Lawyer is hired to represent buyer in an apartment building purchase.  Purchase goes bad because instead of a regular multiple dwelling setting, the building is actually a Single Room Occupancy (SRO) which are an old form of a hotel.  Buyer does not get what it expected.  Claim against attorney is that it did not read the title report with all the consequences one might expect.  After some litigation the attorneys third-party the seller in Wiles v JLC & Assoc. September 22, 2020 Supreme Court, New York County Docket Number: 150706/2017 Judge: Kathryn E. Freed.

JLC alleged that Murphy knew that these representations were false, that she knew plaintiffs would rely on them, and that she made the same in order to induce plaintiffs to enter into the PSA and to induce JLC to advise plaintiffs to enter into the same. Doc. 29 at pars. 16, 17.Specifically, JLC claimed that Murphy knew that: 1) the RSI claimed the right to remain in the building pursuant to the Rent Stabilization Code (“RSC”); 2) the RSI had asserted this right in the Housing Court proceeding commenced in 2014; 3) the RSI obtained a vacatur of a stipulation of settlement in the Housing Court proceeding pursuant to which stipulation the RSI had agreed to vacate the building; 4) the DOB refused to approve Murphy’s plan to convert the building to a two-family dwelling and that the HPD violations against the building prevented her from obtaining a C of 0 for a two-family dwelling. Doc. 29 at par. 18. JLC further claimed that Murphy falsely stated under oath that she believed that the Housing Court proceeding was still pending. Doc. 29at par. 18.”

“As noted above, plaintiffs allege that their damages were caused by JLC’s legal malpractice insofar as JLC “negligently fail[ed] to discover and disclose material information relating to the [b ]uilding that was readily available, by failing to advise [plaintiffs] of the consequences of [the RST’s] rent-stabilized status, and by failing to negotiate fair terms on behalf of [the plaintiffs] for the [e]scrow [a]greement, [thereby breaching] its obligation to provide competent legal services
and representation to [plaintiffs].” Doc. 1 at par. 72. Also noted above is that JLC claims in its third-party complaint that any damages sustained by plaintiffs were caused in whole or in part by the fraud and negligent misrepresentations by Murphy. Doc. 29 at pars. 22-24, 26-30. Since JLC
clearly alleged that “the breach of duty by [Murphy had] a part in causing or augmenting the injury for which contribution is sought” (Nassau Roofing & Sheet Metal Co. v Facilities Dev. Corp., 71 NY2d at 603), Murphy’s motion to dismiss the contribution claims must be denied. “