Generally speaking, fraud claims in a legal malpractice setting are dismissed as duplicitive of the legal malpractice claim. For years, litigants have used the longer statute of limitations period for fraud as a way around a stale legal malpractice claim along with a discovery onset of the statute. In addition, fraud allows for greater damage calculations. Courts have sometimes said that any claim against a professional requires that it be translated into malpractice, rather than fraud. Federal Ins. Co. v Lester Schwab Katz & Dwyer, LLP 2021 NY Slip Op 32305(U) November 15, 2021 Supreme Court, New York County
Docket Number: Index No. 151093/2021 Judge: Shawn T. Kelly is that rare case where the claims survive dismissal.
“Plaintiff alleges that Lester Schwab made ( a) a false representation of fact to the Insured that the conflict check returned negative results; (b) defendants had knowledge of the falsity as shown by their internal e-mails; (c) the misrepresentation was made to induce plaintiff’s reliance
that Lester Schwab did not have any conflict of interest and so could continue its representation of the Insured in the underlying case; ( d) the Insured and its insurers justifiably relied on the misrepresentation as it is known that performing a conflict check in the context of litigation,
especially with multiple parties, is required to be done so that the Insured and its insurers could rely on Lester Schwab to advocate and protect their interests solely; and (e) the Insured and its insurers were injured by the reliance on the misrepresentation.
On this pre-Answer motion to dismiss, Plaintiff’s allegations are sufficient to sustain a fraud cause of action distinct from the legal malpractice claim. Accordingly, Defendants’ motion to dismiss is denied as to the fraud cause of action.”