Ableco Finance LLC v. Hilson,  Ippolito and Paul, Hastings, Janofsky & Walker LLP; Supreme Court, New York County, [Justice Kornreich ]is a case we reported on last year.  Now, Justice Kornreich has dismissed some parts of the case, and retained some other causes of action.  "1This malpractice action arises from a 2008 transaction in which plaintiff, Ableco Finance LLC (Ableco), retained defendant attorneys, John F. Hilson and Mario J. Ippolito, and their law firm, defendant Paul, Hastings, Janofsky & Walker LLP, (collectively, Paul, Hastings) in connection with a loan transaction. Defendants now move to dismiss the First Amended Complaint (seq. no. 002) pursuant to CPLR 3211(a)(1) (documentary evidence) and (a)(7) (failure to state a claim)."
 

"Paul Hastings has not shown, with conclusive documentary evidence, that it accurately advised Ableco regarding the terms of the underlying acquisition documents and their impact on the security for its Loan. Any negligence on the part of Ableco in reviewing the underlying documents is merely a factor to be assessed in mitigation of damages. See Arnav Indus. Inc. Retirement Trust v. Brown, Raysman, Millstein, Felder & Steiner, 96 NY2d 300, 305 n2 (2001). Ableco’s additional allegations of attorney negligence also are sufficient. According to the complaint, Paul Hastings advised Ableco that it was not necessary to include, in the Funds Flow, a certification that the borrower (BH) would have merchandise "having an aggregate Cost Value…of no less than $183,700,000 immediately after giving effect to the Acquisition," because it was already a condition of the LC Letter. ¶31, Ex. E. Questions of fact remain as to the "aggregate cost value" of the S&B assets that BH did acquire.

Further, it is not incontrovertible that Ableco understood, or should have understood, from the Agency Agreement and the APR, that S&B would retain control over certain credit card receivables. It is apparent from statements by Ippolito in a November 21, 2008 e-mail that Paul Hastings was unaware of this fact prior to the Loan closing. The first Security Agreement specifically provides that Ableco has a security interest in BH’s accounts, its interest in any Deposit Account, and General Intangibles, "whether now owned or hereafter acquired." S&B thereafter exercised control and took credit card receivables from accounts in which Ableco alleges it had a security interest. Questions remain as to whether Paul Hastings was negligent in not being aware that S&B had the right to do this and in failing to disabuse Ableco of the notion that the Security Agreement somehow protected its interest in ensuring that credit card receivables deposited into these accounts would be used to repay the Loan."

"Paul Hastings argues that Ableco has not sufficiently pled that its attorneys’ negligence proximately caused it specific damages. Ableco, however, has repeatedly alleged that if Paul Hastings had properly advised it (as to matters discussed above), then it would not have closed on the Loan and would not have lost $55 Million, including the monies taken by S&B. This is sufficient. A complaint for malpractice need allege only that the defendants should have been able to foresee that some injury might result from their acts [see Singer v. Jefferies & Co., Inc., 160 AD2d 216, 219 (1st Dept 1990)],and that "but for" their negligence, the alleged loss would not have been suffered. See Fielding, 65 AD3d 439-440 (reversing dismissal of malpractice complaint where plaintiff alleged that but for attorney negligence in failing to advise of certain tax consequences in signing stipulation, plaintiff would not have suffered damages). "Specific" damages need not be pled. It is sufficient if some injury can reasonably be inferred from the attorney’s conduct. Id."