The continuous intertwining of legal malpractice and real estate in NYC cases is not merely coincidence.  It is a marriage of money and dispute resolution.  Community Assn. of the E. Harlem Triangle, Inc. v Butts  2020 NY Slip Op 32163(U)  June 29, 2020  Supreme Court, New York County  Docket Number: 656028/2018  Judge: Andrea Masley puts together some of the most powerful civil rights leaders, valuable real estate in Harlem and money.  Millions of dollars were at stake in this real estate transaction, which went badly.

“In March 1994, defendant ADC and plaintiff the Community Association of East Harlem Triangle, Inc. (CAEHT) formed a joint venture agreement for the purpose of developing the property located at 160 East 125th Street (the Property) as a Pathmark supermarket (NYSCEF Doc: No. 72, First Amended Complaint [FAC] 1{12). The parties formed East Harlem Abyssinian Triangle Corp. (EHAT Corp.) to conduct the business of the joint venture and East Harlem Abyssinian Triangle Limited Partnership (EHAT LP) to own and develop the Property (id.1f1f 13, 16). EHAT Corp. was the general managing partner of EHAT LP, and CAEHT and ADC each held 50% of EHAT Corp.’s stock (id. 1J1f14-15). EHAT Corp. holds a 51% interest in EHAT LP and the New York City Economic Development Corporation holds a 49% interest in EHAT LP (id. 1111 19). ”

“On March 24, 2014, the Board held a meeting to consider an offer from Extell Development Company (Extell), a New York City based real estate development firm, to purchase the Property for $39 million (id. 1142). Simpson, Howard and Sozio personally · attended the meeting (id.1f 46). During the meeting, a CAEHT representative asked Howard whether there were any other offers to purchase the Property aside from that ofExtell (id.). Before Howard could answer, however, Simpson falsely stated that Extell was the only party to show an interest in purchasing the Property (id.). Despite knowing this statement was untrue, neither Sozio nor Howard corrected Simpson at or after the meeting, or otherwise disclosed the higher Peebles/Integrated offer (id. W 47-50). Plaintiffs allege that the Peebles/Integrated offer was deliberately concealed from it because Simpson, WM, ADC, Butts, Howard, Sozio and Ariel had previously agreed upon a scheme to steer the Property to Extell (id. W 72-74). In this connection, at the March 2, 2014 meeting, the Board also discovered that ADC had already received an advance payment from Extell in the amount of $2.5 million at an unspecified date prior to the  eeting, which Simpson, Howard, Sozio and Butts had failed to disclose (id.1f 45).”

“Plaintiffs allege that, as a direct and proximate consequence of the fraudulent concealment of the Peebles/Integrated offer, EHAT Corp. was damaged in the amount of
$3 million, or the difference between the amount paid by Extell to purchase the Property and the market value of the Property (id., 111197, 104, 111, 118, 125). The Complaint sets
forth 58 causes of action in various permutations against different combinations of the defendants, sounding in fraud, breach of fiduciary duty, and aiding and abet, together with
a claim pursuant to Business Corpc>rations Law (BCL) § 720 and a demand for punitive damages. ”

“The WM defendants assert that plaintiffs’ claims against them are barred by the three-year statute of limitations for professional malpractice under CPLR 214(6). They argue that plaintiffs have characterized their cause of action as fraud merely to circumvent the time-bar by taking advantage of the six-year limitations period of CPLR 213(8). Emphasizing that the WM defendants were acting the capacity as plaintiffs’ counsel, they contend that the essence the Complaint is that Simpson failed to inform his clients of material information in context of his legal representation.

The New York State Legislature amended CPLR 214(6) in 1996 to address the” effect of decisions that “abrogat[ed] and circumvent[ed]” the original legislative intent by’· allowing actions that were technically malpractice actions to proceed under a six-year contract statute of limitations (Revised Assembly Memo in Support, Bill Jacket, L 1996, ch 623). The legislative history explains that “where the underlying complaint is one which essentially claims thatthere was a failure to utilize reasonable care or where acts of omission or negligence are alleged or claimed, the statute of limitations shall be three years … regardless of whether the theory is based in tort or in a breach of contract” (In re
R.M. Kliment & Frances Halsband, Architects, 3 NY3d 538, 541-542 [2004]). Accordingly, a purported fraud claim against an attorney will be dismissed if it actually sounds in legal
malpractice (Kinberg v Garr, 60 AD3d 597, 597 [1st Dept 2009]). Thus, if all the WS defendants did was breach the Rules of Professional Conduct by negligently failing to keep
plaintiffs apprised of developments regarding the Property or providing them with information, then they would be entitled to dismissal.

Defendants’ analysis, however, disregards plaintiffs’ key allegation that Simpson deliberately lied about the existence of additional offers. Regardless of whether the mispresentation was made in the course of the WM defendants’ legal representation, the alleged deception takes the claim out of the realm of mere negligence. The time-bar will not apply where there exists a fraud claim that is in essence “sufficiently distinct” from a claim of legal malpractice (Johnson v Proskauer Rose LLP, 129 AD3d 59, 70 [1st Dept 2015]). The fact that a fraud against a client might a/so constitute a departure from the standard of reasonable care, or that plaintiffs might assert other claims that are mere malpractice, does not render the entire Complaint untimely.”

“Epiphany Community Nursery School v Levey, 171AD3d1 (1st Dept 2019), does·  not require a different result. There, the Court upheld the dismissal of a fraud claim against an accounting firm on the ground that it was, in fact, duplicative of an untimely malpractice claim (id. at 11 ). Although the decision recited that “defendants” made false material representation (id. at 8), it does not appear that those parties included the accountant. Notably, the lower court specifically distinguished between the malpractice
and fraud claims, and found that the former were time barred, and the latter were deficient for failure to allege justifiable reliance – not that they were duplicative (Epiphany
Community Nursery School v Levey, 2017 WL 3386267, *6-9; n.16 [Sup Ct, NY County 2019)). In any event, there is no indication that the First Department intended to overrule Johnson and hold that every fraud claim asserted against an attorney is subject to the limitations period for malpractice. “

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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.