We’ve seen $7 Million legal malpractice cases, and $ 700,000 cases, but it is rare to see a Supreme Court case for $ 7,171.00  Nevertheless, plaintiff brought Dash v Davis & Gilbert LLP
2013 NY Slip Op 51469(U)   Decided on September 6, 2013   Supreme Court, New York County
Ling-Cohan,  only to lose on a CPLR 3211 motion. 

"Defendants argue that plaintiff is seeking to re-litigate issues that were settled in the Surrogate’s Court Action, and, thus, plaintiff’s claims are barred by res judicata. Defendants further argue that, pursuant to CPLR 3211(a)(1), the undisputed documentary evidence disposes of plaintiff’s claims. Defendants also contend that plaintiff’s complaint must be dismissed as it fails to state a cause of action.
In opposition to defendants’ motion, plaintiff argues that she was not previously provided with a full and fair opportunity to litigate her claims of fraud, negligence, and legal malpractice [*3]in the Surrogate’s Court Action. Plaintiff also argues that the Executors failed to support the claim of pre-arrangement contracts with conclusive facts. Plaintiff alleges that on April 6, 2012, she received an email from defendants which contained a Final Accounting and a Stipulation of Settlement which differed from what was agreed upon. According to plaintiff, this proves defendants’ deceit and fraudulent behavior. Specifically, in her opposition, plaintiff seeks damages of $7,171 for the difference between the agreed upon sale price of the Amsterdam Memorial Chapel and the actual sale price. In support, plaintiff proffers a letter sent by defendant Law Firm, dated November 10, 2011, to plaintiff’s attorney in the Surrogate’s Court Action with a proposed settlement of, inter alia, a "distribution of the estate’s interest in the [Amsterdam Memorial] chapel in kind, or a sale for $60,000, whichever [plaintiff] prefer[s]. …[I]f there is a distribution in kind, [defendant Harris] intends to sell her interest to Mr. Bethea in a separate transaction." Dash Affidavit in Opposition, Exh. K, p. 1. Plaintiff also proffers a copy of the email and Final Accounting, dated April 6, 2012, which lists the sale of the interest in the Amsterdam Memorial Chapel at $52,829, rather than $60,000. See Dash Affidavit in Opposition, Exh. L, Schedule A.

It is well settled that New York has adopted the transactional analysis approach to res judicata. "Under the transactional analysis approach…, once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy". Cornwall Warehousing, Inc. v Town of New Windsor, 238 AD2d 370, 371 (2d Dep’t 1997) (internal quotations omitted).

Here, plaintiff concedes that she raised objections in the Surrogate’s Court Action, obtained an attorney to represent her, negotiated and ultimately agreed to a settlement in the Surrogate’s Court Action, and withdrew her objections with prejudice. While plaintiff proffers a proposed settlement allegedly offered by defendants to settle the Surrogate’s Court Action, such proposal did not result in the final settlement agreement. Significantly, plaintiff does not allege that she agreed to settle on the terms proposed in defendants’ letter of November 10, 2011, and, thus, such proposed settlement is not conclusive proof of agreed upon terms. Further, the Final Accounting proffered by plaintiff dated April 6, 2012 – nearly five months after the proposed settlement – was admittedly received and reviewed by plaintiff, prior to her entering into the Stipulation of Settlement in the Surrogate’s Court Action on April 19, 2012. Plaintiff, knowing that the interest in the Amsterdam Memorial Chapel was sold for $52,829, nonetheless, chose to settle the Surrogate’s Court Action and withdrew her objections with prejudice; thus, she may not now contest her decision to settle the Surrogate’s Court Action. "

When a claim for legal malpractice accrues is a contentious source of motion practice in legal malpractice litigation.  Traditionally it is said that malpractice accrues on the date of the mistake, but that it can be tolled because of continuous representation.  Continuous representation is said to require an understanding between client and attorney that more work needs to be done, and that there is a relationship of trust and confidence between them.  Disciplinary complaints tend to undermine the "trust and confidence" aspect of the equation.

in Miller v Friedman  2013 NY Slip Op 32030(U)  August 23, 2013  Sup Ct, New York County  Docket Number: 400833/12  Judge: Joan A. Madden finds that the attorneys continued to represent the client for a while, and that this particular disciplinary complaint did not end the continuous representation.

"An action for legal malpractice must be commenced within three years of accrual, regardless of whether the underlying theory is grounded in tort or contract law. See McCoy v. Feinman, 99 NY2d 295,301 (2002); CPLR 214(6). Accrual is measured from the date when the injury occurs. See Ackerman v. Price ‘Waterhouse, 84 NY2d 535 (1994). However, aider the continuous representation doctrine, when an attorney continues to represent a client in the matter from which the claim arises, the statute of limitations on the legal malpractice claim is tolled and the limitations period does not begin to run until the termination of the attorney-client relationship. Shumsky v. Eisenstein, 96 NY2d 164 (2001); Riley v. Segan, Nemerov & Singer, P.C., 82 AD3d 572 (lst Dept 2011). For the doctrine to apply, “there must be clear indicia of an ongoing, continuous, developing and dependant relationship between the client and the attorney.” Elizabeth Arden, Inc v. Abelman, Frayne & Schwab, 29 Misc3d 1215(A) (Sup Ct, NY Co 2010) (citing Luk Lamellen U. Kupplungbau GmbH v. Lerner, 166 AD2d 505,507 [2d Dept 1990); accord Henry v. Leeds & Morelli, 4 AD3d 229 (lst Dept 2004) (“relationship and bond of continuous trust necessary for the continuing representation doctrine to apply”).

Furthermore, contrary to defendants’ position, under these circumstances, plaintiffs complaint to the Disciplinary Committee filed in 20 10, does not establish as a matter of law that it no longer
represented plaintiff in April 20 1 1. Accordingly, the motion to dismiss on statute of limitations
grounds is denied."
However, defendants’ motion is granted to the extent of striking plaintiffs request for

Except for the fact that they were there, there is little in this decision to show why the attorneys were sued.  Antonelli v Guastamacchia  2013 NY Slip Op 32046(U)  August 22, 2013  Supreme Court, Richmond County Docket Number: 100705/08  Judge: Joseph J. Maltese tells the story of a good real estate and mortgage company gone bad, and how the attorneys were not involved.

"The plaintiff, Nicholas Antonelli, is a businessperson versed in real estate transactions and money lending. Antonelli operates several real estate businesses, including several mortgage brokerage firms. On or about December 27, 2004, Antonelli advanced the sum of $600,000 for
the purposes of purchasing property to construct, and eventually sell eight homes on Sprague
Avenue and Amboy Road, on Staten Island, New York to the Decker Defendants’ escrow account to pay for expenses of the project, for which the 7296-7304 Realty Corp (“Realty Corp.”) was established. Steven Decker, Decker, Decker, Dito & Internicola, LLP and their predecessor firm represented Antonelli, his wife Susan Guiffre, and his various companies in connection with making mortgage loans for 20 years. Guastamacchia and Lentini constructed the eight homes. The first six homes were sold without incident. According to the deposition testimony elicited in this action, Guastamacchia would keep Antonelli apprised of the status of the closings as they took place. During the first six closings the Decker defendants represented Realty Corp. in the transactions, with Guastamacchia appearing on behalf of the Realty Corp. "

"The last two units to be sold were located at 7300 Amboy Road and 7302 Amboy Road on Staten Island. On August 28, 2007, the defendant Catherine Guastamacchia applied for a loan from the defendant HCI to “refinance” and “cash out” the properties located at 7300 Amboy Road and 7302 Amboy Road. On September 13, 2007 and September 14, 2007 the Realty Corp transferred these to properties to Catherine and Vito Lentini and the properties were subsequently refinanced. These actions were taken without Antonelli’s knowledge or consent. Indeed, there is no evidence that the Decker defendants were in anyway involved with the transfers and subsequent mortgages on the last 2 houses that Guastamacchia and Lentini transferred from the Realty Corp. unto themselves without Decker’s knowledge or consent. This was a conversion by Guastamacchia and Lentini.
On or about February 10, 2006, Antonelli’s corporation, Cucamonga, LLC made a loan in the amount of $499,000 to V.E.V. Development LLC. In return Cucamonga, LLC received a mortgage on property located at 157 Kiswick Avenue, Staten Island, New York. The plaintiffs’ allege that the Decker defendants failed to file a mortgage lien on this property. In deposition testimony in connection with this action, Antonelli testified that this loan was repaid in its entirety and consequently, there are no damages sustained by Antonelli. But more importantly, Cucamonga, LLC is not a party to this action."

‘Here, the Decker Defendants demonstrated that they did not commit any acts of negligence. It is acknowledged by the plaintiffs that the Decker Defendants were not in any way involved in the transfer of 7300 Amboy Road and 7302 Amboy Road from the Realty Corp. to the Lentinis. Moreover, with respect to the Kiswick Avenue property, it is conceded that the plaintiff Antonelli’s loan was repaid in fully. Consequently, there is no evidence that Antonelli sustained any damage
irrespective of whether the Decker Defendants failed to file a mortgage lien on the Kiswick  Avenue property. Consequently, the plaintiffs’ failed to raise an issue of fact in opposition to the defendants’ motion for summary judgment, nor have they met their burden going forward on
their own motion for summary judgment. Therefore, summary judgment is granted in favor of
the Decker Defendants."

Kassel v Donohue  2013 NY Slip Op 32015(U)  August 22, 2013  Supreme Court, New York County  Docket Number: 150886/2013  Judge: Eileen A. Rakower is an example of the court working its way through a series of causes of action, and individually (rather than blanketly) upholding or dismissing them.

"As alleged in the proposed Amended Complaint, in or about July 2010, Plaintiff retained the legal services of defendant C&D, a New York law firm of which defendant Donohue was a member, in connection with an arbitration pending against Plaintiffs former employer ISSI Holdings, LLC. The arbitration arose from ISSI’s alleged default on a prior judgment in Plaintiffs favor in the amount of$I,822,500. It is alleged that at Donohue’s bequest, Plaintiff executed an engagement letter with
the accounting firm of CC&C and Lynch to provide forensic accounting services and expert testimony in connection with the arbitration. Donohue, along with Plaintiff and Lynch, also executed that engagement letter. As further alleged in the proposed Amended Complaint, Plaintiff became
dissatisfied with CC&C and Lynch’s services in the weeks preceding the arbitration, and instructed Donahue to discharge them. It is further alleged that Donahue ignored Plaintiffs instruction, Donohue and Lynch concealed from Plaintiff the full extent of their involvement in the preparation for arbitration, and Donohue directed Lynch to opine contrary to Plaintiff s position that the appropriate interest rate applicable to the Default Judgment was 9%, rather than a two percent rate of interest. The proposed Amended Complaint asserts the following causes of action: legal
malpractice as against defendants Donohue and C&D (first cause of action), breach of contract against defendants CC & Lynch (second cause of action), and seeks to set aside the engagement letter of defendants CC & Lynch (third cause of action)

"To sustain a cause of action for legal malpractice, moreover, a party must show that an attorney failed to exercise the reasonable skill and knowledge commonly possessed by a member of the legal profession." (Darby & Darby v. VIS Int ‘I, 95 N.Y. 3d 308, 313 [2000]). 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. (see Tydings v. Greenfield, Stein & Senior, 2007 NY Slip Op 6734, *2 [1 st Dept. 2007]). Here, the four corners the Amended Complaint make out a claim for legal malpractice against defendants Donohue and C&D. The Complaint alleges that defendants Donohue and C&D were negligent in "advocat[ing] for the improper interest rate at the 2011 Arbitration," "advocating for no acceleration on the default," and by failing to correct his alleged legal and factually incorrect assertions concerning the default rate when provided an opportunity", and that but for this
negligence, the arbitrators would have awarded 9% statutory interest and accelerate the payment of the amount in default. The second cause of action of the proposed Amended Complaint alleges breach of contract against defendants CC and Lynch. It alleges that Plaintiff and CC and Lynch entered into a contract with Plaintiff, that pursuant to its terms, CC and Lynch were to provide Plaintiff with biweekly billing for services rendered under the Retainer Agreement, and that they failed to do so thereby depriving Plaintiff of notice of the extent of the services being rendered. It further alleges that CC & Lynch were required to request and receive payment prior to the drafting of an expert report and that they failed to submit the required advance notices for these services. However, despite this alleged breach of the terms of the contract, the Complaint then asserts that
"Plaintiff sustained economic damages as a direct and proximate result of the professional malpractice of Defendants CC and Lynch," and that "but for" this professional negligence, Plaintiff would not have sustained economic damages. This cause of action therefore fails to state a claim because although it asserts the existence of a contract and breach of that contract, it does not allege damages as a result of that breach but rather as a result of Defendants’ "professional negligence," a claim that Plaintiff has withdrawn."

Board of Mgrs. of Foundry at Wash. Park Condominium v Foundry Dev. Co., Inc.   2013 NY Slip Op 51423(U)   Decided on August 23, 2013   Supreme Court, Orange County   Marx, J. is a short caption for a very convoluted case.  It involves real estate as does much NY litigation.  What is particularly interesting here is that the attorney defendants (admittedly the tail of the dog) seem to have been vindicated earlier, yet are dragged in again.  More to the point, the Court strongly admonishes plaintiff, who is "a judge in a lower court" and hits him with the full $ 10,000 sanction along with attorney fees.
 

"It is obvious that Plaintiffs are attempting to use this derivative action to launch a collateral attack on counsel for The Foundry in an effort to hobble their legal representation of The Foundry in Action No. 1. The Foundry’s claims against Plaintiffs in Action No. 1 have survived pleading motions but their ultimate merit remains to be determined. Plaintiffs must await the trial and/or resolution of Action No. 1 and advance their defenses appropriately in that action instead of raising them here under the guise of an action that purports to vindicate the rights of the very entity that is prosecuting claims against them. Essentially, Plaintiffs’ claim is that but for the negligence of counsel, the action brought against them on The Foundry’s behalf would not have been filed. While they may incorporate that notion into their defense against The Foundry’s claims, it cannot serve as the basis for a derivative action on behalf of The Foundry against their own counsel, particularly while The Foundry’s case is ongoing. This Court declines to be made a party to such efforts. As the Court previously noted in its Decision and Order dismissing Plaintiffs’ claims against Smith, Buss & Jacobs, the liens are intended to protect the interest of The Foundry and its ability to recover on its claims in Action No.1. Plaintiffs may not thwart that effort with this collateral attack on counsel’s representation of The Foundry. Accordingly, BSRB’s motion to dismiss is granted.

Sanctions

BSRB requests sanctions against Plaintiffs pursuant to 22 NYCRR §130-1.1(c) for filing a frivolous claim.

Pursuant to 22 NYCRR §130-1.1(c) "conduct is frivolous if:

(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;
(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or
(3) it asserts material factual statements that are false."
The Court finds Plaintiffs’ conduct in asserting the claim for breach of fiduciary duty against BSRB to be frivolous within the meaning of 22 NYCRR §130-1.1(c), because it is "completely without merit in law" and was "undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or
(3) it asserts material factual statements that are false."
The Court finds Plaintiffs’ conduct in asserting the claim for breach of fiduciary duty against BSRB to be frivolous within the meaning of 22 NYCRR §130-1.1(c), because it is "completely without merit in law" and was "undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another." It is apparent, as this Court has already stated, that Plaintiffs undertook a claim against BSRB in an effort to thwart their efforts to adequately represent The Foundry. In fact, Plaintiffs’ suit against BSRB is part of a disturbing pattern that has emerged in these cases, whereby the defendants in Action No. 1, including Plaintiffs herein, seek to attack the attorneys representing The Foundry rather than address the merits of the claims that are alleged against them. The Court is deeply dismayed at [*5]the dilatory and disingenuous conduct that has been displayed, including the filing of related actions in other courts, the existence of which was not disclosed to this Court until the filing of a motion to consolidate and/or join such actions with Action No. 1, which has been pending in this Court. The pattern of delay and distraction which has emerged is a drain upon the resources of this Court and counsel who have had to respond to the unrelenting efforts to protract the litigation and prevent the adjudication of Action No. 1 on the merits. Such conduct cannot and will not be tolerated by this Court. What makes this matter even more egregious is the fact that Joseph Suarez is not only an attorney, but a judge in a lower court. As such, he should know how taxing baseless actions are on the Court’s already strained resources. Further, he persisted in pursuing this action against BSRB even after this Court cautioned him, on the record in open court, that the Court took a dim view of any effort to unnecessarily delay this case[FN4] and/or to attempt to improperly chill BSRB’s representation of The Foundry. Accordingly, as permitted by Court Rule 22 NYCRR §130-1.1(a), the Court imposes a sanction on Mr. Suarez, in the amount of $10,000.00, to be paid to the client security fund within 30 days of the date hereof.The Court also awards BSRB attorney’s fees for bringing both the motion to consolidate and/or join Action No. 3 with Action No. 1 and the instant Order to Show Cause, together with costs and disbursement related thereto. BSRB shall file an application for said attorney’s fees, costs and disbursements within 15 days of the date of this Order. "

As Christine Simmons of the New York Law Journal reports today:  "Cadwalader Wickersham & Taft failed to defeat a malpractice suit brought by Red Zone, an investment vehicle run by the owner of the Washington Redskins, after a state judge found the firm did not prove it gave adequate warning that a side letter it reviewed may not have limited Red Zone’s liability in a proxy fight."  In an unusual turn of events, plaintiff was granted partial  summary judgment. 

Red Zone LLC retained Cadwalader to advise it in connection with a potential acquisition of the entertainment company, Six Flags.  Red Zone owned 8.76% of Six Flags’ common voting stock.  Red Zone desired to acquire Six Flags and was advised by Cadwalader in connection with the Engagement Agreement whihc included a $10 million fee to UBS bank.

Disputes arose over the reach of the agreement, and exactly what had to be done to trigger the fee payment.  A side agreement was reached, which ultimately did not benefit Red Zone. It eventually had to pay the $ 10 million.

Supreme Court found that Cadwalader took two inconsistent positions on whether they warned Red Zone, and presented no evidence to create a material issue of fact on the warning. Supreme Court fond that a gap in the side letter was unreasonable as a matter of law, and that problems were easily forseeable.

Result:  Summary judgment to plaintiff.

CIT Lending Serv. Corp. v Morrison & Foerster LLP  2013 NY Slip Op 31980(U)  August 20, 2013
Sup Ct, New York County  Docket Number: 653797/2012  Judge: Melvin L. Schweitzer has a well written discussion of the difference between contribution and indemnity, as well as an exposition on how "pure economic loss" applies to legal malpractice.  We discussed the contribution issues several days ago.  Here are the indemnity issues. 

"Implied Indemnity Claim
Morrison & Foerster amended its complaint to include an implied indemnity claim after the Third-Party Defendants’ motion to dismiss. Morrison & Foerster objects to Third-Party Defendant’s  attempt to expand their motion to address that separate claim for relief in their reply papers. "[T]he moving party has the option to decide whether its motion should be applied to the new pleadings." Sage Realty Corp. v Proskauer Rose LLP, 251 AD2d 35, 38 (1 st Dept 1998). Morrison & Foerster has fully argued the issues in dispute in its memoranda and sur-reply papers. In favor of judicial efficiency, the Third-Party Defendants motion to dismiss applies to the claim for implied indemnity.
The common law doctrine of implied indemnity permits one who is held vicariously liable, solely on account of the negligence of another, to shift its burden of the loss to the actual wrongdoer. Third Party Defendants argue that in the absence of vicarious liability, the claim for implied indemnity should be dismissed. Although indemnity commonly arises in cases involving an express contract, an implied indemnity obligation may be based upon the law’s notion of what is fair and proper between the parties. See Mas v Two Bridges Assoc. by Nat. Kinney Corp., 75 NY2d 680, 690 (1990). Third-Party Defendants argue that the claim for implied indemnity should be dismissed
because Morrison & Foerster is being sued for its own alleged wrongdoing, attorney malpractice, which bears no relation to the Third-Party Defendants’ actions. A party cannot seek common law implied indemnification, when its liability is predicated on its own fault. See Bleecker St. Health & Beauty Aids, Inc. v Granite State Ins. Co., 38 AD3d 231, 233 (1st Dept 2007); Mathis v Central Park Conservancy, AD2d 171, 172 (1998). The basis for liability in claims of implied indemnity "arises from the principle that ‘every one is responsible for the consequences of his own negligence, and if another person has been compelled … to pay the damages which ought to have been paid by the wrongdoer, they may be recovered from him. ", Raquet v Braun, 90 NY2d 177, 183 (1997). CIT’s malpractice claim against Morrison & Foerster is primarily based on the improper filing of the Building Loan Agreement which, as alleged in the Third-Party Complaint, resulted from the Third-Party Defendants’ untimely filing of the Amendment to the Building Loan Agreement.

Morrison & Foerster has properly alleged a claim for implied indemnity against Third- Party Defendants."

The Court of Appeals has ruled that the only damages available in legal malpractice are  purely economic.  Dombrowski v Bulson  2012 NY Slip Op 04203 [19 NY3d 347]  "We see no compelling reason to depart from the established rule limiting recovery [*4]in legal malpractice actions to pecuniary damages."  "Wolkstein v Morgenstern, 275 AD2d 635, 637 [1st Dept 2000] ["A cause of action for legal malpractice does not afford recovery for any item of damages other than pecuniary loss so there can be no recovery for emotional or psychological injury"]).

Coming at the issue from a slightly different vantage point, CIT Lending Serv. Corp. v Morrison & Foerster LLP; 2013 NY Slip Op 31980(U); August 20, 2013 Sup Ct, New York County ; Docket Number: 653797/2012 Judge: Melvin L. Schweitzer discusses the effect of a law suit that seeks solely "pure economic loss". 

""[P]urely economic loss resulting from a breach of contract does not constitute ‘injury to property’ within the meaning of New York’s contribution statute [CPLR 1401]" Board of Educ. of Hudson City School Dist. v Sargent, Webster, Chrenshaw & Folley, 71 NY2d 21, 26 (1987). The nature of the industry here differs greatly from the one in Sommer. Insurers have an obligation to deal fairly
and protect the fiscal interest of those insured, not to protect the personal safety of citizens. NY  Univ. v Continental Ins. Co., 87 NY2d at 317 (1995). Insurers’ liability is based on contract law, and governed by agreements, terms, provisions, and conditions of the insurance policy. CWbank, NA. v
Commonwealth Land Tit. Ins. Co, 228 AD2d 635, 637 (2d Dept 1996). Though the Third-Party
Defendants’ conduct, as alleged here, did violate NY Lien Law 22, statutory law regulates the insurer’s performance of its contractual obligation, and it does not impose a separate duty of care. NY Univ, 87 NY2d at 317-318."

Morrison & Foerster argues that its contribution claim is not barred by the pure economic loss doctrine, because a tort claim remains pending against Third-Party Defendants, even if that claim may eventually fail. Sound Refrig. and A. C,Inc. v All City Testing & Balancing Corp., 84 AD3d 1349,1350 (2d Dept 2011). As previously mentioned, the Appellate Divisions have held that merely including an alternative tort claim in a breach of contract action will not create a right of contribution if the plaintiff s sole measure of damages is the lost benefit of the bargain. See e.g. Children’s Corner Learning Center v A. Miranda Contracting Corp., 64 AD3d 318 [1 st Dept 2009]; Scalp &  Blade, Inc. v Advest, Inc., 300 AD2d 1 068 (4th Dept 2002); Rothberg v Reichelt, 270 AD2d 760 (3d  Dept 2000)."

Is legal malpractice still a tort?