New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

What Exactly is Fiduciary Duty ?

Posted in Legal Malpractice Cases

Terms that are often used, often lose their meaning.  What is legal malpractice?  It’s a situation in which  an attorney is retained to represent a client, takes on the case, departs from the standard of good practice for an attorney in similar representations, and where that departure from good practice proximately leads to a bad economic result, but for which departure from good practice there would have been a better economic result for the client.

That’s more exact than “the attorney made a mistake.”

Similarly, in a breach of fiduciary duty, what exactly is that fiduciary duty?  Here, we have Deutsche Bank Natl. Trust Co. v Sidden , 2017 NY Slip Op 27074, Decided on February 24, 2017, Supreme Court, Queens County where Judge Modica channels Judge Cardozo:

“In a beautifully written and scholarly article, “Understanding Fiduciary Duty,” (Fla. B.J., March 2010, at 20, 22), Florida lawyers John F. Mariani, Christopher W. Kammerer, and Nancy Guffey-Landers, Esqs., discuss the fiduciary duty:

The most basic duty of a fiduciary is the duty of loyalty, which obligates the fiduciary to put the interests of the beneficiary first, ahead of the fiduciary’s self interest, and to refrain from exploiting the relationship for the fiduciary’s personal benefit. This gives rise to more specific duties, such as the prohibition against self-dealing, conflicts of interest, and the duty to disclose material facts. Perhaps [*3]the most famous description of the duty of loyalty is by Chief Judge Benjamin Cardozo in Meinhard v. Salmon, 249 NY 458, 464, 164 N.E. 545, 546 (1928):

Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.

In addition to a duty of loyalty, a fiduciary also owes a duty of care to carry out its responsibilities in an informed and considered manner and to act as an ordinary prudent person would act in the management of his or her own affairs. If the fiduciary has special skills, or becomes a fiduciary on the basis of representations of special skills or expertise, the fiduciary is under a duty to use those skills.

John F. Mariani, Christopher W. Kammerer, Nancy Guffey-Landers, “Understanding Fiduciary Duty,” Fla. B.J., March 2010, at 20, 22 (footnote references omitted).

Aside from Cardozo’s famous statement in Meinhard, made in 1928, for the New York Court of Appeals, the Supreme Court of Florida, one year earlier, in Quinn v. Phipps, 93 Fla. 805, 113 So. 419 (1927), articulated, with equal polish:

Stripped of all embellishing verbiage, it may be confidently asserted that every instance in which a confidential or fiduciary relation in fact is shown to exist will be interpreted as such. The relation and duties involved need not be legal; they may be moral, social, domestic or personal. If a relation of trust and confidence exists between the parties (that is to say, where confidence is reposed by one party and a trust accepted by the other, or where confidence has been acquired and abused), that is sufficient as a predicate for relief. The origin of the confidence is immaterial.
Quinn v. Phipps, 93 Fla. at 811, 113 So. at 421 (1927).”


No Privity, No Case

Posted in Legal Malpractice Cases

Risk Control Assoc., Inc. v Maloof, Lebowitz, Connahan & Oleske, P.C.  2017 NY Slip Op 01654 Decided on March 7, 2017 Appellate Division, First Department was dismissed and affirmed for the reason that “The factual allegations and the damages sought in the instant action are the same as the factual allegations underlying the legal malpractice claims and the damages sought in an earlier action brought against defendants by plaintiff Risk Control Associates, Inc., the claims administrator for plaintiff National Specialty Insurance Company (Risk Control Assoc. Ins. Group v Maloof, Lebowitz, Connahan & Oleske, P.C., 127 AD3d 500 [1st Dept 2015]) (see Voutsas v Hochberg, 103 AD3d 445, 446 [1st Dept 2013], lv denied 22 NY3d 853 [2013]). The instant claims are also time-barred (see CPLR 214[6]).”

The first case was dismissed “or its failure to allege that it had a “contractual obligation to pay for the loss in the personal injury action,” and to “allege that it sustained actual damages because of this obligation” (Risk Control Assoc. Ins. Group v Maloof, Lebowitz, Connahan & Oleske, P.C., 113 AD3d 522, 522 [1st Dept 2014] [Risk Control I]).”

“Here, no damages can be “reasonably inferred,” as plaintiff’s amended allegations are defeated by the documentary evidence it submitted. The affidavit submitted by the vice-president of one of the proposed plaintiffs averred that plaintiffs were all claims administrators. Furthermore, the vice-president attested that the loss, allegedly resulting from defendants’ malpractice, was paid by an entity who was not a party plaintiff, or proposed party plaintiff. Thus, plaintiff failed to allege either a “contractual obligation to pay for the loss,” or actual damages (Risk Control I at 522;Tenzer, Greenblatt at 45).

Moreover, plaintiff’s conclusory allegations of representation will not suffice in the absence of an attorney-client relationship with defendants (see Denenberg v Rosen, 71 AD3d 187, 196 [1st Dept 2010], lv dismissed 14 NY3d 910 [2010]).

To the extent the motion sought to add the primary insurer as a plaintiff, defendants would be unduly prejudiced by the introduction of that new party plaintiff after the statute of limitations has expired (see Bellini v Gersalle Realty Corp., 120 AD2d 345 [1st Dept 1986]). ”



Legal Malpractice Claims Lost in Bankruptcy Mistakes

Posted in Legal Malpractice Cases

Bankruptcy plays a major disrupting role, and in Kleinplatz v Nathan L. Dembin & Assoc., P.C. 2017 NY Slip Op 01645  Decided on March 7, 2017 Appellate Division, First Department we see plaintiff losing the right to sue in legal malpractice.  It vanished when he repeatedly failed to list the potential claim as an asset.

“Plaintiff’s prolonged failure to disclose the instant lawsuit to the bankruptcy court renders him judicially estopped from pursuing the claim (Koch v National Basketball Assn., 245 AD2d 230, 230-231 [1st Dept 1997]; Becerril v City of N.Y. Dept. of Health & Mental Hygiene, 110 AD3d 517, 519 [1st Dept 2013], lv denied 23 NY3d 905 [2014]). While the error initially may not have been intentional, as plaintiff had not commenced the legal malpractice claim when he filed his Chapter 13 petition, and was pro se at the time and may not have known that he was required to disclose such a suit, he failed to disclose the lawsuit to the bankruptcy court even after he commenced it, even after he retained bankruptcy counsel, and even after defendants cited the failure to disclose it in an unsuccessful summary judgment motion made years earlier, in June 2011. Thus, plaintiff’s ongoing failure to correct the omission suggests it was not merely a good faith mistake or unintentional (compare Murray, 248 BR at 487; United States v Hussein, 178 F3d 125, 130 [2d Cir 1999]).

Because we determine that dismissal is appropriate on this ground, it is unnecessary to consider whether plaintiff otherwise had standing to pursue the claim.

The court providently exercised its discretion in granting leave to amend the answer (CPLR 3025[b]; Cherebin v Empress Ambulance Serv., Inc., 43 AD3d 364, 365 [1st Dept 2007]). There was no significant prejudice to plaintiff from the delay to seek leave; plaintiff cannot claim [*2]surprise regarding his own failure to disclose the instant lawsuit in the bankruptcy proceeding (Edenwald Contr. Co. v City of New York, 60 NY2d 957, 959 [1983]). As previously noted, plaintiff failed to disclose the instant lawsuit to the bankruptcy court for years, even after he was alerted to the issue of nondisclosure.”


The Rare Plaintiffs’ Summary Judgment Success in Legal Malpractice

Posted in Legal Malpractice Cases

Summary judgment in favor of defendant-attorneys is common; summary judgment in favor of the plaintiff-client is rare.  Genesis Merchant Partners, L.P. v Gilbride, Tusa, Last & Spellane, LLC 2017 NY Slip Op 30430(U) February 27, 2017 Supreme Court, New York County Docket Number: 653145/2014 Judge: Nancy M. Bannon is an example of plaintiffs’ case, well-played.

“In this action to recover damages, inter alia, for legal malpractice, the plaintiffs move pursuant to CPLR 3212 for summary judgment on the issue of liability on so much of the first cause of action as alleges that the defendants committed legal malpractice in failing to perfect security interests in certain life insurance policies, and dismissing the defendants’ counterclaims for unpaid legal fees. The defendants oppose the motion. The motion is granted. ”

“The plaintiffs established their prima facie entitlement to judgment as a matter of law on the issue of liability on so much of the legal malpractice cause of action as is premised on the failure to perfect security interests in the insurance policies. A cause of action to recover for legal malpractice requires proof “that the attorney failed to exercise ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney’s breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages.” Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY 3 d 4 3 8 I 4 4 2 ( 2 0 0 7 ) . Where, as here, an attorney fails to properly record a security interest or mishandles an express task for which he or she was engaged, it is a per se breach of the standard of care, and does not require expert testimony to establish a prima facie case, since ordinary experience of a fact finder would provide a sufficient basis for judging the adequacy of the professional service rendered. See Lory v Parsoff, 296 AD2d 535, 536 (2~d Dept. 2002); Deb-Jo Const., Inc. v Westphal, 210 AD2d 951, 951 (4th Dept. 1994); S & D Petroleum Co. v Tamsett, 144 AD2d 849, 850 (3rd Dept. 1988). A security interest in a life insurance policy may not be perfected by filing a UCC-1 financing statement with the Secretary of State (see ucc 9-109[d] [8]), but only by the actual possession of the original policy or the delivery of a properly executed collateral assignment to the underwriter of the policy. See Matter of Bickford, 265 App Div 266 (3rd Dept. 1942). Moreover, the plaintiffs established, prima facie, that the defendants’ failure to properly perfect the security interests in the policies proximately led to the plaintiffs’ inability enforce a lien on the policies after Progressive defaulted, and that the plaintiffs were unable to collect from Progressive in their Connecticut breach of contract action. Cf. Gladstone v Ziegler, 46 AD3d 366 (lsc Dept. 2007) (plaintiffs established liability, but could not demonstrate, prima facie, that their attorney’s failure to perfect a security interest proximately caused damages) . ”

“Rule 1.2(c) of the Rules of Professional Conduct provides that “[a] lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances, the client gives informed consent and where necessary notice is provided to the tribunal and/or opposing counsel.” Generally, where the scope of representation is properly limited, an attorney may not be held liable for his or her failure to undertake a task that falls outside of the scope of representation. See generally AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435 (2007). The court, however, rejects the defendants’ contention that their submission is sufficient to defeat summary judgment. Even if there are factual disputes as to whether the defendants received any limiting instructions from Kelly and whether Kelly had authority to bind the plaintiffs with respect to the scope of representation, the plaintiffs established that the defendants, by filing the UCC-1 statements and billing the plaintiffs for that work, voluntarily assumed the obligation to perfect the security interests. Where one assumes a duty to act, the failure to perform the act in a proper fashion constitutes a breach of the assumed duty, and may render the actor liable in negligence. See Applewhite v Accuhealth, Inc., 21 NY3d 420, 431, 434 (2013); Palka v Servicemaster Mgt. Servs. Corp., 83 NY2d 579, 587 (1994); Podesta v Assumable Homes Dev. II Corp., 137 AD3d 767, 769 (2nd Dept. 2016); see generally Katz v United Synagogue of Conservative Judaism, 135 AD3d 458, 461 (1st Dept. 2016). Therefore, where a fiduciary, by its conduct, voluntarily assumes the obligation to properly deliver to, or file documentation with, a particular entity or governmental agency, the fiduciary’s failure to timely or properly deliver or file the documentation constitutes actionable negligence if it proximately causes damage to the plaintiff. See Nilazra, Inc. v Karakus, Inc., 136 AD3d 994, 996 (2nd Dept. 2016) (failure to file a certain notice with the Department of Taxation & Finance); see also AG Capital Funding Partners, L.P. v State Street Bank & Trust Co., 5 NY3d 582, 594 (2005) (failure to deliver secured indebtedness statement to a bank); Podesta v Assumable Homes Dev. II Corp., supra (failure to record partial satisfaction of mortgage) .”

Indemnification in Professional Negligence

Posted in Legal Malpractice Cases

Real estate and real estate development are always hot topics in New York, never more so that after a real estate developer won the presidency.  Politics notwithstanding, indemnification in real estate development is always pertinent, and in  Board of Mgrs. of the Norfolk Atrium Condominium v 115 Norfolk Realty LLC 2017 NY Slip Op 30348(U) February 23, 2017 Supreme Court, New York County Docket Number: 652529/16,  Judge Barry Ostrager does a great job of explaining the rules.

“As indicated earlier, one remaining issue is the request by G+P, Betro, and V & P to dismiss the indemnification claims asserted against them by the third-party plaintiffs. G+P and V & P also seek to dismiss Betro’s indemnification cross-claims against them. The principle of common law indemnification permits a vicariously liable party to shift all liability to the party whose negligence actually caused the loss. See, 17 Vista Fee Assoc. v Teachers Ins. & Annuity Assn. of Am., 259 AD2d 75, 80 (1st Dep’t 1999). However, “[s]ince the predicate of common-law indemnity is vicarious liability without actual fault on the part of the proposed indemnitee, it follows that a party who has itself actually participated to some degree in the wrongdoing cannot receive the benefit of the doctrine.” SSDW Co. v Fefdman-Misthopoulos Assoc., 151 AD2d 293, 296 (1st Dep’t 1989). Thus, to be entitled to indemnification, the party seeking indemnity “must have delegated exclusive responsibility for the duties giving rise to the loss to the party from whom indemnification is sought … ” 17 Vista Fee Assoc. v Teachers Ins. & Annuity Assn. of Am., 259 AD2d 75, 80 (1st Dep’t 1999) (citations omitted). The moving third-party defendants argue that they may not be held vicariously liable for the alleged wrongs by the Sponsor, and that the Sponsor did not delegate exclusive responsibility to them for the duties that give rise tc:> the claims asserted by the plaintiff Board. Rather, it is alleged that the Sponsor itself participated, at least to some degree, in the alleged wrongdoing. The Sponsor argues in opposition. that the Board is, in fact, seeking to hold the Sponsor vicariously liable for the negligence of the architects and contractors and that the Sponsor itself committed no wrong as it did not perform the work at issue. While the evidence may ultimately prove otherwise, the pleadings contain sufficient allegations to withstand the motions to dismiss and allow discovery to proceed. The pleadings do allege, for example, that the Sponsor delegated to the third-party defendants the duty to properly perform the design and construction work at issue and that none of the damages are attributable to any fault, want of care or negligence by the Sponsor. The Court thus declines to dismiss the Sponsor’s indemnification claims based largely on the standard governing pre-answer motions to dismiss pursuant to CPLR §3211 (a)(7) for failure to state a cause of action, where the Court must “accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference,. and determine only whether facts as alleged fit within any cognizable legal theory …. ” Leon v Martinez, 84 NY2d 83, 87-88 (citations omitted). And while indemnification would not lie for certain claims by plaintiff against the Sponsor, such as fraudulent misrepresentation and inducement, no need exists to
parse the claims at this time. Based on the same analysis, the Court declines to dismiss
Betro’s cross-claims at this time as the precise role played by Betro with respect to the
other third-party defendants and the degree of shared responsibility, if any, particularly
with respect to G+P, is in dispute. ”


Speculation and Discretion Are Fatal to Legal Malpractice Case

Posted in Legal Malpractice Cases

Gersh v Nixon Peabody LLP 2017 NY Slip Op 30363(U)  February 27, 2017
Supreme Court, New York County  Docket Number: 155668/2016  Judge: Carol R. Edmead is an example of the hurdles over which a legal malpractice plaintiff must jump.  Its a complicated but familiar estate planning issue.  Decedent was previously married with children.  Separation agreement many years ago required part of Decedent’s estate to go to children.  He remarries and many years later tries to leave everything to second wife.  Predictably, there is friction.

“On the other hand, as to the claim that Defendants failed to advise Edward of the potential consequences and impact of the Separation Agreement, and to the extent Defendants’ alleged failure to properly prepare Edward’s 2003 Will rests on the impact of the Separation Agreement, an attorney cannot be held liable for legal malpractice for failing to disclose facts already known to the client. In Green v. Conciatori, an action for legal malpractice, plaintiff alleged that his former attorneys in a personal injury suit, failed to discover facts about the underlying incident that differed from what plaintiff had given defendants (Green v. Conciatori, 26 A.D.3d 410, 809 N.Y.S.2d 559 [2d Dept 2006]). The undiscovered facts were known to plaintiff, but never disclosed to defendants (Id. at 411 ). The court held that while plaintiffs claim is time-barred, defendants “should not be held liable for ignorance of facts which the client neglected to tell him or her” (Id.). ”

“In any event, and even assuming Defendants breached any obligation to investigate Edward’s prior agreements, Defendants established that Plaintiff cannot establish that any negligent representation on behalf of the Defendants was the proximate cause of her damages. · Plaintiffs assertion of what Edward would have done had he received difference advice is speculative and insufficient to support a legal malpractice claim (see Leff v. Fulbright & Jaworski, LLP, 2009 N.Y. Slip Op. 31445(U) [Sup. Ct. N.Y. Cnty. June 30, 2009], aff’d 78 A.D.3d 531, 533 [1st Dept 201 O]). In Leff, the complaint alleged that defendants who drafted her late husband Leff’s will committed legal malpractice by failing to advise Leff about a separation agreement that required him to leave half of his probated estate to his son (78 A.D.3d at 533). Leff s separation agreement provided that “[i]n the event the parties shall be divorced and the [plaintiff] shall have remarried, [Leff] shall provide by Will that no less than one-half (1/2) of his probate estate shall pass to the Child … . “(id.). Plaintiff claimed that Leff would have-taken various different actions to increase her inheritance had defendants discovered and advised Leff of the separation agreement. The trial Court rejected plaintiffs speculation that Leff “would most likely have provided for inter-vivos gifts, created trusts, or joint accounts outside the probate estate to attain that goal” as “pure conjecture” (id.) The Court held that a “jury would only be speculating about how Leff might have solved the problem of the Separation Agreement,” and. therefore, Plaintiff failed to establish that “but for defendants’ negligence, she would have come out of probate a richer woman” (id.)

The First Department affirmed, explaining that: [P]laintiff cannot recover damages that are grossly speculative [internal citations omitted]. Defendants demonstrated that plaintiff could not satisfy the causation element of her malpractice claim because she could not prove that her inheritance would have increased if defendants had advised her late husband about a separation agreement that required him to leave half of his probated estate to his son. While plaintiff suggests various things her late husband could have done to ensure her more money than she eventually received, she cannot prove precisely what he would have done had he received different advice. Therefore, she cannot establish that but for defendants’ failure to advise her late husband of the separatiqn agreement, she would have received more money. In this regard, we note that plaintiffs late husband had the right to reduce her inheritance at any point in time. Leff, 78 A.D.3d at 533.

As in Leff, Plaintiffs claims here are too speculative to support a claim for legal malpractice. Specifically, Plaintiffs arguments that Edward could have transferred assets, entered into an agreement, and limit inter vivos gifts to Laurie and Ellynn, are speculative and plaintiffs allegations are insufficient to support her claim of what Edward would have done had he received different advice. Therefore, dismissal of legal malpractice claim (First Cause of Action) and negligence claim (Third Cause of Action), is warranted. ”


Fighting In The Trenches in This Legal Malpractice Case

Posted in Legal Malpractice Cases

The parties in Kelleher v Adams  2017 NY Slip Op 01542  Decided on March 1, 2017  Appellate Division, Second Department have descended from philosophical discussions of the relationship of privity to contract and are fighting over who is permitted to represent the plaintiffs.  Initially plaintiff’s attorney was disqualified.  That changed on appeal.

“The defendants Jeffrey M. Adams and The Adams Law Firm, P.C. (hereinafter together the Adams defendants), moved, inter alia, to disqualify the nonparty-appellant, Beattie Padovano, LLC, from representing the plaintiffs on the ground that it had violated various rules of the New York Rules of Professional Conduct. As relevant to this appeal, the Supreme Court granted that branch of the Adams defendants’ motion which sought disqualification. We reverse insofar as reviewed.

” A party’s entitlement to be represented in ongoing litigation by counsel of his or her own choosing is a valued right which should not be abridged absent a clear showing that disqualification is warranted. While the right to choose one’s counsel is not absolute, disqualification of legal counsel during litigation implicates not only the ethics of the profession but also the parties’ substantive rights, thus requiring any restrictions to be carefully scrutinized. The party seeking to disqualify a law firm or an attorney bears the burden to show sufficient proof to [*2]warrant such a determination'” (Hele Asset, LLC v S.E.E. Realty Assoc., 106 AD3d 692, 693, quoting Gulino v Gulino, 35 AD3d 812, 812; see S & S Hotel Ventures Ltd. Partnership v 777 S.H. Corp., 69 NY2d 437, 443-445). ” Whether to disqualify an attorney is a matter which lies within the sound discretion of the court'” (Hele Asset, LLC v S.E.E. Realty Assoc., 106 AD3d at 693, quoting Matter of Madris v Oliviera, 97 AD3d 823, 825; see Matter of Marvin Q., 45 AD3d 852, 853; Olmoz v Town of Fishkill, 258 AD2d 447).

Here, the Supreme Court improvidently exercised its discretion in granting that branch of the Adams defendants’ motion which was to disqualify the plaintiffs’ attorney, inasmuch as there was insufficient proof to demonstrate that disqualification was warranted.

Accordingly, the Supreme Court should have denied that branch of the Adams defendants’ motion which was to disqualify the nonparty-appellant from representing the plaintiffs.”

Assignments of Legal Malpractice Cases and Judicial Estoppel

Posted in Legal Malpractice Cases

Molina v. Faust Goetz Schenker & Blee, (S.D.N.Y. 2017) illustrates the difficulty of assignments of legal malpractice cases.  To be sure, assignment is permitted.  “While legal malpractice claims may be assigned in New York (even to former litigation adversaries), nothing prevents a New York court from applying judicial estoppel to a case where all of its requisite elements are satisfied.”  However, there are a number of intellectual hurdles to clear.

In this case, condo owners sued contractor for negligent construction.  Condo owner won a default judgment, and the insurance carrier disclaimed coverage for a series of complicated reasons. The contractor (with no coverage) then agreed with the condo owners to sue the contractor’s attorneys, and to turn over the proceeds to the condo owner.  So far, so good.

However:  “Plaintiff Benny Molina brought this legal malpractice suit against the lawyers who represented him in two related state court actions that culminated in the entry of substantial default judgments against him. But, due to a series of agreements between Molina and the plaintiff-judgment-creditor in one of the underlying actions, Molina sues here as the assignee of the judgment-creditor. Defendants have moved for summary judgment dismissing the amended complaint on several grounds. They rely chiefly on the equitable doctrine of judicial estoppel. The Court agrees that the doctrine applies and holds that Molina, as the judgment-creditor’s assignee, may not take positions here contrary to those his assignor successfully advanced in the state court actions. For that reason, the Court grants defendants’ motion for summary judgment in its entirety without addressing their remaining arguments.”

“In line with many jurisdictions and the federal courts, New York follows the doctrine of judicial estoppel, whereby “a party who assumes a certain position in a prior legal proceeding and secures a favorable judgment therein is precluded from assuming a contrary position in another action simply because his or her interests have changed.”13Link to the text of the note The equitable doctrine “rests upon the principle that a litigant should not be permitted to lead a court to find a fact one way and then [*7]  contend in another judicial proceeding that the same fact should be found otherwise.”14Link to the text of the note Doing so could be viewed as “playing fast and loose with the courts.”15Link to the text of the note

Equitable in nature, the doctrine [*8]  “cannot be reduced to a precise formula or test,”16Link to the text of the note but its requirements are well catalogued. The New York Court of Appeals has cited approvingly17Link to the text of the note to the United States Supreme Court’s helpful articulation of the factors courts typically consider:

“First, a party’s later position must be clearly inconsistent with its earlier position. Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party’s earlier position . . . . A third consideration is whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.”18Link to the text of the note

These factors are not “inflexible prerequisites” and do not constitute “an exhaustive formula,” as [a]dditional considerations may inform the doctrine’s application in specific factual contexts.”19Link to the text of the note Ultimately, judicial estoppel is invoked at the court’s discretion.20Link to the text of the note

The somewhat convoluted series of assignments in this case present a twist on an otherwise routine application of the doctrine. Molina brought this suit in his own name, ostensibly to redress the financial harm he allegedly has suffered to due to the alleged negligence of his lawyers in the underlying actions. But defendants argue that Gregory Oyen is the “de facto plaintiff.”21Link to the text of the note That is so, they say, because Molina gave away his right to sue in the First Assignment and derives his role as plaintiff here solely from the Second Assignment. Defendants further maintain that Molina, acting on behalf of Oyen, should be precluded from taking positions in this case inconsistent with those Oyen took in the underlying actions, which they contend Molina must do to prevail on either cause of action in the amended complaint. Not surprisingly, Molina opposes the application of judicial estoppel at each point.”



A Federal Take on Judiciary Law 487

Posted in Uncategorized

Sometimes it takes a federal court decision to clarify the current state of the law in a discrete area.

CANON U.S.A., INC., et al, Plaintiffs, v. DIVINIUM TECHNOLOGIES, INC., et al., Defendants. No. 15 Civ. 1804 (PAC). United States District Court, S.D. New York.February 21, 2017.

Judge Crotty neatly sets forth the application of Judiciary Law § 487, whether it may be brought against attorneys who “strongly advocate” and whether it may be brought in this lawsuit.

“New York Judiciary Law § 487 provides that an attorney who “[i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party. . . is guilty of a misdemeanor, and . . . forfeits to the party injured treble damages, to be recovered in a civil action.” A § 487 plaintiff “may recover the legal expenses incurred as a proximate result of a material misrepresentation in a prior action” “regardless of whether the attorney’s deceit was successful.” Melcher v. Greenberg Traurig LLP, 135 A.D.3d 547, 552 (N.Y. App. Div. 1st Dep’t 2016). While some New York courts have required “a chronic and extreme pattern” of legal delinquency by the defendant to maintain a § 487 action, “[t]hat requirement appears nowhere in the text of the statute.” Amalfitano v. Rosenberg, 533 F.3d 117, 123 (2d Cir. 2008). The Court therefore concludes that “[a] single act or decision, if sufficiently egregious and accompanied by an intent to deceive, is sufficient to support liability.” Amalfitano v. Rosenberg, 428 F. Supp. 2d 196, 207 (S.D.N.Y. 2006).”

“The Attorney Defendants make several unavailing arguments to attack the sufficiency of the proposed pleadings. First, the Attorney Defendants appear to take the position that an attorney does not have an intent to deceive if he is merely asserting arguments and points at the client’s request, to advance the client’s position. Opp’n at 6. The Court rejects this argument. An attorney that has knowingly and intentionally filed material misrepresentations with a court in order to induce the court to take an action that it would not otherwise take cannot stand behind vigorous advocacy as an excuse to avoid § 487 liability.

Second, the Attorney Defendants argue that Plaintiffs knew of Grimaldi and Hernandez’s involvement with EZ Docs. Opp’n at 6. This, however, is not relevant to the question of whether the Attorney Defendants intended to deceive the New York Supreme Court by filing papers with material misrepresentations.”

“he Attorney Defendants assert that Canon USA was required to bring its § 487 claim in the Termination Lawsuit and thus is precluded from raising it here. They are wrong. Because Canon USA does not seek to collaterally attack a prior adverse judgment or order, and because it seeks “to recover lost time value of money and the excess legal expenses incurred” in the prior action, Canon USA is permitted to bring “a separate action under the Judiciary Law.” Melcher, 135 A.D.3d at 554.

Nor is the claim precluded by res judicata. Under the doctrine of res judicata, “a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action” when “the parties have had a full and fair opportunity to litigate the matter. Charmer v. Dep’t of Homeland Sec., 527 F.3d 275, 279 (2d Cir. 2008). Res judicata has no application here as the Termination Lawsuit was dismissed for failure to prosecute, and the dismissal order did not specify that dismissal was on the merits, see Exhibit D to the Declaration of Jonathan B. Bruno (Dkt. 92-4); N.Y. C.P.L.R. 3216(a); Hanrahan v. Riverhead Nursing Home, 592 F.3d 367, 369 (2d Cir. 2010).”

Why Was This Legal Malpractice Case Brought?

Posted in Uncategorized

We’re having a little trouble understanding what went wrong in the transaction, and why the legal malpractice case was brought.  It looks like the sub-sub-lessor bought the sub-lessor’s stock and then encountered trouble with the landlord.  However, that theory emerged only on appeal.  So, in Salyamov v Lyhovsky  2017 NY Slip Op 00929  Decided on February 7, 2017  Appellate Division, First Department we see the total disconnect between fact and liability.

“Plaintiff asserts a legal malpractice claim based on defendant’s alleged failure to confirm that a sublessor of premises in which plaintiff wished to operate a business had the owner’s consent to assign the sublease at issue. However, there was no assignment of the sublease; the subtenant was a corporation whose stock plaintiff purchased in the transaction at issue. Further, it is undisputed that the master lease allowed the sublessor to sublet the premises without the owner’s consent.

Plaintiff’s additional theory of liability, that defendant failed to ascertain the status of the master lease, was improperly raised for the first time in opposition to defendant’s motion for summary judgment (see Atkins v Beth Abraham Health Servs., 133 AD3d 491 [1st Dept 2015]).”