New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

No Continuous Representation, Not Much Explanation

Posted in Legal Malpractice Cases

Continuous representation tolls the statute of limitations, and requires actual work, a mutual understanding between client and attorney of the need for the actual work along with a mutual relationship of trust and confidence.  In RJR Mech. Inc. v Ruvoldt  2019 NY Slip Op 01844
Decided on March 14, 2019 Appellate Division, First Department some of that was missing.

“The statute of limitations on a cause of action for legal malpractice is three years (see CPLR 214[6]). Contrary to plaintiff’s assertions, the claim was not tolled by the continuous representation doctrine. Generally, tolling under the continuous representation doctrine “end[s] once the client is informed or otherwise put on notice of the attorney’s withdrawal from representation” (Shumsky v Eisenstein, 96 NY2d 164, 171 [2001]).

Moreover, there was not a “mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim” (McCoy v Feinman, 99 NY2d 295, 306 [2002]).”

Failure to Appeal is a Problem

Posted in Legal Malpractice Basics

In Pugliese v Martin Law Group, P.C.  2019 NY Slip Op 01810  Decided on March 13, 2019
the Appellate Division, Second Department  reminds that legal malpractice consists of more than a mere mistake.  Plaintiff must still prove proximate or “but for” cause.  Merely failing to perfect an appeal is insufficient.

“ORDERED that the order is modified, on the law, by deleting the provision thereof granting that branch of the defendants’ motion which was for summary judgment dismissing the first cause of action, and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed, without costs or disbursements.

In 2014, the plaintiffs commenced this action to recover damages for legal malpractice. In their first cause of action, the plaintiffs allege that the defendants committed legal malpractice when they failed to perfect and prosecute an appeal from an order dismissing an underlying action entitled Pugliese v Allstate Indemnity Company, commenced in the Supreme Court, Dutchess County, under Index No. 7265/09 (hereinafter the underlying action). The underlying action sought insurance coverage under a homeowners insurance policy for losses to property caused by a fire.

“A plaintiff in an action alleging legal malpractice must prove that the defendant attorney’s failure to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession proximately caused the plaintiff to suffer damages” (Harris v Barbera, 163 AD3d 534, 535). Even if a plaintiff establishes that an attorney failed to exercise the reasonable skill and knowledge commonly possessed by a member of the legal profession, the plaintiff must still demonstrate that he or she would have succeeded on the merits of the action but for the attorney’s negligence (see Di Giacomo v Michael S. Langella, P.C., 119 AD3d 636).

Here, we disagree with the Supreme Court’s determination that the defendants established their prima facie entitlement to judgment as a matter of law dismissing the first cause of action. The evidence submitted in support of the defendants’ motion did not establish, prima facie, that the plaintiffs could not prove a breach of a duty to perfect and prosecute an appeal in the [*2]underlying action (see Barnave v Davis, 108 AD3d 582). Furthermore, the defendants also failed to establish, prima facie, that had they perfected and prosecuted the appeal, the appeal would not have been successful (see Coccia v Liotti, 70 AD3d 747). Since the defendants failed to make their prima facie showing, we do not need to consider the sufficiency of the plaintiffs’ opposition papers (see Winegrad v New York Univ. MedCtr., 64 NY2d 851, 853).”

The Satisfaction Question

Posted in Legal Malpractice Cases

Is the client satisfied with the settlement is different from whether the client is “satisfied with the representation” which, in the past few years has taken on a totemic power to kill legal malpractice cases.  Clients, when/if asked at the settlement allocution whether they are satisfied with their attorney’s representation and required to answer.  If they answer yes, a legal malpractice case based upon mistakes by the attorney is severely compromised.  We think this perverse.  Would a surgery patient, coming out of anesthesia, and asked whether they are satisfied be precluded from a medical malpractice case ?  Probably not.

Rosenberg Feldman Smith, LLP v Ninety Five  Madison Co., L.P.  2019 NY Slip Op   30582(U)  March 7, 2019  Supreme Court, New York County  Docket Number: 653953/2018
Judge: Andrew Borrok finds that there was no such question asked.  Nevertheless, it averts to the Katebi-Greenberg line of matrimonial-legal malpractice cases.

“In this legal malpractice action, the plaintiffs/counterclaim defendants Rosenberg Feldman
Smith, LLP (RFS), Richard Feldman, and Stephen Rosenberg move to dismiss the counterclaims
asserted against them by defendant/counterclaim plaintiff Ninety-Five Madison Company, L.P.
(NFMC). The underlying action concerns legal fees sought by RPS in connection with its
representation ofNFMC on seven separate matters from 2017-2018 totaling $189,328.86. The
counterclaims brought by NFMC against RPS, Feldman, and Rosenberg all relate to RFS’s
representation of NFMC in one particular case, Vitra, Inc. v Ninety-Five Madison Co., L.P.,
Index No. 652342/2017 (the Vitra Action). ”

‘On December 7, 2017, the approximately 30 paragraph settlement agreement was read into the
record in front of New York State Supreme Court Justice Saliann Scarpulla. Pursuant to the
terms of the settlement agreement, among other things, the parties agreed that all disputes
relating to the enforcement and interpretation of the settlement would be referred to arbitration,
and the parties waived the rights to put on evidence or conduct any discovery at such proceeding
(Feldman aff, exhibit Q at 15, lines 22-16; at 16, lines 9-15). After reading the settlement
agreement into the record, the Court discussed the settlement agreement with Ms. Sklar:
THE COURT: Please state and spell your full name for the record.
THE WITNESS: Rita A. Sklar, S-K-L-A-R.
THE COURT: Do you want to allocute or I?
MR. FELDMAN: You can, Your Honor.
THE COURT: Ms. Sklar, you were in the courtroom this whole morning. In fact,
you’ve been in the courtroom for the last couple of days. You’ve heard the terms of the stipulation of settlement between the parties of this dispute. Do you
understand the stipulation?
THE WITNESS: Yes.
THE COURT: Do you have any questions about the stipulation?
THE WITNESS: No.
THE COURT: Do you agree to the stipulation of settlement voluntarily?
THE WITNESS: Yes.
THE COURT: Has anyone coerced or forced you into agreeing to the settlement?
THE WITNESS: No.
THE COURT: Did you take any medication today or anything else that would
impair your ability to enter into this stipulation?
THE WITNESS: No.
THE COURT: Do you feel comfortable and confident communicating in the
English language or would you like me to have a translator come and translate the
settlement?
THE WITNESS: No.
THE COURT: You’re good with English?
THE WITNESS: Yes.
THE COURT: Good. Thank you very much.
(Feldman aff, exhibit Q at 17, lines 7-26; at 18 lines 1-26; at 19, lines 1-2). NFMC alleges that
the stipulation read in court was materially different from the one that Ms. Sklar agreed to and
that she only agreed to its terms on the record because she was not informed by RPS that the
terms had changed (Counterclaim, iii! 21-27). ”

“The counterclaims raised by NFMC state a claim for legal malpractice. RPS argues that NFMC
has failed to demonstrate that any of the alleged acts of malpractice proximately caused any
damages to NFMC, i.e., that “but for” the alleged acts, NFMC would have achieved a more
favorable outcome. The Court does not agree. NFMC alleges that RFS’s failure to conduct
discovery, failure to pursue counterclaims, failure to adequately inform Ms. Sklar regarding the
settlement, putting NFMC in a position where it had to settle, agreeing to settlement terms not
approved by NFMC, and waiving critical rights in arbitration including the right to appeal resulted in a highly unfavorable settlement and unsuccessful arbitration proceedings and caused
NFMC to incur significant monetary damages (Counterclaim, iii! 59, 60-71 ).
RPS further argues that Ms. Sklar’ s allocution in open court stating that she understood and
agreed to the stipulation of settlement precludes an action for legal malpractice based on any
alleged deficiencies in the settlement agreement or alleged failure to inform Ms. Sklar of any
material changes to its terms. Simply put, the cases cited by RPS do not mandate this conclusion
at this stage of the proceeding. Significantly, Ms. Sklar was not asked whether she was satisfied
with her representation in the matter or whether she had an opportunity to discuss the proposed
settlement and whether her attorneys satisfactorily answered all of her questions regarding the
proposed settlement. See Knox v. Aronson, Mayesfsky & Sloan, LLP, 168 AD3d 70, 75-76 [1st
Dept 2018]; Harvey v Greenberg, 82 AD3d 683, 683 [1st Dept 2011]; Katebi v Fink, 51 AD3d
424, 425 [1st Dept 2008]). “

Not Legal Malpractice But Not Dismissed Either

Posted in Uncategorized

An-Jung v Rower LLC  2019 NY Slip Op 30600(U)  March 6, 2019  Supreme Court, New York County  Docket Number: 152694/2018  Judge: Francis A. Kahn III is a thoughtful discussion of the difference between legal malpractice and an overbiling case.  Here, in a matrimonial setting, plaintiff’s case is that the bills lack any discernible detail and are excessive.  Is this legal malpractice, fraud or unjust enrichment?  No.  Read on for the Court’s explanation.

“In the complaint, the facts alleged focus nearly exclusively on Defendants’ billing practices during the period of representation. The allegations made include: the total amount billed, the rates charged by each employee, the justification or lack thereof for the rates charged by each employee and the amounts billed for particular services. The Plaintiff asserts five causes
of action against Defendants as follows: [ 1] breach of contract and the implied covenant of good
faith and fair dealing, [2] unjust enrichment, [3] breach of fiduciary duty, [ 4] fraud, and [ 5]
negligence. Plaintiff seeks as compensatory damages “at least” $93,920.00 on each cause of
action along with interest and attorney’s fees.”

“A fair overall reading of the complaint reveals that Plaintiffs grievance against Defendant is overbilling, not professional negligence. Although Plaintiffs negligence cause of action alleges a breach of the standard of care, it does not tum “on the quality or content of the legal advice that defendants rendered to plaintiffs, let alone a finding that the defendants failed to meet professional standards in rendering legal advice” to Plaintiff (see Johnson v Rose, Misc3d_, 2014 NY Misc. LEXIS 4052014 [Sup Ct, NY County 2011]). As such, Plaintiffs first four causes of action are not duplicative of her negligence claims (see Postiglione v Castro, 119 AD3d 920, 922 [2d Dept 2014]; Cherry Hill Mkt. Corp. v Cozen O’Connor P. C., 118 AD3d 514, 515 [!51 Dept 2014]). ”

“As to the sufficiency of the Plaintiffs negligence claim, based upon the nature of a professional malpractice claim as analyzed above and that the gravamen of the complaint concerns excessive billing, the fifth cause of action fails to state a claim of either negligence or legal malpractice (see, Chowaiki & Co. Fine Art Ltd. v Lacher, 115 AD3d 600, 601 [151 Dept 2014]).

As to Plaintiff’s fourth cause of action, “[t]o properly plead a cause of action to recover
damages for fraud, the plaintiff must allege that (I) the defendant made a false representation of
fact, (2) the defendant had knowledge of the falsity, (3) the misrepresentation was made in order
to induce the plaintiffs reliance, ( 4) there was justifiable reliance on the part of the plaintiff, and
(5) the plaintiff was injured by the reliance” (Pace v Raisman & Assoc., Esqs., LLP, 95 AD3d
1185, 1188-1189 [2 Dept 2012]; see also Eurycleia Partners, LP v Seward & Kissel, LLP, 12
NY3d 553 [2009]).

While incontrovertible proof of fraud is not required at the pleading stage, CPLR 3016[b]
mandates particularity such that elementary facts from which misconduct may be inferred must
be stated (see Eurycleia Partners, LP v Seward & Kissel, LLP, supra). Allegations of fraud
should be dismissed as insufficient where the claim is unsupported by specific and detailed
allegations of fact in the pleadings (see Callas v Eisenberg, 192 A.D.2d 349 [I st Dept 1993]; see
also Ben-Zvi v Kronish Lieb Weiner & Hellman LLP, 278 AD2d 167 [1st Dept 2000])”

“Here, the existence of the parties’ retainer agreement, which was annexed to the
complaint, is undisputed. As to its applicability, the retainer defines the parties’ rights and
responsibilities as to fees, disbursements, rates and billing practices. In opposition, the only
arguments made by Plaintiff were that the Defendants admittedly breached and/or did not perform in accordance with the terms of the retainer. As such the unjust enrichment cause of
action fails. “

The Attorney Client Privilege in a Litigation Setting

Posted in Legal Malpractice Cases

The attorney client privilege is sacrosanct, no?  Well, not really.  Heth v Satterlee Stephens Burke & Burke LLP  2019 NY Slip Op 30555(U)  March 5, 2019  Supreme Court, New York County  Docket Number: 650379/2015  Judge: Andrew Borrok demonstrates what happens when the client possibly  discusses how attorney 1 is handling the case with attorney 2.

“As more fully set forth on the record, the “at-issue” waiver of the attorney-client privilege arises
where a party places the subject matter of privileged communications at issue, thereby making
invasion of the privilege necessary to assess the validity of a claim or defense, and where the
opposing party would be deprived of critical information absent a waiver of privilege (Deutsche
Bank Trust Co. of Ams. v Tri-Links Inv. Trust, 43 AD3d 56, 63 [1st Dept 2007]). In the context
of a legal malpractice action involving concurrent representation by the defendant and non-party
counsel in the same underlying litigation or transaction, New York courts have consistently
found that the privilege is waived with respect to communications with the non-party counsel
concerning the litigation or transaction (Goetz v Volpe, 11 Misc3d 632, 635 [Sup Ct, NY County 2006]). In such cases, communications with non-party counsel in connection with the
underlying action lose their privilege to the extent that they are relevant in establishing whether
the plaintiff relied on the advice of the non-party counsel and whether the plaintiff was harmed
as a result (IMO Indus., Inc. v Anderson Kill & Glick, P.C., 192 Misc2d 605, 609, 611 [Sup Ct,
New York County 2002]). ”

“Specifically, the disclosure of the communications between Messrs. Heth and Mellen is essential
to SSBB and Mr. Markham’s defense that any alleged reliance by Mr. Heth on legal advice
provided by SSBB and Mr. Markham did not proximately cause Mr. Beth’s alleged damages
(i.e., the theory being that Mr. Mellen provided deficient legal advice rather than SSBB and Mr.
Markham [or potentially, also provided deficient advice]). This disclosure is also critical to
SSBB’s and Mr. Markham’s defense that it was Mr. Mellen, not SSBB and Mr. Markham, who
represented Mr. Heth with respect to the March and December agreements, that Mr. Heth was
aware that any release from the March agreement needed to be in writing, and to defend against
the allegation that SSBB and Mr. Markham suppressed information from Mr. Heth regarding the
agreements. “

Attorney Disqualification in a Legal Malpractice Setting

Posted in Legal Malpractice Cases

Akin to a pro-se situation, when law firms defend themselves in a legal malpractice setting they run the risk of attorney disqualification on the attorney-witness rule.

Quadrozzi v Castro  2019 NY Slip Op 30550(U)  March 5, 2019  Supreme Court, New York  County Docket Number: 151675/2018 Judge: Frank P. Nervo is a good example.

“Plaintiffs seek to disqualify defense counsel on the basis that defense counsel, an associate at defendants’ law firm, was closely involved in plaintiffs real estate closing and defendants’ conduct in preparing for and during the closing formed the basis for the instant legal malpractice suit.

As relevant here, Plaintiff Quadrozzi was involved in an estate dispute with his nephew. The dispute was settled, by a separate law firm, and the settlement of that dispute included a transfer of real property to Plaintiff Quadrozzi. Defendants represented plaintiff in that real estate closing. Plaintiffs allege, inter alia, that defendants failed to properly identify or satisfy all liens against the subject property and defendants’ failure resulted in the lien(s) accruing substantial interest. Plaintiffs cite defense counsel’s email correspondences to Plaintiff Quadrozzi, including an email for approval of an appellate brief on the real estate matter, and that briefs reference to the underling settlement agreement, as evidence of defense counsel’s close involvement with the underlying matter. Additionally, plaintiffs cite defense counsel’s billing records, showing a combined 4.25 hours worked by defense counsel, and billed to Plaintiff Quadrozzi, for work on an affirmation and motion in the underlying real estate matter. Plaintiffs, therefore, argue that defense counsel should be disqualified, as a conflict exists between counsel’s former and current clients and they have not consented to this representation, counsel will be a material fact witness, and even if an actual or potential conflict does not exist, an appearance of impropriety does. ”

“Rule 3.7(a) of the Rules of Professional Conduct, addressing advocate-witnesses, provides that a “lawyer shall not act as an advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact” (22 NYCRR 1200.0 ). On a motion to disqualify counsel, based on the advocate-witness rule, the challenging party bears the heavy burden to identify the expected testimony of the advocate-witness and demonstrate that such testimony would be adverse to the client’s factual allegations (Dishi v. Federal Ins. Co., 112 AD3d 484 [1st Dept 2013; see also  Broadwhite Assoc. v. Truong, 237 AD2d 162 [1st Dept 1997]). Disqualification is required “only when it is likely that the testimony to be given by the witness is necessary. Testimony may be relevant and even highly useful but still not strictly necessary. A finding of necessity takes into account such factors as the significance of the matters, weight of the testimony, and availability of other evidence” (S&S Hotel Ventures Ltd. Partnership v. 777S.H. Corp., 69 NY2d 437, 445-456 [1987]). Where an advocate-witness’ testimony would be cumulative, it is necessarily unessential and a motion to disqualify is properly denied (Shah v. Ortiz, 112 AD3d 543 [1st Dept 2013]).

Conversely, where an attorney is closely involved in an underlying matter which forms the basis for a subsequent legal malpractice action, and it is likely the attorney will be a witness on a significant issue of fact, the attorney is properly disqualified from representing the law firm in the legal malpractice action (Delgado v. Bretz & Coven, LLP, 109 AD3d 38, 47 [1st Dept 2013]; Chang v. Chang, 190 AD2d 311 [1st Dept 1993]; see also Lauder v. Goldhamer, 122 AD3d 908 [2q Dept 2014]).”

“However, the Court finds it is likely that defense counsel will be a witness on a significant issue of fact, namely the defendants’ representation of plaintiff in the real estate closing and research regarding liens. Plaintiff has established that defense counsel performed legal work on the matter giving rise to the instant malpractice action, and although defense counsel characterizes his involvement in the matter as more closely related to that of an assistant, he does not refute that he corresponded with plaintiff regarding the matter and billed plaintiff for 4.25 hours of said work. Defendant does not identify any other witness, besides Defendant Castro, who may be able to
provide testimony relating to standard of legal work performed for the closing. Consequently, defense counsel’s testimony regarding the closing is likely to be necessary, and he should be disqualified from representing defendants (Delgado, 109 AD3d at 47; Chang, 190 AD2d at 311). ”

 

A Multi-Million Dollar Legal Fee Lurking in the Background

Posted in Uncategorized

Big projects require lots of legal work.  In Whiteman Osterman & Hanna, LLP v Preserve Assoc., LLC  2019 NY Slip Op 29056  Decided on February 28, 2019  Supreme Court, Albany County Platkin, J. we see the unusual situation in which a law firm waits 13 years or so to collect a huge legal fee, and does so in a way that allows immediate summary judgment on the amount.

“Pending before the Court are motions for summary judgment in lieu of complaint, made pursuant to CPLR 3213, in two separate collection actions brought against defendants Preserve Associates, LLC and Tupper Lake Preserve LLC.[FN1] In Action No. 1, the law firm of Whiteman, Osterman & Hanna, LLP (“WOH”) sues to recover the sum of $7,131,156 pursuant to a written agreement providing for the payment of past-due amounts owed for legal services rendered from 2006 through 2018. In Action No. 2, the law firm of Shanley, Sweeney, Reilly & Allen, P.C. (“SSRA”) sues under a similar instrument to recover the sum of $667,808, representing unpaid legal fees from 2004 and 2005. Defendants oppose the motions.

BACKGROUND

Plaintiffs are law firms that rendered legal services to defendants in connection with the development of the Adirondack Club and Resort (“Adirondack Club”) in Tupper Lake, New York (see NY St Cts Electronic Filing [NYSCEF] Doc No. 3 [Action No. 1], ¶¶ 2-3 [“Henry Aff.”]; NYSCEF Doc No. 3 [Action No. 2], ¶¶ 2-3 [“Allen Aff.”]). The Adirondack Club project (“Project”) is located on about 6,200 acres of land surrounding the former Big Tupper Ski Area, and the Project encompassed: the renovation and re-opening of the long-closed ski area; the construction of a new ski lodge, restaurant and hotel; permits for 651 building lots; development of an extensive network of cross-country and hiking trails; and the construction of a marina and clubhouse on Tupper Lake (see Henry Aff., ¶ 3).[FN2]

SSRA rendered legal services to defendants in 2004 and 2005 in connection with the real-estate development work on the Project (see Allen Aff., ¶ 2). By January 2006, defendants had fallen behind in their payments. “As an accommodation to the client, [SSRA] agreed to a [*2]forbearance in the collection of the legal bills in exchange for accruing interest and a bonus in the event that an extremely contentious permit was obtained from the Adirondack Park Agency” (id., ¶ 4).

In January 2006, lawyers from SSRA joined WOH (see id., ¶ 4), and WOH thereafter rendered legal services to defendants from January 2006 through October 2018 in relation to the Project (seeHenry Aff., ¶¶ 2, 4-5, 10). “By 2008, the growing recession caused [defendants] to fall behind in payments due for legal fees and expenses,” and WOH similarly agreed to forbear from collection in exchange for the accrual of interest and the prospect of a success fee (id., ¶ 4; see NYSCEF Doc No. 5 [Action No. 1], pp. 3-4 [“WOH Retainer”]).

From 2006 through 2018, plaintiffs honored the forbearance agreements while WOH “guided the project through . . . the APA permit, Town of Tupper Lake rezoning and subdivision approvals, New York State Department of Environmental Conservation permits, United States Army Corps of Engineers permits, and New York State Attorney General approvals” (Henry Aff., ¶ 5). WOH’s legal work also “included defense of five lawsuits involving the [P]roject, including two appeals to the Appellate Division and a motion for leave to appeal to the Court of Appeals. All of this litigation was decided in [defendants’] favor” (id.).”

“”An estoppel . . . rests upon the word or deed of one party upon which another rightfully relies and so relying changes his [or her] position to his [or her] injury” (Triple Cities Constr. Co. v Maryland Cas. Co., 4 NY2d 443, 448 [1958] [internal quotation marks and citation omitted]). Under principles of judicial estoppel, a party may not take a “factual position in a legal proceeding that is contrary to a position previously taken by [the party] in a prior legal proceeding” (American Mfrs. Mut. Ins. Co. v Payton Lane Nursing Home, Inc., 704 F Supp 2d 177, 192 [ED NY 2010]). In other words, a “party will not be permitted to assume a contrary position in another proceeding simply because the party’s interests have changed” (Green Harbour Homeowners Assn., Inc. v Ermiger, 128 AD3d 1142, 1144 [3d Dept 2015] [internal quotation marks and citation omitted]). These principles apply with equal force where the earlier position successfully was taken before an administrative agency (see American Mfrs., 704 F Supp [*8]2d at 193 [collecting authorities]; see also Mahoney-Buntzman v Buntzman, 12 NY3d 415, 422 [2009]).

Further, “a party’s affidavit that contradicts his or her prior sworn testimony creates only a feigned issue of fact, and is insufficient to defeat a properly supported motion for summary judgment” (Pippo v City of New York, 43 AD3d 303, 304 [1st Dept 2009] [internal quotation marks, brackets and citation omitted]).

Here, plaintiffs have established that Lawson did, at pertinent times, bind defendants in relation to matters critical to the development of the Project. This is in stark contrast to Lawson’s current testimony that he lacked such authority, as well as Lawson and Foxman’s testimony that Lawson’s only authority to bind defendants arose from formal actions of the type taken in connection with the OWDT transaction.

Plaintiffs’ proof further demonstrates that defendants, through Lawson, submitted sworn statements to OAG that were relied upon by the administrative agency in taking favorable action on the proposed Martin Act amendments. Lawson also prepared affidavits on behalf of defendants for submission to Supreme Court, Franklin County in connection with the successful continuation of a mechanic’s lien asserted against Project lands.

Having consistently obtained substantial benefits on the basis of Lawson’s representations that he was authorized to act on defendants’ behalf, defendants are estopped as a matter of law from denying Lawson’s authority to execute the Agreements and Amendments. To hold otherwise would accord defendants “an unfair advantage [and] impose an unfair detriment on [plaintiffs]” (American Mfrs., 704 F Supp 2d at 198).

B. Statute of Limitations

Defendants contend that plaintiffs’ claims are partially barred by the expiration of the statute of limitations. Specifically, defendants argue that plaintiffs may not obtain recovery of attorney’s fees incurred more than six years prior to the commencement of these actions.

The Court concludes that this defense is without merit. Plaintiffs’ actions are brought under the Agreements. Defendants’ default under the SSRA Agreement occurred no later than September 16, 2017, and their default under the WOH Agreement occurred no later than December 1, 2017.Moreover, and in any event, the record shows that defendants reaffirmed their indebtedness to plaintiffs on January 29, 2016 via written instruments executed by Foxman (see Henry Aff., Ex. B; Allen Reply Aff., Ex. H), thereby beginning the running of the six-year statute of limitations anew (see General Obligations Law § 17-101; Lew Morris Demolition Co. v Board of Educ. of City of NY, 40 NY2d 516, 520-521 [1976]).

C. Reasonableness of Attorney’s Fees

Finally, defendants claim to have raised triable issues of fact concerning the reasonableness of the underlying fee obligation that plaintiffs are seeking to collect. Specifically, defendants argue that in the absence of detailed invoices, time sheets and billing records, there is no way to ascertain the manner in which the underlying fee obligation has been calculated, and no way to assess whether plaintiffs’ charges were necessary, reasonable and/or proper. According to defendants, they are entitled to discovery to analyze, assess and challenge the amounts claimed due.

The proof adduced by plaintiffs in reply [FN12] shows that WOH contemporaneously sent at least 148 monthly billing packages to defendants, each broken down to the tenth of the hour and providing detailed narratives of the legal services provided (see Henry Reply Aff., ¶ 11 & Exs. 6-7). Likewise, SSRA sent 13 similar billing packages to defendants during its more limited period of representation (see Allen Reply Aff., ¶ 4 & Ex. A). Despite receiving detailed billing statements for almost 13 years and repeatedly reaffirming the amount of their indebtedness in documents delineating plaintiffs’ computations (see e.g. Henry Aff., Ex. B), defendants failed to raise any contemporaneous objections to the charges claimed by plaintiffs (see Lapidus & Assoc., 92 AD3d at 405-406).[FN13]

Even now, defendants fail to raise any particularized objections to the amounts claimed by plaintiffs. Defendants merely question the reasonableness of certain charges in highly conclusory fashion (see Foxman Aff., ¶ 12), which is insufficient to raise a triable issue of fact (see Shea, 194 AD2d at 371). In this connection, the Court notes that detailed information concerning the fees claimed by plaintiffs has been in the possession of defendants for many years, and defendants neither contend nor offer admissible proof that information needed to oppose the motion lies in the exclusive possession of plaintiffs (see CPLR 3212 [f]; Ingalsbe v Chicago Ins. Co., 287 AD2d 939, 940 [3d Dept 2001]).

Finally, the Court observes that plaintiffs undertook about 13 years of legal work to assist defendants in obtaining all of the government permits and approvals needed to develop a 6,200-acre luxury resort in the Adirondack Park (see Henry Reply Aff., Ex. 9, p. 3). Plaintiffs’ work further encompassed the successful defense of all associated litigation and appeals. All the while, plaintiffs were not being paid for their work, but undertook to continue to render professional services (and forbear from collection, despite the obvious risks) in reliance on defendants’ repeated promises to pay the past-due legal fees, interest and a success fee. On these facts, the Court sees no procedural or substantive unconscionability that should prevent plaintiffs from obtaining the substantial recovery sought herein (see generally Matter of Lawrence, 24 NY3d 320 [2014]).”

Experts Sued In Inexpert Fashion

Posted in Legal Malpractice Cases

The experts were hired, and now plaintiff (whose attorney hired them) says that they were inexpert.  Marks Paneth LLP v Economic Alchemy LLC     2019 NY Slip Op 30532(U)  February 26, 2019  Supreme Court, New York County Docket Number: 60427/2017 Judge: Lucy Billings is determined on sufficiency of pleading grounds.  The fraud claim fails.

“Plaintiff Marks Paneth LLP seeks damages from defendantthird party plaintiff Economic Alchemy LLC, an intellectual property holding company, for its breach of a contract for expert services in a legal malpractice dispute. Economic Alchemy in turn commenced a third party action against third party defendant Law Office of Daniel L. Abrams, PLLC, Economic Alchemy’s former attorney for the legal malpractice action, to recover the expert fees claimed by plaintiff from Economic Alchemy. It  claims that third party defendant misrepresented plaintiff’s 1 expertise, inducing it to retain plaintiff for expert services and to incur fees for services that were never provided or were useless. Third party defendant now moves to dismiss Economic Alchemy’s third party complaint based on documentary evidence, and failure to state a claim. C.P.L.R. § 3211(a) (1) and (7) ”

“Although Economic Alchemy adequately alleges that third party defendant misrepresented plaintiff’s expertise and that Economic Alchemy sustained damages after it relied on these
misrepresentations, it fails to allege any facts supporting the conclusion that third party defendant, somehow, knew its representations were false. The third party complaint’s sole, conclusory allegation that third party defendant knew its representations regarding plaintiff’s expertise were  false lacks the requisite specificity or detail to satisfy C.P.L.R. § 3016(b) ‘s pleading requirement. Nowhere . ‘ does Economic Alchemy allege any facts or present’ any evidence indicating that third
party defendant knew plaintiff lacked expertise regarding utility patents, offering nothing from which the court reasonably may infer third party defendant’s scienter. GE Oil & Gas. Inc. v.
Turbine Generation Servs., L.L.C., 168 A.D.3d 563, 563 , (1st Dep’t 2019); Fried v. Lehman Bros. Real Estate Assoc. III, L.P., 156 A.D.3d 464, 465 (1st Dep’t 2017); MMCT. LLC v. JTR Coll. Point.
LLC, 122 A.D.3d 497, 498 (1st Dep’t 2014) i Giant Group, Ltd. v. Arthur Andersen. LLP., 2 A.D.3d 189, 190 (1st Dep’t 2003). ”

“For these reasons, even though third party defendant’s motion to dismiss the third party complaint based on documentary evidence fails for the reasons explained above, C.P.L.R. § 3212(a) (1) I the court grants third party defendant’s motion to dismiss the third party complaint based on its failure to state a claim of fraud, the single claim alleged. C.P.L.R. §§ 301_6 (b)) 3211(a) (7). This decision constitutes the court’s order and judgment dismissing the third party action. “

Damages or Speculation?

Posted in Legal Malpractice Cases

Departure is the first question in legal malpractice; it is the one that almost everyone gets right.  What is often shocking to the client is that judges (and then juries) scrutinize the remaining three elements (proximate cause, “but for” causation and ascertainable damages) in reaching a decision.

Lisi v Lowenstein Sandler LLP  2019 NY Slip Op 01665  Decided on March 7, 2019 Appellate Division, First Department is an example of how the fourth elements comes into play.  Here, damages are too “speculative” to be “ascertainable.”

“In this legal malpractice action, plaintiff alleges that defendants were negligent in failing to advise him that the income realized from the exercise of his stock options would be taxed as ordinary income and that, had they so advised him, he would have sold his shares earlier or eliminated any market risk by shorting the shares in full or otherwise taking measures to eliminate risk. However, this theory of proximate cause is belied by the record and relies on gross speculation (see Gallet, Dreyer & Berkey, LLP v Basile, 141 AD3d 405 [1st Dept 2016]; Sherwood Group v Dornbush, Mensch, Mandelstam & Silverman, 191 AD2d 292, 294 [1st Dept 1993]).

The complaint alleges that plaintiff shorted as much stock as possible; thus, he could not have shorted more stock before exercising his options. Moreover, plaintiff’s trading decisions demonstrate that he intended to speculate on the stock; after he received his shares from his exercised stock options, plaintiff did not begin immediately to sell them off to achieve a profit, despite the volatility of the stock market and the fact that the stock price at that time greatly exceeded his perceived investment in the stock. Plaintiff therefore assumed the risk that the stock price would plummet without notice (see National Union Fire Ins. Co. of Pittsburgh, Pa. v Christopher Assoc., 257 AD2d 1, 12 [1st Dept 1999]). The allegation that plaintiff would have stopped speculating on the stock at a time when its shares were selling for an amount greater than his actual investment thus depends on “a chain of gross speculations on future events” (Phillips-Smith Speciality Retail Group II v Parker Chapin Flattau & Klimpl, 265 AD2d 208, 210 [1st Dept 1999] [internal quotation marks omitted], lv denied 94 NY2d 759 [2000]). The speculative nature of the allegation is brought into sharper relief by the fact that the last time the stock sold for more than the amount of plaintiff’s actual investment was November 11, 2015, less than two months after plaintiff received his shares.”

How Many Elements Does Judiciary Law 487 Have?

Posted in Legal Malpractice Cases

There is great dispute over the elements of Judiciary Law § 487.  Is it attempted deceit or successful deceit?  Does it require egregious conduct, or chronic conduct or chronic and extreme conduct or a pattern of delinquency?

Schwartzman v Pliskin, Rubano, Baum & Vitulli  2019 NY Slip Op 30419(U)  January 14, 2019  Supreme Court, Queens County  Docket Number: 714510/2017  Judge: Joseph Risi takes the position that all the above are required.

“Section 487 of the Judiciary Law broadly provides for a private civil cause of action for treble
damages against lawyers who deceive any party or the court. Relief under this statute, however, is
reserved for a chronic, extreme pattern of legal delinquency (see Bridges v 725 Riverside Drive, Inc., 119 AD2d 789 [1986]; see also Wiggin v Gordon, 115 Misc. 2d 1071 [1982]), or for misconduct that is chronic. (See Bridges v 725 Riverside Drive, Inc., supra.) Furthermore, to recover under Section 487, a plaintiff must plead and prove both actual deceit by the attorney and causation, that is, that the deceit or collusion actually caused the plaintiffs damages. (See Maroulis v Sari M Friedman, P.C., supra; see also Gumarova v Law Offe. of Paul A. Boronow, P.C., 129 AD3d 911 [2015]; Mizuno v Barak, 113 AD3d 825 [2014]).

Thus, even egregious misconduct will not rise to the level of a violation of Section 487 ifthere is no pattern of intentional deceit or wrongdoing. Here, defendants PRBV and Vitulli, Esq. demonstrated that plaintiffs failed to state a cause of action for violation of Judiciary Law §487 as plaintiffs did not allege the requisite pattern of wrongdoing or deceit necessary to sustain such claim. (See CPLR §3211 [a][7].) Defendants PRBV and Vitulli, Esq. further demonstrated that plaintiff John’s statements in his affidavits submitted in the Tabco and Beroukhim actions constitute informal judicial admissions and documentary evidence warranting the dismissal of plaintiffs’ claim of violation of Judiciary Law §487. (See CPLR §3211 [a][l]; see also Morgenthow & Latham v Bank of N. Y. Co., supra.) Accordingly, that branch of the motion of defendants PRBV and Vitulli, Esq. which seeks dismissal of plaintiffs’ third cause of action for violation of Judiciary Law §487 is granted. “

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