After reading the first few lines of this case, Hagans v Dell 2023 NY Slip Op 00846 Decided on February 15, 2023 Appellate Division, Second Department, we expected to see a discussion of notice or storm timing in the snow and ice personal injury world. But, no. It deals with individual liability in LLPs.

“Dell contends that he is immunized from individual liability under Partnership Law § 26(b). “Partnership Law § 26(b) . . . immunizes from individual liability any partner in a partnership registered as a limited liability partnership who did not commit the underlying wrongful act, except to the extent that Partnership Law § 26(c) imposes liability on that partner where he or she directly supervised the person who committed the wrongful act” (Salazar v Sacco & Fillas, LLP, 114 AD3d 745, 747; see Ederer v Gursky, 9 NY3d 514, 523). Here, Dell established his prima facie entitlement to judgment as a matter of law by submitting the transcript of his deposition testimony and his affidavit demonstrating that he was not involved in handling the plaintiff’s personal injury action and did not supervise the attorney who was responsible.

However, in opposition, the plaintiff raised a triable issue of fact regarding the extent of Dell’s involvement in her personal injury action. The plaintiff submitted documents showing that attorneys at the law firm had consulted with Dell about strategies in responding to motions and seeking a default judgment. A stipulation of discontinuance as to certain defendants in the personal injury action was signed by Dell. In addition, the record reflects that Dell met with the plaintiff to discuss her case at an initial intake meeting, filled out a client fact sheet, and signed the retainer agreement. Under the circumstances, there is a triable issue of fact as to whether Dell was involved in handling the plaintiff’s personal injury action and, as such, was involved in the underlying allegedly wrongful act (see Partnership Law § 26[c]; Swift Funding, LLC v Isacc, 144 AD3d 471, 472).”

RTW Retailwinds, Inc. v Colucci & Umans 2023 NY Slip Op 00831 Decided on February 14, 2023 Appellate Division, First Department represents a rare instance of the Appellate Division examining all of the reasons why a legal malpractice case is dismissed early on in a case. There were three or more acts by the defendant attorneys which were pled, with one claim remaining in the case after appeal.

“Order, Supreme Court, New York County (Joel M. Cohen, J.), entered on or about August 13, 2021, which, to the extent appealed from as limited by the briefs, granted defendants’ motions to dismiss the legal malpractice claim as against them, unanimously modified, on the law and the facts, to the extent of denying the motions as to plaintiffs’ claim based on defendants’ failure to produce discovery and present evidence at trial relevant to a “crowded field” defense, and the malpractice claim reinstated to that extent only, and otherwise affirmed, without costs.

Plaintiffs commenced this legal malpractice action on or about June 1, 2020 against defendant law firms and some of the individual attorneys who had represented plaintiffs before and/or during a federal copyright infringement action that resulted in a judgment against plaintiffs. Plaintiffs appeal from Supreme Court’s order entered on or about August 13, 2021, to the extent that it granted defendants’ motions to dismiss the legal malpractice cause of action against all defendants.”

“Third, documentary evidence establishes that defendants’ decision not to call witnesses, including plaintiffs’ employees to whom defendants had referred in opening statements, was a reasonable strategic decision and not malpractice (see Hand v Silberman, 15 AD3d 167, 167 [1st Dept 2005], lv denied 5 NY3d 707 [2005]). The supporting evidence includes defendants’ written legal opinion, delivered to plaintiffs’ in-house counsel just prior to the close of plaintiff’s case in the copyright infringement action, which examined the pros and cons of calling the witnesses. That correspondence advised that the risks of putting on plaintiffs’ witnesses included likely credibility issues and that evidence indicating plaintiffs’ “bad faith” use of the NY&C VELOCITY mark, which was not consistent with defendants’ original advice, might be brought out at trial. Moreover, plaintiffs’ claim that the outcome of the trial might have been favorable if defendants had presented witnesses is entirely speculative.

However, contrary to the motion court’s conclusions, and viewing the evidence in the light most favorable to plaintiffs, the documentary evidence submitted by defendants did not utterly refute plaintiffs allegations that defendants failed to produce discovery relevant to a “crowded field” affirmative defense and that this led to the exclusion of certain evidence at trial. Moreover, defendants failed to present any evidence supportive of plaintiffs’ “crowded field” defense (see e.g. RiseandShine Corp. v PepsiCo, Inc., 41 F4th 112, 123 [2d Cir 2022][“[I]n a crowded field of similar marks, each member of the crowd . . . is relatively weak in its ability to prevent use by others in a crowd”] [internal quotation marks omitted]). Accordingly, defendants have not conclusively established a defense to these claims as a matter of law (see CPLR 3211[a][1]; Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314[*3], 326 [2002]). Therefore, the motion court should not have dismissed these claims. Contrary to defendants’ contention, at this early stage of the action, it is not speculative for plaintiffs to allege that, but for defendants’ negligence in this regard, the jury would have returned a favorable verdict, particularly where plaintiff had identified specific acts and omissions by defendants that resulted in documents relevant to a “crowded field” defense not being placed before the jury. The documentary evidence proffered by defendants also did not otherwise establish, as a matter of law, that the allegedly negligent acts or omissions of defendants in this regard were harmless.”

In this unusual case, Zanani v Scott Seidler Family Trust 2023 NY Slip Op 00836
Decided on February 14, 2023 Appellate Division, First Department, the attorney brought the claim for legal fees as a special proceedings, seeing a declaratory judgment that he was owed money. Supreme Court analyzed his claim, and dismissed it in favor of a regular plenary proceeding seeking a breach of contract or quantum meruit claim.

Dismissal was improper. “Supreme Court should have converted the special proceeding into a plenary action rather than dismissing the petition, as CPLR 103(c) “prohibits dismissal of [a] proceeding solely on the ground that it was not brought in the proper form” (Matter of Greene v. Finley, Kumble, Wagner, Heine & Underberg, 88 AD2d 547, 548 [1st Dept 1982]; see Matter of Jacob D. Fuchsberg Law Firm v Danzig, 248 AD2d 178, 179 [1st Dept 1998]).

We note that petitioner withdraws his claims except for those asserting breach of contract and account stated. Nonetheless, we decline petitioner’s request to construe the petition and answer as summary judgment papers and to summarily adjudicate his remaining claims at this stage. When a special proceeding is converted into a plenary action in accordance with CPLR 103(c), the petition is deemed a complaint, not a motion for summary judgment (see Matter of David H. Berg & Assoc. v Weksler, 193 AD3d 612, 613 [1st Dept 2021]). The record may present material issues of fact as to whether petitioner is entitled to recover under either remaining cause of action, or whether he committed legal malpractice, and these issues are for the motion court to address in the first instance (see Commissioner of the State Ins. Fund v Weissman, 90 AD3d 417, 417-418 [1st Dept 2011]; Nationwide Mut. Ins. Co. v Hausen, 143 AD2d 577, 581 [1st Dept 1988]).”

Tsionis v Sekas Law Group, LLC 2023 NY Slip Op 30423(U) February 9, 2023
Supreme Court, New York County Docket Number: Index No. 158575/2016
Judge: David B. Cohen is an example of a well-known subset of the New York legal malpractice world – real estate problems.

“In January 2005, plaintiffs, as owners, sold commercial property located at 60-72 Route
303, Tappan, New York (the property) to nonparties So Young Choi, Sarah Kim and Mi-Hyang Yang ( collectively, the Original Mortgagors) (NYSCEF 268). The contract of sale provides that a portion of the sale price, or $1. 65 million, was secured by a purchase money mortgage and note given to plaintiffs from, and personally guaranteed by, the Original Mortgagors (id.; NYSCEF 292).
Sekas represented plaintiffs on the transaction and prepared the loan documents,
including a Term Loan Note dated January 12, 2005 (the Note), which provides for repayment of the principal over 10 years at 6.25% interest per annum (NYSCEF 268; 363; 368). Article I, Section 27 of the First Term Loan Mortgage dated January 12, 2005 (the Mortgage) prohibited the Original Mortgagors from causing a second mortgage or other encumbrance, apart from certain permitted encumbrances, to be placed on the Property without plaintiffs’ written consent (id. at 29). “

Things went south from there. The details are too long to present here, but use the link to read the story.

”In January 2005, plaintiffs, as owners, sold commercial property located at 60-72 Route
303, Tappan, New York (the property) to nonparties So Young Choi, Sarah Kim and Mi-Hyang Yang ( collectively, the Original Mortgagors) (NYSCEF 268). The contract of sale provides that a portion of the sale price, or $1. 65 million, was secured by a purchase money mortgage and note given to plaintiffs from, and personally guaranteed by, the Original Mortgagors (id.; NYSCEF 292).
Sekas represented plaintiffs on the transaction and prepared the loan documents,
including a Term Loan Note dated January 12, 2005 (the Note), which provides for repayment of the principal over 10 years at 6.25% interest per annum (NYSCEF 268; 363; 368). Article I, Section 27 of the First Term Loan Mortgage dated January 12, 2005 (the Mortgage) prohibited the Original Mortgagors from causing a second mortgage or other encumbrance, apart from certain permitted encumbrances, to be placed on the Property without plaintiffs’ written consent (id. at 29).”

Moreover, according to SLG’ s expert, if plaintiffs had proceeded with litigating the
foreclosure action and a sale was held for the Property, plaintiffs were assured of being “made whole” as the appraised value of the property was more than the amount owed to plaintiffs, and thus plaintiffs would have suffered no damages if they had chosen to litigate the foreclosure action rather than settling with Yong.
To the extent that SLG should not have moved for a default judgment against Yong, the
Second Department found that the presiding justice erred in granting the judgment and compounded the error by granting plaintiffs relief against Yong that SLG had not requested in the foreclosure complaint. If the default judgment had instead been correctly denied in the first instance, then plaintiffs would have been in the same position that they were in following the Appellate Division’s reversal, namely, having to either litigate the validity of Yong’s mortgage or settle with him. Thus, SLG shows that any errors it may have made related to the default judgment motion did not result in any detrimental change to plaintiffs’ position regarding the Yong’s mortgage.”

ORDERED that the motions of defendant/third-party plaintiff Sekas Law Group, LLC
and defendant Nicholas G. Sekas, Esq. for summary judgment dismissing the complaint (motion sequence nos. 008 and 009) are granted, and the complaint is dismissed in its entirety with costs and disbursements to said defendants as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further ORDERED that the cross-motion of third-party defendant Rosenberg & Estis, P.C. for summary judgment dismissing the third-party complaint (motion sequence no. 008) is granted, and the third-party complaint is dismissed in its entirety with costs and disbursements to said
third-party defendant as taxed by the Clerk upon the submission of an appropriate bill of costs;
and it is further
ORDERED that the cross-motion of plaintiffs Elias Tsionis and George Tzoulafis for
summary judgment (motion sequence no. 009) is denied”

Martin v Claude Castro & Assoc. PLLC 2023 NY Slip Op 50099(U) Decided on February 9, 2023 Supreme Court, New York County Lebovits, J. illustrates the wide breadth and strength of the attorney-judgment rule in legal malpractice.

“This is a legal-malpractice action. Defendants, Claude Castro and Associates PLLC, Claude Castro, Esq., and Daniel Paul Martin, Esq., represented plaintiffs, Steven and Jodee Martin, in multiple lawsuits in Housing Court and Supreme Court that arose from a carpet-beetle infestation in the Martins’ Manhattan apartments. The Housing Court proceeding, brought by plaintiffs’ landlord, was decided against them. The Supreme Court action, brought by plaintiffs, was voluntarily discontinued.

Plaintiffs, dissatisfied with the outcomes of those lawsuits, and with defendants’ legal representation, later brought this action. Plaintiffs initially asserted several causes of action, of [*2]which the only one that remains is a legal-malpractice claim. Defendants now move for summary judgment dismissing the malpractice claim. Plaintiffs cross-move for summary judgment in their favor on that claim. Defendants’ motion is granted; plaintiffs’ cross-motion is denied.”

“Under the attorney judgment rule “[a]n attorney’s selection of one among several reasonable courses of action does not constitute malpractice.” (Rosner v Paley, 65 NY2d 736, 738 [1985].) Legal strategies with a reasonable basis are not actionable. Nor is a former client’s “hindsight criticism” of a legal strategy. (Brookwood Cos., Inc. v Alston & Bird LLP, 146 AD3d 662, 667 [1st Dept 2017].)

Plaintiffs argue that defendant Castro’s decision not to raise a breach of the warranty of habitability as an affirmative defense in the Housing Court answer constituted malpractice. In support, plaintiffs point to Justice York’s May 2010 decision, which noted that Housing Court would be the more appropriate forum for landlord-tenant matters. Plaintiffs also argue that Castro incorrectly believed he would be barred from raising a breach of the warranty of habitability as both an affirmative defense in Housing Court and a separate claim in Supreme Court. Plaintiffs argue that Castro’s choice not to raise the defense in his answer to the nonpayment proceedings caused plaintiffs to suffer damages in the form of judgments rendered against them.

This court concludes that Castro’s decision to refrain initially from raising a warranty-of-habitability defense in his Housing Court answer, in favor of raising it as an affirmative claim in Supreme Court, was a reasonable strategic choice rather than actionable malpractice.

An attorney may choose to bring an affirmative action for a breach of the warranty of habitability in Supreme Court. (See Fabricius v 1150 Fifth Ave. Owners Corp, 2021 NY Slip Op 30215[U], at *2 [Sup Ct, NY County 2021]; Metro 765, Inc. v Eighth Ave. Sky, LLC, 2017 NY Slip Op 30898[U], at *5 [Sup Ct, NY County 2017]; W. 189, LLC v Louis-Jeune, 2016 NY Slip Op 31614[U], at *1 [Sup Ct, NY County 2016].) And Castro has provided valid and reasonable explanations for his choosing to litigate the warranty of habitability claim in the Supreme Court. For example, his clients would be entitled to discovery as of right in an action in Supreme Court; whereas discovery is available in a nonpayment summary proceeding in Housing Court only upon a showing of “ample need.” (New York Univ. v Farkas, 121 Misc 2d 643, 646 [Civ Ct, NY County 1983].) And the Martins would not be able to assert in Housing Court claims for property or emotional distress that were grounded in a breach of the lease or the warranty of habitability, because “damages traditionally within the scope of tort liability . . . are more appropriately tried outside the limited sphere of landlord-tenant proceedings.” (390 W. End [*5]Associates v Raiff, 166 Misc 2d 730, 734-735 [App Term, 1st Dept 1995]; see also NY City Civ Ct Act (CCA) § 110 [a] [delineating scope of actions and proceedings to be heard in Housing Court]; 610 West 142nd St. Owners Corp. v Braxton, 140 Misc 2d 826, 827 [App Term, 1st Dept 1988].)

To be sure, Castro erred in believing that the Martins could not obtain an injunction in Housing Court compelling landlord to abate the insect infestation in the plaintiffs’ apartment and the building. (See Central Park Gardens, Inc. v Klein, 107 Misc 2d 414, 415 [Civ Ct, NY County 1980] [holding that CCA § 110 confers on Housing Court “the power to issue injunctions and restraining orders for the enforcement of housing standards promulgated under State and local laws”].) But even setting this (erroneous) reason aside, Castro’s other reasons for proceeding in Supreme Court rather than Housing Court are valid and reasonable justifications for that strategic choice.

Castro also erred in his initial belief that he could not have both brought an affirmative warranty-of-habitability claim in Supreme Court and raised a warranty-of-habitability defense in Housing Court. (See Atherton v 21 E. 92nd St. Corp., 149 AD2d 354, 355 [1st Dept 1989] [“[P]laintiff’s claim for breach of the implied warranty of habitability may be interposed as a defense to the Civil Court action for rent and has been raised affirmatively in the Supreme Court action.”) But the record of the Housing Court proceeding reflects that Castro attempted to correct this error by moving to amend the Martins’ answer in that proceeding to add a warranty-of-habitability defense.[FN6] Castro persuasively argued in his papers on that motion that landlord would not be prejudiced by adding a warranty-of-habitability defense because landlord had been well aware of the carpet-beetle infestation before litigation began, and that a claim for the breach of the warranty of habitability arising from that infestation was pending in Supreme Court. And landlord conceded that it was aware of the substance of the proceedings in the Supreme Court.

Housing Court nonetheless denied Castro’s motion to amend his pleadings, based on Supreme Court’s consolidation decision, which the court read as holding that plaintiffs’ warranty-of-habitability claim raised in the Supreme Court action was completely unrelated to their defenses in the Housing Court proceeding. (See NYSCEF No. 155 at 4-5.) It is not clear, though, why Housing Court should have viewed itself as bound by Supreme Court’s legal conclusion on that point; nor, for that matter, why it should matter for leave-to-amend purposes that plaintiffs’ warranty-of-habitability defense to landlord’s rent-nonpayment claims in Housing Court would rest on different facts from plaintiffs’ other defenses. That Housing Court perhaps erred in rejecting Castro’s proper arguments for permitting plaintiffs to amend their pleadings does not constitute malpractice on Castro’s part.

Further, even if Castro’s decision not to raise the warranty of habitability in the initial Housing Court answer fell below reasonable professional standards, plaintiffs have not shown that a dispute of fact exists about whether that decision proximately caused them harm. It did not. The statute of limitations for a warranty-of-habitability claim is six years from accrual. (See CPLR 213 [2].) Here, the claim accrued no earlier than November 2009. Because the Supreme Court action was discontinued without prejudice, plaintiffs could, if they chose, have refiled a [*6]warranty-of-habitability claim (and thus recovered part of the rent awarded to their landlord in the Housing Court proceeding, plus attorney fees) until November 2015. Plaintiffs did not do so. Nor were they prevented from doing so by any act of defendants.”

Gerzog v Goldfarb 2022 NY Slip Op 04120 [206 AD3d 554] June 28, 2022 Appellate Division, First Department discusses the fiduciary duties an accountant may have to its client.

“Plaintiff was an attorney at the law firm of nominal defendant Goldfarb & Gerzog. He claims that he and defendant Goldfarb were partners at the firm and that he was entitled to a one-third share of the firm’s profits. Defendant Migden was the firm’s accountant.

Issues of fact exist as to plaintiff’s partnership status and entitlement to a share of the firm’s profits (see generally M.I.F. Sec. Co. v Stamm & Co., 94 AD2d 211, 214 [1st Dept 1983], affd in part 60 NY2d 936 [1983]). Evidence in the record—including plaintiff’s testimony, the firm’s filing of partnership tax returns and K-1s, and its representations to others—supports plaintiff’s claim that the firm was a partnership and that he was entitled to a percentage of the firm profits (see Rosen v Efros, 258 AD2d 333, 333 [1st Dept 1999]; see also 26 CFR 301.7701-2 [a]; Peterson v Neville, 58 AD3d 489, 489 [1st Dept 2009]). Although the K-1s and representations are not dispositive, they are still relevant (see Rakosi v Sidney Rubell Co., LLC, 155 AD3d 564, 565 [1st Dept 2017]). The fact that the K-1s refer to plaintiff as a “limited partner” is not determinative of whether he had an equity stake, especially given that they also refer to Goldfarb as a limited partner.”

“As to Migden, plaintiff also raises an issue of fact as to the applicability of the exception to the general rule that accountants do not owe clients fiduciary duties. That exception applies “where the allegations include knowledge and concealment of illegal acts and diversions of funds and failure to withdraw in the face of a conflict of interest” (Nate B. & Frances Spingold Found. v Wallin, Simon, Black & Co., 184 AD2d 464, 465-466 [1st Dept 1992]). Plaintiff has submitted evidence from which the factfinder could conclude that Migden [*2]falsely classified Goldfarb’s personal expenses as case preparation expenses on income tax returns, with knowledge that deducting these expenses would reduce the profits available to be paid to plaintiff and that classifying them in this way would conceal the wrongdoing. The fact that plaintiff had access to his K-1s and the firm’s tax returns is immaterial because his claim is that the true nature of Goldfarb’s personal expenses was not obvious on the face of those documents. Plaintiff also submitted evidence indicating that Migden was responsible for categorizing expenses as deductions and did not simply rely on Goldfarb’s assessment. The parties also offered conflicting expert opinions regarding whether an accountant’s duties run to all partners or only to the partner in charge of tax matters. However, whether Migden owed a duty to plaintiff personally is irrelevant to the accounting malpractice claim, which was asserted derivatively on behalf of the firm.

Partial dismissal of the accounting malpractice claim on statute of limitations grounds (see CPLR 214 [6]) is precluded by issues of fact as to whether Migden is equitably estopped from asserting the defense because his alleged concealment of the misconduct induced plaintiff to refrain from filing a timely action (see Simcuski v Saeli, 44 NY2d 442, 448-449 [1978]; Langston v MFM Contr. Corp., 172 AD3d 583, 584 [1st Dept 2019]), whether the statute of limitations was tolled because Migden was in a fiduciary relationship with the firm (see Robinson v Day, 103 AD3d 584, 586 [1st Dept 2013]), and whether it was tolled under the continuous representation doctrine (see Booth v Kriegel, 36 AD3d 312, 314 [1st Dept 2006]). Although repetition of the same mistake on successive tax returns does not constitute continuous representation, the doctrine may apply where there is repeated intentional disregard of professional standards with respect to the same type of expense (see id. at 315; Ackerman v Price Waterhouse, 252 AD2d 179, 205 [1st Dept 1998]).”

The issue of the reach of a post-answer CPLR 3211 motion and whether it should have been brought as a CPLR 3212 motion came up in an accounting malpractice case in Pioneer Bank v Teal, Becker & Chiaramonte, CPAs, P.C. 2022 NY Slip Op 22316 [77 Misc 3d 360] October 4, 2022 Platkin, J. Supreme Court, Albany County.

“Notwithstanding the foregoing, [very significant litigation events] defendants moved for dismissal of the complaint under CPLR 3211 (a) (7) and (c), on the grounds that: (1) Pioneer’s claims are partially barred by the expiration of the statute of limitations; (2) the claims for the remaining years must be dismissed because Pioneer was presented with forged financial statements, and, therefore, never relied upon defendants’ actual audit reports; and (3) TBC’s audit reports are not the proximate cause of Pioneer’s alleged losses (see NYSCEF Doc No. 156). Defendants submit 85 exhibits in support of their motion, including letters, emails, financial statements, deposition transcripts and an affidavit.

Pioneer opposes the motion on the grounds that: (1) the complaint states a claim for [*3]accounting malpractice, and defendants do not argue otherwise; (2) binding precedent of the{**77 Misc 3d at 363} Appellate Division, Third Department precludes the consideration of the 85 exhibits submitted and relied upon by defendants to support their motion under CPLR 3211 (a) (7); and (3) TBC’s arguments for dismissal fail on the merits, even if they properly were before the court.”

Nor did defendants move under CPLR 3211 (a) (5) to interpose the defense of the partial expiration of the statute of limitations, and their time in which to do so similarly has expired (see CPLR 3211 [e]). To be sure, defendants preserved the defense in their answer (see id.; see also answer ¶ 156), {**77 Misc 3d at 365}thereby affording them the opportunity to move for summary judgment on the defense or present it at trial (see DeSanctis v Laudeman, 169 AD2d 1026, 1027 [3d Dept 1991] [“although we agree that the issue was properly preserved by defendant, . . . because responsive pleadings were served, defendant’s motion should have been brought pursuant to CPLR 3212 instead of pursuant to CPLR 3211”]; see also CPLR 3212 [c] [contemplating motions for summary judgment “on . . . the grounds enumerated in subdivision (a) or (b) of rule 3211”]).

“The court therefore concludes that defendants’ fact-based causation defense and their partial challenge to the timeliness of Pioneer’s claims should, at this juncture, be the subject of a properly supported motion for summary judgment under CPLR 3212, not a motion for dismissal under CPLR 3211 (a) (7) accompanied by an invitation for conversion under CPLR 3211 (c).

In reaching this conclusion, the court recognizes that the Court of Appeals left open the possibility that a defendant may obtain dismissal under CPLR 3211 (a) (7) through the submission of “conclusive” affidavits and evidence (see Rovello v Orofino Realty Co., 40 NY2d 633, 635-636 [1976] [“affidavits submitted by the defendant will seldom if ever warrant the relief (it) seeks unless too the affidavits establish conclusively that plaintiff has no cause of action”]), and the other Judicial Departments take a more expansive view of CPLR 3211 (a) (7) (see e.g. Doe v Intercontinental Hotels Group, PLC, 193 AD3d 410, 410 [1st Dept 2021]).

But this court is obliged to follow the Third Department’s recent precedent in Carr, which teaches that “a court resolving a motion to dismiss for failure to state a claim cannot base the determination upon submissions by the defendant,” no matter “how compelling claims made in such submissions may appear” (182 AD3d at 668-669).

Moreover, there are sound reasons for requiring motions like the one made here by defendants to be brought under CPLR 3212. Defendants’ approach needlessly deprives the court of useful procedural tools associated with summary judgment motions, including the requirement that parties supply statements of material facts (see Rules of Commercial Div of Sup Ct [22 NYCRR] § 202.70 [g] [rule 19-a]; see also 22 NYCRR 202.8-g).”

In Fierro v Yellen 2022 NY Slip Op 32959(U) August 31, 2022 Supreme Court, Kings County Docket Number: Index No. 523796/2021 Judge: Ingrid Joseph, a case that wended its way through Kings Supreme, and on to the Second Department, everyone in the proceedings take fluid positions on whether there was fraud, whether there was a good class action and on Judiciary Law 487.

The facts are way too long to excerpt here. Here are a portion:

“On August 2, 2000, Cyber-Struct, Inc. (“Cyberstruct”)2, as general contractor, entered into a Standard Form of Agreement (“the contract”) with Dean Boerum Owners, Inc. (“DBO”), as the owner, to construct a new, three-story building containing 21 apartments at 119-125 Boerum Place, 42 Dean Street,· in Brooklyn, New York (“the property”). Pursuant to the contract, Cyberstruct was responsible for the coordination of the construction of the project, and its responsibilities included retaining subcontractors and material suppliers, as necessary,· and paying them for their work and the materials provided by them. Cyberstruct alone (not DBO) was to compensate its subcontractors and material suppliers by using funds paid to Cyberstruct by DBO. Cyberstruct’s contract with DBO required Cyberstruct to complete an American Institute of Architects Application and Certificate for payment at the end of each pay period in order to be paid by DBO. Once Cyberstruct received its funds from DBO, it was obligated, pursuant to the contract and the Lien Law, to forward the appropriate payment to each subcontractor or materialman who applied for payment.

DBO terminated the contract with Cyberstruct in April 2002. According to plaintiffs, at that time, DBO owed Cyberstruct $328,286.49 on the contract. Approximately $160,000 of said sum was retainage, i.e., money earned by the general contractor, but held by the owner, pending job completion. At a meeting held in April 2002 between DBO and Cyberstruct, Cyberstruct presented Philip Mendlow (“Mendlow”), the president of DBO, with a spreadsheet dated April 25, 2002, which indicated that 19 of its subcontractors, suppliers, and/or vendors were owed $353,566.93. Cyberstruct, however, alleges that this amount was the amount owed only if the contract had been fully performed.
Plaintiffs allege that Mendlow entered into a series of executed assignments with
not less than eight of Cyberstruct’s subcontractors and suppliers, one of whom was J.C.
Ryan, a supplier of architectural doors, frames, and finish hardware. The assignment between J.C. Ryan and DBO was dated May 2, 2002 (NYSCEF Doc No. 89), and was executed by Schnipper, who was J.C. Ryan’s President and Chief Executive Officer.
There was also an assignment dated May 2, 2002 by A&A Cibco Construction Inc., an
assignment dated May 2, 2002 by Alta Recycling, an assignment dated May 2, 2002 by
Bay Ridge Mechanical Corp., an assignment dated May 7, 2002 by Express Contracting
Corp., an assignment dated May 6, 2002 by Kamco Supply Co., an assignment dated May 2002 by Empire Restoration Corp., and an assignment dated June 21, 2002 by
Professional Tile Contracting Corp.”

Similarly, since plaintiffs’ first cause of action pursuant to Judiciary Law§ 487 is predicated on the same transactions and could have be~n raised in the class action, this
cause of action is also barred bythe doctrine ·of res judicata. In this regard, it is noted that plaintiffs’ Judiciary Law § 487 claim was specifically raised by them in the bankruptcy proceeding, and the bankruptcy court, in a decision and order dated March 31, 2020, ruled that plaintiffs should have sought their remed[y] in the case in which -the wrongdoing allegedly was committed (NYSCEF Doc No. 24 at 15, In re Fierro, 616 BR 596, 608 [Bankr ED NY 2020], quoting Alliance Network, LLC v Sidley Austin LLP, 43 Misc 3d 848, 858 [Sup Ct, NY County 2014 ]). It is binding precedent that the rules of res judicata apply to the decisions of a bankruptcy court” (Winkler v Weiss, 294 AD2d 428, 429 [2d Dept 2002]).”

Discovery errors lead to a large number of legal malpractice claims. in Comprehensive Mental Assessment & Med. Care, P.C. v Gusrae Kaplan Nusbaum, PLLC 2023 NY Slip Op 00408 Decided on February 1, 2023 Appellate Division, Second Department the legal malpractice case was lost on discovery errors in the actual case itself.

“In 2012, the plaintiffs commenced this action against the defendant law firm, asserting, inter alia, causes of action to recover damages for legal malpractice and unjust enrichment. The defendant moved pursuant to CPLR 3126 to strike the complaint and the plaintiffs’ reply to its counterclaims based on the plaintiffs’ failure to comply with discovery orders directing them to produce certain individuals for depositions. While the motion was pending, the plaintiffs’ attorney moved to be relieved as counsel. By order dated April 18, 2018, the Supreme Court granted the motion of the plaintiffs’ attorney and stayed the action for 60 days in order to afford the plaintiffs the opportunity to retain new counsel, which it noted “is required for corporate entities.” The plaintiffs subsequently defaulted in opposing the defendant’s motion. By order dated July 18, 2018, the court granted the defendant’s unopposed motion.

Thereafter, the plaintiffs moved pursuant to CPLR 5015(a)(1) to vacate the order dated July 18, 2018. By order dated July 24, 2019, the Supreme Court denied the motion. The plaintiffs appeal.

In order to vacate their default in opposing the defendant’s motion pursuant to CPLR 3126 to strike the complaint and the plaintiffs’ reply to the defendant’s counterclaims, the plaintiffs were required to demonstrate a reasonable excuse for their default and a potentially meritorious opposition to the motion (see CPLR 5015[a][1]; Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., Inc., 67 NY2d 138, 141; Follors v TI Ozone Park Stor., LLC, 209 AD3d 843). Here, the plaintiffs [*2]failed to demonstrate a reasonable excuse for their default in opposing the defendant’s motion (see CPLR 5015[a][1]; Dokaj v Ruxton Tower Ltd. Partnership, 91 AD3d 812, 814). Contrary to the plaintiffs’ contention that they were not aware that corporations must be represented by counsel pursuant to CPLR 321(a), the order dated April 18, 2018, specifically stated that counsel “is required for corporate entities.” The record reflects that the plaintiffs’ former counsel served that order upon them.”

Darby Scott, Ltd. v Michael S. Libock & Co. LLC CPAs 2022 NY Slip Op 06746 [210 AD3d 582] November 29, 2022 Appellate Division, First Department discusses the question of continuous representation tolls to the statute of limitations in accounting malpractice cases. Often, the statute is calculated by reference to tax filings and tax years. However, there can be continuous representation for other accounting tasks.

“The record presents issues of fact as to whether the continuous representation doctrine applies to render plaintiff’s accounting malpractice claim timely—namely, whether the work by defendants’ representatives in September and October 2010 constituted a continuation of the services that are the subject of plaintiff’s claim, or at least constituted related remedial services (see Regency Club at Wallkill, LLC v Appel Design Group, P.A., 112 AD3d 603, 606-607 [2d Dept 2013]; Ackerman v Price Waterhouse, 252 AD2d 179, 205 [1st Dept 1998]).

Issues of fact also exist as to whether defendants breached their duty to plaintiff (see Berg v Eisner LLP, 94 AD3d 496, 496 [1st Dept 2012]). Although the engagement letters executed by the parties stated that defendants would perform bookkeeping and administrative tasks, neither party has offered an authoritative definition of the scope of these tasks. Nor has either party eliminated issues of fact as to whether the agreed-upon services were performed in a manner consistent with professional accounting standards (id.). Thus, the record presents issues of fact as to the scope of the engagement letters, and whether defendants’ alleged failure to notify plaintiff of recurring inventory and invoicing issues, or at least the full extent of those issues, constituted a breach of their duty (see Cumis Ins. Socy. v Tooke, 293 AD2d 794, 798 [3d Dept 2002]; cf. Italia Imports v Weisberg & Lesk, 220 AD2d 226, 226 [1st Dept 1995]).

Furthermore, issues of fact exist as to whether defendants proximately caused plaintiff’s damages. Even if it was plaintiff’s responsibility to track its inventory and implement internal controls, it is not clear as a matter of law whether at least some of plaintiff’s losses could have been avoided if defendants had fulfilled their duty to report known inventory and invoicing irregularities to plaintiff (see DG Liquidation v Anchin, Block & Anchin, 300 AD2d 70 [1st Dept 2002]). Plaintiff was not required to offer conclusive proof of the exact amount of damages it suffered in order to defeat an award of summary judgment in defendants’ favor. Concur—Gische, J.P., Kern, Gesmer, Rodriguez, Pitt, JJ.”