Client owns a gas station.  A  dump truck and a fuel truck collide and explode.  The station is closed for 5 years while remediation of the fuel spill goes on.  They sue the trucks, and lose.  Was this legal malpractice?

This case appears to be the first application of Grace v. Law in which the question of not taking an appeal and then starting a subsequent legal malpractice case comes up.  The AD was not “persuaded that an appeal would have been likely to succeed.”

Levine v Horton  2015 NY Slip Op 03021  Decided on April 9, 2015  Appellate Division, Third Department holds that the legal malpractice case survives a motion for summary judgment.

“We cannot agree with Young’s argument that he is entitled to dismissal of the legal malpractice action. Legal malpractice is established by evidence that an attorney “‘failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff, and that the plaintiff would have succeeded on the merits of the underlying action “but for” the attorney’s negligence'” (Leder v Spiegel, 9 NY3d 836, 837 [2007], cert denied sub nom Spiegel v Rowland, 552 US 1257 [2008], quoting AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]; accord Hyman v Schwartz, 114 AD3d 1110, 1112 [2014], lv dismissed 24 NY3d 930 [2014]). In order to succeed on his motion for summary judgment, Young was required to establish the absence of negligence, or that any negligence on his part was not the cause of any actual or ascertainable damages to the owners (see Geraci v Munnelly, 85 AD3d 1361, 1362 [2011]; Guiles v Simser, 35 AD3d 1054, 1055 [2006]; Tabner v Drake, 9 AD3d 606, 610 [2004]).

In support of his motion, Young submitted an expert affidavit opining that he was not negligent because he had engaged the services of an expert who submitted a report suggesting that the spill site had not been completely remediated and the discovery schedule had not yet expired. Thus, Young argues, he was still in the process of obtaining additional proof of damages and had adequately opposed the fuel truck defendants’ motion. In opposition, plaintiff submitted an expert affidavit alleging that Young was negligent because he failed to conduct any relevant discovery prior to the motions being made, mistakenly limited the owners’ damages in their bill of particulars to the stigma associated with the property and failed to allege or establish the existence of the loss of revenue and property damages sustained by the owners. In view of the competing opinions regarding the adequacy of Young’s representation, we agree with Supreme Court that issues of fact exist requiring a trial (see M & R Ginsburg, LLC v Segal, Goldman, Mazzotta & Siegel, P.C., 90 AD3d 1208, 1209 [2011]; Maddux v Schur, 16 AD3d 873, 874 [2005]). Further, we cannot agree with Young’s contention that plaintiff’s failure to appeal the order dismissing the underlying action precluded plaintiff’s claim for legal malpractice, inasmuch as we are not persuaded that an appeal would have been likely to succeed (see Grace v Law, 24 NY3d 203, 210-211 [2014]).

Young also argues in the alternative that the owners did not sustain any damages as a result of the dismissal of their underlying action and, therefore, would not have succeeded on its merits “but for” his alleged negligence. In support of this argument, Young relies on the January 2007 appraisal reflecting that the value of the property was the same in January 2007 as it was prior to the fuel spill in November 2002, the fact that the Department of Environmental Conservation had closed its file on the spill, and that the owners had been reimbursed by their own insurer for all of the damages their adjuster had claimed to be caused by the accident. As we have noted, however, Young’s own expert called the remediation of the site into question. Moreover, the owners alleged that their damages included loss of revenue caused by the pumps not operating properly after the explosion, and Young himself testified at his deposition that he believed that the owners had been damaged above and beyond the amount that they had been paid by their insurer. Furthermore, plaintiff submitted an affidavit from a real estate appraiser opining that a stigma had indeed attached to the property as a result of the spill and that the accident had caused a decline in the gas station’s gross revenue. Although Young argues that a decline in gross revenue is insufficient to establish damage, that argument is countered by plaintiff’s contention that the owners’ prior revenue stream was able to cover their expenses and, with the decrease caused by the accident, they lost the ability to stay current on their mortgage, which led to the foreclosure on their property where both their business and their home were located. Under these circumstances, we agree with Supreme Court that issues of fact exist as to whether the owners were damaged by the alleged malpractice (see Lue v Finkelstein & Partners, LLP, 94 AD3d 1386, 1389 [2012]; M & R Ginsburg, LLC v Segal, Goldman, Mazzotta & Siegel, P.C., 90 AD3d at 1210-1211;Cramer v Englert, 262 AD2d 827, 831 [1999]). Given the existence of these questions of fact, we likewise find no basis for plaintiff’s request that we grant his cross motion for summary judgment.

Attorneys frequently have a business on the side.  After all, they think, I can do the legal work and reap the benefits.   In  Lee & Amtzis, LLP v American Guar. & Liab. Ins. Co.  2015 NY Slip Op 02919  Decided on April 7, 2015
Appellate Division, First Department  Gische, J., J. it did not work out well.

“Kurtin was a client of plaintiff Lee & Amtzis, LLP (law firm). She commenced an action in the Superior Court of New Jersey against the law firm, both partners individually, and Astoria Station, LLP (Kurtin v R. Randy Lee, Esq., et al., Super Ct, Somerset County, docket No. SOM-L-1098-10) (New Jersey action). In the New Jersey action, Kurtin asserted claims for breach of contract, non-payment of two promissory notes which she held and were made, respectively, in 2006 and 2010, and unjust enrichment based upon the non-payment of those notes. Kurtin also asserted claims for legal malpractice/negligence against the law firm and each of its named partners. In connection with her malpractice/negligence claims, Kurtin alleged that when she entered into these loans, Lee was not only the “managing member” of Astoria Station, he was also a practicing attorney and partner of the law firm, which had the same address as Astoria Station. Kurtin claimed that the attorneys had induced her to proceed with certain financial transactions in which they had a financial interest; they failed to recommend that she obtain independent legal counsel; they had allowed their legal services to her to be influenced by their own business ventures outside the practice of law; and the attorneys knew their interests and Kurtin’s interests were adverse.

Following motion practice in the New Jersey action, Kurtin prevailed on her promissory note claims, and in its decision dated and filed October 27, 2011, the court directed entry of a money judgment against Astoria Station and Lee in the amount of $1,332,739.25 on the 2006 note and a money judgment against Lee in the amount of $125,043.65 on the 2010 note (Kurtin v. R. Randy Lee, Esq., Super Ct, Somerset County, Oct. 23, 2011, Coyle, Jr., J.). Lee had signed the 2006 note on behalf of Astoria Station and also personally guaranteed its payment. In relevant part, the 2006 note states that it is a “replacement of all prior debts due to Jane Kurtin, together with accrued interest, from Leewood-Edgemere, LLC [FN1], R. Randy Lee and related entities, all of which are considered to be paid in full.” The 2006 note also refers to a condominium project underway “at the Astoria Station project in Queens,” stating that “pay down will be TWENTY FIVE THOUSAND DOLLARS ($25,000.00) at each unit closing.” The 2010 note represents a loan made by Kurtin to Lee personally.

The law firm and partners moved to dismiss the remaining malpractice/negligence claims in the New Jersey action, but that motion was denied. Subsequently the parties in the New Jersey action stipulated to stay the malpractice/negligence claims pending resolution of this declaratory judgment action.

In this action, plaintiffs seek a declaration that AGLIC has a contractual duty to defend them against the malpractice/negligence claims asserted by Kurtin in the New Jersey action. [*2]Plaintiffs were successful in their motion for summary judgment before Supreme Court, largely due to the motion court’s reliance on a prior decision by this Court in K2 Inv. Group, LLC v American Guar. & Liab. Ins. Co. (91 AD3d 401 [1st Dept 2012]), which construed the identical policy language at issue here. Our decision, however, has since been reversed by the Court of Appeals [FN2] (K2 Inv. Group, LLC v American Guar. & Liab. Ins. Co., 22 NY3d 578 [2014]) (K2). The Court of Appeals’ decision in K2 likewise requires a reversal of the motion court’s order and judgment (one paper) in plaintiffs’ favor and a judgment in favor of AGLIC, declaring that it does not have a duty to defend plaintiffs in the New Jersey action.

Here, we have a well developed record showing that plaintiffs’ activities on Kurtin’s behalf are of a hybrid nature and, therefore, excluded from coverage. It is undisputed that plaintiffs prepared the legal documents necessary to effectuate the loans, including the promissory notes. It is also undisputed that Lee was the managing member of Astoria Station and the obligor on the 2006 note which Lee also personally guaranteed. Lee, personally, was the borrower on the 2010 note. The proceeds from these financial transactions were used in connection with Astoria Station’s real estate development projects, indirectly which benefitted Lee, the managing member of that enterprise. Kurtin prevailed in the New Jersey action and obtained a money judgment for the nonpayment of the promissory notes. Her remaining claims of legal malpractice and negligence do not seek damages that are any different than the relief she already obtained in the New Jersey action. Applying New York law, as the New Jersey court has already found applies, Kurtin’s allegations, that she was not advised to get her own attorney, or that she should have had certain investment properties independently appraised, are generic claims that are insufficient to sustain a claim for legal malpractice (Schwartz v Olshan Grundman Frome & Rosenzweig, 302 AD2d 193 [1st Dept 2003]). Kurtin has not alleged any losses, other than the nonpayment of the notes, and those notes have now been reduced to judgments in her favor.

Lee was simultaneously serving two masters, Kurtin, his client, and a company of which he was a principal. This is precisely the situation that the policy’s Insured Status and Business Enterprise Exclusions exclude from coverage. Since Kurtin’s claims partly arise from the legal services the attorneys provided her with, but also from Lee’s status or activity for his company, Astoria Station, they are of a hybrid nature, and are not covered, meaning that AGLIC has no duty to defend plaintiffs in the New Jersey action.”

 

The retainer agreement in McCallion & Assoc., LLP v Dyche  2014 NY Slip Op 32254(U)  August 20, 2014
Supreme Court, New York County  Docket Number: 157793/13  Judge: Joan A. Madden is not overtly onerous.  It, like Matter of Lawrence does allow for a very large fee.  Take a look at how Judge Madden of New York County handles the matter.

“The complaint asserts causes of action for breach of contract, quantum meruit, an accounting, declaratory relief and injunctive relief. In connection with Olsen v. Dyche, M&A and Ms. Dyche entered into a retainer agreement providing that M&A would receive a [* 1] contingency fee of20% “of any amounts received by (Ms. Dyche) by way of settlement, judgment or award” on the counterclaim and third-party complaint, plus $250/hour for legal work related to the defense of the case. Subsequently, the contingency amount was increased to 30% as evidenced by an email exchange between M&A and Ms. Dyche. The complaint alleges that the increase in fee was “in recognition not only of the increased work load by M&A in the Olsen v. Dyche matter, but also in recognition of the tremendous amount of legal work that M&A was performing in An v. Dyche matter without compensation under the An v. Dyche fee agreement1 ” (Complaint, if 36). Ms. Dyche admits in the defendants’ answer that she agreed to the increase the contingency fee from 20% to 30%, but maintains she only agreed to the increase because she was afraid M&A would withdraw as counsel if she did not consent. The dispute in Olsen v. Dyche centered on whether Ms. Dyche had an ownership interest in Empire, and the extent of such interest. Empire owns 55% of the New York City Regional Center (NYCRC) which collects investment funds from overseas investors pursuant to a program administered by the U.S. Office of Homeland Security and invests the fund in various construction projects. It is alleged that NYCRC had contracts involving four projects that would “be producing $50,187, 500 income to NYCRC, and since Empire … owned 55% of NYCRC, this would yield interest income of fees to Empire of $27 ,604,225 in five years” (Complaint, ,; 21 )

The complaint seeks attorneys’ fees based, in part, on the 30% of these quarterly distributions alleging that “the primary component of the consideration that Ms. Dyche received via the Settlement Agreement was a specific percentage equity interest in Empire, which entitled her to receive quarterly distributions during the five year term of the three or four identified 1 M&A received an initial payment of $30,000 from Ms. Dyche in connection with M&A’s representation of her in An v. Dyche, but M&A alleges that “it received no additional compensation from (Ms. Dyche) for over one and a half years despite the fact that M&A had a fee agreement with Ms. Dyche which entitled M&A to legal fees at its usual hourly rates.” (Complaint, ,-i 34). · 2 [* 2] contracts [and that] the overwhelming majority of M&A’s contingency fee was linked to future quarterly payments to Ms. Dyche contemplated by the Settlement Agreement, since M&A was entitled to receive its contingency percentage of the entire amount ‘of any judgment, settlement or award,’ not just the initial lump payments due Ms. Dyche on a retrospective basis.” (Complaint,~ 28).

The proposed counterclaim seeking rescission of the retainer agreement alleges that the retainer agreement in Olsen v. Dyche “initially included a 20% interest (which M&A partner Kenneth McCallion alleges was later increase to 30%) in Ms. Dyche’s Empire Gateway stock dividends … [and therefore] is “excessive within the meaning of l.5(a) of the New York Rules of Professional Responsibility” (Proposed Amended Answer, rs 23, 80(a). It further alleges that when M&A entered into the retainer agreement it entered into a “business transaction” with a client, within the meaning of Rule 1.8, but failed, as required by that rule to, inter alia, inform Ms. Dyche that under the retainer agreement he was entitled to 20% of the Empire stock dividends and later 30% of the dividends, to advise her to seek advice of counsel, or to receive Ms. Dyche’s consent in writing (Id.,~ 80(b)-(d). The other proposed counterclaim seeks a declaration that retainer agreement is null and void and should be set aside modified and/or vacated based on M&A’s violation of Rules 1.5(a) and 1.8 of the New York Rules of Professional Responsibility (Id., il’ s 129-13 3 ). The Dyche defendants also seek to add allegations ( 1) regarding the reason that Ms. Dyche agreed to increase the contingency fee from 20% to 30%, (2) that M&A “secretly employed” non-M&A lawyers to perform work that M&A should have performed, and (3) M&A performed no legal services related to defense work in Olsen v. Dyche.

Although there is no assertion of prejudice or surprise related to the proposed amendment, the Dyche defendants have not adequately demonstrated the merit of the proposed counterclaims. First, contrary to the allegations relating to proposed counterclaim for rescission, neither the complaint nor the relevant retainer agreement seek to recovery a percentage of Ms. Dyche’s ownership in Empire stock dividends. Instead, the contingency portion of retainer agreement bases M&A’ s fee on “any amounts received by (Ms. Dyche) by way of settlement, judgment or award.” Moreover, the complaint seeks to recover attorneys’ fees equivalent to 30% of future quarterly distributions based on Ms. Dyche’ s percentage interest in Empire, rather than 30% of “Empire stock dividends,” as alleged in the proposed counterclaim. Furthermore, while there may be legal issues relating to M&A’s basing its fee on the distributions from Empire, absent allegations with respect to such distributions, leave to amend to add a counterclaim for rescission must be denied. Such denial, however, is without prejudice to renewal upon proper pleadings. As for the proposed counterclaim related to M&A’s alleged violation of 1.5(a) and 1.8 of the New York Rules of Professional Conduct, such counterclaim is without merit as such violation “does not, in itself, give rise to a private cause of action” Weintraub v. Phillips, Nizer, Benjamin, Krim & Ballon, 172 AD2d 254, 254 (1st Dept 1991 ). However, the alleged violations may be properly asserted with respect to other causes of action.”

In a short and cryptic decision, the First Department affirmed dismissal of a legal malpractice case. Evart v Shapiro, Beilly & Aronowitz, LLP  2015 NY Slip Op 02847  Decided on April 2, 2015  Appellate Division, First Department consists of just two sentences.  Really only one counts.

“The motion court properly dismissed plaintiff’s legal malpractice claims, since this Court previously dismissed the informed consent claims in the underlying action for lack of causation (Evart v Park Ave. Chiropractic, P.C., 86 AD3d 442 [2011], lv denied 17 NY3d 922 [2011]). Accordingly, plaintiff cannot establish that she would have succeeded on the merits ofher underlying informed consent claims “but for” defendants’ negligence (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]).

Evart v. Park Ave  was a chiropractic malpractice case coming from a sudden unexpected and disastrous maneuver.  There, the AD wrote:

“Assuming, arguendo, that the questions [of informed consent] were properly before the jury, the result would not change. Plaintiff did not submit sufficient evidence in support of her lack of informed consent claim. In order to establish a prima facie claim based upon failure to procure a patient’s informed consent to a procedure, a plaintiff, pursuant to CPLR 4401-a, must first adduce expert testimony establishing that the information disclosed to the patient about the risks inherent in the procedure was qualitatively insufficient (see Rodriguez v New York City Health & Hosps. Corp., 50 AD3d 464 [2008]). The expert offering the opinion must be qualified in the area of medicine at issue (see Gershberg v Wood-Smith, 279 AD2d 424 [2001]). In this case, plaintiff failed to put forth any such testimony, either through her experts, or upon cross-examination of defendants’ witnesses. Thus, the evidence was insufficient, as a matter of law, to support the jury’s finding that a reasonably prudent person in plaintiff’s position would not have proceeded with treatment had she been fully informed of the risks, benefits and alternatives (Public Health Law § 2805-d [3]; see Thompson v Orner, 36 AD3d 791 [2007]). Concur—Mazzarelli, J.P., Catterson, DeGrasse, Abdus-Salaam and RomÁn, JJ.

OK, so you want to buy a business.  The best advice is to get an experienced attorney, no?  What happens when the attorney fails to follow the directions of Tax Law § 1141(c)?  That section of the tax law is the bulk sales law, and it says that the purchaser must contact the Tax Department some number of days before closing on the sale of a business which has collected sales tax in order for the Tax Department to tell the purchaser whether there is sales tax due.  Since sales tax is reported and paid on a quarterly calendar, there is almost always some sales tax due.  If the attorney files 10 days ahead, the purchases is told how much money of the sale to put in escrow.  If not, then the purchaser is at risk for personal liability for the unpaid sales tax.  What happens if an escrow agent is appointed and the escrow agent makes a mistake?   Nilzara, Inc. v Karakus Inc. 2015 NY Slip Op 30461(U) March 31, 2015 Supreme Court, Kings County Docket Number: 1181/2013 Judge: David I. Schmidt is the answer.

“Defendant/Third Party Plaintiff NELLIE LEVITIS (“Levitis”) represented Nilzara as the purchaser and third party defendant ERIK IKHILOV represented the seller Karakus Inc. Nilzara’s complaint alleges, among other things, a claim for legal malpractice  against Levitis based on the alleged failure to timely file a “Notification of Sale, Transfer or Assignment of Bulk” with the New York State Department of Taxation and Finance and for the alleged faiure to maintain the proper escrow of the sale proceeds to ensure that funds were available in the event the seller had unpaid sales tax liabilities. Levitis commenced a third party action against Ikhilov sounding in common law indemnification and contribution premised on the allegations that Ikhilov assumed responsibility for filing the proper tax documents by preparing said documents and identifying himself as the escrow agent on the untimely filed form. Levitis claims that Ikhilov is the true tortfeasor by virtue of his premature release of the sale proceeds to his client from escrow. Nilzara now moves for summary judgment on its legal malpractice claim against Levitis and Ikhilov moves to dismiss the third party complaint in its entirety.

Here, Nilzara has established as a matter of law that it was represented by Levitis with respect to the sale of the restaurant and that Levitis failed to ensure compliance with the provisions of Tax Law 1141 (c). Thus plaintiff is entitled to summary judgment as to the liability portion of its claim. However, Nilzara has not established its damages as a matter of law. The sale of the property occurred on or about February I 16, 2010. At or about the same as the closing, the purchaser allegedly executed and filed the “Notification of Sale, Transfer, or Assignment of Bulk” with the New York State Department of Taxation I and Finance.  Thereafter, in December of 2010, the New York State Department of Taxation and Finance issued a warrant assessing $ 83,333.33 as the amount of sales tax due and owing, inclusive of penalties and interest. The record before this court does not indicate what if any portion of the assessment is still due and owing by plaintiff nor does it indicate what if any actions were taken in between plaintiffs issuance of the Notification of Sale, Transfer, or Assignment of Bulk and the issuance of the New York State Department of Tax~tion and Finance warrant. Therefore, as to plaintiffs damages there remains issues of fact with respect to Levitis’ affirmative defenses of culpable conduct and ! the failure to mitigate.”

 

 

Plaintiff was a graduate student at Cornell and had some problems.  The Appellate Division wrote: “Petitioner, a graduate student at respondent, exchanged a series of e-mails with senior professor Davydd Greenwood until she suggested that they have a sexual affair, causing him to request that she no longer contact him. Petitioner nevertheless continued to send e-mails to Greenwood. In November 2004, Greenwood indicated that he would take formal action against petitioner if she persisted in communicating with him, and petitioner agreed to cease any further communication. She adhered to that agreement until November 2006 when she copied Greenwood on an e-mail to respondent’s president stating that her “institutional rights” had been repeatedly violated by the faculty of the Anthropology Department.

Greenwood then instituted proceedings against petitioner, and ultimately filed a[*2]complaint accusing her of harassment in violation of respondent’s Code of Conduct.[FN*]Petitioner, in turn, filed a complaint against Greenwood, accusing him of sexual harassment and retaliation. Petitioner’s complaint was dismissed as lacking in merit and, following a hearing, the University Hearing Board determined that petitioner harassed Greenwood. The Hearing Board issued a written reprimand and a no-contact order, which was affirmed on appeal with a minor modification. Supreme Court dismissed the petition in this ensuing CPLR article 78 proceeding and, upon petitioner’s appeal, we now affirm.”

Sadly, Plaintiff then turned to sue her attorneys.  Hyman v Schwartz  2015 NY Slip Op 02819  Decided on April 2, 2015
Appellate Division, Third Department  is the result.  She fares no better.  Interesting is the parallel narratives of what happens in the professional relationship.  In the legal malpractice case, the Court writes:

“Defendant Arthur Schwartz, a licensed attorney, represented plaintiff in connection with disciplinary action taken against her while she was a graduate student at Cornell University (Matter of Hyman v Cornell Univ., 82 AD3d 1309 [2011]). Schwartz also represented plaintiff in a Title IX action (see 20 USC § 1681 et seq.) against Cornell in federal court (Hyman v Cornell

Univ., 834 F Supp 2d 77 [ND NY 2011], affd 485 Fed Appx 465 [2d Cir 2012], cert denied US , 133 S Ct 1268 [2013]) (hereinafter the federal action). As a result of disagreements between plaintiff and Schwartz over his representation and fees, plaintiff commenced this action against Schwartz and defendant Schwartz, Lichten & Bright, PC, Schwartz’s law firm, as well as defendants Stuart Lichten and Daniel Bright — Schwartz’s former partners. The complaint asserted, among other things, claims for legal malpractice, negligent infliction of emotional distress and intentional infliction of emotional distress. In two motions — one by Schwartz and the law firm and the other by Lichten and Bright — defendants moved to dismiss the complaint alleging, among other things, improper service upon Lichten and Bright. In a December 2012 order, Supreme Court, among other things, held that plaintiff had not properly served Lichten and [*2]Bright and dismissed the complaint against them. The court also partially granted the motion of Schwartz and the law firm by dismissing the negligent and intentional infliction of emotional distress claims. Upon appeal by Schwartz and the law firm, this Court modified and dismissed the legal malpractice claim (114 AD3d 1110, 1112 [2014], lv dismissed 24 NY3d 930 [2014]).

We reach a similar conclusion with respect to the counterclaim for intentional infliction of emotional distress. Schwartz was required to plead “extreme and outrageous conduct, the intentional or reckless nature of such conduct, a causal relationship between the conduct and the resulting injury, and severe emotional distress” (Cusimano v United Health Servs. Hosps., Inc., 91 AD3d 1149, 1152 [2012], lv denied 19 NY3d 801 [2012]; see Howell v New York Post Co., 81 NY2d 115, 121 [1993]). Notably, the alleged conduct must be “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency . . . and [be] utterly intolerable in a civilized community” (Murphy v American Home Prods. Corp., 58 NY2d 293, 303 [1983] [internal quotation marks and citations omitted]; accord Cusimano v United Health Servs. Hosps., Inc., 91 AD3d at 1152). Here, Schwartz alleged that, during the course of their professional relationship, plaintiff sent unwanted gifts and letters, engaged in suggestive conversations and made threats of future conduct toward him. Even reading the allegations liberally and accepting them as true, we find that the alleged conduct, while undeniably inappropriate, did not rise to the level of being “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency” (Murphy v American Home Prods. Corp., 58 NY2d at 303 [internal quotation marks and citation omitted]; see generally Gray v Schenectady City School Dist., 86 AD3d 771, 772 [2011]; Hart v Child’s Nursing Home Co., Inc., 298 AD2d 721, 722-723 [2002]).

As for Schwartz’s counterclaim for prima facie tort, there can be no recovery under this theory “unless malevolence is the sole motive for [plaintiff’s] otherwise lawful act or, in [other words], unless [plaintiff] acts from disinterested malevolence” (Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314, 333 [1983] [internal quotation marks and citation omitted]; see Wiggins & Kopko, LLP v Masson, 116 AD3d 1130, 1131 [2014]; Cuimano v United Health Servs. Hosps., Inc., 91 AD3d at 1153). Stated another way, the act “must be a malicious one unmixed with any other and exclusively directed to injury and damage of another” (Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d at 333 [internal quotation marks and citation omitted]; see Lerwick v Kelsey, 24 AD3d 931, 932 [2005], lv denied 6 NY3d 711 [2006]).”

 

This trial of a legal malpractice case ended up in Civil Court. It was probably there on a claim for legal fees with a legal malpractice counterclaim.   It arose out of US Customs duty litigation, which sometimes takes place in the US District Courts and often wends its way to the US Supreme Court.  Here, the claim was that there was negligence in the representation at a administrative protest of customs duty assessments.

The Appellate Term in Milgram Thomajan & Lee, P.C. v Golden Gate Petroleum, P.C.  2014 NY Slip Op 24063 [43 Misc 3d 68]  worked its way through the entire trial and then resolved a bankruptcy issue.

“The action arises out of plaintiff’s representation of the first-named defendant, a petroleum importer, in connection with an administrative protest of a customs duty assessment imposed on a shipment of gasoline and related chemicals. The jury’s verdict, finding that plaintiff did not commit malpractice in its underlying representation of defendant, was not against the weight of the evidence. The trial evidence, fairly interpreted, supports the jury’s evident rejection of defendant’s contention that but for plaintiff’s advice, defendant would have prevailed in the underlying customs protest, one which, the record shows, defendant elected to pursue in the face of plaintiff’s frank admonition that it “may prove a tough fight, the outcome of which cannot be predicted with any certainty.” The evidence, including the conflicting expert opinion testimony, permitted the jury to conclude that, in advising defendant, the lawyers of plaintiff law firm did not disregard settled law (see Darby & Darby v VSI Intl., 95 NY2d 308, 313 [2000]) and would have permitted a jury finding that the advice itself was not the proximate cause of defendant’s losses (see Chadbourne & Parke v HGK Asset Mgt., 295 AD2d 208, 209 [2002]). And while defendant posits several alternative courses that plaintiff might have pursued in the underlying administrative protest, it failed to show that the tactical decisions made by the firm did not constitute “proper strategic legal decision-making” (Taylor v Paskoff & Tamber, LLP, 102 AD3d 446, 448 [2013]), or so the jury reasonably could find. Nor was the jury’s consideration of the legal malpractice issue shown to have been compromised in any way [*2]by the form{**43 Misc 3d at 70} of the verdict sheet, particularly when that document is viewed in the context of the charge as a whole (see Plunkett v Emergency Med. Serv. of N.Y. City, 234 AD2d 162, 163 [1996]).

The record discloses no evidentiary error warranting reversal. The out-of-court statements made by defendant’s (now) deceased chief financial officer were admissible under the “speaking agent” exception to the hearsay rule (see Loschiavo v Port Auth. of N.Y. & N.J., 58 NY2d 1040, 1041 [1983]). Further, in light of the voluminous evidence considered by the jury, including over 60 trial exhibits introduced by defendant, any error in the exclusion of the two documents now complained of by defendant would have been harmless (see Ramkison v New York City Hous. Auth., 269 AD2d 256, 256 [2000]).

We note finally that the court properly directed a verdict in favor of plaintiff on its main claim for unpaid legal services, a claim which, as one abandoned by plaintiff’s trustee in bankruptcy, revested in plaintiff at the close of the bankruptcy proceeding (see Dynamics Corp. of Am. v Marine Midland Bank-N.Y., 69 NY2d 191, 195-196 [1987]; Culver v Parsons, 7 AD3d 931, 932 [2004]).”

Candela Entertainment, Inc. v Davis & Gilbert, LLP   2015 NY Slip Op 02712   Decided on March 31, 2015 Appellate Division, First Department is another example of the Appellate Division applying a laser-sharp eye to the “but for” portion of a case.  Here the question, on a motion to dismiss, was not whether the complaint stated “any” cause of action, but rather, could Plaintiff prove that it would not have taken up a commercial transaction if the attorneys had advised them that the transaction required certain consents to be given.

From the decision:  “Plaintiffs’ allegations failed to establish that plaintiffs had a cause of action for legal malpractice. The pleadings, affidavits and documentary evidence submitted on the motion established that the law firm’s alleged malpractice did not proximately cause plaintiffs any injury (see generally Borges v Placeres, 123 AD3d 611, 611 [1st Dept 2014], and Barnett v Schwartz, 47 AD3d 197, 205 [2d Dept 2007]). Plaintiffs never alleged that they would have abandoned or postponed the assignment of film rights and attendant intellectual property from the individual plaintiff’s nonparty, nonprofit corporation to the plaintiff corporation, had they been advised by the law firm that the film involved licensing issues necessitating licensor consents in order to be [*2]freely marketable. The individual plaintiff had secured the licenses for materials used in the film before the assignment, and plaintiffs do not allege that they were unable to secure consents after the assignment.”

Goldin v Tag Virgin Is. Inc.  2014 NY Slip Op 31308(U)  May 20, 2014  Supreme Court, New York County
Docket Number: 651021/2013  Judge: Eileen Bransten is an example of overreaching.  The law of legal malpractice in New York cleaves to a policy of strict privity.  If you did not hire the attorney, and the attorney did not work for you, then your opportunities are strictly limited.  The exception of malice, collusion, fraud or other “acts” is very hard to take advantage of.

“This action stems from investments made in brokerage accounts, managed by Defendant TAG, for which Plaintiffs are the beneficiaries or the co-trustees. Defendant TAG, formerly known as Taurus Advisory Group, is a Connecticut corporation owned by Defendants Tagliaferri and Cornell. (Compl. if 17) Collectively, the Complaint refers to Defendants TAG, Tagliaferri and Cornell as the “TAG Defendants.”

Plaintiffs now contend that the ‘TAG Defendants” began “scamming” Plaintiffs in mid-2007 by liquidating their more conservative investments and transferring Plaintiffs’ funds to TAG-affiliated companies through convertible note instruments. See Compl. ii 61. The notes were “mostly drafted” by Defendant Feiner. Id. According to Plaintiffs, these notes, while appearing legitimate, were 11 a fiction designed by the TAG Defendants and Feiner to defraud the Plaintiffs. 11 Id. Plaintiffs contend that pursuant to the terms of the notes, TAG was the payee and TAG-affiliated companies were the makers, purportedly responsible for repaying TAG the principal due plus interest on the maturity date. However, the Complaint alleges that the notes were drafted so that Plaintiffs were not the payees, limiting their ability to recover against the makers. Id.

Defendant Feiner was TAG’s legal counsel, and according to Plaintiffs, “mostly drafted” certain of the convertible note instruments through which Plaintiffs’ funds were transferred to TAG-related companies. In addition, Plaintiffs contend that Feiner was responsible for wiring Plaintiffs’ funds to the TAG-affiliated ~ompanies, including the IEAH Defendants. These allegations are all pleaded “on information and belief.” See Compl. if 81. Based on these allegations, Plaintiffs assert four claims against Feiner – legal malpractice, aiding and abetting breach of fiduciary duty, unjust enrichment, and fraud. Feiner now seeks dismissal of each of these claims pursuant to CPLR 321 l(a)(S) and (a)(7).  In addition, Feiner contends that Plaintiffs’ aiding and abetting and fraud claims are not pleaded with the requisite specificity under CPLR 3016(b). Each of Finer’s arguments will be examined in turn below

Even if timely brought, Plaintiffs legal malpractice claim nonetheless would be dismissed for failure to state a cause of action. “A cse for legal malpractice cannot be stated in the absence of an attorney-client relationship.” Waggoner, 68 A.D.3d at 5. However, Plaintiffs here fail to plead that they had such a relationship with Defendant Feiner. As discussed above, Plaintiffs’ legal malpractice claim stems from Feiner’s representation of TAG in drafting the convertible notes. Since Feiner did not represent Plaintiffs and was performing services only on behalf of TAG, no attorney-client relationship has been stated. See Federal Ins. Co. v. North American Specialty Ins. Co., 47 A.D.3d 52, 59 (1st Dep’t 2007) (“New York courts impose a strict privity requirement to claims of legal malpractice; an attorney is not liable to a third party for negligence in performing services on behalf of his client. 11 )”

Client is in a divorce and really wishes the other spouse to pay legal fees.  Matrimonial is settled, and the settlement allocution establishes that no attorney fees were to be paid.  Client nevertheless sues for this failure as well as overbilling. Here is what happened in  Tanenbaum v Molinoff  2014 NY Slip Op 04186 [118 AD3d 774]  June 11, 2014  Appellate Division, Second Department.

“Here, the defendant established that he was entitled to the dismissal of the first cause of action, which alleged legal malpractice, pursuant to CPLR 3211 (a) (1) and (7). Contrary to the plaintiff’s contentions, the complaint in this action, as well as certain documentary evidence before the Supreme Court, including, inter alia, a portion of the settlement agreement between the plaintiff and his former wife, conclusively established as a matter of law that, under the terms of the settlement agreement (see generally Trinagel v Boyar, 99 AD3d 792, 792 [2012]; Matter of Berns v Halberstam, 46 AD3d 808, 809 [2007]), the plaintiff was not entitled to an award of an attorney’s fee in the proceeding against his former wife before the Family Court (see Matter of Tanenbaum v Caputo, 81 AD3d 839[2011]), and that the defendant therefore did not commit malpractice in failing to obtain an award of an attorney’s fee in that proceeding. Moreover, the retainer agreement between the parties here conclusively refuted any claim based on the plaintiff’s allegation that the defendant assured him that the plaintiff’s former wife would be responsible for the payment of all legal fees in that proceeding. Accordingly, the Supreme Court properly granted that branch of the defendant’s motion which was to dismiss the first cause of action pursuant to CPLR 3211 (a) (1) and (7).

Contrary to the Supreme Court’s determination, however, the plaintiff’s second cause of action, which alleged breach of contract and sought to recover $5,875 in damages, representing the amount he had paid to the defendant, based on, inter alia, overbilling, was not necessarily duplicative of the first cause of action (see O’Connor v Blodnick, Abramowitz & Blodnick, 295 AD2d 586, 587 [2002]). Moreover, while the court concluded that the plaintiff could seek these damages as a counterclaim in the separate action commenced by the defendant (see Molinoff v Tanenbaum, 118 AD3d 761 [2014] [decided herewith]), at the time the order appealed from was issued, that action had been dismissed. Accordingly, we modify the order by deleting the provision thereof granting that branch of the defendant’s motion which was to dismiss the second cause of action, which was to recover $5,875 in damages for breach of contract, and substituting therefor a provision denying that branch of the motion.”