As the economic times turn around, we are still seeing the results of the mortgage bubble.  in Ferreira v Citiwide Real Estate & Mgt. Co.   2013 NY Slip Op 50745(U)   Decided on May 8, 2013
Supreme Court, Queens County   Kitzes, J.  we see a typical issue.  What happens when the system spins, and the owner is put on the street?  Litigation follows. 

Of particular interest is what happens when an attorney negligently or carelessly enters into a stipulation on behalf of a client in "open" court?  Case law says that the client is bound.  however. we are puzzled by what seems to be a complete lack of a remedy here.

" The court finds that plaintiff’s proposed complaint adequately alleges a cause of action for legal malpractice based Mr. Solda’s alleged failure to review the mortgage foreclosure file, and move to vacate the judgment of default, foreclosure and sale, and the referee’s deed on the grounds of lack of personal jurisdiction, rather than entering into the stipulation of settlement which resulted in plaintiff vacating the subject premises. To the extent that Mr. Soldas asserts that he was only retained to represent Mr. Ferreira in the civil court matter, the retainer agreement does not identify the court in which the Deutsche Bank action was pending, does not contain an Index Number for the matter entitled "Deutsche Bank v J Ferreira, et al", and refers to "[a]ll legal matters relative to defense of claims arising out of the above referenced matter and the foreclosed property." The retainer agreement on its face, thus, does not specifically limit Mr. Solda’s representation of Mr. Ferreira to the civil court matter.

However, to the extent that Mr. Ferreira alleges he did not authorize Mr. Solda to enter into the stipulation in civil court, this claim cannot form a basis for legal malpractice. It is well settled that a stipulation made by the attorney may bind a client even where it exceeds the attorney’s actual authority if the attorney had apparent authority to enter into the stipulation (see Hallock v State of New York, 64 NY2d 224, 231 [1984]).

In view of the foregoing, with respect to the motion by defendant Deutsche Bank and Paul Solda, summary judgment dismissing the complaint is granted as against Deutsche Bank and denied as to Paul J. Solda, Esq.; cancellation of the notice of pendency against 24-27 Curtis Street, East Elmhurst, New York is granted; and an award of counsel fees and costs are denied. "

Plaintiff’s mother brought a personal injury case against the City of New York for plaintiff from an injury of December 20, 2002. She retained defendant attorneys to represent her. She discharged the attorneys via a "Consent to Change Attorneys" in August , 2006. She brought the legal malpractice caseFleyshman v Suckle & Schlesinger, PLLC ; 2012 NY Slip Op 00176 ; Appellate Division, Second Department. This case was dismissed on the statute of limitations.

"The Supreme Court erred in denying that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(5) to dismiss the first cause of action, alleging legal malpractice, as time-barred. The defendants sustained their initial burden by demonstrating, prima facie, that the alleged legal malpractice occurred more than three years before this action was commenced in May 2010 (see CPLR 214[6]; Rupolo v Fish, 87 AD3d 684, 685; Krichmar v Scher, 82 AD3d 1164, 1165). In response, the plaintiff failed to raise a question of fact as to whether the statute of limitations was [*2]tolled by the doctrine of continuous representation. All of the documentary evidence demonstrated that the relationship necessary to invoke the continuous representation doctrine terminated in August 2006, and the plaintiff’s submissions did not indicate that her trust and confidence in the defendants continued, or was restored, after that date (see Rupolo v Fish, 87 AD3d 684; Krichmar v Scher, 82 AD3d at 1165; Marro v Handwerker, Marchelos & Gayner, 1 AD3d 488; Piliero v Adler & Stavros, 282 AD2d 511, 512; Aaron v Roemer, Wallens & Mineaux, 272 AD2d 752, 754-755).

Moreover, the Supreme Court should have granted that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(7) to dismiss the second cause of action, which alleged a violation of Judiciary Law § 487. Even as amplified by the plaintiff’s affidavit, and according the plaintiff the benefit of every favorable inference (see Leon v Martinez, 84 NY2d 83), the complaint failed to allege that the defendants acted "with intent to deceive the court or any party" (Judiciary Law § 487[1]; see Jaroslawicz v Cohen, 12 AD3d 160, 160-161). Further, the plaintiff’s allegation that the defendants "willfully delayed [her] recovery with a view to their own ends and benefit" is a bare legal conclusion, "which is not entitled to the presumption of truth normally afforded to the allegations of a complaint" (Rozen v Russ & Russ, P.C., 76 AD3d 965, 969; see Judiciary Law § 487[2]). "
 

Some years ago the Legislature overruled the Court of Appeals, and passed CPLR 214(6). That statute was interpreted to say that all claims against an attorney (some other professionals) were subject to a 3 year statute, whether the claim was made in negligence or contract.

Here, in Walter v Castrataro 2012 NY Slip Op 02676 Appellate Division, Second Department we see a plaintiff unsuccessfully attempting to get the benefit of a typical 6 year statute for breach of contract.

"On April 16, 2003, the plaintiff signed a retainer agreement, wherein the defendant agreed to represent her in a matrimonial action. By letter dated July 1, 2003, the plaintiff terminated the defendant’s representation. On June 11, 2009, the plaintiff commenced this action, alleging in [*2]her complaint that the defendant "negligently failed to represent the Plaintiff and breached her duties" and "[a]s a result of the Defendant’s breach of contract the Plaintiff has suffered substantial damages[.]" The defendant moved, inter alia, for summary judgment dismissing the complaint on the ground that the complaint sounded in legal malpractice and, thus, was barred by the applicable three-year statute of limitations (see CPLR 214[6]). In her opposing affidavit, the plaintiff stated that she "may have inadvertently misused language on the Summons and Complaint. However, the object of the said application served upon Defendant asserts breach of contract verbatim and notably, Plaintiff never uses the term Legal malpractice" (emphasis in original). In her affidavit, the plaintiff alleged numerous "breaches" by the defendant in connection with the underlying matrimonial action, including a failure to file an application for pendente lite support, failure to move to vacate a certain forensic report, and failure to "modify" a certain stipulation. The Supreme Court, among other things, granted that branch of the defendant’s motion which was for summary judgment dismissing the complaint as time-barred.

The complaint is "nothing more than a rephrasing of the claim of malpractice in the language of breach of contract" (Mitschele v Schultz, 36 AD3d 249, 252). The defendant satisfied her initial burden by demonstrating, prima facie, that the complaint sounded in legal malpractice and that the three-year statute of limitations began to run no later than July 1, 2003 (see Sladowski v Casolaro, 84 AD3d 1056, 1057). In opposition, the plaintiff failed to raise a triable issue of fact, e.g., by submitting proof demonstrating that the statute of limitations was tolled by the continuous representation doctrine, or otherwise (see Tsafatinos v Lee David Auerbach, P.C., 80 AD3d 749, 750). Accordingly, the Supreme Court properly concluded that the action, commenced almost six years after the alleged legal malpractice was committed, was barred by CPLR 214(6), and, thus, properly granted that branch of the defendant’s motion which was for summary judgment dismissing the complaint as time-barred. "
 

When clients depend upon the expertise of an attorney, and then end up with a bad result, they can successfully plead legal malpractice. Does a client settle the personal injury case or litigate on? Depending on how the attorney advises the client, there may or may not be legal malpractice. Here is an example.

Polanco v Greenstein & Milbauer, LLP 2012 NY Slip Op 04385, Appellate Division, First Department concerns a case in which plaintiff was struck in the neck by a piece of lumber. She alleged that the defendant was negligent in urging her to settle the case without a MRI and telling her that a MRI would not lead to a more favorable result. She settled the case for $ 20,000 only to find out later that she was permanently disabled.
 

"after settling the case for $20,000, she obtained an MRI showing a disc herniation that required surgical intervention; that she remains permanently disabled; that defendant’s negligence proximately caused her to sustain damages by not gaining the fair value for her case; and that she would have been successful in the underlying action had defendants exercised due care. These allegations are sufficient to state a claim for legal malpractice (see Garnett v Fox, Horan & Camerini, LLP, 82 AD3d 435, 435 [2011]; see generally Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083 [2005], lv denied 6 NY3d 701 [2005]). Plaintiff was not required to [*2]show a likelihood of success in the underlying action, but was "required only to plead facts from which it could reasonably be inferred that defendant’s negligence caused [her] loss" (Garnett, 82 AD3d at 436). Plaintiff plead such facts. "
 

Reading the background information or the caption of some legal malpractice cases often reveals issues about the case itself.  In Stuart v Robert L. Folks & Assoc., LLP   2013 NY Slip Op 03319
Decided on May 8, 2013   Appellate Division, Second Department , we saw that the defense counsel’s name was all alone in the appearance section of the appeal.  Plaintiff appealed from the dismissal of his case, yet his name did not appear at the top, implying that plaintiff was pro-se and did not participate in oral argument.  Sometimes that’s a great decision, other times, not so great.
 

We read on to see that the Appellate Division decided the case on a somewhat related issue.  From the decision:  "Applying these standards to the instant case, the Supreme Court properly directed the dismissal of the legal malpractice cause of action. The plaintiff alleged that the defendants negligently advised him to prosecute an underlying action despite the fact that it was time-barred. However, the documentary evidence submitted by the defendants established that they specifically advised the plaintiff about probable statute-of-limitations problems, and that they reasonably commenced the underlying action despite such concern. Moreover, the documentary evidence also established that the underlying action was dismissed solely because the plaintiff failed to appear pro se with new counsel in that action within the time specified by the court, after the court had granted the motion of Robert L. Folks & Associates, LLP, a defendant in this action, to be relieved as counsel for the plaintiff in the underlying action. "

While the decision inZaidman v Marcel Weisman, LLC  2013 NY Slip Op 03323 Decided on May 8, 2013  Appellate Division, Second Department  does not specifically set forth what Plaintiff could not prove, we believe it would have been "notice" of a defective condition, and lack of proof (in the alternative) of creation of the dangerous condition.  In other words, could plaintiff prove that the plastic wrapper was left by the distributors or not?
 

"The defendant was retained to represent the plaintiff in an action to recover damages for injuries she allegedly sustained when she slipped and fell on a plastic-wrapped package of advertising flyers left on the steps of her residence. The defendant commenced an action on behalf of the plaintiff against the owner of the residence and against a marketing distribution company which allegedly distributed the flyers. The owner of the residence defaulted, and the defendant obtained a judgment against her and in favor of the plaintiff. Depositions of a representative of the marketing distribution company were not conducted until after the expiration of the statute of limitations, at which time the representative testified that the company did not start distributing that particular advertising flyer until a date subsequent to the plaintiff’s accident, and named another company which allegedly was the distributor at the relevant time. The defendant was unable to commence an action against this other company or against the publisher of the advertising flyers, as the statute of limitations had expired, and the plaintiff commenced this action alleging legal malpractice. "

"The plaintiff failed to establish her entitlement to judgment as a matter of law on the issue of defendant’s liability for malpractice, as she failed to establish, prima facie, that she would [*2]have prevailed in the underlying action against certain persons or entities whom she identified, even had they been timely joined as additional defendants (see Greene v Sager, 78 AD3d at 779; Theresa Striano Revocable Trust v Brancato, 71 AD3d 1122). "

The short answer to the question is yes, they do; the longer answer to the question is that their rights to first amendment protection of speech is very limited, and litigation over those rights will be stringently examined, or better put, subject to strict scrutiny. In Ruotolo v Mussman & Northey
2012 NY Slip Op 30860(U), Sup Ct, NY County Docket Number: 109449/2008
Judge: Saliann Scarpulla both plaintiff’s case against the Police Department and his later legal malpractice case against the attorneys are lost.  This case was recently affirmed on appeal.

"Plaintiff Angelo Ruotolo (“Ruotolo”) is a former New York City Police Department (“NYPD”) officer. In June 2003, while still employed with the NYPD, Ruotolo commenced a civil rights action in the United States District Court for the Southern District of New York (“the civil rights action”) against the City of New York and several NYPD supervisors (collectively “the City defendants”). Non-party William Rold (“Rold”) initially represented Ruotolo in the civil rights action. In the civil rights action Ruotolo alleged that the City defendants retaliated against him for writing a report (“the Report”) about the possible health effects of environmental contamination in the 50th precinct, where Ruotolo served as a Command Safety Officer. Ruotolo alleged that after writing the Report, the City defendants arbitrarily denied him time off and overtime, reassigned him repeatedly, and disciplined him for trivial reasons. Ruotolo asserted claims that these retaliation-or.y actions violated the First Amendment and Due Process clauses of the U.S. Constitution, and various state whistle blower laws. "

"In November 2003, the City defendants moved to dismiss Ruotolo’s complaint, arguing that the Report was not protected by the First Amendment because Ruotolo prepared it in his capacity as a public employee, not as a private citizen. On August 25, 2004, Judge Stein denied the City’s motion with respect to the First Amendment and Due Process claims but granted the motion with respect to the state whistle blower claims. Then, in February 2004, the NYPD charged Ruotolo with visiting an out of borough location while on duty, subsequently placed him on modified duty and confiscated his firearms. Ruotolo eventually retired from the NYPD without a permit to carry a firearm as a civilian. Also, by mid-2004 conflicts had arisen between Ruotolo and Rold, his attorney in the civil rights action, and, in May, 2004, Rold withdrew as counsel for Ruotolo. Thereafter, M&N began representing Ruotolo in the civil rights action."

"Before the action could proceed to trial, the United States Supreme Court issued its decision in Garcetti v. Ceballus, 547 U.S. 410 (2006). In Garcetti, the Supreme Court held that the First Amendment does not “protect[] a government employee €from discipline based on speech made pursuant to the employee’s official duties.” 547 [J.S. at 41 3. Thereafter, the City defendants renewed their motion for summary judgment dismissing Ruotolo’s complaint on the grounds that the Report arose from Ruotolo’s official duties as a police officer, and thus was not protected by the First Amendment. In opposition, M&N argued that the amended complaint should in fairness be read to include Ruotolo’s conversation with the PBA attorney, which M&N contended were not pursuant to Ruotolo’s official job duties.
On July 19,2006, Judge Stein granted the City defendants’ motion for summary judgment, holding that Ruotolo prepared the Report pursuant to his official job duties and therefore had no First Amendment claim with respect to the Report. Ruotolo v. City of New York, 2006 U.S. Dist. LEXIS 49903, (S.D.N.Y. July 19,2006).’ Because Ruotolo had not pled any claim based upon the conversation with the PBA attorney in either the initial or amended complaints, Judge Stein based his dismissal of the civil rights action solely on claims arising from the Report itself. However, Judge Stein noted that even if he had considered Ruotolo’s discussion with the PBA attorney, Ruotolo’s First Amendment claim would fail because that discussion was held pursuant to Ruotolo’s official job duties, which included ‘‘answering questions about safety issues at the
precinct.” Ruotolo v. City of New Yo& 2006 U.S. Dist. LEXIS 49903, “12-13 (S.D.N.Y.
July 19, 2006)"

"Here, defendants have made a prima face showing that Ruotolo would not have prevailed on his First Amendment claim even if defendants had amended the complaint to include Ruotolo’s conversations with the PBA attorney in April, 2000. The First Amendment does not protect public employees from adverse employment decisions based on communications they make pursuant to their official duties, see Weintraub v. Bd, of Educ., 593 F.3d 196, 200-01 (2d Cir. 2010), and defendants have submitted sufficient evidence to show that Ruotolo’s conversation with the PRA attorney was made pursuant to his official duties."

"Defendants have also shown that Ruotolo would not have succeeded on a Due Process claim based on the City defendants’ deprivation of Ruotolo’s’s firearms. Where a government agency randomly and arbitrarily deprives a citizen of a protected property interest, due process is satisfied if the state provides an adequate post-deprivation remedy. Hellenic Am. Neighborhood Action Comm. v. New York City, 101 F.3d 877, 880 (2d Cir. 1996)."
 

Legal Malpractice insurance companies have two big exclusions. One is late notice of a claim and the other is acts outside the policy coverage. Late notice is a constant danger to the insured. Carriers take the position that as soon as the attorney knows there has been a mistake he is obligated to tell the carrier. Insureds take the position that if they tell the carrier as soon as they are served with a complaint, it is early enough. The cases run between the two extremes.

Here, however, inK2 Inv. Group, LLC v American Guar. & Liab. Ins. Co. ; 2012 NY Slip Op 00001 
Appellate Division, First Department we see both bad faith and exclusions. They do not work out to the carrier’s benefit.
 

"Plaintiffs are limited liability companies that made multiple loans totaling approximately $3 million to nonparty Goldan, LLC of which defendant’s insured, Jeffrey Daniels, an attorney, was a member. In the legal malpractice action underlying this action, it was alleged that as attorney for plaintiffs, Daniels undertook to record mortgages in plaintiffs’ favor to secure those loans, and to obtain title insurance, and that he failed to do so, rendering plaintiffs’ investments unsecured. Goldan became insolvent and never made any payments on the loans. The legal malpractice action alleged that as a consequence of Daniels’s negligent failure to record the mortgages or obtain title insurance, plaintiffs did not have security in the mortgaged properties, and the promissory notes evidencing the loans became uncollectible.

Plaintiffs demanded $450,000 from Daniels in full settlement of their claims. This amount was well within the $2 million aggregate and $2 million per-claim limits of the lawyers professional liability insurance policy issued to Daniels by defendant. However, defendant disclaimed its duty to defend or indemnify based upon two exclusions in the policy. One exclusion was for claims based upon or arising out of the insured’s capacity or status as an officer, director, etc., of a business enterprise. The other exclusion was for any claim arising out of the alleged acts or omissions of the insured for any business enterprise in which he had a controlling interest.

After Daniels failed to appear in the malpractice action, a default judgment was entered against him in the amounts of $2,404,378.36 in favor of plaintiff K2 and $688,716.00 in favor of plaintiff ATAS. Daniels then assigned to plaintiffs all his claims against defendant, including bad faith claims. [*2]

Having disclaimed its duty to defend its insured in an action that culminated in a default judgment, defendant "cannot challenge the liability or damages determination underlying the judgment" (Lang v Hanover Ins. Co., 3 NY3d 350, 356 [2004]). Nor can it raise defenses to plaintiffs’ claim against Daniels including the applicability of any asserted policy exclusions (Lang at 356).

"To be relieved of its duty to defend on the basis of a policy exclusion, the insurer bears the burden of demonstrating that the allegations of the complaint in the underlying claim cast the pleadings wholly within that exclusion, that the exclusion is not subject to any other reasonable interpretation, and that there is no possible factual or legal basis upon which the insurer might be eventually obligated to indemnify its insured (citations omitted)" (Utica First Ins. Co. v Star-Brite Painting & Paperhanging, 36 AD3d 794, 796 [2007]). No material issue of fact exists as to whether the allegations of plaintiffs’ legal malpractice claims are based, even in part, upon Daniel’s acts or omissions in his capacity as an officer, director, etc., of a business enterprise or any acts or omissions for a business enterprise in which he had a controlling interest, so as to bring them within either of the exclusions invoked by defendant (id). Rather, the allegations of legal malpractice were focused solely on Daniels’s negligence as plaintiffs’ counsel. "