We commonly get two types of fraud letters, and the come all the time.  One recent type is the "collaborative divorce" letter in which an offshore spouse needs held collecting a large equitable distribution check from the US spouse.  Another type is the offshore large corporation that needs help collecting a debt from a US debtor. 

When this law firm fell victim to the second of these frauds its legal malpractice carrier was asked to defend and indemnify against the bank.  Supreme Court found no coverage, but the AD reversed.

Lombardi, Walsh, Wakeman, Harrison, Amodeo & Davenport, P.C. v American Guar. & Liab. Ins. Co. ,  2011 NY Slip Op 04589 ,  Decided on June 2, 2011 ; Appellate Division, Third Department .  "Plaintiff, a law firm, was contacted via e-mail by an individual purporting to be the chief executive officer of a Taiwanese corporation seeking legal assistance in collecting debts in North America. After the individual sent plaintiff a signed retainer agreement, plaintiff received a $384,700 check from a purported debtor of the corporation. Plaintiff opened an account at Berkshire Bank and deposited the check. At the request of the purported chief executive officer, plaintiff instructed Berkshire Bank to wire the value of the check, minus a legal fee for plaintiff, in two transfers to a third party in South Korea, who was allegedly a supplier of the Taiwanese corporation. After the funds were transferred, Berkshire Bank notified plaintiff that the check was counterfeit and plaintiff’s account [*2]was overdrawn."
 

"Plaintiff commenced this action seeking, among other things, declarations that defendant was required to defend and indemnify it. Defendant moved for summary judgment. Plaintiff cross-moved for summary judgment or, in the alternative, an order compelling defendant to comply with its disclosure demands. Supreme Court denied plaintiff’s cross motion, granted defendant’s motion and entered a judgment declaring that defendant was not required to defend or indemnify plaintiff in the Berkshire Bank action. Plaintiff appeals.

An insurer has the duty to defend an insured "whenever the allegations within the four corners of the underlying complaint potentially give rise to a covered claim, or where the insurer ‘has actual knowledge of facts establishing a reasonable possibility of coverage’" (Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 [1997], quoting Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 67 [1991]). The insurer’s duty to defend, which is broader than the duty to indemnify, exists regardless of the merit of the underlying claim (see Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137 [2006]). To avoid defending an action, the insurer bears the burden of showing that the claim is not even potentially covered (see United States Fid. & Guar. Co. v U.S. Underwriters Ins. Co., 194 AD2d 1028, 1028-1029 [1993]).

Berkshire Bank’s complaint alleged that plaintiff, as a law firm, opened a bank account, deposited a check in that account, ordered wire transfers from the account and caused an overdraft when the check was determined to be counterfeit. The complaint included causes of action for breach of the account agreement and violations of the Uniform Commercial Code. The insurance policy issued by defendant provided coverage for any claim "based on an act or omission in [plaintiff’s] rendering or failing to render Legal Services for others." "Legal Services" is defined by the policy as "those services performed by an Insured as a licensed lawyer in good standing . . . or in any other fiduciary capacity but only where the act or omission was in the rendition of services ordinarily performed as a lawyer." The terms of this policy encompass more than what would traditionally be considered "legal [*3]malpractice" (see United States Fid. & Guar. Co. v U.S. Underwriters Ins. Co., 194 AD2d at 1029). "

"Because defendant did not meet its burden on the motion, plaintiff was entitled to a declaration that defendant had a duty to defend plaintiff in the Berkshire Bank action. Due to the confidential settlement of that action, we are unable to determine whether defendant was obligated to indemnify plaintiff. Accordingly, we remit for further proceedings (see Servidone Constr. Corp. v Security Ins. Co. of Hartford, 64 NY2d 419, 425 [1985]). "

Truebright Co., Ltd. v Lester ; 2011 NY Slip Op 04235 ; Decided on May 17, 2011  ;Appellate Division, Second Department is yet another example of a lost legal malpractice case, but not based upon the innocence or non-departure of the attorney.  In fact, just as in a recent case dismissed because the statute of limitations had passed on a case the attorney failed to file, here, there was a lack of capacity to sue.  Was it a bankruptcy filing that killed the capacity?  Was it a sale of the business to another that killed the capacity?  We do not know.
 

What we do know is:

"Under the circumstances, the Supreme Court did not improvidently exercise its discretion when it, in effect, granted the defendant’s motion for leave to amend his answer, as the proposed amendment was neither palpably insufficient nor patently devoid of merit, and there was no evidence that it would prejudice or surprise the plaintiffs (see CPLR 3025 [b]; Matter of Roberts v Borg, 35 AD3d 617, 618; Public Adm’r of Kings County v Hossain Constr. Corp., 27 AD3d 714, 716). To the extent that the plaintiffs "wish[ ] to test the merits of the proposed added . . . defense, [they] may . . . move for summary judgment upon a proper showing" (Lucido v Mancuso, 49 AD3d 220, 229). "

We often ask whether the law of legal malpractice is different from the rest of the negligence world?  Why do attorneys get a second chance, in which judges ponder whether they could have won the case had they not made mistakes?

In Dempster v Liotti ; 2011 NY Slip Op 04408 ; Decided on May 24, 2011 ; Appellate Division, Second Department ; Belen, J. we see a prime example.  Judge Belen himself framed the issue:

"We are asked to consider whether an attorney who failed to oppose a motion to dismiss the complaint in an action underlying a legal malpractice action, and thereafter failed to file a timely notice of appeal from the order that granted the motion to dismiss, is entitled, under the facts of this case, to summary judgment dismissing the legal malpractice cause of action on the ground that such negligence did not proximately cause the dismissal of the underlying action. Here, we conclude that, since the underlying action was time-barred as a matter of law, the attorney’s negligence, although clearly inexcusable, was not a proximate cause of the plaintiff’s alleged injuries, and accordingly this malpractice action must be dismissed.

To state a cause of action to recover damages for legal malpractice, a plaintiff must allege: (1) that the attorney "failed to exercise the 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 plaintiff actual and ascertainable damages (Leder v Spiegel, 9 NY3d 836, 837, cert denied sub nom. Spiegel v Rowland, 552 US 1257; see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442). As to the first prong, "[a]n attorney may be liable for ignorance of the rules of practice, for failure to comply with conditions precedent to suit, for neglect to prosecute or defend an action, or for failure to conduct adequate legal research" (Conklin v Owen, 72 AD3d 1006, 1007). However, even if a plaintiff establishes the first prong, the plaintiff must still demonstrate that he or she would have succeeded on the merits of the action but for the attorney’s negligence (see Hamoudeh v Mandel, 62 AD3d 948, 949; McCluskey v Gabor & Gabor, 61 AD3d 646, 648; Peak v Bartlett, Pontiff, Stewart & Rhodes, P.C., 28 AD3d 1028, 1030-31; see also Brodeur v Hayes, 18 AD3d 979; Raphael v Clune, White & Nelson, 201 AD2d 549, 550). Further, as to the second prong, the plaintiff must plead and prove actual, ascertainable damages as a result of an attorney’s negligence (see Barnett v Schwartz, 47 AD3d 197, 211). "[M]ere speculation about a loss resulting from an attorney’s alleged omission is insufficient to sustain a prima facie case of legal malpractice" (Siciliano v Forchelli & Forchelli, 17 AD3d 343, 345; see Dupree v Voorhees, 68 AD3d 810, 812-813; Plymouth Org., Inc. v Silverman, Collura & Chernis, P.C., 21 AD3d 464; Giambrone v Bank of N.Y., 253 AD2d 786).

In the instant action, the plaintiff alleges that Liotti failed to exercise the ordinary skill and knowledge commonly possessed by a member of the legal profession when he failed to file timely opposition papers in response to the RICO defendants’ motion to dismiss her amended complaint in the RICO action, and when he failed to timely appeal from the District Court’s subsequent order granting such motion. Liotti does not contest these allegations, and we conclude they are factually substantiated by the record.
 

Here, Liotti’s inexcusable failure to file timely opposition papers to the RICO defendants’ motion to dismiss the amended complaint and to file a timely notice of appeal from the District Court’s order granting such motion, clearly falls below the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession (see Conklin v Owen, 72 AD3d at 1007; McCoy v Tepper, 261 AD2d 592, 593). However, as previously discussed, despite such negligence, Liotti is entitled to summary judgment inasmuch as the plaintiff’s civil RICO claim was time-barred as a matter of law. Consequently, Liotti has established that the plaintiff is unable to prove that she would have prevailed in the RICO action but for his negligence. In opposition, the plaintiff failed to raise a triable issue of fact (see Hamoudeh v Mandel, 62 AD3d at 949).

Plaintiff and another get together to form a corporation and buy a 44 condo short stay building in Manhattan.  It’s a multi-million dollar deal, and the closing takes place with no attorney present for plaintiff.  Later, plaintiff sells a different condo for $ 1.6 million, this time with an attorney present.  The Chesterfield, (the short-stay condos) goes sour, and legal malpractice ensues.

"The parties held the closing on September 5, 2000 at North ork Bank on Long Island (the "closing"), Ito, Ishino, Ito’s son, Suzuki, and Rich attended; Roshco was not present. Suzuki
retained Rich to represent Keystone at the closing. In a November 13, 2006 decision/order, Supreme Court (Justice Marylin G. Diamond) dismissed Ito’s individual and derivative claims asserted against Kudman Trachten in the Third Amended Complaint. I t o appealed, and the First Department affirmed, but granted plaintiff leave to file a fourth amended complaint on the limited claim that Kudman Trachten vicariously aided and abetted a breach of fiduciary duty. In August 2009, Ito settled with defendants Sam Suzuki, Katsuko Suzuki, Nomara Suzuki Properties, Ltd., Suzuki Associates, Ltd., Manshion Joho Center I n c . , American Hotel Group, Inc. d/b/a American Hospitality Group, Keystone International, LLC, The Corcoran Funding Group and Suzuki Capital
Funding, Ltd. (collectively referred to as the "Suzuki Defendants") recovering in excess of $1.6 million.’

Thus, to recover, plaintiff must demonstrate that: (1) the attorney was negligent; (2) the attorney’s
negligence was the proximate cause of the sustained loss; and proof of actual damages (L).
Here, even if Ito were to establish defendants were negligent, if Ito cannot raise a factual issue as to whether defendants’ negligence was a proximate cause of the alleged sustained damages, then the legal malpractice should be dismissed (Scbwartz v. Olshan Gundman F rome 302 AD2d 193, 198 [lst Dept 2003). Conclusory allegations are insufficient (a)Hav.ing said that, proximate cause is demonstrated by showing "but for" an attorney’s negligence,  plaintiff would have prevailed in the matter or would not have sustained damages (id).

Although Roshco knew Ito was Japanese, and spoke and understood little English, her language barrier argument is not sufficient to raise a triable issue of fact. To begin, Ito has engaged in p r i o r business transactions and has also previously partnered with Suzuki (Kudman Trachten Moving Papers, Suzuki Aff., p. 2). Indeed, the majority of communications, including Index No. 124399/02
requests to sign important documents were not between the party’s at’torneys, but rather  conducted between Ito and Suzuki, with Ishino or Katsuko’s involvement. Specifically, Ishino said he communicated with Suzuki directly by telephone, e-mail, and facsimile regarding Chesterfield matters, and that Ito signed documents without seeking Roshco’s advice. In fact, Roshco did
not receive t h e March 2000 Contract which It0 alleges altered the Chesterfield price f r o m $9.5 million to $8.6 million. Nor did Roshco receive the operating agreement for review and comment.
Although at no time did Roshco reach out to I t o to ascertain the transaction’s status, Ito, as Keystone’s majority member, did not attempt to reach out to Roshco either."

"Terminated with extreme prejudice" was a euphamism in the older spy novels.  In this legal malpractice case, witholding service until after the death of a defendant-attorney results in dismissal and termination of the case.

Postawa v David ;  2011 NY Slip Op 50902(U) ;  Decided on May 20, 2011 ;  Supreme Court, Queens County  is the story of immigation legal malpractice.  "The plaintiff Krzysztof Postawa ("Postawa") contends that he was a client of suspended attorney Earl Seth David ("David"). David was suspended from the practice of law by the States of New York (3 AD3d 174 [1st Dept. 2004] [suspension of 15 months, citing numerous extenuating circumstances]) and New Jersey (181 NJ 326, 857 A2d 648 [2004] [reciprocal discipline of 15-month suspension], and later reinstatement, 186 NJ 459, 896 A2d 472 [2006]). A review of the List of Disciplined Practitioners of the United States Department of Justice’s Executive Office for Immigration Review further reflects that David was suspended from the practice of immigration cases for a period of 15 months effective July 9, 2004. [*2]

Plaintiff Postawa claims that David mishandled his case. Making matters worse, Postawa contends that his alleged representation by David occurred during the period of his suspension from the practice of law. Postawa contends that David accomplished his representation through the aid and subterfuge of Ava Norris , a non-lawyer who died on July 4, 2010, and her company, TANC, Inc., doing business as The Ava Norris Company. Postawa complains that he paid over $30,000 to Ava Norris, and thus presumably to David, for an immigration problem that David mismanaged. The handwritten agreement between Postawa and TANC, Inc., agreeing to help Postawa obtain a green card is dated September 13, 2004. David is not mentioned in the agreement between Postawa and TANC, Inc. David, on these motions, contends that he had never heard of Postawa until he got a telephone call from Postawa’s attorney, Darius A. Marzec, Esq., on December 22, 2010, informing him that an emergency order to show cause would be brought the next day.

In the agreement that Postawa made with defendant TANC, Inc., on September 13, 2004, the name of the lawyer who is to supply the legal services to obtain the green card is not mentioned. David’s name is not mentioned in the writing, and it was not signed by him. Ava Norris will not be able to shed any light on this case, since she died on July 4, 2010, two months before Marzec filed his complaint on behalf of Postawa.

With this factual backdrop, even if one were to accept Postawa’s allegations that he had been defrauded, there is no documentary evidence that implicates David. David swears that, under an order of suspension from the practice of law from April 2004, he could not have represented Postawa in September 2010. David’s name is not mentioned any where in the contract. David swears that he never represented Postawa, did not meet him, and had not heard of him until the motion practice in this case.

Even assuming arguendo that David did meet with Postawa and represented him – – and David vigorously denies the charges – – the expiration of the statute of limitations and the merit or lack of merit to the complaint are to be considered relevant factors in determining whether this Court should exercise its discretion, under CPLR 306-b, to give the plaintiff another 120 days to serve the complaint. The leading case on whether to grant or deny a motion to extend the time to serve under CPLR 306-b is Leader v Maroney, Ponzini & Spencer, 97 NY2d 95 [2001]. The Court of Appeals stated that reasonable diligence in attempting service is not the "gatekeeper" in deciding such motions. Id. at 104. Courts, instead, in exercising their discretion, are required to weigh and balance an amalgam of factors including the diligence of past attempts to serve, the expiration of the statute of limitations, the length of delay in service, the promptness of plaintiff’s request for an extension of time to serve, and prejudice to a defendant. Id. at 101, 105-106 & n.3.

First, as to the diligence of prior attempts to serve the defendants, Marzec, Postawa’s atttorney, keeps on referring to his efforts to find and serve David as being "duly diligent." This Court does not find that to be the case. Marzec asked a lawyers’ service to serve a copy of the order to show cause on an address in New Jersey. As Gorman points out, the owner of a private mail facility in New Jersey that David uses was authorized to accept service of process. Marzec knew about that private facility, but simply did not have David served with process there. Alex Molman ("Molman") submitted an affidavit that he is the owner of Postmark Plus, 1070H Route 34, South Matawan, New Jersey 07747. Molman and his assistant, Michael Ferrador, were both competent and authorized to accept service of process for David. They were not so served. [*6]

Other than that attempt, Marzec tried to find an address for David on the internet, but was unsuccessful. Those efforts by Marzec are paltry and not "duly diligent."See, Forte v Lutheran Augustana Extended Care and Rehabilitation, 2009 WL 4722325 [EDNY 2009] [party did not show diligence in attempting service thus warranting denial of motion to extend time to serve]; Braxton v McMillan, 76 AD3d 607 [2nd Dept. 2010][failure to show due diligence required denial of motion to extend time to serve]; accord, Krisilas v. Mount Sinai Hospital, 63 AD3d 887 [2nd Dept. 2009]; McSorley v Spear, 50 AD3d 652 [2nd Dept. 2008]; Estate of Waterman, 46 AD3d 63 [2nd Dept. 2007]. "

"Questions of judgment" or "strategies at trial" are frowned upon as legal malpractice departures.  A strong body of law holds that trial is an art and not a science, and choices of strategy, even though eventually losers, will not be the means to a successful legal malpractice case.  Selection of witnesses, of experts, and of the questions to ask at trial (just to name a few) are unsuccessful claims.

In O’Callaghan v Brunelle ; 2011 NY Slip Op 04095 ; Decided on May 17, 2011 ; Appellate Division, First Department found that  the "allegations that defendants’ failure to call the witness, who consented to the NYSE’s Hearing Panel’s finding that he engaged in conduct constituting improper trading arrangements and violated various rules, constituted legal malpractice "  were insufficient, and in fact, refuted by the documentary evidence.
 

Put more simply, a failure to call a witness will rarely support a legal malpractice case.  In a different setting the failure to call an alibi witness might be ineffective assistance of counsel, but the standards, and the way the AD looks at these situations is just a polar opposite.

"Standing" is the concept of a right to sue.  In legal malpractice there is a very strict requirement that only a client (with very limited exceptions) may sue the attorney.  Were this not so, every case would end with a legal malpractice started by the loser, and sometimes, the winner.

So, in Brooklyn Elec. Supply Co., Inc. v Jasne & Florio, LLP ; 2011 NY Slip Op 04186 ; Decided on May 17, 2011 ; Appellate Division, Second Department we see a highly technical, but true and effective defense to legal malpractice.  In essence, it says that the client never existed and hence may not now sue.
 

"The defendant established, prima facie, that the plaintiff, a dissolved corporation, lacked the capacity to sue because the plaintiff had been dissolved before the defendant was retained, and this legal malpractice action does not relate to the plaintiff’s winding up of its corporate affairs (see Business Corporation Law §§ 1005[a][1], 1006[a][4]; [b]; Matter of 172 E. 122 St. Tenants Assn. v Schwarz, 73 NY2d 340, 348-349; Moran Enters., Inc. v Hurst, 66 AD3d 972, 975-976; 2 N. Broadway Food, Inc. v Anduze, 33 AD3d 992; Syzygy Sys. Corp. v Bader, 243 AD2d 336). The plaintiff failed to raise a triable issue of fact to rebut the defendant’s prima facie showing of entitlement to judgment as a matter of law (see Lorisa Capital Corp. v Gallo, 119 AD2d 99, 110). "

Plaintiff’s decedent goes to a Queens motel and is shot dead.  The shooter eventually pleads guilty to manslaughter.  How much time does the estate have to sue the shooter, the hotel and was it given correct advice on the statute of limitations by its attorney?

Ross v Saravanos ;2011 NY Slip Op 31310(U) ; May 8, 2011; Supreme Court, New York County
Docket Number: 108017/2010; Judge: Emily Jane Goodman tells us that the shooter was sued in plenty of time, but the hotel was not, and that a case against the attorneys may continue on in legal malpractice.

"on December 4, 2004, Ross was shot by defendant Saravanos (Saravanos), while on the  premises of a hotel located in Queens, New York, owned, operated, managed and
maintained by the Hotel Defendants. that Ross died that day, as a result of being shot by Saravanos. On November 19, 2009, Saravanos pled guilty to First Degree Manslaughter (Penal Law 1 2 5 . 2 0 ) , and on December 15, 2009, he was sentenced to 13 years in prison and five years of post-release .parole supervision.

On or about December 5, 2005, the Surrogate’s Court issued to plaintiff Letters of Guardianship (of property) of Elijah Franklin Osman Ross, the son of Robert L. Ross. On or about July 30, 2009, the Surrogate’s Court issued Letters of Administration of the property of the Estate of Robert F. Ross to plaintiff. Plaintiff filed this action againat the Hotel Defendants and GASK on June 17, 2010. Plaintiff alleges that the Hotel Defendants owed a duty to its guests, were negligent in
permitting Saravanos to enter the hotel and remain on the premises, and failed to take reasonable precautions to insure the safety of its guests. With respect t o GASK, plaintiff alleges
that she had retained the defendant law firm to represent her in connection with her efforts to obtain the Letters of Guardianship and Letters of Administration, and that GASK knew or should have known that she intended to file litigation in connection with " the death.

"Plaintiff also argues that the claims against the Hotel Defendants are timely under CPLR 213-b, which extends the statute of limitations for personal injury actions brought by victims of
a crime, against ‘a defendant: (1) convicted of a crime which is the subject of such action." CPLR 213-b. However, as the Court ruled in Vasquez v Wood (18 AD3d 645, 646 [2d Dept Z O O S l ) , the
Hotel Defendants have not been convicted of a crime, and there have been no cases which broaden the applicability of this provision as the First Department has broadened CPLR 215 (8) in
Alford. Accordingly, the motion to dismiss is granted.

Plaintiff alleges that the failure by GASK to inform her of the applicable statute of limitations for her claim against the Hotel Defendants constitutes legal malpractice. GASK moves to dismiss the complaint as against it contending that since plaintiff has argued that the statute of limitations has been tolled by operation of either CPLR 215 ( 8 ) or CPLR 213-b, and, thus, her case against the Hotel Defendants was timely commenced, she should not be permitted to simultaneously argue that GASK has committed malpractice by failing to apprise her of the proper statute of limitations. Plaintiff may however assert alternate causes of action even though they may be inconsistent.
See CPLR 3014.
 

ORDERED on Motion Sequence Number 002, that the motion of defendant Goldfarb, Abrandt, Salzman & Kutzmin, LLP is denied.