What, exactly, is the standard by which legal malpractice proximate cause is measured?  Remember, legal malpractice is the sole area of the law in which an additional burden is placed upon the plaintiff:  the “but for” requirement.  New York State Workers’ Compensation Bd. v Program Risk Mgt., Inc.  2017 NY Slip Op 04184  Decided on May 25, 2017  Appellate Division, Third Department gives an interesting take on the question.

“The Community Residence Insurance Savings Plan, a group self-insured trust, was formed in 1995 to provide workers’ compensation to the employees of the members of the trust (see Workers’ Compensation Law § 50 [3-a]; 12 NYCRR 317.2 [i]; 317.3). Defendants Janice Johnson, Antonia Lasicki, Thomas McKeown, John Lessard, Ann Hardiman, Vincent Sirangelo, Phillip Saperia, Steven Greenfield, Peter Pierri, Fred Apers, Peter Campanelli and Diana Antos-Arens (hereinafter collectively referred to as the trustee defendants), among others, each served as individual trustees. Shortly after the trust was formed, it contracted with defendant Program Risk Management, Inc. (hereinafter PRM) to administer the trust (see 12 NYCRR 317.2 [g]) and, in 2001, the trust contracted with defendant PRM Claims Services, Inc. (hereinafter PRMCS) to administer its claims (see 12 NYCRR 317.2 [d]). Defendants Thomas Arney, John M. Conroy, Edward A. Sorensen and Mark J. Crawford (hereinafter collectively referred to as the PRM individual defendants) are former or current officers of PRM and PRMCS and/or served in various corporate capacities. Defendant Thomas Gosdeck served as counsel to the trust and as qualifying officer to PRMCS.

In 2004, plaintiff began advising the trust that it was underfunded and required the execution of a number of consent agreements intended to preserve it. In 2010, plaintiff deemed the trust to be underfunded with a regulatory deficit of more than $7,900,000, and, when efforts to reduce this deficit failed, the trustees voted to stop providing workers’ compensation. After advising the trustees that the trust had “demonstrated an inability to properly administer its liabilities,” plaintiff assumed the administration of the trust, effective August 2011. A subsequent forensic audit determinated that, as of December 31, 2010, the trust was underfunded by more than $60,715,450.

In June 2013, plaintiff commenced this action in both its capacity as the governmental agency charged with administering the state’s workers’ compensation program and as the trust’s successor in interest. As relevant on this appeal, plaintiff seeks to recover damages for breach of contract against PRM, PRMCS and the PRM individual defendants (hereinafter collectively referred to as the PRM defendants) and the trustee defendants (first cause of action); breach of the duty of good faith and fair dealing against the PRM defendants and the trustee defendants (second cause of action); breach of fiduciary duty against PRM and the PRM individual defendants, the trustee defendants and Gosdeck (fourth, fifth and sixth causes of action); fraud against the PRM defendants (seventh cause of action); unjust enrichment against Gosdeck (ninth cause of action); negligent misrepresentation against the PRM defendants and Gosdeck (tenth cause of action); legal malpractice against Gosdeck (eleventh cause of action); contractual indemnification against the PRM defendants (sixteenth cause of action); and common-law indemnification against all defendants (eighteenth cause of action). Plaintiff also seeks a judgment declaring the PRM defendants to be alter egos (thirteenth cause of action) and an accounting from PRM and PRMCS (fifteenth cause of action). As relevant herein, the PRM defendants, the trustee defendants and Gosdeck each moved to dismiss the complaint against them.”

“Turning to Gosdeck’s cross appeal, we find that Supreme Court properly denied the motion to dismiss plaintiff’s claim for legal malpractice against him. Initially, we reject Gosdeck’s argument that plaintiff was required to allege that he was the sole proximate cause of alleged damages. Rather, “[i]n an action to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney’s breach of this duty proximately caused [the] plaintiff to sustain actual and ascertainable damages” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007] [internal quotation marks and citation omitted]). “An attorney’s conduct or inaction is the proximate cause of a plaintiff’s damages if but for the attorney’s negligence the plaintiff . . . would not have sustained actual and ascertainable damages” (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 50 [2015] [internal quotation marks and citations omitted; emphasis added]; see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; Rodriguez v Jacoby & Meyers, LLP, 126 AD3d 1183, 1185-1186 [2015], lv denied 25 NY3d 912 [2015]). We agree with Supreme Court that, on this motion to dismiss a claim of legal malpractice that is based on negligent legal advice given over a period of time, the “but for” standard is not synonymous with sole proximate cause and that plaintiff’s burden is to prove that Gosdeck’s negligence was a proximate cause of damages (see Barnett v Schwartz, 47 AD3d 197, 205 [2007]; compare Dawson v Schoenberg, 129 AD3d 656, 658 [2015], lv denied 26 NY3d 919 [2016] [where legal malpractice arose during a criminal proceeding]).”

“Accepting these allegations to be true, as we must (see NYAHSA Servs., Inc., Self-Ins. Trust v Recco Home Care Servs., Inc., 141 AD3d at 794), we find that plaintiff adequately stated a cause of action for legal malpractice. Further, although plaintiff did not specify the damages, at this early stage plaintiff “need only plead allegations from which damages attributable to the defendant’s malpractice might be reasonably inferred” (Rock City Sound, Inc. v Bashian & Farber, LLP, 74 AD3d 1168, 1171 [2010], lv dismissed 16 NY3d 826 [2011]; see InKine Pharm. Co. v Coleman, 305 AD2d 151, 152 [2003]). Gosdeck’s claim that the audit report constituted documentary evidence warranting dismissal of the cause of action pursuant to CPLR 3211 (a) (1) is without merit, because the document expressing the auditors’ opinions fails to conclusively refute all of the claims asserted against him (see State of N.Y. Workers’ Compensation Bd. v Wang, 147 AD3d at 114).”