In an unusually detailed and explanatory decision, Judge Hasa A. Kingo dissects the question of successor liablity in a legal malpractice setting, contribution and indemnity between predecessor and successor counsel and legal malpractice. The case is 99th Ave. Holdings, LLC v Schatz 2026 NY Slip Op 31476(U) April 9, 2026 Supreme Court, New York County Docket Number: Index No. 151688/2024.

“Third-Party Defendants Thomas D. Shanahan, Esq. and Thomas D. Shanahan, P.C.
(collectively “Third-Third Party Defendants” or “Shanahan”) move, pursuant to CPLR §§
3211(a)(1) and (a)(7), to dismiss the amended third-party complaint asserted by Defendant/ThirdParty Plaintiff Larry H. Schatz (“Schatz”) and, pursuant to 22 NYCRR part 130, for an award of costs and attorneys’ fees. As framed by the motion papers, the amended third-party complaint seeks contribution and common-law indemnification against Shanahan arising from Shanahan’s subsequent representation of plaintiff 99th Avenue Holdings, LLC in related underlying litigation concerning the same alleged economic loss, namely the claimed loss of $375,000 in tenantimprovement funds. Third- Party Defendants also seek sanctions, costs, and attorneys’ fees on the ground that the third-party pleading is frivolous.”

“Plaintiff 99th Avenue Holdings, LLC (“plaintiff”) commenced this action against Schatz
asserting, in substance, legal-malpractice claims arising out of Schatz’s transactional
representation in connection with the sale of a business, the assignment of a lease, and related documents. The gravamen of plaintiff’s complaint is that Schatz failed adequately to protect plaintiff’s interest in certain tenant-improvement funds and failed to ensure that the disputed $375,000 was secured or referenced in the relevant transactional documents. The motion record includes Barton’s affidavit, which reiterates plaintiff’s contention that Schatz was retained to protect plaintiff’s interests in the transaction, was paid substantial fees for that work, and failed to include the disputed $375,000 in the escrow arrangements or otherwise protect plaintiff’s ability to recover those funds.
After plaintiff sued Schatz, Schatz, in turn, commenced a third-party action against
Shanahan, who thereafter represented plaintiff in separate litigation before Justice Engoron arising from efforts to recover the same funds from other entities. According to the amended third-party complaint, Shanahan’s later conduct in the underlying action independently caused or contributed to the same damages plaintiff now seeks to recover from Schatz. More specifically, Schatz alleges that Shanahan failed properly to argue certain theories at oral argument, failed to plead or pursue equitable theories that might have supported recovery, advised plaintiff to enter into a discontinuance or settlement with the landlord for inadequate consideration, and failed to pursue an appeal from an adverse determination. The opposition papers characterize these allegations as failures that either wholly caused plaintiff’s alleged loss or, at minimum, aggravated and contributed to that loss.”

“On a motion to dismiss pursuant to CPLR § 3211(a)(7), the court must afford the pleading a liberal construction, accept the facts alleged as true, accord the pleader the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (Leon v Martinez, 84 NY2d 83, 87-88 (1994). At the same time, bare legal conclusions and factual claims flatly contradicted by documentary evidence are not entitled to such favorable treatment (Connaughton v Chipotle Mexican Grill, Inc., 29 NY3d 137, 141-142 [2017]); Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]). Under CPLR § 3211(a)(1), dismissal is warranted only where the documentary evidence conclusively establishes a defense to the asserted claims as a matter of law and utterly refutes the pleading’s factual allegations (Leon,
84 NY2d at 88; Basis Yield Alpha Fund (Master) v Goldman Sachs Group, Inc., 115 AD3d 128, 135 [1st Dept 2014]). That is a demanding standard.
Measured against those settled principles, Shanahan has not established entitlement to
dismissal of the contribution claim. Contribution under CPLR § 1401 is available where “two or more persons who are subject to liability for damages for the same personal injury, injury to property or wrongful death” seek apportionment among themselves, and the statute applies not only to joint tortfeasors but also to concurrent, successive, independent, alternative, and even intentional tortfeasors (Schauer v Joyce, 54 NY2d 1, 5-6 [1981]). The Court of Appeals in Schauer made plain that successive attorney negligence causing the same injury can support contribution. The Appellate Division, First Department, has similarly held that “[i]t is well settled that an attorney sued for malpractice may assert a third-party claim against another lawyer who advised
the plaintiff on the same matter” (Millennium Import, LLC v Reed Smith LLP, 104 AD3d 190, 193 [1st Dept 2013]).”

Here, the amended third-party complaint alleges that Shanahan represented plaintiff in the underlying litigation, owed plaintiff the ordinary duty of professional care in that representation, and committed specific departures that either caused or exacerbated the same economic loss for which plaintiff seeks to hold Schatz liable. Those alleged departures include the asserted failure to make a dispositive argument at oral argument, the failure to plead or pursue equitable theories, the advice to discontinue or settle against the landlord on unfavorable terms, and the decision not to pursue appellate review. At the pleading stage, those allegations are sufficient to state a
contribution claim because they allege, in substance, that Shanahan owed a duty to plaintiff, breached that duty, and contributed to plaintiff’s alleged injury (Millennium Import, 104 AD3d at 193-194; Schauer, 54 NY2d at 5-6).
Shanahan’s contrary arguments largely go to ultimate merit, not pleading sufficiency. To be sure, not every tactical choice that proves unsuccessful constitutes legal malpractice. Courts have repeatedly recognized that an attorney is not liable for the selection of one among several reasonable courses of action, and that a mere disagreement with strategy, without more, does not state malpractice (Rosner v Paley, 65 NY2d 736, 738 [1985]; Brookwood Cos., Inc. v Alston & Bird LLP, 146 AD3d 662, 667 [1st Dept 2017]). But that principle does not justify dismissal where the pleading alleges not simply hindsight disagreement, but concrete professional lapses and a resulting causal connection to the client’s loss. Whether Shanahan’s challenged decisions were
protected exercises of judgment or actionable departures from ordinary professional skill cannot be resolved on this motion because the record, at best, presents sharply competing narratives about what occurred, what arguments were available, what strategic choices were reasonable, and whether different conduct might have produced a better outcome. Such issues are not properly determined on the pleadings.”