Often enough, Courts have applied res judicata broadly to the question of attorney fee disputes and a later legal malpractice issue.  As a blackletter rule, if an attorney asks the court to set a fee, and it does, that act bars plaintiff from bringing the legal malpractice case on the theory that fees may not be awarded if there has been legal malpractice, and so the award of the fee disposes of the question of whether there was legal malpractice.

In Soni v Pryor   2013 NY Slip Op 00324   Decided on January 23, 2013  Appellate Division,   Second Department a more nuanced approach was taken.  "plaintiffs retained the defendants to represent them in an action commenced against the plaintiffs alleging that the plaintiffs had engaged in certain wrongful acts as directors and officers of several corporations. The parties subsequently had a fee dispute, which was resolved in an arbitration proceeding conducted pursuant to part 137 of the Rules of the Chief Administrator of the Courts (22 NYCRR 137.0-137.12; hereinafter part 137). The panel of arbitrators awarded the defendants the sum of $48,103.75, the full amount in dispute, and the arbitration award was confirmed by the Supreme Court in a proceeding commenced pursuant to CPLR article 75. The plaintiffs subsequently commenced this action alleging that the defendants had committed legal malpractice and breach of contract by failing to investigate whether there were insurance policies issued to the corporations that would have covered the attorney’s fees, defense costs, and loss incurred by the plaintiffs in the underlying action.

The Supreme Court should have denied that branch of the defendants’ motion which was to dismiss the complaint on the ground that the complaint is barred by the doctrines of collateral estoppel and res judicata. Part 137 expressly provides that it does not apply to "claims involving substantial legal questions, including professional malpractice or misconduct" (22 NYCRR 137.1[b][3]). As such, the defendants failed to sustain their burden of demonstrating that all of the issues raised in the instant action which are or may be determinative thereof were necessarily decided in the arbitration proceeding, or in the proceeding to confirm the arbitration award (see Mahler v Campagna, 60 AD3d 1009, 1011-1012). Moreover, in opposition to the motion, the plaintiffs [*2]submitted an affidavit of the plaintiff Om P. Soni, in which he stated that the arbitration panel refused to consider issues regarding the quality of the legal services performed by the defendants, and this evidence was sufficient to demonstrate that, in any event, the plaintiffs lacked a full and fair opportunity to litigate the issues raised in the instant complaint (see id. at 1012). "

Yesterday we looked at Chibcha Rest., Inc. v David A. Kaminsky & Assoc., P.C. 2013 NY Slip Op 00281   Decided on January 22, 2013 Appellate Division, First Department  for the question of how much a plaintiff must show, and the difference between missing a deadline and almost all other claims.
 

Today, we look at the same case for a lesson in Judiciary Law 487.  For reasons, mostly unexplained, the JL 487 claim was dismissed, because it was brought in a plenary action, after arising in a fee dispute.  The AD affirmed Supreme Court’s dismissal and held that plaintiff’s remedy was to move to vacate the fee dispute result, rather than bring this plenary claim.

"The motion court properly dismissed the cause of action alleging a violation of Judiciary Law § 487. Plaintiffs’ allegations stem from defendants’ alleged misconduct in connection with a fee dispute in Civil Court. Accordingly, "plaintiff’s remedy lies exclusively in that lawsuit itself, i.e., by moving pursuant to CPLR 5015 to vacate the civil judgment due to its fraudulent procurement, not a second plenary action collaterally attacking the judgment in the original action" (Yalkowsky v Century Apts. Assoc., 215 AD2d 214, 215 [1st Dept 1995]). "

Although a demonstrated lack of skill and a failure to prepare for litigation might, on its face, seem proper fodder for a legal malpractice case, in Chibcha Rest., Inc. v David A. Kaminsky & Assoc., P.C.   2013 NY Slip Op 00281   Decided on January 22, 2013   Appellate Division, First Department the court held:  "Plaintiffs’ allegations that defendants made "no useful attempt" to argue against a TRO sought and obtained by the landlord, and that defendants were both unprepared and unskilled in defending them, do not suffice. As the motion court observed, plaintiffs do not allege, for example, that defendants missed any deadlines or otherwise failed to protect or preserve plaintiffs’ rights (see Mortenson v Shea, 62 AD3d 414, 414-415 [1st Dept 2009]). "

This case demonstrates the bold difference between a failure to file within a deadline, and almost all other shortcomings.  Presentation of a certain witness, selection of an expert, questions put in cross-exam.  All very important, but none of them a failure to file within a deadline or a failure to preserve a client’s rights.

The Court explains further: "Contrary to plaintiffs’ assertions, the record supports the motion court’s conclusion that plaintiffs’ damages, sustained from the closing of the subject premises after issuance of the TRO, were not caused by defendants’ conduct, but rather by plaintiffs’ failure to obtain the necessary insurance before the landlord brought its motion for a temporary restraining order. Plaintiffs concede that the insurance coverage required by the lease initially was not in place, and that the TRO against them was lifted only after the requisite insurance was obtained. As the premises were closed due to the lack of insurance, it cannot be said that plaintiffs would not have incurred any damages, but for defendants’ purported negligence (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007])."

In our article on Matrimonial Legal Malpractice and settlements in to days New York Law Journal we discuss the recent line of cases which disturb the well settled principal that a legal malpractice case after settlement is permitted where the settlement was "effectively compelled" by the mistakes of counsel.

This new line of cases, starting with Katebi v. Fink has upended a well understood principal of legal malpractice and created much uncertainty.  The rest can be seen in today’s New York Law Journal Outside Counsel Column.

We were recently asked whether an Expert, testifying in a legal malpractice case can commit legal malpractice during testimony in the case. We discussed whether there was an attorney-client relationship, and whether "absolute immunity" for in-court testimony applied. Now, Levine v Harriton & Furrer, LLP ; 2012 NY Slip Op 01401 ; Appellate Division, Third Department discusses the same subject, this time for an engineer.
 

"Plaintiff, a licensed professional engineer, was retained to provide services in connection with a personal injury claim in the Court of Claims against the State of New York arising from an alleged highway defect. The claim was subsequently transferred to defendant, a law firm in the Village of Round Lake, Saratoga County, and plaintiff was again retained. The parties initially proceeded upon an oral agreement. In February 2006, plaintiff submitted a written retainer agreement to defendant setting forth a retainer fee and establishing hourly charges and fees, among other things. Defendant paid the retainer fee and, on the claimant’s behalf, returned the agreement to plaintiff, without signature. Plaintiff subsequently provided services and submitted bills periodically to defendant. Defendant made payments through December 2007, when the trial was completed; thereafter, defendant made no further payments but did request continuing services, which plaintiff provided. In May 2008, the Court of Claims rendered a determination dismissing the claim upon the ground that negligence had not been proven. Plaintiff allegedly continued to submit invoices for payment of the outstanding balance due through October 2008, but received no response. After plaintiff’s counsel contacted [*2]defendant, defendant responded in writing in November 2008, refusing to pay and alleging that the unfavorable determination of the claim had resulted from plaintiff’s professional malpractice. "

"Defendant’s objections were not primarily grounded in the particulars of the invoices; instead, the central contention is that the failure to pay for plaintiff’s services was justified by his alleged malfeasance. However, this claim was not supported by an expert affidavit opining that plaintiff’s services "deviated from accepted industry standards" and that this failure proximately caused the loss of the claimant’s case (Columbus v Smith & Mahoney, 259 AD2d 857, 858 [1999]; see Travelers Indem. Co. v Zeff Design, 60 AD3d 453, 455 [2009]). Contrary to defendant’s claim, the decision of the Court of Claims does not replace such an expert opinion. Although that court criticized some of plaintiff’s methods, it made no finding as to his competence beyond the requisite assessment of the credibility of the conflicting expert opinions. The mere fact that the Court of Claims found plaintiff’s opinions less credible than those of the opposing experts is insufficient to present a factual issue as to whether his performance was substandard; such determinations are necessarily made whenever the opinions of experts are in conflict. Further, the court explicitly stated that its determination was not based solely on credibility, but also on its factual conclusion that the subject accident was proximately caused by driver error, and not by a highway defect.
 

State Court cases may be removed to Federal Court in two instances.  One is where there is complete diversity of citizenship and the requisite dollar-damage amounts; the second is where the claim "arises" under federal law.  One such instance may be questions of legal malpractice in the patents area.  We are certainly aware of case law in the SDNY in which such arguments were decided with mixed results.  Today, we read of a US Supreme Court case that may clear up the dispute.  In Gunn v. Minton, No. 11-1118, U.S. Sup Ct. the question is simply whether the legal malpractice case should be heard in state or federal court.

"The central question is whether legal malpractice claims against attorneys representing the inventors, for failing to raise an “experimental use” defense to the “on-sale bar” doctrine, constituted a question of exclusive state law, or one of exclusive federal jurisdiction and law – like traditionally all Patent Law issues. The issue turns on whether such a state court claim can create or affect Federal patent rights."

Lexis-Nexis writes: "At oral argument, Webre said the Federal Circuit’s rulings "improperly conflate the question of necessity of a federal issue with the question of whether that issue is substantial," representing a "total disregard [of] a proper balance of the state and federal interests."

"The Federal Circuit announced that there’s an interest in – federal interest in uniformity of patent law, and then that was that. That was the end of the inquiry. There is no balance if you don’t look at the state interest on the other side. And in legal malpractice cases in general and in Mr. Minton’s claim in particular, there are substantial state interests. There is the general interest, the right of a state to develop its own state claims, its own state law and its own state courts. But there is also a state interest in governing the relationship between attorney and client that happens through the legal malpractice process," Webre added.

When asked by Justice Sonia Sotomayor whether an allegation of malpractice involving the PTO would qualify for "arising under" jurisdiction, Webre answered in the negative. Though such a scenario would "be a more substantial federal question than the one presented here," Webre nonetheless said no "arising under" jurisdiction exists because "it involves only a hypothetical actual set of patent rights."

"No judgment that can happen in a state legal malpractice case actually impacts any patent rights," Webre replied.

Disputed, Substantial Issues

By contrast, Thomas M. Michel, representing Minton, urged the Supreme Court to affirm. The state district court "made holdings about . . . whether . . . the experimental use exception is a question of law or a question of fact," as well as a determination that "knowledge of the buyer is conclusive, rather than a factor" to be considered, Michel argued.

"Those are all . . . disputed, substantial issues of federal patent law," he added.

To reverse the Texas Supreme Court could also burden the PTO, Michel warned, because the agency "will have to take . . . as guidance" the state district court’s injection of a "brand-new requirement" that an expert witness must testify to establish an experimental use testing exception. In addition, Michel said a reversal would free state courts to choose whether they will interpret and apply Federal Circuit precedent; should they choose not to, it could subject patent attorneys to varying standards and regulations on a state-by-state basis. Justice Antonin Scalia was not persuaded by the argument, however, asking Michel, "Why is that worse than the fact that if it goes to federal court, all of the lawyers in the state in all malpractice cases are going to be supposedly bound by the federal court’s holding as to state issues of malpractice?"

"I mean, it seems to me it’s Twiddle Dum or Twiddle Dee, whichever court system you go to, you are going to terrorize the lawyers of that state on the basis of an opinion of a court that is not dispositive on those issues," Scalia added.

Minton is represented by Michel and Robley E. Sicard of Griffith, Jay & Michel in Fort Worth, Texas; Coyt Randal Johnston, Robert L. Tobey and Coyt Randal Johnston Jr. of Johnston Tobey in Dallas; Theodore F. Shiells of Shiells Law Firm in Dallas; Gregory W. Carr of Carr in Frisco, Texas; and Daniel R. Ortiz of Charlottesville, Va. The petitioners are represented by Webre of Scott, Douglass & McConnico of Austin, Texas."
 

Melcher v Greenberg Traurig, LLP   2013 NY Slip Op 00256   Decided on January 17, 2013
Appellate Division, First Department  is extraordinary.  It’s special for the facts, and for two holdings and the re-statement of a much overlooked principal all seriously affecting calculation of the statute of limitations. Now settled is the correct S/L statute for Judiciary Law 487, and whether there is a discovery statute applied.   Note the names of the appellate players.
 

First:  An "action to recover upon a liability, penalty or forfeiture created or imposed by statute . . ." must be commenced within three years (CPLR 214[2]). A cause of action under Judiciary Law § 487 is purely statutory in nature and therefore subject to the three-year statute of limitations. Judiciary Law § 487 "is a unique statute of ancient origin in the criminal law of England" (Amalfitano v Rosenberg, 12 NY3d 8, 14 [2009]).  

From the dissent:  While we previously held that a cause of action pursuant to Judiciary Law § 487 did not give rise to "a unique form of liability unknown at common law," and was thus governed by a six-year statute of limitations (Guardian Life Ins. Co. of Am. v Handel, 190 AD2d 57, 62-63 [1st Dept 1993]), it is now well settled that Judiciary Law § 487 "is not a codification of a common-law cause of action for fraud. Rather, section 487 is a unique statute of ancient origin in the criminal law of England" (Amalfitano v Rosenberg, 12 NY3d 8, 14 [2009]). Accordingly, pursuant to CPLR § 214(2), a cause of action pursuant to Judiciary Law § 487 is "an action to recover upon liability, penalty or forfeiture created or imposed by statute," and is thus governed by a three-year statute of limitations.
 

Second: An action seeking damages under Judiciary Law § 487 must be commenced within the longer of three years from the time of the underlying deceit or collusion or within two years from the time the deceit or collusion was discovered, or with reasonable diligence, could have been discovered (CPLR 214[2]; see CPLR 203[g]; cf. Sargiss v Magarelli, 12 NY3d 527, 532 [2009]).

Third:  Causes of action do not necessarily accrue at the time of occurrence;  they may accrue later when all facts necessary have occurred including damage.  "A cause of action accrues, for the purpose of measuring the period of limitations, when all of the facts necessary to the cause of action have occurred so that the party would be entitled to obtain relief in court" (Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 221 [1996] [internal quotation marks omitted]).

In the past several years we’ve been given unprecedented access to court records.  No more is it necessary to travel to the courthouse to review a file, nor must we wait for the clerk to mail (or not mail) a decision.  However, access to written decisions is not universal.  in Bullfrog, LLC v Nolan
2013 NY Slip Op 00168  Decided on January 16, 2013  Appellate Division, Second Department
we are able to read the AD decision, but the Supreme Court decision is not on-line.  While we can look and see the date it was decided, and the type of motion which was decided, no scan of the decision is available, so we cannot say what the Supreme Court judge saw that the Appellate Division differed with.

"An action to recover damages for legal malpractice must be commenced within three years after the accrual of the cause of action (see CPLR 214[6]). Here, the defendant Kevin Barry (hereinafter the appellant) sustained his initial burden on that branch of his motion which was to dismiss the cause of action to recover damages for legal malpractice by demonstrating that the applicable limitations period had expired with respect to the alleged acts of legal malpractice. Contrary to the Supreme Court’s determination, the evidence submitted by the plaintiff in opposition was insufficient to raise a triable issue of fact as to whether the continuous representation doctrine tolled the running of the statute of limitations (see Hasty Hills Stables, Inc. v Dorfman, Lynch, Knoebel & Conway, LLP, 52 AD3d 566, 567-568; Melendez v Bernstein, 29 AD3d 872, 873; Dignelli v Berman, 293 AD2d 565, 566; Muller v Sturman, 79 AD2d 482, 486-487). Accordingly, the cause of action to recover damages for legal malpractice should have been dismissed as time-barred. [*2]

The appellant was also entitled to summary judgment dismissing the plaintiff’s cause of action for replevin insofar as asserted against him. The appellant established, prima facie, that he did not unreasonably refuse to return the documents requested by the plaintiff (see Khoury v Khoury, 78 AD3d 903, 904; Wiel v Curtis, Mallet-Prevost, Colt & Mosle, 66 Misc 2d 466, 469, affd 36 AD2d 1027, affd 30 NY2d 500). In opposition to the motion, the plaintiff failed to raise a triable issue of fact. The Supreme Court, therefore, should have granted that branch of the appellant’s motion which was for summary judgment dismissing the cause of action for replevin insofar as asserted against him. "