While many legal malpractice cases are brought, few, very few proceed to trial and fewer reach verdict.  Our research shows only one jury verdict in 2017 and only this bench trial verdict in 2016.

Abramowitz v Lefkowicz & Gottfried, LLP  2018 NY Slip Op 02589  Decided on April 18, 2018  Appellate Division, Second Department is the story of the Daily News and a coin seller fallng out.  The legal malpractice arises from a series of unfortunate mistakes.

“23KT Gold Collectibles, Ltd. (hereinafter 23KT), and Merrick Mint, Ltd. (hereinafter Merrick), are affiliated designers and manufacturers of memorabilia and collectible coins. In 2008, 23KT entered into an agreement with Daily News, L.P. (hereinafter Daily News), in which the parties to the agreement agreed to develop and promote a coin club through which they would sell collectible coins and share profits. 23KT agreed to design and manufacture coins and coin sets, and Daily News agreed to provide 204 pages of advertising space to advertise the coins. The coins sold through the coin club would also be offered for sale on a website called “ecoins,” which would be operated by 23KT. The agreement included an exclusivity clause providing that coin club products could not be advertised, marketed, sold, or offered for sale by 23KT or its affiliates, including Merrick, in any forum or media other than Daily News advertisements or ecoins. Products which were substantially similar, but not identical, to a coin club product could not be sold by 23KT, but were permitted to be sold by its affiliates, such as Merrick. The agreement permitted either party to terminate the agreement via written notice if the other party materially breached the agreement “and the breach is not remedied within thirty (30) days of the breaching party’s receipt of written notice of the breach.” The agreement specified that it was the entire agreement, that it could not be [*2]modified except in writing, and that a failure to exercise any right under the agreement did not operate as a waiver of that right.

By letter dated January 29, 2009, Daily News notified 23KT that it had materially breached the exclusivity provision of the agreement by marketing coin club products and similar products in the New York Post and on certain websites. The notice stated that the breaches were not capable of being remedied, and that the agreement would terminate on March 1, 2009. 23KT responded with a letter in which it disputed that a breach had occurred, and asserted that, in any event, Daily News was required to permit it to cure the alleged breaches. No agreement was reached on the issue of a cure, and 23KT retained the defendant Lefkowicz & Gottfried, LLP (hereinafter the defendant law firm), to commence an action, inter alia, to recover damages for breach of contract against Daily News. Daily News obtained summary judgment dismissing the first complaint filed on behalf of 23KT, a finding in its favor on liability on its counterclaims against 23KT due to discovery failures, and dismissal of the second complaint filed on behalf of 23KT based on the doctrine of res judicata. 23KT then retained another attorney, who negotiated a settlement in which the parties discontinued their claims and 23KT paid Daily News the sum of $20,000.

23KT and others then commenced this legal malpractice action against the defendant law firm and its principals. In an order dated August 4, 2014, the Supreme Court granted the defendants’ motion for summary judgment dismissing the complaint. However, in an order dated April 1, 2015, the court granted the plaintiffs’ motion for leave to reargue the defendants’ motion and, upon reargument, denied the defendants’ motion. The matter proceeded to trial, after which the court determined that 23KT established its legal malpractice cause of action against the defendant law firm. Judgment was entered in favor of 23KT and against the defendant law firm in the principal sum of $1,675,000, representing the sum 23KT would have recovered from Daily News in the absence of the law firm’s negligence, the sum spent to settle the matter with Daily News, and a return of the retainer paid to the defendant law firm. The defendant law firm appeals.”

“Here, the Supreme Court determined that the defendant law firm was negligent in the underlying representation and that, but for such negligence, 23KT would have prevailed in the underlying litigation. On appeal, the defendant law firm challenges only the finding of but-for causation, arguing that 23KT was in breach of the exclusivity clause of the underlying agreement and therefore would not have prevailed in the underlying litigation, regardless of its alleged malpractice. The contention is without merit. The evidence at trial established that most of the alleged breaches listed in Daily News’ January 29, 2009, breach notice were actually sales by Merrick of similar, but not identical, coins, which did not violate the exclusivity clause of the agreement. “