It’s Really Hard to Undo a Divorce Settlement

By Andrew Lavoott Bluestone on July 20, 2018 Posted in Uncategorized

It is even harder to bring a successful legal malpractice case against the divorce attorney when the matter was settled. Holtzman v Griffith 2018 NY Slip Op 04540 Decided on June 20, 2018
Appellate Division, Second Department, aside from its lesson on “account stated” tells us that a legal malpractice claim from a settled divorce action has many hurdles to jump.

“In January 2009, the defendant retained the plaintiff to represent him in a divorce action commenced against him by his former wife. The divorce action culminated in a settlement. The plaintiff represented the defendant from January 2009 through June 2011, and periodically sent invoices to the defendant for legal services rendered in accordance with a retainer agreement executed by the defendant. The defendant received the invoices and made payments with respect thereto through October 22, 2010. Thereafter, he made no further payments to the plaintiff. When the defendant discharged the plaintiff in June 2011, there were outstanding invoices in the total sum of $18,581.50. The plaintiff commenced this action, inter alia, to recover on an account stated. The defendant answered and interposed counterclaims alleging legal malpractice against the plaintiff. The plaintiff moved for summary judgment on the cause of action for an account stated and dismissing the defendant’s counterclaims. The Supreme Court granted the motion, and the defendant appeals.”

“Here, the plaintiff demonstrated her prima facie entitlement to judgment as a matter of law on the cause of action to recover legal fees on an account stated in the amount of $18,581.50, with interest from July 11, 2011 (see Bashian & Farber, LLP v Syms, 147 AD3d at 715). In opposition, the defendant failed to raise a triable issue of fact (see Langione, Catterson & Lofrumento, LLP v Schael, 148 AD3d 797). The plaintiff also demonstrated her prima facie entitlement to judgment as a matter of law dismissing the defendant’s counterclaims. The plaintiff’s submissions demonstrated that in representing the defendant, who was also the defendant in the divorce action, she exercised the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and that the stipulation of settlement executed by the defendant in the divorce action was not the product of any mistakes by the plaintiff (see Schiff v Sallah Law Firm, P.C., 128 AD3d 668, 669). The stipulation of settlement recited, among other things, that the defendant reviewed and understood its terms, had an opportunity to consult with counsel and have the legal and practical effect of the stipulation fully explained to him, executed the stipulation voluntarily, without coercion or pressure of any kind, and believed the stipulation to be fair and reasonable (see Chamberlain, D’Amanda, Oppenheimer & Greenfield, LLP v Wilson, 136 AD3d 1326, 1328; Schiff v Sallah Law Firm, P.C., 128 AD3d at 669). In opposition, the defendant failed to raise a triable issue of fact.

Accordingly, we agree with the Supreme Court’s determination to grant the plaintiff’s motion for summary judgment on the cause of action for an account stated and dismissing the defendant’s counterclaims.”

The Very Strong Account Stated Doctrine

By Andrew Lavoott Bluestone on July 19, 2018 Posted in Legal Malpractice Basics

Holtzman v Griffith 2018 NY Slip Op 04540 Decided on June 20, 2018 Appellate Division, Second Department illustrates the almost overpowering quality of the “account stated” doctrine, in which the failure to object (in writing) to bills from attorneys (or others) can serve as a conclusion that the recipient has accepted the bills without objection and now must pay.

” An account stated is an agreement between parties, based upon their prior transactions, with respect to the correctness of the account items and the specific balance due'” (Bashian & Farber, LLP v Syms, 147 AD3d 714, 715, quoting Citibank [South Dakota], N.A. v Abraham, 138 AD3d 1053, 1056). “Although an account stated may be based on an express [*2]agreement between the parties as to the amount due, an agreement may be implied where a defendant retains bills without objecting to them within a reasonable period of time, or makes partial payment on the account” (Citibank [South Dakota], N.A. v Abraham, 138 AD3d at 1056; see Fleetwood Agency, Inc. v Verde Elec. Corp., 85 AD3d 850). The “agreement” at the core of an account stated is independent of the underlying obligation between the parties (see Citibank [South Dakota], N.A. v Abraham, 138 AD3d at 1056; Citibank [S.D.] N.A. v Cutler, 112 AD3d 573).”

A Vet and a Jumping Horse

By Andrew Lavoott Bluestone on July 13, 2018 Posted in Legal Malpractice Cases

It’s a question of professional malpractice and it involves horses. Tichner v Goldens Bridge Inc. 2018 NY Slip Op 31488(U) July 2, 2018 Supreme Court, New York County Docket Number: 651517/13 Judge: Nancy M. Bannon is about a girl who gets her pony. She rides the pony, competes with the pony, and then sues the farm who sold her the pony. Was it their fault, was it the Vet’s fault, and most importantly, for us, can the Vet be sued for his opinion?

The short answer is no. The longer answer is that absent actual misrepresentation, the opinion that the pony was sound cannot be attacked on the basis that the pony was not sound some time later.

“Briefly, as alleged in the complaint, Tichner sought to purchase a horse for her daughter to use in beginner horse competitions. In March 2012, Tichner contacted the Heritage Farm defendants to find a suitable horse to be used for competitions and for potential resale at a later time. The complaint asserts that the Heritage Farm defendants eventually found a horse named Sports Talk, who was “the perfect horse” for Tichner’s needs, and “an incredible jumper.” Tichner then requested that the Heritage Farm defendants obtain a pre-purchase medical exam of the horse, and they arranged such an exam with Miller, a veterinary practice. Miller conducted the pre-purchase examination of Sports Talk, including radiography, and the Heritage Farm defendants advised Tichner that Sports Talk was “sound, healthy, possessed no physical defects, was fit for competitive jumping and was a good investment pony.”

“Miller established its prima facie entitlement to judgment as a matter of law dismissing the negligent misrepresentation and fraudulent misrepresentation causes of action against it with the
affidavit of Christopher B. Miller, in which he asserts that he properly rendered an opinion based on his veterinary expertise, and that he made no misleading statements to the plaintiff. The plaintiff does not oppose or address these arguments. Since the plaintiff thus did not raise a triable issue of fact in opposition to Miller’s showing in this regard, Miller is entitled to summary judgment dismissing those causes of action against it. “

Defalcation and Negligence

By Andrew Lavoott Bluestone on July 12, 2018 Posted in Legal Malpractice Cases

It’s an age-old story. Trusted assistant embezzles money to pay for private life style, while trusting principal serenely depends on accountants, banks and others to protect him. Naturally, it all goes wrong. Weiser v Citigroup, Inc. 2018 NY Slip Op 31381(U) June 25, 2018 Supreme Court, New York County Docket Number: 655851/16 Judge: Nancy M. Bannon is the story of who might be at risk.

“Weiser is a physician and the principal of the PC, which owns and operates a medical practice. Strows served as bookkeeper of the PC for several years, and was a friend of Weiser’s family. Weiser, in his capacity as principal of the PC, reposed trust in and relied upon Strows to faithfully manage the PC’s books, records, and accounts, and relied on her representations that the credits and debits to the PC’s bank accounts were properly made only with respect to the PC’s actual obligations and receivables.

Beginning in 2009, without the plaintiffs’ permission or knowledge, Strows drafted a total of 132 checks on the PC’s business checking account and Weiser’s personal checking account, both of which were maintained with the Citibank defendants, and made them payable to her personal creditors, including Citigroup and CCSI, which respectively issued her credit card and managed
her credit card account. Strows concealed this conduct from them by representing to Weiser that the checks were to pay legitimate debts of the PC, as well by making entries on the checks after
Weiser signed them, referencing her personal credit card and utility accounts, and concealing the true purpose of the payments in the plaintiffs’ books and records.”

“Ross Perry and his accounting practice, Ross D. Perry CPA, P.C. (together the Perry defendants) ,-as well as the defendant Hecht & Associates, LLP (Hecht), provided accounting, auditing, and oversight services to the PC from 2009 to 2016. “Perry, who was responsible for monitoring and auditing finances relating to Dr. Weiser’s professional and personal accounts and who regularly interacted with Strows took no steps to detect or prevent Straws’ theft or notify Dr. Weiser of Strows’ malfeasance.” (emphasis added). Perry routinely interacted with Strows and used worksheets and ledgers she prepared as part of his rendering of agreed-upon accounting and tax preparation services to the plaintiffs, but “Perry . . failed to discover Strows’ multiple and repeated defalcations and alert Dr. Weiser at any time to the fraud.”

Accounting malpractice “contemplates a failure to exercise due care and proof of a material deviation from the recognized and accepted professional standards for accountants and auditors,
. which proximately causes damage to plaintiff.” Town of Kinderhook v Vona, 136 AD3d 1202, 1204 (3rct Dept. 2016); see D.D. Hamilton Textiles, Inc. v Estate of Mate, 269 AD2d 214 (1st Dept.
2000); Herbert H. Post & Co. v Sidney Bitterman, Inc., 219 AD2d 214 (1st Dept. 1996)
Perry moves to dismiss the second amended complaint against him on the ground that the one cause of action asserted against him, alleging professional malpractice, fails to state a cause of
action. In his affidavit, Perry does not assert that he did not deviate from accepted accounting standards, or that any such deviation was not a proximate cause of the plaintiffs’ alleged losses. Rather, he asserts only that he was not expressly retained by the plaintiffs, in writing or otherwise, that he only participated in the preparation and corporate and personal tax returns based upon cash disbursement sheets prepared by Strows, and that he was in no way involved any auditing or compilation services for the plaintiffs. Perry thus avers that he had no occasion or obligation to review checks, bank statements, or any other documents that might have suggested malfeasance on the part of Strows. Perry’s attorney, in his affirmation, limits the basis for dismissal to the ground that “case law in the State of New York is uniform to the effect that an accountant in the position of Mr. Perry has no legal liability for such transactions or for any damages as claimed by the plaintiff[s] in this matter.”

“Although Perry asserts in his affidavit that he was not retained to, and in fact did not, provide auditing services to the plaintiffs, the plaintiffs’ pleading clearly asserted that he was retained for that purpose. Moreover, the allegations in the second amended complaint, as set forth above in detail, clearly set forth facts sufficient to place Perry on notice that, in providing oversight and auditing services, he deviated from good accounting practice in failing to review cancelled checks or
fully review bank account records, and that said deviation proximately prevented the plaintiffs from stanching the loss of funds occasioned by Strows’s misconduct. ”

The Complaint Was Good Enough, The Proof Not

By Andrew Lavoott Bluestone on July 11, 2018 Posted in Legal Malpractice Cases

Plaintiff naturally thought that when the AD reversed dismissal of the complaint under CPLR 3211 it would have some effect on a later motion for summary judgment. This was incorrect. In Harris v Barbera 2018 NY Slip Op 05023 Decided on July 5, 2018 Appellate Division, Second Department (without much explanation) held that while the complaint stated a cause of action for failing to illuminate marital dissipation, the proofs were not.

“Initially, contrary to the plaintiff’s contention, this Court’s order on the prior appeal with respect to the defendants’ motion pursuant to CPLR 3211(a) to dismiss the complaint does not preclude the present motion pursuant to CPLR 3212 for summary judgment dismissing the complaint (see Bernard v Grenci, 48 AD3d 722, 724; see also Beach v Touradji Capital Mgt., LP, 128 AD3d 501, 502).

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 (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442; Ragunandan v Donado, 150 AD3d 1289, 1290). “The standard to which the defendant’s conduct is to be compared is not that of the most highly skilled attorney, nor is it that of the average member of the legal profession, but that of an attorney who is competent and qualified” (Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 846). To establish proximate causation, the plaintiff must show that she would have prevailed in the underlying action or would not have incurred any damages, but for the defendant attorney’s [*2]negligence (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; Kluczka v Lecci, 63 AD3d 796, 797; Wray v Mallilo & Grossman, 54 AD3d 328, 329).”

“Here, the defendants met their burden by establishing, prima facie, that they did not fail to exercise the requisite skill and knowledge in their representation of the plaintiff (see Smith, Gambrell & Russell, LLP v Telecommunications Sys., Inc., 155 AD3d 457). The defendants also established, prima facie, that, in any event, their alleged negligence did not proximately cause the plaintiff’s alleged damages. In opposition, the plaintiff failed to raise a triable issue of fact (see Richmond Holdings, LLC v David S. Frankel, P.C., 150 AD3d 1168, 1168). Accordingly, the defendants’ motion for summary judgment dismissing the complaint was properly granted.”

The Statute of Limitations is 3 Years, And Not A Day More

By Andrew Lavoott Bluestone on July 10, 2018 Posted in Uncategorized

King Tower Realty Corp. v G & G Funding Corp. 2018 NY Slip Op 05027 Decided on July 5, 2018 Appellate Division, Second Department illustrates the power of the statute of limitations. While plaintiff may succeed in Supreme Court, many such decisions are reversed in the AD. This is one.

“The plaintiff commenced this action on February 27, 2015, inter alia, to recover damages for breach of contract, fraud, and legal malpractice. The plaintiff alleged that it retained the defendant Maximo A. Figueredo, an attorney, in connection with its procurement of a loan from the defendant G & G Funding Corp. (hereinafter G & G Funding) relating to real property the plaintiff owned in Queens. A mortgage was executed on June 30, 2010. On January 5, 2012, after G & G Funding declared a default on the loan, the plaintiff executed a deed and contract of sale in lieu of foreclosure transferring title to the property to G & G Funding. The plaintiff alleged that Figueredo made false and misleading statements and improperly advised it to execute the deed on the basis that the deed would be held in escrow, the other defendants could collect rents from the properties, and the plaintiff preserved a right of redemption.”

“Here, Figueredo established that the legal malpractice cause of action accrued on January 5, 2012, when the plaintiff executed the deed and contract of sale in lieu of foreclosure transferring title to the property to G & G Funding, allegedly based upon Figueredo’s advice and misrepresentations. Since the plaintiff did not commence this action until February 27, 2015, more than three years later, Figueredo demonstrated, prima facie, that the legal malpractice cause of action was time-barred (see Quinn v McCabe, Collins, McGeough & Fowler, LLP, 138 AD3d at 1086; Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 735; Landow v Snow Becker Krauss, P.C., 111 AD3d at 796).

In opposition, the plaintiff’s submissions failed to demonstrate that any damages were incurred after the conveyance of the property on January 5, 2012. Further, there is no indication that Figueredo performed any legal services for the plaintiff with respect to the ownership or the financing of property after the January 5, 2012, conveyance. The plaintiff, thus, failed to raise a question of fact as to whether the alleged legal malpractice occurred at any time after January 5, 2012, or whether any continued representation by Figueredo served to toll the statute of limitations (see Quinn v McCabe, Collins, McGeough & Fowler, LLP, 138 AD3d at 1087; Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 736; Landow v Snow Becker Krauss, P.C., 111 AD3d at 797).”

A Lot of Litigation, All For Naught

By Andrew Lavoott Bluestone on July 9, 2018 Posted in Legal Malpractice Cases

Plaintiff is injured on a Greyhound Bus, and sues. Case is litigated to note of issue, and then “deemed abandoned.” A new law firm is hired but they do not move to restore within the year. After several years, a motion is made to restore, which is denied. A legal malpractice case follows, and after much litigation it too is dismissed. An appeal follows, and fails.

In Sang Seok NA v Schietroma 2018 NY Slip Op 05068 Decided on July 5, 2018 Appellate Division, Second Department the Court determines that there was no good claim to be made.

“To recover damages for legal malpractice, a plaintiff must prove that the defendant failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that this failure proximately caused the plaintiff to suffer damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442; Ragunandan v Donado, 150 AD3d 1289, 1290). To establish causation, the plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the defendant attorney’s negligence (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442).

It is well settled that in order to be entitled to summary judgment, the movant “must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case” (Winegrad v New York Univ. Med. Center, 64 NY2d 851, 853). “It is a defendant’s burden, when it is the party moving for summary judgment, to demonstrate affirmatively the merits of a defense, which cannot be sustained by pointing out gaps in the plaintiff’s proof” (Quantum Corporate Funding, Ltd. v Ellis, 126 AD3d 866, 871; see Bivona v Danna & Assoc., P.C., 123 AD3d 959, 960; Kempf v Magida, 116 AD3d 736, 737; Gamer v Ross, 49 AD3d 598, 600). Once a defendant makes a prima facie showing, the burden shifts to the plaintiff to raise a triable issue of fact (see Valley Ventures, LLC v Joseph J. Haspel, PLLC, 102 AD3d 955, 956; Schadoff v Russ, 278 AD2d 222, 223).

Here, the Schietroma defendants met their burden by establishing, prima facie, that their alleged negligence did not proximately cause the plaintiff’s damages by showing that the plaintiff would not have succeeded on the merits of the underlying action. In opposition, the plaintiff failed to raise a triable issue of fact (see Kaloakas Mgt. Corp. v Lawrence & Walsh, P.C., 157 AD3d 778, 779; Richmond Holdings, LLC v David S. Frankel, P.C., 150 AD3d 1168, 1168), since his opposition consisted entirely of speculation and conclusory assertions (see Kaloakas Mgt. Corp. v Lawrence & Walsh, P.C., 157 AD3d at 779; Financial Servs. Veh. Trust v Saad, 137 AD3d 849, 853; Cusimano v Wilson, Elser, Moskowitz, Edelman & Dicker LLP, 118 AD3d 542, 542; Holschauer v Fisher, 5 AD3d 553, 554). Accordingly, we agree with the Supreme Court’s determination to grant that branch of the Schietroma defendants’ motion which was for summary judgment dismissing the complaint insofar as asserted against them.”

Who’s Responsible For What in a Condo Flood?

By Andrew Lavoott Bluestone on July 3, 2018 Posted in Legal Malpractice Cases

A new luxury condo is built on the Bowery and on a cold night, pipes freeze. 80,000 gallons of water pour through the building, and when workers start to fix the problem, more and more problems are found. Who is responsible? The Sponsor ? The contractors?

Board of Mgrs. of 250 Bowery Condominium v 250 VE LLC, 2018 NY Slip Op 31168(U)
June 5, 2018 Supreme Court, New York County Docket Number: 656608/2016 Judge: O. Peter Sherwood discusses privity, professional negligence and the interplay of tort and contract.

“This ·litigation arises from alleged construction defects in the building, which were discovered in 2016 after the water in a fire sprinkler pipe froze, causing the pipe to burst, and water to flood the building (Morris notice of motion, Schreckinger affirmation, exhibit B [Complaint], ¶66). The building is an eight-story structure containing 24 residential units and 2 commercial units
(id.,¶38). While damage from the flooding was being repaired, plaintiff allegedly discovered
defects in the building (id, ¶¶ 70-82). These conditions were purportedly inconsistent with the
representations made by Sponsor Defendants, who marketed the building as a high-end luxury
condominium (id, ¶¶ 26, 29, 49-58). ”

“Morris, ICOR, and Foundations (Builder Defendants) each separately move to dismiss the
negligence and gross negligence claims as against them (motion sequences 001, 002, and 004).
Builder Defendants each argue that the negligence and gross negligence claims are barred by th~
statute of limitations pursuant to CPLR 214, which states that the statute of limitations is three
years for “an action to recover for damages of malpractice, other than medical, dental or podiatric
malpractice, regardless of whether the underlying theory is based on contract or tort” (CPLR 214.
[6]). These defendants contend that the accrual date for a design professional in a professional
malpractice negligence claim is the date of completion of services and, as their services were
completed over three years ago, plaintiffs negligence claims are barred by the statute of
limitations. Plaintiff counters that its negligence claims are not barred because these claims are not
malpractice claims from a direct contract or professional relationship between plaintiff and these
defendants, and, thus, the accrual date is the date that the damage occurred, not the date of
completion of services. ”

“Assuming the truth of the allegations in plaintiffs pleading and “resolv[ing] all inferences
which reasonably flow therefrom in favor of the [plaintiff],” the court agrees with plaintiff that the
negligence claims are not professional malpractice negligence claims (Sanders, 57 NY2d at 394).
There was no direct or other professional relationship between plaintiff and Morris, ICOR, or
Foundations, and plaintiff asserts claims for property damages that it has incurred as a result of the
alleged negligence. Plaintiff discovered the property damage on or after February 15, 2016, when
the fire sprinkler pipe burst. Plaintiff commenced this action on December 19, 2016, thus it is
timely.
Morris, ICOR, and Foundations also contend that the negligence and gross negligence
claims should be dismissed as plaintiff lacks privity, or the functional equivalent thereof, with all
three defendants. Plaintiff concedes an absence of privity (Plaintiff Opp. at 9-10, 16). However,
this is not fatal to a negligence claim as, even in the absence of privity, New York law allows the
assertion of a cause of action for negligence resulting in property damage (see 905 5th Assocs.,
Inc. v Weintraub, 85 AD3d 667, 668 [1st Dept 2011] [finding that “the lack of privity does not
affect plaintiffs’ ability to bring a general negligence claim against the [defendant] architect for
property damage sustained by them” where there are “issues of fact as to whether the [defendant]
directed or controlled the work which is alleged to have created the injury”]; Topcuoglu v Hotel
124, LLC, 2013 NY Slip Op 31232(U), *4 [Sup Ct, NY County 2013] [finding that “[a] party who
enters into a contract to perform construction-related services may be liable to third parties for
personal injuries or property damage, despite the lack of privity … “]). Plaintiff asserts that its negligence-based cause of action is largely based on property damage and alleges that the Builder
Defendants had responsibilities related to the construction that could be considered as controlling
the work that caused the injury (Plaintiff Opp. at 19; Complaint ifif 24-32, 110-113). City School
Dist. of City of Newburgh v Hugh Stubbins & Associates, Inc. (85 NY2d 535 1995) can be
distinguished because that plaintiff reviewed and approved specifications and had control during
construction, giving it the functional equivalent of privity. Here, plaintiff alleges that it lacks
privity with Morris, ICOR, and Foundations, but it is not clear whether these defendants reviewed
and approved specifications and had control during construction of the building. ”

This Time It’s Only Contract, Not Professional Negligence

By Andrew Lavoott Bluestone on July 2, 2018 Posted in Legal Malpractice Cases

The trinity of claims in legal malpractice is “Legal Malpractice”, “Breach of Contract” and “Breach of Fiduciary Duty.” Often, the breach of contact is dismissed as duplicitive of the LM, and the Breach of Fiduciary Duty is similarly treated. Here, in an about-face, the First Department takes a differing view in City of New York v Eastern Shipbuilding Group, Inc. 2018 NY Slip Op 04113 Decided on June 7, 2018.

“In support of dismissing the breach of contract claim, defendant established prima facie that the defects in the fireboats it designed and constructed for plaintiff (the City) did not cause the City to sustain any damages. It submitted testimony by the fire department’s director of grants admitting that the City paid 100% of the fireboat repair costs using federal grant money. In opposition, the City demonstrated that its use of the federal grant money for the fireboat repairs does not “place [it] in the same position as [it] would have been in if the contract had not been breached” (see Tullett Prebon Fin. Servs. v BGC Fin., L.P., 111 AD3d 480, 481 [1st Dept 2013] [internal quotation marks omitted], lv denied 22 NY3d 864 [2014]). It submitted evidence that, while a small portion of the federal grant money was approved and earmarked for the fireboat repairs, the City was forced to reallocate funds for other projects covered by the grant when the cost of the fireboat repairs exceeded the amount requested. Moreover, the City established that, if it recovers any money from defendant, it will be required either to repay the federal grant money or make a request to keep the money for other necessary projects.

The cause of action for professional malpractice should be dismissed as duplicative. Although the service that defendant performed was “affected with a significant public interest” and the failure to perform could have had “catastrophic consequences,” the City is “essentially seeking enforcement of the bargain” (see Dormitory Auth. of the State of N.Y. v Samson Constr. [*2]Co., 30 NY3d 704, 711 [2018] [internal quotation marks omitted]). The City does not allege any damages that were not “within the contemplation of the parties under the contract,” i.e., not “already encompassed in [its] contract claim” (see id. at 713).”

Contract v. Tort and How it Affects Professionals

By Andrew Lavoott Bluestone on June 29, 2018 Posted in Legal Malpractice Cases

MINEOLA: Millet v Kamen 2018 NY Slip Op 28181 Decided on May 31, 2018 Supreme Court, Nassau County Marber, J. is a case that discusses the balance in obligation and remedy between Professionals and others. Sometimes professionals, such as defendant-architect do business with non-professionals, but do not render professional services. In this case Defendant sold a renovated home to non-professionals, but had not been retained by them to provide professional services. The house displays certain problems. How might the non-professionals recover damages?

“”It is a well-established principle that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated” (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 389 [1987]). “[M]erely alleging that the breach of a contract duty arose from a lack of due care will not transform a simple breach of contract into a tort.” (Sommer v. Federal Signal Corp., 79 NY2d 540, 551 [1992]). Professionals may be held liable in tort for failure to exercise reasonable care, irrespective of their contractual duties (Id.). In such circumstances, “it is policy, not the parties’ contract, that gives rise to a duty of care.” (Id. at 552).

In determining whether a legal duty independent of a contractual obligation should be imposed, courts look to the nature of the services performed and the parties’ relationship — “specifically, where the defendant ‘perform[s] a service affected with a significant public interest [and where the] failure to perform the service carefully and competently can have catastrophic consequences.’ ” (Dormitory Authority of the State of New York v. Samson Construction Co., 30 NY3d 704, 711 [2018], citing Sommer, 79 NY2d at 553). In addition to considering the relationship between the parties, courts also evaluate the nature of the injury, how the injury occurred and the harm it caused (Dormitory Authority, 30 NY3d at 711). The Court of Appeals has made clear that “where plaintiff is essentially seeking enforcement of the bargain, the action should proceed under a contract theory” (Dormitory Authority, 30 NY3d at 711, citing Sommer, 79 NY2d at 552)

One of the legal issues addressed by the New York Court of Appeals in Dormitory Authority is precisely the issue presented here — whether the plaintiff’s negligence claim asserted against the defendant architect was duplicative of the breach of contract claim. Dormitory Authority was decided by the Court of Appeals on February 15, 2018, one day after the instant motion was fully briefed and submitted. As the parties did not have the opportunity to reference this recent opinion in their papers, pertinent portions are noted and relied upon herein.

Dormitory Authority involved a construction project to build a lab for use by the Office of the Chief Medical Examiner in New York City adjacent to Bellevue Hospital. Pursuant to a contract with the City, the plaintiff was responsible for financing and managing the design and [*6]construction of the lab. Pursuant to a contract between Dormitory Authority and Perkins (defendant architect), Perkins was to provide design, architectural, and engineering services for the project and supervise its construction. Ultimately, the failure to properly install an excavation support system led to substantial damage and delays, including causing an adjacent building to “settle” by eight inches and damage to sidewalks, sewers and water mains, requiring emergency repairs. (Dormitory Authority, 30 NY3d at 707-708). The Plaintiff’s breach of contract claim alleged that Perkins failed to provide adequate designs; failed to properly supervise subcontractors it retained; failed to monitor the progress of their work to ensure it was being completed properly and in substantial compliance with design recommendations; failed to ascertain the actual field conditions and the foundation beneath the adjacent building; and failed to advise Dormitory Authority of the risks posed by the installation of the excavation support system and taking precautions against such risks. (Dormitory Authority, 30 NY3d at 708-709). The Court of Appeals described the allegations set forth in plaintiff’s negligence claim as “virtually identical in every respect, but with an introductory phrase that references Perkins’ failure to ‘comply with professional standards of care’ instead of breach of contract. The damages for both claims were described as the “significant additional expenses” necessary to complete the project. However, the damages sought pursuant to plaintiff’s professional malpractice claim was $4 million higher than for its breach of contract.

In dismissing the negligence claim as duplicative of the breach of contract claim, the Court of Appeals found, as it did in Clark-Fitzpatrick, that the negligence allegations were “merely a restatement, albeit in slightly different language, of the ‘implied’ contractual obligations asserted in the cause of action for breach of contract” (Id. at 711-712). The Court noted that there was no distinction in the allegations between the damages applicable to either claim. The Court also found significant that the contract itself contemplated the defendant architect’s responsibility for additional costs or expenses due to the architect’s design errors or omissions, and addressed it in the contract terms.

In the instant matter, dismissal of the Plaintiffs’ negligence claims is warranted. Affording the Plaintiffs every reasonable inference, as required on a pre-answer motion, the Court finds that the negligence allegations are all based upon acts or omissions pursuant to the explicit terms of the Limited Warranty in the parties’ Contract. In the First Cause of Action, labeled breach of Limited Warranty as against Architect, the Plaintiffs allege latent defects resulting from defective installation of the plumbing, HVAC and electrical systems resulting in major water leaks, damaged floors, failure to maintain a temperature and risk to health and safety. Other than employing language that Defendants “[failed] to exercise reasonable care in fulfilling [their] duty to Plaintiffs”, the negligence claims merely include a more detailed description of the defects resulting from the Defendants’ alleged “negligent and/or substandard workmanship or craftmanship in violation of industry standard and/or the applicable building codes”.

As to the relationship between Kamen and the Plaintiffs, nothing in the Contract, amended complaint, or submissions herein suggest that Kamen was retained to provide architectural services or to design a home specifically for the Plaintiffs herein. Rather, while the Defendants were involved in constructing the Premises, the nature of the parties’ relationship is in contract.”