No privity, no malpractice.  That’s the basic lesson of 97 2nd LLC v Goldberg Weprin Finkel Goldstein LLP      2019 NY Slip Op 30021(U)  January 4, 2019  Supreme Court, New York County
Docket Number: 154593/2018  Judge: Arlene P. Bluth.  In this case where a nice piece of property went back and forth between developers, the attorneys obtained dismissal of the legal malpractice claims.

“This action arises out of an ownership dispute over plaintiff, a company that used to own property located at 97 Second Avenue in Manhattan. Initially plaintiffs sole member was Raphael Toledano. The complaint alleges that Toledano received financing in April 2015 from Letko Funding LLC (“Letko”) for another one of his businesses (“West 16”) and that these funds were secured by Toledano’s membership interest in plaintiff. In other words, Toledano’s interest in plaintiff was collateral for Letko’s loan.

In April 2017, West 16 defaulted and Letko conducted an auction sale of Toledano’s membership interest in plaintiff. Letko successfully acquired Toledano’s interest at the sale and assigned the bid to another entity (“22 Columbus”). After other transactions, 22 Columbus eventually appointed Michael K. Shah as sole manager of plaintiff on June 20, 2017.

On that same day, 22 Columbus executed a deed on behalf of plaintiff transferring ownership of the property to DS 97 2nd Avenue Property Owner LLC (“DS 97″), an affiliate of Shah, the owner of22 Columbus. Allegedly, Toledano then called Shah and directed 22 Columbus to sell the premises to him. On July I 0, 2017, DS 97 filed an order to show cause to restrain Toledano from interfering with the property.
In August 2017, defendant (a law firm) filed a Chapter 11 bankruptcy petition at Toledano’s direction on behalf of plaintiff. Plaintiff (controlled by Shah in this action) claims that it never gave defendant permission to file the claim or appear on its behalf in bankruptcy court. Plaintiff contends that its sole member, at the time of the filing of the bankruptcy petition, was 22 Columbus and 22 Columbus never retained defendant. Plaintiff contends.that defendant knew that it did not have authority to bring the bankruptcy case and brought the case anyway. The bankruptcy case was later dismissed after Shah intervened and filed a motion to dismiss. Plaintiff brings causes of action based on Judiciary Law § 487, malicious prosecution, professional negligence, malpractice, conversion and identity theft as well as slander of title based on the bankruptcy case.”

“”New York courts impose a strict privity requirement to claims of legal malpractice; an attorney is not liable to a third party for negligence in performing services on behalf of his client. Thus, absent an attorney-client relationship, a cause of action for legal malpractice cannot be stated” (Federal Ins. Co. v North American Specialty Ins. Co., 47 AD3d 52, 59, 847 NYS2d 7 [!st Dept 2007]).

These causes of action are severed and dismissed because there was no privily between plaintiff (now controlled by Shah) and defendant. It is undisputed that Toledano hired defendant to bring the bankruptcy proceeding and that defendant cited to the June 19 letter agreement with Lefkowitz as the basis for Toledano’s ownership interest in plaintiff. Toledano’s position was that the auction sale by Lefkowitz was improper and hired defendant to bring a bankruptcy case that to help him regain his interest.

While Shah vehemently disagrees with the decision to bring the bankruptcy case, that does not state a cause of action· for professional negligence or legal malpractice because he did not retain defendant. Shah intervened in the bankruptcy case through his own counsel, moved to dismiss and eventually won dismissal. An adversary cannot claim legal malpractice and, unlike the cases cited by plaintiff, defendant did not commit fraud or collusion or a malicious act.”

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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.