exists where the ordinary experience of the fact finder provides sufficient basis for judging the adequacy of the professional service, or "the attorney's conduct falls below any standard of due care" (Northrop v Thorsen, 46 AD3d at 782; Greene v Payne, Wood & Littlejohn, 197 AD2d 664, 602 NYS2d 883 [2d Dept 1993 ]). It is well settled that the exception exists in those instances where an attorney ignores a well-established filing requirement (Whalen v DeGraff, Foy, Conway, Holt-Harris & Mealey, 53 AD3d 912, 863 NYS2d 100 [3d Dept 2008]; Northrop v Thorsen, supra). Tellingly, the exception has been held to apply where an action had been marked off the calendar and the attorney failed to timely restore it (Butler v Brown, 180 AD2d 406, 579 NYS2d 79 [1st Dept 1992]). "
he plaintiffs contend that the order dated October 19, 2009 (O'Donoghue, J.) denying
DeBlasio's cross motion to restore the case to the calendar and dismissing the complaint against
Southampton Hospital, and the decision affirming said order by the Appellate Division, Second
Department, bar Schwartzapfel from re-litigating the issue of its duty to the plaintiffs. Here, despite the
plaintiffs' mistaken reliance on the doctrine of collateral estoppel, it is determined that they have
established that Schwartzapfel violated its duty to exercise the requisite degree of care, skill, and
diligence commonly possessed by a member of the legal community in handling the plaintiffs' medical
malpractice action. It is beyond dispute that the failure to comply with the terms of the order which
marked the case off the trial calendar, and to move within the statutory time period to restore the case to
the calendar establish that Schwartzapfel failed to prosecute the action and to meet any standard of care
in handling the matter.

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$100 Million in Personal Guarantees and a Bad Result

Did Plaintiff paint himself into a corner, when he expanded a business and took on $100 million in personal guarantees, or did his attorneys fail him later, when litigation began?  That's the question in Lichtenstein v Willkie Farr & Gallagher LLP  2014 NY Slip Op 06242  Decided on September 18, 2014  Appellate Division, First Department.

"Plaintiff David Lichtenstein owns and manages real estate through his entities, plaintiffs The Lightstone Group, LLC and Lightstone Holdings, LLC. In 2007, Lichtenstein and a consortium of investors purchased Extended Stay, Inc. (ESI), which owns and manages hotels. Most of the purchase price was financed through a combination of $4.1 billion in mortgage loans to ESI and $3.3 billion in 10 mezzanine loan tranches to its subsidiaries. As part of the loan transaction, Lichtenstein and Lightstone Holdings executed 11 guarantees that subjected them to $100 million in personal liability in the event of particular "bad boy" acts which included the voluntary filing of a bankruptcy petition by ESI. Lichtenstein managed ESI and became its president, CEO and chairperson. The majority of ESI's board of directors was comprised of Lichtenstein and representatives of entities he controlled.

The following year, ESI was faced with a liquidity crisis as its financial situation declined. ESI retained nonparty Weil, Gotshal & Manges as its restructuring counsel. As stated in the complaint, Weil Gotshal could not represent both ESI and Lichtenstein. As further alleged in the complaint, Lichtenstein retained Wilkie Farr in December 2008, "to advise and represent [him] in his role as an officer and director of ESI, particularly as to the liability of him and his entities in any restructuring, as well as to advise and represent affiliates of the Lightstone Group regarding their interests in ESI." Acting as ESI's counsel, Weil Gotshal recommended that ESI file for bankruptcy and advised that its board members, including Lichtenstein, were obligated as fiduciaries to achieve that result. Plaintiffs allege that their counsel, Willkie Farr, embraced Weil Gotshal's position although it was allegedly erroneous and would have exposed plaintiffs to $100 million in liability on the guarantees."

"According to the complaint, ESI's financial condition continued to deteriorate, leaving Lichtenstein with a choice to either a) have the company file for bankruptcy, exposing Lichtenstein to liability on the guarantees or, "b) seek an alternative, including to refuse, or at least delay, and force the Lenders' hand to file a petition for involuntary bankruptcy or foreclose on the collateral (in which case Lichtenstein would risk a lawsuit under a breach of fiduciary claim [sic])." The complaint further alleges that Willkie Farr insisted that Lichtenstein had a fiduciary obligation to put ESI into bankruptcy for the benefit of the lenders. Willkie Farr warned that Lichtenstein otherwise faced the prospect of unequivocal and uncapped personal liability in any subsequent action by the lenders absent a bankruptcy filing by ESI. Before having ESI file for bankruptcy, Lichtenstein offered to surrender the collateral to the lenders as a group. Some of the lenders, however, balked and went to court to block any such surrender in what plaintiffs describe as a likely effort to force ESI into voluntary bankruptcy and trigger the "bad boy" guarantee. On Willkie Farr's advice, Lichtenstein caused ESI to file its bankruptcy petition on June 15, 2009. The lenders brought actions on the guarantees and a judgment was subsequently entered against Lichtenstein and Lightstone Holdings in the sum of $100 million."

"n this appeal, plaintiffs argue that Willkie Farr's advice did not meet the requisite standard of professional skill because a derivative suit by the lenders against Lichtenstein for breach of fiduciary duty would not have been successful. In making the argument, plaintiffs recognize that under Delaware law, the exposure Lichtenstein faced by reason of ESI's insolvency differed from the exposure that would be faced by the officers and directors of a traditional stock-issuing corporation. For example, when a corporation is solvent its directors' fiduciary duties may be enforced by its shareholders, who have standing to bring derivative actions on behalf of the corporation because they are the ultimate beneficiaries of the corporation's growth and increased value (North Am. Catholic Educ. Programming Found., Inc. v Gheewalla, 930 A2d 92, 101 [Del 2007]). On the other hand, when a corporation is insolvent, "its creditors take the place of the shareholders as the residual beneficiaries of any increase in value. Consequently, the creditors of an insolvent corporation have standing to maintain derivative claims against directors on behalf of the corporation for breaches of fiduciary duties" (id.).

There is no merit to plaintiffs' argument that Willkie Farr overlooked the availability of an equitable defense under the doctrine of in pari delicto. By operation of the doctrine, the position of a party defending against a claim is better than that of the party asserting the claim in a case of equal or mutual fault (see In re Oakwood Homes Corp., 389 BR 357, 365 [D Del 2008], affd 356 F Appx 622 [3rd Cir 2009]). Here, plaintiffs argue that the lenders could have been faulted for structuring the loan transactions in a way that prevented ESI from declaring bankruptcy. Plaintiffs' argument is flawed because they allege no wrongdoing that the lenders [*3]have committed in negotiating the guarantees in the course of an arms length transaction. We have considered plaintiffs' remaining arguments and find them unavailing."

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Many Technical Reasons for An Outlier Decision

It's well understood that non-pecuniary damages are not available in legal malpractice.  No damages for emotional distress, no damages for physical injury (think: heart attack) from legal malpractice and no damages for wrongful incarceration which are non-pecuniary.  Nevertheless, in D'Alessandro v Carro  2014 NY Slip Op 06246  Decided on September 18, 2014  Appellate Division, First Department , Presiding Justice Tom, threads his way to a decision in which all of these prohibited damages are available to plaintiff.  It all starts with a dismissed appeal.

"In June 2010, this Court granted plaintiff's application for a writ of error coram nobis, reversing the judgment of conviction and dismissing the indictment (People v D'Alessandro, 2010 NY Slip Op 75591[U] [1st Dept 2010]). We held that appellate counsel's failure to raise a clear-cut speedy trial issue was dispositive of the question of effective assistance of counsel (id.). In particular, we held that the period of 196 days between the filing of plaintiff's omnibus motion seeking dismissal of the indictment and the time the People produced the grand jury minutes in response to the motion alone would have exceeded the 184 days during which the People were required to be ready for trial (CPL 30.30[1][a]). We noted that the issue of whether the time was chargeable to the People was settled law (see People v McKenna, 76 NY2d 59 [1990]) and had counsel raised the issue, his client would have prevailed (D'Alessandro, 2010 NY Slip Op 75591[U]).

Plaintiff then commenced the instant legal malpractice action in January 2011. The complaint alleges that defendants' failure to raise the speedy trial issue on appeal caused plaintiff to needlessly remain incarcerated for over 13 years. He seeks damages of $26 million, including loss of income, as well as nonpecuniary damages for emotional and physical distress, damage to reputation and loss of consortium.

In response, defendants moved to dismiss the complaint for failure to state a cause of action based on the documentary evidence (CPLR 3211[a][1], [7]). In the alternative, the motion sought dismissal of the claims for nonpecuniary damages on the ground that such damages are unavailable in legal malpractice cases. In their memorandum of law in support of the motion, defendants relied upon this Court's ruling in Wilson v City of New York (294 AD2d 290 [1st Dept 2002]), which likewise involved a claim arising out of the plaintiff's conviction on criminal charges and resulting incarceration. As defendants noted, Wilson holds that the bar against recovery of nonpecuniary damages in a legal malpractice action is a matter of policy not limited to the civil context (id. at 292-293).

However, the Supreme Court (Emily Jane Goodman, J.), on February 29, 2012, denied [*3]the motion in its entirety and allowed the claims for nonpecuniary damages to remain (34 Misc 2d 1242[A], 2012 NY Slip Op 50508[U], *6 [Sup Ct, NY, County 2012]). In doing so, the motion court rejected this Court's rule in Wilson that nonpecuniary damages may not be sought in malpractice cases, even in the criminal context (id. at *5-6). The court noted that the "ten year old Wilson theory of damages was not adopted by the Fourth Department" in the more recent decision of Dombrowski v Bulson (79 AD3d 1587 [4th Dept 2010], revd 19 NY3d 347 [2012]), which held that non-pecuniary damages may be recovered in criminal malpractice cases. Noting that D'Alessandro would have been spared 10 years of incarceration if the direct appeal had challenged the speedy trial ruling, the court reasoned, "[I]f the . . . First Department had the occasion to revisit the instant case, or a similar one where malpractice has been established and the issue of damages central, perhaps it would be viewed differently" (2012 NY Slip Op 50508[U], *5). Dombrowski was subsequently overturned on May 31, 2012 (19 NY3d 347 [2012]).

While defendants have denominated their motion as one seeking renewal, they identify no change in law warranting reexamination of their arguments. It is axiomatic that Supreme Court is bound to apply the law as promulgated by the Appellate Division within its particular Judicial Department (McKinney's Cons Laws of NY, Book 1, Statutes § 72[b]), and where the issue has not been addressed within the Department, Supreme Court is bound by the doctrine of stare decisis to apply precedent established in another Department, either until a contrary rule is established by the Appellate Division in its own Department or by the Court of Appeals (Mountain View Coach Lines v Storms, 12 AD2d 663, 664 [2d Dept 1984]; see also People v Turner, 5 NY3d 476, 481-482 [2005]; United States Gypsum Co. v Riley-Stoker Corp., 11 Misc 2d 572, 575 [Sup Ct, Genesee County 1958] ["The doctrine of stare decisis does not compel a judge at Special Term to follow a decision of a Special Term in another judicial district; nevertheless, he shall follow a decision made by the Appellate Division of another department, unless his own Appellate Division or the Court of Appeals holds otherwise"] [emphasis omitted]), affd 7 AD2d 894 [4th Dept 1959], revd on other grounds 6 NY2d 188 [1959]. Thus, a particular Appellate Division will require the lower courts within its Department to follow its rulings, despite contrary authority from another Department, until the Court of Appeals makes a dispositive ruling on the issue (see e.g. Ross v Curtis-Palmer Hydro-Elec. Co., 180 AD2d 385, 390 [3d Dept 1992], mod 81 NY2d 494 [1993]).

In this case, the applicable law was established by our ruling in Wilson v City of New [*5]York (294 AD2d at 292-293), which holds that nonpecuniary damages are unrecoverable in a legal malpractice action whether the malpractice is civil or criminal in nature. The law in this Department was unaltered by the ensuing Court of Appeals' decision in Dombrowski. Indeed, in following Wilson and rejecting the Fourth Department's contrary position, the Court of Appeals stated, "We see no compelling reason to depart from the established rule limiting recovery in legal malpractice actions to pecuniary damages" (19 NY3d at 352). While Supreme Court did not decide the procedural issue, it is clear that defendants have advanced no grounds for renewal of their motion to dismiss. Indeed, an intervening ruling that merely clarifies existing law does not afford a basis for renewal attributed to a change in the law (Philips Intl. Invs., LLC v Pektor, 117 AD3d 1 [1st Dept 2014]). While this Court has the discretion to reconsider an issue on an appeal previously dismissed for failure to prosecute, "even if it could have dismissed the appeal under Bray" (Faricelli at 794), the instant appeal must be dismissed since defendants' motion before the motion court was one to reargue, the denial of which is not appealable (Pier 59 Studios, L.P. v Chelsea Piers, L.P., 40 AD3d 363, 366 [1st Dept 2007]). We have considered defendants' remaining contentions and find them unavailing."

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What Does it Take to Succeed on Summary Judgment in Legal Malpractice?

Gajek v Schwartzapfel, Novick, Truowski & Marcus,  P.C.  2014 NY Slip Op 32418(U)  September 8, 2014  Supreme Court, Suffolk County  Docket Number: 12-2375  Judge: Ralph T. Gazzillo discusses the burden for both plaintiff and defendant.

For Defendant:  Schwartzapfel and Platt now move for summary judgment dismissing the complaint and all cross claims against Platt. In support of their motion, the moving parties submit, among other things, the pleadings, Platt's affidavit, and copies of the preliminary conference order and two compliance conference orders issued in this action. The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issue of fact (see Alvarez v Prospect Hospital, 68 NY2d 320, 508 NYS2d 923 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 487 NYS2d 316 [1985]). The burden then shifts to the party opposing the motion which must produce evidentiary proof in admissible form sufficient to require a trial of the material issues of fact (Roth v Barreto, 289 AD2d 557, 735 NYS2d 197 [2d Dept 2001]; Rebecchi v Whitmore, 172 AD2d 600, 568 NYS2d 423 [2d Dept 1991]; O'Neill v Fishkill, 134 AD2d 487, 521 NYS2d 272 [2d Dept 1987]). Furthermore, the parties' competing interest must be viewed "in a light most favorable to the party opposing the motion" (Marine Midland Bank, N.A. v Dino & Artie's Automatic Transmission Co., 168 AD2d 610, 563 NYS2d 449 [2d Dept 1990]). However, mere conclusions and unsubstantiated allegations are insufficient to raise any triable issues of fact (see Zuckerman v City of New York, 49 NY2d 557, 427 NYS2d 595 [1980]; Perez v Grace Episcopal Church, 6 AD3d 596, 774 NYS2d 785 [2d Dept 2004]; Rebecchi v Whitmore, supra). For a defendant in a legal malpractice case to succeed on a motion for summary judgment, evidence must be presented in admissible form establishing that the plaintiff is unable to prove at least one of the essential elements of a malpractice cause of action (Napolitano v Markotsis & Lieberman, 50 AD3d 657. 855 NYS2d 593 [2d Dept 2008]; Olaiya v Golden, 45 AD3d 823, 846 NYS2d 604 [2d Dept 2007]; Caires v Sihen & Sihen, 2 AD3d 383, 767 NYS2d 785 [2d Dept 2003]; Ippolito v McCormack, Damiani, Lowe & Mellon, 265 AD2d 303, 696 NYS2d 203 [2d Deptl 999]). To establish a cause of action to recover damages for legal malpractice, a plaintiff must prove ( 1) that the defendant attorney failed to exercise that degree of care, skill, and diligence commonly possessed by a member of the legal community, (2) proximate cause, (3) damages, and (4) that the plaintiff would have been successful in the underlying action had the attorney exercised due care (Tortura v Sullivan Papain
Block McGrath & Cannavo, P.C., 21AD3d1082, 803 NYS2d 571 [2d Dept 2005]; Ippolito v McCormack, Damiani, Lowe & Mellon, supra; Iannarone v Gramer, 256 AD2d 443, 682 NYS2d 84
[2d Dept 1998]; Volpe v Canfield, 237 AD2d 282, 654 NYS2d 160 [2d Dept 1997], lv denied 90 NY2d
802, 660 NYS2d 712 [ 1997]). "

For Plaintiff:  The plaintiffs now cross-move for partial summary judgment as to the liability of Schwartzapfel and DeBlasio or, in the alternative, holding that said defendants violated a duty to the plaintiffs which resulted in their medical malpractice action being dismissed. As noted above, after the date of the making of this cross motion, the plaintiffs discontinued their action as to DeBlasio. Thus, the plaintiffs cross motion against DeBlasio is denied as academic. In support of their motion, the plaintiffs submit, among other things, the aforesaid affirmation of Gajek and affidavit of counsel for the plaintiffs, a copy of a letter to Schwartzapfel from the New York State Department of Health, and an affidavit from a physician licensed in New York. In order to establish a prima facie case of legal malpractice, a plaintiff must demonstrate that the breach of the attorney's duty proximately caused the plaintiff actual and ascertainable damages (see Leder v Spiegel, 9 NY3d 836, 840 NYS2d 888 [2007]; Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 835 NYS2d 534 [2007]; McCoy v Fienman, 99 NY2d 295, 755 NYS2d 693 [2002]; Darby & Darby, P.C. v VSI Intl. Inc., 95 NY2d 308, 716 NYS2d 378 [2000]; Kluczka v Lecci, 63 AD3d 796, 880 NYS2d 698 [2d Dept 2007]). Moreover, the plaintiff is required to prove that, "but for" the attorney's negligence, the plaintiff would have prevailed on the underlying cause of action (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 834 NYS2d 705 [2007]; Leder v Spiegel, supra; Snolis v Clare, 81 AD3d 923, 917 NYS2d 299 [2d Dept 2011]; Weil, Gotshall & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 780 NYS2d 593 [1st Dept 2004]; Shopsin v Siben & Siben, 268 AD2d 578, 702 NYS2d 610 [2d Dept 2000]). Thus, the plaintiffs here are required to prove that they would have been successful in their medical malpractice action. "

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The Intersection of Medical Malpractice and Legal Malpractice

A legal malpractice case which arises from a medical malpractice case gone wrong is (we believe) just about the most complicated case to litigate.  Plaintiff must first prove that there were departures from good legal representation, and then afterwards, must prove that there were departures from medical treatment which proximately caused damage.  Both legal and physician experts are needed, and one must prove the value of the hypothetical medical malpractice award.

Gajek v Schwartzapfel, Novick, Truowski & Marcus, P.C.   2014 NY Slip Op 32418(U)   September 8, 2014  Supreme Court, Suffolk County  Docket Number: 12-2375  Judge: Ralph T. Gazzillo is an example of this type of case.  there are several lessons to be derived from this decision and order.

"This action was commenced to recover damages sustained by the plaintiffs due to the alleged
legal malpractice of the defendants. It is undisputed that the plaintiffs retained the defendant
Shwartzapfel Partners, P.C., allegedly wrongfully sued herein as Shwartzapfel, Novick, Truowsky &
Marcus, P.C., (Schwartzapfel) to prosecute an underlying action against Southampton Hospital, among others. The plaintiff Jerzy Gajek (Gajek) was admitted to Southampton Hospital on April 26, 2003. While in the hospital, Gajek developed pressure ulcers, commonly known as "bed sores." In the underlying action, the plaintiffs allege, among other things, that the hospital failed to properly assess  Gajek 's risk of developing bed sores, and that the hospital failed to properly treat said condition. It is also undisputed that, after it was commenced in October 2005, the underlying action (or  medical malpractice action) was handled by an associate at Schwartzapfel, the defendant Jason J. Platt  (Platt), that Schwartzapfel entered into an agreement with the law firm of Duffy, Duffy & Burdo to handle the matter as trial counsel (Trial Counsel) in September 2007, and that Trial Counsel entered into a stipulation marking the underlying action off of the trial calendar on December 5, 2007 for the  purposes of completing outstanding discovery. In late March or April 2008, Platt left his employment with Schwartzapfel. Thereafter, Trial Counsel indicated that it was no longer interested in handling the medical malpractice action and Schwartzapfel entered into an agreement with the defendants Law Office of John W. DeBlasio and John W. DeBlasio (DeBlasio) to handle the matter. In early 2009, the defendants in the medical malpractice action moved to dismiss the action pursuant to CPLR 3404 on the grounds that the plaintiffs had failed to restore the case to the calendar within one year. "

The Successor Attorney Problem

"Here, Platt has established his prima facie entitlement to summary judgment on the ground that
his actions or inactions are not the proximate cause of the plaintiffs alleged injuries. It is well settled that, an attorney's alleged legal malpractice is not a proximate cause of a plaintiff's damages where "subsequent counsel had a sufficient opportunity to protect the plaintiffs' rights by pursuing any remedies it deemed appropriate on their behalf' (Katz v Herifeld & Rubin, P.C., 48 AD3d 640, 853 NYS2d 104 [2d Dept 2008]; see also Alden v Brindisi, Murad, Brindisi, Pearlman, Julian & Pertz ("The People's Lawyer"), 91 AD3d 1311, 937 NYS2d 784 [4th Dept 2012]; Somma v Dansker & Aspromonte Assoc., 44 AD3d 376, 843 NYS2d 577 [1st Dept 2007]; Ramcharan v Panser, 20 AD3d 556, 799 NYS2d 564 [2d Dept 2005]; Perks v Lauto & Garabedian, 306 AD2d 261, 760 NYS2d 231 [2d Dept 2003]; Albin v Pearson, 289 AD2d 272, 734 NYS2d 564 [2d Dept 2001]). That is, an attorney cannot be held liable for legal malpractice where he or she was not representing the plaintiff at the time some period for performance of an action expired and "successor counsel had sufficient time" to complete the action (see Ramcharan v Panser, 20 AD3d at 557, 799 NYS2d at 566). It is undisputed that Schwartzapfel and DeBlasio had approximately eight months after Platt was no longer involved in the plaintiffs' medical malpractice action to move to restore the action to the trial calendar. "

 

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Auto Injury Not Bad Enough for Legal Malpractice

Motor Vehicle injuries are often a question of whether plaintiff suffered a "serious injury" within the meaning of the insurance Law.  A serious injury is defined as "death, dismbmberment, loss of an organ..."  Many a hurtful non-fracture does not qualify as a "serious injury" even though it is life-changing.  What does this mean for legal malpractice litigation afterwards?

Verdon v Duffy  2014 NY Slip Op 06199  Decided on September 17, 2014  Appellate Division, Second Department is an example of the "but for" bar to legal malpractice.  In a nutshell, even if one can show a departure from good and accepted practice, one must still show that if the departure had not been made there would have been a better/more favorable outcome.

"The plaintiff retained the defendants to commence an action to recover damages for, inter alia, personal injuries that she allegedly sustained in an automobile accident. The defendant in the underlying personal injury action moved for summary judgment dismissing the complaint, on the ground that the plaintiff did not suffer a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. While that motion was pending, the plaintiff accepted a certain sum of money to settle the action.

The plaintiff subsequently commenced this action against her attorneys to recover damages for legal malpractice. The plaintiff alleges that the defendants were negligent in their representation of her in the underlying personal injury action, in that they caused her to settle that action for far less than the fair value of her case. The defendants moved for summary judgment dismissing the complaint. The Supreme Court granted the motion.

Here, in support of their motion for summary judgment dismissing the complaint, the defendants established, prima facie, that the plaintiff would not have succeeded on the merits of the underlying personal injury action, as there was insufficient evidence to establish that she sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the automobile accident. Consequently, the defendants also established that they did not "fail[ ] to exercise that degree of care, skill, and diligence commonly possessed by a member of the legal community" (Porello v Longworth, 21 AD3d 541, 541) when they advised her to accept a settlement offer in the sum that she ultimately accepted. In opposition, the plaintiff failed to raise a triable issue of fact.

Accordingly, the Supreme Court properly granted the defendants' motion for summary judgment dismissing the complaint."

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Is This a Judiciary Law 487 Case?

In today's New York Law Journal   Christine Simmons has a truly shocking article about a law firm discovering that one of its attorneys was sending false bills to the client.  OK, this by itself is not so shocking, but the complaint also claims that the attorney created fake orders, forged the signature of a US District Judge, and fabricated expenses.  That's shocking.  More so, the attorney is a Nassau County legislator and is running for the  NY State.

"Davidoff Hutcher & Citron is suing one of its former attorneys, Nassau County Legislator David Denenberg, claiming he sent hundreds of fake invoices to a client and stole hundreds of thousands of dollars from the firm (See Complaint). Denenberg, a Democrat, had been running for a seat in the state Senate, using the campaign slogan, "Nobody Works Harder." After news of the suit broke Tuesday, Denenberg withdrew from the race. Denenberg led Davidoff Hutcher's intellectual property practice in the firm's Long Island office. Davidoff Hutcher claimed its client, Systemax, a retailer of electronics products, paid more than $2 million to satisfy the false bills. The law firm said it discovered the scheme and informed Systemax. After conducting an investigation, the firm agreed to "make full restitution" to Systemax, according to the lawsuit filed Tuesday in Manhattan Supreme Court, Davidoff Hutcher Citron v. Denenberg, 159304-2014."

"Davidoff Hutcher said it was unaware of the conduct and believed the bills represented legitimate charges. Denenberg also improperly billed and collected funds for false business expenses, the firm claims. Specifically, the suit said, Davidoff Hutcher paid him for "numerous false vouchers"  seeking reimbursement of expenses he claimed were incurred on behalf of clients. "By this conduct, defendant Denenberg stole hundreds of thousands of additional dollars directly from DHC based on his false representations that these were client expenses for which he was entitled to reimbursement," the lawsuit said. The firm claims it offered Denenberg an opportunity to explain his actions, but he refused. According to the suit, Denenberg was advised that the firm had  discovered two files for the client involving misconduct and asked if there were any others.
"Denenberg, admitting his guilt, replied 'No.' Unfortunately, this too was a lie, as there were many more than two files involved," according to the lawsuit, which lists six Systemax matters that involved fake invoices. The firm claims Denenberg showed no remorse, and when told he would be fired, replied "You're going to make me go? For this?" The firm said Denenberg went to "great lengths to perpetuate the fraud," by preparing a fake order from federal court that purported to dismiss claims against the client, then signing the order in the name of a federal judge. In another case, according to the suit, Denenberg created a fake stipulated order of dismissal with prejudice of claims between a plaintiff and the client, and the order indicated it had been signed by a different district court judge.

So, why is this not a case of deceit under Judiciary Law 487?

 

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Collateral Estoppel, Attorney Fees and Legal Malpractice

Courts have found many ways to award attorney fees and force litigants to pay them.  Sometimes it is on the merits and sometimes litigants are the losers on technical issues.  One of the more interesting wrinkles in legal malpractice  is the question of attorney fee awards and collateral estoppel of the subsequent legal malpractice case. 

Urias v Daniel P. Buttafuoco & Assoc., PLLC2014 NY Slip Op 06198 Decided on September 17, 2014  Appellate Division, Second Department is a recent example.

'The plaintiff, Delfina Urias, individually and as guardian of her husband, Manuel Urias, commenced a medical malpractice action against the healthcare professionals and providers responsible for treating him. The defendant Daniel P. Buttafuoco & Associates, PLLC (hereinafter the Buttafuoco Firm), represented the plaintiff in the underlying medical malpractice action. On April 2, 2009, shortly before the trial was to begin, the medical malpractice action was settled in open court for the sum of $3,700,000, and the liability was allocated among the various defendants in that action. On July 20, 2009, counsel for the parties to the medical malpractice action appeared before the Supreme Court, Suffolk County, in connection with a proposed change to the terms of the settlement. At that conference, the court, inter alia, approved the award of an attorney's fee to the Buttafuoco Firm in the sum of $864,552. To calculate the attorney's fee, the Buttafuoco Firm applied the "sliding scale" set forth in the retainer agreement and in Judiciary Law § 474-a(2) to each individual medical malpractice defendant's settlement amount, rather than the total settlement amount, which resulted in a larger attorney's fee for the Buttafuoco Firm. The Buttafuoco Firm later reduced its attorney's fee to $710,000.

Meanwhile, the plaintiff retained the defendant John Newman to represent her in a proceeding in the Supreme Court, Nassau County, to appoint a guardian on behalf of Manuel Urias and to obtain approval of the settlement in the medical malpractice action. The plaintiff complained to Newman about the manner in which the Buttafuoco Firm calculated its fee. Subsequently, Newman moved for approval of the medical malpractice settlement in the guardianship proceeding. In an order dated October 27, 2009, the Supreme Court, Nassau County, among other things, denied approval of the settlement and the attorney's fee, without prejudice to reconsideration, and directed that the issue of the Buttafuoco Firm's attorney's fee be revisited by the Supreme Court, Suffolk County. Newman then moved in the Supreme Court, Suffolk County, to confirm the amount of the attorney's fee awarded to the Buttafuoco Firm. In an order dated March 24, 2010, the Supreme Court, Suffolk County, formally approved the attorney's fee as previously calculated. Thereafter, in an order dated June 7, 2010, the Supreme Court, Nassau County, in the context of the guardianship proceeding before it, approved the settlement agreement and the attorney's fee awarded in the malpractice action.

In 2011, the plaintiff commenced the instant action against Newman, as well as the Buttafuoco Firm, the related law firm of Daniel P. Buttafuoco, LLC, and the Buttafuoco Firm's principal attorney, Daniel P. Buttafuoco (hereinafter collectively the Buttafuoco defendants), inter alia, to recover damages for legal malpractice. The Buttafuoco defendants and Newman separately moved pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against each of them.

 

Moreover, the Buttafuoco defendants were not entitled to dismissal pursuant to CPLR 3211(a)(5) on the ground of collateral estoppel. Generally, the award of an attorney's fee to an attorney necessarily establishes that there was no legal malpractice (see Izko Sportswear Co., Inc. v Flaum, 25 AD3d 534, 537; Siegel v Werner & Zaroff, 270 AD2d 119, 120). The Buttafuoco Firm established, prima facie (see Plain v Vassar Bros. Hosp., 115 AD3d 922, 923), that the issue of whether it committed legal malpractice was necessarily decided in its favor when it was awarded a fee in connection with its representation of the plaintiff in the underlying medical malpractice action (see D'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659, 664; Montoya v JL Astoria Sound, Inc., 92 AD3d 736, 738). However, in opposition, the plaintiff raised a question of fact as to whether she was deprived of a full and fair opportunity to litigate the issue. Inasmuch as Newman moved, on behalf of the plaintiff, to confirm the amount of the attorney's fee awarded to the Buttafuoco Firm, and that relief was granted, had the plaintiff attempted to appeal from that order, her appeal would have been dismissed for lack of aggrievement (see CLPR 5511; Village of Croton-on-Hudson v Northeast Interchange Ry., LLC, 46 AD3d 546, 548). Under these particular circumstances, where the plaintiff could not appeal, an issue of fact was raised as to whether she had a full and fair opportunity to litigate the issue of the alleged malpractice committed by the Buttafuoco Firm and, thus, whether she was collaterally estopped from asserting that the Buttafuoco defendants committed legal malpractice in obtaining judicial approval of the fee award (see Davidov v Searles, 84 AD3d 859, 860)."

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Fees in Medical Malpractice Cases and Legal Malpractice

Fees in medical malpractice were lowered many years ago in hopes of curbing the "medical malpractice plague."  Our view is that the AMA has found that there are an incredible number of medical malpractice mistakes, and that litigation is the only way for a damaged patient to obtain reasonable compensation.

Whether you agree with that position or not, it's clear that the artificially depressed fee structure has engendered some problems for attorneys who practice in this field.  Urias v Daniel P. Buttafuoco & Assoc., PLLC  2014 NY Slip Op 06198  Decided on September 17, 2014  Appellate Division, Second Department is one example.  Matter of Harley, 298 AD2d 49 (2002) and Matter of Cousins, 2010 NY Slip Op 07413 [80 AD3d 99] are others.

In  Urias, "The plaintiff, Delfina Urias, individually and as guardian of her husband, Manuel Urias, commenced a medical malpractice action against the healthcare professionals and providers responsible for treating him. The defendant Daniel P. Buttafuoco & Associates, PLLC (hereinafter the Buttafuoco Firm), represented the plaintiff in the underlying medical malpractice action. On April 2, 2009, shortly before the trial was to begin, the medical malpractice action was settled in open court for the sum of $3,700,000, and the liability was allocated among the various defendants in that action. On July 20, 2009, counsel for the parties to the medical malpractice action appeared before the Supreme Court, Suffolk County, in connection with a proposed change to the terms of the settlement. At that conference, the court, inter alia, approved the award of an attorney's fee to the Buttafuoco Firm in the sum of $864,552. To calculate the attorney's fee, the Buttafuoco Firm applied the "sliding scale" set forth in the retainer agreement and in Judiciary Law § 474-a(2) to each individual medical malpractice defendant's settlement amount, rather than the total settlement amount, which resulted in a larger attorney's fee for the Buttafuoco Firm. The Buttafuoco Firm later reduced its attorney's fee to $710,000.

Meanwhile, the plaintiff retained the defendant John Newman to represent her in a proceeding in the Supreme Court, Nassau County, to appoint a guardian on behalf of Manuel Urias and to obtain approval of the settlement in the medical malpractice action. The plaintiff complained to Newman about the manner in which the Buttafuoco Firm calculated its fee. Subsequently, Newman moved for approval of the medical malpractice settlement in the guardianship proceeding. In an order dated October 27, 2009, the Supreme Court, Nassau County, among other things, denied approval of the settlement and the attorney's fee, without prejudice to reconsideration, and directed that the issue of the Buttafuoco Firm's attorney's fee be revisited by the Supreme Court, Suffolk County. Newman then moved in the Supreme Court, Suffolk County, to confirm the amount of the attorney's fee awarded to the Buttafuoco Firm. In an order dated March 24, 2010, the Supreme Court, Suffolk County, formally approved the attorney's fee as previously calculated. Thereafter, in an order dated June 7, 2010, the Supreme Court, Nassau County, in the context of the guardianship proceeding before it, approved the settlement agreement and the attorney's fee awarded in the malpractice action.

In 2011, the plaintiff commenced the instant action against Newman, as well as the Buttafuoco Firm, the related law firm of Daniel P. Buttafuoco, LLC, and the Buttafuoco Firm's principal attorney, Daniel P. Buttafuoco (hereinafter collectively the Buttafuoco defendants), inter alia, to recover damages for legal malpractice. The Buttafuoco defendants and Newman separately moved pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against each of them."

"Here, construing the complaint liberally, accepting the facts alleged in the complaint as true, and according the plaintiff the benefit of every possible favorable inference, as we are required to do, the plaintiff stated a cause of action to recover damages for legal malpractice against Newman and the Buttafuoco defendants (see Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin & Quartararo, 113 AD3d at 589; Palmieri v Biggiani, 108 AD3d 604, 608). Newman's contention, in effect, that his failure to object to the attorney's fee awarded to the Buttafuoco Firm was not a proximate cause of the plaintiff's damages, and that he did not depart from the accepted standard of care, concern disputed factual issues that are not properly resolved on a motion to dismiss the complaint pursuant to CPLR 3211(a)(7)."

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Pro-Se Legal Malpractice Case Fails Its Initial Test

Plaintiff alleges that defendant "caused an action to be commenced against the plaintiff and a preclusion order to be entered against him in that action, and that they failed to assert the defenses of laches and statute of limitations in the underlying action."  Unfortunately for plaintiff, the Appellate Division determined that he was unable to show that the case would have come out better had the attorney adopted some other tactic. 

In Leiner v Hauser  2014 NY Slip Op 06180  Decided on September 17, 2014  Appellate Division, Second Department it was alleged that the attorney "caused" a case to be started against plaintiff, and then failed to plead certain defenses.  The Appellate Division dismissed. 

"Here, the Supreme Court should have granted that branch of the motion of the defendants Estate of Noel Hauser and Noel Hauser & Associates (hereinafter together the appellants) which was pursuant to CPLR 3211(a) to dismiss so much of the complaint insofar as asserted against them as was premised upon allegations that they caused a preclusion order to be entered against the plaintiff in an underlying action. Viewing the complaint in the light most favorable to the plaintiff, it fails to plead specific factual allegations showing that, but for the appellants' alleged negligence in causing the preclusion order to be entered, the plaintiff would have obtained a more favorable outcome in the underlying action (see CPLR 3211[a][7]; Benishai v Epstein, 116 AD3d 726, 728; Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d 812, 813; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d at 1083).

Furthermore, the Supreme Court should have granted that branch of the appellants' motion which was pursuant to CPLR 3211(a) to dismiss so much of the complaint insofar as asserted against them as was premised upon allegations that they caused an action to be commenced against the plaintiff, and that they failed to assert the defenses of laches and statute of limitations in that action. With respect to these allegations, viewing the complaint in the light most favorable to the plaintiff, it fails to set forth facts sufficient to allege that the appellants' alleged failure to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession proximately caused the plaintiff actual and ascertainable damages (see CPLR 3211[a][7]; Held v Seidenberg, 87 AD3d at 617)."

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A Ponzi Scheme Leads to A Legal Malpractice Case

Everyone in this case came out badly.  Attorney represented client, became friends with client, gave financial advice to client, invested with client, lost money in a Ponzi scheme with client.  Now, client survives a summary judgment decision against his former friend/attorney/investment partner.

Biberaj v Acocella  2014 NY Slip Op 06165  Decided on September 17, 2014  Appellate Division, Second Department  is the underlying decision for this story.  "The plaintiff and the defendant, an attorney licensed in New York, met in or about 2001, when the plaintiff sought the defendant's legal representation. The parties established a business relationship, which later evolved into a friendship. In 2007, upon the defendant's recommendation, the plaintiff made an investment of $260,000 in an enterprise known as Agape World (hereinafter Agape), which purportedly used investor money to provide bridge loans to businesses, and paid interest to the investors. The defendant allegedly also invested large sums of his own money in Agape. In 2008, it was revealed that Agape was, in fact, a Ponzi scheme, in which new investors' funds were used to pay earlier investors' returns. The plaintiff and the defendant allegedly lost their investments in Agape."

"Here, in support of that branch of his motion which was for summary judgment dismissing the cause of action to recover damages for legal malpractice, the defendant met his prima facie burden of establishing that he had no attorney-client relationship with the plaintiff referable to the plaintiff's investment in Agape (see Volpe v Canfield, 237 AD2d 282, 283). In opposition, however, the plaintiff raised a triable issue of fact as to the existence of an attorney-client relationship in that context. Moreover, with regard to this cause of action, the defendant failed to show, prima facie, that he exercised the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession in allegedly advising the plaintiff regarding Agape, or that the alleged breach of this duty did not proximately cause the plaintiff to sustain damages. Accordingly, the Supreme Court should have denied that branch of the defendant's motion which was for summary judgment dismissing the cause of action to recover damages for legal malpractice.

The Supreme Court should have granted those branches of the motion which were for summary judgment dismissing the causes of action to recover damages for fraud and breach of contract as duplicative of the cause of action to recover damages for legal malpractice, because they arose from the same facts as the legal malpractice cause of action, and do not allege distinct damages

"

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Are Experts Always Needed in Legal Malpractice?

We often muse that absolute rules depress creative thinking.  As an example, the well recognized rule is that legal malpractice cases always require an expert for plaintiff.  However, is this true?

Board of Mgrs. of Bridge Tower Place Condominium v Starr Assoc. LLP  2013 NY Slip Op 07684 [111 AD3d 526]    November 19, 2013  Appellate Division, First Department  tells us, "not always."

"This Court previously held that the stipulation drafted by defendants unambiguously stripped plaintiff of its right to amend its bylaws to attain a specific result in connection with the underlying action (see Luzzi v Bridge Tower Place Condominium, 52 AD3d 290 [1st Dept 2008]). Under those circumstances, no expert testimony was necessary to establish that defendants' conduct fell below the standards of the profession generally (see S & D Petroleum Co. v Tamsett, 144 AD2d 849, 850 [3d Dept 1988]). Because the alternative to the stipulation was not, as defendants contend, to litigate the underlying action, but for plaintiff to exercise its right to amend the bylaws immediately, the motion court did not err in finding "but for causation" as a matter of law (cf. Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 271-272 [1st Dept 2004]).

Furthermore, although plaintiff's president is an attorney, and did see drafts of the stipulation, the record does not raise a triable issue as to whether he arrogated to himself the role of drafting the stipulation, or micro-managed the negotiation. Rather, the record shows that plaintiff relied on counsel to effect the strategy of preserving in the stipulation the right to amend the bylaws. Accordingly, the defenses of comparative fault were properly dismissed (see Mandel, Resnik & Kaiser, P.C. v E.I. Elecs., Inc., 41 AD3d 386 [1st Dept 2007]). Concur—Andrias, J.P., Friedman, Richter, Manzanet-Daniels and Feinman, JJ."This Court previously held that the stipulation drafted by defendants unambiguously stripped plaintiff of its right to amend its bylaws to attain a specific result in connection with the underlying action (see Luzzi v Bridge Tower Place Condominium, 52 AD3d 290 [1st Dept 2008]). Under those circumstances, no expert testimony was necessary to establish that defendants' conduct fell below the standards of the profession generally (see S & D Petroleum Co. v Tamsett, 144 AD2d 849, 850 [3d Dept 1988]). Because the alternative to the stipulation was not, as defendants contend, to litigate the underlying action, but for plaintiff to exercise its right to amend the bylaws immediately, the motion court did not err in finding "but for causation" as a matter of law (cf. Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 271-272 [1st Dept 2004]).

Furthermore, although plaintiff's president is an attorney, and did see drafts of the stipulation, the record does not raise a triable issue as to whether he arrogated to himself the role of drafting the stipulation, or micro-managed the negotiation. Rather, the record shows that plaintiff relied on counsel to effect the strategy of preserving in the stipulation the right to amend the bylaws. Accordingly, the defenses of comparative fault were properly dismissed (see Mandel, Resnik & Kaiser, P.C. v E.I. Elecs., Inc., 41 AD3d 386 [1st Dept 2007]). Concur—Andrias, J.P., Friedman, Richter, Manzanet-Daniels and Feinman, JJ.

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Mother-Son Litigation with Unexpected Results is not Legal Malpractice

This intra-family dispute pitted brother against brother and mother against son for control of a very close corporation.  When the case was settled, one party had not successfully analyzed the potential tax liabilities and sue the attorney.

Benishai v Epstein  2014 NY Slip Op 02404 [116 AD3d 726]  April 9, 2014  Appellate Division, Second Department examines what happens when you win the case, but the results are more difficult than you expected.

"In 2004, the plaintiff, as attorney-in-fact for his mother, Bella Benishai (hereinafter Bella), commenced an action in the Supreme Court, New York County (hereinafter the New York County action), against his brother, David Benishai (hereinafter David). The plaintiff, inter alia, alleged that David had mismanaged the corporate funds of Ilan Properties, Inc. (hereinafter Ilan), a corporation in which, at that time, Bella and David were each 50% shareholders. Ilan's primary assets were two residential properties located on West 76th Street in Manhattan. After commencing the New York County action against David, the plaintiff retained the defendant attorney to represent Bella, but Bella died during the pendency of that action. Nonetheless, the plaintiff apparently directed the defendant to continue the prosecution of the New York County action against David. On March 31, 2009, the plaintiff, David, Ilan, and Bella's estate entered into a written settlement agreement, pursuant to which the plaintiff became a 50% shareholder in Ilan and agreed to release David from any claims for costs, taxes, and penalties.

In October 2011, the plaintiff commenced this legal malpractice action against the defendant, alleging, among other things, that the defendant failed to undertake an analysis of Ilan's financial status in order to determine the plaintiff's exposure to tax liabilities, fines, penalties, and other charges.

 

To recover damages in a legal malpractice action, a plaintiff must establish "that the attorney 'failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a [*2]member of the legal profession' and that the attorney's breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007], quoting McCoy v Feinman, 99 NY2d 295, 301, 302 [2002] see Held v Seidenberg, 87 AD3d 616, 617 [2011] Kennedy v H. Bruce Fischer, Esq., P.C., 78 AD3d 1016, 1018 [2010]). "To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer's negligence" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442). " 'A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel' " (Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083 [2005], quoting Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1990]). Nonetheless, a plaintiff's conclusory allegations that merely reflect a subsequent dissatisfaction with the settlement, or that the plaintiff would be in a better position but for the settlement, without more, do not make out a claim of legal malpractice (see Boone v Bender, 74 AD3d 1111, 1113 [2010] Holschauer v Fisher, 5 AD3d 553, 554 [2004])."

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A Remarkable Defense in Legal Malpractice

Death of attorneys and clients is inevitable, and planning for death is one thing that is expected of attorneys.  in Cabrera v Collazo  2014 NY Slip Op 00622 [115 AD3d 147]  February 4, 2014 Tom, J. itself arising from a wrongful death case, the attorney died just weeks before plaintiff's time to file the wrongful death complaint ended.  Can his estate be held responsible.

"The remarkable defense proffered in this professional malpractice action is that an attorney who neglects a matter so that the statute of limitations runs against his client cannot be held legally accountable if the attorney happens to expire before the applicable limitations period. A cause of action for attorney malpractice requires: " '(1) the negligence of the attorney; (2) that the negligence was the proximate cause of the loss sustained; and (3) proof of actual damages' " (Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 9 [1st Dept 2008], lv denied 12 NY3d 715 [2009], quoting Mendoza v Schlossman, 87 AD2d 606, 606-607 [2d Dept 1982]). The pleadings, as "[a]mplified by affidavits and exhibits in the record" (Crosland v New York City Tr. Auth., 68 NY2d 165, 167 [1986]), contain allegations from which these elements can be made out and, thus, state a viable cause of action so as to survive a pre-answer motion to dismiss the complaint.

The extent of the duty imposed on the attorney to commence a timely action depends on the immediacy of the running of the statutory period, and no duty will be imposed where sufficient time remains for successor counsel to act to protect the client's interests in pursuing a claim (see Golden v Cascione, Chechanover & Purcigliotti, 286 AD2d 281 [1st Dept 2001] [defendant law firm relieved 2½ years before claim expired]). Where, as here, the expiration of the statute of limitations is imminent and the possibility that another attorney might be engaged to commence a timely action is foreclosed, there is a duty to take action to protect the client's rights.

Plaintiff is entitled to the inference that Tanzman died as a result of a chronic, terminal illness that he knew, or should have known, presented the immediate risk that his ability to represent his clients' interests might be impaired (see Yuko Ito v Suzuki, 57 AD3d 205, 207 [1st Dept 2008]). Here, defendants offered no evidence to elaborate on the cause or circumstances surrounding Tanzman's death. The submitted certificate of death for Tanzman merely states that Tanzman passed away on October 24, 2010 at Memorial Sloan-Kettering Cancer Center. The record suggests that plaintiff had cancer, and that his death may have been foreseeable, but the nature and duration of his illness cannot be determined from the death certificate and defendants' other submissions. Further, the record reflects that Tanzman was well aware that Collazo could not be relied upon to assist with plaintiff's representation. According to Tanzman's own statement, Collazo had done nothing on the matter in over a year, and Tanzman's retainer agreement assigned Collazo only a limited role in the case. In any event, as of September 2010, when Tanzman expressed his concern over the running of the statute of limitations in a letter to Surrogate's Court, Collazo had been convicted on a federal criminal offense and was facing sentencing and disbarment. Plaintiff is entitled to the factual inference that, at this late juncture and mindful of his ill{**115 AD3d at 152} health, Tanzman was aware of the need to prepare and file a complaint or to arrange for one to be filed as soon as the necessary letters of administration were received. The letters of administration were issued on October 6, 2010. Tanzman neither filed a complaint nor engaged another attorney to file one in his stead despite the availability of three attorneys associated with the firm as of counsel.

No discovery has been conducted and, in the absence of any evidence that the onset of Tanzman's final episode of illness was sudden, unanticipated and completely debilitating, the failure to seek assistance with the filing of a timely complaint represents a failure to protect plaintiff's interests. Further, plaintiff was not informed that the statute of limitations was about to expire so that she could protect her claim."

 

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Champerty and Judiciary Law 487

Champerty is not a subject that generates wide discussion.  You won't see a blog about it on Gawker.  When the word comes up, we see a figure from a Daumier etching or a Puck cartoon.  Nevertheless, the transfer of causes of action from individual to individual or to a corporate entity is higly regulated.

In Melcher v Greenberg Traurig LLP  2014 NY Slip Op 51296(U)  Decided on August 19, 2014  Supreme Court, New York County  Sherwood, J. we see the denial of a request to transfer or assign interests to an entity.  It should be remembered that Mr. Melcher made history in his Court of Appeals decision.  There the Court said: 'Thus, even if a claim for attorney deceit originated in the first Statute of Westminster rather than preexisting English common law (a question unresolved by Amalfitano and disputed by the parties in this case), liability for attorney deceit existed at New York common law prior to 1787. As a result, claims for attorney deceit are subject to the six-year statute of limitations in CPLR 213 (1). Because of our disposition of this appeal, we do not reach and need not resolve Melcher's other arguments.

Accordingly, the order of the Appellate Division should be reversed, with costs, and defendants' motion to dismiss the complaint denied."

Here, back in Supreme Court, we see a denial of his assignment request.  "Plaintiff Melcher initiated this action for attorney misconduct pursuant to the New York Judiciary Law §487 in 2007. Now, Melcher, 74, moves to substitute a limited liability company, LJBD Recovery LLC (LJBD) for himself as plaintiff in this action pursuant to CPLR 1018. Plaintiff has assigned his interests in this litigation to LJBD, which he created, and of which he is sole owner and manager. Plaintiff who states that "I am currently in good health", claims the substitution will avoid delay in prosecuting the case in the event of his death, and argues that as such an assignment is not prohibited pursuant to General Obligations Law § 13-101, it is permissible.Defendants argue that the proposed assignment is unnecessary and prejudicial, as Melcher, as a non-party, would be less accessible for discovery, and because the assignment could act to insulate Melcher from decisions of the court. Defendants also argue that the substitution "contravenes clear and long-settled public policy against champerty" (Opp., NYSECF Doc. No. 155 at 4).

When an assignment was made after litigation had already begun, courts have allowed a transfer of claims (see Rosenkrantz v Berlin, 65 Misc 2d 320 [Sup Ct, Nassau County 1971]), but prohibited the addition of new claims (see Erlich v Rebco Ins. Exchange, Ltd., 225 AD2d 75, 77 [1st Dept 1996]).The proposed substitution, if allowed, would prejudice the defendants by shifting the risks of litigation to a shell entity, making plaintiff less accessible to discovery, and allowing Melcher, a non-party, to continue to direct the litigation through his alter ego and to collect and retain all of the relevant information and documents. The plaintiff's rationale for the substitution, to allow the litigation to continue seamlessly in the event of his death, ignores that he is the sole owner and manager of the proposed substitute plaintiff. Plaintiff provides no rationale for how litigation would continue more smoothly with the sole owner and manager of LJBD deceased, than it would with an administrator appointed for a deceased plaintiff (see Moore v Washington, 34 AD2d 903, 904 [1st Dept 1970]). Accordingly, the court declines the invitation to allow the substitution. Plaintiff's Motion to Substitute LJBD Recovery LLC is DENIED."

 

 

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Limited Retainers in a Legal Malpractice Setting

Client is the widow of a worker who died, either at work or at a company Christmas party.  She retains the law firm to "investigate and advise her with respect to all potential claims relating to the accident of December 23, 2010 and Mr. Pena's death."  When she is no longer able to apply for Workers Compensation, she sues.  Was the law firm responsible to her on this issue?

Lirano v Grimble & Logudice, LLC  2014 NY Slip Op 32346(U)  September 3, 2014  Supreme Court, New York County  Docket Number: 154676/2013  Judge: Eileen A. Rakower is just a discovery decision, but this question will come up, and we expect to see a summary judgment motion in the future.

"As alleged in the Verified Complaint, Decedent suffered injuries in an accident while working on December 21, 2010, at 175 East 96th Street, New York, New York 10128, and died on December 23, 2010 as a result of his injuries. Plaintiff retained Defendants to "investigate and advise her with respect to all potential claims relating to the accident of December 23, 2010 and Mr. Pena's
death." The Complaint alleges, by letter dated December 28, 2012, G&L "rejected the case without commencing a lawsuit or filing a Workers' Compensation claim on behalf of the decedent, Eduardo Pena, or his estate." It further alleges, "Pursuant to the applicable statute, a Workers Compensation claim must be filed within two (2) years. Therefore, the decedent and/or his estate are precluded from filing a Workers' Compensation claim as a result of the accident of December 21, 201 O." Plaintiff claims that Defendants were negligent "in not advising the administratrix that the estate had a viable Workers' Compensation claim; in not informing her that a Workers' Compensation claim had to be commenced within two (2) years of the date of the accident and in failing to refer her to a lawyer and/or firm that focused on Workers' Compensation claims and in failing to advise her to consult with a lawyer and/or firm that focused on Workers' Compensation
claims," and resulting damages. In its Answer, G&L denies that the injuries sustained by Pena on the date of the incident was the sole factor causing Pena's death because Pena had preexisting
medical conditions. Furthermore, G&L contends Decedent was intoxicated at an after-hours Christmas party when the injury occurred, which would not be covered by Workers' Compensation. G&L further contends that (1) Plain ti ff failed to state a cause of action; and (2) Plaintiff was aware that G&L was retained solely with regard to an action based upon negligence of others, and not with respect to a Workers' Compensation claim. "

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Sister is Cruelly Used, But Is It Legal Malpractice?

Brother and friend have a Canon brand office automation equipment business.  Problem is that they have criminal records and Canon won't work with them.  They turn to Sister, who is an employee of the company.  She gets all the stock, and with it, all the debts.  Brother and friend have the right to buy back the stock for $ 10,000.  It all ends badly for the sister.  When the law firm represents Brother, Sister and Friend, is it legal malpractice?

Mattiucci v Brach Eichler, LLC  2014 NY Slip Op 32324(U)  August 21, 2014  Supreme Court, New York County  Docket Number: 152238/14  Judge: Nancy M. Bannon says no, it is not legal malpractice.

"In this action seeking damages for legal malpractice, the plaintiff, who agreed to be named sole shareholder, director, and officer of a corporation, complains that the defendant  attorneys were negligent in allowing her to do so and, notwithstanding a signed waiver, complains that the defendants had a conflict of interest in simultaneously representing her  business partners. The defendants move to dismiss the complaint on the grounds of failure to state a cause of action (CPLR 3211 [a][?)) and upon documentary evidence (CPLR 3211 [a][1])   The motion is granted.

On December 4, 2008, the plaintiff, Catherine Mattiucci, along with her brother Anthony  Grimaldi, and a third individual, Steve Hernandez, retained defendant Jay Freireich, an attorney, to represent them regarding the acquisition of a company called EZ Docs, Inc. ("EZ Docs") from Empire Technology Inc., a separate company owned by Grimaldi and Hernandez. EZ Docs is in the business of selling Canon brand office automation equipment. the parties acknowledge that Canon was unwilling to permit Grimaldi or Hernandez to have any ownership interest in a Canon licensed dealership due to their criminal records. Therefore, defendant Freireich prepared an Option to Purchase Stock Agreement which provided that plaintiff owned 100% of the common stock of EZ Docs., and granted the exclusive option to Grimaldi and Hernandez to purchase all of EZ Docs' stock for $10,000. On March 19, 2009, the plaintiff, Grimaldi, and Hernandez executed a retainer agreement which read in pertinent part: [* 1]"You do hereby acknowledge that you have requested this office to represent you with respect to your interests and you understand that I represent all three of you in this matter. You understand and are fully aware that, based upon the
circumstances of such representation your separate interests may be adverse to  the other's interests and that you each have the opportunity to be represented by separate counsel.
Notwithstanding such possible adversity of interest and conflict, you do desire  this office to represent you in connection with your interests. You understand that at any time, you may terminate this office's representation of you and retain separate counsel to represent your interests. Further this office may likewise terminate our representation of you in the event we believe it is impossible to represent you due to your adverse interests." Due to the plaintiff's concerns over her exposure to claims from creditors and taxing authorities as sole shareholder, director, and officer of EZ Docs, Freireich prepared an indemnification agreement. The agreement provided that Grimaldi and Hernandez would indemnify the plaintiff for "any and all liability to make payments under any obligation arising by and through her retention of shares, directorship or acting as officer" of EZ Docs. Defendant Freireich then prepared a Nominee Declaration which provided that the plaintiff acted as nominee for Grimaldi and Hernandez because Canon was not willing to grant any ownership interest in a Canon licensed dealership to Grimaldi or Hernandez.

According to the plaintiff, she was actually a mere employee of the company while Grimaldi and Hernandez were the shareholders, officers, and directors. However, beginning in 2011, she was sued as an officer, director, and shareholder of EZ Docs, Inc. in a number of suits alleging fraud and other causes of action. In addition to incurring legal fees in defending these actions, plaintiff received K-1s from EZ Docs Inc. attributing distributions to her as income which she did not actually receive. In November 2011, Grimaldi and Hernandez terminated the plaintiff's employment and she was unable to collect unemployment insurance benefits due to her documented position as sole shareholder, director, and officer of the company.

Finally, an "applicable principle in this case is that a [party] cannot benefit from [her] own wrongdoing." Zumpano v Quinn, 6 NY3d 666, 685 (2006). The plaintiff knowingly participated in a scheme to acquire a business with her brother and friend and then, when the arrangement she agreed to resulted, not unexpectedly, in her being named as a defendant in legal actions against the company and being ousted by her partners, turned to her attorneys for relief by claiming they committed malpractice by allowing her to participate in that arrangement, notwithstanding her signed waivers. To allow the action to proceed would be to countenance this scheme, and the court declines to do so. In any event, as discussed above, the plaintiff fails to sufficiently allege the essential elements of a claim of malpractice. "

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Defendants go 0-2 in the Motion Sequence

This case arises from representation of the client in a buy-out provision of a stock agreement.  Defendants failed to serve a notice required by the stock agreement on individual shareholders, which led to dismissal of claims against them. 

In Rehberger v Garguilo & Orzechowski, LLP   2014 NY Slip Op 04182 [118 AD3d 767]  June 11, 2014  Appellate Division, Second Department  not only is summary judgment against Plaintiff denied, but summary judgment against third-party defendants is likewise denied.

"Here, the Garguilo defendants each failed to establish their prima facie entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against each of them. The stock redemption agreement in the underlying action required that notice of redemption be mailed to each of the individual shareholders at the address listed in the agreement. As a result of the Garguilo defendants' failure to send this notice to the individual shareholders, the individual shareholder defendants were dismissed from the underlying action. The Garguilo defendants' submissions in support of their respective motions did not establish, prima facie, that the plaintiff will be unable to prove at least one element of his legal malpractice claim and, thus, they failed to demonstrate their entitlement to judgment as a matter of law (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438 [2007]; Barnave v Davis, 108 AD3d at 583; Affordable Community, Inc. v Simon, 95 AD3d at 1048; cf. Board of Mgrs. of Bay Club v Borah, Goldstein, Schwartz, Altschuler & Nahins, P.C., 97 AD3d 612, 613-614 [2012]; Frederick v Meighan, 75 AD3d at 531-532; Leach v Bailly, 57 AD3d 1286, 1289 [2008]). Moreover, contrary to the Garguilo defendants' contention, they failed to demonstrate, prima facie, that the plaintiff's subsequent counsel, Dollinger, Gonski & Grossman, Esqs., and Matthew Dollinger (hereinafter together the Dollinger third-party defendants), had a sufficient opportunity to fully protect the plaintiff's rights when it took over the case, as to establish that any alleged negligence on the part of the Garguilo defendants was not a proximate cause of the plaintiff's damages (cf. Perks v Lauto & Garabedian, 306 AD2d 261 [2003]; Albin v Pearson, 289 AD2d 272 [2001]).

The Garguilo defendants' respective remaining contentions are without merit.

In light of the Garguilo defendants' failure to establish their prima facie entitlement to judgment as a matter of law, the Supreme Court properly denied their respective motions for summary judgment dismissing the complaint insofar as asserted against each of them, regardless of the sufficiency of the plaintiff's opposing papers (see Affordable Community, Inc. v Simon, 95 AD3d at 1048; see generally Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).

Furthermore, the Supreme Court properly denied that branch of the motion of Garguilo & Orzechowski, LLP, which was for summary judgment on the third third-party complaint, which alleged causes of action against the Dollinger third-party defendants for contribution and [*3]common-law indemnification. In the third third-party complaint, Garguilo & Orzechowski, LLP, alleged, inter alia, that if the plaintiff is able to establish that Garguilo & Orzechowski, LLP, committed malpractice, then the Dollinger third-party defendants are culpable for essentially the same conduct because they too failed to serve notice on the individual shareholders and to take action against those shareholders to enforce the buy-out provision of the stock agreement. Contrary to the contentions of Garguilo & Orzechowski, LLP, the Supreme Court properly denied that branch of its motion which was for summary judgment on the cause of action for common-law indemnification. Garguilo & Orzechowski, LLP, failed to establish, prima facie, that it was free from negligence or that its negligence was not a proximate cause of the plaintiff's alleged damages (see Waggoner v Caruso, 14 NY3d 874 [2010];

"

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Big Case, Good Results, Unhappy with Contingent Fee

The Court of Appeals will be reviewing contingent fees in Matter of Lawrence, deceased.   McCallion & Assoc., LLP v Dyche  2014 NY Slip Op 32254(U)  August 20, 2014  Supreme Court, New York County  Docket Number: 157793/13  Judge: Joan A. Madden is Supreme Court's look at the same issue.  When a client retains an attorney on a contingent basis, and the recovery is big, really big, what happens?

"In this action, M&A seeks to recover attorneys' fees arising out of its representation of Ms. Dyche in the matters of Olsen v. Dyche and An v. Dyche. Defendant SD Assets, LLC (SD Assets) is a limited liability company owned by Ms. Dyche. Defendant Empire Gateway LLC ("Empire") is a an entity from which SD Assets was designated to received quarterly distributions pursuant to a settlement agreement in the matter of Olsen v. Dyche (hereafter "the Settlement Agreement"). The complaint asserts causes of action for breach of contract, quantum meruit, an accounting, declaratory relief and injunctive relief. In connection with Olsen v. Dyche, M&A and Ms. Dyche entered into a retainer agreement providing that M&A would receive a [* 1]contingency fee of20% "of any amounts received by (Ms. Dyche) by way of settlement, judgment or award" on the counterclaim and third-party complaint, plus $250/hour for legal work related to the defense of the case. Subsequently, the contingency amount was increased to 30% as evidenced by an email exchange between M&A and Ms. Dyche. The complaint alleges that the increase in fee was "in recognition not only of the increased work load by M&A in the Olsen v. Dyche matter, but also in recognition of the tremendous amount of legal work that M&A was performing in An v. Dyche matter without compensation under the An v. Dyche fee agreement1" (Complaint, if 36). Ms. Dyche admits in the defendants' answer that she agreed to the increase the contingency fee from 20% to 30%, but maintains she only agreed to the increase because she was afraid M&A would withdraw as counsel if she did not consent. The dispute in Olsen v. Dyche centered on whether Ms. Dyche had an ownership interest
in Empire, and the extent of such interest. Empire owns 55% of the New York City Regional
Center (NYCRC) which collects investment funds from overseas investors pursuant to a program
administered by the U.S. Office of Homeland Security and invests the fund in various construction projects. It is alleged that NYCRC had contracts involving four projects that would "be producing $50,187, 500 income to NYCRC, and since Empire ... owned 55% ofNYCRC, this would yield interest income of fees to Empire of $27 ,604,225 in five years" (Complaint, ,; 21 ).
according to the complaint, the Settlement Agreement, which was entered into in June 2012, amends the Empire Operating Agreement to confirm Ms. Dyche's ownership interest in Empire, provides for cash payments to Ms. Dyche for income received by Empire in 2011 and the first two quarters of 2012, and provides for payments to Ms. Dyche (through SD Assets) of future quarterly distributions based on Ms. Dyche's percentage interest in Empire.

The complaint seeks attorneys' fees based, in part, on the 30% of these quarterly distributions alleging that "the primary component of the consideration that Ms. Dyche received via the Settlement Agreement was a specific percentage equity interest in Empire, which entitled her to receive quarterly distributions during the five year term of the three or four identified contracts [and that] the overwhelming majority of M&A's contingency fee was linked to future quarterly payments to Ms. Dyche contemplated by the Settlement Agreement, since M&A was
entitled to receive its contingency percentage of the entire amount 'of any judgment, settlement
or award,' not just the initial lump payments due Ms. Dyche on a retrospective basis."  (Complaint,~ 28).

The proposed counterclaim seeking rescission of the retainer agreement alleges that the retainer agreement in Olsen v. Dyche "initially included a 20% interest (which M&A partner Kenneth McCallion alleges was later increase to 30%) in Ms. Dyche's Empire Gateway stock dividends ... [and therefore] is "excessive within the meaning of l.5(a) of the New York Rules of Professional Responsibility" (Proposed Amended Answer, rs 23, 80(a). It further alleges that when M&A entered into the retainer agreement it entered into a "business transaction" with a client, within the meaning of Rule 1.8, but failed, as required by that rule to, inter alia, inform Ms. Dyche that under the retainer agreement he was entitled to 20% of the Empire stock dividends and later 30% of the dividends, to advise her to seek advice of counsel, or to receive Ms. Dyche's consent in writing (Id.,~ 80(b)-(d). The other proposed counterclaim seeks a declaration that retainer agreement is null and void and should be set aside modified and/or vacated based on M&A's violation of Rules 1.5(a) and 1.8 of the New York Rules of Professional Responsibility (Id., il' s 129-13 3 ).

Although there is no assertion of prejudice or surprise related to the proposed amendment, the Dyche defendants have not adequately demonstrated the merit of the proposed counterclaims. First, contrary to the allegations relating to proposed counterclaim for rescission, neither the complaint nor the relevant retainer agreement seek to recovery a percentage of Ms. Dyche's ownership in Empire stock dividends. Instead, the contingency portion of retainer agreement bases M&A' s fee on "any amounts received by (Ms. Dyche) by way of settlement, judgment or award." Moreover, the complaint seeks to recover attorneys' fees equivalent to 30% of future quarterly distributions based on Ms. Dyche' s percentage interest in Empire, rather than 30% of "Empire stock dividends," as alleged in the proposed counterclaim. Furthermore, while there may be legal issues relating to M&A's basing its fee on the distributions from Empire, absent allegations with respect to such distributions, leave to amend to add a counterclaim for rescission must be denied. Such denial, however, is without prejudice to renewal upon proper pleadings.
As for the proposed counterclaim related to M&A's alleged violation of 1.5(a) and 1.8 of the New York Rules of Professional Conduct, such counterclaim is without merit as such violation "does not, in itself, give rise to a private cause of action" Weintraub v. Phillips, Nizer, Benjamin, Krim & Ballon, 172 AD2d 254, 254 (1st Dept 1991 ). However, the alleged violations may be properly asserted with respect to other causes of action. "

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Some Head Scratching by the Court in a Legal Malpractice

Medicare costs and reimbursements in the Nursing Home field is "arcane" and probably unknown to readers of  legal malpractice blog.  In Berkowitz v Abrams, Fensterman, Fensterman,
Eisman, Formato, Ferrara & Einiger, LLP
 
2014 NY Slip Op 32299(U)  August 15, 2014
Sup Ct, New York County  Docket Number: 152368/13  Judge: Arthur F. Engoron himself admits to being a little confused.

Bottom line is that the legal malpractice case is continuing on the theory that defendant law firm should have commenced an Article 78 action, failed to do so, was conflicted, and lost about $ 450,000 for the client.

"The instant motion to dismiss is one of the most difficult this Court has had to decide in 11 +
years on the bench. This is due to the fact that the Court has been called upon to interpret
documents full of the arcane language of"Medicaid Reimbursement," an area of human activity
hitherto unknown to the Court. However, after countless readings and re-readings, several drafts
and re-drafts, and much head-scratching, the Court believes that it has finally "cracked the code,"
at least sufficiently to decide this motion correctly. In retrospect, the matter was not that
c.i complicated; but hindsight is always 20-20.

In this action, plaintiffs Morris Berkowitz d/b/a Morris Park Nursing Home and Rehab Center
and Morris Park Nursing Home and Rehab Center claim that defendants Abrams, Fensterman,
Fensterman, Eisman, Formato, Ferrara & Einiger, LLP ("Abrams") and Richard T. Yarmel
("Yarmel") committed malpractice in their representation of plaintiffs in a dispute with non-party
Office of the Medicaid Inspector General ("OMIG"). Defendants now move, pursuant to CPLR
321 l(a)(l) and (a)(7), to dismiss the complaint based on documentary evidence and for failure to
state a cause of action. These two grounds will be discussed in reverse order.

Thus, plaintiffs' first two causes of action, both for legal malpractice, are not subject to
dismissal. The third cause of action, also for legal malpractice, but based on the alleged conflict
of interest, is also not subject to dismissal (although on its alleged facts it appears, to this Court,
tenuous). However, plaintiffs' fourth cause of action, for attorney's fees, is dismissed without
prejudice pursuant to CPLR 3211 (a)(7). Plaintiffs have failed to provide a basis (such as statute,
court rule, contract, or egregious conduct) for the recovery of attorney's fees. "

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More on the Proskauer Rose LLP Case

Continuing from yesterday, we discuss one of the largest  fraud - legal malpractice cases we have seen.Chambers v Weinstein 2014 NY Slip Op 51331(U)  Decided on August 22, 2014 Supreme Court, New York County Sherwood, J. 

Proskauer Rose LLP is involved in the case, and walks away with dismissal.The facts are set forth in yesterday's blog post, and here is how  the case was decided for Proskauer.

"The Complaint alleges that 148 (through Weinstein) lent the Kahal Defendants $3.88 million. Complaint, ¶¶ 247-250. Weinstein then directed Kahal to pay $1 million of those funds to Proskauer as a retainer. Id. Proskauer knew or should have known that the funds were probably proceeds of his fraudulent activities. Id. The Complaint avers that Proskauer improperly retained and expended the funds for its benefit, and demands the return of funds. Id., ¶¶ 252-253. As noted, these allegations are largely based on the statements made by FBI Agent Ubellacker in the 2013 Action. Plaintiffs' opposition, ¶¶ 79-81. In their opposition papers, Plaintiffs also attached a document, which purports to show the $1 million payment made by Kahal to Proskauer, in a credit/debit schedule. Id., exhibit O. In such regard, Plaintiffs contend that they are "entitled to the inference that all of the funds sent to [Kahal] by 148 were Plaintiffs' funds." Id., ¶ 84.

A claim for conversion of money can be established "where there is a specific, identifiable fund and an obligation to return or otherwise treat in a particular manner the specific fund in question." Thys v Fortis Sec., LLC, 74 AD3d 546, 547 [1st Dept 2010] (internal quotation marks and citation omitted). "Although the action must be for recovery of a particular and definite sum of money, the specific bills need not be identified." Id. (citation omitted).The conversion claim fails. Despite the allegation that Proskauer "knew or should have known" that the money it received from Kahal were proceeds of Weinstein's fraud, the Complaint does not establish that Proskauer knew or should have known that the money it received from Kahal were "specific, identifiable funds" belonging to Plaintiffs and, thus, had "an obligation to return [same to Plaintiffs] or otherwise treat in a particular manner the specific fund in question."

 

3.Accounting (25th Cause of Action)[FN3] The Complaint alleges that Proskauer accepted $1 million from Weinstein or "other persons for the benefit of" Weinstein, and seeks to have Proskauer "provide an accounting of all sums received directly or indirectly from or for the benefit of Defendant Weinstein," because such funds "belonged to and originated from Plaintiffs." Complaint, ¶¶ 257-259.
To establish an accounting claim, a plaintiff must show "a fiduciary relationship between plaintiff and defendants." AMP Servs. Ltd. v Walanpatrias Found., 34 AD3d 231, 233 [1st Dept 2006]. Here, the Complaint does not allege a fiduciary relationship between Plaintiffs and Proskauer. Yet, Plaintiffs argue that "Proskauer, as a law firm, is held to a higher obligation with respect to the monies of third parties in its possession than ordinary defendants Plaintiffs' opposition, ¶ 90." They rely on Rule 1.15(a) of the Rules of Professional Conduct ("A lawyer in possession of any funds or other property belonging to another person . . . is a fiduciary . . .").

This argument has no foundation in law. The Court of Appeals has held that "an ethical violation will not, in and of itself, create a duty that gives rise to a cause of action that would otherwise not exist at law." Shapiro v McNeill, 92 NY2d 91, 97 [1998]. A fiduciary relationship arises "between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation" or "when confidence is reposed on one side and there is resulting superiority and influence on the other." Eurycleia, 12 NY3d at 561 (citations omitted). Plaintiffs have not met either test in Eurycleia. Plaintiffs' other argument that Proskauer's withdrawal from its representation of Weinstein without completing same vitiates its entitlement to the retainer (Plaintiffs' opposition, ¶¶ 88, 91) is baseless because Proskauer does not [*6]represent Plaintiffs in any action or proceeding. Thus, the accounting claim is dismissed.

5.Unjust Enrichment (30th Cause of Action)
"The essential inquiry in any action for unjust enrichment . . . is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered." Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182 [2011] (citation omitted). To establish this claim, a plaintiff must show: "(1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered'." Id. at 182 (citations omitted). While privity is not required, the complaint must still

 

show there is a connection between the parties that is not "too attenuated." Id.
Similar to the fraudulent conveyance claim, the unjust enrichment claim is asserted against multiple defendants. The Complaint alleges that the defendants, including Proskauer, "accepted monies directly or indirectly from the transactions described herein" and the "retention of said monies would unjustly enrich said defendants." Complaint, ¶¶ 297-298. As to Proskauer, the Complaint seek a $1 million judgment. Moreover, Plaintiffs argue that because Proskauer kept the $1 million retainer to which they have made a claim, not requiring Proskauer, as a fiduciary, to return the funds would unjustly enrich Proskauer, particularly when it voluntarily withdrew as Weinstein's [*7]counsel while keeping the unearned fee. Plaintiffs' Opposition, ¶¶ 101-104.

Plaintiffs' arguments are unavailing. As discussed above, Proskauer is not Plaintiffs' fiduciary. The retainer was paid by Kahal, on behalf of Weinstein, Proskauer's client. The fact that Plaintiffs have made a claim against the retainer does not establish that a benefit has been bestowed upon Proskauer. Also, the cases cited by Plaintiffs (Plaintiffs' Opposition, ¶ 102) do not support their assertion because the plaintiffs in those cases bestowed a benefit directly upon the defendants. Here, the facts show that any benefit bestowed upon Proskauer came from the Kahal Defendants, not Plaintiffs. Thus, the unjust enrichment claim against Proskauer must be dismissed.

"

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Fraud and legal Representation

This case is one of the larger fraud - legal malpractice cases we have seen.  In fact, the scope of the fraud is breathtaking.  Proskauer Rose LLP is involved in the case, and walks away with dismissal.  Here are some of the facts in Chambers v Weinstein  2014 NY Slip Op 51331(U)
Decided on August 22, 2014  Supreme Court, New York County  Sherwood, J.

"The Complaint avers, among other things, that based on Schleider's false representations that [*2]he would invest in certain investment transactions and take steps to protect those investments, Plaintiffs lent up to $6.7 million to defendant 148 Investment LLC (148), a company owned by Todd. Id., ¶¶ 30-31. Schleider engaged the KS Defendants to represent Plaintiffs in transactions with 148. Id., ¶ 32. In February and March of 2012, based on Schleider's representation that Weinstein had access to large blocks of Facebook shares that they intended to purchase through 148 prior to an initial public offering (IPO) and then sell them at a substantially higher price, Plaintiffs lent a total of $3.025 million to 148 to purchase pre-IPO shares in three separate transactions. However, 148 purchased no Facebook shares and did not otherwise invest the money. Id., ¶¶ 35-50. Instead, Todd, Schlieder, Weinstein, Muschel and 148 engaged in self-dealings and used Plaintiffs' money for their own personal expenses. Id., ¶ 51.

To further the fraudulent Facebook scheme, Todd represented to Plaintiffs that the transactions would be secured by collateral valued at $12 million, consisting of mortgages 148 held against a property known as 1741-1751 Park Avenue, New York (Park Avenue Property). Id., ¶ 75. The complaint avers that defendant 121 Park had made a $6 million mortgage to Kahal securing the Park Avenue Property and recorded same in March 2008.[FN1] Id., ¶ 76. In November 2011, Kahal assigned the mortgage to 148, which was recorded in June 2012. However, in or about March 2012, 148 reassigned the mortgage to Kahal. Both of the collateral assignments were performed without any consideration, but rather were made to deceive Plaintiffs. Id., ¶¶ 79-81, 88.

The Complaint also avers that in September 2011, Belle Glade Gardens Realty Group, LLC (BGG), a Florida company owned and controlled by Schleider, entered into an agreement with Prince of Belle Glade Gardens, LLC to purchase Belle Glade Gardens, a 384-unit apartment complex, for $16.4 million. Complaint, ¶¶ 118-120. Schleider retained defendant Greenberg to represent BGG in the transaction. Id. Although BGG deposited $120,000, Greenberg returned the down-payment to BGG in November 2011, thus terminating the purchase agreement. Id., ¶ 121-122. In February and April 2012, Schleider represented to Plaintiffs that the BGG transaction was still active and that he would be matching their investment therein. Id., ¶¶ 123. Based on the representation, Plaintiffs wired $2.5 million to Greenberg in February 2012, which was deposited into an escrow account for Schleider and a subaccount for BGG. Id., ¶¶ 124-125. Schleider subsequently directed Greenberg to wire $2.5 million to 148, but misrepresented to Plaintiffs that the $2.5 million was being held by Greenberg for the transaction. Id., ¶ 128. In April 2012, Schleider induced Plaintiffs to make an additional $330,000 investment, but later directed Greenberg to deduct its legal fees from the $330,000 wired by Plaintiffs, without disclosing that the BGG deal was no longer active. Id., ¶¶ 129-132. Schleider intended to and fraudulently turned over the BGG funds to 148 for use by Schleider, Todd, Weinstein and 148. Id., ¶ 133.

In 2011, Weinstein was prosecuted by the United States in the United States District Court of New Jersey (2011 Action). Proskauer represented Weinstein from December 31, 2012 to May 30, 2013 in the 2011 Action. Complaint, ¶ 226. As compensation for its services, Proskauer charged Weinstein $1 million as a minimum non-refundable fee. On December 20, 2012, Kahal paid the fee with a check containing a reference stating "Loan Return for 148 LLC." Id., ¶¶ 227-228. The Complaint alleges that Proskauer did not perform adequate due diligence to insure that the retainer funds were not proceeds of Weinstein's criminal activities, and that Proskauer had "actual knowledge" that Weinstein was prohibited by the government in the 2011 Action from engaging in financial transactions of more than $1,000. Id., ¶¶ 230-231. On January 3, 2012, Weinstein entered into a plea agreement whereby he admitted to committing wire fraud and money laundering. On May 20, 2013, Weinstein was charged by the United States with various criminal activities (2013 [*3]Action). The indictment alleges that Proskauer received $1 million. The Complaint alleges that Proskauer spent the $1 million within two weeks of its receipt from Kahal, and that Proskauer paid "an unknown portion of these funds to persons unknown" for the benefit of Weinstein, and "thereby intentionally engaged in a scheme to defraud Plaintiffs by agreeing to launder' funds for Defendant Weinstein and prevent their recovery by Plaintiffs." Id., ¶¶ 240-241. Proskauer moved to be relieved as Weinstein's attorney in the 2011 Action, in light of the allegations in the 2013 Action. The motion was granted on May 30, 2013. Id., ¶¶ 236-237."

"To state a claim for aiding and abetting fraud, a plaintiff must allege the existence of the underlying fraud, actual knowledge, and substantial assistance. Oster v Kirschner, 77 AD3d 51, 55 [1st Dept 2010]; Stanfield Offshore Leveraged Assets, Ltd. v Metro. Life Ins. Co., 64 AD3d 472, 476 [1st Dept 2009].

In this case, the parties do not dispute that Weinstein committed fraud prior to 2011 involving victims other than Plaintiffs. In fact, Weinstein was sentenced for fraud in the 2011 Action. The dispute in this case lies in whether fraud perpetrated against Plaintiffs in 2012 is adequately stated in the Complaint, and whether Proskauer had "actual knowledge" and gave "substantial assistance." Notably, Plaintiffs' allegations in the Complaint are primarily based on sworn statements, dated May 13, 2013, made by an FBI agent, Karl Ubellacker, in connection with the government's complaint filed in the 2013 Action. A copy of Agent Ubellacker's statement is annexed as exhibit B to Plaintiffs' opposition to Proskauer's motion to dismiss.

In opposition to the motion, Plaintiffs contend that Proskauer's actual intent can be inferred from the following factual circumstances. Proskauer knew of the allegations against Weinstein in the 2011 Action because it served as his defense counsel. It knew that Weinstein was prohibited from engaging in transactions over $1,000 without the approval of the government's special counsel. It knew that the $1 million retainer was "probably directly or indirectly" proceeds of the 2011 Action. Kahal paid Proskauer's retainer with a check bearing a notation that it was a "Loan Return for 148 LLC." Proskauer accordingly knew that the check never went to 148, but was diverted to pay [*4]Weinstein's legal fees, just as he had diverted funds in the 2011 Action. Additionally, after learning that the government might try to seize the diverted funds, Proskauer was told by Weinstein to "minimally" inquire about the source of funds with Todd, who replied in a manner as directed by Weinstein. Lastly, Weinstein admitted that the fraudulent scheme in the 2011 and 2013 Actions "was a key component of both." Plaintiffs' opposition, ¶¶ 53-63.

Plaintiffs' contentions are insufficient to defeat the motion. That a law firm represents a client accused of a prior fraud against certain victims does not support an inference that the firm knew about, much less aided and abetted, a subsequent fraud committed by the client against other victims. Here, the government's complaints in the 2011 and 2013 Actions named different sets of victims and Plaintiffs were not named in the 2011 Action. Thus, Weinstein's retention of Proskauer as defense counsel in connections with the 2011 Action does not support an inference that Proskauer knew of the subsequent fraud allegedly perpetrated against the Plaintiffs, which fraud was the subject of the 2013 Action. See National Westminister Bank v Weksel, 124 AD2d 144, 150 [1st Dept 1987] (while a law firm gains access to information in the course of representing a client, "the fact of legal representation, even as to transactions allegedly the subject of subsequent [fraud], does not itself support the inference of the high degree of scienter necessary to extend fraud liability [against the firm] on an aiding and abetting theory").

Plaintiffs' attempt to overcome this flaw by relying on Weinstein's recent motion, filed by his new counsel in the New Jersey federal court, seeking "specific performance" of his plea agreement made with the government in connection with the 2011 charges,[FN2] is also misplaced. Even if his argument in that motion were true (i.e., the fraud scheme in the 2011 and 2013 Actions was "a key component of both"), it does not give rise to an inference that Proskauer knew of the fraud concerning the Facebook IPO and other transactions implicated in the 2013 Action. For the same reason, the fact that the retainer fee was paid via a third-party check, with a notation that it was a "Loan Return for 148 LLC," does not infer that Proskauer "substantially assisted" Weinstein in defrauding Plaintiffs by laundering funds that were "probably directly or indirectly fraudulent proceeds" of the 2011 Action. The 2011 Action did not involve Plaintiffs, 148 or the Kahal Defendants. There is no allegation that Proskauer had "actual knowledge "(as opposed to Plaintiffs' speculative phrase "probably directly or indirectly") of any connection between Weinstein and Plaintiffs at the time the retainer was paid. This remains true even if Proskauer "knew" that Weinstein was prohibited from engaging in financial transactions of more than $1,000 or failed to perform sufficient "due diligence" as to the source of the funds.

Moreover, even though the intent to commit fraud may be divined from the surrounding circumstances, "substantial assistance" in aiding and abetting fraud "means more than just performing routine business services for the alleged fraudster." CRT Invs., Ltd. v BDO Seidman, LLP, 85 AD3d 470, 472 [1st Dept 2011] (citations omitted). Here, it is not alleged that Proskauer provided substantial assistance to Weinstein, other than routine legal representation in the 2011 Action, by making fraudulent misrepresentation or inducing Plaintiffs in connection with transactions implicated in the 2013 Action.

Further, when a plaintiff seeks to extend an alleged fraud beyond the principal actors, the requirement of CPLR 3016(b) must be "strictly adhered" to because "the alleged aider and abetter, by hypothesis, has not made any fraudulent misrepresentation and should not be called to account for the intentional tort of another unless the circumstances of his connection therewith can be alleged in detail from the outset." National Westminster, 124 AD2d at 149. The allegations against Proskauer do not meet CPLR 3016 (b)'s requirements. Plaintiffs' reliance on Eurycleia Partners, LP v Seward & Kissel, LLP (12 NY3d 553 [2009]) is also misplaced. Indeed, in Eurycleia, the Court of Appeals dismissed the aiding and abetting fraud claim against the law firm that prepared the [*5]offering memoranda for a hedge fund that later collapsed. The Court held that even though "a plaintiff need not produce absolute proof of fraud," the allegations in the amended complaint were "conclusory" and did not give rise to a "reasonable inference" that the law firm committed fraud or aided and abetted fraudulent activities. Id. 560-561. Here, the Complaint fails to allege that Proskauer knew and substantially assisted Weinstein in those transactions in which Plaintiffs assert they were defrauded. Thus, the aiding and abetting fraud claim shall be dismissed.

"

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Could the Attorney Have Done More?

Sometimes we read a decision and wonder how the case got to trial.  Cinao v Reers  2013 NY Slip Op 05791 [109 AD3d 781]  September 11, 2013  Appellate Division, Second Department is one such case.

"Here, the evidence supports the jury's finding that the defendant did not "depart[ ] from the exercise of that degree of care, skill, and diligence commonly possessed and exercised by a member of the legal community" (Edwards v Haas, Greenstein, Samson, Cohen & Gerstein, P.C., [*2]17 AD3d 517, 519 [2005]). The jury properly credited evidence which established, among other things, that the defendant marshaled the trust assets, communicated with the attorneys representing the plaintiff's brother in an attempt to settle the brothers' dispute over the trust, advised the plaintiff to retain local counsel in Hawaii, and successfully sought to adjourn the proceedings several times to give the plaintiff sufficient opportunity to retain local counsel. The plaintiff admitted that he made no attempt to retain local counsel to oppose his brother's petition to remove him as sole trustee. In addition, it is undisputed that when the plaintiff retained the defendant in April 2000, the plaintiff had already breached the terms of the trust which required him to distribute $158,000 to his brother within six months of their mother's death, and that prior to retaining the defendant, the plaintiff, as the sole trustee, had not taken any steps to administer the trust. Thus, the jury properly concluded that the plaintiff's inaction as sole trustee led to the untimely distributions, as well as his removal as sole trustee, and that the defendant did not depart from the exercise of that degree of care, skill, and diligence commonly possessed and exercised by a member of the legal community in attempting to resolve the brothers' dispute and administer the trust. Accordingly, contrary to the plaintiff's contention, the verdict was supported by a fair interpretation of the evidence (see Lolik v Big V Supermarkets, 86 NY2d at 746)."

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Settlements and Legal Malpractice

Potential clients often ask whether they should settle the underlying case and then sue their present attorney for legal malpractice, or sue before settling.  Aside from the "bird in the hand/bird in the bush" issue, and whether it is better to take something specific now, rather than waiting for the future potential, the rule in legal malpractice is that settlement of the underlying case is not necessarily the end of the legal malpractice case.

Angeles v Aronsky  2013 NY Slip Op 05955 [109 AD3d 720]  September 24, 2013
Appellate Division, First Department  is an example of the issue in the First Department.  There are similar cases in the Second Department, too.

Plaintiff Manuel Angeles commenced this legal malpractice and breach of contract action against defendant Jeffrey A. Aronsky alleging that defendant negligently represented plaintiff in his underlying premises liability action arising from an attack on plaintiff in the lobby of an apartment building. Plaintiff also asserts that defendant breached the retainer agreement.

On December 7, 2007, at approximately 3:15 p.m., plaintiff entered the front entrance of the apartment building where he lived and, immediately upon reaching the lobby, was hit in the jaw. Although there were no witnesses to the actual attack, a neighbor who was standing outside the building around the time of the incident saw three men run out the front entrance. Two of the men were holding baseball bats. The neighbor, who had lived in the building for about five years, did not recognize any of the men. Plaintiff also did not recognize the men, whom he observed briefly before he lost consciousness following the assault.

On the day of the incident, plaintiff admits that the door locked behind him when he left the building around 2:55 p.m. and that he had to unlock it with his key when he returned a short time later. On the side of the building there is a door to the laundry room, which is located in the basement. This door remains unlocked between 9:00 a.m. and 6:00 p.m. From the laundry room, a person can access the lobby without a key by using the elevator.

Shortly after the attack, plaintiff retained defendant to represent him in a potential personal injury case. According to defendant, an investigator from his office initially interviewed plaintiff at the hospital. Defendant asserts that he later spoke with plaintiff over the phone to review the information plaintiff had given the investigator. Plaintiff told defendant that the front door was locking properly on the day he received his injuries and mentioned no other entrances. Defendant accepted plaintiff's statements concerning the security of the building, and did not send an investigator to inspect the premises or visit the premises himself. Also, he did not interview the superintendent. [*2]

Although a settlement agreement was reached with the owner of the building prior to the commencement of any personal injury action, plaintiff commenced a legal malpractice action against defendant, alleging, inter alia, that he negligently investigated plaintiff's premises liability claim. Defendant moved for summary judgment dismissing plaintiff's complaint and the motion court denied the motion.

For a claim for legal malpractice to be successful, "a plaintiff must establish both that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff and that the plaintiff would have succeeded on the merits of the underlying action 'but for' the attorney's negligence" (AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007] [citation omitted]). A client is not barred from a legal malpractice action where there is a signed "settlement of the underlying action, if it is alleged that the settlement of the action was effectively compelled by the mistakes of counsel" (Garnett v Fox, Horan & Camerini, LLP, 82 AD3d 435, 435 [1st Dept 2011] [internal quotation marks omitted], quoting Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1st Dept 1990])."

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Conveying a Settlement Offer is Not Enough

In an interesting case to buck the "but for" dismissal trend in legal malpractice, Angeles v Aronsky  2013 NY Slip Op 05955 [109 AD3d 720]  September 24, 2013  Appellate Division, First Department points out that when viewed correctly, a summary judgment motion should be denied when there is any question of fact. 

"Plaintiff Manuel Angeles commenced this legal malpractice and breach of contract action against defendant Jeffrey A. Aronsky alleging that defendant negligently represented plaintiff in his underlying premises liability action arising from an attack on plaintiff in the lobby of an apartment building. Plaintiff also asserts that defendant breached the retainer agreement.

On December 7, 2007, at approximately 3:15 p.m., plaintiff entered the front entrance of the apartment building where he lived and, immediately upon reaching the lobby, was hit in the jaw. Although there were no witnesses to the actual attack, a neighbor who was standing outside the building around the time of the incident saw three men run out the front entrance. Two of the men were holding baseball bats. The neighbor, who had lived in the building for about five years, did not recognize any of the men. Plaintiff also did not recognize the men, whom he observed briefly before he lost consciousness following the assault.

On the day of the incident, plaintiff admits that the door locked behind him when he left the building around 2:55 p.m. and that he had to unlock it with his key when he returned a short time later. On the side of the building there is a door to the laundry room, which is located in the basement. This door remains unlocked between 9:00 a.m. and 6:00 p.m. From the laundry room, a person can access the lobby without a key by using the elevator.

Shortly after the attack, plaintiff retained defendant to represent him in a potential personal injury case. According to defendant, an investigator from his office initially interviewed plaintiff at the hospital. Defendant asserts that he later spoke with plaintiff over the phone to review the information plaintiff had given the investigator. Plaintiff told defendant that the front door was locking properly on the day he received his injuries and mentioned no other entrances. Defendant accepted plaintiff's statements concerning the security of the building, and did not send an investigator to inspect the premises or visit the premises himself. Also, he did not interview the superintendent. [*2]

Although a settlement agreement was reached with the owner of the building prior to the commencement of any personal injury action, plaintiff commenced a legal malpractice action against defendant, alleging, inter alia, that he negligently investigated plaintiff's premises liability claim. Defendant moved for summary judgment dismissing plaintiff's complaint and the motion court denied the motion."

"In this specific case, given plaintiff's lack of sophistication and his limited education, defendant's statement that he never conducted any investigation, except for speaking to plaintiff for a very limited time, raises a question of fact as to whether defendant adequately informed himself about the facts of the case before he conveyed the settlement offer. Furthermore, defendant says he told plaintiff, when he conveyed the settlement offer, that it was a "difficult liability case." It is difficult to understand, on the record before us, how he made that assessment without going to the building, or speaking to the superintendent. Because the evidence on a defendant's summary judgment motion must be viewed in the light most favorable to plaintiff (Branham v Loews Orpheum Cinemas, Inc., 8 NY3d 931 [2007]), we find there are questions of fact as to whether the attorney failed to exercise the ordinary reasonable skill appropriate under the circumstances."

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A Tragedy, A Trial, A Transfer

Plaintiff's child fell from a window. The window was in a multiple dwelling and there was no window guard.  The building had no insurance, and the owner eventually took off.  Was there legal malpractice in Plaintiff's attorney failing to file a lis pendens or to seek pre-judgment attachment?

The short answer is no, which illustrates the "but for" (and the hardest) portion of legal malpractice.

In Noel v Feinberg  2014 NY Slip Op 32230(U)  August 15, 2014  Supreme Court, Kings County
Docket Number: 502465/12  Judge: David I. Schmidt discusses when pre-judgment attachment may be permitted, and when a lis pendens may be filed. 

"Plaintiff commenced this action seeking to recover damages for the alleged
malpractice committed by defendants in the Personal Injury Action. Therein, plaintiffs sought to recover damages for injuries sustained by the infant plaintiff on July 12, 1997 when
he fell out of a window that did not have proper and/or adequate window guards.

In support of the motion, defendants argue that their representation of plaintiffs in the Personal Injury Action did not fall below the applicable standard of care and that their alleged actions and/or inactions are not the proximate cause of plaintiffs alleged damages. More specifically, defendants argue that a pre-judgment attachment and lis pendens were not available in the Personal Injury Action. Defendants also contend that plaintiff fails to plead that but for defendants' conduct in not seeking these provisional remedies, they would have been able to enforce the judgment obtained, so that they fail to establish that the alleged malpractice was the proximate cause of their alleged damages. Further, defendants contend that plaintiffs action is premature in that he has yet to
sustain any actual or ascertainable damages, since he is free to pursue the true tortfeasor, Mr.
George. In this regard, defendants allege that pursuant to CPLR 211 (b ), there is a 20-year statue of limitations to enforce the judgment. Accordingly, this statue of limitations will not expire until at least March 7, 2020. In addition, plaintiff can still pursue a claim for fraudulent conveyance against Mr. Meisels, since pursuant to CPLR 208, the statue of limitations on that claim is three years after the infant plaintiffs birthday, or July 5, 2014. Finally, defendants argue that they exercised ordinary and reasonable care in representing plaintiff in the Personal Injury Action.

Defendants also explain that during the pre-trial phase of that action, they and the Weicholz Firm expressed concern to the court regarding the lack of liability insurance and insolvency of Mr. George at a pre-trial conference held on November 1, 1999, when they made an oral application to the court for an order of attachment. That application was denied, but Mr. George was ordered to provide an affidavit listing his assets. In his affidavit, dated December 13, 1999, Mr. George stated that he owned three properties valued at $4 76,000, although he held a combined equity of only $176,830.

Pursuant to CPLR 6201(3), the only provision that could be applicable to the facts now before the court:
"An order of attachment may be granted in any
action . . . where the plaintiff has demanded and would be
entitled, in whole or in part, or in the alternative, to a money
judgment against one or more defendants, when:
"[T]he defendant, with intent to defraud his creditors or
frustrate the enforcement of a judgment that might be rendered
in plaintiffs favor, has assigned, disposed of, encumbered or
secreted property, or removed it from the state or is about to do
any of these acts."
 (see generally Crescentini v Slate Hill Biomass Energy, LLC, 113 AD3d 806 [2014]; Corsi v Vroman, 37 AD3d 397 [2007]). '"Furthermore, the mere removal, assignment or other disposition of property is not grounds for attachment"' (Corsi, 37 AD3d at 397, quoting Computer Strategies v Commodore Bus. Machs., 105 AD2d 167, 173 [1984]; accord Mitchell v Fidelity Borrowing LLC, 34 AD3d 366, 366-367 [2006]).

CPLR 6501 provides, in relevant part, that"[ a] notice of pendency may be filed in any action in a court of the state or of the United States in which the judgment demanded would affect the title to, or the possession, use or enjoyment of, real property."

"[B]ecause of 'the powerful impact that this device has on the
alienability of property,' together with 'the facility with which
it may be obtained,' the courts have applied a narrow
interpretation in reviewing whether an action is one affecting the
title to, or the possession, use or enjoyment of, real property."
(Shkolnik v Krutoy, 32 AD3d 536, 537 [2006], quoting 5303 Realty Corp. v 0 & Y Equity
Corp., 64 NY2d 313, 315-316, 321 [1984]).

Thus, it is well settled that "[a] notice of pendency is not available where a plaintiff claims no right, title or interest in the property itself' (Long Island City Sav. & Loan Assa. v Gottlieb, 90 AD2d 766 [ 1982], mod on other grounds 58 NY2d 931 [1983]; see also Khanal v Sheldon, 55 AD3d 684, 686 [2008], lv denied 12 NY3d 714 [2009] [notice ofpendency should be cancelled where plaintiff asserted only a claim for money, not a right, title, or interest in the property itself]). "

 

 

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Multiple Suits were Counterproductive

Plaintiff is sued in Civil Court for attorney fees.  She counterclaims for legal malpractice.  She then goes on to sue in Supreme Court for legal malpractice where her complaint is dismissed.  What happens to the Civil Court case?

Law Offs. of D'Amico & Assoc., PLLC v D'Elia  2014 NY Slip Op 51242(U)  Decided on July 28, 2014  Appellate Term, Second Department tells us that the multiple suit concept merely allows extra opportunities for the case to be dismissed.

"Prior to the return date of the firm's motion to dismiss Ms. D'Elia's counterclaims in the District Court action, that court was advised of the Supreme Court's decision. By order dated October 20, 2009, the District Court dismissed her counterclaims, on res judicata grounds, pursuant to CPLR 3211 (a) (5), based on a finding that the counterclaims were identical to the claims for legal malpractice she had asserted against the firm in the Supreme Court action. By decision and order dated April 26, 2011 (32 Misc 3d 28), this court reversed the District Court's order and remitted the matter to the District Court for a new determination of the firm's motion to dismiss the counterclaims pursuant to CPLR 3211 (a) (1) and (7), without prejudice to the firm's seeking dismissal of the counterclaims on the ground of res judicata, pursuant to CPLR 3211 (a) (5), upon proper notice to Ms. D'Elia.

In May 2011, the firm moved, in the District Court, to dismiss Ms. D'Elia's counterclaims on res judicata grounds, pursuant to CPLR 3211 (a) (5), and also sought a determination on its prior motion to dismiss the counterclaims pursuant to CPLR 3211 (a) (1) and (7). The firm noted that, by order dated March 3, 2010 (2010 NY Slip Op 30545[U]), the Supreme Court (Edward W. McCarty, III, J.), upon granting the branch of Ms. D'Elia's motion seeking, in effect, to vacate her default in opposing the firm's prior motion to dismiss her complaint, dismissed Ms. D'Elia's complaint insofar as asserted against the firm, based upon documentary evidence. Although Ms. D'Elia had filed a notice of appeal from that order, her appeal was ultimately dismissed by the Appellate Division, Second Department, in April 2011, due to her failure to perfect. Ms. D'Elia opposed the firm's motion.

By order dated January 5, 2012, the District Court, upon reviewing the two Supreme Court orders, denied the firm's motion to dismiss Ms. D'Elia's counterclaims on res judicata grounds, pursuant to CPLR 3211 (a) (5). The District Court further denied the firm's original motion to dismiss pursuant to CPLR 3211 (a) (1) and (7). Thereafter, the firm moved for, among other things, leave to renew and reargue its prior motions. The motion was unopposed. By order dated March 16, 2012, the District Court granted renewal and reargument, and adhered to its original determination.

 

The doctrine of res judicata is designed to put an end to a matter once it is duly decided (see Siegel, NY Prac § 442, at 772 [5th ed]). Res judicata "generally dictates that a valid final determination on the merits bars a future action between the same parties on the same cause of action" (Troy v Goord, 300 AD2d 1086, 1087 [2002]) and is invoked when a party, or those in privity with the party, seek to relitigate a disposition on the merits of claims or causes of action arising out of the same transaction or series of transactions which were raised or could have been raised in the prior litigation (see Matter of Hunter, 4 NY3d 260, 269 [2005]; Schuylkill Fuel Corp. v Nieberg Realty Corp., 250 NY 304, 306-307 [1929]). Typically, "once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy" (O'Brien v City of Syracuse, 54 NY2d 353, 357 [1981]). "The rationale underlying this principle is that a party who has been given a full and fair opportunity to litigate a claim should not be allowed to do so again" (Matter of Hunter, 4 NY3d at 269).

In its January 5, 2012 order, the District Court stated that Ms. D'Elia's complaint in the Supreme Court action "included claims of legal malpractice which are essentially identical to Ms. D'Elia's counterclaims in this action" (emphasis added). The District Court, however, denied the firm's motion to dismiss Ms. D'Elia's counterclaims pursuant to CPLR 3211 (a) (5), notwithstanding the fact that the Supreme Court, in both its September 15, 2009 order and its [*3]March 3, 2010 order, stated that dismissal of the complaint insofar as asserted against the firm was warranted pursuant to CPLR 3211 (a) (1), based upon the documentary evidence submitted by the firm, which conclusively established the firm's defenses to plaintiff's claims.

In view of the foregoing, the District Court erred in not giving res judicata effect to the Supreme Court's dismissal of Ms. D'Elia's complaint insofar as asserted against the firm, and should have granted plaintiff's motion to dismiss Ms. D'Elia's counterclaims on that ground.

Accordingly, the District Court's March 16, 2012 order, insofar as appealed from, is modified by providing that, upon renewal and reargument, plaintiff's motion to dismiss defendant's counterclaims on res judicata grounds, pursuant to CPLR 3211 (a) (5), is granted, and plaintiff's motion to dismiss defendant's counterclaims pursuant to CPLR 3211 (a) (1) and (7) is denied as academic."

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When Is An Expert Good Enough?

For summary judgment purposes, an expert is an expert and is good enough .  No?  In legal malpractice, an attorney, duly licensed, is good enough to comment on the work of another attorney?  No?

Not for Judge Buggs.  In  Gonzalez v Flushing Hosp. Med. Ctr2014 NY Slip Op 51226(U)
Decided on August 12, 2014 Civil Court Of The City Of New York, Queens County. Judge Buggs writes:

"To support her argument of legal malpractice, Gonzalez offered the affirmation of attorney Stephen Paul Haber ("Haber"), who opined that B & H's representation of Bey deviated from the standards in the practice of law in that: 1) B & H failed in its obligation to inquire of Bey about his insurance coverage, and to inform any insurance carriers with whom he had coverage about his large financial exposure to liability, and that 2) its representation of both Bey and Cha was a conflict of interest; (Gonzalez' Exhibit E; Affidavit of Stephen Paul Haber).

Before addressing the merits of Haber's affirmation, it must be noted that while the Court accepts that Haber is, as his affirmation states, "an attorney duly licensed to practice in the State of New York" (Gonzalez' Exhibit E, Paragraph 1), his expertise and qualifications to render opinions regarding legal malpractice actions and/or the professional standards for attorneys handling legal matters involving insurance coverage issues for medical malpractice cases is unclear. While Gonzalez' attorney, in his Affirmation in Opposition, speaks to Haber having "over 30 years of extensive experience in representing healthcare providers in the defense of medical malpractice actions," Haber's affirmation itself is silent about his qualifications. He fails to state how long he has practiced, and in what area of law. Movant, in its Reply Memorandum of Law, correctly cites case law requiring that an expert can be deemed qualified to render an opinion if "...he or she is possessed of the requisite skill, training, education, knowledge or experience from which it can be assumed that the information imparted or the opinion is reliable'" (Lopez v Gem Gravure Co., Inc., 50 AD3d 1102 at 1103 [2d Dept 2008]). Considering this standard, there is insufficient indication that Haber qualifies as an expert for the issues in contention herein.

However, solely for the sake of exploring the merits of Haber's affirmation, the Court will assume that Haber is the experienced attorney Gonzalez' counsel says he is, and not some "newbie" attorney randomly snatched from the halls of a local Appellate Division judicial department after having just been sworn in."

"Accordingly, not only is Gonzalez' expert affirmation lacking for failure to establish the expert's credentials, but even upon fully considering the merits of his contentions, he fails to demonstrate a factual issue requiring a trial on legal malpractice. There is insufficient showing of a duty owed by B & H to Bey on the issue of insurance coverage, and even assuming the existence of such a duty, no establishment of proximate cause. Haber's contention that B & H violated ethical rules in representing two physicians with conflicting interests is likewise unsupported with an establishment of a "but for" connection to Bey's damages."

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Sue One Firm, Arbitrate With The Other

in a huge note-issuance transaction, Stonebridge Capital LLC hires Brown Rudnick LLP to prepare the documents.  The attorney handling the case moves from BR to Stroock & Stroock & Lavan LLP and, of course, the transaction goes sour.  The wrinkle here is that BR and a typical retainer agreement with plaintiff while SS&L had an arbitration clause in theirs.

How to proceed?  In Stonebridge Capital, LLC v Brown Rudnick LLP  2014 NY Slip Op 32174(U)
August 12, 2014  Sup Ct, NY County  Docket Number: 152259/2012  Judge Eileen A. Rakower decided to allow the Plaintiff to arbitrate with SS&L first, and then if necessary, litigate with BR.

Brown Rudnick's third-party complaint alleges that that Brown Rudnick "continuously represented" Plaintiff through the Transaction's closing, and that,  "when [Plaintiff] retained [Brown Rudick] to provide legal services in connection  with the Transaction, attorney Boris Ziser ("Ziser"), then a partner of [Brown  Rudnick], was responsible for providing those services to Plaintiff." Brown
Rudnick's third-party complaint further alleges that, on or about June 4, 2007, Ziser left Brown Rudnick to join Stroock, as a partner. The third-party complaint alleges that, Ziser, in his capacity as a partner for Stroock, also continued to represent Plaintiff in the Transaction, from the time Ziser joined Stroock through the Transaction's closing, that Ziser, in his capacity as a partner for Stroock, actively participated in the negotiation and drafting of the final versions of documents for the
Transaction. Brown Rudnick claims that Stroock had an attorney-client relationship with Plaintiff, that Plaintiff executed the final documents for the Transaction on Stroock's advice, and that, as a result, Stroock is responsible for any alleged negligence or malpractice respecting the transaction.

The Statement of Claim alleges that Plaintiff incurred damages, "[a]s a direct and proximate result of the negligence of [Stroock] in connection with the advice, drafting, negotiation, preparation, editing and review of the Transaction documents." CPLR § 2201 provides, "[e]xcept where otherwise prescribed by law, the court in which an action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just."

Here, Brown Rudnick and Stroock do not dispute that both law firms represented Stonebridge in connection with the Transaction, or that the Arbitration relates to the legal advice and services that Plaintiff allegedly received in connection with the Transaction. Although Brown Rudnick is not a signatory to the arbitration agreement between Stroock and Stonebridge, a stay of litigation that includes non-signatories to the subject arbitration agreement may be appropriate where "the
determination of the pending arbitration proceeding may well dispose of or limit the
issues to be determined in this action." (Oxbow Calcining USA Inc. v. American Indus. Partners, 96 A.D.3d 646, 652 [1st Dep't 2012])."

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A Curious Case of Non-Reporting

Hospital and Physician are sued for medical malpractice.  The Med Mal case is as big as they come...a brain damaged baby case.  How it ends up in Civil Court is an interesting story.  In Gonzalez v Flushing Hosp. Med. Ctr.  2014 NY Slip Op 51226(U)  Decided on August 12, 2014
Civil Court Of The City Of New York, Queens County  Buggs, J.the Hospital must have been providing its own insurance, because when it filed Bankruptcy, everything stopped.  The hospital had been defending the Physician, but after the Bankruptcy filing, that ended.  What happened to the Physician?

"On March 3, 1994, Laura Gonzalez gave birth to plaintiff Gonzalez at Flushing Hospital Medical Center ("FHMC"). Due to hypoxia [FN1] which occurred during labor and delivery, plaintiff Gonzalez suffered severe brain damage as well as extensive mental and physical impairments. In June 1995, Gonzalez, by her mother as natural guardian, and both parents individually, filed a medical malpractice case against FHMC alleging negligence in failing to timely respond to signs of fetal distress or to confirm such fetal distress during Laura Gonzalez' labor, and of failing to perform a timely cesarean section which would have prevented the resulting injuries to plaintiff Gonzalez. In August 1996, Gonzalez filed a second malpractice action, this time against Bey, who was the on-call physician at the time of the delivery, and another physician, Jonathan Cha. Both actions were consolidated for joint trial in July 1997.

In August 1996, FHMC retained defendant law firm Breitner & Hoffman, P.C. ("B & H") to defend the action. B & H represented and filed answers on behalf of all defendants, including Bey. However, in June 1998, FHMC filed for Chapter 11 bankruptcy relief in the United States Bankruptcy Court for the Eastern District of New York. The malpractice actions were subsequently stayed pursuant to §362(a) of the United States Bankruptcy Code.In 2000, the law firm of Garbarini & Scher ("G & S") was appointed to represent the bankruptcy Trustee in the mediation of the medical malpractice claims. In 2002, the Court approved a settlement in Gonzalez's case against FHMC and other defendants for two million dollars ($2,000,000); however, Bey was excluded from this settlement because he was deemed to be an independent contractor. The malpractice action against Bey, therefore, continued.

Bey brought this action against FHMC and B & H in 2005. The action was ultimately discontinued as against FHMC, as was a third-party action B & H brought against G & S. The claims against B & H were that it committed legal malpractice in that the firm failed to protect his interests in the Gonzalez lawsuit, particularly in what Bey claimed was its duty to investigate sources of insurance to protect him against a potentially large exposure, and in failing to advise him to notify Medical Liability Mutual Insurance Company ("MLMIC"), his personal medical malpractice insurance carrier. Bey submitted the claim to MLMIC in February 2004, approximately seven and a half years after Gonzalez brought her action against him; the insurance company denied the claim as untimely.

On September 27, 2006, while being represented by another attorney, Bey executed a $1 million confession of judgment in favor of Gonzalez in a "so ordered" stipulation of settlement in Supreme Court, Queens County; in November of the same year, he assigned his rights in the within malpractice action to Gonzalez. After the assignment, B & H filed a motion for summary judgment in 2007 on the theory that "...Bey is no longer a real party in interest as a result of the settlement with Gonzalez, to wit, he has not suffered any pecuniary damages and, thus, cannot establish that B & H proximately caused him to sustain actual damages" (Gonzalez' Affirmation in Opposition, Exhibit E; Geddis Abel Bey v Flushing Hospital Center, and Breitner & Hoffman, P.C., Sup Ct, Queens County, December 7, 2007, Satterfield, J., index No. 23476/2005). The motion was denied. (Exhibit E, supra at 2-3).

Therefore, notwithstanding any duty Gonzalez contends B & H owed to Bey as his attorneys, at the outset, responsibility for notifying the insurance company of any claim or potential claim belonged to Bey, the policyholder. In fact, when Bey finally submitted a claim in 2004, it was [*3]denied for his failure to comply with the policy terms requiring notice to the insurance company of a lawsuit (Gonzalez' Affirmation in Opposition, Exhibit B; Denial letter from MLMIC to Geddis Abel-Bey, M.D., dated May 4, 2004). There is nothing in the language of the policy providing any exception to the notice requirement—not even, as in this case, Bey's belief that he would be represented in all stages of the action by B & H, attorneys retained by FHMC. Bey's duty was not only required by the terms of the policy, but was supported by case law holding that failure to satisfy the timely notice requirement of an insurance policy constitutes valid grounds for denial of a claim. See Security Mut. Ins. Co. of NY v Acker-Fitzsimmons Corp., 31 NY2d 436 (1972); Safer v Government Employees Ins Co., 254 AD2d 344 (2d Dept 1998)

Further, assuming arguendo, that B & H did have such an obligation to Bey and breached it, Gonzalez has also failed to show that such breach was the proximate cause of Bey's damages. "Proximate cause is established by showing that the plaintiff would have succeeded in the underlying action or would not have incurred damages but for the attorney's negligence" (Soliman v O'Connor, McGuiness, Conte, Doyle & Oleson, 118 AD3d 866 [2d Dept 2014] [internal citations omitted]). While Haber posits that B & H's "failure" was a proximate cause of Bey being faced with a large financial exposure in the medical malpractice case, that argument ignores that Bey himself was responsible for notifying his carrier, and further [*4]disregards FHMC's bankruptcy filing as an intervening cause. B & H was not a participant in the Bankruptcy Court proceedings, and the medical malpractice actions for which it had been retained had been stayed. Moreover, the ultimate Bankruptcy Court settlement of the medical malpractice matter as to all parties except Bey—leaving Bey with a large financial exposure—was not a direct or foreseeable consequence of any act or act of omission by B & H. It was in the Bankruptcy Court that Bey was deemed not to be an employee of FHMC, leading to his exclusion from the settlement."

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"I Don't Remember" and Denial of Motion in Legal Malpractice

Immigration legal practice is rife with accusations of neglect, lack of knowledge and incompetence.  INS practice is based almost completely on forms, and knowing when and what to include with the ever-changing forms is the essence of good immigration legal work.  Attorneys often fail their immigration clients by telling them, in essence, "don't worry."

Shayan v O"Malley  2014 NY Slip Op 32144(U)  August 11, 2014  Supreme Court, New York County  Docket Number: 150447/2011  Judge: Ellen M. Coin is an example of what happens when the attorney's deposition consists of "I don't remember."

"This action arises out of defendants' representation of  plaintiff Ali Shay an (Shay an) concerning an immigration matter. Shayan, a native of Iran and citizen of Canada, claims that during
defendants' representation of him from January 2008 until December 4, 2009, defendants failed to advise Shayan of the need to renew his employment authorization document (EAD), and failed to file a proper and timely EAD renewal application, ·which led to the loss of his employment at Moody's Investors Service, Inc. (Moody's) for 11 weeks.   Shayan was born in Iran, and became a citizen of Canada in June 1997. He entered the United States in September 2004 as a visitor. From November 2004 to 2011, he was married to a United States citizen. On or about March 11, 2005, plaintiff retained an immigration attorney in California to change his immigration status from a B-2 visa to a "green card," which is a United States Permanent Resident Card (USCIS Form I-551), based on his marriage. In or around June 2005, Shayan received an EAD from the United
States Citizenship and Immigration Services (USCIS). This EAD expired one year later, in 2006. He moved to New York some time in 2005.

Around the summer of 2008, Castaneda assisted Shayan in learning the status of his EAD application, filed by his California attorney, and in getting fingerprinted in New York City to complete the application. As a consequence, in approximately July 2008, he received the actual EAD card, which was valid from September 17, 2007 through September 16, 2008. When he got the card, he informed Castaneda, who told him she would take care of getting a new card, since this one was about to expire. At a December 2008 meeting between Shayan and O'Malley, the two discussed the status of his EAD as follows: "Now since Diana was gone I asked Mr. O'Malley So I have two issues which Diana was working on for me. One is to postpone the Stokes interview. The second is to get my new EAD. Mr. O'Malley said, 'Don't worry about it. Diana is gone. I will take care of everything'" 1 (Shayan dep tr at 70:15-24). In 2009, when Shayan asked O'Malley about his EAD, O'Malley advised him that "he was not required to renew his EAD, because he had not changed employers and that he was not required to renew his EAD unless he planned to change employers. The defendants took no action to extend [Shayan's] EAD and it expired" (complaint, 'JI 20, Shayan aff, ! 17, Shayan dep tr at 72:8-12).

On or about December 3, 2009, Moody's terminated Shayan' s employment on the ground that his EAD had expired, but agreed to allow Shayan to remain employed pending the outcome of the December 18, 2009 conference. On December 4, 2009, Shayan met with O'Malley to discuss the
potential termination of his employment and the December 18th conference. Shayan alleges that at that meeting, O'Malley advised him that he was not eligible for an EAD "and that he should work
illegally" (id., ! 32). Further, Shayan alleges, O'Malley advised him that defendants had filed an application for an EAD extension, as part of the December 2, 2009 filing, without Shayan's knowledge. Shayan was not satisfied with defendants' responses and terminated
their representation on December 4, 2009.

Klapisch followed up on the EAD application filed by O'Malley, and was able to obtain a new EAD for Shayan on February 1, 2010. Shayan successfully obtained his green card as well. Moody's
reinstated his employment on March 3, 2010.

On their motion, defendants have not successfully argued that there is no question of fact with respect to Shayan' s claim.  First, defendants argue that Shayan is unable to establish the
causation between any failure on defendants' part and Moody's 9 [* 9]termination of Shayan, because Moody's terminated Shayan for lying on his I-9 form. The record, however, does not support this position. The December 21, 2009 email from human resources at Moody's to Susan Hourihan, a Human Resources Generalist at Moody's, indicates the reason for Shayan's termination as "Work Authorization Expired." At her deposition, Hourihan testified that Shayan' s employment was terminated because of his failure to produce proof of a valid work authorization. There is nothing in the record establishing that Moody's terminated Shayan because he
lied on his I-9 form.

Defendants do not deny that Shayan' s EAD had expired, that Shayan made requests to defendants for help with his EAD renewal, or that the firm filed an application for an extension or renewal
of Shayan's EAD on December 2, 2009. Instead, defendants' position on this point is not entirely clear. Defendants argue that they were hired by Shayan to address only the deportation hearings and the Stokes hearing, and that they did so successfully. Defendants do not deny Shayan's need for the extension of his EAD, or explain Castaneda's actions assisting Shayan with his EAD application, or why they did not file an application for an extension of his EAD prior to December 2, 2009. During his deposition, when asked why he did not take steps to extend Shayan's EAD, O'Malley replied that based upon conversations with Ali in "early 2008 into 2008 when he
"understood that [Shayan' s] attorney in Los Angeles was dealing with that issue (O'Malley tr at 81-82). "

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Documentary Evidence and CPLR 3211...What is Allowed?

Daughter works for a law firm, and hears of a financial opportunity. She gets her parents involved, and surprise...the loans do not work out! They sue the law firm for legal malpractice. Rodolico v Rubin & Licatesi, P.C. 2013 NY Slip Op 08068 [112 AD3d 608] December 4, 2013
Appellate Division, Second Department stands for two things. We discussed standing yesterday. The second is that there are a limited number of "documents" that can be utilized for a CPLR 3211(a)(1) motion.

"The Supreme Court also properly denied the branch of the defendants' motion which was to dismiss the sixth cause of action, alleging legal malpractice, pursuant to CPLR 3211 (a) (1). The evidence submitted in support of a motion pursuant to CPLR 3211 (a) (1) to dismiss a complaint on the ground that a defense is founded on documentary evidence "must be documentary or the motion must be denied" (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d 713, 714 [2012], quoting Fontanetta v John Doe 1, 73 AD3d 78, 84 [2010] [internal quotation marks omitted]). " ' [N]either affidavits, deposition testimony, nor letters are considered documentary evidence within the intendment of CPLR 3211 (a) (1)' " (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714, quoting Granada Condominium III Assn. v Palomino, 78 AD3d 996, 997 [2010]; see Suchmacher v Manana Grocery, 73 AD3d 1017 [2010]; Fontanetta v John Doe 1, 73 AD3d at 86).

Here, the only evidence submitted by the defendants that pertained to the legal malpractice cause of action were affidavits. Accordingly, since the defendants failed to support the branch of their motion seeking to dismiss the legal malpractice cause of action pursuant to CPLR 3211 (a) (1) with "documentary" evidence, it was properly denied (see Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714; Integrated Constr. Servs., Inc. v Scottsdale Ins. Co., 82 AD3d 1160, 1163 [2011]; Fontanetta v John Doe 1, 73 AD3d at 86)."

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Corporations, Individuals and Legal Malpractice

Daughter works for a law firm, and hears of a financial opportunity.  She gets her parents involved, and surprise...the loans do not work out!  They sue the law firm for legal malpractice.  Rodolico v Rubin & Licatesi, P.C.   2013 NY Slip Op 08068 [112 AD3d 608]   December 4, 2013
Appellate Division, Second Department  stands for two things.  The first is that standing is very, very important in legal malpractice.  If you did not hire the attorney, you may not sue the attorney.

"In support of that branch of their cross motion which was to dismiss the complaint [*2]for lack of standing, the defendants argued that the plaintiff had no interest in the loaned funds because two of the loans, for which the plaintiff sought recovery in the second and fourth causes of action, were funded by C&R, and three of the loans, for which the plaintiff sought recovery in the first, third, and fifth causes of action, were funded by Joanne. The plaintiff does not deny that the funds for two of the loans were provided by C&R, but merely asserts that he and Joanne own C&R. However, "[f]or a wrong against a corporation a shareholder has no individual cause of action, though he loses the value of his investment" (Abrams v Donati, 66 NY2d 951, 953 [1985]; see Citibank v Plapinger, 66 NY2d 90, 93 n [1985]; Elenson v Wax, 215 AD2d 429 [1995]; General Motors Acceptance Corp. v Kalkstein, 101 AD2d 102, 106 [1984]). Here, the plaintiff's action was brought in his own name, and there is nothing in the complaint to indicate that the plaintiff brought this action in a derivative capacity, on behalf of C&R. Accordingly, since the plaintiff does not have standing, individually, to seek the return of funds purportedly borrowed from C&R by the defendants, the second and fourth causes of action should have been dismissed insofar as they were asserted by the plaintiff in his individual capacity."

The same is not true, however, of the first, third, and fifth causes of action, which sought the return of funds that the defendants allege were provided by Joanne. The plaintiff and Joanne averred that, although Joanne went to the bank to purchase the bank checks, they do not keep their finances separate, and the funds belonged to both of them. The defendants presented no evidence to the contrary. The plaintiff, therefore, had standing to seek the return of the funds (see generally Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 242 [2007]), and the Supreme Court properly denied the branch of the defendants' motion which sought dismissal of the first, third, and fifth causes of action for lack of standing.

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The Very Narrow Privity Exception in Legal Malpractice

For social policy reasons, and probably to prevent wide-spread suits against opposing attorneys which might swamp the system, a legal malpractice complaint must allege an attorney-client relationship in order to survive.  This question of privity is the first of several thresholds that a plaintiff must cross.  In Mr. San, LLC v Zucker & Kwestel, LLP  2013 NY Slip Op 08416 [112 AD3d 796]  December 18, 2013  Appellate Division, Second Department  we see a case which slips into the exception.

"On a motion to dismiss pursuant to CPLR 3211 (a) (1), "dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Leon v Martinez, 84 NY2d 83, 88 [1994]). In deciding a motion to dismiss pursuant to CPLR 3211 (a) (7), the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 NY2d at 87-88).

Applying these principles, the Supreme Court properly denied those branches of the defendants' motion which were pursuant to CPLR 3211 (a) (1) and (7) to dismiss the first cause of action, which sought to recover damages for legal malpractice. While the complaint does not allege an attorney-client relationship between the plaintiffs and the defendants, it sets forth a claim which falls within "the narrow exception of fraud, collusion, malicious acts or other special circumstances" under which a cause of action alleging attorney malpractice may be asserted absent a showing of privity (Ginsburg Dev. Cos., LLC v Carbone, 85 AD3d 1110, 1112 [2011] [internal quotation marks omitted]; see Aranki v Goldman & Assoc., LLP, 34 AD3d 510, 511-512 [2006]; Griffith v Medical Quadrangle, 5 AD3d 151, 152 [2004]). Furthermore, the documentary evidence submitted by the defendants does not conclusively establish a defense to this cause of action as a matter of law (see CPLR 3211 [a] [1])."

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So Many Legal Malpractice Principals Overlooked

Dombrowski v Bulson  2012 NY Slip Op 04203 [19 NY3d 347]  May 31, 2012  Lippman, Ch. J.  Court of Appeals was a very important case in legal malpractice, which held that "an award of nonpecuniary damages is generally unavailable to a plaintiff in an action for attorney malpractice."  It was not wholly unprecedented.  Prior to that it was well understood that emotional disturbance damages were not available in legal malpractice.  In Borges v Placeres  2014 NY Slip Op 24053 [43 Misc 3d 61], Appellate Term, 1st Department (2014), defense attorney failed to raise any objection to the jury charge permitting pain and suffering damages.  Even a statute of limititations defense was overlooked.

"Defendant's various assignments of error regarding the conduct of the trial are lacking in merit. The jury charge as a whole conveyed the correct legal principles (see Georgescu v City of New York, 107 AD3d 946 [2013]). Plaintiff was not required to prove that "but for" defendant's [*2]negligence, he would have prevailed in the immigration case; rather, his trial burden here was limited to proving that he would not have incurred damages but for defendant's pursuit of an unreasonable course of action (see Tenesaca Delgado v Bretz & Coven, LLP, 109 AD3d 38, 44 [2013]; see also Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]). Nor was it reversible error for the court to include in the verdict sheet a question regarding whether defendant's alleged malpractice was a "substantial factor" in causing any injury to plaintiff (see Barnett v Schwartz, 47 AD3d 197, 204-205 [2007]; see also Martonick v Pudiak, 285 AD2d 935, 936 [2001]). Contrary to defendant's contention, there is simply no indication that the verdict sheet, when viewed in the context of the charge as a whole (see Iasello v Frank, 257 AD2d 362 [1999]), caused confusion or doubt among the jurors over the applicable principles of law (see McFadden v Oneida, Ltd., 93 AD3d 1309, 1311 [2012]).

[2]; {**43 Misc 3d at 64}With respect to damages, it need be emphasized that our review of the jury's award may not be based on the recent decisional law relied upon by defendant—precedent holding that an award of nonpecuniary damages is generally unavailable to a plaintiff in an action for attorney malpractice (see Dombrowski v Bulson, 19 NY3d 347 [2012]). Notably, defendant did not raise an objection to the jury charge as given, instructing the jury that they could award plaintiff damages for pain and suffering, or to the corresponding question on the verdict sheet, and, indeed, defendant raised no objection at trial to the introduction of evidence regarding the mental and emotional disturbance caused by plaintiff's detention. Thus, the court's unexcepted to jury charge became the law of the case, or more accurately, "consent . . . to the law to be applied" (Martin v City of Cohoes, 37 NY2d 162, 165 [1975]; see Knobloch v Royal Globe Ins. Co., 38 NY2d 471, 477 [1976]). Moreover, defendant does not otherwise argue that the award of damages deviated materially from what would be reasonable compensation (see Harvey v Mazal Am. Partners, 79 NY2d 218, 225 [1992]).

[3]; Turning to the propriety of the denial of defendant's eve-of-trial motion to amend his answer, we find no abuse of the court's discretion. Defendant's motion for leave to include the statute of limitations as a defense was made approximately eight years after he served his initial answer, and after plaintiff engaged in discovery, motion practice and placed the case on the trial calendar, presumably spending considerable time and expense preparing for trial. "

 

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All Is Lost Except the Legal Malpractice Case

Plaintiff has an excessive force claim against the NYCPD.  Arrest is on 9/15/09. ACD is given on 3/25/10.  Plaintiff retains law firm on 10/27/10.  On 5/16/11 law firm returns case to client and says they will not handle.  No notice of claim is ever filed, and no real motion seeking leave to file a late notice of claim is ever made.  Result?

 "In the motion sub judice, the City seeks (1) dismissal of plaintiff=s state law claims based on her failure to serve a notice of claim and failure to timely commence the action within the one  year-and-ninety-day statute of limitations set forth in General Municipal Law '50-i(1)(c), and (2) dismissal of any federal claims predicated on the violation of USC '1983 as barred by the three-year statute of limitations applicable to such actions (see Saunders v. State of New York, 629 FSupp 1067, 1070 [N.D. N.Y. 1986]). "

"It is a condition precedent to the maintenance of any tort action against the City that a Notice of Claim be served upon it within 90 days after a claim arises (see General Municipal Law '50-e[1][a]; 50-i[1][a]). Of course, it is statutorily provided that a court may, in the exercise of its discretion, extend the 90-day time limit (see General Municipal Law '50-e[5]; "

"Here, not only has plaintiff failed to serve a Notice of Claim upon the City, but she has likewise failed to move for leave to serve a late Notice of Claim as authorized by General Municipal Law '50-e(5). Moreover, although a certain level of laxity in matters of procedure traditionally have been overlooked where a party is proceeding pro se, plaintiff at bar has provided this Court with no proof whatsoever of the City=s acquisition of actual knowledge of the essential facts constituting her claim within 90 days after the claim arose or within a reasonable time thereafter@ (General Municipal Law '50-e[5])."

"Thus, this Court has no alternative but to dismiss her action against the City as barred by
the Statute of Limitations in General Municipal Law '50-i(1)(c). Nevertheless, it should be noted
that plaintiff"s malpractice action against her attorneys Jason Leventhal and Klein is still pending."

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Legal Malpractice Case and Insurance Exclusions

Sometimes the question of legal malpractice is at the forefront of a case, and sometimes it is the least important part.  in K2 Inv. Group, LLC v American Guar. & Liab. Ins. Co2014 NY Slip Op 01102 [22 NY3d 578]  February 18, 2014  Judge Smith of the Court of Appeals makes the rare admission of their mistake, and agrees that on a motion to renew, the decision should be reversed.

"In K2-I, we affirmed an order granting plaintiffs summary judgment, holding that American Guarantee's breach of its duty to defend barred it from relying on policy exclusions. We later granted reargument (21 NY3d 1049 [2013]), and we now vacate our prior decision and reverse the Appellate Division's order.{**22 NY3d at 585}"

In Servidone—a case in which, as in this one, the insurer was relying on policy exclusions in defending against a suit for indemnification—we stated the question as follows:

"Where an insurer breaches a contractual duty to defend its insured in a personal injury action, and the insured thereafter concludes a reasonable settlement with the injured party, is the insurer liable to indemnify the insured even if coverage is disputed?" (64 NY2d at 421.)
We answered the question in Servidone no. In K2-I, we held that "when a liability insurer has breached its duty to defend its insured, the insurer may not later rely on policy exclusions to escape its duty to indemnify the insured for a judgment against him" (21 NY3d at 387). The Servidone and K2-I holdings cannot be reconciled.

 

In short, to decide this case we must either overrule Servidone or follow it. We choose to follow it.

There is much to be said for the rule of K2-I, as our previous opinion shows; but, as the Servidone opinion shows, there is also much to be said for the Servidone rule. Several states follow the Servidone approach (e.g. Sentinel Ins. Co., Ltd. v First Ins. Co. of Haw., Ltd., 76 Haw 277, 290-297, 875 P2d 894, 907-914 [1994]; Polaroid Corp. v Travelers Indem. Co., 414 Mass 747, 760-766, 610 NE2d 912, 919-923 [1993]), while others adopt a rule like that of K2-I (e.g. Employers Ins. of Wausau v Ehlco Liquidating Trust, 186 Ill 2d 127, 150-154, 708 [*4]NE2d 1122, 1134-1136 [1999]; Missionaries of Co. of Mary, Inc. v Aetna Cas. & Sur. Co., 155 Conn 104, 112-114, 230 A2d 21, 25-26 [1967]). A federal district judge, writing in 1999, said that "[t]he majority of jurisdictions which have considered the question" follow the Servidone rule (Flannery v Allstate Ins. Co., 49 F Supp 2d 1223, 1227 [D Colo 1999]).

Under these circumstances, we see no justification for overruling Servidone. Plaintiffs have not presented any indication that the Servidone rule has proved unworkable, or caused{**22 NY3d at 587} significant injustice or hardship, since it was adopted in 1985. When our Court decides a question of insurance law, insurers and insureds alike should ordinarily be entitled to assume that the decision will remain unchanged unless or until the legislature decides otherwise. In other words, the rule of stare decisis, while it is not inexorable, is strong enough to govern this case.

"

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Negligent Drug Testing and Legal Malpractice: Not the Same!

Plaintiff is on probation and gives an oral sample for drug testing.  Kroll labs tests the saliva and finds THC.  An independent urine drug test taken as a safety measure by Plaintiff is negative.  Plaintiff's probation period is extended.  There are no pecuniary losses.  May Plaintiff recover. 

Here, yes.  If it were legal malpractice, no.  Why?  InLandon v Kroll Lab. Specialists, Inc.  2013 NY Slip Op 06597 [22 NY3d 1]  October 10, 2013 Lippman, J. , the Court of Appeals tells us that legal malpractice is different.

"In addition, we reject defendant's argument that plaintiff failed to allege that he has suffered a cognizable harm (see e.g. Martinez v Long Is. Jewish Hillside Med. Ctr., 70 NY2d 697, 699 [1987] ["where there is a breach of a duty owed by defendant to plaintiff, the breach of that duty resulting directly in emotional harm is actionable"]). In this procedural posture, {**22 NY3d at 8}plaintiff's allegations of the loss of freedom occasioned by the extension of his probation and the resulting emotional and psychological harm are sufficient to withstand a motion to dismiss. Defendant places too much weight upon our recent decision in Dombrowski v Bulson (19 NY3d 347 [2012]), characterizing it as holding that loss of freedom damages are not recoverable in negligence actions. In that case, we found that a legal malpractice action did not lie against a criminal defense attorney to recover nonpecuniary damages. The decision was based in part on policy considerations, including the potentially devastating consequences such liability would have on the criminal justice system and, in particular, the possible deterrent effect it would have on the defense bar concerning the representation of indigent defendants (see Dombrowski, 19 NY3d at 352). Similar policy considerations do not weigh in defendant's favor here."

 

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A Trial, A Loss for Plaintiff in Legal Malpractice

Not that many legal malpractice cases get tried, and fewer even in Civil Court, New York County.  here is one that went to defendant.  Milgram Thomajan & Lee, P.C. v Golden Gate Petroleum, P.C.    2014 NY Slip Op 24063 [43 Misc 3d 68]. 

"The action arises out of plaintiff's representation of the first-named defendant, a petroleum importer, in connection with an administrative protest of a customs duty assessment imposed on a shipment of gasoline and related chemicals. The jury's verdict, finding that plaintiff did not commit malpractice in its underlying representation of defendant, was not against the weight of the evidence. The trial evidence, fairly interpreted, supports the jury's evident rejection of defendant's contention that but for plaintiff's advice, defendant would have prevailed in the underlying customs protest, one which, the record shows, defendant elected to pursue in the face of plaintiff's frank admonition that it "may prove a tough fight, the outcome of which cannot be predicted with any certainty." The evidence, including the conflicting expert OPINION TESTIMONY, permitted the jury to conclude that, in advising defendant, the lawyers of plaintiff law firm did not disregard settled law (see Darby & Darby v VSI Intl., 95 NY2d 308, 313 [2000]) and would have permitted a jury finding that the advice itself was not the proximate cause of defendant's losses (see Chadbourne & Parke v HGK Asset Mgt., 295 AD2d 208, 209 [2002]). And while defendant posits several alternative courses that plaintiff might have pursued in the underlying administrative protest, it FAILED to show that the tactical decisions made by the firm did not constitute "proper strategic legal decision-making" (Taylor v Paskoff & Tamber, LLP, 102 AD3d 446, 448 [2013]), or so the jury reasonably could find. Nor was the jury's consideration of the LEGAL MALPRACTICE issue shown to have been compromised in any way [*2]by the form{**43 Misc 3d at 70} of the verdict sheet, particularly when that document is viewed in the context of the charge as a whole (see Plunkett v Emergency Med. Serv. of N.Y. City, 234 AD2d 162, 163 [1996]).

The record discloses no evidentiary error warranting reversal. The out-of-court statements made by defendant's (now) deceased CHIEF FINANCIAL OFFICER were admissible under the "speaking agent" exception to the hearsay rule (see Loschiavo v Port Auth. of N.Y. & N.J., 58 NY2d 1040, 1041 [1983]). Further, in light of the voluminous evidence considered by the jury, including over 60 trial exhibits introduced by defendant, any error in the exclusion of the two documents now complained of by defendant would have been harmless (see Ramkison v New York City Hous. Auth., 269 AD2d 256, 256 [2000]).

We note finally that the court properly directed a verdict in favor of plaintiff on its main claim for unpaid legal services, a claim which, as one abandoned by plaintiff's trustee in BANKRUPTCY, revested in plaintiff at the close of the bankruptcy proceeding (see Dynamics Corp. of Am. v Marine Midland Bank-N.Y., 69 NY2d 191, 195-196 [1987]; Culver v Parsons, 7 AD3d 931, 932 [2004])."

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Students Strikes Out in Legal Malpractice Finals

Student - Plaintiff is charged with harassing a Cornell professor, and loses at the disciplinary and College level.  Student then sues attorney for legal malpractice, breach of fiduciary duty and breach of contract.  Case is lost simply because Plaintiff does not allege and show how the attorney could have won the Article 78 case showing that the University was arbitrary and capricious.

"In August 2007, plaintiff—then a Cornell University graduate student—was charged with violating the University's Campus Code of Conduct by allegedly harassing a professor. Following disciplinary proceedings, the University's Hearing Board sustained the harassment charge and issued a penalty, which was, apart from a slight modification, affirmed by the University's Review Board. Plaintiff then retained defendant Arthur Schwartz to represent her in a CPLR article 78 proceeding challenging the University's determination. In addition, Schwartz represented plaintiff in a Title IX claim (see 20 USC § 1681 et seq.). After both of those matters were unsuccessful (Matter of Hyman v Cornell Univ., 82 AD3d 1309 [2011]; Hyman v Cornell Univ., 834 F Supp 2d 77 [2011]), plaintiff commenced the instant action against Schwartz, defendant Schwartz, Lichten & Bright, PC (hereinafter the law firm)—Schwartz's former and now dissolved law firm—and defendants Stuart Lichten and Daniel Bright—his former partners—seeking damages for negligent and intentional infliction of emotional distress and legal malpractice. In the same complaint, plaintiff also challenged an arbitration award made in Schwartz's favor in connection with a fee dispute between Schwartz and plaintiff."

"However, defendants correctly argue that Supreme Court should have granted their motion to dismiss the legal malpractice claim. It is well established that, "[i]n order to sustain a claim for legal malpractice, a plaintiff must establish both that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff, and that the plaintiff would have succeeded on the merits of the underlying action but for the attorney's negligence" (Leder v Spiegel, 9 NY3d 836, 837 [2007], cert denied sub nom. Spiegel v Rowland, 552 US 1257 [2008] [internal quotation marks and citation omitted]; accord Alaimo v McGeorge, 69 AD3d 1032, [*3]1034 [2010]; see Kreamer v Town of Oxford, 96 AD3d 1128, 1128-1129 [2012]; see also MacDonald v Guttman, 72 AD3d 1452, 1454-1455 [2010]; Bixby v Somerville, 62 AD3d 1137, 1139 [2009]). Here, although the complaint is replete with allegations of Schwartz's alleged failures to use reasonable and ordinary skill in connection with both of plaintiff's underlying claims, it contains no allegation that, but for these alleged failures, plaintiff would have been successful on either claim.[FN2] Therefore, even if we accept the allegations as true and liberally construe the complaint to allege negligent representation by Schwartz (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Moulton v State of New York, 114 AD3d 115, 119 [2013]; Scheffield v Vestal Parkway Plaza, LLC, 102 AD3d 992, 993 [2013]), the allegations are insufficient to make out a prima facie case of legal malpractice (see Kreamer v Town of Oxford, 96 AD3d at 1128; MacDonald v Guttman, 72 AD3d at 1455)."

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Collateral Estoppel and Attorney Liens

Client hires attorney.  Attorney successfully bails out just before trial.  There is no expert.  Medical malpractice case is dismissed because there is no expert.  Attorney asserts a lien, and then when the lien is granted, defends a legal malpractice case on the basis of the lien.  Is this fair?

Snyder v Brown Chiari, LLP   2014 NY Slip Op 02363 [116 AD3d 1116]  April 3, 2014  Appellate Division, Third Department finds for plaintiff, but only because when the lien was litigated,plaintiff was precluded from arguing malpractice.

"Defendants urge as an alternative ground for affirmance the collateral estoppel argument that they unsuccessfully asserted before Supreme Court. They premise this argument upon the fact that Supreme Court permitted their lien on plaintiff's file and the line of cases which hold that "where a client does not prevail in an action brought by counsel for the value of professional services, a subsequent action by the client for malpractice is barred by collateral estoppel" (Thruway Invs. v O'Connell & Aronowitz, 3 AD3d 674, 676 [2004] see e.g. Zito v Fischbein Badillo Wagner Harding, 80 AD3d 520, 521 [2011]). Here, at the appearance regarding the lien on the file, plaintiff was, as stated by Supreme Court in its decision, "expressly prevented by [Supreme] Court from asserting any claims relative to the actual services performed by [d]efendants, and strictly limited to a discussion of the accuracy of the amount of the disbursements made by [d]efendants on her behalf." We agree with Supreme Court's characterization of the lien dispute and, under such circumstances, further agree with Supreme Court that plaintiff did not previously have a full and fair opportunity to litigate the issue of whether defendants were negligent so as to support invoking collateral estoppel (see generally Buechel v Bain, 97 NY2d 295, 303-304 [2001], cert denied 535 US 1096 [2002]). The remaining arguments, to the extent properly before us, are academic or without merit."

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Medical Malpractice and Legal Malpractice

Suing an attorney for his handling of a medical malpractice case is among the most complicated cases in law.  Plaintiff must prove the negligence of two professionals and must do so with the use of experts in two separate fields.  One common scenario is the attorney who bails out just before trial, or at summary judgment time, because there is no expert.

Snyder v Brown Chiari, LLP  2014 NY Slip Op 02363 [116 AD3d 1116]  April 3, 2014  Appellate Division, Third Department is one case where plaintiff found an expert who had actually reviewed the file.

"In late 2002, plaintiff underwent a surgical procedure and shortly thereafter developed complications that resulted in three further surgeries, none of which was successful. She retained defendants, which commenced a medical malpractice action in March 2004 against the physician who had performed the initial surgery as well as that physician's partnership. In late February 2007, and with a trial date scheduled for early March 2007, defendants attempted to withdraw as counsel to plaintiff because, among other things, an expert had not been retained. Supreme Court (Falvey, J.) denied defendants' motion to withdraw as counsel to plaintiff, granted a motion by the defendants in the medical malpractice action to preclude plaintiff from offering expert testimony at trial and, because a prima facie case could not be established without expert proof, dismissed the medical malpractice action. When plaintiff attempted to obtain her file from defendants, Supreme Court permitted a lien for defendants' disbursements of $7,500.45.

Plaintiff commenced the instant action in early 2009 alleging, among other things, legal malpractice. Defendants answered and eventually made a motion to dismiss pursuant to CPLR 3211 asserting various grounds including collateral estoppel and failure to state a cause of action. Supreme Court (Sherman, J.) found no merit in the collateral estoppel argument; however, the court determined that plaintiff failed to establish the legal malpractice claim because of a lack of proof that she would have been successful in the underlying medical malpractice action. Finding the remaining causes of action duplicative of the legal malpractice claim, the court dismissed the [*2]complaint. Plaintiff appeals.

Plaintiff stated a cause of action for legal malpractice. Elements of such a cause of action include "establish[ing] both that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff, and that the plaintiff would have succeeded on the merits of the underlying action 'but for' the attorney's negligence" (AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007] [citations omitted] accord Alaimo v McGeorge, 69 AD3d 1032, 1034 [2010]). In the procedural context of a motion to dismiss for failure to state a cause of action, "the court must afford the pleadings a liberal construction, take the allegations of the complaint as true and provide plaintiff the benefit of every possible inference" (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]). "Whether the plaintiff will ultimately be successful in establishing those allegations is not part of the calculus" (Landon v Kroll Lab. Specialists, Inc., 22 NY3d 1, 6 [2013] [internal quotation marks and citations omitted]) and "a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint" (Leon v Martinez, 84 NY2d 83, 88 [1994]).

Here, plaintiff submitted, among other things, an affidavit and attached memorandum from a physician licensed in New York. This physician had been consulted by defendants in 2003, and he produced his memorandum from such time which set forth in ample detail for purposes of opposing a motion to dismiss that plaintiff's surgeon deviated from appropriate care. His affidavit reaffirmed that he believed there was malpractice in the treatment of plaintiff by her surgeon and, further, stated that he had been available to testify at the scheduled 2007 trial, but was never contacted by defendants. Such proof, together with the detailed allegations in the complaint, state a cause of action."

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Claim for Overbilling Not Duplicative of Legal Malpractice

Very common to legal malpractice litigation is a dismissal of contract causes of action as duplicative of the negligence claim.  Postiglione v Castro  2014 NY Slip Op 05527
Decided on July 30, 2014  Appellate Division, Second Department is an example of how a contract cause of action survives.

"In the order appealed from dated March 21, 2012, the Supreme Court granted the defendants' motion pursuant to CPLR 3211(a) to dismiss the complaint in its entirety. As relevant to this appeal, the Supreme Court granted those branches of the defendants' motion which were to dismiss the breach of contract and fraud causes of action as duplicative of the legal malpractice cause of action, which it dismissed as barred by the statute of limitations.

The plaintiff moved pursuant to CPLR 5015(a) to vacate the order dated March 21, 2012, "in the interests of justice," and pursuant to CPLR 3025(b) for leave to amend the complaint to assert only two causes of action—one alleging breach of contract and one alleging fraud. In the order appealed from dated September 13, 2012, the Supreme Court denied the plaintiff's motion.

As a general rule, where a cause of action alleging breach of contract or fraud arises from the same facts as a legal malpractice cause of action and does not allege distinct damages, the breach of contract or fraud cause of action must be dismissed as duplicative of the legal malpractice cause of action (see Financial Servs. Veh. Trust v Saad, 72 AD3d 1019, 1020; Kvetnaya v Tylo, 49 AD3d 608; Iannucci v Kucker & Bruh, LLP, 42 AD3d 436, 437; Town of Wallkill v Rosenstein, 40 AD3d 972; Town of N. Hempstead v Winston & Strawn, LLP, 28 AD3d 746, 749; Daniels v Lebit, 299 AD2d 310). Here, the plaintiff's breach of contract cause of action makes no claim that the defendants provided inadequate representation in his legal matters. Rather, the plaintiff claims, among other things, that the defendants over-billed him and took money from his escrow account without his permission, in violation of the retainer agreement. Under these circumstances, the plaintiff's breach of contract cause of action was not duplicative of the legal malpractice cause of action, and should not have been dismissed on that basis (see Loria v Cerniglia, 69 AD3d 583; Boglia v Greenberg, 63 AD3d 973, 976; Ideal Steel Supply Corp. v Beil, 55 AD3d 544, 545-546).

Similarly, the cause of action alleging fraud makes no claim of inadequate or negligent legal representation. Rather, the fraud cause of action essentially alleges that the defendants made material misrepresentations concerning the money that the plaintiff owed them. Thus, the fraud cause of action was not duplicative of the legal malpractice cause of action and should not have been dismissed on that ground."

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An Intramural Fight in the Personal Injury Big Leagues

Jacoby & Meyers and Finkelstein & Partners are players in the personal injury big leagues.  Finkelstein & Partners may be the biggest law firm in NY state.  In any event, they deal with a huge number of personal injury cases.  One of the biggest concerns in personal injury litigation is who will pay for the expenses as the cases move forward.  In Flomenhaft v Finkelstein  2014 NY Slip Op 51121(U)  Decided on July 22, 2014  Supreme Court, New York County   Jaffe, J. we see one attorney who moved to J&M and then left in a battle all over the state.  For the most part, the claims of legal malpractice and libel have something to do with litigation funding, and how it affects the plaintiffs.

"On May 2, 2005, non-party Joel Harrison retained defendant Finkelstein & Partners, LLP (F & P) to represent him in a personal injury case. Soon thereafter, F & P brought the action in Broome County Supreme Court. Plaintiff, who had moved his practice to defendant Jacoby & Meyers, LLP (J & M) in April 2009, was also named counsel to F & P, and was assigned as lead trial attorney on the Harrison matter.

Eight months later, on December 28, 2009, plaintiff abruptly resigned from J & M. Shortly thereafter, on January 25, 2010, Harrison discharged F & P and retained plaintiff to [*2]represent him on the personal injury matter.

In March 2010, J & M commenced an action against plaintiff and his law firm in Orange County, based on a loan it had allegedly made to him. That action was transferred to this court (Index No. 403550/10).

On June 16, 2010, Harrison discharged plaintiff and re-retained F & P on his personal injury action.

On August 6, 2010, during the pendency of the personal injury action, Harrison, represented by F & P, brought an action in Broome County Supreme Court against plaintiff, advancing in his verified complaint causes of action for conversion, breach of fiduciary duty, legal malpractice, and fraud, based on allegations that plaintiff had induced him to obtain litigation funding for the personal injury action and then converted the proceeds to his own use. (NYSCEF 9).

"By notice of motion, defendants move pursuant to CPLR 3211(a) for an order dismissing counts one and two of the complaint, striking the request for punitive damages, and imposing sanctions. Plaintiff opposes and by cross motion moves for an order granting him leave to amend his summons with notice and/or complaint."

"It is well-settled that "a statement made in the course of legal proceedings is absolutely privileged if it is at all pertinent to the litigation." (Sexter, at 171). The privilege "applies to statements made in or out of court, on or off the record, and regardless of the motive with which they were made." (El Jamal v Weil, 116 AD3d 732 [2d Dept 2014]; Sexter, 38 AD3d at 171). The privilege does not extend to statements that are not pertinent to the proceedings. (Youmans v Smith, 153 NY 214, 219 [1897]). Courts are liberal in applying the privilege even where the statement is only possibly pertinent to the proceedings "because the due administration of justice requires that the rights of clients should not be imperiled by subjecting their legal advisers to the constant fear of suits for libel or slander." (Youmans, 153 NY at 219-220).

Here, accepting as true the allegations contained in the complaint, as I must on this motion, as the defamatory statement is alleged to have been made by Finkelstein to Harrison the day before Harrison was to be deposed in his action against plaintiff, it was made in the course of a legal proceeding, a proposition not challenged by plaintiff. And, as the statement pertains to the allegations set forth in that legal proceeding, it is absolutely privileged."

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When Does Failure to Inform Tip Over Into Judiciary Law 487?

AQ Asset Mgt., LLC v Levine   2014 NY Slip Op 05244   Decided on July 10, 2014  Appellate Division, First Department  is a big commercial case with lots of overspill into legal malpractice and claims of Judiciary Law 487 violations. 

"By an amended stock purchase agreement (SPA) effective December 9, 2005, defendants Habsburg and Patrizzi (together the Sellers) agreed to sell half of the shares in a group of companies (the Antiquorum entities) to Artist House Holdings, Inc. (Artist House), predecessor to plaintiff AQ Asset Management, LLC (AQ)[FN1]. The Antiquorum entities included plaintiffs Antiquorum, S.A. (ASA) and Antiquorum USA, Inc. (AUSA). Defendant Michael Levine, an attorney, provided legal counsel to the Sellers, drafted the SPA and other transaction documents, and served as the escrow agent for the deal. Plaintiff Evan Zimmermann, also an attorney, helped broker the transaction and is alleged by the Sellers to have been their legal counsel throughout.

The SPA provided that the Sellers would receive $30 million dollars in cash, as well as proceeds from the sale of certain inventory held by the Antiquorum entities. In order to pay the book value of the inventory, the SPA provided that ASA was to execute a promissory note obligating it to pay, to an unspecified third party, the sum of 16 million Swiss Francs (CHF) within six months of the SPA's execution date. The SPA further provided that, "[a]lternatively, Patrizzi may become personally responsible [for payment of the CHF 16 million] to any Stockholder which is entitled thereto."

 

"Patrizzi alleges that Levine and Zimmermann purposely misrepresented the contents of the SPDA to induce him to sign it. According to Patrizzi, because he does not fully comprehend written English, he did not read the document and instead relied on Levine and Zimmermann to inform him of its contents. Patrizzi alleges that Levine and Zimmermann falsely told him that Zimmermann would receive Patrizzi's shares after a period of three years. The SPDA, however, states that the shares would be transferred to an entity jointly owned by Patrizzi and Zimmermann without a three-year delay. Patrizzi further alleges that Levine and Zimmermann did not tell him that the SPDA gave Zimmermann rights to half of Patrizzi's share of the inventory sale proceeds, or that Levine had an economic interest in part of those monies. Finally, Patrizzi claims that he was never told that he should retain independent counsel."

"The Sellers contend that after the $2 million was transferred to Levine's escrow account, Artist House, Levine and Zimmermann wrongfully conspired to oust the Sellers from ASA. At a shareholders meeting held in August 2007, Artist House and Zimmermann relied on the SPDA's purported grant to Zimmermann to vote half of Patrizzi's shares. Using this power, Artist House and Zimmermann gained control of the company, Patrizzi and Verhoeven were removed from the board of directors, and Zimmermann ultimately became the new CEO.

In January 2008, Levine wrote to Habsburg, Patrizzi, Zimmermann and Artist House asking whether they consented or objected to his returning the $2 million to ASA. Levine stated that he would not release the funds absent consent of all necessary parties or a judicial direction to do so. Both Patrizzi and Habsburg wrote back to Levine objecting to release of the money. In August 2010, Zimmermann notified Levine that the $2 million had nothing to do with the sale of inventory and requested its return to ASA. In October 2010, Levine released the $2 million to ASA and/or Zimmermann.

"The motion court correctly dismissed the ninth and tenth causes of action in the fourth-party complaint alleging legal malpractice against Levine, and the seventeenth counterclaim alleging legal malpractice against Zimmermann, as barred by the three-year statute of limitations (see CPLR 214[6]; Champlin v Pellegrin, 111 AD3d 411 [1st Dept 2013]). These claims accrued no later than August 2007, when the Sellers became aware of Levine's and Zimmermann's alleged betrayal and any attorney-client relationship had come to an end. Since the claims were not brought until, at the earliest, December 2010, when this action was commenced, they are untimely."

"The sixth interpleader counterclaim and seventh cause of action in the fourth-party complaint, which allege that Levine violated Judiciary Law § 487 by bringing his interpleader claims without informing the court of his purported business relationship with Zimmermann, were properly dismissed. The absence of such information in Levine's interpleader pleading does not rise to the level of "withholding of crucial information from a court" or "conceal[ing] from a court . . . a fact . . . required by law to [be] disclose[d]" (see Melcher v Greenberg Traurig, LLP, 102 AD3d 497 [1st Dept 2013], revd on other grounds __ NY3d __ [2014])."

 

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"Sufficiently Calculable" and the Statute of Limitations

In legal malpractice cases there is often a long latency period.  In transactional work, that might translate to the time between a deal and the day it goes sour.  That's exactly the situation in Elstein v Phillips Lytle, LLP   2013 NY Slip Op 05132 [108 AD3d 1073]   July 5, 2013  Appellate Division, Fourth Department.  The Appellate Division, 4th Department determined that the statute had already run when the case was commenced.

"In this legal malpractice action, plaintiffs appeal from an order granting the motion of Phillips Lytle, LLP and Albert M. Mercury (defendants) seeking dismissal of the complaint against them as time-barred. Plaintiffs contend that Supreme Court erred in determining the accrual date of their action, for legal malpractice. We reject that contention. " 'A cause of action for legal malpractice accrues when the malpractice is committed' " (Amendola v Kendzia, 17 AD3d 1105, 1108 [2005]; see Glamm v Allen, 57 NY2d 87, 93 [1982]). "In most cases, this accrual time is measured from the day an actionable injury occurs, 'even if the aggrieved party is then ignorant of the wrong or injury' " (McCoy v Feinman, 99 NY2d 295, 301 [2002], quoting Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]). " 'What is important is when the malpractice was committed, not when the client discovered it' " (id., quoting Shumsky v Eisenstein, 96 NY2d 164, 166 [2001]). Here, the alleged malpractice occurred no later than 2003, when plaintiff Daniel Elstein completed his acquisition of plaintiff Hilton Enterprises, Inc. (Hilton) from defendant Alfred D. Spaziano. Indeed, there is no indication in the record that defendants represented plaintiffs after that date. This action was not commenced until approximately eight years later, on March 4, 2011, and is thus time-barred under the applicable three-year statute of limitations (see CPLR 214 [6]).

We reject plaintiffs' contention that they were unable to sue defendants for malpractice until March 7, 2008, when the judgment was entered against Hilton, inasmuch as that is when they sustained an actionable injury. As the Court of Appeals has made clear, a malpractice claim becomes actionable when the plaintiff's damages become "sufficiently calculable" (McCoy, 99 [*2]NY2d at 305; see Ackerman, 84 NY2d at 541-542), and, here, plaintiffs' damages arising from the alleged legal malpractice were sufficiently calculable in January 2007, when plaintiffs learned of the alleged malpractice, if not sooner. Present—Scudder, P.J., Peradotto, Lindley, Sconiers and Whalen, JJ."

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What Does It Take to Defend Against Legal Malpractice?

Portilla v Law Offs. of Arcia & Flanagan  2013 NY Slip Op 08606 [112 AD3d 901]  December 26, 2013  Appellate Division, Second Department  tells us that the golden rule for defendants wishing to have a legal malpractice case dismissed on summary judgment is:

"In an action to recover damages for legal malpractice, a plaintiff must demonstrate that an attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the breach of such duty was the proximate cause of the plaintiff's damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Verdi v Jacoby & Meyers, LLP, 92 AD3d 771, 772 [2012]; Goldberg v Lenihan, 38 AD3d 598 [2007]). Proximate cause is established by showing that the plaintiff would have succeeded in the underlying action or would not have incurred damages but for the attorney's negligence (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442). Therefore, for a defendant in a legal malpractice case to succeed on a motion for summary judgment, evidence must be presented in admissible form establishing that the plaintiff is unable to prove at least one of these essential elements (see Verdi v Jacoby & Meyers, LLP, 92 AD3d at 772; Goldberg v Lenihan, 38 AD3d at 598)."

"Here, the appellants failed to establish their prima facie entitlement to judgment as a matter of law. The appellants, who did not dispute that they were negligent in suing the wrong party, failed to establish, prima facie, that the plaintiff was unable to prove that he would have succeeded in his underlying personal injury action (see Gamer v Ross, 49 AD3d 598 [2008]; J-Mar Serv. Ctr., Inc. v Mahoney, Connor & Hussey, 14 AD3d 482, 483 [2005]). "

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A Legal Malpractice Case Leads to Lawyer Suspension

The story has a potential for pathos.  Attorney working for a law firm receives fee payments meant for the firm, and treats them as if a loan.  Why?  He has Parkinson's disease, and perhaps needed the money.  The payments continue until the law firm moves to withdraw as attorney because of non-payment.Client sues for legal malpractice and it all comes to light.   Attorney now is suspended until the disciplinary matter is over.  That may be a long long time.

Matter of Hornstein  2014 NY Slip Op 05370  Decided on July 17, 2014  Appellate Division, First Department  Per Curiam

"At his September 25, 2013 deposition before the Committee, respondent, who was represented by counsel, admitted that between 2010 and 2011 he diverted approximately 10 payments (via checks) totaling approximately $83,000 made by a client, which were intended as payments of legal fees to his law firm in connection with a zoning matter respondent had been handling for the client. Rather than remit the funds to his firm, respondent used the funds for his own personal purposes, mostly for expenses related to his Parkinson's disease. Respondent also admitted that he failed to declare the $83,000 as taxable income because he considered it to be more in the "nature of a loan" which he intended to pay back.

Respondent's firm was unaware that the client had paid respondent directly, and in May 2012 the firm filed a motion asking to withdraw as attorney of record in another matter it was handling for the client in light of his total unpaid balance for legal fees and disbursements. The firm only learned of the client's payments to respondent in July 2012 after the client had commenced an action against respondent and the firm for, inter alia, legal malpractice, at which time the firm confronted respondent. Shortly thereafter, respondent left the firm and self-reported his diversion of legal fees to the Committee. In December 2012, respondent reimbursed the firm in full.

"The record sufficiently establishes that respondent repeatedly misappropriated and/or converted law-firm funds and used the funds without permission for his own personal purposes. Further, this Court has issued interim suspensions under similar circumstances to those here (see e.g. Matter of Getreu, 113 AD3d 148 [1st Dept 2013] [interim suspension for, inter alia, misappropriation and/or conversion of client funds for own personal purposes based on, inter alia, substantial admissions under oath]; Matter of Gibson, 104 AD3d 228 [1st Dept 2013] [same]; Matter of Armenakis, 58 AD3d 222 [1st Dept 2008][interim suspension based on admission during deposition to, inter alia, conversion of escrow funds]; Matter of Wertis, 307 AD2d 15 [1st Dept 2003] [interim suspension for, inter alia, misappropriation of trust funds based on, inter alia, substantial admissions under oath]).

Accordingly, the Committee's motion is granted and respondent suspended from the practice of law, effective immediately, and until such time as disciplinary matters pending before the Committee have been concluded, and until further order of this Court.."

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Huge Money Dealings and Transfers and Legal Malpractice

The back and forth of this large commercial stock purchase agreement, and the money transfers that ensued have had us read the opinion several times.  Even after multiple reads, we find the description of transfers still confusing.  For our context, the legal malpractice case was time barred.  However, in AQ Asset Mgt., LLC v Levine  2014 NY Slip Op 05244  Decided on July 10, 2014  Appellate Division, First Department the facts should be read in admiration for the twisted nature of this commercial transaction.

"By an amended stock purchase agreement (SPA) effective December 9, 2005, defendants Habsburg and Patrizzi (together the Sellers) agreed to sell half of the shares in a group of companies (the Antiquorum entities) to Artist House Holdings, Inc. (Artist House), predecessor to plaintiff AQ Asset Management, LLC (AQ)[FN1]. The Antiquorum entities included plaintiffs Antiquorum, S.A. (ASA) and Antiquorum USA, Inc. (AUSA). Defendant Michael Levine, an attorney, provided legal counsel to the Sellers, drafted the SPA and other transaction documents, and served as the escrow agent for the deal. Plaintiff Evan Zimmermann, also an attorney, helped broker the transaction and is alleged by the Sellers to have been their legal counsel throughout.

The SPA provided that the Sellers would receive $30 million dollars in cash, as well as proceeds from the sale of certain inventory held by the Antiquorum entities. In order to pay the book value of the inventory, the SPA provided that ASA was to execute a promissory note obligating it to pay, to an unspecified third party, the sum of 16 million Swiss Francs (CHF) within six months of the SPA's execution date. The SPA further provided that, "[a]lternatively, Patrizzi may become personally responsible [for payment of the CHF 16 million] to any Stockholder which is entitled thereto."

The parties agreed that the CHF 16 million was to be paid from the sale of inventory on hand and owned by the Antiquorum entities as of the date of the SPA. The SPA also required Patrizzi to put the inventory up for sale before the due date of the promissory note, and provided that any funds received in excess of the CHF 16 million would belong to Patrizzi or his designees. According to the Sellers, Habsburg was entitled to the first CHF 16 million in inventory sale proceeds and Patrizzi was entitled to the remainder. It is undisputed that ASA never executed a promissory note, and the Sellers contend that they received no proceeds from the sale of inventory.

Patrizzi and Zimmermann also entered into a Stock/Sales Proceeds Distribution Agreement (SPDA) in which they agreed that certain shares of the Antiquorum entities, which were held in escrow for Patrizzi's benefit, [*3]would be transferred to a new entity that Patrizzi and Zimmermann would equally own. The SPDA also provided that Patrizzi and Zimmermann would equally split Patrizzi's share of the inventory sale proceeds. The SPDA, which was drafted by Levine, disclosed that Levine had a personal economic interest in part of Zimmermann's share of those proceeds. The agreement further stated that the parties had been advised of Levine's conflict of interest, had elected to have Levine draft the agreement nevertheless, and had been represented by independent counsel.

Patrizzi alleges that Levine and Zimmermann purposely misrepresented the contents of the SPDA to induce him to sign it. According to Patrizzi, because he does not fully comprehend written English, he did not read the document and instead relied on Levine and Zimmermann to inform him of its contents. Patrizzi alleges that Levine and Zimmermann falsely told him that Zimmermann would receive Patrizzi's shares after a period of three years. The SPDA, however, states that the shares would be transferred to an entity jointly owned by Patrizzi and Zimmermann without a three-year delay. Patrizzi further alleges that Levine and Zimmermann did not tell him that the SPDA gave Zimmermann rights to half of Patrizzi's share of the inventory sale proceeds, or that Levine had an economic interest in part of those monies. Finally, Patrizzi claims that he was never told that he should retain independent counsel.

In December 2005 and January 2006, Artist House delivered $30 million into Levine's escrow account, and various sums were subsequently disbursed. According to the Sellers, in May 2006, Levine advised them that the SPA required that the inventory sale proceeds be deposited into his escrow account. In fact, the SPA did not require this. In December 2006, ASA transferred $2 million into Levine's escrow account, an amount the Sellers contend constitutes a portion of the inventory sale proceeds.

In July 2007, Leo Verhoeven, Habsburg's principal, sent Levine an email requesting that he return the $2 million to ASA. In the email, Verhoeven stated that the $2 million was for other expenses pursuant to the SPA, and thus was not inventory sale proceeds. Levine, however, did not return the $2 million to ASA at that time. It is the Sellers' position in this litigation that the $2 million is in fact inventory sale proceeds to which they are entitled. They admit that Verhoeven's July 2007 email was a ruse, and that he asked for the money back to avoid tax consequences to Habsburg arising from its direct receipt of inventory sale proceeds."

"The Sellers contend that after the $2 million was transferred to Levine's escrow account, Artist House, Levine and Zimmermann wrongfully conspired to oust the Sellers from ASA. At a shareholders meeting held in August 2007, Artist House and Zimmermann relied on the SPDA's purported grant to Zimmermann to vote half of Patrizzi's shares. Using this power, Artist House and Zimmermann gained control of the company, Patrizzi and Verhoeven were removed from the board of directors, and Zimmermann ultimately became the new CEO.

In January 2008, Levine wrote to Habsburg, Patrizzi, Zimmermann and Artist House asking whether they consented or objected to his returning the $2 million to ASA. Levine stated that he would not release the funds absent consent of all necessary parties or a judicial direction to do so. Both Patrizzi and Habsburg wrote back to Levine objecting to release of the money. In August 2010, Zimmermann notified Levine that the $2 million had nothing to do with the sale of inventory and requested its return to ASA. In October 2010, Levine released the $2 million to ASA and/or Zimmermann.

Plaintiffs commenced this action asserting various claims against the Sellers and Levine, in his capacity as escrow agent. Levine then served a "summons in interpleader," answered the complaint, and asserted interpleader counterclaims against plaintiffs and the Sellers. The Sellers [*4]answered the complaint asserting counterclaims against plaintiffs, and answered Levine's interpleader counterclaims, asserting counterclaims against him. The Sellers also commenced a "fourth-party action" against Levine. This appeal brings up for review the motion court's dismissal of a number of causes of action and counterclaims contained in the Sellers' various pleadings."

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Privity and Dismissal in Legal Malpractice

One of the ways in which legal malpractice is different from other torts is the requirement of privity of contract.  This principal, which for the most part no longer exists for torts, is strictly enforced in legal malpractice.  USHA SOHA Terrace, LLC v Robinson Brog  Leinwand Greene Genovese & Gluck, P.C.  2014 NY Slip Op 31813(U)  July 9, 2014  Supreme Court, New York County
Docket Number: 653377/2013  Judge: Melvin L. Schweitzer  is one example.

"This is a legal malpractice action in which plaintiffs assert both direct and derivative claims against legal counsel for the owner and the developer with regard to a construction project  in which plaintiff USHA SOHA Terrace, LLC was a minority investor in the developer. Defendants urge that plaintiffs cannot pursue their claims as either direct or derivative, and even if they could, the claims are insufficiently plead. The motion is granted and the amended complaint is dismissed"

"In moving to dismiss, defendants urge that as a minority, indirect investor in the Project, plaintiff Minority Member cannot claim any direct injury from actions taken by Legal Counsel. They also urge that plaintiffs lack standing to bring a derivative claim on behalf of 2280 FOB, 
because they are not shareholders of, nor entities which control, 2280 FOB. Further, defendants
argue that the claims are insufficient, because the legal malpractice,claim fails to allege proximate cause, the fiduciary duty claim is duplicative of the malpractice claim, and the Judiciary Law §487 claim fails to allege the requisite pattern of wrongdoing or deceit. "

"The motion to dismiss is granted. First, plaintiff Minority Member, as a member of a limited liability corporation, lacks standing to sue in its individual capacity for losses derived solely from injury to the limited liability company. See Yudell v Gilbert, 99 AD3d 108, 113-114 (1st Dept 2012]; Breslin Realty Dev. Corp. v Shaw, 72 AD3d 258, 266 (2d Dept 2010); Baker v Andover Assoc. Mgt. Corp., 30 Misc 3d 1218 [A], 2009 NY Slip Op 52788[U], * 16-17 (Sup Ct Westchester County 2009). To determine if a claim is direct or derivative, the court must look at the source of the claim of right. If the harm is from the defendants to the corporation, the harm to the shareholders or investors flows through the corporation, and is derivative. On the other hand, if the right flows from a breach of a duty owed directly to the shareholder, then the suit is direct. See Weber v King, 110 F Supp 2d 124, 132 (ED NY 2000); Baker v Andover Assoc. Mgt. Corp., 30 Misc 3d 1218 [A], 2009 NY Slip Op 52788 [U], * 16-17., A claim for diminution in value of the shares is harm to the corporation, the shareholder's injury flows through the corporation, and the claim is derivative even if the decrease in value derives from a breach of fiduciary duty. See Yudell v Gilbert, 99 AD3d at 113-144; O'Neill v Warburg Pincus & Co., 39 AD3d 281, 281-282 (1st Dept 2007). Here, in the amended complaint, plaintiff asserts losses as any "monies owed to [2280 FDB] and [Developer], which were in tum paid to [RGS Holdings and Futterman] resulted in actual monetary losses to [plaintiff Minority Member], in that [plaintiff Minority Member] retains a fourteen percent ( 14%) inter~st in assets of Developer" (amended complaint,~ 43). This claim for diminution in the value of plaintiff's shares involves harm to the corporation, and may only be pursued derivatively. In addition, the only other injury alleged is the failure of 2280 FOB to recover any portion of its award against Racanelli, which is a direct injury only to 2280 FDB. "

 

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Continuous Representation and the Statute of Limitations

Motions to dismiss under CPLR 3211(a)(5) are often made in legal malpractice cases.  One reason is that there is often a long latency period between the mistake and its surfacing.  This latency period regularly leads to cases that are brought more than 3 years after the mistake.  The continuous representation principal allows a plaintiff 3 years from the last date that the attorney represented the client in the same matter.

In Kitty Jie Yuan v 2368 W. 12th St., LLC  2014 NY Slip Op 05174  Decided on July 9, 2014
Appellate Division, Second Department we see the AD reversing on this issue.  "Here, the defendant Ronen Shiponi established his prima facie entitlement to dismissal of the complaint based on the expiration of the three-year statute of limitations applicable to the cause of action, inter alia, to recover damages for legal malpractice (see CPLR 214[6]). In opposition, however, the plaintiffs raised a question of fact as to whether the applicable statute of limitations was tolled by the doctrine of continuous representation (see Bill Kolb, Jr., Subaru, Inc. v LJ Rabinowitz, CPA, 117 AD3d 978, 980; Macaluso v Del Col, 95 AD3d 959, 960-961; Leon Petroleum, LLC v Carl S. Levine & Assoc., P.C., 80 AD3d 573, 574; Kennedy v H. Bruce Fischer, Esq., P.C., 78 AD3d 1016, 1017-1018; Rehberger v Garguilo & Orzechowski, LLP, 50 AD3d 760, 760; Deutsch v Polly N. Passonneau, P.C., 297 AD2d 571). Accordingly, the Supreme Court should have denied that branch of Shiponi's motion which was pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against him as time-barred."

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Hearsay Alone Cannot Support a Legal Malpractice Case

Plaintiff hears that a settlement offer had been made, and knows that his attorney did not convey a settlement offer.  We all know that it can be malpractice for an attorney to fail to convey a settlement offer, so long as Plaintiff would have taken the offer.  So, is this legal malpractice?

Not here, in Guerrera v Zysk  2014 NY Slip Op 05156  Decided on July 9, 2014  Appellate Division, Second Department.  The reason is that there was no admissible testimony about the settlement offer in the motion for summary judgment.  Whether the offeror would not testify, or for some other reason, there was only hearsay on the issue.  Hearsay alone is insufficient to defeat summary judgment.

"Here, the defendant established his prima facie entitlement to judgment as a matter of law dismissing the plaintiff's fifth cause of action to recover damages for legal malpractice based on the defendant's alleged failure to convey a settlement offer to the plaintiff during the 2003 Action. [*2]In support of the motion, the defendant submitted a transcript of his deposition, wherein he testified that he was never informed as to the existence of a settlement offer in the 2003 Action, and a transcript of the plaintiff's deposition, wherein the plaintiff testified that he had no personal knowledge of the existence of a settlement offer and had heard about it through statements made to him by others.

In opposition, the plaintiff failed to raise a triable issue of fact, as the only evidence submitted to show that a settlement offer was communicated to the defendant consisted of hearsay statements. Such evidence, standing alone, is insufficient to defeat the defendant's motion for summary judgment on this cause of action (see Mauskopf v 1528 Owners Corp., 102 AD3d 930, 931-932; Mallen v Farmingdale Lanes, LLC, 89 AD3d 996; Rodriguez v Sixth President, Inc., 4 AD3d 406). Accordingly, the Supreme Court should have granted that branch of the defendant's motion which was for summary judgment dismissing the fifth cause of action."

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It's Pure Speculation Whether Anyone Could Save the Day

Defendant A handles a case, and defects in service take place.  Successor counsel has about 6 months until the statute lapses.  Defendant 1 moves for dismissal.  Defendant 2 opposes.  Was there enough time for Defendant 2 to fix the problems, and if so, is Defendant 1 excused?

Grant v LaTrace  2014 NY Slip Op 05155  Decided on July 9, 2014  Appellate Division, Second Department  answers the question such that both defendants remain in the case.

"The plaintiff commenced this instant action against the defendants asserting a single cause of action sounding in legal malpractice. The defendants Anthony P. LaTrace, Michael E. Glynn, and the Law Offices of Michael S. Lamonsoff, PLLC (hereinafter collectively the Lamonsoff defendants), moved pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against them, contending that the actions of the defendants Colin Liverpool and Liverpool Law Office, P.C. (hereinafter together the Liverpool defendants), were the sole proximate cause of the plaintiff's damages because they had assumed representation of the plaintiff when there was sufficient opportunity to protect the plaintiff's rights. The plaintiff did not oppose the motion; however, the Liverpool defendants did. The Supreme Court denied the Lamonsoff defendants' motion. The Lamonsoff defendants appeal.

The Lamonsoff defendants' contention, that the ability of successor counsel, i.e., the Liverpool defendants, to remedy any negligence of the predecessor counsel, i.e., the Lamonsoff defendants, during the approximately six-month period that the Liverpool defendants represented the plaintiff prior to the lapse of the applicable statute of limitations, is without merit. Unlike the cases relied upon by the Lamonsoff defendants (see Katz v Herzfeld & Rubin, P.C., 48 AD3d 640, 641; Ramcharan v Pariser, 20 AD3d 556, 557; Perks v Lauto & Garabedian, 306 AD2d 261; Albin v Pearson, 289 AD2d 272; Golden v Cascione, Chechanover & Purcigliotti, 286 AD2d 281, 281; Kozmol v Law Firm of Allen L. Rothenberg, 241 AD2d 484), here, the Liverpool defendants could not have moved as of right to remedy the defects in service alleged. The Supreme Court would have had to exercise its discretion in the underlying action to extend the time to serve process (see CPLR 306-b, CPLR 2004), and it is pure speculation as to whether the court would have permitted such late service (see generally Glamm v Allen, 57 NY2d 87; Lanoce v Anderson, Banks, Curran & Donoghue, 259 AD2d 965). Accordingly the Supreme Court properly denied the Lamonsoff defendants' motion."

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Who Was At Fault Here?

Plaintiff blames the attorney and the attorney blames the client.  Someone was at fault for not appearing in court for the trial of this case.  A motion to vacate fails.  Was it because the motion was badly written, or because plaintiff-client had no excuse for the default?

Di Giacomo v Langella  2014 NY Slip Op 05150  Decided on July 9, 2014  Appellate Division, Second Department  says that it was client's fault, hence no legal malpractice.

"Here, the alleged malpractice relates to the sufficiency of the order to show cause and supporting papers prepared by the Langella defendants and submitted on behalf of the plaintiffs in the personal injury action, pursuant to which they moved to vacate their default in the personal injury action. A motion to vacate a default by a plaintiff in appearing for trial requires the demonstration of a reasonable excuse and an affidavit setting forth the merits of the cause of action (see CPLR 5015; Tuthill Fin., L.P. v Ujueta, 102 AD3d 765; G.D. Van Wagenen Fin. Servs., Inc. v Sichel, 43 AD3d 1104; Tyberg v Neustein, 21 AD3d 896; Kumar v Yonkers Contr. Co., Inc., 14 AD3d 493, 494; Hargett v Health & Hosps. Corp. of City of N.Y., 88 AD2d 633). An attorney's conduct and performance in connection with a motion to vacate a default may constitute legal malpractice (see Reznick v Zurich N. Am. Specialties, 45 AD3d 750; DeGregorio v Bender, 4 AD3d 384).

The Langella defendants established, prima facie, that the plaintiffs had no reasonable excuse for their default in appearing for jury selection in the personal injury action, thus establishing that the alleged inadequecy of the motion papers that they prepared on the plaintiffs' behalf was not the proximate cause of the plaintiffs' damages (see DeGregorio v Bender, 4 AD3d 384). In opposition, the plaintiffs failed to raise a triable issue of fact as to whether they had a reasonable excuse for their default that could have been communicated to the Langella defendants for inclusion in the papers submitted in connection with the motion to vacate the plaintiffs' default (see Kotzian v McCarthy, 36 AD3d 863; DeGregorio v Bender, 4 AD3d 384).

Accordingly, the Supreme Court properly granted that branch of the Langella defendant's motion which was for summary judgment dismissing the complaint."

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Differences Between Tort and Contract in Legal Malpractice

Legal malpractice claims are often stated in both tort and in contract, and the general feeling is that a contract cause of action in legal malpractice will almost always be a duplicitive or disguised tort claim that warrants dismissal. 

Not so inState of N.Y. Workers' Compensation Bd. v Madden  2014 NY Slip Op 05000
Decided on July 3, 2014  Appellate Division, Third Department.  Here the court incisively isolates the cause of action for return of fees from that of a professional mistake.

"Next, Glaser — the Trust's former counsel — contends that the unjust enrichment claim against him should have been dismissed in its entirety. The challenged cause of action seeks the return of legal fees paid to Glaser by the Trust, alleging, among other things, that Glaser had an [*5]attorney-client relationship with HWG and its principal before he was retained to represent the Trust, that Glaser did not disclose this prior representation to the Trust, that Glaser thereafter continued to perform legal services for HWG and the principal, and that he was paid from Trust funds for these services. Supreme Court found that, to the extent that this claim relied upon alleged conflicts of interest arising from the multiple representation, it sounded in legal malpractice and was time-barred. However, to the extent that the claim sought to recover fees paid by the Trust for legal services that had allegedly been rendered to HWG and/or its principal, the court found that plaintiff had stated a claim for breach of an express contract. Thus, the court converted that portion of the unjust enrichment claim to one for breach of contract and permitted the claim to survive with respect to the period on and after May 2, 2005. We reject Glaser's assertion that the surviving portion of the cause of action is a disguised professional malpractice claim subject to a three-year statute of limitations, as it does not allege that Glaser's professional services were negligently performed, but instead alleges a breach of the contract between the Trust and Glaser in that the Trust paid for services that Glaser did not render to it. Accordingly, that aspect of the claim is timely (see New York State Workers' Compensation Bd. v SGRisk, LLC, 116 AD3d 1148, 1151-1152 [2014]; see also Natural Organics Inc. v Anderson Kill & Olick, P.C., 67 AD3d 541, 542 [2009], lv dismissed 14 NY3d 881 [2010]; Henry v Brenner, 271 AD2d 647, 648 [2000])."

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Was He My Attorney and How Did This Happen?

Mizrahi v Adler  2014 NY Slip Op 31701(U)  June 30, 2014  Sup Ct, NY County  Docket Number: 650802/2010  Judge: O. Peter Sherwood  is the rather sad story of a man and his attorney, who both took a Las Vegas detour into Trump real estate hell.  Whether the attorney was a fellow traveler, or was leading the expedition is the question in this case.  Plaintiff says that he was simply defrauded by the estate planning attorney he approached, and the attorney says that Plaintiff is a sophisticated investor in sheep's clothing.

"It is uncontested that, in 2006, plaintiff Eitan Mizrahi (plaintiff) entered into a written retainer agreement with Adler and his law firm, non-party, Stem, Adler & Associates, LLP, for the firm to
act as plaintiffs attorneys, to provide advice and services specifically with regard to estate planning
issues (Retainer Letter, attached to Adler Aff. as Exhibit C). At a meeting in February 2007,
plaintiff and Adler discussed a possible real estate opportunity, found by Adler, to purchase
residential units then under construction in Las Vegas, Nevada, called the Trump International Hotel and Tower (Trump Towers). Trump Towers was to be comprised of two towers, Tower I and Tower II. Apparently, Adler had marketing materials on hand at the meeting which described the investment, and plaintiff allegedly expressed interest in investing in the project.  Adler claims that he explained to plaintiff that Saw was in a "unique position" to offer prospective investors the opportunity to purchase units in the Towers before they were offered to the general public (Adler Aff.,14), and that plaintiff could take advantage of Saw's contacts to purchase units by entering a finder's agreement with Saw, and paying Saw a fee. Plaintiff claims that he was told that Saw was owned by an individual named Jack Wishna (Wishna), and that Adler would be working Wishna.

Adler contends that plaintiff knew Saw was Adler's company. Adler adds that he told plaintiff that his "contacts" with Wishna would aid in the process of purchasing property in Trump Towers, as Wishna was alleged to have a relationship with the developer (id.). Plaintiff maintains that Adler told him an investment in Trump Towers would be entirely risk-free, and that by investing through the intervention of Saw (and hence, Wishna), plaintiff would obtain certain benefits, "including, but not limited to, the ability to sell or swap units prior to closing, and postpone the contracted closing date" (Complaint, attached to Adler Aff. as Exhibit A, ~ 15).  Plaintiff calls these alleged rights the "Wishna Umbrella."

The complaint alleges that defendant lost his down payment due to wrongdoing by Adler in representing to plaintiff that the investment was risk-free and that the plaintiff would have rights in
the purchase of units in Trump Towers that he did not actually have under the Purchase Agreement. Plaintiff argues that he labored under the reasonable misconception that Adler was acting as his attorney at all times during the transactions at issue. Plaintiff claims to have only a fragmentary education and a slim grasp of the English language, and that he relied entirely on Adler, as his attorney, in making the investment. Plaintiff never read any document he was asked to sign, under the assumption, that Adler, as plaintiffs attorney, was looking out for plaintiffs interests.

Plaintiff's claims for legal malpractice, negligent misrepresentation and breach of fiduciary duty are premised on the existence of an attorney-client relationship between plaintiff and Adler. Therefore, this court must consider whether triable issues of fact exist as to the existence of an , attorney-client relationship between plaintiff and Adler.

Plaintiffs action fails on the question of proximate cause. While the issue of proximate 
cause can often be  a jury question (see Bradley v Soundview Healthcenter, 4 AD3d 194 [1st Dept 2004 ]), the court may always determine whether there are questions of fact (see Laub v Faessel, 97 AD2d 28 [1st Dept 2002]). In Laub v Faessel, dealing with claims for fraud, negligent misrepresentation and breach of fiduciary duty, the court, discussing proximate cause, distinguished between a misrepresentation which induces a plaintiff to engage in a transaction ("transaction causation"), and misrepresentations which directly cause the loss to plaintiff ("loss causation") (id. at 31 ). "Loss causation is the fundamental core of the common-law concept of proximate cause: 'An essential element of the plaintiffs cause of action for negligence, or for ... any ... tort, is that there be some reasonable connection between the act or omission of the defendant and the damage which the plaintiff has suffered [citation omitted]'" (id.). "Transaction causation is often synonymous with 'but for' causation" (Amusement Industry, Inc. v Stern, 786 F Supp 2d 758, 776 [SDNY 2011 ]). "

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Entity Stays in Case, Individuals Out of Legal Malpractice Case

Privity, a requirement rather unique to legal malpractice cases in tort, is the reason that the individuals in this case are out, while the entity remains in the case.  It had privity, but they did not.  Leggiadro, Ltd. v Winston & Strawn, LLP   2014 NY Slip Op 05048   Decided on July 3, 2014
Appellate Division, First Department

"In this legal malpractice action, the individual plaintiffs, who are not identified as clients in the written retainer agreement and did not sign the retainer in an individual capacity, failed to establish the existence of an attorney-client relationship (see Federal Ins. Co. v North Am. Specialty Ins. Co., 47 AD3d 52, 59 [1st Dept 2007]; cf. Huffner v Ziff, Weiermiller, Hayden & Mustico, LLP, 55 AD3d 1009 [3d Dept 2008]). Brooks Ross's claim to have requested that defendant advise of "any and all tax liabilities arising from [a] Buy-Out" of Leggiadro's commercial lease, does not, without more, create a duty to advise the individual plaintiffs of the personal income tax ramifications of the buy-out arising by virtue of their status as S-Corporation shareholders. No "special circumstances" upon which to find a "near privity" relationship and extend liability to the individual plaintiffs have been alleged (compare Good Old Days Tavern v Zwirn, 259 AD2d 300 [1st Dept 1999]; Town Line Plaza Assoc. v Contemporary Props., 223 AD2d 420 [1st Dept 1996]). Moreover, the individual plaintiffs' history of paying pass-through taxes on the S-Corporation precludes them from reasonably relying on defendant's alleged failure to identify such liability here (see Ableco Fin. LLC v Hilson, 109 AD3d 438 [1st Dept 2013], lv denied 22 NY3d 864 [2014])."

"In order to defeat the motion to dismiss, Leggiadro only needed to "plead allegations from which damages attributable to defendant's conduct might be reasonably inferred" (InKine Pharm. Co. v Coleman, 305 AD2d 151, 152 [1st Dept 2003] [internal quotation marks and brackets [*2]omitted]). Leggiadro's claim that, had it known of the full tax ramifications of the buy-out, it would have either insisted that the landlord account for such amount in the settlement figure, in order to make relocation financially viable, or refused to relocate, is not speculative and is instead based upon, inter alia, Leggiadro's alleged strong bargaining position with its landlord, as evidenced by the amount of time left on the lease, the absence of an immediate need to relocate, and the alleged importance of the leased space in the landlord's conversion plans (see Fielding v Kupferman, 65 AD3d 437 [1st Dept 2009]; cf. Sherwood Group v Dornbush, Mensch, Mandelstam & Silverman, 191 AD2d 292, 294 [1st Dept 1993])."

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Is This Legal Malpractice In Contract or Is It A Tort?

We have recently written about the conversion of legal malpractice from a tort to a contact action, and some of the changes that have been occasioned.  Here, in Salazar v Sacco & Fillas, LLP
2014 NY Slip Op 00980 [114 AD3d 745]  February 13, 2014 Appellate Division, Second Department the Court goes to some length to distinguish between the two.  Law firm settles cases and then seeks to get its bill paid.  How they went about it is a problem.

"The plaintiff retained the defendants Sacco and Fillas, LLP (hereinafter the law firm), and attorneys Tonino Sacco and Elias Nikolaos Fillas, who allegedly were partners in the law firm, to represent him as a plaintiff in a personal injury action and to represent two corporate entities that he controlled, Always First, Inc., and Always Fast, Inc. (hereinafter together the Always companies), in connection with certain commercial litigation.

The law firm settled the personal injury action on behalf of the plaintiff, and received certain settlement proceeds on the plaintiff's behalf. Thereafter, the plaintiff and the Always companies, as "the client," and the law firm entered into an agreement (hereinafter the settlement agreement). The settlement agreement provided that, in exchange for the law firm's agreement to "discount outstanding balances" due the law firm from the Always companies, "the client" agreed to give up all rights to certain sums due "the client" from three enumerated litigations.

The plaintiff thereafter commenced the instant action, seeking to recover damages he allegedly sustained as a result of the defendants' legal malpractice, breach of contract, and fraud. The plaintiff alleges, inter alia, that the defendants breached the retainer agreement relating to the personal injury action in that they intentionally failed to pay him the settlement funds from that [*2]action. The plaintiff also alleges that he was fraudulently induced into signing the settlement agreement. The defendants moved to dismiss the complaint pursuant to CPLR 3211 (a) (7). The Supreme Court, upon concluding that the complaint alleged intentional acts only, granted the defendants' motion only insofar as it sought to dismiss the first cause of action, sounding in legal malpractice. The defendants appeal."

"The complaint adequately states a cause of action against the defendants sounding in breach of contract."

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July 4th

We're off celebrating.  Have a great 4th of July!

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The Rare Legal Malpractice Case Lacking Privity

It is very very rare, but here is a case in ""the narrow exception of fraud, collusion, malicious acts or other special circumstances" under which a cause of action alleging attorney malpractice may be asserted absent a showing of privity (Ginsburg Dev. Cos., LLC v Carbone, 85 AD3d 1110, 1112 [2011]" 

Mr. San, LLC v Zucker & Kwestel, LLP  2013 NY Slip Op 08416 [112 AD3d 796]  December 18, 2013  Appellate Division, Second Department]  was not dismissed on CPLR 3211 grounds. 

"On a motion to dismiss pursuant to CPLR 3211 (a) (1), "dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Leon v Martinez, 84 NY2d 83, 88 [1994]). In deciding a motion to dismiss pursuant to CPLR 3211 (a) (7), the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 NY2d at 87-88).

Applying these principles, the Supreme Court properly denied those branches of the defendants' motion which were pursuant to CPLR 3211 (a) (1) and (7) to dismiss the first cause of action, which sought to recover damages for legal malpractice. While the complaint does not allege an attorney-client relationship between the plaintiffs and the defendants, it sets forth a claim which falls within "the narrow exception of fraud, collusion, malicious acts or other special circumstances" under which a cause of action alleging attorney malpractice may be asserted absent a showing of privity (Ginsburg Dev. Cos., LLC v Carbone, 85 AD3d 1110, 1112 [2011] [internal quotation marks omitted]; see Aranki v Goldman & Assoc., LLP, 34 AD3d 510, 511-512 [2006]; Griffith v Medical Quadrangle, 5 AD3d 151, 152 [2004]). Furthermore, the documentary evidence submitted by the defendants does not conclusively establish a defense to this cause of action as a matter of law (see CPLR 3211 [a] [1]).

"

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No Goose-Gander Problem in Legal Malpractice

ALBANY:   Loss of freedom for a tort plaintiff occasioned by the extension of his probation arising from a criminal arrest and the resulting emotional and psychological harm are compensible.  Same thing for a legal malpractice plaintiff?  Not compensible.  Dombrowski v Bulson
[19 NY3d 347]   May 31, 2012  Lippman, Ch. J.  Court of Appeals.
 

Landon v Kroll Lab. Specialists, Inc 2013 NY Slip Op 06597 [22 NY3d 1]  October 10, 2013
Lippman, J.  Court of Appeals  tells us that in a "regular" tort situation, even in a "contract" situation, there may be liability. "Although the existence of a contractual relationship by itself generally is not a source of tort liability to third parties, we have recognized that there are certain circumstances where a duty of care is assumed to certain individuals outside the contract (see Espinal v Melville [*4]Snow Contrs., 98 NY2d 136, 138-139 [2002]). As relevant here, such a duty may arise "where the contracting party, in failing to exercise reasonable care in the performance of [its] duties, launched[s] a force or instrument of harm" (Espinal, 98 NY2d at 140 [internal quotation marks and citation omitted]). This principle recognizes that the duty to avoid harm to others is distinct from the contractual duty of performance. Accepting the allegations of the complaint as true, Kroll did not exercise reasonable care in the testing of plaintiff's biological sample when it failed to adhere to professionally accepted testing standards and, consequently, released a report finding that plaintiff had tested positive for THC. The alleged harm to plaintiff was not remote or attenuated. Indeed, it was his own biological specimen that was the sole subject of this testing and he was directly harmed by the positive test result causing the extension of his probation and the necessity of having to defend himself in the attendant court proceedings."

In a legal malpractice situation, the rules are different. " In addition, we reject defendant's argument that plaintiff failed to allege that he has suffered a cognizable harm (see e.g. Martinez v Long Is. Jewish Hillside Med. Ctr., 70 NY2d 697, 699 [1987] ["where there is a breach of a duty owed by defendant to plaintiff, the breach of that duty resulting directly in emotional harm is actionable"]). In this procedural posture, {**22 NY3d at 8}plaintiff's allegations of the loss of freedom occasioned by the extension of his probation and the resulting emotional and psychological harm are sufficient to withstand a motion to dismiss. Defendant places too much weight upon our recent decision in Dombrowski v Bulson (19 NY3d 347 [2012]), characterizing it as holding that loss of freedom damages are not recoverable in negligence actions. In that case, we found that a legal malpractice action did not lie against a criminal defense attorney to recover nonpecuniary damages. The decision was based in part on policy considerations, including the potentially devastating consequences such liability would have on the criminal justice system and, in particular, the possible deterrent effect it would have on the defense bar concerning the representation of indigent defendants (see Dombrowski, 19 NY3d at 352). Similar policy considerations do not weigh in defendant's favor here."

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A Complete Loss for Plaintiffs

Rochester:   The course of litigation can be twisted, and early decisions often cause later havoc.  Such is the case in this 4th Department case.  Wright v Shapiro  2012 NY Slip Op 08964 [101 AD3d 1682]  December 21, 2012  Appellate Division, Fourth Department  tells us that plaintiff lost one position after another, ending with a complete dismissal of the case.

"It is hereby ordered that the order insofar as appealed from is unanimously reversed on the law without costs, the motion of defendants James J. Shapiro and James J. Shapiro, P.A. is granted, and the second amended complaint is dismissed against those defendants.

Memorandum: James J. Shapiro and James J. Shapiro, P.A. (defendants) appeal from an order denying their motion for summary judgment dismissing the second amended complaint against them and granting plaintiff's cross motion to compel the deposition of James Shapiro. We note at the outset that, although defendants' notice of appeal is from the order in its entirety, they do not address plaintiff's cross motion in their brief and thus, as limited by their brief, are deemed to have appealed only from the denial of their motion. We further note that the appeal taken by defendant Chikovsky & Associates, P.A. has been deemed abandoned and dismissed by its failure to perfect the appeal in a timely fashion (see 22 NYCRR 1000.12 [b]).

We agree with defendants that Supreme Court erred in denying their motion. By establishing that plaintiff could not have prevailed in his underlying personal injury action, defendants met their initial burden of establishing their entitlement to summary judgment with respect to the first cause of action against them, for legal malpractice (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]), and plaintiff failed to raise a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). We note that the court erred in concluding, based on our decision in Wright v Shapiro (16 AD3d 1042 [2005]), that the doctrine of law of the case precluded summary judgment following discovery. Furthermore, plaintiff's theory of liability premised on respondeat superior is barred by his discontinuation of that action on the merits against the employee, thus eliminating the triable issue of fact we discussed in our subsequent decision in Wright v Shapiro (35 AD3d 1253 [2006]). Therefore, the court should have [*2]granted defendants' motion with respect to the first cause of action in that regard (see Town of Angelica v Smith, 89 AD3d 1547, 1549-1550 [2011]).

Inasmuch as the second cause of action is premised upon the legal malpractice cause of action, which we are hereby dismissing against defendants, we further conclude that the court erred in denying defendants' motion with respect to the second cause of action against them. Present—Smith, J.P., Peradotto, Lindley, Valentino and Whalen, JJ.

"

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Attorney wears 3 Hats, Problems Ensue

Seller of real estate has a building with a 50 year lease ending.  Chase Bank has the lease, and long ago subleased the property for a profit.  Buyer says that he never saw the leases, and that $3750 per month is just not enough to run the building.

Attorney admits that he was sellers' attorney, buyer's attorney and the broker in the deal.  Palmieri v Mattimore   2014 NY Slip Op 30300(U)   January 16, 2014   Sup Ct, Suffolk County  Docket Number: 20155/2008  Judge: William B. Rebolini is a description of behavior which cannot but lead to problems.

"The plaintiff Mario Palmieri alleges that he was approached by the defendant with regard to a potential purchase oft e subject property. The defendant had represented Mr. Palmieri and other  family members in real state, zoning, and other legal matters for a period of about 15 years. The original asking price for the property was $900,000.00 but after negotiation the price agreed upon was $700,000,00. Acco ding to the documentary evidence, the property was subject to a 50-year lease held by JP Morgan Chase Bank ("Chase"), which was set to expire in 2011. Under the lease,
Chase paid a total of $3,750 a year in rent. At the time of the sale, Chase no longer occupied the
subject property and ha subleased each of the buildings thereon. One was leased to the State of New York for a monthly rent of $5,665.00. The other building was subleased to the Consulate of El Salvador for a monthly. rent of $4,025.00. Mr. Palmieri testified that the defendant did not inform him that he would only be receiving the rent under the main lease until that lease expired in 2011,
and he testified that the defendant told him several times that he would be receiving $9,500.00 in rent each month. He further claimed that he never saw the lease documents until after the closing and that the leases were not attached to the contract that he signed. Upon discovering that he could receive only $312.00 per month ($3,750.00 for the year) in rent from the property, he was outraged. 


He testified that he called the defendant, who apologized and said he made a mistake. He states in his affidavit that if he ha known the lack of rental income from the property, he would have opted
not to buy it.

The defendant denied at his examination before trial that he failed to disclose the rental  income that Palmieri Realty LLC would receive under the Chase lease until it expired in 2011. He  admitted, however, that he had acted as the seller's attorney and the broker on the transaction and
that he had received fees from both activities. It is also clear from his testimony that he also  represented the plaintiffs and was also paid a legal fee by them for his work. The defendant also
submitted a real estate a appraisal of the subject property from John Grossman, a qualified ppraiser."

Motion for summary judgment denied as to the LLC.

 

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When Is A Release Not Really A Release?

Litigants get together to buy a restaurant.  Problems arise, and a legal malpractice action is commenced. The proceeds over which the litigants argue arose from a legal malpractice case.  The attorney successfully sued had failed to tell his clients that the attorney's friend owned the property next door to a restaurant the clients were buying, and that the attorney's friend was encroaching on their soon-to-be-purchased restaurant.  Things went downhill between the litigants after succeeding on the legal malpractice case.

Buscaglia v Schreck  2014 NY Slip Op 31582(U)  June 10, 2014  Sup Ct, Suffolk County  Docket Number: 26922-11  Judge: Elizabeth H. Emerson should be read for the Court's interpretation of what seemed to be a complete and total general release.

"The complaint alleges in the first cause of action that the plaintiff paid approximately  $197,000 to Mr. Barr during the course of the litigation, while the defendant only paid Mr. Barr  $20,000. The complaint also alleges that the parties were unable to pay the mortgage on the  premises due to the necessity of paying attorney fees in the legal malpractice action, thereby causing the premises to go into foreclosure. The first cause of action seeks reimbursement of one-half of the expenses paid by the plaintiff. The complaint alleges in the second cause of action that, the during the pendency of the litigation, the plaintiff paid property insurance and  expert witness fees and seeks reimbursement of one-half of those expenses. The complaint alleges in the third cause of action that the defendant wrongfully took various assets of the partnership, including heating oil, from the premises and cashed insurance checks payable to both parties. The complaint further alleges that the plaintiff also paid an attorney to represent the parties to resolve the foreclosure action on the premises and seeks reimbursement of one-half the expenses and assets taken by the defendant. The defendant interposed an answer and asserted a general denial, several affirmative defenses and a counter claim seeking "in excess of $50,000," for the plaintiffs refusal to lease the premises during the litigation.

With regard to defendant's first contention that the complaint must be dismissed pursuant to CPLR 3 211 (a) ( 1 ), where a defendant moves to dismiss an action asserting the existence of a def ensc founded upon documentary evidence, the documentary evidence "must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiffs claim" (Trade Source, Inc. v Westchester Wood Works, Inc., 290 AD2d 437; Berger v Temple Beth-El of Great Neck, 303 AD2d 346). The defendant contends that the Settlement Agreement and General Release dated April 26, 2011, represents that the parties released all claims that they had against each other. The defendant relies upon Paragraph 4 of the Settlement Agreement and General Release, which states: the plaintiff, the defendant, and Mr. Barr "hereby mutually release each other * * * from any and all claims * * * and liabilities of any kind whatsoever * * *."

''In construing a general release it is appropriate to look to the controversy being settled and the purpose for which the release was executed[,] ... [and] a release may not be read to cover matter which the parties did not desire or intend to dispose of' (Bugel v WPS Niagara Properties, Inc., 19 AD3d 1081, 1082; see also Wechsler v Diamond Sugar Co., 29 AD3d 681, 682). It is also well settled that "releases are contracts that, unless their language is ambiguous, must be interpreted to give effect to the intent of the parties as indicated by the language employed" (Rubycz-Boyar v Mondragon, 15 AD3d 811, 812).

The court cannot determine from Paragraph 4 of the Settlement Agreement and General Release whether the parties intended to release each other from all disputes that were related to the partnership or whether the subject document relates only to the claims in the litigation against Mr. Nitka. Therefore, the branch of the motion seeking dismissal on the ground of documentary evidence is denied. "

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Moving To Dismiss Without the Documents in Legal Malpractice

A large number of legal malpractice cases are dismissed at the beginning on CPLR 3211 motions.  We believe that legal malpractice cases are overrepresented in these dismissals.  Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin & Quartararo    2014 NY Slip Op 00087 [113 AD3d 587]   January 8, 2014   Appellate Division, Second Department  is an example of this phenomenon, as well as an illustration of the dangers of a 1031 Like-kind exchange of real property intended to avoid capital gains taxation.

"The plaintiff commenced this action to recover damages allegedly sustained as a result of the defendants' legal malpractice. As alleged in the complaint, the plaintiff retained the defendants to represent it in connection with the sale of certain real property and a related exchange of "like-kind property" pursuant to the Internal Revenue Code (see 26 USC § 1031). According to the allegations in the complaint, the plaintiff, based upon the defendants' advice, selected LandAmerica 1031 Exchange Services, Inc. (hereinafter LandAmerica), as the qualified intermediary to hold a portion of the sale proceeds, totaling $5.5 million, for the exchange of like-kind property pursuant to 26 USC § 1031. The complaint alleged, inter alia, that the defendants negligently represented the plaintiff inasmuch as they reviewed, and advised the plaintiff to execute, an agreement with LandAmerica, under which the exchange funds were to be held in a commingled [*2]account and not a qualified escrow account or trust. Soon after the sale proceeds were transferred to LandAmerica, its parent corporation, LandAmerica Financial Group, Inc., declared bankruptcy. According to the complaint, the plaintiff's funds were frozen for several years during the bankruptcy proceedings, and the plaintiff lost a portion of the funds because they were not held in a qualified escrow account or trust. The complaint further alleged that the plaintiff could not defer the taxes on the capital gains from the initial sale, as it did not have access to its funds to purchase a replacement property within the required 180-day period."

"The Supreme Court improperly granted the defendants' motion to dismiss the complaint based on documentary evidence. A motion to dismiss a complaint pursuant to CPLR 3211 (a) (1) may be granted only if the documentary evidence submitted by the moving party utterly refutes the factual allegations of the complaint, "conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]). Here, the retainer agreement submitted by the defendants did not conclusively establish a defense as a matter of law (see Harris v Barbera, 96 AD3d 904, 905-906 [2012]; Rietschel v Maimonides Med. Ctr., 83 AD3d 810, 811 [2011]; Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 38-39 [2006])."

"The documents submitted by the defendants on appeal, which were annexed to their brief, are not properly before this Court, as they were not submitted to the Supreme Court (see CPLR 5526; Constantine v Premier Cab Corp., 295 AD2d 303, 304 [2002]). Moreover, the defendants' arguments that relied upon these documents were improperly raised for the first time on appeal (see Salierno v City of Mount Vernon, 107 AD3d 971, 972 [2013])."

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More Lessons in Legal Malpractice from Red Zone

Red Zone LLC v Cadwalader, Wickersham & Taft LLP    2014 NY Slip Op 04570     Decided on June 19, 2014   Appellate Division, First Department is the latest wow legal malpractice case, since it ended in a $ 17.2 million award, and is sure to be the largest Legal Malpractice award of the year.  Yesterday we discussed the interesting continuous representation issues.  Today, the expert issue.  When is an expert needed?  Would you have used one in a case this large?  None was needed here!

"Plaintiff commenced this action for legal malpractice against defendant law firm based on the alleged negligent drafting of an agreement (Side Agreement) that was intended to memorialize an oral agreement between plaintiff and nonparty UBS Securities LLC (UBS) to cap at $2 million the amount of fees UBS was to receive for acting as plaintiff's exclusive financial advisor in its effort to acquire control of nonparty Six Flags, Inc., unless plaintiff acquired more than 51% of the voting shares of Six Flags. Prior to the instant lawsuit, UBS successfully sued plaintiff for $10 million in fees in connection with the Six Flags transaction. In the course of that lawsuit, we rejected plaintiff's argument that the Side Agreement, read in tandem with the main agreement (Engagement Agreement), capped UBS's fee at $2 million (UBS Sec. LLC v Red Zone LLC, 77 AD3d 575 [1st Dept 2010], lv denied 17 NY3d 706 [2011]) (UBS Decision).

Plaintiff's motion for summary judgment on its legal malpractice claim was also properly granted. Notably, defendant does not dispute that the Side Agreement was intended to cap UBS's fees at $2 million. Given our prior finding in the UBS litigation that the Side Agreement failed to do just that (UBS Sec. LLC, 77 AD3d 575), summary judgment is warranted. Accordingly, no expert opinion evidence was necessary before granting the motion (see Northrop v Thorsen, 46 AD3d 780, 782 [2d Dept 2007]). There are no triable issues as to whether defendant, as opposed to plaintiff or its trial counsel in the UBS litigation, caused plaintiff's injuries. But for defendant's drafting of the Side Agreement, UBS would not have prevailed in its lawsuit seeking $10 million (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007])."

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A Huge Legal Malpractice Award Against Cadwalader Affirmed

Claims are often made for multi-million dollar losses, and often they amount to a dream.  Here, in Red Zone LLC v Cadwalader, Wickersham & Taft LLP  2014 NY Slip Op 04570  Decided on June 19, 2014  Appellate Division, First Department  the case ends in a verdict for $ 17.2 million.

Of note is the AD's take on continuous representation, with a 2 year gap.  "The motion court properly concluded that the continuous representation doctrine applies to toll the statute of limitations on plaintiff's legal malpractice claim. Although defendant drafted the Side Agreement in 2005, it provided legal advice throughout the UBS litigation from 2007 through late 2010. Although plaintiff was represented by other counsel in the UBS litigation, plaintiff and its trial counsel continued to confer with defendant and share privileged documents regarding its defense strategy. In doing so, defendant apparently sought to rectify its earlier alleged malpractice, namely to prevent UBS from demanding more than $2 million when the Side Agreement was intended to limit UBS's fee. In such cases, the continuous representation doctrine applies (see Luk Lamellen U. Kupplungbau GmbH v Lerner, 166 AD2d 505, 506-507 [2d Dept 1990]; N & S Supply v Simmons, 305 AD2d 648, 649-650 [2d Dept 2003]). There is no basis to find that the earlier "gap" in representation from roughly 2005 to 2007 ended defendant's prior representation. There was simply no need to consult defendant during that time, and defendant never communicated to plaintiff that its prior representation had ended (see Shumsky v Eisenstein, 96 NY2d 164, 170-171 [2001])."

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It's Mitigate and Lose in Legal Malpractice

We've remarked in the past that there seems to be an artificially high standard for plaintiff in legal malpractice cases.  On summary judgment we submit that the legal malpractice plaintiff has greater requirement to "disprove" the "but for" arguments of defendants than in any other sphere of law.  As an example Lincoln Trust v Spaziano     2014 NY Slip Op 04601   Decided on June 20, 2014   Appellate Division, Fourth Department  tells us that when plaintiffs mitigated their damages, the wiped them out.  When plaintiffs offered the hypothetical better outcome in comparison to the actual outcome, the Court simply decided that the hypothetical was unprovable.

"Memorandum: Plaintiffs commenced this legal malpractice action seeking damages arising from the alleged negligence of Albert M. Mercury, Esq. (defendant), who represented Daniel Elstein (plaintiff) at the closing of a $750,000 loan that plaintiff made to defendant Alfred D. Spaziano. The closing occurred on September 12, 2001, and the loan was secured by Spaziano's stock in Westview Commons Apartments, Inc. (WCA), which owned and operated an apartment complex (subject property) in the Town of Gates. John Hancock Mutual Insurance Company (John Hancock) held a first mortgage on the subject property while, unbeknownst to plaintiff, Monroe Funding held secondary mortgages, one of which was filed eight days before plaintiff closed on his loan to Spaziano.

The complaint alleges that defendant and his law firm (hereafter, defendants) were negligent in, among other things, failing to notify plaintiff that John Hancock had commenced a foreclosure action in December 2001 with respect to the subject property because Spaziano had failed to make his mortgage payments in October and November of that year. Plaintiff did not learn of Spaziano's default on the John Hancock mortgage until January 2003, when Spaziano [*2]defaulted on the promissory note to plaintiff and WCA filed for bankruptcy. Based on Spaziano's default on the $750,000 promissory note, plaintiff enforced his security interest in the WCA stock. Plaintiff thereafter partnered with David Reidman, a real estate developer in Rochester, to purchase and manage the subject property.

 

Defendants moved for summary judgment dismissing the complaint against them, contending, inter alia, that, because plaintiffs had profited from the purchase and sale of the subject property, they had sustained no damages as a result of defendants' alleged malpractice. Defendants also asserted that plaintiffs are not entitled to damages arising from the unpaid promissory note because plaintiff had released Spaziano from liability on that loan. Plaintiffs opposed the motion and cross-moved for partial summary judgment with respect to several causes of action. Supreme Court granted the motion and denied the cross motion. We now affirm.

To succeed on a claim of legal malpractice, a plaintiff must prove, inter alia, that the attorney's negligence was a proximate cause of a loss that resulted in actual and ascertainable damages (see Leder v Spiegel, 9 NY3d 836, 837, cert denied 552 US 1257; see also Hotaling v Sprock [appeal No. 2], 107 AD3d 1446, 1446-1447). Here, defendants met their initial burden of establishing that plaintiffs were not entitled to damages based on the unpaid promissory note inasmuch as the release given to Spaziano by plaintiff is valid and enforceable (see Appel v Ford Motor Co., 111 AD2d 731, 732-733; see also Gubitz v Security Mut. Life Ins. Co. of N.Y., 262 AD2d 451, 451; Matter of Garvin, 210 AD2d 332, 333) and, in opposition, plaintiffs failed to raise an issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562).

With respect to plaintiffs' alternate theory of damages—that defendants' failure to notify plaintiff of Spaziano's default on the John Hancock mortgage cost plaintiff $703,435.80 in lost profits—we agree with the court that the theory is too speculative to survive defendants' motion [*3]for summary judgment (see Bua v Purcelli & Ingrao, P.C., 99 AD3d 843, 847-848, lv denied 20 NY3d 857; Perkins v Norwick, 257 AD2d 48, 51; Sherwood Group v Dornbush, Mensch, Mandelstam & Silverman, 191 AD2d 292, 294-295; Brown v Samalin & Bock, 168 AD2d 531, 531-532). As defendants point out, it is not clear that plaintiff could have obtained the necessary funding from First Niagara or any other lender to purchase the property in November 2001, 14 months earlier than the actual purchase date. Moreover, it was not certain that Monroe Funding at that time would have accepted a steep reduction in the amount that it was owed on the secondary mortgages, or that plaintiff and Reidman would have been able to sell the subject property for the same price as they later did. In addition, plaintiff acknowledged at his deposition that he would not have purchased the subject property without Reidman, who, according to plaintiff, was vital to the success of the venture. Plaintiff did not meet Reidman until after he learned of Spaziano's default on the John Hancock mortgage. As the court stated in its decision, there is no evidence that plaintiff "would have found an investor similar to Reidman at that time, or acceptable to Monroe Funding as the junior mortgage holder."

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Big Players, Bad Result, Some Skullduggery

Attorney sues his former law firm.  At the arbitration, no expert is presented to value the law firm.  Arbitrators rule against the attorney.  He then finds second law firm to "assist in obtaining relief."  No relief is obtained, and the second law firm surreptitiously sets up a legal malpractice case against the "co-attorney."  Is this wrong?

Roberts v Corwin   2014 NY Slip Op 04563   Decided on June 19, 2014  Appellate Division, First Department.

"Defendants represented plaintiff, an attorney, at an arbitration hearing against his former law firm. On May 11, 2006, the arbitration panel issued an interim award, finding that plaintiff had failed to prove any damages, based in large part on the absence of expert testimony regarding the value of the law firm. Following the unfavorable interim award, plaintiff, with defendants' knowledge and agreement, hired a partner at his current law firm, Epstein Becker & Green (EBG), to assist in obtaining relief from the interim award, including trying to negotiate a settlement with plaintiff's former partners. While these negotiations proceeded, defendants were still actively representing plaintiff. Defendants characterize their relationship with EBG at the time as being co-counsels. The effort at settlement failed and on July 13, 2006, the arbitration panel issued a final award against plaintiff which incorporated in major part the unfavorable interim award. As a result, plaintiff was directed to pay hundreds of thousands of dollars in legal and other fees to his former law firm.

Defendants then filed a petition on plaintiff's behalf, seeking to vacate the arbitration award. In April 2007, the Supreme Court denied plaintiff's petition and the final award was confirmed. After the unfavorable interim award and as early as May 2006, plaintiff was also seeking advice from John Sachs, another attorney at EBG, about a potential malpractice action against defendants. A demand letter asserting a claim for malpractice based upon defendants' failure to disclose an expert witness, was sent by EBG to defendants in October 2007. In November 2009, EBG, acting as plaintiff's counsel, commenced the instant malpractice action against defendants.

Defendants' motion for sanctions, including dismissal of the complaint or the disqualification of EBG from continuing to represent plaintiff was denied, as was defendants' [*2]separate motion for summary judgment.

"There is no disciplinary rule that expressly prohibited EBG from giving plaintiff legal advice about the feasibility of a malpractice action while at the same time working with defendants to obtain a better result for plaintiff in the arbitration matter, especially when it was clear to defendants that EBG was representing plaintiff's interests. While we share the motion court's concerns about EBG's failure to disclose that a malpractice action was being considered, those concerns do not support the sweeping remedies sought by defendants of either dismissing this action or disqualifying plaintiff's chosen counsel."

"Sanctions were also properly denied in connection with plaintiff's failure to disclose a file maintained by his former counsel, who counseled him after the alleged acts of malpractice had occurred, since defendants failed to establish that the file contained discoverable documents that could affect their defense.

The court correctly denied defendants' motion for summary judgment since defendants failed to establish that, even in the absence of their alleged negligence, i.e. their failure to introduce expert testimony during the arbitration of plaintiff's partnership interest in his former law firm, plaintiff would not have prevailed at arbitration (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]). They did not show that the arbitration panel's finding that plaintiff failed to prove impropriety in the dissolution and liquidation of the firm precluded an award of damages (cf. Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1 [1st Dept 2008], lv denied 12 NY3d 715 [2009]). Indeed, in rejecting plaintiff's claim that respondents "looted" the firm, the arbitration panel noted that plaintiff had not shown that respondents' appraisal reports were materially inaccurate or presented any expert testimony in that regard.

"

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Wait, We're A Little Confused

Sometimes reading appellate decisions is enlightening, and sometimes it causes head-spin.  McDonald v Edelman & Edelman, P.C.   2014 NY Slip Op 04560   Decided on June 19, 2014
Appellate Division, First Department is definitely a head-spinner.  First, this is a re-write of the November 12, 2013 decision.  A recall of that decision is understandable, since the Court of Appeals decided Melcher v Greenberg Traurig, LLP   2014 NY Slip Op 02213   Decided on April 1, 2014  Court of Appeals  Read, J. on April 1, 2014.

Here is where the AD loses us. In  Melcher the Court of Appeals determined that Judiciary Law 487 is not a statutory cause of action; it is part of the common law.  Judge Read goes into a long and interesting analysis of the source of common law in the US.

Here the AD does several puzzling things.  First, it recalls an earlier decision. Second, it generally affirms the decision of Supreme Court dismissing three causes of action, but grants costs against defendants.  Third, it either mis-wrote, or simply did not understand MelcherThe Court of Appeals determined that JL 487 is governed by CPLR 213(1).  Two months later, the AD determines McDonald , yet relies upon the overruled AD decision in Melcher.

The AD writes: 'The fourth cause of action, which alleges a violation of Judiciary Law § 487, is untimely because it was asserted within six years of plaintiff's receipt of defendants' June 2008 letter (see CPLR 214[2]; Melcher v Greenberg Traurig, LLP, 102 AD3d 497 [1st Dept 2013])."

There is nothing correct in that sentence.

So, we are still suffering from confusion.

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Partial Success in a Patent Legal Malpractice Case

A world leader in the non-dairy segment of the frozen food industry and in non-dairy emulsions hires a world class law firm to file and prosecute patents for a "pourable dessert liquid product" (think: Mexican Cool Whip) which fails in both Mexico and Columbia.  Is the law firm to blame?  Yes and no.

Rich Prods. Corp. v Kenyon & Kenyon, LLP  2014 NY Slip Op 50937(U)  Decided on June 17, 2014  Supreme Court, Erie County  Walker, J. is a careful dissection of the claims.  In the Mexican instance

"By letter dated September 21, 1999, Uhthoff acknowledged Kenyon's September 15 letter, but stated that it did not review it (or its enclosures) until September 20, 1999, because its offices were closed from September 15 through September 19, due to a Mexican Holiday and the ensuing weekend. Uhthoff stated further that, "in view of [the office closure], we are immediately processing the [Mexican Patent Application for filing] . . . within the one-month grace term ie, month 31th [sic] from the [Deadline], which is acceptable under the practice of the Mexican Patent Office."

By letters dated September 27 and October 1, 1999, Uhthoff confirmed that the Mexican Patent Application had been filed and accepted by the Mexican Patent Office. By letter dated October 21, 1999, Kenyon advised Rich that the Mexican Patent Application "has been entered on 27 September 1999", (emphasis added). On October 22, 2001, the Mexican Patent Office issued a patent for the Invention (the "Mexican Patent").

Thereafter, a series of discussions took place within Rich, to determine whether and/or how to proceed with enforcement of the Mexican Patent. During this time, Rich also attempted [*4]to identify a substitute Mexican law firm to pursue any such enforcement proceedings, because Uhthoff had a conflict with respect to one of Rich's competitors. Ultimately, Rich retained the firm of Calderon y De La Cierra ("Calderon"), which commenced four (4) separate enforcement proceedings on behalf of Rich in Mexico. Kenyon did not prosecute, nor was it named as counsel or co-counsel in these actions.Indeed, Calderon communicated directly with Rich and/or Rich's Mexican joint venture company regarding these proceedings.

In late 2007 (six (6) years after the Mexican Patent was issued), an entity named Lactoproductos La Loma ("Lactoproductos") commenced a "cancellation proceeding", in Mexico, in which it challenged the Mexican Patent on the basis that, inter alia, the Mexican Patent Application was filed after the Deadline.

Calderon represented Rich in the Lactoproductos cancellation proceedings.

On or about September 8, 2008, the Mexican Patent Office issued a decision cancelling the Mexican Patent, (in part) because the Mexican Patent Application was filed after the Deadline. Calderon (on behalf of Rich) appealed the decision to two different Mexican Courts. On June 23, 2009, the Mexican Patent Office determination was upheld. The court held that the Mexican Patent Office's practice of accepting applications in the 31st month (as was done in 1999 with the Mexican Patent Application) was "contrary to current Patent Law in Mexico . . ." [emphasis added].

The Mexican Patent Office's determination, without explanation, overturned an acknowledged and accepted practice for many years in Mexico, that had the force and effect of law. As Calderon noted:. . . the Mexican Patent Office actually ADOPTED the term of 31 months and applied same during more than 13 years. General principles of law in Mexico dictate that habits, customs or repetitive conducts exercise by the authorities are sources of law and actually become law, whenever these are not contrary to existing legal provisions. In the particular case, the fact that the Mexican Patent Office consistently accepted, tried and granted Applications filed with the 31st month, falls within the principle noted above and results in that the legally valid term to enter National Phase Applications in Mexico was legally extended to 31 months . . . . (Emphasis in original).
As a result of the Mexico Patent Office's determination, the Invention lacks patent protection in Mexico."

In the Columbian instance:

"Rich has established, as a matter of law, that Kenyon failed to timely submit the correct documents to Goytia in connection with filing the Columbian Patent Application. Kenyon has failed to raise an issue of material fact requiring a trial regarding this cause of action. Failure to correctly perform these services constitutes malpractice as a matter of law (see, eg., Deb-Jo Const. Inc. v. Westphal, 210 AD2d 951 [4th Dept 1994]; Lory v. Parsoff, 296 AD2d 535, 536 [2nd Dept 2002]).

While Kenyon timely retained Goytia on March 18, 1998, its "instructions" to Goytia were incomplete - indicating that the necessary Power of Attorney, Assignment and Priority Document would "follow". While Goytia filed the Columbian Patent Application by the March 19, 1998 deadline, it specifically advised Kenyon that the notarized and authenticated Power of Attorney and Assignment were due by April 30, 1998. Despite these clear instructions, Kenyon failed to prepare and deliver the required documents to Goytia by the deadline.

Equally relevant here, Goytia requested these documents no less than three (3) more times, and even obtained a filing extension to accommodate Kenyon's failure to provide them. Kenyon finally provided Goytia with additional, but still incorrect documentation days prior to the extended deadline, as well as a faxed copy of the Power of Attorney (that was not authenticated), after the deadline had passed. The faxed copy of the Power of Attorney was insufficient, as the Columbian PTO required an authenticated original.

Three years later, Goytia was still waiting for the authenticated Power of Attorney. In the end, the required documents were filed in December 2001 - more than three (3) years after the extended deadline. Ultimately, the Columbian PTO declared the Columbian Patent Application invalid, because incorrect documents were filed by the extended deadline.

As such, Rich is entitled to summary judgment on its Third Cause of Action on the issue of liability."

 

 

 

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Predicting the Future or Mere Speculation?

Courts rarely enunciate the principal that all legal malpractice claims compare a hypothetical better outcome, assuming that the attorneys did no wrong, with the actual.  If the complaint had been filed timely, I would have won the case and obtained a verdict.  If a bank account had been discovered in the case I would have been able to obtain the money within.  Each of these are comparisons between the hypothetical better outcome and the actual. 

No different is Cusimano v Wilson, Elser, Moskowitz, Edelman & Dicker LLP2014 NY Slip Op 04428  Decided on June 17, 2014  Appellate Division, First Department in which plaintiff says that if the tax returns had been offered in evidence, there would have been a difference.  The Appellate Division, First Department, says, no.

"Plaintiff failed to allege facts that would satisfy the proximate cause element, namely, that "but-for" defendants' alleged inadequate and ineffective representation of her in the underlying arbitration, she would have succeeded in demonstrating that her parents lacked an ownership interest in a contested family asset (see Lieblich v Pruzan, 104 AD3d 462 [1st Dept 2013]). Plaintiff stated that if defendants had introduced her parents' personal income tax returns in the underlying arbitration proceeding, the arbitration panel would have had no choice but to consider them, credit their contents, and hold that the information contained therein (i.e., that the parents allegedly made no claim of an ownership interest in the contested family asset) was binding against the parents in accordance with the tax estoppel doctrine. The contention that mere submission of the parents' personal income tax filings in the arbitration proceeding would necessarily have altered the arbitration panel's determination regarding the parents' ownership interest in the subject asset is grounded in speculation, and thus, insufficient to sustain a claim for legal malpractice (see e.g. AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435 [2007]; Pellegrino v File, 291 AD2d 60, 64 [1st Dept 2002]).

Furthermore, even if the parents' personal tax returns had been offered as evidence in the underlying arbitration, there was no basis to assume they would have been credited by the panel,

in view of evidence suggesting the tax returns were prepared by accountants who relied upon information supplied by Bernadette Strianese who had interests which conflicted with the parents' ownership interests in the assets in dispute."

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Judiciary Law 487 and Retainer Agreements

Riverhead:  One scenario that repeatedly appears is that of an attorney, who was retained on a normal contingent fee agreement, suddenly awakes to the onset of trial and the need for an expert. The attorney also determines that expert require a fee, and sometimes turns to the client, in violation of the contingent fee agreement, and tells the client to pay for the expert.  This is what happened in Palmieri v Biggiani  2013 NY Slip Op 05194 [108 AD3d 604]  July 10, 2013  Appellate Division, Second Department. Instead of paying, the client sued.

    "Contrary to the Supreme Court's conclusion, the plaintiff stated a cause of action alleging violation of Judiciary Law § 487 (see CPLR 3211 [a] [7]; Judiciary Law § 487; Amalfitano v Rosenberg, 12 NY3d 8, 14 [2009]; Rock City Sound, Inc. v Bashian & Farber, LLP, 74 AD3d at 1172; Boglia v Greenberg, 63 AD3d 973, 975 [2009]; Kempf v Magida, 37 AD3d at 764; Izko Sportswear Co., Inc. v Flaum, 25 AD3d 534, 537 [2006]). The plaintiff alleged in the amended complaint that the defendant's assertion, made in support of the motion to be relieved as counsel, that the plaintiff "steadfastly refused to pay the litigation expenses," was knowingly false and was offered with the intent to deceive the Supreme Court into believing that the defendant originally had sufficient cause to be relieved as counsel (see Dupree v Voorhees, 102 AD3d 912, 913 [2013]). Thus, the Supreme Court should have denied that branch of the defendant's motion which was to dismiss the cause of action alleging a violation of Judiciary Law § 487."

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Is Survival of Secondary Claims in Legal Malpractice a Trend?

Causes of Action for Breach of Fiduciary Duty not dismissed...causes of action for breach of contract not dismissed.  Is this a trend?  Today in Cherry Hill Mkt. Corp. v Cozen O'Connor P.C.
2014 NY Slip Op 04248  Decided on June 12, 2014  appellate Division, First Department we see dismissal of the legal malpractice claim, but reversal on the breach of fiduciary duty claim, which in this case is over excessive fees.

"Plaintiffs' third cause of action, alleging that defendants breached their fiduciary duty because they either collected and/or billed plaintiffs for excessive and/or unearned fees, should not have been dismissed as duplicative of the malpractice causes of action (see Loria v Cerniglia, 69 AD3d 583, 583 [2d Dept 2010]). The third cause of action was not based upon the same facts underlying the malpractice claims (cf. Cosmetics Plus Group, Ltd. v Traub, 105 AD3d 134, 143 [1st Dept 2013], lv denied 22 NY3d 855 [2013]). With respect to the instant complaint, a claim [*2]of breach of fiduciary duty can be premised on excessive legal fees charged by an attorney (see Sobell v Ansonelli, 98 AD3d 1020, 1022 [2nd Dept 2012] see also Nason v Fisher, 36 AD3d 486, 487 [1st Dept 2007])."

Compare:  "Contrary to the Supreme Court's determination, however, the plaintiff's second cause of action, which alleged breach of contract and sought to recover $5,875 in damages, representing the amount he had paid to the defendant, based on, inter alia, overbilling, was not necessarily duplicative of the first cause of action (see O'Connor v Blodnick, Abramowitz & Blodnick, 295 AD2d 586, 587). Moreover, while the court concluded that the plaintiff could seek these damages as a counterclaim in the separate action commenced by the defendant (see Molinoff v Tanenbaum, _____ AD3d _____ [decided herewith]), at the time the order appealed from was issued, that action had been dismissed. "  Tanenbaum v Molinoff  2014 NY Slip Op 04186
Decided on June 11, 2014  Appellate Division, Second Department

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It's Defendant v. Defendant in this Legal Malpractice Case

In an ironic situation, two highly placed legal malpractice defense firms accuse each-other's clients of legal malpractice, and seek to apportion blame between their clients in a case where it is clear that one or both of the clients committed legal malpractice.  It's abundantly clear that service of a notice to individual shareholders did not take place.  The next question is which law firm is to blame.  In Rehberger v Garguilo & Orzechowski, LLP  2014 NY Slip Op 04182Decided on June 11, 2014 the Appellate Division, Second Department holds:

"The plaintiff commenced this action to recover damages arising from legal malpractice allegedly committed by Garguilo & Orzechowski, LLP, and Jerry Garguilo (hereinafter together the Garguilo defendants), while representing him in a declaratory judgment action to enforce the buy-out provision of a stock agreement. The plaintiff alleged, inter alia, that the Garguilo defendants failed to serve a notice required by the stock agreement upon the individual shareholders, which resulted in a judgment dismissing them from the action. The Supreme Court, among other things, denied Jerry Garguilo's motion for summary judgment dismissing the complaint insofar as asserted against him, and denied that branch of the separate motion of Garguilo & Orzechowski, LLP, which was for summary judgment dismissing the complaint insofar as asserted against it."

"Here, the Garguilo defendants each failed to establish their prima facie entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against each of them. The stock redemption agreement in the underlying action required that notice of redemption be mailed to each of the individual shareholders at the address listed in the agreement. As a result of the Garguilo defendants' failure to send this notice to the individual shareholders, the individual shareholder defendants were dismissed from the underlying action. The Garguilo defendants' submissions in support of their respective motions did not establish, prima facie, that the plaintiff will be unable to prove at least one element of his legal malpractice claim and, thus, they failed to demonstrate their entitlement to judgment as a matter of law (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438; Barnave v Davis, 108 AD3d at 583; Affordable Community, Inc. v Simon, 95 AD3d at 1048; cf. Bd. of Mgrs. of Bay Club v Borah, Goldstein, Schwartz, Altschuler & Nahins, P.C., 97 AD3d 612, 613-614; Frederick v Meighan, 75 AD3d at 531-532; Leach v Bailly, 57 AD3d 1286, 1289). Moreover, contrary to the Garguilo defendants' contention, they failed to demonstrate, prima facie, that the plaintiff's subsequent counsel, Dollinger, Gonski & Grossman, Esqs., and Matthew Dollinger (hereinafter together the Dollinger third-party defendants), had a sufficient opportunity to fully protect the plaintiff's rights when it took over the case, as to establish that any alleged negligence on the part of the Garguilo defendants was not a proximate cause of the plaintiff's damages (cf. Perks v Lauto & Garabedian, 306 AD2d 261; Albin v Pearson, 289 AD2d 272)."

"Furthermore, the Supreme Court properly denied that branch of the motion of Garguilo & Orzechowski, LLP, which was for summary judgment on the third third-party complaint, which alleged causes of action against the Dollinger third-party defendants for contribution and [*3]common-law indemnification. In the third third-party complaint, Garguilo & Orzechowski, LLP, alleged, inter alia, that if the plaintiff is able to establish that Garguilo & Orzechowski, LLP, committed malpractice, then the Dollinger third-party defendants are culpable for essentially the same conduct because they too failed to serve notice on the individual shareholders and to take action against those shareholders to enforce the buy-out provision of the stock agreement. Contrary to the contentions of Garguilo & Orzechowski, LLP, the Supreme Court properly denied that branch of its motion which was for summary judgment on the cause of action for common-law indemnification. Garguilo & Orzechowski, LLP, failed to establish, prima facie, that it was free from negligence or that its negligence was not a proximate cause of the plaintiff's alleged damages (see Waggoner v Caruso, 14 NY3d 874; Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; Raquet v Braun, 90 NY2d 177, 183; Barnave v Davis, 108 AD3d 582). "Since the predicate of common-law indemnity is vicarious liability without actual fault on the part of the proposed indemnitee" (Konsky v Escada Hair Salon, Inc., 113 AD3d 656, 658), Garguilo & Orzechowski, LLP, failed to establish its prima facie entitlement to indemnification from the Dollinger third-party defendants. The Supreme Court also properly denied that branch of the motion of Garguilo & Orzechawski, LLP, which was for summary judgment on the cause of the action for contribution, as Garguilo & Orzechawski, LLP, failed to eliminate triable issues of fact as to the relative culpability, if any, of the Dollinger third-party defendants (see Markey v C.F.M.M. Owners Corp., 51 AD3d 734, 738). Accordingly, the Supreme Court properly denied that branch of the motion of Garguilo & Orzechowski, LLP, which was for summary judgment on the third third-party complaint, regardless of the sufficiency of the Dollinger third-party defendants' opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d at 853)."

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Not Legal Malpractice, But Could Be Breach Of Contract

Plaintiff sues attorney over fees.  Claim is that attorney failed to try to get client's wife to pay attorney fees in a custody dispute.  Attorney successfully defends legal malpractice case on the "but for" aspect.  A question of overbilling, however, remains in the case on the theory of breach of contract.

"The plaintiff commenced this action, inter alia, to recover damages for legal malpractice and breach of contract against the defendant, the attorney who represented him in a prior proceeding against his former wife in the Family Court (see Matter of Tanenbaum v Caputo, 81 AD3d 839). The defendant moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint. The Supreme Court granted the motion."

"Here, the defendant established that he was entitled to the dismissal of the first cause of action, which alleged legal malpractice, pursuant to CPLR 3211(a)(1) and (7). Contrary to the plaintiff's contentions, the complaint in this action, as well as certain documentary evidence before the Supreme Court, including, inter alia, a portion of the settlement agreement between the plaintiff and his former wife, conclusively established as a matter of law that, under the terms of the settlement agreement (see generally Trinagel v Boyar, 99 AD3d 792, 792; Matter of Berns v Halberstam, 46 AD3d 808, 809), the plaintiff was not entitled to an award of an attorney's fee in the proceeding against his former wife before the Family Court (see Matter of Tanenbaum v Caputo, 81 AD3d 839), and that the defendant therefore did not commit malpractice in failing to obtain an award of an attorney's fee in that proceeding. Moreover, the retainer agreement between the parties here conclusively refuted any claim based on the plaintiff's allegation that the defendant assured him that the plaintiff's former wife would be responsible for the payment of all legal fees in that proceeding. Accordingly, the Supreme Court properly granted that branch of the defendant's motion which was to dismiss the first cause of action pursuant to CPLR 3211(a)(1) and (7).

Contrary to the Supreme Court's determination, however, the plaintiff's second cause of action, which alleged breach of contract and sought to recover $5,875 in damages, representing the amount he had paid to the defendant, based on, inter alia, overbilling, was not necessarily duplicative of the first cause of action (see O'Connor v Blodnick, Abramowitz & Blodnick, 295 AD2d 586, 587). Moreover, while the court concluded that the plaintiff could seek these damages as a counterclaim in the separate action commenced by the defendant (see Molinoff v Tanenbaum, _____ AD3d _____ [decided herewith]), at the time the order appealed from was issued, that action had been dismissed. Accordingly, we modify the order by deleting the provision thereof granting that branch of the defendant's motion which was to dismiss the second cause of action, which was to recover $5,875 in damages for breach of contract, and substituting therefor a provision denying that branch of the motion."

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Expert Discovery Still Very Squishy

What are the rules for use of experts, including when they must be revealed, how they must be noticed, and how a CPLR 3101 notice interacts with jury selection dates?  The answer is that no one knows.

Frankel v Vernon & Ginsburg, LLP  2014 NY Slip Op 04136  Decided on June 10, 2014  Appellate Division, First Department  is a prime example.  Plaintiff sends a CPLR 3101 notice that is said to be insufficient.  Supreme Court incorrectly precludes.  The deficiency is cured by a further notice.  This is just before trial

."Supreme Court incorrectly precluded plaintiff's legal malpractice expert from testifying on the ground that the initial disclosure was insufficiently detailed. Defendants objected to the disclosure's sufficiency for the first time in their omnibus motion in limine, presented to the court on the day trial was to begin. Any deficiency was cured by plaintiff's service of a more detailed supplemental disclosure four days later. Moreover, defendants were aware of the substance of the expert's proposed testimony because plaintiff had previously submitted the expert's affidavit in opposition to their motion for summary judgment. As Supreme Court found, defendants have not established that they were prejudiced by receipt of the expert disclosures 4 days after the 30-day minimum set by local rule, or that the delay was willful or intentional (see Ramsen A. v New York City Hous. Auth., 112 AD3d 439, 440 [1st Dept 2013])."

"To establish causation in this legal malpractice action, plaintiff must show that his decedent would have prevailed in the underlying action but for the attorney defendants' negligence (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]). In the underlying action, plaintiff's decedent asserted causes of action for breach of the warranty of habitability against her cooperative apartment building and for private nuisance against her upstairs neighbors. Accordingly, at trial, to demonstrate the merit of the underlying claim of private nuisance, plaintiff should be permitted to prove, among other things, that his decedent's neighbors intended to cause the nuisance (see Copart Indus. v Consolidated Edison Co. of N.Y., [*2]41 NY2d 564, 570-571 [1977]). The neighbors' testimony is relevant to the issue of intent. Therefore, the court improperly precluded that testimony."

 

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A Tangled Williamsburg Real Estate Deal and Judiciary Law 487

A condominium deal gone sour is the genesis of this Judiciary Law 487 case.  This case initially traveled outside the boundaries of typical cases, and was initially heard by a beth din arbitration panel.  Later, it returned to state court and was decided by more conventional means.

Laufer v Skillman Estates, LLC  2014 NY Slip Op 31357(U)  May 23, 2014  Sup Ct, Kings County
Docket Number: 503414/2013  Judge: Ann T. Pfau allows dismissal of the JL 487 claims on res judicata proofs. 

'Defendants Moshe Junger and Moses Rosner were members of defendant Skillman Estates LLC.  Skillman owned real property in the Williamsburg neighborhood of Brooklyn, and was the sponsor of a proposed condominium project on the 'property.  Plaintiff Moshe C. Laufer (Laufer) alleges that, on August 17, 2004, he entered into an agreement with Skillman to purchase a 1/12 interest in Skillman's property (Verified Complaint), and simultaneously Skillman entered into a contract to sell plaintiffs an Interest in condominium units in the building (id, 14).  Laufer complained that  Skillman, Rosner and Junger breached the agreements, and commenced a Beth Din arbitration proceeding, which in time resulted in an award in Laufer's favor in the amount of $1,551,000 and specific performance, which award was confirmed by this court. "

"The fourth cause of action, which is the only claim directed against defendant Seyfarth Shaw, seeks treble damages under Judiciary Law  487 under the theory that the Forbearance
Agreement was intended to shield Skillman's assets from Laufer, and also was intended to
deceive the court.."

"Here, the claims alleged in the Verified Complaint against the ECG Defendants arise from the Forbearance Agreement, which was known to plaintiffs before ECG moved for judgment of foreclosure and sale. Plaintiffs were a party to the foreclosure action, and Laufer opposed and cross moved against ECG's motion for a judgment of foreclosure and sale. There are no facts alleged in the Verified Complaint to explain or justify why the claims against the ECG Defendants are raised now, rather than when the parties litigated the significance of the  vendee's lien and the Forbearance Agreement in the Foreclosure Action. To the extent that plaintiffs did raise these issues, they were litigated to a final conclusion. Indeed, Laufer argued repeatedly, and without success that his vendee's lien took precedence."

"Even though the legal theory raised in this proceeding is not identical to that set forth in the mortgage proceeding, the claims against the ECG are barred under the doctrine of res judicata. Moreover, the claims against Seyfarth Shaw and the John Doe attorneys, presumably meant to include Seyfarth Shaw attorneys, are barred under the doctrine of collateral estoppel because they are entirely derivative of the attorneys' representation of ECG m the prior action, and of its role m presenting the Forbearance Agreement to the court."

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So Often, It Is About Attorney Fees

Anecdotal evidence suggests that the largest category of attorney-client litigation concerns attorney fees.  Cohen v Hack  2014 NY Slip Op 04068  Decided on June 5, 2014  Appellate Division, First Department is a prime example.  The claim is that the law firm pressured client into changing from a contingent to an hourly fee.  Is this legal malpractice?  No.

"Plaintiff does not assert that defendants' conduct caused the result of his dispute with his disability insurer to be worse than it would have been. Rather, he argues that defendants, in bad faith and without full disclosure, pressured him into changing from an hourly retainer to a contingency retainer. The

only loss he alleges is the additional fees owed to counsel as a result of changing the retainer. This is fatal to his claim for malpractice (see Warshaw Burstein Cohen Schlesinger & Kuh, LLP v Longmire, 106 AD3d 536 [1st Dept 2013], lv dismissed 21 NY3d 1059 [2013]; see also Sumo Container Sta. v Evans, Orr, Pacelli, Norton & Laffan, 278 AD2d 169, 170-171 [1st Dept 2000]).

The court correctly held that, despite the submission to arbitration in the retainer agreement, arbitration of the contract claim was inappropriate under the circumstances. The retainer agreement provided for arbitration under part 137 of the Rules of the Chief Administrator of the Courts. However, the gravamen of the contract claim is that it is invalid because of defendants' misconduct in inducing plaintiff to sign it, or because it created a windfall for defendants. By the express terms of the rules the parties chose to govern their arbitration, claims such as this are not arbitrable since 22 NYCRR 137.1(b)(3) provides that part 137 does [*2]not apply to "claims involving substantial legal questions, including professional malpractice or misconduct" (see Mahler v Campagna, 60 AD3d 1009, 1012 [2d Dept 2009])."

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Is This A Rare Criminal Legal Malpractice Case

It definitely seems so to us.  The original decision is a short-form order, which is not available to state the Court's reasoning, but the Appellate Division cites Plaintiff's arrest at the nursing home where he worked which shows he suffered pecuniary loss. 

Fountain v Ferrara  2014 NY Slip Op 03947  Decided on June 3, 2014  Appellate Division, First Department reiterates the point that hearsay is an acceptable method of opposing summary judgment. 

"Plaintiff's deposition testimony that he was employed by a nursing home in 1998 when he was arrested, together with his bill of particulars, were sufficient to raise a triable issue of fact as to whether he sustained pecuniary losses resulting from the alleged legal malpractice (see D'Agrosa v Newsday, Inc., 158 AD2d 229, 238 [2d Dept 1990]).

Defendants failed to preserve their argument that plaintiff may not rely upon his deposition testimony since such deposition was taken in an action in which they were not parties and were not represented (see Matter of Brodsky v New York City Campaign Fin. Bd., 107 AD3d 544, 545 [1st Dept 2013]). In any event, the argument is unavailing, since defendants' absence at the time of the deposition merely renders the deposition transcript hearsay as to them (see Rugova v Davis, 112 AD3d 404 [1st Dept 2013]), and "hearsay evidence may be considered to defeat a motion for summary judgment as long as it is not the only evidence submitted in opposition" (O'Halloran v City of New York, 78 AD3d 536, 537 [1st Dept 2010]). Here, plaintiff also submitted his bill of particulars, and "factual allegations contained in a verified bill of particulars . . . may be considered in opposition to a motion for summary judgment" (Johnson v Peconic Diner, 31 AD3d 387, 388 [2d Dept 2006]).

"

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The Delay Seems Not To Have Mattered in Legal Malpractice

Contrary to the general view of how cases are decided in legal malpractice, the focus is almost always on the underlying case, or the "but for" question. Pannone v Silberstein  2014 NY Slip Op 03944  Decided on June 3, 2014  Appellate Division, First Department is no exception.  Was the Article 78 actually filed on time?  No.  Does that make a good legal malpractice case?  No.

"Plaintiff retained defendants to represent him in an article 78 proceeding that was brought to challenge the termination of his employment as a police officer. The determination followed a disciplinary hearing that was conducted by the Police Department of the City of New York. Plaintiff appeared at the hearing with counsel other than defendants. The events that gave rise to the disciplinary proceeding began with plaintiff's unauthorized absence from his home while on sick report on July 22, 1998. The decision to terminate plaintiff's employment was based on a finding that he had made false statements regarding his whereabouts to an investigating officer during a "GO-15" interview that was conducted on July 30, 1998 [FN1]. At the hearing, plaintiff admitted that he knew he was required to remain at his residence while on sick report and that he gave a false account of the reason for his absence at the GO-15 interview.

While represented by defendants, plaintiff commenced the article 78 proceeding, which was transferred to this Court pursuant to CPLR 7804(g) on June 27, 2000. It was alleged in the article 78 petition that the penalty of dismissal was excessive and an abuse of discretion. The instant action arises out of this Court's dismissal of the article 78 proceeding upon defendants' failure to timely perfect on behalf of plaintiff [FN2]. To recover damages for legal malpractice, a [*2]plaintiff must demonstrate that the attorney defendant " 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" (Rudolph v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]). "To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer's negligence" (id.). The court below granted defendants' motions for summary judgment, finding the "but for" element lacking because plaintiff would not have prevailed in the underlying article 78 proceeding. We agree.

The giving of false statements in the course of an official investigation has been upheld as a ground for dismissal from municipal employment (see Matter of Duncan v Kelly, 9 Misc 3d 1115[A], 2005 NY Slip Op 51558[U]; [Sup Ct, NY County 2005]; [also involved a GO-15 interview], affd 43 AD3d 297 [1st Dept 2007], affd 9 NY3d 1024 [2008]; see also Matter of Loscuito v Scoppetta, 50 AD3d 905 [2d Dept 2008], lv denied 13 NY3d 716 [2010]). There is no merit to plaintiff's argument that the state of the law in 2000, when the article 78 proceeding was brought, would have dictated a different result (see e.g. Matter of Swinton v Safir, 93 NY2d 758, 763 [1999]; [dishonest statements to police department investigators constituted an independent basis for dismissal])."

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Long Running Patent Legal Malpractice Case Settled, Attorney a Casualty

One of the more interesting legal malpractice cases in the patent area has been the Cold Spring Harbor Laboratory v. Ropes & Gray case.  Cold Spring announced the settlement today which ended a cross-state litigation.  It started in the Eastern District, and was transferred to Massachussets, then dismissed in US District Court, District of Massachusetts  there on jurisdictional grounds.  Revived in state court, it ended in a settlement today.

One interesting casualty was the attorney who wrote the patent application.  Ross Todd of the New York Law Journal reports that Matthew Vincent, the partner who worked on the patent application, had his own bad outcome.

"Vincent was dismissed from Ropes in 2009 after the firm discovered that a patent database company he secretly owned billed the firm and its clients more than $730,000. He resigned from the Massachusetts bar in 2009 while disciplinary charges were pending against him. It was not immediately clear Monday where he is working now. "

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Badly Pled Legal Malpractice Complaint Dismissed

Norwich, NY:  It is ironic when a legal malpractice complaint is dismissed for technical reasons, and worse when it makes claims that are never compensible.  Nevertheless, in Kreamer v Town of Oxford   2012 NY Slip Op 04445 [96 AD3d 1128]   June 7, 2012  Appellate Division, Third Department  that's exactly what happened.

"Defendant Roger Monaco (hereinafter defendant) was the attorney who represented plaintiffs at the closing when they purchased that property. Defendant moved to dismiss the complaint against him.[FN*] Plaintiffs [*2]cross-moved to find defendant in default and for summary judgment based on that default. Supreme Court granted defendant's motion and denied the cross motion. Plaintiffs appeal.

Plaintiffs failed to state a cause of action against defendant. The complaint does not list legal malpractice as a separate cause of action (see CLPR 3014), and all of the allegations concerning defendant are contained in the "statement of facts" portion of the complaint rather than under a specified cause of action. Even accepting the allegations as true and liberally construing the complaint to be alleging legal malpractice against defendant, the allegations are insufficient to make out a prima facie case. An action for legal malpractice requires proof that the attorney failed to exercise the reasonable skill and knowledge ordinarily possessed by a member of the legal profession, that this negligence was the proximate cause of the client's loss or injury, and that the client sustained actual damages (see M & R Ginsburg, LLC v Segal, Goldman, Mazzotta & Siegel, P.C., 90 AD3d 1208, 1208-1209 [2011]). Plaintiffs allege that defendant knew or should have known of the Town's zoning ordinances that could affect plaintiffs' rights as landowners, but failed to advise them of those rights. They further allege that defendant's actions inflicted emotional distress and caused them to expend money to save their house. These allegations do not set out the standard of skill required of an attorney or state that defendant's actions fell below that skill level (see Leder v Spiegel, 9 NY3d 836, 837 [2007], cert denied 552 US 1257 [2008]; compare Canavan v Steenburg, 170 AD2d 858, 859 [1991]; see also Kolev and Collins, The Importance of Due Diligence: Real Estate Transactions in a Complex Land Use World, 84 NY St BJ 24 [Mar./Apr. 2012]). Thus, defendant was entitled to have the complaint against him dismissed."

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Long Intertwined Relationship leads to Death and Non-suit

Attorney represents real estate corporation, and represents it, makes loans to it, and in intimately involved for a number of years.  Attorney dies.  Litigation ensues.

Cohen v Gateway Bldrs. Realty, Inc.   2014 NY Slip Op 50832(U)  Decided on May 27, 2014
Supreme Court, Kings County  Demarest, J. is at base, a very sad story. 

"It is undisputed that prior to his death in September 2009, Malcolm Cohen ("Cohen") acted as attorney for Gateway Builders Realty, Inc. ("Gateway"). According to defendants, Gateway retained Cohen on August 16, 2005 to provide legal services in connection with the purchase and financing of property located at 142 22nd Street, Brooklyn, New York (the "Property"). Over the next four years, Cohen represented Gateway in further refinancing transactions involving the Property, whereby Gateway would obtain a loan from a new lender and pay off its existing loan. It appears that Gateway obtained financing from at least four commercial lenders. During the course of his representation, Cohen also made a number of loans to Gateway.

On or about September 1, 2009, the loans from Cohen to Gateway were amended, restated, and consolidated into one debt totaling $325,000, pursuant to a new note and agreement (the "Consolidation Note" and the "Consolidation Agreement", respectively). In support of her motion, plaintiff submits the Consolidation Note, which reflects the consolidation of two prior notes given by Gateway to Cohen, dated November 8, 2006, and October 1, 2008, each for $100,000, with an additional loan of $125,000 from Cohen to Gateway. The Consolidated Note is secured by a mortgage on the Property and is guaranteed by defendant Yildirim, who is Gateway's principal.

The Lawyer's Code of Professional Responsibility, DR5-104(A),[FN2] in effect at the time, prohibited an attorney from entering into a business transaction with a client without making certain disclosures and obtaining written consent from that client, as Cohen is accused of doing. While a violation of the Code of Professional Responsibility does not alone give rise to a private cause of action (see DeStaso v Condon Resnick, LLP, 90 AD3d 809, 814 [2d Dept 2011]), defendants allege that Cohen's self-dealing gives rise to a breach of fiduciary duty claim. "In order to establish a breach of fiduciary duty, a plaintiff must prove the existence of a fiduciary relationship, misconduct by the defendant, and damages that were directly caused by the defendant's misconduct" (Daly v Kochanowicz, 67 AD3d 78 [2d Dept 2009];(quoting Kurtzman v [*3]Berstol, 40 AD3d 588, 590 [2d Dept 2007]). It is well established that an attorney owes his client a fiduciary duty (see Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 9 [1st Dept 2008]). Defendants complain that Cohen's inclusion of the prepayment penalties and high interest rates, and his inappropriately charging legal fees for services "below the standard of care" from 2005 through 2009, constituted self-interest in lending money to Gateway. Plaintiff argues that defendants' third counterclaim for breach of fiduciary duty should be dismissed as duplicative of the two legal malpractice counterclaims, which are also redundant of each other. As defendants' third counterclaim contains the same allegations of fact and seeks the same relief as its first two counterclaims, it is dismissed as redundant (see Nevelson v Carro, 290 AD2d 399, 400 [1st Dept 2002]; see also Murray Hill Investments v Parker Chapin Flattau & Klimpl, LLP, 305 AD2d 228, 229 [1st Dept 2003]).

Plaintiff argues that the first two counterclaims are indeed time barred because they rest upon allegations about transactions that are separate and distinct from the debt involved in the instant action. Defendants' counterclaims allege malpractice relating to a loan made by Silver Hill Financial ("Silver Hill") to Gateway on February 27, 2008, where defendants' claim that Cohen caused Gateway to enter into a loan agreement with a large prepayment penalty contrary to defendants' express wishes. Plaintiff asserts that Cohen's representation of Gateway regarding the loan from Silver Hill is a separate transaction, unrelated to the Consolidation Agreement, which was entered into on September 1, 2009, eighteen months after the Silver Hill transaction. Defendants' position is that their counterclaims involve Cohen's continuous legal representation of Gateway and Yildirim.

The court agrees with plaintiff that the Silver Hill transaction is a separate transaction and occurrence from the debt upon which plaintiff is suing. Therefore, defendants' counterclaims alleging malpractice in Cohen's representation of Gateway in the February 27, 2008 loan from Silver Hill to Gateway are time-barred. Moreover, it is noted that, based upon the documentary evidence of the loan documents, defendants' claims appear to be without merit in that all of the mortgages signed by Gateway prior to the Silver Hill transaction did include prepayment penalties. The remaining allegations contained in defendants' first counterclaim also ambiguously refer to separate transactions which apparently all occurred prior to the 2008 Silver Hill loan and are, in any event, entirely speculative. The first counterclaim is therefore dismissed."

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It's Almost Always the Underlying Case

UTICA:    The battle in legal malpractice cases almost always centers on the question of "but for", that hypothetical comparison of the actual outcome to the ideal outcome, had there been no malpractice. Dischiavi v Calli  2013 NY Slip Op 07289 [111 AD3d 1258]  November 8, 2013
Appellate Division, Fourth Department  is a prime example.  Sure, the attorneys told the client that an expert physician was examining the client, when it was really an attorney, and sure the attorneys told the client that a well experienced physician was reviewing the records when it was really a veterinarian, but so what?  Could he have won if they did a good job is the real question.

"Memorandum: Plaintiffs commenced this action seeking damages for, inter alia, breach of contract, legal malpractice and fraud, alleging, among other things, that defendants failed to commence timely legal actions to recover damages arising from injuries sustained by Gary M. Dischiavi (plaintiff). Plaintiffs allege in their complaint that plaintiff was injured as the result of an accident that occurred while he was on duty as a City of Utica police officer in 1991, and that he was further injured as a result of his ensuing medical treatment. Although plaintiffs retained defendant law firm of Calli, Kowalczyk, Tolles, Deery and Soja (CKTDS) to represent them with respect to possible claims arising from those injuries, no action was ever instituted. Plaintiffs further allege that defendants purported to have plaintiff examined by an expert physician but had a lawyer examine him instead, purported to have other expert physicians review plaintiff's medical records but had a veterinarian perform that review, misrepresented that they had commenced a personal injury action on plaintiffs' behalf, and created a fake settlement agreement for that "action." This case was previously before us on appeal, and we determined, inter alia, that Supreme Court erred in granting the motions and cross motion of various defendants for summary judgment dismissing the complaint in its entirety against them (Dischiavi v Calli [appeal No. 2], 68 AD3d 1691, 1692-1694 [2009]).

Defendants Andrew S. Kowalczyk, Joseph Stephen Deery, Jr., and CKTDS (collectively, CKTDS defendants), along with defendant William S. Calli, Jr. (Calli, Jr.), as administrator C.T.A. of the estate of former defendant William S. Calli, Sr., contend that the court erred in denying their motions insofar as they concern the underlying medical malpractice claim. Specifically, the CKTDS defendants and Calli, Jr., contend that the underlying medical malpractice claim lacks merit, and thus that plaintiffs could not recover damages based on the failure of those defendants to commence a timely action based on that claim. We conclude, however, that the court properly denied the motions to that extent inasmuch as the CKTDS defendants and Calli, Jr. failed to meet their initial burden of establishing that plaintiffs' medical malpractice claim lacks merit (see generally Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Welch v State of New York, 105 AD3d 1450, 1451 [2013]). In any event, plaintiffs raised a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562 [1980]).

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Why Do People Bother?

A criticism that arises regularly, and which seems embedded in the judiciary's imagination is that the majority of legal malpractice cases are "sour grapes", "Monday morning quarterbacking" and "reflexive counterclaims."  While we hotly dispute these terms, some cases do prove the generalization true.  Liddle & Robinson, LLP v Byrne  2014 NY Slip Op 31328(U)  May 21, 2014
Supreme Court, New York County  Docket Number: 157825/2013  Judge: Eileen A. Rakower is one such example. 

"This is an action for unpaid legal fees incurred by Plaintiff, Liddle & Robinson, LLP ("L&R") in representing Defendant, Brendan P. Byrne ("Byrne").  The Complaint alleges that Byrne breached the parties' Retainer Agreement by failing to pay L&R the outstanding amounts due for legal fees and disbursement  expenses. The Complaint also asserts claims for quantum meruit and account stated.

Presently before the Court is a motion by L&R, Batson, and Feldstein to dismiss Byrne's Counterclaims and Cross Claims asserted against them, pursuant  to CPLR § 321 l(a)(l) and (a)(7). Plaintiff submits the attorney affirmation of  David I. Greenberger, a Partner at L&R. Annexed to Greenberger's affirmation,  among other exhibits, is a copy of the parties' Retainer Agreement, L&R's invoices, and an Order granting L&R's motion to withdraw entered on March 4,
2013.     Byrne does not oppose.

Byrne's first Counterclaim against L&R and first Cross-Claim against Batson and Feldstein are for fraud, based on the following identical allegations: 

6. BYRNE was explicit that he was not in a financial position and that he was not capable nor could he agree to pay for fees in excess of his retainer with the firm.
7. JAMES BATSON explained to BYRNE that it would be a difficult process for attorneys to withdraw from a case, hence the large upfront retainer when taking on the case. Therefore, Batson advised that the firm continue to represent the BYRNE. BATSON continued to make representations that if defendants are unable to pay the firm would not pursue defendants as judges generally frown upon lawyers and firms suing their clients and assured BYRNE that the firm "has bigger fish
to fry" than to chase small clients. It is evident in this action that these representations were fraudulent and misleading and subsequent invoices were fraudulent as well.

9. The Statements made by James Batson, with David Feldstein in regards to he [sic] and the firm does not pursue clients for billing hours over retainer which they are not capable of paying.
10. L&R has fraudulently misrepresented facts to induce Defendant to
continue with the action, which the firm was originally retained.

Here, Byrne's second Counterclaim and second Cross-claim fail to make out a claim for legal malpractice against L&R or Batson and Feldstein. These claims fail to allege any allegations concerning how L&R, Batson, and Feldstein were specifically negligent, and how that alleged negligence was the proximate cause of the loss allegedly sustained.


Wherefore, it is hereby,
ORDERED that the motion is granted without opposition, and the counterclaims asserted by Defendant, Brendan P. Byrne, against plaintiff, Liddle & Robinson, LLP, and the cross-claims asserted by Defendant, Brendan P. Byrne, against James A. Batson and David H. Feldstein are dismissed in their entirety"

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They Sued the Company's Attorney and Legal Malpractice Case is Dismissed

Client is involved in a fraudulent transaction, or even in an investment gone sour, and seeks to get the investment money back.  Client looks to see who might be responsible, and attorneys are always a good target.  This sometimes leads to dismissals of legal malpractice cases on standing, privity and statute of limitations. 

Goldin v Tag Virgin Is. Inc2014 NY Slip Op 31308(U)  May 20, 2014  Supreme Court, New York County  Docket Number: 651021/2013  Judge: Eileen Bransten is such an example.  "In this action, Plaintiffs Steven Goldin and Rochelle Goldin bring claims on behalf  two accounts managed by Defendant TAG Virgin Islands, Inc. ("TAG")-the Bernice  Goldin IRA and the Paul Goldin Marital Trust B ("Trust") (collectively, the "accounts").  Relevant to the instant motion, Plaintiffs assert a variety of tort and contract claims  related to the accounts against Defendant TAG, an investment advisory group, and its two owners, Defendants James S. Tagliaferri and Patricia Cornell. In addition, Plaintiffs  bring claims against TAG's legal counsel, Barry Feiner.

Defendant Feiner was TAG1s legal counsel, and according to Plaintiffs, "mostly drafted" certain of the convertible note instruments through which Plaintiffs' funds were transferred to TAG-related companies. In addition, Plaintiffs contend that Feiner was responsible for wiring Plaintiffs' funds to the TAG-affiliated companies, including the IEAH Defendants. These allegations are all pleaded "on information and belief." See Compl. para. 81. Based on these allegations, Plaintiffs assert four claims against Feiner - legal malpractice, aiding and abetting breach of fiduciary duty, unjust enrichment, and fraud. Feiner now seeks dismissal of each of these claims pursuant to CPLR 3211 l(a)(5) and (a)(7). In addition, Feiner contends that Plaintiffs' aiding and abetting and fraud claims are not pleaded with the requisite specificity under CPLR 3016(b). Each of Feiner
arguments will be examined in turn below.

Defendant Feiner first objects to Plaintiffs' legal malpractice claim, contending that is time-barred. "In moving to dismiss a cause of action pursuant to CPLR 321 l(a)(S) as barred by the applicable statute of limitations, a defendant bears the initial burden of demonstrating, prima facie, that the time within which to commence the action has expired." City of Yonkers v. 58A JVD Indus., Ltd., 115 A.D.3d 635, 635 (2d Dept 2014)  "The burden then shifts to the plaintiff to raise an issue of fact as to whether the statute of limitations was tolled or was otherwise inapplicable, or whether it actually commenced the action within the applicable limitations period." Id.

Plaintiffs do not dispute that the legal malpractice cause of action accrued as late as June 2008. Instead, they contend that the statute of limitations should be tolled under the continuous representation doctrine, which provides for tolling "while representation on the same matter in which the malpractice is alleged is ongoing." Waggoner, 68 A.D.3d at 7. Even assuming, arguendo, that Feiner represented Plaintiffs in the first place when the notes were drafted, Plaintiffs provide no support for the proposition that he continued to represent them in the same matter, i.e. during the pendency of the notes through maturation. "The [continuous representation] doctrine is rooted in recognition that a client cannot be expected to jeopardize a pending case or relationship with an attorney during the period that the attorney continues to handle the case." Id. Here, however, there is no allegation that Feiner continued handling the notes through maturation. Accordingly, the continuous representation doctrine does not apply under the facts as pleaded by Plaintiffs in their Complaint, and the legal malpractice claim is dismissed as untimely"

Even if timely brought, Plaintiffs' legal malpractice claim nonetheless would be dismissed for failure to state a cause of action. 'A cause for legal malpractice cannot be stated in the absence of an attorney-client relationship." Waggoner, 68 A.D.3d at 5. However, Plaintiffs here fail to plead that they had such a relationship with Defendant Feiner. As discussed above, Plaintiffs' legal malpractice claim stems from Feiner's representation of TAG in drafting the convertible notes. Since Feiner did not represent Plaintiffs and was performing services only on behalf of TAG, no attorney-client relationship has been stated. See Federal Ins. Co. v. North American Specialty Ins. Co., 47 A.D.3d 52, 59 (1st Dep't 2007) ("New York courts impose a strict privity requirement
to claims of legal malpractice; an attorney is not liable to a third party for negligence in performing services on behalf of his client.").

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The Collateral Estoppel Trap in Legal Malpractice

A legal malpractice case is brought, and swiftly dismissed.  In Cie Sharp v Krishman Chittur  2014 NY Slip Op 31303(U)  May 13, 2014  Supreme Court, New York County  Docket Number: 155098/13  Judge: Joan A. Madden the reason is that the attorney was awarded a fee for the same work.  The two cannot co-exist.

"In this action for legal malpractice, plaintiffs prose seek $6,000,000 in compensatory, punitive, consequential and treble damages. In lieu of answering, defendants prose move to dismiss the complaint on various grounds. Plaintiff Cie Sharp opposes the motion and crossmoves for a default judgment or summary judgment against defendants. Defendants motion to dismiss is granted, as plaintiffs' legal n:malpractice claims are barred by the order rendered in the underlying action permitting defendants .to withdraw and recognizing their claim to a charging lien on account of their services in that action. See Molinaro v. Bedke, 281 AD2d 242 ( 1st Dept 2001 ).

It has long been the law in New York that a judicial determination fixing the value of a professionals services necessarily decides there was no malpractice. See Blair v. Bartlett, 75 NY 150 (1878). Thus, a plaintiffs claim for legal malpractice is barred by the attorney's successful prosecution of a lien proceeding to recover fees for the same legal services that plaintiff alleges were negligently performed. See Lusk v. Weinstein, 85 AD3d 445 (1st Dept), Iv app den 17 NY3d 709 (2011); Kinberg V. Garr, 28 AD3d 245 (I st Dept 2006); Coburn V. Robson & Miller, LLP, 13 AD3d 323 (I st Dept 2004); Smira v. Roper, Barandes & Fertel, LLP, 302 AD2d 305 (1st Dept 2003); Molinaro v. Bedke, 281AD2d242 (1st Dept 2001); Chalpin v. Caro, 265 AD2d 155 (1st Dept 1999); Koppelman v. Liddle, O'Connor, Finkelstein & Robinson, 246 AD2d 365, 366 (1st  Dept 1998); Summit Solomon & Feldesman v. Matalon, 216 AD2d 91 (1st Dept), Iv app den, 86 NY2d 711 (1995); John Grace & Co., Inc. v. Tunstead, Schechter & Torre, 186 AD2d 15, 19 (1st Dept 1992). Even if plaintiff did not raise any issue of malpractice in the proceeding to determine the attorney's lien, the cases cited above uniformly hold that a court's determination fixing the value of an attorney's professional services, necessarily decides there was no malpractice, even though the issue was not specifically raised. See Blair v. Bartlett, supra; Coburn v. Robson & Miller, LLP, supra; Chalpin v. Caro, supra; Koppelman v. Liddle, O'Connor, Finkelstein & Robinson, supra; Summit Solomon & Feldesman & Matalon, supra; John Grace & Co, Inc. v. Tunstead, Schechter & Torre, supra.."

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No Expert - No Win!

Troy:   Just like Jack Hall Plumbing & Heating, Inc. v Duffy, 100 AD3d 1082, 1084 [2012]) defendant moved for summary judgment without an expert.  Just like Jack Hall, the motion fails.Land Man Realty, Inc. v Faraone   2012 NY Slip Op 08218 [100 AD3d 1336]  November 29, 2012
Appellate Division, Third Department. 

"Thereafter, plaintiff commenced this action against defendants, claiming that it was the procuring cause of the sale of the property and is entitled to a 10% commission pursuant to an alleged agreement with defendants. As is relevant herein, defendants, in turn, commenced a third-party action against third-party defendant, Robert W. Pulsifer, an attorney who represented defendants in the real estate transaction. Defendants claim that Pulsifer (1) failed to respond or take any action regarding plaintiff's letters asserting a claim for a commission, and (2) negotiated the contract for the sale of property to CDP in a manner that did not sufficiently protect defendants against plaintiff's commission claim. Defendants moved for summary judgment dismissing the complaint and Pulsifer moved for summary judgment dismissing the amended third-party complaint. Supreme Court denied both motions. Pulsifer now appeals.

We affirm. A legal malpractice action requires a showing that an attorney "failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession [and] the attorney's breach of this professional duty caused the plaintiff's actual damages" (McCoy v Feinman, 99 NY2d 295, 301-302 [2002] [internal quotation marks and citations omitted]; see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; M & R Ginsburg, LLC v Segal, Goldman, Mazzotta & Siegel, P.C., 90 AD3d 1208, 1208-1209 [2011]). Here, although Pulsifer himself avers that based upon his legal experience he was not negligent in the advice and representation he provided to defendants, he failed to submit adequate proof establishing the applicable standard of care and whether he breached that standard. As Pulsifer failed to meet his initial legal burden of establishing his entitlement to summary judgment as a matter of law (see Jack Hall Plumbing & Heating, Inc. v Duffy, 100 AD3d 1082, 1084 [2012]), his summary judgment motion was properly denied."

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Early Infighting in a Legal Malpractice Case

When parties represent themselves, a skewing of the normal motion practice is often seen.  In general, motions over service of process, and whether a party may practice law in New York are rarely seen.  Here, in Reem Contr. v Altschul & Altschul  2014 NY Slip Op 03638  Decided on May 20, 2014  Appellate Division, First Department we see squabbles over whether plaintiff's attorney may practice law, and whether defendants were served with the summons.

"Contrary to defendants' contention, plaintiffs' counsel, a New Jersey firm, need not obtain authorization to do business in New York pursuant to § 1301(a), § 1528 or other provisions of the Business Corporation Law to commence an action in New York courts. While any purported noncompliance with those provisions might have other consequences, it does not affect the ability of the firm's attorneys to practice in New York and thus to commence these proceedings representatively. Similarly, we reject defendant's contention that plaintiffs' counsel, in seeking attorneys' fees, impermissibly maintained the action on its own behalf, rather than in a representative capacity (see Business Corporation Law § 1312). The action was brought in plaintiffs' name only, and any award of attorneys' fees depends on the resolution of the underlying legal malpractice cause of action brought in plaintiffs' name.

Plaintiffs' affidavits of service on all defendants constitute prima facie evidence of proper service (Chinese Consol. Benevolent Assn. v Tsang, 254 AD2d 222, 223 [1st Dept 1998]). Defendant Mark Altschul's conclusory denial that he was served as alleged in the affidavit of service does not suffice to raise an issue of fact to be resolved at a traverse hearing (see e.g. id.; Public Adm'r of County of N.Y. v Markowitz, 163 AD2d 100 [1st Dept 1990]).

To the extent defendants argue that service was incomplete due to the belated filing of proof of service, the argument is unavailing, since failure to file proof of service within the 20-day time period for answering the complaint is not a jurisdictional defect, but a "mere irregularity," and, as plaintiffs acknowledge, service is deemed complete only 10 days after the [*2]late filing (see Weininger v Sassower, 204 AD2d 715, 716 [2d Dept 1994]; see also Nardi v Hirsh, 245 AD2d 205 [1st Dept 1997]). Any purported defects in the form of the affidavit of service, including the sufficiency of the signature, are mere irregularities, not jurisdictional defects that would warrant dismissal of the complaint (see Bell v Bell, Kalnick, Klee & Green, 246 AD2d 442, 443 [1st Dept 1998]).

"

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Attorney Collection Cases in Small Claims Court

Riverhead:  A huge component of litigation concerning attorneys as parties is for fee collection work.  Often, an attorney will sue in Small Claims Court for a fee.  Sometimes, the attorney will be sued in Small Claims Court and will Counterclaim for fees.  What happens when the fee is in excess of $ 5,000.  Often, the attorney simply lowers the claim to less than $ 5,000 and continues in Small Claims Court, happy as a clam.

No more.  Conway v Dejesu Maio & Assoc.  2014 NY Slip Op 24127  Decided on May 19, 2014
District Court Of Suffolk County, Third District  Hackeling, J..    "Mona Conway, an attorney and the above captioned plaintiff, commenced this small claims action seeking to recover $5,000.00 for independent contractor legal services rendered to the defendant law firm Dejesu Maio and Associates. The defendant counterclaimed for $5,000.00 asserting a legal malpractice cause of action. The trial commenced on May 1, 2014 and the defendant's trial counsel moved for a directed verdict at the close of the plaintiff's case asserting a subject matter jurisdictional defense in that plaintiff's claims exceeded the $5,000.00 small claims limit. The Court reserved decision and adjourned the trial.

The undisputed facts are that both parties are admitted attorneys and both sides have retained counsel for the purpose of trial. No pre-trial discovery was undertaken as is usual in a small claims case. The plaintiff's testimony established that her breach of contract cause of action consists of a $5,341.00 component representing $100 per hour compensation for

 

of-counsel services rendered in a Federal Court and a claim of entitlement to recover undetermined contingency fees in two New York State Court personal injury actions.
The jurisdictional issue presented for disposition is whether a plaintiff can waive any recovery over $5,000.00 so as to fall within the $5,000.00 small claims jurisdictional limit?

 

The Law
Section 1802 of the Uniform District Court Act (hereafter "UDCA") establishes a jurisdictional limit for a small claims action when it provides "the term small claims . . . shall mean and include any cause of action for money only not in excess of $5,000.00 exclusive of interest and costs . . . " Emphasis added.   Section 202 of the UDCA establishes the District Court's general jurisdiction when it provides: ":The Court shall have jurisdiction of actions and proceedings . . . where the amount sought to be recovered . . . does not exceed $15,000.00. Emphasis added.

It is clear that the legislature envisioned and authorized plaintiffs to obtain District Court jurisdiction by simply reducing "the amount sought to be recovered." As this language is omitted from Sec. 1802 the Court must infer that this waiver doctrine does not apply to small claims cases. See, NY Statutes §§ 236,240. In its stead the words "cause of action" is substituted into Sec. 1802. As a matter of statutory construction, when the legislature uses different terms in various parts of the statute, it is assumed that a distinction is intended. Doyle v. Gordon, 158 NY2d 248 (Sp. Ct. NY Co. 1954). The Court also notes that "causes of action" may not be "split" to obtain small claims jurisdiction. See A & j Enterprise Solutions, Inc. v. B.A.O. Tech, 11 Misc 3d 173 (Nas. Dist. Ct. 2005). As such it is logical to conclude that a "cause of action" must be valued "as a whole" in determining whether it is appropriate for small claims jurisdiction."

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Fundamentals Are Everything in Legal Malpractice

Glens Falls:    In this case two fundamental mistakes plague the attorney.  The first got him into the legal malpractice case, and the second kept him from getting out.  A relatively straightforward employment agreement granted the manager the right to a "hearing" of sorts.  The attorney participated in a termination that did away with the "hearing."  When the attorney was sued, he failed to offer the affidavit of an expert and so his summary judgment was denied.  Both are fundamental issues that should not be the least bit controversial.

Jack Hall Plumbing & Heating, Inc. v Duffy  2012 NY Slip Op 07249 [100 AD3d 1082]  November 1, 2012  Appellate Division, Third Department tells us that "Plaintiff, a corporation owned by John Hall Sr. and his two sons, entered into an employment agreement with its chief operating officer, Russell Scudder. The agreement provided that, prior to its expiration, plaintiff could terminate Scudder for cause by presenting written charges setting forth the basis for the termination and then giving Scudder an opportunity to respond to the charges in writing and to request that plaintiff's president review his response. To carry out the termination, the president was then required to obtain the consent of the board of directors and to comply with any guidelines set forth in plaintiff's bylaws.[FN*]

Soon after entering into the agreement, the relationship between the Halls and Scudder [*2]deteriorated to the point that Hall became concerned that he and his sons were in danger of losing the business due to Scudder's mismanagement. Accordingly, Hall sought legal advice from defendant H. Wayne Judge concerning how to terminate Scudder in compliance with the employment agreement and in view of the urgency caused by the perceived danger to the business. After their meeting, Judge drafted a letter for Hall to give to Scudder. The letter outlined the reasons for Scudder's termination and informed him that it was effective immediately. Hall and his sons then unanimously voted to terminate Scudder without giving Scudder notice and an opportunity to respond, after which Hall gave Scudder the letter drafted by Judge. Scudder responded by commencing an action against plaintiff for breach of the employment agreement. Although plaintiff, represented by Judge, prevailed at the trial of that action, we reversed and found that plaintiff failed to comply with the unambiguous terms of the employment agreement by terminating Scudder without any notice or opportunity to respond (Scudder v Jack Hall Plumbing & Heating, 302 AD2d 848 [2003]). Plaintiff then commenced this action alleging that defendants committed legal malpractice by negligently advising plaintiff in connection with Scudder's termination. After joinder of issue and discovery, defendants moved for summary judgment dismissing plaintiff's complaint. Finding that plaintiff's opposing papers were inadequate to raise an issue of fact, Supreme Court granted the motion."

"Plaintiff contends on appeal that defendants failed to meet their initial burden of presenting evidence in admissible form establishing that they had exercised the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession in discharging their obligations to plaintiff (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Geraci v Munnelly, 85 AD3d 1361, 1362 [2011]; Adamski v Lama, 56 AD3d 1071, 1072 [2008]). This issue of the adequacy of the professional services provided here requires a professional or expert opinion to define the standard of professional care and skill owed to plaintiff and to establish whether the attorney's conduct complied with that standard (see Tabner v Drake, 9 AD3d 606, 610 [2004]; Ehlinger v Ruberti, Girvin & Ferlazzo, 304 AD2d 925, 926 [2003]; Greene v Payne, Wood & Littlejohn, 197 AD2d 664, 666 [1993]). Plaintiff argues that the affirmation by Judge submitted in support of defendants' motion for summary judgment fails to establish his prima facie compliance with the standard of care. We must agree."

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Terminated For Cause or Not?

ITHACA:     There are two rules on how to divide contingent attorney fees.  One rule applies when the dispute is between the client and the attorney,and a second rule, which is itself more complex, applies when the dispute is between two attorneys.  Here in Wiggins v Kopko  2013 NY Slip Op 02312 [105 AD3d 1132]   April 4, 2013  Appellate Division, Third Department we the full panoply of human interaction...attorneys meeting each other, liking eachother and then falling out of love.

"In October 2004, a client retained the law firm of Wiggins & Masson, LLP, in which plaintiff was a partner, to represent him in a legal malpractice action on a contingency fee basis. Plaintiff thereafter retained defendant Edward E. Kopko to work on this action. Kopko became the attorney with primary responsibility for the action, and eventually entered into a partnership agreement with plaintiff, forming defendant Wiggins & Kopko, LLP (hereinafter referred to as the partnership).[FN1] Disagreements later arose and, in May 2010, plaintiff commenced this action seeking a judgment dissolving the partnership and compelling Kopko to pay certain legal fees.

Upon learning that Kopko had drafted a letter to the client advising him of the partnership's dissolution and soliciting him as a personal client, plaintiff telephoned the client, [*2]discussed the deteriorating relationship between himself and Kopko and warned the client that fee issues might result if he signed a retainer agreement with Kopko. Angered by this call, the client wrote a letter stating that he was discharging plaintiff and the partnership and retaining Kopko, followed—apparently after consultation with Kopko—by a second letter stating that he had discharged plaintiff, the partnership and Wiggins & Masson "for cause." Plaintiff thereafter executed a consent to withdraw himself, the partnership and Wiggins & Masson from the malpractice action and to substitute Kopko. The action was later tried before a jury, resulting in a substantial award."

"We therefore agree with Supreme Court that plaintiff is entitled to share in the fee obtained in the malpractice action on the partnership's behalf. However, we disagree with the further conclusion that the amount should be determined on the basis of quantum meruit. As against a client, a discharged attorney is entitled to a fee determined on a quantum meruit basis at the time of discharge, but different rules apply where, as here, the fee dispute is between attorneys (see Lai Ling Cheng v Modansky Leasing Co., 73 NY2d 454, 457-458 [1989]). In such circumstances, an outgoing attorney may choose to receive immediate compensation on a quantum meruit basis at discharge or to receive a share of a contingent fee based on a proportionate share of the work he or she performed; if no such election is made at the time of discharge, the attorney is presumed to have elected a contingent fee (see Matter of Cohen v Grainger, Tesoriero & Bell, 81 NY2d 655, 658-660 [1993]; Matter of Benjamin E. Setareh, P.C. v Cammarasana & Bilello Esqs., 35 AD3d 600, 601 [2006]; Connelly v Motor Veh. Acc. Indem. Corp., 292 AD2d 332, 333 [2002]; see also Buchta v Union-Endicott Cent. School Dist., 296 AD2d 688, 689 [2002]). Here, Supreme Court found that plaintiff elected quantum meruit compensation in a July 2011 memorandum of law. Even assuming that an election could be made in this manner, it would have been untimely, as the discharge had occurred more than a year earlier. Nothing in the record reveals that an election as to payment of fees was made at or near the time of discharge. Accordingly, as counsel of record, the partnership is presumed to have elected a contingent fee computed according to the proportionate share of work that was performed on its behalf and that of its predecessor firms before the June 2010 substitution of Kopko, to be divided as appropriate between the partners (see Grant v Heit, 10 AD3d 539, 540 [2004], lv denied 4 NY3d 701 [2004]).

Finally, we reject Kopko's contention that plaintiff and the partnership waived a fee by failing to petition the court for a lien pursuant to Judiciary Law § 475. Such a lien attaches by operation of law for the attorney of record when an action is commenced, even if that attorney is no longer counsel of record upon the action's conclusion (see Klein v Eubank, 87 NY2d 459, 462-463 [1996]; Matter of Cohen v Grainger, Tesoriero & Bell, 81 NY2d at 657-658). An outgoing attorney's failure to seek statutory enforcement does not defeat his or her entitlement to [*4]a fee (see Lai Ling Cheng v Modansky Leasing Co., 73 NY2d at 458-459; Ruta & Soulios, LLP v Litman & Litman, P.C., 27 AD3d 236, 236 [2006])."

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Death and Taxes are Certain...The Future in General is Not

The Appellate Division looked over a Supreme Court decision dismissing a legal malpractice case.  The case alleged that the estate attorneys advised the executor to pay the estate taxes from decedent's estate rather than using an alternative method which would have saved plaintiff a specific amount of tax.  In Estate of Feder v Winne, Banta, Hetherington, Basralian & Kahn, P.C.
2014 NY Slip Op 03593  Decided on May 15, 2014 Appellate Division, First Department wrote:

"The motion court properly dismissed the legal malpractice claim. Plaintiff, the wife of decedent, failed to adequately allege that defendant acted negligently in advising her to pay the estate tax out of decedent's estate, rather than making a qualified terminable interest property (QTIP) election (see IRC § 2056[b][7]). Such a QTIP election would have deferred payment of any estate taxes until plaintiff's death, at which time they would be paid out of her estate. Defendant explained that while a QTIP election might have resulted in an immediate tax savings during plaintiff's lifetime, it could have left significantly less to the residuary beneficiaries of decedent's estate. Defendant's legal obligation was to the estate, not to plaintiff. Thus, as the motion court concluded, defendant selected one among several reasonable courses of action (see Rosner v Paley, 65 NY2d 736, 738 [1985]; Rodriguez v Lipsig, Shapey, Manus & Moverman, P.C., 81 AD3d 551, 552 [1st Dept 2011]). Indeed, another firm with whom plaintiff consulted stated that defendant's analysis was correct. To the extent plaintiff argues that defendant failed to consider other alternatives, such as gifts or other trusts, those options would have contradicted the decedent's apparent testamentary intent to retain control and distribute the remainder of his assets to his children upon plaintiff's death.

The court also correctly concluded that plaintiff failed to adequately allege that defendant's conduct proximately caused any ascertainable damages. Plaintiff's damages claim was based largely on speculation that the estate tax payment could have been avoided in the future, which, as plaintiff itself acknowledged in her motion papers, depended on too many [*2]uncertainties, including future tax laws, tax rates, and the future value of the trust property (see e.g. Brooks v Lewin, 21 AD3d 731, 734-735 [1st Dept 2005], lv denied 6 NY3d 713 [2006]).

"

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A Legal Malpractice Story Right Out of Grisham

There are several views of the legal malpractice world.  One (the most cynical) is that all legal malpractice cases are reflexive attempts to get out of paying attorney fees.  A second view is that legal malpractice is venomous hindsight and unfair to the hard working attorney.  A third view is that legal malpractice is a discipline arising from the thoughtful analysis of reasonable attorney conduct. 

Whatever your view, this attorney is extraordinary, and not in a good way.  Matter of Novins
2014 NY Slip Op 03465 Decided on May 13, 2014 Appellate Division, First Department Per Curiam.  Not only did Mr. Novins completely lack any sense of loyalty, he was awfully clumsy at the same time.

"In February 2006, respondent was hired by Ginarte O'Dwyer Gonzalez Gallardo & Winograd LLP (the Ginarte firm), where he was assigned to work on Bernardini v City of New York and Angel Villirrini [sic], a personal injury action filed in June 1994. While off duty, Bernardini, a New York City police officer, had been shot and wounded in a bar by Villarini, another off-duty police officer. Although the Ginarte firm served the City with the summons and complaint, it never served Villarini.

In March 2007, the City was granted summary judgment in the personal injury action on the ground that the City had not negligently supervised Villarini because it did not have notice of his dangerous propensities. This Court affirmed (45 AD3d 466, 466 [1st Dept 2007], lv denied 10 NY3d 702 [2008]).

On January 12, 2008, while the motion for leave to appeal to the Court of Appeals was pending, respondent and Bernardini met in a restaurant and signed a "Personal Services Agreement" (the Agreement) under which Bernardini agreed to "give" respondent 45% of any net recovery he received relating to the Villarini incident. This included the personal injury action and a legal malpractice claim to be brought against the Ginarte firm "for negligently failing to timely serve ... Villarini, ..., for neglecting to work on [the] case over the many years, for failing to take the deposition of ...Villarini, for having failed to obtain a copy of ... Villarini's .... Personnel File in a timely manner and for failing to bring a Motion ..., for spoliation of this key evidence." Although the Agreement, which respondent drafted, did not specify the services that he was to provide, respondent acknowledges that he agreed to serve as a witness for Bernardini in the malpractice action against his employer.

In May 2008, Bernardini commenced a malpractice action against the Ginarte firm and its principals. Between February and March 2009, respondent left a series of voice-mail messages for Bernardini, asking Bernardini to call him back. On April 28, 2009, respondent left Bernardini a message in which he referred to risking his neck by putting certain notes back into the personal injury action file which Bernardini would need for the malpractice action. In May 2009, respondent left a message stating that he would be leaving the Ginarte firm in 30 days and would be able to prove the malpractice and coverup. On May 28, 2009, respondent left a message [*3]complaining that he had called Bernardini about 30 times but received only one call back a few weeks earlier. Falsely stating that he had given up his job, respondent also said that he considered the Agreement to be in full force and effect and threatened to throw out all the evidence in his possession unless Bernardini called him back. Ten minutes later, respondent left another message stating he would take appropriate recourse to enforce the Agreement as soon as he left his firm.

In April or May 2010, during the course of discovery, the Ginarte firm learned of respondent's secret side agreement with Bernardini, but did not fire him. On or about August 17, 2010, the firm learned of the messages respondent had left on Bernardini's voice mail. On August 20, 2010, respondent was deposed in the malpractice action, at which time he retreated from his prior accusations of malpractice against the Ginarte firm. On or about August 26, 2010, Bernardini filed a disciplinary complaint against respondent. On or about August 31, 2010, the Ginarte firm fired respondent, and on September 7, 2010 they filed a disciplinary complaint against him.

Result?    " Accordingly, the Committee's motion should be granted, the Hearing Panel's findings of fact and conclusions of law sustaining charges one through four and six confirmed, and respondent suspended from the practice of law for a period of one year and until further order of this Court. "

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A Successful Litigation in Which Everyone Loses Money

It's not legal malpractice, says Justice Madden.  Her recitation of the litigation events after an airplane crash in Australia chronicles how victory turned into a financial drain for every party. 

Marshall v Fleming  2014 NY Slip Op 31222(U)  May 7, 2014  Supreme Court, New York County
Docket Number: 651067/13 Judge: Joan A. Madden is the story of a successful airplane crash litigation followed by procedural events that drained the settlement funds completely.

"Kreindler & Kreindler LLP, a New York law firm, devotes much of  its practice to representing plaintiffs in aviation death and  injury litigation. In 2002, Australian lawyers David Greenwell  ("Greenwell") and Michael Prescott ("Prescott") contacted the  Kreindler firm about potential U.S. lawsuits arising from the  deaths of various passengers killed in a Whyalla Airlines crash
off the coast of Australia on May 31, 2000. Kreindler emailed a  draft retainer form to Greenwell and Prescott setting forth the terms. Greenwell and Prescott shared the draft retainer with
other Australian attorneys, including Terrence Goldberg  ("Goldberg") of the Turner Freeman firm in Australia.

Plaintiffs Margaret and Kim, were the wife and son, respectively, of Neil Marshall ("Neil"), who was killed in the plane crash. On May 16, 2002, Margaret, as the executor and  personal representative of the estate of Neil, retained the  Kreindler firm to bring a wrongful death action against the
airline, in federal court in Pennsylvania. The retainer provided  for a contingent fee of 22.2%, and that Kreindler would advance  costs, to be reimbursed at the conclusion of the case.
Neil and Margaret were married, but legally separated in  June 1995, at which time Neil commenced a de facto spousal  relationship with Linda Carruthers ("Linda") in Australia. Under
Australian law, at the time of his death, Neil and Linda were  deemed de facto husband and wife. Margaret remained in Neil's will as the named estate executor. Linda, however, as a financially dependent de facto spouse, was a proper wrongful  death beneficiary under Australian law, as was Kim. "

"On behalf of the Marshalls, Kreindler commenced a wrongful death action against the aircraft manufacturers, in U.S. District  Court Middle District of Pennsylvania. In February 2003, the
Marshalls reached a settlement for a total sum of $481,250.00.  "

"In February 2009, the Marshalls filed an action for legal malpractice in Australia against eleven current and former members of the Kreindler firm. They alleged that Kreindler committed legal malpractice by requiring Margaret to obtain a court order on the distribution of the settlement funds, and that Kreindler thereby breached its fiduciary duty to Margaret and Kim, and was guilty of conspiracy to deprive them of the settlement proceeds. As damages, the Marshalls sought
reimbursement for the legal fees charged by Turner Freeman to obtain the distribution order·in Australia (AU $343,835.88), and the legal fees charged by Turner Freeman in the separate litigation against Linda's Australian counsel (AU $254,838.72). "

"Here, the Marshalls have chosen the streamlined procedure of a motion for summary judgment in lieu of complaint pursuant to CPLR 3213. Based on the undisputed record, plaintiffs have
sustained their burden on the motion. "

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Pro Se Claims in Legal Malpractice

Rochester:   Pro se claims in general are regarded with skepticism, and even more so in legal malpractice. The Bar (and judiciary's) take on legal malpractice cases in general is that they are reflex "dissatisfaction" cases, and are often meritless.  This applies with greater force to pro se cases, where the general thought is that plaintiff could not attract an attorney to prosecute the matter.  In Seubert v Marchioni  2013 NY Slip Op 08761 [112 AD3d 1370]  December 27, 2013
Appellate Division, Fourth Department  the Fourth Department takes a sly swipe at plaintiff.

"Memorandum: Plaintiffs commenced this legal malpractice action seeking damages based on defendants' representation of them in their purchase of a membership interest in a limited liability company. Defendants moved for summary judgment dismissing the complaint, and Supreme Court granted the motion. We affirm. In order to establish their entitlement to judgment as a matter of law, defendants had to present evidence in admissible form establishing that plaintiffs are "unable to prove at least one necessary element of the legal malpractice action" (Giardina v Lippes, 77 AD3d 1290, 1291 [2010], lv denied 16 NY3d 702 [2011]; see Ginther v Rosenhoch, 57 AD3d 1414, 1414-1415 [2008], lv denied 12 NY3d 707 [2009]), e.g., " 'that the defendant attorney failed to exercise that degree of care, skill, and diligence commonly possessed by a member of the legal community' " (Phillips v Moran & Kufta, P.C., 53 AD3d 1044, 1044-1045 [2008]; see generally McCoy v Feinman, 99 NY2d 295, 301 [2002]; Williams v Kublick, 302 AD2d 961, 961 [2003]). Here, defendants met their initial burden on the motion with respect to that element (see generally Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). Inasmuch as plaintiffs did not submit expert testimony or, indeed, any opposition to defendants' motion, they failed to raise an issue of fact concerning defendants' compliance with the applicable standard of care (see Merlin Biomed Asset Mgt., LLC v Wolf Block Schorr & Solis-Cohen LLP, 23 AD3d 243, 243 [2005]; see also Zeller v Copps, 294 AD2d 683, 684-685 [2002]). Plaintiffs' remaining contentions are raised for the first time on appeal and thus are not properly before us (see Ciesinski v Town of Aurora, 202 AD2d 984, 985 [1994]). Present—Smith, J.P., Fahey, Lindley, Valentino and Whalen, JJ.

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4th Department Rejects a Per Se Rule

Buffalo and Rochester:  When Plaintiff settles the underlying action, or fails to take an appeal on a dismissal, may he still commence a legal malpractice case?  In Grace v Law  2013 NY Slip Op 05383 [108 AD3d 1173]  July 19, 2013  Appellate Division, Fourth Department

"We reject defendants' invitation to extend the ruling in Rupert to a per se rule that a party who voluntarily discontinues an underlying action and forgoes an appeal thereby abandons his or her right to pursue a claim for legal malpractice. Indeed, we noted in Rupert that, in determining that the court erred in granting the defendants' cross motion for summary judgment dismissing the complaint in the context of a prior appeal (Rupert v Gates & Adams, P.C., 48 AD3d 1221 [2008]), we "necessarily rejected the very premise upon which the court denied the instant motion for summary judgment," i.e., that "this legal malpractice action is barred by [the] plaintiff's failure to perfect an appeal from the judgment in the matrimonial action" (83 AD3d at 1395).

Although the precise question presented herein appears to be an issue of first impression in New York, we note that several of our sister states have rejected the per se rule advanced by defendants herein (see e.g. MB Indus., LLC v CNA Ins. Co., 74 So 3d 1173, 1176 [2011]; Hewitt v Allen, 118 Nev 216, 217-218, 43 P3d 345, 345-346 [2002]; Eastman v Flor-Ohio, Ltd., 744 So 2d 499, 502-504 [1999]; Segall v Segall, 632 So 2d 76, 78 [1993]). As has been noted, such a rule would force parties to prosecute potentially meritless appeals to their judicial conclusion in order to preserve their right to commence a malpractice action, thereby increasing the costs of litigation and overburdening the court system (see Eastman, 744 So 2d at 504). The additional time spent to pursue an unlikely appellate remedy could also result in expiration of the statute of limitations on the legal malpractice claim (see MB Indus., 74 So 3d at 1181). Further, requiring parties to exhaust the appellate process prior to commencing a legal malpractice action would discourage settlements and potentially conflict with an injured party's duty to mitigate damages (see Crestwood Cove Apts. Bus. Trust v Turner, 164 P3d 1247, 1254 [2007]; Eastman, 744 So 2d at 504).

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What Did the Plaintiff Know, and When Did He Know It?

Cooperstown, NY:  Plaintiff wanted to sell his construction company, and was very involved in the transaction.  In retrospect, the Appellate Division, Third Department found that he was too involved to merely blame his attorney for the bad outcome. Hattem v Smith    2013 NY Slip Op 07791 [111 AD3d 1107]  November 21, 2013  Appellate Division, Third Department tells its story, and then slips in a twist.  Follow for the "a-ha" moment.

"In 2003, plaintiff retained defendant Robert J. Smith, an attorney with defendant Coughlin & Gerhart, LLP, to represent him in the sale of his business, JMF Associates, Inc., to O'Connor and Shew Construction, Inc. (hereinafter OSC). The sale documents included a stock purchase agreement by which the shares in JMF would be conveyed to OSC for a down payment and a balance paid pursuant to a promissory note guaranteed by OSC's two individual owners. The note was backed by a security agreement naming plaintiff as the secured party and JMF as the debtor, and covering all of JMF's assets, including vehicles and construction equipment. In September 2004, Smith sent the proposed sale documents to OSC's attorney; that attorney forwarded the documents to one of OSC's owners and asked that individual to have all parties—including plaintiff—sign the documents and thereafter return them to him. The OSC owners met plaintiff at a branch of NBT Bank, where the documents were fully executed and notarized. Immediately thereafter and without the knowledge of either attorney, OSC obtained a loan from NBT that was secured by the assets of OSC and JMF and consisted of funds sufficient to cover the down payment, bank fees and a line of credit. On October 5, 2004, NBT perfected its [*2]security interest by filing a UCC-1 financing statement (hereinafter a UCC-1). Neither Smith nor OSC's attorney learned about this UCC-1 or the underlying loan from NBT until several years later.

Following these transactions, OSC's owners returned the executed sale documents to OSC's attorney, who sent them to Smith on October 25, 2004. Smith prepared but never filed a UCC-1 securing plaintiff's security interest in the construction equipment, and did not prepare or file Department of Motor Vehicle (hereinafter DMV) liens securing plaintiff's interest in the vehicles (see Vehicle and Traffic Law § 2118). In 2006 and 2007, the Internal Revenue Service filed federal tax liens against JMF, now owned by OSC. OSC's owners stopped making payments upon plaintiff's promissory note and, in 2007, filed for bankruptcy. When plaintiff attempted to repossess the vehicles and equipment pursuant to the security agreement, he discovered that his first-priority security interest had not been protected. Thereafter, NBT sold its security interest to a third party and, in October 2011, by a default order and judgment in a civil action prosecuted by the third party against plaintiff and other defendants, Supreme Court awarded possession of all assets, inventory and other property of JMF and OSC to this third party.

We agree with defendants' contention that Supreme Court erred in refusing to charge the jury regarding plaintiff's comparative fault. The culpable conduct of a plaintiff client may be asserted as an affirmative defense in a legal malpractice action in mitigation of damages (see CPLR 1411, 1412; Schaeffer v Lipton, 243 AD2d 969, 971 [1997]; Caiati v Kimel Funding Corp., 154 AD2d 639, 639-640 [1989]; see also Shapiro v Butler, 273 AD2d 657, 658 [2000]). Here, the evidence was sufficient to support a finding that plaintiff could reasonably have been expected to understand the underlying obligations and formalities (compare Cicorelli v Capobianco, 90 AD2d 524, 524 [1982], affd 59 NY2d 626 [1983]). Plaintiff was experienced in commercial transactions, including secured loans, understood that loans such as the one from NBT to OSC generally require collateral, and testified that his purpose in retaining Smith was to protect his security interest in the vehicles and equipment. He acknowledged that none of the discussions among the parties and their counsel leading up to the execution of the sale documents had included any mention of outside loans to OSC, and that he introduced OSC's owners to the NBT officer who later approved the loan.

Plaintiff's testimony as to his purpose in making this introduction and his personal knowledge regarding the owners' intention to obtain financing for the purchase of JMF was contradictory and inconsistent. The loan officer testified that plaintiff introduced OSC's owners to him for this specific purpose, and one of the owners testified that their plan to obtain a loan was discussed with plaintiff before the sale documents were signed; both the owner and the loan officer testified that plaintiff was present during transactions pertaining to the loan. Plaintiff never advised Smith that he had signed the sale documents, nor did he contact Smith after engaging in these transactions. As this evidence provided "a valid line of reasoning and permissible inferences from which rational people can draw a conclusion of negligence," the [*3]question of plaintiff's comparative fault should have been submitted to the jury (Bruni v City of New York, 2 NY3d 319, 328 [2004]; see Gotoy v City of New York, 94 NY2d 812, 814 [1999]; Klingle v Versatile Corp., 199 AD2d 881, 882 [1993]). Accordingly, the matter must be remitted for a new trial."

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The Successor Attorney Problem in Legal Malpractice

White Plains:  We've often identified ways in which legal malpractice is not like other litigation.  One such area is the successor attorney problem.  In legal malpractice, if attorney 1 makes a mistake, and the client then fires attorney 1 and hires attorney 2, then attorney one is basically off the hook if there is time for attorney 2 to clean up the mess.  In a chain personal injury tort, (think a car accident followed by med mal), the first tortfeasor is responsible for all subsequent forseeable torts.

Anisman v Nissman  2014 NY Slip Op 03218  Decided on May 7, 2014  Appellate Division, Second Department is an example.  Here, the court found that there was insufficient time, but the principal still stands.

"In an action to recover damages for legal malpractice, the defendant Peter N. Nissman appeals from an order of the Supreme Court, Westchester County (O. Bellantoni, J.), entered January 16, 2013, which denied his motion for summary judgment dismissing the amended complaint insofar as asserted against him.

The Supreme Court properly denied Nissman's motion for summary judgment dismissing the amended complaint insofar as asserted against him. Nissman failed to show, prima facie, that the plaintiff was unable to prove at least one of the essential elements of his legal malpractice cause of action (see Bells v Foster, 83 AD3d at 877; Mueller v Fruchter, 71 AD3d at 651; Pedro v Walker, 46 AD3d 789, 790). Contrary to Nissman's contention, he did not establish that successor counsel had a sufficient opportunity to protect the plaintiff's rights such that Nissman's conduct could not have proximately caused the plaintiff's alleged damages (see Gelobter v Fox, 90 AD3d 829, 832). Nissman's failure to make such a showing required denial of the motion, [*2]regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853). "
 

 

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Just Too Speculative For A Successful Legal Malpractice Case

Albany:  Even when plaintiff points out a mistake that an attorney "unfamiliar with the Board's apportionment doctrine" made  at the Workers' Compensation hearing his argument that the Board would have found differently was "too speculative."  Result?  Case dismissed.

"Plaintiff received workers' compensation benefits as a result of a strained hip he sustained in the course of his employment. When his long-standing orthopedic surgeon, who had previously diagnosed him with osteoarthiritis of the hip, concluded that the work-related injury was fully resolved and any remaining symptoms were solely related to the preexisting condition, the State Insurance Fund (hereinafter SIF) requested that his benefits be suspended. Plaintiff then retained defendant to represent him and, on defendant's advice, plaintiff went to see another orthopedic surgeon, who attributed 50% of plaintiff's disability to the work-related injury. At a conciliation hearing, defendant negotiated a settlement with a representative from SIF whereby plaintiff agreed to benefits based upon a temporary, marked disability apportioned 50% to the work-related injury.

Even assuming that defendant was negligent because he was unfamiliar with the Board's apportionment doctrine (see e.g. Matter of Nye v IBM Corp., 2 AD3d 1164, 1164 [2003]; Matter of Krebs v Town of Ithaca, 293 AD2d 883, 883-884 [2002], lv denied 100 NY2d 501 [2003]), he could nevertheless succeed on his motion for summary judgment by demonstrating that his negligence was not a proximate cause of any actual and ascertainable damages to plaintiff (see Geraci v Munnelly, 85 AD3d 1361, 1362 [2011]; Bixby v Somerville, 62 AD3d 1137, 1139 [2009]; Tabner v Drake, 9 AD3d 606, 609 [2004]). In the context of the compromise reached in settlement of plaintiff's workers' compensation claim, a legal malpractice cause of action would be viable " 'if it is alleged that [the] settlement . . . was effectively compelled by the mistakes of counsel' " (Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083 [2005], lv denied 6 NY3d 701 [2005], quoting Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1990]; see Rau v Borenkoff, 262 AD2d 388, 389 [1999]).

Nor is there any evidence that defendant could have litigated a more favorable result for plaintiff (see Sevey v Friedlander, 83 AD3d 1226, 1227 [2011], lv denied 17 NY3d 707 [2011]; Mega Group, Inc. v Pechenik & Curro, P.C., 32 AD3d 584, 586-587 [2006]). In determining whether plaintiff was entitled to continued benefits, the Board would have been confronted with differing medical opinions and would have been free to credit the opinion that plaintiff was no longer disabled as a result of the work-related injury (see e.g. Matter of Altobelli v Allinger Temporary Servs., Inc., 70 AD3d 1083, 1084 [2010]; Matter of Moore v St. Peter's Hosp., 18 AD3d 1001, 1002 [2005]). Had the Board accepted the opinion of plaintiff's treating orthopedist, plaintiff would have been entitled only to a lump-sum payment for his work-related injury, and would not be receiving the continuing benefits provided by the settlement."

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Up and Down and Back Up to the Appellate Division in this Case

Rochester: The Fourth Department heard this case once, and sent it back to Oneida County. Supreme Court dismissed it once again, and the Fourth Department has once again sent it back to Oneida County for trial.Dischiavi v Calli  2013 NY Slip Op 07289 [111 AD3d 1258]  November 8, 2013  Appellate Division, Fourth Department chronicles some strange attorney behavior.
 

"Memorandum: Plaintiffs commenced this action seeking damages for, inter alia, breach of contract, legal malpractice and fraud, alleging, among other things, that defendants failed to commence timely legal actions to recover damages arising from injuries sustained by Gary M. Dischiavi (plaintiff). Plaintiffs allege in their complaint that plaintiff was injured as the result of an accident that occurred while he was on duty as a City of Utica police officer in 1991, and that he was further injured as a result of his ensuing medical treatment. Although plaintiffs retained defendant law firm of Calli, Kowalczyk, Tolles, Deery and Soja (CKTDS) to represent them with respect to possible claims arising from those injuries, no action was ever instituted. Plaintiffs further allege that defendants purported to have plaintiff examined by an expert physician but had a lawyer examine him instead, purported to have other expert physicians review plaintiff's medical records but had a veterinarian perform that review, misrepresented that they had commenced a personal injury action on plaintiffs' behalf, and created a fake settlement agreement for that "action." This case was previously before us on appeal, and we determined, inter alia, that Supreme Court erred in granting the motions and cross motion of various defendants for summary judgment dismissing the complaint in its entirety against them (Dischiavi v Calli [appeal No. 2], 68 AD3d 1691, 1692-1694 [2009])."

"Defendants Andrew S. Kowalczyk, Joseph Stephen Deery, Jr., and CKTDS (collectively, CKTDS defendants), along with defendant William S. Calli, Jr. (Calli, Jr.), as administrator C.T.A. of the estate of former defendant William S. Calli, Sr., contend that the court erred in denying their motions insofar as they concern the underlying medical malpractice claim. Specifically, the CKTDS defendants and Calli, Jr., contend that the underlying medical malpractice claim lacks merit, and thus that plaintiffs could not recover damages based on the failure of those defendants to commence a timely action based on that claim. We conclude, however, that the court properly denied the motions to that extent inasmuch as the CKTDS defendants and Calli, Jr. failed to meet their initial burden of establishing that plaintiffs' medical malpractice claim lacks merit (see generally Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Welch v State of New York, 105 AD3d 1450, 1451 [2013]). In any event, plaintiffs raised a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562 [1980])."

"To the extent that defendants sought summary judgment dismissing the first and second causes of action on the ground that the applicable three-year statute of limitations had expired prior to the commencement of this action (see CPLR 214 [6]; see generally Zorn v Gilbert, 8 NY3d 933, 933-934 [2007]), we conclude that they met their initial burden on their respective motions. We further conclude, however, that plaintiffs raised a triable issue of fact whether the doctrine of continuous representation tolled the statute of limitations (see generally Shumsky v Eisenstein, 96 NY2d 164, 167-168 [2001]). The court therefore properly determined that defendants were not entitled to the relief sought based on the statute of limitations."

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No Continuous Representation? No Case!

Albany / Syracuse:

The statute of limitations exists so that the courts can carry on.  Were it not for the S/L, courts would still be delving into wrongs that took place before World War 2.  Legal malpractice has a 3 year statute of limitations, which is somewhat ameliorated by the continuous representation doctrine.  So long as the attorney is representing the client in the same matter, the S/L does not start to run.

It is more difficult to determine when the continuous representation ends in a transactional setting than in a litigation setting.  it's easy to see when the attorney was substituted out, or the case ended.  It not so easy to determine when negotiations over a transaction might have ended.

in Priola v Fallon  2014 NY Slip Op 03130 Released on May 2, 2014 Appellate Division, Fourth Department we see a case dismissed after plaintiff cannot show that representation continued. 
 

"Memorandum: In this legal malpractice action, plaintiff appeals from an order granting defendants' motion for summary judgment dismissing the amended complaint on the ground that, inter alia, the action was time-barred. Plaintiff contends that Supreme Court erred in granting the motion because the statute of limitations was tolled by the continuous representation doctrine. We reject that contention. "A cause of action for legal malpractice accrues when the malpractice is committed" (Elstein v Phillips Lytle, LLP, 108 AD3d 1073, 1073 [internal quotation marks omitted]). Here, defendants established that any malpractice occurred, at the latest, in 2003 and thus made a prima facie showing that the action was time-barred (see International Electron Devices [USA] LLC v Menter, Rudin & Trivelpiece, P.C., 71 AD3d 1512, 1512). "The burden then shifted to plaintiff[] to raise a triable issue of fact whether the statute of limitations was tolled by the continuous representation doctrine" (id.; see Macaluso v Del Col, 95 AD3d 959, 960), and plaintiff failed to meet that burden inasmuch as he failed to present the requisite " clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the attorney' " to toll the statute of limitations (Kanter v Pieri, 11 AD3d 912, 913; see Guerra Press, Inc. v Campbell & Parlato, LLP, 17 AD3d 1031, 1032-1033). In light of our determination, we do
not address plaintiff's remaining contentions. "

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Mistakes May Be Shown But That's Just The First Step

Albany:  The Third Department decided the matter of Hyman v Schwartz 2014 NY Slip Op 01362 [114 AD3d 1110] February 27, 2014 Appellate Division, Third Department and found that although a plethora of mistakes could be pled in the complaint, no prima facie case of legal malpractice could be stated.  Why?  The complaint simply could not allege that but for the failures, plaintiff would have been ultimately successful.  This portion of the case is the bete noir for plaintiffs in legal malpractice.  Plaintiff's trouble at Cornell were independent of the attorney's work, and the court found them unaffected by it.

"In August 2007, plaintiff—then a Cornell University graduate student—was charged with violating the University's Campus Code of Conduct by allegedly harassing a professor. Following disciplinary proceedings, the University's Hearing Board sustained the harassment charge and issued a penalty, which was, apart from a slight modification, affirmed by the University's Review Board. Plaintiff then retained defendant Arthur Schwartz to represent her in a CPLR article 78 proceeding challenging the University's determination. In addition, Schwartz represented plaintiff in a Title IX claim (see 20 USC § 1681 et seq.). After both of those matters were unsuccessful (Matter of Hyman v Cornell Univ., 82 AD3d 1309 [2011]; Hyman v Cornell Univ., 834 F Supp 2d 77 [2011]), plaintiff commenced the instant action against Schwartz, defendant Schwartz, Lichten & Bright, PC (hereinafter the law firm)—Schwartz's former and now dissolved law firm—and defendants Stuart Lichten and Daniel Bright—his former partners—seeking damages for negligent and intentional infliction of emotional distress and legal malpractice. In the same complaint, plaintiff also challenged an arbitration award made in Schwartz's favor in connection with a fee dispute between Schwartz and plaintiff. "

"However, defendants correctly argue that Supreme Court should have granted their motion to dismiss the legal malpractice claim. It is well established that, "[i]n order to sustain a claim for legal malpractice, a plaintiff must establish both that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff, and that the plaintiff would have succeeded on the merits of the underlying action but for the attorney's negligence" (Leder v Spiegel, 9 NY3d 836, 837 [2007], cert denied sub nom. Spiegel v Rowland, 552 US 1257 [2008] [internal quotation marks and citation omitted]; accord Alaimo v McGeorge, 69 AD3d 1032, [*3]1034 [2010]; see Kreamer v Town of Oxford, 96 AD3d 1128, 1128-1129 [2012]; see also MacDonald v Guttman, 72 AD3d 1452, 1454-1455 [2010]; Bixby v Somerville, 62 AD3d 1137, 1139 [2009]). Here, although the complaint is replete with allegations of Schwartz's alleged failures to use reasonable and ordinary skill in connection with both of plaintiff's underlying claims, it contains no allegation that, but for these alleged failures, plaintiff would have been successful on either claim.[FN2] Therefore, even if we accept the allegations as true and liberally construe the complaint to allege negligent representation by Schwartz (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Moulton v State of New York, 114 AD3d 115, 119 [2013]; Scheffield v Vestal Parkway Plaza, LLC, 102 AD3d 992, 993 [2013]), the allegations are insufficient to make out a prima facie case of legal malpractice (see Kreamer v Town of Oxford, 96 AD3d at 1128; MacDonald v Guttman, 72 AD3d at 1455)."

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Is It Legal Malpractice Not To Answer A Legal Malpractice Complaint?

Defendant attorney is served with a "bare" summons and complaint.  He sends it on to his carrier.He defines a "bare" summons and complaint as one which does not have an index number, filing date or basis of venue.  Carrier appoints a defense attorney who tries to call the plaintiff's attorney, all to no avail.  Motion for a default judgment is filed, with cross-motion to dismiss.  What happens?

In Golia v Char & Herzberg LLP 2014 NY Slip Op 30985(U) April 14, 2014 Supreme Court, New York County Docket Number: 150349/13  Judge Anil C. Singh refuses to grant either motion.  Here are the salient facts:  "Plaintiff Stacey Golia commenced the instant action by filing a summons
and verified complaint on January 11, 2013. The complaint alleges that the defendants committed legal malpractice by: a) failing to properly notice an appeal  on a judgment that was entered against plaintiff following a trial in Queens County  Supreme Court; and b) mishandling proceedings before referees.

After careful consideration, we find that the defendants' delay in this matter was not willful. In addition, plaintiff has failed to show any prejudice whatsoever resulting from the brief delay. Under such circumstances, it would clearly be unjust to enter a default judgment.  We turn next to the cross-motion to dismiss the complaint pursuant to CPLR  321 l(a)(l), (7) and (8). Defendants contend that the legal malpractice action should be dismissed because it: a) fails to set forth specific facts demonstrating that the court in the Queens County action decided any issue that would cause reversal in the Appellate Division; and b) the complaint fails to allege that, but for the alleged negligence of the defendants, plaintiff would have prevailed on the appeal.

Plaintiff was represented by defendants in a case brought against her by her grandmother Sylvia Ann Rosenblatt in Queens County. Following a non-jury trial  before a referee, the referee issued a twenty-two page Decision, finding for the  grandmother and denying plaintiffs counterclaims for libel and abuse of process.  At the conclusion of the Decision, the referee directed the plaintiff in that case (Sylvia Ann Rosenblatt) to "Settle Judgment on Notice," and to "Settle Judgment."  Pursuant to the referee's direction, a judgment was settled on notice between the parties and their counsel. The judgment was signed by the Court on June 29, 2011, and entered on July 22, 2011.
The complaint alleges that the defendants advised plaintiff to appeal the referee's Decision, which she agreed to do. However, defendants failed to advise the plaintiff that an appeal should have been filed from the judgment, and that it is settled law that no appeal may be taken from a Decision. The complaint alleges further that defendants improperly filed a Notice of Appeal with the Appellate Division from the referee's Decision, but not the judgment. According to the complaint, there were numerous meritorious issues raised by defendants on appeal from the referee's Decision, and if these issues had been properly raised on an appeal of the judgment, it is probable that such an appeal would have been successful. Subsequently, the Second Department, on its own motion, issued a decision and order, directing that the appeal be dismissed "on the ground that no appeal lies from a decision."
Finally, the complaint alleges that defendants' failure to pursue an appeal of the judgment, as well as their negligent handling of proceedings before two referees, constituted legal malpractice; that such malpractice caused financial damages; and that "but for" such malpractice, "it likely, and indeed probable, that plaintiff would have succeeded on her appeal of the judgment."

"Viewing the allegations in the light most favorable to plaintiff, as we must at this early stage of the litigation, the Court finds that the complaint sufficiently states a cause of action for legal  malpractice."

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Negotiation Is Not Necessarily Deceit

Judiciary Law 487 is a deceit statute.  It reads:  " § 487. Misconduct by attorneys. An attorney or counselor who:
1. Is guilty of any deceit or collusion, or consents to any deceit or
collusion, with intent to deceive the court or any party; or,
2. Wilfully delays his client's suit with a view to his own gain; or,
wilfully receives any money or allowance for or on account of any money
which he has not laid out, or becomes answerable for,
Is guilty of a misdemeanor, and in addition to the punishment
prescribed therefor by the penal law, he forfeits to the party injured
treble damages, to be recovered in a civil action.

Can overzealous and intimidating behavior constitute a violation of Judiciary Law 487 when it happens during settlement discussions?  Not in Wailes v Tel Networks USA, LLC  2014 NY Slip Op 02861 Decided on April 24, 2014 Appellate Division, First Department.

"The allegations of Snyder's conduct in his representation of defendant Tel Networks USA, LLC during settlement discussions with plaintiff, which plaintiff characterizes as "overzealous and intimidating," do not state a cause of action under Judiciary Law § 487. The complaint alleges neither an intent to deceive nor "a chronic and extreme pattern of legal delinquency" that caused plaintiff a loss (Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 13 [1st Dept 2008] [internal quotation marks omitted], lv denied 12 NY3d 715 [2009]; Nason v Fisher, 36 AD3d 486, 487 [1st Dept 2007]). Moreover, the only allegations of wrongdoing refer to a settlement discussion had after Tel Networks commenced a legal proceeding, and that communication is absolutely privileged (see Wiener v Weintraub, 22 NY2d 330 [1968]; Mosesson v Jacob D. Fuchsberg Law Firm, 257 AD2d 381, 382 [1st Dept 1999], lv denied 93 NY2d 808 [1999])."

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The Evidence of Legal Malpractice Just Keeps Appearing

When you start reading Blanco v Polanco  2014 NY Slip Op 02735  Decided on April 23, 2014  Appellate Division, Second Department it seems to be a simple case.  Buyers purchase a house, and don't do an inspection.  They get a punch list, and then discover that the upstairs apartment does not have a Certificate of Occupancy.  Whose fault is it?  After reading that the AD gives out some more facts, in the manner of a well told story.

"In September 2008, the plaintiffs, Karyll Blanco and Suamy Blanco, Jr. (hereinafter together the buyers), purchased a two-family home from the defendant Your First Home, LLC (hereinafter the seller). At the closing, the seller agreed to make certain repairs set forth on a punch list within 10 business days. Shortly after the closing, the buyers took occupancy of the premises.

According to the buyers, the seller never completed the punch list. Further, according to the buyers, after they moved into the premises, they discovered mold in various areas and found that water accumulated in the basement whenever it rained. Additionally, the buyers allege that when they tried to rent the apartment on the second floor of the house, they were informed that they could not do so because the house did not have a certificate of occupancy (hereinafter CO), and later learned that there were numerous "outstanding requirements" that needed to be satisfied before one could be obtained.

The buyers commenced this action against, among others, the seller and the attorney [*2]who represented the buyers in the transaction, the defendant Jose Polanco (hereinafter the appellant), alleging that they, and the other defendants in the action, colluded to defraud them in connection with the purchase of the premises by, inter alia, dissuading them from obtaining an inspection, representing that any repairs and construction required on the premises would be performed and paid for by the seller before or immediately after the closing, misrepresenting the condition of the premises, and misrepresenting that the apartment on the second floor could be rented immediately upon closing and that the premises had a CO. The buyers sought to recover damages from the appellant for, inter alia, legal malpractice, fraud, breach of fiduciary duty, negligence, unjust enrichment, and conspiracy to commit fraud.'

"The appellant established his prima facie entitlement to judgment as a matter of law dismissing so much of the third cause of action as sought to recover damages for legal malpractice. However, in opposition to the appellant's prima facie showing, the buyers raised a triable issue of fact. The buyers submitted evidence that the appellant had his nonattorney assistant pose as him and counsel the buyers throughout the transaction. The buyers also supplied proof that the appellant hastened them to sign the contract of sale without reading it and failed to advise them that by signing the contract, they were agreeing to purchase the premises "as is" and waiving their opportunity to conduct an inspection. The buyers also presented proof that, at the same time, the appellant reassured them that the seller would make needed repairs and advised them that they should trust the seller's opinion that a professional inspection was not necessary. Additionally, the buyers presented proof that the appellant failed to ask the seller to fulfill its obligation under the contract of sale to provide a CO or "a letter from the building department . . . to the effect that no CO is required. "

"In response, the buyers raised triable issues of fact by submitting their own affidavits, wherein they stated that the appellant made the above-mentioned misrepresentations. Further, the buyers submitted a report from the New York City Department of Buildings indicating that subsequent alterations may have been made to the premises, triggering the need for a CO and that various "outstanding requirements" needed to be satisfied before a CO could be obtained. Moreover, the buyers presented evidence that while they intended for their relative to live in the apartment, the relative paid rent and they purchased the premises relying on the rental income from the apartment to pay their mortgage."

"In opposition to the appellant's prima facie showing, the buyers submitted evidence showing that the appellant had a relationship with the seller, pursuant to which he received over 100 referrals from the seller. Additionally, the buyers submitted evidence that when they were in the seller's office, they were introduced to a nonattorney imposter posing as the appellant who told them that he was the appellant. The buyers also submitted evidence that while in the seller's office, one of the seller's employees told them that they did not need to get an inspection. The buyers also submitted evidence that the imposter told them to heed the seller's opinion in this regard and advised them to sign a contract of sale without obtaining an inspection. When viewed as a whole, it may be inferred from this evidence that the appellant and the seller may have colluded to defraud the buyers in connection with the purchase of the premises."

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When The Dude Ranch Deal Goes South, Blame the Attorney

SS Marks LLC v Morrison Cohen LLP  2014 NY Slip Op 31030(U)  April 16, 2014  Sup Ct, New York County  Docket Number: 650049/2009 Judge: O. Peter Sherwood is an example of how a likely sounding legal malpractice case can be lost on a series of e-mails.  Here, plaintiff's plausible claims are completely undone by e-mails which unseat him.

"Beginning in February 2005, Marks began working with non-party Peter Morris to obtain  financing for real estate transactions. In December 2005, Morris informed Marks about a potential investment in real property located in Stanfordville, NY known as the Roseland Ranch (the  Property"). Originally, the parities contemplated a consulting agreement where Marks would be paid  fees for his services. The proposed transaction involved acquisition of the Property and its
subsequent operation as a dude-ranch style hotel, with the possibility of developing single family
homes on a portion of the land. Brett Marks \was also to invest in the transaction. Eventually it was
proposed that the Marks invest, through SAM.  SSM agreed to invest $1,050,000 toward purchase of the Property. In exchange, SSM was  to receive an 89% ownership interest in the Property as tenant in common with Roseland Ranch  Holdings, LLC ("RR Holdings"). Once acquired, the Property would be managed by Roseland Ranch  Management, LLC (the "Manager'').
The parties entered into a Lease and Management Agreement (the ''Lease") in connect.ion with the transaction. The Lease had a two year initial term, with automatic renewals, unless one party chose to terminate. Under the terms of the Lease, SSM \was entitled to receive monthly payments of$ I 0,500 from the manager. Upon termination of the Lease, SSM was entitled to a return of its investment in the form of a ''termination payment" in the sum of $ I ,050,000.

On March 2, 2006, the Lenders demanded that a subordination clause be included in the 
Lease. The effect of the subordination clause \was that SSM would not receive the termination
payment until after the Lenders were repaid. According to Marks, this clause was inserted without
his knowledge or consent after he had already executed the agreement. Marks also claims that
Soleymani did not explain the effect of the subordination clause on the personal guarantees.
It is undisputed that Soleymani forwarded the Lenders' demand to Marks within half an hour
of receipt (Rule 19-a Stmt 45 and Furman Aff, Ex V.). Two hours later, a draft of the Lease containing the subordination provision \was emailed to Marks (id, Ex Y). Marks denies having read
the emails (Response to Rule 19-a Stmt ,45, 46). However an email exchanged on March 2, 2006 at 12:38 PM shows that Marks was aware of the subordination provision, understood it .and sought to negotiate changes (Furman Aff, Ex U ["We still need to discuss the lender's requested revisions .. , Sandy wants to discuss , .. "]).

Admissible proof in the record, shows that Marks \was advised of the subordination clause and of the unsigned guaranties prior to the closing. Marks's excuse for not having read his emails
even if credited, is insufficient to create a triable fact as to legal malpractice. Dismissal of a
malpractice claim is appropriate \when, as here, it is "inconceivable that plaintiff's principal was
unaware of' that of which defendant allegedly failed to advise him (see Delphi Easter Partners Ltd.
Partnership v Prickett, Jones, Elliott, Kristo! & Schnee, 224 AD2d 349 [1st Dept 1996]). The documents SSM points to in support of its contention that the personal guarantees were critical to the transaction do not support the assertion. ln an email Marks sent to Soleymani on January 19, 2006, he insists that the consulting agreement must ensure that the other investors ''cannot in any way get out of paying that money to me" and that "'in the event they don't pay that the interest in the hotel is then pledged (100% to me)" (Marks Aff, Ex 1 ). The document does not reference guaranties. Instead it refers to a consulting fee Marks wanted, prior to the agreement to invest in the Property. In any case, the other investors did in fact receive an interest junior to SSM.
The "interest in the hotel" \Vas indeed pledged to Marks. A guaranty goes far beyond an "interest in
the hotel." l\farks also sent an email on January 20, 2006 where he stated that the consulting
agreement is "the important agreement I have to make sure they pay me no matter what happens"
(Marks Aff, Ex 2). Again the email refers to a consulting agreement. It makes no mention of a
guaranty.

Accordingly, it is hereby ORDERED that defendants' motion for summary judgment dismissing the complaint is GRANTED in its entirety

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Franchisee Loses Drug Store Case and Loses Attorney Fee Case

Attorney is hired to defend a case. What is the standard of care if the case is "unwinnable"? Justice Jaffe of Supreme Court, New York County discusses what happens when a franchisee who has signed personal guarantees falls behind in royalty payments to the franchisor.  It's not pretty.

In Pu v Mitsopoulos  2014 NY Slip Op 31038(U)  April 17, 2014  Sup Ct, New York County  Docket Number: 602986/06  Judge: Barbara Jaffe the facts are:  "In December 2004, defendant George Mitsopoulos contacted plaintiff, an attorney, to  discuss an ongoing dispute between him and his company, defendant Titan Pharmaceuticals and  Nutrition, Inc., in connection with a franchise agreement with franchisor Medicine Shoppe, Inc. The franchise agreement permitted Mitsopoulos to operate a pharmacy under franchisor's name and required him to pay royalties based on the pharmacy's gross income. The parties also agreed  that any disputes would be arbitrated and that franchisor was entitled to attorney fees in the event  of litigation. When Mitsopoulos first met with plaintiff, he told him that Titan was behind in paying franchisor and that on December 1, 2004, franchisor sued him, his parents, and Titan in federal court. Franchisor also commenced an arbitration proceeding in St. Louis, Missouri against Titan and Mitsopoulos. (Id, Exhs. I, J).
On or about December 15, 2004, Mitsopoulous, his parents, and Titan retained plaintiff,
and agreed to pay him $275 an hour, plus expenses. They also agreed that if plaintiff sued them
to recover his legal fees, they would compensate him for any fees incurred in connection thereof. "

"As plaintiff has submitted the parties' retainer agreement along with an affidavit detailing the work he performed and his itemized bills, he has established, prima facie, his entitlement to the attorney fees and expenses he seeks. (See eg Phillips Nizer et al. v Chu, 240 AD2d 231 [1st Dept 1997] [reasonable value of attorneys' services itemized in invoices annexed to complaint]).
Apart from the malpractice counterclaims, defendants advance the following arguments for why plaintiff is not entitled to some of his fees: (1) plaintiff billed defendants for services rendered during his suspension from practicing law in the federal courts; and (2) plaintiff billed for unnecessary and wasteful motions. (Mem. of Law, dated Oct. 2, 2013).

As defendants raise a triable issue as to whether plaintiff performed unnecessary work on the case or overbilled them for work he should not have performed, the reasonableness of plaintiffs fees must be determined at a hearing. (See eg Bomba v Silberfein, 238 AD2d 261 [1st Dept 1997] [factual issue as to reasonableness of attorney's fees precluded summary judgment as to damages]"

"Although it is not disputed that defendants had no viable defense to the arbitration as they owed franchisor money past due and possible larger sums, and that franchisor had every right to
enforce the parents' guaranty, there is no allegation that plaintiff recommended that defendants
litigate knowing that he could not prevail, leaving them owing franchisor damages as well as
additional legal fees. Rather, plaintiff was faced with defending two actions against defendants
with no viable defense to either, and having to choose a strategy whereby he could minimize
defendants' losses. That plaintiff was unable to win a conceitedly unwinnable case does not
establish that he was negligent. "

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A Short Letter to the Client Would Have Made a World of Difference

Was it strategy or mistake?  Was the Warning given or not?  Was the Attorney negligent or did he do a good job?  These are the questions that are daily raised in legal malpractice cases.  Sometimes, as in Mateo v Silver & Silver, LLP  2014 NY Slip Op 30986(U)  April 15, 2014
Supreme Court, New York County  Docket Number: 150393/10  Judge: Anil C. Singh, a simple letter would have resolved all doubt.

Client says that attorney was hired to vet and do due diligence on a loan, lease and real estate arrangement.  Attorney says he was hired to do the paperwork, but not to advise the client about the landlord's mortgage.  Both experts agree that something should have been said to the client.  We believe that if there had been a letter warning the client there would have been a dismissal here.

"Defendant Herbert Silver asserts that he was retained by plaintiffs to draft promissory notes. He contends that he did not have a duty to assess the adequacy of the security being offered for the loans given by plaintiffs to Peter Skyllas, and that he cannot be held liable for the failure of that security. According to Mr. Silver, plaintiff Fernando Mateo did not ask him to conduct the "due diligence" which he faults him for not having performed.

In opposition to the motion, plaintiff Fernando Mateo contends in a sworn affidavit that he asked Silver to vet the loan transactions and to assist in structuring  the deal. Further, he asserts that plaintiffs specifically retained the Silver defendants  "to vet and review the May lease, and advise us of any problems." Mateo asserts that,  at the time the lease was executed, Silver did not advise plaintiffs that there was an  outstanding mortgage on the Skyllas building; how that mortgage might impact  to plaintiffs' business; what might happen if the landlord defaulted on his mortgage; or
what might happen if the landlord's lender decided to foreclose on the property.  Further, Mateo contends that Silver did not propose any safeguards that Alma might  be able to take to secure its leasehold interest in the Skyllas building against the risk  of foreclosure; and failed to advise plaintiffs of the potential legal benefits and  consequences of recording the lease against the Skyllas building. Finally, Mateo  states that he would have found another space for his restaurant, or pursued an  entirely different business venture, had he known about the risks posed by the
mortgage. "

"Both parties rely upon the opinions of experts. Although the experts appear to agree that a reasonably prudent attorney reviewing a commercial lease transaction has  a duty to warn his client of the potential negative consequences if the attorney fails to obtain a non-disturbance agreement for the lease, they disagree about the nature of the warning the attorney should give to the client. Silver's expert contends that a simple explanation of the consequences to the client entering an unprotected lease is sufficient. By contrast, Mateo's expert contends that a diligent attorney should advise his client not to enter into the lease and, if necessary, should put such advice in writing. "

"In light of the completely divergent facts presented by the parties and the conflicting opinions of the experts, the Court finds that there is clearly a genuine issue of material fact regarding the extent and adequacy of the legal advice, services, and representation provided by defendants. The Court is mindful that, on a motion for summary judgment, the function of the Court is issue finding, not issue determination. "

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Try As They Might, Summary Judgment Just Isn't There

We believe that a greater proportion of legal malpractice cases are subject to motions for summary judgment, and that more decisions to dismiss are granted than in other specialties.  In Kempf v Magida  2014 NY Slip Op 02410  Decided on April 9, 2014  Appellate Division, Second Department the merely unusual happened.  Summary judgment was denied because defendant did not show prima facie entitlement.

"contrary to the defendant's contention, he failed to present evidence in admissible form establishing that the plaintiffs were unable to prove at least one of the essential elements of a cause of action to recover damages for legal malpractice (see Barnave v Davis, 108 AD3d 582; Valley Ventures, LLC v Joseph J. Haspel, PLLC, 102 AD3d 955, 956; Alizio v Feldman, 82 AD3d 804). The defendant failed to affirmatively demonstrate the merits of his defense, and he could not sustain his burden merely by pointing out gaps in the plaintiffs' proof (see Alizio v Feldman, 82 AD3d at 804). Since the defendant did not eliminate all triable issues of fact as to whether he failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and whether his alleged breach of this duty proximately caused the plaintiffs to sustain actual and ascertainable damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442; Barnave v Davis, 108 AD3d at 582-583; Valley Ventures, LLC v Joseph J. Haspel, PLLC, 102 AD3d at 956; Alizio v Feldman, 82 AD3d at 804), he failed to sustain his prima facie burden on the motion, and his motion for summary judgment dismissing the complaint was properly denied. "

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The Attorney Represents the Executor; Who Represents the Estate?

An estate is left to two sisters.  An uncle is named executor.  He loots the estate for more than $1 million, and is surcharged and suspended.  New executor sues the attorneys representing uncle and the estate for the losses.

Betz v Blatt  2014 NY Slip Op 02554  Decided on April 16, 2014  Appellate Division, Second Department tells us that the law suit for legal malpractice fails, because there was no privity (no attorney-client relationship) between the estate and the attorneys.  The attorneys represented the executor only.

"Contrary to the Supreme Court's factual finding, the Sirignano defendants' retainer agreement with Carbone does not contain the phrase "administration of the estate." Both the retainer agreement and the facts as pleaded in the complaint indicate that the Sirignano defendants were retained solely to defend Carbone in the contested accounting proceeding and related matters, and were not retained to administrate the estate. Therefore, the Supreme Court erred in finding that the Sirignano defendants "under[took] a duty of undivided loyalty to the Estate and its beneficiaries." Since the documentary evidence demonstrates that the Sirignano defendants were not in privity with the estate, and because the plaintiff failed to plead specific facts tending to show that the Sirignano defendants engaged in fraud or colluded with Carbone, the plaintiff did not assert a viable cause of action against them on the estate's behalf to recover damages for legal malpractice. Accordingly, the eleventh cause of action, which alleged legal malpractice by the Sirignano defendants, must be dismissed pursuant to CPLR 3211(a) (see Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d at 813; Jacobs v Kay, 50 AD3d at 526-527; Chinello v Nixon, Hargrave, Devans & Doyle, LLP, 15 AD3d at 895; Conti v Polizzotto, 243 AD2d at 672). For the same reasons, the twelfth cause of action, which alleged breach of fiduciary duty by the Sirignano defendants, was properly dismissed.

This Court has held that "an attorney represents the administrators individually and not the estate itself" (Matter of Hof, 102 AD2d 591, 593, citing Matter of Schrauth, 249 App Div 847, 847, and Matter of Scanlon, 2 Misc 2d 65, 69 [Sur Ct, Kings County]; see Matter of Della Chiesa, 23 AD2d 562). Accordingly, an attorney may recover fees from the estate only where the services rendered benefit the estate (see Matter of Rodken, 2 AD3d 1008, 1009; Matter of Winckler, [*3]234 AD2d 307, 309; Matter of Baxter [Gaynor], 196 AD2d 186, 190; Matter of Della Chiesa, 23 AD2d at 562; see also Matter of Smolley, 188 AD2d 535, 538). Where a plaintiff asserts a cause of action for restitution, the " essential inquiry'" is " whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered'" (Goel v Ramachandran, 111 AD3d 783, 791, quoting Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, 421; see Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182; Sample v Yokel, 94 AD3d 1413, 1415; Trotta v Ollivier, 91 AD3d 8, 12). In determining whether this equitable remedy is warranted, a court should " look to see if a benefit has been conferred on the defendant under mistake of fact or law, if the benefit still remains with the defendant, if there has been otherwise a change of position by the defendant, and whether the defendant's conduct was tortious or fraudulent'" (Goel v Ramachandran, 111 AD3d at 791, quoting Paramount Film Distrib. Corp. v State of New York, 30 NY2d at 421; see Zamor v L & L Assoc. Holding Corp., 85 AD3d 1154, 1156-1157).

Here, the plaintiff alleged that the Sirignano defendants' fees for representing Carbone were paid from estate assets even though those services were not beneficial to the estate and were, in fact, adverse to it. Thus, the plaintiff has pleaded facts sufficient to assert a cause of action for restitution (see Goel v Ramachandran, 111 AD3d at 791; see also Matter of Rodken, 2 AD3d at 1009; Matter of Winckler, 234 AD2d at 309; Matter of Baxter [Gaynor], 196 AD2d at 190; Matter of Della Chiesa, 23 AD2d 562). Accordingly, the Supreme Court erred in granting that branch of the Sirignano defendants' motion which was to dismiss the fourteenth cause of action, which sought disgorgement and restitution of attorneys' fees from them."

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The Case Lives On, But Not For This Plaintiff

Here is a case about the attempt to re-make a movie.  It did not go well.  Plaintiff had invested $ 4.5 million in order to put together, or remake, or work with "Dance Cuba"  She retained Davis & Gilbert to handle the transfer of ownership. The transfer went well, but someone forgot to take care of obtaining consents from a number of "sampled" copyright holders. 

Candela Entertainment, Inc. v Davis & Gilbert, LLP  2014 NY Slip Op 30977(U)  April 11, 2014
Sup Ct, New York County  Docket Number: 150553/2011  Judge: Eileen Bransten  tells us the story of what happens when a corporate individual (usually an entrepreneur) sues along with the company.

"Relevant to the instant litigation, significant portions of the "Dance Cuba" film incorporate copyrighted materials for which Illume had signed licensing agreements. (Am. Compl. . 15.) These licensing agreements required that Illume obtain consent from the licensors before any transfer of intellectual property rights could be made. (Am. Compl. 19.) While there is a dispute as to whose duty it was to obtain the consents, the Complaint alleges that no licensor ever granted consent to any assignment. (Am. Compl.  19.) The Amended Complaint further alleges that Defendant's failure to advise that obtaining consents was necessary created a cloud on the film's title, which prevented Plaintiffs from seeking new investors and completing the film. (Am. Compl. 3.)  Plaintiffs filed the Amended Complaint on June 10, 2013, asserting that Defendant's "failure[] to properly understand and advise Plaintiffs as to the structure, the transactions and the effect of the documents utilized in the transactions," constituted (i) negligence, (ii) breach of contract, and (iii) breach of fiduciary duty. Defendant now seeks dismissal of the Amended Complaint. Plaintiffs oppose. "

"As a threshold matter, to maintain a cause of action for legal malpractice, the plaintiff must plead the existence of an attorney-client relationship. See, e.g., AG Capital Funding Partners, L.P. v. State St. Bank & Trust Co., 5 N.Y.3d 582, 595 (2005) (affirming dismissal of legal malpractice claim for failure to plead facts showing actual privity, near privity, or an exception to privity). In order to defeat a motion to dismiss, a party must plead facts showing the privity of an attorney-client relationship, or a relationship so close as to approach privity. Cal. Pub. Employees Ret. Sys. v. Shearman & Sterling, 95 N.Y.2d 427, 434 (2000) (affirming dismissal of legal malpractice claim for failure to plead actual privity or near privity). t. Newport Cannot Establish Express Privity While it is undisputed that D&G represented Candela, Newport alleges that she too was represented by D&G. Newport argues that privity existed because she signed D&G's retainer agreement. Defendant argues that documentary evidence refutes the Amended Complaint's claims of express privity between Newport and D&G, and thus Newport fails to state a cause of action for legal malpractice. Defendant argues that there can be no privity because the retainer agreement is addressed solely to Candela and that Newport signed all pertinent documents simply on behalf of Candela. When dealing with issues of contract interpretation, courts must construe the
agreement according to the parties' intent, and the best evidence of what parties to a written agreement intended is what was said in the writing. See, e.g., Slatt v. Slatt, 64 N.Y.2d 966, 966 (1985). Courts may not fashion a new contract for the parties under the guise of interpreting the writing. See, e.g., Tanking v. Port. Auth. of N. Y. & N.13 N.Y.3d 486, 490 (2004) (holding that a court may not "rewrite the contract and supply a specific obligation the parties themselves did not spell out") "

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A Legal Malpractice Case is Dismissed for Lack of Essentials

Here is a familiar scenario.  Plaintiff litigates case for a period of time. Something goes wrong, or it appears that some element is missing from the mix, and the case is settled.  Better settled than lost, but when that happens, the question becomes, why was it settled.  Was it a good move, or was it required because of some mistake of counsel.  An example might be that when the case is ready for trial, and the note of issue has already been filed, it is discovered that a witness will be excluded because no pre-note notice was given.  Settlement of the case is essential, because plaintiff knows it cannot win without the witness.  It can be said that settlement was effectively compelled by mistakes of counsel.

In Benishai v Epstein   2014 NY Slip Op 02404   Decided on April 9, 2014   Appellate Division, Second Department  we see an analogous situation.
 

"To recover damages in a legal malpractice action, a plaintiff must establish "that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a [*2]member of the legal profession' and that the attorney's breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442, quoting McCoy v Feinman, 99 NY2d 295, 301, 302; see Held v Seidenberg, 87 AD3d 616, 617; Kennedy v H. Bruce Fischer, Esq., P.C., 78 AD3d 1016, 1018). "To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer's negligence" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442). " A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel'" (Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083, quoting Bernstein v Oppenheim & Co., 160 AD2d 428, 430). Nonetheless, a plaintiff's conclusory allegations that merely reflect a subsequent dissatisfaction with the settlement, or that the plaintiff would be in a better position but for the settlement, without more, do not make out a claim of legal malpractice (see Boone v Bender, 74 AD3d 1111, 1113; Holschauer v Fisher, 5 AD3d 553, 554).

""In determining a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory'" (Sierra Holdings, LLC v Phillips, Weiner, Quinn, Artura & Cox, 112 AD3d 909, 910, quoting Leon v Martinez, 84 NY2d 83, 87-88). A complaint in a legal malpractice action will be dismissed pursuant to CPLR 3211(a)(7) where "it fails to plead specific factual allegations demonstrating that, but for the . . . defendant's alleged negligence, there would have been a more favorable outcome in the underlying proceeding or that the plaintiff would not have incurred any damages" (Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d 812, 813). Here, viewing the complaint in the light most favorable to the plaintiff (see Leon v Martinez, 84 NY2d at 87-88), it failed to plead specific factual allegations demonstrating that, but for the defendant's alleged negligence, there would have been a more favorable outcome in the underlying action or that the plaintiff would not have incurred any damages (id.; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d at 1083). Moreover, nowhere does the complaint allege that the settlement was compelled by the mistakes of counsel".

 

 

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Did This Legal Malpractice Case Fail For the Same Reason the Underlying Case Failed?

We often see a "pot and the kettle" issue in legal malpractice cases.  Example:  Plaintiff trips and falls, and her attorney sues the City.  City successfully shows that it had no big apple notice, and that it did not create the defect in the street.  Plaintiff then sues in legal malpractice arguing that photos show that other construction entities were involved, and that attorney departed when he did not sue those entities.  Plaintiff criticizes attorney for not doing thorough investigation.  It later turns out that not only the two construction companies shown in the photo were working there, but others were as well.  Legal malpractice case is lost on the same grounds as the underlying case.  Ironic?

Dalewitz v Gropper  2014 NY Slip Op 30892(U)  April 7, 2014  Supreme Court, New York County
Docket Number: 100198/2007  Judge: Jeffrey K. Oing leads us to this conclusion.  In order to avoid "speculation" you must cover all the bases.  "In bringing the instant action, plaintiff contends that
defendant committed legal malpractice because he sued the City, when Empire City Subway ("ECS") and/or Consolidated Edison ("Con Ed") may have been the responsible parties. Plaintiff bases her claim on the fact that attached to the complaint in the underlying action were two photographs of the accident site (Klein Affirm., Ex. P). According to plaintiff, a review of the
two photographs reveals the letters "CS" spray-painted on the roadway and a metal plate in the crosswalk with the letters "ECS" etched onto the plate. Another photograph of the accident scene
shows a barricade with the letters "ECS" stenciled across it (Id., Ex. Q).

Plaintiff 's claim is simply too speculative and attenuated. The record indicates that no fewer than four different entities were issued permits to open the roadway at or near the intersection, and plaintiff's inability to identify which of these entities was responsible for or created the depression renders her contentions entirely conjectural. Additionally, the record does not support a finding that the depression in t.he crosswalk constitute an actionable, dangerous condition. Plaintiff's testified at her EBT in underlying action that she was unsure if she actually fell or just twisted her ankle, that she did not know whether her foot was partially or completely in the depression at the time her ankle twisted, and that she did not even know if her foot got "caught" in the depression.

Moreover, plaintiff fails to raise a triable issue of fact. Instead, rather than proffer sufficient evidentiary proof, plaintiff s attorney argues that, "upon information and belief," ECS and Con Ed are responsible for the alleged defect. Her arguments are based entire on speculation and conjecture and are insufficient to preclude a finding of summary judgment in favor of defendant."

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A Pro-se Legal Malpractice Action Gone Wrong

The irony of mistakes made in a legal malpractice action, which of course pleads that mistakes were made in the underlying case is not lost on us.  Pro-se legal malpractice litigation is a rich source of examples. Klein v Octobre  2014 NY Slip Op 30907(U)  April 7, 2014  Supreme Court, New York County  Docket Number: 155296/12  Judge: Cynthia S. Kern shows what happens when litigants spar over service issues.  Often, the entire case comes apart over a triffle.

"The relevant facts are as follows. On or about August 8, 2012, plaintiff, prose, filed a Summons with Notice with the clerk of this court alleging causes of action for legal malpractice and violation of Judiciary Law § 487 arising from legal representation she was provided by defendant in an underlying neglect of a minor proceeding. On December 5, 2012, plaintiff served defendant with the Summons with Notice. On January 2, 2013, defendant, who was then pro se, served plaintiff with a Notice of Appearance and Demand for a Complaint. Plaintiff received the Notice of Appearance and Demand for a Complaint but rejected the documents, via two Notices of Rejection, both dated January 31, 2013, on the ground that defendant, as a party to the action, improperly served the documents herself in violation of CPLR § 2103(a). Thereafter, defendant retained counsel and served a second Notice of Appearance and Demand for a Complaint on plaintiff on May 3, 2013 and e-filed same on June 5, 2013. On June 7, 2013, plaintiff contacted defendant's counsel via e-mail confirming her receipt of the Notice of Appearance and Demand for a Complaint and advised that the address listed on her pleadings, 1211 Atlantic A venue, Brooklyn, New York 11216, is not her residence but rather a business service center. However, plaintiffs e-mail did not provide an alternative address for the purpose of service. On June 21, 2013, plaintiff filed a third Notice of Rejection of the second Notice of Appearance and Demand for a Complaint on the grounds that she did not receive the hard copies of the papers because of a lack of notice from the business center which receives her mail, that the Notice of Appearance and Demand for a Complaint is duplicative and that it is untimely. Additionally, on June 28, 2013, plaintiff filed a fourth Notice of Rejection of the Notice of Appearance and Demand for a Complaint on the grounds that it is duplicative, it is untimely, it was improperly served as it was mailed from without the state and that it was not electronically filed. Defendant then brought the instant motion to dismiss the action for failure to serve a complaint on the basis that her second Notice of Appearance and Demand for a
Complaint was valid.

In the instant action, defendant's motion for an Order pursuant to .CPLR § 30 l 2(b) dismissing the action for failure to serve a complaint is granted. Defendant's first Notice of Appearance and Demand for a Complaint, served on January 31, 2013, was invalid pursuant to CPLR § 2103(a) on the ground that said documents were served upon plaintiff by defendant herself and not by a non-party of the age of eighteen years or older. However, such defect was not fatal to the action as "[a ]t any stage of an action, the court may permit a mistake, omission, defect or irregularity to be corrected, upon such terms as may be just, or, if a substantial right of a party is not prejudiced, the mistake, omission, defect or irregularity shall be disregarded." CPLR § 2001. Thus, defendant was entitled to serve a second Notice of Appearance and Demand for a Complaint by the proper means, which was done on May 3, 2013. Defendant properly served the second Notice of Appearance and Demand for a Complaint on plaintiff at the address provided by plaintiff in her Summons with Notice. See CPLR § 2103( c )(stating that if a party has not appeared by an attorney, service upon that party may be made by mailing the papers to the address designated by that party). Plaintiffs assertion that the address listed on the Summons with Notice is not her actual place of residence but rather that of the business center which receives her mail is unavailing. That address was the only address listed by plaintiff on the Summons with Notice provided to defendant and plaintiff has not provided defendant with any alternative address. Thus, as more than twenty days have elapsed since defendant served her demand for a complaint and plaintiff has yet to serve a complaint, the action must be dismissed.

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The Volcano and Legal Malpractice

Allentown, PA is the epicenter of this legal malpractice case.  A group of investors wanted to start a nightclub/bar, and started to explore the Pennsylvania countryside in order to locate the Volcano, where they would set up bar.

Things did not go well.  Allentown was just not ready for the Volcano.  It was too loud, and its permits were not renewed.  The NY attorneys signed up to litigate, even though they were not admitted in PA.  The problem begins. It ends with a choice of law question and the borrowing statute.

Patel v Scheurer  2014 NY Slip Op 30923(U)  April 4, 2014  Supreme Court, New York County  Docket Number: 650185/08  Judge: Saliann Scarpulla.  "In April 2002, the PLCB notified Volcano that, due to the number of times Volcano had been cited for violating regulations, it might decline to renew the liquor license and amusement permit for the establishment. In a letter dated May 21, 2003, the PLCB gave final notice to Volcano that its amusement permit would not be renewed and, ultimately, Volcano went out of business. Believing that it had been discriminatory targeted by the PLCB, plaintiffs consulted with Terence C. Scheurer, Esq. ("Scheurer") and signed a retainer agreement with the law firm of Scheurer & Hardy, PC ("S&H") on January 30, 2002 (the "Retainer"). S&H, a New York firm whose lawyers were not admitted to practice in Pennsylvania, was retained to "represent[] [Volcano] in a possible civil matter against the Pennsylvania State Police along
with other possible individuals and/or entities."2 Notice of Motion, Ex. J, ii l (emphasis in original). The Retainer further provides that it "does not cover any additional work in connection with appeals from any court decisions, orders, or any other actions." Id., ii 7. Finally, the Retainer states that ~'[a]ny and all changes to this retainer agreement must be made in writing and signed by both parties."

"Scheurer allegedly shared his views with LaManna regarding plaintiffs' potential claims and LaManna agreed to draft and file plaintiffs' complaint (the "Federal Complaint"). LaManna filed the Federal Complaint in the District Court for the Eastern District of Pennsylvania on November 15, 2002. Consistent with the terms of the Amended Retainer, defendants were listed as counsel on the Federal Complaint, but they did not sign it. Nevertheless, S&H claims that it did not authorize or consent for LaManna to put their firm name and address on the Federal Complaint, did not sign any pleading filed in Federal Court on behalf of plaintiffs, and did not file a Notice of Appearance in the Federal Action. By order dated January 31, 2005, the District Court entered summary judgment in favor of defendants and dismissed the complaint in its entirety. Plaintiffs filed a motion for reconsideration and, by order dated June 20, 2005, the Court granted that motion in part, but affirmed summary judgment dismissing the complaint. Plaintiffs commenced the present action on June 17, 2008, asserting causes of action for legal malpractice, breach of fiduciary duty, and breach of contract based on defendants' "

"Because plaintiffs' claim for legal malpractice was not filed within two years of the alleged malpractice and plaintiffs do not allege, much less meet, this standard for tolling under Pennsylvania }aw, their claim is time-barred. See Kat House Prods., LLCv. Paul, Hastings, Janofsky& Walker, LLP, 2009WL1032719(Sup. Ct., NY Co. Apr. 6, 2009)( dismissing legal malpractice claims time-barred in California); see also Portfolio Recovery Assoc., LLC v. King, 14 N.Y.3d 410 (2010)(holding that because contract claims are time-barred in Delaware, under CPLR 202 they are time-barred in New York); Metropolitan Life Ins. Co. v. Morgan Stanley, 2013 WL 3724938, *8 (Sup. Ct., NY Co. June 8, 2013). Plaintiffs' claim for breach of fiduciary duty is also subject to a two-year statute of limitations under Pennsylvania law. See Zimmer v. Gruntal & Co., Inc., 732 F.Supp. 1330, 1336 (W.D. Pa. 1989)(citing 42 Pa. Cons. Stat. 5524(7))."

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A Shocking Story in Syracuse

Small Smiles is a horror story of dental marketing, and the abuse of children.  There is a legal malpractice aspect to it, which is wholly overshadowed by the callous dentistry here.

"All plaintiffs allege that: (1) defendants engaged in a scheme to treat patients for Forba's profits rather than for plaintiffs' dental needs; (2) the New York clinics operated in violation of law because they were not owned or controlled by licensed dentists; (3) defendants engaged in a course of conduct that intended to create "a culture at the clinics that put revenue generation as a top priority at the expense of quality of dental treatment" (Compl. ¶56); (4) defendants utilized a common "fraudulent script" with patients regarding the risks of restraints (Compl. ¶68); (5) defendants engaged in deceptive acts or practices; and (6) the treating dentists committed dental malpractice by following the Forba business model of increasing production (procedures) per patient and wrongfully restraining children.
 

Here are some examples:

"Plaintiff Bohn treated at the Syracuse Small Smiles clinic between May 2006 and March 2008, when he was between the ages of three and five. During that time he had four root canals with crowns, seven fillings, two extractions and one crown without a corresponding root canal. He was restrained twice, and on three occasions his teeth were filled without anesthesia. Compl. ¶155.

Defendant Montanye treated at the Syracuse Small Smiles clinic between June 2006 and September 2007, when he was between the ages of two and three. During that time he had four root canals with crowns and six fillings. He was restrained three times, and on three occasions his teeth were filled without anesthesia. Compl. ¶ 163.

Plaintiff Fortino treated at the Syracuse Small Smiles clinic between August 2005 and February 2007, when she was between the ages of four and six. During that time, she had nine root canals with crowns, two fillings, two crowns without corresponding root canals and one extraction. She was restrained four times. Compl. ¶157.

Plaintiff Kenyon treated at the Syracuse Small Smiles clinic between April 2005 and September 2008, when he was between the ages of three and seven. During that time, he had six root canals with crowns and seven fillings. He was restrained three times, and on three occasions his teeth were filled without anesthesia. Compl. ¶158.

Plaintiff Mathews treated at the Syracuse Small Smiles clinic between June 2005 and May 2006, when he was between the ages

of three and four. During that time, he had five teeth filled, two extractions, and one root canal with a crown. He was restrained five times, and on two occasions his teeth were filled without anesthesia. Compl. ¶160. "
 

We'll discuss the legal malpractice aspects tomorrow.

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No Contribution and No Indemnification in this Legal Malpractice Case

A real estate development gone wrong.  It's a common litigation situation, and attorneys are often in for the legal malpractice aspect of the case.  Here, in YDRA,LLC v Mitchell   2014 NY Slip Op 50505(U)    Decided on April 3, 2014   Supreme Court, Queens County   Siegal, J.
 

Supreme Court, Queens County untwists the skein of relationships and claims. 

"On or about September 2, 2012, Plaintiff commenced the within action asserting claims of legal malpractice, architectural malpractice, fraudulent inducement, contract recision and negligence.

Papa was retained by Paul Sklar ("Sklar") by written agreements dated March 15, 2006 and August 9, 2006, to provide a zoning analysis of the subject real property to get Department of Building approval for the construction of a new building on an adjacent lot while the existing building remained. Papa completed his services but Whitestone 8888 Corp opted not to construct the new building. Papa contends that its services were completed at this point.

Plaintiff took title to the property from Whitestone in January of 2009, retaining defendant Mitchell, & Incantalupo ("Mitchell") and Wax Ferraro Architect, PC ("Ferraro") to assist with the purchase.

Plaintiff ultimately brought the within action for breach of contract and negligence as a result of Plaintiff's inability to secure approval for new construction. On or about November 23, 2011, Plaintiff executed a Stipulation of Discontinuance in favor of Christopher V. Papa. However, prior to the discontinuance defendant Mitchell and Ferraro asserted cross-claims against Papa for contribution and indemnification. "

"Initially, Papa contends that Mitchell and Ferraro may not maintain an action for contribution because the Plaintiff seeks to recover only economic losses. Pursuant to CPLR 1401, "two or more persons who are subject to liability for damages for the same personal injury, injury to property or wrongful death, may claim contribution among them whether or not an action has been brought or a judgment has been rendered against the person from whom contribution is sought." Contribution is unavailable for claims seeking recovery for purely economic loss resulting from the breach of contractual obligations. (Capstone Enterprises of Port Chester, Inc. v. Board of Educ. Irvington Union Free Capstone Enterprises of Port Chester, Inc. v. Board of Educ. Irvington Union Free [*3]School Dist., 106 AD3d 856 [2nd Dept 2013] citing Clark-Fitzpatrick, Inc. v. Long Island R. Co., 70 NY2d 382 [1987]; Galvin Brothers, Inc. v. Town of Babylon, 91 AD3d 715 [2nd Dept 2012].) In the within action, Plaintiff is seeking the purely economic relief of recovery of the purchase price of the Property. Accordingly, a claim for contribution from Papa must be dismissed. "

"A right to indemnification can only arise where there is a written contract providing for indemnification or whether indemnification is implied under common law. (Facilities Dev. Corp. v Miletta, 180 AD2d 97 [3rd Dept 1992]; Rosado v Proctor & Schwartz, 66 NY2d 21 [1985] citing Prosser and Keeton, Torts § 51, at 341 [5th ed].) It is undisputed that there is no contractual relationship between Mitchell or Ferraro. Furthermore, Mitchell and Ferraro's liability is based upon the their alleged breach of obligations owed to the Plaintiff, rather than upon vicarious liability attributed solely to the fault of Papa, therefore Mitchell and Ferraro do not have a legally viable claim for implied indemnification against Papa. (Mount Vernon Fire Ins. Co. v Mott, 179 AD2d 626 [2nd Dept 1992]; Dormitory Auth. of State of NY v Caudill Rowlett Scott, 160 AD2d 179 [2nd Dept 1990].) Accordingly, as Mitchell and Ferraro have no contractual relationship with Papa and each of the defendants were retained separately from Papa, there can be no claim for indemnification as against Papa."

 

 

 

 

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Is Legal Malpractice a Tort ?

Legal malpractice is a tort, right?  Everyone knows that it's a variety of negligence, and it can be pled in tort or in contract?  Technically, yes, but its really a different kind of tort.  It does not have unlimited damages (think emotional disturbance) it does not allow for windfalls (think "ascertainable damages") and in generally, the rules are very, very special for attorneys.

As an example, take Chang Yi Chen v Zhen Huang   2014 NY Slip Op 50517(U)   Decided on March 31, 2014   Supreme Court, Kings County  where Judge Schmidt freely admits that legal malpractice has public policy and other considerations attached to it that no other branch of the law requires.

"For the purpose of this motion, defendant does not dispute plaintiff's central allegation that the sale transactions were structured in a way that would have qualified for the deferral of the payment of capital gains taxes but for defendant's release of the proceeds relating to the sale property directly to plaintiff in contravention of the requirement that plaintiff could not receive such proceeds actually or constructively in order to take advantage of the section 1031 exchange (see United States v Okun, 453 Fed Appx 364, 366 n1 [4th Cir 2011], cert denied ___ US ___, 132 SCt 1953 [2012]; see also Endless Ocean, LLC, v Twomey, Latham, Shea, Kelly, Dubin & Quartararo, 113 AD3d 587, 588-589 [2d Dept 2014]; Wo Yee Hing Realty Corp. v Stern, 99 AD3d 58, 64 [1st Dept 2012]).[FN3] The court's determination thus turns on whether plaintiff has a legal basis for obtaining damages from defendant.

"Damages in a legal malpractice case are designed to make the injured client whole'" (Rodolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 443 [2007], quoting Campagnola v Mulholland, Minion & Roe, 76 NY2d 38, 42 [1990]). Generally, the same compensatory damages rules applicable in contract cases apply to damages allowed in legal malpractice cases (Campagnola, 76 NY2d at 42). Such damages are not intended to provide a party with a windfall (id. at 45). However, in light of the unique fiduciary and ethical obligations of attorneys, public policy, at times, requires that traditional contract rules of damages be applied in a different manner in cases involving legal malpratice (id. at 43-44).

Here, defendant correctly asserts that taxes paid are generally not recoverable as damages under New York law (see Menard M. Gertler, M.D., P.C. v Sol Masch & Co., 40 AD3d 282, 283 [1st Dept 2007]; Alpert v Shea Gould Climenko & Casey, 160 AD2d 67, 71-72 [1st Dept 1990]; see also Lama Holding Co. v Smith Barney, 88 NY2d 413, 422-423 [1996]). This is because tax liability results from a taxable event and allowing recovery for the payment of such tax would therefor constitute a windfall for a plaintiff (see Alpert, 160 AD2d at 71-72; Apple Bank for Sav. v PricewaterhouseCoopers, LLP, 23 Misc 3d 1126 [A], 2009 NY Slip Op 50948 * 6 [U] [Sup Ct, New York County 2009], modified on other [*4]grounds 70 AD3d 438 [1st Dept 2010]; see also, Lama Holding Co., 88 NY2d at 423; Gaslow v KPMG LLP, 19 AD3d 264, 265 [1st Dept 2005], lv dismissed 5 NY3d 849 [2005]). In addition, damages that are uncertain or unduly speculative may not be recovered in New York (Ashland Mgt. Inc. v Janien, 82 NY2d 395, 403 [1993]; Farrar v Brooklyn Union Gas Co., 73 NY2d 802, 804 [1988]; see also Solin v Domino, 501 Fed Appx 19, 22 [2d Cir 2012]).

In conjunction, these principles preclude plaintiff from recovering as damages the amount he paid to the IRS as capital gains taxes, at least on the facts here, where plaintiff has not sold the replacement property. In this regard, in a properly completed section 1031 exchange, the basis from the property sold becomes the basis for the replacement property, and the recognition of any gain or loss is deferred until the replacement property is sold in a sale that does not involve a section 1031 exchange (see Ocmulgee Fields, Inc. v C.I.R., 613 F3d 1360, 1364-1365 [11th Cir 2011]). The tax consequences of such a deferral depend on many factors, including any change in the capital gains tax rate, IRS rules for determining capital gains, market forces affecting the value of the property, and plaintiff's ability to offset the gain against the losses (see generally Internal Revenue Code [USC] § 1001; Internal Revenue Code [USC] subtitle A, Chapter 1, subchapter P; IRS, Topic 409 - Capital Gains & Losses, http://www.irs.gov/taxtopics/tc409.html [last reviewed or updated Feb. 27, 2014, accessed March 28, 2014]). As plaintiff has not sold the Purchase Property, any determination at this time that his capital gains liability would be less at the time of a future sale of the Purchase Property than he was actually required to pay involves future changeable events, and is thus inherently speculative (see Farrar, 73 NY2d at 804; Solin, 501 Fed Appx at 22; see also Ashland Mgt. Inc, 82 NY2d at 403; see also Menard M. Gertler, M.D., P.C., 40 AD3d at283; Alpert, 160 AD2d at 71-72).[FN4] "

 

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Taxes and Death. Taxes Don't Qualify as Damages for Legal Malpractice

Yesterday, we discussed Chang Yi Chen v Zhen Huang   2014 NY Slip Op 50517(U)   Decided on March 31, 2014   Supreme Court, Kings County   Schmidt, J. .  Put in short, Plaintiff initiated a 1031 like-kind real estate exchange, only to have it fail because the attorney returned the escrow money to Plaintiff in order to do the purchase.  Plaintiff paid capital gains taxes.  Are they recoverable?  No.
 

""Damages in a legal malpractice case are designed to make the injured client whole'" (Rodolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 443 [2007], quoting Campagnola v Mulholland, Minion & Roe, 76 NY2d 38, 42 [1990]). Generally, the same compensatory damages rules applicable in contract cases apply to damages allowed in legal malpractice cases (Campagnola, 76 NY2d at 42). Such damages are not intended to provide a party with a windfall (id. at 45). However, in light of the unique fiduciary and ethical obligations of attorneys, public policy, at times, requires that traditional contract rules of damages be applied in a different manner in cases involving legal malpratice (id. at 43-44).

Here, defendant correctly asserts that taxes paid are generally not recoverable as damages under New York law (see Menard M. Gertler, M.D., P.C. v Sol Masch & Co., 40 AD3d 282, 283 [1st Dept 2007]; Alpert v Shea Gould Climenko & Casey, 160 AD2d 67, 71-72 [1st Dept 1990]; see also Lama Holding Co. v Smith Barney, 88 NY2d 413, 422-423 [1996]). This is because tax liability results from a taxable event and allowing recovery for the payment of such tax would therefor constitute a windfall for a plaintiff (see Alpert, 160 AD2d at 71-72; Apple Bank for Sav. v PricewaterhouseCoopers, LLP, 23 Misc 3d 1126 [A], 2009 NY Slip Op 50948 * 6 [U] [Sup Ct, New York County 2009], modified on other [*4]grounds 70 AD3d 438 [1st Dept 2010]; see also, Lama Holding Co., 88 NY2d at 423; Gaslow v KPMG LLP, 19 AD3d 264, 265 [1st Dept 2005], lv dismissed 5 NY3d 849 [2005]). In addition, damages that are uncertain or unduly speculative may not be recovered in New York (Ashland Mgt. Inc. v Janien, 82 NY2d 395, 403 [1993]; Farrar v Brooklyn Union Gas Co., 73 NY2d 802, 804 [1988]; see also Solin v Domino, 501 Fed Appx 19, 22 [2d Cir 2012]).

In conjunction, these principles preclude plaintiff from recovering as damages the amount he paid to the IRS as capital gains taxes, at least on the facts here, where plaintiff has not sold the replacement property. In this regard, in a properly completed section 1031 exchange, the basis from the property sold becomes the basis for the replacement property, and the recognition of any gain or loss is deferred until the replacement property is sold in a sale that does not involve a section 1031 exchange (see Ocmulgee Fields, Inc. v C.I.R., 613 F3d 1360, 1364-1365 [11th Cir 2011]). The tax consequences of such a deferral depend on many factors, including any change in the capital gains tax rate, IRS rules for determining capital gains, market forces affecting the value of the property, and plaintiff's ability to offset the gain against the losses (see generally Internal Revenue Code [USC] § 1001; Internal Revenue Code [USC] subtitle A, Chapter 1, subchapter P; IRS, Topic 409 - Capital Gains & Losses, http://www.irs.gov/taxtopics/tc409.html [last reviewed or updated Feb. 27, 2014, accessed March 28, 2014]). As plaintiff has not sold the Purchase Property, any determination at this time that his capital gains liability would be less at the time of a future sale of the Purchase Property than he was actually required to pay involves future changeable events, and is thus inherently speculative (see Farrar, 73 NY2d at 804; Solin, 501 Fed Appx at 22; see also Ashland Mgt. Inc, 82 NY2d at 403; see also Menard M. Gertler, M.D., P.C., 40 AD3d at283; Alpert, 160 AD2d at 71-72).[FN4] "

What about interest paid to the IRS?  It maybe recoverable.  "On the other hand, plaintiff may be entitled to recover the amounts paid to the IRS as interest and penalties. Interest imposed by the IRS based on a failure to pay a tax generally may not be recovered as damages because the interest represents a payment to the IRS for the taxpayer's use of the money while the taxpayer was not entitled to the use of the money (see Shalam v KPMG LLP, 43 AD3d 752, 754 [1st Dept 2007]; Alpert, 160 AD2d at 72). Here, however, plaintiff, but for defendant's alleged malpractice, would have been entitled to the use of this money during the time for which IRS imposed interest. As such, plaintiff suffered a loss as the result of the IRS's imposition of interest and plaintiff's recovery of damages for such a loss would not constitute a windfall (see Jamie Towers Hous. Co. v William B. Lucas, Inc.,, 296 AD2d 359, 359-360 [1st Dept 2002]; Ronson v Talesnick, 33 F Supp2d 347, 355 [DNJ 1999]; see also Liebowitz v Kolodny, 24 AD3d 733, 733 [2d Dept [*5]2005]; Apple Bank for Sav., 2009 NY Slip Op 50948 * 6-7). For the essentially the same reasons, any penalty imposed by the IRS may be recovered as damages.[FN5]"

 

 

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A Small Dispute With Significant Legal Malpractice Issues

Chang Yi Chen v Zhen Huang   2014 NY Slip Op 50517(U)   Decided on March 31, 2014  Supreme Court, Kings County  Schmidt, J. is ostensibly about a single real estate deal, but it discusses two very significant issues.  One is the very nature of legal malpractice damages and the other is when interest paid by plaintiff is a recoverable damage.  We'll cover one today and one tomorrow.

"Plaintiff Chang Yi Chen alleges that defendant Zhen Huang, Esq., failed properly effectuate a real estate transaction intended to be structured as a "like-kind exchange" under Internal Revenue Code (26 USC) § 1031 in order to defer payment of capital gains taxes on the transaction.[FN1] Plaintiff alleges that he approached defendant, who held herself out as an attorney who specialized in real estate transactions, for advice regarding the tax consequences of selling property he owned in order to purchase another property. Defendant allegedly informed plaintiff that he could avoid paying capital gains taxes on the sale and purchase of a new property by way of a section 1031 transfer. Plaintiff thereafter retained defendant to represent him in the sale and purchase of properties through a section 1031 exchange.

On May 28, 2009 plaintiff entered into an agreement to purchase a property (Purchase Property) and on June 15, 2009, reached an agreement to sell the property he owned (Sale Property). Plaintiff alleges that these properties qualified as "like kind property" for purposes of a section 1031 exchange. The closing for the Sale Property occurred on September 1, 2009, and defendant held the proceeds of this sale in escrow until September 2, 2009, when she transferred these proceeds back to plaintiff. At a closing held on November 1, 2009, plaintiff used these sale proceeds to purchase the Purchase Property. Although plaintiff believed that these actions were sufficient to qualify for section 1031 tax treatment, the United States and New York State tax authorities thereafter issued tax warrants notifying plaintiff of deficiencies and penalties because the property transfers did not qualify for section 1031 treatment. According to plaintiff, the transfer did not qualify for such treatment because the proceeds from the sale of the Sale Property were held by defendant in escrow and then released directly to plaintiff in contravention of section 1031's requirement that such proceeds be held by a "qualified intermediary."

Plaintiff has since commenced this action, alleging causes of action for breach of contract, breach of fiduciary duty and legal malpractice based on defendant's alleged failure to insure that the transactions qualified for section 1031 treatment. Defendant now moves for summary judgment dismissing the complaint on the ground that, regardless of whether defendant committed malpractice in failing to effectuate a section 1031 exchange, plaintiff has not alleged any compensable damages. In this respect, defendant, pointing to the complaint, asserts that "plaintiff only seeks to recover the tax liabilities he incurred from the sale of the 57th Street property" (Memorandum of Law at 6). According to defendant, such damages are not recoverable because a section 1031 exchange only defers the payment of capital gains tax until the replacement property is sold, and that as such, plaintiff may not recover the capital gains tax he was required to pay since such a recovery would constitute [*3]a windfall. In addition, as plaintiff has not sold the Purchase Property,[FN2] a determination of the capital gains taxes he will owe with respect to the sale of the property would be unduly speculative. "

The Court eventually rules against Plaintiff on damages from the taxes paid.  

"In conjunction, these principles preclude plaintiff from recovering as damages the amount he paid to the IRS as capital gains taxes, at least on the facts here, where plaintiff has not sold the replacement property. In this regard, in a properly completed section 1031 exchange, the basis from the property sold becomes the basis for the replacement property, and the recognition of any gain or loss is deferred until the replacement property is sold in a sale that does not involve a section 1031 exchange (see Ocmulgee Fields, Inc. v C.I.R., 613 F3d 1360, 1364-1365 [11th Cir 2011]). The tax consequences of such a deferral depend on many factors, including any change in the capital gains tax rate, IRS rules for determining capital gains, market forces affecting the value of the property, and plaintiff's ability to offset the gain against the losses (see generally Internal Revenue Code [USC] § 1001; Internal Revenue Code [USC] subtitle A, Chapter 1, subchapter P; IRS, Topic 409 - Capital Gains & Losses, http://www.irs.gov/taxtopics/tc409.html [last reviewed or updated Feb. 27, 2014, accessed March 28, 2014]). As plaintiff has not sold the Purchase Property, any determination at this time that his capital gains liability would be less at the time of a future sale of the Purchase Property than he was actually required to pay involves future changeable events, and is thus inherently speculative (see Farrar, 73 NY2d at 804; Solin, 501 Fed Appx at 22; see also Ashland Mgt. Inc, 82 NY2d at 403; see also Menard M. Gertler, M.D., P.C., 40 AD3d at283; Alpert, 160 AD2d at 71-72).[FN4] 

On the other hand, plaintiff may be entitled to recover the amounts paid to the IRS as interest and penalties. Interest imposed by the IRS based on a failure to pay a tax generally may not be recovered as damages because the interest represents a payment to the IRS for the taxpayer's use of the money while the taxpayer was not entitled to the use of the money (see Shalam v KPMG LLP, 43 AD3d 752, 754 [1st Dept 2007]; Alpert, 160 AD2d at 72). Here, however, plaintiff, but for defendant's alleged malpractice, would have been entitled to the use of this money during the time for which IRS imposed interest. As such, plaintiff suffered a loss as the result of the IRS's imposition of interest and plaintiff's recovery of damages for such a loss would not constitute a windfall (see Jamie Towers Hous. Co. v William B. Lucas, Inc.,, 296 AD2d 359, 359-360 [1st Dept 2002]; Ronson v Talesnick, 33 F Supp2d 347, 355 [DNJ 1999]; see also Liebowitz v Kolodny, 24 AD3d 733, 733 [2d Dept [*5]2005]; Apple Bank for Sav., 2009 NY Slip Op 50948 * 6-7). For the essentially the same reasons, any penalty imposed by the IRS may be recovered as damages.[FN5]

Accordingly, defendant has failed to demonstrate her initial summary judgment burden of demonstrating, as a matter of law, that plaintiff cannot recover damages. As such, this portion of defendant's motion must be denied regardless of the sufficiency of plaintiff's opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]). The court further notes that the motion turns almost entirely on the pleadings and that the only evidentiary fact before the court is plaintiff's admission that he has not sold the Purchase Property. Thus, to the extent that this motion, couched as a motion for summary judgment, should more appropriately be addressed as a motion to dismiss for failing to state a cause of action pursuant to CPLR 3211 (a) (7) (see Light v Light, 64 AD3d 633, 634 [2d Dept 2009]), the motion is denied because plaintiff has adequately pleaded that he suffered some cognizable damage as the result of the alleged malpractice (see Kocak v Egert, 280 AD2d 335, 336 [1st Dept 2001]). "

 

 

 

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A Tragic Outcome That Could Not Be Prevented

A child falls from the window.  The window had no child-guards. The landlord is at fault. The law firms sue and get a judgment. The landlord sells the building and disappears.  The money is hidden.  is the attorney at fault?

Noel v. Law Off of Mark E. Feinberg, 2014 NY Slip Op 50516(U)   Decided on March 31, 2014
Supreme Court, Kings County   Schmidt, J. is an awful story.  A landlord without insurance sells the buildings and successfully eludes a collection effort.  What should the PI attorney have done?   A lis pendens?  Pre-judgment attachment?  Sadly, NY law does not permit either.
 

"Plaintiff commenced this action seeking to recover damages for the alleged malpractice committed by defendants in the Personal Injury Action. Therein, plaintiffs sought to recover damages for injuries sustained by the infant plaintiff on July 12, 1997 when he fell out of a window that did not have proper and/or adequate window guards. Plaintiff alleges that in that action, defendants committed malpractice when they failed to obtain a pre-trial order of attachment for properties owned by Mr. George or to file a lis pendens against the properties. They allege that as the result of this malpractice and negligence on defendants' part, the judgment they obtained is can not be collected, since the properties owned by Mr. George were sold before the judgment was filed and immediately after the trial, Mr. George physically disappeared and cannot be located.

Plaintiff first retained the law firm of Jacoby & Meyers to bring the Personal Injury Action, but apparently due to the lack of liability insurance and general perception that Mr. George was insolvent, that firm did not actively prosecute the case. Accordingly, plaintiff retained defendants. On October 9, 1998, defendants filed a complaint on plaintiff's behalf in the Personal Injury Action. Defendants retained the firm of Weicholz, Monteleone, Peters & Studley (the Weicholz Firm) to act as trial counsel. Following a four day jury trial before the Honorable Gerald S. Held, the court rendered a directed verdict on the issue of liability and the jury rendered a verdict on the issue of damages in the amount of $500,000 for conscious pain and suffering and $1,500,000 for future conscious pain and suffering. The court accordingly entered a judgment in the amount of $2,010,545 on plaintiff's behalf.

Defendants then retained Michael T. Sucher, Esq., an experienced collections attorney, to enforce the judgment. Despite his efforts, he was unable to locate Mr. George or any assets belonging to him. Accordingly, plaintiff's judgment remains unsatisfied. "

"Pursuant to CPLR 6201(3), the only provision that could be applicable to the facts now before the court:

"An order of attachment may be granted in any action . . . where the plaintiff has demanded and would be entitled, in whole or in part, or in the alternative, to a money judgment against one or more defendants, when:
"[T]he defendant, with intent to defraud his creditors or frustrate the enforcement of a judgment that might be rendered in plaintiff's favor, has assigned, disposed of, encumbered or secreted property, or removed it from the state or is about to do any of these acts."


(see generally Crescentini v Slate Hill Biomass Energy, LLC, 113 AD3d 806 [2014]; Corsi v Vroman, 37 AD3d 397 [2007]). " Furthermore, the mere removal, assignment or other disposition of property is not grounds for attachment'" (Corsi, 37 AD3d at 397, quoting Computer Strategies v Commodore Bus. Machs., 105 AD2d 167, 173 [1984]; accord Mitchell v Fidelity Borrowing LLC, 34 AD3d 366, 366-367 [2006]).
As is also of particular relevance in the instant case, "[t]he moving papers must contain evidentiary facts, as opposed to conclusions, proving the fraud" (Benedict v Browne, 289 AD2d 433, 433 [2001], citing Arzu v Arzu, 190 AD2d 87, 91 [1993], Societe Generale Alsacienne De Banque, Zurich v Flemingdon Dev., 118 AD2d 769, 772 [1986]; accord Laco X-Ray Sys. v Fingerhut, 88 AD2d 425, 429 [1982], lv denied 88 AD2d 425 [1983] [fraud cannot be inferred; it must be proved]). It has also been held that " [t]he fact that the affidavits in support of an attachment contain allegations raising a suspicion [*6]of an intent to defraud is not enough'" (Mitchell, 34 AD3d at 366-367, quoting Rosenthal v Rochester Button Co., 148 AD2d 375, 376 [1989]).

Applying these general principles of law to the facts of this case, defendants have made a prima facie showing that plaintiff could not have obtained a pre-judgment order of attachment in the Personal Injury Action. Plaintiff does not refute this showing. Most significantly, in support of his position, plaintiff relies solely upon the fact that Mr. George transferred his properties prior to entry of the judgment. As discussed above, the fact that a defendant transfers property, standing alone, is insufficient to establish fraud (see Mitchell, 34 AD3d at 366-367; Corsi, 37 AD3d at 397; Computer Strategies, 105 AD2d at 173). Plaintiff offers no other evidentiary basis upon which this court can find an intent to defraud on the part of Mr. George (see Benedict, 289 AD2d at 433, Societe Generale Alsacienne De Banque, Zurich, 118 AD2d at 772; Laco X-Ray Sys., 88 AD2d at 429). Thus, in the absence of raising a question of fact with regard to whether the court would have granted a pre-judgment attachment in the Personal Injury Action, it is irrelevant whether defendants made an oral application or submitted a motion on papers.

Lis Pendens

CPLR 6501 provides, in relevant part, that "[a] notice of pendency may be filed in any action in a court of the state or of the United States in which the judgment demanded would affect the title to, or the possession, use or enjoyment of, real property."

"[B]ecause of the powerful impact that this device has on the alienability of property,' together with the facility with which it may be obtained,' the courts have applied a narrow interpretation in reviewing whether an action is one affecting the title to, or the possession, use or enjoyment of, real property."


(Shkolnik v Krutoy, 32 AD3d 536, 537 [2006], quoting 5303 Realty Corp. v O & Y Equity Corp., 64 NY2d 313, 315-316, 321 [1984]). Thus, it is well settled that "[a] notice of pendency is not available where a plaintiff claims no right, title or interest in the property itself" (Long Island City Sav. & Loan Asso. v Gottlieb, 90 AD2d 766 [1982], mod on other grounds 58 NY2d 931 [1983]; see also Khanal v Sheldon, 55 AD3d 684, 686 [2008], lv denied 12 NY3d 714 [2009] [notice of pendency should be cancelled where plaintiff asserted only a claim for money, not a right, title, or interest in the property itself]).
Applying these general principles of law to the facts of this case, defendants have also made a prima facie showing that plaintiff could not have obtained a pre-judgment order of attachment in the Personal Injury Action. Again, plaintiff does not refute this showing, since it is clear that plaintiff was seeking money damages in the Personal Injury Action, so that his action clearly did not "affect the title to, or the possession, use or enjoyment of, real property." Accordingly, plaintiff fails to establish that defendants were [*7]negligent in not filing a lis pendens in the Personal Injury Action. "

 

 

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A Blow by Blow Description of Overbilling and Padding by an Attorney

What happens when a non-English speaking, novice litigant goes to an attorney for a simple issue to be resolved, and ends up, years later, paying $ 90,000?  What usually happens is that the client goes off unhappy.  Here in Law Off. of Thaniel J. Beinert v Litinskaya   2014 NY Slip Op 50504(U)
Decided on March 31, 2014  Civil Court Of The City Of New York, Kings County Thompson, J. we see just the opposite.  Attorney is told that no fees are due, and that he has to refund money. The decision is very long, and very descriptive.  It's worth reading through.
 

"On October 17, 2003, the Hon. Ellen L. Koblitz, the presiding judge over the above action, dismissed the Defendant's answer and his supporting defenses, and granted LITINSKAYA a Final Judgment of Divorce. The Final Judgment of Divorce, subsequently subsumed by an Amended Final Judgment of Divorce, in addition to the resolution of issues of equitable distribution, child support, and visitation, provides, in relevant part, as follows: "Plaintiff shall receive all title and interest in the condominium located at 4050 Nostrand Avenue, Apartment PH-C, Brooklyn, New York and Judgment is (sic) hereby entered in her favor " (See Exhibit "A" in the BRIEF IN SUPPORT OF PLAINTIFF'S MOTION FOR CERTIFICATION UNDER CPLR §2105-Court Exhibit "1"). The Superior Court appointed Richard Weiner, Esq., attorney-in-fact, to execute and file the New York State Deed and the other recording documents mandated by NY law to complete the transfer of the property to LITINSKAYA. It is irrefutable and undeniable that the deficiency in the aforementioned legal description of the property in the decree is the catalyst for the controversy in this case. "

"In this action, the first course of action for the Plaintiff law firm should have been to communicate with the attorney that handled the divorce action in New Jersey. Although Plaintiff did testify that he spoke to her and obtained her file, he never made any inquiry about the exclusion of the lease agreement or leasehold interest in the divorce decree. Any real estate attorney would have made a determination of any and all liens, tenancies, leases, encumbrances, claims, actions and exceptions to title that were subject to the transfer of the condominium to the Defendant. It is this court's opinion that the divorce attorney assumed responsibility for all rights, title and interest that the Defendant may have had in the subject property including any leases that may have been made subject of the transfer. But for the neglectful exclusion of such qualifying language in the transfer of this real estate located in Brooklyn, New York, the entire course of litigation undertaken by the Plaintiff's attorney would have been different or even non-existent.

Of equal importance, it is the opinion of this court that the course of action in the prosecution of the Defendant's right in the New Jersey Circuit Court was unreasonable and not in conformity with the Rule 1.1 of the Professional Rules. This court finds that the course of action in attempting to modify and/or declare the alleged lease agreement null and void was improper as a matter of fact and law.

The proper course of action would have been to commence a summary proceeding to recover possession of the subject apartment. The Housing Part of the Civil Court of the City of New York has been clearly granted statutory authority pursuant to RPAPL §235-c to declare the alleged twelve (12) year lease agreement at a monthly rent of $590.00 for the duplex Penthouse in Brooklyn unconscionable. RPAPL §235-c provides, in relevant part, as follows: "If the court, as a matter of law, finds a lease or any clause of the lease to have been unconscionable at the time it was made, the court may refuse to enforce the lease, or it may enforce the remainder of the lease without the [*14]unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result". As compelling, Section 2 of the statute provides that when it is claimed or appears to the court that the lease or any clause thereof may be unconscionable, the parties shall be afforded a reasonable opportunity to present evidence as to its setting, purpose and effect to aid the court in making the determination. This is not a new statute. It is well known to those attorneys that practice Landlord and Tenant law. The statute was enacted in 1976, effective July 26, 1976, and is applicable to all leases regardless of when executed in this state. No evidence, testimonial or otherwise, was introduced to show that BEINERT retained or consulted a Landlord and Tenant attorney notwithstanding the fact that he stated he was a veteran in the Landlord and Tenant Court. Even those that are experts consult with others in decision-making particularly in the legal profession.

This court is in accord with the Defendant's claims that the proper venue to remove the tenants from possession was the Brooklyn Housing Part of the Civil Court of the City of New York and not the Superior Court in New Jersey. The Hon. Ellen L. Koblitz correctly instructed the Plaintiff law firm that the appropriate venue was New York based upon the fact that the property was located in New York, the occupants were residents of New York and were not parties to the divorce action. The judge was explicit that the tenants, in light of the evidence presented by both parties, may have some rights to occupancy.

Under New York law, both parties would have been given an opportunity to participate in an evidentiary hearing to determine the validity of the lease. LITINSKAYA could have presented expert testimony of a real estate broker and/or real estate appraiser to substantiate that the rental amount was a "sweetheart deal" and well below the fair market value for a comparable apartment of that size, condition and location. Of equal importance, LITINSKAYA would have been offered the opportunity to present evidence to prove that the sum of $590.00 did not reflect the fair market rent for the subject premises and that such a low rental was due to the prior ownership of the subject premises by the Defendant's former spouse. Evidence should have also been adduced to substantiate, as alleged by the Plaintiff law firm in the New Jersey Order to Show Cause, that the lease was intended to defeat LITINSKAYA's rights of possession contrary to the divorce decree. On the other side, the occupants would have been granted the statutory right to defend the lease, including but not limited to, the memorandum of lease dated March 25, 2003 that was sent to the title company for recordation, the lease itself and any other admissible evidence, testimonial or documentary, to substantiate its authenticity and its enforceability."

 

"In addition to all of the above, this court finds it a deviation from traditional and customary legal practices for BEINERT to have his junior associate act as trial counsel in this case. As the presiding judge in many legal fee cases and trial counsel in many more cases of like substance, it is customary in the legal community for the Plaintiff to retain outside counsel in cases such as this one. In many instances, those outside counselors have an ongoing relationship with the law firm; many act, of counsel, on behalf of the firm as trial counsel or specialize in areas unfamiliar to the law firm. The trial transcript in this case speaks volumes of imprudence, inexperience and developing trial skills. It is apparent that no one, not even the managing partner, consulted with outside counsel to discern the requisite elements to prove a legal fee dispute case. Had such action been taken, maybe this action would have been avoided altogether. This court was remorseful that a young associate was obligated to act as trial counsel for his employer in this legal fee case. This court would discourage such uncustomary and irresponsible practice.

Based on the above analysis, the legal fees are reduced as stated in the annexed Schedule "A" and are based on these grounds. Any and all teleconference bills with "ALEX" are disallowed. According to the testimony of the principal of the law office, ALEX was a former client who introduced the parties, however, the Defendant retained the law firm. Since ALEX is not the party that retained the law firm and no evidence was produced that he had a Power of Attorney to act on behalf of the Defendant or any testimony that the Defendant authorized him to act on her behalf, all bills to the Defendant which state "teleconference with Alex" or the like are denied.

In addition, any and all bills that lacked specificity and were too generalized to disclose the nature and scope of the legal services rendered, are likewise disallowed. The bills, as described in Schedule "A" that are disallowed is replicated verbatim from the BEINERT legal fee bills. BEINERT also did not annexed to the bills or present to the court for review, any schedule of the names of the different employees that worked on the case. At the very least the Defendant should have known the name(s) and rank of the individual that billed for services.

After a careful review and complete analysis of the trial transcript and documentary evidence admitted at trial, the Plaintiff law firm failed to substantiate entitlement to the legal fees billed the Defendant. "

 

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A Medical Malpractice Loss, A Legal Malpractice Win

A frequent scenario in medical malpractice litigation is the attorney or firm that takes on a case, assures the client that it has merit, obtains a certificate of merit to file the complaint, goes through discovery, and then fails to hire an expert.  At that point the law firm asks to be relieved, and often that motion is granted.  Whether the reason is that the law firm does not wish to pay the expensive expert fee, or simply wants to settle, but not try cases, is unknown.  What is known is that many a plaintiff has been left high and dry.  When the law firm seeks to get out early enough they are usually allowed to do so.  Here, not so much.

Snyder v Brown Chiari, LLP   2014 NY Slip Op 02363   Decided on April 3, 2014   Appellate Division, Third Department
"In late 2002, plaintiff underwent a surgical procedure and shortly thereafter developed complications that resulted in three further surgeries, none of which was successful. She retained defendants, which commenced a medical malpractice action in March 2004 against the physician who had performed the initial surgery as well as that physician's partnership. In late February 2007, and with a trial date scheduled for early March 2007, defendants attempted to withdraw as counsel to plaintiff because, among other things, an expert had not been retained. Supreme Court (Falvey, J.) denied defendants' motion to withdraw as counsel to plaintiff, granted a motion by the defendants in the medical malpractice action to preclude plaintiff from offering expert testimony at trial and, because a prima facie case could not be established without expert proof, dismissed the medical malpractice action. When plaintiff attempted to obtain her file from defendants, Supreme Court permitted a lien for defendants' disbursements of $7,500.45. "

"Plaintiff stated a cause of action for legal malpractice. Elements of such a cause of action include "establish[ing] both that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff, and that the plaintiff would have succeeded on the merits of the underlying action 'but for' the attorney's negligence" (AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007] [internal citations omitted]; accord Alaimo v McGeorge, 69 AD3d 1032, 1034 [2010])."

"Here, plaintiff submitted, among other things, an affidavit and attached memorandum from a physician licensed in New York. This physician had been consulted by defendants in 2003, and he produced his memorandum from such time which set forth in ample detail for purposes of opposing a motion to dismiss that plaintiff's surgeon deviated from appropriate care. His affidavit reaffirmed that he believed there was malpractice in the treatment of plaintiff by her surgeon and, further, stated that he had been available to testify at the scheduled 2007 trial, but was never contacted by defendants. Such proof, together with the detailed allegations in the complaint, state a cause of action. "

 

 

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Fee Disputes and Legal Malpractice

CLE speakers constantly tell the attendant attorneys that fee disputes against their client will trigger a legal malpractice claim.  Insurers ask whether attorneys sue for or have sued for a fee in the recent past.  They too must be worrying about a retaliatory legal malpractice suit.  It seems that Wagner Davis P.C. v Gargano  2014 NY Slip Op 02247  Decided on April 1, 2014  Appellate Division, First Department is the poster child for this advice.  Put another way, client did not want to pay the $ 56,000+ fee, which was too large for arbitration.  Legal malpractice, unsuccessfully, followed.

"In this action for unpaid legal fees, defendants asserted a counterclaim for legal malpractice alleging that they would have prevailed on a motion for a preliminary injunction in the underlying action commenced by defendants against their neighbors over a retaining wall between their properties, if it had been made earlier by plaintiff. However, defendants failed to establish that they would have been successful on the motion absent counsel's delay (see Warshaw Burstein Cohen Schlesinger & Kuh, LLP v Longmire, 106 AD3d 536, 536 [1st Dept 2013], lv dismissed 21 NY3d 1059 [2013]). In any event, plaintiff's delay while a new expert prepared a report on the challenged retaining wall, was a reasonable strategic decision that cannot form the basis of a malpractice claim (Morrison Cohen Singer & Weinstein v Zuker, 203 AD2d 119, 119 [1st Dept 1994]).

Defendants' contention that the claims for fees should not have been granted due to plaintiff's failure to comply with the rules on fee arbitration is unavailing. The complaint expressly states that the amount of damages sought is $56,943.25, which is beyond the maximum amount covered by the Fee Dispute Resolution Program (see 22 NYCRR 137.1[b][2]; Kerner & Kerner v Dunham, 46 AD3d 372 [1st Dept 2007]). Although defendants' arguments regarding [*2]the amount of the fees were deferred to an evidentiary hearing, the motion court properly declined to consider the un-notarized, out of state report of defendants' expert (see CPLR 2309; CPLR 2106).

 

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It's Definite! The Statute of Limitations for Judiciary Law 487 is 6 years

Judge Read has written the second earth shifting opinion on Judicary Law 487.  As she writes, "Judiciary Law § 487 exposes an attorney who "[i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party" to criminal (misdemeanor) liability and treble damages, to be recovered by the injured party in a civil action.

Her first opinion in the area was the very important Amalfitano v Rosenberg , 2009 NY Slip Op 01069 [12 NY3d 8]  February 12, 2009  Read, J.  Court of Appeals.  She reviewed the history of the statute: "As the District Court correctly observed, however, Judiciary Law § 487 does not derive from common-law fraud. Instead, as the Amalfitanos point out, section 487 descends from the first Statute of Westminster, which was adopted by the Parliament summoned by King Edward I of England in 1275. The relevant provision of that statute specified that

"if any Serjeant, Pleader, or other, do any manner of Deceit or Collusion in the King's Court, or consent [unto it,] in deceit of the Court [or] to beguile the Court, or the Party, and thereof be attainted, he shall be imprisoned for a Year and a Day, [*3]and from thenceforth shall not be heard to plead in [that] Court for any Man; and if he be no Pleader, he shall be imprisoned in like manner by the Space of a Year and a Day at least; and if the Trespass require greater Punishment, it shall be at the King's Pleasure" (3 Edw, ch 29; see generally Thomas Pitt Taswell-Langmead, English Constitutional History, at 153-154 [Theodore F.T. Plucknett ed, Sweet & Maxwell, 10th ed 1946]).
Five centuries later, in 1787, the Legislature adopted a law with strikingly similar language, and added an award of treble damages, as follows:

"And be it further enacted . . . [t]hat if any counsellor, attorney, solicitor, pleader, advocate, proctor, or other, do any manner of deceit or collusion, in any court of justice, or consent unto it in deceit of the court, or to beguile the court or the party, and thereof be convicted, he shall be punished by fine and imprisonment and shall moreover pay to the party grieved, treble damages, and costs of suit" (L 1787, ch 35, § 5).
In 1830, the Legislature carried forward virtually identical language in the Revised Statutes of New York, prescribing that

"[a]ny counsellor, attorney or solicitor, who shall be guilty of any deceit or collusion, or shall consent to any deceit or collusion, with intent to deceive the court or any party, shall be deemed guilty of a misdemeanor, and on conviction shall be punished by fine or imprisonment, or both, at the discretion of the court. He shall also forfeit to the party injured by his deceit or collusion, treble damages, to be{**12 NY3d at 13} recovered in a civil action" (2 Rev Stat of NY, part III, ch III, tit II, art 3, § 69, at 215-216 [2d ed 1836])."
 

Today, she wrote the opinion that decides the statute of limitations for Judicary Law 487 in Melcher v Greenberg Traurig, LLP   2014 NY Slip Op 02213   Decided on April 1, 2014   Court of Appeals
Read, J.  QuotingCardozo  in Beers v. Hotchkiss, as well as explaining how the common law of the United States started:

"Melcher points out that English statutory and common law became New York common law as part of the Colonial-era incorporation or "reception" of English law into New York law. As explained in Bogardus v Trinity Church (4 Paige Ch 178, 198 [1833]), 

"[t]he common law of the mother country as modified by positive enactments, together with the statute laws which are in force at the time of the emigration of the colonists, become in fact the common law rather than the common and statute law of the colony. The statute law of the mother country, therefore, when introduced into the colony of New-York, by common consent, because it was applicable to the colonists in their new situation, and not by legislative enactment, became a part of the common law of this province" (see also Beers v Hotchkiss, 256 NY 41, 54 [1931, Cardozo, C.J.] ["(T)he statutes of the mother country in existence at the settlement of a colony . . . are deemed to have entered into the fabric of the common law, and like the common law itself became law in the colony unless unsuited to the new conditions"] [emphasis added])."

Wow! 
 

 

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The Documents Are Insufficient...But the Case is Still Dismissed

Motions to dismiss under CPLR 3211 generally start with an (a)(7) motion and then continue with an (a)(1) motion.  Sometimes there is a statute of limitations or more esoteric argument to be made.  In Citidress II Corp. v Tokayer   2013 NY Slip Op 02369 [105 AD3d 798]   April 10, 2013
Appellate Division, Second Department  the Appellate Division gave plaintiff some faint hope in the first paragraph, and then took it all away in the second.  Documents insufficient.  However, too much speculation.
 

"The Supreme Court should not have directed the dismissal of the causes of action based on legal malpractice and breach of contract pursuant to CPLR 3211 (a) (1). The documentary evidence submitted did not resolve all factual issues as a matter of law, and did not conclusively dispose of the claims asserted by the plaintiff (see Beal Sav. Bank v Sommer, 8 NY3d 318, 324 [2007]; AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 590-591 [2005]; McCue v County of Westchester, 18 AD3d 830, 831 [2005]).

However, the Supreme Court properly determined that the complaint failed to state a cause of action. Speculative contentions about what might have happened had the defendant attorney (hereinafter the defendant) taken a different approach in litigating a case on behalf of the plaintiff were not sufficient to support the plaintiff's allegations of legal malpractice (see Humbert v Allen, 89 AD3d 804 [2011]; Dempster v Liotti, 86 AD3d 169, 180 [2011]; Wald v Berwitz, 62 AD3d 786 [2009]). Since the plaintiff failed to plead specific facts showing causation and damages, its claims of legal malpractice failed to state a cause of action (see Kuzmin v Nevsky, 74 AD3d 896, 898 [2010]; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083 [2005]). Moreover, the claims alleging breach of contract also failed to state a cause of action. These claims are duplicative of the legal malpractice cause of action because they arise from the same facts as those underlying the legal malpractice cause of action, and do not allege distinct damages (see Soni v Pryor, 102 AD3d 856 [2013]; Ofman v Katz, 89 AD3d 909, 911 [2011]). "

 

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Big Firms, Big Case, Big Headache

The business of legal representation in real estate transactions has buoyed law firms since the Magna Carta.  It is not a completely carefree practice, as Haberman v Xander Corp.  2012 NY Slip Op 31645(U)  June 11, 2012  Sup Ct, Nassau County  Docket Number: 021508/10  Judge: Randy Sue Marber demonstrates:

"It appears from the Third-Party complaint that in or about October 2002, the  Third-Part Defendant, Michael Zapson and later the Defendant, DMH, was retained by the Defendant/Third-Party Plaintiff, Xander, to represent it in connection with a legal matter relating to a parcel of real property known as 350 Shore Road, Long Beach, New York owned by the Plaintiffs herein and located adjacent to the west of real property known as 360 Shore Road owned by the Defendant/Third-Part Plaintiff, Xander. The Plaintiffs, Sinclair Haberman and Belair Building, LLC (Haberman/Belair) were the developers of the property on which several multiple dwelling buildings were to be constructed over several years. After all of the units in Xander s building (Tower A " ), the first to be constructed, located at 360 Shore Road, had been sold, the Plaintiffs, Haberman/Belair, sought to develop the adjacent property where they proposed to construct Tower "B " The building permit issued on August 12 2003, permitting construction of the second building was, however, revoked by decision of the Zoning Board of Appeals of the City of Long Beach dated December 29 2003.

In or about September 2003, the Third-Part Defendants, on behalf of the Defendant/Third-Party Plaintiff, Xander, filed a Petition (bearing Index No. 014069/03) to determine title by adverse possession to, and/or a prescriptive easement over, part of 350 Shore Road for the purpose inter alia of preserving the parking plan of 360 Shore Road. The litigation, which continued for seven years, culminated in a bench trial which resulted in dismissal of Xander's Petition by order of the Hon. William R. LaMarca entered January 15, 2010.

As a consequence of that dismissal, the Plaintiffs, Haberman/Belair commenced this action against the Defendant, Xander, and its board members alleging that because of the preliminary injunction obtained by Xander , the Plaintiffs were wrongfully prevented from proceeding with construction of Tower "B" at 350 Shore Road. The Plaintiffs allege that the adverse possession action prosecuted by Xander constituted malicious prosecution for which they seek to recover damages as well as the amount of the undertaking.

Inasmuch as the relief sought in the counterclaim asserted by Xander in the action (Index No. 002496/10), before the Hon. Antonio Brandveen  damages in an amount to be determined at trial to recoup part of the attorneys' fees it has already paid as a result of Plaintiff DMH's' s conduct" is different from the indemnification and/or contribution claims Xander asserts in the amended Third-Part complaint in this action, there is no basis  to dismiss the Third-Part complaint on CPLR ~ 3211 (a) (4) grounds as there are not two action(s) pending between the same parties for the same cause of action in a court of any state or the United States. Nor was there any basis to order consolidation of the two actions. A motion for joint trial pursuant to CPLR  602 ( a) rests in the sound discretion of the court. Nationwide Assoc. v. Targee St. Internal Med Group, P. 286 A.D 2d 717,718 (2d Dept. 2001). Where common questions of law or fact exist , a motion to consolidate
or for a joint trial pursuant to CPLR 602 (a) will be granted absent a showing of prejudice  to a substantial right of the part opposing the motion. Whitman v. Parsons Transp. Group of NY, Inc. 72 A. 3d 677 678 (2d Dept. 2010). The court finds no basis, equitable or otherwise, that the claim by the Defendant/Third-Party Xander's former attorneys for unpaid counsel fees for services rendered, settled on June 1 2012, should have been delayed or resolved in the context of the malicious prosecution claim in which the Defendant/Third-Part Plaintiff, Xander, seeks contribution and indemnification for any damages the Plaintiff, Haberman/Belair , may recover against it in this action."

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What That Stipulation Actually Means

A stipulation to answer or respond to a complaint covers a motion to dismiss as well as any other possible "response."  So the pro-se plaintiff found in Bob v Cohen   2013 NY Slip Op 02499 [105 AD3d 530]   April 16, 2013   Appellate Division, First Department.  After defendants were permitted to move to dismiss, the AD then affirmed dismissal because the Workers' Compensation Board awarded legal fees to the law firm.  Under these circumstances, case over.

 "Defendants' motion to dismiss was not untimely, as found by the motion court, since the parties had stipulated, both orally and in writing, to extend defendants' time to "respond" to the complaint to January 31, 2011, and defendants had served and filed their motion to dismiss by that date (see DiIorio v Antonelli, 240 AD2d 537 [2d Dept 1997]; Del Valle v Office of Dist. Attorney of Bronx County, 215 AD2d 258 [1st Dept 1995]; CPLR 320 [a]; 3211 [e]; compare McGee v Dunn, 75 AD3d 624, 625 [2d Dept 2010]). On the merits, defendants were entitled to dismissal of this legal malpractice action commenced by their former client on res judicata grounds. The Workers' Compensation Board's award of legal fees to defendants, imposed as a lien against the ultimate award of compensation to plaintiff (see Workers' Compensation Law § 24), precludes plaintiff's present claim that defendants represented him negligently, a claim that could have been raised in opposition to defendants' fee application (see e.g. Lusk v Weinstein, 85 AD3d 445 [1st Dept 2011], lv denied 17 NY3d 709 [2011]; Zito v Fischbein Badillo Wagner Harding, 80 AD3d 520 [1st Dept 2011]). "
 

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The Professionals Duke It Out in Legal Malpractice

This case illustrates what happens when defendants and third-parties are fighting, while plaintiff remains on the sidelines, enjoying a brief respite.  When this happens in a legal malpractice case, the spectacle of legal malpractice defense firm arguing with a legal malpractice defense firm over technical dismissals is a touch ironic.

Balkheimer v Spanton  2013 NY Slip Op 00715 [103 AD3d 603]  Appellate Division, Second Department   is one such example.  

"In an action to recover damages for legal malpractice, the third-party defendants appeal from an order of the Supreme Court, Suffolk County (Tanenbaum, J.), dated December 9, 2011, which denied their motion pursuant to CPLR 3211 (a) (5) and (7) to dismiss the third-party complaint.

Ordered that the order is reversed, on the law, with costs, and the motion of the third-party defendants pursuant to CPLR 3211 (a) (5) and (7) to dismiss the third-party complaint is granted.

Pursuant to General Obligations Law § 15-108 (b), "[a] release given in good faith by the injured person to one tortfeasor as provided in [General Obligations Law § 15-108 (a)] relieves him [or her] from liability to any other person for contribution as provided in article fourteen of the civil practice law and rules." Here, the plaintiffs executed a general release in favor of the third-party defendants. There is no indication in the record that the release was not executed in good faith. Therefore, pursuant to General Obligations Law § 15-108 (b), the third-party defendants are relieved from liability to the third-party plaintiffs for contribution (see Ziviello v O'Boyle, 90 AD3d 916, 917 [2011]; Kagan v Jacobs, 260 AD2d 442 [1999]). Accordingly, the Supreme Court should have granted that branch of the motion of the third-party defendants which was pursuant to CPLR 3211 (a) (5) to dismiss the contribution cause of action in the third-party complaint as barred by the release.

Here, the third-party complaint does not allege the existence of any duty owed by the third-party defendants to the third-party plaintiffs (see Raquet v Braun, 90 NY2d at 183; Breen v Law Off. of Bruce A. Barket, P.C., 52 AD3d 635, 638 [2008]; Keeley v Tracy, 301 AD2d 502, 503 [2003]). Furthermore, the third-party plaintiffs would not be compelled to pay damages for the alleged negligent acts of the third-party defendants (see Lovino, Inc. v Lavallee Law Offs., 96 AD3d at 910; Jakobleff v Cerrato, Sweeney & Cohn, 97 AD2d 786, 786-787 [1983]). Accordingly, the Supreme Court should have granted that branch of the motion of the third-party defendants which was pursuant to CPLR 3211 (a) (7) to dismiss the common-law indemnification cause of action in the third-party complaint."

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Overbilling, Harassment and Legal Malpractice

The Appellate Division, First Department writes a short and pungent decision on an overbilling case.  In Chowaiki & Co. Fine Art Ltd. v Lacher   2014 NY Slip Op 01992   Decided on March 25, 2014   Appellate Division, First Department dismissal of certain of the claims are affirmed, and some are permitted to continue.  Unjust enrichment in addition to breach of contract remain, and plaintiff is not required to elect.  From the decision:
 

"In this action arising from defendant attorney and his law firm's representation of plaintiffs in an action brought against them by a former employee, plaintiffs allege that they were excessively billed for services rendered, and that they were harassed, threatened and coerced into paying the excessive and overinflated fees. The motion court properly dismissed plaintiffs' claim for breach of fiduciary duty as duplicative of the breach of contract claim, since the claims are premised upon the same facts and seek identical damages, return of the excessive fees paid (see CMMF, LLC v J.P. Morgan Inv. Mgt. Inc., 78 AD3d 562 [1st Dept 2010]; cf. Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1 [1st Dept 2008]). Although plaintiffs sufficiently allege an independent duty owed to them, arising from the attorney-client relationship, the fraud claim is similarly redundant of the breach of contract claim, since it also seeks the same damages (see Coppola v Applied Elec. Corp., 288 AD2d 41, 42 [1st Dept 2001]; Makastchian v Oxford Health Plans, 270 AD2d 25, 27 [1st Dept 2000]).

However, we find that, as a dispute exists as to the application of the retainer agreement as to defendant, plaintiffs need not elect their remedies and may pursue a quasi-contractual claim for unjust enrichment, as an alternative claim (see Wilmoth v Sandor, 259 AD2d 252, 254 [1st Dept 1999]).

The cause of action based upon Judiciary Law § 487 was properly dismissed since relief under this statute is not lightly given and the conduct alleged does not establish the existence of a chronic and/or extreme pattern of legal delinquency which caused damages (see Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 13 [1st Dept 2008], lv denied 12 NY3d 715 [2009]; Nason v Fisher, 36 AD3d 486, 487 [1st Dept 2007]). [*2]

Plaintiffs' claims of excessive billing and related conduct, which actions are not alleged to have adversely affected their claims or defenses in the underlying action, do not state a claim for legal malpractice (see e.g. AmBase Corp. v Davis, Polk & Wardwell, 8 NY3d 428, 434 [2007]). "

 

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A House Sale Goes Wrong. Was the Attorney to Blame?

We've recently reported on a legal malpractice in a  $25 Million real estate project, as well as in a $ 40 Million re-insurance deal.  Here, plaintiff feels no less stung in a single house real estate transaction gone bad.  Was the attorney to blame?  So far the case avoided dismissal under CPLR 3211.  Whether it will ever go to trial is a different question.

Arias v Arbelaez   2014 NY Slip Op 50428(U)   Decided on March 17, 2014   Supreme Court, Queens County   McDonald, J. we see some sophisticated and unsophisticated people fooling around with real estate and mortgages.  
 

"According to the supplemental summons and amended verified complaint, filed on October 3, 2013, the plaintiff, Amparo Arias, was approached by defendant, Jorge E. Arbelaez, with respect to purchasing the subject premises, a residential property located at 250-02, 87th Avenue, Bellerose, New York. Plaintiff alleges that on December 17, 2011, she entered into a written "Acquisition Agreement" with Arbelaez whereby plaintiff would provide the necessary funds to acquire the property, and Arbelaez would handle the administrative process. The agreement stated that each party would be a 50% owner of a corporation known as "THREE A'S 250-02 LLC" formed to hold title of the premises and the corporation would hold the title in trust for the benefit of the plaintiff with title to ultimately pass to the plaintiff as the equitable owner on a future date. In order to acquire the premises, the buyer, THREE A'S 250-02 LLC, was to assume four separate mortgages totaling $550,000 and plaintiff would put up $50,000 for the acquisition of the property. The complaint states that defendant Hector Marichal represented the plaintiff, defendant Arbelaez, and the corporation in the acquisition of the premises.

Plaintiff alleges that she paid $50,000, a portion of which went to Arbelaez and a portion to Hector Marichal, as attorney, to cover the costs of acquiring the premises. On March 2, 2012 the corporation was taking title to the property subject to the four mortgages. Plaintiff claims that subsequent to the purchase she expended an additional $60,000 to settle and satisfy three existing mortgages on the property. Plaintiff claims that in March 2013 defendants Arbelaez and Marichal did not remit any of the monies she paid towards the first mortgage and as a result the property is in foreclosure. In addition, plaintiff contends that she did not receive marketable title in her name nor has she received any of the corporate documents for Three A's 25-02 LLC after repeated requests.
 

Plaintiff asserts causes of action for a constructive trust asserting that the plaintiff is the equitable owner of the property and that nominal title was taken in the name of the corporation on behalf of the plaintiff and that despite her investment of $110,000 defendants have refused to reconvey title to the plaintiff. Plaintiff alleges that as a result, the defendants will be unjustly enriched if the premises are [*3]permitted to remain as presently titled.

With respect to defendant Hector Marichal, the complaint alleges that he was part of a conspiracy with the other defendants in which they had a preconceived intention not to honor their obligations to plaintiff but rather to secure their business interests for their own benefit. Therefore, plaintiff asserts causes of action against Hector Marichal for fraud, breach of fiduciary duty, breach of contract and legal malpractice. Plaintiff asserts in this regard that Marichal had no intention of fully representing plaintiff in the transaction and induced the plaintiff to transfer at least $110,000 to defendant as legal fees and acquisition costs. Counsel alleges that Marichal breached his legal and contractual duties to the plaintiff by engaging in fraudulent and deceitful conduct, failing to deliver marketable title, failing to inform plaintiff that the premises was in foreclosure prior to the purchase, and failing to disclose his conflict of interest with the seller, Ramirez.
 

Here, accepting the allegations in the complaint as true, according the plaintiff the benefit of every favorable inference, and determining only whether the allegations fit within any cognizable legal theory (see DeSandolo v United Airlines Inc., 71 AD3d 1073 [2d Dept.2010]; AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 58 [2005]), this Court finds that the plaintiff has sufficiently stated a cause of action for fraud, legal malpractice and breach of fiduciary duty against Marichal. In the early stages of litigation such as the pre-discovery stage, "plaintiffs are entitled to the most favorable inferences, including inferences arising from the positions and responsibilities of defendants," and "plaintiffs need only set forth sufficient information to apprise defendants of the alleged wrongs" (DDJ Mgt., LLC v Rhone Group L.L.C., 78 AD3d 442 [1st Dept. 2010]; also see Selechnik v Law Off. of Howard R. Birnbach, 82 AD3d 1077 [2d Dept. 2011).
 

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When May One Begin a Legal Malpractice Case?

A persistent problem in legal malpractice (and in accounting malpractice) cases is the delayed damages issue.  Put simply, attorney advises on how to accomplish a goal and prepares papers on January 2.  Client uses the advice and paperwork to start a process and the other side resists.  Litigation ensues and 4 years later the other side wins.  When does the statute of limitations end?

For the most part, the rule is that the statute of limitations commences on the day the negligent advice is given, and is extended only by continuous representation.  This is true, even though no damages existed until the other side won, a year after the statute ran,

in XE Partners, LLC v Skadden Arps Slate Meagher &  Flom LLP    2014 NY Slip Op 30668(U)
March 6, 2014  Sup Ct, New York County  Docket Number: 152994/2013  Judge: Eileen Bransten we see this issue:

"Under New York law, "[i]t is well settled that a legal malpractice claim accrues when all the facts necessary to file the cause have occurred and the injured party can obtain relief in court.'' Creditanstalt Inv. Bank AG v. Chadbourne & Parke LLP, 14 A.D.3d 414, 415 (1st Dep't  2005). "What is important is when the malpractice was committed, not when the client discovered it." McCoy v. Feinman, 99 N.Y.2d 295, 301 (2002).


As explained by the Court of Appeals in the accounting malpractice context: "the claim accrues upon the client's receipt of the accountant's work product since this is the  point that a client reasonably relies on the accountant's skill and advice and, as a consequence of such reliance, can become liable for tax deficiencies.'' Ackerman v. Price Waterhouse, 84 N.Y.2d 53, 541 (1994). Receipt of the accountant's advice "is the time when all the facts necessary to the cause of action have occurred and an injured party can obtain relief." Id. The reasoning of Ackerman has been extended to attorney malpractice claims. For example, in Proskauer Rose Goetz & Mendelsohn LLP v. Munao, 270 A.D.2d 150 (1st Dep't 2000), the First Department cited Ackerman in holding that a client's legal malpractice counterclaims accrued when the client received defendant's purportedly
negligent work product. See id. at 151 ("The counterclaims accrued in April 1991, when plaintiff allegedly gave defendants negligent advice that they could shelter income through a certain joint venture."). The First Department likewise held in Nuzum v. Field, 106 A.D.3d 541, 541 (1st Dep't 2013), deeming legal malpractice claims brought in connection with the drafting of promissory notes time-barred where brought more than three years after the allegedly defective documents were prepared. See also Mark v. Dechert, LLP, 58 A.D.3d 553, 554 (lst Dep't 2009) ("Plaintiffs' legal
malpractice claim is barred by the statute of limitations (CPLR 214[6]), which began to run in January 2000, when the merger of the corporate plaintiffs was completed and defendant law firm filed the merger documents."). Viewed in this framework, Plaintiffs legal malpractice cause of action is clearly barred by the statute of limitations. Plaintiffs claim accrued when Defendants' allegedly negligent work product was received by Defendants. To paraphrase Ackerman, this was
the time when all the facts necessary to the cause of action occurred and when Plaintiff was able to obtain relief. Since the advice was given in 2008, Plaintiffs 2013 filing was untimely. 

In opposition, Plaintiff contends that it did not suffer an "actionable injury" until the adverse arbitral finding, and as such~ had no claim until that point. However, the First Department rejected a similar argument in Lincoln Place, LLC v. RVP Consulting, Inc.,  70 A.D.3d 594 (1st Dep't 2010), dismissing a claim asserting legal malpractice in the drafting of a lease assignment as time-barred where the claim was brought five years after lease assignment was executed. While the plaintiff-client argued that its claim did not accrue until it was found liable for outstanding rent due to the faulty assignment, the First Department held otherwise, stating that the collateral adjudication "was not a prerequisite to the existence of an actionable injury." Id. at 594. Likewise here, the resolution of the arbitration was not a prerequisite to a pleading of"actionable injury" by XE Partners. Accordingly, Plaintiffs claim did not accrue after the arbitration ruling in 2010; instead,
consistent with Ackerman, such claim accrued when the legal advice was received. Plaintiff cites to a Second Department case, Frederick v. Meighan, 75 A.D2d 528 (2d Dep't 20l0) for the contrary proposition. Even accepting Plaintiffs reading of Frederick as correct for the sake of argument, this reading is in conflict with Ackerman and its First Department progeny and therefore is not controlling.

Thus, for the foregoing reasons, Defendants' motion to dismiss is granted on statute of limitations grounds.

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3 Lessons to Learn From This Legal Malpractice Case

Milgram Thomajan & Lee, P.C. v Golden Gate Petroleum, P.C.    2014 NY Slip Op 24063   Decided on March 19, 2014   Appellate Term, First Department  teaches three lessons.  One is that a well written letter to the client during litigation warning of potential problems in choosing one course of conduct over another may sway the outcome.  The second is that strategic choices, supported by good reasons will often defeat legal malpractice claims and the third is that unpaid legal services, especially those that are recouped from a bankruptcy, can be very powerful.
 

"The action arises out of plaintiff's representation of the first-named defendant, a petroleum importer, in connection with an administrative protest of a customs duty assessment imposed on a shipment of gasoline and related chemicals. The jury's verdict, finding that plaintiff did not commit malpractice in its underlying representation of defendant, was not against the weight of the evidence. The trial evidence, fairly interpreted, supports the jury's evident rejection of defendant's contention that but for plaintiff's advice, defendant would have prevailed in the underlying customs protest, one which, the record shows, defendant elected to pursue in the face of plaintiff's frank admonition that it "may prove a tough fight, the outcome of which cannot be predicted with any certainty." The evidence, including the conflicting expert opinion testimony, permitted the jury to conclude that, in advising defendant, the lawyers of plaintiff law firm did not disregard settled law (see Darby & Darby v VSI Intl., 95 NY2d 308, 313 [2000]) and would have permitted a jury finding that the advice itself was not the proximate cause of defendant's losses (see Chadbourne & Parke, LLP v HGK Asset Mgt., Inc., 295 AD2d 208, 209 [2002]). And while defendant posits several alternative courses that plaintiff might have pursued in the underlying administrative protest, it failed to show that the tactical decisions made by the firm did not constitute "proper strategic legal decision-making" (Taylor v Paskoff & Tamber, LLP, 102 AD3d 446, 448 [2013]), or so the jury reasonably could find. Nor was the jury's consideration of the legal malpractice issue shown to have been compromised in any way [*2]by the form of the verdict sheet, particularly when that document is viewed in the context of the charge as a whole (see Plunkett v Emergency Med. Serv., 234 AD2d 162, 163 [1996]).

The record discloses no evidentiary error warranting reversal. The out-of-court statements made by defendant's (now) deceased chief financial officer were admissible under the "speaking agent" exception to the hearsay rule (see Loschiavo v Port. Auth. of New York & New Jersey, 58 NY2d 1040, 1041 [1983]). Further, in light of the voluminous evidence considered by the jury, including over 60 trial exhibits introduced by defendant, any error in the exclusion of the two documents now complained of by defendant would have been harmless (see Ramkison v New York City Hous. Auth., 209 AD2d 256, 256 [2000]).

We note finally that the court properly directed a verdict in favor of plaintiff on its main claim for unpaid legal services, a claim which, as one abandoned by plaintiff's trustee in bankruptcy, revested in plaintiff at the close of the bankruptcy proceeding (see Dynamics Corp. of Am. v Marine Midland Bank—New York, 69 NY2d 191, 195-196 [1987]; Culver v Parsons, 7 AD3d 931, 932 [2004]). "

 

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Move Quickly or Lose the Advantage in Legal Malpractice

Plaintiff sues several attorneys, and waits until nearly the end of the 120 day period to serve the summons and complaint.  Service is not complete (mailing was later) and each of the defendants has a viable CPLR 306-b defense.  One defendant moved within 60 days to dismiss and one did not.  That 60 day time period under CPLR 3211(e)  is vastly important.  As we see in Qing Dong v. Chen Mao Kao 2014 NY Slip Op 01735  Decided on March 19, 2014  Appellate Division, Second Department

"Contrary to the plaintiff's contention, service of the summons and complaint upon Chen Mao Kao and Dickman was not made within 120 days of the commencement of the action as required by CPLR 306-b. Although the summons and complaint were delivered to persons of suitable age and discretion at the actual places of business of those defendants on November 4, 2011, one day before the expiration of the 120-day period, service was not completed within that time frame because the second act required by CPLR 308(2), the mailing, was not performed within the 120-day period (see Furey v Milgrom, 44 AD2d 91, 92-93; see also Siegel, NY Prac § 72 at 120 [5th ed 2011]). Also contrary to the plaintiff's contention, considering all of the circumstances of this case, the Supreme Court providently exercised its discretion in denying her cross motion to extend the time to serve the summons and complaint upon Chen Mao Kao and Dickman, nunc pro tunc, in the interest of justice (see CPLR 306-b; Leader v Maroney, Ponzini & Spencer, 97 NY2d 95, 105-106; Khodeeva v Chi Chung Yip, 84 AD3d 1030, 1030-1031; Calloway v Wells, 79 AD3d 786, 786-787). Accordingly, the Supreme Court properly granted Dickman's motion, and properly denied the plaintiff's cross motion.

The Supreme Court also properly denied that branch of Chen Mao Kao's cross motion which was pursuant to CPLR 306-b to dismiss the complaint insofar as asserted against him. Chen Mao Kao waived his objection that he was not timely served with the summons and complaint by failing to move for judgment on that ground within 60 days after serving his answer (see CPLR 3211[e])."

 

 

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Not All Damages Are Permitted in Legal Malpractice

For policy reasons New York Courts limit the types of damages that might be awarded in legal malpractice. Basically, as the NY Court of Appeals recently reiterated, only pecuniary loss may be the subject of legal malpractice litigation. This specifically and totally leaves out any type of emotional damages. Nevertheless people suffer these injuries when their attorneys are neglectful.

White v Chelli & Bush 2013 NY Slip Op 30491(U)    Supreme Court, Richmond County Docket Number: 103745/11 Judge: Joseph J. Maltese is one such example.

"The plaintiff has been deaf since birth. After an automobile accident on or about April 16, 2007, the plaintiff retained Chelli & Bush to represent her in a personal injury litigation. According to the plaintiff’s allegations, it was communicated to the attorneys that the plaintiff would require a sign language interpreter during all phases of the litigation. On or about November 28, 2007 the law firm of Chelli & Bush commenced a personal injury action on behalf of the plaintiff captioned White v. Varsertriger, Index No. 104489/2007. The plaintiff maintains [* 1] that the defendants failed to provide sign language interpreters as requested, except for the examination before trial and the preceding preparation."

"The plaintiff’s basis for her legal malpractice claim occurs at paragraphs 63 and 64 in her
amended complaint that allege that the defendants inability to communicate with her represents a
failure to comply with an attorney’s basic ethical obligation. At paragraphs 66 and 67 the plaintiff alleges the following damages:
66. As a consequence of Defendants’ actions and inactions, White experienced feelings of frustration, helplessness and inadequacy throughout the pendency of the litigation and during settlement conferences. Thereafter, she has experienced sleep and appetite disturbances, episodes of crying, fearfulness or trepidation, and feelings of worthlessness, anxiety and depression.

67. As a consequence of Defendants’ actions and inactions,  Plaintiff has been prejudiced and suffered severe emotional distress and is entitled to compensatory damages. The Appellate Division, Second Department has made it clear that claims of damages stemming from the intentional infliction of emotional distress are not recoverable in legal malpractice actions.

“Damages in a legal malpractice case are designed ‘to make the injured client whole’ . . . A plaintiff’s damages may include ‘litigation expenses incurred in attempt to avoid, minimize, or
reduce the damage caused by the attorney’s wrongful conduct’. . .” While the Court of Appeals
has held that plaintiff may be awarded litigation expenses incurred to correct an attorney’s error,
it specifically rejected the notion that a plaintiff could be reimbursed for the expenses incurred
because of an attorney’s negligence.8 Consequently, the plaintiff’s claims for damages based on
the costs and attorney’s fees of this law suit is without merit."
 

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Judiciary Law 487? Yes. Everything Else? No.

SuccessfulJudiciary Law 487 cases are more rare than those dismissed. An attempt to deceive courts coupled with sufficiently egregious behavior is necessary.  Courts often reject plaintiff's attempts to portray attorney conduct as deceitful, finding instead that it is within normal limits.

In Cohen v Kachroo   2014 NY Slip Op 01674   Decided on March 13, 2014   Appellate Division, First Department  the Court finds that the attorneys attempted to deceive the Courts with claims that the clients just were not paying the bills.  In the past, we have seen these kind of claims to be more or less "boilerplate."  Here is what the AD said about the various claims in the case:
 

"To the extent that plaintiff seeks to allege malpractice based on a violation of the New York Rules of Professional Conduct, such an alleged violation does not, without more, support a malpractice claim (Schafrann v N.V. Famka, Inc., 14 AD3d 363 [1st Dept 2005]; see also Sumo Container Sta. v Evans, Orr Pacelli, Norton & Laffan, 278 AD2d 169, 170-171 [1st Dept 2000]). Moreover, "[t]he violation of a disciplinary rule does not, without more, generate a cause of action" (Schwartz v Olshan Grundman Frome & Rosenzweig, 302 AD2d 193, 199 [1st Dept 2003]).

Plaintiff's cause of action alleging breach of fiduciary duty is dismissed as duplicative of the legal malpractice cause of action. Contrary to plaintiff's assertion, the breach of fiduciary [*2]duty claim alleged no new facts and sought the same damages as the legal malpractice claim (Cobble Cr. Consulting, Inc. v Sichenzia Ross Friedman Ference LLP, 110 AD3d 550, 551 [1st Dept 2013]; Garnett v Fox, Horan & Camerini, LLP, 82 AD3d 435, 436 [1st Dept 2011]).

The allegations that defendants were fully paid under the terms of the retainer agreement, but falsely represented in court that they sought to be relieved because they had not been paid, suffice to allege that defendants acted with intent to deceive the respective courts (see e.g. Schindler v Issler & Schrage, 262 AD2d 226 [1st Dept 1999], lv dismissed 94 NY2d 791 [1999]). In addition, plaintiff sufficiently alleged a chronic and extreme pattern of legal delinquency by averring that defendants fabricated certain charges, attempted to extract more money than agreed upon in the retainer, and threatened to abandon the matter if plaintiff did not execute an addendum to the retainer, to defendants' benefit (see e.g. Kinberg v Opinsky, 51 AD3d 548, 549 [1st Dept 2008]). The allegedly false representations in two courts, and the coercive threats to plaintiff in an attempt to elicit additional remuneration are sufficiently egregious to state a claim for punitive damages (see Dobroshi v Bank of Am., N.A., 65 AD3d 882, 884 [1st Dept 2009], lv dismissed 14 NY3d 785 [2010]; Smith v Lightning Bolt Prods., 861 F2d 363, 372-373 [2d Cir 1988]).
 

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It's Not Scandalous to Plead A Conflict of Interest

Sometimes, but rarely a defendant will move to strike pleadings that are "scandalous and prejudicial" under CPLR 3024(b).  Sometimes it just does not work.  In those instances, as in Armstrong v Blank Rome LLP  2014 NY Slip Op 30570(U)  March 6, 2014  Sup Ct, NY County
Docket Number: 651881/2013  Judge: Anil C. Singh, the court disagrees and finds the pleadings to be necessary and proper.  Defendants get to dismiss a GBL cause of action, but not the main claims.

Plaintiff commenced divorce proceedings against Michael Armstrong in June of 2009. On or about November 17, 2009, plaintiff retained the services of the defendants to represent her in these proceedings. Defendants undertook review of an extensive file generated by plaintiff's prior Counsel, and consented to a scheduling order obliging the parties to exchange documents by December 31, 2009, and sworn net worth statements by January 9, 2010. On April 7, 2010, defendants hired Martin I. Blaustein, C.P .A. to advise on marital spending and lifestyle, the value of Mr. Armstrong's professional licenses and components of the latter's income. Defendants, allegedly based on the strategic advice of their expert, Mr. Blaustein, advised plaintiff to waive valuation, for distributive purposes, of Mr. Armstrong's professional securities licenses. In waiving this valuation on counsel's advice, the plaintiff complains that she improvidently deprived herself of her marital share of an asset valued by her own expert, Mr. Blaustein, at $16,167,000.00.
The gravamen of plaintiffs conflict-of-interest allegations is the professional relationship between defendant Blank Rome and her ex-husband's employer, Morgan Stanley, for which Blank Rome was engaged in lucrative transactional representation in Pennsylvania. Plaintiff contends that the desire to maintain and augment Blank Rome's billings to Morgan Stanley, motivated the individual partners, defendants Norman Heller and Dylan Mitchell, as well as Blank Rome as an entity, to "throw her under the bus."

Plaintiff maintains that the position of her ex-husband, Mr. Armstrong, is so exalted at Goldman Sachs, and that his interests and his company's were so intertwined, as to lend credibility to her allegations. In any event, it is undisputed that no disclosure of this concμrrent professional engagement with Morgan Stanley was ever made to plaintiff, nor was any waiver thereof obtained from her. "In general, we may conclude that 'unnecessarily' pleaded means 'irrelevant.' We should test this by the rules of evidence and draw the rule accordingly .... (I)f the item would be admissible at trial under the evidentiary rules of relevancy, its inclusion in the pleading, whether or not it constitutes ideal pleading, would not justify a motion to strike under CPLR 3024."
(David D. Siegel, Practice Commentaries, McKinney's Cons Laws of N Y, Book 7B, CPLR C:3024:4 at 323 as cited in Soumayah v. Minelli, 41 AD3d 390, 393 [1st Dept 2007], app. withdrawn 9. NY3d 989) "'Where evidence of the facts pleaded in the allegations has any bearing on the subject matter of the litigation and is a proper subject of proof, the presence of such matter involves no prejudice and the allegations are not irrelevant to the cause of action pleaded' [citation omitted.]" Tomasello v Trump, 30 Misc 2d 643, 649 [Sup Ct, Queens County, 1961].) Measured by these standards, defendants have failed to show that the paragraphs complained of lack evidentiary relevance, apparent necessity, or have demonstrated any prejudice resulting from their inclusion. Accordingly, this branch of the motion to strike them is denied."
 

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Mistakes in the Representation, Mistakes in His Own Defense, Huge Legal Malpractice Verdict

Borges v Placeres  2014 NY Slip Op 24053  Decided on March 5, 2014  Appellate Term, First Department  is rather an amazing story.  On one level it is the vindication of a man harmed, on another level it is the story of mistake piled on top of mistake, and in the end, our guess is that there will be a very minimal recovery.   Damages are $1,249,121.37 and it seems to be for mental and emotional disturbance as well as for non-economic damages.  Neither of these types of damages are permissible in Legal Malpractice cases under Dombrowski v. Bulson, 19 NY3d 347 (2012)
 

We wonder whether there was any insurance. based upon the identity of the defense attorney.

Mistakes in the representation:  This legal malpractice action arises out of defendant-attorney's representation of plaintiff, a Venezuelan native, in connection with an immigration matter. The trial evidence showed, and it is not seriously disputed, that despite a specific directive by the United States Immigration Court that plaintiff personally appear in court on a specified date, defendant advised plaintiff not to comply; that plaintiff heeded defendant's advice, with neither one appearing as directed on the court date; and that the intentional nonappearance, representing defendant's purported "strategy" to "buy time," resulted in the Immigration Court's issuance of an in abstentia deportation order against plaintiff and his subsequent 14-month detention in "lockdown" custody. The jury unanimously returned a plaintiff's verdict finding that defendant committed legal malpractice, a determination not now directly challenged by defendant on sufficiency or weight of the evidence grounds.

Mistakes in the defense of the legal malpractice case:With respect to damages, it need be emphasized that our review of the jury's award may not be based on the recent decisional law relied upon by defendant - precedent holding that an award of nonpecuniary damages is generally unavailable to a plaintiff in an action for attorney malpractice (see Dombrowski v Bulson, 19 NY3d 347 [2012]). Notably, defendant did not raise an objection to the jury charge as given, instructing the jury that they could award plaintiff damages for pain and suffering, or to the corresponding question on the verdict sheet, and, indeed, defendant raised no objection at trial to the introduction of evidence regarding the mental and emotional disturbance caused by plaintiff's detention. Thus, the court's unexcepted to jury charge became the law of the case, or more accurately, "consent . . . to the law to be applied" (Martin v City of Cohoes, 37 NY2d 162, 165 [1975]; see Knobloch v Royal Globe Ins. Co., 38 NY2d 471, 477 [1976]). Moreover, defendant does not otherwise argue that the award of damages deviated materially from what would be reasonable compensation (see Harvey v Mazal American Partners, 79 NY2d 218, 225 [1992]).

Turning to the propriety of the denial of defendant's eve-of-trial motion to amend his answer, we find no abuse of the court's discretion. Defendant's motion for leave to include the Statute of Limitations as a defense was made approximately eight years after he served his initial answer, and after plaintiff engaged in discovery, motion practice and placed the case on the trial calendar, presumably spending considerable time and expense preparing for trial. Such prejudice, coupled with defendant's failure to offer an excuse for the substantial delay, warranted a denial of the motion (see Cameron v 1199 Housing Corp., 208 AD2d 454 [1994]; see also Cseh v. New York City Tr. Auth., 240 AD2d 270 [1997]). Defendant's belated motion for summary judgment on the Statute of Limitations defense was also properly denied.

 

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It's Not Malpractice, But, It's The Worst Case This Year

We read all the NY cases published that discuss legal malpractice, and once in a while we read a case that merely mentions the words "legal malpractice" in another setting. Varano v FORBA Holdings, LLC  2014 NY Slip Op 24056  Decided on March 4, 2014  Supreme Court, Onondaga County  Karalunas, J. is the most gruesome case we have read.  
 

"The Old Forba plaintiffs' treatment can be summarized as follows:

Plaintiff Bohn treated at the Syracuse Small Smiles clinic between May 2006 and March 2008, when he was between the ages of three and five. During that time he had four root canals with crowns, seven fillings, two extractions and one crown without a corresponding root canal. He was restrained twice, and on three occasions his teeth were filled without anesthesia. Compl. ¶155.

Defendant Montanye treated at the Syracuse Small Smiles clinic between June 2006 and September 2007, when he was between the ages of two and three. During that time he had four root canals with crowns and six fillings. He was restrained three times, and on three occasions his teeth were filled without anesthesia. Compl. ¶ 163.

Plaintiff Fortino treated at the Syracuse Small Smiles clinic between August 2005 and February 2007, when she was between the ages of four and six. During that time, she had nine root canals with crowns, two fillings, two crowns without corresponding root canals and one extraction. She was restrained four times. Compl. ¶157.

Plaintiff Kenyon treated at the Syracuse Small Smiles clinic between April 2005 and September 2008, when he was between the ages of three and seven. During that time, he had six root canals with crowns and seven fillings. He was restrained three times, and on three occasions his teeth were filled without anesthesia. Compl. ¶158.

Plaintiff Mathews treated at the Syracuse Small Smiles clinic between June 2005 and May 2006, when he was between the ages

of three and four. During that time, he had five teeth filled, two extractions, and one root canal with a crown. He was restrained five times, and on two occasions his teeth were filled without anesthesia. Compl. ¶160.

The defendants common to these five plaintiffs include all the New and Old Forba defendants, Naveed Aman, DDS and Koury Bonds, DDS. In addition, Yaqoob Khan, DDS is a defendant in the Montanye, Fortino, Mathews and Bohn actions, Tarek Elsafty, DDS and Dimitri Filostrat, DDS are defendants in the Montanye and Fortino actions, Janice Randazzo, DDS is a defendant in the Kenyon action, LocVinh Vuu, DDS is a defendant in the Fortino action, and Grace Yaghmai, DDS is a defendant in the Montanye action.

Treatment of the Groups 1-4 plaintiffs who are not also Old Forba plaintiffs can be summarized as follows:Plaintiff Martin treated at the Syracuse Small Smiles clinic between August 2007 and May 2008, when he was two years old. During that time, he had 10 fillings, and on four occasions his teeth were filled without anesthesia. Compl. ¶159.

Plaintiff McMahon treated at the Syracuse Small Smiles Clinic between October 2006 and November 2007, when he was between the ages of one and three. During that time he had four root canals with crowns and four fillings. He was restrained twice. Compl. ¶162.

The case is now consolidated for trial in Syracuse, in the near future.

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The Rare Insurance Company v. Law Firm Legal Malpractice Case

95% of the cases we see are former plaintiff versus their attorney, and the balance are former defendant against their attorney.  Of those, only one or two are the insurance company versus their attorney after a settlement.  Here, in The Insurance Corp. of N.Y. v Smith, Mazure,
Director, Wilkens, Young & Yagerman, P.C. 
 
2014 NY Slip Op 30494(U)   March 3, 2014
Supreme Court, New York County   Docket Number: 102485/2008  Judge: Saliann Scarpulla plaintiff has avoided summary judgment, and the law firm comes back for a second shot.

"Briefly, in this legal malpractice action, plaintiff The Insurance Corporation of  New York (Inscorp) alleges that a Smith Mazure member, Joel Simon, Esq., provided  negligent legal advice to Inscorp in late 2004 and early 2005 regarding the coverage  available under a general liability policy issued by Inscorp to G.B. Construction LLC (the  policy). Inscorp alleges that Simon negligently advised Inscorp's third-party claims administrator, Ward North America (Ward), that Inscorp was contractually obligated to provide a defense and indemnification to both G.B. Construction and West Perry, LLC in an underlying Labor Law action, captioned Soto v. West Perry, LLC, et al. (Sup Ct, NY County, index No. 114283/2001) (the Soto action). Inscorp further alleges that Smith
Mazure improperly advised it to rescind as invalid and untimely two valid late-notice-of claim
disclaimers issued by Inscorp to G.B. Construction, a subcontractor, and to West Penn, the construction site owner. Inscorp alleges that the disclaimers were, in fact, enforceable because West Perry was not an additional insured under the policy, and because neither G.B. Construction nor West Perry had satisfied the policy's notice-of claim requirements."

In the prior order, this court denied Smith Mazure's summary judgment motion, holding that the parties raised triable issues regarding, among other things, whether Smith Mazure improperly simultaneously represented Inscorp and United National Insurance Group (UNG) on the relevant dates in November 2004 through February 2005 with respect to available insurance coverage for West Pen;r and G.B. Construction in the Soto action. In the prior order, the court also found that triable issues existed regarding whether the alleged negligent legal advice was a proximate cause of Inscorp's damages, and held that the damages alleged were sufficiently ascertainable to sustain a legal malpractice claim.

Smith Mazure contends for a second time that Inscorp cannot demonstrate the damages element of a cognizable legal malpractice claim because it cannot distinguish between the money that it expended in defending and indemnifying West Perry from the money that it expended in defending and indemnifying G.B. Construction, inasmuch as the defense and indemnification of both companies were handled simultaneously by a single law firm, Smith Mazure. In the prior order, this court considered this argument, and held that Inscorp's allegations that it incurred "$563, 173.13 in defending and settling the underlying Soto action on behalf of G .B. Construction and West Perry directly as a result of Simon's allegedly negligent coverage advice to Weiss [were] sufficiently actual and ascertainable to sustain a cause of action for legal malpractice."  Last, Smith Mazure argues for the first time that Inscorp cannot prove damages as a result of Smith Mazure's conduct because Inscorp was aware that West Perry was not an additional insured under the policy, prior to its settlement of the Soto action on behalf of West Perry. Inasmuch as Smith Mazure admittedly makes this argument for the first time, the argument cannot form a basis for reargument."

 

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Many Hands Do Not Make a Better Stew

Defense attorneys, when moving to dismiss, or even to denigrate Plaintiff's case will tell the court (rather haughtily) that  "this is the 4th attorney for plaintiff" or something similar.  Their point is that the case must be worthless if there have been multiple attorneys for plaintiff.

Wadsworth Condos LLC v Dollinger Gonski & Grossman.  2014 NY Slip Op 30502(U, ) February 27, 2014 Supreme Court, New York County Docket Number: 600899/2009 Judge: Louis B. York is an example of how a simple thing like obtaining and serving a notice for the expert can get pushed from attorney to attorney, and then cause a problem.

"Plaintiffs Wadsworth Condos, LLC, and 43 Park Owners Group, LLC, move, pursuant to CPLR 2004, 3101 ( d) (1) (i) and 3101 (h), to compel defendants Dollinger, Gonski, & Grossman, and Michael Dollinger (defendants), to accept plaintiffs' supplementary expert witness disclosure, and to allow plaintiffs' experts to testify at trial. Defendants cross-move for an order denying plaintiffs' motion to compel the acceptance of the expert disclosure."

This action involves allegations that defendants committed legal malpractice when they allegedly commenced an action without plaintiffs' authorization. Plaintiffs served a summons and complaint on defendants on March 24, 2009. Plaintiffs' first attorney of record in this action  was Silverman, Sclar, Shin, & Byrne. On October 5, 2009, the law firm of Shapiro & Shapiro,LLP, took over as plaintiffs' counsel, followed by Daniel Friedman, Esq. who served as counsel until March 24, 2011, at which time the law firm of Peter R. Ginsberg Law, LLC, was retained. Plaintiffs' present counsel is Marc M. Coupey, Esq., who became plaintiffs' sole counsel on August 17, 2012.


Plaintiffs contend that, on August 5, 2011, they served on all parties their initial response to defendants' demand for expert witness information in which they reserved their rights to provide defendants with expert information once they retained such experts. Plaintiffs maintain that on November 4, 2011, all parties were notified at the deposition of witness Joe Bobker that Michael Sullivan was going to be plaintiffs expert and what his probable testimony would be. "

"The Appellate Division, First Department, has held that "[p ]preclusion of expert evidence on the ground of failure to give timely disclosure, as called for in CPR 3101 ( d) (1) (i), is generally unwarranted without a showing that the noncompliance was willful or prejudicial to the party seeking preclusion." Martin v Tribune Bridge & Tunnel Auth., 73 AD3d 481, 482 (1st Dept 2010) (citations omitted). See also Handwork v City of New York, 90 AD3d 409, 409 (1st Dept 2011) (holding that there is no evidence of what prejudice defendants suffered or that plaintiff willfully failed to disclose the experts in a timely manner). Here, defendants fail to meet their burden and do not demonstrate what, if any, prejudice they will suffer if plaintiffs serve expert disclosure. "

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The Case is Settled...Now Comes the Bigger Fight

Piro sued Russo, Karl, Widmaier & Cordano PLLC for legal malpractice.  Piro used attorney Rodriguez for that case.  At the same time Bonacasa obtained a default judgment against Piro. A guess is that both arose from the same issues and that Russo, Karl should have been defending Piro from Bonacasa.  So, in Russo, Karl, Widmaier & Cordano PLLC v Piro  2014 NY Slip Op 30505(U)  February 24, 2014  Supreme Court, Suffolk County  Docket Number: 13-19943  Judge: Peter H. Mayer, we see both Rodriguez and Bonacasa fighting over the same proceeds.  The winner is determined by Judiciary Law 475.  Proceeds of a litigation have a higher priority than other debts. 

"Rodriguez now cross-moves for an order directing the plaintiffs to release its legal fee of $30,000, and dismissing Bonacasa's cross claims. In support of its cross motion, Rodriguez submits, among other things, the pleadings herein, its written retainer agreement and billing statements in the Piro action, a copy of a Court order in the Bonacasa action, and a "settlement" signed by Piro regarding Rodriguez's legal fee. It is undisputed that Rodriguez was retained by Piro on January 10, 2010, that Rodriguez commenced the Piro action on February 1, 2010, that Rodriguez  represented Piro throughout the litigation, and that Rodriguez claims a charging lien based on its procuring a settlement in the mount of $65,000. It is 'A-ell settled that a charging lien for legal fees attaches automatically upon commencement of the client's action (Judiciary Law 475; Resnick v Resnick, 24 AD3d 238, 806 NYS2d 200 [1st Dept 2005]; Matter of Dresner v State of New York, 242 AD2d 627, 662 NYS2d 780 [2d Dept 1997]; Rotker v Rotker, 195 Misc 2d 768, 761 NYS2d 787 [Sup Ct, Westchester County 2003]; see also Matter of Cohen v Grainger, Tesoriero & Bell, 81NY2d655, 602 NYS2d 788 [1993]). An attorney's charging lien is vested equitable ownership interest in client's cause of action and maintains superiority over anyone claiming through the client (LMWT Realty Corp. v Davis Agency Inc., 85 NY2d 462, 626 NYS2d 39 [1995]; see also Banque Indosuez v Sopwith Holdings Corp., 98 NY2d 34, 745 NYS2d 754 [2002]; O'Connor v Spencer (1977) Inv. Ltd. Partnership, 8 Misc 3d 658, 798 NYS2d 888 [Sup Ct, Queens County 2005]). The right to assert such a lien is based upon the equitable doctrine that an attorney should be paid out of the proceeds of the judgment procured by the attorney (Theroux v Theroux, 145 AD2d 625, 536 NYS2d 151 [2d Dept 1988]; see LMWT Realty Corp. v Davis Agency, supra; Kaplan v Reuss, 113 AD2d 184, 495 NYS2d 404 [2d Dept 1985], affd 68 NY2d 693, 506 NYS2d 304 [ 1986]). The statute codifying the law regarding charging liens, Judiciary Law 475, provides, in relevant part, "[f]rom the commencement of an action ... the attorney who appears for a party has a lien upon his client's cause of action, claim or counterclaim, which attaches to a ... determination, decision, judgment
or final order in his client's favor, and the proceeds thereof in whatever hands they may come."  thus, a charging lien affects only the proceeds obtained in a particular litigation and may be enforced only to obtain the reasonable value of legal services and disbursements in connection with that litigation (Kaplan v Reuss, id.; see Natole v Natole, 295 AD2d 706, 708, 744 NYS2d 227 [3d Dept 2002]; Butler, Fitzgerald & Potter v Ge/min, 235 AD2d 218, 651NYS2d525 [1st Dept 1997]; Surdam v Marine Midland Bank, 198 AD2d 578, 603 NYS2d 233 [3d Dept 1993]). It has been held that the statute is remedial in nature and calls for a liberal construction thereunder (Herlihy v Phoenix Assur. Co., 274 AD 342, 83 NYS2d 707 [3 Dept 1948]). Here, Rodriguez has established its entitlement to summary judgment regarding its claim to a  charging lien and the release of its legal fees in the Piro action. 2 Thus, it is incumbent upon the nonmoving parties to produce evidence in admissible form sufficient to require a trial of the material issues of fact (Roth v Barreto, supra; Rebecchi v Whitmore, supra; O'Neill v Fishkill, supra). In opposition to Rodriguez's cross motion, Bonacasa submits the affirmation of her attorney, who reiterates the contentions set forth in her cross motion for summary judgment. As determined above, Bonacasa has failed to raise an issue of fact requiring a trial of Rodriguez's claim for legal fees. As noted above, Piro does not dispute the validity of his retainer agreement with Rodriguez, or the legal fee charged thereunder."
 

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$ 30 Million at Stake and Too Late For Legal Malpractice

AQ Asset Mgt. LLC v Levine  2014 NY Slip Op 30489(U) February 27, 2014  Sup Ct, New York County  Docket Number: 652367/2010  Judge: Shirley Werner Kornreich is the story of a big deal gone bad, and how that failure devolves into looking for suspects.  Put another way, the clients are now looking to see how and why they might get more money back.  In a case that has spanned 37 motions and more than 1200 documents the parties aren't even through depositions.  One thing is clear...it's too late to sue for legal malpractice.  The only question left is fraud and accounting for $30 Million.

"Pursuant to an order dated March 22, 2013, Levine deposited $3,420,787.01 into court, which he claimed represented the remaining balance of the escrow funds at issue in this action. By order dated April 9, 2013, he was directed to account for his handling of the escrow from the time of receipt until the time of deposit. Levine produced an affidavit of account, which he claims sets forth all of the transactions related to the escrow, with supporting exhibits attached. According to Levine's affidavit, the principal, original escrow amount remaining was $3,405,979.68; the amount
deposited with the court included accrued interest to which Levine claims he is entitled. By order dated October 16, 2013, pursuant to a decision by the Appellate Division, the court directed that the monies deposited by Levine be released to defendants' attorney (NYSCEF Doc No. 1053).
On April 22, 2013, plaintiffs served a reply to defendants' original counterclaims. On May 6, defendants served an amended answer, containing counterclaims against plaintiffs  and cross-claims against Michael Levine. Though the amended answer contained a demand that Levine answer (see amended cross-claims~ 305; CPLR 3011 ), Levine has refused to do so. "

"A. Default Judgment
As indicated at oral argument, the issue of Levine's responsive pleading shall be resolved by requiring him to serve an answer to defendants' cross-claims within twenty days. That branch of the motion seeking to hold him in default for failing to answer, therefore, is denied.

B. Cross-Motion to Dismiss
In their amended answer defendants allege that, acting in concert with Zimmermann and Artist House, Levine misled Patrizzi as to the contents of the Distribution Agreement, thereby inducing him to sign it. That agreement was later used to confer voting rights on Zimmermann, who in tum used his power to join with Artist House in removing Patrizzi from management and, later, in reducing defendants' shares in the Company to zero. Defendants also have called into question the final $300,000 payment Levine claims to have made from the escrow to procure a financing commitment from an entity known as Karastir LLC (Karastir), contending that they never authorized that disbursement. These allegations are sufficient to sustain defendants' third and fourth cross-claims against Levine for fraud and breach of his fiduciary duties as escrow agent. Similarly, defendants' first cross-claim for a declaratory judgment that they are entitled to all funds or shares that were delivered to or held by Levine as part of the stock transaction is viable, as is their demand for an accounting.
The other cross-claims challenged here lack merit. The second cross-claim seeks a declaration that defendants have satisfied all of their obligations under the stock purchase agreement and bear no further liability arising out of the stock transaction. Defendants do not explain how any controversy regarding their obligations thereunder could implicate Levine, who was not a party to the transaction. The second cross-claim is dismissed. Since the court has previously held that defendants cannot maintain any claim based on their supposed entitlement to a certain payment of $2 million that was made to Levine's escrow account in 2006 and released by him to  Antiquorum in 2010 (decision & order, Mar 28, 2013, 18-19), the eighth, eleventh and twelfth cross-claims (for constructive fraud, conversion and fraudulent concealment) are dismissed in their entirety, and the third cross-claim for fraud is also dismissed to the extent it relates to the transfer of these funds. Defendants are attempting to use their right to replead to improperly circumvent a decision on the merits which has not been reversed or modified and for which they did not seek reargument (DiPasquale v Sec. Mut. Life Ins. Co. of New York, 293 AD2d 394, 395 [1st Dept 2002] citing Societe Nationale d'Exploitation Jndustrielle des Tabacs et Allumettes v Salomon Bros. Intl., Ltd., 268 AD2d 373, 374 [1st Dept 2000] Iv denied 95 NY2d 762 [2000]; Romanov Kassebaum, 250 AD2d 661, 662 [2d Dept 1998]; see also The Plaza PH2001 LLC v Plaza Residential Owner LP, 98 AD3d 89, 98 [lst Dept 2012] [upholding dismissal of second action commenced prior to  modification of motion court's dismissal of first action on merits])."

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A Missing Ladder, A Legal Malpractice Case

Sometimes legal malpractice cases are an exercise in looking back.  Plaintiffs look backwards to what happened at the first trial, or what went wrong years ago.  Burbige v Siben & Ferber
2014 NY Slip Op 01426  Decided on March 5, 2014  Appellate Division, Second Department  is an example.  Plaintiff fell from a broken ladder at work.  Not stated, but presumed is that he had a workers' compensation case. Two years later he hired the defendant attorneys to sue the manufacturer.  They did, and the manufacturer promptly filed for bankruptcy.  Left unexplained is who has the ladder?
Now, plaintiff sues the attorneys for lack of diligence in suing the manufacturer.  While the case discusses timing of expert witness notifications, it does hold that the attorneys cannot be sanctioned for not having the ladder.  They have a picture, but it's a mystery who has the ladder.

"In August 1989, the plaintiff was injured when a metal railing on a ladder he was descending broke off, causing him to fall. In June 1991, he retained the defendant Siben & Ferber, a partnership consisting of Gary L. Siben and Steven B. Ferber (hereinafter S & F), to represent him in a products liability lawsuit against the ladder manufacturer. The action was commenced in August 1991. After issue was joined in October 1991, the manufacturer filed for bankruptcy. The products liability action remained dormant until March 2004, when the defendant Leonard G. Kapsalis, then an associate at S & F, contacted the plaintiff to sign authorizations to verify his responses to interrogatories. One of the responses indicated that the plaintiff's employer had retained the subject ladder after his accident. However, while S & F's legal file contained photographs of the ladder, the location of the ladder was unknown. In 2007, the plaintiff commenced this legal malpractice action alleging, inter alia, that the defendants were negligent in failing to diligently prosecute the products liability action. The plaintiff now appeals from an order of the Supreme Court which granted the defendants' motion to preclude his expert from testifying at a retrial and which denied his cross motion pursuant to CPLR 3126 to impose a sanction upon the defendants for the spoliation of evidence.

CPLR 3101(d)(1)(i) "does not require a party to respond to a demand for expert witness information at any specific time nor does it mandate that a party be precluded from proffering expert testimony merely because of noncompliance with the statute,' unless there is evidence of intentional or willful failure to disclose and a showing of prejudice by the opposing [*2]party" (Cutsogeorge v Hertz Corp., 264 AD2d 752, 753-754, quoting Lillis v D'Souza, 174 AD2d 976, 976 [internal quotation marks omitted]; see Barchella Contr. Co., Inc. v Cassone, 88 AD3d 832, 832; Saldivar v I.J. White Corp., 46 AD3d 660; Fava v City of New York, 5 AD3d 724, 724-725). Here, the record does not support a conclusion that the plaintiff's delay in retaining his expert or in serving his expert information was intentional or willful. Furthermore, any potential prejudice to the defendants was ameliorated by a two-month adjournment of the retrial agreed to by the parties (see Shopsin v Siben & Siben, 289 AD2d 220, 221). Accordingly, the Supreme Court improvidently exercised its discretion in granting the defendants' motion to preclude the plaintiff's expert from testifying at the retrial (see Johnson v Greenberg, 35 AD3d 380; Dailey v Keith, 306 AD2d 815, affd 1 NY3d 586).

Contrary to the plaintiff's contention, the Supreme Court properly denied his cross motion pursuant to CPLR 3126 to impose a sanction upon the defendants for the spoliation of evidence, as there is no evidence that the defendants were responsible for the loss or destruction of the subject ladder (see Gotto v Eusebe-Carter, 69 AD3d 566, 567). "

 

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Is It Enough For A Good Legal Malpractice Case?

The Client comes in and tells you, "They didn't know the case!  They didn't prepare!  They lost the case!"  Is that enough for a good legal malpractice case?  A demonstrated lack of skill and a failure to prepare for litigation might seem proper fodder for a legal malpractice case, it's not always enough.

In Chibcha Rest., Inc. v David A. Kaminsky & Assoc., P.C. 2013 NY Slip Op 00281 Appellate Division, First Department the court held: "Plaintiffs' allegations that defendants made "no useful attempt" to argue against a TRO sought and obtained by the landlord, and that defendants were both unprepared and unskilled in defending them, do not suffice. As the motion court observed, plaintiffs do not allege, for example, that defendants missed any deadlines or otherwise failed to protect or preserve plaintiffs' rights (see Mortenson v Shea, 62 AD3d 414, 414-415 [1st Dept 2009])."

This case demonstrates the bold difference between a failure to file within a deadline, and almost all other shortcomings. Presentation of a certain witness, selection of an expert, questions put in cross-exam. All very important, but none of them a failure to file within a deadline or a failure to preserve a client's rights.

The Court explains further: "Contrary to plaintiffs' assertions, the record supports the motion court's conclusion that plaintiffs' damages, sustained from the closing of the subject premises after issuance of the TRO, were not caused by defendants' conduct, but rather by plaintiffs' failure to obtain the necessary insurance before the landlord brought its motion for a temporary restraining order. Plaintiffs concede that the insurance coverage required by the lease initially was not in place, and that the TRO against them was lifted only after the requisite insurance was obtained. As the premises were closed due to the lack of insurance, it cannot be said that plaintiffs would not have incurred any damages, but for defendants' purported negligence (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007])."
 

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Here, It's Not Simply the Departure, It's The "But For" Connection

Plaintiff must always prove that departures from good and accepted practice by the defendant were a proximate cause of the injury. Note that there need be no proof that the departure was the proximate cause. In Arbor Realty Funding, LLC v Herrick, Feinstein LLP 2013 NY Slip Op 01216
Appellate Division, First Department we see such an application.
"Defendant argues that even if, but for its allegedly erroneous legal advice as to zoning issues, plaintiff would not have made bridge loans to the developer of a residential tower at 303 East 51st Street in Manhattan, plaintiff cannot establish legal malpractice or negligent representation because it cannot demonstrate that the zoning advice proximately caused its loss on the defaulted loans. Plaintiff made the loans in mid-2007. Defendant contends that the crane collapse at the project site in March 2008, which killed seven people, the market collapse beginning in late 2007 and continuing through 2008, and plaintiff's insufficient response to the Department of Buildings letter notifying plaintiff of its intent to revoke the project's building permits, constituted intervening events that severed the causal link between defendant's zoning advice and plaintiff's loss (see Derdiarian v Felix Contr. Corp., 51 NY2d 308 [1980]).

There is, however, evidence in the record that raises an issue of fact as to causation (see Brooks v Lewin, 21 AD3d 731, 734 [1st Dept 2005], lv denied 6 NY3d 713 [2006]). It appears [*2]that potential takeout lenders had concerns about the zoning issues even before March 2008. To the extent later events contributed to plaintiff's loss, they are properly considered by a fact-finder (see e.g. Schauer v Joyce, 54 NY2d 1 [1981])."
 

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Claims Fail, One by One in this Pro-Se v. Pro-Se Lawsuit

Plaintiff was charged with violating the Cornell University Campus Code by allegedly harassing a professor.  From there on in her legal arc was consistently downward.  She hired defendant attorneys to represent her in a CPLR Art. 78 and in a Title IX claim.  Both were unsuccessful.  She then sued all the attorneys, both individually and as a firm. 

In Hyman v Schwartz   2014 NY Slip Op 01362   Decided on February 27, 2014   Appellate Division, Third Department  the AD dismissed legal malpractice claims against all.

"However, defendants correctly argue that Supreme Court should have granted their motion to dismiss the legal malpractice claim. It is well established that, "[i]n order to sustain a claim for legal malpractice, a plaintiff must establish both that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff, and that the plaintiff would have succeeded on the merits of the underlying action but for the attorney's negligence" (Leder v Spiegel, 9 NY3d 836, 837 [2007], cert denied sub nom. Spiegel v Rowland, 552 US 1257 [2008] [internal quotation marks and citation omitted]; accord Alaimo v McGeorge, 69 AD3d 1032, [*3]1034 [2010]; see Kreamer v Town of Oxford, 96 AD3d 1128, 1128-1129 [2012]; see also MacDonald v Guttman, 72 AD3d 1452, 1454-1455 [2010]; Bixby v Somerville, 62 AD3d 1137, 1139 [2009]). Here, although the complaint is replete with allegations of Schwartz's alleged failures to use reasonable and ordinary skill in connection with both of plaintiff's underlying claims, it contains no allegation that, but for these alleged failures, plaintiff would have been successful on either claim [FN2]. Therefore, even if we accept the allegations as true and liberally construe the complaint to allege negligent representation by Schwartz (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Moulton v State of New York, ___ AD3d ___, ___, 977 NYS2d 797, 801 [2013]; Scheffield v Vestal Parkway Plaza, LLC, 102 AD3d 992, 993 [2013]), the allegations are insufficient to make out a prima facie case of legal malpractice (see Kreamer v Town of Oxford, 96 AD3d at 1128; MacDonald v Guttman, 72 AD3d at 1455). "


 

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It's Sue and Be Sued in a Mega-Huge Legal Malpractice Case

In today's New York Law Journal Christine Simmons reports on how the big boys play at legal malpractice.  Basically, it's client with at least $1B in play hires Proskauer to advise them on a new borrowing/lending plan, which goes awry.  Lots of taxes become due, and finger pointing ensues.  The news in this dog bites man story is that Proskauer has counterclaimed against the client for fraud, constructive fraud and misrepresentation.

Here is something from the story: " After its former client sued the firm for malpractice, Proskauer Rose and four of its partners have sued the client's senior executives, claiming the malpractice suit has harmed the firm's reputation and led it to incur substantial legal fees (See Complaint).

Proskauer is suing James Edelson, the general counsel to Overseas Shipholding Group (OSG); and Myles Itkin, the company's former chief financial officer in Manhattan Supreme Court.

The firm and the partners—Alan Parnes, Richard Rowe, Peter Samuels and Steven Weise—claim the executives solicited legal advice from Proskauer based on "materially false and misleading representations."

Ultimately, OSG filed for Chapter 11 relief in 2012 and a year later sued Proskauer for malpractice, claiming the company expected to have to pay hundreds of millions of dollars in U.S. taxes due to Proskauer's advice (See Complaint).

Proskauer and the four partners are claiming fraud, constructive fraud, negligent misrepresentation and contribution against the executives. They say they have "suffered tremendous reputational damage as a result of OSG's meritless [claims]."


In May 2011, OSG entered into a new credit agreement, but within a few months began preparing refinancing negotiations, Proskauer said. These discussions drew attention to the "joint and several" language in the 2006 credit agreement and the bank lending group expressed concerns about OSG's potential tax liability, Proskauer said.

"Spurred by its need for liquidity, and with knowledge that its own false representations were a fundamental basis of the Memorandum, OSG drew down the funds that remained in its 2006 credit facility—approximately $340 million," Proskauer said in its complaint.

Negotiations with the bank lending group broke down, and OSG became focused on a bankruptcy filing. Proskauer was hired as its restructuring counsel.

Around this time, when Proskauer was asked to turn the memo into an opinion, the firm said it learned of a "trove of hidden documents."

In late October 2012, Samuels, while at OSG's offices, saw for the first time "numerous documents that wholly undermined Edelson's and Itkin's repeated assertions" to Proskauer that the parties to the credit agreements never intended that OIN guarantee OSG's obligations, the firm said in its complaint.

For example, OSG had a document that "plainly indicates that both OSG and its counsel Clifford Chance understood and intended that OIN be a guarantor of OSG's debts under that agreement via the 'joint and several' structure."

"Had Proskauer been aware of these documents prior to drafting the Memorandum, it would have materially altered its conclusion," the firm said. In the end, the firm refused to provide a formal tax opinion.

Also in October 2012, OSG informed the firm that Proskauer would be replaced with new restructuring counsel, and OSG revoked the firm's access to its offices.

The following month, OSG and 180 of its affiliates, including OIN and OBS, filed for Chapter 11 relief in Delaware bankruptcy court."  Read on for more at: http://www.newyorklawjournal.com/id=1202644791712/Proskauer-Sues-Ex-Client-Accusing-Firm-of-Malpractice#ixzz2ucUkb9Qs

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A Pro-Se Legal Malpractice Win in Supreme Court and in the Appellate Division

Reading decisions of the Appellate Division in legal malpractice cases involving attorneys on both sides often shows the AD dismissing the complaint on "but for" grounds.  The AD will look closely at the underlying transactions which led to the underlying litigation, and will decide whether there would have been a better or different outcome.

In contrast, and especially in this pro-se v. defendant attorney case, the AD took a more gentle approach and affirmed the denial of summary judgment to the attorney.  Rodolico v Rubin & Licatesi, P.C. 2014 NY Slip Op 01308  Decided on February 26, 2014  Appellate Division, Second Department discussed pre-discovery summary judgment motions.
 

"The plaintiff's sister worked for the defendant law firm, in which the individual defendants are partners. During his sister's employment, the plaintiff came to learn of an investment opportunity being organized by the defendants, which involved providing high interest, short-term loans for the development of real estate. The plaintiff and his wife decided to participate. Two bank checks, one of which was purchased by the plaintiff's wife and bore only her name, were forwarded to the defendants for the purpose of making two loans. When these two loans were not repaid in full, the plaintiff commenced this action seeking to recover from the defendants the money that he was owed, claiming that the defendants effectively borrowed the money from him (first and second causes of action). In the alternative, the plaintiff sought damages for legal malpractice (third cause of action). The plaintiff made a pre-discovery motion for summary judgment on the complaint, and the defendants cross-moved, inter alia, to dismiss the second cause of action pursuant to CPLR 3211(a)(3), for lack of standing, and to dismiss the complaint pursuant to CPLR 3211(a)(1), based upon documentary evidence. The Supreme Court denied the motion and the cross motion.

In support of that branch of their cross motion which was to dismiss the second cause of action for lack of standing, the defendants argued that the plaintiff had no interest in the loaned funds because the funds were provided by his wife. However, the plaintiff established, through his affidavit, that the funds provided for the subject loan belonged to both him and his wife (see Rodolico v Rubin & Licatesi, P.C., 112 AD3d 608, 609-610). The defendants presented no evidence to the contrary. The plaintiff, therefore, had standing to seek the return of the funds (see id.; see generally Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 242), and the Supreme Court properly denied that branch of the defendants' cross motion which was to dismiss the second cause of action for lack of standing. [*2]

The Supreme Court also properly denied that branch of the defendants' cross motion which was to dismiss the complaint pursuant to CPLR 3211(a)(1). A motion pursuant to CPLR 3211(a)(1) to dismiss a complaint on the ground that a defense is founded on documentary evidence "may be appropriately granted only where the documentary evidence utterly refutes [the] plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326; see Parkoff v Stavsky, 109 AD3d 646; Benson v Deutsche Bank Natl. Trust, Inc., 109 AD3d 495). Further, the evidence submitted in support of a motion pursuant to CPLR 3211(a)(1) to dismiss a complaint on the ground that a defense is founded on documentary evidence "must be documentary' or the motion must be denied" (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d 713, 714, quoting Fontanetta v John Doe 1, 73 AD3d 78, 84 [internal quotation marks omitted]; see Rodolico v Rubin & Licatesi, P.C., 112 AD3d at 610). " [N]either affidavits, deposition testimony, nor letters are considered documentary evidence within the intendment of CPLR 3211(a)(1)'" (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714, quoting Granada Condominium III Assn. v Palomino, 78 AD3d 996, 997; see Rodolico v Rubin & Licatesi, P.C., 112 AD3d at 610; Suchmacher v Manana Grocery, 73 AD3d 1017; Fontanetta v John Doe 1, 73 AD3d at 86).

Here, with respect to the first and second causes of action, the defendants submitted two checks that the plaintiff and his wife provided for the investments, which were written to the defendants' IOLA account. Those checks do not "utterly refute" the plaintiff's allegations that the defendants borrowed funds from the plaintiff and his wife or "conclusively establish[ ] a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d at 326).

The only other evidence submitted by the defendants pertaining to these causes of action as well as the legal malpractice cause of action was affidavits, which do not constitute " documentary evidence within the intendment of CPLR 3211(a)(1)'" (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714, quoting Granada Condominium III Assn. v Palomino, 78 AD3d at 997; see Rodolico v Rubin & Licatesi, P.C., 112 AD3d at 610).

Accordingly, that branch of the defendants' cross motion which was to dismiss the complaint pursuant to CPLR 3211(a)(1) was properly denied (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d at 326; Rodolico v Rubin & Licatesi, P.C., 112 AD3d at 610; Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714; Integrated Constr. Servs., Inc. v Scottsdale Ins. Co., 82 AD3d 1160, 1163; Fontanetta v John Doe I, 73 AD3d at 86). "

 

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They Never Met, Yet The Attorneys Represented Them Anyways

Schlam Stone & Dolan, LLP v Poch  2014 NY Slip Op 30415(U)  February 17, 2014  Supreme Court, New York County  Docket Number: 105769/11  Judge Shlomo S. Hagler presents the question of whether an attorney may be hired to represent an entity, and then represent the individual officers or members, without their knowledge.  What happens when things do not go so well?

In a housing court proceedings, Arfa and Shpigel came to be represented by defendants.  Arfa and Shpigel say that they did not know there was a case, did not know that they were represented, nor did they know that things were going badly in landlord-tenant court.  Indeed, things did go badly.

"Plaintiff’s assignors, Arfa and Shpigel, claim that Poch, an  attorney, committed malpractice when he purported to represent  them without authority in five Housing Court proceedings, wherein 
numerous violations were brought against Arfa and Shpigel, among  others, in their role as owners of the properties subject to the  violations and which Poch settled by five Consent Orders dated
June 24, 2008 (“Consent Orders”) .Arfa and Shpigel complain that Poch committed malpractice by failing to inform them that he was  representing them in the Housing Court matters (of which they
claim to have been ignorant), failing to discuss the matters with  them including exploring possible defenses, failing to inform  them that they were personally named and liable for fines arid  repairs, and by entering into the Consent Orders allegedly  without their knowledge or consent.  Arfa and Shpigel state that they only became aware of the existence of the Consent Orders when they were  called into court to answer contempt proceedings.... "

Arfa and Shpigel litigated through the Civil Court and to the Appellate Term.  Both courts determined that the defendant attorneys had apparent authority.  Is that Collateral Estoppel?  No.

Judge Hagler determined that "To establish collateral estoppel, there must have been an “identical issue . . . necessarily decided in the prior action or  proceeding [which] is decisive of the present action” and a  showing chat “the party who is attempting to relitigate the issue  had a full and fair opportunity to contest it in the prior action  or proceeding” (Matter of Howard v Stature Elec. Inc., 20 NY3d  522, 525 [2013]  citing Kaufman v Eli Lilly & Co., 65 NY2d 443,  455 [1985]; see also Matter of Hoffman, 287 AD2d 119 [lst Dept  2111).  In the present motion, defendants assert that the Appellate Term Decisions have completely resolved the issues in this case  and that they should not be relitigated here. To properly apply  the doctrine of collateral estoppel, this Court must determine  whether Judge Klein and the Appellate Term decided the “identical issue” which is “decisive” of this legal. malpractice act ion.  The issue before Judge Klein and the Appellate Term was limited to whether defendants had the authority ‘to represent Arfa and Shpigel in two discrete  housing Court proceedings which were  ]settled by two Consent Orders. The issue in this case, however,  is whether defendants’ committed legal malpractice in  representing Arfa and Shpigel in five Housing Court proceedings.  More specifically, Arfa and Shpigel not only allege that
defendants did not have authority to act on their behalf, but  defendants also failed to advise and explore with them any  possible defenses prior to entering into the Consent Orders in  all five Housing Court proceedings.  As such, the only issue that the Appellate Term conclusively
determined is that defendants had the authority to represent Arfa  and Shpigel in those two Housing Court Proceedings and are bound by the resulting two Consent Orders. The Appellate Term never determined the issue as to whether defendants committed legal  malpractice in the five Housing Court proceedings. Irrespective  of the doctrine of collateral estoppel, this Court must also  address whether defendants have met their burden in demonstrating  entitlement to summary judgment dismissing this legal malpractice  action. "

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A Personal Injury Case and A Legal Malpractice Case Side by Side

Personal injury and legal malpractice cases have many strong bonds. Because a sizable portion of the litigation world is devoted to personal injuries (on both the plaintiff's and defendant's side), one correctly expects significant legal malpractice litigation after-wards. How the legal malpractice case proceeds along with or after the PI case is a not well understood procedure. In Simoni v Costigan 2012 NY Slip Op 07882  Appellate Division, First Department andSimoni v Napoli 2012 NY Slip Op 08639 Decided on December 13, 2012 Appellate Division, First Department we see two sides of the same issue.
 

 

 

Costigan: Although the personal injury actions and the legal malpractice action involve "a common question of law or fact" (CPLR 602[a]), consolidation could engender jury confusion and [*2]prejudice the defendants in the malpractice action (see Addison v New York Presbyt. Hosp./Columbia Univ. Med. Ctr., 52 AD3d 269, [1st Dept 2008]; Brown v Brooklyn Union Gas Co., 137 AD2d 479 [2nd Dept 1988]).

 

Napoli: The motion court providently exercised its discretion in denying defendants' request for a stay of the legal malpractice action pending resolution of plaintiff's personal injury action (see CPLR 2201). The proceedings do not share complete identity of parties, claims and relief sought (see 952 Assoc., LLC v Palmer, 52 AD3d 236 [1st Dept 2008]; Esposit v Anderson Kill Olick & Oshinsky, P.C., 237 AD2d 246 [2d Dept 1997]).

The motion court also properly permitted plaintiff to amend the complaint (see CPLR 3025[b]). The amended complaint and the documents submitted in support of the cross motion allege facts from which it could reasonably be inferred that defendants' negligence caused plaintiff's loss (see Garnett v Fox, Horan & Camerini, LLP, 82 AD3d 435 [1st Dept 2011]). At this stage of the proceedings, plaintiff does not have to show that he actually sustained damages as a result of defendants' alleged malpractice (id. at 436).

 


 

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Really, I had Nothing to Do With This Legal Malpractice!

Real estate broker is asked to find a buyer. Broker presents a buyer, but no deal ensues. Broker papers the transaction and sits back. Later transaction goes through and Broker eventually seeks commission. Sellers attorney is sued. Is he liable?

Land Man Realty, Inc. v Faraone 2012 NY Slip Op 08218 Appellate Division, Third Department tells us the following: it's not enough to say " I did not commit malpractice," so please let me out of the case!
 

"The facts of this case are more fully set forth in our prior decision of this matter (70 AD3d 1246 [2010]), as well as another related decision of this Court (Land Man Realty, Inc. v [*2]Weichert, Inc., 94 AD3d 1221 [2012]). Briefly, defendants owned a 54-acre parcel of land in the Town of Wilton, Saratoga County, and entered into an exclusive listing agreement with Weichert Realtors Northeast Group to sell the property. Shortly thereafter, plaintiff's counsel sent multiple letters to, among others, defendants, claiming that it had previously presented Capital District Property, LLC (hereinafter CDP) as purchaser of the property prior to the property being listed with Weichert. Therefore, in the event that CDP purchased the property, plaintiff would be entitled to a 10% commission pursuant to an alleged oral agreement with defendants. Weichert ultimately sold the property to CDP.

Thereafter, plaintiff commenced this action against defendants, claiming that it was the procuring cause of the sale of the property and is entitled to a 10% commission pursuant to an alleged agreement with defendants. As is relevant herein, defendants, in turn, commenced a third-party action against third-party defendant, Robert W. Pulsifer, an attorney who represented defendants in the real estate transaction. Defendants claim that Pulsifer (1) failed to respond or take any action regarding plaintiff's letters asserting a claim for a commission, and (2) negotiated the contract for the sale of property to CDP in a manner that did not sufficiently protect defendants against plaintiff's commission claim. Defendants moved for summary judgment dismissing the complaint and Pulsifer moved for summary judgment dismissing the amended third-party complaint. Supreme Court denied both motions. Pulsifer now appeals.

We affirm. A legal malpractice action requires a showing that an attorney "failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession [and] the attorney's breach of this professional duty caused the plaintiff's actual damages" (McCoy v Feinmann, 99 NY2d 295, 301-302 [2002] [internal quotation marks and citations omitted]; see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; M & R Ginsberg, LLC v Segal, Goldman, Mazzotta & Siegel, P.C., 90 AD3d 1208, 1208-1209 [2011]). Here, although Pulsifer himself avers that based upon his legal experience he was not negligent in the advice and representation he provided to defendants, he failed to submit adequate proof establishing the applicable standard of care and whether he breached that standard. As Pulsifer failed to meet his initial legal burden of establishing his entitlement to summary judgment as a matter of law (see Jack Hall Plumbing & Heating, Inc. v Duffy, AD3d , ___, 2012 NY Slip Op 07249, *2 [2012]), his summary judgment motion was properly denied.


 

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They May Have Been Wrong, But They Were Not Frivolous

It was not said by Lord Acton that control of the bank account corrupts, and that absolute control of it  corrupts absolutely, but United States Fire Ins. Co. v Raia  2014 NY Slip Op 00987 Decided on February 13, 2014  Appellate Division, Second Department does show that guardians who control their ward's bank accounts can wreak havoc.
 

The surety insurance company came to be plaintiff after "defendant Camille A. Raia was appointed guardian of the property of Andrea S., an incapacitated person (hereinafter the IP). Raia obtained a guardianship bond through the plaintiff, United States Fire Insurance Company (hereinafter US Fire), as surety. During the course of the guardianship, Raia retained the defendant Cavalcante & Company (hereinafter C & C), an accounting firm, to prepare annual tax returns on behalf of the IP. Ultimately, Raia was removed as the guardian of the IP's property as a result of a criminal investigation. The court accepted an account-stated as [*2]Raia's final account for the period she acted as guardian of the IP's property, and surcharged her in a certain amount. US Fire and the IP, through a successor guardian, entered into a stipulation by which the IP released US Fire from further liability under the bond and assigned all rights and causes of action to it in exchange for a payment in the amount of $1,100,000.

US Fire, on its own behalf and as the IP's subrogee/assignee, commenced this action against Raia, Raia & Rondos, P.C. (hereinafter the R & R firm), Steven T. Rondos, C & C, and another defendant. US Fire alleged, with respect to C & C, that it committed professional malpractice by failing to detect unlawful withdrawals made from the IP's investment account and to report the accounting irregularities.

US Fire settled with Raia, Rondos, and the R & R firm, and thereupon executed a release in favor of Raia, and a separate release in favor of Rondos and the R & R firm.

Raia moved, inter alia, for summary judgment dismissing C & C's cross claims insofar as asserted against her and pursuant to 22 NYCRR 130-1.1 for an award of attorney's fees.  The Supreme Court, in effect, granted those branches of the separate motions and denied the cross motion.

Raia, Rondos, and the R & R firm demonstrated their prima facie entitlement to judgment as a matter of law dismissing C & C's cross claim for contribution insofar as asserted against them. "A release given in good faith by the injured person to one tortfeasor as provided in [General Obligations Law § 15-108(a)] relieves him [or her] from liability to any other person for contribution as provided in article fourteen of the civil practice law and rules" (General Obligations Law § 15-108[b]). Here, US Fire, upon settling with Raia, Rondos, and the R & R firm, executed a release in favor of Raia, and a separate release in favor of Rondos and the R & R firm, and there is no evidence in the record indicating that the releases were not given in good faith. Thus, Raia, Rondos, and the R & R firm are relieved from liability to C & C for contribution (see Balkheimer v Spanton, 103 AD3d 603; Ziviello v O'Boyle, 90 AD3d 916, 917; Boeke v Our Lady of Pompei School, 73 AD3d 825, 826-827; Kagan v Jacobs, 260 AD2d 442, 442-443; Brown v Singh, 222 AD2d 392). In opposition, C & C failed to raise a triable issue of fact.

However, because C & C did not engage in frivolous conduct within the meaning of 22 NYCRR 130-1.1, the Supreme Court improvidently exercised its discretion in awarding attorney's fees pursuant to 22 NYCRR 130-1.1 (see South Point, Inc. v Redman, 94 AD3d 1086, 1087-1088; Joan 2000, Ltd. v Deco Constr. Corp., 66 AD3d 841, 842). "

 

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Lots of Fact Questions in this Legal Malpractice Case

One attorney represents a group of tenants / tenants-in-common in a construction project that runs afoul of the Department of Transportation in NYC.  The sticking point was whether a retaining wall, which the project sought to move was on City or private property.  In Wadsworth Condos LLC v Dollinger Gonski & Grossman   2014 NY Slip Op 00930   Decided on February 13, 2014   Appellate Division, First Department we see how plaintiff weaves a conflict of interest and affiadvits about how the attorneys sided with others, as well as demonstrating capacity to sue.
 

"Defendants preserved the defense that plaintiff lacked the capacity to sue derivatively on behalf of its co-tenant-in-common by asserting the defense in their answer (see CPLR 3211[a][3], 3211[e]; see also Security Pac. Natl. Bank v Evans, 31 AD3d 278 [1st Dept 2006], appeal dismissed 8 NY3d 837 [2007]). However, plaintiff adequately alleged injuries to the common entity and the futility of a demand thereon. "

"Plaintiff's belatedly asserted grounds for alleging legal malpractice may be entertained since they involve no new factual allegations and no new theories of liability, and there is little or no basis on which defendants could claim surprise or prejudice (see generally Alarcon v UCAN White Plains Hous. Dev. Fund Corp., 100 AD3d 431 [1st Dept 2012]; Valenti v Camins, 95 AD3d 519 [1st Dept 2012]). The new claims raise issues of fact whether defendants were negligent in their legal representation of the tenants-in-common, and whether, but for the alleged negligent representation, the tenants-in-common would have been able to avoid the extensive delays in project construction that resulted in the loss of the construction loan, construction delay expenses, and increased attorneys' fees. The tenants-in-common retained defendants initially to advise them with respect to a stop work order issued by the Department of Transportation (DOT) that prohibited further demolition until an appropriate permit was secured from DOT or the Department of Buildings. Rather than trying to secure a permit or obtain a definitive statement of the ownership of the retaining wall sought to be demolished, defendants reviewed a survey and deed and accepted DOT's position that the wall was on city property, and entered into what became protracted negotiations with DOT. In moving for summary judgment, defendants did not submit an expert legal opinion as to the ownership of the wall (which is not clear from the record) or whether the failure to seek a demolition permit rather than engage in negotiations constituted negligence, issues that are beyond the ken of the ordinary person (see Nuzum v Field, [*2]106 AD3d 541 [1st Dept 2013]; Cosmetics Plus Group, Ltd. v Traub, 105 AD3d 134, 141 [1st Dept 2013], lv denied 22 NY3d 855 [2013]).

As to the conflict of interest claim, while plaintiff was aware that defendants were representing the co-tenant-in-common, issues of fact exist whether defendants' actions on behalf of the co-tenant-in-common were in conflict with the interests of the tenants-in-common, particularly since the tenant-in-common management agreement called for unanimous consent on material changes in the project. For example, an affidavit submitted by plaintiff says that plaintiff was not given notice of the switch from a condominium project to a rental project, which the co-tenant-in-common undertook while being advised by defendants. "

 

 

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Fraud, LLPs, Individual Liability and Legal Malpractice

What is the difference between legal malpractice in tort and legal malpractice in contract, and how might an individual attorney in a LLP be liable for the fraud of another attorney?  Salazar v Sacco & Fillas, LLP   2014 NY Slip Op 00980   Decided on February 13, 2014   Appellate Division, Second Department has a simple fact pattern. 
 

"The plaintiff retained the defendants Sacco and Fillas, LLP (hereinafter the law firm), and attorneys Tonino Sacco and Elias Nikolaos Fillas, who allegedly were partners in the law firm, to represent him as a plaintiff in a personal injury action and to represent two corporate entities that he controlled, Always First, Inc., and Always Fast, Inc. (hereinafter together the Always companies), in connection with certain commercial litigation.

The law firm settled the personal injury action on behalf of the plaintiff, and received certain settlement proceeds on the plaintiff's behalf. Thereafter, the plaintiff and the Always companies, as "the client," and the law firm entered into an agreement (hereinafter the Settlement Agreement). The Settlement Agreement provided that, in exchange for the law firm's agreement to "discount outstanding balances" due the law firm from the Always companies, "the client" agreed to give up all rights to certain sums due "the client" from three enumerated litigations.

The plaintiff thereafter commenced the instant action, seeking to recover damages he allegedly sustained as a result of the defendants' legal malpractice, breach of contract, and fraud. The plaintiff alleges, inter alia, that the defendants breached the retainer agreement relating to the personal injury action in that they intentionally failed to pay him the settlement funds from that [*2]action. The plaintiff also alleges that he was fraudulently induced into signing the Settlement Agreement. "
 

Legal malpractice was dismissed because "Supreme Court, upon concluding that the complaint alleged intentional acts only, granted the defendants' motion only insofar as it sought to dismiss the first cause of action, sounding in legal malpractice."

But what of Breach of Contract and Fraud?  "The complaint adequately states a cause of action against the defendants sounding in breach of contract.

To state a cause of action sounding in fraud, a plaintiff must allege that "(1) the defendant made a representation or a material omission of fact which was false and which the defendant knew to be false, (2) the misrepresentation was made for the purpose of inducing the plaintiff to rely upon it, (3) there was justifiable reliance on the misrepresentation or material omission, and (4) injury" (Selechnik v Law Off. of Howard R. Birnbach, 82 AD3d 1077, 1078; see McDonnell v Bradley, 109 AD3d 592, 592-593). In the instant matter, the complaint alleged that Fillas, one of the attorneys representing the plaintiff and the Always companies, made certain false statements, including, inter alia, misrepresenting the amount of past-due attorney's fees owed by the Always companies, and falsely stating, in effect, that he could sue the plaintiff personally for the sums allegedly owed by the Always companies. The complaint further alleged that these statements were known by Fillas to be false at the time they were made, and were intended to deceive, coerce, and induce the plaintiff into entering into the Settlement Agreement, and that the plaintiff relied on these statements to his detriment. Accordingly, these allegations were sufficient to state a cause of action alleging fraud against Fillas and the law firm (see Partnership Law §§ 24, 25, 26[e]; Rabos v R & R Bagels & Bakery, Inc., 100 AD3d 849)."

When might the individual attorney be responsible for the fraud of another partner in an LLP? 

"However, the complaint fails to state a cause of action sounding in fraud against Sacco. As a general matter, Partnership Law § 26(a)(1) imposes joint and several liability upon all individual partners in a partnership for all obligations chargeable to the partnership under Partnership Law §§ 24 and 25, which are referable to wrongful acts committed by one or more partners of the partnership acting in the ordinary course of partnership business. Partnership Law § 26(b), however, immunizes from individual liability any partner in a partnership registered as a limited liability partnership who did not commit the underlying wrongful act, except to the extent that Partnership Law § 26(c) imposes liability on that partner where he or she directly supervised the person who committed the wrongful act and Partnership Law § 26(d) imposes liability on that partner where he or she had previously agreed to assume individual liability for wrongs committed by another partner. Although, at this stage of the litigation, the plaintiff " need only set forth sufficient information to apprise defendants of the alleged wrongs'" (Selechnik v Law Off. of Howard R. Birnbach, 82 AD3d at 1079, quoting DDJ Mgt., LLC v Rhone Group L.L.C., 78 AD3d 442, 443), the complaint fails to allege facts apprising Sacco of the basis of his individual liability. The complaint does not allege that Sacco personally committed a fraudulent act. Nor does the complaint allege that the law firm is a general partnership or that, as such, Sacco may be held individually liable pursuant to Partnership Law § 26(a)(1). Furthermore, the complaint does not allege that the law firm is a registered limited liability partnership, but that Sacco supervised Fillas in the commission of a fraudulent act, thus rendering Sacco individually liable pursuant to Partnership Law § 26(c), or that Sacco had previously agreed to assume personal liability for fraudulent acts committed by Fillas, thus rendering Sacco individually liable pursuant to Partnership Law § 26(d). The allegations in the complaint particularizing Fillas's fraudulent conduct, standing alone, are insufficient to state a cause of action sounding in fraud against Sacco (see Partnership Law § 26[b], [d]; Selechnik v Law Off. of Howard R. Birnbach, 82 AD3d at 1079). Accordingly, the Supreme Court should have granted that branch of the defendants' motion which was to dismiss the fraud cause of action insofar as [*3]asserted against Sacco. "

 

 

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A Hodgepodge of Legal Malpractice and Conflicts Issues

W.S. Corp. v Cullen and Dykman LLP  2014 NY Slip Op 30353(U)  February 5, 2014  Sup Ct, New York County  Docket Number: 654176/12  Judge: Marcy S. Friedman is a CPLR 3211 decision based upon a large number of claims.  Basically, its sibling v. sibling, each of which have enjoyed the benefits of a trust and income from a company.  Now they are at odds.  One law firm has helped for years and sided with the more alpha of the siblings.  Now, there is litigation.

"The action arises out of a dispute between siblings. The Baugher plaintiffs and their brothers, Jeffrey and Kirk Baugher, were all presumptive remainder beneficiaries of a trust. (Complaint 23.) Their mother, Phebe Baugher, was lifetime income beneficiary of the trust and a de facto trustee until her death on November 4, 2008. (Id., 22, 27.) Jeffrey was appointed by Phebe as a trustee and served in that capacity without official appointment by the Surrogates Court. (Id., 28.) In addition, he was a director of the Company's board, and was appointed as its president in January 2007' after the death of another brother who had been president. (Id.,46.) The complaint alleges that Cullen engaged in conflicted simultaneous representation of the Company on the one hand, and Jeffrey and Kirk on the other. (Id., 12.)


More particularly, the complaint alleges:
"Cullen aided and abetted Jeff in breaching his fiduciary duties as an officer and director of W.S. Wilson, and as a trustee of the trust that owned the Company, by engaging with him and/or Kirk to develop a strategy ("the Strategy") to exclude the Baugher Plaintiffs from the operation and management of the Company in order to ensure that a claim for more than $22 million of its retained earnings would be preserved for Phebe or Phebe's Estate, of which Kirk and Jeff became
the primary beneficiaries under a will that Cullen drafted and had Phebe execute days after being discharged from the hospital." (Id., 14.) Cullen allegedly gave legal advice to Jeffrey which he used as a basis for the Company not to hold meetings of the board of directors on which the Baugher plaintiffs had previously served. (Id., 16, 32-33, 56-70.) Cullen also allegedly gave legal advice to Jeffrey on the basis of which the Company did not recognize the Baugher plaintiffs as shareholders after the termination of the trust. (Id.,16.) As the complaint further alleges, Cullen's conflict of interest caused plaintiffs to become embroiled in numerous litigations and to incur legal fees that would not otherwise have been incurred. (Id., 237-241.)" 

"An attorney's conflict of interest, as a result of dual representation of clients in violation of the Code of Professional Responsibility (22 NYCRR 1200.24), does not alone support a cause of action for legal malpractice. However, '"liability can follow where the client can show that he ... suffered actual damage as a result of the conflict."' (Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 13 [1st Dept 2008], Iv denied 12 NY3d 715, quoting Tabner v Drake, 9 AD3d 606, 610 '
[2d Dept 2004]; Pillard v Goodman, 82 AD3d 541, 542 [t5t Dept 2011]; Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 10 [1st Dept 2008].) In seeking dismissal, Cullen argues that its conduct was not the proximate cause of the cited litigations. (D. 's Memo. In Support at 14.) This issue cannot be determined as a matter of law on this record. The pleadings on their face allege Cullen's conflict of interest and damages in the form of attorney's fees incurred by the Company as a result. The documentary evidence, which consists of selected pleadings, decisions, or other papers in the various litigations in which Cullen allegedly had a conflict, does not demonstrate that the conflict did not result in damage to the Company. At least some of the litigations arguably involved a conflict of interest. For example, in July 2009, one month before Cullen withdrew as counsel for the Company, it filed a petition on behalf of Kirk, as preliminary executor of Phebe's Estate, seeking turnover of the Company's retained earnings from the trust. (Complaint, 186, 187.) While the lawsuit was brought against the trust rather than the Company,1 the estate and the Company arguably had differing interests with respect to the disposition of the retained earnings. Another example of a lawsuit that apparently involved a direct conflict was an Article 78 proceeding brought by plaintiffs Laraine and Lisa Baugher to compel Jeffrey, as president of the Company, to call a special meeting of the board of directors. The complaint alleges that although Cullen did not formally appear for Jeffrey in this proceeding, it assisted him in opposing the petition. (Id., 139-145.) Moreover, Jeffrey, in his official capacity as an officer of the Company, defended this proceeding based on advice that Cullen allegedly gave to him not to call a meeting of the board. (Id., 56- 70.)3 In contrast, some of the lawsuits arguably did not involve a conflict. For example, it is undisputed that Cullen did not represent Jeffrey in an arbitration of a wrongful termination claim (Arbitration) that he filed after some or all of the Baugher plaintiffs gained control of the board and terminated him. (Rice Aff., 33.)"

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A Huge Loss, and a Search for The Money

Pope Inv. II LLC v Belmont Partners, LLC  2014 NY Slip Op 30349(U)  February 4, 2014  Sup Ct, New York County  Docket Number: 651479/12  Judge: Jeffrey K. Oing is the story of a huge investment, a huge loss, and the search for missing monies. 

"A Securities Purchase Agreement, dated April 14, 2008, documented the AAXT Investment (Compl.,18). The Investor plaintiffs, along with other investors not named as plaintiffs, invested approximately $12.5 million in AAXT in exchange for 4,008,188 shares of AAXT's Series A Senior Convertible Preferred Stock (Id.). Of the $12.5 million, approximately $10,132,522.35 was left in net proceeds after fees were paid to Deheng and named defendants Guzov and Belmont (Compl., 24). In conjunction with the closing of the AAXT Investment, AAXT and SMT entered into the China Control Agreement (Compl., 23). SMT transferred all of the economic benefits and liabilities of
its business to Anhante in exchange for the net proceeds of the AAXT Investment, namely, $10,132,522.35 (Id.). Pursuant to the China Control Agreement, AAXT effectively became the  indirect beneficial owner of SMT (Id.).

After the AAXT Investment closed, Guzov placed the net proceeds, $10,132,522.35, in a Hong Kong & Shanghai Banking Corporation Limited ("HSBC") account under ABM's name for holding before they were transferred to SMT (Compl., 40, 45). Plaintiffs allege, however, that Shao and/or Kamick retained control of AMB and the bank account at issue, and that they were not aware that Shao and/or Kamick could exercise control over the net proceeds (Compl., 28). The complaint alleges that Shao embezzled most or all of the money in the ABM account within several days (Compl., 29)."

"The complaint also alleges that Shao and Lv had been  conspiring to embezzle the money invested in AAXT since 2007 (Compl., 31). On September 4, 2008, Lv, acting on Kamick's behalf, e-mailed Meuse and Luckman, asking that they act as a bridge between Kamick and the AAXT Investors to avoid legal action (Compl., 33). On September 18, 2008, Lv informed the AAXT Investors that their investment had been invested elsewhere, contrary to the Transaction Documents and SEC filings (Compl., 34). After Deheng had advised Kamick to transfer the net
proceeds out of ABM's account, Lv informed the AAXT investors in an e-mail dated October 9, 2008 that Deheng would no longer be representing Kamick (Compl., 35). According to the complaint,
after the net proceeds were removed from ABM's account, the funds were deposited into Shao's personal bank account, accounts of entities controlled by Shao, and an account controlled by Lv
(Compl., 37). "

The Group plaintiffs allege that Guzov and Ofsink committed legal malpractice by violating New York Rules of Professional Conduct Rule 1. 7 (b) ( 4) . That Rule requires a lawyer who has decided to represent two clients, regardless of an apparent conflict of interest, obtain written consent from each affected client. The Group plaintiffs claim that defendants Guzov and
Of sink represented AAXT and Kamick for the SMT Transactions without their written consent.
In support of dismissal of this claim, defendants Guzov and Ofsink rely on William Kaufman Org., Ltd. v Graham & James LLP, 269 AD2d 171, 173 (1st Dept 2000) to argue that "a violation of a
disciplinary rule does not generate a cause of action." That reliance is misplaced. That case also stands for the proposition that "some of the conduct constituting a violation of a disciplinary rule may also constitute evidence of malpractice" (Id.). Nonetheless, a violation of a disciplinary rule, standing alone and without more, does not generate a cause of action (Schafrann v N.V. Famka, Inc., 14 AD3d 363, 364 [1st Dept 2003]) The issue, thus, is whether there is more than just a violation of the Rule. A review of the complaint demonstrates that it does not
sufficiently plead what negligent conduct defendants Guzov and Of sink allegedly perpetrated to support the legal malpractice claim. Specifically, the allegations of failure to vet Shao and
[* 16] "disclose information surrounding Shao, his management of Kamick, and his personal relationship with Lv are insufficient to substantiate claims of attorney malpractice without allegations that such a duty existed and that these omissions were the proximate cause of the Group plaintiffs' damages."

"This broad and conclusory allegation, however, without more, is insufficient. Even if the Group plaintiffs were to contend that defendants were negligent by failing to conduct due diligence on
Shao and disclose information regarding his management of Kamick and his personal relationship with Lv, nowhere does the complaint allege that defendants had a duty to conduct such due diligence or disclose such information, and that this failure was the proximate cause of plaintiffs' damages. Accordingly, defendants' motion to dismiss the Group plaintiffs' legal malpractice claim (Count VI) is granted, and it is hereby dismissed without prejudice."

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The Tipping Point in a Legal Malpractice Case

In a legal malpractice case worth more than $60 Million, is it possible that the testimony of a single witness at a deposition can make the essential difference? 

In Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP   2014 NY Slip Op 00954
Decided on February 13, 2014   Appellate Division, First Department   Richter, J. bear in mind that a major issue in the legal malpractice case is whether Defendant advised Plaintiff of the REMIC rules.  More than $60 million is at stake. Then read these paragraphs:
 

"Glick testified that she and Adelman had numerous discussions with Nomura's securitization team about REMIC requirements. She submitted an affidavit stating that before the D5 Securitization closed, Cadwalader provided Nomura with "detailed advice" as to how to satisfy the 80% test. As part of that advice, Glick told Nomura to add together the value of what was plainly REMIC real property, such as land and structural improvements. If that sum amounted to at least 80% of the loan amount, the 80% test would be met. If not, Glick advised Nomura that it should make further inquiries to determine whether the loan met the 80% test. Adelman also advised Nomura that it should consult with Cadwalader if it had any questions about a particular loan.

Perry Gershon, a former vice president of Nomura who was in charge of the D5 [*6]Securitization, confirmed that Cadwalader properly advised Nomura of the REMIC rules. He testified that prior to the D5 Securitization, Cadwalader told him, and he understood, that a REMIC loan needed to be secured by real property worth at least 80% of the loan, that real property includes land and buildings, but not personal property, and that the appraisals of the collateral securing the mortgage loans in  the trust had to separately value the real property.

The testimony of Adelman, Glick and Gershon satisfied Cadwalader's prima facie burden on summary judgment showing that the allegedly missing advice was in fact given to Nomura (see Stolmeier v Fields, 280 AD2d 342, 343 [1st Dept 2001], lv denied 96 NY2d 714 [2001] [rejecting failure to advise claim where the client's own deposition testimony showed he was aware of the advice]). Contrary to the motion court's conclusion, we find nothing inconsistent in Gershon's testimony. Gershon's alleged inability to succinctly articulate the REMIC rules during his deposition, which took place more than 10 years after the advice was given, does not refute his unrebutted testimony that Cadwalader advised him of the relevant rules at the time of the D5 Securitization. Nor does the fact that Gershon is married to one of the Cadwalader attorneys who worked on the transaction, standing alone, raise an issue of fact. At his deposition, Gershon made clear that his wife's employment at Cadwalader had no bearing on how he viewed the litigation. Nomura's current argument to the contrary would only be based on speculation. In any event, even if we were to discount Gershon's statements, the unchallenged testimony of Adelman and Glick shows that the proper REMIC advice was given.

Because Cadwalader met its prima facie burden on summary judgment, the burden shifted to Nomura "to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Nomura failed to satisfy that burden. It points to no documentary evidence directly refuting the testimony of Adelman, Glick and Gershon that the proper REMIC advice was given. Nor did any witness testify that Cadwalader specifically failed to advise Nomura that the appraisals for the D5 Securitization had to separately value the real property components of the asset in question.

Thus, the motion court should have granted summary judgment dismissing the advice claim. "
 

 

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More Fraud and Legal Malpractice Combos

Yesterday, we started to discuss how fraud and legal malpractice can exist side by side and not be "duplicitive."  In Johnson v Rose  2014 NY Slip Op 30262(U)  January 23, 2014  Sup Ct, NY County 
Docket Number: 652075/2011  Judge: Lawrence K. Marks we saw how plaintiffs claimed both fraud and legal malpractice in the tax shelters they got involved with.

"Defendants seek to dismiss plaintiffs' first cause of action as duplicative of the legal malpractice claim. It is well-settled that failure to disclose one's own malpractice, standing alone, does not give rise to a fraud claim separate from the customary malpractice action. See, e.g., Weiss v. Manfredi, 83 N.Y.2d 974, 977 (1994); Baystone Equities, Inc. v. Handel-Harbour, 27 A.D.3d 231, 231 (1st Dep 't 2006); Roswick v. Mount Sinai Med. Ctr., 22 A.D.3d 409, 410 (1st Dep't 2005).  Thus, a fraud claim asserted in connection with a claim for legal malpractice "is sustainable only to the extent that it is premised upon one or more affirmative, intentional misrepresentations -- that is, something more egregious than mere concealment or failure to disclose [one's] own malpractice." White of Lake George v. Bell, 251 A.D.2d 777, 778 (3d Dep't 1998) (internal quotation marks and citation omitted); accord Carl v. Cohen, 55 A.D.3d 478, 478-79 (1st Dep't 2008) (fraud claim may be dismissed as duplicative of a malpractice claim if it is '"not based on an allegation of independent, intentionally
tortious' conduct" and "fail[s] to allege 'separate and distinct' damages")"

"The Second Department recently held that an allegation that defendants "committed fraud by misrepresenting that they 'made a motion for a default judgment' when they 'never made, filed, or drafted' such a motion, and that they billed the plaintiff for drafting the motion" was not duplicative or redundant of the allegation that defendants "committed legal malpractice in failing to timely pursue [the] default judgment." Vermont Mut. Ins. Co. v. McCabe & Mack, LLP, 105 A.D.3d 837, 839 (2d Dep't 2013). The court noted that "[ w ]here, as here, tortious conduct independent of the alleged
malpractice is alleged, a motion to dismiss a cause of action as duplicative is properly denied." Id. at 840. Moreover, the apparent overlap in the amount of damages sought on both counts of action did not require dismissal. Id. at 838, 840.3 See also Simcuski v. Saeli, 44 N.Y.2d 442, 451-52 (1978) (determining that fraud claim was distinct from malpractice claim where defendant,  knowing it to be untrue yet expecting his patient to rely on his advice, advised her that physiotherapy would produce a cure, in consequence of which fraudulent misrepresentation the patient was deprived of the opportunity for cure of the condition initially caused by the doctor's alleged malpractice"). Particularly instructive is the First Department's decision in Mitschele v. Schultz,
36 A.D.3d 249, 254 (1st Dep't 2006). In that case, the plaintiff retained the accountant defendants to advise her regarding her tax status and tax liability as a United Statescitizen living and working abroad. The defendants advised plaintiff that her employer, whose president had introduced plaintiff to the defendants (one of whom was his cousin), should compensate plaintiff as an "outside contractor" and therefore withhold no taxes. When it was later revealed that this advice was erroneous and plaintiff incurred tax liabilities as a result, plaintiff sued, alleging a number of causes of action including accounting malpractice and fraud. Plaintiffs fraud cause of action alleged that defendants' advice was made not in an effort to serve her interests but for the sole benefit of her employer, to allow it to avoid payroll and other taxes and costs. On these facts, the
First Department rejected the defendants' contention that plaintiffs fraud claim was duplicative of her malpractice claim. As the court stated, "[D]efendants' alleged fraud is not simply the failure to disclose the malpractice based upon accounting errors. Rather, defendants are alleged to have perpetrated a fraud on plaintiff from the time they were retained to provide accounting services, in failing to disclose their concern with protecting the interests of another entity, namely, plaintiffs employer." Id. at 254. "

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Tax Shelters, Fraud and Legal Malpractice

Heirs to the Johnson & Johnson fortune decided that dividends and distributions were not sufficient, and entered into a tax shelter arrangement.  Naturally, it was disastrous, and ended in litigation.  In Johnson v Rose  2014 NY Slip Op 30262(U)  January 23, 2014  Sup Ct, NY County
Docket Number: 652075/2011  Judge: Lawrence K. Marks  we see how the Proskauer Rose LLP law firm engineered a big mess.  Today we will deal with the question of whether a fraud claim can exists side-by-side with a legal malpractice claim.

"Plaintiffs John Seward Johnson, Jr. ("Johnson") and his wife Joyce H. Johnson are Johnson & Johnson, Inc. stockholders who, along with other close affiliates and related entities, were clients of defendants at certain times relevant to the complaint. Through their attorney-client relationship with Johnson, defendants were aware of material aspects of plaintiffs' financial affairs, including plaintiffs' ownership of substantial amounts of Johnson & Johnson stock. Defendants approached Johnson (through Matthews) to offer him the opportunity to enter into a tax avoidance transaction with another Proskauer client, nonparty Diversified Group, Inc. ("Diversified"), which was in the business of selling tax planning strategies to high income parties. Defendants told Johnson that the transaction would allow plaintiffs to sell a large block of Johnson & Johnson stock in a manner that would minimize the payment of capital gains taxes. Johnson was realizing significant dividends on the stock up to that time, and had no plans to sell the stock before defendants approached him with the idea."

"Defendants seek to dismiss plaintiffs' first cause of action as duplicative of the legal malpractice claim. It is well-settled that failure to disclose one's own malpractice, standing alone, does not give rise to a fraud claim separate from the customary malpractice action. See, e.g., Weiss v. Manfredi, 83 N.Y.2d 974, 977 (1994); Baystone Equities, Inc. v. Handel-Harbour, 27 A.D.3d 231, 231 (1st Dep 't 2006); Roswick v. Mount Sinai Med. Ctr., 22 A.D.3d 409, 410 (1st Dep't 2005). Thus, a fraud claim asserted in connection with a claim for legal malpractice "is sustainable only to the extent that it is premised upon one or more affirmative, intentional misrepresentations -- that is, something more egregious than mere concealment or failure to disclose [one's] own malpractice." White of Lake George v. Bell, 251 A.D.2d 777, 778 (3d Dep't 1998) (internal quotation marks and citation omitted); accord Carl v. Cohen, 55 A.D.3d 478, 478-79 (1st Dep't 2008) (fraud claim may be dismissed as duplicative of a malpractice claim if it is '"not based on an allegation of independent, intentionally
tortious' conduct" and "fail[s] to allege 'separate and distinct' damages"); Atton v. Bier, 12 A.D.3d 240, 241-42 (1st Dep't 2004) (suggesting that an alleged failure to disclose one's own "general incompetence" is, in effect, "founded upon the same underlying allegations as the malpractice claim and seek essentially the same relief'). Mere allegations that defendants "furnished erroneous legal advice and neglected to take appropriate steps to safeguard [plaintiffs'] interests" do not suffice. White of Lake George, 251 A.D.2d at 778. However, not every claim for fraud is duplicative of a professional malpractice claim, even when both are asserted in the same action. For example, it is proper to deny a motion to dismiss a fraud claim as duplicative of a legal malpractice claim where "the fraud cause of action was based upon tortious conduct independent of the alleged malpractice, i.e., an alleged misrepresentation as to the eligibility of the defendant
[attorney] to practice law in the State of Florida, and the plaintiffs alleged that damages flowed from this conduct." Rupolo v. Fish, 87 A.D.3d 684, 685-86 (2d Dep't 2011); see also Burke, Albright, Harter & Rzepka, LLP v. Sills, 83 A.D.3d 1413, 1414 (4th Dep't 2011) (fraud counterclaim not duplicative of legal malpractice counterclaim where "[t]he proposed counterclaims are based on allegations that plaintiffs intended to deceive decedent, whereas the 'legal malpractice  counterclaim] is based on negligent conduct"'); Dischiavi v. Calli, 68 A.D.3d 1691, 1693 (4th Dep't 2009) (fraud claims not duplicative of legal malpractice claims where "plaintiffs have alleged that the fraud caused additional damages, separate and distinct from those generated by the alleged malpractice")"

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A Remarkable Case (Part 3)

Finally, in the case of Cabrera v Collazo  2014 NY Slip Op 00622  Decided on February 4, 2014
Appellate Division, First Department  Tom, J.  

How does the death of an attorney affect the relationship and the statute of limitations for the client's case?
 

"  Expansion of the record on a "more embracive and exploratory motion for summary judgment" (Rovello, 40 NY2d at 634) may or may not disclose facts demonstrating that, Tanzman was suddenly struck by a fatal and totally incapacitating episode of cancer rendering him unable to engage the services of another attorney to file a timely complaint on behalf of plaintiff or to communicate the necessity to do so. Thus, it would be premature to grant defendant's pre-answer motion and summarily dismiss the professional malpractice claim on the basis of the incomplete record before us (id.).

The cases relied upon in support of dismissal of the complaint state only that for the purpose of determining the limitations period for an action for professional malpractice, the statute of limitations begins to run on the date the client sustains injury (e.g. McCoy v Feinman, 99 NY2d 295, 301 [2002]; Glamm v Allen, 57 NY2d 87, 95 [1982]). These cases do not state that the severance of the attorney-client relationship, due to death of the attorney, prior to the accrual of the legal malpractice action deprives the client of any remedy for the inaction or negligence of the attorney which contributed to or resulted in the client's injury. The holding in these cases is not a bar to a legal malpractice claim against Tanzman for alleged failure, while he was alive, to notify plaintiff that he would be unable to file the summons and complaint in time or to enlist the attorneys in his firm to assist in this endeavor. This is especially so considering the short time period between the date of Tanzman's death and the expiration of the statute of limitations on plaintiff's underlying wrongful death action 11 days later.

Likewise, it has been held that the absence of any attorney-client relationship bars an action for attorney malpractice (e.g. Fortress Credit Corp. v Dechert LLP, 89 AD3d 615, 616 [1st Dept 2011], lv denied 19 NY3d 805 [2012] [allegedly faulty legal opinion relied upon was prepared by law firm retained by third parties, not by plaintiff]), as does the severance of the attorney-client relationship prior to any act of malpractice (e.g. Clissuras v City of New York, 131 AD2d 717 [2d Dept 1987], appeal dismissed 70 NY2d 795 [1987], appeal dismissed, cert denied 484 US 1053 [1988] [attorney withdrew after arranging for client's consultation with an actuary regarding her claim involving disputed calculation of pension benefits]). Similarly, such cases do not go so far as to hold that an attorney is absolved of liability for his part in permitting a statute of limitations to run against a client. To the contrary, in Clissuras, this Court expressly noted that counsel had withdrawn from representing the plaintiff "after advising her of the four-month Statute of Limitations" (id. at 719). Indeed, in Mortenson v Shea (62 AD3d 414, 414 [1st Dept 2009]), we noted that attorneys may be held liable for, inter alia, "neglect to prosecute an [*6]action." We stated that in pursuing an action on behalf of the plaintiff, the defendants created the impression that his claim remained viable and, under those circumstances, "defendants had a duty, at a minimum, to expressly advise plaintiff that a limitations period existed," including the need to take the necessary steps to ensure that an action was timely commenced (id. at 415). Whether Mortenson establishes an affirmative duty to advise a client with respect to the running of a limitations period, which the parties dispute, is not a question requiring immediate resolution. What Mortenson signifies is that an attorney will be held accountable for any misconduct that contributes to damages incurred because a statute of limitations is allowed to expire against a client. "

 

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A Remarkable Case (Part 2)

In Cabrera v Collazo  2014 NY Slip Op 00622  Decided on February 4, 2014  Appellate Division, First Department  Tom, J. the question of when the statute of limitations commences and the effect of the death of an attorney.
 

"In late September, Tanzman filed a certificate of lateness with Surrogate's Court stating that "another attorney" had been contacted initially by the family and "did nothing on the file for over a year." It was followed by a letter of September 30, 2010 asking that letters of administration be issued "as soon as is possible because there is a wrongful death matter associated with the above-named decedent and the Statute of Limitations will be expiring shortly." Surrogate's Court issued letters of limited administration on October 6. On October 14, Collazo was sentenced to 24 months' imprisonment on the federal immigration and visa fraud charges [FN2]. On October 24, Tanzman died at Memorial Sloan-Kettering Cancer Center, and the statute of limitations on plaintiff's wrongful death action expired 11 days later on November 4. No complaint was ever filed on behalf of plaintiff, and this action for professional malpractice ensued.

Other than a death certificate, there is no evidence concerning Tanzman's treatment or the course of his illness or when he was hospitalized. Nor is there any information about the nature of his law practice, beyond a letterhead that identifies three other attorneys as "of counsel." While it is clear from the letter dated September 30, 2010 that Tanzman was aware of the impending expiration of the statute of limitations against his client, it is unknown whether he took any steps to prepare a complaint for filing or whether he attempted to enlist the assistance of any other attorney including the attorneys of counsel in his firm.

According to the Tanzman defendants, neglect of a client matter by an attorney is not actionable if, as here, the attorney dies before the applicable limitations period runs against the client. Granted, it has been held that, for the purpose of determining the timeliness of a professional malpractice action, the action accrues "when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court." That a cause of action might accrue when the plaintiff actually sustains a loss, however, does not require the conclusion that an attorney is absolved of responsibility for any and all consequences of his neglect of the matter simply because it occurred prior to accrual of an actionable claim. Giving plaintiff the benefit of every possible favorable inference that can reasonably be drawn from the pleadings (Rovello v Orofino Realty Co., 40 NY2d 633, 634 [1976]), as we must on a pre-answer motion to dismiss (see Arrington v New York Times Co., 55 NY2d 433, 442 [1982], cert denied 459 US 1146 [1983]), it appears that the inaction of counsel rendered the lapse of plaintiff's cause of [*4]action not merely possible — or even probable — but inevitable. On a motion directed at the sufficiency of the pleadings, the issue is whether the facts alleged fit within any cognizable theory of recovery, not whether the complaint is artfully pleaded (see Hirschhorn v Hirschhorn, 194 AD2d 768 [2d Dept 1993]), and the circumstances of this matter do not warrant dismissal of the action, at this juncture, as against the Tanzman defendants.

The extent of the duty imposed on the attorney to commence a timely action depends on the immediacy of the running of the statutory period, and no duty will be imposed where sufficient time remains for successor counsel to act to protect the client's interests in pursuing a claim (see Golden v Cascione, Chechanover & Purcigliotti, 286 AD2d 281 [1st Dept 2001] [defendant law firm relieved 2½ years before claim expired]). Where, as here, the expiration of the statute of limitations is imminent and the possibility that another attorney might be engaged to commence a timely action is foreclosed, there is a duty to take action to protect the client's rights.

Plaintiff is entitled to the inference that Tanzman died as a result of a chronic, terminal illness that he knew, or should have known, presented the immediate risk that his ability to represent his clients' interests might be impaired (see Yuko Ito v Suzuki, 57 AD3d 205, 207 [1st Dept 2008]). Here, defendants offered no evidence to elaborate on the cause or circumstances surrounding Tanzman's death. The submitted certificate of death for Tanzman merely states that Tanzman passed away on October 24, 2010 at Memorial Sloan-Kettering Cancer Center. The record suggests that plaintiff had cancer, and that his death may have been foreseeable, but the nature and duration of his illness cannot be determined from the death certificate and defendants' other submissions. Further, the record reflects that Tanzman was well aware that Collazo could not be relied upon to assist with plaintiff's representation. According to Tanzman's own statement, Collazo had done nothing on the matter in over a year, and Tanzman's retainer agreement assigned Collazo only a limited role in the case. In any event, as of September 2010, when Tanzman expressed his concern over the running of the statute of limitations in a letter to Surrogate's Court, Collazo had been convicted on a federal criminal offense and was facing sentencing and disbarment. Plaintiff is entitled to the factual inference that, at this late juncture and mindful of his ill health, Tanzman was aware of the need to prepare and file a complaint or to arrange for one to be filed as soon as the necessary letters of administration were received. The letters of administration was issued on October 6, 2010. Tanzman neither filed a complaint nor engaged another attorney to file one in his stead despite the availability of three attorneys associated with the firm as of counsel.

No discovery has been conducted and, in the absence of any evidence that the onset of Tanzman's final episode of illness was sudden, unanticipated and completely debilitating, the failure to seek assistance with the filing of a timely complaint represents a failure to protect plaintiff's interests. Further, plaintiff was not informed that the statute of limitations was about to expire so that she could protect her claim. Milagros Cabrera stated that in August 2011, eight months after the statute of limitations of plaintiff's cause of action had expired, Tanzman's law office mailed the case file to her in response to her efforts to learn the status of the matter. It was then that Cabrera for the first time learned that Tanzman was deceased. She later discovered, [*5]after consultation with another law office, that plaintiff's claims were time-barred and that Collazo was incarcerated. Finally, even if plaintiff had been put on notice to engage another attorney to initiate the wrongful death action, no means are identified by which the case file might have been obtained from the Tanzman firm to permit substitute counsel to file a timely complaint. In short, while the statute of limitations had not yet run at the time of Tanzman's death, nothing in the record suggests that there was any available means by which plaintiff might have preserved her wrongful death action. According the facts their most favorable intendment, at the time of Tanzman's death, the running of the statute of limitations against his client was a foregone conclusion because intervention by substitute counsel was not possible. "

 

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A Remarkable Defense That Shocks the First Department

Three concepts are discussed in this very unusual legal malpractice case.  The first is the relationship between attorneys withdrawing and their duties to clients, the second is the effect of an attorney's death (and how he died) on the client's interests, and the third is when the statute of limitations commences. From Cabrera v Collazo  2014 NY Slip Op 00622  Decided on February 4, 2014  Appellate Division, First Department .
 

First, the death of an attorney.  "The remarkable defense proffered in this professional malpractice action is that an attorney who neglects a matter so that the statute of limitations runs against his client cannot be held legally accountable if the attorney happens to expire before the applicable limitations period. A cause of action for attorney malpractice requires: " (1) the negligence of the attorney; (2) that the negligence was the proximate cause of the loss sustained; and (3) proof of actual damages'" (Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 9 [1st Dept 2008], lv denied 12 NY3d 715 [2009], quoting Mendoza v Schlossman, 87 AD2d 606, 606-607 [2d Dept 1982]). The pleadings, as "[a]mplified by affidavits and exhibits in the record" (Crosland by New York City Tr. Auth., 68 NY2d 165, 167 [1986]), contain allegations from which these elements can be made out and, thus, state a viable cause of action so as to survive a pre-answer motion to dismiss the complaint.

This legal malpractice action was brought by plaintiff Milagros Cabrera against defendants Shelley B. Levy, as executor of the estate of Cary M. Tanzman, Esq., and the Law Office of Cary M. Tanzman (collectively, the Tanzman defendants) and Salvador Collazo, who participated in plaintiff's representation. The Tanzman defendants brought a pre-answer motion to dismiss the complaint for failure to state a cause of action based on documentary evidence (CPLR 3211[a][1], [7]), particularly Cary Tanzman's death certificate. The gravamen of their defense is that since the attorney-client relationship was terminated by Tanzman's death on October 24, 2010, Tanzman and his law firm cannot be held liable for any damages sustained by plaintiff as a result of the subsequent running of the statutory limitations period on November 4, 2010 (EPTL 5-4.1[1]).

According to the Tanzman defendants, neglect of a client matter by an attorney is not actionable if, as here, the attorney dies before the applicable limitations period runs against the client. Granted, it has been held that, for the purpose of determining the timeliness of a professional malpractice action, the action accrues "when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court." That a cause of action might accrue when the plaintiff actually sustains a loss, however, does not require the conclusion that an attorney is absolved of responsibility for any and all consequences of his neglect of the matter simply because it occurred prior to accrual of an actionable claim. Giving plaintiff the benefit of every possible favorable inference that can reasonably be drawn from the pleadings (Rovello v Orofino Realty Co., 40 NY2d 633, 634 [1976]), as we must on a pre-answer motion to dismiss (see Arrington v New York Times Co., 55 NY2d 433, 442 [1982], cert denied 459 US 1146 [1983]), it appears that the inaction of counsel rendered the lapse of plaintiff's cause of [*4]action not merely possible — or even probable — but inevitable. On a motion directed at the sufficiency of the pleadings, the issue is whether the facts alleged fit within any cognizable theory of recovery, not whether the complaint is artfully pleaded (see Hirschhorn v Hirschhorn, 194 AD2d 768 [2d Dept 1993]), and the circumstances of this matter do not warrant dismissal of the action, at this juncture, as against the Tanzman defendants. "

We will continue with this Case in the next post.

 

 

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Boomers, Real Estate, True Love and Legal Malpractice

Anyone reading the case of Charell v Brenig   2014 NY Slip Op 30304(U)  January 27, 2014
Sup Ct, New York County  Docket Number: 158589/12  Judge: Joan A. Madden will see the dangers in romance and how true love might turn out.  A New Yorker will recognize the questions of real estate, rent stabilized apartments, and the relationship of Manhattan to the outer boroughs (place of "inferior apartments.")  An attorney will see the relationship of hiring an attorney and legal malpractice.

"Defendants F. Avril Brenig and Julian Lowenfeld, Esq. move for an order pursuant to CPLR 321 l(a)(5) and (7 ), dismissing the complaint on the grounds of statute of frauds and failure to state a cause of action. Defendants also seek an award of costs and attorney's fees as sanctions for frivolous litigation. 1 Plaintiff Ralph C~arell opposes the motion.  In March 2012, plaintiff Charell and defendant Brenig met through the Internet dating site Match.com and began a romantic relationship. At the time, plaintiff was 82 years old, and defendant, a retired widow, was 73 years old. In September 2012, plaintiff moved into Brenig's Mitchell Lama apartment at 150 West 96th Street. Plaintiff alleges that in mid-October 2012, Brenig told him she "changed her mine" and "no longer wanted to cohabitate with him." On October 22, he voluntarily left the apartment after Brenig summoned the police. In November 2012, plaintiff commenced this action, asserting first and second causes of action against Brenig for breach of contract and promissory estoppel, third and fourth causes of action against Brenig and Lowenfeld for fraud and intentional infliction of emotional distress,  and fifth and sixth causes of action against Lowenfeld for legal malpractice and professional negligence. The complaint alleges Brenig "induced" plaintiff to surrender his rent stabilized apartment at 311 East 72nd Street, and he relied upon her representations that if he moved into her apartment, she would "provide him with a room in her apartment for the rest of his life," he would "become a 'cooperator' on the proprietary lease, and participate in the profits if the building was converted," he would be "added" to her will, and they "would share equally in living expenses." Plaintiff alleges Brenig told him that if the relationship did not work out, he could "reside in the middle bedroom for the rest of his life," and assured him that "under no circumstances would he be asked to vacate the apartment." He alleges his rent stabilized apartment had a rental value of less than 40% of market value, resulting in damages in.excess of $150,000, and that he abandoned "much of his personal property, including furniture, books paintings, and collectibles" worth more than $25,000. Plaintiff alleges that on October 15, 2012, Brenig invited defendant Lowenfeld, an attorney, to the apartment, who introduced himself "as a mediator tasked with crafting a mutually acceptable separation between plaintiff and Brenig." The complaint alleges Lowenfeld specially  stated he was not Brenig's attorney, "but rather a mediator acting on behalf of both parties." Plaintiff alleges Lowenfeld conducted two mediation sessions on October 15 and 16, during which Lowenfeld "misrepresented plaintiffs legal rights, stating definitively that plaintiff had no right to reside" in Brenig's apartment and that he should begin looking for a new apartment immediately. The complaint alleges that on October 22, Lowenfeld told plaintiff that he was not a neutral mediator, but Brenig's attorney, and that he had contacted the police and plaintiff had two choices, to leave the apartment immediately, or be escorted out by the police. Lowenfeld then called the police, who escorted plaintiff out of the apartment. Plaintiff alleges he packed just one suitcase,"and Lowenfeld told him his remaining property would be moved to a storage unit the next day. Plaintiff alleges he checked into a hotel, "began to experience severe chest palpitations," and, believing he was having a heart attack, he went to the emergency room where he was diagnosed with "tachycardia,  palpitations and   hypertension." He alleges that prior to that time, he had never suffered any of those ailments. He also alleges he was caused to suffer severe anxiety and extreme emotional distress by the "daunting task of finding an apartment he could afford and figuring out a way to maintain even a modest standard of living," and he is now living in an "inferior apartment in Astoria, Queens." He alleges that "by reason of the mistreatment and elder abuse described above, he was forced to spend thousands of dollars to replace several personal items he had discarded," and is "also living under continuous, severe stress that has adversely affected his health." "

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The Rare Case of Plaintiff's Summary Judgment in Legal Malpractice

Board of Mgrs. of Bridge Tower Place Condominium v Starr Assoc. LLP   2013 NY Slip Op   7684 [111 AD3d 526]     Appellate Division, First Department  teaches three important lessons in a very short decision. The simple facts of the case are that defendant attorneys drafted a stipulation which stripped plaintiff of the right to amend its bylaws to attain a specific result in the underlying case. Plaintiffs successfully moved for summary judgment on the issue of liability and dismissed defendant's' affirmative defense of comparative fault.
 

Lesson 1:  In this case no expert is necessary to establish that defendants' conduct fell below the standard of the professions generally.

Lesson 2:  This was a case in which "but for causation' could be found as a matter of law.  (rare indeed)

Lesson 3:  Even though the Board President was an attorney, he relied upon defendants to draft the stipulation, and cannot be held in comparative fault.

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Professional Malpractice Claims Largely Dismissed in a Construction Negligence Case

Condominiums and co-ops occupy the greatest portion of  New Yorker's real estate world.  Many believe that new construction is the jewel of that grouping, and will purchase a unit well before completion.  New owners depend on the reputation of the sponsor.  How the building will come out is an open question, and in Board of Mgrs. of the 125 N. 10th Condominium v 125 N. 10, LLC
2014 NY Slip Op 50035(U)   Decided on January 6, 2014   Supreme Court, Kings County   Demarest, J.  we see what happens after the residents predominate on the board and the sponsor no longer has control.  It's not a pretty sight.
 In this case there a a very large number of parties, and an even larger number of motions.  Read on, and see how the claims are mostly dismissed, even after the complaint alleges that "According to plaintiff, Sponsors, however, did not deliver a Building in accordance with the Plans and Specifications set forth in the Offering Plan, but, instead, the building was "rife with construction problems," including improperly designed and constructed walls, roofs, and foundation, which have resulted in water infiltration and significant property damage, as well as non-compliance with New York City Department of Building ("DOB") Codes. Other issues complained of include scalding hot water that flows through the residential fixtures, the persistent break down of the building's heating and cooling systems, severe drafts from the windows, extensive leaking from ceilings, flooding in the cellar garage, noxious odors permeating the units, and a dangerous condition created by terrace railings at the top of the ten-story building, which are designed so that it is possible for children to climb over them.

When the defects were discovered, the Sponsor-controlled board requested that all defendants return to the Building to inspect their designs, plans, and work, to determine how to rectify the problems. However, despite numerous inspections, plaintiff claims that the defects remained unresolved. Accordingly, in 2011, the Board, which was no longer Sponsor-controlled,[FN2] retained a non-party firm, RAND Engineering & Architecture, P.C. (" Rand") to perform a visual survey of the building to determine the cost of making repairs, which were estimated to cost at least $2 million. Plaintiff claims to have performed essential repairs to the roof, in addition to other repairs, which have cost much more than estimated by Rand. Despite these expenditures, plaintiff contends, numerous defects still require repair. Finally, plaintiff refers to a case recently filed in Kings County wherein an individual named Tirpak names the Board as defendant, alleging that by reason of a dangerous and defective condition existing on the roof in violation of DOB code, he fell from the roof and was paralyzed from the waist down. "
 

Here are the results:  As all of plaintiff's claims are dismissed as to Penmark, the complaint against Penmark is dismissed with leave to plaintiff to replead with respect to any viable contract causes of action related to the Management Agreement.

As all of plaintiff's claims against Scarano Defendants are dismissed, the complaint is dismissed as to Scarano Defendants.

As all of plaintiff's claims against Cucich Defendants are dismissed, the complaint is dismissed as to Cucich Defendants.

As all of plaintiff's claims against Seta Defendants are dismissed, the complaint is dismissed as to Seta Defendants.

As all of plaintiff's claims are dismissed as to Simon Schwartz, individually, the complaint is dismissed only as to Simon Schwartz, individually, without prejudice to his litigating his cross and counterclaims against the remaining parties.

As all of plaintiff's claims are dismissed as to Jaccarino, the complaint is dismissed as to Jaccarino, individually.

As all of plaintiff's claims against Sharon Defendants are dismissed, the complaint is dismissed as to Sharon Defendants.

As all of plaintiff's claims against AE Design are dismissed, the complaint is dismissed as to AE Design.

All cross claims against the moving defendants are dismissed without prejudice to an aggrieved defendant bringing a third party action against a co-defendant who has been dismissed from this case as a result of this decision.

This constitutes the decision and order of the Court. "

 

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Would An Investigation Have Made a Difference?

An unsophisticated client, a personal injury and an attorney who does not investigate the case.  These are the facts in Angeles v Aronsky   2013 NY Slip Op 02454 [105 AD3d 486]   Appellate Division, First Department . 
 

"On December 7, 2007, at approximately 3:15 p.m., plaintiff entered the front entrance of the apartment building where he lived and, immediately upon reaching the lobby, was hit in the jaw. Although there were no witnesses to the actual attack, a neighbor, Teresa Luna, who was standing outside the building around the time of the incident, saw three men run out the front entrance. Two of the men were holding baseball bats. Luna, who had lived in the building for about five years, did not recognize any of the men. Plaintiff also did not recognize the men, whom he observed briefly before he lost consciousness following the assault.

On the day of the incident, plaintiff admits that the door locked behind him when he left the building around 2:55 p.m. and that he had to unlock it with his key when he returned a short time later. On the side of the building there is a door to the laundry room, which is located in the basement. This door remains unlocked between 9:00 a.m. and 6:00 p.m. From the laundry room, a person can access the lobby without a key by using the elevator.

Shortly after the attack, plaintiff retained defendant to represent him in a potential personal injury case. According to defendant, an investigator from his office initially interviewed plaintiff at the hospital. Defendant asserts that he later spoke with plaintiff over the phone to review the information plaintiff had given the investigator. Plaintiff told defendant that the front door was locking properly on the day he received his injuries and mentioned no other entrances. Defendant accepted plaintiff's statements concerning the security of the building, and did not send an investigator to inspect the premises or visit the premises himself. Also, he did not interview the superintendent."

The case settled, but plaintiff says that he was compelled to settle at a low value.  "A client is not barred from a legal malpractice action where there is a signed "settlement of the underlying action, if it is alleged that the settlement of the action was effectively compelled by the mistakes of counsel" (Garnett v Fox, Horan & Camerini, LLP, 82 AD3d 435, 435 [1st Dept 2011] [internal quotation marks omitted], quoting Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1st Dept 1990])."
 

"In this specific case, given plaintiff's lack of sophistication and his limited education, defendant's statement that he never conducted any investigation, except for speaking to plaintiff for a very limited time, raises a question of fact as to whether defendant adequately informed himself about the facts of the case before he conveyed the settlement offer. Furthermore, defendant says he told plaintiff, when he conveyed the settlement offer, that it was a "difficult liability case." It is difficult to understand, on the record before us, how he made that assessment without going to the building, or speaking to the superintendent. Because the evidence on a defendant's summary judgment motion must be viewed in the light most favorable to plaintiff (Branham v Loews Orpheum Cinemas, Inc., 8 NY3d 931 [2007]), we find there are questions of fact as to whether the attorney failed to exercise the ordinary reasonable skill appropriate under the circumstances."

 

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Too Many Possibilities for Summary Judgment in this Legal Malpractice Case

The essential question in a summary judgment motion is whether after hearing all the arguments, there are still questions of fact upon which reasonable minds differ.  If so, then no summary judgment.  So it is in Arbor Realty Funding, LLC v Herrick, Feinstein LLP   2013 NY Slip Op 01216 [103 AD3d 576]   Appellate Division, First Department . 
 

Legal malpractice case is brought by lender who argues that it would not have made a loan to developer but for negligent legal advice.  "Defendant argues that even if, but for its allegedly erroneous legal advice as to zoning issues, plaintiff would not have made bridge loans to the developer of a residential tower at 303 East 51st Street in Manhattan, plaintiff cannot establish legal malpractice or negligent representation because it cannot demonstrate that the zoning advice proximately caused its loss on the defaulted loans. Plaintiff made the loans in mid-2007. Defendant contends that the crane collapse at the project site in March 2008, which killed seven people, the market collapse beginning in late 2007 and continuing through 2008, and plaintiff's insufficient response to the Department of Buildings letter notifying plaintiff of its intent to revoke the project's building permits, constituted intervening events that severed the causal link between defendant's zoning advice and plaintiff's loss (see Derdiarian v Felix Contr. Corp., 51 NY2d 308 [1980]).

There is, however, evidence in the record that raises an issue of fact as to causation (see Brooks v Lewin, 21 AD3d 731, 734 [1st Dept 2005], lv denied 6 NY3d 713 [2006]). It appears [*2]that potential takeout lenders had concerns about the zoning issues even before March 2008. To the extent later events contributed to plaintiff's loss, they are properly considered by a fact-finder (see e.g. Schauer v Joyce, 54 NY2d 1 [1981]). "
 

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