Catsiapis v Giano   2016 NY Slip Op 30863(U)   May 11, 2016   Supreme Court,   Queens County Docket Number: 21642/2012   Judge: Denis J. Butler is an example of overreach and how it can eventually undermine the entire project.  Defendant attorneys almost always want a confidentiality clause, and will sometimes stretch out the negotiation on the basis that they want an ironclad agreement.  Sometimes it backfires.

“This is a legal malpractice action, which was settled on the record in open court before Special Referee, Elizabeth Yablon on June 1, 2015. The stipulation of settlement provided that “upon the presentation of the release as well as a hold-harmless agreement, and a non-disparagement slash confidentiality agreement in which the plaintiff agrees not to discuss this matter with anyone but governmental agencies, or upon a subpoena from – – or upon a subpoena that, as well as a hold-harmless agreement from the plaintiff as to any potential liens in this matter. . . . (sic)” When plaintiff was allocuted on the record, he answered in the affirmative when asked: “you understood that this settlement that is being paid to you by Peter Giano and Gordon and Gordon is a result of legal malpractice claim that bears index number 21642 of 12?” and “[y]ou understand that means that you cannot go after any of these individuals or entities again.” (Sic.) After asking these questions, plaintiff’s counsel began to state “[w]e had discussions concerning –-” whereupon the referee stated that “we are dealing with this case.” (Sic.) Plaintiff’s counsel indicated that he understood, but wanted it clear. After a discussion off the record, Peter Gordon was sworn in to be allocuted. At a later point on the record, attorneys for the Gordon defendants and for Giano wanted to make sure that confidentiality would be maintained. In accordance with the terms therein, plaintiff sent defendants Peter S. Gordon, Esq. and Gordon & Gordon, PC (collectively Gordon defendants) the release, hold harmless and confidentiality agreements. Gordon defendants refused to sign the documents stating that the terms of the written confidentiality agreement do not accurately reflect the parties oral agreement made in open court. Gordon defendants maintain that the agreement made in open court forbade plaintiff from discussing this matter except with limited circumstances. Plaintiff maintains that he agreed not to disclose the terms of the stipulation of settlement; however, he would be permitted to “generally describ[e] the claims in this action and the amount recovered as long as the parties are not named.” In effect, plaintiff sought to preserve its right to bring a legal malpractice action against the attorney who previously represented him in the underlying action for injuries resulting from an automobile accident.”

“Now plaintiff seeks to reform the stipulation of settlement and compel defendants to pay the agreed upon sums of money. Alternatively, plaintiff seeks to vacate the stipulation of settlement and restore this case to the trial calendar with a date certain for trial. Gordon defendants do not oppose the branch of the motion to vacate the stipulation and restore this case to the trial calendar as there was no meeting of the minds. In the cross motion, defendant Steve Giano, Esq. seeks to compel the Gordon defendants to sign the written drafts of the agreements prepared in accordance with the stipulation of settlement spread on the record. ”

“Considering the stipulation of settlement as a whole, there is ambiguity as to whether the parties intended the confidentiality of “this matter” to mean that only the terms of the stipulation of settlement are confidential, or the terms of the stipulation of settlement and all allegations forming the basis of the claim are 3 [* 3] confidential. This Court cannot reform the stipulation of settlement to conform to what it thinks is proper. Accordingly, the branches of the motion to reform the stipulation of settlement and compel payment and branch of the cross motion to compel execution of the agreements are denied. The branch of the motion to vacate the stipulation of settlement and schedule a trial date is granted. This action is restored to the trial calendar and the parties shall appear in the Trial Scheduling Part on June 27, 2016 at 9:30 a.m.”

There are several variants of potential legal malpractice in Butler v inSync Litig. Support, LLC
2016 NY Slip Op 50757(U)  Decided on May 4, 2016  Supreme Court, Nassau County  Brown, J.  The first is pled, the second is noted by the Court.  In short, Plaintiff retains Attorney.  More than one year, but less than three years later, attorney commences an action for Plaintiff, and gives the papers to a litigation support company to serve.  The papers are never served, and the statute lapses.  Is attorney liable?  Does the litigation support company have an out?

“Plaintiffs commenced this action with the electronic filing of a summons and complaint [*2]on December 18, 2015. The complaint alleges that Agulnick engaged InSync to serve a summons and complaint on behalf of Butler upon two of the defendants in Butler v the City of New York, Koledin, et. al., Supreme Court, Queens County, Index Number 703219/2014 (the underlying action). The complaint further alleges that inSync accepted the job, but failed to serve the papers as requested and never had any further communication with Agulnick. The complaint concludes that plaintiffs have been damaged because the underlying action could not be pursued due to the expiration of the statute of limitations after inSync failed to make service. The complaint asserts a cause of action for negligence and a cause of action for breach of contract.

Defendant contends that documentary evidence directly contradicts the allegations of plaintiffs’ complaint. A complaint may be dismissed based upon documentary evidence, pursuant to CPLR 3211(a)(1), only if the factual allegations contained in the complaint are definitively contradicted by the evidence submitted or if the evidence conclusively establishes a defense (Yew Prospect v Szulman, 305 AD2d 588 [2d Dept 2003]; Sta-Brite Servs., Inc. v Sutton, 17 AD3d 570 [2d Dept 2005]). The documentary evidence must utterly refute the factual allegations in the complaint, resolve all factual issues as a matter of law and conclusively dispose of the claims at issue (Yue Fung USA Enters., Inc. v Novelty Crystal Corp., 105 AD3d 840 [2d Dept 2013]).

In support of its motion to dismiss, inSync offers barely decipherable, self-generated records, which indicate that the papers in the underlying action were sent back to Agulnick when inSync was unable to make service on Michael Koledin, the individual defendant in the underlying action. Those documents fail to make any mention of whether inSync made any attempt to serve the City of New York in the underlying action, as requested by Agulnick.”

“inSync contends that plaintiffs fail to state a cause of action against it because Agulnick, as Butler’s lawyer in the underlying action, had a nondelegable duty to prosecute the case, monitor deadlines and meet the filing requirements. In making that argument, inSync relies upon Kleeman v Rheingold (81 NY2d 270 [1993]), in which the Court of Appeals found that an attorney may be held vicariously liable to his or her client for the negligence of a process server whom the attorney has hired on behalf of that client. While the Court of Appeals held that an attorney owes a nondelegable duty to his or her client to exercise care in the service of process, the Court specified that its decision did not consider the right of an attorney who has been held liable for the negligence of a retained process server to pursue whatever contractual or tort remedies that the attorney may have against the process server.

The fact that Agulnick owed a nondelegable duty to Butler to ensure that service of process in the underlying action was properly completed, does not preclude a claim against inSync for its alleged role in the failure to serve such process.[FN1] The cases cited by defendant in which a client’s initial counsel was granted summary judgment dismissing the legal malpractice claims against it when the client had hired subsequent counsel are inapposite herein.

To survive a motion to dismiss for failure to state a cause of action made pursuant to CPLR 3211(a)(7), plaintiffs need not demonstrate that they actually sustained damages, they need only plead allegations from which damages attributable to defendant’s conduct may reasonably be inferred (Fielding v Kupferman, 65 AD3d 437 [1st Dept 2009]; Mackey Reed Elec., Inc. v Morrone & Assoc., P.C., 125 AD3d 822 [2d Dept 2015]).

The complaint in the underlying action asserts causes of action for: (1) violation of 42 USC § 1983; (2) false arrest/imprisonment; (3) battery; (4) negligence; and (5) negligent hiring and retention. The court would note that since the acts which form the basis of the claims in the underlying action took place in January 2012, the causes of action for false arrest/imprisonment and battery were already time-barred by the applicable one year statute of limitations (CPLR 215[3]) when the underlying action was commenced on May 12, 2014.”

 

Payment of attorney fees is a subject most solemn to attorneys, and a subject of great exasperation to clients.  What happens if you are sued, hire a set of attorneys to defend you and then discover that you had insurance which would have provided a free defense and the attorneys failed to discover or push you to use that insurance?

 Soni v Pryor  2016 NY Slip Op 03731  Decided on May 11, 2016  Appellate Division, Second Department provides a partial answer.  “In an action to recover damages for legal malpractice, the defendants Robert L. Pryor, A. Scott Mandelup, and Pryor & Mandelup, LLP, appeal, as limited by their brief, (1) from so much of an order of the Supreme Court, Nassau County (Brown, J.), dated March 3, 2014, as denied that branch of their motion, made jointly with the defendant Anthony F. Guiliano, which was for summary judgment dismissing the complaint insofar as asserted against them, and (2) from so much of an order of the same court entered June 4, 2014, as, upon reargument, adhered to its original determination in the order dated March 3, 2014, denying that branch of their motion, made jointly with the defendant Anthony F. Guiliano, which was for summary judgment dismissing the complaint insofar as asserted against them.”

“ORDERED that the ordered entered June 4, 2014, is affirmed insofar as appealed from;”

“The plaintiffs retained the defendants Robert L. Pryor, A. Scott Mandelup, and Pryor & Mandelup, LLP (hereinafter collectively the appellants), to represent them in an action commenced against them by CIT Healthcare, LLC (hereinafter the CIT action). The CIT action included allegations that the plaintiffs, as directors and officers of several corporations, aided and abetted the corporations in committing acts of fraud and conversion. After the appellants withdrew as counsel for the plaintiffs, the plaintiffs commenced this action, alleging that the appellants had committed legal malpractice by failing to advise them that they had coverage for the CIT action under a “Directors and Officers” coverage section of an insurance policy issued by National Union Fire Insurance Company of Pittsburgh, Pa. (hereinafter National Union) to one of the corporate entities the plaintiffs controlled.

The appellants moved, inter alia, for summary judgment dismissing the complaint insofar as asserted against them. They asserted, among other things, that any failure on their part to advise the plaintiffs of the existence of insurance coverage did not proximately cause the plaintiffs any damages because a policy exclusion would have barred coverage with respect to the CIT action. The Supreme Court denied that branch of the motion and, upon reargument, adhered to that determination.”

“Here, the Supreme Court correctly determined that the appellants failed to meet their prima facie burden of demonstrating that the plaintiffs could not prove the element of proximate cause due to a policy exclusion. “In construing policy provisions defining the scope of coverage pursuant to a policy of insurance, courts first look to the language of the policy, reading it in light of common speech and the reasonable expectations of a businessperson, and in a manner that leaves no provision without force and effect” (Yeshiva Viznitz v Church Mut. Ins. Co., 132 AD3d 853, 854 [internal quotation marks and citation omitted]; see Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383; Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 221-222; ABM Mgmt. Corp. v Harleysville Worcester Ins. Co., 112 AD3d 763, 764). ” To negate coverage by virtue of an exclusion, [it] must [be] establish[ed] that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case'” (Westview Assoc. v Guaranty Natl. Ins. Co., 95 NY2d 334, 340, quoting Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 652).”

It’s the first time we have seen this approach. Plaintiff sues for a declaratory judgment that Defendant attorneys overbilled their client, as well as on claims of legal malpractice.  In Berardi v Phillips Nizer, LLP  2016 NY Slip Op 30860(U)  May 6, 2016  Supreme Court, New York County
Docket Number: 157690/2012  Judge: Nancy M. Bannon the Court writes: “In this legal malpractice action and action for a judgment declaring that the defendants overbilled the plaintiff for legal services, the defendants move pursuant to CPLR 3211 (a) (1), (5), and (7) to dismiss the amended complaint. The court denies the motion. “The second cause of action in the initial complaint alleged that the defendants overbilled the plaintiff by charging excessive and unreasonable attorneys’ fees. In her amended complaint, the plaintiff adds a specific allegations to the first cause of action that, in 2005, the husband’s counsel had provided a nonmatrimonial attorney at the firm with copies of the shareholder and member agreements referable to the business entities but, for at least two years, that attorney did not share that information with the defendant Elliot Wiener, an attorney with the firm who was the lead matrimonial lawyer assigned to the plaintiff’s case. The amended complaint further asserts that, during that period of time, the firm did not appraise the value of the business entities, did not analyze the consequences of the restrictions on sale and transfer of shares and interests articulated in those agreements, or the difference in value between an immediate buyout of the shares and the plaintiff’s retention of a minority interest in the business entities. The plaintiff alleges that, as a consequence of the nonmatrimonial attorney’s conduct, neither the firm nor Wiener had sufficient facts upon which to base their strategy in responding to the husband’s motion to set aside the postnuptial agreement. The plaintiff further asserts, in a newly added second cause of action, that the firm’s malpractice extended to its failure to properly supervise the nonmatrimonial attorney in connection with her conduct, as described in the first cause of action. The cause of action alleging overbilling was reiterated in the amended complaint as the third cause of action. ”

“On a motion to dismiss pursuant to CPLR 3211 (a) (7), the pleading is to be afforded a liberal construction (see, CPLR 3026). The facts as alleged in the complaint must be accepted as true, the plaintiffs accorded the benefit of every possible favorable inference, and the court must determine only whether the facts as alleged fit within any cognizable legal theory. See Leon v Martinez, 84 NY2d 83, 87~88 (1994); Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., supra, at 270-271. Nonetheless, a complaint must “be sufficiently particular to give the court and parties notice of the transactions, occurrences, or series of transactions” that form the basis of the complaint and “the material elements of each cause of action” (CPLR 3013). In assessing a motion under CPLR 32ll(a)(7), however, a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint. See Nonnon v City of New York, 9 NY3d 825, 827 (2007); Rovella v Orofino Realty Co., 40 NY2d 633, 635 ( 1976) . Where, as here, the movant submits evidence beyond the complaint in support, of a motion to dismiss pursuant to CPLR 3211(a) (7), the criterion is whether the proponent of the pleading has a cause of action, not whether he or she has stated one, but dismissal should not result unless “a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it.” Guggenheimer v Ginzburg, 43 NY2d 268, 275 (1977). The amended complaint states a cause of action to recover damages for legal malpractice, as the allegations, if proven, satisfy all of the elements of that cause of action. See Russo v Rozenholc, 130 AD3d 492 (1st Dept 2015). The amended complaint also states a cause of action sounding in negligent supervision, based, in part, on an alleged violation of Rule 5. 1 of the Rules of Professional Conduct, which may constitute evidence of tortious misconduct. See William Kaufman Organization, Ltd. v. Graham and James, LLP, 269 AD2d 171 (1st Dept 2000). Moreover, those causes of action satisfy the notice requirements of CPLR 3013. The cause of action for a judgment declaring that the defendants overbilled the plaintiff, while not necessarily independent of the legal malpractice cause of action, likewise states a cause of action. “‘A motion to dismiss a declaratory judgment action prior to the service of an answer presents for consideration only the issue of whether a cause of action for declaratory relief is set forth, not the question of whether the plaintiff is entitled to a favorable declaration'” Matter of Tilcon N.Y .. Inc. v Town of Poughkeepsie, 87 AD3d 1148, 1150 (2~ Dept 2011) , quoting Staver Co. v Skrobisch, 144 AD2d 449, 450 (2nd Dept 1988). “Thus, ‘where a cause of action is sufficient to invoke the court’s power to render a declaratory judgment . . as to the rights and other legal relations of the parties to a justiciable controversy, a motion to dismiss that cause of action should be denied'” (DiGiorgio v 1109-1113 Manhattan Ave. Partners. LLC, 102 AD3d 725, 728 (2nd Dept 2013), quoting Matter of Tilcon N. Y.. Inc. v Town of Poughkeepsie, supra, at 1150). Inasmuch as the defendants have not identified which allegations in the amended complaint that are asserted to be facts are not truly facts at all, and have not demonstrated that the purportedly nonfactual nature of any of the plaintiff’s allegations is indisputable, the plaintiff has also shown that she “has” causes of action to recover damages for legal malpractice and for negligent supervision, and for a judgment declaring that the defendants overbilled her by virtue of their malpractice. ”

“

Anderson v Armentano  2016 NY Slip Op 03690  Decided on May 11, 2016  Appellate Division, Second Department is another telling of a sad but familiar story in which a Workers’ Compensation attorney allows the client to think that it is handling all aspects of the personal injury case, but is only handling the WC portion.  Here, as in all versions of this story, the “third-party” action (against the landowner for example) is allowed to drift away.

“On September 17, 2010, the plaintiff allegedly was injured when he fell into a trench at the Hicksville Parking Facility, which was owned by the Town of Oyster Bay, while performing construction work for his employer. After the incident, the plaintiff sought legal representation from the defendant Grey and Grey, LLP (hereinafter G & G), and another attorney with respect to potential claims arising from the accident. On November 17, 2010, G & G and the plaintiff executed a New York State Workers’ Compensation Board “Notice of Retainer and Appearance-Additional Attorney,” which indicated that G & G had been retained to represent the plaintiff “in all proceedings concerning my claim.”

Neither G & G nor the other attorney filed a timely notice of claim against the Town. Although the plaintiff commenced a proceeding for leave to file a late notice of claim against the Town which the Supreme Court granted, this Court reversed the order granting the petition and dismissed the proceeding (see Matter of Anderson v Town of Oyster Bay, 101 AD3d 708).

The plaintiff then commenced this action to recover damages for legal malpractice against G & G and the other attorney. Prior to answering, G & G moved pursuant to CPLR 3211(a)(1) to dismiss the complaint insofar as asserted against it on the basis that documentary evidence established that it had been engaged by the plaintiff only with respect to his Workers’ Compensation claim. The Supreme Court denied G & G’s motion. G & G appeals.”

“

What happens when you have good claims, but fail to enunciate them in the original pleading?  One might guess that you simply file another pleading and include them?  Not that easy.  As Hustedt Chevrolet, Inc. v Jones, Little & Co.  2015 NY Slip Op 04611 [129 AD3d 669]  June 3, 2015
Appellate Division, Second Department demonstrates in an accounting malpractice setting, timeliness plays a part.

“The plaintiffs moved pursuant to CPLR 3025 (b), inter alia, for leave to amend their first amended complaint to supplement the cause of action to recover damages for accounting malpractice. It is undisputed that the plaintiffs’ proposed supplemental claims of accounting malpractice were time-barred (see CPLR 214 [6]). The plaintiffs, however, contend that these proposed supplemental claims relate back to the allegations contained in the accounting malpractice cause of action in the first amended complaint. Contrary to that contention, the allegations in the first amended complaint gave no notice of the facts, transactions, and occurrences giving rise to the proposed supplemental claims of accounting malpractice and thus, the relation-back doctrine does not apply (see CPLR 203 [f]; Fisher v Giuca, 69 AD3d 671, 673 [2010];Pendleton v City of New York, 44 AD3d 733, 736 [2007]; Sabella v Vaccarino, 263 AD2d 451, 452 [1999]; Bergman v Indemnity Ins. Co. of N. Am., 232 AD2d 271 [1996]; Smith v Bessen, 161 AD2d 847, 849 [1990]; Alpert v Shea Gould Climenko & Casey, 160 AD2d 67, 72-73 [1990]). The plaintiffs’ remaining contentions are without merit. Therefore, the Supreme Court properly denied that branch of their motion pursuant to CPLR 3025 (b) which was for leave to amend the first amended complaint to supplement the cause of action to recover damages for accounting malpractice. Mastro, J.P., Chambers, Cohen, Miller and LaSalle, JJ., concur.”

Rochester: Harvey v Handelman, Witkowicz & Levitsky, LLP  2015 NY Slip Op 05794 [130 AD3d 1439]  July 2, 2015  Appellate Division, Fourth Department  is one of the first cases decided after Grace v. Law in which the question of a “likely to succeed” appeal is discussed.

“We note at this juncture that plaintiff has abandoned any issues related to the District (see Ciesinski v Town of Aurora, 202 AD2d 984, 984 [1994]). To establish a cause of action for legal malpractice, “a plaintiff must prove (1) that the defendant attorney failed to exercise that degree of care, skill, and diligence commonly possessed by a member of the legal community, (2) proximate cause, (3) damages, and (4) that the plaintiff would have been successful in the underlying action had the attorney exercised due care” (Phillips v Moran & Kufta, P.C., 53 AD3d 1044, 1044-1045 [2008] [internal quotation marks omitted]; see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]). “In order to prevail on a motion for summary judgment seeking dismissal of a complaint for legal malpractice, a defendant must establish that the plaintiff is unable to prove at least one necessary element of the legal malpractice action, i.e., that the plaintiff is unable to prove that he or she would have been successful on the underlying claim but for [the defendant’s] negligence” (Giardina v Lippes, 77 AD3d 1290, 1291 [2010] [internal quotation marks omitted], lv denied 16 NY3d 702 [2011]). Where a client fails to pursue an appeal in an underlying action, in order to determine whether the failure to pursue an appeal, as opposed to defendants’ negligence, was the proximate cause of the client’s injury, we must determine whether an appeal in the underlying action was “likely to succeed” (Grace v Law, 24 NY3d 203, 210 [2014]).

Here, we conclude that defendants failed to meet their burden to establish as a matter of law that any alleged negligence on their part resulting in the March 21, 2011 order dismissing of the amended complaint against the County was not a proximate cause of plaintiff’s damages (see Grace v Law, 108 AD3d 1173, 1176 [2013], affd 24 NY3d 203 [2014]). Thus, the court erred in granting the motion with respect to plaintiff’s causes of action arising out of defendants’ handling of the underlying personal injury action against the County. In support of their motion for summary judgment, defendants’ own submissions established that the action against the County was commenced 51 days after the expiration of the limitations period. While the statute of limitations set forth in General Municipal Law § 50-i was tolled from the time plaintiff commenced the proceeding to obtain leave to file a late notice of claim until the order granting that relief went into effect (see Giblin v Nassau County Med. Ctr., 61 NY2d 67, 74 [1984]), the order granting such leave was effective when entered (see Toro v City of New York, 271 AD2d 523, 523-524 [2000], lv denied 96 NY2d 705 [2001]), and the appeal from that order provided no further toll (see Dublanica v Rome Hosp./Murphy Mem. Hosp., 126 AD2d 977, 977 [1987], lv denied 70 NY2d 605 [1987]). Thus, the limitations period expired on December 10, 2008, and the amended complaint adding the County was not timely when filed on March 4, 2010 (see generally Ambrus v City of New York, 87 AD3d 341, 345 [2011]). We therefore further conclude that an appeal from the order dismissing the action against the County on limitations grounds had no likelihood of success.“

Yesterday, we looked at Burbacki v Abrams, Fensterman, Fensterman,  Eisman, Formatto, Ferrara & Wolf, LLP  2016 NY Slip Op 30749(U)  April 15, 2016  Supreme Court, Kings County
Docket Number: 509725/2015  Judge: David B. Vaughan and how bankruptcy affected plaintiff’s ability to litigate legal malpractice claims.

The situation was set off, in part, because of a retaining lien.  A common law retaining lien,  gives the attorney the right to keep the papers, documents and other personal property of the client that has come into the lawyer’s possession in his or her professional capacity so long as those items are related to the subject representation.

The Burbacki case seemed to be started when her attorneys refused to give up the file, setting off a series of events that were disasterous to Burbacki.

“The following facts are stated in the plaintiff’s complaint. Ella Burbacki was a named defendant in Gorelik et al v Burbacki, et al, Index No 18128-2008 in 2008 (“Gorelik matter”). She was initially represented in that action by Stuart Wachs, Esq, (“Wachs” or “first attorney”), who was recommended to her by her accountant Richard Kaplan (“Kaplan” or “accountant”). In 2011 Plaintiff sought to obtain new counsel and retained the defendant on December 14, 2011. Upon Burbacki’s failure to compensate her first attorney $80,000 and the accountant $20,000, they refused to turn over her files to her new counsel, the defendants in the instant matter. After the defendants made several appearances for plaintiff in court, Burbacki’s matter was set for trial for March 22, 2012. Unable to compensate either Wachs and Kaplan for their past litigation work or to pay her newly retained attorneys for litigation work going forward, Burbacki filed for bankruptcy. Prior to filing for bankruptcy, Burbacki’s greatest concern was that her house be protected. On or about March 20, 2012, Burbacki filed a voluntary petition under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of New York. ”

“On April 25, 2012 Burbacki learned that the bankruptcy trustee’s position was that Burbacki was a 100% owner of the house and that he was going to argue his position to the bankruptcy court. The bankruptcy court agreed with the trustee, Burbacki’s home became part of the bankruptcy estate and Burbacki moved to dismiss her own bankruptcy petition. Burbacki’s motion was opposed by the bankruptcy trustee, Gorelik, Wachs and Kaplan–creditors in the bankruptcy action. The trustee further argued to the bankruptcy  court that there was another potential creditor, the First National Bank of Jeffersonville, which had a large deficiency judgement against Burbacki. ”

As we discussed yesterday, Burbacki lost all of her legal malpactice claims because of the bankruptcy filing.

 

Plaintiff got herself into a world of money trouble, and did not seem to have a way out.  When Bankruptcy beckoned, she filed a petition.  In doing so, all of her legal malpractice claims were lost.  How did this happen?

Burbacki v Abrams, Fensterman, Fensterman, Eisman, Formatto, Ferrara & Wolf, LLP  2016 NY Slip Op 30749(U)  April 15, 2016  Supreme Court, Kings County
Docket Number: 509725/2015  Judge: David B. Vaughan describes how bankruptcy affects prior claims.

“The main thrust of the plaintiff’s complaint is that she would have been successful in her claims and legal actions against Gorelik, the plaintiff in Gorelik et al v Burbacki, et al, Index No 18128-2008, Stuart Wachs, Esq (“Wachs” or “first attorney”)–her prior counsel, and Richard Kaplan (“Kaplan”)–her accountant, had it not been for thedefendants’ actions and/or omissions in advising her about the bankruptcy process prior to her filing for bankruptcy and in the preparation and filing of her bankruptcy petition. The following facts are stated in the plaintiff’s complaint. Ella Burbacki was a named defendant in Gorelik et al v Burbacki, et al, Index No 18128-2008 in 2008 (“Gorelik matter”). She was initially represented in that action by Stuart Wachs, Esq, (“Wachs” or “first attorney”), who was recommended to her by her accountant Richard Kaplan (“Kaplan” or “accountant”). In 2011 Plaintiff sought to obtain new counsel and retained the defendant on December 14, 2011. Upon Burbacki’s failure to compensate her first attorney $80,000 and the accountant $20,000, they refused to turn over her files to her new counsel, the defendants in the instant matter. After the defendants made several appearances for plaintiff in court, Burbacki’s matter was set for trial for March 22, 2012. Unable to compensate either Wachs and Kaplan for their past litigation work or to pay her newly retained attorneys for litigation work going forward, Burbacki filed for bankruptcy. Prior to filing for bankruptcy, Burbacki’s greatest concern was that her house be protected. On or about March 20, 2012, Burbacki filed a voluntary petition under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of New York. Burbacki’s
matter was set for trial for March 22, 2012. Unable to compensate either Wachs and
Kaplan for their past litigation work or to pay her newly retained attorneys for litigation work
going forward, Burbacki filed for bankruptcy. Prior to filing for bankruptcy, Burbacki’s
greatest concern was that her house be protected. On or about March 20, 2012, Burbacki
filed a voluntary petition under Chapter 7 of the Bankruptcy Code in the United States
Bankruptcy Court for the Eastern District of New York. ”

“Here, it is undisputed that at the time plaintiff switched counsel to the defendants she owed substantial amounts of money to several creditors including $100,000 to her former counsel Wachs and accountant Kaplan. Furthermore, the defendants’ could not obtain plaintiff’s legal file from Wachs and Kaplan, since they asserted a retaining lien for their fees, hindering their ability to represent Burbacki. Plaintiff was also unable to compensate her new counsel for their litigation work going forward. By plaintiff’s own admission in her pleadings, First National Bank of Jeffersonville had a large deficiency judgement against her. Furthermore, a unanimous jury returned a verdict against plaintiff and in favor of Gorelik in the amount of $331,423.04, which Justice Bayne refused to set aside. Besides filing for bankruptcy and settling the claims, as she did, plaintiff fails to articulate any theory as to how she would have compensated all her creditors or dealt with the situation she was in, when she admits she had no money to do so. The Court finds that Burbacki’s blanket assertion that she would not have filed for bankruptcy had she known that her house “was not safe” or that she would not have settled with Wachs, Kaplan and Gorelik but would have prevailed against them in court is mere speculation. Finally, a settlement where an outstanding amount is lowered in exchange of a general release is a common and generally accepted practice in litigation. Accordingly, accepting as true the facts alleged in the complaint and according the plaintiff the benefit of every favorable inference the compliment, this Court rules that on its face, the complaint fails to Page 4 of 6 [* 4] 5 of 6 l. ‘ allege facts from which it could be reasonably inferred that the plaintiff would not have suffered any damages but for the defendants’ negligence. The Court also agrees with the defendants that Burbacki’s claims are the property of the bankruptcy estate and may not be maintained by the plaintiff in her individual capacity. Pursuant to 11 USC 241(a)(1), all the causes of actions that could have been brought on the date of filing a bankruptcy petition become property of the bankruptcy estate upon the filing of the petition. In re Costello, 255 BR 110, 113 (Bkrtcy, EDNY 2000). Pre-petition and filing malpractice claims fully accrue by the time the petition is filed and these claims become property of the estate. In re Strada Design Associates, Inc., 326 BR 229 (Bkrtcy, SONY 2005). Even if a cause of action accrues after the bankruptcy petition is filed, it still becomes property of the bankruptcy estate if there are “sufficient roots” in the debtor’s pre-bankruptcy activiites to warrant inclusion in their estate. Rivera v Ndola Pharmacy Corp., 497 F.Supp.2d 381, 396 (EDNY 2007) citing In re Strada Design Associates, Inc., 326 BR 229, 236 (Bkrtcy. S.D.N.Y.2005). See, SegalvRochelle, 382 US 375 (1966). “

Genesis Merchant Partners, LP v Gilbride, Tusa, Last & Spellane LLC   2015 NY Slip Op 31080(U)  June 16, 2015  Supreme Court, New York County  Docket Number: 653145/2014
Judge: Nancy M. Bannon  is a textbook example of how the statute of limitations is applied to a legal malpractice transactional case.  Defendant represented Plaintiff in series of loan transactions, where there were problems in collection.  Were these a series of unrelated transactions, albeit of the same nature or were they one course of legal representation, which would allow for continuous representation tolling?

“In the instant motion, Gilbride seeks dismissal of so much of the legal malpractice claim as pertains to Loan 2 and Loan 3, on the grounds that the legal malpractice claim, as it relates to these Loans, is time-barred, pursuant to CPLR 3211 (a)(5). Gilbride argues that documentary evidence rebuts Genesis’ claim that Gilbride’s failure to record the mortgage in a timely manner proximately caused its losses. Gilbride also seeks dismissal of the remaining causes of action as duplicitive of the cause of action for legal malpractice. In opposition, Genesis argues that its claims are not time-barred and that the instant action was timely commenced in October 2014 because Gilbride continued its representation regarding Loan 2 and Loan 3 and represented it regarding Loan 4, which it contends is related, through December 2011. The Court notes that the day after Genesis’ opposition to the instant motion was submitted, Genesis filed an amended complaint, which, in addition to the existing four causes of action, asserted a fifth cause of action for breach of fiduciary duty against Gilbride. Gilbride’s reply addresses both the original and amended complaint and the parties subsequently stipulated that the instant motion would be applied to both the original and amended complaint. ”

“An action for legal malpractice must be commenced within three years of its accrual. See CPLR 214(6); McCoy v Feinman, 99 NY2d 295, 301 (2002). The claim accrues ‘”when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court.”‘ McCoy v Feinman, supra at 301, quoting Ackerman v Price Waterhouse, 84 NY2d 535, 541 (1994). That is, a claim accrues when the malpractice is committed, not when it is discovered. See McCoy v Feinman, supra; West Vil. Assoc. Ltd. Partnership v Balber Pickard Battistoni Maldonado & Ver Dan Tuin. PC, 49 AD3d 270 (1st Dept 2008). ”

“In the present matter, Gilbride fails to establish that the legal malpractice claim accrued more than three years prior to the commencement of this action and is, therefore, time-barred. Genesis alleges in the complaint, filed in 2014, that the parties always anticipated Gilbride’s continuing oversight of the Loans through their maturity dates in June 2012. Indeed, Gilbride performed legal work on behalf of Genesis relating to the Loans through, at least, 2011. Specifically, Gilbride completed amendments to the Loans in 2010 and 2011, “crosscollateralized” Loan 4 with the Loans, and consolidated the Loans with Loan 4 in August 2011. Gilbride was responsible for reviewing and revising the Loan documents to ensure the perfection of the collateral for the Loans and using the presumably perfected Loan collateral to “cross-collateralize” with Loan 4. In addition, Gilbride represented Genesis in a suit in Connecticut against Progressive with regard to the Loans. Genesis and Progressive entered into a conditional settlement, drafted by Gilbride, in which Progressive was to pay the aggregate outstanding value of the Loans by June 2012, plus interim monthly payments commencing in January 2012. Such work was done in connection with the Loans and was not merely the continuation of a general professional relationship between the parties. See Transport Workers Union of Am. Local 100 AFL-CIO v Schwartz, supra. Further, some of the work done during this period, including recording a $1 million mortgage on property included as collateral on Loan 3 eighteen months after the closing, was performed to rectify the alleged act of malpractice, i.e. failing to secure the Loans. See Red Zone LLC v Cadwalader. Wickersham & Taft LLP, 118 AD3d 581 (1st Dept. 2014). In support of its motion, Gilbride fails to demonstrate that its representation terminated at some time earlier than the maturity dates of the Loans. Gilbride avers that the Loans were nothing more than a series of distinct, unrelated transactions. However, Gilbride does not dispute that it completed amendments to the Loans, “cross-collateralized” them with Loan 4, consolidated them, and represented Genesis it a suit regarding the Loans, all after the closing dates of the loans in 2008 and 2009. It is notable that Gilbride does not submit or cite to the retainer agreement in support of its contention that its representation ceased with the closings. See Shumsky v Eisenstein, 96 NY2d 164 (2001 ). The complaint, therefore, is sufficient to establish that there was mutual understanding that Gilbride’s representation would continue after the closings of the Loans and the continuous representation doctrine applies. See Lytell v Lorusso, 74 AD3d 905 (2nd Dept. 2010); West Vil. Assoc. Ltd. Partnership v Balber Pickard Battistoni Maldonado & Ver Dan Tuin, PC, supra; cf. Scott v Fields, 85 AD3d 756 (2nd Dept. 2011 ). “