On occasion, a story makes one stop and wonder how it could have happened.  In Heller v Goldberg, Scudieri & Lindenberg, P.C.; 2011 NY Slip Op 32930(U); November 2, 2011;Sup Ct, NY County;Docket Number: 105061/11;Judge: Eileen A. Rakower we see not the first, but rather, the second transgression by a partner in a well known law firm.  How did the law firm let him stay on?

Justice Rakower writes:  "The malpractice allegedly began in 1997 when Block lied and  told plaintiffs that he had filed two claims against their landlord, that he had made several court appearances on plaintiffs’ behalf, and secured default judgments in the total amount of $675,000. In 1999 Block lied to plaintiffs again and told them that he was filing a lien against the landlord’s property in order to secure the two judgments.

Also in 1999, Block negotiated a buy-out of plaintiffs’ rent-stabilized apartment by the landlord for $60,000, from which the Firm was paid a fee of $10,000. As part of the settlement, plaintiffs allege that Block induced them to execute a general release in favor of the landlord by convincing them that the release would not have any bearing on their ability to collect on the fictitious default
judgments. In 2005 Block represented to plaintiffs that the landlord’s building had sold for
$3,500,000, and that a judge had directed the funds to be place in an escrow account by the New York City Department of Finance (LLD OF”I)n. 2006 Block conveyed to plaintiffs that he had  persuaded” the City Department of Finance to transfer the funds into a separate account, but that he could only disburse small amounts per month to them until the money was released.

The monthly stipends were paid out of the Firm’s escrow account. In the meantime, Block told plaintiffs that their judgment was now valued at over $14,200,000 due to penalties imposed by the judge on the DOF. In or around 2008 Block claimed that he secured a default judgment against the DOF in the amount of $5,000,000.  Block continued to make ever increasing payments to plaintiffs out of the firm’s escrow funds until September 28, 2010. On November 9, 2010 Block told
plaintiffs that they could expect a $7,000,000 disbursement the following day. When plaintiffs called the office to inquire further, Defendant Alan J. Goldberg answered and told plaintiffs that Block had been suspended from the practice of law and that the Firm had no active cases on file for them.

Defendants now move to dismiss the claims against them pursuant to CPLR 321 l(a)(l), CPLR321 l(a)(7)and CPLR3016(b). Plaintiffs oppose the motion.Block does not submit papers. In support of their motion, defendants submit: their affidavits; two printouts from the N Y S Department of State Division of Corporations; a copy of the complaint; a list of checks disbursed from the Firm’s escrow account; and a copy of a Grand Jury indictment. Defendants contend that the individual members of the PC cannot be held liable for Block’s malpractice because plaintiff cannot show that they participated in, or had knowledge of Block’s misconduct. Defendants claim that the “Adverse Interest Exception” bars the malpractice claim against the Firm. Plaintiffs, in opposition, claim that defendants had direct supervision and control over Block, and were active participants themselves in Blocks wrongdoing. Plaintiffs argue that defendants affirmatively undertook the duty to supervise Block after his 2001 disciplinary hearing. At that hearing, Block was suspended for six
months from the practice of law for deliberately deceiving another husband and wife “through lies and fabrication of documents to corroborate those lies, and by neglecting the clients’ affairs . . . [and making] false assurances to his client as to the status of their case when, in fact, the matter was never commenced , . .”(Matter of Block, 282 AD2d 12[ 1 st Dept. 200 11). Plaintiffs allege that the partners knew of the . . suspension. Indeed, Goldberg represented Block at the hearing."

The case continues, motion to dismiss legal malpractice denied.