Sometimes a story sounds bad on first reading, and changes thereafter.  This story sounds worse on second reading.  It reeks of non-actionable wrongs suffered by a not-so-astute plaintiff.

Mizrahi v Adler  2014 NY Slip Op 31701(U)  June 30, 2014  Sup Ct, NY County  Docket Number: 650802/2010  Judge: O. Peter Sherwood is a retelling of a very old “hot” real estate deal gone sour.

“It is uncontested that, in 2006, plaintiff Eitan Mizrahi (plaintiff) entered into a written retainer agreement with Adler and his law firm, non-party, Stern, Adler & Associates, LLP, for the firm to act as plaintiffs attorneys, to provide advice and services specifically with regard to estate planning issues (Retainer Letter, attached to Adler Aff. as Exhibit C). At a meeting in February 2007, plaintiff and Adler discussed a possible real estate opportunity, found by Adler, to purchase residential units then under construction in Las Vegas, Nevada, called the Trump International Hotel and Tower (Trump Towers). Trump Towers was to be comprised of two towers, Tower I and Tower II. Apparently, Adler had marketing materials on hand at the meeting which described the [* 1] investment, and plaintiff allegedly expressed interest in investing in the project.

Adler claims that he explained to plaintiff that Saw was in a “unique position” to offer prospective investors the opportunity to purchase units in the Towers before they were offered to the general public (Adler Aff., ¶14), and that plaintiff could take advantage of Saw’s contacts to purchase units by entering a finder’s agreement with Saw, and paying Saw a fee. Plaintiff claims that he was told that Saw was owned by an individual named Jack Wishna (Wishna), and that Adler would be working Wishna. Adler contends that plaintiff knew Saw was Adler’s company. Adler adds that he told plaintiff that his “contacts” with Wishna would aid in the process of purchasing property in Trump Towers, as Wishna was alleged to have a relationship with the developer (id.). Plaintiff maintains that Adler told him an investment in Trump Towers would be entirely risk-free, and that by investing through the intervention of Saw (and hence, Wishna), plaintiff would obtain certain benefits, “including, but not limited to, the ability to sell or swap units prior to closing, and postpone the contracted closing date” (Complaint, attached to Adler Aff. as Exhibit A, ¶ 15). Plaintiff calls these alleged rights the “Wishna Umbrella.” Early in May, 2007, upon Adler’s advice, plaintiff executed Reservation Deposit Forms for two units in Tower II, and made deposits of $I 0,000 per unit. Plaintiff claims that the Reservation Deposit Form named “Jack Wishna of Liberty Realty Inc.” as a sales agent involved with the sale (id.¶ 18).

The complaint alleges that defendant lost his down payment due to wrongdoing by Adler in representing to plaintiff that the investment was risk-free and that the plaintiff would have rights in the purchase of units in Trump Towers that he did not actually have under the Purchase Agreement. Plaintiff argues that he labored under the reasonable misconception that Adler was acting as his attorney at all times during the transactions at issue. Plaintiff claims to have only a fragmentary education and a slim grasp of the English language, and that he relied  totally on Adler, as his attorney
in making the investment. Plaintiff never read any document he was asked to sign, under the assumption, that Adler, as plaintiffs attorney, was looking out for plaintiffs interests.


Plaintiffs action fails on the question of proximate cause. While the issue of proximate cause can often be ~jury question (see Bradley v Soundview Healthcenter, 4 AD3d 194 [1st Dept 2004 ]), the court may always determine whether there are questions of fact (see Laub v Faessel, 297 AD2d 28 [1st Dept 2002]). In Laub v Faessel, dealing with claims for fraud, negligent misrepresentation and breach of fiduciary duty, the court, discussing proximate cause, di~tinguished between a misrepresentation which induces a plaintiff to engage in a transaction (“transaction causation”), and misrepresentations which directly cause the loss to plaintiff (“loss causation”) (id. at 31 ). “Loss causation is the fundamental core of the common-law concept of proximate cause: ‘An essential element of the plaintiffs cause of action for negligence, or for … any … tort, is that there be some reasonable connection between the act or omission of the defendant and the damage which the plaintiff has suffered [citation omitted]'” (id.). “Transaction causation is often synonymous with ‘but for’ causation” (Amusement Industry, Inc. v Stern, 786 F Supp 2d 758, 776 [SDNY 2011 ]). In the present context of a legal malpractice claim, plaintiff alleges “transaction causation,” because he says that he would not have entered into the agreements had he known that they bore any risk. That is, “but for” Adler’s representations, there would have been no transaction. However, even assuming that th_e representations are a basis for finding “transaction causation,” plaintiff cannot establish “loss causation,” because many factors led to the failure to close on Unit 6401, or any other unit in the Trump Towers. Plaintiffs losses were caused by the precipitious drop in real estate prices, and the value of the Trump Towers units in 2008; the Joss of his job; and plaintiffs failure to obtain financing. 4 The “Wishna Umbrella” could not have protected plaintiff from his losses. As a result, plaintiff has failed to plead proximate cause.

The failure to establish proximate cause dooms plaintiffs cause, of action for legal malpractice. Likewise, it dooms his claims for fraud and negligent misrepresentation (see Friedman v Anderson, 23 AD3d 163 [I st Dept 2005]), and for breach of fiduciary duty (see Northbay Constr.Co. v Bauco Constr. Corp., 38 AD3d 737 (2nd Dept 2007]).

Further, plaintiff cannot establish reasonable reliance on any representation that the deal was risk free. Reasonable reliance is an element of a fraud cause of action (see MBIA Ins. Co. v Countrywide Home Loans, Inc., 87 AD3d 287 [I st Dept 2011 ]), and of a claim for negligent misrepresentation (see JA. 0. Acquisition Corp. v Stravitsky, 8 NY3d 144 (2007]). In the Finder Agreement, plaintiff represented to Saw that he was a “sophisticated investor,” and that he “acknowledg[ ed] that buying real estate is a risky investment and that there is no guarantee the value of the unit will increase.over time.” He cannot later claim that he did not know that his investment was risky. “


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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.