A couple of entrepreneurs meet in college and start up a translation company.  Many years later, successful as hell, they embark on a new hobby…litigation.  Both take to the sport and become pros. Shawe v Elting 2017 NY Slip Op 31406(U) June 29, 2017 Supreme Court, New York County Docket Number: 153375/2016 is a wonderful story, well told by Judge Shirley Werner Kornreich.  It touches, tangentially, on Judiciary Law § 487.

“These cases concern the acrimonious disputes between Elizabeth Elting and Philip Shawe that resulted in the Delaware Court of Chancery (Bouchard, C.) ordering the forced sale of Transperfect, the company they co-founded in college. In a 104-page post-trial opinion dated August 13, 2015, Chancellor Bouchard appointed a custodian and ordered the company’s sale because:

the state of management of the corporation has devolved into one of complete dysfunction between Shawe and Elting, resulting in irretrievable deadlocks over significant matters that are causing the business to suffer and that are threatening the business with irreparable injury, notwithstanding its profitability to date. The stockholders of the corporation have stipulated to their inability to elect successor directors, and there is no prospect they will do so in the future …. [A ]ppointment of a custodian to sell the corporation, with a view toward maintaining the business as a going concern and maximizing value for the stockholders, affords the only just and viable remedy under the unique circumstances of this case. ”

“An extensive review of the Post-Trial Decision, with which the court assumes familiarity, makes it clear that while there are no angels in this case, Elting and Shawe are not on anything close to equal equitable footing. Simply put, the Post-Trial Decision was a massive win for Elting; it amounts to a worst-case-scenario loss for Shawe. Shawe’s displeasure is manifest in his vigorous appeal to the Supreme Court of Delaware and political campaign to limit the Court of Chancery from ordering the sale of a profitable closely-held company.”

“Finally, Shawe asserts a claim under Judiciary Law§ 487 based on a defamation counterclaim Elting filed on July 16, 2014 in another action commenced by Shawe (and still pending in a non-commercial part), in which he alleged that Elting assaulted him. See Shawe v Elting, Index No. 155890/2014, Dkt. 22 at 14-16 (Sup Ct, NY County). This claim borders on the frivolous.

On June 10, 2014, “Shawe went to Elting’s office to confront her about [a] tax distribution.” Post-Trial Decision, 2015 WL 4874733, at *20. “According to Elting, Shawe would not leave her office despite repeated requests and blocked her from closing the door by putting his foot in it, at which point Elting tried to move it with [her] foot.”. Id. (citation and quotation marks omitted). “Curiously, while his foot was in the door, Shawe called one of his attorneys from Sullivan & Cromwell, rather than focus on resolving the situation at hand (i.e., removing his foot from the door).” Id. The very next day: On June 11, 2014, Shawe filed a “Domestic Incident Report” in which he accused Elting of pushing him and kicking him in the ankle the previous day. In a parenthetical at the very end of the report, Shawe identified Elting as his exfiancee, even though their engagement ended seventeen years earlier, apparently to ensure that the matter would be treated as a domestic violence incident and require Elting’s arrest. Shawe’s denial of reporting the incident in this manner to have Elting arrested is not credible. The police called Elting the next day and told her she was going to be arrested for assault and battery. After Elting’s lawyers intervened, the charges were dropped, but Shawe filed a civil tort case against her that remains pending. Id. at *21.

Shawe now complains that, before alleging in his tort case that there was an active police investigation, Elting’s counsel should have informed him that they knew that, by June 18, 2014, the police had decided not to arrest Elting. Shawe cynically maintains that, notwithstanding his deceptive reporting of the alleged assault to the police, the failure of Elting’s counsel to notify him of the police decision amounts to egregious conduct sufficient to give rise to a claim under section 487. As explained below, he is wrong. “

The statute, which has been with us in one form or another for more than 800 years does not mention “egregious” nor “chronic” nor a “pattern of delinquent behavior.”  487 is handled differently in the First Department, and in the other Departments, there appears to be a lower threshold for its application.  Here in Gelwan v Youni Gems Corp.  2017 NY Slip Op 05187
Decided on June 27, 2017  Appellate Division, First Department , as so often is found, the AD determined that there was no sufficiently egregious conduct.

“Order, Supreme Court, New York County (Manuel J. Mendez, J.), entered March 19, 2015, which, to the extent appealed from as limited by the briefs, granted plaintiff’s motion to dismiss defendants’ counterclaims, unanimously affirmed, without costs. Order, same court and Justice, entered August 12, 2014, which, to the extent appealed from, directed the parties to proceed to arbitration before the American Arbitration Association (AAA) of the first, sixth, seventh, eighth, and ninth causes of action, which were severed and dismissed from the action, unanimously modified, on the law, to dismiss, sever, and refer to arbitration before AAA the part of the eighth cause of action, which seeks a charging lien, addressed to fees covered by the retainer agreement, and to reinstate the sixth cause of action, which seeks an account stated, and otherwise affirmed, without costs.

Plaintiff seeks to recover legal fees and costs relating to his successful representation of defendants in an action involving a joint venture enterprise called Bassco Creations, pursuant to a contingency fee retainer agreement that contained an arbitration provision, and for work performed outside of the retainer agreement.

The motion court correctly found that defendants’ counterclaims do not allege conduct sufficiently egregious to support a Judiciary Law § 487 claim (see Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 13 [1st Dept 2008], lv denied 12 NY3d 715 [2009]).”

Our mission is to cover and report every legal malpractice case we can fine.  In Kings County, there are fewer decisions published electronically than in other places.  So, when the Appellate Division rules without giving any of the underlying facts, we traditionally go to the electronic filing system, and if the case is too old, to WebCivilSupreme.  However, the only published decisions in Seidman v Einig & Bush LLP  2017 NY Slip Op 05257  Decided on June 28, 2017  Appellate Division, ,Second Department are old Orders to Show Cause.  So, motion denied, decision affirmed, no reasons or facts.

“Here, the Supreme Court properly denied the defendants’ motion for summary judgment dismissing the complaint (see Rosenstrauss v Jacobs & Jacobs, 56 AD3d 453, 454; Velie v Ellis Law, P.C., 48 AD3d 674, 675; Pedro v Walker, 46 AD3d 789, 790). The defendants failed to make a prima facie showing of their entitlement to judgment as a matter of law since they failed to show that the plaintiff was unable to prove at least one of the essential elements of his legal malpractice cause of action (see Rosenstrauss v Jacobs & Jacobs, 56 AD3d at 454; Velie v Ellis Law, P.C., 48 AD3d at 675; Pedro v Walker, 46 AD3d at 790). Thus, we need not address the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).”

Cordero v Koval Retjig & Dean PLLC  2017 NY Slip Op 05036  Decided on June 20, 2017 Appellate Division, First Department presents an interesting question.  How does continuous representation in legal malpractice affect the statute of limitations amid lateral movement of attorneys from one firm to the next?

In this case, the matter travelled with the attorney from firm 1 to firm 2, and tolled the statute:

“The claim for malpractice accrued when defendants failed to timely file a notice of claim (see General Municipal Law § 50-e) upon the City of New York and the New York City Department of Transportation after plaintiff was allegedly injured in a fall from his motorcycle because he struck a defectively-placed construction plate in the road (see generally Glamm v Allen, 57 NY2d 87, 93 [1982]). However, the evidence raised triable issues whether the malpractice statute of limitations (CPLR 214[6]) was tolled under the continuous representation doctrine. Mark Koval, an attorney formerly employed by defendant law firm, joined another law firm at or about the time plaintiff’s personal injury case was transferred to such new law firm. Defendants admit that plaintiff’s case was transferred to the new firm, and Koval does not deny having worked on the case at either the old or new firm (see generally Antoniu v Ahearn, 134 AD2d 151 [1st Dept 1987]; HNH Intl., Ltd. v Pryor Cashman Sherman & Flynn LLP, 63 AD3d 534, 535 [1st Dept 2009]). Although Koval claims he subsequently left the new firm and did not take plaintiff’s case with him, there is no evidence that plaintiff was ever informed of, or had [*2]objective notice of, Koval’s departure such as to end the continuous representation circumstance and the tolling of the statute of limitations (see Shumsky v Eisenstein, 96 NY2d 164, 167-169, 170 [2001]).”

We are pleased to say that the Court of Appeals answered a certified question in our favor in Gevorkyan v Judelson   2017 NY Slip Op 05176  Decided on June 27, 2017  Court of Appeals
DiFiore, Ch. J. a case we have labored on over the past several years.  In this novel question of law, the Court of Appeals defined when a bail bond agent earns a bail bond premium.  Amici briefs suggested that there is widespread abuse of criminal defendants regarding bail bond premiums.

“The United States Court of Appeals for the Second Circuit, by certified question, has asked us whether an entity engaged in the bail bond business may retain the premium paid on [*2]a criminal defendant’s behalf when bail is denied and the defendant is never released from custody. Inasmuch as the Insurance Law provides that such an entity does not earn a premium for a bail bond if a court refuses to accept the bond following a bail source hearing, we answer in the negative.

I.

In 2011, Arthur Bogoraz was indicted on state law fraud charges and bail was fixed at $2 million. Plaintiffs, the wife and family friends of Bogoraz, contacted defendant Ira Judelson, a licensed bail bond agent affiliated with the International Fidelity Insurance Company (International Fidelity), a bail bond surety. Judelson, on behalf of International Fidelity, entered into an indemnity agreement with plaintiffs whereby International Fidelity agreed to underwrite a bail bond to secure Bogoraz’s release from custody in exchange for a premium of $120,560. Plaintiffs promised to indemnify the bond and provide collateral. Shortly thereafter, plaintiffs paid the premium to Judelson, in trust for International Fidelity. ”

“Further, as discussed above, the bail bond statutes empower a court to examine a posted bail bond and determine whether it should be approved or rejected (see CPL 520.30 [1], [*6][3]; Insurance Law § 6803 [b]). The court may reject the bail bond if it is dissatisfied with the source of the funds, the reliability of the obligors, the value of the security, the qualifications of the surety, or indeed “any feature of the undertaking [that] contravenes public policy” (CPL 520.30 [1]; see also Insurance Law § 6803 [b]). Under Judelson’s interpretation, a court could reject a bail bond following a bail source hearing based on the surety’s qualifications or because the surety failed to properly vet the underlying security, yet, because the surety “posted” bail bond, the surety could still retain the premium. Such an outcome does not comport with the legislative intent to protect against abuses in the bail bond industry.

In short, Insurance Law § 6804 (a) prohibits a bail bond surety from retaining a premium when the criminal defendant is not released on bail.”

High-level employee is the subject of a state investigation along with the Hospital employer.  The investigation and litigation continue and eventually the hospital and the County succeed.  The employee, not so much.  Employee says that had the attorneys filed a certain appeal, he would have been exonerated.  May he sue the attorneys assigned to him, who also represented the County?

Spring v County of Monroe  2017 NY Slip Op 04645  Decided on June 9, 2017  Appellate Division, Fourth Department  says, “no.”

“Memorandum: In this action arising from plaintiff’s employment at defendant Monroe Community Hospital (MCH), plaintiff asserted three causes of action against various defendants. The first cause of action, for legal malpractice, was asserted against defendants Daniel M. DeLaus, Jr., Esq., William K. Taylor, Esq., Brett Granville, Esq., and Merideth H. Smith, Esq. (collectively, County attorneys). The second cause of action, for negligence, was asserted against MCH, the County attorneys, and defendants County of Monroe (County), and Maggie Brooks, as Monroe County Executive. The third cause of action, for defamation, was asserted against Brooks and defendant Karen Fabi. The County, MCH, Brooks, and the County attorneys (collectively, County defendants) and Fabi made separate motions to dismiss the complaint against them. The County defendants and Fabi now appeal from an order that denied the motions, and we modify the order by granting the County defendants’ motion in part and dismissing the first and second causes of action.

On these motions to dismiss, we accept the facts alleged in the complaint as true and accord plaintiff the benefit of every favorable inference (see Daley v County of Erie, 59 AD3d 1087, 1087-1088). According to plaintiff, he became employed by the County in 2001 and became the Executive Health Director/Chief Administrative Officer of MCH in 2004. In February or March 2013, “questions were raised” regarding the treatment of a patient of MCH and, in March 2013, an investigation was commenced by the New York State Department of [*2]Health (DOH) and the New York State Attorney General. The County provided plaintiff with legal representation by the County attorneys. Although plaintiff was assured that there was no conflict of interest, the County attorneys were also representing the County and other MCH staff members, whose interests were adverse to plaintiff. On March 29, 2013, the DOH issued a statement of deficiency that included accusations against plaintiff with respect to the treatment of a patient at MCH. In or around April 2013, the County hired an independent consultant to assist with a response to the statement of deficiencies and to contest DOH’s allegations by preparing and filing an “Informal Dispute Resolution” (IDR/appeal). The consultant invited plaintiff to provide her with any information, and she told plaintiff that she agreed with him that an IDR/appeal should be filed. The written IDR/appeal report was finalized on April 25, 2013 but, at the last minute, the County attorneys decided not to submit it. In plaintiff’s view, the filing of the IDR/appeal was in his best legal interests and would have protected his reputation, his license as a nursing home administrator, and his position as executive director of MCH. On May 8, 2013, plaintiff requested that he be represented by private counsel. The County defendants did not respond to that request and, on May 10, 2013, plaintiff was terminated.

We agree with the County attorneys that Supreme Court erred in denying that part of the motion of the County defendants seeking to dismiss the legal malpractice cause of action, and we therefore modify the order accordingly. It is well established that, “[t]o recover damages for legal malpractice, a plaintiff must prove, inter alia, the existence of an attorney-client relationship” (Moran v Hurst, 32 AD3d 909, 910; see Berry v Utica Natl. Ins. Group, 66 AD3d 1376, 1376; Rechberger v Scolaro, Shulman, Cohen, Fetter & Burstein, P.C., 45 AD3d 1453, 1453). In a prior appeal arising from the same incident as here, we determined that plaintiff did not have an attorney-client relationship with the County attorneys inasmuch as “[c]ounsel for the County represented [plaintiff] only in [plaintiff’s] capacity as a County employee” (Matter of Spring v County of Monroe, 141 AD3d 1151, 1152). Consequently, plaintiff is collaterally estopped from claiming here that the County attorneys represented him individually (see generally Buechel v Bain, 97 NY2d 295, 303-304, cert denied 535 US 1096). Thus, the legal malpractice cause of action must be dismissed because there was no attorney-client relationship between plaintiff and the County attorneys (see Berry, 66 AD3d at 1376; Moran, 32 AD3d at 911-912).”

Attorneys and client have a number of related cases arising out of a real estate transaction.  They are in and out of some of the transactions, and other eventually go sour.  How does the continuous representation doctrine play out in this setting?

In RJR Mech. Inc. v Ruvoldt 2017 NY Slip Op 31232(U)  June 8, 2017 Supreme Court, New York County Docket Number: 158764/2015  Judge Jeffrey K. Oing discusses the various principles and application of the continuous representation doctrine.

“On or about August 25, 2016, plaintiff filed a new complaint, which is the subject of this motion, wherein it alleges, again, claims for 1) legal malpractice, and 2) unjust enrichment stemming from defendants’ failure to inform it of the alleged proposed settlement offer as well as failure to prepare for trials and hearings (the “second action”) . As with the allegations in the first action, in this action, plaintiff alleges that in 2002 it retained Ruvoldt to represent it, as the plaintiff, in a mortgage foreclosure action, .which was originally commenced by the lender, but assumed by plaintiff after it had . . \ . acquired the lender’s interest in the mortgage for the Maspeth Property (Norwest Bank Minnesota,. N.A. v E.M.V. Realty Corp., Index No. 20159/200.2 [Sup Ct, Queens County] [the “Norwest Bank action”]) (Verified Complaint)”

“Plaintiff’s new allegations are as follows. Plaintiff alleges that not only did Ruvoldt represent it in the Norwest Bank action,.but he also represented it in another action commenced in 2004 against it and related to the Maspeth Property: EMV Realty Corp. v RJR Mechanical- Inc., ‘Index No. 14778/2004 (Sup Ct, Queens County) (the “EMV Realty actionn). Plaintiff alleges it retained Ruvoldt to represent it and one of its principalsj Roy Leibo~itz (“Leibowitzn) in the EMV Realty action (Verified Complaint, !! 14-15). The EMV Realty action has laid dormant since 2005, save for a single 2011 substitution of counsel (Elman Affirm., Ex. C). On February~ry 11, 2011, Kevin J. Espinosa (“Espinosan), an attorney at Hodgson Russ, sent an email to plaintiff’s representative, Randy Karpman (“Karpman), notifying plaintiff th~t an appeal for the Norwest Bank action needed to be perfected by March 23, 2011 .(Verified :Complaint, ! 22; Espinosa Affirm, Ex. A). In the email, Espinosa advised Karpman that if he did not hear from plaintiff by February 25, 2011 defendants would no longer be able to represent it on the appeal (Id.). In. this email, Espinosa did not mention anything about withdrawing from the EMV Realty action or from other aspects of the Norwest Bank action (Verified Complaint, ! 22; Espinosa Affirm., Ex. A). ”

“The continuous representation doctrine, which is the offspring of the continuous treatment doctrine, recognizes that a layperson seeking legal assistance “[h]as a right to repose confidence ~n the professional’s ability and good faith, and realistically cannot be expected to question and assess the techniques employed or the manner in which the services· are rendered” (Greene v Greene, 56 NY2d 86, 94 [1982]; Matter of Lawrence, 24 N~3d 320, 342-343 [2014]). “The continuous representation doctrine tolls a statute of limitations where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim” (Zorn v Gilbert, 8 NY3d 933, 934 [2007] [internal quotations and citations omitted]). The two prerequisites needed to invoke a continuous representation toll are 1) a claim of misconduct regarding the mann~r in which the profession~l services were performed,· and 2) the ongoing provision bf professional services.with respect to the contested matter or transaction (Matter of Lawrence, 24 NY3d at 342). The ongoing representation must be specifically related to the matter in which the attorney committed the alleged malpractice (Id.; Johnson v Proskauer Rose LLP, 129 AD3d 59, 68 [1st Dept 2015]). The continuous representation doctrine is inapplicable where “plaintiff’s allegations establish defendant[s’] failures within a continuing professional relationship, not a course of representation as to the particular problems (conditions) that gave rise to plaintiff’s malpractice claims” (Id. at 341-342 [internal quotations and citations·omitted]). Here, plaintiff cont’ends that prior to its decision to substitute defendants as counsel it was unaware that defendants no longer intended t6 represent·~t and that defendants’ letters were not indicative of such. Rather plaintiff asserts that defendants’. letters established that they would continue to represent it in the settlement of the Norwest Bank action and the EMV Realty aeration.

“Further, and more importantly, in order for a legal malpractice claim to be subject to the continuous representation toll, the ongoing representation must be directly linked to the alleged malpractice. Given that plaintiff has failed to plead with sufficiency that the EMV Realty action is related to the underlying allegations of legal malpractice, the continuous representation doctrine cannot be transferred to the second action based on the EMV Realty action. Based on the foregoing, plaintiff’s legal malpractice claim is time barred.”

After a multi-million dollar investment suffered some unexpected tax issues, litigation between some legal giants started.  Bloostein v Morrison Cohen LLP  2017 NY Slip Op 31238(U)  June 7, 2017  Supreme Court, New York County  Docket Number: 651242/2012  Judge: Anil C. Singh involves a state supreme court case and at least one arbitration.  The players include Morrison Cohen LLP, Brown Rudnick, LLP and Stroock & Stroock & Lavan LLP.  The case now revolves around the meaning of certain releases.

“The plaintiff investors commenced the main action against Morrison Cohen for, inter alia, legal malpractice. In the main action, the plaintiff investors allege that Morrison Cohen was negligent in failing to address the inclusion of a new provision in the documents that comprised the Transaction (the “Transaction Documents”) and as a direct result of this negligence, the investors incurred various damages, including having to pay significant capital gains taxes. The Transaction closed ©n September 26, 2007. ”

“On or about January 9, 2015, Morrison Cohen commenced the third-party action against Stonebridge and Brown Rudnick. In the Second Amended Third-Party Complaint (“Third-party Complaint”), Morrison Cohen alleges that Stonebridge retained two law firms to represent their interests in the Transaction, including Brown Rudnick. The terms of Stonebridge’s retention of Brown Rudnick are set forth in the March 16, 2006 Stonebridge/ Brown Rudnick engagement letter (“Engagement Letter”). The Third-party Complaint further alleges that Brown Rudnick was the primary drafter of the Transaction Documents. In addition to drafting the Transaction Documents, Brown Rudnick is also alleged to have issued a tax opinion letter to the plaintiff investors (the “Opinion Letter”). The Third-party Complaint states three causes of action: (1) indemnification and contribution as against Stonebridge (“First Cause of Action”) (2) indemnification and contribution as against Brown Rudnick concerning the Opinion Letter (“Second Cause of Action”); and (3) indemnification and contribution as against Brown Rudnick concerning the Transaction Documents (“Third Cause of Action”). Stonebridge and Brown Rudnick filed motions to dismiss by their respective counsel. ”

“Stroock argues that Brown Rudnick is precluded from seeking contribution because under the Settlement Agreement with Stonebridge it was released from all claims, asserted or that could have been asserted relating in any manner to [Stroock’s] representation of [Stonebridge] or any of [Stone bridge’s] current or former parents, subsidiaries, affiliates, successors, or assigns, and each of their current or former employees, principals, partners, members, ag~nts, advisors, representatives, or attorneys in the Transaction. (emphasis added). Paragraph 5 of the Settlement Agreement further provides that: [t]he Parties intend that the release of [Stroock] … be within the scope of New York General Obligations Law (‘GOL’) §15-108, and that [Stroock] be provided with, and [is] entitled to, a contribution bar to the fullest extent permitted by law. The Settlement Payment shall be deemed to be the monetary · consideration required to bring the release of [Stroock] within the scope of New York GOL § 15-108 … and in full satisfaction of all claims against [Stroock], including, but not limited to, any claims that have been or may be asserted in Bloostein v. Morrison Cohen LLP et al., Index No. 651242/12 (Sup. Ct. N.Y. Cnty.) … NY GOL § 15-108 states in relevant part that “[ w] hen a release or a covenant not to sue or not to enforce a judgment is given to one of two or more persons liable or claimed to be liable in tort for the same injury, … , it does not discharge any of the other tortfeasors from liability for the injury … unless its terms expressly so provide but … it reduces the claim of the releaser against the other tortfeasors.” (emphasis added). The Court of Appeals has held that GOL § 15-108 was designed precisely to allow “defendant[s] to settle a claim and obtain release without fear of being brought back into the action by a non-settling defendant seeking contribution.” Mitchell v. New York Hosp. 61 N.Y.2d209, 215 (1984). NY GOL § 15-108( d) also lays out the requirements for a release and covenant that fall within the scope of the provision 1 • Brown Rudnick does not dispute the validity of the release with respect to GOL §15-108(d). The gravamen of Brown Rudnick’s opposition is that GOL § 15-108(a) applies only to persons liable for “the same injury” and the injury in this action is not the same injury as in the Arbitration. ”

“Brown Rudnick argues that there are distinct injuries in the instant action and the Arbitration. It claims that the injuries in the Arbitration were “having to pay legal fees and disbursements to Stroock for the negligent legal services Stroock provided Stonebridge; deprivation of the full amount -of the loan fee Stonebridge was to recover had an Event of Default not occurred; (and) Stonebridge’s payment of c substantial fees to participants in the Transaction.” (NYSCEF No. 145 at p.4-5). Brown Rudnick contends that the injuries in this action are distinct as they concern “significant capital gains taxes; (and) legal fees and disbursements the (plaintiff investors) paid to Morrison Cohen in connection with the Transaction.” Id. This argument is without merit. Unlike Ackerman, the contribution claim brought in this action by Brown Rudnick against Stroock stems from the same Transaction, Qpinion Letter and losses as those addressed in the Arbitration. This action and the Arbitration is predicated upon legal malpractice. Both Brown Rudnick and Stroock may be held j~intly or severally culpable to the plaintiff investors for the same injury. Accordingly, GOL §15-108 and the release bars Brown Rudnick from seeking contribution from Stroock. “

Gall v Colon-Sylvain  2017 NY Slip Op 04424  Decided on June 7, 2017  Appellate Division, Second Department is the story of a real estate case gone bad, a non-jury trial ending in success for plaintiff and a complete reversal at trial.  How can Supreme Court and the Appellate Division differ so, on the same set of facts?

“The plaintiff commenced this action against, among others, the defendant attorneys Anthony Michael Camisa and David M. Fish (hereinafter together the defendants), alleging that the defendants breached a duty to the plaintiff by failing to ascertain whether the signator on a deed of transfer had the authority to transfer on behalf of a corporation. The property at issue was a residential parcel owned by JJRG Enterprises, Inc. (hereinafter JJRG). The plaintiff was a 50% shareholder of JJRG and the other 50% was held by the defendant Joseph Grant. During the sales transaction, Grant represented himself to be the sole shareholder of JJRG. Camisa represented the purchaser-borrower and the lender on the transaction. Fish represented the seller, JJRG.

At the conclusion of a nonjury trial, the Supreme Court found in favor of the plaintiff. The court concluded that Fish, as attorney for JJRG, had an obligation to ascertain who had the authority to act on JJRG’s behalf. Fish failed to exercise due care in the discharge of that obligation by relying on, inter alia, Camisa’s determinations regarding Grant’s purported authority to bind JJRG to the transaction. As to Camisa, the court held that a fiduciary relationship was created between [*2]Camisa and the plaintiff because the evidence demonstrated that Camisa had de facto control and dominance over the real estate transaction due to, among other things, Fish’s reliance on Camisa’s expertise. In a judgment entered November 14, 2014, the Supreme Court awarded the plaintiff the principal sum of $100,000 against the defendants, jointly and severally. The defendants separately appeal from that judgment.”

“Here, the Supreme Court erred in concluding that the plaintiff satisfied his burden of proof with respect to the elements necessary to prove legal malpractice against Fish. Namely, the plaintiff failed to present evidence to establish that he would not have incurred any damages but for Fish’s negligence (see Nomura Asset Capital Corp. v Caldwalader, Wickersham & Taft LLP, 26 NY3d at 50; Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442). Although the plaintiff argues that but for Fish’s misconduct the plaintiff would not have lost his equity interest in the property, the plaintiff failed to present evidence as to the value of that interest. Contrary to the court’s conclusion, the plaintiff’s expectation that he would receive $100,000 through an agreement with Grant does not establish the fair market value of the plaintiff’s equity interest in the property.

To recover damages for a breach of a fiduciary duty, a plaintiff must establish (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendant’s misconduct (see Baumann v Hanover Community Bank, 100 AD3d 814, 817; Rut v Young Adult Inst., Inc., 74 AD3d 776, 777). “A fiduciary relationship exists between two persons when one of them is under a duty to act for or give advice for the benefit of another upon matters within the scope of the relation'” (Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d 47, 62, quoting EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19; see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d 146, 158). “Such a relationship may exist where one party reposes confidence in another and reasonably relies on the other’s superior expertise or knowledge, but an arms-length business relationship does not give rise to a fiduciary obligation'” (Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d at 62, quoting WIT Holding Corp. v Klein, 282 AD2d 527, 529). “The core of a fiduciary relationship is a higher level of trust than normally present in the marketplace between those involved in arm’s length business transactions'” (Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d at 62, quoting EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d at 19). Determining whether a fiduciary relationship exists is a fact-specific inquiry and the essential elements are reliance by one party, and de facto control and dominance by the other (see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d at 158).

Here, the Supreme Court erred in concluding that the plaintiff satisfied his burden of proof with respect to the elements necessary to prove a breach of fiduciary duty against Camisa. The evidence did not establish that Camisa, who was the attorney for the purchaser and the lender, had any duty to act or give advice for the benefit of the plaintiff (see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d at 158; EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d at 19; Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d at 61).”

It’s a common enough scenario.  Home buyer (not a professional) wants to buy what looks like a bargain.  Home buyer goes to an attorney and the closing takes place.  Problem?  ECB as judgments against the property which don’t get taken care of, the neighbor has a right to use the driveway and there are structural problems.  Was it the obligation of the attorney to tell the buyer to get an inspection?  Did the attorney have to explain the title search results to the buyer?

Right now, in Bergwijn v Big Queens Rehab Inc.  2017 NY Slip Op 31227(U) June 1, 2017  Supreme Court, Kings County  Docket Number: 505174/16  Judge: Genine D. Edwards the title company is out, and there is to be more briefing for the attorney.

“Bergwijn commenced this action on April 5, 2016, regarding his January 9, 2012 purchase of the residential real property at 115 Miller Avenue in Brooklyn (Property) from defendant, Big Queens Rehab Inc. (Big Queens). In connection with the sale of the Property, DeGaetano was Bergwijn’s attorney and Old Republic issued Owner’s Policy Of Title Insurance No. OX-08524493 (Title Policy)

The complaint alleges that Big Queens and DeGaetano “advised Plaintiff that he did not need an inspection of the house” and, in reliance on that advice, Bergwijn did not have the Property inspected (complaint at iii! 14-15 and 18). Allegedly: (1) Bergwijn was not informed of Environmental Control Board (ECB) violations against the Property; (2) there was an illegal basement and a hidden bathroom at the Property; (3) the neighbor had an easement to use the common driveway at the Property; and (4) DeGaetano “encouraged” Bergwijn “to sign the closing documents without explaining what they meant” (id. atirif 19- 22). The complaint further alleges that the ECB violations “had been converted into Judgments totaling $66,000.00 [which] predate the Plaintiffs purchase of the Property” and “the Title Policy from Defendant Old Republic … did not alert Plaintiff to any of the liens, judgments or violations … ” (id. at iii! 25 and 26).  ”

“ORDERED that: (a) Bergwijn shall serve and file papers in opposition to DcGaetano’s motion for summary judgment within 45 days of service of a copy of this interim decision and order with notice of entry; (b) DeGaetano shall serve and file papers in opposition to Bergwijn’s cross-motion for summary judgment within 45 days of service of a copy of this interim decision and order with notice of entry; (c) DeGaetano shall serve and file reply papers in further support of his motion for summary judgment within 45 days of receipt of opposition papers; and ( d) Bergwijn shall serve and file reply papers in further support of his cross-motion for summary judgment within 45 days of receipt of opposition papers. “