Vista Food Exch., Inc. v BenefitMall  2016 NY Slip Op 02923  Decided on April 14, 2016 Appellate Division, First Department is an example of the tendency to apply a winning template to almost any situation.  The AD found the template inapplicable in this setting.

“Plaintiff alleges that it relied on defendants’ advice in outsourcing its human resources and benefits functions to a third party recommended by defendants. The third party allegedly accepted funds from plaintiff for the payment of its payroll taxes, but failed to make such payments to the taxing authorities before becoming insolvent.

First, the court correctly dismissed the breach of contract claims asserted in the amended complaint, because the amended complaint does not sufficiently allege that there was consideration to support the alleged oral contract. Consideration sufficient to create a contract “consists of either a benefit to the promisor or a detriment to the promisee” (Weiner v McGraw-Hill, Inc., 57 NY2d 458, 464 [1982]). Here, plaintiff, or the alleged promisee, claims that on the advice of defendants, it decided not to hire a different third-party company to perform its human resources and payroll services, and instead hired the company that defendants recommended. However, it is not alleged that this purported detriment was required by defendants as a condition of their promising to give advice, or was otherwise necessary to consummate the transaction, and, therefore, cannot serve as the requisite consideration needed to form a contract (22 NY Jur 2d, Contracts § 76). Similarly, there are no allegations that defendants, the alleged promisors, received a direct benefit, monetary or otherwise, in exchange for their promise to provide advice. To the extent defendants received payments from the recommended third party rather than from plaintiff directly, such payments provide a benefit that is too remote or indirect to constitute consideration (Trans Intl. Corp. v Clear View Tech., 278 AD2d 1, 1 [1st Dept 2000]).

Even if an enforceable contract had been formed between the parties here, plaintiff’s breach of contract claim would still fail because plaintiff has failed to properly plead general or special damages. Plaintiff’s alleged damages (namely, its potential incurment of tax penalties and other liabilities due to the third party’s failure to pay plaintiff’s taxes) do not directly flow from and are not the “natural and probable consequence” of defendants’ alleged breach, and, therefore, do not qualify as general damages (Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d 187, 192 [2008] [internal quotation marks omitted], rearg denied 10 NY3d 890 [*2][2008]). Moreover, the allegations in the amended complaint fail to allege special damages because there are no allegations that defendants foresaw, or should have foreseen, the alleged damages, prior to or at the time the alleged contract was made (id. at 192-193).

The motion court correctly dismissed plaintiff’s claim for breach of the implied covenant of good faith and fair dealing, because it cannot be used as a substitute for plaintiff’s nonviable breach of contract claim (Smile Train, Inc. v Ferris Consulting Corp., 117 AD3d 629, 630 [1st Dept 2014]).

Because plaintiff did not allege defendants’ violation of a legal duty independent of a contract, the motion court correctly dismissed the promissory estoppel claim in the amended complaint and the negligence/negligent misrepresentation claim in the original complaint (MatlinPatterson ATA Holdings LLC v Federal Express Corp., 87 AD3d 836, 842-843 [1st Dept 2011][promissory estoppel], lv denied 21 NY3d 853 [2013]; Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 389 [1987][negligence]). Further, plaintiff failed to support its negligent misrepresentation claim with sufficient allegations of “a special or privity-like relationship imposing a duty on the defendant[s] to impart correct information to the plaintiff,” or that the information imparted by defendants was incorrect (J.P. Morgan Sec. Inc. v Ader, 127 AD3d 506, 506 [1st Dept 2015][internal quotation marks omitted]).

To the extent plaintiff has not abandoned the issue on appeal, it failed to state a claim for professional malpractice because, under New York law, defendants are not professionals (see Chase Scientific Research v NIA Group, 96 NY2d 20, 29-30 [2001]). Further, plaintiff failed to state a claim for breach of fiduciary duty, since there are no allegations in the complaint that defendants misled plaintiff by making false misrepresentations (see Roni LLC v Arfa, 74 AD3d 442, 444 [1st Dept 2010], affd 18 NY3d 846 [2011]).

A bill is sent, and a partial payment is made.  More bills are sent, and the client just stops paying. The case does not go well, and there is a dispute between client and attorney.  When the attorney sues for fees, what will be the outcome?

More often than not, the account stated principle comes into play and the attorney wins.  Wagner Davis P.C. v Brady  2016 NY Slip Op 50431(U)   Decided on March 30, 2016  Appellate Term, First Department is a recent example.

“A fair interpretation of the trial evidence supports the jury’s finding that plaintiff proved its claim for legal fees based on an account stated. The trial evidence showed that defendant James Brady Jr. retained plaintiff law firm (1) on his own behalf, to represent him in an appeal of a decision rendered in an action regarding air rights to his residential cooperative apartment and (2) as principal of the corporate defendants and on his own behalf, with respect to three commercial nonpayment proceedings commenced against defendants. The evidence also showed that defendants received and retained plaintiff’s invoices without proper objection for a reasonable time, and made partial payments on the sums due (see Brunelle & Hadjikow, P.C. v O’Callaghan, 126 AD3d 584 [2015], appeal dismissed 26 NY3d 975 [2015]; Moses & Singer v S & S Mach. Corp., 251 AD2d 271 [1998], lv denied 92 NY2d 1024 [1998]).

Defendants’ claim that the legal fees were unreasonable is unavailing; “it is not necessary to establish the reasonableness of the fee since the client’s act of holding the statement without objection will be construed as acquiescence as to its correctness” (Cohen Tauber Spievak & Wagner, LLP v Alnwick, 33 AD3d 562, 562—563 [2006] [internal quotation marks omitted], lv dismissed 8 NY3d 840 [2007]).

The trial court properly refused to charge the jury as to discharge “for cause.” There was [*2]insufficient evidence to support a finding that plaintiff engaged in misconduct, failed to prosecute defendants’ cases diligently, or otherwise improperly handled the cases or committed malpractice (see Coccia v Liotta, 70 AD3d 747, 757 [2010], lv dismissed 15 NY3d 767 [2010]). Defendants essentially pointed to so-called errors of counsel which were, in fact, strategic choices which cannot support a discharge for cause (see Doviak v Finkelstein & Partners, LLP, 90 AD3d 696, 699-700 [2011]). Defendants’ claim that attorneys other than Steven Wagner and Stuart Klein personally performed work in the two matters is unavailing, since the governing retainer agreements do not specify that any particular attorney will handle the cases; and defendants, who were aware from the itemized bills that other attorneys were working on the matter, regularly made payments (see Bixby v Somerville, 62 AD3d 1137, 1139 [2009]).

 

You work for a landscaping company, and are working on a big job at Van Cortlandt Park.  You fall off a machine and get hurt.  You apply for Workers’ Compensation benefits, and they are paid. Some months later you are told that you need an attorney.  You hire the attorney and he works on the WC claim.  No one starts a personal injury case.  Is this legal malpractice?

Felix v Klee & Woolf, LLP  2016 NY Slip Op 02960  Decided on April 20, 2016  Appellate Division, Second Department shows the AD going into great detail on how the “but for” portion of legal malpractice is applied.

“To state a cause of action to recover damages for legal malpractice, a plaintiff must allege: (1) that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and (2) that the attorney’s breach of the duty [*2]proximately caused the plaintiff actual and ascertainable damages” (Marino v Lipsitz, Green, Fahringer, Roll, Salibury & Cambria, LLP, 87 AD3d 566, 566 [internal quotation marks omitted]; see Leder v Spiegel, 9 NY3d 836, 837; Wray v Mallilo & Grossman, 54 AD3d 328, 328-329). “To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the attorney’s negligence” (Wray v Mallilo & Grossman, 54 AD3d at 329;see Marino v Lipsitz, Green, Fahringer, Roll, Salibury & Cambria, LLP, 87 AD3d at 566).

Thus, “[a] defendant moving for summary judgment in a legal malpractice action must . . . establish prima facie that the plaintiff cannot prove at least one of the essential elements of the malpractice claim” (Wray v Mallilo & Grossman, 54 AD3d at 329; see Marino v Lipsitz, Green, Fahringer, Roll, Salibury & Cambria, LLP, 87 AD3d at 566). Contrary to the plaintiff’s contention, even if the defendant had successfully moved on the plaintiff’s behalf for leave to serve a late notice of claim against the City and the Parks Department, the plaintiff would not have prevailed in a subsequent personal injury action against them, as he had no viable common-law negligence or Labor Law claim.

“To make a prima facie showing of liability under Labor Law § 240(1), a plaintiff must establish that the statute was violated and that the violation was a proximate cause of his or her injuries” (Singh v City of New York, 113 AD3d 605, 606). Here, the defendant established that the plaintiff would not have been successful against the City or the Parks Department on a cause of action asserting a violation of Labor Law § 240(1), because the plaintiff would not have been able to show that the accident occurred in the context of “work performed on buildings or structures'” (Vargas v State of New York, 273 AD2d 460, 461, quoting Labor Law § 240[1]). Similarly, the plaintiff would not have been able to assert a viable cause of action pursuant to Labor Law § 241(6), since he was involved with seeding a cricket field, rather than in “construction, excavation or demolition work” (Labor Law § 241[6]). In opposition to the defendant’s prima facie showing, the plaintiff failed to raise a triable issue of fact with respect to whether the work he performed was covered by Labor Law § 240(1) or § 241(6).

“A cause of action alleging a violation of Labor Law § 200 or common-law negligence may arise from either dangerous or defective premises conditions at a work site or the manner in which the work is performed” (Rodriguez v Trades Constr. Servs. Corp., 121 AD3d 962, 964). Where, as here, the claim arises out of alleged defects or dangers in the methods or materials of the work, “recovery cannot be had under Labor Law § 200 unless it is shown that the party to be charged had the authority to supervise or control the performance of the work” (id. at 964; see Ortega v Puccia, 57 AD3d 54, 61). The defendant established, prima facie, that neither the City nor the Parks Department, as the owner of Van Cortlandt Park, could be held liable under Labor Law § 200 or for common-law negligence. Although the plaintiff argues that the City and the Parks Department had notice of the dangerous manner in which the seeding machine was being used at the work site, the record is clear that neither the City nor the Parks Department had any authority to supervise or control the performance of the plaintiff’s work (see Rizzuto v L.A. Wenger Contr. Co., 91 NY2d 343, 352; Russin v Louis N. Picciano & Son, 54 NY2d 311, 317; Gallello v MARJ Distribs., Inc., 50 AD3d 734, 735; Dooley v Peerless Importers, Inc., 42 AD3d 199, 204-205; Guerra v Port Auth. of N.Y. & N. J., 35 AD3d 810, 811; Perri v Gilbert Johnson Enters., Ltd., 14 AD3d 681, 683; Everitt v Nozkowski, 285 AD2d 442, 443; Reynolds v Brady & Co., 38 AD2d 746, 746-747). In opposition, the plaintiff failed to raise a triable issue of fact (see Pacheco v Halstead Communications, Ltd., 90 AD3d 877).

Accordingly, the Supreme Court properly granted that branch of the defendant’s motion which was for summary judgment dismissing the cause of action alleging legal malpractice.”

 

Client is a big-time hedge fund earner, getting $5 and $6 million in bonuses over the years.  Suddently, the bottom falls out, and he is offered severeness of only $ 1.6 million.  He consults with defendants who tell him that they can help.  However, defendants divert from the contractually set-up appeal procedure and plaintiff ends up with nothing at all.  Negligence or judgment?

Garner v Liddle & Robinson, L.L.P.  2016 NY Slip Op 30659(U)  April 13, 2016  Supreme Court, New York County  Docket Number: 150058-2012  Judge: George J. Silver takes the view that there are sharp issues of fact to be determined by the jury.

“From 2001 through 2006, plaintiff, along with Alai, received an annual Bonus ranging from $5.1 million to approximately $9 million. Specifically, plaintiff and Alai each received, for the years 2001through2006, bonuses of $5.1 million, $7.25 million, $8.9 million, $8.3 million, $9 million, and $7.4 million respectively. Then, in June 2007, UBS closed Dillon Read, and on June 20, 2007, plaintiff and Alai each received a letter terminating his employment and detailing the terms of his termination and the UBS Separation Program (the “Separation Letter”). The Separation Letter offered to pay plaintiff severance under the UBS Global Management Separation Program (the “Separation Program”) consisting of (i) thirty nine (39) weeks of his base salary, and (ii) a Special payment of $1,850,000 (“Severance Offer”), for a total of $1,981,000.00. Alai received an identical termination letter. The Separation Letter explained that the Special Payment of $1,850,00 had been determined at the sole discretion of Dillon Read’s management and authorized under a supplement to the Separation Program for certain employees, and that in order to receive the Severance Offer, plaintiff was required to sign a Separation Agreement and General Release within forty five ( 45) days. Further, the Separation Letter explained that if plaintiff wished to challenge the Severance Offer or any aspect of the Separation Agreement, plaintiff was required to first consult with his Client Relationship Manager. The Separation Letter further stated that if plaintiff was unable to resolve the issues through such consultation, plaintiff had the right, within forty-five (45) days, to submit a written statement to a UBS committee (the “Committee”) through Kiku Taura, the UBS Executive Director/Human Resources at UBS Global Asset Management (Americas), Inc., describing the basis for his claim. Upon receiving the letter, plaintiff and Alali met with Liddle and Marc Susswein (“Susswein”) and retained L&R for the purpose of obtaining “guidance and advice concerning their rights under the Separation Agreement Letter, the Separation Program, their employment agreements, and prevailing employment and contract laws”, and ultimately, to obtain a higher Severance Offer. On May 2, 2008, plaintiff entered into a retainer agreement with defendants whereby plaintiff agreed to pay, in addition to retainer and contingency fees, disbursements and expenses. Plaintiff alleges that Liddle advised him that he and Alali were each entitled to receive a minimum of 3% of the net profits of the CRE for the period from January 1, 2007 until their termination – approximately $6 million each, a sum that more closely represented their historical bonuses of 3% during the years 2001-06 – as opposed to the Special Payment of $1.8 million. Further, plaintiff alleges that Liddle advised him that he would respond to the Separation Letter, and “expressed confidence that they would each receive at least $6 million based upon the prevailing law and his familiarity with UBS’ business practice and management, and that, in no event would they receive less than $2 million each.” On August 1, 2007, Liddle wrote to Rebecca White, Esq. (White), the Managing Director of UBS America’s Legal Employment Section, to discuss the terms of the Settlement Letter and the Severance Offer on behalf of plaintiff and Alali. The letter asks White to share its contents with certain specified “senior business executives within UBS.” Upon receipt of the letter, which had been forwarded to her as an email attachment by Susswein that same day, White emailed Susswein that she would forward the letter to “the UBS AM Severance Committee,” and suggested in the future he deal directly with Kiku Taura, “as set forth in the plan.” In response, Susswein told White, “Messrs. Garner and [redacted] are of the belief that given the substantial amounts that are at issue in their matter, that it is likely better addressed at a senior level outside of the UBS SM Severance Committee, which is why we have not submitted their letter directly to the committee.” White responded, “Just so it is clear, the severance packages offered to these employees will expire by their terms. As you requested, we will address the issues you have raised after we have had the opportunity to discuss them with the appropriate members of management.”

” In October of 2008, approximately six months after plaintiff turned down the increased offer of $2.6 million, defendants initiated an arbitration proceeding on behalf of plaintiff before the Honorable Stephen Crane at JAMS. Judge Crane dismissed the majority of plaintiffs claims, and specifically determined that “because he failed to comply with the Separation program’s appeal procedure, [plaintiffJ has failed to exhaust his administrative remedies.” As such, plaintiff was no longer entitled to the initial Severance Offer. Subsequently, on September 24, 20 I 0, defendants asked Judge Crane to restore the Severance Offer, which Judge Crane declined to do. Twelve days later, Judge Crane issued his Final Award, dismissing plaintiffs remaining claims. As a result, plaintiff received no severance payment from UBS, and now seeks to recover from defendants the amount originally offered by UBS in its June 20, 2007 Separation Letter, as well as legal fees. ”

“Neither party is entitled to summary judgment with respect to plaintiffs’ causes of action for legal malpractice. Based upon the record before the court it is for jury to determine whether defendants’ decision to attempt to negotiate a higher severance payment for plaintiff by means other than an appeal to the UBS AM Severance Committee, as called for in the Separation Agreement Letter, was a reasonable strategic decision which cannot serve as the basis of a malpractice claim (see Wagner Davis P.C. v Gargano, 116 AD3d 426 [l5t Dept 2014]) or was “so unreasonable at the inception as to have manifested professional incompetence” (Rodriguez v Fredericks, 213 AD2d 176 [1st Dept 1995]). There are also issues of fact as to whether defendants’ alleged negligence proximately caused plaintiff actual and ascertainable damages. Plaintiff contends that when he rejected UBS’ Revised Severance Offer of $2.6 million he did so under the belief that he was choosing between the Revised Severance Offer and original Severance Offer because he had never been advised that defendants, through the August 2007 correspondence with White, had not preserved his rights to the original Severance Off er. Plaintiff claims that had he known that he did not have the right to any severance payment from UBS unless UBS renewed its offer or a court or arbitrator awarded him the payment he would have viewed the Revised Severance Offer differently and would have accepted it without hesitation. Plaintiff also claims that the Revised Severance Offer was conditional in that both he and Alali had to accept it and that he rejected it in light of the advice provided to him by defendants that he was entitled to a $6 million severance, based upon his past bonuses, and that he would receive, at worst, approximately $2 million. Defendants argue that their representation of plaintiff was not a proximate cause of plaintiffs alleged loss because their representation of plaintiff resulted in the Revised Severance Offer that was $750,000 higher than the initial Severance Offer. Defendants argue that in the face of an increased severance offer there can be no legal malpractice. Plaintiffs claim that his rejection of the significantly higher Revised Severance Offer was compelled by defendants’ advice that plaintiffs rights to the Severance Offer had been preserved and that he that he was entitled to at most $6 million and at worst $2 million, in the face of defendants’ claim that no such advice was given, raises issues of fact and credibility that must be resolved by a jury and which necessitate denial of both the motion and cross-motion for summary judgment. “

Weight v Day  2015 NY Slip Op 09093 [134 AD3d 806]  December 9, 2015  Appellate Division, Second Department is an accounting malpractice case with implications for the legal malpractice field.  The statute of limitations begins to run, the Second Department tells us, when there is a verifiable and concrete end to the representation.  The basics are that husband and wife hired defendant to run a steel business while they divorced.  The steel business did not go well, and it “closed.”  About a year later defendant tendered his resignation as trustee.  Does the statute run from the “closing” or the resignation?  It is the latter.

“On February 10, 2014, exactly three years after Day sent his resignation letter, the plaintiff commenced this action against the defendants, alleging, inter alia, accounting malpractice, breach of fiduciary duty, fraud, and breach of contract. The plaintiff alleged, among other things, that Day failed to properly manage Weight Steel, prevent her husband from needlessly using the company’s assets for his personal gain, deposit the company’s payments, and bill its customers. The plaintiff further alleged that Day irresponsibly ran up the company’s debt, intentionally concealed its dire financial situation, and denied her access to its records and facilities. The complaint included an allegation that Weight Steel “closed” on or about August 23, 2010.

[*2] Thereafter, the defendants moved pursuant to CPLR 3211 (a) (5) and (7) to dismiss the complaint. Among other things, they argued that the complaint was time-barred because it did not allege any errors, acts, or omissions that occurred after August 23, 2010, the date that Weight Steel allegedly closed. In addition, the defendants argued that all of the causes of action other than that alleging accounting malpractice should be dismissed as duplicative of the accounting malpractice cause of action. The Supreme Court granted the defendants’ motion to dismiss the complaint, concluding that the causes of action alleging accounting malpractice and breach of fiduciary duty were time-barred, and further concluding, in effect, that the remaining causes of action should be dismissed for failure to state a cause of action. The plaintiff appeals, and we modify.

In moving to dismiss a cause of action pursuant to CPLR 3211 (a) (5) as barred by the applicable statute of limitations, a defendant bears the initial burden of demonstrating, prima facie, that the time in which to sue has expired (see Jalayer v Stigliano, 94 AD3d 702, 703 [2012]; Fleetwood Agency, Inc. v Verde Elec. Corp., 85 AD3d 850, 850 [2011]). Contrary to the Supreme Court’s determination, the defendants failed to make a prima facie showing that the causes of action alleging accounting malpractice and breach of fiduciary duty were time-barred. A claim sounding in accounting malpractice is governed by a three-year statute of limitations (see CPLR 214 [6]), and, under the circumstances of this case, the plaintiff’s claim of breach of fiduciary duty is also governed by a three-year statute of limitations since, inter alia, the remedy sought is purely monetary in nature and it cannot be said that an allegation of fraud is essential to that claim (see IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139 [2009]; Loeuis v Grushin, 126 AD3d 761, 764 [2015]; McDonnell v Bradley, 109 AD3d 592, 594 [2013]; cf. Matter of R.M. Kliment & Frances Halsband, Architects [McKinsey & Co., Inc.], 3 NY3d 538, 541-542 [2004]; RGH Liquidating Trust v Deloitte & Touche LLP, 47 AD3d 516, 517 [2008]). Contrary to the court’s determination, the defendants failed to establish that these causes of action accrued on August 23, 2010, when Weight Steel allegedly “closed.” It is undisputed that Day did not resign as trustee of Weight Steel until February 10, 2011. Further, the defendants did not establish when they delivered to the plaintiff all the pertinent documents related to their accounting work and Day’s additional duties as trustee. Based upon the defendants’ submissions, including the complaint and the agreement outlining the terms of the trusteeship, the earliest possible accrual date with respect to the claims of accounting malpractice and breach of fiduciary duty was February 10, 2011, exactly three years prior to the commencement of this action (see IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d at 139; McCoy v Feinman, 99 NY2d 295, 301 [2002]; Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]). Thus, the defendants failed to meet their initial burden of demonstrating that those causes of action were time-barred. Accordingly, the court should have denied that branch of the defendants’ motion which was pursuant to CPLR 3211 (a) (5) to dismiss those causes of action. Moreover, contrary to the defendants’ contention, dismissal of the cause of action alleging breach of fiduciary duty is not warranted on the ground that it is duplicative of the cause of action alleging accounting malpractice (cf. Staffenberg v Fairfield Pagma Assoc., L.P., 95 AD3d 873, 874 [2012]).”

Sure, there is a requirement that attorneys provide a retainer agreement or a letter setting forth the work to be performed and the costs.  However, the Appellate Division has ruled that an attorney can collect fees even in the absence of a retainer agreement in Seth Rubenstein v. Ganea.   So, what does it matter anyway?

Well, it can matter when the attorney wants to limit his exposure for not undertaking certain acts. Soubbotin v Joseph Potashnik & Assoc., PLLC
2016 NY Slip Op 02800  Decided on April 13, 2016  Appellate Division, Second Department  is an example.  Was the attorney required to engage in a hearing before the NYS Dept. of Labor?  It’s a question of fact, and one which could have been ruled out in the retainer agreement.

“The plaintiffs commenced this action alleging that the defendants committed legal malpractice by failing to timely request a hearing before an Administrative Law Judge to review certain determinations of the New York State Department of Labor regarding overpayment of unemployment insurance benefits.

The Supreme Court properly denied the defendants’ motion for summary judgment dismissing the complaint. Contrary to the defendants’ contention, they failed to demonstrate, prima facie, that the acts that they allegedly failed to perform were beyond the scope of the subject retainer agreement (cf. AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435;DeNatale v Santangelo, 65 AD3d 1006, 1007; Turner v Irving Finkelstein & Meirowitz, 61 AD3d 849, 850). Accordingly, the defendants failed to make a prima facie showing of entitlement to judgment as a matter of law. Thus, the motion was properly denied, regardless of the sufficiency of the opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).”

Sometimes the Appellate Division will opine and give its full reasoning, sometimes not.  In Soubbotin v Joseph Potashnik & Assoc., PLLC  2016 NY Slip Op 02800  Decided on April 13, 2016  Appellate Division, Second Department the AD merely said that an argument put forward by  the attorneys did not even make it to the prima facie stage.

“The plaintiffs commenced this action alleging that the defendants committed legal malpractice by failing to timely request a hearing before an Administrative Law Judge to review certain determinations of the New York State Department of Labor regarding overpayment of unemployment insurance benefits.

The Supreme Court properly denied the defendants’ motion for summary judgment dismissing the complaint. Contrary to the defendants’ contention, they failed to demonstrate, prima facie, that the acts that they allegedly failed to perform were beyond the scope of the subject retainer agreement (cf. AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435; DeNatale v Santangelo, 65 AD3d 1006, 1007; Turner v Irving Finkelstein & Meirowitz, 61 AD3d 849, 850). Accordingly, the defendants failed to make a prima facie showing of entitlement to judgment as a matter of law. Thus, the motion was properly denied, regardless of the sufficiency of the opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).”

Bad result suggests that a bad choice was made by the attorneys.  The bad result/choice suggests that a legal malpractice case might be indicated.  This is fair reasoning, but Courts often fail to join in the analysis, and point to a different cause of the bad result.  Put another way, lots of legal malpractice cases are dismissed on the “but for” portion of the equation.

Excelsior Capitol LLC v K&L Gates LLP  2016 NY Slip Op 02738  Decided on April 12, 2016
Appellate Division, First Department is one such example.  The First Department found, in essence, that it was the judge who decided the case wrongly, and the bad result was not proximately caused by attorney mistake.

“In the underlying action, the Second Department found that the trial court erred in dismissing Excelsior’s causes of action to recover upon the guarantor’s three personal guarantees, finding that a jury could have found that the guarantor consented to the extensions of said guarantees, and remitted the matter for a new trial on those causes of action (Excelsior Capital, LLC v Superior Broadcasting Co., Inc., 82 AD3d 696, 699 [2d Dept 2011] [internal citations omitted]). The trial court’s error in that enforcement action was “independent of or far removed from the [attorney’s] conduct,” and therefore constituted an intervening cause, breaking any proximate cause by the defendants (Kriz v Schum, 75 NY2d 25, 36 [1989], quoting Derdiarian v Felix Contr. Corp., 51 NY2d 308, 315 [1980]). In any event, plaintiff’s causation theory is speculative.

“[T]he selection of one among several reasonable courses of action does not constitute malpractice'” (Zarin v Reid & Priest, 184 AD2d 385, 387 [1st Dept 1992]). The issue in this case is a May 26 letter which merely reserved Excelsior’s rights while the parties worked out a possible forbearance agreement and redocumentation of the notes and guarantees, and did not ask the guarantor to reaffirm his guarantees. This was a reasonable course of action based on statements made by the guarantor’s attorney as to the continuing validity of the guarantees, and the fact that the parties were attempting resolution of this matter. More importantly, it was speculative to believe that the guarantor would have provided such a reaffirmance, since if[*2] prompt resolution was not reached, litigation was likely (see Sherwood Group v Dornbush, Mensch, Mandelstam & Silverman, 191 AD2d 292, 294 [1st Dept 1993]).”

While the non-attorney was but a small part of this case and non-disclosure was a larger part of the case, this case was dismissed mostly because it is very difficult to succeed on a legal malpractice matrimonial case unless one can show that the monied spouse hid significant assets.

Schiff v Sallah Law Firm, P.C.  2015 NY Slip Op 03820 [128 AD3d 668]  May 6, 2015
Appellate Division, Second Department tells us that “Here, the Sallah defendants established, prima facie, that the law firm, Donald R. Sallah, Dean J. Sallah, and Patrick M. Kerr did not fail to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and that settlement of the underlying divorce action was not effectively compelled by any mistakes on their part (see Boone v Bender, 74 AD3d 1111, 1113 [2010]; Luniewski v Zeitlin, 188 AD2d 642 [1992]). Further, the Sallah defendants established, prima facie, that the defendant Francine J. Zecca could not be held liable for professional malpractice because she was not an attorney.

The plaintiff, in opposition, failed to raise a triable issue of fact. Contrary to the plaintiff’s contention, the Supreme Court’s determination was not premature. Although the plaintiff opposed summary judgment based, in part, on the defendant’s failure to produce certain discovery, that discovery was requested or ordered after the filing of the defendants’ motion for summary judgment, which imposed an automatic stay of discovery (see CPLR 3214 [b]). Furthermore, the plaintiff failed to demonstrate that further discovery may have led to relevant evidence, or that facts essential to oppose summary judgment were exclusively within the defendants’ knowledge and control (see South Shore Neurologic Assoc., P.C. v Mobile Health Mgt. Servs., Inc., 121 AD3d 881 [2014]; Buchinger v Jazz Leasing Corp., 95 AD3d 1053, 1053-1054 [2012]).

Accordingly, the Supreme Court properly granted that branch of the Sallah defendants’ motion which was for summary judgment dismissing the complaint insofar as asserted against them. Skelos, J.P., Balkin, Dickerson and LaSalle, JJ., concur.”

What happens when NY clients engage in Georgia real estate transactions and the deal goes sour?  The short answer is that you sue the attorney, if it was (even arguably) the attorney’s fault.  Where do you sue?  NY is definitely easier, and may have laws which favor plaintiff.  The sticking point is due process and the ability of a NY client to haul a GA lawyer up here to defend.

Jacobs v 201 Stephenson Corp.  2016 NY Slip Op 02621  Decided on April 6, 2016 Appellate Division, Second Department is an example of how the courts balance due process and state’s rights.

“The plaintiffs, Sholom Jacobs and 326 Coy Burgess Road, LLC, are domiciliaries of the State of New York. The defendants Douglas P. McManamy, an attorney, and McManamy Jackson PC, a law firm (hereinafter together the defendants) are domiciliaries of the State of Georgia. In 2014, the plaintiffs commenced this action against the defendants and others seeking damages for, inter alia, alleged fraud in connection with out-of-state real estate transactions. Insofar as asserted against the defendants, the complaint alleged a cause of action sounding in legal malpractice and one sounding in fraudulent misrepresentation. The defendants made a pre-answer motion pursuant to CPLR 3211(a)(8) to dismiss the complaint insofar as asserted against them for lack of personal jurisdiction. In an order entered June 24, 2014, the Supreme Court denied the motion. Thereafter, the defendants moved for leave to reargue their motion. In the order appealed from, the Supreme Court granted the defendants’ motion for leave to reargue and, upon reargument, granted the defendants’ motion to dismiss the complaint insofar as asserted against them.

“Although the ultimate burden of proof regarding personal jurisdiction rests with the plaintiff, to defeat a CPLR 3211(a)(8) motion to dismiss a complaint, the plaintiff need only make a prima facie showing that the defendant is subject to the personal jurisdiction of the court” (Whitcraft v Runyon, 123 AD3d 811, 812; see Weitz v Weitz, 85 AD3d 1153, 1154; Cornely v Dynamic HVAC Supply, LLC,44AD3d 986, 986). Under CPLR 302(a)(1), “a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent . . . transacts any business within the state.” The transaction of business criterion under CPLR 302(a) is satisfied if it can be shown that a ” defendant’s activities [in New York] were purposeful and there is a [*2]substantial relationship between the transaction and the claim asserted'” (Kimco Exch. Place Corp. v Thomas Benz, Inc., 34 AD3d 433, 434, quoting Deutsche Bank Sec., Inc. v Montana Bd. of Invs., 7 NY3d 65, 71). “Purposeful activities are those with which a defendant, through volitional acts, avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws'” (Fischbarg v Doucet, 9 NY3d 375, 380, quoting McKee Elec. Co. v Rauland-Borg Corp., 20 NY2d 377, 382). “Whether a non-domiciliary has engaged in sufficient purposeful activity to confer jurisdiction in New York requires an examination of the totality of the circumstances” (Farkas v Farkas, 36 AD3d 852, 853).

Here, review of the totality of the circumstances leads to the conclusion that the defendants did not conduct sufficient purposeful activities in New York which bore a substantial relationship to the subject matter of this action so as to avail themselves of the benefits and protections of New York’s laws (see Paterno v Laser Spine Inst., 112 AD3d 34, 40, affd 24 NY3d 370; Executive Life Ltd. v Silverman, 68 AD3d 715; Kimco Exch. Place Corp. v Thomas Benz, Inc., 34 AD3d at 434). Therefore, the defendants did not “transact business” in this State and were not subject to the “long arm” jurisdiction provision of CPLR 302(a)(1).

In addition, contrary to the plaintiffs’ contention, personal jurisdiction over the defendants was not conferred pursuant to CPLR 302(a)(3)(ii), based upon alleged tortious activity occurring outside New York which caused injury within New York (see Muse Collections, Inc. v Carissima Bijoux, Inc., 86 AD3d 631, 631-632).

Accordingly, the plaintiffs failed to make a prima facie showing that the defendants were subject to the personal jurisdiction of the Supreme Court (see Daniel B. Katz & Assoc. Corp. v Midland Rushmore, LLC, 90 AD3d 977, 978). Therefore, the Supreme Court properly, upon reargument, granted the defendants’ motion pursuant to CPLR 3211(a)(8) to dismiss the complaint insofar as asserted against them.”