Settlements in “open court” are one thing.  They are enforceable just as they are.  Anything else requires a signature.  When the parties settled this matrimonial action using a court reporter in an attorney’s office they did not produce a document that was enforceable.  This might very well be legal malpractice says the Second Department.

Lieberman v Green  2016 NY Slip Op 03717  Decided on May 11, 2016  Appellate Division, Second Department reverses a decision of Supreme Court to dismiss the counterclaim for legal malpractice.

“The defendant retained the plaintiff law firm, Lieberman & LeBovit (hereinafter the law firm), to represent him in an underlying divorce action commenced against him by his now former wife (hereinafter the wife). On March 9, 2012, during the course of the divorce action, the parties agreed to resolve all matters in the action and a stipulation of settlement was read into the record by the plaintiff Mitchell Lieberman, a member of the plaintiff law firm, and transcribed by a court reporter who was present with the parties at the office of the wife’s counsel. According to the transcript, it was the parties’ intention to have the stipulation so-ordered by the Supreme Court at an appearance on March 15, 2012. However, the settlement was not so-ordered by the court on that date, or at any point thereafter. At some point, the wife repudiated the agreement.

In August 2012, the defendant discharged the plaintiffs and retained new counsel. On or about December 3, 2012, the plaintiffs commenced this action to recover unpaid legal fees. The defendant answered and asserted, inter alia, a counterclaim alleging that the plaintiffs committed legal malpractice in that they were negligent in failing to have a written stipulation of settlement signed by the parties and in failing to have the settlement so-ordered by the Supreme Court. The defendant claimed that, as a result, he incurred additional legal fees in having to continue litigating the divorce action. The plaintiffs moved, inter alia, to dismiss that counterclaim pursuant to CPLR 3211(a)(1) and (a)(7). The Supreme Court granted the plaintiffs’ motion. The defendant appeals from so much of the order as granted that branch of the plaintiffs’ motion which was to dismiss the counterclaim to recover damages for legal malpractice.

The Supreme Court improperly granted that branch of the plaintiffs’ motion which was to dismiss the counterclaim to recover damages for legal malpractice. On a motion to dismiss a pleading pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the pleading is afforded a liberal construction and the court must give the party “the benefit of every possible favorable inference, accept the facts alleged in the [pleading] as true, and determine only whether the facts as alleged fit within any cognizable legal theory” (High Tides, LLC v DeMichele, 88 AD3d 954, 956 [internal quotation marks omitted]; see McDonnell v Bradley, 109 AD3d 592, 593). “CPLR 3211(a)(7) dismissals merely address the adequacy of the [pleading], and do not reach the substantive merits of a [party’s] cause of action” (Hendrickson v Philbor Motors, Inc., 102 AD3d 251, 255). Therefore, whether the pleading will later survive a motion for summary judgment, or whether the party will ultimately prevail on the claims, is not relevant on a pre-discovery motion to dismiss (see Tooma v Grossbarth, 121 AD3d 1093, 1095-1096; Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin & Quartararo, 113 AD3d 587, 589; Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 38).”

“Here, construing the counterclaim liberally, accepting the facts alleged in the counterclaim as true, and according the defendant the benefit of every possible inference, the defendant has stated a cause of action alleging legal malpractice (see Leon v Martinez, 84 NY2d 83, 87-88; Tooma v Grossbarth, 121 AD3d at 1095). The counterclaim alleged that the plaintiffs were negligent in failing to ensure that the settlement was enforceable by having the parties sign a written stipulation of settlement or in having the settlement so-ordered by the Supreme Court, and that this negligence was a proximate cause of the defendant’s damages.”