Judiciary Law § 487 is ancient, strict and sparse.  It rarely succeeds and in Kaufman v Moritt Hock & Hamroff, LLP  2021 NY Slip Op 01969 [192 AD3d 1092] March 31, 2021 Appellate Division, Second Department is denied outright.

“Relief pursuant to Judiciary Law § 487 “is not lightly given” (Chowaiki & Co. Fine Art Ltd. v Lacher, 115 AD3d 600, 601 [2014]), and requires a showing of “egregious conduct or a chronic and extreme pattern of behavior on the part of the defendant attorneys” (Savitt v Greenberg Traurig, LLP, 126 AD3d 506, 507 [2015] [internal quotation marks omitted]; see Facebook, Inc. v DLA Piper LLP [US], 134 AD3d 610, 615 [2015]; Wailes v Tel Networks USA, LLC, 116 AD3d 625, 625-626 [2014]). “A cause of action alleging a violation of Judiciary Law § 487 must be pleaded with specificity” (Betz v Blatt, 160 AD3d 696, 698 [2018]; see Sammy v Haupel, 170 AD3d 1224, 1225 [2019]).

The complaint essentially alleges only that in the underlying Surrogate’s Court [*2]matters, the defendants advocated for certain legal and factual positions on behalf of their client. Under these circumstances, the Supreme Court properly granted that branch of the defendants’ motion which was pursuant to CPLR 3211 (a) (7) to dismiss the complaint, finding that these allegations, even if proven, would not entitle the plaintiff to relief pursuant to Judiciary Law § 487 (see Sammy v Haupel, 170 AD3d at 1225-1226; Seldon v Lewis Brisbois Bisgaard & Smith LLP, 116 AD3d 490, 491 [2014]; Schiller v Bender, Burrows & Rosenthal, LLP, 116 AD3d 756, 759 [2014]; see also Bill Birds, Inc. v Stein Law Firm, P.C., 164 AD3d 635, 636-637 [2018], affd 35 NY3d 173 [2020]).”

Successful Judiciary Law § 487 cases are very rare.  The hurdles are quite high for the proponent as is shown in Cordell Marble Falls, LLC v Kelly
2021 NY Slip Op 00833 [191 AD3d 760] February 10, 2021 Appellate Division, Second Department.

“In April 2013, nonparty Whitecap (US) Fund, L.P. (hereinafter Whitecap), commenced an action against the plaintiffs in which it was alleged, inter alia, that the plaintiffs breached their fiduciary duties related to a land development project (hereinafter the prior action). The defendants, Munsch Hardt Kopf & Harr, P.C., and Cara Mittleman Kelly, were the attorneys who represented Whitecap in the prior action. During the course of the prior action, Whitecap submitted affidavits executed by Eric Kamisher and Westin Lovy in which they stated that the plaintiffs failed to provide required financial disclosure. In October 2013, after it was learned that the plaintiffs had complied with their financial disclosure obligations, the Supreme Court granted Whitecap’s motion to voluntarily discontinue the prior action.

Thereafter, the plaintiffs commenced this action against the defendants to recover damages for violation of Judiciary Law § 487 based on the defendants’ filing of the Kamisher and Lovy affidavits in the prior action, which the plaintiffs alleged contained knowingly false [*2]information intended to deceive the Supreme Court. The defendants moved pursuant to CPLR 3211 (a) to dismiss the complaint. In an order entered October 23, 2017, the Supreme Court granted the defendants’ motion. Subsequently, a judgment was entered on November 21, 2017, in favor of the defendants and against the plaintiffs, dismissing the complaint. The plaintiffs appeal.

“In assessing the adequacy of a complaint under CPLR 3211 (a) (7), the court must give the pleading a liberal construction, accept the facts alleged in the complaint to be true and afford the plaintiff ‘the benefit of every possible favorable inference’ ” (J.P. Morgan Sec. Inc. v Vigilant Ins. Co., 21 NY3d 324, 334 [2013], quoting AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 591 [2005]). “A court is, of course, permitted to consider evidentiary material submitted by a defendant in support of a motion to dismiss pursuant to CPLR 3211 (a) (7)” (Sokol v Leader, 74 AD3d 1180, 1181 [2010]; see CPLR 3211 [c]). “If the court considers evidentiary material, the criterion then becomes ‘whether the proponent of the pleading has a cause of action, not whether he [or she] has stated one’ ” (Sokol v Leader, 74 AD3d at 1181-1182, quoting Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). “[B]are legal conclusions and factual claims which are flatly contradicted by the record are not presumed to be true” (Parola, Gross & Marino, P.C. v Susskind, 43 AD3d 1020, 1021-1022 [2007]).

Under Judiciary Law § 487 (1), an attorney who “[i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party” is liable to the injured party for treble damages (see Shaffer v Gilberg, 125 AD3d 632, 636 [2015]; Curry v Dollard, 52 AD3d 642, 644 [2008]). “[V]iolation of Judiciary Law § 487 requires an intent to deceive” (Moormann v Perini & Hoerger, 65 AD3d 1106, 1108 [2009]) as opposed to conduct which is negligent. Here, the evidentiary material submitted by the defendants in support of their motion, which included, among other things, the motion papers filed in the prior action and excerpts of Lovy’s deposition testimony given in the prior action, was sufficient to demonstrate that the fact as alleged by the plaintiffs—that the defendants knew that certain statements set forth in the Kamisher and Lovy affidavits when submitted in the prior action were false with intent to deceive the court—was not a fact at all (see Shaffer v Gilberg, 125 AD3d at 636; Siskin v Cassar, 122 AD3d 714, 717 [2014]; see generally Guggenheimer v Ginzburg, 43 NY2d at 274-275). The complaint, as amplified by the plaintiffs’ evidentiary submissions in opposition to the defendants’ motion, contained only conclusory allegations, without any factual basis, that the defendants acted to deceive the court when submitting the Kamisher and Lovy affidavits in the prior action (see generally Patel v Gardens at Forest Hills Owners Corp., 181 AD3d 611, 613 [2020]).”

The headline is somewhat misleading.  There may have been deceit, but for Judiciary Law § 487 purposes, the deceit did not take place during a litigation.  Pszeniczny v Horn
2021 NY Slip Op 02553 [193 AD3d 1091] April 28, 2021 Appellate Division, Second Department is the rare case where a complaint survives against an attorney not in actual privity.  That statement, too, is somewhat misleading,  The Court found that there was a “privity-like” relationship.

“”Liability to a third party may attach for negligent misrepresentation where there is ‘(1) an awareness by the maker of the statement that it is to be used for a particular purpose; (2) reliance by a known party on the statement in furtherance of that purpose; and (3) some conduct by the maker of the statement linking it to the relying party and evincing its understanding of that reliance’ ” (Rides Unlimited of N.Y., Inc. v Engineered Energy Solutions, LLC, 184 AD3d 695, 696 [2020], quoting Prudential Ins. Co. of Am. v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377, 384 [1992]).

Here, the complaint sufficiently pleaded a cause of action to recover damages for negligent misrepresentation. Contrary to the defendant’s contentions, the complaint alleged a privity-like relationship, as it alleged that the defendant knew the plaintiff was relying on the guaranty to enter into the stipulation, delivered the guaranty to the plaintiff, and assured the plaintiff that Serao had signed the guaranty (see Prudential Ins. Co. of Am. v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d at 385; Remediation Capital Funding LLC v Noto, 147 AD3d 469, 469 [2017]; Lyons v Medical Malpractice Ins. Assn., 286 AD2d 711, 711 [2001]). Accordingly, the Supreme Court should have denied those branches of the defendant’s motion which were to dismiss the first and second causes of action.

“ ’The elements of a cause of action for fraud require a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages. A claim rooted in fraud must be pleaded with the requisite particularity under CPLR 3016 (b)’ ” (Shahid v Ridgewood Bushwick Senior Citizens Council, Inc., 181 AD3d 744, 745 [2020], quoting Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559 [2009]).

Here, contrary to the defendant’s contention, the complaint adequately pleaded a cause of action to recover damages for fraud, as it alleged, in effect, that the defendant misrepresented to the plaintiff that Serao had signed the guaranty in order to persuade the plaintiff to sign the stipulation, that the defendant knew Serao had not signed the guaranty, and that the plaintiff relied on the guaranty in agreeing to execute the stipulation (see e.g. Minico Ins. Agency, LLC v B&M Cleanup Servs., 165 AD3d 776, 777 [2018]; Fox Paine & Co., LLC v Houston Cas. Co., 153 AD3d 673, 677 [2017]).

Accordingly the Supreme Court properly denied that branch of the defendant’s motion which was to dismiss the third cause of action.

However, the Supreme Court should have granted that branch of the defendant’s motion which was to dismiss the fourth cause of action. “[A] Judiciary Law § 487 cause of action requires that the alleged deceit occurred during a judicial proceeding in which the plaintiff was a party” (Gorbatov v Tsirelman, 155 AD3d 836, 840 [2017]). Here, the complaint failed to allege that the deceit occurred during a judicial proceeding or before any court (see US Suite LLC v Baratta, Baratta & Aidala LLP, 171 AD3d 551 [2019]; Henry v Brenner, 271 AD2d 647, 647-648 [2000]; see also Gorbatov v Tsirelman, 155 AD3d at 840).”


Dial Car Inc. v Tuch & Cohen, LLP  2021 NY Slip Op 30407(U) February 10, 2021 Supreme Court, Kings County Docket Number: 514138/20 Judge: Leon Ruchelsman gives a nice description of the current standard of JL § 487 in the Second Department.  This standard is strikingly different from that of the First Department.

“Concerning Judiciary Law §487, it is well settled that to establish such a cause of action the plaintiff must present evidence an attorney acted “with intent to deceive” either the
court or any party (see, Moormann v. Perini Hoerger, 65 AD3d 1106, 886 NYS2d 49 [2d Dept., 2009]). The allegations concerning the deception must be pled with particularity (Betz v. Blatt, 160 AD3d 696, 74 NYS3d 75 [2d Dept., 2018]). Moreover, the cause of action is only applicable if the conduct alleges took place in a proceeding where the plaintiff was a party (Barouh v. Law offices of Jason L. Abelove, 131 AD3d 988, 17 NYS3d 144 [2d Dept., 2015]). First, it must be noted that the Second Department no longer maintains a cause of action pursuant to Judiciary Law §487 based upon an attorney’s egregious, extreme or chronic delinquent activities. Rather, “the only liability standard recognized in Judiciary Law §487 is that of an intent to deceive” (Dupree v. Vorhees, 102 AD3d 912, 959 NYS2d 235 [2d Dept., 2013]). Second, considering the intent to deceive, such intent can hardly be demonstrated. The complaint merely alleges in conclusory fashion that the defendants “have continuously consented to deceit or collusion, with the intent to deceive and harm Dial” (see, Complaint, ¶157) without elaborating upon those allegations. The mere pursuant of the dismissal of the Guzman lawsuit can hardly be considered an intent to deceive the plaintiff. Further, since
that is the only conduct alleged wherein Dial was a party in a pending action all of the other allegations of the complaint cannot sustain a cause of action in this regard. Therefore, the
motion seeking to dismiss the seventh cause of action is granted. “

Vernum v Freyer  2021 NY Slip Op 50120(U) [70 Misc 3d 1218(A)]  Decided on February 11, 2021 Supreme Court, Warren County Muller, J. describes a curious representation and ends with a split decision.

“Defendant is a licensed attorney in New York who focuses her practice primarily on real estate transactions. In May 2017 she was retained by plaintiff, as executrix of the estate of Clay A. Beaudet (hereinafter Clay), to represent her in the sale of two parcels of land located at 9 Rhode Island Avenue and 0 Rhode Island Avenue in the Town of Queensbury, Warren County. 9 Rhode Island Avenue is .14 acres in size and improved by a single-family dwelling. 0 Rhode Island Avenue — which is located immediately adjacent to 9 Rhode Island Avenue — is .21 acres in size and unimproved. At the time of this initial retainer, plaintiff had contracted to sell both parcels of land to DKC Holdings, Inc. (hereinafter DKC). These contracts were subsequently cancelled, however, when certain title issues were discovered and DKC was unwilling to await their resolution.

Specifically, defendant discovered that Clay never held title to 0 Rhode Island Avenue. Both 9 Rhode Island Avenue and 0 Rhode Island Avenue were previously owned by Dorothy Skellie (hereinafter Dorothy) and her husband, Ernest Skellie (hereinafter Ernest), as tenants by the entirety. Ernest died in 1998, leaving his interest in the property to Dorothy, who then married Clay. In 2006, Dorothy executed a warranty deed conveying 9 Rhode Island Avenue from herself to herself and Clay as tenants by the entirety. She did not, however, convey title to 0 Rhode Island Avenue, which she continued to own individually until dying intestate in 2013. [*2]Upon her death, Clay acquired an ownership interest in 0 Rhode Island Avenue as Dorothy’s surviving spouse. Defendant advised that an investigation was necessary, however, to determine whether Dorothy had other heirs who might also have an interest in the property.”

“The Court finds that the documentary evidence succeeds in refuting plaintiff’s first cause of action. It is clear that—until defendant discovered the title issues with respect to 0 Rhode Island Avenue—plaintiff believed the property was owned by her father. Indeed, she paid the property taxes on 0 Rhode Island Avenue in 2016 as the executrix of his estate. It is likewise clear that plaintiff wanted defendant to contact Bernard and in fact assisted defendant in [*3]contacting him to ensure that she could close on the sale of 0 Rhode Island Avenue simultaneous with the sale of 9 Rhode Island Avenue, as intended. In this regard, it bears noting that plaintiff signed the January 2018 sales contract for 0 Rhode Island Avenue as “seller.” At the time of signing, she was aware of the title issues relative to the property and was actively assisting defendant in resolving them. The record thus demonstrates that plaintiff was fully aware of and consented to defendant’s simultaneous representation of her in the sale of 9 Rhode Island Avenue, and her and Bernard in the sale of 0 Rhode Island Avenue.

That being said, the Court declines to find that this documentary evidence refutes plaintiff’s second cause of action. At the outset, it appears that the mortgage was intended to cover 9 Rhode Island Avenue, but erroneously included a description of 0 Rhode Island Avenue. Indeed, the mortgage expressly states that the property covered is improved by a one or two-family residence—and 0 Rhode Island Avenue is unimproved. Further, the mortgagee clearly believed that the mortgage covered 9 Rhode Island Avenue, as it paid the property taxes on 9 Rhode Island Avenue from escrowed funds and included the address of the property in its payoff letter. Finally, a mortgagee would unlikely accept a vacant parcel like 0 Rhode Island Avenue as security for a $62,997.71 loan. The problem, however, is that the mortgage was no longer valid at the time the properties were sold. As such, the mortgage should not have been paid from the proceeds of any sale—be it the sale of 9 Rhode Island Avenue or the sale of 0 Rhode Island Avenue.”

“Having found that defendant established her entitlement to dismissal of the first cause of action based upon documentary evidence, the Court focuses solely upon whether she is entitled to dismissal of the second cause of action on the grounds of failure to state a claim. In this regard, it is impossible to say whether the outcome in the underlying matter would have been more favorable to plaintiff had the mortgage not been paid from the proceeds of sale for 9 Rhode Island Avenue. To the extent that the purchasers were related and their title agent, Maple Abstract, required the mortgage to be paid off and satisfied as a condition to issuance of the title policies,[FN2] it is possible that the sales would have fallen through had defendant not paid the mortgage off. Plaintiff would thus have remained responsible for the properties and their concomitant costs until another buyer came along. If the sales had somehow gone forward notwithstanding plaintiff’s refusal to pay off the mortgage and she had walked away with the $48,162.95, then litigation of some sort surely would have resulted. While it does not appear that Clay’s estate would have born any liability for the amount due and owing under the loan,[FN3] his estate would likely have been named in the litigation—thus resulting in legal fees for [*5]plaintiff.

In any event, mindful that plaintiff must be accorded the benefit of every favorable inference, the Court finds that defendant has failed to establish her entitlement to dismissal of the second cause of action on the grounds of failure to state a cause of action.”


“Words and actions” can create a retention agreement even if there is no adequate writing.  This is one of the holdings in Fricano v Law Offs. of Tisha Adams, LLC  2021 NY Slip Op 03306 Decided on May 26, 2021
Appellate Division, Second Department.

“Here, the defendants failed to eliminate triable issues of fact as to whether their attorney-client relationship with Fricano included litigation of her insurance claim. The undated copy of an alleged retainer agreement between the defendants and Fricano, which is not signed by Adams, submitted in support of the defendants’ motion for summary judgment, failed to establish, prima facie, that the defendants did not undertake to represent Fricano in litigation against Travco (see Terio v Spodek, 63 AD3d at 721). Further, while the defendants met their initial burden of demonstrating that they had no contract or relationship with Lakeside (see Moran v Hurst, 32 AD3d 909, 911), viewing the evidence in the light most favorable to the plaintiffs, the plaintiffs’ submissions in opposition raised a triable issue of fact as to whether Adams’s words and actions created a contract and/or an attorney-client relationship between the defendants and both Fricano and Lakeside (see Biberaj v Acocella, 120 AD3d 1285, 1287; Terio v Spodek, 63 AD3d at 721).

The defendants also failed to establish, as a matter of law, that the plaintiffs could not have prevailed in an action against Travco (see Blumencranz v Botter, 182 AD3d 568, 569; see also 83 Willow, LLC v Apollo, 187 AD3d 563, 564). In support of their motion for summary judgment, the defendants did not submit a complete copy of the insurance policy, nor a copy of the underlying application for insurance coverage, and thus did not prove that Fricano misrepresented herself to Travco such that the plaintiffs would not have succeeded in a litigation disputing Travco’s denial of their claim. Moreover, even if there were no dispute as to whether Fricano made the alleged misrepresentation, the materiality of such alleged misrepresentation typically is a question of fact for the jury (see Liang v Progressive Cas. Ins. Co., 172 AD3d 696, 698; Zilkha v Mutual Life Ins. Co. of N.Y., 287 AD2d 713, 714).”

In this short decision, the Appellate Division recited the basic mantra of legal malpractice, but chose not to explain where Plaintiff failed.  Little guidance to bar or counsel is offered in Muller v Schecter  2021 NY Slip Op 03326 Decided on May 26, 2021 Appellate Division, Second Department.

“”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 plaintiff to sustain actual and ascertainable damages” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442, quoting McCoy v Feinman, 99 NY2d 295, 301-302; see Ferrigno v Jaghab, Jaghab & Jaghab, P.C., 152 AD3d 650, 652). “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 attorney’s negligence” (Wray v Mallilo & Grossman, 54 AD3d 328, 329; see Ferrigno [*2]v Jaghab, Jaghab & Jaghab, P.C., 152 AD3d at 652; Marino v Lipsitz, Green, Fahringer, Roll, Salibury & Cambria, LLP, 87 AD3d 566).

Here, accepting as true the facts alleged in the complaint, and according the plaintiff the benefit of every favorable inference (see Leon v Martinez, 84 NY2d at 87-88), the complaint failed to sufficiently allege a failure by the defendants to exercise the ordinary skill and knowledge commonly possessed by a member of the legal profession and that any breach of such duty proximately caused damages (see Cali v Maio, 189 AD3d 1337). Accordingly, the Supreme Court properly granted that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(7) to dismiss the complaint (see Janker v Silver, Forrester & Lesser, P.C., 135 AD3d 908, 910; Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 847).”

Plaintiff sues attorney for settling a motor vehicle case for $ 1500.  Case runs into trouble for two reasons.  First, there has already been a determination that Plaintiff authorized the settlement through his attorney.  Second, while Plaintiff says he needs a Turkish translator, he repeatedly answered the questions in English.

The court dismissed all claims in Guliyev v Banilov & Assoc., P.C.  2021 NY Slip Op 31728(U) May 17, 2021 Supreme Court, Kings County Docket Number: 516045/2020 Judge: Peter P. Sweeney.

“Plaintiff’s claims arise from an underlying action captioned Shahin Guliyev v. David Han and Gelco Corp. [Index # 515757/2016] where plaintiff sought damages for injuries allegedly sustained in a motor vehicle accident [MVA]. After the MVA action was settled for the sum of $1500.00, plaintiff changed attorneys and plaintiff’s new counsel moved to vacate the settlement. Han and Gelco Corp. then moved to compel enforcement of the settlement. In opposition to the enforcement motion, plaintiff argued that he had not authorized the settlement. The Court directed that a framed issue hearing be conducted to hear and determine whether Shahln Guliyev’s prior counsel, Harlan Wittenstein, of counsel to Nick Banilov, had the authority to enter into the settlement agreement. Therein, plaintiff claimed there was a language barrier and that the offer had not been properly conveyed to him. The Referee determined that plaintiff was not a credible witness and that his prior counsel had the authority to settle the case. Referee Sunshine stated: “The court notes that throughout the hearing, Guliyev answered the questions in English before they were translated to him in Turkish finding that he understands the English language very well. Furthermore, the court notes that Guliyev had no difficulties speaking English during the court proceedings. In fact, he kept responding in English when questioned, “I don’t know”. “ “He said he did not  understand what the Sabrina, the office member stated to him but then testified that she told him that he should come to the office to obtain the $1,500.00 so he clearly understood.”

“Under CPLR 3211[a][5], a cause of action may be dismissed because of collateral estoppel [issue preclusion] and/or res judicata [claim preclusion]. The proponent of the application of the doctrine of collateral estoppel has the burden of establishing an identity of
issues, and the opponent of the application of the doctrine has the burden of establishing an absence of a full and fair opportunity to litigate (see Klapper v. Cypress Hills Cemetery, 184 AD3d 813; Parker v. Blauvelt Volunteer Fire Co., 93 NY2d 343, 349; Schwartz v. Public Adm’r
of County of Bronx, 24 NY2d 65, 71). Here, defendant Banilov  submitted a copy of plaintiff’s opposition to the enforcement motion, a copy of the Court’s order determining the enforcement motion, a copy of the Referee’s Report, and the transcript of the framed issue hearing. Banilov’s submissions establish that the question of plaintiff’s consent to the agreement was previously determined. Accordingly, the doctrine of collateral estoppel precludes the plaintiff from relitigating the issue of whether he consented to the settlement (see Karakash v Trakas, 163 AD3d at 789). In opposition, plaintiff failed to show that he lacked the opportunity to litigate the issue in the prior action.

On a motion to dismiss based upon documentary evidence under CPLR §3211[a][1], dismissal is only warranted if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law” (Walker v. Kramer, 63 AD3d 723 quoting
Klein v Gutman, 12 AD3d 417, 418, 784 NYS2d 581 [2004] [citations omitted]; see CPLR 3211[a][1]). Here, the defendants’ documentary evidence including the prior Court’s decision/order, plaintiff’s opposition to the enforcement motion, the Referee’s report, and the
transcript of the framed issue hearing, conclusively establishes as a matter of law a defense to plaintiff’s claim that he did not consent to the settlement in the underlying action (see CPLR § 3211[a][1]). “

Legal malpractice cases in real estate transactions sometimes are about multi-million dollar losses, sometimes about smaller deals gone bad.  FTF Lending, LLC v Mavirides Moyal Packman & Sadkin, LLP  2021 NY Slip Op 31502(U) May 4, 2021 Supreme Court, New York County Docket Number: 153620/2020 Judge: Margaret A. Chan is about a smaller deal.

“On or about May 30, 2018, FTF retained MMPS, which held itself out as “experts in real estate financing,” to represent FTF in loan transaction with 2330 Dutch and 2330 Dutch’s sole member Dwayne A. Samuels (“Samuels”) (id., ¶’s 8, 9). Weinberg is an associate at MMPS, who practices in MMPS’s commercial real estate practice group (id., ¶ 3).

On or about May 26, 2018, FTF and Samuels executed a Term Sheet, which contemplated FTF providing a to-be named entity owned by Samuels a $375,000 loan related to first mortgage financing for 2330 Dutch Broadway, Elmont, New York 11003 (the “Property”) (id, ¶ 12). As part of the transaction, FTF required, inter alia, that the Property be transferred from Samuels to 2330 Dutch, a title insurance policy be secured, a closing protection letter, and a first mortgage lien on
the Property (id, ¶ 15). On May 30, 2018, MMPS sent a check list of these requirements to counsel for Samuels and 2330 Dutch, Robert Thony (id., ¶ 14). On June 8, 2018, Thony sent MMPS a copy of an unmarked and marked up purported title reports purportedly prepared by Fidelity National Title Insurance Company (“Fidelity”) and a purported closing protection letter (id., ¶¶16, 17). Both the marked and unmarked purported title reports contained a purported deed falsely evidencing the transfer of the Property by Samuels to 2330 Dutch (id., ¶ 18).

Defendants scheduled the loan to close on June 12, 2018, and, at that time, on advice of defendants, FTF entered into a certain loan with 2330 Dutch in the amount of $375,000 (id., ¶ 19). In connection with the loan, 2330 Dutch also executed a certain Mortgage and Security Agreement, and Samuels executed a guaranty, which guaranteed all of 2330 Dutch’s obligations under the loan (id., 20).

Neither 2330 Dutch nor Samuels ever made payments and, as a result, FTF sought to foreclose on the Property (id., ¶ 25). After conducting a title search, on or about June 30, 2019, FTF discovered that the unmarked purported title report and marked up purported title report provided by Thony to MMPS were entirely fraudulent; that the  Property was encumbered by numerous liens, judgments and
the subject of a pending foreclosure proceeding; that the Property was never transferred to 2330 Dutch; that the “recorded” mortgage provided by Thony was not actually recorded in the Nassau County Clerk’s Office; and that title insurance policy with Fidelity was fraudulent and title insurance was never secured (id., ¶’s
27-33). ”

““[A]n action for legal malpractice requires proof of three elements: the negligence of the attorney; that the negligence was the proximate cause of the loss sustained; and proof of actual damages” (Schwartz v Olshan Grundman Frome & Rosenzweig, 302 AD2d 193, 198 [1st Dept 2003]). Negligence is shown if a plaintiff can demonstrate that “the attorney failed to exercise that degree of care, skill and diligence commonly possessed by a member of the legal profession, and that this failure caused damages” (Cosmetics Plus Group, Ltd. v Traub, 105 AD3d 134, 140 [1st Dept ], lv denied 22 NY3d 855 [2013]).

Applying these principles, the court finds that FTF has sufficiently stated a claim for legal malpractice based on allegations that defendants breached their duty to FTF by not adequately reviewing the title report and various closing documents so as to ascertain that 2330 Dutch did not own the Property, and therefore caused damages to FTF. Moreover, defendants’ assertion that they relied on Thony’s status as an attorney does not provide grounds for dismissal based on the pleadings.

Additionally, contrary to defendants’ argument, evidence that FTF was
responsible for, and failed to exercise, due diligence, including in investigating Samuels, does not warrant the dismissal of the complaint for lack of causation. To survive a motion to dismiss under 3211(a)(7), “a pleading need only state allegations from which damages attributable to the defendant’s conduct may be reasonably
inferred” (Lappin v Greenberg, 34 AD3d 277, 279 [1st Dept 2006] [internal citations omitted]). And, at the pleading stage, a plaintiff “is not obligated to show…that it actually sustained damages” (Inkine Pharmaceutical Company, Inc. v Coleman, 305 AD2d 151, 152 [1st Dept 2003] [internal citation and quotation omitted]).

Here, the complaint sufficiently alleges that FTF’s damages are attributable to defendants’ failure to exercise the appropriate standard of care in examining the pre-closing documents. And, the cases relied on the defendants to argue lack of causation are inapposite as they were based on evidence refuting causation
submitted in support of summary judgment (see e.g. Stolmeier v Fields, 280 AD2d 342, 343 [1st Dept], lv denied 96 NY2d 714 [2001] [granting summary judgment dismissing plaintiff contractor’s legal malpractice claim against attorney based on attorney’s alleged failure to advise him of the need for a license based on “overwhelming evidence, including [plaintiff’s] own deposition testimony, that he
was aware prior to the [subject] contract” of the licensing requirement])”

As in a blog from this week, New Canaan Capital Mgt., LLC v Chadbourne & Parke LLP  2021 NY Slip Op 02758 Decided on May 04, 2021 Appellate Division, First Department is a case with a past. it is dismissed on the basis of collateral estoppel and the statute of limitations.

“The complaint is barred as against the attorney defendants by the doctrine of collateral estoppel. The issue of whether plaintiff pleaded a fraud or a legal malpractice claim was necessarily decided in the 2018 action, where plaintiff had a full and fair opportunity to contest it (see Parker Madison Partners v Airbnb, Inc., 184 AD3d 544 [1st Dept 2020]). The pleading deficiencies found in the earlier complaint were not remedied in the instant complaint (see id.). The doctrine of res judicata bars plaintiff’s present claims against the remaining defendants. Plaintiff has brought two actions against them, a state action that was dismissed without prejudice and a federal action that was dismissed on the merits, and its present aiding and abetting fraud claim is based upon the subject matter and transactions that were dismissed in those prior actions (see Marinelli Assoc. v Helmsley-Noyes Co., 265 AD2d 1, 5 [1st Dept 2000]).

The complaint is also time-barred. The fraud claims rest on the allegations that the attorney defendants violated their duties as lawyers by not disclosing a conflict of interest, improperly disclosing confidential information, and preparing documents that resulted in plaintiff’s failure to obtain the equity interest it sought. These allegations “essentially” state a malpractice claim (see Matter of R.M. Kliment & Frances Halsband, Architects [McKinsey & Co., Inc.], 3 NY3d 538, 542 [2004]; see also Gourary v Green, 143 AD3d 580, 581 [1st Dept 2016]). Thus, they cannot serve “to circumvent the shorter statute of limitations for legal malpractice” (Hsu v Liu & Shields LLP, 127 AD3d 522, 523 [1st Dept 2015], lv dismissed in part, denied in part 26 NY3d 996 [2015]).”