Sometimes reading appellate decisions is enlightening, and sometimes it causes head-spin.  McDonald v Edelman & Edelman, P.C.   2014 NY Slip Op 04560   Decided on June 19, 2014
Appellate Division, First Department is definitely a head-spinner.  First, this is a re-write of the November 12, 2013 decision.  A recall of that decision is understandable, since the Court of Appeals decided Melcher v Greenberg Traurig, LLP   2014 NY Slip Op 02213   Decided on April 1, 2014  Court of Appeals  Read, J. on April 1, 2014.

Here is where the AD loses us. In  Melcher the Court of Appeals determined that Judiciary Law 487 is not a statutory cause of action; it is part of the common law.  Judge Read goes into a long and interesting analysis of the source of common law in the US.

Here the AD does several puzzling things.  First, it recalls an earlier decision. Second, it generally affirms the decision of Supreme Court dismissing three causes of action, but grants costs against defendants.  Third, it either mis-wrote, or simply did not understand Melcher.  The Court of Appeals determined that JL 487 is governed by CPLR 213(1).  Two months later, the AD determines McDonald , yet relies upon the overruled AD decision in Melcher.

The AD writes: ‘The fourth cause of action, which alleges a violation of Judiciary Law § 487, is untimely because it was asserted within six years of plaintiff’s receipt of defendants’ June 2008 letter (see CPLR 214[2]; Melcher v Greenberg Traurig, LLP, 102 AD3d 497 [1st Dept 2013])."

There is nothing correct in that sentence.

So, we are still suffering from confusion.

A world leader in the non-dairy segment of the frozen food industry and in non-dairy emulsions hires a world class law firm to file and prosecute patents for a "pourable dessert liquid product" (think: Mexican Cool Whip) which fails in both Mexico and Columbia.  Is the law firm to blame?  Yes and no.

Rich Prods. Corp. v Kenyon & Kenyon, LLP  2014 NY Slip Op 50937(U)  Decided on June 17, 2014  Supreme Court, Erie County  Walker, J. is a careful dissection of the claims.  In the Mexican instance

"By letter dated September 21, 1999, Uhthoff acknowledged Kenyon’s September 15 letter, but stated that it did not review it (or its enclosures) until September 20, 1999, because its offices were closed from September 15 through September 19, due to a Mexican Holiday and the ensuing weekend. Uhthoff stated further that, "in view of [the office closure], we are immediately processing the [Mexican Patent Application for filing] . . . within the one-month grace term ie, month 31th [sic] from the [Deadline], which is acceptable under the practice of the Mexican Patent Office."

By letters dated September 27 and October 1, 1999, Uhthoff confirmed that the Mexican Patent Application had been filed and accepted by the Mexican Patent Office. By letter dated October 21, 1999, Kenyon advised Rich that the Mexican Patent Application "has been entered on 27 September 1999", (emphasis added). On October 22, 2001, the Mexican Patent Office issued a patent for the Invention (the "Mexican Patent").

Thereafter, a series of discussions took place within Rich, to determine whether and/or how to proceed with enforcement of the Mexican Patent. During this time, Rich also attempted [*4]to identify a substitute Mexican law firm to pursue any such enforcement proceedings, because Uhthoff had a conflict with respect to one of Rich’s competitors. Ultimately, Rich retained the firm of Calderon y De La Cierra ("Calderon"), which commenced four (4) separate enforcement proceedings on behalf of Rich in Mexico. Kenyon did not prosecute, nor was it named as counsel or co-counsel in these actions.Indeed, Calderon communicated directly with Rich and/or Rich’s Mexican joint venture company regarding these proceedings.

In late 2007 (six (6) years after the Mexican Patent was issued), an entity named Lactoproductos La Loma ("Lactoproductos") commenced a "cancellation proceeding", in Mexico, in which it challenged the Mexican Patent on the basis that, inter alia, the Mexican Patent Application was filed after the Deadline.

Calderon represented Rich in the Lactoproductos cancellation proceedings.

On or about September 8, 2008, the Mexican Patent Office issued a decision cancelling the Mexican Patent, (in part) because the Mexican Patent Application was filed after the Deadline. Calderon (on behalf of Rich) appealed the decision to two different Mexican Courts. On June 23, 2009, the Mexican Patent Office determination was upheld. The court held that the Mexican Patent Office’s practice of accepting applications in the 31st month (as was done in 1999 with the Mexican Patent Application) was "contrary to current Patent Law in Mexico . . ." [emphasis added].

The Mexican Patent Office’s determination, without explanation, overturned an acknowledged and accepted practice for many years in Mexico, that had the force and effect of law. As Calderon noted:. . . the Mexican Patent Office actually ADOPTED the term of 31 months and applied same during more than 13 years. General principles of law in Mexico dictate that habits, customs or repetitive conducts exercise by the authorities are sources of law and actually become law, whenever these are not contrary to existing legal provisions. In the particular case, the fact that the Mexican Patent Office consistently accepted, tried and granted Applications filed with the 31st month, falls within the principle noted above and results in that the legally valid term to enter National Phase Applications in Mexico was legally extended to 31 months . . . . (Emphasis in original).
As a result of the Mexico Patent Office’s determination, the Invention lacks patent protection in Mexico."

In the Columbian instance:

"Rich has established, as a matter of law, that Kenyon failed to timely submit the correct documents to Goytia in connection with filing the Columbian Patent Application. Kenyon has failed to raise an issue of material fact requiring a trial regarding this cause of action. Failure to correctly perform these services constitutes malpractice as a matter of law (see, eg., Deb-Jo Const. Inc. v. Westphal, 210 AD2d 951 [4th Dept 1994]; Lory v. Parsoff, 296 AD2d 535, 536 [2nd Dept 2002]).

While Kenyon timely retained Goytia on March 18, 1998, its "instructions" to Goytia were incomplete – indicating that the necessary Power of Attorney, Assignment and Priority Document would "follow". While Goytia filed the Columbian Patent Application by the March 19, 1998 deadline, it specifically advised Kenyon that the notarized and authenticated Power of Attorney and Assignment were due by April 30, 1998. Despite these clear instructions, Kenyon failed to prepare and deliver the required documents to Goytia by the deadline.

Equally relevant here, Goytia requested these documents no less than three (3) more times, and even obtained a filing extension to accommodate Kenyon’s failure to provide them. Kenyon finally provided Goytia with additional, but still incorrect documentation days prior to the extended deadline, as well as a faxed copy of the Power of Attorney (that was not authenticated), after the deadline had passed. The faxed copy of the Power of Attorney was insufficient, as the Columbian PTO required an authenticated original.

Three years later, Goytia was still waiting for the authenticated Power of Attorney. In the end, the required documents were filed in December 2001 – more than three (3) years after the extended deadline. Ultimately, the Columbian PTO declared the Columbian Patent Application invalid, because incorrect documents were filed by the extended deadline.

As such, Rich is entitled to summary judgment on its Third Cause of Action on the issue of liability."

Courts rarely enunciate the principal that all legal malpractice claims compare a hypothetical better outcome, assuming that the attorneys did no wrong, with the actual.  If the complaint had been filed timely, I would have won the case and obtained a verdict.  If a bank account had been discovered in the case I would have been able to obtain the money within.  Each of these are comparisons between the hypothetical better outcome and the actual. 

No different is Cusimano v Wilson, Elser, Moskowitz, Edelman & Dicker LLP.  2014 NY Slip Op 04428  Decided on June 17, 2014  Appellate Division, First Department in which plaintiff says that if the tax returns had been offered in evidence, there would have been a difference.  The Appellate Division, First Department, says, no.

"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]).

Furthermore, even if the parents’ personal tax returns had been offered as evidence in the underlying arbitration, there was no basis to assume they would have been credited by the panel,

in view of evidence suggesting the tax returns were prepared by accountants who relied upon information supplied by Bernadette Strianese who had interests which conflicted with the parents’ ownership interests in the assets in dispute."

Riverhead:  One scenario that repeatedly appears is that of an attorney, who was retained on a normal contingent fee agreement, suddenly awakes to the onset of trial and the need for an expert. The attorney also determines that expert require a fee, and sometimes turns to the client, in violation of the contingent fee agreement, and tells the client to pay for the expert.  This is what happened in Palmieri v Biggiani  2013 NY Slip Op 05194 [108 AD3d 604]  July 10, 2013  Appellate Division, Second Department. Instead of paying, the client sued.

    "Contrary to the Supreme Court’s conclusion, the plaintiff stated a cause of action alleging violation of Judiciary Law § 487 (see CPLR 3211 [a] [7]; Judiciary Law § 487; Amalfitano v Rosenberg, 12 NY3d 8, 14 [2009]; Rock City Sound, Inc. v Bashian & Farber, LLP, 74 AD3d at 1172; Boglia v Greenberg, 63 AD3d 973, 975 [2009]; Kempf v Magida, 37 AD3d at 764; Izko Sportswear Co., Inc. v Flaum, 25 AD3d 534, 537 [2006]). The plaintiff alleged in the amended complaint that the defendant’s assertion, made in support of the motion to be relieved as counsel, that the plaintiff "steadfastly refused to pay the litigation expenses," was knowingly false and was offered with the intent to deceive the Supreme Court into believing that the defendant originally had sufficient cause to be relieved as counsel (see Dupree v Voorhees, 102 AD3d 912, 913 [2013]). Thus, the Supreme Court should have denied that branch of the defendant’s motion which was to dismiss the cause of action alleging a violation of Judiciary Law § 487."

Causes of Action for Breach of Fiduciary Duty not dismissed…causes of action for breach of contract not dismissed.  Is this a trend?  Today in Cherry Hill Mkt. Corp. v Cozen O’Connor P.C.
2014 NY Slip Op 04248  Decided on June 12, 2014  appellate Division, First Department we see dismissal of the legal malpractice claim, but reversal on the breach of fiduciary duty claim, which in this case is over excessive fees.

"Plaintiffs’ third cause of action, alleging that defendants breached their fiduciary duty because they either collected and/or billed plaintiffs for excessive and/or unearned fees, should not have been dismissed as duplicative of the malpractice causes of action (see Loria v Cerniglia, 69 AD3d 583, 583 [2d Dept 2010]). The third cause of action was not based upon the same facts underlying the malpractice claims (cf. Cosmetics Plus Group, Ltd. v Traub, 105 AD3d 134, 143 [1st Dept 2013], lv denied 22 NY3d 855 [2013]). With respect to the instant complaint, a claim [*2]of breach of fiduciary duty can be premised on excessive legal fees charged by an attorney (see Sobell v Ansonelli, 98 AD3d 1020, 1022 [2nd Dept 2012] see also Nason v Fisher, 36 AD3d 486, 487 [1st Dept 2007])."

Compare:  "Contrary to the Supreme Court’s determination, however, the plaintiff’s second cause of action, which alleged breach of contract and sought to recover $5,875 in damages, representing the amount he had paid to the defendant, based on, inter alia, overbilling, was not necessarily duplicative of the first cause of action (see O’Connor v Blodnick, Abramowitz & Blodnick, 295 AD2d 586, 587). Moreover, while the court concluded that the plaintiff could seek these damages as a counterclaim in the separate action commenced by the defendant (see Molinoff v Tanenbaum, _____ AD3d _____ [decided herewith]), at the time the order appealed from was issued, that action had been dismissed. "  Tanenbaum v Molinoff  2014 NY Slip Op 04186
Decided on June 11, 2014  Appellate Division, Second Department

In an ironic situation, two highly placed legal malpractice defense firms accuse each-other’s clients of legal malpractice, and seek to apportion blame between their clients in a case where it is clear that one or both of the clients committed legal malpractice.  It’s abundantly clear that service of a notice to individual shareholders did not take place.  The next question is which law firm is to blame.  In Rehberger v Garguilo & Orzechowski, LLP  2014 NY Slip Op 04182Decided on June 11, 2014 the Appellate Division, Second Department holds:

"The plaintiff commenced this action to recover damages arising from legal malpractice allegedly committed by Garguilo & Orzechowski, LLP, and Jerry Garguilo (hereinafter together the Garguilo defendants), while representing him in a declaratory judgment action to enforce the buy-out provision of a stock agreement. The plaintiff alleged, inter alia, that the Garguilo defendants failed to serve a notice required by the stock agreement upon the individual shareholders, which resulted in a judgment dismissing them from the action. The Supreme Court, among other things, denied Jerry Garguilo’s motion for summary judgment dismissing the complaint insofar as asserted against him, and denied that branch of the separate motion of Garguilo & Orzechowski, LLP, which was for summary judgment dismissing the complaint insofar as asserted against it."

"Here, the Garguilo defendants each failed to establish their prima facie entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against each of them. The stock redemption agreement in the underlying action required that notice of redemption be mailed to each of the individual shareholders at the address listed in the agreement. As a result of the Garguilo defendants’ failure to send this notice to the individual shareholders, the individual shareholder defendants were dismissed from the underlying action. The Garguilo defendants’ submissions in support of their respective motions did not establish, prima facie, that the plaintiff will be unable to prove at least one element of his legal malpractice claim and, thus, they failed to demonstrate their entitlement to judgment as a matter of law (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438; Barnave v Davis, 108 AD3d at 583; Affordable Community, Inc. v Simon, 95 AD3d at 1048; cf. Bd. of Mgrs. of Bay Club v Borah, Goldstein, Schwartz, Altschuler & Nahins, P.C., 97 AD3d 612, 613-614; Frederick v Meighan, 75 AD3d at 531-532; Leach v Bailly, 57 AD3d 1286, 1289). Moreover, contrary to the Garguilo defendants’ contention, they failed to demonstrate, prima facie, that the plaintiff’s subsequent counsel, Dollinger, Gonski & Grossman, Esqs., and Matthew Dollinger (hereinafter together the Dollinger third-party defendants), had a sufficient opportunity to fully protect the plaintiff’s rights when it took over the case, as to establish that any alleged negligence on the part of the Garguilo defendants was not a proximate cause of the plaintiff’s damages (cf. Perks v Lauto & Garabedian, 306 AD2d 261; Albin v Pearson, 289 AD2d 272)."

"Furthermore, the Supreme Court properly denied that branch of the motion of Garguilo & Orzechowski, LLP, which was for summary judgment on the third third-party complaint, which alleged causes of action against the Dollinger third-party defendants for contribution and [*3]common-law indemnification. In the third third-party complaint, Garguilo & Orzechowski, LLP, alleged, inter alia, that if the plaintiff is able to establish that Garguilo & Orzechowski, LLP, committed malpractice, then the Dollinger third-party defendants are culpable for essentially the same conduct because they too failed to serve notice on the individual shareholders and to take action against those shareholders to enforce the buy-out provision of the stock agreement. Contrary to the contentions of Garguilo & Orzechowski, LLP, the Supreme Court properly denied that branch of its motion which was for summary judgment on the cause of action for common-law indemnification. Garguilo & Orzechowski, LLP, failed to establish, prima facie, that it was free from negligence or that its negligence was not a proximate cause of the plaintiff’s alleged damages (see Waggoner v Caruso, 14 NY3d 874; Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; Raquet v Braun, 90 NY2d 177, 183; Barnave v Davis, 108 AD3d 582). "Since the predicate of common-law indemnity is vicarious liability without actual fault on the part of the proposed indemnitee" (Konsky v Escada Hair Salon, Inc., 113 AD3d 656, 658), Garguilo & Orzechowski, LLP, failed to establish its prima facie entitlement to indemnification from the Dollinger third-party defendants. The Supreme Court also properly denied that branch of the motion of Garguilo & Orzechawski, LLP, which was for summary judgment on the cause of the action for contribution, as Garguilo & Orzechawski, LLP, failed to eliminate triable issues of fact as to the relative culpability, if any, of the Dollinger third-party defendants (see Markey v C.F.M.M. Owners Corp., 51 AD3d 734, 738). Accordingly, the Supreme Court properly denied that branch of the motion of Garguilo & Orzechowski, LLP, which was for summary judgment on the third third-party complaint, regardless of the sufficiency of the Dollinger third-party defendants’ opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d at 853)."

Plaintiff sues attorney over fees.  Claim is that attorney failed to try to get client’s wife to pay attorney fees in a custody dispute.  Attorney successfully defends legal malpractice case on the "but for" aspect.  A question of overbilling, however, remains in the case on the theory of breach of contract.

"The plaintiff commenced this action, inter alia, to recover damages for legal malpractice and breach of contract against the defendant, the attorney who represented him in a prior proceeding against his former wife in the Family Court (see Matter of Tanenbaum v Caputo, 81 AD3d 839). The defendant moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint. The Supreme Court granted the motion."

"Here, the defendant established that he was entitled to the dismissal of the first cause of action, which alleged legal malpractice, pursuant to CPLR 3211(a)(1) and (7). Contrary to the plaintiff’s contentions, the complaint in this action, as well as certain documentary evidence before the Supreme Court, including, inter alia, a portion of the settlement agreement between the plaintiff and his former wife, conclusively established as a matter of law that, under the terms of the settlement agreement (see generally Trinagel v Boyar, 99 AD3d 792, 792; Matter of Berns v Halberstam, 46 AD3d 808, 809), the plaintiff was not entitled to an award of an attorney’s fee in the proceeding against his former wife before the Family Court (see Matter of Tanenbaum v Caputo, 81 AD3d 839), and that the defendant therefore did not commit malpractice in failing to obtain an award of an attorney’s fee in that proceeding. Moreover, the retainer agreement between the parties here conclusively refuted any claim based on the plaintiff’s allegation that the defendant assured him that the plaintiff’s former wife would be responsible for the payment of all legal fees in that proceeding. Accordingly, the Supreme Court properly granted that branch of the defendant’s motion which was to dismiss the first cause of action pursuant to CPLR 3211(a)(1) and (7).

Contrary to the Supreme Court’s determination, however, the plaintiff’s second cause of action, which alleged breach of contract and sought to recover $5,875 in damages, representing the amount he had paid to the defendant, based on, inter alia, overbilling, was not necessarily duplicative of the first cause of action (see O’Connor v Blodnick, Abramowitz & Blodnick, 295 AD2d 586, 587). Moreover, while the court concluded that the plaintiff could seek these damages as a counterclaim in the separate action commenced by the defendant (see Molinoff v Tanenbaum, _____ AD3d _____ [decided herewith]), at the time the order appealed from was issued, that action had been dismissed. Accordingly, we modify the order by deleting the provision thereof granting that branch of the defendant’s motion which was to dismiss the second cause of action, which was to recover $5,875 in damages for breach of contract, and substituting therefor a provision denying that branch of the motion."

What are the rules for use of experts, including when they must be revealed, how they must be noticed, and how a CPLR 3101 notice interacts with jury selection dates?  The answer is that no one knows.

Frankel v Vernon & Ginsburg, LLP  2014 NY Slip Op 04136  Decided on June 10, 2014  Appellate Division, First Department  is a prime example.  Plaintiff sends a CPLR 3101 notice that is said to be insufficient.  Supreme Court incorrectly precludes.  The deficiency is cured by a further notice.  This is just before trial

."Supreme Court incorrectly precluded plaintiff’s legal malpractice expert from testifying on the ground that the initial disclosure was insufficiently detailed. Defendants objected to the disclosure’s sufficiency for the first time in their omnibus motion in limine, presented to the court on the day trial was to begin. Any deficiency was cured by plaintiff’s service of a more detailed supplemental disclosure four days later. Moreover, defendants were aware of the substance of the expert’s proposed testimony because plaintiff had previously submitted the expert’s affidavit in opposition to their motion for summary judgment. As Supreme Court found, defendants have not established that they were prejudiced by receipt of the expert disclosures 4 days after the 30-day minimum set by local rule, or that the delay was willful or intentional (see Ramsen A. v New York City Hous. Auth., 112 AD3d 439, 440 [1st Dept 2013])."

"To establish causation in this legal malpractice action, plaintiff must show that his decedent would have prevailed in the underlying action but for the attorney defendants’ negligence (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]). In the underlying action, plaintiff’s decedent asserted causes of action for breach of the warranty of habitability against her cooperative apartment building and for private nuisance against her upstairs neighbors. Accordingly, at trial, to demonstrate the merit of the underlying claim of private nuisance, plaintiff should be permitted to prove, among other things, that his decedent’s neighbors intended to cause the nuisance (see Copart Indus. v Consolidated Edison Co. of N.Y., [*2]41 NY2d 564, 570-571 [1977]). The neighbors’ testimony is relevant to the issue of intent. Therefore, the court improperly precluded that testimony."