Morris Eisen was a huge figure in the personal injury law sector.  As the Sun King of PI attorneys, Eisen could truthfully say "Le etat ce moi!" His firm had a full floor at the Woolworth Building, and early every morning, breakfast was served there.  Anything from 10-30 trial attorneys assembled and were given new trial assignments.  We first met him, as an opponent, sitting on a Judge’s robing room desk, using her telephone, while she sat in the visitor’s chair, and told us to go get money to settle "Mr. Eisen’s" case

Of course, it changed as do all things.  The entire structure came crashing down, and Eisen ended up doing time in Federal prison.  But that’s not our story today.  Today, we see his legal malpractice law suit against the LaRossa law firm.  In Landau, P.C. v LaRossa, Mitchell & Ross ;2010 NY Slip Op 50620(U) ;Decided on April 7, 2010 ;Supreme Court, New York County ;Schlesinger, J.
 

From the decision: "In June of 2008, the highest court of this State decided that a legal malpractice action instituted by Landau, P.C., as successor to Morris J. Eisen, P.C., should, for the first time, go forward on its merits.

It was the City’s position that in two of the three cases named in their action, (the third was a Bronx case wherein no settlement occurred) Aboud and Rehberger, both of which settled, the former for $700,000, the latter for $15,000 (an additional $45,000 was paid by a private defendant), they were entitled to a return of this money (in fact tripled, pursuant to § 487 of the Judiciary Law) because their sole reason for settling was the [*2]introduction at trial by defendants of perjured testimony.[FN2]

The plaintiffs claim that the law firm committed malpractice in its failure to put into issue the factual under-pinnings of the City’s claim, in the City’s motion for summary judgment before Justice Jane Solomon. As stated earlier, the City claimed that its sole reason for settling these two matters was the perjured testimony presented at their respective trials. Since this testimony had been proven false at the Federal trial, the City argued that the defendant, Eisen, P.C. was collaterally estopped from challenging this falsity.

The sole opposition interposed by LaRossa, Mitchell & Ross was that collateral estoppel did not apply under these circumstances. However, the law firm never challenged the central premise of the motion, that the City’s sole reason for settling was the perjured testimony. That is, they never challenged that premise, so plaintiff argues here, until it was too late.

Justice Solomon ruled in favor of the City in a Decision and Order dated February 24, 1995. In the course of that decision she made the following correct statements:

…none of these defendants challenges any of the City’s contentions as to the underlying facts, including that, but for the fabricated testimony, and evidence, there would have been no viable claim in any of the three lawsuits (pp 14-15)

and

The City argues that but for the criminal acts of defendants, it would not have paid any money in connection with these cases because there would have been no evidence of prior notice which was required to establish a prima facie case against the City… This contention is unrefuted (p. 27). [*3]

But the plaintiff very definitely in his complaint and papers accompanying this motion, refutes that. Plaintiff takes great pains to show that conclusion was not true, and in fact, that there was clear evidence to rebut said conclusion. Plaintiff asserts their was sufficient evidence without the use of perjured testimony to merit a jury trial, or alternatively to have convinced the City to settle the actions, albeit perhaps for lesser figures.

Further plaintiff argues, and it is a good argument, that by the defendants’ firm’s very own words and actions, taken soon after Justice Solomon’s decision, it is clear the firm felt similarly.

What was that action? In May of 1995, the defendants moved for reargument/renewal of Justice Solomon’s decision. That motion was supported with a nine-page affirmation by an associate of the law firm, Susan G. LaRossa. Eight of these pages addressed the defendant’s position in detail. Ms. LaRossa argued that in fact the defendants were contesting the City’s claim that but for the fabricated evidence and perjurious testimony, the cases had no value. The affirmant tried to explain why these new facts had not been argued earlier, that there had not been a conviction of mail fraud, merely bribery, which went to their argument why collateral estoppel was not applicable, and that true discovery had not yet occurred. However, the thrust of the affirmation, citing the deposition testimony of Daniel Loveglia from the City Department of Highways, read at the trial regarding a daily log for the Queensboro Bridge, as well as repair records, supported the plaintiff Aboud’s position that there were potholes on the bridge and that only three days before the accident, repairs had begun to address these. The LaRossa deposition also referred to attached memoranda from the City evaluating the case as an extremely serious one and taking note of these repair records. "

 

The matter of  Steinberg v. Schnapp, 2010 NY SlipOp 02991 relates the story of three lawyers, all of whom labored over a decedent’s estate, and how the triumvirate fell apart.  Steinberg and Schnapp were retained to handle the estate by the executor who in this case was the third attorney.  Things fell apart rapidly, and, although unsaid, some mistakes were made.  Attorney 1 sues attorney 2 over fees, but does not sue the estate.  Why is this?

Judge Nardelli seems to have hit it on the head when he wrote "Inchoate in his complaint and the averments in support is a veiled concern that he might face a legal malpractice action for actions for which he was not responsible. Why a claim in quantum meruit against co-counsel would forestall such an action is left unsaid, but, in any event, the only issue before us with regard to the quantum meruit claim is whether Steinberg has raised any questions of fact as to Schnapp’s argument that he has failed to state a cause of action.

At issue is the propriety of the motion court’s dismissal of an attorney’s claims under the theories of quantum meruit, as well as tortious interference with advantageous economic relationships. Both plaintiff Robert Steinberg and defendant Stanley Schnapp are attorneys admitted to practice in New York. Non-party Leon Baer Borstein also is an attorney, and was the preliminary executor of the estate of Isi Fischzang.

In the claim for tortious interference Steinberg alleges that he was fired because the "underlying client" (Borstein) had become dissatisfied with the delays in the probate of the estate, but that Schnapp fired Steinberg to shift the blame for the delays to Steinberg. Notably, Steinberg acknowledges that the "underlying client" could have requested his discharge "whimsically or capriciously or for any reason or for no reason, but the discharge would remain without cause.’" His concern that there is an intimation that his termination was "for cause" apparently provides much of the impetus for this litigation.

 

"[W]e are required to adjudicate [parties’] rights according to the unambiguous terms of the contract and therefore must give the words and phrases employed their plain meaning (Laba v. Carey, 29 NY2d 302, 308 [1971]). The plain language of all the written documents presented in this record evidences that Steinberg’s client was the estate, and not Schnapp. Certainly, "[i]f a client exercises the right to discharge an attorney after some services are performed but prior to the completion of the services for which the fee was agreed upon, the discharged attorney is entitled to recover compensation from the client measured by the fair and reasonable value of the completed services" (Matter of Cooperman, 83 NY2d 465, 473 [1994] [emphasis added]). In this case Steinberg has sought to recover compensation for his services from a party who did not have any obligation to compensate him – his co-counsel – with whom he was clearly not in privity. There is not even a suggestion that the estate is an undisclosed principal, in which case liability might attach to Schnapp, under time-honored principles (see e.g. Ell Dee Clothing Co. v. Marsh, 247 NY 392, 397 [1928])."

 

Legal Malpractice and immigration cases are a rare fit.  Practitioners in legal malpractice get lots of calls about immigration malpractice, but the elements and the parties rarely line up.  Often if there is a good liability case, the client is no longer in the US.  If the client is available, there is little evidence of actually out-of pocket loss.  If the client is available, and there is proof of loss, then liability is a mixed issue.  Here, in Jansz v Meyers, 2010 NYSlipOp 30781, we see all three line up.

Plaintiff is an Australian citizen, and an attorney.  She was here legally on a H1-B visa.  She wanted to switch jobs, and hired the defendant attorney to handle the transition and visa renewal. He failed to file the visa application, and she lost her visa.  Able to remain in the US, but unable to leave and return, she made applications for hardship exemptions.  Here the attorney wrote that the client placed her trust in him, and he "failed her miserably" and that none of this was her fault.  The hardship request failed. 

In the ensuing legal malpractice law suit, the attorney, of course backtracked, and said that he wrote the material for her hardship application merely out of the goodness of his heart, and that it was indeed her fault.  Justice Solomon found for plaintiff on summary judgment.

We continue from yesterday in an examination of the statute of limitations in legal malpractice.  It’s three years, pursuant to CPLR 214(6). It is a "bright line" rule,  but it can have exceptions. Beyond the exceptions there is always a question as to when the statute begins to run. For example, there is a line of cases which hold that the statute does not begin to run until all elements of a case are in place. 

However, A recent US District Court case, in Southern District of New York, authored by Judge Sullivan has an excellent discussion of the traditional rule, the origins of the rule, of continuous representation and its relation to the continuous treatment concept of medical malpractice, and how it impacts transactional work, which has negative results years later. We’ll discuss this case today and tomorrow.

MIG, INC., v. PAUL, WEISS, RIFKIND, WHARTON & GARRISON, L.L.P., No 09 Civ. 5593 (RJS)UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2010 U.S. Dist. LEXIS 29548; March 29, 2010. While the facts of the case are somewhat complicated and deal with corporate documents and share holding issues, the legal malpractice issue is simpler. It is alleged that Paul Weiss made mistakes in the drafting of corporate documents in 1997 that had real world consequences in 2009.
 

From the opinion: "The alleged drafting malpractice occurred in September 1997, the date when the COD was filed. (See FAC P 2.) Clearly, the cause of action accrued at the same time. Absent the continuing representation doctrine, then, the claim would have expired in September of 2000. Accordingly, the Court must determine whether there was "a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim." McCoy, 99 N.Y.2d at 306. Of course, a plaintiff cannot simply make conclusory allegations that such an understanding existed, but must plead facts that support such an understanding. See W. Vill. Assocs., 854 N.Y.S.2d at 341 ("[F]acts are required to demonstrate [*20] continued representation in the specific matter directly under dispute."); cf. Iqbal, 129 S. Ct. at 1949. Therefore, the Court must evaluate the specific allegations in the Complaint that support Plaintiff’s conclusion.

Plaintiff offers two theories of how the continuing representation doctrine tolls the statute of limitations until 2007. First, Plaintiff argues that it has alleged specific representations related to the COD in each year from 1997 through 2007. (Pl.’s Opp. 11-18.) In the alternative, Plaintiff argues that it need not describe specific instances of continuing representation each year because the parties’ "mutual understanding" suffices to toll the statute of limitations. Neither of these arguments is persuasive.

a. Continuing Representations

Plaintiff first argues that specific work done by PW for MIG each year from 1997 through 2007, mostly in the form of SEC filings, is sufficient to satisfy the continuing representation doctrine. Thus, Plaintiff alleges that after the COD was filed in 1997, "PW consistently monitored the COD . . . [and] represented MIG in connection with each and every development concerning the COD through March, 2008." (FAC P 19.)

To support this claim, [*21] MIG alleges that "PW advised, reviewed, commented, edited and wrote MIG’s 10Ks, 10KAs, 10Qs, 10QAs and other SEC filings that concerned both the Preferred Stock and the COD." (Id. P 20.) For example, in 1998, PW prepared MIG’s 10K for 1997, which "recites that the sum of 199.4 million dollars was raised by the preferred stock public offering." (Id. P 21.) In addition, the 1997 10K provides, inter alia, a summary of the Company’s outstanding equity, including the amount of preferred shares and their principal rights. (Glanc Decl. Ex. 15 (Form 10K filed by Metromedia International Group, Inc. on March 31, 1998) at F-37.) The 10K did not, however, address the Preferred Holders’ conversion rights under section 8 — the provision containing the alleged malpractice. (Id.)

Plaintiff’s memorandum also argues that a 1999 bond offering in connection with a merger is further evidence of a continuing representation with respect to the 1997 COD. (Pl.’s Opp. 15-16.) Plaintiff contends that PW’s opinion letter in that offering, incorporated into the Registration Statements of those notes (Form S-4s), brings this representation within the continuing representation doctrine. (FAC P 21.) In the opinion [*22] letter, PW states that, "[i]n connection with this opinion . . . we have examined . . . those corporate records of the Company as we have considered appropriate, including copies of its Amended and Restated Certificate of Incorporation." (See Gluckow Supp. Ex. D (Form S-4, filed by Metromedia International Group, Inc. on Aug. 31, 1999) & Ex. E (Form S-4/A, filed by Metromedia International Group, Inc. on Sept. 24, 1999).) Plaintiff concludes that, because the COD "amends" the Certificate of Incorporation, "Defendant flatly admitted it ‘examined’ the COD in connection with the merger." (Pl.’s Opp. 15-16.) Similarly, Plaintiff alleges that PW analyzed the effects of the new issue on the Preferred Stock: "a 10K405 filing states that the indenture for the senior discount notes limits the ability of MIG and certain of its subsidiaries to, among other things, incur additional indebtedness or issue capital or preferred stock." (FAC P 21.) 8
 

The statute of limitations in legal malpractice in NY is three years, pursuant to CPLR 214(6).  It is a "bright line" rule, and can be both harsh and unbending.  There are exceptions, and there are question as to when the statute  begins to run.  A recent US District Court case, in Southern District of New York, authored by Judge Sullivan has an excellent discussion of the origins of the rule, of continuous representation and its relation to the continuous treatment concept of medical malpractice, and how it impacts transactional work, which has negative results years later.  We’ll discuss this case today and tomorrow.

MIG, INC., v. PAUL, WEISS, RIFKIND, WHARTON & GARRISON, L.L.P., No 09 Civ. 5593 (RJS)UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2010 U.S. Dist. LEXIS 29548;  March 29, 2010.  While the facts of the case are somewhat complicated and deal with corporate documents and share holding issues, the legal malpractice issue is simpler.  It is alleged that Paul Weiss made mistakes in the drafting of corporate documents in 1997 that had real world consequences in 2009.  During the period between drafting and an adverse outcome in the Chancery Court of Delaware, Paul Weiss worked on the issue, billed the client on the issue, made presentations and wrote letters on the issue.  Does this amount to continuous representation?

From the decision: "New York’s statute of limitations for legal malpractice is three years. See N.Y. C.P.L.R. § 214(6). The claim accrues when the [*17] malpractice is committed. Shumsky v. Eisenstein, 96 N.Y.2d 164, 166, 750 N.E.2d 67, 726 N.Y.S.2d 365 (2001). Accordingly, the three years begins to run "when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court." Williamson ex rel. Lipper Convertibles, L.P. v. PricewaterhouseCoopers LLP, 9 N.Y.3d 1, 8, 872 N.E.2d 842, 840 N.Y.S.2d 730 (2007) (quotation omitted); accord McCoy v. Feinman, 99 N.Y.2d 295, 301, 785 N.E.2d 714, 755 N.Y.S.2d 693 (2002). "In most cases, this accrual time is measured from the day an actionable injury occurs, even if the aggrieved party is then ignorant of the wrong or injury." McCoy, 99 N.Y.2d at 301 (quotation omitted).

New York does, however, recognize a limited exception to the three-year bar. The continuing representation doctrine "’recognizes that a person seeking professional assistance has a right to repose confidence in the professional’s ability and good faith, and realistically cannot be expected to question and assess the techniques employed or manner in which the services are rendered."’ Shumsky, 96 N.Y.2d at 167 (quoting Greene v. Greene, 56 N.Y.2d 86, 94, 436 N.E.2d 496, 451 N.Y.S.2d 46 (1992)). In such cases, the three-year statute of limitations will not begin to run until the representation ends. See Glamm v. Allen, 57 N.Y.2d 87, 94, 439 N.E.2d 390, 453 N.Y.S.2d 674 (1982).

The [*18] continuing representation doctrine is an exception, however, and not the rule. "Application of the [continuing representation doctrine is] . . . generally limited to the course of representation concerning a specific legal matter," Shumsky, 96 N.Y.2d at 168, and courts must determine "’whether there has been continuous treatment, and not merely a continuing relation’" between the attorney and client. Id. at 168 (quoting McDermott v. Torre, 56 N.Y.2d 399, 405, 437 N.E.2d 1108, 452 N.Y.S.2d 351 (1982)) (borrowing rationale from medical malpractice cases). Thus, "the doctrine is not applicable to a client’s or patient’s continuing general relationship with a lawyer or physician involving only routine contact for miscellaneous legal representation or medical care, unrelated to the matter upon which the allegations of malpractice are predicated." Id.; accord Williamson ex rel. Lipper Convertibles, L.P, 9 N.Y.3d at 9 ("The [continuing representation doctrine] does not apply to a continuing general relationship between patient and physician or to situations where the patient initiates routine, periodic examinations to check a condition."). Rather, the continuing representation doctrine is only applicable "where the continuous [*19] representation pertains specifically to the matter in which the attorney committed the alleged malpractice." Id.; cf. W. Vill. Assocs. Ltd. P’ship v. Balber Pickard Battistoni Maldonado & Ver Dun Tuin, PC, 49 A.D.3d 270, 854 N.Y.S.2d 340, 341 (1st Dep’t 2008) ("The pleading must assert more than simply an extended general relationship between the professional and client, and the facts are required to demonstrate continued representation in the specific matter directly under dispute.")"  More tomorrow.

 

Sometimes a court opinion sets forth a grand landscape of the facts, the law, and public policy.  These cases are revered forever. They are studied in law school, and provide fodder for generations of law students.  We may not remember the names of the cases, but they remain in memory as mileposts.  The folding box case about privacy rights; the firefighter’s case about whether the municipality owes a duty to landowners to put out a fire, the ancient case over what power the Supreme Court has. 

Sometimes the decision is cryptic and requires ferreting out the facts.  Here is one such case. Zinger v Levinson ; 2010 NY Slip Op 50562(U) ; Decided on April 7, 2010 ; Appellate Term, First Department . What do we gather from this case?  We see that it started in Civil Court, so either the amounts in dispute are less than $ 25000 or it was started by a pro-se litigant who either didn’t want to spend $ 210 for an index number, or didn’t know better.  We see that there no attorney names which suggests a pro-se plaintiff.  We see that the dispute is over succession to a rent stabilized apartment which suggests that plaintiff was the decedent of a parent who lived in a rent stabilized apartment and wanted to move in, and was willing to hire an attorney to try for that right.  We see that the plaintiff didn’t get the apartment and was willing to sue the attorney over this issue.
 

Finally, we see that plaintiff was unable to offer proof of the attorney’s negligence.  Not much going on, but definitely a bad outcome for plaintiff.

 

Today we report on a recent US District Court case, in Southern District of New York, authored by Judge Sullivan  which has an excellent discussion of the traditional rule, of continuous representation,  the origins of the rule and its relation to the continuous treatment concept of medical malpractice.  Transactional legal work such as drafting of contracts, preparing wills, and performing closings of real estate may have negative results years later. How does the statue of limitations and its exceptions apply?

MIG, INC., v. PAUL, WEISS, RIFKIND, WHARTON & GARRISON, L.L.P., No 09 Civ. 5593 (RJS)UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2010 U.S. Dist. LEXIS 29548; March 29, 2010. concerning the drafting of corporate documents in 1997 that had real world consequences in 2009.  Eventually the Chancery Court of Delaware and its highest court found that mistakes in the corporate shareholder documents would cost MIG about $ 130 million,  Their legal malpractice case has been dismissed on statute grounds.  The documents were drafted in 1997, but "On October 13, 2004, while advising MIG on a series of proposals for the "sale of the majority of MIG," PW issued a memorandum informing the MIG Board of a potential problem with the COD. (FAC P 21; Decl. of Paul C. Gluckow in Supp. of Def.’s Mot. to Dismiss or Stay ("Gluckow Supp.") Ex. B (Mem. from James M. Dubin & Jeffrey D. Marell to the Board of Directors of Metromedia International Group, Inc. (Oct. 13, 2004) (the "2004 Memo")).) The 2004 Memo informed MIG that an "inconsistency" or "ambiguity" in the COD could be read to provide the Preferred Holders with greater financial rights than either MIG or PW had intended.
 

On April 16, 2009, the Delaware Chancery Court concluded that the COD entitled preferred shareholders to "double-dip," or be paid twice for the accrued dividends. (FAC PP 28, 30.) See Metromedia I, 971 A.2d at 906-07 (Del. Ch. 2009); In re Appraisal of Metromedia Int’l Group, Inc. (Metromedia II), No. 3351-CC, 2009 Del. Ch. LEXIS 92, 2009 WL 1509182, at *3 (Del. Ch. May 28, 2009)

New York’s statute of limitations for legal malpractice is three years. See N.Y. C.P.L.R. § 214(6). The claim accrues when the [*17] malpractice is committed. Shumsky v. Eisenstein, 96 N.Y.2d 164, 166, 750 N.E.2d 67, 726 N.Y.S.2d 365 (2001). Accordingly, the three years begins to run "when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court." Williamson ex rel. Lipper Convertibles, L.P. v. PricewaterhouseCoopers LLP, 9 N.Y.3d 1, 8, 872 N.E.2d 842, 840 N.Y.S.2d 730 (2007) (quotation omitted); accord McCoy v. Feinman, 99 N.Y.2d 295, 301, 785 N.E.2d 714, 755 N.Y.S.2d 693 (2002). "In most cases, this accrual time is measured from the day an actionable injury occurs, even if the aggrieved party is then ignorant of the wrong or injury." McCoy, 99 N.Y.2d at 301 (quotation omitted).

New York does, however, recognize a limited exception to the three-year bar. The continuing representation doctrine "’recognizes that a person seeking professional assistance has a right to repose confidence in the professional’s ability and good faith, and realistically cannot be expected to question and assess the techniques employed or manner in which the services are rendered."’ Shumsky, 96 N.Y.2d at 167 (quoting Greene v. Greene, 56 N.Y.2d 86, 94, 436 N.E.2d 496, 451 N.Y.S.2d 46 (1992)). In such cases, the three-year statute of limitations will not begin to run until the representation ends. See Glamm v. Allen, 57 N.Y.2d 87, 94, 439 N.E.2d 390, 453 N.Y.S.2d 674 (1982)."  We’ll continue this discussion.
 

 

What is a question of judgment, what is neglect of a case and what is ignorance of the rules in legal malpractice?  Sometimes this is an easy question, other times, slightly more complex. in  MCCORD -v.- O’NEILL,;  No. 08-3096-cv ;  Summary Order;  UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT;2010 U.S. App. LEXIS 5139 we see the 2d Circuit’s general definitions;
 

"Construing all the facts in McCord’s favor, an independent review of the record shows that the district court properly granted O’Neill’s motion for summary judgment. "To state a claim for legal malpractice under New York law, a plaintiff must allege: (1) attorney negligence; (2) which is the proximate cause of a loss; and (3) actual damages." Achtman v. Kirby, McInerney & Squire, LLP, 464 F.3d 328, 337 (2d Cir. 2006). Under this standard, "[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. (quoting Rosner v. Paley, 65 N.Y.2d 736, 481 N.E. 2d 553, 554, 492 N.Y.S.2d 13 (N.Y. 1985)). And, in general, "an attorney may only be held liable for ‘ignorance of the rules of practice, failure to comply with conditions precedent to suit, or for his neglect to prosecute or defend an action.’" Id. (quoting Bernstein v. Oppenheim & Co., 160 A.D.2d 428, 554 N.Y.S.2d 487, 489-90 (N.Y. App. Div. 1st Dep’t 1990)).

Here, McCord’s malpractice claim rested on the allegation that O’Neill’s failure to contact Ron Lawrence, another employee of McCord’s former employer, as a possible witness constituted [*4] negligence, and that, had Lawrence been a witness in his case, the district court would not have granted Airborne’s motion for judgment of a matter of law and dismissed McCord’s discrimination claims. O’Neill met his initial burden of demonstrating that his decision was a reasonable strategic choice by showing that the only information regarding Lawrence in McCord’s possession at the time was Lawrence’s "Summary of Disciplinary/Attendance History." This document showed that Lawrence, a Caucasian, had received much the same disciplinary treatment as McCord, undermining McCord’s contention that calling Lawrence would have enabled him to demonstrate that his employer treated him less favorably than a similarly situated employee outside of his protected group. See Mandell v. County of Suffolk, 316 F.3d 368, 379 (2d Cir. 2003). As the district court correctly observed, McCord adduced no evidence in response suggesting that O’Neill’s failure to contact Lawrence was negligent, or that this decision could have proximately resulted in the court’s unfavorable decision in Hill."
 

Clients depend on attorneys to advise them on the law.  Quick, what do you know about usury?  Do you know enough competently to advise a client, or just enough to get yourself into trouble?  Here is a legal malpractice story about the later.Theresa Striano Revocable Trust v Blancato
2010 NY Slip Op 02773 ;Decided on March 30, 2010 ;Appellate Division, Second Department
 

Attorney is retained to perform two mortgage transactions, and notes that the interest rate is 17%.  Usury, he wonders?  He asks the borrower’s attorney, who tells him not to worry, its a commercial transaction.  Naturally, it all falls apart soon enough.

"Before the closing documents were finalized, the defendant Richard T. Blancato, who was the plaintiffs’ attorney, observed that the 17% annual interest rate on the loans might be usurious under General Obligations Law § 5-501 and Banking Law § 14-a, which generally fix the maximum annual interest rate which may be charged for these types of transactions at 16%. He shared his concern with the borrower’s counsel, who assured him that the rate was not usurious because the loans were commercial in nature. Based on this explanation, the defendant was persuaded that no usury issue existed, and never notified Striano about the potential problem.
 

Here, the defendant’s reliance upon the advice of the borrower’s attorney reflects a failure to exercise ordinary reasonable skill (see Shopsin v Siben & Siben, 268 AD2d 578; McCoy v Tepper, 261 AD2d 592, 593; Logalbo v Plishkin, Rubano & Baum, 163 AD2d 511, 514). As the plaintiffs’ current counsel correctly notes, even a cursory review of the relevant statutes would have revealed that the proposed loans did not fall under any usury exceptions. Additionally, the defendant’s efforts to paint his actions in a favorable light are unavailing, as his recent averments directly contradict both his 2008 affirmation and the averments of Thomas Fatato, Striano’s brother, who submitted an affidavit on the defendant’s behalf (see Denicola v Costello, 44 AD3d 990; Telfeyan v City of New York, 40 AD3d 372, 373).

The defendant contends that Fatato ultimately was responsible for the decision to provide the loans despite the potential usury problem. Assuming, however, that Fatato acted as Striano’s agent and was aware of the borrower’s counsel’s advice (such that Fatato’s knowledge can be imputed to Striano), the defendant "may not shift to the client the legal responsibility [he] was specifically hired to undertake because of [his] superior knowledge" (Hart v Carro, Spanbock, Kaster & Cuiffo, 211 AD2d 617, 619).

Accordingly, the plaintiffs established, prima facie, that the defendant acted negligently with respect to the usury issue. Issues of fact exist, however, as to whether Striano was involved in certain decisions regarding the handling of the mortgage foreclosure actions filed against the borrower and, if so, whether those decisions constituted an intervening cause of the plaintiffs’ injuries (see Eisenberger v Septimus, 44 AD3d 994, 995; Brooks v Lewin, 21 AD3d 731, 734; Selletti v Liotti, 22 AD3d 739, 740; Blank v Harry Katz, P.C., 3 AD3d 512, 513). The Supreme Court’s denial of the plaintiffs’ motion was, therefore, proper. "

 

Associate is hired and assigned to a case. A mistake of malpractice proportions takes place, and the associate leaves to form his own firm. He takes the case with him, and is alleged to have made more mistakes of malpractice proportion. Is the Original law firm still responsible?"

in this case, yes. In Red Hook/Gowanus Chamber of Commerce, Inc. v Brightbill ;2010 NY Slip Op 02719 ; Decided on April 1, 2010 ; Appellate Division, First Department .

"In preparing the CPLR article 78 proceeding seeking to vacate a determination approving a variance, Brightbill allegedly committed malpractice in failing to name a necessary party. Brightbill subsequently left the firm and formed his own firm, which was substituted for appellants in prosecuting plaintiff’s claims. Additional acts of malpractice were allegedly committed in connection with Brightbill’s subsequent representation of plaintiff, and appellants maintain that they cannot be held liable for the alleged negligence of Brightbill and his firm.

"[A]n intervening act which is a normal consequence of the situation created by a defendant cannot constitute a superseding cause absolving the defendant from liability" (Lynch v Bay Ridge Obstetrical & Gynecological Assoc., 72 NY2d 632, 636-637 [1988]). Here, the motion court properly determined that appellants failed to sustain their prima facie burden of establishing that the alleged negligence of Brightbill and his firm was not a normal consequence of the situation created by the initial purportedly negligent act of failing to name a necessary party in the article 78 proceeding. In this regard, we note that plaintiff does not allege that the motion to amend the petition to request a remand rather than vacatur of the variance was an act [*2]of malpractice.

We have considered appellants’ remaining arguments, including that they cannot be held liable because their conduct could not be considered the proximate cause of plaintiff’s damages, and find them unavailing. "