Amtrust N. Am., Inc. v Pavloff  2020 NY Slip Op 31005(U)  April 23, 2020 Supreme Court, New York County  Docket Number: Index No. 156855/2019 Judge: Andrew Borrok is a wonderful recapitulation of how “but for” causation, proximate cause, allegations of damage in a pre-answer motion to dismiss should be handled.  All too often, judges require proofs necessary in a summary judgment motion to be provided in a pre-answer motion, and seem away too quick to dismiss.

“To plead a legal malpractice claim, a plaintiff must allege: (1) that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, (2) that the attorney’s breach of that duty proximately caused plaintiff to (3) sustain actual and ascertainable damages (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY 3d 40, 49-50 [2015]). A claim for legal malpractice can be viable “despite settlement of the underlying action, if it is alleged that the settlement was effectively compelled by [the] mistakes of counsel” (Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1st Dept 1990] [holding settlement of underlying action did not compel dismissal]). At the pleading stage, a legal malpractice plaintiff does not need to show “likelihood of success” but “is required only to plead facts from which it could reasonably be inferred that the defendant’s negligence caused” his loss (Garnett v Fox, Horan & Camerini, LLP, 82 AD3d 435 [1st Dept 2011]). As concerns damages, it is sufficient to sustain a claim for a plaintiff to allege facts from which actual damages may be reasonably inferred, a showing of actual damages is not required at the motion to dismiss stage of proceedings (id.).
Here, contrary to the Defendants’ argument, the Complaint adequately pleads a duty owed by the Defendants to AmTrust as a client. And, for the avoidance of any doubt, Ms. Pavloffhas acknowledged under oath at her deposition that Am Trust was, in fact, her client, along with CastlePoint (NYSCEF Doc. No. 15 at 5:8-16). To the extent that Ms. Pavloff may have taken the position at her deposition that advising Am Trust (or Mr. Kuhn) about the Conservation Order and/or inquiring as to whether Mr. Kuhn was aware of the Conservation Order and whether the Conservation Order impacted his authority to settle the case was outside of the scope of her representation (i.e., even after she represented to the court that funds were available in the course of the settlement of the Underlying Action), this is, at best, a factual issue for discovery and the trier of fact as Ms. Pavloff and FBZ have not produced a retainer agreement and have acknowledged that they never made a retainer agreement for their services to Am Trust in the Underlying Action.

Turning to proximate cause, although the required standard of proximate cause has been imprecisely and variously stated, the alleged malpractice needs to be at least a substantial factor if not the “but for” factor in a plaintiffs damages (180 E. 88th St. Apt. Corp. v Law Office of Robert Jay Gumenick, P.C., 2010 NY Slip Op 33848 [Sup Ct NY Cnty 2010] [discussing
varying formulations of proximate cause for legal malpractice actions] [ affd 84 AD3d 5 82 [pt Dept 2011]). Here, the Complaint alleges that, “[h]ad [Ms. Pavloff] read the Conservation Order in any meaningful way … , or call[ed] the California Conservation Court or the California Conservation and Liquidation Office, or even just discuss the Order with her client, she would have known to advise Am Trust not to proceed with the settlement conference … where she represented that the insurer would contribute its $5 million limit to the settlement,” which representation then “directly caused AmTrust to be sued (Compl., iii! 71-75). This, together with other allegations in the Complaint, is sufficient to allege that the Defendants’ conduct was a substantial factor in Am Trust’s damages for purposes of pleading a legal malpractice claim. Inasmuch as the Defendants cite Kluczka v Lecci ( 63 AD3d 796 [2d Dept 2009]) and Reibman v Senie (302 AD2d 290 [l st Dept 2003]) for the proposition that the Complaint does not allege  proximate cause, those are both summary judgment decisions which do not address allegations at the pleading stage of the proceedings. Simply put, an “attorney’s conduct or inaction is the proximate cause of a plaintiffs damages if but for the attorney’s negligence the plaintiff. .. would not have sustained actual and ascertainable damages” (Gallet, Dryer & Berkley, LLP v Basile, 141AD3d405 [l st Dept 2016]). Here, the Complaint pleads that Ms. Pavloff s failure to meaningfully read and discuss the Conservation Order caused Am Trust to proceed with a settlement it would not have otherwise undertaken and that it has sustained at least a million dollars in damages as a result. This is sufficient at this juncture. ”

“Finally, to the extent that the Defendants argue that Mr. Kuhn as the client authorized Ms.Pavloff as Am Trust’s attorney to represent to counsel for Ms. Pruss and Great American and to the court that the $5 million was available for settlement in the Underlying Action, this argumentsimply misses the point. While it is true that “an attorney should not be held liable for ignorance of facts which the client neglected to tell him or her,” an attorney also “has a responsibility to investigate and prepare every phase of a client’s case” (Green v Conciatori, 26 AD3d 410, 411 “

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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.