Well, actually not "buying" the case and not losing the "receipt", nevertheless, plaintiff purchased 50% of an intended legal malpractice case and then lost the contract…or did he?

Pearlman v Faulisi  2013 NY Slip Op 31963(U)  August 7, 2013  Supreme Court, Suffolk County
Docket Number: 15123-2011  Judge: Emily Pines.  "In the Amended Verified Complaint, the plaintiff, Lee R. Pearlman (“Plaintiff’) alleges, among other things, that on or about July 13, 2007, he tendered $125,000 to defendant Peter Faulisi (“Faulisi”) in accordance with an agreement with Faulisi pursuant to which Plaintiff “purchased the rights to one half of any and all proceeds payable or attributable to Faulisi, whether directly from Faulisi’s claims in [a legal malpractice action pending in Federal court] or from his share of any monies paid to Protostorm, in an anticipated legal malpractice lawsuit to be brought by Protostorm and Faulisi against various attorneys.” Plaintiff alleges that he and Faulisi entered into a written contract regarding the Protostorm case and that Faulisi maintained sole custody of the written contract. Plaintiff claims that after they entered into the contract, Faulisi failed to respond to Plaintiffs repeated requests for a copy of the contract and documents regarding the Protostorm case. In the First cause of action, Plaintiff seeks a declaratory judgment and accounting from the defendants declaring that Plaintiff is entitled to 50% of Faulisi’s proceeds from the Protostorm case. In the Second cause of action, Plaintiff
seeks equitable relief (injunction, attachment, receivership) to safeguard Faulisi’s proceeds from the Protostorm case given what Plaintiff calls Faulisi’s extensive pattern of fraud, deceit and unsavory business practices. A copy of the alleged written contract is not annexed to the Amended Verified Complaint. Neither party produced the original or a copy of the written contract during discovery."

Defendants now move (Mot. Seq. 002) for summary judgment dismissing the First  and Second causes of action. In an affidavit in support of Defendants’ motion, Faulisi states, among other things, that the $125,000 check given to him by Pearlman on July 13, 2007, was a personal loan, and that there was no arrangement of any kind, or even any discussion, that the $125,000 was in exchange for a 50% interest in the Protostorm case. Defendants argue, among other things, that Plaintiff cannot meet his burden of demonstrating the existence of an enforceable contract between the parties because there is no writing signed by the parties containing the terms of such an agreement. Defendants contend that the $125,000 was nothing more than a loan between  Pearlman and Faulisi, to be repaid when Faulisi or Lean for Life Products, LLC, a start-up company of which Faulisi is Chief Operating Officer, had sufficient funds. "

Here, the Defendants allege that a written agreement forming the basis of the First and Second causes of action asserted by the Plaintiff never existed and contend that summary judgment must be granted because Plaintiff cannot produce the agreement and, therefore, cannot prove the existence of an enforceable contract. However, the Defendants cannot satisfy their initial burden by merely pointing to gaps in Plaintiff‘s case (see Johnson v Culinary Institute of America, 95 AD3d 1077, 1078 [2d Dept 2012). Moreover, the Defendants have failed to establish, as a matter of law, that secondary evidence of the contents of the agreement would be inadmissible at trial under the best evidence rule (see Schozer v William Penn Life Ins. Co. ofNew York, 84 NY2d 639,644
[1994]; Matter of Eshaghian; 100 AD3d 751, 752 [2d Dept 2012). "

Reading this case produces an image of a train rolling through the countryside, without anyone at the controls. It is the story of a car accident, an unjoined party, and mistake after mistake. In the end plaintiffs are non-suited and all the efforts are for naught.

Di Giacomo v Michael S. Langella, P.C. 2012 NY Slip Op 32658(U)  Supreme Court, Suffolk County Docket Number: 08-7307 Judge: John J.J. Jones J

This action for legal malpractice was commenced to recover damages allegedly sustained by the
plaintiffs as the result of the failure of the defendants to properly present a motion to vacate the dismissal of the plaintiffs’ underlying action for personal injuries. On May 23, 2000, the plaintiff Lisa Di Giacomo Frangione (Di Giacomo) was involved in a motor vehicle accident. In May 2000, the plaintiffs retained Ira Levine, Esq. (Levine), to commence an action against Barbara Daniels (Daniels), the owner and operator of the other vehicle involved in the underlying accident. On September 18, 2003, the plaintiff executed a Consent to Change Attorney substituting Hankin, Handwerker & Mazel, PLLC (HHM) as her attorneys in place of Levine. Depositions in the personal injury action were conducted on or about April 2,2004, and Daniels testified that at the time of the accident she had been operating her vehicle in the course of her employment with Weight Watchers. After the underlying action (or Daniels action) had been placed on the trial calendar, HHM moved for leave to withdraw as counsel for the plaintiffs. By order of the Court dated May 15, 2006 (Molia, J.), the motion was granted, counsel was directed to serve a copy of the order on the plaintiffs on or before May 19, 2006, and the discharge was to be effective ten days after filing proof of service. In addition, the order set down July 12,2006 as the date for jury selection. When the plaintiffs failed to appear for jury selection on July 12,2006, the matter was adjourned until July 19, 2006. The record before this Court reveals that the plaintiffs again failed to appear on July 19,2006, and upon oral application made on the record by defense counsel in the underlying action, the action was dismissed with prejudice by the Honorable Denise F. Molia. On or about August 9,2006, the plaintiff retained the defendants to represent them in the underlying action. The defendants prepared and submitted an order to show cause dated August 10, 2006, seeking to vacate the plaintiffs default and to restore the case to the trial calendar. By order dated November 16, 2006, the Court (Molia, J.) denied the plaintiffs’ motion to vacate their default ."

"On February 20, 2008, the plaintiffs commenced this action for legal malpractice against Levine,
HHM, Stacy Rinaldi Guzman, Esq. (Guzman), and the defendants. Among the allegations set forth in the complaint is a claim that the failure to timely join Weight Watchers ( Daniel’s employer) as a party in the underlying action constituted malpractice. In addition, it is asserted that after HHM was relieved as plaintiffs’ counsel, the plaintiffs were represented by Guzman, who had agreed to appear on the plaintiffs’ behalf to obtain an adjournment of the July 12,2006 court date, but failed to do so. It is further alleged that the defendants failed to include an affidavit of merits with the motion to vacate the dismissal of the plaintiffs’ underlying action resulting in its denial, and the loss of the plaintiffs’ ability to recover damages for their injuries.In early 2008, Levine, HHM, Guzman and the defendants separately moved to dismiss the plaintiffs’ complaint on the grounds, among other things, that it failed to state a cause of action. By order dated October 30,2008, the undersigned granted the motions of Levine, HHM and the defendants, dismissing the complaint against them. By order entered on January 12, 2009, the undersigned granted Guzman’s motion, dismissing the complaint against her. After the plaintiffs’ appealed from the judgments entered pursuant to those orders, the Decision and Order of the Appellate Division, Second Department, dated September 14, 20 10, affirmed the dismissal of the complaints against Levine, HHM and Guzman, and reversed that branch of the order dismissing the complaint against the defendants. In a stipulation dated June 15, 20 1 1, the parties agreed to amend the caption to reflect the dismissals in favor of Levine, HHM and Guzman. Said stipulation was so ordered on July 13, 201 1, and filed with the Clerk of the Supreme Court on July 18,2011. Thereafter, the action proceeded against the defendants and, after all discovery was completed, a compliance order dated September 7,201 1, directed the plaintiffs to file a note of issue on or before October 7, 201 1. The computerized records maintained by the Court reflect that the plaintiffs filed a note of issue on October 28, 201 1, resulting in the caption set forth above.’

"At his deposition, the defendant Michael S. Langella (Langella) testified that he was retained by
the plaintiffs on or about August 9,2006, to attempt to vacate the dismissal of the underlying action, to restore the action to the trial calendar, and to litigate that action. He decided to move by order to show cause as quickly as possible to avoid a claim by Daniels that she was prejudiced in the interim. Langella indicated that he was aware of the legal standard required to vacate a default, and that his affirmation and the affidavit of Di Giacomo, submitted in support of the order to show cause, established that the plaintiffs had meritorious causes of action against Daniels. He acknowledged that the order to show cause did not state how the accident happened, and that the court order denying the motion stated that it was denied because it did not contain any proof regarding the merits of the plaintiffs’ action against Daniels. Langella further testified that he was aware of the facts surrounding the dismissal of the Daniels action, and that the case had been on the trial calendar and adjourned a number of times. He indicated that he spoke with Levine by telephone to corroborate the plaintiffs’ claim that Di Giacomo had spoken with Guzman to obtain an adjournment of the July 12, 2006 court date, that he did not advise the plaintiffs that they had a legal malpractice claim against Levine, and that he did not receive the plaintiffs’ file from HHM until October 10, 2006. He stated that he handled a subsequent motion to reargue the denial of the order to show cause differently, attaching a doctor’s affirmation and Levine’s affirmation. Langella testified that the written retainer signed by the plaintiffs provides that he and his firm were going to represent them to collect compensation for their injuries in the car accident, and to sue any persons or entities that may be liable to them for damages under the law. He indicated that the retainer stated that the plaintiffs would be responsible for the costs of any appeals, but that he did not charge them for the costs of the two appeals that he prosecuted on their behalf in the Daniels action. He stated that “based on the circumstances here, I believed that it was my obligation to undertake those costs and responsibilities.” He believed that Di Giacomo should have been compensated for the injuries that she suffered in the car accident. Langella further testified that the plaintiffs’ actions did not contribute lo the denial of the motion to vacate their default, that he was not aware of any third party that would be responsible for the plaintiffs’ damages during his representation of them, that he was not aware of any issues regarding privity of contract regarding the subject retainer, and that he is not claiming that he made any errors in judgment in representing the plaintiffs. He further stated that he had no knowledge that would indicate that the plaintiffs are not the real parties in interest in this action, and that he did not have any facts that would support a claim that this action is barred by the statute of limitations, or that the plaintiffs lack standing to bring this action
 

In the construction industry, bonding is extremely important.  Huge jobs, and large expenditures of money are based upon the belief that there is a pot of money protecting the process.  Sub-contractors provide work and materials on the basis that there is someone who will pay, eventually.  Sometimes it goes wrong, and a wedge of the legal industry is devoted to construction litigation.  Injuries, as well as provision of work and materials are constantly being litigated.

In Phoenix Erectors LLC v Fogarty  2013 NY Slip Op 31936(U)  August 14, 2013  Supreme Court, New York County  Docket Number: 100701/10 Judge: Louis B. York we see a case that has been dismissed, appealed, reversed and sent back, now to plaintiff’s successful motion for summary judgment.

"Plaintiff is a construction company, which was hired as a subcontractor by Hera Construction, Inc. (Hera) in connection with the construction of a monorail in Newark Airport, in New Jersey (project).
Hera was also the principal under a Subcontractor Labor and Material Payment Bond No. B99-020680 (bond), issued by Ulico Casualty Company (Ulico), as surety for amounts Hera was
obligated to pay subcontractors on the project. The bond, which was for $1,600,000, contained a forum selection clause requiring that Ulico could only be sued in the United States District Court
of the jurisdiction in which the bonded project was situated, here, New Jersey. A pay dispute arose between Phoenix and Hera, in which Phoenix claimed it was due approximately $180,000. Apparently, Hera got wind of plaintiff’s decision to commence a suit against Hera and Ulico in the New Jersey District Court, and commenced a peremptory suit against plaintiff in Supreme Court, Suffolk County, New York, in January 2002 (Hera Construction, Inc. v Phoenix Erectors, LLC., Index No. 00044/02)(Suffolk County action), seeking damages for plaintiff’s alleged failure to provide materials to the project, Fogarty was retained by plaintiff to represent it in the Suffolk County action. Fogarty served an answer on Hera, on plaintiff’s behalf, in April 2002. Plaintiff obtained New Jersey counsel, John Rittley (Rittley), to prosecute an action against Hera and Ulico in the United State District Court, District of New Jersey (New Jersey action). against Hera sounding in breach of contract, plaintiff brought a claim for payment against Ulico under the bond. Besides bringing claims in the New Jersey action Fogarty moved to dismiss the Suffolk County action, claiming
lack of jurisdiction and forum non conveniens. The motion, and a motion for reargument, were denied, based on a forum selection clause in the Hera-Phoenix contract calling for suits against
Hera to be brought in Suffolk County. Hera then moved in the New Jersey action to be dismissed
from the action based on the same forum selection clause. This motion was granted, and the New Jersey action continued against Ulico without Hera. At some point, Fogarty contacted Rittley to discuss adding Ulico to the Suffolk County action. The court notes that Ulico inserted a second affirmative defense in its answer, claiming that the New Jersey action should be dismissed, as the proper venue to settle disputes among plaintiff, Hera and Ulico was in Suffolk County, because Ulico’s forum selection clause was subordinate to Hera’s. Fogarty apparently never saw Ulico‘s
answer in the New Jersey action. Fogarty and Ulico‘s counsel discussed Ulico’s insertion into
the Suffolk County action. Apparently, Ulico refused to enter into a stipulation to become a defendant in a direct action against it, but agreed to stipulate to becoming a third-party
defendant in the Suffolk County action, waiving all jurisdictional defenses."

"W&M’s creative summation of the gist of plaintiff‘s complaint does not reflect the actual cause of action plaintiff has brought, and which the Appellate Division recognized in its decision. Plaintiff is claiming that it would have obtained a better result in the underlying litigations if it had been able
to pursue a direct action against Ulico in either New York or New Jersey, because Ulico is a solvent company whose bond covered the subject matter of the payment dispute, and that a judgment against Ulico would have been a more favorable outcome for plaintiff, since the judgment obtained against Hera implicated Ulico’s bond, so that the bond would have been available to pay that judgment. Plaintiff is alleging that Fogarty failed to protect plaintiff’s valid and valuable action against Ulico, in that he should have either gotten a stipulation allowing for a direct
action against Ulico in New York, waiving the statute of limitations, or, failing that, refused to permit Rittley to execute the New Jersey stipulation, so that the direct action could have proceeded against Ulico in New Jersey. Plaintiff is essentially faulting Fogarty for believing, without actual knowledge, that plaintiff could not sue Ulico in the New Jersey action without Hera, and not being aware that a third-party suit in New York was useless as a means to collect from Ulico."

Businesses grow huge, make multi-million dollar loans (read: $ 125 million+) and buy/sell huge ongoing and decrepit stores.  How do they go astray?  We see one example in Ableco Fin. LLC v Hilson  2013 NY Slip Op 05665   Decided on August 20, 2013   Appellate Division, First Department .  Was it attorney error, or merely a delusional business deal?
 

"Plaintiff is in the business of making commercial loans. This action for legal malpractice stem from a $125 million loan that plaintiff made to BH S & B Holdings LLC (Bay Harbor) in August 2008. The loan was made to finance Bay Harbor’s purchase of certain assets from the bankruptcy estate of S & B Industries, Inc. (Steve & Barry’s), a retail clothing chain. According to the controlling asset purchase agreement, Bay Harbor’s desire was "to purchase substantially all the assets and to assume certain lease and other obligations of [Steve & Barry’s] with the present intention of operating the Business as a going concern." Plaintiff retained defendants on August 14, 2008 and the loan closed on August 26, 2008. Without repaying the loan, Bay Harbor filed its own bankruptcy petition in November 2008.

Plaintiff alleges, with respect to the credit card receivables claim, that defendants committed legal malpractice by failing to advise it that, after the closing, the cash proceeds of credit card sales of Bay Harbor’s inventory would be deposited in a Steve & Barry’s bank account on which plaintiff had no lien. Under the inventory claim, plaintiff alleges that defendants failed to adequately advise it that its first priority security interest on Bay Harbor’s assets was collateralized by only a portion of the Steve & Barry’s inventory as opposed to the entire inventory. Plaintiff alleges that it would not have made the loan had defendants provided it with proper legal advice that it was not acquiring a first priority lien on the entire Steve & Barry’s inventory.

The credit card receivables claim was properly dismissed because the record establishes that before making the loan plaintiff knew that agreements creating its liens on the bank accounts would not be negotiated and executed until after the closing. The inventory claim should have [*2]also be dismissed on the basis of information plaintiff indisputably possessed prior to the August 26, 2008 closing.

Defendants deposed Kevin Genda, plaintiff’s vice chair who was in charge of all of its lending activities. After negotiating the loan’s basic terms, Genda, on behalf of plaintiff, retained defendants on or about August 14, 2008. Ten days earlier, Bay Harbor and Steve & Barry’s had entered into an asset purchase agreement (APA). Under the terms of the APA, the Steve & Barry’s inventory purchased by Bay Harbor excluded inventory that constituted GOB (going out of business) inventory. The APA defined "GOB Assets" as "all owned Merchandise and Furniture and Equipment located at Store Closing Locations" as opposed to locations at which Bay Harbor intended to assume the Steve & Barry’s lease obligations and operate the business as a going concern. According to a term sheet that was transmitted on August 15, 2008 by Paul Lusardi, plaintiff’s senior vice president, the collateral for the loan was to consist of "a perfected first priority security interest in all existing and future assets of Borrower." The term sheet lists Newco (Bay Harbor) as the only "Borrower."

The record also contains an August 14, 2008 email to Lusardi from Nate Land, a member of plaintiff’s deal making team. Attached to the email is a press release about the bankruptcy court’s approval of the APA. The press release reads, in part: "The assets to be acquired include but are not limited to . . . all Steve & Barry’s merchandise, with the exclusion of any product located at stores not purchased by [Bay Harbor] [emphasis added] . . ." The foregoing documentary evidence refutes plaintiff’s pivotal claim that it made the loan on August 26, 2008 without knowing that it was not getting a first priority lien on the entire Steve & Barry’s inventory. "

Time limitations and continuing representation are a constant issue in legal malpractice cases.  When the statute begins to run and how long it may be tolled are sub-issues.  Cordero v Koval Rejtig & Dean PLLC;  2013 NY Slip Op 31893(U) ;  August 8, 2013;  Supreme Court, New York County ;  Docket Number: 113450/11; Judge: Debra A. James gives us a nice discussion of both.

"The statute of limitations for attorney malpractice is three years (CPLR 214 [ 6 ] ) . A claim for legal malpractice accrues when the attorney commits the malpractice, not when the client discovers it (Shumsky v Eisenstein, 96 NY2d 164, 166 [lst Dept 20011). A client’s ignorance of his or her attorney’s misconduct has no effect on when a claim for malpractice accrues (Lincoln Place, LLC v RVP Consulting, 70 AD3d 594, 594-595 [lst Dept, 2010). The accrual of the limitations period may be tolled according to the continuous representation doctrine."
 

"Plaintiff contends that the action accrued on December 5,2008, when his personal injury case  was dismissed, and that he had until December 5, 2011 to sue defendants. Plaintiff relies on case law stating that a legal malpractice claim accrues "when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court’" (McCoy v Feinman, 99 NY2d 295, 301 [2002] , quoting Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]). He argues that, until his case was dismissed, he did not have an action against defendants. Plaintiff misstates the applicable law. Plaintiff had a claim against defendants before his case was dismissed, even if he was ignorant of that fact. Where it is alleged that an attorney negligently let pass the statute of limitations for the client’s action, the claim for legal malpractice accrues upon the
expiration of that statute of limitations (Cohen v Wallace & Minchenberg, 39 AD3d 691, 692 [2d Dept 20071; Baker v Levitin, 211 AD2d 507, 507 [1st Dept.1951)."

"As defendants implicitly point out, Koval’s continuous representation of plaintiff can be imputed to defendants. In Antoniu v Ahearn (134 AD2d 151 [lst Dept 1987]), the plaintiff hired the first attorney and her law firm in 1978. 1981 or 1982, the first attorney left that firm and joined In another firm, where she continued to represent plaintiff. Upon hiring a new attorney, plaintiff fired the first attorney in July 1983. On October 10, 1985, plaintiff began an action against the firm retained in 1978. The court determined that the action against the firm that plaintiff retained in 1978 was within the statute of limitations. The limitations period against that firm was tolled until the first attorney stopped representing the plaintiff. The first attorney’s continuing representation, which
stopped in 1983, was imputed to the firm."

In this case, the court permits client to plead fraud even though legall malpractice is time barred. Why? Unsophisticated client retains attorney for a first time purchase of a business. Attorney undertakes complicated transaction for $ 3000. As soon as the contract is ready, attorney tells client to sign a wavier, and then seems to have a conflict of interest and starts to represent the landlord and undertakes to evict the client.’

Hernandez v Marquez 2012 NY Slip Op 31112(U) Supreme Court, New York County Docket Number: 103531/11 Judge: Joan A. Madden:

"In October 2007, Hernandez retained Marquez, an attorney, who represented to her that he was competent to handle all aspects of the purchase of a restaurant and the acquisition of a liquor license. (Amended Complaint, 7 3). Hernandez “made it very clear to [Marquez] that she had never purchased a business before this particular purchase transaction, that she had no experience purchasing a business and that she had to rely on him completely for all aspects of the purchase of the restaurant with a liquor license.” (u 7 4). Marquez “promised that he would perform in the manner required by [Hernandez] and that she had nothing to worry about [if] she contracted with him” (a 7 5). In consideration for these promises to properly handle the purchase of the restaurant and the acquisition of the liquor license, Hernandez paid Marquez $3,000.

In reliance of Marquez’s advice, including representations that the liquor license could be transferred from the seller, so long as Hernandez was not convicted of any crimes, Hernandez contracted with the seller to purchase the business. (Ig 7 8). The purchase was accomplished through a Stock Transfer Agreement entered into on October 2,2007, a copy of which is annexed to the proposed amended complaint. The Agreement made the obtaining of a liquor license for the Restaurant a condition of the purchase. As soon as she told Marquez that she was not convicted of any crimes, Marquez had her sign a waiver, which states in pertinent part: Parties represent and state that notwithstanding anything to the contrary in documents for the above purchase, that [Hernandez Is irrevocably purchasing said store and waives condition of approval by the State of New York Liquor Authority and Beverage Control Board, and further states that he/she is qualified
for an off-premises beer license,After signing the waiver, Hernandez paid the seller $30,000 as a down payment for the business, at which time Marquez advised Hernandez to pay for the seller’s landlord $10,000 rent arrears due and owing from the seller, and instructed Hernandez to execute a new lease with the landlord, which required $5,250 as a security deposit and as monthly rent ( 7 19). There may have been a conflict of interest that caused Marquez to have Hernandez sign the waiver, since Marquez now represents the landlord in an action to evict Hernandez from her apartment 18). If Marquez had told Hernandez the truth about the waiver, Hernandez would not have gone through with the purchase of the restaurant until she had secured a liquor license. 7 20).
However, “[s]olely due to assurances, representations, advice and direction of the Marquez,
Hernandez was caused … to close the transaction with no approval from the State Liquor
Authority.”

Due to Marquez’s misrepresentations and omissions, “includ[ing] his directing Hernandez to execute a lease and pay rent of $5,250 a month, which she paid for over a year, for a premises which she believed that she would have a restaurant and liquor license,” Hernandez suffered damages (Id, 7 27). As a result of her reliance on Marquez’s representations, Hernandez alleges that she had become indebted to the seller for $91,350,000.In addition, contrary to Marquez’s representations, the liquor license for the restaurant could not be secured.
 

Accounting malpractice, like any other variant of professional malpractice (attorneys, brokers, financial professionals) are all subject to a three year statute of limitations, which may be tolled for continuous representation.  In Ghiz v Schreck & Co.  2013 NY Slip Op 31869(U)  August 9, 2013
Sup Ct, New York County Docket Number: 158805/2012  Judge: Eileen A. Rakower we see a description of the application of continuous representation.

"A cause of action charging that a professional failed to perform services with due care and in accordance with the recognized and accepted practices of the profession is governed by the three-year statute of limitations applicable to negligence actions. (See, CPLR §214[6).
 

As set forth in ATC Healthcare Inc. v. Goldstein, Golub & Kessler LLP, 28 Misc. 3d 1237(A), *3 (N.Y. Sup. July 26, 2010):

The continuous representation doctrine is an exception to the Statute of Limitations and applies only where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim. Symbol Technologies, Inc. v. Deloitte & Touche, LLP, supra, at p. 195 (citation omitted). That is, "the continuous representation must be in connection with the particular transaction which is the subject of the action and not merely during the continuation of a general professional relationship." Zaref v. Berk & Michaels, P. c., 192 A.D.2d 346, 347-48 (1 st Dept. 1993) (citations omitted). "[T]he facts are required to demonstrate
continued representation in the specific matter directly under dispute." Zaref v. Berk & Michaels, P. c., supra, at p. 348.

ATC Healthcare Inc., 28 Misc. 3d 1237(A) at *3.

Schreck contends that Plaintiffs’ accounting malpractice claim is time barred because Plaintiffs filed the Complaint in the present action on December 12, 2012, more than three years after the embezzlement was allegedly discovered on August 27, 2009 and argues that it did not continue to represent Plaintiffs specifically with respect to the embezzlement because it "could not have done anything in any ongoing capacity to ‘correct’ or ‘mitigate’ the embezzlement." However, the Complaint alleges that "Defendant Schreck continuously represented plaintiffs regarding claims
by various government bodies as to said tax penalties and liabilities up and until September 2012 as well as rendered its usual and customary services to plaintiffs and attempted to restate and correct the mistakes made during the period of defendant Schreck’s malfeasance."

Legal malpractice, and its cousin deceit might be found anywhere attorneys tend problems.  One fairly startling setting is the Poly Prep sex abuse litigation.  Like the similar Horace Mann sexual abuse litigation, there are numerous claims of concealment and lying. Andrew Keshner writes in today’s New York Law Journal that former students have filed a Judiciary Law 487 claim against Poly Prep’s outside counsel O’Melveny & Myers.

‘Former students who settled a lawsuit alleging a prestigious private school in Brooklyn covered up a football coach’s years of sexual abuse are now suing the school’s outside counsel at O’Melveny & Myers for allegedly trying to "deceive" the court with "fraudulent evidence" and "materially false and fraudulent statements."

Naming O’Melveny and Jeffrey Kohn, managing partner of the firm’s New York office, as defendants, the action argues they "should not be allowed to escape sanction for their grievous and oft-repeated falsehoods."

The lawsuit, Zimmerman v. Kohn, 652826/2013, was filed Aug. 11 in Manhattan Supreme Court (See Complaint). It demands that, in addition to other things, O’Melveny reimburse the plaintiffs for $2 million in legal fees expended to achieve a confidential settlement. In addition, the plaintiffs are seeking that all fees paid to O’Melveny by Poly Prep Country Day School be turned over to the plaintiffs.

O’Melveny scoffed at the claims.

"The underlying case was concluded nine months ago with a settlement voluntarily entered into by the plaintiffs. These claims are completely baseless and without merit," the firm said in a statement.

The current suit arises from a lawsuit 10 alumni and two former summer camp participants filed against the school and its officials in 2009 for allegedly concealing abuse that occurred from 1966 to 1991 by coach Philip Foglietta. The coach died in 1998 after working 25 years at the school.

After Eastern District Judge Frederic Block (See Profile) ruled last August that some claims could proceed in Zimmerman v. Poly Prep Country Day School, 09-cv-4586, the parties reached a confidential settlement in December. Philip Culhane, a partner at Simpson Thacher & Bartlett, was among the plaintiffs (NYLJ, Aug. 30, 2012 & Dec. 28, 2012).

The current suit’s claims include a violation of the state’s Judiciary Law §487, which prohibits attorney misconduct toward a court that includes "deceit or collusion, with intent to deceive the court or any party."

It was brought by 11 of the 12 plaintiffs, except for Culhane, and especially targets the firm’s defense of the school with a focus on Kohn and the firm’s description of an internal probe the school conducted in 2002."