They Never Met, Yet The Attorneys Represented Them Anyways

Schlam Stone & Dolan, LLP v Poch  2014 NY Slip Op 30415(U)  February 17, 2014  Supreme Court, New York County  Docket Number: 105769/11  Judge Shlomo S. Hagler presents the question of whether an attorney may be hired to represent an entity, and then represent the individual officers or members, without their knowledge.  What happens when things do not go so well?

In a housing court proceedings, Arfa and Shpigel came to be represented by defendants.  Arfa and Shpigel say that they did not know there was a case, did not know that they were represented, nor did they know that things were going badly in landlord-tenant court.  Indeed, things did go badly.

"Plaintiff’s assignors, Arfa and Shpigel, claim that Poch, an  attorney, committed malpractice when he purported to represent  them without authority in five Housing Court proceedings, wherein 
numerous violations were brought against Arfa and Shpigel, among  others, in their role as owners of the properties subject to the  violations and which Poch settled by five Consent Orders dated
June 24, 2008 (“Consent Orders”) .Arfa and Shpigel complain that Poch committed malpractice by failing to inform them that he was  representing them in the Housing Court matters (of which they
claim to have been ignorant), failing to discuss the matters with  them including exploring possible defenses, failing to inform  them that they were personally named and liable for fines arid  repairs, and by entering into the Consent Orders allegedly  without their knowledge or consent.  Arfa and Shpigel state that they only became aware of the existence of the Consent Orders when they were  called into court to answer contempt proceedings.... "

Arfa and Shpigel litigated through the Civil Court and to the Appellate Term.  Both courts determined that the defendant attorneys had apparent authority.  Is that Collateral Estoppel?  No.

Judge Hagler determined that "To establish collateral estoppel, there must have been an “identical issue . . . necessarily decided in the prior action or  proceeding [which] is decisive of the present action” and a  showing chat “the party who is attempting to relitigate the issue  had a full and fair opportunity to contest it in the prior action  or proceeding” (Matter of Howard v Stature Elec. Inc., 20 NY3d  522, 525 [2013]  citing Kaufman v Eli Lilly & Co., 65 NY2d 443,  455 [1985]; see also Matter of Hoffman, 287 AD2d 119 [lst Dept  2111).  In the present motion, defendants assert that the Appellate Term Decisions have completely resolved the issues in this case  and that they should not be relitigated here. To properly apply  the doctrine of collateral estoppel, this Court must determine  whether Judge Klein and the Appellate Term decided the “identical issue” which is “decisive” of this legal. malpractice act ion.  The issue before Judge Klein and the Appellate Term was limited to whether defendants had the authority ‘to represent Arfa and Shpigel in two discrete  housing Court proceedings which were  ]settled by two Consent Orders. The issue in this case, however,  is whether defendants’ committed legal malpractice in  representing Arfa and Shpigel in five Housing Court proceedings.  More specifically, Arfa and Shpigel not only allege that
defendants did not have authority to act on their behalf, but  defendants also failed to advise and explore with them any  possible defenses prior to entering into the Consent Orders in  all five Housing Court proceedings.  As such, the only issue that the Appellate Term conclusively
determined is that defendants had the authority to represent Arfa  and Shpigel in those two Housing Court Proceedings and are bound by the resulting two Consent Orders. The Appellate Term never determined the issue as to whether defendants committed legal  malpractice in the five Housing Court proceedings. Irrespective  of the doctrine of collateral estoppel, this Court must also  address whether defendants have met their burden in demonstrating  entitlement to summary judgment dismissing this legal malpractice  action. "

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