Real estate is a recurrent theme in the NY legal malpractice world.  In a way it’s location, location, location.  Real estate transactions  comprise big money in New York, big money involves attorneys, and where there is attorney activity, there is someone who loses in the transaction.  Where there is a lose in a transaction, there is always the possibility of legal malpractice litigation.

Harpia Asset Mgt. LLC v Shanbaum  2020 NY Slip Op 30953(U)  April 16, 2020  Supreme Court, New York County  Docket Number: Index No. 158691/2019 Judge: Andrew Borrok is an extreme example of a claim of conflict of interest, inasmuch as the opinion states that the attorney admitted representing two parties at once.

“The elements of a claim for breach of fiduciary duty are that (1) defendant owed plaintiff a fiduciary duty, (2) defendant committed misconduct, and (3) plaintiff suffered damages caused by that misconduct (Burry v Madison Park Owner LLC, 84 AD3d 699, 699-700 [1st Dept 2011] [citations omitted]). Here, the Plaintiffs allege that they were owed a fiduciary duty by the Shanbaum Defendants, including a duty of loyalty and honesty (NYSCEF Doc. No. 1, ¶ 99). The Plaintiffs’ further allege that the Shanbaum Defendants breached their fiduciary duty by (i) disclosing the Plaintiffs’ confidential and privileged information to other clients, including Mr. Broyn, (ii) assisting Mr. Broyn with purchasing the Property, and (iii) representing both Mr. Broyn and the Plaintiffs in the potential sale of the Property from Mr. Broyn to the Plaintiffs after the Auction (id. ¶¶ 100-102). The Plaintiffs have also alleged damages (id. ¶ 103-105). Taking the Plaintiffs allegations as true as this court must on a motion to dismiss, the Plaintiffs sufficiently state a claim for breach of fiduciary duty with the requisite particularity pursuant to CPLR §3016(b).

Dismissal is also not required because the Plaintiffs’ breach of fiduciary duty claim does not arise from the same set of facts that underlie the legal malpractice claim (Kurman v Schnapp, 73 AD3d 435, 435-436 [1st Dept 2010] [citations omitted] [explaining that a claim for breach of fiduciary duty is not duplicative of a claim for legal malpractice where each claim is premised on separate facts that support a different theory]). Here, as discussed above, the Plaintiffs allege, among other things, that the Shanbaum Defendants breached their duty of loyalty by assisting Mr. Broyn with the purchase of the Property while at the same time representing the Plaintiffs in having the Auction stayed. By contrast, the Plaintiffs’ ground their legal malpractice claim on the Shanbaum Defendants’ alleged failure to (i) timely file a motion to vacate the Foreclosure Judgment and/or stay the Foreclosure Action before the Auction, (ii) advise the Plaintiffs that the Auction would proceed on April 18, 2019, (iii) make any attempt to reschedule the Auction, and (iv) include the relevant information in the Plaintiffs’ motion to vacate the Auction (NYSCEF Doc. No. 1, ¶¶ 88-93). Under these circumstances, the breach of fiduciary claim arises from a different set of facts than the legal malpractice claim such that both may be sustained (see Exeter Law Group LLP v Wong, 2016 NY Slip Op 32425[U] [Sup Ct, NY County 2016] [denying motion to dismiss certain counterclaims, including counterclaim for legal malpractice due to reliance on alleged negligent representations when forming business ventures and counterclaim
for breach of fiduciary duty for disclosure of confidential and privileged information]; Colucci v Arisohn, 2009 NY Slip Op 32053[U] [Sup Ct, NY County 2009] [declining to dismiss breach of fiduciary claim for defendants’ alleged unauthorized use of plaintiffs’ confidential communications as duplicative of legal malpractice claim predicated on defendants’ actions as
plaintiffs’ former counsel]). Accordingly, that branch of the Shanbaum Defendants’ motion to dismiss the second cause of action for breach of fiduciary duty must be denied.”

Print:
EmailTweetLikeLinkedIn
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.