Nerayoff v Covington & Burling LLP 2025 NY Slip Op 34563(U) November 25, 2025 Supreme Court, New York County Docket Number: Index No. 158208/2024 Judge: Mary V. Rosado, is that avis rara criminal defense legal malpractice case that permits the claim upon a showing of actual innocence. While that structural defense was not deployed or mentioned, that won the case was the successful Rosner v. Paley strategic choice defense.

“Plaintiff, allegedly an attorney, inventor and founder involved in cryptocurrency and blockchain, sues Defendant, his former attorneys, for legal malpractice allegedly committed during representation of him in a federal criminal matter captioned United States v. Steven Nerayoff and Michael Hlady (the “Criminal Case”). Plaintiff was charged with Hobbs Act extortion under 18 U.S.C. § 195 l(a) for allegedly extorting StormX, a company who hired Plaintiff to sell a new cryptocurrency to the public. A criminal complaint was filed against Plaintiff in the Eastern District of New York in September of 2019 (NYSCEF Doc. 17). After his arrest on September 25, 2019, Plaintiff retained Defendant for the limited purpose of pre-indictment representation (NYSCEF Doc. 18). According to Plaintiff, he presented Defendant with exculpatory evidence, but Defendant advised him to not share this information with prosecutors pre-indictment and to wait until trial. Plaintiff alleges as a result, he was indicted on January 10, 2020. Plaintiff was subsequently represented by four other criminal defense attorneys and defended the Criminal Case for three years (NYSCEF Docs. 20-23). Nonetheless, none of his other attorneys presented the allegedly exculpatory evidence until June of 2022 (NYSCEF Doc. 8 at , 11 ). The prosecutors ultimately moved to dismiss the charges against Plaintiff on March 21, 2023 and on May 5, 2023, United States District Court Judge Margo K. Brodie dismissed the charges against Plaintiff. Plaintiff now sues Defendant for legal malpractice based on Defendant’s allegedly negligent advice not to meet with prosecutors’ pre-indictment. Defendant moves to dismiss pursuant to CPLR 321 l(a)(l) and (a)(7), which Plaintiff opposes.”

‘Defendant’s motion to dismiss is granted. “In order to survive a motion to dismiss, a plaintiffs complaint in an action for legal malpractice must show that ‘but for counsel’s alleged malpractice, the plaintiff would not have sustained some actual ascertainable damages”‘ (Gopstein v Beilinson Law, LLC, 227 AD3d 465, 466 [1st Dept 2024] quoting Pellegrino v File, 291 AD2d 60, 63 [l st Dept 2002], lv denied 98 NY2d 606 [2002]). Whether a pleading alleges adequately legal malpractice is a question of law which may be determined on a motion to dismiss (Rosner v Paley, 65 NY2d 736, 738 [1985]). It is well established that a client’s disagreement with his lawyer’s reasonable strategic decision, even if the strategy has alleged flaws, does not give rise to a legal malpractice claim (see RTW Retailwinds, Inc. v Colucci & Umans, 213 AD3d 509, 510 [1st Dept 2023] citing Wagner Davis P.C. v Gargano, 116 AD3d 426, 426 [1st Dept 2014]; see also Genet v Buzin, 159 AD3d 540 [1st Dept 2018] citing Kassel v Donohue, 127 AD3d 674, 674 [1st Dept 2015]).”

“Plaintiffs allegations oflegal malpractice fail because they amount to a mere disagreement over the timing to present allegedly exculpatory evidence in the underlying Criminal Action, which Plaintiff, with the benefit of hindsight, alleges should have been done pre-indictment (see, e.g. Brookwood Companies, Inc. v Alston & Bird LLP, 146 AD3d 662, 667 [1st Dept 2017] citing Rosner v Paley, 65 NY2d 736, 738 [1985]; see also Rodriguez v Lipsig, Shapey, Manus & Moverman, P.C., 81 AD3d 551, 552 [1st Dept 2011]). Defendant’s advice to withhold this information pre-indictment and to disclose it at the time of trial was not unreasonable. There are numerous treatises and legal articles which warn of the significant risks of sharing evidence and defense strategy with prosecutors pre-indictment, including: (a) risks that the information shared may be used to expand the scope of investigation and bring further charges; (b) the client may be exposed to potential liability for perjury or making false statements, and ( c) notifying the prosecutor to potential legal defenses and trial strategy. There is nothing alleged that Defendant did something to bar Plaintiff from disclosing this exculpatory information post-indictment or at the time of trial, when the risks of sharing this information may have diminished significantly (see, e.g. Ferguson v Hauser, 156 AD3d 425,425 [1st Dept 2017]). Further, Plaintiff fails to allege Defendant’s advice to withhold this information was the “but-for” cause of his alleged damages. Court documents from the Criminal Case show Plaintiff retained multiple other attorneys who either did not share the purportedly exculpatory information with the prosecution or waited months, if not years to share it with prosecutors. The Complaint fails to allege how Defendant’s advice not to proffer certain exculpatory evidence pre-indictment caused his alleged damages when subsequent attorneys likewise did not disclose that information or delayed in disclosing that same evidence.”