New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

The Account Stated Conundrum

Posted in Legal Malpractice Cases

Clients want results, and are sometimes hesitant about paying bills.  Lawyers want to get paid, whether they are in good relations with the client or not.  Let me repeat:  Lawyers want to get paid.  The greater portion of cases in which lawyers are parties concerns attorney fees.  This is amply demonstrated by Adam Leitman Bailey, P.C. v Pollack  2019 NY Slip Op 50793(U)  Decided on May 17, 2019 Supreme Court, New York County  Reed, J..

Here, plaintiff owned a brownstone which was being damaged by the next-door neighbor’s construction.  The attorney either did a great job, or not.  Regardless, this attorney wanted to get paid.

“Defendant is the owner of a townhouse located at 44 East 82nd Street, New York, New York (the Premises) (NY St Cts Elec Filing [NYSCEF] Doc No. 34, affidavit of John. M. Desiderio [Desiderio aff], exhibit A [complaint], ¶ 4). In 2014, nonparty 46 East 82nd Street LLC, whose principal is nonparty Penny Bradley (Bradley), purchased the adjacent townhouse at 46 East 82nd Street, and proceeded to renovate the property (id., ¶ 6; NYSCEF Doc No. 56, affirmation of plaintiff’s counsel, exhibit W [defendant tr] at 11). Defendant alleges that Bradley’s renovation work caused damage to the interior and exterior of the Premises. In [*2]addition, defendant’s tenants, to whom he had leased the townhouse for $384,000 in annual rent (NYSCEF Doc No. 56 at 22), vacated the Premises in mid-November 2014 before their two-year lease term expired “because of [the] noise and dust and dangerous conditions” (id. at 77). They surrendered possession to defendant on December 5, 2014 (id. at 24).

Defendant executed a retainer agreement with plaintiff on December 8, 2014, and paid $10,000 in advance (NYSCEF Doc No. 37, Desiderio aff, exhibit D [Retainer] at 1). The Retainer provides that plaintiff would render monthly invoices to defendant and that payment was due upon receipt (id. at 1). Importantly, the Retainer reads, in pertinent part, “[y]ou understand that, although ALBPC will use its best professional judgment in the prosecution or defense of this claim, ALBPC cannot and does not guarantee any particular outcome or result” (id. at 3). Attached to the Retainer is a two-page statement of client’s rights as mandated by 22 NYCRR 1210.1. Plaintiff represented defendant in his dispute with Bradley from December 8, 2014 through July 2015, when defendant terminated plaintiff’s services (NYSCEF Doc No. 32, Desiderio aff, ¶ 17). Although plaintiff has billed defendant $110,461.36 (NYSCEF Doc No. 34, ¶¶ 22 and 30), he has been paid only $26,783.20 (NYSCEF Doc No. 35, Desiderio aff, exhibit B [amended answer], ¶ 29).

Plaintiff commenced this action against defendant for breach of contract, an account stated, quantum meruit and unjust enrichment. Defendant interposed 13 affirmative defenses and two counterclaims for legal malpractice and breach of fiduciary duty in is amended answer. Plaintiff asserts five affirmative defenses in its response to the counterclaims.”

“To prevail on a cause of action for legal malpractice, a plaintiff must plead and prove “the negligence of the attorney; that the negligence was the proximate cause of the loss sustained; and actual damages” (Leder v Spiegel, 31 AD3d 266, 267 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied sub nom. Spiegel v Rowland, 552 US 1257 [2008] [internal quotation marks and citations omitted]). “An attorney’s conduct or inaction is the proximate [*5]cause of a plaintiff’s damages if ‘but for’ the attorney’s negligence ‘the plaintiff would have succeeded on the merits of the underlying action'” (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 50 [2015], rearg denied 27 NY3d 957 [2016], quoting AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]). Thus, a plaintiff must meet the “case within a case” requirement to avoid dismissal (see Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 272 [1st Dept 2004] [internal quotation marks and citations omitted]).

Defendant grounds the malpractice counterclaim upon a purported violation of rule 1.4 (a) (1) (iii) of the Rules of Professional Conduct (22 NYCRR 1200.0), which provides that a lawyer shall promptly inform a client of “material developments in the matter including settlement or plea offers.” Specifically, he complains of plaintiff’s failure to apprise him of Bradley’s demand for a counteroffer and plaintiff’s voluntary withdrawal of the motion for a preliminary injunction (NYSCEF Doc No. 35, ¶ 32). Defendant concedes that a violation of the Rules of Professional Conduct (22 NYCRR 1200.0) does not, without more, support a malpractice claim (see Cohen v Kachroo, 115 AD3d 512, 513 [1st Dept 2014] [citations omitted]). Nevertheless, he maintains that plaintiff’s actions have proximately caused substantial damages.”

“Regarding the first event, defendant posits that he “would have resolved” his dispute with Bradley in May 2015 had plaintiff discussed the proposal Bradley’s contractor had raised about repairing two of the three damaged walls (NYSCEF Doc No. 115, affirmation of defendant’s counsel, exhibit 53 at 1). However, “speculation on future events are insufficient to establish that the defendant lawyer’s malpractice, if any, was a proximate cause of any such loss” (Brooks v Lewin, 21 AD3d 731, 734-735 [1st Dept 2005], lv denied 6 NY3d 713 [2006] [citations omitted]). Apart from supposition and conjecture, defendant has not presented any admissible evidence that but for plaintiff’s failure to pursue the contractor’s proposal, he has sustained damages, or that Bradley would have consented to a compromise with respect to a repair of the [*8]third wall. In any event, even if such an arrangement was reached, it would have resolved only one aspect of the dispute with Bradley because defendant still wished to pursue monetary damages.[FN3] Moreover, defendant has not established that he would have agreed to accept Bradley’s settlement offer at any time, or that but for plaintiff’s negligence, he would have or has negotiated a more favorable monetary settlement (see Gallet, Dreyer & Berkey, LLP v Basile, 141 AD3d 405, 406 [1st Dept 2016]).

As to the second event, defendant maintains that plaintiff should not have pursued an injunction without first conducting an adequate investigation into the facts. Preliminarily, defendant’s contention that plaintiff failed to advise him that it would withdraw the application for injunctive relief is unfounded. Two weeks after plaintiff received Bradley’s settlement offer, defendant’s architects received Bradley’s revised architectural plans, and advised plaintiff and defendant that the renovation work would no longer directly impact the Premises (NYSCEF Doc No. 98, affirmation of defendant’s counsel, exhibit 36 at 3). As a result, the change obviated the need for a license agreement as Bradley’s counsel had warned previously (NYSCEF Doc No. 87 at 2). Plaintiff indicated it was unlikely that an injunction would issue (NYSCEF Doc No. 96, affirmation of defendant’s counsel, exhibit 34 at 1), and further advised defendant that it would “weaken us to argue the preliminary injunction and lose” (NYSCEF Doc No. 90, affirmation of defendant’s counsel, exhibit 28 at 1; NYSCEF Doc No. 95, affirmation of defendant’s counsel, exhibit 33 at 1). Here, defendant ignores the effect of Bradley’s changes to her plans, which could not have been reasonably anticipated when plaintiff commenced the Bradley Litigation in March 2015 because Bradley only exchanged the revised plans in May. Thus, defendant cannot establish that but for plaintiff’s actions, he would have prevailed on the preliminary injunction motion. Consequently, the part of plaintiff’s motion for summary judgment dismissing the first counterclaim for legal malpractice is granted.”

“”An account stated is an agreement between the parties to an account based upon prior transactions between them with respect to the correctness of the separate items composing the account and the balance due, if any, in favor of one party or the other” (Shea & Gould v Burr, 194 AD2d 369, 370 [1st Dept 1993] [internal quotation marks and citation omitted]). The cause of action “exists where a party to a contract receives bills or invoices and does not protest within a reasonable time” (Russo v Heller, 80 AD3d 531, 532 (1st Dept 2011] [internal quotation marks and citation omitted]), or where partial payment has been made (see Morrison Cohen Singer & Weinstein, LLP v Waters, 13 AD3d 51, 52 [1st Dept 2004]). “In the context of an account stated pertaining to legal fees, a firm does ‘not have to establish the reasonableness of its fee'” (Lapidus & Assoc., LLP v Elizabeth St., Inc., 92 AD3d 405, 405 [1st Dept 2012] [internal quotation marks and citation omitted]).

Plaintiff has demonstrated that defendant retained the invoices rendered between December 15, 2014 and June 15, 2015 without objection and made partial payments on them (NYSCEF Doc No. 47, Desiderio aff, exhibit N at 23; NYSCEF Doc No. 48 at 5). Thus, a balance did not begin to accrue until the March 15, 2015 invoice.

Defendant’s assertion that he was reviewing the invoices is too general to defeat the claim (see Schulte Roth & Zabel, LLP v Kassover, 80 AD3d 500, 501 [1st Dept 2011], lv denied 17 NY3d 702 [2011]), and he was unable to articulate a specific objection as to any of the invoices at his deposition. Furthermore, defendant failed to object to a specific amount or invoice until he terminated plaintiff’s services, and plaintiff elected to pursue litigation (see Mintz & Gold LLP v Daibes, 125 AD3d 488, 489 [1st Dept 2015]). As for the invoice dated July 15, 2015, defendant promptly raised an objection within five days of receipt (NYSCEF Doc No. 113, affirmation of defendant’s counsel, exhibit 51 at 1). Thus, plaintiff is entitled to summary judgment on liability only as to those invoices rendered prior to July 15, 2015.”

A Very Old Legal Malpractice Case Proceeds

Posted in Legal Malpractice Cases

A lawsuit arising from the 2008 stock market decline, involving whether there was downside protection, and what the attorney who was hired to pursue the brokerage did or did not do proceeds. Finkel v Wedeen  2019 NY Slip Op 31395(U)  May 9, 2019 Supreme Court, New York County Docket Number: 161019/2015 Judge: Paul A. Goetz  survives summary judgment in this opinion.

“In 2005, Norman Finkel (Finkel) and I. Finkel Electrical Contractor, Inc. (together plaintiffs) opened three brokerage accounts with Bank of America/Merrill Lynch (BOA/ML). (Marchetti EBT Transcript at 38-39, NYSCEF Doc. No. 62; Affirmation of Plaintiffs’ Counsel in Opposition to Motion at~ 8, NYSCEF Doc. No. 73 [referring to Statement of Claim for recitation of facts]; Statement of Claim,~~ 6,7,4, NYSCEF Doc. No. 60). According to plaintiffs, all three accounts were opened by broker Philip Marchetti (Marchetti), who advised them that the accounts would be protected by a so-called “5% stop loss order” that would trigger an automatic liquidation of the accounts in the event of a 5% or greater depreciation in any asset (Finkel EBT Transcript at 37·38, 50·5 l, NYSCEF Doc. No. 56; Marchetti EBT Transcript at 40· 41, 48, NYSCEF Doc. No. 62; Affirmation of Plaintiffs’ Counsel in Opposition at ii 8, NYSCEF Doc. No. 73 [referring to Statement of Claim for recitation of facts]; Statement of Claim at if 7, NYSCEF Doc. No. 60). ”

Marchetti left BOA/ML in 2007, at which point Robert Schiano (Schiano) became the account executive on plaintiffs’ accounts (Schiano EBT Transcript at 22·23, NYSCEF Doc. No. 63; Affirmation of Plaintiffs’ Counsel in Opposition to Motion at if 8, NYSCEF Doc. No. 73 [referring to Statement of Claim for recitation of facts]; Statement of Claim at if 9, NYSCEF Doc. No. 60). Plaintiffs claim that between August 2008 and April 2009, their accounts incurred losses of $727,831 (dropping in value from roughly $2.303 million to $1.575 million) because BOA/ML and Schiano failed to execute the 5% stop loss order (Affirmation of Plaintiffs’ Counsel in Opposition to Motion at if 8, NYSCEF Doc. No. 73 [referring to Statement of Claim for recitation of facts]; Statement of Claim at ifif 15, 18, NYSCEF Doc. No. 60).”

“According to plaintiffs, on or about August 10, 2010, they retained Timothy Wedeen (Wedeen)
and his law firm, Wedeen & Kavanagh, to initiate a FINRA arbitration proceeding against BOA/ML and Schiano, based upon their alleged mismanagement of plaintiffs’ investment portfolio from August 2008 through April 2009 (Complaint at if 4, NYSCEF Doc. No. I). ”

“In October 2015, plaintiffs commenced the instant action against Wedeen and Wedeen & Kavanagh seeking to recover damages for legal malpractice and fraud (Complaint, NYSCEF Doc. No. 1). In the first cause of action for legal malpractice, plaintiffs allege that Wedeen failed to timely commence the FINRA arbitration proceeding. Plaintiffs assert in this regard that Wedeen told them that he would timely submit their claim for FINRA arbitration. However, in May 2015, when plaintiffs called to inquire about the status of their claim, Wedeen informed them for the first time that he never submitted the claim (id at ii 7). At that point, the six-year statute of limitations for submitting the claim to arbitration had already elapsed. Plaintiffs allege that they had a meritorious and valuable claim against BOA/ML and that but for Wedeen’s misrepresentation and negligence, they would have prevailed and recovered on their claim (id. at  12)”

“Here, defendants seek to dismiss the cause of action to recover damages for legal malpractice on the ground that plaintiffs cannot establish that they would have succeeded on their claim against BOA/ML but for defendants’ failure to timely submit the claim to FINRA arbitration. This is not an issue involving subject matter within the ken of an ordinary person and cannot be adequately judged based on the ordinary experience of the fact finder without expert testimony (cf Boye v Rubin & Bailin, LLP, 152 AD3d 1, 9 [1st Dept 2017]). Although in support of their motion, defendants submit DeMarco’s expert report, it is unsworn and therefore not in admissible form (see Accardo v Metro-North R.R., 103 AD3d 589, 589 [1st Dept 2013]; 221 E. 50th St. Owners, Inc. v Efficient Combustion & Cooling Corp., 2018 NY Slip Op 33160[U][Sup Ct, NY County 2018]). This error “could not be cured by submitting a sworn affidavit by this expert in reply papers” (Accardo v Metro-North R.R., 103 AD3d at 589; see Henry v Peguero, 72 AD3d 600, 602 [1st Dept 2010][“a deficiency of proof in moving papers cannot be cured by submitting evidentiary material in reply”]). As such, defendants’ expert report may not be considered (see Accardo v Metro-North R.R., 103 AD3d at 589). Since, without the expert affidavit, defendants failed to meet their prima facie burden, their motion must be denied without regard to the sufficiency of plaintiffs’ opposition papers (see Suppiah v Kalish,76 AD3d 829, 832 [1st Dept 2010][“By failing to submit the affidavit of an expert, defendant never shifted the burden to plaintiff’]; see generally Winegrad v New York Univ. Med Ctr., 64 NY2d 851, 853 [1985]).

Furthermore, even if defendants’ expert report had been in admissible form, it was insufficient to establish their prima facie entitlement to judgment as a matter of law because it does not address whether plaintiffs had a viable claim against BOA/ML based upon Marchetti’s representation to Finkel that plaintiffs’ accounts were protected by a stop loss order. Assuming defendants’ expert correctly opined that it was impossible to place a stop loss order on the type of accounts opened by plaintiffs, this does not establish that Marchetti never promised Finkel that the accounts were protected by such a trigger. Although the expert’s opinion may cast doubt on the truth ofMarchetti’s and Finkel’s testimony in this regard, “[i]t is not the function of a court deciding a summary judgment motion to make credibility determinations or findings of fact” (Vega v Restani Constr. Corp., 18 NY3d 499, 505 [2012]). “

We Said It, But, We Didn’t Mean It

Posted in Legal Malpractice Cases

Admissions that the law firm made a mistake are frowned upon by insurance companies as well as by CLE lecturers.  Ortiz v Joel J. Turney, LLC  2019 NY Slip Op 03917  Decided on May 21, 2019
Appellate Division, First Department is a fine example for use in this years lecture series.

“Order, Supreme Court, Bronx County (Lucindo Suarez, J.), entered on or about January 16, 2018, which, in this action alleging legal malpractice, granted plaintiff’s motion for summary judgment on the issue of liability and remanded the matter for a trial on damages, unanimously affirmed, without costs.

Defendants’ letter to plaintiff, in which they admit that plaintiff’s underlying property damage action was not timely commenced and state that they will “willingly compensate [him] for all actual damages subject to proof and interest since the time of the loss,” constitutes an admission of defendants’ negligence and that it was the proximate cause of plaintiff’s loss (see Marchi Jaffe Cohen Crystal Rosner & Katz v All-Star Video Corp., 107 AD2d 597 [1st Dept 1985]; see generally Leder v Spiegel, 31 AD3d 266, 267-268 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008]). Contrary to defendants’ contentions, the language of the letter cannot be interpreted in any other manner.”

A Pro-Se Judiciary Law 487 Claim Founders

Posted in Legal Malpractice Cases

Pro-se claims start at a disadvantage.  This particular case seems to be the culmination of several failed efforts.  The Appellate Division is dismissive, both in tone and content.

Estate of Lipin v Lipin  2019 NY Slip Op 03897  Decided on May 16, 2019 Appellate Division, First Department could be a shorter opinion, but not by much.  This is the entirety.

“Orders, Supreme Court, New York County (Shlomo S. Hagler, J.), entered on or about January 4, 2019, which, inter alia, denied pro se defendant Joan C. Lipin’s cross motion to dismiss plaintiffs’ motion for summary judgment in lieu of complaint, her motion to dismiss the action with prejudice, and her motion for contempt, unanimously affirmed, without costs.

Supreme Court denied defendant’s motions as “incomprehensible and lacking any basis in law or fact,” and defendant presents no reason to disturb that determination on appeal. The appeal is, in large part, an apparent effort to relitigate failed claims asserted by defendant, as the plaintiff, in Lipin v Danske Bank (2014 NY Slip Op 32694[U] [Sup Ct, NY County 2014]), a case whose dismissal we affirmed in 2016 (Lipin v Hunt, 137 AD3d 518 [1st Dept 2016], appeal dismissed 27 NY3d 1053 [2016]).

We reject defendant’s stated effort to shoehorn an alleged appeal from a January 2, 2019 order in Lipin v Danske Bank into this appeal.

This action is timely (see CPLR 5014[1]). Defendant failed to present grounds for holding any attorney in contempt or in violation of Judiciary Law § 487. To the extent defendant purports to offer factual support for arguments, she cites only her own prior, unproven allegations.

We have considered defendant’s remaining arguments and find them without merit.”

You Can Almost Never Sue The Other Guy’s Attorney

Posted in Legal Malpractice Cases

Whether it’s social policy, whether it’s an attempt to prevent every case from turning into a legal malpractice coda, the rule is simple:  absent fraud, collusion, malice or other special circumstances you just cannot successfully sue the other guy’s attorney.  The alternative?  Every case would then proceed to a legal malpractice case.  So says Hinnant v Carrington Mtge. Servs., LLC  2019 NY Slip Op 03575  Decided on May 8, 2019  Appellate Division, Second Department along with hundreds of other cases.

“In March 2015, the plaintiffs executed a consolidated note in favor of the defendant Carrington Mortgage Services, LLC (hereinafter Carrington), in the sum of $715,533, which was secured by a consolidated mortgage on the plaintiffs’ property in Brooklyn. In March 2016, the plaintiffs commenced this action against, among others, the defendant Jeffrey Leavitt, the settlement agent for Carrington, seeking to recover damages for fraud and professional negligence. The plaintiffs alleged that while the consolidated note stated that their monthly mortgage payment would be $3,364.70, their monthly mortgage payment was, in fact, approximately $4,500. The plaintiffs alleged, among other things, that Leavitt ignored the fact that “the monthly mortgage payments expected from the Plaintiffs [were] not consistent with the principal as it appeared on the initial monthly mortgage obligation and the subsequent . . . Consolidated Agreement,” and that Leavitt failed to point out these inconsistencies to the plaintiffs. Leavitt moved pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against him. The Supreme Court denied Leavitt’s motion, and Leavitt appeals.”

“Absent fraud, collusion, malicious acts, or other special circumstances, an attorney is not liable to third parties not in privity, or near-privity, for harm caused by professional negligence (see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 595; Fredriksen v Fredriksen, 30 AD3d 370, 372; Rovello v Klein, 304 AD2d 638; Conti v Polizzotto, 243 AD2d 672). Here, even accepting the facts alleged in the complaint as true, the complaint fails to allege the existence of an attorney-client relationship, privity, or a relationship that otherwise closely resembles privity between the plaintiffs and Leavitt (see DeMartino v Golden, 150 AD3d 1200, 1201; Fredriksen v Fredriksen, 30 AD3d at 371-372; Goldfarb v Schwartz, 26 AD3d 462, 463; Rovello v Klein, 304 AD2d at 638-639). Furthermore, the complaint does not contain specific allegations that would place the plaintiffs within an exception to the privity requirement (see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d at 595; Fredriksen v Fredriksen, 30 AD3d at 372). The complaint fails to set forth evidentiary facts demonstrating that Leavitt was a participant with Carrington in a common scheme or plan to defraud the plaintiffs, or otherwise aided and abetted Carrington in the commission of fraud (see Fredriksen v Fredriksen, 30 AD3d at 372; Goldfarb v Schwartz, 26 AD3d at 463-464).

Furthermore, the documentary evidence submitted by Leavitt in support his motion utterly refuted the plaintiffs’ factual allegations, and conclusively established a defense as a matter of law (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d at 326). Specifically, Leavitt submitted an acknowledgment dated March 14, 2015, signed by the plaintiffs in connection with the consolidated mortgage transaction, which stated: “The undersigned further acknowledge that Jeffrey H. Leavitt, Esq., P.C. represents the Lender in this transaction, that the parties have not been given nor are relying on any legal advice given by Jeffrey Leavitt, Esq. and that no attorney/client relationship exists between the Borrowers and Jeffrey H. Leavitt, Esq., P.C.” Additionally, Leavitt submitted, among other things, the consolidated note and consolidated mortgage, which both stated that the monthly payment of principal and interest, in the amount of $3,364.70, would be just part of a larger monthly payment required by the security instrument, which would include taxes, insurance, and other charges.”

Too Late to Amend a Professional Malpractice Claim

Posted in Legal Malpractice Basics

The City of New York waited too long to try to amend its third-party complaint.  The Court found that the City knew all the facts upon which the new complaint might be based and after 26 depositions or so, its just too late.

Commodore Constr. Corp. v City of New York  2019 NY Slip Op 31316(U)  May 8, 2019
Supreme Court, New York County  Docket Number: 651969/2015  Judge: Andrew Borrok reminds that while freely given, amendment may not cause prejudice.

“Leave to amend under CPLR § 3025 (b) is committed to the sound discretion of the trial court
(Colon v Citicorp Inv. Servs., 283 AD2d 193, 193 [1st Dept 2001], citing Edenwald Contr. Co. v
New York, 60 NY2d 957, 959 [1983]). Leave to amend pleadings should be freely given unless
there is prejudice or surprise resulting from the delay to the opposing party or if the proposed
amendment is “palpably improper or insufficient as a matter of law” (McGhee v Odell, 96 AD3d
449, 450 [1st Dept 2012])

In this case, the City proposes to amend its complaint nearly four years after filing this lawsuit,
following 28 party depositions after extensive document discovery which extensive document
discovery followed pre-litigation and mediation (NYSCEF Doc. No. 241, iii! 3-13). At this late
stage in the litigation, when discovery is nearly completed, amendment of the City’s complaint to
bring direct claims against the third-party defendants would be highly prejudicial.”

“In any event, the City’s proposed claims for professional malpractice and negligent misrepresentation are devoid of merit as there is no privity between the City and the third-party defendants (see Greenstreet of NY, Inc. v Davis, 166 AD3d 470 [1st Dept 2018]). In addition, the allegations in support of the additional claims for negligent misrepresentation and malpractice are entirely conclusory and insufficient. In fact, the negligent misrepresentation does not even allege a single misrepresentation. Finally, Pier 59 Studios, L.P. v Chelsea Piers, L.P., which is cited by the City on reply, is inapposite as, in that case, the proposed amendment was based on newly discovered evidence, which is not the case here (40 AD3d 363 [1st Dept 2007]).”

Only One Of These Two Claims Survives

Posted in Legal Malpractice Cases

Delay in obtaining adverse evidence and overbilling are both claimed in Ostrolenk Faber LLP v Sakar Intl., Inc.  2019 NY Slip Op 31303(U)  April 23, 2019  Supreme Court, New York County
Docket Number: 657134/17 Judge: Melissa A. Crane.  Only one of the claims works in a legal malpractice setting.  It is not overbilling.

Plaintiff Ostrolenk Faber LLP (Ostrolenk), a law firm specializing in intellectual property, brings this action against its former client, Sakar International, Inc. (Sakar), to collect on outstanding invoices, totaling $259,841.20 plus interest. The four-count complaint asserts causes of action for breach of implied contract, account stated, quantum meruit, and unjust enrichment. In its answer, Sakar asserts several affirmative defenses and counterclaims for improper billing and malpractice (first and second counterclaims, respectively).”

“Of the $259,841.20 that Ostrolenk seeks in this action, approximately $240,000 relates to a patent infringement lawsuit, entitled Voltstar Tech., Inc. v Office Depot, Inc. (civil case No. 9: 15-cv-81190) and commenced in the United States District Court for the Southern District of Florida on August 21, 2015 (Underlying Action). 1 In that action, Voltstar Technologies, Inc. (Voltstar) alleged that a product that Sakar manufactured and sold to Office Depot, Inc. (Office Depot) infringed Voltstar’s patent. Ostrolenk represented Office Depot in the Underlying Action, at Sakar’s expense. ”

In addition, Sakar avers that “[Voltstar] settled for only $30,000 after [Ostrolenk] belatedly located ‘prior art’ (earlier patents) that invalidated [Voltstar’s] patent” and that “[Ostrolenk] reasonably should have located that prior art at the commencement of the Underlying Action and not after expending hundreds of thousands of dollars in unnecessary legal fees and expenses.” Id.,~ 46. Sakar alleges that “an attorney practicing in [Ostrolenk’s] specialty exercising reasonable skill and produce [sic] would have found such prior art promptly” (id.,~ 55) and that Ostrolenk’s failure to do so at the outset of the Underlying Action resulted in over $400,000 in fees and expenses.”

“Generally, allegations of improper billing, without more, are insufficient to state a claim for malpractice. See Chowaiki & Co. Fine Art Ltd. v Lacher, 115 AD3d 600, 601 (1st Dept 2014)
(finding that “[p]laintiffs’ claims of excessive billing and related conduct, which actions [were] not alleged to have adversely affected their claims or defenses in the underlying action, [did] not
state a claim for legal malpractice”); see also Gottlieb, Rackman & Reisman, P. C. v Zencolor
Corp., 2015 WL 4206982, *6, 2015 US Dist LEXIS 90345, *14 (SD NY, July 10, 2015, No. 13-
CV-5715 (JGK]) (finding that “allegations of improper billing-standing alone-[ did] not state a
claim for legal malpractice,” where former client “[did] not allege that but for this improper
billing, its patent applications would have been approved”); Byrne & Storm, P.C. v Handel, 2013
WL 2444092, *4, 2013 US Dist LEXIS 78708, *14-15 (ND NY, June 5, 2013, No. 1:12-CV-716
[GLS/RFT]) (finding “no support for the proposition that overbilling by itself ‘constitute[s] an
act oflegal malpractice”‘). ”

“Here, accepting the counterclaim’s allegations as true and according Sakar the benefit of
every favorable inference, Sakar states a claim for legal malpractice. The answer specifically
alleges that Ostrolenk “reasonably should have located [the] prior art at the commencement of
the Underlying Action” (answer, ,-i 46) and that its failure to do so constitutes malpractice. Id., ,-i
55. In addition, the answer alleges that the discovery of this prior art resulted in a favorable
settlement of the Underlying Action, which could have been accomplished sooner had Ostrolenk
been more prompt in conducting the prior art search. See id, , 46. Sakar is, therefore, not
merely second-guessing Ostrolenk’s litigation strategy and speculating about alternative results,
which would be insufficient to state a malpractice claim. See Dweck Law Firm, 283 AD2d at
293 (“[a]ttorneys may select among reasonable courses of action in prosecuting their clients’
cases … so that a purported malpractice claim that amounts only to a client’s criticism of
counsel’s strategy may be dismissed”). “

Parking And Real Estate Legal Malpractice Case

Posted in Legal Malpractice Cases

What could be more New York than a case about real estate and parking?  Here, the problem was construction of two homes, each of which required off-street parking.  The seller set up a situation in which both houses had the parking, but it all got screwed up.

Muco v Sadiku  2019 NY Slip Op 50709(U)  Decided on May 9, 2019  Supreme Court, Queens County Butler, J is the story of the two purchasers suing each other and every one else too.

“This action concerns two premises: (1) 60-28 60th Place, Maspeth, New York (the Muco premises or the first premises ) and (2) 60-34 60th Place, Maspeth, New York (the Sadiku premises or the second premises). The Mucos claim that the Sadikus are depriving them of an alleged easement burdening the latter’s property which permits the former to use two parking spaces.

Defendant/third party defendant/fourth party plaintiff 60th Court Maspeth LLC (60th Court) is the developer and seller of the two subject premises. Defendant 60th Court hired Vintage Homes, Inc. (Vintage), whose President is Danny Zivan, to serve as a construction manager and representative.

In order to obtain permits to construct the homes on the subject premises, defendant 60th Court had to show it would provide each of them with two off-street parking spaces. The Muco premises was not spacious enough for parking spaces, so defendant 60th Court decided to burden the Sadiku premises with an easement in favor of the Muco premises.

Acting as the representative of 60th Court, Vintage, by Zivan, retained fourth party defendant Rothkrug, Rothkrug & Spector LLP (RRS), a law firm, to prepare an instrument creating a permanent easement benefitting the Muco premises and burdening the Sadiku premises with two parking spaces and a means of access over the latter property from the public street known as 60th Court. RRS alleges that the instrument was merely intended to satisfy NYC Department of Buildings (DOB) requirements concerning construction permits and that the instrument contained no errors of omission or commission.

On February 5, 2009, 60th Court executed a Driveway Space Restrictive Declaration (the Declaration) prepared by RRS. The Declaration provided for an easement allowing ingress and egress over the Sadiku property to and from 60th Court, but did not expressly provide that the current and future owners of the Muco premises were to have exclusive use of two parking spaces on the Sadiku premises. The Declaration was recorded against the two properties on February 17, 2009 in the City Register’s Office.”

“The fourth party complaint brought against defendant Pacht is for legal malpractice. In an action to recover damages for legal malpractice, “a plaintiff must establish that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and that the breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages ***” ( Island Properties & Equities, LLC v Cox, 93 AD3d 639, 640 [2d Dept 2012]; McCoy v Feinman, 99 NY2d 295 [2002]; Cosmetics Plus Grp., Ltd. v Traub, 105 AD3d 134[1st Dept 2013]; Fireman’s Fund Ins. Co. v Farrell, 57 AD3d 721 [2d Dept 2008]).

Pacht, denying that his actions or omissions could have been the proximate cause of any injury sustained by the Sadiku’s or 60th Court, purports to have made a prima facie showing of entitlement to summary judgment dismissing the fourth party complaint by (1) the submission of evidence in the record that Zivan and Demkowics informed the Sadikus before they closed title about the parking easement and (2) an interpretation of the Declaration as granting a parking easement. As to the first ground, the transcripts of the deposition testimony submitted in support of the cross motion contain conflicting versions of the events that occurred prior to the closing of title on the Sadiku premises, raising triable issues of fact, and, thus, Pacht failed to demonstrate a prima facie entitlement to judgment as a matter of law (see Stafford v Allied Bldg. Prod. Corp., 164 AD3d 1398[2d Dept 2018] [failure to make prima facie showing because of conflicting versions of traffic accident]). As to the second ground, this court has previously held that there is an issue of fact as to the meaning and intent of the Declaration. Moreover, Pacht did not rebut additional allegations of malpractice made against him: (1) that although he received a copy of the title report ordered by the Sadikus before they closed title, he failed to bring to the attention of the title company or the attorney for the Sadikus the existence of the Supplemental Declaration, and (2) that he failed to identify the easement on the deed he drew conveying title to the Sadikus.

Pacht is not entitled to summary judgment dismissing the fourth party complaint and all other claims against him.”

“COM did make a prima facie showing that the Sadikus did not sustain any damages. The Sadikus purchased their premises on October 4, 2010 for $690,000.00. COM submitted an appraisal of the Sadiku property as encumbered by the parking easement rendered by Victor Schlesinger of Republic Valuations which concludes that on October 4, 2010, the Sadkiu premises were worth $690,000.00 even as encumbered by the parking easement.

The burden on COM’s cross motion shifted to the Sadiku’s, requiring them to submit evidence showing that there is an issue of fact which must be tried (see Alvarez v Prospect Hospital, supra). They successfully sustained this burden. In regard to the element of actual and ascertainable damages, the Sadikus submitted an appraisal report from Matthew J. Guzowski, the President of Goodman-Marks Associates, Inc., and an affidavit from him which states: “We have determined that the subject property with the easement in place suffers a diminution in value due to the hypothetical easement being contested.” The conflicting affidavits of experts preclude summary judgment (see Haas v F.F. Thompson Hosp., Inc., 86 AD3d 913 [4th Dept 2011]; Florio v Kosimar, 79 AD3d 625 [1st Dept 2010]).

COM is not entitled to summary judgment dismissing the third party complaint and other claims against it.”

Speculation in Real Estate, Speculation in Legal Malpractice

Posted in Legal Malpractice Cases

A real estate deal gone wrong…what could be more New York than that?  In our world, only a legal malpractice claim after the deal is more relevant.

83 Willow, LLC v Apollo 2019 NY Slip Op 31203(U)  May 2, 2019 Supreme Court, New York County Docket Number: 151266/2015 Judge: Barbara Jaffe is the story of a client, an attorney and a big problem.  The problem is a one-sided contract.  However, the court finds damages are speculative and dismisses.

“Plaintiff limited liability company was formed in New Jersey and has its principal place
of business there. Defendant’s principal place of business is in New York County.
In reliance on defendant’s asserted skill, knowledge, and experience as an attorney,
plaintiffs managing member retained him in connection with the development and sale of an
undeveloped parcel ofland it owned in a redevelopment area in New Jersey.”

“Defendant drafted, reviewed, and revised the contract of sale, which provided, inter alia,
for a sales price of $3.730 million for the property, a deposit of $50,000, and the contingency
that within six months, plaintiff obtain site-plan approval for the development of a structure of a
minimum size and/or nature, with a six-month extension. The contingency constituted a material
element of and material inducement for entering into the contract, and defendant recommended it
to plaintiff, who relied on his professional guidance and advice on the interpretation of the
prov1s10n.
Unbeknownst to plaintiff, the contingency provision permitted only the buyer to cancel
the contract in the event that the contingency remained unsatisfied and contained no date on
which the contract would be deemed cancelled if the closing did not occur. In effect, the buyer
was given a” de facto option contract, extending in perpetuity, with no remedy to cancel
available to [plaintiff] and at a cost of approximately 1 % of the agreed upon value of the Property.”

Defendant advised plaintiff that the contract allowed it to cancel upon expiration of the
contingency provision. Thus, when the contingency provision expired, and on defendant’s
advice, on or about March 15, 2013, defendant informed the buyer’s attorney that the contract
was terminated and cancelled. In response, the buyer’s attorney objected and advised that the
contract permitted only the buyer to cancel. ”

“Soon thereafter, the buyer filed an action against plaintiff in the New Jersey Superior
Court seeking specific performance of the contract of sale, and filed a notice of pendency against
the property, the value of which then exceeded $5.5 million. Plaintiff was unable to sell the
property for fair market value even though there were ready, able, and willing buyers for that
amount. It was thus forced to sell the property to the buyer for $3.540 million.
Had it not been for defendant’s malpractice, plaintiff would have been able to cancel the
contract and sell the property for not less than $5.5 million and would not have incurred 18
months of litigation which cost it more than $200,000 in legal fees. ”

“Here, plaintiff’s assertion that absent defendant’s negligence, it would have been able to
terminate the contract and sell the property is fatally conclusory, and defendant reasonably
observes that the buyer would not have agreed to such a provision, having paid a non-refundable
deposit and undertaken to obtain the funds needed for the transaction. Thus is revealed the
speculative nature of plaintiff’s case. Additionally, even if open to the idea, the buyer would
likely have sought to extract something in return from plaintiff, a possibility that plaintiff does
not address.
Thus, defendant satisfactorily shows, prima facie, that plaintiffs claim that but for his
failure to negotiate the inclusion in the contract of sale a clause affording it the right to terminate
in the event of a failure to obtain the requisite approvals, it would have been able to terminate the
contract and sell the property for a higher amount of money than that set forth in the contract is
too conclusory and speculative to prove that he was the proximate cause of plaintiff’s damages. “

Suing the Other Guy’s Attorney

Posted in Legal Malpractice Cases

In an artificial social policy sort of way, lawyers protect lawyers.  Although legal malpractice is a tort (maybe), there is still a requirement of privity.  Remembering back to law school and the progression in products liability from a strict requirement of privity for a recovery from the manufacturer to strict liability, we wonder if the legal world will ever accept that any attorney who participated in a specific litigation should be responsible for departures?

Well, Tatintsian v Pryor Cashman LLP  2018 NY Slip Op 33152(U)  December 10, 2018
Supreme Court, New York County  Docket Number: 152022/2017  Judge: David Benjamin Cohen describes the current state of affairs.

“In this action, plaintiff Gary Tatintsian (Plaintiff) alleges that defendants Pryor Cashman
LLP (Pryor Cashman), Eric Hellige (Hellige) and Eudora Partners LLC (Eudora, along with
Pryor Cashman and Hellige, collectively, Defendants) participated in a scam perpetrated by
Mikhail Vorotyntsev (MV) to “fleece” investors, including Plaintiff. The complaint asserts four
causes of action: fraudulent inducement, aiding and abetting fraud, legal malpractice and unjust
enrichment. By the instant motion (sequence number 001), Defendants move, pursuant to CPLR
3211 (a) (1) and (a) (7), for an order dismissing all causes of action with prejudice. For the
reasons set forth below, the relief sought in the motion is granted in part and denied in part. ”

“In order to plead a legal malpractice claim, the complaint must allege “the negligence of
the attorney” and that the negligence is the “proximate cause of the loss sustained” by plaintiff
(O’Callaghan v Brunelle, 84 AD3d 581, 582 [I51 Dept 201 l][internal citations and quotation
marks omitted]). Further, a legal malpractice claim cannot be stated if there is no attorney-client
relationship between the parties (Waggoner v Caruso, 68 AD3d 1, 3 [1 51 Dept2009], affd 14
NY3d 874 [2010]).
Plaintiff acknowledges that he is not a client of and is not in privity with Defendants, but
asserts that he may recover for losses arising from Defendants’ legal malpractice if the complaint
alleges “fraud, collusion, malicious acts or other special circumstances” (Plaintiffs opposition at
25, citing, inter alia, Estate of Schneider v Finmann, 15 NY3d 306, 308 [2010]). In such regard,
the complaint alleges that Defendants “engaged in fraud, collusion, or malicious or tortious acts
against Plaintiff,” and as a result, “Defendants are liable to Plaintiff for legal malpractice”
(Complaint, iii! 61-62).
However, Plaintiffs allegation of “collusion” in the complaint is conclusory because he
fails to identify any collusive acts between Defendants and MV, and has neither alleged nor specifically identified any “malicious acts” on the part of Defendants. In his opposition to the
motion, Plaintiff merely alleges that because “Defendants committed fraud against him to benefit
themselves … and implicitly … Defendants secretly colluded with [MV] to misappropriate
Plaintiffs investment for Defendants’ and [MV’s] own enrichment” (Defendants’ opposition at
26-27), The foregoing allegations sound more like an unjust enrichment claim rather than a legal
malpractice claim, because the conclusory allegation of “secret collusion” is not supported by any
fact. Also, his fraud against Defendant has been dismissed, for the reasons stated above.
Accordingly, the legal malpractice claim should be dismissed (Benzemann v Citibank,
NA., 149 AD3d 586, 586 [1st Dept 2017] [absence of privity, along with conclusory allegation of
fraud and collusion, required dismissal of the legal malpractice claim]). “

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