Real estate is a major contributor to the legal malpractice oeuvre. Wells Fargo Bank, N.A. v Pickett 2020 NY Slip Op 05795 [187 AD3d 965] October 14, 2020 Appellate Division, Second Department is an interesting example of a conflict of interest and the AD’s suggestion that a legal malpractice case might be appropriate.
“The defendant Lauren L. Pickett (hereinafter the defendant) was the owner of a condominium unit located in Brooklyn. In July 2013, the plaintiff commenced this action against, among others, the defendant and 39 Pierrepont Condominium (hereinafter the Condominium) to foreclose a mortgage given by the defendant encumbering the subject premises. The Condominium cross-claimed against the defendant to foreclose a lien it held for nonpayment of common charges. The defendant retained nonparty David H. Perlman to represent her in the foreclosure action. On September 19, 2016, a judgment of foreclosure and sale was entered in favor of the Condominium, directing that the premises be sold at a public auction. Perlman subsequently filed a bankruptcy petition on behalf of the defendant; however, the petition was dismissed due to the failure to file the required schedules.
On December 7, 2017, the same date that the auction sale was noticed to be held, the Supreme Court declined to sign an order to show cause filed by Perlman on behalf of the defendant seeking to stay the foreclosure sale. A referee conducted a foreclosure sale on that date. The highest bidder at the auction bid $2 million, but that bid was rejected since the bidder did not intend to reside at the premises, as required under the terms of sale. The second highest bidder at the auction was Perlman, with a bid of $1.97 million. However, he declined to proceed with the purchase of the premises. The referee reopened the auction for bidding, and Perlman was the successful bidder with a bid of $1.6 million. Thereafter, the defendant moved, inter alia, to vacate the foreclosure sale and to impose sanctions against Perlman. In an order dated February 13, 2018, the court denied those branches of the defendant’s motion. The defendant appeals.”
“Accordingly, the Supreme Court should have granted that branch of the defendant’s motion which was to vacate the foreclosure sale of the subject premises.
Contrary to the defendant’s contention, however, the Supreme Court providently exercised its discretion in denying that branch of her motion which was to impose sanctions against Perlman. Although Perlman’s conduct may give rise to a cause of action to recover damages for legal malpractice, it was not frivolous within the meaning of 22 NYCRR 130.1-1 (see 22 NYCRR 130-1.1 [c]; see generally Youcheng Wu v Jian Xu, 137 AD3d 1016, 1016 ). Dillon, J.P., Chambers, Cohen and Duffy, JJ., concur.”