Real estate and real estate development are always hot topics in New York, never more so that after a real estate developer won the presidency.  Politics notwithstanding, indemnification in real estate development is always pertinent, and in  Board of Mgrs. of the Norfolk Atrium Condominium v 115 Norfolk Realty LLC 2017 NY Slip Op 30348(U) February 23, 2017 Supreme Court, New York County Docket Number: 652529/16,  Judge Barry Ostrager does a great job of explaining the rules.

“As indicated earlier, one remaining issue is the request by G+P, Betro, and V & P to dismiss the indemnification claims asserted against them by the third-party plaintiffs. G+P and V & P also seek to dismiss Betro’s indemnification cross-claims against them. The principle of common law indemnification permits a vicariously liable party to shift all liability to the party whose negligence actually caused the loss. See, 17 Vista Fee Assoc. v Teachers Ins. & Annuity Assn. of Am., 259 AD2d 75, 80 (1st Dep’t 1999). However, “[s]ince the predicate of common-law indemnity is vicarious liability without actual fault on the part of the proposed indemnitee, it follows that a party who has itself actually participated to some degree in the wrongdoing cannot receive the benefit of the doctrine.” SSDW Co. v Fefdman-Misthopoulos Assoc., 151 AD2d 293, 296 (1st Dep’t 1989). Thus, to be entitled to indemnification, the party seeking indemnity “must have delegated exclusive responsibility for the duties giving rise to the loss to the party from whom indemnification is sought … ” 17 Vista Fee Assoc. v Teachers Ins. & Annuity Assn. of Am., 259 AD2d 75, 80 (1st Dep’t 1999) (citations omitted). The moving third-party defendants argue that they may not be held vicariously liable for the alleged wrongs by the Sponsor, and that the Sponsor did not delegate exclusive responsibility to them for the duties that give rise tc:> the claims asserted by the plaintiff Board. Rather, it is alleged that the Sponsor itself participated, at least to some degree, in the alleged wrongdoing. The Sponsor argues in opposition. that the Board is, in fact, seeking to hold the Sponsor vicariously liable for the negligence of the architects and contractors and that the Sponsor itself committed no wrong as it did not perform the work at issue. While the evidence may ultimately prove otherwise, the pleadings contain sufficient allegations to withstand the motions to dismiss and allow discovery to proceed. The pleadings do allege, for example, that the Sponsor delegated to the third-party defendants the duty to properly perform the design and construction work at issue and that none of the damages are attributable to any fault, want of care or negligence by the Sponsor. The Court thus declines to dismiss the Sponsor’s indemnification claims based largely on the standard governing pre-answer motions to dismiss pursuant to CPLR §3211 (a)(7) for failure to state a cause of action, where the Court must “accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference,. and determine only whether facts as alleged fit within any cognizable legal theory …. ” Leon v Martinez, 84 NY2d 83, 87-88 (citations omitted). And while indemnification would not lie for certain claims by plaintiff against the Sponsor, such as fraudulent misrepresentation and inducement, no need exists to
parse the claims at this time. Based on the same analysis, the Court declines to dismiss
Betro’s cross-claims at this time as the precise role played by Betro with respect to the
other third-party defendants and the degree of shared responsibility, if any, particularly
with respect to G+P, is in dispute. ”

Gersh v Nixon Peabody LLP 2017 NY Slip Op 30363(U)  February 27, 2017
Supreme Court, New York County  Docket Number: 155668/2016  Judge: Carol R. Edmead is an example of the hurdles over which a legal malpractice plaintiff must jump.  Its a complicated but familiar estate planning issue.  Decedent was previously married with children.  Separation agreement many years ago required part of Decedent’s estate to go to children.  He remarries and many years later tries to leave everything to second wife.  Predictably, there is friction.

“On the other hand, as to the claim that Defendants failed to advise Edward of the potential consequences and impact of the Separation Agreement, and to the extent Defendants’ alleged failure to properly prepare Edward’s 2003 Will rests on the impact of the Separation Agreement, an attorney cannot be held liable for legal malpractice for failing to disclose facts already known to the client. In Green v. Conciatori, an action for legal malpractice, plaintiff alleged that his former attorneys in a personal injury suit, failed to discover facts about the underlying incident that differed from what plaintiff had given defendants (Green v. Conciatori, 26 A.D.3d 410, 809 N.Y.S.2d 559 [2d Dept 2006]). The undiscovered facts were known to plaintiff, but never disclosed to defendants (Id. at 411 ). The court held that while plaintiffs claim is time-barred, defendants “should not be held liable for ignorance of facts which the client neglected to tell him or her” (Id.). ”

“In any event, and even assuming Defendants breached any obligation to investigate Edward’s prior agreements, Defendants established that Plaintiff cannot establish that any negligent representation on behalf of the Defendants was the proximate cause of her damages. · Plaintiffs assertion of what Edward would have done had he received difference advice is speculative and insufficient to support a legal malpractice claim (see Leff v. Fulbright & Jaworski, LLP, 2009 N.Y. Slip Op. 31445(U) [Sup. Ct. N.Y. Cnty. June 30, 2009], aff’d 78 A.D.3d 531, 533 [1st Dept 201 O]). In Leff, the complaint alleged that defendants who drafted her late husband Leff’s will committed legal malpractice by failing to advise Leff about a separation agreement that required him to leave half of his probated estate to his son (78 A.D.3d at 533). Leff s separation agreement provided that “[i]n the event the parties shall be divorced and the [plaintiff] shall have remarried, [Leff] shall provide by Will that no less than one-half (1/2) of his probate estate shall pass to the Child … . “(id.). Plaintiff claimed that Leff would have-taken various different actions to increase her inheritance had defendants discovered and advised Leff of the separation agreement. The trial Court rejected plaintiffs speculation that Leff “would most likely have provided for inter-vivos gifts, created trusts, or joint accounts outside the probate estate to attain that goal” as “pure conjecture” (id.) The Court held that a “jury would only be speculating about how Leff might have solved the problem of the Separation Agreement,” and. therefore, Plaintiff failed to establish that “but for defendants’ negligence, she would have come out of probate a richer woman” (id.)

The First Department affirmed, explaining that: [P]laintiff cannot recover damages that are grossly speculative [internal citations omitted]. Defendants demonstrated that plaintiff could not satisfy the causation element of her malpractice claim because she could not prove that her inheritance would have increased if defendants had advised her late husband about a separation agreement that required him to leave half of his probated estate to his son. While plaintiff suggests various things her late husband could have done to ensure her more money than she eventually received, she cannot prove precisely what he would have done had he received different advice. Therefore, she cannot establish that but for defendants’ failure to advise her late husband of the separatiqn agreement, she would have received more money. In this regard, we note that plaintiffs late husband had the right to reduce her inheritance at any point in time. Leff, 78 A.D.3d at 533.

As in Leff, Plaintiffs claims here are too speculative to support a claim for legal malpractice. Specifically, Plaintiffs arguments that Edward could have transferred assets, entered into an agreement, and limit inter vivos gifts to Laurie and Ellynn, are speculative and plaintiffs allegations are insufficient to support her claim of what Edward would have done had he received different advice. Therefore, dismissal of legal malpractice claim (First Cause of Action) and negligence claim (Third Cause of Action), is warranted. ”

The parties in Kelleher v Adams  2017 NY Slip Op 01542  Decided on March 1, 2017  Appellate Division, Second Department have descended from philosophical discussions of the relationship of privity to contract and are fighting over who is permitted to represent the plaintiffs.  Initially plaintiff’s attorney was disqualified.  That changed on appeal.

“The defendants Jeffrey M. Adams and The Adams Law Firm, P.C. (hereinafter together the Adams defendants), moved, inter alia, to disqualify the nonparty-appellant, Beattie Padovano, LLC, from representing the plaintiffs on the ground that it had violated various rules of the New York Rules of Professional Conduct. As relevant to this appeal, the Supreme Court granted that branch of the Adams defendants’ motion which sought disqualification. We reverse insofar as reviewed.

” A party’s entitlement to be represented in ongoing litigation by counsel of his or her own choosing is a valued right which should not be abridged absent a clear showing that disqualification is warranted. While the right to choose one’s counsel is not absolute, disqualification of legal counsel during litigation implicates not only the ethics of the profession but also the parties’ substantive rights, thus requiring any restrictions to be carefully scrutinized. The party seeking to disqualify a law firm or an attorney bears the burden to show sufficient proof to [*2]warrant such a determination'” (Hele Asset, LLC v S.E.E. Realty Assoc., 106 AD3d 692, 693, quoting Gulino v Gulino, 35 AD3d 812, 812; see S & S Hotel Ventures Ltd. Partnership v 777 S.H. Corp., 69 NY2d 437, 443-445). ” Whether to disqualify an attorney is a matter which lies within the sound discretion of the court'” (Hele Asset, LLC v S.E.E. Realty Assoc., 106 AD3d at 693, quoting Matter of Madris v Oliviera, 97 AD3d 823, 825; see Matter of Marvin Q., 45 AD3d 852, 853; Olmoz v Town of Fishkill, 258 AD2d 447).

Here, the Supreme Court improvidently exercised its discretion in granting that branch of the Adams defendants’ motion which was to disqualify the plaintiffs’ attorney, inasmuch as there was insufficient proof to demonstrate that disqualification was warranted.

Accordingly, the Supreme Court should have denied that branch of the Adams defendants’ motion which was to disqualify the nonparty-appellant from representing the plaintiffs.”

Molina v. Faust Goetz Schenker & Blee, (S.D.N.Y. 2017) illustrates the difficulty of assignments of legal malpractice cases.  To be sure, assignment is permitted.  “While legal malpractice claims may be assigned in New York (even to former litigation adversaries), nothing prevents a New York court from applying judicial estoppel to a case where all of its requisite elements are satisfied.”  However, there are a number of intellectual hurdles to clear.

In this case, condo owners sued contractor for negligent construction.  Condo owner won a default judgment, and the insurance carrier disclaimed coverage for a series of complicated reasons. The contractor (with no coverage) then agreed with the condo owners to sue the contractor’s attorneys, and to turn over the proceeds to the condo owner.  So far, so good.

However:  “Plaintiff Benny Molina brought this legal malpractice suit against the lawyers who represented him in two related state court actions that culminated in the entry of substantial default judgments against him. But, due to a series of agreements between Molina and the plaintiff-judgment-creditor in one of the underlying actions, Molina sues here as the assignee of the judgment-creditor. Defendants have moved for summary judgment dismissing the amended complaint on several grounds. They rely chiefly on the equitable doctrine of judicial estoppel. The Court agrees that the doctrine applies and holds that Molina, as the judgment-creditor’s assignee, may not take positions here contrary to those his assignor successfully advanced in the state court actions. For that reason, the Court grants defendants’ motion for summary judgment in its entirety without addressing their remaining arguments.”

“In line with many jurisdictions and the federal courts, New York follows the doctrine of judicial estoppel, whereby “a party who assumes a certain position in a prior legal proceeding and secures a favorable judgment therein is precluded from assuming a contrary position in another action simply because his or her interests have changed.”13 The equitable doctrine “rests upon the principle that a litigant should not be permitted to lead a court to find a fact one way and then [*7]  contend in another judicial proceeding that the same fact should be found otherwise.”14 Doing so could be viewed as “playing fast and loose with the courts.”15

Equitable in nature, the doctrine [*8]  “cannot be reduced to a precise formula or test,”16 but its requirements are well catalogued. The New York Court of Appeals has cited approvingly17 to the United States Supreme Court’s helpful articulation of the factors courts typically consider:

“First, a party’s later position must be clearly inconsistent with its earlier position. Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party’s earlier position . . . . A third consideration is whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.”18

These factors are not “inflexible prerequisites” and do not constitute “an exhaustive formula,” as [a]dditional considerations may inform the doctrine’s application in specific factual contexts.”19 Ultimately, judicial estoppel is invoked at the court’s discretion.20

The somewhat convoluted series of assignments in this case present a twist on an otherwise routine application of the doctrine. Molina brought this suit in his own name, ostensibly to redress the financial harm he allegedly has suffered to due to the alleged negligence of his lawyers in the underlying actions. But defendants argue that Gregory Oyen is the “de facto plaintiff.”21 That is so, they say, because Molina gave away his right to sue in the First Assignment and derives his role as plaintiff here solely from the Second Assignment. Defendants further maintain that Molina, acting on behalf of Oyen, should be precluded from taking positions in this case inconsistent with those Oyen took in the underlying actions, which they contend Molina must do to prevail on either cause of action in the amended complaint. Not surprisingly, Molina opposes the application of judicial estoppel at each point.”

Oral argument sometimes drifts to the “analogy” stage, where an example must be used in order to show the simplest type of legal malpractice case.  It is often the particular fact pattern found in Detoni v McMinkens  2017 NY Slip Op 01334  Decided on February 22, 2017  Appellate Division, Second Department.

“On November 19, 2005, the plaintiff allegedly sustained serious injuries as a result of a motor vehicle accident in Queens. She allegedly retained the defendants on December 15, 2005, to represent her in a personal injury action against the owner and operator of the motor vehicle that struck her vehicle, but the defendants failed to commence an action before the expiration of the statute of limitations. The plaintiff commenced this action, inter alia, to recover damages for legal malpractice. ”  For the legal malpractice example one need only add that she was in the rear seat, and the car was stopped at a red light.  What is possibly left for defendant to argue?

“The defendants moved for summary judgment dismissing the complaint on the ground that, even if they were negligent in failing to timely commence the underlying personal injury action, the plaintiff would not have prevailed because she did not sustain a serious injury within the meaning [*2]of Insurance Law § 5102(d) as a result of the accident. In an order dated March 5, 2014, the Supreme Court granted the defendants’ motion for summary judgment dismissing the complaint.”

This issue bedeviled Supreme Court.  First it found for the attorneys on summary judgment and then it reversed itself and found against the attorneys on summary judgment.

“Upon reargument, the Supreme Court properly denied the defendants’ motion for summary judgment dismissing the complaint. The defendants failed to establish, prima facie, that the plaintiff did not sustain a serious injury under the 90/180-day category of Insurance Law § 5102(d) (see Cross v Labombard, 127 AD3d 1355, 1357; Poole v State of New York, 121 AD3d 1224, 1225). Among other things, the defendants submitted the plaintiff’s deposition testimony that, after the accident, she was confined to bed for two months and she was out of work for approximately 10 months (compare Lanzarone v Goldman, 80 AD3d 667, 669, with Bacon v Bostany, 104 AD3d 625, 628). Thus, the defendants failed to establish, prima facie, that, even if they were negligent in failing to timely commence the underlying personal injury action, the plaintiff would not have prevailed on the underlying cause of action. Since the defendants failed to meet their prima burden, it is unnecessary to consider whether the plaintiff’s opposition papers were sufficient to raise a triable issue of fact (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).”

Superior Tech. Solutions, Inc. v Rozenholc  2017 NY Slip Op 01136 Decided on February 10, 2017 Appellate Division, First Department is an example of trying anything to fix a deadly problem.  When this happens, anyone in the general vicinity becomes a target.

From what we can glean, longtime tenant gets into a problem with the landlord, and has to try to fix that problem.  It was a violation of some part of the lease, and the solution is a Yellowstone action, which gets the tenant a stay while it fixes the violation.  Defendant attorney was retained to do the Yellowstone litigation.  Apparently he did so successfully.  Then the tenant fails to renew the lease correctly.  Is there someone available to blame?

“Defendant has established that the malpractice claim fails for multiple reasons, and plaintiffs have failed to raise any triable issues (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; Sabalza v Salgado, 85 AD3d 436, 437 [1st Dept 2011]). There is no support for plaintiffs’ contention that defendant had a duty to renew the lease on their behalf, or to advise them of the need to do so (see Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 9 [1st Dept 2008], lv denied 12 NY3d 715 [2009]). The record demonstrates that defendant’s representation was limited to litigating and negotiating a settlement with respect to the Yellowstone action, which defendant brought on plaintiffs’ behalf, and that the scope of his services was not transactional. Defendant was not actively representing plaintiffs at the time the lease was negotiated or when the renewal option was to be exercised.

Defendant has also demonstrated that it cannot be shown that any alleged negligence by him was the proximate cause of plaintiffs’ damages (Stolmeier v Fields, 280 AD2d 342, 343 [1st Dept 2001], lv denied 96 NY2d 714 [2001]). Plaintiff Lee’s testimony establishes that he knew that notice for the renewal had to be in writing and sent by certified or registered mail to the landlord, and his own affidavits reflect his knowledge that the lease ran until January 31, 2011 with the option to renew.

In fact, Lee had renewed a prior lease, identical to the lease at issue, years before he even retained defendant to represent him in the Yellowstone litigation.”