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."

Client selection is a fine art, and one in which every attorney must apprentice.  Select the right client – with a good cause of action and of a sane temperament – and all may go well.  Select the wrong client, and a world of abuse and possibly legal malpractice litigation may follow.

Breytman v Schechter ;2011 NY Slip Op 50125(U) ;Decided on February 8, 2011 ;Supreme Court, Kings County ;Schack, J. is one of those cases which end with the Judge ordering that the plaintiff may not file any more papers except with the approval of the administrative judge.  Of course, it gets worse than that.
 

"SCHECHTER, on the next day, advised plaintiff BREYTMAN that he would seek to be relieved. Plaintiff responded with a rambling letter, dated November 31, 2006 [sic], repeatedly accusing SCHECHTER of senility and incompetence, and then in larger print and boldface stating "YOU ARE FIRED" [exhibit D of motion]. Thereafter, on December 7, 2006, plaintiff BREYTMAN served SCHECHTER with a "Notice with Motion to Compel and Cease and Desist," in which he advised SCHECHTER that he would proceed pro se and requested the file and "privileged material" [exhibit E of motion]. Typical of Breytman’s abusive behavior is a letter, dated January 2, 2007 [p. 148 of 209 pages attached to February 25, 2009 order to quash the subpoena of December 5, 2008, in Kings County Clerk Minutes for Kings County, Supreme Court Index No. 2423/06, ALEXANDER BREYTMAN v OLINVILLE REALTY LLC and WEINER REALTY], from BREYTMAN to SCHECHTER, in which BREYTMAN called SCHECHTER, among other things, "incompetent habitual liar," "pure Asshole " and "cretin."

Justice Karen Smith of Supreme Court, New York County, on March 7, 2007, issued a decision and order [exhibit F of motion], in which she: consolidated the two actions; dismissed all malicious prosecution claims; and, permitted the false arrest claim to proceed against the landlord and the building superintendent. Justice Smith, in a separate order the same day, March 7, 2007, relieved SCHECHTER as counsel for plaintiff BREYTMAN. Subsequently, while [*4]plaintiff proceeded as a pro se litigant, the remaining false arrest claim against the non-city defendants was dismissed [exhibit 1 of cross-motion].

Despite being relieved as BREYTMAN’s counsel, SCHECHTER’s contact with BREYTMAN, as well as BREYTMAN’s abusive conduct toward SCHECHTER, did not end. SCHECHTER had the entire file photocopied and available for plaintiff. Plaintiff wanted the original file, despite being informed by Justice Milton Tingling, to whom the case had been reassigned in Supreme Court, New York County, that he was only entitled to a copy of the file. SCHECHTER explained, in ¶ 30 of his affidavit in support of the motion, that "[w]hile I had offered to provide plaintiff with a copy of the file, I did not want to provide him with the original out of concern that he might alter the original documents. In proceedings before the court in the underlying actions, plaintiff submitted copies of my letters which left out words and sentences or were otherwise altered."

On December 5, 2008, long after SCHECHTER provided BREYTMAN with a copy of the file, BREYTMAN served SCHECHTER with a subpoena for the original file, in connection with another of his pro se actions against the landlord, ALEXANDER BREYTMAN v OLINVILLE REALTY LLC and WEINER REALTY, Supreme Court, Kings County, Index No. 2423/06 [exhibit G of motion]. Then, SCHECHTER served an order to show cause [OSC], dated December 12, 2008, to quash the subpoena and for a protective order [exhibit H of motion]. In his affirmation in support of the OSC, SCHECHTER pointed out how BREYTMAN altered documents to place SCHECHTER in a bad light and spent $1,091.34 to have the entire file copied for BREYTMAN. Then, BREYTMAN, in a letter to SCHECHTER, dated December 29, 2008, told SCHECHTER that he had twenty days to deliver "my property" but "[y]ou had chosen death you got no one to blame but yourself I am given another 10 days more days to deliver my property after which you fund how unwise your obtuse decision is [sic] [p. 206 of 209 pages attached to February 25, 2009 order to quash the subpoena of December 5, 2008, in Kings County Clerk Minutes for Kings County, Supreme Court Index No. 2423/06, ALEXANDER BREYTMAN v OLINVILLE REALTY LLC and WEINER REALTY]."

While this issue was pending before Justice Yvonne Lewis, BREYTMAN, in a February 18, 2008 letter to Justice Lewis [exhibit I of motion], admitted that he altered documents to redact privileged material. The same day, BREYTMAN sent a letter to SCHECHTER [exhibit J of motion] in which he told SCHECHTER "[a]s usually you are fat on your mouth short on your feet [sic]," "I will sue" and "show how incompetent you are." Justice Lewis, on February 25, 2009, granted SCHECHTER’s OSC to quash the December 5, 2008 subpoena. Further, she ordered that BREYTMAN "shall not file the same or similar applications for relief without the prior written permission of the Court."

Justice Lewis, at the February 25, 2009 oral arguments on SCHECHTER’s OSC, told plaintiff not to directly contact SCHECHTER. However, plaintiff BREYTMAN continued to directly contact SCHECHTER with motion papers [exhibit M of motion]. SCHECHTER’s counsel sent a letter to BREYTMAN, dated June 18, 2010, advising him not to directly serve SCHECHTER [exhibit K of motion]. In the February 22, 2010 preliminary conference order in the instant action, signed by myself, plaintiff was ordered "to have no contact with defendant directly [exhibit L of motion]." However, plaintiff violated my order by subsequently sending an abusive letter [exhibit N of motion] to SCHECHTER, stating "[t]ake your [threats] and your [*5]family and shove up your ass you dick. I will only serve you. I suppose [being an] asshole runs in the family. I do not recognize your family, get used to it, you ASSHOLE DICKHEAD."

Despite being ordered by Justice Lewis, on February 25, 2009, to "not file the same or similar applications for relief without the prior written permission of the Court," plaintiff commenced the instant action, by filing the summons and his rambling, disjointed verified complaint on January 23, 2010, with eight causes of action, many of them duplicative. Plaintiff seeks, according to the verified complaint: the return of the $7,500.00 retainer; the return of the $1,500.00 psychologist’s fee; $5,000,000.00 for breach of contract; $5,000,000.00 "for causing me paint and suffering [sic]"; $10,000,000.00 for punitive damages; and, the return of the original file and all copies of any material in the file. "

Billing disputes between attorneys and clients fuel the legal malpractice cycle.  Attorney seeks to enforce a bill, client responds with a legal malpractice claim, and the litigation clock starts.  Each side seeks and looks for shortcuts, or checkmates.  One checkmate, which may cut off a legal malpractice action at the beginning is the principal of account stated.

In Brooks Banker,v. Esperanza Health Systems, Ltd., , 05 Civ. 4115 (DAB) (JCF) Magistrate James C. Francis writes:
 

"To recover on a claim for an account stated under New York law, the plaintiff must show that: "'(1) an account was presented; (2) it was accepted as correct; and (3) [the] debtor promised to pay the amount stated.’" Camacho Mauro Mulholland LLP v. Ocean Risk Retention Group, Inc., No. 09 Civ. 9114, 2010 WL 2159200, at *2 (S.D.N.Y. May 26, 2010) (alteration in original) (quoting IMG Fragrance Brands, LLC v. Houbigant, Inc., 679 F. Supp 2d 395, 411 (S.D.N.Y. 2009)). A debtor’s agreement to pay can be inferred from its failure to raise a timely objection to the amount due. See Wesco Distribution, Inc. v. Anshelewitz, No. 06 Civ. 13444, 2008 WL 2775005, at *6 (S.D.N.Y. July 16, 2008). Conversely, "[a]n allegation of a timely objection to the account, whether ultimately meritorious or not, will generally defeat a summary judgment motion on an account stated." Sid Paterson Advertising, Inc. v. Giuffre Auto Group, LLC, No. 601905/05, 2007 WL 3378349, at *2 (N.Y. Sup. Ct. Oct. 29, 2007) (citing Shea & Gould v. Burr, 194 A.D.2d 369, 371, 598 N.Y.S.2d 261, 262 (1st Dep’t 1993)). However, "[u]nsubstantiated claims of oral objections do not create a material issue of fact" sufficient to defeat summary judgment. White Diamond Co. v. Castco, Inc., 436 F. Supp. 2d 615, 624 (S.D.N.Y. 2006); see Lankler Siffert & Wohl, LLP v. Rossi, 287 F. Supp. 2d 398, 408 (S.D.N.Y. 2003) ("conclusory and unsubstantiated" objections to account stated insufficient to defeat summary judgment), aff’d, 125 Fed. Appx. 371 (2d Cir. 2005); Darby & Darby, P.C. v. VSI International, Inc., 95 N.Y.2d 308, 315, 716 N.Y.S.2d 378, 382 (2000) (holding that "selfserving, bald allegations of oral protests were insufficient to raise a triable issue of fact"). The party challenging the account must "raise specific allegations of protest, indicating when, how, and/or to whom objections were made, along with some indication of the content of the conversation(s) had." Goldberg & Connolly v. Hancock Industries, Ltd., No. 11258/06, 2007 WL 1532294, at *2 (N.Y. Dist. Ct. May 29, 2007)."

Magistrate Judge James C. Francis writes in  Brooks Banker,  v.Esperanza Health Systems, Ltd.,  05 Civ. 4115 (DAB) (JCF):

"Brooks Banker, an attorney, brings this action against the defendants, his former clients, for unpaid fees. Mr. Banker now moves pursuant to Rule 56 of the Federal Rules of Civil Procedure for summary judgment on his account stated claims against defendants Esperanza Health Systems, Ltd., Hunt Health Systems, Ltd., P&G Enterprises, Inc., and MHTJ Investments, Inc. (collectively, the "Business Defendants"). For the reasons that follow, I recommend that the plaintiff’s motion be granted."

Account stated claims are those where it is said that the biller sent bills and the payor failed to argue or contradict the bills.  When this happens, the courts deem the bill to be undisputed, and often order it paid, even though there are many new disputes about the bill now.

"Whether an attorney discharged without cause is entitled to bring a claim for account stated is a matter of state law that has not been addressed by the New York Court of Appeals. "In the absence of a definitive ruling by the highest court of a particular state, a district court should predict what the highest state court would decide when faced with an undecided issue of state law." Liddle & Robinson, LLP v. Garrett, 720 F. Supp. 2d 417, 424 (S.D.N.Y. 2010) (citing In re Methyl Tertiary Butyl Ether Products Liability Litigation, 415 F. Supp. 2d 261, 268 (S.D.N.Y. 2005)).

In Liddle, the Honorable Peter K. Leisure, U.S.D.J., engaged in such an analysis and concluded that "where an attorney allegedly discharged without cause seeks unpaid legal fees pursuant to a blended contingency and hourly fee agreement, New York’s highest court would find, as this Court does, that the attorney is limited to seeking relief in quantum meruit." Id. at 425. Based on this conclusion, Judge Leisure dismissed breach of contract and account stated claims asserted by an attorney against his former client where the attorney had been terminated without cause. Id. at 425-27."

"More compelling is the plaintiff’s contention that Judge Leisure’s construction of the New York cases upon which he relied was overbroad. While Rubenstein and Sae Hwan Kim both state that an attorney terminated without cause is entitled to recover in quantum meruit, neither holds that such an attorney is precluded from asserting an account stated claim. See also Schneider, Kleinick, Weitz, Damashek & Shoot v. City of New York, 302 A.D.2d 183, 186, 754 N.Y.S.2d 220, 223 (1st Dep’t 2002) (identifying remedies for attorney discharged without cause as retaining lien, charging lien, and quantum meruit, but not addressing account stated); Butler, Fitzgerald & Potter v. Gelmin, 235 A.D.2d 218, 218-19, 651 N.Y.S.2d 525, 527 (1st Dep’t 1997) (same).

The cases that do address account stated claims hold unequivocally that such claims may be brought by attorneys discharged without cause. For example, in Ferraioli ex rel.

*8

Suslak v. Ferraioli, 8 A.D.3d 163, 164, 779 N.Y.S.2d 72, 73 (1st Dep’t 2004), the court first found that the petitioner, a law firm, had been terminated without cause and then went on to hold that it was entitled to summary judgment on its account stated claim. Similarly, in Zanani v. Schvimmer, 50 A.D.3d 445, 446, 856 N.Y.S.2d 65, 66 (1st Dep’t 2008), the court granted summary judgment to a discharged attorney on an account stated claim, which included bills received by the clients after the attorney was terminated. In Bartning v. Bartning, 16 A.D.3d 249, 249-50, 791 N.Y.S.2d 541, 541-42 (1st Dep’t 2005), the court overturned a ruling rejecting an account stated claim based on an invoice sent after the attorney had been terminated. Finally, in Salans Hertzfeld Heilbronn Christy & Viener v. Between the Bread East, Inc., 290 A.D.2d 381, 736 N.Y.S.2d 665 (1st Dep’t 2002), the court explicitly addressed the argument advanced by the Business Defendants here. It stated:

The motion court, in denying defendants’ motion to dismiss, properly rejected their contention that the termination of plaintiff law firm’s services relegated plaintiff to recovering in quantum meruit for services rendered to defendants. Termination does not necessarily result in such remedial limitation and, indeed, we have specifically approved recovery by attorneys on an account stated theory for pre-termination services billed on an hourly basis at a contractually agreed rate.

Id. at 381, 736 N.Y.S.2d at 666 (citations omitted); see also Steven Wechsler, Professional Responsibility, 53 Syracuse L. Rev. 737, 760 (2003).Thus, whatever limitations there may be in New York law to the ability of a lawyer discharged without cause to recover under breach of contract or other theories, they do not preclude a claim for account stated. It is therefore appropriate to turn to the specific claims asserted in this case."

Clients often believe that their attorney was "bought off" and sometimes stretch the facts to fit a conspiracy theory.  Most of the time there is simply no institutional way that "buying off" could even have happened.  Sometimes we are non-plussed at the actions of attorneys.  We wonder, in this case, why the attorney didn’t tell the client that the buyer of real property had not sent a certified check, as per the contract, and why the attorney did not tell the client that the check was refused for insufficient funds.  What can their explanation be?

In Bilin v Segal, Goodman & Goodman, LLP ; 2011 NY Slip Op 00995 ; Decided on February 8, 2011 ; Appellate Division, Second Department  the court writes:
 

"The plaintiffs retained the defendant Segal, Goodman & Goodman, LLP, and one of its principals, the defendant Frank Goodman (hereinafter together the law firm), to represent them and three other individuals in the sale of six adjacent properties in Brooklyn to a real estate developer, the defendant Criterion Group, LLC (hereinafter Criterion). Each of the six contracts provided that the purchase price of each property was $1,250,000, of which a $62,500 down payment for each property was payable upon execution of the contract, with the $1,187,500 balance for each property due at closing. Although the contracts were executed in early June 2004, the plaintiffs contend that unbeknownst to them, Criterion did not authorize the law firm to deposit its uncertified check in the sum of $375,000, representing the collective down payment for all six properties, until sometime in July 2004. The plaintiffs further assert that the law firm did not inform them for at least two months that when the law firm deposited Criterion’s check in July 2004, it was returned for insufficient funds, and thereafter, Criterion never followed through on its promise to the law firm to provide it with a certified replacement check for the down payment."

"According to the plaintiffs, during this time period, with the law firm’s assistance, they pursued proceedings to ensure that tenants vacated their respective properties, as required under the contracts of sale executed between them and Criterion, and lost an opportunity to sell the properties to another developer at essentially the same purchase price offered by Criterion. They further contend that since Criterion never remitted a down payment, they were unable to retain such funds as liquidated damages when the sale of the properties to Criterion was never completed. The properties were ultimately sold to a third party, but in the interim, the plaintiffs contend that they were unable to rent the properties. "
 

"Here, contrary to the assertion of the law firm, it failed to meet its burden of establishing its entitlement to judgment as a matter of law (see Greene v Sager, 78 AD3d 777; Eisenberger v Septimus, 44 AD3d 994). Accordingly, the Supreme Court properly denied the law firm’s cross motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against them. "
 

The Redskins!  6 Flags!  Cadwalader, Wickersham & Taft !  Legal malpractice cases do not get much higher visibility than this case. Nate Raymond of the  The New York Law Journal reports that  "Redskins owner Daniel Snyder has sued Cadwalader, Wickersham & Taft for $13 million over advice it gave on an investment bank’s fee during a proxy fight at Six Flags Inc. in 2005."  The legal malpractice claim, filed in Supreme Court, New York County "followed an October appellate ruling that the company owed UBS A.G. $8 million for its work on the Six Flags matter. While Red Zone said its lawyers at Cadwalader had claimed a contract they secured would limit the fee to $2 million, it did not."

"According to the malpractice complaint in Red Zone, LLC v. Cadwalader, Wickerham & Taft, 650318/2011, Red Zone hired Cadwalader in mid-2004 to advise it on its investment in and possible acquisition of Six Flags. Mr. Block, one of the top rainmakers at the New York firm and a veteran of mergers and acquisitions, was the partner in charge of the engagement, the complaint said.

At the start of 2005, Red Zone held 8.76 percent of the voting stock in the company with shares it purchased the year before for $34.5 million. Red Zone believed Six Flags was underperforming and wanted to see about raising money to take it over.

Red Zone brought in UBS to advise on the investment, with Cadwalader negotiating the engagement agreement. The contract called for UBS to receive a $10 million fee if the acquisition succeeded.

But Six Flags had an agreement with its bondholders that all of its $2.6 billion in debt would need to be paid immediately if someone acquired the company or more than 34.9 percent of its shares. UBS could not raise enough money to cover that payout.

Red Zone opted instead for a proxy contest. Before it moved, it told Mr. Block that it was unwilling to pay the $10 million fee to UBS if Red Zone could not secure a majority of the voting stock.

Instead, Red Zone told Mr. Block to have Cadwalader negotiate a new deal with UBS limiting the fee to no more than $2 million, the complaint said."
 

Real Estate commerce is a big time sport in New York, and in Manhattan might be considered a lifestyle unto itself.  The buying and selling of cooperative and condominium apartments goes on in an endless swirl, good or bad economic times notwithstanding.

One element of the purchase is an educated or studied prediction of future costs.  One may always expect an upward arc to maintenance or common charges; inflation is a constant pressure.  However, 14-142% increases are a nightmare.  That’s what happened in Hefter v Citi Habitats, Inc.; 2011 NY Slip Op 00733 ; Decided on February 8, 2011 ; Appellate Division, First Department . 
 

This was, at a minimum, the largest purchase that buyer made for a long time, perhaps the largest in his lifetime.  Why did he take the attorney recommended by the broker?  We don’t know, but he turned and sued the attorney for not advising buyer of potential increases.  However, it seems that attorney himself did not know, and no reasonable inquiry would have predicted actual future increases.  Thus case dismissed.

"Plaintiff’s allegations of legal malpractice against Nihamin, the attorney who represented him in the purchase of a cooperative apartment owned by the Greens, are conclusory and were properly dismissed. There is no allegation that Nihamin had notice of any facts which might reasonably have caused him to question the veracity of the managing agent’s response to a question about future maintenance increases. The "selection of one among several reasonable courses of action does not constitute malpractice" (Rosner v Paley, 65 NY2d 736, 738 [1985]), and plaintiff acknowledges that further inquiry by Nihamin would have been futile. Furthermore, plaintiff’s contention that Nihamin "had a potential conflict of interest" because he was recommended by the broker is, by itself, insufficient to state a claim for legal malpractice ."