In this legal malpractice case which was dismissed and then affirmed on appeal, the decision reveals so wide a difference in analysis of the corporate and loan documents that it is astonishing.  In Manus v Flamm   2013 NY Slip Op 07683   Decided on November 19, 2013   Appellate Division, First Department plaintiff presents a claim that is not merely a shade different from that of defendant, it is night and day.
 

"The complaint alleges that defendant committed legal malpractice while representing plaintiff in a replevin action brought against her in October 1998 by nonparty Family M. Foundation, Ltd., a Cayman Islands corporation formed by the late Allen Manus, plaintiff’s former husband.

The first cause of action, which alleges that defendant was negligent in failing to assert certain defenses or move to dismiss the complaint in the replevin action, is belied by the seventh and eighth affirmative defenses, which assert that the loan agreement imposed no personal liability on plaintiff.

The second cause of action alleges that plaintiff "felt compelled" to sign the stipulation of settlement in the replevin action, which converted a $1,000,000 obligation from the corporation to her into a $400,000 obligation from her to the corporation. However, plaintiff’s obligation arose in the context of the loan agreement she executed, not the stipulation of settlement. The stipulation did not impose personal liability on plaintiff for the debt created under the loan agreement; it merely directed that her shares in her cooperative apartment be substituted for her jewelry as collateral for the loan.

The third cause of action alleges that, but for defendant’s insistence that the corporation’s president and sole director, Elizabeth (Libby) Manus, had to execute the corporation’s release of plaintiff’s obligations to it and that Allen Manus’s execution of the release would not be sufficient, Allen Manus would have signed the release and plaintiff would have been free of her obligations under the stipulation. However, this Court has found that the action by the corporation to enforce the stipulation upon plaintiff’s default was properly maintained under Libby Manus’s authority (see Family M. Found. Ltd. v Manus, 71 AD3d 598 [1st Dept 2010], lv dismissed 15 NY3d 819 [2010]). Even assuming that Allen Manus, who held a power of [*2]attorney for the corporation, was authorized to release plaintiff’s obligations to the corporation, Libby Manus’s refusal to sign the release would have revoked his authority (see Zaubler v Picone, 100 AD2d 620, 621 [2d Dept 1984]). "

We’re proud and pleased that the New York Law Journal published "Statute of Limitations in Legal Malpractice" today.  From the article:

"
The statute of limitations sets the maximum time during which an action for damages may be commenced. It is of ancient heritage. Its first appearance in Anglo-American law is as early as 1237. In New York the statute of limitations applies to all actions in law and in equity. CPLR Article 2 sets time limitations in every enumerated action or special proceeding. However, not all actions are specifically enumerated. Those which are not enumerated are subject to a six-year statute pursuant to CPLR 213. In general, separate treatment is afforded to commencement of actions based upon contract (CPLR 213) and tort (CPLR 214(6)).

Legal malpractice is different. It is often described as both a tort and a breach of retainer contract. Shumsky v. Eisenstein, 96 NY2d 164 (2001). Whether it is a "tort" or a "contract" is generally decided by the nature of the damages sought, Sears Roebuck & Co. v. Enco Assocs., 43 NY2d 389 (1977); Santulli v. Englert, 78 NY2d 700 (1992). Tort damages are those which compensate a plaintiff for all of the "reasonably foreseeable injury suffered." PJI 2:277. Contract damages are to "indemnify plaintiff for the gains prevented and the losses sustained by the breach of the retainer contract." PJI 4:20.

Initially different periods of limitation were applied to legal malpractice claims in tort and in contract, Santulli, supra. In reaction to Santulli, the Legislature shortened the statute of limitations to three years for breach of contract claims in 1996. Now, legal malpractice is enumerated in Article 2 and is subject solely to a three-year statute of limitations under CPLR 214[6] no matter how the claim is denominated. This three-year statute is applicable whether the claim is called tort or contract, and applies all other descriptions. Whether it is "fraud," "breach of fiduciary duty," or any other claim, should the allegations arise from professional representation of the client by the attorney it is subject to a three-year statute, Ulico Cas. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1 (1st Dept. 2008); Melendez v. Bernstein, 29 AD3d 872 (2d Dept. 2006).

Calculating the onset and length of the legal malpractice statute of limitations is enormously complex. To begin, it is not always clear when the clock starts to run. Several considerations govern that calculation. These include the date of the mistake, whether that mistake immediately causes problems, continuing representation, and the maturing of an actionable injury, To further complicate the analysis there is equitable tolling and equitable estoppel."

Read more: http://www.newyorklawjournal.com/PubArticleNY.jsp?id=1202629531207&Statute_of_Limitations_in_Legal_Malpractice#ixzz2lkqm76Up

Here is a textbook example of how the statute of limitations in legal malpractice is stretched to the extreme, yet plaintiff loses.  In 2003 defendants wrote an opinion letter which was contrary to the IRS determination which came in 2007.  Attorneys (or related attorneys) were retained in 2007 to fight the IRS and lost in 2011.  5 months later plaintiff sued.  Timely or too late? 

Landow v Snow Becker Krauss, P.C.   2013 NY Slip Op 07710   Decided on November 20, 2013
Appellate Division, Second Department   holds that they were too late, and for the reason that more than 3 years went by between the engagements in 2003 and 2007. Legal Malpractice continuing representation requires that there be no 3 year period between the islands of representation.  Hence, continuous representation does not permit the archipelago theory of strung out islands of representation with more than 3 years of ocean between them.
 

""On a motion to dismiss a complaint pursuant to CPLR 3211(a)(5) on statute of limitations grounds, the moving defendant must establish, prima facie, that the time in which to [*2]commence the action has expired" (Zaborowski v Local 74, Serv. Empls. Intl. Union, AFL-CIO, 91 AD3d 768, 768-769). In a legal malpractice action, the statute of limitations is three years (see CPLR 214[6]). "A legal malpractice claim accrues when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court’" (McCoy v Feinman, 99 NY2d 295, 301, quoting Ackerman v Price Waterhouse, 84 NY2d 535, 541). Here, the defendants met their prima facie burden by establishing that the cause of action alleging legal malpractice accrued on March 5, 2003, the date they allegedly issued the opinion letter advising the plaintiff that the proposed sale would not result in the loss of his tax deferment status (see Ackerman v Price Waterhouse, 84 NY2d at 541-543; Byron Chem. Co., Inc. v Groman, 61 AD3d 909). Although the plaintiff did not discover that his attorneys’ alleged advice was incorrect until years later, " [w]hat is important is when the malpractice was committed, not when the client discovered it’" (McCoy v Feinman, 99 NY2d at 301, quoting Shumsky v Eisenstein, 96 NY2d 164, 166). Therefore, since the defendants demonstrated that the plaintiff did not commence this action until December 29, 2011, more than three years after his claim for legal malpractice accrued, the defendants established, prima facie, that the claim was time-barred.

Upon that showing, the burden then shifted to the plaintiff to raise a question of fact as to whether he actually commenced the action within three years after the legal malpractice cause of action accrued, the statute of limitations was tolled, or the statute of limitations relied on by the defendants was otherwise inapplicable (see Zaborowski v Local 74, Serv. Empls. Intl. Union, AFL-CIO, 91 AD3d at 769). The plaintiff, in opposition to the defendants’ showing, relies on the continuous representation doctrine as a toll of the three-year statute of limitations; however, he failed to raise a question of fact in this regard. As evidenced by, inter alia, the more than four-year period of time between the issuance of the opinion letter and the plaintiff’s alleged retention of the defendants in July 2007, during which no further legal representation was undertaken with respect to the subject matter of the opinion letter, the parties did not contemplate that any further representation was needed (see McCoy v Feinman, 99 NY2d at 306; Byron Chem. Co., Inc. v Groman, 61 AD3d at 911).

Accordingly, the Supreme Court properly granted those branches of the defendants’ respective motions which were pursuant to CPLR 3211(a)(5) to dismiss, as time-barred, the cause of action alleging legal malpractice. "

A win at trial and a loss on Appeal in this legal malpractice case was based upon Plaintiff’s potential comparative fault.  Hattem v Smith    2013 NY Slip Op 07791  Decided on November 21, 2013  Appellate Division, Third Department is the story of a fairly straight-forward sale of a business coupled with the failure to file liens and UCC-1s.  Seller was found by the 3d Department to be sophisticated enough to potentially share in some of the blame.

"In September 2007, plaintiff commenced this legal malpractice action. Following a trial, the jury was asked whether Smith was negligent in failing to file a UCC-1 prior to NBT’s filing, and in failing to file DMV liens. The jury answered both questions in the affirmative and awarded damages to plaintiff. Supreme Court denied defendants’ cross motion to set aside the verdict, and judgment was entered thereon. Defendants appeal from the order denying the cross motion and from the judgment.

We agree with defendants’ contention that Supreme Court erred in refusing to charge the jury regarding plaintiff’s comparative fault. The culpable conduct of a plaintiff client may be asserted as an affirmative defense in a legal malpractice action in mitigation of damages (see CPLR 1411, 1412; Schaeffer v Lipton, 243 AD2d 969, 971 [1997]; Caiati v Kimel Funding Corp., 154 AD2d 639, 639-640 [1989]; see also Shapiro v Butler, 273 AD2d 657, 658 [2000]). Here, the evidence was sufficient to support a finding that plaintiff could reasonably have been expected to understand the underlying obligations and formalities (compare Cicorelli v Capobianco, 90 AD2d 524, 524 [1982], affd 59 NY2d 626 [1983]). Plaintiff was experienced in commercial transactions, including secured loans, understood that loans such as the one from NBT to OSC generally require collateral, and testified that his purpose in retaining Smith was to protect his security interest in the vehicles and equipment. He acknowledged that none of the discussions among the parties and their counsel leading up to the execution of the sale documents had included any mention of outside loans to OSC, and that he introduced OSC’s owners to the NBT officer who later approved the loan.

Plaintiff’s testimony as to his purpose in making this introduction and his personal knowledge regarding the owners’ intention to obtain financing for the purchase of JMF was contradictory and inconsistent. The loan officer testified that plaintiff introduced OSC’s owners to him for this specific purpose, and one of the owners testified that their plan to obtain a loan was discussed with plaintiff before the sale documents were signed; both the owner and the loan officer testified that plaintiff was present during transactions pertaining to the loan. Plaintiff never advised Smith that he had signed the sale documents, nor did he contact Smith after engaging in these transactions. As this evidence provided "a valid line of reasoning and permissible inferences from which rational people can draw a conclusion of negligence," the [*3]question of plaintiff’s comparative fault should have been submitted to the jury (Bruni v City of New York, 2 NY3d 319, 328 [2004]; see Gotoy v City of New York, 94 NY2d 812, 814 [1999]; Klingle v Versatile Corp., 199 AD2d 881, 882 [1993]). Accordingly, the matter must be remitted for a new trial.

In light of this determination, we need only briefly address defendants’ remaining assertions relative to Supreme Court’s denial of the cross motion to set aside the verdict. Defendants assert that it was impossible for Smith to file a UCC-1 before the date of NBT’s filing, as he neither possessed the executed security agreement nor knew that it had been executed until several weeks thereafter (see UCC 9-509 [b] [1]; see generally McDaniel v 162 Columbia Hgts. Hous. Corp., 21 Misc 3d 244 [2008]). However, upon defendants’ cross motion, Supreme Court analyzed the issue more broadly, and denied the cross motion upon the ground that the evidence established that the transaction could have been structured differently. This finding based upon the evidence was properly within Supreme Court’s power (see CPLR 4111 [b]; Siegel, NY Prac § 399 at 696 [5th ed 2011]). Plaintiff’s expert testified that plaintiff’s security interest could have been protected by instructions to OSC’s attorney precluding release of the sale documents, which Smith did not provide. Thus, it cannot be said that there was "simply no valid line of reasoning and permissible inferences which could possibly lead rational [people] to the conclusion reached by the jury on the basis of the evidence presented at trial" (Cohen v Hallmark Cards, 45 NY2d 493, 499 [1978]; accord Popolizio v County of Schenectady, 62 AD3d 1181, 1183 [2009]). In light of this very high standard, we further find that the evidence sufficiently established that Smith’s failure to file DMV liens was the proximate cause of loss to plaintiff. Accordingly, the court did not err in denying the cross motion to set aside the verdict insofar as it addressed liability. Defendants’ remaining claims need not be addressed, as they pertain to the sufficiency of proof of the quantum of damages and are thus encompassed within the issues that will necessarily be presented upon retrial. "

OK, say you’re a law firm, and the client is a Board of Managers, and the President is an Attorney.  You do work for them, and things don’t go well.  You can blame the "micro-managing" President/Attorney, no?

Well, in Board of Mgrs. of Bridge Tower Place Condominium v Starr Assoc. LLP  2013 NY Slip Op 07684  Decided on November 19, 2013  Appellate Division, First Department  the answer is NO.  In fact, as rarely happens, Plaintiff obtains summary judgment on liability and dismissing the affirmative defense of comparative fault.

"This Court previously held that the stipulation drafted by defendants unambiguously stripped plaintiff of its right to amend its bylaws to attain a specific result in connection with the underlying action (see Luzzi v Bridge Tower Place Condominium, 52 AD3d 290 [1st Dept 2008]). Under those circumstances, no expert testimony was necessary to establish that defendants’ conduct fell below the standards of the profession generally (see S & D Petroleum Co. v Tamsett, 144 AD2d 849, 850 [3d Dept 1988]). Because the alternative to the stipulation was not, as defendants contend, to litigate the underlying action, but for plaintiff to exercise its right to amend the bylaws immediately, the motion court did not err in finding "but for causation" as a matter of law (cf. Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 271-272 [1st Dept 2004]).

Furthermore, although plaintiff’s president is an attorney, and did see drafts of the stipulation, the record does not raise a triable issue as to whether he arrogated to himself the role of drafting the stipulation, or micro-managed the negotiation. Rather, the record shows that plaintiff relied on counsel to effect the strategy of preserving in the stipulation the right to amend the bylaws. Accordingly, the defenses of comparative fault were properly dismissed (see Mandel, Resnik & Kaiser, P.C. v E.I. Elecs., Inc., 41 AD3d 386 [1st Dept 2007]). "

Settlements including pleas to criminal charges are the linchpin of an orderly system of justice.  As any prosecutor, and indeed, any litigator knows, only a very small portion of cases can be tried to a fact finder.  if 95% of all civil cases, and a similar amount of criminal cases were not subject to disposition by voluntary settlement, the staggering numbers of cases would quickly overwhelm the entire system.

So the Court of Appeals found in People v Peque 2013 NY Slip Op 07651   Decided on November 19, 2013   Court of Appeals   Abdus-Salaam, J. for criminal cases, and so it is in matrimonial cases.  In Peque   the question of deportation and the low level of understanding may constitute lack of due process, and in legal malpractice litigation after Katebi v. Fink. 51 AD3d 424 (1st Dept, 2008).   In criminal law, "the plea represents a voluntary and intelligent choice among the alternative courses of action open to the defendant" and requires that the defendant be told of the significant consequences of a plea.  No such obligation is found in settling a matrimonial case and being asked whether the attorney’s work is satisfactory. 
 It is customary in settlement of a matrimonial action to inquire of the litigants whether they are satisfied with the work of their attorneys.  When they are told (in rote fashion) to say "yes", the suffer the consequence of losing any legal malpractice rights later.  "While "[a] claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel" (Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1990]), here, the complaint is contradicted by the evidentiary material submitted on the motion to dismiss (see Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). Plaintiff testified that she did not wish to proceed with the trial of the matrimonial action, that she decided instead to enter into the stipulation of settlement because she wanted no further connection with her husband, that she understood that by settling the action before the completion of the trial she was foregoing the right to pursue the funds allegedly dissipated by him, and that she was satisfied with the services provided by her attorney. "

Plaintiff hires law firm to handle labor law case, Defendant is then hired to handle the appeal from dismissal of the case.  The appeal was dismissed for want of prosecution in 2006.  The law firm did not tell the client, and in 2008 wrote a letter telling him that the judgment was affirmed.  The legal malpractice case did not commence until 2012. 

McDonald v Edelman & Edelman, P.C.  2013 NY Slip Op 07432   Decided on November 12, 2013
Appellate Division, First Department  holds that the case was brought too late, but that an accounting of disbursements can be held.
"Defendants argue that the second cause of action, which seeks an accounting, is based on breach of fiduciary duty, in light of the attorney-client relationship, and seeks money damages, and is therefore barred by the three-year statute of limitations set forth in CPLR 214(6). They improperly raised this argument for the first time in reply on their motion (see Caribbean Direct, Inc. v Dubset LLC, 100 AD3d 510 (1st Dept 2012]). In any event, the argument is unavailing. Plaintiff’s claim for an accounting so that he can recoup disbursements allegedly improperly charged against his jury award has little to do with whether defendants performed their legal services in a non-negligent manner (see Matter of R.M. Kliment & Frances Halsband, Architects [McKinsey & Co.], 3 AD3d 143 [1st Dept 2004], affd 3 NY3d 538 [2004]). It has to do with whether defendants owe plaintiff a fiduciary duty to account for money or property allegedly belonging to him, and is therefore governed by the "residual" six-year statute of limitations set forth in CPLR 213(1) (see Hartnett v New York City Tr. Auth., 86 NY2d 438, 443 [1995]; Bouley v Bouley, 19 AD3d 1049, 1051 [4th Dept 2005]).

The first cause of action, alleging legal malpractice, accrued at the time that plaintiff’s appeal from the order that granted summary judgment dismissing his underlying Labor Law claims was dismissed for want of prosecution, in July 2006, notwithstanding his lack of knowledge of the dismissal (see McCoy v Feinman, 99 NY2d 295, 301 [2002]). Plaintiff then had three years to commence a malpractice action against defendants (see CPLR 214[6]), absent an applicable ground for tolling the limitations period. He did not commence this action until March 2012.

Plaintiff relies on the continuous representation doctrine. However, in June 2008, defendants sent him a letter enclosing the Second Department’s affirmance of the underlying judgment and formally closing their representation of him. The letter, which plaintiff did not [*2]object to, demonstrates that the parties lacked "a mutual understanding of the need for further representation on the specific subject underlying the malpractice claim" (see Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 9-10 [2007] [internal quotation marks omitted]). Even accepting that defendants concealed from plaintiff the fact that his appeal was dismissed as abandoned, their letter placed him on notice that his attorney-client relationship with them had ended. "