Weis v Rheem, Bell & Freeman, LLP  2022 NY Slip Op 31203(U) April 12, 2022  Supreme Court, New York County Docket Number: Index No. 160796/2020 Judge: Barbara Jaffe is a example of how courts burrow into the “but for” portion of the legal malpractice claim.

“Plaintiffs allege that in or about April 2015, plaintiff Weis was contacted by non-parties Zoltan Kovacs and Peter Kovacs (the Kovacses) who sought investors for the development of
two Manhattan properties. The Kovacses introduced Weis to non-parties Erin Wincomb and Joseph Ferrigno, the principals and/or members of the developer Mavrix Equity Group, Inc.
(Mavrix parties). Over several weeks of negotiations, the Mavrix parties and the Kovacses (the co-investors) agreed with Weis that Weis would provide $5 million in interim financing to
acquire and develop the properties, one at 9 Minetta Street and the other at 30 Thompson Street. Plaintiffs allege that in or about April 2015 and thereafter, defendants were retained by Weis for legal advice and counsel regarding the real estate loans and transactions, and that defendants agreed to represent Weis by, inter alia, structuring the transaction and conducting due diligence concerning the potential investments, borrowers, and/or other parties to the transactions. It is thus alleged that defendants owed Weis a duty to provide reasonable care to protect his interests in connection with the contemplated transactions.

In April and/or May 2015, the co-investors represented to plaintiffs and defendants that they had a net worth of $18 million, including Kovacs-owned real properties in Kings County
and Suffolk County worth more than several million dollars. Plaintiffs complain that defendants failed to conduct due diligence to validate these and other representations made by the coinvestors.

In May 2015, Weis loaned the co-investors $1 million for the Minetta property and $4  million for the Thompson property, at an annual interest rate of 18 percent, in exchange for
equity in the projects, a security interest in the membership interests in the co-investors’ future limited liability companies, their personal guarantees, and affidavits of confessions of judgment signed by them.

The co-investors did not close on the Minetta property transaction and the $1 million loaned was thus forfeited to the seller. Although the Thompson property transaction closed on or
about May 20, 2015, shortly thereafter, the co-investors defaulted on the related loans and payment obligations to plaintiffs. Consequently, in January 2016, plaintiffs invested an
additional $240,000 in the Thompson property. Absent sufficient funds in the operating account that had been controlled by the co-investors, plaintiffs were unable to maintain the loan payments for the Thompson property transaction. ”

“Due allegedly to defendants’ structuring of the Minetta property investment and/or transaction and the Thompson property investment and/or transaction, and defendants’
representation relating to the two actions, Zoltan was able to transfer title of a property in Southampton that was owned by him into a corporate entity, thereby avoiding the enforcement and/or effect of any judgment entered against the co-investors. Defendants told Weis that they were arranging a sheriff’s sale of the Southampton
property which had allegedly been pledged as collateral. Plaintiffs then learned that the  Southampton property had not been pledged as collateral, that defendants had not properly
arranged for a sheriffs sale, and that it was too late to do so. To date, none of the enforcement actions undertaken by defendants have resulted in a recovery.

On or about February 12, 2018, plaintiffs discharged defendants. In January 2019, Wicomb and Ferrigno were convicted of second-degree grand larceny for embezzling plaintiffs’
loan proceeds for these transactions; the convictions were affirmed on appeal. Plaintiffs maintain that due to defendants’ failure to advise, counsel, and represent plaintiffs properly, plaintiffs lost all of the money invested in the two properties and incurred significant additional interest costs, legal fees, and other related expenses arising from enforcement proceedings, interest costs, legal fees. ”

“Here, even if plaintiffs succeed in demonstrating that defendants were negligent and that their negligence was the proximate cause of the loss sustained, defendants offer undisputed documentary evidence of the judgments they obtained for plaintiffs in New York and California (NYSCEF 25, 29), thereby utterly refuting the element pleaded by plaintiffs of actual ascertainable damages. That the judgments have not been satisfied does not render them uncollectible, nor does the present inability to locate collateral foreclose future success. (See Noel ex rel. Deegas v L. Off of Mark E. Feinberg, 43 Misc 3d 1207[A] [Sup Ct, Kings County 2014] [ as plaintiffs time to enforce judgment not yet expired and cause of action premised on alleged fraudulent transfer still viable for time within which to collect judgment plaintiff has not yet sustained ascertainable damages]). Kish v Bd. of Educ. Of the City of New York, 76 NY3d 3 79 (1990) and CPLR 4545 are inapposite.”


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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.