Our survey of all the 2016 Judiciary Law cases continues with:

15.  M.T. Packaging, Inc. v Fung Kai Hoo    2016 NY Slip Op 31189(U)  June 23, 2016
Supreme Court, New York County  Docket Number: 652579/2014  Judge: Cynthia S. Kern  A contract case concerning bags and packaging sales was based on a claim that the bags had levels of lead and chromium that exceeded legal limits, despite provision of certificates attesting to their safety.  Plaintiff was allowed to bring in an attorney from a related case: “In the present case, the portion of M.T.’s motion for leave to amend its complaint to add a cause of action for the violation of Judiciary Law § 487(1) against Maidenbaum is granted as defendants have shown that no prejudice or surprise would result from the proposed amendment and that the proposed amendment is not palpably insufficient or clearly .devoid of merit. M. T. ‘s cause of action for the violation of Judiciary Law § 487(1) is not palpably insufficient or clearly devoid of merit as it alleges in its proposed amended complaint that Maidenbaum engaged in deceitful conduct in violation of Judiciary Law§ 487(1) by withholding documents, including I documents that allegedly controverted its client’s claims, during discovery in the related action and submitting penurious affidavits wherein Hoo stated that he was only .in New York to attend the deposition in the instant action. Taking M.T.’s allegations as true for the purpose of deciding the instant motion, M.T. has stated a cause of action for the violation of Judiciary Law§ 487(1). ”

16.  Charles Deng Acupuncture, P.C. v Titan Ins. Co.  2016 NY Slip Op 26211 [53 Misc 3d 216]  June 30, 2016  Montelione, J.  This case mentions JL § 487, but only in a passing reference which says that attorneys are subject to penalties if they lie.

17. Stock v Schnader Harrison Segal & Lewis LLP  2016 NY Slip Op 05247 [142 AD3d 210]  June 30, 2016  Friedman, J.  Appellate Division, First Department   “The primary issue on this appeal is whether attorneys who have sought the advice of their law firm’s in-house general counsel on their ethical obligations in representing a firm client may successfully invoke attorney-client privilege to resist the client’s demand for the disclosure of communications seeking or giving such advice. We hold that such communications are not subject to disclosure to the client under the fiduciary exception to the attorney-client privilege (recognized in Hoopes v Carota, 142 AD2d 906 [3d Dept 1988], affd 74 NY2d 716 [1989]) because, for purposes of the in-firm consultation on the ethical issue, the attorneys seeking the general counsel’s advice, as well as the firm itself, were the general counsel’s “ ’real clients’ ” (United States v Jicarilla Apache Nation, 564 US 162, 172 [2011] [Apache Nation], quoting Riggs Natl. Bank of Washington, D.C. v Zimmer, 355 A2d 709, 711-712 [Del Ch 1976]). Further, we decline to adopt the “current client exception,” under which a number of courts of other jurisdictions (see e.g. Bank Brussels Lambert v Credit Lyonnais [Suisse], 220 F Supp 2d 283 [SD NY 2002]) have held a former client entitled to disclosure by a law firm of any in-firm communications relating to the client that took place while the firm was representing{**142 AD3d at 213} that client. Because we also find unavailing the former client’s remaining arguments for compelling the law firm and one of its attorneys to disclose the in-firm attorney-client communications in question, we reverse the order appealed from and deny the motion to compel.”  There is a passing reference to a claim of JL 487 for “attempting to cover up the malpractice .”  Nothing more is said of the statute.

State of N.Y. Workers’ Compensation Bd. v Wang  2017 NY Slip Op 00057  Decided on January 5, 2017  Appellate Division, Third Department  Egan Jr., J., is the story of a trust gone bad.  “The Health Care Providers Self-Insurance Trust, a group self-insured trust, was formed in 1992 to provide mandated workers’ compensation coverage to employees of the trust’s members (see Workers’ Compensation Law § 50 [3-a]; 12 NYCRR 317.2 [i]; 317.3). The trust contracted with defendant Program Risk Management, Inc. (hereinafter PRM) to serve as its program administrator, which, in turn, employed defendants Thomas Arney, Colleen Bardascini, John M. Conroy, Gail Farrell and Edward Sorenson (hereinafter collectively referred to as the PRM individual defendants). Additionally, the trust contracted with defendant PRM Claims Services, Inc. (hereinafter PRMCS) to serve as its claims administrator (see 12 NYCRR 317.2 [d]). Arney and defendants Judy Balaban-Krause, Robert Callaghan, Nelson Carpentar, Laura Donaldson, Ronald Field, Thomas Gosdeck, Joel Hodes, Albert Johansmeyer ^[FN1] and Michael Reda (hereinafter collectively referred to as the trustee defendants), among others, served as trustees.”

“In 2009, plaintiff determined that the trust was insolvent and assumed the administration thereof (see 12 NYCRR 317.20). Thereafter, plaintiff obtained a forensic audit, which allegedly revealed that the trust had an accumulated deficit of over $188 million. On July 8, 2011, plaintiff commenced this action, later amended in January 2012, in its capacity as the governmental entity charged with the administration of the Workers’ Compensation Law and attendant regulations, and as successor in interest to the trust. Plaintiff alleged 32 causes of action against certain defendants sounding in, among other things, breach of contract, breach of good faith and fair dealing, breach of fiduciary duty, fraud, fraud in the inducement, negligent misrepresentation, [*2]gross negligence, alter ego liability and indemnification ^[FN3]. The complaint asserts that, as a result of defendants’ failures and wrongdoings, plaintiff has incurred liability for, among other things, “certain [t]rust [m]embers’ assessments,” “significant additional administrative expenses of the [t]rust” and “the amount of the total deficit of the [t]rust.”

“Beginning with plaintiff’s first cause of action for breach of contract, as well as its second and third causes of action for breach of good faith and fair dealing, we agree with Supreme Court that such claims are time-barred by the applicable six-year statute of limitations to the extent that the alleged breaches occurred before July 8, 2005 (see CPLR 203 [a]; 213 [2]; see also Town of Oyster Bay v Lizza Indus., Inc., 22 NY3d 1024, 1030 [2013]; Kosowsky v Willard Mtn., Inc., 90 AD3d 1127, 1131 [2011]; Liberman v Worden, 268 AD2d 337, 339 [2000]). Turning to plaintiff’s fourth and fifth causes of action for breach of fiduciary duty, each [*4]is subject to a three-year statute of limitations as “the remedy sought is purely monetary in nature and it cannot be said that an allegation of fraud is essential to [these] claim[s]” (Weight v Day, 134 AD3d 806, 808 [2015]; see CPLR 214 [4]; see generally IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139 [2009]; compare New York State Workers’ Compensation Bd. v Consolidated Risk Servs., Inc., 125 AD3d 1250, 1253-1254 [2015]). Furthermore, the statute of limitations for breach of fiduciary duty claims begins to run on the date that the fiduciary’s relationship with or administration of a trust ceases (see Tydings v Greenfield, Stein & Senior, LLP, 11 NY3d 195, 201 [2008]; Matter of Therm, Inc., 132 AD3d 1137, 1138 [2015]; New York State Workers’ Compensation Bd. v Consolidated Risk Servs., Inc., 125 AD3d at 1253).”

“To prevail on a claim for aiding and abetting a breach of fiduciary duty, the cause of action must allege “(1) a breach by a fiduciary of obligations to another, (2) that the defendant knowingly induced or participated in the breach, and (3) that the plaintiff suffered damage as a result of the breach” (Kaufman v Cohen, 307 AD2d 113, 125 [2003]; see Torrance Constr., Inc. v Jaques, 127 AD3d 1261, 1264 [2015]). “A defendant knowingly participates in the breach of fiduciary duty when he or she provides substantial assistance to the fiduciary, which occurs when a defendant affirmatively assists, helps conceal or fails to act when required to do so, thereby enabling the breach to occur” (Schroeder v Pinterest Inc., 133 AD3d 12, 25 [2015] [internal quotation marks and citation omitted]; see Monaghan v Ford Motor Co., 71 AD3d 848, 850 [2010]).”

We started the discussion of attorney-client privilege on Friday.  In this case, plaintiff  loaned money to corporation, and eventually, the corporation stops paying it back.  From there, the UCC-1, Security Agreements and Transfers are simply too complicated for a blog entry such as this.  Suffice it to say, there are multiple law firms, making multiple claims against the parties and eachother, and a huge question of attorney-client privilege.  Justice O’Neill Levy sorts it all out in a primer on attorney -client privilege in Priestley v Panmedix Inc. 2017 NY Slip Op 30054(U)  January 12, 2017 Supreme Court, New York County, Docket Number: 114874/10.  Today we examine the crime-fraud exception to attorney-client privilege.

“Crime Fraud Exception

“A party may not invoke the attorney-client privilege where ‘it involves client communications that may have been in furtherance of a fraudulent scheme, an alleged breach of fiduciary duty or an accusation of some other wrongful conduct.'” Art Capital Group LLC v Rose, 54 AD3d 27 6 I 277 (1st Dept 2008) I quoting Ulico Cas. Co. v Wilson, Elser, Mo-skowitz, Edelman & Dicker, 1 AD3d 223, 224 (1st Dept 2003). “A party seeking ‘to invoke the crime-fraud exception must demonstrate that there is a factual basis for a showing of probable cause to believe that a fraud or crime has been committed and that the communications in question were in furtherance of the fraud or crime.'” Matter of New York City Asbestos Litig., 109 AD3d 7, 10-11 · (lst Dept 2013), quoting United States v Jacobs, 117 F3d 82, 87 (2d Cir 1997) (other citations omitted). The crime-fraud exception also applies· to the attorney work product privilege. See Meyer v Kalanick, F Supp 3d, 2016 WL 3981369 , * 5 , * 6 n 5 , 2016 US Dist LEXIS 96583, *16, *22 n 5 (SD NY 2016) .

Clients loan money to corporation, and eventually, the corporation stops paying it back.  From there, the UCC-1, Security Agreements and Transfers are simply too complicated for a blog entry such as this.  Suffice it to say, there are multiple law firms, making multiple claims against the parties and eachother, and a huge question of attorney-client privilege.  Justice O’Neill Levy sorts it all out in a primer on attorney -client privilege in Priestley v Panmedix Inc.
2017 NY Slip Op 30054(U)  January 12, 2017 Supreme Court, New York County, Docket Number: 114874/10.  On Monday, we will highlight the question of work-product privilege, which is different.

“In April 2001, Priestley loaned $750,000 to Panmedix, pursuant to a senior security promissory note and a patent security agreement, which granted plaintiff a security interest in, respectively~ Panmedix’s personal property and patents. Plaintiff recorded her security interests by filing a UCC financing statement (UCC-1). The loan was to mature in a year. By March 2005, Panmedix had stopped making payments to plaintiff on the loan. In 2007, plaintiff sued in federal court to recover the amount owed, and, in 2008, obtained a judgment against Panmedix and others in the amount of approximately $1.million. Priestley v Comrie, 2007 WL 4208592, 2007 US Dist LEXIS 87386 (SD NY 2007). Because Panmedix was financially unable to pay the judgment, plaintiff and Panmedix entered into a payment agreement, providing that payment to plaintiff would be made from the sale of the company and other possible transactions. When no sale or other transactions occurred, and plaintiff was not paid, she contacted the federal court, in or around June 2009, seeking an order of attachment, and was advised that it would be faster to take her judgment to the marshal. and levy on the assets. See generally Priestley v Panmedix.Inc., 18 F Supp 3d 486, 490-491 (SD NY 2014). Plaintiff asserts that she and Comrie, President and CEO of Panmedix; subsequently began negotiating another payment agreement. (see the case for much, much more detail)

“”The attorney-client privilege shields from disclosure any confidential communications between an attorney and his or her client made for the purpose of obtaining or facilitating legal advice in the course of a professional relationship.” Ambac Assur. Corp. v Countrywide Home Loans, Inc., 27 NY3d 616, 623-24 (2016); see Madden -v Creative Servs., Inc., 84 NY2d 738, 745 ( 1995) . Recognized at common law and codified in CPLR 4503 (a), the attorney-client privilege “fosters the· open dialogue between lawyer and client that is deemed essential.to effective representation” (Spectrum Sys. Intl. Corp. v Chemical Bank, 78 NY2d 371, 377 [1991]), and “exists to ensure that one seeking legal advice will be able to confide,  fully and freely in his [or her] attorney, secure in the knowledge that his [or her] confidences will not later be exposed to public view to his [or her] embarrassment or legal detriment.” Matter of Priest v Hennessy, 51 NY2d 62, 67-681 (1980). “The privilege belongs to the client” (People v Osorio, 75 NY2d at 84) and “is intended to protect the client., Matter of Tartakoff  v. New York State Educ. Dept., 130 AD3d 1331, 1333 (3d Dept 2015); see Arkin Kaplan Rice LLP v Kaplan, 107 AD3d 502, 503 (Pt Dept 2013).

“The privilege, however, is not limitless.” Matter of Priest, 51 NY2d at 68. It “must be narrowly construed because it is at odds with the general policy of this State favoring liberal ‘ discovery, and the party asserting the privilege bears the burden of establishing that it applies.” ACE Sec. Corp. v DB Structured Prods., Inc., 40 NYS3d 723, 732, 2Q16 NY Siip Op 26337 (Sup Ct, NY County 2016), citing Ambac Assur. Corp., 27 NY3d at 624, citing Spectrum Sys. Intl. Corp., 78 NY2d at 377; see Matter of Priest, 51 NY2d at 68-69; NAMA Holdings, LLC v Greenberg Traurig LLP, 133 AD3d 46, 52 (Pt Dept 2015). The privilege also “is subject to exceptions, both legislative and Judge-made.” Madden, 84 NY2d at 745 (citations omitted) . Such an exception, for example, at issue in this case, is the “crime fraud exception.” Also at issue here, while the privilege generally is waived where confidential communications are shared with third parties, an exception may apply to communications between and among jointly represented clients and their attorney. 27 NY3d at 624-625. “

The danger and beauty of contingent fee arrangements is that this method of risk allocation recognizes that while the attorney may make a large sum of money, there is the attendant risk that there will be no fee at all.  For the client, as has been well-recognized over the years, this arrangement allows for representation where the client cannot afford an attorney.  The rub comes when there is a good or very good result, and the client feels that there is no longer a reasonable link between effort and fees.

 Cohen v Hack  2017 NY Slip Op 30070(U)  January 9, 2017 Supreme Court, New York County Docket Number: 159052/12  Judge: Gerald Lebovits is a perfect example.  Client wanted to get his disability insurance paid, but when he succeeded, he thought, why should the attorneys get 1/3 of my money for the rest of my life?

“Plaintiff alleges that on April 23, 2008, he met with Evan Schwartz, a member of the law firm of Quadrino & Schwartz, P.C. (the law firm), and that he and Schwartz, on the law firm’s behalf, executed a retainer agreement (the initial retainer) to represent him in connection with filing long-term disability claims against Guardian Life Insurance Company of America (Guardian) and New York Life Insurance Company (NY Life) (plaintiff affidavit, 1, 2; plaintiff EBT at 26-28). ”

“Plaintiff contends that he provided the necessary financial documentation to the law firm to enable it to prosecute his claim (plaintiff affidavit, 3). Plaintiff states that in May 2009, he was advised that Guardian had denied his claim for disability benefits, that he was not advised of an appeal procedure, but that he was told that if he did not pay the then-outstanding balance of accrued legal fees of approximately $17,000, the law firm would withdraw from representing him (id.,  7-9; plaintiff EBT at 29, 34-37, 42-43). Plaintiff further states that on July 24, 2009, he was advised that the only way to contest Guardian’s denial of his claim was to commence a lawsuit against it and that this required a new retainer agreement (the lawsuit retainer) (plaintiff affidavit,  10-11; plaintiff EBT at 35-37, 51-54). On July 24, 2009, plaintiff and Schwartz, on the law firm’s behalf, executed the lawsuit retainer (plaintiff affidavit,  11-14 ). ”

“On August 5, 2009, the law firm electronically filed a summons and complaint in Supreme Court, New York County, under index number 111342/2009: Brian Cohen v The Guardian Life Insurance Company of America (the lawsuit). In November 2009, the lawsuit was settled and, under the terms of the settlement, plaintiff received a monthly disability payment of $5, 181. He contends that the one-third contingency fee owing to the law firm under the lawsuit retainer is excessive. ”

“Plaintiffs cross-motion for summary judgment seeking rescission of the lawsuit retainer is denied because plaintiff has not shown “by clear and convincing evidence” (Executive Risk, 56 AD3d at 206) “a unilateral mistake where the enforcement of the contract would be unconscionable” (William E. McClain Realty, 144 AD2d at 218) or a “mutual mistake” (Silver, 7 AD3d at 781 ). Also, plaintiff has offered no reason to vary from “the general rule … that a party may not obtain summary judgement on an unpleaded cause of action” (Pludeman, 106 AD3d at 616, quoting Weinstock, 254 AD2d at 166). Plaintiff contends that the law firm has engaged in excessive and improper billing and, thus, was not entitled to the outstanding balance or the one-third contingency fee. But “[a]bsent incompetence, deception or overreaching, contingent fee agreements that are not void at the time of inception should be enforced as written [and] ‘the power to invalidate fee agreements with hindsight should be exercised only with great caution”‘ (Matter of Lawrence, 24 NY3d at 339, quoting Lawrence v Graubard Miller, 11 NY3d 588, 596 n 4 [2008]). ”

“The contingent-fee arrangement of one-third of the recovery under the terms of the lawsuit retainer has not been shown to be unreasonabie and the court notes that plaintiff had executed similar contingency-fee agreements providing for a one-third recovery in other lawsuits (id. at 18-23). For a court to engage in “hindsight analysis of contingent fee agreements not unconscionable when made is a dangerous business, especially when a [court’s] determination of unconscionability is made solely on the basis that the size of the fee seems [in retrospect to be] too high to be fair” (Matter of Lawrence, 24 NY3d at 340). Defendants have shown that they acted according to the terms of the initial retainer, the la~suit retainer, and the addendum. A court should “enforce clear and complete documents, like [these agreements] according to their terms” (see id at 341 ). Defendants’ motion to dismiss plaintiffs remaining breach-of-contract cause of action, and this action, is granted. ”

Westchester Hills Golf Club, Inc. v Panken  2017 NY Slip Op 30045(U)  January 10, 2017
Supreme Court, New York County  Docket Number: 155528/2016  Judge: Cynthia S. Kern is a decision on a CPLR 3211 motion in a legal malpractice setting.  We have become  accustomed to reading 3211 decisions where the Court goes well beyond the settled standard and reaches arguments on the “but for” portion of the case or on attorney judgment that go beyond the pale.  Here, Judge Kern assiduously tracks the proper standard and scrutinizes the pleadings.

“Plaintiff operates a golf course, clubhouse and restaurant for its members which is located in White Plains, New York. The full-time bartenders, wait staff and kitchen employees of the restaurant are members of Unite Here Local 100 of New York and Vicinity (the “Union”). Plaintiff retained defendants to be general counsel with respect to plaintiff’s labor and employment issues, specifically to negotiate labor agreements with the Union and to address disputes between plaintiff and those employees who were Union members. Plaintiff alleges that defendants negligently handled two employee disputes between 2009 and 2013 regarding Timothy Cremin (“Cremin”), a bartender and Union member, and Mark Wills (“Wills”), a line cook/chef and Union member. ”

“Legal malpractice is defined as the failure of an attorney to “exercise that degree of skill commonly exercised by an ordinary member of the legal community.” Estate of Nevelson v. Carro, Spanbock, Kaster & Cuijfo, 259 A.D.2d 282, 284 (1st Dept 1999). To sufficiently plead a claim for legal malpractice, a plaintiff must allege “(l) that the attorney was negligent; (2) that such negligence was the proximate cause of plaintiffs losses; and (3) proof of actual damages.” Brooks v. Lewin, 21 A.D.3d 731, 734 (1st Dept 2005). The court first turns to defendants’ motion to dismiss the complaint on the ground that the complaint fails to sufficiently allege that defendants’ conduct in both the Cremin matter and the Wills matter was the proximate cause of plaintiffs damages. In order to sufficiently allege proximate cause in a legal malpractice action, a plaintiff must allege “that but for the attorney’s negligence, (plaintiff] would have prevailed in the underlying matter or would not have sustained any ascertainable damages.” Brooks, 21 A.D.3d at 734.

In the present case, this court finds that the complaint sufficiently alleges that defendants’ conduct in the Wills matter was the proximate cause of plaintiffs damages. The complaint alleges that “but for [defendants’] malpractice, … Wills'[] grievance would have been dismissed” and that plaintiff would not have been damaged. Specifically, the complaint alleges that defendants’ conduct in failing to move to stay the arbitration based on the fact that Wills was not covered under the CBA and in failing to assert the defense of untimeliness, which was then waived, proximately caused plaintiffs damages in that plaintiff had to prepare for the scheduled arbitration hearing, engage in settlement negotiations with Wills and eventually settle the matter with Wills, causing plaintiff to incur damages from the settlement as well as the payment ofa $2,000 arbitrator fee and the fee for late cancelation of the arbitration. The complaint further asserts that but for defendants’ failure to properly litig!lte the Wills matter, the grievance would have been dismissed and plaintiff would not have negotiated with Wills or agreed to settle Wills’ grievance. To the extent defendants assert that the portion of the complaint that alleges malpractice with respect to the Wills matter must be dismissed based on the fact that plaintiff voluntarily agreed to settle the Wills matter, such assertion is without merit. “Where the termination [of the underlying case] is by settlement rather than by a dismissal or adverse judgment, malpractice by the attorney is more difficult to establish, but a cause of action can be made out if it is shown that assent by the client to the settlement was compelled because prior misfeasance or nonfeasance by the attorneys left no other recourse.” Becker v. Julien, Blitz & Schlesinger, P.C., 95 Misc.2d 64, 66 (Sup. Ct. N.Y. County, Special Term, 1977)(emphasis added). Indeed, “the cause of action for legal malpractice must stand or fall on its own merits, with no automatic waiver of a plaintiffs right to sue for malpractice merely because plaintiff had voluntarily agreed to enter into a stipulation of settlement.” Id. Here, plaintiff has alleged that it negotiated a settlement with Wills based on defendants’ negligence in litigating the Wills matter. ”

“To the extent defendants assert that the complaint should be dismissed on the ground that it fails to set forth the amount of damages purportedly sustained by plaintiff in the Wills matter, such assertion is without merit as defendants have failed to provide any basis for the proposition that plaintiff is required to plead the exact amount of damages it has sustained. With regard to damages, all that a plaintiff is required to plead in a legal malpractice action is that it has sustained actual and ascertainable damages. The court next turns to defendants’ motion to dismiss the complaint on the ground that defendants’ alleged conduct is protected by the attorney judgment rule. Under the attorney judgment rule, “[a]ttorneys may select among reasonable courses of ac.tion in prosecuting their clients’ cases without thereby committing malpractice so that a purported malpractice claim that amounts only to a client’s criticism of counsel’s strategy may be dismissed.” Dweck Law Firm v. Mann, 283 A.D.2d 292, 293 (I st Dept 2001)(internal citation omitted). Indeed, “[a]ctions or conduct which constitute an error of judgment or are found to constitute one of several alternative ways in which a reasonable prudent attorney would proceed, are not actionable as legal malpractice.” Gonzalez v. Ellenberg, 5 Misc.3d 1023 at *6 (Sup. Ct. N.Y. County 2004). “

Taxi jumps a curb and strikes a person simply standing there.  Excuse by the licensed taxi driver is that he pushed the gas and brake at the same time. Injured Plaintiff is awarded partial summary judgment and negotiations start from there.  Eventually the case is settled well in excess of the policy limits. Is there a bad faith claim against the insurer and is there a legal malpractice claim against the defense law firm?  Will there eventually be a legal malpractice claim by the insurance company against their attorneys?

Jacal Hacking Corp. v American Tr. Ins. Co.  2017 NY Slip Op 30031(U)  January 6, 2017
Supreme Court, New York County  Docket Number: 154248/12  Judge: Joan A. Madden says there may be a bad faith claim but that there is no legal malpractice claim.  It does not address the third question.

“In this action, plaintiff Jacal Hacking seeks damages against American Transit for bad faith refusal to settle an action to recover damages for personal injuries entitled Jishan Ahmad v. Bivomi M. Alshorbagi and Jacal Hacking Corp (Index No. 115755/08, Supreme Court, New York County) (the “underlying action”). Jacal Hacking also seeks damages against the Baker firm for legal malpractice in connection with its representation of Jacal Hacking in the underlying action. The underlying action involved a motor vehicle accident that occurred on May 11, 2007.

Plaintiff in the underlying action, Ahmad, was standing on the sidewalk at LaGuardia Airport, near the taxi holding area, when a taxi owned by Jacal Hacking and driven by Alshorbagi, jumped the curb and struck him. According to the police accident report, Alshorbagi stated that he accidentally pressed the gas and brake pedals at the same time. Jacal Hacking was insured by American Transit under a policy providing liability insurance coverage with a limit of $100,000 per person and a maximum of $300,000 per accident. American Transit assigned the Baker firm to defend Jacal Hacking, and assigned separate counsel for Alshorbagi.

On April 7, 2010, the Hon. George J. Silver issued a decision and order awarding plaintiff Ahmad partial summary judgment on the issue of liability. The trial on damages commenced on February 16, 2011, and the jury returned a verdict in favor of Ahmad, awarding damages in the total amount of $800,000. Defendants appealed and by a stipulation dated January 24, 2012, the parties agreed to settle the action for $410,000, with American Transit paying Ahmad $250,000 ($100,000 on the policy and an additional $150,000) and the Sheriff $5,000, and Jacal Hacking paying Ahmad $150,000 and the Sheriff $5,000.”

“First, as to the claim against American Transit, it is “well settled that an insurer may be held liable for damages to its insured for the bad faith refusal of a settlement offer.” Smith v. General Accident Insurance Co, 91NY2d648, 652 (1998). ”

“”Bad faith is established only ‘where the liability is clear and the potential recovery far exceeds the insurance coverage.”‘ Id (quoting DiBlasi v. Aetna Life & Casualty Insurance Co, 147 AD 93, 98 (2″d Dept 1989). “The bad-faith equation must include consideration of all of the facts and circumstances relating to whether the insurer’s investigatory efforts prevented it from making an informed evaluation of the risks of refusing settlement.”

“Applying the foregoing standards, the issue of American Transit’s bad faith cannot be resolved as a matter of law. Contrary to Jacal Hacking’ s assertion, the record as a whole, as presented on the motions, does not clearly and conclusively establish bad faith as defined by the Court of Appeals, i.e. that American Transit engaged in a pattern of behavior evincing a conscious or knowing indifference to the probability that Jacal Hacking would be personally accountable for a large judgment if a settlement offer within the policy limits were not accepted. Pavia v. State Farm Mutual Insurance Automobile Insurance Co, supra. Although liability was clearly determined against Jacal Hacking in April 2010 when Ahmad was awarded partial summary judgment, the record is otherwise inconclusive as to other factors bearing on the issue of bad faith. Those factors include but are not limited to whether Ahmad would have actually accepted a settlement within the limits of the policy at some time before or during trial, whether it was “highly probable” that the nature of Ahmad’s injuries and the specific circumstances surrounding the accident would result in a large verdict in excess of the policy limits, and whether American Transit kept Jacal Hacking informed of the status of settlement offers and negotiations both before and during trial. See Smith v. General Accident Insurance Co, supra; Pavia v. State Farm Mutual Automobile Insurance Co, supra. ”

“In any event, even assuming without deciding that the Baker firm was negligent in failing to communicate directly and personally with Jacal Hacking as to the status of the settlement negotiations and trial, Jacal Hacking cannot establish that such negligence was a proximate cause of the loss sustained, i.e. that but for the attorney’s negligence, the underlying action would have settled for $75,000 and Jacal Hacking would not have sustained any damages. While Jacal Hacking asserts that it lost an opportunity to settle the underlying action for $75,0000, the undisputed record shows that American Transit was solely responsible for making the decisions as to the amounts offered in settlement and the timing of each settlement offer. Notably, Jacal Backing’s general manager, Natalia Sorkin, admits as much when she states that if they had 1 · known about the underlying action and the settlement offers and demands, “we would have demanded that American Transit meet the demands of plaintiff and settle at $75,000.” Under the circumstances presented, the alleged malpractice relates to allegations of bad faith on the part of the insurer. As noted above, an insurer’s failure to communicate with its insured and keep it informed of the status of settlement offers and negotiations can constitute some evidence of bad faith. See Smith v. General Accident Insurance Co, supra at 653. Thus, given the absence of causation, Jacal Hacking cannot maintain a claim for legal malpractice and the Baker firm is entitled to summary judgment. See Leder v. Spiegel, supra. “