DSW Lenox LLC v Rosetree on Lenox Ave. LLC  2015 NY Slip Op 32244(U)  November 23, 2015  Supreme Court, New York County  Docket Number: 652786/2011  Judge: Saliann Scarpulla is an example of the principal of privity and how it affects a legal malpractice case.  DSW was a 30% owner of a condominium at 381 Lenox Avenue, New York.  They alleged fraud in the marketing and sale of units at the condo and sued a wide swath of persons and entities.  However, the Court found that when the balance of the owner/board decided not to sue the individuals, and for us, more importantly, the attorneys, the business judgment rule protected that decision, as well as the fact that the Board hired the attorneys, not DSW.

“According to the SAC, this derivative action seeks recovery for construction defects in a building at 381-387 Lenox Avenue (the “Condominium”) in New York, and it also seeks “damages for fraud committed by defendants in co~ection with the marketing and sale of the units in the [Condominium] pursuant to material misrepresentations and omissions in the Offering Plan which were never disclosed despite the eight amendments thereto.” Plaintiff DSW is allegedly a 30% owner of the Condominium. The Court incorporates by reference the facts of the SAC as discussed in the May 2014 Order, and I only address additional facts as they relate to this motion. In the May 2014 Order I found, in pertinent part, that the:breach of fiduciary duty claims could not be sustained because the board’s decision not to file suit was protected by the business judgment rule. I additionally dismissed the SAC in its entirety because “[ e ]very cause of action asserted in the Complaint seeks to remedy the same wrongs that the Board voted not to pursue.” I also noted that while some defendants did not move to dismiss, the business judgment rule nonetheless applied to claims against them, “and ‘[i]t would exalt form over substance’ to await motions from the nonmoving defendants that would be granted as ‘compelled by the doctrine of the law of the case.”‘ (Citation omitted) Therefore, the claims against the nonmoving defendants were also dismissed. ”

“”Reargument is not designed to afford the unsuccessful party successive opportunities to reargue issues previously decided or to present arguments different from those originally asserted.” William P. Pahl Equip. Corp. v. Kassis, 182 A.D.2d 22, 27 (1st Dep’t 1992) (internal citation omitted). Pursuant to CPLR § 2221 ( d)(3 ), counsel must move for leave to reargue “within thirty days after service of a copy of the order determining the prior motion and written I notice of its entry.” On May 19, 2014, the MSF Defendants filed their Notice of Entry with the May 2014 Order. On June 19, 2014, thirty-one days after the Notice of Entry was filed, qsw filed this motion for leave to reargue. Pursuant to the discussion at oral argument, held on February 5, 2015, I deny the motion to reargue as against the MSF Defendants as untimely.2 Also as articulated during oral argument, the narrow question that I review on this I motion is whether the cases cited by plaintiff indicate that I erred in finding that the application of the business judgment rule effectively ended this lawsuit. The other portions of plaintiffs motion are denied because plaintiff has not shown that I overlooked or misapprehended any law or fact.”

Pine Street, however, is distinguishable. Pine Street, the trial court described the plaintiffs as “owners of condominium units in defendant 20 Pine Street Condominium, and allege that they represent the Homeowners Association (HOA) thereof,” and they ‘ . brought suit “for damages allegedly sustained by plaintiffs as a result of defendants’ failure to construct the condominium in accordance with the promises appearing in the offering plan, the plans and specifications filed with and approved by the Department of Buildings (DOB), the New York City Building Code (Building Code), and local industry standards.” 2012 N.Y. Misc. Lexis 2365, 2012 NY Slip Op 31302(U), *5 (Sup Ct, NY County May 16, 2012), ajf’d as modified 109 A.D.3d 733 (lst Dep’t 2013). It is clear from the trial court’s opinion that this was a direct, rather than a derivative action. E.g., id. at 12 (“Although it is well-settled that ‘individual unit owners lack standing to seek 652786/2011 Motion No. 019 Page 7 of 8 [* 7] damages for injury to the building’s common elements’ the offering plan specifically grants such a right to the individual unit owners under circumstances in which the condominium Board fails to act to enforce the Sponsor’s obligati~ns” [citation omitted]). Notably, nowhere in the opinion does the trial court claim that this is a derivative action, and I do not find it instructive in this derivative action where DSW has stepped into the shoes of the board of directors. Accordingly, for those defendants as against whom the motion was timely, I deny that part of the motion referencing the business judgment rule because plaintiff has not shown that I overlooked or misapprehended any law or fact. I decline to award costs and sanctions as requested by the CTSW Defendants.”

797 Broadway Group, LLC v Stracher Roth Gilmore Architects  2014 NY Slip Op 08689 [123 AD3d 1250]  December 11, 2014 Appellate Division, Third Department discusses when and how a professional relationship between an architect and a client begins, ends, and the terms upon which the architect serves.  There are “design-build” agreements and more simple ones for “professional services” alone.  Depending on which agreement is reached between the architect and the client determines when the statute commences.

“Plaintiff owns an office building in the City of Schenectady, Schenectady County. In response to a 2006 request for proposals by the County of Schenectady to provide newly constructed or renovated office space to house its Department of Social Services and Job Training Agency, defendant, a professional partnership that provides architecture services, submitted a proposal to plaintiff to redevelop the premises. Plaintiff accepted the proposal and also entered into a separate agreement with the general contractor, BCI Construction, Inc., for construction administration and management services. Following substantial completion of the work, the County assumed use and occupation of the building in early 2009. Approximately three years later, the stucco facade of the building began to crack and fail, with delamination allegedly occurring over most of the building’s exterior vertical surfaces.

In December 2012, plaintiff commenced this action, asserting claims sounding in strict liability, breach of implied warranty of fitness for a particular purpose, breach of implied warranty of merchantability, negligent design or review, breach of contract and negligent misrepresentation. In lieu of answering, defendant moved to dismiss all six causes of action in the complaint. As relevant here, defendant argued that the claims either failed to state a cause of action or that they were time-barred under the three-year statute of limitations applicable to claims of professional malpractice. Supreme Court granted defendant’s motion, prompting this appeal.

[*2] Plaintiff argues that Supreme Court erred in determining that the contract at issue was not a turnkey or design-build agreement pursuant to which defendant was responsible for all aspects of designing and building the project, as opposed to only professional services. In “turnkey” or “design-build” construction projects, “an owner contracts with one entity to both design and build the project [and] [t]he turnkey builder is responsible for every phase of the construction from final design through subcontracting, construction, finishing, and testing” (Robert A. Rubin, Sarah B. Biser & Catherine M.K. Brown, New York Construction Law Manual § 1:23 [2d ed 33 West’s NY Prac Series 2013]; see Richard K. Allen, Stanley A. Martin & Leah A. Rochwarg, Construction Law Handbook § 6.03 [A] at 134-135 [2d ed 2013]; see also Charlebois v Weller Assoc., 72 NY2d 587, 590-592 [1988]). The design-builder generally cannot shift liability and is the “single point [of] responsibility” under a design-build contract, because it is “the [d]esign-[b]uilder [who] has the responsibility of the preliminary and construction design, the responsibility of submitting a fixed sum for the construction of the project and the responsibility for holding the contracts with its trade contractors” (Richard K. Allen, Stanley A. Martin & Leah A. Rochwarg, Construction Law Handbook § 6.03 [A] at 134 [2d ed 2013] [emphasis added]). As plaintiff asserts, it follows that nearly every design-build project involves the existence of two or more contracts—at least one among the members of the design-build team and one between the design-builder and the owner. Here, however, it was not defendant, the purported design-builder, who held the separate contract with the general contractor, but plaintiff as the owner. Hence, Supreme Court correctly determined that the parties had not entered into a design-build agreement, despite their mislabeling the agreement as such, because the critical factor in a design-build arrangement—that the owner has only a single contract with the design-builder—is absent.”

“In light of the foregoing, we conclude that plaintiff’s fourth and fifth causes of action—alleging that defendant was negligent and breached the parties’ contract by failing to use reasonable care in rendering its professional services—essentially allege professional malpractice (see id. at 542-543; City of Binghamton v Hawk Eng’g P.C., 85 AD3d 1417, 1418 [2011], lv denied 17 NY3d 713 [2011]). Such claims “ ’come[ ] within the purview of CPLR 214 (6),’ ” which sets forth a three-year statute of limitations for nonmedical malpractice, “ ’regardless of whether the theory is based in tort or breach of contract’ ” (City of Binghamton v Hawk Eng’g P.C., 85 AD3d at 1418, quoting Rev Assembly Mem in Support, Bill Jacket, L 1996, ch 623 at 6; accord Matter of R.M. Kliment & Frances Halsband, Architects [McKinsey & Co., Inc.], 3 NY3d at 542). We note that “ ’a claim for professional malpractice against an engineer or architect accrues upon the completion of performance under the contract and the consequent termination of the parties’ professional relationship’ ” (City of Binghamton v Hawk Eng’g P.C., 85 AD3d at 1418, quoting Town of Wawarsing v Camp, Dresser & McKee, Inc., 49 AD3d 1100, 1101-1102 [2008]). Defendant provided both invoices indicating that it last rendered services to plaintiff in early January 2009, and a certificate of substantial completion that was signed by plaintiff’s representative that acknowledged that the work was “sufficiently complete in [*3]accordance with the [c]ontract [d]ocuments so that [plaintiff could] occupy” the premises as of December 19, 2008. Plaintiff signed the certificate of substantial completion in March 2009; defendant signed it in April 2009. Accordingly, in the absence of any contractual obligations extending beyond issuance of the certification of substantial completion, the running of the statute of limitations commenced in April 2009, at the latest (see State of New York v Lundin, 60 NY2d 987, 989 [1983]; City of Binghamton v Hawk Eng’g P.C., 85 AD3d at 1419; cf. Town of Wawarsing v Camp, Dresser & McKee, Inc., 49 AD3d at 1102-1104). Inasmuch as plaintiff did not commence this action until December 2012, plaintiff’s fourth and fifth causes of action are time-barred (see CPLR 214 [6]).”

Kaplan v Khanna  2015 NY Slip Op 25158 [48 Misc 3d 665]  May 15, 2015  Braun, J. illustrates a virtual compendium of errors in litigation.  Starting with making up the names of statutes, and failing to serve a complaint within 120 days, trying to sue a criminal defense attorney for mistakes without “actual innocence alleged, each were cause for dismissal.  On Friday, we’ll look at the “satisfaction” and settlement issue.

“This is an action with two formally designated causes of action, for legal malpractice and breach of contract, plus numerous others mentioned by pro se plaintiff in his papers, in connection with defendant’s representation of plaintiff in a criminal prosecution in the United States District Court, District of New Jersey, in which plaintiff pleaded guilty. Defendant moves to dismiss the complaint, pursuant to CPLR 3211 (a) (8), because service of the summons and complaint was not completed within the required 120 days of filing thereof, in violation of CPLR 306-b, and for failure to state a cause of action under CPLR 3211 (a) (7). Plaintiff filed a “Counter Motion” “pursuant to NY State Court Rules L.R. 83.1,” “Rule 47-Jury Trials-Civil Actions,”^[FN1] and “for Discovery.”^[FN2]

[1] The first issue to determine is whether to apply New York or New Jersey law. Matters of procedure are to be{**48 Misc 3d at 667} determined under New York law (see Tanges v Heidelberg N. Am., 93 NY2d 48, 53 [1999]; Lerner v Prince, 119 AD3d 122, 127-128 [1st Dept 2014]). Whether the summons and complaint were timely served is a procedural issue under CPLR 306-b, a New York statute governing the time period of service of process to obtain personal jurisdiction over a party in a New York action (see Federal Ins. Co. v Fries, 78 Misc 2d 805, 808 [Civ Ct, NY County 1974] [“matters dealing with the conduct of the litigation are procedural”]). The summons and complaint were not timely served within the required 120 days under CPLR 306-b,^[FN3] and plaintiff did not seek leave to extend the time in which to serve them and does not do so in his “Counter Motion” (see Qing Dong v Chen Mao Kao, 115 AD3d 839, 840 [2d Dept 2014]; Webb v Greater N.Y. Auto. Dealers Assn., Inc., 93 AD3d 561, 562 [1st Dept 2012]). Thus, the motion must be granted for this reason.

[2] As to whether the complaint alleges a cause of action, “[t]he first step in any case presenting a potential choice of law issue is to determine whether there is an actual conflict between the laws of the jurisdictions involved” (Matter of Allstate Ins. Co. [Stolarz—New Jersey Mfrs. Ins. Co.], 81 NY2d 219, 223 [1993]; see generally Cooney v Osgood Mach., 81 NY2d 66, 72-73 [1993]). Here, there is no conflict. Plaintiff’s complaint fails to state a cause of action under both New York and New Jersey law.

On a motion pursuant to CPLR 3211 (a) (7), a complaint must be liberally construed, the factual allegations therein must be accepted as true, the plaintiff must be given the benefit of all favorable inferences therefrom, and the court must decide only whether the facts alleged fall under any recognized legal theory (Miglino v Bally Total Fitness of Greater N.Y., Inc., 20 NY3d 342, 351 [2013]; Lee v Dow Jones & Co., Inc., 121 AD3d 548, 549 [1st Dept 2014];{**48 Misc 3d at 668} Siegmund Strauss, Inc. v East 149th Realty Corp., 104 AD3d 401, 403 [1st Dept 2013]). This motion also must be granted under CPLR 3211 (a) (7).

Where a plaintiff pleads guilty in an underlying criminal prosecution, expressly admitting his or her guilt, and that plea remains undisturbed, it precludes a legal malpractice claim as a matter of law (see Carmel v Lunney, 70 NY2d 169, 173 [1987] [“To state a cause of action for legal malpractice arising from negligent representation in a criminal proceeding, plaintiff must allege his innocence or a colorable claim of innocence of the underlying offense, for so long as the determination of his guilt of that offense remains undisturbed, no cause of action will lie. [*2]Here, because plaintiff’s conviction by plea of a misdemeanor violation of the Martin Act has not been successfully challenged, he can neither assert, nor establish, his innocence. He has thus failed to state a cause of action” (citation omitted)]; Alampi v Russo, 345 NJ Super 360, 371, 785 A2d 65, 72 [2001] [to permit the plaintiff in a legal malpractice action to “go behind his federal guilty plea . . . would undermine the integrity of the federal guilty plea in pursuit of a highly speculative thesis—that plaintiff would have achieved an ‘optimum outcome’ of no prosecution if his first attorney had in retrospect used different tactics”]).”

In a professional services setting, (in this case an accountant) when you can’t claim malpractice, you claim fraud.  Malpractice in this case was not possible to claim, because there was no privilty, and the paper documents ruled out “near privity.”

Israel Discount Bank of N.Y. v EisnerAmper LLP  2014 NY Slip Op 51620(U) [45 Misc 3d 1218(A)]  Decided on November 14, 2014  Supreme Court, New York County  Kornreich, J. demonstrates the importance of privity, and when a third-party may or may not rely on “near-privity.”

“Oak Rock, founded in 2001 by non-party John Murphy, is “a specialty asset-based lending company.” Complaint ¶¶ 12-13. Until the fraud at Oak Rock (discussed below) was discovered, Oak Rock was solely managed and controlled by Murphy. ¶ 12. Oak Rock makes “revolving asset-based loans” to installment financing dealers. ¶ 13. Simply put, Oak Rock [*2]funds the dealers’ financing and collateralizes that funding with the receivables in which the dealers have a security interest. Id. Oak Rock, in turn, finances its lending with credit facilities with a lower cost of debt than Oak Rock charges the dealers. ¶ 15. Thus, Oak Rock leverages its ability to obtain relatively low-cost debt and creates credit lines for merchants via the dealers, with the dealers doing the actual merchant lending. The merchant lending is secured by the merchants’ receivables, which is the collateral that flows upward to Oak Rock and its own financers, such as IDB, as the asset that backs this lending channel.

EisnerAmper issued unqualified Independent Auditors’ Reports on Oak Rock’s balance sheet and other financial statements for the years 2002 through 2011. ¶ 19. For 2002 through 2005, these audited reports were prepared by an EisnerAmper partner, Steve Singer. ¶ 20. Singer retired from EisnerAmper in 2006. ¶ 21. Thereafter, the audited repots were prepared by another partner, Steven Guzik. ¶ 22. Guzik, allegedly, “had virtually no experience in auditing asset based lenders.” ¶ 23. According to the complaint, at least four other EisnerAmper employees [see ¶¶ 24-27] also worked on Oak Rock audited reports, “[s]ome or all” of whom “lacked appropriate experience in auditing asset based lenders.” ¶ 28.

Each year, before EisnerAmper conducted its audit, Oak Rock signed substantially similar engagement letters. For instance, the engagement letter dated January 11, 2011 (for the 2010 audit) provided that “[t]he objective of [EisnerAmper’s] audit is to express an opinion about whether [Oak Rock’s] financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States [GAAP].” The engagement letter then explained that the audit would be conducted in accordance with generally accepted auditing standards (GAAS), which required that EisnerAmper “plan and perform the audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement whether caused by error or fraud. Accordingly, a material misstatement may remain undetected.” The engagement letter further provided that “[t]he engagement is being undertaken solely for [Oak Rock’s] benefit and the parties do not intend to provide contractual rights to any other person” [emphasis added]. The engagement letter also noted that “the financial statements are the responsibility of the management of [Oak Rock]” and that “[m]anagement is responsible for designing and implementing programs and controls to prevent and detect fraud.””

“In this action, IDB seeks to hold EisnerAmper liable for the false information in Oak Rock’s financial statements that IDB allegedly relied on in lending money to Oak Rock. It is undisputed that, each year, Oak Rock’s financial statements contained myriad inaccuracies, which are set forth extensively in the complaint. See, e.g., ¶ 90 (false statements in 2010 financial statements). However, as noted earlier, in a highly unusual (and possibly intentional) decision, the complaint does not identify the cause or causes of action being asserted against EisnerAmper. Rather, a long, detailed narrative is presented, spanning 96 pages. When the court first read the complaint, it was unsure what claims were being asserted, and assumed that, based on the nature of the accusations, IDB was attempting to assert a malpractice claim against EisnerAmper. EisnerAmper’s counsel, understandably, thought so as well, and devoted a significant portion of its moving brief to explain, quite correctly, why such a claim fails as a matter of law. In opposition, IDB claimed its complaint was misunderstood, and, in reality, was only a claim for fraud. Specifically, IDB alleges that EisnerAmper’s false statements in its audit reports about Oak Rock’s financials, which IDB claims were the result of a grossly negligent audit process, amount to actionable fraud.”

“Finally, it should be noted that, while not a basis for this decision, the recently filed adversary proceeding (brought by the Official Committee of Oak Rock’s unsecured creditors) against IDB in Oak Rock’s bankruptcy proceeding suggests that, even if this case survived dismissal, its viability would be very much in question. The recently unsealed adversary complaint [see In re: Oak Rock Financial LLC, Case No. 8-14-08231, Dkt. 21 (Bankr EDNY Oct. 6, 2014)]^[FN5] alleges that IDB “had more contact, control and information about [Oak Rock] than any other lender and was responsible for managing [Oak Rock’s] collateral.” Id. ¶ 2 (emphasis added). The facts alleged in the adversary complaint, if true, would preclude an assertion of reasonable reliance and likely implicate the in pari delicto doctrine. See Kirschner v KPMG LLP, 15 NY3d 446, 464 (2010). Accordingly, it is

ORDERED that the motion to dismiss by defendant EisnerAmper LLP is granted, and the Clerk is directed to enter judgment dismissing the Complaint with prejudice.”

Women’s Integrated Network, Inc. v Anderson Kill P.C.  2015 NY Slip Op 08500
Decided on November 19, 2015  Appellate Division, First Department illustrates the all-consuming aspect of legal malpractice that sets it aside from all other areas of the law…the “but for” need to prove what would have happened if the attorneys had not made the mistake.  Here, the mistake was failing to file a notice of appeal on time.  Notwithstanding this very serious error, the law firm still obtained dismissal.

“Defendants candidly concede that their failure to file a timely notice of appeal from the federal district court’s order granting the insurer’s motion for judgment on the pleadings in plaintiff’s declaratory judgment action against the insurer constituted a breach of their duty (see Darby & Darby v VSI Intl., 95 NY2d 308, 313 [2000]; see also Ocean Ships, Inc. v Stiles, 315 F3d 111, 117 [2d Cir 2002]). However, because plaintiff did not show that defendants’ negligence was a proximate cause of plaintiff’s losses, the motion court correctly dismissed this legal malpractice action (Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 9 [1st Dept 2008], lv denied 12 NY3d 715 [2009]). Plaintiff failed to establish that its insurance contract covered the loss for which plaintiff sought coverage in the federal court declaratory judgment action (see Roundabout Theatre Co. v Continental Cas. Co., 302 AD2d 1, 6 [1st Dept 2002]). As the district court and the motion court found, plaintiff’s settlement of its former employee’s stock option [*2]action, which gave rise to the declaratory judgment action, is not a “Loss” as defined by the policy; the policy states in plain language that “Loss” does not include “payments for stock option or stock appreciation rights.”

A restaurant is sold without the owner’s permission and it sues the attorney whom it says was involved in the sale.  That case is dismissed, apparently on the ground that there was no attorney-client relationship between the corporation and the attorney.  This illustrates the principal of privity which requires that there be an actual attorney-client relationship, whether reduced to a writing or not, between plaintiff and defendant in a legal malpractice setting.

What’s a litigant to do?  Ricatto v Mapliedi  2015 NY Slip Op 08401  Decided on November 18, 2015  Appellate Division, Second Department provides one answer.  The individual (and presumed owner of the shares of the corporation) sues in his own name, “doing business as” the corporation.

“In a prior action, J & J Metro Restaurant, Inc., and Michael Ricatto alleged, among other things, that the defendant Robert F. Giusti had committed legal malpractice in connection with the sale of a restaurant owned by J & J Metro Restaurant, Inc. In an order dated July 31, 2013, the Supreme Court granted that branch of the defendants’ motion which was pursuant to CPLR 3211(a) to dismiss the complaint in the prior action based upon the plaintiffs’ lack of standing. The plaintiffs’ motion for leave to reargue their opposition to that motion was subsequently denied.

Thereafter, Ricatto, doing business as J & J Metro Restaurant, commenced this action against, among others, Giusti, alleging the same causes of action as asserted in the prior action. As pertinent here, the complaint alleges that Riccatto was the owner of a restaurant which was sold without his permission and that Giusti committed legal malpractice in connection with the sale of the restaurant.

In the order appealed from, the Supreme Court granted that branch of Giusti’s motion which was pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against him as barred by the doctrine of res judicata, based upon the aforementioned orders issued in the prior action.

The doctrine of res judicata gives binding effect to the judgment of a court of [*2]competent jurisdiction and prevents the parties to an action, and those in privity with them, from subsequently relitigating any questions that were necessarily decided therein (see Moran Enters., Inc. v Hurst, 66 AD3d 972, 974). A party seeking to assert res judicata or claim preclusion must show the existence of a prior judgment on the merits (see Matter of Farkas v New York State Dept. of Civ. Serv., 114 AD2d 563, 554).

Here, Giusti has not demonstrated that a judgment on the merits exists between the same parties involving the same subject matter (see Laccone v Chalet, 128 AD3d 1020). Res judicata does not bar this action, as the disposition of the prior action was based upon a lack of standing only and the Supreme Court has not yet considered the merits of the allegations (see Landau, P.C. v LaRossa, Mitchell & Ross, 11 NY3d 8, 14; Matter of Schulz v State of New York, 81 NY2d 336). To the extent that Giusti argues, as an alternate ground for affirmance (see Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539), that the complaint should be dismissed insofar as asserted against him as barred by the doctrine of collateral estoppel, which issue had been asserted by Giusti in support of his motion to dismiss the complaint insofar as asserted against him, this contention is without merit. The dismissal of the prior action for lack of standing was not made on the merits and, therefore, a different judgment in the instant action would not “destroy or impair rights or interests established” in the prior action (Conason v Megan Holding, LLC, 25 NY3d 1, 18).

Accordingly, the Supreme Court should have denied that branch of Giusti’s motion which was pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against him as barred by the doctrine of res judicata.”

This is not strictly a legal malpractice case, yet there are allusions within the appellate decision.  This case is a warning to attorneys who attend Independent Medical Examinations (a sometimes oxymoron because they are rarely independent, and sometimes not so medical) that they cannot surreptitiously record the exam.  In this case, with the extraordinary interference of a Supreme Court justice, the case blew up, will cost Plaintiff’s attorney some stupendous attorney fee and costs associated with a new trial, and generally did no one any good.

Bermejo v New York City Health & Hosps. Corp.  2015 NY Slip Op 08374  Decided on November 18, 2015  Appellate Division, Second Department  Roman, J., J. is an extraordinary read, and not just for the facts.  For any trial lawyer, the colloquy and arc of events before Supreme Court, Queens County are not only realistic, they are the stuff of nightmares.

The decision is over 25pp. so we cannot re-print enough to give you the entire story.  Here is the gist:

“Prior to the trial on the issue of damages in this personal injury action, the plaintiff’s trial attorney surreptitiously videotaped an independent medical examination (hereinafter IME) conducted by an orthopedist retained by the defendant Ibex Construction, LLC (hereinafter Ibex). The attorney failed to disclose the existence of that recording to defense counsel, and then revealed its existence for the first time at trial, during redirect examination of his own paralegal, who took the witness stand to testify as to the brevity of the orthopedist’s examination of [*2]the plaintiff. This resulted in the declaration of a mistrial, and the orthopedist subsequently declared that he was not willing to testify at the new trial. Since Ibex and the defendant Amsterdam & 76th Associates, LLC (hereinafter Amsterdam, and together the appellants), would be required to serve a subpoena upon the orthopedist to secure his testimony at the new trial, they separately moved, inter alia, for leave to have the plaintiff re-examined by an orthopedist of their own choosing, and for an award of costs against plaintiff’s counsel pursuant to 22 NYCRR 130-1.1. Justice Duane A. Hart of the Supreme Court, Queens County, denied those branches of the appellants’ separate motions.

These appeals require us to determine whether a plaintiff’s attorney must obtain approval from the court before making a video recording of an IME of the plaintiff, and whether CPLR 3101 requires that such a recording be disclosed to opposing counsel before trial. We answer both questions in the affirmative. We further conclude that the declaration of a mistrial in this case was attributable to the conduct of the plaintiff’s trial attorney. Moreover, we find that the orthopedist was unwilling to testify voluntarily at the new trial because of that conduct and because the Supreme Court repeatedly, without any basis in fact, accused the orthopedist of lying during his cross-examination. The court also repeatedly threatened to recommend that the District Attorney’s office prosecute the orthopedist for perjury. Accordingly, those branches of the appellants’ separate motions which were for leave to have the plaintiff re-examined by an orthopedist of their own choosing and for an award of costs against plaintiff’s counsel pursuant to 22 NYCRR 130-1.1 should have been granted, and we remit the matter to the Supreme Court, Queens County, before a different Justice, for further proceedings consistent herewith.”

“In sum, given the avalanche of errors that occurred in this case, we find that the appellants satisfied their burden of demonstrating unusual and unanticipated circumstances justifying an additional medical examination of the plaintiff by an orthopedist to be designated by them. Under the particular circumstances of this case, a second examination by a different physician is necessary “to ensure that the focus of the medical testimony will be on the nature and extent of plaintiff’s alleged injuries, rather than on any taint or irregularity [surrounding] the [prior] examination” (Orsos v Hudson Tr. Corp., 95 AD3d at 526).

Accordingly, the Supreme Court abused its discretion in denying those branches of the appellants’ motions which were to compel the plaintiff to submit to an additional orthopedic examination.”

“As the appellants correctly contend, the necessity for a mistrial was created by the conduct of plaintiff’s counsel, and was not to any extent attributable to any conduct of the appellants or their counsel. First, as discussed above, plaintiff’s counsel surreptitiously created a video recording of the second IME without providing any notice to the court or defense counsel, much less obtaining the court’s approval, as is required. Had counsel obtained approval, or at least provided notice, of the videotaping, the mistrial would not have occurred. Second, as discussed above, plaintiff’s counsel compounded the prejudice to the appellants by improperly failing to disclose the video recording to defense counsel, as was clearly required under CPLR 3101(i). Had counsel disclosed the recording, the mistrial would not have occurred. Third, plaintiff’s counsel chose to reveal the existence of the recording to the jury in a way that maximized its dramatic effect, and was unfair to the appellants. Notably, Mr. Hackett admitted that he consulted with other attorneys prior to his paralegal’s testimony regarding the admissibility of the undisclosed video recording. Mr. Hackett waited until his re-direct examination of his paralegal to reveal the recording’s existence, even though Ms. Ramirez had not been asked any questions on cross-examination regarding the duration of the second IME. This was improper.

In opposing those branches of the appellants’ motions which sought an award of costs against plaintiff’s counsel pursuant to 22 NYCRR 130-1.1, the plaintiff’s only argument as to why the appellants should be held accountable for precipitating the mistrial, and plaintiff’s counsel should not be, is that the mistrial was caused by Dr. Katz’s act of lying during his cross-examination. The Supreme Court appears to have ultimately adopted this view. This position is unsupportable since, as discussed above, Dr. Katz did not lie. Moreover, even if Dr. Katz had lied, that act would not be the proximate cause of the mistrial.

Thus, we conclude that the conduct of plaintiff’s counsel was frivolous within the meaning of 22 NYCRR 130-1.1, and that the Supreme Court abused its discretion in denying those branches of the appellants’ motions which were for an award of costs against plaintiff’s counsel. The appellants are entitled to recover from Patrick J. Hackett and Constantinidis & Associates the costs they incurred in participating in the first trial on the issue of damages, as well as the costs they incurred in making and litigating the motions at issue on these appeals and in pursuing these appeals. Upon remittal, the Supreme Court should conduct a hearing to determine the total amount of such costs, as well as the proper apportionment of those costs as between Mr. Hackett and Constantinidis & Associates (see Preferred Equities Corp. v Ziegelman, 190 AD2d 659, 660).”

“Accordingly, the appeals by the defendant Ibex Construction, LLC, from the order and the amended order are dismissed, as those orders were superseded by the amended order and the second amended order, respectively, the second amended order is reversed insofar as appealed from, on the law, the order and the amended order are vacated, those branches of the motion of the defendant Ibex Construction, LLC, and the separate motion of the defendant Amsterdam & 76th Associates, LLC, which were for leave to have the plaintiff re-examined by an orthopedist of their own choosing, and for an award of costs against plaintiff’s counsel pursuant to 22 NYCRR 130-1.1, are granted, that branch of the motion of the defendant Amsterdam & 76th Associates, LLC, which was to disqualify plaintiff’s counsel based on a violation of rule 3.7 of the Rules of Professional Conduct is denied as academic, and the matter is remitted to the Supreme Court, Queens County, before a different Justice, for further proceedings consistent herewith.”