Legal malpractice is ubiquitous, and yet, prone to many hurdles.  Here, in  HOURANEY,  -against- BURTON & ASSOCIATES, P.C. and BERNARD BURTON,08-CV-2688 (CBA)(LB);   UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK; 2011 U.S. Dist. LEXIS 17046; February 21, 2011, Decided we see the plaintiff pro-se lose on summary judgment for lack of standing, and lack of proofs. 
 

Standing is lacking, because plaintiff retained defendants as a LLC.  Now the LLC is dissolved.  Typically, we guess, it is because the member no longer wants to or has paid state taxes for a LLC which is not doing business.  However, we don’t know why.  From the decision:

"Houraney first objects [*3] to the Magistrate Judge’s determination that he did not have standing to plead a cause of action alleging malpractice against NE Holding. Houraney argues that his right to self-representation is guaranteed; however, Houraney appears to misapprehend the finding of the R&R. Although it is true that Houraney, who is not admitted to practice law, could not represent NE Holdings on his own, see Lattanzio v. COMTA, 481 F.3d 137, 139-40 (2d Cir. 2007) (per curiam), the Magistrate Judge did not hold that Houraney had no right to representation. Instead, the Magistrate Judge held that Houraney had no standing to pursue a claim alleging wrongs to the corporation.

Limited Liability Companies (LLCs) are distinct legal entities. If the defendants committed malpractice against NE Holdings, that is a wrong committed against the LLC, not to Houraney himself. Thus, "[u]nder New York law, ‘an individual shareholder has no right to bring an action in his own name and in his own behalf for a wrong committed against the corporation, even though the particular wrong may have resulted in a deprecation or destruction of the value of his corporate stock.’" Solutia Inc. v. FMC Corp., 385 F. Supp. 2d 324, 331 (S.D.N.Y. 2005) [*4] (citing Fifty States Mgmt. Corp. v. Niagara Permanent Sav. & Loan Assoc., 58 A.D.2d 177, 179, 396 N.Y.S.2d 925, 927 (4th Dep’t 1977)). The rule is applied with equal force to Limited Liability Companies (LLCs), like NE Holdings. Solutia, 385 F. Supp. 2d at 331 n.1.

Houraney argues that he has standing because the company has dissolved, citing New York Limited Liability Company Law § 703(b). That provision reads: "[u]pon dissolution of a limited liability company, the persons winding up the limited liability company’s affairs may, in the name of and for and on behalf of the limited liability company, prosecute and defend suits, whether civil, criminal or administrative . . . ." However, Houraney is not prosecuting this action in the company’s name, but in his individual capacity. The Magistrate Judge was correct, therefore, in determining that Houraney does not have standing in his individual capacity to pursue a cause of action alleging malpractice against NE Holding.

Houraney next objects to the Magistrate Judge’s finding that plaintiff failed to allege facts to demonstrate how defendants’ alleged conduct caused the plaintiff harm. As the Magistrate Judge explained, to succeed on a [*5] legal malpractice claim under New York law, a plaintiff must "plead specific factual allegations establishing that but for counsel’s deficient representation, there would have been a more favorable outcome to the underlying matter." Dweck Law Firm LLP v. Mann, 283 A.D.2d 292, 293, 727 N.Y.S.2d 58 (1st Dep’t 2001).

The Magistrate Judge found that Houraney had failed to adequately plead causation. Houraney does not object to that determination, which is itself dispositive of Houraney’s claim. Instead, Houraney argues that the defendants breached various cannons of legal ethics. Alleging an ethical violation, however, does not relieve plaintiff of the requirement of proving causation. Schwartz v. Olshan Grundman Frome & Rosenzweig, 302 A.D.2d 193, 199, 753 N.Y.S.2d 482 (4th Dep’t 2003) ("The violation of a disciplinary rule does not, without more, generate a cause of action."); see also The William Kaufman Organization Ltd. V. Graham & James LLP, 269 A.D.2d 171, 173, 703 N.Y.S.2d 439 (1st Dep’t 2000); Kyle v. Heiberger & Associates, P.C., 25 Misc. 3d 1218A, 901 N.Y.S.2d 907 (N.Y. Sup. Ct. 2009) (explaining in claim for legal malpractice that "[w]here, as here, plaintiffs do not sufficiently allege the elements [*6] of the claim, dismissal is properly granted-even if there were allegations of ethical violations, and negligence"). Plaintiff cites to Lipton v. Boesky, 110 Mich. App. 589, 313 N.W.2d 163 (Mich. Ct. App. 1981); however, the Court applies New York, not Michigan law in this action."

 

Mortgages have been with us since the middle ages.  One might not expect a legal malpractice case to arise over the filing of a garden or varietal mortgage, yet…

In U.S. Bank Natl. Assn. v Stein ; 2011 NY Slip Op 01457 ; Decided on February 22, 2011 ; Appellate Division, Second Department we see not one, but two different law firms sued for legal malpractice.  "The plaintiff, represented by Steven J. Baum, P.C., and Steven J. Baum, commenced an action against, among others, Alan C. Stein, Gastwirth, Mirsky & Stein, LLP, and Law Office of Alan C. Stein, P.C. (hereinafter collectively the Stein defendants), to recover damages for, inter alia, legal malpractice in connection with the recording of a certain mortgage. The Stein defendants, who had previously represented the plaintiff’s predecessor in interest, commenced a third-party action against Steven J. Baum, P.C., and Steven J. Baum for contribution and/or indemnification. Subsequently, the third-party defendants moved pursuant to CPLR 3211(a)(7) to dismiss the third-party complaint. The Supreme Court, among other things, denied that branch of the motion which was to dismiss the third-party complaint insofar as asserted against Steven J. Baum, P.C. We affirm the order insofar as appealed from. " "The Supreme Court properly determined that the Stein defendants stated a cause of action against the third-party defendant Steven J. Baum, P.C., by asserting, among other things, that Steven J. Baum, P.C., failed to timely correct the legal errors allegedly committed by the Stein defendants in their representation of the plaintiff’s predecessor in interest, despite having sufficient time and an opportunity to do. The third-party complaint alleged sufficient facts which, if true, would establish that Steven J. Baum, P.C., may be liable to the Stein defendants for causing or contributing to the plaintiff’s alleged damages (see Schauer v Joyce, 54 NY2d 1, 6; see also Frederick v Meighan, 75 AD3d 528, 532). "

 

Attorneys can easily be substituted in and out of cases, and personal injury matters are no exception.  When client goes from attorney 1 to attorney 2 to attorney 3 the outlook for the case may sometimes be good, and in this case bad.  Client was involved in a car accident, and hired attorney 1 to handle the case.  Attorney 1 did so, but apparently never looked to see who owned the car.  Owner was a rental car company, with apparent unlimited liability and assets.  Attorney 2 takes over the case and finds out at a deposition that defendant did not own the car.  Attorney 2 takes their time and does nothing.  Attorney 2 is substituted out and Attorney 3 immediately makes a motion to add the owner.  Attorney 3 does not succeed.  is there a good cause of action against attorney 2?  The statute of limitations is long over for attorney 1.  Answer ?  No.  in Snolis v Clare
2011 NY Slip Op 01455 ; Decided on February 22, 2011 ; Appellate Division, Second Department
the Court writes:

"The plaintiffs failed to demonstrate their prima facie entitlement to judgment as a matter of law because they failed to establish that any negligence on the part of the defendants in failing to move for leave to amend the complaint in the personal injury action to add the owner as a defendant, immediately upon learning of the owner’s identity, was the proximate cause of their alleged damages (see Greene v Sager, 78 AD3d 777; Erdman v Dell, 50 AD3d 627; see also Buran v Coupal, 87 NY2d 173, 180; Flederbach v Fayman, 57 AD3d 474). Accordingly, the Supreme Court properly denied the plaintiffs’ motion.

The Supreme Court improvidently exercised its discretion in denying, as untimely, that branch of the defendants’ cross motion which was for summary judgment dismissing the complaint insofar as asserted against them. While the defendants’ cross motion was made more than 120 days after the note of issue was filed and, therefore, was untimely (see Brill v City of New York, 2 NY3d 648), an untimely cross motion for summary judgment may be considered by the court where, as here, a timely motion for summary judgment was made on nearly identical grounds (see Grande v Peteroy, 39 AD3d 590, 592; Lennard v Khan, 69 AD3d 812, 814; Bressingham v Jamaica Hosp. Med. Ctr., 17 AD3d 496, 497). In such circumstances, the issues raised by the untimely cross motion are already properly before the court and, thus, the nearly identical nature of the grounds may provide the requisite good cause (see CPLR 3212[a]) to review the merits of the untimely cross motion (see Grande v Peteroy, 39 AD3d at 592). Notably, a court, in deciding the timely motion, may search the record and award summary judgment to a nonmoving party (see CPLR 3212[b]).

The defendants demonstrated their prima facie entitlement to judgment as a matter of law dismissing the legal malpractice cause of action insofar as asserted against them by demonstrating that any negligence on their part did not proximately cause the plaintiffs’ alleged damages (see Von Duerring v Hession & Bekoff, 71 AD3d 760). It is true that the more than one-year delay in moving for leave to amend the complaint in the personal injury action to add the owner as a defendant, which was attributable to the defendants’ failure to seek that relief, prejudiced the owner and, thus, was a sufficient basis for denying the motion for leave to amend the complaint in the personal injury action (see Snolis v Biondo, 21 AD3d 546). However, the defendants demonstrated that even if they had expeditiously made such a motion in April 2003, immediately upon learning of the owner’s identity, the motion could not have been granted. "
 

 

"Medicine is an art and not a science" is a phrase heard at every medical malpractice case, often in summation.  This is a folksy restatement of the judgment principal.  In law it’s slightly different.  An attorney may not be held responsible in legal malpractice for a choice of reasonable strategy, even when its a loser. 

in Rodriguez v Lipsig, Shapey, Manus & Moverman, P.C. ; 2011 NY Slip Op 01346 ; Decided on February 22, 2011 ; Appellate Division, First Department we see one application of the rule.  Here it was a choice of what evidence to place before the arbitrator in a Motor Vehicle arbitration.
 

"Defendant established its entitlement to judgment as a matter of law by demonstrating that the associate who represented plaintiffs in the underlying arbitration was pursuing a reasonable strategy in not submitting repair bills and photographs that depicted damage consistent with the uninsured driver’s testimony (see Noone v Stieglitz, 59 AD3d 505 [2009]; Iocovello v Weingrad & Weingrad, 4 AD3d 208 [2004]). In opposition, plaintiff failed to raise a triable issue of fact. Plaintiff’s argument that the damage depicted in the photographs would [*2]have led the arbitrator to conclude that the uninsured driver was speeding, is insufficient speculation (see Alter & Alter v Cannella, 284 AD2d 138, 139 [2001]; John P. Tilden, Ltd. v Profeta & Eisenstein, 236 AD2d 292 [1997]). "

This would be the place for a witty take-off on an American Express ad, playing off the "Don’t leave home without…"  This however, is a story of how a foreclosure case started, went to judgment, and then unraveled.  Attorneys are found to have violated professional standards, and American Express has no attorney in the fight. 

In American Express,  v. Charles Nath, Defendant, 22507/07 ;Civil Court, Richmond County
Judge Philip S. Straniere writes:

"Plaintiff, American Express, commenced this action against the defendant, Charles Nath, alleging that the defendant owed for charges incurred on his credit card. Defendant defaulted in appearing and answering and on January 24, 2008 a default judgment was entered against the defendant in favor of American Express in the amount of $11,794.01 which included interest, costs and disbursements. Plaintiff was represented by Mel Harris & Associates, LLC in this litigation.

As the defendant did not have an attorney, the case appeared on the trial calendar for self-represented individuals initially on January 26, 2010. It was adjourned to May 4, 2010, October 5, 2010 and then to February 8, 2011. On February 8, 2011, counsel for Mel Harris & Associates, LLC appeared and informed the court that they were no longer counsel for the plaintiff. As a result of that, the court on the second call of the calendar, dismissed the plaintiff’s action and issued an order vacating the default and permanently lifting any stays and restraining notices previously served on his bank accounts or garnishments served upon his employer.

A review of this file revealed several substantial problems. First, there is no record

*2

of an assignment of the judgment from American Express to LR Credit 14,LLC. If no such assignment had been made and the clerk made an error in the caption, then why was there no attempt by anyone on behalf of the plaintiff to correct the court file? Discussion with the parties at the bench leads to the conclusion that American Express is the proper plaintiff and the parties were proceeding with that as the fact. An order was subsequently issued directing the clerk to correct the paperwork in the file to eliminate LR Credit 14, LLC as the plaintiff.

Second, no matter which is the correct entity to be designated as plaintiff, Mel Harris & Associates, LLC, is listed as the attorney of record. There is nothing in the file to indicate that Mel Harris is no longer counsel. If that law firm has been relieved as attorney of record, some notice should have been given to the court and to the defendant. Although it is a common practice in the consumer debt industry to sell delinquent accounts faster than George Steinbrenner would send a rookie pitcher back to the minors after one bad outing, no such right exists for attorneys.
 

 

A French artist wants to buy an apartment in New York for a studio and living space. So far, this could be the start of a fairy tale in which the artist comes to NY, works hard, triumphs,  etc.  But, this real estate transaction soon turned to legal malpractice litigation.  One reason for the problems is that the artist nominated another to take care of the transaction, a second reason is that the attorney seems to have done not much work.

In Ehrenhalt v Kinder; 2011 NY Slip Op 30375(U); February 15, 2011; Supreme Court, New York County ;Judge: Martin Shulman we see how things went bad:

"At the time she signed the contract, Shapolsky tendered the contract deposit of $85,000 directly to Kinder. Paragraph 3(i) of the contract confirms the foregoing and provides for plaintiff to pay an additional $20,000 on July 20, 2008, which she did, for a total contract deposit of $1 05,000. The unit required extensive renovation and/or repairs as reflected in a work rider attached to the contract. Kinder undertook to perform such work prior to closing. To finance this work, the contract provides for the immediate release of the contract deposit to defendant Max Management LLC (“Max LLC”).’ Thereafter, pursuant to a separate oral agreement of unspecified date, Ehrenhalt paid additional funds to Kinder- and/or Max LLC in the total amount of $28,597.45 for further renovations not indicated in the contract and not included in the purchase price (the “additional work”).‘  It appears Mehl ordered a title report pertaining to the unit on or about July 11 , 2008 and received it on or about July 24, 2008 (see Exh. 8 to Motion). The title report revealed that co-defendant Maxcine Holder (“Holder”) owned the unit, rather than Kinder, and further revealed the existence of two outstanding mortgages; an outstanding judgment of foreclosure; a lien for unpaid common charges; tax liens; and a certificate of occupancy designating the unit as a doctor’s office (hereinafter collectively referred to as the “title defects” or “title issues”). The total amount of liens exceeded the balance of the purchase price due,

Understandably, the foregoing title defects delayed any possible closing."

"Turning to defendant’s conduct after he learned of the title defects, as stated in Logalbo v Plishkiii, Rubano & Baum, supra: While the issue of whether certain conduct constitutes legal malpractice
normally requires a factual determination to be made by a jury . . , , a plaintiff will be entitled to summary judgment in a case where there is no conflict at all in the evidence, the defendant’s conduct fell below any permissible standard of due care, and the plaintiff’s conduct was not really
involved (citations omitted). Here, once he learned of the title defects, Mehl alleges only that he spoke to Kinder’s closing attorney about these issues and was assured they would be resolved prior to closing. He also vaguely alleges he spoke to plaintiff numerous times about the title
defects and she repeatedly indicated her willingness to proceed to closing once title was clear. However, Mehl gives no indication when he spoke to plaintiff or what he claims to have told her, nor does he refute plaintiffs claim that the earliest correspondence documenting such discussions is dated December 2008 (Exh. 15 to Motion), months after plaintiff had already paid $1 33,597.45 to Kinder As to this claim, defendant does not meet his burden of refuting plaintiff’s entitlement to summary judgment as to liability. This court finds that defendant’s failure to advise plaintiff of the title defects immediately upon learning of same was a breach of his professional duty as a matter of law and that this negligence was a proximate cause of at least a portion of plaintiffs’ damages, the amount of which will be determined at trial."

Jousting with the landlord over rent stabilized apartments is a uniquely NYC type of activity. Violations of the rent-stabilization laws may lead to treble damages, and tenants routinely litigate over the actual v. statutory rent, whether there has been an illegal rent increase, and over violations.

Here, in Kyle v. Heiberger, NY Slip Op 32409(u) we see how the process can linger and sometimes go off the rails. Tenant was successful, and eventually obtained a $ 21,000 or so judgment against the landlord in litigation that lasted from 2002 – 2007. That litigation and the legal malpractice case it spawned reached New York and Bronx Counties, took place in L & Court, included two Article 78 cases, and ended up in Supreme Court, Bronx County where the legal malpractice case was recently dismissed.

The legal malpractice case is against Ronald Hart who represented plaintiff from 2002-2007. The gist of this case is that he won the L & T case after much procedural wrangling, and sought attorney fees from the landlords, as plaintiff was permitted. Those legal fees were said to be in the vicinity of $ 426,000. Eventually the landlord agreed to pay $ 190,000 which ended the dispute with a stipulation. Shortly thereafter, tenant started its attempts to vacate the stipulation.

The theory against the attorney was that he settled the case and then withdrew in favor of successor attorney, and breached his fiduciary duty. Defendant Heiberger & Associates PC is a later successor attorney and is now a defendant.

The breach of fiduciary duty claim was dismissed by Supreme Court, on the basis that no damages could be demonstrated, and that when a breach of fiduciary duty claim is based upon the legal malpractice [rather than, for example, a disgorgement of fees for overbiling], then one must demonstrate the "but for" aspect of legal malpractice. Citing Kurtzman v. Bergstol, 40 AD3d 588 (2d Dept,2007) the court held: In order to establish a breach of fiduciary duty, a plaintiff must prove the existence of a fiduciary relationship, misconduct by the defendant, and damages that were directly caused by the defendant’s misconduct."

 

The decision doesn’t tell us in what capacity the attorneys represented the client, but they are now in suit over legal fees, with a legal malpractice counterclaim. As we read this case, we wondered whether the time and effort was worth it. Will there ever be a collection of fees?

in Bender, Jenson & Silverstein, LLP v. Walter ; 2009 NY Slip Op 08572 ; ;Appellate Division, Second Department the attorney is seeking fees. Defendant-counterclaimant asked the court to "assign counsel", a sure sign that the client has few funds. The Court declined, and the Appellate Division determined that "on the Court’s own motion, the appeal from the first order dated June 6, 2008, is dismissed, on the ground that no appeal lies as of right from an order that does not affect a substantial right of the appealing party (see CPLR 5701[a][2][v]), and we decline to grant leave to appeal." Next, the court looked at plaintiff’s claim that she could not afford photocopies.
 

The balance of the decision covers a frequent situation in pro-se representation; getting tangled up in discovery problems. "The plaintiff sought to recover its fee for legal services provided to the defendant, who asserted counterclaims sounding in legal malpractice. In response to the plaintiff’s requests for the production of documents, the defendant claimed to be without financial resources to photocopy the requested documents and refused to produce them, in spite of the plaintiff’s offer to bear the cost of photocopying. [*2]

Since the defendant failed to establish that she made any effort to comply with the plaintiff’s repeated discovery requests, the Supreme Court properly considered her lack of cooperation to be willful and contumacious, and properly conditionally granted the plaintiff’s motion to preclude her from introducing the requested documents in evidence (see Kihl v Pfeffer, 94 NY2d 118; D’Aloisi v City of New York, 7 AD3d 750; Brooks v City of New York, 6 AD3d 565; Donovan v City of New York, 239 AD2d 461; cf. Scardino v Town of Babylon, 248 AD2d 371).

In light of the defendant’s noncompliance with discovery, the Supreme Court properly denied her motion to quash certain subpoenas which had been served on nonparty witnesses

 

How often it happens that plaintiff learns of mistakes his prior counsel made, but only years later.  Years is the operative word here, as the statute of limitations for legal malpractice is 3 years.  So what happens when the attorney lets plaintiff’s claim lapse, more than three years goes by, and plaintiff then learns of it?  Plaintiff loses. 

Here, inMorrison Cohen LLP v Parrish ;  2011 NY Slip Op 30354(U);  February 9, 2011; Supreme Court, New York County; Docket Number: 115815/07; Judge: Joan A. Madden the court for a second time denies plaintiff’s motion because too much time has passed.

"In support of the instant motion, defendant attempts to address the statute of limitations issue, by alleging that he did not discover the malpractice until after he terminated plaintiff’s representation. It is well settled, however, that a cause of action for legal malpractice accrues when the malpractice is committed, and not when it is discovered by the client. &g Shumskv v, Eisenstein, 96 NY2d 164, 16 6 (200 1); Wangoner v. Caruso, 68 AD3d 1 , 6 (lst Dept 2009), aff’d 14 NY3d 874 (2010). Under the doctrine of continuous representation, the statute of limitations is tolled while representation on the same matter in which the malpractice is alleged is ongoing. -See Shumsky v. Eisenstein, D uane Morris LLP v. Astar Hold-. Inc., 61 AD3d 418 ( lst Dept 2009). That doctrine, however, does not save defendant’s legal malpractice defense or counterclaim, as it is undisputed that plaintiff rendered no legal services to defendant after March 2004."

 

In this particular case it is a mortgage broker’s work, and the attorney may not get (or keep) legal fees for the work.  In Patricia Dell’Olio, Claimant v. Law Office of Charles S. Spinardi P.C., Defendant, SCR 1199/10;  Civil Court, Richmond County;  we see on way in which an attorney who is doing transactional work is re-case as an unlicensed mortgage broker and required to return legal fees.

"The facts of this case are similar in many respects those in Timofeyev v. Palant & Shapiro, 2010 WL 4904685, 2010 NY Slip Op 20484 (2010). The court will not recite here the detailed analysis presented in that case. In Timofeyev the court made the finding that if the client seeks that attorney’s legal advice in regard to a mortgage foreclosure or modification of an existing mortgage, a written retainer is required under the Rules of Professional Conduct (Rule 5.7). The facts of this case indicate that the claimant sought advice from the defendant because he was an attorney. Therefore, a written retainer was required.

A review of the retainer agreement discloses that the services proposed to be rendered are not legal in nature. As pointed out in Timofeyev negotiation and modification of mortgage and similar services are not legal services, they are services a mortgage broker performs and as such a person providing those functions must be licensed pursuant to Banking Law Article 12-D. The expertise of an attorney is necessary at a closing or for the reviewing of mortgage commitment documents where the legal implications of the terms of the loan need to be explained, but negotiation of the terms of a standard home mortgage is not legal services. The documents are on forms dictated by a governmental agency and are uniform so as to assist the sale of the debt in the secondary mortgage market. Does anyone really think that an attorney representing a borrower could negotiate a change in the terms of a preprinted note and mortgage? And that such a request would receive the answer "If you don’t like it, don’t close." Negotiation of the amount borrowed, the interest rate and the length of the loan does not require an attorney- a fact recognized by New York in its licensing of mortgage bankers and brokers. A description of the services rendered by the defendant discloses that they are not legal in nature. Obtaining documentation as to a clients income and expenses with supporting documentation does not require a law degree. Defendant was not in the business of providing mortgage modification assistance incidental to the practice of law which would constitute an exception to the licensing requirement. He was engaging in the mortgage modification business as a vocation and needs to be licensed in that regard. There is no indication that this defendant has such a license as it is not disclosed any where in the retainer."

"Second, it is difficult to understand what legal services it is contemplated the defendant will be rendering to the claimant. The agreement specifically excludes from the scope of the retainer "the filing of pleadings relating to a mortgage foreclosure defense or a Bankruptcy Petition." These legal services require a separate retainer subject to the charging of additional attorney fees. In spite of not being retained to defend the mortgage foreclosure, although that is the specific reason the claimant contacted the defendant, the defendant submitted an "affirmation of actual engagement" to the Supreme Court, Richmond County indicating he represented the defendants, "Patricia Del Olio a/k/a/ Feliciano and Fred Del Olio"[sic] in the litigation commenced by Richmond County Savings Bank (Index # 131651/09) against them for foreclosure of their mortgage."