Malpractice? Possibly. Breach of Contract? No

Kassel v Donohue  2013 NY Slip Op 32015(U)  August 22, 2013  Supreme Court, New York County  Docket Number: 150886/2013  Judge: Eileen A. Rakower is an example of the court working its way through a series of causes of action, and individually (rather than blanketly) upholding or dismissing them.

"As alleged in the proposed Amended Complaint, in or about July 2010, Plaintiff retained the legal services of defendant C&D, a New York law firm of which defendant Donohue was a member, in connection with an arbitration pending against Plaintiffs former employer ISSI Holdings, LLC. The arbitration arose from ISSI's alleged default on a prior judgment in Plaintiffs favor in the amount of$I,822,500. It is alleged that at Donohue's bequest, Plaintiff executed an engagement letter with
the accounting firm of CC&C and Lynch to provide forensic accounting services and expert testimony in connection with the arbitration. Donohue, along with Plaintiff and Lynch, also executed that engagement letter. As further alleged in the proposed Amended Complaint, Plaintiff became
dissatisfied with CC&C and Lynch's services in the weeks preceding the arbitration, and instructed Donahue to discharge them. It is further alleged that Donahue ignored Plaintiffs instruction, Donohue and Lynch concealed from Plaintiff the full extent of their involvement in the preparation for arbitration, and Donohue directed Lynch to opine contrary to Plaintiff s position that the appropriate interest rate applicable to the Default Judgment was 9%, rather than a two percent rate of interest. The proposed Amended Complaint asserts the following causes of action: legal
malpractice as against defendants Donohue and C&D (first cause of action), breach of contract against defendants CC & Lynch (second cause of action), and seeks to set aside the engagement letter of defendants CC & Lynch (third cause of action)

"To sustain a cause of action for legal malpractice, moreover, a party must show that an attorney failed to exercise the reasonable skill and knowledge commonly possessed by a member of the legal profession." (Darby & Darby v. VIS Int 'I, 95 N.Y. 3d 308, 313 [2000]). In order to prevail against an attorney on a legal malpractice claim, a plaintiff must first prove that the attorney was negligent, that such negligence was the proximate cause of the loss sustained, and that actual damages resulted. (see Tydings v. Greenfield, Stein & Senior, 2007 NY Slip Op 6734, *2 [1 st Dept. 2007]). Here, the four corners the Amended Complaint make out a claim for legal malpractice against defendants Donohue and C&D. The Complaint alleges that defendants Donohue and C&D were negligent in "advocat[ing] for the improper interest rate at the 2011 Arbitration," "advocating for no acceleration on the default," and by failing to correct his alleged legal and factually incorrect assertions concerning the default rate when provided an opportunity", and that but for this
negligence, the arbitrators would have awarded 9% statutory interest and accelerate the payment of the amount in default. The second cause of action of the proposed Amended Complaint alleges breach of contract against defendants CC and Lynch. It alleges that Plaintiff and CC and Lynch entered into a contract with Plaintiff, that pursuant to its terms, CC and Lynch were to provide Plaintiff with biweekly billing for services rendered under the Retainer Agreement, and that they failed to do so thereby depriving Plaintiff of notice of the extent of the services being rendered. It further alleges that CC & Lynch were required to request and receive payment prior to the drafting of an expert report and that they failed to submit the required advance notices for these services. However, despite this alleged breach of the terms of the contract, the Complaint then asserts that
"Plaintiff sustained economic damages as a direct and proximate result of the professional malpractice of Defendants CC and Lynch," and that "but for" this professional negligence, Plaintiff would not have sustained economic damages. This cause of action therefore fails to state a claim because although it asserts the existence of a contract and breach of that contract, it does not allege damages as a result of that breach but rather as a result of Defendants' "professional negligence," a claim that Plaintiff has withdrawn."

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