As further proof of the wide-ranging nature of legal malpractice litigation, we see in D’Elia v. D’Amico & Associates  , 2010 NY Slip Op 30545, Supreme Court, Nassau County, J. McCarty a plaintiff who has claims against the target attorneys for estate matters for two relatives as well as in the purchase of a house.

One important aspect of legal malpractice is the relatively high incidence of pro-se representation.  This case is chock full of missed deadlines, failures to obtain adjournments, etc.  The bottom line here is the statue of limitations.  Unclear from the decision is how the three year legal malpractice statute applies to work completed within that time frame, but what is absolutely clear is the effect of a disorganized approach to litigation leads to dismissal.  We see:  "To the extent that plaintiff failed to offer any opposition to any of the defendants’ motions to dismiss, this Court cannot be said to have overlooked or misapprehended the matters of fact or law prof erred by plaintiff, as there were none, and plaintiff may not include such matters of fact now, having failed to offer them in opposition to defendants’ prior motions."

"With regard to the issue of reasonable justification, plaintiff alleges that she failed to oppose defendants’ motions to dismiss because she needed additional time to prepare her opposition to such motions, and she misunderstood this Court’s procedure for the granting of adjournments on motions."

We’re not sure how to value this legal malpractice law suit reported in Law.Com in a story by Julia Kay.    It’s not simply a $ 168 Million claim, it’s a class action case too.

"A Sarasota, Fla., judge dismissed some counts but let stand malpractice and breach of fiduciary duty charges in a lawsuit filed against Holland & Knight by the receiver in a $168 million Ponzi scheme.

The rulings by Circuit Judge Rick DeFuria keep alive a suit filed last year by Burton Wiand against the law firm and one of its partners, Scott MacLeod. Wiand of Wiand Guerra King of Tampa was appointed receiver in January 2009 to try to recover funds from indicted Sarasota hedge fund manager Arthur Nadel.

Nadel, 77, pleaded guilty last month to 15 counts of operating a Ponzi scheme in Sarasota from 1999 to 2009. In a case that has been compared to Bernard Madoff’s, Nadel’s investors thought they were investing in a variety of hedge funds under Nadel’s control or association. He is awaiting sentencing in a New York prison and faces up to 300 years. "

"Wiand hired the law firm Johnson Pope Bokor Ruppel & Burns of Tampa to sue Holland & Knight for allegedly preparing disclosure documents for investors that failed to mention Nadel was a disbarred New York attorney who had drained a client’s escrow account. The suit also accuses Holland of conflicts of interest for representing Nadel and his investment funds simultaneously.

Wiand is seeking up to $168 million from Holland, equal to the amount of the Ponzi loss.

A separate class action suit brought by investors is pending in Tampa federal court with motions to dismiss filed by Holland & Knight. "

"

Legal Malpractice cases arise from any number of interesting underlaying matters.  In Shawandya L. Simpson v. Bernard M. Alter and Diana A. Johnson, the legal malpractice case alleges breach of fiduciary duty, conflict of interest, legal malpractice and wrongful disclosure of information.

Here, Simpson was running for judicial office in Brooklyn as was Diana Johnson.  Simpson had retained Alter to help her "establish a sufficient residency in the borough of Brooklyn to allow her to run for judicial office in that County."  He did the work, and she ran for office.

In the internecine world of borough politics, naturally an opponent sought to keep her off the ballot.  Johnson retained Alter to do so, in 2004.  There was a hearing on interlocutory applications as well "as the ultimate relief to remove Simpson from the ballot."  Alter no longer represented Simpson, and was permitted to represent her opponent on trial.  However, there were limits on the questions he could ask. The Court challenged Alter on his cross-exam, threatening to disqualify him.  Alter tailored his questions in the face of the court’s ruling.

Now, Simpson successfully avoids dismissal, and may move ahead on her breach case.

One rule that we think distinguishes legal malpractice from all other areas of the law (with the possible exception of medical malpractice) is the question of judgment and how it might insulate the practitioner from claims of negligence.  Here, in MARK A. MCCORD, -v.- MICHAEL G. O’NEILL, UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT;2010 U.S. App. LEXIS 5139;March 11, 2010, Decided the principal is defined.
 

"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.

The Appellate Decision in Steven Von Duerring,  v. Hession & Bekoff,  is so sparse that one has absolutely no idea what the case is about.  When we turn to the Supreme Court case from which the appeal emanates we see that it is a legal malpractice arising out of a claim that "they were negligently represented by defendants in the failed purchase of a house to be constructed on plaintiff’s behalf by third parties (sellers).

The deal fell apart.  Plaintiffs did not get a mortgage, but seemed to be able to demonstrate financial ability and willingness to set aside funds to comply.  Did the deal fall apart because of negligence of the attorneys or not?  Supreme Court determined that under the circumstances, issues of fact existed as to whether defendant attorneys breached their duty of care in advising plaintiffs during the closing process that an escrow deposit would be sufficient to avoid cancelling the contract.

Supreme Court said yes, the Appellate Division said no.  Unfortunately for us, the AD did not set forth its reasons.

If thing go wrong, sue the attorney!  It’s a familiar meme, yet there are more and more arbitration clauses found in retainer agreements, especially media representations and patent law.  On the one hand, in NYS there are the mandatory fee dispute arbitrations, but that is now what we are thinking about.  As an example: PROTOSTORM, LLC and PETER FAULISI, Plaintiffs, -against- ANTONELLI, TERRY, STOUT & KRAUS, LLP, DALE HOGUE, FREDERICK D. BAILEY, CARL I. BRUNDRIDGE, ALAN E. SCHIAVELLI; 08-CV-931 (NGG)(JO);  UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK; 2010 U.S. Dist. LEXIS 20894 is a multi-defendant patent action.  One of the defendants had an arbitration clause in its retainer agreement.
 

"The party seeking to resolve a dispute by arbitration has the burden of proving a valid [*12] arbitration agreement. See Symphony Fabrics, 2008 U.S. Dist. LEXIS 44588 at *31; Peterson v. Beale, No. 92-CV-5412 (RPP), 1995 U.S. Dist. LEXIS 11580 at *3 (S.D.N.Y. Aug. 11, 1995). A court evaluating this issue applies the same standard as it would when faced with a motion for summary judgment. See Mina v. Foot Locker, Inc., No. 09-CV-0472 (DB), 2009 U.S. Dist. LEXIS 93155 at *3 (S.D.N.Y. Sept. 30, 2009) (citing Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003). "If there is an issue of fact as to the making of the agreement for arbitration, then a trial is necessary." Bensadoun, 316 F.3d at 175. "[W]hether the parties agreed to arbitrate is determined by state law," Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002), and a party contesting the existence of a an agreement to arbitrate may assert all "generally applicable contract defenses, such as fraud, duress, or unconscionability." Doctor’s Assocs. v. Casarotto, 517 U.S. 681, 687, 116 S. Ct. 1652, 134 L. Ed. 2d 902 (1996).

The court must first determine which state’s contract law applies to the threshold issue of the existence of an agreement to arbitrate. A district court sitting in diversity applies the choice-of-law rules of the state in which it sits. [*13] See Lee v. Bankers Trust Co., 166 F.3d 540, 545 (2d Cir. 1999) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941)). New York courts generally honor an express choice-of-law clause if the selected state has sufficient contacts with the matter in dispute, so long as there is no fraud or violation of public policy. See Hartford Fire Ins. Co. v. Orient Overseas Containers Lines, 230 F.3d 549, 556 (2d Cir. 2000).
 

Unlike the existence of an agreement to arbitrate, the scope of such an agreement, once shown, is a question of law to be determined by a court. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, 123 S. Ct. 588, 154 L. Ed. 2d 491 (2002). Plaintiffs assert that the Arbitration Clause solely governs fee disputes. (See Pl. Mem. 46.) Hogue, by contrast, argues that the Arbitration Clause is sufficiently broad to encompass all of Plaintiffs’ claims. (See Reply 16-18.) Each side cites to California law to support their arguments regarding the scope of the Arbitration Clause. No party, however, explains why California law should apply to this question. While the existence [*16] of a binding agreement to arbitrate is a matter of state law, "[t]he issue of an arbitration agreement’s scope is governed by the federal substantive law of arbitrability." Progressive Cas. Ins. Co. v. Reaseguradora Nacional De Venezuela, 991 F.2d 42, 48 (2d Cir. 1993).

"Federal policy strongly favors arbitration as an alternative dispute resolution process." Collins & Aikman Prods. Co. v. Building Sys., Inc., 58 F.3d 16, 19 (2d Cir. 1995); see also JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 171 (2d Cir. 2004). "[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem. Hosp. v. Mercury Const. Com., 460 U.S. 1, 24-25, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983)."

The first cousin to Legal Malpractice is the eternal question of legal fees.  Who pays them?  From whom may they be obtained?  How does one calculate them?  What is reasonable?  Under which situations might an attorney forfeit them?  Might one law firm be responsible to another when it says that it will cover the legal fees of a client?

DePetris & Bachrach, LLP v. Srour   2010 NY Slip Op 01840 ; Decided on March 9, 2010
Appellate Division, First Department  speaks to some of these issues. 
 

"Applying these standards, the motion court erroneously dismissed the fourth and fifth causes of action which allege claims against defendants-respondents for breach of the implied warranty of authority and for tortious misrepresentation of authority and assurances of payment, respectively. These causes of action seek to hold defendants-respondents liable for their own action in misrepresenting that they had authority from the Nassers to enter into a contract in which the defendants, Jacques and Ezequiel Nasser would pay plaintiff law firm $75,000 ($37,500 each) of the legal fees incurred by plaintiff’s client Srour.

Under the doctrine of implied warranty of authority, a person who purports to make a [*2]contract, representation, or conveyance to or with a third party on behalf of another person, lacking power to bind that person, gives an implied warranty of authority to the third party and is subject to liability to the third party for damages for loss caused by breach of that warranty, including loss of the benefit expected from performance by the principal (see Restatement (Third) of Agency § 6.10 [2006]).

Under the doctrine of tortious misrepresentation and assurances of payment, if the person who falsely claims to have power to bind another knows that the claim is untrue, the person has made a fraudulent misrepresentation and is subject to liability to those who, justifiably relying on the representation, suffer a loss as a consequence (see Restatement (Third) of Agency § 7.01 [2006]).

The complaint alleges that defendants-respondents represented to plaintiff law firm that they had authority from the Nassers to promise payment of $75,000 of the legal fees incurred by plaintiff’s client when, in fact, they lacked the authority to bind the Nassers. Thus, the complaint alleges a viable claim for breach of the implied warranty of authority. The complaint also alleges that defendants-respondents falsely represented to plaintiff law firm that they specifically discussed the subject matter of their authority and representations with the Nassers. Thus, the complaint alleges a viable clam for tortious misrepresentation of authority and assurances of payment.

To the extent the motion court relied on the principle of apparent authority, lack of consideration and the statute of frauds to dismiss these causes of action, such was error. The doctrine of apparent authority is irrelevant because the fourth and fifth causes of action are not seeking to hold the principals (the Nassers) liable on the ground that defendants-respondents had apparent authority from the Nassers to make promises of payment. Rather, these causes of action are seeking to hold the agents, defendants-respondents, liable for contracts or representations they purported to make on behalf of the principal (the Nassers) while acting without authority from the principal."
 

We recently reported on this Case in SDNY, captioned STONEWELL CORP., and RICHARD GLADSTONE, Plaintiffs, -against- CONESTOGA TITLE INSURANCE CO., WILLIAM KOLSHORN, and JERSEYSEARCH TITLE SERVICES, INC., Defendants. – as consolidated with – CONESTOGA TITLE INSURANCE CO., WILLIAM KOLSHORN, and JERSEYSEARCH TITLE SERVICES, INC.,

As is common in Federal District Court cases, there are complaints, and then amended complaints and so on.  Today’s iteration of the case involves a second amended complaint.  Here, from the decision:

"For the reasons stated below, Stonewell’s motion for leave to amend as set forth in the Corrected Proposed Second Amended Third-Party Complaint is granted in part and denied in part.

II. Analysis of Proposed Amendments

Stonewell has proposed three new causes of action in its Corrected Proposed Second Amended Third-Party Complaint. The Court finds that: (1) proposed Cause of Action Two is approved as consistent with the Court’s Opinion and Order, dated January 7, 2010; (2) proposed Cause of Action Three is approved as sufficiently related to the original pleadings; (3) proposed Cause of Action Four is denied as unmeritorious and futile; and (4) Dollinger’s other objections to the Corrected Proposed Second Amended Third-Party Complaint are denied.

A. Proposed Cause of Action Two is Approved

Cause of Action Two sets forth the relevant facts in support of the claim that Dollinger failed to convey two offers of settlement to Gladstone. These two instances of a purported breach of duty formed the basis for Stonewell’s first motion for leave to amend the Third-Party Complain, which was granted by the Court. The Court therefore approves the proposed Cause of Action Two [*4] in Stonewell’s Corrected Proposed Second Amended Complaint.

B. Proposed Cause of Action Three is Approved

In its Second Motion to Amend its Third-Party Complaint, Stonewell also seeks to add Cause of Action Three, which provides, in pertinent part:
41. On information and belief, at various times during the period of 1997 and 2007, a variety of settlement discussions were entered into between Conestoga representatives and Dollinger (on behalf of Stonewell/Gladstone). . . . Further, Dollinger admitted in his deposition that he tried to settle the pending matters at various times.

42. At no time did Dollinger communicate any of these discussions of settlement with Stonewell/Gladstone, who would have instructed Dollinger to proceed and settle the case.

43. Dollinger had an absolute duty to bring all settlement discussions to his client’s immediate attention, and to discuss its relative merits and demerits. His failure to do so breaches a fundamental duty to his client.

In support of this new cause of action, Stonewell provides Proposed Exhibit A, which includes several of Dollinger’s invoices. These invoices, dating from between March 1999 and February 2006, make a number of references to Dollinger [*5] engaging in settlement negotiations on behalf of Stonewell. Dollinger objects to the proposed Cause of Action Three on the ground that the allegations are too vague and lack adequate specificity.

The Court finds that the facts and allegations developed during discovery and set forth in Paragraphs 41-43 of the proposed amended pleadings are sufficiently related to the original claims and are foreshadowed in the earlier pleadings. See Bridgeport Music, Inc. v. UMG Recordings, Inc., 248 F.R.D. 408, 415 (S.D.N.Y. 2008); State Farm Mut. Auto. Ins. Co. v. CPT Med. Servs., P.C., 246 F.R.D. 143, 148 (S.D.N.Y. 2007). Permitting the proposed amendment would allow for the full adjudication of the merits of the remaining claim in this litigation – to wit, that, in the course of the attorney-client relationship, Dollinger failed to convey one or more settlement offers to Stonewell, and that this alleged breach caused damages to Stonewell. See Morin v. Trupin, 835 F. Supp. 126, 129 (S.D.N.Y. 1993). Accordingly, the Court grants the motion for leave to amend the pleadings to include Cause of Action Three. The Court also permits the addition of Proposed Exhibit A to the Third-Party Complaint.

C. Proposed [*6] Cause of Action Four is Denied

Stonewell next seeks, for the first time, to add a cause of action based on Dollinger’s alleged failure to send Stonewell copies of invoices for legal fees and expenses that Dollinger sent to Conestoga during the period that Conestoga funded Dollinger’s legal representation of Stonewell. Stonewell offers no legal basis for such a claim, nor does it allege any damages from this purported breach of Dollinger’s duty to Stonewell.

The Court therefore denies leave to amend with respect to proposed Cause of Action Four (Paragraphs 44 and 45) on the ground that such amendment would be futile. See Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 9 L. Ed. 2d 222 (1962).

D. Dollinger’s Other Objections Are Without Merit

Dollinger objects to specific contents of the Corrected Proposed Second Amended Third-Party Complaint that are unchanged from the original pleadings. Dollinger contends that the First Cause of Action (Legal Malpractice) and the Fifth Cause of Action (Failure to Cooperate and Failure to Produce Documents) should be excised from the proposed amended pleadings because they have been dismissed by the Court in its Opinion and Order, dated January 7, 2010. Dollinger further objects to "background [*7] allegations" in the pleadings that relate to these now-dismissed causes of action. 2

FOOTNOTES

2 These "background allegations" appear in Paragraphs 16-26 and 29-31.

These two causes of action have been dismissed and are not the subject of the upcoming trial. Their continued presence in the pleadings is inconsequential to the adjudication of this case. Requiring a redrafting of the original pleadings based on a summary disposition is unnecessary and would be a waste of time and resources. Dollinger’s objections with respect to these portions of the Corrected Proposed Second Amended Third-Party Complaint are therefore denied. 3 "