Hand in hand with legal malpractice cases are attorney fee cases.  We’ve commented that attorney fee disputes are of  biblical proportion, and have existed as long.  Today’s New York Law Journal reports that "DLA Piper Emails Reveal Firm Overbilled, Former Client Says"

In an article written by Christine Simmons, she reports that internal e-mails from DLA Piper are being used in an attorney fee dispute, and are said to show intentional and gleeful churning of a bankruptcy representation bill.  "According to court papers, Thomson replied to Eisenegger and Johnson: "What was our estimate? But Tim [Walsh] brought Vince [Roldan] [two other DLA Piper attorneys working on POA] in to work on the objection for whatever reason, and now Vince has random people working full time on random research projects in standard ‘churn that bill, baby!’ mode. That bill shall know no limits."

Thomson, who no longer works at DLA Piper, could not be reached for comment.

Roldan was a senior associate at DLA Piper who now practices at Vandenberg & Feliu, according to the firm’s website. He did not return a call for comment.

Eisenegger, Johnson and Walsh are now all partners at McDermott Will & Emery. They did not return calls for comment. McDermott spokesman Christopher Rieck declined to comment.

Victor claims in his papers that Eisenegger, Thomson and Johnson continue the email thread, "with each joking about how many attorneys were over-staffed on the POA file and how little work those attorneys actually accomplished."

According to the attached exhibits, Thomson writes to Eisenegger and Johnson, "DLA seems to love to low ball the bills and with the number of bodies being thrown at this thing, it’s going to stay stupidly high and with the absurd litigation POA has been in for years, it does have lots of wrinkles."

Johnson allegedly replied: "Didn’t you use 3 associates to prepare for a first day hearing where you filed 3 documents?"

Thomson allegedly responded to Johnson and Eisenegger, "And it took all of them 4 days to write those motions while I did cash collateral and talked to the client and learned the facts. Perhaps if we paid more money we’d have more skilled associates."

According to the court exhibits, Johnson also allegedly said, "It’s a Thomson project, he goes full time on whatever debtor case he has running. Full time, 2 days a week.""

It’s rare that the Appellate Division looks back and says that its own decisions were "simply wrong."  Here, in Goodwin v Pretorius  2013 NY Slip Op 01931   March 22, 2013  Appellate Division, Fourth Department   Scudder, P.J., the Court does it twice.
 

"First, as defendants correctly conceded at oral argument of this appeal, General Municipal Law § 50-e does not require service of a notice of claim on the Employee Defendants as a condition precedent to the commencement of this action. ECMCC is a public benefit corporation (see Public Authorities Law § 3628 et seq.) and, therefore, it is undisputed that the provisions of General Municipal Law § 50-e apply (see Public Authorities Law § 3641 [1] [a]; see e.g. Stanfield v Nohejl, 182 AD2d 1138, 1138). General Municipal Law § 50-e (1) (b) provides, in pertinent part, that

"[s]ervice of the notice of claim upon an . . . employee of a public corporation shall not be a condition precedent to the commencement of an action or special proceeding against such person.

We thus note that, to the extent that our prior decision in Rew v County of Niagara (73 AD3d 1463, 1464) suggests that service of a notice of claim upon an employee of a public corporation is a condition precedent to commencement of the action against such employee, that decision is no longer to be followed.

Second, defendants contend that, although service of the notice of claim on the Employee Defendants was not required, plaintiff was nevertheless required to name those individual defendants in the notice of claim as a condition precedent to the commencement of an action against them. Despite precedent supporting that contention, we agree with Supreme Court that there is no such requirement.

While stare decisis is the preferred course, that doctrine "does not enjoin departure from precedent or preclude the overruling of earlier decisions" (Matter of Simonson v Cahn, 27 NY2d 1, 3; see Dufel v Green, 198 AD2d 640, 640-641, affd 84 NY2d 795).Although "[p]recedents involving statutory interpretation are entitled to great stability" (People v Hobson, 39 NY2d 479, 489; see Matter of Chalachan v City of Binghamton, 81 AD2d 973, 974, affd 55 NY2d 989), we conclude that the courts have misapplied or misunderstood the law in creating, by judicial fiat, a requirement for notices of claim that goes beyond those requirements set forth in the statute. If the legislature had intended that there be a requirement that the individual employees be named in the notices of claim, it could easily have created such a requirement. Indeed, the absence of such a requirement has previously been noted (see Verponi v City of New York, 31 Misc 3d 1230 [A], 2011 NY Slip Op 50908 [U], *5). It is a well-settled rule of statutory construction that, "where as here the statute describes the particular situations in which it is to apply, an irrefutable inference must be drawn that what is omitted or not included was intended to be omitted or excluded’ " (Patrolmen’s Benevolent Assn. of City of N.Y. v City of New York, 41 NY2d 205, 208-209, quoting McKinney’s Cons Laws of NY, Book 1, Statutes, § 240). Inasmuch as the notice of claim requirements are "in derogation of [a] plaintiff’s common-law rights," the statute creating such a requirement should be strictly construed in the plaintiff’s favor (Sandak, 308 NY at 230). "

Plaintiff sues for negligence in the preparation, filing and work on a trade dress application, and is then sued for fees.  Settlement of the fee dispute ensued.  Was this settlement of all claims?  Of interest is the AD’s comment in Pure Power Boot Camp, Inc. v Fross Zelnick Lehrman & Zissu, P.C.   2013 NY Slip Op 01920   Decided on March 21, 2013   Appellate Division, First Department 
 that the lack of a release is not dispositive of whether there is a release.

"Defendant failed to establish that plaintiff’s legal malpractice action is barred by an agreement, purportedly entered into in connection with the settlement of a legal fee dispute, to release the firm from all claims. The parties agreed to settle their legal fee dispute for $5,000, and $5,000 was paid to defendant. At issue is the scope of the settlement and whether the settlement was intended to include a general release of all claims against defendant. While the absence of an executed general release is not necessarily dispositive, defendant failed to establish that the parties agreed to execute the release and intended to be bound by it (see Kowalchuk v Stroup, 61 AD3d 118, 121 [1st Dept 2009]). Defendant also failed to establish that it was not negligent in preparing, filing and amending a trade dress application, since the mere fact that the [*2]application was accepted by the U.S. Patent and Trademark Office is not evidence of a lack of negligence. "

This must have been a highly contentious legal malpractice  case, with the Court showing its displeasure to both attorneys.  A sanction of $10,000 on defendant pro-se attorney is unusual; a sanction on both sides even more so

Selletti v Liotti    2013 NY Slip Op 01816   Decided on March 20, 2013   Appellate Division, Second Department ended with defendant being given a $ 10,000 sanction, and with plaintiff’s attorney being given a $ 2500 sanction.  It ended with $10,000 on each.
 

"ORDERED that the order is modified, on the facts and in the exercise of discretion, by deleting the provision thereof granting that branch of the defendant’s motion which was pursuant to 22 NYCRR 130-1.1 to impose a sanction upon the nonparty Jeffrey Levitt only to the extent of directing Jeffrey Levitt to pay the sum of $2,500 to the Lawyers’ Fund for Client Protection, and substituting therefor a provision granting that branch of the defendant’s motion to the extent of directing Jeffrey Levitt to pay the sum of $10,000 to the Lawyers’ Fund for Client Protection; as so modified, the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

The Supreme Court providently exercised its discretion in granting the plaintiff’s cross motion pursuant to 22 NYCRR 130-1.1 to impose a sanction upon the defendant in the sum of $10,000 (see 22 NYCRR 130-1.1[a], [c]; Grossman v New York Life Ins. Co., 90 AD3d 990, 992). Contrary to the defendant’s contention, since the plaintiff expressly requested the subject relief in [*2]his cross motion papers, and the defendant was afforded an opportunity to be heard and to oppose the cross motion, a hearing was not required (see 22 NYCRR 130-1.1[d]; Matter of Minister, Elders & Deacons of Refm. Prot. Dutch Church of City of N.Y. v 198 Broadway, 76 NY2d 411, 413 n; Matter of Nazario v Ciafone, 65 AD3d 1240, 1241). Although the Supreme Court did not set forth "the reasons why the court found the amount . . . imposed to be appropriate" (22 NYCRR 130-1.2), we find that the sum imposed upon the defendant was appropriate in light of his conduct (see Schwab v Phillips, 78 AD3d 1036, 1037; see also Bernadette Panzella, P.C. v DeSantis, 36 AD3d 734, 736).

However, the Supreme Court improvidently exercised its discretion in granting that branch of the defendant’s motion which was pursuant to 22 NYCRR 130-1.1 to impose a sanction upon the plaintiff’s attorney, the nonparty Jeffrey Levitt, only to the extent of directing Levitt to pay the sum of $2,500 to the Lawyers’ Fund for Client Protection. Under the circumstances of this case, the court should have granted that branch of the defendant’s motion to the extent of directing Levitt to pay the sum of $10,000 to the Lawyers’ Fund for Client Protection (see generally Commissioners of State Ins. Fund v Kernell, 91 AD3d 811). "

Nichols v Curtis  2013 NY Slip Op 01776  Decided on March 19, 2013  Appellate Division, First Department  is the story of how a legal malpractice case went awry and then how the legal malpractice case against the legal malpractice defendants went awry.  Curtis & Associates, and an earlier Curtis & Riess-Curtis PC were early adopters in the legal malpractice field.  In this case, their legal malpractice case ended badly and they were sued. 
 

"In this action, plaintiff claims her former attorneys committed malpractice, breached their fiduciary duty, and engaged in fraud, coercion and defamation in prosecuting a malpractice action against the attorneys who represented her in an action in 1988 against nonparty Morris Sales, Inc. Notwithstanding the court’s characterization of their motion, defendants moved to dismiss the fifth through ninth causes of action only. Curtis and C & A, against whom the first four causes of action are asserted, did not move to dismiss those causes of action, and, even though the court found them to have duplicated the fifth through ninth causes of action, the court should not have dismissed them sua sponte (see e.g. Purvi Enters., LLC v City of New York, 62 AD3d 508, 509 [1st Dept 2009]; West Washington Cut Meat Ctr., Inc. v Solomon, 260 App Div 741, 742 [1st Dept 1940]). Reinstatement of the first four causes of action is without prejudice to a motion for dismissal in view of the analysis set forth below.

Plaintiff’s fraud claim is based on defendants’ failure to tell her that C & R-C had been dissolved; she contends that, had she known that, she would not have retained C & R-C in 1998 and/or would not have allowed defendants to continue representing her until 2003. However, where a dissolved "corporation carries on its affairs and exercises corporate powers as before, it is a de facto corporation … and ordinarily no one but the state may question its corporate existence" (Garzo v Maid of Mist Steamboat Co., 303 NY 516, 524 [1952]). Thus, defendants’ failure to tell plaintiff that C & R-C had been administratively dissolved and subsequently reinstated was not a material omission (see Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]; see also Global Mins. & Metals Corp. v Holme, 35 AD3d 93, 99 [1st Dept 2006] [materiality can be disposed of summarily], lv denied 8 NY3d 804 [2007]). Furthermore, plaintiff failed to show that she was injured by the alleged fraud (see Lama, 88 NY2d at 421). There is no indication that, had C & R-C not been dissolved, it would have provided better legal services to plaintiff. Plaintiff’s request for at least $2 million in damages has no relationship to the $87,000 in fees that she paid defendants.

Plaintiff contends that the statute of limitations on her breach of fiduciary duty claims should be six years instead of three because the claims are based on fraud (see e.g. IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139 [2009]). However, since, as indicated, the complaint fails to state a cause of action for fraud, the statute of limitations for the breach of fiduciary duty claims, which seek money damages rather than equitable relief, is three years (see Kaufman v Cohen, 307 AD2d 113, 119 [1st Dept 2003]); thus, those claims are time barred.

We also reject plaintiff’s contention that defendants should be equitably estopped by their fraud from asserting the three-year statute of limitations defense to the malpractice, breach of contract (this claim is duplicative of the malpractice claim), and conversion claims. First, the complaint does not state a cause of action for fraud. Second, the failure to disclose that underlies plaintiff’s equitable estoppel argument is also the basis for her fraud claim (see Ross v Louise Wise Servs., Inc., 8 NY3d 478, 491 [2007]; see also Corsello v Verizon N.Y., Inc., 18 NY3d 777, 789 [2012]). Third, plaintiff fails to allege specific actions by defendants that kept her from timely bringing suit (see Putter v North Shore Univ. Hosp., 7 NY3d 548, 553 [2006]); mere failure to disclose wrongdoing is not sufficient (see Ross, 8 NY3d at 491; see also Zumpano v [*3]Quinn, 6 NY3d 666, 675 [2006]). Fourth, with respect to the malpractice and breach of contract claims, the complaint admits that plaintiff realized by November 2003 that defendants’ representation of her had fallen below the skill and knowledge commonly required of members of the legal profession (see Putter, 7 NY3d at 553; Zumpano, 6 NY3d at 674). "

Gardner v Leitgeb & Vitelli, LLP ;2012 NY Slip Op 50282(U) ;Decided on February 17, 2012 ;Supreme Court, Suffolk County ;Emerson, J. presents an interesting story of parents v. children, with professionals in the middle. More interesting, fraud, associations with organized crime, and a pizza location are all added in the mix of ingredients.
 

"This matter involves a dispute between the plaintiffs, Robert and Carmela Gardner, and their son, the defendant James Gardner, over the ownership of the corporate plaintiff, CJEFA Pizza, Inc.("CJEFA"), which operated an Italian restaurant and pizzeria in Fort Salonga, New York. The plaintiffs claim that they were the sole shareholders and officers of CJEFA from 1984 until its dissolution in 2009. The defendant James Gardner claims that he became the sole shareholder and president of CJEFA in 1997 and that he managed the restaurant until the last quarter of 2001, when his parents took over the business illegally. The plaintiffs agree that James was the manager of the business at one time until that relationship was terminated in November 2001 and he no longer had any authority to conduct CJEFA’s affairs. "

"Robert and Carmela commenced this action against James and the Vitelli defendants on or about September 30, 2004. The gravamen of the complaint is that the plaintiffs were damaged by the Vitelli defendants’ failure to prepare and file CJEFA’s federal and state income tax returns for the years 2001 and 2002 and by the Vitelli defendants’ returning CJEFA’s corporate documents to James. The plaintiffs allege that, as a result, they incurred fines and penalties because they were unable to prepare and file CJEFA’s tax returns in subsequent years and because they were unable to properly defend against and cooperate with the sales-tax audit by the [*3]New York State Department of Taxation. The complaint contains causes of action for malpractice, breach of contract, and breach of fiduciary duty against the Vitelli defendants and for conversion against both James and the Vitelli defendants."

"Each of the parties has produced copies of documents, including stock certificates, that purports to prove that party as the lawful owner of the corporation. However, the parties have disputed the authenticity of the produced documents, and the proceedings are rife with allegations of fraud, forgery and associations with organized crime. It is impossible for the Court at this time to determine the authenticity of the documents and the veracity of the various affidavits submitted, which are wildly divergent in their recitation of the facts."
 

"The first and second causes of action for malpractice and breach of contract, respectively, are based on the Vitelli defendants’ purported failure to prepare and file CJEFA’s federal and state income tax returns for the years 2001 and 2002. The unambiguous written engagement letters between CJEFA and the Vitelli defendants required the Vitelli defendants to prepare federal and state income tax returns for CJEFA for the year 2001. There was no agreement to prepare CJEFA’s federal or state income tax return for the year 2002, nor was there an agreement to file any tax returns. The plaintiffs contend that the Vitelli defendants continued to perform accounting work on the sales-and-use tax returns through mid-2003 and that there was an oral agreement between Robert and the Vitelli defendants to file the income tax returns for the year 2001. The clear engagement letters govern the terms of the parties’ relationship and, as a matter of law, cannot be altered by alleged parol or extrinsic evidence (see, Italia Imports, Inc. v Weisberg & Lesk, 220 AD2d 226, 227). It is undisputed that the Vitelli defendants prepared CJEFA’s federal and state income tax returns for the year 2001. They were under no obligation to file those returns or to prepare income tax returns for any other year. Unlike their obligation to prepare CJEFA’s sales-and-use tax returns, their obligation to prepare income tax returns was limited to one year and was not open-ended. Moreover, it is the taxpayer’s nondelegable duty to file timely tax returns (see, Penner v Hoffberg Oberfest Burger & Burger, 303 AD2d 249). Accordingly, the first and second causes of action are dismissed."
 

A non-party deponent, served with a subpoena, arrives for a deposition.  That non-party  wisely brings an attorney.  What may the attorney do at the deposition?  It depends where the case is taking place.  In the 4th Department (22 Counties, roughly half the state?) the attorney will be permitted no objections and may not speak.  Sciara v Surgical Assoc. of W. N.Y., P.C.   2013 NY Slip Op 01741  Released on March 15, 2013   Appellate Division, Fourth Department  hews to the line first set in Thompson v. Mather, 70 AD3d 1436 (4th Dept., 2010).

"As we stated in Thompson, "counsel for a nonparty witness does not have a right to object during or otherwise to participate in a pretrial deposition. CPLR 3113 (c) provides that the examination and cross-examination of deposition witnesses shall proceed as permitted in the trial of actions in open court’ " (id. [emphasis added]), and it is axiomatic that counsel for a nonparty witness is not permitted to object or otherwise participate in a trial (see e.g. id.). We recognize that 22 NYCRR 221.2 and 221.3 may be viewed as being in conflict with CPLR 3113 (c) inasmuch as sections 221.2 and 221.3 provide that an "attorney" may not interrupt a deposition except in specified circumstances. Nevertheless, it is well established that, in the event of a conflict between a statute and a regulation, the statute controls (see Matter of Hellner v Board of Educ. of Wilson Cent. School Dist., 78 AD3d 1649, 1651).

We also recognize the practical difficulties that may arise in connection with a nonparty deposition, which also have been the subject of legal commentaries (see e.g. 232 Siegel’s Practice Review, Objections by Nonparty Witness? at 4 [Apr. 2011]; Patrick M. Connors, Supp Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 3313:7, 2013 Pocket Part at 31-33). However, we decline to depart from our conclusion in Thompson (70 AD3d at 1438) that the express language of CPLR 3113 (c) prohibits the participation of the attorney for a nonparty witness during the deposition of his or her client. We further note, however, that the nonparty has the right to seek a protective order (see CPLR 3103 [a]), if necessary. "

A lively dissenting opinion (2 judges) ensures that we will see this case in the Court of Appeals.

It as common as rain.  Law firms hire clerical or service organizations to do things for the law firm.  File papers, serve parties, perfect a security lien and file the UCC-1.  What happens to the law firm, and the client, when things go wrong.  Here, in Gutarts v Fox  2013 NY Slip Op 01492  Decided on March 12, 2013  Appellate Division, First Department  things go wrong, and no one has a good remedy.

"Defendant L.T. Service Corporation (LT) was engaged by defendant Fox and his firm, O’Donnell & Fox (the Fox defendants) to file the necessary UCC statements to establish a lien in plaintiffs’ favor on the cooperative apartment owned by nonparty Irina Chatkhan to secure a loan by plaintiffs to her. The Fox defendants had been retained as counsel by plaintiffs to file the necessary documents. As a result of erroneous information provided by the Fox defendants and a misapprehension on the part of LT as to how to correct the mistake, the lien was not perfected for nearly 18 months after it was first filed. In the interim, Ms. Chatkhan filed for bankruptcy, leading other creditors to challenge plaintiff’s security interest.

Plaintiffs then commenced this action, alleging legal malpractice and negligence against all the defendants. The legal malpractice and negligence claims against LT did not survive a motion to dismiss. LT is not a law firm and had no duty to plaintiffs; it had been hired by the Fox firm as an independent contractor for the ministerial act of filing the necessary documents with the City Register’s Office.

After plaintiffs’ claims against LT were dismissed, the Fox defendants sought leave to amend their answer to include cross claims against LT for breach of contract, breach of warranty, and indemnification. LT opposed the amendment of the answer, and, in the event that leave was granted, sought summary judgment dismissing the cross claims. The motion court granted leave to amend the answer to contain all the alleged cross claims and denied LT’s cross motion.

The court erred in denying the cross motion. The Fox defendants’ alleged need for unspecified additional discovery was an insufficient basis to deny summary judgment. Plaintiffs’ malpractice claim, far from being unspecified, alleges the Fox defendants’ failure to file the UCC [*2]financing statement, as they had been retained to do. The record is clear that mistakes were made by both the Fox defendants and LT in completing the filing. The Fox defendants may not pass any liability they may have for this malpractice onto their independent contractor (Kleeman v Rheingold, 81 NY2d 270, 275 [1993]).

The record shows that LT had established its entitlement to judgment as a matter of law and the Fox defendants failed to raise any triable issue of fact. With regard to the breach of contract claim, the contract, as reflected by the invoices, was for LT to file a UCC Correction Statement and the Termination Statement on the Fox defendants’ behalf. There is no question that, despite some difficulties, the documents were filed. That LT may have been negligent in its performance of the contract is of no moment; the contract as bargained for was performed. Indeed, even if LT was negligent, it would not be liable, as the Fox defendants have not alleged that any legal duty independent of the contract has been violated (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 389 [1987]).

A breach of warranty claim does not lie against LT, as there is no cause of action for breach of warranty where the defendant has only provided a service (Aegis Prods. v Arriflex Corp. of Am., 25 AD2d 639, 639 [1st Dept 1966]).

Finally, there is no proper claim for indemnification against LT. The invoice agreement contains a liquidated damages provision, limiting LT’s liability to the cost of the service provided, here, $160."