This clearly written Court of Appeals case lays out the Insurance carrier’s obligation to defend legal malpractice cases, and what happens when they refuse to defend.  K2 Inv. Group, LLC v American Guar. & Liab. Ins. Co. ,2013 NY Slip Op 04270 , Decided on June 11, 2013  Court of Appeals, Smith, J. tells us that when the carrier wrongfully fails to defend, it cannot then litigate other policy exclusions, and can (but not in this case) be responsible for bad faith amounts in excess of the policy.
 

"We affirm the summary judgment in plaintiffs’ favor on the breach of contract claims without reaching the question that divided the Appellate Division: the applicability of the insured’s status exclusion and the business enterprise exclusion to American Guarantee’s duty to indemnify Daniels for a judgment based on legal malpractice. We hold that, by breaching its duty to defend Daniels, American Guarantee lost its right to rely on these exclusions in litigation over its indemnity obligation.

It is quite clear that American Guarantee breached its duty to defend — indeed, it does not seem to contend otherwise now. We summarized the law applicable to this issue in Automobile Ins. Co. of Hartford v Cook (7 NY3d 131, 137 [2006]):

"It is well settled that an insurance company’s duty to defend is broader than its duty to indemnify. Indeed, the duty to defend is exceedingly broad and an insurer will be called upon to provide a defense whenever the allegations of the complaint suggest a reasonable possibility of coverage. If, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured no matter how groundless, [*4]false or baseless the suit may be.
"The duty remains even though facts outside the four corners of the pleadings indicate that the claim may be meritless or not covered . . . . Thus, an insurer may be required to defend under the contract even though it may not be required to pay once the litigation has run its course.""
 

"Here, the complaint in the underlying lawsuit against Daniels unmistakably pleads a claim for legal malpractice. American Guarantee no doubt had reason to be skeptical of the claim; it is unusual, in a loan transaction, for lenders to retain a principal of the borrower to act as their lawyer, as plaintiffs here claimed they did. But that means only that the claim against Daniels may have been "groundless, false or baseless . . . meritless or not covered" — it does not allow American Guarantee to escape its duty to defend. It would be different if the claim were collusive, but American Guarantee has neither claimed that plaintiffs and Daniels were colluding against it nor alleged any facts to support such a claim.

It is also well established that, when an insurer has breached its duty to defend and is called upon to indemnify its insured for a judgment entered against it, the insurer may not assert in its defense grounds that would have defeated the underlying claim against the insured (Lang v Hanover Ins. Co., 3 NY3d 350, 356 [2004]). As the court said in Mendoza v Schlossman (87 AD2d 606, 607 [2d Dept 1982]):

"A default judgment on the issue of liability in a legal malpractice action disposes of the issue of the lawyer’s negligence and the validity of the underlying claim."
The rule as we have just stated it does not dispose of the present case, because American Guarantee is not relying on defenses that would have shielded Daniels from malpractice liability; it is relying on exclusions in its insurance contract with Daniels. In Lang, however, we stated the rule more broadly:

"[A]n insurance company that disclaims in a situation where coverage may be arguable is well advised to seek a declaratory judgment concerning the duty to defend or indemnify the purported insured. If it disclaims and declines to defend in the underlying [*5]lawsuit without doing so, it takes the risk that the injured party will obtain a judgment against the purported insured and then seek payment . . . Under those circumstances, having chosen not to participate in the underlying lawsuit, the insurance carrier may litigate only the validity of its disclaimer and cannot challenge the liability or damages determination underlying the judgment."

The Adult Use industry was the subject of constitutional litigation in the City of New York, and was essentially limited to certain non-residential corridors.  In DeWitt, New Yorkits use is also limited.  What happens when an operator hires a law firm to help set up an adult use industry, and finds that the warehouse and buildings cannot be used for that purpose?

Hotaling v Sprock  2013 NY Slip Op 04170  Released on June 7, 2013  Appellate Division, Fourth Department  is just such a situation.  "Plaintiff commenced this legal malpractice action seeking damages for the alleged negligence of defendants in failing to determine that a Town of Dewitt zoning ordinance prohibited him from operating an "adult use" business in the building he purchased for that purpose. Zonen, Ltd. (Zonen), the corporation formed by plaintiff to operate the business, has operated a retail establishment in the building, which includes "adult use" inventory, since 2001. Supreme Court granted defendants’ motion for summary judgment dismissing the third amended complaint on the ground that plaintiff failed to raise an issue of fact whether he sustained actual and ascertainable damages, an
" essential element[] of [a] legal malpractice cause of action’ " (Malachowski v Daly, 87 AD3d 1321, 1321; see generally Dombrowski v Bulson, 19 NY3d 347, 350). "

"Nevertheless, viewing the submissions of the parties in the light most favorable to plaintiff, as we must (see Victor Temporary Servs. v Slattery, 105 AD2d 1115, 1117), we conclude that the court erred in determining that plaintiff failed to raise an issue of fact whether he has sustained damages for loss of rent (cf. Malachowski, 87 AD3d at 1323). We therefore modify the judgment accordingly. Plaintiff alleges in the third amended complaint, as amplified by his response to defendants’ interrogatories, that he is unable to lease a portion of the property to Zonen or any other entity because defendants failed to advise him of zoning ordinances governing parking restrictions. Plaintiff also averred in his affidavit in opposition to the motion that his efforts to lease the warehouse were prohibited by the Town of Dewitt inasmuch as the property lacks the required number of parking spaces. Moreover, in response to defendants’ interrogatories, plaintiff submitted documentary evidence establishing that he has been damaged by the loss of rent for 2,500 feet at a rate of $3.50 per square foot. "

From what we can decipher in this decision, an insured car owner was convinced that it had to pay $200,000 from its personal assets in settlement of a case, and that the insurance company was allowed not to pay.  Plaintiff alleges that this happened because of deceit. 

In Duszynski v Allstate Ins. Co.   2013 NY Slip Op 04172   Released on June 7, 2013  Appellate Division, Fourth Department plaintiff moves to amend the complaint. 
 

"James Lambert (Lambert) struck a pedestrian while operating a vehicle owned by his mother, Ruby Lambert (decedent). The pedestrian commenced a personal injury action against decedent and Lambert, both of whom were insured by defendant Allstate Insurance Company (Allstate). Defendants Paul E. Richardson and The Law Offices of Mary A. Bjork (Bjork) were assigned by Allstate to defend decedent and Lambert in the personal injury action. As part of the settlement of that action, decedent agreed to pay approximately $200,000 from her personal assets. Before that payment could be made, however, decedent passed away. Pursuant to an order of Surrogate’s Court, decedent’s estate paid that amount to the personal injury plaintiff in full and final settlement of the action as against decedent.

Plaintiff, as administratrix of decedent’s estate, thereafter commenced the instant action alleging, inter alia, that Richardson and Bjork were negligent and committed legal malpractice while handling the defense of the personal injury action. Sixteen months later, plaintiff moved for leave to amend the complaint to add a cause of action under Judiciary Law § 487. Supreme Court granted that motion, and we now affirm. "

""A violation of Judiciary Law § 487 may be established either by the defendant’s alleged deceit or by an alleged chronic, extreme pattern of legal delinquency by the defendant" (Scarborough v Napoli, Kaiser & Bern, LLP, 63 AD3d 1531, 1533 [internal quotation marks omitted]; cf. Donaldson v Bottar, 275 AD2d 897, 898, lv dismissed 95 NY2d 959; see generally Amalfitano v Rosenberg, 12 NY3d 8, 12-14). With respect to the element of deceit, "[t]he operative language at issue— guilty of any deceit’—focuses on the attorney’s intent to deceive, not the deceit’s success" (Amalfitano, 12 NY3d at 14). Here, in addition to alleging that Richardson "intentionally deceived . . . Lambert when Richardson falsely stated to . . . Lambert that [the personal injury plaintiff] was intent on settling the matter for the combined policy limits," plaintiff alleges that "Bjork/Richardson intentionally deceived [decedent] and . . . Lambert in representing to them that the [personal injury action] had been settled within policy limits and that neither [Lambert’s] nor [decedent’s] personal assets would be exposed." Inasmuch as plaintiff alleges that the attorneys "engaged in intentional deceit" (Scarborough, 63 AD3d at 1533), we conclude that plaintiff has alleged sufficient facts to state a cause of action under Judiciary Law § 487.

Defendants further contend that plaintiff’s motion should have been denied inasmuch as no damages resulted from the alleged misconduct. In her proposed amended complaint, plaintiff alleges that, as a result of defendants’ violation of section 487, decedent was damaged. On this record, we cannot conclude that plaintiff’s allegation of damages is patently lacking in merit (cf. Manna v Ades, 237 AD2d 264, 265, lv denied 90 NY2d 806; Michalic v Klat, 128 AD2d 505, 506). In any event, " the decision whether to grant leave to amend a complaint is committed to the sound discretion of the court’ " (Carro v Lyons Falls Pulp & Papers, Inc., 56 AD3d 1276, 1277), and we see no basis to disturb the court’s decision here. "

Client retains attorney, and reaches settlement of an underlying workers’ compensation case.  He later sues attorney for legal malpractice.  May he?

The short answer is yes, a client may sue his attorney after a settlement, if "’if it is alleged that [the] settlement . . . was effectively compelled by the mistakes of counsel’" (Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083 [2005], lv denied 6 NY3d 701 [2005].

The longer answer is seen in Marchell v Littman 2013 NY Slip Op 04068  Decided on June 6, 2013  Appellate Division, Third Department.   "Even assuming that defendant was negligent because he was unfamiliar with the Board’s apportionment doctrine (see e.g. Matter of Nye v IBM Corp., 2 AD3d 1164, 1164 [2003]; Matter of Krebs v Town of Ithaca, 293 AD2d 883, 883-884 [2002], lv denied 100 NY2d 501 [2003]), he could nevertheless succeed on his motion for summary judgment by demonstrating that his negligence was not a proximate cause of any actual and ascertainable damages to plaintiff (see Geraci v Munnelly, 85 AD3d 1361, 1362 [2011]; Bixby v Somerville, 62 AD3d 1137, 1139 [2009]; Tabner v Drake, 9 AD3d 606, 609 [2004]). In the context of the compromise reached in settlement of plaintiff’s workers’ compensation claim, a legal malpractice cause of action would be viable "’if it is alleged that [the] settlement . . . was effectively compelled by the mistakes of counsel’" (Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083 [2005], lv denied 6 NY3d 701 [2005], quoting Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1990]; see Rau v Borenkoff, 262 AD2d 388, 389 [1999]).

Here, SIF’s representative testified that, even with apportionment, he felt that he had given "too much" to plaintiff and that the negotiations had resulted in a "bad deal" for SIF. He also testified that an agreement that failed to include apportionment would have been "the ultimate victory for [plaintiff]." In short, there is no evidence to support plaintiff’s contention that the carrier would have agreed to the settlement without apportioning the claim. Rather, the record supports the contrary conclusion that it was to SIF’s advantage to seek a settlement that apportioned its liability.

Nor is there any evidence that defendant could have litigated a more favorable result for plaintiff (see Sevey v Friedlander, 83 AD3d 1226, 1227 [2011], lv denied 17 NY3d 707 [2011]; Mega Group, Inc. v Pechenik & Curro, P.C., 32 AD3d 584, 586-587 [2006]). In determining whether plaintiff was entitled to continued benefits, the Board would have been confronted with differing medical opinions and would have been free to credit the opinion that plaintiff was no longer disabled as a result of the work-related injury (see e.g. Matter of Altobelli v Allinger Temporary Servs., Inc., 70 AD3d 1083, 1084 [2010]; Matter of Moore v St. Peter’s Hosp., 18 AD3d 1001, 1002 [2005]). Had the Board accepted the opinion of plaintiff’s treating orthopedist, plaintiff would have been entitled only to a lump-sum payment for his work-related injury, and would not be receiving the continuing benefits provided by the settlement.

We cannot agree with plaintiff’s argument, based on Matter of Sidaris v Brookhaven Mem. Hosp. (271 AD2d 884 [2000]), that he would have been entitled to continuing benefits after a hearing even if the treating orthopedist’s opinion was accepted. The claimant in Sidaris received benefits based on an accident that aggravated his preexisting condition (id. at 884). Here, plaintiff’s treating orthopedist opined that his work-related injury was fully resolved and had no impact on his preexisting condition, which he described as naturally progressing. Accordingly, the damages alleged by plaintiff are speculative and Supreme Court properly granted defendant’s motion for summary judgment dismissing the complaint (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 443 [2007]; Sevey v Friedlander, 83 AD3d at 1227; Country Club Partners, LLC v Goldman, 79 AD3d 1389, 1392 [2010]). "

Judgment calls are exempt from legal malpractice consideration.  Put another way, an attorney may not be held for legal malpractice on the basis of a reasonable trial strategy even when unsuccessful.  But, what is a trial strategy and what is a departure from good standards?  Often the difference is in the eye of the beholder, or in a slightly more objective sense, when it is reasonable.  Today, we use a criminal case, in a different setting.  Here, the question is whether there was ineffective assistance of counsel. 

In People v Oliveras  2013 NY Slip Op 04040  Decided on June 6, 2013  Court of Appeals
Rivera, J. the question of trial strategy v. ineffective assistance concerned the mental status of the defendant and whether the attorney reasonably refused to seek his psychiatric records.   
 

"After several requests to review the evidence and for a clarification on Miranda, the jury found defendant guilty of murder in the second degree. The court sentenced him to 25 years to life.
D. Defendant’s Motion to Vacate the Conviction

Defendant obtained new counsel who moved to vacate the conviction pursuant to CPL 440.10, arguing that defendant’s trial counsel was ineffective based on several enumerated failures and errors. The motion raised trial counsel’s failure to provide timely notice pursuant to CPL 250.10, to present evidence of defendant’s psychiatric history, to obtain defendant’s psychiatric records, to consult an expert to explain the relationship between defendant’s psychiatric history and the voluntariness and reliability of his statements, and trial counsel’s ignorance of the law regarding the CPL 250.10 notice.

At the hearing, trial counsel testified about his representation of defendant, and explained his decision to not obtain defendant’s records. He stated that while he initially intended to obtain defendant’s psychiatric records to show that defendant’s inculpatory statements were involuntary, he did not pursue this approach because of defendant’s objections. He testified that defendant said he was innocent, and "shut [him] down" from pursuing a psychiatric defense. According to trial counsel, defendant "did not want to be portrayed as someone suffering from a [*5]psychiatric mental illness." He said he believed that defendant did not want to "end up in a mental institution." He further stated that it was his understanding that defendant "didn’t want psychiatric mumbo jumbo, whatever you want to call it, because he felt it would paint him in a bad way."

Trial counsel explained that he then decided to present defendant’s mental capacity without the records and as a result decided to forgo obtaining them. Trial counsel claimed that he "stood to gain nothing by getting those records . . . unless [he] was headed towards [putting on] a psychiatric defense." Counsel further claimed: "And my feeling is and has been, and I’ve done it in many cases, is that you’re better off . . . without having so many experts on the witness stand and getting bogged up in that, and just giving the jury a good gut feeling." Thus, trial counsel sought to secure his client’s acquittal by demonstrating to the jury that his client was "not playing with a full deck" and arguing on summation that the police took advantage of him.

Trial counsel said he intended to convince the jury that defendant’s will was overborne by the police due to his mental history and the affects of the interrogation. According to trial counsel, he wanted to "build" this idea "in the minds of the jury" by demonstrating that defendant "had no work history," "was on SSI," "had a grade school education at the most," "was in special ed," "had some hospitalizations," and was someone "whose mind could be played with." Trial counsel sought to have this history introduced by defendant’s mother, who would discuss her son’s educational, institutional, and occupational history.

At the hearing, trial counsel admitted that he developed this defense approach without the full benefit of defendant’s psychiatric and government records. He stated that he never saw defendant’s psychiatric records or Social Security Administration records, and that he did not know the diagnosis contained in those records. Trial counsel also admitted that he did not get the records because he believed that he would have to turn them over to the People, even if he never introduced them at trial or presented a formal psychiatric defense.
"And you know, yes, the strategy was born in the blind without those [records], but I felt that number one, if I have the records, I got to turn them over. Number two, I don’t gain anything by having those records. The fact that he was — his history is what it was should have been good enough."

This is not simply a case of a failed trial strategy(see Baldi, 54 NY2d at 146 ["trial tactics which terminate unsuccessfully do not automatically indicate ineffectiveness"]). [*8]Rather, this is a case of a lawyer’s failure to pursue the minimal investigation required under the circumstances. Given that the People’s case rested almost entirely on defendant’s inculpatory statements, trial counsel’s ability to undermine the voluntariness of those statements was crucial. The strategy to present defendant’s mental capacity and susceptibility to police interrogation could only be fully developed after counsel’s investigation of the facts and law, which required review of records that would reveal and explain defendant’s mental illness history, and defendant’s diagnosis supporting his receipt of federal SSI benefits.

The People’s argument that the contested records would not have helped the defense, regardless of trial counsel’s choices, misconstrues the central issue in this case. The issue is not whether trial counsel’s choice to have certain documents excluded from the record constitutes a legitimate trial strategy, but whether the failure to secure and review crucial documents, that would have undeniably provided valuable information to assist counsel in developing a strategy during the pre-trial investigation phase of a criminal case, constitutes meaningful representation as a matter of law. The utter failure to obtain these documents constituted denial of effective assistance. "

Plaintiff starts a legal malpractice law suit, and then settles it for $ 40,000.  Later, he turns around and seeks to set aside a stipulation of discontinuance, general release, and hold-harmless agreement in the case.  In Rosin v Weinberg 2013 NY Slip Op 03981  Decided on June 5, 2013
Appellate Division, Second Department  plaintiff is unable to set aside the settlement.
 

"Here, the plaintiff sought to set aside a stipulation of discontinuance, general release, [*2]and hold-harmless agreement (hereinafter the settlement documents) on the grounds of unilateral mistake (see Yorker v Daniel Yorker, Ltd., 12 AD3d 506, 506; Long v Fitzgerald, 240 AD2d 971, 974; Matter of Goldman v Goldman, 201 AD2d 860, 861; William E. McClain Realty v Rivers, 144 AD2d 216, 218) and unconscionability (see Gillman v Chase Manhattan Bank, 73 NY2d 1, 10-12). In his complaint, the plaintiff essentially alleged that he was not aware that the $40,000 which the defendant gave him in exchange for, inter alia, discontinuing the underlying legal malpractice action consisted of escrow funds that already belonged to the plaintiff. The evidentiary material submitted by the defendant in support of his motion demonstrated that the plaintiff’s alleged unawareness of the source of the settlement funds was not a fact at all, and that there was no significant dispute regarding that allegation. Specifically, the defendant’s submissions conclusively demonstrated that the terms of the settlement documents were clear and unambiguous, that the settlement documents were reviewed by the plaintiff and his counsel and were executed by the plaintiff in his counsel’s office, and that the source of the $40,000 was readily apparent from the face of the settlement documents. "

Sadly for plaintiff, her case is now fully dismissed. It was earlier dismissed against her attorney.

  She alleges in Strujan v Head  2013 NY Slip Op 31154(U) May 24, 2013 Supreme Court, New York County Docket Number: 800029/2012 Judge: Eileen A. Rakower that her case arose from : "an incident in September 1997 in which plaintiff alleges she was stuck by a HIV positive needle, while working as a nurse technician at New Yolk University Hospital. Plaintiffs Complaint alleges that she “lost the [Workers’ Compensation]  case for disability and economic loss due to the all [sic] defendants [sic] false affirmation under oath.”   As alleged in the Complaint, Dr. Head was a medical examiner who evaluated Plaintiff on behalf of the insurance carrier, prepared a medical report, and provided testimony at her Worker’s’s Compensation appeal.

Plaintiff alleges that Dr. Head provided false testimony at her proceeding based on his erroneous medical report, and as a result, an adverse Workers’ Compensation determination was rendered against her.  Plaintiff’ s first cause of action alleges “civil conspiracy to commit humiliation,
defamation [sic]” against all defendants, asserting that Dr. Head entered into a conspiracy with other co-defendants in order to “sabotage [her] Worker Compensation case.” Civil conspiracy is not recognized in New York as an independent tort, but may be viable if connected with other actionable torts. (see Alexander & Alexander of New York, Inc. v. Fritzen, 68 NY2d 968 [1986).

To the extent that Plaintiff is asserting civil conspiracy to commit defamation, the claim is time barred by the one year statute of limitations. (CPLR 215(3). The alleged defamatory statements were made in 2009, and Plaintiff did not commence this action until January 2012, after the statute of limitations expired, To the extent that Plaintiff’s civil conspiracy claim is predicated on a fraud, while Plaintiff alleges fraud in her fourth cause of action against Kosovich and Friedman, she does not assert a fraud claim as against Dr. Head.
 

While Plaintiff asserts a breach of contract and a breach of implied covenant of good faith and fair dealing against Dr. Head, there is no allegation of the existence of a contract or contractual relationship between Plaintiff and Dr. Head nor any allegation that Dr. Head promised to obtain a specific result and failed to do so. See generally Forman v. Guardian Life Ins. Co. of America, 2010 6606, “2 [ 1st Dept. 2010); Fredinand v. Crecca & Blair, 5 AD. 3d 538, 539 [2n‘Dept 2004).

Plaintiffs “breach of trust,” “breach of standard of care,” negligence, gross negligence / recklessness, and medical malpractice claims against Dr. Head also failed to state a claim. There are no allegations that Dr. Head provided treatment to Plaintiff, nor has Plaintiff served a certificate of merit along with her complaint, as required by CPLR 30 12-a. Furthermore, any claim for medical malpractice based on Dr. Head’s medical evaluation of Plaintiff in March 2009 would be barred by the 2.5 year statute of limitations that applies to medical malpractice claims, as Plaintiff commenced this action in January 2012, after the statute of limitations had run.

Furthermore, even accepting the allegations as true, the (our corners of the  Complaint also fail to state claim for economic loss, intentional “mental scars and emotional distress”, unlawful trade practice under the Consumer Protection Procedure Act, perjury; and obstruction of justice."

The First Department delved into a legal malpractice case with several unusual affirmative defenses.  In Whitney Group, LLC v Hunt-Scanlon Corp. 2013 NY Slip Op 03929  Decided on May 30, 2013  Appellate Division, First Department  we see affirmative defenses of "in pari delicto", comparative fault and a question of whether there must be joint and several liability with other defendants.
 

The underlying case, one corporation against another arose after the CFO began causing the plaintiff corporation to lend money to the defendant corporation.  Twice, the CFO asked Jaspan Schlesinger, outside corporate counsel for plaintiff for advice.  They advised him that the loans were improper but did nothing more.

"The record presents an issue of fact whether, as the Jaspan defendants contend, plaintiff knew as of January 2006 that loans had been extended to Hunt-Scanlon and did nothing to prevent Sussman from issuing additional loans, and therefore whether the Jaspan defendants’ failure to notify plaintiff of the loans in February 2007 was a proximate cause of plaintiff’s losses (see e.g. AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435-436 [2007]; GUS [*2]Consulting GmbH v Chadbourne & Parke LLP, 74 AD3d 677, 679 [1st Dept 2010], lv denied 16 NY3d 702 [2011]). Thus, the motion court properly denied the Jaspan defendants’ motion for summary dismissal of the plaintiff’s malpractice claim. It also correctly held that "[t]he apportionment of liability among alleged tortfeasors is a matter for trial" (Greenidge v HRH Constr. Corp., 279 AD2d 400 [1st Dept 2001]).

Turning to the Jaspan defendants’ affirmative defenses, we find that there is a question of fact as to whether the Jaspan defendants have established that the doctrine of in pari delicto defeats plaintiff’s claims (see Kirschner v KPMG LLP, 15 NY3d 446, 466 [2010]). As already noted, whether plaintiff knew of Sussman’s conduct and allowed him to continue loaning monies for several years remains a question of fact. Further, the Jaspan defendants allege that plaintiff received allegedly significant and substantial benefits during the time that Sussman made the unauthorized loans. Plaintiff disputes this claim, but failed to establish as a matter of law, that Sussman acted solely for his own or Hunt-Scanlon’s purposes, totally abandoning plaintiff’s interests. Plaintiff therefore failed to demonstrate that the adverse interest exception to the doctrine of in pari delicto applies (Center v Hampton Affiliates, Inc., 66 NY2d 782, 784-785 [1985] [insufficient to allege only that agent had a conflict of interest or was not acting primarily for the principal]; Concord Capital Mgt., LLC v Bank of Am., N.A., 102 AD3d 406, 406 [1st Dept 2013] [quoting Kirschner, supra at 468 (" So long as the corporate wrongdoer’s fraudulent conduct enables the business to survive — to attract investors and customers and raise funds for corporate purposes, — ‘ the adverse interest exception does not apply")]).

However, the Jaspan defendants’ affirmative defenses seeking to bar or reduce plaintiff’s damages based on plaintiff’s alleged comparative fault must be dismissed because plaintiff’s alleged failure to discover or prevent ongoing fraud by its fiduciary, Sussman, did not prevent or interfere with the Jaspan defendants’ performance of their own professional duties to plaintiff (see National Sur. Corp. v Lybrand, 256 AD 226, 235-236 [1st Dept 1939]; see also Collins v Esserman & Pelter, 256 AD2d 754, 757 [3d Dept 1998] [although the record was "replete with evidence" that the company’s bookkeeper was able to exploit the lack of internal controls to embezzle from the company, none of this interfered with the defendant accounting firm’s ability to complete the review for which it had been hired to perform; comparative fault was not applicable]).

To permit an affirmative defense of comparative negligence in a legal malpractice case, there must be a showing that the client did or did not do something that hindered the law firm from performing its duties toward its client. The Jaspan defendants’ reliance on cases addressing the application of comparative negligence in the context of alleged accountant malpractice, or breach of fiduciary duty, are not squarely on
point (see e.g. Hall & Co. v Steiner & Mondore, 147 AD2d 225, 227-228 [3d Dept 1989]; Lippes v Atlantic Bank of N.Y., 69 AD2d 127 [1st Dept 1979]). Here, none of the examples of plaintiff’s alleged internal weaknesses could rationally lead a factfinder to conclude that plaintiff interfered with the Jaspan defendants’ ability to carry out their fiduciary duties toward plaintiff. Thus, on the extant record, there is no valid line of reasoning that could lead rational people to conclude [*3]plaintiff was negligent, and that such negligence was a substantial factor in causing the losses attributed to the Jaspan defendants’ negligence. "