Boesky v Levine  2018 NY Slip Op 33017(U)  November 27, 2018  Supreme Court, New York County  Docket Number: 650756/2017  Judge: Eileen Bransten is a story containing the only certainties in life:  massive taxes and death, along with  a tricky tax scheme, bankruptcies, indictments, millions of dollars in losses and 15 years of litigation.  This case ends in dismissal, mostly for taking too long to sue.

“In this action, plaintiffs seek to recover damages for, among other things, defendants’
alleged fraud and negligence in connection with their tax-related advice, in the preparation of
plaintiffs’ ta”{ returns, and in their representation of plaintiffs in the litigation of a tax dispute.
Defendants Mazars USA LLP as successor in interest to Weiser LLP (Mazars USA), Herrick
Feinstein LLP (Herrick Feinstein), Moritt Hock & Hamroff LLP (Moritt Hock), and Harold
Levine, separately nove to dismiss the complaint insofar as asserted against them pursuant to
CPLR 3211 (a) (5) and (a) (7) (Motion Sequence Nos. 001- 004, respectively). 1 For the
following reasons, the motions are granted”

“Plaintiffs Boesky and Hirmes were senior executives of The Related Companies, Inc.
(Related), a global real estate development firm to which Katz provided tax advice and
accounting services. ld. at il~i 22-24. In or about 2002, Boesky approached Katz, who had
become a trusted advisor to plaintiffs, to inquire whether Katz knew of any legitimate real estate
deals that would reduce Boesky’s tax liability. Id. at ¶ 25. Katz informed Boesky that he knew
of a strategy to take advantage of a legal loophole in the tax law, whereby Boesky could invest in
a limited liability company (LLC) for the sole purpose of purchasing and then donating a remainder interest in certain real estate (or a remainder interest in the rights to an entity that
directly or indirectly holds the real estate). The amount of the charitable deduction claimed
would be higher than the amount Boesky paid to acquire the remainder interest, thereby creating
a tax deduction offsetting most of the income realized by Boesky for that tax year. Id. at ~26.
This strategy is referred to in the complaint as the “remainder interest tax strategy”. Id.
At the behest of Katz, plaintiffs retained Katz’s close friend Levine, to provide them Vvith
legal advice and services concerning the remainder interest tax strategy, including fonning the
LLCs required to execute the strategy. Id. at ~27. In 2002, Levine and Herrick Feinstein began
providing legal advice and services to plaintiffs pursuant to oral agreements. See Comp. at 4128.
At the time, plaintiffs did not have a written engagement letter with Levine or Herrick Feinstein.
Levine advised plaintiffs that the charitable deduction created by the remainder interest
tax strategy was legal and the “only legitimate way” to shelter income from taxation. Id. at ~~ 31-
32, Levine also told plaintiffs that a taxpayer utilizing the remainder interest tax strategy had
been audited by the Internal Revenue Service (IRS) and prevailed in the audit See id. at~- 34. In
addition, he told plaintiffs that the IRS had issued a letter ruling, or other position statement, that
the remainder interest tax strategy was a legitimate tax savings transaction. Id.”

“The first cause of action is for legal malpractice and is assessed against Levine, Herrick
Feinstein, and Moritt Hock. See Comp. iii! 172~185. Plaintiffs allege that these defendants
breached their duty to represent plaintiffs with such reasonable skill, care and diligence as
members of the legal profession commonly exercise in similar situations by: failing to implement
adequate controls to protect clients such as plaintiffs tram the intentional fraud and the negligent
misconduct of Levine; not doing anything to prevent Levine from marketing and promoting
unlawful tax shelters and in profiting from those acts; failing to apprise plaintiffs as additional
legal developments, rulings and decisions were issued by the IRS and the courts making it dear
the tax shelters they were prompting were not legitimate; and in continuing to provide flawed
and erroneous advice despite their continuing representation of plaintiffs through 2016. See id. at
¶s 74-18 l.

“Levine, Henick Feinstein, and Moritt Hock each contend that this cause of action is time~
barred. Plaintiffs have conceded that their malpractice claim insofar asserted  against Herrick
Feinstein is untimely. See Plaintiffs’ Memorandum of Law in Opposition to Defendant Herrick Feinstein’s Motion to Dismiss Complaint, at 8 n3. Therefore, the only remaining defendants
against whom this cause of action is asserted are Levine and Moritt Hock.”

“Here, the complaint does not allege that there was an “express, mutual agreement to advise” plaintiffs on the effect of the remainder interest tax strategy after Levine’s original advice. Apple Bank for Sav. v. PricewaterhouseCoopers LLP, 70 AD3d 438, 438 (1st Dept 2010); Johnson v. Proskauer Rose LLP, 129 A.D.3d 59, 68 (1st Dept 2015) (“while there was certainly the possibility that the need for future legal work would be required with respect to the tax strategy (promoted by the defendants), plaintiffs could not have ‘acutely’ anticipated the need for farther counsel from defendants that would trigger the continuous representation toil”). ”

“Here, the complaint alleges that plaintiffs received counsel from Levine between 2002 to
2004 regarding the tax strategy, However, it was not UIJ.til three years later, 1112007, that Levine
began to counsel them on the same subject matter — i.e., how to handle the IRS’s and NYSDTF’s
challenges to the strategy. This three-year gap between the provision of Levine’s services on this
matter is so great that the representation cannot be deemed continuous. See Landau v. Snow
Becker Krauss, P.C., 111 A.D.3d 795, 797 (2d Dept 2013) (stating “as evidenced by, inter aha,
the more than four-year period of time between the issuance of the opinion letter and the
plaintiffs alleged retention of the defendants in July 2007, during which no further legal
representation was undertaken with respect to the subject matter of the opinion letter, the parties
did not contemplate that any further representation was needed”). As such, any claims based
upon the advice rendered by Levine from 2002 through 2004 are untimely. ”


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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.