We had not heard of this particular branch of legal malpractice before, but upon examination, it is a classic.  Equity-stripping foreclosure  fraud legal malpractice.  Here’s the basic outline:  homeowner gets in financial trouble, faces foreclosure.  Group, including lawyers comes in, induces the homeowner to transfer ownership to avoid foreclosure.  Group gets a new mortgage, re-sells through their superior ability/knowledge and disposesses the homeowner.  

No surprise, there is a web site devoted to this particular problem. Read on.  Q:  How did they get these big-law firms to represent them????

"A foreclosure rescue lawsuit brought by a couple in a Brooklyn, New York Federal Court was settled privately by the parties involved earlier this year. The homeowners in this case brought suit against foreclosure rescue operator Principle Investors Realty, and individuals Frankie L. Freeman, Edith A. Lorick, attorneys Fred D. Way, III (remember him from yesterday’s posts) and Appolo Pitton, and Kevin Waite, who ultimately ended up with the title to the home. When the homeowners approached the operators for help in "saving" their home, they (the foreclosure rescue operator) allegedly proceeded to engage in an equity stripping, foreclosure rescue deal that ultimately forced the homeowners out of their home. According to the allegations contained in the lawsuit:

"But instead of helping the Hineses save their home, Freeman induced them to transfer their deed to his associate, defendant Edith A. Lorick ("Lorick"), who took out a new mortgage on the property that exceeded the Hines’s previous mortgage by more than $100,000; distributed the proceeds of the new mortgage to himself and his co-conspirators; and demanded monthly rental payments from the Hineses that he knew they could not afford. Unable to make the payments, the Hineses were forced to move out of their home."
According to the lawsuit, the property was ultimately sold for $100,000 more than the amount of the subsequent mortgage taken out by Lorick, and nearly $200,000 more than the payoff amount on the homeowners’ original mortgage. The homeowners allegedly only received $10,000 in the transaction.

This lawsuit brought claims (not unlike many of the claims brought in those New York cases I reported on in yesterday’s posts) against those involved for:

Equitable Mortgage (NY Real Property Law Sec. 320),
Violations of the Federal Truth In Lending Act,
Violations of the Federal Real Estate Settlement Procedures Act,
Common law fraud,
Conspiracy to commit fraud,
Violations of New York State General Business Law Sections 349 & 350 ("The Deceptive Practices Act"),
Unjust Enrichment and Constructive Trust,
Legal Malpractice
Representing the homeowners in this case were attorneys from the firms Chadbourne & Parke, LLP and Patterson Belknap Webb & Tyler LLP. 


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Andrew Lavoott Bluestone

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened…

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened his private law office and took his first legal malpractice case.

Since 1989, Bluestone has become a leader in the New York Plaintiff’s Legal Malpractice bar, handling a wide array of plaintiff’s legal malpractice cases arising from catastrophic personal injury, contracts, patents, commercial litigation, securities, matrimonial and custody issues, medical malpractice, insurance, product liability, real estate, landlord-tenant, foreclosures and has defended attorneys in a limited number of legal malpractice cases.

Bluestone also took an academic role in field, publishing the New York Attorney Malpractice Report from 2002-2004.  He started the “New York Attorney Malpractice Blog” in 2004, where he has published more than 4500 entries.

Mr. Bluestone has written 38 scholarly peer-reviewed articles concerning legal malpractice, many in the Outside Counsel column of the New York Law Journal. He has appeared as an Expert witness in multiple legal malpractice litigations.

Mr. Bluestone is an adjunct professor of law at St. John’s University College of Law, teaching Legal Malpractice.  Mr. Bluestone has argued legal malpractice cases in the Second Circuit, in the New York State Court of Appeals, each of the four New York Appellate Divisions, in all four of  the U.S. District Courts of New York and in Supreme Courts all over the state.  He has also been admitted pro haec vice in the states of Connecticut, New Jersey and Florida and was formally admitted to the US District Court of Connecticut and to its Bankruptcy Court all for legal malpractice matters. He has been retained by U.S. Trustees in legal malpractice cases from Bankruptcy Courts, and has represented municipalities, insurance companies, hedge funds, communications companies and international manufacturing firms. Mr. Bluestone regularly lectures in CLEs on legal malpractice.

Based upon his professional experience Bluestone was named a Diplomate and was Board Certified by the American Board of Professional Liability Attorneys in 2008 in Legal Malpractice. He remains Board Certified.  He was admitted to The Best Lawyers in America from 2012-2019.  He has been featured in Who’s Who in Law since 1993.

In the last years, Mr. Bluestone has been featured for two particularly noteworthy legal malpractice cases.  The first was a settlement of an $11.9 million dollar default legal malpractice case of Yeo v. Kasowitz, Benson, Torres & Friedman which was reported in the NYLJ on August 15, 2016. Most recently, Mr. Bluestone obtained a rare plaintiff’s verdict in a legal malpractice case on behalf of the City of White Plains v. Joseph Maria, reported in the NYLJ on February 14, 2017. It was the sole legal malpractice jury verdict in the State of New York for 2017.

Bluestone has been at the forefront of the development of legal malpractice principles and has contributed case law decisions, writing and lecturing which have been recognized by his peers.  He is regularly mentioned in academic writing, and his past cases are often cited in current legal malpractice decisions. He is recognized for his ample writings on Judiciary Law § 487, a 850 year old statute deriving from England which relates to attorney deceit.