Continuing the trend towards a combination of bankruptcy and legal malpractice, we note that bankruptcy follows, and rarely precedes legal malpractice situations, hence, we expect a swell of the intersection following the financial down-trends of the past year.  Here, Tabner v Drake
2009 NY Slip Op 10006; Decided on December 31, 2009 ; Appellate Division, Third Department is an example of how settlement of an underlying case is handled in Bankruptcy Court, even when the attorneys seeking their fee have nothing to do with the bankruptcy.  Apparently, individual Drake had carved out a portion of the settlement that was then taken away from him by the Bankruptcy Court, and as a result he would not sign a stipulation and release so that the law firm which had produced the settlement sums might get paid.
 

"In 1998, plaintiffs commenced an action to recover legal fees for services allegedly rendered to defendant Ralph H. Drake Jr.’s residential and commercial real estate business — defendant RHD Construction Corporation. In response, Drake and RHD asserted negligence and malpractice counterclaims against plaintiffs. Multiple pretrial proceedings ensued (see e.g. Tabner v Drake, 9 AD3d 606 [2004]) and, in 2001, Drake filed for bankruptcy under chapter 7 of the Bankruptcy Code.

Shortly after the start of trial, the parties entered into a stipulation of settlement in open court which, among other things, contemplated the exchange of general releases from the parties with respect to all aspects of the litigation. The parties acknowledged that the Bankruptcy Court’s approval of the settlement was required and, in November 2007, the Bankruptcy Court issued an order approving the settlement and authorizing the bankruptcy estate’s trustee to execute general releases in accordance therewith, specifically authorizing the payment of $50,000 to plaintiffs by the trustee. Nevertheless, citing purported inconsistencies between the actual [*2]terms of the settlement and the "Bankruptcy Court approval relative to the amounts to be paid to each defendant," Drake and RHD refused to execute their respective releases. Consequently, plaintiffs moved in Supreme Court for an order directing that defendants execute the releases called for within the agreement and enforcing the stipulation of settlement. Supreme Court granted the motion, prompting this appeal. "

"Accordingly, although the parties agreed to a total settlement of $350,000, with $50,000 going to plaintiffs, $295,000 to RHD and $5,000 to Drake, the Bankruptcy Court properly observed that the bankruptcy estate was the "legal and equitable owner of the litigation whether through [Drake] directly or as the sole shareholder of RHD" (see 11 USC § 541). Its resultant order — that $50,000 be tendered to plaintiffs and $300,000 be tendered to the bankruptcy trustee — thus adequately reflects the terms and conditions of the settlement. In view of the foregoing, we find no reason to disturb Supreme Court’s order."

Plaintiff suffers a construction accident, and his attorneys wait too long to bring the action.  He had a Labor Law 200.240, 241 and other claims, typical in a gravity-fall construction case.  His attorney admit that they waited too long to commence the action, but was successful in dismissal of the Labor la 200 and 240 causes of action.  Then, after an appeal, plaintiff moved for partial summary judgment on Labor Law 241,  In Long v. Cello & Barnes, 2009 NY Slip Op 09790 ; Decided on December 30, 2009 ; Appellate Division, Fourth Department we see
 

"Plaintiff commenced this legal malpractice action seeking, inter alia, damages resulting from the conceded negligence of defendants in representing him in the underlying action by failing to commence the action against the proper parties in a timely manner. Supreme Court erred in denying plaintiff’s motion seeking partial summary judgment on the first cause of action against defendants insofar as it is based upon the loss of a viable Labor Law 240 (1) claim in the underlying action. We note that, on a prior appeal, we affirmed an order granting, inter alia, those parts of the cross motion of defendants seeking summary judgment dismissing the second and third causes of action against them (Long v Cellino & Barnes, P.C., 59 AD3d 1062). We agree with plaintiff that he met his burden of establishing that he would have prevailed on the Labor Law § 240 (1) claim in the underlying action but for defendants’ negligence (see generally McKenna v Forsyth & Forsyth, 280 AD2d 79, 81, lv denied 96 NY2d 720). In support of his motion, plaintiff established that he was injured by a fall from an elevated work site and that the absence of appropriate safety devices was a proximate cause of his injuries (see Ewing v ADF Constr. Corp., 16 AD3d 1085, 1086). Defendants failed to raise a triable issue of fact in opposition to the motion (see generally Zuckerman v City of New York, 49 NY2d 557, 562). Contrary to defendants’ contention, the nondelegable duty imposed upon the owner and general contractor under section 240 (1) " is not met merely by providing safety instructions or by making other safety devices available, but by furnishing, placing and operating such devices so as to give [a worker] proper protection’ " (Haystrand v County of Ontario, 207 AD2d 978; see Heath v Soloff Constr., 107 AD2d 507, 512). "
 

In today’s NYLJ, Abraham B. Krieger writes a compelling article about "negligent referral ", and gives some history and out of state cases, along with a discussion of NY cases in the area.  To backtrack, Mr. Krieger writes: "Recently, New York’s Appellate Divisions in the First, Second and Third departments, and a number of other state courts, implicitly recognized negligent recommendation/referral as a potential cause of action. While New York does not yet expressly recognize "negligent referral" or "negligent recommendation" as a cause of action, such a claim may be supported by applying the tort of negligent misrepresentation. A claim for negligent recommendation/referral may also be supported by the scope of duty voluntarily taken as part of a professional’s responsibility under the rules governing professional ethics, conduct and responsibility."

Looking from a slightly different viewpoint, both under the old rules and the new (since April 2009) "Rules of Professional Conduct"   Rule 1.5(g):  "A lawyer shall not divide a fee for legal services with another lawyer who is not associated in the same law firm unless: (1) the division is in proportion to the services performed by each lawyer, or, by a writing given to the client, each lawyer assumes joint responsibility for the representation; (2) The client agrees to employment of the other lawyer after a full disclosure that a division of fees will be made, including the share each lawyer will receive, and the client”s agreement is confirmed in writing and (3) the total fee is not excessive."

Under these rules, there is no more "sub silentio" referral of cases to trial attorneys, or to outside attorneys, or to "specialists."  Hence, the theory of referral malpractice seems to be a relic.  Referral malpractice now appears to be simply another variant of legal malpractice, although in this iteration, referring to multiple attorneys.

In Dischiavi v Calli ;2009 NY Slip Op 09773 ;Decided on December 30, 2009 ;Appellate Division, Fourth Department  we see a discussion of the effects of a bankruptcy filing on a legal malpractice claim.  While the governing principal applies to any cause of action which a plaintiff had when bankruptcy was filed. it seems to come up especially frequently in legal malpractice cases.  Briefly put, any claim at all, whether in suit, or simply in existence, which exists at the time a bankruptcy petition is filed, becomes an asset of the debtor’s estate, and thus passes out of the hands of the individual debtor.  The usual scenario is that the debtor obtains a discharge in bankruptcy, then sues an attorney.  Absent some act which allows the debtor to keep the asset [cause of action] it belongs to the estate, and the debtor lacks standing to bring the action.
 

In Dischiavi, the court found it a question of fact whether the debtor [plaintiff] had reason to know of the cause of action at the time of petition filing. "Defendants met their initial burdens in part by establishing that plaintiffs failed to include any of their causes of action against defendants in their schedule of assets for their bankruptcy proceeding, that the causes of action for breach of contract, legal malpractice, breach of fiduciary duty and negligence accrued prior to the commencement of the bankruptcy proceeding, and that plaintiffs obtained a [*2]discharge in bankruptcy (see Wright v Meyers & Spencer, LLP, 46 AD3d 805; Nationwide Assoc., Inc. v Epstein, 24 AD3d 738; see also Whelan v Longo, 23 AD3d 459, affd 7 NY3d 821). Defendants failed, however, to demonstrate that plaintiffs "knew or should have known of" those causes of action against defendants prior to commencing the bankruptcy proceeding (Dynamics Corp. of Am., 69 NY2d at 197; see R. Della Realty Corp. v Block 6222 Constr. Corp., 65 AD3d 1323). Defendants also failed to establish that the fraud cause of action accrued prior to commencement of the bankruptcy proceeding (cf. Wright, 46 AD3d 805). "
 

"The Cobbler’s Son had no shoes…" is an ancient way of saying that people attend to the needs of others, including clients, while ignoring the requirements closer to home.  While the decision does not make this analogy, nor does it explicitly hinge the reasoning on the lack of an affidavit of plaintiff, we wonder whether there is some connection in a legal malpractice case which had the lack of an affidavit of plaintiff as a central motif in the underlying action.

In McComsey v. Kera Graubard & Litzman we see the plight of a Manhattan tenant.  She rented an apartment on East 67th Street, and obtained a two year lease, with a renewal clause.  Renewal required a certified or registered letter by a date certain.  Instead, plaintiff left a renewal notice in the spot where she left the rent.  After much litigation in both Supreme Court and in Housing Court, plaintiff lost, and had to pay a hefty legal bill to the landlord’s attorneys.

She sued her attorneys.  One central issue was that while she was traveling in Europe a motion for summary judgment was filed, and no affidavit was submitted in opposition.  Her fault or the attorneys?

When the client sued the attorneys, they moved pursuant to CPLR 3211(a)(7)  and submitted affidavits.  But, a motion under CPLR 3211(a)(7) is on the sufficiency of the pleadings, no?  Do you need an affidavit in opposition, as if it were CPLR 3212?

Left unanswered, the court did state: ‘Plaintiff opposes Defendant’s motion but notably fails to submit an affidavit from Plaintiff and instead relies on counsel’s affirmation.  Was the malpractice attorney wrong to respond in this way?

There is a tension between responding strongly to a CPLR 3211(a)(7) motion and going over the edge, "charting a course to summary judgment" and impelling the Court to consider the 3211 motion under 3212 rules. This is a danger, and one not to be lightly discarded as impossible.

Today’s NYLJ article by Daniel Wise chronicles the chilling story of an attorney who put his own freedom at risk in order to stymie a former client, and a successor attorney.  Why, and the clumsy method undertaken is the mystery.  in In re: RUBY G. EMANUEL, Debtor.;Chapter 7, Case No. 97-44969 (SMB); UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 Bankr. LEXIS 4024;December 23, 2009

"This matter has its origins in an unfortunate, fatal accident involving the debtor’s husband. On December 17, 1992, Mr. Emanuel’s employer was performing repairs on a barge in dry dock at the Brooklyn Navy Yard. The task called for the placement of a gangway connecting the barge to the dock. Mr. Emanuel was charged with the responsibility of placing the gangway. While standing on the gangway as it was being hoisted into place, Mr. Emanuel fell 45 feet to the bottom of the dry dock, sustaining massive injuries that rendered him a quadriplegic and ultimately led to his death on August 30, 2004. Emanuel v. Sheridan Transp. Corp., 10 A.D.3d 46, 779 N.Y.S.2d 168, 170-71 (N.Y. App. Div. 2004) ("Emanuel I").

The debtor retained Heller, individually and as administratrix of her husband’s estate, to file a wrongful death action. Heller commenced suit against the barge owner, among others, asserting claims under the Jones Act, New York Labor Law and in negligence (the "Action"). Prior to the trial, on July 28, 1997, the debtor filed a voluntary petition [*3] for relief under chapter 7. By Order dated August 10, 1999, the Trustee retained Heller (and Samuel Hirsch) as special personal injury counsel to the Trustee to prosecute the Action." Heller won a multi million dollar verdict

Approximately one month after the Appellate Division reversal, Heller was disbarred. The charges that triggered the disbarment were unrelated to the Emanuel case.. The Appellate Division disagreed. Citing Heller’s pattern of misconduct, "utter contempt for the judicial system" and "his consistent, reprehensible, [*5] unprofessional behavior," the court concluded that he should be disbarred rather than suspended:
In light of the cumulative evidence of respondent’s 24-year history of sanctions, his perverse and persistent refusal to accept adverse rulings, reflective of an utter contempt for the judicial system, and his consistent, reprehensible, unprofessional behavior, which has included screaming at, threatening and disparaging judges, adversaries and experts, intentionally defying court rulings, and disrupting and thwarting proper legal process through both physical and verbal aggression, we are of the opinion that the appropriate sanction here is disbarment.
Heller failed to purge himself of the contempt, and state Supreme Court Justice Silver issued a warrant for Heller’s arrest on February 26, 2007. In re Emanuel, 406 B.R. 634, 635 (Bankr. S.D.N.Y. 2009) ("Emanuel II"). Heller was arrested that same day, and was subsequently sentenced to 30 days in jail and a $ 10,000 fine (the "Sentencing Order").

Deprived of Heller’s files, J&M carried on the best it could relying on the Record on Appeal. 5 Eventually, it procured a $ 3.65 million settlement that the Trustee accepted.

Heller’s post-disbarment conduct caused prejudice to his former clients. Having lost the case he tried, Heller obstructed J&M’s attempts to retry the case he lost. His refusal to turn over the files, in the face of several court orders directing him to do so, was symptomatic of what the Appellate Division described as his "utter contempt for the judicial system, and his consistent, reprehensible, unprofessional behavior, which has included . . . intentionally defying court rulings" in the Heller disbarment order. In re Heller, 780 N.Y.S.2d at 319. Furthermore, although he argued to the Appellate Division, as he does here, that the Record on Appeal included everything that [*25] J&M needed to retry the case, (see J&M Findings, Ex. 25, at 51-53), the Appellate Division concluded that Heller’s contemptuous refusal to turn over the files caused "resulting prejudice to plaintiff’s right to a new trial."

The rule is pretty clear; one may not sue a criminal defense attorney unless there is a showing of innocence.  Innocence means acquittal or reversal on appeal.  Here, in Peo v. Radcliff is a stunning example of how and why the rule exists.  In this case, defendant was convicted after a bench trial.  The implication is that the attorney told his client that the trial judge gave him "the wink" and that an acquittal was in the offing.  Note the confluence of literature, TV and this trial.

In People v Radcliffe ;2009 NY Slip Op 52593(U) ; Decided on December 18, 2009 ; Supreme Court, Bronx County ; Price, J. , "On July 10, 2003, defendant was convicted after a non-jury trial of criminal possession of a weapon in the second degree (PL 256.03 [2]) and assault in the second degree (PL 120.05 [2]) by Supreme Court Justice Dominic Massaro. Upon that conviction, Justice Massaro entered judgment against this defendant on September 25, 2003, sentencing him to two concurrent determinate terms of imprisonment of fifteen years and seven years, respectively. On November 22, 2005, the Appellate Division, First Department, rejected defendant’s challenge to the trial court’s suppression rulings and affirmed his conviction. On February 24, 2006, Court of Appeals Judge Victoria Graffeo denied defendant’s petition seeking leave to appeal. "

"The People, in opposing defendant’s motion, argue that Mr. Feige indeed provided meaningful and effective representation in that he thoroughly cross-examined the People’s witnesses at the pre-trial suppression hearing, emphasized weaknesses in the People’s case and delivered a persuasive summation. They further argue that defendant’s waiver of his right to a jury trial and Mr. Feige’s decision to rest on the pre-trial hearing testimony and stipulations as the trial record were not only a reasonable trial strategy, but were tactically justifiable since they were based on Mr. Feige’s belief that doing so would achieve a favorable result. The People also correctly note that although the determination of whether counsel provided meaningful and effective representation is not dependent on achieving the desired outcome, here the trial court ultimately acquitted the defendant of the most serious charges, attempted murder in the second degree and assault in the first degree. This, they argue, supports the notion that Mr. Feige’s representation was indeed meaningful and effective; that the result was not what the defendant desired, expected or liked is of no moment. This court agrees. "
 

"Since defendant’s motion is predicated on Mr. Feige’s mea cupla statements, scrutiny is warranted here as well. Generally, mea culpa statements made by trial counsel cannot be taken at face value because counsel may be motivated by either a desire to assist a former client or protect their own reputation (Barclay v Spitzer, 371 F Supp 2d 273, 283 [EDNY 2005]; but cf, e.g., Henry v Poole, 409 F3d 48 [2d Cir 2005]). Moreover, where, as here, an otherwise excellent attorney, who consistently performs in a highly credible manner as a member of the criminal defense bar, unexpectedly and inexplicable pleads ineptitude, skepticism is particularly called for. As such, this court is wary of Mr. Feige’s claim that he lays awake at night wrought with guilt for having made "the most stunning and appalling decision" of his career.

This court finds it acutely disturbing that after spewing his mea culpas, Mr. Feige implicitly abdicates responsibility to Justice Massaro for the verdict not being what he anticipated. "Had Justice Massaro not done what he did, I would had [sic] proceeded with a trial, as I had throughout my career and as I always intended to do." Unfortunately, for both Mr. Feige and the defendant, nothing in the record before this court remotely suggests that Justice Massaro assured, promised or guaranteed that he would acquit the defendant. Even Mr. Feige’s characterization that Justice Massaro gave him the "wink" is devoid of any factual support. In fact, as noted above, Mr. Feige based his strategic decision on a dubious head-nod and "unmistakable" look, which does not remotely qualify as a promise or guarantee.[FN1] To infer that Justice Massaro somehow made false or misleading representations is intellectually dishonest.

If Mr. Feige is indeed guilty of that which he claims to be, it would perhaps constitute far more than ineffective assistance of counsel. It is patently absurd to believe that an extraordinarily experienced defense attorney with an admittedly inherent distrust for the judiciary would suddenly unravel into a hideously incompetent advocate merely by the way a judge looked at him.[FN2] Of course, it is not for this court to speculative what Mr. Feige thought, believed or intended when concluding that defendant’s best opportunity for success was to waive a jury. What appears unmistakable, however, is the striking similarity between the defendant’s case and an ostensibly fictitious case contained in Mr. Feige’s book "Indefensible."[FN3] Also unmistakable is that in one episode of Mr Feige’s television drama, "Raising the Bar," another ostensibly similar [*10]fictitious case involves a corrupt judge who agrees to acquit the defendant but fails to do so.[FN4]

Perhaps Mr. Feige does indeed seek redemption for his perceived malpractice or perhaps there are other motivational forces in operation. Neither is of any moment. If, however, Mr. Feige is indeed guilty of the ills he claims to be, then in light of the accomplished author and producer he has become, disbarment, which he curiously appears too eager to accept, seems far from adequate. If, on the other hand, Mr. Feige is simply remorseful for misreading Justice Massaro, such remorse hardly qualifies as error, much less ineffective assistance of counsel; it is merely an unsuccessful defense strategy.

A recurring problem in medical malpractice cases is one in which the attorneys take on a case, start the case, and then at the critical juncture when an expert has to be named, abandon the case.  From a business point of view, this behavior is incomprehensible.  On further reflection, it seems to us that the real explanation is that some medical malpractice attorneys really believe that enough cases will settle prior to needing an expert, that it is feasible to start cases they never intend to finish.

In Riley v. Segan Nemerov & Singer P.C., 303097/08;  Decided: December 14, 2009;  Justice George D. Salerno;BRONX COUNTY;  Supreme Court we see a slightly different variant.  In this med mal case, the claim was lack of informed consent to plastic surgery, and the case went well until it was ready for trial, and the expert dropped out.  From the decision it seems that the surgeon-expert lost his license.  From that point on, the law firm just did not get a new expert, or even oppose the eventual motion to dismiss after the case was marked off calendar.  Shockingly, the court determined that no expert was even needed at all.

"Applying the above principals, this legal malpractice action was timely commenced within three years after its accrual. This legal malpractice claim accrued on the date that plaintiffs’ actionable injury occurred, namely, the date of the Order dismissing the case, June 20, 2005, or on the date of the decision, April 29, 2005, upon which the said Order was made. Using either date as the date of accrual, this action was timely commenced within three years of accrual, because it was commenced on April 16, 2008. See McCoy v. Feinman, supra.

Even assuming, arguendo, that the legal malpractice claim accrued prior to April 16, 2005, the continuous representation doctrine would toll the statute of limitations until the attorney-client relationship ended. Segan has not shown that their representation was unequivocally ended prior to April 16, 2005.

Leon Segan never sought leave of court to withdraw as counsel, as required by CLR 321 and 22 NYCRR 604.1(6). Rather, Segan remained the attorney of record until after Justice Silver rendered his decision on April 29, 2005. Segan continued to make appearances in the STP Part of this court on plaintiffs’ behalf, including appearing for oral argument on Dr. Goldstein’s motion to dismiss, on March 11, 2005, and April 8, 2005.

The Segan firm represented plaintiffs for seven years when Leon Segan sent his clients the letter dated the August 25, 2004. Lisa Riley states that, at that time: "it was [her] understanding that my medical malpractice action against Dr. Goldstein was active and that the defendants were doing everything possible to represent [her] best interests." Lisa Riley also indicates that she relied upon and trusted Segan to legally represent her, and she cooperated with them at every juncture. 7

It is also noted that, from the Bill of Particulars served by the Segan firm in the underlying Malpractice action against Dr. Goldstein, that Lisa Riley had suffered severe depression including a "suicide attempt", requiring psychiatric attention, caused by the deformities and scarring resulting from the alleged botched breast-reduction surgery. 8 Especially under such circumstances, Segan should have unambiguously orally communicated with the Plaintiffs, preferably in-person, (and certainly not merely by crafted letters), if they intended to end this long-term relationship of trust and confidence, which began when Lisa Riley was an infant.

"An attorney "does not have an unfettered right to unilaterally withdraw" as counsel, and "[good cause is required, to be determined, ultimately, by the Court" upon motion by said counsel.[citations omitted]." Frenchman v. Queller, Fisher, Danced, Saurianness, Washer & Pool, LP, 24 Misc. 3d 486 (N.Y. Sup. Ct. 2009)."