A Legal Malpractice Case about a Legal Malpractice Case, Not Quite Wound Up

Nichols v Curtis  2013 NY Slip Op 01776  Decided on March 19, 2013  Appellate Division, First Department  is the story of how a legal malpractice case went awry and then how the legal malpractice case against the legal malpractice defendants went awry.  Curtis & Associates, and an earlier Curtis & Riess-Curtis PC were early adopters in the legal malpractice field.  In this case, their legal malpractice case ended badly and they were sued. 
 

"In this action, plaintiff claims her former attorneys committed malpractice, breached their fiduciary duty, and engaged in fraud, coercion and defamation in prosecuting a malpractice action against the attorneys who represented her in an action in 1988 against nonparty Morris Sales, Inc. Notwithstanding the court's characterization of their motion, defendants moved to dismiss the fifth through ninth causes of action only. Curtis and C & A, against whom the first four causes of action are asserted, did not move to dismiss those causes of action, and, even though the court found them to have duplicated the fifth through ninth causes of action, the court should not have dismissed them sua sponte (see e.g. Purvi Enters., LLC v City of New York, 62 AD3d 508, 509 [1st Dept 2009]; West Washington Cut Meat Ctr., Inc. v Solomon, 260 App Div 741, 742 [1st Dept 1940]). Reinstatement of the first four causes of action is without prejudice to a motion for dismissal in view of the analysis set forth below.

Plaintiff's fraud claim is based on defendants' failure to tell her that C & R-C had been dissolved; she contends that, had she known that, she would not have retained C & R-C in 1998 and/or would not have allowed defendants to continue representing her until 2003. However, where a dissolved "corporation carries on its affairs and exercises corporate powers as before, it is a de facto corporation ... and ordinarily no one but the state may question its corporate existence" (Garzo v Maid of Mist Steamboat Co., 303 NY 516, 524 [1952]). Thus, defendants' failure to tell plaintiff that C & R-C had been administratively dissolved and subsequently reinstated was not a material omission (see Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]; see also Global Mins. & Metals Corp. v Holme, 35 AD3d 93, 99 [1st Dept 2006] [materiality can be disposed of summarily], lv denied 8 NY3d 804 [2007]). Furthermore, plaintiff failed to show that she was injured by the alleged fraud (see Lama, 88 NY2d at 421). There is no indication that, had C & R-C not been dissolved, it would have provided better legal services to plaintiff. Plaintiff's request for at least $2 million in damages has no relationship to the $87,000 in fees that she paid defendants.

Plaintiff contends that the statute of limitations on her breach of fiduciary duty claims should be six years instead of three because the claims are based on fraud (see e.g. IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139 [2009]). However, since, as indicated, the complaint fails to state a cause of action for fraud, the statute of limitations for the breach of fiduciary duty claims, which seek money damages rather than equitable relief, is three years (see Kaufman v Cohen, 307 AD2d 113, 119 [1st Dept 2003]); thus, those claims are time barred.

We also reject plaintiff's contention that defendants should be equitably estopped by their fraud from asserting the three-year statute of limitations defense to the malpractice, breach of contract (this claim is duplicative of the malpractice claim), and conversion claims. First, the complaint does not state a cause of action for fraud. Second, the failure to disclose that underlies plaintiff's equitable estoppel argument is also the basis for her fraud claim (see Ross v Louise Wise Servs., Inc., 8 NY3d 478, 491 [2007]; see also Corsello v Verizon N.Y., Inc., 18 NY3d 777, 789 [2012]). Third, plaintiff fails to allege specific actions by defendants that kept her from timely bringing suit (see Putter v North Shore Univ. Hosp., 7 NY3d 548, 553 [2006]); mere failure to disclose wrongdoing is not sufficient (see Ross, 8 NY3d at 491; see also Zumpano v [*3]Quinn, 6 NY3d 666, 675 [2006]). Fourth, with respect to the malpractice and breach of contract claims, the complaint admits that plaintiff realized by November 2003 that defendants' representation of her had fallen below the skill and knowledge commonly required of members of the legal profession (see Putter, 7 NY3d at 553; Zumpano, 6 NY3d at 674). "


 

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