Seibel v Scarola Zubatov Schaffin PLLC 2025 NY Slip Op 00067 [234 AD3d 457]
January 7, 2025 Appellate Division, First Department answers a murky question: How can a law firm set up an exit strategy in its retainer agreement and keep the fees already paid?

Order, Supreme Court, New York County (Jennifer G. Schecter, J.), entered on or about August 31, 2023, which, to the extent appealed from as limited by the briefs, granted defendant Scarola Zubatov Schaffzin PLLC’s (SZS) motion for summary judgment dismissing the complaint, unanimously affirmed, with costs.

The court properly granted defendant’s motion for summary judgment dismissing the complaint for legal malpractice and breach of contract. Contrary to plaintiffs’ contention, the affidavit by defendant law firm managing member, Richard Scarola, was admissible. Scarola’s statements, recounting what Steven Bennett, now deceased, one of the attorneys assigned to plaintiffs’ case, told him, were not offered for the truth of the matters asserted, but for the effect those statements had on Scarola’s state of mind, specifically on why he decided that SZS should discontinue its representation of plaintiffs Rowen Seibel and the Seibel-related entities (see Matter of Bergstein v Board of Educ., Union Free School Dist. No. 1 of Towns of Ossining, New Castle & Yorktown, 34 NY2d 318, 323-324 [1974]). The affidavit of Daniel Brooks, the other attorney assigned to plaintiffs’ matter, was admissible based on his personal knowledge of the facts stated therein. Also contrary to plaintiffs’ contention, the Brooks affidavit did not require the attachment of SZS’s billing statements, as Seibel not only failed to object to the billing statements, but admittedly paid the fees (see Aronson Mayefsky & Sloan, LLP v Praeger, 228 AD3d 182, 185 [1st Dept 2024]). In fact, Seibel did not object to the fees until the instant action; such belated protest is insufficient to defeat summary judgment (see Mintz & Gold LLP v Daibes, 125 AD3d 488, 489 [1st Dept 2015]).

SZS was properly granted summary judgment based on Seibel’s breach of the parties’ retainer agreement (see Markov v Katt, 176 AD3d 401, 401-402 [1st Dept 2019]). The retainer agreement called for a retainer and installment payments from Seibel totaling $500,000 as a cap through discovery and summary judgment (if any). The retainer agreement further provided that either party could terminate the relationship at any time, with SZS having the right to terminate its services if Seibel failed “to cooperate with a reasonable request, or if [SZS] determines, in its sole discretion, that continuing services to [Seibel] would be unethical, impractical, improper or otherwise inappropriate.” Several circumstances warranted SZS’s discontinuation of its representation of Seibel, including: the breach of Seibel’s duty to be truthful about certain kickbacks and his supposed disassociation from agreements with Caesars Enterprises Inc.; Seibel’s refusal to cooperate with SZS’s reasonable request that he produce his prenuptial agreement to Caesars; and the impracticability of continuing the representation due to Seibel’s failure to pay key vendors and expert witnesses and because of Bennett’s untimely death.

Furthermore, SZS demonstrated [*2]that it had grounds to discontinue its services without refunding Seibel’s fees. Seibel failed to object to the billing, which exceeded the $500,000 cap, and admitted that he paid that amount, thereby waiving any right he may have had to insist that SZS either continue representation or refund a portion of its fees (see generally Hyperion Med. P.C. v TriNet HR III, Inc., 190 AD3d 456, 458 [1st Dept 2021]). Seibel is also estopped from claiming that SZS breached the retainer agreement by terminating its services (see Nassau Trust Co. v Montrose Concrete Prods. Corp., 56 NY2d 175, 184 [1982]). SZS relied to its detriment upon Seibel’s agreement to find replacement counsel, and Seibel never claimed that SZS was not entitled to discontinue its representation, nor did he request that SZS refund the fees already paid.”

Accounting malpractice is different from legal malpractice in several important ways. The first is the nature of yearly tax filings, which sets the structure for the application of the statute of limitations to a mistake in a single tax year and often rules out any question of the tolling of that statute because of continuing representation. A second difference is the prevalence of engagement letters that strongly favor the accountants and the general acceptance of such conditions as “gross negligence”, limitations of damages and the necessity of notice.

We recently discussed the statute of limitations issues and now follow up on the balance of the decision.

In Island Consol. v Grassi & Co., Certified Public Accountants PC 2025 NY Slip Op 30094(U) January 7, 2025 Supreme Court, New York County Docket Number: Index No. 451469/2023, Judge Margaret A. Chan works her way through many of these issues.

“In this professional malpractice action, plaintiffs Island Consolidated, Eastern Materials Corp., Island International Exterior Fabricators Del LLC, and Island Exterior Fabricators LLC (hereinafter collectively referred to as “Island” or “Plaintiffs”) allege professional malpractice and gross negligence against their accountant, defendant Grassi & Co., Certified Public Accountants PC for the sales tax advice it gave plaintiffs in 2015. In reliance on defendant’s 2015 sales tax advice, plaintiffs sustained monetary damages through tax penalties and interests on repayment costs to the New York State Department of Taxation and Finance, costs, and lost profits. Defendant moves to dismiss plaintiffs’ Amended Complaint for failure to: (1) comply with the condition precedent before bringing a suit against defendant; (2) timely bring their claims within the three-year statute of limitations; and (3) state a cause of action with sufficiency. Alternatively, defendant urges dismissal of damages on the grounds that they are not recoverable and is limited by the parties’ agreement. Plaintiffs oppose the motion.
For the reasons stated below, defendant’s motion is denied.”

“Defendant raises the three-year statute of limitations for professional malpractice claims as barring plaintiffs suit on the 2015 sales tax advice that defendant did not work on since 2015 forestalling plaintiffs’ argument on continuous representation (id. at 9-11).

As to the plaintiffs’ claims for gross negligence and intentional misrepresentation, defendant argues that plaintiffs failed to state a cause of action for these claim as their allegations are insufficient. Further, defendant argue that the misrepresentation claim should be dismissed also because it is duplicative of the malpractice claim.

Finally, defendant argues that absent gross negligence, plaintiffs’ damages
claims are limited by the parties’ Engagement Letters.

“Defendant argues that because plaintiffs failed to comply with the terms of the Engagement Letters by failing to give defendant requisite notice of claim within
one year of completion of subject services and failing to seek mediation as a
condition precedent to bring suit, the complaint should be dismissed (NYSCEF # 39

Deft’s MOL at 5-9). Defendant contends that the Engagement Letters signed by both parties are binding and dispositive (id. at 5). Defendant states that plaintiffs agreed that written notice of the dispute was required to be provided within one year from the date of completion of the subject services and that mediation was a condition precedent to bringing suit (id. at 6-8). Defendant informs that while the alleged advice and services rendered occurred in 2015, plaintiffs’ notice of a potential claim came on June 6, 2022, and their request for mediation followed five months thereafter (id. at 8).
Plaintiffs assert that the Engagement Letters attached as defendants’ exhibits C-M (NYSCEF #’s 61-71) do not apply to the 2014-2015 sales tax advice because other “written communications” sufficiently document the advice and the subject services are not covered by any Engagement Letters (Pltfs’ MOL at 6). The sales tax advice at issue is evidenced in written communications and in emails from April 2015 and 2020-2021 (id. at 7). Thus, plaintiff concludes that the condition precedent in the Engagement Letters do not apply to the 2014-2015 sales tax advice.
In any event, plaintiffs address the required one-year notice of claims upon completion of services. Plaintiffs assert that in December 2021 they had asked defendants to let their insurer know to expect claims to be forthcoming, and in June 2022, defendant was put on notice of plaintiffs’ claim against it with the summons with notice for this suit (id. at 9; NYSCEF # 59, Exh A- Summons). Plaintiffs claim that the notice was timely because until at least October 28, 2021, defendant was working on the tax appeal on the 2015 sales tax advice. Hence, plaintiffs conclude that the “completion of services” was at the end of October 2021 (Pltfs’ MOL at 9).
Contractual provisions that place a requirement on plaintiffs to file a notice of claim or to seek mediation before they can bring suit are commonly approved and upheld by New York courts as valid conditions precedent (see A.H.A. General Const., Inc. v New York City Housing Authority, 92 NY2d 20, 31-32 [1998] [holding a provision requiring plaintiffs to serve a timely notice of claim was a valid condition precedent, and not an exculpatory clause]). Failure to comply has often been found as a reason for dismissal of a plaintiffs’ complaint (see Archstone Dev. LLC v Renval Constr. LLC, 156 AD3d 432, 433 [1st Dept 2017] [holding lower court correctly dismissed breach of contract claim on the ground that plaintiff failed to satisfy a condition precedent of pursuing mediation prior to bringing suit]; see also Centennial Elevator Industries, Inc. v JRM Construction Management, LLC, 212 AD3d 457, 458 [1st Dept 2023] [same].

Here, the Engagement Letters from 2012 to 2020 include provisions requiring plaintiffs to provide notice of claim within one year from the date of the completion of the subject services and to pursue mediation within 90 days after (see e.g. Exhs C through M). These provisions make it such that noncompliance renders a plaintiffs claim as waived (see David Fanara!, Inc. v Dember Const. Corp., 195 AD2d 346, 348 [1st Dept 1993]). However, none of these Engagement Letters cover the sales tax advice service. Thus, plaintiffs’ point that the condition precedent in the Engagement Letters does not cover the sales tax service is well taken.”

“Defendant argues that because gross negligence is different from ordinary negligence in that it is conduct that ‘smacks of intentional wrongdoing’, plaintiffs have failed to plead any facts that would arise to the level of gross negligence as a matter of law.
It is true that in the context of liability, “‘gross negligence’ differs in kind, not only degree, from claims of ordinary negligence [and] evinces a reckless disregard for the rights of others” (see Colnaghi, U.S.A. v Jewelers Protection Servs, 81 NY2d 821, 824 [1993]). Where a plaintiffs cause of action merely repeats the allegations for a negligence cause of action and simply adds a claim that the defendant recklessly disregarded facts, this allegation will be insufficient to meet any special pleading standards that may be required (see Credit Alliance Corp. v Arthur Andersen & Co, 65 NY2d 536, 554 [1985] [holding that where a cause of action for fraud repeats the allegations for negligence and merely adds a claim that defendant recklessly disregarded facts which would have apprised it that its reports were misleading, this allegation was insufficient under the special pleading standards required under CPLR 3016[b] and the case should have been dismissed]). Claims of gross negligence and recklessness have been found to be sufficiently particularized under CPLR 3016(b) where the complaint alleges that the defendant failed to independently verify provided information, despite having notice of particular circumstances raising doubts as to the verity of such information (see Foothill Capital Corp. v Grant Thornton LLP, 276 AD2d 437 [1st Dept 2000]).
Plaintiffs here have sufficiently pleaded their claim of gross negligence with sufficient particularity so as to survive the motion to dismiss. In their complaint, plaintiffs specifically allege that defendant acted with not just reckless disregard but that defendant provided different and correct sales tax advice and guidance to other similarly situated clients, while failing to notify plaintiffs of its error or take any remedial steps to mitigate the damage. Plaintiffs further allege that defendant took steps to intentionally conceal any such negligence by falsely representing to plaintiffs in 2020 that their newfound conclusions were a result of a change in law. Thus, plaintiffs have gone beyond merely adding a claim that defendant acted with a reckless disregard for plaintiffs’ right and have specifically enumerated factual allegations, which if taken as true as the court must do at the pleading stage, could reasonably be found by a fact-finder to evince an utter indifference to plaintiffs’ rights. Plaintiffs’ claim for gross negligence withstands defendant’s motion to dismiss.”

Accounting malpractice is different from legal malpractice in several important ways. The first is the nature of yearly tax filings, which sets the structure for the application of the statute of limitations to a mistake in a single tax year and often rules out any question of the tolling of that statute because of continuing representation. A second difference is the prevalence of engagement letters that strongly favor the accountants and the general acceptance of such conditions as “gross negligence”, limitations of damages and the necessity of notice.

In Island Consol. v Grassi & Co., Certified Public Accountants PC 2025 NY Slip Op 30094(U) January 7, 2025 Supreme Court, New York County Docket Number: Index No. 451469/2023, Judge Margaret A. Chan works her way through many of these issues. The decision is fairly long (too long for a blog) but well worth reading.

“In this professional malpractice action, plaintiffs Island Consolidated, Eastern Materials Corp., Island International Exterior Fabricators Del LLC, and Island Exterior Fabricators LLC (hereinafter collectively referred to as “Island” or “Plaintiffs”) allege professional malpractice and gross negligence against their accountant, defendant Grassi & Co., Certified Public Accountants PC for the sales tax advice it gave plaintiffs in 2015. In reliance on defendant’s 2015 sales tax advice, plaintiffs sustained monetary damages through tax penalties and interests on repayment costs to the New York State Department of Taxation and Finance, costs, and lost profits. Defendant moves to dismiss plaintiffs’ Amended Complaint for failure to: (1) comply with the condition precedent before bringing a suit against defendant; (2) timely bring their claims within the three-year statute of limitations; and (3) state a cause of action with sufficiency. Alternatively, defendant urges dismissal of damages on the grounds that they are not recoverable and is limited by the parties’ agreement. Plaintiffs oppose the motion.”

“Defendant makes three arguments to dismiss the plaintiffs’ claims: (1) failure to comply with a condition precedent set forth in the Engagement Letters; (2) the
three-year statute of limitations bars this suit; and (3) plaintiffs fail to state a cause
of action based on documentary evidence, or allege their intentional misrepresentation with specificity, which claim is also duplicative of their professional malpractice claim, or allege their gross negligence claim with sufficiency. Each of the three arguments with plaintiffs’ corresponding opposition will be addressed in turn starting with defendant’s statute of limitations argument, followed by the condition precedent issue, the failure to state a cause of action arguments, and finally, the damages issue.”

“Defendant argues that plaintiffs’ causes of action based on malpractice for its sales tax advice in 2015 are barred by the three-year statute of limitations for professional malpractice (id. at 9-11). And because such a claim accrues when the malpractice is initially committed, plaintiffs’ claims for professional malpractice expired in 2018 (id. at 10). Defendant adds that the continuous representation doctrine did not toll the statute of limitations here because the recurrence of any professional relationship between the parties was limited to incidental and general advising and not specific to the 2015 advice (id. at 11).
In opposing defendant’s statute of limitations argument, plaintiffs contend that the parties had an understanding that more work is needed and that defendant had to engage in corrective measures or remedial measures (id. at 18). Citing Shumsky v Eisenstein (96 NY2d 164, 168 [2001]), plaintiffs assert that “[f]or accounting malpractice, the statute of limitations begins to run when the accounting representation is completed. The continuous representation doctrine tolled the statute of limitations for plaintiffs’ cause of action such that their complaint is timely” (id. at 18-19). Plaintiffs contend that defendant continued to provide their professional advice and guidance on the sales tax issues from 2015 through late 2021 and dealt with tax authorities to try to avoid the very sales taxes that defendant had claimed were not taxable (id.). Plaintiffs claim that defendants were engaged in continuous representant which tolls the statute of limitations for accounting malpractice (id. at 18 citing Lemle v Regen, Benz & MacKenzie, CPA, PC, 165 AD3d 414, 415 [1st Dept 2018]).”

“Here, plaintiffs have alleged sufficient facts establishing that the continuous
representation doctrine tolled the statute of limitations for professional malpractice
in this case. While the follow-up June 16, 2020, memorandum and follow-up 2021 emails do repeat, clarify, and elaborate on the advice first given, this alone is likely not sufficient to rise to what is needed to trigger the continuous representation doctrine (see Apple Bank for Sau., 70 AD3d at 438). However, plaintiffs here also allege and demonstrate that defendant continued to provide their professional advice and guidance regarding sales taxes by defending a tax appeal on the exact issues through late 2021 (see Lemle, 165 AD3d at 414). These allegations support a reasonable inference that the parties’ professional relationship was not just comprised of a recurrence of general duties.
Accordingly, defendant’s motion to dismiss the amended complaint as barred by the statute of limitations is denied.”

Gans v Leech Tishman Fuscaldo & Lampl, LLC 2026 NY Slip Op 01305 Decided on March 10, 2026 Appellate Division, First Department features some of the biggest players in the legal malpractice defense world, a surprise entry on the plaintiff’s side and a party in the underlying transactions with the same name but that has nothing to do with this author.

“Plaintiff is an experienced real estate investor who held a real estate portfolio of approximately 20 commercial properties (the Gans Entities), including Westside Realty of New York, Inc. (Westside). Westside owned property located at West 28th Street in Manhattan (the 28th St property). In June of 2018, plaintiff began having cash flow issues due to a failed investment. In an effortto generate more cash, he entered into three separate loans: (i) a preferred equity agreement between plaintiff’s entity (the Common Member) and nonparty Eli Tabak’s entity (the Preferred Member), whereby the Preferred Member invested $5 million in a joint venture that owned 100% of the stock in Westside, secured by UCC liens; (ii) cross-collateralized mortgages on the Gans Entities with nonparty Mack Real Estate Credit (Mack) for $130 million in senior debt; and (iii) an $18 million loan agreement with nonparty Bluestone Group LLC (Bluestone) for mezzanine financing.

In 2020, during the pandemic, plaintiff defaulted on his obligations with the Preferred Member, Mack, and Bluestone. Plaintiff subsequently reached out to his lawyers of more than 25 years, defendants Robinson Brog Leinwand Greene Genovese & Gluck, P.C., Neil S. Goldstein, and Philip H. Thomas (collectively, Robinson Brog), to assist with modifying the joint venture agreement and restructuring his debt with Mack and Bluestone. However, on June 17, 2021, the Preferred Member gave notice that it would sell Common Member’s interests in the joint venture at a public sale to be held on August 11, 2021. According to plaintiff, despite obtaining an offer to purchase the 28th St property for $27 million, the Preferred Member elected to move forward with the auction. As a result, plaintiff’s common membership interest in the joint venture was sold for only $100,000.

In March 2024, plaintiff sued defendants for malpractice, alleging inter alia,that Robinson Brog committed malpractice by failing to take necessary actions and provide certain advice to plaintiff to prevent the foreclosure of the 28th St property. Further, plaintiff alleges that because he was unable to use the proceeds of the proposed sale of the 28th St property, the ongoing negotiations with Mack and Bluestone concerning the restructuring of debt failed, causing plaintiff to file for bankruptcy. Finally, plaintiffalleges that Robinson Brog’s negligence caused him to lose ownership of his property portfolio in which he held equity of over $80 million.

The court correctly granted Robinson Brog’s motion to dismiss the legal malpractice action against them. “[T]o state a cause of action for legal malpractice, the complaint must set forth three elements: the negligence of the attorney; that the negligence was the proximate cause of the loss sustained; and proof of actual damages” (Bishop v Maurer, 33 AD3d 497, 498 [1st Dept 2006], affd 9 NY3d 910 [2007]; see also e.g. AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]). Even assuming plaintiff satisfied the first element of negligence, he failed to demonstrate the second element of proximate cause (see Leder v Spiegel, 31 AD3d 266, 268 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008]). Plaintiff failed to show that “but for” Robinson Brog’s negligence, he would not have lost his interest in the 28th St property, which caused him even greater losses (Bishop, 33 AD3d at 498).

Plaintiff’s argument that the foreclosure of his interest in the 28th St property could have been prevented had Robinson Brog promptly contacted Preferred Member’s counsel, Isaac Neuberger, after notice of the auction or Neuberger’s June 30, 2021 email, is unavailing and purely speculative (see Brooks v Lewin, 21 AD3d 731, 734-735 [1st Dept 2005], lv denied 6 NY3d 713 [2006] [“[S]peculation on future events is insufficient to establish that the defendant lawyer’s malpractice, if any, was a proximate cause of [the plaintiff’s] loss”]). Robinson Brog asserts that they did reach out to Neuberger before the auction to explain that it was adverse to the Preferred Member’s business interests because it would enable senior lenders Mack and Bluestone to foreclose on the property. Moreover, even if Robinson Brog contacted Neuberger, plaintiff’s admission that the Preferred Member “had not been acting in good faith throughout the process” and had a “scheme” to steal the 28th St property contradicts plaintiff’s allegations of malpractice (see generally Lisi v Lowenstein Sandler LLP, 170 AD3d 461, 462 [1st Dept 2019] [dismissing malpractice claim where complaint’s allegations contradicted the plaintiff’s theory]). Further, it appears that the offer to purchase the 28th St property for $27 million would have been insufficient to make the Preferred Member whole, and thus it would have still been within its rights to sell. In short, plaintiff failed to demonstrate that but for Robinson Brog’s inaction or delayed action as discussed above, the foreclosure would not have occurred.

Plaintiff’s argument that Robinson Brog should have tried to enjoin the auction is also without merit. Because the Common Member owned shares of Westside, which owned a commercial property, it could not demonstrate irreparable injury (see Broadway 500 W. Monroe Mezz II LLC v Transwestern Mezzanine Realty Partners II, LLC, 80 AD3d 483, 484 [1st Dept 2011]; see also RTW Retailwinds, Inc. v Colucci & Umans, 213 AD3d 509, 510 [1st Dept 2023] [“Reasonable strategic decisions made by an attorney cannot form the basis of a cause of action for legal malpractice”]). Moreover, plaintiff’s contention that the Preferred Member needed the senior lender’s consent to remove the Common Member as manager lacks merit. While the senior loan agreement prohibited Westside from permitting such removal, it did not require the Preferred Member to obtain Mack’s consent before exercising its rights under the joint venture agreement.

Additionally, assuming Robinson Brog advised plaintiff again to pursue bankruptcy before the auction, it is speculative to assume that the bankruptcy would ultimately have allowed plaintiff to keep the equity in his properties (see Heritage Partners, LLC v Stroock & Stroock & Lavan LLP, 133 AD3d 428, 428-429 [1st Dept 2015], lv denied 27 NY3d 904 [2016]).”

The client didn’t exercise a right of first refusal. Was it the attorney’s fault for not presenting a complete package to the client including a title report, or was it the client’s choice not to proceed?

In Sathyanarayanan v Moberg 2026 NY Slip Op 50237(U) Decided on February 27, 2026
Supreme Court, Suffolk County Pastoressa, J, the court finds for the attorneys.

“This is a legal malpractice action. Defendants, Michael Moberg and Moberg Law Group P.C., represented plaintiffs, Pranav Sathyanarayanan and Kaitlin Pranav, in a real estate transaction. Pursuant to a January 2022 contract, plaintiffs purchased the premises at 416 Oakwood Road in Port Jefferson, New York, from nonparties John Reiersen and Eugenia Reiersen. As pertinent here, paragraph 45 of the rider to the contract stated that “[t]he PURCHASERS shall have a Right of First Refusal with regard to the purchase of the adjacent lot (0206/66/1/1034) to be exercised, if at all, no later than 10 business days from the date they are served with notice of a valid purchase offer from a third party, by SELLERS.” Paragraph 38 of the rider to the contract stated that “[t]he parties hereby designate their respective attorneys as their agents to send or receive any notices pursuant to this contract.”

On March 30, 2022, the Reiersens’ counsel sent to defendants notice of a valid offer to purchase the adjacent lot for $232,000.00. The next day, defendants emailed plaintiffs with the Reiersens’ counsel’s letter. On April 4, defendants emailed plaintiffs again to ensure that they received the letter. Sathyanarayanan responded, stating that he had seen the letter. In an April 13 email, plaintiffs asked for an update on the title search for the adjacent lot (Amended Complaint, NYSCEF doc. 21, at ¶ 29 citing Emails, NYSCEF doc. 16). Defendants responded that he had still not received the title report for the adjacent lot and asked if April 29 was a good closing date for the main property (id.; Emails, NYSCEF doc. 16). Plaintiffs stated that they “aren’t really in a position to make an offer since without [sic] knowing its [sic] a pink elephant of an investment” (Amended Complaint, NYSCEF doc. 21, at ¶ 30), stated that April 29 was a good closing date for the main property, and that they were “[l]ooking forward to putting pen to paper on this!” (Emails, NYSCEF doc. 16).

Two years later, in March 2024, an entity named J & E Associates transferred the [*2]adjacent lot to M3K Development, LLC. Plaintiffs then commenced this action for legal malpractice and breach of fiduciary, all based on their failure to exercise their right of first refusal for the adjacent lot in 2022. Their amended complaint alleges, in broad terms, that defendants committed legal malpractice and breached their fiduciary duties by failing to demand proper service of the notice of purchase upon plaintiffs, as service on defendants was allegedly improper; failing to give plaintiffs an accurate date by which they had to exercise their right of first refusal; failing to object to the Reiersens’ counsel’s letter as insufficient; failing to draft a proper right of first refusal; and failing to record the contract of sale, with the right of first refusal, against the adjacent lot.”

“Defendants correctly argue that plaintiffs have not pleaded but-for causation, so the legal malpractice claim is dismissed. The emails between the parties, which were quoted in the complaint and referenced in the complaint by NYSCEF document number,^[FN1] reveal that plaintiffs declined to exercise their right of first refusal, at which point their right to do so was extinguished (Yudell Trust I v API Westchester Assoc., 227 AD2d 471, 473; McPeady & Co. v Chestnut St. Props., 179 AD2d 915, 917; Story v Wood, 166 AD2d 124, 129). The amended complaint pleads that without a title report, plaintiffs “[we]ren’t really in a position to make an offer since without [sic] knowing it’s a pink elephant of an investment” (Amended Complaint, at ¶ 30, citing Email, NYSCEF doc. 16). In other words, the amended complaint pleads that plaintiffs declined to exercise their right of first refusal.^[FN2] Without any allegation that defendants’ failure to procure a title report quicker constituted malpractice, plaintiffs’ decision not to purchase the adjacent lot eliminates any but-for causation.

A breach of fiduciary duty claim also requires but-for causation “in the context of an action asserting attorney liability” (Lambro Indus., Inc. v Gilbert, 233 AD3d 765, 767; see Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 10). For the reasons explained above, this claim is dismissed too.”

PCO 1500 Inv., L.P. v Ahmuty, Demers & McManus 2026 NY Slip Op 30664(U)
February 25, 2026 Supreme Court, New York County Docket Number: Index No. 158852/2025 Judge: James d’Auguste quickly telegraphs its decision by finding that dismissal was in no way attributed to departures by the attorneys.

“Defendant Ahmuty, Demers & McManus (“Ahmuty”) seeks dismissal of this attorney
malpractice litigation commenced by its former client, plaintiff Zapco 1500 Investment, L.P. (“Zapco”). The motion to dismiss is granted.
Zapco was a defendant in the underlying litigation in this Court captioned Citizen Watch
Company of America, Inc. v. Zapco 1500 Investment, LP., Index No. 655565/2020. In an
amended complaint filed in the underlying litigation, Citizen asserted ten causes of action against Zapco: (1) Breach of Contract; (2) Rescission/Termination for Water Leaks; (3) Fraudulent Concealment; (4) Breach of Covenant of Quiet Enjoyment; (5) Nuisance; (6) Mandatory Injunction; (7) Specific Performance; (8) Rescission/Termination – Frustration of Purpose; (9) Rescission/Termination-Impossibility of Performance; and (10) Reformation of Lease. In its answer to the amended complaint, Zapco disputed Citizen’s allegations in support of its claims and opposed the relief sought against it.

On May 25, 2021, a preliminary conference order was issued setting discovery deadlines. Notably, Zapco failed to meet its discovery obligations as directed by court order. There is no contention that this failure is in any way attributable to Ahmuty. As a result of Zapco’s failure to produce relevant discovery, Citizen filed a sanctions motion. After providing the parties with a full opportunity to brief the issue and hearing oral argument, the Court (Masley, J.), on January 14, 2022, issued an order of conditional dismissal. NYSCEF Doc. No. 23. In its order, the Court directed Zapco to provide documents, identify its records custodian together with search terms used to search responsive files, produce a privilege log, and, concerning one individual, a Jackson affidavit detailing a good faith search for responsive documents. Id.
Zapco failed to comply with the terms of the conditional order striking its pleading.
Citizen then sought to enforce the conditional order. On July 4, 2022, the Court (Masley, J.) found Zapco’s discovery responses to be inadequate to comply with the conditional order. NYSCEF Doc. No. 26. As a result, Zapco’s answer was stricken and Citizen was awarded $62,113.25 in attorneys’ fees. Id. A judgment was filed by the Clerk on August 10, 2022, which entered a money judgment and declared the lease between Zapco and Citizen to have been rescinded and terminated. NYSCEF Doc. No. 27. In an opinion dated May 25, 2023, the First Department affirmed the striking of Zapco’s answer, together with the declaration that the lease had been terminated and rescinded. NYSCEF Doc. No. 29.”

“Zapco has not asserted a meritorious claim of professional negligence. Legal
malpractice requires two showings: “(1) that the attorney ‘failed to exercise the ordinary
reasonable skill and knowledge commonly possessed by a member of the legal profession’; and (2) that the attorney’s breach of the duty proximately caused the plaintiff actual and ascertainable damages.” Dempster v Liotti, 86 A.D.3d 169, 176 (2d Dep’t 2011). Zapco has not alleged facts supporting a legal conclusion that either of the factors necessary to support a claim oflegal malpractice has been met under the circumstances presented.
First, ” [ a ]ttorneys may select among reasonable courses of action in prosecuting their
clients’ cases without thereby committing malpractice. Dweck Law Firm, LLP v. Mann, 283 A.D.2d 292,293 (1st Dep’t 2001); see also Dimondv. Salvan, 78 A.D.3d 407,408 (1st Dep’t 2010) (rejecting malpractice claim even if law firm could have “advanced other theories”); MII Exports, Inc. v Mooney, 223 A.D.2d 499,499 (1st Dep’t 1996) (that attorneys moved to vacate, modify or reopen a prior summary judgment order in the underlying action instead of appealing that order, and that they negotiated a settlement upon the consent of their clients, plaintiffs herein, does not raise an issue of fact as to legal malpractice). In this regard, it was reasonable to await the conclusion of discovery to file a dispositive motion for what could only be partial summary judgment. However, the challenge is impermissibly based upon hindsight, given the striking of Zapco’ s answer. Ahmuty was not required to clairvoyantly predict Zapco’ s willful failure to abide by its discovery obligations. It was also reasonable to address the sanctions motion without attempting to file a dispositive motion, which would have represented an application that the Court would have been permitted to deny as moot once the answer was stricken. Liberty Community Assoc., LP v DeClemente, 139 A.D.3d 532, 532 (1st Dep’t 2015) (denial of defendant’s cross motion to dismiss was moot in case where defendant’s answer had been stricken as a discovery sanction). Notably, Zapco has not cited a single case supporting the proposition that attorneys commit legal malpractice for not filing dispositive motions earlier in a case because they failed to anticipate a client’s willful violation of multiple court orders to produce discovery.
Second, Zapco has not met the second factor necessary to show legal malpractice, which is proximate cause. In this regard, Zapco was required to plead facts showing that any purported professional negligence was the proximate cause of its damages. Nomura Asset Capital Corporation v. Cadwalader Wickersham & Taft, 26 N.Y.3d 40, 49-50 (2015). Causation is a “high bar to attorney malpractice liability, [which] seeks to insure a tight causal relationship exists between the claimed injuries and the alleged malpractice.” Flutie Bros. v. Hayes, 2006 WL 1379594, at *5 (S.D.N.Y. May 18, 2006) (internal citations and quotations omitted). Here, Ahmuty did not miss any deadlines for filing a dispositive motion. Indeed, such a motion was capable of being raised even after a Note of Issue would have been filed pursuant to the CPLR and the preliminary conference order. Assuming Zapco had meritorious defenses to certain claims, it was Zapco’ s misconduct that resulted in the imposition of a judgment in favor of Citizen pursuant to CPLR 3126. See Bernard v. Proskauer Rose, LLP, 87 A.D.3d 412,416 (1st
Dep’t 2011) (affirming dismissal of attorney malpractice claim where “it was plaintiffs own misconduct prior to and apart from any advice from defendants that led to his termination for cause”). Zapco cannot show that “but for” Ahrnuty’s purported professional negligence there would have been a more favorable outcome since it was not Ahrnuty that deprived Zapco of a merits-based resolution of Citizen’s claim.
Finally, Zapco’s assertion that it would have prevailed in the underlying action is based
upon impermissible speculation. Giambrone v. Bank of New York, 253 A.D.2d 786, 787 (2d Dep’t 1998). Citizen lodged multiple substantive claims of misconduct against Zapco. For instance, Citizen asserted that Zapco committed fraud in relation to the water leaks. Notably, Zapco willfully violated court orders to produce discovery in relation to issues surrounding this very issue. For example, the keywords used by Zapco to search its records did not even include the term “water leaks.” The striking of Zapco’s answer demonstrates that the court in the underlying action believed that Zapco’ s conduct was “clearly deliberate or contumacious.”
Henry Rosenfeld, Inc. v. Bower & Gardner, 161 A.D.2d 374,374 (1st Dep’t 1990). Considering this ruling, it is speculative in the extreme to contend that the court in the underlying action would have permitted any sort of end run around its order striking the answer in its entirety.”

In Sebastiano v Bamundo, Zwal & Schermerhorn LLP 2026 NY Slip Op 01145
Decided on February 26, 2026 Appellate Division, First Department Plaintiff was injured on an interior stairway which lacked treads. The case was lost either because the stairway did not need treads or because the plaintiff expert failed to convince the court that the stariway required treads. It all depends on when the building was built.

“Order, Supreme Court, Bronx County (Elizabeth A. Taylor, J.), entered on or about January 23, 2025, which, to the extent appealed from, denied defendant law firm’s motion for summary judgment dismissing the legal malpractice action as against it, unanimously reversed, on the law, without costs, the motion granted, and the complaint dismissed. The Clerk is directed to enter judgment accordingly.

The law firm established its prima facie entitlement to summary judgment because its expert opined that the 1914 Building Code applied, since the plans for the construction of the staircase were approved in 1915, and the approval date was the operative date for the purposes of applying a code provision to any portion of a structure. The 1914 Code, as opposed to the 1916 Code, did not require that interior stairs have non-slip treads.

Plaintiff failed to raise a triable issue of fact as to which code applied, and so we are able to decide as a matter of law that the 1914 code applied (see DeRosa v City of New York, 30 AD3d 323, 326 [1st Dept 2006]). Accordingly, since plaintiff, as required by General Municipal Law § 205-e, is unable to cite to a predicate code and/or ordinance, which did require that the stairs that plaintiff’s decedent fell on have a non-slip tread, he cannot establish any causal connection between the law firm’s failure to determine the station’s “built” date and applicable building code, and the dismissal of the complaint in the underlying action (see Gallet, Dreyer & Berkey, LLP v Basile, 141 AD3d 405, 405 [1st Dept 2016]).”

In 538 Morgan Realty LLC v Law Off. of Aihong You, PC 2025 NYSlipOp 06639 December 2, 2025 the Appellate Division, First Department parses the responsiblity of several groups of attorneys. Some remain in the case.

“Plaintiffs alleged facts permitting a reasonable inference that the liquidated damages clause would have been found unenforceable had the You defendants timely challenged it in the underlying action (see generally Bates Adv. USA, Inc. v 498 Seventh, LLC, 7 NY3d 115, 120 [2006]; Truck Rent-A-Ctr. v Puritan Farms 2nd, 41 NY2d 420, 423-425 [1977]). Plaintiffs adequately pleaded that contract damages could have been readily ascertained by deducting the contract price from the fair market value of the property at the time of the breach (see generally White v Farrell, 20 NY3d 487, 489 [2013]), obviating the need to resort to liquidated damages, and/or that the liquidated damages amount was grossly disproportionate to any potential actual damages. Moreover, the testimony of the contracting parties’ representatives that the liquidated damages clause constituted a “punishment” or “penalty” supports plaintiffs’ claims that the clause was unenforceable, as well as plaintiffs’ allegations that the You defendants advised them that the liquidated damages clause was unenforceable.

The contract’s statements that “Purchaser’s damages in case of Seller’s default might be impossible to ascertain” and that the liquidated damages amount was “a fair and reasonable amount of damages under the circumstances” are not dispositive (see Truck Rent-A-Ctr., 41 NY2d at 425).

Plaintiffs also alleged facts permitting a reasonable inference that had the liquidated damages clause been deemed unenforceable, the damages awarded at trial (which were largely based on the liquidated damages amount) would have been significantly reduced, and given plaintiffs greater leverage in settlement negotiations (cf. Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1st Dept 1990] [claim for malpractice stated where counsel’s mistakes compelled settlement]).

Plaintiffs did not, however, adequately plead a legal malpractice claim against defendants Joseph & Smargiassi, LLC, John Smargiassi, and Mario Alexis Joseph (the JS defendants) with respect to the alleged negligent failure to challenge the liquidated damages clause. The JS defendants were not retained until four years after the motion to dismiss was decided, an amended complaint filed and answered, and approximately seven months after the note of issue was filed. Plaintiffs argue that defendants should have filed a summary judgment motion seeking dismissal of the claim for liquidated damages; however, by the time the JS defendants were retained, the time to file such a motion had already expired (see CPLR 3212 [a]). Although a court may grant leave to file a late summary judgment motion “on good cause shown” (CPLR 3212 [a]), the You defendants had already moved to vacate the note of issue and to file a late summary judgment motion, and those motions were denied.

Further, the legal malpractice claim was properly dismissed as against all defendants to the extent that it was premised on their alleged failure to take measures beyond the motion to dismiss to shield the individual plaintiffs from personal liability in the underlying action on the conversion claim. Plaintiffs failed to allege facts permitting a reasonable inference that any motion to establish that they lacked “complete domination and control” over their entity would have been successful (see Matter of Morris v New York State Dept. of Taxation & Fin., 82 NY2d 135, 141-142 [1993]; Tap Holdings, LLC v Orix Fin. Corp., 109 AD3d 167, 174 [1st Dept 2013]). Further, that defendants may have promised to file such a motion is not sufficient. The court in the underlying action found that the allegations in the complaint supported a piercing the corporate veil theory, and the testimony at trial showed that the individual plaintiffs personally received the contract prepayment amount. The trial court’s comments at the posttrial hearing do not give any indication as to how it would have ruled had the issue of personal liability actually been before it.”