Topless photographs, sexual harassment, "heavy-handed" negotiations, emotional distress to highly pregnant women – it all seems to be out of a TV show.  Nevertheless, these are the elements of Abrams v. Pacile, Supreme Court, New York County, Justice Tolub.  In this decision, printed in the NYLJ today, and soon to be on the Court’s website, we see brothers in the financial industry, their workers, their wives, topless photos on the honeymoon, entrustment of the photos to assistants for printing at Duane Reede, and the fallout in dueling suits.  By the way, how could a guy send his assistant out with topless photos of his wife, and ask her to go to Duane Reede to get prints made?  Was he expecting his assistant or the clerk there to make them?  What reaction did he expect?

This blog is devoted to attorney behavior and legal malpractice, so we will detour there.

"Claims Against Mr. Wigdor and TWG

Under New York law, attorneys are afforded immunity where their conduct arises out of the professional representation of their clients.

There is a general principle embodied in the law of the State of New York that attorneys should be free to advise their clients without fear of liability [to] third parties. However, the mere fact one is an attorney acting in a professional capacity does not make him absolutely immune from responsibility for his wrongful acts.

An attorney may be held personally liable to a third party who sustains an injury in consequence of his wrongful act of improper exercise of authority, where the attorney has been guilty of fraud, collusion or of a malicious or tortious act.

Beatie v. DeLong,164 AD2d 104, 108 [1st Dept 1990].

Here, Plaintiff has not sufficiently alleged, let alone submitted any evidence, that Mr. Wigdor or his firm acted with either malice or bad faith or that they colluded with Danielle and Cristina in some illegal manner. The "settlement" negotiations of May 2008, as heavy handed as they were, provide no basis for a recovery. Indeed, there is nothing to indicate from the Plaintiff herself that she was ever aware of the letters Mr. Wigdor sent. In the absence of fraud, collusion, malice or bad faith, Mr. Wigdor and TWG are immunized from liability under the shield afforded attorneys in advising their clients, even when such advice is erroneous. The Complaint as to Mr. Wigdor and TWG is dismissed(id.)."

"Rule 1.16(a)(1) provides:

(A) A lawyer shall not accept employment of behalf of a person if the lawyer knows or reasonably should know that such person wishes to:

(1) bring a legal action, conduct a defense, or assert a position in a matter, or otherwise have steps taken for such person, merely for the purpose of harassing or maliciously injuring any person;

It is clear to the Court that the Complaint as to Ms. Culicea and Mr. Wigdor has no basis in law and fact and could only have been brought to harass Ms. Culicea and the Wigdor law firm. As such, counsel’s actions are sanctionable."

Dismissals are not always dismissals on the merits, and dissolved corporations are not always unable to sue in New York.  In this legal malpractice case, we see the intersection of Chapter 11, Tax Law 203-a, CPLR 205(a) and Res judicata.

In Moran Enters., Inc. v Hurst ;  2009 NY Slip Op 07807 ;  Decided on October 27, 2009 ;  Appellate Division, Second Department plaintiff corporation had several brushes with Bankruptcy.
"The plaintiff, Moran Enterprises, Inc. (hereinafter MEI), was incorporated in New York in January 1996. On or before August 15, 2000, MEI retained attorney Margaret Hurst to represent it in certain matters, including filing a Chapter 11 petition for bankruptcy on its behalf. In November 2000, Hurst left active practice and transferred her clients to another attorney. On December 27, 2000, MEI was dissolved by the Secretary of State pursuant to Tax Law § 203-a for failure to pay franchise taxes. On July [*2]23, 2001, MEI retained attorney Heath Berger and the law firm Steinberg, Fineo, Berger & Fischoff, P.C. (then known as Steinberg, Fineo, Berger & Barone, P.C.) (hereinafter together the Berger defendants) to file another Chapter 11 bankruptcy petition on its behalf."

"The Supreme Court erred in dismissing the complaint pursuant to CPLR 3211(a)(5). The principle of res judicata bars relitigation of claims where a judgment on the merits exists from a prior action between the same parties involving the same subject matter (see Matter of Hunter, 4 NY3d 260, 269). Dismissal of the prior action insofar as asserted by MEI was upheld by this Court on the ground that MEI failed to appear by an attorney as required by CPLR 321(a) (see Moran v Hurst, 32 AD3d 909). Such was not a determination on the merits and thus res judicata does not apply to bar commencement of another action based on the same transactions (see Sclafani v Story Book Homes, 294 AD2d 559; Matter of Farkas v New York State Dept. of Civ. Serv., 114 AD2d 563). Moreover, since the issue of MEI’s capacity to commence an action was not determined on appeal, collateral estoppel does not bar relitigation of that issue (see Tydings v Greenfield, Stein & Senior, LLP, 11 NY3d 195, 200; Sabbatini v Galati, 43 AD3d 1136; Bergstol v Town of Monroe, 305 AD2d 348). Further, this action was timely commenced pursuant to CPLR 205(a). Contrary to the Berger defendants’ contention, the prior action was commenced by MEI within the meaning of CPLR 205(a), despite its dismissal for MEI’s failure to appear by an attorney "

"Pursuant to Tax Law § 203-a, the Secretary of State may dissolve a corporation by proclamation for the nonpayment of franchise taxes. Upon dissolution, the corporation’s legal existence terminates (see Lorisa Capital Corp. v Gallo, 119 AD2d 99, 109). A dissolved corporation is prohibited from carrying on new business (see Business Corporation Law § 1005[a][1]) and does not enjoy the right to bring suit in the courts of this state, except in the limited respects specifically permitted by statute (see Vantrel Enters. v Vantage Petroleum Corp., 270 AD2d 412; De George v Yusko, 169 AD2d 865; [*3]Lorisa Capital Corp. v Gallo, 119 AD2d 99, 110-111). "

Attorneys regularly drop in and out of cases, and for the most part, there is no particular notice taken of the event.  Here, in Soussis v Lazer, Aptheker, Rosella & Yedid, P.C. ; 2009 NY Slip Op 07823 ; Decided on October 27, 2009 ; Appellate Division, Second Department  we see a wholly different result.  In Soussis,  Plaintiff hired the target defendants to arbitrate over unpaid commissions, which are said to have arisen from employment discrimination.  Target attorneys did not raise the discrimination claim.  Benjamin Vinar to sue the attorneys; at the same time he stepped in and settled the arbitration case targets had started.  In turn, target attorneys bring a third-party action against Vinar.  Vinar does not succeed on summary judgment, and is held in the case for a portion of the third party claims.

"The plaintiff retained the defendant law firm, Lazer, Aptheker, Rosella & Yedid, P.C. (hereinafter the Lazer firm), in connection with her claims for unpaid commissions and unreimbursed expenses, alleging employment discrimination against her former employer, Stephens, Inc. (hereinafter Stephens), a member of the New York Stock Exchange.""It is undisputed that Goidell failed to bring a federal or state action against Stephens on the plaintiff’s behalf before the statute of limitations applicable to the employment discrimination claim expired. The plaintiff retained the third-party defendant Benjamin Vinar to commence the instant action against the Lazer firm, Goidell, and two partners in the firm, David Lazer and Ralph A. Rosella, to recover damages for legal malpractice. While represented by Vinar, the plaintiff settled her arbitration claims against Stephens."

"Subsequently, the Lazer firm, David Lazer, and Rosella (hereinafter together the Lazer defendants) impleaded Vinar, asserting claims for contribution and/or indemnification. They alleged that [*2]Vinar was negligent in settling the plaintiff’s arbitration claims. Specifically, they alleged that Vinar was negligent in failing to seek leave to amend the plaintiff’s statement of claim in the arbitration proceeding to add the employment discrimination claim. They also alleged that Vinar was negligent in failing to seek reformation of the National Association of Securities Dealers, Inc., Form U-5 (hereinafter the U-5), provided by the plaintiff’s employer to remove an allegedly false or defamatory statement contained therein regarding the reason for the termination of her employment. "

"The Supreme Court properly denied that branch of Vinar’s motion which was for summary judgment dismissing so much of the third-party complaint as asserted claims for contribution and indemnification. Contrary to Vinar’s contention, the Lazer defendants are entitled to seek contribution or indemnification from him, as a subsequently retained attorney, to the extent his alleged negligence in settling the plaintiff’s arbitration claims may have contributed to or aggravated her injuries (see Schauer v Joyce, 54 NY2d 1, 3-6; Alfaro v Schwartz, 233 AD2d 281, 281-282; Herkrath v Gaffin & Mayo, 192 AD2d 487, 488).

Furthermore, in opposition to Vinar’s prima facie showing on the issue of his failure to seek reformation of the U-5, the plaintiff’s deposition testimony and the Lazer defendants’ expert affidavit were sufficient to raise a triable issue of fact as to whether Vinar was negligent in failing to seek reformation and, if so, whether the plaintiff suffered a greater loss of future earnings than she would have had the U-5 been reformed to remove the damaging information regarding the reason for her termination from Stephens.

Plaintiff and a buddy go to attorney to start a business.  Attorney is retained, and eventually Plaintiff is the odd-person out.  Attorney’s retainer agreement names only the buddy, and even though attorney sends letters to both Plaintiff and buddy, and creates documents which plaintiff and buddy sign, it is Buddy who comes out with 75% of the business.  Is there a breach of fiduciary duty, and if so, what is the statute of limitations, 3 years or 6?

Some answers are found in Schlissel v Subramanian ;2009 NY Slip Op 52188(U) ; Decided on October 26, 2009 ; Supreme Court, Kings County ; Demarest, J.   As to Breach of Fiduciary Duty:
 

""In order to establish a breach of fiduciary duty, a plaintiff must prove the existence of a fiduciary relationship, misconduct by the defendant, and damages that were directly caused by the defendant’s misconduct" (Kurtzman v Bergstol, 40 AD3d 588, 590 [2d Dept 2007]).

"An attorney stands in a fiduciary relation to the client" (Graubard Mollen Dannett & Horowitz v Moskovitz, 86 NY2d 112, 118 [1995]). As a fiduciary, an attorney "is charged with a high degree of undivided loyalty to his [or her] client" (Matter of Kelly v Greason, 23 NY2d 368, 375 [1968]). "In this case, plaintiff alleges that Van Epps was her attorney, that he unilaterally advanced Wasan’s interests over those of plaintiff, that he prepared certain corporate documents for the purpose of diluting and diminishing plaintiff’s interest in T & T, and that he concealed material information from plaintiff concerning the adverse contents of these documents (Stark Affirmation in support of the Cross Motion, Ex. 2, Proposed Amended Complaint, ¶¶ 46-47). In opposition, Van Epps contends that he was not plaintiff’s attorney and that, in any event, his representation of her had ended by the time she signed the corporate documents.

There is no set of rigid rules that must be followed to form an attorney-client relationship (see McLenithan v McLenithan, 273 AD2d 757, 758 [3d Dept 2000]). It may exist without an explicit retainer agreement or payment of fee (see Tropp v Lumer, 23 AD3d 550, 551 [2d Dept 2005]). "Rather, to establish an attorney-client relationship there must be an explicit undertaking to perform a specific task. In determining the existence of an attorney-client relationship, a court must look to the actions of the parties to ascertain the existence of such a relationship," (id., at 551 [internal quotation marks and citations omitted]) [*8]bearing in mind that plaintiff’s unilateral belief does not confer upon her the status of defendant’s client (see Volpe v Canfield, 237 AD2d 282, 283 [2d Dept 1997], lv denied 90 NY2d 802 [1997]). "

"Ultimately, the evidence as to the alleged existence of an attorney-client relationship between plaintiff and defendant Van Epps is inconclusive, depends on a fact-finder’s [*11]assessment of the parties’ credibility, and thus is outside the scope of the court’s review on a motion to dismiss. Assuming the truth of her affidavits, plaintiff sufficiently alleges that Van Epps represented conflicting interests at the time plaintiff signed the corporate documents (see Shumsky, 96 NY2d at 168). Plaintiff thus adequately alleges the first element of her breach of fiduciary duty claim — the existence of a fiduciary relationship. Furthermore, having alleged misconduct by defendant by his alleged simultaneous representation of adverse interests, and damages directly caused by his misconduct (Proposed Amended Complaint, ¶¶ 47-50), plaintiff adequately pleads the other two elements of her claim. Defendant’s motion seeking dismissal of the breach of a fiduciary duty cause of action pursuant to CPLR 3211(a) (7) is denied. Defendant’s motion pursuant to CPLR 3211 (a) (1) is also denied inasmuch as defendant’s affidavit and the documents attached thereto do not definitively and "conclusively establish[ ] a defense to the asserted action as a matter of law" (Leon, 84 NY2d at 88); the documentary evidence merely raises numerous issues of fact, rather than finally dispose of them (see Bernstein v Oppenheim & Co., P.C., 160 AD2d 428, 435 [1st Dept 1990]). "

"Defendant contends that plaintiff’s claims against him are in the nature of professional malpractice and, therefore, are barred by the three-year statute of limitations of CPLR 214 (6), which is applicable to legal malpractice actions. Defendant asserts that by formulating her proposed amended complaint using language such as fraud and breach of fiduciary duty, plaintiff is attempting to circumvent the three-year limitations period applicable to legal malpractice claims pursuant to CPLR 214 (6) regardless of whether the underlying theory is based in contract or tort. However, as discussed, plaintiff adequately pleads a distinct cause of action for fraud against Van Epps which goes beyond ordinary malpractice (see Simcuski v Saeli, 44 NY2d 442, 453 [1978][finding that an independent cause of action for fraud against a professional may be established when exposure to liability "is not based on errors of professional judgment, but is predicated on proof of the commission of an intentional tort, in this instance, fraud"]; see also Mitschele v Schultz, 36 AD3d 249 [1st Dept 2006]). Defendant’s malpractice argument fails, as the gravamen of plaintiff’s suit is fraud. The motion to dismiss the action is therefore denied. "

Matrimonial legal malpractice is typically all about the money – and the money is usually about equitable distribution.  Money, or having to give it to someone else drives people insane.  in this case it apparently drove the husband to solicit the murder of his wife.  Luckily, the plan fizzled, and ended in divorce and equitable distribution instead.  After settlement of the divorce case, husband sued his attorney.  He lost in summary judgment, in an instructive decision. 

In Pascarella v Goldberg, Cohn & Richter, LLP ; 2009 NY Slip Op 52193(U) ;Decided on October 23, 2009 ; Supreme Court, Kings County ; Hinds-Radix, J. we see how the court works its way through plaintiff’s claims.  "On December 15, 2003, on the eve of trial on the ancillary issues in the matrimonial action, the parties entered into a stipulation of settlement (the settlement) which was placed on the record in open court before Justice Yancey. The settlement fixed Susan’s equitable distribution award at $400,000 and required that plaintiff pay it to her in lump sum by March 1, 2004.[FN15] In connection with the settlement, plaintiff testified under oath before Justice Yancey that (1) he heard and understood the terms of the settlement as it was placed on the record; (2) he discussed its terms with his lawyer (Mr. Goldberg), had enough time [*4]to speak with his lawyer about it, and required no additional time; (3) he was satisfied with the services of his lawyer; (4) he was not forced, threatened, or coerced to enter into the settlement; (5) the terms of the settlement were acceptable to him; and (6) he promised to live by its terms.
 

"Plaintiff’s first charge of malpractice is that Goldberg was negligent in failing to seek discovery from Susan concerning her non-marital property. The court notes that plaintiff and Susan were married from July 28, 1984 until September 1, 2001, when plaintiff abandoned the marital home, and thus were together for 17 years.[FN24] Yet, plaintiff has never claimed in any of his numerous affidavits filed in this action or in the matrimonial action that Susan had any non-marital property. Nor has plaintiff submitted to the court Susan’s Statement of Proposed Disposition, which was to indicate if she had any separate property. There is not one iota of evidence that suggests that Susan had any separate property. To the contrary, the gravamen of plaintiff’s legal malpractice claim is that plaintiff overpaid Susan because he used his own separate property, and not because Susan already had too much on account of her own separate property. Without some evidence of actual, ascertainable damages flowing from Goldberg’s alleged failure to conduct discovery, this branch of plaintiff’s legal malpractice claim fails (see Luniewski, 188 AD2d at 643).

"Plaintiff’s second charge that the settlement was coerced or fair has no merit. As stated, the matrimonial action was scheduled for trial on the equitable distribution issue when the parties entered into a settlement of $400,000, which was higher than plaintiff’s counter-offer of $300,000 and lower than Susan’s initial offer of $450,000. Plaintiff took the stand where he was allocuted on the settlement. He testified that he understood the settlement, wanted to accept it, and was satisfied with Goldberg’s services as his counsel. Plaintiff’s allegations in support of his claim that the settlement was a product of coercion or duress are inherently incredible and flatly contradicted by documentary evidence, including (1) the minutes of Justice Yancey’s careful and thorough allocution of plaintiff, during which he showed no sign that he was compelled to enter into the settlement, and (2) his "Affidavit of Appearance and Adoption of Oral Stipulation," in which he acknowledged that the terms of the settlement were fully explained to and understood by him, and that he consented to its terms voluntarily and with advice of counsel (see Kinberg v Kinberg, 50 AD3d 512, 513 [1st Dept 2008]).

"As a matter of policy, cases once settled should not be readily re-litigated as to their merits before another judge, where the original party has been released and the plaintiff’s original attorney has become the defendant. "Under those circumstances, the burden must be on the plaintiff seeking such a recovery to demonstrate by evidence rather than by conclusory allegations, that he indeed suffered substantial financial loss because of misdeeds by his attorneys and not by second guessing as to their judgment" (Becker v Julien, Blitz & Schlesinger, P.C., 95 Misc 2d 64, 68 [Sup Ct, New York County 1977], modified on other grounds 66 AD2d 674 [1st Dept 1978], appeal dismissed 47 NY2d 705 and 761 [1979], lv dismissed 47 NY2d 800 [1979]). "

LOK PRAKASHAN, LTD.  -v.- RALPH A. BERMAN, DAVIDOFF MALITO & HUTCHER, LLP,
No. 09-0136-cv; UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT;2009 U.S. App. LEXIS 22988 is an example of the Court’s continued romance with the concept that litigation is an art and not a science.

What is a question of judgment? " "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.

The District Court concluded that "[b]ecause there is ample evidence in the record that Defendants’ omission of the specified document was a conscious and reasonable decision regarding trial strategy, not negligence, and the omission of the document was not the proximate cause of any loss, Plaintiff has failed to show the elements required to support a claim of legal malpractice." [*4] Order of November 1, 2005. We agree and, substantially for the reasons stated by the District Court in its well-reasoned orders of November 1, 2005 and December 12, 2008, find plaintiff’s arguments to be without merit."
 

Way back when, there were different statute of limitation in legal malpractice cases which sounded in either tort [3 years] or contract [6 years].  The Court of Appeals approved, and it was the law of the land.  As is its power, the legislature then passed CPLR 214(6) which created a single 3 year statute of limitations for legal malpractice actions, whether sounding in tort or contract. 

With enterprising attorneys, and strange damage situations, this was not the end of the question.  Can there be a cause of action for breach of contract between a client and an attorney?  The short answer is yes.  As an example, were the attorney to contract to write an appeal, and no appeal was written, that would be a breach of contract.  Damages would be limited to traditional contract damages:  payments made but not earned, and perhaps the additional cost of cover [paying someone else a higher fee to do the work.]

Here, in Lambroza v. Tworney, Latham, Shea, Kelly, Dubin & Quartararo, 2009 NY Slip Op 32333(U) we see a slightly different fact pattern.  Plaintiff alleges that he hired defendant attorney to provide legal services in the purchase of real property in the Hamptons.  Plaintiff alleges that defendant was to compare the survey of the Property and the existing deed and look for differences. 

Some 6 years later differences arise, an encroachment existed, and plaintiff had to drop his sale price by $ 50,000 to cover the problem.  Is the attorney liable for breach of contract, since the statute of limitations for legal malpractice has long passed?

The answer in this case is no, as Justice Solomon was unpersuaded that this was really a contract action and not a traditional legal malpractice case. She determined that comparison of a deed to the survey is within the normal realm of legal services and was not the basis of a real contract.  Accordingly, case dismissed on statute of limitations.

In General Credit Corp v. Guidice 2009 NY Slip Op 32418(U), Supreme Court, New York County, Decided 10/15/09, Justice Kornreich, we one reason that the public has less than stellar views of attorneys.  Here, evidence was produced to show that one attorney wrested control of the corporation and caused it to enter into adverse financial transactions that benefited the attorney, prepared agreements to give that attorney control of the board, obtained loans from a captive entity controlled by the attorney at interest rates above 20%, seized control of all the bank accounts, changed the locks in the office, fired the staff, interfered with its banking relationships and drove the company to file bankruptcy.

The case ended in a judgment of about $ 864,000 along with punitive damages (10x compensatory damages) in the amount of $ 1.5 million and additional punitive damages of $ 850,000 against others of the attorneys.