Lautman v 2800 Coyle St. Owners Corp. 2024 NY Slip Op 00068 Decided on January 10, 2024 Appellate Division, Second Department is one of those inexplicable cases in which a plaintiff loses all, and then waits too long to sue the attorney. The question of how plaintiff lost it all never comes up for review.

“The plaintiff is the former proprietary lessee of a cooperative apartment located in Brooklyn. He owned shares of stock in the defendant 2800 Coyle St. Owners Corp. (hereinafter the co-op), the cooperative corporation that owns the building where the subject apartment is located. In 2012, the co-op commenced a nonpayment proceeding in the Civil Court of the City of New York against the plaintiff. In September 2013, a default judgment of possession was entered against the plaintiff. Thereafter, the plaintiff’s shares were sold at auction, and he was evicted from the apartment.

In 2019, the plaintiff commenced this action against the co-op, the Board of Directors of the co-op, Dependable Property Management, Inc. (hereinafter collectively the co-op defendants), and Sauchik & Giyaur, P.C. (hereinafter Sauchik), the law firm that represented the co-op in the nonpayment proceeding. The co-op defendants moved, inter alia, pursuant to CPLR 3211(a)(1), (5), and (7) to dismiss the complaint insofar as asserted against them. Sauchik separately moved pursuant to CPLR 3211(a)(5) and (7) to dismiss the complaint insofar as asserted against it. The [*2]plaintiff cross-moved, among other things, for leave to enter a default judgment against the defendants based upon their alleged failure to timely answer or move to dismiss the complaint. In an order dated June 16, 2020, the Supreme Court granted that branch of the co-op defendants’ motion, granted Sauchik’s separate motion, and denied the plaintiff’s cross-motion. The plaintiff appeals. We affirm.”

“Here, in their respective moving submissions, the co-op defendants and Sauchik demonstrated, prima facie, that the first, second, third, fourth, sixth, seven, eighth, ninth, and twelfth causes of action insofar as asserted against each of them were time-barred (see Chao v Westchester Med. Ctr. Advanced Physicians Servs., P.C., 131 AD3d 1130). In opposition, the plaintiff failed to raise a question of issue of fact (see Heritage Hills Socy., Ltd. v Heritage Dev. Group, Inc., 56 AD3d 426, 426-427). Contrary to the plaintiff’s contention, the application of the savings provision of CPLR 205(a), raised for the first time on appeal, “does not involve a pure question of law that appears on the face of the record and could not have been avoided if brought to the Supreme Court’s attention” (U.S. Bank N.A. v Doura, 204 AD3d 721, 723).”

It’s often said (and the PJI specifically covers this) that an attorney is not a guarantor of a good result. The attorney has to use reasonable efforts and not to depart from the standard of practice. Lopez v Pasternack, Tilker, Ziegler, Walsh, Stanton & Romano, LLP
2024 NY Slip Op 30318(U) January 18, 2024 Supreme Court, Kings County Docket Number: Index No. 514717/2023 Judge: Richard J. Montelione is a decision highlighting that principle.

” On or about February 11,2014, Decedent Alba Morales hired defendant Pasternack, Tilker, Ziegler~ Walsh, Stanton &Romano; LLP (”the Pasternack Firm”) to represent her in connection with her Workers’ Compensation claims. Defendant Matthew Funk, Esq. was the primary attorney handling her case. The complaint alleges that the Pasternack Firm and defendant Funk held themselves out to be experts in the field of Workers’ Compensation claims.

Ms. Morales’ Workers’ Compensation claims against her former employer Graphnet, Inc arose out of her September 200l work, related injuries and/or illness, Ms. Morales was employed by Graphnet,1nc. in September2001 to clean debris and ashes in buildings neat the World Trade Center in the wake of the September 11, 2001 attacks. Consequently. Ms. Morales developed gastroesophageal reflux disease (“GERD “) and interstitial lung disease.”

“Defendants submitted the Section ‘.32 Agreement to the Workers’ Compensation Board on April 15, 2019. A Workers’ Compensation hearing Was held on July 22. 2019 before Judge Schwartz. Judge Schwartz disapproved the Settlement without preJudice to return the case to the calendar once Ms. Morales obtained the requisite Letter from the World Ttade Center Health Program (“WTCHP”). Ms. Morales passed away on July30, 2020 due to her work-related iJlness. Plaintiff states in the complaint that upon Ms. Morales’ death, she was no longer eligible to receive compensation for the Section 32 Agreement, as she was no longer receiving medical care

The complaint alleges that defendants’ failure to obtain the Letter and finalize the settlement prior· to Ms. Morales’ death constituted a deviation from the good and accepted standards of legal practice in litigating Ms. Morales Workers’ Compensation Claim. However, the record shows that defendants made numerous attempts to obtain the Letter from the WTCHP. On the day of the hearing, July 22, 2019 Fischer Brothers, Esqs. ; the firm representing Graphnet; LLC and their insurance company, expeditiously sent a letter to the WTCHP requesting the Letter and sent a copy of said request to defendants (NYSCEF #8}. Defendants followed up. with Fischer Brothers, Esqs. via email om October 18, 2019 inquiring as to status of the letter (NYSCEF #9). An attorney from Fischer Brothers; Esq. and a:n attorney from the Pasternak’s Firm, Rochelle Jean-Baptiste (“Mr. Jean-Baptiste;;), confirmed via email that they would attempt to call the WTCHP regarding the letter (NYSCEF #9)”

“Accordingly; accepting the allegations in the complaint as true; and the additional facts by undisputed documentary evidence of the. attempts to obtain the Letter, plaintiff fails to state a cause of action for legal malpractice as there are no facts that show that defendants did not exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, that their breach proximatey caused the settlement to not be finalized, and that Ms. Morales’ damages were actual and ascertainable, Marinelli v. Sullivan Papa in Block, McGrath& Cannavo, P.C., supra.”

In Sharp v Ferrante Law Firm, 2023 NY Slip Op 05383 [220 AD3d 587], October 24, 2023
the Appellate Division, First Department found that there was no collateral estoppel, but nevertheless, the case was untimely.

“The motion court incorrectly applied the doctrine of collateral estoppel to preclude plaintiff’s legal malpractice claim, as plaintiff’s attorney-client relationship with defendants was not the issue determined in the arbitration between plaintiff and plaintiff’s former employer, Industry Model Group LLC d/b/a Industry Model Management (IMM). Nevertheless, the malpractice claim must be dismissed because it is time-barred. Plaintiff confirmed in the amended complaint that the alleged attorney-client relationship ended as of July 10, 2018. Therefore, the statute of limitations for plaintiff’s malpractice claim expired in July 2021, three years after the attorney-client relationship ended (see CPLR 214 [6]). As plaintiff did not commence this action until June 23, 2022, the malpractice claim is time-barred. Even if the malpractice claim was timely, it should be dismissed because plaintiff failed to allege any negligence on the part of defendants in connection with the July 2018 correspondence (to assist plaintiff’s re-entry into the United States), or that it harmed him.”

McGlynn v Burns & Harris, Esq. 2024 NY Slip Op 00187 Decided on January 17, 2024
Appellate Division, Second Department, which we discussed last week, has a secondary issue. Was it spoliation to discard a litigation file?

“In 2007, the plaintiff retained the defendant Burns & Harris, Esq. (hereinafter the B & H law firm), to represent him in the prosecution of an action to recover damages for personal injuries he allegedly sustained in March 2005 while working for United Parcel Service due to an allegedly defective condition on a loading dock in Brooklyn. The defendant Alison R. Keenan was the attorney assigned to handle the plaintiff’s case. The B & H law firm commenced two separate actions on the plaintiff’s behalf against alleged owners of the loading dock. The actions were consolidated (hereinafter the personal injury action), and a default judgment against all the defendants in the personal injury action was obtained, awarding the plaintiff the total sum of $255,914.50.

The plaintiff alleged that he was unable to collect the judgment because the insurance providers for the defendants in the personal injury action disclaimed coverage on the ground that timely notice of the claim was not provided. The plaintiff commenced this action against the B & H law firm and Keenan (hereinafter together the law firm defendants), among others, alleging, inter alia, legal malpractice for the failure to investigate and timely notify the applicable insurance carriers in the personal injury action.”

“The Supreme Court providently exercised its discretion in denying the plaintiff’s cross-motion pursuant to CPLR 3126 to strike the law firm defendants’ answer for spoliation of evidence. “A party that seeks sanctions for spoliation of evidence must show that the party having control over the evidence possessed an obligation to preserve it at the time of its destruction, that the evidence was destroyed with a culpable state of mind, and that the destroyed evidence was relevant to the party’s claim or defense such that the trier of fact could find that the evidence would support that claim or defense” (Pegasus Aviation I, Inc. v Varig Logistica S.A., 26 NY3d 543, 547 [internal quotation marks omitted]; see S.W. v Catskill Regional Med. Ctr., 211 AD3d 890, 891-892). Here, the plaintiff failed to establish that the law firm defendants had an obligation to preserve the case file from the personal injury action or that it was destroyed with a culpable state of mind (see Tanner v Bethpage Union Free Sch. Dist., 161 AD3d 1210, 1211; Perez v Tedesco, 214 AD3d 1010, 1012).”

McGlynn v Burns & Harris, Esq. 2024 NY Slip Op 00187 Decided on January 17, 2024
Appellate Division, Second Department illustrates the proposition that attorneys must try to prove all causes of an accident, even when one of them seems more important than the other. Attorneys also have to try to make sure there is insurance on the other side.

“In 2007, the plaintiff retained the defendant Burns & Harris, Esq. (hereinafter the B & H law firm), to represent him in the prosecution of an action to recover damages for personal injuries he allegedly sustained in March 2005 while working for United Parcel Service due to an allegedly defective condition on a loading dock in Brooklyn. The defendant Alison R. Keenan was the attorney assigned to handle the plaintiff’s case. The B & H law firm commenced two separate actions on the plaintiff’s behalf against alleged owners of the loading dock. The actions were consolidated (hereinafter the personal injury action), and a default judgment against all the defendants in the personal injury action was obtained, awarding the plaintiff the total sum of $255,914.50.

The plaintiff alleged that he was unable to collect the judgment because the insurance providers for the defendants in the personal injury action disclaimed coverage on the ground that timely notice of the claim was not provided. The plaintiff commenced this action against the B & H law firm and Keenan (hereinafter together the law firm defendants), among others, alleging, inter alia, legal malpractice for the failure to investigate and timely notify the applicable insurance carriers in the personal injury action.”

“Contrary to the Supreme Court’s determination, the law firm defendants failed to establish their prima facie entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against them. The law firm defendants’ submissions in support of their motion did not establish, prima facie, the absence of at least one element of the legal malpractice cause of action (see Burbige v Siben & Ferber, 152 AD3d 641, 642). “Under the doctrine of judicial estoppel, also known as estoppel against inconsistent positions, a party may not take a position in a legal proceeding that is contrary to a position he or she took in a prior proceeding, simply because his or her interests have changed” (Bihn v Connelly, 162 AD3d 626, 627; see Archer v Beach Car Serv., Inc., 180 AD3d 857, 861). Here, the plaintiff’s allegation that he was injured due to a defect in the loading dock was not necessarily contrary to the position taken in his workers’ compensation claim that he suffered injuries while moving heavy boxes on the loading dock. There can be more than one proximate cause of a plaintiff’s injuries (see Scurry v New York City Hous. Auth., 39 NY3d 443, 454; Turturro v City of New York, 28 NY3d 469, 483; Moe-Salley v Highbridge House Ogden, LLC, 214 AD3d 722, 722; Reyes v S. Nicolia & Sons Realty Corp., 212 AD3d 851, 852). Accordingly, the court should have denied the law firm defendants’ motion for summary judgment dismissing the complaint insofar as asserted against them.”

Servider v Law Offs. of Cervini, Ronemus & Vilensky 2024 NY Slip Op 30160(U)
January 12, 2024 Supreme Court, New York County Docket Number: Index No. 161166/2022 Judge: Mary V. Rosado is a pro-se legal malpractice case which comes after plaintiff has settled a case, and then wriggled to get out of the settlement. These legal malpractice cases rarely succeed, especially after a settlement.

“Beginning in October 2014, Plaintiff retained Cervini to represent him in an action
captioned Philip Servinder et al v. The City of New York, Index No. 160683/2014 (the “Underlying Matter”) to recover damages for alleged personal injuries he suffered while working for the New York City Sanitation Department (NYSCEF [)oc. IS at 5). Cervini represented Plaintiff in the Underlying Matter from October 2014 to October 2015 (NYSCEF Doc. 21). R&V were briefly retained to represent Plaintiff in the Underlying matter beginning in October 2015, pursuant to a signed Consent 10 Change of Attorney form dated October 25, 2015 (NYSCEF Doc. 18). Cervini resumed representation of Plaintiff pursuant to a subsequent Consent to Change Attorney form dated February 3, 2016 (NYSCEF Doc. 19).
The Underlying Mauer was resolved pursuant to a signed Stipulation of Settlement dated April 23, 2019 (the “Settlement Agreement”) (NYSCEF Doc. 17). Subsequently, Plaintiff fired Cervini in December 2022 and proceeded pro se in an attempt to invalidate the Settlement Agreement (NYSCEF Doc. 14 at 7). Plaintiffs motion to vacate the Stipulation of Settlement was denied by the Decision and Order of Hon. Alexander M. Tisch, J.S.C. dated May 24, 2021 and unanimously affirmed by the First Department (Servinder v City of New York, 212 AD3d 475 lst Dept 2023).”

Here, Plaintiff fails to plead that R& V’s negligence was the proximate cause of Plaintiffs
alleged loss. The First Department has held that to establish prox.in1atc cause on a claim for legal malpractice, the “plaintiff must demonstrate that but for the attorney’s negligence, [they] would have prevailed in the underlying mailer or would not have sustained any ascertainable damages” (Brooks v, Lewin, 21AD3d 73 1, 734 [1st Dept 2005]). Further, “speculation on future events are insufficient to establish that fa] defendant lawyer’s malpractice, if any, was the proximate cause of any such loss” (Id. at 735). Even given the benefit of every possible favorable inference, Plaintiffs Complaint fails to adequately allege that but for R&V’s alleged malpractice, Plaintiff
would have prevailed in his underlying actions or would not have sustained any damages. As such, R&V”s motion to dismiss Plaintiffs malpractice claims against it is granted.”

Attorney CLEs generally preach that attorneys should refrain from legal fee suits as they bring legal malpractice counterclaims. Wojcik Law Firm, P.C. v Mull 2024 NY Slip Op 00060 Decided on January 09, 2024 Appellate Division, First Department is a legal fee claim with a guarantee twist.

“

Order, Supreme Court, New York County (Gerald Lebovits, J.), entered on or about March 23, 2021, which, upon reargument, denied plaintiff’s motion and defendant’s cross-motion for summary judgment, unanimously modified, on the law, to grant that portion of plaintiff’s motion for summary judgment dismissing defendant’s affirmative defenses, except for overbilling, and to grant that branch of defendant’s cross-motion that asserted that the guaranty only applied to fees and expenses incurred after the February 2017 engagement letter, and remand for a hearing on the proper amount of fees and expenses, and otherwise affirmed, without costs.

Defendant’s reading of the guaranty contained in the 2017 engagement letter, limiting it to future fees and expenses, was reasonable given the text and the agreement as a whole. Therefore, defendant’s reading must be adopted (Shaw v Manufacturers Hanover Trust Co., 68 NY2d 172, 177 [1986]; see also Lo-Ho LLC v Batista, 62 AD3d 558, 559 [1st Dept 2009] [guaranty must be read strictly and in guarantor’s favor]).

The 2017 engagement letter was not procedurally unconscionable, where defendant was a sophisticated businessperson who had retained a number of other law firms and was not suffering from any clinical emotional or psychiatric condition. Mere business or financial stress is not sufficient to establish unconscionability (see King v Fox, 2004 WL 68397, *6, 2004 US Dist LEXIS 462, *18-19, [SD NY Jan. 14, 2004, No. 97CIV4134 (RWS)]). Moreover, the terms of the agreement at issue, a personal guaranty for fees, and an acknowledgement of past fees, are common terms that do not meet the high bar for substantive unconscionability (id.) In addition, the provision in the agreement setting a cap on defendant’s monthly payment undermines his argument that the agreement was unconscionable. For these same reasons, there was no issue of fact as to whether defendant was subject to undue influence by counsel (see Matter of Lawrence, 24 NY3d 320, 337—388 [2014]).”

Amid v Del Col 2024 NY Slip Op 00178 Decided on January 17, 2024 Appellate Division, Second Department is a common story. Plaintiff alleges that he hired the attorney, the attorney did little or no work, discontinued certain causes of action without consent and paid himself from the retainer fees without good cause or permission. What is unusual is a cause of action for conversion of the retainer funds.

“In September 2012, the plaintiff entered into a retainer agreement with the defendant Robert Del Col and his law firm to represent the plaintiff in a series of legal actions she had commenced, including a federal court case and two state court cases. At some point after the retainer agreement was executed, Del Col allegedly “promised” to represent the plaintiff in an action entitled Airmix Long Island, Inc. v Amid. Thereafter, the plaintiff commenced this action, inter alia, to recover damages for legal malpractice, alleging that the defendants performed little or no work on her cases, withdrew several claims without her permission, and failed to return any unearned portion of the retainer fee. The defendants moved for summary judgment dismissing the second amended complaint. In an order dated September 23, 2019, the Supreme Court denied the motion. The defendants appeal.”

“The Supreme Court properly denied that branch of the defendants’ motion which was to dismiss the first cause of action, alleging legal malpractice. With respect to the state court cases, the defendants failed to submit evidence establishing, prima facie, the absence of at least one essential element of the legal malpractice cause of action (see Aqua-Trol Corp. v Wilentz, Goldamn & Spitzer, P.A., 197 AD3d 544, 545; Fricano v Law Offs. of Tisha Adams, 194 AD3d 1016, 1018).

With respect to the federal court case, the defendants established, prima facie, that the plaintiff would not have prevailed on her 42 USC § 1983 claim regardless of whether the defendants consented to the discontinuance of that claim. However, in opposition, the plaintiff raised a triable issue of fact (see Hall v Schrader, Israely, DeLuca & Waters, LLP, 147 AD3d 1421, 1422). And, with respect to the Airmax case, the defendants failed to demonstrate, prima facie, that there was no attorney-client relationship between them and the plaintiff (see Edelman v Berman, 195 AD3d 995, 997).

The Supreme Court also properly denied that branch of the defendants’ motion which was for summary judgment dismissing the second cause of action, alleging conversion of a portion of the retainer fee. “To establish a cause of action to recover damages for conversion, a plaintiff must show legal ownership or an immediate superior right of possession to a specific identifiable thing and must show that the defendant exercised an unauthorized dominion over the thing in question to the exclusion of the plaintiff’s rights” (RD Legal Funding Partners, LP v Worby Groner Edelman & Napoli Bern, LLP, 195 AD3d 968, 970 [internal quotation marks omitted]; see Vigilant Ins. Co. of Am. v Housing Auth. of the City of El Paso, Tex., 87 NY2d 36, 44; C & B Enters. USA, LLC v Koegel, 136 AD3d 957, 958). A claim of conversion of money is proper “when funds designated for a particular purpose are used for an unauthorized purpose” (East Schodack Fire Co., Inc. v Milkewicz, 140 AD3d 1255, 1256 [internal quotation marks omitted]). Here, the defendants failed to establish, prima facie, that all fees taken by them were in accordance with the retainer agreement.”

Eichengrun v Panasci 2024 NY Slip Op 00014 Decided on January 4, 2024
Appellate Division, Third Department is the story of a multiple representation real estate transaction going bad, then into bankruptcy and then back into foreclosure. Which, if any, of the attorneys may be liable?

“Plaintiff Green Oak Stockade View Apartments, LLC, of which plaintiffs William A. Eichengrun and Justin Sterling were managing members, executed a note in favor of National Bank of Coxsackie (hereinafter NBC) that was secured by a mortgage on real property located in the City of Schenectady. Sterling also personally guaranteed Green Oak’s financial obligations under the note and mortgage. In 2016, NBC commenced an action to foreclose on the property. Eichengrun retained defendants Young Sommer Ward Ritzenberg Baker & Moore LLC (hereinafter Young/Sommer) and Robert Panasci (hereinafter collectively referred to as defendants) to represent Green Oak and Sterling in that foreclosure action. No formal retainer agreement was entered into for this representation. During the pendency of the foreclosure action, Green Oak had an agreement to sell the subject property to a buyer. Before this sale could be consummated, however, NBC obtained a judgment of foreclosure and sale, which was entered on September 9, 2016, and noticed a sale for December 1, 2016.

To stay the foreclosure action and the sale noticed for December 2016 and to obtain more time to finalize the potential sale with the buyer, Eichengrun, after consulting with Panasci, retained Christian Dribusch to commence a proceeding in US Bankruptcy Court for Green Oak to declare bankruptcy. On November 23, 2016, Panasci emailed Eichengrun and Sterling a consent to change attorney to substitute Dribusch in the place of defendants as the attorney of record in the foreclosure action. The consent to change attorney was executed only by Panasci and was never filed with the court in the foreclosure action. On or about November 30, 2016, Dribusch filed a petition in Bankruptcy Court, thereby staying the foreclosure action. In February 2017, Eichengrun, on behalf of Green Oak, retained defendant Tully Rinckey, PLLC to replace Dribusch as the attorney of record in the bankruptcy proceeding. The retainer agreement limited Tully Rinckey’s representation to preparing a bankruptcy petition and related schedules and did not include any service for appeals, postjudgment work or matters other than the bankruptcy proceeding. Tully Rinckey then filed a reorganization plan, which maintained a stay of the foreclosure action. Bankruptcy Court, however, ultimately rejected it. NBC then moved to lift the stay and, on May 18, 2017, Bankruptcy Court granted NBC’s motion. On June 1, 2017, NBC served a notice of sale on Young/Sommer indicating that the subject property would be sold on June 22, 2017. Panasci reviewed the notice and placed it in his file, but he did not notify anyone of it.

Shortly after the lifting of the stay, an attorney with Tully Rinckey advised Eichengrun that, other than filing [*2]a notice of appeal with respect to the May 2017 order to preserve appellate rights, Tully Rinckey would not perfect the appeal or perform any other appellate work absent another retainer agreement. Tully Rinckey did file a notice of appeal, and Eichengrun contemplated a further engagement with Tully Rinckey for appellate work. In the meantime, Eichengrun also asked an attorney at Tully Rinckey if there had been a notice of sale and if Tully Rinckey could inquire about it. A second retainer agreement between Green Oak and Tully Rinckey for appellate work in the bankruptcy proceeding was eventually entered into on June 26, 2017. The subject property, however, had already been sold on June 22, 2017. NBC ultimately sought confirmation of the sale and, in November 2017, a deficiency judgment was entered against Sterling. Green Oak thereafter moved to vacate the sale of the subject property, but the motion was denied.

A legal malpractice claim requires, among other things, the existence of an attorney-client relationship between the client and the attorney (see Maddux v Schur, 16 AD3d 873, 874 [3d Dept 2005]; Tabner v Drake, 9 AD3d 606, 609 [3d Dept 2004]). Defendants argue that they did not have an attorney-client relationship with plaintiffs at the time that the June 2017 notice of sale was served and, therefore, cannot be liable for failing to advise plaintiffs about such notice. In that regard, defendants argue that their attorney-client relationship with plaintiffs terminated when the judgment of foreclosure and sale was entered and when bankruptcy proceedings on plaintiffs’ behalf were commenced. We disagree. First, the consent to change attorney did not comply with the requirements [*3]of CPLR 321 (b) (1) given that only Panasci executed it and the consent was never filed with the appropriate court clerk. In view of this failure, and in the absence of a court order discharging defendants as the attorneys of record in the foreclosure action, defendants continued to represent plaintiffs in that action and their authority as the attorneys of record continued unabated (see GMAC Mtge., LLC v Galvin, 184 AD3d 750, 750-751 [2d Dept 2020]; Hess v Tyszko, 46 AD2d 980, 980 [3d Dept 1974]). Second, the record reflects that, following the entry of the judgment of foreclosure and sale, the December 2016 notice of sale was served upon Panasci, and Panasci advised Eichengrun about options to pursue with regard to that judgment and notice. The June 2017 notice of sale was also served upon Young/Sommer and, in his deposition testimony, Panasci confirmed that, at that time, he was the attorney of record for Green Oak and Sterling. Additionally, Young/Sommer billed Eichengrun for work in connection with NBC’s motion for a deficiency judgment, and Panasci submitted a letter to the court in the foreclosure action regarding that motion. Third, under the circumstances of this case, the commencement of a bankruptcy proceeding and the listing of Young/Sommer as a creditor in the bankruptcy petition did not terminate the attorney-client relationship as a matter of law. Accordingly, defendants failed to show that their attorney-client relationship with plaintiffs was severed following the entry of the judgment of foreclosure and sale and the commencement of the bankruptcy proceeding.

As to the merits of the legal malpractice claim, defendants do not contest Supreme Court’s finding that their failure to notify Eichengrun about the June 2017 notice of sale constituted negligence. Rather, they contend that plaintiffs cannot establish that such negligence was a proximate cause of the alleged damages. “To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer’s negligence” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007] [citations omitted]; see Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 49-50 [2015]). That said, defendants’ argument centers on the notion that plaintiffs had to prove that they could have obtained a stay pending an appeal of the May 2017 order in the bankruptcy proceeding and that they would have been successful on such appeal. This argument, however, focuses on Tully Rinckey’s actions. Although defendants point to Tully Rinckey’s purported failures in the bankruptcy proceeding, even assuming that Tully Rinckey bore some liability due to those failures, such fact does not necessarily preclude a finding that defendants’ negligence was a proximate cause of plaintiffs’ claimed damages. In this regard, there can be more than one proximate cause of an alleged injury (see Grant v Nembhard[*4], 94 AD3d 1397, 1399 [3d Dept 2012]). Defendants seemingly attempt to deflect the blame to Tully Rinckey, but they cannot completely absolve themselves from liability when they do not explain how the failure to notify Eichengrun of the June 2017 notice of sale did not proximately cause plaintiffs’ alleged injuries or how Tully Rinckey’s actions were the sole proximate cause of those injuries.”

Rothstein v Krane LLP 2024 NY Slip Op 30016(U) January 3, 2024 Supreme Court, New York County Docket Number: Index No. 157694/2017 Judge: Gerald Lebovits is that very rare species of summary judgment in a legal malpractice case in favor of plaintiff.

“On motion sequence 001, defendant Michael Steger moves, pursuant to CPLR 3212, for summary judgment dismissing the complaint against him in this action for professional malpractice and breach of contract. On motion sequence 002, plaintiff, Michael Rothstein, moves, pursuant to CPLR 3212, for summary judgment on the complaint; and defendants Krane LLP and Steven S. Krane cross-move, pursuant to CPLR 3212, to dismiss the complaint.
Motion Sequences 001 and 002 are consolidated for disposition. Steger’s summary judgment motion (mot seq 001) is granted. Plaintiff’s summary-judgment motion (mot seq 002) is granted only with respect to liability on his malpractice claim against defendants Krane LLP and Krane, and is otherwise denied. Krane LLP/Krane’s cross-motion for summary judgment (mot seq 002) is granted only with respect to plaintiff’s breach-of-contract claims against them, and is otherwise denied.”

“On March 31, 2015, plaintiff retained Steger Krane LLP to represent him in an
investment opportunity with nonparty Shane Dax Taylor and/or Isolation Film LLC
(“Isolation”), an entity formed to produce a film project (see Engagement Letter, NYSCEF Doc. No. 48). Thereafter, Taylor, Isolation’s managing member, executed a promissory note, dated April 6, 2015, pursuant to which he agreed to repay plaintiff the principal amount of $150,000.00, plus 25% interest, for a total of $187,500.00, by October 1, 2015 (see Promissory Note, NYSCEF Doc. No. 60). Plaintiff and Isolation also executed a film financing agreement, dated April 7, 2015 (see Film Financing Agreement, NYSCEF Doc. No. 60). The agreement, among other things, memorialized the promissory note (id.). In addition, Taylor executed a guaranty, dated April 8, 2015, unconditionally guaranteeing repayment of the $150,000.00 loan, plus 25% interest (see Guarantee, NYSCEF Doc. No. 60).

Isolation failed to repay the loan timely, with interest (see Complaint, NYSCEF Doc. No.
1, supra). On March 16, 2016, plaintiff retained Steger Krane LLP to represent him in the loan dispute with Isolation and Taylor (as guarantor) (see Engagement Letter, NYSCEF Doc. No. 55). Thereafter, plaintiff commenced an action (Rothstein v Isolation, Sup Ct, NY County, Index No. 152589/2016) to recover the $187,500.00 due under the promissory note (see Complaint, NYSCEF Doc. 71). Defendants in that action successfully removed the action to federal court, based on diversity jurisdiction, and made a written offer to settle the action (see Email, NYSCEF Doc No. 72), which, plaintiff contends, defendants advised him to decline. The federal court eventually granted the defendants’ motion to dismiss the action “on the ground that the contract is void because the interest rate on the loan was criminally usurious” (Judgment, NYSCEF Doc. No. 76). Plaintiff asserts that defendants failed timely to reargue or appeal the judgment, and specifically advised him that a motion to reargue or an appeal would be futile.”

Plaintiff commenced this action against defendants to recover for the loss of his investment (see NYSCEF Doc. No. 1, supra). The complaint alleges claims for professional malpractice (first cause of action) and breach of contract (second cause of action) against defendants (id.). Plaintiff essentially claims that defendants committed professional malpractice and breached the retainer agreement by allowing him to enter into a loan agreement deemed by a federal district court to be criminally usurious, rendering plaintiff unable to collect under a loan agreement that had been prepared by defendants (id.). Plaintiff seeks to recover $150,000.00, the principal amount due under the loan agreement, promissory note, and guaranty, plus $37,500.00 in interest due as of October 21, 2015, and $52,500.00 for attorney fees and costs (id.).”

“Krane and Krane LLP acknowledge representing plaintiff in the film financing
transaction with Isolation and Taylor, but argue that plaintiff’s special financial relationship with Taylor, prior financial dealings, and unlawful financial dealings with Isolation and Taylor warrant dismissing plaintiff’s claims. Defendants also assert that Taylor dictated the terms, covenants, and conditions of the promissory note to plaintiff, who subsequently dictated the terms to Krane, without his input about any inherent legal issues. Defendants further assert that Krane prepared the promissory notes, film financing agreement, and personal guaranty according to those terms, and that plaintiff was not interested in any input, comment, or suggestion about
the substance of the documents. Krane insists that he was never asked for a legal opinion in connection with the promissory note, film financing agreement, or guaranty.

Krane’s failure to draft documents for the film financing transaction that were not
usurious reflects a failure to exercise the care, skill, and diligence commonly possessed and exercised by an ordinary member of the legal community (see Theresa Striano Revocable Trust v Blancato, 71 AD3d 1122, 1124 [2d Dept 2010] [holding that an attorney’s reliance on the advice of another’s attorney in lieu of reviewing usury statutes himself “reflects a failure to exercise ordinary reasonable skill”]). A professional-malpractice claim “may be based upon the creation of a loan document which is usurious and does not fall under any exceptions to the law of usury” (DeStaso v Condon Resnick, LLP, 90 AD3d 809, 812 [2d Dept 2011]). Plaintiff established, prima facie, that Krane and Krane LLP acted negligently with respect to the usury issue.

Furthermore, defendants’ negligence regarding the usury issue proximately caused the
dismissal of plaintiff’s action to recover the amount allegedly due under the loan agreement, promissory note, and guaranty in the film financing transaction. Thus, plaintiff has met his burden of establishing entitlement to summary judgment as to liability on his claim for professional malpractice against Krane and Krane LLP.

Defendants fail to provide any evidence to establish the existence of material issues of
fact that require a trial on the issue of liability for the professional malpractice, or to warrant judgment in favor of defendants. Even assuming that plaintiff dictated the terms of the documents for the transaction, a review of the relevant statutes would have revealed that the proposed loans did not fall under any usury exceptions (see id.). Thus, the branch of plaintiff’s motion that seeks summary judgment on the issue of liability for professional malpractice against Krane and Krane LLP is granted, and the matter is referred to a special referee to hear and report on the issue of plaintiff’s damages due to the malpractice of Krane and Krane LLP.”