Serrone v Southbridge Towers, Inc.  2019 NY Slip Op 32472(U)  August 20, 2019 Supreme Court, New York County Docket Number: 653567/2018
Judge: Francis A. Kahn III is the story of a foreclosure in what was once a Mitchel-Lama building.  Plaintiff succeeds on this motion in keeping the attorneys in the case.

“This is an action concerning the purported wrongful sale of a  2 cooperative apartment. Plaintiff Pasquale Serrone contends that despite his eviction from co-operative unit 4A located at 100 Beekman Street in Manhattan in 2015, his ownership interest in the Cooperative Company
Defendant Southbridge Towers, Inc., (“Southbridge”) remains. Plaintiff argues his ownership of his shares in Southbridge was not properly terminated before the unit was sold in 2018 to Defendants Frank and Monica Chung (“Chungs”) and that he is entitled to damages constituting the revenue from the sale plus interest. Plaintiff has not pled a cause of action seeking restoration of his ownership interest in the shares sold to the Chungs. ”

“However, Plaintiff properly pled a negligence claim against NMM and Roberts. Generally, claims of professional malpractice against an attorney are barred against those not in privity (see Good Old Days Tavern, Inc., v Zwirn, 259 AD2d 300 [1st Dept 1999]). An exception
exists and liability may be extended where a plaintiff sufficiently pleads acts of fraud, collusion, malicious acts or other special circumstances (see Leggiadro, Ltd. v Winston & Strawn, 119 AD3d 442 [Pt Dept 2014]).
Here, Plaintiff pled Southbridge did not own the shares the time of the disputed sale and NMM and Roberts acknowledge, they corresponded with Plaintiff by letters dated November 14, 2017 and November 29, 2017 regarding Plaintiffs equity in the subject apartment. The
surrender agreement that NMM and Roberts sought Plaintiff to sign, that accompanied the second correspondence, sought to extinguish “any remaining rights” Plaintiff had to the apartment. Despite Plaintiff not executing said surrender agreement NMM and Roberts
represented Southbridge in the March 1, 2018 closing for this apartment.

It is inescapable that NMM and Roberts were aware that Southbridge’ s ownership interest in the co-op shares was potentially fatally flawed and that Plaintiff may have retained an ownership interest. Yet, NMM and Roberts facilitated the consummation of the closing. These
actions sufficiently state a claim of collusion, malicious acts or special circumstances for pleading purposes (see A & M Bldg. & Condo Maintenance, Inc. v Atlas Elec. of Staten Is., Inc., 294 AD2d 520 [2d Dept 2002] [Claim against defendant’s law firm and lawyer sufficiently
pleaded where it was alleged firm committed fraud by submitting order discharging lien without indicating its conditional nature and without satisfying condition]; Green v Fischbein Olivieri Rozenholc & Badillo, 119 AD2d 345 [Pt Dept 1986] [Attorney’s liability to third-party premised
on commencing and prosecuting eviction proceedings without legal basis sufficiently pled fraud, collusion, malicious or tortious act]; see also Hahn v Wylie, 54 AD2d 629 [1st Dept 1976]; New York Cooling Towers, Inc. v Goidel, 10 Misc 3d 219 [Sup Ct, Queens Cty 2005]).
With respect to the proffered documentary evidence, NMM and Roberts argue it demonstrates Southbridge participated in the Mitchell-Lama Program and Plaintiff was required to surrender the disputed apartment to Southbridge at the end of his tenancy in exchange for the
refund of his equity, less any charges due plus any capital contributions that were approved (see NYSCEF Document #51, page 4, paragraph20; page 6, paragraph 32). However, in opposition, Plaintiff notes the privatization of the co-op building occurred while Plaintiff still both possessed the apartment and retained an ownership interest (see NYSCEF Document #84, page 2-3, paragraphs 4-7). Indeed, Plaintiff signed an agreement to participate in the privatization of the
building (see NYSCEF Document #84, page 2-3, paragraph 7 and #89, Plaintiffs Exhibit D, Schedule A). Thus, Plaintiffs claimed ownership interest is a vital disputed issue that NMM and Roberts’s documentation fails to definitively refute and requires denial of this branch of the motion. “

Gobindram v Ruskin Moscou Faltischek, P.C., 2019 NY Slip Op 06190
Decided on August 21, 2019  Appellate Division, Second Department stand for the proposition that when an attorney has a second chance to correct mistakes and fails to do so, a claim for legal malpractice may be good.

“The defendants represented the plaintiff in connection with his filing of a voluntary bankruptcy petition in federal court in August 2011. Although the Statement of Financial Affairs (hereinafter SOFA) form appended to the petition called for the disclosure of recent payments to creditors and insiders, the plaintiff failed to report such payments he made to creditors and to his wife from 2010 tax refunds he had received in May and June 2011. Rather, the SOFA indicated that no such payments were made. The plaintiff’s signature on the SOFA was preceded by the following statement: “I declare under penalty of perjury that I have read the answers contained in the foregoing statement of financial affairs and any attachments thereto and that they are true and correct.” Shortly after the commencement of the proceeding, the bankruptcy trustee requested an accounting of the transfers that had disposed of the plaintiff’s 2010 tax refunds, and the omissions in the SOFA then came to light. In November 2011, two of the plaintiff’s major creditors commenced an adversary proceeding in the Bankruptcy Court, contending that the plaintiff should be denied a discharge in bankruptcy based on his misrepresentations in the SOFA relating to the disposition of the 2010 tax refunds. In his defense, the plaintiff argued that the defendants had prepared the bankruptcy submissions and he had relied on them to do so accurately.

At the ensuing trial in the adversary proceeding, the defendants admitted that they had been aware of the plaintiff’s transfers of his 2010 tax refunds at the time they prepared the bankruptcy petition and had erroneously checked boxes marked “none” where the SOFA called for their disclosure. The plaintiff admitted that the defendants had provided him with a copy of the draft petition to review before they filed it and that he had represented to them that he had read it and that it was accurate, and that he had signed the verification line of the petition declaring that it was true and correct despite the fact that he had not actually read the petition in its entirety before signing.”

“However, we disagree with the Supreme Court’s determination granting that branch of the defendants’ motion which was to dismiss so much of the legal malpractice cause of action as sought to recover damages for the defendants’ failure to amend the bankruptcy petition. The findings of the federal courts regarding the knowing and fraudulent conduct on the plaintiff’s part related solely to the initial filing; they made no determination that the plaintiff acted knowingly and fraudulently in failing to file an amended petition. Accordingly, that part of the plaintiff’s legal malpractice cause of action is not subject to dismissal on the grounds of collateral estoppel and in pari delicto.

As an alternative ground for affirmance (see Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539, 545-546), the defendants contend that the legal malpractice cause of action should have been dismissed in its entirety pursuant to CPLR 3211(a)(7), since the parties’ evidentiary submissions on the motion established that the plaintiff hired subsequent counsel who had ample opportunity to rectify their alleged error in this regard (see e.g. Perks v Lauto & Garabedian, 306 AD2d 261, 262). This contention lacks merit.”

 

Legal malpractice cases are especially prone to statute of limitations defenses, as the consequences of the departure from good practice may not come up for a while.  The standard is rather strict.  As we see in Webster v Sherman, 2018 NY Slip Op 06590 [65 AD3d 738] October 3, 2018 Appellate Division, Second Department  the statute begins to run at the time of the mistake.  “However, as an alternate ground for affirmance, T&L contends, as it did in the Supreme Court, that this cause of action is barred by the statute of limitations. “In moving to dismiss a cause of action pursuant to CPLR 3211 (a) (5) as barred by the applicable [statute of] limitations period, a defendant bears the initial burden of demonstrating, prima facie, that the time within which to commence the action has expired” (Hohwald v Farm Family Cas. Ins. Co., 155 AD3d 1009, 1010 [2017] [internal quotation marks omitted]; see Wells Fargo Bank, N.A. v Eitani, 148 AD3d 193, 197 [2017]). “If the defendant meets this initial burden, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations has been tolled, an exception to the limitations period is applicable, or the plaintiff actually commenced the action within the applicable limitations period” (Amrusi v Nwaukoni, 155 AD3d 814, 816 [2017] [internal quotation marks omitted]; see Shah v Exxis, Inc., 138 AD3d 970, 971 [2016]).

The statute of limitations for a cause of action alleging legal malpractice is three years [*3]from the accrual of the cause of action (see CPLR 214 [6]; Quinn v McCabe, Collins, McGeough & Fowler, LLP, 138 AD3d 1085, 1086 [2016]; Farage v Ehrenberg, 124 AD3d 159, 163 [2014]). “Accrual is measured from the commission of the alleged malpractice, when all facts necessary to the cause of action have occurred and the aggrieved party can obtain relief in court . . . regardless of when the operative facts are discovered by the plaintiff” (Farage v Ehrenberg, 124 AD3d at 164 [citations omitted]; see McCoy v Feinman, 99 NY2d 295, 301 [2002]; Quinn v McCabe, Collins, McGeough & Fowler, LLP, 138 AD3d at 1086).”

 

We are pleased to announce that Best Lawyers 2020 recognized Andrew Lavoott Bluestone  for his work in the area of Legal Malpractice litigation.  He has been selected continuously since 2012.

Recognition by Best Lawyers is based entirely on peer review – that is, the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice areas.  Additional recognition is also awarded to individual attorneys with the highest peer-feedback.  This designation is awarded to only one attorney for each specialty and location.

Pinto-Bedoya v Yacoob  2019 NY Slip Op 51332(U)  Decided on August 14, 2019 Supreme Court, Kings County  Rivera, J. is the ridiculous story of how some individuals were conned into getting involved in a mortgage fraud ring.  Question:  how did the attorneys not know what was going on?

“The Pinto-Bedoya’s complaint bearing Index Number 75822/2008, has alleged the following salient facts. At some time before January 12, 2006, the Yacoobs approached Pinto-Bedoya to enter into a transaction for the purchase of real property located at 2052 East 53 Place, Brooklyn, NY (hereinafter subject property). The Yacoobs made the following representations to Pinto-Bedoya: that Pinto-Bedoya’s credit history would be [*2]utilized to obtain a mortgage for the purchase of the subject property, that she would be both the mortgagor and fee simple owner of the subject property, that the subject property would be purchased at a favorable price and then sold a year later, and that the subject property would be operated and managed by defendant Y & S during pendency of plaintiff’s ownership.

Additionally, the Yacoobs informed Pinto-Bedoya that they would provide an attorney for plaintiff for the closing of the subject property. On January 12, 2006, the Yacoobs informed Pinto-Bedoya that Edwards would be that attorney. At the closing, the Yacoobs and Edwards compelled her to sign a flurry of documents that included, a note and mortgage on the subject property in the sum of $428,000.000, a second note and second mortgage in the sum of $200,000.00, a powers of attorney, and a deed transferring the subject property over to the defendant Y & S.

Through the actions of the defendant acting in concert, plaintiff was defrauded such that she was left solely with the mortgage debts and without ownership of the subject property or anything else.”

“The Pinto-Bedoya’s complaint bearing Index Number 75822/2008, has alleged the following salient facts. At some time before January 12, 2006, the Yacoobs approached Pinto-Bedoya to enter into a transaction for the purchase of real property located at 2052 East 53 Place, Brooklyn, NY (hereinafter subject property). The Yacoobs made the following representations to Pinto-Bedoya: that Pinto-Bedoya’s credit history would be [*2]utilized to obtain a mortgage for the purchase of the subject property, that she would be both the mortgagor and fee simple owner of the subject property, that the subject property would be purchased at a favorable price and then sold a year later, and that the subject property would be operated and managed by defendant Y & S during pendency of plaintiff’s ownership.

Additionally, the Yacoobs informed Pinto-Bedoya that they would provide an attorney for plaintiff for the closing of the subject property. On January 12, 2006, the Yacoobs informed Pinto-Bedoya that Edwards would be that attorney. At the closing, the Yacoobs and Edwards compelled her to sign a flurry of documents that included, a note and mortgage on the subject property in the sum of $428,000.000, a second note and second mortgage in the sum of $200,000.00, a powers of attorney, and a deed transferring the subject property over to the defendant Y & S.

Through the actions of the defendant acting in concert, plaintiff was defrauded such that she was left solely with the mortgage debts and without ownership of the subject property or anything else.”

Two threshold issues in legal malpractice, which are not mirrored in other areas of the law are standing and privity.  While intertwined, they are not merely two names for the same thing.  Illustrated by Matter of Benson  2019 NY Slip Op 51331(U)   Decided on August 12, 2019
Surrogate’s Court, Albany County Pettit, J. only certain individuals may sue an attorney for legal malpractice.  In estate (death) settings the privity problem is this:  decedent hired the attorney to do estate planning.  Decedent is dead.  No one else has privity to sue the attorney for negligent estate planning.  Estate of Schneider v. Finmann dealt with this issue.  Here is a further refinement.

“Before this Court is a motion by respondent Weitz & Luxenberg, P.C. (hereinafter respondent), pursuant to CPLR 1003 for an order dropping Robert Thomas Benson (hereinafter Benson) as a party to the trial of this proceeding and precluding him from participating as a party on the ground that he lacks privity to maintain a cause of action against respondent. Benson has opposed the motion and it is now submitted for decision.”:

“Even if respondent had not waived the argument that Benson lacks standing, the Court would not be persuaded. While it is generally true that “a third party, without privity, cannot maintain a claim against an attorney in professional negligence, ‘absent fraud, collusion, malicious acts or other special circumstances'” (Estate of Schneider v Finmann, 15 NY3d 306, 308-309 [2010], quoting Estate of Spivey v Pulley, 138 AD2d 563, 564 [2d Dept 1988]), the Court of Appeals recognized that such a rule “leaves [a decedent’s] estate with no recourse against an attorney who planned the estate negligently” and whose negligent actions or inactions affected the estate (Estate of Schneider v Finmann, 15 NY3d at 309). Accordingly, the Court established an exception to the rule for personal representatives of an estate, finding that such persons have privity, or a relationship sufficiently approaching privity, with the estate planning attorney (see id.). The Court reaffirmed that “strict privity remains a bar against beneficiaries’ and other third-party individuals’ estate planning malpractice claims absent fraud or other circumstances.” (id. at 310). Here, Benson is participating in this proceeding as a court-appointed fiduciary, and not as a beneficiary of the estate.

This Court finds that Benson, in his role as a co-administrator of the estate, has a relationship sufficiently approaching privity with respondent, counsel for the initial estate administrator, to maintain a claim against respondent for professional malpractice it may have committed with respect to the administration of this estate (cf. Estate of Schneider v Finmann, 15 NY3d at 209). Any remaining contentions, to the extent not specifically addressed, have been considered and determined to lack merit. “

Plaintiffs attend a settlement conference and agree to settle the case.  They are then  prepared for the allocution by their attorneys, which is a series of questions by the judge designed to document that the settlement is voluntary, not coerced.  The same questions are typically asked of the defendant.  The last question, which has no apparent purpose is “Are you satisfied with your attorney’s work?”  The parties are each told to answer the question with a “Yes.”

This “yes” may later doom a legal malpractice claim as it did in Glenwayne Dev. Corp v James J. Corbett, P.C.  2019 NY Slip Op 06069  Decided on August 7, 2019  Appellate Division, Second Department.  One issue with this principle is:  How would a client know whether to be satisfied or not?  A second issue with this principle is:  Would you ask a surgical patient who has just been awakened whether they are satisfied with their doctor’s work?

From Glenwayne:  “In an action to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession’ and that the attorney’s breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442, quoting McCoy v Feinman, 99 NY2d 295, 301; see Darby & Darby v VSI Intl., 95 NY2d 308, 313). “To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer’s negligence” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; see Davis v Klein, 88 NY2d 1008, 1009). A legal malpractice cause of action “is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the [*2]mistakes of counsel” (Bernstein v Oppenheim & Co., 160 AD2d 428, 430; see Maroulis v Sari M. Friedman, P.C, 153 AD3d 1250, 1251; Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d 812, 813; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083).

In support of their motion, the defendants submitted the transcript of the court proceeding setting forth the terms of the settlement of the underlying action, which conclusively established that the plaintiff was not coerced into settling (see Schiller v Bender, Burrows & Rosenthal, LLP, 116 AD3d 756, 757; Pacella v Whiteman Osterman & Hanna, 14 AD3d 545Laruccia v Forchelli, Curto, Schwartz, Mineo, Carlino & Cohn, 295 AD2d 321, 322). The plaintiff’s allegations that it was coerced into settling the underlying action were utterly refuted by the admissions of its principals during the settlement proceeding that they had discussed the terms of the settlement with their attorneys, understood the settlement terms, and had no questions about them; that they were entering into the settlement freely, of their own volition, and without undue influence or coercion; and that they were satisfied with their legal representation (see Schiller v Bender, Burrows & Rosenthal, LLP, 116 AD3d at 757-758; Boone v Bender, 74 AD3d 1111, 1113).”

Irony aside, there are a significant number of failures in legal malpractice litigation.  These failures are aside from cases which seek to push the limits of the statute of limitations, continuous representation and non-privity claims.  This can be seen in a series of cases by one pro-se plaintiff against one set of attorneys.  The cases were dismissed for not serving all parties with motion papers, Manko v Gabay  2019 NY Slip Op 06080  Decided on August 7, 2019  Appellate Division, Second Department;  for trying to amend too late;  for failing to state a cause of action; for suing too late; and for filing an inadequate appellate record.

In a related case, Manko v Broome  2019 NY Slip Op 06075 Decided on August 7, 2019
Appellate Division, Second Department plaintiff was required to obtain permission before filing any more motions.

We’re excited to report that the New York Law Journal published this Outside Counsel Column today.

“Legal Malpractice Principles arose in medieval common law.  It is linked with and has become more clearly intertwined with ancient deceit statutes with the Court of Appeals’ determination that Judiciary Law § 487 controls over attorney conduct are not merely statutory. Control of attorney conduct is rather a part of the common law imported into New York law with the formation of our state and nation.  What are the ancient origins of legal malpractice and controls over attorney deceit?

The entire article:  https://www.law.com/newyorklawjournal/2019/08/08/legal-malpractice-history-from-genesis-to-today/

 

 

 

The statute of limitations has a number of purposes, one of which is to end stale cases, another of which is to quiet old controversies.  Giller v Kate, Nussman, Ellis Farhi & Earle, LLP
2019 NY Slip Op 32301(U) July 31, 2019  Supreme Court, New York County  Docket Number: 156885/2018 Judge: W. Franc Perry illustrates how a claim of fraudulent concealment affects a statute of limitations defense.

“This legal malpractice’ action arises out of Kates Nussman’s representation of Giller in an
underlying consolidated tort action by Giller and non-party Richard Ginsberg {“Ginsberg”)
against Daniel Gittleman (“Gittleman”), Patricia Gittleman, and HP, before the United States
District Court, District of New Jersey, under Claim Action Nos. 1 :Ol~cv-5698 and 1 :02-cv-2247
(SSB) (the “Gittleman Action”). In the Gittleman Action, Giller, as the former owner of a 10%
interest in Raid Power, Inc. (“Raid”), alleged that in 1995, Gittleman misrepresented to Giller
and Ginsberg that he was winding up Raid, and offered to return th~ amounts paid by Giller and Ginsberg for their respective ownership stake’s in Raid. At the time, Ginsberg and Gittleman each owned a 45% stake in Raid. Instead of winding up Raid, Gittleman continued the business and eventually sold Raid to HP for three-hundred and twenty million dollars (Complaint, irir 8-15).

Initially, Kates Nussman and Ginsberg agreed to share the costs and fees regarding
depositions and the retention of experts. As litigation continued, it became apparent during settlement conferences that Giller’s and Ginsberg’s interests were no longer aligned. Moreover, Kates Nussman had failed to honor the parties’ letter agreement to share deposition costs and expert fees. As a result, Ginsberg ceased coordinating with Giller and commenced private negotiations that resulted in a settlement agreement between Ginsberg, Gittleman and HP on December 5, 2014. Given Plaintiffs failure to share costs and fees, after the settlement agreement, Ginsberg refused to provide Kates Nussman with access to the reports and testimony of his experts (see Letters, NYSCEF Doc. Nos. 17, 18, 19). ”

“In opposition, Giller argues that Kates Nussman is barred from asserted a defense based
on the statute of limitations under the doctrine of equitable estoppel. “In order for equitable
estoppel to apply, plaintiffs bear the burden in showing: (1) plaintiffs were induced by fraud,
misrepresentations or deception to refrain from filing a timely action; and (2) plaintiffs
reasonably relied on defendant’s misrepresentations” (MB! Intern. Holdings Inc. v Barclays
Bank PLC, 151AD3d108, 117 [1st Dept 2017], Iv to appeal denied, 29 NY3d 919 [2017]
[internal quotations and citation omitted]). However, “the doctrine of equitable estoppel ‘will not toll a limitations statute where plaintiffs possessed timely knowleqge sufficient to have placed them under a duty to make inquiry and ascertain all the relevant facts prior to the expiration of the applicable statute oflimitations”‘ (Brean Murray; Carret & Co. v Morrison & Foerster LEP, 165 AD3d 582, 582 [1st Dept 2018], quoting Rite Aid Corp. v. Grass, 48 A.D.3d 363, 364-365 [1st Dept. 2008]; see also Simcuski v Saeli, 44 NY2d 442, 450 [1978] [“due diligence on the part of the plaintiff in bringing his action is an essential element for the applicability of the doctrine of equitable estoppel”]).

Here, the alleged malpractice occurred between 2002 and 2005 when Kates Nussman  allegedly cajoled Giller to accept a low settlement offer by concealing the deteriorating health of Giller’s lead attomey,_Mr. Nashe!, and that Ginsberg had settled his claims against Gittleman and HP and would no longer cooperate with Kates Nussman or permit Kates Nussman to review or rely on the evidence and experts that Ginsberg had paid for. Giller’s conceded contemporary belief that the settlement offer was woefully inadequate, his knowledge that he was never asked to pay for experts, and KatesNussman’s refusal to continue to negotiate on Giller’s behalf, put Giller on notice to inquire further within the statute of limitations period. Accordingly, the doctrine of equitable estoppel does not save Giller’s untimely legal malpractice claim.”