Harris Beach PLLC v Eber Bros. Wine & Liq. Corp.  2014 NYSlipOp 06704 [121 AD3d 1524]
October 3, 2014  Appellate Division, Fourth Department is an interesting case in which the Third Department briskly reversed the order of Supreme Court.  Harris Beach is a large powerful upstate law firm, and it sued for close to $1 Million in fees.  Supreme Court granted Harris Beach partial summary judgment, but the Third Department saw things differently.  It held that plaintiff law firm failed to demonstrated that it did no wrong, hence, partial summary judgment was inappropriate.

“It is hereby ordered that the order so appealed from is unanimously reversed on the law without costs and the motion is denied in accordance with the following memorandum: Plaintiff, the longtime general counsel for defendant, commenced this action seeking to recover approximately $750,000 in costs, disbursements, legal fees, and interest thereon for services rendered to defendant in the defense of a tort and breach of contract action in which defendant had been sued (underlying action). The underlying action was commenced on October 5, 2006, and, at that time, defendant was insured by Illinois National Insurance Company (Illinois National) pursuant to a policy of directors, officers and private company liability insurance (Illinois National policy) effective for the period from March 31, 2006 to March 31, 2007. The coverage under the Illinois National policy was limited to claims made and reported during the period in which that policy was effective, as was the coverage afforded defendant under a policy of directors, officers, and private company liability insurance issued by National Union Fire Insurance Company of Pittsburgh, Pa. (National Union) for the period from March 31, 2008 to March 31, 2009 (National Union policy). On August 7, 2008, i.e., approximately two years after the commencement of the underlying action, plaintiff wrote to M&T Insurance Agency, from which defendant had obtained the National Union policy, and, inter alia, tendered the defense of defendant in the underlying action pursuant to what the record reflects was the National Union policy. Both Illinois National and National Union are part of the AIG group of insurers, and by letter dated September 24, 2008, a claims analyst employed by AIG Domestic Claims, Inc. rejected plaintiff’s tender on the ground that it was untimely.”

“In its answer, defendant denied that it “failed to pay any legal bills justly due to [plaintiff].” Defendant also asserted 10 affirmative defenses, only two of which are relevant on appeal. In the fifth affirmative defense defendant alleged that plaintiff’s claims are barred by the doctrine of unclean hands, and in the sixth affirmative defense defendant alleged that any recovery by plaintiff must be reduced by sums presently owing or found to be owed to defendant arising from plaintiff’s professional negligence and breach of fiduciary duty. Defendant also asserted two counterclaims, including a counterclaim for professional negligence alleging, in relevant part, that plaintiff was negligent in failing to provide defendant’s insurer with timely notice of the claim that was the underlying action. Defendant alleged that, had plaintiff given timely notice of the claim, coverage for defendant in that matter would not have been denied and, “[defendant’s] insurer would have advanced the very defense costs that [plaintiff] now seeks to recover from [defendant].” Plaintiff thereafter moved for partial summary judgment dismissing the subject affirmative defenses as well as the subject counterclaim insofar as it is based on the alleged late reporting of the underlying action. Supreme Court granted the motion, and we reverse.

In order to establish legal malpractice by plaintiff, defendant “ ’must demonstrate that [plaintiff] failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession’ and that [plaintiff’s] breach of this duty proximately caused [defendant] to sustain actual and ascertainable damages . . . To establish causation, [defendant] must show that [it] would have prevailed in the underlying action or would not have incurred any damages, but for [plaintiff’s] negligence” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; see Utica Cutlery Co. v Hiscock & Barclay, LLP, 109 AD3d 1161, 1161 [2013]). In the context of this motion by plaintiff for partial summary judgment, the burden was on plaintiff to present “evidence . . . in admissible form establishing that [defendant] is unable to prove at least one of [the] essential elements of a malpractice cause of action” (Ippolito v McCormack, Damiani, Lowe & Mellon, 265 AD2d 303, 303 [1999]; see Compis Servs., Inc. v Greenman, 15 AD3d 855, 855 [2005], lv denied 4 NY3d 709 [2005]). More specifically, plaintiff was required to establish in this case that, even if plaintiff had timely tendered defendant’s defense in the underlying action, defendant’s insurer would nothave furnished defense dollars in the underlying action, and thus that defendant could not have been harmed by plaintiff’s untimely notice of the underlying action. We conclude that plaintiff failed to do so and that the court therefore erred in granting the motion.”

Sometimes what appears to be a clear and convincing description of a mistake by an attorney fails to elicit approval from Supreme Court or from the Appellate Division.  One reads the introduction to a decision, and it’s almost -wham- “that sounds like a real departure”.  Then you read the balance of the decision, and the Court is unmoved.  So, Barouh v Law Offs. of Jason L. Abelove
2015 NY Slip Op 06770  Decided on September 16, 2015  Appellate Division, Second Department and Barouh v Law Offs. of Jason L. Abelove   2015 NY Slip Op 06769  Decided on September 16, 2015  Appellate Division, Second Department tell a complete story of what the Courts thought was a speculative claim.

The facts are simple.  Plaintiff hired defendant attorney to represent him when he sued a corporation.  Plaintiff won the first case.  After the case, the attorney did some work for the corporation.  Somewhat later Plaintiff hired the attorney to sue the corporation again.  This time the corporation claimed that the conflict of interest poisoned the litigation.  Plaintiff had to pay legal fees but eventually won the right to sue.  He claimed the attorney did not disclose his conflict, which cost plaintiff money and time.  Good case, no?

When the court was presented with a motion to dismiss, it ended the Judiciary Law§ 487 claims but left the legal malpractice case intact.

When the Court was presented with a motion for summary judgment, it ended the case.

“To recover damages for legal malpractice, a plaintiff must establish that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and that the breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages (see Smith v Kaplan Belsky Ross Bartell, LLP, 126 AD3d 877). 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” (id. at 878). “To succeed on a motion for summary judgment, the defendant in a legal malpractice action must present evidence in admissible form establishing that the plaintiff is unable to prove at least one of these essential elements” (Verdi v Jacoby & Meyers, LLP, 92 AD3d 771, 772 [internal quotation marks omitted]).

Here, the defendants met their initial burden of demonstrating, prima facie, that the plaintiff cannot establish that but for Abelove’s conduct, the plaintiff would not have incurred damages in defending against the BEA defendants’ motion to dismiss (see Alaimo v Mongelli, 93 AD3d 742, 744; Pistilli Constr. & Dev. Corp. v Epstein, Rayhill & Frankini, 84 AD3d 913, 914; see also Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 848). In opposition, the plaintiff failed to raise a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562). In addition, [*2]the defendants established that they were entitled to summary judgment dismissing the cause of action alleging breach of fiduciary duty, as this claim is based upon the same alleged acts of legal malpractice (see Breslin Realty Dev. Corp. v Shaw, 72 AD3d 258, 261; Adamski v Lama, 56 AD3d 1071, 1072-1073; see also Boone v Bender, 74 AD3d 1111, 1113).

The plaintiff’s contention that the defendants’ motion for summary judgment was premature is improperly raised for the first time on appeal and, thus, not properly before this Court (see Aglow Studios, Inc. v Karlsson, 83 AD3d 747, 749).”

For social policy reasons, courts have severely limited the class of persons who may sue an attorney for legal malpractice.  The alternative, courts have often held, is chaos.  After every case, no matter who wins, the losing party will sue both attorneys.  There will be two legal malpractice cases for every regular case!  The same is somewhat less true for other forms of professional malpractice. “Near privity” may suffice.   Silverboys, LLC v Skordas   2015 NY Slip Op 31711(U)
September 4, 2015  Supreme Court, New York County  Docket Number: 653874/2014  Judge: Saliann Scarpulla is a recent example.

“The following allegations are drawn from the amended complaint. Silverboys is a Delaware limited liability company owned and managed by the Silvermans, and it “was created to acquire, own, and manage the [Silvermans’ property in the Bahamas].” On or about April 25, 2014, Henry Silverman signed a contract with Skordas, wherein “Skordas agreed to perform traditional architecture services” such as “coordinat[ing] all architectural, structural, MEP, and design drawings.” “Skordas promised to deliver costeffective, honest, and quality supervision and management of an estimated $8 million construction project that included extensive site work, renovation of an existing main residence, and construction of a guest house, pool, and staff residence.” Plaintiffs allege [* 1] Skordas is responsible for many construction defects, including using inappropriate or inferior materials, installing a “jail-like fence around the property,” constructing “a door to nowhere,” and for failing to maintain proper records or make plans for some of the materials purchased. In addition to acting as an architect, Plaintiffs allege that “Skordas agreed to act as the owner’s representative and the project manager.” Skordas’s alleged responsibilities included, among other things “managing the bidding process for all general contractors and subcontractors, supervising the construction and making regular visits to the construction site, handling all shipments of materials and their clearance through customs, and approving payments to all contractors and subcontractors.” In addition to claims of mismanagement, Plaintiffs allege that Skordas was dishonest during their relationship. One of the alleged incidents of dishonesty occurred on July 21, 2014 when “Silverboys transferred $27,907 to Mr. Skordas as a deposit for a Veyko railing and as full payment for 3 Velux America skylights.” Rather than distributing the funds to and placing the orders with the vendors, the Plaintiffs allege that Skordas, himself, retained the funds. ”

“Third, Skordas’s claim that he owed no duty to Karen Silverman and Silverboys because he did not have a contractual relationship with them is meritless. Tort liability may be found absent privity of contract where the relationship of the parties is “so close as to approach that of privity.” See Ossining Union Free Sch. Dist. v. Anderson LaRocca Anderson, 73 N.Y.2d 417, 424 (1989). Ossining references three factors in assessing liability under these circumstances: “(I) awareness that the [house] w[ as] to be used for a particular purpose or purposes; (2) reliance by a known party or parties in furtherance of that purpose; and (3) some conduct by the defendants linking them to the party or parties and evincing defendant’s understanding of their reliance.” See id. at 425 (citing Credit Alliance Corp. v. Andersen & Co., 65 N.Y.2d 536, 551 (1985)). Here, the Plaintiffs allege facts establishing a relationship approaching privity between Karen Silverman, Silverboys, and Skordas. The Plaintiffs sufficiently allege that the Silvermans hired Skordas specifically for the purpose of performing architectural services, that they relied on Skordas to complete quality construction of their home, and that Skordas knew that the Silvermans relied on him. Moreover, the complaint alleges 7 [* 7] that Silverboys, an LLC owned by the Silvermans “to acquire, own, and manage the Bahamian Property,” received invoices from Skordas and remitted funds to Skordas. For the foregoing reasons, Skordas’s motion to dismiss the claim for professional malpractice is denied. “

Claims against a professional for negligence arise from policy reasons, not simply from breach of contract grounds.  So, a non-architect might still be liable for professional negligence.  Silverboys, LLC v Skordas    2015 NY Slip Op 31711(U)   September 4, 2015   Supreme Court, New York   County  Docket Number: 653874/2014  Judge: Saliann Scarpulla is the story of a large-scale residential construction and how things can go wrong, even with contracts, and checks / balances in place.

“The following allegations are drawn from the amended complaint. Silverboys is a Delaware limited liability company owned and managed by the Silvermans, and it “was created to acquire, own, and manage the [Silvermans’ property in the Bahamas].” On or about April 25, 2014, Henry Silverman signed a contract with Skordas, wherein “Skordas agreed to perform traditional architecture services” such as “coordinat[ing] all architectural, structural, MEP, and design drawings.” “Skordas promised to deliver costeffective, honest, and quality supervision and management of an estimated $8 million construction project that included extensive site work, renovation of an existing main residence, and construction of a guest house, pool, and staff residence.” Plaintiffs allege Skordas is responsible for many construction defects, including using inappropriate or inferior materials, installing a “jail-like fence around the property,” constructing “a door to nowhere,” and for failing to maintain proper records or make plans for some of the materials purchased. In addition to acting as an architect, Plaintiffs allege that “Skordas agreed to act as the owner’s representative and the project manager.” Skordas’s alleged responsibilities included, among other things “managing the bidding process for all general contractors and subcontractors, supervising the construction and making regular visits to the construction site, handling all shipments of materials and their clearance through customs, and approving payments to all contractors and subcontractors.” In addition to claims of mismanagement, Plaintiffs allege that Skordas was dishonest during their relationship. One of the alleged incidents of dishonesty occurred on July 21, 2014 when “Silverboys transferred $27,907 to Mr. Skordas as a deposit for a Veyko railing and as full payment for 3 Velux America skylights.” Rather than distributing the funds to and placing the orders with the vendors, the Plaintiffs allege that Skordas, himself, retained the funds. Plaintiffs further allege that Skordas proposed “subcontractors that quoted grossly inflated prices and with which he had undisclosed connections.” For example, Plaintiffs cite a particular instance when Skordas suggested a landscaper who estimated that his work would cost more than $480,000, but “a comparable landscaper, contacted independently by the Silvermans, bid only $270,000 for the same project.”  The Plaintiffs allege that Skordas never held a license to practice as an architect, which is required by New York Education Law §6512 and that Skordas presented himself as an architect and did not hire necessary engineers. ”

“In the second cause of action, Plaintiffs assert that Skordas agreed to perform professional architectural services on the Bahamian Property. I.n addition to performing architectural services without a valid license as required by New York Education Law §6512, Plaintiffs allege that Skordas deviated from acceptable standards of care for architects.  The “elements of [a] professional negligence cause of action … includ[ e] a departure from the applicable standard of care, causation, and damages.” See Health Acquisition Corp. v. Program Risk Mgmt., Inc., 105 A.D.3d 1001, 1004 (2d Dep’t 2013). While Skordas contends that he cannot be liable for malpractice because he is not a licensed architect, defendants who hold themselves out as licensed professionals when they are not may nonetheless be liable for malpractice. See Rudman v. Bancheri, 260 A.D. 957, 957 (2d Dep’t 1940) (“Recovery may be had in such an action as this only if the defendant’s treatment of the plaintiff fell short of the professional standards of skill and care prevailing among those who offer treatment lawfully.”). 1 Second, the Plaintiffs’ professional negligence cause of action is not duplicative of their breach of contract claim. “Professionals … may be subject to tort liability for failure to exercise reasonable care, irrespective of their contractual duties. In these instances, it is policy, not the parties’ contract, that gives rise to a duty of due care.” See Sommer v. Fed. Signal Corp., 79 N.Y.2d 540, 551 (1992) (internal citations omitted). Here, Plaintiffs sufficiently allege that Skordas held himself out as an architect while “fail[ing] to exercise reasonable care.” See id. Plaintiffs correctly note that New York courts have held that a party may sue both for breach of contract and professional malpractice. See 17 Vista Fee Assocs. v. Teachers Ins. & Annuity Assoc. of Am., 259 A.D.2d 75, 83 (I st Dept. 1999); see also City of Kingston Water Dept. v. Charles A. Manganaro Consulting Eng’rs, P.C., No. Ol-CV-1317 (LEK/DRH), 2003 WL 355763, at *4 (N.D.N.Y. Feb. 13, 2003) (“Whereas parties may not create a negligence claim simply by alleging that a contracting party was negligent, New York courts have allowed parties to assert professional malpractice claims together with breach of contract claims.”) “

Judiciary Law §487 is a really really old common law provision coming to us from medieval England.  Fraud on the Court has been happening since the first day a court was held anywhere.  They are similar, but have differences.   Tooker v Schwartzberg  2015 NY Slip Op 31620(U)
August 17, 2015  Supreme Court, Suffolk County  Docket Number: 9463/14  Judge: Paul J. Baisley discusses that difference.

“Other than her conclusory allegations, however, plaintiff has set forth no facts to establish that the movants, or any of the defendants, committed a fraud on the Court or violated Judiciary Law §487 in connection with the foreclosure action. With regard to the former, the Court of Appeals recently held that: “in order to demonstrate fraud on the court, the non-offending party must establish by clear and convincing evidence that the offending ‘party has acted knowingly in an attempt to hinder the fact finder’s fair adjudication of the case and his adversary’s defense of the action” [citations omitted). A court must be persuaded that the fraudulent conduct, which may include proof of fabrication of evidence, perjury, and falsification of documents concerns ‘issues that are central to the truth-finding process’ [citation omitted]. Essentially, fraud upon the court requires a showing ‘that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system’s ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party’s claim or defense'” [citations omitted] (CDR Creances S.A.S v Cohen, 23 NY3d 307 [2014]). As to the latter, Judiciary Law §487 provides that “An attorney or counselor who: 1. Is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party … [i]s guilty of a misdemeanor, and in addition to the punishment prescribed therefor by the penal law, he forfeits to the party injured treble damages, to be recovered in a civil action.” The plaintiff has the burden of pleading and proving that the attorney, whether in a physical appearance or by any oral or written statement communicated to the Court or any party, intended to deceive the Court or that party (Dupree v Voorhees, I 02 AD3d 912 [2d Dept 2013]; Amalfitano v Rosenberg, 533 F3d 117 [2d Cir 2008]). Plaintiff’s allegations herein fail to meet the foregoing standards (Godfrey v Spano, 13 NY3d 358 [2009]). ”

 

How does continuous representation interplay with claims of fraud by attorneys? Hansen-Nord v Youmans  2015 NY Slip Op 31684(U)  September 1, 2015  Supreme Court, New York County  Docket Number: 651924/2014  Judge: Anil C. Singh  discusses the unusual situation in which an attorney and a law firm are accused of aiding and abetting fraud, but not sued for legal malpractice.

“This case arises out of the commingling of funds between plaintiff, her ex-husband Stephen Fortier, and their restaurants, including Pasta La Vista, Inc. (“Pazza Notte”) and Pazza Notte Columbus, LLC (“Loft”). Several promissory notes were executed by the corporate restaurants in favor of defendant Youmans. Ultimately, defendant Youmans initiated a lawsuit against plaintiff’s husband Fortier in 2008 alleging breach of fiduciary duty and seeking the amount owed. Tove Hansen-Nord, Pazza Notte, and Fortier entered into a settlement agreement with Youmans dated June 5, 2008, as amended on June 27, 2008. Plaintiff Nord further executed a personal guaranty on June 13, 2008. Plaintiff now alleges, inter alia, fraudulent inducement in order to set aside that settlement agreement.”

“The crux of plaintiffs complaint stems from her assertion that “defendants Meister, Cohen, Federman and McAnneny lent active assistance to Youmans both in fraudulently inducing the settlement agreement, consulting agreements and Nord guaranty, and in the years which followed during which Pazza Notte was fleeced by these defendants and they each actively induced plaintiffs to make payments that Youmans was not entitled to.” (Second Am. Compl. at if 142). The settlement agreement is dated June 5, 2008, as amended on June 27, 2008. The consulting agreement is dated June 17, 2008. Applicable Statutes of Limitations Under the law of New York the claims herein for fraud, aiding and abetting, fraud, fraudulent inducement and unjust enrichment are subject to a six year statute of limitations (CPLR §213( I) and (8); Standard Realty Associates, Inc. v. Chelsea Gardens Corp .. 105 A.D.3d 510, 964 N.Y.S.2d 94 [I st Dept 2013] (six year statute oflimitations applies to a claim for unjust enrichment); Pike v. New York Life Insurance Co., 72 A.D.3d 1043 [2d Dept 20 IO] (six year statute of limitations applies to a claim of fraudulent inducement); CSAM Capital, Inc. v. Lauder, 67 A.D.3d 149 [1st Dept 2009] (six year statute of limitations applies to a claim for aiding and abetting fraud); Avalon, LLC v. Derfner & Mahler, LLP, 16 A.D.3d 209 [1st Dept 2005] (six year statute of limitations applies to claim of fraud.  A cause of action for breach of fiduciary, as herein, which seeks a monetary remedy, 4 [* 4] is subject to a three year statute oflimitations); CPLR 214(4); IDT Corp. v. Morgan Stanley Dean Witter & Co .. 12 N.Y.3d 132 [2009]). ”

“Likewise, plaintiff alleges that the continuous representation doctrine applies to defendants MSF and Cohen. The continuous representation doctrine tolls the statute of limitations only where there is a mutual understanding of the need for further representation on the specific subject matter. (McCoy v Feinman, 99 NY2d 295, 306 [2002]). However, the continuous representation doctrine only applies to legal malpractice claims. The First Department has explicitly held that when the continuous representation doctrine is available “the tolling it allows only applies to the specific matter out of which the malpractice claim arises” (Johnson v Proskauer Rose LLP, 2015 NY Slip Op 03626 [1st Dept Apr. 30, 2015]). 8  Here, plaintiff has not asserted a legal malpractice claim against defendants MSF and Cohen. Thus, the continuous representation doctrine is inapplicable herein. ”

 

Continuing to look at Tantleff v Kestenbaum & Mark  2015 NY Slip Op 06720  Decided on September 2, 2015   the Appellate Division, Second Department answers that discussion and a rational explanation for a decision may well make it strategic rather than negligence.

“Here, the cause of action to recover damages for legal malpractice accrued on October 3, 2001, when the plaintiffs, upon the defendants’ recommendation, executed IRS Form 4549-CG consenting to an assessment of over $1.5 million in tax liability as well as civil fraud and negligence penalties (hereinafter the consent agreement) (see Landow v Snow Becker Krauss, P.C., 111 AD3d 795; Weiss v Deloitte & Touche, LLP, 63 AD3d 1045). Based on that accrual date, the applicable three-year statute of limitations would have expired on October 3, 2004, approximately two years prior to the commencement of this action on September 15, 2006. However, it is undisputed that, pursuant to the doctrine of continuous representation, the three-year statute of limitations pertaining to the defendants’ alleged legal malpractice in October 2001 was tolled during the time period when the defendants continued to represent the plaintiffs before the IRS on the specific subject matter underlying the malpractice claim. Consequently, at issue is when that representation and tolling ceased and the three-year statute of limitations period began (see Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 735).”

“In any event, even if this action were timely commenced, the defendants established their prima facie entitlement to judgment as a matter of law by demonstrating that their recommendation that the plaintiffs execute the consent agreement was a reasonable strategic decision (see Leon Petroleum, LLC v Carl S. Levine & Assoc., P.C., 122 AD3d 686; Keeley v Tracy, 301 AD2d 502; Hart v Carro, Spanbock, Kaster & Cuiffo, 211 AD2d 617). Furthermore, the defendants demonstrated that the recommendation was made after extensive discussions with the plaintiffs, who agreed to the course of action (see Noone v Stieglitz, 59 AD3d 505; Holschauer v Fisher, 5 AD3d 553; cf. Estate of Nevelson v Carro, Spanbock, Kaster & Cuiffo, 259 AD2d 282). In opposition, the plaintiffs offered no evidence to raise a triable issue of fact as to whether the recommendation “was an unreasonable course of action that constituted legal malpractice” (Keeley v Tracy, 301 AD2d at 503; see Leon Petroleum, LLC v Carl S. Levine & Assoc., P.C., 122 AD3d at 687). The plaintiffs’ claims amounted to nothing more than their present dissatisfaction with the defendants’ strategic choice and thus, did not support a malpractice claim as a matter of law (see Pere v St. Onge, 15 AD3d 465, 466; Zarin v Reid & Priest, 184 AD2d 385, 385).”

Attorney gives advice to sign a certain tax document, and the result is additional or unnecessary tax liability.  When does the statute of limitations commence and under what circumstances might it be tolled?

Tantleff v Kestenbaum & Mark  2015 NY Slip Op 06720  Decided on September 2, 2015  Appellate Division, Second Department gives an answer to this question.

“A legal malpractice claim accrues when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court. In most cases, this accrual time is measured from the day an actionable injury occurs, even if the aggrieved party is then ignorant of the wrong or injury. What is important is when the malpractice was committed, not when the client discovered it” (McCoy v Feinman, 99 NY2d 295, 301 [internal quotation marks and citations omitted]).

The three-year limitations period applicable to causes of action to recover damages for legal malpractice (see CPLR 214[6]) may be tolled by the continuous representation doctrine where ” there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim'” (Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d 733, 735, quoting McCoy v Feinman, 99 NY2d at 306). “For the doctrine to apply, there must be clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the attorney. One of the predicates for the application of the doctrine is continuing trust and confidence in the relationship between the parties” (Beroza v Sallah Law Firm, P.C., 126 AD3d 742, 743 [internal quotation marks and citations omitted]; see Zorn v Gilbert, 8 NY3d 933, 934; Singh v Edelstein, 103 AD3d 873, 874). “It requires more than a continuing, general, professional relationship; it tolls the [s]tatute of [l]imitations only where the continuing representation pertains specifically to the matter in which the attorney committed the alleged malpractice'” (Deep v Boies, 121 AD3d 1316, 1318-1319, quoting Shumsky v Eisenstein, 96 NY2d 164, 168). “The essence of a continuous representation toll is the client’s confidence in the attorney’s ability and good faith, such that the client cannot be expected to question and assess the techniques employed or the manner in which the services are rendered” (Farage v Ehrenberg, 124 AD3d 159, 167-168, citing Shumsky v Eisenstein, 96 NY2d at 167; Glamm v Allen, 57 NY2d 87, 93-94; Greene v Greene, 56 NY2d 86, 94). “What constitutes a loss of client confidence is fact specific, varying from case to case, but may be demonstrated by relevant documentary evidence involving the parties, or by the client’s actions” (Farage v Ehrenberg, 124 AD3d at 167-168).

Here, the cause of action to recover damages for legal malpractice accrued on October 3, 2001, when the plaintiffs, upon the defendants’ recommendation, executed IRS Form 4549-CG consenting to an assessment of over $1.5 million in tax liability as well as civil fraud and negligence penalties (hereinafter the consent agreement) (see Landow v Snow Becker Krauss, P.C., 111 AD3d 795; Weiss v Deloitte & Touche, LLP, 63 AD3d 1045). Based on that accrual date, the applicable three-year statute of limitations would have expired on October 3, 2004, approximately two years prior to the commencement of this action on September 15, 2006. However, it is undisputed that, pursuant to the doctrine of continuous representation, the three-year statute of limitations pertaining to the defendants’ alleged legal malpractice in October 2001 was tolled during the time period when the defendants continued to represent the plaintiffs before the IRS on the specific subject matter underlying the malpractice claim. Consequently, at issue is when that representation and tolling ceased and the three-year statute of limitations period began (see Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 735).

The defendants established their prima facie entitlement to judgment as a matter of law dismissing this action as time-barred upon proof demonstrating that the representation and the tolling stopped, and the three-year statute of limitations period began, on August 25, 2003, following which no further legal representation was undertaken by the defendants with respect to the consent agreement (see Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 736; Farage v Ehrenberg, 124 AD3d at 166; Landow v Snow Becker Krauss, P.C., 111 AD3d at 796-797). Upon that showing, the burden then shifted to the plaintiffs to raise a triable issue of fact as to whether the tolling ceased on or after September 15, 2003, such that this action alleging legal malpractice was timely commenced (see Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 736). However, even when viewing the evidence submitted in opposition in a light most favorable to the plaintiffs, it was insufficient to raise a triable issue of fact (see Beroza v Sallah Law Firm, P.C., 126 AD3d at 743; Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 736; Farage v Ehrenberg, 124 AD3d at 167; Landow v Snow Becker Krauss, P.C., 111 AD3d at 797; cf. Ortiz v Allyn, Hausner & Montanile, LLP, 18 Misc 3d 34).”

Trustees, just like regular prople, put their trust in attorneys.  After all, the attorney can be trusted to take care of the details, no?  Anyway, the attorney is sure to send a bill.  In this situation, the trust in the attorneys rigor was misplaced.

Ianiro v Bachman  2015 NY Slip Op 06709  Decided on September 2, 2015  Appellate Division, Second Department determines that trustees have privity to sue an attorney for work performed for the trust.

“The defendant, who is a lawyer, was retained by the plaintiff Lowell Babington and his wife, Toni Babington, to create and fund a trust of which the plaintiffs Carol Ianiro, Thomas Babington, and Margaret Onody serve as trustees (hereinafter collectively the trustee plaintiffs). The trust was funded with several policies which insured the lives of Lowell and Toni and which were previously owned by the trustee plaintiffs. The plaintiffs allege that the defendant allowed one of the policies on the life of Toni, who is now deceased, to lapse due to nonpayment. The plaintiffs commenced this legal malpractice action to recover the amount of the face value of the policy from the defendant. The defendant moved to dismiss the amended complaint pursuant to CPLR 3211(a), asserting, among other things, that the trustee plaintiffs lack legal standing to maintain this action. The Supreme Court, inter alia, denied that branch of the motion which was to dismiss the complaint insofar as asserted by the trustee plaintiffs as trustees and owners of the trust.

The Supreme Court properly denied that branch of the defendant’s motion which was pursuant to CPLR 3211(a)(7) to dismiss the amended complaint insofar as asserted by the trustee plaintiffs. As the court correctly found, the trustee plaintiffs stand in a position analogous to that of the personal representative of an estate, and therefore, possess the requisite privity, or a relationship sufficiently approaching privity, to maintain an action alleging legal malpractice against the defendant (see generally Estate of Schneider v Finmann, 15 NY3d 306).”

Augustus Butera is a photographer whose work was handled by the former MCA Creative Services, which self-immolated some time back.  In Augustus Butera Photography, Inc. v MCA Creative Servs., Inc.2014 NY Slip Op 32974(U) October 21, 2014   Supreme Court, New York County  Docket Number: 651984/11  Judge Nancy M. Bannon gives a primer on the difference between professional negligence and breach of contract.  In this case it appears that Butera received compensation for the use of his photographs and came up short in the final accounting.  He sued for loss of compensation, punitive damages and other claims, and he referenced other law suits against MCA and its principals in support of his claim.

“In this breach of contract action, the plaintiff corporation, Augustus Butera Photography, Inc., seeks, inter alia, to recover unpaid professional fees from defendant MCA Creative Services, a/k/a Marge Casey Associates (“MCA”), its former agent. The complaint includes causes of action for conversion and unjust enrichment and seeks damages of $45,000, punitive damages, an accounting and judgment declaring that the parties had a valid contract which was breached by the defendant. The defendant, who had had a 13-year business relationship with the plaintiff’s principal, the photographer Augustus Butera, answered and asserted a cross-claim seeking damages for tortious interference with prospective business relations. In a third-party action, MCA seeks damages in excess of $150,000 from Augustus Butera, individually, upon the same theory as well as breach of contract for failure to pay contractual commissions. Butera answered and asserted several counterclaims approximating the claims in the complaint. The action was commenced in 2011 and discovery has been ongoing.”

“The plaintiff alleges that the defendant was negligent in its “billing, invoicing and licensing of photographic works” which resulted in a loss to him of professional fees totaling $45,000. To the extent that the plaintiff is attempting to assert a type of “professional malpractice” claim, it provides no factual support or legal authority for doing so and thus states no cognizable tort claim. See Clark-Fitzpatrick, Inc. v Long Island R.R. Co., 70 NY2d 382 (1987); Harrogate House Limited v Jovine, 2 AD3d 108 (1″ Dept. 2003). To the extent the plaintiff is alleging that the defendant failed to meet its obligations under the parties’ agreement, it is duplicative of the breach of contract claim. See Clark-Fitzpatrick Inc. v Long Island R.R. Co., supra; Sebastion Holdings, Inc. v Deutsche Bank, AG., 108 AD3d 433 (1’1 Dept. 2013). The defendant is entitled to summary dismissal of that claim. “