Coverage under a legal malpractice insurance policy, is the sole reason for paying premiums, and probably one good reason that litigating attorneys fall asleep at night. They are handling multi-million dollar cases, earning big fees and (hopefully) helping their clients.  If it all goes wrong, and in the field of human events there are always mistakes, then the insurance is there to cushion the blow.  However, in legal malpractice policies there is the reporting clause.  In Property & Cas. Ins. Co. of Hartford v Levitsky   2013 NY Slip Op 30273(U)  January 25, 2013  Supreme Court, New York County  Docket Number: 109550/11  Judge: Lucy Billings  the attorneys did not timely report a problem, and lost their coverage.

"Defendants represented Paul Rowland as a plaintiff in an action in Monroe County for personal  injuries sustained on October 24, 2003, while Rowland was performing construction work
at a mall. On August 29, 2006, less than two months before the statute of limitations of three years expired, C.P.L.R. § 214(5), defendants commenced an action on Rowland’s behalf against
Wllmorite, Inc. Defendant Levitsky believed that Wilmorite owned the Eastview Mall where Rowland was injured, based On a sign at the premises and on common knowledge that Wilmorite owns all the large malls in the Rochester area, including Eastview." Steven Levitsky (Nov. 30, 2011) Ex. 8, at 1. On October 19, 2006, five days before the statute of limitations expired, Wilmorite answered Rowland’s complaint, Aff. of denying ownership of the mall where Rowland was injured. Almost 14 months later, at a deposition December 12, 2007, a witness on behalf of Wilmorite again denied that it owned the mall and claimed Great Eastern Mall, LP, was the owner. That same witness, however, testified that Great Eastern Mall and Wilmorite worked closely together and shared an office address.

Wilmorite was the construction manager on the site when Rowland was injured under a contract with Great Eastern Mall. Only then did defendants undertake any investigation and eventually learn that that contract required Great Eastern Mall to maintain insurance for Wilmorite covering persona1 injuries arising from employees’ operations at the site. Based on that relationship between Great Eastern and Wilmorite, defendants believed Rowland still would be entitled to recover from Wilmorite, e.q., N.Y. Labor Law §§ 200, 240(1); Walls v. Turner Constr. Co., 4 N.Y.3d 861, 864 (2005); Rizzuto v. Wenqer Contr. CO., 91 N.Y.2d 343, 352-53 (1998), or, despite the expiration of the statute of limitations, . to join Great Eastern Mall under the relation back doctrine. C.P.L.R. § 203(b). e.g.., Buran v Cural, 87 N.Y.2d 173, 178 (1995); Cooley v. Urban, 6 A.D.3d 1077, 1078 (4th Dep’t 2004 ) .

On February 5, 2008, Wilmorite moved to dismiss Rowland’s claims against it. On May 28, 2008, defendants opposed Wilmorite’s motion and cross-moved to join Great Eastern Mall as
a defendant. On July 30, 2008, the Supreme Court, Monroe County, granted Wilmorite’s motion and denied Rowland’s cross-motion,

On August 19, 2008, Rowland’s new attorney informed defendants that he had been retained for purposes of a possible malpractice claim against defendants. On May 4, 2009, Rowland  commenced, through his new attorney, a malpractice action against defendants.Defendants first notified plaintiff of a possible malpractice claim . August 29, 2008. Levitsky Aff. Ex. 8, at 2. From defendants’

From defendants’ vantage point, defendants thus notified plaintiff of the potential claim 30 days after the Supreme Court granted Wilmorite’s motion to dismiss Rowland’s action and denied his cross-motion to join Great Eastern Mall, 10 days after Rowland’s new attorney informed defendants Rowland was pursuing a possible malpractice claim, and several months before he commenced an actual malpractice action. Nevertheless, defendants’ notice came more than one year and 10 months after Wilmorite’s answer informed defendants that, with less than a week remaining before the statute of limitations expired, defendants had not sued the premises’ owner and more than eight months after deposition testimony confirmed that fact, then more than a year after the statute of limitations expired.

The notice provisions are not ambiguous. Nothing in their plain language suggests that 2(b) supersedes 2(a) or that 2(a) applies only to a claim after the policy period has expired.
Although 1 provides that "claims subsequently made against an insured arising out of that circumstance will be considered to have been made and reported during the policy period nothing in 1 suggests that the requirement to report circumstances that may give rise to a claim is limited to post-policy period claims. Coploff Aff. Ex. D § III(A) , at 8 (emphases omitted). Nor do  1’s terms indicate any modification of  2(a).

Once they became aware of circumstances that might produce a claim, however, it is irrelevant whether eventually they learned of evidence regarding Wilmorite’s relationship with the owner of Rowland’s injury site that led to a reasonable, good faith belief in his right to recover from Wilmorite or to join the owner. between Wilmorite and the owner until the December 2007 deposition, 14 months after defendants became aware of a potential claim, obligating them to notify plaintiff within 60 days. By the time of the deposition, defendants already had  breached that policy requirement and lost entitlement to coverage."

Rather than try to boil this case down, we quote fromHadar v Pierce  2013 NY Slip Op 30185(U)
January 4, 2013 Sup Ct, New York County Docket Number: 652811/11 Judge: Eileen Bransten. 

"This action arises from an underlying dispute between Eric Hadar and his father Richard Hadar. Eric Hadar has been a successful real estate developer for over fifteen years. Affirmation of John S. Rand, Ex. A. ("Comp!."), ~ 3. Eric Hadar suffered from drug addiction, and, on October 3,2008, he was arrested for drug possession. Id. at ~ 26. Eric Hadar subsequently entered a rehabilitation program. Id. Richard Hadar offered to "hold down the fort" at Eric Hadar’s real estate business
until Eric Hadar completed his treatment. Id. at ~ 28. Plaintiffs claim that, rather than "hold down the fort," Richard Hadar took advantage of his son’s absence to attempt to wrest control of the real estate business from Eric Hadar. Id. Plaintiffs claim that Richard Hadar’s plan to accomplish this scheme was to accuse his son of mismanagement of the real estate company and the EDHFT. Id. at ~ 28. For example, Plaintiffs assert that, in January or February 2009, Richard Hadar and his attorney,Michael Rosenbaum, told partners in Lawrence One, L.P., which was one of Eric Hadar’s
real estate ventures and Robert Weir, who was then the trustee of the EDHFT, that Eric Hadar: (1) mismanaged and neglected various properties and trusts; (2) engaged in self dealing by taking interest-free loans and misappropriating assets from EDHFT; (3) along with Allied Partners, charged excessive and unauthorized management fees; (4) negligently managed a property near Kennedy Airport known as "Carlton House"; and (5) was no longer able to manage real estate competently. Id at ~ 30. Rosenbaum prepared a letter containing these alleged mis representations and had Weir and Yohalem sign the letter. Id. at ~ 31. On February 11,2009, Richard Hadar, Ira Yohalem as trustee of the Joshua D. Hadar Family Trust ("JDHFT") and several holding companies for Eric Hadar’s various real estate developments (the "Holding Company Plaintiffs") brought an action against Eric Hadar, Allied and JFK (the "Prior Action"). Winter Affirm., Ex. A, p. 1. Defendants Rosenbaum and Patterson served as plaintiffs’ attorneys. Id. The plaintiffs in the Prior Action accused Eric Hadar of mismanaging and wasting the plaintiffs’ assets and investments. Id. at p. 9. The Prior Action alleged breach of fiduciary duty, breach of contract, and sought to remove Eric Hadar from his position as a manager of the Holding Company Plaintiffs and to enjoin Eric Hadar from taking any further action as manager. Id at pp. 18-24.

Defendants assert that the "judicial proceedings privilege" shields them from liability for bringing the Prior Action and the Surrogates Action. Defendants argue that all of Plaintiffs’ claims derive from the filing of these lawsuits, and, because the filing of lawsuits is protected by the judicial proceedings privilege, the complaint should be dismissed in its entirety. Defamation Claim Against Rosenbaum Ordinarily, "a statement made in the course of legal proceedings is absolutely privileged ifit is at all pertinent to the litigation." Sexter & Warmflash, PC. v. Margrabe,
38 A.D2d 163, 171 (1st Dep’t 2007) (internal citations and quotation marks omitted). However, the "privilege may not be extended to a litigant who commences a sham lawsuit for the sole purpose of defaming his adversary." Sexter & Warmflash, P.C., 38 A.D2d at 173, n. 5. Plaintiffs have alleged that Rosenbaum commenced the Prior Litigation against Eric Hadar solely to harass and disparage Eric Hadar in an effort to alienate his partners and investors in his real estate business. PI. Memo, pp. 8-9. Plaintiffs further claim that the allegations in the Prior Action and Surrogates Court Action were patently false, and that Rosenbaum conspired with Richard Hadar to invent the allegations. Plaintiffs assert that Rosenbaum was assisting Richard Hadar in his ultimate goal of taking over Eric Hadar’s real estate business."

The balance of the motion to dismiss was denied.  Read on, in the decision, for privity, privilege and documentary evidence issues.

To what extent did defendant attorneys participate in the negotiation and advice given to a doctor who had a condo along with a professional suite, and then rented the suite?  Was co-defendant the attorney who gave all the advice and defendant merely one who attended the closing?

In Gershkovich v Miller, Rosado & Algios, LLP   2013 NY Slip Op 50050(U) [38 Misc 3d 1211]  Decided on January 9, 2013  Supreme Court, Kings County  Schmidt, J. we see such a question.  More than that, we see the folly of an early motion for summary judgment, made before plaintiff testified.
 

"In support of its motion for summary judgment, Miller had submitted the affidavit of Christopher Rosado. In his affidavit (see Zamurs aff., Ex. B) therein, Mr. Rosado stated that he [*2]was retained by co-defendant, Arthur Welsher, solely to represent the plaintiff at the closing of the purchase of the units. All other aspects of the purchase were performed by the co-defendant. Mr. Rosado did not negotiate, or participate in any way in the negotiation of the contract of sale of the subject units. He did not review any documents with plaintiffs prior to the date of the closing. Plaintiffs did not seek his advice concerning the leasing of the units and Mr. Rosado did not represent them or prepare any documents concerning the leasing of the units.

In opposition to Miller’s motion, plaintiffs submitted the affidavit of Tibor

Gershkovich, a practicing medical doctor, in which he stated that Miller (through Rosado) advised him and his wife that "the commercial units were merely an appendage to the plaintiffs condominium, had zero percentage of the common elements, paid no condominium dues or assessments, and were not bound by any of the restrictions imposed upon the residential unit owners." See affirmation of Roman Popik dated September 5, 2012 (Popik aff.), Ex. B, ¶ 29. Dr. Gershkovich also stated in his affidavit that, following the advice of Miller, he did not submit prior notice to the Board of Managers concerning the entering into the leases for the subject units. Id., ¶ 20.

This court, in denying Miller’s motion for summary judgment, found that Mr. Rosado’s affidavit was sufficient to make a prima facie showing that Miller did not negligently advise the plaintiffs. However, the court found that the affidavit of Dr. Gershkovich raised a question of fact as to whether Mr. Rosado advised the plaintiffs that the commercial units were not bound by any of the restrictions imposed upon the residential unit owners.

Subsequently, on January 25, 2012 and March 28, 2012, the deposition of plaintiff Tibor Gershkovich was held. See Zamurs aff., Ex. C (transcript).

Miller now moves to renew its summary judgment motion, arguing that the testimony of plaintiffs at their depositions contradict the affidavit relied on by plaintiffs to defeat Miller’s motion for summary judgment and also provide evidence which clearly demonstrates that plaintiffs cannot establish the requisite elements of legal malpractice against Miller.

A motion for leave to renew is addressed to the sound discretion of the court." Matheus v Weiss, 20 AD3d 454, 454-455 (2d Dept 2005). Pursuant to CPLR 2221, a motion for leave to renew "shall be based upon new facts not offered on the prior motion that would change the prior determination" (CPLR 2221[e] [2]) and "shall contain reasonable justification for the failure to present such facts on the prior motion." CPLR 2221(e) (3).

In the matter at bar, the court finds that Miller has established reasonable justification for his initial failure to submit the new facts in that the evidence revealed by the testimony of plaintiff Dr. Tibor Gershkovich was not known at the time of the making of the original motion for summary judgment. Therefore, the court grants Miller’s motion to renew its prior summary judgment motion.

Upon renewal of Miller’s motion for summary judgment, the court further finds that Miller has established entitlement to judgment dismissing plaintiffs’ complaint.

At his deposition, Dr. Gershkovich testified that the contract of sale for the subject units was negotiated solely by Mr. Welsher. Tr. at 31. According to plaintiff, Mr. Welsher told him that the units could be rented out like a commercial unit. Id. Plaintiff did not speak to anyone other than Mr. Welsher prior to the signing of the contract of sale. Id. at 48.

At the closing, plaintiffs were represented by Mr. Rosado. Id. at 59. According to Dr. [*3]

Gershkovich, he spoke to Mr. Rosado one week prior to the closing. Id. at 60. During the conversation, he asked Mr. Rosado if he reviewed all of the documents needed for closing on the units and whether there would be any problems during the closing. Id. Significantly, however, Dr. Gershkovich acknowledged that he did not mention any particular problems that he may have had in mind. Id. "

Plaintiff must always prove that departures from good and accepted practice by the defendant were a proximate cause of the injury.  Note that there need be no proof that the departure was the proximate cause.  In Arbor Realty Funding, LLC v Herrick, Feinstein LLP   2013 NY Slip Op 01216
Decided on February 26, 2013   Appellate Division, First Department  we see such an application. 
"Defendant argues that even if, but for its allegedly erroneous legal advice as to zoning issues, plaintiff would not have made bridge loans to the developer of a residential tower at 303 East 51st Street in Manhattan, plaintiff cannot establish legal malpractice or negligent representation because it cannot demonstrate that the zoning advice proximately caused its loss on the defaulted loans. Plaintiff made the loans in mid-2007. Defendant contends that the crane collapse at the project site in March 2008, which killed seven people, the market collapse beginning in late 2007 and continuing through 2008, and plaintiff’s insufficient response to the Department of Buildings letter notifying plaintiff of its intent to revoke the project’s building permits, constituted intervening events that severed the causal link between defendant’s zoning advice and plaintiff’s loss (see Derdiarian v Felix Contr. Corp., 51 NY2d 308 [1980]).

There is, however, evidence in the record that raises an issue of fact as to causation (see Brooks v Lewin, 21 AD3d 731, 734 [1st Dept 2005], lv denied 6 NY3d 713 [2006]). It appears [*2]that potential takeout lenders had concerns about the zoning issues even before March 2008. To the extent later events contributed to plaintiff’s loss, they are properly considered by a fact-finder (see e.g. Schauer v Joyce, 54 NY2d 1 [1981]). "

Complaints might be compared to a precision rifled single shot or to a shotgun, in which an ever-widening pattern of scatter shot is fired.  Complaints patterned on either might be successful, but Iwachiw v Bahr  2013 NY Slip Op 30283(U)  January 11, 2013  Supreme Court, New York County
Docket Number: 401546/2011  Judge: Lucy Billings chose the shotgun approach and was wholly unsuccessful.

"The thrust of the complaint’s allegations against Adorno Denker and Scheiner is that they  participated with other defendants in fraudulently or negligently denying plaintiff Workers’  compensation and insurance coverage for property loss. The complaint simply alleges that
Metazur Restaurant was negligent and also claims wrongful death, malpractice, and defamation against all defendants.

The complaint provides no detail as to what actions by any defendants were fraudulent or what insurance claims they fraudulently or negligently canceled, failed to file, or otherwise denied to plaintiff. His unsworn opposition to Scheiner’s motion indicates that defendant Tower Group’s
misdescription of his mother’s house caused the denial of insurance coverage for the house, but he nowhere pleads the source of any duty on defendants’ part to provide insurance coverage to him.

A fraud claim requires plaintiff to allege that defendants misrepresented or omitted a material fact, knowing the misstatement or omission was false, to induce plaintiff to rely on it, and that plaintiff justifiably relied on the misrepresentation or omission and incurred damages from that reliance. Mandarin Tradinq Ltd. v. Wildenstein, 16 N.Y.3d 173, 178 (2011); Gosmile, Inc. v. Levine, 81 A.D.3d 7 7 , 81 (1st Dep’t 2011); Nicosia v. Board of Mqrs. of the Weber House Condominium, 77 A.D.3d 455, 456 (1st Dep’t 2010); Zanett Lombardier, Ltd. v. Maslow, 29 A.D.3d 495, 496 (1st Dep’t 2006). Plaintiff must plead the circumstances of any claimed fraud in detail, such as the contents of any misrepresentation and when and to whom it was stated. C.P.L.R. § 3016(b); Pludeman v. Northern Leasing SysInc., 10 N.Y.3d 486, 492 (2008); El Entertainment U . S . LP v. Real Talk Entertainment, Inc., 85 A.D.3d 561, 562 (1st Dep’t 2011); Waggoner v. Carum, 68 A.D.3d 1, 6 (1st Dep’t 2009); Caldwell v. Gumley-Haft L.L.C., 55 A.D.3d 408 (1st Dep’t 2008). Since plaintiff pleads none of these elements, let alone in detail, the complaint, even when supplemented by his affidavits in opposition to the motions and cross-motion, fails to support a claim of fraud perpetrated by any defendants against him. Therefore the court grants the motions and cross-motion to
dismiss the fraud claim against defendants Adorno Denker, Metazur Restaurant, and Scheiner. C.P.L.R. §§ 3016(b), 3211(a) (7)."

So many of these cases start over a fee.  Here, relatives try to push relatives out of a house (we guess it was bequeathed to both), and clients end up spending about $ 50,000 to avoid being put in the street.  Then, it comes time to pay the attorneys.  This leads to an attorney fee case and a legal malpractice counterclaim.  In the end, clients lose all around.

Davis v Siskopoulos  2013 NY Slip Op 30353(U)  February 11, 2013  Supreme Court, New York County  Docket Number: 111965/04  Judge: Barbara Jaffe.

"In 2000, defendants hired plaintiff law firm to defend them in a partition action commenced by the brother of decedent Angelo Siskopoulos seeking to evict them from their residence. A referee held a hearing and issued a report finding that defendants had not ousted the brother from the residence, and awarded defendants certain damages, including reimbursement of half of the mortgage payments paid by them and for repairs and maintenance of the property. (Affidavit of Bonnie Reid Berkow, Esq., dated Feb. 13,2012 [Berkow Affid.], E)(h. GG). Between August 1,2000 and December 21,2003, plaintiff rendered legal services to them. As of January 31,2004, defendants had paid plaintiff $8,559.68 for its services, leaving a balance of$45,577.92. (Affirmation of Alexandra Siskopoulos, Esq., dated Feb. 12,2012 [Siskopoulos Aff.], Exh. A).
On or about August 16, 2004, plaintiff commenced the instant action against defendants, asserting causes of action for an account stated and quantum meruit.

Defendants’ failure to plead the specific allegations in their affirmative defenses is not fatal here as plaintiff opposes them on the merits and defendants asked questions relating to them in discovery. (See Drago v Spadafora, 94 AD3d 1041 [2d Dept 2012] [no showing made that plaintiffs were taken by surprise or prejudiced by defendant’s use of unpleaded affirmative defense in support of his motion for summary judgment]; Sullivan v Am. Airlines, Inc., 80 AD3d 600 [2d Dept 2011] [unpleaded defense may serve as basis for granting summary judgment in absence of surprise or prejudice to opposing party]; Joan Hansen & Co., Inc. v Everlast World’s Boxing Headquarters Corp., 2 AD3d 266 [1 st Dept 2003], Iv denied 2 NY3d 702 [2004] [summary judgment may be granted on unpleaded defense where opponent of motion has not been surprised and fully opposed motion]).

Here, defendants have failed to establish, prima facie, that plaintiff is not an expert in the real estate field or had no experience dealing with partition actions as plaintiff s discovery response that it could not recall working on partition actions before 2000 does not constitute an admission that it had no experience working on such actions, and they cite nothing in Wagner’s deposition testimony that is relevant to this claim. Thus, to the extent that plaintiff made certain representations to defendants, defendants have not shown that they were false misrepresentations. In any event, as defendants fail to submit an affidavit from someone with personal knowledge of the circumstances underlying their retention of plaintiff, they cannot establish that plaintiff made the representations to them on which they relied, and the printout of plaintiffs website is not probative. (See eg Dombroski v Samaritan Hasp., 47 AD3d 80 [3d Dept 2007] [general accusation of deception not based on personal knowledge insufficient to establish estoppel]; Cohen v Houseconnect Realty Corp., 289 AD2d 277 [2d Dept 2001] [complaint contained no allegations setting forth alleged misrepresentations, and no such allegations were contained in plaintiffs affidavit submitted on motion]; Urquhart v Philbor Motors, Inc., 9 AD3d 458 [2d Dept 2004] [affidavit submitted by defendant insufficient to establish prima facie entitlement to summary judgment as it was not by person with first-hand knowledge of alleged misrepresentations]; see also Nissan Motor Acceptance Corp. v Scialpi, 83 AD3d 1020 [2d Dept 2011] [conclusory and unsubstantiated allegations of fraud and misrepresentation insufficient]; cf Silber v Muschel, 190 AD2d 727 [2d Dept 1993] [defendant submitted fact-specific affidavit evincing first-hand knowledge of  misrepresentations made by plaintiff during parties’ negotiations]; Slavin v Victor, 168 AD2d 399 [1 st Dept 1990] [in alleging fraud, party appropriately offered affidavit of person with first-hand  knowledge as to nature of misrepresentations). For the same reasons, defendants have not established their claim that plaintiff breached ethical rules by holding itself out as an expert in real estate.

Not only did the defendants obtain dismissal, but the non-answering defendant obtained dismissal too.  Unfortunately the 2d Department decision in Siwiec v Rawlins 2013 NY Slip Op 00903 Decided on February 13, 2013  Appellate Division, Second Department did not explain its reasoning. The most that can be gleaned from this slender record is "Here, the complaint fails to allege facts sufficient to establish that the underlying action would have been successful or that the defendants proximately caused the plaintiff to sustain damages (see Hallman v Kantor, 72 AD3d 895, 897; Wald v Berwitz, 62 AD3d at 787; Simmons v Edelstein, 32 AD3d 464, 465-466). Accordingly, the Supreme Court properly granted the motion of the defendants Gary N. Rawlins and The Rawlins Law Firm, PLLC, and the cross motion of the defendant Craig F. Wilson, pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against them.

Further, the Supreme Court providently exercised its discretion in denying the plaintiff’s cross motion pursuant to CPLR 3215(a) for leave to enter a default judgment against the defendant Craig F. Wilson (see Feder v Eline Capital Corp., 80 AD3d 554; Giha v Giannos Enters., Inc., 69 AD3d 564, 565). "

Plaintiff loses in Supreme Court, and dismissal is affirmed in the Appellate Division in this legal malpractice case.  Voutsas v Hochberg   2013 NY Slip Op 00803   Decided on February 7, 2013
Appellate Division, First Department  discusses the limits of the fraud discovery rule, as well as continuous representation.
 

"The fraud and breach of contract claims alleging that plaintiff’s former attorneys had misrepresented to the Bankruptcy Court that plaintiff was insolvent accrued no later than the December 26, 2001 entry of the bankruptcy decree. Accrual of the portion of the fraud claim alleging that payment of part of plaintiff’s legal fees by a third party was concealed from him was not deferred by the discovery rule, since the documentary evidence, even without the affidavits submitted, clearly showed that plaintiff had been aware of such payment more than two years before he commenced this action. The continuous representation doctrine did not apply to the malpractice claim, as the legal services relied upon were unrelated to the specific legal matter as to which malpractice was alleged (see Shumsky v Eisenstein, 96 NY2d 164, 168 [2001]), and was not pursuant to a retainer agreement in which the attorney and client anticipated continued representation (id. at 170).

Moreover, the fraud, breach of fiduciary duty and breach of contract causes of action all arose from the same facts as the malpractice claim and alleged similar damages, and were therefore properly dismissed as duplicative of the deficient malpractice claim (see e.g. Sun Graphics Corp. v Levy, Davis & Maher, LLP, 94 AD3d 669 [1st Dept 2012]; Bernard v [*2]Proskauer Rose, LLP, 87 AD3d 412, 416 [1st Dept 2011]). "