Privity between client and attorney is mirrored by the doctrine of the lack of a doctor-patient relationship.  Forget that there was a failure to diagnose breast cancer, and that the result can be deadly.  Social policy of limiting suits between patients and remote medical providers as well as the social policy of limiting legal malpractice cases is supreme here.

Gormley v Estabrook  2017 NY Slip Op 32021(U)  September 25, 2017  Supreme Court, New York County  Docket Number: 805236/16, Judge Martin Shulman tells us that: “Contrary to Gormley’s claim, RadNet has established its prima facie entitlement to summary judgmerit dismissing the complaint by submitting Linden’s sworn affidavit. See Hanna v North Shore-LIJ Network, Irie., 2013 WL 6222918, at *3 (Sup Ct Nassau County) (affidavit from defendant’s employee averring that defendant does not render patient care, did not render care to plaintiff and was not a corporate member of co-defendant medical center established entitlement to summary judgment and shifted burden to plaintiff to establish a material issue of fact). Upon RadNet establishing its prima facie case the burden shifted to plaintiff to “present facts in admissible form sufficient to raise genuine, triable issues of fact.” Mazurek v Metropolitan Museum of Art, supra; Zuckerman v City of New York, supra. “

In one of the more confusing fact recitations we have come across, where Plaintiff in action 1 is Defendant in action 2 and where both parties are female, pronouns and party-designation does not help.  Whatever.  In Verkowitz v Ursprung  2017 NY Slip Op 06675  Decided on September 27, 2017  Appellate Division, Second Department the attorney represented the client in a divorce, and then later in litigation over her husband’s estate, where the divorce proceedings were material.  In the end legal malpractice claims about the divorce are too late, but claims about the second case are still timely.

“The Supreme Court properly denied that branch of the defendant’s motion which was for leave to renew her opposition to that branch of the plaintiff’s prior motion pursuant to CPLR 3211(a) which was to dismiss the defendant’s counterclaim alleging that the plaintiff committed legal malpractice while representing her in a divorce action which ended with the entry of a judgment of divorce on February 27, 2004. The court properly determined, in an order entered June 16, 2011, granting that branch of the plaintiff’s motion, that the continuous representation doctrine was not applicable to toll the statute of limitations, and the new facts relied upon in support of the defendant’s motion would not have changed that determination (see CPLR 2221[e][2]). There was no evidence that the parties contemplated further representation of the defendant by the plaintiff after the entry of the judgment of divorce in the divorce action (see McCoy v Feinman, 99 NY2d 295, 306). The fact that the defendant again retained the plaintiff in May 2007, to represent her in subsequent litigation with her former husband’s estate which involved, inter alia, the interpretation of the divorce settlement agreement drafted by the plaintiff, did not render the representation continuous for the purpose of tolling the statute of limitations (see Matter of Lawrence, 24 NY3d 320, 341-342; Byron Chem. Co., Inc. v Groman, 61 AD3d 909, 911).

Defendant attorney in Baram v Person 2017 NY Slip Op 06625 Decided on September 26, 2017
Appellate Division, First Department  tried to spread the blame in two ways, each of which failed.  A third-party action was wholly wiped out.  His arguments that papers were insufficient similarly failed.

“Plaintiffs alleged in their complaint that defendant attorney was negligent in failing to timely file an underlying malpractice claim in arbitration as against plaintiffs’ original attorneys, and that, as a result of such negligence, plaintiffs’ late-filed arbitration claim for actual and ascertainable damages was permanently stayed (see Herrick Feinstein LLP v Baram, 132 AD3d 499 [1st Dept 2015]). These factual allegations, as supplemented by plaintiffs’ papers in opposition to defendant attorney’s dismissal motion, sufficiently alleged a legal malpractice claim (see generally Leon v Martinez, 84 NY2d 83, 87-88 [1994]; see Brooks v Lewin, 21 AD3d 731, 734 [1st Dept 2005], lv denied 6 NY3d 713 [2006]; Escape Airports [USA], Inc. v Kent, Beatty & Gordon, LLP, 79 AD3d 437 [1st Dept 2010]).

Defendant attorney’s argument that plaintiffs’ papers in opposition to his motion to dismiss lacked evidentiary value because the annexed affidavits were notarized by the third-party defendant attorney (Feldman) and Feldman only submitted affirmations rather than affidavits, is unavailing. Feldman was not a party to plaintiffs’ action alleging malpractice, and as such, his submission of affirmations was appropriate, particularly since the causes of action in plaintiffs’ action and the third-party action were distinct and independent of one another (see CPLR 2106). Also, Feldman did not have a direct, pecuniary interest in the malpractice action, and thus was capable of acting as a notary in that action (see New York State, Department of State, Division of Licensing Services, Notary Public License Law at 7 [June 2016], http://www.dos.ny.gov/licensing/lawbooks/notary.pdf [accessed Aug. 28, 2017]).

The motion court correctly dismissed the third-party complaint, as the viability of its claims for, among other things, abuse of process, fraud on the court, and tortious interference with advantageous business relationships were wholly undermined by the submissions on the motions.”

In an otherwise run-of-the-mill contract case between an IT provider and a bank, Justice Kornreich illustrates a couple of interesting principles.  The first is that IT providers do not rise to the level of professional engineers for the purpose of allowing tort litigation against them.  The second is the “economic loss doctrine.”

 Cervalis LLC v RBS Holdings, USA, Inc.  2017 NY Slip Op 31973(U)  September 18, 2017
Supreme Court, New York County  Docket Number: 650405/2017  Judge: Shirley Werner Kornreich is a case about computers and a data center.  There were failures.

“Plaintiff provides computer information technology services, including colocation (rental, housing, and/or maintenance of computer servers), power and cooling, security, compliance, and network services. Answer at I ~ 2. Defendant is a Connecticut-based financial services provider who contracted for plaintiffs services, which were to be used by the global financial markets division of The Royal Bank of Scotland.”

“In its Counterclaims (Answer at 6-16), defendant alleges that on November 28, 2015, at approximately 12:50 P.M., plaintiff caused a power outage in the Data Center by failing to properly return the fire alarm control panel and related systems to normal operation following a test of the fire alarm system.~~ 10-18. Defendant contends that the power outage disrupted its computer systems, which were housed in the Data Center(~ 19); that plaintiff prolonged the outage by performing unnecessary troubleshooting (~ 20); that the outage lasted for more than eight hours (~ 23 ); and that plaintiff failed to promptly notify defendant of the power outage as it was required to do pursuant to contract.~ 25; Dkt. 20 at 8 (Addendum). Moreover, defendant claims that when defendant became aware of the outage, plaintiff refused certain access to defendant personnel, again in violation of contract.~ 27; Dkt. 20 at 7 (Addendum). Finally, defendant surmises that to avoid the contractual consequences of a power outage lasting longer than two hours (a “Catastrophic Failure,” discussed below), plaintiff attempted to restore power at the Data Center in an abrupt fashion, causing unnecessary damage to defendant’s equipment, data, and operations. At about 9: 15 P.M., normal operations at the Data Center were finally restored.”

Here are the interesting bits:

  1.  “[A] simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated.” Clark-Fitzpatrick, Inc. v Long Island R. Co., 70 NY2d 382, 389 (1987). Additionally, under the so-called economic loss doctrine, “a contracting party seeking only a benefit of the bargain recovery, viz., economic loss under the contract, may not sue in tort …. ” 17 Vista Fee Assocs. v Teachers Ins. & Annuity Ass ·n of Am., 259 AD2d 75, 83 (I st Dept 1999); see also Sommer v Fed. Signal Corp., 79 NY2d 540, 552 ( 1992) (“[W]here plaintiff is essentially seeking enforcement of the bargain, the acfion should proceed under a contract theory.”). 5 However, where a party to a contract breaches a “legal duty independent of contractual .obligations … imposed by law as an incident to the parties’ relationship,” that party “may be subject to tort liability for failure to exercise reasonable care, irrespective of their contractual duties.” Sommer, 79 NY2d at 551. “
  2. “While courts have recognized a professional duty for some engineers, see, e.g., Hydro Inv ‘rs, Inc. v Trafalgar Power, Inc., 227 F.3d 8 (2d Cir. 2000), operating a computing data center does not implicate the same policy concerns as traditional engineering professions. See Sommer, 79 NY2d at 551-52 (“In [some] instances, it is policy, not the parties’ contract, that gives rise to a duty of due care.”); see also Richard A. Rosenblatt & Co. v Davidge Data Sys. Corp., 295 AD2d 168, 169 (1st Dept 2002) (“[T]he courts of this State do not recognize a cause of action for professional malpractice by computer consultants.”).”

In this legal malpractice case, the attorney has the right to represent himself.  Question:  How does insurance filter into this?  In Herczl v Feinsilver  2017 NY Slip Op 06528 Decided on September 20, 2017 Appellate Division, Second Department

“In 2010, the defendant David Feinsilver, an attorney, commenced representing the plaintiff in a legal matter unrelated to this action. While that unrelated matter was pending, Feinsilver and the plaintiff entered into an arrangement to purchase properties and “flip” them for a profit. Feinsilver and the plaintiff agreed on the terms of the arrangement, which the plaintiff refers to as a “joint venture” and Feinsilver refers to as an “independent contractor” agreement. The agreement set out, among other matters, their roles and responsibilities, and the division and allocation of profits and losses.

A dispute arose with respect to two properties in Brooklyn, and, in August 2013, the plaintiff commenced this action against Feinsilver and other entities related to Feinsilver. The plaintiff alleged, among other things, breach of fiduciary duties, breach of contract, fraud, and legal malpractice. The defendants interposed various counterclaims.

In December 2013, as relevant here, the plaintiff moved to disqualify Feinsilver and his law firm, The Feinsilver Law Group, from representing the defendants in this action. In an order dated June 6, 2014, the Supreme Court, inter alia, granted the motion with respect to Feinsilver himself, disqualifying him from representing any of the defendants, including himself. The defendants appeal from so much of the order as disqualified Feinsilver from representing himself.

An attorney, like any other litigant, has the right, both constitutional (see NY Const, [*2]art I, § 6) and statutory (CPLR 321[a]), to self-representation (see Walker & Bailey v We Try Harder, 123 AD2d 256, 257). Although the right is not absolute, any restriction on it must be carefully scrutinized (see id. at 257; Oppenheim v Azriliant, 89 AD2d 522, 522). Here, the plaintiff failed to demonstrate any compelling reason why Feinsilver should not be allowed to represent himself in this action (see Old Saratoga Sq. Partnership v Compton, 19 AD3d 823, 825; Walker & Bailey v We Try Harder, 123 AD2d at 257; Oppenheim v Azriliant, 89 AD2d at 522). Accordingly, the Supreme Court erred in disqualifying Feinsilver from representing himself in this action (see Old Saratoga Sq. Partnership v Compton, 19 AD3d at 825; Walker & Bailey v We Try Harder, 123 AD2d at 257; Azriliant v Oppenheim, 91 AD2d 586, 587; Oppenheim v Azrilant, 89 AD2d at 522).

We’re proud to present our “Judiciary Law § 487 Suffers an Earthquake” article from today’s New York Law Journal.  It discusses the recent sweep of JL § 487 law, including Bounkhoun v. Barnes et al., Case No. 15-cv-631A,  which now awaits a decision by District Judge Joseph Arcara whether to accept the recommendation.

A recent Judiciary Law §487 case in the Western District of New York has violently shaken the basic understanding of the elements of this common-law cause of action. We predict a Second Circuit case, and potentially a Certified Question to the New York Court of Appeals. Here are the particulars.

Attorneys are interlaced throughout our country and world. In the United States litigation is rampant, all-encompassing and shot through with discontent. Clients are looking for superior work and fair pricing. Attorneys are interested in getting work, succeeding at that work and being paid. It is both obvious and simple to say that the two sets of desires do not always mesh.

When expectations are not met, there are a series of well-trodden paths down which the clients and the attorneys move. Legal malpractice claims are mirrored in attorney fee law suits. There is a symmetry to it all, from a perspective far enough above the fray to have a clear picture of the whole scene.

Here is a good example of a “no-damage” claim against an attorney.  The claim fails in this case for two reasons.  The first reason is that plaintiff has not been harmed.  No damages can be pled.  The second reason is that plaintiff cannot really say what the attorney might have done wrong.

Miami Capital, LLC v Hurwitz 2017 NY Slip Op 31925(U) September 12, 2017 Supreme Court, New York County Docket Number: 150310/2016 Judge: Saliann Scarpulla.

“In 2013, Miami Capital hired Hurwitz to provide legal services for its purchase of real property located at 218 West l l 6th Street, New York, New York (“the property”). The real estate transaction was consummated through two steps. First, the owner of the property, a non-for-profit corporation, Edith Pennamon Apartments Housing Development Fund Corporation (“Seller”), entered into a contract of sale for the property with 1111, Inc. Second, 1111, Inc. assigned all rights in the contract of sale and the property to Miami Capital. The purchase price of the property under the contract of sale was $1,400,000.

After the sale, West Harlem Community Organization, Inc. (“WHCO”) commenced an action against Miami Capital to rescind the purchase of the property and the deed. See West Harlem Communi_ty Organization, Inc. v. Miami Capital, LLC (Index No. 651003/2015). In that action, WHCO argued that the sale must be rescinded because the Seller’s officers failed to obtain approval from the New York State Supreme Court or the New York State Attorney General’s Office, as required under the New York Not-forProfit Corporation Law. In addition, WHCO alleged that Miami Capital knew or should have known that it was necessary to obtain approval for the purchase of the property. Shortly thereafter, Miami Capital commenced this legal malpractice action against Hurwitz. Miami Capital alleges that Hurwitz breached his duty of care by: (i) failing to obtain approval of the sale from New York Supreme Court; (ii) failing to obtain approval of the sale from the New York Attorney General; (iii) failing to comply with New York Not-for-Profit Corporation Law§ 510; (iv) failing to comply with New York Not-forProfit Corporation Law§ 511; and (v) failing to obtain clearance of title exceptions prior to the closing of the transaction. Miami Capital seeks $1,400,000 in damages, plus interest, costs, and attorney’s fees. Hurwitz now moves to dismiss the complaint because: (I) his representation did not fall below the standard of care for a New York attorney; (2) no proximate cause exists between the alleged negligence and damages; and (3) damages are not sufficiently alleged because Miami Capital remains the owner of the property and WHCO’s action against Miami Capital was discontinued.”

“Miami Capital does not plead that it suffered any damages from the WHCO action, which has been discontinued. Instead, the damages alleged by Miami Capital relate to a subpoena issued by the New York Attorney General’s Office. The subpoena seeks a deposition of “a person with knowledge concerning the title insurance for the sale of the Property” as well as documents related to Miami Capital’s purchase of the property. Although Miami Capital has received a subpoena frorn the Attorney General, Miami Capital does not plead any damages that it has suffered resulting from the subpoena or the Attorney General’s investigation. While Miami Capital anticipates that at some point in the future it could be subject to a rescission claim and could possibly lose the property because of the Attorney General’s investigation, at this point in time these alleged damages are purely speculative and not yet ripe. Accordingly, I find that Miami Capital failed to adequately plead damages to support a legal malpractice action. Moreover, Miami Capital does not adequately allege that Hurwitz breached his duty of care as a lawyer. NPCL § 510 requires a not-for-profit corporation to obtain . approval for the sale of substantially all its assets from the New York Supreme Court or Attorney General’s Office. The contract of sale for the property placed that burden on the Seller, requiring the Seller to obtain an order from the New York Supreme Court “[i]n the event that judicial consent is required in order for the Seller as a Not for profit Corporation to transfer and sell the Premises.” 1 . The Seller’s attorney informed Hurwitz by letter dated November 13, 2013 that the Seller “does not need [court] approval because the property is not ‘substantially all’ of our assets and/or real property.” The documents submitte.d thus show that the Seller, not Miami Capital was contractually obligated, to obtain court approval for the transaction if necessary, and that the Seller’s attorney represented to Miami Capital that court approval was not necessary under NPCL § 510. Under these circum~tances, Miami Capital has not adequately plead that Hurwitz breached his duty of care as its lawyer by not obtaining court approval for the sale. For the above stated reasons, Hurwitz’s motion to dismiss Miami Capital’s complaint is granted. “

In a fact pattern that could have come from a bar exam, Justice Bannon dissects the fraud-discovery-statute of limitations issues arising from a real-estate fraud scheme which is said to have involved attorneys, lenders, borrowers and developers.

D. Penguin Bros., Ltd. v City Natl. Bank  2017 NY Slip Op 31926(U)  September 8, 2017
Supreme Court, New York County  Docket Number: 158949/2014 is about some lenders who lost a large amount of money.

“The plaintiffs served the complaint in Action No. 1 on January 20, 2016, and the complaint in Action No. 2 on May 26, 2015, alleging that the defendants improperly diverted approximately $10 million rightfully belonging to the plaintiffs from numerous real estate investment accounts and escrow accounts maintained for the plaintiffs’ benefit. The Williams defendants moved to dismiss the complaint as against them (Action No. 1, SEQ 002) and Spiegelman moved to dismiss the complaint against him (Action No. 2, SEQ 002) but, by orders dated July 26, 2016, and July 20, 2016, respectively, the defendants were permitted to withdraw the motions when the plaintiffs filed amended complaints in both actions during the pendency of the motions.

The amended complaint in Action No. 1 asserts 52 causes of action and the amended complaint in Action No. 2 asserts 78 causes of action alleging, inter alia, conversion, fraud, forgery, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, gross negligence, professional malpractice, and breach of contract, and also seeking an accounting.

The amended complaints allege that, in 2005 and 2008, the plaintiffs were induced to invest $4,500,000 with the defendants by false representations that the defendants were going to develop residential buildings for inclusion in federally subsidized housing programs, and that several of the defendants forged deeds and various approvals required from municipal agencies to falsely show the plaintiffs that closings on the sales of the buildings were effected in 2009, and that municipal approvals were acquired thereafter. The amended complaints further alleged that the Williams defendants and Spiegelman misappropriated the invested and escrowed funds without ever entering into actual development agreements or obtaining necessary governmental approvals. The plaintiffs also assert that Spiegelman, on behalf of the Williams defendants and himself, obtained unauthorized loans in the plaintiffs’ names in the sum of $2,200,000, and pocketed the loan proceeds, leaving the plaintiffs responsible for repayment. The plaintiffs aver that the defendants provided them with forged and fraudulent memoranda, thus concealing their scheme from the plaintiffs, and that the plaintiffs did not discover the thefts until February 3, 2011. ”

“”Under res judicata, or claim preclusion, a valid final judgment bars future actions between the same parties on the same cause of action.” Parker v Blauvelt Volunteer Fire Co., 93 NY2d 343, 347 (1999); see Matter of Reilly v Reid, 45 NY2d 24 (1978). As a general rule, New York applies a “transactional approach” to analyzing the doctrine of res judicata, so that “once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy.” O’Brien v Syracuse, 54 NY2d 353, 357 (1981). ” “Since the prior federal court actions were dismissed for failure to state a claim under federal law, and the federal court declined to exercise supplemental jurisdiction over the pendent state-law causes of action, and thus not on the merits, the causes of action asserted here against the Williams defendants, save NBUF, as well as the causes of action asserted against Spiegelman, are not barred by res judicata. See Bielby v Middaugh, 120 AD3d 896 (4th Dept. 2014). The plaintiffs correctly contend that the dismissal of the state-court action against NBUF on the ground that it was time-barred does not have a res judicata effect upon the causes of action asserted against the remaining Williams defendants or Spiegelman because the statute of limitations defense was personal to NBUF and there was no privity between NBUF and the other Williams defendants. See Israel v Wood Dolson Co., 1 NY2d 116 (1956); see also John J. Kassner & Co., Inc. v City of New York, 46 NY2d 544 (1979). “

Professionals are often sued in both tort and contract.  So what is the difference?  One is a general wrong to the public and one is a specific wrong to a contracting party.  Judge Scarpulla discusses the issue in City of New York v Eastern Shipbuilding Group, Inc.
2017 NY Slip Op 31906(U)  September 7, 2017  Supreme Court, New York County  Docket Number: 452725/2014.  The case involves fireboats.

“This action arises out of the alleged defective design and construction of two fireboats, 343 and Firefighter II, for the Fire Department of New York (“FDNY”). In July 2005, FDNY contracted with RTL, an engineering firm, to design and oversee the construction of the fireboats, and selected ESG to complete the construction. Though no longer a defendant in this action, AMSEC, LLC (“AMSEC”) agreed with FDNY in May 2008 to act as the “owner’s representative.” The City formally accepted delivery of fireboats 343 and Firefighter II in 2010 after completing sea trials and final inspection. In 2014, both fireboats were taken from service and dry-docked for inspection and defect correction. The City alleges that the fireboats were a major investment for FDNY, and numerous design and construction flaws, including a lack of corrosion prevention measures, have caused severe and premature damage to the fireboats. To address the fireboats’ design and construction flaws, the City attests that it has spent nearly two million dollars in costs and repairs and expects to spend another million dollars in · additional necessary costs and repairs. ”

“Generally, “[ w ]here the plaintiff is merely seeking the benefit of its agreement, it is limited to a contract claim.” Dormitory Auth. Of State v. Samson Const. Co., 137 A.D.3d 433, 434 (1st Dep’t 2016). “Where, however, the particular project … is so affected with the public interest that the failure to perform competently can have catastrophic consequences; a professional may be subject to tort liability as well.” Id. (citations and quotations omitted). Here, there is a factual question whether the fireboats at issue were so affected with the public interest that RTL’s alleged failure to comply with the relevant standards could result in catastrophic consequences. RTL’s assertion that the fireboats merely failed to perform as anticipated does not eliminate the issue of fact of whether accessible fireboats to address an issue, e.g., a fire on the City waterfront, could have catastrophic consequences. “

Maroulis v Sari M. Friedman, P.C.  2017 NY Slip Op 06437  Decided on September 13, 2017
Appellate Division, Second Department is a textbook example of why approximately 40% of Judiciary Law § 487 cases are dismissed.  The Courts don’t really like them, and lack of damages proximately caused by the violation is the stated reason.  Here, the legal malpractice claims were dismissed on the theory after settlement, one must show that the attorneys effectively compelled that settlement.

“The defendants were also entitled to dismissal of the cause of action alleging a violation of Judiciary Law § 487, albeit on a ground different from that articulated by the Supreme Court. “[A]n injury to the plaintiff resulting from the alleged deceitful conduct of the defendant attorney is an essential element of a cause of action based on a violation” of Judiciary Law § 487 (Rozen v Russ & Russ, P.C., 76 AD3d 965, 968). Thus, to state a cause of action alleging a violation of Judiciary Law § 487 , the plaintiff must “plead allegations from which damages attributable to the defendants’ conduct might be reasonably inferred” (Mizuno v Nunberg, 122 AD3d 594, 595 [internal quotation marks and brackets omitted]; see Gumarova v Law Offs. of Paul A. Bornow, P.C., 129 AD3d 911, 912; Mizuno v Barak, 113 AD3d 825, 827). Here, the plaintiff failed to plead that he suffered any damages as a result of Friedman’s alleged misconduct.”