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

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

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

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

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

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

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

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