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. "

In a professional malpractice case, be it legal malpractice or accounting malpractice, plaintiff must be able to show proximate cause.  Might a firm be liable for damages based upon issues that arose before its retention?  It might be, but in Cannonball Fund, Ltd. v Marcum & Kliegman, LLP
2013 NY Slip Op 32891(U)  November 14, 2013  Supreme Court, New York County  Docket Number: 651674/2011  Judge: Bernard J. Fried it was not.

"Plaintiffs bring this action against Marcum & Kliegman, LLP ("M&K"), alleging professional malpractice stemming from M&K’s engagement as an auditor of Dutchess Private Equities Fund, L.P. and Dutchess Private Equities Cayman Fund, Ltd. (the "Funds") in 2008. Defendant M&K moves to dismiss the complaint pursuant to CPLR 321 l(a)(l) and (7).

Briefly, the allegations giving rise to this action are as follows. According to the Complaint, the Funds were hedge funds with a similar stated strategy of investing in companies with positive cash flow and in fully secured or liquid securities. (Complaint paras 27, 36). The Funds’ common investment manager was Dutchess Capital Management LLC. (Complaint para 16). Between 2004 and 2007, Plaintiffs invested over $13 million in the Funds, with the bulk of the investments made in 2006 and 2007. (Complaint para 6-11).

Plaintiffs allege that they suffered damages as a result of M&K’s negligence.(Complaint if 238). Plaintiffs allege that had M&K performed a proper audit, or, I
alternatively, refused to certify the Funds’ financial statements, then Plaintiffs would have been alerted to the Funds’ problems. (Complaint if 238). Plaintiffs allege that, armed with this  knowledge, they could have made an informed decision as to whether they should remain invested in the Funds or put in requests for "gated redemptions, in which investors could request redemption, subject [to] an amount and timing to be determined by" the Funds. (Complaint if 60). Alternatively, Plaintiffs allege that they could have removed the Funds’ management or changed the Funds’ investment strategy. (Complaint if 238). M&K moves to dismiss the complaint pursuant to CPLR 3211 (a)( 1) and (7). M&K argues that the allegedly negligent Audit Opinion could not have proximately caused the Plaintiffs’ injuries. The Audit Opinion was issued on June 16, 2008. (Complaint if 60). However, all of the redemptions from the Funds were suspended in February 2008 and since that time the Plaintiffs were effectively prohibited from withdrawing their investments. (Complaint , 174). Plaintiffs have demanded full redemption from the Funds, and their
demands have been denied. (Complaint , 183). Thus, M&K argues that even ifthe Audit Opinion had disclosed different information, the resulting losses to the Plaintiffs would have been the same.

However, any new management hired after the Audit Opinion was issued could not have done anything to rectify the losses incurred by the Funds’ prior to the time the Audit Opinion was issued in June 2008. For example, in April 2008, two months prior to the issuance of the M&K Audit Opinion, the Funds reported a 33% loss, partially due to the decline in value of the Funds’ investment in Challenger. (Complaint ,-i 177). Any new management hired after June 2008 could not have prevented this loss.

Accordingly, Plaintiffs have failed to allege that M&K’s negligence was the proximate cause of  laintiffs damages and thus the Complaint fails to state a cause of action for accounting malpractice.

We believe that legal malpractice cases are more harshly reviewed, and held up to a higher standard, almost always in the "but for" portion of the case.  Engelke v Brown Rudnick Berlack Israels LLP   2013 NY Slip Op 07419   Decided on November 12, 2013   Appellate Division, First Department is no exception.  Plaintiff can demonstrate a conflict, but cannot show proximity.  Plaintiff can claim a conflict, but it was already "extinguished."  Plaintiff can show spoliation of electronic evidence, but, hey…he had the material anyway.
 

"The motion court properly dismissed the claim of legal malpractice. Even if plaintiff established the requisite conflict based on the existence of a prior attorney-client relationship, which relationship the parties do not dispute, plaintiff failed to establish that he incurred any damages attributable to defendant’s breach of duty (Kodsi v Gee, 100 AD3d 437, 438 [1st Dept 2012]; Leder v Spiegel, 31 AD3d 266, 268 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008]; Estate of Steinberg v Harmon, 259 AD2d 318 [1st Dept 1999]). Plaintiff argues that, by exclusion from the settlement between Pinnacle and Athle-Tech, he was forced to incur more than $1 million in attorney’s fees in defending against the second Athle-Tech litigation. However, plaintiff cannot show with sufficient certainty that he would have been able to settle with Athle-Tech and thereby have avoided or reduced his costs. Nor can any alleged damages be attributed to a breach of duty of loyalty based on defendant’s prior representation of plaintiff in connection with the Montage SPA. By the time the settlement was made final, plaintiff’s indemnification obligations under the Montage SPA were extinguished.

The court also properly denied plaintiff’s motion to strike defendant’s answer based on the destruction of electronic evidence. Plaintiff had all of the disputed documents and cannot claim any prejudice in pursuing his claim (see Suazo v Linden Plaza Assoc., L.P., 102 AD3d 570, 571 [1st Dept 2013]; McMahon v Ford Motor Co., 34 AD3d 263, 264 [1st Dept 2006]). Plaintiff further fails to establish that any failure to produce the emails was willful (CPLR 3126)."
 

We’ve always thought that a retainer agreement between an attorney and a client had some meaning, real meaning.  Emery Celli Brinckerhoff & Abady, LLP v Rose   2013 NY Slip Op 07428 Decided on November 12, 2013  Appellate Division, First Department  disabuses us of that notion, and has two other interesting things about it.  It’s the first appeal we’ve seen from the Law office of Richard Lerner, long an appellate star with Wilson Elser.  The decision also sets forth that an "account stated" cannot be successful if the fees claimed are "intertwined" with the asserted malpractice.
 

"Plaintiff established its entitlement to judgment as a matter of law on its claim for an account stated "by showing that its client received, retained without objection, and partially paid invoices without protest" (Scheichet & Davis, P.C. v Nohavicka, 93 AD3d 478, 478 [1st Dept 2012] [internal quotation marks omitted]; see Miller v Nadler, 60 AD3d 499 [1st Dept 2009]).

Defendant’s argument that plaintiff failed to make a prima facie case because it submitted no expert opinion that its retainer agreement and the legal services it rendered were fair and reasonable is unpreserved. Were we to reach the merits, we would find it unavailing. It is not part of a plaintiff’s prima facie case on a claim for an account stated to show the reasonableness of the retainer agreement or its legal services (see e.g. Scheichet & Davis. P.C. at 478; Miller at 499). Indeed, in Miller, we found that "[p]laintiff’s failure to comply with the rules on retainer agreements … does not preclude it from suing to recover legal fees for the services it provided" (Miller at 500), and "[i]n the context of an account stated pertaining to legal fees, a firm does not have to establish the reasonableness of its fee" (Lapidus & Assoc., LLP v Elizabeth St., Inc., 92 AD3d 405, 405-406 [1st Dept 2012] [internal quotation marks omitted]).

If a defendant client’s legal malpractice claim is intertwined with a plaintiff law firm’s claim for legal fees, the plaintiff will not be entitled to summary judgment on its account stated claim. However, if the malpractice claim is not so intertwined, courts are not precluded from [*2]granting the plaintiff summary judgment (see Morrison Cohen Singer & Weinstein v Ackerman, 280 AD2d 355, 356 [1st Dept 2001]).

Here, it was not an improvident exercise of the motion court’s discretion to rule, in effect, that defendant had waived his right to raise malpractice by not filing an amended answer by the deadline set by the court (see Quintanna v Rogers, 306 AD2d 167, 168 [1st Dept 2003]). Furthermore, the record shows that plaintiff performed a great deal of work that was unrelated to the purported malpractice.

People question whether "they" like us?  Do "they" treat us fairly?  We wonder whether legal malpractice is treated differently than all other law suits? Fielding v Kupferman, 2013 NY Slip Op 02008 Appellate Division, First Department raises the question once again. Compare this case to a garden or varietal slip and fall. Example: plaintiff trips over a defective step and breaks his leg. Would the Appellate Division then discuss whether breaking a bone was better than what might have happened, were plaintiff to fall down an entire flight of stairs and break his neck? We believe that it would not.
 

Nevertheless, this is what happens regularly in a legal malpractice case. Take Fielding as an example. "Defendants established their entitlement to judgment as a matter of law in this action alleging legal malpractice. Defendants submitted evidence showing that the divorce settlement, in which plaintiff achieved his goal of retaining the parties’ marital residence, was advantageous to plaintiff, and resulted in his receiving consideration that more than compensated him for the allegedly unforeseen tax consequences of liquidating his Keogh account (see e.g. Kluczka v Lecci, 63 AD3d 796, 798 [2d Dept 2009]). Defendants also submitted evidence demonstrating that the subject tax consequences were discussed with plaintiff during the course of the settlement negotiations.

In opposition, plaintiff failed to raise a triable issue of fact. His argument that if he had been properly advised on the tax consequences, he would have reached a better settlement or outcome after trial, is speculative (see Klucka at 798). Plaintiff failed to take into account the benefits he received in the actual settlement, including buying out his wife’s share of the marital residence based on an outdated appraisal that assigned a value that was significantly lower than the actual value at the time the agreement was executed. Moreover, plaintiff failed to provide proof of any ascertainable actual damages sustained as a result of the alleged negligence (see Lavanant v General Acc. Ins. Co. of Am., 212 AD2d 450 [1st Dept 1995]). [*2]

Under the circumstances presented, plaintiff’s claim for disgorgement of legal fees already paid was properly dismissed."

This legal malpractice case started around 1991.  It’s been up to the AD 4th Department, back down to Supreme Court and now is back at the AD.  Here is their recitation.  We love the attorney masquerading as a doctor and a Vet reviewing human medical records. From:  Dischiavi v Calli
2013 NY Slip Op 07289   Released on November 8, 2013   Appellate Division, Fourth Department
"Memorandum: Plaintiffs commenced this action seeking damages for, inter alia, breach of contract, legal malpractice and fraud, alleging, among other things, that defendants failed to commence timely legal actions to recover damages arising from injuries sustained by Gary M. Dischiavi (plaintiff). Plaintiffs allege in their complaint that plaintiff was injured as the result of an accident that occurred while he was on duty as a City of Utica police officer in 1991, and that he was further injured as a result of his ensuing medical treatment. Although plaintiffs retained defendant law firm of Calli, Kowalczyk, Tolles, Deery and Soja (CKTDS) to represent them with respect to possible claims arising from those injuries, no action was ever instituted. Plaintiffs further allege that defendants purported to have plaintiff examined by an expert physician but had a lawyer examine him instead, purported to have other expert physicians review plaintiff’s medical records but had a veterinarian perform that review, misrepresented that they had commenced a personal injury action on plaintiffs’ behalf, and created a fake settlement agreement for that "action." This case was previously before us on appeal, and we determined, inter alia, that Supreme Court erred in granting the motions and cross motion of various defendants for summary judgment dismissing the complaint in its entirety against them (Dischiavi v Calli [appeal No. 2], 68 AD3d 1691, 1692-1694). "

To the extent that defendants sought summary judgment dismissing the first and second causes of action on the ground that the applicable three-year statute of limitations had expired prior to the commencement of this action (see CPLR 214 [6]; see generally Zorn v Gilbert, 8 NY3d 933, 933-934), we conclude that they met their initial burden on their respective motions. We further conclude, however, that plaintiffs raised a triable issue of fact whether the doctrine of continuous representation tolled the statute of limitations (see generally Shumsky v Eisenstein, 96 NY2d 164, 167-168). The court therefore properly determined that defendants were not entitled to the relief sought based on the statute of limitations.

We agree with all defendants that the court erred in denying those parts of their motions seeking summary judgment dismissing the third cause of action, for fraud, against them. Thus, we modify the order accordingly. "The elements of a cause of action for fraud require a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff[s] and damages" (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559; see Ross v Louise Wise Servs., Inc., 8 NY3d 478, 488; Lama Holding Co. v Smith Barney, 88 NY2d 413, 421). "Where, as here, a fraud [cause of action] is asserted in connection with charges of professional malpractice, it is sustainable only to the extent that it is premised upon one or more affirmative, intentional misrepresentations . . . which have caused additional damages, separate and distinct from those generated by the alleged malpractice" (White of Lake George v Bell, 251 AD2d 777, 778, lv dismissed 92 NY2d 947; see Tasseff v Nussbaumer & Clarke, 298 AD2d 877, 878; see generally Wells Fargo Bank, N.A. v Zahran, 100 AD3d 1549, 1550, lv denied 20 NY3d 861). We agree with defendants that they met their initial burden on their motions by establishing that plaintiffs did not sustain any additional damages as a result of the alleged fraud, and plaintiffs failed to raise a triable issue of fact (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324-325). Contrary to plaintiffs’ contention, this Court’s prior order denying those parts of the respective defendants’ initial motions and cross motions "pursuant to CPLR 3211 (a) (7) to dismiss the complaint, which w[ere] addressed to the sufficiency of the pleadings, did not establish the law of the case for the purpose of their subsequent motion[s] pursuant to CPLR 3212 for summary judgment, which [were] addressed to the sufficiency of the evidence" (Thompson v Lamprecht Transp., 39 AD3d 846, 847).
 

On their cross appeal, plaintiffs contend that the court erred in dismissing the first and second causes of action insofar as they are premised upon defendants’ failure to commence a personal injury action. The court granted defendants’ motions for summary judgment dismissing those causes of action to that extent based on its determination that the statute of limitations therefor had expired before plaintiffs retained any of the defendants. Plaintiffs now contend that the statute of limitations for those causes of action was extended several times by amendments to General Municipal Law § 205-e (2), which resulted in the revival of plaintiffs’ causes of action until a time after they first retained CKTDS. That contention is not properly before us because it is raised for the first time on appeal, and "[a]n issue may not be raised for the first time on appeal . . . where it could have been obviated or cured by factual showings or legal countersteps’ in the trial court" (Oram v Capone, 206 AD2d 839, 840, quoting Telaro v Telaro, 25 NY2d 433, 439, rearg denied 26 NY2d 751). The revival statute on which plaintiffs rely applies to causes of action that "would have been actionable on or after January [1, 1987] had this section been effective" (§ 205-e [2]), and we conclude that defendants could have made a factual showing that plaintiffs’ first and second causes of action insofar as they are premised upon defendants’ failure to commence a personal injury action were not actionable because they were precluded by plaintiff’s receipt of benefits pursuant to General Municipal Law § 207-c. "

Case is marked "disposed."  This can happen when there is a failure to appear in court, when a motion goes unanswered, or when some other event transpires and the court routinely "disposes" of a case administratively.  It can also happen after a contested motion is decided.  How Plaintiff’s case was disposed of in Champlin v Pellegrin 2013 NY Slip Op 07257  Decided on November 7, 2013  Appellate Division, First Department we don’t know.
 

What we do know, from the decision, is that none of the suggested reasons why the case was still timely worked.  "Contrary to plaintiff’s assertions, the claim was not tolled by the continuous representation doctrine. Generally, tolling under the continuous representation doctrine "end[s] once the client is informed or otherwise put on notice of the attorney’s withdrawal from representation" (Shumsky v Eisenstein, 96 NY2d 164, 171 [2001]). The parties do not dispute that there were no communications between them from 1994 until 2011, when plaintiff purported to discharge defendant from representing him. The more than 16-year lapse in communications from defendant was sufficient to constitute reasonable notice to plaintiff that defendant was no longer representing him.

Furthermore, as there was no "clear indicia of an ongoing, continuous, developing, and dependent relationship between [plaintiff and defendant]" (Pittelli v Schulman, 128 AD2d 600, 601 [2d Dept 1987] [internal quotation marks omitted]), or a "mutual understanding of the need for further representation on the specific subject matter[s] underlying the malpractice claim" [*2](McCoy v Feinman, 99 NY2d 295, 306 [2002]), we find that plaintiff’s reliance on CPLR 321(b) is misplaced. "

Client has lost millions and goes to attorney.  Attorney arranges for a private investigator to work on the case.  So far so good?  The investigator’s contract called for payment of $ 350,000 plus 25% on success in locating assets.  Clients thought this too much.  Can a complaint for fraud adequately be stated on these facts?

In Moche v Srour  2013 NY Slip Op 32740(U)  October 26, 2013  Sup Ct, New York County
Docket Number: 157764/2012  Judge: Eileen A. Rakower tells us that the answer is yes.

"This action arises from the retention of a private investigator on Plaintiffs’ behalf by their attorney. In this action, plaintiffs Charles M. Moche and Ezra S. Moche (collectively, "Plaintiffs"), residents of New Jersey, contend they "were individuals who were victims of a real estate fraud scheme which caused them to lose millions of dollars." Plaintiffs allege that they thereafter "retained Deborah R. Srour, Esq. Srour and the law firm of Cox, Padmore Skolnick & Skarachy LLC to help regain the money they had lost." Plaintiffs further allege that Srour thereafter "took undue advantage of plaintiffs’ desperate situation because of their significant losses and entered into an agreement with defendant Patrol H.Y. Security (2007) Ltd. (Patrol) and Chaim Sharvit (Sharvit) purportedly obligating plaintiffs [sic] to pay Patrol $350,00 caused plaintiffs [sic] to give $225,000 to Patrol."
Plaintiffs allege, "Sharvit provided almost no services or work product to plaintiffs yet retained plaintiffs’ $225,000.00 and demanded the additional $125,000 purportedly due under Srour’s agreement." Plaintiffs further allege that "[u]pon information and belief, Sharvit shared those funds with Srour and/or Cox Padmore while Srour in fact during said period in question was purportedly representing plaintiff and had a fiduciary obligation to plaintiff."

"Here, accepting the allegations as true that Srour "at the time of entering into the agreement either acted as Patrol’s attorney and/or partner, and failed to disclose same to plaintiffs," "Sour also concealed that under the agreement … , Sharvit was not obligated to do anything," and "Upon information and belief, Sharvit shared those funds with Srour and/or Cox Padmore … ," Plaintiffs have stated claims for fraud and fraud in the inducement as against Srour and Cox Padmore.
 

The second cause of action of the Amended Complaint is for unjust enrichment. "[T]o prevail on a claim of unjust enrichment, "a party must show that (1) the other party was enriched, (2) at that party’s expense, and (3) that ‘it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered."’ (Cruz v. McAneney, 31 A.D.3d 54, 59 [2006]). "The existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter." Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y. 2d 382, 399 [1987]. "[A] party is not precluded from proceeding on both breach of contract and quasi contract theories where there is a bona fide dispute as to the existence of a contract or where the contract does not cover the dispute in issue." Curtis Props. Corp. v. Greif Cos., 236 A.D.2d 237, 239 (1st Dep’t 1997). A bona fide dispute exists where a defendant alleges unconscionability or fraud. (Id.). Here, accepting the allegations that Plaintiffs paid Sharvit and Patrol $225,000 for services that were not adequately invoiced or rendered, that Srour and Cox Padmore shared those funds, and the contract entered by Srour with Patrol and Sharvit on Plaintiffs’ behalf was unconscionable, Plaintiffs have stated a claim for unjust enrichment.

The third cause of action of the Amended Complaint is for breach of fiduciary duty. The elements of a cause of action for breach of fiduciary duty include (1) the existence of a fiduciary relationship; (2) misconduct; and (3) damages caused by the misconduct. (Armentano v. Paraco Gas Corp., 90 AD3d 683, 935 NYS2d 304 [2nd Dept 2011]). Based on the allegations that Srour, as Plaintiffs’ attorney, "prepared the agreement with Sharvit to the benefit of Sharvit and the detriment of plaintiffs" and thereafter shared in those funds that Plaintiffs paid to Sharvit without Plaintiffs’ knowledge," Plaintiffs have stated a claim for breach of fiduciary as against Srour and Cox Padmore. The fourth cause of action of the Amended Complaint is for legal malpractice
stemming from Plaintiffs’ recommendation of Patrol and Sharvit. In order to prevail against an attorney on a legal malpractice claim, a plaintiff must first prove that the  attorney was negligent, that such negligence was the proximate cause of the loss sustained, and that actual damages resulted therefrom (see Tydings v. Greenfield, Stein& Senior, 2007 NY Slip Op 6734, *2 [1st Dept. 2007]). An attorney does not, except by express agreement, guarantee results. Weinberg v. Needelman, 226 A.D. 3,4-5 [1st Dept 1929], aff’d, 252 N.Y. 622 [1930]. "[A]n attorney is not held to the rule of infallibility and is not liable for an honest mistake of judgment, where the proper course is open to reasonable doubt. Thus, ‘selection of one among several reasonable courses of action does not constitute malpractice."’ Bernstein v. Oppenheim & Co.,  P.C., 160 A.D.2d 428, 430 [151 Dept 1990]. Here, Plaintiffs’ legal malpractice claim is based on Srour’s recommendation which they followed in the retention of the private investigator. This allegation alone is insufficient to make out a legal malpractice claim."