Yesterday, we looked at Burbacki v Abrams, Fensterman, Fensterman,  Eisman, Formatto, Ferrara & Wolf, LLP  2016 NY Slip Op 30749(U)  April 15, 2016  Supreme Court, Kings County
Docket Number: 509725/2015  Judge: David B. Vaughan and how bankruptcy affected plaintiff’s ability to litigate legal malpractice claims.

The situation was set off, in part, because of a retaining lien.  A common law retaining lien,  gives the attorney the right to keep the papers, documents and other personal property of the client that has come into the lawyer’s possession in his or her professional capacity so long as those items are related to the subject representation.

The Burbacki case seemed to be started when her attorneys refused to give up the file, setting off a series of events that were disasterous to Burbacki.

“The following facts are stated in the plaintiff’s complaint. Ella Burbacki was a named defendant in Gorelik et al v Burbacki, et al, Index No 18128-2008 in 2008 (“Gorelik matter”). She was initially represented in that action by Stuart Wachs, Esq, (“Wachs” or “first attorney”), who was recommended to her by her accountant Richard Kaplan (“Kaplan” or “accountant”). In 2011 Plaintiff sought to obtain new counsel and retained the defendant on December 14, 2011. Upon Burbacki’s failure to compensate her first attorney $80,000 and the accountant $20,000, they refused to turn over her files to her new counsel, the defendants in the instant matter. After the defendants made several appearances for plaintiff in court, Burbacki’s matter was set for trial for March 22, 2012. Unable to compensate either Wachs and Kaplan for their past litigation work or to pay her newly retained attorneys for litigation work going forward, Burbacki filed for bankruptcy. Prior to filing for bankruptcy, Burbacki’s greatest concern was that her house be protected. On or about March 20, 2012, Burbacki filed a voluntary petition under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of New York. ”

“On April 25, 2012 Burbacki learned that the bankruptcy trustee’s position was that Burbacki was a 100% owner of the house and that he was going to argue his position to the bankruptcy court. The bankruptcy court agreed with the trustee, Burbacki’s home became part of the bankruptcy estate and Burbacki moved to dismiss her own bankruptcy petition. Burbacki’s motion was opposed by the bankruptcy trustee, Gorelik, Wachs and Kaplan–creditors in the bankruptcy action. The trustee further argued to the bankruptcy  court that there was another potential creditor, the First National Bank of Jeffersonville, which had a large deficiency judgement against Burbacki. ”

As we discussed yesterday, Burbacki lost all of her legal malpactice claims because of the bankruptcy filing.