A win at trial and a loss on Appeal in this legal malpractice case was based upon Plaintiff’s potential comparative fault.  Hattem v Smith    2013 NY Slip Op 07791  Decided on November 21, 2013  Appellate Division, Third Department is the story of a fairly straight-forward sale of a business coupled with the failure to file liens and UCC-1s.  Seller was found by the 3d Department to be sophisticated enough to potentially share in some of the blame.

"In September 2007, plaintiff commenced this legal malpractice action. Following a trial, the jury was asked whether Smith was negligent in failing to file a UCC-1 prior to NBT’s filing, and in failing to file DMV liens. The jury answered both questions in the affirmative and awarded damages to plaintiff. Supreme Court denied defendants’ cross motion to set aside the verdict, and judgment was entered thereon. Defendants appeal from the order denying the cross motion and from the judgment.

We agree with defendants’ contention that Supreme Court erred in refusing to charge the jury regarding plaintiff’s comparative fault. The culpable conduct of a plaintiff client may be asserted as an affirmative defense in a legal malpractice action in mitigation of damages (see CPLR 1411, 1412; Schaeffer v Lipton, 243 AD2d 969, 971 [1997]; Caiati v Kimel Funding Corp., 154 AD2d 639, 639-640 [1989]; see also Shapiro v Butler, 273 AD2d 657, 658 [2000]). Here, the evidence was sufficient to support a finding that plaintiff could reasonably have been expected to understand the underlying obligations and formalities (compare Cicorelli v Capobianco, 90 AD2d 524, 524 [1982], affd 59 NY2d 626 [1983]). Plaintiff was experienced in commercial transactions, including secured loans, understood that loans such as the one from NBT to OSC generally require collateral, and testified that his purpose in retaining Smith was to protect his security interest in the vehicles and equipment. He acknowledged that none of the discussions among the parties and their counsel leading up to the execution of the sale documents had included any mention of outside loans to OSC, and that he introduced OSC’s owners to the NBT officer who later approved the loan.

Plaintiff’s testimony as to his purpose in making this introduction and his personal knowledge regarding the owners’ intention to obtain financing for the purchase of JMF was contradictory and inconsistent. The loan officer testified that plaintiff introduced OSC’s owners to him for this specific purpose, and one of the owners testified that their plan to obtain a loan was discussed with plaintiff before the sale documents were signed; both the owner and the loan officer testified that plaintiff was present during transactions pertaining to the loan. Plaintiff never advised Smith that he had signed the sale documents, nor did he contact Smith after engaging in these transactions. As this evidence provided "a valid line of reasoning and permissible inferences from which rational people can draw a conclusion of negligence," the [*3]question of plaintiff’s comparative fault should have been submitted to the jury (Bruni v City of New York, 2 NY3d 319, 328 [2004]; see Gotoy v City of New York, 94 NY2d 812, 814 [1999]; Klingle v Versatile Corp., 199 AD2d 881, 882 [1993]). Accordingly, the matter must be remitted for a new trial.

In light of this determination, we need only briefly address defendants’ remaining assertions relative to Supreme Court’s denial of the cross motion to set aside the verdict. Defendants assert that it was impossible for Smith to file a UCC-1 before the date of NBT’s filing, as he neither possessed the executed security agreement nor knew that it had been executed until several weeks thereafter (see UCC 9-509 [b] [1]; see generally McDaniel v 162 Columbia Hgts. Hous. Corp., 21 Misc 3d 244 [2008]). However, upon defendants’ cross motion, Supreme Court analyzed the issue more broadly, and denied the cross motion upon the ground that the evidence established that the transaction could have been structured differently. This finding based upon the evidence was properly within Supreme Court’s power (see CPLR 4111 [b]; Siegel, NY Prac § 399 at 696 [5th ed 2011]). Plaintiff’s expert testified that plaintiff’s security interest could have been protected by instructions to OSC’s attorney precluding release of the sale documents, which Smith did not provide. Thus, it cannot be said that there was "simply no valid line of reasoning and permissible inferences which could possibly lead rational [people] to the conclusion reached by the jury on the basis of the evidence presented at trial" (Cohen v Hallmark Cards, 45 NY2d 493, 499 [1978]; accord Popolizio v County of Schenectady, 62 AD3d 1181, 1183 [2009]). In light of this very high standard, we further find that the evidence sufficiently established that Smith’s failure to file DMV liens was the proximate cause of loss to plaintiff. Accordingly, the court did not err in denying the cross motion to set aside the verdict insofar as it addressed liability. Defendants’ remaining claims need not be addressed, as they pertain to the sufficiency of proof of the quantum of damages and are thus encompassed within the issues that will necessarily be presented upon retrial. "