Dupree v. Voorhees, 2009 NY Slip Op 09183 ;Decided on December 8, 2009 ;Appellate Division, Second Department  is an example of the breathtaking reversals that might happen on appeal, and how the law can "change" in the period between dismissal and the appeal.  Today we will look at the legal malpractice part of this case which is more traditional; on Monday we will look at the Judiciary Law 487 reversal, and how it kept two attorneys in the case.
In this matrimonial case, it appears that some very strange motion practice took place.  we;ll quote:

"Specifically, the record reveals that the attorneys representing the plaintiff’s former husband in a matrimonial action failed to provide advance notice to the appellant, the plaintiff’s [*2]former counsel in the matrimonial action and a solo practitioner, of a closing scheduled for November 21, 2003, for the refinancing of the former marital residence. Rather, on the date in question, the appellant, who was in Suffolk County serving jury duty, received a voice mail message from one of those attorneys, Karyn A. Villar, advising him of a purportedly "emergency" application being made that day before Justice John C. Bivona in the Supreme Court, Suffolk County (hereinafter the motion court). Shortly thereafter, during a break, the appellant returned Villar’s call and was informed by Villar that the closing would be taking place later that day. The application made by order to show cause ostensibly was to allow the former husband to effectuate the refinancing transaction.

Although Villar advised the motion court that the appellant was unavailable, and although the order to show cause had a return date of November 25, 2003, four days later, the order to show cause was signed by the motion court on November 21, 2003. The order to show cause granted the ultimate relief requested therein, essentially appointing the former husband receiver of the plaintiff’s interest in the marital residence without her consent. The former husband, after the closing, failed to comply with an earlier stipulation in the matrimonial action requiring him to buy out his wife’s interest in the marital property for the sum of $95,000.

Notably, a copy of the order to show cause signed by the motion court was faxed to the appellant’s office at 3:54 P.M., approximately one hour after the time the closing was scheduled to occur. The appellant submitted opposition papers on the return date but, necessarily, after the closing had occurred. Under these circumstances, the appellant demonstrated the absence of any negligence on his part.

Result?  Case dismissed and affirmed against this attorney.  But, the case continues against two others under Judiciary Law 487.  Tomorrow, we’ll see how a motion to renew worked and how the Court of Appeals decision in Amalfitano v. Rosenberg alerted Supreme Court that a lot had changed.

Reading between the lines in Minkow v. Sanders, plaintiff was a difficult client.  To begin, he was her third attorney.  As a digression, defense attorneys in legal malpractice cases often tee off with the assertion that their client is the "third" or "fourth" attorney that plaintiff has had, and boot strap from that to the assertion that only a despicable person has more than one attorney.  While in the main this is unwarranted, in this particular case, it seems that the client was already about to be held in contempt for financial issues in the matrimonial action when defendant attorney took over.

Plaintiff seems to have had the money in this relationship, as there was eventually a pre-nup agreement found, and she had control of the bank accounts, and the kid’s money.  Needless to say, it turned sour, and Ms. Minkow ended up in jail over Christmas.  In matrimonial litigation, this is almost unheard of.

She sued and had her case dismissed by Justice Solomon in Supreme Court, New York County for the basic reasons:  failure to state a cause of action   Interestingly, Justice Solomon "summarily dismissed" several of the causes of action, and then dismissed the balance of them

The decision should be read for two reasons.  The first is a discussion of termination of the attorney-client relationship when "trust and confidence" has fled.  The second is Justice Solomon’s treatment of a cause of action for the attorney’s "inability to gain plaintiff’s compliance with a court order."  As Justice Solomon states:"A client’s wilful disregard of a court order cannot be attributed to her attorney who consistently advised compliance" no matter that it got her locked up over Christmas.

What do the parties really think in an attorney – fee dispute which totals in the $6 million range.  Most attorney fee disputes are less than $50,000,  In NY that qualifies for the court monitored Attorney-Fee dispute program  Here, in a startling NYLJ article Nate Raymond writes about the Debevoise & Plimpton cases against Candlewood Timber Group LLC.
 

Here are some of the issues in the case, from the NYLJ:  "Debevoise, which grossed $760.8 million in 2008, in its complaint said it submitted invoices and requests for payment to Candlewood for a year after trial wrapped in May 2006. Debevoise also attempted earlier this year to take Candlewood to arbitration.

But in March, Candlewood filed a petition to stay the proceedings, arguing its engagement letter with the firm did not cover arbitration.

Debevoise withdrew its notice to arbitrate in June, according to an affirmation in the proceedings in Debevoise & Plimpton LLP v. Candlewood Timber Development, LLC, 103982-2009. It then sued Candlewood and its principal, Jeffrey Kossak, on Nov. 12 (Debevoise & Plimpton LLP v. Candlewood Timber Group, LLC, 603479-2009).

According to the state court complaint, the fee dispute stems from Debevoise’s representation of Candlewood in litigation against Pan American Energy LLC, a joint venture of BP p.l.c. and Bridas Corporation, which had subsurface rights to extract oil and gas in Argentina on land owned by Candlewood.

In an interesting side note to the article, a "legal cost" expert tells the firm not to sue for $6 million in fees.  Aside from the astounding concept, we wonder about the advice:

"John Marquess, president of Legal Cost Control Inc. in Haddonfield, N.J., said he would counsel a firm not to sue for fees, even with a "significant" demand like the more than $6.37 million Debevoise is seeking.

"If I were advising any law firm, I would tell them suing a client over fees is a no-win situation," he said. "It’s going to get you adverse publicity you may or may not recover from. And if it went before a jury, juries hate lawyers."

Mr. Marquess said law firms usually attempt to resolve the disputes quietly to avoid litigation, which Debevoise tried to do."

There are lawyers who try cases to the limit and there are lawyers who try too hard.  This morning we were reading a NY Times article about the "capital panel.’  These are attorneys who will eventually represent the Guantanimo defendants at their Federal terrorism trials.  A potential for the death penalty exists in these cases.

In contradistinction, there is the garden or varietal civil case in which an attorney just goes too far.   KLIN Construction Group Inc. v. Blue Diamond Group Corp., 5215/09;Decided: November 20, 2009;  Justice Arthur M. Schack; KINGS COUNTY is one such case.  Justice Schack has become known recently for his imposition of sanctions, and has held attorneys in contempt.  Read the case closely, and we come away with the belief that a little less hostility by the sanctioned attorney would have gone a long way.

"Defendants’ counsel, in his affirmation in support of MS # 2, asserts that he received this Court’s April 24, 2009 Northside Tower Realty, LLC decision and order on April 27, 2009. Then, that day, he wrote and faxed a letter to Ms. Wang, with a copy of my April 24, 2009 decision and order, asked her to withdraw the instant action as moot and warned her that her failure to do so would result in a sanctions motion [exhibit B of MS # 2 OSC]. Ms. Wang, the same day, wrote and faxed to plaintiff’s counsel a response rejecting the notice because she had not been served with a notice of entry. Further, she alleged that defendants’ counsel’s letter was a threat, which is "attorney misconduct, and in and of itself sanctionable [exhibit C of MS # 2 OSC]."

The letter by defendants’ counsel was not a threat but fair warning of the consequences to follow if Ms. Wang continued the instant action. Further, CPLR Rule 2220 (b) states that "[s]ervice of an order shall be made by serving a copy of the order." Notice of entry of an order only affects the time to appeal and the time to re-argue. CPLR §5513; CPLR Rule 2221 (d) (3)."
 

"In MS # 2, plaintiff’s counsel also raised the issue of false jurats in the subject November 21, 2009-mechanic’s lien and the November 21, 2009-affidavit of service of the mechanic’s lien. The November 21, 2008-mechanic’s lien was executed by Ming Chin Lin, President of KLIN, who swore that she signed the mechanic’s lien in the State of New York, County of Kings [exhibit E of MS # 2 OSC]. The notary who took her signature was plaintiff’s counsel, Ms. Wang. Further, Ms. Lin swore in the affidavit of service that she served the mechanic’s lien on the same day, November 21, 2008, on defendant BLUE DIAMOND, "by depositing a true copy of [mechanic’s line]…in an official depository of the United States Postal Service in New York State." Ms. Wang signed the jurat as the notary [exhibit E of MS # 2 OSC].

However, in a related Supreme Court, Nassau County action, Blue Diamond Group Corp. v. Klin Construction Group, Inc. and Chunyu Jean Wang, Index No. 22040/08, for breach of contract and the filing of false jurats with respect to the subject November 21, 2008-mechanic’s lien, both Ms. Wang and Ms. Lin admitted that the mechanic’s lien was signed in Taiwan, not New York. Ms. Wang, in her January 14, 2009 affirmation in support of her motion to dismiss [exhibit F of MS # 2 OSC] states in ¶3:

Pictures of Ming Chin Lin and Ms. Wang at the marriage ceremony of her brother, Kenny Lin…prove that Ms. Wang, attorney for defendants, witnessed Ming Chin Ling, the President of the corporate defendant, KLIN Construction Group, Inc., sign the refiled Mechanic’s Lien on behalf of the corporate defendant in Taiwan. Ming Lin Chin met Ms. Wang in Taiwan on November 21, 2008, because both were attending the marriage ceremony of Ming Chin Lin’s brother, Kenny Lin, on November 22, 2008…As attorney for the corporate defendant, Ms. Wang is fit to acknowledge her client’s signature in Taiwan, especially since the papers are to be filed in the same proceeding as her representation."

"Ms. Wang’s conduct with respect to: her use of false jurats and material factual statements that are false; her continued failure to discontinue the instant action when notified of my cancellation and discharge of the subject November 21, 2008 mechanic’s lien on April 27, 2009; and, her contemptuous refusal to provide this Court with affirmations as to her Father’s alleged medical emergency on May 29, 2009 and her absence on June 26, 2009; is completely without merit in law. This Court, in having to adjudicate MS #’s 2, 3 and 5, conduct hearings and conferences on May 29, 2009, June 1, 2009, June 26, 2009 and July 13, 2009, and draft this decision and order wasted valuable judicial resources.

Therefore, this Court, pursuant to 22 NYCRR §130-1.1 (a), and as discussed above, has the discretion to award costs for reimbursement of "for actual expenses reasonably incurred and reasonable attorney’s fees, resulting from frivolous conduct as defined" in 22 NYCRR §130-1.1 (c), and may impose sanctions upon an attorney who engages in frivolous conduct. In his post hearing brief, defendants’ counsel, Mr. Scher, submitted detailed documentation with respect to defendants’ "actual expenses reasonably incurred and reasonable attorney’s fees resulting from frivolous conduct," from April 27, 2009 to the August 17, 2009 submission of the post hearing brief. The documentation demonstrates that defendants had actual expenses, which the Court deems reasonably incurred, of $4,158.83, resulting from Ms. Wang’s frivolous conduct. Further, with respect to reasonable attorney’s fees, Mr. Scher billed $53,910.45 (108.91 hours at $495.00 per hour, pursuant to Retainer Agreements, submitted with the post-hearing brief), and his associate, Austin Graf, Esq., billed $9,967.50 (26.58 hours at $375.00 per hour, pursuant to Retainer Agreements, submitted with the post-hearing brief). This total of $63,877.95 ($53,910.45 + $9,967.50) is deemed by the Court as reasonable attorney’s fees resulting from Ms. Wang’s frivolous conduct."

We are proud to report that Andrew Lavoott Bluestone has been admitted as a Diplomate to the American Board of Professional Liability Attorneys.  Andrew Lavoott Bluestone is the author and publisher of the New York Attorney Malpractice Blog

The American Board of Professional Liability Attorneys (ABPLA) is the only organization accredited by the American Bar Association (ABA) to certify attorneys in the areas of medical malpractice and legal malpractice. Legal & medical malpractice lawyers who are Board Certified must meet and exceed rigorous standards set by the ABPLA, and are recognized as leaders in professional negligence law.

LEGAL PROFESSIONAL LIABILITY REQUIREMENTS

To become Board Certified in the area of Legal Professional Liability, the following requirements must also be met:

Demonstrate substantial involvement in Legal Professional Liability by showing you:

• Have served as LEAD counsel during your legal career in at least 10 trials or arbitrations where testimonial evidence was presented and the matters were submitted to the finder of fact; and of the aforesaid 10 trials, 2 must involve claims of Legal Professional Liability and 1 must be a jury trial.
• Participated in 20 additional contested matters (trials, hearings, depositions) involving claims of Legal Professional Liability.
• Within the 3 years prior to application, have done any one of the following:
  • 1. Participated in 10 matters involving claims of Legal Professional Liability that went to trial or alternate dispute resolution;
  • 2. Concluded 24 litigated matters involving claims of Legal Professional Liability as lead counsel or in a supervisory capacity to lead counsel;
  • 3. Had 24 performances (depositions, hearings) involving claims of Legal Professional Liability; or
  • 4. Any combination of trial days, participation in litigated matters or performances which demonstrates substantial involvement in Legal Professional Liabiity

Andrew Lavoott Bluestone can be reached:  233 Broadway, Suite 2702, New York, NY 10279  His telephone number is (212) 791-5600.

It’s a complex question, but in troubled financial times, legal malpractice law suits become more visible and valuable.  Receivers, Trustees in Bankruptcy, and other fiduciary appointees all eye and measure pockets in an ongoing attempt to broaden and increase the fisc.

in COBALT MULTIFAMILY INVESTORS I, LLC, , -against- MARK A. SHAPIRO, UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 111399; November 30, 2009, Decided  we see Justice Wood’s analysis of the relationship:
 

"The court-appointed receiver (the "Receiver") for Plaintiffs Cobalt Multifamily Investors I, LLC, and its related, defunct entities (collectively, "Cobalt"), filed suit against numerous Defendants, including three sets of attorneys and their law firms ("Law Firm Defendants") who provided professional services to Cobalt. Law Firm Defendants moved to dismiss the claims against them on the ground that the Receiver lacks standing. On March 28, 2008, the Court granted the motion to dismiss the Receiver’s claims against Law Firm Defendants.

In light of a subsequent decision issued by the Court of Appeals for the Second Circuit, Bankruptcy Services, Inc. v. Ernst & Young ("CBI Holding Co."), 529 F.3d 432 (2d Cir. 2008), the Receiver moved for reconsideration of the motion to dismiss. On July 15, 2009, the Court granted the motion for reconsideration on the ground that failure to do so would result in clear error. On reconsideration, the Court granted in part and denied in part Defendants’ motion to dismiss. Relevant to the instant motion, the Court denied Law Firm Defendants’ motion to dismiss [*3] Plaintiffs’ legal malpractice and corporate looting claims."
 

"A receiver or trustee representing a bankrupt corporation generally does not have standing to assert claims against third parties for defrauding the corporation where the third parties assisted corporate managers in committing the alleged fraud. See In re Bennett Funding Group, Inc., 336 F.3d 94, 99-100 (2d Cir. 2003). This legal principle is based on the Wagoner rule, which states that a bankruptcy trustee has standing to assert only those claims that the bankrupt corporation itself could have brought. See Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 120 (2d Cir. 1991)."

"The adverse interest exception is an exception to the Wagoner rule that [*7] is applicable when the corporate managers "totally abandoned [the corporation’s] interests and [acted] entirely for his own or another’s purposes." Center v. Hampton Affiliates, Inc., 66 N.Y. 2d 782, 784-85, 488 N.E.2d 828, 497 N.Y.S.2d 898 (1985). Determination of the exception’s applicability requires a court to engage in a fact-specific inquiry. Such an inquiry may include consideration of (1) the manager’s intent with respect to abandoning the corporation’s interests, (2) the nature and extent of the benefit (if any) obtained by the manager as a result of the fraudulent conduct, (3) the nature and extent of the benefit (if any) received by the corporation itself as a result of the fraudulent conduct, (4) the various financial losses caused by the fraudulent conduct, and (5) other dynamics and details of the fraud relevant to analysis the party’s standing to sue. See In re CBI Holding Co., Inc., 529 F.3d at 451-53."

"If a court finds that the adverse interest exception applies, the receiver or trustee representing the bankrupt corporation has standing to assert claims against a third party that assisted the corporate agent in the fraudulent conduct. In re Bennett Funding Group, 336 F.3d at 100 (citing Wight v. BankAmerica Corp., 219 F.3d 79, 87 (2d Cir. 2000)."

"Even if the Court were to consider [*21] this argument’s merit, there is no clear error warranting reconsideration of the July 2009 Order. The decisions cited by Certilman Defendants stand for the proposition that outside attorneys, like Law Firm Defendants, represent the corporate entity. See, e.g., Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y. 3d 553, 562, 910 N.E.2d 976, 883 N.Y.S.2d 147 (2009) ("a corporation’s attorney represents the corporate entity"). Here, the Receiver stands in the shoes of Cobalt, the corporate entity, and thus has standing to assert claims that would belong to Cobalt, such as claims for legal malpractice. See Wagoner, 944 F.2d at 120. The issue of Law Firm Defendants’ fiduciary duty to shareholders is no barrier to the Receiver’s standing at this stage of the litigation."
 

"

The rules concerning fee-sharing, and the precision of detail which must be given to a client. have changed.    Now, one must be precise in the percentages between attorneys, lest a violation of the rule lead to the Court denying attorney fees at a later stage of the proceedings.

In Lapidus & Associates LLP v. Elizabeth Street Inc., 601955/05;Decided: November 4, 2009;Decided on November 4, 2009 ;Supreme Court, New York County ;Goodman, J.  we see he difference between the old rule and the new:

"Defendants also contend that the account stated has been impeached because Lapidus engaged in an unethical and undisclosed fee-sharing agreement with Fass that violates DR 2-107 (A). DR 2-107(A) provides:

"(A) A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of the lawyer’s law firm, unless:

(1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made. [*6]

(2) The division is in proportion to the services performed by each lawyer or, by a writing given the client, each lawyer assumes joint responsibility for the representation.[FN6]

(3) The total fee of the lawyers does not exceed reasonable compensation for all legal services they rendered the client."

Defendants argue that in the Dencorp Matter, the facts suggest that Fass was being paid less than he was being billed to defendants. This conclusion is based on Fass’s deposition testimony that he was paid $273.00 per hour from plaintiff. The submitted invoices demonstrate, and it is undisputed, that plaintiff billed Reiver $390.00 per hour for Fass’s work, including for his communications with Lapidus. "

"With the adoption of the Rules of Professional Conduct (the Rules) in April of this year, New York is now among the states that wisely require that the percentage fee split be disclosed to [*7]a client (see section 1.5 [g] [2] of the Rules). However, representation in this action occurred in 2003-2005, when the Code, and specifically DR 2-107, did not so state, and was not interpreted as requiring such detailed disclosure.[FN8] In instances, such as here, where all of the involved attorneys worked on the case, the court has uncovered no New York authority or expert commentary suggesting that attorneys are required to provide the level of disclosure for which defendants advocate. In fact, according to an expert commentator, DR 2-107 was intended to address referral situations, prevent unreasonable fees to a client and to ensure that the client was made aware of the identities of attorneys working on his or her case and there has never been a controversy as to fee sharing where a lawyer works on a case (Simon, New York Code of Professional Responsibility Annotated, at 402-405 [2007 ed]; see also Lapidus & Associates, LLP v Reiver, 2008 WL 909670, 2008 NY Misc LEXIS 2577 [Sup Ct, NY County 2008] [discussing DR 2-107 extensively]).

The retainer letter submitted by defendants indicates that more than one firm would be working on the case, and identifies the attorneys that would be working on the matter. As payments were to be made only to the plaintiff law firm, and defendants do not contend that it was their understanding that any of the involved attorneys or firms would not receive payment, the only reasonable inference to be drawn is that the attorneys or firms working on the case would be sharing in the fees paid by plaintiff. While defendants may have benefitted from knowing the percentage split, DR 2-107 has not been interpreted to require this level of disclosure.

Concerning the proportionality requirement of DR 2-107, in fee-splitting disputes between attorneys, the Court of Appeals has stated that "courts will not inquire into the precise worth of the services performed by the" attorneys (see Benjamin v Koeppel, 85 NY2d 549, 556 [1995]). Defendants argue that courts should employ greater scrutiny when, as here, the dispute is between an attorney and a client. But defendants also effectively suggest that each attorney should be paid just what was billed to the client for his or her work, but, as discussed extensively in the Dencorp Matter, fee-sharing arrangements where one attorney receives a larger cut than others are not prohibited under the Code.

Finally, "fee forfeitures are disfavored" (Benjamin, 85 NY2d at 553), and "the courts are especially skeptical of efforts by clients or customers to use public policy as a sword for personal gain rather than a shield for the public good” (id. [citation and internal quotation marks omitted]). While a more expansive interpretation of the DR 2-107 would perhaps permit defendants to avoid paying their legal fees, defendants do not make persuasive arguments as to why the interpretation they seek is justified. Consequently, while the court is pleased that the Code has been changed in a way that may benefit some clients, defendants present no basis for a finding [*8]that plaintiff’s fee sharing agreement violates DR 2-107. "

Judiciary Law 487 may be the oldest statute in the English-American Law world.  It dates from 1275, just years after the Magna Carta,  Once in a while we see a reference to Marbury v. Madison, 5 US (1 Cranch) 137 (1803) and think that perhaps this a law student or a new lawyer flexing some muscle.

1275 is a whole other ballgame, however.  There are some misconceptions about the statute which may have been cured by the Court of Appeals decision in Amalfitano v. Rosenberg, 12 NY3d 8 (2009).  One, taken up here, is whether the deceit or attempt to deceive has to be to a judge, or may it be to litigants, or even non-litigants.  In Mokay v Mokay ;2009 NY Slip Op 08528
Decided on November 19, 2009 ;Appellate Division, Third Department  we see that even a non-party may be the subject of an attempt to deceive, and this behavior will be sufficient for a violation of Judiciary Law 487.
 

"Next, we turn to Neroni’s argument that his conduct was "covered by advisor’s immunity" and therefore not actionable. It is the general rule that "attorneys, in the exercise of their proper functions as such, shall not be civilly liable for their acts when performed in good faith and for the honest purpose of protecting the interests of their clients" (Gifford v Harley, 62 AD2d 5, 7 [1978] [internal quotation marks and citation omitted]). However, "[a]n attorney may [*3]be liable to third parties for wrongful acts if guilty of fraud or collusion or of a malicious or tortious act" (Kahn v Crames, 92 AD2d 634, 635 [1983]; see Mills v Dulin, 192 AD2d 1001, 1003 [1993]; Koncelik v Abady, 179 AD2d 942, 944 [1992]). Moreover, Judiciary Law § 487 sets forth a civil cause of action that may be established by, among other things, an attorney’s intent to deceive (see Amalfitano v Rosenberg, 12 NY3d 8, 14 [2009]; Scarborough v Napoli, Kaiser & Bern, LLP, 63 AD3d 1531, 1533 [2009]; Singer v Whitman & Ransom, 83 AD2d 862, 863 [1981]).

Here, Neroni’s actions were directed at a judgment of Supreme Court of which he was fully aware and had, in fact, participated in constructing the terms thereof. He was present and representing decedent at the time the terms of the pertinent stipulation were placed on the record and he was involved in the stipulation being incorporated into the judgment of divorce. The stipulation was neither ambiguous nor unenforceable. It clearly provided that decedent would keep the two parcels during his life, but that such parcels would ultimately pass to his five children [FN1]. Plaintiffs presented proof, including a detailed affidavit from Mokay, establishing that, despite his obvious knowledge of the stipulation, Neroni suggested to decedent shortly after the divorce various schemes to attempt to circumvent the transfer and, when decedent elected one of those schemes, Neroni prepared the documents he had advised would successfully accomplish the nefarious goal. The documents were executed and Neroni had them recorded in a fashion aimed at avoiding publication of the transactions. This proof was sufficient to meet plaintiffs’ threshold burden and Neroni failed to contest these basic underlying facts. Accordingly, Supreme Court properly granted plaintiffs’ motion for partial summary judgment. "