When the law firm’s financial officer steals $ 4M+ from the escrow accounts, there are bound to be some unhappy people.  It is even worse when the law firm’s financial officer is the brother of the named partner.  In Galasso, Langione & Botter, LLP v Galasso,  2019 NY Slip Op 07769  Decided on October 30, 2019 the Appellate Division, Second Department upheld summary judgment decisions in favor of the defrauded party whose funds were stolen.

“Anthony Galasso (hereinafter Anthony) was the bookkeeper and office manager for the law firm Galasso, Langione & Botter, LLP (hereinafter the Firm), where his brother, Peter Galasso (hereinafter Peter), was a named partner. In 2002, the Firm began banking with Signature Bank (hereinafter Signature). According to Peter, the Firm intended to open two operating accounts and an IOLA account at Signature. Applications for those accounts were completed by Peter and his law partner James Langione and given to Anthony to submit to the bank. Instead, however, Anthony submitted forged account applications for three operating accounts, on which Anthony was listed as a signatory, and as well as an IOLA account. The applications requested that the Firm have access to Internet banking. A user-ID and password were mailed to the Firm’s street address and acquired by Anthony, who opened the mailing.

In 2004, Peter represented Stephen Baron in a matrimonial action commenced by Wendy Baron. The Barons entered into an escrow agreement with Peter, as the designated escrow agent, in which Peter agreed to hold proceeds in the sum of $4,840,862.34, derived from a sale of commercial property owned by Stephen Baron, pending further order of the matrimonial court. Anthony, in his capacity as office manager, deposited the funds at Signature into an escrow account entitled “Galasso Langione LLP as Escrow Agents for Stephen Baron” (hereinafter the Baron escrow account). Peter and Langione were the only authorized signatories on the account application completed by the Firm. However, Anthony altered the escrow account application to include himself as a signatory and to permit electronic funds transfers. Signature accepted the application.

Between June 23, 2004, and January 17, 2007, Anthony transferred approximately $4,501,571 from the Baron escrow account into other Firm accounts maintained at Signature through the use of Internet transfers. The funds transferred from the Baron escrow account were then disbursed to Peter and the Firm’s employees, without their knowledge, in order to replace funds that Anthony had previously removed from other accounts. Additionally, approximately $360,000 in funds transferred from the Baron escrow account was used to finance the purchase of the Firm’s office condominium by GC Lawcondo, LLC (hereinafter GC Lawcondo). To conceal this conduct, Anthony arranged for the Firm’s account statements, including for the Baron escrow account, to be sent to a post office box. He then fabricated false account statements for review by the Firm.”

“The Supreme Court should not have granted that branch of Signature’s motion which was for summary judgment dismissing the fifth cause of action asserted against it in Action No. 1, alleging negligent conduct with respect to the Baron escrow account. In light of the expert affidavits submitted by both Signature and the plaintiff in Action No. 1, there are triable issues of fact as to whether Signature was negligent in knowingly permitting Anthony—a nonattorney—to be a signatory on the Baron escrow account, and as to whether any such negligence was a proximate [*3]cause of the loss of funds deposited in the Baron escrow account (see generally Stucchio v Bikvan, 155 AD3d 666, 667). For the same reasons, we likewise agree with the court’s determination to deny that branch of the motion of the plaintiff in Action No. 1 which was for summary judgment on the fifth cause of action asserted against Signature (see generally id. at 667).”

“We agree with the Supreme Court’s determination to deny that branch of the motion of the moving defendants in Action No. 4 which was for summary judgment dismissing the second cause of action insofar as asserted against the law firm defendants, and to grant that branch of the Barons’ motion which was for summary judgment on that cause of action insofar as asserted against the law firm defendants. The Barons established their prima facie entitlement to judgment as a matter of law against the law firm defendants by adducing evidence that the law firm defendants were enriched at the Barons’ expense by Anthony’s transfer of funds from the Baron escrow account into the Firm’s accounts, and that it is against equity and good conscience to permit the law firm defendants to retain the funds (see Mobarak v Mowad, 117 AD3d 998, 1001). In opposition, the moving defendants failed to raise a triable issue of fact. Further, we agree with the court’s determination to deny that branch of the moving defendants’ motion which was for summary judgment dismissing this cause of action insofar as asserted against Botter because they failed to adduce evidence demonstrating, prima facie, that he was not enriched at the Barons’ expense.”

“We agree with the Supreme Court’s determination to deny that branch of the motion of the moving defendants in Action No. 4 which was for summary judgment dismissing the tenth cause of action, alleging breach of fiduciary duty, insofar as asserted against Peter. Contrary to the moving defendants’ contention, they failed to demonstrate, prima facie, that Peter’s alleged breach of his fiduciary duty to safeguard the funds in the Baron escrow account was not a proximate cause of the Barons’ loss of the funds (see Matter of Galasso, 19 NY3d at 694-695). In that respect, an intervening act, such as Anthony’s theft of the funds, “may not serve as a superseding cause, and [*4]relieve an actor of responsibility, where the risk of the intervening act occurring is the very same risk which renders the actor negligent” (Derdiarian v Felix Contr. Corp., 51 NY2d 308, 316; see Santaiti v Town of Ramapo, 162 AD3d 921, 927).

We agree with the Supreme Court’s determination to grant that branch of the Barons’ motion which was for summary judgment on the twelfth cause of action in Action No. 4, seeking to impose vicarious liability for Anthony’s misconduct, insofar as asserted against the law firm defendants and Peter. Under the doctrine of respondeat superior, an employer may be held vicariously liable for the torts committed by an employee who is acting within the scope of employment (see Riviello v Waldron, 47 NY2d 297, 302). “While such vicarious liability does not arise from acts that are committed for the employee’s personal motives unrelated to the furtherance of the employer’s business, those acts which the employer could reasonably have foreseen are within the scope of the employment and thus give rise to liability under the doctrine of respondeat superior, even where those acts constitute an intentional tort or a crime” (Holmes v Gary Goldberg & Co., Inc., 40 AD3d 1033, 1034 [citations omitted]; see Riviello v Waldron, 47 NY2d at 302-305). “[F]or an employee to be regarded as acting within the scope of his [or her] employment, the employer need not have foreseen the precise act or the exact manner of the injury as long as the general type of conduct may have been reasonably expected” (Riviello v Waldron, 47 NY2d at 304).

Here, contrary to the moving defendants’ contention, the Barons established, prima facie, that Anthony was acting within the scope of his employment by demonstrating that Anthony’s theft of the Barons’ funds was foreseeable (see Holmes v Gary Goldberg & Co., Inc., 40 AD3d at 1035; Hatton v Quad Realty Corp., 100 AD2d 609, 610). In opposition, the moving defendants failed to raise a triable issue of fact. For the same reasons, we agree with the Supreme Court’s determination to deny that branch of the moving defendants’ motion which was for summary judgment dismissing the twelfth cause of action insofar as asserted against the law firm defendants and Peter. We also agree with the court’s determination to deny that branch of the moving defendants’ motion which was for summary judgment dismissing this cause of action insofar as asserted against Botter, because they failed to adduce evidence establishing, prima facie, that he did not directly supervise Anthony (see Partnership Law § 26[c]).”

 

 

One might think that if you hire an attorney to do a certain task, then the attorney is simply required to meet the generally accepted standard of practice in completing that task.  That assumption is correct.  What matters is how the agreement between the attorney and the client is worded.  Attallah v Milbank, Tweed, Hadley & McCloy, LLP  2019 NY Slip Op 00583 [168 AD3d 1026]  January 30, 2019  Appellate Division, Second Department is an excellent example.

“In 2011, the defendant agreed to assist the plaintiff on a pro bono basis, in a very limited fashion, regarding the plaintiff’s expulsion in 2010 from the New York College of Osteopathic Medicine. To that end, the parties executed a letter of engagement dated July 7, 2011. The letter of engagement provided, in relevant part, that: “Our services will include all activities necessary and appropriate in our judgment to investigate and consider options that may be available to urge administrative reconsideration of your dismissal from the New York College of Osteopathic Medicine (the ‘College’). This engagement does not, however, encompass any form of litigation or, to the extent ethically prohibited in this circumstance, the threat of litigation, to resolve this matter. This engagement will end upon your re-admittance to the College or upon a determination by the attorneys working on this matter that no non-litigation mechanisms are available to assist you. The scope of the engagement may not be expanded orally or by conduct; it may only be expanded by a writing signed by our Director of Public Service.””

“We agree with the Supreme Court’s determination granting the defendant’s motion to dismiss the amended complaint. Contrary to the plaintiff’s contention, according to the parties’ undisputed letter of engagement, the defendant did not promise to negotiate administrative reconsideration on the plaintiff’s behalf but, rather, that it would “investigate and consider options that may be available to urge administrative reconsideration of your dismissal from the New York College of Osteopathic Medicine.” The letter of engagement conclusively demonstrated that there was no promise to negotiate. There was only a promise to investigate and consider whether there were any options possibly available to urge the school to reconsider the plaintiff’s expulsion. Anything else, including the defendant’s failure to commence litigation against the school and the defendant’s alleged rendering of legal advice regarding the efficacy of the plaintiff’s commencing a defamation action against others, was outside the scope of the letter of engagement.

An attorney may not be held liable for failing to act outside the scope of a retainer (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428 [2007]). Therefore, since the defendant’s alleged failure to negotiate with the school, its alleged failure to commence litigation against the school, and its alleged failure to properly advise the plaintiff on the efficacy of a defamation action against nonschool parties fell outside the scope of the parties’ letter of engagement, dismissal of the cause of action alleging legal malpractice was warranted, pursuant to CPLR 3211 (a) (1), on documentary evidence grounds.”

It is ironic when attorney errors harm an otherwise good legal malpractice case.  Leeder v Antonucci  2019 NY Slip Op 05898 [174 AD3d 1469] July 31, 2019 Appellate Division, Fourth Department is an example.

“We reject plaintiff’s contention that Supreme Court erred in granting the cross motion with respect to the biofuel cause of action. It is well settled that “a necessary element of a cause of action for legal malpractice is that the attorney’s negligence caused ‘a loss that resulted in actual and ascertainable damages’ ” (New Kayak Pool Corp. v Kavinoky Cook LLP, 125 AD3d 1346, 1348 [4th Dept 2015]), and that “ '[c]onclusory allegations of damages or injuries predicated on speculation cannot suffice for a malpractice action’ ” (id.). With respect to the biofuel cause of action, defendant met his initial burden on the cross motion by establishing that plaintiff’s allegations of damages are entirely speculative (see Lincoln Trust v Spaziano, 118 AD3d 1399, 1401 [4th Dept 2014]; Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 848 [2d Dept 2012], lv denied 20 NY3d 857 [2013]), and thus plaintiff is “unable to prove at least one of the essential elements of [his] legal malpractice cause of action” (Boglia v Greenberg, 63 AD3d 973, 974 [2d Dept 2009]; see Grace v Law, 108 AD3d 1173, 1174-1175 [4th Dept 2013], affd 24 NY3d 203 [2014]). Plaintiff failed to raise an issue of fact in opposition (see generally Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). We are unable to review plaintiff’s contention that he raised a triable issue of fact with respect to those damages by submitting an expert report inasmuch as plaintiff failed to include that document in the record on appeal. Thus plaintiff, as the party raising this issue on his appeal, “submitted this appeal on an incomplete record and must suffer the consequences” (Matter of Santoshia L., 202 AD2d 1027, 1028 [4th Dept 1994]; see Resetarits Constr. Corp. v City of Niagara Falls, 133 AD3d 1229, 1229 [4th Dept 2015]).”

The dreaded thin letter is no different from the short appellate decision.  It bodes poorly for the applicant.  Bautista v Hach & Rose, LLP  2019 NY Slip Op 07528 Decided on October 22, 2019 Appellate Division, First Department.  Here is the entire decision (no edits):

“Order, Supreme Court, Bronx County (Lucindo Suarez, J.), entered October 26, 2018, which, to the extent appealed from as limited by the briefs, denied defendant Hach & Rose, LLP’s (defendant) motion to dismiss plaintiff’s cause of action for legal malpractice against it, unanimously affirmed, without costs.

We decline to entertain defendant’s arguments, which were improperly raised for the first time on appeal.

Were we to reach those arguments, we would nevertheless find that plaintiff’s allegations supported an inference of proximate causation and the documentary evidence did not refute those allegations (CPLR 3211[a][1], [7]; Brooks v Lewin, 21 AD3d 731, 734 [1st Dept 2005], lv denied 6 NY3d 713 [2006]; cf. Somma v Dansker & Aspromonte Assoc., 44 AD3d 376, 377 [1st Dept 2007]; Alden v Brindisi, Murad, Brindisi, Pearlman, Julian & Pertz [“The People’s Lawyer”], 91 AD3d 1311, 1311 [4th Dept 2012]).”

An attorney sues the client for legal fees.  Client has two choices.  Resist the fee claim on its merits (overbilled,work not performed, work not contemplated in contract) or add a claim for legal malpractice.  Either way, the client must make the legal malpractice claim stick now.  It cannot be brought later.

Kleinman v Weisman Law Group, P.C.   2019 NY Slip Op 07573  Decided on October 23, 2019 Appellate Division, Second Department illustrates the problem.

“In 2013, the defendant Weisman Law Group, P.C. (hereinafter the defendant firm), commenced an action against the plaintiff to recover unpaid legal fees in the Nassau County District Court. The plaintiff asserted a counterclaim, alleging that he was overbilled by the defendant firm. A judgment was entered in favor of the defendant firm and against the plaintiff. The plaintiff appealed the judgment of the Nassau County District Court to the Appellate Term of the Supreme Court for the Ninth and Tenth Judicial Districts, which affirmed the judgment (see Weisman Law Group, P.C. v Kleinman, 60 Misc 3d 133[A], 2018 NY Slip Op 51042[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2018]). In 2016, the plaintiff commenced the instant action against the defendants asserting causes of action alleging, inter alia, breach of contract and legal malpractice.

The plaintiff contends that the doctrines of res judicata and collateral estoppel do not apply in the instant case, as the Nassau County District Court lacked subject matter jurisdiction over his counterclaim in the prior action. Contrary to the plaintiff’s contention, the Nassau County District Court did have jurisdiction over his counterclaim pursuant to Uniform District Court Act § 208(b), as the counterclaim was for money only. The doctrine of res judicata precludes the plaintiff from litigating the claims set forth in his complaint, as a judgment on the merits exists in the prior action between the same parties involving the same subject matter (see Matter of Josey v Goord, 9 NY3d 386, 389; Matter of Hunter, 4 NY3d 260, 269). New York has adopted the transactional analysis approach to res judicata, so that once a claim is brought to a final conclusion, all other claims between the same parties or those in privity with them arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy (see Matter of Josey v Goord, 9 NY3d at 389-390; Matter of Hunter, 4 NY3d at 269; O’Brien v City of Syracuse, 54 NY2d 353, 357; Greenstone/Fontana Corp. v Feldstein, 72 AD3d 890, 893).

Furthermore, the plaintiff’s causes of action are barred by the doctrine of collateral estoppel, which precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same (see Ryan v New York Tel. Co., 62 NY2d 494, 500; Williams v New York City Tr. Auth., 171 AD3d 990). The doctrine of collateral estoppel applies here, as the issues in both actions are identical, the issue in the prior action was actually litigated and decided, there was a full and fair opportunity to litigate the action, the issue previously litigated was necessary to support a valid and final judgment on the merits, and the defendant Rachel J. Weisman was in privity with the defendant firm (see Conason v Megan Holding, LLC, 25 NY3d 1, 17; Williams v New York City Tr. Auth., 171 AD3d at 991-992; Karimian v Time Equities, Inc., 164 AD3d 486).”

Incarceration for not paying child support is unusual but certainly not unheard of.  This case illustrates the defense strategy of receding into the background and waiting while the controversy swirls around the other defendants.  In this case more than a year went by after a default and the defendant obtained dismissal. Rivera v Kerr  2019 NY Slip Op 33047(U)
October 11, 2019 Supreme Court, Suffolk County Docket Number: 17736/2015 Judge: Sanford Neil Berland is also notable for having 7 prior judges all recuse themselves.

“The current action alleges legal malpractice in connection with, among other things. the handling of a prior action concerning and a contempt proceeding arising from the Settlement Agreement and Amendment to Separation Agreement (individually, the “‘Settlement Agreement” and the ··Amendment”; together. the ‘”Amended Settlement Agreement”) and the Judgment of Divorce that resolved the matimonial action between plaintiff and his Conner wife . Plaintiff alleges that he retained the defendants to bring and prosecute a plenary action challenging the
Amended Settlement Agreement as defective and unenforceable and to defend him in the contempt proceedings that were brought against him for allegedly violating the Amended Settlement Agreement. The result of those contempt proceedings, which were conducted in Family Court. was that plaintiff was found to have willfully failed to pay court-ordered child
support and maintenance to his ex-wife and was sentenced to serve six months of incarceration. and plaintiff now claims that the defendants committed legal malpractice by failing to challenge the validity of the Amended Settlement Agreement. For their part. defendants maintain that the Amended Settlement Agreement was not defective; that even if it was. plaintiff, as a matter of law. could not have been saved from being held in contempt: and that the complaint is otherwise without merit. ”

“On June 3, 20 13, defendant Sullivan. a partner in the Long Tuminello law firm, requested a Preliminary Conference in the plenary action. The application was granted, and on June 15, 2013. Sullivan sent an email to plaintiff advising him that a preliminary conference would be held in the plenary action in July 2013. Plaintiff sent a responding email in which he directed that Long Tuminello “‘hold off on doing any further work ..” and to … “put the case on hold” indicating that plaintiff was concerned about cost and was ‘”exploring other avenues:· On June
28, 20 l 3. plaintiff retained defendant Del Col to represent him in the plenary action and to file and prosecute a writ of habeas corpus regarding the contempt finding in Family Court. Del Col filed the writ. On .July 18, 20 13, Del Col appeared for the plaintiff at the preliminary conference held in the plenary action. On October 10, 2013, Kathryn Rivera filed a motion to dismiss the plenary action for failure to state a cause of action. Del Col did not interpose an answer to the motion, and in an order dated May 29, 2014, the court dismissed the plenary action, holding, inter alia that plaintiff was estopped from seeking to set aside the Settlement Agreement in question as he had. by order to show cause in September 20 12. sought both to enforce the agreement and to modify it.

Defendant served the sentence imposed upon him by the Family Court. On October 8, 2015. he commenced the current action by filing a Summons With Notice, and on November 18, 2015, he filed the Verified Complaint. Seven Suffolk County justices. including Justice Luft,
were randomly assigned to preside over plaintiffs action and recused themselves before the matter was assigned to the undersigned. ”

“Defendant pro se Robert Del Col. Esq. (“Del Col'”) is moving: to dismiss the complaint against him (seq. #005 ) as abandoned pursuant to CPLR 3215[c). Plaintiff commenced this action by filing a summons with notice dated October 8.2015. Del Col served a notice of
Appearance dated October 26. 2015 upon plaintiff” with a demand that a complaint be served upon his office. Plaintiff served a Verified Complaint dated November 18, 2015 on all defendants. Del Col never answered the complaint.

Plaintiff contends that his complaint against Del Col is meritorious and never abandoned. He asserts that the fact that he defended a motion interposed by the Sallah defendants which was later withdrawn  and served Del Col with opposing documents and judicial recusal orders related to plaintiff’s action constitutes evidence that he had not abandoned his claims against Del Col.  He offers as excuses for his delay in seeking a default judgment against Del Col that plaintiff had
filed for bankruptcy and was unsure until the discharge in September 2017 “whether the current law suit would be considered part of the bankruptcy estate, and that he was suffering from post-traumatic stress syndrome as a result of his incarceration as well as fear induced by a series of judicial recusals in this case that rendered him incapable of handling the stress or making an application to a Suffolk County judge for a default judgment against Del Col.

When a plaintiff fails to seek leave to enter a default judgment within one year after a default has occurred, the action is deemed abandoned (see CPLR 3215(c): Geraghty  v Elmhurst Hosp. Ctr. of N. Y. NYC Health & Hosps., Corp .. 305 AD2d 634. 759 NYS2d 888 [2d Dept 2003]). To avoid dismissal of the complaint as abandoned under such circumstances. a plaintiff must offer a reasonable excuse for the delay in moving for leave to enter a default judgment and demonstrate that the complaint is meritorious (Kay Waterproofing Corp. v Ray Realty Fulton Inc., 23 AD3d 624, 804 NYS2d 815 [1st Dept 2005]: HSBC Bank USA, Nat. Ass’n v Grella,”

Plaintift’s claims against Del Col essentially mirror those he has asserted against the other defendants and, for the same reasons those defendants are entitled to summary judgment, plaintiff’s claims against Del Col cannot be considered meritorious. Furthermore. plaintiff has
failed co explain why litigation with non-defaulting defendants excuses his failure timely to seek a default judgment against Del Col (see Private Capital Group, LLC v Hosseinipour. 170 AD3d 909, 911. 95 NYS3d 585 2nd Dept 2019).  Nor do plaintiffs concerns with respect to  his bankruptcy proceeding provide a reasonable excuse for that failure (see Pipinias v J. Sackaris & Sons, Inc .. supra). Finally. insofar as plaintiff was represented by counsel. his assertion that he could not tolerate the stress of making the application for a default judgment is not  reasonable. Accordingly. defendant prose Robert Del Col’s motion to dismiss the complaint as a gainst him pursuant to CPLR 321 S[ c] is granted. “

What is an attorney at a real estate closing required to do and when does a failure to do so bleed into legal malpractice?  Mah v 40-44 W. 120th St. Assoc., LLC,  2019 NY Slip Op 33071(U)  October 10, 2019 Supreme Court, New York County  Docket Number: 650927/2016  Judge: Robert R. Reed provides some answers.  Here, in a condo development gut renovation the purchasers were promised roof decks.  The City Department of Buildings ruled them illegal.

“In this action, plaintiffs seek damages against the sponsor, the sponsor’s exclusive listing agents, and the attorneys who represented plaintiffs in their purchases of apartments Penthouse A (PHA) and Penthouse D (PHD) in the Park Place Condominium in Manhattan. Plaintiffs Timothy Lloyd Mah and James M. Carter III purchased PHA around September 5, 2012, and plaintiff Crystal Cash purchased PHD around September 7, 2012. ”

“As plaintiffs note, the complaint alleges that Jassen did not exercise “the degree of care, skill, and diligence commonly possessed and exercised by ordinary members of the legal community in performing pre-contract and post-contract ‘due diligence’ and review of title”
(NYSCEF Doc. No. 181 [Resko Aff in Opp] if 14 [quoting complaint]). To prevail on summary judgment, Jassen must show that the activities she has described are consistent with legal standards. As Jassen has not produced evidence showing that “she exercised an ordinary [degree
of] skill and knowledge” for real estate lawyers in the community, she has not sustained her burden on this motion (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Bakcheva, 169 AD3d at 625).

In addition, Jassen contends, Mah and Carter have not shown that she had access to information which showed that the roof deck was illegal. As plaintiffs’ opposition indicates, however, Jassen bears the initial burden in the context of her motion (see NYSCEF Doc. No. 181 [Resko Aff in Opp] if 16] [citing, inter alia, Alvarez v Prospect Hosp., 68 NY2d 320 [1986]). She states that she was not negligent in checking the Certificate of Occupancy (CO) for the building because until the roof deck was constructed, the document would not include it as a permissible use. Department of Building’s Guide to: Certificate of Occupancy, which Jassen annexes, states although a building must update a CO if it changes or expands the building’s use, a final CO is issued only “when the completed construction work matches the submitted plans” (NYSCEF Doc. No. 121 ). This does not vitiate Mah and Carter’s contention, however, as there is an issue of fact as to whether Jassen should have taken any further steps, especially as the roof deck was a particular area of concern for her clients (see, e.g., NYSCEF Doc. Nos. 115-119 [email chains]). Jassen’s statement that that she “diligently reviewed the transaction documents” and went over the documents with Mah (NYSCEF Doc. No. 104 [Jassen Aff in Support] iii! 16-17) may support her argument at trial but does not refute the argument of her former clients (cf Bakcheva, 169 AD3d at 625). Furthermore, Jassen’s statement that she explained that the CO “could not and did not reflect use of the roof deck” (NYSCEF Doc. No. 104 [Jassen Aff in Support]~ 43) merely raises an issue of fact in light of the affidavits of Mah and Carter, which state that Jassen provided no
such explanation (see NYSCEF Doc. No. 186 [Mah Aff in Opp]~~ 5, 8; NYSCEF Doc. No. 187 [Carter Aff in Opp]~~ 6, 8).

Jassen argues that Mah and Carter additionally cannot show proximate cause. However, Mah and Carter claim that, if Jassen had not been negligent, she would have learned of the problem with the use of the roof and they would not have purchased the apartment or undertook to renovate the roof (compare Stackpole v Cohen, Ehrlich & Frankel, LLP, 82 AD3d 609, 610 [1st Dept 2011] [after a nonjury trial, the court properly dismissed the claim because plaintiff did not show that
“but for defendant’s negligence, she would not have purchased the apartment”]). This creates an issue of fact and renders summary judgment improper. ”

 

How does a release work and what are its limits?  This is the question that Avnet, Inc. v Deloitte Consulting LLP  2019 NY Slip Op 33026(U)
October 11, 2019 Supreme Court, New York County Docket Number: 653146/2019 Judge: Jennifer G. Schecter answers in great detail.  The opinion comes with extensive and fascinating footnotes.  They are too extensive to reprint here, but well worth the read.

“In 2008, the parties entered into a Master Services Agreement govemmg
consulting work performed by Deloitte for Avnet (Dkt. 29 [the MSA]). For each consulting matter, the parties would enter into a separate Work Order (see id. at 2-3). The MSA provides that all litigation “based on or arising out of’ it must be brought in New York and that the MSA “and each Work Order, and all matters relating to [the MSA ]” are governed by New York law (id. at 15 [emphasis added]).

Beginning m 2013, the parties executed Work Orders governmg Deloitte’s
development and implementation of a software platfonn known as “Project Evolve” (see Dkt. 38). That system went live on April 4, 2016. It was riddled with problems. Avnet claims that Deloitte was at fault. However, rather than litigate, on September 7, 2016, the ‘parties executed a settlement agreement in which Avnet released all of its claims against Deloitte – both known and unknown – relating to Project Evolve (Dkt. 28 [the Settlement Agreement]). The Settlement Agreement is governed by New York law (id. at 4).”

“Shortly after executing the Settlement Agreement, the parties executed a Work Order governing Deloitte’s attempts to fix the system. In March 2017, Avnet terminated Deloitte and decided it would abandon Project Evolve as soon as an alternative system could be implemented.
On May 28, 2019, Avnet commenced this action against Deloitte. In its
complaint, it asserts 13 causes of action. The first six concern Deloitte’s work on Project Evolve through August 1, 2016: 1 (1) fraud; (2) constructive fraud; (3) fraudulent inducement; ( 4) breach of contract and breach of the implied covenant of good faith and fair dealing; ( 5) professional negligence; and ( 6) ‘violation of New York General Business Law (GBL) § 349. The remaining seven causes of action, number~d here as in the complaint, concern Deloitte’s conduct after August 1, 2016: (7) fraud; (8) constructive fraud; (9) fraudulent inducement . of the Settle~nent Agreement and post-Settlement
consulting work; (10) breach of contract (the MSA and Work Orders) and breach of the implied covenant of ‘good faith and fair dealing; (11) professional negligence; (12) violation of GBL § 349; and (13) unjust enrichment.

Deloitte moves to dismiss, arguing that: (1) the first six causes of action are barred by the Settlement Agreement; (2) Avnet does not plead a viable claim for fraudulent inducement of the. Settlement Agreement or any post-Settlement Agreement work; (3) none of the claims based on Delditte’ s post-Settlement conduct are viable; and ( 4) in the
alternative, all of the post-Settlement Agreement work claims (;ir e duplicative of the express breach of contract claim pleaded in the tenth cause of action.”

“”It is well established that a valid release constitutes a complete bar to an action on a claim which is the,subject of the release” (Global Minerals & Metals Corp. v Solme, 35 AD3d 93, 98 [1st Dept 2006]). If “the language of a release is clear and unambiguous, the signing of a release is a ‘jural act’ binding on the parties” (Booth v 3669 Delaware,·
Inc., 92 NY2d 934, 935 [1998]). “A release should never be converted into a starting point for, .. litigation except under circumstances and under rules which would render any other result a grave injustice” (Centro Empresarial Cempresa S.A. v Am. Movil, S.A.B. de C. V, 17 NY3d 269, 276 [2011]). Significantly, “a release may encompass unknown
claims, including unknown fraud claims, if the parties so intend and the agreement is ‘fairly and knowingly made”‘ (id.,, quoting Mangini v McClurg, 24 NY2d 556, 568 [1969]). . ‘)

The Settlement ~Agreement released Deloitte from “any and an claims . . . or actions or causes of action of every nature and. description,” including both “known and unknown” claims relating to Project Evolve. This includes an claims for breach of the MSA and the pre-settlement Work Orders and any rel~ted tort and statutory claims, Avnets’ contention that alleged fraud committed by Deloitte in conjunction with its presettlement work on Project Evolve is beyond the scope of the release is baseless. A release of all unknown claims includes fraud claims whose basis was not· yet known to the plaintiff at the time of the release (see Centro, 17 NY3d at 277). That is the essence of a release of unknown claims.”

Read on in the original for footnotes 1-4

Seaman v Schulte Roth & Zabel LLP  2019 NY Slip Op 07510 Decided on October 17, 2019 Appellate Division, First Department illustrates to bedrock principles of legal malpractice.  The first is that of privity and the second is that of  demonstrable technical mistakes v. dashed expectations.  The attorneys working on the post-nup were not in privity and they did not make a technical  mistake such as a bad acknowledgement.

“The course of conduct among the parties demonstrated by the documentary evidence, particularly the repeated communications from defendants to plaintiff clearly disclaiming an attorney-client relationship and advising plaintiff and his wife to consult independent counsel, refute plaintiff’s general allegations that Frunzi was his attorney in connection with the negotiation and execution of the postnuptial agreement in question (cf. Barrett v Goldstein, 161 AD3d 472 [1st Dept 2018]). Although defendants were required to use the ordinary degree of skill required of the legal community in drafting a postnuptial agreement, there is no claim that the agreement was ineffective due to a technical error or that Frunzi failed to accurately memorialize the terms of the parties’ agreement (compare Shanley v Welch, 31 AD3d 1127 [4th Dept 2006] and Shanley v Welch, 6 AD3d 1065 [4th Dept 2004] [defendant attorney failed to [*2]have settlement agreement properly acknowledged, so that it was ineffective]).”

 

A claim for legal malpractice has been made, and damages in a commercial setting are alleged.  How does one prove them, what are the rules and what is the difference between general and consequential damages?  In Electron Trading LLC v Perkins Coie LLP 2019 NY Slip Op 33019(U) October 9, 2019
Supreme Court, New York County Docket Number: 652178/2018 Judge O. Peter Sherwood gives an explanation.

“The law in New York is well settled that in order to obtain lost profits for breach of contract, plaintiff must prove the extent of such damages “with a reasonable degree of certainty” Calif Dairies, Inc. v Penn Station News Corp., 262 AD 2d 193, 194 (1st Dept 1999). However, as Electron argues, there is a distinction to be made between (1) lost profits that are general damages
and (2) lost profits that are consequential or special damages (see, e.g. Am List Corp. v US. News & World Rpt., Inc., 75 NY 2d 38, 42 [1989]). In the former case (which Electron claims is properly pleaded here), such damages may be recovered so long as plaintiff demonstrates a sable foundation
for a reasonable estimate. In the latter case (which defendants assert applies), consequential damages must be demonstrated with reasonable certainty. Electron also argues that it has sufficiently pleaded that it could have recovered lost profits even as consequential damages.

“A party may not recover damages for loss profits unless they were within the contemplation of the parties at the time the contract was entered into and are capable of measurement with reasonable certainty” Ashland Mgt. Inc. v Janien, 82 NY2d 395, 403 (1993). The first requirement is a rule of foreseeability (see id). The second requirement “does not require
absolute certainty … It requires only that damages be capable of measurement based upon known reliable factors without undue speculation” id “[I]n the case of a new business seeking to recover
loss of future profits [as here], a stricter standard is imposed because there is no experience from which lost profits may be estimated with reasonable certainly and other methods of evaluation may be too speculative” id, at 404. ”