In Eighth Ave. Garage Corp. v Kaye Scholer LLP 2012 NY Slip Op 02402  Appellate Division, First Department Kaye Scholer defended itself, and obtained dismissal. Schwartz & Ponterio were unable to save the case for plaintiff.
 

The Court held that "Plaintiffs failed to allege facts in support of their claim of legal malpractice that "permit the inference that, but for defendants’ [alleged negligence], [they] would not have sustained actual, ascertainable damages" (Pyne v Block & Assoc., 305 AD2d 213 [2003]). Although they maintain that as a result of defendants’ negligence in failing to obtain an estoppel certificate from the landlord of the premises where the garage is located, they were unable to sell the subject parking garage, they failed to demonstrate that they would have sold the subject garage but for defendants’ alleged malpractice. In any event, plaintiffs are precluded by the doctrine of collateral estoppel from litigating the issue of whether the landlord’s failure to give them the certificate damaged them, as that issue was raised and decided against plaintiff Eighth Avenue Garage Corporation in a prior proceeding (Eighth Ave. Garage Corp. v H.K.L. Realty Corp., 60 AD3d 404 [2009], lv dismissed 12 NY3d 880 [2009]; see Hirsch v Fink, 89 AD3d 430 [2011]).

Supreme Court properly considered the evidence submitted on the motion, including the e-mails, which conclusively disposed of plaintiffs’ claims (see Pitcock v Kasowitz, Benson, Torres & Friedman LLP, 74 AD3d 613 [2010]). Accordingly, it is of no moment that discovery has not been conducted. In addition, plaintiffs have not asserted that facts essential to justify [*2]opposition to the motion may have existed but could not be stated (see CPLR 3211[d]). "

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

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

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

Attorneys make mistakes. Sometimes mistakes are fixed, sometimes not. Rarely do attorneys go to the length of fabricating complaints, making up stories of ongoing litigation and then running away from the disciplinary committee. We don’t know what defense the attorney might offer, but this tale is both sad and shocking. The attorney in Matter of Gold; Grievance Committee for the Tenth Judicial District ; Motion No: 2011-06543 ; Slip Opinion No: 2012 NY Slip Op 61346(U)
; Appellate Division, Second Department, Motion Decision is now suspended.
 

"We find, prima facie, that the respondent is guilty of professional misconduct immediately threatening the public interest based upon his failure to cooperate with the lawful demands of the Grievance Committee for the Tenth Judicial District (hereinafter the Grievance Committee), with respect to its investigation of one complaint of professional misconduct.

On or about December 6, 2010, the Grievance Committee received a complaint against the respondent submitted by Paul Niehaus, on behalf of his client, David Goldstein. The complaint alleged that the respondent represented Mr. Goldstein in a matter entitled Goldstein v Massachusetts Mutual Insurance Company, commenced in the Supreme Court, New York County, under Index No. 113804/99. Mr. Goldstein, the plaintiff, sought, inter alia, declaratory relief that "the requirement in his disability policy that he be under a doctor’s care and that monthly reports be submitted be deemed waived by defendant." By order dated May 3, 2000, the Supreme Court dismissed the complaint.

On or about February 2, 2005, the respondent commenced another action entitled Goldstein v. Massachusetts Mutual Insurance Company, in the Supreme Court, New York County, under Index No. 2515/05. The verified complaint, dated February 1, 2005, sought a declaratory judgment based, in sum and substance, on the same allegations previously alleged. By order dated August 22, 2005, the court found that the action was barred based on res judicata, as well as the applicable statute of limitations, and the matter was dismissed.

From in or about 2001 through in or about 2006, the respondent allegedly engaged in misleading and deceitful conduct by permitting his client, David Goldstein, to believe that the respondent had commenced a new action on Mr. Goldstein’s behalf in 2001 (hereinafter the purported 2001 action) when, in fact, no new action had been commenced after dismissal of the first action until the commencement of the 2005 action. In response to an inquiry from David Goldstein regarding the purported 2001 action, the respondent, on or about October 29, 2004, forwarded to him copies of a purported amended summons and a purported amended verified complaint, dated November 3, 2003, and on or about January 6, 2006, forwarded to him copies of a purported summons and a purported verified complaint, dated February 12, 2001. None of those pleadings were filed. In response to another inquiry from David Goldstein regarding the purported 2001 action, the respondent, on or about May 3, 2006, forward to him copies of a purported notice of deposition and a purported verified answer, dated April 27, 2001, allegedly submitted by Michael Yoelli, of, Assail & Yoelli, LLP, on behalf of Massachusetts Mutual Insurance Company. Neither the purported notice of deposition, nor the purported verified answer, had been created, prepared or served by Michael Yoelli.

Based on the foregoing, David Goldstein commenced an action against the respondent, on or about December 20, 2006, entitled Goldstein v Gold, in the United States District Court for the Eastern District of New York, under Index No. CV-06-6707, alleging, inter alia, that the respondent had engaged in fraud and legal malpractice. In a Final Judgment by Consent dated November 4, 2010, the respondent consented to the entry of a judgment against him in the amount of $250,000.

By letter dated December 13, 2010, mailed to 5535 42nd Terrace, Vero Beach, Florida 32967 (the business address listed for the respondent with the Office of Court Administration at that time), the Grievance Committee asked the respondent to submit a written answer to the Goldstein complaint. By letter dated December 27, 2010, the respondent submitted an answer and response to a background questionaire. The answer contained another address for the respondent, to wit, P.O. Box 700148, Wabasso, Florida 32970, and the background questionnaire stated that the respondent’s home address was 5535 42nd Terrace, Vero Beach, Florida 32970.

The respondent has neither opposed the Grievance Committee’s motion nor submitted a any response relative thereto."

Based upon the foregoing, the motion is granted, the respondent is immediately suspended from the practice of law, pursuant to 22 NYCRR 691.4(l)(1)(i), pending further order of this Court, the Grievance Committee is authorized to institute and prosecute a disciplinary proceeding against him, and the matter is referred to a Special Referee to hear and report.
 

"The defendants Alisa Schiff and Schiff & Skurnik, PLLC (hereinafter together the Schiff defendants), who served as the plaintiff’s attorney with respect to the drafting, and the execution by the plaintiff, of a contract to sell her home (hereinafter the contract of sale), and the defendant Michael Gross, who served as the plaintiff’s attorney for the related real estate closing, failed to meet this burden. Contrary to the Supreme Court’s conclusion, the Schiff defendants and Gross failed to demonstrate, prima facie, that the plaintiff did not sustain any actual or ascertainable [*3]damages as a result of their alleged negligence. The contract of sale provided that the purchase price of the plaintiff’s home was $615,000, with the plaintiff to credit the purchaser with the sum of $155,000 at the closing. Approximately $241,000 of the proceeds of the sale went to satisfy the plaintiff’s mortgage, and the plaintiff received approximately $216,000. The Schiff defendants and Gross failed to eliminate triable issues of fact as to the propriety of the $155,000 credit to the purchaser and other disbursements made of the proceeds, and thus, as to whether the plaintiff should have obtained more money for the sale of her home than she received. " So, in Gelobter v Fox ;2011 NY Slip Op 09268; Appellate Division, Second Department we see that both sets of defendants failed to clear themselves of potential liability.
 

"The Schiff defendants failed to meet their prima facie burden on the issue of proximate cause, as they merely established, in this respect, that they did not participate in the real estate closing. However, this fact did not negate any negligence on their part in the drafting of the contract of sale, which the plaintiff signed under Schiff’s representation, and in connection with alleged alterations made to the purchase price on the contract prior to the real estate closing. In other words, as the contract of sale had already been signed and altered before the real estate closing, contrary to the Schiff defendants’ contention, they did not establish as a matter of law that Gross had "a sufficient opportunity to protect the plaintiffs’ rights" (Katz v Herzfeld & Rubin, P.C., 48 AD3d 640, 641), such that Schiff’s conduct could not have proximately caused the plaintiff’s damages. "

Ponzi schemes probably make bad law, in as much as everyone points the finger at everyone, and claims of fraud swirl through and through.  So it goes in Kimmel v Schon  2013 NY Slip Op 32318(U) September 26, 2013  Sup Ct, Kings County  Docket Number: 015633/2012  Judge: Bernard J. Graham.

A real estate purchase, a loan , ponzi schemes, claims of legal malpractice?  What is more interesting is the appalling lack of formality in the summary judgment practice.  Plaintiff, who is an attorney, files his own affirmation, which is rejected by the court.  The motion for summary judgment lacks the admissible evidence of a person with actual knowledge, which is its own reason to deny the motion.

"The instant motion, by which plaintiff seeks dismissal of the counterclaims and summary judgment appointing a referee to compute, is supported solely by the plaintiffs attorney’s affirmation. Also provided as exhibits in support of the instant motion are (1) an affirmation of Miriam W. Hermann (Hermann), and (2) an affirmation of Kimmel. In support of plaintiffs argument disputing the Schons’ assertion that Tepfer & Tepfer did not represent him at the loan closing, Hermann states that, as an attorney associated with the law firm of Ferro Labella & Zucker LLC, she represented the lender in the subject transaction, drafted the papers and attended the closing at which the Schons were represented by Tepfer & Tepfer, P.C. In addition, she states that at the closing, the borrowers signed a closing statement, and were provided with an opinion letter by Tepfer & Tepfer. In further support, stating that he is an attorney duly admitted to practice in the State of New York, Kimmel provides, as plaintiff, his own attorney’s affirmation. He states that as lender and administrator of the subject loan, he received all payments made thereunder, and he (1) never agreed to extinguish the note, (2) never agreed to accept a new note to replace the one that is at issue here, and (3) there was never a new obligation that replaced the Note, and no new contract was discussed or drafted with respect thereto. "

"Plaintiff s motion for summary judgment must be denied. It is well settled that on a motion for summary judgment, an affidavit of counsel who demonstrates no knowledge of the underlying facts is without probative value (see Zuckerman, 49 NY2d at 563, citing Columbia Ribbon & Carbon MIg. CO. v A-J-A Corp., 42 NY2d 496,500 [1977]; Israelson v Rubin, 20 AD2d 668 [1964], affd 14 NY2d 887 [1964]; Lamberta v Long Is. R. R., 51 AD2d 730 [1976]). Here, plaintiffs counsel’s affirmation is silent regarding his basis of knowledge of the underlying facts. Moreover, the affirmation of plaintiff, an attorney, is not admissible in this instance. Under the language of CPLR 2106,2 the use of an unsworn affirmation bearing the individuals signature alone, in lieu of an affidavit, is prohibited where the signatory, even if otherwise authorized by the statute, is a party to the action (see Slavenburg, Corp. v Opus Apparel, Inc, 53 NY2d 799, 801[FN] [1981]; Schutzer v Suss- Kolyer, 57 AD2d 653 [1977]; Fitzgerald v Willes, 83 Misc 2d 853 [App Tenn 1975]). Consequently, plaintiff has failed to meet his initial burden of making a prima facie showing of entitlement to judgment as a matter of law, requiring denial of his motion and regardless of the sufficiency of the opposing papers (see Vega v Restani Const. Corp., 18 NY3d 499 [2012]). In any event, were it necessary to do so, the court would find that defendants have met their burden of raising an issue of fact in opposition to plaintiff s motion through their particularized showing, in admissible form, that the underlying transaction was permeated with, and arose out of, fraudulent conduct."

So many of these cases start over a fee. Here, relatives try to push relatives out of a house (we guess it was bequeathed to both), and clients end up spending about $ 50,000 to avoid being put in the street. Then, it comes time to pay the attorneys. This leads to an attorney fee case and a legal malpractice counterclaim. In the end, clients lose all around.

Davis v Siskopoulos 2013 NY Slip Op 30353(U)   Supreme Court, New York County Docket Number: 111965/04 Judge: Barbara Jaffe.

"In 2000, defendants hired plaintiff law firm to defend them in a partition action commenced by the brother of decedent Angelo Siskopoulos seeking to evict them from their residence. A referee held a hearing and issued a report finding that defendants had not ousted the brother from the residence, and awarded defendants certain damages, including reimbursement of half of the mortgage payments paid by them and for repairs and maintenance of the property. (Affidavit of Bonnie Reid Berkow, Esq., dated Feb. 13,2012 [Berkow Affid.], E)(h. GG). Between August 1,2000 and December 21,2003, plaintiff rendered legal services to them. As of January 31,2004, defendants had paid plaintiff $8,559.68 for its services, leaving a balance of$45,577.92. (Affirmation of Alexandra Siskopoulos, Esq., dated Feb. 12,2012 [Siskopoulos Aff.], Exh. A).
On or about August 16, 2004, plaintiff commenced the instant action against defendants, asserting causes of action for an account stated and quantum meruit.

Defendants’ failure to plead the specific allegations in their affirmative defenses is not fatal here as plaintiff opposes them on the merits and defendants asked questions relating to them in discovery. (See Drago v Spadafora, 94 AD3d 1041 [2d Dept 2012] [no showing made that plaintiffs were taken by surprise or prejudiced by defendant’s use of unpleaded affirmative defense in support of his motion for summary judgment]; Sullivan v Am. Airlines, Inc., 80 AD3d 600 [2d Dept 2011] [unpleaded defense may serve as basis for granting summary judgment in absence of surprise or prejudice to opposing party]; Joan Hansen & Co., Inc. v Everlast World’s Boxing Headquarters Corp., 2 AD3d 266 [1 st Dept 2003], Iv denied 2 NY3d 702 [2004] [summary judgment may be granted on unpleaded defense where opponent of motion has not been surprised and fully opposed motion]).

Here, defendants have failed to establish, prima facie, that plaintiff is not an expert in the real estate field or had no experience dealing with partition actions as plaintiff s discovery response that it could not recall working on partition actions before 2000 does not constitute an admission that it had no experience working on such actions, and they cite nothing in Wagner’s deposition testimony that is relevant to this claim. Thus, to the extent that plaintiff made certain representations to defendants, defendants have not shown that they were false misrepresentations. In any event, as defendants fail to submit an affidavit from someone with personal knowledge of the circumstances underlying their retention of plaintiff, they cannot establish that plaintiff made the representations to them on which they relied, and the printout of plaintiffs website is not probative. (See eg Dombroski v Samaritan Hasp., 47 AD3d 80 [3d Dept 2007] [general accusation of deception not based on personal knowledge insufficient to establish estoppel]; Cohen v Houseconnect Realty Corp., 289 AD2d 277 [2d Dept 2001] [complaint contained no allegations setting forth alleged misrepresentations, and no such allegations were contained in plaintiffs affidavit submitted on motion]; Urquhart v Philbor Motors, Inc., 9 AD3d 458 [2d Dept 2004] [affidavit submitted by defendant insufficient to establish prima facie entitlement to summary judgment as it was not by person with first-hand knowledge of alleged misrepresentations]; see also Nissan Motor Acceptance Corp. v Scialpi, 83 AD3d 1020 [2d Dept 2011] [conclusory and unsubstantiated allegations of fraud and misrepresentation insufficient]; cf Silber v Muschel, 190 AD2d 727 [2d Dept 1993] [defendant submitted fact-specific affidavit evincing first-hand knowledge of misrepresentations made by plaintiff during parties’ negotiations]; Slavin v Victor, 168 AD2d 399 [1 st Dept 1990] [in alleging fraud, party appropriately offered affidavit of person with first-hand knowledge as to nature of misrepresentations). For the same reasons, defendants have not established their claim that plaintiff breached ethical rules by holding itself out as an expert in real estate.

What happens when plaintiff believes that defendant made a serious mistake, and some time has passed, but the underlying case has not yet concluded?  The statute of limitations and the requirement for "ascertainable damages" come in conflict.  Wait too long and the statute will have passed.  Start too early, and one sees a result similar to Flintlock Constr. Servs., LLC v Rubin, Fiorella & Friedman LLP ; 2013 NY Slip Op 06313  ; Decided on October 1, 2013 ; Appellate Division, First Department .  Case dismissed for now, but try again later.
 

"In this legal malpractice action, plaintiff alleges that defendant law firm negligently represented it in connection with underlying construction litigation by entering into a stipulation, without its authorization, pursuant to which it became obligated to defend and indemnify the owner of the subject premises in the underlying litigation without limitation. Defendant incorrectly argues that plaintiff’s claims should be dismissed as a matter of law based on the Eleventh Circuit’s vacatur of the federal district court’s finding that the stipulation requires plaintiff to defend and indemnify the premises owner without limitation and for its own negligence (see Flintlock Constr. Servs. v Well-Come Holdings, LLC, 710 F3d 1221, 1224 [11th Cir 2013]). The Eleventh Circuit vacated the decision on diversity grounds and did not reach the merits of the subject stipulation.

Contrary to defendant’s assertion, the documentary evidence does not conclusively refute plaintiff’s allegations (see Franklin v Winard, 199 AD2d 220, 220 [1st Dept 1993]), since the premises owner, its consultants and subcontractors are named in the underlying litigation, their contracts are not included in the record on appeal, and the allegations against them include the types of activities which form the basis of the underlying complaints. Nevertheless, even if the stipulation provides for an unlimited obligation, there has been no finding that the project owner was negligent. At this juncture, plaintiff’s allegations of proximate cause and damages are premature or speculative, as it is unable to prove that any such damages are directly traceable to defendant’s conduct (see InKine Pharm. Co. v Coleman, 305 AD2d 151, [*2]153-154 [1st Dept 2003]). Accordingly, we dismiss without prejudice to raising the malpractice claims upon resolution of the underlying action. "

Big corporate client goes to Big white shoe law firm and believes that the Big litigator there will take and handle the case. It does not happen. A lesser light handles the case, and the Big Corporate client is unhappy. Now what?

Matter of Matter of G.K. Las Vegas Ltd. Partnership v Boies Schiller & Flexner LLP 2012 NY Slip Op 04831 Decided on June 14, 2012 Appellate Division, First Department.
 

"In this proceeding alleging the law firm’s breach of performance of a retainer agreement, including breach of an alleged oral agreement to have a particular attorney in its firm serve as lead counsel in an underlying matter, the client failed to preserve its arguments that the law firm did not meet its burden of demonstrating that the client fully understood the terms of the parties’ retainer agreement, and that public policy rendered such retainer agreement unenforceable, as these arguments were not sufficiently brought to the attention of the arbitrator. (see Edward M. Stephens, M.D., F.A.A.P. v Prudential Ins. Co. of Am., 278 AD2d 16 [2000]; see also Matter of Joan Hansen & Co., Inc. v Everlast World’s Boxing Headquarters Corp., 13 NY3d 168, 173-174 [2009]). The client did not explicitly argue that the law firm violated public policy by failing to ensure that the client fully understood the terms of the parties’ retainer agreement. It only argued that parol evidence was needed because the retainer agreement, as written, was allegedly incomplete and/or ambiguous.

Were we to reach the merits of the client’s public policy argument, we would find it unavailing. The parties agreed to arbitrate any disputes arising from their retainer agreement, and there is no basis to conclude that the asserted public policy ground (requiring a client’s full knowledge and understanding of an attorney-client retainer agreement) was violated. The arbitrator’s award dismissing the client’s challenge to the legal fees that were due in accordance with the express terms of the parties’ amended written retainer agreement had a rational basis, inasmuch as the Arbitrator found the written retainer arrangement to be unambiguous and to constitute a fully integrated agreement that would satisfy the requirements of 22 NYCRR 1215.1 (see generally Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223-224 [1996]). The arbitrator’s rejection of the sophisticated client’s argument that sought inclusion of claimed oral terms that would modify the clear terms of the amended retainer agreement was rationally based in contract principles, including New York’s parol evidence rule, [*2]and the criteria for allowing modification of written terms without altering them was not established by the client (see Mitchill v Lath, 247 NY 377 [1928]; Chemical Bank v Weiss, 82 AD2d 941 [1981], appeal dismissed 54 NY2d 831 [1981]). Since the terms of the fully integrated retainer agreement were unambiguous, there was no basis to consider parol evidence (see Slotnick, Shapiro & Crocker, LLP v Stiglianese, 92 AD3d 482 [2012]; Moore v Kopel, 237 AD2d 124, 125 [1997]).

Moreover, the client’s argument that the arbitrator, in deciding the dismissal motion, denied it "fundamental fairness" by refusing to accept the truth of its allegations regarding the oral promise, including that the parties intended this oral promise to be a component of the parties’ retainer agreement, thereby precluding it from offering evidence to demonstrate the parties’ understanding in regard to the alleged oral promise, is unavailing. It was within the province of the arbitrator to find, as a matter of law, that the retainer agreement was not ambiguous (see W.W.W Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]), notwithstanding the client’s claims that alleged oral promises were intended to be added as components of the written retainer agreement. Since an arbitrator’s award ordinarily will not be vacated even if founded upon errors of law and/or fact (see Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 479-480 [2006], cert dismissed 548 US 940 [2006]), there is no basis to vacate this award founded upon applicable contract principles (see Szabados v Pepsi Cola Bottling Co. of N.Y., 191 AD2d 367 (1998)"