Discovery errors lead to a large number of legal malpractice claims. in Comprehensive Mental Assessment & Med. Care, P.C. v Gusrae Kaplan Nusbaum, PLLC 2023 NY Slip Op 00408 Decided on February 1, 2023 Appellate Division, Second Department the legal malpractice case was lost on discovery errors in the actual case itself.

“In 2012, the plaintiffs commenced this action against the defendant law firm, asserting, inter alia, causes of action to recover damages for legal malpractice and unjust enrichment. The defendant moved pursuant to CPLR 3126 to strike the complaint and the plaintiffs’ reply to its counterclaims based on the plaintiffs’ failure to comply with discovery orders directing them to produce certain individuals for depositions. While the motion was pending, the plaintiffs’ attorney moved to be relieved as counsel. By order dated April 18, 2018, the Supreme Court granted the motion of the plaintiffs’ attorney and stayed the action for 60 days in order to afford the plaintiffs the opportunity to retain new counsel, which it noted “is required for corporate entities.” The plaintiffs subsequently defaulted in opposing the defendant’s motion. By order dated July 18, 2018, the court granted the defendant’s unopposed motion.

Thereafter, the plaintiffs moved pursuant to CPLR 5015(a)(1) to vacate the order dated July 18, 2018. By order dated July 24, 2019, the Supreme Court denied the motion. The plaintiffs appeal.

In order to vacate their default in opposing the defendant’s motion pursuant to CPLR 3126 to strike the complaint and the plaintiffs’ reply to the defendant’s counterclaims, the plaintiffs were required to demonstrate a reasonable excuse for their default and a potentially meritorious opposition to the motion (see CPLR 5015[a][1]; Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., Inc., 67 NY2d 138, 141; Follors v TI Ozone Park Stor., LLC, 209 AD3d 843). Here, the plaintiffs [*2]failed to demonstrate a reasonable excuse for their default in opposing the defendant’s motion (see CPLR 5015[a][1]; Dokaj v Ruxton Tower Ltd. Partnership, 91 AD3d 812, 814). Contrary to the plaintiffs’ contention that they were not aware that corporations must be represented by counsel pursuant to CPLR 321(a), the order dated April 18, 2018, specifically stated that counsel “is required for corporate entities.” The record reflects that the plaintiffs’ former counsel served that order upon them.”

Darby Scott, Ltd. v Michael S. Libock & Co. LLC CPAs 2022 NY Slip Op 06746 [210 AD3d 582] November 29, 2022 Appellate Division, First Department discusses the question of continuous representation tolls to the statute of limitations in accounting malpractice cases. Often, the statute is calculated by reference to tax filings and tax years. However, there can be continuous representation for other accounting tasks.

“The record presents issues of fact as to whether the continuous representation doctrine applies to render plaintiff’s accounting malpractice claim timely—namely, whether the work by defendants’ representatives in September and October 2010 constituted a continuation of the services that are the subject of plaintiff’s claim, or at least constituted related remedial services (see Regency Club at Wallkill, LLC v Appel Design Group, P.A., 112 AD3d 603, 606-607 [2d Dept 2013]; Ackerman v Price Waterhouse, 252 AD2d 179, 205 [1st Dept 1998]).

Issues of fact also exist as to whether defendants breached their duty to plaintiff (see Berg v Eisner LLP, 94 AD3d 496, 496 [1st Dept 2012]). Although the engagement letters executed by the parties stated that defendants would perform bookkeeping and administrative tasks, neither party has offered an authoritative definition of the scope of these tasks. Nor has either party eliminated issues of fact as to whether the agreed-upon services were performed in a manner consistent with professional accounting standards (id.). Thus, the record presents issues of fact as to the scope of the engagement letters, and whether defendants’ alleged failure to notify plaintiff of recurring inventory and invoicing issues, or at least the full extent of those issues, constituted a breach of their duty (see Cumis Ins. Socy. v Tooke, 293 AD2d 794, 798 [3d Dept 2002]; cf. Italia Imports v Weisberg & Lesk, 220 AD2d 226, 226 [1st Dept 1995]).

Furthermore, issues of fact exist as to whether defendants proximately caused plaintiff’s damages. Even if it was plaintiff’s responsibility to track its inventory and implement internal controls, it is not clear as a matter of law whether at least some of plaintiff’s losses could have been avoided if defendants had fulfilled their duty to report known inventory and invoicing irregularities to plaintiff (see DG Liquidation v Anchin, Block & Anchin, 300 AD2d 70 [1st Dept 2002]). Plaintiff was not required to offer conclusive proof of the exact amount of damages it suffered in order to defeat an award of summary judgment in defendants’ favor. Concur—Gische, J.P., Kern, Gesmer, Rodriguez, Pitt, JJ.”

Judiciary Law 487 claims, along with all other claims were dismissed in this claim of extortion, fraud and deceit and defamation case. in Murphy v Kozlowska 2022 NY Slip Op 32947(U) September 2, 2022 Supreme Court, New York County Docket Number: Index No. 150978/2022 Judge: Lisa S. Headley discussed the case allegations.

“On February 2, 2022, the plaintiff filed this action against defendants for alleged illegal acts committed by defendants, including conversion, trespass to chattel, defamation, libel, slander, extortion by attorneys, fraud and deceit, theft, coercion, extortion, blackmail, intentional infliction of emotional distress, negligent infliction of emotional distress, and punitive damages. In the complaint, plaintiff alleges, inter alia, that defendant Gary Certain told plaintiff that if the case was not settled quick, “it will not look good for him” and “to lay out $750,000 if [plaintiff] didn’t want any problems.” Plaintiff alleges that such interaction is considered blackmail and extortion. Plaintiff
contends that this interaction caused emotional distress to plaintiff. Further, plaintiff alleges that defendant Kozlowska is in possession of electronic devices belonging to plaintiff that Kozlowska is using, along with her co-defendants, in order to blackmail and extort plaintiff. Plaintiff alleges that defendant Kozlowska has been saying “untrue things” about plaintiff to third parties, causing damage to plaintiffs reputation.”

“Defendants’ motion to dismiss must be granted in its entirety as plaintiff has failed to state a cause of action for conversion, trespass to chattel, defamation, libel, slander, extortion by attorneys, fraud and deceit, theft, coercion, extortion, blackmail, intentional infliction of emotional distress, negligent infliction of emotional distress, and punitive damages as the complaint on its face is based on bare legal conclusions and insufficient factual evidence to fit within any cognizable legal theory.”

“Likewise, plaintiff failed to state a cause of action for deceit. “A violation of Judiciary Law § 487 may be established either by the defendant’s alleged deceit or by an alleged chronic, extreme pattern of legal delinquency by the defendant.” Duszynski v. Allstate Ins. Co., 107 A.D. 3d 1448, 1449 ( 4th Dep’t 2013). Plaintiff does not set forth any evidence to show how defendants’ conduct was deceitful, nor how plaintiff was misled by defendants’ conduct.

Lastly, plaintiff fails to state a cause of action for intentional infliction of emotional distress, negligent infliction of emotional distress, and punitive damages. Plaintiff does not set forth evidence to show that defendants “by extreme and outrageous conduct intentionally or recklessly caused severe emotional distress to another. ” The Restatement (2nd) of Torts, §46. Plaintiff states he was scared by defendants alleged blackmail and had suffered physical and mental pain, but does not delineate any specific evidence of the severe emotional distress he encountered as a result of
defendants’ supposed conduct. Plaintiff merely asserts bare conclusions without any factual evidence to support his claims.”

In what appears to be an attorney v. attorney case, which asks for Prima Facie Tort and Judiciary Law 487, Defendant failed to answer. Supreme Court forgave. The Appellate Division did not.

“The plaintiff commenced this action to recover damages for prima facie tort and violation of Judiciary Law § 487. After the defendant failed to timely answer the complaint, the plaintiff moved pursuant to CPLR 3215 for leave to enter a default judgment against the defendant upon her failure to answer the complaint or for a hearing on the issue of any reasonable excuse [*2]offered by the defendant. The defendant cross-moved, inter alia, to compel the plaintiff to accept her late answer. The defendant separately moved pursuant to CPLR 3211(a)(5) to dismiss the complaint as time-barred. In an order entered February 16, 2018, the Supreme Court denied the plaintiff’s motion, in effect, granted that branch of the defendant’s cross motion which was to compel the plaintiff to accept her late answer, and granted the defendant’s separate motion pursuant to CPLR 3211(a)(5) to dismiss the complaint.

Thereafter, the plaintiff moved for leave to renew and reargue its motion and its opposition to the defendant’s cross motion and separate motion. In an order entered March 25, 2019, the Supreme Court denied the plaintiff’s motion.

The plaintiff appeals from the orders entered February 16, 2018, and March 25, 2019, respectively.

“A defendant who has failed to timely answer a complaint and who seeks leave to file a late answer must provide a reasonable excuse for the delay and demonstrate a potentially meritorious defense to the action” (Bank of Am., N.A. v Viener, 172 AD3d 795, 796; see Jacobson v Val, 206 AD3d 803, 804). To avoid the entry of a default judgment upon the failure to answer the complaint, a defendant must make a similar showing (see Sadowski v Windsor Vil. Apts. Co., LLC, 200 AD3d 816, 817; Yuxi Li v Caruso, 161 AD3d 1132, 1133). “Whether a proffered excuse is reasonable is a sui generis determination to be made by the court based on all relevant factors, including the extent of the delay, whether there has been prejudice to the opposing party, whether there has been willfulness, and the strong public policy in favor of resolving cases on the merits” (Nowakowski v Stages, 179 AD3d 822, 823 [internal quotation marks omitted]; see Jinwu Yu v Hong Qin Jiang, 205 AD3d 1012, 1013).

Here, the defendant failed to provide a reasonable excuse for her delay in answering the complaint, as her claims that her and her counsel’s respective medical issues prevented her from timely answering the complaint were vague and unsupported by any medical documentation (see PennyMac Corp. v Sellitti, 193 AD3d 959Dankenbrink v Dankenbrink, 154 AD3d 809, 810; Salatino v Pompa, 134 AD3d 692, 693). Since the Supreme Court should not have granted that branch of the defendant’s cross motion which was to compel the plaintiff to accept her late answer, the defendant’s separate motion pursuant to CPLR 3211(a)(5) to dismiss the complaint was untimely, as a defendant must make this motion before service of the responsive pleading is required (see id. § 3211[e]; Wan Li Situ v MTA Bus Co., 130 AD3d 807, 808). Accordingly, the court should have granted that branch of the plaintiff’s motion which was pursuant to CPLR 3215 for leave to enter a default judgment against the defendant upon her failure to answer the complaint, denied that branch of the defendant’s cross motion which was to compel the plaintiff to accept her late answer, and denied the defendant’s separate motion pursuant to CPLR 3211(a)(5) to dismiss the complaint.”

Continue Reading What Happens When An Attorney Fails To Answer a Complaint?

Delo v O’Connor 2022 NY Slip Op 34135(U) December 7, 2022 Supreme Court, New York County Docket Number: Index No. 652721/2022 Judge: Arlene P. Bluth is the kind of case that judges are prepared to dismiss wholesale. Judges, viewing this type of legal malpractice claim often find that everything is speculative, even when facts/arguments are properly pled.

“This action, in which plaintiff represents himself, relates to an underlying litigation in
which plaintiff, also self-represented, sued non-party JPMorgan for employment-related issues. Defendants here are the attorneys and law firm which represented JPMorgan in that case, which was commenced and settled in federal court.

Here, plaintiff alleges that defendants made a misrepresentation to the federal court
regarding an agreement for an extension of time to answer the complaint filed in that case. Ms. Queliz, representing JPMorgan, submitted a letter to the court requesting an extension to answer the complaint, stating that she had “consulted Plaintiff on [her] request, and he has given his consent for the additional time,” (NYSCEF Doc. No. 11). Plaintiff then submitted a separate letter stating Ms. Queliz made a misrepresentation to the Court, stating that there was a condition that JPMorgan accept service, which was merely emailed to JPMorgan. After receiving both letters, U.S. District Judge Vernon S. Broderick issued an order granting JPMorgan’s request for an extension of time.”

Pursuant to CPLR 3211 (a)(1), the documentary evidence submitted indicates that Ms.
Queliz did not misrepresent any facts in the underlying action. As Ms. Queliz attempted to explain to plaintiff in her emails, plaintiff attempted to serve JPMorgan by emailing the summons and complaint. That, of course, is not a permissible way to effectuate service. Ms. Queliz agreed to accept service this way and asked plaintiff to extend the time for JPMorgan to respond. Plaintiff agreed (NYSCEF Doc. No. 9 at 5). After this exchange, Ms. Queliz received from her client a request to waive service that was submitted by plaintiff after he sent the complaint to JPMorgan but before she came to an agreement with him. Ms. Queliz attempted to clarify whether there would be a waiver of service or an acceptance of service, and when plaintiff failed to communicate either, Ms. Queliz wrote to the court requesting an extension of time to answer. Plaintiff, self-represented, believed that because Ms. Queliz had all the documents, a waiver of service was not necessary. But this is not how service works; just because the defendants had the papers does not mean they were appropriately served under New
York law.


In any event, even after receiving plaintiff’s letter alleging fraudulent conduct, Judge
Broderick granted the extension. If plaintiff thought that decision was improper, then he should have sought to vacate it or appeal that decision in the court where it occurred. Instead, plaintiff accepted it, settled that case and signed a release.
The release, signed by plaintiff, states that plaintiff “knowingly and voluntarily releases
[entities’ present and former attorneys], both individually and in their business capacities, to the full extent permitted by law, from all claims, [and] causes of action,” (NYSCEF Doc. No. 13 at 3). Despite releasing the attorneys, he sues them here.

Additionally, plaintiff failed to state a cause of action against the attorneys for a party
with whom he settled an action. His claim that he would have received a default judgment for $2 million if defendants had not allegedly committed fraud upon the federal court is total speculation. He did not show that he properly served JPMorgan or adequately explain how this Court can ignore the fact that plaintiff voluntarily settled the case. As defendants stated, if plaintiff believes there was fraudulent conduct during the course of litigation, then the appropriate remedy is to pursue a vacatur of the stipulation of dismissal.”

Lembert v Zucker 2022 NY Slip Op 34440(U) December 23, 2022 Supreme Court, New York County Docket Number: Index No. 151344/2021 Judge: Verna L. Saunders is aptly described by the court:

“Plaintiff commenced this action asserting violation of Judiciary Law § 487, abuse of process, intentional infliction of emotional distress, negligent infliction of emotional distress, and defamation as against defendant, Evan Zucker, an attorney retained to represent plaintiffs former spouse, John Bruzzese, in various matrimonial proceedings. (NYSCEF Doc. No. 1, summons and complaint). “

“The relevant background is as follows: Plaintiffs ex-husband, John Bruzzese, commenced a divorce proceeding on July 31, 2011. The trial took place over several months in 2014 and the court issued its decision after trial on December 30, 2014 (NYSCEF Doc. No. 7, Decision after Trial). Mr. Bruzzese sought a modification of the 2014 order requesting a credit against his equitable distribution payment amongst other things. Plaintiff opposed the motion and cross-moved for relief on various grounds. (NYSCEF Doc. No. 8., Decision and Order June 25, 2018). Several branches of plaintiffs cross-motion were denied and as such, she moved to reargue. The court denied her
motion to reargue (NYSCEF Doc. No. 9, Decision and Order August 23, 2018) and plaintiff appealed (NYSCEF Doc. No. I 0, Appellant’s Brief). At the time the instant motion was filed, the Second Department had not yet rendered a decision. However, a decision has since been rendered affirming the June 25, 2018 and August 23, 2018 decisions of the trial court (NYSCEF Doc. No. 21, App Div, Second Dept Decision and Order March 23, 2022). The Second Department did not address the claims asserted in this action.

In the case at bar, plaintiff alleges several instances in which defendant knowingly made
material misrepresentations to the court. Most, if not all, of the examples provided are with respect to arguments advanced on behalf of Mr. Bruzzese before the Second Department. There is no dispute that plaintiff included these claims in her brief to the Second Department. However, as previously noted, the Second Department declined to address said claims.

After careful consideration of the arguments advanced, defendant’s motion is granted.”

“Turning to the Judiciary Law § 487, “relief under a cause of action based upon Judiciary Law § 487 is not lightly given and requires a showing of egregious conduct or a chronic and extreme pattern of behavior on the part of the defendant attorneys that caused damages. Allegations regarding an act of deceit or intent to deceive must be stated with particularity. The claim will be dismissed if the allegations as to scienter are conclusory and factually insufficient.” (Face book, Inc. v DLA Piper LLP (US), 134 AD3d 610,615 [1st Dept 2015] [internal citations and quotations omitted].) Scienter is a legal term that refers to a culpable state of mind, as such plaintiff would need to prove that defendant acted knowingly, willfully, intentionally, or recklessly. While plaintiff asserts defendant made material misrepresentations knowingly, such allegation is wholly conclusory, especially where defendant was making statements on behalf of another person in his capacity as their attorney. An attorney is liable for a violation of Judiciary Law § 487 if he or she “[i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the Court or any party; or … [ w ]ii fully delays his client’s suit with a view to his own gain.” A cause of action under the statute “requires a showing of ‘egregious conduct or a chronic and extreme pattern of behavior’
on the part of the defendant attorneys that caused damages” (Facebook, Inc. v DLA Piper LLP (US), 134 AD3d 610,615 [1st Dept 2015), Iv denied 28 NY3d 903 [2016] [citation omitted]). Allegations of deceit or the intent to deceive must be pied with particularity (Bill Birds, Inc. v Stein Law Firm, P.C., 164 AD3d 635, 637 [2d Dept 2018), affd 35 NY3d 173 [2020]; Face book, Inc. v DLA Piper LLP (US), 134 AD3d at 615 [ dismissing a Judiciary Law § 487 claim where the allegations of scienter were conclusory and were not supported by specific facts]). Insofar as plaintiff’s claims of a scienter are not supported by sufficient facts, this cause of action for Judiciary Law § 487 must also be dismissed.”

Chicas v Cassar 2023 NY Slip Op 00202 Decided on January 18, 2023 Appellate Division, Second Department is an example of how trial courts tend to handle legal malpractice matters…dismiss them and look the other way. The Appellate Division almost summarily reversered.

In May 2015, the plaintiff retained the defendants to represent him in a personal injury action arising from a motor vehicle accident that occurred on May 4, 2015. The defendants settled the personal injury action for the tortfeasor’s policy limit in the amount of $50,000. The defendants took one-third of the recovery as their fee, totaling $16,644.08, plus $22.59 in disbursements, and paid the remaining amount of $33,333.33 to the New York State Insurance Fund to satisfy a workers’ compensation lien. The plaintiff received none of the proceeds. The plaintiff thereafter substituted the law firm of Victor A. Carr & Associates for the defendants. Through his new counsel, the plaintiff settled a Supplemental Underinsured Motorist (hereinafter SUM) claim with his employer’s insurance carrier for the policy limit in the amount of $50,000, and executed a release for the SUM claim.

The plaintiff’s new counsel commenced the instant action against the defendants alleging legal malpractice on the ground that the defendants failed to investigate and pursue recovery from, among others, the alleged tortfeasor personally. The defendants moved for summary judgment dismissing the complaint and, pursuant to 22 NYCRR 130-1.1. to impose sanctions against the plaintiff and his counsel. The plaintiff opposed the defendants’ motion. The Supreme Court granted [*2]that branch of the defendants’ motion which was for summary judgment dismissing the complaint, but denied that branch of their motion which was pursuant to 22 NYCRR 130-1.1 to impose sanctions against the plaintiff and his counsel. The plaintiff appeals, and the defendants cross-appeal.

Here, the defendants failed to establish, prima facie, that the plaintiff had no actual or ascertainable damages. “The defendant must affirmatively demonstrate the absence of one of the elements of legal malpractice” (EDJ Realty, Inc. v Siegel, 202 AD3d 1059, 1060). The complaint alleged that the damages included the failure to pursue SUM benefits, as well as the failure to pursue recovery against the alleged tortfeasor. Since it was alleged herein, inter alia, that the defendants’ legal malpractice prevented the plaintiff from obtaining a judgment against the alleged tortfeasor, the defendants had the burden of affirmatively demonstrating that the plaintiff would not have prevailed against the alleged tortfeasor or that the alleged tortfeasor did not have personal assets such that his motorist insurance policy limit that was recovered in the amount of $50,000, was the maximum judgment that could have been obtained from him (see id. at 1060). The defendants failed to do so. Accordingly, the Supreme Court should have denied that branch of the defendants’ motion which was for summary judgment dismissing the complaint.”

Hutcher v Madison Sq. Garden Entertainment Corp. 2022 NY Slip Op 34417(U)
December 23, 2022 Supreme Court, New York County Docket Number: Index No. 653793/2022 Judge: Lyle E. Frank is already a famous case. Banned from MSG, these attorneys took to the courts.

The present action anses out of Defendant MADISON SQUARE GARDEN ENTERTAINMENT CORP.’s (“MSG”) policy related to denying entry to its premises to attorneys associated with lawsuits against it. Plaintiffs are all such attorneys, bringing the present action to seek an order to: (1) enjoin and restrain Defendants from taking any action that may adversely impact Hutcher’ s Season Tickets, and lifting MSG’ s ban on Plaintiffs from entering MSG Venues; (2) declare MSG’ s decision to revoke Hutcher’ s Season Tickets to be in violation of ACAL §25.30(2); (3) declare MSG’s decision to ban Plaintiffs from MSG Venues to be in violation of CRL §40-b plus damages; (4) declare MSG’s decision to revoke Hutcher’s Season Tickets to be in violation of ACAL §25.30(2) and Defendants’ decision to ban Plaintiffs to be in violation of CRL §40-b; (5) Damages arising out of alleged Prima Facie Tort Against MSG; (6) Damages arising out of alleged Violation of Judiciary Law §487 Against Weidenfeld; (7) Damages arising out of alleged Tortious Interference with Business Relations Against MSG; and (8) Damages arising out of alleged Aiding and Abetting in Violation of CRL §40-b Against Weidenfeld.
Defendants now move to dismiss Plaintiffs’ complaint in its entirety.”

Here, Plaintiffs fail to show both the first and the third prong of the CapLOC test, as the
allegations are vague and conclusory and fail to identify a specific business relationship that was allegedly adversely affected, nor do they show that defendants acted with the sole purpose of harming the plaintiff. This seventh cause of action is accordingly dismissed. It is therefore 0RDERED that the motion to dismiss is granted with regards to Plaintiffs’ causes of action one, two, five, six, and seven only, and denied as to the remaining counts.”

Plaintiff, Lil Wayne seeks to sue his “former representative” and lawyer of 13 years for practicing law in New York without a license. Carter v Sweeney, 2023 NY Slip Op 00150
Decided on January 12, 2023, Appellate Division, First Department , fails for a plethora of reasons.

“Plaintiff, a prominent rap artist and musician, alleges that defendant Sweeney, his former representative and lawyer of 13 years, fraudulently induced his retention by (1) representing that he was a lawyer authorized to provide legal services despite having been administratively suspended in California for brief periods around that time, and (2) by practicing law in New York without a license. To state a claim for fraudulent inducement, a plaintiff must show that the defendant’s misrepresentation or concealment induced the plaintiff to enter into the transaction and directly caused the plaintiff to suffer a loss (Meyercord v Curry, 38 AD3d 315, 316 [1st Dept 2007]). Here, however, plaintiff has not alleged that Sweeney was suspended from practice at the time he was retained, or that a misrepresentation regarding his status induced the retention. Nor has plaintiff pointed to any direct harm he suffered on account of not knowing Sweeney’s status at the time of his retention, more than a decade ago.

The legal malpractice claim, largely premised on the same allegations, also fails. Plaintiff clarifies on appeal that his malpractice claim is tethered to the contingency fee agreement that Sweeney drafted with a litigation firm in California on his behalf and Sweeney’s actions in a breach of settlement agreement action in New York that resulted in a default judgment entered against plaintiff. In a legal malpractice action, a plaintiff must also prove that, but for the defendant’s negligence, the plaintiff would have been successful in the underlying action or not sustained the alleged damages (Rudolph v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442-443 [2007]). In both instances, however, plaintiff has failed to sufficiently allege how any purported shortcoming by Sweeney was the direct cause of harm.”

“Plaintiff’s breach of fiduciary duty claim, based upon the same alleged misrepresentations and omissions regarding Sweeney’s status as a lawyer as those contained in the fraudulent inducement and legal malpractice claims, fails for the same reasons (see e.g. EBC I, Inc. v Goldman Sachs & Co, 5 NY3d 11, 19-20 [2005]). Plaintiff has failed to establish that damages were directly caused by defendant’s conduct other than the payment of his fees (Retirement Plan for Gen. Empls. of the City of N. Miami Beach v McGraw, 158 AD3d 494, 496 [1st Dept 2018]).”

Reem Contr. v Altschul & Altshcul 2022 NY Slip Op 34430(U) December 30, 2022 Supreme Court, New York County Docket Number: Index No. 104202/2011 Judge: Kelly A. O’Neill Levy discusses two interesting points: when an expert is needed in a summary judgment motion on a legal malpractice case (covered on 1/9/23) and whether an account stated claim can proceed in a legal malpractice counterclaim/defense setting. Today, the Account Stated claim is discussed.

This is a legal malpractice action brought by plaintiffs Reem Contracting Corp. (Reem
Contracting), Jona Szapiro (Szapiro ), Reem Plumbing and Heating Corp. (Reem Plumbing), and the Estate of Steven Stein (Stein) (collectively, plaintiffs) against defendants Altschul & Altschul, Mark Altschul, Esq. (Altschul), and Cory Dworken, Esq. (Dworken) (collectively, defendants). Defendants represented plaintiffs in a federal action seeking recovery under section 515 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 USC§ 1145 (the underlying action). Defendants have asserted a counterclaim for account stated. Defendants move, pursuant to CPLR 3212, for summary judgment on their account stated counterclaim.”

“In 2004, plaintiffs were named as defendants in the underlying action, captioned Trustees of Plumbers Local Union No. 1 Welfare Fund v Reem Plumbing & Heating Corp., 04-CV-4698 (CBA) (ED NY) (id., ,-i 5). The trustees (the Trustees) alleged that Reem Plumbing and Reem Contracting were contractually obligated to contribute to certain union benefit funds (the Funds), as required by four collective bargaining agreements between the Association of Contracting Plumbers of the City of New York and Local Union No. 1 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada (id.). The Trustees conducted an audit for the period of January 1, 2002 through December 31, 2004, believing that there had been a significant shortfall in contributions (id., ,-i 6). The Trustees sought unpaid contributions, interest, liquidated damages, and attorney’s fees (id., ,-i 8). They also sought to hold Stein and Szapiro personally liable as fiduciaries of the Funds as defined under ERISA (id.). Altschul & Altschul represented plaintiffs in the underlying
action (id., ,-i 9). Altschul and Dworken were tasked with defending plaintiffs (id., ,-i 10).”

In the case below, ” By memorandum and order dated March 31, 2009, Judge Amon granted the Trustees’ motion for summary judgment, finding that Reem Plumbing was obligated to make contributions to the Funds during the audit period (2009 WL 10700668, *8, 2009 US Dist LEXIS 154698, *25). Judge Amon further held that, since plaintiffs admitted that Reem Plumbing and Reem Contracting were alter egos, Reem Contracting was bound to the same collective bargaining agreements as Reem Plumbing (id.). Judge Amon further held that Stein and Szapiro were fiduciaries of the Funds under ERISA, and that they were personally liable given their exclusive
control of the entities (2009 WL 10700668, * 10, 2009 US Dist LEXIS 154698, * 32). Finally, Judge Amon awarded damages against plaintiffs, jointly and severally, in the amount of $1,337,707.63 (2009 WL 10700668, *15, 2009 US Dist LEXIS 154698, *44). In doing so, Judge Amon determined the amount of unpaid contributions based solely on a Marshall & Moss audit of Reem Plumbing and Reem Contracting (2009 WL 10700668, * 13, 2009 US Dist LEXIS 154698, * 40-41 ).”

Account Stated Claim

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 agreement is an acceptance of an amount due on an account that has been rendered (Jnterman Indus. Prods. v R. S. M Electron Power, 37 NY2d 151, 153-154 [1975]; M & A Constr. Corp. v McTague, 21 AD3d 610, 611 [3d Dept 2005]). To establish an account stated, there must be a mutual examination of the claims of the respective parties, a balance struck, an agreement either express or implied that the balance is correct, and that the party against whom it is found will pay it (Bank of New York-Del. v Santarelli, 128 Misc 2d 1003, 1004 [County Ct, Greene County 1985]).
A client has “an absolute right, at any time, with or without cause, to terminate the
attorney-client relationship by discharging the attorney” (Campagnola v Mulholland, Minion Roe, 76 NY2d 38, 43 [1990]). An attorney discharged without cause may seek recovery in quantum meruit for the reasonable value of his or her services (Butler, Fitzgerald & Potter v Gelmin, 235 AD2d 218,219 [1st Dept 1997]). However, “[a]n attorney who is discharged for cause is not entitled to compensation or a lien” (Maher v Quality Bus Serv., LLC, 144 AD3d 990, 992 [2d Dept 2016]). In this regard, cases hold that “[a]n attorney who violates a disciplinary rule may be discharged for cause … ” (Doviak v Finkelstein & Partners, LLP, 90 AD3d 696, 699 [2d Dept 2011 ]). Moreover, “[ m ]isconduct that occurs before an attorney’s discharge but is not discovered until after the discharge may serve as a basis for a fee forfeiture” ( Orendick v Chiodo,
272 AD2d 901, 902 [ 4th Dept 2000]). “Th[is] rule * * * is well calculated to promote public confidence in the members of an honorable profession whose relation to their clients is personal and confidential” (Campagna/a, 76 NY2d at 44 [internal quotation marks and citation omitted]).

Generally, “a hearing is required to determine whether discharge was for cause” ( Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 13 [1st Dept 2008]).
Defendants are not entitled to summary judgment on their account stated counterclaim, as their claim for legal fees is intertwined with plaintiffs’ legal malpractice claim. Indeed, the alleged conduct which forms the basis for the malpractice occurred during the billing period atissue2 (see Glassman v Weinberg, 154 AD3d 407,409 [1st Dept 2017] [attorney not entitled to summary judgment on account stated claim since he “has not demonstrated entitlement to dismissal of defendant’s legal malpractice counterclaims, which are sufficiently intertwined with the account stated claim so as to provide a bona fide defense”]; Emery Celli Brinckerhoff & Abady, LLP v Rose, 111 AD3d 453,454 [1st Dept 2013], Iv denied 23 NY3d 904 [2014] [same]; cf Morrison Cohen Singer & Weinsten v Ackerman, 280 AD2d 355, 356-357 [1st Dept 2001] [ noting that legal malpractice claim was not “so intertwined” with a claim for fees where “the
vast majority, if not all, of the alleged conduct on plaintiffs part, which forms the basis of the malpractice claim, occurred prior to the billing period covered by the invoices in question”]). Altschul only states that “[t]he legal services were reasonably required to defend the Plaintiffs herein against claims for breach of a union collective bargaining agreement the Plaintiffs were a party to at the specific request of the Plaintiffs” (NYSCEF Doc No. 245, Altschul aff, ~ 5).

Additionally, there are issues of fact as to whether defendants were discharged for cause (see Brill & Meisel v Brown, 113 AD3d 435,436 [1st Dept 2014]). Contrary to plaintiffs’ contention, defendants’ failure to comply with the rules concerning retainer agreements (22 NYCRR 1215.1) does not preclude them from recovering in quantum meruit (Frechtman v Gutterman, 140 AD3d 538,538 [1st Dept 2016]; Seth Rubenstein, P.C. v Ganea, 41 AD3d 54, 60-63 [2d Dept 2007]).”