Sitomer v Goldweber Epstein, LLP 2015 NY Slip Op 31541(U) August 14, 2015 Supreme Court, New York County Docket Number: 158325/13 Judge: Barbara Jaffe is a gold-mine of legal malpractice issues and decisions.  What happens if you have good evidence in favor of your client, but fail to use it?

“By letter dated May l, 2002, plaintiff, then married, signed a shareholder agreement whereby he transferred to several institutional investors 2,500 or his 5,000 shares in his holding company, International Star Investments Limited (ISi Ltd.) in exchange for capital contributions. (NYSCEF 44). On April 1, 2005, plaintiff hired defendants to represent him in connection with an anticipated divorce action to be commenced against him. In signing the retainer agreement, plaintiff agreed, as pertinent here, that defendants would provide services in connection with [* 1] proceedings at the trial court level only. (NYSCEF 9). On April 11, 2005, plaintiffs ex-wife commenced the divorce action in New York County. (NYSCEF 10). At that time, in addition to his interest in ISI Ltd., plaintiff had an ownership interest in Blue Star Jets, LLC. (NYSCEF 8, 37). Although plaintiff waived his answer and did not object to the grounds for divorce, he contested, inter alia, the distribution of marital assets. On August 15, 2005, the justice presiding in the matrimonial action so ordered the appointment of Klein Liebman & Gresen, LLC, a neutral valuation expert recommended by plaintiff and agreed to by his wife to appraise Blue Star. (NYSCEF 11). On July 16, 2007, Klein Liebman submitted its report, concluding that plaintiff owned a 45 percent interest in Blue Star valued at $4,829,000. (NYSCEF 15).”

“Defendants maintain that plaintiff’s allegation that they engaged in legal malpractice by failing to offer “appropriate evidence” at trial to establish that his interest in ISi Ltd. was only 50 percent is fatally conclusory and insufficient to state a claim for legal malpractice. (NYSCEF 8). According to plaintiff, the 2002 shareholder agreement, whereby half of ISi Ltd.’ s shares were transferred to three investors, conclusively establishes that at the time of valuation, plaintiff owned a 50 percent interest in the company. He blames defendants for failing to prove to the court’s satisfaction that he in fact owned only 50 percent, claiming that they possessed the agreement at the time of trial but negligently failed to introduce it in evidence, relying instead on 12 [* 12] plaintiffs testimony alone as to his percentage interest. Due to their failure, he argues, the court determined that he owned 60 percent, and that had they called to the court’s attention the November 2007 letter from ISi Ltd. shareholders notifying him that his interest would be further diluted, or the March 2008 letter, and offered Wilde’s testimony, the court would have found duly corroborated his claim of 50 percent ownership in ISi Ltd. (NYSCEF 37, 49). Defendants deny having possessed the 2002 shareholder agreement and 2007 and 2008 letters during the course ofrepresentation, and that in any event, the probative value of the agreement and letters is negligible. They observe that when questioned during trial about the existence of documents evidencing the sale of shares to investors, plaintiff denied any knowledge. (NYSCEF 55, 62). Although defendants initially arranged for Wilde to testify, copied plaintiff on their email correspondence with him, and sent him a check, he did not appear. In any event, they claim that plaintiff does not explain how calling Wilde would have altered the court’s decision. (Id.). B. Analysis 1. ISi Ltd. documents The 2002 shareholder agreement on which plaintiff relies establishes that 50 percent of the available shares of ISi Ltd. were transferred to investors, leaving plaintiff with, at most, a 50 percent interest before commencement of the action. Defendants’ contention that the document lacks probative value is controverted by the cover letter, in which counsel for the investors directed plaintiff to review and sign the agreement, and by the 2007 letter referencing the shareholder/investors’ then-50 percent interest. As the court described plaintiffs testimony regarding his ownership interest in ISi Ltd. as “vague” and lacking corroboration, it is reasonably 13 [* 13] inferred that the agreements would have altered the court’s final calculation (see Wahl v Wahl, 277 AD2d 445, 446 [2d 2000] [court overlooked documentary evidence revealing additional stock purchases before commencement of action and thus improperly calculated amount of IBM stock husband owed; matter remanded to trial court]), and thus plaintiff sufficiently states a cause of action in legal malpractice (see Pillard v Goodman, 82 AD3d 541, 541-542 [1st Dept 2011] [plaintiff stated cause of action in legal malpractice alleging that defendants failed to proffer documentary evidence that plaintiff was not president of company at time it was sued, which would have exonerated him from liability]; see also Biro v Roth, 121 AD3d 733, 734 [2d Dept 2014] [plaintiff stated cause of action alleging that defendants failed to incorporate certain documentation in disability application resulting in denial of benefits]). Defendants’ denial that they possessed this documentation during the trial does not entitle them to a dismissal of this claim as it does not establish that no significant dispute exists regarding this alleged fact. (See Weill v E. Sunset Park Realty, LLC, 101 AD3d 859, 860 [2d Dept 2012] [defendants’ denial of actual or constructive notice of plaintiffs’ mortgage interest insufficient to resolve issue beyond dispute and warrant dismissal under CPLR 321 l(a)(7)]; cf Fried v Tucker, 22 Misc 3d 1122[A], 2008 NY Slip Op 52656[U], *5 [Sup Ct, Kings County 2008] [plaintiffs challenge of defendant’s affirmative defense amounted to “bald and selfserving denial” warranting denial of summary dismissal of defense]). Moreover, defendants’ claim that plaintiff’s testimony reveals that he was unaware of documentation evidencing his interest in ISI Ltd. mischaracterizes his testimony, as plaintiff only denied recalling whether he had produced documentation pertaining to his receipt of the $200,000 cash distribution during the 2002 stock sale. “