Client wants to open a business.  Client goes to attorney to make sure that the store she is building in NYC will meet all codes.  Attorney tells her no employee bathroom is necessary.  The City says it is necessary.  She loses the store as a result.  Legal Malpractice?

In Cavlak v Helbraun;  2013 NY Slip Op 32704(U);  October 25, 2013;  Supreme Court, New York County;  Docket Number: 103896/2012;  Judge: Richard F. Braun says that the legal malpractice claim remains, while all other causes of action are dismissed.

"This is an action sounding in negligence, legal malpractice, violation of Judiciary Law§ 487, breach of fiduciary duty, and breach of contract, all arising out of the review by defendant David
Helbraun (defendant) of plaintiffs lease for plaintiffs storefront take-out window bakery/ cafe and
giving of advice in relation thereto. Plaintiff contends that she was not properly advised by defendant of the need for an available employee bathroom under the New York City Health Code. After receiving a number of citations for New York City Health Code violations, including one for the lack of an available employee bathroom, plaintiff maintains that she was forced to end the operation of her business, which caused her to lose her investment in the business. Defendant contends that the complaint should be dismissed, pursuant to CPLR 3211 (a) (1) and (7), based on the documentary evidence that he submitted and because plaintiff has failed to state a cause of action.·"

"Plaintiff has stated a cause of action for legal malpractice sufficient to withstand a motion to dismiss, insofar as she alleges that she was not properly apprised of the implications of a lack of an employee bathroom for the premises, which ultimately caused her to lose her business and her investment therein. Plaintiff effectively pleads that she was erroneously advised that a bathroom for employees was not required. Defendant contends that under then NYCHC § 81.29 (a) (now modified in § 81.22 [a]) a bathroom for employee use need not be in the actual store, but that some facilities must be available for employee use. Even assuming that bathrooms in nearby
restaurants could serve that function, bathrooms in those restaurants were not available at the time
of the New York City Department of Health inspection because the restaurants were not open and
thus seemingly would not ordinarily be available during plaintiffs prime morning hours. Had
plaintiff not been advised that a bathroom for employees was not required, as alleged, she would not have faced this dilemma. While defendant asserts that the violation could have been challenged and cured, that would involve a determination on proximate cause beyond the face of the pleading (cf Bernardi v Spyratos, 79 AD3d 684, 688 [2nd Dept 2010] [where the determination on causation was on a motion for summary judgment]). Indeed, plaintiff maintains that she obtained documents showing that she was authorized to use the bathroom in the restaurant next door and presented them at a hearing, apparently to no avail.

"Failure to exhaust administrative remedies is not a defense to a legal malpractice claim, but rather generally bars a judicial challenge to an administrative action (see Watergate II Apts. v Buffalo Sewer Auth., 46 NY2d 52, 57 [1978]). While a failure to exhaust administrative remedies could be a factor in determining whether an attorney’s negligence was a proximate cause of a plaintiffs damages (cf Catuzza v Rodriguez, 93 AD3d 1214, 1214-1215 [4th Dept 2012] [the defendant attorneys in a legal malpractice action failed to establish as a matter of law that the plaintiff employee’s complaint against the county would have been dismissed on the ground that he failed to exhaust his administrative remedies]), that too goes beyond the issue of the sufficiency of the pleading."

In a most ironic turnabout. a law firm is sued for not producing bills.  Often enough, it is claimed that legal malpractice cases start up when a law firm actually bills the client.  Not here, in TufAmerica, Inc. v Warshavsky  2013 NY Slip Op 32690(U)  October 24, 2013  Sup Ct, New York County  Docket Number: 157795/12  Judge: Anil C. Singh.   Plaintiff loses here on the statute of limitations.  Here is the back story:

"Plaintiff TufAmerica, Inc. ("TufAmerica") retained defendant Oren Warshavsky ("Warshavsky"), a New York attorney, to provide legal services beginning in August 1999 in connection with a lawsuit brought by Wardell Quezergue and Joseph Johnson against TufAmerica in federal district court in
New Orleans, Louisiana. Warshavsky also represented TufAmerica in connection with a second suit brought against TufAmerica by the same two plaintiffs in 2002, this one in state court in Louisiana. Warshavsky was admitted pro hac vice in connection with both lawsuits, and entered an appearance as counsel for TufAmerica in both lawsuits. In the federal court suit, the court in a December 11, 2000, decision awarded summary judgment to TufAmerica against another defendant, Joe Jones, for copyright infringement, and awarded TufAmerica its attorneys’ fees as to the claims against Joe Jones only."

When the time came, and TufAmerica had to produce bills so that they could be reimbursed, the bills could not be found.

"On May 31, 2006, plaintiff’s local counsel in Louisiana, Dino Gankendorff, sent the following e-mail to Warshavsky:
Oren:
I am still tring [sic.] to get in touch with you on the motion to compel.
I have called you everyday for almost two weeks now and have not
heard back. We have a hearing on this Friday, June 2, and face a
serious problem. In reviewing the file, we have already agreed to
produce certain documents, see your letter dated June 17, 2005.
Donald Hyatt reports that he never received these docs. nor has our
office. Frankly, I don’t see how I can go to court on Friday and
objection [sic.] to this production when we have already agreed to
produce these documents. In short, I need you to overnight me these
documents referenced in your letter dated June 17, 2006 today so we
can produce them at the hearing on Friday or I feel certain that the
Judge will cast us with attorney’s fees and sanctions. Please let me
hear from you immediately. Thanks  dino
(Pergament Affirmation, exhibit A).
 

"Later that day, Warshavsky replied:

I do not have any documents, and if Tuff City does not have the bills
then there is not much that can be done – sometimes there are no
documents found, and we can only give circumstantial evidence.
Essentially, they want back up data – sorry, it is gone. And the
company that generated the bills, Cobrin & Gittes, ceased operation
in April 2002."

The Surrogate of New York County has undoubtedly been presented with unique cases and big estates, but Matter of Eisenberg  2013 NY Slip Op 51713(U)  Decided on October 15, 2013
Sur Ct, New York County  Mella, J. presents some unusual issues.

  Start with an attorney who boldly proclaims her lack of knowledge of wills, trusts and estates law (""Further, I am not an experienced attorney relating to trust and estate matters given its challenges, whereby I am gaining competency as we go because I am required to do so on my own. ""With my full disclosure however, I do want to assure you that I can manage all such issues and its [sic] complexity as that is my specialty overall in practicing law where my skills are unique as a lawyer.")

End with the attorney seeing incompetency everywhere: "  "the record speaks to [sic] itself as to how much Petitioners have worked to make all parties on the record and this Court to understand the law and its duties for proper trust administration. In fact, it ought to be clear to this Court that it is Petitioners who have the greatest understanding of the laws of Trusts and Estates over all other attorneys assigned to these matters. The record speaks for itself that it is this Court who has no understanding of the record and the law over the course these [sic] entire matters . . . If this Court is not prepared to understand each and every legal detail and its implications being said and executed [sic], then this Court should not have ruled upon it to cause more harm. . . No staff has been assigned to understand the record and legal documents that are being ruled on, except for a single court attorney who does not possess enough knowledge to help resolve these matters effectively. . . Yet, Judge Glen ruled in her limited [*14]understanding . . ."
 

Continue to a claim in US District Court which is dismissed in its entirety’ "Finally, in January 2011, Law Offices of Seema Verma PLLC filed a complaint in the United States District Court for the Southern District of New York, alleging eleven claims against defendants Citigroup, Inc., et al. The March 23, 2011 order of Judge Paul A. Crotty, dismissing the complaint, provides:

"The allegations . . . suggest that Citigroup and related entities have billions of dollars of clients’ assets and they exercise control over law firms, which are only too anxious to cooperate with the bank. The Complaint suggests that the bank controls and directs the New York Attorney General’s office; [sic] and improperly influences the New York County Surrogate’s Court. Finally, the Complaint alleges that as a result of Citigroup’s unlawful practices and conflict of interest relationships, Plaintiff lost her client and has suffered substantial financial losses and hardships (i.e., lost legal fees).

* * * * *
"The gravamen of the Complaint deals with certain actions involving a trust in a litigated Surrogate’s Court proceeding. Plaintiff believes that a large trust affects interstate commerce all by itself. This is quite wrong. While it is not clear how any facet of a proceeding pending before the Surrogate’s Court can be the subject of a monopoly claim under Sherman Act §2, the Complaint is barren of any allegation of a monopoly or any attempt to monopolize any part of the trade or commerce among the several states. . .

* * * * *
"Whatever else may be said concerning Plaintiff’s claim that she is entitled to her legal fees for representing a party in a contested Surrogate’s Court proceeding, it does not amount to a plausible anti-trust claim, Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).
"When the Court advised Plaintiff that she had failed to state a claim under the Sherman Act or the Clayton Act, and that if Defendants were forced to make a motion to dismiss for failure to state a claim, the Court would permit a motion for sanctions, the Plaintiff decided to withdraw her Complaint."
 

In the end the attorney is treated quite well by Surrogate’s Court.  "Throughout these proceedings, Seema Verma, Esq., has demonstrated a clear want of understanding. The imposition of sanctions, in the instant case, would advance neither the [*15]punitive nor prophylactic purpose of sanctions.[FN19] Therefore, the court declines to impose costs and sanctions and so denies the motion of Citibank.

V.Ms. Hamada’s Motion for a Determination of the Attorney’s Lien of the Law Officesof Seema Verma PLLC:

Ms. Hamada has moved for a determination of the value of Verma’s attorney’s lien, so that Citibank, as trustee of the revocable trust, may make distributions.[FN20]

Even if the court were to assume, arguendo, that Verma had a right to a

charging lien pursuant to Judiciary Law § 475, upon her discharge by Ms. Hamada, Verma was limited, at most, to a fee based on quantum meruit for the reasonable value of its services (see Campagnola v Mulholland, 76 NY2d 38, 43-44 [1990]). The court having determined Verma’s SCPA 2110 petition, Ms. Hamada’s motion is moot, and, accordingly, it is dismissed. "

Plaintiff retains attorney to arrange for a tax free gift to her son.  The IRS cutoff for tax free gift v. taxable gift is $1 million.  She did not have a million in cash.  However, she owned a valuable building in Manhattan. So, the law firm selected a Real Estate appraiser and arranged for the transaction.  Problem?  The IRS challenged, and Plaintiff had to pay $ 180,000 in additional tax.  Was the law firm responsible for the mistake of the RE appraiser, or was the appraiser an independent contractor for whom they were not responsible?

Put another way, is this a Kleeman v. Rhinegold problem or not?  There the attorney was responsible for negligent process service.  Here, in Goldstein v Stern Keiser & Panken, LLC
2013 NY Slip Op 32666(U)  October 18, 2013  Supreme Court, New York County  Docket Number: 157177/12  Judge Joan A. Madden decided that the attorneys were not responsible.

From Kleeman : "The most often cited formulation is that a duty will be deemed nondelegable when "`the responsibility is so important to the community that the employer should not be permitted to transfer it to another’" (id., at 119, quoting Prosser and Keeton, op. cit., at 512). This flexible formula recognizes that the "privilege to farm out [work] has its limits" and that those limits are best defined by reference to the gravity of the public policies that are implicated (5 Harper, James and Gray, Torts § 26.11, at 73 [2d ed]; see also, id., at 76-77).

Viewed in the light of these principles, the duty at issue here — that owed by an attorney to his or her client to exercise care in the service of process — fits squarely and neatly within the category of obligations that the law regards as "nondelegable." Manifestly, when an individual retains an attorney to commence an action, timely and accurate service of process is an integral part of the task that the attorney undertakes (see, 5 Harper, James and Gray, op. cit., at 76-77; cf., Feliberty v Damon, supra, at 120). Furthermore, proper service of process is a particularly critical component of a lawyer’s over-all responsibility for commencing a client’s lawsuit, since a mistake or oversight in this area can deprive the client of his or her day in court regardless of how meritorious the client’s claim may be. Given the central importance of this duty, our State’s attorneys cannot be allowed to evade responsibility for its careful performance by the simple expedient of "farming out" the task to independent contractors.

The existence of an extensive and comprehensive Code of Professional Responsibility that governs the obligations of attorneys to their clients reinforces our conclusion. Under the Code, a lawyer may not "seek, by contract or other means, to 276*276 limit prospectively the lawyer’s individual liability to a client for malpractice" (DR 6-102, 22 NYCRR 1200.31). Moreover, the Code forbids lawyers from "[n]eglect[ing] legal matter[s] entrusted to [them]" (DR 6-101 [A] [3], 22 NYCRR 1200.30 [a] [3]), enjoins them to assist in "secur[ing] and protect[ing] available legal rights" (EC 7-1) and requires them to represent their clients as zealously as the "bounds of the law" permit (Canon 7). All of the latter ethical and disciplinary considerations are implicated when a client’s lawsuit is undermined — or even defeated — as a consequence of carelessness in the service of process.

Our conclusion is also supported by the perceptions of the lay public and the average client, who may reasonably assume that all of the tasks associated with the commencement of an action, including its formal initiation through service of   process, will be performed either by the attorney or someone acting under the attorney’s direction. While it may be a common practice among attorneys to retain outside agencies like Fischer’s to assist them in effecting service, that custom is not necessarily one of which the general public is aware. Even where a client is expressly made aware that a process serving agency will be retained, it is unlikely that the client will understand or appreciate that the process serving agency’s legal status as an "independent contractor" could render the retained attorney immune from liability for the agency’s negligence. Under established principles, the client’s reasonable expectations and beliefs about who will render a particular service are a significant factor in identifying duties that should be deemed to be "nondelegable" (see, Restatement, op. cit., § 429; see also, Feliberty v Damon, supra, at 120).

Finally, we conclude that permitting lawyers to transfer their duty of care to process servers would be contrary to sound public policy. In this State, licensed attorneys have been granted an exclusive franchise to practice law, with the understanding that they have both the specialized knowledge and the character required to represent clients in a competent, diligent and careful manner. Under this system, lawyers are authorized to hold themselves out as being uniquely qualified to manage their clients’ legal affairs, a task that unquestionably includes the commencement of lawsuits. While it is true that the State also licenses nonlawyers to perform certain discrete, law-related tasks such as service of process (see, General Business Law art 8), the existence of that licensing system certainly does not evince a governmental intent to 277*277 relieve attorneys of the responsibilities implicit in their franchise."

From Goldstein:   In the present matter, where there is no allegation that SKP was negligent in choosing JDM, where there is no non-delagable duty, or dangerous condition, the attorney defendants are not liable for JDM’s alleged negligence iri preparing the report.  Plaintiff has made no allegations which would establish that SKP I should be held vicariously liable for JDM’s  mistake. There is no showing that the attorney defendants’ negligence was the proximate cause of plaintiff’s injuries, or that "but foru their handling of any duty owed to plaintiff, plaintiff would not have
been injured. Consequently, the attorney defendants’ motion to dismiss the complaint is granted."
‘

Plaintiffs inIsaacson v Law Off. of Norman L. Horowitz, LLC    2013 NY Slip Op 32598(U) October 18, 2013;  Supreme Court, New York County;  Docket Number: 112174/2010;  Judge: Joan A. Madden were commercial tennants who became disenchanged with the building after a big burglary.  They had a ‘good guy" guarantee, and attempted to terminate their lease without penalty.  This attempt did not turn out well.  However, Supreme Court held that they could not prove exactly how the landlord would have handled the case, and could not show ascertainable damages.
 

"Upon instruction from defendants, plaintiffs sent the landlord written notice that they were vacating the premises as of July 31, 2009, with a line for the landord to countersign.  The landlord refused to do so, notifying plaintiffs of this fact in a letter to defendants, where the landlord also declined to accept surrender of the lease, and instructed defendants that the landlord would hold plaintiffs to their rent obligations.

Defendants apparently did not inform plaintiffs of this letter and continued to advise plaintiffs to move forward with vacating the premesis.

Plaintiffs retained their present counsel after the decision was rendered. On June 25, 2010, the court entered an order and judgment awarding the landlord $851,618.27 against the tenants,
representing unpaid rent, interest and penalties. An award of $595,235.92 was rendered against the guarantors, under the guaranty. However, plaintiffs’ new counsel eventually negotiated
a settlement of the entire matter for $500,000. In the present action, commenced on September 15, 2010,plaintiffs seek damages against defendants on the ground that, but for defendants’ faulty advice, plaintiffs could have settled with the landlord before vacating the premises, and before the
commencement of any lawsuits, at a much lower figure than the $500,000 settlement amount which was eventually reached. In the present motion, defendants move to dismiss the
complaint, on the ground that plaintiffs cannot prove that they would have fared better in settling the amount had they not heeded defendants’ advice."

"If proximate cause is not established, the action must be dismissed "regardless of whether it is demonstrated that the attorney was negligent." Schwartz v Olshan Grundman Frome & Rosenzweig, 302 AD2d at 198. Moreover, the damages claimed for legal malpractice must be "actual and ascertainable" resulting from the proximate cause of the attorney’s negligence. Ressis v. Wojick, 105 A.D.2d 565, 567 (3d Dept 1984), lv. denied 64 N.Y.2d 609 (1985)

Plaintiffs cannot prove that "but for" defendants’ advice they would have settled for less than $500,000. Specifically, there is no proof available that would show that the landlord would have discounted the rent in any amount, less a  specific amount, such as 41%. Moreover, contrary to plaintiffs’ position any testimony by the landlord’s representative would be insufficient to establish actual and ascertainable damages as he would be speculating as to what the landlord might  have done years earlier."

Here is a case in which the attorney has successfully shut down plaintiff’s case, plaintiff’s future cases, and in general, plaintiff himself.  It’s rare that defendant scores a victory so comprehensive.  The Appellate Division, and earlier, Justice Ling-Cohan in Banushi v Law Off. of Scott W. Epstein  2013 NY Slip Op 06930   Decided on October 24, 2013   Appellate Division, First Department    found plaintiff’s case most unworthy.

"Notwithstanding the public policy requiring free access to the courts, the motion court’s order barring plaintiff from initiating further litigation or motion practice against defendants without prior court approval unless he is represented by counsel was justified by plaintiff’s continuous and vexatious litigation against defendants (Matter of Robert v O’Meara, 28 AD3d 567 [2d Dept 2006], lv denied 7 NY3d 716 [2006]; Capogrosso v Kansas, 60 AD3d 522 [1st Dept 2009], cert denied ___ US ___, 133 S Ct 278 [2012]; see also Melnitzky v Apple Bank for Sav., 19 AD3d 252, 253 [1st Dept 2005]). Among other things, in addition to the instant action, plaintiff filed a lawsuit in state court and a lawsuit in federal court and a counterclaim in a third suit, as well as a disciplinary complaint, all alleging legal malpractice based on the same sparse allegations, and all unavailing.

Contrary to plaintiff’s contentions, the order is not overly broad; it granted the part of defendants’ motion that sought injunctive relief only as to litigation against them. "

Thomas F. Bello, an attorney from Staten Island is well known, and had many many clients. This week his resignation and disbarrment was accepted by the Appellate Division, Second Department.  What is shocking is the number of clients who had made complaints against him, and how long it took to resolve the matter.  Matter of Bello   2013 NY Slip Op 06859   Decided on October 23, 2013   Appellate Division, Second Department   Per Curiam. is worth reading to see how many clients he let down. 
 

"PER CURIAM.The Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts served a petition and supplemental petition on the respondent. Following a preliminary conference held on December 28, 2011, and a hearing conducted in nine separate sessions in 2012, the Special Referee sustained all six charges, concluding that the respondent "neglected the legal matters entrusted to him, . . . failed to adequately communicate with his clients, . . . failed to comply with court directives, and . . . failed to honor a stipulation to which he agreed." The Grievance Committee now moves to confirm the report of the Special Referee and for the imposition of such discipline as the Court deems just and proper. The respondent has now submitted an affidavit sworn to February 25, 2013, wherein he tenders his resignation as an attorney and counselor-at-law (see 22 NYCRR 691.9), and cross-moves for its acceptance, and the striking of his name from the roll of attorneys. In his affidavit, the respondent acknowledges, in essence, that he cannot successfully defend himself against the merits of the charges.

Charge one, as amended, alleges that the respondent engaged in a pattern of neglecting legal matters entrusted to him, in violation of former Code of Professional Responsibility DR 6-101(a)(3) and DR 1-102(a)(7) (22 NYCRR 1200.30[a][3]; 1200.3[a][7]). Between 2004 and 2010, [*2]the respondent was retained to represent 19 different clients, and thereafter failed to diligently pursue those matters with respect to each of them.

Charge two alleges that the respondent engaged in a pattern of failing to maintain adequate communications with his clients, in violation of former Code of Professional Responsibility DR 6-101(a)(3) and DR1-102(a)(7) (22 NYCRR 1200.30[a][3]; 1200.3[a][7]). Between in or about 2001 and 2010, the respondent was retained to represent 18 different clients, and thereafter failed to adequately respond to those clients’ inquiries with respect to their cases.

Charge three alleges that the respondent failed to comply with numerous court directives, in violation of former Code of Professional Responsibility DR 1-102(a)(5) and (7) (22 NYCRR 1200.3[a][5], [7]). In or about December 2007, the respondent was retained to represent Tony Chin in a legal matter. In or about 2008, the respondent commenced an action on Mr. Chin’s behalf, entitled Chin v U. S. Postal Service, in the United States District Court for the Eastern District of New York. Although twice directed by the court to provide it with a status letter/report, the respondent failed to do so. The respondent also failed to comply with two orders directing the plaintiff to file, inter alia, affidavits of proper service on the defendant on or before December 22, 2008. By order dated June 16, 2009, the court dismissed the action, in view of the respondent’s "pattern of delay and inexplicable noncompliance."

Charge four, as amended, alleges that the respondent engaged in a pattern of neglecting legal matters entrusted to him. Between 1999 and 2010, the respondent was retained by five clients. Thereafter, the respondent failed to diligently pursue their legal matters, in violation of former Code of Professional Responsibility DR 6-101(a)(3) and DR 1-102(a)(7) (22 NYCRR 1200.30[a][3]; 1200.3[a][7]).

Charge five, as amended, alleges that the respondent engaged in a pattern of failing to maintain adequate communications with his clients. Between 1999 and 2010, the respondent was retained to represent six clients. Thereafter, the respondent failed to adequately respond to inquiries made by these clients with respect to their legal cases, in violation of former Code of Professional Responsibility DR 6-101(a)(3) and DR 1-102(a)(7) (22 NYCRR 1200.30[a][3]; 1200.3[a][7]).

Charge six alleges that the respondent failed to timely satisfy the terms of a settlement agreement, in violation of former Code of Professional Responsibility DR 1-102(a)(5) and (7) (22 NYCRR 1200.3[a][5], [7]). In or about 2008, the respondent was sued for legal malpractice in the Supreme Court, Richmond County, in a matter entitled Hayes v Bello. In or about February 2011, the respondent executed a settlement agreement, in which he agreed to pay the total sum of $25,000 to the plaintiff, as follows: "$5,000.00 within 90 days, and balance with [sic] 6 months thereafter." To date, the respondent has failed to satisfy the terms of the agreement.

The respondent acknowledges that his resignation is tendered freely and voluntarily, that he is not subject to coercion or duress, and that he is fully aware of the implications of its submission. He further acknowledges that the Court has the power to disaffirm the Special Referee’s report or issue discipline that could range from a public censure, to suspension, or disbarment. Nonetheless, he requests that the Court accept his resignation and strike his name from the roll of attorneys.

There are three (or perhaps four) elements of legal malpractice.  They are a departure from good and accepted practice, which proximately causes damage to plaintiff, "but for" which there would have been a better or different result, with ascertainable damages.  in Cobble Cr. Consulting, Inc. v Sichenzia Ross Friedman Ference LLP ;  2013 NY Slip Op 06820;  Decided on October 22, 2013 ; Appellate Division, First Department we see a decision which affirms dismissal on the basis that plaintiff cannot show how any negligence was the proximate cause of their damage. 
 

"The motion court properly dismissed the claim of legal malpractice, as plaintiffs failed to allege how any negligence was the proximate cause of their damages (see O’Callaghan v Brunelle, 84 AD3d 581, 582 [1st Dept 2011], lv denied 18 NY3d 804 [2012]; McLoughlin v Sullivan Papain Block McGrath & Cannavo, P.C., 18 AD3d 245, 246 [1st Dept 2005], lv denied 5 NY3d 709 [2005]). The motion court considered plaintiffs’ allegations, quoted in its decision, that defendant acted in a manner contrary to its discussions with plaintiffs by assisting the subject corporation in eliminating the Preferred A shares. As the motion court noted, plaintiffs alleged only that the parties had discussed, and defendant failed to include, a provision in the Certificate of Designation that prevented changes in the common stock structure from affecting the conversion rate of plaintiffs’ Preferred A Stock. Plaintiffs did not challenge the inclusion of language in the Certificate of Designation that allows changes in the value or voting rights of Preferred A shares by a majority vote of Preferred A shareholders. The complaint reveals that a vote held pursuant to this latter provision is what altered the conversion ratio, allegedly rendering plaintiffs’ stock virtually worthless. Thus, inclusion of the anti-dilution provision plaintiffs cite would not have altered the result. Accordingly, plaintiffs failed to set forth facts showing that, but for defendant’s conduct, plaintiffs would not have incurred any damages.

Plaintiffs further alleged, without elaborating, that defendant failed to advise them to seek independent counsel at any time. Plaintiffs failed to allege how this omission proximately caused their injuries. Any claim that independent counsel could have negotiated a provision prohibiting changes to the Certificate or any changes to the conversion ratio, even upon a majority vote, or could have insulated plaintiffs from incurring any losses upon a conversion, is speculative."