Curtis v Berutti 2022 NY Slip Op 22307 Decided on August 24, 2022 Supreme Court, Orange County McElduff Jr., J. illustrates two points which frequently come up in legal malpractice cases: privity and collateral estoppel. If a guardian hires an attorney to represent the guardian (and his ward) does the ward eventually have standing to sue the attorney? This is an issue of Near Privity.
If the attorney successfully obtains a court order granting the attorney fees, is the guardian or ward collaterally estopped from suing for legal malpractice? Often yes, and in this case definitely yes.
“Mr. Curtis’ Verified Complaint, dated December 19, 2019, contained four, labeled causes of action against the Defendants: (1) breach of fiduciary duty, (2) breach of contract, (3) unjust enrichment and (4) a demand for common law accounting. (See Iaconis Affm. Ex. A). The breach of fiduciary duty, breach of contract and unjust enrichment causes of action arise from the same set of facts and sought the same damages, which are “believed to be in excess of” $600,000.00, with such additional finance and interest charges that have accrued, including costs of legal fees. (See Iaconis Affm. Ex. A). Mr. Curtis’ accounting cause of action alleges that the Defendants are in possession of books and records without having returned them and demands that the Defendants provide him with “an accounting” for his Brooklyn property (1190 Bedford Avenue), turn over their files and “account” for the two lawsuits handled by the Defendants on Mr. Curtis’ behalf (the Tabak and Phillip cases).”
“The precise question of whether an attorney who represents a guardian also represents the guardian’s ward (under a “near privity” exception or otherwise) has not been answered in New York. Other states, however, have answered the question in the affirmative. Such states have recognized that an exception to the privity requirement for legal malpractice liability must exist when a guardian hires an attorney specifically the benefit their ward. For example, in Illinois, courts have recognized that an attorney-client relationship extended from the attorney to the ward where the attorney, although hired by the ward’s guardian, was acting for the primary benefit or best interests of the ward. See Schwartz v. Cortelloni, 177 Ill. 2d 166, 174—75 (1997) (stating that the key factor to be considered is whether the attorney acted at the direction of or on behalf of the client for the benefit of the ward). Similarly, in Florida, it has been held that the attorney for guardian owes a duty to the ward where the ward is the intended third-party [*4]beneficiary of the attorney’s services. See Saadeh v. Connors, 166 So. 3d 959 (Fla. Dist. Ct. App. 2015) (reinstating the ward’s legal malpractice claim against the guardian’s attorney and noting that the relationship between the guardian and the ward is such that the ward must be considered to be the primary or intended beneficiary and cannot be considered an “incidental” beneficiary). Further, Arizona courts have held that when an attorney undertakes to represent the guardian of an incompetent ward, the attorney assumes a relationship not only with the guardian but also with the ward as the intended beneficiary, whose interests overshadow those of the guardian and, thus, an attorney cannot escape liability for wrongful conduct on the ground of lack of privity. See In re Guardianship of Sleeth, 226 Ariz. 171 (Ct. App. 2010); see also Fickett v. Superior Court, 27 Ariz. App. 793 (1976).
Here, there is sufficient “near privity” between The Weiner Law Group and Mr. Curtis, notwithstanding the fact that his guardian, Mishael Pine, Esq., retained The Weiner Law Group. It is patently obvious that Ms. Pine retained The Weiner Law Group for Mr. Curtis’ benefit, in that The Weiner Law Group was hired as replacement counsel to represent Mr. Curtis in two pending Supreme Court actions, in which Mr. Curtis was already a party. For purposes of meeting New York’s “near privity” exception to the privity requirement for imposing legal malpractice liability, it doesn’t get any nearer than that. Under these circumstances, it is indisputable that Defendants were aware that their services would be used for a specific purpose that benefitted the ward (i.e., both defending Mr. Curtis and prosecuting his claims in the pending litigations) and that the ward/Mr. Curtis would necessarily be relying on those services as the intended beneficiary. Accordingly, this Court concludes that the relationship between The Weiner Law Group and Mr. Curtis was so near privity that The Weiner Law Group cannot escape liability for legal malpractice on the ground of lack of direct contractual privity.”
“As summarized in the case of Chisholm-Ryder Co. v. Sommer & Sommer:
It is familiar law that the doctrine of res judicata or claim preclusion forecloses a party from relitigating a cause of action which was the subject matter of a former lawsuit or from raising issues or defenses that might have been litigated in the first suit (see Gramatan Home Investors Corp. v. Lopez, 46 NY2d 481, 485, 414 N.Y.S.2d 308, 386 N.E.2d 1328). The related doctrine of collateral estoppel precludes a party from relitigating issues which were previously determined even though the prior suit involved a separate cause of action or a different **72 adversary. By definition, collateral estoppel, or issue preclusion, does not bar the litigation of issues which were not previously raised. It will, however, foreclose issues which were necessarily decided in the first action, litigated or not (Statter v. Statter, 2 NY2d 668, 672, 163 N.Y.S.2d 13, 143 N.E.2d 10 (in an action for separation, the validity of the marriage was “necessarily determined” and barred a subsequent action for annulment).
Chisholm-Ryder Co. v. Sommer & Sommer, 78 AD2d 143, 144 (4d Dept. 1980).
Specifically, a judicial determination fixing the value of a professional’s services necessarily decides there was no legal malpractice, even if the client did not raise any issue of malpractice in the prior proceeding. See Sharp v. Chittur, No. 155098/13, 2014 WL 2042295, at [*5]*1 (Sup. Ct. 2014); See also Breslin Realty Dev. Corp. v. Shaw, 72 AD3d 258, 264 (2d Dept. 2010) (holding that a prior determination awarding fees bars a subsequent claim sounding in legal malpractice pursuant to both the doctrine of res judicata and the doctrine of collateral estoppel).
By Decision and Order dated August 22, 2022, this Court granted Defendant Weiner Law Group’s application for attorney’s fees incurred on Mr. Curtis’ behalf during pendency of his guardianship (from the period August 1, 2018 through the termination of the guardianship on January 17, 2019) over the objection of Mr. Curtis, who, with counsel, submitted opposition to the motion.[FN1] Similar to the allegations of legal malpractice made in the instant Verified Complaint, Mr. Curtis’s opposition to The Weiner Law Group’s fee application contained allegations of fee churning, questionable billing practices and strategic choices. However, this Court’s determination of the propriety and reasonableness of The Weiner Law Group’s fees bars Mr. Curtis’ subsequent claim of legal malpractice concerning those fees pursuant to the doctrines of res judicata and collateral estoppel.”