Insurance Company Claims Malpractice Against Its Attorney

In this subrogation case, an insurance company has successfully pleaded fraud and legal malpractice.  The insurance company plaintiff proceeded in the subrogation and alleged that legal malpractice was committed in failing to pursue a default judgment.  They claimed fraud when the law firm billed for making a motion for a default judgment when it did not. So, in Vermont Mut. Ins. Co. v McCabe & Mack, LLP   2013 NY Slip Op 02392   Decided on April 10, 2013   Appellate Division, Second Department the AD found:

 "However, the Supreme Court erred in granting that branch of the defendants' motion which was pursuant to CPLR 3211(a)(7) to dismiss the causes of action alleging fraud. "To properly plead a cause of action to recover damages for fraud, the plaintiff must allege that (1) the defendant made a false representation of fact, (2) the defendant had knowledge of the falsity, (3) the misrepresentation was made in order to induce the plaintiff's reliance, (4) there was justifiable reliance on the part of the plaintiff, and (5) the plaintiff was injured by the reliance" (Pace v Raisman & Assoc., Esqs., LLP, 95 AD3d 1185, 1188-1189; see Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553; New York Univ. v Continental Ins. Co., 87 NY2d 308). Here, the complaint alleged that the defendants committed fraud by misrepresenting that they "made a motion for a default judgment" when they "never made, filed, or drafted" such a motion, that the plaintiff relied on the misrepresentation, and that the defendants billed the plaintiff for drafting the motion. Those allegations were sufficient to state a cause of action to recover damages for fraud (see Guggenheimer v Ginzburg, 43 NY2d at 275; Rabos v R & R Bagels & Bakery, Inc., 100 AD3d 849, 853).

The defendants' alternate ground for dismissal of the causes of action alleging fraud, that those claims were duplicative of the causes of action alleging legal malpractice (see Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539, 545), is without merit. The evidence submitted by the defendants does not establish that the plaintiff sustained no other damages, separate and apart from those sought as a result of the alleged legal malpractice, as a result of the defendants' alleged fraudulent conduct (see Guggenheimer v Ginzburg, 43 NY2d at 274-275; East Hampton Union Free School Dist. v Sandpebble Bldrs. Inc., 66 AD3d 122, affd 16 NY3d 775; Fleming v Kamden Props., LLC, 41 AD3d 781). Where, as here, tortious conduct independent of the alleged malpractice is alleged, a motion to dismiss a cause of action as duplicative is properly denied (see Lax v Design Quest N.Y. Ltd., 101 AD3d 431; Rupolo v Fish, 87 AD3d 684, 686).

Accordingly, the Supreme Court should have denied that branch of the defendants' motion which was to dismiss the causes of action alleging fraud.


 

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