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]).

"

ALBANY:   Loss of freedom for a tort plaintiff occasioned by the extension of his probation arising from a criminal arrest and the resulting emotional and psychological harm are compensible.  Same thing for a legal malpractice plaintiff?  Not compensible.  Dombrowski v Bulson
[19 NY3d 347]   May 31, 2012  Lippman, Ch. J.  Court of Appeals.
 

Landon v Kroll Lab. Specialists, Inc.  2013 NY Slip Op 06597 [22 NY3d 1]  October 10, 2013
Lippman, J.  Court of Appeals  tells us that in a "regular" tort situation, even in a "contract" situation, there may be liability. "Although the existence of a contractual relationship by itself generally is not a source of tort liability to third parties, we have recognized that there are certain circumstances where a duty of care is assumed to certain individuals outside the contract (see Espinal v Melville [*4]Snow Contrs., 98 NY2d 136, 138-139 [2002]). As relevant here, such a duty may arise "where the contracting party, in failing to exercise reasonable care in the performance of [its] duties, launched[s] a force or instrument of harm" (Espinal, 98 NY2d at 140 [internal quotation marks and citation omitted]). This principle recognizes that the duty to avoid harm to others is distinct from the contractual duty of performance. Accepting the allegations of the complaint as true, Kroll did not exercise reasonable care in the testing of plaintiff’s biological sample when it failed to adhere to professionally accepted testing standards and, consequently, released a report finding that plaintiff had tested positive for THC. The alleged harm to plaintiff was not remote or attenuated. Indeed, it was his own biological specimen that was the sole subject of this testing and he was directly harmed by the positive test result causing the extension of his probation and the necessity of having to defend himself in the attendant court proceedings."

In a legal malpractice situation, the rules are different. " In addition, we reject defendant’s argument that plaintiff failed to allege that he has suffered a cognizable harm (see e.g. Martinez v Long Is. Jewish Hillside Med. Ctr., 70 NY2d 697, 699 [1987] ["where there is a breach of a duty owed by defendant to plaintiff, the breach of that duty resulting directly in emotional harm is actionable"]). In this procedural posture, {**22 NY3d at 8}plaintiff’s allegations of the loss of freedom occasioned by the extension of his probation and the resulting emotional and psychological harm are sufficient to withstand a motion to dismiss. Defendant places too much weight upon our recent decision in Dombrowski v Bulson (19 NY3d 347 [2012]), characterizing it as holding that loss of freedom damages are not recoverable in negligence actions. In that case, we found that a legal malpractice action did not lie against a criminal defense attorney to recover nonpecuniary damages. The decision was based in part on policy considerations, including the potentially devastating consequences such liability would have on the criminal justice system and, in particular, the possible deterrent effect it would have on the defense bar concerning the representation of indigent defendants (see Dombrowski, 19 NY3d at 352). Similar policy considerations do not weigh in defendant’s favor here."

Rochester:   The course of litigation can be twisted, and early decisions often cause later havoc.  Such is the case in this 4th Department case.  Wright v Shapiro  2012 NY Slip Op 08964 [101 AD3d 1682]  December 21, 2012  Appellate Division, Fourth Department  tells us that plaintiff lost one position after another, ending with a complete dismissal of the case.

"It is hereby ordered that the order insofar as appealed from is unanimously reversed on the law without costs, the motion of defendants James J. Shapiro and James J. Shapiro, P.A. is granted, and the second amended complaint is dismissed against those defendants.

Memorandum: James J. Shapiro and James J. Shapiro, P.A. (defendants) appeal from an order denying their motion for summary judgment dismissing the second amended complaint against them and granting plaintiff’s cross motion to compel the deposition of James Shapiro. We note at the outset that, although defendants’ notice of appeal is from the order in its entirety, they do not address plaintiff’s cross motion in their brief and thus, as limited by their brief, are deemed to have appealed only from the denial of their motion. We further note that the appeal taken by defendant Chikovsky & Associates, P.A. has been deemed abandoned and dismissed by its failure to perfect the appeal in a timely fashion (see 22 NYCRR 1000.12 [b]).

We agree with defendants that Supreme Court erred in denying their motion. By establishing that plaintiff could not have prevailed in his underlying personal injury action, defendants met their initial burden of establishing their entitlement to summary judgment with respect to the first cause of action against them, for legal malpractice (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]), and plaintiff failed to raise a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). We note that the court erred in concluding, based on our decision in Wright v Shapiro (16 AD3d 1042 [2005]), that the doctrine of law of the case precluded summary judgment following discovery. Furthermore, plaintiff’s theory of liability premised on respondeat superior is barred by his discontinuation of that action on the merits against the employee, thus eliminating the triable issue of fact we discussed in our subsequent decision in Wright v Shapiro (35 AD3d 1253 [2006]). Therefore, the court should have [*2]granted defendants’ motion with respect to the first cause of action in that regard (see Town of Angelica v Smith, 89 AD3d 1547, 1549-1550 [2011]).

Inasmuch as the second cause of action is premised upon the legal malpractice cause of action, which we are hereby dismissing against defendants, we further conclude that the court erred in denying defendants’ motion with respect to the second cause of action against them. Present—Smith, J.P., Peradotto, Lindley, Valentino and Whalen, JJ.

"

Seller of real estate has a building with a 50 year lease ending.  Chase Bank has the lease, and long ago subleased the property for a profit.  Buyer says that he never saw the leases, and that $3750 per month is just not enough to run the building.

Attorney admits that he was sellers’ attorney, buyer’s attorney and the broker in the deal.  Palmieri v Mattimore   2014 NY Slip Op 30300(U)   January 16, 2014   Sup Ct, Suffolk County  Docket Number: 20155/2008  Judge: William B. Rebolini is a description of behavior which cannot but lead to problems.

"The plaintiff Mario Palmieri alleges that he was approached by the defendant with regard to a potential purchase oft e subject property. The defendant had represented Mr. Palmieri and other  family members in real state, zoning, and other legal matters for a period of about 15 years. The original asking price for the property was $900,000.00 but after negotiation the price agreed upon was $700,000,00. Acco ding to the documentary evidence, the property was subject to a 50-year lease held by JP Morgan Chase Bank ("Chase"), which was set to expire in 2011. Under the lease,
Chase paid a total of $3,750 a year in rent. At the time of the sale, Chase no longer occupied the
subject property and ha subleased each of the buildings thereon. One was leased to the State of New York for a monthly rent of $5,665.00. The other building was subleased to the Consulate of El Salvador for a monthly. rent of $4,025.00. Mr. Palmieri testified that the defendant did not inform him that he would only be receiving the rent under the main lease until that lease expired in 2011,
and he testified that the defendant told him several times that he would be receiving $9,500.00 in rent each month. He further claimed that he never saw the lease documents until after the closing and that the leases were not attached to the contract that he signed. Upon discovering that he could receive only $312.00 per month ($3,750.00 for the year) in rent from the property, he was outraged. 

He testified that he called the defendant, who apologized and said he made a mistake. He states in his affidavit that if he ha known the lack of rental income from the property, he would have opted
not to buy it.

The defendant denied at his examination before trial that he failed to disclose the rental  income that Palmieri Realty LLC would receive under the Chase lease until it expired in 2011. He  admitted, however, that he had acted as the seller’s attorney and the broker on the transaction and
that he had received fees from both activities. It is also clear from his testimony that he also  represented the plaintiffs and was also paid a legal fee by them for his work. The defendant also
submitted a real estate a appraisal of the subject property from John Grossman, a qualified ppraiser."

Motion for summary judgment denied as to the LLC.

Litigants get together to buy a restaurant.  Problems arise, and a legal malpractice action is commenced. The proceeds over which the litigants argue arose from a legal malpractice case.  The attorney successfully sued had failed to tell his clients that the attorney’s friend owned the property next door to a restaurant the clients were buying, and that the attorney’s friend was encroaching on their soon-to-be-purchased restaurant.  Things went downhill between the litigants after succeeding on the legal malpractice case.

Buscaglia v Schreck  2014 NY Slip Op 31582(U)  June 10, 2014  Sup Ct, Suffolk County  Docket Number: 26922-11  Judge: Elizabeth H. Emerson should be read for the Court’s interpretation of what seemed to be a complete and total general release.

"The complaint alleges in the first cause of action that the plaintiff paid approximately  $197,000 to Mr. Barr during the course of the litigation, while the defendant only paid Mr. Barr  $20,000. The complaint also alleges that the parties were unable to pay the mortgage on the  premises due to the necessity of paying attorney fees in the legal malpractice action, thereby causing the premises to go into foreclosure. The first cause of action seeks reimbursement of one-half of the expenses paid by the plaintiff. The complaint alleges in the second cause of action that, the during the pendency of the litigation, the plaintiff paid property insurance and  expert witness fees and seeks reimbursement of one-half of those expenses. The complaint alleges in the third cause of action that the defendant wrongfully took various assets of the partnership, including heating oil, from the premises and cashed insurance checks payable to both parties. The complaint further alleges that the plaintiff also paid an attorney to represent the parties to resolve the foreclosure action on the premises and seeks reimbursement of one-half the expenses and assets taken by the defendant. The defendant interposed an answer and asserted a general denial, several affirmative defenses and a counter claim seeking "in excess of $50,000," for the plaintiffs refusal to lease the premises during the litigation.

With regard to defendant’s first contention that the complaint must be dismissed pursuant to CPLR 3 211 (a) ( 1 ), where a defendant moves to dismiss an action asserting the existence of a def ensc founded upon documentary evidence, the documentary evidence "must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiffs claim" (Trade Source, Inc. v Westchester Wood Works, Inc., 290 AD2d 437; Berger v Temple Beth-El of Great Neck, 303 AD2d 346). The defendant contends that the Settlement Agreement and General Release dated April 26, 2011, represents that the parties released all claims that they had against each other. The defendant relies upon Paragraph 4 of the Settlement Agreement and General Release, which states: the plaintiff, the defendant, and Mr. Barr "hereby mutually release each other * * * from any and all claims * * * and liabilities of any kind whatsoever * * *."

”In construing a general release it is appropriate to look to the controversy being settled and the purpose for which the release was executed[,] … [and] a release may not be read to cover matter which the parties did not desire or intend to dispose of’ (Bugel v WPS Niagara Properties, Inc., 19 AD3d 1081, 1082; see also Wechsler v Diamond Sugar Co., 29 AD3d 681, 682). It is also well settled that "releases are contracts that, unless their language is ambiguous, must be interpreted to give effect to the intent of the parties as indicated by the language employed" (Rubycz-Boyar v Mondragon, 15 AD3d 811, 812).

The court cannot determine from Paragraph 4 of the Settlement Agreement and General Release whether the parties intended to release each other from all disputes that were related to the partnership or whether the subject document relates only to the claims in the litigation against Mr. Nitka. Therefore, the branch of the motion seeking dismissal on the ground of documentary evidence is denied. "