Wow! Furgang & Adwar, LLP v S.A. Intl., Inc.  2018 NY Slip Op 31151(U)  June 6, 2018
Supreme Court, New York County  Docket Number: 651192/2014  Judge: Eileen A. Rakower is a primer on the elements of legal malpractice, breach of contract, breach of fiduciary duty, fraud, as well as how to decide a CPLR 3211 motion and when reargument may be had.  It’s practically a full course on legal malpractice and its siblings.  So, we’ll review the legal malpractice portion today.

“SAI’ s first counterclaim alleges that F &A and Furgang breached their fiduciary duty during their representation of SAI in the trademark dispute. Specifically, SAI claims that F&A and Furgang inter alia overcharged for work allegedly performed approximating $300,000 including costs. As a second counterclaim, SAI alleges that F&A and Furgang committed legal malpractice. The reason being that F &A and Furgang inter alia incorrectly assessed the strength of SAI’ s position in the trademark litigation, incorrectly assessed the strength of a motion to dismiss filed by SAI’s adversary and competitor, advised against negotiation and settlement efforts, and “embroil[ ed] SAi in costly litigation.” (SAI Answer at 15) SAI adds that “But for Furgang’s 1 departure from the ordinary standards of professional conduct and breach of Furgang’ s fiduciary duties, SAi would not have become embroiled in a costly lawsuit and would have benefitted by saving more than $300,000 in legal fees.” (SAi Answer at 15) As a third counterclaim, SAi alleged that that F &A and Furgang breached its contract with SAi by inter alia pursuing a costly and aggressive litigation strategy that avoided  settlement, charging exorbitant amounts that were not justified, and causing SAi to sustain losses in the amount of $300,000. As a fourth counterclaim, SAi alleges that F &A and Furgang breached the implied covenant of good faith and fair dealing by: pursuing resolution of the trademark litigation in a reckless manner that increased expenses and destroyed SAi’ s right to receive the fruits of the contract. This claim especially holds according to SAi because F&A’s agreement with SAi to pursue the trademark litigation in a matter that “did not cost a large sum of money constituted a contract.” (SAi Answer at 16) ”

“To sustain a cause of action for legal malpractice, the plaintiff must show 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 client to sustain actual and ascertainable damages. (Brookwood Companies, Inc., v Alston & Bird LLP, 146 AD3d 662, 666
[1st Dept 201 7].) “An attorney’s conduct or inaction is the proximate cause of a plaintiffs damages if ‘but for’ the attorney’s negligence ‘the plaintiff would have succeeded on the merits of the underlying action’, or would not have sustained ‘actual and ascertainable’ damages.” (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 50 [2015].) Accordingly, “the successful
conclusion of the underlying action does not preclude the maintenance of a malpractice action where a claim is made that the defendant attorney’s neglect increased litigation expenses.” (76 NY Jur 2d, Malpractice § 2) Indeed, in Skinner v Stone, Raskin & Israel (724 F2d 264, 265 [2d Cir 1983]), the Court noted, “Whether appellant wins or loses in the [underlying] action, he still will be out of pocket for his expenses in opposing enforcement of the defective default judgment … If these
expenses resulted from [the attorney’s] negligence and were reasonably incurred, they should be recoverable.” (see also VDR Realty Corp. v Mintz, 167 AD2d 986, 986 [4th Dept 1990]) (stating “Plaintiff VDR Realty Corp. may recover damages even though it was successful in the underlying action.”) ”

“SAi states a counterclaim for legal malpractice. Because SAi alleges that F &A incorrectly assessed the strength of SAi’ s position in the trademark litigation, incorrectly assessed the strength of a motion to dismiss filed by SAi’ s adversary and competitor, advised against negotiation and settlement efforts, and embroiled SAi in costly litigation, SAi alleges that F &A “failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession.”
(Brookwood Companies, Inc., v Alston & Bird LLP, 146 AD3d 662, 666 [1st Dept 2017]; SAi Answer at 15) In this regard, SAi’s counterclaim for legal malpractice is not solely based on the excessiveness of F&A’s fee because it is premised on the quality or content of F&A’s legal advice. (Johnson v Proskauer Rose LLP, 129 AD3d at 65) Because SAi claims that “[b]ut for Furgang’s2 departure from the ordinary standards of professional conduct, SAi would … have [saved] more than $300,000 in legal fees”, SAi states that “‘but for’ [F&A’s] negligence[,] [SAi] … would not have sustained ‘actual and ascertainable’ damages.” (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 50 [2015].) That the underlying trademark litigation was dismissed in SAi’s favor does not preclude the maintenance of the malpractice action because the counterclaim alleges that F&A’s neglect “increased litigation expenses.” (76 NY Jur 2d, Malpractice§ 2) “If these [300,000] expenses resulted from [F&A’s] negligence and were reasonably incurred, they should be recoverable.” (Skinner v Stone, Raskin & Israel (724 F2d 264, 265 [2d Cir 1983]) Accordingly, SAi “may recover damages even though it was successful in the underlying action.” (VDR Realty Corp. v Mintz, 167 AD2d 986, 986 [4th Dept 1990].) “