The decision in International Electron Devices (usa) LLC v Menter, Rudin & Trivelpiece, P.C.
2010 NY Slip Op 02343 ; Decided on March 19, 2010 ;Appellate Division, Fourth Department is not groundbreaking, but it is illustrious of what sometimes appears to be unwarranted deference to target attorneys on the question of the statute of limitations.  Defendant attorneys represented plaintiffs in the purchase and closing of business assets and commercial property.  Some two years later, plaintiffs became enmeshed in an Environmental Protection Agency (EPA) investigation about contamination on the property requiring abatement at an estimated cost of $8 million.
 

Plaintiffs sued defendants more than three years after the closing.  Does this fact alone warrant dismissal based upon the statute of limitations?  Supreme Court granted dismissal, but the 4th Department reversed:

"We agree with plaintiffs that Supreme Court erred in granting defendant’s motion for summary judgment dismissing the amended complaint on the ground that it was time-barred. As plaintiffs correctly concede, the three-year statute of limitations applicable to a legal malpractice cause of action accrued on October 26, 2004, the date of the closing and thus when the malpractice was committed, and it expired on October 26, 2007 (see CPLR 214 [6]; Shumsky v Eisenstein, 96 NY2d 164, 166; see also Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 7). Defendant thus met its initial burden of establishing that this action, commenced in October 2008, was time-barred (see Gravel v Cicola, 297 AD2d 620, 620-621). The burden then shifted to plaintiffs to raise a triable issue of fact whether the statute of limitations was tolled by the continuous representation doctrine (see id. at 621). "For the continuous representation doctrine to apply to an action sounding in legal malpractice . . ., there must be clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the attorney[,] which often includes an attempt by the attorney to rectify an alleged act of malpractice" (Luk Lamellen U. Kupplungbau [*2]GmbH v Lerner, 166 AD2d 505, 506-507; see Aaron v Roemer, Wallens & Mineaux, 272 AD2d 752, 754, lv dismissed 96 NY2d 730). That doctrine "tolls the [s]tatute of [l]imitations only where the continuing representation pertains specifically to the matter in which the attorney committed the alleged malpractice" (Shumsky, 96 NY2d at 168; see Amendola v Kendzia, 17 AD3d 1105, 1108-1109). Thus "if there is merely a continuing general relationship with [an attorney] . . . involving only routine contact for miscellaneous legal representation . . . unrelated to the matter upon which the allegations of malpractice are predicated’ . . ., the toll will not be found" (Chicago Tit. Ins. Co. v Mazula, 47 AD3d 999, 1000, quoting Shumsky, 96 NY2d at 168).

In opposition to the motion, plaintiffs established that defendant represented them in the late summer and fall of 2006 in connection with the EPA investigation. We agree with plaintiffs that there is a triable issue of fact whether that representation was related to defendant’s alleged malpractice in failing to conduct a thorough environmental investigation of the property prior to the closing (see generally Shumsky, 96 NY2d at 168). Plaintiffs also raised a triable issue of fact whether that representation constituted an attempt to rectify the alleged malpractice (see Gravel, 297 AD2d at 621). "

 

Humans have fingers, and are willing to point with them.  Looking back over events and apportioning blame is not particularly limited to legal malpractice questions, but seems to be very prevalent there.  Here, in Sklover & Donath, LLC v Eber-Schmid ; 2010 NY Slip Op 02002
Decided on March 16, 2010 ; Appellate Division, First Department  the justices borrow from an unidentified law review article to state that hindsight is "an unreliable test for determining the past existence of legal malpractice" (Darby & Darby v VSI Intl., 95 NY2d 308, 315 [2000] [law review source omitted]).
 

Attorneys represented clients in a federal criminal proceeding as well as a related civil proceeding.  Relations broke down over legal fees, and eventually the attorneys moved to be relieved.  A fee action with a legal malpractice counterclaim followed.  The counterclaim fails for several different reasons.

"Defendants failed to allege a viable counterclaim for breach of contract, as they were unable to identify the terms of the agreement allegedly breached (767 Third Ave. LLC v Greble & Finger, LLP, 8 AD3d 75 [2004]). Nothing in the modified agreement prohibited plaintiff from requesting a lien on real property, withdrawing as counsel, or commencing an action based on unpaid legal fees.

Nor did defendants properly allege a counterclaim for legal malpractice. The steps plaintiff took in litigating these cases were among many reasonable options (see Rosner v Paley, 65 NY2d 736, 738 [1985]). The allegations that plaintiff’s decisions were unreasonable are based on hindsight, As to breach of fiduciary duty, defendants’ contention that plaintiff prolonged the litigation for purposes of "churning" the case to increase the legal fees is speculative and conclusory. Defendants failed to otherwise allege any facts showing that their attorney followed any inappropriate course of action. "

 

Client from outside New York is sued in Federal Court in New York.  Client hires a NY attorney, and then the case shifts focus to a London Arbitration.  When does the billing in NY end, when does the London case take over, and what happens when there is a billing dispute later?  Justice Edmead’s decision in Eaton & Van Winkle LLP v. Midway Oil Holdings Ltd. sets forth a well written explanation of jurisdiction and account stated.

How much must take place in NY for the out of state defendant to be jurisdictionally available in NY?  The short answer is:  enough to satisfy due process.  The longer answer is:  The burden of proving jurisdiction is on the party asserting it.  Long arm jurisdiction is found at CPLR 302(a)(1), and allows for jurisdiction over any non-domiciliary who "transacts any business" within the State, provided that the cause of action arises out of that transaction of business.  A single act will suffice, so long as there is a substantial relationship between that transaction and the injury. The test is the totality of circumstances when determining the existence of purposeful activity. Such acts may include contract negotiations between the parties, meetings, letters or phone calls.  For a fuller description see the decision at pp. 10-13.

The decision also sets forth a full description of the account stated principal.  Where an agreement between the parties holds that when the bill is presented, the recipient is bound to examine it, and if the accounting is admitted as correct, it becomes binding upon both parties.  Receipt and retention of a law firm bill , without objection within a reasonable time, gives rise to an actionable account stated, thereby entitling a firm to summary judgment.

How long is too long? "A lapse of two months is not so long as to constitute such an assent, nor a lapse of three months.  However, four months…"  For a longer explanation, see p. 31-34 of the decision.

In today’s NYLJ  article by Drew Combs we see the interim outcome we see the basic outline of the attorney-client relationship gone bad.

"A California venture capitalist who has admitted to bribing New York state pension officials has sued Gibson Dunn & Crutcher over $1.3 million in fees the firm seeks for representing him during the investigation that precipitated that admission.

Elliott Broidy’s lawsuit—filed March 15 in Los Angeles Superior Court—comes in response to a Gibson Dunn motion to have an arbitrator in New York resolve the fee dispute between the two parties (NYLJ, Feb. 18). Mr. Broidy wants the disagreement handled in California.

The clash stems from work done by Gibson Dunn on behalf of Mr. Broidy and his Markstone Capital Group private equity firm while both were targets of an investigation into "pay-to-play" investments made by the New York State Common Retirement Fund.

Wherever the matter is ultimately decided, Mr. Broidy also claims in his complaint that Gibson Dunn is not entitled to any legal fees because it committed fraud by failing to obtain appropriate conflicts waivers while representing him.

Mr. Broidy seeks an order compelling Gibson Dunn to dismiss the New York arbitration proceedings as well as orders preventing the firm from any further efforts to collect the $1.3 million in legal fees it claims it is owed.

 

At the heart of the dispute, according to Mr. Broidy’s complaint, are two retainer agreements and an engagement letter prepared by Gibson Dunn in connection with the pension probe.

Under terms of the first retainer agreement, Mr. Broidy’s complaint maintains, any dispute that might arise between the investor and the law firm would be submitted to arbitration in Los Angeles and California law would govern.

Mr. Broidy alleges that in April 2009, New York-based Gibson Dunn partner Randy Mastro "demanded" that Mr. Broidy sign a new retainer with the firm on his own behalf. Mr. Broidy says in his complaint that Mr. Mastro allegedly assured him that the terms of the two were otherwise the same, and acknowledges signing the new agreement."

 

This story about a Kentucky case comes from the Legal Profession Blog. 

"A high school English teacher was sitting in her living room when a small plane hit the roof of the second story of her home. She suffered no direct physical injury but went into a state of shock, which led to health problems.

She retained an attorney to file suit against the pilot. The attorney missed the one-year statute of limitations despite reminders and also failed to comply with discovery obligations and court orders. The suit was dismissed. The teacher then sued her attorney for malpractice. A jury returned a verdict in her favor of over $5 million. The lawyer appealed.

The Kentucky Court of Appeals affirmed the jury verdict of malpractice and punitive damages against the attorney. The court vacated some aspects of the damage award. In particular, the teacher’s "case-within-a-case" proving negligence on the part of the pilot could not sustain a claim for punitive damages because of Kentucky’s "impact" rule. (Mike Frisch)"

 

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.