We are not sure where the line between privacy and whistleblowing exists, nor where the balance should be.  Galloway v Wittels  2014 NY Slip Op 30006(U)  January 6, 2014 Supreme Court, New York County  Docket Number: 151287/2013  Judge: Cynthia S. Kern is an interesting example of how a person can become enmeshed in a situation much larger than himself, and be buffeted by the resulting storm.

"The relevant facts are as follows. This action centers around the fact that plaintiff, in 2009, was publicly identified as a whistleblower in a patent lawsuit between Convolve, Inc. ("Convolve") and Seagate Technology, LLC ("Seagate"). Specifically, in 2003, plaintiff was employed as an engineer at Seagate Technology, LLC ("Seagate"). At that time, plaintiff testified as a 30 (b)(6) witness for Seagate in a pending patent lawsuit commenced by Convolve against Seagate (the "CS Lawsuit"). Six years later, after being terminated by Seagate, plaintiff was contacted by Seagate’s attorney and was advised that the CS Lawsuit was likely going to trial in January 2010 and that he might be called as a trial witness on Seagate’s behalf. According to plaintiffs complaint, "[p]rompted by the call from Seagate’s attorney, [he] did some research on the ongoing lawsuit and learned that, in addition to the patent litigation, Convolve had sued Seagate for violation of a non-disclosure agreement (NOA)." Thereafter, "[a]fter reviewing the case, [plaintiff] came to the conclusion that Seagate·:had violated the NOA." (Emphasis in original). Apparently, disturbed by the realization that the work he had done at Seagate had violated the NOA, plaintiff sent an email to Convolve asking that its legal department contact him.

Plaintiff alleges that in response to this email, he was contacted by one or more attorneys from defendant Cadwalader Wickersham & Taftt, LLP ("Cadwalader"), who represented Convolve in the CS Litigation. Specifically, plaintiff alleges that defendant Debra Brown Steinberg ("Steinberg") was on the initial call with him. During the call, Cadwalder’s attorneys ‘ allegedly asked if plaintiff was represented by counsel and after he told them he might still be represented by Seagate’s attorney, the call ended. Thereafter, plaintiff alleges that he was contacted by Neil Singer, CEO of Convolve who recommended that plaintiff contact Wittels, an attorney formerly employed by Sanford Heisler’s predecessor firm, Sanford Wittels & Heisler, LLP, at the time of the acts complained of herein, regarding plaintiffs termination of his employment from Seagate."

"Plaintiff now brings the instant action alleging that as a direct result of the defendants’ misconduct in regards to allowing him to be publicly identified as a whistleblower he has been unable to find suitable employment in his field. Specifically, in his amended complaint, plaintiff asserts two causes of action against Wittels and Sanford Heisler, as successor in interest to Wittels former employer at the time the acts complained of herein occurred, for malpractice and breach of fiduciary duty. Wittels and Sanford Heisler now move for an order dismissing the two claims."

"In the present case, plaintiffs claim for malpractice must be dismissed as against the moving defendants as the allegations in the amended complaint, taken as true and given the benefit of every possible inference, fail to demonstrate that but for Wittels’ alleged negligence plaintiff would not have been publicly named as a whistleblower and he would have found suitable employment. Moreover, plaintiff fails to plead actual and ascertainable damages that resulted from Wittels’ alleged negligence."

We have noted over the years that trial courts are all too eager to dismiss legal malpractice claims.  We argue that trial courts delve way to far into the underlying transaction (or litiigation)  in order to determine at the pre-answer stage, whether there is a "but for" component. 

The same issue is present in Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin & Quartararo   2014 NY Slip Op 00087  Decided on January 8, 2014  Appellate Division, Second Department. 

"The plaintiff commenced this action to recover damages allegedly sustained as a result of the defendants’ legal malpractice. As alleged in the complaint, the plaintiff retained the defendants to represent it in connection with the sale of certain real property and a related exchange of "like-kind property" pursuant to the Internal Revenue Code (see 26 USC § 1031). According to the allegations in the complaint, the plaintiff, based upon the defendants’ advice, selected LandAmerica 1031 Exchange Services, Inc. (hereinafter LandAmerica), as the qualified intermediary to hold a portion of the sale proceeds, totaling $5.5 million, for the exchange of like-kind property pursuant to 26 USC § 1031. The complaint alleged, inter alia, that the defendants negligently represented the plaintiff inasmuch as they reviewed, and advised the plaintiff to execute, an agreement with LandAmerica, under which the exchange funds were to be held in a commingled [*2]account and not a qualified escrow account or trust. Soon after the sale proceeds were transferred to LandAmerica, its parent corporation, LandAmerica Financial Group, Inc., declared bankruptcy. According to the complaint, the plaintiff’s funds were frozen for several years during the bankruptcy proceedings, and the plaintiff lost a portion of the funds because they were not held in a qualified escrow account or trust. The complaint further alleged that the plaintiff could not defer the taxes on the capital gains from the initial sale, as it did not have access to its funds to purchase a replacement property within the required 180-day period. "

"The Supreme Court improperly granted the defendants’ motion to dismiss the complaint based on documentary evidence. A motion to dismiss a complaint pursuant to CPLR 3211(a)(1) may be granted only if the documentary evidence submitted by the moving party utterly refutes the factual allegations of the complaint, "conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326). Here, the retainer agreement submitted by the defendants did not conclusively establish a defense as a matter of law (see Harris v Barbera, 96 AD3d 904, 905-906; Rietschel v Maimonides Med. Ctr., 83 AD3d 810, 811; Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 38-39). "

"Here, construing the complaint liberally, accepting the facts alleged in the complaint as true, and according the plaintiff the benefit of every possible inference, as we are required to do, the plaintiff stated a cause of action to recover damages for legal malpractice (see Palmieri v Biggiani, 108 AD3d 604, 608; Kempf v Magida, 37 AD3d 763, 764). The plaintiff alleged in the complaint that the defendants were negligent in failing, inter alia, to advise it to keep its exchange funds in a qualified escrow account or trust, and that this negligence was a proximate cause of its damages. The defendants’ contentions that it was the conduct of the plaintiff’s manager and unforeseeable events that were the proximate causes of the plaintiff’s damages, and that the defendants did not depart from the standard of care, concern disputed factual issues that are not properly raised and resolved on a motion to dismiss a complaint pursuant to CPLR 3211(a)(7).

The documents submitted by the defendants on appeal, which were annexed to their brief, are not properly before this Court, as they were not submitted to the Supreme Court (see CPLR 5526; Constantine v Premier Cab Corp., 295 AD2d 303, 304). Moreover, the defendants’ arguments that relied upon these documents were improperly raised for the first time on appeal (see Salierno v City of Mount Vernon, 107 AD3d 971, 972). "

Continuing from yesterday’s blog post, we look at another appellate legal malpractice case.  In Aramarine Brokerage, Inc. v Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C. 2012 NY Slip Op 03533  Appellate Division, First Department the question of whether appellate counsel’s failure to argue that District Court allowed an impermissible argument raised only in reply is now the basis of a legal malpractice claim against the attorney who did not make the argument.
 

"Plaintiff, an insurance broker, seeks to recover for legal malpractice arising out of defendant law firms’ successive representation of it in connection with an underlying federal action against a group of insurers (the CGU insurers). In the federal action, the CGU insurers moved for, inter alia, summary judgment on their counterclaims for a return of insurance brokerage commissions paid in connection with premiums subsequently returned, on the ground that plaintiff’s claim of an oral agreement between the parties was controlled by New York law and was unenforceable pursuant to the statute of frauds. The CGU insurers argued for the first time in reply that the oral agreement also failed for lack of consideration. Plaintiff, then represented by Hall Estill, neither objected to the CGU insurers’ raising this issue in reply nor sought to submit a sur-reply. The district court (Casey, J.) granted the CGU insurers’ motion, finding that the oral modification was subject to New York law and was unenforceable under New York’s statute of frauds. The court found, alternatively, that plaintiff "failed to establish that any consideration was given in exchange for the alleged agreement" (American Hotel Intl. Group Inc. v CGU Ins. Co., 2004 WL 626187 *7 n 7, 2004 US Dist LEXIS 5154, *25 n 7 [SD NY 2004], vacated in part 307 Fed Appx 562 [2d Cir 2009]). On appeal by EB & G, the Second Circuit vacated the finding that New York law and the statute of frauds applied to the oral modification. Neither EB & G’s appellate brief nor the Second Circuit’s decision addressed the district court’s alternative holding of "no consideration." [*2]"

"On remand, the district court (McMahon, J.) held that, although Judge Casey could have disregarded the argument first raised in reply, his "no consideration" ruling was "law of the case," because it had not been reversed on appeal (American Hotel Intl. Group Inc. v OneBeacon Ins. Co., 611 F Supp 2d 373, 379 [SD NY 2009], affd 374 Fed Appx 71 [2d Cir 2010]). Judge McMahon noted that plaintiff had not, inter alia, objected to Judge Casey’s consideration of this argument on reply, or sought leave to file a sur-reply, or raised the issue on the prior appeal and reconsideration motions (id. at 376). She observed that, while the Second Circuit could have responded favorably to an abuse of discretion argument, it was "equally likely" to have "viewed with disfavor" plaintiff’s failure to raise the issue before the district court, and concluded that, "[h]aving passed up every conceivable opportunity to raise this issue . . . [plaintiff] has waived any right to argue . . . that Judge Casey erred by considering the belatedly-raised no consideration’ argument" (id. at 376, 377). "

"The complaint alleges that EB & G’s failure to address the "no consideration" ruling in its appellate brief in the first federal appeal resulted in plaintiff’s inability to defend against the CGU insurers’ counterclaims. By thus alleging "facts from which it could reasonably be inferred that defendant’s negligence caused [plaintiff’s] loss," the complaint states a cause of action for malpractice (see Garnett v Fox, Horan & Camerini, LLP, 82 AD3d 435 [2011], citing InKine Pharm. Co. v Coleman, 305 AD2d 151 [2003]). In opposition to EB & G’s motion, plaintiff was not required to show a "likelihood of success" (id. at 436). "
 

We have mused that legal malpractice litigation is often created by financial pressures.  Either the attorney has too many cases, or the law firm is understaffed, or the client is unwilling to pay/was overbilled. or, as discussed by Thomas Newman and Steven Ahmuty in today’s New York Law Journal, the attorney is aware of the "high cost of reproducing a full record on appeal." 

The potential for legal malpractice exists here when the appellate attorney risks dismissal of the appeal because of financial constraints.  A full record, including a lot of material that no one is interested in, nor relies upon, can be shockingly expensive.  In order to save printing costs (often exorbitant), an appendix is used, with the unnecessary material carved out.

From the article: ‘A concern over the high cost of reproducing a full record on appeal led to the adoption of the "appendix method" as an alternate means of prosecuting an appeal. Use of the appendix method is governed by CPLR 5528 "Content of briefs and appendices," and 5529 "Form of briefs and appendices," as supplemented by the individual rules of the Court of Appeals and each of the four departments of the Appellate Division.1 There are no uniform rules governing appendices so it is always necessary to check the rules of the court to which the appeal is being taken.

CPLR 5528(a)(5) permits the appellant to file "an appendix…containing only such parts of the record on appeal as are necessary to consider the questions involved." If the parties agree, a joint appendix bound separately may be used and filed with the appellant’s brief.2 Two important points must be kept in mind: First, use of the appendix method does not eliminate the requirement of settlement of the entire trial transcript, absent a stipulation to the contrary. "It is primarily because a complete typewritten transcript settled by the trial court is available, that an appellant is authorized, without further settlement or court approval," to employ the appendix method.3 In the absence of the parties’ consent, the court does not have the power under CPLR 5525 to settle any transcript which fails to include the entire transcript of the stenographic minutes of the trial.4

Second, the appellant must also include "those parts [of the record] the appellant reasonably assumes will be relied upon by the respondent." The court rules reinforce this latter requirement. Under the First Department’s Rule 600.10(c)(2)(ii), an appendix must include "[r]elevant excerpts from transcripts of testimony or papers in connection with a motion. These must contain all the testimony or averments upon which appellant has reason to believe respondent will rely. Such excerpts must not be misleading because of incompleteness or lack of surrounding context." Each of the other departments has a similar rule.

What should be included in the appendix is not a matter of guesswork. Before preparing the appendix, the appellant’s counsel should consult with the respondent’s counsel to determine which parts of the record will be relied upon by the respondent. If counsel are unable to reach agreement as to the contents of the appendix, the respondent may file a supplemental appendix or, if the omissions from the appellant’s appendix are substantial and material, the respondent may move to dismiss the appeal or compel the appellant to file a proper appendix."

Attorneys are subject to a triumvirate of claims, which may generally be: legal malpractice in tort, legal malpractice in contract and breach of fiduciary duty. Attorneys are fiduciaries of their clients, but interestingly, accountants (even CPAs) are not. In Knockout Vending Worldwide, LLC v Grodsky Caporrino & Kaufman CPA’s, P.C. 2012 NY Slip Op 31855(U)    Supreme Court, Suffolk County Judge: Elizabeth H. Emerson we see the distinction.

In this case business buyers claim they were defrauded when business sellers artificially inflated the value of the business through fraud. They sue sellers, sundry others, and their CPAs whom they say were hired to do the due diligence on the value of the business.

"Turning to the motion by the Kauman defendants to dismiss the second cause of action, according the plaintiffs the benefit of every possible favorable inference as a general rule, the plaintiffs have failed to state a second cause of action alleging a breach of fiduciary duty. TheCourt notes that the plaintiffs have alleged a cause of action for accounting malpractice. The existence of negligence claims, however, docs not create a fiduciary relationship between the Kaufman defendants and the plaintiffs (Friedman v Anderson, 23 AD3d 163). In general, there is no fiduciary relationship between an accountant and his client (DG Liquidation, Inc. v Anchin, Block & Anchin, 300 AD2d 70). "A conventional business relationship, without more, does not become a fiduciary relationship by mere allegation" (Friedman v Anderson, supra at 166, Oursler v Women’s Interart Center, Jnc., 170 AD2d 407, 408). Here, the complaint alleges that the Kaufman defendants were the plaintiffs’ personal accountants, and that the plaintiffs placed confidence in the Kaufman defendants’ advice and opinions as professional accountants, consultants and advisors. However, while providing financial advice may be within the scope or an accountant’s duties, and so within the definition of a conventional business relationship, the standard that plaintiffs must meet to sustain a cause of action for breach of fiduciary duty has not been met (Staffenberg v Fairfield Pagma Assoc., L.P., 2012 NY AppDiv LEXIS 3423, citing Friedman v Anderson, supra at 166; ef Lavin v Kaufman, Greenhut, Lebowitz & Forman, 226 AD2d 107). Accordingly, the Kaufman defendants’ motion to dismiss the second cause of action is granted."
 

We reported theRed Zone v. Cadwalader summary judgment news back in September.  Today, the case is complete, andthe Judge awarded $ 16.7 million to plaintiff Red Zone for Cadwalader’s failure to carry out its instructions to ensure a letter agreement between Red Zone and UBS Securities LLC which itself memorialized an oral agreement to limit Red Zone’s liability for fees to UBS for a Six Flags deal.

Christine Simmons writes in today’s NYLJ that the case is ended.  "
Red Zone filed suit against Cadwalader after the Appellate Division, First Department, ruled in 2010 that Red Zone owed UBS $8 million plus interest. In August, Acting Supreme Court Justice Melvin Schweitzer granted summary judgment to Red Zone against Cadwalader but held off on the amount of damages (NYLJ, Sept. 5, 2013).

In a new ruling, Schweitzer awarded Red Zone about $11.7 million in damages and another $1.5 million for its legal fees in the underlying litigation with UBS. With interest, the judgment against Cadwalader totals more than $16.7 million. "The judge awarded to Red Zone every dollar proven in our summary judgment papers," he said in an interview.

Meanwhile, Cadwalader’s appeal on the summary judgment decision is pending in the First Department. David Marriott, a partner at Cravath, Swaine & Moore who represented Cadwalader, did not return a message seeking comment, nor did a Cadwalader spokesman."

In this legal malpractice case, defendant made motions in a seemingly out-of-order fashion, yet succeeded even though. Here is the AD discussing a novel method of moving to dismiss in Shirzadnia v Lecci 2012 NY Slip Op 09043 Appellate Division, Second Department:
 

"The plaintiff commenced the instant action by the filing of a summons and complaint on December 28, 2004. By notice of motion dated February 15, 2005, the defendant moved for an order, inter alia, "pursuant to CPLR 3211 and 3212 dismissing the complaint upon the ground that there is documentary evidence which precludes plaintiff’s complaint." In an order dated June 15, 2005, the Supreme Court denied that branch of the defendant’s motion which was to dismiss the complaint pursuant to CPLR 3211, without addressing that branch of the motion which was for summary judgment. Following discovery, the defendant, by notice of motion dated June 9, 2011, moved for an order "pursuant to CPLR Rule 3211(a)(1) through (7) and 3212 dismissing the action." The Supreme Court granted that branch of the defendant’s motion which was pursuant to CPLR 3212 for summary judgment dismissing the complaint.

The plaintiff’s sole argument on appeal is that the Supreme Court should have denied the defendant’s motion as either an untimely motion for leave to reargue, or an improper successive motion for summary judgment. However, since the defendant’s 2005 motion was made prior to the service of an answer, and the 2011 motion was made following the completion of discovery, the record supports the Supreme Court’s determination that the 2005 motion was not properly characterized as one for summary judgment, and that, accordingly, the 2011 motion did not violate the rule against successive motions for summary judgment (see Sutter v Wakefern Food Corp., 69 AD3d 844, 845; see also Kimber Mfg., Inc. v Hanzus, 56 AD3d 615, 616; Williams v City of White Plains, 6 AD3d 609). For similar reasons, the defendant’s 2011 motion was not an untimely motion for leave to reargue. "
 

It’s called lateral movement. The New York Law Journal is constantly talking about how mid-level laterals are being sought, or how they are finding difficulty in moving from one firm to another.  Attorneys are constantly in motion, moving from one firm to another.  Because movement is usually a business decision attorneys take care to bring cases and client with them.How does this affect the statute of limitations in legal malpractice, and can the predecessor law firm ever be responsible for later malpractice>

Some cases hold that the former law firm remains on the hook even though the attorney left. Rosenbaum v Sheresky Aronson Mayefsky & Sloan, LLP 2012 NY Slip Op 07651 Decided on November 14, 2012 Appellate Division, Second Department does not. While in the past, the Appellate Division has written: "The statute of limitations was tolled as to defendant because the attorneys who initially handled the matter continued to represent plaintiffs in the matter, albeit at different law firms, until 2005 (see Antoniu v Ahearn, 134 AD2d 151 [1987])", here the result is different.
 

From Rosenbaum: "As alleged in the amended complaint, the plaintiff was represented by the defendant Alton L. Abramowitz and two other members of the defendant firm Sheresky, Aronson, Mayefsky & Sloan, LLP (hereinafter the Sheresky Firm), beginning in February 2006. When Abramowitz joined the defendant firm Mayerson, Stutman, Abramowitz, LLP (hereinafter together the Mayerson Firm defendants), in or around August 2006, he continued to represent the plaintiff pursuant to a retainer agreement with that firm, as did the Sheresky Firm. According to the allegations in the amended complaint, the Mayerson Firm defendants’ representation of the plaintiff continued until August 25, 2008, while the Sheresky Firm’s representation of the plaintiff continued until approximately February 23, 2009. "
 

"The Mayerson Firm defendants tendered evidentiary material conclusively and indisputably demonstrating that their relationship with the plaintiff ended in March 2007, which was 19 months before the separation agreement was executed. In the interim, successor counsel, the Sheresky Firm, negotiated the separation agreement, which the plaintiff executed in November 2008. Under these circumstances, the Mayerson Firm defendants could not have been a proximate cause of the allegedly "wholly inadequate" separation agreement (see Marshel v Hochberg, 37 AD3d 559; Perks v Lauto & Garabedian, 306 AD2d 261, 261-262; Albin v Pearson, 289 AD2d 272). The remaining allegations of legal malpractice against the Mayerson Firm defendants are conclusory, and the plaintiff’s affidavit failed to remedy those defects (see Hashmi v Messiha, 65 AD3d 1193, 1195; Parola, Gross & Marino, P.C. v Susskind, 43 AD3d 1020, 1022; Hart v Scott, 8 AD3d 532). Therefore, the Supreme Court properly granted that branch of the Mayerson Firm defendants’ motion which was to dismiss the cause of action alleging legal malpractice insofar as asserted against them. "