How many ways might a simple house sale contract go wrong?  Aromino v Van Tassel ;  2011 NY Slip Op 51058(U) ; Decided on June 6, 2011 ; Civil Court Of The City Of New York, Richmond County ; Straniere, J. points out a plethora.
 

Plaintiffs contract to buy a house, and give a down payment of $ 35,000.  They discover structural problems.  They hire an inspector.  Sellers did not agree, and send a "Time of the Essence letter."  Buyers resist and do not come to the closing.  Seller relents and sends a "cure letter."  The cure letter set November 8, 2006 as the closing date.  On November 6, sellers attorney wrote a letter saying that he was going to release the down payment on November 7, 2006 and mailed it by regular mail.  Of course the letter did not arrive until after November 8.

What was done wrong?  "This cure letter, issued six days after the alleged "time of the essence" closing was scheduled, gave the purchasers thirty-four days to appear for the closing. It also asserts a position which negates the intention of the "time of the essence" letter because it states: "If your client fail [sic] to cure said default, my clients [sic] intend to deem the contract canceled and retain as and for liquidated damages, all sums paid by Purchaser and will pursue other rights under the contract and law." Seller is withdrawing its previous declaration of the purchaser being in default and the contract breached, by stating that the client has not yet "deemed" that the contract has been canceled and seller only "intends" to cancel the contract. [*10]

Further negating the "time of the essence" is the fact that O’Sullivan sent the letter on October 5, 2006 to Strazzullo offering purchasers the opportunity to cure their default especially after having received a letter from Strazzullo dated September 18, 2006 rejecting the "time of the essence" closing and demanding a return of the deposit. Although this letter does not specifically state that the purchasers are canceling the contract, it makes an unequivocal demand for the return of the deposit. Based on this letter, seller could have claimed an anticipatory breach as of the date of receipt of the Strazzullo letter and sought to assert and enforce seller’s contract rights at that point and in any case, after the "time of the essence" closing date. There was no need to grant the purchasers an opportunity to cure in view of the fact there does not appear to be any evidence that the purchasers were interested in performing the contract.

The final action negating the "time of the essence" demand, is the fact that O’Sullivan in the October 5, 2006 letter gave the purchasers until November 8, 2006 to cure, yet on November 7, 2006 O’Sullivan released the escrow deposit to the seller. This was one day prior to the cure date. Even if giving the purchasers a date by which to cure their default was not required by the contract, once seller unilaterally afforded the purchasers the opportunity to do so O’Sullivan was required to wait until after November 8, 2006 to release the money; assuming he had a right to do so. "

Based on the court’s findings set forth above, O’Sullivan was not permitted to release the down payment to his client. Assuming however, that he either did properly make "time of the essence" and that he believed he was acting lawfully and in good faith, could O’Sullivan release the escrow? The answer is an unequivocal "NO."

First, paragraph 27 setting forth how the deposit would be treated states: "At Closing, the down payment shall be paid to Seller upon consummation of the closing…." The closing never took place. The contract, which was drafted by seller’s attorney, could have provided for release of the deposit upon a default by either party to the non-defaulting party, yet it did not. Because the seller drafted the contract, it must be construed against the seller.

Second, for some totally incomprehensible reason, seller’s attorney drafted paragraph 27 as if this were a contract subject to General Business Law Article 23-A, the statute commonly referred to as the Martin Act. As noted in the footnote in reference to that paragraph, there is no evidence that the property in question is subject to that law. In fact, paragraph 7 of the contract referring to the existence of a "home owners [sic] association" has been deleted from the agreement. Referance to the non-exisiting offering plan was not deleted from paragraphs 12 & 33. The only explanation would seem to be that seller’s attorney either cut and pasted this contract from another one in his computer or he adopted a contract drafted by some other practitioner without fully comprehending the significance of the paragraph.

The above being said, seller’s counsel voluntarily subjected himself to the requirements promulgated by the New York State Department of Law. These regulations are found in New York Code, Rules and Regulations (13 NYCRR §22.3). Prior to releasing any monies held in escrow, O’Sullivan had to comply with the procedure set forth in that regulation. The rules provide (13 NYCRR §22.3(k)(2)(vii)): "

The more important basis for purchasers seeking the refund of their deposit is the alleged structural defects discovered by Coull Building Inspections. This report is dated July 20, 2006, apparently after the parties executed the undated contract of sale. It should be noted that the contract did not give the purchasers a right to have a structural inspection nor did it make the agreement subject to a structural inspection. In fact, the common practice in Richmond County is for a potential purchaser to have a structural report prior to signing a contract in regard to the resale of a home. Although not prohibited, to seek one in the case of new construction is highly unusual. Had the purchasers been concerned about the structural integrity of the house, their counsel could have either negotiated having the structural inspection done before the contract was signed, or as a clause permitting cancellation of the contract after signing based on items in the structural report. Counsel for the purchasers did neither.

Before getting into an analysis of the Coull report, the court must note that as of December 31, 2005, six months before the undated contract was signed, the legislature passed legislation requiring that all home inspectors be licensed (Real Property Law Article 12-B, Home Inspection Professional Licensing). The report from William Coull fails to indicate that either he or the business was in fact properly licensed. No license number is disclosed any where in the document. In fact, disclosure of this information is required by the statute "on every home inspection report and in all advertising" (RPL §444-g). "
 

Judiciary Law 487 is an attorney related statute that derives from one of the oldest English laws, carried over to New York statutes.  It is over 700 years old, in its earliest version.  inBaker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuworth, LLC v Comprehensive
 Mental Assessment & Medical Care, P.C.; 2011 NY Slip Op 31385(U) ;May 10, 2011
Sup Ct, Nassau County ;Docket Number: 016008/2007; Judge: Ira B. . Warshawsky defines the elements of JL 487 and then finds that a cause of action is stated.

Judiciary Law 487(1) permits injured third parties to recover treble damages when an attorney engages in ‘ any deceit or collusion or consents to any deceit or collusion, with intent to deceive the court or any par. ‘ " The plaintiffs must show evidence of either intent by the defendants to deceive or a chronic and extreme pattern of legal delinquency which proximately caused their damages. Connell v Kerson, 291 AD2d 386 (2 Dept. 2002). "Moreover, the alleged deceit when not directed at a court must occur during a pending judicial proceeding (citations omitted). Elmowitz v McCormick Dunne & Foley, 30 Misc 3d 1209 (A) (Supreme Court New York County 2010), citing Jacobs v Kay, 50 AD3d 526, 527 (1 Dept. 2008); Costalas v Amalfitano, 305 AD2d 202 203-204 (1 st Dept. 2003).

Contrary to Barshay s allegations, the defendants have adequately stated a claim against him to recover under Judiciary Law 487. The defendants have alleged that "(t)he partners failed to provide business records and accounting(s); the partners failed to hand over funds collected on settled cases; (plaintiffs) failed to make timely court and arbitration filings.Checks payable to defendants (were placed) in partner accounts; settlement checks issued by insurance carriers. . . were deposited into Partnership s accounts; plaintiffs compromised defendants ‘ causes of actions , particular in a bulk settlement with AIU Insurance Company, and a bulk settlement with GEICO Insurance Company;  (P)artners took possession of the settlement funds from both Bulk
Settlements;" and that " (P)artners failed to inform defendants of the receipt of funds resulting from both Bulk Settlements. . . (and) deposited settlement funds from Bulk Settlements into (plaintiffs) bank accounts." The defendants have alleged that Sanders & Grossman, P. , Baker Barshay, LLP and the Partnership as well as all of the additional defendants improperly represented to adversaries as well as the courts in the course of judicial proceedings related to their no-fault claims that they represented them and that they had the authority to settle their claims when they did not and that they settled those claims at a significant discounted rate causing them substantial damage. A claim pursuant to Judiciary Law 9 487 has clearly been stated."

In this case, Plaintiff made such a persuasive argument that Supreme Court granted summary judgment and the AD affirmed.  Failing to tell a client about title problems is legal malpractice, says the AD in Ehrenhalt v Kinder ; 2011 NY Slip Op 05194 ; Decided on June 16, 2011 ; Appellate Division, First Department . 
 

Put simply:  "Defendant’s failure to inform plaintiff of the defects in title to the apartment when he learned of them was a failure "to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession," and this failure resulted in actual damages to plaintiff (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]).

Defendant’s contention that plaintiff’s motion is premature because more discovery is required is unsupported by any evidence suggesting that additional discovery will lead to further relevant evidence (see CPLR 3212[f]; Zinter Handling, Inc. v Britton, 46 AD3d 998, 1001 [2007]; Duane Morris LLP v Astor Holdings Inc., 61 AD3d 418 [2009]). "

T&V Constr., Inc. v Margolin; 2011 NY Slip Op 31598(U); June 3, 2011; Sup Ct, Nassau County
Docket Number: 0834/08 ;Judge: Anthony L. Parga demonstrates that no good deed goes unpunished.  In short, after getting divorced, plaintiff is told that his ex can’t pay the mortgage on the old marital home.  He has his own company purchase the mortgage and trades the mortgage payments for maintenance.  Later, ex wants to sell the house, so he buys it from her.  His attorney is tasked with the transaction, and especially with filing the deed.

The deed is not filed, and several years later ex sells the house to a third-party.  Now litigation begins, and the legal malpractice case commences.  "Plaintiffs argue in their opposition that "
but for" the defendants deed in lieu ‘  or take other steps to protect plaintiffs ‘ rights , Garcia could not have committed fraud in transferring the property to another. Plaintiffs also contend that Garcia fraud in reselling the premises was a foreseeable possibility and that Garcia s intentional break the causal nexus where the act could have been foreseen. (.f)ee s actions do not
of City of New York Bell v. Board of Educations 90 N.Y.2d 944 (1997))

Plaintiff argues, contrary to the defendants, that this is not a circumstance where subsequent counsel had a sufficient opportunity to protect plaintiffs ‘ rights or correct the prior counsel’ s errors, as the harm was already done at the time new counsel was retained and the new counsel could not prevent the injury itself. Lastly, plaintiffs submit that any judgment collected against Garcia would be uncollectible as she has  viable assets that are free from liens and/or judgments.

Defendants’ motion for summary judgment against T & V is denied as there are several questions of fact regarding whether the defendants’ negligence was a proximate cause of plaintiff T & V’s alleged damages.

Scott v Fields ; 2011 NY Slip Op 05043 ; Decided on June 7, 2011 ; Appellate Division, Second Department  is not the first mortgage-legal malpractice case, but it appears to be the most extensively written 2d department opinion in one.  Here, as in most mortgage fraud cases, there is a straw buyer, the belief that owner is getting their house saved for them, and disaster.  Plaintiff brought the case a few months too late, and legal malpractice is dismissed on the statute of limitations.
"The plaintiff alleges that the defendants conspired to defraud her of her real property by causing her to believe that she was refinancing the mortgage on her home when, in actuality, she was conveying her property to the defendant Sherran Fields. In the complaint filed on March 25, 2009, the plaintiff asserted causes of action sounding in conversion, conspiracy, fraud, implied contract, breach of fiduciary duty, and malpractice. The Supreme Court granted those branches of the separate motions of the defendants Kecia J. Weaver and Kecia J. Weaver, P.C. (hereinafter together Weaver), and the defendants Stella Azie and Stella Azie, P.C. (hereinafter together Azie), which were to dismiss the complaint insofar as asserted against each of them pursuant to CPLR 3211. The Supreme Court also denied that branch of the plaintiff’s motion which was pursuant to CPLR 3025(b) for leave to amend the complaint. We affirm the order insofar as appealed from."

The remaining two causes of action asserted against Weaver, alleging breach of fiduciary duty and professional malpractice, are time-barred. The statute of limitations for a breach of fiduciary duty cause of action depends on the substantive remedy which the plaintiff seeks (see Loengard v Santa Fe Indus., 70 NY2d 262). Where the relief sought is equitable in nature, the statute of limitations is six years, and where the relief sought is purely monetary, the statute of limitations is three years (see Monaghan v Ford Motor Co., 71 AD3d 848). Here, the cause of action against Weaver alleging breach of fiduciary duty seeks purely monetary damages, and, under the circumstances, a three-year statute of limitations applies. The claimed breach occurred during the closing on November 25, 2005. As such, the cause of action to recover damages for breach of fiduciary duty is time-barred insofar as asserted against Weaver (see CPLR 3211[a][5]). Similarly, the cause of action to recover damages for professional malpractice were also properly dismissed insofar as asserted against Weaver. The statute of limitations for a legal malpractice claim is three years (see CPLR 214[6]; Tsafatinos v Lee David Auerbach, P.C., 80 AD3d 749). The alleged legal malpractice occurred on November 25, 2005, and, as such, the claim of professional negligence, i.e., legal malpractice, is time-barred (see CPLR 3211[a][5]). Contrary to the plaintiff’s contention, the continuous representation doctrine is inapplicable. The complaint did not allege there was a mutual understanding that Weaver’s legal representation of the plaintiff would continue after the closing (cf. Lytell v Lorusso, 74 AD3d 905). "

Justice Judith Gische writes clear and unambiguous decisions, and often, one side or the other gets hurt. Schindler v Lester Schwab Katz & Dwyer, LLP ; 2011 NY Slip Op 31519(U); June 6, 2011 ;Supreme Court, New York County; Docket Number: 115967/2010; Judge: Judith J. Gische is one example.

Plaintiff was sued by law firm 1 for fees.  He retained defendants Lester Schwab to defend him in the attorney fee issue.  This is an unusual choice for defense of a legal fee case, since it is likely that the Lester Schwab bills to defend an attorney fee case will equal the fees being sought in the case.  Nevertheless, the defense ensued and the case went bad.  Eventually, Lester Schwab also asked to be relieved, and cited fee issues.  A default judgment was later entered against plaintiff for discovery failures. Was Lester Schwab negligent in the way it defended plaintiff?

"Here, the issue in dispute is the defendants’ alleged legal malpractice. The doctrine of collateral estoppel is a flexible doctrine grounded in the facts and realities of a particular litigation which should not be rigidly or mechanically applied since it is, at its core, an equitable doctrine reflecting general concepts of fairness (Buechel v. Bain, 97 N.Y.2d at 303). Applying this legal principle, it is readily apparent that the issue of whether Lester Schwab capably represented Schindler in the legal fees action was decided, not only in Judge Kornreich’s decision granting Lester Schwab’s motion and in the decision granting Fish & Richardson’s motion to strike Schindler’s answer and
allowing it to enter a default judgment against him, but also addressed in the decision of Judge Richter rendered on appeal. The decisions by Judge Kornreich were before the Appellate Division when Schindler appealed and it is clear from Judge Richter’s  decision that the Appellate Division rejected all of Schindler’s explanations and defenses for why he failed to provide discovery.
In any event, even if the court were persuaded that Schindler’s claims are not collaterally estopped by the events that preceded this action, based on this record, plaintiffs claims are entirely too speculative to support a recovery against the defendants, affording the plaintiff the benefit of every possible inference (Lombardi v. Giannattasio, 192 A.D.2d 512 [2nd Dept.,1993]). Although Schindler has the right to rest on his complaint in opposing the motion to dismiss, he has not provided a sworn affidavit in support of his cross motion explaining why he did not comply with Judge Kornreich’s discovery orders once he obtained new counsel. His failure to make
amends belies any claim that Schindler “misunderstood” the proceedings against him or
was mislead by counsel about what his discovery responsibilities were. As for Schindler’s claims against Attorney Murphy individually, they are entirely without any factual basis. Attorney Murphy provided the November 26, 2008 affidavit because he was ordered to by Judge Kornreich pursuant to her order of November 6, 2008. The order was issued in connection with Fish & Richardson’s motion for leave to serve a subpoena on Schindler. She ordered that Fish & Richardson “seek and obtain an affidavit from someone with knowledge from plaintiffs prior firm Lester Schwab,
(Jonathan Murphy), as to whether a copy of my decision relieving them as counsel was
served upon defendant and when.” Thus, Attorney Murphy’s affidavit was little more than an affidavit of service, not the destructive document that Schindler portrays it to be.

Defendants’ motion for the imposition of sanctions pursuant to Part 130-1 .l[c] furnished Schindler and his attorneys with adequate notice that such relief would be considered and renders a formal hearing unnecessary (Minister, Elders and Deacons of Reformed Protestant Dutch Church of City of New York v. 198 Broadway, Inc., 76 N.Y.2d 41 1 [1990; Dubai Bank Ltd v. Ayyub 187 AD2d 373 [1st Dept 19921). In deciding the what sanction should be imposed, the court has considered the time and attention this matter has involved and the severity (frivolity) of the claim made against
defendants. The court orders that plaintiff Schindler and his attorneys, the firm of Danzig, Fishman & Decea, pay the sum of $5,000 as costs to Lester Schwab and Jonathan A. Murphy, Esq. The Clerk shall enter judgment against Schindler and his attorneys, jointly and severally, in the manner provided in the decretal section appearing directly below."

When may a legal malpractice litigant obtain prejudgment interest (interest from the date of malpractice to present)?  When the malpractice arises from the loss of a cause of action.  In DiTONDO v Meagher ; 2011 NY Slip Op 04805 ; Decided on June 9, 2011 ; Appellate Division, Third Department  the third department enunciated two principals.  The first is that when a contract cause of action arises from the same facts and depends on the same damages as the tort cause of action, it is redundant.
 

When damages arise from a lost cause of action, prejudgment interest will apply.

 "Where an individual claim of breach of contract arises out of the same facts as an asserted legal malpractice cause of action and does not allege distinct damages, the breach of contract claim is duplicative of the malpractice claim (see Turner v Irving Finkelstein & [*2]Meirowitz, LLP, 61 AD3d 849, 850 [2009]; Garten v Shearman & Sterling LLP, 52 AD3d 207, 207-208 [2008]; Peak v Bartlett, Pontiff, Stewart & Rhodes, P.C., 28 AD3d 1028, 1031 [2006]; see also 76 NY Jur 2d, Malpractice § 37). Therefore, we agree with Supreme Court that plaintiffs’ proposed amendment to the complaint, asserting a breach of contract cause of action based upon the same facts as the legal malpractice claim, is redundant and their motion was appropriately denied.
However, "’CPLR 5001 operates to permit an award of prejudgment interest from the date of the accrual of the malpractice action in actions seeking damages for attorney malpractice’" (Barnett v Schwartz, 47 AD3d 197, 208 [2007], quoting Horstmann v Nicholas J. Grasso, P.C., 210 AD2d 671, 673 [1994]; see Mizuno v Fischoff & Assoc., 82 AD3d 849, 850 [2011]; Leach v Bailly, 57 AD3d 1286, 1289 [2008]; but see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 444 n 3 [2007]). Moreover, as here, "[w]here the injury suffered [as a result of legal malpractice] is the loss of a cause of action, the measure of damages is generally the value of the claim lost," whether the malpractice claim sounds in negligence or in breach of contract (Campagnola v Mulholland, Minion & Roe, 76 NY2d 38, 42 [1990]). Thus, contrary to defendants’ contentions, Supreme Court erred by dismissing plaintiffs’ claim for preverdict interest. "

Reported on the front page of the NY Law Journal today is a $ 5 million dollar legal malpractice verdict and judgment that could swell to $ 10 million after interest.  in Friedman v. Boros, Justice Jaffe determined that the jury verdict will stand, and that pre-judgment interest in this commercial legal malpractice case commenced in 2000.  The case turned on collateral estoppel and arbitration.

"The court rejected defendants’ argument based on State Farm Ins. Co. v Smith, 277 AD2d 390 (2d Dept, 2000) and Kerins v. Prudental Prop. & Cas., 185 AD2d 403 (3d Dept 1992), and concluded that if plaintiff and Katz had entered into a limiting agreement, Mahoney Cohen would likely have not prevailed in asserting collateral estoppel as a defense in plaintiff‘f s action against it.
By decision and order dated April 26, 2005, the Appellate Division, First Department,
affirmed the September 2004 decision, finding that defendants had not “established as a matter of‘
law, that even if plaintiff and Katz had entered into an agreement limiting the collateral estoppel
effect of the arbitration award, the Mahoney Cohen lawsuit would nonetheless have been
dismissed on collateral estoppel grounds.” (17 AD3d 275, 276). ‘I’he If the Court, citing Smith, also
observed. that “in circumstances involving arbitration, the parties themselves can formulate their
own contractual restrictions on the carry-over estopple effect.” (Id.).

Defendant was found liable for both legal malpractice and accouting malpractice in a mid 7 figure judgment.