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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Legal Malpractice Took Place Who Knows When

Plaintiff brings a legal malpractice action based upon a series of real estate closings.  His  2011 complaint strikingly fails to  say when the attorney last represented him.  Result?  In Elmakies v Sunshine   2014 NY Slip Op 00478   Decided on January 29, 2014   Appellate Division, Second Department the case is dismissed on the statute of limitations.
 

"The instant action to recover damages for legal malpractice and breach of fiduciary duty was commenced in December 2011. The complaint does not allege when the conduct giving rise to these causes of action occurred.

The defendant Jeffrey Sunshine and his law firm, Jeffrey Sunshine, P.C. (hereinafter together the Sunshine defendants), moved, inter alia, pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against them as time-barred. In support of the motion, Sunshine submitted an affidavit stating that his firm "was retained to represent the plaintiff Downstate Elmira Acquisiton Corp. in a series of real estate closings for the purchase of properties in Elmira, New York," and "[t]to the best of my recollection, the last closing took place on October 5, 2007." In support of that claim, Sunshine submitted a copy of a closing statement dated October 5, 2007.

In opposition, the plaintiff Nissim Elmakies submitted an affidavit stating that Sunshine acted as his business attorney, and was in "continuous communication regarding my investment." However, the last communication with Sunshine alleged by the plaintiffs was a facsimile transmission dated December 7, 2007.

The Sunshine defendants made a prima facie showing that the three-year statute of limitations for legal malpractice (see CPLR 214[6]) expired before the action was commenced, and the plaintiffs failed to raise a question of fact in opposition (see Hadda v Lissner & Lissner LLP, 99 AD3d 476, 477). Further, since the plaintiffs seek monetary relief for the alleged breach of fiduciary duty, the statute of limitations for that cause of action is also three years (see IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139). That cause of action was based on the same facts underlying the legal malpractice cause of action and, therefore, was time-barred (see Vermont Mut. Ins. Co. v McCabe & Mack LLP, 105 AD3d 837, 839; Tsafatinos v Lee David Auerbach, P.C. , 80 AD3d 749, 750). "

 

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Spoliation of Evidence and the Aftermath

In Scekic v SL Green Realty Corp.   2014 NY Slip Op 30186(U)  January 21, 2014  Sup Ct, New York County  Docket Number: 113386/10  Judge: Doris Ling-Cohan a worker is injured while up on a 15 foot ladder which suddenly splits apart.  He falls, and a Labor Law 240(1) case is born.  but, what happened to the ladder, and how does that affect the case.  More importantly, was it the obligation of any attorney to preserve or seek to preserve the ladder?

"This action arises out of a construction site accident. Plaintiff Zoran Scekic, a steamfitter, was allegedly injured on September 30, 2010 when the ladder he was standing on split in two, causing him to fall 15 feet to the floor. Plaintiff and his wife, Vesna Scekic (together, plaintiffs), subsequently commenced this action seeking recovery for violations of Labor Law § § 240 ( 1 ), 241 (6), 200 and for common-law negligence.  Plaintiff testified at his deposition that he was working as a  teamfitter for FL Mechanical on the date of his accident (Plaintiff EBT Transcript, at 27). According to plaintiff, FL Mechanical provided all of his tools and equipment except for hand tools (id. at 34). While he was looking through blueprints, a supervisor named Mike from Structure Tone called him and told him that a pipe needed to be raised that was too low (id. at 45-46). Plaintiff testified that the pipe needed to be raised because the contractors could not put the ceiling below that pipe (id. at 47). Plaintiff told Mike that he needed a ladder to reach that 15-foot height because FL -3- [* 4]
Mechanical had already sent back its ladder that would have been tall enough to reach that area a
week or two earlier (id. at 47, 141). Mike then pointed to a ladder and told plaintiff to "use that ladder" (id. at 48). The ladder, which plaintiff described as an extension ladder, was located about 30 or 40 feet away (id at 48, 49). Plaintiff further testified that while he was on the ladder and tightening bolts, "the ladder broke up somehow," and "just split, you know, in two pieces," causing him to fall (id. at 52, 55, 59). Plaintiff was not wearing a harness at the time of his accident (id. at 59). Plaintiff testified that he only received instructions from Mike and his boss Silvio as to what to do on the job (id. at 128)."

"Plaintiffs move to strike Structure Tone's answer based upon spoliation of evidence. In support, plaintiffs contend that Structure Tone's superintendent, Michael Sansone, observed plaintiff and the ladder lying on the ground in two pieces after the accident, but did nothing to preserve the ladder. Plaintiffs maintain that Sansone was on notice that plaintiff would commence a lawsuit as a direct result of the accident. In opposition, the Structure Tone defendants contend that Structure Tone did not destroy the ladder; rather, Schindler destroyed the ladder on the date of the accident. The  structure Tone defendants argue that plaintiff never demanded production of the ladder, and that there is no need to preserve the ladder for a Labor Law§ 240 (1) claim. In any event, the Structure Tone defendants contend that they produced copies of photographs of the ladder that were  identified at the depositions (Levien Affirm. in Support, Exh. 20). "Under New York law, spoliation sanctions are appropriate where a litigant, intentionally or negligently, disposes of crucial items of evidence involved in an accident before the adversary has an opportunity to inspect them" (Kirkland v New York City Housing. Auth., 236 AD2d 170, 173 [1st Dept 1997]). In determining the sanction to be imposed on a spoliator, the court must examine the extent that the non-spoliating party is prejudiced by the destruction of the evidence and whether dismissal is warranted as "a matter of elementary fairness" (id. at 175 [internal ·quotation marks and citation omitted]). Striking a pleading is warranted only where the loss of the evidence leaves the affected party without the means to prosecute or defend the action (see Tommy Hilfiger, USA v Commonwealth Trucking, 300 AD2d 58, 60 [1st Dept 2002]). However, where there is independent evidence that permits a party to adequately prepare its case, a less drastic sanction is appropriate (see e.g. Jfraimov v Phoenix Indus. Gas, 4 AD3d 332, 333-334 [2d at 2004] [negative inference charge for destruction of truck and propane tanks]). ere, plaintiffs' request to strike Structure Tone's answer is denied. It is undisputed that the ladder was destroyed after the accident. However, plaintiffs have not shown that Structure Tone destroyed the ladder. Structure Tone's project superintendent, Michael  Ransone, testified that Structure Tone did not destroy the ladder, and that he heard that Schindler destroyed the ladder based upon superstition in the trade (Sansone EBT, at 38-40). In any case, plaintiffs have ·not demonstrated that they are without the means to prosecute any of their claims based upon the loss of this evidence."

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Good Practice and Its Application to Legal Malpractice

It's said that there is a general level of good practice standards for attorneys in New York, and its well settled that all attorneys are expected to practice at the level (admittedly not the very highest level) of good practice among competent attorneys in New York.  What does this actually mean?

The question of how a competent and qualified attorney would handle a case is the crux of Bua v Purcell & Ingrao, P.C. 2012 NY Slip Op 06908  Appellate Division, Second Department . At issue is whether attorney committed malpractice in the termination of a real estate contract of sale.

"The plaintiff commenced this action to recover damages allegedly sustained as a result of the defendants' legal malpractice. The amended complaint alleged that the plaintiff retained the defendants to represent and advise him in connection with the sale of certain real property. The plaintiff entered into a contract of sale with a buyer, who tendered a deposit to be held in escrow. The amended complaint further alleged that, prior to the closing date, the buyer's attorney attempted to terminate the contract of sale because the buyer was unable to obtain financing for the purchase. The defendant Joseph A. Ingrao informed the plaintiff that the buyer wished to cancel the contract of sale, and the plaintiff agreed to cancel the contract and return the deposit.

The amended complaint stated that Ingrao sent the buyer's attorney a letter "purporting to terminate" the contract of sale and returning the deposit. More than seven months later, however, the buyer attempted to revive the contract of sale and purchase the property under its terms. The plaintiff refused, maintaining that the contract had been terminated. The buyer subsequently commenced an action against the plaintiff for specific performance of the contract of sale and filed a notice of pendency. In that action, the plaintiff argued, inter alia, that the contract of sale, had been terminated when the deposit was returned. The plaintiff also commenced a holdover proceeding. The plaintiff ultimately prevailed in the specific performance action.

The amended complaint asserted that the defendants committed malpractice by failing to "obtain a clear and unambiguous termination of the [contract of sale] after [the buyer's] attorneys advised Ingrao that she wished to terminate the [contract of sale]." The amended complaint listed various things that the plaintiff claimed the defendants "should have done" in order to accomplish [*2]a "clear and unambiguous" termination of the contract of sale. "

"The standard to which the defendant's conduct is to be compared is not that of the most highly skilled attorney, nor is it that of the average member of the legal profession, but that of an attorney who is competent and qualified (see Restatement [Second] of Torts: Negligence § 299A, Comment e). The conduct of legal matters routinely "involve[ ] questions of judgment and discretion as to which even the most distinguished members of the profession may differ" (Byrnes v Palmer, 18 App Div 1, 4, affd 160 NY 699). Absent an express agreement, an attorney is not a guarantor of a particular result (see Byrnes v Palmer, 18 App Div at 4; see also 1B NY PJI3d 2:152, at 140-141 [2012]), and may not be held "liable in negligence for . . . the exercise of appropriate judgment that leads to an unsuccessful result" (Rubinberg v Walker, 252 AD2d 466, 467; see Grago v Robertson, 49 AD2d 645, 646; see also PJI 2:152).

It follows that "[the] selection of one among several reasonable courses of action does not constitute malpractice" (Rosner v Paley, 65 NY2d 736, 738; see Dimond v Kazmierczuk & McGrath, 15 AD3d 526, 527). Attorneys are free to act in a manner that is "reasonable and consistent with the law as it existed at the time of representation," without exposing themselves to liability for malpractice (Darby & Darby v VSI Intl., 95 NY2d 308, 315; see Noone v Stieglitz, 59 AD3d 505, 507; Iocovello v Weingrad & Weingrad, 4 AD3d 208, 208). "

 

"In conclusion, as the plaintiff effectively concedes, he is estopped from denying that the defendants effected a legally valid termination of the contract of sale. To the extent that the allegations in the amended complaint are not barred by the doctrine of judicial estoppel, they fail to state a cause of action to recover damages for legal malpractice. Accordingly, the defendants' motion to dismiss the amended complaint was properly granted and the plaintiff's cross motion was properly denied as academic."

 

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Why Was This Case Brought?

We've read and re-read the decision in Risk Control Assoc. Ins. Group v Maloof, Lebowitz, Connahan & Oleske, P.C.   2014 NY Slip Op 00419   Decided on January 23, 2014  Appellate Division, First Department  and we still cannot see how plaintiff thought it could proceed.  It was not the insurance company which hired defense attorneys, nor a re-insurer who became liable after the underlying case ended; it was not even the defendant itself.  In this case the "claims administrator" for the insurer sued.  Why?
 

"Plaintiff, a claims administrator for an insurer, commenced this action alleging legal malpractice against defendants, who were retained to represent the insurer in a personal injury action. Acknowledging that it is not in privity with defendants, plaintiff contends that it may bring the cause of action by virtue of its relationship of near privity with them (see Federal Ins. Co. v North Am. Specialty Ins. Co., 47 AD3d 52, 59, 60-61 [1st Dept 2007]). However, plaintiff does not allege that it had a contractual obligation to pay for the loss in the personal injury action (compare Allianz Underwriters Ins. Co. v Landmark Ins. Co., 13 AD3d 172 [1st Dept 2004] [excess insurer alleged relationship of near privity with counsel hired by primary carrier to represent defendant in underlying action]). Nor does it allege that it sustained actual damages because of this obligation (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]). Similarly, plaintiff's factual allegations do not suffice to state an equitable subrogation cause of action against defendants (see Winkelmann v Excelsior Ins. Co., 85 NY2d 577, 581 [1995]). "

 

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Arrested, Convicted and Now Loses Legal Malpractice Case

Judge Lippman once wrote that allowing legal malpractice proceedings against the criminal defense attorney absent "actual innocence" would be very very bad.   "We see no compelling reason to depart from the established rule limiting recovery [*4]in legal malpractice actions to pecuniary damages. Allowing this type of recovery would have, at best, negative and, at worst, devastating consequences for the criminal justice system. Most significantly, such a ruling could have a chilling effect on the willingness of the already strapped defense bar to represent indigent accused. Further, it would put attorneys in the position of having an incentive not to participate in post-conviction efforts to overturn wrongful convictions. "

Here, in Herschman v Kern, Augustine, Conroy & Schoppman  2014 NY Slip Op 00416
Decided on January 23, 2014  Appellate Division, First Department we see one result.  Plaintiff was arrested and later convicted for medicare violations.  His claim against the attorney was that they negligently advised him such that he was arrested.  His claim fails.
 

In this legal malpractice action, plaintiff, a physician, alleges that defendants failed, inter alia, to represent him properly in connection with investigations by Medicare and the Office of Professional Conduct 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 documentary evidence submitted by defendants on their CPLR 3211 motion refutes plaintiff's allegations, by showing that any purported negligence on their part in connection with the administrative proceedings or any advice with respect to plaintiff's method of billing Medicare for Levoritz's services did not proximately cause plaintiff's arrest. The indictment for grand larceny in the second degree charged that plaintiff 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]). "

 

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Judiciary Law 487 in the Major Leagues

Today'sNYLJ article by Andrew Keshner gives the background to a very high level spat between marquee named attorneys Ire Lee Sorkin, Judd Bernstein and Raoul Felder.  Was it deceit, or was it just good old bare-knuckled lawyering?

"In two separate rulings, one state and one federal judge declined to punish high-profile attorney Ira Lee Sorkin for his advocacy in a now-dismissed civil racketeering case.

Though Eastern District Judge Arthur Spatt disqualified Sorkin, of Lowenstein Sandler, and later tossed the suit, he stopped short on Jan. 10 of sanctioning Sorkin and plaintiff Annette Lorber, finding their decision to bring the case was not "wholly unreasonable."

A day earlier, Nassau County Supreme Court Justice Jerome Murphy dismissed a related action that alleged Sorkin told "outright lies" about how he came to possess a document subject to the work product privilege between an adversary and the adversary's attorney.

"Was Sorkin's defense of a claim that he had utilized a document shielded by the attorney work product deceit or collusion within the intent of [Judiciary Law] §487? The Court believes not," Murphy wrote in Winston v. Sorkin, 8227-13.

Both rulings mark the latest round for a legal brawl touched off by a July 2012 suit that Lorber brought against her estranged son-in-law, real estate developer Jonathan Winston and others. With the suit dismissed on procedural grounds, Winston countered with a challenge to Sorkin's conduct related to possession of the privileged document and his decision to file the suit for Lorber in the first place.


Winston filed an August 2012 motion saying Sorkin's previous representation of Winston disqualified him from representing Lorber. Two months later, he filed a motion to dismiss or at least disqualify Sorkin, saying the attorney came to possess a document he was not authorized to have.

The document was an incomplete memorandum from Winston's former attorneys to end his probation that was never submitted in the criminal case. Explanations of its contents are either redacted or go without elaboration in court papers.

The original complaint had a single reference to the memo, saying, it "contains false and misleading information, including much of the same false and misleading information alleged herein." The reference was omitted in the amended complaint.

Winston said, to the best of his recollection, he only shared the document with Eve, when their marriage was still strong.

At a conference in front of Spatt, Sorkin said the document "was given to a third party. That third party passed it on to another party and that party gave the document to me in the presence of the first third party."

In a subsequent affidavit, Sorkin said he got a copy of the document by email from the offices of Raoul Felder, who had previously represented Eve in the divorce. In his affidavit, Sorkin said neither Felder nor an associate told him the document was privileged, adding that Felder told him either Eve or her mother gave Felder the document.

Felder said in an affidavit he did not remember the circumstances surrounding receipt of the document, and Eve did not remember ever seeing the document.

In any event, in November 2012, Spatt, sitting in Central Islip, said Sorkin's previous representation made "trial taint" a "clear" possibility. The judge said Sorkin offered "varying accounts" of how he got the document, which was shielded by the work-product privilege. Spatt said use of the document was an "additional" ground to support Sorkin's disqualification (NYLJ, Nov. 27, 2012).

In July 2013, Spatt dismissed Lorber's civil racketeering claim as time barred and refused to rule on Lorber's remaining state law claims.

Within a month of dismissal, Winston asked Spatt to impose sanctions against Sorkin and Lorber for pressing a suit that, he said, was false and they knew, or should have known, was false.

Moreover, he sued Sorkin in Nassau County Supreme Court under Judiciary Law §487, arguing that Sorkin "engaged in deceit with intent to deceive the Court," when he explained how he obtained the draft (NYLJ, July 10, 2013). Sorkin countered he was not deceitful as a matter of law.

 

The Judiciary Law case is Winston v. Sorkin, Supreme Court, Nassau County.

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It's Just Too Late, Too Late for Legal Malpractice Case

Clients think about suing their attorney; they think long and hard.  Sometimes, they get distracted, and time passes.  Sometimes too much consideration leads to too much delay. As an example, in this case Plaintiff's mother brought a personal injury case against the City of New York for plaintiff from an injury of December 20, 2002. She retained defendant attorneys to represent her. She discharged the attorneys via a "Consent to Change Attorneys" in August , 2006. She brought the legal malpractice case Fleyshman v Suckle & Schlesinger, PLLC ; 2012 NY Slip Op 00176 ; Appellate Division, Second Department. This case was dismissed on the statute of limitations.

"The Supreme Court erred in denying that branch of the defendants' motion which was pursuant to CPLR 3211(a)(5) to dismiss the first cause of action, alleging legal malpractice, as time-barred. The defendants sustained their initial burden by demonstrating, prima facie, that the alleged legal malpractice occurred more than three years before this action was commenced in May 2010 (see CPLR 214[6]; Rupolo v Fish, 87 AD3d 684, 685; Krichmar v Scher, 82 AD3d 1164, 1165). In response, the plaintiff failed to raise a question of fact as to whether the statute of limitations was [*2]tolled by the doctrine of continuous representation. All of the documentary evidence demonstrated that the relationship necessary to invoke the continuous representation doctrine terminated in August 2006, and the plaintiff's submissions did not indicate that her trust and confidence in the defendants continued, or was restored, after that date (see Rupolo v Fish, 87 AD3d 684; Krichmar v Scher, 82 AD3d at 1165; Marro v Handwerker, Marchelos & Gayner, 1 AD3d 488; Piliero v Adler & Stavros, 282 AD2d 511, 512; Aaron v Roemer, Wallens & Mineaux, 272 AD2d 752, 754-755).

Moreover, the Supreme Court should have granted that branch of the defendants' motion which was pursuant to CPLR 3211(a)(7) to dismiss the second cause of action, which alleged a violation of Judiciary Law § 487. Even as amplified by the plaintiff's affidavit, and according the plaintiff the benefit of every favorable inference (see Leon v Martinez, 84 NY2d 83), the complaint failed to allege that the defendants acted "with intent to deceive the court or any party" (Judiciary Law § 487[1]; see Jaroslawicz v Cohen, 12 AD3d 160, 160-161). Further, the plaintiff's allegation that the defendants "willfully delayed [her] recovery with a view to their own ends and benefit" is a bare legal conclusion, "which is not entitled to the presumption of truth normally afforded to the allegations of a complaint" (Rozen v Russ & Russ, P.C., 76 AD3d 965, 969; see Judiciary Law § 487[2]). "
 

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Giving With One Hand, Taking With the Other

In the past several years we've been given unprecedented access to court records. No more is it necessary to travel to the courthouse to review a file, nor must we wait for the clerk to mail (or not mail) a decision. The Court's online presence has rapidly increased.   However, access to written decisions is not universal. in Bullfrog, LLC v Nolan ; 2013 NY Slip Op 00168; Appellate Division, Second Department  we are able to read the AD decision, but the Supreme Court decision is not on-line. While we can look and see the date it was decided, and the type of motion which was decided, no scan of the decision is available, so we cannot say what the Supreme Court judge saw that the Appellate Division differed with.

"An action to recover damages for legal malpractice must be commenced within three years after the accrual of the cause of action (see CPLR 214[6]). Here, the defendant Kevin Barry (hereinafter the appellant) sustained his initial burden on that branch of his motion which was to dismiss the cause of action to recover damages for legal malpractice by demonstrating that the applicable limitations period had expired with respect to the alleged acts of legal malpractice. Contrary to the Supreme Court's determination, the evidence submitted by the plaintiff in opposition was insufficient to raise a triable issue of fact as to whether the continuous representation doctrine tolled the running of the statute of limitations (see Hasty Hills Stables, Inc. v Dorfman, Lynch, Knoebel & Conway, LLP, 52 AD3d 566, 567-568; Melendez v Bernstein, 29 AD3d 872, 873; Dignelli v Berman, 293 AD2d 565, 566; Muller v Sturman, 79 AD2d 482, 486-487). Accordingly, the cause of action to recover damages for legal malpractice should have been dismissed as time-barred. [*2]

The appellant was also entitled to summary judgment dismissing the plaintiff's cause of action for replevin insofar as asserted against him. The appellant established, prima facie, that he did not unreasonably refuse to return the documents requested by the plaintiff (see Khoury v Khoury, 78 AD3d 903, 904; Wiel v Curtis, Mallet-Prevost, Colt & Mosle, 66 Misc 2d 466, 469, affd 36 AD2d 1027, affd 30 NY2d 500). In opposition to the motion, the plaintiff failed to raise a triable issue of fact. The Supreme Court, therefore, should have granted that branch of the appellant's motion which was for summary judgment dismissing the cause of action for replevin insofar as asserted against him. "
 

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Looking at Medical Malpractice; Looking at Legal Malpractice

Our meme is that legal malpractice is ubiquitous and may arise in almost any setting. Here, in a medical malpractice case we see what could have been a nasty legal malpractice had the AD no intervened. In Westchester, cases go the the Trial Assignment Part which has broad discretion in the scheduling of trials. There is great tension in the scheduling of trials. On the one hand, attorneys need to fully book their time in order to make a living. On the other hand, there are at least two and often more law firms all booking cases (plaintiff and defense) and trying to make a living. In order to try a case, one needs witnesses, and experts each have their own schedules, with vacations and professional responsibilities and other trials. Its a challenge to get a case tried. Cases get dismissed when the process gets too hard, and parties are injured. Legal mal often follows.

In Vera v Soohoo 2012 NY Slip Op 07104 ; Appellate Division, Second Department we see how one effort came apart.


"On January 4, 2010, David Pierguidi of The Pagan Law Firm, P.C., appeared on behalf of the plaintiff, and notified the Supreme Court that the plaintiff's expert, who was of paramount importance to the plaintiff's case, was unavailable to testify. Counsel provided the Supreme Court with an affidavit from the expert, in which he stated that he would be away on vacation from January 5 through January 13, and that the vacation could not be canceled. Counsel informed the Supreme Court that the parties had conferred and would all be available to try the case in the middle of February. The Supreme Court, after noting that the case was eight years old, offered to adjourn the matter until January 14. Counsel for Malhotra inquired as to how long the plaintiff's case would last, noting that he had a case on January 25, in Rockland County, and a case in federal court scheduled for February 1. The plaintiff's counsel responded that his case alone would take three days to try, and alerted the court that his firm had a conflict with another case that was being tried in Kings County. In response, the Supreme Court directed the law clerk to read the procedural history of the case into the record. While she was still doing so, the Supreme Court cut her off, stating, "that's enough." Then, without further comment or questions about plaintiff's counsel's claimed scheduling conflict, the Supreme Court, sua sponte, dismissed the action pursuant to 22 NYCRR 202.27, stating "this is a fault [sic] dismissal." The court subsequently issued a written order indicating that the action was being dismissed for counsel's failure to proceed to trial on January 4, 2010.

The plaintiff timely moved to vacate the order and restore the action to the action to the trial calendar. In the moving papers, the plaintiff's counsel affirmed that the trial date offered by the Supreme Court, January 14, 2010, conflicted with a case entitled Bryan v Hurwitz that his firm was scheduled to try on January 19, 2010, and that Bryan v Hurwitz had a 1999 index number. In an order dated June 4, 2010, the Supreme Court denied the plaintiff's motion, finding that, while she had a potentially meritorious cause of action, she had failed to provide a reasonable excuse for her inability to proceed on January 4, 2010, or January 14, 2010.

Under 22 NYCRR 202.27, a court may dismiss an action when a plaintiff is unprepared to proceed to trial at the call of the calendar (see Fink v Antell, 19 AD3d 215; Johnson v Brooklyn Hosp. Ctr., 295 AD2d 567, 569; Farley v Danaher Corp., 295 AD2d 559, 560). In order to be relieved of that default, a plaintiff must demonstrate both a reasonable excuse for the default and a potentially meritorious cause of action (see e.g. Felsen v Stop & Shop Supermarket Co., LLC, 83 AD3d 656).

Here, the plaintiff's proffered reason for being unable to proceed on January 4, 2010, was that her expert was unavailable to testify because of a scheduled vacation between January 5 and January 13, 2010, which the expert could not cancel. That excuse was a reasonable one (see Vorontsova v Priolo, 61 AD3d 556, 556-557; Conde v Williams, 6 AD3d 569, 570; Goichberg v Sotudeh, 187 AD2d 700, 701; cf. Kandel v Hoffman, 309 AD2d 904; Spodek v Lasser Stables, 89 AD2d 892). Indeed, the Supreme Court accepted that excuse, as evidenced by its offer during the colloquy on January 4 to adjourn the trial to January 14. In addition, in its order denying the plaintiff's motion to vacate the default, the Supreme Court stated that it had been willing to adjourn the trial to accommodate the expert's vacation, tacitly acknowledging that it had concluded that the excuse was reasonable. Nevertheless, it held in that order that the plaintiff's action should be dismissed, in part, because the record was silent as to when the plaintiff's counsel informed his expert of the trial date, when the expert scheduled his vacation, and when counsel learned of the expert's vacation schedule. However, that claimed justification for dismissing the plaintiff's action, which is adopted by the dissent, is not supported by the record since the Supreme Court never mentioned any of those enumerated deficiencies during the colloquy on January 4, 2010.
Even accepting the post hoc conclusion that the action was validly dismissed for the failure to proceed on January 14, a reasonable excuse for that failure was provided. The plaintiff's counsel explained that his firm had another trial involving a medical malpractice claim scheduled in Kings County for January 19, 2010, that the case had been marked as final, and that it was older than this case. The plaintiff's counsel noted that, in the instant action, the presentation of his case alone would take three days, and, thus, depending on the length of the case presented by the Hospital and Malhotra, there was the potential for a conflict between the Kings County case and this case. Thus, it is evident from the record that counsel was trying to avoid the "overbooking of cases" (Pichardo-Garcia v Josephine's Spa Corp., 91 AD3d 413, 414 [internal quotation marks omitted]; see Perez v New York City Hous. Auth., 47 AD3d 505, 505). While we agree with the dissent that there was no actual conflict on January 14, the point is that there was the potential for conflict on January 19 when the two trials might overlap, and the plaintiff's counsel was attempting to avoid creating a conflict for his firm. Moreover, contrary to our dissenting colleague's assertion, counsel indicated that The Pagan Law Firm, P.C., consisted of only three lawyers, and that William Pagan was the only attorney from the firm qualified to try medical malpractice cases. The dissent characterizes this contention as "unsubstantiated and self-serving after-the-fact," since it was not made until counsel for the plaintiff submitted reply papers on the motion to vacate. However, this contention was made in response to arguments advanced by the Hospital and Malhotra, which is the proper function of reply papers (see Matter of Harleysville Ins. Co. v Rosario, 17 AD3d 677, 677-678; Lebar Constr. Corp. v HRH Constr. Corp., 292 AD2d 506, 507). Therefore, under the circumstances of this case, we conclude that the plaintiff provided a reasonable excuse for the inability to proceed on January 4, 2010, and January 14, 2010 (see Mayo v New York Tel. Co., 175 AD2d 390, 391; see also Krivda v Liberty Lines Express, Inc., 27 AD3d 260, 261; cf. McKenna v Connors, 36 AD3d 1062, 1063)."
 

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Discovery Disregarded, Cases Lost, Legal Malpractice Case Started

QBE Ins. Corp. v Lebowitz  2013 NY Slip Op 31752(U)  July 11, 2013  Supreme Court, New York County   Docket Number: 600412/10 Judge: Milton A. Tingling leads one to the question, How could this happen?  Law firm defends insurance company, and routine discovery demands are served.  Routine discovery demands are ignored.  Not until after the date for responses does the law firm even ask its client for the materials.  Numerous adjourned dates go by and the material is not provided.  Summary judgment ensues.  Appeal is taken. Appeal is lost. 

Insurance company sues its attorney, and the attorney brings in the claims service which was taking care of the insurance company's files and documents.  Claims service company tries to get out of the case.  Here, from the decision:

"All of the files handled by CSB for QBE were transferred to Rockville Risk Management Associates in early November 2006. These included the files for the AWL Industries action. Another status Conference in the AWL Industries action was held on November 8, 2006 and the court extended QBE’s time to comply with the court’s October 16,2006 order to December 8, 2006 (id. at 18-1 9). On December 19,2006 another compliance conference was held where the court entered a status order stating that the note of issue was ready to be filed. Plaintiffs in the A WL Industries action filed note of issue on or about December 2 1, 2006. On February 20, 2007, the plaintiffs in the underlying AWL Industries action filed a motion for summary  judgment and to strike QBE’s answer for failure to provide discovery (id. at 77 20-21). On February 2 1, 2007, Rockville informed Maloof Lebowitz that Newman Myers would substitute in as counsel for QBE. Ultimately, Judge Tingling issued and order on October 17,2007 that granted summary judgment to AWL Industries (id. at 77 21-22). On March 24, 2008, on behalf of QBE, Newman Myers served a motion for leave to renew the motion or summary judgment. On December 22,2008, the court issued an order denying the motion to renew. An appeal of these orders was taken and an appellate brief was filed on February 5,2009. On September 15, 2009, the Appellate Division, First Department affirmed the trial court’s orders granting summary judgment (id. at 18 23-25). QBE claims that as a result of the First Department’s decision it was forced to settle the coverage action an tender the full amount of the policy, $1 million, as well as AWL Plaintiffs legal fees and costs. In addition, QBE alleges that Maloof Lebowitz engaged in legal malpractice in its representation of QBE in the AWL Industries action because their answer was stricken as a result of Maloof Lebowitz’s repeated failure to timely comply with discovery 

Once the movant has established a prima facie case that it is entitled to summary judgment, the burden then shifts to the party opposing the motion to tender sufficient evidence in admissible form to defeat the motion Zuckerman v. City of New York, 49 N.Y.2d 557 (1980). The third party plaintiffs opposition raises triable issues of fact in dispute concerning what caused the legal malpractice in the underlying action. Here, Maloof Lebowitz claims that CSB failed to provide them with a written statement from an employee, Frank Allecia in the underlying AWL Industries action, which they received in March of 2006. Maloof Lebowitz relied on CSB to relay its claims administrations and investigation to them on numerous occasions to no avail. In addition, CSB failed to provide Maloof with discovery assistance before the final discovery deadline became effective and before they were relieved of their third party administrator duties. Accordingly summary judgment does not lie. Therefore the third party defendant's motion for summary judgment is denied."
 

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Neglect in the Hospital, Neglect in the Courtroom

Bedsores are a cardinal mark of neglect in hospital care.  They need never occur, and once they are created, should/could/must be treated so that they go away.  The decedent in this legal malpractice case was treated horribly.  The survivors then hired an attorney who let the case go, and himself was disbarred upon a guilty plea to a felony.  Result?  Not good.

In Corsiatto v Maddalone  2013 NY Slip Op 30553(U)  March 13, 2013  Supreme Court, Suffolk County  Docket Number: 2009-14305  Judge: John J.J. Jones Jr   we see:"’I‘he legal malpractice action was commenced on April 14, 2009. The underlying claim was for medical malpractice, neglect and mistreatment of Veronica Pecoraro, the plaintiffs mother, [“the decedent”], while the decedent was a patient at United Presbyterian Residence [“UPR’]. The decedent was admitted to UPR in August of 1994. She presented with a history of having suffered a stroke and congestive heart failure, was oxygen dependent and diabetic. Upon admission to UPR she had a Stage 1-11 pressure ulcer in the sacral area in the beginning stages, also referred to as a bedsore or decubitus ulcer."

"This action for legal malpractice was commenced on April 14,2009. On this inquest the plaintiff” seeks $1,000,000 in compensatory damages, $1,000,000 in punitive damages, and interest on the award from the date of the legal malpractice. In support of the application the. plaintiff submitted, inter alia, the affidavit of Paul Knieste, R.N., dated October 16,20 12 [“the Knieste affidavit”] to express an expert opinion based on the decedent’s medical records regarding her care and management while at UPR. The Knieste affidavit does not include Knies te’s educational background or a description of credentials qualifying Knieste as an expert on wound care."
 

"This action for legal malpractice was commenced on April 14,2009. On this inquest the plaintiff” seeks $1,000,000 in compensatory damages, $1,000,000 in punitive damages, and interest on the award from the date of the legal malpractice. In support of the application the. plaintiff submitted, inter alia, the affidavit of Paul Knieste, R.N., dated October 16,20 12 [“the Knieste affidavit”] to express an expert opinion based on the decedent’s medical records regarding her care and management while at UPR. The Knieste affidavit does not include Knies te’s educational background or a description of credentials qualifying Knieste as an expert on wound care."

"Informed by the foregoing, and in light of the evidence adduced by the plaintiff‘ demonstrating a violation of the Public Health Law in the management of the decedent’s Stage IV bedsore for a period of one month, the court believes that $200,000 does not materially deviate from what could be considered reasonable compensation given that the decedent’s medial condition made her a high risk for decubitus ulcers, that on admission to UPR she presented with a Stage 1-11 pressure sore, and that the proof pointed out UPR’s failures to properly manage the bedsore that occurred in the approximately four weeks that preceded her death."

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Some Important Baseline Determinations in a Legal Malpractice Case

Attorney sues Client for legal fees.  Opening a legal malpractice blog with that sentence is akin to starting a novel with "it was a dark and stormy night..."  So much of legal malpractice litigation arises after a fee dispute that "Fee dispute-legal malpractice" is a google search term.  Here, in Brill & Meisel v Brown  2014 NY Slip Op 00180  Decided on January 14, 2014  Appellate Division, First Department  the Appellate Division states some bedrock rules. 
 

1.  Whether the time to file a summary judgment motion has passed, a cross-motion for summary judgment which seeks dismissal of the same claims is properly considered. 

2.  It is error to refer a summary judgment case to a referee to determine factual matters, when the MSJ itself debates whether there are questions of fact to be determined.

3.  Timely objection to a bill will defeat an account stated defense, but general objections may not be sufficient.

4. Misconduct that occurs before an attorney's discharge but discovered after the discharge may serve for fee forfeiture. 

"The motion court correctly found that issues of fact exist as to whether defendants sustained damages in connection with their malpractice counterclaim and whether plaintiff proximately caused those damages. In particular, the motion court correctly held that issues of fact exist as to whether defendants incurred unnecessary, as yet unreimbursed, attorneys' fees when plaintiff continued to pursue allegedly futile contempt proceedings in a Housing Court action even after Housing Court made clear it could not afford defendants any relief. Further, plaintiff failed to eliminate any triable issues of fact as to whether its conduct in signing a confidentiality agreement was the proximate cause of defendants' damages, as defendants allegedly incurred additional fees in procuring another inspection and report not covered by the agreement, and in attempting to overturn the agreement.

The motion court correctly ruled that any damages stemming from disclosure of defendant Altman's litigation outline are too speculative to support defendants' malpractice counterclaim (see Russo v Feder, Kaszovitz, Isaacson, Weber, Skala & Bass, 301 AD2d 63, 67 [1st Dept 2002]). Among other things, it is too speculative to conclude that cross-examination at Altman's deposition would have been shorter, and thus legal fees lower, but for disclosure of the outlines.

The motion court, however, erred in denying defendants' cross motion to strike plaintiff's references to a "Damages Analysis" as proof of the value of defendants' damages. The document was created for settlement purposes in a Supreme Court action against the cooperative corporation of defendants' building. Such documents "are inadmissible to prove either liability or the value of the claims" (CIGNA Corp. v Lincoln Natl. Corp., 6 AD3d 298, 299 [1st Dept 2004]; see also CPLR 4547).

As issues of fact remain regarding whether defendant was discharged for cause, summary judgment is not warranted on plaintiff's account stated claim (see EMC Iron Works v Regal Constr. Corp., 7 AD3d 366, 367 [1st Dept 2004]). Defendants' timely written objections to plaintiff's final invoice, dated July 2, 2008, for work performed in the Supreme Court action also creates triable issues of fact as to plaintiff's account stated claim (id.). Defendants' general objections, however, to plaintiff's bills do not suffice to challenge the remainder of the amount owed (see Schulte Roth & Zabel, LLP v Kassover, 80 AD3d 500, 501 [1st Dept 2011], lv denied 17 NY3d 702 [2011]).
Given the numerous triable issues of fact regarding plaintiff's representation, triable [*3]issues of fact exist regarding plaintiff's performance of the retainer agreement. Accordingly, summary judgment is not warranted on plaintiff's breach of contract claim (see Kluczka v Lecci, 63 AD3d 796, 798 [2d Dept 2009]). "

 

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A Matrimonial Representation Gone Bad

Matrimonial legal malpractice has two distinct sides.  In representing the monied spouse, it generally consists of a claim that the attorney overbilled, and churned the file.  In representing the non-monied spouse, it generally consists of a claim that the settlement was unfair, or that the attorney failed to discover a large cache of assets.

In Mayerson Stutman Abramowitz, LLP v Rosenbaum  2014 NY Slip Op 30016(U)  January 6, 2014  Supreme Court, New York County  Docket Number: 152172/2013  Judge: Eileen A. Rakower we see a more common or varietal species of fee dispute/counterclaim situation.  Here, defendant-spouse has already tried and lost a legal malpractice case, and is now defending against an account stated claim.

"This action was commenced on March 8, 2013 by plaintiff Mayerson Stutman Abramowitz, LLP ("Plaintiff') with the filing of a Summons and Verified Complaint on March 8, 2013. The Complaint alleges claims for account stated and breach of contract against defendant Carolyn Donovan Rosenbaum ("Defendant" or "Rosenbaum").


On March 27, 2013, Defendant interposed an answer with affirmative defenses and counterclaims. The affirmative defenses asserted are: statute of limitations has expired, the services rendered by Plaintiff were "unnecessary, unwarranted, and duplicative," and the services rendered were "inadequate and improperly performed." Defendant's first counterclaim is for breach of contract
by Plaintiff in "charging Defendant unnecessary, wasteful and duplicative legal charges and expenses in the amount of $159,536 and seeks the refund of all sums paid to Plaintiff; the second is for unjust enrichment; and the third is for misrepresentation of sums allegedly due and owing and violation of the New York Code of Professional Responsibility.

Here, Plaintiff has made a prima facie showing of entitlement to judgment as a matter of law on its account stated claim by submitting evidence of Defendant's receipt and retention of Plaintiffs invoices without objection within a reasonable time, and partial payments made thereon. Defendant, in opposition, has failed to raise a triable issue of fact by failing to submit evidence in admissible form that Defendant made any objection upon receipt of the Plaintiffs invoices or
within a reasonable time thereafter. The discovery defendant claims is outstanding, specifically, the deposition of Abramowitz, would not be the source of such evidence. Furthermore, as for Defendant Rosenbaum' s Counterclaims, Defendant Rosenbaum previously commenced an action on March I 0, 20 I 0 entitled "Carolyn Donovan Rosenbaum v. Sheresky Aronson Mayefsky & Sloan, LLP, Heidi E. Harris, Esq., Allan Mayesky, Esq., Mayerson Stutman Abramowitz, LLP, and
Alton L. Abramowitz, Esq.," Index No. 7341-2010, which asserted claims for legal malpractice arising from the Mayerson law firm's negotiation of her Separation Agreement, breach of contract based on allegations of overcharging of Plaintiff by the Mayerson law firm, and unjust enrichment. On August 17, 20 I 0, Justice Mary H. Smith dismissed the legal malpractice claim on the basis that the Mayerson law firm demonstrated that the parties' legal relationship had ceased nineteen months before the purported Settlement Agreement had been reached. The Court further dismissed Rosenbaum's breach of contract claim as duplicative of her legal malpractice and excessive fee claims and Rosenbaum's unjust enrichment claim in light of the existence of a written retainer agreement. The Court permitted Rosenbaum to re-file her fee dispute claim with the Joint Committee on Fee Dispute and Conciliation. On March 3, 2011, Defendant filed an appeal with the Appellate Division, Second Department, asserting that the lower court erred in dismissing the action against the Mayerson law firm. On November 14, 2012, the Second Department affirmed the decision of the trial court. On November 28,2012, the Mayerson law firm attempted to restore the Fee Arbitration but was unable to do so and commenced the instant action. "

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Harsh Words Do Not Sever the Attorney-Client Relationship

The beginning and end of an attorney-client relationship have some formal aspects to them.  They are guided and controlled by CPLR 321.  The end of the attorney-client relationship has a direct link to the question of commencement of the statute of limitations.  Defendant attorneys in legal malpractice cases often point to harsh communications which precede the actual end of the attorney-client relationship, and argue that it ended well before a consent to change attorney was filed.

Here, in  Louzoun v Kroll Moss & Kroll, LLP   2014 NY Slip Op 00096   Decided on January 8, 2014  Appellate Division, Second Department   we see how this argument fares.  "In support of their motion, the defendants proffered an email message from the plaintiff dated August 7, 2008, in which the plaintiff expressed dissatisfaction with KMK, accused KMK of having committed malpractice, disputed fees, and demanded her legal file. The defendants argued that the August 7, 2008, email message ended the trust and confidence required of a continuing attorney-client relationship, rendering the action commenced on August 9, 2011, untimely. In opposition, the plaintiff argued that her action was timely commenced, as the defendants' representation of her continued until August 19, 2008, the date on which she executed a formal Consent to Change Attorney. The Supreme Court denied the defendants' motion.

To dismiss a complaint pursuant to CPLR 3211(a)(5) as barred by the applicable statute of limitations, the defendant bears the burden of establishing, prima facie, that the time in which to sue had expired prior to the commencement of the action (see Singh v Edelstein, 103 AD3d 873; DeStaso v Condon Resnick, LLP, 90 AD3d 809, 812). The statute of limitations for legal malpractice is three years measured from the date of the alleged malpractice (see CPLR 214[6]; [*2]McCoy v Feinman, 99 NY2d 295, 301; Shumsky v Eisenstein, 96 NY2d 164, 166; Singh v Edelstein, 103 AD3d at 873), but may be tolled by operation of the continuous representation doctrine (see Zorn v Gilbert, 8 NY3d 933, 934; Shumsky v Eisenstein, 96 NY2d at 167). Documentary evidence may entitle a defendant to the dismissal of a complaint pursuant to CPLR 3211 (a)(1), but only where such evidence "conclusively establishes a defense to the asserted claims as a matter of law" (Leon v Martinez, 84 NY2d 83, 88).

Here, the plaintiff's email message dated August 7, 2008, does not conclusively contradict the allegation, set forth in paragraph 103 of her complaint, that the defendants were not discharged as her counsel until August 19, 2008. The email message makes demands and accusations but does not necessarily or unequivocally terminate the parties' attorney-client relationship. The email message states, inter alia, that, "without the judgment being signed, I have no money with which to pay," which suggests the need for further legal work to be performed, and also states that since the plaintiff and counsel both attend the same synagogue, "it will be a pity to have bad blood between us." In light of those statements, and the Consent to Change Attorney that was not executed until August 19, 2008, the defendants failed to conclusively establish that the attorney-client relationship did not continue until the latter date. Accordingly, the defendants' motion to dismiss the complaint was properly denied. "


 

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Whistleblower Loses Legal Malpractice Claim over Public Identification

We are not sure where the line between privacy and whistleblowing exists, nor where the balance should be.  Galloway v Wittels  2014 NY Slip Op 30006(U)  January 6, 2014 Supreme Court, New York County  Docket Number: 151287/2013  Judge: Cynthia S. Kern is an interesting example of how a person can become enmeshed in a situation much larger than himself, and be buffeted by the resulting storm.

"The relevant facts are as follows. This action centers around the fact that plaintiff, in 2009, was publicly identified as a whistleblower in a patent lawsuit between Convolve, Inc. ("Convolve") and Seagate Technology, LLC ("Seagate"). Specifically, in 2003, plaintiff was employed as an engineer at Seagate Technology, LLC ("Seagate"). At that time, plaintiff testified as a 30 (b)(6) witness for Seagate in a pending patent lawsuit commenced by Convolve against Seagate (the "CS Lawsuit"). Six years later, after being terminated by Seagate, plaintiff was contacted by Seagate's attorney and was advised that the CS Lawsuit was likely going to trial in January 2010 and that he might be called as a trial witness on Seagate's behalf. According to plaintiffs complaint, "[p]rompted by the call from Seagate's attorney, [he] did some research on the ongoing lawsuit and learned that, in addition to the patent litigation, Convolve had sued Seagate for violation of a non-disclosure agreement (NOA)." Thereafter, "[a]fter reviewing the case, [plaintiff] came to the conclusion that Seagate·:had violated the NOA." (Emphasis in original). Apparently, disturbed by the realization that the work he had done at Seagate had violated the NOA, plaintiff sent an email to Convolve asking that its legal department contact him.

Plaintiff alleges that in response to this email, he was contacted by one or more attorneys from defendant Cadwalader Wickersham & Taftt, LLP ("Cadwalader"), who represented Convolve in the CS Litigation. Specifically, plaintiff alleges that defendant Debra Brown Steinberg ("Steinberg") was on the initial call with him. During the call, Cadwalder's attorneys ' allegedly asked if plaintiff was represented by counsel and after he told them he might still be represented by Seagate's attorney, the call ended. Thereafter, plaintiff alleges that he was contacted by Neil Singer, CEO of Convolve who recommended that plaintiff contact Wittels, an attorney formerly employed by Sanford Heisler's predecessor firm, Sanford Wittels & Heisler, LLP, at the time of the acts complained of herein, regarding plaintiffs termination of his employment from Seagate."

"Plaintiff now brings the instant action alleging that as a direct result of the defendants' misconduct in regards to allowing him to be publicly identified as a whistleblower he has been unable to find suitable employment in his field. Specifically, in his amended complaint, plaintiff asserts two causes of action against Wittels and Sanford Heisler, as successor in interest to Wittels former employer at the time the acts complained of herein occurred, for malpractice and breach of fiduciary duty. Wittels and Sanford Heisler now move for an order dismissing the two claims."

"In the present case, plaintiffs claim for malpractice must be dismissed as against the moving defendants as the allegations in the amended complaint, taken as true and given the benefit of every possible inference, fail to demonstrate that but for Wittels' alleged negligence plaintiff would not have been publicly named as a whistleblower and he would have found suitable employment. Moreover, plaintiff fails to plead actual and ascertainable damages that resulted from Wittels' alleged negligence."

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A Real Estate Transaction Gone Bad...Was it Legal Malpractice?

We have noted over the years that trial courts are all too eager to dismiss legal malpractice claims.  We argue that trial courts delve way to far into the underlying transaction (or litiigation)  in order to determine at the pre-answer stage, whether there is a "but for" component. 

The same issue is present in Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin & Quartararo   2014 NY Slip Op 00087  Decided on January 8, 2014  Appellate Division, Second Department. 

"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). 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; Rietschel v Maimonides Med. Ctr., 83 AD3d 810, 811; Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 38-39). "

"Here, construing the complaint liberally, accepting the facts alleged in the complaint as true, and according the plaintiff the benefit of every possible inference, as we are required to do, the plaintiff stated a cause of action to recover damages for legal malpractice (see Palmieri v Biggiani, 108 AD3d 604, 608; Kempf v Magida, 37 AD3d 763, 764). The plaintiff alleged in the complaint that the defendants were negligent in failing, inter alia, to advise it to keep its exchange funds in a qualified escrow account or trust, and that this negligence was a proximate cause of its damages. The defendants' contentions that it was the conduct of the plaintiff's manager and unforeseeable events that were the proximate causes of the plaintiff's damages, and that the defendants did not depart from the standard of care, concern disputed factual issues that are not properly raised and resolved on a motion to dismiss a complaint pursuant to CPLR 3211(a)(7).

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). 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). "

 

 

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Other Appellate Legal Malpractice Issues

Continuing from yesterday's blog post, we look at another appellate legal malpractice case.  In Aramarine Brokerage, Inc. v Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C. 2012 NY Slip Op 03533  Appellate Division, First Department the question of whether appellate counsel's failure to argue that District Court allowed an impermissible argument raised only in reply is now the basis of a legal malpractice claim against the attorney who did not make the argument.
 

"Plaintiff, an insurance broker, seeks to recover for legal malpractice arising out of defendant law firms' successive representation of it in connection with an underlying federal action against a group of insurers (the CGU insurers). In the federal action, the CGU insurers moved for, inter alia, summary judgment on their counterclaims for a return of insurance brokerage commissions paid in connection with premiums subsequently returned, on the ground that plaintiff's claim of an oral agreement between the parties was controlled by New York law and was unenforceable pursuant to the statute of frauds. The CGU insurers argued for the first time in reply that the oral agreement also failed for lack of consideration. Plaintiff, then represented by Hall Estill, neither objected to the CGU insurers' raising this issue in reply nor sought to submit a sur-reply. The district court (Casey, J.) granted the CGU insurers' motion, finding that the oral modification was subject to New York law and was unenforceable under New York's statute of frauds. The court found, alternatively, that plaintiff "failed to establish that any consideration was given in exchange for the alleged agreement" (American Hotel Intl. Group Inc. v CGU Ins. Co., 2004 WL 626187 *7 n 7, 2004 US Dist LEXIS 5154, *25 n 7 [SD NY 2004], vacated in part 307 Fed Appx 562 [2d Cir 2009]). On appeal by EB & G, the Second Circuit vacated the finding that New York law and the statute of frauds applied to the oral modification. Neither EB & G's appellate brief nor the Second Circuit's decision addressed the district court's alternative holding of "no consideration." [*2]"

"On remand, the district court (McMahon, J.) held that, although Judge Casey could have disregarded the argument first raised in reply, his "no consideration" ruling was "law of the case," because it had not been reversed on appeal (American Hotel Intl. Group Inc. v OneBeacon Ins. Co., 611 F Supp 2d 373, 379 [SD NY 2009], affd 374 Fed Appx 71 [2d Cir 2010]). Judge McMahon noted that plaintiff had not, inter alia, objected to Judge Casey's consideration of this argument on reply, or sought leave to file a sur-reply, or raised the issue on the prior appeal and reconsideration motions (id. at 376). She observed that, while the Second Circuit could have responded favorably to an abuse of discretion argument, it was "equally likely" to have "viewed with disfavor" plaintiff's failure to raise the issue before the district court, and concluded that, "[h]aving passed up every conceivable opportunity to raise this issue . . . [plaintiff] has waived any right to argue . . . that Judge Casey erred by considering the belatedly-raised no consideration' argument" (id. at 376, 377). "

"The complaint alleges that EB & G's failure to address the "no consideration" ruling in its appellate brief in the first federal appeal resulted in plaintiff's inability to defend against the CGU insurers' counterclaims. By thus alleging "facts from which it could reasonably be inferred that defendant's negligence caused [plaintiff's] loss," the complaint states a cause of action for malpractice (see Garnett v Fox, Horan & Camerini, LLP, 82 AD3d 435 [2011], citing InKine Pharm. Co. v Coleman, 305 AD2d 151 [2003]). In opposition to EB & G's motion, plaintiff was not required to show a "likelihood of success" (id. at 436). "
 

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Potential Legal Malpractice in Appeals

We have mused that legal malpractice litigation is often created by financial pressures.  Either the attorney has too many cases, or the law firm is understaffed, or the client is unwilling to pay/was overbilled. or, as discussed by Thomas Newman and Steven Ahmuty in today's New York Law Journal, the attorney is aware of the "high cost of reproducing a full record on appeal." 

The potential for legal malpractice exists here when the appellate attorney risks dismissal of the appeal because of financial constraints.  A full record, including a lot of material that no one is interested in, nor relies upon, can be shockingly expensive.  In order to save printing costs (often exorbitant), an appendix is used, with the unnecessary material carved out.

From the article: 'A concern over the high cost of reproducing a full record on appeal led to the adoption of the "appendix method" as an alternate means of prosecuting an appeal. Use of the appendix method is governed by CPLR 5528 "Content of briefs and appendices," and 5529 "Form of briefs and appendices," as supplemented by the individual rules of the Court of Appeals and each of the four departments of the Appellate Division.1 There are no uniform rules governing appendices so it is always necessary to check the rules of the court to which the appeal is being taken.

CPLR 5528(a)(5) permits the appellant to file "an appendix…containing only such parts of the record on appeal as are necessary to consider the questions involved." If the parties agree, a joint appendix bound separately may be used and filed with the appellant's brief.2 Two important points must be kept in mind: First, use of the appendix method does not eliminate the requirement of settlement of the entire trial transcript, absent a stipulation to the contrary. "It is primarily because a complete typewritten transcript settled by the trial court is available, that an appellant is authorized, without further settlement or court approval," to employ the appendix method.3 In the absence of the parties' consent, the court does not have the power under CPLR 5525 to settle any transcript which fails to include the entire transcript of the stenographic minutes of the trial.4

Second, the appellant must also include "those parts [of the record] the appellant reasonably assumes will be relied upon by the respondent." The court rules reinforce this latter requirement. Under the First Department's Rule 600.10(c)(2)(ii), an appendix must include "[r]elevant excerpts from transcripts of testimony or papers in connection with a motion. These must contain all the testimony or averments upon which appellant has reason to believe respondent will rely. Such excerpts must not be misleading because of incompleteness or lack of surrounding context." Each of the other departments has a similar rule.

What should be included in the appendix is not a matter of guesswork. Before preparing the appendix, the appellant's counsel should consult with the respondent's counsel to determine which parts of the record will be relied upon by the respondent. If counsel are unable to reach agreement as to the contents of the appendix, the respondent may file a supplemental appendix or, if the omissions from the appellant's appendix are substantial and material, the respondent may move to dismiss the appeal or compel the appellant to file a proper appendix."

 

 

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Attorneys Are Always Fiduciaries; Accountants Not So Much

Attorneys are subject to a triumvirate of claims, which may generally be: legal malpractice in tort, legal malpractice in contract and breach of fiduciary duty. Attorneys are fiduciaries of their clients, but interestingly, accountants (even CPAs) are not. In Knockout Vending Worldwide, LLC v Grodsky Caporrino & Kaufman CPA's, P.C. 2012 NY Slip Op 31855(U)    Supreme Court, Suffolk County Judge: Elizabeth H. Emerson we see the distinction.

In this case business buyers claim they were defrauded when business sellers artificially inflated the value of the business through fraud. They sue sellers, sundry others, and their CPAs whom they say were hired to do the due diligence on the value of the business.

"Turning to the motion by the Kauman defendants to dismiss the second cause of action, according the plaintiffs the benefit of every possible favorable inference as a general rule, the plaintiffs have failed to state a second cause of action alleging a breach of fiduciary duty. TheCourt notes that the plaintiffs have alleged a cause of action for accounting malpractice. The existence of negligence claims, however, docs not create a fiduciary relationship between the Kaufman defendants and the plaintiffs (Friedman v Anderson, 23 AD3d 163). In general, there is no fiduciary relationship between an accountant and his client (DG Liquidation, Inc. v Anchin, Block & Anchin, 300 AD2d 70). "A conventional business relationship, without more, does not become a fiduciary relationship by mere allegation" (Friedman v Anderson, supra at 166, Oursler v Women's Interart Center, Jnc., 170 AD2d 407, 408). Here, the complaint alleges that the Kaufman defendants were the plaintiffs' personal accountants, and that the plaintiffs placed confidence in the Kaufman defendants' advice and opinions as professional accountants, consultants and advisors. However, while providing financial advice may be within the scope or an accountant's duties, and so within the definition of a conventional business relationship, the standard that plaintiffs must meet to sustain a cause of action for breach of fiduciary duty has not been met (Staffenberg v Fairfield Pagma Assoc., L.P., 2012 NY AppDiv LEXIS 3423, citing Friedman v Anderson, supra at 166; ef Lavin v Kaufman, Greenhut, Lebowitz & Forman, 226 AD2d 107). Accordingly, the Kaufman defendants' motion to dismiss the second cause of action is granted."
 

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Huge Legal Malpractice Win v. Cadwalader

We reported theRed Zone v. Cadwalader summary judgment news back in September.  Today, the case is complete, andthe Judge awarded $ 16.7 million to plaintiff Red Zone for Cadwalader's failure to carry out its instructions to ensure a letter agreement between Red Zone and UBS Securities LLC which itself memorialized an oral agreement to limit Red Zone's liability for fees to UBS for a Six Flags deal.

Christine Simmons writes in today's NYLJ that the case is ended.  "
Red Zone filed suit against Cadwalader after the Appellate Division, First Department, ruled in 2010 that Red Zone owed UBS $8 million plus interest. In August, Acting Supreme Court Justice Melvin Schweitzer granted summary judgment to Red Zone against Cadwalader but held off on the amount of damages (NYLJ, Sept. 5, 2013).

In a new ruling, Schweitzer awarded Red Zone about $11.7 million in damages and another $1.5 million for its legal fees in the underlying litigation with UBS. With interest, the judgment against Cadwalader totals more than $16.7 million. "The judge awarded to Red Zone every dollar proven in our summary judgment papers," he said in an interview.

Meanwhile, Cadwalader's appeal on the summary judgment decision is pending in the First Department. David Marriott, a partner at Cravath, Swaine & Moore who represented Cadwalader, did not return a message seeking comment, nor did a Cadwalader spokesman."

 

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Multiple Tries Leads to Dismissal of Legal Malpractice Case

In this legal malpractice case, defendant made motions in a seemingly out-of-order fashion, yet succeeded even though. Here is the AD discussing a novel method of moving to dismiss in Shirzadnia v Lecci 2012 NY Slip Op 09043 Appellate Division, Second Department:
 

"The plaintiff commenced the instant action by the filing of a summons and complaint on December 28, 2004. By notice of motion dated February 15, 2005, the defendant moved for an order, inter alia, "pursuant to CPLR 3211 and 3212 dismissing the complaint upon the ground that there is documentary evidence which precludes plaintiff's complaint." In an order dated June 15, 2005, the Supreme Court denied that branch of the defendant's motion which was to dismiss the complaint pursuant to CPLR 3211, without addressing that branch of the motion which was for summary judgment. Following discovery, the defendant, by notice of motion dated June 9, 2011, moved for an order "pursuant to CPLR Rule 3211(a)(1) through (7) and 3212 dismissing the action." The Supreme Court granted that branch of the defendant's motion which was pursuant to CPLR 3212 for summary judgment dismissing the complaint.

The plaintiff's sole argument on appeal is that the Supreme Court should have denied the defendant's motion as either an untimely motion for leave to reargue, or an improper successive motion for summary judgment. However, since the defendant's 2005 motion was made prior to the service of an answer, and the 2011 motion was made following the completion of discovery, the record supports the Supreme Court's determination that the 2005 motion was not properly characterized as one for summary judgment, and that, accordingly, the 2011 motion did not violate the rule against successive motions for summary judgment (see Sutter v Wakefern Food Corp., 69 AD3d 844, 845; see also Kimber Mfg., Inc. v Hanzus, 56 AD3d 615, 616; Williams v City of White Plains, 6 AD3d 609). For similar reasons, the defendant's 2011 motion was not an untimely motion for leave to reargue. "
 

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Does the Attorney Carry Baggage on the Lateral Move?

It's called lateral movement. The New York Law Journal is constantly talking about how mid-level laterals are being sought, or how they are finding difficulty in moving from one firm to another.  Attorneys are constantly in motion, moving from one firm to another.  Because movement is usually a business decision attorneys take care to bring cases and client with them.How does this affect the statute of limitations in legal malpractice, and can the predecessor law firm ever be responsible for later malpractice>

Some cases hold that the former law firm remains on the hook even though the attorney left. Rosenbaum v Sheresky Aronson Mayefsky & Sloan, LLP 2012 NY Slip Op 07651 Decided on November 14, 2012 Appellate Division, Second Department does not. While in the past, the Appellate Division has written: "The statute of limitations was tolled as to defendant because the attorneys who initially handled the matter continued to represent plaintiffs in the matter, albeit at different law firms, until 2005 (see Antoniu v Ahearn, 134 AD2d 151 [1987])", here the result is different.
 

From Rosenbaum: "As alleged in the amended complaint, the plaintiff was represented by the defendant Alton L. Abramowitz and two other members of the defendant firm Sheresky, Aronson, Mayefsky & Sloan, LLP (hereinafter the Sheresky Firm), beginning in February 2006. When Abramowitz joined the defendant firm Mayerson, Stutman, Abramowitz, LLP (hereinafter together the Mayerson Firm defendants), in or around August 2006, he continued to represent the plaintiff pursuant to a retainer agreement with that firm, as did the Sheresky Firm. According to the allegations in the amended complaint, the Mayerson Firm defendants' representation of the plaintiff continued until August 25, 2008, while the Sheresky Firm's representation of the plaintiff continued until approximately February 23, 2009. "
 

"The Mayerson Firm defendants tendered evidentiary material conclusively and indisputably demonstrating that their relationship with the plaintiff ended in March 2007, which was 19 months before the separation agreement was executed. In the interim, successor counsel, the Sheresky Firm, negotiated the separation agreement, which the plaintiff executed in November 2008. Under these circumstances, the Mayerson Firm defendants could not have been a proximate cause of the allegedly "wholly inadequate" separation agreement (see Marshel v Hochberg, 37 AD3d 559; Perks v Lauto & Garabedian, 306 AD2d 261, 261-262; Albin v Pearson, 289 AD2d 272). The remaining allegations of legal malpractice against the Mayerson Firm defendants are conclusory, and the plaintiff's affidavit failed to remedy those defects (see Hashmi v Messiha, 65 AD3d 1193, 1195; Parola, Gross & Marino, P.C. v Susskind, 43 AD3d 1020, 1022; Hart v Scott, 8 AD3d 532). Therefore, the Supreme Court properly granted that branch of the Mayerson Firm defendants' motion which was to dismiss the cause of action alleging legal malpractice insofar as asserted against them. "

 

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Was This Case Lost Because of a Few Words Missing?

Would the words "mutual understanding" have made the difference in this case? Continuous representation by an attorney of a client requires actual work, a mutual understanding that further work has to be performed and a relationship of trust and confidence. In Landow v Snow Becker Krauss P.C. 2012 NY Slip Op 31971(U)    Supreme Court, Nassau County Docket Number: 18038/11 Judge: Denise L. Sher we see a $4 Million legal malpractice case dismissed on statute of limitations. Plaintiff argued continuous representation, and the court finally hung its decision on the following:

"For continuous representation doctrine to apply, for purposes of tolling limitations period for legal malpractice action, there must be clear indicia of an ongoing, continuous, developing and dependent relationship between client and attorney which often includes an attempt by attorney to rectify an alleged act of malpractice; its application is limited to instances in which attorney s involvement in case after alleged malpractice is for performance of the same or related services and is not merely continuation of general professional relationship (emphasis added). See Pellati v. Lite Lite 290 AD.2d 544, 736 N.Y.S.2d 419 (2d Dept. 2002). Also, referencing the language of the case cited by plaintiff Shumsky v. Eisenstein, 96 Y.2d 164, 726 N.Y.S.2d 365 (2001), under the doctrine of continuous representation, the three-year statute of limitations for legal malpractice is tolled while the attorney continues represent the client in the same matter, after the alleged malpractice is committed (emphasis added). Firer, the parries must have a "mutual understanding" that further representation is needed with respect to the matter underlying the malpractice claim. See Hasty Hills Stables, Inc. v. Dorfman, Lynch, Knoebel Conway, LLP 52 AD.3d 566 860 N.Y.S.2d 182 (2d Dept. 2008). Since the Verified Complaint in the instant matter lacks any allegation of a "mutual understanding" between plaintiff and defendants of the need for further representationn regarding the tax opinion and/or DC transaction, the continuous representation doctrine does not apply to the instant matter. In fact, the Verified Complaint and supporting affidavit are devoid of any facts that occurred between any defendant and plaintiff regarding the DC transaction and/or the tax treatment thereof between the time period of2003 (when the alleged malpractice act was committed) and 2007 when defendant Meltzer Lippe was retained. Additionally, a legal malpractice cause of action accrues on the date the malpractice was committed, not when it was discovered. See Byron Chemical Co., Inc. v. Groman 61 AD. 909, 877 N.Y.S.2d 457 (2d Dept. 2009). In other words, the statute does not run from the time plaintiff received notice from the IRS in 2007. Accordingly, the malpractice claims of all defendants are dismissed as time-bared
 

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Sure, We Sued the Wrong Person, But...

Legal malpractice is different from all other areas of litigation, as it has a fourth and unique requirement that "but for" the mistake of the attorney, there would have been a different and better result for plaintiff.  In Portilla v Law Offs. of Arcia & Flanagan   2013 NY Slip Op 08606   Decided on December 26, 2013   Appellate Division, Second Department we see that played out.  In essence, the defendant attorneys admitted suing the wrong person, but argued that it did not matter, because plaintiff could never have won,  The argument failed in Supreme Court and on Appeal.
 

"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; Verdi v Jacoby & Meyers, LLP, 92 AD3d 771, 772; Goldberg v Lenihan, 38 AD3d 598). 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; J-Mar Serv. Ctr, Inc. v Mahoney, Connor & Hussey, 14 AD3d 482, 483). Accordingly, the Supreme Court properly denied the appellants' motion for summary judgment dismissing the complaint insofar as asserted against them. "

 

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Legal Malpractice and the Conflict of Laws

Reading the beginning of this case immediately brought us back to a Conflicts class at law school, and that's a very long time ago. We were to to analyze an auto accident in which plaintiff resided in state A and the accident took place in state B and the insurer was from state C...well you get the picture. Here in Cambridge Integrated Servs. Group, Inc. v Faber 2012 NY Slip Op 07880 Appellate Division, First Department a NY resident was injured in a MVA in Connecticut while employed by a NJ company who had NJ workers' compensation.
 

"On September 14, 2000, defendant Donald Pressley, a New York City resident, was injured in a tractor-trailer accident in Connecticut during the course of his employment with nonparty Cobra Express Inc., which is located in New Jersey. Fremont Compensation Company (Fremont), the workers' compensation carrier for Cobra Express, paid Pressley New Jersey workers' compensation benefits, making the last payment to Pressley on May 9, 2002.

On or about September 19, 2000, Pressley retained nonparty Paul A. Shneyer, Esq., to bring a personal injury lawsuit for injuries he sustained in the accident. When Shneyer failed to timely commence an action, Pressley commenced a malpractice action against him. The Faber defendants represented Pressley in that action and settled the case against Shneyer in December 2008. On March 24, 2009, plaintiff, the administrator for Fremont (now in liquidation), commenced the instant action to enforce a lien against the settlement proceeds.

The Faber defendants maintain that under Matter of Shutter v Phillips Display Components Co. (90 NY2d 703 [1997]), New Jersey cases holding that workers' compensation liens attach to legal malpractice recoveries (see Frazier v New Jersey Mfrs. Ins. Co., 142 NJ 590, 667 A2d 670 [1995]; Utica Mut. Ins. Co. v Maran & Maran, 142 NJ 609, 667 A2d 680 [1995]) do not apply in this case because the malpractice recovery did not duplicate the medical payments and lost wages Pressley received under workers' compensation. This argument is unavailing. Pursuant to a June 2010 order from which the Faber defendants did not appeal, New Jersey law applies to the merits of plaintiff's claims and thus, New York law regarding double recoveries is inapplicable. [*2]

Under New Jersey law, a double recovery "occurs when the employee keeps any workers' compensation benefits that have been matched by recovery against the liable third person" (Frazier, 142 NJ at 602, 667 A2d at 676 [emphasis in original]), rendering irrelevant whether the settlement of the legal malpractice action included medical expenses and lost wages. We note, however, that even if New York law applied, the settlement did not specify what it was for and therefore, we cannot conclude that no part of it was for medical expenses and lost wages.

Defendants' argument that the application of New Jersey law in this case violates New York public policy because Pressley is a New York resident fails because although defendants have shown that New York and New Jersey law differ on this issue, they have not satisfied the stringent test for rejecting New Jersey law as against New York public policy (see 19A NY Jur 2d, Conflict of Laws § 17).

Contrary to defendants' argument, the instant action is not time-barred. As agreed to by the parties, New York's three year statute of limitations is applicable. We agree with the motion court that plaintiff's claim accrued when Pressley received the settlement payment from Shneyer (see Aetna Life & Cas. Co. v Nelson, 67 NY2d 169, 175-176 [1986]). "
 

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It's Not Always "Happily Ever After"

Husband suffers personal injury in a fall from a scaffold. He resolves the case for $1M. Even at that number, he and wife then succeed in a legal malpractice case for an additional $ 297,000. What happens then? Burnett v Burnett, 2012 NY Slip Op 08850  Appellate Division, Third Department tells the sad but familiar story of everything unraveling.
 

"The parties were married in 1974 and raised six grown children. During the course of the marriage, plaintiff (hereinafter the wife) worked within the home and defendant (hereinafter the husband) was the primary wage earner, excluding a period during the marriage — described by Supreme Court as "significant" in duration — when the husband left the wife and children dependant upon public assistance benefits and charity from her family. In 2002, in the course of his employment, the husband suffered personal injuries in a fall from a scaffold. In 2006, the parties settled their claims for personal injury and loss of consortium in the combined net sum of $1 million and deposited the funds into a joint investment account managed by their son, with the stated intention of drawing $4,000 monthly from the account for their household expenses and support. In 2007, they jointly obtained a settlement payment upon a legal malpractice action (arising from the underlying personal injury and consortium claims) in the sum of roughly $297,000. The husband deposited this check into his separate account. Thereafter, the husband engaged in extensive and habitual gambling, depleting the accounts. After learning of an adulterous affair in 2009, the wife withdrew the remaining balance of just under $140,000 from the joint investment account. The husband has never accounted for the funds from the malpractice settlement and Supreme Court found, based upon this failure and upon his "less than forthcoming testimony," that the possibility remained that he had secreted or transferred assets.

Supreme Court awarded the wife title to the marital residence, the remaining balance of [*2]the investment account, and the household furnishings and farm equipment. The husband received his checking account, plumbing business and equipment, and a motor boat and trailer. The husband appeals.

We reject the husband's contention that Supreme Court erred in determining that the settlement funds were marital property. Although the governing statute provides that compensation for personal injury constitutes separate property (see Domestic Relations Law § 236 [B] [1] [d] [2]), here, Supreme Court noted the complete lack of any evidence upon which the funds might have been allocated as between the husband's personal injury claim and the wife's consortium claim, and the substantial evidence supporting the legal presumption that the parties wished to treat the proceeds as joint assets of the marriage (see Cameron v Cameron, 22 AD3d 911, 912 [2005]; Garner v Garner, 307 AD2d 510, 512 [2003], lv denied 100 NY2d 516 [2003])."

 

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Too Eager to Dismiss a Legal Malpractice Claim?

We've asked in the past whether there is an institutional bias against legal malpractice cases. Self-regulation of industries ( the LIBOR, for example) often lacks any rigor. The legal world also, in a way, self regulates. It is after all, rules for attorneys, written by attorneys, administered and judged by attorneys. In Wiener v Epstein 2012 NY Slip Op 22277   Appellate Term, First Department we see the Appellate Term reversing Civil Court on a summary judgment dismissal. Was Civil Court too ready to decide the underlying "but for" issues?
 

"Plaintiffs' legal malpractice claim is not ripe for summary dismissal, since the defendant law firm failed in its burden to demonstrate the absence of a triable issue as to whether plaintiffs would have prevailed to some extent in the underlying action but for defendant's alleged malpractice (see Cruz v Durst Law Firm, 273 AD2d 120 [2000]), i.e., failing in the underlying action to identify and timely serve a notice of claim upon the Hudson River Park Trust ("Trust"), the record owner of the bicycle path on which the first-named plaintiff was injured.

Giving plaintiffs the benefit of every favorable inference (see Ortega v Everest Realty LLC, 84 AD3d 542, 545 [2011]), the record contains circumstantial evidence sufficient to permit a fact-finder to determine that the condition which allegedly caused the first-named plaintiff to fall from his bicycle - described as a six foot by three foot patch of a "glass bead-like material used in the painting of bike ways ... to provide better visibility" - was created by a contractor retained by the Trust (see Schneider v King's Highway Hosp. Ctr., 67 NY2d 743, 744-745 [1986]; Chimilio-Ramos v Banguera, 62 AD3d 538 [2009]; Carboy v. Cauldwell-Wingate Co., Inc. 43 AD3d 261, 262-263 [2007]; Berner v 2061 A Bartow Food Corp., 279 AD2d 275 [2001]), for which the Trust may have been held vicariously liable, if properly sued in the underlying action, based upon its nondelegable duty as the owner of the public bicycle path (see Sarisohn v 341 Commack Rd., Inc., 89 AD3d 1007, 1008 [2011]; Hill v Fence Man, Inc., 78 AD3d 1002, 1004 [2010]; Correa v City of New York, 66 AD3d 573, 574-575 [2009]). Thus, the lack of prior notice to the Trust of the hazard was not dispositive of the Trust's potential liability (see Jabbour v Finnegan's Moving & Warehouse Corp., 299 AD2d 192 [2002]; Katz v City of [*2]New York, 231 AD2d 448 [1996]).

Defendant's summary judgment evidence failed to conclusively establish that a contractor retained by the Trust did not cause or create the pathway condition that allegedly caused the first-named plaintiff's injuries. The deposition testimony of the Department of Transportation ("DOT") employee (Patel) did not serve to absolve the Trust of potential liability, since Patel testified that "it is possible" that the Trust could have contracted for the repair or painting of the bike path without DOT's knowledge.

The record so far developed raises triable issues as to whether plaintiffs would have prevailed in the underlying personal injury litigation "but for" defendant's negligence (cf. Wo Yee Hing Realty Corp. v Stern, ___ AD3d ___, 2012 NY Slip Op 05792 [1st Dept 2012]). "
 

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Defendants Fail to Require Joinder or Obtain Dismissal

Defendants in this legal malpractice case argued that there was a missing party, and that the lack of privity between plaintiff and the defendant attorney was fatal.  They lost in Supreme Court, and on appeal, continued to lose.

Mr. San, LLC v Zucker & Kwestel, LLP   2013 NY Slip Op 08416   Decided on December 18, 2013  Appellate Division, Second Department  held that Justice Bucaria was correct when he denied defendant's motion. 
 "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 [internal quotation marks omitted]; see Aranki v Goldman & Assoc., LLP, 34 AD3d 510, 511-512; Griffith v Medical Quadrangle, Inc., 5 AD3d 151, 152). 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]).

Contrary to the defendants' contention, the Supreme Court providently exercised its discretion in denying that branch of the defendants' motion which was pursuant to CPLR 1001 to direct the plaintiffs to join BarCred Holdings Affiliates, LLC (hereinafter BarCred), as a party plaintiff. The defendants failed to demonstrate that BarCred needed to be joined in order to accord complete relief between the parties, or that BarCred would be inequitably affected by a judgment in this action absent its joinder (see CPLR 1001[a]; Mason Tenders Dist. Council Welfare Fund v Diamond Constr. & Maintenance, Inc., 84 AD3d 754, 755; Spector v Toys "R" Us, Inc., 12 AD3d 358, 359; O'Brien v Town of Huntington, 308 AD2d 479, 481). "

 

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Spoliation of Evidence and Legal Malpractice

This is a convoluted case, which started as a products liability-fall from a ladder- case, morphed into a legal malpractice case, went to trial and was prematurely dismissed during plaintiff's case, was reversed on appeal and now comes back on a preclusion motion. The problem in Burbige v Siben & Ferber 2012 NY Slip Op 32086(U)   Sup Ct, Nassau County Docket Number: 010334/07 Judge: Randy Sue Marber is that there is no ladder. In this case, no ladder, no proof that the ladder was defective. Whose fault is it?

"As to the order of preclusion, this Court begins with noting that, here, the Appellate Division has not only directed a new trial but has specifically set forth the evidentiary issue inadequately established at the original trial by the Plaintiff; to wit plaintiff() fail ( ed) to make an offer of proof that he would have been successful in the underlying products liability action by offering expert testimony that the ladder from which he fell was defective. Consequently, the issue becomes whether the Plaintiff should be permitted to now present evidence that it could have properly presented at the first trial, the expert affidavit necessary to establish his success in the underlying products liability action.

Based upon the papers presented for this Court' s consideration, this Court finds that the Plaintiff s failure to disclose his expert was in fact willful and intentional. Indeed the Appellate Division found that the Plaintiff s offer of proof was inadequate and wholly insufficient due to the absence of an expert affidavit demonstrating the merits of the underlying products liability action. Perhaps more critical is the fact that counsel for the Plaintiff, in support of his cross-motion infra again states that "the case law and the circumstances do not war ant the plaintiff to obtain an expert" (Aff. In Supp. Of Cross- Motion 6). Furthermore, the Plaintiff has failed entirely, even at this juncture in opposition
to the Defendants s instant motion, to proffer a reasonable excuse, under the circumstances
for his delay in furnishing name and affidavit of his expert (CPLR ~ 3101 (d) (I); Wartski v. C.W Post Campus of Long Is. Univ. 63 A.DJd 916 917 (2 Dept. 2009)). Moreover the Defendants wil clearly be prejudiced should this Court determination be to permit the Plaintiff to now submit the name and testimony of their expert. Although a new trial has been granted by the Appellate Division and further that the Appellate Division has specifically set forth the evidentiary issue inadequately
established at the original trial, the fact is that the Plaintiff has, nonetheless, failed to meet his burden, under CPLR ~ 3101 that would sufficiently oppose the Defendants' entitlement to preclusion. In fact, the Plaintiff has even failed to establish his burden under 22 NYCRR 202.21 (d) that would permit this Court to award post-note of issue discovery (cf Scanga Family Practice Assocs. of Rockland, P. c., 2006 WL 6822760 (Sup. Ct. Rockland 2006); Bierzynskiv. New York Central Railroad Co. 59 Misc. 2d 315 (Sup. Ct. Erie 1969) aff' d29 2d 804 (1971) rearg. denied 30 N. 2d 790 (1972)).

Counsel for the Plaintiff bases his entire motion on a spoliation of the evidence argument; that is, counsel for the Plaintiff submits that allegedly for more than 16 years counsel for the Defendants, failed to inspect and preserve the defective ladder, failed to obtain expert reports with respect to the defectively manufactured ladder, and effectively destroyed the key physical evidence of the defective ladder prior to the commencement of the Plaintiff s legal malpractice action. Spoliation of evidence is a factual and legal question in this malpractice case involving an underlying products liability claim. Spoliation of evidence occurs where a litigant intentionally or negligently disposes of crucial items of evidence before his or her adversaries have any opportunity to inspect them (Kirkland v. New York City Housing Authority, 236 A. 2d 170 (1st Dept. 1997)).

The underlying action was one sounding in products liability. The Plaintiff claims herein that the product that was alleged to be defectively designed or manufactured the ladder, was negligently or intentionally lost or destroyed subsequent to his accident and before anyone had an opportunity to inspect it. Although the Plaintiff charges his former attorneys in the underlying action, the Defendants herein, with spoliation of evidence, the Plaintiff makes no attempts to show that the ladder in question was ever in the possession of the Defendants or that it existed or was available when they were retained. "
 

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Is This a Paradigm of Legal Representation?

The question of how a competent and qualified attorney would handle a case is the crux of Bua v Purcell & Ingrao, P.C. 2012 NY Slip Op 06908    Appellate Division, Second Department . At issue is whether attorney committed malpractice in the termination of a real estate contract of sale.

"The plaintiff commenced this action to recover damages allegedly sustained as a result of the defendants' legal malpractice. The amended complaint alleged that the plaintiff retained the defendants to represent and advise him in connection with the sale of certain real property. The plaintiff entered into a contract of sale with a buyer, who tendered a deposit to be held in escrow. The amended complaint further alleged that, prior to the closing date, the buyer's attorney attempted to terminate the contract of sale because the buyer was unable to obtain financing for the purchase. The defendant Joseph A. Ingrao informed the plaintiff that the buyer wished to cancel the contract of sale, and the plaintiff agreed to cancel the contract and return the deposit.

The amended complaint stated that Ingrao sent the buyer's attorney a letter "purporting to terminate" the contract of sale and returning the deposit. More than seven months later, however, the buyer attempted to revive the contract of sale and purchase the property under its terms. The plaintiff refused, maintaining that the contract had been terminated. The buyer subsequently commenced an action against the plaintiff for specific performance of the contract of sale and filed a notice of pendency. In that action, the plaintiff argued, inter alia, that the contract of sale, had been terminated when the deposit was returned. The plaintiff also commenced a holdover proceeding. The plaintiff ultimately prevailed in the specific performance action.

The amended complaint asserted that the defendants committed malpractice by failing to "obtain a clear and unambiguous termination of the [contract of sale] after [the buyer's] attorneys advised Ingrao that she wished to terminate the [contract of sale]." The amended complaint listed various things that the plaintiff claimed the defendants "should have done" in order to accomplish [*2]a "clear and unambiguous" termination of the contract of sale. "

"The standard to which the defendant's conduct is to be compared is not that of the most highly skilled attorney, nor is it that of the average member of the legal profession, but that of an attorney who is competent and qualified (see Restatement [Second] of Torts: Negligence § 299A, Comment e). The conduct of legal matters routinely "involve[ ] questions of judgment and discretion as to which even the most distinguished members of the profession may differ" (Byrnes v Palmer, 18 App Div 1, 4, affd 160 NY 699). Absent an express agreement, an attorney is not a guarantor of a particular result (see Byrnes v Palmer, 18 App Div at 4; see also 1B NY PJI3d 2:152, at 140-141 [2012]), and may not be held "liable in negligence for . . . the exercise of appropriate judgment that leads to an unsuccessful result" (Rubinberg v Walker, 252 AD2d 466, 467; see Grago v Robertson, 49 AD2d 645, 646; see also PJI 2:152).

It follows that "[the] selection of one among several reasonable courses of action does not constitute malpractice" (Rosner v Paley, 65 NY2d 736, 738; see Dimond v Kazmierczuk & McGrath, 15 AD3d 526, 527). Attorneys are free to act in a manner that is "reasonable and consistent with the law as it existed at the time of representation," without exposing themselves to liability for malpractice (Darby & Darby v VSI Intl., 95 NY2d 308, 315; see Noone v Stieglitz, 59 AD3d 505, 507; Iocovello v Weingrad & Weingrad, 4 AD3d 208, 208). "

 

"In conclusion, as the plaintiff effectively concedes, he is estopped from denying that the defendants effected a legally valid termination of the contract of sale. To the extent that the allegations in the amended complaint are not barred by the doctrine of judicial estoppel, they fail to state a cause of action to recover damages for legal malpractice. Accordingly, the defendants' motion to dismiss the amended complaint was properly granted and the plaintiff's cross motion was properly denied as academic."
 

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How to Use an Expert in Legal Malpractice Litigation

There is nothing new in the case of Jack Hall Plumbing & Heating, Inc. v Duffy 2012 NY Slip Op 07249   Appellate Division, Third Department , merely a restatement of the long-standing and settled rule that expert opinion is required to show that there was / was not a departure from good and accepted practice. Supreme Court got it wrong, and the Third Department corrected Supreme Court, not once but twice.
 

"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.

According to Judge, based on his reading of the contract and plaintiff's bylaws, he formed a legal opinion that the employment agreement was ambiguous and that immediate termination was consistent with its terms. Judge was motivated, however, by Hall's desire for urgency and his own view that engaging in the termination process provided for by the agreement would damage plaintiff's business. While Judge offers his legal conclusion and the business-related motivation behind it, his affirmation is insufficient to establish compliance with the applicable standard of care because he neither defines that standard nor explains that a reasonable attorney would reach the same conclusion that he did on the facts as they were presented to him. In short, Judge's explanation of the urgency of the business factors that he considered in formulating the advice that he gave fails to establish that his legal advice was within the standard of care.

Further, Judge's reliance on the fact that he initially prevailed at trial as proof that his interpretation of the employment agreement was reasonable is also misplaced as that order was reversed by this Court on the law (Scudder v Jack Hall Plumbing & Heating, 302 AD2d at 851). Accordingly, the argument that any error was one of judgment in selecting between reasonable alternatives must fail in light of the lack of a prima facie showing that the legal advice provided was a reasonable course of action. Inasmuch as defendants failed to shift the burden to plaintiff [*3]to demonstrate a departure from the standard of care, the motion for summary judgment should have been denied (see Suppiah v Kalish, 76 AD3d 829, 832 [2010]; Ehlinger v Ruberti, Girvin & Ferlazzo, 304 AD2d at 927; Estate of Nevelson v Carro, Spanbock, Kaster & Cuiffo, 259 AD2d 282, 284 [1999]). "
 

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Early Summary Judgment Motion Fails in a Legal Malpractice Case

We have mused on the eagerness with which Courts sometimes exhibit in granting early dismissal of legal malpractice cases, sometimes prematurely grappling with the "but for" portion of the case well before a good record is developed.  In Carter Ledyard & Millburn LLP v Pearl Seas Cruises, LLC  2013 NY Slip Op 33081(U)  December 5, 2013  Sup Ct, New York County  Docket Number: 155872/2013  Judge: Eileen A. Rakower we see a reasoned approach to the motion practice.  The Court notes that there are questions of fact on whether the client objected to attorney's bills, and decides that the affirmative defenses are well pleaded.  From the decision:

"Kennedy avers that in August 2008, pursuant to a written letter of engagement, Pearl Seas retained Plaintiff as legal counsel in connection with a pending arbitration arising out of a contract for the construction of a passenger vessel, Plaintiff continued to represent Pearl Seas through October 7, 2011, Plaintiff continued to send invoices to Pearl Seas for its services, Pearl Seas
admitted receiving and retaining invoices from Plaintiff and made partial payments. In opposition, Defendant submits the affidavit of Charles A. Robertson, which avers that Pearl Seas repeatedly complained about Kennedy's performance, objected to the firm's invoices, and terminated the firm due to Kennedy's performance. Furthermore, Defendant contends that discovery is needed from
Plaintiff, including documents and testimony from Kennedy and his associate, Christopher Rizzo, regarding Defendant's complaints about Kennedy's performance and objection to Plaintiffs invoices."

In light of issues of fact concerning whether Defendant objected to the invoices and Plaintiff's performance and Defendant's outstanding First Notice for Discovery and Inspection and Notice to Take Deposition, Plaintiff's motion for summary judgment is denied."

"On a motion to dismiss pursuant to CPLR §321 l(a)(l) "the court may grant dismissal when documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law." (Beal Sav. Bank v. Sommer, 8 NY3d 318, 324 [2007]) (internal citations omitted) "When evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one." (Guggenheimer v. Ginzburg, 43 N.Y.2d
268, 2 7 5 [ 1977]) (emphasis added). A movant is entitled to dismissal under CPLR §3211 when his or her evidentiary submissions flatly contradict the legal conclusions and factual allegations of the complaint. (Rivietz v. Wolohojian, 3 8 A.D.3d 301 [1st Dept. 2007]) (citation omitted). Pearl Seas sets forth the following "facts common to all counterclaims:"

13. Mr. Kennedy advised Pearl Seas that the company would prevail in its dispute with Irving Shipbuilding. He repeatedly gave assurances of success to Pearl Seas, all of which failed, as described below, because of his poor performance and legal malpractice.
14. However, Mr. Kennedy's performance was in sharp contrast to his assurances. In fact, Mr. Kennedy's and Counterclaim Defendants' performance as counsel for Pearl Seas fell far below the standard of care required of attorneys.
15. Specifically, and among other failings, Mr. Kennedy was routinely unprepared for appearances before the arbitration panel and in federal court.

16. Mr. Kennedy also failed to adequately understand critical legal issues, including the law relating to the issuance and timing of classification certificates. 17. Mr. Kennedy's cross-examinations of key witnesses at the arbitration hearing were poor. They were unfocused, poorly conceived, and poorly executed. Indeed, Mr. Kennedy's cross-examinations were so poor that
Pearl Seas forced him to allow his junior associate to examine a key witness. 18. Mr. Kennedy's arguments to the arbitration panel were equally poor. He failed to make obvious arguments, and was extremely combative with the panel. 19. Mr. Kennedy also botched a key witness interview with a potentially critical witness, James Shephard, which further compromised Pearl Seas' case.
20. From Pearl Seas' perspective, Mr. Kennedy's poor performance in the arbitration had caused the arbitration panel to tum against it, notwithstanding his repeated assurances of success. Indeed, Pearl Seas expected to do far better than they ultimately did in the arbitration, which
was a direct result of Counterclaim Defendants' malpractice. 21. Mr. Kennedy also exhibited strange and unprofessional behavior outside of the arbitration. He was unwilling to take advice from anyone else, and did not work well with the term that Pearl Seas had put in place. He was unfocused and scatterbrained. He would frequently cut critical meetings short in order to get home to watch a television program that he said he was "addicted to."
22. Fearful that it was going to lose what was a winnable case, on or about October 7, 2011, Pearl Seas terminated Mr. Kennedy and his firm's representation of the company. Pearl Seas was forced to retain another law firm, which only added to the expenses related to the arbitration, but which
did turn the case around immediately and produced an acceptable result. 23. In total, Pearl Seas paid Counterclaim Defendant more than $2.2 million for its services, which had no value. That does not include the amounts that Counterclaim Defendant claim are due in this lawsuit.
24. Pearl Seas repeatedly made clear that it was unhappy with Mr. Kennedy's performance, and that it disputed the amounts billed to it."

"Accepting all allegations as true, Defendant has stated a counterclaim for legal malpractice and Plaintiffs proffered evidentiary submissions do not flatly contradict the legal conclusions and factual allegations of this counterclaim."

 

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Early Summary Judgment Motion Fails in a Legal Malpractice Case

We have mused on the eagerness with which Courts sometimes exhibit in granting early dismissal of legal malpractice cases, sometimes prematurely grappling with the "but for" portion of the case well before a good record is developed.  In Carter Ledyard & Millburn LLP v Pearl Seas Cruises, LLC  2013 NY Slip Op 33081(U)  December 5, 2013  Sup Ct, New York County  Docket Number: 155872/2013  Judge: Eileen A. Rakower we see a reasoned approach to the motion practice.  The Court notes that there are questions of fact on whether the client objected to attorney's bills, and decides that the affirmative defenses are well pleaded.  From the decision:

"Kennedy avers that in August 2008, pursuant to a written letter of engagement, Pearl Seas retained Plaintiff as legal counsel in connection with a pending arbitration arising out of a contract for the construction of a passenger vessel, Plaintiff continued to represent Pearl Seas through October 7, 2011, Plaintiff continued to send invoices to Pearl Seas for its services, Pearl Seas
admitted receiving and retaining invoices from Plaintiff and made partial payments. In opposition, Defendant submits the affidavit of Charles A. Robertson, which avers that Pearl Seas repeatedly complained about Kennedy's performance, objected to the firm's invoices, and terminated the firm due to Kennedy's performance. Furthermore, Defendant contends that discovery is needed from
Plaintiff, including documents and testimony from Kennedy and his associate, Christopher Rizzo, regarding Defendant's complaints about Kennedy's performance and objection to Plaintiffs invoices."

In light of issues of fact concerning whether Defendant objected to the invoices and Plaintiff's performance and Defendant's outstanding First Notice for Discovery and Inspection and Notice to Take Deposition, Plaintiff's motion for summary judgment is denied."

"On a motion to dismiss pursuant to CPLR §321 l(a)(l) "the court may grant dismissal when documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law." (Beal Sav. Bank v. Sommer, 8 NY3d 318, 324 [2007]) (internal citations omitted) "When evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one." (Guggenheimer v. Ginzburg, 43 N.Y.2d
268, 2 7 5 [ 1977]) (emphasis added). A movant is entitled to dismissal under CPLR §3211 when his or her evidentiary submissions flatly contradict the legal conclusions and factual allegations of the complaint. (Rivietz v. Wolohojian, 3 8 A.D.3d 301 [1st Dept. 2007]) (citation omitted). Pearl Seas sets forth the following "facts common to all counterclaims:"

13. Mr. Kennedy advised Pearl Seas that the company would prevail in its dispute with Irving Shipbuilding. He repeatedly gave assurances of success to Pearl Seas, all of which failed, as described below, because of his poor performance and legal malpractice.
14. However, Mr. Kennedy's performance was in sharp contrast to his assurances. In fact, Mr. Kennedy's and Counterclaim Defendants' performance as counsel for Pearl Seas fell far below the standard of care required of attorneys.
15. Specifically, and among other failings, Mr. Kennedy was routinely unprepared for appearances before the arbitration panel and in federal court.

16. Mr. Kennedy also failed to adequately understand critical legal issues, including the law relating to the issuance and timing of classification certificates. 17. Mr. Kennedy's cross-examinations of key witnesses at the arbitration hearing were poor. They were unfocused, poorly conceived, and poorly executed. Indeed, Mr. Kennedy's cross-examinations were so poor that
Pearl Seas forced him to allow his junior associate to examine a key witness. 18. Mr. Kennedy's arguments to the arbitration panel were equally poor. He failed to make obvious arguments, and was extremely combative with the panel. 19. Mr. Kennedy also botched a key witness interview with a potentially critical witness, James Shephard, which further compromised Pearl Seas' case.
20. From Pearl Seas' perspective, Mr. Kennedy's poor performance in the arbitration had caused the arbitration panel to tum against it, notwithstanding his repeated assurances of success. Indeed, Pearl Seas expected to do far better than they ultimately did in the arbitration, which
was a direct result of Counterclaim Defendants' malpractice. 21. Mr. Kennedy also exhibited strange and unprofessional behavior outside of the arbitration. He was unwilling to take advice from anyone else, and did not work well with the term that Pearl Seas had put in place. He was unfocused and scatterbrained. He would frequently cut critical meetings short in order to get home to watch a television program that he said he was "addicted to."
22. Fearful that it was going to lose what was a winnable case, on or about October 7, 2011, Pearl Seas terminated Mr. Kennedy and his firm's representation of the company. Pearl Seas was forced to retain another law firm, which only added to the expenses related to the arbitration, but which
did turn the case around immediately and produced an acceptable result. 23. In total, Pearl Seas paid Counterclaim Defendant more than $2.2 million for its services, which had no value. That does not include the amounts that Counterclaim Defendant claim are due in this lawsuit.
24. Pearl Seas repeatedly made clear that it was unhappy with Mr. Kennedy's performance, and that it disputed the amounts billed to it."

"Accepting all allegations as true, Defendant has stated a counterclaim for legal malpractice and Plaintiffs proffered evidentiary submissions do not flatly contradict the legal conclusions and factual allegations of this counterclaim."

 

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Unsophisticated Legal Malpractice Claims in a Sophisticated Commercial Case

High end financing companies tailored to the art and antique world hit a bare patch, and suddenly are in $20 Million + financing difficulties.  They hire plaintiff law firm in the Hahn & Hessen LLP v Peck   2013 NY Slip Op 33017(U)  November 25, 2013  Sup Ct, New York County  Docket Number: 603122/08  Judge: Barbara Jaffe which is seeking its attorney fees.  Simply put, in the face of extremely sophisticated financing agreements, and multiple-draft settlement agreements of disputes valued at over $ 20 million, counterclaimant's case derives from the unsophisticated claims that he was unaware of the terms of the settlements.

"In 2007, SageCrest II, LLC (SageCrest), a private equity firm, sued defendants, alleging  that they had defaulted under the terms of a loan. (SageCrest II LLC v ACG Credit Company, LLC, et al., index No. 600195/2007). (NYSCEF 157). On or about September 11, 2007, another justice of this court granted an ex parte order of attachment against defendants ACG Credit Company, LLC and Art Capital Group II, LLC (ACG II), securing $29,841,156.19 allegedly owed SageCrest. Following a mediation session on January 25, 2008, the parties signed a shortform settlement agreement, which, inter alia, requires that defendants pay SageCrest $29,925,000, $21 million of which would effectively vacate the order of attachment. The agreement is subject to further revisions and final documentation, and either party is authorized to submit it to the court to be so-ordered. (Id., Exh. B).Unable to secure the $21 million, defendants, represented by plaintiff, sought to renegotiate the terms of the settlement, offering $14.3 million in cash and an assignment of $6.7 million in loans due defendant ACG II. SageCrest rejected defendants' offer and sought by motion to have the court so-order the short-form agreement. (NYSCEF 157, Exh. C). In response, defendants sought, also by motion, to have the proposed assignment treated as the "cash equivalent" of the $6.7 million. They attached to their motion an affidavit from Peck asserting his repeated and unsuccessful efforts to assure SageCrest that the loans would be paid. (Id., Exh. D). "

"At an EBT held on June 27, 2011, Peck testified that he recalled questioning Newman on May 18 as to whether the agreement protected him personally, and that Newman responded that the pledged loans were the sole security for the assignment, along with the "credit enhancement
of my limited personal guarantee," and that this limitation of liability was the "beauty of the settlement." (NYSCEF 168). Although Peck conceded that he had no reason to believe that SageCrest had agreed to the sole recourse provision, he nonetheless maintained that he thought
that the sole recourse provision was included in the final agreement. (NYSCEF 168).At an EBT held on June 27, 2011, Peck testified that he recalled questioning Newman on May 18 as to whether the agreement protected him personally, and that Newman responded that the pledged loans were the sole security for the assignment, along with the "credit enhancement of my limited personal guarantee," and that this limitation of liability was the "beauty of the settlement." (NYSCEF 168). Although Peck conceded that he had no reason to believe that SageCrest had agreed to the sole recourse provision, he nonetheless maintained that he thought that the sole recourse provision was included in the final agreement. (NYSCEF 168)."

"Plaintiff has thus established, primafacie, that it did not breach the standard of professional care and that its actions were not the proximate cause of the 2009 action. (See Engelke v Brown Rudnick Berlack Israels LLP, _ NYS2d _, 2013 NY Slip Op 07419 [1st Dept 2013] [plaintiff could not show with sufficient certainty that, absent alleged malpractice, he would have been able to avert defending second lawsuit]; Natural Organics Inc. v Anderson Kill & Glick, P.C., 67 AD3d 541, 542 [1st Dept 2009], Iv dismissed 14 NY3d 881 [2010] [plaintiff failed to demonstrate causal connection between alleged malpractice and injuries]; Cohen v Weitzner, 47 AD3d 594, 595 [1st Dept 2008] [typographical error on defendant attorneys'  spreadsheet not proximate cause of plaintiffs' injury]; Leder v Speigel, 31 AD3d 266, 268 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008] [plaintiffs malpractice claim based on unsupported, conclusory assertion that defendant's alleged erroneous advice proximately caused injury]; Merz v Seaman, 265 AD2d 385, 389 [2d Dept 1999] [defendant attorneys who allegedly negligently drafted contract not liable for failing to warn banker-client about repercussions of personal guarantee]; Levine v Lacher & Lovell-Taylor, 256 AD2d 147 [1st Dept 1998] [plaintiffs disposition of collateral in disregard of court order was sole proximate cause of his injury; that alleged negligent drafting of loan agreement contributed to injury ..."

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Unsophisticated Legal Malpractice Claims in a Sophisticated Commercial Case

High end financing companies tailored to the art and antique world hit a bare patch, and suddenly are in $20 Million + financing difficulties.  They hire plaintiff law firm in the Hahn & Hessen LLP v Peck   2013 NY Slip Op 33017(U)  November 25, 2013  Sup Ct, New York County  Docket Number: 603122/08  Judge: Barbara Jaffe which is seeking its attorney fees.  Simply put, in the face of extremely sophisticated financing agreements, and multiple-draft settlement agreements of disputes valued at over $ 20 million, counterclaimant's case derives from the unsophisticated claims that he was unaware of the terms of the settlements.

"In 2007, SageCrest II, LLC (SageCrest), a private equity firm, sued defendants, alleging  that they had defaulted under the terms of a loan. (SageCrest II LLC v ACG Credit Company, LLC, et al., index No. 600195/2007). (NYSCEF 157). On or about September 11, 2007, another justice of this court granted an ex parte order of attachment against defendants ACG Credit Company, LLC and Art Capital Group II, LLC (ACG II), securing $29,841,156.19 allegedly owed SageCrest. Following a mediation session on January 25, 2008, the parties signed a shortform settlement agreement, which, inter alia, requires that defendants pay SageCrest $29,925,000, $21 million of which would effectively vacate the order of attachment. The agreement is subject to further revisions and final documentation, and either party is authorized to submit it to the court to be so-ordered. (Id., Exh. B).Unable to secure the $21 million, defendants, represented by plaintiff, sought to renegotiate the terms of the settlement, offering $14.3 million in cash and an assignment of $6.7 million in loans due defendant ACG II. SageCrest rejected defendants' offer and sought by motion to have the court so-order the short-form agreement. (NYSCEF 157, Exh. C). In response, defendants sought, also by motion, to have the proposed assignment treated as the "cash equivalent" of the $6.7 million. They attached to their motion an affidavit from Peck asserting his repeated and unsuccessful efforts to assure SageCrest that the loans would be paid. (Id., Exh. D). "

"At an EBT held on June 27, 2011, Peck testified that he recalled questioning Newman on May 18 as to whether the agreement protected him personally, and that Newman responded that the pledged loans were the sole security for the assignment, along with the "credit enhancement
of my limited personal guarantee," and that this limitation of liability was the "beauty of the settlement." (NYSCEF 168). Although Peck conceded that he had no reason to believe that SageCrest had agreed to the sole recourse provision, he nonetheless maintained that he thought
that the sole recourse provision was included in the final agreement. (NYSCEF 168).At an EBT held on June 27, 2011, Peck testified that he recalled questioning Newman on May 18 as to whether the agreement protected him personally, and that Newman responded that the pledged loans were the sole security for the assignment, along with the "credit enhancement of my limited personal guarantee," and that this limitation of liability was the "beauty of the settlement." (NYSCEF 168). Although Peck conceded that he had no reason to believe that SageCrest had agreed to the sole recourse provision, he nonetheless maintained that he thought that the sole recourse provision was included in the final agreement. (NYSCEF 168)."

"Plaintiff has thus established, primafacie, that it did not breach the standard of professional care and that its actions were not the proximate cause of the 2009 action. (See Engelke v Brown Rudnick Berlack Israels LLP, _ NYS2d _, 2013 NY Slip Op 07419 [1st Dept 2013] [plaintiff could not show with sufficient certainty that, absent alleged malpractice, he would have been able to avert defending second lawsuit]; Natural Organics Inc. v Anderson Kill & Glick, P.C., 67 AD3d 541, 542 [1st Dept 2009], Iv dismissed 14 NY3d 881 [2010] [plaintiff failed to demonstrate causal connection between alleged malpractice and injuries]; Cohen v Weitzner, 47 AD3d 594, 595 [1st Dept 2008] [typographical error on defendant attorneys'  spreadsheet not proximate cause of plaintiffs' injury]; Leder v Speigel, 31 AD3d 266, 268 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008] [plaintiffs malpractice claim based on unsupported, conclusory assertion that defendant's alleged erroneous advice proximately caused injury]; Merz v Seaman, 265 AD2d 385, 389 [2d Dept 1999] [defendant attorneys who allegedly negligently drafted contract not liable for failing to warn banker-client about repercussions of personal guarantee]; Levine v Lacher & Lovell-Taylor, 256 AD2d 147 [1st Dept 1998] [plaintiffs disposition of collateral in disregard of court order was sole proximate cause of his injury; that alleged negligent drafting of loan agreement contributed to injury ..."

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Still May Be Responsible For Some of the Damage

Supreme Court and the Appellate Division sometimes are able to perform surgery on a complaint, allowing provable claims and damages to remain in play while the balance is excised.  Such is the case in Morad Assoc., LLC v Lee   2013 NY Slip Op 08204   Decided on December 10, 2013
Appellate Division, First Department.   
 

We deduce that defendant attorney represented a landlord, and that a tenant was illegally evicted, and when evicted, his property was destroyed.  Both Justice Edmead and the AD found that the attorneys might be liable for the illegal eviction, but the AD conclusively held that attorneys were not responsible for the destruction.

"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. "

 

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Legal Malpractice in the Electronic Era

Wherever attorneys do their work the question of legal malpractice may arise. In today's New York Law Journal, Joel Cohen and James Bernard present an excellent compilation of potential legal malpractice issues in the ESI area.  Investigation of electronically stored information has become a central issue in litigation since the Zabulake v. USB Warburg decision.  As the country becomes more involved in social media, further sophistication is required.  Even the question of when an attorney may use public Wi-Fi is discussed.   From the article "The 'Ethic' of Getting up to Speed 'Technologically' by Cohen and Bernard:

"When things end up poorly in a case, whether the client deserved to win or not, the client may decide to come after his criminal lawyer claiming malpractice, either in a civil action or in a post-conviction proceeding claiming "ineffectiveness." He may argue that the lawyer 1) didn't explain all of the litigating options to me; or 2) was "ineffective" in investigating the case, or in cross-examining key witnesses; or 3) did not let me, or mistakenly encouraged me to, take the witness stand in my own defense.

Examples may range from a lawyer's failure to obtain text messages (we all know about emails), to a failure to obtain posts on a Facebook page, to a more common failure to adequately preserve electronic materials. Which disgruntled client, particularly one sitting in a jail cell, wouldn't use the judge's remarks to try to nail to the wall his now or soon-to-be-terminated lawyer for malpractice or—maybe, worse for his reputation at the bar—by claiming "ineffective assistance of counsel" in a post-conviction appeal or collateral attack on his conviction? For in such a lawsuit, appeal or collateral attack he will "name [his lawyer's] name" as ineffectually having tried the case by tying his own arm behind his back against—perhaps a younger—prosecutor more in tune with modern Internet technology.

The origins of the modern technological revolution in the art of lawyering can probably trace itself back to a number of milestones: the first Westlaw/Lexis terminals, the advent of the Internet and, on the judicial front, Judge Shira A. Scheindlin's decisions in the seminal Zubulake case. Whether you believe that the decisions opened up a Pandora's box of litigation costs and burdens for defendants, or whether you believe they gave plaintiffs access to critical evidence which would have otherwise been destroyed, there is no question that Zubulake changed the way litigators think about and prepare cases. It also required us to learn more about technology issues. As Scheindlin wrote in Zubulake V: "[C]ounsel must become fully familiar with her client's document retention policies, as well as the client's data retention architecture. This will invariably involve speaking with information technology personnel and the actual (as opposed to theoretical) implementation of the firm's recycling policy."1 In other words, counsel had to get tech savvy.

And it is worth asking, if a lawyer fails to "get smart," what are the consequences? Of course, there are the potential sanctions that might be available to the aggrieved party. But can, after this new Comment 8, a lawyer face an ethics charge for this sort of lapse in knowledge? It is quite possible that it could be the basis for a malpractice claim if the failure to discuss these issues with a client resulted in a serious enough sanction, such as dismissal of a claim or defense.

Given all of the resources which have been devoted to educating the bar about the need to preserve electronic information, emails, documents, etc., it is not too hard to imagine a client claiming that the failure to do so in this day and age amounts to malpractice, even though that would not have been the case however many years ago. In the criminal context, could it rise to the level of ineffective assistance of counsel resulting in a possible conviction reversal? Not too many years ago, the U.S. Supreme Court held that a lawyer provided ineffective assistance of counsel when the lawyer failed to tell a client about the likelihood of deportation if a client pleaded guilty to drug distribution charges.2

There are obvious differences between working with a client on e-discovery issues and informing a client of the legal consequences of pleading guilty to a felony, but it is not impossible to imagine a scenario in which the failure to learn about a client's technological infrastructure is egregious enough and results in a serious enough sanction so as to bring the attorney's behavior within the realm of a constitutional claim of ineffectiveness. After all, constitutional ineffectiveness under Strickland is triggered when counsel's conduct falls "below an objective standard of reasonableness."3 What is "reasonable" in terms of what counsel is expected to know about e-discovery is rapidly changing, and only in the direction of requiring greater knowledge."
 

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Law Firm Strikes Out Twice in One Case

It seems that Lacher & Lovell-Taylor PC were attorneys working for Lloyd's of London.  They ran into disputes with the carrier, and in this New York county case, not only had to pay back monies, but were also found not to be covered for a malpractice case.  Here the AD determines that a demand for the return of legal fees paid to a law firm is not "legal malpractice."

Certain Underwriters at Lloyd's London Subscribing to Policy No. SYN-1000263 v Lacher & Lovell-Taylor, P.C.   2013 NY Slip Op 08112   Decided on December 5, 2013   Appellate Division, First Department 
"Order, Supreme Court, New York County (Anil C. Singh, J.), entered March 26, 2012, which granted plaintiff's motion for summary judgment declaring that it was not obligated to defend or indemnify defendants in the underlying estate proceeding, and on its cause of action for reimbursement of its defense costs, and order, same court and Justice, entered October 9, 2012, which, to the extent appealable, granted plaintiff's motion to modify the order to include summary judgment on its supplemental complaint, and order and judgment (one paper), same court and Justice, entered March 13, 2013, awarding plaintiff the total sum of $166,968.90 in defense costs from defendants, unanimously affirmed, with costs.

A claim for the return of legal fees is not a claim for "damages" in a legal malpractice action, as defined in the professional liability policy issued by plaintiff to defendants (see Shapiro v OneBeacon Ins. Co., 34 AD3d 259, 260 [1st Dept 2006], lv denied 9 NY3d 803 [2007]). In support of each of the causes of action, the complaint alleges only that defendants overbilled their client in the underlying estate proceeding; it does not allege facts tending to show that but for their negligence, they could have achieved a better result for him (see Allstate Ins. Co. v Mugavero, 79 NY2d 153, 162-163 [1992]; Barbara King Family Trust v Voluto Ventures LLC, 46 AD3d 423 [1st Dept 2007]). Moreover, plaintiff reserved its right to seek reimbursement of its defense costs in the event of a finding of no coverage (see American Guar. & Liab. Ins. Co. v CNA Reins. Co., 16 AD3d 154 [1st Dept 2005]). "

 

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It Takes Pro-Se Litigants to Change the Law of Legal Malpractice

Legal Malpractice, we often think, is a body of law, written by lawyers, concerning lawyers, judged by lawyers and results in decisions concerning solely lawyers.  However, sometimes this is simply not true.  Venecia V. v August V.  2013 NY Slip Op 08140  Decided on December 5, 2013 Appellate Division, First Department  Saxe, J., J.  is one such example. 
 

Pro-se Husband and pro-se wife are engaged in divorce and custody dispute, and huge  legal malpractice law changes follow.  "This appeal, arising in the context of a contentious post-divorce dispute, raises a variety of challenges to the court's determinations involving custody, visitation and expenses. While the bulk of these issues may be briefly addressed seriatim, we must address at greater length the unresolved question of whether parents who are directed to pay the fees of the attorney appointed to represent the children may raise the defense of legal malpractice to that attorney's claim for fees. Determination of this issue requires us to decide whether, as defendant father claims, Mars v Mars (19 AD3d 195 [1st Dept 2005], lv dismissed 6 NY3d 821 [2006]) gives him legal standing to assert the legal malpractice defense.

In Mars v Mars (19 AD3d at 196), this Court held that a parent may assert legal malpractice as an affirmative defense to a Law Guardian's fee application "to the extent of challenging that portion of the fees attributable to advocacy, as opposed to guardianship." Our ruling was limited by the then-prevailing view that attorneys appointed as law guardians for children in divorce cases often functioned in a role similar to a guardian ad litem, advocating for [*3]what they believed to be the best interests of the child, as opposed to what the child desired. Accepting the rule of Bluntt v O'Connor (291 AD2d 106 [4th Dept 2002], lv denied 98 NY2d 605 [2002]), which held that absent special circumstances, a parent in a visitation dispute lacks standing to bring a legal malpractice claim against a child's court-appointed law guardian, we limited our ruling to the portion of the law guardian's fee representing the work that consisted of advocacy rather than guardianship.

 

Accordingly, after 2007, the distinction made by our ruling in Mars is no longer necessary in cases such as this; where the child is capable of decision-making, the task of the attorney for the child is generally solely advocacy, rather than guardianship, as long as the child is capable of knowing, voluntary and considered judgment. The portion of the Mars decision allowing a parent to raise malpractice as a defense to a fee application for that portion of the fee earned by advocacy has become applicable to the attorney's entire fee claim. Rule 7.2 does not in any way vitiate the Mars ruling; on the contrary, it renders it more generally applicable.

We reaffirm the essence of the Mars v Mars ruling, namely that a parent may assert legal malpractice as an affirmative defense to the fee claim of an attorney for a child. The attorney for the child, no less than the attorneys for the parties, is serving as a professional and must be equally accountable to professional standards. That the children cannot hire and pay for their own attorneys, leaving it to the court to make the necessary appointment, does not alter the applicable standards, or the means by which they may be raised.

The attorney for the children protests that if this type of defense is allowed generally, parents dissatisfied with the results of their custody claims will use malpractice challenges to avoid paying, resulting in a proliferation of applications for enforcement of ordered fees. She also suggests that the threat of malpractice claims from disgruntled parents will have a negative impact on the effectiveness of attorneys for children, by giving those parents control over the representation of their children.

We disagree. The possibility that a parent who feels aggrieved over the developments in a custody or visitation dispute may claim malpractice as a means of avoiding payment of the attorney's fee does not warrant granting these attorneys complete immunity against the defense of [*4]legal malpractice. "

 

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It Takes Pro-Se Litigants to Change the Law of Legal Malpractice

Legal Malpractice, we often think, is a body of law, written by lawyers, concerning lawyers, judged by lawyers and results in decisions concerning solely lawyers.  However, sometimes this is simply not true.  Venecia V. v August V.  2013 NY Slip Op 08140  Decided on December 5, 2013 Appellate Division, First Department  Saxe, J., J.  is one such example. 
 

Pro-se Husband and pro-se wife are engaged in divorce and custody dispute, and huge  legal malpractice law changes follow.  "This appeal, arising in the context of a contentious post-divorce dispute, raises a variety of challenges to the court's determinations involving custody, visitation and expenses. While the bulk of these issues may be briefly addressed seriatim, we must address at greater length the unresolved question of whether parents who are directed to pay the fees of the attorney appointed to represent the children may raise the defense of legal malpractice to that attorney's claim for fees. Determination of this issue requires us to decide whether, as defendant father claims, Mars v Mars (19 AD3d 195 [1st Dept 2005], lv dismissed 6 NY3d 821 [2006]) gives him legal standing to assert the legal malpractice defense.

In Mars v Mars (19 AD3d at 196), this Court held that a parent may assert legal malpractice as an affirmative defense to a Law Guardian's fee application "to the extent of challenging that portion of the fees attributable to advocacy, as opposed to guardianship." Our ruling was limited by the then-prevailing view that attorneys appointed as law guardians for children in divorce cases often functioned in a role similar to a guardian ad litem, advocating for [*3]what they believed to be the best interests of the child, as opposed to what the child desired. Accepting the rule of Bluntt v O'Connor (291 AD2d 106 [4th Dept 2002], lv denied 98 NY2d 605 [2002]), which held that absent special circumstances, a parent in a visitation dispute lacks standing to bring a legal malpractice claim against a child's court-appointed law guardian, we limited our ruling to the portion of the law guardian's fee representing the work that consisted of advocacy rather than guardianship.

 

Accordingly, after 2007, the distinction made by our ruling in Mars is no longer necessary in cases such as this; where the child is capable of decision-making, the task of the attorney for the child is generally solely advocacy, rather than guardianship, as long as the child is capable of knowing, voluntary and considered judgment. The portion of the Mars decision allowing a parent to raise malpractice as a defense to a fee application for that portion of the fee earned by advocacy has become applicable to the attorney's entire fee claim. Rule 7.2 does not in any way vitiate the Mars ruling; on the contrary, it renders it more generally applicable.

We reaffirm the essence of the Mars v Mars ruling, namely that a parent may assert legal malpractice as an affirmative defense to the fee claim of an attorney for a child. The attorney for the child, no less than the attorneys for the parties, is serving as a professional and must be equally accountable to professional standards. That the children cannot hire and pay for their own attorneys, leaving it to the court to make the necessary appointment, does not alter the applicable standards, or the means by which they may be raised.

The attorney for the children protests that if this type of defense is allowed generally, parents dissatisfied with the results of their custody claims will use malpractice challenges to avoid paying, resulting in a proliferation of applications for enforcement of ordered fees. She also suggests that the threat of malpractice claims from disgruntled parents will have a negative impact on the effectiveness of attorneys for children, by giving those parents control over the representation of their children.

We disagree. The possibility that a parent who feels aggrieved over the developments in a custody or visitation dispute may claim malpractice as a means of avoiding payment of the attorney's fee does not warrant granting these attorneys complete immunity against the defense of [*4]legal malpractice. "

 

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Standing and Documents in Legal Malpractice

Small closely held corporations abound in New York, and they present a special issue for the principal of standing in legal malpractice.  Who actually hired the attorney...was it the president / owner / sole shareholder, or was it the corporate entity.  While the law is clear, Rodolico v Rubin & Licatesi, P.C. 2013 NY Slip Op 08068  Decided on December 4, 2013  Appellate Division, Second Department  shows us a third way the case can be resolved.  Note the lack of "documents" in defendant's attack on the complaint.
 

"The plaintiff's daughter worked for the defendant law firm, in which the individual defendants are partners. During her 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, Joanne Rodolico, decided to participate. Several bank checks were purchased by Joanne and a corporation owned by the plaintiff and Joanne, C & R Door and Frame Corporation (hereinafter C & R), and forwarded to the defendants for the purpose of making loans. When five of the 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. Alternatively, the plaintiff sought damages for legal malpractice. The plaintiff made a pre-discovery motion for summary judgment on the complaint, which motion is not the subject of this appeal, and the defendants cross-moved to dismiss the complaint pursuant to CPLR 3211(a)(1) and (3), for lack of standing and based upon documentary evidence. The Supreme Court denied the motion and cross motion, and also directed that Joanne and C & R be joined as plaintiffs in the action.

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; see Citibank v Plapinger, 66 NY2d 90, 93 n; Elenson v Wax, 215 AD2d 429; General Motors Acceptance Corp. v Kalkstein, 101 AD2d 102, 106). 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), 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.

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, quoting Fontanetta v John Doe 1, 73 AD3d 78, 84 [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., 78 AD3d 966, 997; see Suchmacher v Manana Grocery, 73 AD3d 1017; 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; Fontanetta v John Doe 1, 73 AD3d at 86). "

 

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Finding the Departure is Easy...It's the Rest that is Hard in Legal Malpractice

Battling over the "but for" portion of the legal malpractice requirements is generally where commercial cases such as Garten v Shearman & Sterling LLP 2013 NY Slip Op 00035
Appellate Division, First Department end up. Here, in a surprisingly clear recitation, the AD tells us why this case was doomed.
 

"On an appeal from a denial of a dismissal motion, this Court found that plaintiff "has stated a cause of action for malpractice by alleging that but for' defendant's failure to prepare and procure documents necessary to provide him with a first-priority security interest, he would have been able to recover the amounts owed to him by the defaulting borrower" (52 AD3d 207 [1st Dept 2008]).

Now, after discovery, it is clear that plaintiff cannot establish either a breach of duty or causation, both of which are necessary to proceed with the claim (see Wo Yee Hing Realty Corp v Stern, 99 AD3d 58, 62-63 [1st Dept 2012]).

Plaintiff's own deposition testimony establishes that he understood that at the time he was advancing a loan to Pacific Jet, there was a superior lien on the accounts receivable, which were also being used to collateralize his loan. He knew the identity of the senior creditor and fully understood that his position would be junior when his loan was first made and would remain so, unless and until the first lien was paid off. He was, however, under a mistaken impression about the amounts owed to the senior creditors because his friend, Tim Prero, Pacific Jet's principal, misled him by significantly understating those amounts. Plaintiff's assumptions about his business risk in getting repaid were based upon false factual information about the financial health of Pacific Jet and how quickly the senior creditors would be paid off. Defendant established a prima facie case warranting dismissal of the complaint by showing that plaintiff's losses were caused by Pacific Jet's poor financial condition and plaintiff's misjudgment of risk based upon the false factual information provided to him by Prero. (see A & R Kalimian v Berger, Gorin & Leuzzi, 307 AD2d 813 [1st Dept 2003]).

Plaintiff failed to raise any factual disputes in opposition. There is no evidence that defendant was retained to review Pacific Jet's private corporate records. The undisputed evidence reveals that plaintiff alone reviewed Pacific Jet's private financial records and negotiated the material terms of the transaction. The public UCC records, which defendant searched, revealed a prior security interest, a fact known to all, but no lien amount was recorded. [*2]Although plaintiff asked defendant to "document" his first priority interest, he did not have a first priority interest at the time he advanced the loan and had no expectation of a first priority interest before the senior creditor was paid. Subordination agreements or releases from the senior creditor at the time the loan was made, therefore, were not in order. Plaintiff has not elucidated what other documents defendant could have procured or prepared that would have altered the outcome of what was in hindsight a bad business deal.

Plaintiff no longer claims that defendant could have taken actions that would have allowed him to recover the amounts owed. He currently argues that he would not have entered into the transaction had he known his friend was misleading him about the amounts owed to prior creditors. This position is different from the position he prevailed upon on the motion to dismiss. It is also contrary to his deposition testimony, when in answer to a direct question about whether he considered not making any loans because his friend had failed to show him any documentation, plaintiff could not "speak to his mindset" at the time. Plaintiff's new claim does not create an issue of fact that would defeat summary judgment (see Madtes v Bovis Lend Lease LMB, Inc., 54 AD3d 630 [1st Dept 2008]). Finally, the undisputed evidence reveals that plaintiff was aware that there were risks associated with having a junior security position at the time he advanced the loan proceeds and negotiated his own remedy of enhanced interest. "
 

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Legal Malpractice and the Statute of Limitations

Sometimes events take place long after the attorney - client relationship has ended.  There are two arguments over whether the statute of limitations has run.  One is that the statute commences when the mistake is made and might be tolled by the continuous representation doctrine.  The other is that  the statute cannot commence to run until all the elements of a case exist, including damage.  Plaintiff loses either way in Adeli v Ballon Stoll Bader & Nadler, P.C.  2013 NY Slip Op 32993(U)  November 22, 2013  Sup Ct, NY County  Docket Number: 154685/12  Judge: Saliann Scarpulla.

"Adeli commenced this action in or about July 2012. In her complaint, Adeli alleged that on or about December 17, 2003, Richard Sachs, an investor in her company and holder of a defaulted loan which Adeli had personally guaranteed, sued both Adeli and her company for breach of personal guarantee and fraud ("Sachs action"). In or about early 2004, Adeli retained BSBN to represent her in the Sachs action, and in or about April 2005, the First Department granted Sachs judgment against Adeli. 

BSBN sought an interim stay while it appealed the First Department's decision. Adeli alleged that BSBN advised her that Sachs' lawyers would not abide by a stay, and would nevertheless, seek to enforce the judgment against her. According to Adeli, BSBN then advised her to move her assets to friends of hers to protect them from judgment; Adeli transferred her assets in or about early summer of2005, and subsequently filed for bankruptcy in or about early September 2005. The bankruptcy court granted her bankruptcy discharge on or about March 27, 2008, but, based on her transfer of assets in 2005, the Bankruptcy Panel of the Ninth Circuit Court of Appeals reversed that
bankruptcy discharge on or about March 24, 2009.

Adeli asserted a legal malpractice claim, alleging that because she followed BSBN's advice and transferred her assets to her friends, she was denied a bankruptcy discharge and suffered monetary damages. BSBN now moves to dismiss the complaint. First, BSBN argues that the action should be dismissed because Adeli lacks legal capacity to bring suit. Second, BSBN
argues that the action should be dismissed because it was commenced beyond the applicable statute of limitations. Finally, BSBN argues that the action should be dismissed because Adeli's complaint fails to establish the damages element for legal malpractice. In support of its motion, BSBN provides a court document relieving BSBN as attorney for Adeli's company in 2006. BSBN also submits two affidavits from BSBN attorneys stating that the relationship between BSBN and Adeli ended in 2005.

Here, Adeli's legal malpractice claim accrued in or about April 2005 when BSBN allegedly told her to transfer her assets so that they would be protected from judgment in the Sachs matter, and thus the statute of limitations for this claim expired in or about April 2008.


Contrary to Adeli's assertions, the continuous representation doctrine does not apply here because her attorney-client relationship with BSBN ended in 2005. Her allegations of malpractice are predicated upon BSBN's advice in the Sachs matter, and are unrelated to the bankruptcy proceeding, thus it cannot be said that BSBN continued to represent her after 2005. Even if the continuous representation doctrine did apply, it only tolled the statute of limitations until March 24, 2009, when the Ninth Circuit reversed the bankruptcy court's decision and denied Adeli her bankruptcy discharge. Therefore, at the latest, the statute of limitations expired on March 24, 2012, months before Adeli filed this action in July 2012."

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How Could Two Parties So Disagree On The Facts?

In this legal malpractice case which was dismissed and then affirmed on appeal, the decision reveals so wide a difference in analysis of the corporate and loan documents that it is astonishing.  In Manus v Flamm   2013 NY Slip Op 07683   Decided on November 19, 2013   Appellate Division, First Department plaintiff presents a claim that is not merely a shade different from that of defendant, it is night and day.
 

"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]). "

 

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Statute of Limitations in Legal Malpractice

We're proud and pleased that the New York Law Journal published "Statute of Limitations in Legal Malpractice" today.  From the article:

"
The statute of limitations sets the maximum time during which an action for damages may be commenced. It is of ancient heritage. Its first appearance in Anglo-American law is as early as 1237. In New York the statute of limitations applies to all actions in law and in equity. CPLR Article 2 sets time limitations in every enumerated action or special proceeding. However, not all actions are specifically enumerated. Those which are not enumerated are subject to a six-year statute pursuant to CPLR 213. In general, separate treatment is afforded to commencement of actions based upon contract (CPLR 213) and tort (CPLR 214(6)).


Legal malpractice is different. It is often described as both a tort and a breach of retainer contract. Shumsky v. Eisenstein, 96 NY2d 164 (2001). Whether it is a "tort" or a "contract" is generally decided by the nature of the damages sought, Sears Roebuck & Co. v. Enco Assocs., 43 NY2d 389 (1977); Santulli v. Englert, 78 NY2d 700 (1992). Tort damages are those which compensate a plaintiff for all of the "reasonably foreseeable injury suffered." PJI 2:277. Contract damages are to "indemnify plaintiff for the gains prevented and the losses sustained by the breach of the retainer contract." PJI 4:20.

Initially different periods of limitation were applied to legal malpractice claims in tort and in contract, Santulli, supra. In reaction to Santulli, the Legislature shortened the statute of limitations to three years for breach of contract claims in 1996. Now, legal malpractice is enumerated in Article 2 and is subject solely to a three-year statute of limitations under CPLR 214[6] no matter how the claim is denominated. This three-year statute is applicable whether the claim is called tort or contract, and applies all other descriptions. Whether it is "fraud," "breach of fiduciary duty," or any other claim, should the allegations arise from professional representation of the client by the attorney it is subject to a three-year statute, Ulico Cas. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1 (1st Dept. 2008); Melendez v. Bernstein, 29 AD3d 872 (2d Dept. 2006).

Calculating the onset and length of the legal malpractice statute of limitations is enormously complex. To begin, it is not always clear when the clock starts to run. Several considerations govern that calculation. These include the date of the mistake, whether that mistake immediately causes problems, continuing representation, and the maturing of an actionable injury, To further complicate the analysis there is equitable tolling and equitable estoppel."

 

Read more: http://www.newyorklawjournal.com/PubArticleNY.jsp?id=1202629531207&Statute_of_Limitations_in_Legal_Malpractice#ixzz2lkqm76Up

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Legal Malpractice Island or Archepelago ?

Here is a textbook example of how the statute of limitations in legal malpractice is stretched to the extreme, yet plaintiff loses.  In 2003 defendants wrote an opinion letter which was contrary to the IRS determination which came in 2007.  Attorneys (or related attorneys) were retained in 2007 to fight the IRS and lost in 2011.  5 months later plaintiff sued.  Timely or too late? 

Landow v Snow Becker Krauss, P.C.   2013 NY Slip Op 07710   Decided on November 20, 2013
Appellate Division, Second Department   holds that they were too late, and for the reason that more than 3 years went by between the engagements in 2003 and 2007. Legal Malpractice continuing representation requires that there be no 3 year period between the islands of representation.  Hence, continuous representation does not permit the archipelago theory of strung out islands of representation with more than 3 years of ocean between them.
 

""On a motion to dismiss a complaint pursuant to CPLR 3211(a)(5) on statute of limitations grounds, the moving defendant must establish, prima facie, that the time in which to [*2]commence the action has expired" (Zaborowski v Local 74, Serv. Empls. Intl. Union, AFL-CIO, 91 AD3d 768, 768-769). In a legal malpractice action, the statute of limitations is three years (see CPLR 214[6]). "A legal malpractice claim accrues when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court'" (McCoy v Feinman, 99 NY2d 295, 301, quoting Ackerman v Price Waterhouse, 84 NY2d 535, 541). Here, the defendants met their prima facie burden by establishing that the cause of action alleging legal malpractice accrued on March 5, 2003, the date they allegedly issued the opinion letter advising the plaintiff that the proposed sale would not result in the loss of his tax deferment status (see Ackerman v Price Waterhouse, 84 NY2d at 541-543; Byron Chem. Co., Inc. v Groman, 61 AD3d 909). Although the plaintiff did not discover that his attorneys' alleged advice was incorrect until years later, " [w]hat is important is when the malpractice was committed, not when the client discovered it'" (McCoy v Feinman, 99 NY2d at 301, quoting Shumsky v Eisenstein, 96 NY2d 164, 166). Therefore, since the defendants demonstrated that the plaintiff did not commence this action until December 29, 2011, more than three years after his claim for legal malpractice accrued, the defendants established, prima facie, that the claim was time-barred.

Upon that showing, the burden then shifted to the plaintiff to raise a question of fact as to whether he actually commenced the action within three years after the legal malpractice cause of action accrued, the statute of limitations was tolled, or the statute of limitations relied on by the defendants was otherwise inapplicable (see Zaborowski v Local 74, Serv. Empls. Intl. Union, AFL-CIO, 91 AD3d at 769). The plaintiff, in opposition to the defendants' showing, relies on the continuous representation doctrine as a toll of the three-year statute of limitations; however, he failed to raise a question of fact in this regard. As evidenced by, inter alia, the more than four-year period of time between the issuance of the opinion letter and the plaintiff's alleged retention of the defendants in July 2007, during which no further legal representation was undertaken with respect to the subject matter of the opinion letter, the parties did not contemplate that any further representation was needed (see McCoy v Feinman, 99 NY2d at 306; Byron Chem. Co., Inc. v Groman, 61 AD3d at 911).

Accordingly, the Supreme Court properly granted those branches of the defendants' respective motions which were pursuant to CPLR 3211(a)(5) to dismiss, as time-barred, the cause of action alleging legal malpractice. "

 

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Comparative Fault in Legal Malpractice

A win at trial and a loss on Appeal in this legal malpractice case was based upon Plaintiff's potential comparative fault.  Hattem v Smith    2013 NY Slip Op 07791  Decided on November 21, 2013  Appellate Division, Third Department is the story of a fairly straight-forward sale of a business coupled with the failure to file liens and UCC-1s.  Seller was found by the 3d Department to be sophisticated enough to potentially share in some of the blame.

"In September 2007, plaintiff commenced this legal malpractice action. Following a trial, the jury was asked whether Smith was negligent in failing to file a UCC-1 prior to NBT's filing, and in failing to file DMV liens. The jury answered both questions in the affirmative and awarded damages to plaintiff. Supreme Court denied defendants' cross motion to set aside the verdict, and judgment was entered thereon. Defendants appeal from the order denying the cross motion and from the judgment.

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.

In light of this determination, we need only briefly address defendants' remaining assertions relative to Supreme Court's denial of the cross motion to set aside the verdict. Defendants assert that it was impossible for Smith to file a UCC-1 before the date of NBT's filing, as he neither possessed the executed security agreement nor knew that it had been executed until several weeks thereafter (see UCC 9-509 [b] [1]; see generally McDaniel v 162 Columbia Hgts. Hous. Corp., 21 Misc 3d 244 [2008]). However, upon defendants' cross motion, Supreme Court analyzed the issue more broadly, and denied the cross motion upon the ground that the evidence established that the transaction could have been structured differently. This finding based upon the evidence was properly within Supreme Court's power (see CPLR 4111 [b]; Siegel, NY Prac § 399 at 696 [5th ed 2011]). Plaintiff's expert testified that plaintiff's security interest could have been protected by instructions to OSC's attorney precluding release of the sale documents, which Smith did not provide. Thus, it cannot be said that there was "simply no valid line of reasoning and permissible inferences which could possibly lead rational [people] to the conclusion reached by the jury on the basis of the evidence presented at trial" (Cohen v Hallmark Cards, 45 NY2d 493, 499 [1978]; accord Popolizio v County of Schenectady, 62 AD3d 1181, 1183 [2009]). In light of this very high standard, we further find that the evidence sufficiently established that Smith's failure to file DMV liens was the proximate cause of loss to plaintiff. Accordingly, the court did not err in denying the cross motion to set aside the verdict insofar as it addressed liability. Defendants' remaining claims need not be addressed, as they pertain to the sufficiency of proof of the quantum of damages and are thus encompassed within the issues that will necessarily be presented upon retrial. "

 

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There Can Still Be Legal Malpractice When the Client is an Attorney

OK, say you're a law firm, and the client is a Board of Managers, and the President is an Attorney.  You do work for them, and things don't go well.  You can blame the "micro-managing" President/Attorney, no?

Well, in Board of Mgrs. of Bridge Tower Place Condominium v Starr Assoc. LLP  2013 NY Slip Op 07684  Decided on November 19, 2013  Appellate Division, First Department  the answer is NO.  In fact, as rarely happens, Plaintiff obtains summary judgment on liability and dismissing the affirmative defense of comparative fault.

"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]). "

 

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Due Process and Voluntary Case Settlement

Settlements including pleas to criminal charges are the linchpin of an orderly system of justice.  As any prosecutor, and indeed, any litigator knows, only a very small portion of cases can be tried to a fact finder.  if 95% of all civil cases, and a similar amount of criminal cases were not subject to disposition by voluntary settlement, the staggering numbers of cases would quickly overwhelm the entire system.

So the Court of Appeals found in People v Peque 2013 NY Slip Op 07651   Decided on November 19, 2013   Court of Appeals   Abdus-Salaam, J. for criminal cases, and so it is in matrimonial cases.  In Peque   the question of deportation and the low level of understanding may constitute lack of due process, and in legal malpractice litigation after Katebi v. Fink. 51 AD3d 424 (1st Dept, 2008).   In criminal law, "the plea represents a voluntary and intelligent choice among the alternative courses of action open to the defendant" and requires that the defendant be told of the significant consequences of a plea.  No such obligation is found in settling a matrimonial case and being asked whether the attorney's work is satisfactory. 
 It is customary in settlement of a matrimonial action to inquire of the litigants whether they are satisfied with the work of their attorneys.  When they are told (in rote fashion) to say "yes", the suffer the consequence of losing any legal malpractice rights later.  "While "[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., 160 AD2d 428, 430 [1990]), here, the complaint is contradicted by the evidentiary material submitted on the motion to dismiss (see Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). Plaintiff testified that she did not wish to proceed with the trial of the matrimonial action, that she decided instead to enter into the stipulation of settlement because she wanted no further connection with her husband, that she understood that by settling the action before the completion of the trial she was foregoing the right to pursue the funds allegedly dissipated by him, and that she was satisfied with the services provided by her attorney. "

 

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It's Too Late To Do Anything But Count Up The Expenses

Plaintiff hires law firm to handle labor law case, Defendant is then hired to handle the appeal from dismissal of the case.  The appeal was dismissed for want of prosecution in 2006.  The law firm did not tell the client, and in 2008 wrote a letter telling him that the judgment was affirmed.  The legal malpractice case did not commence until 2012. 

McDonald v Edelman & Edelman, P.C.  2013 NY Slip Op 07432   Decided on November 12, 2013
Appellate Division, First Department  holds that the case was brought too late, but that an accounting of disbursements can be held.
"Defendants argue that the second cause of action, which seeks an accounting, is based on breach of fiduciary duty, in light of the attorney-client relationship, and seeks money damages, and is therefore barred by the three-year statute of limitations set forth in CPLR 214(6). They improperly raised this argument for the first time in reply on their motion (see Caribbean Direct, Inc. v Dubset LLC, 100 AD3d 510 (1st Dept 2012]). In any event, the argument is unavailing. Plaintiff's claim for an accounting so that he can recoup disbursements allegedly improperly charged against his jury award has little to do with whether defendants performed their legal services in a non-negligent manner (see Matter of R.M. Kliment & Frances Halsband, Architects [McKinsey & Co.], 3 AD3d 143 [1st Dept 2004], affd 3 NY3d 538 [2004]). It has to do with whether defendants owe plaintiff a fiduciary duty to account for money or property allegedly belonging to him, and is therefore governed by the "residual" six-year statute of limitations set forth in CPLR 213(1) (see Hartnett v New York City Tr. Auth., 86 NY2d 438, 443 [1995]; Bouley v Bouley, 19 AD3d 1049, 1051 [4th Dept 2005]).

The first cause of action, alleging legal malpractice, accrued at the time that plaintiff's appeal from the order that granted summary judgment dismissing his underlying Labor Law claims was dismissed for want of prosecution, in July 2006, notwithstanding his lack of knowledge of the dismissal (see McCoy v Feinman, 99 NY2d 295, 301 [2002]). Plaintiff then had three years to commence a malpractice action against defendants (see CPLR 214[6]), absent an applicable ground for tolling the limitations period. He did not commence this action until March 2012.

Plaintiff relies on the continuous representation doctrine. However, in June 2008, defendants sent him a letter enclosing the Second Department's affirmance of the underlying judgment and formally closing their representation of him. The letter, which plaintiff did not [*2]object to, demonstrates that the parties lacked "a mutual understanding of the need for further representation on the specific subject underlying the malpractice claim" (see Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 9-10 [2007] [internal quotation marks omitted]). Even accepting that defendants concealed from plaintiff the fact that his appeal was dismissed as abandoned, their letter placed him on notice that his attorney-client relationship with them had ended. "

 

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Questions of Proximate Cause in an Accounting Malpractice Case

In a professional malpractice case, be it legal malpractice or accounting malpractice, plaintiff must be able to show proximate cause.  Might a firm be liable for damages based upon issues that arose before its retention?  It might be, but in Cannonball Fund, Ltd. v Marcum & Kliegman, LLP
2013 NY Slip Op 32891(U)  November 14, 2013  Supreme Court, New York County  Docket Number: 651674/2011  Judge: Bernard J. Fried it was not.

"Plaintiffs bring this action against Marcum & Kliegman, LLP ("M&K"), alleging professional malpractice stemming from M&K's engagement as an auditor of Dutchess Private Equities Fund, L.P. and Dutchess Private Equities Cayman Fund, Ltd. (the "Funds") in 2008. Defendant M&K moves to dismiss the complaint pursuant to CPLR 321 l(a)(l) and (7).

Briefly, the allegations giving rise to this action are as follows. According to the Complaint, the Funds were hedge funds with a similar stated strategy of investing in companies with positive cash flow and in fully secured or liquid securities. (Complaint paras 27, 36). The Funds' common investment manager was Dutchess Capital Management LLC. (Complaint para 16). Between 2004 and 2007, Plaintiffs invested over $13 million in the Funds, with the bulk of the investments made in 2006 and 2007. (Complaint para 6-11).

Plaintiffs allege that they suffered damages as a result of M&K's negligence.(Complaint if 238). Plaintiffs allege that had M&K performed a proper audit, or, I
alternatively, refused to certify the Funds' financial statements, then Plaintiffs would have been alerted to the Funds' problems. (Complaint if 238). Plaintiffs allege that, armed with this  knowledge, they could have made an informed decision as to whether they should remain invested in the Funds or put in requests for "gated redemptions, in which investors could request redemption, subject [to] an amount and timing to be determined by" the Funds. (Complaint if 60). Alternatively, Plaintiffs allege that they could have removed the Funds' management or changed the Funds' investment strategy. (Complaint if 238). M&K moves to dismiss the complaint pursuant to CPLR 3211 (a)( 1) and (7). M&K argues that the allegedly negligent Audit Opinion could not have proximately caused the Plaintiffs' injuries. The Audit Opinion was issued on June 16, 2008. (Complaint if 60). However, all of the redemptions from the Funds were suspended in February 2008 and since that time the Plaintiffs were effectively prohibited from withdrawing their investments. (Complaint , 174). Plaintiffs have demanded full redemption from the Funds, and their
demands have been denied. (Complaint , 183). Thus, M&K argues that even ifthe Audit Opinion had disclosed different information, the resulting losses to the Plaintiffs would have been the same.

However, any new management hired after the Audit Opinion was issued could not have done anything to rectify the losses incurred by the Funds' prior to the time the Audit Opinion was issued in June 2008. For example, in April 2008, two months prior to the issuance of the M&K Audit Opinion, the Funds reported a 33% loss, partially due to the decline in value of the Funds' investment in Challenger. (Complaint ,-i 177). Any new management hired after June 2008 could not have prevented this loss.

Accordingly, Plaintiffs have failed to allege that M&K's negligence was the proximate cause of  laintiffs damages and thus the Complaint fails to state a cause of action for accounting malpractice.

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Conflict? Perhaps. Legal Malpractice? No.

We believe that legal malpractice cases are more harshly reviewed, and held up to a higher standard, almost always in the "but for" portion of the case.  Engelke v Brown Rudnick Berlack Israels LLP   2013 NY Slip Op 07419   Decided on November 12, 2013   Appellate Division, First Department is no exception.  Plaintiff can demonstrate a conflict, but cannot show proximity.  Plaintiff can claim a conflict, but it was already "extinguished."  Plaintiff can show spoliation of electronic evidence, but, hey...he had the material anyway.
 

"The motion court properly dismissed the claim of legal malpractice. Even if plaintiff established the requisite conflict based on the existence of a prior attorney-client relationship, which relationship the parties do not dispute, plaintiff failed to establish that he incurred any damages attributable to defendant's breach of duty (Kodsi v Gee, 100 AD3d 437, 438 [1st Dept 2012]; Leder v Spiegel, 31 AD3d 266, 268 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008]; Estate of Steinberg v Harmon, 259 AD2d 318 [1st Dept 1999]). Plaintiff argues that, by exclusion from the settlement between Pinnacle and Athle-Tech, he was forced to incur more than $1 million in attorney's fees in defending against the second Athle-Tech litigation. However, plaintiff cannot show with sufficient certainty that he would have been able to settle with Athle-Tech and thereby have avoided or reduced his costs. Nor can any alleged damages be attributed to a breach of duty of loyalty based on defendant's prior representation of plaintiff in connection with the Montage SPA. By the time the settlement was made final, plaintiff's indemnification obligations under the Montage SPA were extinguished.

The court also properly denied plaintiff's motion to strike defendant's answer based on the destruction of electronic evidence. Plaintiff had all of the disputed documents and cannot claim any prejudice in pursuing his claim (see Suazo v Linden Plaza Assoc., L.P., 102 AD3d 570, 571 [1st Dept 2013]; McMahon v Ford Motor Co., 34 AD3d 263, 264 [1st Dept 2006]). Plaintiff further fails to establish that any failure to produce the emails was willful (CPLR 3126)."
 

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Does a Retainer Agreement Mean Anything At All?

We've always thought that a retainer agreement between an attorney and a client had some meaning, real meaning.  Emery Celli Brinckerhoff & Abady, LLP v Rose   2013 NY Slip Op 07428 Decided on November 12, 2013  Appellate Division, First Department  disabuses us of that notion, and has two other interesting things about it.  It's the first appeal we've seen from the Law office of Richard Lerner, long an appellate star with Wilson Elser.  The decision also sets forth that an "account stated" cannot be successful if the fees claimed are "intertwined" with the asserted malpractice.
 

"Plaintiff established its entitlement to judgment as a matter of law on its claim for an account stated "by showing that its client received, retained without objection, and partially paid invoices without protest" (Scheichet & Davis, P.C. v Nohavicka, 93 AD3d 478, 478 [1st Dept 2012] [internal quotation marks omitted]; see Miller v Nadler, 60 AD3d 499 [1st Dept 2009]).

Defendant's argument that plaintiff failed to make a prima facie case because it submitted no expert opinion that its retainer agreement and the legal services it rendered were fair and reasonable is unpreserved. Were we to reach the merits, we would find it unavailing. It is not part of a plaintiff's prima facie case on a claim for an account stated to show the reasonableness of the retainer agreement or its legal services (see e.g. Scheichet & Davis. P.C. at 478; Miller at 499). Indeed, in Miller, we found that "[p]laintiff's failure to comply with the rules on retainer agreements ... does not preclude it from suing to recover legal fees for the services it provided" (Miller at 500), and "[i]n the context of an account stated pertaining to legal fees, a firm does not have to establish the reasonableness of its fee" (Lapidus & Assoc., LLP v Elizabeth St., Inc., 92 AD3d 405, 405-406 [1st Dept 2012] [internal quotation marks omitted]).

If a defendant client's legal malpractice claim is intertwined with a plaintiff law firm's claim for legal fees, the plaintiff will not be entitled to summary judgment on its account stated claim. However, if the malpractice claim is not so intertwined, courts are not precluded from [*2]granting the plaintiff summary judgment (see Morrison Cohen Singer & Weinstein v Ackerman, 280 AD2d 355, 356 [1st Dept 2001]).

Here, it was not an improvident exercise of the motion court's discretion to rule, in effect, that defendant had waived his right to raise malpractice by not filing an amended answer by the deadline set by the court (see Quintanna v Rogers, 306 AD2d 167, 168 [1st Dept 2003]). Furthermore, the record shows that plaintiff performed a great deal of work that was unrelated to the purported malpractice.

 

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Are Remedies Available for Excessive Billing by an Attorney?

We found this story in the NYLJ     by Christine Simmons shocking.  Law firm charged hourly rates of $ 300 per hour (combined for all attorneys) PLUS a 40% contingency.  Parents were billed $ 104,000,  paid more than $ 75,000 and the settlement was only  for $ 17,500.

"A federal magistrate judge has referred a Long Island law firm to an attorney disciplinary committee after finding the firm's fees were excessive for the amount of work performed and that it failed to disclose critical facts to support a settlement agreement.

Eastern District Magistrate Judge Gary Brown (See Profile) chastised Leeds Brown Law's conduct in an infant compromise case—a proceeding to obtain court approval of a settlement of a child's claim.

"It is simply astonishing that the Leeds firm would propose an infant compromise in which the fees paid were more than four times the settlement amount, and fail to disclose that fact to the Court," Brown said in C.M. v. Syosset, 11-cv-01402.

Upon Brown's recommendation, the Leeds firm has agreed to return about $70,000 in fees, he said.

The firm in a Nov. 8 letter to the court defended its actions and said nothing unethical occurred and that it was confident that once all the facts were examined the firm would be exonerated from any allegation of wrongdoing.

Leeds Brown Law, a discrimination and civil rights firm with about 10 attorneys, represented C.M., a child whose parents claimed that defendants Syosset Central School District and a school principal, Joanne Mannion, discriminated and retaliated against C.M., who has life threatening food allergies.

In a proposed settlement agreement, the district's insurers would pay $17,500 to C.M.

The parents' attorney, Rick Ostrove, a partner with Leeds, told the court that no attorney fees or disbursements are due or will be paid from the settlement, according to Brown.

Ostrove also wrote that once the settlement money is deposited in C.M.'s bank account, which is linked to his parents' accounts, the funds will be used to pay an outstanding home equity loan his parents took out to cover litigation expenses.

In an August report and recommendation, Brown said the settlement papers failed to say what portion of the settlement fund would be used to offset the loan for legal expenses.

When asked for the figure, the Leeds firm said "the entire amount of the proposed settlement" would be used to pay the loan "as the legal fees substantially exceeded the settlement amount."

Brown asked to see the firm's retainer agreement, which showed the parents were to pay a retainer fee of $15,000, would "replenish" the retainer in increments of $10,000, and that the firm would receive a 40 percent contingency fee based on a certain formula.

In August of this year, Brown said the parties failed to demonstrate the settlement amount is fair and reasonable. "Even though the defendants would pay $17,500, C.M. would receive absolutely nothing, as the entire corpus would be diverted to reimburse attorneys' fees and costs, a fact revealed only upon Court inquiry," Brown said.
 

Overall, Brown said "several instances" of conduct by Ostrove and Leeds "may have run afoul" of the Rules of Professional Conduct.

Brown said there are serious doubts that a contingency fee was appropriate.

He said Ostrove argued that the hybrid fee arrangement was justified based on the firm's expertise, write-off of blocks of time and "discounted" hourly rate of $300.

"I cannot credit the contention that $300 per hour for all attorneys in the firm represented a significant discount justifying the draconian contingency arrangement," Brown said.

But "perhaps the most troubling aspects of this matter arise from the failure by Ostrove to comply" with the settlement procedures, Brown said, including the failure to disclose material information.

"The seriousness of these deficiencies, considered together with the surrounding circumstances, raise the specter of whether these omissions and misstatements represent stratagems rather than oversights," Brown said.

"By failing to disclose the attorneys' fees charged and paid, and revealing only that certain of the funds would be used to pay off a loan that had been for legal costs and fees, the application filed by Ostrove clearly evaded dictates of state and federal law requiring that the Court review attorneys' fees arrangements entered in connection with a claim by a minor plaintiff," Brown said.

He said these failings taken together may implicate Rule 3.3, which provides that a lawyer shall not knowingly make a false statement of fact or law to a tribunal or fail to correct a false statement.

The Leeds firm agreed to return all fees except for $5,000, about 28.6 percent of the settlement. The remainder, $12,500, will be deposited into an account for the child's benefit, to be held until he reaches a suitable age, Brown said in the October report, which must be approved by U.S. District Judge Margo Brodie. (See Profile)

The magistrate judge said he was mindful that the Leeds firm voluntarily agreed to refund about $70,000."
 

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Legal Malpractice As The Disfavored Child

People question whether "they" like us?  Do "they" treat us fairly?  We wonder whether legal malpractice is treated differently than all other law suits? Fielding v Kupferman, 2013 NY Slip Op 02008 Appellate Division, First Department raises the question once again. Compare this case to a garden or varietal slip and fall. Example: plaintiff trips over a defective step and breaks his leg. Would the Appellate Division then discuss whether breaking a bone was better than what might have happened, were plaintiff to fall down an entire flight of stairs and break his neck? We believe that it would not.
 

Nevertheless, this is what happens regularly in a legal malpractice case. Take Fielding as an example. "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 Klucka 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."

 

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The Case Is More Than 20 Years Old and Still a Mess

This legal malpractice case started around 1991.  It's been up to the AD 4th Department, back down to Supreme Court and now is back at the AD.  Here is their recitation.  We love the attorney masquerading as a doctor and a Vet reviewing human medical records. From:  Dischiavi v Calli
2013 NY Slip Op 07289   Released on November 8, 2013   Appellate Division, Fourth Department
"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). "

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), 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). The court therefore properly determined that defendants were not entitled to the relief sought based on the statute of limitations.

We agree with all defendants that the court erred in denying those parts of their motions seeking summary judgment dismissing the third cause of action, for fraud, against them. Thus, we modify the order accordingly. "The elements of a cause of action for fraud require a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff[s] and damages" (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559; see Ross v Louise Wise Servs., Inc., 8 NY3d 478, 488; Lama Holding Co. v Smith Barney, 88 NY2d 413, 421). "Where, as here, a fraud [cause of action] is asserted in connection with charges of professional malpractice, it is sustainable only to the extent that it is premised upon one or more affirmative, intentional misrepresentations . . . which have caused additional damages, separate and distinct from those generated by the alleged malpractice" (White of Lake George v Bell, 251 AD2d 777, 778, lv dismissed 92 NY2d 947; see Tasseff v Nussbaumer & Clarke, 298 AD2d 877, 878; see generally Wells Fargo Bank, N.A. v Zahran, 100 AD3d 1549, 1550, lv denied 20 NY3d 861). We agree with defendants that they met their initial burden on their motions by establishing that plaintiffs did not sustain any additional damages as a result of the alleged fraud, and plaintiffs failed to raise a triable issue of fact (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324-325). Contrary to plaintiffs' contention, this Court's prior order denying those parts of the respective defendants' initial motions and cross motions "pursuant to CPLR 3211 (a) (7) to dismiss the complaint, which w[ere] addressed to the sufficiency of the pleadings, did not establish the law of the case for the purpose of their subsequent motion[s] pursuant to CPLR 3212 for summary judgment, which [were] addressed to the sufficiency of the evidence" (Thompson v Lamprecht Transp., 39 AD3d 846, 847).
 

On their cross appeal, plaintiffs contend that the court erred in dismissing the first and second causes of action insofar as they are premised upon defendants' failure to commence a personal injury action. The court granted defendants' motions for summary judgment dismissing those causes of action to that extent based on its determination that the statute of limitations therefor had expired before plaintiffs retained any of the defendants. Plaintiffs now contend that the statute of limitations for those causes of action was extended several times by amendments to General Municipal Law § 205-e (2), which resulted in the revival of plaintiffs' causes of action until a time after they first retained CKTDS. That contention is not properly before us because it is raised for the first time on appeal, and "[a]n issue may not be raised for the first time on appeal . . . where it could have been obviated or cured by factual showings or legal countersteps' in the trial court" (Oram v Capone, 206 AD2d 839, 840, quoting Telaro v Telaro, 25 NY2d 433, 439, rearg denied 26 NY2d 751). The revival statute on which plaintiffs rely applies to causes of action that "would have been actionable on or after January [1, 1987] had this section been effective" (§ 205-e [2]), and we conclude that defendants could have made a factual showing that plaintiffs' first and second causes of action insofar as they are premised upon defendants' failure to commence a personal injury action were not actionable because they were precluded by plaintiff's receipt of benefits pursuant to General Municipal Law § 207-c. "

 

 

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16 Year Gap is Too Big for Legal Malpractice Case

Case is marked "disposed."  This can happen when there is a failure to appear in court, when a motion goes unanswered, or when some other event transpires and the court routinely "disposes" of a case administratively.  It can also happen after a contested motion is decided.  How Plaintiff's case was disposed of in Champlin v Pellegrin 2013 NY Slip Op 07257  Decided on November 7, 2013  Appellate Division, First Department we don't know.
 

What we do know, from the decision, is that none of the suggested reasons why the case was still timely worked.  "Contrary to plaintiff's assertions, the claim was not tolled by the continuous representation doctrine. Generally, tolling under the continuous representation doctrine "end[s] once the client is informed or otherwise put on notice of the attorney's withdrawal from representation" (Shumsky v Eisenstein, 96 NY2d 164, 171 [2001]). The parties do not dispute that there were no communications between them from 1994 until 2011, when plaintiff purported to discharge defendant from representing him. The more than 16-year lapse in communications from defendant was sufficient to constitute reasonable notice to plaintiff that defendant was no longer representing him.

Furthermore, as there was no "clear indicia of an ongoing, continuous, developing, and dependent relationship between [plaintiff and defendant]" (Pittelli v Schulman, 128 AD2d 600, 601 [2d Dept 1987] [internal quotation marks omitted]), or a "mutual understanding of the need for further representation on the specific subject matter[s] underlying the malpractice claim" [*2](McCoy v Feinman, 99 NY2d 295, 306 [2002]), we find that plaintiff's reliance on CPLR 321(b) is misplaced. "

 

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Not Legal Malpractice, But A Lot of Other Things

Client has lost millions and goes to attorney.  Attorney arranges for a private investigator to work on the case.  So far so good?  The investigator's contract called for payment of $ 350,000 plus 25% on success in locating assets.  Clients thought this too much.  Can a complaint for fraud adequately be stated on these facts?

In Moche v Srour  2013 NY Slip Op 32740(U)  October 26, 2013  Sup Ct, New York County
Docket Number: 157764/2012  Judge: Eileen A. Rakower tells us that the answer is yes.

"This action arises from the retention of a private investigator on Plaintiffs' behalf by their attorney. In this action, plaintiffs Charles M. Moche and Ezra S. Moche (collectively, "Plaintiffs"), residents of New Jersey, contend they "were individuals who were victims of a real estate fraud scheme which caused them to lose millions of dollars." Plaintiffs allege that they thereafter "retained Deborah R. Srour, Esq. Srour and the law firm of Cox, Padmore Skolnick & Skarachy LLC to help regain the money they had lost." Plaintiffs further allege that Srour thereafter "took undue advantage of plaintiffs' desperate situation because of their significant losses and entered into an agreement with defendant Patrol H.Y. Security (2007) Ltd. (Patrol) and Chaim Sharvit (Sharvit) purportedly obligating plaintiffs [sic] to pay Patrol $350,00 caused plaintiffs [sic] to give $225,000 to Patrol."
Plaintiffs allege, "Sharvit provided almost no services or work product to plaintiffs yet retained plaintiffs' $225,000.00 and demanded the additional $125,000 purportedly due under Srour's agreement." Plaintiffs further allege that "[u]pon information and belief, Sharvit shared those funds with Srour and/or Cox Padmore while Srour in fact during said period in question was purportedly representing plaintiff and had a fiduciary obligation to plaintiff."

"Here, accepting the allegations as true that Srour "at the time of entering into the agreement either acted as Patrol's attorney and/or partner, and failed to disclose same to plaintiffs," "Sour also concealed that under the agreement ... , Sharvit was not obligated to do anything," and "Upon information and belief, Sharvit shared those funds with Srour and/or Cox Padmore ... ," Plaintiffs have stated claims for fraud and fraud in the inducement as against Srour and Cox Padmore.
 

The second cause of action of the Amended Complaint is for unjust enrichment. "[T]o prevail on a claim of unjust enrichment, "a party must show that (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."' (Cruz v. McAneney, 31 A.D.3d 54, 59 [2006]). "The existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter." Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y. 2d 382, 399 [1987]. "[A] party is not precluded from proceeding on both breach of contract and quasi contract theories where there is a bona fide dispute as to the existence of a contract or where the contract does not cover the dispute in issue." Curtis Props. Corp. v. Greif Cos., 236 A.D.2d 237, 239 (1st Dep't 1997). A bona fide dispute exists where a defendant alleges unconscionability or fraud. (Id.). Here, accepting the allegations that Plaintiffs paid Sharvit and Patrol $225,000 for services that were not adequately invoiced or rendered, that Srour and Cox Padmore shared those funds, and the contract entered by Srour with Patrol and Sharvit on Plaintiffs' behalf was unconscionable, Plaintiffs have stated a claim for unjust enrichment.

The third cause of action of the Amended Complaint is for breach of fiduciary duty. The elements of a cause of action for breach of fiduciary duty include (1) the existence of a fiduciary relationship; (2) misconduct; and (3) damages caused by the misconduct. (Armentano v. Paraco Gas Corp., 90 AD3d 683, 935 NYS2d 304 [2nd Dept 2011]). Based on the allegations that Srour, as Plaintiffs' attorney, "prepared the agreement with Sharvit to the benefit of Sharvit and the detriment of plaintiffs" and thereafter shared in those funds that Plaintiffs paid to Sharvit without Plaintiffs' knowledge," Plaintiffs have stated a claim for breach of fiduciary as against Srour and Cox Padmore. The fourth cause of action of the Amended Complaint is for legal malpractice
stemming from Plaintiffs' recommendation of Patrol and Sharvit. In order to prevail against an attorney on a legal malpractice claim, a plaintiff must first prove that the  attorney was negligent, that such negligence was the proximate cause of the loss sustained, and that actual damages resulted therefrom (see Tydings v. Greenfield, Stein& Senior, 2007 NY Slip Op 6734, *2 [1st Dept. 2007]). An attorney does not, except by express agreement, guarantee results. Weinberg v. Needelman, 226 A.D. 3,4-5 [1st Dept 1929], aff'd, 252 N.Y. 622 [1930]. "[A]n attorney is not held to the rule of infallibility and is not liable for an honest mistake of judgment, where the proper course is open to reasonable doubt. Thus, 'selection of one among several reasonable courses of action does not constitute malpractice."' Bernstein v. Oppenheim & Co.,  P.C., 160 A.D.2d 428, 430 [151 Dept 1990]. Here, Plaintiffs' legal malpractice claim is based on Srour's recommendation which they followed in the retention of the private investigator. This allegation alone is insufficient to make out a legal malpractice claim."

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Where May You Bring That Legal Malpractice Case?

Plaintiff is injured while at work as a teacher in NYC and goes to an attorney. The attorney advises her to bring a Workers' Compensation Claim, and does so for her. More than 90 days passes, and lo and behold, it turns out that Teachers in NYC are not covered by WC, and are (must) bring a personal injury claim. It's too late for plaintiff. Is this legal malpractice?

Supreme Court did not think so. The Appellate Division, however, did. Gaskin v Harris 2012 NY Slip Op 06123 ;  Appellate Division, Second Department .
 

"However, the Supreme Court should not have granted that branch of the defendant's cross motion which was to pursuant to CPLR 3211(a)(1) and (7) to dismiss the cause of action alleging legal malpractice. To recover damages for legal malpractice, a plaintiff is required to show that the defendant 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 caused the plaintiff to suffer actual and ascertainable damages (see Dombrowski v Bulson, 19 NY3d 347, 350; Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442; McCoy v Feinman, 99 NY2d 295, 301-302; Gershkovich v Miller, Rosado & Algios, LLP, 96 AD3d 716, 717). When determining a motion to dismiss pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the court must accept the facts alleged in the pleading as true, accord the plaintiff the benefit of every possible [*2]inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326; Leon v Martinez, 84 NY2d 83, 87; Marom v Anselmo, 90 AD3d 622, 623), and "may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint" (Leon v Martinez, 84 NY2d at 88; see Berman v Christ Apostolic Church Intl. Miracle Ctr., Inc., 87 AD3d 1094, 1096-1097; Kopelowitz & Co., Inc. v Mann, 83 AD3d 793, 797). Further, a motion pursuant to CPLR 3211(a)(1) may be granted "only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d at 326; see Leon v Martinez, 84 NY2d at 88; Robertson v Wells, 95 AD3d 862, 863; Magnus v Sklover, 95 AD3d 837, 837).

Applying these principles here, the complaint, as amplified by the affidavits submitted by the plaintiff, adequately states a cause of action to recover damages for legal malpractice. The plaintiff alleges that the defendant negligently advised her to seek Workers' Compensation benefits for injuries sustained in the course of her employment as a substitute teacher, when he should have known, as an attorney specializing in this area, that New York City teachers and substitute teachers are not covered by the Workers' Compensation Law. She further claims that the defendant advised her to pursue a baseless Workers' Compensation claim instead of litigation, failed to advise her of the deadline for filing a notice of claim, and counseled her against accepting a mediator's recommended settlement that would have afforded her some compensation for her injuries. Although the documentary evidence submitted by the defendant establishes that he promptly filed a Workers' Compensation claim on the plaintiff's behalf, and that the claim was denied on the ground that New York City teachers, including substitute teachers, are not covered by the Workers' Compensation Law, this evidence does not conclusively establish a defense to the plaintiff's asserted malpractice claims. Accordingly, the Supreme Court should have denied that branch of the defendant's cross motion which was to pursuant to CPLR 3211(a)(1) and (7) to dismiss the cause of action alleging legal malpractice (see Magnus v Sklover, 95 AD3d at 837; Ofman v Katz, 89 AD3d 909, 910; Thompsen v Baier, 84 AD3d 1062, 1063).
 

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More Bello Malpractice Cases

Last week we reported on the disbarment of Tom Bello of Staten Island in Matter of Bello ;2013 NY Slip Op 06859 ;  Decided on October 23, 2013 ; Appellate Division, Second Department  ;  Per Curiam.

Today, we see some of the after effects of his representation of other clients.  in Stein v Research Found. City Univ. of N.Y. 2013 NY Slip Op 51812(U) ;  Decided on October 28, 2013 ;  Supreme Court, Richmond County ;  Maltese, J.


"In or about September of 2006, the plaintiff was terminated by the Small Business Development Center (hereinafter "SBDC") located on the campus of the College of Staten Island. The SBDC is one of twenty four regional centers of the New York State Small Business [*2]Development Center and receives funding from the City and State Universities of New York."

"In the years following his termination, plaintiff contacted the Public Integrity Bureau of the New York State Attorney General's office, the Civil Rights Center of the United States Department of Labor, the Department of Investigation for the City of New York, the United States Department of Justice and the Equal Employment Opportunity Commission before ultimately filing suit against the City University of New York, the SBDC, the College of Staten Island and Dean Balsamini in April of 2011.The plaintiff indicated that he, along with others from the college, retained the services of Attorney Thomas Bello to assist them in the legal proceedings. The record is unclear as to how long this relationship lasted, but the plaintiff's submissions indicate Attorney Bello failed to file necessary documents even though he provided the plaintiff with notarized documentation and advised him the case was proceeding smoothly. Attorney Bello has previously been the subject of a legal malpractice suit brought by a different individual and is under investigation by the Staten Island District Attorney.[FN1] The record is also unclear as to the status of any proceeding brought by plaintiff against Attorney Bello concerning their relationship. However, on October 23, 2013 the New York Supreme Court Appellate Division, Second Department in Matter of Thomas F. Bello, an attorney and counselor-at-law, discipline number D38484 issued an order accepting the resignation of Attorney Thomas F. Bello from the bar and thereby disbarred him and struck his name from the roll of attorneys and counselors-at-law.[FN2] "

"Moreover, the plaintiff's instant action is not based on legal malpractice but instead is centered on the alleged actions of the Research Foundation. While the court recognizes the plaintiff may have a malpractice action based on Attorney Bello's failure to appropriately file documents in the 2011 case before the statute of limitations period expired,[FN11] any such claim does not bear on the res judicata analysis since the malpractice suit is separate and apart from his claim against this defendant. The substance of his current claim against the Research Foundation is the same as his previous claim and thus cannot be re-litigated. The plaintiff's claims against Attorney Bello would be best pursued in a separate action provided it is not filed outside the three year statute of limitation which runs from the date of the original malpractice.[FN12]
"

 

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Legal Malpractice Claim Survives While Judiciary Law 487 Claim is Dismissed

Client wants to open a business.  Client goes to attorney to make sure that the store she is building in NYC will meet all codes.  Attorney tells her no employee bathroom is necessary.  The City says it is necessary.  She loses the store as a result.  Legal Malpractice?

In Cavlak v Helbraun;  2013 NY Slip Op 32704(U);  October 25, 2013;  Supreme Court, New York County;  Docket Number: 103896/2012;  Judge: Richard F. Braun says that the legal malpractice claim remains, while all other causes of action are dismissed.

"This is an action sounding in negligence, legal malpractice, violation of Judiciary Law§ 487, breach of fiduciary duty, and breach of contract, all arising out of the review by defendant David
Helbraun (defendant) of plaintiffs lease for plaintiffs storefront take-out window bakery/ cafe and
giving of advice in relation thereto. Plaintiff contends that she was not properly advised by defendant of the need for an available employee bathroom under the New York City Health Code. After receiving a number of citations for New York City Health Code violations, including one for the lack of an available employee bathroom, plaintiff maintains that she was forced to end the operation of her business, which caused her to lose her investment in the business. Defendant contends that the complaint should be dismissed, pursuant to CPLR 3211 (a) (1) and (7), based on the documentary evidence that he submitted and because plaintiff has failed to state a cause of action.·"

"Plaintiff has stated a cause of action for legal malpractice sufficient to withstand a motion to dismiss, insofar as she alleges that she was not properly apprised of the implications of a lack of an employee bathroom for the premises, which ultimately caused her to lose her business and her investment therein. Plaintiff effectively pleads that she was erroneously advised that a bathroom for employees was not required. Defendant contends that under then NYCHC § 81.29 (a) (now modified in § 81.22 [a]) a bathroom for employee use need not be in the actual store, but that some facilities must be available for employee use. Even assuming that bathrooms in nearby
restaurants could serve that function, bathrooms in those restaurants were not available at the time
of the New York City Department of Health inspection because the restaurants were not open and
thus seemingly would not ordinarily be available during plaintiffs prime morning hours. Had
plaintiff not been advised that a bathroom for employees was not required, as alleged, she would not have faced this dilemma. While defendant asserts that the violation could have been challenged and cured, that would involve a determination on proximate cause beyond the face of the pleading (cf Bernardi v Spyratos, 79 AD3d 684, 688 [2nd Dept 2010] [where the determination on causation was on a motion for summary judgment]). Indeed, plaintiff maintains that she obtained documents showing that she was authorized to use the bathroom in the restaurant next door and presented them at a hearing, apparently to no avail.

"Failure to exhaust administrative remedies is not a defense to a legal malpractice claim, but rather generally bars a judicial challenge to an administrative action (see Watergate II Apts. v Buffalo Sewer Auth., 46 NY2d 52, 57 [1978]). While a failure to exhaust administrative remedies could be a factor in determining whether an attorney's negligence was a proximate cause of a plaintiffs damages (cf Catuzza v Rodriguez, 93 AD3d 1214, 1214-1215 [4th Dept 2012] [the defendant attorneys in a legal malpractice action failed to establish as a matter of law that the plaintiff employee's complaint against the county would have been dismissed on the ground that he failed to exhaust his administrative remedies]), that too goes beyond the issue of the sufficiency of the pleading."

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Is It Legal Malpractice Not to Produce Bills for Attorney Work?

In a most ironic turnabout. a law firm is sued for not producing bills.  Often enough, it is claimed that legal malpractice cases start up when a law firm actually bills the client.  Not here, in TufAmerica, Inc. v Warshavsky  2013 NY Slip Op 32690(U)  October 24, 2013  Sup Ct, New York County  Docket Number: 157795/12  Judge: Anil C. Singh.   Plaintiff loses here on the statute of limitations.  Here is the back story:

"Plaintiff TufAmerica, Inc. ("TufAmerica") retained defendant Oren Warshavsky ("Warshavsky"), a New York attorney, to provide legal services beginning in August 1999 in connection with a lawsuit brought by Wardell Quezergue and Joseph Johnson against TufAmerica in federal district court in
New Orleans, Louisiana. Warshavsky also represented TufAmerica in connection with a second suit brought against TufAmerica by the same two plaintiffs in 2002, this one in state court in Louisiana. Warshavsky was admitted pro hac vice in connection with both lawsuits, and entered an appearance as counsel for TufAmerica in both lawsuits. In the federal court suit, the court in a December 11, 2000, decision awarded summary judgment to TufAmerica against another defendant, Joe Jones, for copyright infringement, and awarded TufAmerica its attorneys' fees as to the claims against Joe Jones only."

When the time came, and TufAmerica had to produce bills so that they could be reimbursed, the bills could not be found.

"On May 31, 2006, plaintiff's local counsel in Louisiana, Dino Gankendorff, sent the following e-mail to Warshavsky:
Oren:
I am still tring [sic.] to get in touch with you on the motion to compel.
I have called you everyday for almost two weeks now and have not
heard back. We have a hearing on this Friday, June 2, and face a
serious problem. In reviewing the file, we have already agreed to
produce certain documents, see your letter dated June 17, 2005.
Donald Hyatt reports that he never received these docs. nor has our
office. Frankly, I don't see how I can go to court on Friday and
objection [sic.] to this production when we have already agreed to
produce these documents. In short, I need you to overnight me these
documents referenced in your letter dated June 17, 2006 today so we
can produce them at the hearing on Friday or I feel certain that the
Judge will cast us with attorney's fees and sanctions. Please let me
hear from you immediately. Thanks  dino
(Pergament Affirmation, exhibit A).
 

"Later that day, Warshavsky replied:


I do not have any documents, and if Tuff City does not have the bills
then there is not much that can be done - sometimes there are no
documents found, and we can only give circumstantial evidence.
Essentially, they want back up data - sorry, it is gone. And the
company that generated the bills, Cobrin & Gittes, ceased operation
in April 2002."

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How Far is Too Far in Legal Malpractice?

The Surrogate of New York County has undoubtedly been presented with unique cases and big estates, but Matter of Eisenberg  2013 NY Slip Op 51713(U)  Decided on October 15, 2013
Sur Ct, New York County  Mella, J. presents some unusual issues.

  Start with an attorney who boldly proclaims her lack of knowledge of wills, trusts and estates law (""Further, I am not an experienced attorney relating to trust and estate matters given its challenges, whereby I am gaining competency as we go because I am required to do so on my own. ""With my full disclosure however, I do want to assure you that I can manage all such issues and its [sic] complexity as that is my specialty overall in practicing law where my skills are unique as a lawyer.")

End with the attorney seeing incompetency everywhere: "  "the record speaks to [sic] itself as to how much Petitioners have worked to make all parties on the record and this Court to understand the law and its duties for proper trust administration. In fact, it ought to be clear to this Court that it is Petitioners who have the greatest understanding of the laws of Trusts and Estates over all other attorneys assigned to these matters. The record speaks for itself that it is this Court who has no understanding of the record and the law over the course these [sic] entire matters . . . If this Court is not prepared to understand each and every legal detail and its implications being said and executed [sic], then this Court should not have ruled upon it to cause more harm. . . No staff has been assigned to understand the record and legal documents that are being ruled on, except for a single court attorney who does not possess enough knowledge to help resolve these matters effectively. . . Yet, Judge Glen ruled in her limited [*14]understanding . . ."
 

Continue to a claim in US District Court which is dismissed in its entirety' "Finally, in January 2011, Law Offices of Seema Verma PLLC filed a complaint in the United States District Court for the Southern District of New York, alleging eleven claims against defendants Citigroup, Inc., et al. The March 23, 2011 order of Judge Paul A. Crotty, dismissing the complaint, provides:

"The allegations . . . suggest that Citigroup and related entities have billions of dollars of clients' assets and they exercise control over law firms, which are only too anxious to cooperate with the bank. The Complaint suggests that the bank controls and directs the New York Attorney General's office; [sic] and improperly influences the New York County Surrogate's Court. Finally, the Complaint alleges that as a result of Citigroup's unlawful practices and conflict of interest relationships, Plaintiff lost her client and has suffered substantial financial losses and hardships (i.e., lost legal fees).

* * * * *
"The gravamen of the Complaint deals with certain actions involving a trust in a litigated Surrogate's Court proceeding. Plaintiff believes that a large trust affects interstate commerce all by itself. This is quite wrong. While it is not clear how any facet of a proceeding pending before the Surrogate's Court can be the subject of a monopoly claim under Sherman Act §2, the Complaint is barren of any allegation of a monopoly or any attempt to monopolize any part of the trade or commerce among the several states. . .

 


* * * * *
"Whatever else may be said concerning Plaintiff's claim that she is entitled to her legal fees for representing a party in a contested Surrogate's Court proceeding, it does not amount to a plausible anti-trust claim, Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).
"When the Court advised Plaintiff that she had failed to state a claim under the Sherman Act or the Clayton Act, and that if Defendants were forced to make a motion to dismiss for failure to state a claim, the Court would permit a motion for sanctions, the Plaintiff decided to withdraw her Complaint."
 

In the end the attorney is treated quite well by Surrogate's Court.  "Throughout these proceedings, Seema Verma, Esq., has demonstrated a clear want of understanding. The imposition of sanctions, in the instant case, would advance neither the [*15]punitive nor prophylactic purpose of sanctions.[FN19] Therefore, the court declines to impose costs and sanctions and so denies the motion of Citibank.

V.Ms. Hamada's Motion for a Determination of the Attorney's Lien of the Law Officesof Seema Verma PLLC:

Ms. Hamada has moved for a determination of the value of Verma's attorney's lien, so that Citibank, as trustee of the revocable trust, may make distributions.[FN20]

Even if the court were to assume, arguendo, that Verma had a right to a

charging lien pursuant to Judiciary Law § 475, upon her discharge by Ms. Hamada, Verma was limited, at most, to a fee based on quantum meruit for the reasonable value of its services (see Campagnola v Mulholland, 76 NY2d 38, 43-44 [1990]). The court having determined Verma's SCPA 2110 petition, Ms. Hamada's motion is moot, and, accordingly, it is dismissed. "

 

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Independent Contractors and Legal Malpractice

Plaintiff retains attorney to arrange for a tax free gift to her son.  The IRS cutoff for tax free gift v. taxable gift is $1 million.  She did not have a million in cash.  However, she owned a valuable building in Manhattan. So, the law firm selected a Real Estate appraiser and arranged for the transaction.  Problem?  The IRS challenged, and Plaintiff had to pay $ 180,000 in additional tax.  Was the law firm responsible for the mistake of the RE appraiser, or was the appraiser an independent contractor for whom they were not responsible?

Put another way, is this a Kleeman v. Rhinegold problem or not?  There the attorney was responsible for negligent process service.  Here, in Goldstein v Stern Keiser & Panken, LLC
2013 NY Slip Op 32666(U)  October 18, 2013  Supreme Court, New York County  Docket Number: 157177/12  Judge Joan A. Madden decided that the attorneys were not responsible.

From Kleeman : "The most often cited formulation is that a duty will be deemed nondelegable when "`the responsibility is so important to the community that the employer should not be permitted to transfer it to another'" (id., at 119, quoting Prosser and Keeton, op. cit., at 512). This flexible formula recognizes that the "privilege to farm out [work] has its limits" and that those limits are best defined by reference to the gravity of the public policies that are implicated (5 Harper, James and Gray, Torts § 26.11, at 73 [2d ed]; see also, id., at 76-77).

Viewed in the light of these principles, the duty at issue here — that owed by an attorney to his or her client to exercise care in the service of process — fits squarely and neatly within the category of obligations that the law regards as "nondelegable." Manifestly, when an individual retains an attorney to commence an action, timely and accurate service of process is an integral part of the task that the attorney undertakes (see, 5 Harper, James and Gray, op. cit., at 76-77; cf., Feliberty v Damon, supra, at 120). Furthermore, proper service of process is a particularly critical component of a lawyer's over-all responsibility for commencing a client's lawsuit, since a mistake or oversight in this area can deprive the client of his or her day in court regardless of how meritorious the client's claim may be. Given the central importance of this duty, our State's attorneys cannot be allowed to evade responsibility for its careful performance by the simple expedient of "farming out" the task to independent contractors.

The existence of an extensive and comprehensive Code of Professional Responsibility that governs the obligations of attorneys to their clients reinforces our conclusion. Under the Code, a lawyer may not "seek, by contract or other means, to 276*276 limit prospectively the lawyer's individual liability to a client for malpractice" (DR 6-102, 22 NYCRR 1200.31). Moreover, the Code forbids lawyers from "[n]eglect[ing] legal matter[s] entrusted to [them]" (DR 6-101 [A] [3], 22 NYCRR 1200.30 [a] [3]), enjoins them to assist in "secur[ing] and protect[ing] available legal rights" (EC 7-1) and requires them to represent their clients as zealously as the "bounds of the law" permit (Canon 7). All of the latter ethical and disciplinary considerations are implicated when a client's lawsuit is undermined — or even defeated — as a consequence of carelessness in the service of process.

Our conclusion is also supported by the perceptions of the lay public and the average client, who may reasonably assume that all of the tasks associated with the commencement of an action, including its formal initiation through service of   process, will be performed either by the attorney or someone acting under the attorney's direction. While it may be a common practice among attorneys to retain outside agencies like Fischer's to assist them in effecting service, that custom is not necessarily one of which the general public is aware. Even where a client is expressly made aware that a process serving agency will be retained, it is unlikely that the client will understand or appreciate that the process serving agency's legal status as an "independent contractor" could render the retained attorney immune from liability for the agency's negligence. Under established principles, the client's reasonable expectations and beliefs about who will render a particular service are a significant factor in identifying duties that should be deemed to be "nondelegable" (see, Restatement, op. cit., § 429; see also, Feliberty v Damon, supra, at 120).

Finally, we conclude that permitting lawyers to transfer their duty of care to process servers would be contrary to sound public policy. In this State, licensed attorneys have been granted an exclusive franchise to practice law, with the understanding that they have both the specialized knowledge and the character required to represent clients in a competent, diligent and careful manner. Under this system, lawyers are authorized to hold themselves out as being uniquely qualified to manage their clients' legal affairs, a task that unquestionably includes the commencement of lawsuits. While it is true that the State also licenses nonlawyers to perform certain discrete, law-related tasks such as service of process (see, General Business Law art 8), the existence of that licensing system certainly does not evince a governmental intent to 277*277 relieve attorneys of the responsibilities implicit in their franchise."

From Goldstein:   In the present matter, where there is no allegation that SKP was negligent in choosing JDM, where there is no non-delagable duty, or dangerous condition, the attorney defendants are not liable for JDM's alleged negligence iri preparing the report.  Plaintiff has made no allegations which would establish that SKP I should be held vicariously liable for JDM's  mistake. There is no showing that the attorney defendants' negligence was the proximate cause of plaintiff's injuries, or that "but foru their handling of any duty owed to plaintiff, plaintiff would not have
been injured. Consequently, the attorney defendants' motion to dismiss the complaint is granted."
'

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Departure? Yes, but no Ascertainable Damages Shown

Plaintiffs inIsaacson v Law Off. of Norman L. Horowitz, LLC    2013 NY Slip Op 32598(U) October 18, 2013;  Supreme Court, New York County;  Docket Number: 112174/2010;  Judge: Joan A. Madden were commercial tennants who became disenchanged with the building after a big burglary.  They had a 'good guy" guarantee, and attempted to terminate their lease without penalty.  This attempt did not turn out well.  However, Supreme Court held that they could not prove exactly how the landlord would have handled the case, and could not show ascertainable damages.
 

"Upon instruction from defendants, plaintiffs sent the landlord written notice that they were vacating the premises as of July 31, 2009, with a line for the landord to countersign.  The landlord refused to do so, notifying plaintiffs of this fact in a letter to defendants, where the landlord also declined to accept surrender of the lease, and instructed defendants that the landlord would hold plaintiffs to their rent obligations.

Defendants apparently did not inform plaintiffs of this letter and continued to advise plaintiffs to move forward with vacating the premesis.

Plaintiffs retained their present counsel after the decision was rendered. On June 25, 2010, the court entered an order and judgment awarding the landlord $851,618.27 against the tenants,
representing unpaid rent, interest and penalties. An award of $595,235.92 was rendered against the guarantors, under the guaranty. However, plaintiffs' new counsel eventually negotiated
a settlement of the entire matter for $500,000. In the present action, commenced on September 15, 2010,plaintiffs seek damages against defendants on the ground that, but for defendants' faulty advice, plaintiffs could have settled with the landlord before vacating the premises, and before the
commencement of any lawsuits, at a much lower figure than the $500,000 settlement amount which was eventually reached. In the present motion, defendants move to dismiss the
complaint, on the ground that plaintiffs cannot prove that they would have fared better in settling the amount had they not heeded defendants' advice."

"If proximate cause is not established, the action must be dismissed "regardless of whether it is demonstrated that the attorney was negligent." Schwartz v Olshan Grundman Frome & Rosenzweig, 302 AD2d at 198. Moreover, the damages claimed for legal malpractice must be "actual and ascertainable" resulting from the proximate cause of the attorney's negligence. Ressis v. Wojick, 105 A.D.2d 565, 567 (3d Dept 1984), lv. denied 64 N.Y.2d 609 (1985)

Plaintiffs cannot prove that "but for" defendants' advice they would have settled for less than $500,000. Specifically, there is no proof available that would show that the landlord would have discounted the rent in any amount, less a  specific amount, such as 41%. Moreover, contrary to plaintiffs' position any testimony by the landlord's representative would be insufficient to establish actual and ascertainable damages as he would be speculating as to what the landlord might  have done years earlier."

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Legal Malpractice Unavailing and Now Enjoined

Here is a case in which the attorney has successfully shut down plaintiff's case, plaintiff's future cases, and in general, plaintiff himself.  It's rare that defendant scores a victory so comprehensive.  The Appellate Division, and earlier, Justice Ling-Cohan in Banushi v Law Off. of Scott W. Epstein  2013 NY Slip Op 06930   Decided on October 24, 2013   Appellate Division, First Department    found plaintiff's case most unworthy.

"Notwithstanding the public policy requiring free access to the courts, the motion court's order barring plaintiff from initiating further litigation or motion practice against defendants without prior court approval unless he is represented by counsel was justified by plaintiff's continuous and vexatious litigation against defendants (Matter of Robert v O'Meara, 28 AD3d 567 [2d Dept 2006], lv denied 7 NY3d 716 [2006]; Capogrosso v Kansas, 60 AD3d 522 [1st Dept 2009], cert denied ___ US ___, 133 S Ct 278 [2012]; see also Melnitzky v Apple Bank for Sav., 19 AD3d 252, 253 [1st Dept 2005]). Among other things, in addition to the instant action, plaintiff filed a lawsuit in state court and a lawsuit in federal court and a counterclaim in a third suit, as well as a disciplinary complaint, all alleging legal malpractice based on the same sparse allegations, and all unavailing.

Contrary to plaintiff's contentions, the order is not overly broad; it granted the part of defendants' motion that sought injunctive relief only as to litigation against them. "

 

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How Many Legal Malpractice Cases Will Follow the Bello Resignation?

Thomas F. Bello, an attorney from Staten Island is well known, and had many many clients. This week his resignation and disbarrment was accepted by the Appellate Division, Second Department.  What is shocking is the number of clients who had made complaints against him, and how long it took to resolve the matter.  Matter of Bello   2013 NY Slip Op 06859   Decided on October 23, 2013   Appellate Division, Second Department   Per Curiam. is worth reading to see how many clients he let down. 
 

"PER CURIAM.The Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts served a petition and supplemental petition on the respondent. Following a preliminary conference held on December 28, 2011, and a hearing conducted in nine separate sessions in 2012, the Special Referee sustained all six charges, concluding that the respondent "neglected the legal matters entrusted to him, . . . failed to adequately communicate with his clients, . . . failed to comply with court directives, and . . . failed to honor a stipulation to which he agreed." The Grievance Committee now moves to confirm the report of the Special Referee and for the imposition of such discipline as the Court deems just and proper. The respondent has now submitted an affidavit sworn to February 25, 2013, wherein he tenders his resignation as an attorney and counselor-at-law (see 22 NYCRR 691.9), and cross-moves for its acceptance, and the striking of his name from the roll of attorneys. In his affidavit, the respondent acknowledges, in essence, that he cannot successfully defend himself against the merits of the charges.

Charge one, as amended, alleges that the respondent engaged in a pattern of neglecting legal matters entrusted to him, in violation of former Code of Professional Responsibility DR 6-101(a)(3) and DR 1-102(a)(7) (22 NYCRR 1200.30[a][3]; 1200.3[a][7]). Between 2004 and 2010, [*2]the respondent was retained to represent 19 different clients, and thereafter failed to diligently pursue those matters with respect to each of them.

Charge two alleges that the respondent engaged in a pattern of failing to maintain adequate communications with his clients, in violation of former Code of Professional Responsibility DR 6-101(a)(3) and DR1-102(a)(7) (22 NYCRR 1200.30[a][3]; 1200.3[a][7]). Between in or about 2001 and 2010, the respondent was retained to represent 18 different clients, and thereafter failed to adequately respond to those clients' inquiries with respect to their cases.

Charge three alleges that the respondent failed to comply with numerous court directives, in violation of former Code of Professional Responsibility DR 1-102(a)(5) and (7) (22 NYCRR 1200.3[a][5], [7]). In or about December 2007, the respondent was retained to represent Tony Chin in a legal matter. In or about 2008, the respondent commenced an action on Mr. Chin's behalf, entitled Chin v U. S. Postal Service, in the United States District Court for the Eastern District of New York. Although twice directed by the court to provide it with a status letter/report, the respondent failed to do so. The respondent also failed to comply with two orders directing the plaintiff to file, inter alia, affidavits of proper service on the defendant on or before December 22, 2008. By order dated June 16, 2009, the court dismissed the action, in view of the respondent's "pattern of delay and inexplicable noncompliance."

Charge four, as amended, alleges that the respondent engaged in a pattern of neglecting legal matters entrusted to him. Between 1999 and 2010, the respondent was retained by five clients. Thereafter, the respondent failed to diligently pursue their legal matters, in violation of former Code of Professional Responsibility DR 6-101(a)(3) and DR 1-102(a)(7) (22 NYCRR 1200.30[a][3]; 1200.3[a][7]).

Charge five, as amended, alleges that the respondent engaged in a pattern of failing to maintain adequate communications with his clients. Between 1999 and 2010, the respondent was retained to represent six clients. Thereafter, the respondent failed to adequately respond to inquiries made by these clients with respect to their legal cases, in violation of former Code of Professional Responsibility DR 6-101(a)(3) and DR 1-102(a)(7) (22 NYCRR 1200.30[a][3]; 1200.3[a][7]).

Charge six alleges that the respondent failed to timely satisfy the terms of a settlement agreement, in violation of former Code of Professional Responsibility DR 1-102(a)(5) and (7) (22 NYCRR 1200.3[a][5], [7]). In or about 2008, the respondent was sued for legal malpractice in the Supreme Court, Richmond County, in a matter entitled Hayes v Bello. In or about February 2011, the respondent executed a settlement agreement, in which he agreed to pay the total sum of $25,000 to the plaintiff, as follows: "$5,000.00 within 90 days, and balance with [sic] 6 months thereafter." To date, the respondent has failed to satisfy the terms of the agreement.

The respondent acknowledges that his resignation is tendered freely and voluntarily, that he is not subject to coercion or duress, and that he is fully aware of the implications of its submission. He further acknowledges that the Court has the power to disaffirm the Special Referee's report or issue discipline that could range from a public censure, to suspension, or disbarment. Nonetheless, he requests that the Court accept his resignation and strike his name from the roll of attorneys.

 

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Plaintiff Unable to Show Proximate Cause

There are three (or perhaps four) elements of legal malpractice.  They are a departure from good and accepted practice, which proximately causes damage to plaintiff, "but for" which there would have been a better or different result, with ascertainable damages.  in Cobble Cr. Consulting, Inc. v Sichenzia Ross Friedman Ference LLP 2013 NY Slip Op 06820;  Decided on October 22, 2013 ; Appellate Division, First Department we see a decision which affirms dismissal on the basis that plaintiff cannot show how any negligence was the proximate cause of their damage. 
 

"The motion court properly dismissed the claim of legal malpractice, as plaintiffs failed to allege how any negligence was the proximate cause of their damages (see O'Callaghan v Brunelle, 84 AD3d 581, 582 [1st Dept 2011], lv denied 18 NY3d 804 [2012]; McLoughlin v Sullivan Papain Block McGrath & Cannavo, P.C., 18 AD3d 245, 246 [1st Dept 2005], lv denied 5 NY3d 709 [2005]). The motion court considered plaintiffs' allegations, quoted in its decision, that defendant acted in a manner contrary to its discussions with plaintiffs by assisting the subject corporation in eliminating the Preferred A shares. As the motion court noted, plaintiffs alleged only that the parties had discussed, and defendant failed to include, a provision in the Certificate of Designation that prevented changes in the common stock structure from affecting the conversion rate of plaintiffs' Preferred A Stock. Plaintiffs did not challenge the inclusion of language in the Certificate of Designation that allows changes in the value or voting rights of Preferred A shares by a majority vote of Preferred A shareholders. The complaint reveals that a vote held pursuant to this latter provision is what altered the conversion ratio, allegedly rendering plaintiffs' stock virtually worthless. Thus, inclusion of the anti-dilution provision plaintiffs cite would not have altered the result. Accordingly, plaintiffs failed to set forth facts showing that, but for defendant's conduct, plaintiffs would not have incurred any damages.

Plaintiffs further alleged, without elaborating, that defendant failed to advise them to seek independent counsel at any time. Plaintiffs failed to allege how this omission proximately caused their injuries. Any claim that independent counsel could have negotiated a provision prohibiting changes to the Certificate or any changes to the conversion ratio, even upon a majority vote, or could have insulated plaintiffs from incurring any losses upon a conversion, is speculative."

 

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Could This Case Turn Into a Rare Criminal Legal Malpractice Case?

Legal malpractice in the criminal defense sphere does not, for the most part, exist.  Under well settled Court of Appeals cases a criminal defendant may not successfully sue the criminal defense attorney for legal malpractice absent "actual innocence", which is generally defined as acquittal, reversal or exoneration.  Britt v. Legal Aid Socy, 95 NY2d 443 (2000) ; Carmel v. Lunney, 70 NY2d 169 (1987).  Here is case where plaintiff might make an appropriate showing.

InPeople v Clermont;  2013 NY Slip Op 06806;   Decided on October 22, 2013;  Court of Appeals  we see a case which might be one of the rare possible candidates, if the gun is suppressed on remand.
 

"Defendant was charged with weapon possession offenses after he was found in possession of a gun as a consequence of a street encounter with the police. Three days before the suppression hearing, his assigned counsel made an application to be relieved as counsel, stating that his associate had quit, he was overwhelmed with work and could not competently represent defendant. Counsel restated these concerns on the record before the hearing commenced and the court stated that the motion would be granted after counsel completed the hearing. Thereafter, the hearing ensued, the court denied suppression, new counsel was appointed and the case proceeded to trial where defendant was convicted of criminal possession of a weapon in the second and third degrees.

On appeal, defendant sought reversal of his conviction based on the ineffective assistance of his first attorney. The Appellate Division affirmed the judgment in a divided decision. The majority concluded that counsel's representation had not fallen below the constitutional standard but the dissent disagreed, reasoning that multiple errors by the attorney in relation to defendant's suppression application warranted remittal of the case to Supreme Court. The Appellate Division dissenter granted defendant leave to appeal to this Court.

We agree with the dissent that defendant is entitled to relief. In his written motion requesting a hearing, counsel misstated the facts relating to the arrest, indicating that defendant had been involved in a motor vehicle stop rather than a street encounter with police. At the suppression hearing, the attorney did not marshal the facts for the court and made no legal argument. This, coupled with his failure to make appropriate argument in his motion papers or to submit a post-hearing memorandum, meant that the defense never supplied the hearing court with any legal rationale for granting suppression. Moreover, after the court issued a decision describing the sequence of events in a manner that differed significantly from the testimony of the police officer (the only witness at the hearing) and was adverse to the defense, defendant's attorney made no motion to reargue or otherwise correct the court's apparent factual error. Counsel never ascertained whether the court decided the motion based on the hearing proof or a misunderstanding of the officer's uncontradicted testimony.

And this is not a case where any of these errors can be explained as part of a strategic design (assuming one could be imagined), given that defense counsel asked to be relieved, informing the court that he was unable to provide competent representation to defendant. Thus, although the attorney secured a hearing, his representation in relation to the application as a whole was deficient in so many respects — both before, during and after the proceeding — that defendant was not afforded meaningful representation at a critical stage of this [*3]prosecution. "

From the Rivera Dissent:

 

"Defendant was arrested and charged with criminal possession of a weapon. Prior to defendant's trial, counsel moved as part of an omnibus motion to suppress the weapon, a gun seized shortly after defendant's arrest. However, in that branch of defendant's omnibus motion that sought suppression of physical evidence, counsel recited a wholly different factual scenario from the events actually leading up to defendant's arrest and the seizure of the gun. Counsel incorrectly stated that police officers approached defendant while he was seated in an automobile, and that after they forcibly removed him from the vehicle, a gun fell out onto the ground. This was a complete fiction. The correct facts were that the officers had observed defendant walking on the street, arrested him after a chase on foot, and seized the gun from a [*4]private yard near where he was arrested. Additionally, because counsel's legal argument was based on these incorrect facts, he also failed to tailor the legal standards to the specifics of defendant's case. Although counsel's motion papers stated that he was "unaware of many of the relevant facts necessary to [his] preparation of the defense," and requested permission to submit a post-hearing memorandum, "so that [he] might more effectively represent the interests of [defendant]," he never filed such memorandum.

In order to justify police pursuit, the officers must have "reasonable suspicion that a crime has been, is being, or is about to be committed" (People v Holmes, 81 NY2d 1056, 1058 [1993]). Reasonable suspicion encompasses a "quantum of knowledge sufficient to induce an ordinarily prudent and cautious [person] under the circumstances to believe criminal activity is at hand" (People v Martinez, 80 NY2d 444, 448 [1992][citation omitted]). We have found that "[f]light, combined with other specific circumstances indicating that the suspect may be engaged in criminal activity, could provide the predicate necessary to justify pursuit" (Holmes, 81 NY2d at 1058). "Flight alone, however, or even in conjunction with equivocal circumstances that might justify a police request for information is insufficient to justify pursuit" (id.[citations omitted]).

Nearly two decades ago, in a case on all fours with the present appeal, we held that flight in combination with a defendant grabbing at his waistband, "does not support a determination that the officers had reasonable suspicion to pursue defendant" (see People v Sierra, 83 NY2d 928, 930 [1994]). In Sierra, we found no reasonable suspicion to pursue a fleeing defendant where "the officers knew only that, after exiting from the back seat of a livery cab that had been stopped for defective brake lights, defendant grabbed at his waistband" (id. [emphasis added]).


Years later, we reiterated that flight must be accompanied by other suggestive conduct in order to support reasonable suspicion justifying a seizure (People v Pines, 99 NY2d 525,526 [2002][citing Martinez, 80 NY2d at 447-48]). In Martinez, we acknowledged that the "[d]efendant had a right to refuse to respond to a police inquiry and his flight when officers approached could not, in and of itself, create a reasonable suspicion of criminal activity" (id. at 448 [citation omitted]). Only after aggregating other compelling circumstances—namely that defendant was observed "removing an instrument known to the police to be used in concealing drugs"—did we find reasonable suspicion (id.) "


 

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When Might Their Lawyer be Your Lawyer?

Mr. San LLC v Zucker & Kwestel LLP ; 2012 NY Slip Op 32119(U);  Sup Ct, Nassau County Docket Number: 601065/11;  Judge: Stephen A. Bucaria is an interesting example of the "whose lawyer is it" question that frequently arises in the formation of new businesses.

"This is an action for aiding and abetting fraud. Plaintiffs invested substantial amounts of money with Gershon Barkany who held himself out as a financial advisor and real estate investor. Plaintiffs allege that Barkany represented that the money was to be used to fund real estate loans and other investments but Barkany was actually running a Ponzi scheme. Plaintiffs further allege that Barkany presented defendants Zucker & K westel LLP and Steven K westel as his attorneys in connection with the sham real estate transactions, and the firm accepted wire transfers of plaintiffs ' funds into its escrow account."

"Absent fraud, collusion, malicious acts, or other special circumstances, an attorney is not liable to third parties, for harm caused by professional negligence, unless there is a relationship sufficiently approaching privity between the attorney and the alleged client Schneider v Finman 15 NY3d 306 309 (2010)). This rule protects attorneys from legal malpractice suits by indeterminate classes of plaintiffs whose interests may be at odds with the interests of the acknowledged client (Id). Since an attorney-client relationship does not depend upon a formal retainer agreement or upon payment of a fee, the court must look to the words and actions of the parties (Moran v Hurst 32 AD3d 909, 911 (2d Dept 2006)). The unilateral belief of a plaintiff alone does not confer upon him or her the status of a client (Id). Plaintiffs allege that Barkany presented defendants as his attorneys, rather than the attorneys for the plaintiffs. An attorney for an organization is not the attorney for its members (Professional Conduct Rule 1. 13). However, it appears that no company had been formed at the time that plaintiffs made their investment. At the time that plaintiffs invested
their funds, their interests seemed aligned with Barkany , at least as to the expected profitability of the venture. Moreover, the fact that Kwestel borrowed money from Barkany suggests that there may have been collusion between client and attorney and perhaps even knowledge on Kwestel' s part as to Barkany s fraud upon the plaintiff. In these circumstances, the court must give plaintiffs the benefit of the possible favorable inference that an attorney-client relationship arose when defendants accepted plaintiffs ' money into their escrow account. Defendants' motion to dismiss plaintiffs ' malpractice claim for a defense founded upon documentary evidence and failure to state a cause of action is denied. Fiduciary liability is not dependent solely upon an agreement, but results when one of the parties is under a duty to act for or give advice for the benefit of the other upon matters within the scope of the relationship EBC I, Inc v Goldman Sachs 5 NY3d 11 , 19-
(2005)). An attorney for a limited liability company may have a fiduciary duty towards an individual member, at least with respect the member s share of distributions of the company's profits Kurtzman v Burgol 40 AD3d 588 (2d Dept 2007)). As noted, it appears that no company had been formed at the time that plaintiffs made their investment. Nevertheless, having accepted plaintiffs ' money into escrow , defendants may have had a fiduciary duty to make sure that the funds were applied to the real estate investment. Defendants' motion to dismiss plaintiffs ' breach of fiduciary duty claim for a founded upon documentary evidence and failure to state a cause of action is denied."
 

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A Large Amount of Money is Lost. Will Legal Malpractice Claims Follow?

We saw Margin Call.       Dexia SA/NV v Morgan Stanley  013 NY Slip Op 51696(U); Decided on October 16, 2013; Supreme Court, New York County; Bransten, J. is the litigation that might have followed the events in Margin Call.

Admittedly there is no legal malpractice claim in Dexia.  We wonder what will happen now that the Court has determined that the assignment of certificates in this mega multi-million dollar transaction laced the right to sue for fraud. 

"n this action for common-law fraud, aiding and abetting fraud, and fraudulent inducement, defendants Morgan Stanley ("MS"), Morgan Stanley & Co., Inc. ("MS & Co."), Morgan Stanley ABS Capital I Inc. ("MSAC"), Morgan Stanley Capital I Inc. ("MSC"), Morgan Stanley Mortgage Capital Inc. ("MSMC"), and Morgan Stanley Mortgage Capital Holdings LLC bring the instant motion to dismiss the amended complaint, pursuant to CPLR 3211. Defendants contend that plaintiffs lack standing to bring fraud claims and that plaintiffs have not pled the requisite elements to state a cause of action sounding in fraud. Plaintiffs FSA Asset Management LLC ("FSAM"), Dexia SA/NV, Dexia Holdings, Inc. ("DHI"), and Dexia Crédit Local SA ("DCL") oppose the motion.

[*2]I.Background

This action concerns 29 residential mortgage-backed securities ("RMBS"), which FSAM purchased from MS & Co in 2006 and 2007, for a total of $626 million. On June 30, 2009, FSAM assigned the securities to Dexia SA/NV, DHI, and DCL for face value, via a put option transaction. By the time this instant action was filed, all 29 RMBS at issue had been downgraded to "junk" status.

Investors in RMBS receive payments from the cash flow generated by thousands of mortgages, which have been deposited into designated pools. The actual securities held by the investor are pass-through participation certificates, which are an ownership interest in the issuing trust, the entity that holds the pools.

The first step in the securitization process is the creation of a pool of designated mortgages by the sponsor. The mortgages can be originated by the sponsor itself, purchased from other financial institutions, or be a mixture of self-originated and purchased loans. Before creating the pool, the sponsor reviews a sample of the mortgages in order to verify that they comport with underwriting guidelines.

After the pool of designated mortgages has been created by the sponsor, the mortgages are transferred to the depositor. The depositor carves up the projected cash flow from the mortgages into tranches; the tranches are ordered by seniority on the basis of risk, thus, any losses in the loan pool are applied to the junior (riskiest) tranches first. Once the tranche structure has been finalized, the proposed security is sent to rating agencies for evaluation. Next, the depositor transfers the mortgage pool to the issuing trust, which issues participation certificates for each tranche. The issuing trust then conveys the participation certificates to the depositor as consideration for the mortgages.

Once the depositor is in possession of the participation certificates, the underwriter will begin marketing the RMBS to potential investors, providing them with free writing prospectuses and term sheets. The depositor then transfers the certificates to the underwriter, who will sell them to investors and remit the proceeds to the depositor, minus underwriting fees.

In this action, MS & Co. underwrote and sold all the RMBS in dispute, MSMC was the sponsor of 15 of the 21 securitizations, MSAC served as depositor for 17 of the securitizations, and MSC served as depositor for three of the securitizations.

Plaintiffs allege they were fraudulently induced into purchasing the RMBS by defendants. Specifically, plaintiffs allege defendants misrepresented the due diligence and underwriting standards on the underlying mortgages, misrepresented the loan to value ("LTV") ratios of the mortgaged properties, and misrepresented the debt to income ("DTI") ratios of the borrowers. Plaintiffs further contend that defendants misrepresented the risks associated with the RMBS in general, and made misrepresentations to rating agencies, resulting in artificially high ratings. Plaintiffs assert that in reliance on defendants' misrepresentations, they were damaged by paying far more for the RMBS than they were worth. Plaintiffs pray for compensatory, rescissory and punitive damages, as well as costs and expenses incurred in this action. "

"Furthermore, plaintiffs' own pleadings contradict their assertion that FSAM intended to assign fraud claims, in that they allege that "[t]he Dexia Plaintiffs could not have uncovered Morgan Stanley's fraud until 2011, at the earliest, regardless of the amount of due diligence that they performed." (Am. Compl. ¶ 259.) It is unclear how FSAM could have intended to convey fraud claims of which it was not aware, and were not discoverable for a year and a half after the assignment. "It is manifest that the plaintiff did not intend to assign the cause of action . . . because neither at the time of the assignment, nor of the execution of the conveyance, had the plaintiff discovered the fraud." Fox, 157App. Div. at 368. If FSAM had intended to assign fraud claims which they had not yet discovered, it could have included express language to that effect.

The court concludes that FSAM did not assign fraud claims to assignee-plaintiffs Dexia SA/NV, DHI and DCL; to the extent any fraud claims exist, they remain with FSAM alone. "

"In an action for fraud, "[t]he true measure of damage is indemnity for the actual pecuniary loss sustained as the direct result of the wrong or what is known as the out-of-pocket' rule." Lama Holding Co. v. Smith Barney, 88 NY2d 413, 421 (1996) (internal quotation marks and citations omitted). "Damages are to be calculated to compensate plaintiffs for what they lost because of the fraud, not to compensate them for what they might have gained." Id. FSAM sustained no losses on the RMBS it purchased; it received exactly the purchase price upon the sale to the Dexia plaintiffs. There is also no allegation that pass-through payments due to FSAM as holders of the participation certificates were missed. To the extent FSAM did receive pass through payments, the RMBS were profitable to them, and there can be no claim of damages. See Jung Hing Leung v. Lotus Ride, 198 AD2d 155, 156 (1st Dep't 1993).

Even if the court is to accept as true that there have been material misrepresentations, scienter, and justifiable reliance by FSAM, without damages, the claims must be dismissed. [*6]Deception without damages is not actionable, nor is deception, in and of itself, a legally cognizable injury. Small v. Lorillard Tobacco Co., 94 NY2d 43, 56-57 (1999). "


 

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Waiting Too Long In a Legal Malpractice Case

While one might expect that this article is about a statute of limitations question, it is about both moving too fast and waiting too long in a motion for summary judgment.  Imagine the tensions that exist for defense counsel in legal malpractice litigation.  They want the case to end, yet, must amass enough evidence to support a motion.  They want to save legal fees in the defense, yet must spend money to win.  Beyond that, there is a one-summary judgment rule.  You may not move over and over for summary judgment.  What is one to do?

Vinar v Litman 2013 NY Slip Op 06675  Decided on October 16, 2013  Appellate Division, Second Department  is an example of moving too fast (prior to Plaintiff's deposition) and waiting too long (the one motion rule.)
 

"The plaintiff commenced this action alleging, inter alia, legal malpractice, fraud, and conversion. The defendants Honig, Mongioi, Monahan and Sklavos LLP, Edward H. Honig, Robert Anthony Monahan, Mary E. Mongioi, Alexander E. Sklavos, Monahan & Sklavos, P.C., and Alexander E. Sklavos, P.C. (hereinafter collectively the attorney defendants) moved for summary judgment dismissing the complaint insofar as asserted against them. The Supreme Court concluded that their motion for summary judgment constituted their second motion for that relief, and denied it on the ground that they failed to identify the specific new evidence or sufficient cause that would justify the making of a successive summary judgment motion. On appeal, the attorney defendants contend, inter alia, that the court erred in denying their motion since their second summary judgment motion was premised on new evidence that was unavailable at the time of their initial motion.

"Generally, successive motions for summary judgment should not be entertained, absent a showing of newly discovered evidence or other sufficient cause" (Sutter v Wakefern Food Corp., 69 AD3d 844, 845; see Coccia v Liotti, 101 AD3d 664, 666; Powell v Trans-Auto Sys., 32 AD2d 650; Levitz v Robbins Music Corp., 17 AD2d 801). Although, in this context, newly discovered evidence may consist of "deposition testimony which was not elicited until after the date of a prior order denying an earlier motion for summary judgment" (Auffermann v Distl, 56 AD3d 502, 502; see Coccia v Liotti, 101 AD3d at 666; Alaimo v Mongelli, 93 AD3d 742, 743; Staib v City of New York, 289 AD2d 560), such evidence is not "newly discovered" simply because it was not submitted on the previous motion (Sutter v Wakefern Food Corp., 69 AD3d at 845). Rather, the evidence that was not submitted in support of the previous summary judgment motion must be used [*2]to establish facts that were not available to the party at the time it made its initial motion for summary judgment and which could not have been established through alternative evidentiary means (see Pavlovich v Zimmet, 50 AD3d 1364, 1365; Capuano v Platzner Intl. Group, 5 AD3d 620, 621; Rose v La Joux, 93 AD2d 817, 818; Graney Dev. Corp. v Taksen, 62 AD2d 1148, 1149; Harding v Buchele, 59 AD2d 754, 755; Abramoff v Federal Ins. Co., 48 AD2d 676; Powell v Trans-Auto Sys., 32 AD2d 650). Indeed, "successive motions for summary judgment should not be made based upon facts or arguments which could have been submitted on the original motion for summary judgment" (Capuano v Platzner Intl. Group, 5 AD3d at 621; see Harding v Buchele, 59 AD2d at 755).

Here, contrary to the contention of the attorney defendants, the plaintiff's deposition testimony did not constitute newly discovered evidence. Although the plaintiff's deposition was elicited after the prior summary judgment motion was denied, the purported new facts established by the plaintiff's deposition testimony could have been asserted by the attorney defendants in support of their previous motion. The purported new facts pertained to matters about which the individual attorney defendants had personal knowledge, and could have been established through alternative evidentiary means..."
 

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What May Plaintiff's Attorney Do in Response to an Arons Interview Request?

While not exactly legal malpractice-centric, the question of how plaintiff's and defendant's attorneys prepare for a medical malpractice case does touch on whether either is departing from good and accepted practice of law. 

The dispute is easily set forth.  Under Arons v. Jutkowitz,  9 NY3d 393 (2007), Defense counsel were permitted private interviews with treating physicians.  Plaintiffs were required to provide HIPPA authorizations permitting the interviews.

In Charlap v Khan  2013 NY Slip Op 23349   Decided on October 11, 2013  Supreme Court, Erie County  Curran, J. plaintiff's attorney wrote to the doctors in an attempt to mitigate the effects of a private conversation between defense counsel and the physician.  Plaintiff's attorney wrote: "I am writing to you regarding a lawsuit that has been commenced on behalf of my late wife, Lisa Charlap, which is listed above. The attorneys for the defendants in this lawsuit have indicated that they intend to contact you, and will attempt to meet with you to discuss the medical treatment you have provided, and perhaps other issues that relate to this lawsuit.
Although I am required to provide these defense lawyers with a written authorization permitting them to contact you, the law does not obligate you in any way to meet with them or talk with them. That decision is entirely yours. If you decide to meet with their lawyers, I would ask that you let me know, because I would like the opportunity to be present or to have my attorneys present."

is this permissible?  Is it a departure from good practice for a plaintiff's attorney not to send such a letter? 

Supreme Court, in this case, held: "Arons did not establish a common law right to conduct a private interview of a non-party witness. To insist that plaintiff's counsel not request of a witness to be present at defense counsel's interview is to assert that a plaintiff has a duty to forbear from doing so. Arons did not impose any such duty. Further, any insistence that plaintiff's counsel has such a duty is the equivalent of demanding that plaintiff's counsel forebear from representing his or her client with "competence" (Rule 1.1) and "diligence" (Rule 1.3), as required by the Rules. The assertion of one person's legal right in a court of law should be understood in the adversarial process as ordinarily limiting the rights of the adverse party or imposing a duty thereon. Arons did no such thing in merely indicating that an attorney "may" conduct interviews.

For these reasons, this Court concludes that Arons did not create a "right" to conduct private interviews of non-party witnesses.[FN6] The absence of such a "right" does not, however, mean that the process of non-party witnesses being interviewed by attorneys is without boundaries."

"The Court concludes that the letter which is the subject of this motion does not cross the boundaries set by the Rules. The letter does not advise the witness to do anything [*13]improper under the Rules. It does not even express a preference that the witness not meet with the adversary, which in any event would be permissible under Op. 2009-5. Rather, at most, it is a request to be present during an interview, a request which may or may not be honored by the witness. For these reasons, the Court denies the motions but declines to opine at this time as to whether the letter may be used for credibility purposes during cross examination of the plaintiff (see e.g. David B. Harrison, Annotation, Admissibility and Effect, on Issue of Party's Credibility or Merits of His Case, of Evidence of Attempts to Intimidate or Influence Witness in Civil Action, 4 ALR 4th 829). "

 

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Judiciary Law 487, Sexual Abuse and Advocacy

A shockingly large number of educational institutions in New York and all over the country are now facing their history of teacher-student sexual abuse.  Horace Mann, Brown & Nichols, Poly Prep.  Each have had their past investigated, and in many instances come up short. 

What of the law firms that represented these schools?  Are they responsible for wrongful acts, especially in the nature of deceit?  If they forcefully defended the schools, can they now be held to have violated Judiciary Law 487?

In Zimmerman v. O'Melveny & Myers, LLP we see the competing arguments.  As reported in today's New York Law Journal, by Andrew Keshner  " O'Melveny & Myers, fighting to dismiss a state suit brought by alumni of an elite Brooklyn prep school that was represented by the firm in a prior federal action, said the alumni cannot sue the firm with "previously abandoned" claims of purported deception on the courts.

In December, 10 Poly Prep Country Day School alumni and two former summer camp participants settled a closely-watched Eastern District lawsuit stemming from alleged decades of abuse by the school's football coach, Philip Foglietta, now deceased, and the school's concealment of the actions.

Less than a year after the confidential settlement, many of the same plaintiffs sued O'Melveny and Jeffrey Kohn, the New York managing partner, in Manhattan Supreme Court. Pointing to state Judiciary Law §487—which forbids attorneys' "deceit or collusion, with intent to deceive the court or any party"—the alumni said the defendants should be held accountable for "their grievous and oft-repeated falsehoods" when defending the school in the federal suit (NYLJ, Aug. 15)."

""After settling an earlier federal court litigation on confidential terms, Plaintiffs are now seeking more money by bringing a new action in which they repeat spurious allegations that the defense lawyers made 'misrepresentations' in the earlier action. Plaintiffs made—and then voluntarily abandoned—the identical allegations in the earlier federal proceedings. Plaintiffs' improper attempt to revive in a new action the allegations they previously abandoned fails as a matter of law for several reasons," O'Melveny said in Zimmerman v. Kohn, 652826/2013."

 

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The Death of a Legal Malpractice Case

We often wonder whether legal malpractice cases are subject to a higher form of scrutiny, although it may also be true that mistakes are more often made by attorneys in their worst (underlying) cases.  In any event sometimes a legal malpractice case goes to the jury on the real question of whether plaintiff could have prevailed in the underlying case (the "but for" issue) and sometimes the legal malpractice case is ended at the motion stage. Here is one that was ended early.

Magidson v Badash ; 2012 NY Slip Op 00935 ;  Appellate Division, Second Department is a legal malpractice case in which the underlying matter remains undescribed. The legal malpractice suffered from infirmities in the underlying case, and failed the "but for" problem.
 

"The complaint failed to state a cause of action to recover damages for legal malpractice because the plaintiff neglected to plead that she would have prevailed in the underlying action, commenced in the Supreme Court, New York County, but for the defendants' alleged malpractice in failing to file certain motions and appeal from certain orders issued in that action (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442; Kuzmin v Nevsky, 74 AD3d 896, 898; see also Weiner v Hershman & Leicher, 248 AD2d 193).

Moreover, the Supreme Court providently exercised its discretion in denying the plaintiff's cross motion for leave to amend the complaint, as the proposed amendment was patently devoid of merit. The Appellate Division, First Department, concluded that the complaint in the underlying action was properly dismissed because the plaintiff commenced that action after the applicable statute of limitations had expired (see Magidson v Otterman, 57 AD3d 264, 264), and the proposed amendment, which did not include allegations that the defendants committed malpractice by failing to timely commence the underlying action, would not alter that result (see Matter of New York County DES Litig., 89 NY2d 506, 514; Byrd v Manor, 82 AD3d 813, 815).

 

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An Arbitration, A Falling Out of Attorneys, Legal Malpractice Litigation

Two mega law firms work together to present the case of an attorney against his former partnership. The arbitration goes badly, expert witnesses are precluded and the award is not good for plaintiff.  Shortly thereafter law firm 1 starts a legal malpractice action against law firm 2.  Needless to say, relations between them do not proceed smoothly.

Roberts v Corwin   2013 NY Slip Op 51637(U)   Decided on October 3, 2013   Supreme Court, New York County   Friedman, J. illustrates the fall-out after unsuccessful litigation. 
 

"Mr. Roberts retained Greenberg Traurig to represent him in an arbitration against the firm he founded, Roberts & Finger, LLP. The arbitration panel issued an adverse interim award on May 11, 2006, finding that Mr. Roberts "failed to establish a prima facie case [*2]that he has suffered any damage as a result of the manner in which the dissolution of Rogers & Finger LLP was carried out." (Interim Award, ¶ 10.) The panel's determination was based in pertinent part on Mr. Roberts' failure to present expert testimony as to the value of the law firm and its assets. (Id., ¶¶ 8, 9, 10.) Mr. Roberts retained Epstein Becker to serve as co-counsel to Greenberg Traurig in the arbitration in May 2006, after the panel's issuance of the interim award. (May 2012 Decision at 19.) The panel issued an adverse final award on July 13, 2006, incorporating the interim award. (Final Award.) Mr. Roberts' petition to vacate the unfavorable final award was denied by order of this Court (Moskowitz, J.), dated April 3, 2007. (Sept. 2012 Decision at 4.) Mr. Roberts ultimately reached a global settlement with Roberts & Finger in August 2007. (Sept. 2012 Decision at 24; Complaint, ¶ 55.)

Shortly after the issuance of the adverse interim award, and while Epstein Becker, through Mr. Cozier, was co-counseling with Greenberg Traurig to obtain relief from the award, Mr. Roberts consulted with John Sachs, also an attorney at Epstein Becker, regarding a possible malpractice action against Greenberg Traurig.[FN1] Although the parties dispute the date as of which Epstein Becker was retained for the malpractice action, it is undisputed that Mr. Roberts consulted with Mr. Sachs as early as May 2006, and that a formal demand was not served until October 2007.[FN2] This demand, made by letter dated October 18, 2007 (Sachs Aff., Ex. 1), asserted that the arbitrators precluded expert testimony on the valuation of Mr. Roberts' partnership interest based on Greenberg Traurig's failure to disclose that it would call an expert, and that such failure constituted malpractice. This malpractice action was filed on October 30, 2009, and was also based on Greenberg Traurig's failure to disclose the expert witness.

Greenberg Traurig contends that Epstein Becker misused its position as co-counsel "to build a record against [Greenberg Traurig] to support a purported malpractice claim." (Ds.' Memo. of Law in Support at 15.) In support, Greenberg Traurig cites Mr. Corwin's testimony that he "disclosed to [Epstein Becker] and Cozier, without reservation of any kind, as I would to any of my own colleagues at [Greenberg Traurig], or to any other qualified lawyer selected by Roberts to be my co-counsel, all information that would be helpful to them in understanding the background of the case and, in particular, all aspects of the underlying arbitration." (Corwin Aff., ¶ 17.) "

"As previously noted, Epstein Becker's simultaneous representation of Mr. Roberts for purposes of both mitigating damages in the arbitration proceeding and preparing for a possible malpractice action raises ethical concerns. (See May 14, 2012 Tr. at 25-26.) However, this case does not involve the egregious conduct in obtaining confidential information through deceptive means, or an inherent conflict of interest, which has been held to require the severe remedy of disqualification.

Greenberg Traurig also relies on alleged violations of the ethical rules governing attorney conduct (22 NYCRR 1200.0) to buttress its claim that Mr. Roberts' complaint should be dismissed or Epstein Becker disqualified as his attorney. (Ds.' Memo. in Support at 18-21.) Rule 4.3, which Greenberg Traurig cites, provides that a lawyer shall not "state or imply that the lawyer is disinterested" when communicating with a person who is not represented, or give legal [*4]advice to that person. Rule 8.4 (c) and its predecessor, Disciplinary Rule 1-102, also prohibit dishonest and deceitful conduct. The court credits Greenberg Traurig's claim that Rule 4.3, which did not exist at the time of Epstein Becker's alleged misconduct, is consistent with a lawyer's " general obligation not to engage in conduct involving dishonesty, deceit, fraud, or misrepresentation.'" (Reply Memo. Of Law at 12 [quoting Roy D. Simon, Simon's New York Rules of Professional Conduct Annotated at 850 [2012]].) The court finds, however, that Rule 4.3 is not applicable to the co-counseling relationship. Rule 8.4 (c) also is not implicated because this case does not involve the type of egregious conduct that has been held to warrant disqualification or sanctions. The court further rejects Greenberg Traurig's claim that Epstein Becker violated Rule 3.1 (a) which provides that a lawyer shall not bring or defend a frivolous claim. Epstein Becker has not engaged in frivolous conduct by arguing in the arbitration proceeding that the panel should not have rejected Mr. Roberts' damages evidence, while now arguing in this malpractice action that Greenberg Traurig committed malpractice by not noticing an expert on damages. "

 

 

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Court of Appeals Re-Invigorates Dombrowski

In a decision about liability for negligent drug testing, Landon v Kroll Lab. Specialists, Inc.  2013 NY Slip Op 06597  Decided on October 10, 2013  Court of Appeals, Ch. J/   Lippman took time to restate the policy rationale for Dombrowski v. Bulson, 19 NY3d 347(2012).
 

In Landon, plaintiff "commenced this action alleging that Kroll had issued the report reflecting the positive test result both negligently and as part of a policy of deliberate indifference to his rights. The basis for his claim was that the screen test cutoff level employed by Kroll was substantially lower than that recommended by Orasure or by federal standards and that Kroll failed to disclose those differences in its report. As alleged in the complaint, the screen test cutoff level recommended by Orasure is 3.0 ng/ml and the level recommended by the United States Department of Health and Human Services Substance Abuse and Mental Health Services Administration (SAMHSA) is 4.0 ng/ml —- both of which are substantially lower than the 1 ng/ml used by Kroll. The complaint further stated that, despite applicable New York State [*3]Department of Health Laboratory Standards requiring samples to be subject to confirmatory testing through the use of gas chromatography-mass spectronomy, Landon's sample was not subject to any type of confirmation test before defendant reported a positive result. In addition, the complaint alleged that proposed revisions to SAMHSA guidelines contemplated requiring the taking of a urine sample, contemporaneous with the oral fluid sample, in order to protect federal workers from inaccurate results. The complaint maintained that Kroll knew of, and failed to disclose, the potential for false positive THC readings when oral fluid samples were tested without a simultaneous urine sample. Moreover, plaintiff alleged that the VOP petition was the result of systemic negligence in Kroll's substance abuse testing practices. He asserted that he was required to serve an extended term of probation, thereby suffering a loss of freedom, as well as emotional and psychological harm, and monetary loss in the form of attorneys' fees expended in defense of the VOP petition."
 

Of interest in legal malpractice, Judge Lippman went on to explain why defendants were wrong to rely upon Dombrowski.  "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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How A Legal Malpractice Case Can Fail

In Eighth Ave. Garage Corp. v Kaye Scholer LLP 2012 NY Slip Op 02402  Appellate Division, First Department Kaye Scholer defended itself, and obtained dismissal. Schwartz & Ponterio were unable to save the case for plaintiff.
 

The Court held that "Plaintiffs failed to allege facts in support of their claim of legal malpractice that "permit the inference that, but for defendants' [alleged negligence], [they] would not have sustained actual, ascertainable damages" (Pyne v Block & Assoc., 305 AD2d 213 [2003]). Although they maintain that as a result of defendants' negligence in failing to obtain an estoppel certificate from the landlord of the premises where the garage is located, they were unable to sell the subject parking garage, they failed to demonstrate that they would have sold the subject garage but for defendants' alleged malpractice. In any event, plaintiffs are precluded by the doctrine of collateral estoppel from litigating the issue of whether the landlord's failure to give them the certificate damaged them, as that issue was raised and decided against plaintiff Eighth Avenue Garage Corporation in a prior proceeding (Eighth Ave. Garage Corp. v H.K.L. Realty Corp., 60 AD3d 404 [2009], lv dismissed 12 NY3d 880 [2009]; see Hirsch v Fink, 89 AD3d 430 [2011]).

Supreme Court properly considered the evidence submitted on the motion, including the e-mails, which conclusively disposed of plaintiffs' claims (see Pitcock v Kasowitz, Benson, Torres & Friedman LLP, 74 AD3d 613 [2010]). Accordingly, it is of no moment that discovery has not been conducted. In addition, plaintiffs have not asserted that facts essential to justify [*2]opposition to the motion may have existed but could not be stated (see CPLR 3211[d]). "


 

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There Are Differences Between Accountants and Attorneys

Attorneys are subject to a triumvirate of claims, which may generally be: legal malpractice in tort, legal malpractice in contract and breach of fiduciary duty. Attorneys are fiduciaries of their clients, but interestingly, accountants (even CPAs) are not. In Knockout Vending Worldwide, LLC v Grodsky Caporrino & Kaufman CPA's, P.C. 2012 NY Slip Op 31855(U) Supreme Court, Suffolk County Judge: Elizabeth H. Emerson we see the distinction.

In this case business buyers claim they were defrauded when business sellers artificially inflated the value of the business through fraud. They sue sellers, sundry others, and their CPAs whom they say were hired to do the due diligence on the value of the business.

"Turning to the motion by the Kauman defendants to dismiss the second cause of action, according the plaintiffs the benefit of every possible favorable inference as a general rule, the plaintiffs have failed to state a second cause of action alleging a breach of fiduciary duty. TheCourt notes that the plaintiffs have alleged a cause of action for accounting malpractice. The existence of negligence claims, however, docs not create a fiduciary relationship between the Kaufman defendants and the plaintiffs (Friedman v Anderson, 23 AD3d 163). In general, there is no fiduciary relationship between an accountant and his client (DG Liquidation, Inc. v Anchin, Block & Anchin, 300 AD2d 70). "A conventional business relationship, without more, does not become a fiduciary relationship by mere allegation" (Friedman v Anderson, supra at 166, Oursler v Women's Interart Center, Jnc., 170 AD2d 407, 408). Here, the complaint alleges that the Kaufman defendants were the plaintiffs' personal accountants, and that the plaintiffs placed confidence in the Kaufman defendants' advice and opinions as professional accountants, consultants and advisors. However, while providing financial advice may be within the scope or an accountant's duties, and so within the definition of a conventional business relationship, the standard that plaintiffs must meet to sustain a cause of action for breach of fiduciary duty has not been met (Staffenberg v Fairfield Pagma Assoc., L.P., 2012 NY AppDiv LEXIS 3423, citing Friedman v Anderson, supra at 166; ef Lavin v Kaufman, Greenhut, Lebowitz & Forman, 226 AD2d 107). Accordingly, the Kaufman defendants' motion to dismiss the second cause of action is granted."
 

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A Cautionary Tale in Legal Malpractice

Attorneys make mistakes. Sometimes mistakes are fixed, sometimes not. Rarely do attorneys go to the length of fabricating complaints, making up stories of ongoing litigation and then running away from the disciplinary committee. We don't know what defense the attorney might offer, but this tale is both sad and shocking. The attorney in Matter of Gold; Grievance Committee for the Tenth Judicial District ; Motion No: 2011-06543 ; Slip Opinion No: 2012 NY Slip Op 61346(U)
; Appellate Division, Second Department, Motion Decision is now suspended.
 

"We find, prima facie, that the respondent is guilty of professional misconduct immediately threatening the public interest based upon his failure to cooperate with the lawful demands of the Grievance Committee for the Tenth Judicial District (hereinafter the Grievance Committee), with respect to its investigation of one complaint of professional misconduct.

On or about December 6, 2010, the Grievance Committee received a complaint against the respondent submitted by Paul Niehaus, on behalf of his client, David Goldstein. The complaint alleged that the respondent represented Mr. Goldstein in a matter entitled Goldstein v Massachusetts Mutual Insurance Company, commenced in the Supreme Court, New York County, under Index No. 113804/99. Mr. Goldstein, the plaintiff, sought, inter alia, declaratory relief that "the requirement in his disability policy that he be under a doctor's care and that monthly reports be submitted be deemed waived by defendant." By order dated May 3, 2000, the Supreme Court dismissed the complaint.

On or about February 2, 2005, the respondent commenced another action entitled Goldstein v. Massachusetts Mutual Insurance Company, in the Supreme Court, New York County, under Index No. 2515/05. The verified complaint, dated February 1, 2005, sought a declaratory judgment based, in sum and substance, on the same allegations previously alleged. By order dated August 22, 2005, the court found that the action was barred based on res judicata, as well as the applicable statute of limitations, and the matter was dismissed.

From in or about 2001 through in or about 2006, the respondent allegedly engaged in misleading and deceitful conduct by permitting his client, David Goldstein, to believe that the respondent had commenced a new action on Mr. Goldstein's behalf in 2001 (hereinafter the purported 2001 action) when, in fact, no new action had been commenced after dismissal of the first action until the commencement of the 2005 action. In response to an inquiry from David Goldstein regarding the purported 2001 action, the respondent, on or about October 29, 2004, forwarded to him copies of a purported amended summons and a purported amended verified complaint, dated November 3, 2003, and on or about January 6, 2006, forwarded to him copies of a purported summons and a purported verified complaint, dated February 12, 2001. None of those pleadings were filed. In response to another inquiry from David Goldstein regarding the purported 2001 action, the respondent, on or about May 3, 2006, forward to him copies of a purported notice of deposition and a purported verified answer, dated April 27, 2001, allegedly submitted by Michael Yoelli, of, Assail & Yoelli, LLP, on behalf of Massachusetts Mutual Insurance Company. Neither the purported notice of deposition, nor the purported verified answer, had been created, prepared or served by Michael Yoelli.

Based on the foregoing, David Goldstein commenced an action against the respondent, on or about December 20, 2006, entitled Goldstein v Gold, in the United States District Court for the Eastern District of New York, under Index No. CV-06-6707, alleging, inter alia, that the respondent had engaged in fraud and legal malpractice. In a Final Judgment by Consent dated November 4, 2010, the respondent consented to the entry of a judgment against him in the amount of $250,000.

By letter dated December 13, 2010, mailed to 5535 42nd Terrace, Vero Beach, Florida 32967 (the business address listed for the respondent with the Office of Court Administration at that time), the Grievance Committee asked the respondent to submit a written answer to the Goldstein complaint. By letter dated December 27, 2010, the respondent submitted an answer and response to a background questionaire. The answer contained another address for the respondent, to wit, P.O. Box 700148, Wabasso, Florida 32970, and the background questionnaire stated that the respondent's home address was 5535 42nd Terrace, Vero Beach, Florida 32970.

The respondent has neither opposed the Grievance Committee's motion nor submitted a any response relative thereto."


Based upon the foregoing, the motion is granted, the respondent is immediately suspended from the practice of law, pursuant to 22 NYCRR 691.4(l)(1)(i), pending further order of this Court, the Grievance Committee is authorized to institute and prosecute a disciplinary proceeding against him, and the matter is referred to a Special Referee to hear and report.
 

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A Lot of Money is Missing...Is it Legal Malpractice?

"The defendants Alisa Schiff and Schiff & Skurnik, PLLC (hereinafter together the Schiff defendants), who served as the plaintiff's attorney with respect to the drafting, and the execution by the plaintiff, of a contract to sell her home (hereinafter the contract of sale), and the defendant Michael Gross, who served as the plaintiff's attorney for the related real estate closing, failed to meet this burden. Contrary to the Supreme Court's conclusion, the Schiff defendants and Gross failed to demonstrate, prima facie, that the plaintiff did not sustain any actual or ascertainable [*3]damages as a result of their alleged negligence. The contract of sale provided that the purchase price of the plaintiff's home was $615,000, with the plaintiff to credit the purchaser with the sum of $155,000 at the closing. Approximately $241,000 of the proceeds of the sale went to satisfy the plaintiff's mortgage, and the plaintiff received approximately $216,000. The Schiff defendants and Gross failed to eliminate triable issues of fact as to the propriety of the $155,000 credit to the purchaser and other disbursements made of the proceeds, and thus, as to whether the plaintiff should have obtained more money for the sale of her home than she received. " So, in Gelobter v Fox ;2011 NY Slip Op 09268; Appellate Division, Second Department we see that both sets of defendants failed to clear themselves of potential liability.
 

"The Schiff defendants failed to meet their prima facie burden on the issue of proximate cause, as they merely established, in this respect, that they did not participate in the real estate closing. However, this fact did not negate any negligence on their part in the drafting of the contract of sale, which the plaintiff signed under Schiff's representation, and in connection with alleged alterations made to the purchase price on the contract prior to the real estate closing. In other words, as the contract of sale had already been signed and altered before the real estate closing, contrary to the Schiff defendants' contention, they did not establish as a matter of law that Gross had "a sufficient opportunity to protect the plaintiffs' rights" (Katz v Herzfeld & Rubin, P.C., 48 AD3d 640, 641), such that Schiff's conduct could not have proximately caused the plaintiff's damages. "


 

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A Pox On Both Houses in a Case Permeated Wtih Fraud

Ponzi schemes probably make bad law, in as much as everyone points the finger at everyone, and claims of fraud swirl through and through.  So it goes in Kimmel v Schon  2013 NY Slip Op 32318(U) September 26, 2013  Sup Ct, Kings County  Docket Number: 015633/2012  Judge: Bernard J. Graham.

A real estate purchase, a loan , ponzi schemes, claims of legal malpractice?  What is more interesting is the appalling lack of formality in the summary judgment practice.  Plaintiff, who is an attorney, files his own affirmation, which is rejected by the court.  The motion for summary judgment lacks the admissible evidence of a person with actual knowledge, which is its own reason to deny the motion.

"The instant motion, by which plaintiff seeks dismissal of the counterclaims and summary judgment appointing a referee to compute, is supported solely by the plaintiffs attorney's affirmation. Also provided as exhibits in support of the instant motion are (1) an affirmation of Miriam W. Hermann (Hermann), and (2) an affirmation of Kimmel. In support of plaintiffs argument disputing the Schons' assertion that Tepfer & Tepfer did not represent him at the loan closing, Hermann states that, as an attorney associated with the law firm of Ferro Labella & Zucker LLC, she represented the lender in the subject transaction, drafted the papers and attended the closing at which the Schons were represented by Tepfer & Tepfer, P.C. In addition, she states that at the closing, the borrowers signed a closing statement, and were provided with an opinion letter by Tepfer & Tepfer. In further support, stating that he is an attorney duly admitted to practice in the State of New York, Kimmel provides, as plaintiff, his own attorney's affirmation. He states that as lender and administrator of the subject loan, he received all payments made thereunder, and he (1) never agreed to extinguish the note, (2) never agreed to accept a new note to replace the one that is at issue here, and (3) there was never a new obligation that replaced the Note, and no new contract was discussed or drafted with respect thereto. "

"Plaintiff s motion for summary judgment must be denied. It is well settled that on a motion for summary judgment, an affidavit of counsel who demonstrates no knowledge of the underlying facts is without probative value (see Zuckerman, 49 NY2d at 563, citing Columbia Ribbon & Carbon MIg. CO. v A-J-A Corp., 42 NY2d 496,500 [1977]; Israelson v Rubin, 20 AD2d 668 [1964], affd 14 NY2d 887 [1964]; Lamberta v Long Is. R. R., 51 AD2d 730 [1976]). Here, plaintiffs counsel's affirmation is silent regarding his basis of knowledge of the underlying facts. Moreover, the affirmation of plaintiff, an attorney, is not admissible in this instance. Under the language of CPLR 2106,2 the use of an unsworn affirmation bearing the individuals signature alone, in lieu of an affidavit, is prohibited where the signatory, even if otherwise authorized by the statute, is a party to the action (see Slavenburg, Corp. v Opus Apparel, Inc, 53 NY2d 799, 801[FN] [1981]; Schutzer v Suss- Kolyer, 57 AD2d 653 [1977]; Fitzgerald v Willes, 83 Misc 2d 853 [App Tenn 1975]). Consequently, plaintiff has failed to meet his initial burden of making a prima facie showing of entitlement to judgment as a matter of law, requiring denial of his motion and regardless of the sufficiency of the opposing papers (see Vega v Restani Const. Corp., 18 NY3d 499 [2012]). In any event, were it necessary to do so, the court would find that defendants have met their burden of raising an issue of fact in opposition to plaintiff s motion through their particularized showing, in admissible form, that the underlying transaction was permeated with, and arose out of, fraudulent conduct."

 

 

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Plaintiffs Lose Case and Must Pay Their Attorneys

So many of these cases start over a fee. Here, relatives try to push relatives out of a house (we guess it was bequeathed to both), and clients end up spending about $ 50,000 to avoid being put in the street. Then, it comes time to pay the attorneys. This leads to an attorney fee case and a legal malpractice counterclaim. In the end, clients lose all around.

Davis v Siskopoulos 2013 NY Slip Op 30353(U)   Supreme Court, New York County Docket Number: 111965/04 Judge: Barbara Jaffe.

"In 2000, defendants hired plaintiff law firm to defend them in a partition action commenced by the brother of decedent Angelo Siskopoulos seeking to evict them from their residence. A referee held a hearing and issued a report finding that defendants had not ousted the brother from the residence, and awarded defendants certain damages, including reimbursement of half of the mortgage payments paid by them and for repairs and maintenance of the property. (Affidavit of Bonnie Reid Berkow, Esq., dated Feb. 13,2012 [Berkow Affid.], E)(h. GG). Between August 1,2000 and December 21,2003, plaintiff rendered legal services to them. As of January 31,2004, defendants had paid plaintiff $8,559.68 for its services, leaving a balance of$45,577.92. (Affirmation of Alexandra Siskopoulos, Esq., dated Feb. 12,2012 [Siskopoulos Aff.], Exh. A).
On or about August 16, 2004, plaintiff commenced the instant action against defendants, asserting causes of action for an account stated and quantum meruit.

Defendants' failure to plead the specific allegations in their affirmative defenses is not fatal here as plaintiff opposes them on the merits and defendants asked questions relating to them in discovery. (See Drago v Spadafora, 94 AD3d 1041 [2d Dept 2012] [no showing made that plaintiffs were taken by surprise or prejudiced by defendant's use of unpleaded affirmative defense in support of his motion for summary judgment]; Sullivan v Am. Airlines, Inc., 80 AD3d 600 [2d Dept 2011] [unpleaded defense may serve as basis for granting summary judgment in absence of surprise or prejudice to opposing party]; Joan Hansen & Co., Inc. v Everlast World's Boxing Headquarters Corp., 2 AD3d 266 [1 st Dept 2003], Iv denied 2 NY3d 702 [2004] [summary judgment may be granted on unpleaded defense where opponent of motion has not been surprised and fully opposed motion]).

Here, defendants have failed to establish, prima facie, that plaintiff is not an expert in the real estate field or had no experience dealing with partition actions as plaintiff s discovery response that it could not recall working on partition actions before 2000 does not constitute an admission that it had no experience working on such actions, and they cite nothing in Wagner's deposition testimony that is relevant to this claim. Thus, to the extent that plaintiff made certain representations to defendants, defendants have not shown that they were false misrepresentations. In any event, as defendants fail to submit an affidavit from someone with personal knowledge of the circumstances underlying their retention of plaintiff, they cannot establish that plaintiff made the representations to them on which they relied, and the printout of plaintiffs website is not probative. (See eg Dombroski v Samaritan Hasp., 47 AD3d 80 [3d Dept 2007] [general accusation of deception not based on personal knowledge insufficient to establish estoppel]; Cohen v Houseconnect Realty Corp., 289 AD2d 277 [2d Dept 2001] [complaint contained no allegations setting forth alleged misrepresentations, and no such allegations were contained in plaintiffs affidavit submitted on motion]; Urquhart v Philbor Motors, Inc., 9 AD3d 458 [2d Dept 2004] [affidavit submitted by defendant insufficient to establish prima facie entitlement to summary judgment as it was not by person with first-hand knowledge of alleged misrepresentations]; see also Nissan Motor Acceptance Corp. v Scialpi, 83 AD3d 1020 [2d Dept 2011] [conclusory and unsubstantiated allegations of fraud and misrepresentation insufficient]; cf Silber v Muschel, 190 AD2d 727 [2d Dept 1993] [defendant submitted fact-specific affidavit evincing first-hand knowledge of misrepresentations made by plaintiff during parties' negotiations]; Slavin v Victor, 168 AD2d 399 [1 st Dept 1990] [in alleging fraud, party appropriately offered affidavit of person with first-hand knowledge as to nature of misrepresentations). For the same reasons, defendants have not established their claim that plaintiff breached ethical rules by holding itself out as an expert in real estate.


 

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Not now, thanks...Try that Legal Malpractice Case Again Later

What happens when plaintiff believes that defendant made a serious mistake, and some time has passed, but the underlying case has not yet concluded?  The statute of limitations and the requirement for "ascertainable damages" come in conflict.  Wait too long and the statute will have passed.  Start too early, and one sees a result similar to Flintlock Constr. Servs., LLC v Rubin, Fiorella & Friedman LLP ; 2013 NY Slip Op 06313  ; Decided on October 1, 2013 ; Appellate Division, First Department .  Case dismissed for now, but try again later.
 

"In this legal malpractice action, plaintiff alleges that defendant law firm negligently represented it in connection with underlying construction litigation by entering into a stipulation, without its authorization, pursuant to which it became obligated to defend and indemnify the owner of the subject premises in the underlying litigation without limitation. Defendant incorrectly argues that plaintiff's claims should be dismissed as a matter of law based on the Eleventh Circuit's vacatur of the federal district court's finding that the stipulation requires plaintiff to defend and indemnify the premises owner without limitation and for its own negligence (see Flintlock Constr. Servs. v Well-Come Holdings, LLC, 710 F3d 1221, 1224 [11th Cir 2013]). The Eleventh Circuit vacated the decision on diversity grounds and did not reach the merits of the subject stipulation.

Contrary to defendant's assertion, the documentary evidence does not conclusively refute plaintiff's allegations (see Franklin v Winard, 199 AD2d 220, 220 [1st Dept 1993]), since the premises owner, its consultants and subcontractors are named in the underlying litigation, their contracts are not included in the record on appeal, and the allegations against them include the types of activities which form the basis of the underlying complaints. Nevertheless, even if the stipulation provides for an unlimited obligation, there has been no finding that the project owner was negligent. At this juncture, plaintiff's allegations of proximate cause and damages are premature or speculative, as it is unable to prove that any such damages are directly traceable to defendant's conduct (see InKine Pharm. Co. v Coleman, 305 AD2d 151, [*2]153-154 [1st Dept 2003]). Accordingly, we dismiss without prejudice to raising the malpractice claims upon resolution of the underlying action. "

 

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They Promise to be Lead Counsel. They Arent't. Can you Sue?

Big corporate client goes to Big white shoe law firm and believes that the Big litigator there will take and handle the case. It does not happen. A lesser light handles the case, and the Big Corporate client is unhappy. Now what?

Matter of Matter of G.K. Las Vegas Ltd. Partnership v Boies Schiller & Flexner LLP 2012 NY Slip Op 04831 Decided on June 14, 2012 Appellate Division, First Department.
 

"In this proceeding alleging the law firm's breach of performance of a retainer agreement, including breach of an alleged oral agreement to have a particular attorney in its firm serve as lead counsel in an underlying matter, the client failed to preserve its arguments that the law firm did not meet its burden of demonstrating that the client fully understood the terms of the parties' retainer agreement, and that public policy rendered such retainer agreement unenforceable, as these arguments were not sufficiently brought to the attention of the arbitrator. (see Edward M. Stephens, M.D., F.A.A.P. v Prudential Ins. Co. of Am., 278 AD2d 16 [2000]; see also Matter of Joan Hansen & Co., Inc. v Everlast World's Boxing Headquarters Corp., 13 NY3d 168, 173-174 [2009]). The client did not explicitly argue that the law firm violated public policy by failing to ensure that the client fully understood the terms of the parties' retainer agreement. It only argued that parol evidence was needed because the retainer agreement, as written, was allegedly incomplete and/or ambiguous.

Were we to reach the merits of the client's public policy argument, we would find it unavailing. The parties agreed to arbitrate any disputes arising from their retainer agreement, and there is no basis to conclude that the asserted public policy ground (requiring a client's full knowledge and understanding of an attorney-client retainer agreement) was violated. The arbitrator's award dismissing the client's challenge to the legal fees that were due in accordance with the express terms of the parties' amended written retainer agreement had a rational basis, inasmuch as the Arbitrator found the written retainer arrangement to be unambiguous and to constitute a fully integrated agreement that would satisfy the requirements of 22 NYCRR 1215.1 (see generally Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223-224 [1996]). The arbitrator's rejection of the sophisticated client's argument that sought inclusion of claimed oral terms that would modify the clear terms of the amended retainer agreement was rationally based in contract principles, including New York's parol evidence rule, [*2]and the criteria for allowing modification of written terms without altering them was not established by the client (see Mitchill v Lath, 247 NY 377 [1928]; Chemical Bank v Weiss, 82 AD2d 941 [1981], appeal dismissed 54 NY2d 831 [1981]). Since the terms of the fully integrated retainer agreement were unambiguous, there was no basis to consider parol evidence (see Slotnick, Shapiro & Crocker, LLP v Stiglianese, 92 AD3d 482 [2012]; Moore v Kopel, 237 AD2d 124, 125 [1997]).

Moreover, the client's argument that the arbitrator, in deciding the dismissal motion, denied it "fundamental fairness" by refusing to accept the truth of its allegations regarding the oral promise, including that the parties intended this oral promise to be a component of the parties' retainer agreement, thereby precluding it from offering evidence to demonstrate the parties' understanding in regard to the alleged oral promise, is unavailing. It was within the province of the arbitrator to find, as a matter of law, that the retainer agreement was not ambiguous (see W.W.W Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]), notwithstanding the client's claims that alleged oral promises were intended to be added as components of the written retainer agreement. Since an arbitrator's award ordinarily will not be vacated even if founded upon errors of law and/or fact (see Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 479-480 [2006], cert dismissed 548 US 940 [2006]), there is no basis to vacate this award founded upon applicable contract principles (see Szabados v Pepsi Cola Bottling Co. of N.Y., 191 AD2d 367 (1998)"
 

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Is It Legal Malpractice Not to Tell The Client to Review Its Insurance?

Client is sued for trade dress infringement.  "Trade Dress" are those non-functional aspects of an otherwise patented item.  Even after the patent runs out, "trade dress", or the appearance of a thing, remains protected.

Client had insurance that may have covered the law suit in which it was a defendant.  InUtica Cutlery Co. v Hiscock & Barclay, LLP  2013 NY Slip Op 06171  Released on September 27, 2013 Appellate Division, Fourth Department  we see the 4th Department denying summary judgment to defendant on the argument that its malpractice may be "a" proximate cause of the damages, even if not "the" proximate cause of the Damages. 
 

"Defendant moved for summary judgment on the ground that plaintiff had a contractual duty and actual knowledge of the requirement to notify its insurers of the commencement of the underlying action, which superceded any alleged duty that defendant had to plaintiff. We conclude that defendant "failed to meet its burden of establishing as a matter of law that any alleged negligence on its part was not a proximate cause of plaintiff['s] damages" (New Kayak Pool Corp. v Kavinoky Cook LLP, 74 AD3d 1852, 1853). Notably, a plaintiff in a legal malpractice action must establish that the defendant law firm was a proximate cause of damages, but need not establish that it was the proximate cause (see Barnett v Schwartz, 47 AD3d 197, 204-205). Defendant also failed to establish that plaintiff's conduct was an intervening and superseding cause such that defendant's alleged negligence was not a proximate cause of any damages (cf. Alden v Brindisi, Murad, Brindisi, Pearlman, Julian & Pertz ["The People's Lawyer"], 91 AD3d 1311, 1311; see generally Arnav Indus., Inc. Retirement Trust v Brown, [*2]Raysman, Millstein, Felder & Steiner, 96 NY2d 300, 304-305).

Contrary to defendant's contention, the court properly denied its alternative request for partial summary judgment on the second and fourth affirmative defenses and dismissal of a particular claim for damages. Defendant correctly notes that the insurance policies required plaintiff to give timely notice of the underlying action and properly alleges the culpable conduct of plaintiff in failing to give notice in a timely manner to the insurance companies as an affirmative defense (see generally Arnav Indus., Inc. Retirement Trust, 96 NY2d at 305 n 2). On this record, however, defendant has not established that plaintiff was comparatively negligent as a matter of law. Plaintiff's president explained at his deposition and in his affidavit the reason why he failed to give timely notice to the insurance companies, i.e., he did not believe that the underlying claim was covered by insurance. Whether that belief was reasonable and negated any culpable conduct on plaintiff's part is for a jury to determine. We further conclude that defendant failed to establish as a matter of law that the insurance policies would not have covered certain damages paid by plaintiff in the underlying action. "

We wonder why Darby & Darby, P.C. v. VSI, Int;l, 95 NY2d 308 (2000) was not mentioned. The Court of Appeals wrote:  "A New York law firm retained to defend a corporate client in a Florida patent infringement litigation had no duty to advise the client about possible insurance coverage for the costs of the litigation. Defendants' claim is based on a then novel theory that patent insurance coverage was available under an "advertising liability" clause in general liability policies, and at the time of plaintiff's representation, neither New York nor Florida recognized the duty of an insurer to defend patent infringement claims under a general liability policy's advertising injury clause. "

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Pro-Se Plaintiff Strikes Out

Plaintiff sues law firm, which represented his former employer after he failed to get them to file a corrected opinion letter to facilitate removal of restrictive legends on his stock certificate. The mistake was in the opinion letter where the law firm mistakenly said it represented "Plaintiff" rather than the employer.

The Appellate Division affirms Judge Bransten writes and writes an opinion that lists every attempt the plaintiff made to hold the law firm responsible, denying each.  In Cusack v Greenberg Traurig, LLP   2013 NY Slip Op 06070 Decided on September 26, 2013.

"The complaint stems from plaintiff's failed efforts to have defendant, counsel for plaintiff's former employer, American Defense Systems, Inc. (ADSI), issue a corrected opinion letter to facilitate removal of restrictive legends on his stock certificate. Defendants had issued an opinion letter that misstated that it represented plaintiff, rather than ADSI. Defendant asserts that ADSI subsequently directed it not to issue a corrected letter because ADSI maintains, in a separate lawsuit, that plaintiff fraudulently procured his employment and the stock.

The court properly dismissed the claim of legal malpractice, as there was no attorney-client relationship (Waggoner v Caruso, 68 AD3d 1, 5 [1st Dept 2009], affd 14 NY3d 874 [2010]). Defendant represented ADSI, not its shareholders or employees and, thus, not plaintiff (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 562 [2009]). Contrary to plaintiff's contentions, nothing in the parties' actions created an attorney-client relationship (see Polovy v Duncan, 269 AD2d 111, 112 [1st Dept 2000]). Defendant's request that plaintiff complete a second shareholder questionnaire to issue a corrected opinion letter does not suffice to create an attorney-client relationship. Defendant represented ADSI in ongoing adversarial litigation against plaintiff after his employment was terminated. Moreover, plaintiff essentially acknowledges the lack of an attorney-client relationship, as his complaint largely stems from the allegation that defendant misstated that it represented plaintiff in the opinion letter.

Nor is there near privity to support a claim of legal malpractice based on an allegedly negligent misrepresentation. As the motion court noted, the opinion letter was addressed to BNY Mellon, and as plaintiff alleged in the complaint, the parties contemplated only that BNY Mellon, not plaintiff, would
rely on the letter (Prudential Ins. Co. of Am. v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377, 384 [1992]).

The motion court correctly dismissed the breach of fiduciary duty claim, as there was no attorney-client relationship and no other factual allegations establishing such a duty (see [*2]Eurycleia Partners, 12 NY3d at 562).

Plaintiff cites no allegations in the complaint to refute the motion court's conclusion that there was no breach of contract claim. Plaintiff failed to allege that the "contract," defendant's alleged acceptance of plaintiff's offer to issue a letter to remove the restrictive covenant, was supported by consideration. Since a claim for breach of a duty of good faith cannot be plead absent an underlying contract (see Keefe v New York Law School, 71 AD3d 569, 570 [1st Dept 2010]), that claim was properly dismissed as well.

The motion court correctly dismissed the fraud claim and both negligence claims as duplicative of plaintiff's malpractice claim (see Dinhofer v Medical Liab. Mut. Ins. Co., 92 AD3d 480, 481 [1st Dept 2012], lv denied 19 NY3d 812 [2012]; Weksler v Kane Kessler, P.C., 63 AD3d 529, 531 [1st Dept 2009]).

Contrary to plaintiff's contention, in assessing the common-law securities fraud claim, the motion court acknowledged that plaintiff's alleged deceptive practices included not only issuance of a defective opinion letter but also the subsequent failure to correct it. To allege fraud, however, the complaint must allege, among other things, that plaintiff justifiably relied on an alleged misrepresentation or material omission (IDT Corp. v Morgan Stanley Dean Witter & Co, 12 NY3d 132, 140 [2009]). The only alleged misrepresentation here was the misstatement in the opinion letter that defendant represented plaintiff, and the motion court correctly concluded that plaintiff failed to allege that he relied on it to his detriment.
The court also properly dismissed plaintiff's securities fraud claim based on General Business Law § 349, as plaintiff's allegations do not encompass consumer-oriented conduct (see Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 24-25 [1995]). "

 

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Privity and Legal Malpractice in the Modern Commercial Setting

Plaintiff is a 50% shareholder in a lucrative franchise operation, and at the end of a contract term both he and the entire franchise is faced with a difficult franchisor, which wants to upset the arrangement.  An attorney is hired, and not only does the eventual franchisor-franchisee litigation end badly, but the individual plaintiff is advised to forego a consulting contract worth $800,000.  May the individual sue the law firm?

Bayit Care Corp. v Einbinder 2013 NY Slip Op 51557(U)  Decided on September 24, 2013  Supreme Court, New York County  Bransten, J. holds that for the moment, he may sue.  A motion to dismiss was denied as to him. 
 

"Plaintiff Bayit is a corporation that provided healthcare services. Plaintiff Schreier is the 50% co-owner of Bayit, as well as its president and on-site manager. Defendant E & D is a law firm practicing, among other things, franchise law. Defendant Einbinder is an attorney at E & D.

As part of its business, Bayit had previously entered into a franchise agreement whereby Bayit, as franchisee, managed a healthcare center and paid the cost of [*2]administrative personnel. (Defs.' Order to Show Cause, Exhibit F ¶ 6.) The franchisor employed and paid the healthcare personnel, and coordinated billing and collection from customers of the center. (Id., Exhibit F ¶ 6.)

The instant litigation stems from the alleged failure of E & D and Einbinder to take certain actions with respect to the renewal of the Plaintiffs' franchise. In 2009, a dispute arose as a result of the imposition of certain business decisions by the franchisor on Bayit. (Am. Compl. ¶ 21.) Defendants were retained by Bayit and, according to the Amended Complaint, Schreier, in connection with this dispute. (Id. ¶ 19.) From January 2010 to June 2011, a total of three retainer agreements were executed between Plaintiffs and Defendants. (Id. ¶ 19.)

Following settlement discussions between the franchisor and Plaintiffs, on the advice of Einbinder, Plaintiffs commenced a lawsuit against the franchisor, rather than either renewing the franchise or accepting one of the buyout or termination offers made by the franchisor. (Id. ¶¶ 40-48.) According to Plaintiffs, Defendants likewise failed to advise them of the requirements for renewal of the franchise. (Id. ¶¶ 47, 87-89.) Defendants also advised Schreier to reject an offer to enter into a consulting agreement with the franchisor, which would have provided Schreier with up to $800,000 in income over a five-year period. (Id. ¶¶ 9, 43.) Plaintiffs maintain that Defendants knew or should have known that Plaintiffs wanted to renew the franchise and that the franchise had monetary value to the Plaintiffs, and that Defendants took no action to renew the franchise until after the deadline for doing so had passed. (Id. ¶¶ 79-80.) "

""It is well settled that a corporation's attorney represents the corporate entity, not its shareholders or employees." Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 NY3d 553, 562 (2009) (citations omitted). As the First Department has observed, "[a] lawyer's representation of a business entity does not render the law firm counsel to an [*4]individual partner, officer, director or shareholder unless the law firm assumed an affirmative duty to represent that individual." Campbell v. McKeon, 75 AD3d 479, 480-81 (1st Dep't 2010). That is, "[u]nless the parties have expressly agreed otherwise in the circumstances of a particular matter, a lawyer for a corporation represents the corporation, not its employees." Talvy v. American Red Cross, 205 AD2d 143, 149 (1st Dep't 1994), aff'd, 87 NY2d 826 (1995).

In this case, the record is unclear as to whether there was such an express agreement given the manner in which the retainer agreements were drafted. Each of the retainer agreements was addressed to Schreier personally, care of his business address at Bayit. (Am. Compl. ¶ 24.) " [T]he addition of a care of line . . . merely adds a person at that address who may claim the mail.'" Matter of Informart New York LLC v. Hugh O'Kane Elec. Co. LLC, 2003 WL 26094732, at *1 (Sup. Ct. NY County Jan. 6, 2003) (quoting Hoffenberg v. Commissioner, 905 F.2d 665, 666 (2d Cir. 1990)). See Russell & Annis v. Livingston & Wells, 16 NY 515, 518 (1858) (explaining that "[o]rdinarily, the address of a package to the care of any one is an authority to the carrier to deliver it to such person").

Moreover, the retainer letters do not clearly identify Bayit as the client. (Am. Compl. ¶ 25.) To the contrary, the January 11, 2010 retainer letter begins, "Dear Mr. Schreier: This retainer letter is intended to express our mutual understanding regarding our legal representation of you." (Defs.' Order to Show Cause, Exhibit C, at 1.) Similarly, the June 13, 2011 retainer letter begins, "Dear Shabsi: This confirms that you have retained Einbinder & Dunn, LLP ( E & D') to represent you in the above-referenced action." (Id., Exhibit D, at 1.) Likewise, the June 28, 2011 retainer letter begins, "Dear Shabsi: This confirms that you have retained Einbinder & Dunn, LLP ( E & D') to represent you in the above-referenced actions in New York and Louisiana and in the Louisiana action to work with the local attorney." (Id., Exhibit E, at 1.)

Also significant is the fact that Defendants made multiple references to Schreier as their client during a hearing in a consolidated action against the franchisor, and as part of that action, Schreier submitted sworn declarations to that court "focus[ing] on his personal contributions to the Franchisor." (Am. Compl. ¶¶ 69-70.) In Cooke v. Laidlaw Adams & Peck, Inc., 126 AD2d 453 (1st Dep't 1987), the First Department held that "[a]n attorney's appearance in a judicial or quasi-judicial proceeding creates a presumption that the attorney-client relationship exists." Cooke, 126 AD2d at 455 (citation omitted). Finding that an attorney-client relationship between a corporation's employee and corporate counsel did, in fact, exist, that court noted that it was "significant" that corporate counsel appeared at a proceeding involving an employee of a corporation and "admitted on the record before the SEC that they were appearing personally on [the employee's] behalf." Cooke, 126 AD2d at 455.

Accordingly, both the language of the retainer agreements and Defendants' conduct are sufficiently ambiguous as to create an issue of fact regarding the identity of [*5]Defendants' client.

Defendants separately argue that Schreier is not a third-party beneficiary of the retainer agreements between Bayit and E & D, and that there are no "special circumstances" present that would give Schreier standing to bring this legal malpractice claim against E & D notwithstanding the absence of an attorney-client relationship.

"While privity of contract is generally necessary to state a cause of action for attorney malpractice, liability is extended to third parties, not in privity, for harm caused by professional negligence in the presence of fraud, collusion, malicious acts or other special circumstances." Good Old Days Tavern, Inc. v. Zwirn, 259 AD2d 300, 300 (1st Dep't 1999) (citations omitted). "[S]pecial circumstances" are present where the relationship between the plaintiff and the defendant attorney is "tantamount to one of contractual privity." Good Old Days Tavern, Inc., 259 AD2d at 300. The First Department found that special circumstances were present where the plaintiff "was the president and sole shareholder" of the corporation that had retained the defendant attorney and running that corporation was the business from which "he derived his livelihood." Good Old Days Tavern, Inc., 259 AD2d at 300.

Defendants distinguish the holding in Good Old Days from the instant case, citing Topor v. Enbar, 841 N.Y.S.2d 824 (Sup. Ct. NY County 2007). In Topor, the plaintiff alleged that he and multiple related entities had retained and consulted the defendant attorney, and the court found that the plaintiff "held, at most, a minority interest" in the corporate client. Topor, 841 N.Y.S.2d at 824 (emphasis added).

However, the facts in Topor are distinguishable from those in this case. Here, Plaintiffs allege that Schreier was a 50% co-owner of Bayit, that he was Bayit's president and on-site manager, and that he was a "foreseeable third-party beneficiary" of certain agreements between Bayit and the franchisor. (Am. Compl. ¶¶ 2, 18.) Plaintiffs also allege that "Defendants knew or should have known" that the "Franchisor was motivated to terminate Bayit's Franchise," "that Bayit wanted to renew its franchise for an Additional Term of five (5) years until March 31, 2017, and that this renewal term had substantial monetary value to Bayit and Mr. Schreier." (Id. ¶¶ 41, 79.) Moreover, Plaintiffs allege that Defendants "counsel[ed] Mr. Schreier to decline" the offer to provide consulting services to the franchisor, and that as a result of failing to renew the franchise, Schreier lost his annual income of $300,000 and $800,000 in consulting fees. (Id. ¶¶ 9, 14-16.) "

 

 

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Was It Legal Malpractice To Settle the Case Too Fast?

Plaintiff unlocks the front door to his apartment building and it knocked unconscious as soon as he enters the lobby.  Three men run out with bats in hand.  Is there a case against the landlord?  In Angeles v Aronsky  2013 NY Slip Op 05955  Decided on September 24, 2013  Appellate Division, First Department we see not only that there easily could be a case for premises security liability, but it could be legal malpractice to settle too fast, and potentially, for too little money.
 

"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] [internal 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 [1st Dept 2011] [internal quotation marks omitted], quoting Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1st Dept 1990]).
 

Plaintiff, a waiter with a sixth grade education, retained defendant to represent him in a premises liability claim, relying on defendant's expertise as a personal injury attorney to evaluate his claim and provide advice on the case. Plaintiff asserts that defendant only contacted him once after being retained, and only to ask him to go into defendant's office to sign paperwork for the case. Plaintiff, an unsophisticated client with no legal experience, states that defendant did not explain to him the strengths and weaknesses of his claim and did not do a proper investigation. Defendant does not dispute that he never went to the building or spoke to the superintendent, but argues that he fulfilled his obligation by conveying the settlement offer to plaintiff.

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.

The motion court properly found that plaintiff raised a question of fact as to whether the underlying action would have succeeded. To prevail on a premises liability claim, a plaintiff does not have "to exclude every other possible" explanation as to how the assailants entered the building, but only present "evidence [that] renders it more likely or more reasonable than not that the assailant was an intruder who gained access to the premises through a negligently maintained entrance" (Burgos v Aqueduct Realty Corp., 92 NY2d 544, 550-551 [1998]). In Bello v Campus Realty, LLC (99 AD3d 638, 639 [1st Dept 2012]), this Court found an issue of fact as to how the assailants entered the building where the plaintiff did not recognize her attackers as fellow tenants and the men were dressed as police officers. Similarly, in Chunn v New York City Hous. Auth. (83 AD3d 416, 417 [1st Dept 2011]), a factual issue was presented as to whether it was [*3]more likely than not that plaintiff's assailants were intruders where the men made no attempt to conceal their faces."

 

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Legal Malpractice Cases and Attorney Fee Collections

A recurring theme in defense-side publications in the legal malpractice field is the connection between attorney fee collection suits and subsequent legal malpractice counter-claims.  For us, its a chicken-egg issue.  Is the legal malpractice case a shameless effort to avoid payment, or did the non-payment arise because there was poor performance (read:  legal malpractice)?

We don't know, and we definitely don't link the two in this story.  We have no opinion on the quality of work performed by the Kasowitz law firm.  We do predict many further events in this large fee collection lawsuit reported today in the NYLJ by Christine Simmons

"Kasowitz Sues Ex-Client for $2.3 Million in Fees
Christine Simmons

New York Law Journal

2013-09-24 00:00:00.0

 

Kasowitz, Benson, Torres & Friedman is suing hedge fund manager Alphonse Fletcher Jr. for $2.3 million in unpaid legal fees after the firm represented him in a high-profile discrimination suit against the Dakota, the legendary co-op on the Upper West Side of Manhattan (See Complaint). Kasowitz Benson lawyers, including managing partner Marc Kasowitz, were counsel to Fletcher and Fletcher Asset Management.

Fletcher, a former president of the co-op board, alleged that the Dakota discriminated against him based on his race in its refusal to approve his application to purchase an apartment next to his own for the purpose of combining the two. Fletcher, in Fletcher v. Dakota, 101289-2011, in Manhattan Supreme Court, also alleged the Dakota defamed him by making false statements about his finances, including an observation that he had "checked out of his business" and was living on "borrowed money." The Dakota case is still pending.

In its Sept. 19 collection lawsuit, Kasowitz Benson v. Alphonse Fletcher, Fletcher Asset Management, 158590/2013, Kasowitz said it advised Fletcher from July 2011 through November 2012, and Fletcher did not object to the invoices. The firm said it has received partial payment of about $1 million, leaving an unpaid balance of about $2.3 million. The suit said Fletcher "ceased paying any of the fees and disbursements" under the retainer agreement "despite repeated demands for payment."

Nathaniel Read, a partner at Cohen & Gresser who represents Fletcher, did not return a message seeking comment. Neither Kasowitz nor a representative of the firm returned messages for comment."
 

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Death and Legal Malpractice

The decision is somewhat short on facts, but we guess that this case arose froma settled landlord-tenant case in which tenant then died. His estate sued his former attorneys, and the case continues. Frankel v Vernon & Ginsburg, LLP 2012 NY Slip Op 08425 Appellate Division, First Department tells us that the AD often scrutinizes the "but for" portion of the case very closely.

"The IAS court properly declined to dismiss the legal malpractice cause of action. Defendants failed to sustain their burden on summary judgment of demonstrating that plaintiff would be unable to prove one of the essential elements of his claim (see Sabalza v Salgado, 85 AD3d 436 [1st Dept 2011]). On the contrary, the record demonstrated that plaintiff's decedent had viable causes of action for breach of the warranty of habitability and nuisance against defendants in the underlying action (see 61 W. 62 Owners Corp. v CGM EMP LLC, 77 AD3d 330 [1st Dept 2010], affd in part, mod in part 16 NY3d 822 [2011]; Misra v Yedid, 37 AD3d 284, 285 [1st Dept 2007]). Furthermore, the record demonstrated that plaintiff's decedent might have recovered legal fees, which alone exceeded the amount of the settlement in this matter (Real Property Law § 234). "

 

 

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The French Person Defense

In an otherwise garden or varietal attorney fee dispute with a legal malpractice defense, we ran across the "French Person" defense to attorney fees for the first time. Justice Gische, in Singer v Adler ; 2010 NY Slip Op 33439(U); Sup Ct, NY County gave it short shrift.

"This action is based upon claims for legal services rendered by plaintiff, Stephen Sayre Singer, to defendant, Joel A. Adler. Adler brings a pre-answer motion to dismiss the verified complaint against him on the basis that it is barred by the statute of limitations and alternatively, he is a “French person” and a New York Court does not have personal jurisdiction over him, pursuant to Article 14 of the Civil Code of the Republic of France. Both parties are attorneys at law and each is self represented in this action."

"Defendant generally claims there is no personal jurisdiction over him because he is a “French person.” Whether this argument pertains to long arm jurisdiction or service of process, it fails.
CPLR 5 302 provides that a court may assert jurisdiction over a non-domiciliary when the non-domiciliary “transacts any business within the state” and the cause of action arises out of that business. See CPLR 302 (a)(l). In order to have personal jurisdiction over a defendant, it is essential that the suit against the non-domiciliary have some “articulable nexus” to the business transacted. See McGowan v, Smith, 52 NY2d 268, 272 (1981). The basis of plaintiffs complaint, premised on plaintiffs performance of legal services for defendant, and the non-payment of legal fees, while defendant was domiciled in New York, amounts to “transaction of business within the state” and has an “articulable nexus” to the business transacted, specifically the provision of legal
services. Therefore, personal jurisdiction over defendant is proper. "

 

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Fabrication of Documents in a Legal Malpractice Setting

The undisputed facts in this case are shocking. "The following facts are undisputed. In or about May 2004, plaintiff, which had a lease on the building located at 2944 3d Avenue in the Bronx , retained the law firm of Gold, Rosenblatt & Goldstein to commence a commercial summary nonpayment action against the subtenants of the building, Diab and Hasan Saleh, who were doing business as 2944 3d Ave Retail Corp.("Retail Corp."). Defendant Steven E. Goldstein, a then-partner of the firm undertook the representation of plaintiff, and after commencing the action (Steven's Distributions, Inc. v 2944 3rd Ave Realty Corp., Index No. 90110 (Civ Ct, B r o n x Co, 2 0 0 8 ) , fabricated several court orders purporting to award plaintiff various sums in back rent, so as to persuade plaintiff that Goldstein was actively prosecuting the action. "

So goes Steven's Distribs. Inc. v Gold, Rosenblatt & Goldstein 2012 NY Slip Op 31990(U)
July 24, 2012 Supreme Court, New York County Docket Number: 106283/09 Judge: Joan A. Madden. This case is another example of the microscopic examination of "proximate cause" that goes on in legal malpractice litigation.

Justice Madden goes on to find that no matter how much fooling around took place during the litigation it was doomed from the start because no demand for rent had been timely made. If no demand for rent, then no case. If no case, then the internal bad behavior of of no interest.

"Accordingly, while Goldstein's erroneous naming of the parties in the caption was unquestionably malpractice sufficient to have caused the dismissal of plaintiff's petition, and while, perhaps, Goldstein's (or Lubellls) failure to prepare plaintiff's bookkeeper for her testimony would also have been sufficient to cause the dismissal, plaintiff in any event could not have prevailed in the first proceeding, since it had failed to prove a pre-litigation rent demand. For that reason, Goldstein's (and possibly, Lubellls) negligence ''was not a proximate cause of any damages arising from the ?loss of the underlying action. Barnett v. Schwartz, 47 AD3d 197, 204 (2nd Dept 2007). Nor can plaintiff prove that, but for Goldstein's failure to prosecute the underlying case for almost t w o years, Retail Corp.'s motion to vacate its default would not have been granted by Judge Rodriguez. While Judge Rodriguez based her decision on l1 [the long standing status of [the] proceeding with no indication that respondent neglected to appear or negotiate, and no indication that petitioner zealously prosecuted its claim" (Chera Aff., Exh. 10, at 2 ) , Diab Salehls' affidavit in support of
Retail Corp's order to show cause noted both that there was no such entity as the petitioner named in the caption of the proceeding, and that petitioner lacked standing to prosecute i t s claim, since its lease with the over-landlord had been terminated for nonpayment."
 

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The Interconnection of Legal Malpractice and Personal Injury Cases

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 and Simoni v Napoli 2012 NY Slip Op 08639;  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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Hoisted on One's Own Petard in Legal Malpractice

Falling into a trap laid by oneself is a pitiful outcome to litigation.  Plaintiff hires defendant attorney to represent plaintiff when he is sued. The underlying case seems to be a construction accident matter. Did plaintiff lose the case because defendant failed to make certain arguments, or was defendant prevented from making those arguments by his client? We can't really tell from the decision, but it seems that defendant undercut his own case here.'

Affordable Community, Inc. v Simon  2012 NY Slip Op 03789  Decided on May 15, 2012  Appellate Division, Second Department tells us: "The defendant here is an attorney who represented the plaintiff in a lawsuit asserted against the plaintiff by an individual who was injured at a construction site owned by the plaintiff. In this legal malpractice action, the defendant alleged that the plaintiff limited him to presenting only certain unsuccessful defense arguments in the course of representation. However, the defendant's own evidence raised a triable issue of fact regarding this allegation. Consequently, there remain triable issues of fact as to whether the defendant negligently failed to present viable defenses in the underlying action and if so, whether, as a result of such failure, the plaintiff incurred liability for damages in that lawsuit. Accordingly, the defendant's submissions in support of his motion for [*2]summary judgment did not establish, prima facie, that the plaintiff will be unable to prove the elements of legal malpractice and, thus, he failed to demonstrate his entitlement to judgment as a matter of law (see Mueller v Fruchter, 71 AD3d 650, 651; Rosenstrauss v Jacobs & Jacobs, 56 AD3d 453, 454). In light of our determination, we need not address the sufficiency of the plaintiff's opposition papers (see Scott v Gresio, 90 AD3d 736, 737; see generally Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853). "
 

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