We’re scratching our heads on this one.  A Brooklyn Church decides to sell its real estate after 50+ years.  It finds a developer who offers a couple of million dollars for the Bedford Avenue property, and the church has its longtime attorney draft up the contracts of sale.  Downpayments are exchanged and then nothing happens.  A couple of years later the Church decides to sell to someone else, and the same attorney drafts up the contracts of sale.  Soon, all the buyers are suing the Church, and the Church goes into default.  How could this happen with a competent attorney handling matters?

1200 Bedford Ave., LLC v Grace Baptist Church  2015 NY Slip Op 51045(U)  Decided on July 17, 2015  Supreme Court, Kings County  Schack, J. may be a prototypical New York real estate story, but there is no explanation for the attorney’s work.  Result?  He’s in the case, and the default has been lifted.

Defendant CHURCH retained WAY to represent it for these transactions and obtain the requisite approvals for the sales of church property from the New York State Attorney General. WAY received $345,000 in down payments from FREUND’s two LLC’s, as CHURCH’s escrow agent. The Attorney General never approved these sales.

In June 2011, after more than one year of inaction, FREUND’s two LLC’s, the purchasers of the premises under the 2010 CONTRACTS commenced two lawsuits for specific performance of the 2010 CONTRACTS. INTERVENOR, on June 16, 2011, filed notices of pendency in each of these actions. Three years later, in June 2014, the two notices of pendency were renewed. Further, the two actions were consolidated in July 2014 and stayed pending the outcome of the instant action.

CHURCH, relying upon WAY, entered into a contract of sale with BEDFORD AVENUE, on December 27, 2011, for the sale of all three lots, 1194-1202 Bedford Avenue, Brooklyn, for $2,200,000, with a $110,000 down payment received by WAY as escrow agent. When CHURCH inquired of WAY if this was legitimate in light of the 2010 CONTRACTS, WAY misrepresented to CHURCH that the 2010 CONTRACTS were cancelled and it was proper to enter into a new contract of sale for the property.

Plaintiff BEDFORD AVENUE, in November 2012, commenced the instant action against defendant CHURCH for specific performance of the December 27, 2011-contract. Reverend Melvyn Louis Rankin, Pastor and President of defendant CHURCH, in his [*3]affidavit in support of the motion to implead WAY, states:

10. On or about late November 2012, after we received notification that this lawsuit was  commenced, I delivered a copy of the Summons and Complaint to Mr. Way requesting his legal services in defending the matter.Mr. Way informed me, “not to worry about it,” and that, he would “take care of it.”

It is clear that WAY misrepresented to defendant CHURCH that INTERVENOR’s 2010 CONTRACTS were canceled and that it was proper and appropriate that it enters into a new contract of sale for the subject premises with plaintiff BEDFORD AVENUE. Further, it appears that WAY acted incompetently and ineffectively advised defendant CHURCH to enter into three separate contracts of sale for all or part of the subject premises in June 2010 and

December 2011. After plaintiff BEDFORD AVENUE commenced the instant action and CHURCH’s Reverend Rankin contacted WAY, in November 2012, WAY misrepresented to Reverend Rankin “not to worry about it,” and that he would “take care of it.” A reasonable client could conclude that: after a lengthy relationship with its attorney such statements inferred that the attorney would appear in court in the matter, utilizing the legal knowledge, skill, thoroughness and preparation reasonably necessary for representation; and, its attorney would not neglect such an important matter entrusted to him. However, WAY failed to appear in the instant action nor file any papers on behalf of defendant CHURCH. Also, WAY failed to return phone calls to CHURCH’s representatives or respond whenever CHURCH inquired as to the status of the instant action.
Defendant CHURCH, as a result of WAY’s misrepresentations and neglect, was blind to the ongoing litigation against it and the Court granted the September 12, 2013 default judgment for specific performance of plaintiff BEDFORD AVENUE’s encumbered 2011 contract. At no time did Defendant CHURCH intend to abandon the instant action or anticipate that its status as rightful owner to the subject premises would be relinquished by the granting of a default judgment against it. Defendant CHURCH was unaware of the nature of the present litigation because it was unjustifiably misled by WAY, its former counsel.

Therefore, defendant CHURCH’s motion to implead Way is granted. Given the pre-existing 2010 CONTRACTS with INTERVENOR, the notices of pendency extending from these contracts, which predate the contract, litigation and notice of pendency in the instant action, defendant CHURCH can assert a defense on the merits of the instant action and should be allowed to defend itself accordingly and implead WAY for misrepresentation, neglect and legal malpractice.”