In the super-heated world of Manhattan real estate, $9.8 Million apartments are the middle children.  Not the biggest, not the smallest.  However, Riviera Prop. Holdings, LLC v Ferber Chan Essner & Coller, LLP  2017 NY Slip Op 27424 [58 Misc 3d 708]  July 31, 2017  Billings, J.
Supreme Court, New York County is an exceptional case.  Plaintiffs were induced to give the 10% downpayment in a unique form.  It did not go to a escrow agent; it mostly went to the sponsors as a loan. The transaction did not end well.

“Section 4.1 of the purchase agreement provided that the condominium unit’s purchase price was $9,850,000 and that the{**58 Misc 3d at 711} deposit was $985,000, 10% of the purchase price. In connection with the purchase, plaintiff, whose members were nonparties Neil Yaris, Alan Green, and Wendy Maitland, executed the second and third riders to the purchase agreement regarding the 10% deposit required by the agreement. The riders provided for payment of the deposit to the sponsor and its controlling owners, instead of the escrow agent as the purchase agreement specified. Specifically, the second rider required plaintiff to pay a nonrefundable deposit of 1% of the purchase price to the sponsor itself. The third rider required plaintiff to pay a deposit of the remaining 9% of the purchase price by making a loan to the sponsor’s majority owner and the majority owner’s individual members Marc Jacobs and Ira Shapiro.

Plaintiff contends that defendants committed legal malpractice by failing to advise plaintiff that the arrangement to pay the deposit directly to the sponsor and its controlling entity and individuals instead of to an escrow agent was void under the applicable statute and regulations. (General Business Law § 352-h; 13 NYCRR 20.3 [o] [2], [3] [xii].) Defendants do not dispute that, had plaintiff’s deposit complied with the law, plaintiff would have recouped its deposit from the escrow agent when plaintiff invoked its right to rescind the purchase and the sale never closed. Defendants contend that the statute and regulations were inapplicable and that plaintiff’s members were aware that the deposit arrangement with the sponsor posed heightened risks.

To establish legal malpractice, plaintiff must demonstrate that defendants failed to use the ordinary reasonable skill and knowledge of members of the legal profession and that the breach proximately caused plaintiff actual, ascertainable damages. (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d at 49; Dombrowski v Bulson, 19 NY3d 347, 350 [2012].) Plaintiff establishes proximate cause by demonstrating that plaintiff would not have sustained ascertainable damages but for defendants’ negligence. (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d at 50; LaRusso v Katz, 30 AD3d 240, 243 [1st Dept 2006]; Brooks v Lewin, 21 AD3d 731, 734 [1st Dept 2005]; see Stackpole v Cohen, Ehrlich & Frankel, LLP, 82 AD3d 609, 610 [1st Dept 2011].)

For defendants to prevail by summary judgment, they must show that they advised plaintiff with the due diligence and skill of members of the legal profession or that a breach of that{**58 Misc 3d at 712} standard was not the proximate cause of plaintiff’s damages. (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d at 50.) While defendants’ failure to advise plaintiff of an inapplicable statute or regulation would not support a legal malpractice claim (Gabrielli v Dobson & Pinci, 51 AD3d 571, 572 [1st Dept 2008]) defendants fail to show that the statute or regulations on which plaintiff relies did not apply. (See Lichtenstein v Willkie Farr & Gallagher LLP, 120 AD3d 1095, 1098 [1st Dept 2014].)”

“Section 4.1 of the purchase agreement provided that the condominium unit’s purchase price was $9,850,000 and that the{**58 Misc 3d at 711} deposit was $985,000, 10% of the purchase price. In connection with the purchase, plaintiff, whose members were nonparties Neil Yaris, Alan Green, and Wendy Maitland, executed the second and third riders to the purchase agreement regarding the 10% deposit required by the agreement. The riders provided for payment of the deposit to the sponsor and its controlling owners, instead of the escrow agent as the purchase agreement specified. Specifically, the second rider required plaintiff to pay a nonrefundable deposit of 1% of the purchase price to the sponsor itself. The third rider required plaintiff to pay a deposit of the remaining 9% of the purchase price by making a loan to the sponsor’s majority owner and the majority owner’s individual members Marc Jacobs and Ira Shapiro.

Plaintiff contends that defendants committed legal malpractice by failing to advise plaintiff that the arrangement to pay the deposit directly to the sponsor and its controlling entity and individuals instead of to an escrow agent was void under the applicable statute and regulations. (General Business Law § 352-h; 13 NYCRR 20.3 [o] [2], [3] [xii].) Defendants do not dispute that, had plaintiff’s deposit complied with the law, plaintiff would have recouped its deposit from the escrow agent when plaintiff invoked its right to rescind the purchase and the sale never closed. Defendants contend that the statute and regulations were inapplicable and that plaintiff’s members were aware that the deposit arrangement with the sponsor posed heightened risks.”

 

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Andrew Lavoott Bluestone

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened…

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened his private law office and took his first legal malpractice case.

Since 1989, Bluestone has become a leader in the New York Plaintiff’s Legal Malpractice bar, handling a wide array of plaintiff’s legal malpractice cases arising from catastrophic personal injury, contracts, patents, commercial litigation, securities, matrimonial and custody issues, medical malpractice, insurance, product liability, real estate, landlord-tenant, foreclosures and has defended attorneys in a limited number of legal malpractice cases.

Bluestone also took an academic role in field, publishing the New York Attorney Malpractice Report from 2002-2004.  He started the “New York Attorney Malpractice Blog” in 2004, where he has published more than 4500 entries.

Mr. Bluestone has written 38 scholarly peer-reviewed articles concerning legal malpractice, many in the Outside Counsel column of the New York Law Journal. He has appeared as an Expert witness in multiple legal malpractice litigations.

Mr. Bluestone is an adjunct professor of law at St. John’s University College of Law, teaching Legal Malpractice.  Mr. Bluestone has argued legal malpractice cases in the Second Circuit, in the New York State Court of Appeals, each of the four New York Appellate Divisions, in all four of  the U.S. District Courts of New York and in Supreme Courts all over the state.  He has also been admitted pro haec vice in the states of Connecticut, New Jersey and Florida and was formally admitted to the US District Court of Connecticut and to its Bankruptcy Court all for legal malpractice matters. He has been retained by U.S. Trustees in legal malpractice cases from Bankruptcy Courts, and has represented municipalities, insurance companies, hedge funds, communications companies and international manufacturing firms. Mr. Bluestone regularly lectures in CLEs on legal malpractice.

Based upon his professional experience Bluestone was named a Diplomate and was Board Certified by the American Board of Professional Liability Attorneys in 2008 in Legal Malpractice. He remains Board Certified.  He was admitted to The Best Lawyers in America from 2012-2019.  He has been featured in Who’s Who in Law since 1993.

In the last years, Mr. Bluestone has been featured for two particularly noteworthy legal malpractice cases.  The first was a settlement of an $11.9 million dollar default legal malpractice case of Yeo v. Kasowitz, Benson, Torres & Friedman which was reported in the NYLJ on August 15, 2016. Most recently, Mr. Bluestone obtained a rare plaintiff’s verdict in a legal malpractice case on behalf of the City of White Plains v. Joseph Maria, reported in the NYLJ on February 14, 2017. It was the sole legal malpractice jury verdict in the State of New York for 2017.

Bluestone has been at the forefront of the development of legal malpractice principles and has contributed case law decisions, writing and lecturing which have been recognized by his peers.  He is regularly mentioned in academic writing, and his past cases are often cited in current legal malpractice decisions. He is recognized for his ample writings on Judiciary Law § 487, a 850 year old statute deriving from England which relates to attorney deceit.