New York Attorney Malpractice Blog

New York Attorney Malpractice Blog

What We Mean When We Speak of Lawyers

Posted in Legal Malpractice Basics

Litigation is alternatively a blood sport or the sport of kings.  It takes a lot of money and sometimes tempers flare.  In Englese v Sladkus  2018 NY Slip Op 50625(U) Decided on April 25, 2018
Supreme Court, New York County St. George, J.  we see what happens when a litigant speaks candidly without any filtering.

“Steven D. Sladkus, an attorney, brings this defamation action against Melanie Englese a/k/a Melanie Sisskind, his former client. Ms. Englese and her husband initiated a legal malpractice action against Mr. Sladkus and his former law firm by summons and notice on June 4, 2015 and followed with a complaint on September 27, 2015. Their complaint asserts that Mr. Sladkus and his former firm committed malpractice when they 1) allowed the statute of limitations to expire as to two allegedly appropriate defendants, and 2) due to this and other alleged malpractice, forced Ms. Englese and her husband to accept a poor settlement. The settlement Mr. Sladkus negotiated for Englese and her husband was finalized on June 5, 2012. The legal malpractice action, Englese v Sladkus (Sup. Ct., NY County, St. George, J., index No. 101006/2015 [Englese]), is also before this Court and is the subject of a pre-answer motion to dismiss, which this Court addresses in a separate decision. Additional details about the Englese case are contained in the Court’s interim order on the pre-answer motion.

In the instant case, Mr. Sladkus asserts that around August 22, 2015 — more than two months after the summons with notice was filed in Englese but a little more than a month before the Englese complaint was filed — Ms. Englese defamed him to William Suk, one of his key business relations, stating that Mr. Sladkus “(i) is a lawyer who ‘gives poor advice’; (ii) is ‘a shitty lawyer’; (iii) caused them to lose ‘a ton of money in their settlement with the sponsor; (iv) ‘took advantage of [her and her husband] because [her own husband] was not effectual in the negotiations and because [she] was in [her] final term of pregnancy’; and (v) ‘theatened [her and [*2]her husband] into settling’ the litigation against the sponsor” (Complaint, ¶ 29). Mr. Sladkus learned of this alleged defamation when Mr. Suk contacted him and informed him of such. The complaint also asserts, on information and belief, that Ms. Englese has maligned him to other individuals as well.”

“”Defamation is the making of a false statement about a person that tends to expose the plaintiff to public contempt, ridicule, aversion or disgrace, or induce an evil opinion of him or her in the minds of right-thinking persons, and to deprive him or her of their friendly intercourse in society” (Frechtman v Gutterman, 115 AD3d 102, 104 [1st Dept 2014] [citations and internal quotation marks omitted]). Opinion, on the other hand, is not actionable (see Parks v Steinbrenner, 131 AD2d 60, 62 [1st Dept 1987]). As stated earlier, Mr. Sladkus has cited five alleged defamatory comments that Ms. Englese allegedly made about him: 1) he gives poor legal advice, 2) he is a shitty lawyer, 3) he caused Ms. Englese and her husband to lose a lot of money in their settlement, 4) her husband was not effectual in the settlement negotiations and Ms. Englese was especially vulnerable due to the advanced stage of her pregnancy, and Mr. Sladkus [*4]took advantage of this, and 5) Mr. Sladkus threatened her and her husband into settling the case.

Although Ms. Englese argues to the contrary, the Court finds that the allegations of defamation are not too vague to support a claim. As Mr. Sladkus points out, the complaint sets forth the approximate date of the occurrence, the place of the occurrence, and the words Ms. Englese allegedly used. Ms. Englese’s arguments in support of her motion to dismiss, including that not all the words were in quotes and that the quotes contain brackets are unpersuasive.

Next, the Court concludes that the first, second and fourth of these five statements should be dismissed as opinion. Ms. Englese’s statements that Mr. Sladkus is a bad lawyer and gives bad advice are clearly opinion and, as such, are not actionable. The fourth statement listed above, as described in the complaint, is opinion because it focuses on the facts that she was in the last term of her pregnancy and that her husband was ineffectual. The statements that Mr. Sladkus caused Ms. Englese and her husband to lose a “ton of money” is set forth as fact and speaks to Mr. Sladkus’ competence in his profession, and the statement that Mr. Sladkus threatened them into settling also is a factual allegation. Because the comments, in their entirety and in their proper context, essentially accuse him of incompetence in his profession, he sets forth a claim for defamation per se (Cf. Carney v Memorial Hospital and Nursing Home of Greene County, 64 NY2d 770, 772 [1985]). Moreover, as this constitutes defamation per se, the complaint does not have to assert special damages as to this claim (see Nolan v State, 158 AD3d 186, 191 [1st Dept 2018]).”

 

Court Takes a Deeper Look at the Motion to Dismiss

Posted in Legal Malpractice Cases

The process is set forth in CPLR 3211(c) wherein the Court may convert a motion to dismiss under CPLR 3211 into a motion for summary judgment under CPLR 3212, so long as adequate notice is given to the litigants.  In Englese v Sladkus  2018 NY Slip Op 50621(U)  Decided on April 25, 2018  Supreme Court, New York County, Judge St. George tells the litigants that the materials presented by the attorney in this 3211 motion is better looked at in a 3212 setting, and employs CPLR 3211(c).

“The underlying action related to an apartment that plaintiffs purchased in the building located at 205-209 East 57th Street. Plaintiffs alleged that the apartment was defectively constructed and had toxic mold and that they relocated following an inspection which revealed the scope of the problems. Between June 2007 and August 2009 plaintiffs tried unsuccessfully to get defendant 205-209 East 57th Street Associates, LLC (Sponsor), the owner of the building, to remediate the problems. When these efforts failed, around November 2009, plaintiffs commenced the underlying lawsuit, with another law firm as their counsel. Subsequently, they hired defendants to replace the original firm. The complaint alleges that defendants assured them they would add the Clarett Group, which owned the building’s Sponsor, as well as Clarett’s CEO [*2]at the time, Veronica Hackett, as defendants. Plaintiffs assert that defendants also assured them they would research and confirm that the Sponsor had sufficient assets to satisfy any judgment.

According to the complaint, defendants did none of the things they promised, and in addition they allowed the statute of limitations to lapse. Because of this, and because the Sponsor now contained no assets, plaintiffs contend, they were forced to accept a poor settlement during the mediation that commenced in March of 2012. Plaintiffs assert that, had the case gone to trial, they would have “obtained a judgment against, and collected from, [the defendants in the underlying case] net money damages in excess of three million dollars” (Complaint, ¶ 48). They assert that defendants misled them deliberately in all the above actions. Accordingly, plaintiffs assert causes of action for negligence and legal malpractice, breach of contract, breach of fiduciary duties, fraud and/or negligent misrepresentation, and fee disgorgement.”

“Dismissal is proper under CPLR § 3211 (a) (7) if the allegations are duplicative of or encompassed by the legal malpractice claim (see Kliger-Weiss Infosystems, Inc. v Ruskin Moscou Faltischek, P.C., — AD3d &mdash, &mdash, 2018 Slip Op 01456, at *3 [1st Dept 2018]). Accordingly, much of the second cause of action, for breach of contract, duplicates the legal malpractice claim and cannot stand. The remainder of this cause of action, which asserts that defendants billed them for work they did not perform, or improperly billed them $30,000, cannot stand because of plaintiffs’ acknowledgment that they paid the bills without objection (see Gamiel, 60 AD3d at 474-75). Therefore, the second cause of action is dismissed. The portions of the third and fourth causes of action which relate to the allegations of overbilling are dismissed for the same reason. The remainder of the third cause of action, for breach of fiduciary duty, and the fourth cause of action, for fraud, are dismissed because the allegations are adequately encompassed by the claims for malpractice.[FN3]

Defendants have not satisfied their burden under CPLR § 3211 (a) (1), which requires them to “utterly refute plaintiff[s’] allegation, conclusively establishing a defense as a matter of law” (Goshen v Mutual Life Ins. Co. of New York, 98 NY2d 314, 326 [2002]). In a legal malpractice case, a plaintiff must establish that the attorney was negligent, that the negligence [*5]proximately caused plaintiff’s losses, and that the negligence damaged the plaintiff (Global Business Inst. v Rivkin Radler, 101 AD3d 651, 651 [1st Dept 2012]). Thus, to prevail on this argument, defendants must rely on documents that conclusively refute these elements. Defendants primarily rely on emails to support this prong of their motion. Emails and other correspondence may be sufficient to satisfy this burden in certain circumstances (see Kolchins v Evolution Mkts., Inc., — NY3d &mdash, &mdash, 2018 NY Slip Op 02209, at *5 [2018] [citing Kolchins v Evolution Mkts., Inc., 128 AD3d 47, 58-59 [1st Dept 2015], aff’d, — NY3d — [2018]), but only if they “negate beyond substantial question” the allegations in the complaint” (Amsterdam Hospitality Group,120 AD3d at 433), and “conclusively establish[ ] a defense to the asserted claims as a matter of law” (Calpo-Rivera v Siroka, 144 AD3d 568, 568 [1st Dept 2016] [citation and internal quotation marks omitted] [finding that the emails, affidavits, and contract at issue were not “documentary evidence”]). Here, defendants’ documents do not satisfy this burden.

Along with the emails, the remaining contentions in the motion and the opposing papers raise issues of fact that are not proper in the context of a motion to dismiss but are eminently worthy of consideration in a summary judgment motion. Under CPLR § 3211 (c), the Court has the discretion to convert this motion to one for summary judgment. The Court may do so regardless of whether issue has been joined, provided the Court gives ample notice to the parties to “make a complete record and to come forward with evidence that could be considered” (Nonnon v City of New York, 9 NY3d 825, 826 [2007]; see also Mihlovan v Grozavu, 72 NY2d 506 [1988] [reversing the court’s conversion of pre-answer motion to dismiss to one for summary judgment solely because the court did not give the parties notice and the opportunity to brief the issue]). One of the bases for such conversion is that it can lead to an “expeditious disposition of the controversy” (CPLR § 3211 [c]).”

It’s a Three-Way Circus in This Real Estate Deal

Posted in Legal Malpractice Basics, Uncategorized

Plaintiffs hired an attorney in order to purchase a condominium.  Unfortunately, the condo was subject to mold and water damage.  Razdolskaya v Lyubarsky  2018 NY Slip Op 02817
Decided on April 25, 2018  Appellate Division, Second Department starts out with an analysis of why there is a fraud claim.  It ends with an analysis of why the attorney may be subject to legal malpractice and whether he can seek to share the burden with the sellers.

“The plaintiff purchased a condominium unit from the defendants Roman Lyubarsky and Yelena Lyubarsky (hereinafter together the Lyubarskys). The plaintiff was represented by the defendant attorney Zorik Erik Ikhilov in connection with the sale. The plaintiff commenced this action against the Lyubarskys and Ikhilov after allegedly discovering that the condominium building required remediation for mold and water damage. Specifically, the plaintiff alleged that the Lyubarskys actively concealed mold and water damage in the unit’s balcony, and assigned storage unit and parking space, and additionally concealed defective conditions throughout the common areas of the building. The plaintiff alleged Ikhilov committed legal malpractice in his representation of her in the transaction. In his answer, Ikhilov asserted cross claims against the Lyubarskys for contribution and common-law and contractual indemnification.”

“Here, accepting the facts alleged in the complaint as true and according the plaintiff the benefit of every possible favorable inference (see CPLR 3211[a][7]; Leon v Martinez, 84 NY2d 83, 87-88), the complaint sufficiently states a cause of action to recover damages for fraud on the theory that the Lyubarskys actively concealed defects throughout the common areas of the condominium building. The complaint alleges that the Lyubarskys took several steps to hide the existence of leaks and mold damage including, inter alia, claiming that they had lost the key to the storage area in the cellar which was assigned to the subject condominium, and removing and replacing damaged sheetrock from the cellar and the parking area. These allegations, if true, might have thwarted the plaintiff’s efforts to fulfill her responsibilities imposed by the doctrine of caveat emptor with respect to the common areas of the building (see Camisa v Papaleo, 93 AD3d 623, 625; Margolin v IM Kapco, Inc., 89 AD3d 690, 692; Jablonski v Rapalje, 14 AD3d 484, 487; see also Radushinsky v Itskovich, 127 AD3d at 839). Further, in support of that branch of their motion which sought dismissal pursuant to CPLR 3211(a)(1), the Lyubarskys failed to sustain their burden of submitting documentary evidence to resolve all factual issues as a matter of law, and conclusively dispose of the plaintiff’s fraud cause of action as it related to the common areas of the building (see Leon v Martinez, 84 NY2d at 87; Camisa v Papaleo, 93 AD3d at 625).

We also agree with the Supreme Court’s determination to deny that branch of the Lyubarskys’ motion which was pursuant to CPLR 3211(a)(7) to dismiss Ikhilov’s cross claim for contribution (see Schauer v Joyce, 54 NY2d 1, 5). A claim for contribution may be established, among other ways, where the party from whom contribution is sought owed a duty to the injured plaintiff, and a breach of this duty contributed to the plaintiff’s alleged injury (see Morris v Home Depot USA, 152 AD3d 669, 671-672; Phillips v Young Men’s Christian Assn., 215 AD2d 825, 827). An “essential requirement” for contribution is “that the parties must have contributed to the same injury” (Nassau Roofing & Sheet Metal Co. v Facilities Dev. Corp., 71 NY2d 599, 603). “[C]ontribution is available whether or not the culpable parties are allegedly liable for the injury under the same or different theories” (Raquet v Braun, 90 NY2d 177, 183 [internal quotation marks omitted]). Here, the Lyubarskys and Ikhilov are alleged to have caused the same injury to the plaintiff, i.e., the diminution in value of the plaintiff’s condominium unit and her interest in the common elements of the building as a result of the alleged mold and water damage. Under these circumstances, Ikhilov has stated a cause of action against the Lyubarskys to recover damages for contribution (see Schauer v Joyce, 54 NY2d at 5).”

Guardianship and Privity

Posted in Legal Malpractice Cases

All attorney representations are not equal, and a strong public policy of limiting the volume of legal malpractice cases is highlighted by Siemsen v Mevorach  2018 NY Slip Op 02821  Decided on April 25, 2018  Appellate Division, Second Department.  A guardian is not susceptible of a legal malpractice claim for want of privity.

“In 2012, the Supreme Court issued a commission to guardian, appointing the defendant as the guardian of the person and property of Virginia Lenzovich pursuant to Mental Hygiene Law article 81. The commission to guardian authorized the defendant, among other things, to “[e]xercise any right to an elective share in the estate of the Incapacitated Person’s deceased spouse.” Virginia’s husband, John Lenzovich, died in March 2014, and Virginia died in July 2014. The defendant then moved for judicial settlement of the final account of the defendant as guardian. By order dated January 30, 2015, the Supreme Court discharged the defendant “from any and all liability in connection with all matters embraced in the said final account.” John’s will, in which he disinherited Virginia, was not filed for probate until March 2015.
Subsequently, the plaintiff, as administrator of Virginia’s estate, commenced this action to recover damages for legal malpractice and breach of fiduciary duty based on the defendant’s failure to exercise, on Virginia’s behalf, the right of election against John’s estate. The defendant moved pursuant to CPLR 3211(a)(1), (5), and (7) to dismiss the complaint based on documentary evidence, collateral estoppel, and failure to state a cause of action. The Supreme Court granted the motion, and the plaintiff appeals.”

“The Supreme Court properly granted that branch of the defendant’s motion which was pursuant to CPLR 3211(a)(7) to dismiss the cause of action to recover damages for legal malpractice. In a legal malpractice action, a plaintiff must establish, inter alia, that an attorney-client relationship existed (see United States Fire Ins. Co. v Raia, 94 AD3d 749, 750-751; Nelson v Kalathara, 48 [*2]AD3d 528, 529). Here, the plaintiff failed to allege facts that would support a finding that the defendant, as guardian of the person and property of Virginia under Mental Hygiene Law article 81, had an attorney-client relationship with Virginia (see United States Fire Ins. Co. v Raia, 94 AD3d at 750-751; Nelson v Kalathara, 48 AD3d at 529).”

The Very Very Rare Partial Summary Judgment in Legal Malpractice

Posted in Legal Malpractice Cases

Partial summary judgment for plaintiff is a rare beast in legal malpractice.  Judges have to overcome their natural bias against legal malpractice and the facts have to be very strong, or the acts of the attorneys very clearly wrong for partial summary judgment to be granted.  Here, in Krigsman v Goldberg  2018 NY Slip Op 30694(U)  April 19, 2018  Supreme Court, New York County  Docket Number: 151271 /16  Judge: Manuel J. Mendez we see the rara avis.

“Plaintiff claims that the Goldberg Defendants were retained by plaintiff’s mother, Dora Avrumson (hereinafter “Dora”) in March of 2003, about a month after the death of her second husband Shlomo Cyngiel (hereinafter “Shlomo”), who died on February 15, 2003. It is alleged that the Goldberg Defendants committed malpractice when they failed to exercise Dora’s right of election in accordance with EPTL§5-1.1-A. It is further alleged that instead of exercising the right of election, the Goldberg Defendants filed objections against the Estate of Shlomo in a proceeding in Surrogate’s court to probate Shlomo’s Will, and commenced a separate action in New York State Supreme Court Kings County (Index 21521- 2003) on Dora’s behalf, against Shlomo’s Estate and his children, for the imposition of a constructive trust and a declaration of Dora’s rights in Shlomo’s property (hereinafter referred to as the “constructive trust action).” The Supreme Court Kings  County action was transferred to Surrogates Court in October 2003. Dora died on November 28, 2008 during an ongoing dispute with Shlomo’s Estate over the legality of their marriage. She died without exercising her right of election. ”

It is alleged that the Goldberg Defendants failed to take adequate party and nonparty discovery and otherwise prepare the constructive trust action for trial prior to the discovery cut-off. On June 12, 2015, the constructive trust action was stricken from the trial calendar after the Goldberg Defendants informed the Kings County Surrogate that they could not try the action due to a scheduling conflict and sought an adjournment. Plaintiff alleges that when the Goldberg Defendants neglected the action and failed to move to restore the action to the trial calendar, the defendants in the action moved to dismiss the action for failure to prosecute.”

“Plaintiff has shown that the Goldberg Defendants failed to follow the proper procedure required under EPTL §5-1.1-A[d][1] which provides the procedure to exercise the right of election and specifically states: “Written notice of such election shall be served upon any personal representative in the manner herein provided, or upon a person named as Executor in a will on file in the surrogate’s court in a case where such will has not yet been admitted to probate, and the original thereof shall be filed and recorded, with proof of service, in the surrogate’s court in which such letters were issued within six months from the date of the issuance of letters but in no event later than two years from the date of decedent’sdeath … ” (Emphasis added) (McKinney’s Consol. Laws of New York Annot., vol.17B, EPTL §5-1.1-A) There was a continuous attorney-client relationship between the Goldberg Defendants and Dora and her estate from March of 2003 through March 14, 2013 when they were first substituted by Nicholas Kowalchyn, Esq .. Plaintiff relies on correspondence and the retainer agreement to show that the Goldberg Defendants were aware of their responsibility of properly exercising Dora’s right of election (Mot. Exhs. 6, 7, 9 and 10).
Plaintiff has shown that the Goldberg Defendants proximately caused her damage. ”

“The Goldberg Defendants fail to provide proof in opposition to partial summary judgment on plaintiffs claims of their malpractice in the constructive trust action. The Goldberg Defendants’ representation was also continuous in the constructive trust action c:ommenced in May of 2003 through January 2016 when the Goldberg Defendants withdrew as counsel. The May 10, 2016 Decision and Order of Kings County Surrogate S. Johnson, states: “in the month since Ms. Krigsman retained Greenfield Stein & Senior, the firm has developed this matter to a greater extent than prior counsel did in thirteen years of representation.” (Mot. Exh. 35). The Goldberg Defendants provide no proof that the delay and failure to obtain discovery in the constructive trust action was the fault of other attorneys. Ultimately dismissal of the constructive trust action was due solely to their lack of proper representation, further warranting partial summary judgment on liability to plaintiff. ”

 

 

Limits on Privilege in a Judiciary Law 487 Setting

Posted in Legal Malpractice Cases

Judiciary Law § 487 relates to deceit by attorneys and allows for treble damages.  There are already multiple hurdles for the successful litigant, not the least of which is that the deceit must take place during litigation and within New York state.  M.T. Packaging, Inc. v Maidenbaum & Assoc.,
P.L.L.C.  2018 NY Slip Op 30601(U)  April 4, 2018  Supreme Court, New York County  Docket Number: 153441/2017  Judge: James E. d’Auguste outlines another concern.  To what extent may privileged discussions form the basis of a good 487 claim?

“The allegations set forth in paragraphs 16 through 30 of the complaint in the withi~
action are duplicative of the very factual allegations of fraud that formed the basis of this Court’s
earlier severance decision. In defendants’ moving papers, they indicate that the allegedly
fraudulent certificate at issue in that action was provided to plaintiff more than four years prior to
the retention of defendants as counsel and commencement of the Contract Action. The
undersigned agrees with this Court’s prior determination that the allegations contained in
paragraphs 16 through 30 of the complaint have no bearing on the Judiciary Law claim and are
prejudicial to defendants as the only purpose such allegations serve are to disparage defendants
in this action. Defendants themselves, as attorneys, had nothing to do with the breach of contract
or certificate fraud because they were not involved in the conduct that is the subject of the
Contract Action and the Fraud Action. Defendants merely represented their clients in both
actions. Moreover, any pre-litigation conduct is not relevant to Claims brought under the

Judiciary Law as this is not the type of fraud contemplated by the statute. See, e.g., Mahler v. Campagna, 60 A.D.3d 1009, 1012 (2d Dep’t 2009). It is both unnecessary in this action and
inappropriate for plaintiff to prove the truth of the allegations contained in the Fraud Action
because it would be tantamount to having a litigation within this litigation. Further, it would be
prejudicial to defendants to make them defend against such allegations as parties. However, if
· the pu~ose of including such allegations in the complaint is to give context to the instant
Judiciary Law claim, as plaintiff asserts, the most appropriate way would be to state, using
neutral language, that defendants were lawyers in the Fraud Action and the Contract Action.
Accordingly, the·Court permits plaintiff leave to amend the complaint as directed above.

Moreover, the allegations contained in paragraphs 55 through 62.of the complaint relate
to privileged attorney-client communications-a privilege owned by defendants’ non-party
clients. The only way for defendants to defend against such allegations would be for defenaants
to reveal what they communicated to their clients, which is privileged. The Judiciary Law was
never designed to require such diselosure to defend against an allegation where the privilege has
not been waived. Because waiver of the attorney-client privilege belongs to the client, the
attorney, and thus defendants herein, cannot waive the privilege. While there are some situations
where an attorney’s conduct can constitute a waiver by the client, this is because the attorney is
acting as the client’s agent. In re von Bulow, 828 F.2d 94, 101 (2d Cir~ 1987). However, in this
instance, the allegations are not that defendants are acting as the .client’s agents, but that
defendants, as attorneys, are themselves committing a fraud. In such situations, an attorney is
not acting as an agent, but as a principal. This Court then must return to the strictures of the
attorney-client privilege-that the privilege belongs to the client and only the client can waive
the privilege, either expressly or impliedly. Defending against allegations made pursuant to the
Judiciary Law does not equate to a knowing or implied waiver of the attorney-client privilege by the client.  As such, this Court does not read the Judiciary Law as a hammer to chip away at the attorney-client privilege. Section 487 of the Judiciary Law is not meant to require disclosure by attorneys or waiver by their clients. See Wailes v. Tel Networks USA, LLC, 116 A.D.3d 625, 626 (l st Dep’t 2014) (“[T]he only allegations of wrongdoing refer to a settlement discussion had after Tel Networks commenced a legal proceeding, and that communication is absolutely privileged.”). Thus, the Court does not read the Judiciary Law as permitting a claim where the only means of defending against the cause of action is to disclose privileged communications. “

One Toll Permitted; Not Two

Posted in Legal Malpractice Cases

Continuous representation tolls the statute of limitations in legal and professional malpractice.  There are other more general tolls that apply to all cases, such as infancy and insanity.  Here, in Estate of Smulewicz v Meltzer, Lippe, Goldstein & Breitstone, LLP  2018 NY Slip Op 02722 Decided on April 19, 2018  Appellate Division, First Department plaintiff got the benefit of continuous representation, but not “insanity” in the nature of dementia.

“Defendant established its entitlement to dismissal on statute of limitation grounds by submitting evidence that the malpractice occurred in 2008, but plaintiff did not commence this action until March 2016, well beyond the three-year limitation period for legal malpractice (CPLR 214[6]; see McCoy v Feinman, 99 NY2d 295, 301 [2002]; Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]; Glamm v Allen, 57 NY2d 87, 93 [1982]). Even accepting plaintiffs’ continuous-representation argument, there is no evidence that such continued representation went beyond, at most, July 16, 2012, which still renders plaintiffs’ action untimely. Plaintiffs’ argument that the limitation period was tolled by the decedent’s alleged dementia is also unavailing, as there is no evidence that the decedent suffered from such disability at the time the claim accrued (CPLR 208), or that it rendered her “unable to protect [her] legal rights because of an over-all inability to function in society” (McCarthy v Volkswagen of Am., 55 NY2d 543, 548 [1982]; see Burgos v City of New York, 294 AD2d 177 [1st Dept 2002]).”

The Rare Legal Malpractice Verdict

Posted in Legal Malpractice Cases

While many legal malpractice cases are brought, few, very few proceed to trial and fewer reach verdict.  Our research shows only one jury verdict in 2017 and only this bench trial verdict in 2016.

Abramowitz v Lefkowicz & Gottfried, LLP  2018 NY Slip Op 02589  Decided on April 18, 2018  Appellate Division, Second Department is the story of the Daily News and a coin seller fallng out.  The legal malpractice arises from a series of unfortunate mistakes.

“23KT Gold Collectibles, Ltd. (hereinafter 23KT), and Merrick Mint, Ltd. (hereinafter Merrick), are affiliated designers and manufacturers of memorabilia and collectible coins. In 2008, 23KT entered into an agreement with Daily News, L.P. (hereinafter Daily News), in which the parties to the agreement agreed to develop and promote a coin club through which they would sell collectible coins and share profits. 23KT agreed to design and manufacture coins and coin sets, and Daily News agreed to provide 204 pages of advertising space to advertise the coins. The coins sold through the coin club would also be offered for sale on a website called “ecoins,” which would be operated by 23KT. The agreement included an exclusivity clause providing that coin club products could not be advertised, marketed, sold, or offered for sale by 23KT or its affiliates, including Merrick, in any forum or media other than Daily News advertisements or ecoins. Products which were substantially similar, but not identical, to a coin club product could not be sold by 23KT, but were permitted to be sold by its affiliates, such as Merrick. The agreement permitted either party to terminate the agreement via written notice if the other party materially breached the agreement “and the breach is not remedied within thirty (30) days of the breaching party’s receipt of written notice of the breach.” The agreement specified that it was the entire agreement, that it could not be [*2]modified except in writing, and that a failure to exercise any right under the agreement did not operate as a waiver of that right.

By letter dated January 29, 2009, Daily News notified 23KT that it had materially breached the exclusivity provision of the agreement by marketing coin club products and similar products in the New York Post and on certain websites. The notice stated that the breaches were not capable of being remedied, and that the agreement would terminate on March 1, 2009. 23KT responded with a letter in which it disputed that a breach had occurred, and asserted that, in any event, Daily News was required to permit it to cure the alleged breaches. No agreement was reached on the issue of a cure, and 23KT retained the defendant Lefkowicz & Gottfried, LLP (hereinafter the defendant law firm), to commence an action, inter alia, to recover damages for breach of contract against Daily News. Daily News obtained summary judgment dismissing the first complaint filed on behalf of 23KT, a finding in its favor on liability on its counterclaims against 23KT due to discovery failures, and dismissal of the second complaint filed on behalf of 23KT based on the doctrine of res judicata. 23KT then retained another attorney, who negotiated a settlement in which the parties discontinued their claims and 23KT paid Daily News the sum of $20,000.

23KT and others then commenced this legal malpractice action against the defendant law firm and its principals. In an order dated August 4, 2014, the Supreme Court granted the defendants’ motion for summary judgment dismissing the complaint. However, in an order dated April 1, 2015, the court granted the plaintiffs’ motion for leave to reargue the defendants’ motion and, upon reargument, denied the defendants’ motion. The matter proceeded to trial, after which the court determined that 23KT established its legal malpractice cause of action against the defendant law firm. Judgment was entered in favor of 23KT and against the defendant law firm in the principal sum of $1,675,000, representing the sum 23KT would have recovered from Daily News in the absence of the law firm’s negligence, the sum spent to settle the matter with Daily News, and a return of the retainer paid to the defendant law firm. The defendant law firm appeals.”

“Here, the Supreme Court determined that the defendant law firm was negligent in the underlying representation and that, but for such negligence, 23KT would have prevailed in the underlying litigation. On appeal, the defendant law firm challenges only the finding of but-for causation, arguing that 23KT was in breach of the exclusivity clause of the underlying agreement and therefore would not have prevailed in the underlying litigation, regardless of its alleged malpractice. The contention is without merit. The evidence at trial established that most of the alleged breaches listed in Daily News’ January 29, 2009, breach notice were actually sales by Merrick of similar, but not identical, coins, which did not violate the exclusivity clause of the agreement. “

No Continuous Representation in a $ 80 Million Legal Malpractice Case

Posted in Legal Malpractice Cases

The statute of limitations is a very high barrier to litigation, and to legal malpractice in particular, as there is often a long delay between the malpractice and the result.  The statue starts to run with the negligent act, and only continuous representation tolling can save the day for plaintiff.  Here, in Davis v Cohen & Gresser, LLP  2018 NY Slip Op 02542  Decided on April 12, 2018
Appellate Division, First Department the statute of limitations and the successor counsel doctrine join to defeat the claim.

“In opposing defendant’s prima facie showing that the claim is untimely, Davis had the burden of demonstrating the statute of limitations has been tolled or does not apply (see CLP Leasing Co., LP v Nessen, 12 AD3d 226, 227 [1st Dept 2004]). Davis cannot rely on the continuous representation doctrine to toll the statute of limitations as the doctrine “tolls the Statute of Limitations only where the continuing representation pertains specifically to the matter in which the attorney committed the alleged malpractice” (see Shumsky v Eisenstein, 96 NY2d 164, 168 [2001]).

The documentary evidence establishes that following decedent’s death, defendant did not represent the estate in the Devine action. The retainer agreements executed with defendant after [*2]the decedent’s death were explicitly limited to representing the estate in other litigation and not the Devine litigation. In addition, the evidence demonstrated that following decedent’s passing defendant never entered an appearance on the estate’s behalf while other law firms were substituted as counsel in the Devine action, made a motion to substitute the estate as plaintiff, and appeared on behalf of the estate, and ultimately settled with the Devine parties in May 2014 (see Matter of Merker, 18 AD3d 332, 332-333 [1st Dept 2005] [no continuous representation where plaintiff had “retained new counsel”]).

Further, the continuous representation doctrine does not apply where there is only a vague “ongoing representation” (Johnson v Proskauer Rose LLP, 129 AD3d 59, 68 [1st Dept 2015]). For the doctrine to apply, the representation must be specifically related to the subject matter underlying the malpractice claim, and there must be a mutual understanding of need for further services in connection with that same subject matter (see Shumsky, 96 NY2d at 168; see also CLP Leasing, 12 AD3d at 227).

Contrary to purported ongoing representation by decedent’s family and advisors, the record evidence demonstrates the lack of a mutual understanding that defendant would continue to represent the estate in the Devine action, even if there was a continuation of a general professional relationship (see Pellegrino v Oppenheimer & Co., Inc., 49 AD3d 94, 99 [1st Dept 2008] [“a party cannot create the relationship based on his or her own beliefs or actions”]; Jane St. Co. v Rosenberg & Estis, 192 AD2d 451, 451 [1st Dept 1993], lv denied 82 NY2d 654 [1993] [“plaintiff’s unilateral beliefs and actions do not confer upon it the status of client”]).”

“Even were it not untimely, the malpractice claim should also be dismissed because “the proximate cause of any damages sustained by plaintiff was not the alleged malpractice of defendant[], but rather the intervening and superseding failure of plaintiff’s successor attorney” (Boye v Rubin & Bailin, LLP, 152 AD3d 1, 10 [1st Dept 2017]). This is the case where successor counsel had “sufficient time and opportunity to adequately protect plaintiff’s rights,” but failed to do so (Maksimiak v Schwartzapfel Novick Truhowsky Marcus, P.C., 82 AD3d 652, 652 [1st Dept 2011]; Somma v Dansker & Aspromonte Assoc., 44 AD3d 376, 377 [1st Dept 2007]).”

An Error, Yes. “But For” Causation? Nope

Posted in Legal Malpractice Cases

Here is the difference between legal malpractice and all other forms of litigation, distilled to a single sentence by Justice Kornreich in NextEra Energy, Inc. v Greenberg Traurig, LLP  2018 NY Slip Op 30638(U) April 11, 2018  Supreme Court, New York County  Docket Number: 652484/2017

“Between August 2002 and December 2010, NextEra was represented in the Bankruptcy
Action by Greenberg Traurig. From December 2010 through the remainder of the proceedings,
NextEra was represented by Skadden, Al-ps, Slate, Meagher & Flom LLP (Skadden). NextEra
changed counsel due to Greenberg Traurig’s failure to assert an affirmative defense at the outset
of the Bankruptcy Action. As discussed herein, such delay resulted in the bankruptcy court
(Gerber, J.), upon Skadden’s motion, denying NextEra’s motion for leave to amend. That said,
Judge Gerber made it clear at oral argument that even if the defense had been timely pleaded by NextEra, it would have failed on the merits. “

The facts and analysis of why the defense would have failed on the merits takes up many pages, but the message is that a mistake has been pointed out, and the mistake is clear.  However, in this “case-within-a-case” analysis, it would not have made a whit of difference.

Put in more elegant language by the Judge: “This fact is dispositive. It is well settled that “in order to prevail in an action for legal malpractice, the plaintiff must plead factual allegations which, if proven at trial, would demonstrate that counsel had breached a duty owed to the client, that the breach,was the proximate cause of the injuries, and that actual damages were sustained.” Dweck Law Firm, LLP v Mann, 283 AD2d 292, 293 (1st Dept 2001) (emphasis added); see Heritage Partners, LLC v Stroock & Stroock & Lavan LLP, 133 AD3d 428, 428-29 (1st Dept 2015). On a malpractice claim, proximate causation is “but for” causation. Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 50 (2015), citing AmBase, 8 NY3d at 434. Here, there is nothing that Greenberg Traurig could have done to avoid a trial and, therefore, its alleged
malpractice was not the “but for” cause of NextEra’s trial and appellate expenses. While it surely would have been better practice for Greenberg Traurig to plead a section 546( e) defense at the outset if that was a defense it intended to assert, the failure to do so in this instance did not end up harming NextEra. FPLG ultimately won at trial because Adelphia failed to prove insolvency. 16 The only marginally better outcome would have been a win on summary judgment. Given the timeline of the Bankruptcy Action, an earlier assertion of a section 546( e) defense could not have plausibly resulted in summary dismissal. See Heritage Partners LLC v Stroock & Stroock & Lavan LLP, 155 AD3d 561 (1st Dept 2017) (causation cannot be based on “speculative nature of plaintiffs’ claim.”). NextEra’s section 546(e) defense had two possible fates: (1) early pleading, which would have resulted in dismissal based on Judge Gerber’s clear pre-Enron view of the law; or (2) late pleading, which, as we know, resulted in dismissal for inexcusable delay. Greenberg Traurig could not have avoided these outcomes. Ergo, it cannot be held liable for malpractice.”

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