New, or unique causes of action rarely arise.  In Alrose Steinway, LLC v Jaspan Schlesinger, LLP 2017 NY Slip Op 32082(U) September 29, 2017  Supreme Court, New York County Docket Number: 151482/2017 we see a claim that failure to supervise a vastly experienced partner in an LLP  is negligence.  Supreme Court permits discovery on the issue, finding that it is both “interesting” and “unique.”

“In the complaint, p’laintiff alleges that on February 1, 2014, it entered a 10-year ground lease covering two properties in Astoria, Queens (the Premises). The lease contained an option to purchase the Premises for $11 million after February 1, 2023 (the Option), as well as a right of first refusal to match any third-party offer to purchase the Premises during the term of the lease (the ROFR). Any interim purchaser would purchase the Premises subject to the Option. On January 6, 2016, Allen Rosenberg, plaintiff’s principal, executed an amendment to the lease which voided the Option if plaintiff’s landlord sold the Premises to a third-party (the Amendment). Specifically, the Amendment states, “[t]enant’s option to purchase during the final lease year under Article XXX shall be void.” Plaintiff alleges that defendant Stephen P. Epstein, Esq., a real estate partner at defendant Jaspan Schlesinger, LLP, advised Mr. Rosenberg to sign the Amendment and told Mr. Rosenberg that the Amendment was for “housekeeping” purposes. In an November 17, 2015 email, Mr. Epstein writes, “[t]he attached shows the changes requested by [landlord]. The lease that was actually signed was the last version and I believe that is what we agreed to. However, this may be necessary for ‘shalom bayit.”‘ Plaintiff alleges that it relied on Mr. Epstein’s advice and, on January 6, 2016, executed the Amendment without reading it. On August 6, 2016, plaintiff exercised its ROFR and entered into a contract to purchase the Premises for $14.5 million. The purchase closed on November 1, 2016. Plaintiff opines that the Premises were worth $25 million on the date of the malpractice based on an unsolicited offer it received within months of the Amendment to purchase one of the two buildings for $11 million and its sale of the other building for $12.5 million, just one month after the November 2016 closing. ”

“In addition to malpractice, plaintiff asserts an interesting claim of failure to supervise in its third cause of action against defendants Jaspan Schlesinger LLP and Steven Schlesinger, the managing partner of the firm. There is no vicarious liability for a general partner in an LLP. New York Partnership Law§ 26 (b). Although plaintiff argues that Mr. Schlesinger is liable under New York Partnership Law§ 26 (c) (i), which provides that “each partner … shall be personally and fully liable and accountable for any negligent or wrongful act or misconduct committed by him or her or by any person under his or her direct supervision and control while rendering professional services on behalf of such registered limited liability partnership,” it is undisputed that Mr. Schlesinger never communicated with plaintiff nor supervised Mr. Epstein, another partner. Thus, this causes of action against Mr. Schlesinger are dismissed. Plaintiff also advances the argument that the absence of any supervisory structure of partners at the firm is malpractice under Partnership Law§ 26 (c) (i). It argues that the law firm, as a whole, has an obligation to make reasonable efforts to ensure that its partners are appropriately supervised. Under this theory, Mr. Epstein’s status as a partner and 39 years of experience is irrelevant. At this early stage, plaintiff may explore this unique theory against the firm alone. “

This is a sordid story of an attorney gone wrong, seriously wrong.  Whether getting precluded while handling a legal malpractice case was the straw or not, a wake of devastation has been left in his wake.

Matter of Pierre  2017 NY Slip Op 06999 Decided on October 5, 2017  Appellate Division, First Department  Per Curiam

“Respondent Alex H. Pierre was admitted to the practice of law in the State of New York by the First Judicial Department on June 10, 1991, under the name Alex Hugues Pierre. Respondent was also admitted to practice in Pennsylvania in 1993. Respondent’s last business address listed with the Office of Court Administration is in Manhattan. Since June 7, 1999, respondent has been suspended from the practice of law in New York State by this Court for failing to file and pay his biennial registration dues. He has not appeared in this matter.”

“In a report and recommendation dated June 13, 2005, the Board noted that there were two charges brought against respondent involving a total of 11 disciplinary violations and aggravating factors. With respect to the first charge, the Board found that: on July 9, 1998, a woman was injured while riding a Southeastern Pennsylvania Transportation Authority (SEPTA) bus and on July 14, 1998, she retained respondent by executing a 40% contingency fee arrangement. The client received medical care from NovaCare Outpatient Rehabilitation. In June 1999, NovaCare’s counsel sought payment of her medical bill totaling $4,106.25. Respondent was given copies of the bills and a Statement of Account from NovaCare’s counsel.

By letter dated June 1, 2000, respondent wrote to SEPTA’s Claims Department seeking a claim number. However, by letter dated July 14, 2000, a SEPTA claim supervisor informed respondent that the statute of limitations had expired for third-party benefits. Respondent did not inform his client that he had failed to commence an action before the statute of limitations expired. SEPTA erroneously closed its claim file, even though the statute of limitations for the client’s claim for first-party benefits had not expired.

By letter dated November 27, 2000, respondent requested that SEPTA pay the NovaCare outstanding medical bill as it was a claim for first-party benefits. From December 2000 to February 2001, respondent provided SEPTA with numerous documents in support. On July 9, 2001, respondent commenced a lawsuit against SEPTA to recover first-party benefits for his client.”

“In a report and recommendation dated December 21, 2005, the Board set forth two charges. With respect to the first charge, they found that in 1998 when respondent was an associate at a law firm he filed a legal malpractice complaint but repeatedly failed to answer [*3]expert interrogatories, resulting in defense counsel obtaining two court orders directing him to produce responses, which he failed to do. In May 2000, respondent finally provided responses, albeit more than three months after the court ordered deadline. In June 2000, defense counsel moved to prohibit presentation of any expert testimony, and in August 2000, the trial court granted the defendants’ summary judgment motion. The trial court denied reconsideration and its decisions were affirmed by Pennsylvania appellate courts.”

“While the Pennsylvania court did not disbar respondent for his actions, this Court has found that where the sanction imposed in the original jurisdiction substantially deviates from that of New York, a more severe penalty may be imposed (see Matter of Munroe, 89 AD3d 1 [1st Dept 2011]). In Munroe this Court found that an attorney, who had been suspended for 2½ years in Massachusetts for engaging in a pattern of fraud, forgery, filing frivolous lawsuits and conversion, should be disbarred in New York (id.).

Here, the Pennsylvania court disciplined respondent after finding that he willfully engaged in the unauthorized practice of law for 18 months as he accepted new clients, failed to notify his new or former clients of his status, filed legal documents, and appeared in court numerous times after he was moved to “inactive” status. Under this Court’s precedent, engaging in the unauthorized practice of law over an extended period of time following a disciplinary suspension has resulted in disbarment (Matter of Sampson, 145 AD3d 95 [1st Dept 2016]; Matter of Rosabianca, 131 AD3d 215 [1st Dept 2015]).”

“In light of all of the circumstances and the nature of disbarment versus the punishment imposed by the Supreme Court of Pennsylvania (a three-year suspension), the Committee’s motion for reciprocal discipline should be granted, and respondent is disbarred from the practice of law in the State of New York and his name stricken from the roll of attorneys and counselors-at-law, nunc pro tunc to August 30, 2005.”

Attorney fees are the driver of what could be a majority of legal malpractice cases.  CLE lecturers consistently warn of the attorney fee-legal malpractice reflex arc, and with good reason.  Glassman v Weinberg 2017 NY Slip Op 06885 Decided on October 3, 2017  Appellate Division, First Department is a prime example.  Here the account stated claim fails and the breach of fiduciary duty claim withstands attack.

“Nevertheless, plaintiff’s motion for partial summary judgment on the account stated claim cannot be granted as to the other amounts billed, because plaintiff has not demonstrated entitlement to dismissal of defendant’s legal malpractice counterclaims, which are sufficiently intertwined with the account stated claim so as to provide a bona fide defense (see Emery Celli Brinckerhoff & Abady, LLP v Rose, 111 AD3d 453, 454 [1st Dept 2013], lv denied 23 NY3d 904 [2014]). In support of his motion for summary judgment dismissing these counterclaims, plaintiff failed to make a prima facie showing that his representation of defendant met the applicable standard of professional care and/or did not proximately cause any damages (see Rojas v Paine, 125 AD3d 745, 746 [2d Dept 2015]). With respect to the services he provided in Weinberg v Sultan, plaintiff simply asserted that defendant and her daughter were unable to provide facts concerning the closing, but made no showing that his investigation of the case, preparation of the complaint, and conduct of the litigation met the standard of “ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession” (Rudolf v Shayne, Dachs, Stanisci, Corker, & Sauer, 8 NY3d 438, 442 [2007] [internal quotation marks omitted]). Similarly, with respect to the other three legal malpractice counterclaims, plaintiff made conclusory assertions that he acted properly, without addressing defendant’s allegations or submitting any evidentiary support. Since plaintiff did not meet his initial burden, the burden did not shift to defendant to raise an issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

The motion court correctly sustained the counterclaims alleging plaintiff’s breach of fiduciary duty. Plaintiff did not respond to the third counterclaim’s allegation that his efforts to delay turnover of the escrowed funds were contrary to his fiduciary duty as an escrow agent. Further, plaintiff did not dispute the fourth counterclaim’s allegation that he kept the escrowed funds in a noninterest bearing account, nor did he offer any legal support for his claim that this conduct did not breach a duty of care owed to defendant.

In the world of big lending, a simple omission can cause large damages.  So it went in Scopia Windmill LP v Olshan Frome Wolosky LLP  2017 NY Slip Op 32031(U)  September 26, 2017
Supreme Court, New York County  Docket Number: 650616/2016  Judge: Saliann Scarpulla.  Plaintiffs were investing in agriculture in order to get into the fracking business. Apparently a certain bean is useful in thickening fracking water.  So, the investors hire Olshan to do the loan documents.  At the end a UCC-1 is not filed, and big costs ensue.  Question:  who is the client, who may sue and how do the affidavits in related cases affect everything?

“In its complaint against Olshan Scopia alleges three causes of action: (1) legal malpractice, for failing to file a UCC-1 financing statement when the 2012 Loan and Security Agreement and 2012 Loan were executed and for “drafting the 2012 Loan Agreement with problematic provisions that increased the likelihood that a bankruptcy court would recharacterize the loan as equity; and . . . otherwise failing to draft the 2012 Loan and Security Agreement and 2012 Term Loan Note in a competent manner so as to establish Scopia’s position as a senior secured debtor,” (2) for breaching the retainer agreement; and (3) for breach of fiduciary duty. In its motion to dismiss, Olshan first argues that it has no attorney-client relationship with two of the three named plaintiffs – Holdings and Windmill – and that any claim of malpractice does not extend to these two plaintiffs because they are not in privity with Olshan. Olshan further argues that SCM’s main contention — that due to Olshan’s late filing of the UCC-1 it was prevented from filing a petition for reorganization and enjoying the undisputed status of secured creditor – is disproved as a matter of law by testimony and affidavits filed by the principals of SCM and WTG in other proceedings. Olshan also claims that Scopia’s damages are impermissibly speculative. ”

“On the legal malpractice claim, Olshan claims that it is not in privity with either Windmill or Holdings, thus, their malpractice claims must be dismissed. As Scopia concedes, only SCM signed the retainer agreement with Olshan. Thus, for Windmill and ” Holdings to maintain this action, they must plead facts showing near privity to Olshan. To show “near privity,” a plaintiff must allege that the attorney was aware that its services were used for a specific purpose, that the plaintiff relied upon those services, and that the attorney demonstrated an understanding of the plaintiffs reliance. Cal. Pub. Employees Ret. Sys. v. Shearman & Sterling, 95 N.Y.2d 427, 434 (2000). Scopia alleges that, although SCM retained Olshan, Windmill, the actual lender to WTG, was a “foreseeable third-party beneficiary” of the retainer agreement between Olshan and SCM. The 2012 loan documents submitted show that Windmill was the lender for whom Olshan prepared and/or reviewed loan documents. These documents support Scopia’s allegation that Windmill was in near privity with Olshan. ”

“Finally, with respect to the malpractice claim of SCM and Windmill, Olshan argues that testimony and documents submitted in the bankruptcy and other legal proceedings conclusively refute their allegations of proximate cause and damages. “Under CPLR 3211 (a) (1), a dismissal is warranted only ifthe documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter oflaw.” Leon v. Martinez, 84 N.Y.2d 83, 88 (1994). After reviewing the documents and testimony submitted by Olshan, and the affidavits submitted by Scopia, I find that Olshan has failed to ‘refute conclusively Scopia’s allegations of proximate cause and damages. Accordingly, I deny the motion to dismiss the legal malpractice claim against Olshan asserted by Windmill and SCM. “

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).