Building is being sued by NYC for a public nuisance.  While the case is being litigated, building owner rents the storefront to a club.  Operating a club seems to be part of the public nuisance. Did the landlord know that renting it out (again?) to a club was a no-no?  Was the economic incentive too large?  Was it the attorney’s fault that the lease did not include certain phrases?  Jadidian v Drucker   2019 NY Slip Op 03033  Decided on April 24, 2019  Appellate Division, Second Department doesn’t exactly come to a conclusion on this question.

“The plaintiffs, who own certain commercial property in Queens, retained the defendant, an attorney, from 2009 until November 2014 to handle, inter alia, all matters relating to leasing the premises. In addition, in 2013 the defendant represented the plaintiffs in connection with an action commenced by the City of New York to abate a public nuisance(hereinafter the nuisance action). In October 2013, while the nuisance action was pending against the plaintiffs, the defendant negotiated and drafted a lease of the premises to the Hive Sports Bar and Grill, Inc. (hereinafter the Hive). The defendant did not disclose to representatives of the Hive that the premises were the subject of the ongoing nuisance action.

In May 2014, the defendant negotiated a stipulation of settlement with the City on behalf of the plaintiffs, resolving the nuisance action. In the stipulation of settlement, the plaintiffs agreed, among other things, that the premises would not be used for any type of cabaret or club. In November 2014, the City obtained a court order enjoining the use of the premises for any reason and directing that the premises be closed until further order of the court. The Hive, which had been operating a cabaret/club on the premises, commenced an action against the plaintiffs to recover damages, inter alia, for breach of the lease agreement and fraud, alleging that the plaintiffs leased the premises to the Hive knowing of its intended operations. The Hive alleged that the plaintiffs intentionally withheld disclosure of the nuisance action, in which the City had sought to enjoin any use of the premises for a period of one year, and that the premises were shut down in relation to the settlement of the nuisance action, causing the Hive to sustain monetary damages.

The plaintiffs settled the action commenced by the Hive, and then commenced this action against the defendant to recover damages for his alleged legal malpractice in the negotiation and drafting of the lease agreement with the Hive. The defendant moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint. The Supreme Court denied the motion, and the [*2]defendant appeals.”

“Here, accepting the facts alleged in the complaint as true, and according the plaintiffs the benefit of every possible favorable inference, the complaint sufficiently alleges a cause of action to recover damages for legal malpractice. The complaint alleges that the defendant failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession by failing to account for the potential outcome of the nuisance action on the use and occupancy of the premises and to protect the plaintiffs’ interests in relation thereto. The complaint further alleges that the defendant’s negligence proximately caused the plaintiffs to sustain actual and ascertainable damages in lost rent and in settling the action brought by the Hive, and thus, validly states a cause of action to recover damages for legal malpractice (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 443; Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 847; Wolstencroft v Sassower, 124 AD2d 582). Accordingly, we agree with the Supreme Court’s denial of that branch of the defendant’s motion which was pursuant to CPLR 3211(a)(7) to dismiss the complaint.”