Whether there has been legal malpractice in a real estate development setting, or no malpractice at all depends on at least four elements.  The least interesting of these elements is the departure.  In almost every legal malpractice case there is a definite departure.  It’s the “proximate cause” and the “but for” portions of the equation that are much more interesting.  In Bauhouse Group I, Inc. v Kalikow  2018 NY Slip Op 33055(U)  December 4, 2018  Supreme Court, New York County
Docket Number: 158277/2017 Judge: Saliann Scarpulla which we discussed last week, not only was collateral estoppel a problem, but the Court found that there was no proximate cause connection between the alleged wrongs and the bad outcome.  Put another way an unwaivable conflict without more is insufficient.

“The remaining allegations in the complaint underlying the malpractice claim are that: Defendants had unwaivable conflicts of interest while representing Plaintiffs because Kalikow was related to Lenders and because Defendants’ represented Lenders in other, unrelated matters; these conflicts were not adequately explained or waived; and Defendants coerced Bauhouse to sign the inadequate Waiver Letter.

To state a claim for legal malpractice, the plaintiff must allege: “the negligence of the attorney; that the negligence was the proximate cause of the loss sustained; and proof of actual damages.” Between The Bread Realty Corp. v Salans Hertzfeld Heilbronn Christy & Viener, 290 AD2d 380, 380 (1st Dept 2002) (internal citations omitted). In order to adequately allege proximate cause, the plaintiff “must plead specific factual allegations establishing that but for counsel’s deficient representation, there would have been a more favorable outcome to the underlying matter,” Dweck Law Firm, LLP v Mann, 283 AD2d 292, 293 (1st Dept 2001) (citation omitted), or that “plaintiff would have prevailed in the matter at issue or would not have sustained any damages.” Between
The Bread Realty Corp., 290 AD2d at 380 (citations omitted).

Here, the complaint does not contain factual allegations sufficient to establish that the purportedly ill-explained unwaivable conflicts of interest were the proximate cause of any alleged harm to Plaintiffs. See Schafrann v NV Famka, Inc., 14 AD3d 363, 364 (1st Dept 2005) (“A conflict of interest, even if a violation of the Code of Professional Responsibility, does not by itself support a legal malpractice cause of action.” (citation omitted)); Coleman v Fox Horan & Camerini, LLP, 274 AD2d 308, 309 (1st Dept 2000); see also Kodsi v Gee, 100 AD3d 437, 438 (1st Dept 2012) (citations omitted).

Moreover, the complaint is devoid of any factual allegations to support the Plaintiffs’ contention that Defendants coerced Bauhouse into executing the Waiver Letter. See generally Rau v Borenkojf, 262 AD2d 388, 388 (2d Dept 1999) (complaint containing conclusory allegations, “unsupported by any factual allegations, that the defendants negligently advised and coerced [plaintiff] to settle his claim, and that he would have obtained a higher settlement or judgment but for their negligence” failed to state claim for malpractice).

In sum, to the extent that Plaintiffs’ allegations survive the application of collateral estoppel, they nevertheless fail to state a cause of action for malpractice.”