Did the defendants wait too long to seek attorney fees as prevailing parties?  If they did wait too long, it could be malpractice.  In Smith, Gambrell & Russell, LLP v Telecommunication Sys., Inc.  2017 NY Slip Op 30951(U)  May 5, 2017  Supreme Court, New York County  Docket Number: 653476/2016  Judge: Anil C. Singh sits (in effect) as an Appellate Court and renders judgment on whether the attorneys waited too long.

“Plaintiff law firm Smith, Gambrell & Russell, LLP (“plaintiff’ or “SGR”) moves pursuant to CPLR 321 l(a)(l) and (7) to dismiss defendant Telecommunications Systems, Inc.’ s (“defendant” or “TCS”) counterclaim alleging legal malpractice, ·· contending that it did not miss a statutory 14-day deadline under Rule 54(d)(2)(B) of the Federal Rules of Civil Procedure for filing a motion for attorneys’ fees as the deadline was tolled while post-judgment motions were pending in the underlying federal matter. Defendant opposes the motion. ”

“TCS contends that SGR sought fees based on a sanctions argument not because of difficulties in establishing TCS as the “prevailing party” – the judgment expressly held that TCS was the prevailing party- but because SGR had missed the deadline for an attorneys’ fee application set by Rule 54(d)(2)(B). Neither TCS nor SGR states whether the Court ever decided the motion for sanctions. SGR points out that, after the motion for sanctions was filed, Cassidian and TCS settled their dispute, and all pending actions and appeals were withdrawn by the parties on December 18, 2015 (SGR’s Memorandum of Law dated Nov. 11, 2016, p. 7). The counterclaim asserts a single cause of action for legal malpractice alleging that by failing to file a timely motion for attorneys’ fees, SGR breached its duty of care (Counterclaim, p. 20, para. 96). TCS seeks damages in the sum of $3.4 million. ”

“There are numerous federal cases holding that a motion for attorneys’ fees is timely under Rule 54(d)(2)(B) when filed within 14 days after the entry of judgment, or within 14 days of the resolution of post-judgment motions. For example, in Sorenson v. Wolfson, 170 F.Supp.3d 622 (S.D.N.Y. 2016), the Court held that a postjudgment motion revives the time to seek legal fees regardless of whether or not an initial application was made during the 14-day period following entry of the original judgment (id. at 628). Other federal district and circuit courts have reached the same conclusion (see, for example, SAS Inst .. Inc. v. World Programming Ltd., 2016 WL 3920203, at *3 (E.D.N.C. July 15, 2016) (“After disposition of defendant’s [post~judgment motions], the filing period for attorney’s fees began anew.”); Waltrous v. Bomer, 995 F.Supp.2d 84, 88 (D. Conn. 2014) (“[A] party’s motion for attorney’s fees is timely, unless filed outside the fourteen-day window following the court’s last ruling on any pending [post-judgment] motions.”); Drumgold v. Callahan, 806 F.Supp.2d428, 435 (D. Mass. 2011) (“The overarching rule is that a motion for attorneys’ fees ‘is timely filed if filed no later than 14 days after the resolution of [post-trial motions].”‘) (citing Weyant v. Okst, 198 F .3d 311, 315 (2d Cir. 1999); Chirco v. Charter Oak Homes. Inc., 2008 WL 1743343, at *8 (E.D. Mich. Apr. 11, 2008) (“Where a post-judgment motion has been filed, the time limit shall begin to run upon the denial of the motion.”); Bio-Med. Applications of Tex., Inc. v. BAP-FMC San Antonio, Ltd., 2006 WL 2728915, at *1 (W.D. Tex. July 7, 2006) (“Plaintiffs motion for attorney’s fees was filed within fourteen days of the order disposing of plaintiffs [post-judgment motion]  The motion is therefore timely.”) It is noteworthy that in four of the above cases, the prevailing party filed a motion for attorneys’ fees after the initial 14-day deadline expired. Likewise, we note that TCS has not cited a case setting forth an inflexible – and arguably irrational – holding that a motion for attorneys’ fees should have been filed within 14 days of the initial entry of judgment even where post-judgment motions were filed .”

“The documentary evidence shows unambiguously that post-judgment motions were filed in the Cassidian matter; the Court issued its final ruling on the postjudgment motions on April 20, 2015; and on May 4, 2015, SGR made a timely motion to recover legal fees as a sanction (Rosenthal Aff., exhibits C, D, E, F). The Court finds that the documentary evidence utterly refutes the allegation that SGR failed to make a timely motion for attorneys’ fees. The counterclaim fails to state a cause of action for malpractice predicated on the missed deadline. Accordingly, it is ORDERED that the motion is granted, and the counterclaim is dismissed pursuant to CPLR 321 l(a)(l) and (7) without leave to replead. ”

 

Was there an attorney-client relationship or not?  That will be the central issue in Prott v Lewin & Baglio, LLP  2017 NY Slip Op 03786  Decided on May 10, 2017  Appellate Division, Second Department.  Defendants sought to prove at the pre-answer stage that the relationship had ended.  The documentary proof was incompetent for purposes of CPLR 3211(a)(1).

“The plaintiff commenced this action against the defendants, inter alia, to recover damages for legal malpractice. The plaintiff alleged that, although he retained the defendants to prosecute an action on his behalf, the defendants failed to commence the action before the expiration of the applicable statute of limitations in December 2012. The defendants moved pursuant to CPLR 3211(a) to dismiss the complaint, and the Supreme Court denied the motion.

“A motion pursuant to CPLR 3211(a)(1) to dismiss the complaint on the ground that the action is barred by documentary evidence may be granted only where the documentary evidence utterly refutes the plaintiff’s factual allegations, thereby conclusively establishing a defense as a matter of law” (Mawere v Landau, 130 AD3d 986, 987 [internal quotation marks omitted]; see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326). The evidence submitted in support of such motion must be ” documentary'” or the motion must be denied (Fontanetta v John Doe 1, 73 AD3d 78, 84, quoting Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C3211:10, at 22; see Cives Corp. v George A. Fuller Co., Inc., 97 AD3d 713, 714). In order for evidence submitted in support of a CPLR 3211(a)(1) motion to qualify as documentary evidence, it must be “unambiguous, authentic, and undeniable” (Granada Condominium III Assn. v Palomino, 78 AD3d 996, 996-997 [internal quotation marks omitted]). “[J]udicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable, would qualify as documentary evidence in the proper case” (Fontanetta v John Doe 1, 73 AD3d at 84-85 [internal quotation marks omitted]). “Conversely, letters, emails, and affidavits fail to meet the requirements for documentary evidence” (25-01 Newkirk Ave., LLC v Everest Natl. Ins. Co., 127 AD3d 850, 851; see Attias v Costiera, 120 AD3d 1281, 1283; Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714; Granada [*2]Condominium III Assn. v Palomino, 78 AD3d at 997; Fontanetta v John Doe 1, 73 AD3d at 86).

Here, the evidence submitted by the defendants, which included a letter dated September 28, 2012, purporting to terminate the attorney-client relationship between the plaintiff and the defendants, did not constitute documentary evidence within the meaning of CPLR 3211(a)(1) and, in any event, failed to utterly refute the plaintiff’s factual allegations, thereby failing to conclusively establish a defense as a matter of law (see Mawere v Landau, 130 AD3d at 990; Lindsay v Pasternack Tilker Ziegler Walsh Stanton & Romano LLP, 129 AD3d 790, 792; 25-01 Newkirk Ave., LLC v Everest Natl. Ins. Co., 127 AD3d at 851; Louzoun v Kroll Moss & Kroll, LLP, 113 AD3d 600, 601-602). Therefore, the Supreme Court properly denied that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(1) to dismiss the legal malpractice cause of action.”

It seems that when the husband was injured, the defendant law firm sued for both him and the wife (in loss of consortium).  Years later it was said that the plaintiff signed a release for her “loss of services” claim.  She denies settling her portion of the case.  What happened?  Were they now divorced and no longer allies?

Anderson v Dinkes & Schwitzer, P.C.  2017 NY Slip Op 03721  Decided on May 10, 2017
Appellate Division, Second Department is a win for the attorneys.

“In 2003, the plaintiff’s then husband, the defendant Yoni Anderson (hereinafter Yoni), retained the defendants Dinkes & Schwitzer, P.C. (hereinafter the Dinkes firm), William Schwitzer, and Michael Kimmelman to represent him in filing a personal injury action (hereinafter the prior action), in which a claim for loss of services was asserted on behalf of the plaintiff, allegedly without her knowledge. On June 10, 2009, following negotiations to settle the prior action, the plaintiff signed a document stating, inter alia, that she agreed to receive $200,000 from the settlement proceeds “as full and final compensation for her loss of services claim.” In February 2012, the plaintiff commenced the instant action against, among others, the Dinkes firm, Schwitzer, and Kimmelman, seeking, inter alia, to recover damages for legal malpractice and fraudulent concealment, based on the alleged failure to disclose her status as a plaintiff in the prior action and that she was accepting $200,000 in full settlement of her claim in that action. The plaintiff also asserted a cause of action alleging notarial misconduct against the defendant Alice Lin, a notary public who notarized documents including a general release that allegedly contained the plaintiff’s forged signature. Thereafter, the Dinkes firm, Schwitzer, and Lin (hereinafter collectively the Dinkes defendants) moved for summary judgment dismissing the complaint insofar as asserted [*2]against them, and the plaintiff cross-moved, among other things, to compel the Dinkes defendants and Kimmelman to appear for depositions. In an order dated February 3, 2015, the Supreme Court, inter alia, granted the Dinkes defendants’ motion for summary judgment and denied that branch of the plaintiff’s cross motion which was to compel depositions.

” A party is under an obligation to read a document before he or she signs it, and a party cannot generally avoid the effect of a [document] on the ground that he or she did not read it or know its contents'” (Fulton v Hankin & Mazel, PLLC, 132 AD3d 806, 808, quoting Martino v Kaschak, 208 AD2d 698, 698). Generally, a cause of action alleging that the plaintiff was induced to sign something different from what he or she thought was being signed only arises if the signer is illiterate, blind, or not a speaker of the language in which the document is written (see Ackerman v Ackerman, 120 AD3d 1279, 1280). Here, the Dinkes defendants established their prima facie entitlement to judgment as a matter of law dismissing the causes of action asserted against the Dinkes firm and Schwitzer by presenting evidence that the plaintiff could read and understand English, that she had the opportunity to read the document dated June 10, 2009, which expressly stated that she was accepting $200,000 “as full and final compensation for her loss of services claim,” and that she never expressed any difficulty understanding the terms of the document (see Matter of Augustine v BankUnited FSB, 75 AD3d 596, 597; Cash v Titan Fin. Servs., Inc., 58 AD3d 785, 788). In opposition, the plaintiff failed to raise a triable issue of fact as to whether she was incapable of understanding the document signed by her based on her conclusory testimony that “[n]o one . . . explained [it] to me.””

Often, an appellate decision is phrased in mild, soothing language, masking the trench warfare taking place beneath the surface.  Polanco v Greenstein & Milbauer, LLP  2017 NY Slip Op 03707  Decided on May 9, 2017  Appellate Division, First Department is a prime example.  Note the level upon which defendants treated plaintiff’s expert.

Beyond the way the attorneys handled their roles in this legal malpractice case, note the lack of care these PI attorneys took to their client.  It seems that this was just another car case, and garnered very little thought or attention. It seems she had a herniated disc, but settled the case for only $ 20,000.

“On a prior appeal, this Court reversed the grant of defendant’s motion to dismiss, finding that the allegation “that defendant was negligent in urging her to settle the underlying personal injury action and in advising her that an MRI was not necessary and that its results would not lead to a more favorable outcome of her case,” supported a cause of action for legal malpractice (96 AD3d 438, 439 [1st Dept 2012]).

Defendant law firm failed to meet its prima facie burden on the instant motion for summary judgment (see Suppiah v Kalish, 76 AD3d 829, 832 [1st Dept 2010]). The firm’s legal expert did not address the stated basis for plaintiff’s legal malpractice claim, ignored her testimony as to the nature of pre-settlement discussions with her attorney, and misstated that attorney’s testimony. The firm’s radiologist’s opinion on causation, attributing plaintiff’s injuries to degenerative changes, was equivocal, inter alia, conceding that causation as to a herniation was “uncertain” and that certain changes seen on an MRI, taken over one year after the accident, could have been formed in a matter of “months.”

Even if the firm had met its initial burden on the motion, denial would be warranted based upon the existence of triable issues of fact raised by plaintiff. That plaintiff’s expert may have committed improper acts or malpractice bears on his credibility and not the admissibility of his testimony (see Williams v Halpern, 25 AD3d 467, 468 [1st Dept 2006]) and plaintiff’s surgeon’s attribution of her injuries to a different, plausible cause, creates a triable issue of fact on causation (see Linton v Nawaz, 62 AD3d 434, 439-440 [2009], affd 14 NY3d 821 [2010]; Norfleet v Deme Enter., Inc., 58 AD3d 499, 500 [1st Dept 2009]).

 

Estate cases sometimes run into the dead man’s statute, and even if not, there are unique difficulties in providing proofs of intent, which are sometimes very, very important.  In Steffan v Wilensky  
2017 NY Slip Op 03602  Decided on May 4, 2017  Appellate Division, First Department plaintiff can no longer prove that the bank account was a “convenience” and not a “joint” account.  Neither, says the Appellate Division, could the attorneys.

“In support of his legal malpractice claim, plaintiff failed to establish prima facie that his predecessor executor would have prevailed in a Surrogate’s Court proceeding against a bank but for defendant’s negligence in not bringing such a proceeding sooner (see LaRusso v Katz, 30 AD3d 240, 243 [1st Dept 2006]).

Banking Law § 675(b) states that the making of a deposit in the name of a depositor (in the instant action, the decedent, Anne McLaughlin Doris) and another person (Bridie McKiernan) “shall . . . be prima facie evidence . . . of the intention of both depositors . . . to create a joint tenancy and to vest title to such deposit . . . in such survivor.” As the evidence submitted with plaintiff’s opening motion papers (e.g., the transcript of defendant’s deposition) shows, the predecessor executor would have had difficulty adducing “clear and convincing evidence that the account was opened only as a matter of convenience” (Pinasco v Del Pilar Ara, 219 AD2d 540, 540 [1st Dept 1995]). His conversations with Doris, which tended to show that the account was a convenience account, could have been excluded pursuant to the Dead Man’s Statute (CPLR 4519), and he would have had to rely on defendant’s testimony about his telephone conversation with McKiernan, because McKiernan could not be located.

Because plaintiff failed to make a prima facie case, it is unnecessary to decide if defendant raised a triable issue of fact in opposition to plaintiff’s motion.

By his silence in his opposition brief, defendant concedes, as plaintiff argues, that the second, third, and sixth affirmative defenses should be dismissed.”

Courts often take claims of attorney mistakes short of the outright failure to start a case not so seriously.  Many the act, which plaintiff claims is a departure, is said to be a failing but permitted strategic decision.  Not so in Caso v Miranda Sambursky Sloane Sklarin Ver Veniotis LLP
2017 NY Slip Op 03607   Decided on May 4, 2017  Appellate Division, First Department.

Plaintiff was the victim of a hit-and-run and there was an eye-witness.  Here is what happened.

“In this legal malpractice action, plaintiff, the victim of a hit-and-run accident, alleges that defendants, who represented him in the underlying personal injury action, were negligent in failing to prepare and present the testimony of the sole eyewitness; that defendants’ negligence caused a verdict against him; and that he sustained actual damages. Specifically, plaintiff alleges that, prior to the eyewitness’s deposition testimony two years after the accident, defendants failed to refresh the eyewitness’s memory by showing him the police record of a phone call he made shortly after the accident, in which he described the hit-and-run vehicle as a green garbage truck with a flat front. The eyewitness then testified to the contrary at his deposition, stating that the garbage truck he remembered fleeing the scene had a round front, not a flat front. Plaintiff alleges that but for defendants’ negligence in handling the key witness in his case, he would have prevailed, as the driver operated a green garbage truck with a flat front, and the driver had already admitted to a route that would have placed him at the scene on the day and time of the accident. These allegations are sufficient to survive a CPLR 3211(a)(1) and (7) motion to dismiss, as nothing in the record conclusively establishes a defense as a matter of law (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]) and plaintiff has adequately pleaded a claim for legal malpractice (see Global Bus. Inst. v Rivkin Radler LLP, 101 AD3d 651, 651 [1st Dept 2012]; see also Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]).”

In legal malpractice cases it is presumed, generally conclusively, that an attorney is a fiduciary of the client.  That principle probably derives from the education and licensing of the attorney.  It can be true in many other relationships, as Milonakis v Haralampopoulos  2017 NY Slip Op   30863(U)  April 26, 2017  Supreme Court, New York County  Docket Number: 653928/14
Judge: Barry Ostrager shows us.

“Presently before the Court is a post-note of issue motion by defendants Lambrini Haralampopoulos (“Lambrini”), J.P. Morgan Securities LLC, and JP Morgan Chase Bank, N.A (collectively, “defendants”) for an order pursuant to CPLR § 3212, granting them summary judgment dis~issing all remaining claims against all defendants. Plaintiff Ioannis Milonakis (“Milonakis”) asserted ten causes of action in his Verified Complaint, most of which were dismissed on the record on January 7, 2016 in connection with the defendants’ pre-answer motion to dismiss (motion sequence. 001 ). The third cause of action sounding in breach of fiduciary duty survived, pending further development of the record through discovery, and is the sole focus of this summary judgment motion. The motion is denied for the following reasons. 1 Plaintiff started banking at a particular Chase Bank branch in Astoria, Queens in 2002 (see Milonakis Deposition dated June 1, 2016 at 33:15-20, 42:7-14)2. Defendant ~ambrini, a Chase employee at this particular branch, performed various banking services for plaintiff, such as cashing rent checks from Milonakis’s rental property (id.), and, being a native Greek speaker like plaintiff, Lambrini occasionally translated certain conversations with other bank representatives for plaintiff during the course of their 10-year business relationship at the branch (see Milonakis Dep. 36: 19-25, 40:3-4, 34, 45- 47). In 2002, shortly after plaintiff retired from his union job, Larribrini introduced plaintiff to a colleague at Chase to discuss the purchase of an annuity with plaintiff’s retirement funds of roughly $500,000 (Milonakis Dep. 35:15-36-21). Lambrini translated during that conversation (id.). Plaintiff purchased an annuity (“Annuity”) issued by Genworth Financial (“Genworth”) which was marketed by a Chase affiliate (see Weiss Aff., Exh. 39). Lambrini is a licensed insurance representative and holds Series 6 and Series 63 licenses with the ability to transmit insurance forms (Lambrini Dep. 70:24-71 :5). ”

“Plaintiff commenced this action in December 2014 alleging, inter alia, that Lambrini never explained the withdrawal form to him, or the consequences of the withdrawal and surrender of the Annuity, when Lambrini knew that plaintiff did not speak English. Plaintiff further alleged that he had relied on Lambrini’ s “investment advice” when Lambrini told plaintiff in June 2012 that “it was proper to transfer the annuity funds” to a new Chase account, allegedly as part of a scheme by Lambrini to earn commissions at the expense of Greek Chase customers in the community (Milonakis Aff. at 3). Plaintiff claims he had a special relationship with Lambrini that rises to the level of a fiduciary duty and that Lambrini breached her fiduciary duty to him. To establish a common law tort for breach of fiduciary duty, plaintiff must prove (1) the existence of a fiduciary relationship; (2) misconduct by the defendants; and (3) damages directly caused by the defendants’ misconduct. Pokoik v Pokoik, 115 AD3d 428, 429 (1st Dept 2014), citing Kurtzman v Bergstol, 40 AD3d 588, 590 (2d Dept 2007). A fiduciary relationship is “grounded in a higher level of trust than normally present in the marketplace between those involved in arm’s length business transactions.” Oddo Asset Management v Barclays Bank.PLC, 19 NY3d 584, 593 (2012), citingEBC I, Inc. v Goldman Sachs & Co., 5 NY3d 11, 19 (2005). The Court of Appeals has held that a fiduciary duty exists between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relationship. Roni LLC v Ar/a, 18 NY3d 846, 848 · (2011). Additionally, a fiduciary relationship may exist where one party reposes confidence in another and reasonably relies on the other’s superior expertise or knowledge. Id, quoting AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d 146, 158 (2008) (“A fiduciary relation exists when confidence is reposed on one side and there is resulting superiority and influence on the other”). Defendants cite cases such as Bennice v Lakeshore Sav. & Loan Assn., 254 AD2d 731 (4th Dept 1998) for the proposition that ordinarily there is no fiduciary relationship between a bank and a depositor. However, as that Court and others recognize, the conduct of the parties can create a “special relationship.” As the record shows, there are material issues of fact as to whether plaintiff and defendants, through Lambrini, had a sufficiently special relationship to support a claim for breach of fiduciary duty, and even assuming that a special relationship existed, there are material issues of fact as to what transpired between the parties in June 2012. Consequently, the motion for summary judgment must be denied.”

 

The statute of limitations is a fierce barrier to litigation.  Time ticks by in an excruciating but unstoppable parade.  Three years can go by in a flash.  The only toll to the statute (barring another inevitable, death) is continuous representation.  It applies in legal malpractice as well as in accounting malpractice.  In Reville v Melvin Ginsberg & Assoc.    2017 NY Slip Op 30821(U) April 20, 2017   Supreme Court,   New York County   Docket Number: 152167/2015   Judge: Joan M. Kenney we see a good explanation of its application in accounting or professional malpractice.

“CPLR 214 (6) imposes a three-year time limitation period in all professional malpractice actions, except those involving medical malpractice. In an accounting malpractice action, the limitations period is measured from the date the client receives the accountant’s advice and/or work product (Ackerman v Price Waterhouse, 84 NY2d 535, 541-543 [1994]). The statute may be tolled in accounting malpractice cases pursuant to the continuous representation doctrine (Zaref v Berk & Michaels, 192 AD2d 346 [1st Dept 1993]; Hall & Co. v Steiner & Mondore, 147 AD2d 225 [3d Dept 1989]). Facts supporting the application of the continuous representation doctrine must be proffered in connection with the “specific matter directly under dispute” and must assert more than merely “the continuation of a general professional relationship” (Zaref, 192 AD2d at 347-348). A negligence-based claim, absent fraud, accrues when the malpractice is committed, even though the injured party may be ignorant of the wrong or injury (Ackerman, 84 NY2d at 541). Plaintiffs action was not commenced until March 4, 2015, well past the three year limitations period. Consequently, plaintiffs malpractice claim is untimely unless the continuous representation doctrine serves to toll the three-year limitations period. ”

“Here, plaintiffs allegations do not establish a course of representation as to the particular problems relating to this transaction that gave rise to the malpractice claim. Furthermore, there is no written agreement between the parties. The invoices submitted by defendant appear to contemplate separate and discrete accounting services for each fiscal year, and once the defendant had performed the services for a particular year, no further work was undertaken (Vergari reply affirmation, exhibit GG). No corrective or remedial services were offered. As a result, there was no mutual understanding between the parties that MGA would provide Reville with any further representation in connection with this alleged unlawful transaction (see also, Apple Bank for Sav. v PricewaterhouseCoopers, LLP, 23 Misc 3d 1126 [A], 2009 NY Slip Op 50948 [U] [Sup Ct, NY County 2009], revd 70 AD3d 438 [l51 Dept 2010]). In Apple Bank, the Appellate Division, First Department, reversed the Supreme Court, which had found a question of fact about whether certain claims based on tax advice and the resulting tax returns are timely under the continuous representation doctrine. In its decision, the lower court had relied on Cuccolo v Lipsky, Goodkin & Co. (826 F Supp 763 [SD NY 1993]) for the proposition that determining whether a toll applies to a particular cause of action is generally a question of fact. However, the First Department, citing Williamson, supra, held that the continuous representation doctrine did not apply to toll the statute of limitations on a malpractice claim brought by a client against its accounting firm, where the accountant never had an express, mutual agreement to advise the client on the effect of a stock buy back after the original advice.”

In big financial transactions, big law firm 1 may often interact with big law firm 2 in the generation of loan documents, opinion letters and the such.  Their interaction, viz-a-viz the clients (on both sides) may yield significant risk the law firms.

Bloostein v Morrison Cohen LLP  2017 NY Slip Op 30833(U)  April 21, 2017  Supreme Court, New York County  Docket Number: 651242/2012  Judge: Anil C. Singh is an example.  We discussed this case last year, several times but now the third-party motion practice seems to have come to an end.

“Plaintiffs in the main action (the “plaintiff investors”) allegedly engaged Morrison Cohen as attorneys to represent them in connection with a reinvestment transaction (the “Transaction”) designed by former third-party defendant Stonebridge Capital (“Stonebridge”). The advice rendered by Morrison Cohen to the investors form the basis for the main action. 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 Stone bridge/ Brown Rudnick engagement letter (“Engagement Letter”). The Third-party Complaint further alleges that Brown Rudnick was the primary drafter of the documents that comprised the Transaction (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”). ”

“On or about January 9, 2015, Morrison Cohen commenced the third-party action against Stonebridge and Brown Rudnick. The Third-party Complaint interposes three causes of action: (1) indemnification and contribution as against Stonebridge (“First Cause of Action~’) (2) indemnification and contribution as against Brown Rudnick arising from 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, by their respective counsel, filed motions to dismiss the Third-party Complaint. By Order dated July 11, 2016, this Court granted Stonebridge’s motion to dismiss. Brown Rudnick’s motion to dismiss was granted as to indemnification, and denied as to contribution. Brown Rudnick brings this motion pursuant to CPLR §2221 seeking clarification of the Order. Brown Rudnick states that the contribution claim brought against it by Morrison Cohen concerned both the Opinion Letter and the Transaction Documents. The Order denied dismissal of the claim for contribution as to the Opinion Letter but did not explicitly address the Transaction Documents. ”

“The Court of Appeals has held that an intended third-party beneficiary relationship will be found where the following elements are met: ( 1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for the benefit of the third-party; and (3) that the benefit to the third-party is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate the third-party if the benefit is lost.” State of California Public Employees’ Retirement System v. Shearman & Sterling, 95 N.Y.2d 427, 434-35 (2000). The Court of Appeals has adopted the reasoning of the Restatement (Second) of Contracts as to the determination of an intended beneficiary. Fourth Ocean Putnam Corp. v. Interstate Wrecking Co., Inc., 66 N.Y.2d 38, 44 (1985) (quoting the Restatement). The Restatement states that:

“a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) … 1 ; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.”

Restatement (Second) of Contracts§ 302 (1981).

Here, Morrison Cohen has not pied any facts to show that Brown Rudnick and Stonebridge intended their Engagement Letter to be for the benefit of the plaintiff investors. The Engagement Letter itself states that, “[Unless] we expressly agree to provide additional services, our engagement is to represent solely Stonebridge Funding, LLC in connection with the specific matter set forth above.” Morrison Cohen’s contention that the preceding sentence proves otherwise is unavailing. Thepreceding sentence provides that Brown Rudnick was willing to have discussions about the representation of a party other than Stonebridge but it does not suggest that the Engagement Letter covered a third-party. Moreover, the circumstances surrounding the Transaction and the drafting of the Transaction Documents do not support Morrison Cohen’s argument that the benefit to the plaintiff investors was sufficiently immediate, rather than incidental. The contracts between the parties in this action are a result of sophisticated parties making arms-length decisions. The plaintiff investors contracted with Morrison Cohen for legal services. Stonebridge contracted with Brown Rudnick for legal services. The plaintiff investors and Brown Rudnick did not contract and there is no indication that they intended to rely on each other’s performance. There is nothing in the Engagement Letter which suggests an intent to benefit the plaintiff investors. Therefore, Morrison Cohen has failed to plead that Brown Rudnick owed the plaintiff investors a duty in preparation of the Transaction Documents. ”

 

Widlitz v Douglas Elliman, LLC  Decided on April 19, 2017  Supreme Court, New York County
Bluth, J. is a quintessential New York City story.  Basically, Plaintiff buys into a newly constructed building, does so long prior to completion of the building,  asks and expects “city views” but gets a view of a brick wall.  Whose fault is it?  Hers, the real estate agents’ or the attorney’s?

“This case arises out of plaintiff’s purchase of an apartment located at 5 Franklin Place (also known as 317 Broadway) in New York, New York. Plaintiff stresses that despite her express wishes to purchase an apartment with city views, and repeated assurances from Elliman and Lee that the apartment would contain these views once completed, the north-facing apartment only had views of the brick wall of a nearby building.

The subject apartment building, called the Franklin Place Condominium, was under construction when plaintiff sought to purchase an apartment in August 2014. Plaintiff claims that her primary requirement was that her apartment have expansive city views. Plaintiff alleges that she retained defendant Elliman, a real estate brokerage firm, to assist her in finding a suitable apartment. Plaintiff insists that Elliman acted as both her, and the seller’s, real estate agent.

Plaintiff argues that because the Franklin Place Condominium was under construction, she relied on Elliman’s representations concerning a potential apartment. Plaintiff acknowledges that she went to the construction site on or about August 19, 2014, but was unable to identify the [*2]specific location of the apartment (12B) within the building or how tall each floor of the condo would be. Plaintiff insists that she had a conversation with an Elliman agent on August 20, 2014 where she noted that she was relying on representations about the subject apartment’s city views and that Elliman’s agent confirmed the apartment had city views. Plaintiff claims she was told to refer to a link on Elliman’s website showing the listing, which contained views from the apartment captured by a drone.

Plaintiff contends that she submitted an offer to purchase the apartment on or about August 21, 2014 and was told by an agent for Elliman to retain defendant Lee (an attorney) to help her conduct due diligence. Plaintiff subsequently retained defendant Lee, and she insists she told him she wanted city views. On September 11, 2014 plaintiff entered into an assignment agreement in which she was assigned the rights, title and interest of Hashem LLC for $1.39 million. Hashem had previously entered into a contract of sale with the sponsor (Broadway 371 LLC) to purchase Unit 12B for $1.1 million in June 2013. Plaintiff contends that the scheduled closing in the original contract of sale (between Hashem and 371 Broadway) was July 2015. Plaintiff insists that she was informed the closing would be delayed until fall 2015. Plaintiff argues that she wanted the right to rescind the contract and claims that defendant Lee failed to inform her that she may have had this right because the first residential unit closing did not occur until after July 1, 2015.”

“Here, plaintiff’s amended complaint states a cause of action for legal malpractice. Plaintiff alleges that she reiterated on numerous instances to Lee that she wanted an apartment with city views (see amended complaint ¶¶ 41, 42). Lee correctly observes that there are discrepancies between plaintiff’s interpretation of email communications between her and Lee that suggest that she was concerned with air rights. But plaintiff refers to verbal assurances from Lee that requires this case to proceed to the discovery stage on this cause of action (see id. ¶ 48).

Although Lee disputes plaintiff’s version of events, this Court is unable to dismiss the amended complaint at the motion to dismiss stage because the plaintiff is afforded every favorable inference.

With respect to the rescission issue, plaintiff has also stated a cause of action. Plaintiff points to an assignment and acceptance agreement (attached to a letter dated September 19, 2014), allegedly separate from the assignment agreement, which states that “Assignor hereby assigns, sets over and transfers to Assignee its interest of Assignor’s rights, title and interest in, to and under the Agreement” (id. exh C). This agreement is signed by Hashem, plaintiff and the sponsor. It does not specify that these rights were to transfer at the time of the closing.

The assignment agreement, dated September 11, 2014 states that Hashem (Assignor) would assign to plaintiff its rights, title and interest at the time of closing (see Lee affirmation exh E ¶ 2). The assignment agreement also notes that at the time of closing, Hashem and plaintiff were to execute and deliver an assignment and assumption agreement (id. ¶ 4). The parties do not explain why an assignment and assumption agreement was executed eight days after the assignment agreement (instead of at the closing) or why the assignment and assumption agreement does not specify that the rights are to transfer at the closing. The letter accompanying the assignment and assumption agreement states that “This letter shall confirm the Sponsor hereby grants its consent to allow Purchaser to assign its rights and obligations under the Purchase Agreement for the captioned Unit. Sponsor shall execute and deliver an assignment of the contract at closing” (amended complaint, exh C).

It is not the Court’s role, at the motion to dismiss stage, to sort through these apparently conflicting agreements. Discovery may clarify the timeline of events or substantiate Lee’s claim that plaintiff did not have the right to rescind at closing. But Lee did not explain the significance of the assignment and assumption agreement in his papers.”