Defendant A handles a case, and defects in service take place.  Successor counsel has about 6 months until the statute lapses.  Defendant 1 moves for dismissal.  Defendant 2 opposes.  Was there enough time for Defendant 2 to fix the problems, and if so, is Defendant 1 excused?

Grant v LaTrace  2014 NY Slip Op 05155  Decided on July 9, 2014  Appellate Division, Second Department  answers the question such that both defendants remain in the case.

"The plaintiff commenced this instant action against the defendants asserting a single cause of action sounding in legal malpractice. The defendants Anthony P. LaTrace, Michael E. Glynn, and the Law Offices of Michael S. Lamonsoff, PLLC (hereinafter collectively the Lamonsoff defendants), moved pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against them, contending that the actions of the defendants Colin Liverpool and Liverpool Law Office, P.C. (hereinafter together the Liverpool defendants), were the sole proximate cause of the plaintiff’s damages because they had assumed representation of the plaintiff when there was sufficient opportunity to protect the plaintiff’s rights. The plaintiff did not oppose the motion; however, the Liverpool defendants did. The Supreme Court denied the Lamonsoff defendants’ motion. The Lamonsoff defendants appeal.

The Lamonsoff defendants’ contention, that the ability of successor counsel, i.e., the Liverpool defendants, to remedy any negligence of the predecessor counsel, i.e., the Lamonsoff defendants, during the approximately six-month period that the Liverpool defendants represented the plaintiff prior to the lapse of the applicable statute of limitations, is without merit. Unlike the cases relied upon by the Lamonsoff defendants (see Katz v Herzfeld & Rubin, P.C., 48 AD3d 640, 641; Ramcharan v Pariser, 20 AD3d 556, 557; Perks v Lauto & Garabedian, 306 AD2d 261; Albin v Pearson, 289 AD2d 272; Golden v Cascione, Chechanover & Purcigliotti, 286 AD2d 281, 281; Kozmol v Law Firm of Allen L. Rothenberg, 241 AD2d 484), here, the Liverpool defendants could not have moved as of right to remedy the defects in service alleged. The Supreme Court would have had to exercise its discretion in the underlying action to extend the time to serve process (see CPLR 306-b, CPLR 2004), and it is pure speculation as to whether the court would have permitted such late service (see generally Glamm v Allen, 57 NY2d 87; Lanoce v Anderson, Banks, Curran & Donoghue, 259 AD2d 965). Accordingly the Supreme Court properly denied the Lamonsoff defendants’ motion."

Plaintiff blames the attorney and the attorney blames the client.  Someone was at fault for not appearing in court for the trial of this case.  A motion to vacate fails.  Was it because the motion was badly written, or because plaintiff-client had no excuse for the default?

Di Giacomo v Langella  2014 NY Slip Op 05150  Decided on July 9, 2014  Appellate Division, Second Department  says that it was client’s fault, hence no legal malpractice.

"Here, the alleged malpractice relates to the sufficiency of the order to show cause and supporting papers prepared by the Langella defendants and submitted on behalf of the plaintiffs in the personal injury action, pursuant to which they moved to vacate their default in the personal injury action. A motion to vacate a default by a plaintiff in appearing for trial requires the demonstration of a reasonable excuse and an affidavit setting forth the merits of the cause of action (see CPLR 5015; Tuthill Fin., L.P. v Ujueta, 102 AD3d 765; G.D. Van Wagenen Fin. Servs., Inc. v Sichel, 43 AD3d 1104; Tyberg v Neustein, 21 AD3d 896; Kumar v Yonkers Contr. Co., Inc., 14 AD3d 493, 494; Hargett v Health & Hosps. Corp. of City of N.Y., 88 AD2d 633). An attorney’s conduct and performance in connection with a motion to vacate a default may constitute legal malpractice (see Reznick v Zurich N. Am. Specialties, 45 AD3d 750; DeGregorio v Bender, 4 AD3d 384).

The Langella defendants established, prima facie, that the plaintiffs had no reasonable excuse for their default in appearing for jury selection in the personal injury action, thus establishing that the alleged inadequecy of the motion papers that they prepared on the plaintiffs’ behalf was not the proximate cause of the plaintiffs’ damages (see DeGregorio v Bender, 4 AD3d 384). In opposition, the plaintiffs failed to raise a triable issue of fact as to whether they had a reasonable excuse for their default that could have been communicated to the Langella defendants for inclusion in the papers submitted in connection with the motion to vacate the plaintiffs’ default (see Kotzian v McCarthy, 36 AD3d 863; DeGregorio v Bender, 4 AD3d 384).

Accordingly, the Supreme Court properly granted that branch of the Langella defendant’s motion which was for summary judgment dismissing the complaint."

Legal malpractice claims are often stated in both tort and in contract, and the general feeling is that a contract cause of action in legal malpractice will almost always be a duplicitive or disguised tort claim that warrants dismissal. 

Not so inState of N.Y. Workers’ Compensation Bd. v Madden  2014 NY Slip Op 05000
Decided on July 3, 2014  Appellate Division, Third Department.  Here the court incisively isolates the cause of action for return of fees from that of a professional mistake.

"Next, Glaser — the Trust’s former counsel — contends that the unjust enrichment claim against him should have been dismissed in its entirety. The challenged cause of action seeks the return of legal fees paid to Glaser by the Trust, alleging, among other things, that Glaser had an [*5]attorney-client relationship with HWG and its principal before he was retained to represent the Trust, that Glaser did not disclose this prior representation to the Trust, that Glaser thereafter continued to perform legal services for HWG and the principal, and that he was paid from Trust funds for these services. Supreme Court found that, to the extent that this claim relied upon alleged conflicts of interest arising from the multiple representation, it sounded in legal malpractice and was time-barred. However, to the extent that the claim sought to recover fees paid by the Trust for legal services that had allegedly been rendered to HWG and/or its principal, the court found that plaintiff had stated a claim for breach of an express contract. Thus, the court converted that portion of the unjust enrichment claim to one for breach of contract and permitted the claim to survive with respect to the period on and after May 2, 2005. We reject Glaser’s assertion that the surviving portion of the cause of action is a disguised professional malpractice claim subject to a three-year statute of limitations, as it does not allege that Glaser’s professional services were negligently performed, but instead alleges a breach of the contract between the Trust and Glaser in that the Trust paid for services that Glaser did not render to it. Accordingly, that aspect of the claim is timely (see New York State Workers’ Compensation Bd. v SGRisk, LLC, 116 AD3d 1148, 1151-1152 [2014]; see also Natural Organics Inc. v Anderson Kill & Olick, P.C., 67 AD3d 541, 542 [2009], lv dismissed 14 NY3d 881 [2010]; Henry v Brenner, 271 AD2d 647, 648 [2000])."

Mizrahi v Adler  2014 NY Slip Op 31701(U)  June 30, 2014  Sup Ct, NY County  Docket Number: 650802/2010  Judge: O. Peter Sherwood  is the rather sad story of a man and his attorney, who both took a Las Vegas detour into Trump real estate hell.  Whether the attorney was a fellow traveler, or was leading the expedition is the question in this case.  Plaintiff says that he was simply defrauded by the estate planning attorney he approached, and the attorney says that Plaintiff is a sophisticated investor in sheep’s clothing.

"It is uncontested that, in 2006, plaintiff Eitan Mizrahi (plaintiff) entered into a written retainer agreement with Adler and his law firm, non-party, Stem, Adler & Associates, LLP, for the firm to
act as plaintiffs attorneys, to provide advice and services specifically with regard to estate planning
issues (Retainer Letter, attached to Adler Aff. as Exhibit C). At a meeting in February 2007,
plaintiff and Adler discussed a possible real estate opportunity, found by Adler, to purchase
residential units then under construction in Las Vegas, Nevada, called the Trump International Hotel and Tower (Trump Towers). Trump Towers was to be comprised of two towers, Tower I and Tower II. Apparently, Adler had marketing materials on hand at the meeting which described the investment, and plaintiff allegedly expressed interest in investing in the project.  Adler claims that he explained to plaintiff that Saw was in a "unique position" to offer prospective investors the opportunity to purchase units in the Towers before they were offered to the general public (Adler Aff.,14), and that plaintiff could take advantage of Saw’s contacts to purchase units by entering a finder’s agreement with Saw, and paying Saw a fee. Plaintiff claims that he was told that Saw was owned by an individual named Jack Wishna (Wishna), and that Adler would be working Wishna.

Adler contends that plaintiff knew Saw was Adler’s company. Adler adds that he told plaintiff that his "contacts" with Wishna would aid in the process of purchasing property in Trump Towers, as Wishna was alleged to have a relationship with the developer (id.). Plaintiff maintains that Adler told him an investment in Trump Towers would be entirely risk-free, and that by investing through the intervention of Saw (and hence, Wishna), plaintiff would obtain certain benefits, "including, but not limited to, the ability to sell or swap units prior to closing, and postpone the contracted closing date" (Complaint, attached to Adler Aff. as Exhibit A, ~ 15).  Plaintiff calls these alleged rights the "Wishna Umbrella."

The complaint alleges that defendant lost his down payment due to wrongdoing by Adler in representing to plaintiff that the investment was risk-free and that the plaintiff would have rights in
the purchase of units in Trump Towers that he did not actually have under the Purchase Agreement. Plaintiff argues that he labored under the reasonable misconception that Adler was acting as his attorney at all times during the transactions at issue. Plaintiff claims to have only a fragmentary education and a slim grasp of the English language, and that he relied entirely on Adler, as his attorney, in making the investment. Plaintiff never read any document he was asked to sign, under the assumption, that Adler, as plaintiffs attorney, was looking out for plaintiffs interests.

Plaintiff’s claims for legal malpractice, negligent misrepresentation and breach of fiduciary duty are premised on the existence of an attorney-client relationship between plaintiff and Adler. Therefore, this court must consider whether triable issues of fact exist as to the existence of an , attorney-client relationship between plaintiff and Adler.

Plaintiffs action fails on the question of proximate cause. While the issue of proximate 
cause can often be  a jury question (see Bradley v Soundview Healthcenter, 4 AD3d 194 [1st Dept 2004 ]), the court may always determine whether there are questions of fact (see Laub v Faessel, 97 AD2d 28 [1st Dept 2002]). In Laub v Faessel, dealing with claims for fraud, negligent misrepresentation and breach of fiduciary duty, the court, discussing proximate cause, distinguished between a misrepresentation which induces a plaintiff to engage in a transaction ("transaction causation"), and misrepresentations which directly cause the loss to plaintiff ("loss causation") (id. at 31 ). "Loss causation is the fundamental core of the common-law concept of proximate cause: ‘An essential element of the plaintiffs cause of action for negligence, or for … any … tort, is that there be some reasonable connection between the act or omission of the defendant and the damage which the plaintiff has suffered [citation omitted]’" (id.). "Transaction causation is often synonymous with ‘but for’ causation" (Amusement Industry, Inc. v Stern, 786 F Supp 2d 758, 776 [SDNY 2011 ]). "

Privity, a requirement rather unique to legal malpractice cases in tort, is the reason that the individuals in this case are out, while the entity remains in the case.  It had privity, but they did not.  Leggiadro, Ltd. v Winston & Strawn, LLP   2014 NY Slip Op 05048   Decided on July 3, 2014
Appellate Division, First Department

"In this legal malpractice action, the individual plaintiffs, who are not identified as clients in the written retainer agreement and did not sign the retainer in an individual capacity, failed to establish the existence of an attorney-client relationship (see Federal Ins. Co. v North Am. Specialty Ins. Co., 47 AD3d 52, 59 [1st Dept 2007]; cf. Huffner v Ziff, Weiermiller, Hayden & Mustico, LLP, 55 AD3d 1009 [3d Dept 2008]). Brooks Ross’s claim to have requested that defendant advise of "any and all tax liabilities arising from [a] Buy-Out" of Leggiadro’s commercial lease, does not, without more, create a duty to advise the individual plaintiffs of the personal income tax ramifications of the buy-out arising by virtue of their status as S-Corporation shareholders. No "special circumstances" upon which to find a "near privity" relationship and extend liability to the individual plaintiffs have been alleged (compare Good Old Days Tavern v Zwirn, 259 AD2d 300 [1st Dept 1999]; Town Line Plaza Assoc. v Contemporary Props., 223 AD2d 420 [1st Dept 1996]). Moreover, the individual plaintiffs’ history of paying pass-through taxes on the S-Corporation precludes them from reasonably relying on defendant’s alleged failure to identify such liability here (see Ableco Fin. LLC v Hilson, 109 AD3d 438 [1st Dept 2013], lv denied 22 NY3d 864 [2014])."

"In order to defeat the motion to dismiss, Leggiadro only needed to "plead allegations from which damages attributable to defendant’s conduct might be reasonably inferred" (InKine Pharm. Co. v Coleman, 305 AD2d 151, 152 [1st Dept 2003] [internal quotation marks and brackets [*2]omitted]). Leggiadro’s claim that, had it known of the full tax ramifications of the buy-out, it would have either insisted that the landlord account for such amount in the settlement figure, in order to make relocation financially viable, or refused to relocate, is not speculative and is instead based upon, inter alia, Leggiadro’s alleged strong bargaining position with its landlord, as evidenced by the amount of time left on the lease, the absence of an immediate need to relocate, and the alleged importance of the leased space in the landlord’s conversion plans (see Fielding v Kupferman, 65 AD3d 437 [1st Dept 2009]; cf. Sherwood Group v Dornbush, Mensch, Mandelstam & Silverman, 191 AD2d 292, 294 [1st Dept 1993])."

We have recently written about the conversion of legal malpractice from a tort to a contact action, and some of the changes that have been occasioned.  Here, in Salazar v Sacco & Fillas, LLP
2014 NY Slip Op 00980 [114 AD3d 745]  February 13, 2014 Appellate Division, Second Department the Court goes to some length to distinguish between the two.  Law firm settles cases and then seeks to get its bill paid.  How they went about it is a problem.

"The plaintiff retained the defendants Sacco and Fillas, LLP (hereinafter the law firm), and attorneys Tonino Sacco and Elias Nikolaos Fillas, who allegedly were partners in the law firm, to represent him as a plaintiff in a personal injury action and to represent two corporate entities that he controlled, Always First, Inc., and Always Fast, Inc. (hereinafter together the Always companies), in connection with certain commercial litigation.

The law firm settled the personal injury action on behalf of the plaintiff, and received certain settlement proceeds on the plaintiff’s behalf. Thereafter, the plaintiff and the Always companies, as "the client," and the law firm entered into an agreement (hereinafter the settlement agreement). The settlement agreement provided that, in exchange for the law firm’s agreement to "discount outstanding balances" due the law firm from the Always companies, "the client" agreed to give up all rights to certain sums due "the client" from three enumerated litigations.

The plaintiff thereafter commenced the instant action, seeking to recover damages he allegedly sustained as a result of the defendants’ legal malpractice, breach of contract, and fraud. The plaintiff alleges, inter alia, that the defendants breached the retainer agreement relating to the personal injury action in that they intentionally failed to pay him the settlement funds from that [*2]action. The plaintiff also alleges that he was fraudulently induced into signing the settlement agreement. The defendants moved to dismiss the complaint pursuant to CPLR 3211 (a) (7). The Supreme Court, upon concluding that the complaint alleged intentional acts only, granted the defendants’ motion only insofar as it sought to dismiss the first cause of action, sounding in legal malpractice. The defendants appeal."

"The complaint adequately states a cause of action against the defendants sounding in breach of contract."

We’re off celebrating.  Have a great 4th of July!

It is very very rare, but here is a case in ""the narrow exception of fraud, collusion, malicious acts or other special circumstances" under which a cause of action alleging attorney malpractice may be asserted absent a showing of privity (Ginsburg Dev. Cos., LLC v Carbone, 85 AD3d 1110, 1112 [2011]" 

Mr. San, LLC v Zucker & Kwestel, LLP  2013 NY Slip Op 08416 [112 AD3d 796]  December 18, 2013  Appellate Division, Second Department]  was not dismissed on CPLR 3211 grounds. 

"On a motion to dismiss pursuant to CPLR 3211 (a) (1), "dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Leon v Martinez, 84 NY2d 83, 88 [1994]). In deciding a motion to dismiss pursuant to CPLR 3211 (a) (7), the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 NY2d at 87-88).

Applying these principles, the Supreme Court properly denied those branches of the defendants’ motion which were pursuant to CPLR 3211 (a) (1) and (7) to dismiss the first cause of action, which sought to recover damages for legal malpractice. While the complaint does not allege an attorney-client relationship between the plaintiffs and the defendants, it sets forth a claim which falls within "the narrow exception of fraud, collusion, malicious acts or other special circumstances" under which a cause of action alleging attorney malpractice may be asserted absent a showing of privity (Ginsburg Dev. Cos., LLC v Carbone, 85 AD3d 1110, 1112 [2011] [internal quotation marks omitted]; see Aranki v Goldman & Assoc., LLP, 34 AD3d 510, 511-512 [2006]; Griffith v Medical Quadrangle, 5 AD3d 151, 152 [2004]). Furthermore, the documentary evidence submitted by the defendants does not conclusively establish a defense to this cause of action as a matter of law (see CPLR 3211 [a] [1]).

"