There are scholarly works (in the form of law review articles) which argue that the courts tilt towards attorneys in legal malpractice cases.  It is logical that such a prejudice might exist.  Legal malpractice (and ethical) rules are written by attorneys, apply to attorneys, are reviewed by attorneys and are acted upon by judge-attorneys.  Any survey of in-house disciplinary or self-disciplining organizations yields the conclusion that self-discipline is less rigorous than discipline by uninvolved outsiders.

So goes Onyenwe v Hamernick  2020 NY Slip Op 04314 [185 AD3d 1044]  July 29, 2020  Appellate Division, Second Department.  While the AD eventually set things right, look at the number of opportunities given the pro-se attorney, and even when Supreme Court sanctioned him, look how a second judge gave the pro-se attorney defendant another out.

“Ordered that the order dated November 28, 2018, is reversed, on the law and in the exercise of discretion, with costs, and the defendant’s motion, inter alia, pursuant to CPLR 5015 (a) (1) to vacate the order dated April 16, 2018, and thereupon to vacate the note of issue is denied.

In 2014, the plaintiff commenced this action against the defendant, inter alia, to recover damages for legal malpractice. Pursuant to a preliminary conference order dated July 6, 2015, the parties were to appear for depositions and to provide disclosure. By notice of motion dated December 11, 2015, the plaintiff moved, inter alia, to strike the defendant’s answer for his willful failure to appear for his deposition. In an order dated January 15, 2016, the Supreme Court resolved the plaintiff’s motion by directing the parties to appear for their depositions on certain dates and to respond to discovery demands. Thereafter, upon additional motions by the plaintiff, inter alia, to strike the defendant’s answer, the court issued two more orders directing, inter alia, the defendant to appear for his deposition. By notice of motion dated January 5, 2018, the plaintiff again moved, inter alia, to strike the defendant’s answer. In an order dated February 2, 2018, the court directed the defendant to appear for his deposition on or before March 9, 2018, and adjourned the plaintiff’s motion to April 16, 2018. The court stated that the issue of preclusion would be addressed on the adjourned date. In an order dated April 16, 2018, the court granted the plaintiff’s unopposed motion, inter alia, to strike the answer.

By order to show cause dated May 31, 2018, the defendant moved, inter alia, pursuant to CPLR 5015 (a) (1) to vacate the order dated April 16, 2018, and thereupon to vacate the note of issue. The plaintiff opposed the motion. In an order dated November 28, 2018, the Supreme Court granted the defendant’s motion, and the plaintiff appeals.

In order to vacate his default in opposing the plaintiff’s motion, inter alia, to strike the answer, the defendant was required to demonstrate a reasonable excuse for the default and a potentially meritorious opposition to the motion (see CPLR 5015 [a] [1]; 210 E. 60 St., LLC v Rahman, 178 AD3d 888, 889 [2019]; Mollica v Ruzza, 151 AD3d 714 [2017]; Remote Meter Tech. of NY, Inc. v Aris Realty Corp., 83 AD3d 1030, 1031 [2011]). Inasmuch as the defendant failed to demonstrate a reasonable excuse for his default, we need not consider whether he offered a potentially meritorious opposition to the motion (see Turko v Daffy’s, Inc., 111 AD3d 615, 617 [2013]).

Accordingly, the Supreme Court should have denied the defendant’s motion, inter alia, pursuant to CPLR 5015 (a) (1) to vacate the order dated April 16, 2018, and thereupon to vacate the note of issue. Chambers, J.P., Maltese, Christopher and Wooten, JJ., concur.”

Plaintiff sued and was successful in obtaining a judgment.  The judgment was uncollectible.  In Ofman v Tenenbaum Berger & Shivers LLP  2020 NY Slip Op 32828(U)  July 23, 2020
Supreme Court, Kings County  Docket Number: 524482/2019  Judge: Richard Velasquez,  Plaintiff alleged that had the attorney been quicker, the defendant would not have been able to leave the US and the judgment would have been collectible.  The Court thought not.

“In the present case, accepting the facts as alleged in the complaint as true, according plaintiff the benefit of every possible favorable inference, and determining only whether the facts as alleged fit within any cognizable legal theory the only element the plaintiff satisfies for legal malpractice is the existence of an attorney-client relationship.

Plaintiff has not alleged facts that satisfy any other element of a claim for legal malpractice. Most notably, the plaintiff was successful in the underlying action and cannot
allege that he was unsuccessful. He has not alleged facts showing breach of duty; he has not alleged facts showing ‘but for’ causation; and he has not alleged facts setting forth
actual or ascertainable damages. Therefore, the plaintiff has failed to state a cause of action for legal malpractice.

Accordingly, Defendants, motion to dismiss plaintiff’s complaint is hereby Granted, for the reasons stated above.”

Legal malpractice issues arise in all kinds of settings. in Wikked Entertainment, Inc. v Burbacki  2020 NY Slip Op 32375(U)  July 20, 2020 Supreme Court, New York County Docket Number: 652352/2018 Judge: Andrew Borrok the setting is a claimed hiring of a niece as an attorney to a talent management agency, and the claimed attempted take-over of the agency.  Maria Carey was the sole client, and that relationship ended badly.

“According to the Amended Complaint, in January 2016, Stella Stolper hired her niece, Zarina Burbacki, an attorney licensed to practice in New York, to work for Ms. Stolper’ s management and production company, Wikked Entertainment, Inc. (Wikked) as its in-house counsel and Chief of Staff (Am. Compl., iii! 2-8). Ms. Stolper also helped Ms. Burbacki’s husband, Yonatan Shimrony, get a job in the entertainment industry (id., iJ 10). However, within a few months after Ms. Burbacki began working for Ms. Stolper at Wikked, Ms. Burbacki and Mr. Shimrony created their own, competing companies called YoZa Consulting LLC (Y oZa) and 345 Consulting LLC (345 Consulting), for the purpose of poaching Wikked’s clients and diverting business opportunities for their own benefit (id., iJiJ 13-15). ”

“Ms. Stolper also details allegations concerning Ms. Burbacki’s attempts to wrest control of Ms. Stolper and Wikked’s finances from Ms. Stolper. In one example, she alleges that, acting as Ms. Stolper’s personal attorney, Ms. Burbacki advised Ms. Stolper to set up two trusts in California to safeguard her assets (id., i123). Ms. Burbacki then allegedly set up the trusts and named herself and Mr. Shimrony as the trustees in a scheme designed to give them complete control over Ms. Stolper’s assets (id.). Ms. Stolper asserts that Ms. Burbacki, who was not licensed to practice law in California and had no knowledge of California law, misrepresented the need for the trusts and the benefits of structuring them in such a way as to give Ms. Burbacki and Mr. Shimonry complete control (id.). In another example, Ms. Stolper alleges that Ms. Burbacki convinced Ms. Stolper to put her funds in an attorney escrow account, but after a few months, she stopped providing a formal accounting and withheld $125,000, which Ms. Stolper claims Ms. Burbacki kept for herself (id., iii! 31-37). ”

“Ms. Burbacki’s argument fails because although Ms. Stolper and Ms. Carey released each other and each other’s lawyers (NYSCEF Doc. No. 88, § 4 [emphasis added]), they did not release claims against their own lawyers. The plain meaning of the language of the Mutual Release is that there was no release as to any claims that each party might have against its own lawyers (Elias v Gettry Marcus CPA, P.C., 2018 WL 3117510 at *4 [SD NY, June 25, 2018, 17 Civ. 4066 (ER)] [“The most natural reading of this language is that the parties intended to release each other and those individuals acting as the counterparties’ agents, not that the parties intended to release claims against their own agents.”]). Put another way, Ms. Stolper released any and all claims against Ms. Carey and Ms. Carey’s lawyers, and Ms. Carey released any and all claims against Ms. Stolper and Ms. Stolper’s lawyers, but they did not release any claims that either of them may have as against their own lawyers. For the avoidance, to the extent that Ms. Burbecki argues that there is no carve-out of her from the release, it is of no moment because, for the reasons set forth above, Mr. Stolper’s release language does not cover her or any of her own employees in the first instance. In other words, the absence of a carve-out does not expand the language of the release itself. Accordingly, the Mutual Release is not a bar to Ms. Stolper’s claims in this action. ”

“Here, Ms. Stolper alleges that “[i]n the course of their employment as Ms. Stolper’s and Wikked’s attorneys, Burbacki consistently committed malpractice by either negligently and
improperly performing legal tasks or by negligently failing to perform necessary and required legal tasks” (Am. Compl, iJ 70). Specifically, Ms. Stolper alleges that (i) Ms. Burbacki
intentionally misrepresented her legal knowledge and experience (id., iJ 16), (ii) Ms. Burbacki represented that she was working on securing certain patents and trademarks that were necessary in connection with a skin care product line that Ms. Stolper planned to launch, but that she failed to take the necessary actions to obtain them and, as a result, the product line never launched (id., iii! 18-21), (iii) Ms. Burbacki served as Ms. Stolper’s personal lawyer but failed to provide herwith a written retainer letter as required under New York law (id., iJ 22), (iv) Ms. Burbacki misrepresented her knowledge and understanding of California law and lacked the legal acumen to perform the services that she was entrusted to perform, including advising Ms. Stolper on the benefits of setting up trusts in California and giving total control to Ms. Burbacki and Mr. Shimonry, and (v) Ms. Burbacki mismanaged the attorney escrow account by comingling and then converting Ms. Stolper’s funds (id., iii! 33-35). Taking these allegations as true and according them the benefit of every favorable inference, Ms. Stolper has sufficiently stated a cause of action for legal malpractice. Therefore, the motion to dismiss is denied as it relates to the fourth cause of action.”

CPLR 3211 dismissals are granted more frequently than might be expected,  Dedaj v Berisha  decided on July 15, 2020 Appellate Division, Second Department is almost an exception.  Two items are of interest.  First, the assignment of the legal malpractice claim is affirmed, almost without comment.  Second, the (a)(7) motion is denied almost mechanically.  This is not always the case in legal malpractice litigation.

“We agree with the Supreme Court’s determination denying the defendant’s motion to dismiss the complaint insofar as asserted against it to the extent that the motion was based upon CPLR 3211(a)(1). The documents proffered by the defendant did not utterly refute the plaintiffs’ allegations or conclusively establish that there was no attorney-client relationship between the [*2]defendant and the plaintiffs (see Anderson v Armentano, 139 AD3d at 771; Mawere v Landau, 130 AD3d 986, 990).

We also agree with the Supreme Court’s denial of the defendant’s motion to dismiss the complaint insofar as asserted against it to the extent that the motion was made under CPLR 3211(a)(7). Where, as here, evidentiary material is considered on a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), and the motion has not been converted to one for summary judgment, the criterion is whether the plaintiff has a cause of action, not whether he or she has stated one, and, unless it has been shown that a material fact as claimed by the plaintiff to be one is not a fact at all, and unless it can be said that no significant dispute exists regarding it, dismissal should not eventuate (see Guggenheimer v Ginzburg, 43 NY2d 268, 275).

Here, the allegations in the complaint, if true, are sufficient for the plaintiffs to establish a cause of action to recover damages for legal malpractice (see Mawere v Landau, 130 AD3d at 990; see also Sitar v Sitar, 50 AD3d 667, 669-670). The defendant’s evidentiary submissions did not establish that a material fact alleged in the complaint is not a fact at all and that no significant dispute exists regarding it (see Lopez v Lozner & Mastropietro, P.C., 166 AD3d 871, 873; see also Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin & Quartararo, 113 AD3d at 589).

We also agree with the Supreme Court’s determination denying that branch of the defendant’s motion which was based upon CPLR 3211(a)(3) to dismiss the fourth cause of action insofar as asserted against the defendant for lack of standing (see General Obligations Law § 13-101; Greevy v Becker, Isserlis, Sullivan & Kurtz, 240 AD2d 539, 541). That cause of action, asserted by the plaintiff Prel Dedaj, as assignee of Arben Dedaj, alleges that the defendant engaged in legal malpractice with respect to Arben Dedaj.”

Almost unheard of, Plaintiff was granted summary judgment on liability in this legal malpractice case.

Reem Contr. v Altschul & Altschul  2020 NY Slip Op 32301(U)  July 13, 2020  Supreme Court, New York County  Docket Number: 104202/2011  Judge: Kelly A. O’Neill Levy is the one-in-a-million where Plaintiff obtains a summary judgment order in a legal malpractice setting.

“”A legal malpractice claim requires a showing that the attorney was negligent, that her negligence proximately caused the loss in question, and that the pla,intiffs sustained actual
damages … To prevail on a summary judgment motion, the attorney must show that she exercised an “ordinary (degree of) skill and knowledge.” Mah v. 40-44 West J 20th St. Associates, LLC, 65 Misc3d l2l5(A) (1st Dep’t 2019) (citing Bishop v. Maurer, 33 AD3d 497, 498 [!st Dept. 2006], affd 9 NY3d 910 [2007]; Bakcheva v. Law Offs. q{Stein & Assoc, 169 AD3d 624, 625 [2d Dept. 20 J 9]). “While the issue of whether certain conduct constitutes legal malpractice is generally a factual detennination to be made by the jury. a plaintiff will be entitled to summary judgment in a case where there is no conflict at all in the evidence. the defendant’s conduct fell below any permissible standard of due care. and the plaintiffs conduct was not really involved.” Selletli v Liotti. 22 A.D.3d 739 (2d Dep’t 2005).

“Expert testimony is normally needed to establish that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession.·· Northrop v. Thorsen, 46 A.D.3d 780 (2d Dep’l 2011). To this end. Plaintiffs have submitted a signed expert report from Bennett J. Wassennan, Esq. which concludes in detail that Defendants were negligent and that there is a direct causal link between Defendants’ negligence and actual damages that Plaintiff incurred”

” This case presents an extraordinary situation where this Court can appreciate how Plaintiffs’ expert came to the conclusion that Defendants’ “failure to retain a liability expert in a
timely fashion, failure to secure a proper expert report in a timely fashion, and failure to properly oppose the underlying plaintiffs’ motion for summary judgment” was “a substantial causative factor” in a determination ofliability that was potentially avoidable where, as here, Defendants’ failure to retain a liability expert in a timely fashion, failure to secure an expert report in a timely fashion, and failure to oppose plaintiffs’ motion for summary judgment are a substantial causative factor in determining liability.

Plaintiffs’ motion for summary judgment as to liability is granted. ”

 

Schuster v Miller  2020 NY Slip Op 32291(U) July 13, 2020 Supreme Court, New York County Docket Number: 155658/2019 Judge: Kathryn E. Freed is a strange case that really seems to be about $ 10,000.  Plaintiff participated in an attorney fee request in the Matrimonial part and her affidavit there came back to haunt the proceedings in this legal malpractice case.

“As a first cause of action, plaintiff alleged that Miller advised her that she was withdrawing as counsel and recommended that the Levoritz Firm take over. Plaintiff subsequently
retained the Levoritz Firm for her representation. On October 20, 2016, the parties were to attend a conference and motion argument before Justice Grossman. However, plaintiff alleges that the Levoritz Firm resigned without notice. Plaintiff alleges that she would not have consented to the withdrawal of Miller if she was advised that discovery was ongoing and would not be extended by the court. ”

“As her second cause of action, plaintiff alleged that Miller filed a motion to collect fees from a cash bond that was made by plaintiffs ex-husband and deposited with the court. She maintained that Justice Grossman could have awarded $60,000 in fees, the amount deposited in the bond by her ex-husband, but only awarded $50,000 to the Miller Firm. Plaintiff alleged that no attempt was made to collect the remaining fees and that the $10,000 balance from the posted bond was returned to ex-her husband. Plaintiff requested a return of the retainer fee and the fees paid by her ex-husband’s spouse. ”

“As a third cause of action, plaintiff alleged that defendants were negligent because their withdrawal as the attorney of record resulted in a diminished settlement amount. She claimed that defendants’ request for $50,000, instead of asking for the entire fee claimed, ignored her financial needs….”

“Plaintiff alleges that the Miller Firm was negligent by failing to obtain the full $60,000 in legal fees which was posted in a bond by her ex-husband during the course of the matrimonial action. Plaintiff claims that, although the Miller Firm obtained $50,000, it made no effort to collect the remaining $10,000. In support of their motion to dismiss, defendants contend that, on or about October 27, 2016, two months after the Miller Firm was substituted out of the case and ceased to represent plaintiff, it submitted an Order to Show Cause for court
approval of its fees relating to its representation of plaintiff in the matrimonial underlying action. Defendants argue that, in that application, the Miller Firm requested that the court vacate a prior stay of the fee award and direct payment to them in the amount of $50,000.

Defendants maintain that, in November of 2016, plaintiff submitted an affidavit in support of the fee application wherein she authorized, consented to, and requested that an award of $50,000 of counsel fees be paid directly to the Miller Firm. Plaintiff stated:

“3. I acknowledge that as of today’s date, I owe MZWS [the Miller Firm] approximately $84,440.04 in legal fees and disbursements. 4. I hereby join in the request of MZWS to vacate the bond and authorize, consent and request that the counsel fee award of $50,000 under the Amended Decision and Order dated September 14, 2016 be ordered to be paid directly to MZWS.” Doc. 29.

Defendants contend that, on December 22, 2016, Justice Grossman approved the Miller Firm’s fee application and awarded the Miller Firm $50,000 in counsel fees despite opposition to the same by plaintiffs ex-spouse. Here, plaintiff supported and consented to the Miller Firm’s fee application of $50,000 by submitting an affidavit. At the time plaintiff signed the affidavit, the Miller Firm no longer represented her as counsel. Plaintiff was aware that the total amount of legal fees which she owed to the Miller Firm was $84,440.04. Since the
Miller Firm no longer represented plaintiff at the time the counsel fees application was made, and because plaintiff consented to the amount of counsel fees, that branch of plaintiffs complaint seeking the return of all of the fees she paid to the Miller Firm is without merit. “

Matin v Chowdhury  2020 NY Slip Op 32491(U)  June 18, 2020  Supreme Court, Queens County  Docket Number: 701633/2019  Judge: Joseph Risi is the story of possible dual representation in the purchase of a franchise.  Naturally something went wrong, and now there are claims and third-party claims of legal malpractice.

“Applying these principles to the case at bar, the court concludes that the allegations of the third-party complaint as well as certain documentary evidence submitted by the Billah defendants, including e-mails and the underlying management agreements between Chowdhury and the plaintiff in the main action, Mohammed Matin (“Matin”), do not conclusivelyestablish as a matter of law that the Billah defendants are entitled to dismissal of the third-party claim for legal malpractice asserted against them. In an action to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney’s breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Von Duerring v Hession & Bekoff, 71 AD3d 760 [2d Dept 2010]). To establish causation, a plaintiff must show that, but for the lawyer’s negligence, he
or she would have prevailed in the underlying action or would not have incurred any damages (id.).

Here, the third-party complaint sufficiently alleges a claim for legal malpractice by stating that, in 2018, Chowdhury believed that the Billah defendants were acting as her attorney with respect to the management agreement and the purchase agreement between Matin and Chowdhury, and that the Billah defendants were negligent in failing to advise and discuss with Chowdhury all the legal rights and remedies available to her, failing to know the applicable law, and failing to advise Chowdhury of a conflict of interest in representing both Matin and Chowdhury in connection with the management agreement. The third-party complaint further alleges that, as a result of this alleged negligence, Chowdhurysigned the management agreement thatshewould have not otherwise signed and forewent legal action to recover the $95,000.00 paid by Chowdhury in the purchase of the subject Subway restaurant. The Billah defendants primarily argue that they did not provide legal representation to Chowdhury in connection with the management agreement and subsequent asset
purchase agreement between Chowdhury and Matin. In support of their motion, the Billah defendants submitted an email dated June 28, 2016, in which it was stated that the Billah defendants represented Matin in the preparation of the contract of sale between Matin and Chowdhury and that Chowdhury informed Matin that she would not be represented by an attorney in the transaction, as well as the signed asset purchase agreement between the parties dated April 13, 2018, the signed management agreement between the parties dated October 4, 2017, and the signed management agreement between the parties dated January 16, 2018. These documents, however, do not completely disprove Chowdhury’s factual allegations of legal malpractice surrounding the events that occurred in connection with the management agreement and the asset purchase agreement between Matin and Chowdhury in 2018.”

Here, seller’s attorney is sued for a real estate transaction gone bad.  The dispute was about title problems.  In Jenkin v Cadore, 2020 NY Slip Op 03649  Decided on July 1, 2020
Appellate Division, Second Department, one important issue is that Plaintiffs did not use an expert affidavit in opposition to summary judgment.

“On December 14, 2012, the plaintiff, James Jenkin (hereinafter the buyer), and the defendants third-party plaintiffs, Veronica Cadore and Michelle Cadore (hereinafter together the sellers), entered into a contract for the sale of real property in Brooklyn. The sellers were represented in the transaction by the third-party defendants, Peter J. Goodman and The Goodman Law Firm (hereinafter together the Goodman defendants). The contract required that the sellers provide marketable title.

On December 21, 2012, the buyer’s title insurance company raised certain objections [*2]to the sellers’ title to the subject property. On March 7, 2013, the buyer’s attorney sent Goodman a letter scheduling the closing for April 8, 2013, with marketable title as required by the contract and with time being of the essence. On March 18, 2013, Goodman rejected the proposed closing, indicating that the sellers were unable to deliver clear and marketable title at that time. However, Goodman also advised the sellers that all substantive title issues had been resolved and that the objections to title could easily be removed by ministerial action. He cautioned the sellers that they risked a lawsuit for specific performance by the buyer if they attempted to unilaterally cancel the contract. On March 21, 2013, the sellers emailed Goodman, indicating their belief that the contract had expired and authorizing Goodman to return the down payment to the buyer. On April 3, 2013, the buyer’s attorney sent Goodman a letter stating that the title insurance company had waived its objections to title, and rescheduled the closing for April 22, 2013, with time being of the essence. When the closing did not go forward, the buyer commenced this action against the sellers, seeking, inter alia, specific performance of the contract of sale.

Thereafter, the sellers commenced a third-party action against the Goodman defendants, seeking to hold them liable, inter alia, on a theory of legal malpractice for failing to terminate the contract of sale and refund the buyer’s down payment in accordance with their instructions. Following joinder of issue in the third-party action, the Goodman defendants moved, inter alia, for summary judgment dismissing the third-party complaint. Insofar as relevant, the sellers cross-moved for summary judgment on the cause of action in the third-party complaint to recover damages for legal malpractice. In an order dated April 14, 2017, the Supreme Court granted the Goodman defendant’s motion, denied the sellers’ cross motion, and dismissed the third-party complaint. The sellers appeal.

“In an action to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney’s breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages” (Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 845; see Bells v Foster, 83 AD3d 876, 877). ” To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer’s negligence'” (Bells v Foster, 83 AD3d at 877, quoting Kennedy v H. Bruce Fischer, Esq., P.C., 78 AD3d 1016, 1018).

In order to be entitled to summary judgment dismissing a cause of action, a defendant “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” (Winegrad v New York Univ. Med. Center, 64 NY2d 851, 853). ” Once a defendant makes this prima facie showing, the burden shifts to the plaintiff to raise an issue of fact requiring a trial'” (Buczek v Dell & Little, LLP, 127 AD3d 1121, 1123, quoting Valley Ventures, LLC v Joseph J. Haspel, PLLC, 102 AD3d 955, 956).

Here, the Goodman defendants established their prima facie entitlement to judgment as a matter of law dismissing the sellers’ cause of action to recover damages for legal malpractice through the affirmation of an expert witness establishing both that Goodman did not fail to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and the sellers did not sustain actual and ascertainable damages as a result of any alleged breach of Goodman’s duty (see Buczek v Dell & Little, LLP, 127 AD3d at 1123; Valley Ventures, LLC v Joseph J. Haspel, PLLC, 102 AD3d at 956).

In opposition, the sellers failed to raise a triable issue of fact, since they did not produce any expert evidence regarding whether Goodman’s conduct constituted malpractice and caused the sellers to incur damages, and under the circumstances of this case, such expert evidence was required for an evaluation of the adequacy and propriety of Goodman’s actions (see Healy v Finz & Finz, P.C., 82 AD3d 704, 706; Northrop v Thorsen, 46 AD3d 780, 782; Natale v Samel & Assoc., 308 AD2d 568, 569). In this regard, the record demonstrates that Goodman’s conduct in the instant case did not rise to the level of malpractice as a matter of law (cf. Logalbo v Plishkin, Rubano & Baum, 163 AD2d 511, 514). The sellers’ conclusory and speculative contention that Goodman breached the duty of loyalty to them due to his professional relationship with the real estate broker [*3]handling the transaction was likewise insufficient to raise a triable issue of fact (see generally Morgan v New York Tel., 220 AD2d 728, 729).”

 

The continuous intertwining of legal malpractice and real estate in NYC cases is not merely coincidence.  It is a marriage of money and dispute resolution.  Community Assn. of the E. Harlem Triangle, Inc. v Butts  2020 NY Slip Op 32163(U)  June 29, 2020  Supreme Court, New York County  Docket Number: 656028/2018  Judge: Andrea Masley puts together some of the most powerful civil rights leaders, valuable real estate in Harlem and money.  Millions of dollars were at stake in this real estate transaction, which went badly.

“In March 1994, defendant ADC and plaintiff the Community Association of East Harlem Triangle, Inc. (CAEHT) formed a joint venture agreement for the purpose of developing the property located at 160 East 125th Street (the Property) as a Pathmark supermarket (NYSCEF Doc: No. 72, First Amended Complaint [FAC] 1{12). The parties formed East Harlem Abyssinian Triangle Corp. (EHAT Corp.) to conduct the business of the joint venture and East Harlem Abyssinian Triangle Limited Partnership (EHAT LP) to own and develop the Property (id.1f1f 13, 16). EHAT Corp. was the general managing partner of EHAT LP, and CAEHT and ADC each held 50% of EHAT Corp.’s stock (id. 1J1f14-15). EHAT Corp. holds a 51% interest in EHAT LP and the New York City Economic Development Corporation holds a 49% interest in EHAT LP (id. 1111 19). ”

“On March 24, 2014, the Board held a meeting to consider an offer from Extell Development Company (Extell), a New York City based real estate development firm, to purchase the Property for $39 million (id. 1142). Simpson, Howard and Sozio personally · attended the meeting (id.1f 46). During the meeting, a CAEHT representative asked Howard whether there were any other offers to purchase the Property aside from that ofExtell (id.). Before Howard could answer, however, Simpson falsely stated that Extell was the only party to show an interest in purchasing the Property (id.). Despite knowing this statement was untrue, neither Sozio nor Howard corrected Simpson at or after the meeting, or otherwise disclosed the higher Peebles/Integrated offer (id. W 47-50). Plaintiffs allege that the Peebles/Integrated offer was deliberately concealed from it because Simpson, WM, ADC, Butts, Howard, Sozio and Ariel had previously agreed upon a scheme to steer the Property to Extell (id. W 72-74). In this connection, at the March 2, 2014 meeting, the Board also discovered that ADC had already received an advance payment from Extell in the amount of $2.5 million at an unspecified date prior to the  eeting, which Simpson, Howard, Sozio and Butts had failed to disclose (id.1f 45).”

“Plaintiffs allege that, as a direct and proximate consequence of the fraudulent concealment of the Peebles/Integrated offer, EHAT Corp. was damaged in the amount of
$3 million, or the difference between the amount paid by Extell to purchase the Property and the market value of the Property (id., 111197, 104, 111, 118, 125). The Complaint sets
forth 58 causes of action in various permutations against different combinations of the defendants, sounding in fraud, breach of fiduciary duty, and aiding and abet, together with
a claim pursuant to Business Corpc>rations Law (BCL) § 720 and a demand for punitive damages. ”

“The WM defendants assert that plaintiffs’ claims against them are barred by the three-year statute of limitations for professional malpractice under CPLR 214(6). They argue that plaintiffs have characterized their cause of action as fraud merely to circumvent the time-bar by taking advantage of the six-year limitations period of CPLR 213(8). Emphasizing that the WM defendants were acting the capacity as plaintiffs’ counsel, they contend that the essence the Complaint is that Simpson failed to inform his clients of material information in context of his legal representation.

The New York State Legislature amended CPLR 214(6) in 1996 to address the” effect of decisions that “abrogat[ed] and circumvent[ed]” the original legislative intent by’· allowing actions that were technically malpractice actions to proceed under a six-year contract statute of limitations (Revised Assembly Memo in Support, Bill Jacket, L 1996, ch 623). The legislative history explains that “where the underlying complaint is one which essentially claims thatthere was a failure to utilize reasonable care or where acts of omission or negligence are alleged or claimed, the statute of limitations shall be three years … regardless of whether the theory is based in tort or in a breach of contract” (In re
R.M. Kliment & Frances Halsband, Architects, 3 NY3d 538, 541-542 [2004]). Accordingly, a purported fraud claim against an attorney will be dismissed if it actually sounds in legal
malpractice (Kinberg v Garr, 60 AD3d 597, 597 [1st Dept 2009]). Thus, if all the WS defendants did was breach the Rules of Professional Conduct by negligently failing to keep
plaintiffs apprised of developments regarding the Property or providing them with information, then they would be entitled to dismissal.

Defendants’ analysis, however, disregards plaintiffs’ key allegation that Simpson deliberately lied about the existence of additional offers. Regardless of whether the mispresentation was made in the course of the WM defendants’ legal representation, the alleged deception takes the claim out of the realm of mere negligence. The time-bar will not apply where there exists a fraud claim that is in essence “sufficiently distinct” from a claim of legal malpractice (Johnson v Proskauer Rose LLP, 129 AD3d 59, 70 [1st Dept 2015]). The fact that a fraud against a client might a/so constitute a departure from the standard of reasonable care, or that plaintiffs might assert other claims that are mere malpractice, does not render the entire Complaint untimely.”

“Epiphany Community Nursery School v Levey, 171AD3d1 (1st Dept 2019), does·  not require a different result. There, the Court upheld the dismissal of a fraud claim against an accounting firm on the ground that it was, in fact, duplicative of an untimely malpractice claim (id. at 11 ). Although the decision recited that “defendants” made false material representation (id. at 8), it does not appear that those parties included the accountant. Notably, the lower court specifically distinguished between the malpractice
and fraud claims, and found that the former were time barred, and the latter were deficient for failure to allege justifiable reliance – not that they were duplicative (Epiphany
Community Nursery School v Levey, 2017 WL 3386267, *6-9; n.16 [Sup Ct, NY County 2019)). In any event, there is no indication that the First Department intended to overrule Johnson and hold that every fraud claim asserted against an attorney is subject to the limitations period for malpractice. “

Real Estate claims fill a large part of the Legal Malpractice docket in New York.  This is certainly not surprising, as real estate might be the largest economic engine for New York City, and there is certainly a lot of money moving around in the real estate market.  Moncho v Miller  2020 NY Slip Op 31821(U)  June 12, 2020  Supreme Court, New York County  Docket Number: 155382/2017  Judge: W. Franc Perry is a fine example.  Here, the question surrounds standing, privity and whose ox was gored.

“The following facts are taken from the second amended complaint. Plaintiffs allege that, at all relevant times, Moncho was the sole shareholder of 261 East 78 Realty Corp. (NY St Cts
Elec Filing System [NYSCEF] Doc No. 149, second amended verified complaint, ¶ 2). From April 1, 2007 through February 28, 2014, 261 East 78 Realty Corp. owned a six-story medical office building located at 261 East 78th Street in Manhattan (id., ¶ 4). Miller was the sole member of 261 Lofts Manager, LLC (id., ¶ 6). Sprei was Miller’s business associate (id., ¶ 8). On December 6, 2011, 261 East 78 Realty Corp. filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York (id., ¶ 27).

On January 1, 2013, Moncho, in his capacity as president of 261 East 78 Realty Corp., entered into a retainer agreement with the DelBello firm (id., ¶ 11). Pursuant to the retainer
agreement, the DelBello firm was to provide legal services to 261 East 78 Realty Corp., including, but not limited to, the prosecution of a Chapter 11 bankruptcy proceeding (id., ¶ 12). Pasternak was one of the attorneys who was anticipated to offer services to 261 East 78 Realty Corp. (id., ¶ 13). Pasternak was a non-equity partner in the DelBello firm (id., ¶ 14). Plaintiffs allege that, upon confirmation of the bankruptcy plan, the DelBello firm and Pasternak continued to provide legal services to Moncho individually (id., ¶ 16). The DelBello firm continued to send invoices to Moncho (id., ¶¶ 18-19; exhibit C).

Approximately one week later, on January 10, 2013, Pasternak began suggesting that Moncho utilize Sprei as a plan funder and Madison Realty Capital as lender (id., ¶ 29). Plaintiffs
allege, upon information and belief, that neither Pasternak nor the DelBello firm performed any due diligence as to Sprei or Miller’s suitability as plan funders (id., ¶ 30). Plaintiffs allege that there were at least seven lawsuits filed against Sprei and/or Miller, with similar allegations and  which resulted in judgments against Miller and Sprei (id., ¶ 31). Plaintiffs allege, upon information and belief, that Sprei induced Pasternak to recommend him to plaintiffs by promising to pay him a personal brokerage commission in the amount of $25,000 (id., ¶ 32). According to plaintiffs, Sprei, in fact, paid Pasternak a $25,000 commission (id., ¶ 33). In September 2013, Pasternak negotiated a settlement of 261 East 78 Realty Corp.’s debt
with the secured creditor (id., ¶ 43). One of the key terms of the settlement was that the secure creditor would foreclose and plaintiffs would lose the property if the reorganization plan were not fully funded by Friday, February 28, 2014 (id., ¶ 44).”

“Pasternak next argues that the “inability to fund” legal malpractice claim should be dismissed because it is refuted by documentary evidence, and fails to allege but for causation. In
addition, Pasternak contends that the legal malpractice claim based on his alleged conflict of interest in accepting a commission fails to allege but for causation. Pasternak maintains that he only represented 261 East 78 Realty Corp. Finally, Pasternak argues that the Bankruptcy Court’s Fee Order granting fees bars the legal malpractice claims based on the doctrine of res judicata.

To state a cause of action for legal malpractice, the plaintiff must allege that “the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession,” and that the “breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007], quoting McCoy v Feinman, 99 NY2d 295, 301-302 [2002]). Violations of disciplinary or ethical rules do not, by themselves, give rise to a cause of action (Sumo Container Sta. v Evans, Orr, Pacelli, Norton & Laffan, 278 AD2d 169, 170-171 [1st Dept 2000]; Lavanant v General Acc. Ins. Co. of Am., 212 AD2d 450, 451 [1st Dept 1995]). However, “liability can follow where the client can show that he or she suffered actual damage as a result of the conflict” (Tabner v Drake, 9 AD3d 606, 610 [3d Dept 2004]). “Unsupported factual allegations, conclusory legal argument or allegations contradicted by documentation, do not suffice” (Dweck Law Firm v Mann, 283 AD2d 292, 293 [1st Dept 2001]). “Moreover, the client must plead specific factual allegations establishing that but for counsel’s deficient representation there would have been a more favorable outcome to the underlying matter” (id.). “To recover damages for legal malpractice, a plaintiff must prove, inter alia, the existence of an attorney-client relationship” (Moran v Hurst, 32 AD3d 909, 910 [2d Dept 2006]). “Since an attorney-client relationship does not depend on the existence of a formal retainer agreement or upon payment of a fee, a court must look to the words and actions of the parties to ascertain the existence of such a relationship” (Nelson v Kalathara, 48 AD3d 528, 529 [2d Dept 2008] [citation omitted]; see also Matter of Priest v Hennessy, 51 NY2d 62, 71 [1980] [payment of fee by third party does not create attorney-client relationship between attorney and payor]). “[A]n attorneyclient relationship is established where there is an explicit undertaking to perform a specific task” (Wei Cheng Chang v Pi, 288 AD2d 378, 380 [2d Dept 2001], lv denied 99 NY2d 501 [2002]).

However, “[t]he unilateral belief of a plaintiff alone does not confer upon him or her the status of a client” (Moran, 32 AD3d at 911). Pasternak has failed to establish the absence of an attorney-client relationship with Moncho. While Pasternak points out that the retainer agreement was between 261 East 78 Realty Corp. and the DelBello firm (NYSCEF Doc No. 240), an attorney-client relationship does not depend on the existence of a retainer agreement. Moreover, the fact that the Bankruptcy Court authorized the DelBello firm to appear on behalf of 261 East 78 Realty Corp. is not dispositive (see Terio v Spodek, 63 AD3d 719, 721 [2d Dept 2009] [“the fact that it was purportedly not the attorney of record at the time of a hearing before the United States Bankruptcy Court to determine whether the particular asset at issue qualified as an exemption, is not dispositive of the existence of an attorney-client relationship during the period of the alleged negligence”]). The invoices relied upon by Pasternak do not conclusively establish that Pasternak was not Moncho’s attorney.
In any event, the legal malpractice claims are legally insufficient.

Although plaintiffs allege that Pasternak “introduce[ed] his client to a plan funder who he knew lacked the ability to fund a reorganization plan” (NYSCEF Doc No. 149, second amended
verified complaint, ¶ 162), plaintiffs do not allege any damages resulting from this purported negligence (see Lavanant, 212 AD2d at 451). Moreover, plaintiffs’ allegation that “had Moncho been able to utilize his preferred choice of plan funder, the Lightstone Group, none of the injuries incurred as the result of Miller and Sprei’s acts would have occurred” (NYSCEF Doc No. 149, second amended verified complaint, ¶ 169) is too speculative (see Brooks v Lewin, 21 AD3d 731, 734-735 [1st Dept 2005], lv denied 6 NY3d 713 [2006] [“speculation on future events is insufficient to establish that the defendant lawyer’s malpractice, if any, was a proximate cause of any such loss”]). ?