Parties may chart their own litigation course, and often the Court accedes.  Here, however, in West Village Assoc. L.P. v Balber Pickard Battistoni    Maldonado & VanDerTuin, PC    2012 NY Slip Op 31444(U)   May 25, 2012   Sup Ct, New York County   Docket Number: 108423/05  Judge: Saliann Scarpulla, problems arose for the motion maker.  Over the past several years, Courts have tightened the rules/dates for summary judgment motions.  This is an example.

‘It is well settled that “statutory time frames [and] court-ordered time- e frames are not options, they are requirements, to be taken seriously by the parties.” Micsli v. State Farm Mut. Auto. Ins. Co., 3 N.Y.3d 725, 726 (2004) (citing Kihl v. Pfefler, 94 N.Y.2d 118 [ 19991). A Court has no “discretion to entertain nonprejudicial, meritorious post-note of issue motions made after a court-imposed deadline but within the statutory maximum 120-day period in CPLR 3212 (a) . . . .” Glasser v Abramovitz, 37 A.D.3d 194, 194 (1” Dept 2007).‘ See also Brill v. City of New York, 2 N.Y.3d 648, 653 (2004). Therefore, the deadline included in the Scheduling Order – 60 days from the completion of
depositions – is to be strictly followed. See also Corchado v City of New York, 64 AD3d 429 ( 1st Dept 2009). The fact that the parties then entered into the July 25 stipulation, has no effect on
this analysis. The July 25 stipulation states in pertinent part that “[although the time in which Defendants can move for summary judgment . . . may expire as early as July 27, 20 1 1, the undersigned hereby stipulate and agree that the motion for summary judgment can be served on July 29,201 1, by hand and also by electronic transmittal (such as e-mail)  Balber’s affidavit of service indicates that the moving papers were served on July 29, 20 1 1 by priority mail and electronic mail, not by hand and electronic mail as specified in the stipulation. Further, the papers served that day were either incomplete or not final, as an “updated set of motion papers” were served via electronic mail on August 2, 20 1 1. Additionally, the July 29, 2011 notice of motion was never filed with the court, but rather an Amended Notice-of Motion, also dated July 29, 20 I 1 and served via e-mail on September 9, 20 1 1, was filed September 9, 2011. Even where parties are allowed to chart their own course,” they are bound to follow that course, and comply with the
stipulation they executed. Mill Rock Plaza Assocs. v. Lively, 224 A.D.2d 301 (1st Dep’t 1996) (“[strict enforcement of the parties’ stipulation . . . is warranted based upon the principle that the parties to a civil dispute are free to chart their own litigation course). See also Powell v. Kasper, 84 A.D.3d 915, 917 (2d Dep’t 201 1) (summary judgment motion filed beyond deadline set forth in parties’ stipulation denied as untimely). "

In March 2006, plaintiff reported to defendant CSI, Inc., its third-party claims administrator, that an employee had filed a discrimination claim against it. CSI allegedly failed to notify plaintiff’s insurer until February 2008, after plaintiff again brought its employee’s claim to CSI’s attention. In April 2008, plaintiff’s insurer denied coverage for the claim on the basis of late notice. Plaintiff eventually commenced this action against CSI for malpractice, alleging that CSI had negligently failed to give timely notice of the employee’s claim to plaintiff’s insurer. CSI then sought coverage for plaintiff’s malpractice action from its own professional liability carrier, defendant Admiral Insurance Company. Admiral’s policy contained a prior knowledge exclusion, however, and Admiral disclaimed coverage on the ground that CSI knew or should have known that plaintiff would have a claim against it prior to September 5, 2008, the effective date of Admiral’s claims made policy. In an amended complaint, plaintiff sought a declaratory judgment holding that Admiral was obligated to defend and indemnify CSI. After joinder of issue, but prior to any discovery, Admiral moved for summary judgment seeking, among other [*2]things, a declaration that it was not obligated to defend and indemnify CSI against the claim asserted by plaintiff. Supreme Court granted Admiral’s motion and plaintiff appeals [FN1].  

Ulster County v CSI, Inc.   2012 NY Slip Op 04262   Decided on May 31, 2012   Appellate Division, Third Department   "Plaintiff contends that reversal is warranted here because Admiral failed to establish CSI’s subjective knowledge of the relevant facts with proof in admissible form. We agree.

Admiral argues that the allegations in plaintiff’s own amended verified complaint are a sufficient basis to warrant summary judgment. Those allegations are not conclusive evidence, however, when read in light of CSI’s verified answer. Although there is no dispute that plaintiff notified CSI of the discrimination claim in March 2006, CSI answered by denying the allegation that it failed to notify plaintiff’s insurer until February 2008. CSI also denied knowledge or information sufficient to form a belief as to whether plaintiff’s insurer then disclaimed coverage in April 2008.

Contrary to Admiral’s contention that Supreme Court could have relied on unsworn statements and letters from CSI employees submitted in support of the motion, we note that Supreme Court did not do so. In any event, those writings are not acknowledged as required by CPLR 4538 and, thus, do not qualify as evidentiary proof in admissible form (see CPLR 3212 [b]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). Nor do they qualify as an admission absent evidence that the employees were authorized to speak on CSI’s behalf (see Gstalder v State of New York, 240 AD2d 541, 542 [1997]; Vozdik v Frederick, 146 AD2d 898, 900 [1989]). As the unsworn writings are inadmissible hearsay, they are insufficient to support the motion for summary judgment (see Matter of Patricia YY. v Albany County Dept. of Social Servs., 238 AD2d 672, 674 [1997]; Welch v Prevost Landowners, 202 AD2d 803, 804 [1994]). "

Whether it is subconscious, whether it is intentional, or whether it is simply ingrained into the minds of attorneys, legal malpractice is handled differently from all other torts.  Yesterday’s decision from the Court of Appeals highlights this difference.

Dombrowski v Bulson  2012 NY Slip Op 04203   Decided on May 31, 2012   Court of Appeals is a case in which both the US District Court for the Western District and the Court of Appeals recognize that the criminal defense attorney failed his client.  The client was convicted of attempted rape and served about 6 years before the indictment was dismissed.
 

"Plaintiff then commenced this action, alleging that he had been damaged as a result of defendant’s attorney malpractice. In relevant part, the complaint alleged that he had been incarcerated from January 17, 2001 until July 19, 2006. He then served a period of postrelease supervision, which was terminated only after his habeas corpus petition was granted.

Supreme Court granted defendant’s motion for summary judgment and dismissed the complaint, finding that plaintiff’s receipt of Social Security disability benefits while incarcerated precluded his claim of pecuniary damages and that damages for nonpecuniary loss were not available in an action for attorney malpractice. The Appellate Division modified and reinstated the portion of the complaint seeking nonpecuniary damages (79 AD3d 1587 [4th Dept 2010]). The Court recognized that nonpecuniary damages were not available for legal malpractice claims where the underlying action was a civil matter, but found that an individual who had been wrongfully convicted as a result of attorney malpractice in a criminal matter could recover compensatory damages for loss of liberty and any other losses that were the direct result of his or her imprisonment (see 79 AD3d at 1590). The Court then granted defendant leave to appeal, certifying the following question for our review: "Was the order of this Court entered December 30, 2010, properly made?" We reverse and answer the certified question in the negative.

In order to recover damages in a legal malpractice action, a plaintiff must establish "that the attorney ‘failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession’ and that the attorney’s breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages" (Rudolf v Shayne, [*3]Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007], quoting McCoy v Feinman, 99 NY2d 295, 301 [2002]). For malpractice actions arising from allegations of negligent representation in a criminal matter, the plaintiff must have at least a colorable claim of actual innocence — that the conviction would not have resulted absent the attorney’s negligent representation (see Britt v Legal Aid Socy., 95 NY2d 443, 446-447 [2000]). While the criminal charges at issue remain pending, a plaintiff is precluded, for purposes of a civil action, from asserting innocence (see id., at 448).

New York courts that have been confronted with the issue have generally rejected the claim that a plaintiff in a legal malpractice action is entitled to nonpecuniary damages arising out of representation in civil proceedings (see e.g. Dirito v Stanley, 203 AD2d 903, 904 [4th Dept 1994] [affirming dismissal of damages claim for emotional pain and suffering]; Wolkstein v Morgenstern, 275 AD2d 635, 637 [1st Dept 2000] ["A cause of action for legal malpractice does not afford recovery for any item of damages other than pecuniary loss so there can be no recovery for emotional or psychological injury"]). "

Its a policy decision.  "We see no compelling reason to depart from the established rule limiting recovery [*4]in legal malpractice actions to pecuniary damages. Allowing this type of recovery would have, at best, negative and, at worst, devastating consequences for the criminal justice system. Most significantly, such a ruling could have a chilling effect on the willingness of the already strapped defense bar to represent indigent accused. Further, it would put attorneys in the position of having an incentive not to participate in post-conviction efforts to overturn wrongful convictions. We therefore hold that plaintiff does not have a viable claim for damages and the complaint should be dismissed in its entirety. "

The "frozen out" minority loses a corporate cause of action – contract case, and believes that the attorneys for the majority colluded with the majority to freeze them out.  They believe that the attorneys helped the majority to breach fiduciary duties.  They felt that there was sufficient evidence to support a claim for legal malpractice against the other party’s attorneys.  Their case was dismissed on summary judgment , and in Aranki v Goldman & Assoc., LLP   2012 NY Slip Op 04117   Decided on May 30, 2012   Appellate Division, Second Department  the dismissal was affirmed.
 

"Absent fraud, collusion, malicious acts, or other special circumstances, an attorney is not liable to third parties not in privity or near-privity for harm caused by professional negligence" (Fredriksen v Fredriksen, 30 AD3d 370, 372; see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 595). Here, the defendants established that they did not collude with the majority members of Millennium Alliance Group, LLC (hereinafter MAG), inter alia, to freeze the plaintiffs out of MAG’s management and profit sharing and force them to surrender, at a reduced price, their minority membership interest in MAG. Thus, the defendants established their entitlement to judgment as a matter of law dismissing the cause of action alleging legal malpractice. In opposition, the plaintiffs failed to raise a triable issue of fact.

The defendants also established their entitlement to judgment as a matter of law dismissing the cause of action alleging breach of fiduciary duty by showing that they did not knowingly induce the majority members of MAG to breach their fiduciary duty to the plaintiffs (see Kaufman v Cohen, 307 AD2d 113, 125). In opposition, the plaintiffs failed to raise a triable issue of fact. "

How does a settlement affect the later legal malpractice claim against the attorney who represented plaintiff in the settlement?  We have seen an erosion of the standard that a legal malpractice claim after settlement is permitted if plaintiff was ‘effectively compelled" to settle because of the departures of the attorney.  In some divorce cases in the 1st Department, an allocution upon settlement that the client was "satisfied" with the attorney’s work has vitiated the later legal malpractice.

In In re: STUART MELTZER, Debtor   Case No. 808-73746-reg, Chapter 7 UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF NEW YORK 2012 Bankr. LEXIS 2261  
May 18, 2012, we see a discussion the "effectively compelled" principle.

"In order to sustain a malpractice claim, [*18] the client must allege and prove: "(1) that the attorney ‘failed to exercise ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession’; and (2) that the attorney’s breach of the duty proximately caused the [client] actual and ascertainable damages." Dempster v. Liotti, 86 A.D.3d 169, 176, 924 N.Y.S.2d 484, 489 (N.Y. App. Div. 2011) (quoting Leder v. Spiegel, 9 N.Y.3d 836, 837, 840 N.Y.S.2d 888, 872 N.E.2d 1194, (N.Y. 2007), cert. denied sub nom. Spiegel v. Rowland, 552 U.S. 1257, 128 S.Ct. 1696, 170 L.Ed.2d 354 (2008)). Causation, which is an element of a malpractice claim, requires a showing by the party alleging malpractice "that he or she would have prevailed in the underlying action. . . . but for the lawyer’s negligence." Pistilli Constr. & Dev. Corp. v. Epstein, Rayhill & Frankini, 84 A.D.3d 913, 921 N.Y.S.2d 887 (N.Y. App. Div. 2011) (quoting Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 N.Y. 3d 438, 442, 835 N.Y.S.2d 534, 867 N.E.2d 385 (N.Y. 2007)).

Dr. Haywoode alleges, and the Debtor admits, that the Debtor’s failure to file a summons and complaint on behalf of Dr. Haywoode prior to expiration of the applicable statute of limitations [*19] constituted malpractice. HN3An attorney’s admitted failure to commence an action within the applicable time frame provided by statute constitutes negligence as a matter of law. Bergin v. Grace, 39 A.D.3d 1017, 1018, 833 N.Y.S.2d 729, 730 (N.Y. App. Div. 2007) (citing A.H. Harris & Sons, Inc. v. Burke, Cavalier, Lindy and Engel P.C., 202 A.D.2d 929, 930, 610 N.Y.S.2d 888, 889 (N.Y. App. Div. 1994) (other citations omitted)). This is not a case where the client decided to accept a settlement in lieu of facing the risks of trial. Because of the Debtor’s malpractice, Dr. Haywoode was left with no choice but to accept the settlement, having lost the right to maintain any action for damages against the City of New York.

Because the underlying action was settled, and the settlement was upheld, the effect of the settlement on the malpractice claim must be examined. HN4Under New York law, where the underlying action has been terminated by settlement rather than by dismissal or adverse judgment, a claim for legal malpractice survives only if the court finds that the settlement was compelled because of the mistakes of counsel. Cohen v. Lipsig, 92 A.D.2d 536, 459 N.Y.S.2d 98, 99 (N.Y. App. Div. 1983) [*20] (citing Kerson Co. v. Shayne, Dachs, Weiss, Kolbrenner, Levy & Levine, 45 N.Y.2d 730, 732, 408 N.Y.S.2d 475, 380 N.E.2d 302 (N.Y. 1978), and Becker v. Julien, Blitz & Schlesinger, 95 Misc.2d 64, 66-67, 406 N.Y.S.2d 412 (N.Y. Sup. Ct.1977), modified on other grounds, 66 A.D.2d 674, 411 N.Y.S.2d 17 (N.Y. App. Div. 1978)).

As stated in Becker v. Julien, Blitz & Schlesinger, P.C.:
HN5Where the termination (of the underlying action) is by settlement rather than by a dismissal or adverse judgment, malpractice by the attorney is more difficult to establish, but a cause of action can be made out if it is shown that assent by the client to the settlement was compelled because prior misfeasance or nonfeasance by the attorneys left no other recourse. Thus, the court finds itself in agreement with the concurring opinion by Mr. Justice Suozzi in the Kerson case, supra, that the cause of action for legal malpractice must stand or fall on its own merits, with no automatic waiver of a plaintiff’s right to sue for malpractice merely because plaintiff had voluntarily agreed to enter into a stipulation of settlement.
95 Misc.2d at 66, 406 N.Y.S.2d at 414 (citing Kerson Co. v. Shayne, Dachs, Weiss, Kolbrenner, Levy & Levine, 45 N.Y.2d at 732, 408 N.Y.S.2d 475, 380 N.E.2d 302). [*21]

The Debtor and the Trustee urge the Court to find that the settlement and release bar Dr. Haywoode from maintaining a malpractice action against the Debtor. According to the Debtor and the Trustee, Dr. Haywoode accepted the settlement and found it to be reasonable, signed the general release, and made subsequent efforts to enforce the settlement. Based on Dr. Haywoode’s actions, including her ratification of the settlement when she executed the settlement and release, she forfeited her right to maintain the malpractice action. In contrast, Dr. Haywoode argues that she was compelled to accept the settlement due to the Debtor’s malpractice. Because Dr. Haywoode had no other choice but to accept the settlement, she did not waive her right to bring a malpractice action against the Debtor, and the settlement of the personal injury action does not restrict her right to assert a claim for malpractice.

In this case, neither party has accurately characterized the effect the settlement has on Dr. Haywoode’s malpractice claim. The City of New York offered to settle Dr. Haywoode’s claim for $7,750.00. This offer appears to have been made solely based on the City of New York’s view [*22] of the value of the claim, in that it was made before the City became aware that a complaint was not filed prior to expiration of the statute of limitations. Once the Debtor failed to file a timely complaint, the personal injury "claim" was effectively worthless and the City of New York revoked the settlement. The Debtor’s failure to file a timely complaint precluded Dr. Haywoode from having her day in court. As a result of the Debtor’s negligence, the most that Dr. Haywoode could ever collect from the City of New York was $7,750.00. Only an intervening order of a State Court judge preserved the deal. The $7,750.00 settlement, while providing some evidence of the value of the claim, only mitigated the damages caused by the Debtor’s negligence. The Debtor recognized that the settlement served to mitigate any damages he caused because he agreed to be responsible for up to $7,750.00 in the event the City of New York reneged. It was in the best interests of Dr. Haywoode as well as the Debtor to seek enforcement of the City’s agreement."
 

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.

In Ehrenhalt 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."
 

Schneider v. Finmann, 15 NY3d 306 (2010) notwithstanding, Pace v Raisman & Assoc., Esqs., LLP   2012 NY Slip Op 03989   Decided on May 23, 2012   Appellate Division, Second Department
is yet another case in which alleged legal malpractice in a trust setting is dismissed on statute of limitations grounds.

"In 2001 the plaintiff’s decedent sought to amend a trust that he had created in 1998. He approached his attorney, the defendant Myron Raisman, of the defendant Raisman & Associates, Esqs., LLP (hereinafter together the law firm defendants), who had previously provided the decedent with legal advice pertaining to the planning of his estate. The law firm defendants prepared an amendment to the trust to purportedly allow the decedent to convey his assets during his life to the trust in order to avoid the payment of estate taxes with respect to these assets at the time of his death. The decedent’s intention in amending his trust was to leave him, as grantor, with limited power over the assets that he conveyed to the trust so that those assets would not be included in his estate at the time of his death for tax purposes.

Between the time that the trust was amended on January 9, 2001, and the decedent’s death on October 7, 2005, the decedent conveyed numerous assets and gifts to the trust.

In January 2007 the law firm defendants, along with the related accounting firm of Raisman Magen and Zicht Associates, C.P.A.s, P.C. (hereinafter the accounting firm), prepared the tax returns for the decedent’s estate. In November 2009 the Internal Revenue Service (hereinafter [*2]the IRS) conducted an audit of the estate’s tax return. The audit uncovered deficiencies in the estate’s tax return, which ultimately led to the assessment of additional taxes, interest, and penalties upon the estate. The IRS determined that the value of the estate included those assets and gifts which the decedent had transferred to the trust subsequent to its amendment in January 2001 because the trust’s amendment, drafted as an "intentionally defective grantor trust," provided the decedent with too much authority to borrow the corpus or income from the trust without adequate consideration.

The plaintiff, who is the decedent’s son and executor of the decedent’s estate, commenced this action in January 2010 against the law firm defendants and the accounting firm to, inter alia, recover damages for legal malpractice against the law firm defendants in the drafting of the trust (first cause of action) and for fraud against the law firm defendants in allegedly falsely representing that the decedent could transfer assets to the trust for less than fair consideration without those assets being included as part of the decedent’s estate at the time of his death (fourth cause of action).

The complaint alleged that the decedent routinely and continuously retained the defendants for estate planning and related services because he wanted to plan his estate in a manner that maximized his children’s inheritance and that, in the course of the representation, the defendants advised the decedent to create the trust. The plaintiff alleged that the law firm defendants committed legal malpractice in drafting the amendment to the trust since it subjected the assets transferred thereto to estate tax. The plaintiff also alleged that the law firm defendants knowingly made false representations to the decedent, commencing on January 9, 2001, to the effect that the assets conveyed to the trust were outside of the decedent’s estate for estate tax purposes. The plaintiff asserted that the decedent did not know, although the law firm defendants did, that the decedent’s conveyances to the trust would be included in part of the estate for tax purposes."

"The burden then shifted to the plaintiff to "establish that the statute of limitations has been tolled or that he . . . actually commenced the action within the applicable limitations period" (Krichmar v Scher, 82 AD3d at 1165; see Fleyshman v Suckle & Schlesinger, PLLC, 91 AD3d at 593; East Hampton Union Free School Dist. v Sandpebble Bldrs. Inc., 90 AD3d at 822). The plaintiff failed to do so. Contrary to the plaintiff’s contention, the statute of limitations was not tolled by the doctrine of continuous representation where the decedent, the original client, died, severing the attorney-client relationship (see Velasquez v Katz, 42 AD3d 566, 567), and the law firm defendants’ representation of the decedent’s estate in connection with legal advice as to the estate’s tax liability, given subsequent to the decedent’s death, was separate and distinct from the alleged negligent creation of the trust, which is the act underlying the legal malpractice cause of action (see Shumsky v Eisenstein, 96 NY2d 164, 168). Further, contrary to the plaintiff’s contention, the legal malpractice cause of action did not accrue at the time that the IRS conducted its audit in 2009. [*3]Therefore, the legal malpractice cause of action was not interposed within the applicable limitations period (see McCoy v Feinman, 99 NY2d at 301; Ackerman v Price Waterhouse, 84 NY2d 535, 541). "

We are pleased to announce the publication of out Outside Counsel Column " Legal Malpractice in Matrimonial Litigation" from this week.