9/11 is almost 10 years behind us.  Its direct effects may have passed, but the indirect effects still resonate.  Here is a fraud, foreclosure scam and legal malpractice case which arises out of the post 9/11 world.

Cullen v. Steinberg, 2010 U.S. Dist. LEXIS 62138 is a case in which plaintiff was the surviving widow of a murdered victim of 9/11.  She invested her compensation in real estate, and then fell prey to a variant of a scheme.  "In 2004, plaintiff received $ 1.9 million in compensation for her husband’s murder in the 9/11 attacks on the World Trade Center. She invested some of the money in [*4] real estate, buying residential property at 653 Jacey Drive in Fort Lee, New Jersey in 2004, and at 1400 Outlook Avenue in the Bronx in 2006."
 

"At a party in December 2006, plaintiff met Maximo (Max) Almonte, who had gone to grammar school with her. Almonte initially told plaintiff he was a stock broker; plaintiff learned in May 2007 that he was actually a felon who had been convicted of real estate fraud. Almonte moved in with plaintiff at 653 Jacey Drive two days after meeting her at the party.In late December 2006 or early January 2007, Almonte introduced plaintiff to Robert (Bob) Kotch, who, plaintiff later learned, had been convicted of mortgage fraud and had met Almonte while they were both in prison. Almonte took plaintiff to Kotch’s office in Manhattan’s Wall Street area to discuss plaintiff’s involvement in a potential real estate [*5] business in which Kotch and plaintiff would buy foreclosed homes and resell them for a profit. Kotch represented to plaintiff that if she invested $ 100,000, she would be able to earn an additional $ 90,000 in a short amount of time. Plaintiff orally agreed to this transaction during their meeting. She told Kotch she did not have the cash but that she owned the 653 Jacey Drive property and that it was not subject to any mortgage. Kotch told plaintiff that he could arrange a $ 100,000 loan for her, secured by that property."

"On or around March 13, 2007, at the request of Jason Steinberg, plaintiff signed a letter on behalf of Wholistic Change, LLC, authorizing the disbursement of $ 104,000 from the loan proceeds to "Private Lenders" [*8] (DX 5), the company Kotch purportedly was going to use to buy and sell foreclosed homes in partnership with plaintiff. It is Jason Steinberg’s practice to get written authorization from the borrower before a loan closing if any of the loan proceeds will be disbursed directly to third parties. On or around March 13, 2007, plaintiff signed an agreement with Ellissa Liebowitz of Be Approved which stated that plaintiff agreed to pay Be Approved, the broker, three percent of the total loan amount (DX 6). Both Jason and Ronald Steinberg understood the loan was being made to a corporation rather than an individual."

"Plaintiff’s second claim alleges that Jason Steinberg violated New York Judiciary Law Section 487 by deceiving or colluding to deceive plaintiff. Section 487 provides: "[a]n attorney or counselor who . . . [i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party . . . [i]s guilty of a misdemeanor, and in addition to the punishment prescribed therefor by the penal law, he forfeits to the party injured treble damages, to be recovered in a civil action."

 Section 487 only applies to an attorney’s conduct in a pending judicial proceeding. Mahler v. Campagna, 60 A.D.3d 1009, 1012-13, 876 N.Y.S.2d 143, 147 (2d Dep’t 2009); Jacobs v. Kay, 50 A.D.3d 526, 527, 857 N.Y.S.2d 81, 83 (1st Dep’t 2008); Tawil v. Wasser, 21 A.D.3d 948, 949, 801 N.Y.S.2d 619, 620 (2d Dep’t 2005) (Judicary Law Section 487 did not apply to conduct by attorney in a real estate transaction); Henry v. Brenner, 271 A.D.2d 647, 648, 706 N.Y.S.2d 465, 466 (2d Dep’t 2000); Stanski v. Ezersky, 228 A.D.2d 311, 313, 644 N.Y.S.2d 220, 223 (1st Dep’t 1996).

None of the alleged conduct by Jason Steinberg took [*21] place in the context of a judicial proceeding. Further, I find no deceit or collusion on the part of Jason Steinberg with the intent to deceive plaintiff. Accordingly, Jason Steinberg did not violate Section 487 of the Judiciary Law of the State of New York in connection with the loan to Wholistic Change, LLC. Thus, plaintiff’s second claim fails."

At the outset, we find that the Supreme Court improvidently exercised its discretion in, sua sponte, directing dismissal of the complaint insofar as asserted against the Meighan defendants pursuant to CPLR 3211(a)(4) in view of the continued pendency of the first legal malpractice action against those defendants, which relief was not requested by any party in this action (see Clair v Fitzgerald, 63 AD3d 979, 980; Frankel v Stavsky, 40 AD3d 918, 919).

"We further find that the Supreme Court should have granted that branch of the plaintiff’s motion which was for summary judgment on the issue of liability against the Meighan defendants. In order to prevail in an action to recover damages for legal malpractice, a plaintiff must establish that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and that the breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442). Here, in opposition to the plaintiff’s prima facie showing of entitlement to judgment as a matter of law, the Meighan defendants failed to demonstrate the existence of any triable issues of fact with respect to their liability for legal malpractice (see Alvarez v Prospect Hosp., 68 NY2d 320, 324; Northrop v Thorsen, 46 AD3d 780, 784; Jampolskaya v Victor Gomelsky, P.C., 36 AD3d 761, 762). Contrary to the Meighan defendants’ contention, inasmuch as the plaintiff did not sustain "actionable injury" until this Court awarded the buyers specific performance in the underlying action, the plaintiff’s legal malpractice cause of action against them was not time-barred (McCoy v Feinman, 99 NY2d 295, 301; see Kerbein v Hutchison, 30 AD3d 730, 732). Also contrary to the Meighan defendants’ contention, their malpractice was a proximate cause of the injury in this case. If the DeCaro defendants are found to have also committed malpractice, the Meighan defendants and the DeCaro defendants may both be liable as successive tortfeasors who each contributed to the same injury (see Schauer v Joyce, 54 NY2d 1, 6; Soussis v Lazer, Aptheker, Rosella & Yedid, P.C., 66 AD3d 993, 994-995; Khlevner v Tylo, 16 Misc 3d 1129[A]).

The Supreme Court should have denied those branches of the DeCaro defendants’ cross motion which were for summary judgment dismissing so much of the complaint as alleged that they committed legal malpractice by failing to interpose a claim in the underlying action for rescission of the construction agreement based on mistake, by failing to interpose an affirmative defense in the underlying action of rescission based on mistake, and by arguing on appeal in the underlying action that the plaintiff instructed the Meighan defendants to send the construction agreement to the attorneys for the other parties to that agreement, which argument was contrary to the plaintiff’s testimony at the underlying trial. While the DeCaro defendants contend that a rescission defense based on unilateral mistake would not have been successful in the underlying action for specific performance, specific performance may be denied based on unilateral mistake [*4]where the other party must have been aware of the mistake (see Da Silva v Musso, 53 NY2d 543, 548; Sheridan Drive-In v State of New York, 16 AD2d 400, 405; Harper, Inc. v City of Newburgh, 159 App Div 695, 696-697). However, the Supreme Court should have granted that branch of the DeCaro defendants’ cross motion which was for summary judgment dismissing so much of the complaint as alleged that they committed legal malpractice by failing to advise the plaintiff of a potential legal malpractice claim against the Meighan defendants. As discussed above, the plaintiff lacked a viable legal malpractice claim against the Meighan defendants until this Court awarded the buyers specific performance.

in Frederick v Meighan ;2010 NY Slip Op 06076 ;Decided on July 13, 2010 ;Appellate Division, Second Department  we see the effect of Attorney 2 failing to clean up Attorney 1’s mistakes.  In addition we see an instance of what we believe to be a systemic aversion to legal malpractice cases.  Here, for example, Supreme Court sua sponte grants dismissal to Attorney 1 in this legal malpractice case; the Appellate Division not only reinstates the case, it grants summary judgment to plaintiff.  But, on to the substance"
 

Tsafatinos v Wilson Elser Moskowitz Edelman & Dicker, LLP ;2010 NY Slip Op 06085 ;decided on July 13, 2010 ;Appellate Division, Second Department is short on details as to how and why the legal malpractice case was filed on a date the Appellate Division determined to be too late.  The rules, however, are clear:
 

"To dismiss a cause of action pursuant to CPLR 3211(a)(5) on the ground that it is barred by the Statute of Limitations, a defendant bears the initial burden of establishing prima facie that the time in which to sue has expired" (Savarese v Shatz, 273 AD2d 219, 220; see Morris v Gianelli, 71 AD3d 965, 967). Here, the defendants demonstrated that the plaintiffs’ cause of action to recover damages for legal malpractice accrued no later than July 2005, more than three years before the commencement of the instant action in August 2008 (see CPLR 214[6]; McCoy v Feinman, 99 NY2d 295, 301; Nickel v Goldsmith & Tortora, Attorneys at Law, P.C., 57 AD3d 496). Thereafter, "the burden shifted to the plaintiffs to aver evidentiary facts establishing that the case falls within an exception to the Statute of Limitations" (Savarese v Shatz, 273 AD2d at 220 [internal quotation marks omitted]). Contrary to the plaintiffs’ contention, they failed to establish that the statute of limitations was tolled by the continuous representation doctrine (see McCoy v Feinman, 99 NY2d at 306; cf. Shumsky v Eisenstein, 96 NY2d 164, 168). "
 

Justice Gische, of Supreme Court, New York County has written a number of legal malpractice decisions over the years.  One recently decided  is Kleinser v Astarita  NY Slip Op 31675U.

Here, plaintiff was a trader and employee of Rockrimon Securities.  He was fired by them and sued.  The case was litigated before Justice Ramos.  At issue was whether he was a partner or an employee.  After a full litigation, Justice Ramos determined that he was an employee and reduced the claims to an accounting.  Plaintiff believed that he had a claim of $ 1 million.  The Court awarded $ 67,000.  Plaintiff appealed and lost.  This was the bad-good result.

In this legal malpractice case, issues turned on a statute of limitations issue.  When did the representation end?  Was it when plaintiff wrote to the attorneys and "I understand you will not continue with my case despite our earlier agreement that was affirmed.  Again, I do not believe you  ‘have completed our assignment’" or was it when the law firm finally returned the file?

The Court determined that representation ended with the letter, and that this case was untimely.

Justice Goodman of Supreme Court, New York County has a caseload full of legal malpractice cases.  Here is an accounting malpractice case coming as a counterclaim for accounting fees, but the idea is just the same.  In Perelson Weiner, LLP v Allison 06/29/2010 Supreme Court, New York County, Goodman, J. the claim was that client did not pay fees, and client counterclaimed that the accountant committed malpractice in handling a foreign investment, to the tune of $ 61,000.  Client alleges that accountant overbilled him and advised him that litigation in the Cayman Islands was essential, when in fact it was useless.

In this motion on the amended pleadings, Justice Goodman lays out a well enunciated explanation of how such a pleading should look and why it is permissible. Here, it is neither too late, nor too prejudicial to dismiss.

LOK PRAKASHAN, LTD.  -v.- RALPH A. BERMAN, DAVIDOFF MALITO & HUTCHER, LLP,
No. 09-0136-cv; UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT;2009 U.S. App. LEXIS 22988 is an example of the Court’s continued romance with the concept that litigation is an art and not a science.

What is a question of judgment? " "A complaint that essentially alleges either an ‘error of judgment’ or a ‘selection of one among several reasonable courses of action’ fails to state a claim for malpractice." Id.

The District Court concluded that "[b]ecause there is ample evidence in the record that Defendants’ omission of the specified document was a conscious and reasonable decision regarding trial strategy, not negligence, and the omission of the document was not the proximate cause of any loss, Plaintiff has failed to show the elements required to support a claim of legal malpractice." [*4] Order of November 1, 2005. We agree and, substantially for the reasons stated by the District Court in its well-reasoned orders of November 1, 2005 and December 12, 2008, find plaintiff’s arguments to be without merit."
 

Fees and Attorneys seem to be a dyad that never stops recurring.  More correctly put, disputes about  fees and attorneys have been here forever.  we’re certain that the bible contains some commentary, and we do know that Abraham Lincoln had attorney fee cases in his docket.  Here is a decision from Judge Scheindlin on the issue.

Simon v. Unum Group, 07 Civ. 11426;  Decided: June 22, 2010;  District Judge Shira A. Scheindlin; U.S. DISTRICT COURT  SOUTHERN DISTRICT OF NEW YORK. 

"Section 475 of the New York Judiciary Law provides, in pertinent part:

From the commencement of an action,…the attorney who appears for a party has a lien upon his client’s cause of action, claim or counterclaim, which attaches to a verdict, report, determination, decision, judgment or final order in his client’s favor…. The court upon the petition of the client or attorney may determine and enforce the lien.

However, attorneys are not entitled to a charging liens in all instances. Under New York law, a client has an absolute right to terminate the attorney-client relationship at any time, with or without cause. 7 "If a lawyer is discharged for cause, he or she is not entitled to legal fees." 8 However, "[p]oor client relations, differences of opinion, or personality conflicts do not amount to cause." 9 Cause requires a showing of "impropriety or misconduct on the part of the attorney." 10 If the lawyer is not discharged for cause, then he or she is entitled to legal fees—which may be recovered either (1) in quantum meruit, the fair and reasonable value of the services rendered, or (2) as a contingent portion of the former client’s ultimate recovery if the parties entered into a contingency agreement. 

If awarding fees in quantum meruit, the court may consider multiple factors to determine the fair and reasonable value of an attorney’s legal services, including:

[(1)] the difficulty of the matter, [(2)] the nature and extent of the services rendered, [(3)] the time reasonably expended on those services, [(4)] the quality of performance by counsel, [(5)] the qualifications of counsel, [(6)] the amount at issue, and [(7)] the results obtained (to the extent known).

"It is appropriate, after ‘consider[ing] all the factors relevant to a quantum meruit fee analysis…[to] turn[] to lodestar analysis to reach a specific dollar figure for the value of the services rendered[.]’"  "This method, which results in the determination of the presumptively reasonable fee, is comprised of a reasonable hourly rate multiplied by a reasonable number of expended hours."

In this most simple of legal malpractice cases, plaintiff was the victim of a rear-end Motor Vehicle accident.  She retained attorney who failed to bring the action within the statute of limitations.  Plaintiff sues attorney and settles for $ 50,000. which was the amount of the underlying car insurance.  She is said to have sought the approval of her own carrier for the settlement, but there was no response.

Now, when plaintiff seeks underinsured/uninsured coverage from her own carrier, it declines to cooperate and seeks to stay arbitration.  Was there double legal malpractice?  Should the underlying attorney have been liable for both primary and underinsured coverage amounts?

In Matter of Kemper Mut. Ins. Co. v Russell ;  2010 NY Slip Op 05847 ;Decided on July 1, 2010
Appellate Division, Third Department  we see the majority opinion:
 

"An insurer is obligated to pay under SUM coverage if the bodily injury liability insurance limits of its insured’s policy exceed those of the other policy, subject to the condition that "the limits of liability of all bodily injury liability bonds or insurance policies applicable at the time of the accident shall be exhausted by payment of judgments or settlements" (Insurance Law § 3420 [f] [2] [A]; see Matter of Federal Ins. Co. v Watnick, 80 NY2d 539, 546 [1992]). The statute, in short, "requires primary insurers to pay every last dollar, and requires [respondent] to accept no less, prior to the initiation of an underinsurance claim" (Matter of Federal Ins. Co. v Watnick, 80 NY2d at 546). The primary insurer here, however, has paid nothing, as respondent was forced to recover damages in a separate legal malpractice claim. As the other driver’s policy limit was not exhausted by payment, respondent’s own SUM coverage does not come into play, and Supreme Court should have granted petitioners’ application for a permanent stay. "

While the minority opinion comes to the conclusion that it is the amount and not the source of the insurance proceeds that controls, neither opinion asks whether the attorney should have demanded or obtained settlement in the amount of primary and underinsured coverage.