Sometimes the attorney representing a client is actually retained by the client, and sometimes the attorney is provided to the client.  In one recurring situation, union members are provided with legal representation.  The member (plaintiff) does not have an attorney-client relationship with the attorney.  That relationship and the privity that is created is between the union and the attorney, and the member may not sue the attorney for legal malpractice.

in Cruz v United Fedn. of Teachers  ;2011 NY Slip Op 33499(U); December 23, 2011
Supreme Court, New York County; Docket Number: 103386/11; Judge: Eileen A. Rakower the client-member was a teacher who was charged with "unsatisfactory performance, misconduct or other disciplinary charges"  From there it was on to a "rubber room."  From the decision:

"Based upon the charges against her, Plaintiff was placed on an Ineligible Inquiry List, was removed from her teaching responsibilities, and was placed in a Temporary Reassignment Center – otherwise known as a “rubber room.” Plaintiff states that she provided UFT with timely notice
of the charges and her reassignment. UFT then called upon defendant New York State Unified Teachers (“NYSUT”) to represent Plaintiff in her Education Law $3020-a hearing. Defendants Sandner and Rubinstein were assigned to be Plaintiffs attorneys concerning her disciplinary charges.

Plaintiff claims that Sandner and Rubinstein failed to adequately represent Plaintiff during the course of her disciplinary proceeding. Specifically she states that during the two year pendency of her disciplinary charges, they never moved to have the charges dismissed or dropped; and that during the proceedings, they failed to “raise jurisdictional or other objections to the disciplinary hearing process.”

In 2008, during her- disciplinary proceeding, Plaintiff, along with other teachers, filed a lawsuit against UFT alleging, inter alia, that UFT (1) failed to honor its obligations to Plaintiff and to other teachers who were reassigned to the “rubber room” and facing disciplinary charges; (2) was discriminating against Plaintiff and (3) that UFT was failing to fairly represent her. Plaintiff alleges that, in response to, and in retaliation for commencing the lawsuit against UFT, defendant Moerdler, a UFT attorney, advised NYSUT, Sandner and Rubinstein that they should end their representation of Plaintiff. Sandner and Rubinstein complied and moved to withdraw as Plaintiffs attorneys, citing a conflict of interest. After the arbitrator granted Sandner and Rubinstein’s motion to withdraw, Plaintiff proceeded pro se. After the hearing, the Arbitrator issued a decision dated
December 1,2008 finding Plaintiff guilty of ten out of the 14 specifications brought against her (see Cruz v. New York City Dept. of Educ., 20 10 NY Slip Op 5001 6U [Sup. Ct., N.Y. Co. 20101) (denying Plaintiffs Article 75 petition challenging the termination). Plaintiff claims that her termination was the result of her pro se status and her inability to adequately defend herself.

Here, the court finds that Plaintiffs complaint must be dismissed. Petitioner’s DFR claim is clearly barred by the four-month statute of limitations set forth in CPLR 52 17(2)(a), which provides:
Any action or proceeding against an employee organization subject to article fourteen of the civil service law or article twenty of the labor law which complains that such employee organization has breached its duty of fair representation regarding someone to whom such employee organization has a duty shall be commenced within four months of the  date the employee or former employee knew or should have known that the breach has occurred, or within four months of the date the employee or former employee suffers actual harm, whichever is later. Further, the court notes that, even if timely, Plaintiff fails to state a DFR cause of action.

Plaintiff‘s additional claims are preempted by her DFR claim, and may not be asserted in order to circumvent the applicable four-month statute of limitations (see Roman v. Ciq Emples. Union Local 237, 300 A.D.2d 142 [lst Dept. 20021 (“The expedient of characterizing a claim for breach of the duty of fair representation as one  for breach of contract is unavailing to avoid the four-month limitations period prescribed in CPLR 2 17(2)(a)”); Mamorella v. Derkasch, 276 A.D.2d 152, 155 [4th Dept. 20003 (“attorneys who perform services for and on behalf of a union may not
be held liable in malpractice to individual grievants where the services performed constitute part of the collective bargaining process.. .. Plaintiff is limited to bringing an action against the union for breach of the duty of fair representation.”).

Legal Malpractice insurance companies have two big exclusions.  One is late notice of a claim and the other is acts outside the policy coverage.  Late notice is a constant danger to the insured.  Carriers take the position that as soon as the attorney knows there has been a mistake he is obligated to tell the carrier.  Insureds take the position that if they tell the carrier as soon as they are served with a complaint, it is early enough.  The cases run between the two extremes.

Here, however, in K2 Inv. Group, LLC v American Guar. & Liab. Ins. Co. ; 2012 NY Slip Op 00001
Decided on January 3, 2012 ; Appellate Division, First Department  we see both bad faith and exclusions.  They do not work out to the carrier’s benefit.
 

"Plaintiffs are limited liability companies that made multiple loans totaling approximately $3 million to nonparty Goldan, LLC of which defendant’s insured, Jeffrey Daniels, an attorney, was a member. In the legal malpractice action underlying this action, it was alleged that as attorney for plaintiffs, Daniels undertook to record mortgages in plaintiffs’ favor to secure those loans, and to obtain title insurance, and that he failed to do so, rendering plaintiffs’ investments unsecured. Goldan became insolvent and never made any payments on the loans. The legal malpractice action alleged that as a consequence of Daniels’s negligent failure to record the mortgages or obtain title insurance, plaintiffs did not have security in the mortgaged properties, and the promissory notes evidencing the loans became uncollectible.

Plaintiffs demanded $450,000 from Daniels in full settlement of their claims. This amount was well within the $2 million aggregate and $2 million per-claim limits of the lawyers professional liability insurance policy issued to Daniels by defendant. However, defendant disclaimed its duty to defend or indemnify based upon two exclusions in the policy. One exclusion was for claims based upon or arising out of the insured’s capacity or status as an officer, director, etc., of a business enterprise. The other exclusion was for any claim arising out of the alleged acts or omissions of the insured for any business enterprise in which he had a controlling interest.

After Daniels failed to appear in the malpractice action, a default judgment was entered against him in the amounts of $2,404,378.36 in favor of plaintiff K2 and $688,716.00 in favor of plaintiff ATAS. Daniels then assigned to plaintiffs all his claims against defendant, including bad faith claims. [*2]

Having disclaimed its duty to defend its insured in an action that culminated in a default judgment, defendant "cannot challenge the liability or damages determination underlying the judgment" (Lang v Hanover Ins. Co., 3 NY3d 350, 356 [2004]). Nor can it raise defenses to plaintiffs’ claim against Daniels including the applicability of any asserted policy exclusions (Lang at 356).

"To be relieved of its duty to defend on the basis of a policy exclusion, the insurer bears the burden of demonstrating that the allegations of the complaint in the underlying claim cast the pleadings wholly within that exclusion, that the exclusion is not subject to any other reasonable interpretation, and that there is no possible factual or legal basis upon which the insurer might be eventually obligated to indemnify its insured (citations omitted)" (Utica First Ins. Co. v Star-Brite Painting & Paperhanging, 36 AD3d 794, 796 [2007]). No material issue of fact exists as to whether the allegations of plaintiffs’ legal malpractice claims are based, even in part, upon Daniel’s acts or omissions in his capacity as an officer, director, etc., of a business enterprise or any acts or omissions for a business enterprise in which he had a controlling interest, so as to bring them within either of the exclusions invoked by defendant (id). Rather, the allegations of legal malpractice were focused solely on Daniels’s negligence as plaintiffs’ counsel. "

Sometimes a case reads like a movie script or a Grisham novel.  People v Wlasiuk ; 2011 NY Slip Op 09544 ; Decided on December 29, 2011 ; Appellate Division, Third Department  reads like one. In reading the case a thought flitted across our mind…could reversible error intentionlly be built in to a case?

 
"Defendant was convicted in 2003 of the crime of murder in the second degree in connection with the death of his wife (hereinafter the victim), whose body was found next to defendant’s submerged pick-up truck at the bottom of Guilford Lake. Defendant was present at the scene and, when the ensuing investigation both contradicted his version of the events and revealed evidence suggesting that he had killed the victim at their home and then staged a motor vehicle accident, police became suspicious. Upon defendant’s appeal from his judgment of conviction, this Court concluded that "the cumulative effect of a litany of errors deprived defendant of a fair trial" and, therefore, we reversed (People v Wlasiuk, 32 AD3d 674, 675 [2006], lv dismissed 7 NY3d 781 [2006]). Following remittal, County Court granted defendant’s motion for dismissal of the original indictment. "

On the second trial, a second reversal for ineffective assistance of counsel.  "We agree with defendant, however, that reversal is nonetheless required because he received ineffective assistance of counsel. Specifically, counsel — without a reasonable strategy — (1) failed to join in the prosecutor’s request that juror No. 5 be discharged for cause once it became clear that the juror had committed misconduct in obtaining his seat on the jury, and (2) introduced evidence that this Court previously held to be unduly prejudicial, inadmissible hearsay.

With respect to the juror, when the names of potential witnesses were read during jury selection, juror No. 5 indicated that he knew Joyce Worden — defendant’s paramour, who was also the baby-sitter for the couple’s young children — as a patient in his podiatric medical practice. He expressly denied knowing any other witnesses. Juror No. 5 further maintained that he could be fair despite his prior professional relationship with Worden. He stated that he did not "even know much about the [first] trial," because he had recently moved to the area and had been busy with his medical practice and child-rearing at the time. He was then sworn as a juror and excused for the day.

During the lunch recess that immediately followed, the lead police investigator in the case, Lieutenant James Lloyd, informed the People that juror No. 5 had been interviewed by police at the time of the victim’s death. The interview with Detective Gerald Parry — whose name was also read to juror No. 5 from the potential witness list and who ultimately testified at trial — was written up in the police lead sheet, which the People read into the record. The lead sheet indicated that juror No. 5 had informed police that he knew the victim, had worked with her at a hospital, had heard nurses discussing the victim’s "problem with her husband," and referred police to other hospital employees who had further information about defendant’s prior violent acts towards the victim. In response to this information, the People and County Court were indifferent regarding whether juror No. 5 should remain. Defense counsel, however, adamantly resisted the discharge of juror No. 5, stating:

"I’m not going to pick a jury and have [Lieutenant] Lloyd decide he doesn’t like somebody on the jury or he interviewed [*4]somebody . . . I don’t want [Lieutenant] Lloyd to find out who the jurors are and then decide that he’s not happy with one of them and come up with a reason to have that juror disqualified."

The next day, following completion of jury selection but before the jury was given preliminary instructions, defense counsel advised County Court that he had been contacted by Worden, who had been a witness for the defense during the first trial. Worden told counsel that juror No. 5 had a conflict inasmuch as, while treating her as a patient, he had asked her many questions about the case. Although defense counsel asserted that he liked jurors who asked questions and wanted juror No. 5 to remain on the jury, County Court became concerned that the juror had not been forthright during voir dire. In addition, the People expressed grave doubts about the fitness of juror No. 5, stating that "his calling the police and being involved in the investigation and his failing to disclose that [fact] . . . has demonstrated that he is highly unqualified . . . to be a juror in this particular matter." Essentially, the People requested that the juror be dismissed for cause — as grossly unqualified under CPL 270.35 (1) — and claimed that they would have exercised a peremptory challenge against the juror had this information come to light when peremptory challenges remained available.^[FN2]

During an in camera inquiry, juror No. 5 revealed that he had treated defendant’s children after the first trial, but had not mentioned the relationship because the children were not named on the witness list. Although the juror initially indicated that he did not recall speaking to police about the case, he eventually admitted that he had been interviewed by Parry after the court informed him that the police lead sheets described the interview. The juror stated, however, that he had no "real affiliation with" the victim and had no information for police. In addition, the juror denied asking Worden questions about the case, explaining that she started to discuss it with him, but he steered the conversation back to her medical condition. The juror then swore that he could remain fair and impartial, and County Court did not discharge him.^[FN3]

Defendant now argues that County Court committed reversible error in failing to dismiss juror No. 5 when it became clear that the juror was grossly unqualified under CPL 270.35 (1). Pursuant to that statute, "[a] sworn juror must be discharged when facts come to light, which were not known at the time the jury was empaneled, indicating that the juror is ‘grossly unqualified to serve’" (People v Harris, 99 NY2d 202, 212 [2002], quoting CPL 270.35 [1]). In determining whether the sworn juror is "grossly unqualified," the court must, "[i]n a probing and tactful inquiry, . . . evaluate the nature of what the juror has seen, heard, or has [*5]acquired knowledge of, and assess its importance and its bearing on the case" (People v Buford, 69 NY2d 290, 299 [1987]). This test is more stringent than that used in resolving a for-cause challenge. While, under CPL 270.20 (1) (b), a challenge for cause is permissible when a prospective juror "has a state of mind that is likely to preclude him [or her] from rendering an impartial verdict based upon the evidence adduced at the trial" (emphasis added), a sworn juror may be discharged as grossly unqualified over a defendant’s objection "only when it becomes obvious that [the] particular juror possesses a state of mind which would prevent the rendering of an impartial verdict" (People v Buford, 69 NY2d at 298 [internal quotation marks and citation omitted] [emphasis added]). "

Architectural malpractice follows the same rules as legal malpractice.  Duplicitive pleadings are not permitted, and will be dismissed.  As we discussed yesterday in Beck v Studio Kenji, Ltd.
2011 NY Slip Op 33470(U); December 21, 2011; Sup Ct, NY County; Docket Number: 108995/09
Judge: Louis B. York one might plead 10 claims, only to have them cut to the basic breach of contract and malpractice.

"Recovery in quasi-contract ordinarily is precluded “when a valid and enforceable written contract” governs the specific subject matter (Clark-Fr‘Fitzpatrick, Inc. v. Long Island R. Co., 70 N.Y.2d 382, 389, 521 N.Y.S.2d 653, 656 [1987](Clark-Fitzpatrick)). Only where there is no express contract or where the validity of the contract is at issue is a quasi-contract theory possible, If there is no contract or an unenforceable agreement, the Court may find that a quasi-contact exists to prevent unjust enrichment (Clark v. Fitzpatrick,, 70 N.Y.2d 382,389, 521 N.Y.S.2d 653,656 [1987]). Here, neither party questions that a contract exists. Moreover, plaintiff bases his unjust enrichment claim on the contract itself. Therefore, an independent quasi-contract claim cannot exist and the
claim is not legally viable. "

"Next, defendants state that the fourth cause of action for breach of implied covenant of good faith and fair dealing is not viable against Studio Kenji because it is based on the same facts as the breach of contract claim. Defendants are correct. Under New York law, parties to an express contract are bound by an implied duty of good faith, but breach of that duty is merely a breach of the underlying contract (Panasia Estates, Inc. v. Hudson Ins. Co., 68 A.D.3d 530, 530,889 N.Y.S.2d 452,453 [lst Dept 20091). Accordingly, a claim for breach of the implied covenant is dismissible as redundant if it arises under the same facts which form the basis for the breach of contract claim (Constar v. JA. Jones Const. Co., 212 A.D.2d 452,453,622 N.Y.S.2d 730,73 1 [1st Dept
19951). The court therefore dismisses the fourth cause of action as well. Turning to the fifth cause of action for breach of fiduciary duty, defendants argue that the claim is redundant of the malpractice claim and therefore they seek the same relief. Defendants are correct when they state that the claims are duplicative. New York courts have consistently held that a breach of fiduciary duty claim that is premised on the same facts as the legal malpractice cause of action, is redundant and should be dismissed (E.g., Murray Hill Investments, Inc. v. Parker Chapin Flatow & Kimple, LLP 305 A.D.2d 228,229,759 N.Y.S.2d 463,464 [l” Dept 20031; Turk. Angel, 293 A.D.2d 284,284, 740 N.Y.S.2d 50, 58 [l” Dept 2002)."

Finally, defendants argue that the this Court should dismiss the cause of action, for gross negligence. Gross negligence, as both parties state, is “conduct that evinces a reckless disregard for the rights of others or ‘smacks’ of intentional wrongdoing,” (Sommer v. Federal Signal Corp., 79 N.Y.2d 540,554,583 N.Y.S.2d 957,593 N.E.2d 1365). “It is conduct that evinces a reckless indifference to the rights of others,” (id.). Whether defendants’ conduct rises to this level of culpability is a question of fact. The failure to meet applicable building and fire safety codes, as well as DOB rules and regulations during construction could arguably constitute gross negligence in light of the potentially serious consequences thereof, both financially and in creating a risk of injury to plaintiff and other residents of the building. This is a question to be resolved by a jury
and it would therefor be inappropriate to dismiss the cause of action.

Just as in Legal malpractice, so professional malpractice has its pleading rules.  In Beck v. Studio Kenji;  2011 NY Slip Op 33470(U) ; December 21, 2011; Sup Ct, NY County; Docket Number: 108995/09 ;Judge: Louis B. York we see the Court reducing the variety of claims to a contract and a negligence claim. 

" In this action, plaintiff Andrew Beck III (Beck) sues defendants Studio Kenji (Kenji), Justin Miyamoto Weiner (Weiner), and Ellen Honigstock (Honigstock), alleging eight causes of action including breach of contract, negligence, breach of fiduciary duty, and professional malpractice. Plaintiff states that as a result of defendants’ gross mismanagement of its architectural and reconstruction project and corresponding failure to investigate New York City rules, regulations, and codes, plaintiff was forced to deconstruct nearly all work performed during defendants’ three-plus years on the project, and rebuild large portions of the apartment to satisfy the requirements of the building code so the building could maintain its temporary certificate of occupancy.

The following facts of the case are undisputed:   Plaintiff purchased Unit PH7/8N,eighth and rooftop floors at 169 Hudson Street around August of 2004. Plaintiff retained Weiner on behalf of Kenji, a high-end Manhattan interior design and consulting firm, to plan and design the interior and various other elements of plaintiffs apartment, and to serve as manager, consultant, and designer for the apartment’s construction. Plaintiff and Weiner, on behalf of Kenji, subsequently agreed upon a
comprehensive eight-page design and consulting agreement (the retainer agreement). The retainer agreement stated that Kenji and Weiner would design and prepare drawings and architectural plans, file the plans with the New York City Department of Buildings (DOB), and obtain all necessary approvals for the build out. The initial sketches included the removal of a section of the separation between the existing seventh and the newly constructed eighth floors to create a double-height space and the addition of a catwalk connecting both ends of the apartment. The final architectural plans, including the above elements, were filed with the DOB.From 2004 through early 2008, plaintiff alleges, he paid in excess of one million dollars to defendants in connection with their work on the project. On or about October of 2007, with work at a standstill, plaintiffs interior designer and his project contractor each advised him to retain a new, independent architect. Plaintiff hired a new architect to review the status of the project and formally terminated defendants in early 2008. In March 2008, plaintiffs new architect inspected the construction that had
occurred and determined that many aspects of the apartment’s design, including but not
limited to the double height space and the catwalk, failed to meet both the industry
standards and the DOE! fire and safety codes and regulations. The new architect created a
plan to remedy the problems without deconstructing the original work. However, the DOB rejected the plan and, as a result, deconstruction of defendants’ work was necessary. Subsequently, plaintiff commenced this action."

"Defendants’ basis for dismissal of the claims asserted against Weiner is that the contract in question was with Kenji, not Weiner, and plaintiff retained Kenji to provide services regarding the interior spaces and roof decks for plaintiff’s apartment, with Honigstock as the architect of record for the project. As defendants argue, under New York law “persons may not be held liable on contracts of their corporations, provided they did not purport to bind themselves individually under such contracts.’’ (Wiernik v. Kurth, 59 A.D.3d 535, 537, 873 N.Y.S.2d 673,675-76 [TdDe pt 20091). Here, Weiner signed the retainer agreement in his capacity as an officer of Studio Kenji (Plaintiffs
exhibit C), rather than in his individual capacity. Nor does plaintiff raise an issue of fact as to whether Weiner held himself out as individually responsible for the work in question. Accordingly, as defendants assert, Weiner cannot be held liable for the alleged breach of contract .

We’ll discuss the further dismissals tomorrow.

We’d like to take this chance to thank our readers for this year and to wish a very good year to all.  If you just can’t get enough legal malpractice, take a look at our article in the New York Law Journal from this week.  The Nuts and Bolts of Legal Malpractice.  See you soon.

Continuing the trend towards a combination of bankruptcy and legal malpractice, we note that bankruptcy follows, and rarely precedes legal malpractice situations, hence, we expect a swell of the intersection following the financial down-trends of the past year. Here, Tabner v Drake
2009 NY Slip Op 10006; ; Appellate Division, Third Department is an example of how settlement of an underlying case is handled in Bankruptcy Court, even when the attorneys seeking their fee have nothing to do with the bankruptcy. Apparently, individual Drake had carved out a portion of the settlement that was then taken away from him by the Bankruptcy Court, and as a result he would not sign a stipulation and release so that the law firm which had produced the settlement sums might get paid.
 

"In 1998, plaintiffs commenced an action to recover legal fees for services allegedly rendered to defendant Ralph H. Drake Jr.’s residential and commercial real estate business — defendant RHD Construction Corporation. In response, Drake and RHD asserted negligence and malpractice counterclaims against plaintiffs. Multiple pretrial proceedings ensued (see e.g. Tabner v Drake, 9 AD3d 606 [2004]) and, in 2001, Drake filed for bankruptcy under chapter 7 of the Bankruptcy Code.

Shortly after the start of trial, the parties entered into a stipulation of settlement in open court which, among other things, contemplated the exchange of general releases from the parties with respect to all aspects of the litigation. The parties acknowledged that the Bankruptcy Court’s approval of the settlement was required and, in November 2007, the Bankruptcy Court issued an order approving the settlement and authorizing the bankruptcy estate’s trustee to execute general releases in accordance therewith, specifically authorizing the payment of $50,000 to plaintiffs by the trustee. Nevertheless, citing purported inconsistencies between the actual [*2]terms of the settlement and the "Bankruptcy Court approval relative to the amounts to be paid to each defendant," Drake and RHD refused to execute their respective releases. Consequently, plaintiffs moved in Supreme Court for an order directing that defendants execute the releases called for within the agreement and enforcing the stipulation of settlement. Supreme Court granted the motion, prompting this appeal. "

"Accordingly, although the parties agreed to a total settlement of $350,000, with $50,000 going to plaintiffs, $295,000 to RHD and $5,000 to Drake, the Bankruptcy Court properly observed that the bankruptcy estate was the "legal and equitable owner of the litigation whether through [Drake] directly or as the sole shareholder of RHD" (see 11 USC § 541). Its resultant order — that $50,000 be tendered to plaintiffs and $300,000 be tendered to the bankruptcy trustee — thus adequately reflects the terms and conditions of the settlement. In view of the foregoing, we find no reason to disturb Supreme Court’s order."

Attorney fees and legal malpractice should have nothing to do with each other. However, the general rule is that no legal fees may be awarded in the face of legal malpractice and its corollary is that if legal fees are awarded by a court or tribunal, then there could have been no legal malpractice, whether the issue is briefed or not.

Here is another example: Liberty Assoc. v Etkin ; 2010 NY Slip Op 00225 ; Decided on January 12, 2010 ;Appellate Division, Second Department :
 

"In January 2003 the Ravin Firm commenced an action against Liberty Associates in the Superior Court of New Jersey to recover fees for the legal services rendered. In 2004, during the pendency of the instant action, Liberty Associates and the Ravin Firm settled the New Jersey fee dispute action (hereinafter the fee dispute action), which was dismissed with prejudice. Upon learning of the settlement, Etkin moved for summary judgment dismissing the complaint in the instant action. The Supreme Court granted the defendant’s motion. We affirm. ""This action to recover damages for legal malpractice against Etkin, as a member of the Ravin Firm, arises out of the same series of transactions as the fee dispute action asserted by the Ravin Firm against the plaintiff herein for legal fees. Upon resolution of the fee dispute action, the parties, by their attorneys, executed a stipulation of dismissal with prejudice and without costs. A stipulation of discontinuance with prejudice without reservation of right or limitation of the claims disposed of is entitled to preclusive effect under the doctrine of res judicata (see Matter of Hofmann, 287 AD2d 119, 123 ["An order of discontinuance effecting settlement on the merits is accorded the same res judicata effect as the entry of judgment on the merits"]; see also Fifty CPW Tenants Corp. v Epstein, 16 AD3d at 294).

Here, Etkin established, prima facie, that the legal services at issue in the instant action and in the fee dispute action were the same and, thus, that Liberty Associates’ settlement of the fee dispute action with the Ravin Firm, of which Etkin was a member, precludes Liberty Associates from maintaining the instant action against Etkin under the doctrine of res judicata (see Izko Sportswear Co, Inc. v Flaum, 25 AD3d 534, 537)."