In Acosta v. Falick & RochmanPLATZER, FALLICK & STERNHEIM, LLP, 05 Civ. 8254 (KTD)UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; 2009 U.S. Dist. LEXIS 70878 we see a case brought pro-se and "in forma pauperis against his former lawyer, Barry M. Fallick, and his former lawyer’s firm, Rochman, Platzer, Fallick & Sternheim, LLP (collectively, "Defendants"). Acosta seeks the return of legal fees paid to Defendants plus other incidental costs arising out of Defendants’ representation of him in a criminal matter." 

There, Judge Duffy "satisfied myself of both the guilt of the defendant and that the plea was being made voluntarily by a person who knew exactly what his rights were and knew exactly what he was doing. Indeed I remember thinking about the arguments that must have been raised by defense counsel in bargaining with the government, and I still marvel at the wonderful result defense counsel obtained for his client. The government had originally charged Acosta with dealing in narcotics–a charge reduced by the bargain to use of a "communication facility" in connection with drug dealing. I knew that Acosta, as a police officer, would face a tough time in prison, but believed that he was not exempt from jail time. On January 9, 2001, I sentenced him to forty-eight months’ imprisonment, two years’ supervised release, and charged the mandatory $ 100 special assessment."

Apparently there was no diversity jurisdiction, so plaintiff " alleges violations of 41 U.S.C. § 37 and 28 U.S.C. § 1927, but neither of these statutes provide a legal basis for his claims. First, 41 U.S.C. § 37 authorizes the Comptroller General of the United States to distribute to certain government agencies lists of persons who have breached public contracts. See 41 U.S.C. § 37. The fee agreement in this case is not a public contract, so it is not covered under the statute. Further, the statute does not authorize a private right of action or money damages at all."
"However, Plaintiff’s complaint in this case, broadly construed, alleges only facts most closely resembling state law breach of contract and legal malpractice claims over which this Court does not have subject matter jurisdiction. As Defendants point out, complete diversity is lacking and Plaintiff does not claim more than $ 75,000 in damages, so 28 U.S.C. § 1332(a) cannot provide a basis for jurisdiction. Therefore, as Acosta’s complaint lacks any basis in law and is consequently frivolous under 28 U.S.C. 1915 (e) (2) (B) (i), I must dismiss it."
 

Different result in State Court?

X is sued by defendants.  He loses at trial using target attorneys.  He hires new attorneys, mediates, settles, and assigns his rights to a legal malpractice action against his former [target] attorneys to plaintiff, who now sues target attorneys in the place of X.  Is there still any confidentiality to the mediation asks the target attorney?

Yes, there is, says Judge Bernstein of US Bankruptcy Court, SDNY in In re: TELIGENT, INC., Reorganized Debtor. SAVAGE & ASSOCIATES, P.C., as the Unsecured Claims Estate Representative for and on behalf of TELIGENT, INC., et al., Plaintiff, — against — ALEX MANDL, Defendant.

Chapter 11, Case No. 01-12974 (SMB), Adv. Proc. No. 03-2523; UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; 2009 Bankr. LEXIS 3037; 
September 24, 2009

"Non-party K&L Gates LLP ("K&L") formerly represented the defendant Alex Mandl. The parties engaged in unsuccessful pre-trial mediation, and following trial, the Court entered a judgment in excess of $ 12 million against Mandl and in favor of the plaintiff, Savage & Associates, P.C. ("Savage"), the Unsecured Claims Representative for and on behalf of Teligent, Inc. ("Teligent"). After the entry of [*2] judgment, Mandl discharged K&L, participated in a second round of mediation with new counsel, and eventually settled with Savage. As part of the settlement, Mandl assigned to Savage a portion of the proceeds derived from his legal malpractice claim against K&L. As contemplated by the settlement, Mandl sued K&L for legal malpractice in the District of Columbia (the "DC Action").

K&L contends that it needs the documents and communications generated during the two mediations to defend itself in the DC Action. (Memorandum of Points and Authorities in Support of [K&L’s] Motion to Lift Mediation Confidentiality Restrictions, dated March 5, 2009 (the "Motion"))(ECF Doc. # 227.) 1 Toward that end, it has moved for relief from the confidentiality provisions contained in this Court’s General Order M-143, dated Jan. 17, 1995 ("General Mediation Order") and the specific mediation order entered in this case.

K&L offers several reasons why the Mediations communications and the mediator’s testimony "may be relevant." First, they may shed light on the issues of causation, mitigation, and damages, and in particular, why Mandl settled at the price he did rather than pursue his post-trial motions or an appeal. (See id., at 13-14.) K&L speculates that Mandl may have settled without regard to his actual exposure, which GT had estimated to be $ 3.19 million, (id., at 14-15), or because Savage threatened Mandl with criminal and tax-related liability. (Id., at 15.) Moreover, Savage discontinued the fraudulent conveyance action against Susan Mandl and ASM without extracting a separate payment from either defendant. The release of his wife and affiliate may have affected Mandl’s decision to settle at a higher number than his potential exposure. (Id., at 15-16.)

Second, the Mediations communications may be relevant to Mandl’s damages. The parties valued the Settlement at $ 16 million (i.e., the Agreed Valuation), but the amount of consideration that Mandl committed to pay, aside from half of the net proceeds of the DC Action, was far [*12] less. (Id., at 16-17.) The mediator’s report stated that he was "not aware of any reason why that amount is not a reasonable approximation of the value of the settlement," and Savage asserted at the time that she sought judicial approval of the Settlement that the Settlement would include a claim of $ 16 million against K&L. (Id., at 16-17.) Lastly, Mandl responded to an interrogatory that the Agreed Valuation was based on the probabilities assigned by each party to the outcome of the post-trial motions, and K&L’s failure to exercise due diligence in discovering important evidence that surfaced after the trial. (Id., at 17.)

Third, K&L contends that the Proceeds Assignment is invalid, and suggests that the Mediations communications may be relevant in establishing that the assignment was improper. (Id., at 18-19.)
 

K&L has plainly failed to meet its burden. Although the Mediations communications may be relevant to some of the issues in the DC Action, K&L has not explained satisfactorily why they are critically needed. Mandl has not charged K&L with committing malpractice in connection with the 2004 Mediation, and K&L did not participate in the 2008 Mediation. Hence, K&L’s conduct during the Mediations is not material to the malpractice [*21] claim."
 

We reported on this case back on5/14/07 and again on 9/19/08.  Today, the NYLJ reports that the Morelli law firm’s attempt to garner disbursements from plaintiff has failed.

From the decision of Justice Goodman:  "The following illustrates why members of the public may hold cynical views about the legal profession. This motion seeks to renew and reargue denial of a motion to restore a counterclaim for disbursements from defendants’ former client. Granted to the extent of considering the present submission; but on reargument the motion is denied.
 

A legal malpractice action against Benedict P. Morelli & Associates, P.C. (Defendants/Movants) of plaintiff resulted from the representation of plaintiff in a medical malpractice action. In that medical malpractice action, which was dismissed as untimely, Victoria Kremen (Plaintiff/Client) claimed that certain doctors and hospitals misdiagnosed her as having breast cancer, when she did not; the result was an unnecessary bi-lateral mastectomy. (Kremen v. Brower, Index No. 112829/01, Joan B. Carey, Sup Ct NY County 2001, affd, Kremen v. Brower, 16 AD3d 156 [1st Dept 2005]). This Court’s denial of summary judgment to defendants in the ensuing legal malpractice action which was based on the prior case being dismissed on statute of limitations grounds, was reversed (in connection with a time calculation of Plaintiffs’ filing bankruptcy) and the legal malpractice action was dismissed (Kremen v. Benedict P. Morelli & Assoc. P.C., 54 AD3d 596 [1st Dept 2008]).

In the legal malpractice action defendants had argued, inter alia, that there had been no merit to the medical malpractice case in the first instance, even though they had clearly undertaken the engagement of representing plaintiffs, which suggests that they must have or should have believed it was a meritorious action. Defendants then took the uncommon step in the legal malpractice action, of asserting a counterclaim for disbursements allegedly incurred in the medical malpractice action. However, the law firm submitted to this Court no support whatsoever for the motion to restore their unusual counterclaim."

Now, for the first time, and in violation of motion practice parameters concerning reargument under CPLR 2221, defendants submit a copy of the retainer agreement which was drafted by them and was in their possession when they originally made the motion hereunder. Aside from that impropriety, and despite being an experienced tort firm active in the field of personal injury, defendants obviously are not familiar with the terms of their own retainer agreement.

Hinshaw reports an interesting South Carolina case in which plaintiff is estopped from a legal malpractice case against his attorney, on the basis that he is a wrongdoer, and one in in pari delicto may not recover civil liability.

From the Hinshaw alert:  "Plaintiff William Whiteheart sued his former law firm, Waller & Stewart, for malpractice. Whiteheart’s claim was based on multiple instances in which Waller & Stewart facilitated Whiteheart’s wrongdoing. For example, Waller & Stewart reviewed a per se defamatory letter that Whiteheart wrote about one of his business competitors. Waller & Stewart did not warn Whiteheart of potential liability for the letter, and he later distributed the letter. In a related matter, Waller & Stewart helped Whiteheart maintain a billboard well past the term of the billboard’s lease, even though the landlord rightfully sought removal of the billboard. Waller & Stewart even went so far as to obtain a temporary restraining order to prevent removal of the billboard, despite no apparent legal basis for maintaining the billboard on the property."
 

"The court of appeals affirmed based on the doctrine of in pari delicto. The doctrine prevents courts from redistributing losses among wrongdoers. The court held that this doctrine bars recovery in legal malpractice unless the client acts pursuant to legal advice so complex that assessing the illegality of the advice would not be possible. Whiteheart was barred from arguing that he was ignorant of any wrongdoing, the court held, because in the prior proceeding the court had found Whiteheart’s misconduct intentional.

Whiteheart, therefore, was collaterally estopped from arguing against the court’s application of in pari delicto. Because no North Carolina court had applied in pari delicto to a legal malpractice case, the court of appeals looked to other jurisdictions for guidance. The court noted that allowing malpractice recovery in such cases could encourage clients to commit illegal acts upon the advice of their lawyers, and that malpractice liability is not needed to deter such faulty legal advice because the threat of attorney discipline serves as an adequate deterrent."
 

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. "