Plaintiff was working in the movie industry.  He and the movie company came to a parting, and a separation agreement was produced between him and the company, negotiated by the company’s CEO.  Later Plaintiff was not paid his equity investments and did not get certain credits.  Board is unhappy with the deal itself, and blames the attorneys hired by the CEO.

Morgan v Worldview Entertainment Holdings, Inc. 2017 NY Slip Op 31594(U) July 27, 2017 Supreme Court, New York County  Docket Number: 652323/2014 Judge: Eileen A. Rakower discusses apparent authority and whether the attorney may rely upon the CEO’s assurance that he has the power to initiate the agreement.

“Hoyt David Morgan (“Morgan”) commenced the first party action on July 28, 2014. The first party action arose from an alleged breach of an agreement entered between Morgan and Worldview Inc., on June 20,- 2013 (“the Separation Agreement”). The Separation Agreement identified the obligors of its terms as “Worldview Entertainment Holdings, Inc., its parents, successors, predecessors, divisions, affiliates, and assigns.” In the first party action, Morgan claimed that W orldview Inc. breached the terms of the Separation Agreement by failing to pay him for his non-recouped equity investments and provide him with Executive Producer credits on among other films, the film Birdman. Morgan also alleged that Holdings LLC, Partners VII, Conners, Cestone, and Sarah Johnson were jointly and severally liable to him for the alleged breach of the Separation Agreement as “affiliates” of Worldview, Inc. Specifically, Holdings LLC was alleged to “own 100% of the equity of Worldview Inc. and thus is its parent and affiliate.” Partners VII was alleged to be “a division and affiliate of Worldview Inc., being the investment vehicle specifically associated with the Worldview Inc. film Birdman.” Conners was alleged to be “an affiliate of Worldview Inc., as she owns a significant equity interest in Holdings, LLC, which in tum owns and controls Worldview Inc., and she controls Worldview Inc. as its Chief Executive Officer.” Cestone was alleged to be “an affiliate ofWorldview Inc., as she owns a significant equity interest in Holdings LLC, which in tum owns and controls Worldview Inc., and she controls Worldview Inc. as its co-founder and board member.” Defendants Holdings LLC, Partners VII, Conners, Cestone, and Johnson previously moved the Court to dismiss Morgan’s claims against them. They argued that they were not parties to the Separation Agreement and did not fall into the definition of “affiliates.” This Court denied their motions. The Appellate Division dismissed the tortious interference with·· contract claims as against the individual defendants, and otherwise affirmed the decision by order dated July 21, 2016. ”

“Third-Party Plaintiffs allege that “[t]he bylaws ofWorldview Inc. require that compensation provided to an officer of the corporation be fixed by its Board of Directors … or by the Chairman of the Board or the Chief Executive Officer (‘CEO’) acting under authority expressly delegated to such person by the Board of Directors.” They allege that “the Board of Directors did not give Woodrow authority to pay Morgan any additional compensation in connection with Worldview Inc.’s termination of Morgan’s employment” and “did not approve or authorize the Agreement at any time.” Third-Party Plaintiffs allege that the Goetz Third-Party Defendants breached the attorney-client duty and/or a fiduciary duty that they owed to them by “(i) failing to confirm whether the Board of Directors had approved or otherwise authorized Woodrow to enter into the Agreement; and (ii) violating the standard of care by negligently preparing the Agreement so as to allegedly make each of Holdings LLC, Partners VII and Conners an obligor under the Agreement, thereby potentially subjecting each of them to obligations that they were not otherwise required to undertake.” They allege that as a result of Goetz Third-Party Defendants’ breach, they have “(i) incurred and will continue to incur legal fees and expenses in connection with the defense of Morgan’s claims in this action; and (ii) may be subjected to liability to Morgan if it is determined that they are “affiliates” of Worldview Inc. and/or obligors under the Agreement.” They seek reimbursement of “(i) all of their legal fees and expenses incurred in connection with the defense of Morgan’s claims in this action; and (ii) any and all liabilities imposed upon any of the Third-Party Plaintiffs to Morgan as a result of any determination that they are ‘affiliates’ of Worldview Inc. and/or obligors under the Agreement.”

“The Goetz Third-Party Defendants argue that Based on Article 4, Section 2, of Worldview Inc.’ s bylaws, Woodrow was authorized to hire and terminate employees of the corporation and to sign contracts that would be binding on the corporation. They argue that the third-party allegations that board approval was required for the Separation Agreement is based on an inaccurate interpretation of Article 4, Section 10 of the Bylaws, which only states that “the compensation of all officers of the corporation shall be fixed by the board of directors.” They argue that the Third-Party Plaintiffs fail to explain how the Separation Agreement constitutes compensation that would trigger Article IV, Section 10 of the Bylaws. The Goetz Third-Party Defendants further argue that even if the Court were to accept Third Party Plaintiffs’ allegations that Woodrow’s acts with respect to the Separation Agreement were not authorized, Worldview Inc. should bear the risk of any loss arising from Woodrow, their then CEO, because they appointed him to act on its behalf. ”

“Third-party Plaintiffs and Cestone also allege that Boyajian acted negligently by drafting the Separation Agreement because it contained the language identifying its obligors as “Woodrow, its parents, successors, predecessors, divisions, affiliates and assigns.” Third-party Plaintiffs and Cestone fail to allege facts to substantiate how the inclusion of this provision is a deviation from the standard of care or negligent. While Third-Party Plaintiffs and Cestone argue that the provision may make them bound as obligors of the terms of the Separation Agreement, nowhere in the agreement does it specifically reference these parties or state that they are obligors. In fact, the Appellate Division January 30, 2015 decision stated, “The term ‘affiliates’ is not defined within the agreement, and neither its meaning, nor whether the parties intended for the individual defendants to be bound under the agreement, and neither its meaning, nor whether the parties intended for the individual defendants to be bound under the agreement, can be discerned on this pre-answer to dismiss.” Here, the mere use of the word “affiliate” in the Separation Agreement does not constitute negligence on Third-Party Defendants’ behalf – where at the time of making of the Separation Agreement – there was no apparent conflict between Worldview Inc. and the “affiliates” nor any allegation of such a conflict. “

In legal malpractice there are transactional representations and there are litigation representation.  It’s easier to show privity when the attorney has signed on as attorney of record.  It’s more difficult when the attorney may/may not be involved in a transactional setting.  Breslin v Raich, Ende, Malter & Co., LLP  2016 NY Slip Op 32015(U)  July 25, 2016  Surrogate’s Court, Nassau County
Docket Number: 290592J  Judge: Margaret C. Reilly probably reaches the outer edge of representation.  Dismissal is avoided based solely on the affidavit of plaintiff, with no particular document to show lawyering by the defendant.

“Robert Frankel (the decedent) died on April 21, 1995, survived by his wife, Adele Frankel-Loeb, and three adult children, Wendy Frankel, Richard Frankel and Lynn Frankel Fleetwood (Wendy, Richard and Lynn, collectively, the objectants). Under the terms of decedent’s will, each of the objectants is a beneficiary under Article III of the will and a beneficiary of 1/3 of decedent’s residuary estate. Prior to his death, the decedent owned a chain of stores and was a real estate investor and manager. The decedent and Breslin jointly owned a number of real estate ventures, and had personally and jointly guaranteed related bank debt of approximately $100,000,000.00.  At the time of the decedent’s death, some of these ventures were in financial distress. Shortly after the death of the decedent, an arrangement was reached among the preliminary executors of the decedent’s estate, Gerald Deutsch, Stephen Levy, Breslin, and the decedent’s children, whereby Breslin’s family purchased control over a portion of the decedent’s assets, and reserved the right to acquire the remaining assets for $2,500,000.00 (the Weary Option). Pursuant to this agreement, on December 11, 1995, Breslin was appointed as successor executor of the estate, taking over management of the real estate ventures that previously had been jointly owned by Breslin and the decedent, as well as the decedent’s assets and properties.”

“Breslin hired Tenzer in 1995, when Tenzer was associated with a prior accounting firm, and continued to utilize Tenzer’s services after Tenzer joined Raich Ende as a principal and accountant in 2002, pursuant to a retainer letter, dated November 7, 2002. The defendants, among other services, were to prepare a final accounting for the Frankel estate. On February 22, 2012, the defendants produced the accounting, which covered the period from April 21, 1995 through March 31, 2010.”

“The defendant further raises the Statute of Limitations and a failure to allege a timely claim against Tenzer for legal malpractice and against Raich Ende under the doctrine of respondent superior. The defendant argued that, in order to prevail in an action for legal malpractice, the plaintiff must show that the attorney failed to exercise ordinary reasonable skill and knowledge possessed by a member of the legal profession, and that the breach of duty caused damages. However, first the plaintiff must establish the existence of an attorney-client relationship. The defendant further posited that the plaintiff only offers conclusory allegations, without factual support, that Tenzer rendered both accounting and legal advice, and that Raich Ende operates solely as an accounting firm, in which capacity it cannot offer legal services.

The plaintiff submitted an affidavit and a memorandum of law in opposition to the motion to dismiss. Breslin states that he retained Tenzer as both his attorney and his accountant and claims that Tenzer held himself out to the plaintiff as having expertise as both a lawyer and an accountant, in which capacities he continuously provided the plaintiff with legal and accounting services in connection with the estate, including tax law advice. According to the plaintiff, the professional relationship rose to a fiduciary level between the plaintiff and the various partners, accounting firms and professionals who worked with Tenzer.

“In Breslin’s complaint, he states that the defendants were retained “to perform a variety of accounting, audit, tax, and consulting services with regard to Breslin’s role as both a major creditor and Successor Executor of the Frankel Estate.” Breslin asserts that “for many years prior to December 1995, Tenzer had already provided substantial legal, accounting and tax services to Breslin . . .” and that “Tenzer repeatedly induced Breslin to repose an extremely high degree of trust and confidence in Tenzer with respect to numerous legal, tax and accounting matters . . . .” In his claim for legal malpractice, Breslin asserts that Tenzer breached his “duty to exercise due professional care and to render reasonable and competent legal advice and legal services . . . .”

The court finds that the plaintiff’s complaint states a cause of action. The defendants’ motion to dismiss the cause of action for legal malpractice is DENIED.”

There is a long history of doctor-lawyer litigations.  Often there seems to be a disconnect between the world-views of the protagonists.  Lawyers may seem avaricious and doctors naive and pedantic.  In Dubrow v Herman & Beinin  2017 NY Slip Op 31545(U) July 21, 2017 Supreme Court, New York County  Docket Number: 651605/2016  Judge: Ellen M. Coin  a doctor is terminated just before he turns 64.  He hires attorneys to sue for age discrimination.  The case is lost.  Focus of the case is on the billing practices of the attorneys.

“On March 1, 2013, defendants filed a lawsuit against BIMC and others in this court, entitled Alan Dubrow v Beth Israel Medical Center, et al., Index No. 151877/2013 (the BIMC Action). The complaint in the BIMC Action alleged, among other claims, a cause of action for age discrimination under the New York City Human Rights Law. In July 2014, BIMC filed a motion for summary judgment. Oral argument was held on November 6, 2014. In October 2015, Dr. Dubrow retained new counsel. On December 14, 2015, the BIMC Action was dismissed in its entirety by the Hon. Debra A. James. Justice James held that Dr. Dubrow had not established a prima facie case of employment discrimination based on age, even under the law’s extremely low threshold, and that she concurred with the defendants “that there is no evidence that age played any role whatsoever in defendants’ decision to terminate plaintiff’ (Herman moving affirmation, Ex. E, Decision at 7). By letter dated December 23, 2015, plaintiff’s new counsel requested an itemization of the legal fees that Dr. Dubrow paid to defendants. This action was commenced on March 14, 2016. The complaint alleges that Dr. Dubrow paid defendants “a monetary retainer over $3000″ in September 2012 (Cmplt., ,-i 7), and a total of$176,500 in legal fees. Dr. Dubrow paid this amount, despite the fact that defendants never provided him with a written retainer agreement, in violation of 22 NYCRR 1215; never provided the plaintiff with any billing statements for the hours that they worked; and never provided any explanation of how the amount collected was fair and reasonable for the legal services that were rendered. Dr. Dubrow sues to recover the $176,500 paid to defendants based on breach of contract, conversion and legal malpractice, and also seeks $500,000 in punitive damages.”

“The first cause of action alleges that the $176,500 Dr. Dubrow paid to defendants was a retainer for work performed in the BIMC Action, and that said retainer was to be used in the prosecution of the case and debited on an hourly basis of $300 per hour, as counsel’s time was expended. It was further allegedly understood that all retainer funds not exhausted would be returned to Dr. Dubrow after the BIMC Action was resolved. ”

” By this motion, defendants neither dispute the existence of an oral contract to perform legal services on Dr. Dubrow’s behalf, nor explain the circumstances surrounding the seventeen alleged voluntary payments by Dr. Dubrow or how these amounts were calculated. Dr. Dubrow may not have asked for an itemized bill from defendants at the time he was being asked to pay legal fees, but he certainly did so in December 2015. By court rule effective April 15, 2013, a client is “entitled to request and receive a written itemized bill from [the] attorney at reasonable intervals” (22 NYC RR § 1210 .1 ). The court interprets this rule as requiring an attorney to provide a client with an itemized bill, even after the representation has been concluded and after payment from the client has been forthcoming. “[A]s a matter of public policy, courts pay particular attention to fee arrangements between attorneys and their clients” (Jacobson v Sassower, 66 NY2d 991, 993 [1985]). Even where it is the client who commences an action to recover a portion of attorney’s fees that have already been paid, it is the attorney who must shoulder the burden of demonstrating the fair and reasonable value of the services rendered (id.). Defendants maintain that the “voluntary payment doctrine” bars Dr. Dubrow’s complaint. “That common-law doctrine bars recovery of payments voluntarily made with full knowledge of the facts, and in the absence of fraud or mistake of material fact or law” (Dillon v U-A Columbia Cablevision of Westchester, 100 NY2d 525, 526 [2003]). “The onus is on a party that receives what it perceives as an improper demand for money to ‘take its position at the time of the demand, and litigate the issue before, rather than after, payment is made'” (DRMAK Realty LLC v Progressive Credit Union, 133 AD3d 401, 403 [I st Dept 2015], quoting Gimbel Bros. v Brook Shopping Ctrs., 118 AD2d 532, 535 [2d Dept 1986]). In view of the fact that defendants admittedly failed to furnish Dr.Dubrow with a written retainer agreement and never once sent him an itemized bill documenting the hours spent on the BMIC Action, Dr. Dubrow may very well establish that the seventeen payments he made, totaling $176,500, were not made “with full knowledge of the facts.” However, such a factual ruling is completely inappropriate on a motion to dismiss pursuant to CPLR 321 l(a). “

Snow and ice cases are difficult.  Fall too soon and the landowner gets the benefit of the “strorm-in-progress” defense.  Fall at the right time, and you have to prove that the landowner created the situation.  Hire the wrong attorney, and your legal malpractice case difficulty rises to the Nth degree.  So, Balan v Rooney  2017 NY Slip Op 05801  Decided on July 26, 2017  Appellate Division, Second Department is a notable win for plaintiff.

“Shortly after a snowstorm, when attempting to enter the building in which she lived, the plaintiff allegedly slipped on ice and was injured. Three days after the accident, the plaintiff consulted with and hired the defendant to represent her in an action against the property owner. The defendant failed to commence an action prior to the expiration of the statute of limitations. The plaintiff then commenced this action to recover damages for legal malpractice and breach of contract. The defendant moved for summary judgment dismissing the complaint, and the Supreme Court granted the motion.”

“”[A] landowner generally cannot be held liable for injuries sustained as a result of slippery conditions that occur during an ongoing storm, or for a reasonable time thereafter'” (Weller v Paul, 91 AD3d 945, 947, quoting Mazzella v City of New York, 72 AD3d 755, 756; see Kantor v Leisure Glen Homeowners Assn., Inc., 95 AD3d 1177; Salvanti v Sunset Indus. Park Assoc., 27 AD3d 546). “However, once a landowner elects to engage in snow removal activities, it is required to act with reasonable care so as to avoid creating a hazardous condition or exacerbating a natural hazard created by the storm” (Kantor v Leisure Glen Homeowners Assn., Inc., 95 AD3d at 1177; see Salvanti v Sunset Indus. Park Assoc., 27 AD3d at 546; Chaudhry v East Buffet & Rest., 24 AD3d 493).

Here, the defendant failed to demonstrate his prima facie entitlement to judgment as a matter of law dismissing the cause of action to recover damages for legal malpractice on the ground that the plaintiff could not have prevailed in an action against the property owner. While the defendant demonstrated, prima facie, through certified meteorological data and the plaintiff’s deposition testimony, that the accident occurred less than one hour after the snowstorm ceased, he did not eliminate triable issues of fact as to whether the property owner created or exacerbated a hazardous condition through negligent snow removal efforts (see Anderson v Landmark at Eastview, Inc., 129 AD3d 750, 751; Salvanti v Sunset Indus. Park Assoc., 27 AD3d at 546-547; Chaudhry v East Buffet & Rest., 24 AD3d at 494). In particular, in light of the plaintiff’s deposition testimony, a triable issue of fact exists as to whether the property owner, upon clearing snow from a small portion of the premises, had left a pile of snow that the plaintiff had to “lift [her] leg” to “cross” over, causing her to slip and fall. Accordingly, that branch of the defendant’s motion which was for summary judgment dismissing the legal malpractice cause of action should have been denied.”

Palmeri v Wilkie Farr & Gallagher LLP  2017 NY Slip Op 05794  Decided on July 25, 2017
Appellate Division, First Department is one of those rare cases where a subsidiary cause of action survives, while the major causes of action are all dismissed.  In the legal malpractice world, the major cause of action is LM, while the subsidiary causes are breach of contract or breach of fiduciary duty.  The latter two are often dismissed as “duplicitive” of the LM cause of action.  Here, the opposite obtains.

“Order, Supreme Court, New York County (Eileen Bransten, J.), entered November 5, 2015, which, to the extent appealed from as limited by the briefs, granted defendant’s motion for summary judgment dismissing the complaint, unanimously modified, on the law, to deny in part defendant’s motion for summary judgment, and reinstate the first cause of action for breach of fiduciary duty, and otherwise affirmed, without costs.”

“Defendant moved under CPLR 3212 to dismiss the complaint as time-barred and for failure to state a claim. Plaintiff cross-moved for summary judgment in his favor. In its decision, which it read into the record, the IAS court found that all six of plaintiff’s claims were premised on the same operative facts and sought identical monetary damages. Accordingly, the IAS court “merged” plaintiff’s claims for gross negligence, breach of contract and breach of the implied covenant of good faith and fair dealing into his legal malpractice claim, leaving for consideration only that claim and claims based on breach of fiduciary duty.

The IAS court then dismissed both claims as untimely. Because plaintiff sought purely monetary damages, the court applied the three-year statute of limitations to the breach of fiduciary duty claim, rather than the six-year period. The court held that the claim was time-barred, since plaintiff filed it in February 2013, more than three years after defendant represented him from January through June 2009.

To begin, the motion court properly dismissed plaintiff’s claims for gross negligence, breach of contract, and breach of the implied covenant of good faith and fair dealing as duplicative of his legal malpractice claim, given that they are all based on the same facts and seek the same relief (Sun Graphics Corp. v Levy, Davis & Maher, LLP, 94 AD3d 669 [1st Dept 2012]).

Plaintiff’s claim for legal malpractice, in turn, is untimely. Claims for legal malpractice are subject to a three-year statute of limitations and accrue when the malpractice is committed, not when the client learns of it (Lincoln Place, LLC v RVP Consulting, Inc., 70 AD3d 594 [1st Dept 2010], lv denied 15 NY3d 710 [2010]; CPLR 214[6]). Plaintiff’s legal malpractice claim first accrued on or about June 25, 2009, when defendant terminated its legal representation of him, but continued to represent Ramius in the ongoing FINRA investigation. He did not, however, file his claim until February 15, 2013, more than three years later.

In addition, the motion court correctly dismissed the claim for aiding and abetting a breach of fiduciary duty, as plaintiff is collaterally estopped from relitigating the question of whether an attorney-client relationship existed between him and his employer’s in-house counsel. The identical issue was decided in the FINRA proceeding and plaintiff had a full and fair opportunity to litigate it before FINRA (see Jeffreys v Griffin, 1 NY3d 34, 39 [2003]; Auqui v Seven Thirty One Ltd. Partnership, 22 NY3d 246, 255 [2013]).

However, the IAS court should have permitted the breach of fiduciary duty claim to proceed. The IAS court correctly noted that the claim was subject to a three-year statute of limitations. The court was mistaken, however, in finding that the allegedly wrongful conduct ended on June 25, 2009, when defendant unilaterally terminated its representation of plaintiff. On the contrary, defendant’s conduct extended through at least June 29, 2011, during which time it represented Ramius and its employees in their participation at plaintiff’s FINRA disciplinary hearing.”

“Here, plaintiff has presented evidence of a “continuing wrong,” which is “deemed to have accrued on the date of the last wrongful act” (Leonhard v United States, 633 F2d 599, 613 [2d Cir. 1980], cert denied 451 US 908 [1981]; Harvey, 34 AD3d at 364). Indeed, the record contains evidence sufficient to create an issue of fact as to whether defendant breached its fiduciary obligations to plaintiff after June 2009 and well into June 2011 during its ongoing representation of the Ramius parties.”

When you tease out the underlying process of the summary judgment motion practice in Burbige v Siben & Ferber  2017 NY Slip Op 05704  Decided on July 19, 2017  Appellate Division, Second Department it becomes apparent that the Appellate Division saw less in the underlying motions than did Supreme Court.  Both, however, came to the same conclusion.  No one wins summary judgment.  Defendants did not even show prima facie entitlement to summary judgment, and the motion should have been denied outright.

“ORDERED that the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

Multiple summary judgment motions in the same action should be discouraged in the absence of a showing of newly discovered evidence or other sufficient cause (see Valley Natl. Bank v INI Holding, LLC, 95 AD3d 1108). However, under the circumstances of this case, the Supreme Court improvidently exercised its discretion in denying the plaintiff’s cross motion for summary judgment as a successive motion, and declining to reach the merits on the issue of liability (see Town of Angelica v Smith, 89 AD3d 1547, 1549).”

“Here, contrary to the Supreme Court’s determination, the defendants failed to establish their prima facie entitlement to judgment as a matter of law dismissing the complaint. The defendants’ submissions in support of their motion for summary judgment did not establish, prima facie, that the plaintiff will be unable to prove at least one element of his legal malpractice claim (see Kempf v Magida, 116 AD3d 736, 736; Barnave v Davis, 108 AD3d 582; Alizio v Feldman, 82 AD3d 804). Furthermore, the defendants failed to establish, prima facie, that the plaintiff did not sustain “actual and ascertainable damages” as a result of the defendants’ alleged neglect of the underlying action (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; see Suydam v O’Neill, 276 AD2d at 550).

In addition, the plaintiff’s opposition papers raised a triable issue of fact as to whether the defendants’ lengthy delay in prosecuting the underlying action was a proximate cause of the plaintiff’s loss (see Shopsin v Siben & Siben, 268 AD2d 578, 578-579). The plaintiff’s reliance upon the same evidence in support of that branch of his cross motion which was for summary judgment on the issue of liability was similarly insufficient to establish a prima facie case of legal malpractice (see Feldman v Finkelstein & Partners, LLP, 131 AD3d 505, 507). Accordingly, the Supreme Court properly denied the defendants’ motion for summary judgment dismissing the complaint and that branch of the plaintiff’s cross motion which was for summary judgment on the issue of liability.

Contrary to the plaintiff’s contention, he failed to establish that the conduct of the defendants’ counsel was frivolous. Accordingly, the Supreme Court providently exercised its discretion in denying that branch of his cross motion which was to impose sanctions upon the defendants’ counsel pursuant to 22 NYCRR 130-1.1.”

 

Under Labor Law §240(1) a person may prevail in litigation if injured “during the “erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure” (Labor Law § 240[1]; see Moreira v Ponzo, 131 AD3d 1025, 1026; Enos v Werlatone, Inc., 68 AD3d 713, 714). In determining whether a particular activity constitutes “repairing,” courts are careful to distinguish between repairs and routine maintenance, the latter falling outside the scope of section 240(1) (see Esposito v New York City Indus. Dev. Agency, 1 NY3d 526, 528; Joblon v Solow, 91 NY2d 457, 465; Smith v Shell Oil Co., 85 NY2d 1000, 1002). Generally, courts have held that work constitutes routine maintenance where the work involves “replacing components that require replacement in the course of normal wear and tear” (Esposito v NY City Indus. Dev. Agency, 1 NY3d at 528; see Mammone v T.G. Nickel & Assoc. LLC, 144 AD3d 761, 761).”

Ferrigno v Jaghab, Jaghab & Jaghab, P.C.  2017 NY Slip Op 05709  Decided on July 19, 2017 Appellate Division, Second Department is a legal malpractice case based upon the failure timely to commence an action under the Labor Law.

“Here, the defendants’ own submissions failed to eliminate triable issues of fact as to whether the plaintiff was engaged in “repair[s]” at the time of his accident or whether he was engaged in routine maintenance. On the one hand, the defendants submitted evidence establishing that the plaintiff was changing a ballast in a light fixture at the time of his accident, a job which constitutes routine maintenance since the replacement of this component occurs in the course of normal wear and tear (see Konaz v St. John’s Preparatory Sch., 105 AD3d 912, 913; Monaghan v 540 Inv. Land Co. LLC, 66 AD3d 605, 605; Deoki v Abner Props. Co., 48 AD3d 510; Sanacore v Solla, 284 AD2d 321). However, the defendants also submitted the plaintiff’s deposition testimony in support of their motion. The plaintiff testified at his deposition that he was in the midst of disconnecting, splicing, cleaning, and assessing the internal electrical wires in order to fix a light fixture when he fell from the ladder. Thus, the plaintiff’s deposition testimony demonstrated the existence of a triable issue of fact as to whether the plaintiff was “repairing” the light fixture at the time of his accident (see Nowakowski v Douglas Elliman Realty, LLC, 78 AD3d 1033, 1034; Eisenstein v Board of Mgrs. of Oaks at La Tourette Condominium Sections I-IV, 43 AD3d 987, 988; Fitzpatrick v State of New York, 25 AD3d 755, 757; Piccione v 1165 Park Ave., 258 AD2d 357, [*3]358). Accordingly, the Supreme Court properly denied that branch of the defendants’ motion which was for summary judgment dismissing the legal malpractice cause of action, regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).

The defendants are correct, however, that the Supreme Court erred in denying those branches of their motion, which were unopposed, for summary judgment dismissing the second and third causes of action as duplicative of the legal malpractice cause of action (see Mecca v Shang, 258 AD2d 569, 570; Sage Realty Corp. v Proskauer Rose, 251 AD2d 35; CVC Capital Corp. v Weil, Gotshal, Manges, 192 AD2d 324, 324-325; cf. Rupolo v Fish, 87 AD3d 684, 685-686; Reidy v Martin, 77 AD3d 903). Accordingly, the court should have awarded summary judgment dismissing the second and third causes of action in the second amended complaint.”

Wimbledon Fin. Master Fund, Ltd. v Weston Capital Mgt. LLC  2017 NY Slip Op 31515(U)
July 17, 2017  Supreme Court, New York County  Docket Number: 653468/2015 as explained by  Judge Shirley Werner Kornreich is the material of a movie.  Here it is in a nutshell:

“This action involves approximately 30 defendants and has already, in the pre-answer motion to dismiss stage, resulted in more than 1,000 e-filed documents and more than 40 motions. It concerns two related fraudulent schemes for which some of the defendants are going to prison pursuant to federal prosecution. Hallac and Galanis have pleaded guilty and admitted to the fraud. Hallac directly implicated Bergstein in his allocution. Bergstein has since been indicted and arrested. Galanis, the mastermind of the Gerova scheme, has been sentenced to more than a decade in federal prison. 5 That being said, a detailed understanding of the two schemes is necessary to evaluate the causes of action in this civil case and ascertain whether all of the named defendants bear responsibility for the fraudulent schemes.

The first scheme was a pump-and-dump scam involving Gerova Financial Group, Ltd. (Gerova). As explained herein, after that scheme began to unravel, Wimbledon’s investment in Gerova was transferred to Arius Libra, Inc. (Arius Libra). The money then allegedly was stolen by some of the defendants through a fraudulent collateralized loan scheme. The court recently discussed these schemes in two turnover proceedings, but only in broad strokes.”

“For the purpose of this motion, it is sufficient to explain that, prior to the alleged schemes, Wimbledon’s assets were illiquid interests in hedge funds. 7 Hence, an investor in Wimbledon was really investing in those hedge fund interests (the Assets). What happened next was a series of complicated events in which WCAM, which managed Wimbledon, transferred the Assets on multiple occasions in exchange for equity in other companies. According to Wimbledon, all of these transfers were fraudulent in nature because the companies in which Wimbledon was given equity were scams – one (Gerova) was a sham reinsurance company, while the other (Arius Libra) was a sham medical billing company. The end result, Wimbledon claims, was that it lost its Assets, which were pledged as collateral on a loan that defaulted because the individuals who controlled Wimbledon stole the loan proceeds. ”

Justice Kornreich’s opinion is a detailed description of the world-class fraud which ensued. “Weingarten seeks dismissal of Wimbledon’s claim against him for legal malpractice. The alleged malpractice concerns Weingarten’ s purported drafting of some of the contracts used by Bergstein in the alleged schemes and his failure to adequately protect Wimbledon’s interests in the Aramid bankruptcy action. There are legal malpractice and Judiciary Law § 487 claims against defendant Weingarten. ”

“The parties dispute whether Weingarten personally drafted the subject contracts. On this motion to dismiss, where no definitive documentary evidence resolving this dispute was submitted, the question of whether Weingarten drafted the subject contracts must be resolved in Wimbledon’s favor. The court, nonetheless, dismisses the malpractice claim to the extent it relates to Weingarten’s contract drafting. Redress for the claim that Weingarten harmed Wimbledon by virtue of these contracts is more properly pursued with the other well-pleaded claims asserted against Weingarten, which are addressed below. The malpractice claim is dismissed because Weingarten is not alleged to have negligently drafted the contracts, but, instead, aided in a fraudulent scheme. In other words, Weingarten is not accused of transactional malpractice (because the contracts effectuated the intended transactions) but of fraud. The allegation that an attorney defrauded its client may be maintained (both substantively and for statute of limitations purposes) independently of a malpractice claim. See .Johnson v Proskauer Rose LLP, 129 AD3d 59, 69 (1st Dept 2015) (fraud claim considered independent of malpractice claim though harm arose out of accountant’s failure to properly protect its client), citing Mitschele v Schultz, 36 AD3d 249, 254 (1st Dept 2006). That said, Weingarten’s representation of Wimbledon in the Aramid bankruptcy action may give rise to malpractice liability. Wimbledon explains:

‘Weingarten’s representation of Wimbledon was undertaken at the instruction of Bergstein, and his principal purpose was to aid Bergstein in his litigation war against Aramid and David Molner. Bianco admits that the Wimbledon investment in Aramid was one of the reasons Bergstein joined Galanis’ conspiracy. Weingarten was representing Bergstein in various capacities in this war, and was owed millions of dollars by him. He agreed to represent Wimbledon in an attack on Aramid and Molner, but did not protect Wimbledon’s interests, instead seeking to advance Bergstein’s interests. Bergstein settled with Aramid and Molner in 2014, and during settlement discussions Weingarten purported to enter into a tolling agreement and standstill on behalf of Bergstein and Wimbledon. Bergstein subsequently settled with the Aramid bankruptcy for $6 million, but Wimbledon received nothing. Wimbledon’s liquidators then appeared in the bankruptcy, and the Court sustained Wimbledon’s objection to any release of Wimbledon’s claims in the Bergstein settlement. Weingarten, who had been representing Wimbledon since 2012 in its dispute with Aramid, used that litigation in part to ensure that Bergstein received a settlement, to the detriment of his client Wimbledon. This was malpractice. ‘”

“These allegations suffice to state a claim that Weingarten failed to zealously represent Wimbledon in the Aramid action and, as a result, Wimbledon lost out on the chance to get more money out of that litigation. And, Weingarten’s representation of Bergstein, whose interests are directly adverse to Wimbledon’s, would appear to be problematic. See Rules of Professional Conduct, Rule l.7(a)(l) (“a lawyer shall not represent a client if a reasonable lawyer would conclude that … the representation will involve the lawyer in representing differing interests.”). Weingarten’s conclusory denials of the conflict, especially given the obvious nature of the conflict, or the lack of harm suffered by Wimbledon, do not merit dismissal. See Fielding v Kupferman, 65 AD3d 437, 442 (1st Dept 2009). With respect to the remaining claims, Weingarten is correct that all of the claims asserted against him other than fraud and violation of Judiciary Law § 487 (breach of fiduciary duty, aiding and abetting fraud, negligence, gross negligence, and unjust enrichment) must be dismissed as duplicative. ”

“With respect to Judiciary Law§ 487, the portion of such claim relating to Weingarten’s contract drafting is dismissed. Neither § 487(1) (“deceit or collusion … with intent to deceive the court or any party”) nor§ 487(2) (“[w]ilfully delays his client’s suit with a view to his own gain; or, wilfully receives any money or allowance for or on account of any money which he has not laid out, or becomes answerable for”) apply to Weingarten’s transactional work. Wimbledon cites no case where similar transactional work gave rise to § 487 liability. The statute and the cited cases concern deceiving the court or the client within litigation.

However, to the extent the§ 487 claim relates to Weingarten’s conduct in the Aramid action, the claim remains. The Appellate Division has held that the intent element of a § 487 claim (as opposed to the negligence element of malpractice) precludes the claim from being dismissed as duplicative. See Sabalza v Salgado, 85 AD3d 436, 438 (1st Dept 2011); Moormann v Perini & Hoerger, 65 AD3d 1106, 1108 (2d Dept 2009). Weingarten’s alleged loyalty to Bergstein was incompatible with his duty to zealously advocate for Wimbledon. Bergstein is alleged to have defrauded Wimbledon, aided and abetted by Weingarten. Weingarten was conflicted and should not have given up Wimbledon’s claims in favor of Bergstein’ s. The court finds this alleged ethical violation rises to the requisite level of egregiousness necessary to state a claim under § 487. See Savitt v Greenberg Traurig, LLP, 126 AD3d 506, 507 (I st Dept 2015).”

 

 

One does not often see legal malpractice cases reported out of Surrogate’s Court. Matter of Schleifer  2017 NY Slip Op 31501(U)  July 14, 2017  Surrogate’s Court, New York County
Docket Number: 2010-3599/A  Judge: Rita M. Mella is a big-number, multi-defendant real estate and commercial estate-fraud-legal malpractice case.  It discusses a number of fraud-rescission-release-pleading issues which we rarely see.

“Decedent Jack Schleifer was a real estate investor, and his will left his estate to his lifetime trust that benefits his only child, Natalie Schleifer (“Schleifer”) and charity. Schleifer, along with decedent’s estate planning counsel, Martin Rosen, serve as two of the co-executors under decedent’s will and co-trustees of his trust, and they have commenced the instant proceeding against Richard Yellen, the third co-executor and co-trustee, as well as against certain real estate companies and the developer managing or controlling those companies, David Marx (“Marx”), and his father, Robert Marx. Petitioners seek to rescind, on the basis of fraud and other grounds, a September 30, 2011 settlement agreement entered into among all the parties to this proceeding. By its terms, the agreement resolves claims that decedent and decedent’s estate had against Marx and his companies in connection with loans or investments decedent made during his life. The respondents have moved to dismiss the petition on several grounds, namely, that documentary evidence bars petitioners’ claims, that their claims have been released, and that the petition fails to state a claim for which relief may be granted (CPLR 321 l[a][l], [5] & [7]). Additionally, respondents argue petitioners have not pled fraud and mistake with the requisite particularity (CPLR 3016[b]). ”

“In support of his motion, Yellen argues that the breach of fiduciary duty claim against him and his law firm (the 9th claim) is merely a duplication of both the fraud claims asserted against him in the second claim, and the legal malpractice alleged in the tenth claim, requiring its dismissal. He further argues that, even if not duplicative of the other claims, no damages have been specified for the alleged breach, which likewise provides grounds for dismissal. Regarding the legal malpractice cause of action, Yellen claims that no attorney-client relationship existed regarding the settlement agreement, and that petitioners have failed to plead “but for” causation necessary to state a legal malpractice claim. Because the allegations supporting the claimed breach of fiduciary duty and legal malpractice are distinct and establish the necessary elements for each, dismissal of these two claims is not appropriate.

The allegations regarding breach of fiduciary duty must show the existence of a fiduciary relationship, misconduct by the other party, and damages directly caused by that party’s misconduct (Pokoik v Pokoik, 115 AD3d 428, 429 [1st Dept 2014]). Here, they involve Yellen’s actions as co-executor and co-trustee, and as attorney and, additionally, as escrow agent for Marx’s financials under the agreement, which relationships are fiduciary in nature as a matter of law (Sanke! v Spector, 33 AD3d 167 [1st Dept 2006] [trustee-beneficiary]; Graubard Mallen Dannett & Horowitz v Moskovitz, 86 NY2d 112 [1995] [attorney-client]; Talansky v Schulman, 2 AD3d 355, 770 NYS2d 48 [1st Dept 2003] [escrow agent]; see Parker v Rogerson, 49 AD2d 689 [4th Dept 1975] [co-fiduciaries]).

No authority is provided by Yellen to support his assertion that a breach of fiduciary duty claim must be dismissed because it involves a claim of fraud for which relief is also sought. To the contrary, fraud claims can be integral to claims of breach of fiduciary duty (see, e.g., Carbon Capital Mgt., LLC v Am. Exp. Co., 88 AD3d 933, 939 [2d Dept 2011]; Kaufman v Cohen, 307 AD2d 113, 123 [1st Dept 2003]). In any event, the allegations supporting the claimed fiduciary duty breach by Yellen are not limited to affirmative fraud as pied by petitioners in their second claim, but extend to his alleged failure as co-fiduciary and the estate’s attorney to disclose documents and information concerning decedent’s transactions with Marx (see Dube-Forman v D’Agostino, 61AD3d1255, 1257 [3d Dept 2009]; see also Pokoik, 115 AD3d at 429).

Concerning allegations of damages, a party asserting a claim for breach of fiduciary duty “must, at a minimum, establish that the offending parties’ actions were ‘a substantial factor’ in causing an identifiable loss” (Gibbs v Breed, Abbott & Morgan, 271AD2d180, 189 [1st Dept 2000]). Here, the allegations that fees were paid to Yellen in his various fiduciary capacities and should be returned is sufficient to identify a loss and plead damages, and makes this case distinguishable from those relied upon by him (compare Estate of Feder v Winne, Banta, Hetherington, Basralian & Kahn, P.C., 117 AD3d 541, 542 [1st Dept 2014] [damages claimed were speculation based on “uncertainties, including future tax laws, tax rates, and the future value of the trust property”]; Greenberg v Jaffee, 34 AD3d 426, 427 [2d Dept 2006] [fact that real estate agent had known ultimate purchaser was interested in estate property for investment before its sale did not create issue of fact on summary judgment as to agent’s breach of fiduciary duty]).

Nor does the fact that damages may overlap with those sought for Yellen’s malpractice mean that the breach of fiduciary duty claim duplicates it since Yellen is being sued in capacities as co-fiduciary that are not a part of the legal malpractice claim (Pillard v Goodman, 82 AD3d 541, 542 [1st Dept 2011] [breach of fiduciary duty not dismissed as against corporate director, even though malpractice relief sought against director as attorney]).

A legal malpractice claim has three essential elements: (1) the attorney’s failure to exercise that degree of care, skill and diligence commonly possessed by a member of the legal profession; (2) causation; and (3) actual damages (Prudential Ins. Co. of America v Dewey Ballantine, Bushby, Palmer & Wood, 170 AD2d 108 [1st Dept 1991], affd 80 NY2d 377 [1992]). While an attorney-client relationship is a necessary prerequisite (Moran v Hurst, 32 AD3d 909 [2d Dept 2006]), Yellen cannot avoid having a malpractice claim stated against him by asserting that his attorney-client relationship had ended for purposes of negotiating the 2011 settlement. This is a misunderstanding of the claim which is based on the allegations that Yellen was retained and paid to duly and diligently provide petitioners with information concerning the extent of decedent’s investments and loans with the Marx Group. The malpractice claimed is Yellen’ s negligent carrying out of this work, which, petitioners also allege, led them to enter into the settlement that they would not have otherwise agreed to, and which damaged the estate (see Theresa Striano Revocable Trust v Blancato, 71 AD3d 1122, 1124 [2d Dept 2010] [attorney may not shift to the client the legal responsibility he was specifically hired to undertake because of his superior knowledge]). 15

Overall, these allegations are sufficient to claim malpractice. Additionally, petitioners have provided specific factual allegations in this instance, which satisfy the more stringent requirement of “but for” causation required to be alleged for legal malpractice (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Urias v Daniel P. Buttafuoco & Assoc., PLLC, 120 AD3d 1339, 1342 [2d Dept 2014]; Gallet Dreyer & Berkey, LLP v Basile, 2013 NY Slip Op 30101 [U], at *6 [Sup Ct, NY County Jan. 16, 2013] [settlement compelled by mistakes of counsel actionable in legal malpractice]; see also Gottlieb v Karlsson, 295 AD2d 158 [1st Dept 2002]).

It follows that the motion by Yellen and his law firm to dismiss the ninth and tenth claims for breach of fiduciary duty and legal malpractice, respectively, is denied. “

First off, look at the lineup.

Chadbourne & Parke LLP, New York (Thomas J. Hall of counsel), and Cooley LLP, New York

Sidley Austin LLP, Washington, DC (

Sidley Austin LLP, New York

Quinn Emanuel Urquhart & Sullivan, LLP, New York

Kirkland & Ellis LLP, Washington, DC (Paul Clement) , Williams & Connolly, New York (John J. Buckley, Jr. of counsel), and Lupkin and Associates, New York

Pillsbury Winthrop Shaw Pittman LLP, New York

Jenner Block LLP, New York

Moses & Singer LLP, New York  for Kenneth R. Feinberg, amicus curiae.

Friedman Kaplan Seiler and Adelman, New York

Now that you have the scorecard, here is what happened in regular play in Matter of TCR Sports Broadcasting Holding, LLP v WN Partner, LLC  2017 NY Slip Op 05689  Decided on July 13, 2017  Appellate Division, First Department:

“Pursuant to the negotiated terms of the parties’ written agreement, the subject arbitration, governed by the Federal Arbitration Act (FAA) (9 USC § 1 et seq.), was initiated before the Revenue Sharing Definitions Committee (RSDC) of Major League Baseball (MLB), to resolve a contractual dispute over telecast rights fees between TCR Sports Broadcasting Holding, LLP d/b/a the Mid-Atlantic Sports Network (MASN) and the Baltimore Orioles, and the Washington Nationals. For the reasons stated herein, we find that the arbitration award issued by the RSDC on June 30, 2014 was correctly vacated based on “evident partiality” (9 USC § 10[a][2]) arising out of the Nationals’ counsel’s unrelated representations at various times of virtually every participant in the arbitration except for MASN and the Orioles, and the failure of MLB and the RSDC, despite repeated protests, to provide MASN and the Orioles with full disclosure or to remedy the conflict before the arbitration hearing was held. However, even if this Court has the inherent power to disqualify an arbitration forum in an exceptional case, on the record before us there is no basis, in law or in fact, to direct that the second arbitration be heard in a forum other than the industry-insider committee that the parties selected in their agreement to resolve this particular dispute, fully aware of the role MLB would play in the arbitration process.

Contrary to the view of the dissent, there has been no showing of bias or corruption on the part of the members of the reconstituted RSDC, and the Nationals will use new counsel at the second arbitration. Speculation that MLB will dictate the outcome of the second arbitration by exerting pressure on the new members of the RSDC does not suffice to establish that they will not exercise their independent judgment or carry out their duties impartially, or that the proceedings will be fundamentally unfair.

In 2001, the Orioles and TCR Sports Broadcasting Holding, LLP (TCR) established the Orioles’ Television Network as a platform to broadcast Orioles games in a seven-state television territory. In 2002, MLB purchased the failing Montreal Expos for $120 million. In 2004, MLB announced the relocation of the Expos to Washington, D.C. to become the Nationals. The Orioles objected to the move on the grounds that the introduction of the Nationals into its previously-exclusive markets would cause it significant economic harm.”

“To vacate an award because of evident partiality under the FAA (9 USC § 10[a][2]), the movant bears the burden of showing that a reasonable person, considering all the circumstances, would have to conclude that an arbitrator was partial to one party to the arbitration (see Kolel [*8]Beth Yechiel Mechil of Tartikov, Inc. v YLL Irrevocable Trust, 729 F3d 99, 104 [2d Cir 2013]; U.S. Elecs., Inc. v Sirius Satellite Radio, Inc., 17 NY3d 912 [2011] [adopting the Second Circuit’s “reasonable person standard”]). Although this requires “something more than the mere appearance of bias” (see Morelite Constr. v New York City Dist. Council Carpenters Benefit Funds, 748 F2d 79, 83 [2d Cir 1984] [internal quotation marks omitted]), “[p]roof of actual bias is not required” (Scandinavian Reins. Co. Ltd. v St. Paul Fire & Marine Ins. Co., 668 F3d 60, 72 [2d Cir 2012]). Rather, a finding of partiality can be inferred “from objective facts inconsistent with impartiality” (Kolel Beth Yechiel Mechil, 729 F3d at 104 [internal quotation marks omitted]).

“Among the circumstances under which the evident-partiality standard is likely to be met are those in which an arbitrator fails to disclose a relationship or interest that is strongly suggestive of bias in favor of one of the parties” (Scandinavian Reinsurance Co. Ltd., 668 F3d at 72). Factors to be considered include “(1) the extent and character of the personal interest, pecuniary or otherwise, of the arbitrator in the proceedings; (2) the directness of the relationship between the arbitrator and the party he is alleged to favor; (3) the connection of that relationship to the arbitrator; and (4) the proximity in time between the relationship and the arbitration proceeding” (Yosemite Ins. Co. v Nationwide Mut. Ins. Co., 2016 WL 6684246, *7, 2016 US Dist LEXIS 157061, *19-20 [SD NY 2016] [internal quotation marks omitted]). “While the presence of actual knowledge of a conflict can be dispositive of the evident partiality test, the absence of actual knowledge is not” (Applied Indus. Materials Corp. v Ovalar Makine Ticaret Ve Sanayi, A.S., 492 F3d 132, 138 [2d Cir 2007]).

The record shows that Proskauer, while representing the Nationals in the arbitration, had an extensive relationship with the clubs that comprised the RSDC and/or their representatives, and with MLB, which administered the proceeding. Discovery in the vacatur proceeding revealed that

(i) the Proskauer attorneys representing the Nationals represented the Pirates in Senne v Office of the Commissioner of Baseball, No. 14-00608 (ND Cal) and Garber v Office of the Commissioner of Baseball, No. 12-03704 (SD NY). Proskauer had also represented the Pirates president, who was its representative on the RSDC, in Phillips, et al. v Selig, No. 1966 EDA 2007 (Pa Super Ct), and advised the Pirates on Americans with Disability Act matters.

(ii) Proskauer represented the Rays in Senne and four separate salary arbitrations, one of which occurred during the arbitration; and

(iii) Proskauer defended the father of Jeffery Wilpon, the Mets chief operating officer and its representative on the RSDC, and the father’s company, in a class action arising out of the Madoff Ponzi scheme, which was ongoing during the arbitration. Proskauer also represented the Mets in Senne.”