In a recurring theme, the “but for” element of legal malpractice is the place where battles are lost. Rag & Bone Holdings LLC v Hand Baldachin & Assoc. LLP 2020 NY Slip Op 31149(U) May 2, 2020 Supreme Court, New York County Docket Number: Index No. 156994/2019 Judge: Andrea Masley is a fine example. The Court determines that the case is timely. It determines that there is enough of an attorney-client relationship for “privity.” However, there is no “but for” causation.
“Defendants contend that the legal malpractice claim must be dismissed because the alleged legal malpractice occurred in 2012, and this action was not commenced until
2019, far beyond the three year statute of limitations. Holdings asserts that its claim is timely because defendants continuously represented Holdings in connection with the
matters at issue until at least January 2017. As alleged in the complaint, defendants routinely advised Holdings relating to the MA and the calculation of T J PRP’s distributions pursuant to the operating agreement, which depended on the calculation of the management fee under the MA (NYSCEF 11, Complaint at ~~25, 33). These allegations are also supported by documentary evidence, including an email sent by defendant Hand to TJ PRP in November 2016 and defendants’ invoices (NYSCEF 38, Email; NYSCEF 40, Invoices).
While the court acknowledges that the allegations in the complaint involve references to the MA and its application, but do not involve specific action taken by defendants regarding the agreement, the references to the MA in the exhibits submitted by Holdings demonstrate a continued representation in connection with the MA. At this stage, the allegations, as supported by documentary evidence, are sufficient to deny the motion to dismiss on statute of limitations grounds. At the very least, the documentary evidence raises an issue of fact as to continuous representation. ”
“Defendants contend that the complaint must be dismissed because Holdings is not a party to the MA. Defendants contend that as a nonparty, Holdings lacks standing
to sue for damages based on defendants’ alleged malpractice in drafting the MA. Holdings asserts that the legal work that defendants performed in connection with the
MA was performed on behalf of Holdings, as evidenced by defendants’ own invoices. Holdings alleges “specific facts upon which the existence of an attorney-client
relationship or privity between the parties could be inferred” (Conti v Polizzotto, 243 AD2d 672, 673 [2d Dept 1997]). Holdings has sufficiently alleged that the existence of
an attorney-client relationship with defendants. This relationship is also supported by documentary evidence (NYSCEF 38, Email; NYSCEF 40, Invoices). It is irrelevant that
Holdings was not a party to the MA. What is relevant is the alleged attorney-client relationship between Holdings and defendants, and Holdings has sufficiently established that relationship.”
“Here, Holdings has failed to sufficiently allege that defendants’ alleged negligent drafting of the MA and operating agreement was the proximate cause of its damages.
In contrast, Holdings alleges in its complaint that Holdings was made aware of the alleged error in the calculation formula but failed to do anything to correct it besides
sending one email to defendants which went unanswered (NYSCEF 11, Complaint at 22, 23). Further, Holdings admits that, despite knowing of the calculation formula
agreed to in the MA, for five years, it continued to calculate the management fees contrary to the plain language of the MA (id. at ~24). This continued defiance of the MA
calculation was the proximate cause of Holdings’ damages. Further, although Holdings alleges that defendants continued to provide legal services in respect to T J PR P’s distributions, the complaint is bereft of an allegation that defendants continued to advise Holdings to breach the MA by calculating the fees in the manner Holdings believed that
the parties intended. The court cannot hold an attorney liable for the egregious conduct of its client. “