Whether it’s social policy, whether it’s an attempt to prevent every case from turning into a legal malpractice coda, the rule is simple: absent fraud, collusion, malice or other special circumstances you just cannot successfully sue the other guy’s attorney. The alternative? Every case would then proceed to a legal malpractice case. So says Hinnant v Carrington Mtge. Servs., LLC 2019 NY Slip Op 03575 Decided on May 8, 2019 Appellate Division, Second Department along with hundreds of other cases.
“In March 2015, the plaintiffs executed a consolidated note in favor of the defendant Carrington Mortgage Services, LLC (hereinafter Carrington), in the sum of $715,533, which was secured by a consolidated mortgage on the plaintiffs’ property in Brooklyn. In March 2016, the plaintiffs commenced this action against, among others, the defendant Jeffrey Leavitt, the settlement agent for Carrington, seeking to recover damages for fraud and professional negligence. The plaintiffs alleged that while the consolidated note stated that their monthly mortgage payment would be $3,364.70, their monthly mortgage payment was, in fact, approximately $4,500. The plaintiffs alleged, among other things, that Leavitt ignored the fact that “the monthly mortgage payments expected from the Plaintiffs [were] not consistent with the principal as it appeared on the initial monthly mortgage obligation and the subsequent . . . Consolidated Agreement,” and that Leavitt failed to point out these inconsistencies to the plaintiffs. Leavitt moved pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against him. The Supreme Court denied Leavitt’s motion, and Leavitt appeals.”
“Absent fraud, collusion, malicious acts, or other special circumstances, an attorney is not liable to third parties not in privity, or near-privity, for harm caused by professional negligence (see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 595; Fredriksen v Fredriksen, 30 AD3d 370, 372; Rovello v Klein, 304 AD2d 638; Conti v Polizzotto, 243 AD2d 672). Here, even accepting the facts alleged in the complaint as true, the complaint fails to allege the existence of an attorney-client relationship, privity, or a relationship that otherwise closely resembles privity between the plaintiffs and Leavitt (see DeMartino v Golden, 150 AD3d 1200, 1201; Fredriksen v Fredriksen, 30 AD3d at 371-372; Goldfarb v Schwartz, 26 AD3d 462, 463; Rovello v Klein, 304 AD2d at 638-639). Furthermore, the complaint does not contain specific allegations that would place the plaintiffs within an exception to the privity requirement (see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d at 595; Fredriksen v Fredriksen, 30 AD3d at 372). The complaint fails to set forth evidentiary facts demonstrating that Leavitt was a participant with Carrington in a common scheme or plan to defraud the plaintiffs, or otherwise aided and abetted Carrington in the commission of fraud (see Fredriksen v Fredriksen, 30 AD3d at 372; Goldfarb v Schwartz, 26 AD3d at 463-464).
Furthermore, the documentary evidence submitted by Leavitt in support his motion utterly refuted the plaintiffs’ factual allegations, and conclusively established a defense as a matter of law (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d at 326). Specifically, Leavitt submitted an acknowledgment dated March 14, 2015, signed by the plaintiffs in connection with the consolidated mortgage transaction, which stated: “The undersigned further acknowledge that Jeffrey H. Leavitt, Esq., P.C. represents the Lender in this transaction, that the parties have not been given nor are relying on any legal advice given by Jeffrey Leavitt, Esq. and that no attorney/client relationship exists between the Borrowers and Jeffrey H. Leavitt, Esq., P.C.” Additionally, Leavitt submitted, among other things, the consolidated note and consolidated mortgage, which both stated that the monthly payment of principal and interest, in the amount of $3,364.70, would be just part of a larger monthly payment required by the security instrument, which would include taxes, insurance, and other charges.”