Plaintiff attorney loses fee case against pro-se client because he could not show substantial compliance with the matrimonial billing rules of 22 NYCRR 1400, et seq in Swergold v. Weinrib  2021 NY Slip Op 02555
Decided on April 28, 2021Appellate Division, Second Department.

“The plaintiff attorney represented the defendant in a matrimonial action, in which the Supreme Court directed the defendant’s former husband to pay the plaintiff an attorney’s fee in the sum of $100,000. Following the former husband’s failure to pay, the plaintiff commenced the instant action, inter alia, to recover on an account stated, alleging that the defendant failed to pay the [*2]plaintiff’s legal fees in connection with the matrimonial action. In an amended verified answer, the defendant asserted counterclaims, including to recover damages for legal malpractice. The plaintiff moved for summary judgment on the complaint and pursuant to CPLR 3211(a) to dismiss the counterclaims. In an order entered March 2, 2017, the Supreme Court, among other things, denied those branches of the plaintiff’s motion which were for summary judgment on the cause of action to recover on an account stated and pursuant to CPLR 3211(a) to dismiss the defendant’s legal malpractice counterclaim.

Thereafter, the defendant made a motion denominated as a motion in limine, inter alia, to preclude the plaintiff from presenting evidence pertaining to legal fees based upon a violation of 22 NYCRR 1400.3. In an order dated July 11, 2018, the Supreme Court treated the defendant’s motion as a motion pursuant to CPLR 3211(a)(7) to dismiss the complaint, and granted the motion to the extent of requiring the plaintiff to demonstrate his compliance with 22 NYCRR 1400.3. In an order dated December 28, 2018, the court determined that the plaintiff failed to demonstrate his substantial compliance with 22 NYCRR 1400.3 and granted the defendant’s motion to dismiss the complaint.

Contrary to the plaintiff’s contention, the Supreme Court properly granted the defendant’s motion to dismiss the complaint based upon the plaintiff’s failure to demonstrate his substantial compliance with 22 NYCRR 1400.3 (see Montoya v Montoya, 143 AD3d 865; Badawi v Alesawy, 135 AD3d 793, 795; Cornish v Eraca-Cornish, 107 AD3d 1322, 1326; Wagman v Wagman, 8 AD3d 263). “

Divorce in wealthy families can be expensive.  Division of significant assets, using teams of lawyers can quickly add up.  Kaufman v Boies Schiller Flexner, LLP  2021 NY Slip Op 31340(U) April 22, 2021 Supreme Court, New York County Docket Number: 154149/2018 Judge: James E. d’Auguste not only cost a lot, it spawned multiple other litigations as well. This case has a good discussion of the elements of breach of contact claims in a legal malpractice setting.

“The breach of contract cause of action is predicated upon defendants’ alleged overbilling practices. According to the complaint, “critical errors, in violation of the terms of the relevant retainer agreements” resulted in substantial overbilling, and defendants charged “[p]laintiff for services that were unnecessary, duplicative or wasteful” (NYSCEF Doc No. 66, ¶¶ 1 and 50).

To sustain a cause of action for breach of contract, the plaintiff must prove the existence of a contract, the plaintiff’s performance, the defendant’s breach, and damages (see Harris v Seward Park Hous. Corp., 79 AD3d 425, 426 [1st Dept 2010]). “[A] cause of action for breach of contract may be maintained against an attorney ‘only where the attorney makes an express promise … to obtain a specific result and fails to do so’” (Aglira v Julien & Schlesinger, 214 AD2d 178, 185 [1st Dept 2004], quoting Pacesetter Communications Corp. v Solin & Breindel, 150
AD2d 232, 236 [1st Dept 1989], lv dismissed 74 NY2d 892 [1989]; accord Kaplan v Sachs, 224 AD2d 666, 667 [2d Dept 1996], lv dismissed and denied 88 NY2d 952 [1996]).

Applying these principles, the complaint fails to adequately plead a breach of contract claim. First, plaintiff fails to set forth the terms of the BSF Retainer or the BRIR Retainer in the complaint that defendants allegedly breached (see Boies, Schiller & Flexner LLP v Modell, 129 AD3d 533, 534 [1st Dept 2015] [dismissing the defendant client’s counterclaim for breach of contract because the defendant failed to identify the  specific provision of the retainer in which the plaintiff law firm promised to produce a specific result]; Steiner v Lazzaro & Gregory, 271 AD2d 596, 597 [2d Dept 2000] [dismissing a cause of action for breach of contract where the complaint failed to set forth the terms of the retainer agreement]). Second, a close examination of both retainer agreements reveals that defendants did not commit to obtaining a specific result or outcome for plaintiff in the Divorce Proceeding. ”

“Generally, where a breach of contract claim arises out of the same facts and seeks the same or similar damages as a legal malpractice claim, the contract claim must be dismissed (see Courtney v McDonald, 176 AD3d 645, 645-646 [1st Dept 2019]; Roth v Ostrer, 161 AD3d 433, 435 [1st Dept 2018]). That said, a breach of contract claim premised upon the assertion that the “defendants overbilled … and performed unnecessary services … is not duplicative of the legal
malpractice claim” (Ullmann-Schneider v Lacher & Lovell-Taylor, P.C., 121 AD3d 415, 416 [1st Dept 2014]). “The former claim, unlike the latter claim, does not speak to the quality of defendants’ work” (id.). Hence, the plaintiff must “reasonably allege that the fee bore no rational relationship to the product delivered” (Johnson v Proskauer Rose LLP, 129 AD3d 59, 70 [1st Dept 2015]). Here, plaintiff’s opposition largely consists of complaints about the quality of defendants’
work which then led to the purported overbilling. As discussed earlier, complaints about overbilling based on the quality of an attorney’s work cannot support a breach of contract claim (see Ullmann-Schneider, 121 AD3d at 416). Thus, defendants’ motions to dismiss the first cause of action for breach of contract are granted, and the first cause of action is dismissed. ”

Traditionally, one pleads:  “If this, then that.”  However, when proposing how persons would have reacted to a specific stimulus, in the legal malpractice setting, one must avoid speculation.  So, attorney was tardy in serving and filing a Notice of Entry.  That gave the other side more time to file a notice of appeal.  Did it make a difference?

Here, no.

“Order, Supreme Court, New York County (Kathryn E. Freed, J.), entered August 6, 2020, which granted defendants’ motion to dismiss the complaint, unanimously affirmed, without costs.

This legal malpractice action was properly dismissed. There is no basis other than speculation to support the allegation that, had defendants attorneys, who represented plaintiff client in an underlying action, served notice of entry sooner, the adverse party would not have sought leave to appeal (see Levine v Lacher & Lovell-Taylor , 256 AD2d 147, 149 [1st Dept 1998]).”

Could there be anything more ironic than a defendant attorney (accused of malpractice) losing the case because the defendant attorney failed to answer the complaint?

Rene v Abrams  2021 NY Slip Op 02431 Decided on April 21, 2021 Appellate Division, Second Department provides the short answer.

“In an action to recover damages for legal malpractice, the defendants appeal from an order of the Supreme Court, Nassau County (Anna R. Anzalone, J.), entered March 27, 2019. The order, upon an amended order of the same court entered November 18, 2016, inter alia, granting the plaintiffs’ motion for leave to enter a default judgment against the defendants on the issue of liability upon their failure to appear or answer the complaint, and after an inquest on the issue of damages, directed payment of the sum of $9,000 in damages to the plaintiff Emmanuel Rene and payment of the sum of $1,000 in damages to the plaintiff Danica Drakes.

ORDERED that the appeal is dismissed, with costs.

An order which does not decide a motion made on notice is not appealable as of right (see CPLR 5701[a][2]; Sholes v Meagher, 100 NY2d 333, 335; Deutsche Bank Natl. Trust Co. v Brown, 186 AD3d 1195), and we decline to grant leave to appeal. While the defendants seek appellate review of the Supreme Court’s determination of damages after an inquest, they failed to include the relevant papers and transcripts to enable meaningful appellate review of that issue (see CPLR 5526; Rubio-Modica v Modica, 100 AD3d 979; Keita v United Parcel Serv., 65 AD3d 571, 572).”

We look to the Courts for legal guidance, and practitioners look to Appellate decisions in order to understand guiding principles.  In a legal malpractice setting, one question might be whether the standard of practice requires attorneys to ensure that a purchaser of real property gets everything that is promised in the contract of sale?

This question arises in Mah v 40-44 W. 120th St. Assoc., LLC  2021 NY Slip Op 02365 Decided on April 20, 2021 Appellate Division, First Department and there is an answer but with little guidance.  Plaintiffs bought an apartment which was to have a private roof deck.  They did not get it.

“In this breach of contract and legal malpractice action, defendant attorney Sheryl D. Jassen represented plaintiffs Timothy Lloyd Mah and James M. Carter III in connection with their purchase of a penthouse residential condominium unit. The condo unit was sold by defendant 40-44 West 120th Street Associates LLC (the sponsor), which agreed to construct a private roof deck in compliance with all appropriate laws and regulations of governmental agencies. The roof deck was included in the square footage assigned to the unit for purposes of dividing common charges. At the time of closing, construction on the roof deck was not complete and the certificate of occupancy did not address the roof.

Plaintiffs allege that the deck delivered by the sponsor after closing was not legal because it did not have a corresponding amended certificate of occupancy, and the sponsor could not have obtained an amended certificate because the building’s floor area already exceeded what was permitted under applicable zoning regulations. Plaintiffs allege that prior to closing, defendant Jassen failed to inform them that the certificate of occupancy had not yet been amended to allow for or permit the deck. They claim that but for defendant Jassen’s malpractice they would not have purchased the unit, they would not have been assigned increased common charges based on the deck’s square footage, and they would not have renovated the roof deck, attempted to “legalize” it, or removed it.

Plaintiffs’ theories of proximate cause are interrupted by an intervening act and are impermissibly speculative (see Lisi v Lowenstein Sandler LLP, 170 AD3d 461, 462 [1st Dept 2019]; Excelsior Capitol LLC v K&L Gates LLP, 138 AD3d 492 [1st Dept 2016], lv denied 28 NY3d 906 [2016]). The sponsor’s failure to deliver a legal deck is at the core of plainitiffs’ alleged damages. The sponsor’s alleged breach of contract was “independent of or far removed from [defendant Jassen’s] conduct,” and thus, severed any proximate cause flowing from her representation (Kriz v Schum, 75 NY2d 25, 36 [1989] [internal quotation marks omitted]). Plaintiffs’ assertion that but for defendant Jassen’s negligence they would not have purchased the condo unit relies on gross speculation of future events.”

People often ask attorneys whether they have any celebrity clients?  Here, in Carter v Sweeney  2021 NY Slip Op 31261(U) April 16, 2021
Supreme Court, New York County Docket Number: 151067/2019
Judge: James E. d’Auguste Lil Wayne asks for 13 years of legal fees to be returned to him.  He is generally unsuccessful.

“This action arises after the end of a 13-year relationship, in which defendant Ronald Sweeney (Sweeney, or Defendant) acted as the transactional attorney for plaintiff Dwayne Michael Carter, Jr., p/k/a Lil Wayne (Carter). The relationship ended when Carter fired Sweeney
on September 18, 2018. Now, Carter brings this action, seeking to recoup the legal fees that he paid Sweeney throughout those 13 years.  Defendants move to dismiss the first amended complaint (Complaint).”

The Complaint, which seeks, among other, nonmonetary, relief, the recovery of all the  legal fees that Carter payed Sweeney in the course of 13 years, alleges the following 10 causes of action: (1) fraudulent inducement, (2) legal malpractice, (3) breach of fiduciary duty, (4) unjust enrichment, against both defendants, (5) violation of California Business and Professional Code § 6147, (6) violation of California  Business and Professional Code § 6148, (7) violation of California Business and Professional Code §§17200-17219, (8) violation of N.Y. General Business Law (GBL) §349, against both defendants, (9) violation of N.Y. Judiciary Law § 487, against both defendants, and (10) a request for a declaratory judgment.”

“It is established that a plaintiff alleging legal malpractice must show that such malpractice “proximately caused actual and ascertainable damages.” Rudolph v Shayne, Dachs, Stanisci, Corker &Sauer, 8 NY3d 438, 443 (2007). The Complaint, instead, alleges the same $20,000,000 in damages that it alleges with regard to multiple other causes of action. It is also established that, in order to make a prima facie case of legal malpractice, the plaintiff must show that he or she would have prevailed in underlying litigation, but for the attorney’s negligence.
Davis v Klein, 88 NY2d 1008, 1009-1010 (1996); Schorsch v Moses & Singer, L.L.P., 60 AD3d 557, 557 (1st Dept 2009). The Complaint alleges that, when Carter and one of his companies were sued by their New York litigation counsel over their nonpayment of legal fees, Sweeney
negotiated a settlement for Carter, but, after Carter failed to pay the negotiated sum, and a second action was commenced to recover the fees, Sweeney, although notified of that action, negligently failed to act, thereby allowing the New York firm to obtain a default judgment “for hundreds of thousands of dollars.” These allegations fail to specify “ascertainable damages,” Rudolph at 443, and it is no more than “an insufficient speculation” (Rodriguez v Lipsig, Shapey, Manus & Moverman, P,C., 81 AD3d 551, 557 [1st Dept 2011]) that Carter, who had failed to pay his New York counsel, and then failed to pay a settlement of that counsel’s claim, would have prevailed in that counsel’s subsequent suit.

For the rest, this claim repeats many of the allegations raised in the first cause of action and, inexplicably, faults Sweeney for “breaching his duty of care by his advice concerning the California litigation firm’s written contingency fee agreement.” NYSCEF Doc, No. 5, ¶94. The
Complaint discloses that “[i]n March 2018, the California litigation firm negotiated a settlement of [two matters] . . . which required certain payments to Carter and [his record label]. NYSCEF Doc. No. 5, ¶ 60. If Carter was dissatisfied with that settlement, he fails to explain either why he was dissatisfied, or how Sweeney might have been at fault, in connection with the matter. “

Client agrees to arbitrate attorney fee issues.  Is Client required to arbitrate a legal malpractice claim as well?  In Protostorm, Inc. v Foley & Lardner LLP  2021 NY Slip Op 02227 Decided on April 08, 2021
Appellate Division, First Department the answer is yes.

“Plaintiff retained defendant Foley & Lardner LLP to maintain a malpractice action against plaintiff’s prior counsel. Thereafter, plaintiff commenced a malpractice action against defendants and other attorneys in the United States District Court, Eastern District of New York. Defendants moved to dismiss the federal action based on lack of subject matter jurisdiction. They also commenced an arbitration proceeding against plaintiff for unpaid legal fees based on the parties’ retainer agreement, which provides that “[a]ny dispute over fees and/or costs. . .will be submitted to and settled exclusively by binding arbitration.” The federal action was ultimately dismissed for lack of subject matter jurisdiction. As a result, the court did not rule on whether the arbitration should be stayed. Plaintiff then brought the instant action alleging the same claim of legal malpractice and moved to stay the arbitration pending resolution of this action. Defendants cross moved to stay the action and compel arbitration.

“Where there is no substantial question whether a valid agreement [to arbitrate] was made or complied with, . . .the court shall direct the parties to arbitrate” and its order “shall operate to stay a pending. . .action” (CPLR 7503[a] [emphasis added]). Once a valid arbitration agreement is identified, an arbitration should only be stayed “when the sole matter sought to be submitted to arbitration is clearly beyond the arbitrator’s power” (Silverman v Benmor Coats, 61 NY2d 299, 309 [1984] [emphasis added]). Further, where “arbitrable and nonarbitrable claims are inextricably interwoven, the proper course is to stay judicial proceedings pending completion of the arbitration, particularly where. . .the determination of issues in arbitration may well dispose of nonarbitrable matters” (Cohen v Ark Asset Holdings, 268 AD2d 285, 286 [1st Dept 2000]; see also Lake Harbor Advisors, LLC v Settlement Servs. Arbitration and Mediation, Inc., 175 AD3d 479 [2d Dept 2019]; Monotube Pile Corp. v Pile Foundation Constr. Corp., 269 AD2d 531 [2d Dept 2000]).

There is no dispute that there is a valid agreement between the parties to arbitrate any dispute regarding unpaid fees. Thus, the court must compel arbitration of defendants’ claim for unpaid fees and stay this action pending completion of the arbitration (CPLR 7503[a]). Moreover, because plaintiff’s nonarbitrable malpractice claim is inextricably intertwined with the arbitrable claim for unpaid fees, the proper course is to stay the action pending completion of the arbitration (see Cohen, 268 AD2d at 286[*2]; Lake Harbor Advisors, LLC, 175 AD3d at 479; Monotube Pile Corp., 269 AD2d at 531).

To the extent plaintiff argues that it cannot be forced to arbitrate its malpractice claim because it did not explicitly agree to do so, both the First and Second Departments have clearly found that a nonarbitrable issue can be decided in an arbitration when it is inextricably intertwined with an arbitrable issue, particularly where, as here, the determination of the arbitrable unpaid fees claim may dispose of the nonarbitrable malpractice claim (see Cohen, 268 AD2d at 286; Lake Harbor Advisors, LLC, 175 AD3d at 480; Monotube Pile Corp., 269 AD2d at 531-532).”

Scarola Malone & Zubatov LLP v Ellner  2021 NY Slip Op 31199(U) April 8, 2021 Supreme Court, New York County Docket Number: 651324/2017 Judge: Anthony Cannataro pits a “sophisticated businessman, with degrees from Wharton and the University of Chicago” against the attorneys in a legal malpractice counterclaim.  Sophisticated businessman loses.

“Where a sophisticated client imposes a strategic decision on counsel, the client’s action absolves the attorney from liability for malpractice (Town of North Hempstead v Winston & Strawn, LLP, 28 AD3d 746 [2006]; Stolmeier v Fields, 280 AD2d 342 [2001]). Additionally, with regard to strategic decisions “the selection of one among several
reasonable courses of action does not constitute malpractice” (Rosner v Paley, 65 NY2d 736, 738 [1985]). “Attorneys may select among reasonable courses of action in prosecuting their clients’ cases without thereby committing malpractice … so that a purported malpractice claim that amounts only to a client’s criticism of counsel’s strategy may be dismissed” (Dweck Law Firm, LLP v Mann, 283 AD2d 292, 293 [2001 ]). Hindsight arguments concerning selection of one of several reasonable courses of action do not state a viable cause of action for malpractice (Brookwood Cos., Inc. v Alston & Bird LLP, 146 AD3d 662, 667 [2017]).

In this case, the Lightbox defendants’ counterclaims stem from the Scarola firm’s representation of them in a business dispute and litigation related to a joint venture agreement between the Lightbox defendants and a nonparty entity named 3rd Home Limited. The counterclaims allege that the Scarola firm made several mistakes during the course of its representation of the Lightbox defendants, specifically: failing to advise the Lightbox defendants to accept a potential buyout from 3rd Home Limited; recommending that the Lightbox defendants litigate in an “uber aggressive” manner rather than advising them to settle, causing the Lightbox defendants to “waste” money Lightbox’ s allegations relate primarily to strategic decisions made during the course of the Scarola firm’s representation. Regarding the allegations that the Scarola firm took an overly aggressive approach, the documentary evidence shows that the
Lightbox defendants consistently rejected attempts to settle, for reasons having nothing to do with any advice received from the Scarola firm. While Mr. Ellner occasionally expressed interest in settling with 3rd Home Limited, when he did so, it was his settlement demands that could best be characterized as aggressive, and he rejected actual offers of settlement. Additionally, it is clear from the pleadings that when the Lightbox defendants retained the Scarola firm, they wanted to “preserve and grow” the joint venture business and were not interested in a buyout.”