What happens when the Defendant-Attorney defends itself, and the main witness plaintiff seeks to call is that attorney?  The textbook answer is disqualification on the advocate-witness rule.  That’s exactly what happened in Lauder v Goldhamer  2014 NY Slip Op 08321  Decided on November 26, 2014  Appellate Division, Second Department. 

"The disqualification of an attorney is a matter that rests within the sound discretion of the Supreme Court (see Nationscredit Fin. Servs. Corp. v Turcios, 41 AD3d 802, 802). Here, the Supreme Court did not improvidently exercise its discretion in granting that branch of the plaintiff’s cross motion which was to disqualify Kantrowitz from representing the defendants pursuant to the advocate-witness rules (see Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.7). The allegations in the amended complaint and the plaintiff’s affidavit established that the testimony of Kantrowitz, who was the only attorney involved in the plaintiff’s execution of the retainer agreement and who the plaintiff alleged made certain misrepresentations that induced her to execute the agreement, would be necessary to resolve issues pertinent to the cause of action to set aside the retainer agreement (see Fuller v Collins, 114 AD3d 827; Falk v Gallo, 73 AD3d 685).

Accordingly, the Supreme Court properly denied those branches of the defendants’ motion pursuant to CPLR 3211(a)(7) which were to dismiss the amended complaint insofar as asserted against the defendant Paul B. Goldhamer individually, and to dismiss the second, sixth, and seventh causes of action, and properly granted the plaintiffs’ cross motion."

 Rules are rules, no?  "A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel." In the First Department the case is Bernstein v. Oppenheim & Co., PC and in the Second Department the case is Tortura v. Sullivan Papain Block McGrath & Cannavo PC..  So, that’s a pretty clear rule?

Not so.  In the First Department, cases have started to be dismissed on the grounds that at settlement the client stated that they were satisfied with the work of their attorney.  Today, in Katz v Essner
2014 NY Slip Op 32967(U)  November 18, 2014  Supreme Court, New York County  Docket Number: 154865/2013  Judge: Eileen A. Rakower dismissed on this ground.  It’s the Katebi v. Fink line of cases. 

From Katz:

 Judiciary Law 487, which was recently the subject of a Court of Appeals Case in Melcher,  is a difficult claim to prove.  It requires proof of an attorney’s intent to deceive the Court or the parties, and is viewed with a very jaundiced eye by the Courts. Agai v Liberty Mut. Agency Corp.  2014 NY Slip Op 04455 [118 AD3d 830]  June 18, 2014  Appellate Division, Second Department is an example of a JL 487 claim lost on documentary grounds.

The instant action concerns a dispute regarding the disposition of the collateral for a bond that was posted in connection with an appeal from a judgment in a prior action between the parties. In the prior action (hereinafter the note action), the plaintiff, Jacob Agai, sought to recover on a promissory note that was issued in his favor by the defendants Dennis Mihalatos and Diontech Consulting, Inc. (hereinafter Diontech) in connection with a $500,000 loan. In the note action, the Supreme Court, in an order dated March 11, 2008, granted Agai’s motion pursuant to CPLR 3213 for summary judgment in lieu of complaint, and judgment was entered thereon. Mihalatos and Diontech appealed, and this Court ultimately reversed the judgment and denied the motion for summary judgment (see Agai v Diontech Consulting, Inc., 64 AD3d 622 [2009]).

In connection with the appeal in the note action, Mihalatos and Diontech together [*2]filed a bond with the Supreme Court. The bond was guaranteed by Liberty Mutual Insurance Corporation, sued herein as Liberty Mutual Agency Corporation, doing business as Ohio Casualty Insurance Company (hereinafter Ohio Casualty). It is undisputed that, subsequent to this Court’s determination in Agai v Diontech Consulting, Inc. (64 AD3d at 622), the attorney representing Mihalatos and Diontech in the note action, Peter Kutil of King & King, LLP, obtained, from Ohio Casualty, the return of the collateral for the bond.

Agai then commenced the instant action, inter alia, to recover damages pursuant to Judiciary Law § 487 against, among others, Ohio Casualty, Kutil, and King & King, LLP.

The Supreme Court also properly directed the dismissal of the complaint insofar as asserted against Kutil and King & King, LLP (hereinafter together the Kutil defendants), based on documentary evidence, which included the bond itself (see CPLR 3211 [a] [1]; Fontanetta v John Doe 1, 73 AD3d 78, 86 [2010]). Since the bond, by its terms, was an appeal bond obtained pursuant to CPLR 5519 (a) (2), and since the bond was extinguished upon this Court’s determination of the appeal in the note action in favor of Mihalatos and Diontech, the Kutil defendants could not have acted with the "intent to deceive the court or any party" in violation of Judiciary Law § 487 (1) when they caused the collateral to be returned to Mihalatos and Diontech (see Dupree v Voorhees, 102 AD3d 912, 913 [2013]). Further, the Supreme Court properly directed the dismissal of the remaining causes of action, which were to recover damages based on violations of the Debtor and Creditor Law, unjust enrichment, pursuant to CPLR 5225, and on other equitable grounds, based upon the same documentary evidence (see Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182-183 [2011]; Federal Deposit Ins. Corp. v Porco, 75 NY2d 840, 842 [1990]; Nanomedicon, LLC v Research Found. of State Univ. of N.Y., 112 AD3d 594, 598 [2013]; D’Mel & Assoc. v Athco, Inc., 105 AD3d 451, 452 [2013]; Pesa v Dayan, 104 AD3d 662, 663-664 [2013]). Accordingly, the Supreme Court properly granted the Kutil defendants’ motion to dismiss the entire complaint insofar as asserted against them, based on the [*3]documentary evidence."

Thomas Puccio captured the world’s attention at the Abscam trial.  Think American Hustle.  He died in 2012.  A claim of legal malpractice, itself riddled with mistakes was recently dismissed.  Fundacion Fair Weather v Puccio    2014 NY Slip Op 32931(U)  November 13, 2014  Supreme Court, New York County  Docket Number: 65032/2013  Judge: Eileen A. Rakower.

"Plaintiff commenced this action on February 19, 2013, by summons with Notice. Plaintiff now  moves, by notice of motion dated October 2, 2014, for an Order, pursuant to CPLR § 3215, directing the entry of a default judgment as against Defendant on the basis of Defendant’s nonappearance in this action. In support, Plaintiff submits the attorney affirmation of Maurice W. Heller; the affidavit of merit of Domecq, dated April 24, 2014; the affidavits of service of Plaintiffs initiatory papers upon Defendant and upon the Law Offices of Thomas P. Puccio on May 30, 2013, by personal delivery to a person of suitable age and discretion at Defendant’s residence located at 61 Singing Oaks Drive, Weston, Connecticut; the affidavits of service of Plaintiffs initiatory papers upon Defendant
by first class mail, one for each of her capacities, enclosed in a post-paid wrapper, marked "Personal and Confidential" on May 14, 2013; the affidavit of additional mailing, pursuant to CPLR 3215(g)(3)(i), upon Defendant on November 6, 2013; a copy of the retainer agreement (the "Retainer Agreement"), dated August 11, 2008; a copy of a demand for arbitration, dated November 28, 2012; a copy of a letter,dated January 8, 2013, addressed to Decedent, referring Plaintiffs complaint to the Joint Committee on Fee Disputes and Conciliation; a copy of a NYCEF notification,
dated September 11, 2014. 

Here, Plaintiff concedes that Plaintiff filed the instant motion for default  judgment more than one year after default. Heller affirms that Defendant was in default as of July 17, 2013, and that Plaintiff filed the instant motion for a default 2 [* 2]judgment more than one year later, on October 2, 2014. However, Heller affirms that Plaintiff previously filed a timely application for default judgment with the Clerk, on May 6, 2014. Heller also affirms that, in November 2012, Plaintiff sought to arbitrate Plaintiffs claims before the Joint Committee on Fee Disputes and Conciliation of the New York County Lawyers Association (the "Comm ttee"), pursuant to an arbitration clause contained in the Retainer Agreement. Heller affirms that, by notice dated January 8, 2013, the Committee advised Decedent’s Law Office that the matter was referred to arbitration, and that the Law Office did
not respond to the Committee’s notices.

Here, even assuming that Plaintiff sufficiently demonstrates a reasonable excuse for its delay in filing the instant motion for a default judgment, Plaintiff does not provide sufficient allegations to establish the prima facie validity of its claim that Decedent is liable for $250,000 in damages resulting from Decedent’s alleged legal malpractice, breach of contract, or fraud. Domecq does not state that Decedent failed to perform any legal services on Domecq’s behalf, and Domecq’s allegation that Decedent failed to obtain a specific outcome is insufficient, without more, to sustain
a claim that Decedent failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession. Moreover, to the extent that, "the granting of an application for transfer to a dual citizen, such as Domecq,is far less likely than had [Domecq] been solely a citizen of Spain", Plaintiff does not provide facts sufficient to support an inference that Domecq’s application would have been granted "but for" Decedent’s purported negligence. In addition, the Retainer Agreement does not contain any express promise respecting Domecq or Domecq’s transfer. Indeed, the Retainer Agreement, which is addressed to "Fairboum, c/o Christina Domecq," and signed by Christina Domecq on behalf of "Fairboum", does not contain any reference whatsoever to Plaintiff, Domecq, the IPTP, or the IPTU. Plaintiff does not allege with particularity facts sufficient to establish the prima facie validity of Plaintiffs claim that Decedent
fraudulently induced Plaintiff to enter into the Retainer Agreement, and Domecq’s allegation that Decedent did not intend to perform under the Retainer Agreement is not enough to give rise to a cause of action for fraud that is distinct from Plaintiff’s breach of contract claim.
 

Accordingly, Plaintiff fails to provide the reviewing Court with sufficient allegations to establish a basis for Plaintiff’s legal malpractice, breach of contract, or fraudulent inducement claims. "

It is unfortunate to see a legal malpractice case be dismissed on technical grounds.  Here,in Cullin v Spiess  2014 NY Slip Op 07975  Decided on November 19, 2014   the Appellate Division, Second Department found that Plaintiff’s summary judgment motion lacked an affidavit of a person with knowledge, and that there was insufficient opposition to Defendant’s motion.

"The plaintiff failed to demonstrate her prima facie entitlement to judgment as a matter of law on the complaint. The plaintiff failed to submit, with her moving papers, an affidavit by a person with knowledge of the facts (see CPLR 3212[b]; Currie v Wilhouski, 93 AD3d 816, 817; Menzel v Plotnick, 202 AD2d 558, 559). The affirmation of the plaintiff’s attorney, who did not have personal knowledge of the facts, was without probative value, and the remaining exhibits were insufficient to support the motion for summary judgment (see Zuckerman v City of New York, 49 NY2d 557, 563; Rivers v Birnbaum, 102 AD3d 26; 1911 Richmond Ave. Assoc., LLC v G.L.G. Capital, LLC, 60 AD3d 1021, 1022; Menzel v Plotnick, 202 AD2d at 559).

In contrast, the defendant demonstrated his prima facie entitlement to judgment as a matter of law dismissing the fourth, sixth, eighth, and twelfth causes of action alleging that he violated Judiciary Law § 487, by establishing that there was no evidence of his alleged intent to deceive the plaintiff in connection with the settlement (see Dupree v Voorhees, 102 AD3d 912; [*2]Boglia v Greenberg, 63 AD3d 973, 975; Pui Sang Lai v Shuk Yim Lau, 50 AD3d 758; Knecht v Tusa, 15 AD3d 626, 627). In opposition, the plaintiff failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324).

Accordingly, the Supreme Court properly denied the plaintiff’s motion for summary judgment on the complaint and properly granted the defendant’s cross motion for summary judgment dismissing the fourth, sixth, eighth, and twelfth causes of action."

 One piece of advice repeated endlessly at CLEs is that attorney fee cases created legal malpractice counterclaims.  In Jeffrey M. Rosenblum, P.C. v Casano  2014 NY Slip Op 51629(U)  Decided on November 19, 2014  District Court Of Nassau County, First District  Fairgrieve, J. we see a sterling example of this problem.  Attorney lost attorney fee arbitration and started a trial de novo, once again seeking the fees.  This time there was a counterclaim, which Plaintiff fails to get dismissed.

"In her Verified Answer with Counterclaims (Plaintiff’s Exhibit B), defendant sets forth [*2]and classifies each of the five (5) counterclaims raised therein. They are designated as Breach of Contract (First and Second Counterclaims), Unjust Enrichment (Third Counterclaim), Declaratory Judgment (Fourth Counterclaim), and Attorney Malpractice (Fifth Counterclaim).

Initially, plaintiff’s counsel presses two arguments for dismissal of the first four counterclaims. First, she argues that pursuant to CPLR 3211(a)(2), this court lacks subject matter jurisdiction because "the monetary jurisdictional limit of the District Court is $15,000," which these counterclaims exceed (Affirmation in Support, ¶ 22). To the contrary, however, this court "shall have jurisdiction of counterclaims … for money only, without regard to amount" (UDCA §208[b]). Accordingly, plaintiff’s argument characterizing the amount sought by defendant’s counterclaims as exceeding statutory authority, is rejected. Therefore, its requests for dismissal on this basis are denied.

The third counterclaim is clearly marked as one seeking relief from plaintiff’s unjust enrichment. " The theory of unjust enrichment lies as a quasi-contract claim’" and contemplates "an obligation imposed by equity to prevent injustice, in the absence of an actual agreement between the parties (IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 142, 879 NYS2d 355, 907 NE2d 268 [2009], quoting Goldman v Metropolitan Life Ins. Co., 5 NY3d 561, 572, 807 NYS2d 583, 841 NE2d 742 [2005])" (Georgia Malone & Co., Inc. v Rieder, 19 NY3d 511, 516 [2012]). "The essential inquiry in any action for unjust enrichment or restitution is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered" (Greenfield M.D., P.C. v Long Beach Imaging Holdings, LLC, 114 AD3d 888, 889, citing Paramount Film Distribution Corporation v State of New York, 30 NY2d 415, 421 [1972] [remainder of citation omitted]).

"Although a claim for unjust enrichment involves equitable considerations’, it is essentially a claim for a money judgment which is covered within the jurisdictional boundaries contemplated for the Civil Court. A court, of course, has the inherent right to take equitable considerations into account (Dobbs, Remedies, § 2.1, p 28), and since they are merely reflections of fairness, no court, unless expressly limited by a statute, should deprive itself of the capacity to take them into account where the suit involves money damages only (Fiona Press, Inc. v Hewig & Marvic, Inc., 122 Misc 2d 680-681 [Civil Court, NY County 1984], emphasis added). Notably, "[t]he [New York City Civil Court Act ("NYCCCA")] is the original of the uniform acts. The second of them, also effective on September 1, 1963, is the Uniform District Court Act [*3](UDCA), which was modeled on and is in many instances identical to the NYCCCA" ( David D. Siegel, General Commentary on the Lower Court Acts (NYCCCA, UDCA, UCCA and UJCA) and Their Background, McKinney’s Cons Laws of NY, Book 29A, p 9 [1989 ed])."

Reading between the lines,Manus v Flamm  2013 NY Slip Op 07683 [111 AD3d 525]  November 19, 2013  Appellate Division, First Department sounds like a 1930’s romantic divorce movie.  Husband marries glamorous starlet, gives her beaucoup jewelery and then, The Divorce.  Starlet is caught between Husband and another woman.  His mother?  Anyway…

The complaint alleges that defendant committed legal malpractice while representing plaintiff in a replevin action brought against her in October 1998 by nonparty Family M. Foundation, Ltd., a Cayman Islands corporation formed by the late Allen Manus, plaintiff’s former husband.

The first cause of action, which alleges that defendant was negligent in failing to assert certain defenses or move to dismiss the complaint in the replevin action, is belied by the seventh and eighth affirmative defenses, which assert that the loan agreement imposed no personal liability on plaintiff.

The second cause of action alleges that plaintiff "felt compelled" to sign the stipulation of settlement in the replevin action, which converted a $1,000,000 obligation from the corporation to her into a $400,000 obligation from her to the corporation. However, plaintiff’s obligation arose in the context of the loan agreement she executed, not the stipulation of settlement. The stipulation did not impose personal liability on plaintiff for the debt created under the loan agreement; it merely directed that her shares in her cooperative apartment be substituted for her jewelry as collateral for the loan.

The third cause of action alleges that, but for defendant’s insistence that the corporation’s president and sole director, Elizabeth (Libby) Manus, had to execute the corporation’s release of plaintiff’s obligations to it and that Allen Manus’s execution of the release would not be sufficient, Allen Manus would have signed the release and plaintiff would have been free of her obligations under the stipulation. However, this Court has found that the action by the corporation to enforce the stipulation upon plaintiff’s default was properly maintained under Libby Manus’s authority (see Family M. Found. Ltd. v Manus, 71 AD3d 598 [1st Dept 2010], lv dismissed 15 NY3d 819 [2010]). Even assuming that Allen Manus, who held a power of [*2]attorney for the corporation, was authorized to release plaintiff’s obligations to the corporation, Libby Manus’s refusal to sign the release would have revoked his authority (see Zaubler v Picone, 100 AD2d 620, 621 [2d Dept 1984]). Concur—Andrias, J.P., Friedman, Richter, Manzanet-Daniels and Feinman, JJ.

Courts reserve the application of Judiciary Law 487, the Attorney Deceit Law to very few cases.  Put another way, courts are loathe to apply it.  In Kuruwa v 130E. 18 Owners Corp. 2014 NY Slip Op 06880 Decided on October 9, 2014  the Appellate Division, First Department merely sweeps the question away in a very short opinion.

"The IAS court correctly found that respondent bank’s perfected, secured interest in the subject property has priority over petitioners’ unsecured money judgment (see Chrysler Credit Corp. v Simchuk , 258 AD2d 349 [1st Dept 1999]). The bank’s false answers to the information subpoena, in which it denied having a mortgage on the Meyers respondents’ apartment, did not prejudice petitioners; nor do they point to any detrimental reliance upon the statements (cf. Leber-Krebs, Inc. v Capitol Records , 779 F2d 895, 896 [2d Cir 1985]).

The court also correctly held that there could be no judicial sale of the cooperative apartment. The Meyers defendants had purchased the co-op before they were married, and they concede that they originally owned it as tenants in common (see EPTL 6-2.2). They refinanced the purchase money mortgage after they were married, and the bank required a name change on a newly issued stock certificate and proprietary lease. The change in title, made by the cooperative corporation, after the parties were married effectively changed ownership from tenants in common to tenants by the entirety.

The legal arguments made by the bank’s counsel and the Meyerses’ counsel do not give rise to claims under Judiciary Law § 487."