Reisner v. Litman & Litman PC is a motorcycle – car collision case in which plaintiff was driving his motorcycle in Nassau County. He was driving on a road that had become known to be dangerous.  At this particular intersection there had been a large number of turning left accidents, which later was said to be caused by a double set of traffic lights, which to a certain extent contradicted each other.

Defendant law firm was retained by motorcyclist and started an action against the driver.  Soon, but not soon enough, they learned of the dangerous road situation and filed a motions seeking leave to file a late notice of claim against the County.  It was denied.

Two things are interesting in this case.  The first is that both sides failed to discuss third-party liability of the traffic light company under Espinal v. Melville Snow Contractors, Inc.., 98 NY2d 136 (2002).

More interestingly, the Court determined that defendants negligently handled the motion for leave, and ordered disgorgement of the fees.  "An attorney may not recover fees for legal services performed in a negligence manner even when that negligence is not a proximate cause of the client’s injury." Kluczka v. Lecci, 63 AD3d 796 (2d Dept, 2009). 

Here, the court ordered disgorgement of the fees involved in the County portion of the case.

 

A series of loans, a single attorney in the transactions, a failure to file the mortgage, a defense that the clients should have filed the mortgage themselves, a loss of $ 750,000.  How can this happen to sophisticated lenders?

The question is not exactly answered, but the picture that emerges from Brija v. Fernandez NY SlipOp 32559, New York County, Justice Ling-Cohan is of lenders with money but little experience, an attorney who is willing to represent both sides, and what looks like failure to file security interests. 

One reason that the case resisted dismissal was the utter lack of retainer agreements or documents which showed when the attorney was finished with the work.  An otherwise paled defense of statute of limitations failed because there was not a single indicator whether the representation lasted a single day or years.

As Justice Ling-Cohan wrote:"The conflicting statements about the end of his representation, the absence of a retainer agreement by Fernandez with any party, the lack of a document signifying the conclusion of his representation (of either plaintiffs or borrowers) the internal inconsistency of the date ranges provided by either side and the possible relevance of the letters and note"… all rule out dismissal on the statute of limitations.

The rapid transferring back and forth of rights and liabilities, through assignments, factoring and bankruptcy is highlighted in Maggioni v Clyde Meredith Schaefer, Esq., NY SlipOp 32544 [Sup.Ct. New York County, Wooten. J]   

Apparently IFT International Inc. was a worthwhile football.  It and its assets bounced back and forth between Bankruptcy Court and Supreme Court, with liens coming and going.  In the end, the president seems to have arranged to obtain its assets, only to be thwarted by outside creditors.  Later, he purchased assets at a bankruptcy sale.  The effect? 

Justice Wooten found that there was continuous representation through the back and forth and that plaintiff, as president, had sufficient connection with the company and its assets to avoid dismissal under CPLR 3211.

Gatto v Burke & Burke, NY Slip Op 32511, Nassau County, Justice Bucaria illustrates a two part transactional represent ion by attorneys of the clients in a  business sale case.  Facts are simple:  plaintiff sells restaurant to X and uses target attorneys as transactional counsel.  Sale documents do not have a security interest for Plaintiff-seller.  End of phase one.

Sale goes sour, and buyer files bankruptcy.  Seller again retains target attorney to represent them in suit against buyer and then in bankruptcy court.  Seller has no security interest and is treated as an ordinary creditor, losing the proceeds. 

Question is whether statute of limitations begins to run on mistake date when transaction closes without a security interest, or it there is continuing representation, or whether there are two different and non-continuing retentions such that the s/l has already run on the mistake.

Here, the court found that it was continuing.  Read the decision for the Justice’s reasoning.  It is based upon the interconnectedness of the sale and the remedy work by the attorneys.

Result:  motion to dismiss denied.

An attorney must carefully and assiduously guard his client’s confidences, secrets and communications with the attorney.  This remains true until the attorney has to defend himself.  Must this defense be to criminal charges, or to ethical charges only?  The answer is set forth in a recently decided case in the First Department.Hélie v McDermott, Will & Emery ; 2008 NY Slip Op 09289 ; Decided on November 25, 2008 ; Appellate Division, First Department
 

"Code of Professional Responsibility DR 4-101(C) (22 NYCRR 1200.19[c]) provides: "A lawyer may reveal: . . . (4) Confidences or secrets necessary . . . to defend the lawyer . . . against an accusation of wrongful conduct." We decline to make defendants’ invocation of this rule dependent on plaintiff’s demonstration of a prima facie case of defendants’ liability (see Justice Stallman’s later ruling on a related matter in this case, 18 Misc 3d 673, 683 [December 17, 2007]). "

"Even if plaintiff were not defendants’ client, DR 4-101(C)(4) does not require the non-client’s allegation of wrongful conduct to involve criminal or regulatory charges rather than malpractice (see Restatement [Third] of Law Governing Lawyers § 64, Comment c)." 
 

We have commented about the Collateral Estoppel trap in legal malpractice with regard to fee arbitrations and hearings. in short, when a court grants an attorney fee application, it implicitly determines that there can have been no malpractice, as the court may not award fees in the face of malpractice. Fee arbitrations and hearings in state court happen, but not that often. Bankruptcy fee hearings happen in every case, and in every case where fees are awarded to counsel, the question of res judicata comes up.

In re D.A. ELIA CONSTRUCTION CORP., Plaintiff, v. DAMON & MOREY, LLP, Defendant.;07-CV-143A ; UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK; 389 B.R. 314; 2008 U.S. Dist. LEXIS 25496 has been the leading case on this issue. There, attorneys who had been granted fees were able to fend off legal malpractice claims based upon res judicata.

Now, in PENTHOUSE MEDIA GROUP, INC., , – against – PACHULSKI STANG ZIEHL & JONES LLP, ;UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; 2009 U.S. Dist. LEXIS 46617 we see a slightly different result. Judge Scheindlin sitting in appeal of a US Bankruptcy decision by Judge Bernstein, finds that the legal malpractice plaintiffs did not have a full and fair opportunity to be heard, and that res judicata does not control the issue of legal malpractice.

"Although Pachulski’s fee application was approved by the bankruptcy court in the prior proceeding, I cannot conclude as a matter of law that PMG had a full and fair opportunity to litigate allegations of Pachulski’s malpractice during that hearing. Many of the factors used to consider whether a party had a full and fair opportunity to litigate an issue favor PMG, particularly given PMG’s continued retention of Pachulski as its counsel. For instance, one of the factors courts have considered is "the importance of the claim in the prior litigation." 45 PMG had just undergone a reorganization with the help of Pachulski as its counsel. The possibility that Pachulski may have committed malpractice while representing PMG during that reorganization may not have been at the forefront of PMG’s concerns. In addition, PMG [*16] had no "incentive [or] initiative to litigate" the malpractice issue, 46 considering that it expected Pachulski to continue to advise PMG in the winding down of its bankruptcy proceeding.

Of particular importance to this Court is the bankruptcy court’s reliance on D.A. Elia Construction Corp. 50 Judge Bernstein concluded that D.A. Elia was directly on point, 51 but D.A. Elia is perhaps even more clearly distinguishable from the instant case than other cases cited by Pachulski, as in that case the malpractice claim was actually litigated during the fee application proceeding. D.A. Elia emphasized that
many of the same allegations made by Elia in its [malpractice] complaint were previously made by Elia in its objections to Damon & Morey’s final fee application. Specifically, Elia argued to the bankruptcy court that the firm had labored under a conflict of interest, had committed legal malpractice and had failed to turn over money owed to the estate. The bankruptcy court provided Elia with ample opportunity [to] raise those claims, but ultimately rejected them as meritless. 52
The district court concluded that "it cannot be said that Elia was denied the opportunity to raise these [malpractice] claims in the prior action." 53 In the instant case, PMG raised no such objections [*19] at the fee hearing."

 

An interesting phenomenon in legal malpractice is the persistence of errors in a long series of otherwise isolated incidents.  DiGiacomo v Levine ;2010 NY Slip Op 06566 ; Decided on September 14, 2010 ; Appellate Division, Second Department illustrates how this hoppers.
 

Auto accident takes place and clients hire attorney 1.  Attorney 1 is said to have sued the driver but not the owner.  This is significant as owner has otherwise unlimited coverage.  Some time later Attorney 1 is relieved by Court.  Clients hire  attorney 2 to appear for them, sort of as a per diem.  Per diem does not show up in court, yet case is adjourned once.  On adjourned date case is dismissed.

Client hires attorney 3 to move to vacate the dismissal, and attorney 3 is said (by AD) not to have filed an affidavit of merits in the motion to vacate.  Legal malpractice follows.

As might be expected, too much time has passed to sue attorney 1.  Attorney 1 is dismissed.  Too little evidence that Attorney 2 was actually hired, or agreed to be retained.  Since case was adjourned and not immediately dismissed, Attorney 2 is dismissed.

Attorney 3 still in the case (contrary to the lower court’s dismissal) because no affidavit of merits was filed.  Legal malpractice case continues.

Ripeness and mootness are two concepts not all that readily associated with litigation.  If a case exists, it should be ready to adjudicate, no?  If someone has been damaged, then the case cannot be moot?  We see one such example in GREENSTREET FINANCIAL, L.P., -against- CS-GRACES, LLC, et al., Defendants. CS-GRACES, LLC, et al.,07 Civ. 8005 (KNF)UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK2010 U.S. Dist. LEXIS 84827.

In this multi-party case, fourth party defendant attorneys were brought in "[i]n the unlikely event that the Smul Trust and Sheryl Smul are found liable in contract to [the] Third Party Plaintiffs in this action, . . . Sheryl Smul and the Smul Trust . . . have a right of action . . . for indemnity against their former attorneys, Stoloff & Silver, LLP and Gary D. Silver," because they engaged in legal malpractice."

The Court determined that it was a wee bit too early.  ""A plaintiff must establish the following elements for a claim of legal malpractice under New York State law (1) an attorney-client relationship, (2) [*6] attorney negligence (3) that is the proximate cause of a loss, and (4) actual damages." Stonewell Corp. v. Conestoga Title Ins. Co., 678 F. Supp. 2d 203, 208 (S.D.N.Y. 2010). "To succeed on a motion for summary judgment in a legal malpractice action, the defendant must establish that the plaintiff cannot prove at least one of these essential elements." Id. at 209.

In the instant case, "actual damages" have not been determined, since judgment has not been entered against Smul and the Smul Trust in this action, and, according to the fourth-party defendants, litigation is also pending in Florida, that might affect the amount, if any, for which Smul is liable to the plaintiff and/or the third-party plaintiffs. Therefore, to the extent the fourth-party defendants move for summary judgment, their motion must be denied, without prejudice, as premature, since the issue of "actual damages" has not yet been determined. See id. at 214 (finding that adjudication of a legal malpractice claim was "premature" when the plaintiff could not "establish actual damages absent a final judgment or resolution in the still pending controversy"). As a result, the fourth-party defendants’ request, that the claims [*7] made against them in the Fourth-Party complaint be stayed, pending resolution of the claims against Smul and the Smul Trust, is granted. See id (noting that "a legal malpractice claim may not be asserted until the matter on which the claim is based has been concluded," and determining that the legal malpractice claim would be tried after a verdict was rendered, if still appropriate). The motion to sever is denied, as moot."

 

 

An auto accident.  Severe injuries.  A multi-million dollar settlement.  Is that the end of the story?   TOKYO MARINE AND NICHIDO FIRE INSURANCE CO., LTD., as subrogee for Mitsubishi Motors Credit of America, Inc., Plaintiff, -against- ROSALIE CALABRESE and LOUIS FACCIPONTI, Defendants. ROSALIE CALABRESE and LOUIS FACCIPONTI, Third-Party Plaintiffs, -against- RUSSO & APOZNANSKI, and MONTFORT, HEALY, MCGUIRE & SALLEY, LLP, Third-Party Defendants. RUSSO & APOZNANSKI, Cross-Claimant, -against- MONTFORT, HEALY, MCGUIRE & SALLEY, LLP, Cross-Claim Defendant, MONTFORT, HEALY, MCGUIRE & SALLEY, LLP, Cross-Claimant, -against- RUSSO & APOZNANSKI, Cross-Claim Defendant,

07-CV-2514 (JS) (AKT);  UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK; 2010 U.S. Dist. LEXIS 95079

Here, we see how the ever-shifting cast of attorneys and insurers have cast the trial of plaintiff’s injury claim as simply a first act.  After the plaintiff leaves the stage, the regular players start their own action to determine who pays the money.

How does the court decide who will pay the settlement in the end?  By applying the known and well settled rules of legal malpractice.  "In objecting to Magistrate Judge Tomlinson’s Order, the Third Party Defendants contend that London Fischer can face contribution liability even though it owed no duty to Ms. Calabrese, Mr. Facciponti, or the Third Party Defendants. In this regard, the Third Party Defendants rely principally on Shauer v. Joyce, 54 N.Y.2d 1 (N.Y. 1981) and Nassau Roofing & Sheet Metal Co. v. Facilities Development Corp., 71 N.Y.2d 599 (N.Y. 1988). But this reliance is misplaced.

In Shauer, the New York Court of Appeals held that an attorney sued for legal malpractice could bring a contribution claim against another attorney who represented the same client in the same [*5] matter, under a theory that it was the second attorney’s negligence that at least partially caused the client’s injuries. Shauer, 54 N.Y.2d at 5. Here, however, London Fischer never represented the Third Party Defendants’ clients, but rather a co-defendant and that defendant’s insurer. So, unlike in Shauer, the Third Party Defendants and London Fischer did not owe a duty to the same client, and London Fischer’s alleged negligence in representing its clients cannot reduce the Third Party Defendants’ potential liability to Ms. Calabrese and Mr. Facciponti.

Nassau Roofing Company is equally inapposite. There, the New York Court of Appeals held that, "[w]hile the culpable party from whom contribution is sought will ordinarily have breached a duty owed directly to the injured party, this is not invariably so," and noted that "[i]n the unusual case the right to apportionment may arise from the duty owed from the contributing party to the party seeking contribution." 71 N.Y.2d at 603 (internal citations and quotations omitted). Here, however, London Fischer did not owe a duty to either the allegedly injured parties (Ms. Calabrese and Mr. Facciponti) or the parties seeking contribution (the [*6] Third Party Defendants). Indeed, if anything, London Fischer’s obligations were potentially adverse to Ms. Calabrese, Mr. Facciponti, and the Third Party Defendants, because it represented a co-defendant who may have had divergent and conflicting interests. See generally DeAngelis v. American Airlines, Inc., 06-CV-1967, 2010 WL 1270005, at *3 (E.D.N.Y. Mar. 26, 2010) (noting that co-defendants can have "starkly divergent interests").

The Third Party Defendants also argue that, under Nassau County, "[t]he critical requirement for apportionment . . . is that the breach of duty by the contributing party must have had a part in causing or augmenting the injury for which contribution is sought." 71 N.Y.2d at 603. But, contrary to the Third Party Defendants’ claims, this does not mean that the Third Party Defendants can seek relief predicated on London Fischer’s allegedly negligent representation of co-defendants with potentially divergent or conflicting interests. For, under New York law, a party can seek damages stemming from legal practice only if it enjoys "actual privity" with the allegedly negligent attorney, or a relationship "so close as to approach privity." 76 N.Y. Jur. [*7] 2d Malpractice § 39. And here, the Third Party Defendants lacked privity, or anything "approach[ing]" privity with London Fischer."
 

In a remarkably detailed and reasoned decision, Justice NeMoyer of Supreme Court, Erie County dissects the holding of Carvalho v New Rochelle Hosp. 53 AD2d 635 [2d Dept 1976].  Carvalho is a seminal case in trial practice, which permits questioning of one party [lawyers as well as doctors] as experts in their own case.

In Grisanti v Kurss ;2010 NY Slip Op 51579(U) ; Decided on September 10, 2010 ; Supreme Court, Erie County ;NeMoyer, J.  writes:
 

""In an action for malpractice brought against more than one physician, one defendant physician may not be examined before trial about the professional quality of the services rendered by a codefendant physician if the questions bear solely on the alleged negligence of the codefendant and not on the practice of the witness . . .. Where, however, the opinion sought refers to the treatment rendered by the witness, the fact that it may also refer to the services of a codefendant does not excuse the defendant witness from [being deposed] as an expert" (Carvalho, 53 AD2d at 635).
Applying those rules, the Carvalho court held it proper for plaintiff’s counsel to ask the first, but proper for the defendant-witness’s counsel to advise the witness not to answer the second, of the following two questions:

1) "[I]s the presence of a fecalith in any way significant to the possibility of the development of an intra-abdominal abscess postoperatively?"; and
2) ""Would it have been good medical practice for a doctor having removed an appendix and receiving this pathology report subsequent to the removal of the appendix to have requested a culture and sensitivity on the purulent exudate material described in the pathology report?"

"This Court has serious misgivings about the provenance (let alone the sense) of the first rule set out in Carvalho, i.e., that the defendant-witness may not be examined before trial about the professional quality of the services rendered by a codefendant physician if the questions bear solely on the alleged negligence of the codefendant and not on the practice of the witness. That rule is not to be found in, and does not seem in the least to be suggested by, either of the two decisions cited by the Second Department in Carvalho (see McDermott v Manhattan Eye, Ear & Throat Hosp., 15 NY2d 20, 27 [1964]; Johnson v New York City Health & Hosps. Corp., 49 AD2d 234 [2d Dept 1975]). McDermott unequivocally holds that "a plaintiff in a malpractice action is entitled to call the defendant doctor to the stand [i.e., at trial] and question him both as to his factual knowledge of the case (that is, as to his examination, diagnosis, treatment and the like) and, if he be so qualified, as an expert for the purpose of establishing the generally accepted medical practice in the community" (McDermott, 15 NY2d at 29-30 [parenthetical material in original; bracketed material supplied]; see Gilly v City of New York, 69 NY2d 509, 511 [1987] [reading McDermott as holding that plaintiff could "examine his doctor-opponent as fully and freely as other qualified witnesses, and that such testimony could include expert opinion"]). In its subsequent decision in Johnson, the Second Department addressed nothing beyond the issue [*6]of whether the McDermott holding "should be extended to examinations before trial," holding that it should, for the common-sense reason "that the scope of the pretrial examination is even broader than that at the trial" (Johnson, 49 AD2d 234, 236-237). Neither McDermott nor Johnson involved a defendant-physician’s being asked to opine specifically on the conduct of a codefendant-physician in relation to the standard of care, and thus neither decision went so far as to say that such opinion would not be a proper area of inquiry of the defendant-witness in a medical malpractice case.

With regard to the internal logic of the Second Department’s holding in Carvalho, it is impossible for this Court to discern why the second Carvalho question ran afoul of the Carvalho rule while the first question did not. Neither of the Carvalho questions referred explicitly to the due care or dereliction of the co-defendant physician; and both questions arguably went to the witness’s knowledge of a particular medical standard within his expertise. With regard to the external logic of the Carvalho holding, both Carvalho questions fell well within the compass of the McDermott-Johnson rule permitting the defendant-witness to be questioned as an expert for the purposes of eliciting his "knowledge of" the facts of plaintiff’s case and "establishing the generally accepted medical practice in the community" (McDermott, 15 NY2d at 29-30; see also Harley v Catholic Med. Ctr. of Brooklyn, 57 AD2d 827, 828 [2d Dept1977] [holding it permissible at EBT to ask defendant-pediatrician about the effects on the infant of certain medicines given by codefendant-obstetrician during the mother’s labor, inasmuch as such questions did not "bear solely on the alleged negligence of the codefendant physician"]).

Apart from the foregoing, this Court has serious doubts that the decision in Carvalho would be rendered today, in the era of 22 NYCRR part 221."