Everyone in this case came out badly.  Attorney represented client, became friends with client, gave financial advice to client, invested with client, lost money in a Ponzi scheme with client.  Now, client survives a summary judgment decision against his former friend/attorney/investment partner.

Biberaj v Acocella  2014 NY Slip Op 06165  Decided on September 17, 2014  Appellate Division, Second Department  is the underlying decision for this story.  "The plaintiff and the defendant, an attorney licensed in New York, met in or about 2001, when the plaintiff sought the defendant’s legal representation. The parties established a business relationship, which later evolved into a friendship. In 2007, upon the defendant’s recommendation, the plaintiff made an investment of $260,000 in an enterprise known as Agape World (hereinafter Agape), which purportedly used investor money to provide bridge loans to businesses, and paid interest to the investors. The defendant allegedly also invested large sums of his own money in Agape. In 2008, it was revealed that Agape was, in fact, a Ponzi scheme, in which new investors’ funds were used to pay earlier investors’ returns. The plaintiff and the defendant allegedly lost their investments in Agape."

"Here, in support of that branch of his motion which was for summary judgment dismissing the cause of action to recover damages for legal malpractice, the defendant met his prima facie burden of establishing that he had no attorney-client relationship with the plaintiff referable to the plaintiff’s investment in Agape (see Volpe v Canfield, 237 AD2d 282, 283). In opposition, however, the plaintiff raised a triable issue of fact as to the existence of an attorney-client relationship in that context. Moreover, with regard to this cause of action, the defendant failed to show, prima facie, that he exercised the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession in allegedly advising the plaintiff regarding Agape, or that the alleged breach of this duty did not proximately cause the plaintiff to sustain damages. Accordingly, the Supreme Court should have denied that branch of the defendant’s motion which was for summary judgment dismissing the cause of action to recover damages for legal malpractice.

The Supreme Court should have granted those branches of the motion which were for summary judgment dismissing the causes of action to recover damages for fraud and breach of contract as duplicative of the cause of action to recover damages for legal malpractice, because they arose from the same facts as the legal malpractice cause of action, and do not allege distinct damages

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