The undisputed facts in this case are shocking.  "The following facts are undisputed. In or about May 2004, plaintiff, which had a lease on the building located at 2944 3d Avenue in the B r o n x , retained the law firm of Gold, Rosenblatt & Goldstein to commence a commercial summary  nonpayment action against the subtenants of the building, Diab and Hasan Saleh, who were doing business as 2944 3d Ave Retail Corp.("Retail Corp."). Defendant Steven E. Goldstein, a then-partner of the firm undertook the representation of plaintiff, and after commencing the action (Steven’s Distributions, Inc. v 2944 3rd Ave Realty Corp., Index No. 90110 (Civ Ct, B r o n x Co, 2 0 0 8 ) , fabricated several court orders purporting to award plaintiff various sums in back rent, so as to persuade plaintiff that Goldstein was actively prosecuting the action. "

So goes Steven’s Distribs. Inc. v Gold, Rosenblatt & Goldstein    2012 NY Slip Op 31990(U)
July 24, 2012   Supreme Court, New York County   Docket Number: 106283/09  Judge: Joan A. Madden.  This case is another example of the microscopic examination of "proximate cause" that goes on in legal malpractice litigation.

Justice Madden goes on to find that no matter how much fooling around took place during the litigation it was doomed from the start because no demand for rent had been timely made.  If no demand for rent, then no case.  If no case, then the internal bad behavior of of no interest.

"Accordingly, while Goldstein’s erroneous naming of the parties in the caption was unquestionably malpractice sufficient to have caused the dismissal of plaintiff’s petition, and while, perhaps, Goldstein’s (or Lubellls) failure to prepare plaintiff’s bookkeeper for her testimony would also have been sufficient to cause the dismissal, plaintiff in any event could not have prevailed in the first proceeding, since it had failed to prove a pre-litigation rent demand. For that reason, Goldstein’s (and possibly, Lubellls) negligence ”was not a proximate cause of any damages arising from the ?loss of the underlying action. Barnett v. Schwartz, 47 AD3d 197, 204 (2nd Dept 2007). Nor can plaintiff prove that, but for Goldstein’s failure to prosecute the underlying case for almost t w o years, Retail Corp.’s motion to vacate its default would not have been granted by Judge Rodriguez. While Judge Rodriguez based her decision on l1 [the long standing status of [the] proceeding with no indication that respondent neglected to appear or negotiate, and no indication that petitioner zealously prosecuted its claim" (Chera Aff., Exh. 10, at 2 ) , Diab Salehls affidavit in support of
Retail Corp’s order to show cause noted both that there was no such entity as the petitioner named in the caption of the proceeding, and that petitioner lacked standing to prosecute i t s claim, since its lease with the over-landlord had been terminated for nonpayment.

In Crawford v Himmelstein ; 2011 NY Slip Op 31669(U); ; Supreme Court, New York County; Docket Number: 115432/10; Judge: Donna M. Mills we see a straightforward analysis of a typical legal malpractice case. Client is being pursued by landlord to give up three apartments, on the basis of owner-personal use. (Put aside why a rent stabilized tenant could have three apartments?). Case is litigated, and plaintiff eventually settles for $ 300,000 and one year grace period. At the end of the grace period, tenant does not want to move out, and eventually sues attorney for malpractice. Plaintiff loses.

"To prevail in a legal malpractice action, a plaintiff must show that the attorney “failed to exercise that degree of care, skill, and diligence commonly possessed and exercised by a member of the legal community” (Volpe v Canfield, 237 AD2d 282,283 that such negligence was the proximate cause of their damages, and that, but for the attorney’s negligence, the plaintiff would have prevailed oh the underlying claim (see Rau v , Borenkoff, 262 AD2d 388.

Here, the plaintiff claims that Himmelstein failed to file a motion for summary judgment or proceed to trial on the issue of the owner landlord’s immigration status relating to the underlying holdover proceeding. In addition to the immigration issue, plaintiff claims there were a number of real estate irregularities surrounding the way the house was sold which was never explored sufficiently by Himmelstien. However, Himmelstein submitted documentary evidence establishing that between May 2004 and November 2007, the parties engaged in lengthy motion practice which involved significant discovery battles. It is quite apparent that Himmelstien was litigating vigorously on plaintiffs behalf before the parties decided to settle. Plaintiff has failed to demonstrate a meritorious cause of action for legal malpractice (Tortorello v Carlin, 286 AD2d 628 [2001]), there being insufficient evidence that “but for” defendants’ alleged negligence in not filing a motion for summary judgment or going to trial in lieu of settling the underlying action, plaintiff would have achieved a more favorable result (Wexler v Shea & Gould, 1 1 AD2d 450 . The record establishes that the parties with the assistance of the court in the underlying action, voluntarily decided to settle the matter instead of proceeding to trial. Moreover, Himmelstein offers a reasonable strategy as to why they did not make a motion for summary judgment. Attorneys are free to select among reasonable courses of action in prosecuting clients’ cases without thereby
exposing themselves to liability for malpractice (Dweck Law Firm v Mann, 283 AD2d 292,
293 [2001])."
 

Familiarity breeds contempt; so goes the aphorism.  In the years since the Court of Appeals decided  Amalfitano v. Rosenberg the use of Judiciary Law 487 has been trending.  Is it now overexposed?  Will we see it in every legal malpractice setting?  Will it be invoked as often as Rule 130?

Herschman v. Kern, Augustine, Conroy & Schoppmann, 2012 NY Slip Op. 31988(U), Justice Madden is a current example.  The case reads very badly for plaintiff, who makes a legal malpractice claim as well as a Judiciary Law 487 claim.  Both are dismissed.

"Although the statute does not expressly require a pattern of chronic delinquency, in certain instances, the Appellate Division, First Department, has made it a prerequisite to recovery (Dinhofer v. Medical Liability Mut. Ins. Co. 92 AD3d 480 [l“Dept 20121; Nason v. Fisher, 36 AD3d 486 [1st Dept 20071, but see, Amalfitano v. Rosenberg, 533 F3d 1 17 [2d Cir ZOOS]). Here, the complaint contains insufficient allegations of chronic delinquency or a pattern of misconduct.
Moreover, Herschman’s claims under Judiciary Law 5 487 fail to allege the type of intentional,
egregious conduct required to permit recovery under the statute. Judiciary Law Section 487 concerns
intentional deception, and not merely negligence (Specialized Indus. Services Corp. v. Carter, 68
AD3d 750 [2d Dept 20091; Scarborough v Napoli, Kaiser & Bern, LLP, 63 AD3d 153[4th Dept]], rearg. denied, 66 AD3d 1.50 [2009]). In this connection, Herschman does not indicate that one of the defendants, or anyone else from the firm, specifically represented to him that KACS was performing work concerning the Medicare investigation after December 10,2008, when Herschman states the file was sent to storage."

"The claim under Judiciary Law 487 must be dismissed."

 

Wo Yee Hing Realty, Corp. v Stern  ;  2012 NY Slip Op 05792   Decided on July 31, 2012
Appellate Division, First Department   is an example of just how minutely the AD will examine an "underlying case" when deciding a case of legal malpractice.  Here, plaintiffs hired an attorney to do the closing on a commercial property, and a deep split of testimony takes place.  Plaintiff and Defendant agree that Defendant attorney did not have the requisite knowledge to handle a 1031 exchange, yet he held the closing.  There was no 1031 exchange, there could be no 1031 exchange after the checks were made out to plaintiffs yet there is no legal malpractice.  Plaintiffs paid capital gains tax of $ 5 Million +
 

"The parties’ claims as to the understanding that was reached regarding the corporation’s retention of defendant are diametrically opposed. According to plaintiff’s principals, defendant assured them that the anticipated sale could be structured as a "like-kind exchange" under Internal Revenue Code (26 USC) § 1031, which permits taxes on gains from the sale of real property to be deferred if the seller purchases another property of like kind, within certain parameters (see 26 USC § 1031[a]). Plaintiff asserts that defendant "held himself out as knowledgeable in [1031 exchanges] and able to effectuate the sale and transfer of real property" to enable it to take advantage of the capital gains tax deferral.

Defendant, however, asserts that he informed plaintiff’s principals that he "had no expertise or experience with structuring Section 1031 like-kind exchanges" and that responsibility for taking advantage of Section 1031 would fall to them, and that they assured him that they were familiar with 1031 exchanges and would take care of that aspect of the transaction. "

"Strong evidence that defendant acted negligently is presented by his admission that he told the Yungs that he was not qualified to handle a 1031 exchange, but nevertheless undertook the preparation of the contract of sale. "[A]n attorney is obligated to know the law relating to the matter for which he/she is representing a client and it is the attorney’s duty, if he has not knowledge of the statutes, to inform himself, for, like any artisan, by undertaking the work, he represents that he is capable of performing it in a skillful manner" (Fielding v Kupferman, 65 AD3d 437, 440 [2009] [internal quotations marks omitted]). Defendant’s failure to have the checks made payable to a qualified intermediary similarly constitutes evidence of his negligence, since that failure would preclude plaintiff from taking advantage of the like-kind exchange option (see 26 CFR 1.1031[k]-1[f]).

In seeking summary judgment dismissing the case, defendant contends that plaintiff cannot show that his negligence, if any, caused plaintiff’s alleged losses. He relies on the absence of evidence of a pending deal that plaintiff could have used to consummate a 1031 exchange. Plaintiff argues, citing Suppiah v Kalish (76 AD3d 829, 832 [2010]) that defendant was required to submit an expert affidavit establishing that even if he did commit malpractice, his actions were not the proximate cause of its losses. However, Suppiah concerned an allegation of attorney malpractice in an immigration matter that involved issues so "byzantine" that the issue of proximate cause could not be resolved without expert testimony (id. at 833). Here, by contrast, the mechanics of the governing legal framework are undisputed, and the issue of proximate cause turns on the discrete factual question of whether plaintiff took the requisite actions to identify and purchase a suitable replacement property in the required time frame. There is no need for expert testimony on the point.

The question is therefore whether plaintiff raised an issue of fact as to whether negligence on defendant’s part proximately caused its claimed losses. "

"Unlike the dissent, we do not think that defendant’s failure to have the checks made out to a qualified intermediary eliminates plaintiff’s burden to offer evidence showing that but for defendant’s negligence, it would have been able to complete a valid like-kind exchange. Although it is now clear that, as the dissent puts it, "the opportunity for a like-kind exchange was irretrievably lost once plaintiff received the proceeds of the sale," it is also clear that plaintiff had failed to satisfy all the other elements required for the successful completion of other such an exchange, and that the failure to meet those requirements is not attributable to defendant’s alleged negligence."

 

InLaw Offs. of D’amico & Assoc., PLLC v D’Elia ; 2011 NY Slip Op 21160 ; Appellate Term, Second Department attorney (plaintiff) has sued client (defendant) for fees, while at the same time attorney (defendant) is being sued for legal malpractice in Supreme Court by Client (plaintiff.) What happens to the Civil Court fee suit when the Supreme Court malpractice is dismissed.
The general rules of civil procedure apply. While there may be application of res judicata and collateral estoppel there is also application of the rule that you may not bring up new arguments in reply.

"While plaintiff, in its initial moving papers, sought to dismiss defendant’s counterclaims pursuant to CPLR 3211 (a) (1) and CPLR 3211 (a) (7), it did not, in those papers, seek dismissal based upon res judicata pursuant to CPLR 3211 (a) (5), and it implicitly sought dismissal on res judicata grounds, if at all, only by letter to the District Court. New theories and arguments in support of a motion which do not appear in the initial moving papers should not be considered by the motion court (see e.g. Ritt v Lenox Hill Hosp., 182 AD2d 560 [1992] [reply papers should not be used to raise new arguments]). By granting plaintiff relief on the alternative ground implicitly raised by its letter, the District Court relieved plaintiff of its burden of demonstrating in its initial moving papers that the claims asserted against the D’Amico firm in the Supreme Court action were the same as those asserted against it in defendant’s counterclaims in the instant action, and deprived defendant of a meaningful opportunity to contest that issue (see Fergusson v Dumbacher, 21 Misc 3d 145[A], 2008 NY Slip Op 52547[U] [App Term, 1st Dept 2008]; Zarintash v Kopple, 5 Misc 3d 130[A], 2004 NY Slip Op 51309[U] [App Term, 1st Dept 2004]). Accordingly, it was error for the District Court to dismiss defendant’s counterclaims on the alternative ground of res judicata implicitly raised by plaintiff.

In view of the foregoing, the order is reversed, and the matter is remitted to the District Court for a new determination of the branch of plaintiff’s motion seeking to dismiss defendant’s counterclaims pursuant to CPLR 3211 (a) (1) and CPLR 3211 (a) (7). This disposition is without prejudice to plaintiff’s seeking dismissal of defendant’s counterclaims on the ground of res judicata upon proper notice. "

Plaintiff lives to fight another day, but is unlikely to win the war.

 

 

A French artist wants to buy an apartment in New York for a studio and living space. So far, this could be the start of a fairy tale in which the artist comes to NY, works hard, triumphs, etc. But, this real estate transaction soon turned to legal malpractice litigation. One reason for the problems is that the artist nominated another to take care of the transaction, a second reason is that the attorney seems to have done not much work.

InEhrenhalt v Kinder; 2011 NY Slip Op 30375(U); February 15, 2011; Supreme Court, New York County ;Judge: Martin Shulman we see how things went bad:

"At the time she signed the contract, Shapolsky tendered the contract deposit of $85,000 directly to Kinder. Paragraph 3(i) of the contract confirms the foregoing and provides for plaintiff to pay an additional $20,000 on July 20, 2008, which she did, for a total contract deposit of $1 05,000. The unit required extensive renovation and/or repairs as reflected in a work rider attached to the contract. Kinder undertook to perform such work prior to closing. To finance this work, the contract provides for the immediate release of the contract deposit to defendant Max Management LLC (“Max LLC”).’ Thereafter, pursuant to a separate oral agreement of unspecified date, Ehrenhalt paid additional funds to Kinder- and/or Max LLC in the total amount of $28,597.45 for further renovations not indicated in the contract and not included in the purchase price (the “additional work”).‘ It appears Mehl ordered a title report pertaining to the unit on or about July 11 , 2008 and received it on or about July 24, 2008 (see Exh. 8 to Motion). The title report revealed that co-defendant Maxcine Holder (“Holder”) owned the unit, rather than Kinder, and further revealed the existence of two outstanding mortgages; an outstanding judgment of foreclosure; a lien for unpaid common charges; tax liens; and a certificate of occupancy designating the unit as a doctor’s office (hereinafter collectively referred to as the “title defects” or “title issues”). The total amount of liens exceeded the balance of the purchase price due,

Understandably, the foregoing title defects delayed any possible closing."

"Turning to defendant’s conduct after he learned of the title defects, as stated in Logalbo v Plishkiii, Rubano & Baum, supra: While the issue of whether certain conduct constitutes legal malpractice
normally requires a factual determination to be made by a jury . . , , a plaintiff will be entitled to summary judgment in a case where there is no conflict at all in the evidence, the defendant’s conduct fell below any permissible standard of due care, and the plaintiff’s conduct was not really
involved (citations omitted). Here, once he learned of the title defects, Mehl alleges only that he spoke to Kinder’s closing attorney about these issues and was assured they would be resolved prior to closing. He also vaguely alleges he spoke to plaintiff numerous times about the title
defects and she repeatedly indicated her willingness to proceed to closing once title was clear. However, Mehl gives no indication when he spoke to plaintiff or what he claims to have told her, nor does he refute plaintiffs claim that the earliest correspondence documenting such discussions is dated December 2008 (Exh. 15 to Motion), months after plaintiff had already paid $1 33,597.45 to Kinder As to this claim, defendant does not meet his burden of refuting plaintiff’s entitlement to summary judgment as to liability. This court finds that defendant’s failure to advise plaintiff of the title defects immediately upon learning of same was a breach of his professional duty as a matter of law and that this negligence was a proximate cause of at least a portion of plaintiffs’ damages, the amount of which will be determined at trial."
 

Would the words "mutual understanding" have made the difference in this case?  Continuous representation by an attorney of a client requires actual work, a mutual understanding that further work has to be performed and a relationship of trust and confidence.  In Landow v Snow Becker Krauss P.C.  2012 NY Slip Op 31971(U)  July 10, 2012  Supreme Court, Nassau County  Docket Number: 18038/11  Judge: Denise L. Sher we see a $4 Million legal malpractice case dismissed on statute of limitations.  Plaintiff argued continuous representation, and the court finally hung its decision on the following:

"For continuous representation doctrine to apply, for purposes of tolling limitations period for legal malpractice action, there must be clear indicia of an ongoing, continuous, developing and dependent relationship between client and attorney which often includes an attempt by attorney to rectify an alleged act of malpractice; its application is limited to instances in which attorney s involvement in case after alleged malpractice is for performance of the same or related services and is not merely continuation of general professional relationship (emphasis added). See Pellati v. Lite Lite 290 AD.2d 544, 736 N.Y.S.2d 419 (2d Dept. 2002). Also, referencing the language of the case cited by plaintiff Shumsky v. Eisenstein, 96 Y.2d 164, 726 N.Y.S.2d 365 (2001), under the doctrine of continuous representation, the three-year statute of limitations for legal malpractice is tolled while the attorney continues represent the client in the same matter, after the alleged malpractice is committed (emphasis added). Firer, the parries must have a "mutual understanding" that further representation is needed with respect to the matter underlying the malpractice claim. See Hasty Hills Stables, Inc. v. Dorfman, Lynch, Knoebel Conway, LLP 52 AD.3d 566 860 N.Y.S.2d 182 (2d Dept. 2008). Since the Verified Complaint in the instant matter lacks any allegation of a "mutual understanding" between plaintiff and defendants of the need for further representationn regarding the tax opinion and/or DC transaction, the continuous representation doctrine does not apply to the instant matter. In fact, the Verified Complaint and supporting affidavit are devoid of any facts that occurred between any defendant and plaintiff regarding the DC transaction and/or the tax treatment thereof between the time period of2003 (when the alleged malpractice act was committed) and 2007 when defendant Meltzer Lippe was retained. Additionally, a legal malpractice cause of action accrues on the date the malpractice was committed, not when it was discovered. See Byron Chemical Co., Inc. v. Groman 61 AD. 909, 877 N.Y.S.2d 457 (2d Dept. 2009). In other words, the statute does not run from the time plaintiff received notice from the IRS in 2007. Accordingly, the malpractice claims of all defendants are dismissed as time-bared. See Serino v. Lipper 47 AD.3d 70 846 N. S.2d 138 (1st Dept. 2007).

Attorneys are subject to a triumvirate of claims, which may generally be:  legal malpractice in tort, legal malpractice in contract and breach of fiduciary duty. Attorneys are fiduciaries of their clients, but interestingly, accountants (even CPAs) are not.   In Knockout Vending Worldwide, LLC v Grodsky Caporrino & Kaufman CPA’s, P.C.  2012 NY Slip Op 31855(U)  July 11, 2012
Supreme Court, Suffolk County  Judge: Elizabeth H. Emerson we see the distinction.

In this case business buyers claim they were defrauded when business sellers artificially inflated the value of the business through fraud.  They sue sellers, sundry others, and their CPAs whom they say were hired to do the due diligence on the value of the business.

"Turning to the motion by the Kauman defendants to dismiss the second cause of action, according the plaintiffs the benefit of every possible favorable inference as a general rule, the plaintiffs have failed to state a second cause of action alleging a breach of fiduciary duty. TheCourt notes that the plaintiffs have alleged a cause of action for accounting malpractice. The existence of negligence claims, however, docs not create a fiduciary relationship between the Kaufman defendants and the plaintiffs (Friedman v Anderson, 23 AD3d 163). In general, there is no fiduciary relationship between an accountant and his client (DG Liquidation, Inc. v Anchin, Block & Anchin, 300 AD2d 70). "A conventional business relationship, without more, does not become a fiduciary relationship by mere allegation" (Friedman v Anderson, supra at 166, Oursler v Women’s Interart Center, Jnc., 170 AD2d 407, 408). Here, the complaint alleges that the Kaufman defendants were the plaintiffs’ personal accountants, and that the plaintiffs placed confidence in the Kaufman defendants’ advice and opinions as professional accountants, consultants and advisors. However, while providing financial advice may be within the scope or an accountant’s duties, and so within the definition of a conventional business relationship, the  standard that plaintiffs must meet to sustain a cause of action for breach of fiduciary duty has not been met (Staffenberg v Fairfield Pagma Assoc., L.P., 2012 NY AppDiv LEXIS 3423, citing Friedman v Anderson, supra at 166; ef Lavin v Kaufman, Greenhut, Lebowitz & Forman, 226 AD2d 107). Accordingly, the Kaufman defendants’ motion to dismiss the second cause of action is granted."

Datatreasury Corp. v Del Col; 2012 NY Slip Op 31913(U); July 5, 2012; Sup Ct, Suffolk County
Docket Number: 11-26774; Judge: John J.J. Jones Jr represents a very unusual use of Judiciary Law 487.  It comes mid-case in a commercial setting.

Judge Jones writes: "As is relevant to the instant action, Del Col, in an attorney affirmation dated January 20,2011, submitted in support of applications for an order to show cause and a temporary restraining order (TR 0) in the underlying case, affirmed that he was the attorney for Mitchael Trimarco and was seeking an ex parte order, without prior notice to defendant Data Treasury and nonparties Keith DeLuca, Shepard Lane, and Claudia Ballard, pursuant to 22 NYCRR 202.7 on the basis that such notice would significantly prejudice Trimarco. The bases for prejudice to Trimarco, according to Del Co ’s affirmation, were that Data Treasury was fleeing the jurisdiction; that Data Treasury was in violation of court orders and secreting its assets; that Data Treasury had tampered with witnesses; and that Data Treasury would further obstruct and impair Trimarco’s ability to recover if advance notice was given. A TRO was thereafter granted ex parte by order dated January 21,201 1 (Gazzillo, J.). The order enjoined Data Treasury and nonparties DeLuca, Lane, and Ballard, the alleged principals of IData Treasury, among other things, from selling, disposing, transferring, and diluting personal property and corporate assets of Data Treasury. It also prohibited Nix, Patterson & Roach, a law firm in Texas, from dispersing any monies or things of value to Data Treasury or its principals pending further order of the Court. Thereafter, the Appellate Division, Second Department, vacated the temporary restraining order.
    Subsequently, plaintiff Data Treasury commenced this action against Del Col seeking damages
pursuant to Judiciary Law 8 487 for attorney misconduct."

"Judiciary Law $ 487 applies only to wrongful conduct by an attorney in an action that is actually
pending (Mahler v Campagna, 60 AD3d 1009,876 NYS2d 143 [2d Dept 20091; see Tawil v Wasser, 21 AD2d 948, 801 NYS2d 619 [2d Dept 20061). Deception of a court is not confined to the actual
appearance in court, but may include any statement, oral or written, made with regard to a  proceeding brought or to be brought therein and communicated to the court with intent to deceive (Cinao v Rem, 27 Misc3d 195, 893 NYS2d 851 [Sup Ct Kings County 2010). A violation of Judiciary Law 487 permits the imposition of treble damages for certain attorney misconduct. Such violation may be established by either the defendant’s deceit or by a chronic, extreme pattern of legal delinquency by the defendant (Cinao v Reers, supra). When a party commences an action grounded in a material misrepresentation of fact, the opposing party is obligated to defend or default and necessarily incurs legal expenses. As such, the party’s legal expenses in defending the lawsuit may be treated as the proximate result of the misrepresentation (Amalfitano v Rosenberg, 12 NY3d 8, 874 NYS2d 868 [2009]). An attorney who is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive – the court or any party, is guilty of a misdemeanor and is liable for treble damages to the party injured (Amalfitano v Rosenberg, supra). The elements of a deceit claim are essentially the same elements that constitute a cause of action for fraud, namely representation, falsity, scienter, deception and injury (Morris v. Rochdale Village, Inc., 201 1 NY Slip Op 33315U [Sup Ct Queens County 2011).   CPLR 6301 provides that a temporary restraining order may be granted pending a hearing for a preliminary injunction where it appears that immediate and irreparable injury, loss or damage will result unless the defendant is restrained before the hearing can be had. Unlike a preliminary injunction,  where an undertaking is mandated by statute (CPLR 6212[b]), the posting of an undertaking prior to issuance of a TRO is discretionary with the court (CPLR 63 13 [c]) (see Napoleon Art & Production, Inc. and Code Films, Inc. v Laughlin, 14 Misc3d 1226A, 836 NYS2d 494 [Sup. Ct. New York County 20071). The granting of a TRO in an order to show cause without notice to the opposing party deprives the  party of the opportunity to argue that an undertaking is warranted, neutralizing the defendant at the discretionary phase (Napoleon Art & Production, Inc. and Code Films, Inc. v Laughlin, supra).

We’re still looking at Wortman v. Cheng today.

Although at oral argument, plaintiff’s principal stated he was not challenging the contingency fee agreement the law firm is, in fact, doing just that. Wortman states in his February 17, 2012 affidavit that "I am entitled to the quantum meruit  value of my services In the Cheng v. Cartelli case. Chang has unreasonably refused to settle the Cartelli case for the maximum limits of Cartelli’s policy of $500,000 despite her representations that she would accept such amount once offered, despite 4 offers to settle at $500,000 …”    

Elsewhere plaintiff states that Wortman relied on these misrepresentations in agreeing to represent her in three cases. Thus the law firm contends that it is entitled to its fees based upon quasi contractual principles because it was induced and defrauded into signing the flat free retainer with Chang, The law firm contends that had it known Chang had no intention of settling the Cartelli case immediately or ever, it would not have taken the other matters on would have made a different agreement with Chang her In connection with the Citidress and Golden City matters. Phrased differently, anticipating an effortless recovery of a 20% contingency fee in the malpractice action, Wortman agreed to take the foreclosure cases on for a modest fee. These arguments blur the distinctions between plaintiffs 2d COA for quantum meruit and its 3d COA for fraud.

Regardless of which factual claims are true, Wortman has no claim against Chang for legal fees in the Cartelli action, other than for the 20% contingency fee of the amount – if any- Chang eventually recovers on the judgment entered against the Cartelli estate. By its very nature a contingency fee is “contingent” on a successful result. Although Chang prevailed in the Cartelli action, and the $8,708,490 judgment was affirmed on appeal, it is unclear whether she will ever recover any part of that judgment. This uncertainty is the subject of Chang’s malpractice counterclaim against the law firm. Since Chang and the law firm entered Into a retainer agreement for a contingency fee, Wortman cannot assert a valid claim against his client for quantum meruit in the Cartelli action. Georgia Malone & Co., Inc. v. Ralph Rieder, 86 A .D.3d 406,410 [lst Dept 201 11).

The existence of a valid and enforceable written contract governing the disputed subject matter precludes the law firm from recovering in quantum meruit (Sheiffer v. Shenkman Capital Management, supra).

The law firm contends it was defrauded by Chang because Chang lied to Wotman about her eagerness and willhgness to settle the Cartelli case for $500,000. This claim presents complicated issues about an attorney’s fiduciary duties to his or her client and the nature of retainer agreements.

The unique relationship between an attorney and his or her client is based upon "the elements of trust and confidence on the part of the, client and of undivided loyalty  and devotion on the part of the attorney …" Demov, Morris. Levin & Shein v. Glantz. 53 N.Y.2d 553 [1981]). An attorney has a fiduciary duty to his or her client and this duty transcends those prevailing in the commercial market place (Ulico Cas. Go. v. Wilson, Elser. Moskowitz , Edelman & Dicker, 56 A.D.3d 1,8 [1st "Dept 2008]  internal citations  omitted). It is well established law that an agreement between an attorney and his or her is subject to close scrutiny and in the event of any ambiguity, it must be construed in a manner most favorable to the client [Shaw v., Manufacturers Hanover Trust Co,, 68 N.Y.2d 172 [1986]).
 

A "deliberate misrepresentation of present intent made for the purpose of inducing another to enter a contract will normally constitute actionable fraud if there is a reliance by the party to whom the misrepresentation was made" (Demov. Morris. Levine & Shein v, Glantz, 53 N.Y.2d at 557). Where, however, it is a client who made a misrepresentation to an attorney to induce him to take the case, that misrepresentation, even if deliberate, will not, as a matter of public policy, support a fraud cause of action against the client   [Demov, Morris. Levin & Shein v. Glantz  supra].

Applying the legal principles of Damov, plaintiffs claim fails because he has not established a material element of his fraud claim: reliance. Although in the client discharged the attorneys after she had promised them they would be substitute in as counsel on another, more financially lucrative matter, the underlying type of promise in this case is  indistinguishable. Wortman’s fraud claim is based on his expectation of fees which have not materialized. Therefore, plaintiff cannot, as a matter of public policy assert a fraud claim against Chang, its client. Even were the court to decide that the firm’s claim is valid, plaintiffs claims skirt dangerously close to the prohibitions set forth in DR 5-101 [1200.20] pertaining to conflicts of interest and a lawyer’s own interests. An attorney must deal fairly, honestly with his or her client and with undivided loyalty, avoiding conflicts of interest, operating competently, safeguarding his or her client’s property and honoring the client’s interests over the lawyer’s own interests ( Matter of Cooperman, 83 N.Y.2d 465 [1994]