Legal Malpractice, we often think, is a body of law, written by lawyers, concerning lawyers, judged by lawyers and results in decisions concerning solely lawyers.  However, sometimes this is simply not true.  Venecia V. v August V.  2013 NY Slip Op 08140  Decided on December 5, 2013 Appellate Division, First Department  Saxe, J., J.  is one such example. 
 

Pro-se Husband and pro-se wife are engaged in divorce and custody dispute, and huge  legal malpractice law changes follow.  "This appeal, arising in the context of a contentious post-divorce dispute, raises a variety of challenges to the court’s determinations involving custody, visitation and expenses. While the bulk of these issues may be briefly addressed seriatim, we must address at greater length the unresolved question of whether parents who are directed to pay the fees of the attorney appointed to represent the children may raise the defense of legal malpractice to that attorney’s claim for fees. Determination of this issue requires us to decide whether, as defendant father claims, Mars v Mars (19 AD3d 195 [1st Dept 2005], lv dismissed 6 NY3d 821 [2006]) gives him legal standing to assert the legal malpractice defense.

In Mars v Mars (19 AD3d at 196), this Court held that a parent may assert legal malpractice as an affirmative defense to a Law Guardian’s fee application "to the extent of challenging that portion of the fees attributable to advocacy, as opposed to guardianship." Our ruling was limited by the then-prevailing view that attorneys appointed as law guardians for children in divorce cases often functioned in a role similar to a guardian ad litem, advocating for [*3]what they believed to be the best interests of the child, as opposed to what the child desired. Accepting the rule of Bluntt v O’Connor (291 AD2d 106 [4th Dept 2002], lv denied 98 NY2d 605 [2002]), which held that absent special circumstances, a parent in a visitation dispute lacks standing to bring a legal malpractice claim against a child’s court-appointed law guardian, we limited our ruling to the portion of the law guardian’s fee representing the work that consisted of advocacy rather than guardianship.

 

Accordingly, after 2007, the distinction made by our ruling in Mars is no longer necessary in cases such as this; where the child is capable of decision-making, the task of the attorney for the child is generally solely advocacy, rather than guardianship, as long as the child is capable of knowing, voluntary and considered judgment. The portion of the Mars decision allowing a parent to raise malpractice as a defense to a fee application for that portion of the fee earned by advocacy has become applicable to the attorney’s entire fee claim. Rule 7.2 does not in any way vitiate the Mars ruling; on the contrary, it renders it more generally applicable.

We reaffirm the essence of the Mars v Mars ruling, namely that a parent may assert legal malpractice as an affirmative defense to the fee claim of an attorney for a child. The attorney for the child, no less than the attorneys for the parties, is serving as a professional and must be equally accountable to professional standards. That the children cannot hire and pay for their own attorneys, leaving it to the court to make the necessary appointment, does not alter the applicable standards, or the means by which they may be raised.

The attorney for the children protests that if this type of defense is allowed generally, parents dissatisfied with the results of their custody claims will use malpractice challenges to avoid paying, resulting in a proliferation of applications for enforcement of ordered fees. She also suggests that the threat of malpractice claims from disgruntled parents will have a negative impact on the effectiveness of attorneys for children, by giving those parents control over the representation of their children.

We disagree. The possibility that a parent who feels aggrieved over the developments in a custody or visitation dispute may claim malpractice as a means of avoiding payment of the attorney’s fee does not warrant granting these attorneys complete immunity against the defense of [*4]legal malpractice. "

 

Small closely held corporations abound in New York, and they present a special issue for the principal of standing in legal malpractice.  Who actually hired the attorney…was it the president / owner / sole shareholder, or was it the corporate entity.  While the law is clear, Rodolico v Rubin & Licatesi, P.C. 2013 NY Slip Op 08068  Decided on December 4, 2013  Appellate Division, Second Department  shows us a third way the case can be resolved.  Note the lack of "documents" in defendant’s attack on the complaint.
 

"The plaintiff’s daughter worked for the defendant law firm, in which the individual defendants are partners. During her employment, the plaintiff came to learn of an investment opportunity being organized by the defendants, which involved providing high interest, short-term loans for the development of real estate. The plaintiff and his wife, Joanne Rodolico, decided to participate. Several bank checks were purchased by Joanne and a corporation owned by the plaintiff and Joanne, C & R Door and Frame Corporation (hereinafter C & R), and forwarded to the defendants for the purpose of making loans. When five of the loans were not repaid in full, the plaintiff commenced this action seeking to recover from the defendants the money that he was owed, claiming that the defendants effectively borrowed the money from him. Alternatively, the plaintiff sought damages for legal malpractice. The plaintiff made a pre-discovery motion for summary judgment on the complaint, which motion is not the subject of this appeal, and the defendants cross-moved to dismiss the complaint pursuant to CPLR 3211(a)(1) and (3), for lack of standing and based upon documentary evidence. The Supreme Court denied the motion and cross motion, and also directed that Joanne and C & R be joined as plaintiffs in the action.

In support of that branch of their cross motion which was to dismiss the complaint [*2]for lack of standing, the defendants argued that the plaintiff had no interest in the loaned funds because two of the loans, for which the plaintiff sought recovery in the second and fourth causes of action, were funded by C & R, and three of the loans, for which the plaintiff sought recovery in the first, third, and fifth causes of action, were funded by Joanne. The plaintiff does not deny that the funds for two of the loans were provided by C & R, but merely asserts that he and Joanne own C & R. However, "[f]or a wrong against a corporation a shareholder has no individual cause of action, though he loses the value of his investment" (Abrams v Donati, 66 NY2d 951, 953; see Citibank v Plapinger, 66 NY2d 90, 93 n; Elenson v Wax, 215 AD2d 429; General Motors Acceptance Corp. v Kalkstein, 101 AD2d 102, 106). Here, the plaintiff’s action was brought in his own name, and there is nothing in the complaint to indicate that the plaintiff brought this action in a derivative capacity, on behalf of C & R. Accordingly, since the plaintiff does not have standing, individually, to seek the return of funds purportedly borrowed from C & R by the defendants, the second and fourth causes of action should have been dismissed insofar as they were asserted by the plaintiff in his individual capacity.

The same is not true, however, of the first, third, and fifth causes of action, which sought the return of funds that the defendants allege were provided by Joanne. The plaintiff and Joanne averred that, although Joanne went to the bank to purchase the bank checks, they do not keep their finances separate, and the funds belonged to both of them. The defendants presented no evidence to the contrary. The plaintiff, therefore, had standing to seek the return of the funds (see generally Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 242), and the Supreme Court properly denied the branch of the defendants’ motion which sought dismissal of the first, third, and fifth causes of action for lack of standing.

The Supreme Court also properly denied the branch of the defendants’ motion which was to dismiss the sixth cause of action, alleging legal malpractice, pursuant to CPLR 3211(a)(1). The evidence submitted in support of a motion pursuant to CPLR 3211(a)(1) to dismiss a complaint on the ground that a defense is founded on documentary evidence "must be documentary’ or the motion must be denied" (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d 713, 714, quoting Fontanetta v John Doe 1, 73 AD3d 78, 84 [internal quotation marks omitted]). " [N]either affidavits, deposition testimony, nor letters are considered documentary evidence within the intendment of CPLR 3211(a)(1)’" (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714, quoting Granada Condominium III Assn., 78 AD3d 966, 997; see Suchmacher v Manana Grocery, 73 AD3d 1017; Fontanetta v John Doe 1, 73 AD3d at 86).

Here, the only evidence submitted by the defendants that pertained to the legal malpractice cause of action were affidavits. Accordingly, since the defendants failed to support the branch of their motion seeking to dismiss the legal malpractice cause of action pursuant to CPLR 3211(a)(1) with "documentary" evidence, it was properly denied (see Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714; Integrated Constr. Servs., Inc. v Scottsdale Ins. Co., 82 AD3d 1160, 1163; Fontanetta v John Doe 1, 73 AD3d at 86). "

 

Battling over the "but for" portion of the legal malpractice requirements is generally where commercial cases such as Garten v Shearman & Sterling LLP 2013 NY Slip Op 00035
Appellate Division, First Department end up. Here, in a surprisingly clear recitation, the AD tells us why this case was doomed.
 

"On an appeal from a denial of a dismissal motion, this Court found that plaintiff "has stated a cause of action for malpractice by alleging that but for’ defendant’s failure to prepare and procure documents necessary to provide him with a first-priority security interest, he would have been able to recover the amounts owed to him by the defaulting borrower" (52 AD3d 207 [1st Dept 2008]).

Now, after discovery, it is clear that plaintiff cannot establish either a breach of duty or causation, both of which are necessary to proceed with the claim (see Wo Yee Hing Realty Corp v Stern, 99 AD3d 58, 62-63 [1st Dept 2012]).

Plaintiff’s own deposition testimony establishes that he understood that at the time he was advancing a loan to Pacific Jet, there was a superior lien on the accounts receivable, which were also being used to collateralize his loan. He knew the identity of the senior creditor and fully understood that his position would be junior when his loan was first made and would remain so, unless and until the first lien was paid off. He was, however, under a mistaken impression about the amounts owed to the senior creditors because his friend, Tim Prero, Pacific Jet’s principal, misled him by significantly understating those amounts. Plaintiff’s assumptions about his business risk in getting repaid were based upon false factual information about the financial health of Pacific Jet and how quickly the senior creditors would be paid off. Defendant established a prima facie case warranting dismissal of the complaint by showing that plaintiff’s losses were caused by Pacific Jet’s poor financial condition and plaintiff’s misjudgment of risk based upon the false factual information provided to him by Prero. (see A & R Kalimian v Berger, Gorin & Leuzzi, 307 AD2d 813 [1st Dept 2003]).

Plaintiff failed to raise any factual disputes in opposition. There is no evidence that defendant was retained to review Pacific Jet’s private corporate records. The undisputed evidence reveals that plaintiff alone reviewed Pacific Jet’s private financial records and negotiated the material terms of the transaction. The public UCC records, which defendant searched, revealed a prior security interest, a fact known to all, but no lien amount was recorded. [*2]Although plaintiff asked defendant to "document" his first priority interest, he did not have a first priority interest at the time he advanced the loan and had no expectation of a first priority interest before the senior creditor was paid. Subordination agreements or releases from the senior creditor at the time the loan was made, therefore, were not in order. Plaintiff has not elucidated what other documents defendant could have procured or prepared that would have altered the outcome of what was in hindsight a bad business deal.

Plaintiff no longer claims that defendant could have taken actions that would have allowed him to recover the amounts owed. He currently argues that he would not have entered into the transaction had he known his friend was misleading him about the amounts owed to prior creditors. This position is different from the position he prevailed upon on the motion to dismiss. It is also contrary to his deposition testimony, when in answer to a direct question about whether he considered not making any loans because his friend had failed to show him any documentation, plaintiff could not "speak to his mindset" at the time. Plaintiff’s new claim does not create an issue of fact that would defeat summary judgment (see Madtes v Bovis Lend Lease LMB, Inc., 54 AD3d 630 [1st Dept 2008]). Finally, the undisputed evidence reveals that plaintiff was aware that there were risks associated with having a junior security position at the time he advanced the loan proceeds and negotiated his own remedy of enhanced interest. "
 

Sometimes events take place long after the attorney – client relationship has ended.  There are two arguments over whether the statute of limitations has run.  One is that the statute commences when the mistake is made and might be tolled by the continuous representation doctrine.  The other is that  the statute cannot commence to run until all the elements of a case exist, including damage.  Plaintiff loses either way in Adeli v Ballon Stoll Bader & Nadler, P.C.  2013 NY Slip Op 32993(U)  November 22, 2013  Sup Ct, NY County  Docket Number: 154685/12  Judge: Saliann Scarpulla.

"Adeli commenced this action in or about July 2012. In her complaint, Adeli alleged that on or about December 17, 2003, Richard Sachs, an investor in her company and holder of a defaulted loan which Adeli had personally guaranteed, sued both Adeli and her company for breach of personal guarantee and fraud ("Sachs action"). In or about early 2004, Adeli retained BSBN to represent her in the Sachs action, and in or about April 2005, the First Department granted Sachs judgment against Adeli. 

BSBN sought an interim stay while it appealed the First Department’s decision. Adeli alleged that BSBN advised her that Sachs’ lawyers would not abide by a stay, and would nevertheless, seek to enforce the judgment against her. According to Adeli, BSBN then advised her to move her assets to friends of hers to protect them from judgment; Adeli transferred her assets in or about early summer of2005, and subsequently filed for bankruptcy in or about early September 2005. The bankruptcy court granted her bankruptcy discharge on or about March 27, 2008, but, based on her transfer of assets in 2005, the Bankruptcy Panel of the Ninth Circuit Court of Appeals reversed that
bankruptcy discharge on or about March 24, 2009.

Adeli asserted a legal malpractice claim, alleging that because she followed BSBN’s advice and transferred her assets to her friends, she was denied a bankruptcy discharge and suffered monetary damages. BSBN now moves to dismiss the complaint. First, BSBN argues that the action should be dismissed because Adeli lacks legal capacity to bring suit. Second, BSBN
argues that the action should be dismissed because it was commenced beyond the applicable statute of limitations. Finally, BSBN argues that the action should be dismissed because Adeli’s complaint fails to establish the damages element for legal malpractice. In support of its motion, BSBN provides a court document relieving BSBN as attorney for Adeli’s company in 2006. BSBN also submits two affidavits from BSBN attorneys stating that the relationship between BSBN and Adeli ended in 2005.

Here, Adeli’s legal malpractice claim accrued in or about April 2005 when BSBN allegedly told her to transfer her assets so that they would be protected from judgment in the Sachs matter, and thus the statute of limitations for this claim expired in or about April 2008.

Contrary to Adeli’s assertions, the continuous representation doctrine does not apply here because her attorney-client relationship with BSBN ended in 2005. Her allegations of malpractice are predicated upon BSBN’s advice in the Sachs matter, and are unrelated to the bankruptcy proceeding, thus it cannot be said that BSBN continued to represent her after 2005. Even if the continuous representation doctrine did apply, it only tolled the statute of limitations until March 24, 2009, when the Ninth Circuit reversed the bankruptcy court’s decision and denied Adeli her bankruptcy discharge. Therefore, at the latest, the statute of limitations expired on March 24, 2012, months before Adeli filed this action in July 2012."

Attorney licensed in NY and California forms a partnership with a non-attorney to represent home owners under water across the country.  Around 2011 the attorney goes to Hawaii to change his name from Sean Alan Rutledge to Alan Frank.  During this period of time his legal practice in California is unraveling.

"Respondent’s disciplinary proceedings in California arose from his operation of United Law Group (ULG), through which he represented homeowners in California and other states who were in default on mortgage payments or in foreclosure proceedings. In July 2009, the Office of the Chief Trial Counsel of the State Bar of California (OCTC) served respondent with a Notice of Disciplinary Charges alleging seven violations of the California Rules of Professional Conduct, in connection with his representation of a particular client. Specifically, respondent was charged with, inter alia, intentionally, recklessly, or repeatedly failing to perform legal services with competence; settling a client’s claim or potential claim for malpractice without informing the client in writing that he may seek the advice of independent counsel and without giving the client a reasonable opportunity to do so; failing to refund unearned fees; and forming a partnership involving the practice of law with a nonlawyer. Respondent, through counsel, submitted an answer denying all charges.

On November 6, 2009, after a hearing in which respondent was represented by counsel, the State Bar Court issued a lengthy decision and order granting an application by the OCTC to have respondent involuntarily declared an inactive member of the bar. The State Bar Court found that there was clear and convincing evidence that respondent’s conduct posed a substantial threat of harm to his clients or the public and, absent the court’s intervention, respondent would continue to harm present and future clients. Additionally, the court determined it was likely that the State Bar would prevail on additional counts of misconduct raised by other clients’ complaints.

Shortly thereafter, respondent submitted his "Resignation With Charges Pending" on November 25, 2009, and according to the Committee, "fled" California and could not be located. The State Bar Court stayed the disciplinary matter pending a ruling on respondent’s resignation by the Supreme Court of California. By order of July 13, 2011, the Supreme Court of California [*3]accepted respondent’s resignation.

The Committee assumed this matter from the Appellate Division, Third Department’s Committee on Professional Standards, perhaps because the Committee has been investigating numerous complaints — many of which are similar in nature to those made in California — filed against respondent since 2009. The Third Department, noting that placement of respondent on involuntary inactive status was a "regulatory procedure" and not "discipline" under California law, denied its committee’s 2010 motion for reciprocal discipline without prejudice to the re-filing of charges. Nevertheless, we agree with the Committee that this Court is not bound by the Third Department’s prior order because it pre-dated the California Supreme Court’s order accepting respondent’s resignation.

Respondent was served with the Committee’s petition for reciprocal discipline at his registered address in California (by first-class and certified mail, return receipt requested), yet he has not submitted a response.

We find that reciprocal discipline is warranted in this case and, therefore, respondent should be disbarred. There are only three defenses to reciprocal discipline, enumerated at 22 NYCRR 603.3(c): (1) a lack of notice and opportunity to be heard in the foreign jurisdiction; (2) an infirmity of proof establishing the misconduct; and (3) that the misconduct at issue in the foreign jurisdiction would not constitute misconduct in New York. Notwithstanding respondent’s failure to raise any of these defenses, none are available here.

Respondent received notice of the allegations against him in the charges filed by the OCTC, and he was afforded the opportunity to be heard. Represented by counsel, he answered the charges, unsuccessfully contested the OCTC’s application to have him declared involuntarily inactive, and then voluntarily submitted his resignation in California. Furthermore, there was no infirmity of proof establishing respondent’s misconduct. Indeed, the State Bar Court’s order placing him on involuntary inactive status was amply supported by documentary evidence.

In addition, the charges under which respondent resigned in California would likewise constitute misconduct under both New York’s former Code of Professional Responsibility and the current Rules of Professional Conduct (rules) (22 NYCRR 1200.0) (see DR 6-101(a)(2) (22 NYCRR 1200.30[a][2]) [inadequate preparation] and rule 1.1 (a) [failure to provide competent representation]; DR 6-101(a)(3) (22 NYCRR 1200.30[a][3]) and rule 1.3(b) [neglect]; rule 1.3(a) [failure to act with reasonable diligence and promptness]; DR 6-102(a) (22 NYCRR 1200.31[a]) and rule 1.8(h) [improper agreement to settle a client claim, or potential claim, for legal malpractice]; DR 2-106(a) (22 NYCRR 1200.11[a]), DR 2-110(a)(3) (22 NYCRR 1200.15[a][3]), rule 1.5(a) and rule 1.16(e) [failure to promptly refund unearned fees]; DR 3-102(a) (22 NYCRR 1200.17[a]) and rule 5.4(b) [improper partnership with a nonlawyer]).[FN2]

Thus, the only remaining issue is the appropriate sanction to be imposed. "
 

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]). "