Matter of Blatt 2023 NY Slip Op 04120 Decided on August 2, 2023 Appellate Division, Second Department Per Curiam is both a common and unusual attorney story. It is common in that attorneys are often disbarred (or suspended) for financial wrongs, very often escrow issues where the “escrowed” monies are used by the attorney. It’s a disbarment event, but not that unusual. Independently, this is the attorney in the relatively famous Judiciary Law 487 case line.

What is unusual is that there was a (very uncommon) legal malpractice trial and verdict against the attorneys. This verdict was in 2019. Many years go by without any legal malpractice verdicts (bench or jury) at all.

“The Grievance Committee for the Ninth Judicial District served the respondent with a notice of petition dated July 22, 2020, and a verified petition dated July 16, 2020, containing 12 charges of professional misconduct, and the respondent served and filed a verified answer dated July 28, 2020. Subsequently, the Grievance Committee served and filed a statement of disputed and undisputed facts dated August 17, 2020, which the respondent did not challenge. By decision and order on motion of this Court dated June 2, 2021, the respondent was immediately suspended from the practice of law in the State of New York, pursuant to 22 NYCRR 1240.9(a)(2) and (5), and the matter was referred to the Honorable Sondra M. Miller, as Special Referee, to hear and report. A pre-hearing conference was held on July 21, 2021, and a hearing was conducted on October 19, 2021. The Special Referee filed a report dated December 20, 2021, in which she concluded that the respondent was guilty of serious misconduct and sustained the charges against the respondent. The Grievance Committee now moves to confirm the Special Referee’s report and impose such discipline upon the respondent as the Court deems just and proper. The respondent has not submitted any papers in response nor sought additional time to respond.”

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Betz commenced an action against the respondent, and multiple successor attorneys who served the executor and/or the estate, in the Supreme Court, Westchester County, entitled Debra Betz, Administrator of the Estate of Carmelo Carbone (a/k/a Mel Carbone ) v Arnold Blatt, et al. , Index No. 58938/2011, asserting causes of action to recover damages for legal malpractice, aiding and abetting fraud, and violations of Judiciary Law § 487. Only the respondent proceeded to trial.

After a nonjury trial, in a decision and order dated April 29, 2019, the Honorable Gerald E. Loehr found, inter alia, that the respondent: (a) failed to use a written retainer agreement with the executor; (b) negligently failed to carry out his obligations as spelled out in demand letters [*3]sent to him from the beneficiaries’ counsel; (c) failed to counsel or control the executor with respect to the dissolution of CRF, Inc., thereby allowing the executor to continue to operate the corporation and generate fictitious bills and incur additional operating costs, without any oversight, solely for the executor’s benefit and the compensation of the executor’s own children; (d) negligently failed to ensure that the proceeds of the estate’s sale of its real properties were segregated into a separate estate account, despite a request by the beneficiaries that he do so, thereby enabling the executor to appropriate those monies for the executor’s own purposes; (e) overlooked the executor’s actions, even though he knew that the executor had not been properly marshaling the estate’s assets or preserving them for distribution to the beneficiaries, as well as that the executor was continuing to operate CRF, Inc., for the benefit of himself and his own children, who were being paid for fictitious services out of estate funds; (f) failed to exercise the degree of skill required of an attorney advising the estate when the executor’s own daughter was hired to perform an accounting for the estate, even though the respondent recognized that the accounting she performed “was terrible” on its face; (g) failed to properly assist in the administration of the estate and oversee the executor’s actions, thereby facilitating the executor’s self-dealing, waste, and substantial depletion of the estate; and (h) allowed the case to evolve beyond his ability to handle it on his own, without calling in a competent attorney to assist him, or moving to withdraw from the representation, while continuing to hold himself out as the estate’s attorney and to make checks payable to the executor, even though the respondent knew the executor was engaging in self-dealing. Justice Loehr also found: (i) that even after the executor’s powers were suspended, the respondent continued to assist the suspended executor and his son with preparing and filing approximately $1,137,500 in liens against certain properties to insulate them from recovery by the estate; (j) that the respondent allowed approximately $1,500,000 in proceeds from the sale of the Farm to be wired to the account of CRF, Inc., rather than depositing these proceeds into an estate account; (k) that all the foregoing was exacerbated, aided, and abetted by the respondent’s failure to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession; and (l) that the respondent’s breach of these duties was the proximate cause of the plaintiff’s damages.

Justice Loehr concluded that the respondent negligently performed his duties and breached his fiduciary duty to the estate and the beneficiaries resulting in financial damages by the depletion of the estate’s assets, tax penalties for late filing, and an increase in attorney fees charged to the estate.”