New York Attorney Malpractice Blog

The Appellate Decision in Steven Von Duerring,  v. Hession & Bekoff,  is so sparse that one has absolutely no idea what the case is about.  When we turn to the Supreme Court case from which the appeal emanates we see that it is a legal malpractice arising out of a claim that "they were negligently represented by defendants in the failed purchase of a house to be constructed on plaintiff's behalf by third parties (sellers).

The deal fell apart.  Plaintiffs did not get a mortgage, but seemed to be able to demonstrate financial ability and willingness to set aside funds to comply.  Did the deal fall apart because of negligence of the attorneys or not?  Supreme Court determined that under the circumstances, issues of fact existed as to whether defendant attorneys breached their duty of care in advising plaintiffs during the closing process that an escrow deposit would be sufficient to avoid cancelling the contract.

Supreme Court said yes, the Appellate Division said no.  Unfortunately for us, the AD did not set forth its reasons.

If thing go wrong, sue the attorney!  It's a familiar meme, yet there are more and more arbitration clauses found in retainer agreements, especially media representations and patent law.  On the one hand, in NYS there are the mandatory fee dispute arbitrations, but that is now what we are thinking about.  As an example: PROTOSTORM, LLC and PETER FAULISI, Plaintiffs, -against- ANTONELLI, TERRY, STOUT & KRAUS, LLP, DALE HOGUE, FREDERICK D. BAILEY, CARL I. BRUNDRIDGE, ALAN E. SCHIAVELLI; 08-CV-931 (NGG)(JO);  UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK; 2010 U.S. Dist. LEXIS 20894 is a multi-defendant patent action.  One of the defendants had an arbitration clause in its retainer agreement.
 

"The party seeking to resolve a dispute by arbitration has the burden of proving a valid [*12] arbitration agreement. See Symphony Fabrics, 2008 U.S. Dist. LEXIS 44588 at *31; Peterson v. Beale, No. 92-CV-5412 (RPP), 1995 U.S. Dist. LEXIS 11580 at *3 (S.D.N.Y. Aug. 11, 1995). A court evaluating this issue applies the same standard as it would when faced with a motion for summary judgment. See Mina v. Foot Locker, Inc., No. 09-CV-0472 (DB), 2009 U.S. Dist. LEXIS 93155 at *3 (S.D.N.Y. Sept. 30, 2009) (citing Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003). "If there is an issue of fact as to the making of the agreement for arbitration, then a trial is necessary." Bensadoun, 316 F.3d at 175. "[W]hether the parties agreed to arbitrate is determined by state law," Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002), and a party contesting the existence of a an agreement to arbitrate may assert all "generally applicable contract defenses, such as fraud, duress, or unconscionability." Doctor's Assocs. v. Casarotto, 517 U.S. 681, 687, 116 S. Ct. 1652, 134 L. Ed. 2d 902 (1996).

The court must first determine which state's contract law applies to the threshold issue of the existence of an agreement to arbitrate. A district court sitting in diversity applies the choice-of-law rules of the state in which it sits. [*13] See Lee v. Bankers Trust Co., 166 F.3d 540, 545 (2d Cir. 1999) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941)). New York courts generally honor an express choice-of-law clause if the selected state has sufficient contacts with the matter in dispute, so long as there is no fraud or violation of public policy. See Hartford Fire Ins. Co. v. Orient Overseas Containers Lines, 230 F.3d 549, 556 (2d Cir. 2000).
 

Unlike the existence of an agreement to arbitrate, the scope of such an agreement, once shown, is a question of law to be determined by a court. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, 123 S. Ct. 588, 154 L. Ed. 2d 491 (2002). Plaintiffs assert that the Arbitration Clause solely governs fee disputes. (See Pl. Mem. 46.) Hogue, by contrast, argues that the Arbitration Clause is sufficiently broad to encompass all of Plaintiffs' claims. (See Reply 16-18.) Each side cites to California law to support their arguments regarding the scope of the Arbitration Clause. No party, however, explains why California law should apply to this question. While the existence [*16] of a binding agreement to arbitrate is a matter of state law, "[t]he issue of an arbitration agreement's scope is governed by the federal substantive law of arbitrability." Progressive Cas. Ins. Co. v. Reaseguradora Nacional De Venezuela, 991 F.2d 42, 48 (2d Cir. 1993).

"Federal policy strongly favors arbitration as an alternative dispute resolution process." Collins & Aikman Prods. Co. v. Building Sys., Inc., 58 F.3d 16, 19 (2d Cir. 1995); see also JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 171 (2d Cir. 2004). "[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem. Hosp. v. Mercury Const. Com., 460 U.S. 1, 24-25, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983)."

The first cousin to Legal Malpractice is the eternal question of legal fees.  Who pays them?  From whom may they be obtained?  How does one calculate them?  What is reasonable?  Under which situations might an attorney forfeit them?  Might one law firm be responsible to another when it says that it will cover the legal fees of a client?

DePetris & Bachrach, LLP v. Srour   2010 NY Slip Op 01840 ; Decided on March 9, 2010
Appellate Division, First Department  speaks to some of these issues. 
 

"Applying these standards, the motion court erroneously dismissed the fourth and fifth causes of action which allege claims against defendants-respondents for breach of the implied warranty of authority and for tortious misrepresentation of authority and assurances of payment, respectively. These causes of action seek to hold defendants-respondents liable for their own action in misrepresenting that they had authority from the Nassers to enter into a contract in which the defendants, Jacques and Ezequiel Nasser would pay plaintiff law firm $75,000 ($37,500 each) of the legal fees incurred by plaintiff's client Srour.

Under the doctrine of implied warranty of authority, a person who purports to make a [*2]contract, representation, or conveyance to or with a third party on behalf of another person, lacking power to bind that person, gives an implied warranty of authority to the third party and is subject to liability to the third party for damages for loss caused by breach of that warranty, including loss of the benefit expected from performance by the principal (see Restatement (Third) of Agency § 6.10 [2006]).

Under the doctrine of tortious misrepresentation and assurances of payment, if the person who falsely claims to have power to bind another knows that the claim is untrue, the person has made a fraudulent misrepresentation and is subject to liability to those who, justifiably relying on the representation, suffer a loss as a consequence (see Restatement (Third) of Agency § 7.01 [2006]).

The complaint alleges that defendants-respondents represented to plaintiff law firm that they had authority from the Nassers to promise payment of $75,000 of the legal fees incurred by plaintiff's client when, in fact, they lacked the authority to bind the Nassers. Thus, the complaint alleges a viable claim for breach of the implied warranty of authority. The complaint also alleges that defendants-respondents falsely represented to plaintiff law firm that they specifically discussed the subject matter of their authority and representations with the Nassers. Thus, the complaint alleges a viable clam for tortious misrepresentation of authority and assurances of payment.

To the extent the motion court relied on the principle of apparent authority, lack of consideration and the statute of frauds to dismiss these causes of action, such was error. The doctrine of apparent authority is irrelevant because the fourth and fifth causes of action are not seeking to hold the principals (the Nassers) liable on the ground that defendants-respondents had apparent authority from the Nassers to make promises of payment. Rather, these causes of action are seeking to hold the agents, defendants-respondents, liable for contracts or representations they purported to make on behalf of the principal (the Nassers) while acting without authority from the principal."
 

We recently reported on this Case in SDNY, captioned STONEWELL CORP., and RICHARD GLADSTONE, Plaintiffs, -against- CONESTOGA TITLE INSURANCE CO., WILLIAM KOLSHORN, and JERSEYSEARCH TITLE SERVICES, INC., Defendants. - as consolidated with - CONESTOGA TITLE INSURANCE CO., WILLIAM KOLSHORN, and JERSEYSEARCH TITLE SERVICES, INC.,

As is common in Federal District Court cases, there are complaints, and then amended complaints and so on.  Today's iteration of the case involves a second amended complaint.  Here, from the decision:

"For the reasons stated below, Stonewell's motion for leave to amend as set forth in the Corrected Proposed Second Amended Third-Party Complaint is granted in part and denied in part.

II. Analysis of Proposed Amendments

Stonewell has proposed three new causes of action in its Corrected Proposed Second Amended Third-Party Complaint. The Court finds that: (1) proposed Cause of Action Two is approved as consistent with the Court's Opinion and Order, dated January 7, 2010; (2) proposed Cause of Action Three is approved as sufficiently related to the original pleadings; (3) proposed Cause of Action Four is denied as unmeritorious and futile; and (4) Dollinger's other objections to the Corrected Proposed Second Amended Third-Party Complaint are denied.

A. Proposed Cause of Action Two is Approved

Cause of Action Two sets forth the relevant facts in support of the claim that Dollinger failed to convey two offers of settlement to Gladstone. These two instances of a purported breach of duty formed the basis for Stonewell's first motion for leave to amend the Third-Party Complain, which was granted by the Court. The Court therefore approves the proposed Cause of Action Two [*4] in Stonewell's Corrected Proposed Second Amended Complaint.

B. Proposed Cause of Action Three is Approved

In its Second Motion to Amend its Third-Party Complaint, Stonewell also seeks to add Cause of Action Three, which provides, in pertinent part:
41. On information and belief, at various times during the period of 1997 and 2007, a variety of settlement discussions were entered into between Conestoga representatives and Dollinger (on behalf of Stonewell/Gladstone). . . . Further, Dollinger admitted in his deposition that he tried to settle the pending matters at various times.

42. At no time did Dollinger communicate any of these discussions of settlement with Stonewell/Gladstone, who would have instructed Dollinger to proceed and settle the case.

43. Dollinger had an absolute duty to bring all settlement discussions to his client's immediate attention, and to discuss its relative merits and demerits. His failure to do so breaches a fundamental duty to his client.

In support of this new cause of action, Stonewell provides Proposed Exhibit A, which includes several of Dollinger's invoices. These invoices, dating from between March 1999 and February 2006, make a number of references to Dollinger [*5] engaging in settlement negotiations on behalf of Stonewell. Dollinger objects to the proposed Cause of Action Three on the ground that the allegations are too vague and lack adequate specificity.

The Court finds that the facts and allegations developed during discovery and set forth in Paragraphs 41-43 of the proposed amended pleadings are sufficiently related to the original claims and are foreshadowed in the earlier pleadings. See Bridgeport Music, Inc. v. UMG Recordings, Inc., 248 F.R.D. 408, 415 (S.D.N.Y. 2008); State Farm Mut. Auto. Ins. Co. v. CPT Med. Servs., P.C., 246 F.R.D. 143, 148 (S.D.N.Y. 2007). Permitting the proposed amendment would allow for the full adjudication of the merits of the remaining claim in this litigation - to wit, that, in the course of the attorney-client relationship, Dollinger failed to convey one or more settlement offers to Stonewell, and that this alleged breach caused damages to Stonewell. See Morin v. Trupin, 835 F. Supp. 126, 129 (S.D.N.Y. 1993). Accordingly, the Court grants the motion for leave to amend the pleadings to include Cause of Action Three. The Court also permits the addition of Proposed Exhibit A to the Third-Party Complaint.

C. Proposed [*6] Cause of Action Four is Denied

Stonewell next seeks, for the first time, to add a cause of action based on Dollinger's alleged failure to send Stonewell copies of invoices for legal fees and expenses that Dollinger sent to Conestoga during the period that Conestoga funded Dollinger's legal representation of Stonewell. Stonewell offers no legal basis for such a claim, nor does it allege any damages from this purported breach of Dollinger's duty to Stonewell.

The Court therefore denies leave to amend with respect to proposed Cause of Action Four (Paragraphs 44 and 45) on the ground that such amendment would be futile. See Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 9 L. Ed. 2d 222 (1962).

D. Dollinger's Other Objections Are Without Merit

Dollinger objects to specific contents of the Corrected Proposed Second Amended Third-Party Complaint that are unchanged from the original pleadings. Dollinger contends that the First Cause of Action (Legal Malpractice) and the Fifth Cause of Action (Failure to Cooperate and Failure to Produce Documents) should be excised from the proposed amended pleadings because they have been dismissed by the Court in its Opinion and Order, dated January 7, 2010. Dollinger further objects to "background [*7] allegations" in the pleadings that relate to these now-dismissed causes of action. 2

FOOTNOTES

2 These "background allegations" appear in Paragraphs 16-26 and 29-31.

These two causes of action have been dismissed and are not the subject of the upcoming trial. Their continued presence in the pleadings is inconsequential to the adjudication of this case. Requiring a redrafting of the original pleadings based on a summary disposition is unnecessary and would be a waste of time and resources. Dollinger's objections with respect to these portions of the Corrected Proposed Second Amended Third-Party Complaint are therefore denied. 3 "

It's fairly rare for defendant-attorney to move for summary judgment in a legal malpractice case, lose, and then lose at appeal.  Why do defendants move for summary judgment ?  Beyond the obvious answer that it is a shot that they can take without any downside, the general reason is that defendant believes that it can win in one of two areas. 

The first area is generally some lack of privity, or some lack of authority in the representation.  For example, that plaintiff did not cooperate in giving an affidavit, or plaintiff did not pay expenses for an expert, or lacked standing because of bankruptcy,

The second area is plaintiff's  generalized inability to prove success on the underlying case.  As examples, that there was no collectible assets, or the statute had already passed when the client came to the attorney, or the such.

While we cannot tell why defendant took his appeal in Mueller v Fruchter ;2010 NY Slip Op 01771 ;Appellate Division, Second Department ; Decided on March 2, 2010  we do see that neither Supreme Court nor the Appellate Division thought much of the motion:

"Here, the Supreme Court properly denied that branch of the defendants' motion which was for summary judgment dismissing the plaintiff's first cause of action (see Rosenstrauss v Jacobs & Jacobs, 56 AD3d 453, 454; Velie v Ellis Law, P.C., 48 AD3d 674, 675; Pedro v Walker, 46 AD3d 789, 790). The defendants failed to make a prima facie showing of their entitlement to judgment as a matter of law since they failed to show that the plaintiff was unable to prove at least one of the essential elements of her legal malpractice cause of action (see Rosenstrauss v Jacobs & Jacobs, 56 AD3d at 454; Velie v Ellis Law, P.C., 48 AD3d at 675; Pedro v Walker, 46 AD3d at 790). Thus, we need not address the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).


 

Legal Malpractice is family to its cousin, Medical Malpractice. In either situation, a person has put faith in a professional, asking that a threatening problem be solved. It matters little to the client/patient whether the situation is an operation or a trial. in either, the problem is overwhelming and threatening. What happens when something goes wrong.

There are financial considerations, but equally as important is the anger which comes from believing that you've been let down. Here, at the crux, is where an apology might help. Dr. Emily Senay, of CBS reports on medical malpractice. It is equally applicable to legal malpractice:

"It's not greed that drives most people to file medical malpractice lawsuits," Wojcieszak said. "It's anger. They get — people get angry when they think there's a cover-up."

Wojcieszak's anger turned into action. He created the Sorry Works Coalition with a simple idea: Reduce malpractice lawsuits by telling patients the truth followed by an apology.

"Basically, what it is is we're advocating good customer service. Without apology and disclosure, there can be no patients' safety because as long as you're coving up and denying, you're never gonna learn," Wojcieszak said.

According to healthcare litigation attorney Jim Saxton even lawyers say empathy works.

"That 'I'm sorry' done the right way with the right process can, number one, derail a lawsuit," Saxton said.

It could also reduce costs. After the University of Michigan health system changed its medical error policy on malpractice cases, legal fees per case were more than cut in half. The legal climate is slowly changing. Twenty-nine states now have laws that protect doctors from lawsuits when they say they're sorry.

It was the apology that opened the door for Kenney the patient and Van Pelt the doctor. "

Infant Plaintiff is injured in a paper shredder, and goes to attorney 1.  Attorney 1, who wisely understands that he lacks the special expertise to handle the case correctly in US District Court hands case off to Attorney 2.  After a while attorney 2 speaks to a law firm even more experienced, and they together bring the case to an almost  $1 million settlement.  At the infant's compromise, all the attorneys agree on a split between them.  Balance is to go to a structured settlement for the infant.  Done, ok?  Not so ok. 

The Magistrate decides that Attorney 1 is in violation of the then Dr-102 and has not done enough work to warrant a fee.  So, what does the Magistrate do?  The money which was to go to Attorney 1 is given to the plaintiffs, so that they get roughly 75% of the settlement. 

In   WAGNER & WAGNER, LLP, DANIEL J. BAURKOT, ESQ., Non-Party-Appellants, DAYANARA RODRIGUEZ, an infant by her , Plaintiffs, v. ATKINSON, HASKINS, NELLIS, BRITTINGHAM, GLADD & CARWILE, P.C., Non-Party-Appellee, INTERNATIONAL SALES, INC., INTERNATIONAL GROUP OF COMPANIES, Docket No. 08-4966-cv; UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT;2010 U.S. App. LEXIS 3170;August 25, 2009, Argued ; February 18, 2010, Decided  we see:

"After an infant compromise hearing, Judge Mann awarded $ 107,654.56 in attorneys' fees and $ 49,866.84 in expenses to Atkinson, Haskins, Nellis, Brittingham, Gladd, & Carwile , P.C. (the "Atkinson firm" or "appellees"), and $ 133,286.60 in attorneys' fees and $ 2,378.86 in expenses to Wagner & Wagner, LLP. She denied an award of fees to Baurkot because Wagner & Wagner's sharing of the fees with Baurkot was not properly disclosed to plaintiffs and Baurkot had performed no services of value in the litigation. Therefore, she concluded, the fee sharing agreement was in violation of New York Disciplinary Rule 2-107 ("DR 2-107"). 1 The magistrate judge awarded Baurkot's portion of the fee to the plaintiffs. Appellants then took this appeal. The Atkinson firm has filed a brief responding to Wagner & Wagner's argument that if we affirm the award to the plaintiffs, the fee splitting agreement between Wagner & Wagner and the Atkinson firm requires a redistribution of fees between the two firms."
 

"The magistrate judge then denied any portion of the attorneys' fees to Baurkot because DR 2-107 prohibited it. First, she found that DR 2-107 was violated because plaintiffs never received the required disclosure of the fee-sharing agreement. The judge rejected Wagner & Wagner's and Baurkot's contentions that they [*9] had orally sought and received the required consent. Instead, the magistrate judge relied on the plaintiffs' testimony indicating they were unaware that Baurkot would be working on the case.

Second, the magistrate judge concluded that DR 2-107 was violated because the requirement that either the work done be in proportion to the fee received or that the attorneys agree in a writing to undertake joint responsibility was not met. In so finding, she relied on several pieces of evidence, including: (i) Wagner & Wagner's initial failure to disclose Baurkot's share of the fee to plaintiffs; (ii) Wagner & Wagner's and Baurkot's failure to show specific work he performed on the case; and (iii) the lack of any documents in Wagner & Wagner's file to corroborate the claim that Baurkot performed services on the case.

The magistrate judge determined that the portion of the fee claimed by Baurkot should be awarded to the plaintiffs, rather than going to Wagner & Wagner. She expressed a concern that the fee would still find its way to Baurkot if Wagner & Wagner received it, and, moreover, noted that Wagner & Wagner had acknowledged that it considered $ 133,286.60 fair and adequate compensation for [*10] its efforts.

Wagner & Wagner and Baurkot filed timely objections to the Report and Recommendation. They objected to those parts of the order that determined that Baurkot's portion of the fee should go to plaintiffs. These objections included an objection to the awarded fees because they resulted in a 55.3%/44.7% split between Wagner & Wagner and the Atkinson firm, rather than the agreed upon 65%/35% split. However, Wagner & Wagner and Baurkot specifically stated that "[t]he Wagner Firm, [sic] is not suggesting that the fee to the Atkinson Firm be reduced. . . . What we are stating is that since the fee to the Atkinson Firm is 35% of the full one-third contingency fee, the fee to the Wagner Firm should be 65% of the full one-third contingency fee." Judge Gleeson adopted the magistrate judge's Report and Recommendation in full. This appeal followed."
 

Some states have mandatory legal malpractice insurance, but New York does not.  Result?  Plaintiffs who have suffered real damages at the hands of uninsured attorneys pursue them, and cannot collect their actual damages from the attorneys.  Here is one sad example. Matter of Jobi
2010 NY Slip Op 01704 ;Decided on March 2, 2010 ;Appellate Division, First Department .
 

Not only did this attorney convert monies, which the Clients' Fund reimbursed, but the attorney avoided several legal malpractice judgments.  It is a violation of attorney ethics to avoid satisfying a judgment which arises from professional acts, but, in this case, the attorney could [apparently] care less.

"Respondent's affidavit of resignation, sworn to on December 21, 2009, complies with 22 NYCRR 603.11[a][1-3] in that she states: (1) her resignation is rendered freely, voluntarily, without coercion or duress and that she is fully aware of the implications of submitting her resignation; (2) she is aware of a pending investigation based upon allegations of deceit involving the conversion of funds held in escrow, giving false testimony with respect thereto and the failure to satisfy judgments entered against her by two former clients and a third party; and (3) she acknowledges that if charges were predicated upon the misconduct under investigation by the Committee, she could not successfully defend herself.

With respect to one of the charges of conversion, it is alleged that respondent converted the sum of $21,250 which she deposited into her escrow account after she received the same from a real estate contract vendee named Jean John. A default judgment John subsequently obtained against respondent as a result of the conversion remains unsatisfied. Two other judgments entered against respondent in legal malpractice actions brought by former clients also remain unsatisfied. The Committee has reviewed respondent's affidavit, found it in compliance with Rule 603.11 and recommends its acceptance by this Court.

Pursuant to Judiciary Law § 90(6-a)(a), restitution may be ordered in a disciplinary proceeding where that attorney has wilfully misappropriated or misapplied money or property in the practice of law. An order directing such restitution may be entered as a civil judgment (Judiciary Law § 90[6-a][d]). Here, an order directing restitution would be futile in light of the fact that John has entered judgment against respondent as set forth above. In any event, respondent should reimburse the Lawyers' Fund for Client Protection of the State of New York as provided for by the statute.

Accordingly, the Committee's motion should be granted to the extent that respondent's resignation be accepted,
 

Legal malpractice seems to exist across the board everywhere an attorney interacts with a client.  Like the New Yorker cartoon showing a 5 year old who has dropped an ice cream cone, with an adult standing above and asking "Do you need an attorney?"  we see legal malpractice cases stitched in all settings.

Here in AMUSEMENT INDUSTRY, INC. dba WESTLAND INDUSTRIES; and PRACTICAL FINANCE CO., INC., Plaintiffs, -v.- MOSES STERN, aka MARK STERN; JOSHUA SAFRIN; FIRST REPUBLIC GROUP REALTY LLC; EPHRAIM FRENKEL; and LAND TITLE ASSOCIATES ESCROW, Defendants.;07 Civ. 11586 (LAK) (GWG);UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2010 U.S. Dist. LEXIS 11817 the attorney is Buchanan Ingersol.
This case is about a failed real estate partnership.  From the case: "On June 29, 2007, third-party defendants Steven Alevy and Friedman -- who "was acting, at all times mentioned herein, in his capacity as an attorney and shareholder of [Buchanan]," 3d-Party Compl. P 5 -- "presented an investment opportunity to Amusement, purportedly on behalf of Safrin and others," although Safrin had not authorized either party to do so, id. PP 26-27. Indeed, while Friedman held himself out as Safrin's representative, "Safrin never retained or otherwise authorized Friedman to speak or act on his behalf in connection with the transactions described in the [underlying] Complaint." Id. P 29.

On that same date, Steven Alevy drafted [*10] a "letter of intent," which was "signed by [defendant Moses] Stern on behalf of First Republic Corp.," and which "identifies as its parties First Republic Corp. and Westland Industries, the name under which Amusement does business." Id. P 30. Safrin was not a party to the letter of intent. Id. P 31. That day, Amusement wired $ 13 million into an escrow account. Id. P 33.

Amusement and First Republic agreed to "work in good faith 'to finalize [their agreements]'" during the seven-day period following June 29, 2007. Id. P 37. During this period, Amusement "drafted and forwarded three partnership agreements to Friedman for Safrin, among others, to sign in order 'to complete a transaction.'" Id. (emphasis omitted). Nonetheless, "[n]one of these draft agreements called for Safrin's signature." Id. P 38.
 

Buchanan argues that Safrin's claim for implied indemnification against it must be dismissed because "Safrin's denial of any contractual relationship between he [sic] and BIR makes it impossible for him to allege an implied contractual right to indemnification because there is nothing from which to create any implied obligation running from BIR to Safrin." Buchanan Mem. at 6 (citing 3d-Party Compl. PP 28, 63, 65, 66, 72, 73).

Buchanan's argument must be rejected because Fed. R. Civ. P. 8(d) expressly permits "hypothetical" pleading and the assertion of "inconsistent claims or defenses." See Fed. R. Civ. P. 8(d)(2)-(3). Safrin's assertion that there was no relationship between him and Buchanan, see, e.g., 3d-Party Compl. P 3, does not, therefore, bar him from asserting that, should such a relationship be found, Buchanan is obligated to indemnify him, id. PP 85-86. See, e.g., Henry v. Daytop Vill., Inc., 42 F.3d 89, 95 (2d Cir. 1994) ("Under [Rule 8(d)] of the Federal Rules of Civil Procedure, a plaintiff may plead two or more statements of a claim, even within the same count, regardless of consistency. [*17] . . . [T]herefore, we may not construe [the] first claim as an admission against another alternative or inconsistent claim.") (citations omitted); Padre Shipping, Inc. v. Yong He Shipping, 553 F. Supp. 2d 328, 333 (S.D.N.Y. 2008) ("plaintiffs are allowed to assert inconsistent facts in support of alternative claims, and courts may not construe allegations regarding one claim to be an admission against another") (citation omitted); Ascher v. Target Corp., 522 F. Supp. 2d 452, 458 (E.D.N.Y. 2007) ("the Court cannot construe one claim as an admission against another alternative or inconsistent claim") (citation omitted)."
 

We are reminded yet again that the statute of limitations starts to run in legal malpractice on the day that the mistake is made.  It's not the day that you realize that a mistake was made.  This issue arises mostly in transactional representations, such as the lease in this case.  When there is litigation, then a continuous representation question comes into play, and plaintiffs usually know when the case ends.  Case endings, although not always a milestone, often provide a comfortable point of reference.

Here,  in Lincoln Place, LLC, Plaintiff, v. RVP Consulting, Inc., et al., Defendants. Robert Peters, et al., Third-Party Plaintiffs-Appellants, Michael E. Pekofsky, Esq., . 
plaintiff hired attorney to write up and administer a lease.  Things went wrong from the beginning, when there was an assignment rather than designating a lessee.  What is the difference?  In one, the plaintiff remained responsible for unpaid rents when the lessee stopped paying.  In the other, plaintiff would not have been responsible.

When and how was the mistake made?  When and how did plaintiff become aware?  When did the statute of limitations start to run?  To save the statue, plaintiff argues that a decision had to be made on the underlying case before he had the ability to sue.  This argument loses. Justice Kornreich of Supreme Court, New York County writes:

"The third-party complaint alleging legal malpractice is time-barred, the action having been commenced more than three years after the malpractice was committed (CPLR 214[6]; Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]). Third-party defendant Pekofsky negotiated a lease on behalf of third-party plaintiffs RVP Consulting and Robert Peters (collectively, Peters), as tenants, in 1997. He then assigned the lease, rather than designating a lessee, thereby causing Peters, pursuant to the terms of the lease, to remain liable for the full performance of all the tenant's obligations thereunder. In 1998, the assignee defaulted in its rent obligations, triggering Peters's liability for the outstanding rent. This action was not commenced until 2002.

Contrary to Peters's contention, an adjudication of the meaning of Pekofsky's 1997 letter was not a prerequisite to the existence of an actionable injury. Indeed, while Peters may not have been aware until 2001 or 2002 that Pekofsky's actions could result in liability, it is not the date on which Peters learned that malpractice had occurred, but the date on which the malpractice was committed, that is relevant (West Vil. Assoc. Ltd. Partnership v Balber Pickard Battistoni [*2]Maldonado & Ver Dan Tuin, PC, 49 AD3d 270, 270 [2008]). Peters's subjective belief that Pekofsky had designated a lessee rather than assigning the lease is of no consequence. "

In Seaview Mezzanine Fund, LP v. LoPresti, 2010 NY Slip Op 30350(U), decided by Justice York on February 18, 2010, in New York County, we see a well written explanation of several basic principals.  In this case a review of releases, of contract interpretation and the difference between a CPLR 3211(a)(7) and a CPLR 3211(a)(1) motion.

CPLR 3211(a)(7)  v.  CPLR 3211(a)(1) motion:   "When evaluating  a defendant's motion to dismiss, pursuant to CPLR 3211(a) the test is `not whether the plaintiff has artfully drafted the complaint,  but whether, deeming the complaint to allege whatever can be reasonably implied from its statements, a cause of action can be sustained." That's true for all CPLR 3211 motions except under (a)(1), where "A CPLR 3211(a)(1) motion to dismiss on the ground that the action is barred by documentary evidence...may be appropriately granted only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law.'"

Contract interpretation:  "On a motion to dismiss, the interpretation of this contractual language is a question of law for the court to determine. `The fundamental rule of contract interpretation is that agreements are to be construed in accord with the parties intent...and the best evidence of what parties to a written agreement intend is what they say in their writing."

Releases:  Need there be actual consideration in a release?  No.  General Obligations Law 15-303 states:  A written instrument which purports to be a total or partial release of all claims, debts, demands or obligations, or a total or partial release of any particular claim...shall not be invalid because of the absence of consideration or of a seal.

This week brings a decision in SHEEHY,v. NEW CENTURY MORTGAGE CORP., ET AL., No. 08-CV-377 (JFB) (MLO);UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK;2010 U.S. Dist. LEXIS 15201,  We have noted a trend in legal malpractice cases involving allegaions of breach of fiduciary duty.  Here is another one.
 From the decision:

"Breach of Fiduciary Duty

Under New York law, the elements of a breach of fiduciary duty claim are (1) that a fiduciary duty existed between plaintiff and defendant, (2) that defendant breached that duty, and (3) damages as a result of the breach. Meisel v. Grunberg, 651 F. Supp. 2d 98, 114 (S.D.N.Y. 2009) (citing Whitney v. Citibank, N.A., 782 F.2d 1106, 1115 (2d Cir. 1986) and Regions Bank v. Wieder & Mastroianni, P.C., 423 F. Supp. 2d 265, 270 (S.D.N.Y. 2006), remanded on other grounds by 253 Fed. Appx. 52 (2d Cir. 2007)).

Halpern does not--and cannot--dispute that, by serving as plaintiff's attorney, she had a fiduciary relationship with plaintiff. (See Halpern Mem. of Law at 17); see also Graubard Mollen Dannett & Horowitz v. Moskovitz, 86 N.Y.2d 112, 653 N.E.2d 1179, 1182, 629 N.Y.S.2d 1009 (N.Y. 1995) ("[A]n attorney stands in a fiduciary relation to the client.").

Instead, Halpern argues that plaintiff cannot establish a breach of fiduciary duty occurred because plaintiff has not submitted any expert testimony. (See id. at 17-18.) In support of this argument, Halpern cites the fact that New York courts generally require expert testimony to establish the standard of care in legal malpractice [*24] cases. See, e.g., D'Jamoos v. Griffith, No. 00 CV 1361, 2001 U.S. Dist. LEXIS 17595, 2001 WL 1328592, at *6 (E.D.N.Y. Aug. 1, 2001). Typically, in these cases, expert testimony is used to establish the reasonableness of discretionary decisions made by an attorney, such as a decision to question a witness, raise a particular argument, or make a particular motion. See, e.g., Kranis v. Scott, 178 F. Supp. 2d 330, 335 (E.D.N.Y. 2002) (requiring expert testimony where malpractice claim involved, inter alia, questions of the reasonableness of failure to raise a particular defense); Hatfield v. Herz, 109 F. Supp. 2d 174, 179-80 (S.D.N.Y. 2000) (granting summary judgment to defendant where plaintiff failed to provided expert testimony on malpractice claim that concerned, inter alia, defendant's failure to request a jury trial, failure to prepare adequately for trial, failure to call certain witnesses, and failure to file and litigate certain pre-trial motions); Greene v. Payne, Wood and Littlejohn, 197 A.D.2d 664, 602 N.Y.S.2d 883, 885 (App. Div. 1993) (requiring expert testimony to address "the question of whether the defendants were negligent in failing to separately plead the pendent State claim at the time they instituted the Federal [*25] suit"). However, there are exceptions to the rule requiring expert testimony. Expert testimony is not required in legal malpractice cases if "'the ordinary experience of the fact-finder provides sufficient basis for judging the adequacy of the professional service . . . , or the attorney's conduct falls below any standard of due care . . . ." Greene, 602 N.Y.S.2d at 885; see also Stonewell Corp. v. Conestoga Title Ins. Co., No. 04 CV 9867 (KMW) (GWG), F. Supp. 2d , 2010 U.S. Dist. LEXIS 1107, 2010 WL 46015, at *5 (S.D.N.Y. Jan. 7, 2010) ("[E]xpert testimony may be deemed unnecessary [in legal malpractice cases] where the ordinary experience of the fact finder provides sufficient basis for judging the adequacy of the professional service." (internal quotations and citations omitted)).

Here, plaintiff asserts a breach of fiduciary duty claim against Halpern, not a legal malpractice claim. However, the Court will assume, arguendo, that the rule regarding expert testimony applies to breach of fiduciary duty claims against an attorney as well as legal malpractice claims because these causes of action are closely related under New York law. For example, the Appellate Division, First Department, has described breach [*26] of fiduciary duty and legal malpractice claims as "co-extensive," 11 and, when a plaintiff asserts both a legal malpractice claim and a breach of fiduciary duty claim against an attorney, New York courts typically dismiss the breach of fiduciary duty claim as duplicative of the malpractice claim. See, e.g., Joyce v. Thompson Wigdor & Gilly, LLP, No. 06 Civ. 15315 (RLC) (GWG), 2008 U.S. Dist. LEXIS 43210, 2008 WL 2329227 (S.D.N.Y. June 3, 2008) ("Under New York law, where claims of negligence, breach of contract, breach of fiduciary duty, negligent misrepresentation, or fraudulent misrepresentation are premised on the same facts and seek identical relief as a claim for legal malpractice, those claims are duplicative and must be dismissed."); Amadasu v. Ngati, No. 05 CV 2585 (JFB) (LB), 2006 U.S. Dist. LEXIS 19654, 2006 WL 842456, at *9 (E.D.N.Y. Mar. 27, 2006) (collecting cases); Fashion Boutique of Short Hills, 780 N.Y.S.2d at 596; Schweizer v. Mulvehill, 93 F. Supp. 2d 376, 400 & n.29 (S.D.N.Y. 2000) ("New York law clearly provides . . . that where breach-of-fiduciary duty claims mirror allegations of malpractice, they must be dismissed.").

FOOTNOTES

11 Weil, Gotshal, & Manges v. Fashion Boutique of Short Hills, 10 A.D.3d 267, 780 N.Y.S.2d 593, 596 (App. Div. 2004); [*27] see also Kirk v. Heppt, 532 F. Supp. 2d 586, 591 (S.D.N.Y. 2008) (construing pro se plaintiff's claim for breach of fiduciary duty as a claim for legal malpractice).

In any event, plaintiff need not provide expert testimony to survive summary judgment because both above-referenced exceptions to the rule apply here. Typically, the exceptions apply in cases where the attorney's alleged conduct is so egregious that the reasonableness of the conduct is not at issue. See, e.g., Northrop v. Thorsen, 46 A.D.3d 780, 848 N.Y.S.2d 304, 308 (App. Div. 2007) (stating that expert testimony not required because attorney's disregard of "clearly defined and firmly established" rule set forth in New York Worker's Compensation law "fell below any permissible standard of due care"); Shapiro v. Butler, 273 A.D.2d 657, 709 N.Y.S.2d 687, 689 (App. Div. 2000) (expert testimony not required to establish that lawyer who failed to file an answer, which led to a default judgment against client, acted negligently); S & D Petroleum Co. v. Tamsett, 144 A.D.2d 849, 534 N.Y.S.2d 800, 802 (App. Div. 1988) (expert testimony not required to establish that lawyer retained to secure a debt rendered inadequate professional service by failing to file a security agreement [*28] necessary to secure the debt). The allegations in this case clearly fall within the exceptions to the requirement of expert testimony. The gravamen of plaintiff's breach of fiduciary duty claim is that Halpern lied to her and had conflicting loyalties. Specifically, plaintiff claims that Halpern provided false assurances and made material omissions during the October 10, 2006 meeting--which included, among other things, allegedly lying to plaintiff by telling her that Adlerstein was also going to be on the mortgage--and thereby convinced plaintiff to close on 111 Berkley Street and that, by doing so, Halpern furthered Adlerstein's interests at plaintiff's expense. (See Pl. Mem. of Law (Halpern) at 10; see also, e.g., Pl. Dep. 112:6-22; 114:10-115:20.) Additionally, plaintiff has submitted evidence that Halpern knew about the $ 21,567.52 payment to Adlerstein (see DeRossi Dec. Ex. N) and that she failed to disclose this payment to plaintiff.

False statements or material omissions by an attorney to a client clearly breach the attorney's fiduciary duties, particularly where those false statements and omissions further conflicting interests. See, e.g., Summit Rovins & Feldesman v. Fonar Corp., 213 A.D.2d 201, 623 N.Y.S.2d 245, 246 (App. Div. 1995) [*29] (noting that attorney has fiduciary duty "to bring to the client's attention all relevant considerations" and denying defendant-attorney summary judgment because triable issues of fact existed regarding adequacy of attorney's disclosures about conflicts of interest). See generally Mermelstein v. Spector, 485 F.2d 474, 479 (2d Cir. 1973) (classifying, as a "recognized basic principle," the rule than an attorney who "negligently or willfully withholds from his client information material to the client's decision to pursue a given course of action, or to abstain therefrom, . . . is liable for the client's losses suffered as a result of action taken without benefit of the undisclosed material facts"); Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 56 A.D.3d 1, 865 N.Y.S.2d 14, 21 (App. Div. 2008) ("[A]ny act of disloyalty by counsel will also comprise a breach of the fiduciary duty owed to the client.") Assuming the jury credited plaintiff's version of events, it would not need expert testimony to find that a lawyer who allegedly violated basic requirements of the attorney-client relationship--candor and loyalty -- by engaging in, among other things, outright fraud (as is alleged here) [*30] failed to provide "adequa[te] professional service" and "fell [] below any standard of due care." Therefore, where, as here, the issue is whether an attorney breached her fiduciary duty by engaging in outright fraud in connection with a real estate transaction, plaintiff need not provide expert testimony to survive summary judgment on this claim."

It's a rare phenominom, but in this case the Second Department took another look at a case, and significantly changed its decision regarding legal malpractice.  in Uzzle v Nunzie Ct. Homeowners Assn., Inc. ;2010 NY Slip Op 01476 ;Decided on February 16, 2010 ;Appellate Division, Second Department   under 2008 NY Slip Op 7905, the AD wrote:"Given the limited scope of the plaintiff's notice of appeal, the issue of whether the Supreme Court erred in dismissing the causes of action aserted against the defendant John C. DiGiovanna is not peroperly before this Court."
 

Today, that decision was recalled and this is the final outcome: "The Supreme Court properly granted that branch of DiGiovanna's motion which was to dismiss the cause of action to recover damages for breach of contract insofar as asserted against him, as that cause of action was duplicative of the legal malpractice cause of action (see Maiolini v McAdams & Fallon, P.C., 61 AD3d 644, 645; Gelfand v Oliver, 29 AD3d 736; Shivers v Siegel, 11 AD3d 447). However, affording the legal malpractice cause of action a liberal construction and according the plaintiff every favorable inference, the complaint does state a cause of action to recover damages for legal malpractice (see generally Hamoudeh v Mandel, 62 AD3d 948, 949; Maiolini v McAdams & Fallon, P.C., 61 AD3d 644, 645; Malik v Beal, 54 AD3d 910, 911). "
 

What was it that turned the case around?

In Yakubov v Borukhov we see a common fact pattern.  It consists of an early event followed by litigation, bad outcome, and a look back, in legal malpractice, at the original attorney from years before.

Here the sequence is:  Real estate contract which was to allow plaintiff to subdivide property.  Seller balks, and Plaintiff-buyer litigates, eventually winning what turns out to be a damaged property.  Presumably, no subdivision is permitted.  Client, now years later, looks back at contract attorney seeking legal malpractice damages, some 5 years later.  How does this come out?

Attorney wins dismissal.  Plaintiff offers the following arguments:  I thought he was still my attorney.  This is patently insufficient, and the court so finds, in rather summary fashion.  Well then, says plaintiff, how about continuous representation ?  That's no good either, says the Court.  There is no indication, either in affidavit form or in evidence that there was a continuing, ongoing relationship.

Case dismissed.

How does an attorney prove negligence in a trip & fall case?  Failures in such proof provide a steady steam of legal malpractice inquiies, and fuel much plaintiff suspicion that the law is either not fair, or that their attorney could have done a better job.

In  Grazidei v. Mezeny Inc., 4903/07; Decided: February 9, 2010; Justice Jack M. Battaglia;KINGS COUNTY; Supreme Court we find the following discussion of the law of trip & fall:

"As summarized by Mezeny, Defendants contend that they are entitled to summary dismissal of Plaintiff's Verified Complaint "because the evidence demonstrates that [Plaintiff] did not know what caused her to fall and to the extent she now claims that she fell on the single step, a single step is not [an] inherently dangerous condition." (Affirmation, ¶8.) Defendants contend, in effect, that Plaintiff cannot establish the existence of an unreasonably dangerous condition on the premises, or that any such condition caused her to fall. Although questions as to breach of duty conceptually precede questions as to causation, where the plaintiff cannot identify the cause of a fall, the questions are conflated and addressed in the caselaw under the rubric of proximate cause. Here, by their contention on this motion that a single step is not an unreasonably dangerous condition, after service and acceptance of the Supplemental Verified Bill of Particulars and expert disclosure, Defendants recognize that Plaintiff has identified the single step as a cause of her fall. Their complaint becomes, in the first instance, therefore, that disclosure did not reveal any evidence that would relate the single step to Plaintiff's fall.

"In a trip and fall case, [a] plaintiff's inability to identify the cause of his or her fall is fatal to his or her cause of action, since, in that instance, the trier of fact would be required to base a finding of proximate cause upon nothing more than speculation." (Antonia v. Srour, 2010 NY Slip Op 213, * 1 [2d Dept Jan 12, 2010] [internal quotation marks and citations omitted]; see also Cherry v. Daytop Vil., Inc., 41 AD3d 130, 131 [1st Dept 2007]; Jackson v. Fenton, 38 AD3d 495, 495 [2d Dept 2007].) The defendant in a trip and fall case establishes its entitlement to judgment as a matter of law by submitting the deposition testimony of the plaintiff, demonstrating that the plaintiff cannot identify the cause of the fall. (See Scott v. Rochdale Vil., Inc., 65 AD3d 621, 621 [2d Dept 2009]; Hunt v. Meyers, 63 AD3d 685, 685 [2d Dept 2009]; Plowden v. Stevens Partners, LLC, 45 AD3d 659, 660 [2d Dept 2007]; Lee v. J&R Electronic, Inc., 38 AD3d 501, 501 [2d Dept 2007].)

"Proximate cause may be established without direct evidence of causation, by inference from the circumstances of the accident." (Constantino v. Webel, 57 AD3d 472, 472 [2d Dept 2008]; see also Cintron v. New York City Tr. Auth., 61 AD3d 803, 804 [2d Dept 2009]; Manning v. 6638 18th Ave. Realty Corp., 28 AD3d 434, 435 [2d Dept 2006].) But there must be "a sufficient nexus between the condition of the [property] and the circumstances of [the plaintiff's] fall to establish causation" (see Cherry v. Daytop Vil., Inc., 41 AD3d at 131), that is, "a reasonable inference of causation" and not "mere speculation" (see Constantino v. Webel, 57 AD3d at 472-473; see also Lissauer v. Shaarel Halacha, Inc., 37 AD3d 427, 427-28 [2d Dept 2007] ["sheer speculation"]; Grob v. Kings Realty Assocs., LLC, 4 AD3d 394, 395 [2d Dept 2004] ["purely speculative"].)

The "unknown cause" caselaw is most appropriately applicable where a foreign object or substance on the floor or stairs is alleged to have created the danger, or some defect in construction, such as a hole or broken step. It must be applied realistically where there is an alleged flaw in structural design, since a plaintiff cannot be expected to testify with an engineer's eye to the presence of the flaw and its likely effect in bringing about a fall.

With this in mind, the Court finds that Plaintiff's deposition testimony is insufficient to satisfy Defendants' prima facie burden based upon the "unknown cause" caselaw. As quoted above, Plaintiff testified that she "fell on the step," and, although she did not know "if there was anything about the step which caused [her] to fall," she described what happened. "I felt my left foot go under me…It's like walking out straight and not knowing…If you are walking out straight you are thinking you are going to be on a flat level, and I wasn't…It looked like I was going straight. I didn't see any difference."

Plaintiff's description of her fall is, at the least, consistent with a height differential, such as is presented by the single-step riser addressed in the expert disclosure. Moreover, although the "slope on the step" does not appear to be addressed in the expert disclosure, Plaintiff's testimony about it clearly points to the step itself as the cause of her fall.

Assuming, however, that Defendants have made a prima facie showing under the "unknown cause" caselaw, then the affidavits of Plaintiff and her expert engineer, submitted in opposition, are sufficient to raise triable issues as to whether the absence of handrails "constituted a violation of the subject building code ordinances, and whether the lack of handrails was a proximate cause of the accident." (See Spallina v. St. Camillus Church, 53 AD3d 650, 651 [2d Dept 2008].) Plaintiff asserts that "[w]hen [her] right foot buckled, [she] reached to [her] right for something to stop [her] from falling but there was nothing to hold onto and [she] fell to the ground." (Affidavit of Nancy Grazdei, ¶4.) "Even if the plaintiff's fall was precipitated by a misstep, given her testimony that she reached out to try to stop her fall, there is an issue of fact as to whether the absence of a handrail was a proximate cause of her injury." (See Antonia v. Srour, 2010 NY Slip Op 213, at * 1; see also Christian v. Railroad Deli Grocery, 57 AD3d 599, 601 [2d Dept 2008]; Scala v. Scala, 31 AD3d 423, 425 [2d Dept 2006].) The expert's affidavit tracks the 3101 (d) disclosure, and specifically addresses the absence of a handrail at the subject premises.

Defendants contend that the Court should not consider Plaintiff's affidavit as it relates to the absence of a handrail to find a triable issue, because she did not testify at her deposition that the absence of a handrail contributed to her fall. They contend that Plaintiff's affidavit "present[s] feigned issues of fact designed to avoid the consequences of [her] earlier deposition testimony, and thus [is] insufficient to defeat the defendants' motion." (See Hunt v. Meyers, 63 AD3d at 685-86]; see also Wilson v. Prazza, 306 AD2d 466, 467 [2d Dept 2003].) There is nothing in Plaintiff's affidavit that contradicts her deposition testimony, and the most that could be argued is that she would have been expected to mention the absence of a handrail as contributing to her fall. But the Court disagrees that the relevant questions asked, most of which are quoted above, would have elicited such a response. Moreover, it is debatable whether a layperson would immediately think of the lack of a handrail as the cause of a fall.

Defendants may yet succeed in at least removing the single-step issue from the case, if they are correct that "a single step is not an inherently dangerous condition." (Affirmation, ¶8.) But Defendants clearly overstate the significance of the caselaw on the issue. A defendant may establish its entitlement to judgment as a matter of law with evidence that a single step is both "open and obvious and not inherently dangerous." (See Bretts v. Lincoln Plaza Assoc., Inc., 2009 NY Slip Op 8771, * 1-* 2 [2d Dept Nov 24, 2009]; Groon v. Herricks Union Free School District, 42 AD3d 431, 432 [2d Dept 2007]; Luciano v. 144-18 Rockaway Realty Corp., 32 AD3d 505, 506 [2d Dept 2006].) Where a sufficient showing is not made, however, the defendant will be denied summary judgment. (See Kempter v. Horton, 33 AD3d 868, 869 [2d Dept 2006].) The caselaw on single steps or other height differentials is consistent with premises liability authority generally that, in the absence of a warning, the defendant seeking summary dismissal must demonstrate "as a matter of law, that the condition was both open and obvious and not unreasonably dangerous." (See Holly v. 7-Eleven, Inc., 40 AD3d 1033, 1033 [2d Dept 2007] [emphasis added]; see also Selig v. Burger King Corp., 66 AD3d 986, 986 [2d Dept 2009].)

And so, in a case involving an interior single-step riser, the defendant made a sufficient showing with evidence that "[t]here was a gold-color nosing on the step and the pattern of the tiles on the top of the steps was different from the pattern of the tiles below the steps"; and "[t]here was also a sign stating "Watch Your Step" adjacent to the step." (See Bretts v. Lincoln Plaza Assocs., Inc., 2009 NY Slip Op 8771, at * 1-* 2.) And where there was a single step in a hallway, the defendant made a sufficient showing with photographs revealing that "a yellow line had been painted across the top of the step to alert passersby of the height differential and that, also present, to the side, was a short ramp, allowing passersby to circumvent the step altogether." (See Groon v. Herricks Union Free School District, 42 AD3d at 432.)

Here, Defendants make no showing that the single step in front of the doors to the restaurant is either open and obvious or not inherently dangerous. Although defendant Prime Holdings does include photographs in its motion papers, they are not authenticated or otherwise shown to be admissible as evidence (see Corsi v. Town of Bedford, 58 AD3d 225, 228-29 [2d Dept 2008]), and they are not supported by any opinion, lay or expert, admissible or not, on the controlling issues.

Defendants cannot, therefore, obtain summary dismissal under either the "unknown cause" or single-step caselaw."

A common law retaining lien entitles the outgoing attorney to retain all papers, securities, or money belonging to the client that came into the attorney's possession in the course of representation, as security for payment of attorney's fees. Arising from Judiciary Law 475, it is enforceable only by retention of the items themselves and is lost if the file or documents are no longer in the attorney's possession.

A charging line similarly arises and attaches to any recovery and thus secures the attorney's right to compensation. A hearing will be held to determine fees, based upon Quantum meruit.

Quantum meruit is the fair and reasonable value of the services rendered, which may be more or less than the amount provided in the contract or retainer agreement and is determined by "taking into consideration the character of the services, the nature and importance of the litigation, the degree of responsibility imposed or incurred, the amount or value involved, the length of time spent, the ability skill and experience required and exercised, the character, qualifications and standing of the attorney and the results achieved. The recovery is not limited to the amount billed, the original terms of the retainer agreement, and may be less or more than the amount which might have been recovered under a contingency fee or other measuring tools of fees.

Unions provide attorneys and legal coverage for their members.  Sometimes employers provide attorneys for their employees.  Do they have legal malpractice responsibility to the member-employee ?  Does the attorney have a legal malpractice responsibility to the client, in the absence of privity?  Some answers are set forth in   NADA, -against- 1199 SEIU HEALTH CARE EMPLOYEES UNION, 09 Civ. 5796 (SAS);UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2010 U.S. Dist. LEXIS 12061;February 11, 2010,

Take this situation.  Client is a member of a union that provides legal free attorneys to its members. Perhaps the client needs an attorney for a closing, or to handle a simple contract.  In most cases, the attorney and the client do not sign a retainer agreement.  The attorney is paid, in some fashion, by the union, or in some cases, by the employer.  Then something goes wrong.  The main doctrinal problem in a legal malpractice analysis is that there is no professional relationship between the attorney and the client.  Resort  to an argument that the relationship is "so close" as to resemble privity often fails.  What then?

A suit against the union for lack of fair representation, or against the employer for breach of a collective bargaining agreement is one resort.  If that is the action, what is the statute of limitations?

Judge Scheindlin in Nada tells us: 'Liberally construed, Nada alleges that 1199 has breached its duty of fair representation. 12 In DelCostelio v. Teamsters, the Supreme Court held that the six-month statute of limitations of section 10(b) of the National Labor Relations Act applies to cases in which employees sue both their employer for breach of the collective [*5] bargaining agreement pursuant to section 301(a) of the Labor Management Relations Act, and their union for breach of its duty of fair representation. 13 In reaching this conclusion, the Court rejected the notion that state statute of limitation periods for vacating an arbitration award and for legal malpractice were applicable to such claims. 14 The Second Circuit has held "DelCostello to require that the § 10(b) six-month limitations period also be applied to unfair representation claims standing alone…."

"Here, Nada asserts that 1199 breached the duty of fair representation by failing to remedy the pay differential for certain of the former-144 members through the committee created by the May 2004 side letter agreement. Nada was aware of this claim on October 30, 2007, when he signed a grievance form complaining about 1199's failure to secure the raises and benefits mentioned in that agreement. Therefore, the six-month limitation period in which to bring this cause of action expired, at the latest, on April 30, 2007. Because Nada did not commence this action until June 5, 2009, it is untimely."

Once, the Corning glass works were a behemoth in upstate New York.  World class, cutting edge [no pun], and hugely successful, ownership of Corning stock was both a good investment and an emblem of upstate NY industriousness.  This case, Matter of Hsbc Bank U.S.A. v Jesse T. Littleton, 2010 NY Slip Op 01099 ; Decided on February 11, 2010 ; Appellate Division, Fourth Department demonstrates both the economic downturn in NY as well as the principal of trusts and releases.
Beneficiaries of a trust took a big hit in the value of Corning stock held in the trust.  The Corning stock comprised 80% of the corpus, and when its value went down, it hurt.  We pick up from the 4th Department opinion:

"The accounting revealed significant declines in the value of Corning stock, which constituted more than 80% of the trust corpus. Petitioners signed their respective releases, which provided that HSBC was forever absolved of all liability for the handling of trust assets.

More than three years later, petitioners commenced this proceeding seeking to set aside the releases, and Surrogate's Court granted the motions of HSBC and respondent law firm to dismiss the petition. We affirm.

According to petitioners, HSBC and respondent law firm committed fraud by failing to disclose the possible legal effect of the accounting and the execution of the releases. Contrary to petitioners' contention, however, the petition fails to state a cause of action for fraud or constructive fraud against either HSBC or respondent law firm because it fails to make a "factually supported allegation" of misrepresentation (Pope v Saget, 29 AD3d 437, 441, lv denied 8 NY3d 803; see Simmons v Washing Equip. Tech., 51 AD3d 1390, 1391-1392). We further conclude that the Surrogate properly determined that the breach of fiduciary claim against respondent law firm was, in essence, a claim for legal malpractice and thus was barred by the three-year statute of limitations (see CPLR 214 [6]; Harris v Kahn, Hoffman, Nonenmacher & Hochman, LLP, 59 AD3d 390). Even assuming, arguendo, that the petition states a separate claim for breach of fiduciary duty against respondent law firm, we conclude that such claim arises from the same facts as those from which the legal malpractice claim arises, and thus the Surrogate properly dismissed that claim as duplicative of the legal malpractice claim (see TVGA Eng'g, Surveying, P.C. v Gallick [appeal No. 2], 45 AD3d 1252, 1256).

Finally, we conclude that the Surrogate properly dismissed the breach of fiduciary duty claim against HSBC. HSBC fulfilled its fiduciary duty by providing petitioners with a full accounting of the trust, and petitioners failed to object to the accounting and executed releases waiving their rights against HSBC (see Matter of Hunter, 4 NY3d 260, 270-271; Matter of Schoenewerg, 277 NY 424, 427-428). "

When one starts to read a case, and the plaintiff is pro-se, look out for common mistakes within.  In Williams v Bushman ;2010 NY Slip Op 00840 ;Decided on February 2, 2010 ;Appellate Division, Second Department  we see at least two.  Here is the story line:
 

"The plaintiff, Nathaniel N. Williams, retained the law firm of Goldberg, Scudieri & Block, P.C. (hereinafter the Goldberg firm), to defend him in a mortgage foreclosure action. Franklin moved for summary judgment on the complaint, submitting in support of its motion the executed mortgage and evidence of Williams's default. In opposition, Mark K. Lindenberg, an attorney associated with the Goldberg firm, submitted an affidavit from Williams asserting, inter alia, that Williams had tendered a notice rescinding the mortgage to Franklin's predecessor in interest, Interstate Resource Corporation (hereinafter Interstate). Williams did not have a mail receipt or any other proof that the rescission notice had been sent to Interstate. Williams also asserted that Interstate had used unspecified "high pressure tactics" to induce him "to execute a high rate note and mortgage." In July 2000 the Supreme Court, Kings County, granted Franklin's motion for summary judgment. 

Problem 1

Williams subsequently retained the defendant, David M. Bushman, to prosecute an action in the Supreme Court, Rockland County, to recover damages for legal malpractice against Lindenberg and the Goldberg firm. In July 2004 the Supreme Court granted the motion of Lindenberg and the Goldberg [*2]firm to dismiss the complaint as time-barred. 

Problem 2

Williams then commenced the instant action alleging legal malpractice against Bushman on the ground that he failed to commence the legal malpractice action against Lindenberg and the Goldberg firm within the statute of limitations. Bushman moved for summary judgment dismissing the complaint, arguing that Williams could not show that he would have been successful in the underlying legal malpractice action but for Bushman's alleged error, because he could not show that Lindenberg committed malpractice or that any actions or omissions on Lindenberg's part were a proximate cause of the unfavorable resolution of the foreclosure proceeding. In an order dated May 21, 2008, the Supreme Court denied Bushman's motion for summary judgment.

Following the denial of summary judgment, Bushman moved to enforce a settlement agreement, which he alleged had been approved by Williams. In an order dated April 17, 2009, the Supreme Court denied Bushman's motion, holding that, although a settlement was apparently reached in principle, "it was never finalized by the execution of the settlement documents."  Plaintiff resisted taking a settlement from defendant.
 

Problem 3

 Through, inter alia, the affidavit of an attorney who specialized in real estate law, Bushman made a prima facie showing that Lindenberg's alleged omissions did not constitute a failure to exercise the skill and knowledge commonly possessed by an attorney, and were not the cause of Franklin's motion for summary judgment being granted. That motion was granted because Franklin submitted validly executed mortgage documents and evidence of Williams's default, and Williams could not raise a triable issue of fact (see Wells Fargo Bank, N.A. v Webster, 61 AD3d 856).

Plaintiff's complaint dismissed.

Courts are closed today and on Monday for the President's weekend.  Nevertheless, today we present an Appellate Term case on the interplay of fee dispute arbitration and legal malpractice.

Calabro & Assoc., P.C. v Katz ;2010 NY Slip Op 50192(U) ;Decided on February 9, 2010 ; Appellate Term, First Department .  This was a garden or varietal version of a fee demand, legal malpractice counterclaim.  Client successfully seeks dismissal of the case in favor of Part 137 fee arbitration, but then roundly loses the balance of his argument.  From the decision:
 

"As defendant conceded in his opposition papers below, his counterclaims alleging that plaintiff over-billed him are properly addressed in the attorneys' fees arbitration proceeding, since the arbitrators must determine the reasonableness of the fees based on "all relevant facts and circumstances" (22 NYCRR 137.0) and those counterclaims relate to a potential "adjustment of the fee" (22 NYCRR 137.1[b][4]). The counterclaim for legal malpractice should have been dismissed. Plaintiff made a prima facie showing that it was not negligent and that any alleged negligence did not proximately cause defendant's claimed damages. In opposition, defendant failed to raise a triable issue on either score. On the issue of plaintiff's alleged negligence, defendant did not submit any competent evidence showing that plaintiff failed to exercise the degree of care commonly exercised by a member of the legal profession (see Orchard Motorcycle Distrib., Inc. v Morrison Cohen Singer & Weinstein, LLP, 49 AD3d 292 [2008]; Schadoff v Russ, 278 AD2d 222 [2000]). Moreover, defendant failed to show that "but for" plaintiff's alleged negligence defendant would have obtained a more favorable result in the underlying landlord-tenant proceeding or would have successfully sold his business to a third-p[*2]arty (see AmBase Corp. v Davis Polk & Wardell, 8 NY3d 428 [2007]; Davis v Klein, 88 NY2d 1008 [1996]). "

Actually we're a little shocked at the facts of this matrimonial action involving Thomas Liotti.  in Coccia v Liotti ;2010 NY Slip Op 00917 ; Decided on February 9, 2010 ; Appellate Division, Second Department  we see some very unusual language from the Appellate Division.  Beyond reinstating [or more correctly put, modifying] the legal malpractice claims, the AD basically granted summary judgment wiping out attorney fees by Liotti on the almost unheard of use of a disbarred attorney and misleading the client into thinking that the attorney was in good standing.
 

Rather than explain, here is the decisional language:

"The Supreme Court also erred by, in effect, upon renewal, vacating the determination in the order entered September 13, 2007, denying that branch of the initial cross motion which was for summary judgment dismissing the fourth cause of action to the extent that it was based upon a failure to render itemized bills, and in thereupon granting that branch of the initial cross motion. Although the court appropriately reasoned that noncompliance with 22 NYCRR 1400.2 does not require an attorney to return fees already paid to him or her for services properly rendered (see Mulcahy v Mulcahy, 285 AD2d 587, 588; Markard v Markard, 263 AD2d 470, 471), this cause of action sought the return of counsel fees already paid by the plaintiff not only on the ground that the defendant failed to render itemized bills in compliance with 22 NYCRR 1400.2 and 1400.3, but also on the ground that the defendant breached the retainer agreement by virtue of the manner, form, substance, and timeliness of his billing. Based on the contents of the defendant's submissions on the initial cross motion, the defendant failed to make a prima facie showing that he complied with the provision in the retainer agreement related to the manner of billing. Thus, the court erred in awarding summary judgment to the defendant dismissing this cause of action to the extent that it was based upon a failure to render itemized bills.

The Supreme Court properly, in effect, upon renewal, vacated the determination in [*5]the order entered September 13, 2007, denying that branch of the initial cross motion which was for summary judgment dismissing the fifth cause of action to recover damages for fraudulent inducement, based upon the defendant's alleged misrepresentation that he would prosecute an appeal from an order in the underlying malpractice action, and in thereupon granting that branch of the initial cross motion. "In an action to recover damages for fraud, the plaintiff must prove a misrepresentation or a material omission of fact which was false and known to be false by [the] defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury" (Lama Holding Co. v Smith Barney, 88 NY2d 413, 421). The plaintiff alleged that she was fraudulently induced into executing the retainer agreement by the defendant's alleged promise that he would prosecute an appeal from an order in the underlying matrimonial action. She also asserted that she was informed during the course of the representation that the defendant's firm would address the appeal, but that the defendant failed to prosecute the appeal. Since the plaintiff is, in essence, arguing that the defendant breached the retainer agreement, the Supreme Court appropriately awarded summary judgment to the defendant dismissing this cause of action. " [A] cause of action to recover damages for fraud will not arise when the only fraud alleged relates to a breach of contract'" (Biancone v Bossi, 24 AD3d 582, 583, quoting Rosen v Watermill Dev. Corp., 1 AD3d 424, 426). Further, a representation of opinion or a prediction of something which is hoped or expected to occur in the future does not sustain an action to recover damages for fraud (see Chase Invs. v Kent, 256 AD2d 298, 299).

However, the Supreme Court erred by, in effect, upon renewal, vacating the determination in the order entered September 13, 2007, denying that branch of the initial cross motion which was for summary judgment dismissing the sixth cause of action to recover damages for fraudulent inducement, based upon the defendant's alleged misrepresentation that the person who would be substantially responsible for her case was an attorney. The plaintiff alleged that she later learned that such person was a disbarred attorney, prohibited from practicing law, and that the defendant fraudulently concealed this information. Contrary to the Supreme Court's conclusion, we find that the defendant failed in his initial submissions to establish, as a matter of law, that the plaintiff did not justifiably rely upon his representation of this individual's status as an attorney in good standing.

The Supreme Court erred in denying those branches of the plaintiff's cross motion which were for summary judgment dismissing the first, second, and third counterclaims seeking to recover outstanding counsel fees. The Supreme Court, in denying these branches of the plaintiff's cross motion, reasoned that questions of fact existed as to whether the defendant was justifiably discharged for cause, based upon his alleged failure to perfect and prosecute the appeal from the matrimonial order. However, as the plaintiff correctly points out, this was not the only basis upon which she sought summary judgment dismissing these counterclaims. The plaintiff also argued to the Supreme Court, inter alia, that these counterclaims should be dismissed since, had she known that a disbarred attorney was working on her case, she would have been justified in discharging the defendant for cause.

"[A] client has an absolute right, at any time, with or without cause, to terminate the attorney-client relationship by discharging the attorney" (Campagnola v Mulholland, Minion & Roe, 76 NY2d 38, 43; see Solomon v Bartley, 203 AD2d 449). Where the discharge is for cause, the attorney has no right to compensation, and may not assert a retaining lien on the client's file (see Campagnola v Mulholland, Minion & Roe, 76 NY2d at 43; Orendick v Chiodo, 272 AD2d 901; Matter of Leopold, 244 AD2d 411). "Misconduct that occurs before an attorney's discharge but is not discovered until after the discharge may serve as a basis for a fee forfeiture" (Orendick v Chiodo, 272 AD2d at 902). An attorney may be discharged for cause where he or she has engaged in misconduct, has failed to prosecute the client's case diligently, or has otherwise improperly handled the client's case or committed malpractice (see e.g. Costello v Kiaer, 278 AD2d 50; Hawkins v Lenox Hill Hosp., 138 AD2d 572).

In her cross motion, the plaintiff alleged that the disbarred attorney was closely involved in her case, and reassured her that he was working on her appeal from the matrimonial [*6]order. The plaintiff alleged that the disbarred attorney not only had contact with her, but also dealt with the husband's attorney and with the attorney for the children who had been appointed by the court. She claimed that the defendant seemed unfamiliar with her case, consulted with the disbarred attorney, and sought advice from the disbarred attorney when it was necessary to appear in court. The time records which the plaintiff submitted on her cross motion indicated that the defendant intended to bill her for conferring or meeting with the disbarred attorney on several occasions, that the disbarred attorney drafted memos and notes and that, on one occasion, the disbarred attorney accompanied the defendant to court. The plaintiff alleged in her affidavit that, while in court, the disbarred attorney consulted with her and the defendant "on how to handle whatever was in front of the court at that time."

Based upon the plaintiff's allegations, it appears that the disbarred attorney was engaged in the practice of law (see Matter of Rowe, 80 NY2d 336, 341-342, cert denied sub nom. Rowe v Joint Bar Assn. Grievance Comm. for Second & Eleventh Jud. Dists., 508 US 928 ["The practice of law involves the rendering of legal advice and opinions directed to particular clients"]). A disbarred attorney may not engage in the practice of law (see 22 NYCRR 691.10[e]), and an attorney may be guilty of professional misconduct where he intentionally aids a disbarred attorney to continue to practice law (see Matter of Raskin, 217 AD2d 187). Further, the plaintiff alleged that the defendant knew that this individual was disbarred, yet intentionally failed to reveal this information. Moreover, the orders related to this individual's suspension and disbarment involve sustained charges of lying to clients and neglecting their cases. By entrusting the plaintiff's case to this individual to the extent alleged by the plaintiff, the defendant failed diligently to handle her case. Thus, the plaintiff met her burden of establishing, as a matter of law, that she would have been justified in discharging the defendant for cause.

In response to these allegations, the defendant merely asserted that the disbarred attorney's involvement in the plaintiff's case had no bearing on the issue of counsel fees since the plaintiff received a "phenomenal result," and that the Grievance Committee for the Tenth Judicial District "took no action with respect to [these allegations]." The defendant, however, never attempted to raise a triable issue of fact as to the level of this individual's involvement in the plaintiff's case, and never claimed that he was unaware of this person's status as a disbarred attorney. Although, on this appeal, the defendant raises a number of allegations in this regard, including that the disbarred attorney was only minimally involved in the plaintiff's case, these allegations are dehors the record. Accordingly, in response to the plaintiff's prima facie showing with respect to the defendant's lack of entitlement to retain counsel fees that she already paid, the defendant failed to raise a triable issue of fact. "

Macaluso v Pollack , 2010 NYSlipOp 30276(U) , Justice Diamond, Nassau County presents an interesting story of how a case can get dismissed. Beyond the storyline, the case presents analysis of liability of predecessor/subsequent attorneys, how the dissolution of a partnership affects legal malpractice litigation, what subsequent attorneys  can accomplish in the Second Circuit, and potential liability of associate attorneys.

The original attorneys were to represent plaintiff in an employment discrimination case, but negligently failed to follow court orders in US District Court.  Eventually, the case was dismissed by the US District Judge, on one particular day in which the attorneys did not appear for a conference.  This was apparently the last straw, as there had been many previous late filings, etc.  So case is dismissed.  Attorneys for plaintiff at that point were a partnership of two attorneys.  These attorneys then file an appeal to the Second Circuit, but leave out several essential filings which dooms the appeal.

Plaintiff hires set two of attorneys, who try to fix the appeal, but fail.  The appeal is dismissed by the Second Circuit. This firm consists of attorneys and an associate attorney who are sued.  Who is at fault?

Read the decision for the full analysis, which cannot be excerpted here. In the end, first attorneys remain in the case, second attorneys are out, and the associate is out, too.

Carboni v Ginsberg ; 02/02/2010 2010 NYSlipOp 30256(U) Maltese, J. is an illustration of how a potential legal malpractice case underlays almost all activity within the realm of attorney representation, which is to say, everything.

Here, the question is whether plaintiff lost his employment in a wrongful manner, and after that determination, whether he has sued the attorneys within the appropriate statute of limitations time.

In a meticulous, fact specific decision, Justice Maltese writes that under CPLR 3211(a)(1) "the movant is required to demonstrate that the `documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law.'"

In this case, defendant's documents were less than conclusive.  A stipulation did not end the question of whether a discharge from employment could still be litigated.  On the opposite side, there was inconclusive proofs of whether a named defendant continued to be an employee of the law firm on the date of the purported malpractice.

Lastly, defendants wanted to demonstrate that they did not yet represent plaintiff when his statute of limitations against the Transit Authority expired. 

In Edelman v Poster ;  2010 NY Slip Op 00788 ;  Decided on February 4, 2010 ;  Appellate Division, First Department  we see a situation in which a matrimonial retainer agreement boldly stated a right to arbitrate, yet the Appellate Division, First Department, determined that client has no right to arbitrate.
 

Here is the retainer language:  "While I seek to avoid any disputes concerning the payment of our fee, in the event such a dispute does arise, you have the right, at your election, to seek arbitration, the results of which are binding on both parties. I shall advise you in writing by certified mail that you have 30 days from receipt of such notice in which to elect to resolve the dispute by arbitration, and I shall enclose a copy of the arbitration rules and a form for requesting arbitration. If no action is pending and if you do not timely enforce your rights to enter into fee arbitration, I may commence legal proceedings against you to recover any unpaid fee "

Here is how the First Department interpreted this language:

"Because we do not believe that the parties' retainer agreements may be interpreted without reference to the matrimonial rules in effect at the time they were entered, which governed the attorney-client relationship in domestic relations matters with respect to fee disputes and arbitration, we reverse the grant of summary judgment in defendant's favor and reinstate the complaint. A contrary result would do violence to the very rules we endeavor to enforce and penalize an attorney who complied in all respects with the matrimonial rules in effect at the time each retainer agreement was drafted and executed.

While these retainer agreements evidence a clear intent to give defendant the right to binding arbitration of fee disputes at her option, to be governed by arbitration rules to be provided by plaintiff, material terms are missing in that they do not specify what those rules are or identify the forum for the arbitration. However, there is no requirement that an agreement to arbitrate be encompassed in "a single comprehensive document" (5 NY Jur 2d, Arbitration and Award § 17, at 45-46; see also American States Ins. Co. v Sorrell, 258 AD2d 782, 783 [1999]), and where it is clear from the language of an agreement that the parties intended to be bound and there exists an objective method for supplying a missing term, the court should endeavor to hold the parties to their bargain (166 Mamaroneck Ave., 78 NY2d at 91; see also Cobble Hill Nursing Home v Henry & Warren Corp., 74 NY2d 475, 483 [1989] cert denied 498 US 816 [1990] [before rejecting an agreement as indefinite, a court must be satisfied that the agreement cannot be rendered reasonably certain by reference to an extrinsic standard that makes its meaning clear]; Marshall Granger & Co., CPA's, P.C. v Sanossian & Sardis, LLP, 15 AD3d 631, 632 [2005]). "

In this Case Egnotovich v. Katten Muchin Zavis & Roseman LLP, 604101/06 , Decided January 23, 2008 ,Justice Bernard J. Fried NEW YORK COUNTY ,Supreme Court Plaintiffs joined a vacation club in which they each deposited $ 400,000, and the group was to purchase or lease apartments or houses in prime vacatiion spots. These spots included Paris, Mexico, Teluride, and other hot spots. More than $1.6 million was collected, and the Katten law firm drafted escrow agreements in which it was to hold 80% of the collections and pay them out when the club gave the law firm vouchers. The money was collected and paid out.

For reasons unstated [bad locations? no houses actually available?] some of the members sue the law firm for fraud and escrow violations. "Plaintiffs are former founding members of nonparty Havens, Inc. (Havens), a resort destination club in the business of acquiring vacation properties to be used by the club members. Funding for these property acquisitions was to be generated principally through the financial contributions of the founding members. To become founding members, plaintiffs were required to sign a membership agreement, and to pay $150,000 in membership dues. A portion of the membership dues was to be held as a deposit in escrow. Defendant Katten Muchin Rosenman LLP, sued here as Katten Muchin Zavis & Roseman LLP (Katten), acted as escrow agent for the escrow account. In 2006, Havens failed as a going concern, and is now apparently without funds to pay damages suffered by plaintiffs. Plaintiffs then brought this action against Katten seeking return of their deposits, and alleging wrongful release of escrowed funds and furtherance of fraud by the club's sponsors. Katten now moves for summary judgment dismissing the amended complaint1 on the ground that it fails to state a cause of action, and is contradicted by clear and unambiguous documentary evidence.

For the reasons set forth below, Katten's motion is granted. "

"absolutely secured were not collateral to the Membership Documents (see e.g. Martian Entertainment , LLC v. Harris, 12 Misc 3d 1190[A], * 5 [representations underlying fraudulent inducement claim must be "collateral to the contract"]). To the contrary, the degree of security backing the Deposits is expressly provided by the Certificates (see Certificate, ¶1 [the membership deposits are subject to refund 30 years from the date of the Certificate and "pursuant to and subject to the terms and conditions of the Membership Agreement and the Membership Plan]"; id., ¶2 [the refund right "is backed by and subject to the availability of the assets of (Havens)"]). Indeed, it is plaintiffs' own position that each of the Membership Documents "discusses Deposits and their use and repayment . . . and thereby implicates use of an escrow" (Pls Facts, ¶¶2, 4, 6). An issue "central" to a contract cannot be construed as collateral to that contract (PSI Intl., Inc. v. Ottimo, 272 AD2d 279 [1st Dept 2000]).

Moreover, even fraudulent inducement requires "misrepresentations of present Facts (rather than merely of future intent)" (Martian Entertainment, LLC v. Harris, 12 Misc 3d 1190[A], * 5). Plaintiffs allege that Havens promised that "deposits would be handled in a specified way," that they "would be held in escrow . . . for the protection and benefit of the Founding Members," and that "[Founding Members] would be protected by the continuing existence of cash on deposit or real estate available to fund repayment if the venture failed" (Opp Br., at 24, 25 [emphasis added]; Egnotovich Aff., ¶6 [emphasis added]; see also Loeb Aff., ¶¶4-5). To the extent, if any, that these representations made by Havens are untrue, they are broken promises, and not fraudulent statements of fact (see e.g. Morgan, Lewis & Bockius LLP v. IBuyDigitial.com, Inc., 14 Misc 3d 1224[A], 2007 NY Slip Op 50149[U], *7 [Sup Ct, NY County 2007] [dismissing counterclaim that plaintiff "fraudulently induced (defendant) into entering the engagement letter by stating that (plaintiff) would be personally involved in handling the IPO, that the fees would be capped at $425,000, that the IPO would be consummated by March 2005 and that the legal fees charged would be limited to work on the IPO"] [emphasis added]; Ullmann v. Norma Kamali, Inc., 207 AD2d 691, 692-693 [1st Dept 1994] ["cause of action for fraud does not arise" based on "failure to perform promises of future acts"] [citation omitted]).

Consequently, the aiding and abetting fraud claim must be dismissed."

There are a few situations in legal malpractice where an expert is not needed for plaintiff.  An expert is needed, in general, when the subject matter is unknown or too complicated for lay jurors to understand or determine, and they require explanation by a person who is professionally or educationally acquainted with the specialized field. 

Whether an act by the target attorney was a departure from the good and applicable standards of attorney practice is almost always the province of an attorney-expert.  The few exceptions are only the most basic of mistakes, such as a forgotten statute of limitations.

Here, in Tran Han Ho v Brackley   2010 NY Slip Op 00575   Decided on January 28, 2010   Appellate Division, First Department  we see two mistakes:  the failure to offer an expert, and an attempt to offer an expert opinion on sur-reply.  We envision plaintiff's attorney reading defendant''s reply with dread, seeing [hypothetically] the argument that no expert opinion has been submitted and that summary judgment must issue.
 

"The motion court properly refused to consider the sur reply affirmation of plaintiffs' legal expert presented to the court after the motion had been fully submitted (see Foitl v G.A.F. Corp., 64 NY2d 911 [1985]). Absent an expert's affidavit, and given claims that, as pleaded, raise issues of professional standards and causation beyond the ordinary experience of persons who are not lawyers, summary judgment was properly granted (see Ehlinger v Ruberti, Girvin & Ferlazzo, 304 AD2d 925, 926 [2003]; cf. Butler v Brown, 180 AD2d 406, 407 [1992], lv denied 80 NY2d 751 [1992], citing S & D Petroleum Co. v Tamsett, 144 AD2d 849, 850 [1988])."

We can't tell an awful lot of the facts of the underlying case from the Second Department decision in Nelson v Roth   2010 NY Slip Op 00658   Decided on January 26, 2010   Appellate Division, Second Department but we do see the ironic clash of two well known Legal Malpractice defense firms, one acting as a plaintiff's attorney while at the same time defending an attorney in this case. 
 

Plaintiff sues defendant for legal malpractice.  In an attempt to knock out the plaintiff's attorney (success would not end the case, but would definitely place it in jeopardy, and create a time out ) defendant started a third party action against the plaintiff's attorney, and then at the same time moved to dismiss the complaint.

"The Supreme Court properly granted that branch of Sieradzki's motion which was to dismiss the third-party cause of action to recover damages for legal malpractice. "On a motion to dismiss pursuant to CPLR 3211(a)(7), the pleading is to be afforded a liberal construction" (Kempf v Magida, 37 AD3d 763, 764). The court must accept the facts as alleged in the complaint as true, accord the plaintiffs the benefit of every possible favorable inference, and determine whether the facts as alleged fit within any cognizable legal theory (see Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, 96 NY2d 300, 303; Leon v Martinez, 84 NY2d 83, [*2]87-88). To establish a cause of action alleging legal malpractice, a plaintiff must prove, inter alia, the existence of an attorney-client relationship (see Terio v Spodek, 63 AD3d 719, 721; Velasquez v Katz, 42 AD3d 566, 567). To prove an attorney-client relationship, there must be an explicit undertaking "to perform a specific task" (Terio v Spodek, 63 AD3d at 721). " It is well established that, with respect to attorney malpractice, absent fraud, collusion, malicious acts, or other special circumstances, an attorney is not liable to third parties, not in privity, for harm caused by professional negligence'" (Moran v Hurst, 32 AD3d 909, 911, quoting Rovello v Klein, 304 AD2d 638, 638). Viewing the third-party complaint in the light most favorable to Roth, she failed to allege the existence of an attorney-client relationship between herself and Sieradzki.

Further, the Supreme Court properly denied that branch of Roth's cross motion which was for summary judgment dismissing the complaint. "To make a prima facie showing on a motion for summary judgment, the attorney in a legal malpractice action must present admissible evidence that the plaintiff cannot prove at least one of the essential elements of a legal malpractice claim" (Terio v Spodek, 63 AD3d at 721). The evidence submitted demonstrated the existence of a triable issue of fact as to whether there was an attorney-client relationship between Roth and the plaintiffs. In light of Roth's failure to meet her prima facie burden, it is unnecessary to consider the adequacy of the plaintiffs' opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).

Finally, the Supreme Court properly, in effect, denied that branch of Roth's cross motion which was to disqualify Sieradzki as counsel for the plaintiffs. Roth failed to satisfy her burden by offering any proof that Sieradzki's testimony would be "necessary" (Bentvena v Edelman, 47 AD3d 651, 652). "

Client hires law firm, law firm is said to have made mistakes, law firm is said to have made corrective motions based upon its own mistakes, and then charged client.  Law firm sues client, and client answers without filing a counterclaim.

Its not evident from the decision but we guess that client then hired an attorney who seeks to change an affirmative defense to a counterclaim for legal malpractice.  in addition, attorney seeks to add an employee of the law firm as a "third party" defendant, and asks for a copy of the file and discovery responses.  How does Judge Gische of Supreme Court, New York County decide?

In Wagner Divs, P.C. v Gargano 01/20/2010 ;  2010 NYSlipOp 30156(U)  Justice Gische decides:

a.  In a regular case, retaining lien trumps need for file

b.  In a case with a legal malpractice counterclaim, need for file trumps law firm's retaining lien

c.  Law firm has to allow photocopying

d.  Defendant must pay for the copies

e. Amendment should be, and is, freely granted here.

 

Victoria Kremen suffered unnecessary, and negligent bilateral mastectomy.  It is said that removal of secondary sexual characteristics is akin to removal of ones central identity.  Ms. Kremen was subjected to a horrible misdiagnosis, with subsequent surgery.

Things only went from bad to worse.  She hired attorneys, but the action was not filed correctly.  From law.com: ""[T]he following illustrates why members of the public may hold cynical views of the legal profession," Supreme Court Justice Emily Jane Goodman began her ruling in Kremen v. Benedict P. Morelli & Associates, 101739/06.

Victoria Kremen underwent a double mastectomy after allegedly being misdiagnosed with breast cancer. She accused Morelli Ratner and the now defunct Schapiro & Reich of mishandling the action she brought against her doctors, a suit that was ultimately dismissed because the 2 1/2-year statute of limitations had expired.

Morelli Ratner was formerly known as Benedict P. Morelli & Associates.

Kremen also lost her bid to sue the attorneys for legal malpractice on the ground that they had failed to preserve her case. Now, Morelli Ratner is pressing a counterclaim against Kremen to recoup $6,000 the lawyers spent in advancing her medical malpractice case. "

The Appellate Division reversed Justice Goodman's decision on the statute of limitations against Morelli Ratner and dismissed. "Plaintiffs allege negligence in legal representation in their original medical malpractice action, which was dismissed as untimely. Specifically, they allege failure to argue their entitlement to the "bankruptcy toll" of the statute of limitations. 11 USC § 108 (a) (2) provides debtors a two-year toll of an existing statute of limitations period, but only if "such period has not expired before the date of the filing of the petition." Here, the bankruptcy toll was not triggered because the statute of limitations had already run. "

Morelli Ratner then sued plaintiff for $ 6000 of expenses.  Justice Goodman has rendered a decision on this claim. From Law.Com: "A Manhattan judge has slapped the personal injury firm of Morelli Ratner with $6,000 in sanctions for bringing a "spiteful" and "wasteful" suit against a former client. Supreme Court Justice Emily Jane Goodman's ruling comes three months after she sharply criticized the firm for launching a "nonsensical" action to recover the costs of an unsuccessful medical malpractice action from Victoria Kremen. "

Professional Judgment is what we hire attorneys for, and what we expect from them.  Litigants are generally unable to proceed through difficult thickets of choice of courts, choice of strategy, choice of questions to ask at a trial.  Nevertheless, we expect that our attorney will exercise correct and satisfactory professional judgment.  When the client suspects that a bad result came is a departure from good and accepted practice, rather than justified by the facts, a legal malpractice case will follow.

In our examination of STONEWELL CORP., and RICHARD GLADSTONE, Plaintiffs, -against- CONESTOGA TITLE INSURANCE CO., WILLIAM KOLSHORN, 04 CV 9867 (KMW)(GWG) we looked at the legal malpractice definitions and application.  Today, we look at the professional judgment defense.

"The Court is not persuaded by Stonewell's contention that Dollinger was negligent in advising Stonewell to proceed in the "bias[ed] forum" of the Middle District of Florida instead of the more "impartial" forum of the New York district court. (See Pl. Resp. at 10, 13, DE 126.) The Court will not endorse the view that some district courts are "biased" while others are "impartial," and that an attorney's duty to a client includes determining whether or not a court is "biased." The appropriate inquiry is whether the defendant-attorney exercised a "degree of care, skill and diligence commonly possessed and exercised by a member of the legal community." Nobile, 265 F. Supp. 2d at 288. Based upon the record before the Court, Dollinger met the requisite standard of care and conduct in pursuing the first "innocent owner" petition. 5

 Stonewell's reliance [*19] on Rubens v. Mason, 527 F.3d 252 (2d Cir. 2008), is without merit. In Rubens, the Court of Appeals for the Second Circuit vacated the district court's granting of defendant's motion for summary judgment in a legal malpractice suit, holding that one alleged act -- the attorney's decision not to present an expert witness in an arbitration proceeding -- may have constituted negligence. In a highly fact-specific analysis, the appellate court noted that, under some circumstances, "[d]etermining whether [the attorney's] alleged failures were negligent or merely reasonable tactical decisions present[] a question of fact that [can]not be resolved on summary judgment." Rubens, 527 F.3d at 254 (quoting Rubens v. Mason, 387 F.3d 183, 190 (2d Cir. 2004)). In the instant case, the Court must engage in its own fact-specific analysis to determine whether there is a disputed issue of fact as to whether Dollinger's conduct was negligent or proximately caused any damages to Stonewell. See Rubens, 527 F.3d at 255; Wester, 757 N.Y.S. 2d at 501.

The Court finds that Dollinger's decision to notify the court in the Southern District of New York of the status [*20] of the Florida proceedings and to request an interim stay pending decision on the first "innocent owner" petition in Florida satisfies the basic standards of legal practice. It is undisputed that the Florida and New York courts both had jurisdiction over the issue of whether Stonewell was a bona fide purchaser of the Center Point Mall property, a legal matter that would essentially determine the validity of Stonewell's title. See United States v. Weiss, 467 F.3d 1300, 1307 (11th Cir. 2006) (holding that the Florida district court had jurisdiction over the criminal forfeiture proceeding pursuant to 18 U.S.C. § 3231, while the New York district court had diversity jurisdiction over the Williams action pursuant to 28 U.S.C. § 1332).

Given the highly complex and substantively overlapping legal proceedings touching upon the validity of Stonewell's purported title to the Center Point Mall property at the time, there was no clearly superior legal strategy for Stonewell. It was reasonable for Dollinger to inform the Williams court about the Florida proceedings and to seek an interim stay in the Southern District of New York. The Williams court itself agreed with Dollinger's assessment of the [*21] situation in granting the interim stay. The record does not indicate that Dollinger's decision to give priority to the litigation in the Florida district court by filing the "innocent owner" petition there, and to seek the interim stay of the Williams action, constituted anything less than competent legal representation under difficult circumstances. Where a claim of legal malpractice is based upon a plaintiff's displeasure, developed only with the benefit of hindsight, regarding a defendant-attorney's selection of one among several reasonable strategic options, summary judgment should be granted in defendant's favor. See Rosner, 481 N.E. 2d at 554; Bernstein, 554 N.Y.S. 2d at 490."

Complex multi-state, multi-district, criminal-civil high stakes litigation...really, it can only end in a legal malpractice case.  Here, in Stonewell Corp. v. Conestoga Title Ins. Co., 2010 U.S. Dist. LEXIS 1107 [2004 cv 9867] a decision by Judge Kimba Woods lays out just how complex a case can get.  Today we will deal with the elements of legal malpractice, and tomorrow, with the defense of "professional judgment."

"Stonewell asserts three separate claims alleging that Dollinger committed legal malpractice while representing Stonewell in proceedings related to Stonewell's purported property rights over a Center Point Mall property in New Jersey. First, Stonewell claims that Dollinger committed legal malpractice by: (1) advising Stonewell to pursue certain legal actions, including filing an "innocent owner" petition pursuant to 18 U.S.C § 1963(l) in the Middle District of Florida; (2) failing to advise Stonewell of the risks of taking such legal actions; (3) advising Stonewell to stay related proceedings in the Southern District of New York; and (4) failing to advise Stonewell of or otherwise [*3] address an alleged conflict of interest with respect to a second "innocent owner" petition in light of Dollinger's relationship with Conestoga Title Insurance Company (hereinafter "Conestoga"). "
 

"A plaintiff must establish the following elements for a claim of legal malpractice under New York State law: (1) an attorney-client relationship, (2) attorney negligence (3) that is the proximate cause of a loss, and (4) actual damages. See Allianz Ins. Co. v. Lerner, 416 F.3d 109, 118 (2d Cir. 2005); Estate of Re v. Kornstein Veisz & Wexler, 958 F. Supp. 907, 920 (S.D.N.Y. 1997). To succeed on a motion for summary judgment in a legal malpractice action, the defendant must establish that the plaintiff cannot prove at least one of these essential elements. See Rubens v. Mason, 527 F.3d 252, 255 (2d Cir. 2008); Carney v. Philippone, 332 F.3d 163, 167 (2d Cir. 2003).

To find negligence, a court must find sufficient evidence that the defendant-attorney's conduct "fell below the ordinary and reasonable skill and knowledge commonly [*14] possessed by a member of his profession." Achtman v. Kirby, McInerney & Squire, LLP, 464 F.3d 328, 337 (2d Cir. 2006) (quoting Grago v. Robertson, 49 A.D.2d 645, 370 N.Y.S. 2d 255 (N.Y. 1975)). If the pleadings and evidence indicate no more than an "error of judgment" or a "selection of one among several reasonable courses of action," dismissal of the claims is warranted. Rosner v. Paley, 65 N.Y.2d 736, 481 N.E. 2d 553, 554, 492 N.Y.S.2d 13 (N.Y. 1985); see also Nobile v. Schwartz, 265 F. Supp. 2d 282, 288 (S.D.N.Y. 2003) (noting that a plaintiff must show that the attorney "failed to exercise that degree of care, skill and diligence commonly possessed and exercised by a member of the legal community").

Common examples of circumstances for which an attorney may be held liable include "ignorance of the rules of practice, failure to comply with conditions precedent to suit, or . . . neglect to prosecute or defend an action." Hatfield v. Herz, 109 F. Supp. 2d 174, 180 (S.D.N.Y. 2000) (quoting Bernstein v. Oppenheim & Co., 160 A.D.2d 428, 554 N.Y.S. 2d 487, 489-90 (1st Dep't 1990)) Allegations that amount to nothing more than a "dissatisfaction with strategic choices" will not support a malpractice claim as a matter of law. Bernstein, 554 N.Y.S. 2d at 490."

We're proud to point today to the article "Settlements and Subsequent Legal Malpractice" in today's New York Law Journal.  One interesting wrinkle on the legal malpractice scene is how settlements, and the rote allocutions at settlement affect legal malpractice.

"It is well settled that to establish a cause of action for legal malpractice, "a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney's breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages." Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438 (2007), quoting McCoy v. Feinman, 99 NY2d 295 (2002), "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 at 442; Fireman's Fund Ins. Co. v. Farrell, 57 AD3d 721 (2d Dept. 2008).

The four elements of legal malpractice, put more simply, are: departure, proximity, ascertainable damage, and the "but for" element. The defense of a legal malpractice action may take place on any of the four elements set forth. Was the behavior of the attorney a departure from the degree of skill and care? Was the departure a proximate cause of the damage? Was there one or more than one cause of the damage? "

One way that settlements may upset a later legal malpractice case is when the judge asks "Are you satisfied with the work of your attorney?"  How this question crept into a settlement allocution is buried in ancient ritual.  How important it is is shown in a few recent cases.

"Recently, one Appellate Division case and two Supreme Court cases have challenged the "effectively compelled" principle, and in effect, turned it on its head. The setting for this triumvirate of cases is matrimonial settlements. For reasons not sanctioned in the CPLR or any statute, the custom on settlement of a matrimonial action is to allocute the two parties to the settlement. Beyond the questions of whether the parties have capacity, are in sufficient health to understand, are not taking cognitive altering medication, the court often chooses to ask whether the clients are satisfied with their attorney's work. The genesis of this practice is not clear; its purpose seems to be to insulate the attorneys from later criticism. In this latest set of cases, the insulation appears to work."

For the rest of the discussion, please see today's NYLJ.

Our meme today, again, is that legal malpractice is to be found in all endeavors involving attorneys.  It is no stranger to Bankruptcy proceedings, and in today's case, a verdict is found against a Long Island Bankruptcy attorney.  Mizuno v Fischoff & Assoc. ;2010 NY Slip Op 50064(U) Decided on January 14, 2010 Supreme Court, Suffolk County ;Whelan, J.  demonstrates how plaintiff lost his house when the case could have been saved.  Supreme Court, Suffolk County entered a judgment for plaintiff in a substantial amount.
 

"Can a homeowner who loses his home to foreclosure, after filing four separate bankruptcy petitions, prevail on a legal malpractice claim against his bankruptcy attorney and recoup the remaining equity in the home as damages? This Court not only finds the claim to viable but, based upon this record, holds that a substantial award of damages is appropriate. "

"In order to prevail in an action to recover damages 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, resulting in actual damages to the plaintiff, and that "but for" the attorney's negligence, the plaintiff would have succeeded on the merits in the underlying action or not have sustained any damages (Dupree v Voorhees, _ AD3d _ , 2009 WL 4681166 [2d Dept Dec. 8, 2009]; Ali v Fink, 67 AD3d 935, _ NYS2d _ [2d Dept 2009]; Santiago v Fellows, Epstein & Hymowitz, P.C., 66 AD3d 758, 886 NYS2d 766 [2d Dept 2009]).

Here, it is obvious, from the testimony of defendant's associate, that the provision in the Conditional Order which held that a default would not be protected by the filing of a new petition, was simply forgotten. The legal advise to commence a new bankruptcy proceeding was contrary to the dictates of the May 1, 2000 order and offered no protection to plaintiff, in response to the foreclosing bank's claim that plaintiff was in default of the Conditional Order. Moreover, the defendant's law office just assumed that plaintiff had not complied with the Conditional Order and accepted the representations made by the foreclosing bank's attorney."
 

"With regard to the element of causation, plaintiff has to show that he would not have incurred any damages but for the attorney's negligence. Defendant attempted to show that plaintiff did not have the ability to pay the monthly mortgage payments and offered plaintiff's tax returns for the 1998 (Def. Ex. P), 1999 (Def. Ex. Q), 2000 (Def. Ex. L), 2001 (Def. Ex. M), and 2002 (Def. Ex. O) as evidence of plaintiff's inability to pay. Plaintiff offered bank account statements from December 2001 to April 2002 (Pl. Ex. 8) to demonstrate the ability to pay the monthly payments. Plaintiff also testified that for the year, 2002, the month of July was the only [*6]month that he would have had difficulty making the required payments.

In deciding the issue of causation, the Court need not speculate as to the financial ability of the plaintiff to pay into the future. The sole issue to be determined is whether "but for" the negligence of the defendant, plaintiff would not have lost his home to foreclosure. Here, plaintiff satisfied his burden by the submission of evidence that he could comply with the Conditional Order during the time frame in question, that is, satisfaction of the November 15, 2001 payment by January 15, 2002 and each monthly payment thereafter up to the foreclosure sale date of April 4, 2002. Such evidence satisfied plaintiff's obligation to establish causation.

Having found for the plaintiff on the issue of liability, the Court must address the issue of damages. The object of awarding damages in a legal malpractice action is "to make the injured client whole" (Campagnola v Mulholland Minion & Roe, 76 NY2d 38, 42, 556 NYS2d 239 [1990]). Compensatory damages are generally awarded where a plaintiff can demonstrate that he or she suffered any actual damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 31 AD3d 418, 818 NYS2d 153 [2d Dept 2006]). "

Plaintiff sues law firm for legal malpractice.  Case rests on representation in a commercial real estate lease.  There was a four year period in which the landlord was building the premises, and the question of in what year  a tax escalation clause starts led to this legal malpractice case. 

Global Bus. Inst. v Rivkin Radler, LLP 01/13/2010 Other Courts 2010 NYSlipOp 30062(U)  follows a familiar path in which the court makes factual determinations, as a matter of law even when the parties have not moved for summary judgment.

Several years ago, the matter was transferred to Civil Court pursuant to CPLR 321(d).  Now plaintiff seeks to increase the ad damnum clause and restore to Supreme Court.  They fail, because the court scrutinizes the evidence and determines [via summary judgment or something like it] that it was the client and not the law firm who negotiated the tax escalation clause themselves.

Judiciary Law  487 is suddenly all the rage.  Ironic, as it may be the oldest statute in Anglo-American jurisprudence, coming only years after the Magna Carta.  We see references to  Marbury v. Madison once in a while, but this statute is  perhaps 500 years older.

Here, in Cinao v. Reers, Index no.  12274/04 , Supreme Court, Kings County, we see a discussion of whether a case must be pending in a New York Court for Judiciary Law 487 to apply.

There is scant judicial opinion on this issue.  Justice Battaglia discusses his take on whether a case in Hawaii, with a NY plaintiff and a NY attorney might fall under Judiciary Law 487.

"Based as it is on a line of judicial decisions, beginning with the Second Circuit's decision in Schertenleib v. Traum (589 F2d 1156 [2d Cir 1978]), Defendant's most serious objection to Plaintiff's motion is that Judiciary Law §487 applies only to misconduct by attorneys in connection with proceedings pending in New York courts. As stated by the Second Circuit:

"[S]ection 487…is…intended to regulate, through criminal and civil sanctions, the conduct of litigation before the New York courts. We doubt it was the purpose of the New York legislature to fasten on its attorneys criminal liability and punitive damages for acts occurring outside the state. It seems more likely that the concern is for the integrity of the truth-seeking processes of the New York courts, not for injury to foreign litigants." (Id. at 1166.)

No authority or other source is cited by the court for its understanding of the New York Legislature's intent as to the scope of Judiciary Law §487. Schertenleib was relied upon by a federal district court in dismissing a §487 claim based upon a restraining order obtained from a federal district court in Florida, stating that "Section 487 only applies to conduct within the borders of New York State" (see Papworth v. Steel Hector & Davis, 2007 US Dist LEXIS 72864, * 33 [NDNY 2007]; see also Nardella v. Braff, 621 F Supp 1170, 1172 [SDNY 1985].) The subsequent decisions by federal courts have not added to Schertenleib's rationale.

Schertenleib has been relied upon in one New York state court decision. Civil Court held in Southern Blvd. Sound v. Felix Storch Inc. (165 Misc 2d 341 [Civ Ct, NY County 1995], mod. on other grounds 167 Misc 2d 731 [App Term, 1st Dept 1996]) that "Judiciary Law §487 (1) does not apply to acts committed in courts of States other than the State of New York" (see id. at 344), offering the following rationale:

"If the Legislature wanted to regulate the behavior of New York State attorneys in courts other than those of our State, it would have had to have been more specific or have stated 'any court' in Judiciary Law §487 (1). The use of the term 'the court' means a court of the State of New York." (Id.)

Civil Court's reading may be even narrower that the Second Circuit's if understood as precluding applicability of the statute to deceit on a federal court sitting in New York. In any event, this Court respectfully disagrees if either court would refuse to apply the statute here for the sole reason that the allegations relate to proceedings pending in a Hawaii court and not a court sitting in New York.

The statute itself states no such limitation. "The statutory text is the clearest indicator of legislative intent." (Maraia v. Orange Regional Med. Ctr., 63 AD3d 1113, 1116 [2d Dept 2009] [internal quotation marks and citations omitted].) "[A] court cannot amend a statute by inserting words that are not there, nor will a court read into a statute a provision which the Legislature did not see fit to enact." (Matter of Charles S., 60 AD3d 954, 955 [2d Dept 2009] [internal quotation marks and citations omitted].)

"[T]he statute's evident intent [is] to enforce an attorney's special obligation to protect the integrity of the courts and foster their truth-seeking function" (see Amalfitano v. Rosenberg, 12 NY3d at 14), with a related "concern for curbing and providing redress for attorney overreaching vis-a-vis clients" (see Liddle & Robinson v. Shoemaker, 276 AD2d 335, 336 [1st Dept 2000].) The first New York statute on the subject, adopted in 1787, provided redress for attorney deceit or collusion "in any court of justice." (See Amalfitano v. Rosenberg, 12 NY3d at 12 [quoting L 1787, ch 36, §5] [emphasis added].)

Generally, Judiciary Law §487 "applies only to wrongful conduct by an attorney in an action that is actually pending." (See Mahler v. Campagna, 60 AD2d 1009, 1012 [2d Dept 2009].) "Where the deception is directed against a court, a pending judicial proceeding is not required; it is sufficient if the deception relates to a prior judicial proceeding or one which may be commenced in the future." (Singer v. Whitman & Ransom, 82 AD2d 862, 863 [2d Dept 1981]; see also Costalas v. Amalfitano, 305 AD2d 202, 204 [1st Dept 2003]; Hansen v. Caffry, 280 AD2d 704, 705 [3d Dept 2001].) "Deception of a court is not confined to the actual appearance in court but has reference to any statement, oral or written, made with regard to a proceeding brought or to be brought therein and communicated to the court with intent to deceive." (Fields v. Turner, 1 Misc 2d 679, 681 [Sup Ct, NY County 1955]; see also Amalfitano v. Rosenberg, 533 F3d 117, 123 [2d Cir 2008].)

The limitation, in the case of deceit of a party, to a pending proceeding was first articulated by the Court of Appeals more than a century ago in Loof v. Lawton (97 NY 478 [1884].) "The 'party' referred to is clearly a party to an action pending in a court in reference to which the deceit is practiced, and not a person outside, not connected with the same at the time or with the court." (Id. at 482.) "In placing a construction upon the section cited," a predecessor to Judiciary Law §487, "we should consider its provisions in connection with others which relate to the same general subject, and in view of the object to be attained." (Id. at 481-82.)

With respect to Supreme Court's ruling in Southern Blvd. Sound (165 Misc 3d 341), there is nothing in Judiciary Law §487 that would limit its applicability to deceit practiced on a court sitting in New York, and a limitation cannot be fairly implied from the use of the definite article "the," rather than the indefinite article "a." Section 487 appears as part of Article 15 of the Judiciary Law, "Attorneys and Counselors," with statutory provisions governing the admission and supervision of attorneys. The "integrity of the courts and…their truth-seeking function" (see Amalfitano v. Rosenberg, 12 NY3d at 14) is no less worthy of protection because the court sits in a sister state, and, in any event, the statutory purpose extends to "curbing and providing redress for attorney overreaching vis-a-vis clients" (see Liddle & Robinson v. Shomaker, 276 AD2d at 336.)

This Court is not bound by the federal court decisions in Schertenlieb and its progeny, nor is it bound by Supreme Court's and Appellate Term's decision in Southern Blvd. Sound. (See Cox v. Microsoft Corp., 290 AD2d 206, 207 [1st Dept 2002]; People v. Gundarev, 2009 NY Slip Op 51972 [U], * 1-* 2 [Crim Ct, Kings County 2009]; King Transp. Servs. v. State, 185 Misc 2d 684, 687 [Ct Cl 2000].) Nonetheless, a court should be reluctant to divert from an accepted view of the law, particularly where interpretation of a statute is at issue. Here, however, only the Schertenleib and Southern Blvd. Sound courts offered any reasoning to support the implied limitation on the applicability of Judiciary Law §487, and neither cited any authority or other support for its reading of the statute.

In light of the statutory language and purposes, this Court sees no basis for limiting the applicability of Judiciary Law §487 to judicial proceedings pending in New York courts. A New York court has sufficient interest in supervising the conduct of attorneys admitted before its bar, and protecting resident clients who have been harmed by the deceit of an admitted attorney, to apply Judiciary Law §487 to the attorney's conduct no matter where the action is pending."

Attorney fees and legal malpractice should have nothing to do with each other.  However, the general rule is that no legal fees may be awarded in the face of legal malpractice and its corollary is that if legal fees are awarded by a court or tribunal, then there could have been no legal malpractice, whether the issue is briefed or not.

Here is another example: Liberty Assoc. v Etkin ; 2010 NY Slip Op 00225 ; Decided on January 12, 2010 ;Appellate Division, Second Department :
 

"In January 2003 the Ravin Firm commenced an action against Liberty Associates in the Superior Court of New Jersey to recover fees for the legal services rendered. In 2004, during the pendency of the instant action, Liberty Associates and the Ravin Firm settled the New Jersey fee dispute action (hereinafter the fee dispute action), which was dismissed with prejudice. Upon learning of the settlement, Etkin moved for summary judgment dismissing the complaint in the instant action. The Supreme Court granted the defendant's motion. We affirm. ""This action to recover damages for legal malpractice against Etkin, as a member of the Ravin Firm, arises out of the same series of transactions as the fee dispute action asserted by the Ravin Firm against the plaintiff herein for legal fees. Upon resolution of the fee dispute action, the parties, by their attorneys, executed a stipulation of dismissal with prejudice and without costs. A stipulation of discontinuance with prejudice without reservation of right or limitation of the claims disposed of is entitled to preclusive effect under the doctrine of res judicata (see Matter of Hofmann, 287 AD2d 119, 123 ["An order of discontinuance effecting settlement on the merits is accorded the same res judicata effect as the entry of judgment on the merits"]; see also Fifty CPW Tenants Corp. v Epstein, 16 AD3d at 294).

Here, Etkin established, prima facie, that the legal services at issue in the instant action and in the fee dispute action were the same and, thus, that Liberty Associates' settlement of the fee dispute action with the Ravin Firm, of which Etkin was a member, precludes Liberty Associates from maintaining the instant action against Etkin under the doctrine of res judicata (see Izko Sportswear Co, Inc. v Flaum, 25 AD3d 534, 537)."

 

It should be fairly easy to determine when the statute of limitations ends, no?  In legal malpractice, one must commence an action within three years of when the cause of action accrues, unless there continues to be "continuous representation."  When does the cause of action accrue?  This question remains thorny, and not always easily resolved.  Here, as an example is 730 J & J, LLC v Polizzotto & Polizzotto, Esqs. ;2010 NY Slip Op 00244 ;Decided on January 12, 2010 ;Appellate Division, Second Department  found that the statute had not expired some 6 years after the "error" and at least 5 years after another specified date that defendants argued was the start:
 

"Summary judgment based on the defense of the statute of limitations requires that a defendant make a prima facie showing that an action to recover damages for legal malpractice was filed more than three years after the cause of action accrued (see CPLR 214[6]; Rachlin v LaRossa, Mitchell & Ross, 8 AD3d 461), 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 [internal quotation marks omitted]). An action to recover damages for legal malpractice is deemed to accrue on the date the [*2]malpractice was committed, not when it was discovered (see Shumsky v Eisenstein, 96 NY2d 164, 166).

Under the doctrine of "continuous representation," the three-year statue of limitations for legal malpractice is tolled while the attorney continues to represent the client in the same matter in which the malpractice allegedly occurred, after the alleged malpractice is committed (Shumsky v Eisenstein, 96 NY2d at 168). The parties must have a "mutual understanding" that further representation is needed with respect to the matter underlying the malpractice claim (McCoy v Feinman, 99 NY2d at 306).

Here, the defendant failed to establish its prima facie entitlement to summary judgment dismissing the legal malpractice cause of action by demonstrating that the statute of limitations expired (see generally Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853). Accordingly, the Supreme Court properly denied that branch of the defendant's motion which was for summary judgment dismissing the complaint as time-barred without prejudice to renewal after completion of discovery.

Plaintiff starts a case on their own, and then when they get near trial, hire the defendant attorneys to represent them in an action for personal injury to their child either at school, or due to the alleged negligence of the School district.  The attorneys take over, and are said to agree that they can provide a doctor/expert and obtain all the necessary medical records to try the case.

Defendants take the case off the trial calendar, work/fool around with it for a few months, then "Plaintiffs were given one year to restore the case to the calendar but failed to timely comply, and defendant subsequently refunded plaintiffs' retainer and terminated the representation. Six months after their time to do so had expired, plaintiffs moved, pro se, to restore the case to the calendar. Supreme Court (Meddaugh, J.) denied the motion and dismissed the case with prejudice retroactive to June 14, 2005, finding that plaintiffs "set forth no meritorious claim [and] no reasonable excuse for their failure to restore the case to the calendar within [one] year of the case being struck." Plaintiffs' subsequent pro se submission, attaching affidavits, letters and reports from plaintiffs' medical providers was deemed a motion to renew/reargue. In denying that motion, the court noted that the papers submitted with that application "were couched in only the most conclusory terms and failed to establish any causal connection between any allegedly improper conduct by [the school district] and the [infant's] medical conditions."
 

Plaintiffs sue for legal malpractice and defendants move to dismiss the complaint.  The Court's decision reads: "Defendant's attempt to invoke collateral estoppel is unavailing. Plaintiffs' motion to restore their case against the school district to the calendar required a showing of merit sufficient to establish a triable issue of fact (see Alise v Colapietro, 119 AD2d 921, 922 [1986]) and conclusory allegations are inadequate in that setting (see Fountain v Village of Canastota, 219 AD2d 781, 782 [1995]). In contrast, on defendant's motion to dismiss, plaintiffs' allegations, including conclusory allegations in supporting affidavits, are deemed to be true (see Berry v Ambulance Serv. of Fulton County, Inc., 39 AD3d 1123, 1124 [2007]). Defendant, therefore, failed to carry his burden to establish an identity of issues between the two actions and is not entitled to invoke the doctrine of collateral estoppel (see Cary v Fisher, 149 AD2d 890, 891 [1989]).

On the record before us, plaintiffs have stated a cause of action for legal malpractice. "'In 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 Spiegel v Rowland, ___ US ___, ___, 128 S Ct 1696 [2008], quoting AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007] [internal citation omitted]). Although plaintiffs' evidence may be insufficient to withstand a motion for summary judgment, on an unconverted preanswer motion to dismiss, plaintiffs' allegations are accepted as true and are entitled to the benefit of every reasonable inference (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Rovello v Orofino Realty Co., 40 NY2d 633, 634 [1976]).

How does one prove legal malpractice, and what documents are necessary to support a successful legal malpractice case?  A colliery to that question is how do you get those documents, and when is a request too broad, and when does a demand go to far?  An illustration of a request which went too far is found in Aaron v Pattison, Sampson, Ginsberg & Griffin, P.C. ;2010 NY Slip Op 00342 ;Decided on January 14, 2010 ;Appellate Division, Third Department .
 

Aaron asked for: "documents showing Katzman's time entries and billings related to other client matters; documents showing Katzman's employment contracts, partnership agreements and income; evidence of loans to Katzman by PSGG; evidence of any malpractice suits against Katzman; claims against Katzman made to the Committee on Professional Standards; documents showing Katzman's absences from work, including vacation, personal and sick time; and documents pertaining to Katzman's reviews, disciplinary actions, internal grievances, demotions and promotions. "

Instead of getting such documents, he ended up paying attorney fees to the other side.  "As Aaron has failed to demonstrate that these materials are in any way material and necessary to proving a claim of legal malpractice (see AmBase Corp. v Davis Polk & Wardwell, [*3]8 NY3d 428, 434 [2007]) or to defending against PSGG's claims for counsel fees, the motion to compel must be denied (see CPLR 3101 [a]). Furthermore, under the same rationale, we find that Supreme Court did not abuse its discretion in granting the protective order (see CPLR 3103 [a]). Nor do we find an abuse of discretion in the award of counsel fees and costs on the motion (see 22 NYCRR 130-1.1 [a]). As set forth in the court's amended order, Aaron's motion to compel the production of the patently immaterial and unnecessary information detailed above was nothing more than a "fishing expedition" made for the "illegitimate purpose" of "uncovering facts supporting insufficient, conclusory allegations."

in Lyons v Cronin & Byczek, LLP 01/06/2010 2010 NYSlipOp 30006(U Plaintiff started an employment discrimination case against the LIRR and while it was pending, filed a petition in Bankruptcy.  How this fact was not known to his attorneys, or the LIRR is not explained, but he settled the case and accepted the proceeds.  Later, after being discharged in Bankruptcy.

He was dissatisfied with the settlement, and retained the target attorneys to sue his former attorneys.  In this round it was established that he had filed bankruptcy during the pendency of the underlying case, and the rule is that he lost rights to that case at the moment that the petition was filed.  It belonged to the debtor's estate, to be administered by the Chapter 7 trustee.

So, case dismissed.  Now he sues his own attorneys, saying that they should have known.  If they knew, they also should have known that he could move to reopen the bankruptcy, amend the petition and schedules, have the trustee cede the cause of action back to him, and refile under CPLR 205. They didn't, and this forms the basis of his second legal malpractice action.

Currently, motion for summary judgment by the target attorney was dismissed.

It's popularly thought that legal malpractice is all about the mistakes made by an attorney.  While that is the first elements of legal malpractice, there are far harder hurdles to jump in a successful case.  Mistakes, or problems in the way a case was handled are not that difficult to fine, attorneys being human, and the natural law of imperfection still remains in effect.

A successful legal malpractice case requires departure, proximate connection with some financial loss, ascertainable collectible  damages and proof that the attorney's mistake was the real ["but for"] reason for the financial loss.  In Route 9A Realty Corp. v. Vincent A. DeIorio Law Firm, 015931/06;Decided: January 6, 2010; Justice Ute Wolff Lally  we see defendants showing how the last three elements often decide how a case ends.

"According to the complaint, "[d]uring the period 1998 through 2002, on at least two occasions, defaults occurred on the payments due pursuant to the tax installment agreement." Further, "[o]n or about July 31, 2002 the Town commenced a tax foreclosure proceeding against numerous property owners, including Route 9A which allegedly owed taxes in the amount of $105,905.75.The last day to redeem the property was November 7, 2002.On or about August 8, 2002 the plaintiff retained the defendants attorneys (the Firm) as counsel for the plaintiff in the Tax Foreclosure Action.

It is alleged that from the time the Firm was retained until the November 7, 2002 redemption date, the Firm did not advise the plaintiff that if the taxes were not paid by the redemption date, it would lose all right, title and interest in the Property.

The complaint also alleges as follows: the firm breached its duty of care to the plaintiff by failing to research and correctly interpret provisions of the Real Property Tax Law; by failing to perfect an appeal; and by failing to ensure that plaintiff would be able to recover and develop the Property. Moreover, the plaintiff alleges it "had the financial wherewithal to obtain the necessary monies to satisfy the outstanding taxes." However, in December 2005 a judgment of foreclosure was entered as a result of which the plaintiff lost its right, title and interest in the Property and its right to develop the Property.

In opposition to the motion for summary judgment the plaintiff contends that from February 7, 2002, to December 5, 2004, defendants led plaintiff to believe the property would not be lost even if a foreclosure occurred, but rather could be recovered at auction. In support of this assertion, plaintiff refers to the deposition of Bernard Deutsch. However, the one page of the Deutsch transcript, a copy of which is annexed to the Notice of Cross Motion does not support plaintiff attorney's claim. Nor does Exhibit 18 support plaintiff's attorneys' claim that "defendants insisted that plaintiff could buy back the property, pay the taxes, receive the proceeds from the sale over and above the taxes." In further opposition to defendants' motion for summary judgment the plaintiff submitted a 10-page affidavit by David C. Wilkes, a purported expert on real property tax matters. Plaintiff's expert opines that "[i]n my opinion, an ordinary attorney with reasonable skill and ability, after having read the installment agreement, would have advised plaintiff the only manner in which to retain the property was to pay the taxes. Without such payment, the Town was entitled to awny [sic] entry of judgment as of the redemption date of November 7, 2009. However, it is clear from the testimony of defendant Patrick V. Deiorio, he advised the plaintiff that if the taxes were not paid by the redemption date the plaintiff would risk losing the property. Plaintiff has failed to present any documentary evidence to support the conclusory allegations that the plaintiff had sufficient resources to pay the taxes as of the redemption date. Plaintiff does not refute defendants' assertion that as of the redemption date, the plaintiff owed debts in excess of $1.2 million. Nor does plaintiff establish its ability to pay the taxes, its access to funds, its ability to borrow such funds or its desire to borrow said funds."

For those with any knowledge of the history of the statute of limitations in legal malpractice, there was once a time in which a three year s/l for tort and a six year s/l for contract existed.  Under the Court of Appeals in Santulli it was permissible.  In response the Legislature passed CPLR 214-6:

" an action to recover damages for malpractice, other than medical, dental or podiatric malpractice, regardless of whether the underlying theory is based in contract or tort; "

Now, however, we see a quasi-legal malpractice cause of action with a 6 year s/l:  disgorgement of excessive fees.  In Loria v Cerniglia ;  2010 NY Slip Op 00112 ;  Decided on January 5, 2010
Appellate Division, Second Department  the court reversed and remanded to Supreme Court for trial on the issue of excessive fees even when it decided that the s/l for legal malpractice had passed.
 

"The Supreme Court properly granted that branch of the defendant's motion which was to dismiss the first cause of action, alleging legal malpractice, as time-barred. The action was commenced on August 14, 2008, and the three-year statute of limitations (see CPLR 214[6]) began to run on August 12, 2005, when the plaintiff signed a consent to change attorney form, relieving the defendant as counsel in the underlying action (see Frost Line Refrig., Inc. v Gastwirth, Mirsky & Stein, LLP, 25 AD3d 532, 532-533; Sommers v Cohen, 14 AD3d 691, 692; Marro v Handwerker, Marchelos & Gayner, 1 AD3d 488, 488; Daniels v Lebit, 299 AD2d 310, 310).

However, the second cause of action, alleging that the defendant charged an excessive fee, was not duplicative of the first cause of action, and should not have been dismissed (see Boglia v Greenberg, 63 AD3d 973, 976). "

For those with any knowledge of the history of the statute of limitations in legal malpractice, there was once a time in which a three year s/l for tort and a six year s/l for contract existed.  Under the Court of Appeals in Santulli it was permissible.  In response the Legislature passed CPLR 214-6:

" an action to recover damages for malpractice, other than medical, dental or podiatric malpractice, regardless of whether the underlying theory is based in contract or tort; "

Now, however, we see a quasi-legal malpractice cause of action with a 6 year s/l:  disgorgement of excessive fees.  In Loria v Cerniglia ;  2010 NY Slip Op 00112 ;  Decided on January 5, 2010
Appellate Division, Second Department  the court reversed and remanded to Supreme Court for trial on the issue of excessive fees even when it decided that the s/l for legal malpractice had passed.
 

"The Supreme Court properly granted that branch of the defendant's motion which was to dismiss the first cause of action, alleging legal malpractice, as time-barred. The action was commenced on August 14, 2008, and the three-year statute of limitations (see CPLR 214[6]) began to run on August 12, 2005, when the plaintiff signed a consent to change attorney form, relieving the defendant as counsel in the underlying action (see Frost Line Refrig., Inc. v Gastwirth, Mirsky & Stein, LLP, 25 AD3d 532, 532-533; Sommers v Cohen, 14 AD3d 691, 692; Marro v Handwerker, Marchelos & Gayner, 1 AD3d 488, 488; Daniels v Lebit, 299 AD2d 310, 310).

However, the second cause of action, alleging that the defendant charged an excessive fee, was not duplicative of the first cause of action, and should not have been dismissed (see Boglia v Greenberg, 63 AD3d 973, 976). "

In Denenberg v Rosen ;2010 NY Slip Op 00081 ;Decided on January 7, 2010 ;Appellate Division, ;First Department ; Moskowitz, J. the question of when the relationship begins between client and attorney is discussed.  Plaintiff, who was a knowledgeable investor, as a commodities trader, formed a retirement account that was ultimately disallowed by the IRS.  He incurred big losses.
At the time he formed the tax shelter, his accountants used the name of a law firm to highlight the deal.  Bryan Cave had issued an opinion letter, but in this case it was to be narrowly construed.

"The marketing materials included an opinion letter that Smith and Bryan Cave had issued, on September 10, 1999, to Hartstein/ECI expressing that the Pendulum Plan was legal. The opinion letter contained the caveat that it was solely for ECI:

"This opinion is solely for the information of ECI Pension Services, LLC and its professional advisors. We have not considered whether adoption of the Plan would be appropriate for any particular employer. ..."

Privity is the relationship between client and attorney.  At the strongest, there is a contractual relationship, undisputed, between them.  At the far reaches, on some occasions, an opinion letter upon which a person might reasonably rely has been sufficient.

Here, it was not enough. "The motion court should have dismissed the legal malpractice claims against Bryan Cave and Smith because no attorney-client relationship existed in 2002. The motion court was correct that the tax opinion letter was insufficient to support an attorney- client relationship, considering the letter stated it was for ECI solely and contained disclaimers cautioning readers to procure tax advice tailored to their specific plan. The motion court was also correct that the limited power of attorney was insufficient to show an attorney-client relationship as that document could also have [*7]authorized nonattorneys to act on behalf of plaintiff. The limited power of attorney only authorized Bryan Cave to represent "Robert A. Dennenberg, a Sole Proprietorship Defined Benefit Pension Plan" before the IRS and only for "Form 5307," which was the application submitted to the IRS for it to determine whether to approve the Plan. Plaintiff does not contend that Bryan Cave was negligent in submitting the Form 5307.

However, the motion court improperly relied on plaintiff's entirely conclusory allegations that plaintiff retained the services of Bryan Cave in 2001 to support the legal malpractice claim. Plaintiff points to no communications with Bryan Cave for legal advice about implementation of the Plan. Plaintiff offers no objective facts or actions to show the existence of an attorney-client relationship or the parties' mutual agreement that Bryan Cave would perform ongoing legal services for plaintiff. "

We have written that legal malpractice cases arise from a large base of underlying matters.  Here is a huge NY case that starts in Austria, travels east to Russia, and then is dismissed in New York.  In this story from the NYLJ by Nate Raymond we see how an Austrian Bank which lost it all in Russia came to New York to sue and lose a legal malpractice case against Chadbourne & Parke.

"A state judge on Friday threw out a $500 million lawsuit by an Austrian bank against Chadbourne & Parke stemming from advice its Moscow office gave the bank about the structure of an investment vehicle whose legality later came under scrutiny.

"Chadbourne in 2004 lost a bid to have the case tried in Russia instead of New York (NYLJ, June 14, 2004). The firm had better success in 2007, when a divided First Department, Appellate Division, panel ruled that the bank had waived its right to attorney client privilege (NYLJ, April 5, 2007).

Creditanstalt, with advice from the Denver-based firm of Holme Roberts & Owen, in 1996 acquired the assets of a Russian company engaged in securities brokerage activities. The bank then allegedly turned to Holme Roberts for advice on a legal structure that would allow its clients to invest in Russian securities. Those securities included Gazprom, the Russian natural gas giant.

Holme Roberts closed its Moscow office in 1998 as its team there joined Chadbourne, which took over the Creditanstalt relationship. The bank said Chadbourne provided a legal opinion on the structure's legality, specifically with regards to a decree by President Boris Yeltsin in 1997 limiting the extent foreign entities could invest in Gazprom. It also issued a risk assessment letter in 1998 advising on the legality of the structure.

Creditanstalt claimed Chadbourne later realized its advice was faulty but failed to tell the bank. It also claimed Chadbourne failed to warn about any potential repercussions. Chadbourne disputed that its advice was wrong and claimed it warned the bank of tax and political consequences of the structures."
 

We've discussed the oft-found fact situation of how a fee determination by a bankruptcy court may block a later legal malpractice action.  In Breslin Realty Dev. Corp. v Shaw ;  2010 NY Slip Op 00087 Decided on January 5, 2010; Appellate Division, Second Department; Chambers, J., J.  the court writes persuasively about the concept:
 

"In bankruptcy proceedings, the general rule arising under 11 USC § 330(a)(4) is that "a finding of malpractice would mean that the attorneys were not entitled to compensation for those services found to be substandard" and, accordingly, failure to raise the malpractice claims when the final fee applications were considered and approved by the Bankruptcy Court barred later litigation of such claims under principles of res judicata (In re Iannochino, 242 F3d 36, 42; see Grausz v Englander, 321 F3d 467; Osherow v Ernst & Young [In re Intelogic Trace], 200 F3d 382; cf. Clement v Brumfield, 2004 Cal. App. Unpub. LEXIS 1031, citing Matter of Boddy, 950 F2d 334). Res judicata bars future litigation between the same parties or those in privity arising out of transactions giving rise to a cause of action which could have been raised in a prior bankruptcy proceeding (see Truesdell v Donaldson, Lufkin & Jenrette Sec. Corp., 281 AD2d 334; Evergreen Bank v Dashnaw, 246 AD2d 814). An exception lies if the plaintiff was deceived in the prior action or proceeding (see Izko Sportwear Co. Inc., v Flaum, 25 AD3d 534; Penthouse Media Group v Pachulski Stang Ziehl & Jones [US Dist Ct, SD NY, 9 Civ 85, Scheindlin, J., 2009]).

Applying these principles, we conclude that the final award of fees in the bankruptcy proceeding bars the plaintiffs' malpractice claim based upon the same services in the present litigation. The final fee award in the bankruptcy proceeding was a determination on the merits, barring the legal action sounding in legal malpractice pursuant to the doctrine of res judicata (see Izko Sportwear Co. Inc. v Flaum, 25 AD3d 534).

Further, we are unpersuaded that there is evidence in this case that the defendants deceived the debtors or the Bankruptcy Court. The June 2003 agreement demonstrates that the plaintiffs were aware of the factual basis of their malpractice claim at the time of the defendants' fee application. Moreover, the June 2003 agreement was drafted at least in part by separate and independent counsel—the Dollinger law firm. Thus, on the date that the Bankcuptcy Court entered the defendants' final award, December 15, 2003, the debtors had ample opportunity to raise their malpractice claims as objections to the fee award. Accordingly, we conclude that the plaintiffs failed to meet their burden of demonstrating under the doctrine of collateral estoppel that they lacked a full and fair opportunity to litigate the legal malpractice claim in the Bankruptcy Court (see Izko Sportswear Co. Inc. v Flaum, 25 AD3d 534; cf. Penthouse Media Group v Pachulski Stang Ziehl & Jones [US Dist Ct, SD NY, 9 Civ 85, Scheindlin, J., 2009]). "

Criminal defendants have a well known and exacting path.  Arrest, Indictment, Trial, Appeal, CPL 440 Motion (or its federal equivalent) habeas proceedings, and finally, they often turn to a legal malpractice action.  In New York there is a strict prohibition against suing ones criminal defense attorney.  Its sort of a quasi-immune situation.  "New York law also demands that, in order to "open the door for even a colorable claim of innocence, criminal defendants must free themselves of the conviction, for the conviction precludes those potential plaintiffs from asserting innocence in a civil suit." Britt v. Legal Aid Soc., Inc., 95 N.Y.2d 443, 447, 741 N.E.2d 109, 718 N.Y.S.2d 264 (N.Y. 2000)." 

So, in Sash, v. Schwartz,No. 07-1249-pr;UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT;2009 U.S. App. LEXIS 27421; December 16, 2009 we see plaintiff lose in summary judgment.  "As Appellant's brief does not raise the issue of whether he established diversity jurisdiction, that argument is waived on appeal. See LoSacco v. City of Middletown, 71 F.3d 88, 92-93 (2d Cir. 1995) (holding that, where a litigant, including one proceeding pro se, raises an issue before the district court but does not raise it on appeal, it is abandoned).

In any case, the district court properly granted summary judgment to Appellee. [*2] We review orders granting summary judgment de novo and focus on whether the district court properly concluded that there was no genuine issue as to any material fact and the moving party was entitled to judgment as a matter of law. See Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir. 2003). Under New York law, in order to state a cause of action for legal malpractice arising from negligent representation in a criminal proceeding, the plaintiff "must allege his innocence or a colorable claim of innocence of the underlying offense . . . for so long as the determination of his guilt of that offense remains undisturbed, no cause of action will lie." Carmel v. Lunney, 70 N.Y.2d 169, 173, 511 N.E.2d 1126, 518 N.Y.S.2d 605 (N.Y. 1987). "

Continuing the trend towards a combination of bankruptcy and legal malpractice, we note that bankruptcy follows, and rarely precedes legal malpractice situations, hence, we expect a swell of the intersection following the financial down-trends of the past year.  Here, Tabner v Drake
2009 NY Slip Op 10006; Decided on December 31, 2009 ; Appellate Division, Third Department is an example of how settlement of an underlying case is handled in Bankruptcy Court, even when the attorneys seeking their fee have nothing to do with the bankruptcy.  Apparently, individual Drake had carved out a portion of the settlement that was then taken away from him by the Bankruptcy Court, and as a result he would not sign a stipulation and release so that the law firm which had produced the settlement sums might get paid.
 

"In 1998, plaintiffs commenced an action to recover legal fees for services allegedly rendered to defendant Ralph H. Drake Jr.'s residential and commercial real estate business — defendant RHD Construction Corporation. In response, Drake and RHD asserted negligence and malpractice counterclaims against plaintiffs. Multiple pretrial proceedings ensued (see e.g. Tabner v Drake, 9 AD3d 606 [2004]) and, in 2001, Drake filed for bankruptcy under chapter 7 of the Bankruptcy Code.

Shortly after the start of trial, the parties entered into a stipulation of settlement in open court which, among other things, contemplated the exchange of general releases from the parties with respect to all aspects of the litigation. The parties acknowledged that the Bankruptcy Court's approval of the settlement was required and, in November 2007, the Bankruptcy Court issued an order approving the settlement and authorizing the bankruptcy estate's trustee to execute general releases in accordance therewith, specifically authorizing the payment of $50,000 to plaintiffs by the trustee. Nevertheless, citing purported inconsistencies between the actual [*2]terms of the settlement and the "Bankruptcy Court approval relative to the amounts to be paid to each defendant," Drake and RHD refused to execute their respective releases. Consequently, plaintiffs moved in Supreme Court for an order directing that defendants execute the releases called for within the agreement and enforcing the stipulation of settlement. Supreme Court granted the motion, prompting this appeal. "

"Accordingly, although the parties agreed to a total settlement of $350,000, with $50,000 going to plaintiffs, $295,000 to RHD and $5,000 to Drake, the Bankruptcy Court properly observed that the bankruptcy estate was the "legal and equitable owner of the litigation whether through [Drake] directly or as the sole shareholder of RHD" (see 11 USC § 541). Its resultant order — that $50,000 be tendered to plaintiffs and $300,000 be tendered to the bankruptcy trustee — thus adequately reflects the terms and conditions of the settlement. In view of the foregoing, we find no reason to disturb Supreme Court's order."

Plaintiff suffers a construction accident, and his attorneys wait too long to bring the action.  He had a Labor Law 200.240, 241 and other claims, typical in a gravity-fall construction case.  His attorney admit that they waited too long to commence the action, but was successful in dismissal of the Labor la 200 and 240 causes of action.  Then, after an appeal, plaintiff moved for partial summary judgment on Labor Law 241,  In Long v. Cello & Barnes, 2009 NY Slip Op 09790 ; Decided on December 30, 2009 ; Appellate Division, Fourth Department we see
 

"Plaintiff commenced this legal malpractice action seeking, inter alia, damages resulting from the conceded negligence of defendants in representing him in the underlying action by failing to commence the action against the proper parties in a timely manner. Supreme Court erred in denying plaintiff's motion seeking partial summary judgment on the first cause of action against defendants insofar as it is based upon the loss of a viable Labor Law 240 (1) claim in the underlying action. We note that, on a prior appeal, we affirmed an order granting, inter alia, those parts of the cross motion of defendants seeking summary judgment dismissing the second and third causes of action against them (Long v Cellino & Barnes, P.C., 59 AD3d 1062). We agree with plaintiff that he met his burden of establishing that he would have prevailed on the Labor Law § 240 (1) claim in the underlying action but for defendants' negligence (see generally McKenna v Forsyth & Forsyth, 280 AD2d 79, 81, lv denied 96 NY2d 720). In support of his motion, plaintiff established that he was injured by a fall from an elevated work site and that the absence of appropriate safety devices was a proximate cause of his injuries (see Ewing v ADF Constr. Corp., 16 AD3d 1085, 1086). Defendants failed to raise a triable issue of fact in opposition to the motion (see generally Zuckerman v City of New York, 49 NY2d 557, 562). Contrary to defendants' contention, the nondelegable duty imposed upon the owner and general contractor under section 240 (1) " is not met merely by providing safety instructions or by making other safety devices available, but by furnishing, placing and operating such devices so as to give [a worker] proper protection' " (Haystrand v County of Ontario, 207 AD2d 978; see Heath v Soloff Constr., 107 AD2d 507, 512). "
 

In today's NYLJ, Abraham B. Krieger writes a compelling article about "negligent referral ", and gives some history and out of state cases, along with a discussion of NY cases in the area.  To backtrack, Mr. Krieger writes: "Recently, New York's Appellate Divisions in the First, Second and Third departments, and a number of other state courts, implicitly recognized negligent recommendation/referral as a potential cause of action. While New York does not yet expressly recognize "negligent referral" or "negligent recommendation" as a cause of action, such a claim may be supported by applying the tort of negligent misrepresentation. A claim for negligent recommendation/referral may also be supported by the scope of duty voluntarily taken as part of a professional's responsibility under the rules governing professional ethics, conduct and responsibility."

Looking from a slightly different viewpoint, both under the old rules and the new (since April 2009) "Rules of Professional Conduct"   Rule 1.5(g):  "A lawyer shall not divide a fee for legal services with another lawyer who is not associated in the same law firm unless: (1) the division is in proportion to the services performed by each lawyer, or, by a writing given to the client, each lawyer assumes joint responsibility for the representation; (2) The client agrees to employment of the other lawyer after a full disclosure that a division of fees will be made, including the share each lawyer will receive, and the client''s agreement is confirmed in writing and (3) the total fee is not excessive."

Under these rules, there is no more "sub silentio" referral of cases to trial attorneys, or to outside attorneys, or to "specialists."  Hence, the theory of referral malpractice seems to be a relic.  Referral malpractice now appears to be simply another variant of legal malpractice, although in this iteration, referring to multiple attorneys.

In Dischiavi v Calli ;2009 NY Slip Op 09773 ;Decided on December 30, 2009 ;Appellate Division, Fourth Department  we see a discussion of the effects of a bankruptcy filing on a legal malpractice claim.  While the governing principal applies to any cause of action which a plaintiff had when bankruptcy was filed. it seems to come up especially frequently in legal malpractice cases.  Briefly put, any claim at all, whether in suit, or simply in existence, which exists at the time a bankruptcy petition is filed, becomes an asset of the debtor's estate, and thus passes out of the hands of the individual debtor.  The usual scenario is that the debtor obtains a discharge in bankruptcy, then sues an attorney.  Absent some act which allows the debtor to keep the asset [cause of action] it belongs to the estate, and the debtor lacks standing to bring the action.
 

In Dischiavi, the court found it a question of fact whether the debtor [plaintiff] had reason to know of the cause of action at the time of petition filing. "Defendants met their initial burdens in part by establishing that plaintiffs failed to include any of their causes of action against defendants in their schedule of assets for their bankruptcy proceeding, that the causes of action for breach of contract, legal malpractice, breach of fiduciary duty and negligence accrued prior to the commencement of the bankruptcy proceeding, and that plaintiffs obtained a [*2]discharge in bankruptcy (see Wright v Meyers & Spencer, LLP, 46 AD3d 805; Nationwide Assoc., Inc. v Epstein, 24 AD3d 738; see also Whelan v Longo, 23 AD3d 459, affd 7 NY3d 821). Defendants failed, however, to demonstrate that plaintiffs "knew or should have known of" those causes of action against defendants prior to commencing the bankruptcy proceeding (Dynamics Corp. of Am., 69 NY2d at 197; see R. Della Realty Corp. v Block 6222 Constr. Corp., 65 AD3d 1323). Defendants also failed to establish that the fraud cause of action accrued prior to commencement of the bankruptcy proceeding (cf. Wright, 46 AD3d 805). "
 

"The Cobbler's Son had no shoes..." is an ancient way of saying that people attend to the needs of others, including clients, while ignoring the requirements closer to home.  While the decision does not make this analogy, nor does it explicitly hinge the reasoning on the lack of an affidavit of plaintiff, we wonder whether there is some connection in a legal malpractice case which had the lack of an affidavit of plaintiff as a central motif in the underlying action.

In McComsey v. Kera Graubard & Litzman we see the plight of a Manhattan tenant.  She rented an apartment on East 67th Street, and obtained a two year lease, with a renewal clause.  Renewal required a certified or registered letter by a date certain.  Instead, plaintiff left a renewal notice in the spot where she left the rent.  After much litigation in both Supreme Court and in Housing Court, plaintiff lost, and had to pay a hefty legal bill to the landlord's attorneys.

She sued her attorneys.  One central issue was that while she was traveling in Europe a motion for summary judgment was filed, and no affidavit was submitted in opposition.  Her fault or the attorneys?

When the client sued the attorneys, they moved pursuant to CPLR 3211(a)(7)  and submitted affidavits.  But, a motion under CPLR 3211(a)(7) is on the sufficiency of the pleadings, no?  Do you need an affidavit in opposition, as if it were CPLR 3212?

Left unanswered, the court did state: 'Plaintiff opposes Defendant's motion but notably fails to submit an affidavit from Plaintiff and instead relies on counsel's affirmation.  Was the malpractice attorney wrong to respond in this way?

There is a tension between responding strongly to a CPLR 3211(a)(7) motion and going over the edge, "charting a course to summary judgment" and impelling the Court to consider the 3211 motion under 3212 rules. This is a danger, and one not to be lightly discarded as impossible.

Today's NYLJ article by Daniel Wise chronicles the chilling story of an attorney who put his own freedom at risk in order to stymie a former client, and a successor attorney.  Why, and the clumsy method undertaken is the mystery.  in In re: RUBY G. EMANUEL, Debtor.;Chapter 7, Case No. 97-44969 (SMB); UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 Bankr. LEXIS 4024;December 23, 2009

"This matter has its origins in an unfortunate, fatal accident involving the debtor's husband. On December 17, 1992, Mr. Emanuel's employer was performing repairs on a barge in dry dock at the Brooklyn Navy Yard. The task called for the placement of a gangway connecting the barge to the dock. Mr. Emanuel was charged with the responsibility of placing the gangway. While standing on the gangway as it was being hoisted into place, Mr. Emanuel fell 45 feet to the bottom of the dry dock, sustaining massive injuries that rendered him a quadriplegic and ultimately led to his death on August 30, 2004. Emanuel v. Sheridan Transp. Corp., 10 A.D.3d 46, 779 N.Y.S.2d 168, 170-71 (N.Y. App. Div. 2004) ("Emanuel I").

The debtor retained Heller, individually and as administratrix of her husband's estate, to file a wrongful death action. Heller commenced suit against the barge owner, among others, asserting claims under the Jones Act, New York Labor Law and in negligence (the "Action"). Prior to the trial, on July 28, 1997, the debtor filed a voluntary petition [*3] for relief under chapter 7. By Order dated August 10, 1999, the Trustee retained Heller (and Samuel Hirsch) as special personal injury counsel to the Trustee to prosecute the Action." Heller won a multi million dollar verdict

Approximately one month after the Appellate Division reversal, Heller was disbarred. The charges that triggered the disbarment were unrelated to the Emanuel case.. The Appellate Division disagreed. Citing Heller's pattern of misconduct, "utter contempt for the judicial system" and "his consistent, reprehensible, [*5] unprofessional behavior," the court concluded that he should be disbarred rather than suspended:
In light of the cumulative evidence of respondent's 24-year history of sanctions, his perverse and persistent refusal to accept adverse rulings, reflective of an utter contempt for the judicial system, and his consistent, reprehensible, unprofessional behavior, which has included screaming at, threatening and disparaging judges, adversaries and experts, intentionally defying court rulings, and disrupting and thwarting proper legal process through both physical and verbal aggression, we are of the opinion that the appropriate sanction here is disbarment.
Heller failed to purge himself of the contempt, and state Supreme Court Justice Silver issued a warrant for Heller's arrest on February 26, 2007. In re Emanuel, 406 B.R. 634, 635 (Bankr. S.D.N.Y. 2009) ("Emanuel II"). Heller was arrested that same day, and was subsequently sentenced to 30 days in jail and a $ 10,000 fine (the "Sentencing Order").

Deprived of Heller's files, J&M carried on the best it could relying on the Record on Appeal. 5 Eventually, it procured a $ 3.65 million settlement that the Trustee accepted.

Heller's post-disbarment conduct caused prejudice to his former clients. Having lost the case he tried, Heller obstructed J&M's attempts to retry the case he lost. His refusal to turn over the files, in the face of several court orders directing him to do so, was symptomatic of what the Appellate Division described as his "utter contempt for the judicial system, and his consistent, reprehensible, unprofessional behavior, which has included . . . intentionally defying court rulings" in the Heller disbarment order. In re Heller, 780 N.Y.S.2d at 319. Furthermore, although he argued to the Appellate Division, as he does here, that the Record on Appeal included everything that [*25] J&M needed to retry the case, (see J&M Findings, Ex. 25, at 51-53), the Appellate Division concluded that Heller's contemptuous refusal to turn over the files caused "resulting prejudice to plaintiff's right to a new trial."

The rule is pretty clear; one may not sue a criminal defense attorney unless there is a showing of innocence.  Innocence means acquittal or reversal on appeal.  Here, in Peo v. Radcliff is a stunning example of how and why the rule exists.  In this case, defendant was convicted after a bench trial.  The implication is that the attorney told his client that the trial judge gave him "the wink" and that an acquittal was in the offing.  Note the confluence of literature, TV and this trial.

In People v Radcliffe ;2009 NY Slip Op 52593(U) ; Decided on December 18, 2009 ; Supreme Court, Bronx County ; Price, J. , "On July 10, 2003, defendant was convicted after a non-jury trial of criminal possession of a weapon in the second degree (PL 256.03 [2]) and assault in the second degree (PL 120.05 [2]) by Supreme Court Justice Dominic Massaro. Upon that conviction, Justice Massaro entered judgment against this defendant on September 25, 2003, sentencing him to two concurrent determinate terms of imprisonment of fifteen years and seven years, respectively. On November 22, 2005, the Appellate Division, First Department, rejected defendant's challenge to the trial court's suppression rulings and affirmed his conviction. On February 24, 2006, Court of Appeals Judge Victoria Graffeo denied defendant's petition seeking leave to appeal. "

"The People, in opposing defendant's motion, argue that Mr. Feige indeed provided meaningful and effective representation in that he thoroughly cross-examined the People's witnesses at the pre-trial suppression hearing, emphasized weaknesses in the People's case and delivered a persuasive summation. They further argue that defendant's waiver of his right to a jury trial and Mr. Feige's decision to rest on the pre-trial hearing testimony and stipulations as the trial record were not only a reasonable trial strategy, but were tactically justifiable since they were based on Mr. Feige's belief that doing so would achieve a favorable result. The People also correctly note that although the determination of whether counsel provided meaningful and effective representation is not dependent on achieving the desired outcome, here the trial court ultimately acquitted the defendant of the most serious charges, attempted murder in the second degree and assault in the first degree. This, they argue, supports the notion that Mr. Feige's representation was indeed meaningful and effective; that the result was not what the defendant desired, expected or liked is of no moment. This court agrees. "
 

"Since defendant's motion is predicated on Mr. Feige's mea cupla statements, scrutiny is warranted here as well. Generally, mea culpa statements made by trial counsel cannot be taken at face value because counsel may be motivated by either a desire to assist a former client or protect their own reputation (Barclay v Spitzer, 371 F Supp 2d 273, 283 [EDNY 2005]; but cf, e.g., Henry v Poole, 409 F3d 48 [2d Cir 2005]). Moreover, where, as here, an otherwise excellent attorney, who consistently performs in a highly credible manner as a member of the criminal defense bar, unexpectedly and inexplicable pleads ineptitude, skepticism is particularly called for. As such, this court is wary of Mr. Feige's claim that he lays awake at night wrought with guilt for having made "the most stunning and appalling decision" of his career.

This court finds it acutely disturbing that after spewing his mea culpas, Mr. Feige implicitly abdicates responsibility to Justice Massaro for the verdict not being what he anticipated. "Had Justice Massaro not done what he did, I would had [sic] proceeded with a trial, as I had throughout my career and as I always intended to do." Unfortunately, for both Mr. Feige and the defendant, nothing in the record before this court remotely suggests that Justice Massaro assured, promised or guaranteed that he would acquit the defendant. Even Mr. Feige's characterization that Justice Massaro gave him the "wink" is devoid of any factual support. In fact, as noted above, Mr. Feige based his strategic decision on a dubious head-nod and "unmistakable" look, which does not remotely qualify as a promise or guarantee.[FN1] To infer that Justice Massaro somehow made false or misleading representations is intellectually dishonest.

If Mr. Feige is indeed guilty of that which he claims to be, it would perhaps constitute far more than ineffective assistance of counsel. It is patently absurd to believe that an extraordinarily experienced defense attorney with an admittedly inherent distrust for the judiciary would suddenly unravel into a hideously incompetent advocate merely by the way a judge looked at him.[FN2] Of course, it is not for this court to speculative what Mr. Feige thought, believed or intended when concluding that defendant's best opportunity for success was to waive a jury. What appears unmistakable, however, is the striking similarity between the defendant's case and an ostensibly fictitious case contained in Mr. Feige's book "Indefensible."[FN3] Also unmistakable is that in one episode of Mr Feige's television drama, "Raising the Bar," another ostensibly similar [*10]fictitious case involves a corrupt judge who agrees to acquit the defendant but fails to do so.[FN4]

Perhaps Mr. Feige does indeed seek redemption for his perceived malpractice or perhaps there are other motivational forces in operation. Neither is of any moment. If, however, Mr. Feige is indeed guilty of the ills he claims to be, then in light of the accomplished author and producer he has become, disbarment, which he curiously appears too eager to accept, seems far from adequate. If, on the other hand, Mr. Feige is simply remorseful for misreading Justice Massaro, such remorse hardly qualifies as error, much less ineffective assistance of counsel; it is merely an unsuccessful defense strategy.

A recurring problem in medical malpractice cases is one in which the attorneys take on a case, start the case, and then at the critical juncture when an expert has to be named, abandon the case.  From a business point of view, this behavior is incomprehensible.  On further reflection, it seems to us that the real explanation is that some medical malpractice attorneys really believe that enough cases will settle prior to needing an expert, that it is feasible to start cases they never intend to finish.

In Riley v. Segan Nemerov & Singer P.C., 303097/08;  Decided: December 14, 2009;  Justice George D. Salerno;BRONX COUNTY;  Supreme Court we see a slightly different variant.  In this med mal case, the claim was lack of informed consent to plastic surgery, and the case went well until it was ready for trial, and the expert dropped out.  From the decision it seems that the surgeon-expert lost his license.  From that point on, the law firm just did not get a new expert, or even oppose the eventual motion to dismiss after the case was marked off calendar.  Shockingly, the court determined that no expert was even needed at all.

"Applying the above principals, this legal malpractice action was timely commenced within three years after its accrual. This legal malpractice claim accrued on the date that plaintiffs' actionable injury occurred, namely, the date of the Order dismissing the case, June 20, 2005, or on the date of the decision, April 29, 2005, upon which the said Order was made. Using either date as the date of accrual, this action was timely commenced within three years of accrual, because it was commenced on April 16, 2008. See McCoy v. Feinman, supra.

Even assuming, arguendo, that the legal malpractice claim accrued prior to April 16, 2005, the continuous representation doctrine would toll the statute of limitations until the attorney-client relationship ended. Segan has not shown that their representation was unequivocally ended prior to April 16, 2005.

Leon Segan never sought leave of court to withdraw as counsel, as required by CLR 321 and 22 NYCRR 604.1(6). Rather, Segan remained the attorney of record until after Justice Silver rendered his decision on April 29, 2005. Segan continued to make appearances in the STP Part of this court on plaintiffs' behalf, including appearing for oral argument on Dr. Goldstein's motion to dismiss, on March 11, 2005, and April 8, 2005.

The Segan firm represented plaintiffs for seven years when Leon Segan sent his clients the letter dated the August 25, 2004. Lisa Riley states that, at that time: "it was [her] understanding that my medical malpractice action against Dr. Goldstein was active and that the defendants were doing everything possible to represent [her] best interests." Lisa Riley also indicates that she relied upon and trusted Segan to legally represent her, and she cooperated with them at every juncture. 7

It is also noted that, from the Bill of Particulars served by the Segan firm in the underlying Malpractice action against Dr. Goldstein, that Lisa Riley had suffered severe depression including a "suicide attempt", requiring psychiatric attention, caused by the deformities and scarring resulting from the alleged botched breast-reduction surgery. 8 Especially under such circumstances, Segan should have unambiguously orally communicated with the Plaintiffs, preferably in-person, (and certainly not merely by crafted letters), if they intended to end this long-term relationship of trust and confidence, which began when Lisa Riley was an infant.

"An attorney "does not have an unfettered right to unilaterally withdraw" as counsel, and "[good cause is required, to be determined, ultimately, by the Court" upon motion by said counsel.[citations omitted]." Frenchman v. Queller, Fisher, Danced, Saurianness, Washer & Pool, LP, 24 Misc. 3d 486 (N.Y. Sup. Ct. 2009)."

An often found situation in legal malpractice cases is the successor counsel problem.  In a nutshell, here it is.  Plaintiff hires attorney 1 who makes a mistake.  Plaintiff finds out about the mistake, which has not led to outright dismissal, but rather, to a problem.  Plaintiff hires attorney 2 who is unable to solve the problem, and the case is dismissed.  May plaintiff sue attorney 1 ?  The answer is not clear, as it depends on the individual facts, but attorney 1 will certainly defend on the proposition that successor counsel took over prior to outright dismissal, and had the last clear chance to fix the problem, thus insulating attorney 1 from liability.

Here, in Guzzello v Steinberg, Finneo, Berger, Barone & Fischoff, P.C. ;2009 NY Slip Op 09427 ;
Decided on December 15, 2009 ;Appellate Division, Second Department  we see one additional element added in.  Plaintiff is too late to sue one of the defendants, but they are free to cross-claim amongst themselves.
 

"Although Berger and the Berger firm established that the action insofar as asserted against them was time-barred, the appellants are not precluded from asserting the cross claims against Berger and the Berger firm (cf. Sommer v Federal Signal Corp., 79 NY2d 540, 558; Hill v Metropolitan Suburban Bus Auth., 157 AD2d 93, 100). Moreover, the Supreme Court improperly considered the argument of Berger and the Berger firm that they were entitled to summary judgment dismissing the appellants' cross claims insofar as asserted against them on the ground that the appellants, as successor counsel, had the opportunity to protect the plaintiff's rights. That argument was raised for the first time in the reply papers of Berger and the Berger firm (cf. Matter of Harleysville Ins. Co. v Rosario, 17 AD3d 677, 677-678). In any event, since, under the circumstances, the appellants cannot be considered successor counsel (cf. Northrop v Thorsen, 46 AD3d 780, 783; Johnson v Berger, 193 AD2d 784, 786; Sucese v Kirsch, 177 AD2d 890, 892), that argument is without merit. Accordingly, the court should have denied that branch [*2]of the motion of Berger and the Berger firm which was for summary judgment dismissing the appellants' cross claims insofar as asserted against them. "
 

Rule 1215, setting forth the necessity for a retainer agreement between attorney and client, has some very strong language.  Under the rule, in the absence of a retainer agrement, no legal fee can be enforced.  This is the rule, no?

Actually, no.  A case this week in the Appellate Division, First Department underscores the reluctance of a court to give the rule any substance.  in Nabi v Sells ;2009 NY Slip Op 09408 ;Decided on December 17, 2009 we see yet another re-iteration of the rule in Seth Rubenstein.  No retainer agreement is necessary, and while collection under the retainer agreement may not proceed, the attorney may yet recover in quantum meruit.

"It was error to dismiss the first cause of action merely because plaintiff is not entitled to the declaration he seeks (see Lanza v Wagner, 11 NY2d 317, 334 [1962], cert denied 371 US 901 [1962]); the proper course is to declare in favor of defendants (see Holliswood Care Ctr. v Whalen, 58 NY2d 1001, 1004 [1983]; Mongelli v Sharp, 140 AD2d 273 [1988]). The aspects of the contingency fee retainer agreement prepared by defendants and signed by plaintiff that allegedly render it noncompliant with 22 NYCRR 1215.1 do not bar defendants from recovering in quantum meruit (see Seth Rubenstein, P.C. v Ganea, 41 AD3d 54, 60-64 [2007]; see also Egnotovich v Katten Muchin Zavis & Roseman LLP, 55 AD3d 462, 464 [2008]; Nicoll & Davis LLP v Ainetchi, 52 AD3d 412 [2008]). " We need not decide whether any of the alleged defects in the retainer agreement, alone or in combination, bar recovery in contract. Provided that defendant attorneys were not discharged for cause, in which case they would not be entitled to any fee
(see Matter of Montgomery, 272 NY 323, 326 [1936]), their recovery would be limited to the fair and reasonable value of their services, computed on the basis of quantum meruit (see Matter of Cohen v Grainger, Tesoriero & Bell, 81 NY2d 655, 658 [1993]; Lai Ling Cheng v Modansky Leasing Co., 73 NY2d 454, 457-458 [1989]; Schneider, Kleinick, Weitz, Damashek & Shoot v City of New York, 302 AD2d 183, 186, 188-189 [2002]; Smith v Boscov's Dept. Store, 192 AD2d 949, 950 [1993]). The rationale for the rule is that, due to the special relationship of the utmost trust and confidence between a client and an attorney, the client has the right to discharge the attorney at any time, for any reason, or for no reason, regardless of any particularized retainer agreement, and the client should not be compelled to pay damages for exercising the absolute right to cancel the contract (see Martin v Camp, 219 NY 170, 173-176 [1916]; see also Demov, Morris, Levin & Shein v Glantz, 53 NY2d 553, 556-557 [1981]; Matter of Montgomery, 272 NY at 327; Matter of Krooks, 257 NY 329, 331-332 [1931]). Against the client's unqualified right to terminate the attorney-client relationship is balanced the notion that a client should not be unjustly enriched at the attorney's expense or take undue advantage of the attorney, and therefore the attorney is entitled to recover the reasonable value of services rendered

Is there a difference between quantum meruit and the retainer agreement amounts?  Actually, no. "Although the annulled contingency fee agreement no longer governs the parties' relationship, it may "be taken into consideration as a guide for ascertaining quantum meruit" (Matter of Tillman, 259 NY 133, 135 [1932]), in addition to such pertinent factors as " the nature of the litigation, the difficulty of the case, the time spent, the amount of money involved, the results achieved and amounts customarily charged for similar services in the same locality'" (Schneider, Kleinick, Weitz, Damashek & Shoot, 302 AD2d at 188-189 [quoting Smith, 192 AD2d at 951]).
"

It's just a few words spoken to the record, and in this case, none of the participants dispute what was the agreement between the parties, yet, here, a settlement was not a settlement, and all because the judge made a decision and held firmly to it.

In Diarassouba v Urban ;2009 NY Slip Op 09420 ; Decided on December 15, 2009 ;Appellate Division, Second Department  here is what happened:

"While the court was in recess and the jury was deliberating, Conrad Jordan, counsel for the plaintiff, communicated to the defendants' counsel, Barry M. Viuker, that his client had authorized him to accept a settlement offer in the sum of $150,000. Viuker provided no confirmation of the settlement, but rather asked, "Do we have a settlement?" Jordan responded that [*2]he accepted the settlement offer. Viuker proceeded to leave the room for several minutes, without having responded in any way to Jordan's statement. The defense counsel's question, "Do we have a settlement?" was his only and final mention of the settlement agreement until after the court took the jury's verdict.

During Viuker's absence from the courtroom, Jordan informed the court clerk that the parties had reached a settlement, although he did not provide a specific settlement amount. The clerk did not record this information, but said that he would inform the Judge, who was already on her way to the courtroom to read a new jury note. Viuker then returned to the courtroom. When the judge arrived at the courtroom, Viuker inquired, off the record, as to the contents of the jury note. The Judge responded that the jury had reached a verdict. Once again, Viuker left the room for a short while.

When Viuker returned, Jordan asked the court to memorialize the settlement on the record prior to taking the verdict, but the court refused Jordan's requests.

"Mr. Jordan: Could I put my request on the record?
"The Court: Once I have a verdict, I take the verdict, and then the parties are free to do what they agreed to. An agreement is an agreement, counsel.
"Mr. Jordan: Why can't we put the agreement to settle the case for $150,000 on the record?
"The Court: Because I said what I have to say. Let's proceed."

Viuker was silent throughout this whole exchange.
The verdict was then taken in the plaintiff's favor, finding that Dr. Lubin and Dr. Horiuchi were each 35% at fault for the plaintiff's injury. The jury awarded the plaintiff the sum of $800,000 for past pain and suffering and the sum of $650,000 for future pain and suffering over 30 years. "

Even though Supreme Court ruled that the settlement was effective, the Appellate Division stated a blackletter rule:  "Thus, a settlement agreement is valid only if both parties stipulate to the settlement in a written agreement or it is made in open court and placed on the record. "

" 
 

One might think that after a loss of the underlying case, a legal malpractice action will undoubtedly be successful.  That thought is, of course, naive.  As an example. suppose you are a landlord and owner of a commercial setting who sells to buyer, who is to pay for the sale over time.  buyer disappears, and the store is left unattended.  Seller watches, then padlocks the store for safety, then later runs the business to pay for the upkeep.  Buyer later returns and sues.  Seller's attorney defends, does not file a counterclaim, then bails out just before trial.  Seller loses the trial.  Malpractice?  US District Court says no.

In CHARL-HO PARK, v.. REIZES; 5:06-CV-0843 (GTS/GJD)UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK 009 U.S. Dist. LEXIS 117077 the court summarizes: "Plaintiff's Complaint alleges that Defendant committed legal malpractice in the following ways: (1) he improperly advised Plaintiff of his legal rights regarding the padlocking of the premises in question; (2) he improperly advised Plaintiff of the amount that Plaintiff's tenants needed to pay to cure a default; (3) he failed to assert affirmative defenses and counterclaims on behalf of Plaintiff in an action filed against Plaintiff; and/or (4) he breached his professional duty by abandoning Plaintiff on the eve of trial, thereby [*2] causing Plaintiff to lose that action."

"Specifically, the Court finds that whatever issue of fact may exist with regard to the padlocking incident is not material to the issue of whether Defendant breached a legal duty to Plaintiff. The Court makes this finding for two reasons.

First, whether Plaintiff notified Defendant that his wife had padlocked the area is immaterial because Plaintiff admitted in his deposition that he asked his wife to lock the store for security reasons, as opposed to locking the store for the purpose of keeping the Lees from entering. (Dkt. No. 23, Part 10, at 30-31 [Plf.'s Deposition].) Defendant properly notes that New York courts recognize a landlord's padlocking or changing of locks as an eviction only when the landlord does so for the purpose of keeping a tenant out. 1 As a result, even assuming that Defendant owed Plaintiff a duty to advise him with regard to whether to padlock the premises in question, Defendant would have had a reasonable basis for not advising Plaintiff to remove the lock. As a result, Defendant [*7] did not breach any duty to Plaintiff with regard to the padlocking incident.

"In any event, whether or not Defendant gave this advice or calculated the amount owed (or even whether the calculation was incorrect) is immaterial to Defendant's motion for summary judgment. This is because, just as Plaintiff has done with regard to the issue of the padlocking of the doors discussed above in Part III.A. of this Decision and Order, Plaintiff has failed to provide admissible evidence to meet the burden needed to survive summary judgment on the element of causation in his claim regarding the default claim. "

"However, even assuming that Defendant erroneously notified Plaintiff that filing a counterclaim would cost more money (rather than notifying him that it merely could cost more money and time), Plaintiff has failed to adduce admissible record evidence from which a rational factfinder could conclude that such an error caused him any harm. "The object of compensatory damages is to make the injured client whole. Where the injury suffered is a loss of a cause of action, the measure of damages is generally the value of the claim lost." Campagnola v. Mulholland, Minion and Roe, 76 N.Y.2d 38, 42 (N.Y. 1990).."


 

Nate Raymond of the NYLJ reports a second unusual legal malpractice case, this time with an attorney as the plaintiff.  He sues over a case concerning his former law office and whether he was due money in the wake of its breakup.  "Partnership law expert Leslie Corwin is being sued by an attorney he represented who claims Mr. Corwin mishandled an arbitration with the attorney's former firm.  The case seems to revolve around the failure of either plaintiff or defendant to list an expert witness for use in the arbitration.  Because he was listed as a witness, but not an expert witness, his testimony on valuation was precluded.

Unanswered, but discussed in the case is why plaintiff did not take advantage of the right to offer documentary evidence on valuation.  Is that comparative negligence?

Allen Roberts, a partner at Epstein Becker & Green, sued Mr. Corwin and his firm, Greenberg Traurig, in October, claiming they were negligent in failing to prove liability against Mr. Roberts' former partners at New York employment boutique Roberts & Finger. Mr. Roberts is seeking more than $6.6 million in damages (See the Complaint).

Mr. Corwin, in an answer filed earlier this month, acknowledged Mr. Roberts lost the dispute but said the fault lies with Mr. Roberts, who, as an experienced lawyer, acted as co-counsel in his own case. Mr. Roberts "failed to heed advice" from Mr. Corwin, the answer claims, and caused the alleged damages himself. Greenberg also said Mr. Roberts owes the firm more than $141,000 in legal fees."
 

"Mr. Roberts' side rested without offering other testimony to support theories of valuation and liability, according to Mr. Roberts complaint.

The arbitration panel gave Mr. Corwin the opportunity to submit valuation theories in a chart or addendum. Mr. Corwin did not submit those, the complaint said, nor did he seek to reopen the hearing to receive further evidence"
 

Nate Raymond of the NYLJ reports on a $55 Million legal malpractice case  Ableco Finance LLC v. Hilson, Ippolito and Paul Hastings Janofsky & Walker LLP arising from loans made to a large retailer, and events after the loan went sour, bankruptcy filings, and apparently a big pay back by the lender in Bankruptcy Court.

"A financing unit of Cerberus Capital Management L.P. has sued Paul, Hastings, Janofsky & Walker, claiming the law firm gave it bad advice in connection with a loan the private equity firm made last year to a company looking to bring retailer Steve & Barry's out of bankruptcy.

Ableco Finance LLC, a unit of Cerberus with more than $6 billion under management, filed an amended complaint Friday in Manhattan Supreme Court against its former lawyers seeking more than $55 million it said it lost because of the $125 million loan. Ableco claims it would never have made the loan last year if the Paul Hastings team had advised it that the buyer would not have rights to all of Steve & Barry's inventory, which Ableco understood would back the loan.

"No competent, diligent finance lawyer would have put his client in such a vulnerable position," Ableco's complaint reads in part."

We obtained the Amended Complaint which  has as its main point "Paul Hastings Failed to Advise Ableco That the Terms of the BH/S&B Agency Agreement Made it  Impossible for Ableco to Get a Perfected First Priority Lien on S&B's Entire Inventory"

The Amended Complaint has but a single claim in Legal Malpractice against all defendants.

As the NYLJ article continues: "It was a difficult time to make a loan, given "an economy that was suffering major disruptions in the housing and credit markets," Ableco said in its complaint. To ensure it got paid back in full, Ableco said it told Paul Hastings lawyers to require a first priority lien on Steve & Barry's entire inventory, which Ableco estimated to be worth $183.7 million. Language agreeing to a first priority lien made it into the commitment letter drafted by Paul Hastings, and Ableco agreed to make the loan.

But according to the complaint, Ableco had not been advised about an earlier agreement between Bay Harbour and Steve & Barry's that would have made a right to the entire inventory impossible. Bay Harbour's earlier agreement with Steve & Barry's left the retailer with control of more than 50 percent of its stores. While the estate had given Bay Harbour a lien on the assets at these stores, the estate kept priority rights to the inventory and sales proceeds that came ahead of that lien.

As a result, Ableco claimed it was in fact impossible for it to receive its lien on a large portion of Steve & Barry's inventory. Ableco said Paul Hastings did not provide a copy of the earlier agreement between Bay Harbour and the retailer's estate, nor communicated its terms, before Ableco made the loan.

With the economy worsening, the company created by Bay Harbour, BH S&B Holdings, began to struggle and it filed for Chapter 11 bankruptcy in the Southern District in November 2008. "

One has to shake the head and ask why all the effort goes into a law suit that will [or is so likely to] fail?  The question is multiplied when plaintiff is an attorney seeking fees.

Rule 137 seems pretty comprehensive and exacting.  Attorney who seeks a fee needs to serve th client with an opportunity to arbitate.  Here in Messenger v Deem ; 2009 NY Slip Op 29501 ;Decided on December 7, 2009 ;Supreme Court, Westchester County ;Giacomo, J. we see what turns out to be a total waste of time for everyone, including the jurors.
 

"In his complaint, plaintiff alleged that "Pursuant to Second Department case law, notice of right to arbitrate legal fees need not be provided to a client who never disputes the reasonableness of an attorney's legal fees...Defendant never disputed the reasonableness of Plaintiff's fees." (Complaint at ¶¶6-7.)

In her answer [FN1], defendant denied the allegations of the complaint and plead thirteen affirmative defenses including that plaintiff was not entitled to an attorney's fee because of his: failure to provide defendant with notice of arbitration before commencement of the suit ."
 

"Part 137 of the Rules of the Chief Administrator of the Courts provides for a Fee Dispute Resolution Program. A mandatory Arbitration Procedure is set forth therein for all representations that commenced on or after January 1, 2002, and is applicable "to all attorneys admitted to the bar of the State of New York who undertake to represent a client in any civil matter." 22 NYCRR 137.1.

Plaintiff argues that the mandatory arbitration provisions of Part 137 are inapplicable to the instant matter because, like in the Scordio matter, there was no disagreement as to the amount of attorney's fee due to plaintiff, and that defendant [*3]simply did not pay what was due. In Scordio, the Appellate Division, Second Department held that the mandatory arbitration notice provided for by then Court Rule 136.5 did not apply where the client did not dispute the reasonableness of the fees charged, and specifically declined "to follow the rule adopted by the Appellate Division, First Department, which obligates an attorney to send such a notice even in the absence of any fee disagreement with a client." Scordio v. Scordio, 270 AD2d at 329, 705 NYS2d at 59.

Court Rule 136.5, upon which Scordio was premised, was repealed in January 2002 and replaced with Court Rule 137.6. Former Rule 136, which was applicable only to domestic matters has been subsumed by the newer Part 137 which, with limited exceptions that are not alleged here, is applicable to all civil matters. Court Rule 137.6 is applied in the same manner as former Rule 136.5. See, Abinanti v. Pascale, 41 AD3d 395, 837 NYS2d 740 (2nd Dept., 2007); Borah, Goldstein, Altschuler, Schwartz & Nahins, PC v. Lubnitzki, 13 Misc 3d 823, 822 NYS2d 425 (N.Y.Civ.Ct., 2006). "

"A "fee dispute" (22 NYCRR §137.2) or a disagreement as "to the attorney's fee" [22 NYCRR §137.6(a)] is not only found when the former client complains as to time billings on a line by line basis. Under Part 137, arbitrators are entrusted to "determine the reasonableness of fees for professional services". 22 NYCRR §137.0. Here the defendant "disputed the reasonableness of the fees" plaintiff was charging. See, Scordio v. Scordio, supra , 270 AD2d at 329, 705 NYS2d at 59. The "reasonableness" of the fee cannot be limited to disputes as to whether an attorney should have charge "1.0 hours of billing time" instead of "1.2 hours of billing time". If such were the case a simple audit of the bill would be all that was necessary. Instead, arbitrators are given authority to evaluate and make a subjective finding of reasonableness. For something to be reasonable it must be fair and proper under the circumstances. To hold otherwise would render the Rule impotent and unenforceable. "

Yesterday we discussed the plaintiff v. her own attorney part of Dupree v Voorhees ; 2009 NY Slip Op 09183 ; Decided on December 8, 2009 ; Appellate Division, Second Department .  Today we look at Dupree v. her husband's attorneys.  Traditionally this type of case has been out of bounds.  For policy reasons, courts do not like suits against your adversary's attorney...they might come after every case if allowed.  Here, however, after the Judiciary Law 487 claims were initially dismissed,, continued to remain dismissed on renewal, and then reversed on appeal.
For the bizarre events, see yesterday's blog entry.  It is alleged that the husband's attorneys deceived the court on an Order to Show Cause application, which permitted a receivership to be established while the wife's attorney was kept from knowing about the application.

"Based upon events which occurred in an underlying divorce action, the plaintiff commenced this action against her former attorney, Oliver Raymond Voorhees III, her former husband's attorney, Karyn A. Villar, and Villar's law partner, Dorothy A. Courten. As is relevant [*2]to this appeal, the third cause of action sought damages for abuse of process against Villar and Courten, alleging that Villar made certain misrepresentations in applying for a receivership order in the underlying action. In the fourth cause of action, the plaintiff seeks treble damages against Villar and Courten under Judiciary Law § 487, alleging that Villar intended to deceive the court in connection with a receivership application. The complaint further alleged that because Courten and Villar were partners in the same law firm, Courten was vicariously liable for the damages the plaintiff sustained as a result of Villar's alleged wrongdoing. "

"The court determined that a subsequent decision of the Court of Appeals in Amalfitano v Rosenberg (12 NY3d 8) provided a reason for granting renewal, and, upon renewal, to deny that branch of the motion which was to dismiss the complaint as against Villar with respect to the Judiciary Law § 487 cause of action. The court, however, denied the plaintiff relief with respect to the Judiciary Law § 487 cause of action against Courten, noting that Judiciary Law § 487 is rooted in the criminal law and that it would be inconsistent with this history and the statute itself to hold a second attorney responsible for the deceit of another unless the attorney participated in or ratified the wrongdoer's actions. We disagree.

Partnership Law § 24 provides that "[w]here, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership, or with the authority of his copartners, loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act" (Partnership Law § 24 [emphasis added]). Partnership Law § 26(a)(1) provides that "all partners are liable . . . [j]ointly and severally for everything chargeable to the partnership under section[ ] twenty-four." The pivotal test for liability in this regard is whether the wrong was committed on behalf of and within the reasonable scope of the partnership business, not whether the wrongful act was criminal in nature, or whether the other partners condoned the offending partner's actions (see Rudow v City of New York, 642 F Supp 1456, affd 822 F2d 324; Muka v Wiliamson, 53 AD2d 950; see also Clients' Sec. Fund v Grandeau, 72 NY2d 62). Therefore, the Supreme Court erred in adhering to the determination in the order dated May 1, 2008, dismissing the Judiciary Law § 487 cause of action against Courten. "

Dupree v. Voorhees, 2009 NY Slip Op 09183 ;Decided on December 8, 2009 ;Appellate Division, Second Department  is an example of the breathtaking reversals that might happen on appeal, and how the law can "change" in the period between dismissal and the appeal.  Today we will look at the legal malpractice part of this case which is more traditional; on Monday we will look at the Judiciary Law 487 reversal, and how it kept two attorneys in the case.
In this matrimonial case, it appears that some very strange motion practice took place.  we;ll quote:

"Specifically, the record reveals that the attorneys representing the plaintiff's former husband in a matrimonial action failed to provide advance notice to the appellant, the plaintiff's [*2]former counsel in the matrimonial action and a solo practitioner, of a closing scheduled for November 21, 2003, for the refinancing of the former marital residence. Rather, on the date in question, the appellant, who was in Suffolk County serving jury duty, received a voice mail message from one of those attorneys, Karyn A. Villar, advising him of a purportedly "emergency" application being made that day before Justice John C. Bivona in the Supreme Court, Suffolk County (hereinafter the motion court). Shortly thereafter, during a break, the appellant returned Villar's call and was informed by Villar that the closing would be taking place later that day. The application made by order to show cause ostensibly was to allow the former husband to effectuate the refinancing transaction.

Although Villar advised the motion court that the appellant was unavailable, and although the order to show cause had a return date of November 25, 2003, four days later, the order to show cause was signed by the motion court on November 21, 2003. The order to show cause granted the ultimate relief requested therein, essentially appointing the former husband receiver of the plaintiff's interest in the marital residence without her consent. The former husband, after the closing, failed to comply with an earlier stipulation in the matrimonial action requiring him to buy out his wife's interest in the marital property for the sum of $95,000.

Notably, a copy of the order to show cause signed by the motion court was faxed to the appellant's office at 3:54 P.M., approximately one hour after the time the closing was scheduled to occur. The appellant submitted opposition papers on the return date but, necessarily, after the closing had occurred. Under these circumstances, the appellant demonstrated the absence of any negligence on his part.

Result?  Case dismissed and affirmed against this attorney.  But, the case continues against two others under Judiciary Law 487.  Tomorrow, we'll see how a motion to renew worked and how the Court of Appeals decision in Amalfitano v. Rosenberg alerted Supreme Court that a lot had changed.

Reading between the lines in Minkow v. Sanders, plaintiff was a difficult client.  To begin, he was her third attorney.  As a digression, defense attorneys in legal malpractice cases often tee off with the assertion that their client is the "third" or "fourth" attorney that plaintiff has had, and boot strap from that to the assertion that only a despicable person has more than one attorney.  While in the main this is unwarranted, in this particular case, it seems that the client was already about to be held in contempt for financial issues in the matrimonial action when defendant attorney took over.

Plaintiff seems to have had the money in this relationship, as there was eventually a pre-nup agreement found, and she had control of the bank accounts, and the kid's money.  Needless to say, it turned sour, and Ms. Minkow ended up in jail over Christmas.  In matrimonial litigation, this is almost unheard of.

She sued and had her case dismissed by Justice Solomon in Supreme Court, New York County for the basic reasons:  failure to state a cause of action   Interestingly, Justice Solomon "summarily dismissed" several of the causes of action, and then dismissed the balance of them

The decision should be read for two reasons.  The first is a discussion of termination of the attorney-client relationship when "trust and confidence" has fled.  The second is Justice Solomon's treatment of a cause of action for the attorney's "inability to gain plaintiff's compliance with a court order."  As Justice Solomon states:"A client's wilful disregard of a court order cannot be attributed to her attorney who consistently advised compliance" no matter that it got her locked up over Christmas.

What do the parties really think in an attorney - fee dispute which totals in the $6 million range.  Most attorney fee disputes are less than $50,000,  In NY that qualifies for the court monitored Attorney-Fee dispute program  Here, in a startling NYLJ article Nate Raymond writes about the Debevoise & Plimpton cases against Candlewood Timber Group LLC.
 

Here are some of the issues in the case, from the NYLJ:  "Debevoise, which grossed $760.8 million in 2008, in its complaint said it submitted invoices and requests for payment to Candlewood for a year after trial wrapped in May 2006. Debevoise also attempted earlier this year to take Candlewood to arbitration.

But in March, Candlewood filed a petition to stay the proceedings, arguing its engagement letter with the firm did not cover arbitration.

Debevoise withdrew its notice to arbitrate in June, according to an affirmation in the proceedings in Debevoise & Plimpton LLP v. Candlewood Timber Development, LLC, 103982-2009. It then sued Candlewood and its principal, Jeffrey Kossak, on Nov. 12 (Debevoise & Plimpton LLP v. Candlewood Timber Group, LLC, 603479-2009).

According to the state court complaint, the fee dispute stems from Debevoise's representation of Candlewood in litigation against Pan American Energy LLC, a joint venture of BP p.l.c. and Bridas Corporation, which had subsurface rights to extract oil and gas in Argentina on land owned by Candlewood.

In an interesting side note to the article, a "legal cost" expert tells the firm not to sue for $6 million in fees.  Aside from the astounding concept, we wonder about the advice:

"John Marquess, president of Legal Cost Control Inc. in Haddonfield, N.J., said he would counsel a firm not to sue for fees, even with a "significant" demand like the more than $6.37 million Debevoise is seeking.

"If I were advising any law firm, I would tell them suing a client over fees is a no-win situation," he said. "It's going to get you adverse publicity you may or may not recover from. And if it went before a jury, juries hate lawyers."

Mr. Marquess said law firms usually attempt to resolve the disputes quietly to avoid litigation, which Debevoise tried to do."

There are lawyers who try cases to the limit and there are lawyers who try too hard.  This morning we were reading a NY Times article about the "capital panel.'  These are attorneys who will eventually represent the Guantanimo defendants at their Federal terrorism trials.  A potential for the death penalty exists in these cases.

In contradistinction, there is the garden or varietal civil case in which an attorney just goes too far.   KLIN Construction Group Inc. v. Blue Diamond Group Corp., 5215/09;Decided: November 20, 2009;  Justice Arthur M. Schack; KINGS COUNTY is one such case.  Justice Schack has become known recently for his imposition of sanctions, and has held attorneys in contempt.  Read the case closely, and we come away with the belief that a little less hostility by the sanctioned attorney would have gone a long way.

"Defendants' counsel, in his affirmation in support of MS # 2, asserts that he received this Court's April 24, 2009 Northside Tower Realty, LLC decision and order on April 27, 2009. Then, that day, he wrote and faxed a letter to Ms. Wang, with a copy of my April 24, 2009 decision and order, asked her to withdraw the instant action as moot and warned her that her failure to do so would result in a sanctions motion [exhibit B of MS # 2 OSC]. Ms. Wang, the same day, wrote and faxed to plaintiff's counsel a response rejecting the notice because she had not been served with a notice of entry. Further, she alleged that defendants' counsel's letter was a threat, which is "attorney misconduct, and in and of itself sanctionable [exhibit C of MS # 2 OSC]."

The letter by defendants' counsel was not a threat but fair warning of the consequences to follow if Ms. Wang continued the instant action. Further, CPLR Rule 2220 (b) states that "[s]ervice of an order shall be made by serving a copy of the order." Notice of entry of an order only affects the time to appeal and the time to re-argue. CPLR §5513; CPLR Rule 2221 (d) (3)."
 

"In MS # 2, plaintiff's counsel also raised the issue of false jurats in the subject November 21, 2009-mechanic's lien and the November 21, 2009-affidavit of service of the mechanic's lien. The November 21, 2008-mechanic's lien was executed by Ming Chin Lin, President of KLIN, who swore that she signed the mechanic's lien in the State of New York, County of Kings [exhibit E of MS # 2 OSC]. The notary who took her signature was plaintiff's counsel, Ms. Wang. Further, Ms. Lin swore in the affidavit of service that she served the mechanic's lien on the same day, November 21, 2008, on defendant BLUE DIAMOND, "by depositing a true copy of [mechanic's line]…in an official depository of the United States Postal Service in New York State." Ms. Wang signed the jurat as the notary [exhibit E of MS # 2 OSC].

However, in a related Supreme Court, Nassau County action, Blue Diamond Group Corp. v. Klin Construction Group, Inc. and Chunyu Jean Wang, Index No. 22040/08, for breach of contract and the filing of false jurats with respect to the subject November 21, 2008-mechanic's lien, both Ms. Wang and Ms. Lin admitted that the mechanic's lien was signed in Taiwan, not New York. Ms. Wang, in her January 14, 2009 affirmation in support of her motion to dismiss [exhibit F of MS # 2 OSC] states in ¶3:

Pictures of Ming Chin Lin and Ms. Wang at the marriage ceremony of her brother, Kenny Lin…prove that Ms. Wang, attorney for defendants, witnessed Ming Chin Ling, the President of the corporate defendant, KLIN Construction Group, Inc., sign the refiled Mechanic's Lien on behalf of the corporate defendant in Taiwan. Ming Lin Chin met Ms. Wang in Taiwan on November 21, 2008, because both were attending the marriage ceremony of Ming Chin Lin's brother, Kenny Lin, on November 22, 2008…As attorney for the corporate defendant, Ms. Wang is fit to acknowledge her client's signature in Taiwan, especially since the papers are to be filed in the same proceeding as her representation."

"Ms. Wang's conduct with respect to: her use of false jurats and material factual statements that are false; her continued failure to discontinue the instant action when notified of my cancellation and discharge of the subject November 21, 2008 mechanic's lien on April 27, 2009; and, her contemptuous refusal to provide this Court with affirmations as to her Father's alleged medical emergency on May 29, 2009 and her absence on June 26, 2009; is completely without merit in law. This Court, in having to adjudicate MS #'s 2, 3 and 5, conduct hearings and conferences on May 29, 2009, June 1, 2009, June 26, 2009 and July 13, 2009, and draft this decision and order wasted valuable judicial resources.

Therefore, this Court, pursuant to 22 NYCRR §130-1.1 (a), and as discussed above, has the discretion to award costs for reimbursement of "for actual expenses reasonably incurred and reasonable attorney's fees, resulting from frivolous conduct as defined" in 22 NYCRR §130-1.1 (c), and may impose sanctions upon an attorney who engages in frivolous conduct. In his post hearing brief, defendants' counsel, Mr. Scher, submitted detailed documentation with respect to defendants' "actual expenses reasonably incurred and reasonable attorney's fees resulting from frivolous conduct," from April 27, 2009 to the August 17, 2009 submission of the post hearing brief. The documentation demonstrates that defendants had actual expenses, which the Court deems reasonably incurred, of $4,158.83, resulting from Ms. Wang's frivolous conduct. Further, with respect to reasonable attorney's fees, Mr. Scher billed $53,910.45 (108.91 hours at $495.00 per hour, pursuant to Retainer Agreements, submitted with the post-hearing brief), and his associate, Austin Graf, Esq., billed $9,967.50 (26.58 hours at $375.00 per hour, pursuant to Retainer Agreements, submitted with the post-hearing brief). This total of $63,877.95 ($53,910.45 + $9,967.50) is deemed by the Court as reasonable attorney's fees resulting from Ms. Wang's frivolous conduct."

We are proud to report that Andrew Lavoott Bluestone has been admitted as a Diplomate to the American Board of Professional Liability Attorneys.  Andrew Lavoott Bluestone is the author and publisher of the New York Attorney Malpractice Blog

The American Board of Professional Liability Attorneys (ABPLA) is the only organization accredited by the American Bar Association (ABA) to certify attorneys in the areas of medical malpractice and legal malpractice. Legal & medical malpractice lawyers who are Board Certified must meet and exceed rigorous standards set by the ABPLA, and are recognized as leaders in professional negligence law.

LEGAL PROFESSIONAL LIABILITY REQUIREMENTS

To become Board Certified in the area of Legal Professional Liability, the following requirements must also be met:

Demonstrate substantial involvement in Legal Professional Liability by showing you:

• Have served as LEAD counsel during your legal career in at least 10 trials or arbitrations where testimonial evidence was presented and the matters were submitted to the finder of fact; and of the aforesaid 10 trials, 2 must involve claims of Legal Professional Liability and 1 must be a jury trial.
• Participated in 20 additional contested matters (trials, hearings, depositions) involving claims of Legal Professional Liability.
• Within the 3 years prior to application, have done any one of the following:
  • 1. Participated in 10 matters involving claims of Legal Professional Liability that went to trial or alternate dispute resolution;
  • 2. Concluded 24 litigated matters involving claims of Legal Professional Liability as lead counsel or in a supervisory capacity to lead counsel;
  • 3. Had 24 performances (depositions, hearings) involving claims of Legal Professional Liability; or
  • 4. Any combination of trial days, participation in litigated matters or performances which demonstrates substantial involvement in Legal Professional Liabiity

Andrew Lavoott Bluestone can be reached:  233 Broadway, Suite 2702, New York, NY 10279  His telephone number is (212) 791-5600.

It's a complex question, but in troubled financial times, legal malpractice law suits become more visible and valuable.  Receivers, Trustees in Bankruptcy, and other fiduciary appointees all eye and measure pockets in an ongoing attempt to broaden and increase the fisc.

in COBALT MULTIFAMILY INVESTORS I, LLC, , -against- MARK A. SHAPIRO, UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 111399; November 30, 2009, Decided  we see Justice Wood's analysis of the relationship:
 

"The court-appointed receiver (the "Receiver") for Plaintiffs Cobalt Multifamily Investors I, LLC, and its related, defunct entities (collectively, "Cobalt"), filed suit against numerous Defendants, including three sets of attorneys and their law firms ("Law Firm Defendants") who provided professional services to Cobalt. Law Firm Defendants moved to dismiss the claims against them on the ground that the Receiver lacks standing. On March 28, 2008, the Court granted the motion to dismiss the Receiver's claims against Law Firm Defendants.

In light of a subsequent decision issued by the Court of Appeals for the Second Circuit, Bankruptcy Services, Inc. v. Ernst & Young ("CBI Holding Co."), 529 F.3d 432 (2d Cir. 2008), the Receiver moved for reconsideration of the motion to dismiss. On July 15, 2009, the Court granted the motion for reconsideration on the ground that failure to do so would result in clear error. On reconsideration, the Court granted in part and denied in part Defendants' motion to dismiss. Relevant to the instant motion, the Court denied Law Firm Defendants' motion to dismiss [*3] Plaintiffs' legal malpractice and corporate looting claims."
 

"A receiver or trustee representing a bankrupt corporation generally does not have standing to assert claims against third parties for defrauding the corporation where the third parties assisted corporate managers in committing the alleged fraud. See In re Bennett Funding Group, Inc., 336 F.3d 94, 99-100 (2d Cir. 2003). This legal principle is based on the Wagoner rule, which states that a bankruptcy trustee has standing to assert only those claims that the bankrupt corporation itself could have brought. See Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 120 (2d Cir. 1991)."

"The adverse interest exception is an exception to the Wagoner rule that [*7] is applicable when the corporate managers "totally abandoned [the corporation's] interests and [acted] entirely for his own or another's purposes." Center v. Hampton Affiliates, Inc., 66 N.Y. 2d 782, 784-85, 488 N.E.2d 828, 497 N.Y.S.2d 898 (1985). Determination of the exception's applicability requires a court to engage in a fact-specific inquiry. Such an inquiry may include consideration of (1) the manager's intent with respect to abandoning the corporation's interests, (2) the nature and extent of the benefit (if any) obtained by the manager as a result of the fraudulent conduct, (3) the nature and extent of the benefit (if any) received by the corporation itself as a result of the fraudulent conduct, (4) the various financial losses caused by the fraudulent conduct, and (5) other dynamics and details of the fraud relevant to analysis the party's standing to sue. See In re CBI Holding Co., Inc., 529 F.3d at 451-53."

"If a court finds that the adverse interest exception applies, the receiver or trustee representing the bankrupt corporation has standing to assert claims against a third party that assisted the corporate agent in the fraudulent conduct. In re Bennett Funding Group, 336 F.3d at 100 (citing Wight v. BankAmerica Corp., 219 F.3d 79, 87 (2d Cir. 2000)."

"Even if the Court were to consider [*21] this argument's merit, there is no clear error warranting reconsideration of the July 2009 Order. The decisions cited by Certilman Defendants stand for the proposition that outside attorneys, like Law Firm Defendants, represent the corporate entity. See, e.g., Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y. 3d 553, 562, 910 N.E.2d 976, 883 N.Y.S.2d 147 (2009) ("a corporation's attorney represents the corporate entity"). Here, the Receiver stands in the shoes of Cobalt, the corporate entity, and thus has standing to assert claims that would belong to Cobalt, such as claims for legal malpractice. See Wagoner, 944 F.2d at 120. The issue of Law Firm Defendants' fiduciary duty to shareholders is no barrier to the Receiver's standing at this stage of the litigation."
 

"

The rules concerning fee-sharing, and the precision of detail which must be given to a client. have changed.    Now, one must be precise in the percentages between attorneys, lest a violation of the rule lead to the Court denying attorney fees at a later stage of the proceedings.

In Lapidus & Associates LLP v. Elizabeth Street Inc., 601955/05;Decided: November 4, 2009;Decided on November 4, 2009 ;Supreme Court, New York County ;Goodman, J.  we see he difference between the old rule and the new:

"Defendants also contend that the account stated has been impeached because Lapidus engaged in an unethical and undisclosed fee-sharing agreement with Fass that violates DR 2-107 (A). DR 2-107(A) provides:

"(A) A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of the lawyer's law firm, unless:

(1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made. [*6]

(2) The division is in proportion to the services performed by each lawyer or, by a writing given the client, each lawyer assumes joint responsibility for the representation.[FN6]

(3) The total fee of the lawyers does not exceed reasonable compensation for all legal services they rendered the client."

Defendants argue that in the Dencorp Matter, the facts suggest that Fass was being paid less than he was being billed to defendants. This conclusion is based on Fass's deposition testimony that he was paid $273.00 per hour from plaintiff. The submitted invoices demonstrate, and it is undisputed, that plaintiff billed Reiver $390.00 per hour for Fass's work, including for his communications with Lapidus. "

"With the adoption of the Rules of Professional Conduct (the Rules) in April of this year, New York is now among the states that wisely require that the percentage fee split be disclosed to [*7]a client (see section 1.5 [g] [2] of the Rules). However, representation in this action occurred in 2003-2005, when the Code, and specifically DR 2-107, did not so state, and was not interpreted as requiring such detailed disclosure.[FN8] In instances, such as here, where all of the involved attorneys worked on the case, the court has uncovered no New York authority or expert commentary suggesting that attorneys are required to provide the level of disclosure for which defendants advocate. In fact, according to an expert commentator, DR 2-107 was intended to address referral situations, prevent unreasonable fees to a client and to ensure that the client was made aware of the identities of attorneys working on his or her case and there has never been a controversy as to fee sharing where a lawyer works on a case (Simon, New York Code of Professional Responsibility Annotated, at 402-405 [2007 ed]; see also Lapidus & Associates, LLP v Reiver, 2008 WL 909670, 2008 NY Misc LEXIS 2577 [Sup Ct, NY County 2008] [discussing DR 2-107 extensively]).

The retainer letter submitted by defendants indicates that more than one firm would be working on the case, and identifies the attorneys that would be working on the matter. As payments were to be made only to the plaintiff law firm, and defendants do not contend that it was their understanding that any of the involved attorneys or firms would not receive payment, the only reasonable inference to be drawn is that the attorneys or firms working on the case would be sharing in the fees paid by plaintiff. While defendants may have benefitted from knowing the percentage split, DR 2-107 has not been interpreted to require this level of disclosure.

Concerning the proportionality requirement of DR 2-107, in fee-splitting disputes between attorneys, the Court of Appeals has stated that "courts will not inquire into the precise worth of the services performed by the" attorneys (see Benjamin v Koeppel, 85 NY2d 549, 556 [1995]). Defendants argue that courts should employ greater scrutiny when, as here, the dispute is between an attorney and a client. But defendants also effectively suggest that each attorney should be paid just what was billed to the client for his or her work, but, as discussed extensively in the Dencorp Matter, fee-sharing arrangements where one attorney receives a larger cut than others are not prohibited under the Code.

Finally, "fee forfeitures are disfavored" (Benjamin, 85 NY2d at 553), and "the courts are especially skeptical of efforts by clients or customers to use public policy as a sword for personal gain rather than a shield for the public good'' (id. [citation and internal quotation marks omitted]). While a more expansive interpretation of the DR 2-107 would perhaps permit defendants to avoid paying their legal fees, defendants do not make persuasive arguments as to why the interpretation they seek is justified. Consequently, while the court is pleased that the Code has been changed in a way that may benefit some clients, defendants present no basis for a finding [*8]that plaintiff's fee sharing agreement violates DR 2-107. "

Judiciary Law 487 may be the oldest statute in the English-American Law world.  It dates from 1275, just years after the Magna Carta,  Once in a while we see a reference to Marbury v. Madison, 5 US (1 Cranch) 137 (1803) and think that perhaps this a law student or a new lawyer flexing some muscle.

1275 is a whole other ballgame, however.  There are some misconceptions about the statute which may have been cured by the Court of Appeals decision in Amalfitano v. Rosenberg, 12 NY3d 8 (2009).  One, taken up here, is whether the deceit or attempt to deceive has to be to a judge, or may it be to litigants, or even non-litigants.  In Mokay v Mokay ;2009 NY Slip Op 08528
Decided on November 19, 2009 ;Appellate Division, Third Department  we see that even a non-party may be the subject of an attempt to deceive, and this behavior will be sufficient for a violation of Judiciary Law 487.
 

"Next, we turn to Neroni's argument that his conduct was "covered by advisor's immunity" and therefore not actionable. It is the general rule that "attorneys, in the exercise of their proper functions as such, shall not be civilly liable for their acts when performed in good faith and for the honest purpose of protecting the interests of their clients" (Gifford v Harley, 62 AD2d 5, 7 [1978] [internal quotation marks and citation omitted]). However, "[a]n attorney may [*3]be liable to third parties for wrongful acts if guilty of fraud or collusion or of a malicious or tortious act" (Kahn v Crames, 92 AD2d 634, 635 [1983]; see Mills v Dulin, 192 AD2d 1001, 1003 [1993]; Koncelik v Abady, 179 AD2d 942, 944 [1992]). Moreover, Judiciary Law § 487 sets forth a civil cause of action that may be established by, among other things, an attorney's intent to deceive (see Amalfitano v Rosenberg, 12 NY3d 8, 14 [2009]; Scarborough v Napoli, Kaiser & Bern, LLP, 63 AD3d 1531, 1533 [2009]; Singer v Whitman & Ransom, 83 AD2d 862, 863 [1981]).

Here, Neroni's actions were directed at a judgment of Supreme Court of which he was fully aware and had, in fact, participated in constructing the terms thereof. He was present and representing decedent at the time the terms of the pertinent stipulation were placed on the record and he was involved in the stipulation being incorporated into the judgment of divorce. The stipulation was neither ambiguous nor unenforceable. It clearly provided that decedent would keep the two parcels during his life, but that such parcels would ultimately pass to his five children [FN1]. Plaintiffs presented proof, including a detailed affidavit from Mokay, establishing that, despite his obvious knowledge of the stipulation, Neroni suggested to decedent shortly after the divorce various schemes to attempt to circumvent the transfer and, when decedent elected one of those schemes, Neroni prepared the documents he had advised would successfully accomplish the nefarious goal. The documents were executed and Neroni had them recorded in a fashion aimed at avoiding publication of the transactions. This proof was sufficient to meet plaintiffs' threshold burden and Neroni failed to contest these basic underlying facts. Accordingly, Supreme Court properly granted plaintiffs' motion for partial summary judgment. "

Plaintiff sells meat, made loans to a restaurant and its owner.  It was partially repaid, over many years by the restaurant, which added a payment to the meat bills.  All things end, and the owner of the meat company died; then the restaurant went under.  Meat company went to the attorneys and asked them to start a suit.  We see the outcome in Empire Purveyors, Inc. v. Brief Justice Carmen & Kleiman LLP, ; Supreme Court, New York County, NY Slip Op 2009  32752.

This case alleges that one of the attorneys lied to the client for years, and claimed that an action had been commenced, when none had actually been started.  "Plaintiffs contend that Cook misled them about work done on the matter by falsely representing that a lawsuit was commenced against Weinberg, a judgment obtained and that collection efforts were underway.  In a companion law suit [with the same parties] plaintiffs allege that the attorney converted funds returned from their landlord, and violated Judiciary Law 487.

To what extent can plaintiff's subsequent attorney be disqualified, and to what extent may plaintiff's communications with subsequent counsel be discovered?  In this case, to no extent. 

Defendants seek discovery on what the attorney tried to do to fix the problems of missing documents, to ameliorate the consequences of defendant's alleged misconduct, the failure to obtain written acknowledgment of the restaurant's indebtedness and the litigation strategy.

Justice Solomon of Supreme Court, New York County  determined that the party seeking disqualification "bears the burden of showing the taint or unfairness arising from the lawyer's testimony in this Case, that the attorney is likely to be called as a witness and that the testimony is necessary."

More to the point, the testimony about communications must be relevant to this lawsuit (it must be "at issue"), under Jakobleff v. Cerrato, Sweeney and Cohn, 97 Ad2d 834 (3d Dept, 1983),  Here, Justice Solomon determined that it was not 'at issue."

Plaintiff retains attorney to handle promissory note case, and a default judgment is obtained.  Defendant owns real property, yet no lis pendens is filed.  Is this legal malpractice?  In Ali v Fink
2009 NY Slip Op 08766 ;Decided on November 24, 2009 ; Appellate Division, Second Department  we see the following:
"Several months later, the defendant commenced a second action on the plaintiff's behalf, seeking to set aside a transfer of real property which the debtor had allegedly made to impede the plaintiff's ability to recover under the promissory notes (hereinafter the fraudulent conveyance action). Although the defendant obtained a default judgment against the debtor and the transferee in the fraudulent conveyance action, while that action was pending, title to the property was transferred twice more. The plaintiff subsequently commenced this legal malpractice action against the defendant, alleging, inter alia, that he had negligently failed to file a notice of pendency upon commencement of the fraudulent conveyance action, and that his failure to do so had allowed title to the subject property to be transferred to bona fide purchasers, thus effectively putting the property out of reach as a means of enforcing her judgment in the collection action."

"Contrary to the defendant's contention, the Supreme Court properly concluded that he failed to sustain his prima facie burden of demonstrating that the plaintiff would be unable to prove one of the essential elements of her malpractice cause of action. Although the defendant contends that the plaintiff cannot establish the element of causation because she could not have prevailed on the merits in the underlying collection and fraudulent conveyance actions, neither of the default judgments have been set aside. Under these circumstances, the Supreme Court correctly determined that the plaintiff need not prove that she would have prevailed on the merits in those actions in order to establish the element of causation. "

When do divorce, crime and legal malpractice intertwine?  In this case, at the intersection of divorce and fighting ex's  In short, plaintiff had a child with GF, and they were separating, and at the same time arguing over custody and support.  GF charges plaintiff with child abuse, and a series of investigations start.  Attorney represents plaintiff and helps settle the custody/support issues, and gets a [shaky?] written agreement that GF will not testify against plaintiff.  What happens then?  We see the story in Boykin v. Campbell, NY Slip Op 32721(U). Supreme Court, Nassau, Judge Adams.

For his part, plaintiff gives GF half of a Florida house as tenants in common.  As you might guess, the deal unravels, probably after the criminal and abuse charges were dismissed.  What does one do after the deal works to plaintiff's benefit, where plaintiff successfully ends the criminal and abuse problems and is prepared to walk away from the litigation?  One sues the attorney.

Eventually this legal malpractice action is dismissed on the grounds that there is no showing [in summary judgment] that the attorney departed from good and accepted practice.  Of interest is the court;s last paragraph in which it opines that the stipulation of settlement of the custody/support case itself is valid...although we do not understand the relevance to the legal malpractice case.

The decision doesn't tell us in what capacity the attorneys represented the client, but they are now in suit over legal fees, with a legal malpractice counterclaim.  As we read this case, we wondered whether the time and effort was worth it.  Will there ever be a collection of fees?

in Bender, Jenson & Silverstein, LLP v Walter ;  2009 NY Slip Op 08572 ;Decided on November 17, 2009 ;Appellate Division, Second Department  the attorney is seeking fees.  Defendant-counterclaimant asked the court to "assign counsel", a sure sign that the client has few funds. The Court declined, and the Appellate Division determined that "on the Court's own motion, the appeal from the first order dated June 6, 2008, is dismissed, on the ground that no appeal lies as of right from an order that does not affect a substantial right of the appealing party (see CPLR 5701[a][2][v]), and we decline to grant leave to appeal."  Next, the court looked at plaintiff's claim that she could not afford photocopies.
 

The balance of the decision covers a frequent situation in pro-se representation; getting tangled up in discovery problems.  "The plaintiff sought to recover its fee for legal services provided to the defendant, who asserted counterclaims sounding in legal malpractice. In response to the plaintiff's requests for the production of documents, the defendant claimed to be without financial resources to photocopy the requested documents and refused to produce them, in spite of the plaintiff's offer to bear the cost of photocopying. [*2]

Since the defendant failed to establish that she made any effort to comply with the plaintiff's repeated discovery requests, the Supreme Court properly considered her lack of cooperation to be willful and contumacious, and properly conditionally granted the plaintiff's motion to preclude her from introducing the requested documents in evidence (see Kihl v Pfeffer, 94 NY2d 118; D'Aloisi v City of New York, 7 AD3d 750; Brooks v City of New York, 6 AD3d 565; Donovan v City of New York, 239 AD2d 461; cf. Scardino v Town of Babylon, 248 AD2d 371).

In light of the defendant's noncompliance with discovery, the Supreme Court properly denied her motion to quash certain subpoenas which had been served on nonparty witnesses
 

Almost as popular as attorney fee cases are defenses of legal malpractice.  Here, in Sieratzki v Sei Global, Inc., NY Slip Op 32656(u), all the basics are laid out.  Attorney represents client for a longish period of time, and substitutes into an Arbitration entitled  HL Group Partners, LLC v. Sei Global, Inc  He worked on the case for a while, He did some other work, in three other matters, including a holdover proceeding.  The general picture [one conjectures[  is that of a failing NY business, which is having landlord problems, is being sued by a trader, and is not paying its bills.  What happens to the attorney? 

He sends his bills, and when they are not paid, asks the arbitrator to be relieved as attorney.  The decision indicates that the reasons set forth were lack of communication and non-payment of legal fees.  Mr. Sohn told the arbitrator that he would continue pro-se and the attorney ws relieved.

Was this enough?  In this case, bills were sent on a monthly basis and ignored.  Fee arbitration, set forth in the retainer agreement was for sums greater than $ 50,000. 

The court held that attorney correctly withdrew from arbitration, and that the counterclaim for legal malpractice was completely conclusory, with "not a single fact' included.

Decision:  summary judgment to plaintiff for fees.  Effect?  We guess that it may be too little and too late to collect fees from this corporation. 

It does not happen often, but non-lawyers sometimes come to represent clients.  An impostor?  A simple clerical mistake?  We don't know how it happened in this case, but in Natural Organics Inc. v Anderson Kill & Olick, P.C. ;2009 NY Slip Op 08472 ;Decided on November 17, 2009 ;Appellate Division, First Department "Plaintiff alleged that it retained defendant law firm to
bring an action against an insurance company. After several years of litigation, plaintiff agreed to settle the matter for $750,000, which was less than the $1.3 million claimed value of the lawsuit. Several years after the settlement, the law firm informed plaintiff that Brian Valery, who had held himself out as an attorney and worked on plaintiff's case, was in fact not licensed to practice law. Plaintiff then brought this action, alleging it would have obtained a more favorable result in the insurance litigation if the firm had exercised more care with regard to Valery's employment. The complaint sought damages for the difference between the purported $1.3 million value of plaintiff's insurance claim and the $750,000 settlement amount, as well as all of the legal fees billed by the law firm for the entire matter. "

"That part of the breach of contract cause of action alleging a breach of professional standards and seeking damages for the alleged shortfall from the settlement and all of plaintiff's legal fees is dismissed as duplicative of the malpractice claim (see Rivas v Raymond Schwartzberg & Assoc., PLLC, 52 AD3d 401 [2008]). However, to the extent that plaintiff's [*2]breach of contract claim rests on the fees it paid for Valery's services, plaintiff has pleaded sufficient facts to state a claim. The complaint alleges that the law firm continuously held out Valery as a licensed attorney and billed in excess of $70,000 for his services, even though it is undisputed that he was, in fact, not an attorney. At this early stage of the proceedings, it cannot be said that these particular damages are too speculative (see Fielding v Kupferman, 65 AD3d 437, 442 [2009]).

Monique Pillard, president of Elite Models, is the plaintiff in this legal malpractice case,  She was a defendant in a highly significant employment discrimination case revolving around an asthmatic worker who was fired, and the harassment and smoking that took place all around her.

in Pillard v. Goodman, Supreme Court, New York County, we see one of Justice Lehner's opinions.  Pillard was at one time president of Elite, and then moved around by John Casablancas to another position. Victoria Gallegos was hired as a liaison between Elite and its clients.  After complaining about smoke, she was filed in 1999.  Pillard was one of several defendants in the employment discrimination and eventually received an award of $ 2.6 million in compensatory damages and $ 2.6 million in punitive damages.  The awards were later reduced, but remained substantial.

Pillard was forced into voluntary bankruptcy under Chapter 11, but the crux of this case is whether the attorneys for all the Elite Defendants committed legal malpractice with regard to the smallest defendant in the group.  Supreme Court has determined that the claims survive a motion to dismiss the complaint under CPLR 3211(a)(7).

Pillard's claim arises from the dense relationship between the attorneys, the company, the board, and the individual defendants. Pillard alleges that attorney Curtin was both her private attorney as well as attorney for Elite, and failed to advise Pillard that asthma was a disability under the Human Rights law and that accommodations had to be made for Gallegos.

More to the point, Pillard alleges multiple conflicts of interest and a wrongful joint representation, failed to offer crucial documents and failed to demonstrate that Pillard was no longer the president of Elite at the time.

Justice Lehner dismissed certain of the causes of action, but the case continues.

There are some basic rules in legal malpractice litigation about fees.  One of these rules is that an attorney may be terminated at any time by the client, either for cause or without cause.  A corollary rule is that when an attorney is terminated for cause, he is due no compensation. 

That's a pretty stark rule, and admits of little wiggle room.  Nevertheless, in Felix v. Law Office of Thomas F. Liotti, 8395/07;Decided: October 28, 2009; Justice Ute Wolff Lally;NASSAU COUNTY
Supreme Court found a middle path.

"It has already been determined by the order of Justice Diamond dated June 30, 2008 that defendant failed to file a CPL 440 motion as promised in the retainer. Further, in said decision Justice Diamond stated that "the letters attached to defendant's motion to reargue as exhibits that were allegedly received from plaintiff do not indicate plaintiff's consent to ignore the filing of the CPL 440 motion that defendant was retained to prepare and submit to the court."

Plaintiff further claims that defendant failed to file the Nassau County appeal provided for in the Retainer Agreement. Defendant asserts that the Nassau County brief was filed before discharge and submits a copy of the brief showing a date of January 23, 2006 (Exh. F). However, said brief was not served upon the Nassau County District Attorney's office until March 1, 2006 and caused the District Attorney to cross-move the Appellate Division, 2nd Dept. for an order striking said brief as "filed by an attorney who does not represent defendant" (Exh. 7).

Plaintiff seeks a refund of $20,000.00 (see complaint, Exh. 5) arguing that defendant forfeited his entire fee due to his discharge for cause.

At trial plaintiff requested treble damages pursuant to Judiciary Law §487 claiming that defendant deceived this court and committed perjury in claiming to have filed a CPL 440 motion and thus forcing the court (Diamond, J.) to order the Kings County Supreme Court file (People v. Felix, No. 9425/98) and conduct an inspection of same and thereafter making a determination that plaintiff was correct in stating that no CPL 440 motion was filed by defendant. Since plaintiff failed to make such a demand in his pleadings the request is denied as untimely.

Based upon the testimony of plaintiff and defendant and the exhibits the court finds that defendant was discharged for cause on February 8, 2006, and that defendant attempted to file the Nassau County brief on March 1, 2006, although dated January 23, 2006, thirty-five days after discharge.

A client has the absolute right to discharge an attorney at any time with or without cause (Campagnola v. Mulholland, Minion & Roe, 76 NY2d 38; Byrne v. Leblond, 25 AD3D 640).

Where the discharge is without cause, the attorney is limited to recovering in quantum meruit the reasonable value of the services he rendered. However, if the discharge is for cause the attorney has no right to compensation, notwithstanding a retainer agreement (Cheng v. Modansky Leasing Co., Inc., 73 NY2d 454; Teichner v. W & J Holsteins, Inc., 64 NY2d 977; Crowley v. Wolf, 281 NY 59; In the Matter of Terijon Weitling, 266 NY 184).

Here the retainer agreement was for a flat fee. Notably, it specifically stated in paragraph 2: "It is understood that we are not entering into an hourly rate contract, and will not bill on such basis."

Although an attorney discharged for cause is not entitled to any fees, here plaintiff requested in his discharge notice that "all unearned funds be refunded to Rufina Felix promptly (Exh. 2).

Consequently, since the fee agreement had provided for a flat fee of $20,000.00 for two Appellate briefs and one CPL 440 motion, and defendant performed work for only one brief, plaintiff is entitled to a refund of two-thirds of said $20,000.00, to wit $13,333.34."

New York traveled through a sea change in its attorney disciplinary and ethical rules when the new rules were enacted in April.  Prior to the change, DR 2-107 did not require that a client be notified of the "percentage split" of fees between multiple attorneys working on a case; only the fact of multiple attorneys and fee sharing was required.

Now, the NY rules require that a percentage fee split be disclosed to the client under section 1.5[g][2] of the Rules.  As based upon this interpretation, Justice Goodman of Supreme Court, New York County has decided Lapidus & Associates, LLP v, Elizabeth Street Inc. we wee a result.  Plaintiff attorney seeks $90,000 in fees, and defendants have put up several defenses to the claim, with their own counterclaim of $ 175,000 for overbilling.

Clients are in a tough spot when the attorney sends out regular bills, and the client does not vociferously dispute the bills.  Of course, when the litigation is ongoing, and the client needs representation; when the bills are mostly ok, and there is a percentage of overbilling, the client has to decide what to do.  Does it fire the attorney and pay new counsel to pick up ?  Does it bite the bullet?  Does it find a middle course>

Here, client loses almost all around.  It makes an argument that the attorneys were wrongfully sharing fees;  it loses under the old rules, although the court implies that the result would be different for work performed today.  The Client loses on account stated, which is well described in this decision.

Legal malpractice plaintiffs who are suing for representation in a divorce action are routinely placed between a rock and a hard place, when asked at the settlement of their divorce action whether they are satisfied with attorney's representation.  They are told to say 'yes" and often do, simply to end the torture.  This simple "yes" can negate the issue of whether they were "effectively compelled to settle" the case.

In Harvey v. Greenberg we see the ultimate negative outcome to plaintiff.  Plaintiff's theory (as is almost aways true) is that attorney's mistakes were not clear to the non-attorney client, and were not evident until explained by successor attorney, hence, how could client be held to a "satisfied" standard?

"According to the First Department, a "claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel" (Bernstein v. Oppenheim & Co., P.C., 160 AD2d 428, 429-430 [1st Dept 1990]) (emphasis added). However, the First Department also makes clear that an allocution at settlement wherein the client states that she is satisfied with the attorney's performance constitutes documentary evidence that contradicts an allegation of legal malpractice (Katebi v. Fink, 51 AD3d 424, 425 [1st Dept 2008], citing Bernstein [holding that 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,' here, the complaint is contradicted by the evidentiary material submitted on the motion to dismiss"]). In Katebi, the plaintiff/client settled the matrimonial action during trial, and the plaintiff's allocution took place on the record. The Court granted defendants' motion to dismiss the complaint for failure to state a cause of action for legal malpractice, on the following grounds:

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 . (Id. at 425)

Similarly, in dismissing another plaintiff's legal malpractice case, the Court in Weissman v. Kessler, 2008 WL 6920033 [Sup Ct, NY County 2008]) noted that the plaintiff "allocuted that she was satisfied with her counsel and that no one forced her to settle…. Defendants have demonstrated that the documentary evidence conclusively establishes that [plaintiff's legal malpractice claims] should be dismissed."])."

Corporate clients assign causes of action between themselves on a fairly regular basis.  Often, for purely economic reasons, in mergers, and in other corporate maneuverings, a cause of action will become one of many assets to be exchanged.  Here, in NEW FALLS CORP.,  v. EDWARD N. LERNER,No. 08-4991-cv;UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT;2009 U.S. App. LEXIS 24627;November 10, 2009, Decided it was not permitted, since this 2d Circuit case was decided under California substantive law.
 

"New Falls brought this diversity action alleging [*2] that Lerner committed legal malpractice by failing to perfect an attachment of real estate. Lerner committed the alleged malpractice while representing another entity, Stornawaye Capital, LLC, in an action to enforce a loan. Id. at 283-84. Stornawaye assigned its rights in the loan enforcement action to New Falls, and New Falls subsequently brought this claim for legal malpractice as Stornawaye's successor.

"Reviewing the District Court's grant of summary judgment de novo, Sassaman v. Gamache, 566 F.3d 307, 312 (2d Cir. 2009), we affirm the District Court's clear and thoughtful order. Stornawaye and New Falls unequivocally agreed that California law "determined" their "rights and obligations" under the assignment contract. New Falls, 579 F. Supp. 2d at 286. As a result, the "rights" that New Falls acquired in the assignment could not have included a right to bring malpractice claims, which is a right that cannot be assigned under California law. As the District Court aptly put it, "[b]ecause any attempt to assign a legal malpractice claim by a contract governed by California law is rendered void on the basis of California's emphatic public policy prohibiting the assignment of legal malpractice claims, Stornaware's [*4] attempt to transfer its legal malpractice claim against Lerner to New Falls was ineffective as a matter of law." Id. at 288. New Falls, therefore, may not assert Stornawaye's rights in this malpractice action, and the District Court correctly granted summary judgment for Lerner."
 

Yesterday we discussed medical treatment liens and when an attorney might become liable to pay them, even though the attorney did not deduct from the settlement proceeds when making the distribution.

Today, Joel Stashenko in the NYLJ reports passage of a bill to eliminate "double dipping" by public employees in the disability area.  Specifically, "The bill, contained in a mandate relief measure put on the Legislature's special session agenda Tuesday by Governor David A. Paterson, eliminates a quirk in state law that has allowed public employees injured due to employer negligence who successfully sue for loss of future wages to get those payments plus whatever disability benefits workers qualify for."

While this is of interest to public employees who are injured, there is a much wide application and interest that this bill addresses.  The entire area of lien recovery, of attorney representation in post-verdict (or settlement) lien resolution, and equitable subrogation is in flux, and this bill simply adds to the mix.

"Another compromise was a provision that eliminates subrogation in medical malpractice suits that litigators have complained has made it more difficult to reach settlements.

The legislation prohibits insurers, except in a few narrow exceptions, from seeking from either plaintiffs or defendants to recoup insurers' coverage costs if a settlement has been reached in a malpractice case.

"The parties can freely settle a tort suit without being concerned that the disability provider is going to go after those monies," Mr. Schwartz said.

Mr. Cardozo said the provision would effectively undo the Court of Appeals' ruling in Fasso v. Doerr, 12 NY3d 80, in which the Court ruled that an insurer's equitable subrogation rights could not be extinguished without the insurer's consent in the settlement of a personal injury action (NYLJ, Feb. 25, 2009)."

Personal injury law requires doctors, doctor reports, doctor testimony and medical treatment of the plaintiff-clients.  Clients rarely have the means to pay for medical treatment after an injury, yet need it.  Because of this need a system has developed in which plaintiff-clients go to medical providers, who provide medical treatment and file a "doctor's lien." 

The lien is supposed to work like this:  client sues for the personal injury and if they win, the medical treatment is part of the damages, and then the attorney is supposed to pay off the lien.  Good?  Sure, but what happens when the case is settled 5 years later, and the file is a little confused, and the lien does not get paid?  What happens is that the attorney deducts his fee, the client gets the rest, and then years later, the doctor comes to the attorney for payment.  Naturally, the attorney does not want to pay the client's medical costs from his own pocket, and litigation ensues.

Here in Complete Management Inc. v. Bader, 112683/08; Decided: October 13, 2009; Justice Emily Jane Goodman , Supreme Court, New York County we see one outcome:

"On April 25, 2005, AR Synergy LLC (ARS), an escrow and collection agent for CMI, mailed listings of reported open liens to Defendants to begin the collection of the outstanding GMMS receivables. Id., ¶23. A spreadsheet listing such liens or GMMS receivables is annexed as "Exhibit B" to the complaint. CMI alleges that, in the ensuing months following the mailing, ARS received no cooperation from Defendants, who have failed to make "subsequent payments of any owed GMMS Receivables to ARS or CMI." Id., ¶24. CMI brings this action against Defendants for "refusing to remit proceeds of liens owed to Plaintiff, or to provide Plaintiff with a more detailed accounting of the status of many of Defendants' [personal injury] cases."
 

"In Leon v. Martinez (193 AD2d 788 [2d Dept 1993]), the defendant attorney who drafted and notarized a document that gave plaintiffs a lien on the proceeds of his client's personal injury action was sued by the plaintiffs, after he disbursed proceeds from the settlement of the action to his client in disregard of the lien or assignment. The trial court granted the attorney's CPLR 3211 motion to dismiss, reasoning that his preparation of the document did not create a personal liability on his part. The Appellate Division reversed, and held that "[w]here attorneys have notice of an assignment or [sic] a portion of their client's claim for personal injuries and pay out money in disregard of the assignment, they may be liable to the assignees." Id. at 789 (citations omitted). The appellate court's decision was affirmed by the Court of Appeals. Leon, 84 NY2d 83, supra (Court concluded that there were sufficient allegations in plaintiff's complaint and supporting affidavit to withstand the motion to dismiss); see also Stanger, D.C., P.C. v. Panzella, 13 Misc 3d 130(A), 2006 NY Slip Op 51842(U) (App Term, 1st Dept 2006) (affirming small claim court's award of damages to plaintiff chiropractor because, in disregard of assignment, defendant attorney failed to make direct payment of medical fees to plaintiff upon attorney's receipt of client's personal injury action settlement proceeds); Williamsburg South Medical v. Maloney, NYLJ, Feb. 10, 2003, at 20, col 6 (Civ Ct, NY County 2003) (court denied defendant lawyer's motion to dismiss plaintiff doctor's claims based on breach of contract and breach of fiduciary duty, because complaint contained sufficient facts to support allegation that defendant failed to pay plaintiff with funds from settlement proceeds in which plaintiff has a lien).

In the instant case, the complaint alleges that Defendants knew of the liens in favor of CMI-GMMS, but disregarded such liens by refusing to remit to CMI the settlement or judgment proceeds of their clients. Complaint, ¶¶41-43, 47-52, 58-59. The supporting affidavit submitted by CMI's agent, Ray Rowney, Jr., also stated, inter alia, that Defendants knew of these liens because (1) they compensated CMI on some of the liens over a period of eight years; (2) CMI communicated with Defendants about payment of the liens and status of the personal injury cases for a 10-year period; and (3) CMI sent the executed lien documents to Defendants. Rowney Affidavit, ¶¶11-12; Exhibit 3. This court may "freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint." Leon, 84 NY2d at 88."

Any place there are disputes over anything, legal malpractice questions lurk.  One is reminded of the New Yorker cartoon in which a 4 year old has dropped his ice cream cone, only to have an adult ask if he needs an attorney.

in a far more serious vein, here is a legal malpractice case arising from return and reimbursement of Nazi confiscated artworks.  Eventually one attorney represented a massive family tree of descendants, all of whom had some claim on a vast trove of artwork which was boxed up and ready to leave Germany in 1939, only to be intercepted by the Nazis and taken away.

In THEKLA NORDWIND and GRETA HOERMAN,  - v.- DAVID J. ROWLAND and ROWLAND & ASSOCIATES we look back to WWII.  ,Clara and Gustav Kirstein lived in Leipzig, Germany with their two daughters, Gabrielle and Marianna, in the 1930s. They were "a close Jewish family of means." Gustav, who was a renowned art publisher and art collector, died in 1934, leaving a life estate in all of his assets to his wife Clara and the remainder to Marianna and Gabrielle in equal shares.

Before his death, Gustav had experienced the beginnings of Nazi persecution when his business was subjected to a forced sale. Faced with the continuing rise of Nazi power, Clara sent her two daughters [*4] to the United States after Gustav's death. Clara, intending to emigrate to the United States after her daughters, remained in Germany to "sell whatever she could of her remaining artwork and business" and to "ship the balance of her artwork and other personal property to . . . New York, where she planned to join [her family]." On June 29, 1939, however, the Nazis confiscated Clara's passport and denied her permission to leave Germany. That night, Clara returned to her home in Leipzig and committed suicide. Thereafter, the Nazis confiscated her assets (the "Kirstein Assets"), which included "the artwork and other property that had been packed for shipment to . . . the United States."

In September of 1998, the Nordwind Parties, who are nieces and nephews of Clara Kirstein, became aware of the possibility that they may be entitled to recover restitution for the Kirstein Assets. After conducting research on the Internet, the Nordwind Parties retained defendant Rowland [*7] on October 1, 1998, to "file a claim . . . to the Kirstein Assets and to maximize [their] recovery on the claim to the extent possible." 

"At no point did Rowland inform the Nordwind Parties of any potential conflicts of interests arising from his representation of persons who might hold interests adverse to the Nordwind Parties. Rowland did inform the Nordwind Parties, however, that "[b]oth Miriam Reitz [Baer] . . . and Christel Gauger have indicated that they may wish to assign their rights to Clar[a] Kirstein's nieces and nephews[, i.e., the Nordwind Parties,] at some time in the future." Rowland had also informed the Nordwind Parties that "only heirs are eligible to file claims under the [German Property Act], a prerequisite status to the assertion of a claim [*9] to the JCC Goodwill Fund." Although it is disputed whether Rowland received oral consent from the Nordwind Parties to contact Gauger and offer his services, it is undisputed that Rowland never obtained a written waiver from them to do so."

"On December 22, 1998, Rowland filed a restitution claim with the JCC Goodwill Fund on behalf of only Miriam Baer and Gauger as heirs to the Kirstein Assets. The following year, on December 3, 1999, Miriam Baer and the Oriental Institute assigned their interests in the Kirstein Assets to the Nordwind Parties. Gauger, however, refused to assign her interests in the Kirstein Assets to the Nordwind Parties."

"The Nordwind Parties also argue that the District Court erred in dismissing their breach of fiduciary duty claim as duplicative of their legal malpractice [*28] claim. We disagree because we conclude, as did the District Court, that the breach of fiduciary duty claim that plaintiffs combined in the first cause of action with their legal malpractice claim must be dismissed as duplicative of the malpractice claim.

HN8Under New York law, where a claim for breach of fiduciary duty is "premised on the same facts and seeking the identical relief" as a claim for legal malpractice, the claim for fiduciary duty "is redundant and should be dismissed." Weil, Gotshal & Manges, LLP v. Fashion Boutique of Short Hills, Inc., 10 A.D.3d 267, 780 N.Y.S.2d 593, 596 (App. Div. 2004). However, if the remedy sought by the plaintiffs "is a restitutionary one to prevent the fiduciary's unjust enrichment," the "less stringent 'substantial factor' standard" would apply to the causation element of the claim for breach of fiduciary duty. See LNC Invs., Inc. v. First Fidelity Bank, N.A. N.J., 173 F.3d 454, 465 (2d Cir. 1999) (Sotomayor, J.); see also, e.g., RSL Commc'ns PLC v. Bildirici, F. Supp. 2d , 2009 U.S. Dist. LEXIS 72691, 2009 WL 2524614, at 23 n.15 (S.D.N.Y. 2009). Otherwise, "where damages are sought for breach of fiduciary duty under New York law, the plaintiff must demonstrate that the defendant's [*29] conduct proximately caused injury in order to establish liability." LNC Invs., Inc., 173 F.3d at 465; cf. Achtman, 464 F.3d at 337 (requiring proximate-causation standard to establish legal malpractice claim)."

One of the paradoxes of the legal malpractice world is the number of pro-se plaintiffs.  While there are some pro-se defendants [both top-tier and totally uninsured], pro-se plaintiffs are often present.  Here, in Walter v Jones, Sledzik, Garneau & Nardone, LLP ;  2009 NY Slip Op 08003 ;  Decided on November 4, 2009 ; Appellate Division, Second Department we see a pro-se plaintiff who sues the law firm, only to fail at the very begining of the case.
 

"The plaintiff did not effect proper service of process upon the defendant, since she failed to deliver the summons, or cause it to be delivered, to an individual who was authorized to accept service on behalf of the defendant (see Hossain v Fab Cab Corp., 57 AD3d 484, 485; Kurshan v Townhouse Mgmt. Co., 223 AD2d 402). The defendant moved pursuant to CPLR 3211(a)(8) to dismiss the complaint for lack of personal jurisdiction. The plaintiff failed to oppose that motion, and the Supreme [*2]Court granted it upon her default.

Thereafter, the plaintiff moved, in effect, to vacate her default. The Supreme Court properly denied her motion. A party seeking to vacate an order entered on his or her default must establish both a reasonable excuse for the default and a meritorious cause of action (see Matter of Jones v Stewart, 63 AD3d 836, 836; Aguilera v Pistilli Constr. & Dev. Corp., 63 AD3d 765, 768; Zherka v Zherka, 17 AD3d 668, 668). Contrary to the plaintiff's contention, neither the fact that she was proceeding pro se, nor her belief that the defendant's motion was frivolous and, therefore, that opposition was unnecessary, constituted a reasonable excuse for her default (see Kanat v Ochsner, 301 AD2d 456, 458). " A litigant appearing pro se acquires no greater right than any other litigant and such appearance may not be used to deprive defendants of the same rights enjoyed by other defendants'" (Roundtree v Singh, 143 AD2d 995, 996, quoting Morgan v Sylvester, 125 F Supp 380, 388, affd 220 F2d 758, cert denied 350 US 867). Accordingly, the Supreme Court providently exercised its discretion in denying the plaintiff's motion, in effect, to vacate her default. "

Cohen v Engoron, 2009 Slip Op 32521 is a fascinating look at the lower end of legal malpractice litigation.  In this case, plaintiff is an incarcerated inmate who tried to sue his attorney for the return of $ 8500 in legal fees.  While being incarcerated was painful for plaintiff, his attorney suffered a worse fate, dying about three months before the summons and complaint.

Everyone in this case has a bad outcome to consider.  Plaintiff, who had the time to litigate this matter, and some significant motivation to move forward, determined that an estate existed, and successfully served the voluntary administrator.  The estate hired an attorney who had a NY address, but apparently practiced out of North Carolina. 

The attorney attempts to have the case dismissed in Supreme Court, and Justice Kapnick denies his motions, then transfers the case pursuant to CPLR 325(d).  While in Civil Court, the estate wins an appeal dismissing the case, as the death preceded the summons.  As far as the estate goes, this seems to be the end.

However, while in Civil Court, plaintiff succeeds in an order which finds that the attorney may not practice in NY since he lacks an office for the practice of law in NY.  This leads to the current Article 78 against the Civil Court Judge, which fails in this decision.

Topless photographs, sexual harassment, "heavy-handed" negotiations, emotional distress to highly pregnant women - it all seems to be out of a TV show.  Nevertheless, these are the elements of Abrams v. Pacile, Supreme Court, New York County, Justice Tolub.  In this decision, printed in the NYLJ today, and soon to be on the Court's website, we see brothers in the financial industry, their workers, their wives, topless photos on the honeymoon, entrustment of the photos to assistants for printing at Duane Reede, and the fallout in dueling suits.  By the way, how could a guy send his assistant out with topless photos of his wife, and ask her to go to Duane Reede to get prints made?  Was he expecting his assistant or the clerk there to make them?  What reaction did he expect?

This blog is devoted to attorney behavior and legal malpractice, so we will detour there.

"Claims Against Mr. Wigdor and TWG

Under New York law, attorneys are afforded immunity where their conduct arises out of the professional representation of their clients.

There is a general principle embodied in the law of the State of New York that attorneys should be free to advise their clients without fear of liability [to] third parties. However, the mere fact one is an attorney acting in a professional capacity does not make him absolutely immune from responsibility for his wrongful acts.

An attorney may be held personally liable to a third party who sustains an injury in consequence of his wrongful act of improper exercise of authority, where the attorney has been guilty of fraud, collusion or of a malicious or tortious act.

Beatie v. DeLong,164 AD2d 104, 108 [1st Dept 1990].

Here, Plaintiff has not sufficiently alleged, let alone submitted any evidence, that Mr. Wigdor or his firm acted with either malice or bad faith or that they colluded with Danielle and Cristina in some illegal manner. The "settlement" negotiations of May 2008, as heavy handed as they were, provide no basis for a recovery. Indeed, there is nothing to indicate from the Plaintiff herself that she was ever aware of the letters Mr. Wigdor sent. In the absence of fraud, collusion, malice or bad faith, Mr. Wigdor and TWG are immunized from liability under the shield afforded attorneys in advising their clients, even when such advice is erroneous. The Complaint as to Mr. Wigdor and TWG is dismissed(id.)."

"Rule 1.16(a)(1) provides:

(A) A lawyer shall not accept employment of behalf of a person if the lawyer knows or reasonably should know that such person wishes to:

(1) bring a legal action, conduct a defense, or assert a position in a matter, or otherwise have steps taken for such person, merely for the purpose of harassing or maliciously injuring any person;

It is clear to the Court that the Complaint as to Ms. Culicea and Mr. Wigdor has no basis in law and fact and could only have been brought to harass Ms. Culicea and the Wigdor law firm. As such, counsel's actions are sanctionable."

Dismissals are not always dismissals on the merits, and dissolved corporations are not always unable to sue in New York.  In this legal malpractice case, we see the intersection of Chapter 11, Tax Law 203-a, CPLR 205(a) and Res judicata.

In Moran Enters., Inc. v Hurst ;  2009 NY Slip Op 07807 ;  Decided on October 27, 2009 ;  Appellate Division, Second Department plaintiff corporation had several brushes with Bankruptcy.
"The plaintiff, Moran Enterprises, Inc. (hereinafter MEI), was incorporated in New York in January 1996. On or before August 15, 2000, MEI retained attorney Margaret Hurst to represent it in certain matters, including filing a Chapter 11 petition for bankruptcy on its behalf. In November 2000, Hurst left active practice and transferred her clients to another attorney. On December 27, 2000, MEI was dissolved by the Secretary of State pursuant to Tax Law § 203-a for failure to pay franchise taxes. On July [*2]23, 2001, MEI retained attorney Heath Berger and the law firm Steinberg, Fineo, Berger & Fischoff, P.C. (then known as Steinberg, Fineo, Berger & Barone, P.C.) (hereinafter together the Berger defendants) to file another Chapter 11 bankruptcy petition on its behalf."

"The Supreme Court erred in dismissing the complaint pursuant to CPLR 3211(a)(5). The principle of res judicata bars relitigation of claims where a judgment on the merits exists from a prior action between the same parties involving the same subject matter (see Matter of Hunter, 4 NY3d 260, 269). Dismissal of the prior action insofar as asserted by MEI was upheld by this Court on the ground that MEI failed to appear by an attorney as required by CPLR 321(a) (see Moran v Hurst, 32 AD3d 909). Such was not a determination on the merits and thus res judicata does not apply to bar commencement of another action based on the same transactions (see Sclafani v Story Book Homes, 294 AD2d 559; Matter of Farkas v New York State Dept. of Civ. Serv., 114 AD2d 563). Moreover, since the issue of MEI's capacity to commence an action was not determined on appeal, collateral estoppel does not bar relitigation of that issue (see Tydings v Greenfield, Stein & Senior, LLP, 11 NY3d 195, 200; Sabbatini v Galati, 43 AD3d 1136; Bergstol v Town of Monroe, 305 AD2d 348). Further, this action was timely commenced pursuant to CPLR 205(a). Contrary to the Berger defendants' contention, the prior action was commenced by MEI within the meaning of CPLR 205(a), despite its dismissal for MEI's failure to appear by an attorney "

"Pursuant to Tax Law § 203-a, the Secretary of State may dissolve a corporation by proclamation for the nonpayment of franchise taxes. Upon dissolution, the corporation's legal existence terminates (see Lorisa Capital Corp. v Gallo, 119 AD2d 99, 109). A dissolved corporation is prohibited from carrying on new business (see Business Corporation Law § 1005[a][1]) and does not enjoy the right to bring suit in the courts of this state, except in the limited respects specifically permitted by statute (see Vantrel Enters. v Vantage Petroleum Corp., 270 AD2d 412; De George v Yusko, 169 AD2d 865; [*3]Lorisa Capital Corp. v Gallo, 119 AD2d 99, 110-111). "

Attorneys regularly drop in and out of cases, and for the most part, there is no particular notice taken of the event.  Here, in Soussis v Lazer, Aptheker, Rosella & Yedid, P.C. ; 2009 NY Slip Op 07823 ; Decided on October 27, 2009 ; Appellate Division, Second Department  we see a wholly different result.  In Soussis,  Plaintiff hired the target defendants to arbitrate over unpaid commissions, which are said to have arisen from employment discrimination.  Target attorneys did not raise the discrimination claim.  Benjamin Vinar to sue the attorneys; at the same time he stepped in and settled the arbitration case targets had started.  In turn, target attorneys bring a third-party action against Vinar.  Vinar does not succeed on summary judgment, and is held in the case for a portion of the third party claims.

"The plaintiff retained the defendant law firm, Lazer, Aptheker, Rosella & Yedid, P.C. (hereinafter the Lazer firm), in connection with her claims for unpaid commissions and unreimbursed expenses, alleging employment discrimination against her former employer, Stephens, Inc. (hereinafter Stephens), a member of the New York Stock Exchange.""It is undisputed that Goidell failed to bring a federal or state action against Stephens on the plaintiff's behalf before the statute of limitations applicable to the employment discrimination claim expired. The plaintiff retained the third-party defendant Benjamin Vinar to commence the instant action against the Lazer firm, Goidell, and two partners in the firm, David Lazer and Ralph A. Rosella, to recover damages for legal malpractice. While represented by Vinar, the plaintiff settled her arbitration claims against Stephens."

"Subsequently, the Lazer firm, David Lazer, and Rosella (hereinafter together the Lazer defendants) impleaded Vinar, asserting claims for contribution and/or indemnification. They alleged that [*2]Vinar was negligent in settling the plaintiff's arbitration claims. Specifically, they alleged that Vinar was negligent in failing to seek leave to amend the plaintiff's statement of claim in the arbitration proceeding to add the employment discrimination claim. They also alleged that Vinar was negligent in failing to seek reformation of the National Association of Securities Dealers, Inc., Form U-5 (hereinafter the U-5), provided by the plaintiff's employer to remove an allegedly false or defamatory statement contained therein regarding the reason for the termination of her employment. "

"The Supreme Court properly denied that branch of Vinar's motion which was for summary judgment dismissing so much of the third-party complaint as asserted claims for contribution and indemnification. Contrary to Vinar's contention, the Lazer defendants are entitled to seek contribution or indemnification from him, as a subsequently retained attorney, to the extent his alleged negligence in settling the plaintiff's arbitration claims may have contributed to or aggravated her injuries (see Schauer v Joyce, 54 NY2d 1, 3-6; Alfaro v Schwartz, 233 AD2d 281, 281-282; Herkrath v Gaffin & Mayo, 192 AD2d 487, 488).

Furthermore, in opposition to Vinar's prima facie showing on the issue of his failure to seek reformation of the U-5, the plaintiff's deposition testimony and the Lazer defendants' expert affidavit were sufficient to raise a triable issue of fact as to whether Vinar was negligent in failing to seek reformation and, if so, whether the plaintiff suffered a greater loss of future earnings than she would have had the U-5 been reformed to remove the damaging information regarding the reason for her termination from Stephens.

Plaintiff and a buddy go to attorney to start a business.  Attorney is retained, and eventually Plaintiff is the odd-person out.  Attorney's retainer agreement names only the buddy, and even though attorney sends letters to both Plaintiff and buddy, and creates documents which plaintiff and buddy sign, it is Buddy who comes out with 75% of the business.  Is there a breach of fiduciary duty, and if so, what is the statute of limitations, 3 years or 6?

Some answers are found in Schlissel v Subramanian ;2009 NY Slip Op 52188(U) ; Decided on October 26, 2009 ; Supreme Court, Kings County ; Demarest, J.   As to Breach of Fiduciary Duty:
 

""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" (Kurtzman v Bergstol, 40 AD3d 588, 590 [2d Dept 2007]).

"An attorney stands in a fiduciary relation to the client" (Graubard Mollen Dannett & Horowitz v Moskovitz, 86 NY2d 112, 118 [1995]). As a fiduciary, an attorney "is charged with a high degree of undivided loyalty to his [or her] client" (Matter of Kelly v Greason, 23 NY2d 368, 375 [1968]). "In this case, plaintiff alleges that Van Epps was her attorney, that he unilaterally advanced Wasan's interests over those of plaintiff, that he prepared certain corporate documents for the purpose of diluting and diminishing plaintiff's interest in T & T, and that he concealed material information from plaintiff concerning the adverse contents of these documents (Stark Affirmation in support of the Cross Motion, Ex. 2, Proposed Amended Complaint, ¶¶ 46-47). In opposition, Van Epps contends that he was not plaintiff's attorney and that, in any event, his representation of her had ended by the time she signed the corporate documents.

There is no set of rigid rules that must be followed to form an attorney-client relationship (see McLenithan v McLenithan, 273 AD2d 757, 758 [3d Dept 2000]). It may exist without an explicit retainer agreement or payment of fee (see Tropp v Lumer, 23 AD3d 550, 551 [2d Dept 2005]). "Rather, to establish an attorney-client relationship there must be an explicit undertaking to perform a specific task. In determining the existence of an attorney-client relationship, a court must look to the actions of the parties to ascertain the existence of such a relationship," (id., at 551 [internal quotation marks and citations omitted]) [*8]bearing in mind that plaintiff's unilateral belief does not confer upon her the status of defendant's client (see Volpe v Canfield, 237 AD2d 282, 283 [2d Dept 1997], lv denied 90 NY2d 802 [1997]). "

"Ultimately, the evidence as to the alleged existence of an attorney-client relationship between plaintiff and defendant Van Epps is inconclusive, depends on a fact-finder's [*11]assessment of the parties' credibility, and thus is outside the scope of the court's review on a motion to dismiss. Assuming the truth of her affidavits, plaintiff sufficiently alleges that Van Epps represented conflicting interests at the time plaintiff signed the corporate documents (see Shumsky, 96 NY2d at 168). Plaintiff thus adequately alleges the first element of her breach of fiduciary duty claim — the existence of a fiduciary relationship. Furthermore, having alleged misconduct by defendant by his alleged simultaneous representation of adverse interests, and damages directly caused by his misconduct (Proposed Amended Complaint, ¶¶ 47-50), plaintiff adequately pleads the other two elements of her claim. Defendant's motion seeking dismissal of the breach of a fiduciary duty cause of action pursuant to CPLR 3211(a) (7) is denied. Defendant's motion pursuant to CPLR 3211 (a) (1) is also denied inasmuch as defendant's affidavit and the documents attached thereto do not definitively and "conclusively establish[ ] a defense to the asserted action as a matter of law" (Leon, 84 NY2d at 88); the documentary evidence merely raises numerous issues of fact, rather than finally dispose of them (see Bernstein v Oppenheim & Co., P.C., 160 AD2d 428, 435 [1st Dept 1990]). "

"Defendant contends that plaintiff's claims against him are in the nature of professional malpractice and, therefore, are barred by the three-year statute of limitations of CPLR 214 (6), which is applicable to legal malpractice actions. Defendant asserts that by formulating her proposed amended complaint using language such as fraud and breach of fiduciary duty, plaintiff is attempting to circumvent the three-year limitations period applicable to legal malpractice claims pursuant to CPLR 214 (6) regardless of whether the underlying theory is based in contract or tort. However, as discussed, plaintiff adequately pleads a distinct cause of action for fraud against Van Epps which goes beyond ordinary malpractice (see Simcuski v Saeli, 44 NY2d 442, 453 [1978][finding that an independent cause of action for fraud against a professional may be established when exposure to liability "is not based on errors of professional judgment, but is predicated on proof of the commission of an intentional tort, in this instance, fraud"]; see also Mitschele v Schultz, 36 AD3d 249 [1st Dept 2006]). Defendant's malpractice argument fails, as the gravamen of plaintiff's suit is fraud. The motion to dismiss the action is therefore denied. "

Matrimonial legal malpractice is typically all about the money - and the money is usually about equitable distribution.  Money, or having to give it to someone else drives people insane.  in this case it apparently drove the husband to solicit the murder of his wife.  Luckily, the plan fizzled, and ended in divorce and equitable distribution instead.  After settlement of the divorce case, husband sued his attorney.  He lost in summary judgment, in an instructive decision. 

In Pascarella v Goldberg, Cohn & Richter, LLP ; 2009 NY Slip Op 52193(U) ;Decided on October 23, 2009 ; Supreme Court, Kings County ; Hinds-Radix, J. we see how the court works its way through plaintiff's claims.  "On December 15, 2003, on the eve of trial on the ancillary issues in the matrimonial action, the parties entered into a stipulation of settlement (the settlement) which was placed on the record in open court before Justice Yancey. The settlement fixed Susan's equitable distribution award at $400,000 and required that plaintiff pay it to her in lump sum by March 1, 2004.[FN15] In connection with the settlement, plaintiff testified under oath before Justice Yancey that (1) he heard and understood the terms of the settlement as it was placed on the record; (2) he discussed its terms with his lawyer (Mr. Goldberg), had enough time [*4]to speak with his lawyer about it, and required no additional time; (3) he was satisfied with the services of his lawyer; (4) he was not forced, threatened, or coerced to enter into the settlement; (5) the terms of the settlement were acceptable to him; and (6) he promised to live by its terms.
 

"Plaintiff's first charge of malpractice is that Goldberg was negligent in failing to seek discovery from Susan concerning her non-marital property. The court notes that plaintiff and Susan were married from July 28, 1984 until September 1, 2001, when plaintiff abandoned the marital home, and thus were together for 17 years.[FN24] Yet, plaintiff has never claimed in any of his numerous affidavits filed in this action or in the matrimonial action that Susan had any non-marital property. Nor has plaintiff submitted to the court Susan's Statement of Proposed Disposition, which was to indicate if she had any separate property. There is not one iota of evidence that suggests that Susan had any separate property. To the contrary, the gravamen of plaintiff's legal malpractice claim is that plaintiff overpaid Susan because he used his own separate property, and not because Susan already had too much on account of her own separate property. Without some evidence of actual, ascertainable damages flowing from Goldberg's alleged failure to conduct discovery, this branch of plaintiff's legal malpractice claim fails (see Luniewski, 188 AD2d at 643).

"Plaintiff's second charge that the settlement was coerced or fair has no merit. As stated, the matrimonial action was scheduled for trial on the equitable distribution issue when the parties entered into a settlement of $400,000, which was higher than plaintiff's counter-offer of $300,000 and lower than Susan's initial offer of $450,000. Plaintiff took the stand where he was allocuted on the settlement. He testified that he understood the settlement, wanted to accept it, and was satisfied with Goldberg's services as his counsel. Plaintiff's allegations in support of his claim that the settlement was a product of coercion or duress are inherently incredible and flatly contradicted by documentary evidence, including (1) the minutes of Justice Yancey's careful and thorough allocution of plaintiff, during which he showed no sign that he was compelled to enter into the settlement, and (2) his "Affidavit of Appearance and Adoption of Oral Stipulation," in which he acknowledged that the terms of the settlement were fully explained to and understood by him, and that he consented to its terms voluntarily and with advice of counsel (see Kinberg v Kinberg, 50 AD3d 512, 513 [1st Dept 2008]).

"As a matter of policy, cases once settled should not be readily re-litigated as to their merits before another judge, where the original party has been released and the plaintiff's original attorney has become the defendant. "Under those circumstances, the burden must be on the plaintiff seeking such a recovery to demonstrate by evidence rather than by conclusory allegations, that he indeed suffered substantial financial loss because of misdeeds by his attorneys and not by second guessing as to their judgment" (Becker v Julien, Blitz & Schlesinger, P.C., 95 Misc 2d 64, 68 [Sup Ct, New York County 1977], modified on other grounds 66 AD2d 674 [1st Dept 1978], appeal dismissed 47 NY2d 705 and 761 [1979], lv dismissed 47 NY2d 800 [1979]). "

LOK PRAKASHAN, LTD.  -v.- RALPH A. BERMAN, DAVIDOFF MALITO & HUTCHER, LLP,
No. 09-0136-cv; UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT;2009 U.S. App. LEXIS 22988 is an example of the Court's continued romance with the concept that litigation is an art and not a science.

What is a question of judgment? " "A complaint that essentially alleges either an 'error of judgment' or a 'selection of one among several reasonable courses of action' fails to state a claim for malpractice." Id.

The District Court concluded that "[b]ecause there is ample evidence in the record that Defendants' omission of the specified document was a conscious and reasonable decision regarding trial strategy, not negligence, and the omission of the document was not the proximate cause of any loss, Plaintiff has failed to show the elements required to support a claim of legal malpractice." [*4] Order of November 1, 2005. We agree and, substantially for the reasons stated by the District Court in its well-reasoned orders of November 1, 2005 and December 12, 2008, find plaintiff's arguments to be without merit."
 

Way back when, there were different statute of limitation in legal malpractice cases which sounded in either tort [3 years] or contract [6 years].  The Court of Appeals approved, and it was the law of the land.  As is its power, the legislature then passed CPLR 214(6) which created a single 3 year statute of limitations for legal malpractice actions, whether sounding in tort or contract. 

With enterprising attorneys, and strange damage situations, this was not the end of the question.  Can there be a cause of action for breach of contract between a client and an attorney?  The short answer is yes.  As an example, were the attorney to contract to write an appeal, and no appeal was written, that would be a breach of contract.  Damages would be limited to traditional contract damages:  payments made but not earned, and perhaps the additional cost of cover [paying someone else a higher fee to do the work.]

Here, in Lambroza v. Tworney, Latham, Shea, Kelly, Dubin & Quartararo, 2009 NY Slip Op 32333(U) we see a slightly different fact pattern.  Plaintiff alleges that he hired defendant attorney to provide legal services in the purchase of real property in the Hamptons.  Plaintiff alleges that defendant was to compare the survey of the Property and the existing deed and look for differences. 

Some 6 years later differences arise, an encroachment existed, and plaintiff had to drop his sale price by $ 50,000 to cover the problem.  Is the attorney liable for breach of contract, since the statute of limitations for legal malpractice has long passed?

The answer in this case is no, as Justice Solomon was unpersuaded that this was really a contract action and not a traditional legal malpractice case. She determined that comparison of a deed to the survey is within the normal realm of legal services and was not the basis of a real contract.  Accordingly, case dismissed on statute of limitations.

In General Credit Corp v. Guidice 2009 NY Slip Op 32418(U), Supreme Court, New York County, Decided 10/15/09, Justice Kornreich, we one reason that the public has less than stellar views of attorneys.  Here, evidence was produced to show that one attorney wrested control of the corporation and caused it to enter into adverse financial transactions that benefited the attorney, prepared agreements to give that attorney control of the board, obtained loans from a captive entity controlled by the attorney at interest rates above 20%, seized control of all the bank accounts, changed the locks in the office, fired the staff, interfered with its banking relationships and drove the company to file bankruptcy.

The case ended in a judgment of about $ 864,000 along with punitive damages (10x compensatory damages) in the amount of $ 1.5 million and additional punitive damages of $ 850,000 against others of the attorneys.

When is it the attorney's fault, and when the Client's ?  That question is answered, in this particular situation, by the decision in Bernard v/ Proskauer Rose LLP.

Client is an extraordinarily accomplished real estate transactionalist.  In 1994 he joined the Trust Company of the West, as a portfolio manager for certain real estate investment funds.  He and others left TCW to create Oaktree Capital Management LLC which managed funds catering to high net-worth investors. 

During his time there, he earned a lot of money, and had more than $ 51 million owed to him in back end incentive fees and other fees.  Nevertheless, he wanted to leave and form his own company, and so he hired Proskauer.

Even though plaintiff knew that he had to hang around Oaktree for 120 days after giving notice of resignation, he asked his secretary to copy lists of investors and to put his quarterly investment letters onto a computer disk for him.  Furthermore, there were some questions about a diverted opportunity called 60 Main Street property.

In the end, he was expelled, and lost all.  He lost the 60 Main Street Property, and lost his back incentive fees.  His fault or Proskauer's ?  Arbitration of the underlying case ensued and plaintiff lost.

Justice Lowe determined that it was not Proskauer's fault, and dismissed.  He too, determined that the arbitrator had already determined the issues, and that plaintiff loses.  However, it was not due to collateral estoppel and res judicata, It was due, instead, to the court's determination that plaintiff had breached his fiduciary duty to Oaktree, and that the breach preceded and had nothing to do with Proskauer's advice.

Jousting with the landlord over rent stabilized apartments is a uniquely NYC type of activity. Violations of the rent-stabilization laws may lead to treble damages, and tenants routinely litigate over the actual v. statutory rent, whether there has been an illegal rent increase, and over violations.

Here, in Kyle v. Heiberger, NY Slip Op 32409(u) we see how the process can linger and sometimes go off the rails.  Tenant was successful, and eventually obtained a $ 21,000 or so judgment against the landlord in litigation that lasted from 2002 - 2007.  That litigation and the legal malpractice case it spawned reached New York and Bronx Counties, took place in L &  Court, included two Article 78 cases, and ended up in Supreme Court, Bronx County where the legal malpractice case was recently dismissed.

The legal malpractice case is against Ronald Hart who represented plaintiff from 2002-2007.  The gist of this case is that he won the L & T case after much procedural wrangling, and sought attorney fees from the landlords, as plaintiff was permitted.  Those legal fees were said to be in the vicinity of $ 426,000.  Eventually the landlord agreed to pay $ 190,000 which ended the dispute with a stipulation.  Shortly thereafter, tenant started its attempts to vacate the stipulation.

The theory against the attorney was that he settled the case and then withdrew in favor of successor attorney, and breached his fiduciary duty.  Defendant Heiberger & Associates PC is a later successor attorney and is now a defendant.

The breach of fiduciary duty claim was dismissed by Supreme Court, on the basis that no damages could be demonstrated, and that when a breach of fiduciary duty claim is based upon the legal malpractice [rather than, for example, a disgorgement of fees for overbiling], then one must demonstrate the "but for" aspect of legal malpractice. Citing Kurtzman v. Bergstol, 40 AD3d 588 (2d Dept,2007) the court held:  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."

Izko Sportswear Co., Inc. v Flaum ; 2009 NY Slip Op 04387 [63 AD3d 687] ; June 2, 2009 ; Appellate Division, Second Department  is a somewhat famous case in Legal Malpractice.  In earlier decisions, the Appellate Division determined that plaintiff stated a cause of action in Judiciary Law 487.  Now, the case has ended with a dismissal;   The Court of Appeals then denied leave to appeal.  Two lessons are to be learned here:
 

1.  Violation of Judiciary Law 487 may be demonstrated either by deceit or by chronic extreme pattern of delinquency; and

2.  Judicial determinations of attorney fees act as collateral estoppel to a later legal malpractice or Judiciary Law 487 determination.

Reviewing the findings of the Appellate Division, we see:

"A violation of Judiciary Law § 487 may be established "either by the defendant's alleged deceit or by an alleged chronic, extreme pattern of legal delinquency by the defendant" (emphasis supplied) (Knecht v Tusa, 15 AD3d 626, 627 [2005]; see O'Connell v Kerson, 291 AD2d 386, 387 [2002]; see also Bridges v 725 Riverside Dr., 119 AD2d 789 [1986]; Trepel v Dippold,2005 WL 1107010, 2005 US Dist LEXIS 8541 [May 9, 2005]). "

Now the AD affirms the dismissal of the case:  "On a prior appeal, this Court found that the plaintiffs stated a cause of action pursuant to Judiciary Law § 487, against the defendants, who were the former bankruptcy attorneys for the plaintiff Izko Sportswear Co., Inc. (hereinafter Izko). The plaintiffs alleged in the complaint that the defendants concealed their relationship with Heartland Rental Properties Partnership (hereinafter Heartland), who was Izko's primary creditor, and also denied having a relationship with any of Izko's creditors (see Izko Sportswear Co., Inc. v Flaum, 25 AD3d 534 [2006]). In so doing, this Court noted that on a motion to dismiss pursuant to CPLR 3211 (a) (7), the plaintiffs' allegations must be accepted as true, and "whether the defendants would be entitled to summary judgment" was not an issue (see Izko Sportswear Co., Inc. v Flaum, 25 AD3d 534, 537 [2006]).

After discovery, the defendants moved for summary judgment dismissing the complaint based upon evidence which established, as a matter of law, that the plaintiffs were not [*2]deceived, and that the plaintiffs learned of the defendants' representation of Heartland on March 3, 2000, at the latest. In opposition, the plaintiffs failed to raise a triable issue of fact.

Thus, the revelation of the defendants' representation of Heartland occurred prior to May 31, 2000, when the Bankruptcy Court approved of a stipulation with respect to the amount of fees payable by Izko to the defendants. Accordingly, the plaintiffs' claim pursuant to Judiciary Law § 487 based upon the defendants' prior representation of Heartland is barred by the doctrines of collateral estoppel and res judicata, as the plaintiffs had a full and fair opportunity to raise the issue before the Bankruptcy Court (see generally Lefkowitz v Schulte, Roth & Zabel, 279 AD2d 457 [2001]).

The folks over at Attorney.org recently contacted me about an interview for their website. If you don't know who they are, check them out.  . In addition to legal news, they also highlight noteworthy attorneys from around the country. One of their upcoming features is a highlight of local Attorney Generals and District Attorneys. They interviewed me for an article about how to decide if you need a Legal Malpractice Attorney and whether or not you have a case. You can view the article here: Attorney.org
 

A prime worry for the legal malpractice practitioner, on either side of the aisle, is whether there is legal malpractice insurance.  For the defendant, it is paramount; for the plaintiff it is significant.  Much thought has gone into how to determine whether the target defendant has adequate [or indeed, any] insurance, and planning has to go into the target's application for insurance."

One prime weapon that the insurer has is the "prior acts" doctrine.  It says in essence that you must report all past prior acts that one might reasonably believe could lead to a law suit for legal malpractice, whether it has been started or not.  We remember one managing attorney who shouted at least once a week: "Put the Carrier on Notice!"  Sometimes he was right.

Here, in Executive Risk Indemnity v, Pepper Hamilton, LLP, we see Justice Jone's decision on this issue:

"We are asked to determine, under Pennsylvania law, whether excess insurers Executive Risk Indemnity Inc. and Twin City Fire Insurance Company, based upon their prior knowledge exclusions, and Continental Casualty Company, based upon rescission of its policies, were entitled to summary judgment declaring that they have no obligation to indemnify defendants Pepper Hamilton LLP and one of its members W. Roderick GagnÉ (collectively, the law firm defendants) in actions asserted against them for, among other claims, professional malpractice."

"Executive Risk commenced this action against the law firm defendants and Westport, seeking a declaration that it had no obligation to indemnify defendants in the underlying actions. The law firm defendants counterclaimed for a declaration in their favor and brought third-party claims against Twin City and Continental Casualty. Executive Risk and Twin City relied upon Westport's prior knowledge exclusion, expressly incorporated into their policies, and Continental Casualty cross-claimed for rescission of its excess policies for 2002-[*4]2003 and 2003-2004. "

"Here, it is undisputed that the law firm defendants knew of SFC's securities fraud months prior to the effective dates of the Executive Risk and Twin City policies. The courts below noted that GagnÉ subjectively believed, and informed Mr. Wilcox at least one month prior to the submission of one of the law firm's insurance applications, that he and the law firm could be subject to a lawsuit from their representation of SFC. Such a belief, although subjective, was also reasonable, but Pepper Hamilton did not provide that information to its insurers. Given the law firm defendants' role in the securitization of the loans and GagnÉ's close involvement with SFC, a reasonable attorney with the law firm defendants' knowledge should have anticipated the [*5]possibility of a lawsuit, particularly when millions of dollars may have been lost from activities of which they were aware. Here, the law firm's knowledge of its client's fraudulent payments prior to its application for excess coverage coupled with the fact that a reasonable attorney would have concluded that the law firm defendants would likely be included in the litigation because of their role in their client's business satisfy the test of Coregis and create an obligation for the law firm to inform its insurers of this potential litigation.

Contrary to the Appellate Division's holding, the prior knowledge exclusion in this case does not require the known of act, error, omission or circumstance to be "wrongful conduct on the part of the insured" (Executive Risk Indem. Inc. v Pepper Hamilton LLP, 56 AD3d 196, 204 [1st Dept]). It excludes coverage of "any act, error, omission, circumstance . . . occurring prior to the effective date of the [policy] if any [insured] at the effective date knew or could have reasonably foreseen that such act, error, omission, circumstance . . . might be the basis of a [claim]." Here, on October 27, 2002, the effective date of the Executive Risk and Twin City policies, the law firm defendants knew of acts that occurred prior to that date, which they could have foreseen to be the basis of a claim. Thus, the prior knowledge exclusions apply to those policies.
 

In    PETER GIANOUKAS, DORIS GIANOUKAS and NICHOLAS TARSIA, Plaintiffs, - against - PETER CAMPITIELLO, ESQ., LEVY & BOONSHOFT P.C., DAVID M. LEVY, ESQ., STEPHEN BOONSHOFT, ESQ. and EAST WEST ACQUISITIONS, LLC, Defendants.;09 Civ. 1266 (PAC);UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 95354;October 13, 2009   we see the outer reaches of a breach of fiduciary duty and of legal malpractice in a well written and reasoned decision by Judge Paul Crotty of Southern District of New York. The facts and allegations are simple:

"The Amended Complaint alleges five separate fraudulent transactions: (1) Codine(x), (id. PP 41-68); (2) Pay Pad, (id. PP 69-87); (3) LIMPE, (id. PP 88-106); (4) Acellus, (id. PP 107-16); [*3] and (5) UTTI, (id. PP 117-34). Throughout the Amended Complaint, Campitiello is portrayed as the architect of the fraudulent transactions which bilked Plaintiffs out of in excess of $ 400,000. He did this as an employee of L&B, and used L&B's escrow account to receive funds from the Plaintiffs and thereafter funds were disbursed from the account to consummate the fraud. The Amended Complaint does not allege that Levy and Boonshoft were involved in, or knew of, the fraud"

"According to the Amended Complaint, the L&B escrow account is an "interest on lawyer account," also known as an "IOLA" account. (Am. Compl. PP 10-11); see N.Y. JUD. LAW § 497. Plaintiffs contend that Levy and Boonshoft owed them a fiduciary duty as escrow agents and as "signatories on the defendant law firm IOLA account."  "Next, Plaintiffs claim that Levy and Boonshoft are liable for breach of fiduciary duty as "signatories" on the L&B IOLA account. An IOLA account "is a creation of New York State statute, and is defined as 'an unsegregated interest-bearing deposit account … for the deposit by an attorney of qualified funds.'"

"Plaintiffs argue that lawyers "who accept funds from persons [*11] in escrow or make a decision to have funds in the firm IOLA accounts are fiduciaries to such persons with respect to those funds." (Pls.' Opp'n at 10.) The Amended Complaint does not, however, allege that Levy and Boonshoft agreed to accept funds from the Plaintiffs or that they were involved in the decision to have the Plaintiffs transfer funds to the L&B IOLA account. Nor does the Amended Complaint allege that Levy and Boonshoft misappropriated or commingled Plaintiffs' funds; it is Campitiello who allegedly misappropriated the Plaintiffs' money."
 

"Most importantly, "[w]hatver may be the constraints imposed by the Code of Professional Responsibility with the associated sanctions of professional discipline . . . [New York] courts have not recognized any liability of the lawyer to third parties . . . [for violations of disciplinary [*12] rules] where the factual situations have not fallen within one of the acknowledged categories of tort or contract liability." Drago v. Buonagurio, 386 N.E.2d 821, 46 N.Y.2d 778, 779-80, 413 N.Y.S.2d 910 (N.Y. 1978). Plaintiffs do not contend that they had an attorney-client relationship with Levy or Boonshoft. (Pls.'s Opp'n at 3.) As shown above, Levy and Boonshoft were not the Plaintiffs' escrow agents. Thus, to the extent Plaintiffs rely on DR 9-102 as the basis for their breach of fiduciary duty claim, the claim fails because "an alleged violation of a disciplinary rule 'does not, without more, generate a cause of action.'

In Santiago v Fellows, Epstein & Hymowitz, P.C. ; 2009 NY Slip Op 07393 ; Decided on October 13, 2009 ;Appellate Division, Second Department we see a rather stark and short decision from the Appellate Division after dueling summary judgment motions are decided in defendant's favor.  There is not a lot of factual background, but plaintiff aparently thought that a $1 million offer was made, and defendant denied that any offer was made.  If no offer was made, then how can there be malpractice?
 

From the decision:  "In support of that branch of their cross motion which was for summary judgment, the defendants established, prima facie, that during their representation of the plaintiff in the underlying action, Selective Insurance Company (hereinafter Selective), the insurer of two of the four defendants in the underlying action, did not offer to settle the matter on behalf of its insureds for the $1,000,000 policy limit. The defendants submitted an affidavit from the individual defendant Robert L. Fellows, who categorically denied that Selective ever made a $1,000,000 settlement offer to the defendants or to the plaintiff during [*2]the defendants' representation of the plaintiff. Rather, he explained that by letter dated August 6, 2002, from Selective to Travelers Insurance Company (hereinafter Travelers), the insurer of one of the defendants in the underlying action, Selective "tendered its $1 million single limit policy to Travelers. Selective requested that Travelers assume the handling and defense of the action. On August 15, 2002, a mere nine days after Selective's letter tender to Travelers of its policy limits, Selective retracted the tender." According to Fellows, it was not until June 2003 that the plaintiff directed him to settle the underlying action with Selective for a total sum of $1,000,000. However, Selective never made such an offer, and thus, Fellows could not possibly have acted on the plaintiff's behalf to settle the case, and his failure to do so cannot be deemed malpractice."

In Pu v. Mitsopoulos, Supreme Court, New York County recalls what every CLE program tells its audience:  Fee suits invite legal malpractice counterclaims.  Invariably, the suing attorney says that the counterclaim has no merit, and that it is sour grapes, and motivated solely by a deadbeat who refuses to pay wholly justified legal fees for work well done.

Here, the situation seems just a little different.  Plaintiff represented defendants when a franchisor sued the defendant-pharmacist over unpaid royalties.  Defendant, who became educated through the litigation, arbitration, appeals and other proceedings, says that the franchisor never had the right to sue in NY courts; it was a foreign corporation doing business in NY and had not paid taxes.  Under Business Corporation Law section 1312, a foreign corporation which conducts business in the state without authority cannot maintain an action in the state, and any action initiated by that corporation must be dismissed.

So, reasons defendant, a simple motion to dismiss would have succeeded, and a debt of $ 231,000 would not have turned into a total debt of $ 1,2 Million.  Who is right?

Justice Feinman, for the Court, found that defendant's counterclaims have merit, and has allowed the case to go forward. 

In Acosta v. Falick & RochmanPLATZER, FALLICK & STERNHEIM, LLP, 05 Civ. 8254 (KTD)UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; 2009 U.S. Dist. LEXIS 70878 we see a case brought pro-se and "in forma pauperis against his former lawyer, Barry M. Fallick, and his former lawyer's firm, Rochman, Platzer, Fallick & Sternheim, LLP (collectively, "Defendants"). Acosta seeks the return of legal fees paid to Defendants plus other incidental costs arising out of Defendants' representation of him in a criminal matter." 

There, Judge Duffy "satisfied myself of both the guilt of the defendant and that the plea was being made voluntarily by a person who knew exactly what his rights were and knew exactly what he was doing. Indeed I remember thinking about the arguments that must have been raised by defense counsel in bargaining with the government, and I still marvel at the wonderful result defense counsel obtained for his client. The government had originally charged Acosta with dealing in narcotics--a charge reduced by the bargain to use of a "communication facility" in connection with drug dealing. I knew that Acosta, as a police officer, would face a tough time in prison, but believed that he was not exempt from jail time. On January 9, 2001, I sentenced him to forty-eight months' imprisonment, two years' supervised release, and charged the mandatory $ 100 special assessment."

Apparently there was no diversity jurisdiction, so plaintiff " alleges violations of 41 U.S.C. § 37 and 28 U.S.C. § 1927, but neither of these statutes provide a legal basis for his claims. First, 41 U.S.C. § 37 authorizes the Comptroller General of the United States to distribute to certain government agencies lists of persons who have breached public contracts. See 41 U.S.C. § 37. The fee agreement in this case is not a public contract, so it is not covered under the statute. Further, the statute does not authorize a private right of action or money damages at all."
"However, Plaintiff's complaint in this case, broadly construed, alleges only facts most closely resembling state law breach of contract and legal malpractice claims over which this Court does not have subject matter jurisdiction. As Defendants point out, complete diversity is lacking and Plaintiff does not claim more than $ 75,000 in damages, so 28 U.S.C. § 1332(a) cannot provide a basis for jurisdiction. Therefore, as Acosta's complaint lacks any basis in law and is consequently frivolous under 28 U.S.C. 1915 (e) (2) (B) (i), I must dismiss it."
 

Different result in State Court?

X is sued by defendants.  He loses at trial using target attorneys.  He hires new attorneys, mediates, settles, and assigns his rights to a legal malpractice action against his former [target] attorneys to plaintiff, who now sues target attorneys in the place of X.  Is there still any confidentiality to the mediation asks the target attorney?

Yes, there is, says Judge Bernstein of US Bankruptcy Court, SDNY in In re: TELIGENT, INC., Reorganized Debtor. SAVAGE & ASSOCIATES, P.C., as the Unsecured Claims Estate Representative for and on behalf of TELIGENT, INC., et al., Plaintiff, -- against -- ALEX MANDL, Defendant.

Chapter 11, Case No. 01-12974 (SMB), Adv. Proc. No. 03-2523; UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; 2009 Bankr. LEXIS 3037; 
September 24, 2009

"Non-party K&L Gates LLP ("K&L") formerly represented the defendant Alex Mandl. The parties engaged in unsuccessful pre-trial mediation, and following trial, the Court entered a judgment in excess of $ 12 million against Mandl and in favor of the plaintiff, Savage & Associates, P.C. ("Savage"), the Unsecured Claims Representative for and on behalf of Teligent, Inc. ("Teligent"). After the entry of [*2] judgment, Mandl discharged K&L, participated in a second round of mediation with new counsel, and eventually settled with Savage. As part of the settlement, Mandl assigned to Savage a portion of the proceeds derived from his legal malpractice claim against K&L. As contemplated by the settlement, Mandl sued K&L for legal malpractice in the District of Columbia (the "DC Action").

K&L contends that it needs the documents and communications generated during the two mediations to defend itself in the DC Action. (Memorandum of Points and Authorities in Support of [K&L's] Motion to Lift Mediation Confidentiality Restrictions, dated March 5, 2009 (the "Motion"))(ECF Doc. # 227.) 1 Toward that end, it has moved for relief from the confidentiality provisions contained in this Court's General Order M-143, dated Jan. 17, 1995 ("General Mediation Order") and the specific mediation order entered in this case.

K&L offers several reasons why the Mediations communications and the mediator's testimony "may be relevant." First, they may shed light on the issues of causation, mitigation, and damages, and in particular, why Mandl settled at the price he did rather than pursue his post-trial motions or an appeal. (See id., at 13-14.) K&L speculates that Mandl may have settled without regard to his actual exposure, which GT had estimated to be $ 3.19 million, (id., at 14-15), or because Savage threatened Mandl with criminal and tax-related liability. (Id., at 15.) Moreover, Savage discontinued the fraudulent conveyance action against Susan Mandl and ASM without extracting a separate payment from either defendant. The release of his wife and affiliate may have affected Mandl's decision to settle at a higher number than his potential exposure. (Id., at 15-16.)

Second, the Mediations communications may be relevant to Mandl's damages. The parties valued the Settlement at $ 16 million (i.e., the Agreed Valuation), but the amount of consideration that Mandl committed to pay, aside from half of the net proceeds of the DC Action, was far [*12] less. (Id., at 16-17.) The mediator's report stated that he was "not aware of any reason why that amount is not a reasonable approximation of the value of the settlement," and Savage asserted at the time that she sought judicial approval of the Settlement that the Settlement would include a claim of $ 16 million against K&L. (Id., at 16-17.) Lastly, Mandl responded to an interrogatory that the Agreed Valuation was based on the probabilities assigned by each party to the outcome of the post-trial motions, and K&L's failure to exercise due diligence in discovering important evidence that surfaced after the trial. (Id., at 17.)

Third, K&L contends that the Proceeds Assignment is invalid, and suggests that the Mediations communications may be relevant in establishing that the assignment was improper. (Id., at 18-19.)
 

K&L has plainly failed to meet its burden. Although the Mediations communications may be relevant to some of the issues in the DC Action, K&L has not explained satisfactorily why they are critically needed. Mandl has not charged K&L with committing malpractice in connection with the 2004 Mediation, and K&L did not participate in the 2008 Mediation. Hence, K&L's conduct during the Mediations is not material to the malpractice [*21] claim."
 

We reported on this case back on5/14/07 and again on 9/19/08.  Today, the NYLJ reports that the Morelli law firm's attempt to garner disbursements from plaintiff has failed.

From the decision of Justice Goodman:  "The following illustrates why members of the public may hold cynical views about the legal profession. This motion seeks to renew and reargue denial of a motion to restore a counterclaim for disbursements from defendants' former client. Granted to the extent of considering the present submission; but on reargument the motion is denied.
 

A legal malpractice action against Benedict P. Morelli & Associates, P.C. (Defendants/Movants) of plaintiff resulted from the representation of plaintiff in a medical malpractice action. In that medical malpractice action, which was dismissed as untimely, Victoria Kremen (Plaintiff/Client) claimed that certain doctors and hospitals misdiagnosed her as having breast cancer, when she did not; the result was an unnecessary bi-lateral mastectomy. (Kremen v. Brower, Index No. 112829/01, Joan B. Carey, Sup Ct NY County 2001, affd, Kremen v. Brower, 16 AD3d 156 [1st Dept 2005]). This Court's denial of summary judgment to defendants in the ensuing legal malpractice action which was based on the prior case being dismissed on statute of limitations grounds, was reversed (in connection with a time calculation of Plaintiffs' filing bankruptcy) and the legal malpractice action was dismissed (Kremen v. Benedict P. Morelli & Assoc. P.C., 54 AD3d 596 [1st Dept 2008]).

In the legal malpractice action defendants had argued, inter alia, that there had been no merit to the medical malpractice case in the first instance, even though they had clearly undertaken the engagement of representing plaintiffs, which suggests that they must have or should have believed it was a meritorious action. Defendants then took the uncommon step in the legal malpractice action, of asserting a counterclaim for disbursements allegedly incurred in the medical malpractice action. However, the law firm submitted to this Court no support whatsoever for the motion to restore their unusual counterclaim."

Now, for the first time, and in violation of motion practice parameters concerning reargument under CPLR 2221, defendants submit a copy of the retainer agreement which was drafted by them and was in their possession when they originally made the motion hereunder. Aside from that impropriety, and despite being an experienced tort firm active in the field of personal injury, defendants obviously are not familiar with the terms of their own retainer agreement.

Hinshaw reports an interesting South Carolina case in which plaintiff is estopped from a legal malpractice case against his attorney, on the basis that he is a wrongdoer, and one in in pari delicto may not recover civil liability.

From the Hinshaw alert:  "Plaintiff William Whiteheart sued his former law firm, Waller & Stewart, for malpractice. Whiteheart’s claim was based on multiple instances in which Waller & Stewart facilitated Whiteheart’s wrongdoing. For example, Waller & Stewart reviewed a per se defamatory letter that Whiteheart wrote about one of his business competitors. Waller & Stewart did not warn Whiteheart of potential liability for the letter, and he later distributed the letter. In a related matter, Waller & Stewart helped Whiteheart maintain a billboard well past the term of the billboard’s lease, even though the landlord rightfully sought removal of the billboard. Waller & Stewart even went so far as to obtain a temporary restraining order to prevent removal of the billboard, despite no apparent legal basis for maintaining the billboard on the property."
 

"The court of appeals affirmed based on the doctrine of in pari delicto. The doctrine prevents courts from redistributing losses among wrongdoers. The court held that this doctrine bars recovery in legal malpractice unless the client acts pursuant to legal advice so complex that assessing the illegality of the advice would not be possible. Whiteheart was barred from arguing that he was ignorant of any wrongdoing, the court held, because in the prior proceeding the court had found Whiteheart’s misconduct intentional.

Whiteheart, therefore, was collaterally estopped from arguing against the court’s application of in pari delicto. Because no North Carolina court had applied in pari delicto to a legal malpractice case, the court of appeals looked to other jurisdictions for guidance. The court noted that allowing malpractice recovery in such cases could encourage clients to commit illegal acts upon the advice of their lawyers, and that malpractice liability is not needed to deter such faulty legal advice because the threat of attorney discipline serves as an adequate deterrent."
 

Much of the law-related news is about multi-national law firms.  Leaving them aside there is a serious question over whether our regular old national law firms can be sued in US District Court under diversity jurisdiction. 

Let's review the basics, as set forth in Lee v. Brown, 3:08-CV-01206 (CSH);  UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT; 2009 U.S. Dist. LEXIS 88494; September 25, 2009

1.  It's citizenship, not residence in diversity jurisdiction:  "District courts have subject matter jurisdiction based on diversity of citizenship in civil cases where the matter in controversy exceeds the sum or value of $ 75,000 and is between citizens of different states. 28 U.S.C. § 1332(a)(1). Diversity of citizenship requires "complete diversity between all plaintiffs and all defendants," Lincoln Prop. Co. v. Roche, 546 U.S. 81, 88, 126 S. Ct. 606, 163 L. Ed. 2d 415 (2005), meaning that no plaintiff and no defendant are citizens of the same state. Wis. Dep't of Corr. v. Schacht, 524 U.S. 381, 389, 118 S. Ct. 2047, 141 L. Ed. 2d 364 (1998). The party seeking to invoke diversity jurisdiction -- here plaintiffs [*4] -- bears the burden of demonstrating that complete diversity exists. Herrick Co. v. SCS Commc'ns, Inc., 251 F.3d 315, 322-23 (2d Cir. 2001).
 

2.  Citizenship [domicile] is more than residence:    "Domicile is the place where a person has his true fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning." " A natural person is considered to be a citizen of the state where he is domiciled, Palazzo v. Corio, 232 F.3d 38, 42 (2d Cir. 2000), and "it is well-established that allegations of residency alone cannot establish citizenship." Canedy v. Liberty Mut. Ins. Co., 126 F.3d 100, 102-103 (2d Cir. 1997).

3.Partnerships are citizens of the state of each parthers' domicile:  A person's domicile is "the place where a person has his true fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning." Palazzo, 232 F.3d at 42. A partnership, which is not a natural person, has the citizenship of each of its partners. Herrick Co. v. SCS Commc'ns, Inc., 251 F.3d 315, 322-23 (2d Cir. 2001).at 322. This is true also of limited liability partnerships. See Mudge Rose Guthrie Alexander & Ferdon v. Pickett, 11 F. Supp. 2d 449 (S.D.N.Y. 1998).
 

4. Lack of complete diversity may result in no subject matter jurisdiction..   "In moving to dismiss this action for lack of subject matter jurisdiction, McDermott claims that a number of its partners are domiciled in, and thus citizens of, the same states of which plaintiffs claim to be "residents" -- California, Massachusetts, and Connecticut. The declaration of Alan M. Rutkoff indicates that 41 of McDermott's partners work at the firm's office in Boston, Massachusetts, and that at least 104 of its partners work at one of the firm's California offices. According to the declaration, all or substantially all of the partners who work at these offices [*7] are domiciled in the state wherein their office is located."  "If plaintiffs are indeed citizens of the states in which they claim to reside, then a number of McDermott's partners are citizens of the same states and complete diversity is lacking in this action."

5.  That determination may not be the end of the story   Even if there is overlap between the citizenship of some of the plaintiffs and some of McDermott's partners, it does not follow that the entire action must be dismissed for lack of subject matter jurisdiction. Under Fed. R. Civ. P. 21, a district court have the power to dismiss nondiverse dispensable parties to preserve diversity jurisdiction. Kafaru v. Burrows, 2008 U.S. Dist. LEXIS 1797, *4 (D. Conn. 2008); See Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832, 109 S. Ct. 2218, 104 L. Ed. 2d 893 (1989). McDermott appears to be a dispensable party.

 Rule 21 reads: "On motion or on its own, the court may at any time, on just terms, add or drop a party."

Sheri Qualters at The National Law Journal reports that Mintz, Levin and its attorney Steven Rosenthal  have been sued for "allegedly misusing his position to enrich himself and a friend."  Rosenthal, formerly an attorney there, has moved on to real estate investment and development at Northland Investment Corp.

The suit revolves around a claim that Rosenthal "appointed a friend, Neil Cooper, and his company, Macher Management and Development Corp.

The Lamb v. Rosenthal lawsuit, which was filed in Suffolk County Superior Court in Massachusetts on Sept. 16, accuses Rosenthal and Mintz Levin of fraud, breach of fiduciary duty and legal malpractice. The plaintiffs also allege that the defendants violated the Massachusetts consumer protection law, which allows plaintiffs to collect triple damages and attorney fees. They accuse Rosenthal of threatening to oppose the appointment of the plaintiffs as their mothers' guardian unless they signed a settlement agreement, which was finalized in 2006.

The plaintiffs claim they learned of Rosenthal and Cooper's close friendship and how they improperly protected each others' interests at the expense of the plaintiffs when Cooper's company sued them in Essex County Superior Court in Massachusetts.

Cooper filed the 2007 lawsuit, Macher Development & Management Company LLC v. Stevens, to collect money the plaintiffs in the Rosenthal case allegedly owed him under his contracts to manage their commercial property. The Macher lawsuit was settled in July 2008.

According to the complaint in the recently filed lawsuit, during the discovery process in the Macher suit, Mintz Levin produced e-mails in which Cooper referred to Rosenthal as his "best friend" and "soul mate." The complaint cites another Cooper e-mail in which he said he didn't want it to look as though Rosenthal was negotiating for him and that a little "fake tension" between them would look good. "

Legal malpractice is a filed associated with situations in which a person has lost their case.  In real legal malpractice, but for the mistake of the attorney, there would have been a positive outcome.  In a small subset of cases, however, there really is no merit to the action at all.  Defense counsel in legal malpractice all too often use a broad brush and paint any complaint as "frivolous'; sometimes they are right.  Here is an example:

ELIOT S. SASH, Plaintiff, - against - UNITED STATES OF AMERICA et al., Defendants; 09 Civ. 450 (DC);UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 90866   we are looking at this case because in earlier matters, Mr. Sash unsuccessfully sued his attorneys.  Here is his story:
 

"On September 4, 2002, federal and state officials executed a search warrant at Sash's home in Yonkers, New York. United States v. Sash, 396 F.3d 515, 517 (2d Cir. 2005). The search uncovered thousands of false federal, state, and local identification documents and badges, along with the tools, computers, and printers necessary to manufacture such documents and badges. Id. Sash was not authorized to manufacture any of the badges or documents found. Id.

On November 27, 2002 Sash was charged in a twenty-one count indictment with producing, and unlawfully possessing with intent to transfer, hundreds of NYPD badges and ID cards; selling counterfeit badges through the mail; and making false statements to federal customs officials. Id.

On December 30, 2002, while free on bail, Sash was arrested in New Jersey for defrauding a K-Mart department store. His bail was revoked, and he was [*4] charged in a superseding indictment that included charges relating to Sash's attempt to defraud K-Mart. Id. He later agreed to plead to an information, and pled guilty on September 30, 2003 to access device fraud and unlawful transfer of police badges. Id. at 518. On January 13, 2004, Judge Casey sentenced Sash to twenty-seven months in prison followed by eight years of supervised release, which was subsequently lowered to two years and nine months. Id. As a special condition of his supervised release, Sash was explicitly prohibited from
possess[ing] any law-enforcement equipment, such as New York Police Department shields and badges, that [he was] not authorized to possess, [and] . . . possess[ing] any raw materials, inventory, or badge components that could be used to manufacture law-enforcement equipment that [he was] not authorized to manufacture.
United States v. Sash, 444 F. Supp. 2d 224, 228 (S.D.N.Y. 2006).

On March 3, 2006, after Sash completed his sentence and was subject to supervised release, Sash's Probation Officer conducted a search of his home. Id. at 226. That search uncovered a number of NYPD badges and shirts, which Sash was prohibited from possessing. Id. A subsequent [*5] search took place on March 6, 2006 and revealed, as Judge Casey later put it, "enough law-enforcement equipment to outfit a small police force." Id. at 228. Sash possessed, inter alia, NYPD uniforms, NYPD badges, Department of Defense badges, seals used to make FBI, Department of Justice, and Customs Service badges, and several fake handguns. Id. at 227.

On March 6, 2006, the Probation Office filed a Request for Court Action, charging Sash with two violations of supervised release -- possessing law enforcement badges and equipment, and lying to his Probation Officer. Sash, who denied both charges, was arrested that same day. Id. at 225. Judge Casey held a hearing on April 4, 2006, and on August 2, 2006 issued a decision, concluding that Sash had committed the two violations. Id. On September 25, 2006, Judge Casey sentenced Sash to twenty-four months in prison and twelve months of supervised release. United States v. Sash, 02 Cr. 1519 (S.D.N.Y. 2002) (Docket Entry 73).

B. Procedural History

Upon his release from prison in late 2007, Sash moved, pursuant to Federal Rule of Criminal Procedure 41(g), for the return of his property seized in 2001, 2002, and 2006. The property in possession [*6] of the Probation Office generally includes law enforcement pins, tie clips, uniforms (including clothing), money clips, badges, utility belts, DVDs, fake ammunition, fake ammunition magazines, and fake firearms. (Merrigan Decl. Ex. A (full catalog of items); Arce Decl. P 5). The property in possession of the NYPD Property Clerk generally includes thousands of NYPD badges, hundreds of other badges, thousands of molds for producing NYPD badges, police shields and shield components, ten fake firearms, a variety of government identification cards and identification documents, two police vehicle identification plaques, assorted police paraphernalia, business and personal records, a computer along with parts and hardware, and $ 869 in United States currency. (Weir Decl. Ex. C (full catalog of items)).
 

On February 5, 2009, Sash filed an amended complaint, full of elaborate conspiracy theories as to how he was "persecuted" by the City and Federal Defendants for his "legitimate" badge-making business. The complaint cast aspersions not only on the Assistant United States Attorney who prosecuted Sash, but also the late Judge Casey. (Compl, at 11 ("The Pro-Se Plaintiff appealed but the appeal was allegedly not filed due to the clandestine orders and interference of Judge Casey."))."
 

We don't understand why, but in Hashmi v Messiha ;  2009 NY Slip Op 06665 ; Decided on September 22, 2009 ;  Appellate Division, Second Department  the court places great weight on a mix-up between brothers.  The basic claim is that plaintiff asked his attorneys to make a motion to dismiss would undoubtedly be successful.  They didn't do it as quickly as he would have liked.  Here's the story: 

"almost immediately after the appellant was retained, but prior to November 7, 2005, the individual plaintiff, Imaduddin Syed Hashmi (hereinafter Hashmi) requested that Patricia E. Permakoff, the attorney assigned by the appellant to defend him, make a motion to dismiss the complaint in the medical malpractice action insofar as asserted against him on the ground that he never physically worked at the Hospital, but she allegedly refused to do so. Significantly, Hashmi does not deny that he was aware, prior to consulting with Permakoff, that his brother, Kabeerudin Hashmi, was the physician who was actually present at the Hospital and treated Sahar, but that he did not inform her of that fact.
 

On November 7, 2005, approximately three weeks after the appellant assumed Hashmi's defense in the medical malpractice action, the defendant New York Post published an article identifying Hashmi as the "Death Sentence Doc" in the underlying malpractice action.

Apparently the brother question was insufficient for the Appellate Division:

"The plaintiffs' mere conclusory allegations as to Hashmi's requests that Permakoff take certain actions, together with their failure to allege any knowledge by the appellant that the New York Post planned to publish an article in connection with this matter and their failure to immediately inform the appellant that it was Hashmi's brother, Kabeerudin Hashmi, who was actually the physician present in the Hospital when Sahar was examined and treated, render the allegations in the complaint conclusory and speculative insofar as asserted against the appellant. The allegations are thus insufficient, as a matter of law, to show that the plaintiffs have a cause of action sounding in legal malpractice. Accordingly, the Supreme Court should have granted the appellant's motion to dismiss the complaint insofar as asserted against it (see Wald v Berwitz, 62 AD3d 786; Riback v Margulis, 43 AD3d 1023; Hartman v Morganstern, 28 AD3d at 424).

Moreover, in any event, the plaintiffs' allegations as to the consequences and damages flowing from the appellant's alleged failure to accede to Hashmi's request that Permakoff immediately move to dismiss the complaint in the medical malpractice action are also too speculative to permit a trier of fact to find that such failure caused "actual and ascertainable damages" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442) to them. "

In Berry v Utica Natl. Ins. Group ;2009 NY Slip Op 06935 ; Decided on October 2, 2009 ;Appellate Division, Fourth Department we see a situation in which plaintiff was suing Utica National Insurance Group and evidently there was communication between plaintiff and the defendant law firm.  "evidence that plaintiff contacted defendant concerning his dispute with Utica National does not establish the existence of an attorney-client relationship absent further evidence of an "explicit undertaking [by defendant] to perform a specific task" (Wei Cheng Chang v Pi, 288 AD2d 378, 380, lv denied 99 NY2d 501; see McGlynn v Gurda, 184 AD2d 980, appeal dismissed and lv denied 80 NY2d 988).

How do these situations arise?  Generally, there are telephone calls, and even letters between the attorneys and the plaintiff over starting a law suit.  We cannot say what the evidence in this case was, but in typical cases, either the attorney takes on tasks 1,2,3 but not 4 (where 4 is the case sued upon), or there are "agreements to agree" over a retainer agreement that never jell.

One solution that is raised in almost every advice article for attorneys is a retention/no retention letter that states affirmatively, for example, that "we are not retained nor will we be representing you in the -______________ case.

Yesterday, we started to discuss  Waggoner v. Caruso 2009 NY Slip Op 06739 Decided on September 29, 2009 ; Appellate Division, First Department ; (DeGrasse, J.)

Today we discusse continuous representation, which, in this form, is a question of first impresssion, an issue taken up directly by Justice DeGrasse in the Appellate Division order:
 

"Although we affirm Supreme Court's order, we do not do so on the ground that plaintiffs' legal malpractice claim against Pillsbury is time-barred. A legal malpractice action must be commenced within three years of accrual (CPLR 214[6], 203[a]). Accrual occurs when the malpractice is committed (Shumsky v Eisenstein, 96 NY2d 164, 166 [2001]). In this case, plaintiffs' malpractice claim against Pillsbury accrued nearly six years before this action was commenced. Under the doctrine of continuous representation, however, the statute of limitations is tolled while representation on the same matter in which the malpractice is alleged is ongoing (see Glamm v Allen, 57 NY2d 87 [1982]). The 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 (see id. at 94). In rendering its decision, Supreme Court ruled that the statute of limitations was not tolled as to Pillsbury because it ceased representing plaintiff in January 2002 when Caruso left the firm and took plaintiffs' case with him. In HNH Intl., Ltd. v Pryor Cashman Sherman & Flynn LLP (63 AD3d 534 [2009]), this Court has since held that the statute was tolled as to a malpractice claim against a law firm because the attorneys who handled the case continued to represent the plaintiffs in the same matter, albeit at different law firms. Guided by this precedent, we now hold that the statute of limitations was tolled by the doctrine of continuous representation during the time that Caruso represented plaintiffs in the underlying matter while he was a partner at Chadbourne and Bracewell.

Sound policy considerations also support the tolling of the statute of limitations with respect to the legal malpractice claim against Pillsbury. Any suit brought by plaintiffs against Pillsbury would have been based upon Caruso's acts of malpractice. Caruso would have thereby been exposed to Pillsbury's potential claims for contribution or indemnification. As noted by the [*5]Court of Appeals in Glamm, a person cannot be expected to jeopardize a relationship with the attorney handling his or her case during the period that the attorney continues to represent him (57 NY2d at 94). An attorney-client relationship would certainly be jeopardized by a client's allegation that his or her attorney committed malpractice while representing the client. Beal Bank, SSB v Arter & Hadden, LLP (42 Cal 4th 503, 167 P3d 666 [2007]), a case defendants cite, is distinguishable because it involves the interpretation of a California statute that codifies the continuous representation doctrine. New York does not have a similar statute.

Accordingly, the order of Supreme Court, New York County (Bernard J. Fried, J.), entered September 11, 2008, which granted defendants' motion to dismiss the complaint pursuant to CPLR 3211, should be affirmed, with costs. "

This is a Politico - A List legal malpractice case.  In Waggoner v. Caruso   2009 NY Slip Op 06739 Decided on September 29, 2009 ; Appellate Division, First Department ; (DeGrasse, J.) we see some of the nations biggest names.

Besides being about a $ 10 Million loss, the players are all very recognizable.  For Plaintiff, Helms & Greene along with Asa Hutchinson [former Representative (R-AK), former US Attorney, Former DEA Administrator, House Manager of the impeachment case and Venable LLP..  For Defendants, Bracewell & Giuliani, Pillsbury Winthrop,  Patterson Belknap and Chadbourne & Parke. 

After dismissal in Supreme Court  this case then went to the First Department.  The original  decision was by Justice Fried, There were four causes of action:  malpractice, breach of fiduciary duty, fraud and conspiracy to commit fraud.  On the malpractice portion, Pillsbury argued that no court in New York has ever addressed the issue of applying the continuous representation doctrine to the former firm of an attorney who left that firm and took the client with him. 

Supreme Court went on to discuss the breach of Fiduciary duty claim, citing Weil Gotschal & Manges LLP v, Fashion Boutique of Short Hills, Inc., 10 AD3d 267 (1st Dept, 2004). Supreme Court found that plaintiff must prove the existence of a fiduciary relationship and a breach of the duty imposed by such a relationship that  directly caused actual damages.  "Where the only actual damage alleged is the value of a lost claim, a plaintiff  client must prove that he or she would have prevailed in the underlying action but for the attorney's conduct.  In other words, as in a malpractice claim, the plaintiff must meet the case within a case requirement."

More tomorrow

Justice Judith Gische of Supreme Court, New York County presents a primer on attorney fee litigation and the disposition of counterclaims for legal malpractice in Hurley v. Bulah Church of God in Christ Jesus, Inc.  In this case the Church had gone through some hard times.  A pastor was accused of financial wrongdoing, and the Church was in Bankruptcy Court for taxes and other debts.  Attorney was retained, and worked on the case in what turns out to be an admirable fashion.  When the Bankruptcy was winding up, leadership of the Church changed, and he was no longer so admired there.  Effect?  The Bankruptcy court approved fees, and he was paid.  Nevertheless, there were post-discharge work and fees, and this dispute in state court followed.

Read for the excellent description of why and how an attorney is due fees. "an attorney who is discharged by a client for cause has no right to compensation or a retaining lien, notwithstanding a specific retainer agreement.  Teichner by Teichner v. W & J Holsteins, Inc., 64 NY2d 977 (1985).    On this motion plaintiff has successfully established that he: 1) owed unpaid legal fees; 2) was not discharged for cause, but withdraw as counsel with court approval; 3) deposited money into his attorney escrow account to be applied to post closing matters, like distribution of money to creditors, etc; and 4) Deacon Roberts was authorized to attend to the church's financial matters with respect to the reorganization.  Thus, plaintiff has proved he is owed unpaid legal fees and other fees."

Today's NYLJ features an article by Marcia Coyle on a series of cases coming up before the US Supreme Court.  Of the 6 cases to be heard [almost triple the usual number] at least four are legal malpractice scenario:  Wood v. Allen  is a death penalty case in Alabama in which a newly admitted attorney failed to investigate mental deficiency of his client in the death penalty phase.  The second case, Padilla v. Kentucky [see article for briefs] concerns deportation consequences and lack of  advice in taking a criminal plea,  The fourth case is described as follows:  "Pottawattamie v, McGhee, in which two Iowa prosecutors, who fabricated evidence and used it in the murder trial of two men, seek immunity from a civil rights damages suit by the wrongfully convicted men. 

Lastly is Milavetz, Gallop & Milavetz v. United States [briefs in the article] on whether attorneys are properly subject to the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act.  Are attorneys required to be part of the "debt relief agencies" and may they properly be prohibited from advising clients "to incur more debt in contemplation of bankruptcy."

We end this week with a look at a huge legal malpractice action just brought against Greenberg Traurig LLP, based upon patent work, and a more than $1 million judgment entered against their client.  Widely reported yesterday, the complaint was set forth in the NYLJ.  What is it about?

The complaint alleges that defendants Sutton and predecessors had handled the IP and patent work for Leviton Manufacturing Co. and with a former partner, had handled the Leviton work for 35+ years.  Leviton holds more than 800 patents in the electrical and electronic wiring field.

It is alleged that problems arose in the patent applications for a Ground Fault Circuit interruption device which was the mainstay of the Leviton company.  More problems followed, and it is alleged that Greenberg Traurig failed to make proper disclosures to the US Patent office.

Litigation with Shanghai Meihao Electric Inc then started and went badly.  It was argued that "inequitable conduct" by Greenberg Traurig might invalidate and make unenforceable the patent.  US District court agreed and found that GT had intended to deceive the PTO.

This led to sanctions in excess of $ 1 Million, along with attorney fees. This litigation ensues.  Of interest will be the Breach of Fiduciary Duty cause of action.  Breach of Fiduciary Duty, best illustrated by the Ulico v. Wilson Elser case, stands for a claim of damages, not for malpractice, but for billing, and quasi-fraudulent activity.  Damages generally are the return of fees, and re-imbursement of sanctions and attorney fees to others.  Beyond the Breadh of Fiduciary Duty is a legal malpractice for a wide variety of patent application mistakes.

Here is how a borrowing statute affects litigation and why a Pennsylvania statute of limitations applies to New York litigation.  CPLR 202 requires that when a nonresident sues on a cause of action accruing outside New York, CPLR 202 requires the cause of action to be timely under the limitations periods of both New York and the jurisdiction where the cause of action accrued.   "This prevents nonresidents from shopping in New York for a favorable Statute of Limitations." Global Financial Corp v. Triarc, 93 NY2d 525 (1999).

In Merritt v. Blumenthal, Supreme Court, New York County, Fried, J. we find:

" New York's borrowing statute, CPLR §202, applies to determine the statute of limitations that governs the malpractice and Judiciary Code claims at issue here. The parties' dispute regards the outcome of the application of CPLR §202. Specifically, Defendants contend that proper application CPLR §202 requires that the claims in this case be subject to the Pennsylvania statute of limitations, whereas Plaintiff argues that analysis under CPLR §202 leads to the conclusion that either the Delaware of New York statute of limitations applies. Under the shorter Pennsylvania statute of limitations, Plaintiff's claims would be time-barred. They would still be viable under the New York or Delaware statutes.
 

"This action arises out of Plaintiff's failed business relationship with a former client of Defendant Michael V. Blumenthal, Esq., involving investments in real estate and race horses. Plaintiffs' allegations can be characterized as (1) claiming that Mr. Blumenthal committed malpractice against Plaintiff in the course of his involvement in the business transactions and subsequent litigation between Plaintiff and Mr. Blumenthal's then-client, Ira Russack, and (2) claiming that Defendant violated New York Judiciary Code §487 by offering false testimony when called as a fact witness in the litigation between Plaintiff and Mr. Russack. Defendants Mr. Blumenthal and his former law firms, Brown Raysman Millstein Felder & Steiner LLP and Thelen LLP (collectively, Defendants) move to dismiss on the grounds that Plaintiff's claims are time-barred and, additionally, that the Complaint does not state a cause of action under New York Judiciary Code §487. For the reasons stated below, Defendants' motion is granted."
 

Landlord hires big-time Landlord-Tenant attorneys in New York City, and expect that the attorneys are in fact bringing a series of eviction proceedings.  This case alleges that they did not, yet charged fees, and misled the client.  What is a client to do?  In this instance they sued for legal malpractice, breach of fiduciary duty, fraud, breach of contract, etc.  Justice Joan Madden of Supreme Court, New York County decided a CPLR 3211 motion to dismiss in Cayuga Capital Mgt. LLC v, Borah Goldstein.

The fraudulent inducement, fraudulent misrepresentation and negligence claims were all trimmed as duplicitive of a potential legal malpractice case. Justice Madden reasoned that they were based upon the same facts, and sought the same damages, and thus were duplicates of the potential legal malpractice.

More interesting was plaintiff's invocation of Ulico v. Wilson Elser, 56 AD1 (1st Dept, 2008),  That case has been the center of a growing number of "breach of fiduciary duty" cases, and supports a claim for such a breach.  Here, in a footnote, Justice Madden disposes of reliance upon Ulico.

The legal malpractice action was dismissed without prejudice, allowing plaintiff to amend and demonstrate the "but for" aspects of the eviction cases.  Presumably, if the evictions are now in process, claims for damage will be limited to the delays, and not for a permanent loss of the ability to evict.

Were one to read each of the 150+ legal malpractice cases decisions filed each year, one would see a wide range of attorney-client problems.  Some are frivolous and some very serious.  This case, DAVID GOLDSTEIN, Plaintiffs, - against - ALLEN S. GOLD and LAW OFFICES OF ALLEN S. GOLD, Defendants;No. 06 CV 6707 (ERK)(VVP); UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 78822; September 1, 2009 is remarkable for the "brazen" behavior by the attorney.  Judge Korman disposes of a motion for summary judgment in this decision.

"Plaintiff further alleges that, in early 2001, defendant informed him that he filed a complaint against Mass Mutual ("2001 action"), "seeking the relief [plaintiff] had requested." (Id. P 8). This was not true - defendant never filed the 2001 action. (Id. P 9.) Nevertheless, from 2001 to 2005, in response to plaintiff's repeated inquires as to the status of the 2001 action (id. PP 10-12), defendant led plaintiff to believe that he was vigorously litigating the 2001 action against Mass Mutual (id. PP 8, 13-22).

Although defendant denies telling plaintiff that he filed a lawsuit in 2001 (Niehaus Aff., Ex. B, Answer P 22), the record does not support this assertion. Indeed, between November 2, 2001, and August 6, 2006, plaintiff sent defendant at least twenty-three emails and letters that referenced the 2001 action. (See Pl.'s Aff. Exs. B-U, W, Z, AA.) It is clear from this correspondence that plaintiff believed defendant had not simply filed the 2001 action but was aggressively litigating it on his behalf. (See, e.g., id., Ex. E, letter, dated February 24, 2002 ("What is [*5] your legal opinion on how [Mass Mutual's] response to your serving them with the order to show cause will impact my '3 part lawsuit' commenced against them?"); id., Ex. F, letter, dated March 27, 2002 ("is there any additional information on the status (date) for the 'Preliminary Conference' for the 3-part lawsuit that you commenced on my behalf?"); id., Ex. N, letter, dated December 27, 2003 ("thank god the court has ordered a January 20, 2004 status conference; with the intent being; as I understand it; to get this case on a tight schedule in order to bring it to completion.").) Plaintiff alleges that "at no point did Mr. Gold ever state that no lawsuit had been filed" (Pl.'s Aff. P 26), nor did he "ever question what lawsuit [plaintiff] was referring to in any of the above correspondence" (Pl.'s Aff. P 27). On the contrary, plaintiff "specifically recall[s defendant] informing [him] that he had engaged in extensive discovery with MassMutual" (id. P 16), "that MassMutual was engaged in delaying tactics to slow the case down" (id. P 17), "that he had responded to numerous sets of interrogatories propounded by MassMutual" (id. P 18), "that a 'Preliminary Conference' had been scheduled [*6] . . . for July 23, 2002" (id. P 20), and "that a 'Status Conference' had been scheduled . . . for January 20, 2004" (id. P 21).
 

The dismissal of the 2005 action "shocked" plaintiff, particularly the Supreme Court's findings "regarding my not 'interposing' claims three through six b[y] the end of 2001", because he believed that defendant had "interposed" these claims in the 2001 action. (Id., Ex. T.) Indeed, plaintiff was so convinced that the Supreme [*11] Court had erred in finding his tort claims time-barred that he decided to appeal the decision. (See id., Ex. HH.) In an email to defendant on December 7, 2005, shortly before defendant filed the appeal, plaintiff wrote: "I am sure the appellate guy you met with on Monday had the opportunity to realize that [the Supreme Court Justice']s finding that I had not "'interpos[ed]' claims three through six b[y] the end of 2001 w[as] outright [i]ncorrect." (Id., Ex. T (emphasis in original).) Plaintiff believed that all the documents defendant told him he had filed in the 2001 action were "sit[ting] within the 'sealed 100545/01' part" of the file for the 2005 action. (Id.)

Defendant never disabused plaintiff of these views. On the contrary, in response to plaintiff's numerous requests for a "copy of the originally filed, 'interposed' . . . claims that [the Supreme Court Justice] has apparently not had an opportunity to read" (id., Ex. T; see also id., Exs. U, W, X, Z), defendant fabricated documents and provided them to plaintiff as evidence that he had filed the 2001 action. (Pl.'s Aff. PP 28a-d.) Indeed, defendant produced a summons and verified complaint, dated February 12, 2001, which bore [*12] no index number (id., Ex. CC); a check, dated February 1, 2001, made out to the Queens County Clerk (id., Ex. DD); and an unsigned Notice of Deposition and Verified Answer, both dated April 27, 2001 and bearing the Index No. 10054/01, which defendant represented had been filed and served by Mass Mutual's counsel, Michael Yoeli of the law firm Assail & Yoeli, LLP (id., Ex. EE)."
 

"Each of plaintiff's claims -- for fraud, attorney malpractice, breach of contract, attorney misconduct under New York Judiciary Law § 487 and intentional infliction of emotional distress -- is based on defendant's alleged failure to file the 2001 action and his continued misrepresentation that he had not only filed the action but was vigorously litigating it. Moreover, defendant concedes that "[t]here is no doubt that the counterclaim [for attorney's fees] arises under the same circumstances and facts that form the basis for the Plaintiff's claims." (Niehaus Aff., Ex. F, at 5.) Defendant does not contest plaintiff's allegations that he failed to file the 2001 action or that he "deceived [plaintiff] about commencing an action in 2001. . . ." (Def.'s Reply Mem. at 5.) Instead, he argues that plaintiff's claims fail, because "plaintiff simply cannot establish damages" (Def. Mem. 2), and that he entitled to summary [*15] judgment on his counterclaim, because "plaintiff's account was in arrears at the time of his termination" (Def.'s Reply Mem. at 2).

As to the fraud, breach of contract, attorney misconduct and intentional infliction of emotional distress claims, defendant argues merely that it is "indisputable" that plaintiff cannot establish damages. (Def.'s Mem. at 2.) Defendant, however, does not offer any evidence nor point to a single material fact that supports this "indisputable" conclusion. The facts material to plaintiff's alleged damages are (1) whether he "paid [defendant] tens of thousands of dollars based on [defendant]'s false representation that the money was paying for an ongoing litigation [the 2001 action]" (Pl.'s Opp'n Mem. 8); (2) whether the 2005 action was dismissed as untimely due to defendant's failure to interpose the tort claims by the end of 2001 (Pl.'s Aff., Ex. GG); and (3) whether plaintiff "suffer[ed] severe-mental trauma as a result of [defendant]'s deliberate and knowing actions in . . . fraudulently leading [him] to believe that the MassMutual situation was being addressed" (Pl.'s Opp'n Mem. at 9)."
 

When one files a petition in bankruptcy, ownership of assets is upended.  Some if not all assets of the debtor become part of the estate, and will be used to pay creditors.  A current cause of action in legal malpractice, even if not reduced to a law suit is one such asset.  What happens if the negligence is unearthed in the bankruptcy proceedings?  Is it the property of the estate or that of the debtors; is is pre-petition or post-petition.

in IN RE: ANNE DE HERTOGH and PETER DE HERTOGH, DEBTOR;  CASE NO. 04-22006 (ASD), CHAPTER 7; UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF CONNECTICUT;2009 Bankr. LEXIS 2466;August 28, 2009 we see the following:

"The major point of contention in the present proceeding concerns whether the Malpractice Action is property of the estate or of the Debtors. Courts have taken several approaches to this question. Some, relying on Butner v. United States, 440 U.S. 48, 99 S.Ct. 914, 59 L. Ed. 2d 136 (1979), and the language of Section 541, have looked to whether, as of the petition date, a cause of action had accrued under applicable state law. See, e.g. Swift v. Seidler (In re Swift), 198 B.R. 927 (Bankr. W.D.Tex. 1996) (under Texas law, cause of action for legal malpractice causing loss of an exemption could only accrue post-petition and was therefore not property of the estate); Holstein v. Knopfler (In re Holstein), 321 B.R. 229 (Bankr. N.D. III. 2005) (cause of action for legal malpractice allegedly causing denial of discharge accrued post-petition; was property of debtor, not property of estate); But see Helbling v. Josselson (In re Almasri), 378 B.R. 550 (Bankr. N.D. Ohio 2007) (concluding that, under Ohio law, a malpractice claim that accrued at the time petition was filed rather than post-petition when discharge was revoked; held property of estate). Other courts, relying on Segal v. Rochelle, 382 U.S. 375, 380, 86 S.Ct. 511, 515, 15 L. Ed. 2d 428 (1966) [*8] considered whether a cause of action that accrued post-petition was nevertheless "sufficiently rooted in the pre-bankruptcy past and so little entangled with the bankrupt's ability to make an unencumbered fresh start that it should be regarded as 'property' under § 70(a)(5) [of the former Bankruptcy Act]." See, e.g. Casey v. Grasso (In re Riccitelli), 320 B.R. 483, 491-92 (Bankr. D.Mass. 2005) (malpractice claim alleging loss of homestead exemption that accrued post-petition was not "sufficiently rooted in the pre-bankruptcy past" to become property of the estate); But see Wheeler v. Magdovitz (In re Wheeler), 137 F.3d 299 (5th Cir. 1998) (malpractice claim for allegedly causing debtor's conviction for bankruptcy fraud held property of estate even though cause of action did not accrue under Mississippi law until post-petition); Rich v. Strada Design Associates, Inc. (In re Strada Design Associates, Inc.), 326 B.R. 229, 236 (Bankr. S.D.N.Y. 2005) (concluding that claim that attorney filed petition under wrong chapter was property of estate; held that "a cause of action will be 'property of the estate' if it has sufficient roots in the debtor's pre-bankruptcy activities and is not entangled [*9] with the debtor's 'fresh start,' regardless of when the claim accrues under state law.").

The Court finds the matter best resolved by direct reference to Bankruptcy Code Sections 541(a)(1) and § 541(a)(7), and the property interests created by state law. Such an approach, the same as is used to determine whether any other interest in property becomes property of the estate, is most consistent with the language, precedents and policy of the Bankruptcy Code. See, e.g. Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1093 (2d Cir. 1995) ("Whether the rights belong to the debtor . . . is a question of state law. Thus, the trustee stands in the shoes of the debtors, and can only maintain those actions that the debtors could have brought prior to the bankruptcy proceedings.") (citations and internal quotation marks omitted). Accordingly, the Court's analysis focuses on when (pre- or post-petition) and to whom (the estate or the post-petition debtor) a legally cognizable interest in the cause of action arose under the applicable state law.

HN2The filing of a Chapter 7 petition creates a bankruptcy estate encompassing "all legal or equitable interests of the debtor in property as of the commencement [*10] of the case," 11 U.S.C. § 541(a)(1), including any causes of action possessed by the debtor. Seward v. Devine, 888 F.2d 957, 963 (2d Cir. 1989). "Property interests are created and defined by state law. Unless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding." Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 918, 59 L. Ed. 2d 136 (1979).
HN3The federal bankruptcy code broadly defines property of a debtor's estate as including "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1) (1988). Within this definition of a debtor's property fall the debtor's rights of action. . . .

HN4Although federal bankruptcy law determines the outer boundary of what may constitute property of the estate, state law determines the "nature of a debtor's interest" in a given item. Therefore, whereas federal law instructs us that [an action] may constitute property of [the Debtors'] estate, state law determines whether [the Debtors'] interest in the cause of action is sufficient to confer on the estate a property right in [*11] the action."
 

Since the Court of Appeals decided Amalfitano v. Rosenberg  we have seen an upswing in reported successful Judiciary Law 487 cases.  Here in Moormann v Hoerger ;2009 NY Slip Op 06518 ;Decided on September 15, 2009 ;Appellate Division, Second Department plaintiff loses legal malpractice, but avoids summary judgment on the Judiciary Law cause of action. 

Plaintiff was convicted of DWI (he blew a .30) and the DA moved to forfeit his car.  Attorneys were retained to defend criminal action and to defend the forfeiture.  Here is the shocking testimony which supported the Judicary Law case and the court's analysis.  Note that there seems to have been a single instance of deceit.

"In this regard, the defendant sent an affidavit to the plaintiff to sign in August 2004, allegedly related to the forfeiture action. The associate who sent the affidavit and the cover letter admitted, at his deposition, that he knew at the time that the default judgment had been entered and there was no possibility that the plaintiff could retrieve his vehicle, but he did not so inform the plaintiff. Eventually, the plaintiff learned through other means that the default judgment had been entered and his vehicle had been auctioned. [*2]

The Supreme Court properly granted that branch of the defendant's motion which was for summary judgment dismissing the causes of action alleging legal malpractice. The defendant established that the plaintiff would be unable to prove that he would have been successful in the forfeiture action but for the alleged negligence (see Simmons v Edelstein, 32 AD3d 464, 465; Lichtenstein v Barenbaum, 23 AD3d 440; Edwards v Haas, Greenstein, Samson, Cohen & Gerstein, P.C., 17 AD3d 517, 519). In opposition, the plaintiff failed to raise a triable issue of fact.

In addition, the defendant established, prima facie, its entitlement to judgment as a matter of law dismissing the cause of action alleging fraud, as that cause of action was not pleaded with the specificity required under CPLR 3016(b) (see Dumas v Fiorito, 13 AD3d 332, 333).

The court erred, however, in dismissing, as duplicative of the causes of action alleging legal malpractice, the cause of action alleging violation of Judiciary Law § 487. A violation of Judiciary Law § 487 requires an intent to deceive (see Judiciary Law § 487), whereas a legal malpractice claim is based on negligent conduct (see Simmons v Edelstein, 32 AD3d at 465; Edwards v Haas, Greenstein, Samson, Cohen & Gerstein, P.C., 17 AD3d at 519). Furthermore, in opposition to the defendant's establishment, prima facie, of its entitlement to judgment as a matter of law as to this cause of action, the plaintiff raised a triable issue of fact as to whether the defendant intentionally deceived him (cf. Izko Sportswear Co., Inc. v Flaum, 25 AD3d 534, 537; Knecht v Tusa, 15 AD3d 626, 627). "

In Tatum v. Oberg; UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT;2009 U.S. Dist. LEXIS 82208;September 3, 2009 we see a spirited discussion of the overlap between fraud claims and negligence, as well as a discussion of the overlap between breach of contact claims and negligence.  It is a 2d Circuit case decided on Connecticut law, but the basic premises are similar.

"Oberg and FOMH first move to dismiss Tatum's fraud claim. Under Connecticut law, a fraud claim is established if "(1) a false representation was made as a statement of fact; (2) the statement was untrue and known to be so by its maker; (3) the statement was made with the intent of inducing reliance thereon; and (4) the other party relied on the statement to his detriment." Weinstein v. Weinstein, 275 Conn. 671, 685, 882 A.2d 53 (Conn. 2005). In this case, Tatum alleges that Oberg and FOMH committed fraud because Oberg made numerous false statements of fact related to Tatum's dissolution action (see, supra section II); Oberg knew such statements to be untrue; Oberg intended to induce Tatum to rely [*9] on her statements; and Tatum relied on Oberg's statements to his detriment. ""It is also worth noting that Tatum does not specify facts in support of his assertion that Oberg knew her allegedly fraudulent statements to be false and made them for the purpose of inducing Tatum to rely on them. While Rule 9(b) states that the scienter element of fraud "may be alleged generally," pleadings with respect to scienter must still comply with the requirements of Rule 8(a)(2). See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1954, 173 L. Ed. 2d 868 (2009). As the Supreme Court has held, a pleading offering [*11] merely "labels and conclusions" or "a formulaic recitation of the elements of a cause of action" is insufficient to satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555. In this case, Tatum's Amended Complaint contains merely a bare-bones assertion of scienter. It alleges no "facts that give rise to a strong inference of fraudulent intent," as is required by the law of this Circuit. Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir. 1994).
 

"Under Connecticut law, the elements of a breach of contract are "the formation of an agreement, performance by one party, breach of the agreement by the other party and damages." Rosato v. Mascardo, 82 Conn. App. 396, 411, 844 A.2d 893 (Conn. App. Ct. 2004) (quoting Bouchard v. Sundberg, 80 Conn. App. 180, 189, 834 A.2d 744 (Conn. App. Ct. 2003)). In general, a client may sue his or her attorney for either breach of contract, negligence or both. Conn. Educ. Ass'n, Inc. v. Milliman USA, Inc., 105 Conn. App. 446, 458, 938 A.2d 1249 (Conn. App. Ct. 2008). See also Mac's Car City, Inc. v. DeNigris, 18 Conn. App. 525, 529-30, 559 A.2d 712 (Conn. App. Ct. 1989). The court must dismiss a claim for breach of contract, however, if the claim is in fact "a claim that one has breached a standard of care in the language of contract." Caffery v. Stillman, 79 Conn. App. 192, 197, 829 A.2d 881 (Conn. Ct. App. 2003). See also Gazo v. City of Stamford, 255 Conn. 245, 263, 765 A.2d 505 (Conn. 2001) [*13] ("[W]e look beyond the language used in the complaint to determine what the plaintiff really seeks. . . . [P]utting a contract tag on a tort claim will not change its essential character.").

Tatum's breach of contract and malpractice claims are based largely on the same underlying facts. The only difference in this respect is that the malpractice claim, but not the breach of contract claim, rests in part on allegations that Oberg and FOMH "[c]onceal[ed] discovery and/or fail[ed] to obtain discovery that would have alerted Plaintiff to their failure to comply with the standard of care," and "[f]ail[ed] to respond to Plaintiff's request regarding the manner in which the case proceeded." Am. Comp. P 19(f)-19(g). 3 Despite similar factual underpinnings, Tatum asserts that his breach of contract claim derives from Oberg and FOMH's "contractual duty to provide timely and correct legal advice to Plaintiff," and that his malpractice claim derives from the defendants' "duty to provide Plaintiff with professional services equal to the degree of skill and learning commonly applied under the circumstances then and there existing by a prudent member of the legal profession." Am. Comp. PP 18, 18.

"

In Felt v. Van Alstyne we see an interesting real estate-legal malpractice case, one which is, unfortunately, no so uncommon.  Plaintiff owns 51 acres of property in Greene County and wants to sell a portion, 6.1 acres.  The balance of 45 acres or so, which is unimproved, is to be sub-divided and kept.  Defendant attorney is hired to do the closing.

What is a closing?  It is the sale transaction, and the attorney for a party is supposed to make sure that the transaction actually follows the intent of the parties.  Here everything went wrong.  Now, plaintiff, who has sued the buyers in a separate action, must sue the attorney and the title closing company over this mistake:  the deed did not have a description of the premises to be sold attached to it.  Imagine that, the deed simply recited all 51 acres, when in fact only 6 acres were to be sold.

The defense?  That's how it's done here!    The lesson to be taken from this case, is that when plaintiff moves for summary judgment, and includes the affidavit of an expert, defendant better have one too.  The affidavit of co-defendant was simply not enough.  Result?  Plaintiff is granted partial summary judgment with the damages to await the outcome of another trial, presumably against the buyer.

In law, sometimes a single case decision opens the flood gates.   This is an oft-heard argument, with a rarely seen result, yet in legal malpractice the Ulico v. Wilson Elser, 56 AD3d 1 (1st Dept, 2008) case seems to have accomplished the re-awakening of "breach of fiduciary duty."

As an example, see Colucci v. Arisohn, 2009 NY Slip Op 32053(U).  There the claim was that plaintiff had been involved in a medical billing scheme which went into the 70+ million range, and involved Beth Israel Hospital.  He hired attorneys who at the same time were representing another plaintiff in a qui tam whistle blower action.  The plaintiff [relator] in such a case may reap a significant reward, and here, a Mr. Perez did.

Colucci ended up pleading guilty to Grand Larceny and settling a civil suit as a defendant.  He felt that his own qui tam information was taken from him by the attorneys and used in the Perez case, all to the attorney's benefit.

The interesting aspect of this case is that the legal malpractice case was dismissed on the basis that a criminal defendant who cannot demonstrate actual innocence may not sue for legal malpractice.  Plaintiff's Judiciary Law section 487 case was dismissed as too similar to the legal malpractice case.

The Breach of fiduciary duty matter, however, remains vital, and in the case.  Based upon Ulico the court held:

"The attorney-client relationship imposes on the attorney `the duty to deal fairly, honestly and with undivided loyalty...including maintaining confidentiality, operating competently, safeguarding client property and honoring the client's interests over the lawyers [Matter of Cooperman, 83 NY2d 465 (1994).  Thus any act of disloyalty by counsel will also comprise a breach of the fiduciary duty owed to the client."

"The Labaton Defendants argue that plaintiff's breach of fiduciary duty-based claims (as well as fraud, usurpation of economic opportunity and unjust enrichment claims) should be dismissed because they are duplicitive of plaintiff's malpractice claims.  This argument is rejected."

When practitioners in Legal Malpractice stay in the area long enough, older cases they handled come back to save or haunt them.  A prime example is DeNatale v Santangelo ;  2009 NY Slip Op 06398 ;  Decided on September 8, 2009 ;  Appellate Division, Second Department .  Here the defendant law firm wins dismissal based upon a now well known case.  In that case, defendant attorney lost the motion and the appeal, here, based on the same law, defendant attorney wins. 
 

The case in common is Barnett v Schwartz ;2007 NY Slip Op 09712 [47 AD3d 197] .  Important language there:  "The elements to be proved in a legal malpractice action have been subjected to various formulations. Thus, while it is clear that a plaintiff-client must prove negligence (i.e., that the defendant-attorney failed to exercise that degree of care, skill, and diligence commonly possessed and exercised by members of the legal community), some cases hold that the negligence must be "the" proximate cause of damages (Britt v Legal Aid Socy., 95 NY2d 443, 446 [2000]; see e.g. Kleeman v Rheingold, 81 NY2d 270 [1993]; Caruso, Caruso & Branda, P.C. v Hirsch, 41 AD3d 407 [2007]; Cohen v Wallace & Minchenberg, 39 AD3d 691 [2007]; Cummings v Donovan, 36 AD3d 648 [2007]; Kotzian v McCarthy, 36 AD3d 863 [2007]), while others hold that it must be "a" proximate cause of damages (Bauza v Livington, 40 AD3d 791, 793 [2007]; see e.g. Moran v McCarthy, Safrath & Carbone, P.C., 31 AD3d 725 [2006]; Terio v Spodek, 25 AD3d 781 [2006]; Pistilli v Gandin, 10 AD3d 353 [2004]). There are also cases from this Court requiring the damages to be a "direct result" of the negligence (Caruso, Caruso & Branda, P.C. v Hirsch, 41 AD3d 407, 409 [2007]; Kotzian v McCarthy, 36 AD3d 863 [2007]; Moran v McCarthy, Safrath & Carbone, P.C., 31 AD3d 725 [2006]). In the main, the cases from the Court of Appeals, including the most recent, do not expressly require that the negligence be either "the" or "a" proximate cause of damages, but require proof that, "but for" the negligence of the defendant-attorney, the plaintiff-client would have prevailed in the underlying action (in a classic lawsuit-within-a-lawsuit scenario) or would not have incurred damages (in an action alleging negligent advice, etc.) (see e.g. Leder v Spiegel, 9 NY3d 836 [2007]; Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438 [2007]; AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428 [2007]; Davis v Klein, 88 NY2d 1008 [1996]; Carmel v Lunney, 70 NY2d 169 [1987]). The defendants here, while not expressly describing the difference between proximate and "but for" causation, argue that the latter requires a greater, more direct degree of causation. However, we find no substantive{**47 AD3d at 204} import to the variations in the formulations discussed above, and hold that a plaintiff-client in a legal malpractice action need prove only that the defendant-attorney's negligence was a proximate cause of damages. "

"Moreover, our reading of the case law does not reveal that a heightened standard for causation is actually being applied in legal malpractice cases. Rather, all results can be explained by application of general principles of proximate cause.""In sum, regardless of the formulation employed, a plaintiff in a legal malpractice action need prove only that the defendant-attorney's negligence was a proximate cause of damages. "

Continuing from yesterday, what is the relationship between legal malpractice litigation and breach of fiduciary duty?  One reflexive answer is that the broad category of legal malpractice litigation, which requires a demonstration of deviation, proximate cause, "but for" causation and damages contains breach of fiduciary duty as a subset.  Often, alternative claims of breach of fiduciary duty are routinely dismissed as included in , or "coextensive" with the legal malpractice claims.

In one species of breach of fiduciary duty area, there is divergence.  Here, plaintiff seeks disgorgement or reimbursement of legal fees paid to the attorney on the theory that there was a fiduciary duty between attorney an client and there was a breach of that duty.  No proof of damages is offered, and none is alleged.  Plaintiff simply wants his fees returned.  Is this proper?

Here is Judge Sweet's reasoning from KIRK , -against-  HEPPT, ESQ., 05 Civ. 9977;UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 80989;September 1, 2009,

"in order to prevail on a cause of action for breach of fiduciary duty in New York, a plaintiff must prove only two elements: (1) the existence of a fiduciary duty between the parties and (2) the breach of that duty by defendant. See January 9, 2008 Opinion at 592. In holding that the Kirks were not required to allege causation, the Court relied on cases from this District, see Official Comm. of Asbestos Claimants of G-l Holding, Inc. v. Heyman, 277 B.R. 20, 37 (S.D.N.Y. 2002) ("Under New York law, the elements of a claim for breach of fiduciary duty are (1) existence of fiduciary relationship and (2) breach of a fiduciary duty."); Schweizer v. Mulvehill, 93 F. Supp. 2d 376, 401 (S.D.N.Y. 2000) ("[A] breach of fiduciary duty may give rise to liability in the absence of damages."), as well as a New York Supreme Court case, Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, et al., 843 N.Y.S.2d 749 (Sup. Ct. 2007).

In Ulico, the New York Supreme Court, New York County, held that unless a legal malpractice claim and a breach of fiduciary duty claim are [*34] "co-extensive," "no proof of damages is required where the remedy that is sought for the breach is forfeiture of compensation." Id. The First Department recently addressed the lower court's application of that "considerably lower standard of recovery" in the breach of fiduciary duty context, clarifying "that to recover under a claim for damages against an attorney arising out of the breach of the attorney's fiduciary duty, the plaintiff must establish the 'but for' element of malpractice, irrespective of how the claim is denominated in the complaint." Ulico Cas. Co. v. Wilson, Elser, Mosokowitz, Edelman & Dicker, 865 N.Y.S.2d 14, 22 (App. Div. 2008) .
 

Sometimes a court's decision will simply tell how the case came out.  Sometimes a decision can teach a lesson; in this case one decision teaches several lessons in Legal Malpractice.  KIRK , -against-  HEPPT,   05 Civ. 9977;UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 80989;September 1, 2009, Decided
by Judge Sweet is one such case. We will look at this case today and tomorrow.

"The Kirks, pro se, filed their complaint against Heppt, Kirk's former attorney, on November 28, 2005, alleging claims for, inter alia, breach of contract, fraudulent misrepresentation, and breach of fiduciary duty arising out of Heppt's representation of Kirk in an action brought by Kirk against his former employer. On October 2, 2003, Kirk filed suit against Schindler in New York State Supreme Court, New York County, asserting causes of action for breach of contract and defamation and seeking a declaratory judgment that Kirk had been constructively discharged by Schindler.

In November 2003, Schindler removed the state court action to federal court on the ground that Kirk's breach of contract claim was preempted by ERISA. At the time, Heppt believed that proceeding in federal court offered certain advantages, namely that the fast pace of litigation there would make it more likely [*9] that Schindler would enter into settlement negotiations."

Issue:  May an attorney hire a contract attorney to work on the case, and bill rates for that contract attorney in excess of the contract attorneys pay?

In January 2004, Heppt hired a contract attorney, Elizabeth Hill ("Hill"), to assist him with Kirk's case. Hill's time was listed on Heppt's invoices beginning with an invoice dated January 31, 2004, identifiable by the use of her initials in the "lawyer" column. According to the Kirks, they did not know that Heppt had been charging them for Hill's time beginning [*15] in January and dispute that Hill's time was readily identifiable. According to the Kirks, Heppt did not obtain their consent to Hill's participation until three months after she began working on the case. The Kirks further allege that they never formally agreed to pay Heppt for Hill's services.According to the Kirks, Heppt "grossly overcharged" them for Hill's work and charged for work performed by Hill for which she was not paid by Heppt."
"The Kirks make the following allegations with respect to their breach of fiduciary duty cause of action: 1) Heppt's hiring of Hill was unauthorized and resulted in inflated fees; 2) the sole purpose of the April 2004 remand motion was to increase fees; 3) Heppt produced incomplete responses to Schindler's summary judgment motion; and 4) Heppt failed to advise Kirk about the limited value of his defamation claim."
 

"Assuming that such conduct on the part of Heppt constituted a breach of his fiduciary duty, the Kirks have not satisfied their burden in pointing to any injuries suffered as a result of such a breach. Beginning in January 2004, Heppt's invoices listed Hill's time and gave a detailed description of the work that she was performing. Kirk then met Hill at Heppt's offices in March 2004, at which time Heppt informed Kirk that he wanted Hill to assist on the case, and Kirk asked Heppt about Hill's billable rate. The Kirks never questioned or objected to Hill's participation, either when they received the invoices in January or when they met Hill in March 2004."

Sometimes we find a stimulating discussion of a principal of legal malpractice in decisions concerning other professions.  In this case Sykes v RFD Third Ave. 1 Assoc., LLC ;2009 NY Slip Op 06387 ;Decided on September 8, 2009 ;Appellate Division, First Department ;Moskowitz, J.  we find a discussion of privity and third-party beneficiary law which informs legal malpractice issues.
 

"Plaintiffs' negligent misrepresentation claim fails to allege a "special relationship," i.e., "a relationship so close
as to approach that of privity" (Parrott v Coopers & Lybrand, 95 NY2d 479, 484 [2000]). The New York Court of Appeals takes a rather cautious approach to determining whether a relationship necessary to support a claim for negligent misrepresentation exists (see Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417, 424 [1989] ["[w]e have defined this duty narrowly, more narrowly than other jurisdictions"]). This narrow approach developed out of concern for the "limitless liability" that could result that otherwise would stop with the contracting parties (Parrott at 483 citing Prudential Ins. Co., v Dewey Ballantine, Bushby, Palmer & Wood, 80 NY2d 377, 382 [1992]; see also Credit Alliance Corp. v Arthur Andersen & Co., 65 NY2d 536, 553 [1985] [explicitly rejecting a rule "permitting recovery by any foreseeable plaintiff"]; Ossining, 73 NY2d at 421 ["[i]n negligent misrepresentation cases especially, what is objectively foreseeable injury may be vast and unbounded, wholly disproportionate to a defendant's undertaking or wrongdoing"]).

Therefore, before a stranger to a contract can claim harm from negligent misrepresentation, there must be: "(1) an awareness by the maker of the statement that it is to be used for a particular purpose; (2) reliance by a known party on the statement in furtherance of that purpose; and (3) some conduct by the maker of the statement linking it to the relying party and evincing its understanding of that reliance" (Parrott, 95 NY2d at 484 [citations omitted]; see also Securities Investor Protection Corp. v BDO Seidman, 95 NY2d 702, 712 [2001] [no privity between SIPC and accountants where accountants had not prepared audit reports for the specific benefit of SIPC, did not send them to SIPC and SIPC never read these reports]). [*4]

Accordingly, we have been circumspect when assessing privity (see e.g. Houbigant, Inc. v Deloitte & Touche, 303 AD2d 92, 94-95 [2003] [accountant's audit "was a task performed pursuant to professional standards applicable in the context of any audit, and was not undertaken pursuant to any duty owed toward [plaintiff]"); LaSalle Natl. Bank v Ernst & Young, 285 AD2d 101, 107-108 [2001] no privity between lender and borrower's accountants where only contact was single phone call]; see also Israel Discount Bank of N.Y. v Miller, Ellin & Co., 277 AD2d 58, 59 [2000]).

"Although this rule first developed in the context of accountant liability, it has applied equally in cases involving other professions" (Parrott, 95 NY2d at 483; see also Ossining at 424 ["[n]or does the rule apply only to accountants"]). This Court too has extended the privity requirements of Parrott beyond
the accountant arena (see e.g. Bri-Den Constr. Co., Inc. v Kappell & Kostow Architects P.C., 56 AD3d 355 [2008], lv denied 12 NY3d 703 [2009] [no privity between architect and bidder]); Point O'Woods Assn. v Those Underwriters at Lloyd's, London subscribing to Certificate No. 6771, 288 AD2d 78, 79 [2001], lv denied 98 NY2d 611 [2002] [no privity between insurance carrier and broker]). "

In "Boglia,  v  Greenberg, et al., ; SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT;2009 NY Slip Op 5278; 63 A.D.3d 973; 882 N.Y.S.2d 215; 2009 N.Y. App. Div. LEXIS 5183  the court writes:

"The client retained the attorneys to represent her in a matrimonial action. After terminating the attorneys' representation, the client settled the underlying action and received a settlement in the amount of $ 200,000. Thereafter, the client sued the attorneys alleging, inter alia, that they negligently advised her of her rights to equitable distribution of the residence, and failed to communicate an offer of settlement to her in the amount of $ 250,000. She also sought to recover legal fees already paid to the attorneys."

"The defendants met their burden of establishing entitlement to judgment as a matter of law by demonstrating that the plaintiff would be unable to prove that, but for the defendants' alleged negligent advice regarding her rights to equitable distribution, she would have prevailed in the underlying action had it proceeded to trial. The plaintiff, in opposition, failed to raise a triable issue of fact. Accordingly, the Supreme Court properly granted that branch of the defendants' cross motion which was for summary judgment dismissing the first cause of action, alleging legal malpractice based upon the defendants' alleged negligent advice regarding her rights to equitable distribution of the [***218] residence, and properly denied that branch of the plaintiff's motion which was for summary judgment on that cause of action (see Oberkirch v Charles G. Eichinger, P.C., 35 AD3d 558, 559, 827 N.Y.S.2d 192).

However, the Supreme Court should have denied that branch of the defendants' cross motion which was for summary judgment dismissing the second cause of action, alleging legal malpractice based upon their alleged failure to convey her former husband's $ 250,000 settlement offer to her, as triable issues of fact exist regarding whether the defendants failed to convey the settlement offer to the plaintiff and whether the plaintiff would have accepted that offer (cf. Bauza v Livington, 40 AD3d "

In MELNICK  v. CARY PRESS,;No 06-CV-6686 (JFB) (ARL);UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 77609; August 28, 2009, Decided  we find an excellent discussion of the rules of attorney fee liens under the Judiciary Law.
 

"Under New York law, an attorney who is discharged is statutorily entitled to a charging lien on any monetary recoveries obtained by the former client in the proceedings in which the attorney had rendered legal services. 1 See N.Y. Judiciary Law § 475. The Second Circuit has [*7] explained the rationale behind the charging lien:
New York's statutory charging lien, see N.Y. Judiciary Law § 475 (McKinney 1983), is a device to protect counsel against "the knavery of his client," whereby through his effort, the attorney acquires an interest in the client's cause of action. In re City of New York, 5 N.Y.2d 300, 307, 184 N.Y.S.2d 585, 157 N.E.2d 587 (1959). The lien is predicated on the idea that the attorney has by his skill and effort obtained the judgment, and hence "should have a lien thereon for his compensation, in analogy to the lien which a mechanic has upon any article which he manufactures." Williams v. Ingersoll, 89 N.Y. 508, 517 (1882).
Butler, Fitzgerald & Potter v. Sequa Corp., 250 F.3d 171, 177 (2d Cir. 2001).

FOOTNOTES

1 A discharged attorney is also entitled to a retaining lien on the former client's papers and property that are in the attorney's possession, under New York common law. See Resolution Trust Corp. v. Elman, 949 F.2d 624, 626 (2d Cir. 1991); see also McDermott v. Great Am. Alliance Ins. Co., No. 5:02 Civ. 0607 (NAM/DEP), 2006 U.S. Dist. LEXIS 52878, 2006 WL 2038452, at *2 (N.D.N.Y. July 18, 2006) ("In New York, an attorney who ceases to represent his or her client but has rendered [*8] services for which payment has not yet been received has two forms of recourse against non-payment, other than commencement of a plenary action -- one derived from the common law [generally referred to as a retaining lien], and the other created by statute [referred to as a charging lien]."). Wagner Davis' assertion of a retaining lien is discussed in connection with plaintiffs' motion to compel infra.

Specifically, Section 475 of the New York Judiciary Law provides:
From 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 verdict, report, determination, decision, judgment or final order in his client's favor, and the proceeds thereof in whatever hands they may come; and the lien cannot be affected by any settlement between the parties before or after judgment, final order or determination. The court upon the petition of the client or attorney may determine and enforce the lien.
N.Y. Judiciary Law § 475. The Second Circuit has made clear that Section 475 governs attorneys' charging liens in federal courts sitting in New York, and such liens are "enforceable in federal courts in [*9] accordance with its interpretation by New York courts." Itar-Tass Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442, 449 (2d Cir. 1998) (internal quotation marks and citations omitted). In order to establish a lien under Section 475, "there must be asserted a claim which can eventuate in there being proceeds payable to, or assets recoverable by, the client as a result of the efforts of the attorney." Rosewood Apartments Corp. v. Perpignano, No. 99 Civ. 4226 (NRB), 2005 U.S. Dist. LEXIS 8396, 2005 WL 1084396, at *3 (S.D.N.Y. May 3, 2005). Further, attorneys who terminate their representation are still entitled to enforce their charging liens, as long as the attorney does not withdraw without "good cause" and is not discharged for "good cause." See, e.g., McDermott v. Great Am. Alliance Ins. Co., No. 5:02 Civ. 0607 (NAM/DEP), 2006 U.S. Dist. LEXIS 52878, 2006 WL 2038452, at *2 (N.D.N.Y. July 18, 2006); Hill v. Baxter, No. 98 Civ. 4314 (SJF) (ASC), 2005 U.S. Dist. LEXIS 7157, 2005 WL 465429, at *2 (E.D.N.Y. Feb. 7, 2005); Petition of Harley & Browne, 957 F. Supp. 44, 48 (S.D.N.Y. 1997); Rankel v. Tracey, No. 84 Civ. 3412 (KMW), 1991 U.S. Dist. LEXIS 10673, 1991 WL 156324, at *7 (S.D.N.Y. Aug. 2, 1991); Klein v. Eubank, 87 N.Y.2d 459, 663 N.E.2d 599, 600, 640 N.Y.S.2d 443 (N.Y. 1996).
 

On calculating the actual amount the court wrote: "The Court does, however, find it necessary to subtract those hours that the firm spent on its motion to withdraw and on this pending motion. Such activities were not in furtherance of obtaining a favorable judgment on behalf of plaintiffs in this case and are thus not properly the subject of the charging lien. See, e.g., Cutner & Assocs., P.C. v. Kanbar, No. 97 Civ. 1902 (SAS), 1998 U.S. Dist. LEXIS 1045, 1998 WL 104612, at *3 (S.D.N.Y. Feb. 4, 1998)

"The Johnson factors are: "(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the level of skill required to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the attorney's customary hourly rate; (6) whether the fee is fixed or contingent; (7) the time limitation imposed by the client or the circumstances; (8) the amount involved in the case and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the 'undesirability' of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases." 488 F.2d at 717-19."

How much does one take on as attorney, and how does that scope of work affect legal malpractice litigation?  In Douglas v. Dashevsky, SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT; 2009 NY Slip Op 4187; 62 A.D.3d 937, ; 880 N.Y.S.2d 667, plaintiff says that she was terminated, and was terminated while disabled.  She retained defendant attorney, and now sues in legal malpractice on the theory that :

"The plaintiff retained the defendant to represent her in a claim against her former employer for wrongfully discharging her as a result of a medical condition. The plaintiff contends that the defendant advised her not to file a claim with her employer's disability carrier and as a result she was denied disability benefits for not filing a timely claim. The defendant moved to dismiss the complaint pursuant [**669] to CPLR 3211(a)(1) and (7). The defendant maintained that the plaintiff retained him solely for the purposes of obtaining a damage award on the wrongful termination claim and restoring her to her prior position. [***2] The defendant argues that the plaintiff's claim that she was disabled at the time and entitled to benefits contradicts the representations that the plaintiff made to him and alleged in her termination action that she was capable of performing her job.

The motion to dismiss was denied.  "Here, the retainer agreements submitted by the defendant do not establish, as a matter of law, that the defendant's obligation was to advise the plaintiff solely with respect to her wrongful termination action against her employer. The one page of the disability carrier's policy along with the complaint from the action alleging wrongful termination fails to conclusively establish that the plaintiff would not otherwise have been entitled to receive benefits under the policy, had she filed a timely claim.""The action is not barred by the doctrine of judicial estoppel since the plaintiff's action predicated upon wrongful termination was settled and did not result in a judgment (see Kimco of [*939] New York, Inc. v Devon, 163 AD2d 573, 575, 558 N.Y.S.2d 630).

What is obvious to one is a judgment call to another.  in Noone v Stieglitz ;2009 NY Slip Op 01093 ; 59 AD3d 505]  February 10, 2009 ;Appellate Division, Second Department we see a plaintiff involved in a motor vehicle accident.  Defendant in that MV case claimed that it was forced out of its lane into plaintiff's lane by an errent cab.  When the target attorney says that such a decision was a "judgment call" it often carries the day.
 

Case went to trial, and there was strong evidence for plaintiff, strong enough for plaintiff and defendant to enter into a high/low agreement while awaiting the jury.  High was $ 1 million and low was $ 500,000.  Verdict was for defendant, and plaintiff received the $ 500,000.

Plaintiff sues the attorneys on the theory that a map of the accident site would have demonstrated that there was no place from which a cab could have come, and if a map had been introduced in evidence, there would inevitably have been a plaintiff''s verdict.

"The respondents moved for summary judgment on the grounds, inter alia, that the plaintiff was advised of the consequences of the high-low settlement on the record in the underlying action, their strategy was to rely upon the favorable testimony of a nonparty eyewitness, and submitting a map of the road would not have helped the plaintiff's case. The respondents noted that at the trial in the underlying action, the plaintiff's position was that if there was no shoulder, there was no place for the yellow car to come from, but if there was some sort of shoulder, the defendant in the underlying action should have used the shoulder rather than the plaintiff's lane to avoid the yellow car.

The Supreme Court granted the respondents' motion for summary judgment dismissing the complaint insofar as asserted against them, noting that the respondents "offered a reasonable trial strategy as to why they did not submit the maps and diagrams." The plaintiff appeals.

To establish a claim to recover damages for legal malpractice, "a plaintiff must demonstrate that the attorney 'failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession' and that the attorney's breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007], quoting McCoy v Feinman, 99 NY2d 295, 301-302 [2002])."Attorneys are free to select among reasonable courses of action in prosecuting clients' cases without thereby exposing themselves to liability for malpractice" (Iocovello v Weingrad & Weingrad, 4 AD3d 208, 208 [2004]; see Rosner v Paley, 65 NY2d 736, 738 [1985]). Here, the respondents established their entitlement to judgment as a matter of law by demonstrating that they were pursuing a reasonable trial strategy. Further, they demonstrated that the plaintiff was advised of the consequences of the high-low settlement. In opposition, the plaintiff failed to raise a triable issue of fact.

in Williams v Omrani & Taub, P.C. ;2009 NY Slip Op 51832(U) ;Decided on August 25, 2009 ;Supreme Court, Kings County ;Rivera, J. rendered a tri-partate decision, reviewing a dismissal motion pursuant to CPLR 3211(a)(1)  (a)(5) and  (a)(7).  Reading like a thriller, first the court denies dismissal on documentary grounds by the unusual reasoning:
 

"On a motion to dismiss based upon documentary evidence, dismissal is only warranted if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Klein v Gutman, 12 AD3d 417, 418 [2004]; CPLR 3211 [a] [1]; see also Saxony Ice Co., Div. of Springfield Ice Co., Inc. v Ultimate Energy Rest. Corp., 27 AD3d 445 [2006]). A complaint containing factual claims that are flatly contradicted by documentary evidence should be dismissed (Well v Rambam, 300 AD2d 580, 581 [2002]; Kenneth R. v Roman Catholic Diocese of Brooklyn, 229 AD2d 159, 162 [1997], cert. denied 522 US 967 [1997]). However, in considering a motion to dismiss, the plaintiff's pleadings must be given their most favorable intendment (Arrington v New York Times Co., 55 NY2d 433, 442 [1982]), and the plaintiff's allegations which are contrary to the documentary evidence must be accepted (Scheller v Martabano, 177 AD2d 690 [1991]).

Here, defendants rely on documentary evidence that allegedly conclusively demonstrates that defendants' representation of plaintiff ended prior to April 12, 2005 (rendering the instant action untimely). However, this court must accept the sworn statement of plaintiff's current counsel, who stated that pursuant to a referral arrangement, Omrani (and, by extension, Fink), continued to represent plaintiff until December 20, 2007"
 

For the same reasons, the court denied plaintiff's CPLR 3211(a)(5) motion on S/L grounds.

However, and contrary to this reader's expectation as the decision was followed, the court dismissed under CPLR 3211(a)(7).

"The Second Department of the Appellate Division recently stated in Kluczka v Lecci (63 AD3d 796 [2009]) that:

"[i]n order to prevail in an action to recover damages for legal malpractice, a plaintiff must establish 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 breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Malik v Beal, 54 AD3d 910, 911 [2008]; Carrasco v Pena & Kahn, 48 AD3d 395, 396 [2008]). To establish the element of 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 attorney's negligence (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; Wray v Mallilo & Grossman, 54 AD3d 328, 329 [2008]; Carrasco v Pena & Kahn, 48 AD3d at 396). The failure to demonstrate proximate cause requires dismissal of a legal malpractice action regardless of whether the attorney was negligent (see Leder v Spiegel, 31 AD3d 266, 267-268 [2006], affd 9 NY3d 836 [2007])" (id. at 797).

Here, plaintiff cannot show either that defendants failed to exercise reasonable attorney skill and knowledge or the requisite causation. First, although plaintiff conclusorily states that "defendants have offered no defense or explanation" for their failure to file the Reliance proof of claim, the court notes that there is in fact a defense and explanation—the failure of outgoing counsel Don Carlos Jr. to transfer the subject file to Omrani until after March 17, 2004. Indeed, given that Omrani (and, by extension, Fink) did not possess the file before December 31, 2003, it would have been difficult, if [*7]not impossible, for Omrani to file the subject proof of claim before the deadline. Thus, plaintiff has failed to plead facts that demonstrate defendants breached the duty of professional legal representation. "

This is part 3 of a series based on the case of ASTON BAKER,  -against- CHARLES SIMPSON, ESQ., WINDELS MARX LANE & MITTENDORF, LLP, STANLEY GALLANT, GALSTER CAPITAL LLC, GARLSTER MANAGEMENT CORP., ALLSTATE INSURANCE COMPANY, AND JP MORGAN CHASE BANK, N.A.,

Here the court discusses the "abstention" question, whether the court should permit state court actions to go on, or to remove them to the Bankruptcy court as a "core" issue.

"Appellant contends that, even if the bankruptcy court had jurisdiction over his claims, it should have abstained from hearing the state court action. Section 1334(c)(1) [*16] gives the district court the power to abstain from hearing civil proceedings arising under Title 11, or arising in or related to cases under Title 11 "in the interest of justice, or in the interest of comity with State courts or respect for State law." 28 U.S.C. § 1334(c)(1). This section "is informed by and interpreted according to 'the principles developed under the judicial abstention doctrine,'" which impose on federal courts a "virtually unflagging obligation . . . to exercise the jurisdiction given them." Norkin, 2006 U.S. Dist. LEXIS 14254, 2006 WL 839079, at *5 (citations omitted). Accordingly, federal courts "may abstain only for a few 'extraordinary and narrow exceptions.'" Id. (quoting Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976)).

Courts often apply a twelve-factor test, or some variation of it, to decide whether to abstain from hearing a lawsuit related to a bankruptcy under Section 1334(c)(1). See, e.g., In re Bay Point Assocs., No. 07 Civ. 1492 (JS), 2008 U.S. Dist. LEXIS 108402, 2008 WL 822122, at *2-3 (E.D.N.Y. Mar. 19, 2008); In re Twin Labs. Inc., 300 B.R. 836, 841 (S.D.N.Y. 2003). The twelve factors are:
(1) the effect or lack thereof on the efficient administration of the estate if a Court [*17] recommends abstention, (2) the extent to which state law issues predominate over bankruptcy issues, (3) the difficulty or unsettled nature of the applicable state law, (4) the presence of a related proceeding commenced in state court or other nonbankruptcy court, (5) the jurisdictional basis, if any, other than 28 U.S.C. § 1334, (6) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case, (7) the substance rather than form of an asserted "core" proceeding, (8) the feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to the bankruptcy court, (9) the burden [on] the court's docket, (10) the likelihood that the commencement of the proceeding in bankruptcy court involves forum shopping by one of the parties, (11) the existence of a right to a jury trial, and (12) the presence in the proceeding of nondebtor parties.
See In re Twin Labs. Inc., 300 B.R. at 841 (citations omitted). Here, these twelve factors do not favor discretionary abstention.

Most significantly, although appellant's causes of action "are styled as New York State law claims, they turn largely on issues that [*18] are intertwined" with his bankruptcy, including the propriety of Simpson and Windel Marx's advice regarding his bankruptcy proceedings. Norkin, 2006 U.S. Dist. LEXIS 14254, 2006 WL 839079, at *5. In Norkin, which also involved allegations of legal malpractice for advice rendered by a law firm during a debtor's Title 11 proceedings, the court refused to exercise discretionary abstention because "[s]tate law issues do not predominate here," and where such issues did arise, "they are in the well settled areas of professional malpractice, negligence, and breach of fiduciary duty." Id. A similar conclusion is warranted here."

We reviewed this case in part yesterday.  Here is the balance of the case, ASTON BAKER, , -against- CHARLES SIMPSON, ESQ., WINDELS MARX LANE & MITTENDORF, LLP, STANLEY GALLANT, GALSTER CAPITAL LLC, GARLSTER MANAGEMENT CORP., ALLSTATE INSURANCE COMPANY, AND JP MORGAN CHASE BANK, N.A.,

Curiously, Footnote 3 seems to say that the entire case has been dismissed. ":FOOTNOTES

3 In addition to denying appellant's motion to remand, the bankruptcy court also dismissed appellant's case in its entirety. (See Tr. at 18:24-19:6.) Indeed, appellee JP Morgan Chase invites the court to consider on appeal whether the bankruptcy court properly dismissed the underlying action. However, Appellant does not challenge the merits of the bankruptcy court's dismissal of the complaint, but rather limits his appeal to review of the bankruptcy court's assertion of jurisdiction over this matter and its refusal to abstain from considering the same. Accordingly, the court need not address the merits of appellant's substantive claims."

However: "Appellant contends that the bankruptcy court's jurisdiction over his claims was circumscribed by the disposal of his estate. Once all the property has been disposed of, he argues, the Title 11 proceeding terminated, and, with it, the court's original jurisdiction under Section 1334(a) over the instant case.

The court finds that the disposal of appellant's estate is immaterial to the jurisdictional issue for two reasons. First, "a bankruptcy court retains post-confirmation jurisdiction to interpret and enforce its own orders, particularly when disputes arise over a bankruptcy plan of reorganization." In re Millenium Seacarriers, Inc., 419 F.3d 83, 96 (2d Cir. 2005) (internal quotation [*11] marks omitted). Second, the Title 11 case ends only when it is closed under Section 350(a) of Title 11, and not, as appellant argues, with disposition of the estate. See 11 U.S.C. § 350(a) (2006).

The question of whether the bankruptcy court has exclusive jurisdiction over appellant's claims is similarly immaterial, as is appellant's assertion that it is unlikely that his state court claims will have any conceivable effect on the bankruptcy case. For this court to uphold the exercise of jurisdiction, the bankruptcy court need not have exclusive jurisdiction under Section 1334(a), or find that appellant's claims are "related to" his bankruptcy petition. As set forth below, the court finds that appellant's claims are civil proceedings arising in a case under Title 11, and are thus subject to the bankruptcy court's jurisdiction under Section 1334(b). 28 U.S.C. § 1334(b).

District courts in this circuit have found that "[a] matter 'arises in' [T]itle 11 when 'the gravamen of the proceeding arises in the particular bankruptcy case and would have no existence outside of bankruptcy,'" even if the matter is not based on any right expressly created by Title 11. D.A. Elia Constr. Corp. v. Damon & Morey, LLP, 389 B.R. 314, 317 (W.D.N.Y. 2008) [*12] (citation omitted). Since claims arising out of services rendered in connection with a debtor's bankruptcy proceeding "are inextricably connected to the bankruptcy proceeding," courts generally find "no bar, statutory, constitutional, or otherwise, to the [b]ankruptcy [c]ourt exercising jurisdiction" over such claims. In re SPI Commc'ns & Mktg., Inc., 114 B.R. at 18.

For instance, in D.A. Elia Construction Corp., a plaintiff asserted various claims against a law firm for failure to provide adequate legal representation in connection with a Title 11 petition and related proceedings, alleging, inter alia, legal malpractice and conversion of funds belonging to the bankruptcy estate. 389 B.R. at 317. The district court found that "there can be no doubt that all of [plaintiff's] state law claims 'arise in' the bankruptcy proceeding within the meaning of 28 U.S.C. § 1334 . . . But for [the law firm's] representation of [plaintiff] in the bankruptcy case, there would be no cause of action." Id.

Similarly, in Norkin v. DLA Piper Rudnick Gray Cary, LLP, a plaintiff sued a defendant law firm alleging legal malpractice and breach of fiduciary duty for advice rendered during his personal bankruptcy [*13] and the bankruptcy of a company that he owned and managed. 05 Civ. 9137 (DLC), 2006 U.S. Dist. LEXIS 14254, 2006 WL 839079 (S.D.N.Y. March 31, 2006). The district court upheld the exercise of jurisdiction over state law claims by a bankruptcy court, finding, inter alia, that because some of the claims "arise out of advice provided by [law firm] to [plaintiff] in his bankruptcy proceeding, they cannot be considered independent of that petition." 2006 U.S. Dist. LEXIS 14254, [WL] at *3.

Here too, the gravamen in each claim is that Simpson and Windels Marx provided substandard legal services in the course of representing appellant in his Title 11 and related legal proceedings. Appellant's case, which asserts claims of legal malpractice, conversion, negligence, fraud and intentional misrepresentation, would have no existence but for the bankruptcy. The bankruptcy court appointed Simpson and Windels Marx as bankruptcy counsel, and appellant's relationship with all appellees arose only in connection with his Title 11 proceeding. The Galster mortgage loans that appellant complains about were authorized and approved by the bankruptcy court, as were the allegedly fixed auction sales. Moreover, to the extent that Simpson made misrepresentations during [*14] a bankruptcy court hearing and fraudulently or negligently added certain tenants to his list of creditors, this claim is inseparable from the bankruptcy context. With respect to appellant's claims concerning the collection and disbursement of insurance proceeds, appellees respond that the JP Morgan Chase account and insurance proceeds were handled pursuant to and consistent with bankruptcy court orders. (See Tr. 12:2-21; 18:2-5.) The alleged malpractice thus implicates the integrity of the entire bankruptcy process. As such, appellant's claims "arise in" the Title 11 case, and Section 1334(b) clearly gives the bankruptcy court jurisdiction over them. See Elia Constr. Corp., 389 B.R. at 318.

Although the Second Circuit has not directly considered whether claims of professional malpractice based on services rendered pursuant to a Title 11 petition fall within Section 1334's scope of jurisdiction, this court's holding is consistent with the conclusions reached by other circuit courts addressing the issue. See, e.g., In re Seven Fields Dev. Corp., 505 F.3d 237, 259, 262 (3d Cir. 2007) (internal quotation marks omitted) (finding that state law "claims of professional malpractice . . . based [*15] on services provided during the bankruptcy, under the supervision of, and subject to the approval of, the bankruptcy court," are subject to the court's Section 1334(b) "arising in" jurisdiction); In re V&M Mgmt., Inc., 321 F.3d 6, 7 (1st Cir. 2003) (where allegations of fraud, professional malpractice, and breach of fiduciary duties by legal counsel "wholly arise out of the . . . counsel's performance of their duties with respect to the Debtor after the petition for bankruptcy was filed," such claims are subject to the court's jurisdiction under Section 1334(b)); Grausz v. Bradford, 321 F.3d 467, 469 (4th Cir. 2003) (holding that the district court had bankruptcy jurisdiction over a professional malpractice action filed by a Title 11 debtor against the law firm that represented him in his bankruptcy case under Section 1334(b) "because the malpractice claim arose in the bankruptcy case"); see also In re Southmark Corp, 163 F.3d 925, 931 (5th Cir. 1999); In re Ferrante, 51 F.3d 1473, 1476 (9th Cir. 1995)."

When may plaintiff bring a state court action for legal malpractice and when may it be removed, as a "core" proceeding, to US Bankruptcy Court.  It's an involved question, and ASTON BAKER,  -against- CHARLES SIMPSON, ESQ., WINDELS MARX LANE & MITTENDORF, LLP, STANLEY GALLANT, GALSTER CAPITAL LLC, GARLSTER MANAGEMENT CORP., ALLSTATE INSURANCE COMPANY, AND JP MORGAN CHASE BANK, N.A.,   08-CV-1855 (DLI);
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK;
2009 U.S. Dist. LEXIS 73098;August 18, 2009,  discusses this issue.

"On February 8, 2002, Simpson and Windels Marx, the law firm to which Simpson belonged, were appointed by the bankruptcy court as counsel for appellant and two additional entities for which appellant was the sole or controlling shareholder, in their jointly administered Title 11 cases. (See Order Authorizing Retention of Windels Marx Lane & Mittendorf [*3] as Attorney for Debtor-in-Possession, Dkt. # 20.) Appellant brings claims related to legal malpractice, conversion, negligence, fraud and intentional misrepresentation, based primarily on four incidents that occurred during the course of Simpson's engagement as counsel in connection with appellant's bankruptcy petition.

First, appellant independently found a broker that allegedly would refinance all his properties and net him enough money to pay off his creditors. On the advice of Simpson, appellant did not retain such broker, and, instead, refinanced through appellee Galster Capital LLC ("Galster"), whose services were procured by Simpson. The bankruptcy court issued three orders, dated April 17, 2003 (Dkt. # 142), June 4, 2004 (Dkt. # 207), and July 2, 2004 (Dkt. # 214), authorizing and approving mortgage loans from Galster to appellant. Appellant now claims that Galster misrepresented itself as a lender, and, after two years, failed to fund the loan as agreed, causing appellant to forgo offers from other prospective lenders, incur legal fees, and accrue interest on his debt.

Second, at the inception of the Title 11 case, during a status conference before the bankruptcy court, Simpson [*4] allegedly misrepresented that appellant was holding security deposits for the tenants at one of the buildings that formed part of appellant's bankruptcy estate. Simpson then allegedly produced a document bearing appellant's forged signature to substantiate said misrepresentation. As a result, all tenants were erroneously added to appellant's list of creditors pursuant to Rule 1007-1 of the Eastern District of New York's Local Bankruptcy Rules.

Third, Simpson allegedly arranged an auction sale of two of appellant's commercial properties that resulted in winning bids by Simpson's friends or affiliates. Although appellant alleges that Simpson arranged these sales without communicating to appellant his intent to proceed, the record shows that at least one of these sales was approved by the bankruptcy court. (See Order Granting Mot. to Sell Free and Clear of Liens Real Property located at 1801 Pitkin Avenue, Brooklyn, NY on April 23, 2002, Dkt. # 37.) After a prospective buyer moved to reopen the sale, the bankruptcy court issued an order on May 3, 2002 vacating the original sale and scheduling a new sale on notice. (See Decision and Order Granting Mot. to Vacate the Oral Decision of the [*5] Court on April 23, 2002, Approving the Sales of Pitkin Avenue Property & Forest Avenue Property, Dkt. # 52.) 1 The winning bids were for significantly higher amounts than those offered in the initial, allegedly fixed auction arranged by Simpson.

"Appellant contends that the bankruptcy court's jurisdiction over his claims was circumscribed by the disposal of his estate. Once all the property has been disposed of, he argues, the Title 11 proceeding terminated, and, with it, the court's original jurisdiction under Section 1334(a) over the instant case.

The court finds that the disposal of appellant's estate is immaterial to the jurisdictional issue for two reasons. First, "a bankruptcy court retains post-confirmation jurisdiction to interpret and enforce its own orders, particularly when disputes arise over a bankruptcy plan of reorganization." In re Millenium Seacarriers, Inc., 419 F.3d 83, 96 (2d Cir. 2005) (internal quotation [*11] marks omitted). Second, the Title 11 case ends only when it is closed under Section 350(a) of Title 11, and not, as appellant argues, with disposition of the estate. See 11 U.S.C. § 350(a) (2006).

The question of whether the bankruptcy court has exclusive jurisdiction over appellant's claims is similarly immaterial, as is appellant's assertion that it is unlikely that his state court claims will have any conceivable effect on the bankruptcy case. For this court to uphold the exercise of jurisdiction, the bankruptcy court need not have exclusive jurisdiction under Section 1334(a), or find that appellant's claims are "related to" his bankruptcy petition. As set forth below, the court finds that appellant's claims are civil proceedings arising in a case under Title 11, and are thus subject to the bankruptcy court's jurisdiction under Section 1334(b). 28 U.S.C. § 1334(b).

District courts in this circuit have found that "[a] matter 'arises in' [T]itle 11 when 'the gravamen of the proceeding arises in the particular bankruptcy case and would have no existence outside of bankruptcy,'" even if the matter is not based on any right expressly created by Title 11. D.A. Elia Constr. Corp. v. Damon & Morey, LLP, 389 B.R. 314, 317 (W.D.N.Y. 2008) [*12] (citation omitted). Since claims arising out of services rendered in connection with a debtor's bankruptcy proceeding "are inextricably connected to the bankruptcy proceeding," courts generally find "no bar, statutory, constitutional, or otherwise, to the [b]ankruptcy [c]ourt exercising jurisdiction" over such claims. In re SPI Commc'ns & Mktg., Inc., 114 B.R. at 18."
 

As we have reported before, sometimes legal malpractice cases arise by action of the plaintiff, and sometimes they arise after the attorney sues for legal fees.  Courts often take the later situation as a "reflexive" or "defensive" maneuver, and may not always believe that the client is genuinely prosecuting a legal malpractice case so much as avoiding paying a fee. 

In this case, it appears that the Appellate Division came down half-way between the two poles.  Bender Burrows & Rosenthal, LLP v Simon ;2009 NY Slip Op 06296 ;Decided on August 25, 2009 ; Appellate Division, First Department holds that plaintiff, who is defending a fee claim, is unable to prove legal malpractice, but has demonstrated a question of whether the law firm is aptly holding escrowed monies or not.

"Defendant's first counterclaim for malpractice should have been dismissed since she failed to demonstrate that she would have succeeded on the merits of the underlying action for divorce but for plaintiff's negligence (Maillet v Campbell, 280 AD2d 526, 527 [2001]). Defendant was not prejudiced by plaintiff's mid-trial motion to withdraw. On defendant's earlier appeal from the judgment of divorce (55 AD3d 477 [2008]), this Court found that the trial court appropriately exercised its discretion in granting a five-day adjournment rather than the longer one requested by defendant's counsel since successor counsel had nearly a month to prepare for trial. Moreover, although this Court remanded the matter for recalculation of the parties' respective child support obligations and a finding as to the cost of health insurance for defendant at the predivorce level of coverage, it found defendant's arguments relating to the classification, valuation and distribution of property and the award of maintenance unavailing (id. at 478). Cruciata v Mainiero (31 AD3d 306 [2006]), which was decided on the specific facts of that case, is not to the contrary.

As to defendant's second counterclaim seeking recovery of her escrow funds, the motion court aptly concluded that there are triable questions of fact as to what agreement, if any, the parties had reached as to the disposition of those funds. [*2]"

The New York Court of Appeals determined that a medical insurance provider has the right to intervene in a personal injury case to protect its right to subrogation and to assert  "lien" on the proceeds of the case.  In a well researched article, J. Michael Hayes writes:

"Recent developments have changed the way that lien law is applied given Arkansas Department of Health and Human Services v. Ahlborn, 126 S.Ct. 1752 (2006) and Fasso v. Doerr, MD, et al., 12 NY3d 80, 875 NYS2d 846 (2009). Medicare, Medicaid and Workers' Compensation carriers claim they are entitled to full recovery of their expenses under the lien statutes. The reality is that recent decisions in Ahlborn and Fasso, combined with New York's shift to comparative negligence and itemized verdicts since the 1970s, confirm that at best, they have a right of apportionment for their "subrogation" claims.

Whether the right is a lien or subrogation affects the relationships between the co-claimants and the attorney as well as his fees. If these constitute subrogation rights then the attorney is clearly representing two claimants, negotiating an aggregate settlement and taking a fee from each. A conflict arises because the attorney must reduce/assign part of his client's recovery to the insurance carrier for medical expenses. Ethically, an attorney is barred from representing more than one party where there may be a lump sum award that has to be divided/allocated. "

For as long as there have been attorneys, it seems that there have been fee disputes.  Fee disputes and legal malpractice counterclaims go together like, well you fill in the simile...love and marriage, horse and carriage...

Here is a case from Nassau which illustrates that question of whether defendant counterclaminant has the right to a jury trial, when plaintiff elects to have a bench trial.

"The plaintiff also submits, essentially, that the defendant waived her right to serve a Demand for Jury pursuant to CPLR §4101, as plaintiff has asserted a cause of action for unjust enrichment, (equitable), along with plaintiff's claim for legal fees, (law), and the defendant has asserted the affirmative defense of estoppel, (equitable), and a counterclaim sounding in breach of fiduciary duty and legal malpractice, (equitable and legal).

"A plaintiff cannot, by artful pleading, deprive a defendant of his constitutionally guaranteed right to a trial by jury by limiting his demand for relief to a declaration of rights instead of seeking whatever coercive relief would be appropriate in enforcing the rights thus established." (Gordon v. Continental Casualty Company, 91 AD2d 987). When the facts pleaded permit a judgment for a sum of money, the defendant's jury demand must be honored under CPLR §4101 despite plaintiff's framing his demand for relief in equity. (Id.) Where one cause of action seeks equity, and another law, the plaintiff may have waived its right to a jury trial, but the plaintiff cannot deprive defendant of its rights to a jury trial of all issues so triable. (L.C.J. Realty Corp. v. Back, 37 AD2d 840). An executor was held to be entitled to a jury trial on a legal malpractice claim even where the attorney fee proceeding was equitable. (Sackler v. Breed, Abbott & Morgan, 222 AD2d 9). In Behrins & Behrins, P.C. v. Chan, 15 AD3d 515, following a divorce action, the law firm that represented the wife brought an action against her seeking payment of outstanding attorney fees. The wife also brought a legal malpractice action against the firm and made a jury demand on both actions. The Second Department reversed the lower court's decision that held that the wife was not entitled to a jury trial on such claims. The Court found that plaintiff's action involved actions at law seeking money judgments, and thus the wife was entitled to a jury trial. (Id.) The Court also stated that although the jury may have to incidentally have to examine a prior equitable distribution award, it is irrelevant as the jury is not being called upon to change the prior distribution of the assets between the appellant and her former husband. (Id.)

Here, the defendant is entitled to a jury trial as the defendant has asserted a counterclaim sounding in malpractice, and the plaintiff's action seeks a money judgment from the defendant in order to recoup its legal fees in connection with the plaintiff's representation of the defendant in her divorce action.

In light of the foregoing, the plaintiff's motion is denied."

Often, the only way plaintiff knows whether target attorney defendant has legal malpractice insurance is by the name of the attorneys who answer the complaint.  If they are attorneys who normally are retaied by legal malpractice insurance carriers, then plaintiff knows there is insurance.  If not, then there is trouble brewing.  What happens if the attorney simply is out of the picture, and completely refuses to answer any correspondence, and never notifies his carrier?

McCabe v St. Paul Fire & Mar. Ins. Co. ;2009 NY Slip Op 29341 ;Decided on August 19, 2009 ;Supreme Court, Erie County ;Nemoyer, J. is one such case.  "Factually speaking, the focus of the motion and cross motion is on the repeated efforts by plaintiffs to communicate with Fretz, the eventual communications by both Fretz and plaintiffs with St. Paul, and St. Paul's responses to those communications. Apparently, plaintiffs' first attempt to communicate with Fretz following his catastrophic neglect of their insurance claim came in late September 2006, after plaintiffs had consulted with attorney John J. Fromen for the purpose of engaging in such communication. Plaintiffs apparently do not contend that Fromen's September 22, 2006 letter to Fretz constituted the making of a claim against Fretz, so this Court will not summarize that letter. It is enough to note that Fretz did not respond to Fromen's entreaties to contact Fromen with regard to plaintiff's matter. "

"The fundamental question is whether the instant policy insuring Fretz against liability for attorney malpractice is a "policy or contract insurance liability for injury to person," within the meaning of Insurance Law § 3420 (a). St. Paul says that it is not, relying on a decision of the Federal District Court in Sirignano v Chicago Ins. Co. (192 F Supp 2d 199, 206-207 [SDNY [*6]2002]). The Court cannot accept that contention for several reasons. First, Sirignano was concerned with the applicability to a malpractice insurance policy of Insurance Law § 3420 (d) — which pertains to the timeliness of a disclaimer by an insurer of a liability for "death or bodily injury" arising out of an "accident" — not the discernibly distinct provisions of section 3420 (a), which are by no means limited to "accident" insurance. The same is true with regard to various New York cases cited by St. Paul on this question on the applicability of section 3420 (see e.g. Doyle v Siddo, 54 AD3d 988, 989 [2d Dept 2008]; Iafalo v Nationwide Mut. Fire Ins. Co. 299 AD2d 925, 926-927 [4th Dept 2002]; Fairmont Funding Ltd. v Utica Mut. Ins. Co., 264 AD2d 581 [1st Dept 1999]). This case has nothing to do with section 3420 (d). "

"Having determined the applicability of Insurance Law § 3420 (a) (2), it remains for this Court to determine the validity of St. Paul's disclaimer under the policy. St. Paul now contends that it validly disclaimed coverage under the policy on two grounds: first, that no claim was made during the policy period; and second, that no claim was reported to St. Paul during the policy period or the 60-day extension period. The problem for St. Paul is that only the second of those disclaimer grounds was articulated in St. Paul's July 17, 2007 disclaimer letter to Fretz. The pertinent paragraph of the letter stated that St. Paul was denying Fretz any defense and indemnity in the malpractice action on the ground that "this Claim' was neither reported to St. Paul during the Policy Period,' nor was the Claim' or your disability reported within the 60 days following the date of the St. Paul Policy's" lapse. It is of course a fundamental principle of the law in this realm that an insurer's attempt at disclaimer is strictly limited to those grounds articulated in the notice of disclaimer, and that a ground not raised in a disclaimer letter may not be later asserted by the insurer (see General Accident Ins. Co v Cirucci, 46 NY2d 862, 864 [1979]; City of Kingston, Harco Nat. Ins. Co., 46 AD3d 1320, 1321 [3d Dept 2007]; Benjamin Shapiro Realty Co. v Agric. Ins. Co., 287 AD2d 389 [1st Dept 2001]; see also Wraight v Exchange Ins. Co., 234 AD2d 916, 917-918 [4th Dept 1996] [held: where insurer disclaimed coverage based solely upon its insured's failure to provide timely notice, insurer is subsequently estopped from raising the injured party's allegedly untimely notice as a defense in the declaratory judgment action]). Indeed, St. Paul's July 17, 2007 letter explicitly assumed, based on Doyle's representations, that the claim was first made against the insured on January 2, 2007, within the policy period. The Court understands that St. Paul entertained that assumption without having seen the January 2, 2000 letter, but St. Paul's own lack of reasonable investigation into the circumstances is not a ground for departing from the aforementioned principle that the insurer is strictly limited to those disclaimer grounds articulated in the letter of disclaimer (see 2540 Associates, Inc. v Assicurazioni Generali, S.p.A., 271 AD2d 282, 284 [1st Dept 2000] [held: "as a matter of policy, [*8]reasonable investigation is preferable to piecemeal disclaimers"]; see also DiGuglielmo v Travelers Property Cas., 6 AD3d 344, 346 [1st Dept 2004], lv denied 3 NY3d 608 [2004]). Contrary to St. Paul's contention, enforcement of the rule that an insurer's attempt at disclaimer is strictly limited to those grounds articulated in the notice of disclaimer does not involve the creation of coverage where none would otherwise exist. St. Paul's belated attempt to supplement its disclaimer letter to Fretz by adding or resurrecting the "claim not timely made" disclaimer ground — an attempt not made until October 7, 2008, after the commencement of this declaratory judgment action by plaintiffs and indeed following the interposition of St. Paul's answer and counterclaim asserting only that the malpractice claim had not been timely reported — cannot avail for obvious reasons, both procedural and substantive. "{

There are conflicting rules in the 4 departments of New York. In legal malpractice, it is plaintiff's obligation to demonstrate that a hypothetical judgment could be collected in a legal malpractice case in the 2d, 3d and 4th departments. In the First Department, it is an affirmitive defense for defendant to prove.

Here is a procedural case from the 4th Department on the issue. Williams v Kublick
2007 NY Slip Op 04932 Decided on June 8, 2007 Appellate Division, Fourth Department .

"We conclude that Supreme Court erred in granting defendants' motion, and we therefore modify the order accordingly. In granting the motion, the court determined, inter alia, that defendants established as a matter of law that plaintiff is unable to prove that defendants' [*2]negligence is a proximate cause of plaintiff's damages (see Robbins v Harris Beach & Wilcox, 291 AD2d 797, 798). That was error."

"A necessary element of a cause of action for legal malpractice is the collectibility of the damages in the underlying action (see McKenna v Forsyth & Forsyth, 280 AD2d 79, 82-83, lv denied 96 NY2d 720; cf. Lindenman v Kreitzer, 7 AD3d 830, 835). Here, regardless of whether the value of the property was improperly considered by the experts, we conclude that the otherwise conflicting opinions of the experts concerning the value of the assets of the joint venture precluded the court from determining as a matter of law that defendants established that plaintiff is unable to prove that he could collect damages in the underlying lawsuits (see generally Simmons v State Farm Mut. Auto. Ins. Co., 16 AD3d 1117; Herzog v Schroeder, 9 AD3d 669, 670)."

Legal Malpractice cases are dismissed upon a motions on the pleadings.  It happens not infrequently.  It seems that legal malpractice actions are more scrupulously examined for the "but for" portion of the matter than might occur in other aras of the law.

Here is a case in which not only was the case dismissed at pleadings, but it was ruled frivolous as a matter of law.  ACOSTA,, -against- BARRY M. FALLICK & ROCHMAN, PLATZER, FALLICK & STERNHEIM, LLP, 05 Civ. 8254 (KTD);  UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;  2009 U.S. Dist. LEXIS 70878; August 11, 2009, Decided
 

"Plaintiff alleges violations of 41 U.S.C. § 37 and 28 U.S.C. § 1927, but neither of these statutes provide a legal basis for his claims. First, 41 U.S.C. § 37 authorizes the Comptroller General of the United States to distribute to certain government agencies lists of persons who have breached public contracts. See 41 U.S.C. § 37. The fee agreement in this case is not a public contract, so it is not covered under the statute. Further, the statute does not authorize a private right of action or money damages at all.

Second, 28 U.S.C. § 1927 provides that an "attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927. In this case, Plaintiff alleges facts opposite to the evil that the statute seeks to prevent--unreasonable and vexatious expansion of litigation. See id. Plaintiff [*5] alleges that his attorney minimized his criminal proceedings allegedly in violation of the fee agreement by failing to file several motions and inducing Plaintiff to sign a plea agreement.

It is true that when a plaintiff proceeds pro se, I must construe his complaint broadly. See Livingston, 141 F.3d at 437. However, Plaintiff's complaint in this case, broadly construed, alleges only facts most closely resembling state law breach of contract and legal malpractice claims over which this Court does not have subject matter jurisdiction. As Defendants point out, complete diversity is lacking and Plaintiff does not claim more than $ 75,000 in damages, so 28 U.S.C. § 1332(a) cannot provide a basis for jurisdiction. Therefore, as Acosta's complaint lacks any basis in law and is consequently frivolous under 28 U.S.C. 1915 (e) (2) (B) (i), I must dismiss it.

Accordingly, Plaintiff's claims are DISMISSED. "

GABRIEL D'JAMOOS, , v. MICHAEL GRIFFITH, No. 08-3668-cvUNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT;2009 U.S. App. LEXIS 17868;August 12, 2009, discusses termination for cause and the proofs needed:

"Under New York law, an attorney may be dismissed by a client at any time with or without cause." Garcia v. Teitler, 443 F.3d 202, 211 (2d Cir. 2006). "If the discharge is for cause, [*7] the attorney is not entitled to fees." Id. "If, however, the discharge is without cause, the attorney may recover the value of services rendered in quantum meruit," id. at 211-12, "even where the attorney discharged without fault was employed under a contingent fee contract," Universal Acupuncture Pain Servs., P.C. v. Quadrino & Schwartz, P.C., 370 F.3d 259, 263 (2d Cir. 2004) (internal quotation marks omitted). "Poor client relations, differences of opinion, or personality conflicts do not amount to cause, which is shown by impropriety or misconduct on the part of the attorney." Garcia v. Teitler, 443 F.3d at 212.

We identify no error in the district court's conclusion that Griffith was not terminated as a result of such "impropriety or misconduct." Id. D'Jamoos's December 1, 1999 letter releasing Griffith notes plaintiff's "profound dissatisfaction with the [1998 settlement] and the quality of the representation that [he] received." At his deposition, D'Jamoos noted as causes for the termination, inter alia, Griffith's failure to enforce the 1997 settlement, his dissatisfaction with the 1998 settlement, and various trial-related omissions. To the extent these complaints "consist solely [*8] of dissatisfaction with reasonable strategic choices regarding litigation," under New York law, "[s]uch choices do not, as a matter of law, constitute cause for the discharge of an attorney." Callaghan v. Callaghan, 48 A.D.3d 500, 501, 852 N.Y.S.2d 273 (2d Dep't. 2008). Moreover, as the district court rightly emphasized, on March 27, 1998, D'Jamoos expressed, under oath, his agreement with the 1998 settlement. That he subsequently became dissatisfied with that settlement does not constitute "cause" for Griffith's termination warranting D'Jamoos's withholding compensation for counsel's services. To the extent plaintiff also cites certain litigation and enforcement delays that might support termination for cause, plaintiff has failed to offer evidence indicating that such delays were caused by Griffith. Finally, while we have noted that, "[i]f a client who retained an attorney under a contingent-fee agreement discharges that attorney because there is no chance of recovery for the client, the discharge may be for cause, and the attorney may not be entitled to fees in quantum meruit," Universal Acupuncture Pain Services, P.C. v. Quadrino & Schwartz, P.C., 370 F.3d at 265 n.7, we agree with the district [*9] court that the record does not demonstrate this to be such a case."
 

A common law retaining lien entitles the outgoing attorney to retain all papers, securities, or money belonging to the client that came into the attorney's possession in the course of representation, as security for payment of attorney's fees. Arising from Judiciary Law 475, it is enforceable only by retention of the items themselves and is lost if the file or documents are no longer in the attorney's possession.

A charging line similarly arises and attaches to any recovery and thus secures the attorney's right to compensation. A hearing will be held to determine fees, based upon Quantum meruit

Quantum meruit</em></strong> is the fair and reasonable value of the services rendered, which may be more or less than the amount provided in the contract or retainer agreement and is determined by "taking into consideration the character of the services, the nature and importance of the litigation, the degree of responsibility imposed or incurred, the amount or value involved, the length of time spent, the ability skill and experience required and exercised, the character, qualifications and standing of the attorney and the results achieved. The recovery is not limited to the amount billed, the original terms of the retainer agreement, and may be less or more than the amount which might have been recovered under a contingency fee or other measuring tools of fees.
 

One answer to this question is found in Carl v, Cohen,  NY Slip Op 31747(u), a decision by Justice Edmead.  Here defendants Joel Cohen and Greenberg Traurig, LLP reached a "so ordered" stipulation concerning depositions of subsequent attorneys, against whom, presumably, defendants would either like to bring a third-party action, or to say that these subsequent attorneys could have saved the day, and who had a "last clear-chance."  Depending on that stipulation, which concerned depositions of the subsequent attorneys, defendants Cohen and Greenberg Traurig asked Justice Edmead to hold off on other depositions.  Defendants argued that a motion on whether the attorney-client privilege would be invaded be held off in view of the stipulation.

The Court acknowledged that there was indeed a stipulation, but determined that it could decide the motion, and that because plaintiff was willing to authenticate documents, that no deposition of the subsequent attorneys was necessary.  Accordingly, defendant's attorneys will not get to ask the subsequent successor attorneys any questions.

In Fielding v Kupferman ;2009 NY Slip Op 06151 ;Decided on August 11, 2009 ;Appellate Division, First Department  we see a reversal of a dismissal in Supreme Court.  The facts are uncomplicated.  Wife sues for divorce and husband hires target attorney.  A settlement is reached, and the couples funds are accurately set forth in the settlement agreement.  H's funds are mostly in a "Profit Sharing Keogh Account" which is characterized as "immediately available,"  The funds were not, and plaintiff suffered a significant tax burden in withdrawing the funds to satisfy the settlement of the divorce.

Defendant moved to dismiss, and Supreme Court granted the motion.  In reversing, the AD wrote:

"Here, not only are the allegations of the giving of incorrect advice sufficient and nonconclusory, as noted above, the documentary evidence provides significant support for plaintiff's claim. It clearly establishes that the overwhelming majority of plaintiff's funds, including the amount necessary to satisfy the obligation to his wife, were not, as characterized by the stipulation, "immediately available." Plaintiff alleges that he did not know that under the applicable tax laws the necessary funds were not "immediately available" — we must accept that allegation as true (see Leon v Martinez, 84 NY2d 83, 87 [1994]) —- and that a reasonably competent matrimonial attorney who read the stipulation would not have advised him to sign it. Given these allegations, the stipulation may constitute evidence of defendants' negligence and does not constitute a defense to the malpractice claim (see Mandel, Resnik & Kaiser, P.C. v E.I. Elecs., Inc., 41 AD3d 386 [2007]; IMO Industries Inc. v Anderson Kill & Olick, 267 AD2d 10 [1999]). "

"Defendants' documentary evidence not only fails to refute plaintiff's allegations [*3]conclusively, it supports plaintiff's claim of malpractice in a key respect. The stipulation identifies four accounts in plaintiff's name representing his financial assets and states that $894,530 of the total ($1,258,854) is in a "Profit Sharing Keogh Account," a retirement account that has specific rules regarding the withdrawal of funds and requires that significant taxes be paid upon preretirement withdrawal. Thus, the stipulation makes clear that the sum of money that plaintiff needed to comply with its requirements was not "immediately available," yet defendants advised plaintiff to sign it. Given that the ground for plaintiff's claim of malpractice is apparent from the face of the stipulation, the allegations contained in the complaint are not conclusory and plaintiff properly has pleaded a cause of action for legal malpractice. "

From Gina Passarella at  the Legal Intelligencer today:  Blank Rome settles a huge legal malpractice law suit brought by a bankrutpcy trustee.

"Blank Rome has entered into a $20 million agreement with the trustee of a former client that is now in bankruptcy to settle a complaint that alleged breach of fiduciary duty, professional malpractice and breach of contract claims against the firm.

The settlement, reached in the Philadelphia Common Pleas Court case Miller v. Blank Rome, was approved by U.S. Bankruptcy Judge Mary F. Walrath for the District of Delaware on July 28.

Walrath is overseeing the bankruptcy of American Business Financial Services, which is involved in a string of litigation in both state and federal court stemming from its bankruptcy and business dealings.

Blank Rome does not admit any liability or wrongdoing in agreeing to the settlement, according to the agreement.

"Blank Rome has expressly denied and continues to deny all allegations of any wrongdoing or liability against it whatsoever arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged by the Trustee," the settlement agreement reads.

"Nonetheless, Blank Rome has concluded that further conduct of the Blank Rome Litigation would be protracted, expensive and distracting and that it is desirable that the Blank Rome Litigation be settled. Blank Rome has also taken into account the uncertainty and risks inherent in any litigation, especially in complex cases such as the Blank Rome Litigation."

Blank Rome represented ABFS in a variety of legal matters prior to the company's January 2005 Chapter 11 bankruptcy filing and acted as debtors' counsel in the Chapter 11 proceeding. The bankruptcy was converted to a Chapter 7 in May 2005 and George L. Miller was named trustee of the ABFS estate, according to the agreement.

Miller filed suit — Miller v. Santilli — in Philadelphia Common Pleas Court against former officers and directors of ABFS in July 2006 as well as a number of financial institutions. Those financial institutions joined accounting firm BDO Seidman. [Read more in The Legal this week about BDO Seidman's defeat of a class action motion in the related federal court case.] "

What are the elements of Professional Malpractice?

Malpractice is a professional's failure to use minimally adequate levels of care, skill or diligence in the performance of the professional's duties, causing harm to another. In New York, attorney malpractice is defined as a "deviation from good and accepted legal practice, where the client has been proximately damaged by that deviation, but for which, there would have been a different, better or more positive outcome."

The first element of a relationship between the client and the professional was previously discussed. The second element, deviation, is shown by evidence, not necessarily expert, which shows that the acts of the professional fell so below the good and accepted practice of law in New York, that a jury would be permitted to find that the acts below standard.

Expert testimony is necessary when the deviation is subtle; an example could be the failure to supply an affidavit of merits to restore a case marked off calendar, the failure to respond to a CPLR 3216 notice, or failures in response to a motion for summary judgment. Expert testimony is not always necessary however. None is needed to demonstrate the deviation in failing to file within the statute of limitations. Bad outcome do not necessarily equal a deviation. Furthermore, questions of judgment of strategic choice cannot serve as the basis of malpractice. An attorney is permitted the reasonable choice of strategy, if supported by acceptable reasoning. The strategic choice must be reasonable both objectively and subjectively. The difference between strategic choice and mistake are subtle, and create the most difficult cases.

The third element of proximate cause encompasses both the typical analysis that arises in all negligence litigation and the additional element of "but for." The plaintiff must demonstrate not only that the deviation was a substantial cause of the poor outcome, but must additionally show that "but for" the deviation there would have been a different, better or more positive outcome. An example of this potential difficulty arises in an automobile accident. No matter how many deviations are shown, it may be that the maximum insurance for the other driver limits the recovery. If that is true, it will be impossible to show that "but for" the deviation, more than the policy limit was available and could have been recovered from the defendant.
 

Plaintiff has a right to sue target attorney, and then, for strategic reasons, agrees to put the case aside for the time being.  Plaintiff and target attorney reach a stand-still agreement, but the question of tolling or abatement of  the statute of limitations remains.  How is the statute of limitations calculated in this situation?

In  CMI Capital Mkt. Inv., LLC v Buchanan Ingersoll & Rooney P.C., 2009 NY Slip Op 31708(u) we see Justice Tolub's definitions and answer.  In that case, the statute of limitations was tolled, not abated.  Tolling is the suspension of the running of a statute for a period of time.  Abatement is the ending of the statute, allowing for it to start running again, from the beginning.

Both parties wanted to "temporarily suspend the running of the statute to await the outcome of [other] litigation."  Abatement would "nullify the period of the statute of limitations and for it to run anew at the expiration of the parties agreement."

The court then goes on to set forth how one decides whether an agreement is ambiguous:

"Despite CMI's best arguments, contractual language does not become ambiguous simply because the parties to the litigation argue different interpretations. Riverside S. Planning Corp.,60 AD3d 61."

Defendant hired plaintiff to represent him in a Federal Court law suit over NYC placard holders parking on sidewalks and curbs in front of his commercial establishments, depriving defendant of use of his properties.  He retained plaintiff who started the Federal law suit, and was attorney until a settlement conference.  Defendant's story is that he was so taken aback by the negligence of plaintiff, that he settled the case for $ 2,125,000 against the City.

We are amazed that the case settled at all, but confess not to have seen anything by Justice Gische's decision in Bellinson Law LLC. v. Iannucci.  Justice Gische found enough in the motion to deny the attorney's dismissal request.  While the decision does not discuss the shortcomings in any sort of detail, it does give a good blackletter recitation of the standard for a motion to dismiss.

Defendant was required to place the sum of $ 376,000 in escrow pending the outcome of the case.

In MICHAEL S. JOHNSON, DONNA DYMKOWSKI, PATRICIA LONG-CORREA, , -against- NEXTEL COMMUNICATIONS, INC.,  LEEDS, MORELLI & BROWN, P.C.,  , which ws reviewed on Friday we see more of a clutch of definitions which are quite useful:

Breach of Contract:  To state a claim of breach of contract, the plaintiff must establish 1) the formation of a contract between the plaintiff and defendant, 2) performance by the plaintiff, 3) failure by the defendant to perform, and 4) resulting damages. Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004) (citing Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996); Furia v. Furia, 116 A.D.2d 694, 498 N.Y.S.2d 12, 13 (2nd Dep't 1986).
To state a claim of breach of contract, the plaintiff must establish 1) the formation of a contract between the plaintiff and defendant, 2) performance by the plaintiff, 3) failure by the defendant to perform, and 4) resulting damages. Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004) (citing Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996); Furia v. Furia, 116 A.D.2d 694, 498 N.Y.S.2d 12, 13 (2nd Dep't 1986).
 

Common Law Fraud:, the plaintiff must show that the defendant (1) made a material false representation or omission of an existing fact; (2) defendant made such false representation with knowledge of its falsity; (3) with the intent to defraud; (4) which plaintiffs justifiably relied upon to their detriment. Compudyne Corp. v. Shane, 453 F. Supp. 2d 807, 831 (S.D.N.Y. 2006) (citing Kline v. Taukpoint Realty Corp., 302 A.D.2d 433, 754 N.Y.S.2d 899 (2nd Dep't 2003)); Century Pacific, Inc. v. Hilton Hotels Corp., 528 F. Supp. 2d 206, 217 (S.D.N.Y. 2007) (citing PPI Enters., Inc. v. Del Monte Foods Co., No. 99 Civ. 3794, 2003 U.S. Dist. LEXIS 16006, 2003 WL 22118977, at * 19 (S.D.N.Y. Sept. 11, 2003)). Additionally, in the complaint, the plaintiff must specify the particulars of the alleged [*20] fraud such as the misleading statements along with the speaker, time, place, individuals involved, and specific conduct at issue. Sullivan v. Kodsi, 373 F. Supp. 2d 302, 306 (S.D.N.Y. 2005) (citing United Feature Syndicate, Inc. v. Miller Features Syndicate, Inc., 216 F. Supp. 2d 198, 221 (S.D.N.Y. 2002)); Dover Ltd. V. A.B. Watley, Inc., 423 F. Supp. 2d 303, 317 (S.D.N.Y. 2006) (citing Acito v. IMCERA Group, Inc., 47 F.3d 47, 51 (2d Cir. 1995)).
 

Legal Malpractice:   the plaintiff must show that the attorney acted negligently, such negligence was the proximate cause of the loss sustained, and the loss sustained is actual and ascertainable. Mega Group, Inc. v. Pechenik & Curro, P.C., 32 A.D.3d 584, 819 N.Y.S.2d 796, 798 (3rd Dep't 2006) (citing Ehlinger v. Ruberti, Girvin & Ferlazzo, 304 A.D.2d 925, 758 N.Y.S.2d 195 (3rd Dep't 2003)); Flutie Bros. v. Hayes, No. 04 Civ. 4187, 2006 U.S. Dist. LEXIS 31379, 2006 WL 1379594, at *5 (S.D.N.Y. May 18, 2006) (citation omitted). To qualify as negligence, the conduct of the lawyer [*22] must fall below "the ordinary and reasonable skill and knowledge commonly possessed by a member of the profession." Achtman v. Kirby McInerney & Squire, LLP, 464 F.3d 328, 337 (2d Cir. 2006) (citing Grago v. Robertson, 49 A.D.2d 645, 370 N.Y.S.2d 255 (3rd Dep't 1975). To adequately plead causation, the plaintiff must show that "but for" the attorney's negligence "what would have been a favorable outcome was an unfavorable outcome." Flutie Bros., 2006 U.S. Dist. LEXIS 31379, 2006 WL 1379594, at *5; Even Street Productions, Ltd. v. Shkat Arrow Hafer & Weber, LLP, No. 05 Civ. 3834, 2008 U.S. Dist. LEXIS 42397, 2008 WL 2224297, at *3 (S.D.N.Y. 2008) (citing D'Jamoos v. Griffith, No. 00 Civ. 1361, 2001 U.S. Dist. LEXIS 17595, 2001 WL 1328592, at *5 (E.D.N.Y. Aug. 1, 2001)).
 

Conversion:  conversion is the unauthorized dominion over property by the defendant that interferes with the plaintiff's superior right of possession. U.S. v. New York State Div. Of Lottery, No. 92 Civ. 9001, 2007 WL 1703656, at *4 (S.D.N.Y. Mar. 13, 2007); see Zendler Const. Co. v. First Adjustment Group, Inc., 59 A.D.3d 439, 873 N.Y.S.2d 134, 2009 WL 260905, at *1 (2nd Dep't 2009). To establish a conversion claim, the plaintiff must show: (1) a specific identifiable thing is the subject of the conversion claim; (2) prior to the conversion plaintiff retained ownership or [*26] possession of the property; (3) exercise of unauthorized dominion by the defendant was to the exclusion of the plaintiff's rights. Moses v. Martin, 360 F. Supp. 2d 533, 541 (S.D.N.Y. 2004).
 

This case presents a most unusual fee arrangement and litigation strategy in which the attorneys took on a large number of discrimination cases against a single employer, fashioned a reverse payment strategy for themselves and then settled a large number of discrimination cases through arbitration and other ADR means.  Was this malpractice? 

In MICHAEL S. JOHNSON, DONNA DYMKOWSKI, PATRICIA LONG-CORREA, , -against- NEXTEL COMMUNICATIONS, INC.,  LEEDS, MORELLI & BROWN, P.C., ;07 CV 8473 (GBD); UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 35137;March 31, 2009,  we see a longish explanation of how the attorneys adequately advised their clients and why there was no conflict.  This case is notable for its definitions.

Breach of Fiduciary Duty:  To state a claim for breach of fiduciary duty in New York, 3 "plaintiff must allege three elements: (1) the existence of fiduciary relationship; (2) knowing breach of a duty that relationship imposes; and (3) damages suffered." Nay ex. rel. Thiele v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 05 Civ. 10264, 2006 U.S. Dist. LEXIS 52074, 2006 WL 2109467, at *6 (S.D.N.Y. July 25, 2006) [*10] (quoting Carruthers v. Flaum, 388 F. Supp. 2d 360, 380 (S.D.N.Y. 2005)) (internal quotation marks omitted).
 

Common Law Fraud: In New York, to establish common law fraud, the plaintiff must show that the defendant (1) made a material false representation or omission of an existing fact; (2) defendant made such false representation with knowledge of its falsity; (3) with the intent to defraud; (4) which plaintiffs justifiably relied upon to their detriment. Compudyne Corp. v. Shane, 453 F. Supp. 2d 807, 831 (S.D.N.Y. 2006) (citing Kline v. Taukpoint Realty Corp., 302 A.D.2d 433, 754 N.Y.S.2d 899 (2nd Dep't 2003)); Century Pacific, Inc. v. Hilton Hotels Corp., 528 F. Supp. 2d 206, 217 (S.D.N.Y. 2007) (citing PPI Enters., Inc. v. Del Monte Foods Co., No. 99 Civ. 3794, 2003 U.S. Dist. LEXIS 16006, 2003 WL 22118977, at * 19 (S.D.N.Y. Sept. 11, 2003)). Additionally, in the complaint, the plaintiff must specify the particulars of the alleged [*20] fraud such as the misleading statements along with the speaker, time, place, individuals involved, and specific conduct at issue. Sullivan v. Kodsi, 373 F. Supp. 2d 302, 306 (S.D.N.Y. 2005) (citing United Feature Syndicate, Inc. v. Miller Features Syndicate, Inc., 216 F. Supp. 2d 198, 221 (S.D.N.Y. 2002)); Dover Ltd. V. A.B. Watley, Inc., 423 F. Supp. 2d 303, 317 (S.D.N.Y. 2006) (citing Acito v. IMCERA Group, Inc., 47 F.3d 47, 51 (2d Cir. 1995)).
 

In this highly complicated case, COBALT MULTIFAMILY INVESTORS I, LLC, , -against- MARK A. SHAPIRO, et al., Defendants.;06 Civ. 6468 (KMW) (MHD);UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 60481 we see what may turn out to be a blueprint for a legal malpractice niche.  In this case a receiver brings legal malpractice actions against the attorneys for a situation in which "The Complaint alleges that Mark A. Shapiro, Irving J. Stitsky, and William B. Foster (collectively, "Individual Defendants" or "managers") engaged in a massive fraud on the investing public by founding the Cobalt entities and making egregious misrepresentations in order to persuade members of the public to invest millions of dollars in Cobalt. 2 In the written materials disseminated to potential and actual investors, Individual Defendants allegedly misrepresented: (1) their personal and professional backgrounds, such as failing to disclose their past criminal histories; (2) Stitsky and Foster's involvement in Cobalt; (3) their plans for [*4] the investors' funds; and (4) the nature and scope of Cobalt's property holdings. Individual Defendants allegedly appropriated the majority of the funds invested in Cobalt for their own personal use."

This case has already been to a magistrate's hearing, a decision by Judge Kimba Wood, to the 2d Circuit, and now back.  Turning in large part on the Waggoner rule, the question before the court was whether the receiver had standing to sue on behalf of the corporation, or whether the receiver was divested of standing based upon the acts of the managers of the corporation.

"The Complaint alleges that all of Law Firm Defendants assisted the Individual Defendants in committing investor fraud, and in subsequently looting the Cobalt entities of corporate assets. Law Firm Defendants allegedly: (1) approved documents that they should have known contained material misrepresentations; (2) assisted the Individual Defendants in siphoning corporate funds into the Individual Defendants' bank accounts; and (3) helped conceal the Individual Defendants' criminal activities from both investors and law enforcement."
 

We will discuss this rule in upcoming posts.

In ST. PAUL FIRE & MARINE INSURANCE COMPANY, v.SLEDJESKI & TIERNEY, PLLC,;  No 08-CV-5184 (JFB) (ETB);  UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK; 2009 U.S. Dist. LEXIS 61393; July 17, 2009, Decided  we see an excellent discussion of the standard for a 12(b)(6) motion in this post-Iqbal world, as well as a discussion of legal malpractice insurance coverage for defendants. 
 

Here, the insurance company for defendant attorneys wishes to disclaim coverage on the basis of lack of notice.  So far, they are succeeding.  The court denied a 12(b)(6) motion with a fulsome discussion of the new standards there.

The facts are simple:  "Candice Nelson retained that firm to represent her and the Nelson estate for recovery of damages resulting from the death of her husband, Jeffrey Nelson, in a July 26, 2003 motor vehicle accident. (Compl. P 16.) The firm of Michael T. Clifford & Associates thereafter dissolved, and S&T assumed the representation of Candice Nelson and the Nelson estate. (Compl. PP 17-18.) The applicable statute of limitations for recovery of damages for the wrongful death of Jeffrey Nelson expired on July 26, 2005, two years after the death. (Compl. P 19.) On July 26, 2005, S&T filed a summons and complaint in the Supreme Court, Suffolk County, captioned Candice Nelson as proposed Administratrix for the Estate of Jeffrey Nelson, and Candice Nelson, individually, v. Bonnie A. Rubin and Maier A. Rubin (hereinafter, "the wrongful death action"). "

"Prior to the filing of the malpractice action, in October 2007, Tierney mailed a letter to S&T's broker, which St. Paul received on November 8, 2007, regarding the alleged error that could potentially lead to the legal malpractice action" 

Notice, rather than occurrence [service of the malpractice complaint] is important,  "Despite defendants' insistence that the policy is a "claims-made," as opposed to "occurrence-based" policy, discussed in more detail infra, that fact does not change the analysis; although the general rule of a claims-made policy may be that coverage is triggered upon filing of a claim or suit against an insured and/or notice to the insurer thereof, that does [*15] not mean that the potential claim provision cannot provide for an earlier policy period under certain circumstances. It also does not mean that all claims filed during that period are automatically covered by the policy, as then any exclusion policy would be meaningless, and it is clear under New York law that the policy should be interpreted to give meaning and effect to all of the provisions, if possible."

Fraud is often alleged in legal malpractice cases, for one of several reasons.  One common reason is for a longer statute of limitations, 6 years rather than 3.  For as long as there has been a different statute of limitations in fraud and tort, this tension has existed.  After the NY legislature enacted CPLR 214(6) in reaction to a Court of Appeals decision in Santulli v. Englert, 78 NY2d 700 (1992), the tension escalated.  CPLR 214(6) determined that there was a 3 year statute whether the theory of liability is described in tort or fraud, so long as it is for professional work done by non-medical professionals.

A second reason is that the behavior feels more like fraud than malpractice, and the temptation is to plead and describe it as a misrepresentation type of wrong rather than a departure type of wrong.  However, the fraud must be more than a mere variant of the malpractice, and it must be more than the hiding of malpractice.

Here, in Reichenbaum v Cilmi ;2009 NY Slip Op 05954 ;Decided on July 21, 2009 ;Appellate Division, Second Department we see one description of the issue:
 

"The factual allegations in support of the cause of action to recover damages for fraud fail to meet the heightened pleading requirement of CPLR 3016(b) (see Kline v Taukpoint Realty Corp., 302 AD2d 433) and, in any event, the "mere failure to disclose malpractice does not give rise to a cause of action alleging fraud or deceit separate from the underlying malpractice cause of action" (Ferdinand v Crecca & Blair, 5 AD3d 538, 539). "
 

When does the statute of limitations start to run in legal malpractice?  Is it on the day that former attorneys are "substituted out" or perhaps on the day that successor counsel sign a retainer agreement?  One answer is found in Fur Online v. Rivkin Radler, LLP, Supreme Court, New York County, Index No. 113292/08. 

There, Justice Friedman determines that CPLR 214(6) applies, and that the rule in Matter of Kliment, 3 NY3d 535 (2004) is illustrative.  Where the "underlying complaint is one which essentially claims that there was a failure to utilize reasonable care or where acts of omission or negligence are alleged or claimed, the statute of limitations shall be three years if the case comes within the purview of CPLR Section 214(6) regardless of whether the theory is based in tort or in breach of contract."

Here, the decision illustrates the problems inherent.  In a US District Court case, Judge John G. Koeltl so ordered a letter application to be relieved as counsel on September 14, 2005.  The attorney-client relationship ended on that day.  One Roberta Ashkin purportedly took over the case on October 14, 2005, but this "does not show that plaintiff was continuously represented by defendant up until that date."

Result?  Case dismissed.

No matter how you phrase it, it's a 3 year statute under CPLR 214(6).  Attorneys try to phrase it as contract, or breach of fiduciary duty, or misrepresentation, but so long as the wrong arises from a professional relationship between client and attorney its a 3 year statute.  In Matter of R.M. Kliment & Frances Halsband, Architects (McKinsey & Co., Inc.) ;2004 NY Slip Op 09319 [3 NY3d 538] December 16, 2004 Ciparick, J. Court of Appeals  we see:
 

"CPLR 214 (6) states that "an action to recover damages for malpractice, other than medical, dental or podiatric malpractice, regardless of whether the underlying theory is based in contract or tort" is subject to a three-year statute of limitations. The Legislature specifically amended this statute in 1996 to counteract the effect of decisions by this Court that "abrogat[ed] and circumvent[ed] the original legislative intent" by allowing actions that were technically malpractice actions to proceed under a six-year contract statute of limitations (Revised Assembly Mem in Support, Bill Jacket, L 1996, ch 623).

Prior to the 1996 amendment, we determined the appropriate statute of limitations in nonmedical malpractice actions based upon the proposed remedy instead of the theory of liability (see e.g. Santulli v Englert, Reilly & McHugh, P.C., 78 NY2d 700, 708 [1992]; Sears, Roebuck & Co. v Enco Assoc., Inc., 43 NY2d 389, 394-395 [1977]). These cases held that liability would not have existed between the parties without the contractual relationship and that there was an implied agreement to perform professional services using due care (see Santulli, 78 NY2d at 707; Sears, 43 NY2d at 396). Parties were permitted to maintain a malpractice action under a breach of contract theory within the six-year statute of limitations, but were limited to damages available in a contract action if the three-year malpractice limitations period had expired (see Santulli, 78 NY2d at 709).

It is the effect of these decisions that the amendment to CPLR 214 (6) was intended to change. The legislative history makes clear that "where the underlying complaint is one which essentially claims that there was a failure to utilize reasonable care or where acts of omission or negligence are alleged or claimed, {**3 NY3d at 542}the statute of limitations shall be three years if the case comes within the purview of CPLR Section 214 (6), regardless of whether the theory is based in tort or in a breach of contract" (Revised Assembly Mem in Support, Bill Jacket, L 1996, ch 623). [*4]"

Actions have consequences, and in legal representation it may be malpractice,   Here is an example.  Say, for example that you have a robust asbestos practice, and in one of your many pending actions, you have one of many defendants file a motion for summary judgment.  You may not be sure whether there is any evidence against that particular defendant and sign a stipulation of discontinuance.  Is the stipulation binding, when a couple of months later you determine that there was evidence against that defendant?  Can you vacate?  The short answer is NO.  The longer answer is found in Hallock v. State of New York and in Charlop v A.O. Smith Water Prods.
2009 NY Slip Op 05911 ;Decided on July 21, 2009 ;Appellate Division, First Department

"stipulations of settlement are judicially favored and should not be lightly cast aside (see Hallock v State of New York, 64 NY2d 224, 230 [1984]; Matter of Kanter, 209 AD2d 365 [1994]). Thus, a party will not be relieved from the consequences of a stipulation unless there was sufficient cause to invalidate it, such as fraud, mistake, collusion, accident, or some other ground (see Hallock, 64 NY2d at 230; Daniel v Long Is. Univ., 184 AD2d 350, 352 [1992]). The party seeking to vacate the stipulation should do so with reasonable promptness under the circumstances (see Hallock, 64 NY2d at 231)[parties bound by a stipulation where they voiced no objection for two months following the execution of a stipulation]).

In Structured Asset Sales Group LLC v Freeman (45 AD3d 327 [2007]), the parties mutually decided to discontinue the action. The plaintiff received the proposed stipulation — which stated on its face that the discontinuance was "with prejudice" — and held onto it for two months before executing it (id. at 328). The plaintiff then sought to set aside the stipulation, a request which was denied by Supreme Court. This Court upheld the dismissal of the action (id.)."
 

Plaintiff loses a commercial law case, and sues his attorneys for legal malpractice.  During discovery, while preparing responses to interrogatories, he discovers, and then sues over what he claims is a forged affidavit said to be prepared by the attorneys and unsuccessfully used in his case.  Worse he says, the affidavit contained inaccurate information which was the cause of the loss, and hence a sort of double malpractice.  Defendants say, its too late, and what kind of a cause of action is this, anyway?

In Shelly v. Mintz Levin Cohn Ferris Glovsky & Popeo PC we see Justice Emily Jane Goodman's answer to these two questions.  Forgery is a civil cause of action, akin to fraud, but without some of the more onerous elements.  No "reliance" is necessary in a forgery case; it is "counterintuitive."

Forgery is "the fraudulent making of a writing to the prejudice of another's rights, or the making malo animo of any written instrument for the purpose of fraud and deceit...."  It is subject to a 6 year from the making or two year from the reasonable discovery statute of limitations.

Attorney takes on case for client, and the job is to check whether client can erect a Walgreens in Brooklyn.  Attorney does research, and determines that the building and parking lot will be legal in that zoning.  Attorney, however, fails to check if any new laws have been passed by the NYC Council on zoning recently. Two weeks prior to the report, the Council had passed a law which made the parking lot illegal, and those changes were certified. 

$5 million in loans and construction pre-costs later, plaintiff cannot build the Walgreens,  Legal Malpractice law suit follows.  Will a restrictive retainer agreement be applicable ?  Is the attorney responsible for checking the up-to-date law?

In Santo Nostrand LLC v. Cozen O'Connor  602415/08 we see the answer, at least at the pleading stage.  Plaintiff states a cause of action.  The importance of a parking lot to plaintiff in attempting to contract with Walgreens was known to defendants, and it was their obligation to be up to date on the law.  The case continues.

Legal representation in even simple matters can lead to unintended consequences.  As an Example  H & J Restaurant v, A & J Grand Enterprises and Leigh, 2009 Slip OP 21544, authored by Justice Edmead, demonstrates how a simple ministerial mistake can end up with a potential $ 400,000 loss, with later judgment against the attorney. 

It's a simple transaction, A buys a restaurant from B.  As might be expected, Seller exaggerates the sales, or hides underpayment of taxes.  Since these commercial transactions have taken place since time immemorial, there are safeguards and protections.  Buyer can take the business free of personal liability if it notifies the tax authorities 10 days prior to the sale, in which case the tax authorities have 5 days to assert tax liability.  Should it happen, buyer can then back out.

Here, the notification was not made within 10 days, and several months later the tax authorities asserted personal liability to buyer in the neighborhood of $ 400,000.  Seller is in default, and no where to be found.

What is the lesson here?  Lesson 1:  Legal malpractice is everywhere lawyers represent clients.  Lesson 2:  Know the subject matter of your area of law and don't make simple transactions difficult.  Lesson 3:  Review lesson 2.

Today we look at a second legal malpractice motion decided this week by Justice Emily Jane Goodman in Supreme Court, New York County.  This case involves a divorce action between a US husband and a Czech wife, with immigration and fraud elements mixed in.  On top of the international aspects of the case, Justice Goodman upheld [in a motion to dismiss] the viability of a Judicary Law 487 claim.

 IN Koch v. Sheresky, Aronson & Mayersky,  2009 NYSlip Op 31520 (u), the claim is that husband left the Czech Republic and his marriage to her, after adopting her son, and commenced a marital action in NY.  In that marital action he claimed that there were no children of the marriage, and that significant commercial assets were marital property, rather than being subject to partnership agreements.In the case plaintiff-wife alleges that her attorneys failed to challenge subject matter as well as personal jurisdiction issues, and withdrew without resolving partnership/business interests. More interesting is the Judiciary Law 487 claim against the Husband's attorneys [with whom she had no privity] over alleged immigrration advice which led to her not being able to come to the US to contest the divorce proceedings.

An inquest followed, and not until much later was the default judgment vacated. By then all the business assets had vaporized. Husband is now himself absent and in default, and the legal malpractice action, after mixed results in the motions to dismss, continues.
 

In Supreme Court, New York County, Justice Emily Jane Goodman issued not one but two legal malpractice decisions this week.  We'll cover Koch tomorrow.  Today, Esterman v. Schwartz, New York Slip Op. 2009-31523.

Plaintiffs are a subset of a group of owners of a waterfront Staten island development which suffered retaining wall damage in a storm.  The group was divided into waterfront owners and inland owners, and they did not agree on who had to pay for the retaining wall to be fixed.  Plaintiff's group retained defendant attorneys, and in the end, they were the only group that did not sue the City and other defendants who constructed the wall which failed.

This case is interesting for three reasons.  The first is a question of how parol evidence may affect a limited retainer agreement between attorney and client.  The retainer agreement was only for investigation, not litigation.  The claim was that the attorneys did not file a notice of claim and did not move for permission to file a late notice of claim, although the unaffected waterfront owners who hired other counsel were successful in bringing suit.

Justice Goodman held that in the absence of a merger clause in the retainer agreement [ e.g.,"this is the complete agreement and may not be changed or altered without express written agreement"] parol evidence that the attorneys orally agreed to bring suit was permissible.

The second area of interest is the "but for" aspect of the case.  As do all defendants, here they argued that there is no evidence that plaintiffs would be successful against the city.  Justice Goodman made an interesting observation.  If there is no possible merit to such a claim against the City, why did the attorneys send a contingent retainer agreement which called for them to bring such an action.  That the retainer remained unsigned is of no moment.

Lastly, the court gruffly laid aside questions of sanctions. 

Here, in GURVEY,, v. COWAN, LIEBOWITZ & LATMAN, PC., CLEAR CHANNEL COMMUNICATIONS, INC., INSTANTLIVE CONCERTS, LLC, LIVE NATION, INC., NEXTICKETING, INC. DALE HEAD, STEVE SIMON, and DOES I-VIII, INCLUSIVE, ; 06 Civ. 1202  UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 34839; 2009-1 Trade Cas. (CCH) P76,623; we see a unique combination of legal malpractice claims, cliams of "passing off", Lahham Act claims and general conversion causes of action.  Plaintiff, who was of counsel to Cowan, brought a new ticketing/management/sales "invention" to the law firm, and it was eventually filed with the Patent office.  Beyond that,Phish is a part of it all.

"At that time, CLL agreed to represent the Plaintiff before the US Patent and Trademark office ("USPTO") to file Provisional Patent Applications ("PPA"s) for inventions developed by Plaintiff prior to joining CLL. (TAC PP28, 33).

Plaintiff's inventions included business plans to edit, package and distribute live recordings of live music events, as well as electronic ticketing methods related to these recordings. (TAC PP 28, 33.)

Shortly after beginning at CLL, Plaintiff presented her projects, business plans, and inventions at the firm's monthly partners' conference. (TAC P34).

After the meeting a CLL [*3] Partner told Plaintiff that the her business plans would be of significant interest to the firm's client CCC. (TAC P36). This same CLL Partner also told Plaintiff that he preferred to have her as a client of CLL rather than as Of Counsel. (TAC P37.)

In early May 2002, Plaintiff was notified that she would no longer be employed Of Counsel, but that CLL continued to have interest in the subject matter of her patents and would file the Plaintiff's PPA's before the USPTO. (TAC P43). On May 22, 2002 and May 24, 2002, CLL filed two patents with the USPTO naming the plaintiff as sole inventor and CLL as attorneys of record. (TAC P44).

In August 2002, Plaintiff returned from a business trip to find that she had been locked out of her office. (TAC P47)

On or about February 16, 2003, the Plaintiff received notification from the USPTO that CLL had withdrawn as the attorney on one of her patents because of a conflict of interest. (TAC P50).

In March 2003, the CCC affiliated entity InstantLive posted ads/statements on their website announcing a new program that would allow concert-goers to purchase its recordings. (TAC P55). On May 5, 2003, The New York Times published an article describing InstantLive. [*4] Plaintiff alleges that this description mirrored her business models for the onsite distribution of live recordings at concerts. (Band members of Phish were also interviewed for the article and identified their interest in this new product. (TAC P52). A member of Phish is married to a CLL attorney.)
 

"Here, Plaintiff offers only vague and non-actionable challenges to CLL's legal representation. Plaintiff first pleads that CLL "failed to protect and safeguard her trade secrets." TAC P120(1). This allegation appears to refer either to the presence of non-attorney CLL employees at the initial presentation of Plaintiff's inventions or to the misappropriation at the heart of Plaintiff's TAC. However, neither instance is premised on anything more than speculation, and neither presents a challenge to the actual quality of CLL's legal representation Plaintiff also alleges that CLL "fail[ed] to properly advise [her] with respect to the opportunities for commercial exploitation of [her] [*20] inventions and trade secrets" (TAC P120(2)). This allegation again does not address CLL's legal representation and merely challenges the "selection of one among several reasonable courses." Finally, Plaintiff alleges that CLL failed to eliminate a conflict of interest to its representation of Plaintiff TAC PP120(3) and (4). Because this allegation includes no detail, even in speculation, as to the supposed conflict, the allegation does not provide a basis for a malpractice claim."
 

In Boglia v Greenberg ; 2009 NY Slip Op 05278 ; Decided on June 23, 2009 ; Appellate Division, Second Department  wee see a successful opposition to summary judgment based upon a claim of failure to report a settlement  offer to plaintiff.
 

"To sustain a cause of action alleging legal malpractice, a plaintiff must establish that the attorney "failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession," and that the attorney's breach of this duty proximately caused the plaintiff 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 Bauza v Livington, 40 AD3d 791, 792-793; Magnacoustics, Inc. v Ostrolenk, Faber, Gerb & Soffen, 303 AD2d 561, 562). To obtain summary judgment dismissing a complaint in an action to recover damages for legal malpractice, a defendant must demonstrate that the plaintiff is unable to prove at least one of the essential elements of its legal malpractice cause of action (see Kotzian v McCarthy, 36 AD3d 863, 863; Fasanella v Levy, 27 AD3d 616, 616).

However, the Supreme Court should have denied that branch of the defendants' cross motion which was for summary judgment dismissing the second cause of action, alleging legal malpractice based upon their alleged failure to convey her former husband's $250,000 settlement offer to her, as triable issues of fact exist regarding whether the defendants failed to convey the settlement offer to the plaintiff and whether the plaintiff would have accepted that offer (cf. Bauza v Livington, 40 AD3d at 793). "

There are two traps for the unwary legal malpractice litigant in Bankruptcy Court.  One is the failure to list a potential or actual legal malpractice claim in the schedules, depriving the emergent litigant from bringing a legal malpractice case later.  A second trap is the attorney fee hearing, which if it allows fees to the attorney may insulate that attorney from a later legal malpractice case.

Here is an example where there is no res judicata. In PENTHOUSE MEDIA GROUP, INC.,  - against - PACHULSKI STANG ZIEHL & JONES LLP, UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 46617; June 2, 2009, Decided  we see:
 

"Even when all of the elements of res judicata are satisfied, a malpractice claim remains viable unless a party "could and should have brought [it] in the former proceeding." 40 "In this context, important factors in this analysis include whether the fee hearing [*12] was an adversary proceeding or contested matter, the nexus between the order awarding [] fees and the claims now being asserted, and 'the amount of time that has elapsed since the case commenced.'" 41 Such a determination depends on "whether and to what extent [the party] had actual or imputed awareness prior to the fee hearing of a real potential for claims . . . and whether the bankruptcy court possesse[s] the procedural mechanisms that . . . allow [the party] to assert such claims." 42

40 In re Intelogic Trace, Inc., 200 F.3d 382, 388 (5th Cir. 2000). Accord EDP Med. Computer Sys., Inc. v. United States, 480 F.3d 621 (2d Cir. 2007) HN8("Under the doctrine of res judicata, or claim preclusion, '[a] final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.'") (quoting St. Pierre v. Dyer, 208 F.3d 394, 399 (2d Cir. 2000) (emphasis added)); Sure-Snap Corp. v. State Street Bank & Trust Co., 948 F.2d 869, 875 (2d Cir. 1991) (finding that a claim for tortious infliction of emotional distress against creditors should have been brought as part of a prior bankruptcy proceeding and was therefore [*13] barred by res judicata).

41 In re Intelogic, 200 F.3d at 388 (quoting Matter of Howe, 913 F.2d 1138, 1147 n.28 (5th Cir. 1990)).

42 Id.

For the reasons discussed above, the bankruptcy court's Order granting Pachulski's motion for summary judgment is reversed. This case shall be remanded to the United States Bankruptcy Court for the Southern [*25] District of New York for actions consistent with this opinion. The Clerk of the Court is directed to close this case."
 

Legal malpractice in the estate and probate areas is limited by the concept of privity.  Errors in the preparation or wills, and mistakes in the handling of probate proceedings are often precluded on one of two bases.  The first is that a beneficiary may not sue for malpractice to the decedent, and the second is lack of privity...a contractual or near-contractual relationship with the attorney.

In Leff v. Fullbright & Jaworsky, LLP. we see a well reasoned and explained decision which covers all the areas of estate and probate legal malpractice.  Beyond the shocking size of the estate [90 Million] and the cavalier attitude decedent had to his wife [the anniversary present, and the language of his letters to her] we see the bedrock principals of legal malpractice, and the eternal question of whether this attorney is susceptible to suit by this plaintiff.  Here, Leff may not successfully sue her attorneys, as they provided legal advice and work to her husband, and not to her.  By her reasoning, she is out $9 million. 

One of the beautiful things about the US is that every state has its own law.  It was shocking to learn in Law School that events a few miles away, across a state border could be handled differently.  Sure, other countries, but Connecticut?

Here is a story  from Law.Com about how Texas handles executor-estate attorney legal malpractice cases.

"In a 5-2 decision, the Texas Supreme Court held on June 26 that the executor of an estate may sue a decedent's attorneys for alleged malpractice committed outside the realm of estate planning.

"We hold that the executor should not be prevented from bringing the decedent's survivable claims on behalf of the estate," Justice Harriet O'Neill wrote for the majority in Smith, et al. v. O'Donnell.

According to the majority opinion, Corwin Denney retained the San Antonio firm Cox & Smith to advise Denney in the independent administration of the estate of his wife following her death in 1968. The firm's legal name is Cox Smith Matthews.

As noted in Cox & Smith's petition for review to the state Supreme Court, the defendants in Smith also include attorneys Paul H. Smith and Jack Guenther and the former partnerships of Cox, Smith & Smith; Cox, Smith, Smith, Hale & Guenther; and Cox, Smith, Smith, Hale & Guenther Inc., all predecessors to Cox & Smith Inc.

The Supreme Court's majority opinion in Smith provides the following background: Denney contended that he and his wife had agreed orally that stock in Automation Industries Inc. would be his separate property, and property in Gilcrease Oil Co. would be hers. Cox & Smith advised Denney in a memorandum that additional information was necessary before classifying the assets. According to Cox & Smith, the firm advised Denney that he probably should seek a declaratory judgment to properly classify the stock, but Denney declined to do so. Without seeking a declaratory judgment and relying on an analysis by Denney's California accountant, Cox & Smith prepared an estate tax return that omitted Automation stock from a list of the deceased wife's assets. After Denney died 29 years later, leaving the bulk of his estate to charity, the Denney children sued Denney's estate, alleging that he underfunded their mother's trust. Thomas O'Donnell, the executor of Denney's estate, settled the children's claims for $12.9 million and then sued Cox & Smith, alleging that the firm failed to properly advise Denney about the serious consequences of mischaracterizing assets and that their negligence caused damage to Denney's estate. Asserting a claim of malice, O'Donnell alleged that Cox & Smith's conduct constituted gross negligence."
 

Criminal law and legal malpractice law seldom intersect.  One reason is an almost complete ban on criminal defendants suing their defense attorneys.  In order to sue, one must show "actual innocence" which is customarily demonstrated by reversal upon appeal or exoneration.  Since that is a rare occurrence, there is little vitality to criminal defense legal malpractice.

Here, the view is obverse, and a real estate broker [perhaps an investor ?] sues an attorney involved in the real estate transaction for legal malpractice.  The kicker is that the attorney has been arrested upon a felony complaint, and now awaits the action of the Grand Jury.

In  THE CORCORAN LAW GROUP, L.L.C. et ano., -against- JANE Y. POSNER, ESQ. ;09 Civ. 1861 (WHP)UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 we see that the Court grants a stay of legal malpractice proceedings to see what happens to the felony complaint.  In criminal prosecutions, the DA files a complaint, in this case for a felony,  which may not serve as an accusatory instrument for trial upon a felony.  The Constitution and the Bill of Rights requires the action of the Grand Jury which must issue a true bill, otherwise known as an indictment.
 

"In determining whether a stay is appropriate, courts balance the following factors: (1) the extent to which the issues in the criminal case overlap with those presented in the civil case; (2) the status of the case, including whether the defendant has been indicted; (3) the interests of the plaintiffs in proceeding expeditiously, weighed against the prejudice to plaintiffs caused [*3] by a delay; (4) the private interests of and burden on the defendant; (5) the public interest; and (6) the interest of the Court in the efficient management of cases. See, e.g., Transworld Mechanical, 886 F. Supp. at 1139.
"[D]istrict courts in this Circuit generally grant the extraordinary remedy of a stay only after the defendant seeking a stay has been indicted." Sterling Nat'l Bank, 175 F. Supp. 2d at 576 (citation and internal quotation marks omitted). However, at least one district court in this Circuit has noted that the filing of a felony complaint should be treated as the substantial equivalent of an indictment. See Parker v. Dawson, No. 06-CV-6191 (JFB), 2007 U.S. Dist. LEXIS 63068, 2007 WL 2462677, at *4 (E.D.N.Y. Aug. 27, 2007). The [*4] question is "whether the criminal proceedings have substantially progressed beyond the investigatory stage to the filing of formal charges against a particular defendant, so that there is an imminent likelihood that the defendant will be subject to a criminal proceeding, including a trial, in the very near future." Parker, 2007 U.S. Dist. LEXIS 63068, 2007 WL 2462677, at *4 (collecting cases).

Corcoran submitted its supporting deposition to the Putnam County DA on October 30, 2008, and a felony complaint was filed four months later. Therefore, it is evident that the "criminal proceedings have substantially progressed beyond the investigatory stage." Parker, 2007 U.S. Dist. LEXIS 63068, 2007 WL 2462677, at *4. Accordingly, this factor weighs in favor of a stay."

Privity of contract is an important element of legal malpractice.  For policy reasons [and to avoid infinite and endless litigation] courts enforce a rather strict requirement that one may sue their own attorney, but not the opponent's in legal malpractice. There are exceptions.

In LYDIAN PRIVATE BANK d/b/a VIRTUALBANK, -v- RICHARD A. LEFF, UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 48756
June 8, 2009, we see a well enunciated set of rules for the combination of breach of fiduciary duty and legal malpractice by Judge Laura Taylor Swain.

" "An action for legal malpractice requires proof of three essential elements: (1) the negligence of the attorney; (2) that the negligence was the proximate cause of the loss sustained; and (3) proof of actual damages." Mendoza v. Schlossman, 87 A.D.2d 606, 606-7, 448 N.Y.S.2d 45 (2d Dep't 1982). In some cases, a lawyer may owe duties to a nonclient that are actionable in a legal malpractice claim if his client has a fiduciary relationship with the nonclient, to the extent that action necessary to prevent or rectify the [*9] breach of a fiduciary duty owed by the client to the nonclient falls within the scope of his representation. 4 In order to state a claim for negligence, a plaintiff must demonstrate "(1) a duty owed by the defendant to Plaintiff, (2) a breach thereof, and (3) injury proximately resulting there from." Solomon by Solomon v. City of New York, 66 N.Y.2d 1026, 1027, 489 N.E.2d 1294, 499 N.Y.S.2d 392 (N.Y. 1985).

FOOTNOTES

4 As one court noted in In re Food Mgmt. Group, LLC, 380 B.R. 677, 708-10 (Bankr. S.D.N.Y. 2008) (citing Law Governing Lawyers § 51(4)), a lawyer owes a duty to a nonclient when and to the extent that:
(a) the lawyer's client is a trustee, guardian, executor, or fiduciary acting primarily to perform similar functions for the nonclient;

(b) the lawyer knows that appropriate action by the lawyer is necessary with respect to a matter within the scope of the representation to prevent or rectify the breach of a fiduciary duty owed by the client to the nonclient, where (i) the breach is a crime or fraud . . . ;

(c) the nonclient is not reasonably able to protect its rights; and

(d) such a duty would not significantly impair the performance of the lawyer's obligations to the client.

The duty imposed by [this] rule . . . arises [*10] when the lawyer knows that appropriate action by the lawyer is necessary to prevent or mitigate a breach of the client's fiduciary duty. . . . [A]ctual knowledge by the . . . Defendants is not required to impose liability predicated on this theory. The . . . Defendants cannot escape liability if they closed their eyes to what someone with their 'superior intelligence' would find obvious. [However, the plaintiff] cannot predicate liability . . . on the . . . Defendants' failure to investigate facts beyond those of which they were otherwise aware."
 

In SASH v.  ROSAHN, ESQ., as the Supervising Attorney for the Parole Revocation Unit of Defendant The Legal Aid Society, UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK  2009 U.S. Dist. LEXIS 52480   June 16, 2009, Decided  we see a three-pronged attack on plaintiff's criminal defense attorney, each of which fails.
 

Legal malpractice against one's criminal defense attorney is difficult to impossible. "[t]o state a cause of action for legal malpractice arising from negligent misrepresentation in a criminal proceeding, plaintiff must allege his innocence or a colorable claim of innocence of the underlying offense." Sash v. Dudley, No. 05-cv-7498, 2006 U.S. Dist. LEXIS 20146, 2006 WL 997256, at **2 -3 (S.D.N.Y. April 17, 2006); Carmel v. Lunney, 70 N.Y.2d 169, 511 N.E.2d 1126, 518 N.Y.S.2d 605, 607 (1987). It is well established under New York law that "so long as the determination of [a plaintiffs] guilt for that offense remains undisturbed, no cause of action will lie." Id. A guilty plea will therefore generally preclude a defendant from lodging a malpractice claim against his defense lawyer. See Scanio v. Palmiere & Pellegrino, 251 A.D.2d 1018, 674 N.Y.S.2d 527, 528 (4th Dep't 1998); see also Estes v. Doe, No. 97 Civ. 8133, 1999 U.S. Dist. LEXIS 16768, 1999 WL 983886, at *4 (S.D.N.Y. Oct. 29, 1999). "Thus, a criminal defendant cannot even state a claim for legal malpractice until his conviction is overturned or vacated." Smith v. Morgenthau, No. 95 Civ. 4159, 2001 U.S. Dist. LEXIS 15690, at *8 (S.D.N.Y. June 8, 2001). Public policy prevents maintenance of a malpractice action against a defense attorney if a criminal defendant cannot assert his innocence. "This is so because criminal [*11] prosecutions involve constitutional and procedural safeguards designed to maintain the integrity of the judicial system and to protect criminal defendants from overreaching governmental actions. These aspects of criminal proceedings make criminal malpractice cases unique, and policy considerations require different pleading and substantive rules." Carmel, 518 N.Y.S.2d at 607."

Suing one's criminal defense attorney in defamation for words spoken at the trial or hearing is similarly difficult.  "Under New York law, the elements of a defamation claim are a false statement, published without privilege or authorization to a third party, constituting fault and it must either cause special harm or constitute defamation per se." Peters v. Baldwin Union Free School Dist., 320 F.3d 164, 169 (2d Cir.2003) [*14] (citation omitted); see also Albert v. Loksen, 239 F.3d 256, 265-66 (2d Cir.2001) (spoken defamation is slander and "[t]he elements of a cause of action for slander under New York law are (i) a defamatory statement of fact, (ii) that is false, (iii) published to a third party, (iv) of and concerning the plaintiff, (v) made with the applicable level of fault on the part of the speaker, (vi) either causing special harm or constituting slander per se, and (vii) not protected by privilege" (citation omitted)).

At the parole revocation hearing, Sash pled guilty with an explanation to the charge of violating the conditions of his release, at which time Rosahn provided mitigating factors to the court on Sash's behalf. Following the hearing, Rosahn made the above-described statements to various court officers (stating that she had to "bite her tongue" in representing Sash). (Comp. para. 35; Def. Motion Ex. D.)

To the extent that Sash seeks to base a claim of defamation on words spoken by Rosahn during the hearing, those words are privileged and cannot give rise to an actionable claim here. Shernoff v. Soden, 266 Fed.Appx., 12, 12 (2d Cir. 2008); Park Knoll Assocs. v. Schmidt, 59 N.Y.2d 205, 464 N.Y.S.2d 424, 451 N.E.2d 182, 184 (1983) [*15] ("[A] lawyer has immunity for defamatory words spoken in a judicial proceeding[.]").

To the extent that Sash seeks to base a claim of defamation on Rosahn's statements to the administrative law judge and the parole specialist, those statements are protected expressions of opinion, not defamatory assertions of fact of or concerning Sash, and cannot give rise to a claim of defamation. See Shernoff v. Soden, 266 Fed.Appx., 12, 12 (2d Cir. 2008); Celle v. Filipino Reporter Enters. Inc., 209 F.3d 163, 177-79 (2d Cir.2000)."

Defendant attorneys in legal malpractice cases often have valid, technical, factual and compelling defenses.  Sometimes they claim that the alleged malpractice is a question of judgment; sometimes the law suit is too late.  In other examples, there is a less than clear relationship between the attorney and plaintiff, perhaps beneficiary to an estate or plaintiff sues an opponent's attorney.

Here, in Zautner v. Arcodia, 2009 Slip Op 31362(u), Justice  Joseph C. Terasi cuts to the chase, and denies summary judgment.  Plaintiff is the seller of a house, and defendant is his attorney.  The contract called for defendant to hold the down payment, which in this case was sizeable.  Down payments are, in one instance, the remedy for buyer wrongfully cancelling the contract.

Defendant failed to collect the down payment, and of course, the buyer wrongfully cancelled.  What was defendants excuse?  He said that in his area of the state, brokers usually held onto the deposits, so he allowed the broker to hold onto it.  What of the fact that seller had no broker, and the house was for sale "by owner ?"

Defendant apparently had no answer.  Summary judgment granted against the attorney.

In a short, one line reversal, the Court of Appeals put to rest a very old legal malpractice case, Gotay v. Breitbart..  The Court of Appeals simply wrote: "Plaintiff's legal malpractice claim was not brought within the applicable statute of limitations period, and defendants-appellants established as a matter of law that the continuous representation doctrine does not apply."

This is a case that arose in the 1990's at a time when it was not necessary to purchase an index number, and cases were commenced by service of a summons and complaint.  In this Erbs palsy case against the NYCHHC, we see several traps that personal injury attorneys feared at the time.  Service of the complaint on NYCHHC rather than the hospital, loss of the files in a long intervening period, and failure to purchase an index number when the rules changed.

For a longer discussion of judicial activism and "fanciful" theories see Justice Friedman's dissent in the Appellate Division.  This dissent, although not credited in the Court of Appeals decision, is the reason for reversal.  It is interesting to note that Justice Lippman wrote the majority opinion in the Appellate Division, which his new court reversed.

From the Dissent:

"This legal malpractice action is the culmination of a long and convoluted chain of events that began three decades ago. Ultimately, however, the lawsuit's timeliness turns on an attorney's sworn—and entirely uncontradicted—account of what occurred at his meeting with plaintiff and her father on January 28, 1999, more than three years before the commencement of the action. The attorney (Mark Hankin) avers in his affidavit that, at the January 1999 meeting, he advised plaintiff and her father that his firm would not undertake plaintiff's representation in a medical malpractice matter arising from her birth in 1977.[FN1] Hankin further states that, in response to his rejection of plaintiff's case, "plaintiff's father requested the immediate return of the file."

In opposing defendants' summary judgment motion, plaintiff submitted no evidence of any kind—not in deposition testimony, not in an affidavit, not in a letter, not in a jotted piece of notepaper—controverting Hankin's account of the January 28, 1999 meeting. Indeed, Hankin's account of the meeting is not even challenged in plaintiff's appellate briefs. The majority nonetheless denies summary judgment to the appealing defendants, based on two theories never suggested by plaintiff. The majority's first theory is that plaintiff and her father (although neither [*6]makes this claim) were unaware that Michael Handwerker, the attorney who had accepted plaintiff's matter several years before, had joined Hankin's firm. The other theory the majority has devised is that Hankin's claim that plaintiff's father requested the return of the file at the January 1999 meeting is somehow placed in doubt by boilerplate language in Hankin's follow-up letter, dated February 22, 1999, offering to return the file "[i]n the event you require the whole or any portion thereof."

Here is a blackletter rule:  You must obtain consent from the Worker's Compensation carrier before settling a personal injury action in which there was WC payments.  If you don't, the WC carrier takes a 'vacation" and the plaintiff stops getting money.  Easy, No?

in Flaherty v Attie ;2009 NY Slip Op 51296(U) ; Supreme Court, Queens County ; Markey, J. we see what happens.  Our guess is that plaintiff stopped getting paid a few months after settling the case. but the decision does not supply this detail.  Plaintiffs sue their attorney, and lose on statute of limitations grounds.
 

"[P]laintiffs commenced their action against defendant to recover damages for, inter alia, legal malpractice and fraudulent concealment. Plaintiffs allege that, in 1998, they retained the legal services of defendant to represent them in an underlying personal injury suit. The injury allegedly sustained by plaintiff John J. Flaherty (Flaherty) occurred during the course of his employment. On December 24, 1998, a retainer agreement was signed, and defendant filed a summons and complaint on March 26, 1999 in connection with the underlying accident. During the pendency of that action, Flaherty was receiving workers' compensation benefits, said benefits creating a lien against plaintiffs and their potential recovery.  [D]efendant Attie had failed to obtain pre-settlement consent from the workers' compensation carrier and/or the New York State Insurance Fund and/or plaintiff's [*3]employer, which ultimately negatively affected plaintiffs' right to future workers' compensation benefits; and failure to obtain such clearance, approval, or consent constituted legal malpractice. Plaintiffs, furthermore, allege that defendant's failure to disclose this to plaintiffs was an attempt by defendant to fraudulently conceal any alleged malpractice.
 

In or about 2006, plaintiffs contacted defendant Attie with regard to the above circumstances. Plaintiffs allege that from 2006 until May of 2008, a new attorney-client relationship was formed by defendant Attie undertaking the responsibility to seek nunc pro tunc consent and approval of the settlement. Plaintiffs contend that, in so doing, defendant Attie made affirmative representations to plaintiffs that he would and could secure such consent and approval and, that, in May 2008, defendant Attie acknowledged to plaintiffs that he failed to seek nunc pro tunc consent to the settlement during this time. Plaintiffs claim that the above constituted a second instance of legal malpractice, as well as fraudulent concealment, by making affirmative representations that defendant Attie could do that which he could not, and by, again, failing to disclose to plaintiffs the malpractice which he had allegedly committed in 2001. Plaintiffs then filed the subject suit on December 18, 2008.

On the contrary, plaintiffs improperly attempt to convert defendant's alleged failure to obtain pre-settlement consent — a negligent act — into an active, ongoing, concealment. However, failure to disclose the wrongdoing is insufficient to invoke this "uncommon remedy," which requires fraudulent behavior (Ross, 8 NY3d at 491; see also, Zumpano, 6 NY3d at 675; Weiss v Manfredi, 83 NY2d 974, 977 [1994]; Ferdinand v Crecca & Blair, 5 AD3d 538, lv. to appeal denied, 5 NY3d 710 [2004]). Based on the above, plaintiffs failed to show that they were prevented from bringing suit due to their justifiable reliance on some intentional [*5]misrepresentation made by defendant after his alleged failure to obtain pre-settlement consent (see, Bevinetto, 51 AD3d at 614). The fact that defendant claimed on the closing statement that there were no "medical liens" does not rise to the level of wrongfully inducing plaintiffs not to file suit; rather, this speaks to the alleged malpractice about which plaintiffs are complaining. By plaintiffs' own admission, they had no contact whatsoever with defendant until sometime in 2006. Notably, then, there is no evidence of any type of ongoing misrepresentation made to plaintiffs for an approximate five-year period (see, e.g., Melnitzky v Hollander, 16 AD3d 192 [1st Dept.], lv. to appeal denied, 5 NY3d 710 [2005]). "

Legal Malpractice is unique, in that lawyers write the rules for suing lawyers, and those cases are heard by lawyers.  This situation does not obtain in any other field of jurisprudence.  Here is an interesting case from Small Claims Court and a report from the NYLJ by Mark Fass.  Read the case for its wide-ranging discussion of Citibank's practices, and its findings on Claimant's attorney, who was not present nor a party.

"A Staten Island judge has thrown out a small claims action over a broken furnace filed by the buyer of a house against the seller's attorney."""This is another case of what appears to be a disturbing trend of litigation being brought by persons suing attorneys who did not represent them for that attorney's proper representation of his or her client," Judge Straniere wrote in DeFelice v. Costagliola, 81/09. "The theory behind bringing these baseless legal actions being that owing to the small amount of money involved, the lawyer would pay the claim rather than engage in the cost of litigation."

"Claimant testified that when he moved into the premises on December 12, 2008 the furnace was not operating properly. Claimant had temporary repairs done on December 13, 2008 at a cost of $425.00 and then on December 18, 2008 paid $1,800.00 for the installation of a new furnace. Claimant spoke to his attorney whom, the claimant credibly testified, advised him to sue the seller's lawyer because the seller allegedly had moved from New York. There is no evidence as to the new address of the seller and if she is beyond the jurisdiction of the court. "

"Claimant's cause of action is dismissed on the merits. Defendant has no personal liability for the actions or inactions of his client. Defendant is not a stakeholder pursuant to an escrow agreement nor did he personally promise to perform any obligations for his client. This suit is completely baseless. The court commends the claimant for being honest and forthright admitting that his attorney suggested that he bring this suit, however, there are consequences of his actions. Defendant was required to incur the expense of hiring an attorney to represent him in this matter and was subjected to public ridicule as a defendant in a crowded small claims courtroom in regard to an alleged breach of contract arising from his work as an attorney.

Many times in legal malpractice cases, courts find causes of action to be duplicitive.  Some of this arises from over-pleading.  As an example, plaintiff may plead legal malpractice, negligence, breach of contact, breach of fiduciary duty, unjust enrichment, fraud, and so on  Courts will trim these causes of action, all the while assuring plaintiff that any damages will still be permitted before the jury.

In our continued examination of SMARTIX INTERNATIONAL CORPORATION, a.k.a. SMARTIX INTERNATIONAL, LLC, - against - GARRUBBO, ROMANKOW & CAPESE, P.C. AND ANTHONY RINALDO, ; 06 Civ. 1501 (JGK); UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; 2009 U.S. Dist. LEXIS 29114; 
March 30, 2009,  we look at the non-duplicitive cause of action for inflated billing and unjust enrichment.

"The plaintiff brings a claim for unjust enrichment against the defendants on the basis of alleged over-billing. The elements for a claim of unjust enrichment under New York law are: (1) that the defendant was enriched; (2) the enrichment was at the plaintiff's expense; and (3) the circumstances were such that equity and good conscience require the defendants to make restitution. See, e.g., Golden Pac. Bancorp v. Fed. Deposit Ins. Corp., 273 F.3d 509, 519 (2d Cir. 2001).
 

"In connection with its unjust enrichment claim, the plaintiff asserts, among other things, that the defendants inflated their bills without justification. The plaintiff produces evidence raising issues of fact with respect to whether bills were inflated without justification. (See, e.g., Dus Decl. Ex. 42 at 10/3/2000 and 10/11/2000 entries.) The defendants do not respond substantively to the plaintiff's unjust enrichment claim, arguing only that the unjust enrichment claim should be dismissed [*28] as duplicative of the plaintiff's legal malpractice claims. See, e.g., Town of Wallkill v. Rosenstein, 40 A.D.3d 972, 837 N.Y.S.2d 212, 215 (App. Div. 2007) (holding that claims for unjust enrichment and breach of fiduciary duty, among other claims, should be dismissed because "[t]hey were merely duplicative of the legal malpractice cause of action, as they arose from the same facts and did not allege distinct and different damages").

This argument is without merit, because the unjust enrichment claim is not duplicative of any of the legal malpractice claims. The unjust enrichment claim alleges that the defendants inflated their legal bills. The legal malpractice claims allege errors in judgment and performance by the defendants with respect to the legal services they provided to the plaintiff. Plainly these are different claims relying on different facts.

In a well-reasoned opinion from the SDNY, Judge Koeltl determined that plaintiff may continue with three claims against the attorneys.  In SMARTIX INTERNATIONAL CORPORATION, a.k.a. SMARTIX INTERNATIONAL, LLC,  - against - GARRUBBO, ROMANKOW & CAPESE, P.C. AND ANTHONY RINALDO, 6 Civ. 1501 (JGK); UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; 2009 U.S. Dist. LEXIS 29114;March 30, 2009, Decided
 

In this case, Smartix, a corporation with certain ticketing intellectual property, was in the business of selling and licensing that technology, and wanted to enter into a contract with Mastercard.  They retained the defendant law firm to advise them on the contract negotiation, to engage in corporate governance, and put one of the attorneys on the board.

Things went wrong with the MC contract and then Smartix was sued by plaintiffs named Metzger.  Plaintiffs retained defendants to defend that suit.  In this blog entry we'll look at the legal malpractice claims, and in tomorrow's we'll look at the unjust enrichment claim.

Plaintiffs complained that defendants failed to advise them correctly on the Mastercard contract negotiation and left them open to Mastercard's exploitation.  Beyond that, they claim malpractice when defendant attorney failed to attend a court ordered mediation session, [as well as the other attorneys] and was open to a sanctions hearing for which they billed plaintiffs.

Judge Koeltl denied summary judgment on both counts. "The plaintiff's first legal malpractice claim is based on the defendants' representation of the plaintiff in the course of the Metzger litigation. The plaintiff alleges that it was billed for the defendants' attendance at a sanctions hearing resulting from Mr. Rinaldo's failure to attend a court-ordered mediation. The defendants [*11] point out that both Metzger parties failed to attend the court-ordered mediation and that no sanctions were ultimately imposed.

The allegation regarding the sanctions hearing raises an issue of material fact with respect to the plaintiff's first legal malpractice claim. The plaintiff has provided evidence that it was billed in connection with a sanctions hearing resulting in part from Mr. Rinaldo's failure to attend a court-ordered mediation.  [T]he failure to follow direct orders from the court would fall below any standard of care. Cf. Logalbo v. Plishkin, Rubano & Baum, 163 A.D.2d 511, 558 N.Y.S.2d 185, 187-88 (App. Div. 1990) (finding in the absence of expert testimony or expert report that attorney who disregarded "clearly defined and firmly imbedded" obligation failed to meet any permissible standard of due care). Moreover, although the defendants point out that the trial judge in the Metzger litigation did not ultimately [*12] impose sanctions on the defendants, they do not argue that this decision by the trial judge precludes a finding of legal malpractice against the defendants, and there is no reason that would be so. Plainly claims for legal malpractice may exist even where attorneys have not been sanctioned for their conduct."
 

"The plaintiff has produced evidence in the form of deposition testimony that the MasterCard Agreement was drafted to the disadvantage of the plaintiff and contained certain vagaries that MasterCard was able to exploit at the expense of the plaintiff. (Katz Dep. at 47-49 ("[The Agreement] was very vague . . . . It did not protect Smartix from MasterCard's efforts to secure [*19] use of the software outside the contract."), 101 ("The MasterCard Agreement was vague enough so that MasterCard felt that they would roll the dice and try to do these businesses without us, which they subsequently did . . . ."); Huber Dep. at 72 ("It sounds as if MasterCard can do pretty much anything they want with this in one part of the contract . . . . There's also penalty clauses in here that would cause Smartix enormous damages if they wanted to market this outside of MasterCard . . . .").)
"

Privity of contract is an essential in legal malpractice litigation.  One may not sue the opponent's attorney; only one's own.  What makes for privity of contract?  As all know, no writing is necessary to create a contract.  So, can there be privity of contract without a retainer agreement.  Putting aside Rule 137 questions about the attorney's obligation to provide a writing, in Denise Terio,  v Lance Roger Spodek, Reich Reich & Reich, P.C., 2008-03594, 2008-04435;  SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT; 2009 NY Slip Op 4412; 2009 N.Y. App. Div. LEXIS 4411June 2, 2009, Decided we see a short answer:
 

"To recover damages for legal malpractice, a plaintiff [**4] must prove, inter alia, the existence of an attorney-client relationship (see Velasquez v Katz, 42 AD3d 566, 567, 840 N.Y.S.2d 410; Moran v Hurst, 32 AD3d 909, 822 N.Y.S.2d 564; Wei Cheng Chang v Pi, 288 AD2d 378, 380, 733 N.Y.S.2d 471; Volpe v Canfield, 237 AD2d 282, 283, 654 N.Y.S.2d 160). While a plaintiff's unilateral belief does not confer upon him or her the status of client (see Volpe v Canfield, 237 AD2d at 283), an attorney-client relationship may exist in the absence of a formal retainer agreement (see e.g. Swalg Dev. Corp. v Gaines, 274 AD2d 385, 386, 710 N.Y.S.2d 619). To establish an attorney-client relationship there must be an explicit undertaking to perform a specific task (see Wei Cheng Chang v Pi, 288 AD2d 378, 733 N.Y.S.2d 471; Volpe v Canfield, 237 AD2d at 283)."

So often, the practice of law seems to have devolved into an attorney v. client battle over the work and fees.  Here in Morelli & Gold  LLP v. Altman, NY Slip Op 31492(U) we see a large scale battle over a child support/custody case in which there has been litigation, fees, fee dispute, trial de novo, counterclaims and appeals. All this, and the case has not yet left the pleadings stage.

In her 32 page decision, Justice Edmead goes through a complete primer on:

a.  Rule 137 fee disputes, trial de novo, the pleading requirements for a trial de novo, and the forms used;

b.  Defenses and counterclaims after a fee dispute;

c.  Proper pleadings in legal malpractice counterclaims;

d.  The role of res judicata and collateral estoppel in legal malpractice fee disputes.

It's a long decision,,,look to the link and read through it for a good discussion on these issues.

Legal Malpractice litigation is a world apart from the rest of regular litigation ; it has its own rules, it has its own prinicipals, and is the sole set of rules written by attorneys to regulate attorneys.  Criminal legal malpractice is a world within a world...not unlike a russian doll set.

Here, in a Federal District Court case, we see how criminal defense attorneys enjoy almost total freedom from legal malpractice suits, and how a defamation law suit for words spoken in litigation will have little heft.

In Sash v. Rosahn, 08 cv 4032; Decided: June 16, 2009 ; District Judge Barbara S. Jones;U.S. DISTRICT COURT; SOUTHERN DISTRICT OF NEW YORK
 

"Plaintiffs bring a variety of claims stemming from Rosahn's legal representation of Sash at an April 2005 parole revocation hearing, during which Sash pled guilty with explanation to violations of conditional release.

The Court construes Plaintiffs' Complaint to state claims of legal malpractice, defamation, and intentional and/or negligent infliction of emotional harm.3

Specifically, Sash alleges that Rosahn committed malpractice in ineffectively representing him at a 2005 parole revocation hearing (including allegations that Rosahn failed to move to suppress certain evidence potentially relevant to the hearing, that Rosahn arranged with officers of the court to "fix" the hearing against Sash, and that Rosahn abaondoned representation of Sash following the hearing), defamed Sash in conversation with officers of the Court following the hearing, and intentionally or negligently inflicted emotional harm on Plaintiff Sash therein.4

On January 17, 2003, Plaintiff Sash was sentenced to a term of one to three years following a guilty plea on a second-degree forgery charge. Sash was placed on conditional release in January of 2005. In February 2005, Sash was arrested at his wife's residence in New Jersey for violation of his conditional release (leaving the state of New York without permission).

On April 4, 2005, at a parole revocation hearing, Sash pled guilty with explanation to violating the conditions of his release. Rosahn, then an employee of the Legal Aid Society of New York, represented Sash during that hearing and provided the explanation to the charges as requested by Sash.

Directly following the hearing Rosahn spoke with the administrative law judge and the parole specialist, during which conversation transcripts indicate that Rosahn stated, "thank you for biting your tongue," and "I had to bite my tongue," Comp. paras. 41-42. The Complaint alleges that these statements referred to Sash.
 

"[t]o state a cause of action for legal malpractice arising from negligent misrepresentation in a criminal proceeding, plaintiff must allege his innocence or a colorable claim of innocence of the underlying offense." Sash v. Dudley, No. 05-cv-7498, 2006 WL 997256, at **2-3 (S.D.N.Y. April 17, 2006); Carmel v. Lunney, 518 N.Y.S.2d 605, 607 (1987). It is well established under New York law that "so long as the determination of [a plaintiff's] guilt for that offense remains undisturbed, no cause of action will lie." Id. A guilty plea will therefore generally preclude a defendant from lodging a malpractice claim against his defense lawyer. See Scanio v. Palmiere & Pellegrino, 674 N.Y.S.2d 527, 528 (4th Dep't 1998); see also Estes v. Doe, No. 97 Civ. 8133, 1999 WL 983886, at *4 (S.D.N.Y. Oct. 29, 1999). "Thus, a criminal defendant cannot even state a claim for legal malpractice until his conviction is overturned or vacated."

Attorneys deal in areas of well settled law and in areas of "unsettled law."  Clients have problems or issues which exist, no matter how settled the law is in that area.  Attorneys are held to a standard of reasonable care in all aspects of their representation.  How does one square these contradictory settings?

An answer is given in HNH Intl., Ltd. v Pryor Cashman Sherman & Flynn LLP ; 2009 NY Slip Op 04964 ; Decided on June 18, 2009 ;Appellate Division, First Department .
 

"Plaintiffs allege that defendant, a law firm, incorrectly advised them concerning the early 20th century sound recordings they proposed to re-engineer, re-master and distribute as CDs. After the CDs had been manufactured and distributed, plaintiffs were sued and found liable for common-law copyright infringement.

The court dismissed the legal malpractice complaint, pursuant to CPLR 3211(a)(1), based on documentary evidence from which it concluded that the state of the law at the time the advice was given was unsettled and defendants therefore had not " failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession'" at that time (quoting Darby & Darby v VSI Intl., 95 NY2d 308, 313 [2000]).

We conclude, however, that the state of the law was not so unsettled at the time the advice was given as to bar as a matter of law plaintiffs' claim that a reasonably skilled attorney would have advised that the CDs were or might be entitled to common-law copyright protection and would not have advised that the release of the CDs would not result in any copyright liability. Although defendant maintains that it did advise plaintiffs of the possibility of common-law liability and did not advise plaintiffs that the release of the CDs would not result in any copyright liability, we must accept the facts alleged in the complaint as true and accord plaintiffs the benefit of every possible
favorable inference (Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & [*2]Steiner, 96 NY2d 300, 303 [2001]). "
 

In Weksler v Kane Kessler, P.C. ;2009 NY Slip Op 04957 ;Decided on June 16, 2009 ;Appellate Division, First Department  we see the fatal duo of lack of privity and lack of proximity.  The short story is that Plaintiff, while married to decedent was promised a life-long annuity of $ 4000 per month, said to come from the adult sons, so long as she remained married until decedent's death.  He went into the hospital, came out and filed for divorce.  The sons never funded the annuity.  Plaintiff sues the decedent's attorney who prepared the plan and the sons, and loses all around.
 

"As to the claim for legal malpractice, there was never an attorney-client relationship between plaintiff and the firm. Even assuming plaintiff had been the firm's client, she failed to show how such alleged malpractice caused her injury, as the agreement simply effectuated the intent of the parties, i.e., to provide plaintiff with an annuity during her lifetime subject to the stated terms and conditions (see Finova Capital Corp. v Berger, 18 AD3d 256 [2005]; cf. Mandel, Resnik & Kaiser, P.C. v E.I. Elecs., Inc., 41 AD3d 386 [2007]).

Plaintiff's remaining causes of action against the firm, for negligent misrepresention and tortious interference, are dismissed as redundant of the legal malpractice claim (see Shwartz v Olshan Grundman Frome & Rosenzweig, 302 AD2d 193 [2003]; Reyes v Leuzzi, 2005 NY Misc LEXIS 2914, *3, 2005 WL 3501578, *4; cf. William Kaufman Org. v Graham & James, 269 AD2d 171 [2000]). Finally, although such affirmative relief was not sought, the court did not err in denying plaintiff an opportunity to amend her complaint for a second time, as the proposed speculative allegations failed to establish any viable cause of action (see Davis & Davis v Morson, 286 AD2d 584 [2001]). "

The short answer is when there is spoliation.  Spoliation is the intentional or negligent destruction of evidence.  It may take place prior to, or during litigation, and it always deprives one side of the use of otherwise admissible evidence. 

In the helicopter case, it seems to have been intentional. IN RE HELICOPTER CRASH NEAR WENDLE CREEK, BRITISH COLUMBIA, ON AUGUST 8, 2002; Docket No. 3:04md1649 (SRU)
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT; 2009 U.S. Dist. LEXIS 41477; May 18, 2009,

Spoliation comes into the legal malpractice picture when, for example, defendant attorney fails to take discovery of important evidence in the underlying case, and the ability later to obtain that evidence no longer exists.  In a matrimonial legal malpractice case, it may no longer be possible to discovery the other spouse's financial records, and so plaintiff cannot show exactly how much she lost by target attorney's negligent failure to take discovery.

In the helicopter case: "...defendants' alleged failure to maintain or produce the allegedly "missing" records materially impaired her prosecution of her medical negligence and informed consent claims.

Plaintiff's "negligent spoliation" claim is akin to a legal malpractice claim [*6] in that "damages arise from the loss" -- or diminution of value -- of an underlying claim. . . . [P]plaintiff's primary medical negligence and informed consent claims ultimately failed for lack of proof of scientific/medical causation. Plaintiff argues that, if the allegedly absent records had been created or maintained and produced, Williamson might have been provided with the "missing link" that would have enabled him to identify and persuasively explain the causal relationship between gadolinium extravasation and Raynaud's syndrome. Specifically, plaintiff points to the fact that no records reflect the amount of gadolinium used during the procedure. . . .
 

We have commented about the Collateral Estoppel trap in legal malpractice with regard to fee arbitrations and hearings.  in short, when a court grants an attorney fee application, it implicitly determines that there can have been no malpractice, as the court may not award fees in the face of malpractice.  Fee arbitrations and hearings in state court happen, but not that often.  Bankruptcy fee hearings happen in every case, and in every case where fees are awarded to counsel, the question of res judicata comes up.

In re D.A. ELIA CONSTRUCTION CORP., Plaintiff, v. DAMON & MOREY, LLP, Defendant.;07-CV-143A  ;  UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK;   389 B.R. 314; 2008 U.S. Dist. LEXIS 25496 has been the leading case on this issue.  There, attorneys who had been granted fees were able to fend off legal malpractice claims based upon res judicata.

Now, in PENTHOUSE MEDIA GROUP, INC., , - against - PACHULSKI STANG ZIEHL & JONES LLP, ;UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;  2009 U.S. Dist. LEXIS 46617 we see a slightly different result.  Judge Scheindlin sitting in appeal of a US Bankruptcy decision by Judge Bernstein, finds that the legal malpractice plaintiffs did not have a full and fair opportunity to be heard, and that res judicata does not control the issue of legal malpractice.

"Although Pachulski's fee application was approved by the bankruptcy court in the prior proceeding, I cannot conclude as a matter of law that PMG had a full and fair opportunity to litigate allegations of Pachulski's malpractice during that hearing. Many of the factors used to consider whether a party had a full and fair opportunity to litigate an issue favor PMG, particularly given PMG's continued retention of Pachulski as its counsel. For instance, one of the factors courts have considered is "the importance of the claim in the prior litigation." 45 PMG had just undergone a reorganization with the help of Pachulski as its counsel. The possibility that Pachulski may have committed malpractice while representing PMG during that reorganization may not have been at the forefront of PMG's concerns. In addition, PMG [*16] had no "incentive [or] initiative to litigate" the malpractice issue, 46 considering that it expected Pachulski to continue to advise PMG in the winding down of its bankruptcy proceeding.

Of particular importance to this Court is the bankruptcy court's reliance on D.A. Elia Construction Corp. 50 Judge Bernstein concluded that D.A. Elia was directly on point, 51 but D.A. Elia is perhaps even more clearly distinguishable from the instant case than other cases cited by Pachulski, as in that case the malpractice claim was actually litigated during the fee application proceeding. D.A. Elia emphasized that
many of the same allegations made by Elia in its [malpractice] complaint were previously made by Elia in its objections to Damon & Morey's final fee application. Specifically, Elia argued to the bankruptcy court that the firm had labored under a conflict of interest, had committed legal malpractice and had failed to turn over money owed to the estate. The bankruptcy court provided Elia with ample opportunity [to] raise those claims, but ultimately rejected them as meritless. 52
The district court concluded that "it cannot be said that Elia was denied the opportunity to raise these [malpractice] claims in the prior action." 53 In the instant case, PMG raised no such objections [*19] at the fee hearing."

Clients often ask whether it matters that their legal malpractice case comes as a defense to an attorney fee case.  It should not, but judges are swayed by the procedural setting of cases before them.  Does it make a difference whether the legal malpractice case is a main action or a counterclaim?  Taking a look at this case gives possible insight.

Kluczka v Lecci  2009 NY Slip Op 04867  Decided on June 9, 2009  Appellate Division, Second Department  holds that:
 

"The plaintiff retained the defendant attorney to represent him in a divorce action commenced by his former wife. The divorce action was settled by a stipulation pursuant to which the plaintiff agreed, inter alia, to waive his interest in the marital residence and give his former wife a share of his pension benefits, while she agreed to waive her interest in another property, and forgive certain child support arrears. The plaintiff thereafter commenced this action, contending that the defendant had committed legal malpractice by recommending that the plaintiff enter into the stipulation without obtaining appraisals of the subject real property or his pension.

Here, the defendant made a prima facie showing that he was entitled to summary judgment by demonstrating that the stipulation in the underlying divorce action was a provident agreement which provided both parties with benefits, and that his allegedly negligent failure to obtain appraisals did not cause the plaintiff to incur any damages. In opposition, the plaintiff failed to raise an issue of fact as to whether he incurred damages by submitting evidentiary proof that, but for the defendant's alleged negligence, he would have been able to negotiate a more favorable settlement (see Rapp v Lauer, 229 AD2d 383, 384; Rogers v Ettinger, 163 AD2d 257, 258). Accordingly, the Supreme Court should have granted that branch of the defendant's motion which was for summary judgment dismissing the complaint.

However, the court properly denied that branch of the plaintiff's cross motion which was for summary judgment dismissing the defendant's counterclaim to recover unpaid legal fees. An attorney may not recover fees for legal services performed in a negligent manner even where that negligence is not a proximate cause of the client's injury (see Martin, Van de Walle, Guarino & Donohue v Yohay, 149 AD2d 477, 480; Campagnola v Mulholland, Minion & Roe, 148 AD2d 155, 158, affd 76 NY2d 38). Here, the submissions of both parties demonstrate that there is a sharply disputed issue of fact as to whether the defendant's performance of legal services, as measured against that of an attorney of reasonable skill and knowledge, was negligent (see Kutner v Catterson, 56 AD3d 437). Thus, the issue of whether the defendant is entitled to recover legal fees on his counterclaim must await resolution at trial. "

CPLR 3211 (a)(1) is the "documentary evidence" portion of a general pre-answer motion to dismiss.  The standard applied to dismissal motions under this particular sub-section is:

"On a motion to dismiss based upon documentary evidence, dismissal is only warranted if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Klein v Gutman, 12 AD3d 417, 418; see CPLR 3211[a][1]; Saxony Ice Co., Div. of Springfield Ice Co., Inc. v Ultimate Energy Rest. Corp., 27 AD3d 445). Moreover, where "evidentiary material is submitted and considered on a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the court must determine whether the plaintiff has a cause of action, not whether the plaintiff has stated one" (Steve Elliot, LLC v Teplitsky, 59 AD3d 523, 524, citing Guggenheimer v Ginzburg, 43 NY2d 268, 275). "[U]nless it has been shown that a material fact as claimed by the [plaintiff] to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it . . . dismissal should not eventuate" (Guggenheimer v Ginzburg, 43 NY2d at 275).
 

Here, in the quote taken from Walker v Kramer ; 2009 NY Slip Op 04414 ;  Decided on June 2, 2009 ;  Appellate Division, Second Department we see a situation in which neither defendant demonstrated their right to dismissal.  Plaintiff has adequately stated a cause of action, or indeed, has a cause of action which the court discerned, in this matrimonial legal malpractice case.
 

A "client's unilateral belief" in the attorney-client relationship is insufficient to prove privity between the attorney and client, sufficient for a legal malpractice lawsuit, but subsequent behavior or acts by the attorneys might provide the necessary proof.  Here, in Terio v Spodek ;  2009 NY Slip Op 04412
Decided on June 2, 2009 ; Appellate Division, Second Department  we see how that might happen:
 

"To recover damages for legal malpractice, a plaintiff must prove, inter alia, the existence of an attorney-client relationship (see Velasquez v Katz, 42 AD3d 566, 567; Moran v Hurst, 32 AD3d 909; Wei Cheng Chang v Pi, 288 AD2d 378, 380; Volpe v Canfield, 237 AD2d 282, 283). While a plaintiff's unilateral belief does not confer upon him or her the status of client (see Volpe v Canfield, 237 AD2d at 283), an attorney-client relationship may exist in the absence of a formal retainer agreement (see e.g. Swalg Dev. Corp. v Gaines, 274 AD2d 385, 386). To establish an attorney-client relationship there must be an explicit undertaking to perform a specific task (see Wei Cheng Chang v Pi, 288 AD2d 378; Volpe v Canfield, 237 AD2d at 283).

Here, Reich failed to establish, as a matter of law, that an attorney-client relationship was not formed and did not exist during the time that the alleged acts of negligence occurred. Reich's submissions demonstrated that it consulted with the plaintiff, advised her of her chances of success, and negotiated a settlement with a bankruptcy trustee. Contrary to Reich's arguments, the fact that it was purportedly not the attorney of record at the time of a hearing before the United States Bankruptcy Court to determine whether the particular asset at issue qualified as an exemption, is not dispositive of the existence of an attorney-client relationship during the period of the alleged negligence. "

In the past six months, new life has been breathed into Judiciary law 487.  It may well be the oldest statute in Anglo-American jurisprudence.  Dating from1275  the statute provides that an attorney who is guilty of any deceit or collusion, may be guilty of a misdemeanor and held for treble damages.

Since the Court of Appeals decided Amalfitano v Rosenberg   12 NY3d 8 a rise in the acceptance of, and application of the statute has been seen.  Here, in a Fourth Department case, Scarborough v Napoli, Kaiser & Bern, Llp ;2009 NY Slip Op 04475 ;Decided on June 5, 2009 ;Appellate Division, Fourth Department  we see summary judgment being denied to the target attorney defendants,

"The medical malpractice action was dismissed against the underlying medical defendants after defendants failed to file a timely note of issue. Following the dismissal of that action, defendants asked plaintiff to sign a stipulation of discontinuance with respect to the underlying action, which in fact had already been dismissed. According to plaintiff, he was informed that he could not prevail in his underlying action but was never informed that the action already had been dismissed as a result of defendants' failure to file [*2]a timely note of issue. Subsequently, a member of defendants' firm telephoned plaintiff and told him the actual basis for the dismissal of the underlying action.

Plaintiff thereafter commenced this action asserting causes of action for legal malpractice and for treble damages pursuant to Judiciary Law § 487. Defendants moved for summary judgment dismissing the amended complaint in its entirety on the ground that no acts or omissions by the underlying medical defendants were the proximate cause of the death of plaintiff's father, an essential element of a cause of action for legal malpractice.

Contrary to the further contention of defendants, the court properly determined that none of the defendants is entitled to summary judgment dismissing the Judiciary Law § 487 cause of action. That statute provides in relevant part that an attorney who is "guilty of deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party . . . [i]s guilty of a misdemeanor, and . . . he [or she] forfeits to the party injured treble damages, to be recovered in a civil action." "A violation of Judiciary Law § 487 may be established either by the defendant's alleged deceit or by an alleged chronic, extreme pattern of legal delinquency by the defendant' " (Izko Sportswear Co., Inc. v Flaum, 25 AD3d 534, 537; see Amalfitano v Rosenberg, 12 NY3d 8; Schindler v Issler & Schrage, 262 AD2d 226, lv dismissed 94 NY2d 791, rearg denied 94 NY2d 859). Here, the documents submitted by defendants in support of their motion establish that some of the attorneys at defendant law firm engaged in intentional deceit, and thus by their own submissions defendants defeated their entitlement to summary judgment dismissing that cause of action. "

In both Federal District Court and in State Court in New York attorneys have a "retaining lien" under Judiciary Law 475.  In Federal District Court the rule is set forth in Katz v. Image Innovations Holdings Inc., 06 Civ. 3707;Decided: May 27, 2009; District Judge John G. Koeltl

U.S. DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

"It is well settled in this Circuit that an attorney may claim a retaining lien for outstanding unpaid fees and disbursements on a client's papers and property that came into the attorney's possession as the result of his professional representation of that client. See Pomerantz v. Schandler, 704 F.2d 681, 683 (2d Cir. 1983) (per curiam) (citing In re San Juan Gold, Inc., 96 F.2d 60 (2d Cir. 1938)). This right to a retaining lien is grounded in common law, and is enforced in federal courts unless a specific federal law alters the parties' rights. See Allstate Ins. Co. v. Nandi, 258 F.Supp.2d 309, 311 (S.D.N.Y. 2003) (citing Rivkin v. A.J. Hollander & Co., Inc., No. 95 Civ. 9314, 1996 WL 633217, at *2 (S.D.N.Y. Nov. 1, 1996)). In this case, no federal law prevents the Court from fixing a retaining lien.

The decision to fix a retaining lien lies within the discretion of the district court. See Allstate, 258 F.Supp.2d at 311 (citing Pay Television of Greater New York, Inc. v. Sheridan, 766 F.2d 92, 94 (2d Cir. 1985) (per curiam)). A retaining lien attaches "when the action is commenced and remains in force when an attorney is discharged without cause." See Allstate, 258 F.Supp.2d at 312 (quoting Casper v. Lew Lieberbaum & Co., Inc., No. 97 Civ. 3016, 1999 WL 335334, at *8 (S.D.N.Y. May 26, 1999)). While an attorney who has been discharged for cause has no right to compensation or to a retaining lien, an attorney who has been discharged without cause is entitled to be paid a fee on a quantum meruit basis for the reasonable value of the legal services that were provided. See Viada v. Osaka Health Spa, Inc., No. 04 Civ. 2744, 2005 WL 3481196, at *2 (S.D.N.Y. Dec. 19, 2005) (citing Gurry v. Glaxo Wellcome, Inc., No. 98 Civ. 6243, 2000 WL 1702028, at *1 (S.D.N.Y. Nov. 14, 2000)). When counsel is granted leave to withdraw by the court, the discharge is not for cause. See Viada, 2005 WL 3481196, at *2. Absent a defendant's urgent need for the papers subject to the retaining lien, such as for a criminal trial, the Court of Appeals for the Second Circuit has held it an abuse of discretion to require withdrawing counsel to turn over papers subject to a retaining lien without conditioning it on payment or posting bond for payment of outstanding legal fees. See Pomerantz, 704 F.2d at 683-684."
 

How are "inefficiencies" such as intra-office conferences and duplication of effort handled?

"There is some duplication caused by McCarter's employment of 14 attorneys in this matter, and its billing for internal conferences. (See generally Ex. A, Moran Decl., Jan. 21, 2009.) A deduction of 5 percent from the attorney's fees adequately compensates for this inefficiency. See New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1146 (2d Cir. 1983) (endorsing percentage reductions as a practical means of reducing a fee application to avoid an excessive fee, and noting percentage reductions of 5 percent to 22 percent ); Mr. X v. New York State Educ. Dept., 20 F.Supp.2d 561, 564 (S.D.N.Y. 1998) (reducing requested attorney's fees award by twenty percent for, among other considerations, duplicative work)."

The collapse of a hedge fund gives rise to a legal malpractice claim by various of the investors.  The hedge fund impresario is convicted of securities fraud, and then turns around to help the investors sue the funds' attorney. 

In Eurycleia Partners, LP v Seward & Kissel, LLP ; 2009 NY Slip Op 04299 ; Decided on June 4, 2009 ; Court of Appeals ; Graffeo, J. we see that there is not enough connection between the attorneys and plaintiffs, and that plaintiffs cannot show the requisite relationship between the attorneys and the funds.
 

"The July 2007 amended complaint presents three main allegations against S & K. First, plaintiffs assert S & K learned at some point in 2005 that Wood River invested more than 10% of its assets in Endwave stock in violation of the 10% restriction contained in the offering memoranda. According to plaintiffs, S & K nonetheless persisted in drafting offering memoranda falsely representing that Wood River was adhering to the 10% cap as part of its investment policy. Second, plaintiffs claim that S & K falsely stated in the offering memoranda that TBS was Wood River's auditor even though S & K knew from the inception that TBS had not been retained to perform any auditing work. Third, plaintiffs allege S & K learned in January 2005 that Wood River had violated securities laws by failing to file required notices when Wood River obtained 5% and, later, 10% of Endwave's stock [FN5]. Plaintiffs maintain that S & K breached fiduciary duties owed to them, as limited partners, by failing to disclose the SEC violations to them.

Here, whether the claim is labeled fraud or aiding and abetting fraud, we conclude that neither the allegations in the complaint nor the surrounding circumstances give rise to a reasonable inference that S & K participated in a scheme to defraud or knew about the falsity of the two contested statements in the offering memoranda. The amended complaint conclusorily alleges that at some unspecified point in 2005 S & K became aware that more than 10% of Wood River's holdings were invested with Endwave but, nonetheless, S & K continued to issue offering memoranda falsely representing that Wood River would not invest more than 10% of its assets in any given security.

We likewise find the amended complaint's alternative allegation of fraud or aiding and abetting fraud — that S & K knew TBS was not Wood River's auditor yet continued to list TBS in the offering memoranda — to be similarly conclusory. As the Appellate Division recognized, the complaint elsewhere alleges that in the summer of 2005 TBS falsely represented that it was the fund's auditor and would conduct an audit. In short, although we are mindful that a plaintiff need not produce absolute proof of fraud and that there may be cases in which particular facts are within a defendant's possession, it is also true that the strength of the requisite inference of fraud will vary based on the facts and context of each case.

A fiduciary relationship arises "between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation" (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005] [internal quotation marks and citation omitted]). Put differently, "[a] fiduciary relation exists when confidence is reposed on one side and there is resulting superiority and influence on the other" (AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d 146, 158 [2008] [internal quotation marks and citation omitted]). Ascertaining the existence of such a relationship inevitably requires a fact-specific inquiry. [*6]

Here, plaintiffs do not allege that they had direct contact or any relationship — contractual or otherwise — with S & K. Indeed, plaintiffs acknowledge that the offering memoranda advised prospective limited partners to consult their own legal counsel prior to investing in Wood River. Plaintiffs nevertheless contend that S & K's attorney-client relationship with Wood River in and of itself created a fiduciary relationship between S & K and the limited partners themselves. We disagree. "

Aside from the precatory "You've got to be crazy...", 

" on occasion, true mental incompetence does collide with questions of legal malpractice, and in this case, criminal conviction.  In ALLEN WOLFSON, -v- AVRAHAM MOSKOWITZ,  08 Civ. 8796 (DLC);UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK'; 2009 U.S. Dist. LEXIS 45822;  May 29, 2009, Decided   we see the result:
 

"Allen Wolfson has filed suit against Avraham Moskowitz, Wolfson's former attorney in a criminal matter. Moskowitz moved to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. . For the following reasons, the Report is adopted, and the motion is granted.

Following trial, Wolfson moved for a new trial and to vacate his conviction, as well as to vacate his guilty plea entered in another case, arguing, inter alia, that the jury instructions were defective, that he was incompetent at the time of his trial and plea, and that his counsel was ineffective. The Honorable John G. Koeltl, United States District Judge, denied these motions in two separate opinions issued on the same day.  Judge Koeltl did find that Wolfson was not competent to be sentenced. Wolfson, . Wolfson was therefore provisionally sentenced and ordered to a facility for treatment, and will be given a final sentence when he is deemed competent.

The Report states that in a diversity action such as this case, a federal court applies the choice-of-law rules of the state in which the court sits. See Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135, 147 (2d Cir. 2008). Finding that the complaint against Moskowitz for failure to inform Wolfson that the indictment failed to charge a crime was a claim for the tort of legal malpractice, the Report applied New York's "interest analysis," see White Plains Coat & Apron Co., Inc. v. Cintas Corp., 460 F.3d 281, 284 (2d Cir. 2006), and concluded that New York's interest was paramount and therefore [*6] New York law applied. See, e.g., LNC Inv., Inc. v. First Fidelity Bank, N.A., 935 F. Supp. 1333, 1350-51 (S.D.N.Y. 1996).

The Report correctly concluded that under New York law, a party cannot maintain a cognizable claim for legal malpractice in connection with representation provided in a criminal case when his conviction still stands. See Britt v. Legal Aid Soc, Inc., 95 N.Y.2d 443, 447, 741 N.E.2d 109, 718 N.Y.S.2d 264 (2000); Carmel v. Lunney, 70 N.Y.2d 169, 173, 511 N.E.2d 1126, 518 N.Y.S.2d 605 (1987). Thus, because Wolfson has not had his conviction vacated and remains incarcerated, he fails to state a claim for malpractice and his complaint must be dismissed."


 

This recent Court of Appeals Case, Wyly v Milberg Weiss Bershad & Schulman, LLP
2009 NY Slip Op 03628 ; Decided on May 7, 2009 ; Court of Appeals  discusses the rights of a client to "its" case file for use in a later proceeding...which is often a legal malpractice action.  Wyley is the offshoot  of the Computer Associates class actions, and one in which millions of dollars were at stake.
The rule in New York concerning whether a client is entitled to look at and copy a file  is generally set forth in Matter of Sage Realty Corp. v Proskauer Rose Goetz & Mendelsohn, 91 NY2d 30 [1997]  The Court of Appeals held that the joined the "majority of courts and State legal ethics advisory bodies," which take the position that "upon termination of the attorney-client relationship, where no claim for unpaid legal fees is outstanding," a client is "presumptively accord[ed] . . . full access to the entire attorney's file on a represented matter with narrow exceptions" (Sage Realty, 91 NY2d at 34).

"The petitioners in Sage Realty retained Proskauer to represent them in a multi-million dollar mortgage financing and a restructuring of ownership interests, all involving New York City properties. After a falling out with Proskauer, the petitioners retained a different firm to represent them in the transaction. Proskauer refused to turn over certain documents relating to its representation of the petitioners, prompting them to commence a special proceeding to recover the documents. "
 

A recurring theme in legal malpractice is how to obtain the documents from the underlying representation.  A confounding factor is that often there is a fee dispute between the plaintiff and its prior counsel, and the prior counsel refuse to allow plaintiff a copy of the file under the authority of a Judiciary Law retaining lien.  Sage remains the authority in this area.

In Leone v Silver & Silver, LLP ; 2009 NY Slip Op 04204 ; Decided on May 26, 2009
Appellate Division, Second Department we see that merely settling a case does not deprive plaintiff of the right to sue the attorney, so long as the settlement was effectively compelled by the acts of the target attorney. If the attorney's acts caused plaintiff to be in a position where settlement was the correct choice, there may still be liability for the attorney.
 

"The gravamen of the plaintiff's complaint is that the defendants failed to protect her interest in connection with the fraudulent conveyance of certain real property. In order to prevail on this claim, the plaintiff must establish both that the defendants "failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442; see Davis v Klein, 88 NY2d 1008, 1009-1010) and that their breach of this duty proximately caused her actual and ascertainable damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; see Hearst v Hearst, 50 AD3d 959, 963; Bauza v Livington, 40 AD3d 791, 792-793). To succeed on their motion for summary judgment, the defendants were required to establish, through the submission of evidentiary proof in admissible form, that the plaintiff is unable to prove at least one of the essential elements of the cause of action (see Suydam v O'Neill, 276 AD2d 549; Ostriker v Taylor, Atkins & Ostrow, 258 AD2d 572). The Supreme Court correctly concluded that the defendants failed to do so here. Contrary to the defendants' contention, the plaintiff's decision to settle an action to recover the property, rather than risk dismissal on the basis of the defense of laches allegedly caused by their conduct, does not preclude the plaintiff from maintaining a subsequent action against them to recover damages for legal malpractice (see N.A. Kerson Co. v Shayne, Dachs, Weiss, Kolbrenner, Levy & Levine, 45 NY2d 730, 732; Tortura v Sullivan Papain Block McGrath & Cannavo, 21 AD3d 1082, 1083; Rau v Borenkoff, 262 AD2d 388, 389; Lattimore v Bergman, 224 AD2d 497). The Supreme Court, therefore, properly denied the defendants' motion for summary judgment dismissing the complaint. "
 

Slip and fall cases are a major part of the personal injury oeuvre, and personal injury litigation remains a large part of the world of the bar.  Accordingly the laws of personal injury, and specifically those relating to trips and falls are widely known and highly important.  Mistakes and bad outcomes in personal injury litigation often lead to legal malpractice litigation.

One perennial problem in trips and falls is causation. The problem arises in the tension between whether one should have seen a defect, and proving that the defect was significant enough to cause the fall.  In sidewalk negligence, there is the principal of a defect that is "de minimus" and as a matter of law insufficient to support a negligence claim.

In Hamoudeh v Mandel ;2009 NY Slip Op 04195 ;decided on May 26, 2009 ; Appellate Division, Second Department we see the effect of plaintiff stating in a deposition [likely in the underlying action] that  he did not see what caused him to fall.  Whether this was the result of the attorney's affirmative coaching, the attorney's negligence failure to prepare plaintiff for a deposition, or the truth, it was fatal to both the underlying personal injury action and the legal malpractice action.
 

"During a deposition, the plaintiff stated that he did not know what had caused him to fall. The defendants moved for summary judgment, contending that the plaintiff would not have prevailed in the underlying action even if they had timely commenced an action. The Supreme Court denied the motion. We reverse.

To establish a cause of action to recover damages for legal malpractice, a plaintiff must prove that the attorney "failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney's breach of this duty proximately caused the plaintiff actual and ascertainable damages" (Maiolini v McAdams & Fallon, P.C.,AD3d, 2009 NY Slip Op 02755, *2 [2d Dept 2009] [citations omitted]). "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. [citations omitted]; see also Pedro v Walker, 46 AD3d 789; Lichtenstein v Barenbaum, 23 AD3d 440; Porello v Longworth, 21 AD3d 541; Dimond v Kazmierczuk & McGrath, 15 AD3d 526; Iannarone v Gramer, 256 AD2d 443, 444).

Here, the defendants established, prima facie, that even if they had commenced a timely action, the plaintiff would not have been successful on the merits, since he could not identify what had caused him to fall (see Costantino v Webel, 57 AD3d 472; Karwowski v New York City Tr. Auth., 44 [*2]AD3d 826; Manning v 6638 18th Ave. Realty Corp., 28 AD3d 434; Golba v City of New York, 27 AD3d 524; Tejada v Jonas, 17 AD3d 448). In opposition, the plaintiff failed to raise a triable issue of fact (see Denicola v Costello, 44 AD3d 990; Tejada v Jonas, 17 AD3d 448; Sanchez v City of New York, 305 AD2d 487). "

Some time ago the legislature passed a statute of limitations for legal malpractice, overruling the Court of Appeals which permitted both a 3 year and a 6 year statute.  Of course, now there is but a single 3 year statute.  At the same time, it was determined that no matter whether one calls the attorney's mistakes fraud, breach of fiduciary duty or something else, there is a single 3 year statute, and it's all called legal malpractice except in certain unusual circumstances.

Here in Kullahsi v. Marengo, NY Slip Op 31154, Justice Tolub, Supreme Court, New York County, Mary 27, 2009, we see a more detailed explanation.  The allegation of fraud must be separate and distinct from the allegation of malpractice.  There must be damages separate and different from those which were caused by the malpractice.  The fraud must be independent, intentionally tortuous conduct.

Retainer agreements or letters of engagement are required in New York, and there is a large body of law concerning attorney fees and the necessity of retainer agreements.  On a different dimension, the question of what work an attorney has agreed to perform, and the limits of that attorney's liability may well be determined by the scope of the retainer agreement.  May one, for example, limit representation to a single issue, and not be responsible for other issues?

in Douglas v Dashevsky ;2009 NY Slip Op 04187 ; Decided on May 26, 2009 ;Appellate Division, Second Department we see this issue illustrated.  Plaintiff retains attorney in a wrongful termination case, and alleges that he told her not to file a disability claim with the employer.  He says that his sole obligation was the wrongful termination matter. Is he responsible?
 

"To demonstrate entitlement to dismissal of a complaint pursuant to CPLR 3211(a)(1), the documentary evidence submitted must conclusively establish a defense to the asserted claims, as a matter of law (see Leon v Martinez, 84 NY2d 83, 87-88; Williams v Williams, 36 AD3d 693, 695; New York Community Bank v Snug Harbor Sq. Venture, 299 AD2d 329, 330). Here, the retainer agreements submitted by the defendant do not establish, as a matter of law, that the defendant's obligation was to advise the plaintiff solely with respect to her wrongful termination action against her employer. The one page of the disability carrier's policy along with the complaint from the action alleging wrongful termination fails to conclusively establish that the plaintiff would not otherwise have been entitled to receive benefits under the policy, had she filed a timely claim.

Further, "in reviewing a motion pursuant to CPLR 3211(a)(7) to dismiss a complaint for failure to state a cause of action, the facts as alleged in the complaint must be accepted as true, the plaintiff is accorded the benefit of every possible favorable inference, and the court's function is to determine only whether the facts as alleged fit within any cognizable legal theory" (Kupersmith [*2]v Winged Foot Golf Club, Inc., 38 AD3d 847, 848; see Leon v Martinez, 84 NY2d at 87-88; Board of Educ. of City School Dist. of City of New Rochelle v County of Westchester, 282 AD2d 561, 562). Here, the plaintiff has pleaded sufficient facts to fit within a theory of legal malpractice.

The action is not barred by the doctrine of judicial estoppel since the plaintiff's action predicated upon wrongful termination was settled and did not result in a judgment (see Kimco of New York, Inc. v Devon, 163 AD2d 573, 575). "
 

One might not expect a legal malpractice case such as this to take place in Brooklyn.  It would be far more plausible in a small upstate hamlet, where everyone knows everyone else, and there are strongly intersecting lines of business and social life.  But, even here in the big city, attorneys are fiduciaries and must bring all their knowledge and experience to the table.

In this case , Romano v Ficchi , 2009 NY Slip Op 51011(U) , Decided on May 22, 2009 , Supreme Court, Kings County , Rivera, J. plaintiff sought to buy a condo with a view.  She found one, and hired an attorney to handle the closing.  In a big city/small town twist, it turns out that the attorney had dealings with the next door real estate and knew that there were plans to build up next door, and that the plans would eventually block plaintiff's view.

From the decision: "Plaintiff alleges that defendant knew that the purchaser of an adjoining property was going to build on the land in a way that would obstruct her view from her condominium. She further alleges that he gained this knowledge by representing the seller of the adjoining property in the sale to the new owner. She contends he did not inform her of this fact to her detriment and damage. The damage was the loss of the market value of the unit caused by the loss of the view and not having the opportunity to take into consideration the anticipated loss of the view before making a decision to buy the unit for the price she paid. Accepting all of the plaintiff's allegations fact as true, and according her every favorable inference, the remaining question is whether these facts support a claim for legal malpractice.

It is well settled that the relationship of client and counsel is one of "unique fiduciary reliance" (Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1 [1st Dept.,2008] citing Matter of Cooperman, 83 NY2d 465 at 472 [1994] and that the relationship imposes on the attorney "[t]he duty to deal fairly, honestly and with undivided loyalty ... including maintaining confidentiality, avoiding conflicts of interest, operating competently, safeguarding client property and honoring the clients' interests over the lawyer's"(Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, supra).

The attorney's obligation is to exercise professional judgment "solely for the benefit of the client and free of compromising influences and loyalties" (Code of Professional Responsibility EC 5-1) to represent the client zealously within the bounds of the law ( see Code of Professional Responsibility Canon 7), and "to seek the lawful objectives of the client through reasonably available means permitted by law and the Disciplinary Rules" (Code of Professional Responsibility DR 7-101 [A] [1], (Sedore v. Epstein, 56 AD3d 60 [2nd Dept.,2008]).

Defendant's knowledge of the intention of an adjoining buyer to develop his property in a way that would obstruct the view of the condominium unit plaintiff was considering to purchase and his failure to inform the her that she was going to lose the very view which induced her to purchase it may support a claim of legal malpractice. It cannot be said as a matter of law that it does not. A lawyer should look out for his client's interest and inform his client of those matters within his knowledge that are material to the client's informed decision making process. Plaintiff's contention that she would not have bought the unit had she known this fact is reasonable. Her claim that the unit has lost value because of the loss of her view is also reasonable and supports the damage element of a legal malpractice claim. Whether or not the plaintiff can ultimately establish the truth of their allegations before the trier of fact is irrelevant (Campaign for Fiscal Equity, Inc. v. State, 86 NY2d 307 [1995]). [*4]"

Legal Malpractice cases frequently involve a series of attorneys, each of whom comments or gives advice concerning the acts of a predecessor.  When will these communications be protected and when will the protection be waived ?  A simple answer would be that all communications are protected, forever.  The wise commentator amongst us knows that some communications will be protected, and some placed "at issue," and thus lose their attorney-client privilege.

Here, in Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP ; 2009 NY Slip Op 04099 ; Decided on May 26, 2009 ; Appellate Division, First Department we see a well reasoned discussion of the difference. 
 

"We find no merit to defendant's argument that privileged materials relating to and created after commencement of the Doctor's Hospital Action have been put "in issue" by this litigation and are therefore discoverable. Such argument fails to recognize that nothing that plaintiff's attorneys could have said or done in the prior lawsuit could have possibly affected plaintiff's reliance on defendant's allegedly erroneous advice given years earlier in connection with the [*2]formation of the D5 Trust. " At issue' waiver of [the attorney-client] privilege occurs where a party affirmatively places the subject matter of its own privileged communication at issue in litigation, so that invasion of the privilege is required to determine the validity of a claim or defense of the party asserting the privilege, and application of the privilege would deprive the adversary of vital information" (Deutsche Bank Trust Co. of Ams. v Tri-Links Inv. Trust, 43 AD3d 56, 63 [2007]). While any communications between plaintiff and its attorneys in the Doctor's Hospital Action that evaluated defendant's prior advice in the allegedly bungled D5 Trust transaction are certainly relevant to the issue of defendant's alleged malpractice, plaintiff disavows any intention to use such communications and defendant fails to show that any such communications are necessary to either plaintiff's claim or its defense (see id. at 64 [relevance alone insufficient to put privileged materials "at issue"; "if that were the case, a privilege would have little effect"]; see also Veras Inv. Partners, LLC v Akin Gump Strauss Hauer & Feld LLP, 52 AD3d 370, 374 [2008]). "

Taken verbatim from the New York Law Journal by Andrew Longstreth
 

"McDermott Will Settles Malpractice Claim

McDermott, Will & Emery has settled a malpractice claim brought by the litigation trustee in the bankruptcy of Saint Vincent's Catholic Medical Centers of New York, according to court records. News of the settlement, which is filed under seal at the request of the trustee, was first reported by Crain's New York.  The trustee alleged that the law firm purposefully delayed the bankruptcy filing of Saint Vincent's to keep members of the hospital's restructuring team in place and run up its own bills, which delayed the hospital's emergence from bankruptcy. (St. Vincent's substituted McDermott with Weil, Gotshal & Manges as its debtor's counsel in September 2005.) One of the reasons cited in the trustee's motion to file the settlement under seal is to protect McDermott Will from competitors. "MWE has a strong interest in maintaining the confidentiality of the proposed settlement agreement because it contains confidential information about MWE, disclosure of which could adversely affect its commercial activities," it states. "Specifically, disclosure of the terms of the proposed settlement agreement could provide a road map for any disgruntled current or former client of MWE for the pursuit of litigation against the firm, giving an unfair advantage to MWE's competitors in the marketplace."

In this Albany County case, via the Third Department, Bixby v Somerville ;2009 NY Slip Op 03821
Decided on May 14, 2009   we see the unraveling of a marriage, and the eventual custody dispute, now played out in legal malpractice.  Father fights with mother over sole custody, ending in a shared custody decision, later modified by the Appellate Division to joint custody.  Unhappy, plaintiff sues his law firm, both in his name and in the name of his daughter, and disputes fees paid and fees still owing.  Plaintiff loses on the judgment rule and plaintiff's daughter loses on the privity rule. 

 "Here, plaintiffs cite extensive proof, including the transcript of the Family Court custody hearing, to demonstrate that their conduct was a reasonable exercise of professional judgment. In the alternative, plaintiffs assert that any shortcomings in their representation did not proximately cause defendant's alleged damages because he would not have been successful on the merits of the underlying proceeding. In our view, plaintiffs amply met their initial burden of establishing a prima facie case for summary judgment (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). "

Here is a most unusual case.  Legal Malpractice case in State Court follows personal injury  case in Federal Court and the State Court Judge effectively second guesses the Federal Court judge in  whether plaintiff was subject to North Carolina law or that of another state.

DiTondo v Meagher ;2009 NY Slip Op 29178 ;Decided on April 22, 2009 ;Supreme Court, Broome County  ends by determining that defendant may not have summary judgment.  The enjoyment is in the travel to that decision.  We have not seen a discussion of choice of law cases [car accident in state 1, plaintiff live in State 2, Car owners are corporations of state 2, etc] since law school.
"This is a legal malpractice action. Plaintiffs Joseph N. DiTondo and Caralynn M. DiTondo allege that defendants Frederick J. Meagher, Jr. and Meagher & Meagher committed legal malpractice in an underlying federal case by failing to, among other things, research and advocate the legal proposition that the federal court sitting in diversity should have applied either California or New York's comparative negligence laws, rather than North Carolina's contributory negligence law.

Defendants Frederick J. Meagher, Jr. and Meagher & Meagher (hereinafter collectively "defendant") move for an order pursuant to CPLR § 3212 determining that the laws of North Carolina were properly applied in the underlying federal action, on the grounds it was the site of the underlying accident and has the strongest interest in the outcome of the underlying federal litigation.

Plaintiff [FN1] cross-moves for partial summary judgment for a finding that, had defendant brought the proper facts and law to the attention of the federal court, that the federal court would have been constrained to apply California or New York's comparative negligence rule to the underlying federal case. "

"Under the third Neumeier Rule proviso, plaintiff argues that when the law of the domiciliaries is essentially the same as here (both New York and California have comparative negligence rules) and only the law of situs is different (North Carolina has contributory negligence), courts prefer to apply the law of the domiciliaries because the situs state would have "[n]o interest in the application of its [loss allocation] law in an action between nondomiciliaries" (Marillo v Benjamin Moore & Co., 32 AD3d 1313, 1314 [2006]; King v Car Rentals, Inc., 29 AD3d 205, 209-210 [2006]). This court agrees and finds that had defendant Meagher brought to the federal court's attention the correct facts and law as set forth herein, then Chief Judge Scullin would have been constrained to find that California or New York's comparative negligence rules [*6]applied.

In view of the foregoing, the court finds "[b]ut for defendant's alleged negligence, there would have been a more favorable outcome in the underlying action" (Ellsworth v Foley, 24 AD3d 1239 [2005], lv denied 6 NY3d 712 [2006]; Williams v Kublick, 302 AD2d 961 [2003]). "

We have been following this story of the intersection of legal malractice and the sub-prime morrgage crisis.  Today, Susan Beck in the New York Law Journal reports that Cadwalader Wickersham & Taft faces a continued legal malpractice case for their work in servicing and securing loans worth $1.8 billion.  Cadwalader's motion to dismiss was denied, and the case continues.  From the NYLJ:
"Nomura sued Cadwalader in 2006, claiming that it had botched a 1997 assignment to advise and assist Nomura on the origination and securitization of 156 commercial loans totaling $1.8 billion. (Cadwalader had signed a tolling agreement that extended the statute of limitations.) The most significant claims arose from a $50 million loan made to a doctors hospital that went into default in 2000. Cadwalader, representing Nomura, had drafted documents that asserted that the trust that held these loans qualified for special tax treatment as a Real Estate Mortgage Investment Conduit (REMIC), which required that the fair market value of the real property securing each loan be at least 80 percent of the loan amount. In fact, the doctors hospital loan did not meet this 80 percent test, according to Nomura's own appraisal.
 

Acting Supreme Court Justice Melvin Schweitzer in Nomura Asset Capital Corporation and Asset Securitization Corporation v. Cadwalader Wickersham & Taft, 116147/2006, ruled on April 28 that Nomura's position in the LaSalle litigation did not bar it from bringing claims against Cadwalader, especially since its earlier arguments had failed. Perhaps most significantly, the judge ruled that Cadwalader's reliance on language in the Standard & Poor's manual did not create a defense for a motion to dismiss. The judge also ruled that even if Dechert was primarily responsible for assuring that the loan met the REMIC test, Cadwalader had not established that it did not have a duty to verify this fact."

Here is a case in which plaintiff's attorneys sued for $1 Million Dollars [this reminds one of Austin Powers] and eventually won a verdict in excess of $ 2 Million on a personal injury case.  The question is whether they were negligent in setting the ad damnun clause and whether the defense attorneys might be held in Judiciary Law 487 claims for failing to disclose excess insurance.

Ambra v Awad ;2009 NY Slip Op 03853 ; Decided on May 12, 2009; Appellate Division, Second Department tells us that plaintiff's attorney might be held in, but that notice problems to the carrier will rule out a series of causes of action, and will let the defense attorney out of the case.
 

"In his amended complaint against SA & M, the plaintiff alleges four causes of action: SA & M negligently and incorrectly told him that Makko lacked sufficient assets to pay the full jury verdict; SA & M should have moved to increase the ad damnum prior to trial, but negligently failed to do so, so the plaintiff was required "to settle his claim for less than fifty percent of the amount of the jury award;" SA & M's failure to file an appropriate motion to increase the ad damnum resulted in a one million dollar cap on the plaintiff's recovery and the loss of Makko's excess insurance coverage; and SA & M coerced him into accepting Makko's one million dollar settlement offer. SA & M then impleaded HFD & M, alleging that it violated Judiciary Law * 487 and fraudulently concealed from SA & M the fact that Makko had excess insurance coverage, and that SA & M was entitled to both indemnification and contribution.

Dismissal of the second cause of action, as well as the remaining portion of the third cause of action, was also warranted, albeit for reasons other than those articulated by the Supreme Court. The plaintiff cannot establish that Bellantone's failure to file a pretrial motion to increase the ad damnum amount resulted in a one million dollar cap on his recovery and forced him to settle with Makko under unfavorable terms. Due to a supplemental bill of particulars filed in October 2001, HFD & M was aware long before trial that the plaintiff's damages could far exceed the one million dollar amount in the ad damnum clause. Under the peculiar circumstances of this case, Makko would not have been prejudiced by a post-trial increase in the ad damnum amount, so SA & M's post-trial motion to increase the ad damnum amount would likely have been granted if the case had not settled before the motion could be decided (see Loomis v Civetta Corinno Constr. Corp., 54 NY2d 18, 23).

Although the court correctly noted that issues of fact exist as to what Feretic knew about the excess insurance policy and when he knew it, these issues are not relevant to the question of whether contribution is warranted. Nothing in the record suggests that HFD & M's actions caused or exacerbated in part the injuries alleged in the plaintiff's remaining causes of action (see Nassau Roofing & Sheet Metal Co. v Facilities Dev. Corp., 71 NY2d 599, 60

Broadway and Barry Manilow...it seemed destined for success, but lack of investors doomed the production of Harmony.  The case revolved around alleged wrong advice on the date of the second option payment, which plaintiff has argued could have been made with the correct date advice.

The option lapsed, an arbitration with Manilow and others ensued, and plaintiffs sued attorney Robert Barandes of Beckman, Lieberman & Barandes for malpractice. In Snorkel Prods., Inc. v Beckman Lieberman & Barandes, LLP ; 2009 NY Slip Op 03840  Decided on May 14, 2009
Appellate Division, First Department  we see that plaintiffs have salvaged [in the second act], a small part of the case, in which it is determined that although they cannot proceed on a theory of lost profits in the non-production, they may sue for the costs of arbitration, said by Tom Hyland of Wilson Elser, to be in the $ 200,000 range.
 

"The only loss proximately caused by defendants' negligent advice was plaintiff Snorkel's loss of its right to produce the play. While there is no nonspeculative basis for valuing [*2]that right, Snorkel may seek to recover as damages the expenses it incurred in connection with the arbitration commenced by Manilow and Appoggiatura to recover their rights. "
 

This morning's Law Journal revealed a pair of cases in which just about the same thing happened.  Attorneys acted badly, and the client suffers.  Clients depend on their attorneys, and can do just about nothing without the attorney acting as intermediary.  Clients, too, suffer when their attorney is punished by the court.

In Pacheco v Zenobio ;2009 NY Slip Op 50882(U) ; Decided on May 8, 2009 ;Supreme Court, Kings County ;Battaglia, J. we see that "In short, Plaintiffs' counsel persisted in frivolous motion practice after having been clearly and specifically warned by the Court that a further motion on the same grounds would be sanctionable.

Plaintiffs filed a Note of Issue and Certificate of Readiness on April 25, 2008. At that time, a significant amount of disclosure was outstanding, including the injured Plaintiff's medical examinations and all disclosure with respect to the third-party actions. While it appeared that some items of disclosure were completed after the filing of the Note of Issue, including the [*2]injured Plaintiff's medical examinations, it was undisputed that no disclosure had been conducted with respect to the third-party actions, and that defendant Michael Zenobio's examination before trial had not been held." 

After one losing motion to restore the case to the trial calendar, and then a second, the court wrote: "In the event that Plaintiffs file a disclosure motion without attaching a proper good-faith affirmation or prematurely file a motion involving disclosure, counsel may be subject to sanctions pursuant to 22 NYCRR 130-1.1 or costs pursuant to CPLR 8303(a)."

Perhaps needless to state, the Court's warnings were not heeded.

Plaintiffs again moved for an order "restoring the plaintiffs [sic] matter to the active trail [sic] calender [sic] by restoring the plaintiffs(s) [sic] Calender [sic] number." Incredibly, the motion was served on the same day as the compliance conference, February 13, 2009. The cross-motion for costs and sanctions followed. "  Plaintiff suffers sanctions and a long delay in the case.

In Jameson v. City of New York  1:07-01312 [subscription] we see worse.  As Mark Fass of the NYLJ reports: "A federal judge has thrown out a lawsuit against New York City filed by a man who was shot several times by his wife, a city police officer, with her city-issued gun.

Eastern District Judge Roslynn R. Mauskopf dismissed the case with prejudice, citing the failure of the plaintiff's attorney, Michael P. Mays, to comply with a series of court orders demanding his "meaningful participation" in the case.

Judge Mauskopf also ordered Mr. Mays to pay $1,000 in unpaid contempt fines that have accrued over the last month.  Plaintiff has had a bad few years already.

"In April 2006, the plaintiff, 43-year-old retired police officer Todd Jamison, was sitting in his parked Mercedes-Benz in East New York, Brooklyn, when his estranged wife, Officer Alison Jamison, pulled up along side him in a rental car, shot him several times, then sped to the next corner. She then made a u-turn, fired several more shots and sped off.

Ms. Jamison was arrested later that day when she returned the car to a rental agency at Newark International Airport.

Mr. Jamison survived the shooting, though he was hospitalized for several months. According to subsequent news reports, Ms. Jamison shot her husband in a pique of anger over his many affairs. The tabloids soon dubbed Mr. Jamison "Officer Romeo" and the "Casanova Cop."

Ms. Jamison was convicted of attempted murder and sentenced to up to seven years in prison."

Now, plaintiff's case is dismissed, and his attorney is unlikely to have a very good excuse.

Is this legal malpractice?



 

Henry Gottlieb at Law.Com reports this $10.6 million Legal Malpractice settlement between Buchanan Ingersoll and RCM Technologies over a stock registration agreement, today.  Here is the news article:

" A lawyer and two Philadelphia firms have agreed to pay $10.6 million to settle a claim that they botched work on a New Jersey company's stock transactions and failed to alert the company to the errors.

Buchanan Ingersoll & Rooney, the wind-down committee of defunct Clark, Ladner, Fortenbaugh & Young, and a former partner of both firms, Stephen Cohen, agreed to settlements of a malpractice complaint by computer and engineering consultant RCM Technologies of Pennsauken, N.J.

RCM accused Cohen of preparing a stock registration agreement that failed to memorialize a plan to restrict the rights of two key shareholders to sell their RCM holdings. That drafting, plus an alleged failure to alert RCM in time for remedial action, cost the company millions of dollars, according to the Morris County, N.J., suit.

How much the defendants paid was not included in stipulations of dismissal filed with the court. But RCM did disclose the sums in its March 27 annual report filed with the Securities and Exchange Commission.

A comparison of the dates of the stipulations of dismissal and the SEC filing shows that the Clark Lardner settlement in 2007 was worth $800,000 to RCM and that the company recovered $9.8 million -- $5.9 million after taxes -- in a March 16 settlement with Buchanan Ingersoll."

Real Estate sales and the plummeting economic scene have dominated the news cycles for months now.  Legal Malpractice litigation often follows economic disturbances, and this case, Walker v. Berman, 2009 NY Slip Op 50887(U) ; Decided on May 4, 2009 ; Supreme Court, New York County ; Stallman, J. is an example.  In this case plaintiff wanted to buy an apartment house, but got something different.
Unsophisticated buyer purchases a building at 151 West 76th Street, and relies on broker and attorney to guide buyer through what would turn out to be a difficult process.  In the end, buyer bought a "Class "B" Multiple Dwelling. Ex. G. A Class "B" Multiple Dwelling is a dwelling that is intended for use as the temporary abode of individuals and families; the classification includes hotels, lodging houses, rooming houses, boarding houses, boarding schools, furnished room houses, lodgings, club houses, colleges, and dwellings designated as private dwellings but occupied by one or two families with five or more transient boarders, roomers or lodgers in one household. Multiple Dwelling Law § 4. The Class "B" Multiple Dwelling designation also appears on the certificate of occupancy search ordered by plaintiff prior to agreeing to the purchase (Ex. N), and on the listing notice provided to plaintiff by defendant ."

Plaintiff sues attorney who defaults. [A quick look at the Lawyer's Diary shows no entry for this attorney.  A search of the OCA attorney directory shows that Ira L. Berman is disbarred.]  Plaintiff now tries to go after the broker, with negative results.

"After the contract was signed, but prior to closing, plaintiff informed Robin that there were some problems with the Certificate of Occupancy, and, allegedly, Robin advised plaintiff to confer with her attorney regarding the legal ramifications associated with the Certificate of Occupancy.

After the closing, plaintiff discovered that the Class "B" Multiple Dwelling classification is used for buildings operated as a Single Room Occupancy (SRO) dwelling, not a regular apartment building (i.e., a Class A multiple dwelling). Consequently, plaintiff asserts that she paid far more for the building that it is worth, believing it to be an apartment building, not an SRO. "

Result?  Plaintiff seems to lose all the way around.  Attorney defaults, has been disbarred, has no insurance defense, and broker is not liable.

Questions of attorney billing, expenses and disbursements often surface in the guise of a legal malpractice defense.  Did the attorneys over bill ?  Did they over-charge for expenses?  May a law firm use Lexis or WestLaw as a profit center?  For example, if the law firm is paying a flat fee for legal research, may it charge hourly legal research rates to the client [not the attorney's time...legal research fees]

Here is a case from California, which arose after a NY legal malpractice case.  From the National Law Journal:

"A California plaintiffs' attorney has filed a lawsuit against a New York-based law firm on a behalf of a former client of the firm for what she claims is a hidden but widespread practice within the legal profession: law firms secretly profiting off legal research fees by overcharging clients.

Consumer protection attorney Patricia Meyer filed a suit against New York's Chadbourne & Parke on March 2 for allegedly overcharging J. Virgil Waggoner, a Texas businessman, by several thousands of dollars for computerized legal research. His bill was roughly $20,000 for the research, she said, but it should have been closer to $5,000. Waggoner v. Chadbourne & Parke, No. BC408693 (Los Angeles Co., Calif., Super. Ct.).

She did not serve the firm until May 1 because, she said, she did not want to compromise other investigations alleging similar claims.

Meyer of San Diego's Patricia Meyer & Associates said that many similar lawsuits are in the pipeline, noting that she has amassed evidence that shows at least a dozen other law firms are overcharging clients for legal research, but not telling them.
 

According to Meyer, profiting off fees, such as computerized legal research fees, without the clients' knowledge violates rules of professional conduct set forth by both the California and American bar associations, which limit the recovery of legal fees. She said that law firms can charge clients more for services than what they actually cost — they just have to let the client know upfront. "
 

This case has been widely reported, and we covered it a month ago, too.  Here, from the Blog of Legal Times we read about the $ 72 million legal malpractice verdict based upon patent law.

"Yesterday, a federal jury in San Antonio slapped Akin Gump Strauss Hauer & Feld with a $72.6 million judgment for botching a patent application filed by a Texas-based company and an inventor.

Akin Gump had been hired in 1995 to handle a series of patent applications for Air Measurement Technologies, a company created by Louis Stumberg Jr. and his partner, James Fulton, who had invented an automatic “man down alarm” for firefighters and other emergency personnel. Stumberg currently lives in San Antonio, and Fulton died in 2001.

In their complaint, AMT, North-South Corp., which held a license on the invention, and Stumberg accused the firm of failing to disclose information to the U.S. Patent and Trademark Office. Plaintiffs also accused former Akin Gump partner Gary Hamilton, now a name partner at Hamilton & Terrile in Austin, of withholding information with the intent to deceive the PTO.

AMT and Stumberg initially sued six parties for infringement, and received settlements totaling $9 million. "

"In a statement, Akin Gump says, “A judgment has not yet been entered on the verdict against Akin Gump. However, if a judgment is entered, Akin Gump will appeal because the evidence does not support the jury's verdict.”

Two of the hardest causes of action to prove and prevail upon in legal malpractice are the "failure to appeal" claim and one under Judiciary Law 487.  Failure to appeal claims are difficult because one must not only prove that the attorneys could have and failed to file an appeal, but one must also prove [to a judge and not to a jury] that the appeal would have prevailed.  Judiciary Law 487 claims, although recently cited with approval by the Court of Appeals in Amalfitano v. Rosenberg, remain in general disfavor.  Here is a case which illustrates both: McCluskey v Gabor & Gabor ;
2009 NY Slip Op 02757 ;Decided on April 7, 2009 ;Appellate Division, Second Department .
 

"Here, the plaintiff alleged, inter alia, that the defendants committed malpractice by failing to take an appeal in the underlying age discrimination action from so much of an order as dismissed his causes of action alleging fraud. We find, however, that, inasmuch as the causes of action alleging fraud were properly dismissed (see Kaufman v Torkan, 51 AD3d 977, 980; Weitz v Smith, 231 AD2d 518), the plaintiff cannot establish that the defendants committed malpractice by failing to take an appeal from that order (see Suffolk Ave. Car Wash & Lube v Oberman, 256 AD2d 75; Saferstein v Klein, 250 AD2d 831). Consequently, the Supreme Court should have granted that branch of the defendants' cross motion which was for summary judgment dismissing so much of the complaint as alleged that they committed legal malpractice by virtue of their failure to take an appeal from the portion of the order in the underlying action dismissing the fraud causes of action.

The defendants' alleged misconduct, even if it were proven, did not rise to a violation of Judiciary Law § 487 that would warrant the imposition of treble damages (see Gelmin v Quicke, 224 AD2d 481, 483). Consequently, that branch of the plaintiff's cross motion which was for leave to amend the complaint to add causes of action alleging a violation of Judiciary Law § 487 was properly denied as patently devoid of merit (see Lucido v Mancuso, 49 AD3d 220, 226-227, lv granted AD3d, 2008 NY Slip Op 68750[U][2d Dept 2008]; Glorioso v DeBlasio, [*3]227 AD2d 588, 589). "

Originally dismissed in Supreme Court, this case was re-instated by the Appellate Division, First Department last week. Mortenson v Shea ;2009 NY Slip Op 03611 ;Decided on May 5, 2009
Appellate Division, First Department is a situation in which a New Jersey law firm was retained to sue a New York law firm for legal malpractice.
 

"This action was dismissed on the erroneous grounds that the New Jersey defendants were not and could not be retained to actually commence a legal malpractice action against an attorney in New York State, and that the limited services provided by defendant law firm in attempting to settle the underlying claim did not include a duty to advise plaintiff about the applicable New York statute of limitations. A legal malpractice claim may arise out of the giving of faulty advice to a client (see Scheller v Martabano, 177 AD2d 690 [1991]). Furthermore, an attorney may be liable for his ignorance of the rules of practice, his failure to comply with conditions precedent to suit, his neglect to prosecute an action, or his failure to conduct adequate legal research (see McCoy v Tepper, 261 AD2d 592 [1999]). "

This case took several readings to try and sort out the story.  Plaintiff in this legal malpractice case, Citrin v Baratta & Goldstein ;2009 NY Slip Op 03597 ;Decided on May 5, 2009 ;Appellate Division, First Department  was a defendant in the underlying action. There, "Following a five-day jury trial in a prior action alleging fraud and conspiracy against plaintiff Citrin and three codefendants, the jury reached a verdict in favor of the plaintiffs and awarded substantial compensatory and punitive damages. A motion by Citrin for judgment notwithstanding the verdict was denied by the trial judge, who noted in his memorandum decision that the verdict had been supported by the evidence and also rejected Citrin's other claims, including conflict of interest based on the fact that the same attorney had represented her and a codefendant."
 

Somehow, [through a money payment in settlement?] plaintiff then obtained a stipulation turning the verdict on its head.  "Citrin, through a successor counsel, then settled the matter pursuant to a stipulation, so-ordered by the trial judge, who vacated his prior order "as it pertains to any and all liability against Rita Citrin, directly and/or indirectly, in law and/or based on equitable claims, including all findings of fact supporting such liability."

Citrin then commenced the instant action against her trial attorneys for legal malpractice and breach of contract, alleging a conflict of interest in their representation of both her and a codefendant in the prior action."
 

So, plaintiff obtained a stipulation [sort of like an indulgence] which turned it all around, and allowed her to sue her attorneys.  Motion to dismiss denied.

In Byron Chem. Co., Inc. v.  Groman;  2009 NY Slip Op 03465 ;  Decided on April 28, 2009 ;  Appellate Division, Second Department  plaintiff employer sued its attorneys for an employee benefit provision which was drafted by attorney firm 1, which was then taken over by attorney firm 2.  At issue was whether the doctrine of continuous representation tolled the statute of limitations, and if it did, were the two law firms to be held in the case. The Second Department held that while the law firms continued to intermittently represent the employer, such was not sufficient to toll the statute of limitations.
 

"Contrary to the plaintiff's contention, the statute of limitations was not tolled by the continuous representation doctrine (see Dignelli v Berman, 293 AD2d 565; cf. Shumsky v Eisenstein, 96 NY2d at 168; see also Maurice W. Pomfrey & Assoc., Ltd. v Hancock & Estabrook, LLP, 50 AD3d 1531; Zaref v Berk & Michaels, P.C., 192 AD2d 346). The defendants' subsequent representation in matters unrelated to the specific matter that gave rise to the alleged malpractice was insufficient to toll the statute of limitations (see Dignelli v Berman, 293 AD2d at 565). Accepting the facts alleged in the plaintiff's complaint as true, there was a nine-year lapse between the defendants' representation as to the employment agreements. The continuous representation doctrine does not contemplate such intermittent representation (see Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 9; Shumsky v Eisenstein, 96 NY2d at 167-168; Loft Corp. v Porco, 283 AD2d 556). Accordingly, the Supreme Court correctly granted the defendants' motions to dismiss the complaint insofar as asserted against them as time-barred. "

From time to time we forget that Louisiana is a completely different environment.  Its laws are different, its emphasis is different, and even its terms are wholly different.  Here is an article from Hinshaw & Culbertson on the case of McGuire v. Mosley Rogers Title Co., L.L.C., 997 So.2d 23 (La. App. 2008) in which plaintiffs had to admit that they received a letter from their attorney following a closing of the sale of their house [in which they obtained a purchase money secutity interest] and didn't open the envelope for a year.

"Plaintiffs retained attorney Lance Mosley to help them with the sale of commercial real estate. The sale involved a mix of seller financing and a traditional loan. As a part of the deal, plaintiffs agreed to subordinate their mortgage to the lender’s mortgage. For protection, plaintiffs sought personal guarantees from the buyers and allegedly obtained Mosley’s assurance that he would secure such guarantees. After signing, plaintiffs received copies of the closing documents in the mail but did not even open the envelope, much less review the documents. Over one year later, when the buyers began to have trouble paying, plaintiffs discovered the absence of personal guarantees.

Plaintiffs then sued Mosley for legal malpractice for failure to obtain the personal guarantees. Mosley filed an exception based on prescription, or the statute of limitations. The trial court granted this exception and dismissed the case because the prescriptive period for legal malpractice is one year from when the malpractice should have been discovered. The trial court held that plaintiffs should have discovered the malpractice when they received the closing documents in the mail. Plaintiffs appealed.

Attorneys gnash their teeth when litigating against pro-se parties.  The thought is that the pro-se gets an advantage; they are not held to tight deadlines, are not the subject of rule-specific dismissal, nor are they required to hew to the line of traditional court procedure.

As an example, this pro-se plaintiff in  Kleinser v Astarita; 2009 NY Slip Op 03401; Decided on April 28, 2009; Appellate Division, First Department amended the complaint without leave of court, and then after the decision dismissing the complaint against the amendees, moved for leave to add them and succeeded.  Adding individual defendants to the caption when they were partners in the already named defendant law firm may or may not have collateral benefits to the pro-se.  In this case, law of the case was not an issue.
 

"The law of the case doctrine, however, is not implicated because the court did not alter a ruling by another court of coordinate jurisdiction but rather its own ruling (Wells Fargo Bank, N.A. v Zurich Am. Ins. Co., 59 AD3d 333 [2009]). "[E]very court retains continuing jurisdiction to reconsider its [own] prior interlocutory orders during the pendency of the action" (Liss v Trans Auto Sys., 68 NY2d 15, 20 [1986]), and may do so "regardless of statutory time limits concerning motions to reargue" (id.). Thus, even if plaintiff's motion for leave to add the four partners were a belated motion to reargue the prior order dismissing the action as against those partners for failure to state a cause of action, the court had discretion to [*2]reconsider its prior order, sua sponte, and correct it. Such discretion was properly exercised here in view of plaintiff's pro se status. "

The informal way some people go about hiring an attorney is well documented in a new case decided by Justice Ling-Cohan in Camone v. Levy, 2009 Slip Op 30843(U).  Here plaintiff trustee is of a generation skipping trust, and attorney is shown materials in order for him to tell plaintiff whether a federal estate tax return must be filed. 

Plaintiff and others met with an accountant and Levy, but did not retain Levy.  They were told that if the estate had to file a tax return there was a specific cutoff.  Plaintiffs never spoke directly with Levy again.  Plaintiff's claim is that he directed the accountant to hire Levy, but did not do so directly.  Plaintiff did not even follow up to see if Levy was actually retained.  Levy reviewed the trust documents, which did not include the current financial records and told the accountant that a tax return had to be filed by December 6.  On December 7, one day late, financial records were faxed to Levy.  He prepared a tax return and sent it to the accountant for signature.

Case was dismissed against Levy on the basis that he was never retained to act for plaintiff, and that he received materials only after the deadline.

Here, in an article from NY Lawyer is the shocking outcome of a huge London legal malpractice case.  Linklatters, on trial for $ 55 Million ends up paying $ 5 [actually 5 pounds] as a nominal verdict.  Queery: no motion for summary judgment?  In NY courts, we see such outcomes in pre-answer motions and in motions for summary judgment.

Fromthe article: "Linklaters has staved off paying out a $55 million negligence claim -- one of the largest made against a U.K. law firm in recent years -- having instead to pay out 5 pounds ($7.50) in nominal damages to telecom company Levicom.

In the judgment, handed down in the Royal Courts of Justice Tuesday, Mr Justice Andrew Smith ruled that, despite finding Linklaters' early advice to the claimant was expressed negligently, it did not bear any loss to the client and therefore awarded nominal damages of just 5 pounds.

On all other issues, Smith found Linklaters had not acted negligently.

In his judgment, Smith said: "I conclude that Linklaters' advice was negligent in some respects, but the negligence did not cause [the claimant] Levicom any loss. Linklaters were therefore in breach of contract, but are liable for only nominal damages of 5 pounds."

The judgment follows a five-week trial which started in January after an unsuccessful mediation at the end of last year, over claims Linklaters gave negligent advice to the Baltic telecom company. "

Is an attorney required to perform more work that set forth in a retainer agreement?  If the attorney does not perform more work, will the statute of limitations be tolled by the client's insanity?  These two questions are partially answered in Turner v Irving Finkelstein & Meirowitz, LLP ;2009 NY Slip Op 03158 ;Decided on April 21, 2009 ;Appellate Division, Second Department .
 "The plaintiff allegedly was assaulted by a coworker at his place of employment in 1997. The defendant law firm represented the plaintiff in the ensuing claim before the Workers' Compensation Board (hereinafter the Board). The claim was disallowed, the Board affirmed that decision, and full Board review was denied. No later than May 2002, the defendant informed the plaintiff that its representation was complete."

Plaintiff unsuccessfully appealed, and then years later, sued the attorneys.  "In November 2006, the plaintiff, pro se, commenced the instant action, alleging that after he was [*2]denied full Board review, the defendant failed to advise him of "any other legal remedies" relating to the workplace incident. The defendant moved to dismiss the complaint ....In opposition, the plaintiff asserted that he suffered from a mental illness for which he had been hospitalized several times and, thus, he was entitled to a tolling of the statute of limitations pursuant to CPLR 208. The Supreme Court rejected the plaintiff's claim because the medical records he relied on were not in admissible form.

Although the evidentiary facts alleged by the plaintiff reveal the existence of an issue of fact as to applicability of the insanity toll, we nevertheless affirm on other grounds. "
 

This story from Law.Com by Zusha Elinson tells of the aftermath of a $ 82 million Sony Patent case, with its reports of witness buying, false testimony and unreliable evidence.  From the Legal Malpractice perspective here is the nugget:

"Craig Thorner was the key witness in the Sony legal team's effort to overturn an $82 million patent infringement verdict in a case against Immersion Corp. over vibrating video game controllers. Sony claimed that Immersion paid Thorner to keep quiet about inventions of his that could have invalidated Immersion's patents.

But U.S. District Judge Claudia Wilken wouldn't retry the case, concluding in 2006 that Thorner was an unreliable witness and that there was strong evidence -- supported by testimony and internal Sony documents -- that Sony paid $150,000 for Thorner's testimony.

The patent fight between Silicon Valley's Immersion and Sony, and its salacious post-trial motions, were followed closely by local lawyers.

In a wide-ranging suit filed Tuesday in New Jersey District Court, Thorner accuses Sony's outside and in-house lawyers of snookering him into the $150,000 deal, which came in the form of convoluted agreement to license his patents. He also accuses Sony's outside counsel -- Gregory Gewirtz of New Jersey firm Lerner David Littenberg Krumholz & Mentlik -- of malpractice for allegedly acting as his lawyer in the deal, but for Sony's benefit.

The lawsuit claims that the lawyers "contrived to take advantage of Thorner's inexperience and lack of resources in order to (i) obtain a patent license from Thorner on extremely favorable terms, and (ii) induce Thorner to testify against Immersion."

Reached Thursday afternoon, Gewirtz denied the allegations.

"In my view, all the allegations against me and my firm are reckless and false and all, of course, denied," he said. "We will very vigorously defend against all the claims."

The way the deal at issue worked, according to the lawsuit, was this: Electro Source -- a video game company also being sued by Immersion -- would pay Thorner $150,000 to license his patents. The deal, however, was actually being funded by Sony, which in turn got a license from Electro Source according to the lawsuit and court hearing transcripts.

Thorner claims that Gewirtz agreed to be his lawyer in the negotiations with Electro Source, but was actually looking out for Sony's interest
 

California corporation retains New York law firm to process a trademark application, which fails.  California plaintiff sues New York defendant  for legal malpractice in Federal District Court, SDNY.  Case is dismissed on jurisdictional basis.  Case is later brought in State Court in New York.  Does California or New York statute of limitations apply?

In Kat House Productions v. Paul Hastings Janofsky & Walker, Justice York determines that California law applies, based upon CPLR 202.  The borrower statute's purpose is to prevent forum shopping between states and [as the Court of Appeals favors, have a "bright line rule".]

"CPLR 202 is designed "to prevent forum shopping by plaintiffs and to adhere to the generally accepted definition." Global Fin. Corp, v. Triarc Corp., 93 NY2d 525. 

"CPLR 202 is designed to add clarity to the law and provide the certainty of uniform application to litigants.  This goal is better served by a rule requiring the single determination of a plaintiff's residence than by a rule dependent on a litany of events relevant to the `center of gravity' of a contract dispute." Global  at 530.

Justice York then decided that since the "place where investors resided and sustained the economic impact of the loss" was the state for borrowing purposes, that the California one year statute of limitations applied.

When may the representation of a client  end, what work does an attorney have to do for a contingent fee client, and how do legal malpractice considerations filter in?  Those questions are answered, in this context, in Matter of Mill Creek Phase 1 , Supreme Court, Kings County, Gerges, J.  Must a law firm perform appellate tasks under a contingent fee arrangement with no further legal fees due it, and what happens if the law firm refuses to perform ?

There, "Non-party Goldstein, Goldstein, Rikon & Gottlieb, P.C. (the Firm) moves for an order awarding it legal fees and disbursements in accordance with the retainer agreement executed by claimants Joseph Vigliarolo and Frank J. Vigliarolo and the closing statement that it prepared. Claimants cross move for an order: (1) directing the Firm to turn over the entire disputed amount of $11,506.46, plus interest; (2) directing the Firm to pay the bill of costs awarded to the City of New York Law Department with respect to the NYCTL 1998-1 Trust appeal in the amount of $1,860; and (3) awarding sanctions in the amount of $2,500 pursuant to 22 NYCRR 130-1.1(a).
 

Claimants further allege that the Firm agreed to accept a contingency fee to represent them in this matter and that the retainer agreement provided that the fee included the cost of defending any appeal taken by the condemnor. Accordingly, claimants did not object to the Firm's decision to continue to litigate the issue of the amount of interest due on the lien because they did not believe that they were incurring any costs. Moreover, claimants contend that they would not have agreed to pay $11,500 to oppose the appeal, since the lien would have been reduced by only $8,000 if they had been successful. It is their opinion that the Firm chose to use the instant proceeding as a test case in an effort to establish that the interest rate applicable to a tax lien is 6 percent, and not the 18 percent claimed by the lienor. Further, since the additional interest that accrued was only $5,200, while the lien at the time of the commencement of the appeal was $7,000, the financial benefit of pursuing such an appeal was minimal.

Herein, the Firm's retainer agreement with claimants unquestionably provides that the contingency fee agreed to "shall include the defense of any appeal taken by the condemnor but does not include appeals taken by the client for which, if the attorneys agree to their retention for that purpose, additional compensation will be required." It is equally clear that the appeal at issue herein was taken by the City and defended by claimants. From this it follows that the Firm is not entitled to charge additional fees to defend the appeal...."

We're continuing to discuss the Howard S. Davis article in the New York Law Journal on April 17, 2009.  How does the written attorney retainer agreement relate to an attorney malpractice case?  Is the attorney responsible for handling an appeal, a wrongful death proceeding in Surrogate's Court, a supplemental trust?   Is a fee earned when there is a successful appeal after an adverse outcome?

Davis writes: "The leading case in New York on the interpretation of attorney retainer agreements is Shaw v. Manufacturers Hanover Trust, 68 N.Y.2d 172, 499 N.E.2d 864, 507 N.Y.S.2d 610 (Oct. 14, 1986). In Shaw, the plaintiff's attorney had a signed retainer agreement that provided for a contingent fee for prosecuting or settling a claim for personal injury, but was silent regarding appeals. After a trial and a defendant's verdict, the attorney sought litigation expenses for an appeal, which the plaintiff refused to advance. The attorney was replaced, and an appeal was taken, resulting in a reversal and remand for a new trial. On the retrial, the case was settled for $1.5 million, against which the original attorney sought to collect a fee.

The client objected to the fee application on two grounds: first, that the retainer had ended with the adverse verdict; second, that the attorney had breached the agreement by refusing to proceed with the appeal except on new terms. The New York State Court of Appeals agreed that both arguments were reasonable and denied the fee request.

The Court said, "The importance of an attorney's clear agreement with a client as to the essential terms of representation cannot be overstated. The client should be fully informed of all relevant facts and the basis of the fee charges, especially in contingent fee arrangements . . . an agreement between client and attorney [must] be construed most favorably for the client . . . . Had the client maintained that the retainer agreement required respondent's representation through conclusion of the matter . . . that would have been the mandated interpretation. But where, as here, the client has asserted that the contract terminated upon entry of an adverse judgment we hold that the agreement must be construed so to provide."

In Friedman v. Park Cake, 34 A.D.3d 286, 825 N.Y.S.2d 11 (1st Dept. 2006), the Appellate Division upheld Supreme Court's denial of an application by the plaintiff to deny counsel fees to his attorney after his personal injury case was settled with his consent for $90,000, because allegedly the attorney failed to inform the client of a medical lien that reduced his share of the recovery. The attorney had not only a signed retainer agreement but also a form titled "General Instructions to Our Clients," which discussed plaintiffs' responsibility for liens and said that liens would be deducted from any recovery. Accordingly, the court held that the attorney had not breached any identifiable duty to instruct the client about liens and was entitled to his entire fee.

From an attorney's standpoint, the lesson taught by these cases is that a contingent fee retainer agreement should contain clear language stating that the legal services to be provided in prosecuting or adjusting a personal injury claim does not include legal services relative to the negotiation or litigation of any Medicaid lien under Ahlborn. In fact, to be safe, the retainer should list all those legal services the attorney will not provide - appeals, settlement or litigation of liens, creation and administration of supplemental needs trusts or guardianships, Surrogate's Court proceedings, collection and enforcement of judgments, withdrawal of funds deposited pursuant to an Infant Compromise Order, etc. - limited only by the Appellate Division's rules."
 

A bankruptcy trustee "steps into the shoes of the debtor" and obtains certain benefits from this power.  In Kirschner v. Grant Thornton we see that there are limits to that power. As Mark Hamblett writes in today's NYLJ: "Southern District Judge Gerard E. Lynch ruled Tuesday that the case brought by liquidation trustee Marc S. Kirschner, who is standing in the shoes of Refco, must be dismissed because "a trustee cannot sue to recover for a wrong undertaken by the debtor itself."

In addition to Mayer Brown, the judge in Kirschner v. Grant Thornton, 07 Civ. 11604, also granted motions to dismiss sought by Credit Suisse Securities and other investment banks, Ernst & Young U.S. and other accounting firms, and several third-party participants."

"The Wagoner rule, the circuit explained, "derives from the fundamental principle of agency that the misconduct of managers within the scope of their employment will normally be imputed to the corporation."

Because the trustee stands in the corporation's shoes, the court said, the rule "bars a trustee from suing to recover for a wrong that he himself essentially took part in."

The parties in Kirschner disagreed on whether a narrow exception to the Wagoner rule applied. The "adverse-interest" exception applies where the corporate officer has "totally abandoned" the corporation's interests and is "acting entirely for his own or another's purposes."

Here, Judge Lynch said, "The complaint is saturated by allegations that Refco received substantial benefits from the insiders' alleged wrongdoing."

"Indeed, the gravamen of the trustee's allegation is not that the insiders stole assets from Refco, but rather that the insiders fraudulent scheme was to steal for Refco - to inflate the value of Refco's interests on behalf of Refco itself by maintaining the illusion that Refco was 'fast-growing, highly profitable, and able to satisfy its substantial working capital needs without having to borrow money,'" he said.

Judge Lynch dismissed as "industrious, but without" merit, the plaintiffs' argument that the adverse-interest exception applied in any event because the insiders intended to benefit only themselves.

The trustee alleged that, in connection with the leveraged buyout and the initial public offering, the executives had wasted or "siphoned out" Refco assets.

But Judge Lynch said the insiders did not commit embezzlement. Rather, he said, they sold their interests in Refco "at fraudulently-induced prices."
 

In Arkansas Department of Human Services v. Ahlborn, 547 U.S. 268, 126 S. Ct. 1752,  it was "held that from a $550,000 negotiated settlement in a case arising from a car accident, the Arkansas Medicaid authority could recover only $35,581.47 (about one-sixth) of the $215,645.30 it had paid for treatment of Heidi Ahlborn's injuries, because the $550,000 settlement represented only about one-sixth of the reasonable value of the claim. "
 

Author Howard S. Davis, [disclosure:  HSD was a mentor of NYAMB} writes in today's New York Law Journal on this issue:  how does Ahorn affect plaintiff's settlement proceeds, what must an attorney do after settling or winning a case, and how does a retainer agreement's construction affect the attorney's fees and obligations?

HSD writes: "The Ahlborn decision answered many questions concerning Medicaid liens in personal injury litigation. In the process, by implication, it overturned well-established New York law allowing local Medicaid authorities to collect Medicaid liens in full from settlements in personal injury lawsuits. (See Cricchio v. Pennisi, 90 N.Y.2d 296 [1997]; Gold v. United Health Services, 95 N.Y.2d 683 [2001]; see also Lugo v. Beth Israel Medical Center, 13 Misc. 3d 681, 819 N.Y.S.2d 892 [July 21, 2006]; Harris v. City of New York, 16 Misc. 3d 674, 837 N.Y.S.2d 486 [March 29, 2007]; Chambers v. Jain, 15 Misc. 3d 1120, 839 N.Y.S.2d 432 [April 13, 2007].)2 But Ahlborn did not answer the question whether plaintiffs in tort cases can compel their attorneys, for no additional fee, to negotiate the allocation of the recovery - and even, if necessary, compel them to initiate court proceedings to fix the allocation.

In other words, in New York, after Ahlborn, the question remained whether attorneys, either plaintiffs' personal injury attorneys or outside counsel, were entitled to a fee, in addition to the fee permitted by the Appellate Division rules for prosecuting and settling personal injury cases, for negotiating an Ahlborn allocation or getting a court to set one."
 

A recent case Carl v. Cohen, Supreme Court, New York County, Justice Edmead 2009 NY Slip OP 30806(U), April 15, 2009 illustrates two distinct principals. The first is privilege and at issue communications which we discussed on April 15.  The second principal  is relation-back and the statute of limitations.

The statute of limitations in legal malpractice is three years, pursuant to CPLR 214(6)  An action may be commenced against a newly to-be added defendant if that newly related defendant is so closely related to prior defendants that there is no due process violation.

"Plaintiff now seeks to avoid the expiration of the statute of limitations by asserting that his belated adding of Greenberg as a defendant "relates back" to the commencement of this action, before the statute of limitations had run. The test for determining whether a claim asserted against a new party relates back to the date upon which the claim was interposed against the original named defendants is set forth in the case of Buran v. Coupal (87 NY2d 173, 178 [1995]). This test requires that the following three conditions be met:

(1) both claims arise out of same conduct, transaction or occurrence, (2) the party to be joined is united in interest with the original named defendant (s) and, by reason of that relationship, can be charged with notice of the commencement of the action so that the party to be joined will not be prejudiced in maintaining his or her defense due to the delay and (3) the party to be joined knew or should have known that, but for a mistake by the plaintiff as to the identity of the proper parties, the action would have been brought against him or her as well

(Matter of 27th St. Block Assn. v. Dormitory Auth. of State of N.Y., 302 AD2d 155, 163-164 [1st Dept 2002]; Buran v. Coupal, 87 NY2d at 181). "The burden is on the plaintiff to establish the applicability of the doctrine once a defendant has demonstrated that the statute of limitations has expired" (Nani v. Gould, 39 AD3d 508, 509 [2d Dept 2007]).

Here, plaintiff has met its burden to establish the applicability of the relation-back doctrine as to the first two prongs of the three-prong relation-back test. The asserted claims against Greenberg as Cohen's employer at the time of the alleged malpractice accrued, arise out of the same conduct, transaction or occurrence, and the two parties are united in interest. It should be noted that Greenberg has not challenged plaintiff's position that the first two prongs of the test have been established.

However, plaintiff has failed to establish the third element of the relation-back test, as he has not demonstrated that, but for an excusable mistake as to Greenberg's identity, the action would have been brought against Greenberg as well. "When a plaintiff intentionally decides not to assert a claim against a party known to be potentially liable, there has been no mistake . . . the plaintiff should not be given a second opportunity to assert that claim after the limitations period has expired" (Buran v. Coupal, 87 NY2d at 181)."
 

One of the more interesting memes in legal malpractice is the inevitable turnabout that is played out by the target attorney.  Once the advocate for plaintiff, the target attorney immediately turns around to show the holes in, and deficiencies of plaintiff's position.  The attorney, chameleonlike, turns into plaintiff's earlier opponent; at least the target attorney takes on their coloration.

As an example, Maiolini v McAdams & Fallon, P.C.   2009 NY Slip Op 02755   Decided on April 7,  2009    Appellate Division, Second Department  is instructive.  Plaintiff suffered from TMJ and filed, successfully, for short-term disability insurance payments.  Insurer then denied long term payments, and plaintiff had an opportunity to appeal.  No appeal was undertaken by the retainer [target] attorney.  Was there malpractice in failing to file the appeal?
 

The Appellate Division said no.  "The defendant established its entitlement to judgment as a matter of law by demonstrating that the plaintiff would not have succeeded on a second administrative appeal, even if one had been timely filed (see Alvarez v Prospect Hosp., 68 NY2d 320; Campbell v Tamsen, 37 AD3d 636, 636-637; Flinn v Aab, 167 AD2d 507). In opposition, the plaintiff failed to raise a triable issue of fact (see Teodorescu v Resnick & Binder, P.C., 55 AD3d at 721-722; Campbell v Tamsen, 37 AD3d at 637). Accordingly, the Supreme Court should have awarded summary judgment to the defendant dismissing the legal malpractice cause of action. "  Our bet is that the target attorney simply used the insurance companies medical report, and that plaintiff did not have a better report to show.  It's just a bet, though,  The decision does not describe the actual papers before it.

A recent case Carl v. Cohen, Supreme Court, New York County, Justice Edmead 2009 NY Slip OP 30806(U), April 15, 2009 illustrates two distinct principals. The first is privilege and at issue communications.  The second principal, to be discussed on Friday, is relation-back and the statute of limitations.

Plaintiff in this case was an employee at a mutual fund operation, and was embroiled in a market timing case in which it was alleged that someone was utilizing the time-zone differences between the east coast and California to make money in the mutual funds market.  He hired law firm 1, then fired it, and went on to law firm 2 and 3.  This case discusses the question of whether target attorney in the legal malpractice case may obtain otherwise privileged materials from the successor attorneys.

"The issue at bar in this case is whether Cohen may depose plaintiff's successor attorneys about the contents of and subject matter of these documents, as well as other communications "A waiver may also be found where the client places the subject matter of the privileged communication at issue, or where invasion of the privilege is required to determine the validity of the client's claim or defense and application of the privilege would deprive the adversary of vital information [internal citations omitted] (Jakobleff v. Cerrato, Sweeney & Cohn, 97 AD2d 834, 835 [2d Dept 1983] [plaintiff did not place her privileged communications with her present attorney at issue, nor was discovery of such communications required to enable defendants to assert a defense merely by bringing an action against her former attorney for legal malpractice]; Credit Suisse First Boston v. Ultrecht-American Fin. Co., 27 AD3d 253, 254 [1st Dept 2007]; Raphael v. Clune White & Nelson, 146 AD2d 762, 763 [2d Dept 1989] [attorney-client privilege between client and attorneys who had taken over case from law firm was not waived by client's initiating lawsuit. In addition, appellants failed to establish why the disclosure of privileged correspondence was vital to their defense in light of the broad range of materials already supplied by plaintiff]).

However, "that a privileged communication contains information relevant to issues the parties are litigating does not, without more, place the contents of the privileged communication at issue in the lawsuit; if that were the case, a privilege would have little effect [internal quotation marks omitted]" (Deutsche Bank Trust Co. Of Americas v. Tri-Links Inv. Trust, 43 AD3d 56, 64 [1st Dept 2007]; Veras Investment Partners, LLC v. Akin Gump Strauss Hauer & Feld LLP, 52 AD3d 370, 374 [1st Dept 2008] [Court found that it was error for the JHO to have found a waiver on the basis of relevance alone]). Thus, there is no "at issue" waiver where the party asserting privilege "does not need the privileged documents to sustain its cause of action" (Manufacturers & Traders Trust Co. v. Servotronics, Inc., 132 AD2d 392, 397 [4th Dept 1987]; (Deutsche Bank Trust Co. Of Americas v. Tri-Links Investment Trust, 43 AD3d at 64 [at issue waiver occurs when a claim or defense has been asserted by a party that he intends to prove by use of the privileged materials]).

Plaintiff asserts that the testimony of his successor attorneys is not discoverable in this case, as it cannot be said that plaintiff placed his privileged communications with his successor attorneys at issue, or that discovery of these communications is required to enable defendants to assert a defense (see Jakobleff v. Cerrato, Sweeney & Cohn, 97 AD2d at 834). Specifically, plaintiff asserts that, as he did not begin consulting with his successor attorneys until after his termination on November 14, 2003, and, as plaintiff's successor attorneys did not simultaneously counsel him with Cohen in any post-termination matters, there is no possibility that his successor attorneys have any information that Cohen requires in order to defend plaintiff's claims that Cohen had impermissible and undisclosed conflicts of interest, or that he failed to act in plaintiff's best interests regarding Alliance's defamatory U-5 form and subsequent misleading press releases. In addition, plaintiff notes that he concedes and will stipulate that his successor attorneys have not initiated a "whistleblower" cause of action on his behalf.
 

However, Cohen does not need further discovery of plaintiff's successor attorneys to determine whether or not these actions were timely taken, as these facts are plain on their face. Thus, plaintiff is entitled to a protective order denying defendant Cohen's third-party subpoena ad testificandum on his successor attorneys."

A NYC fact pattern in legal malpractice:  Plaintiff, a MD wishes to buy a co-op for use as a physician's office.  She finds a prior doctor's office and hires attorney and engineering company to do the deal. Plaintiff buys the unit only to find out that the certificate of occupancy is for residential use and not for professional space.  Quandary is how to fix. 

Plaintiff spends a considerable sum of money and succeeds.  She sues attorney , who then third-party the owner's corporation and engineer.  Result?

In Stackpole v. Cohen Ehrlich & Frankel, LLP  we see Justice Madden's decision, which permits a contribution and indemnity claim against the engineer but not the owner's corporation.  The complaint against the attorneys failed to advise her of the contents of the certificate of occupancy, failed to include in the contract of sale a provision that seller represented and warranted that the apartment could be used as a doctor's office, or for a cure provision, failed to advise plaintiff of Local Law 58 [a disability act], and that plaintiff had to spend hundreds of thousands of dollars to fix the situation.

The attorneys started a third party action against many parties, including the lender, the building corporation and the architectural and engineering service company.  In the end, the action against the bank was discontinued, and Justice Madden dismissed the action against the Owner's corporation.  Attorneys did not have a contribution or indemnity case against the Owner's corporation.  Pending discovery, the action against the engineer remains viable.

This recent appellate case McCluskey v Gabor & Gabor,  2009 NY Slip Op 02757 Decided on April 7, 2009 Appellate Division, Second Department illustrates the difference between malpractice at the trial level and at the appellate level. 
 

At the trial level one must prove the usual :"a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession' and that the attorney's breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442, quoting McCoy v Feinman, 99 NY2d 295, 301-302; see Noone v Stieglitz, 59 AD3d 505)."

However, at the appellate level [i.e.]  a claim that the attorneys failed to file an appeal, one must prove "that, had the attorney perfected that appeal, the appeal would have been successful, the cause of action would have been reinstated, and the plaintiff would have prevailed on that cause of action in the underlying action (see Suffolk Ave. Car Wash & Lube v Oberman, 256 AD2d 75; Saferstein v Klein, 250 AD2d 831). "

In McClusky the court dismissed legal malpractice claims: "Here, the plaintiff alleged, inter alia, that the defendants committed malpractice by failing to take an appeal in the underlying age discrimination action from so much of an order as dismissed his causes of action alleging fraud. We find, however, that, inasmuch as the causes of action alleging fraud were properly dismissed (see Kaufman v Torkan, 51 AD3d 977, 980; Weitz v Smith, 231 AD2d 518), the plaintiff cannot establish that the defendants committed malpractice by failing to take an appeal from that order (see Suffolk Ave. Car Wash & Lube v Oberman, 256 AD2d 75; Saferstein v Klein, 250 AD2d 831). "

From theLaw Profession Blog we report on this Arizona Disciplinary Case in which the exitence of attorney malpractice insurance was published.  The attorney was disciplined as we see in the order.

"An Arizona hearing officer has recommended the disbarment of an attorney for misconduct in several matters. The lawyer was no stranger to the bar discipline system. He had been the subject of two informal reprimands, censure with probation, and had been suspended in Decemeber 2008. Here, among other things, he responded to a lawsuit against him that alleged legal malpractice by falsely claiming that he had insurance coverage.

The hearing officer found that he had "violated his duty to the legal system by not being honest about his lack of legal malpractice insurance and by delaying the litigation....[t]he most serious misconduct involves the Respondent making false statements to the court." He also had failed to maintain accurate trust account records, refused to provide medical records authorizations to opposing counsel leading to the dismissal of a client's case, and obstructed court proceedings. (Mike Frisch
 

Cruise Ship Season comes and goes, and even in poor economic times, the ships carry many people to their vacations.  As in all events human, there will be accidents and injury.  The very nature of cruise ships, their location and the mere fact that they travel on water, complicates the legal horizon.  Nautical law is different from terrestrial law, and many times [for legal advantage] the ships themselves are registered in other countries.

All this leads to mistakes when a passenger is physically injured.  Whom does one sue, the travel agent or the cruise ship line?  Where does one sue?  How does one effect service of process?  These are just some of the smaller questions.  How do you line up the witnesses, now back in their many different homes?  How do you get the medical testimony, which was taken far, far away?

Here is a legal malpractice case from such an occurrence.  Engler v Kalmanowitz ;2009 NY Slip Op 02237   Decided on March 24, 2009   Appellate Division, First Department .  Here, the legal malpractice claim is not set forth.  Was it service of process?  Was it failure to bring the action in a timely fashion?  We do not know.  What we do know is that Supreme Court determined that there were questions of fact still existing and that the Appellate Division found, as a matter of law, that the cruise ship, who was not a party to the legal malpractice action, had no notice of the defective carpet.
 

Nature abhors a vacuum, they told us in high school and the law abhors a wrong without a remedy. One particular area of legal malpractice where this occurs is criminal defense, in which no legal malpractice action might be brought by a convicted defendant, no matter whether the attorney's mistakes contributed, or caused the conviction.

Another area is the estates-peri-death area.  One example is the will beneficiary who does not receive a legacy or bequest because of attorney mistakes, but has no privity.  The attorney's mistake may not be litigated by the will beneficiary.  Here is another example:

Estate of Saul Schneider v Finmann ;  2009 NY Slip Op 02319   Decided on March 24, 2009
Appellate Division, Second Department .  Assume here for this example that the attorney mishandled the insurance transfer.  Money is lost to the estate because of it.  May the estate successfully sue?  No.
""The well-established rule in New York with respect to attorney malpractice is that absent fraud, collusion, malicious acts or other special circumstances, an attorney is not liable to third [*2]parties, not in privity, for harm caused by professional negligence" (Estate of Spivey v Pulley, 138 AD2d 563, 564). Inasmuch as the estate was not in privity with Finmann, and there is no allegation that one of the exceptions to the privity requirement is applicable here, the estate may not maintain an action for legal malpractice against Finmann in its own right (see Deeb v Johnson, 170 AD2d 865; cf. Estate of Nevelson v Carro, Spanbock, Kaster & Cuiffo, 259 AD2d 282, 285). Moreover, Schneider himself did not have a claim during his lifetime against Finmann for legal malpractice, since the only alleged damage suffered from the malpractice was the increase in estate tax liability, which could not have been incurred while Schneider was alive. Consequently, the estate may not maintain this action under EPTL 11-3.2(b) (see EPTL 11-3.2[b]; Deeb v Johnson, 170 AD2d at 866; Rutter v Jones, Blechman, Woltz & Kelly, P.C., 264 Va 310, 314; cf. Nembach v Giaimo & Vreeburg, 209 AD2d 222, 222-223). "
 

"The best defense is a strong offense"..."Tyranny shall not go unopposed!"  which of these two opposing story lines will succeed in a legal fee / legal malpractice case.  Here is one example where the fee side wins out.    Duane Morris LLP v Astor Holdings Inc. ,  2009 NY Slip Op 02544
Decided on April 2, 2009   Appellate Division, First Department  permits the attorneys to collect their fee, and the malpractice claims to die. 
 

"The record shows that in December 2003, each defendant signed an agreement with plaintiff, acknowledging that it owed plaintiff a certain sum of money for their legal representation and agreeing to pay it within a certain amount of time. Although defendants contend that there is a triable issue of fact as to whether these agreements were signed under duress, "[r]epudiation of an agreement on the ground that it was procured by duress requires a showing of both (1) a wrongful threat, and (2) the preclusion of the exercise of free will" (Fred Ehrlich, P.C. v Tullo, 274 AD2d 303, 304 [2000]).  The affidavit of defendants' principal, which claimed that he orally protested plaintiff's services, does not serve to defeat plaintiff's motion. A client's "self-serving, bald allegations of oral protests [a]re insufficient to raise a triable issue of fact as to the existence of an account stated" (Darby & Darby v VSI Intl., 95 NY2d 308, 315 [2000])

The part of defendants' malpractice counterclaim that dealt with the action against Edward Roski III was properly dismissed. "A legal malpractice action is unlikely to succeed when the attorney erred because an issue of law was unsettled or debatable" (Darby, 95 NY2d at 315 [internal quotation marks and citation omitted]). When the Southern District of New York found that some of Astor's claims in the Roski Action were barred, it noted that "there appears to be no federal authority directly on point" (Astor Holdings, Inc. v Roski, 325 F Supp 2d 251, 262 [SD NY 2003]), and relied on a California state case that was decided in 2002 (see id.), which was after the Roski action was filed...."

Taking over a pro-se case can be dangerous, as an attorney in NJ has recently found out.  In this story from Law.com recounts the attorney took over after a pro-se college professor started a employment discrimination law suit:

"A lawyer who prevailed in a Title VII suit three years ago has been engaged since then in an unusual fee fight: against her own client, who says his pro se work entitles him to keep the fees awarded.

Worse for the lawyer, Antonia Kousoulas, the client is asserting his right to the $144,462 in fees and interest -- now sitting in a court registry -- through a malpractice counterclaim that a federal judge on Monday refused to throw out.

The underlying suit, Kant v. Seton Hall University, 00-Civ.-5204, was filed pro se in October 2000 by Chander Kant, a tenured assistant professor of economics at Seton Hall University's Stillman School of Business. Kousoulas, who heads an eponymous New York firm, entered her appearance as Kant's lawyer the following March.

Kant, born in India, claimed national-origin discrimination in the school's failure on three occasions to promote him to full professor. He also alleged he was denied promotion in retaliation for complaining of discrimination. The discrimination claim was dismissed on summary judgment."

Judiciary Law sec. 487 is perhaps our oldest statute, certainly the oldest statute in existence concerning legal malpractice.  Recently the Court of Appeals decided Amalfitano v. Rosenberg.  Now we are seeing a resurgence of interest, and in this particular case a court reconsidering its earlier decision to dismiss a Judiciary Law 487 case based upon the Court of Appeals Decision.  Amalfitano has two very important holdings: 

    a.  Plaintiff did not have to bring the 487 claim in the underlying action;

    b.  Attorney fees paid to combat the deceit are sufficient damages for a 487 claim.

In  Dupree v Voorhees , 2009 NY Slip Op 29121   Decided on March 23, 2009   Supreme Court, Suffolk County Palmieri, J. Here Supreme Court reconsidered its earlier decision:

"However, the Court's analysis of the Judiciary Law cause of action was based not on the merits of the facts alleged in support of such a claim, but rather on Appellate Division cases decided before the recent Court of Appeals determination in Amalfitano v Rosenberg, supra. A reading of that case indicates that, contrary to what this Court concluded in the May 1 decision, it should not be fatal to a plaintiff that the misrepresentation(s) upon which the Judiciary Law claim is based became known during the course of the underlying litigation, and that attorneys' fees alone may be considered damages proximately caused by the wrongful conduct.

Therefore, reading the plaintiff's complaint and submissions in the present action favorably to the plaintiff, as it must on a motion to dismiss (Guggenheimer v Ginzbrug, supra), it is apparent that the plaintiff here is not attempting to collaterally attack a judgment in a concluded action. As limited by this Court's determination regarding the absence of any other potential damages, the plaintiff here is seeking to recover the additional legal fees made necessary in her matrimonial action because of the alleged misrepresentation by Villar. "

The Court of Appeals decided an interesting attorney fee sharing case today, in which the successful attorneys called their referring attorneys "unethical" and then promptly lost the case.  Samuel v Druckman & Sinel, LLP   2009 NY Slip Op 02447   Decided on March 31, 2009
Court of Appeals   Pigott, J. determined the following problem.  Attorney A refers a medical malpractice case to Attorney B.  Client agrees to fee and responsibility sharing in writing.  Attorney B later brings in Attorney C to help.  Med mal case is settled and Attorney A is paid his 1/3.  Attorney
B and C ask the court, successfully, for enhanced fees, and get them.  Attorney A asks for his 1/3 and is rebuffed.

"Moreover, contrary to the holding of the Appellate Division, it is of no moment that Sinel did not contribute to that part of the work that resulted in the award of the enhanced fee. In the realm of fee-sharing disputes, "courts will not inquire into the precise worth of the services performed by the parties" (Benjamin v Koeppel, 85 NY2d 549, 556 [1995]). DR 2-107 also makes clear that, regardless of any division of services, where "by a writing given to the client, each lawyer assumes joint responsibility for the representation", attorneys are free to negotiate such division of fees as they deem appropriate (Code of Professional Responsibility DR 2-107 [a] [2] [22 NYCRR 1200.12 [a] [2]; see Lynn v Purcell, 40 AD3d 729, 730-731 [2d Dept 2007]; see also Simon's New York Code of Professional Responsibility Annotated at 439 [2008]). Further, Samuel, who is bound by the same Code of Professional Responsibility as Sinel, cannot be heard to argue that the fee-sharing agreement and the obligations thereunder must be voided on ethical grounds, when he freely agreed to be bound by and received the benefit of the same agreement, particularly where, as here, there is no indication that the client was in any way deceived or misled (see Benjamin, 85 NY2d at 556).

Based on the foregoing, Sinel is entitled to one-third of the entire legal fee of $1.9 million, with interest from June 10, 2005, the date of the entry of the compromise order, the "earliest ascertainable date" the claim existed ..."
 

Among the many weapons a court has is the rarely used injunction against future case filings.  After all, it's a citizen's right to sue.  One of our favorite New Yorker cartoons is the young child asking her mom when she will be old enough to sue someone.  Plaintiff in this case won't be suing anyone until Justice James gives permission. 

In Capogrosso v. Kansas ;2009 NY Slip Op 01916 ; Decided on March 19, 2009 ; Appellate Division, First Department  we see plaintiff's case dismissed on statute of limitations grounds.  Plaintiff is herself an attorney.  The Appellate Division agreed that prior approval was necessary in the future.
 

"Judgment, Supreme Court, New York County (Debra A. James, J.), entered July 24, 2007, in an action for legal malpractice, dismissing the complaint pursuant to an order, which, inter alia, granted defendant's motion to dismiss the complaint and enjoined plaintiff from initiating any further litigation without prior approval of the administrative judge of the court in which she seeks to bring a further motion or future action, unanimously affirmed, with costs.

Plaintiff's action for legal malpractice is barred by the statute of limitations, which began to run no later than the day the order dismissing her underlying medical malpractice action was entered (see McCoy v Feinman, 99 NY2d 295, 298 [2002]). The injunction barring plaintiff from initiating further litigation without prior court approval was justified in light of the evidence of plaintiff's repeated abuse of the judicial process
and her penchant for vexatious conduct (Sassower v Signorelli, 99 AD2d 358 [1984]).

In this particular case, it is possible to read through the entire Appellate decision and not even know what was alleged against the attorneys.  Rather, on summary judgment, the court determines that plaintiff could not have won against the insurer, hence, legal malpractice case is dismissed.  Unlike other types of cases, the fight is usually on the "case within a case" or on a more basic issue such as statute of limitations.  In this case, Schorsch v. Moses Singer, 2009 NY Slip Op 02293 ,Decided on March 26, 2009 , Appellate Division, First Department  we see:
 

"The court properly found that Margaret Schorsch's affidavit failed to create an issue of material fact as to whether her brother David was responsible for the 1995 inventory loss, or whether he was an "authorized representative" of M.R.S. Antiques so as to defeat coverage under the "dishonest acts" exclusion in the policy. Her affidavit contradicts detailed statements she previously made under oath in a 1995 case she brought against David wherein she alleged that he, as an integral member of the family business, had stolen company inventory and was thus responsible for the loss. This contradiction negated the authority of her affidavit as a basis for defeating defendant's motion for summary judgment (see Sugarman v Malone, 48 AD3d 281 [2008]).

Plaintiffs' assertion that the insurance policy did not contain an exclusion for dishonest acts is contrary to the record evidence. It is true that the insurer's counsel, in the February 14, 1997 letter denying coverage, mistakenly cited to a different policy it had issued to M.R.S. Antiques. However, the slight differences between the language of the Fine Arts Coverage dishonest acts exclusion and the one incorrectly cited by counsel in the letter do not affect the [*2]material terms of the applicable exclusion. The basic scope is the same: coverage is excluded for dishonest acts by "you" or the insured's "employees" or "authorized representatives" or "anyone entrusted with the property." Since the inventory loss was caused by the dishonest acts of David, who qualified as an authorized representative of M.R.S. Antiques or a person otherwise entrusted with the missing property, coverage was properly denied. "

Law.Com reprints an interesting article from the Texas Lawyer on the relationship between the economy and legal malpractice litigation.  One theory is that plaintiffs are more in need of recovery, and will either bring more legal malpractice law suits, or are willing to sue over smaller sums.  A second theory is that the economic downturn causes attorneys to take on too much work, which will in any economy create more mistakes, hence later legal malpractice litigation.

From the article; "Economic downturns often increase the risk that lawyers will face unhappy clients complaining of legal malpractice. While some lawyers may think they have nothing to fear since their practices do not involve areas of law many blame for the economic collapse, such a belief is unfounded. Some legal malpractice risks are not tied to any one specialized practice area but simply become more common when the economy goes bad.

Trouble sometimes arises because scenarios lawyers did not consider occur, or difficult economic circumstances test tough-to-draft language. Similarly, insignificant conflicts of interest -- either between the lawyer and the client or between clients in multiple representation situations -- take on heightened importance as clients face difficult financial circumstances.

Clients, desperate to stay afloat, may be more inclined to sue their lawyers, taking a chance that malpractice litigation will solve their financial problems. Lawyers, too, are more likely to sue clients for fees in a recession. Since legal malpractice is a mandatory counterclaim to a suit for fees, clients often elect to pursue a legal malpractice counterclaim rather than lose their opportunity to do so.

Some legal malpractice issues are simply an inevitable outcome of activity occurring more frequently in a bad economy. A spike in the number of foreclosures often means more people are unhappy with related legal services. People often sue lawyers who act as trustees in foreclosures, alleging failure to conduct the sale in a proper manner, though the more likely scenario is a suit to enjoin foreclosure."

As collection activities rise, more people will seek relief under the Fair Debt Collection Practices Act. Various state and federal fair debt collection practices laws may apply to lawyers involved in collection activities, including foreclosures and collection litigation, so all such lawyers should understand and abide by these laws' requirements if there is any doubt as to their application.

Lawyers, regardless of specialty, are more likely to have to consider the application of bankruptcy law and related issues applicable to insolvent adversaries in a tough economy. Failure to warn a client of the potential application of voidable preferences easily can trip up attorneys. Lawyers are sometimes sued for failing to make sure that a bankruptcy trustee completes the actions necessary for clients not in bankruptcy to consummate deals with debtors. Any time a lawyer is dealing with an adversary in bankruptcy, understanding the bankruptcy angles is critical.

We do not have firm statistics in this area, but from a general overview of litigation it seems to us that a higher percentage of legal malpractice cases are subject to motions to dismiss under CPLR 3211(a)(1) than are other types of cases.  We have thought about why this might be.  A benign explanation is that since there is always a "case within a case", there is a greater source of dispositive documents which might early derail a case.  A less benign explanation is that the defense bar realizes that the bench does not hold legal malpractice cases in high regard [laws written to legislate behavior of attorneys by attorneys, judged by attorneys], or that plaintiff's bar is a largely disparate group of practitioners.

In any event, this is a recent case from the Fourth Department on the issue: Younis v Martin
2009 NY Slip Op 02118 ;Decided on March 20, 2009 ; Appellate Division, Fourth Department.
 

"In determining such a motion, "[t]he facts pleaded are to be presumed to be true and are to be accorded every favorable inference, although . . . factual claims flatly contradicted by the record are not entitled to any such consideration" (Gershon v Goldberg, 30 AD3d 372, 373; see Parola, Gross & Marino, P.C. v Susskind, 43 AD3d 1020, 1021-1022). Although we agree with defendant that some factual claims by plaintiff in the complaint were contradicted by evidentiary material that he appended to the complaint, the record establishes that the court's decision to deny the motion was not predicated upon those factual claims. "
 

In the high flown world of patent infringement, large legal fees are the norm.  Here, from law.Com we see the story of $ 10 million in legal fees, all spent in a fruitless effort to enforce a patent infringement case against Palm.  In the end, plaintiff paid its attorney $ 7 million plus in fees, and paid the opposing attorney $ 2.6 million and all for naught.

"E-Pass Technologies is trying to recover millions it paid to Moses & Singer and Squire, Sanders & Dempsey in an ill-fated patent infringement suit by going after the two firms with a negligent misrepresentation lawsuit.

E-Pass originally sued Palm Inc. and others in the Northern District of California in 2000. But U.S. District Judge D. Lowell Jensen dismissed the litigation in 2006, found the German patent holding company had committed litigation misconduct, and awarded attorney fees to the defendants.

"In advising E-Pass to file and maintain their patent infringement claim, they spent $10 million in legal fees and costs without a sound basis to make the elemental case of patent infringement," said James Rosen of Rosen Saba, which filed the suit for E-Pass against its former lawyers at Moses & Singer and Squire Sanders.

The suit against the law firms (.pdf) was filed in San Francisco Superior Court in January, but Rosen Saba didn't serve it then because it was waiting for a decision on E-Pass' appeal of the underlying case, Rosen said. On Friday the U.S. Circuit Court of Federal Appeals affirmed Jensen's decision, and Rosen said the law firms will now be served.

The suit names E-Pass' primary trial counsel, Moses & Singer, and a partner at the New York firm, Stephen Weiss. It also targets Squire Sanders and San Francisco partner Mark Dosker.  "
 

We reported on this case last week; it's an example of big law legal malpractice.  The general view of legal malpractice limits its reach to small cases involving personal injury and blown statutes of limitation.  However, cases such as this one are huge.

From Law.Com and the Blog of Legal Times: "A team of lawyers representing Hogan & Hartson has filed a motion to dismiss a suit that alleges the firm committed legal malpractice, breach of contract and breach of fiduciary duty.

Prestige Brands Inc. sued the Washington, D.C., law firm, claiming lawyers at Hogan used attorney-client communication to help a competitor bring a product to the market quicker than it could have without Hogan's representation. Prestige and the competitor, DenTek Oral Care Inc., are both the makers of an over-the-counter mouth guard designed to prevent people from grinding their teeth while they sleep.

The motion to dismiss, which was filed by Zuckerman Spaeder in D.C., Superior Court Friday afternoon, claims that Prestige did not plead sufficient facts to establish Hogan was guilty of a conflict of interest and a breach of duty. The motion states that Prestige "does not allege facts to establish that the alleged conflict or possession of confidential information proximately caused a reduction in Prestige's market share."

The motion also says that Prestige did not plead any facts against the two lawyers named in the suit, Hogan partner Howard Holstein and former Hogan partner Jeffrey Shapiro, that would show either lawyer committed malpractice or a breach of fiduciary duty. (Shapiro is now a partner with Hyman, Phelps & McNamara.)

The motion also states that the court should dismiss Prestige's request for punitive damages because the company does not allege Hogan acted with "malicious intent." "

The principal that attorneys may not be held in legal malpractice over questions of judgment, strategies at trial and the like is given especial prominence in this case.  Client is found liable for $ 7 Million in patent infringement and $20 million in punitives, for "especially reprehensible " behavior.  On appeal, attorneys succeed in reducing liability to $ 520.00, a stunning victory.  They did not appeal the punitive award of $ 20 million.  On remand the district court whittled the punitives way down , but the appellate court determined that they would stay at $20 million.  From Law.Com:

"A federal appeals court ruled Thursday that a major Washington law firm did not commit malpractice when it represented a client found liable for $20 million in punitive damages — and just $520 in actual damages.

The District of Columbia Court of Appeals determined that Finnegan, Henderson, Farabow, Garrett & Dunner's decision not to initially appeal the punitive damages award was a reasonable, tactical litigation strategy involving an unsettled point of law.

As a result, the appeals court affirmed a lower court's grant of summary judgment to the 350-attorney intellectual property law firm.

The three-judge panel's decision stems from an underlying patent infringement and fraud lawsuit against Biomet Inc. involving the company's manufacture of orthopedic devices. Following a 1996 jury verdict, a trial court found Biomet liable for $7.1 million in compensatory damages and $20 million in punitive damages. After the trial, Biomet hired Finnegan Henderson to handle post-trial motions and the appeal.

On appeal, the law firm did not challenge the punitive damages award as unconstitutional because the ratio of punitive to compensatory damages was only three-to-one, and because rearguing the issue would have required another examination of Biomet's conduct, which the lower court found was particularly reprehensible, the March 19 decision said.

The appeals court in the underlying case eventually reversed the lower court's finding of infringement against Biomet and remanded the case for recalculation.

On remand, the lower court held that Biomet was liable only for $520 in compensatory damages. At that point, Finnegan Henderson challenged the punitive damages award as excessive. It asserted that the 38,000:1 ratio of punitive to compensatory damages violated of due process. The lower court agreed, and reduced the punitive amount to $52,000.

But the appeals court determined that because Biomet had not initially appealed the punitive damages, it had waived its right to seek relief from the $20 million award. "

It's the rare case in which attorney and judge are both defendants, and the rarer case still in which allegations of stalking, habeas corpus, child custody, contempt are joined with legal malpractice.  What makes this case even more unique is that it is set in Federal District Court.  This is a legal malpractice trifecta. Legal malpractice litigation, as we often say, is found everywhere.

The case is LOUIS PISANI, Plaintiff, VERSUS ASHLEY L. DIENER, ESQ., ET AL., Defendants.No 07-CV-5118 (JFB) (ARL) UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK 2009 U.S. Dist. LEXIS 21352  March 17, 2009, Decided  [no link]

Here are some of the facts from the complaint:  "Plaintiff and his ex-wife, America Lopez ("Lopez"), were married in New Jersey in 1993. (Amended Complaint ("Am. Compl.") P 1.) Lopez had a daughter from her first marriage, Tatiana Prats, and wanted two more children in her marriage [*3] with plaintiff. (Id. P 4.) On or about April 2000, Lopez "left on one of her many trips to visit her mother in Miami, FL." (Id. P 10.) "After three months, on or around July 2000 Plaintiff obtained a petition of habeas corpus to have the two children brought back to New York, their home state, in Nassau County venue." (Id. P 11.) The amended complaint does not make clear who the "two children" were, though he is presumably referring to Anthony Pisani and Gabriella Pisani, who are referenced later in the amended complaint. (Id., Exs. A-B.)

Plaintiff alleges that, on advice of counsel, plaintiff began divorce proceedings in New York on October 11, 2000. (Id. P 13.) In January 31, 2001, Lopez filed a petition for dissolution of marriage in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida. (Plaintiff's Addendum of Exhibits filed July 7, 2008, Ex. G.) Around this time, Lopez began a proceeding in Miami-Dade County before Judge Deborah White-Labora to obtain a temporary injunction for protection against domestic violence against plaintiff. (Id. PP 16-17; Plaintiff's Memorandum of Law in Opposition, Ex. 6.) The injunction was entered on agreement between [*4] counsel for the parties on October 27, 2001. (Plaintiff's Memorandum of Law in Opposition, Ex. 6.) Plaintiff alleges that his counsel, Ashley Diener, "intentionally, negligently was in breach of duty to me when he 'agreed' to the temporary injunction," and "plaintiff requests that Ashley Diener be disbarred." (Id. P 17.) Plaintiff alleges that the result of the injunction in Florida was "the parental alienation syndrome." (Id. P 18.)

The amended complaint alleges that Lopez then took the children to California and then Mexico. (Id. P 19.) Plaintiff alleges that Lopez then retained Kutner to represent her, and that Kutner is a contributor to the election campaign of Judge White-Labora. (Id. P 20.) Plaintiff alleges that Kutner made defamatory statements about plaintiff and the children. (Id. P 22.)

The complaint alleges that plaintiff was concerned about the well-being of his children and, therefore, tried to contact the Lopez family. (Id. P 23.) Though the amended complaint is unclear about this, it appears that this was in violation of his injunction and led to proceedings against plaintiff. (Id. PP 23-24.) Plaintiff retained Gale for the evidentiary hearing held before Judge Harnables. [*5] Plaintiff alleges that, "through [Gale's] negligence I was arrested in Feb. 2001. He failed then to defend me at the 2nd evidentiary hearing. 'I should have expected that' was Gales' comment!" (Id. at 24.)

Florida State Attorney Katherine Fernandez-Rundle charged the plaintiff with aggravated stalking on or around July 2001 in Florida state court. (Id. P 25.) The plaintiff alleges that he did not commit aggravated stalking, but rather was just trying to find out where his children were. (Id. PP 26-28.) In December 2002, plaintiff alleges that he went to a day care center "presumably with authority to see his children and give them gifts for Christmas." (Id. P 29.) Plaintiff alleges that he was "arrested for violating the injunction even though according to Ken Kaplan Esq plaintiff had permission to see children. He was negligent." (Id. P 30.) Plaintiff further alleges that "Judge Deborah White-Labora has acted maliciously with no finding of fact to cause plaintiff and children pain and suffering." (Id. P 31.) In December of 2007, plaintiff filed a motion to vacate the injunction against him, but his motion was denied by Judge White-Labora. (Id. P 32.)

Plaintiff alleges that he has not [*6] had any unsupervised contact with his children for the past seven years, that he has had his house taken from him, and that he was imprisoned "because of the negligent, malicious intentions of these defendants." (Id. P 33.) Specifically, Plaintiff alleges that Rogers accused plaintiff of disparaging remarks against Cubans, is a campaign contributor to Judge White-Labora, and communicated ex parte with Judge White-Labora. (Id. PP 34-35.) Plaintiff alleges that Judge White-Labora discriminated against him on the basis of his national origin and gender, in that she "did not vacate injunction based on 'mistreatment' of day care worker who spoke only Spanish. I don't speak Spanish." (Id. P 36.) Plaintiff generally alleges that defendants have discriminated against him on the basis of gender and national origin, in violation of 42 U.S.C. § 1983.
 

Legal Malpractice actions often start with the termination of the target attorney, and even more of them have the common aspect of take-overs by successor attorneys.  What happens to the file, how does it get transferred and who pays for the transfer?

This weeks decision in Moore v. Ackerman, Supreme Court, Kings County is a thoughtful discussion of how transition of attorneys interacts with charging liens, retaining liens, termination for cause and without cause.  While it does not really deal with charging liens [the right of an attorney to have his fees paid for with the client's successful award] it does deal with the question of disbursements made both during and after the representation ends.

There are only a handful of cases which deal with this matter, even though it is a frequent occurrence.  We'll let Justice Jack M. Battaglia, Kings County Supreme Court  explain:

""[A] client may at anytime, with or without cause, discharge an attorney." (Demov, Morris, Levin & Shein v. Glantz, 53 NY2d 553, 556 [1981].) As the Court of Appeals has noted, an attorney's discharge does not in itself imply a lack of competence or diligence on the part of the attorney.

"Attorney-client relationships frequently end because of personality conflicts, misunderstandings or differences of opinion having nothing to do with any impropriety by either the client or the lawyer. Others end because of unexpected conflicts of interests or changes in litigation strategy that require different lawyering skills. In some of those situations, the client may ask the attorney to withdraw. In others, it may be the attorney who initiates the termination process by offering to withdraw in order to avoid embarrassment, avert further conflict, preserve the relationship on a long-term basis or simply save the client from the discomfort of having to fire the attorney. Importantly, in many such cases, the decision to terminate the relationship is the product of a mutual choice." (Klein v. Eubank, 87 NY2d 459, 463 [1996].)

"The three remedies of an attorney discharged without cause - the retaining lien, the charging lien, and the plenary action in quantum meruit - are not exclusive but cumulative." (Levy v. Laing, 43 AD3d 713, 715 [1st Dept 2007]; see also Schneider, Kleinick, Weitz, Damashek & Shoot, v. City of New York, 302 AD2d 183, 186-89 [1st Dept 2002].) "[I]n disputes between attorneys, the discharged attorney may elect to receive compensation based on quantum meruit or on a contingency basis, whereas as against a former client, the discharged attorney is entitled to quantum meruit only, unless the client and attorney agree otherwise." (Levy v. Laing, 43 AD3d at 715.)

The instant dispute concerns only the retaining lien. "A common-law retaining lien, also known as a general possessory lien, entitles the attorney 'to retain all papers, securities or money belonging to the client' that come into the attorney's possession in the course of representation as security for payment of attorneys' fees." (Hope v. Ortiz, 83 NY2d 323, 311 [1994] [quoting People v. Keefe, 50 NY3d 149, 155 (1980)].) "[A]n attorney's rendition of services and expenditure of disbursements on behalf of the client entitles him to a common-law retaining lien on the client's file." (Theroux v. Theroux, 145 AD2d 625, 626 [2d Dept 1988].) "A retaining lien remains in force until the client's account is paid in full." (Id.)
 

For present purposes, and in the first instance, "disbursements" must be understood as amounts "advanced" on behalf of the client. (See Lansky v. Easow, 304 AD2d at 533; Madison v. Spancrete Machine Corp., 278 AD2d 867, 868 [4th Dept 2000]; Silverstein v. National Auto Renting Corp., 4 AD2d 869, 869 [1st Dept 1957].) But in the only New York decision this Court has found that provides insight on the issue, the Court of Appeals has suggested that the outgoing attorney may seek more.

In Matter of Sage Realty Corp. v. Proskauer Rose Goetz & Mendelsohn (91 NY2d 30 [1997]), the Court of Appeals was asked to resolve a dispute between the former counsel for corporate clients and the clients' successor counsel about material in the clients' files that successor counsel requested and former counsel refused to deliver. Successor counsel asked former counsel "to turn over its files in their entirety on the financing and restructuring matters, and tendered a check for [former counsel's] bindery expenses for those transactions, that being the only remaining outstanding claim of [former counsel] for payment with respect to services and disbursements arising out of those matters." (See id. at 33.)

The Court of Appeals adopted the majority view: "A majority of courts and State legal ethics advisory bodies considering a client's access to the attorney's file in a represented matter, upon termination of the attorney-client relationship, where no claim for unpaid legal fees is outstanding, presumptively accord the client full access to the entire attorney's file on a represented matter with narrow exceptions." (See id. at 34-37.) "Barring a substantial showing by [former counsel] of good cause to refuse client access, [former clients] should be entitled to inspect and copy work product materials, for the creation of which they paid during the course of the firm's representation." (Id. at 37 [emphasis added].)
 

In addition, with respect to specified claims or actions, including those for personal injury, property damage, or wrongful death due to negligence, the Second Department requires that "[a]ttorneys for both plaintiff and defendant . . . shall preserve, for a period of seven years" virtually the entire file of the attorney. (See 22 NYCRR §691.20 [f].) Specifically, the retention requirement includes

"the pleadings and other papers pertaining to such claim or cause of action, including but not limited to, letters or other data relating to the claim of loss of time from employment or loss of income; medical reports, medical bills, X-ray reports, X-ray bills; repair bills, estimates of repairs; all correspondence concerning the claim or cause of action; and memoranda of the disposition thereof as well as canceled vouchers, receipts and memoranda evidencing the amounts disbursed by the attorney to the client and others in connection with the aforesaid claim or cause of action." (Id.)

Neither the Disciplinary Rules nor the Second Department's rules make any exception to the retention requirements where the attorney withdraws from representation or is discharged. As to the "bookkeeping records," however, the applicable Disciplinary Rule provides that, upon dissolution of a law firm, "the former partners or members shall make appropriate arrangements for the maintenance by one of them or by a successor firm of the [bookkeeping] records." (See Disciplinary Rule 9-102 [H]; 22 NYCRR §1200.46 [h].) "A lawyer, upon termination of his practice may properly cause the closed files to be delivered to another lawyer, but the receiving lawyer will hold them only as custodian." (See N.Y. St. Bar. Assn. Comm. Prof. Eth. 460, 1977 WL 15688, * 2.) In any event, the obligations of a lawyer upon termination of a practice and a lawyer continuing in practice would, presumably, be different.

In short, there is no clear authority as to whether a charge for copying the client's file is appropriate as a "disbursement" for purposes of a retaining lien, or whether for purposes of general ethical obligations a lawyer may charge for copying a file before releasing it to the client ...."

We've written in the past on the collateral estoppel trap in legal malpractice.  While fee arbitrations in State Court proceedings probably have the greatest absolute number of applications, bankruptcy court fee awards may well cover a greater dollar figure.  Here, in In re D. A. ELIA CONSTRUCTION CORP., Debtor.  07-CV-754,08-CV-103  UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK  2009 U.S. Dist. LEXIS 20443   March 14, 2009, Decided we see a result.  Law firm handles a 10 year bankruptcy for debtor, and is awarded several interim fees.  Law firm then applies for final fee award, and for the first time, debtor raises issue of legal malpractice.  Court considers the fee application, and awards fees.
 

When debtor later sues in State Court, result is: dismissed on the basis of collateral estoppel/res judicata.

"Upon finding that no merit to Elia's claims of malpractice, this Court observed:
As is readily apparent from this Decision and Order, the Court finds Elia's arguments in favor [of] remand and against the motion for summary judgment to be completely without merit. In opposing the motion to dismiss on res judicata grounds, Elia did not even attempt to [*5] distinguish the most obviously relevant case law against it -the First, Fourth and Fifth Circuit rulings holding that a bankruptcy court's grant of fees under 11 U.S.C. § 330 bars any subsequent malpractice claims premised upon those same services. See Grausz v. Englander, 321 F.3d 467 (4th Cir. 2003); In re Iannochino, 242 F.3d 36 (1st Cir. 2001); In re Intelogic Trace, Inc., 200 F.3d 382 (5th Cir. 2000). Instead, Elia attempts to mischaracterize the record by suggesting that the bankruptcy court never considered its claims of malpractice and attorney misconduct. Both this Court and the Second Circuit have expressly rejected that argument and have found that the bankruptcy court gave adequate consideration to Elia's claims of postpetition malpractice. See In re D. A. Elia Constr. Corp., 04-CV-975, Dkt. No. 21, at 20 (this Court's Decision and Order stating that "[t]he bankruptcy court fully considered [Elia's] allegations of misconduct but found them to be without merit"); and id. at Dkt. No. 33, at 3 and 4 (Second Circuit Summary Order stating that the bankruptcy court gave Elia "more than ample opportunity to present its arguments" regarding its claims of "conflicted and negligent [*6] representation").

In light of those express findings, it is difficult to believe that the state court action was filed by Elia in good faith. Even if Elia did have some good faith basis for initially filing its state court claims, it should have been clear that its position was meritless upon reviewing the cases cited in Damon & Morey's motion to dismiss. This is particularly true where, as here, Elia's principal is also an attorney and therefore presumably understood the res judicata arguments being raised. Nevertheless, Elia chose to oppose the motion and filed its own motion to remand.

The foregoing certainly provides sufficient evidence for this Court to conclude that the instant action was brought in bad faith and for the purpose of harassment and delay."

Burt Pugach and Linda Riss are a staple of the blogosphere and the Page Six world.  He was a lawyer who was convicted in 1959 for blinding Linda Riss by use of lye, went to jail ,came out of jail to marry her ,and then was disbarred.  He was determined to have practiced law through the use of a front man-lawyer in 2008.  But that is all part of the Page 6 portion of their lives.

Here, the two sold their life story to HBO for use in a film called "Crazy Love" and this is where the legal malpractice portion of their life comes in.  Was the deal fair, and did HBO owe them more money?

In Pugach v. HBO Pictures Inc., Slip Op. 2009 30489U we see that their legal malpractice action fails. Judge Kitzes of Supreme Court, Queens County writes: 

"This action arises out of an agreement between plaintiffs and defendant Shoot the Moon, dated May 11, 2004, whereby, in consideration of the payment of the sum of $ 2,000, plaintiffs granted Shoot the Moon an option to purchase all rights to their life stories...."  Plaintiff's argument that Linda Pucach could not read the contract because of her blindnes was disallowed on the basis that "if the party could not read it, "not to procure it to be read was equally negligent."

The legal malpractice action was dismissed as the attorney defendants represented Shoot the Moon and not plaintiffs, thus lacking privity.

Our meme on this blog is that Legal Malpractice litigation is ubiquitous and omnipresent.  All right, what exactly does that mean?  It's not just blown statutes in personal injury, and it's not just unanswered questions in matrimonial suits, and it's not even just bankruptcy trustees and ponzi schemes.  It's the basis commercial transactional world too.  Here in an article from Law.Com, by Brian Katkin, we see:

"Hogan & Hartson is being sued for malpractice by a client who alleges the firm used attorney-client information to boost a competitor.

In the complaint, filed in Washington, D.C., Superior Court last month, Prestige Brands Inc., makers of household products like Comet and Compound W, claims lawyers at Hogan & Hartson breached their retainer agreement and committed legal malpractice by helping another company get a competing product on the market.

Hogan has yet to respond to the allegations, but the firm has hired Mark Foster, a partner at Zuckerman Spaeder, to defend the action. Last year, Foster successfully battled malpractice allegations against Wiley Rein when the firm was sued by former client Blackwater Security Consulting. Foster and J. Warren Gorrell Jr., Hogan's chairman, declined to comment.

Prestige is using Marianne Roach Casserly, a partner in the D.C. office of Alston & Bird, along with lawyers from the firm's Atlanta and New York offices. Casserly did not return calls seeking comment.

Charles Jolly, Prestige's general counsel, says he found out Hogan was working for a competitor from the Food and Drug Administration's Web site. "I've been practicing for 40 years, and I can think of only one time when I've gotten in a dispute with a firm that I hired for outside counsel," Jolly says."

In the law, "attorney's fees are awarded..." carry awesome power.  Traditionally, the American rule is that each side bears its own attorney fees unless there is an agreement or a statute which grants attorney fees to the prevailing party.  Attorney fees are awarded in L & T litigation, based upon the usual rental lease; in discrimination cases by statute, and so on.

Then there is the unique New Jersey legal malpractice fee shifting rule.  In a story by the National Law Journal, we see:

"A New Jersey appeals court ruled Feb. 18 that a plaintiff who won a $20,000 settlement from a lawyer and two business entities can pursue the lawyer for the entire $144,000 legal fee expended in the case, even though the non-lawyers paid two-thirds of the settlement.

The three-judge panel ruled in Geranio v. FEC Mortgage Corp. , A-4839-06, that under New Jersey's unique fee-switching rules, West Orange, N.J., lawyer Anthony Gualano is liable for the entire legal fees of the plaintiff in the underlying case, which alleged malpractice in the handling of a property refinancing. The new and old mortgage holders were also defendants.

The suit by Steven Geranio alleged that Gualano, as lawyer for FEC Mortgage Co. -- and as the only attorney at the closing -- failed to spot a $15,000 error in the payoff statement. Geranio also sued FEC for not noticing the error and claimed that the mortgage company being paid off, LHW Development Corp., unjustly enriched itself by accepting the $15,000.

The case settled for $20,000 -- the full substantive damages plus interest -- but that didn't end the matter.

Under Saffer v. Willoughby , 143 N.J. 256 (1996), the costs of pursuing errant lawyers are considered consequential damages of malpractice and can be recovered. That meant a malpractice liability trial was necessary to determine that a fee award was warranted.

Bergen County Superior Court Judge Lawrence Smith found Gualano liable and a subsequent judge, Richard Donohue, set the damages at $38,000 -- not the $144,000 requested -- on the principle that much of the plaintiffs fees were caused by the pursuit of the business entities.

That was wrong, the appeals court said. "The judge failed to consider the legal fees plaintiffs incurred in having to litigate claims against FEC and LHW in order to recoup the $15,000 overpayment," Judges Michael Winkelstein, Jose Fuentes and William Gilroy said in a per curiam opinion.

The judges said Gualano was negligent in various ways that caused the plaintiffs to pay off their mortgage. "Thus, were it not for Gualano's negligence, plaintiffs would not have had to file suit against FEC and LHW to recoup the overpayment," they said. "The motion judge, therefore, should have considered plaintiffs' counsel's legal work [performed] before the $20,000 settlement was reached."

There have been rulings that lawyers can be assessed only the percentage of the plaintiffs fees attributed to the lawyers' negligence if the percentage is apportioned at a trial.

In this case, the defendants agreed on a three-way split before the end of the trial. Gualano's lawyer, Allan Maitlin of Sachs, Maitlin, Fleming & Green in West Orange, argued that the one-third split should apply to the fee as well or that there should be a retrial to apportion liability among the defendants.

But the court said Gualano agreed to the settlement knowing there was no court determination of percentage of liability and that he is on the hook for the cost of the pursuit of all the defendants."

Plaintiff owns property, plaintiff borrows money on property, plaintiff and lender reach a complicated right of first refusal agreement, lender and plaintiff enter into new lending agreements for different businesses, and then it all falls apart.  The transactions end in mutual law suits in Nassau and Suffolk and a legal malpractice and Judiciary Law 487 case before Justice Cohalan, in Suffolk County. In Rozen v. Russ & Russ we see not only Legal Malpractice and Judiciary Law 487 claims, but debtor-creditor and Champerty under Judiciary Law 488 and 489.  When we see Champerty claims we think Marbury v. Madison, our own way of saying, wow, what an uncommon pleading. Remembering, however, the 750 year + history of Judiciary Law 487, this should not surprise.

In this case, the law firm took an assignment of plaintiff's rights to the property, in a most complicated fashion, triggering law suits in two counties when defendants found out that plaintiff's law firm had in interest in how the real property case, with its rights of first refusal came out.

it is instructive to read Justice Cohalan's 15 pp decision, which is linked but cannot be excerpted here.

We have noted the trend towards legal malpractice cases issuing out of Bankruptcy proceedings.  We believe the trend arises from the greater number of large bankruptcy filings in the corporate world, and the smaller pool of assets available to the creditors.  In this case, Law Com reports that Pillsbury Winthrop will re-pay and forego $ 10 million for violating Bankruptcy rules and being an interested creditor while representing debtor.

"Pillsbury Winthrop Shaw Pittman has reached a $10 million settlement in a malpractice dispute with bankrupt client SonicBlue, a court filing Tuesday shows.

The firm will pay $7.6 million and forgo $2.4 million in outstanding fees to SonicBlue's estate, according to the filing, which awaits approval by a bankruptcy judge at a hearing slated for March 31.

SonicBlue's estate had sued Pillsbury for malpractice and breach of fiduciary duty, demanding the firm return $4.2 million in fees and pay $11 million in damages.

"The creditors committee is pleased with the terms of the settlement," said Ron Oliner, a partner at Duane Morris who represents the creditors committee in the bankruptcy.

Pillsbury General Counsel Ronald Van Buskirk declined to comment beyond pointing at language in the settlement saying the deal had been reached to the parties' mutual satisfaction. Pillsbury represented the SonicBlue estate from the filing of its bankruptcy petition in 2003 until 2007 when it came to light that the firm had failed to disclose to the court a 2002 pre-bankruptcy promise to creditors. The firm promised in a letter to three hedge funds, which had invested in a $75 million bond issue, that they would be repaid in full should SonicBlue enter bankruptcy protection.

Pillsbury attorneys later described the letter as a "scrivener's error." The hedge funds threatened to sue for repayment in September 2006.

In a 2005 internal e-mail sent by Pillsbury partner William Freeman about the retainer SonicBlue had paid, he told partner Craig Barbarosh that the firm had "major exposure here."

Citing the potential conflicts, the bankruptcy judge removed Pillsbury from the case in March 2007. "

How and when does the attorney-client relationship end?  Does CPLR 321 have anything to do with calculating the date for statute of limitations purposes?  Is there a bright-line rule?

In this Supreme Court case  Frenchman v. Queller Fisher, authored by Justice Carol Edmead, we see all sides of the arguments. The opinion reproduces the arguments of all litigants. The story is that plaintiff had a medical malpractice case and went to Queller Fisher.  At the time, they had Harvey F. Wachsman of counsel to the firm.  Wachsman left the firm and took this case with him.  Not three months later he told plaintiff that he was no longer interested in the case.  The case shuttled between several attorneys until the last attorney took the case to trial and had a moderate win.  It was claimed that two additional defendants were not named in the case, and had they been, the award would have been much greater.

Discussion swirls around how an when an attorney disengages.  Is it the date of a consent to change attorneys?  Is it in the dueling letters from attorney to client to attorney?  Is is the day that trust no longer reposes in the attorney?  Here, Supreme Court chooses the Aaron v. Roemer course, and analyzes when trust no longer resided in the attorney, foregoing the more clear "consent to change attorney" date which is fixed on paper.

To read all the arguments, see: Frenchman v. Fisher, Slip Op 2009 30483(u)

Today's Outside Counsel Column in the New York Law Journal is "The Use of Lawyer-Targeted Judiciary Law 487.  It discusses the 740 year history of what may be the oldest statute in Anglo-
American jurisprudence, and certainly the oldest to affect attorney conduct in and out of court.

As a treble damage statute, it has been sparsely used in its long history, and as as the article argues, may be trending higher.  This month's The Court of Appeals decision  in Amilfatano v, Rosenberg will likely boost litigator's awareness 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, c 29; see generally Thomas Pitt Taswell-Langmead, English Constitutional History 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 36, § 5).

In 1836, the Legislature carried forward virtually identical language in section 69 of the Revised Statutes of New York, prescribing that
"[a]ny counselor, 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 recovered in a civil action" (2 Rev Stat of New York, chap III, art 3, § 69 [1836]).
 

Right now the legal press centers around attorney lay-offs and the general economic situation.  In this case homeowners were completely unable to either pay the mortgage or obtain new financing.  Eventually they went to a lender whose interest rate exceeded 25%.  Will we be seeing more of this type of case as the mortgage market continues to fester?

In Abir v Malky, Inc. ;2009 NY Slip Op 01432 ; Decided on February 24, 2009 ;Appellate Division, Second Department  we see that even while battling with the lenders over usury, they have also sued the attorney.  For the moment, he seems to have dropped out, but the decision does not say that his action has been terminated.  In the meantime we see:
 

"In an action, inter alia, to recover damages for legal malpractice, the plaintiffs appeal, as limited by their brief, from so much of a judgment of the Supreme Court, Nassau County (Winslow, J.), entered September 12, 2007, as, upon an order of the same court entered August 15, 2007, which, upon reargument, among other things, adhered to a determination in an order entered May 10, 2007, denying those branches of their cross motion which were for summary judgment declaring that a certain judgment of foreclosure and sale entered August 10, 2000, is null and void.

In 1995 the plaintiffs, Fereydoon Abir and Flora Abir (hereinafter together the Abirs) stopped repaying the mortgage loan referable to their home. Their mortgagee, Bank of America (hereinafter the Bank) sought, and in 2000 obtained, a judgment of foreclosure and sale against them, which included a deficiency judgment in the approximate sum of $2,100,000. Subsequently, the Abirs negotiated a settlement in which the Bank agreed, inter alia, to accept the sum of $1,300,000 from the Abirs, or their designee, in full satisfaction of the judgment. The Abirs then sought a bridge loan from Hamerkaz, a not-for-profit entity, in the principal sum of $1,300,000, and thereafter attempted to secure a conventional loan. However, after entering into a contract with the plaintiffs, Hamerkaz was unable to provide the necessary funding and, sometime in mid-December 2001, the plaintiffs received notice that the Bank had scheduled a foreclosure sale of their home for December 18, 2001. The Abirs then contacted the defendant Malky, Inc. (hereinafter Malky), which agreed to provide them with the necessary funds for the bridge loan.

On December 18, 2001, Malky entered into an agreement with the Abirs (hereinafter the Abir/Malky agreement) which, inter alia, provided that the Abirs had 8 to 10 months to repay the debt, at an annual interest rate, including assorted charges, that ranged from 25.6% to 28.5%. The Abir/Malky agreement also provided that if the Abirs did not repay this obligation at the end of that 10-month period, Malky would have the right to enforce the judgment of foreclosure and sale, and take possession of the Abirs' house. The Abirs entered into the Abir/Malky agreement despite the fact that the Bank had yet to sell the judgment of foreclosure and sale to Malky since the Abirs understood that the sale of the judgment of foreclosure and sale was imminent. Moreover, the Abirs never designated Malky as their agent for the purpose of repaying their obligation to the Bank. "

 Refund Plus Life Insurance policies were purchased by Long Island attorneys including Daniel Buttafuoco.  When Boston Life refused to refund the premiums litigation erupted.  In the Virgin Islands, the insurance company asked for a declaratory judgment that it did not have to refund the premiums.  Things spiraled downward, and ended in EDNY legal malpractice litigation.  From the decision in Law Practice Management Consultants LLC v. M & A Counselors & Fiduciaries LLC, 08-CV-4557; Decided: February 28, 2009; District Judge Arthur D. Spatt;U.S. DISTRICT COURT. EASTERN DISTRICT OF NEW YORK
 

"In 2006, Boston Life terminated the Policies and allegedly refused to return the premiums paid by the Plaintiffs. In March of 2006, Boston Life commenced a suit in the British Virgin Islands ("the BVI Litigation") seeking a declaratory judgment that it properly terminated the Policies and was not required to repay any of the premiums. The Plaintiffs in the present action were among the 63 defendants ("the BVI defendants") that Boston Life named in the BVI Litigation. In April of 2006, the BVI defendants retained Hoilman, a member of M & A Counselors & Fiduciaries, to represent them in the BVI litigation.
 

Buttafuoco's deposition was scheduled for October 13, 2008 at his office in Woodbury, New York. The night before the deposition, Hoilman met with Buttafuoco at his office to prepare him for his testimony. The Plaintiffs allege that during this meeting, Hoilman advised Buttafuoco not to provide certain information in his deposition. On the day of the deposition, to Hoilman's surprise, the Plaintiffs discharged him and his local counsel from representing them in the Miami Litigation. At the conclusion of the deposition, Hoilman was served with the summons and complaint that initiated the instant lawsuit.

The complaint, filed in New York State Supreme Court, Nassau County, alleged that Hoilman committed legal malpractice by failing to timely file the opposition papers in the BVI Litigation. The essence of the Plaintiffs' legal malpractice claim is that although the British Virgin Islands Court of Appeal ultimately permitted them to file their opposition papers, the delay caused by the missed filing deadline prevented them from any meaningful recovery because Boston Life went into liquidation while the appeal was pending. In other words, the Plaintiffs contend that if Hoilman did not missing the filing deadline, they would have been able to obtain a judgment against Boston Life before it went into liquidation.

On November 11, 2008, the case was removed to this Court. Shortly thereafter Hoilman and his firm moved to dismiss the Plaintiffs' cause of action for malpractice contending, among other things, that they have failed to state a claim under Fed. R. Civ. P. 12(b)(6). The Court finds that the Plaintiffs have failed to state a claim for legal malpractice, and therefore, it need not address the issue of whether personal jurisdiction is lacking in this case."
 

One may lose the right to bring a legal malpractice case based on earlier attorney fee dispute resolution.  In this case , Margrabe v. Sexter & Warmflash, PC,  07-CV-2798, District Judge Kenneth M. Karas, SDNY, we see just how the process operates.  Plaintiff retains attorneys to represent her in a shareholder derivative matter.  Attorneys were successful in obtaining a significant amount of money for her, but from then on things went badly.  Attorneys were terminated, fees were disputed, escrow accounts started, and a defamation action commenced over the termination letter.  Eventually the attorneys smartly started an attorney fee dispute action under Judiciary Law 475, and were awarded fees.  This was the end of the issue, although plaintiff did not yet know it.

From the Court: "Plaintiff claims that Defendants failed to exercise the degree of skill and knowledge commonly possessed by members of the legal profession in their representation of her in the Rusciano Lawsuit. (Compl. ¶27.)

In the R&R, Magistrate Judge Yanthis recommended that the Court grant Defendants' Motion to Dismiss Plaintiff's legal malpractice claim on res judicata and collateral estoppel grounds. (R&R 4-5.)

Although Plaintiff initially objected to Magistrate Judge Yanthis's recommendation (Pl.'s Objections to R&R ("Pl.'s Obj.") 4), Plaintiff has since acknowledged to the Court that, based on the Court of Appeals' denial of Plaintiff's appeal, her legal malpractice claim "is barred under New York State law by the doctrine of res judicata." (Letter from William Greenberg, Esq. to the Court (Jan. 30, 2009).)

The Court agrees that, in New York, a judgment "fixing the value of a professional's service necessarily decides that there was no malpractice." Lipani v. Collins, Collins & Dinardo, P.C., No. 90-CV-5278, 1992 WL 168267, at *3 (S.D.N.Y. June 25, 1992) (quoting Nat Kagan Meat & Poultry, Inc. v. Kolter, 416 N.Y.S.2d 646, 647 (App. Div. 1979)); accord Best v. Law Firm of Queller & Fischer, 718 N.Y.S.2d 397, 397 (App. Div. 2000) (holding that plaintiffs were "precluded from asserting a cause of action alleging malpractice" against the defendant law firm inasmuch as the New York Supreme Court had found that law firm was entitled to its agreed-upon legal fee).5 Here, it is undisputed that the Plaintiff's legal malpractice claim is precluded by the state supreme court decision that Sexter & Warmflash was entitled to its reasonable legal fees. Accordingly, Plaintiff's malpractice claim is dismissed as barred by the doctrines of res judicata and collateral estoppel."
 

On first blush this decision is a tad confusing.  Legal malpractice plaintiff sues his former defense attorney who defended him in a cross-over head-on car crash.  Plaintiff in legal malpractice case had driven the cross-over car, and had no memory of the accident.  After he loses the car crash case on summary judgment, and then sued the other driver in a second case, he sues the attorneys. The case is Luscher v One Beacon Ins. Group ;2009 NY Slip Op 29076 ;Decided on February 25, 2009 ;Supreme Court, Kings County ;Kramer, J. 
 So far, simple.

Attorneys seek to depose victim of car crash case, in legal malpractice case.  Theory against target attorneys is that they failed adequately to oppose summary judgment with an affidavit of a person with knowledge.  It appears from this decision that only the two drivers have actual knowledge.

Court denies deposition.  One might think this a defeat for attorneys?  We don't think so. Once it is determined that no one has actual knowledge of how the accident occurred, we think the defense has undermined the plaintiff.  Here is the court:

"Defendants argue that they need to depose Arrua in the instant action because he was never actually deposed with respect to liability in the predicate action and the affidavit he submitted with his summary judgment motion did not provide any information about the details of the collision; the lights on the road, the traffic signs, the speed of the vehicles or whether he uses glasses or contacts and whether he is familiar with the area. Defendants argue that this information cannot be obtained from other sources because their former client, Luscher, did not have any memory of the accident.[FN4] The witness argues that the facts and circumstances of the underlying accident were already decided in the predicate action and consequently the defendants are barred by the doctrine of collateral estoppel from taking his testimony.

In order to defend a legal malpractice action, the defendants must show that they were not negligent or that their negligence was not the but for cause of the plaintiff's failure to prevail in the underlying action. (Wray v. Mallilo & Grossman, 54 AD3d 328[2d Dept. 2008]). The appropriate analysis in a legal malpractice case does not include or permit a collateral attack upon the underlying judgment. Thus although New York's liberal discovery rules require "disclosure upon request of any facts bearing on the controversy," Allen v. Crowell-Collier Publishing Co., 21 NY2d 403[1968], the discovery of facts and circumstances whose sole purpose is to launch a collateral attack on the underlying judgment by revealing possible defenses to the predicate action does not fall within this rubric. The information sought to be obtained from this witness with respect to the circumstances attendant at the time of the collision would serve only to undermine the judgment in the predicate action and thus is not relevant [*3]here. "

Here is a rare case in which attorney represents farm owners on a wrongful death case, which does not settle within policy limits.  Instead of settling for $ 300,000 there is a verdict of $ 4.2 million.  Afterwards, everything turns upside down.  The farmer's insurance company approached the attorney's legal malpractice carrier and from there on in the versions diverge:

"After the trial ended, Claverack approached Zurich with six "contemporaneous memorializations" of phone conversations among Mr. Roche and Ms. Hess and Ms. Buckley purporting to show that Mr. Roche had ignored Claverack's instructions and fumbled the case. Claverack requested that Zurich, as holder of the attorney's professional liability insurance policy, contribute to the judgment.

Mr. Roche argued that Ms. Hess and Ms. Buckley misstated their conversations with him and that the memos are defamatory fakes.

According to Claverack's brief before the appellate court, Zurich eventually paid $193,750 toward the verdict and then canceled its policy with Mr. Roche.

Spencertown attorney David Seth Michaels said the dispute between Mr. Roche and Claverack ended a 25-year relationship in which Mr. Roche represented Claverack's insureds. Of the panel's ruling, Mr. Michaels said, "I am delighted and so is my client."

Mr. Roche's action does not specify the damages he is seeking.
After the trial ended, Claverack approached Zurich with six "contemporaneous memorializations" of phone conversations among Mr. Roche and Ms. Hess and Ms. Buckley purporting to show that Mr. Roche had ignored Claverack's instructions and fumbled the case. Claverack requested that Zurich, as holder of the attorney's professional liability insurance policy, contribute to the judgment.

Mr. Roche argued that Ms. Hess and Ms. Buckley misstated their conversations with him and that the memos are defamatory fakes.

According to Claverack's brief before the appellate court, Zurich eventually paid $193,750 toward the verdict and then canceled its policy with Mr. Roche.

Spencertown attorney David Seth Michaels said the dispute between Mr. Roche and Claverack ended a 25-year relationship in which Mr. Roche represented Claverack's insureds. Of the panel's ruling, Mr. Michaels said, "I am delighted and so is my client."

Mr. Roche's action does not specify the damages he is seeking."
 

In the law, "attorney's fees are awarded..." carry awesome power.  Traditionally, the American rule is that each side bears its own attorney fees unless there is an agreement or a statute which grants attorney fees to the prevailing party.  Attorney fees are awarded in L & T litigation, based upon the usual rental lease; in discrimination cases by statute, and so on.

Then there is the unique New Jersey legal malpractice fee shifting rule.  In a story by the National Law Journal, we see:

"A New Jersey appeals court ruled Feb. 18 that a plaintiff who won a $20,000 settlement from a lawyer and two business entities can pursue the lawyer for the entire $144,000 legal fee expended in the case, even though the non-lawyers paid two-thirds of the settlement.

The three-judge panel ruled in Geranio v. FEC Mortgage Corp. , A-4839-06, that under New Jersey's unique fee-switching rules, West Orange, N.J., lawyer Anthony Gualano is liable for the entire legal fees of the plaintiff in the underlying case, which alleged malpractice in the handling of a property refinancing. The new and old mortgage holders were also defendants.

The suit by Steven Geranio alleged that Gualano, as lawyer for FEC Mortgage Co. -- and as the only attorney at the closing -- failed to spot a $15,000 error in the payoff statement. Geranio also sued FEC for not noticing the error and claimed that the mortgage company being paid off, LHW Development Corp., unjustly enriched itself by accepting the $15,000.

The case settled for $20,000 -- the full substantive damages plus interest -- but that didn't end the matter.

Under Saffer v. Willoughby , 143 N.J. 256 (1996), the costs of pursuing errant lawyers are considered consequential damages of malpractice and can be recovered. That meant a malpractice liability trial was necessary to determine that a fee award was warranted.

Bergen County Superior Court Judge Lawrence Smith found Gualano liable and a subsequent judge, Richard Donohue, set the damages at $38,000 -- not the $144,000 requested -- on the principle that much of the plaintiffs fees were caused by the pursuit of the business entities.

That was wrong, the appeals court said. "The judge failed to consider the legal fees plaintiffs incurred in having to litigate claims against FEC and LHW in order to recoup the $15,000 overpayment," Judges Michael Winkelstein, Jose Fuentes and William Gilroy said in a per curiam opinion.

The judges said Gualano was negligent in various ways that caused the plaintiffs to pay off their mortgage. "Thus, were it not for Gualano's negligence, plaintiffs would not have had to file suit against FEC and LHW to recoup the overpayment," they said. "The motion judge, therefore, should have considered plaintiffs' counsel's legal work [performed] before the $20,000 settlement was reached."

There have been rulings that lawyers can be assessed only the percentage of the plaintiffs fees attributed to the lawyers' negligence if the percentage is apportioned at a trial.

In this case, the defendants agreed on a three-way split before the end of the trial. Gualano's lawyer, Allan Maitlin of Sachs, Maitlin, Fleming & Green in West Orange, argued that the one-third split should apply to the fee as well or that there should be a retrial to apportion liability among the defendants.

But the court said Gualano agreed to the settlement knowing there was no court determination of percentage of liability and that he is on the hook for the cost of the pursuit of all the defendants."

Anecdotally, we see major economic changes in the US.  It changed the course of the Presidential elections, and it has changed the climate in legal malpractice.  Viewed through the lens of daily layoffs of attorneys, daily firing of staff, and realignments of law firms, this story from the American Bar Association underlines the trend.

"Attorney malpractice claims are escalating in numbers and intensity, making us wonder if clients, anxiously looking to recoup the hefty sums of money lost because of the struggling economy, are recalling the literal interpretation of Shakespeare’s well-known verse.

“Over the past several months, we have seen a dramatic increase in legal malpractice filings, a trend that would never been seen in a better economic environment,” Fisher, Rushmer, Werrenrath, Dickson, Talley & Dunlap shareholder John E. Fisher told the ABA Journal. “Now, more than ever, attorneys need to be mindful of their actions when dealing with clients."

In Florida, the depressed real estate market is driving many distressed buyers to look for any way out of housing contracts, including blaming their lawyers for their financial issues, said Mike Downey, a partner at Hinshaw & Culbertson.

“People are feeling a bit more desperate,” Downey said. Lawyers are delving into unfamiliar practice areas, and some clients are being less honest, putting attorneys at risk for professional liability issues, he added.

It’s not only clients who are spiteful. Downey said his phone is ringing with phone calls from lawyers complaining about malicious conduct from opposing counsel.

Chicago-based lawyer George B. Collins of Collins, Bargione & Vuckovich, agrees there is a meaner spirit to the recent spate of malpractice suits—and it’s aimed at unexpected targets. “The nastiness is hitting lawyers in substantial law firms, not the type of people you would expect to be in a malpractice suit,” Collins said. “It’s savage the way big firms are attacking each other.”

This intriguing story from New Jersey has several unique aspects to it.  The first is an idea alien to New York litigation and legal malpractice. This attorney was still in practice, and still representing buyers and sellers of the same residential property in the same neighborhood twenty years after the first transaction.  More unique is that he represented buyer in the first transaction and the next door seller in the second transaction, and was adverse to his own early client in the next door house. 

From Law.Com: "Tuckerton, N.J., solo Howard Butensky represented Stanley Shu in the purchase of a parcel at 113 West Main St. in Tuckerton from Earl and Maria Peterson. The Nov. 10, 1986, contract gave Shu a 30-day right of first refusal on the adjoining lot, also owned by the Petersons, and stated "[t]hese terms shall survive the passage of time."

Earl Peterson died, and Maria Peterson transferred the adjoining lot to her children, Lawrence Peterson and Donna Marie Jones.

When Peterson and Jones went to sell the lot in 2005 to Robert Gaudiosi, they hired Butensky to represent them.

Gaudiosi's lawyer, Alphonse DeSimone, learned that a structure on Shu's West Main Street property encroached on the lot and told Butensky that Gaudiosi would go ahead only if $10,000 of the purchase price was held in escrow to reimburse him for any legal fees he might incur in getting the encroachment removed.

Butensky wrote to Shu and told him of the impending sale and the encroachment problem on May 20, 2005.

A second letter from Butensky to Shu on May 27, 2005, warned of possible legal action if Shu did not remove the encroachment. Taking note of his past representation of Shu, Butensky said if a lawsuit was needed, some other lawyer would handle it.

Shu refused to remove the encroachment. Gaudiosi went ahead and bought the parcel.

In March 2006, Gaudiosi sued Shu in Camden County's Chancery Division. Shu counterclaimed for trespass. In his pleading he made no mention of the ri