Sexter & Warmflash was fired by its client, who then sent it an angry letter.  That letter brought  a defamation case.  It survived summary judgment, but the Appellate Division today reversed and dismissed.  Reason?  As Anthony Lin of the NYLJ reports, it was qualified privilege.

"A Manhattan appellate court has thrown out a law firm’s defamation suit against a former client whose husband wrote a letter and copied to others questioning the competence and honesty of lawyers at the firm.

New York firm Sexter & Warmflash was hired by Elizabeth Margrabe in 2001 to represent her and her brother, Anthony Rusciano, in a Westchester County lawsuit against a cousin to whom the siblings wanted to sell their interests in a family business. The retention agreement provided that the firm would work at a reduced rate until the case was resolved, after which it would be entitled to a 50 percent premium over its total bill"

"Manhattan Supreme Court Justice Shirley Werner Kornreich (See Profile) denied the Margrabes’ motion to dismiss and granted summary judgment to Sexter & Warmflash regarding the Margrabes’ liability for the usury allegation. But the Appellate Division, First Department, reversed on the grounds that Mr. Margrabe’s letter was absolutely privileged as part of a judicial proceeding and ordered the dismissal of the defamation suit.

Sexter & Warmflash had argued that the privilege did not apply because Mr. Margrabe’s letter had discharged the firm from the case and because it had no purpose other than malice.

Privilege Applied

But the appellate court, in a ruling by Justice David Friedman (See Profile), said the letter was sufficiently "pertinent" to the proceeding, noting that only the most outrageous out-of-context statements would have escaped the privilege.

"In this case, the allegedly defamatory statements in the April 9 letter concern, on their face, the quality of S&W’s representation of Ms. Margrabe in the Westchester County action and in the negotiations to settle it, and the propriety of S&W’s fee arrangement for that representation," Justice Friedman wrote in Sexter & Warmflash v. Margrabe, 107569/04. "The statements were made in a letter that, besides being sent to S&W itself, was directed solely to parties legitimately involved in the proceeding with which the letter was concerned."