John Napolitano, appellant, v Markotsis & Lieberman, et al., respondents. (Index No. 3514/05)

2007-04674

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT

2008 NY Slip Op 2980; 2008 N.Y. App. Div. LEXIS 2951

Plaintiff loses summary judgment motion for a case in which defendant represented him at trial, ultimately losing plaintiff’s case on the defense of unclean hands. “On their motion for summary judgment, the defendants made a prima facie showing that the plaintiff would be unable to prove at trial that, but for their alleged malpractice, he would have overcome the affirmative defense of "unclean hands" and prevailed in the underlying action. In opposition, the plaintiff failed to raise a triable issue of fact. Accordingly, the Supreme Court [*2] properly granted the defendants’ motion for summary judgment dismissing the complaint

John F. Sitar, et al., appellants, v Steven Sitar, et al., defendants, Kevin J. McGraw, et al., respondents. (Index No. 21538/05)

2007-00122

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT

2008 NY Slip Op 2990; 2008 N.Y. App. Div. LEXIS 2964

April 1, 2008, Decided

In this sale of a business, plaintiffs alleged sufficient conflict of interest to keep the attorney in the case. “The owner agreed to sell the assets and operations of his company to his son’s company. The attorney, who was a member of the company’s board of directors, acted as attorney for both the owner and the owner’s son in the transaction. Although the owner never received the books and records of the company, the sale took place. The owner claimed that the attorney was aware that his son and daughter-in-law had engaged in intentional and unauthorized behavior that had caused the value of the company to be diminished, but the attorney did not disclose that information to him. The appellate court found that the complaint adequately pleaded a cause of action alleging legal malpractice against the attorney and the law firm based on a conflict of interest and failure to disclose critical information concerning the purchase price of the company. The complaint also adequately pleaded a cause of action alleging breach of duty of loyalty and breach of duty of care against the attorney. The remaining causes of action were properly dismissed as duplicative or insufficient.

REENA KUMAR AND PRADEEP KUMAR, AS ASSIGNEES OF JEFFREY A. TISACK, PLAINTIFFS-RESPONDENTS, v AMERICAN TRANSIT INSURANCE COMPANY, DEFENDANT. AMERICAN TRANSIT INSURANCE COMPANY, THIRD-PARTY PLAINTIFF-APPELLANT, ROBERT E. GALLAGHER, JR., AND HISCOCK & BARCLAY, LLP, THIRD-PARTY DEFENDANTS-RESPONDENTS. JEFFREY A. TISACK, NONPARTY RESPONDENT.

1431 CA 07-01317

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FOURTH DEPARTMENT

2008 NY Slip Op 2674; 2008 N.Y. App. Div. LEXIS 2608

March 21, 2008, Decided
March 21, 2008, Entered

One of the bedrock principals of legal malpractice is the requirement of privity, Privity is the direct relationship between an attorney and client. Here is an interesting variation on the theme, in which an insurer is permitted to continue the action based upon equitable subrogation.

“Subrogation is the principle by which an insurer, having paid losses of its insured, is placed in the position of its insured so that it may recover from the third party legally responsible for the loss" (Winkelmann v Excelsior Ins. Co., 85 NY2d 577, 581, 650 N.E.2d 841, 626 N.Y.S.2d 994; see Teichman v Community Hosp. of W. Suffolk, 87 NY2d 514, 521, 663 N.E.2d 628, 640 N.Y.S.2d 472; Humbach v Goldstein, 229 AD2d 64, 66-67, 653 N.Y.S.2d 950, lv dismissed 91 NY2d 921, 692 N.E.2d 132, 669 N.Y.S.2d 263). We agree with American that, "[a]t this stage of the litigation, where there has been no disclosure held, the parties should not be foreclosed, particularly where, as here, the pleadings raise serious issues involving ethical considerations’ " (Great Atl. Ins. Co. v Weinstein, 125 AD2d 214, 216, 509 N.Y.S.2d 325; see Allianz Underwriters Ins. Co., 13 AD3d at 174-175, 787 N.Y.S.2d 15). [**4] We reject the contention of the Hiscock attorneys that the principle of equitable subrogation does not apply because American has not yet paid the loss of its insured (see Allianz Underwriters Ins. Co. v Landmark Ins. Co., 13 AD3d 172, 175, 787 N.Y.S.2d 15; see also Krause v American Guar. & Liab. Ins. Co., 22 NY2d 147, 152-153, 239 N.E.2d 175, 292 N.Y.S.2d 67). Furthermore, unlike the complaint in Federal Ins. Co., the third-party complaint alleges that the loss sustained by American’s insured resulted from the malpractice of the Hiscock attorneys, specifically their failure to appear and defend the insured. Viewing the complaint in the light most favorable to American and according American the benefit of every favorable inference, we therefore conclude that the complaint alleges sufficient facts to withstand the motion to dismiss, inasmuch as we deem it to state a cause of action for equitable subrogation (see generally Great Atl. Ins. Co., 125 AD2d at 215; cf. Federal Ins. Co., 47 AD3d at 62). Contrary to the dissent’s conclusion, we need only determine that American has a cause of action, not whether it has stated one (see Leon, 84 NY2d at 88; Guggenheimer v Ginzburg, 43 NY2d 268, 275, 372 N.E.2d 17, 401 N.Y.S.2d 182).