Summary judgment motion practice is the new trial, or put another way, there are very few trials in legal malpractice (or elsewhere) and a lot more dispositions on summary judgment.  This obviously renders the various components of a motion for summary judgment all the more important.  The expert’s affidavit can be the paramount item in the broth, and in Aur v Manhattan Greenpoint Ltd.  2015 NY Slip Op 07912  Decided on October 29, 2015  the Appellate Division, First Department found everyone’s affidavits to be lacking…defendants’ a little more than plaintiff’s.

“The court erred in denying the Fernandez defendants’ motion for summary judgment on the ground that they failed to submit an affidavit by a person with personal knowledge of the facts underlying the motion (CPLR 3212[b]). Their counsel’s affirmation properly served as a vehicle for the submission of evidentiary proof in admissible form, such as plaintiff’s deposition testimony (Zuckerman v City of New York, 49 NY2d 557, 563 [1980]).

Nevertheless, the Fernandez defendants failed to establish their entitlement to summary dismissal of the complaint as against them (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]). “In an action to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney’s breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007][internal quotation marks omitted]). However, a defendant seeking dismissal of a malpractice case against him has the burden of making a prima facie showing of entitlement to summary judgment (see Suppiah v Kalish, 76 AD3d 829, 832 [1st Dept 2010], appeal withdrawn 16 NY3d 796 [2011]). Where the motion is premised on an argument that the plaintiff could not succeed on her claim below, it is the defendant’s burden to demonstrate that the plaintiff would be unable to prove one of the essential elements of her claim (see Velie v Ellis Law, P.C., 48 AD3d 674 [2d Dept 2008]). Here, the Fernandez defendants failed to make a prima facie showing of entitlement to judgment as a [*2]matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]). The Fernandez defendants’ bare conclusory assertion that they were not negligent is insufficient.

Whether or not the complexities of this particular case involving a real estate transaction require an expert affidavit (see Wo Yee Hing Realty Corp. v Stern, 99 AD3d 58, 63 [1st Dept 2012]), the conclusory, self-serving assertions submitted, lacking any reference to specific industry standards and/or practices, to support the conclusion that the work at issue was done in a professionally competent manner, do not satisfy the movants’ burden. Nor do the Fernandez defendants eliminate all material issues of fact on causation and/or damages. Plaintiff’s expert affidavit on damages is not so deficient that it lacks probative value (see Romano v Stanley, 90 NY2d 444 [1997]; Amatulli v Delhi Constr. Corp., 77 NY2d 525, 533 [1991]).

LaTouche v Terezakis  2015 NY Slip Op 07821  Decided on October 28, 2015  Appellate Division, Second Department illustrates the perils of summary judgment motion practice.  In all litigation, and in legal malpractice litigation to a higher degree, cases are sorted out and culled at the summary judgment level on a increasing basis.  Defendants almost always make the motion, and plaintiffs sometimes do as well.  Here, the case was lost for plaintiffs on the basis that there was no mention of “proximate cause” in their expert’s opposition affidavit.

“In an action, inter alia, to recover on promissory notes and accounts stated, and for legal malpractice, the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Queens County (Pineda-Kirwan, J.), dated June 28, 2013, as denied their motion for summary judgment on their causes of action against the defendant Nicola Cavallo to recover on promissory notes and accounts stated and for summary judgment on their causes of action against the defendant James Follander to recover damages for legal malpractice, and granted those branches of the motion of the defendant James Follander which were for summary judgment dismissing the causes of action to recover damages for legal malpractice asserted against him by the plaintiffs Jaurel LaTouche, Kimberly Joseph, Emmanuel Joseph, and Tracy Monel. The defendant James Follander cross-appeals from so much of the same order as denied those branches of his motion which were for summary judgment dismissing the causes of action to recover damages for legal malpractice and for punitive damages asserted against him by the plaintiffs Sheila Audige, Garcia Montfleury, and Vladimir Monel.

ORDERED that the order is affirmed insofar as appealed from; and it is further,

ORDERED that the order is reversed insofar as cross-appealed from, on the law, and those branches of the motion of the defendant James Follander which were for summary judgment dismissing the causes of action to recover damages for legal malpractice and for punitive damages asserted against him by the plaintiffs Sheila Audige, Garcia Montfleury, and Vladimir Monel, are granted;”

“The Supreme Court properly denied that branch of the plaintiffs’ motion which was for summary judgment on their causes of action against the defendant James Follander to recover damages for legal malpractice and granted those branches of Follander’s motion which were for summary judgment dismissing the causes of action to recover damages for legal malpractice asserted against him by the plaintiffs Jaurel LaTouche, Kimberly Joseph, Emmanuel Joseph, and Tracy Monel. In addition, the court should have granted those branches of Follander’s motion which were for summary judgment dismissing the causes of action to recover damages for legal malpractice and for punitive damages asserted against him by the plaintiffs Sheila Audige, Garcia Montfleury, and Vladimir Monel. In opposition to Follander’s prima facie showing of entitlement to judgment as a matter of law, the plaintiffs failed to raise a triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557). The expert affidavit submitted by the plaintiffs in opposition to Follander’s motion failed to address the issue of proximate cause, and the plaintiffs failed to adduce any evidence to demonstrate that Follander’s alleged legal malpractice proximately caused them to sustain any actual and ascertainable damages (see Parklex Assoc. v Flemming Zulack Williamson Zauderer, LLP, 118 AD3d 968).”

Time passes quickly, and the right to sue can simply pass us by.  When time is running in statute of limitations terms, all can be lost, as it was in Yardeny v. Tanenbaum
Decided on October 28, 2015   2015 NY Slip Op 07834  Appellate Division, Second Department.

“he three-year statute of limitations on a cause of action alleging legal malpractice begins to run when the malpractice is committed, not when the client discovers it (see CPLR 214[6]; McCoy v Feinman, 99 NY2d 295, 301; Landow v Snow Becker Krauss, P.C., 111 AD3d 795, 796). Here, the defendant established his prima facie entitlement to judgment as a matter of law dismissing the complaint as untimely by demonstrating that the plaintiff did not commence the action within three years after the claim accrued in 2006. In opposition, the plaintiff failed to raise a triable issue of fact as to whether the action was timely commenced or whether the defendant should be equitably estopped from relying upon the statute of limitations (see Benjamin v Allstate Ins. Co., 127 AD3d 1120, 1121). Accordingly, the Supreme Court properly granted the defendant’s motion for summary judgment dismissing the complaint as time-barred (id.). In light of our determination, we need not reach the plaintiff’s remaining contentions.”

The Appellate Divisions of New York are deluged with appeals. In the First and Second Departments, there are 20 appeals scheduled for oral argument every day.  In the general range of cases before the ADs, one sees a range of decisions.  Some are thoughtful, some summary but each has its own signals embedded.  In Esposito v Noto  2015 NY Slip Op 07814  Decided on October 28, 2015  Appellate Division, Second Department, we see the Second Department telling a Supreme Court judge that it has a significant problem with his decision on summary judgment.  It reversed and sent the case to a different judge.  This happens only very very rarely.

“The defendant attorney represented the plaintiffs in connection with the sale of real property, upon which they had operated an auto salvage business, for the sum of $1.9 million. The plaintiffs entered into negotiations with a developer, Ofer Attia, who wanted to build condominiums on the property and adjoining parcels. The deal, as originally contemplated, fixed a purchase price of $2.5 million, and called for Attia to make a cash payment in the sum of $700,000, and for the plaintiffs to take back a purchase money mortgage for the remainder of the purchase price. Over the course of the next two years, the proposed deal was revised so that it became a complicated equity transaction, pursuant to which the plaintiffs transferred the premises to a limited liability company (hereinafter LLC) created by Attia, of which they were minority members, and, generally, the plaintiffs would be paid the $1.9 million purchase price from the profits of the development, or by December 31, 2009, at the latest, from all sources, while receiving certain consultant fee payments until full payment. The project faltered and the plaintiffs were never paid the purchase price. Another related LLC, which appears to have held the assets of the development project instead of the initial LLC created by Attia, defaulted on a bridge loan, and the premises went into foreclosure. Attia and the related LLC both filed for bankruptcy protection.

The plaintiffs thereafter commenced this legal malpractice action, alleging that the defendant attorney failed to fully explain the transaction and its inherent risks, and should not have recommended continuing with the transaction after it changed to an equity transaction, especially [*2]in light of the existence of another all-cash offer for the purchase of the premises. They further alleged that the defendant had an undisclosed conflict of interest, in that he represented Attia and the LLCs with regard to zoning issues, financing, and acquisition of other parcels for the project. They alleged that, but for the defendant’s malpractice, they would not have entered into the agreement and would not have lost the property without payment. The defendant moved for summary judgment dismissing the amended complaint, arguing that he was not negligent and, in any event, his advice did not proximately cause the plaintiffs’ alleged damages. The Supreme Court granted the motion, and the plaintiffs appeal.”

“Here, the defendant established, prima facie, that he did not depart from the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession by submitting his affidavit and a transcript of his deposition testimony to the effect that he fully explained the transaction and its inherent risks to the plaintiffs, who consented to his representation of Attia with regard to the development project. However, in opposition, the plaintiffs submitted an affidavit disputing these facts, thereby raising triable issues of fact regarding whether the defendant breached his duty of care (see Hearst v Hearst, 50 AD3d 959, 963; Terio v Spodek, 25 AD3d 781). The Supreme Court erred in rejecting the plaintiffs’ submissions based on its determination of their credibility. “The function of the court on a motion for summary judgment is not to resolve issues of fact or to determine matters of credibility, but merely to determine whether such issues exist” (Bonaventura v Galpin, 119 AD3d 625, 625; see Stukas v Streiter, 83 AD3d 18, 23; Kolivas v Kirchoff, 14 AD3d 493).

Further, the defendant failed to meet his prima facie burden on the issue of proximate cause. The governmental- and market-related issues which beset the project were the types of risks that were inherent in the transaction, and not a superseding cause of the plaintiffs’ alleged damages (see generally Derdiarian v Felix Contr. Corp., 51 NY2d 308, 315). Moreover, we cannot say on this record that the plaintiffs’ failure to commence an action against Attia or one of the LLCs means that they will be unable to establish proximate cause (see Birnbaum v Misiano, 52 AD3d 632, 634).

Accordingly, the Supreme Court should have denied the defendant’s motion for summary judgment dismissing the amended complaint. Under the circumstances of this case, we remit the matter to the Supreme Court, Westchester County, for further proceedings before a different Justice.”

Ragunandan v Donado   2015 NY Slip Op 31957(U)  October 23, 2015  Supreme Court, Queens County  Docket Number: 12332 2012  Judge: David Elliot,  is a case which caused us some head-scratching.  Plaintiff was able to purchase a large number of real properties in Queens and rent them out.  How did she cooperate in letting it all come crashing down?  What could have caused her to sell properties, fail to ensure that the mortgage was paid, and then eventually give it all away to a (soon to be) convicted fraud?  On another note, how could one of the attorneys get out of the case on a failure to take a default within a year?

“Plaintiff seeks to recover from Lozada, the attorney who represented her at a real estate closing, because the proceeds of the sale were ultimately stolen by a nonparty. Plaintiff alleges that Lozada failed to properly advise her against putting the proceeds of the sale into an account where it was ultimately stolen. Lozada moves to dismiss the complaint on the ground that plaintiff cannot show that she suffered actual damages as a direct result of his alleged action or inaction. Plaintiff opposes the motion, and cross-moves for summary judgment in her favor.”

“In or about 2009, plaintiff owned and rented out multiple properties in Queens, New York. In July 2009, plaintiff began experiencing financial difficulties as a result of her tenants having failed to pay rent and having caused property damage. Around that time, plaintiff spoke to Imran Badoolah, a person who she had known for several years, about her financial woes. Badoolah told plaintiff that he was in the real estate business. Plaintiff, in turn, informed Badoolah that she was thinking of selling her properties to pay off the outstanding mortgage on her residence. Plaintiff told Badoolah that she wanted the balance of any sale proceeds from the sale of the properties to be put towards her daughters’ education. Plaintiff further informed Badoolah that three of her relatives – Chandika Persaud, Indranie Saphi, and Aari Arif Saphie – were potential purchasers for the property at issue herein. Badoolah offered to help plaintiff sell the property and to handle her financial difficulties. Plaintiff agreed. Specifically, plaintiff felt that Badoolah would be able to relieve her of the “headache” of selling the property since she had known Badoolah for years and he had never given her any reason to doubt his intentions. According to plaintiff, Badoolah arranged to have the subject property sold to her relatives. Plaintiff stated that she never discussed her financial difficulties with her relatives and never informed them of her plans with the sales proceeds. Plaintiff testified that her relatives did not meet Badoolah until the date of the closing.”

“At some point during the closing, Lozada was told that the sale proceeds would be wired into his escrow account. While Lozada had never done this himself, he had seen sellers’ attorneys in other transactions receive sale proceeds into their escrow accounts. Lozada was then told that he was to disburse the sale proceeds to two entities: AMG3, LLC and Maryann Smith, LLC. Lozada discussed the disbursement arrangement with plaintiff and, after doing so, he drafted disbursement instructions which explicitly outlined the disbursement arrangement. Pursuant to the disbursement instructions, Lozada wasto receive a wire into his escrow account of $442,390.00. He was to disburse $70,000.00 to AMG3, LLC, and the remaining balance was to be disbursed to Maryann Smith, LLC. Plaintiff reviewed the disbursement instructions and signed them. Plaintiff did not inform Lozada as to what she planned to do with the sale proceeds. However, she verbally and in writing authorized the disbursement instructions that were discussed and agreed to at the closing. The sale proceeds were wired into Lozada’s escrow account. Once Lozada confirmed that the wire was effective, Lozada issued two checks from his IOLTA account, one for $70,000.00 to AMG3, LLC, and another for $372,390.00 to Maryann Smith, LLC (the disbursement checks). Plaintiff testified that, sometime after the closing, she contacted Badoolah, who acknowledged stealing the sale proceeds. He explained that he needed to pay certain individuals and would eventually return the sale proceeds. However, to date, he has not done so. After realizing that Badoolah had stolen the sale proceeds without satisfying the mortgage on her residence, plaintiff’s attorney in this action, Ira Cooper, contacted Lozada. Cooper was informed by Lozada that Lozada had disbursed the sale proceeds in accordance with the written disbursement instructions which plaintiff signed at the closing. Lozada also faxed to Cooper a copy of the disbursement document along with copies of the issued checks.

Plaintiff further testified that she owned other properties which she used as rental properties and for her own personal use. She acknowledged that the transaction at issue in this action was not her first real estate transaction and plaintiff states that she trusted Badoolah to take care of her financial difficulties. Plaintiff also signed over deeds to various other properties to third parties, at Badoolah’s direction, allegedly to help plaintiff deal with her financial difficulties.”

“Lozada claims that it is also relevant to note that Badoolah was indicted on charges of defrauding various lending institutions by obtaining mortgages on properties through fraudulent means, including falsifying mortgage loan applications and other documents (United States of America v Imran Ismile Badoolah, Case No. 1:12-cr-00774-KAM (EDNY) (the criminal action). Plaintiff assisted the FBI in its investigation of Badoolah in the federal criminal action. Badoolah has since pleaded guilty to the first count of the indictment, and was sentenced.”

“On this point, Badoolah’s misappropriation of the sale proceeds precludes liability as against Lozada. Courts have routinely rejected that a defendant’s negligence was a direct and proximate cause of a plaintiff’s loss when another party committed a misappropriation and or defalcation that directly caused the alleged loss (see e.g. Liberman v Worden, 268 AD2d 337 [1st Dept 2000] [finding that a subsequent misappropriation of properly deposited funds was the proximate cause of a decedent’s loss]; Geotel, Inc. v Wallace, 162 AD2d 166 [1st Dept 1990] [any loss was a result of the manipulation of accounts by a third nonparty over which the defendant exercised no control]; Nat’l Market Share, Inc. v Sterling Natl Bank, 392 F3d 520 [2d Cir 2004] [an intervening defalcation by a non-party broke the causal link between the defendant’s breach and the complained-of damages and was an integral part of the proximate cause analysis]).”

“Accordingly, Lozada’s motion for an order granting him summary judgment dismissing the complaint is granted. Plaintiff’s cross motion for summary judgment in her favor is denied. The complaint against Lozada is dismissed.”

Sure, it is easy to point out the shortcomings of professionals.  They waited too long, they argued the wrong point, they were not forceful enough, they issued an overly critical report which was unwarranted!  While most persons intuitively feel that identifying the shortcoming is the major part of the exercise, it is showing proximate cause, or the “but for” aspect of the mistake-proximate cause-damage equation that stymies many a case.

KBL, LLP v Community Counseling & Mediation Servs.  2014 NY Slip Op 08581 [123   D3d 488]  December 9, 2014  Appellate Division, First Department is a prime example in the accounting malpractice field.

“Defendant is a not-for-profit organization that provides services funded in large part through government agencies. In 2005 and 2006, defendant applied for and obtained funding from the Administration for Children’s Services (ACS).

For 2007, defendant sought approximately $2.7 million in funding from ACS and hired plaintiff to perform an audit and prepare the audited financial statements for its fiscal year ending June 30, 2006, which were required for the application. In May 2007, plaintiff prepared the statements, which indicated twelve deficiencies in defendant’s financial reporting and practices. Defendant forwarded the statements to ACS, which denied the application five days later.”

“”A jury’s finding that a party was at fault but that such fault was not a proximate cause of the accident is inconsistent and against the weight of the evidence only when the issues are so inextricably interwoven as to make it logically impossible to find negligence without also finding proximate cause” (Garrett v Manaser, 8 AD3d 616, 617 [2d Dept 2004]). Moreover, “[a] contention that a verdict is inconsistent and irreconcilable must be reviewed in the context of the court’s charge, and where it can be reconciled with a reasonable view of the evidence, the successful party is entitled to the presumption that the jury adopted that view” (Rivera v MTA Long Is. Bus, 45 AD3d 557, 558 [2d Dept 2007]).

The court charged the jury:

“An act or omission is regarded as a cause of an injury if it is a substantial factor in bringing about the injury, that is, if it had such an affect in producing the injury that reasonable people would regard it as a cause of the injury.

“[I]f you find that the accountant was negligent that negligence must be the cause of the damages that [defendant] claims, and [defendant] must establish beyond the point of speculation and conjecture that there was a causal connection between its losses and [plaintiff’s] actions.”

Viewed in this light, it can not be said the jury verdict was either contrary to the weight of the evidence or inconsistent. The sole question with regard to causation was why ACS declined to fund defendant for 2007. However, among other things, neither side called anyone from ACS to provide evidence of the reason for ACS’ s decision and testimony from defendant’s CEO downplayed the significance that ACS placed on the audit findings, with the CEO stating: “So there were 12 [audit] findings. They were very insignificant, petty and in a way outrageous that even the refunders, even the funders saw it that way. They could have really beaten us up on those 12. They didn’t.”

Thus, it was not utterly irrational for the jury to find that defendant did not establish “beyond the point of speculation and conjecture that there was a causal connection between its losses and [plaintiff’s] actions.” The jury could find that defendant failed to establish that but for plaintiff’s negligence, ACS would have provided the funding (see Cannonball Fund, Ltd. v Marcum & Kliegman, LLP, 110 AD3d 417 [1st Dept 2013]). Concur—Mazzarelli, J.P., Renwick, Andrias, Saxe and Kapnick, JJ.”

Bank hires accountants.  Accountants fail to file an extension.  Bank loses $ 2.5 Million in carry-back losses.  Seems simple, no?  Not simple.

In First Cent. Sav. Bank v Parentebeard, LLC  2015 NY Slip Op 31921(U)  October 13,   2015  Supreme Court, New York County  Docket Number: 653680/2014  Judge: Shirley Werner Kornreich we see a limitation of liability in the retainer agreement that purports to shield the accountants from just about all mistakes.

“The Bank conducts business on a fiscal year ending September 30. if 16. For the fiscal year ending on September 30, 2010, the Bank was required to file its federal, state, and local tax returns by December 15, 2010. Id. The Bank alleges that “Parente agreed to file extensions with the various taxing authorities, which permitted [the Bank] to file its tax returns for the fiscal year ending September 30, 2010 on June 15, 2011.” if 17. The Bank further alleges that “[o]n or about December 15, 2010, Parente advised [the Bank] that it had electronically filed IRS form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns (“Form 7004″), with the Internal Revenue Service [the IRS] timely, thereby extending [the Bank’s] date to file its tax returns until June 15, 2011.” if 18. Approximately five months later, the Bank engaged Parente to file its federal, state, and local tax returns for the fiscal year ending September 30, 2010. if 19. Parente’s engagement is governed by a letter agreement dated May 2, 2011 (the Agreement). See Dkt. 9. The Agreement provides that the engagement is limited to the preparation and filing of the delineated 2010 tax returns, and in consideration for such services, the Bank agreed to pay Parente a fee of $7,000. See id. at 3. The Agreement is clear that “[Parente’s] work in connection with the preparation of [the Bank’s] corporate income tax returns does not include any procedures designed to discover fraud, defalcations, or other irregularities, should any exist” and that Parente was “undertaking this engagement based on [the Bank’s] express agreement that [the Bank is] releasing [Parente] from any liability for failure to detect fraud.” See id. (emphasis added). The Agreement further provides:

In recognition of the relative risks and benefits of this agreement to both [the Bank and Parente], [the Bank and Parente] have discussed and agreed on the fair 2 … [* 2] See id. allocation of risk between them. As such, [the Bank] agrees, to the fullest extent permitted by law, to limit the liability of [Parente to the Bank] for any and all claims, losses, costs, and damages of any nature whatsoever, so that the total aggregate liability of [Parente to the Bank] shall not exceed [Parente’s] total fee for Services rendered pursuant to this agreement [i.e., $7,000]. [The Bank and Parente] intend and agree that this limitation apply to any and all liability or cause of action against [Parente J, however alleged or arising, unless otherwise prohibited by law.  see id.

Additionally, attached to the Agreement are “Additional Terms and Conditions.” See id. at 5-8. Condition 8 states:

Neither [the Bank or Parente] will, in any event, be liable to the other, for any reason, for any consequential, incidental, special, punitive, or indirect damages, including loss of profits, revenue, data, use of money or business opportunities, regardless of whether notice has been given or there is an awareness that such damages have been or may be incurred. See id. at 6.

Pursuant to the Agreement, Parente prepared and filed the Bank’s 2010 federal tax return. 1 Complaint~ 19. The IRS, however, rejected the tax return as untimely because it had no record of a Form 7004 being filed on the Bank’s behalf. Id. As a result of the late filing, the IRS disallowed the Bank’s right to carry-back $2,514,143 of net operating losses (the Tax Benefit). ~ 20. Though the Tax Benefit was disallowed by the IRS, it was nonetheless included on a September 30, 2010 financial statement issue by Parente (the Financial Statement). ~ 21. The complaint, however, does not state when Parente prepared or issued the Financial Statement or whether it was prepared pursuant to the Agreement or as part of a separate engagement.2″

“Parente argues that even if its liability is established, liability is capped at the $7 ,000 fee amount set forth in the Agreement. See Dkt. 9 at 3. Parente further argues that to the extent the complaint seeks consequential damages, such damages are also expressly precluded by the Agreement. See id With respect to the Bank’s first cause of action relating to Parente’s failure to file the Form 7004, the limitation of liability clauses do not apply because the Bank is not asserting a claim for negligently preparing its 2010 federal tax return. The Bank does not claim that the substance of the 2010 return was improper. Rather, the Bank claims that Parente previously failed to timely file the Form 7004, and as a result, the IRS disallowed the Tax Benefit. The disallowance was not the result of a negligently prepared return. Consequently, the Bank’s claim does not arise from the engagement governed by the Agreement, which was strictly limited to preparation of the Bank’s 2010 tax returns. Instead, the Bank’s claim arises from Parente’s alleged negligence committed five months prior to the engagement.”

Nowhere in the Agreement is there anything that states, as is common in contracts that purport to release all known and unknown claims between parties, that the Agreement releases or limits Parente’s liability for matters beyond the scope of the retention for the preparation of the Bank’s 2010 tax returns. Nor does the Agreement purport to waive or release claims for all wrongdoing that already occurred. Parente clearly understood the distinction between a retrospective release of claims and a prospective limitation ofliability, as the Agreement separately provides that the Bank “is releasing [Parente] from any liability for failure to detect fraud.” See Dkt. 9 at 3 (emphasis added). The failure to detect fraud is a wrong distinct from the mere negligent preparation of a tax return. Had Parente sought an express release for any other actions taken prior to the preparation of Parente’s 2010 returns, or indeed a release for all actions prior to the engagement, it could have so provided. Hence, the court rejects Parente’s argument that its liability for negligence committed with respect to its failure to file the Form 7004 is limited to $7,000.”

Disciplinary charges are not an uncommon event, but we have rarely read of self-destructive conduct as is set forth in Matter of Frelix  2015 NY Slip Op 07775  Decided on October 22, 2015
Appellate Division, First Department  Per Curiam.  The conduct brought a 5 year suspension (they hinted that disbarment was just avoided).  What is more important to us, is that all of this tiresome and unnecessary lawyer disregard hurt regular plaintiffs.  They claim that Frelix committed legal malpractice, and it’s our guess that there will be little or no insurance to cover their claims.  Here is the back story:

“In May 2013, respondent was served with a notice and statement of charges alleging 15 counts of professional misconduct involving four matters, and charging violations of Rules of [*2]Professional Conduct (22 NYCRR 1200.0) rule 1.3(b), rule 1.4(a)(1)(iii), rule 8.4(d), rule 8.4(h), rule 1.16(b)(3), and Code of Professional Responsibility DR 1-102(a)(4) (22 NYCRR 1200.3[a][4]) (two counts), DR 1-102(a)(5) (22 NYCRR 1200.3[a][5]) (seven counts), DR 7-102(a)(2) (22 NYCRR 1200.3[a][2])^[FN1]. Respondent was charged with engaging in a pattern of misconduct including neglect, ex parte communications, misleading the Departmental Disciplinary Committee (the Committee), frivolous motion practice, and disregard of court orders. In her amended answer, respondent denied the charges.

In August 2013, the Committee moved before a referee to find respondent guilty, pursuant to the doctrine of collateral estoppel, of Charges 5-10, 12, and 15, based upon findings and rulings issued by several courts ^[FN2]. The referee granted the motion in its entirety on November 13, 2013, and, following a liability hearing, issued a report sustaining the remaining charges on [*3]April 25, 2014^[FN3]. After a sanction hearing, the referee issued a report, dated October 17, 2014, recommending a 3½-year suspension (to be reduced by six months if respondent submits evidence of remedial studies in ethics and professionalism and pays outstanding fines and penalties).

On January 22, 2015, a Hearing Panel convened for a hearing scheduled to begin at 10:30 a.m. After waiting for respondent for an hour, the Panel proceeded with the hearing in her absence ^[FN4]. By report and recommendation dated March 12, 2015, the Panel recommended affirming the referee’s liability report, disaffirming the sanction report, rejecting the referee’s proposed 3½-year suspension and, instead, imposing a five-year suspension.

Now, by a petition dated April 9, 2015, the Committee seeks an order, pursuant to the Rules of the Appellate Division, First Department (22 NYCRR) § 603.4(d), confirming the Hearing Panel’s report and recommendation and suspending respondent from the practice of law for five years. Respondent opposes the motion and seeks dismissal of the Panel’s report.

We find that the Hearing Panel’s findings of fact and conclusions of law, sustaining all 15 [*4]charges, are supported by an overwhelming amount of evidence and should be confirmed. Respondent’s conduct is marked by her absolute lack of consideration for the courts, her adversaries, and her clients, resulting in the dismissal and/or expiration of time to appeal in each case at issue.

With respect to the charges that were sustained pursuant to the doctrine of collateral estoppel, the Hearing Panel properly found that there was an identity of issues with respect to the underlying orders and that respondent had a full and fair opportunity to litigate those issues (see Kaufman v Eli Lilly & Co., 65 NY2d 449, 455 [1985]). In each case, respondent was given notice of the possible imposition of sanctions and an opportunity to be heard, and either unsuccessfully appealed, attempted to appeal, or took no appellate action.

Respondent’s claim that the Committee admitted, by silence, that her arguments as to collateral estoppel were correct, is nonsensical. Since bringing the collateral estoppel motion, the Committee has consistently maintained the doctrine’s applicability to the underlying sanction orders.”

“As to the remaining charges, respondent’s claim that certain documents relieve her of responsibility is unpersuasive. For example, in her letter to opposing counsel in the first case in the Southern District of New York (SDNY), respondent admitted her failure to contemporaneously serve the defendant a copy of her letter to the unassigned judge, making it an ex parte communication. Moreover, contrary to respondent’s suggestion, a letter from her client’s new counsel in the second SDNY case does not indicate that the client continued to consider respondent to be her counsel; rather, it accused respondent of legal malpractice.

Furthermore, respondent’s objections to the Panel’s composition are meritless. The Panel was comprised of four of the seven members identified in the Committee’s prehearing notice, three of whom were lawyers. Pursuant to 22 NYCRR 605.22(d), all matters before a Hearing Panel are to be determined by three members, two of whom constitute a quorum. Only two members of the Panel must be attorneys (see 22 NYCRR 605.18[b]). Further, respondent’s claim that the Panel did not consider her positions is belied by the Panel’s 58-page report, which reflects a thorough review of the record.

The charged conduct is serious and involves the disregard of numerous court orders and the advancement of frivolous claims, resulting in the dismissal of three matters. Moreover, by failing to timely file papers, failing to appear before the Panel, presenting factually and legally unsupportable arguments, accusing the Panel of bad faith, and suggesting that the Committee hacked her email, respondent is displaying the same kind of disregard for the law, the courts, and her adversaries as she displayed in the underlying cases ^[FN5]. Her actions reflect a lack of understanding of the basic principles guiding professional conduct. She has failed to demonstrate remorse or acknowledge her wrongdoing, and has not presented any character witnesses or evidence of mitigating factors.

With respect to sanctions, the Panel’s recommendation of a five-year suspension, which respondent does not address, is an appropriate sanction, perhaps even a generous one, in light of respondent’s pattern of misconduct in four cases over a five-year period, misconduct which continued in the face of repeated warnings and sanctions. The multiple aggravating factors, including respondent’s lack of remorse or acknowledgment of wrongdoing, and failure to pay prior sanctions, and the absence of compelling mitigating factors also counsel in favor of a lengthy suspension (see Matter of Abady, 22 AD3d 71 [1st Dept 2005] [five-year suspension for pattern of misconduct including neglect and repeated disregard of court orders despite steps to improve behavior, character testimony, and extensive pro bono work]; Matter of Brooks, 271 AD2d 127 [1st Dept 2000], appeal and lv dismissed 95 NY2d 955 [2000] [disbarment, despite health problems and personal tragedies, for neglect, repeated failure to comply with court orders, knowingly advancing unwarranted claims, failure to cooperate with the Committee, and failure to fully accept responsibility]; Matter of Kramer, 247 AD2d 81 [1st Dept 1998], lv denied 93 NY2d 883 [1999], cert denied 528 US 869 [1999] [disbarment for pattern of misconduct over many years, including refusing to cease acting on clients’ behalf after discharge, disobeying discovery orders, making false sworn statements, and filing frivolous claims]).”