In Aramarine Brokerage, Inc. v Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C.    2012 NY Slip Op 03533    Decided on May 3, 2012    Appellate Division, First Department  the question of whether appellate counsel’s failure to argue that the basis for his client’s loss in District Court was an impermissible argument raised only in reply is now the basis of a legal malpractice claim.
 

"Plaintiff, an insurance broker, seeks to recover for legal malpractice arising out of defendant law firms’ successive representation of it in connection with an underlying federal action against a group of insurers (the CGU insurers). In the federal action, the CGU insurers moved for, inter alia, summary judgment on their counterclaims for a return of insurance brokerage commissions paid in connection with premiums subsequently returned, on the ground that plaintiff’s claim of an oral agreement between the parties was controlled by New York law and was unenforceable pursuant to the statute of frauds. The CGU insurers argued for the first time in reply that the oral agreement also failed for lack of consideration. Plaintiff, then represented by Hall Estill, neither objected to the CGU insurers’ raising this issue in reply nor sought to submit a sur-reply. The district court (Casey, J.) granted the CGU insurers’ motion, finding that the oral modification was subject to New York law and was unenforceable under New York’s statute of frauds. The court found, alternatively, that plaintiff "failed to establish that any consideration was given in exchange for the alleged agreement" (American Hotel Intl. Group Inc. v CGU Ins. Co., 2004 WL 626187 *7 n 7, 2004 US Dist LEXIS 5154, *25 n 7 [SD NY 2004], vacated in part 307 Fed Appx 562 [2d Cir 2009]). On appeal by EB & G, the Second Circuit vacated the finding that New York law and the statute of frauds applied to the oral modification. Neither EB & G’s appellate brief nor the Second Circuit’s decision addressed the district court’s alternative holding of "no consideration." [*2]"

"On remand, the district court (McMahon, J.) held that, although Judge Casey could have disregarded the argument first raised in reply, his "no consideration" ruling was "law of the case," because it had not been reversed on appeal (American Hotel Intl. Group Inc. v OneBeacon Ins. Co., 611 F Supp 2d 373, 379 [SD NY 2009], affd 374 Fed Appx 71 [2d Cir 2010]). Judge McMahon noted that plaintiff had not, inter alia, objected to Judge Casey’s consideration of this argument on reply, or sought leave to file a sur-reply, or raised the issue on the prior appeal and reconsideration motions (id. at 376). She observed that, while the Second Circuit could have responded favorably to an abuse of discretion argument, it was "equally likely" to have "viewed with disfavor" plaintiff’s failure to raise the issue before the district court, and concluded that, "[h]aving passed up every conceivable opportunity to raise this issue . . . [plaintiff] has waived any right to argue . . . that Judge Casey erred by considering the belatedly-raised no consideration’ argument" (id. at 376, 377). "

"The complaint alleges that EB & G’s failure to address the "no consideration" ruling in its appellate brief in the first federal appeal resulted in plaintiff’s inability to defend against the CGU insurers’ counterclaims. By thus alleging "facts from which it could reasonably be inferred that defendant’s negligence caused [plaintiff’s] loss," the complaint states a cause of action for malpractice (see Garnett v Fox, Horan & Camerini, LLP, 82 AD3d 435 [2011], citing InKine Pharm. Co. v Coleman, 305 AD2d 151 [2003]). In opposition to EB & G’s motion, plaintiff was not required to show a "likelihood of success" (id. at 436). "

Plaintiff is injured in a motor vehicle accident at an intersection with an inoperative traffic light.  His attorney failed to commence the action within the statute of limitations.  Legal malpractice case is started and proceeds through summary judgment.  Supreme Court denies summary judgment to defendants who appeals.

In Reisner v Litman & Litman, P.C. 2012 NY Slip Op 03428   Decided on May 1, 2012   The Appellate Division, Second Department  reverses and issues a blanket finding that neither the County nor the Contractor "could" have been liable.  "In this case, in opposition to the defendants’ prima facie showing, the plaintiff failed to raise a triable issue of fact as to whether he could have prevailed had the defendants commenced a timely action on his behalf to recover damages for personal injuries against the County of Nassau. The County’s Department of Public Works determined, in September 2003, that the traffic signal at the intersection where the plaintiff allegedly was injured in an accident should be rebuilt. However, the signal work was not completed until August 11, 2004. The plaintiff’s accident occurred on July 18, 2004. Contrary to the determination of the Supreme Court, under the circumstances, the County was immune from liability under the doctrine of qualified immunity (see Friedman v State of New York, 67 NY2d 271, 283; Weiss v Fote, 7 NY2d 579, 584), as the County’s delay in the rebuilding and installation of the traffic signal was not unreasonable in the context of the County’s attempts to remedy a known dangerous highway condition once the decision was made to rebuild (see Friedman v State of New York, 67 NY2d at 284; cf. Bresciani v County of Dutchess, N.Y., 62 AD3d 639, 640; Witkowski v Escobar, 28 AD3d 543, 544; Onorato v City of New York, 258 AD2d 633, 634).

In the amended complaint, the plaintiff did not plead a cause of action to recover damages for legal malpractice on the ground that the defendants failed to commence a personal injury action against the County’s contractor, Welsbach Electric Corp. (hereinafter Welsbach) (cf. Boyle v Marsh & McLennan Cos., Inc., 50 AD3d 1587, 1588). Nevertheless, the Supreme Court concluded that there was a triable issue of fact as to whether the plaintiff could have successfully commenced a personal injury action against Welsbach. The Supreme Court erred in addressing, sua sponte, Welsbach’s potential liability. In any event, for the same reasons set forth herein with regard to the County, the plaintiff could not have prevailed had the defendants commenced a timely action on his behalf to recover damages for personal injuries against Welsbach.

We have come to believe that an artificially large number of legal malpractice cases are dismissed at the pleading stage, generally in an early "but for" analysis by the Court.  Courts (in our anecdotal opinion) delve far further into the underlying case in legal malpractice litigation than they do elsewhere.  Granted, legal malpractice is unique, and one must always prove a case within a case, but nevertheless.

Here, in Magnus v Sklover ; 2012 NY Slip Op 03415 ; Decided on May 1, 2012 ; Appellate Division, Second Department Justice Lefkowitz in Supreme Court, Westchester County denied defendants three-headed motion to dismiss.  She was affirmed on appeal.
 

"The Supreme Court properly denied that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(1) to dismiss the cause of action alleging legal malpractice based on documentary evidence. A motion pursuant to CPLR 3211(a)(1) may be granted "only where the documentary evidence utterly refutes plaintiff’s factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326). "

"Accepting the facts alleged in the complaint as true, and according the plaintiff the benefit of every possible inference, the complaint states a legally cognizable cause of action sounding in legal malpractice (see Guayara v Harry I. Katz, P.C., 83 AD3d 661). Thus, the Supreme Court properly denied that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(7) to dismiss the cause of action alleging legal malpractice. "

"In addition, the Supreme Court properly denied that branch of the defendants’ motion which was, in the alternative, to disqualify the plaintiff’s attorneys. "The advocate-witness rules contained in the Rules of Professional Conduct (see 22 NYCRR 1200.0) provide guidance, but are not binding authority, for the courts in determining whether a party’s attorney should be disqualified during litigation" (Trimarco v Data Treasury Corp., 91 AD3d 756, 757; see S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., 69 NY2d 437, 440)."

In this case, the court permits client to plead fraud even though legall malpractice is time barred.  Why? Unsophisticated client retains attorney for a first time purchase of a business.  Attorney undertakes complicated transaction for $ 3000.  As soon as the contract is ready, attorney tells client to sign a wavier, and then seems to have a conflict of interest and starts to represent the landlord and undertakes to evict the client.’

Hernandez v Marquez   2012 NY Slip Op 31112(U)   April 20, 2012   Supreme Court, New York County  Docket Number: 103531/11  Judge: Joan A. Madden:

"In October 2007, Hernandez retained Marquez, an attorney, who represented to her that he was competent to handle all aspects of the purchase of a restaurant and the acquisition of a liquor license. (Amended Complaint, 7 3). Hernandez “made it very clear to [Marquez] that she had never purchased a business before this particular purchase transaction, that she had no experience purchasing a business and that she had to rely on him completely for all aspects of the purchase of the restaurant with a liquor license.” (u 7 4). Marquez “promised that he would perform in the manner required by [Hernandez] and that she had nothing to worry about [if] she contracted with him” (a 7 5). In consideration for these promises to properly handle the purchase of the restaurant and the acquisition of the liquor license, Hernandez paid Marquez $3,000.

In reliance of Marquez’s advice, including representations that the liquor license could be  transferred from the seller, so long as Hernandez was not convicted of any crimes, Hernandez contracted with the seller to purchase the business. (Ig 7 8). The purchase was accomplished through a Stock Transfer Agreement entered into on October 2,2007, a copy of which is annexed to the proposed amended complaint. The Agreement made the obtaining of a liquor license for the Restaurant a condition of the purchase. As soon as she told Marquez that she was not convicted of any crimes, Marquez had her sign a waiver, which states in pertinent part: Parties represent and state that notwithstanding anything to the contrary in documents for the above purchase, that [Hernandez Is irrevocably purchasing said store and waives condition of approval by the State of New York Liquor Authority and Beverage Control Board, and further states that he/she is qualified
for an off-premises beer license,After signing the waiver, Hernandez paid the seller $30,000 as a down payment for the business, at which time Marquez advised Hernandez to pay for the seller’s landlord $10,000 rent arrears due and owing from the seller, and instructed Hernandez to execute a new lease with the landlord, which required $5,250 as a security deposit and as monthly rent ( 7 19). There may have been a conflict of interest that caused Marquez to have Hernandez sign the waiver, since Marquez now represents the landlord in an action to evict Hernandez from her apartment 18). If Marquez had told Hernandez the truth about the waiver, Hernandez would not have gone through with the purchase of the restaurant until she had secured a liquor license. 7 20).
However, “[s]olely due to assurances, representations, advice and direction of the Marquez,
Hernandez was caused … to close the transaction with no approval from the State Liquor
Authority.”

Due to Marquez’s misrepresentations and omissions, “includ[ing] his directing Hernandez to execute a lease and pay rent of $5,250 a month, which she paid for over a year, for a premises which she believed that she would have a restaurant and liquor license,” Hernandez suffered damages (Id, 7 27). As a result of her reliance on Marquez’s representations, Hernandez alleges that she had become indebted to the seller for $91,350,000.In addition, contrary to Marquez’s representations, the liquor license for the restaurant could not be secured.

The three year statute of limitations is mostly insurmountable.  Clients and attorneys look for ways over, around and sometimes through the principal.  Often they do not sauced.  In Sun Graphics Corp. v Levy, Davis & Maher, LLP    2012 NY Slip Op 03273   Decided on April 26, 2012   Appellate Division, First Department  we are not told the facts behind the decision, but the decision is clear.  More than three years has passed since the departure, and it is too late.
 

"Plaintiffs failed to establish that the three-year statute of limitations on their cause of action alleging legal malpractice was tolled pursuant to the continuous representation doctrine (CPLR 214[6]; see CLP Leasing Co., LP v Nessen, 12 AD3d 226 [2004]). They alleged generally that defendants continued to represent them during the three years preceding the commencement of the action, but failed to allege that that representation pertained to the specific matters at issue (see Apple Bank for Sav. v PricewaterhouseCoopers LLP, 70 AD3d 438 [2010]; Serino v Lipper, 47 AD3d 70, 76 [2007], lv dismissed 10 NY3d 930 [2008]).

The causes of action for breach of contract, breach of fiduciary duty, and negligent misrepresentation are redundant of the legal malpractice claim, since they arise from the same allegations and seek identical relief (see Estate of Nevelson v Carro, Spanbock, Kaster & Cuiffo, 290 AD2d 399, 400 [2002]; see also Weksler v Kane Kessler, P.C., 63 AD3d 529, 531 [2009]).

The cause of action alleging a violation of Judiciary Law § 487 fails to state a cause of action, since plaintiffs do not allege that defendants engaged in any deceptive conduct during a pending proceeding in which plaintiffs were parties (see Stanski v Ezersky, 228 AD2d 311, 313 [*2][1996], lv denied 89 NY2d 805 [1996]). "

Plaintiff sues Attorney and attorney does not answer the complaint.  Attorney then moves to vacate the default judgment that follows.  Question is whether the process server correctly served the summons and complaint.  Under NY’s complicated service rules, Supreme Court determines that service was good and the AD eventually rules that it was not good.  Read to the end to see how both sides wasted valuable time and money on this issue.

"Where, as here, a defendant moves to vacate a judgment entered upon his or her default in appearing or answering the complaint on the ground of lack of personal jurisdiction, the defendant is not required to demonstrate a reasonable excuse for the default and a potentially meritorious defense (see Harkless v Reid, 23 AD3d 622, 622-623; Steele v Hempstead Pub Taxi, 305 AD2d 401, 402). Contrary to the determination of the Supreme Court, the defendant established entitlement to relief from default on the ground that she was not properly served with the summons and complaint pursuant to CPLR 308(4). The affidavit of service of the plaintiff’s process server alleged that the process server attempted to deliver the summons and complaint to the defendant at her "dwelling house" or "usual place of abode," rather than her actual place of business, on January 19, 2009, at 7:17 P.M., January 26, 2009, at 6:51 A.M., and February 25, 2009, at 4:03 P.M. After all three unsuccessful attempts, the process server affixed a copy of the summons and complaint to the defendant’s door and mailed a copy to the same address, which was alleged to be the defendant’s "last known residence." Contrary to these averments in the affidavit of service, the defendant presented proof, inter alia, that the address where service was attempted, as alleged in the affidavit of service, was in fact her office address.

The defendant established that the plaintiff’s process server failed to exercise "due diligence" in attempting to effectuate service pursuant to CPLR 308(1) or (2) before using the "affix and mail" method pursuant to CPLR 308(4) (JPMorgan Chase Bank, N.A. v Iancu Pizza, Ltd., 78 AD3d 902, 903 [internal quotation marks omitted]; see Lombay v Padilla, 70 AD3d 1010, 1012). [*2]Due diligence was not exercised because two of the three attempts at service were at times when the defendant could not reasonably be expected to be at work, a national holiday (January 19, 2009) and at 6:51 A.M. on January 26, 2009 (see Krisilas v Mount Sinai Hosp., 63 AD3d 887, 889; O’Connell v Post, 27 AD3d 630; Earle v Valente, 302 AD2d 353; Annis v Long, 298 AD2d 340). Furthermore, no attempt to effectuate service was made at the defendant’s actual "dwelling place or usual place of abode" (JPMorgan Chase Bank, N.A. v Iancu Pizza, Ltd., 78 AD3d at 903 [internal quotation marks omitted]; see Earle v Valente, 302 AD2d at 353), nor did the process server make genuine inquiries to ascertain the defendant’s actual residence or place of employment (see McSorley v Spear, 50 AD3d 652, 654; Estate of Edward S. Waterman v Jones, 46 AD3d 63, 66).

Under these circumstances, the service of the summons and complaint pursuant to CPLR 308(4) was defective as a matter of law (see JPMorgan Chase Bank, N.A. v Iancu Pizza, Ltd., 78 AD3d at 903; Earle v Valente, 302 AD2d at 354; Gurevitch v Goodman, 269 AD2d 355, 356). Since the Supreme Court had not acquired personal jurisdiction over the defendant, the default judgment entered against her was a nullity (see Fleisher v Kaba, 78 AD3d 1118, 1120; Steele v Hempstead Pub Taxi, 305 AD2d at 402). Accordingly, the defendant’s motion, in effect, to vacate the judgment entered upon her default and to dismiss the complaint on the ground of lack of personal jurisdiction should have been granted. "

Here is the kicker:

"We note that the action was timely commenced by filing the summons and complaint in the office of the Clerk of Kings County. Under the circumstances of this case, despite the dismissal of the complaint on the ground of lack of personal jurisdiction, the plaintiff should be permitted, if she be so advised, to re-serve the appellant within 120 days of the date of this decision and order (see CPLR 306-b; Gurevitch v Goodman, 269 AD2d at 356). "

It’s not enough to point out the mistake an attorney has made.  It’s not enough to show that your case was resolved for less than it was worth.  Even with the additional proof that the defendant was your attorney it is not enough to win a legal malpractice case.  Plaintiff must always show that "but for" the mistake of the attorney there would have been a better outcome.

In Lue v Finkelstein & Partners, LLP ; 2012 NY Slip Op 03259  Decided on April 26, 2012  Appellate Division, Third Department we see a labor law case which partially settled, and in which one defendant declared bankruptcy.  Take a look at what plaintiff had to prove to remain in the game:
 

"In January 2002, plaintiff, while working for O’Connell Electric, fell from a scissor lift at a construction work site owned by K-Mart Corporation. Defendants failed to preserve plaintiff’s Labor Law § 240 claim during K-Mart’s chapter 11 bankruptcy, resulting in the claim being reduced to zero dollars by the Bankruptcy Court in 2004. Plaintiff, represented by new counsel, subsequently commenced an action against various defendants, but his claim against K-Mart was dismissed by Supreme Court (Cannizzaro, J.) based upon the Bankruptcy Court’s order. No appeal was pursued from such dismissal.

Plaintiff eventually settled his claim against another defendant — United Rentals, Inc., the supplier of the scissor lift — for $235,000. He then brought this legal malpractice action, which was previously before us regarding a discovery dispute (67 AD3d 1187 [2009]), asserting that he would have had a larger recovery if his Labor Law § 240 strict liability claim against K-Mart had been preserved by defendants. Plaintiff moved for partial summary judgment on the [*2]issue of liability, and defendants cross-moved for summary judgment dismissing the complaint upon the ground that plaintiff could not prove that defendants’ alleged malpractice caused him any damages beyond what he had recovered from United Rentals. Supreme Court granted plaintiff’s motion and denied defendants’ cross motion. Defendants appeal, arguing that since plaintiff cannot recover any damages other than those that he has already received, his motion for partial summary judgment should have been denied and their cross motion for summary judgment should have been granted.

We find that factual issues exist in this record precluding summary judgment to either party. In a legal malpractice action, "a plaintiff must demonstrate 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 [the] plaintiff to sustain actual and ascertainable damages" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007], quoting McCoy v Feinman, 99 NY2d 295, 301 [2002]). Defendants argue that, even if they had preserved a claim against K-Mart, funds would not have been available to collect on a favorable Labor Law § 240 cause of action because K-Mart was self-insured and the record does not establish that K-Mart was named as an additional insured on O’Connell Electric’s policy with its insurer, Interstate Insurance Group. Plaintiff counters by contending that O’Connell Electric had agreed in a written contract to indemnify K-Mart as well as name K-Mart as an additional insured, and that an avenue to O’Connell Electric’s insurer was provided by Insurance Law § 3420 and the 1978 Bankruptcy Code (see 11 USC § 524 [a], [e]).

The contract between O’Connell Electric and K-Mart had an indemnification clause [FN1] and also a clause requiring that O’Connell Electric include K-Mart as an additional insured. It is the general rule that there is no right to indemnification if the indemnitee does not sustain an actual loss (see Lang v Hanover Ins. Co., 3 NY3d 350, 354 [2004]; Jackson v Citizens Cas. Co., 277 NY 385, 389 [1938]; Bank of India v Trendi Sportswear, Inc., 2002 US Dist LEXIS 894, *10-14, 2002 WL 84631, *4-5 [SD NY 2002], affd 64 Fed Appx 827 [2d Cir 2003], cert denied 540 US 1074 [2003]). This rule had the effect of protecting an insurer from having to pay an injured party when its insured was insolvent or bankrupt. Thus, the Legislature long ago carved out an exception to the rule and "remedied this inequity by creating a limited statutory cause of action on behalf of injured parties directly against insurers" (Lang v Hanover Ins. Co., 3 NY3d at 354; see Coleman v New Amsterdam Cas. Co., 247 NY 271, 275 [1928]). This exception is authorized by the Bankruptcy Code (see 11 USC § 524 [a], [e]), and a personal injury plaintiff may pursue an action against a bankrupt defendant for the purpose of obtaining a judgment to be enforced against that defendant’s insurer (see Lang v Hanover Ins. Co., 3 NY3d at 354-355; Green v Welsh, 956 F2d 30, 35 [2d Cir 1992]; Collier On Bankruptcy P 524.05 [16th ed]). Since it is well settled that an additional insured has the same protection as a named insured (see Kassis v Ohio Cas. Ins. Co., 12 NY3d 595, 599-600 [2009]; Pecker Iron Works of N.Y. v Traveler’s Ins. Co., 99 NY2d 391, 393 [2003]), it follows that an Insurance Law § 3420 cause of action could be brought against the insurer of an additional insured. [*3]"

Here, the contract required O’Connell Electric to name K-Mart as an additional insured. However, as defendants point out, there is no proof in the record that this was actually done. Establishing that a party is an additional insured is not generally difficult (see Kassis v Ohio Cas. Ins. Co., 12 NY3d at 599-600). But, the policy is not in the record and there is not even a sworn statement from a person with actual knowledge indicating such coverage was in place [FN2]. Under such circumstances, plaintiff has failed to establish as a matter of law that a potential claim existed under Insurance Law § 3420 against Interstate Insurance Group.

In a multi-million dollar apartment building sale at 108 W. 76th Street, NYC.  Defendant attorney Marmon drafts and negotiates the contract of sale, which was executed by the sellers.  Contract says that sellers have full power and authority to sell and they expressly represented to buyers that Sharmon Marcus and Stephen Marcus held all of the shares of the corporate owner. But did they?  Apparently Stephen Marcus’ kids say no.

Kids start an action in US District Court saying that they own the building, and what’s going on?  That case is ongoing, and buyers now sue Marmon.  Some documents reveal that Mamon knew of the kids claim yet went ahead.

In Gorton v Marmon  2012 NY Slip Op 31073(U)  April 16, 2012  Supreme Court, New York County
Docket Number: 108094/11  Judge: Joan M. Kenney the question is whether this is a negligence and fraud case, or merely a legal malpractice case in disguise?

Justice Kenny recites the various standards for decisions in this area and eventually holds that this is a negligence and fraud case which can proceed. 

"In reference to plaintiffs’ negligence cause of action, moving defendant fails to refute plaintiffs’ claim on negligence, and instead argues that the negligence claim is really one for legal malpractice. I-Having failed to address the negligence claim at all, defendant is not entitled to its
dismissal. Moreover, plaintiffs deny that they are alleging any legal malpractice claims against
defendant and admit that he was not their attorney at the closing of the sale of this property in
question. Plaintiffs specified the elements of a claim of fraud in the pleadings and therefore the claim cannot be dismissed pursuant to CPLR 3211 (a)(7). Specifically, plaintiffs allege that Mr. Marmon misrepresented the fact that the sellers had the legal right to transfer the property; he knowingly did so, due to his access to all of the Reyrnar records; plaintiffs relied on this representation, made the purchase and are now claiming damages as a result of Mr. Marmon’s purported fraud. The fraud claim is also not barred by the statute of limitations. While the interposition date of July 14, 201 1 is beyond 6 years from the June 30, 2005 sale of the property, plaintiffs assert that they did not discover the fraud until September 2009 when they were served with the pleadings in the Federal  Court action and therefore the 2-years-from-discovery rule is applicable, arid the claim of fraud, timely.

Plaintiffs’ contribution claim is not premature. Plaintiffs have a possibility of losing the
property in the Federal Court Action, having the sale of the property rescinded and losing the $4.8
million apartment. As per* the “critical requirement” of CPLR Article 14, such a claim may be
made before the potential judgment in the Federal Court Action. Moreover, plaintiff‘s have stated a
cause or action for indemnification and at this juncture it is premature to dismiss this cause of
action altogether.