Pinto-Bedoya v Yacoob  2019 NY Slip Op 51332(U)  Decided on August 14, 2019 Supreme Court, Kings County  Rivera, J. is the ridiculous story of how some individuals were conned into getting involved in a mortgage fraud ring.  Question:  how did the attorneys not know what was going on?

“The Pinto-Bedoya’s complaint bearing Index Number 75822/2008, has alleged the following salient facts. At some time before January 12, 2006, the Yacoobs approached Pinto-Bedoya to enter into a transaction for the purchase of real property located at 2052 East 53 Place, Brooklyn, NY (hereinafter subject property). The Yacoobs made the following representations to Pinto-Bedoya: that Pinto-Bedoya’s credit history would be [*2]utilized to obtain a mortgage for the purchase of the subject property, that she would be both the mortgagor and fee simple owner of the subject property, that the subject property would be purchased at a favorable price and then sold a year later, and that the subject property would be operated and managed by defendant Y & S during pendency of plaintiff’s ownership.

Additionally, the Yacoobs informed Pinto-Bedoya that they would provide an attorney for plaintiff for the closing of the subject property. On January 12, 2006, the Yacoobs informed Pinto-Bedoya that Edwards would be that attorney. At the closing, the Yacoobs and Edwards compelled her to sign a flurry of documents that included, a note and mortgage on the subject property in the sum of $428,000.000, a second note and second mortgage in the sum of $200,000.00, a powers of attorney, and a deed transferring the subject property over to the defendant Y & S.

Through the actions of the defendant acting in concert, plaintiff was defrauded such that she was left solely with the mortgage debts and without ownership of the subject property or anything else.”

“The Pinto-Bedoya’s complaint bearing Index Number 75822/2008, has alleged the following salient facts. At some time before January 12, 2006, the Yacoobs approached Pinto-Bedoya to enter into a transaction for the purchase of real property located at 2052 East 53 Place, Brooklyn, NY (hereinafter subject property). The Yacoobs made the following representations to Pinto-Bedoya: that Pinto-Bedoya’s credit history would be [*2]utilized to obtain a mortgage for the purchase of the subject property, that she would be both the mortgagor and fee simple owner of the subject property, that the subject property would be purchased at a favorable price and then sold a year later, and that the subject property would be operated and managed by defendant Y & S during pendency of plaintiff’s ownership.

Additionally, the Yacoobs informed Pinto-Bedoya that they would provide an attorney for plaintiff for the closing of the subject property. On January 12, 2006, the Yacoobs informed Pinto-Bedoya that Edwards would be that attorney. At the closing, the Yacoobs and Edwards compelled her to sign a flurry of documents that included, a note and mortgage on the subject property in the sum of $428,000.000, a second note and second mortgage in the sum of $200,000.00, a powers of attorney, and a deed transferring the subject property over to the defendant Y & S.

Through the actions of the defendant acting in concert, plaintiff was defrauded such that she was left solely with the mortgage debts and without ownership of the subject property or anything else.”

Two threshold issues in legal malpractice, which are not mirrored in other areas of the law are standing and privity.  While intertwined, they are not merely two names for the same thing.  Illustrated by Matter of Benson  2019 NY Slip Op 51331(U)   Decided on August 12, 2019
Surrogate’s Court, Albany County Pettit, J. only certain individuals may sue an attorney for legal malpractice.  In estate (death) settings the privity problem is this:  decedent hired the attorney to do estate planning.  Decedent is dead.  No one else has privity to sue the attorney for negligent estate planning.  Estate of Schneider v. Finmann dealt with this issue.  Here is a further refinement.

“Before this Court is a motion by respondent Weitz & Luxenberg, P.C. (hereinafter respondent), pursuant to CPLR 1003 for an order dropping Robert Thomas Benson (hereinafter Benson) as a party to the trial of this proceeding and precluding him from participating as a party on the ground that he lacks privity to maintain a cause of action against respondent. Benson has opposed the motion and it is now submitted for decision.”:

“Even if respondent had not waived the argument that Benson lacks standing, the Court would not be persuaded. While it is generally true that “a third party, without privity, cannot maintain a claim against an attorney in professional negligence, ‘absent fraud, collusion, malicious acts or other special circumstances'” (Estate of Schneider v Finmann, 15 NY3d 306, 308-309 [2010], quoting Estate of Spivey v Pulley, 138 AD2d 563, 564 [2d Dept 1988]), the Court of Appeals recognized that such a rule “leaves [a decedent’s] estate with no recourse against an attorney who planned the estate negligently” and whose negligent actions or inactions affected the estate (Estate of Schneider v Finmann, 15 NY3d at 309). Accordingly, the Court established an exception to the rule for personal representatives of an estate, finding that such persons have privity, or a relationship sufficiently approaching privity, with the estate planning attorney (see id.). The Court reaffirmed that “strict privity remains a bar against beneficiaries’ and other third-party individuals’ estate planning malpractice claims absent fraud or other circumstances.” (id. at 310). Here, Benson is participating in this proceeding as a court-appointed fiduciary, and not as a beneficiary of the estate.

This Court finds that Benson, in his role as a co-administrator of the estate, has a relationship sufficiently approaching privity with respondent, counsel for the initial estate administrator, to maintain a claim against respondent for professional malpractice it may have committed with respect to the administration of this estate (cf. Estate of Schneider v Finmann, 15 NY3d at 209). Any remaining contentions, to the extent not specifically addressed, have been considered and determined to lack merit. “

Plaintiffs attend a settlement conference and agree to settle the case.  They are then  prepared for the allocution by their attorneys, which is a series of questions by the judge designed to document that the settlement is voluntary, not coerced.  The same questions are typically asked of the defendant.  The last question, which has no apparent purpose is “Are you satisfied with your attorney’s work?”  The parties are each told to answer the question with a “Yes.”

This “yes” may later doom a legal malpractice claim as it did in Glenwayne Dev. Corp v James J. Corbett, P.C.  2019 NY Slip Op 06069  Decided on August 7, 2019  Appellate Division, Second Department.  One issue with this principle is:  How would a client know whether to be satisfied or not?  A second issue with this principle is:  Would you ask a surgical patient who has just been awakened whether they are satisfied with their doctor’s work?

From Glenwayne:  “In an action to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney failed to exercise the 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 NY3d 438, 442, quoting McCoy v Feinman, 99 NY2d 295, 301; see Darby & Darby v VSI Intl., 95 NY2d 308, 313). “To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer’s negligence” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; see Davis v Klein, 88 NY2d 1008, 1009). A legal malpractice cause of action “is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the [*2]mistakes of counsel” (Bernstein v Oppenheim & Co., 160 AD2d 428, 430; see Maroulis v Sari M. Friedman, P.C, 153 AD3d 1250, 1251; Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d 812, 813; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083).

In support of their motion, the defendants submitted the transcript of the court proceeding setting forth the terms of the settlement of the underlying action, which conclusively established that the plaintiff was not coerced into settling (see Schiller v Bender, Burrows & Rosenthal, LLP, 116 AD3d 756, 757; Pacella v Whiteman Osterman & Hanna, 14 AD3d 545; Laruccia v Forchelli, Curto, Schwartz, Mineo, Carlino & Cohn, 295 AD2d 321, 322). The plaintiff’s allegations that it was coerced into settling the underlying action were utterly refuted by the admissions of its principals during the settlement proceeding that they had discussed the terms of the settlement with their attorneys, understood the settlement terms, and had no questions about them; that they were entering into the settlement freely, of their own volition, and without undue influence or coercion; and that they were satisfied with their legal representation (see Schiller v Bender, Burrows & Rosenthal, LLP, 116 AD3d at 757-758; Boone v Bender, 74 AD3d 1111, 1113).”

Irony aside, there are a significant number of failures in legal malpractice litigation.  These failures are aside from cases which seek to push the limits of the statute of limitations, continuous representation and non-privity claims.  This can be seen in a series of cases by one pro-se plaintiff against one set of attorneys.  The cases were dismissed for not serving all parties with motion papers, Manko v Gabay  2019 NY Slip Op 06080  Decided on August 7, 2019  Appellate Division, Second Department;  for trying to amend too late;  for failing to state a cause of action; for suing too late; and for filing an inadequate appellate record.

In a related case, Manko v Broome  2019 NY Slip Op 06075 Decided on August 7, 2019
Appellate Division, Second Department plaintiff was required to obtain permission before filing any more motions.

We’re excited to report that the New York Law Journal published this Outside Counsel Column today.

“Legal Malpractice Principles arose in medieval common law.  It is linked with and has become more clearly intertwined with ancient deceit statutes with the Court of Appeals’ determination that Judiciary Law § 487 controls over attorney conduct are not merely statutory. Control of attorney conduct is rather a part of the common law imported into New York law with the formation of our state and nation.  What are the ancient origins of legal malpractice and controls over attorney deceit?

The entire article:  https://www.law.com/newyorklawjournal/2019/08/08/legal-malpractice-history-from-genesis-to-today/

The statute of limitations has a number of purposes, one of which is to end stale cases, another of which is to quiet old controversies.  Giller v Kate, Nussman, Ellis Farhi & Earle, LLP
2019 NY Slip Op 32301(U) July 31, 2019  Supreme Court, New York County  Docket Number: 156885/2018 Judge: W. Franc Perry illustrates how a claim of fraudulent concealment affects a statute of limitations defense.

“This legal malpractice’ action arises out of Kates Nussman’s representation of Giller in an
underlying consolidated tort action by Giller and non-party Richard Ginsberg {“Ginsberg”)
against Daniel Gittleman (“Gittleman”), Patricia Gittleman, and HP, before the United States
District Court, District of New Jersey, under Claim Action Nos. 1 :Ol~cv-5698 and 1 :02-cv-2247
(SSB) (the “Gittleman Action”). In the Gittleman Action, Giller, as the former owner of a 10%
interest in Raid Power, Inc. (“Raid”), alleged that in 1995, Gittleman misrepresented to Giller
and Ginsberg that he was winding up Raid, and offered to return th~ amounts paid by Giller and Ginsberg for their respective ownership stake’s in Raid. At the time, Ginsberg and Gittleman each owned a 45% stake in Raid. Instead of winding up Raid, Gittleman continued the business and eventually sold Raid to HP for three-hundred and twenty million dollars (Complaint, irir 8-15).

Initially, Kates Nussman and Ginsberg agreed to share the costs and fees regarding
depositions and the retention of experts. As litigation continued, it became apparent during settlement conferences that Giller’s and Ginsberg’s interests were no longer aligned. Moreover, Kates Nussman had failed to honor the parties’ letter agreement to share deposition costs and expert fees. As a result, Ginsberg ceased coordinating with Giller and commenced private negotiations that resulted in a settlement agreement between Ginsberg, Gittleman and HP on December 5, 2014. Given Plaintiffs failure to share costs and fees, after the settlement agreement, Ginsberg refused to provide Kates Nussman with access to the reports and testimony of his experts (see Letters, NYSCEF Doc. Nos. 17, 18, 19). ”

“In opposition, Giller argues that Kates Nussman is barred from asserted a defense based
on the statute of limitations under the doctrine of equitable estoppel. “In order for equitable
estoppel to apply, plaintiffs bear the burden in showing: (1) plaintiffs were induced by fraud,
misrepresentations or deception to refrain from filing a timely action; and (2) plaintiffs
reasonably relied on defendant’s misrepresentations” (MB! Intern. Holdings Inc. v Barclays
Bank PLC, 151AD3d108, 117 [1st Dept 2017], Iv to appeal denied, 29 NY3d 919 [2017]
[internal quotations and citation omitted]). However, “the doctrine of equitable estoppel ‘will not toll a limitations statute where plaintiffs possessed timely knowleqge sufficient to have placed them under a duty to make inquiry and ascertain all the relevant facts prior to the expiration of the applicable statute oflimitations”‘ (Brean Murray; Carret & Co. v Morrison & Foerster LEP, 165 AD3d 582, 582 [1st Dept 2018], quoting Rite Aid Corp. v. Grass, 48 A.D.3d 363, 364-365 [1st Dept. 2008]; see also Simcuski v Saeli, 44 NY2d 442, 450 [1978] [“due diligence on the part of the plaintiff in bringing his action is an essential element for the applicability of the doctrine of equitable estoppel”]).

Here, the alleged malpractice occurred between 2002 and 2005 when Kates Nussman  allegedly cajoled Giller to accept a low settlement offer by concealing the deteriorating health of Giller’s lead attomey,_Mr. Nashe!, and that Ginsberg had settled his claims against Gittleman and HP and would no longer cooperate with Kates Nussman or permit Kates Nussman to review or rely on the evidence and experts that Ginsberg had paid for. Giller’s conceded contemporary belief that the settlement offer was woefully inadequate, his knowledge that he was never asked to pay for experts, and KatesNussman’s refusal to continue to negotiate on Giller’s behalf, put Giller on notice to inquire further within the statute of limitations period. Accordingly, the doctrine of equitable estoppel does not save Giller’s untimely legal malpractice claim.”

Manhattan real estate is a steady source of legal malpractice cases.  It sometimes seems that there are too few clients, as conflict of interest claims often accompany the legal malpractice claims.  Here, too, defendant is accused of having too many clients in187 St. Mazal Manager, LLC v Herrick Feinstein LLP  2019 NY Slip Op 32305(U)  July 29, 2019  Supreme Court, New York County  Docket Number: 158840/2018   Judge: O. Peter Sherwood.

“In 2011, Ben Ari introduced plaintiffs and their affiliates (together, the HAP Entities) to
possible investment properties, which opportunity the Hap Entities decided to pursue. Their
intention was to purchase the property, clear it, and build an apartment building (the Project).
Herrick was hired, pursuant to a retainer agreement, to represent the HAP Entities in the
development of the Project. The agreement set out how Herrick would be paid. Ben Ari was to
perform the day to day services provided by Herrick under the supervision of Levine.

On September 24, 2012, Manager entered into a purchase and sale agreement to purchase
certain properties for $5 million. Manager also obtained assignments from non-party entities of the right to purchase additional parcels of land.

Plaintiffs allege defendants knew of irregularities in the title of certain of the properties
(284 Wadsworth Ave, and 655, 657, 661, 663, and 667 West 187th Street, together, the Demurjian Properties). In November 2011, defendant received a title report from First American Title Insurance Company (the First American Report) which identified some issues with the chains of title, including decades-long delays between transfer of the deed and its recording, potentially improper transfers, gaps in the chain of title, and so on. Defendants were aware of the First American Report and gave a copy to Michael Demurjian (seller of the Demurjian Properties), but never shared it with plaintiffs or advised plaintiffs of the issues  with title to the Demurjian Properties or counseled them not to pursue those properties. In fact, defendants concealed the issues with title, finding Boston National Title Agency, LLC (Boston National), which would insure title of all of the properties. Boston National did no investigation. Defendants also failed to reveal Demurjian was a Herrick client and that Levine was an investor in at least one of his businesses.

Subsequent litigation regarding the Demurjian Properties has prevented plaintiffs from
realizing the Project and raised the question of whether plaintiffs ever acquired a valid interest in certain parcels.”

“The parties agree the three-year statute of limitations applies to the malpractice claims.
Plaintiffs argue the period was tolled based on the continuous representation doctrine.
“Application of the continuous representation or treatment doctrine is … generally limited to the course of representation concerning a specific legal matter or of treatment of a specific ailment or complaint; the concern, of course, is whether there has been continuous  treatment, and not merely a continuing relation between physician and patient. Thus, the doctrine is not applicable to a client’s or patient’s continuing general relationship with a lawyer or physician involving only routine contact for miscellaneous legal representation or medical care, unrelated to the matter upon which the allegations of malpractice are predicated. Instead, in the context of a legal malpractice action, the continuous representation doctrine tolls the Statute of Limitations only where the continuing
representation pertains specifically to the matter in which the attorney committed the alleged
malpractice” (Shumsky v Eisenstein, 96 NY2d 164, 167-68 [2001] [internal citations omitted]). Here, plaintiffs base their argument entirely on the existence of the retainer agreement with Herrick, which had not been terminated. Plaintiffs do not allege any of the defendants provided any legal services after the September 24, 2012, sale agreement. However, the retainer expressly provides for Herrick to perform a long list of services in  connection with the Project. Most of those services have yet to be performed (NYSCEF Doc. No. 22). Because on a motion to dismiss, the court must accord the plaintiff “the benefit of every possible favorable inference” (Rovello v Orofino Realty Co., 40 NY 2d 633, 634 [1976]) and deny the motion where the documentary evidence does not “utterly refute” the claim (McCully v Jersey Partners, Inc., 60 AD 3d 562 [1st Dept 2009]), plaintiffs’ claim of continuous representation by Herrick survives and defendants’ statute of limitations defense fails (see Red Zone LLC v Caldwalader, Wickersham & Taft LLC, 27 NY 3d 1048, 1050 [2016]). The case may not be dismissed pursuant to CPLR 3211 (a)(5). “