Much of the law-related news is about multi-national law firms.  Leaving them aside there is a serious question over whether our regular old national law firms can be sued in US District Court under diversity jurisdiction. 

Let’s review the basics, as set forth in Lee v. Brown, 3:08-CV-01206 (CSH);  UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT; 2009 U.S. Dist. LEXIS 88494; September 25, 2009

1.  It’s citizenship, not residence in diversity jurisdiction:  "District courts have subject matter jurisdiction based on diversity of citizenship in civil cases where the matter in controversy exceeds the sum or value of $ 75,000 and is between citizens of different states. 28 U.S.C. § 1332(a)(1). Diversity of citizenship requires "complete diversity between all plaintiffs and all defendants," Lincoln Prop. Co. v. Roche, 546 U.S. 81, 88, 126 S. Ct. 606, 163 L. Ed. 2d 415 (2005), meaning that no plaintiff and no defendant are citizens of the same state. Wis. Dep’t of Corr. v. Schacht, 524 U.S. 381, 389, 118 S. Ct. 2047, 141 L. Ed. 2d 364 (1998). The party seeking to invoke diversity jurisdiction — here plaintiffs [*4] — bears the burden of demonstrating that complete diversity exists. Herrick Co. v. SCS Commc’ns, Inc., 251 F.3d 315, 322-23 (2d Cir. 2001).
 

2.  Citizenship [domicile] is more than residence:    "Domicile is the place where a person has his true fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning." " A natural person is considered to be a citizen of the state where he is domiciled, Palazzo v. Corio, 232 F.3d 38, 42 (2d Cir. 2000), and "it is well-established that allegations of residency alone cannot establish citizenship." Canedy v. Liberty Mut. Ins. Co., 126 F.3d 100, 102-103 (2d Cir. 1997).

3.Partnerships are citizens of the state of each parthers’ domicile:  A person’s domicile is "the place where a person has his true fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning." Palazzo, 232 F.3d at 42. A partnership, which is not a natural person, has the citizenship of each of its partners. Herrick Co. v. SCS Commc’ns, Inc., 251 F.3d 315, 322-23 (2d Cir. 2001).at 322. This is true also of limited liability partnerships. See Mudge Rose Guthrie Alexander & Ferdon v. Pickett, 11 F. Supp. 2d 449 (S.D.N.Y. 1998).
 

4. Lack of complete diversity may result in no subject matter jurisdiction..   "In moving to dismiss this action for lack of subject matter jurisdiction, McDermott claims that a number of its partners are domiciled in, and thus citizens of, the same states of which plaintiffs claim to be "residents" — California, Massachusetts, and Connecticut. The declaration of Alan M. Rutkoff indicates that 41 of McDermott’s partners work at the firm’s office in Boston, Massachusetts, and that at least 104 of its partners work at one of the firm’s California offices. According to the declaration, all or substantially all of the partners who work at these offices [*7] are domiciled in the state wherein their office is located."  "If plaintiffs are indeed citizens of the states in which they claim to reside, then a number of McDermott’s partners are citizens of the same states and complete diversity is lacking in this action."

5.  That determination may not be the end of the story   Even if there is overlap between the citizenship of some of the plaintiffs and some of McDermott’s partners, it does not follow that the entire action must be dismissed for lack of subject matter jurisdiction. Under Fed. R. Civ. P. 21, a district court have the power to dismiss nondiverse dispensable parties to preserve diversity jurisdiction. Kafaru v. Burrows, 2008 U.S. Dist. LEXIS 1797, *4 (D. Conn. 2008); See Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832, 109 S. Ct. 2218, 104 L. Ed. 2d 893 (1989). McDermott appears to be a dispensable party.

 Rule 21 reads: "On motion or on its own, the court may at any time, on just terms, add or drop a party."

Sheri Qualters at The National Law Journal reports that Mintz, Levin and its attorney Steven Rosenthal  have been sued for "allegedly misusing his position to enrich himself and a friend."  Rosenthal, formerly an attorney there, has moved on to real estate investment and development at Northland Investment Corp.

The suit revolves around a claim that Rosenthal "appointed a friend, Neil Cooper, and his company, Macher Management and Development Corp.

The Lamb v. Rosenthal lawsuit, which was filed in Suffolk County Superior Court in Massachusetts on Sept. 16, accuses Rosenthal and Mintz Levin of fraud, breach of fiduciary duty and legal malpractice. The plaintiffs also allege that the defendants violated the Massachusetts consumer protection law, which allows plaintiffs to collect triple damages and attorney fees. They accuse Rosenthal of threatening to oppose the appointment of the plaintiffs as their mothers’ guardian unless they signed a settlement agreement, which was finalized in 2006.

The plaintiffs claim they learned of Rosenthal and Cooper’s close friendship and how they improperly protected each others’ interests at the expense of the plaintiffs when Cooper’s company sued them in Essex County Superior Court in Massachusetts.

Cooper filed the 2007 lawsuit, Macher Development & Management Company LLC v. Stevens, to collect money the plaintiffs in the Rosenthal case allegedly owed him under his contracts to manage their commercial property. The Macher lawsuit was settled in July 2008.

According to the complaint in the recently filed lawsuit, during the discovery process in the Macher suit, Mintz Levin produced e-mails in which Cooper referred to Rosenthal as his "best friend" and "soul mate." The complaint cites another Cooper e-mail in which he said he didn’t want it to look as though Rosenthal was negotiating for him and that a little "fake tension" between them would look good. "

Legal malpractice is a filed associated with situations in which a person has lost their case.  In real legal malpractice, but for the mistake of the attorney, there would have been a positive outcome.  In a small subset of cases, however, there really is no merit to the action at all.  Defense counsel in legal malpractice all too often use a broad brush and paint any complaint as "frivolous’; sometimes they are right.  Here is an example:

ELIOT S. SASH, Plaintiff, – against – UNITED STATES OF AMERICA et al., Defendants; 09 Civ. 450 (DC);UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 90866   we are looking at this case because in earlier matters, Mr. Sash unsuccessfully sued his attorneys.  Here is his story:
 

"On September 4, 2002, federal and state officials executed a search warrant at Sash’s home in Yonkers, New York. United States v. Sash, 396 F.3d 515, 517 (2d Cir. 2005). The search uncovered thousands of false federal, state, and local identification documents and badges, along with the tools, computers, and printers necessary to manufacture such documents and badges. Id. Sash was not authorized to manufacture any of the badges or documents found. Id.

On November 27, 2002 Sash was charged in a twenty-one count indictment with producing, and unlawfully possessing with intent to transfer, hundreds of NYPD badges and ID cards; selling counterfeit badges through the mail; and making false statements to federal customs officials. Id.

On December 30, 2002, while free on bail, Sash was arrested in New Jersey for defrauding a K-Mart department store. His bail was revoked, and he was [*4] charged in a superseding indictment that included charges relating to Sash’s attempt to defraud K-Mart. Id. He later agreed to plead to an information, and pled guilty on September 30, 2003 to access device fraud and unlawful transfer of police badges. Id. at 518. On January 13, 2004, Judge Casey sentenced Sash to twenty-seven months in prison followed by eight years of supervised release, which was subsequently lowered to two years and nine months. Id. As a special condition of his supervised release, Sash was explicitly prohibited from
possess[ing] any law-enforcement equipment, such as New York Police Department shields and badges, that [he was] not authorized to possess, [and] . . . possess[ing] any raw materials, inventory, or badge components that could be used to manufacture law-enforcement equipment that [he was] not authorized to manufacture.
United States v. Sash, 444 F. Supp. 2d 224, 228 (S.D.N.Y. 2006).

On March 3, 2006, after Sash completed his sentence and was subject to supervised release, Sash’s Probation Officer conducted a search of his home. Id. at 226. That search uncovered a number of NYPD badges and shirts, which Sash was prohibited from possessing. Id. A subsequent [*5] search took place on March 6, 2006 and revealed, as Judge Casey later put it, "enough law-enforcement equipment to outfit a small police force." Id. at 228. Sash possessed, inter alia, NYPD uniforms, NYPD badges, Department of Defense badges, seals used to make FBI, Department of Justice, and Customs Service badges, and several fake handguns. Id. at 227.

On March 6, 2006, the Probation Office filed a Request for Court Action, charging Sash with two violations of supervised release — possessing law enforcement badges and equipment, and lying to his Probation Officer. Sash, who denied both charges, was arrested that same day. Id. at 225. Judge Casey held a hearing on April 4, 2006, and on August 2, 2006 issued a decision, concluding that Sash had committed the two violations. Id. On September 25, 2006, Judge Casey sentenced Sash to twenty-four months in prison and twelve months of supervised release. United States v. Sash, 02 Cr. 1519 (S.D.N.Y. 2002) (Docket Entry 73).

B. Procedural History

Upon his release from prison in late 2007, Sash moved, pursuant to Federal Rule of Criminal Procedure 41(g), for the return of his property seized in 2001, 2002, and 2006. The property in possession [*6] of the Probation Office generally includes law enforcement pins, tie clips, uniforms (including clothing), money clips, badges, utility belts, DVDs, fake ammunition, fake ammunition magazines, and fake firearms. (Merrigan Decl. Ex. A (full catalog of items); Arce Decl. P 5). The property in possession of the NYPD Property Clerk generally includes thousands of NYPD badges, hundreds of other badges, thousands of molds for producing NYPD badges, police shields and shield components, ten fake firearms, a variety of government identification cards and identification documents, two police vehicle identification plaques, assorted police paraphernalia, business and personal records, a computer along with parts and hardware, and $ 869 in United States currency. (Weir Decl. Ex. C (full catalog of items)).
 

On February 5, 2009, Sash filed an amended complaint, full of elaborate conspiracy theories as to how he was "persecuted" by the City and Federal Defendants for his "legitimate" badge-making business. The complaint cast aspersions not only on the Assistant United States Attorney who prosecuted Sash, but also the late Judge Casey. (Compl, at 11 ("The Pro-Se Plaintiff appealed but the appeal was allegedly not filed due to the clandestine orders and interference of Judge Casey."))."
 

We don’t understand why, but in Hashmi v Messiha ;  2009 NY Slip Op 06665 ; Decided on September 22, 2009 ;  Appellate Division, Second Department  the court places great weight on a mix-up between brothers.  The basic claim is that plaintiff asked his attorneys to make a motion to dismiss would undoubtedly be successful.  They didn’t do it as quickly as he would have liked.  Here’s the story: 

"almost immediately after the appellant was retained, but prior to November 7, 2005, the individual plaintiff, Imaduddin Syed Hashmi (hereinafter Hashmi) requested that Patricia E. Permakoff, the attorney assigned by the appellant to defend him, make a motion to dismiss the complaint in the medical malpractice action insofar as asserted against him on the ground that he never physically worked at the Hospital, but she allegedly refused to do so. Significantly, Hashmi does not deny that he was aware, prior to consulting with Permakoff, that his brother, Kabeerudin Hashmi, was the physician who was actually present at the Hospital and treated Sahar, but that he did not inform her of that fact.
 

On November 7, 2005, approximately three weeks after the appellant assumed Hashmi’s defense in the medical malpractice action, the defendant New York Post published an article identifying Hashmi as the "Death Sentence Doc" in the underlying malpractice action.

Apparently the brother question was insufficient for the Appellate Division:

"The plaintiffs’ mere conclusory allegations as to Hashmi’s requests that Permakoff take certain actions, together with their failure to allege any knowledge by the appellant that the New York Post planned to publish an article in connection with this matter and their failure to immediately inform the appellant that it was Hashmi’s brother, Kabeerudin Hashmi, who was actually the physician present in the Hospital when Sahar was examined and treated, render the allegations in the complaint conclusory and speculative insofar as asserted against the appellant. The allegations are thus insufficient, as a matter of law, to show that the plaintiffs have a cause of action sounding in legal malpractice. Accordingly, the Supreme Court should have granted the appellant’s motion to dismiss the complaint insofar as asserted against it (see Wald v Berwitz, 62 AD3d 786; Riback v Margulis, 43 AD3d 1023; Hartman v Morganstern, 28 AD3d at 424).

Moreover, in any event, the plaintiffs’ allegations as to the consequences and damages flowing from the appellant’s alleged failure to accede to Hashmi’s request that Permakoff immediately move to dismiss the complaint in the medical malpractice action are also too speculative to permit a trier of fact to find that such failure caused "actual and ascertainable damages" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442) to them. "

In Berry v Utica Natl. Ins. Group ;2009 NY Slip Op 06935 ; Decided on October 2, 2009 ;Appellate Division, Fourth Department we see a situation in which plaintiff was suing Utica National Insurance Group and evidently there was communication between plaintiff and the defendant law firm.  "evidence that plaintiff contacted defendant concerning his dispute with Utica National does not establish the existence of an attorney-client relationship absent further evidence of an "explicit undertaking [by defendant] to perform a specific task" (Wei Cheng Chang v Pi, 288 AD2d 378, 380, lv denied 99 NY2d 501; see McGlynn v Gurda, 184 AD2d 980, appeal dismissed and lv denied 80 NY2d 988).

How do these situations arise?  Generally, there are telephone calls, and even letters between the attorneys and the plaintiff over starting a law suit.  We cannot say what the evidence in this case was, but in typical cases, either the attorney takes on tasks 1,2,3 but not 4 (where 4 is the case sued upon), or there are "agreements to agree" over a retainer agreement that never jell.

One solution that is raised in almost every advice article for attorneys is a retention/no retention letter that states affirmatively, for example, that "we are not retained nor will we be representing you in the -______________ case.

Yesterday, we started to discuss  Waggoner v. Caruso 2009 NY Slip Op 06739 Decided on September 29, 2009 ; Appellate Division, First Department ; (DeGrasse, J.)

Today we discusse continuous representation, which, in this form, is a question of first impresssion, an issue taken up directly by Justice DeGrasse in the Appellate Division order:
 

"Although we affirm Supreme Court’s order, we do not do so on the ground that plaintiffs’ legal malpractice claim against Pillsbury is time-barred. A legal malpractice action must be commenced within three years of accrual (CPLR 214[6], 203[a]). Accrual occurs when the malpractice is committed (Shumsky v Eisenstein, 96 NY2d 164, 166 [2001]). In this case, plaintiffs’ malpractice claim against Pillsbury accrued nearly six years before this action was commenced. Under the doctrine of continuous representation, however, the statute of limitations is tolled while representation on the same matter in which the malpractice is alleged is ongoing (see Glamm v Allen, 57 NY2d 87 [1982]). The doctrine is rooted in recognition that a client cannot be expected to jeopardize a pending case or relationship with an attorney during the period that the attorney continues to handle the case (see id. at 94). In rendering its decision, Supreme Court ruled that the statute of limitations was not tolled as to Pillsbury because it ceased representing plaintiff in January 2002 when Caruso left the firm and took plaintiffs’ case with him. In HNH Intl., Ltd. v Pryor Cashman Sherman & Flynn LLP (63 AD3d 534 [2009]), this Court has since held that the statute was tolled as to a malpractice claim against a law firm because the attorneys who handled the case continued to represent the plaintiffs in the same matter, albeit at different law firms. Guided by this precedent, we now hold that the statute of limitations was tolled by the doctrine of continuous representation during the time that Caruso represented plaintiffs in the underlying matter while he was a partner at Chadbourne and Bracewell.

Sound policy considerations also support the tolling of the statute of limitations with respect to the legal malpractice claim against Pillsbury. Any suit brought by plaintiffs against Pillsbury would have been based upon Caruso’s acts of malpractice. Caruso would have thereby been exposed to Pillsbury’s potential claims for contribution or indemnification. As noted by the [*5]Court of Appeals in Glamm, a person cannot be expected to jeopardize a relationship with the attorney handling his or her case during the period that the attorney continues to represent him (57 NY2d at 94). An attorney-client relationship would certainly be jeopardized by a client’s allegation that his or her attorney committed malpractice while representing the client. Beal Bank, SSB v Arter & Hadden, LLP (42 Cal 4th 503, 167 P3d 666 [2007]), a case defendants cite, is distinguishable because it involves the interpretation of a California statute that codifies the continuous representation doctrine. New York does not have a similar statute.

Accordingly, the order of Supreme Court, New York County (Bernard J. Fried, J.), entered September 11, 2008, which granted defendants’ motion to dismiss the complaint pursuant to CPLR 3211, should be affirmed, with costs. "

This is a Politico – A List legal malpractice case.  In Waggoner v. Caruso   2009 NY Slip Op 06739 Decided on September 29, 2009 ; Appellate Division, First Department ; (DeGrasse, J.) we see some of the nations biggest names.

Besides being about a $ 10 Million loss, the players are all very recognizable.  For Plaintiff, Helms & Greene along with Asa Hutchinson [former Representative (R-AK), former US Attorney, Former DEA Administrator, House Manager of the impeachment case and Venable LLP..  For Defendants, Bracewell & Giuliani, Pillsbury Winthrop,  Patterson Belknap and Chadbourne & Parke. 

After dismissal in Supreme Court  this case then went to the First Department.  The original  decision was by Justice Fried, There were four causes of action:  malpractice, breach of fiduciary duty, fraud and conspiracy to commit fraud.  On the malpractice portion, Pillsbury argued that no court in New York has ever addressed the issue of applying the continuous representation doctrine to the former firm of an attorney who left that firm and took the client with him. 

Supreme Court went on to discuss the breach of Fiduciary duty claim, citing Weil Gotschal & Manges LLP v, Fashion Boutique of Short Hills, Inc., 10 AD3d 267 (1st Dept, 2004). Supreme Court found that plaintiff must prove the existence of a fiduciary relationship and a breach of the duty imposed by such a relationship that  directly caused actual damages.  "Where the only actual damage alleged is the value of a lost claim, a plaintiff  client must prove that he or she would have prevailed in the underlying action but for the attorney’s conduct.  In other words, as in a malpractice claim, the plaintiff must meet the case within a case requirement."

More tomorrow

Justice Judith Gische of Supreme Court, New York County presents a primer on attorney fee litigation and the disposition of counterclaims for legal malpractice in Hurley v. Bulah Church of God in Christ Jesus, Inc.  In this case the Church had gone through some hard times.  A pastor was accused of financial wrongdoing, and the Church was in Bankruptcy Court for taxes and other debts.  Attorney was retained, and worked on the case in what turns out to be an admirable fashion.  When the Bankruptcy was winding up, leadership of the Church changed, and he was no longer so admired there.  Effect?  The Bankruptcy court approved fees, and he was paid.  Nevertheless, there were post-discharge work and fees, and this dispute in state court followed.

Read for the excellent description of why and how an attorney is due fees. "an attorney who is discharged by a client for cause has no right to compensation or a retaining lien, notwithstanding a specific retainer agreement.  Teichner by Teichner v. W & J Holsteins, Inc., 64 NY2d 977 (1985).    On this motion plaintiff has successfully established that he: 1) owed unpaid legal fees; 2) was not discharged for cause, but withdraw as counsel with court approval; 3) deposited money into his attorney escrow account to be applied to post closing matters, like distribution of money to creditors, etc; and 4) Deacon Roberts was authorized to attend to the church’s financial matters with respect to the reorganization.  Thus, plaintiff has proved he is owed unpaid legal fees and other fees."