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.”

When a client has multiple remedies, such as personal injury, wrongful death, pain and suffering, as well as workers’ compensation, sometimes the attorneys focus on one to the detriment of another remedy.  Such is what seems to have happened in Lirano v Grimble & Logudice, LLC    2014 NY Slip Op 32346(U)   September 3, 2014  Supreme Court, New York County  Docket Number: 154676/2013  Judge: Eileen A. Rakower.  The law firm took on a case in which decedent died while working.  Some two years and 5 days later the law firm rejected the case.  Problem?  No WC case started within the 2 year time limit.  Legal Malpractice?  We don’t know yet.  Right now, the parties are skirmishing over discovery.  More answers later.

“As alleged in the Verified Complaint, Decedent suffered injuries in an accident while working on December 21, 2010, at 175 East 96 th Street, New York, New York 10128, and died on December 23, 2010 as a result of his injuries. Plaintiff retained Defendants to “investigate and advise her with respect to all potential claims relating to the accident of December 23, 2010 and Mr. Pena’s death.” The Complaint alleges, by letter dated December 28, 2012, G&L “rejected the case without commencing a lawsuit or filing a Workers’ Compensation claim on behalf of the decedent, Eduardo Pena, or his estate.” It further alleges, “Pursuant to the applicable statute, a Workers Compensation claim must be filed within two (2) years. Therefore, the decedent and/or his estate are precluded from filing a Workers’ Compensation claim as a result of the accident of December 21, 2010.” Plaintiff claims that Defendants were negligent “in not advising the administratrix that the estate had a viable Workers’ Compensation claim; in not informing her that a Workers’ Compensation claim had to be commenced within two (2) years of the date of the accident and in failing to refer her to a lawyer and/or firm that focused on Workers’ Compensation claims and in failing to advise her to consult with a lawyer and/or firm that focused on Workers’ Compensation claims,” and resulting damages. In its Answer, G&L denies that the injuries sustained by Pena on the date of the incident was the sole factor causing Pena’s death because Pena had preexisting medical conditions. Furthermore, G&L contends Decedent was intoxicated at an after-hours Christmas party when the injury occurred, which would not be covered by Workers’ Compensation. G&L further contends that (1) Plaintiff failed to state a cause of action; and (2) Plaintiff was aware that G&L was retained solely with regard to an action based upon negligence of others, and not with respect to a Workers’ Compensation claim. ”

“Wherefore, it is hereby ORDERED that Defendant’s motion is granted to the extent that Plaintiff is directed to supplement Plaintiffs Bill of Particulars with respect to the paragraphs of G&L’s Demand for a Bill of Particulars as referenced above and to produce outstanding discovery that is requested in Defendant’s First Notice for Discovery and Inspection; and it is further ORDERED that Plaintiffs cross motion for a protective order is granted only to the extent that Plaintiff need not supplement any other portions of its Bill of Particulars not identified above. “

Here is a story which has happened all too often in the past 20 years.

“The plaintiff and the defendant, an attorney licensed in New York, met in or about 2001, when the plaintiff sought the defendant’s legal representation. The parties established a business relationship, which later evolved into a friendship. In 2007, upon the defendant’s recommendation, the plaintiff made an investment of $260,000 in an enterprise known as Agape World (hereinafter Agape), which purportedly used investor money to provide bridge loans to businesses, and paid interest to the investors. The defendant allegedly also invested large sums of his own money in Agape. In 2008, it was revealed that Agape was, in fact, a Ponzi scheme, in which new investors’ funds were used to pay earlier investors’ returns. The plaintiff and the defendant allegedly lost their investments in Agape.”

In Biberaj v Acocella   2014 NY Slip Op 06165 [120 AD3d 1285]  September 17, 2014  Appellate Division, Second Department ( an often cited case), the Appellate Division almost completely realigned the causes of action which were either dismissed or left alone by Supreme  Court.

“Ordered that the order is modified, on the law, (1) by deleting the provision thereof granting that branch of the motion which was for summary judgment dismissing the cause of action to recover damages for legal malpractice, and substituting therefor a provision denying that branch of the motion, and (2) by deleting the provisions thereof denying those branches of the motion which were for summary judgment dismissing the causes of action to recover damages for fraud and breach of contract, and substituting therefor a provision granting those branches of the motion; as so modified, the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

The plaintiff and the defendant, an attorney licensed in New York, met in or about 2001, when the plaintiff sought the defendant’s legal representation. The parties established a business relationship, which later evolved into a friendship. In 2007, upon the defendant’s recommendation, the plaintiff made an investment of $260,000 in an enterprise known as Agape World (hereinafter Agape), which purportedly used investor money to provide bridge loans to businesses, and paid interest to the investors. The defendant allegedly also invested large sums of his own money in Agape. In 2008, it was revealed that Agape was, in fact, a Ponzi scheme, in which new investors’ funds were used to pay earlier investors’ returns. The plaintiff and the defendant allegedly lost their investments in Agape.

[*2] In July 2009, the plaintiff commenced the instant action to recover damages for fraud (first cause of action), breach of fiduciary duty (second cause of action), negligence (third cause of action), money had and received (fourth cause of action), legal malpractice (fifth cause of action), based on a constructive trust (sixth cause of action), and for breach of contract (seventh cause of action). After issue was joined, the defendant moved for summary judgment dismissing the complaint. The Supreme Court granted those branches of the defendant’s motion which were for summary judgment dismissing the causes of action to recover damages for breach of fiduciary duty, negligence, and legal malpractice, and denied the remaining branches of the motion. The defendant appeals and the plaintiff cross-appeals from stated portions of this order.

To recover damages for legal malpractice, a plaintiff must prove the existence of an attorney-client relationship (see Berry v Utica Natl. Ins. Group, 66 AD3d 1376 [2009]; Rechberger v Scolaro, Shulman, Cohen, Fetter & Burstein, P.C., 45 AD3d 1453 [2007]; Moran v Hurst, 32 AD3d 909, 910 [2006]). A plaintiff is also required to establish that the defendant 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 Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Gershkovich v Miller, Rosado & Algios, LLP, 96 AD3d 716, 717 [2012]). “To succeed on a motion for summary judgment dismissing the complaint in a legal malpractice action, the defendant must present evidence in admissible form establishing that the plaintiff is unable to prove at least one essential element of his or her cause of action alleging legal malpractice” (Scartozzi v Potruch, 72 AD3d 787, 789-790 [2010]; see Gershkovich v Miller, Rosado & Algios, LLP, 96 AD3d at 717).

Here, in support of that branch of his motion which was for summary judgment dismissing the cause of action to recover damages for legal malpractice, the defendant met his prima facie burden of establishing that he had no attorney-client relationship with the plaintiff referable to the plaintiff’s investment in Agape (see Volpe v Canfield, 237 AD2d 282, 283 [1997]). In opposition, however, the plaintiff raised a triable issue of fact as to the existence of an attorney-client relationship in that context. Moreover, with regard to this cause of action, the defendant failed to show, prima facie, that he exercised the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession in allegedly advising the plaintiff regarding Agape, or that the alleged breach of this duty did not proximately cause the plaintiff to sustain damages. Accordingly, the Supreme Court should have denied that branch of the defendant’s motion which was for summary judgment dismissing the cause of action to recover damages for legal malpractice.

The Supreme Court should have granted those branches of the motion which were for summary judgment dismissing the causes of action to recover damages for fraud and breach of contract as duplicative of the cause of action to recover damages for legal malpractice, because they arose from the same facts as the legal malpractice cause of action, and do not allege distinct damages”

Some of the largest law firms in New York are the personal injury giants Jacoby & Meyers LLP and Finkelstein & Partners.  All across upstate New York, wherever there are cars and personal injuries, you’ll find their offices.  One of the institutional problems of the personal injury world is the expense of litigation.  Smaller firms act as banks for their clients.  The firm advances court costs, medical record costs, deposition transcript costs…you get the picture.  Jacoby has its own inhouse bank, which lends money to the client.  This shifts the ultimate cost of credit to the client and away from the law firm.

Rodriguez v Jacoby & Meyers, LLP   2015 NY Slip Op 02427   Decided on March 24, 2015  Appellate Division, First Department is a case which investigates this practice.  Is it proper?  Does it violate contingent fee rules?  Is it deceit ?

The answer to deceit is no.  The balance remains unanswered.

“As to the cause of action for breach of fiduciary duty based on over-billing, the record does not permit a finding as a matter of law as to whether the expenses billed by defendants Total Trial Solutions, LLC (TTS) and Cinetrial Solutions, LLC (CTS), providers of litigation support services, were authorized and were reasonable, since issues of fact exist whether defendant Jacoby & Meyers’s guidelines for the provision of litigation support services were followed and whether TTS and CTS provided services in excess of what had been deemed necessary.

The record does not permit summary dismissal of the complaint on the ground of unclean hands since, in addition to the above-cited issues of fact as to the following of the guidelines for litigation support services, issues of fact exist as to which individual or individuals at Jacoby & Meyers were responsible for litigating the case and for reviewing and approving the litigation support services.

As to the breach of fiduciary duty claim based on a conflict of interest, the retainer agreement clearly disclosed that attorneys had a financial interest in TTS and CTS, and advised plaintiff to seek an independent attorney’s opinion on the issue of case expenses if she felt the need (see generally Halevi v Fisher, 81 AD3d 504 [1st Dept 2011], lv denied 16 NY3d 711 [2011]). Plaintiff presented no evidence either that she had difficulty with English (indeed, her[*2]deposition testimony in English reflects no such difficulty) or that her injury rendered her unable to understand the agreement she signed.

For the same reasons, plaintiff’s contention that defendants committed fraud by omission by concealing their conflict of interest from her is unavailing. Nor does the retainer agreement’s language of “potential” conflict of interest render the disclosure less clear.

As to the breach of fiduciary duty claim based on the alleged filing of an improper retaining lien, it has not been determined whether defendants were discharged for cause (see Teichner v W & J Holsteins, 64 NY2d 977 [1985]; Eighteen Assoc. v Nanjim Leasing Corp., 297 AD2d 358 [2d Dept 2002]).

There is no evidence that defendants engaged in misconduct constituting a violation of Judiciary Law § 487 (see e.g. Lifeline Funding, LLC v Ripka, 114 AD3d 507, 508 [1st Dept 2014]).”