How Does One Law Firm Bring In Other Attorneys in a Legal Malpractice Case?

Millennium Imports LLC marketed a huge success in the vodka world, "Belvedere."  Millennium was itself a golden child of the Louis Vuitton, Moet and Hennessy (LVMH) companies, so when a California winery that already had a wine called Belvedere claimed trade infringement, a small licensing fee of $ 30,000 per year was nothing to worry about.

Later, the winery wrote that it was intending to be associated with a gin to be called Belvedere.  Millennium and LVMH went into high gear, and had multiple law firms look at the situation.  Their solution was to write a strong letter and threaten. The Winery claimed breach of contract and eventually won $ 38 Million.  Who's to blame, and how will the resulting legal malpractice litigation shake out?

"It is well settled that an attorney sued for malpractice may assert a third party claim against another lawyer who advised the plaintiff on the same matter. The leading case on this point is Schauer v Joyce (54 NY2d 1 [1981]). In Schauer, an attorney was sued by his client for malpractice, due to his failure to obtain alimony for his client. He, in turn, asserted a third-party claim for contribution under CPLR 1401 against the lawyer who succeeded him in representing the plaintiff, claiming that the successor lawyer's negligence in failing to properly reapply for alimony contributed to the loss. The Appellate Division upheld the dismissal of the third-party claim, reasoning that the third-party defendant could not be liable for the injury caused to the plaintiff by the third-party plaintiff; in the Court's view, "[t]he extent to which plaintiff either personally or through her agent [third-party defendant] failed to mitigate damages is a matter of defense" (79 AD2d 826, 826 [3d Dept 1980]). But the Court of Appeals reinstated the contribution claim, explaining that:

"CPLR 1401, which codified this court's decision in Dole v Dow Chem. Co. (30 NY2d 143), provides that two or more persons who are subject to [*4]liability for damages for the same personal injury, injury to property or wrongful death, may claim contribution among them whether or not an action has been brought or a judgment has been rendered against the person from whom contribution is sought.' The section applies not only to joint tortfeasors, but also to concurrent, successive, independent, alternative, and even intentional tortfeasors'" (Schauer, 54 NY2d at 5, quoting Siegel, New York Practice, § 172, p 213; and citing McLaughlin, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR 1401, pp 362-363).

Not only do we find this reasoning applicable to the third-party claim against the law firm that served directly as plaintiff's counsel, but we also see no basis to find this reasoning inapplicable to the law firms whose allegedly negligent advice was supplied to plaintiff via plaintiff's parent company. It is well settled that attorneys may be liable for their negligence both to those with whom they have actual privity of contract and to those with whom the relationship is "so close as to approach that of privity" (Prudential Ins. Co. of Am. v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377, 382 [1992]). Since here the allegations support a finding that the advice of the two firms acting as counsel to plaintiff's parent company was given "for the very purpose of inducing action" on plaintiff's part, the third-party claim against those firms for contribution is actionable (id. at 383).

Even if we agreed that the affirmative defense of comparative negligence precludes a claim for contribution against an agent of plaintiff's, that would only warrant dismissal of the third-party claim against the Berry firm, as counsel to (and agent for) plaintiff. The claim for contribution against the other two third-party defendants could not be viewed as duplicative, since the affirmative defenses did not specifically name them as plaintiff's agents whose alleged negligence defendants sought to impute to plaintiff for comparative negligence purposes. Consequently, the third-party claims would be viable against third-party defendants the Barack firm and the Fross firm in any event.

With respect to the application to dismiss the third-party action without prejudice under CPLR 1010, there is no indication that the third-party complaint will delay the main action. On the contrary, there clearly are efficiencies to be gained from having the claims proceed together.

Accordingly, the judgments of the Supreme Court, New York County (Milton A. Tingling, J.), entered November 15, 2011, July 6, 2011 and July 18, 2011, dismissing the third-party complaint as against third-party defendants James H. Berry, Jr. and Berry & Perkins, Barack, Ferrazzano, Kirschbaum & Nagelberg LLP and Fross, Zelnick, Lehman & Zissu, P.C., respectively, should be reversed, on the law, without costs, the judgments vacated, and the third-party complaint reinstated. Appeals from the orders, same court and Justice, entered March 30, [*6]2011, July 6, 2011 and July 18, 2011, which granted third-party defendants' motions to dismiss the third-party complaint, should be dismissed, without costs, as subsumed in the appeals from the judgments."
 

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