Legal malpractice is an arcane and complicated body of law.  It has certain doctrines and principles that do not show up in other areas of the law.  Some are found in medical malpractice and some are found nowhere else.  The attorney-judgment rule is one doctrine that is shared with medical malpractice. The “but for ” causation principle is unique.

In Hickey v Steven E. Kaufman, P.C. 2017 NY Slip Op 30216(U) February 1, 2017 Supreme Court, New York County Docket Number: 153640/2013 Judge: Shlomo S. Hagler writes: “The Kaufman defendants argue that the judgment-call doctrine protects them from a claim of malpractice when they exercised their professional judgment by selecting “one among several reasonable courses of action” (Rosner v Paley, 65 NY2d 736, 738 [1985]); see Pere v St. Onge, 15 AD3d 465, 466 [2d Dept 2005]; Dweck Law Firm v Mann, 283 AD2d 292 [1st Dept 2001]). The Kaufman defendants contend that plaintiff was advised of the risks of failing to cooperate with the AG, and that the AG was unambiguously clear that his failure to cooperate expeditiously would result in his immediately having civil fraud charges brought against him. The Kaufman defendants maintain that plaintiff knowingly decided to enter into the agreement to avoid further investigation and indictment. The Kaufman defendants. rely heavily on Tantleff v Kestenbaum & Mark (131 AD3d 955 [2d Dept 2015]). However, Tantleff was before the court on a summary judgment motion, not a motion to dismiss pursuant to CPLR 3211. Therefore the standards for relief are different and the cases are not analogous. 3 Furthermore, there is no indication in Tantleff that the plaintiff had sought various protections that were initially provided in earlier drafts of an agreement but then omitted in later drafts. 4 Thus, at this stage of the litigation, it is premature to conclude that plaintiff has failed to state a cause of action based upon the judgment-call doctrine. ”

“In order to state a cause of action for legal malpractice, a plaintiff must set forth facts to support his assertion that the attorney’s negligence was a proximate cause of the loss sustained, that the attorney’s actions or inactions resulted directly in actual damages to the plaintiff and that the plaintiff would not have sustained the damages but for the attorney’s negligence (Garnett v Fox, Horan & Camerini, LLP, 82 AD3d 435, 435-436 [1st Dept 2011]; Cannistra v O’Connor, McGuinness, Conte, Doyle, Oleson & Collins, 286 AD2d 314, 315-316 [2d Dept 2001]; Lavanant v General Acc. Ins. Co. of Am., 212 AD2d 450, 451 [1st Dept 1995] ) . According to the Kaufman defendants, “the proximate cause of any purported loss was (1) Hickey’s decision to execute the Escrow Agreement and avoid criminal and/or civil indictment by the AG; (2) Majestic’s decision to withhold payment from Hickey because of the AG’s investigation; (3) Plaintiff’s review, agreement, and execution of the Escrow Agreement[; and] (4) Hickey’s informed decision as a sophisticated businessperson to forego indictment” (Kaufman defendants’ Memorandum of Law at 10) . Notably absent from the Kaufman defendants’ recitation ·is plaintiff’s position that his loss was caused by the failure of his.attorneys to “make sure” that the Escrow Agreement was clear that the escrowed funds were plaintiff’s property, and that upon termination of the Escrow Agreement, the funds were to be distributed to him, not to CRM/Majestic. Further, according to plaintiff, his attorneys never made it clear to him that there was ambiguity in the Escrow Agreement itself which would enable CRM/Majestic to collect those funds (Amended Complaint, ¶ 32-33, 41, 56-57; Plaintiff’s Affidavit, ¶4-7).

 

In a puzzling case, Mohyi v Karen G. Brand, P.C. 2017 NY Slip Op 30185(U) January 27, 2017
Supreme Court, New York County Docket Number: 157823/15 Judge: Debra A. James disposed of a Judiciary Law § 487 claim, allowing the case to continue on other claims.  In this electronic age of papers, and the sparsity of a “court file” we wonder what kind of papers could be “removed” by an attorney during a case?

“This action arises out of Brand’s alleged employment of plaintiff Diana T. Mohyi (Mohyi) as an attorney, of counsel, to Brand’s office in a matrimonial action, during the course of which Mohyi was arrested. Mohyi claims that, on January 24, 2014, in such matrimonial action, when she appeared before this court (Kaplan, J.), of counsel, to attorneys of record Brand’s office, she was arrested for improperly removing documents from the court file. Mohyi asserts that Brand had initially told her that she could remove the documents, but later denied that Mohyi had any connection with Brand’s office. As a result, Moyhi was charged with misdemeanor counts by the Manhattan District Attorney’s office, although those charges were eventually dismissed. ”

“Mohyi’s first cause of action alleges malicious prosecution. The Appellate Division, First Department, notes that: The tort of malicious prosecution requires proof of each of the following elements: ‘(1) the commencement or continuation of a . . . criminal proceeding by the defendant against the plaintiff, (2) the termination of the proceeding in favor of the [plaintiff], (3) the absence of probable cause for the . . . proceeding and (4) actual malice.’ Additionally, a plaintiff must also allege and prove ‘special injury’ [internal citations omitted]. Facebook, Inc. v DLA Piper LLP (US), 134 AD3d 610, 613 (1st Dept 2015). ”

“Mohyi’s final cause of action alleges violation of Judiciary Law§ 487. That statute provides that:

An attorney or counselor who: 1. Is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party; or, 2. Wilfully delays his client’s suit with a view to his own gain; or, wilfully receives any money or allowance for or on account of any money which he has not laid out, or becomes answerable for, Is guilty of a misdemeanor, and in addition to the punishment prescribed therefor by the penal law, he forfeits to the party injured treble damages, to be recovered in a civil action.

Brand again raises a number of arguments in favor of dismissal of this statutory claim. First, Brand argues that, “in order to be actionable, the alleged misconduct must occur in a court proceeding in which the plaintiff is a party,” and Mohyi was not a party to the matrimonial action, during the course of which she was arrested. Mohyi responds that this argument is misplaced, since Brand’s alleged misconduct took place during Mohyi’s criminal prosecution, an action to which she most certainly was a party. Since the complaint plainly alleges as much, the court agrees, and reject’s Brand’s first dismissal argument.

Next, Brand argues that Mohyi’s Judiciary Law§ 487 cause of action should be dismissed because it does not allege that she [Brand] engaged in misconduct during the course of representing a client in litigation and, in fact, she did not represent Mohyi in the criminal prosecution. Brand cites the decision of the Appellate Division, Second Department, in Crown Assoc., Inc. v Zot, LLC (83 AD3d 765 [2d Dept 2011]), which held that “the amended complaint failed to allege that [the defendant] was acting in his capacity as an attorney, and ‘the mere fact that a wrongdoer is an attorney is insufficient to impose liability [internal citations omitted].'” Id., at 768. Mohyi counters that “a successful claim for violation of Judiciary Law § 487 does not require that the attorney have represented the party bringing the claim,” and asserts that such a claim succeeds where “the attorney’s statements rose to the level of advice, as they did here.”

“The allegations of plaintiff’s complaint make it clear that Brand was acting merely as a witness, and not in her capacity as an attorney. In light of the fact that Brand was a witness who happened to be an attorney, her purportedly malicious actions were outside the ambit of Judiciary Law§ 487. Crown Assoc., Inc. v Zot, LLC, 83 AD3d at 768. Mohyi’s assertion that Brand’s purportedly fraudulent statements to the Manhattan District Attorney “rose to the level of advice,” in addition to being speculative, cannot overcome the fact of Brand’s status as a witness.”

 

A good legal malpractice case alleges that there were departures from good practice, which led to a bad result and that but for the departure from good practice there would have been a better result, with ascertainable damages.  This is exactly what plaintiff in Hall v Schrader, Israely, Deluca & Waters, LLP   2017 NY Slip Op 00871  Decided on February 3, 2017
Appellate Division, Fourth Department showed.  The Fourth Department found for plaintiff on this motion appeal.

“Addressing first plaintiff’s cross appeal, we note that, in an action to recover damages for legal malpractice, a plaintiff must demonstrate that the “attorney failed to exercise the ordinary reasonable skill and knowledge’ commonly possessed by a member of the legal profession” (Darby & Darby v VSI Intl., 95 NY2d 308, 313), and that “the attorney’s breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442; see Chamberlain, D’Amanda, Oppenheimer & Greenfield, LLP v Wilson, 136 AD3d 1326, 1327, lv dismissed 28 NY3d 942). We conclude that plaintiff’s cross motion was properly denied, inasmuch as she failed to establish that defendant’s alleged malpractice proximately caused her damages. In support of her cross motion, plaintiff submitted no evidence that she would have accepted the $60,000 offer if she had been properly advised, i.e., she failed to establish that, but for defendant’s deviation from the standard of care, she would not have been harmed (see Miazga v Assaf, 136 AD3d 1131, 1134-1135, lv dismissed 27 NY3d 1078; Kluczka v Lecci, 63 AD3d 796, 797-798).

We conclude with respect to defendant’s appeal that its motion also was properly denied. To establish its compliance with an attorney’s duty to keep his or her client reasonably informed, and to provide enough information to allow plaintiff to reasonably participate in settlement negotiations, defendant cited only to a single letter that was sent to plaintiff as a cover sheet with the original settlement offer in the underlying litigation. The letter stated that settlement “could be a quick way to resolve this case, without the need for spending a lot of money on a claim that [*2]the Plan may prevail on (despite our best efforts).” Even assuming, arguendo, that a reasonable factfinder could ultimately conclude that the letter satisfied defendant’s duty to “exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession” (Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 845, lv denied 20 NY3d 857; see Magnacoustics, Inc. v Ostrolenk, Faber, Gerb & Soffen, 303 AD2d 561, 562, lv denied 100 NY2d 511), plaintiff raised a triable issue of fact by submitting an expert affirmation asserting, inter alia, that defendant failed to provide plaintiff with adequate advice (see generally Zuckerman v City of New York, 49 NY2d 557, 562). Defendant also failed to establish as a matter of law that its conduct did not proximately cause plaintiff’s damages, inasmuch as it did not affirmatively eliminate every material issue of fact with respect to whether plaintiff would have accepted the settlement offer but for its deficient conduct (see generally Dempster v Liotti, 86 AD3d 169, 180-181).

Lastly, we reject defendant’s contention that it was entitled to summary judgment on the ground that plaintiff’s damages were not reasonably ascertainable. Plaintiff’s damages in this case were the $60,000 settlement offer that she lost, less the attorney’s fees and costs she incurred in pursuing the settlement. Thus, plaintiff’s damages were indeed ascertainable (see generally Plymouth Org., Inc. v Silverman, Collura & Chernis, P.C., 21 AD3d 464, 465).”

 

Continuing our review of JL 487 cases from 2016 we come across the ironic gem of a JL 487 case which ends in plaintiff’s attorney being sanctioned for bringing a case which (in essence) seeks a sanction for deceit.

Lawrence Ripak Co., Inc. v Gdanski  2016 NY Slip Op 06805 [143 AD3d 862]  October 19, 2016  Appellate Division, Second Department:

“The Supreme Court correctly granted that branch of the defendant’s motion which was for summary judgment dismissing the complaint in this action to recover damages for attorney misconduct pursuant to Judiciary Law § 487. The defendant demonstrated his prima facie entitlement to judgment as a matter of law by establishing that he did not “commit deceit or collusion” upon the court or any party (Judiciary Law § 487 [1]; see Tenore v Kantrowitz, Goldhamer & Graifman, P.C., 121 AD3d 775 [2014]; Pui Sang Lai v Shuk Yim Lau, 50 AD3d 758 [2008]; Knecht v Tusa, 15 AD3d 626 [2005]; O’Connell v Kerson, 291 AD2d 386 [2002]). In opposition, the plaintiff failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

The Supreme Court also properly granted that branch of the defendant’s motion which was for an award of attorney’s fees and costs, and to impose sanctions upon the plaintiff’s counsel pursuant to 22 NYCRR 130-1.1. The court correctly concluded that the lawsuit against the defendant was “completely without merit in the law,” and that it was “undertaken primarily to . . . harass or maliciously injure another” (22 NYCRR 130-1.1 [c] [1], [2]). Under such circumstances, the plaintiff’s commencement and maintenance of the lawsuit constituted sanctionable “frivolous conduct” (22 NYCRR 130-1.1 [c]; see Miller v Cruise Fantasies, Ltd., 74 AD3d 919 [2010]; Astrada v Archer, 71 AD3d 803, 806 [2010]; Kamen v Diaz-Kamen, 40 AD3d 937, 938 [2007]).”

Continuing to review the 2016 Judiciary Law § 487 Cases:

Titan Capital ID, LLC v Eshaghpour  2016 NY Slip Op 31925(U)  October 13, 2016
Supreme Court, New York County  Docket Number: 650128/2016  Judge: O. Peter Sherwood

On Oral Argument the JL 487 was withdrawn on consent

 

M.T. Packaging, Inc. v Fung Kai Hoo  2016 NY Slip Op 32155(U)  October 21, 2016
Supreme Court, New York County  Docket Number: 652579/2014  Judge: Cynthia S. Kern severed the cause of action for Judiciary Law § 487.  “The relevant facts are as follows. Beginning in or around February 2008 and continuing until approximately July 2009, M.T. purchased and received packaging and bags manufactured and sold by VNK’s that allegedly contained levels of lead and chromium that exceeded the legal limits, despite the execution of an allegedly fraudulent certificate of compliance by defendant Fung Kai Hoo (“Hoo”), an officer ofVN K’s. On or about July 10, 2012, K’s International Polybags Mfg. Ltd. (“K’s”) commenced an action against M.T. asserting causes of action for breach of contract, quantum meruit and an account stated based on M.T.’s nonpayment of invoices for the packaging and bags (the “related action”). On or about August 20, 2014, M.T. commenced the instant action asserting causes of action for fraud against Hoo and VN K’s in connection with the sale of packaging and bags. Maidenbaum represents K’s in the related action and represents Hoo and VN K’s in the instant action. By a decision and order of the court dated June 23, 2016, the court granted M.T.’s motion to amend its complaint to add a cause of action for the violation of Judiciary Law§ 487(1) against Maidenbaum premised on Maidenbaum’s alleged misconduct in its representation of K’s in the related action and of Hoo and VNK’s in the instant action. Specifically, plaintiff alleges that Maidenbaum engaged in deceitful conduct by withholding documents, including documents that allegedly controverted its client’s claim, during discovery in the related action and submitting perjurious affidavits of Hoo stating that he only travelled to New York to attend a deposition.”

We continue to review Judiciary Law §487 cases frp 2016:

19.  Kaplan v Valley Natl. Bank  2016 NY Slip Op 51108(U) [52 Misc 3d 1210(A)]  Decided on July 20, 2016  Supreme Court, Suffolk County  Emerson, J.

“The plaintiff’s mother, Marilyn Kaplan, executed a will in 1994, leaving her interest in the home that she shared with her husband, Donald, in trust to him and giving him a life estate therein (the “Jericho property”). She also left approximately $250,000 in cash and securities (the “Family Part Sum”) in trust to Donald to be used for his benefit. She appointed Donald and their two sons, Bruce and Daniel, as the trustees. Bruce and Daniel were also the remaindermen of the trust. The trust allowed Donald to withdraw up to 5% of the principal each year and allowed Bruce and Daniel to make discretionary withdrawals to ensure that Donald enjoyed the same standard of living that he enjoyed when Marilyn’s will was executed in 1994. Marilyn died shortly after executing the will. By 2005, the Family Part Sum was depleted and, except for the real property, there was no principal remaining in the trust.

The Jericho property was sold in 1997, and the trust used the proceeds of the sale to purchase a home in Melville, New York, which was sold in 2003. The trust used the proceeds of the second sale to purchase a two-thirds interest in another home in Melville (the “Altessa property”), the one-third owner of which was Donald’s second wife, Elaine Britvan. Elaine died in 2012, and the Altessa property was sold in 2013 for $1.33 million. Bruce was not advised of the sale. After the closing costs were paid, the proceeds of the sale were divided as follows: $174,310.28 to Bank of America to satisfy a mortgage on the property, $670,494.39 to the trust, and $422,410.33 to the Britvan estate. Donald and Daniel then opened a new trust account at Valley National Bank (the “Valley National account” or “trust account”) without making Bruce a signatory thereon and without disclosing to the bank that Bruce was a beneficiary and trustee of Marilyn’s trust. They deposited $670,494.39 into that account.[FN1] In January 2014, $83,500 was transferred from the Valley National account to Donald’s personal account. When Donald died in September 2014, there was approximately $588,000 remaining in the Valley National account. The balance was distributed to Bruce and Daniel pursuant to the terms of Marilyn’s will. On [*2]December 5, 2014, Bruce and Daniel executed a mutual release acknowledging their receipt of $212,500 and $360,500, respectively, and releasing each other from any and all claims with respect to the trust’s principal and accumulated interest. $15,000 was held in escrow to pay, inter alia, legal fees and other expenses. After the escrow was released, Bruce received another $6,500 for a total of $219,000.[FN2]

Bruce, individually and as a trustee of Marilyn’s trust, (the “plaintiff”), commenced this action in 2015 against Valley National Bank (“Valley National”); Fidelity National Title Insurance Company (“Fidelity”), the underwriter of the title insurance policy issued to the purchasers of the Altessa property; and Martin Bodian and, his law firm, Bodian and Bodian, LLP (the “Bodian defendants”), who represented the sellers of the Altessa property (i.e, the trust and the Britvan estate). The plaintiff seeks to hold the defendants liable for assisting Donald and Daniel’s purported diversion of the proceeds of the sale of the Altessa property to Bank of America and to the Valley National account under a variety of legal theories. Valley National moves to dismiss the complaint pursuant to CPLR 3211 (a) (1), (7), and (10); the Bodian defendants pursuant to CPLR 3211 (a) (1), (3), (5), (7) and (10); and Fidelity pursuant to CPLR 3211 (a) (1).”

“Absent a showing of fraud or collusion or of a malicious or tortious act, an attorney is not liable to third parties for purported injuries caused by services performed on behalf of a client or advice offered to that client (Four Finger Art Factory, Inc. v Dinicola, US Dist Ct, SDNY, Jan. 9, 2001, Koeltl, J. [2001 WL 21248] at *7 [and cases cited therein]). Liberally construing the complaint, accepting the alleged facts as true, and giving the plaintiff the benefit of every possible favorable inference (Leon v Martinez, 84 NY2d 83, 87-88), the court finds that the plaintiff’s allegations do not support an inference that the Bodian defendants acted in bad faith, committed fraud, or acted in an otherwise tortious or malicious way. The plaintiff’s allegations that the Bodian defendants colluded with Donald and Daniel to divert the proceeds of the sale of the Altessa property are conclusory and unsupported by the evidence. The record does not support an inference that the Bodian defendants acted other than in their capacity as attorneys for the trust and the Britvan estate. As previously discussed, Donald and Daniel, as two of the three trustees, had the power act on behalf of the trust and to sell its two-thirds share of the Altessa property. Moreover, the documentary evidence reflects that the proceeds of the sale were used to pay the expenses of the sale, the mortgage on the property, and the Britvan estate. The remaining funds were deposited into the Valley National trust account. There is no evidence in the record to suggest that the Bodian defendants retained any of the proceeds of the sale. When, as here, an attorney acts within the scope of an agency relationship and is not motivated by personal gain, the attorney is not liable to third parties (Four Finger Art Factory, supra, citing Kartiganer Assoc. v Town of New Windsor, 108 AD2d 898; see also Pancake v Franzoni, 149 AD2d 575). Accordingly, the eighth cause of action for malpractice is dismissed.

In view of the foregoing, the plaintiff’s remaining claims against the Bodian defendants, which arise from the same facts and allege the same damages, are also dismissed. Accordingly, the ninth cause of action is dismissed, and the fourth through seventh causes of action are dismissed insofar as they are asserted against the Bodian defendants.”

20.  Galasso, Langione, & Botter, LLP v Galasso 2016 NY Slip Op 51308(U) [53 Misc 3d 1202(A)] Decided on September 19, 2016 Supreme Court, Nassau County DeStefano, J.

“In December 1988, Peter Galasso (“Peter”) and James Langione (“Langione”) established the law firm, Galasso, Langione & Goidell. In 2000, Goidell left the law firm, at which time it [*2]became Galasso Langione, LLP. In 2003, Alan Botter, Esq. joined the law firm, the name of which again changed to Galasso, Langione & Botter, LLP. In 2008, Alan Botter withdrew as a partner and the law firm changed again to Galasso, Langione, Catterson & LoFrumento, LLP. In 2013, following Peter Galasso’s suspension from the practice of law due to circumstances which will be discussed herein, the law firm changed to Langione, Catterson & LoFrumento, LLP (the various firm partnerships shall be hereinafter be referred to as the “Firm”) (Affirmation in Support at ¶¶ 4-6 [Motion Seq. No. 6]; Ex. “36” at pp 18- 20 [Motion Seq. No. 21]).

In 1993, the Firm hired Peter’s brother, Anthony Galasso (“Anthony”), as a “gofer”. Within a few years, Anthony became the Firm’s office manager and bookkeeper, “responsible for all accounting and financial aspects” therefor (Affidavit in Support at ¶ 4 [Motion Seq. No. 20]).”

“According to Peter, both he and Langione executed the Baron escrow application in order to open the Baron escrow account because Anthony purportedly advised Peter that “Signature required that [Langione] be a designated signator on the Baron Escrow Account” (Affirmation in Support of Motion at ¶ 35 [Motion Seq. No. 6]).[FN10] The “original” Baron escrow account application was not produced in this litigation because it was supposedly destroyed by Anthony.[FN11] In its stead, Anthony allegedly substituted a forged Baron escrow account application. The allegedly forged application submitted to Signature allowed internet transfers, listed Post Office Box 721 in Mineola, New York as the address to where bank statements were to be mailed, and designated Anthony as an authorized signatory and primary contact on the account. Reinhardt, Signature’s Executive Vice President, testified that the Baron account application should have been rejected because it violated Signature’s rules that govern the establishment of attorney escrow accounts. Amongst other things, such rules prohibit non-attorneys from being authorized signatories on a law firm’s attorney escrow account (Affirmation in Support at ¶ 29 [Motion Seq. No. 21]).”

“According to the thirteenth cause of action, a claim based upon Judiciary Law § 487, the Firm engaged in a course of conduct to deceive and defraud the Barons of their monies inasmuch [*42]as it retained the Baron escrow funds and misappropriated the funds for its own benefits and hid the true facts regarding the misappropriation over a period of years (Ex “F” to Motion Seq. No. 5 at ¶¶ 122-124).

Pursuant to Judiciary Law § 487, an attorney who is “guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party; or, . . . wilfully receives any money or allowance for or on account of any money which he has not laid out, or becomes answerable for”, is guilty of a misdemeanor.

A violation of Judiciary Law § 487 requires, among other things, an act of deceit by an attorney, with the intent to deceive the court or any party (Curry v Dollard, 52 AD3d 642, 644 [2d Dept 2008]). The Barons’ allegations regarding an act of deceit or intent to deceive are conclusory and factually insufficient and, therefore, the branch of their motion seeking judgment on their thirteenth cause of action is denied.” “The thirteenth cause of action, a claim based upon Judiciary Law § 487, requires, among other things, an act of deceit by an attorney, with the intent to deceive the court or any party (Curry v Dollard, 52 AD3d 642, 644 [2d Dept 2008]). The evidentiary material submitted by the Firm Defendants demonstrates the absence of any intent to deceive the Barons (Shaffer v Gilberg, 125 AD3d 632 [2d Dept 2015]; Cullin v Spiess, 122 AD3d 792 [2d Dept 2014]). The thirteenth cause of action is, accordingly, dismissed.

 

Hindsight reasoning, roundly disliked by the judiciary is at the heart of legal malpractice.  Legal malpractice always comes down to a backwards comparison of the hypothetical better outcome v. the actual outcome.  This is the essence of the “but for” question.  Would there have been a better economic outcome “but for” the mistakes (or acts) of the attorneys?  Was this a mistake or a reasonable trial strategy?  In the end it all comes down to “reasonable doubt” (a criminal law standard of proof).  We see this in Brookwood Cos., Inc. v Alston & Bird LLP  2017 NY Slip Op 00535  Decided on January 26, 2017  Appellate Division, First Department.

“A focal point of this appeal is Brookwood’s claim that A & B, in the patent action, negligently litigated defenses that were available to Brookwood pursuant to 28 USC § 1498. 28 USC § 1498 provides that when a patent is infringed for the benefit of the United States government, the patent holder’s remedy is against the United States in the United States Court of Federal Claims. Brookwood alleges that had A & B not been negligent, the motions that A & B eventually brought based on 28 USC § 1498 would have been granted and Brookwood would have avoided the approximately $10 million it expended on defending itself at trial and on appeal. Important in this analysis is the fact that Brookwood ultimately prevailed in the underlying patent action, achieving a judgment of noninfringement. The theory of Brookwood’s malpractice case is not that but for A & B’s negligence it would have prevailed in the patent action; rather Brookwood’s claim is that but for the manner in which A & B interposed the defenses available to Brookwood under 28 USC § 1498, Brookwood would have prevailed without incurring the additional legal fees it expended. In other words, but for A & B’s negligence, Brookwood could have achieved the same result more expeditiously and economically. The Supreme Court granted A & B’s motion and dismissed the complaint in its entirety, holding, among other things, that the allegations did not support a finding of attorney negligence or of proximate cause. We now affirm.”

“Decisions regarding the evidentiary support for a motion or the legal theory of a case are commonly strategic decisions and a client’s disagreement with its attorney’s strategy does not support a malpractice claim, even if the strategy had its flaws. “[A]n attorney is not held to the rule of infallibility and is not liable for an honest mistake of judgment where the proper course is [*4]open to reasonable doubt” (Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1st Dept 1990]). Moreover, an attorney’s selection of one among several reasonable courses of action does not constitute malpractice (see Rosner v Paley, 65 NY2d 736, 738 [1985]; Rodriguez v Lipsig, Shapey, Manus & Moverman, P.C., 81 AD3d 551, 552 [1st Dept 2011]). Brookwood has not alleged facts supporting its claim that A & B’s evidentiary decision, to rely on Nextec’s expert, rather than compromise the merits of Brookwood’s position on other arguments, was an unreasonable course of action.”

Just as in the N.Y. Workers’ Compensation Board v. Wang case, so Accredited Aides Plus, Inc. v Program Risk Mgt., Inc. 2017 NY Slip Op 00058 Decided on January 5, 2017 Appellate Division, Third Department Garry, J.P., J. deals with groups that have failed to make sure that their Workers’ Compensation programs actually follow generally accepted accounting and insurance procedures, and have gone belly-up.  As to the attorney: “The cause of action for common-law indemnification against Hodes as counsel was properly dismissed because plaintiffs failed to allege that Hodes violated a shared duty to ensure the trust’s solvency; instead, the complaint alleged that Hodes owed and breached duties to the trust to provide various professional legal services (see State of N.Y. Workers’ Compensation Bd. [*8]v Madden, 119 AD3d at 1024; see also Lovino, Inc. v Lavallee Law Offs., 96 AD3d 909, 909-910 [2012]; Jakobleff v Cerrato, Sweeney & Cohn, 97 AD2d 786, 786 [1983]). Further, the causes of action against Hodes for fraud, fraud in the inducement and negligent misrepresentation, unlike the similar claims against the PRM defendants, impermissibly intermingle derivative claims that allege harm to the trust’s management and financial condition. These claims against Hodes are almost wholly addressed to harm caused to the trust by Hodes’ alleged improper selection of trustees, knowledge of improper use of member premiums, failure to monitor the trust’s affairs and other alleged acts and omissions. While a direct allegation is included that Hodes induced plaintiffs to join the trust by, among other things, providing false and misleading information about the trust’s resulting financial condition, this claim is “inextricably embedded in the derivative claim[s]” against the trust (Serino v Lipper, 123 AD3d at 41; compare Craven v Rigas, 85 AD3d 1524, 1527 [2011], appeal dismissed 17 NY3d 932 [2011])[FN3]. Accordingly, these claims were properly dismissed.”

 

Brookwood Cos., Inc. v Alston & Bird LLP   2017 NY Slip Op 00535 Decided on January 26, 2017 Appellate Division, First Department teaches us a number of lessons. Contracting for the government can be big business, and can lead to expensive litigation.  Reliance on specific US statutes can resolve a case, but over-reliance may be rejected by the Courts.  A Judiciary Law § 487 Claim will be rejected unless it is overwhelming.

“In support of its Judiciary Law § 487(1) claim, Brookwood alleges that A & B was deceitful by inducing Brookwood to retain it as its litigation counsel. Brookwood claims such deceit was perpetuated a number of ways. One way was by A & B failing to disclose that the Nextec-related patent noninfringement opinions A & B had prepared could not be used in the patent action to defend Brookwood against claims that it had acted willfully. Brookwood maintains that the reason A & B did not use them was that it would have resulted in the waiver of the attorney-client privilege. Brookwood also claims that the reason A & B litigated the patent action in the manner it did was to ensure that the case would continue, essentially “churning” the case for A & B’s own pecuniary gain. The motion court properly dismissed the Judiciary Law§ 487 claim because there are insufficient facts from which to conclude that A & B intentionally deceived Brookwood, or that A & B otherwise acted so egregiously that Judiciary Law § 487 was violated (Agostini v Sobol, 304 AD2d 395, 396 [1st Dept 2003]; Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 13 [1st Dept 2008], lv denied 12 NY3d 715 [2009]). Brookwood’s arguments that A & B could not use its noninfringement opinions in the patent litigation because it would have waived the attorney-client privilege is incorrect as a matter of law. In re Seagate Tech., LLC (497 F3d 1360, 1374 [Fed Cir 2007], cert denied 552 US 1230 [2008])[FN3] held that the assertion of an advice of counsel defense in a patent infringement action does not automatically constitute a waiver of the attorney-client privilege. We recognize that the opinion of counsel “may be relevant to the issue of willful infringement, for timely consultation with counsel may be evidence that an infringer did not engage in objectively reckless behavior” (Aspex Eyewear, Inc. v Clariti Eyewear, Inc., 605 F 3d 1305, 1313 [Fed Cir 2010]). Even if the issue of attorney-client [*5]waiver was open to dispute, it had no bearing in the patent action because willfulness was never reached. Thus, the facts alleged do not support a finding of an intent to deceive or a chronic and extreme pattern of legal delinquency causing damages to Brookwood (Wailes v Tel Networks USA, LLC, 116 AD3d 625, 625-626 [1st Dept 2014]).”