Judge Lewis of Supreme Court, Kings County decides a legal malpractice case coming from an motor vehicle negligence case.  Defendant attorneys brought the case in Civil Court in which jurisdiction is limited to $25,000.   They did not sue all the potential drivers and owners.  Client took the case away from defendants and gave it to new counsel who settled the case for $ 10,000.  They argued that the case was so damaged, that nothing better could be accomplished.  Hence, original attorneys were responsible for loss of further damages,

In Atiencia v Pinczewski  2015 NY Slip Op 50048(U)  Decided on January 22, 2015  Supreme Court, Kings County  Lewis, J. writes:  "The First Department has held that for the plaintiff to succeed in an action for legal malpractice where there was a settlement in the underlying case, she must "demonstrate that if not for the alleged acts of malpractice, [s]he would have been able to recover or proceed in a manner other than that which actually eventuated" (see Becker v Julien, Blitz & Schlesinger, P.C., 95 Misc 2d 64, 68 [1977]). "Where the termination [of a case] is by settlement rather than by dismissal or adverse judgment, malpractice by the attorney is more difficult to establish, but a cause of action can be made out if it is shown that assent by the client to the settlement was compelled because a prior misfeasance or nonfeasance by the attorneys left no other recourse (id. At 66). "As a matter of policy, cases once settled should not be readily relitigated as to their merits in another forum, where the original defendant has been released and the plaintiff’s original attorneys have become the defendants.Under those circumstances, the burden must be on the plaintiff seeking such recovery to demonstrate by evidence rather than by conclusory allegations, that he indeed suffered substantial financial loss because of misdeeds by his attorneys and not by second guessing as to their judgment" (see Becker, at 68). On appeal, the Appellate Division stated, "we agree with the Special Term that insofar as this action rests upon a claim [*4]that defendants’ misconduct resulted in an unfavorable settlement of plaintiff’s underlying claim against Zale Corporation, the complaint must be dismissed for the reason that it can only be the sheerest speculation whether a different handling of the case by defendants-attorneys, or participation by a particular member of the defendants’ firm, would have resulted more favorably to plaintiff than the settlement that was actually made. Accordingly, the second cause of action for malpractice was properly dismissed" (see Becker v. Julien, Blitz & Schlesinger, P.C., 66 AD2d 674, 19 [1978]). In the case at bar, the plaintiff has failed to demonstrate that she has suffered ascertainable damages or substantial financial loss proximately caused by the defendants’ breach of duty The plaintiff has also failed to demonstrate beyond the sheerest speculation whether a different handling of the case would have produced a more favorable outcome than the settlement that was actually made.

It is uncertain whether the defendants failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession. The fact that the defendants did not name Palaquibay as a party to the lawsuit and did not file the case in Supreme Court raise questions of fact as to whether or not they breached a duty to the plaintiff. However, a failure to exercise ordinary reasonable skill and knowledge is only one of four prongs that the plaintiff must prove in order to succeed on her claim. The plaintiff has failed, with more than conclusory allegations, to demonstrate ascertainable damages or substantial financial loss, let alone that they were proximately caused by the defendants. The medical records provided to the court, indicate that the plaintiff’s treatments following the accident totaled $11,441.39 (see Exhibit B of Defendant’s Affidavit). Those expenses were covered entirely by insurance approximately eight years prior to the $10,000.00 settlement. In her deposition dated March 26, 2012, the plaintiff states that she did not have to pay any money out-of-pocket and that she discontinued treatments when the insurance company stopped paying for them (see Plaintiff’s Deposition, at 73-74).With regards to the amount of time she missed from work, the plaintiff states that she had to take additional maternity leave to recover from the accident, that after returning to work she had to miss days to attend physical therapy, and that she lost salary because of the missed time (id, at 47-50). She contends that the $10,000.00 settlement was inadequate because it doesn’t cover the therapies that she would have undergone on her back, neck, shoulder, and knee which she says continued to be necessary as of the time of her deposition, (March 26, 2012). However, it is unclear what those therapies would be, if they are necessary, and how much they cost (id, at 87). The plaintiff has had adequate time to provide documentation indicating what further treatments are warranted, but has failed to do so. The plaintiff also says that she used some of the settlement money to undergo therapy in Staten Island but neither remembers the name of the facility where she treated, nor how much she spent on therapy (id, at 87-88). The plaintiff has provided no evidence to support the truth of her treatments, no documentation from a medical professional to support her contention of continued treatment after the settlement or need for treatment moving forward, and she provides no pay stubs or employers affidavits to support her claim of work-time or salary lost as a result of the accident. Simply put, the plaintiff has failed to prove the existence of ascertainable damages beyond the amount she received from the settlement.

In Perks v. Lauto, 760 N.Y.S.2d 231 (2003), where plaintiffs’ counsel failed to adequately investigate the assets and insurance coverage of a driver whose vehicle was involved in an accident with the plaintiff, the Second Department found that the appellants "submitting evidence establishing that the plaintiffs discharged them and hired new counsel two months before the plaintiffs settled their claim against the driver. Under such circumstances, subsequent counsel had a sufficient opportunity to protect plaintiffs’ rights, and any negligence by the appellants was not the proximate cause of the plaintiffs’ alleged damages." Here, subsequent counsel represented the plaintiff in the underlying matter for approximately four years prior to the settlement. This court finds four years to be a sufficient period of time to protect the plaintiff’s right and to relieve the defendants of proximate causation for alleged damages suffered by the [*5]plaintiff.

The court disagrees with plaintiff’s contention that this motion for summary judgment is barred by res judicata on the grounds that the defendants made similar arguments in a prior motion to dismiss that was denied. The court has the discretion to treat a CPLR 3211 motion to dismiss as a CPLR 3212 motion for summary judgment and the "disposition will as a rule be deemed a disposition on the merits and thus entitled to res judicata treatment. With such an impact, the treatment is not to be lightly indulged" (see CPLR § 3211, Commentary C3211:44). If the court intends to apply res judicata treatment to a motion to dismiss it should make the parties aware of its intent "so that an appropriate record may be made by the parties" (see Mareno v. Kibbe, 32 AD2d 825, 302 N.Y.S.2d 324 [2nd Dept 1969]). Here, the court never indicated to the parties that it intended to treat prior motion practice for the purposes of res judicata and finds that the plaintiff has failed to produce adequate evidence demonstrating that she has suffered ascertainable damages or that if she had suffered ascertainable damages, the defendants were the cause of those damages."

The Business Judgment rule protects condo and coop boards from many claims. Chief among them are the day-to-day decisions on how to run the building.  Do we fix the elevators?  Do we change the boiler?  Shall we give the super a raise?  Owners who are unhappy have a very limited number of options, as is illustrated by Pomerance v McGrath  2015 NY Slip Op 00466  Decided on January 20, 2015  Appellate Division, First Department. 

Of interest to us is the denial of plaintiff’s motion to amend the pleadings to add a JL 487 claim.  Here it is denied, not for the reason that it is brought in a separate action, but for lack of proper pleading.

"Order, Supreme Court, New York County (Barbara Jaffe, J.), entered June 30, 2014, which, to the extent appealed from as limited by the briefs, (1) granted plaintiff’s motion for leave to amend her amended complaint to the extent of accepting the first, third, fifth, eighth, tenth, eleventh, twelfth, thirteenth, fifteenth, and seventeenth causes of action in the proposed "Verified Second Amended Complaint (Revision 1)," (2) denied the motion to the extent of striking the second, fourth, sixth, and ninth causes of action without leave to replead and the seventh cause of action as against Robert J. Braverman without leave to replead, and (3) denied defendants’ motion for summary judgment on the fifth cause of action of the amended complaint, unanimously modified, on the law, to also strike the first, third, fifth, eighth, tenth, eleventh, twelfth, and seventeenth causes of action, and otherwise affirmed, without costs."

"Plaintiff’s sixth cause of action, alleging that Braverman and his firm aided and abetted the board’s allegedly fraudulent conduct, is insufficient. A plaintiff alleging an aiding-and-abetting fraud claim must allege, among other things, that the defendant substantially assisted in the underlying fraud (Oster v Kirschner, 77 AD3d 51, 55 [1st Dept 2010]). Plaintiff merely alleges that Braverman and his firm failed to act. "[T]he mere inaction of an alleged aider and abettor constitutes substantial assistance only if the defendant owes a fiduciary duty directly to the plaintiff" (Kaufman v Cohen, 307 AD2d 113, 126 [1st Dept 2003]). "[T]he fiduciary duties owed by a limited partnership’s attorney to that entity do not extend to the limited partners" (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 561 [2009]). Hence, Braverman and his firm — the attorneys for the condominium, an unincorporated association — do not owe a fiduciary duty to plaintiff, a unit owner and member of the association.

While it was not improper for plaintiff to bring a Judiciary Law § 487 claim in this action even though it is based on alleged deceit in a prior action (see Newin Corp. v Hartford Acc. & Indem. Co., 37 NY2d 211, 217 [1975]; Specialized Indus. Servs. Corp. v Carter, 68 AD3d 750, 752 [2d Dept 2009]), the motion court properly denied leave to add this claim — the seventh cause of action — due to a failure to allege "a chronic and extreme pattern of legal delinquency" (Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 13 [1st Dept 2008] [internal quotation marks omitted], lv denied 12 NY3d 715 [2009]).

"

In this legal malpractice action Estate of Alston v Ramseur  2015 NY Slip Op 00490  Decided on January 21, 2015 Appellate Division, Second Department the attorney is defending against a claim that there was a departure from good practice which proximately damaged the client.  In defense, the attorney allowed a conditional order to be entered, and then failed to show up for a deposition.  Result?  Answer stricken, assessment of damages.  Not a good outcome.

"In an order dated April 5, 2012 (hereinafter the conditional order), the Supreme Court, Kings County, directed that the defendant’s answer "shall be stricken unless" she appeared for a deposition on or before May 5, 2012. It is undisputed that the defendant failed to comply with the conditional order. In March 2013, the venue of this action was changed from Kings County to Queens County. The Supreme Court, Queens County, granted the plaintiff’s motion to strike the defendant’s answer for failure to comply with, inter alia, the conditional order, and to set the matter down for a hearing on the assessment of damages.

As a result of the defendant’s failure to appear for her deposition on or before May 5, 2012, the conditional order became absolute (see Wilson v Galicia Contr. & Restoration Corp., 10 NY3d 827, 830; Almonte v Pichardo, 105 AD3d 687, 688; Pugliese v Mondello, 67 AD3d 880, 881; Baturov v Marchewka, 10 AD3d 345; D’Aloisi v City of New York, 7 AD3d 750; Hall v Penas, 5 AD3d 549). To be relieved of the adverse impact of the conditional order, the defendant was required to demonstrate a reasonable excuse for her failure to appear for a deposition and a potentially meritorious defense (see Gibbs v St. Barnabas Hosp., 16 NY3d 74, 80; Almonte v Pichardo, 105 AD3d at 688; Panagiotou v Samaritan Vil., Inc., 66 AD3d 979, 980; Zouev v City of New York, 32 AD3d 850). The defendant did neither. Accordingly, the Supreme Court properly granted the plaintiff’s motion pursuant to CPLR 3126 to strike the defendant’s answer for her failure to comply with, inter alia, the conditional order, and to set the matter down for a hearing on the assessment of damages."

Clients sometimes exaggerate or have high hopes about  their damages.  They sometimes  do so in order to interest attorneys in taking their legal malpractice case.  Often, they will inform the potential attorney that the damages are in the MILLIONS!  Sometimes it’s true.  However, this story from the New York Law Journal today eclipses any of those calls.  It’s in the BILLIONS!  One never wants to read a story which starts, " A filing error…"

Mark Hamblett writes about the GM Bankruptcy and a filing mistake which renders a $2.5 Billion loan no longer secured.  In this setting, recovery may be entirely gone.  No matter what, it’s going to cost a lot to regain some of the secured assets…a lot.

"A filing mistake by attorneys that rendered a secured loan from JP Morgan to General Motors unsecured has left a group of creditors free to pursue a clawback of some $1.5 billion in the GM bankruptcy case.   The U.S. Court of Appeals for the Second Circuit held Wednesday that it did not matter that neither GM, nor its counsel at Mayer Brown, nor JP Morgan or its counsel at Simpson Thacher & Bartlett, intended a mistake that changed the secured status of a $1.5 billion loan to GM when preparing for and making a filing under the Uniform Commercial Code.
"We conclude that although the termination statement mistakenly identified for termination a security interest that the lender did not intend to terminate, the secured lender authorized the filing of the document, and the termination statement was effective to terminate the security interest," the Second Circuit said in In Re Motors Liquidation Company, 13-2187.
 

Judges Ralph Winter (See Profile), Richard Wesley (See Profile) and Susan Carney (See Profile) reversed Southern District Bankruptcy Judge Robert Gerber (See Profile), but only after having certified questions on intent under the Uniform Commercial Code, (UCC), answered by the Delaware Supreme Court.

General Motors had entered into a synthetic lease to obtain $300 million in financing from a syndicate that included JPMorgan in 2001. The lease was secured by liens on 12 pieces of real estate.

In 2006, GM obtained an unrelated term loan for about $1.5 billion that was secured by GM assets, including equipment and fixtures at 42 facilities in the United States.
In 2008, GM told its counsel responsible for the 2001 synthetic lease, now-retired Mayer Brown partner Robert Gordon, to prepare the documents to repay the lease and terminate the security interests associated with it. Gordon assigned some of the work to Mayer Brown associate RyanGreen, who, in turn, asked a paralegal at the firm to perform a search of UCC-1 initial financing statements that had been recorded against General Motors in Delaware.
The paralegal came up with three security interests that ultimately ended up on the closing checklist. The problem was that only two of the security interests applied to the synthetic lease and the third applied to the $1.5 billion term loan. So when Mayer Brown prepared draft UCC-3 amendment termination statements, it included a draft termination statement for the term loan, even though the unrelated UCC-3 statement never used the words "term loan.""

 

The 183 day rule in NYS taxation bobs to the surface from time to time.  In this accounting malpractice case, where plaintiff resided makes a difference of about $1 million in tax.  Client relied upon the CPAs explanation of how the 183 day rule is applied, to his detriment.  Was that advice the [or a] proximate cause of this problem?

Hamadeh v Spaulding   2015 NY Slip Op 30027(U)   January 8, 2015   Supreme County, New York County  Docket Number: 114060/09   Judge: Marcy S. Friedman  applies the legal malpractice rule on proximate cause to accounting malpractice. 

"In arguing that plaintiffs cannot establish that they committed malpractice, both Spaulding and Citrin contend that plaintiffs must prove not only that plaintiffs could have avoided taxation as statutory residents if Spaulding had provided different advice about the number of days they could spend in New York, but also that they could have avoided taxation as non-domiciliaries. They further contend that plaintiffs cannot establish that they changed their domicile from New York to Pennsylvania, as evidenced by the finding in the Report of Audit to that effect, as well as by defendants’ analysis of plaintiffs’ failure to satisfy the elements necessary to establish a change of domicile. (See Spaulding Memo. In Opp. to Ps.’ Motion at 12-14; Citrin Memo. In Support of Citrin Motion at 13-17.) Put another way, defendants argue that because plaintiffs cannot show that they changed their domicile, they would have been subject to taxation as New York residents, regardless of whether the NYSDTF concluded that they were statutory residents. Spaulding concludes that plaintiffs cannot establish that his advice was the "proximate cause" of their increased tax liability. (Spaulding Memo. In Opp. to Ps.’ Motion at 14.) Citrin posits that plaintiffs’ failure to change their domicile from New York was an "independent cause" of their tax liability. (Citrin Memo. In Reply to Citrin Motion at 6.) Defendants both argue in effect that Spaulding’s incorrect advice on the statutory residency must  have been the sole proximate cause of the NYSDTF’s assessment of deficiency and interest charges upon plaintiffs. Defendants do not cite any case law in the accountant malpractice context which holds that the malpractice must have been the sole proximate cause of the plaintiffs injury. As discussed above, cases in the accountant malpractice area have used the term "a proximate cause" in articulating the standard that the plaintiff must prove. In the legal malpractice context, an often-cited formulation of the standard of proof requires that three elements be established: "(I) the negligence of the attorney; (2) that the negligence was the proximate cause of the loss sustained; and (3) proof of actual damages. It requires the plaintiff to establish that counsel failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that ‘but for’ the attorney’s negligence, the plaintiff would have prevailed in the matter or would have avoided damages." (Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, I 0 [I st Dept 2008] [internal quotation marks omitted, citing AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 (2007].) In other legal malpractice cases, however, the courts have held that the attorney’s malpractice must have been "a" proximate cause of the plaintiffs injury. (See 180 E. 88th St. Apt. Corp. v Law Off. of Robert Jay Gumenick, P.C., 2010 NY Slip Op 33848 [U], 2010 NY Misc Lexis 6878 [Sup Ct, NY County] [discussing varying formulations of attorney malpractice standard], affd 84 AD3d 582 (1st Dept 2011].) The Second Department has expressly held that these varying
formulations of the proximate cause standard ("a" as opposed to "the" proximate cause) have "no
substantive import," and that the "but for" standard for attorney malpractice cases does not require proof that the defendant attorney’s negligence was the "sole proximate cause" of the plaintiffs losses. (Barnett v Schwartz, 4 7 AD3d 197, 203-205 (2d Dept 20071.) Although the First Department has not expressly so held, it recently approvingly cited the Second  Department’s holding. (See Borges v Placeres, 2014 NY Slip Op 08910, 2014 NY App Div Lexis 8822 [Dec. 23, 2014] [citing Barnett in holding that the trial court’s jury charge appropriately provided that defendant attorney’s malpractice must be a "substantial factor in causing plaintiffs harm"].) 1 The court assumes that the "but for" standard from the legal malpractice context applies equally to accountant malpractice claims. For purposes of this motion, however, the court need not reconcile the differing interpretations of this standard because, even in its most rigorous application, the standard is clearly satisfied by the evidence in the record. "

Summonses and Complaints served at the very last minute are a study in tension and worry.  With good reason, practitioners should fear the NY rules on service of pleadings.  Has the process server found a person of discretion?  Is in hand service good enough for the case? Has the after-mailing been performed correctly?   Sometimes, it is not and dismissal looms.  We see such a situation in Qing Dong v Chen Mao Kao  2014 NY Slip Op 01735 [115 AD3d 839]  March 19, 2014
Appellate Division, Second Department  where both defendants could have obtained dismissal, but for waiting too long to move to dismiss.

"Contrary to the plaintiff’s contention, service of the summons and complaint upon Chen Mao Kao and Dickman was not made within 120 days of the commencement of the action as required by CPLR 306-b. Although the summons and complaint were delivered to persons of suitable age and discretion at the actual places of business of those defendants on November 4, 2011, one day before the expiration of the 120-day period, service was not completed within that time frame because the second act required by CPLR 308 (2), the mailing, was not performed within the 120-day period (see Furey v Milgrom, 44 AD2d 91, 92-93 [1974]; see also Siegel, NY Prac § 72 at 120 [5th ed 2011]). Also contrary to the plaintiff’s contention, considering all of the circumstances of this case, the Supreme Court providently exercised its discretion in denying her cross motion to extend the time to serve the summons and complaint upon Chen Mao Kao and Dickman, nunc pro tunc, in the interest of justice (see CPLR 306-b; Leader v Maroney, Ponzini & Spencer, 97 NY2d 95, 105-106 [2001]; Khodeeva v Chi Chung Yip, 84 AD3d 1030, 1030-1031 [2011]; Calloway v Wells, 79 AD3d 786, 786-787 [2010]). Accordingly, the Supreme Court properly granted Dickman’s motion, and properly denied the plaintiff’s cross motion.

The Supreme Court also properly denied that branch of Chen Mao Kao’s cross motion which was pursuant to CPLR 306-b to dismiss the complaint insofar as asserted against him. Chen Mao Kao waived his objection that he was not timely served with the summons and complaint by failing to move for judgment on that ground within 60 days after serving his answer (see CPLR 3211 [e]). Balkin, J.P., Chambers, Lott and Hinds-Radix, JJ., concur."

It seems that everyone was in on the Barnie Madoff delusion, including  Unions in Upstate New York.  How the IBEW got involved with Madoff is not stated.  However, they lost enough money to sue their CPAs.  In Board of Trustees of Ibew Local 43 v D’Arcangelo & Co., LLP
2015 NY Slip Op 00113  Decided on January 2, 2015  Appellate Division, Fourth Department the court discusses accounting negligence standards and continuous representation. 

""Accounting malpractice or professional negligence contemplates a failure to exercise due care and proof of a material deviation from the recognized and accepted professional standards for accountants and auditors, generally measured by [generally accepted accounting principles] and [generally accepted auditing standards (GAAS)] promulgated by the American Institute of Certified Public Accountants, which proximately causes damage to plaintiff" (Cumis Ins. Socy. v Tooke, 293 AD2d 794, 797-798; see Berg v Eisner LLP, 94 AD3d 496, 496). Here, plaintiff sufficiently alleged that defendant committed malpractice in not adhering to GAAS by, inter alia, failing to obtain a SAS 70 report, and that defendant’s negligence proximately caused plaintiff to sustain damages (see Sacher v Beacon Assoc. Mgt. Corp., 114 AD3d 655, 657). Although defendant contends that GAAS did not require it to obtain a SAS 70 report, it did not submit any evidence establishing that fact in support of its motion (see generally C.P. Ward, Inc. v Deloitte & Touche LLP, 74 AD3d 1828, 1829-1830; Cumis Ins. Socy., 293 AD2d at 798), and [*2]we disagree with the court that such a determination could be made as a matter of law in the absence of such evidence (see Berg, 94 AD3d at 496). With respect to proximate cause, "[a]s a general rule, issues of proximate cause[, including superceding cause,] are for the trier of fact" (Hahn v Tops Mkts., LLC, 94 AD3d 1546, 1548 [internal quotation marks omitted], citing Derdiarian v Felix Contr. Corp., 51 NY2d 308, 312, rearg denied 52 NY2d 784; see Bachmann, Schwartz & Abramson v Advance Intl., 251 AD2d 252, 253), and we see no basis to depart from that general rule in this case (see Sacher, 114 AD3d at 657). Plaintiff alleged that defendant should have obtained the SAS 70 report to confirm the existence and valuation of the funds’ investments. Plaintiff further alleged that, had defendant done so, it would have discovered that it could not confirm the existence of those securities, and plaintiff could have redeemed its investments.

As an alternative ground for affirmance (see generally Parochial Bus. Sys. v Board of Educ. of City of N.Y., 60 NY2d 539, 545-546; Hyatt v Young, 117 AD3d 1420, 1421; Summers v City of Rochester, 60 AD3d 1271, 1273), we agree with defendant that the third through sixth causes of action should be dismissed as duplicative of the professional malpractice cause of action, including the causes of action for fraud (see Long v Cellino & Barnes, P.C., 59 AD3d 1062, 1062), and breach of fiduciary duty (see Matter of HSBC Bank U.S.A. [Littleton], 70 AD3d 1324, 1325, lv denied 14 NY3d 710; Dischiavi v Calli [appeal No. 2], 68 AD3d 1691, 1693). Those causes of action make the same allegations of wrongdoing as the professional malpractice cause of action and do not seek any different damages. The second cause of action for breach of contract was already dismissed by a federal court as duplicative of the professional malpractice cause of action, and plaintiff does not dispute that collateral estoppel bars that cause of action. We reject defendant’s contention, however, that the professional malpractice cause of action, to the extent that it relies on the 2007 audit report, should be dismissed as time-barred. We conclude that plaintiff sufficiently pleaded that the continuous representation doctrine applies to toll the statute of limitations with respect to the 2007 audit report (see Symbol Tech., Inc. v Deloitte & Touche, LLP, 69 AD3d 191, 195-196)."

A client is free to sue his professional, whether it be an attorney, an accountant or even a doctor.  But, if the client has "dirty hands" or has participated in some untoward act, he may be blocked from pursuing the case.  This is the principal of "in pari delicto."

In an accounting setting, Schwartz v Leaf, Salzman, Manganelli, Pfiel, & Tendler, LLP  2014 NY Slip Op 08823  Decided on December 17, 2014  Appellate Division, Second Department  is an example of the rule and an exception.  Where an agent engages in wrongdoing, that misconduct may be attributed to the principal.  Sometimes not. 

"The Supreme Court properly denied that branch of the defendants’ motion which was to dismiss the accounting malpractice cause of action pursuant to CPLR 3211(a)(1). The defendants contend that that cause of action is barred by the doctrine of in pari delicto, "which mandates that the courts will not intercede to resolve a dispute between two wrongdoers" (Kirschner v KPMG LLP, 15 NY3d 446, 464). However, the adverse interest exception to the doctrine of in pari delicto provides that "when an agent is engaged in a scheme to defraud his principal, either for his own benefit or that of a third person, the presumption that knowledge held by the agent was disclosed to the principal fails because he cannot be presumed to have disclosed that which would expose and defeat his fraudulent purpose" (Center v Hampton Affiliates, 66 NY2d 782, 784). Here, the documentary evidence submitted by the defendants did not conclusively foreclose the application of the adverse interest exception to the in pari delicto defense (see Symbol Tech., Inc. v Deloitte & Touche, LLP, 69 AD3d at 196-199; compare Chaikovska v Ernst & Young, LLP, 78 AD3d 1661, 1662-1664)."

The legal principals are straightforward, and the prose is cool and scholarly, but the subtext to this legal malpractice case is heartbreaking.  Parent against child; economic interests tearing apart families. 

Take a look at Cusimano v Wilson, Elser, Moskowitz, Edelman & Dicker LLP   2014 NY Slip Op 04428 [118 AD3d 542]  June 17, 2014   Appellate Division, First Department

"Plaintiff failed to allege facts that would satisfy the proximate cause element, namely, that "but-for" defendants’ alleged inadequate and ineffective representation of her in the underlying arbitration, she would have succeeded in demonstrating that her parents lacked an ownership interest in a contested family asset (see Lieblich v Pruzan, 104 AD3d 462 [1st Dept 2013]). Plaintiff stated that if defendants had introduced her parents’ personal income tax returns in the underlying arbitration proceeding, the arbitration panel would have had no choice but to consider them, credit their contents, and hold that the information contained therein (i.e., that the parents allegedly made no claim of an ownership interest in the contested family asset) was binding against the parents in accordance with the tax estoppel doctrine. The contention that mere submission of the parents’ personal income tax filings in the arbitration proceeding would necessarily have altered the arbitration panel’s determination regarding the parents’ ownership interest in the subject asset is grounded in speculation, and thus, insufficient to sustain a claim for legal malpractice (see e.g. AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435 [2007]; Pellegrino v File, 291 AD2d 60, 64 [1st Dept 2002])."

Plaintiff lacked two elements of a successful legal malpractice case.  The two missing elements were  the "but for" aspect which requires that "but for" the mistake of the attorney there would have been a better outcome for the estate.  The second missing element was ascertainable damages.  Here, the estate had to prove that there would have been identifiable damages in the future.

Estate of Feder v Winne, Banta, Hetherington, Basralian & Kahn, P.C.  2014 NY Slip Op 03593  117 AD3d 541] May 15, 2014 Appellate Division, First Department held that dismissal was warranted. 

"The motion court properly dismissed the legal malpractice claim. Plaintiff, the wife of decedent, failed to adequately allege that defendant acted negligently in advising her to pay the estate tax out of decedent’s estate, rather than making a qualified terminable interest property (QTIP) election (see Internal Revenue Code [26 USC] § 2056 [b] [7]). Such a QTIP election would have deferred payment of any estate taxes until plaintiff’s death, at which time they would be paid out of her estate. Defendant explained that while a QTIP election might have resulted in an immediate tax savings during plaintiff’s lifetime, it could have left significantly less to the residuary beneficiaries of decedent’s estate. Defendant’s legal obligation was to the estate, not to plaintiff. Thus, as the motion court concluded, defendant selected one among several reasonable courses of action (see Rosner v Paley, 65 NY2d 736, 738 [1985]; Rodriguez v Lipsig, Shapey, Manus & Moverman, P.C., 81 AD3d 551, 552 [1st Dept 2011]). Indeed, another firm with whom plaintiff consulted stated that defendant’s analysis was correct. To the extent plaintiff argues that defendant failed to consider other alternatives, such as gifts or other trusts, those options would have contradicted the decedent’s apparent testamentary intent to retain control and distribute the remainder of his assets to his children upon plaintiff’s death.

The court also correctly concluded that plaintiff failed to adequately allege that defendant’s conduct proximately caused any ascertainable damages. Plaintiff’s damages claim was based largely on speculation that the estate tax payment could have been avoided in the future, which, as plaintiff itself acknowledged in her motion papers, depended on too many [*2]uncertainties, including future tax laws, tax rates, and the future value of the trust property (see e.g. Brooks v Lewin, 21 AD3d 731, 734-735 [1st Dept 2005], lv denied 6 NY3d 713 [2006])."