We’ve noted that more legal malpractice cases seem to be dismissed on CPLR 3211 grounds than those in other fields of the law.  Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin & Quartararo  2014 NY Slip Op 00087 [113 AD3d 587]  January 8, 2014  Appellate Division, Second Department looks like on of them. 

In this straightforward claim, plaintiffs retained attorneys to manage a 1031 Like-Kind exchange of real property, which would defer capital gain taxes.  One must arrange for an uninvolved 3d party to receive the sale proceeds and withhold them until a purchase of new property.  This did not happen.  Instead, Plaintiffs were drawn into an unrelated bankruptcy and lost significant amounts of money.

"The plaintiff commenced this action to recover damages allegedly sustained as a result of the defendants’ legal malpractice. As alleged in the complaint, the plaintiff retained the defendants to represent it in connection with the sale of certain real property and a related exchange of "like-kind property" pursuant to the Internal Revenue Code (see 26 USC § 1031). According to the allegations in the complaint, the plaintiff, based upon the defendants’ advice, selected LandAmerica 1031 Exchange Services, Inc. (hereinafter LandAmerica), as the qualified intermediary to hold a portion of the sale proceeds, totaling $5.5 million, for the exchange of like-kind property pursuant to 26 USC § 1031. The complaint alleged, inter alia, that the defendants negligently represented the plaintiff inasmuch as they reviewed, and advised the plaintiff to execute, an agreement with LandAmerica, under which the exchange funds were to be held in a commingled [*2]account and not a qualified escrow account or trust. Soon after the sale proceeds were transferred to LandAmerica, its parent corporation, LandAmerica Financial Group, Inc., declared bankruptcy. According to the complaint, the plaintiff’s funds were frozen for several years during the bankruptcy proceedings, and the plaintiff lost a portion of the funds because they were not held in a qualified escrow account or trust. The complaint further alleged that the plaintiff could not defer the taxes on the capital gains from the initial sale, as it did not have access to its funds to purchase a replacement property within the required 180-day period.

Prior to answering, the defendants moved to dismiss the complaint pursuant to CPLR 3211 (a) (1) based on documentary evidence, and pursuant to CPLR 3211 (a) (7) for failure to state a cause of action. The Supreme Court granted the defendants’ motion to dismiss the complaint on both grounds.

The Supreme Court improperly granted the defendants’ motion to dismiss the complaint based on documentary evidence. A motion to dismiss a complaint pursuant to CPLR 3211 (a) (1) may be granted only if the documentary evidence submitted by the moving party utterly refutes the factual allegations of the complaint, "conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]). Here, the retainer agreement submitted by the defendants did not conclusively establish a defense as a matter of law (see Harris v Barbera, 96 AD3d 904, 905-906 [2012]; Rietschel v Maimonides Med. Ctr., 83 AD3d 810, 811 [2011]; Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 38-39 [2006])."