We sometimes wonder how people agree to unusual methods of accomplishing very ordinary tasks.  How many apartments have been purchased and sold using the traditional contract, price, payment and transfer?  Why monkey with it?

Alskom Realty, LLC v Baranik  2020 NY Slip Op 07153 [189 AD3d 745]
December 2, 2020 Appellate Division, Second Department is the story of trying to re-invent the wheel.  It want asunder.  A lawsuit against the accountant did not progress very well, either.

“The plaintiffs allege accounting malpractice in connection with the defendants’ preparation of a federal income tax return for the year 2007. They claim that the tax return included incorrect information relating to the sale of a condominium apartment to nonparty David Segal, on the ground that they never received the balance of the purchase price at the closing.

The plaintiffs claimed that they transferred title at the closing because Segal promised that he would immediately resell the apartment to another buyer for a profit and that he would then pay the remainder of the purchase price. Thereafter, Segal claimed he paid the purchase price with pieces of artwork from his company. The question of whether the purchase price was in fact paid became the subject of a separate action in the Supreme Court, New York County (hereinafter the New York County action), which was dismissed based upon the statute of frauds, because the plaintiffs did not produce the contract of sale (see Komolov v Segal, 40 Misc 3d 1228[A], 2013 NY Slip Op 51339[U] [Sup Ct, NY County 2013], affd 117 AD3d 557 [2014]).

In preparing the 2007 tax return for the plaintiff Alksom Realty, LLC, the defendants listed a sales price of $4,100,000 for the apartment, a cost basis of $3,564,946, and a capital gain of $535,054. The defendants claim that after the individual plaintiff, Alexander Komolov, and Segal informed the defendants of the transaction, Segal provided a handwritten statement, which stated a [*2]purchase price of $4,100,000 and certain costs.

In 2013, the accountants filed an amended 2007 federal income tax return, but the amended return was rejected as untimely.”

“In order to succeed on a claim for accounting malpractice, a plaintiff must demonstrate a departure from accepted standards of practice and that the departure was a proximate cause of injury (see KBL, LLP v Community Counseling & Mediation Servs., 123 AD3d 488 [2014]; Kristina Denise Enters., Inc. v Arnold, 41 AD3d 788 [2007]; D.D. Hamilton Textiles v Estate of Mate, 269 AD2d 214 [2000]; Estate of Burke v Repetti & Co., 255 AD2d 483 [1998]). Injury is an element of the cause of action (see KBL, LLP v Community Counseling & Mediation Servs., 123 AD3d at 488). No injury was established here. The 2007 tax return was not the basis for the dismissal of the New York County action, which sought recovery of the allegedly unpaid purchase price; rather, that action was dismissed for failure to produce the contract of sale. The plaintiffs did not demonstrate on their motion that the purchase price was never in fact paid with artwork. Further, there is no evidence in this record of increased tax liability.

The capital gain reported in the 2007 return in the amount of $535,054 indicated that the defendants used a cost basis for the calculation. Komolov informed the defendants of the transaction, and did not indicate that the purchase price had not been paid. The record does not indicate whether Segal provided the information in issue without the plaintiffs’ consent.

Further, the affirmation of the plaintiffs’ attorney did not provide evidence in admissible form of whether the defendants complied with acceptable accounting standards. The attorney did not purport to be an expert in standards of accounting practice.

Therefore, the plaintiffs failed to establish their entitlement to judgment as a matter of law on the issue of liability. Accordingly, their motion for summary judgment on the issue of liability on the causes of action to recover damages for accounting malpractice should have been denied. We remit the matter to the Supreme Court, Kings County, for further proceedings on the motions that were denied as academic in light of the court’s determination granting the plaintiff’s motion for summary judgment.”


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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.