Reem Contr. v Altschul & Altshcul 2022 NY Slip Op 34430(U) December 30, 2022 Supreme Court, New York County Docket Number: Index No. 104202/2011 Judge: Kelly A. O’Neill Levy discusses two interesting points: when an expert is needed in a summary judgment motion on a legal malpractice case and whether an account stated claim can proceed in a legal malpractice counterclaim/defense setting. Today, the expert is discussed.

This is a legal malpractice action brought by plaintiffs Reem Contracting Corp. (Reem
Contracting), Jona Szapiro (Szapiro ), Reem Plumbing and Heating Corp. (Reem Plumbing), and the Estate of Steven Stein (Stein) (collectively, plaintiffs) against defendants Altschul & Altschul, Mark Altschul, Esq. (Altschul), and Cory Dworken, Esq. (Dworken) (collectively, defendants). Defendants represented plaintiffs in a federal action seeking recovery under section 515 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 USC§ 1145 (the underlying action). Defendants have asserted a counterclaim for account stated. Defendants move, pursuant to CPLR 3212, for summary judgment on their account stated counterclaim.”

“

In 2004, plaintiffs were named as defendants in the underlying action, captioned Trustees of Plumbers Local Union No. 1 Welfare Fund v Reem Plumbing & Heating Corp., 04-CV-4698 (CBA) (ED NY) (id., ,-i 5). The trustees (the Trustees) alleged that Reem Plumbing and Reem Contracting were contractually obligated to contribute to certain union benefit funds (the Funds), as required by four collective bargaining agreements between the Association of Contracting Plumbers of the City of New York and Local Union No. 1 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada (id.). The Trustees conducted an audit for the period of January 1, 2002 through December 31, 2004, believing that there had been a significant shortfall in contributions (id., ,-i 6). The Trustees sought unpaid contributions, interest, liquidated damages, and attorney’s fees (id., ,-i 8). They also sought to hold Stein and Szapiro personally liable as fiduciaries of the Funds as defined under ERISA (id.). Altschul & Altschul represented plaintiffs in the underlying
action (id., ,-i 9). Altschul and Dworken were tasked with defending plaintiffs (id., ,-i 10).”

In the case below, ” By memorandum and order dated March 31, 2009, Judge Amon granted the Trustees’ motion for summary judgment, finding that Reem Plumbing was obligated to make contributions to the Funds during the audit period (2009 WL 10700668, *8, 2009 US Dist LEXIS 154698, *25). Judge Amon further held that, since plaintiffs admitted that Reem Plumbing and Reem Contracting were alter egos, Reem Contracting was bound to the same collective bargaining agreements as Reem Plumbing (id.). Judge Amon further held that Stein and Szapiro were fiduciaries of the Funds under ERISA, and that they were personally liable given their exclusive
control of the entities (2009 WL 10700668, * 10, 2009 US Dist LEXIS 154698, * 32). Finally, Judge Amon awarded damages against plaintiffs, jointly and severally, in the amount of $1,337,707.63 (2009 WL 10700668, *15, 2009 US Dist LEXIS 154698, *44). In doing so, Judge Amon determined the amount of unpaid contributions based solely on a Marshall & Moss audit of Reem Plumbing and Reem Contracting (2009 WL 10700668, * 13, 2009 US Dist LEXIS 154698, * 40-41 ).”

Expert testimony

“On a plaintiff’s motion for summary judgment in a legal malpractice case, the plaintiff
“will be entitled to summary judgment in a case where there is no conflict at all in the evidence, the defendant’s conduct fell below any permissible standard of due care, and the plaintiff’s conduct was not really involved” (Selletti v Liotti, 22 AD3d 739, 740 [2d Dept 2005]; see also Logalbo v Plishkin, Rubano & Baum, 163 AD2d 511, 514 [2d Dept 1990], appeal dismissed 77 NY2d 940 [ 1991 ]). On the other hand, “[i]n order for a defendant to succeed on a motion for summary judgment, evidence must be presented in admissible form establishing that the plaintiff is unable to prove at least one of the three essential elements of legal malpractice” (Walker v Glotzer, 79 AD3d 737, 738 [2d Dept 2010]).

‘”[U]nless the ordinary experience of the fact-finder provides sufficient basis for judging
the adequacy of the professional service, or the attorney’s conduct falls below any standard of due care, expert testimony will be necessary to establish that the attorney breached a standard of professional care and skill”‘ (Estate ofGinor v Landsberg, 960 F Supp 661, 672 [SD NY 1996], affd 159 F3d 1346 [2d Cir 1998], quoting Greene v Payne, Wood & Littlejohn, 197 AD2d 664, 666 [2d Dept 1993]; accord Estate ofNevelson v Carro, Spanbock, Kaster & Cuijfo, 259 AD2d 282,283 [1st Dept 1999]).

Here, plaintiffs have failed to meet their burden on summary judgment as to their legal
malpractice claim. The court finds that expert testimony is necessary to establish that the adequacy of defendants’ legal services fell below the standard of care, as acknowledged by plaintiffs. It is not within the ordinary jurors’ experience to evaluate whether defendants failed to develop appropriate evidence, failed to secure a proper expert report in a timely fashion, failed to properly oppose the Trustees’ motion for summary judgment, and failed to advise their clients of the nature of the claims made against them. However, as argued by defendants, plaintiffs submit an unsworn expert report from Bennett J. Wasserman, Esq., which opines that defendants’ conduct fell below the standard of care in the underlying action (NYSCEF Doc No. 286, Wasserman report at 21-34). An unsworn report from an expert does not constitute competent evidence to support a motion for summary judgment (see Grasso v Angerami, 79
NY2d 813, 814-815 [1991]). Plaintiffs did not attempt to cure this defect in their reply. While plaintiffs argue that defendants did not submit their own expert affidavit or report outlining the standard of care, this does not eliminate the requirement that plaintiffs make a prima facie showing on their legal malpractice claim by tendering evidence in admissible form (see Zuckerman v City of New York, 49 NY2d 557,562 [1980] [movant on summary judgment “must establish his cause of action … sufficiently to warrant the court as a matter of law in directing judgment in his favor … and he must do so by tender of evidentiary proof in admissible form”] [internal quotation marks and citation omitted]).”

Last post, we discussed Gad v Kramer Levin Naftalis & Frankel, LLP 2022 NY Slip Op 34357(U) December 20, 2022 Supreme Court, New York County Docket Number: Index No. 156841/2021 Judge: Margaret A. Chan where siblings fight long and hard over a very lucrative business, resulting in years of litigation, costly attorney fees, and the ultimate try at selling a portion of the business at a vast profit. For one of the siblings, it goes very wrong. He turns to legal malpractice after the loss of the sale.

Two grounds were advanced to dismiss: lack of standing and speculative damages. We discuss speculative damages in this article.

Albert is a 45% shareholder of Almod Diamonds Ltd. (Almod), a closely held New York corporation that is family owned and operated (NYSCEF #13 – amended complaint, ,r 8). Albert’s siblings, Morris Gad (Morris) and Donna Gad Hecht (Donna), own the remaining 45% and 10% of the shares, respectively (id.). The Gad siblings have been in conflict for years over the control and operations of Almod, and Donna brought a lawsuit in 2014 against Albert, Morris, and Almod in connection with those conflicts (the Donna Litigation) (id., ,r,r 9, 16).

In April or May 2016, Albert retained defendants for legal advice concerning the business disputes involving his family members, including the Donna Litigation (id., ,r,r 9-15). The parties agreed that defendants would charge a flat fee of $10,000 per month, which was subsequently increased to $15,000 per month starting from May 2018 (id.).

While defendants did not represent Albert in the Donna Litigation, they
represented Albert in negotiating and reaching a settlement with Donna (id., ,r,r 16-
19). Albert asked defendants to protect his financial interests and made clear that
any settlement documents must include certain key points, including that (1) any
“true-up” payments to Donna shall be calculated in consideration of her previous
sale of low-quality jewelry inventory to Almod, which was allegedly improper and
unauthorized, (2) a mechanism shall be included by which either Albert or Morris is
immediately elected as the CEO of Almod, (3) all shareholder distributions, salaries,
and expenses, including legal expenses, must continue to be allocated 45/45/10
according to each shareholder’s respective interest in Almod, and (4) if Almod was to
form an independent board of directors, defendants were to vet any potential
Albert-nominated directors who should represent Albert’s interests and be highly
experienced in running retail businesses (amended complaint, ,19-20).

On June 12, 2018, defendants presented Albert with finalized settlement documents, advising Albert to sign them and assuring him that the settlement agreement and the shareholder and voting agreement supplement contained all key provisions Albert wanted (id., ,r 23). Albert alleges that he reminded defendants that he was busy operating the company and was relying on defendants’ assurances when he executed the documents (id., ,r,r 22-24). After Donna and Morris executed the settlement documents, the documents became binding and the Donna Litigation was discontinued (id.).

Albert alleges that the settlement documents did not include the key provisions defendants assured to be included, causing ascertainable damages to him
(id., ,r,r 26-39, 44).”

“Causation and Damages

Although Albert has standing to bring the legal malpractice claim, for the reasons stated below, the claim must be dismissed for failure to adequately allege causation and damages.

· “[A]n action for legal malpractice requires proof of three elements: the negligence of the attorney; that the negligence was the proximate cause of the loss sustained; and proof of actual damages” (Schwartz v Olshan Grundman Frame & Rosenzweig, 302 AD2d 193, 198 [1st Dept 2003]). To satisfy the pleading requirement for causation, a plaintiff must allege that “‘but for’ the attorney’s conduct [or nonfeasance], the client would have prevailed in the underlying action or would not have sustained any ascertainable damages” ( Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 272 [1st Dept 2004]; Cosmetics Plus Group, Ltd. v Traub, 105 AD3d 134, 140-141 [1st Dept 2013]). Regarding damages, “to survive a … pre·answer dismissal motion, a pleading need only state allegations from which damages attributable to the defendant’s conduct [or nonfeasance] may be reasonably inferred” (Lappin v Greenberg, 34 AD3d 277, 279 [1st Dept 2006] [internal citations omitted]). However, conclusory allegations of damages predicated on speculation cannot suffice for a legal malpractice action (Bua v Purcell & Jngrao, P.C., 99 AD3d 843, 847·848 [2d Dept 2012]).

Under these standards, the court finds that the amended complaint fails to adequately plead causation. Notably, even if Albert had been informed by defendants of the content and risks of the settlement terms and had refused to sign the documents, the settlement agreement would still have become effective. Under Section 1 of the settlement agreement, the settlement stipulation shall become effective upon the approval of Almod board of directors and shall be binding on Albert regardless of whether he executes it or not, so long as Donna and Morris both execute the agreement (NYSCEF # 21- settlement agreement,§§ 1.a, 1.b).2 In fact, Donna and Morris executed the agreement and the board of directors approved it. Thus, the amended complaint does not sufficiently allege that “but for” defendants’ alleged negligence related to their failure to inform Albert of the terms and risks of the settlement documents, the settlement agreement would not have become effective and he would not have been damaged by it (Silverstein v Pillersdorf, 199 AD3d 539, 540 [1st Dept 2021]).
Moreover, the amended complaint fails to allege that but for defendants’ negligence, the outcome of the settlement would have been more favorable with respect to the “true-up” payment to Donna, Donna’s salary and benefits, and the legal fee provisions. In this regard, the parties in the Donna Litigation have complete discretion as to how they chose to arrange the terms of the settlement. For instance, the “true-up” payment was the subject of the Donna Litigation that Donna sued Albert personally to pay for. Under the settlement, the “true-up” would instead be paid to Donna by Almod, not Albert, while Albert forfeited the right to claw back any funds Donna profited from her allegedly improper sale of inventory to Almod. Essentially, to find the “but-for” causation, plaintiff is inviting the court to review the settlement terms and speculate how the Donna Litigation would proceed and what other alternative settlement terms would be like if Albert had objected to the settlement agreement. Thus, the alleged causation and damages are too speculative to support the legal malpractice claim (Perkins v Norwick, 275 AD2d 48, 51-52 [1st Dept 1999] [finding that plaintiffs suggestion that he might have later renegotiated different terms but for defendant’s negligence is simply “gross speculation on future events”]).

Further, the damages which allegedly flowed from naming an unsatisfactory independent director, delay in the election of a CEO, and the loss of the CVC

acquisition caused by the delay and COVID· 19 pandemic are speculative as well,
and the causal relationship between those events and defendants’ negligence is even
more remote. When a plaintiffs claim “requires speculation about future events,” it
“does not sufficiently establish that defendants proximately caused him ascertainable damages” (Ferguson v Hauser, 156 AD3d 425, 425·426 [1st Dept 2017]; Sherwood Group v Dornbush, Mensch, Mandelstam & Silverman, 191 AD2d 292, 294 [1st Dept 1993] [hypothetical course of events on which any determination of damages would have to be based constitutes a chain of “gross speculations on future events”]).”

In Gad v Kramer Levin Naftalis & Frankel, LLP 2022 NY Slip Op 34357(U) December 20, 2022 Supreme Court, New York County Docket Number: Index No. 156841/2021
Judge: Margaret A. Chan Siblings fight long and hard over a very lucrative business, resulting in years of litigation, costly attorney fees, and the ultimate try at selling a portion of the business at a vast profit. For one of the siblings, it goes very wrong. He turns to legal malpractice after the loss of the sale.

Two grounds were advanced to dismiss: lack of standing and speculative damages. We discuss standing in this article.

Albert is a 45% shareholder of Almod Diamonds Ltd. (Almod), a closely held New York corporation that is family owned and operated (NYSCEF #13 – amended complaint, ,r 8). Albert’s siblings, Morris Gad (Morris) and Donna Gad Hecht (Donna), own the remaining 45% and 10% of the shares, respectively (id.). The Gad siblings have been in conflict for years over the control and operations of Almod, and Donna brought a lawsuit in 2014 against Albert, Morris, and Almod in connection with those conflicts (the Donna Litigation) (id., ,r,r 9, 16).

In April or May 2016, Albert retained defendants for legal advice concerning the business disputes involving his family members, including the Donna Litigation (id., ,r,r 9-15). The parties agreed that defendants would charge a flat fee of $10,000 per month, which was subsequently increased to $15,000 per month starting from May 2018 (id.).

While defendants did not represent Albert in the Donna Litigation, they
represented Albert in negotiating and reaching a settlement with Donna (id., ,r,r 16-
19). Albert asked defendants to protect his financial interests and made clear that
any settlement documents must include certain key points, including that (1) any
“true-up” payments to Donna shall be calculated in consideration of her previous
sale of low-quality jewelry inventory to Almod, which was allegedly improper and
unauthorized, (2) a mechanism shall be included by which either Albert or Morris is
immediately elected as the CEO of Almod, (3) all shareholder distributions, salaries,
and expenses, including legal expenses, must continue to be allocated 45/45/10
according to each shareholder’s respective interest in Almod, and (4) if Almod was to
form an independent board of directors, defendants were to vet any potential
Albert-nominated directors who should represent Albert’s interests and be highly
experienced in running retail businesses (amended complaint, ,19-20).

On June 12, 2018, defendants presented Albert with finalized settlement documents, advising Albert to sign them and assuring him that the settlement agreement and the shareholder and voting agreement supplement contained all key provisions Albert wanted (id., ,r 23). Albert alleges that he reminded defendants that he was busy operating the company and was relying on defendants’ assurances when he executed the documents (id., ,r,r 22-24). After Donna and Morris executed the settlement documents, the documents became binding and the Donna Litigation was discontinued (id.).

Albert alleges that the settlement documents did not include the key
provisions defendants assured to be included, causing ascertainable damages to him
(id., ,r,r 26-39, 44).”

Standing

As a threshold matter, defendants move to dismiss the legal malpractice claim for lack of standing, arguing that as a shareholder of Almod, Albert has no individual cause of action for the injury to Almod. Defendants argue that since the harm Albert allegedly suffered is essentially the lost value of his investment in Almod, the claim is derivative but not direct.

Defendants’ arguments overlook the nature of this action. Although Albert is a shareholder of Almod and the at-issue settlement has impacts on the company, this action centers around defendants’ attorney-client relationship with Albert in their representation of Albert’s interest in settling the Donna Litigation. In the hearing held on July 19, 2022, defendants also made clear that they represented only Albert, not the company Almod, in the settlement (NYSCEF # 29-Tr 4:15-21). Also, the amended complaint alleges harm to Albert individually as opposed to Almod. As the settlement concerns the Donna Litigation in which Albert was personally named as a defendant, the settlement agreement directly impacts on Albert’s personal legal and financial interests. Therefore, Albert has standing to bring the legal malpractice claim with respect to defendants’ representation of him in the settlement (Delos Ins. Co. v Smith & Laquercia, LLP, 84 AD3d 668, 669 [1st Dept 2011] [“[plaintiff] has standing to pursue its claims against defendant since it is undisputed that defendant represented [plaintiff]” in the underlying litigation]; The Exeter Law Group LLP v Immortalana Inc., 2016 WL 7188559, *3 [Sup Ct, NY County, Dec. 9, 2016] [individual owners of a corporation have standing in a legal malpractice claim against their attorneys for negligently structuring their business ventures]).”

Strict privity of contract requirements make legal malpractice different from all other types of litigation. Even in products liability, which once rested completely and solely upon privity of contract as a prerequisite, things have loosened. Betz v Blatt, 2022 NY Slip Op 07430 Decided on December 28, 2022 Appellate Division, Second Department, which has a very rich appellate history, and is already widely cited for its previous decisions, defines the “fraud, collusion, malicious acts or other special circumstances” exception to privity.

“After a nonjury trial, the Supreme Court found that the defendant committed legal malpractice with respect to the decedent’s estate, but that the plaintiff did not establish a violation of Judiciary Law § 487. The court awarded the plaintiff damages as against the defendant in the principal sum of $1,856,699.36. The defendant appeals.

Although an attorney representing the executor of an estate, generally, is not liable to the beneficiaries of the estate (see Kramer v Belfi, 106 AD2d 615, 616), as the attorney does not represent the estate itself (see Betz v Blatt, 116 AD3d at 816; Matter of Hof, 102 AD2d 591, 593), when fraud, collusion, malicious acts, or other special circumstances exist, an attorney may be liable to those third parties, even though not in privity with them, for harm caused by professional negligence (see Davis v Farrell Fritz, P.C., 201 AD3d 869, 871; Betz v Blatt, 160 AD3d at 698).

Here, although the defendant was not in privity with the estate, the evidence nevertheless established the existence of special circumstances subjecting him to liability (see Betz v Blatt, 160 AD3d at 698; Betz v Blatt, 116 AD3d at 816). At trial, the defendant admitted that, even though he was “not competent to do accountings,” he did not arrange or direct the former executor to arrange for a professional accounting. Further, despite his admitted unfamiliarity with probate law, it was apparent to the defendant that the proposed accounting he circulated on behalf of the [*2]former executor was “terrible.” Nevertheless, the defendant neither alerted the Surrogate’s Court nor opposing counsel to the accounting problem.

Significantly, the defendant admitted that he was aware that the payment of estate funds by the former executor to the former executor and the former executor’s children amounted to self-dealing, but that the defendant took no action other than providing advice to the former executor—which the defendant further admitted he knew would be ignored. Moreover, although the defendant testified that the former executor’s conduct was “shocking,” he nonetheless continued to disburse estate funds to the former executor—including funds from the sale of a parcel of real property which formed the estate’s primary asset. The defendant’s failure to notify the Surrogate’s Court or withdraw as counsel upon discovering the self-dealing and misconduct of the former executor, together with the fact that the defendant fostered the former executor’s self-dealing and misconduct by continuing to disburse estate assets to the former executor despite his knowledge that the former executor was engaging in self-dealing and looting, constitutes the type of “fraud, collusion, malicious acts or other special circumstances” for which an attorney may be held liable to third parties not in privity (Betz v Blatt, 160 AD3d at 698).

“Damages in a legal malpractice action are designed ‘to make the injured client whole'” (Marinelli v Sullivan Papain Block McGrath & Cannavo, P.C., 205 AD3d 714, 716, quoting Campagnola v Mulholland, Minion & Roe, 76 NY2d 38, 42). “‘The plaintiff is required to plead actual, ascertainable damages that resulted from the attorneys’ negligence'” (Marinelli v Sullivan Papain Block McGrath & Cannavo, P.C., 205 AD3d at 716, quoting Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 847). Here, the plaintiff presented ample evidence establishing both her damages and the defendant’s contribution to them.”

In Richmond Hospitality, LLC v Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrera, Wolf & Carone, LLP 2022 NY Slip Op 51310(U) Decided on December 20, 2022
Supreme Court, Richmond County Castorina Jr., J. we see a situation unique to legal malpractice cases. Early on the Court will dismiss, determining that the complaint cannot state a cause of action. This almost never happens in medical malpractice or personal injury cases.

“This is an action for legal malpractice, arising out of an underlying mortgage foreclosure [*2]proceeding, entitled Shaughnessy Capital, LLC v Richmond Hospitality, LLC, et al., bearing Richmond County Supreme Court Index No.: 152641/2019. In September 2019 Richmond Hospitality, LLC [hereinafter “Richmond Hospitality”] retained Defendants [hereinafter “Abrams Fensterman”] to represent them in the underlying foreclosure action brought by Shaughnessy Capital, LLC.

Abrams Fensterman filed an Answer on Defendant’s behalf in the underlying foreclosure action. Shaughnessy Capital then filed a motion for summary judgment. Abrams Fensterman failed to oppose the motion and to appear in Court on the return date causing the motion to go before the Court unopposed, and in May 2021, the motion was granted and an approximately $7.8 million judgment was entered against Defendants. In July 2021, Abrams Fensterman moved to vacate the May 2021 order granting Shaughnessy Capital’s motion for summary judgment. In October 2021, the motion to vacate was denied by Justice Wayne Ozzi.

Defendants allege that Abrams Fensterman failed to exercise care and skill by failing to oppose the summary judgment motion, and that the failure to do so, was the proximate cause for the judgment against them. Defendants further allege that had Abrams Fensterman opposed the motion, they would have prevailed in the underlying foreclosure action by advancing the defense that money was not accounted for properly by the lender, and that money was released without Defenndant’s prior knowledge or approval. Abrams Fensterman alleges that the First Amended Verified Complaint in the within action, fails to state a cause of action, and/or is barred by documentary evidence.”

“Here, the First Amended Verified Complaint alleges that Abrams Fensterman failed to oppose the motion for summary judgment in the underlying foreclosure action, and that, but for that failure, Defendants would have successfully defended and prevailed in the action. In doing so, however, the First Amended Verified Complaint makes only a single vague allegation to support the claim that Defendants would have prevailed in the underlying foreclosure action, to wit:

“That but for the professional negligence of the Defendant in not appearing or opposing the motion for summary judgment that was brought against the within Plaintiffs in the underlying case of Shaughnessy Capital LLC v Richmond Hospitality, LLC the within Plaintiff “would have been successful in defeating said motion for summary judgment, as well as, the underlying action by advancing the defense that they had to the position taken by the lender, Shaughnessy Capital, LLC, to wit, that the money not accounted for properly and money was released without the within Plaintiff’s prior knowledge or approval.”[Emphasis added].

There are no other allegations in the First Amended Complaint bearing on the claim that Richmond Hospitality would have successfully defended against, and prevailed in, the underlying foreclosure action. This lone allegation is insufficient to plead the “but for” element of a cause of action for legal malpractice because it is too conclusory and impermissibly speculative. The First Amended Complaint [1] does not allege that Richmond Hospitality did not default under the Loan Documents, [2] does not allege that liens were never filed against the subject property, [3] does not allege that Richmond Hospitality had no obligation to remove liens filed against the subject property under the Loan Documents, [4] does not allege that Richmond Hospitality otherwise fulfilled its obligations under the Loan Documents, [5] does not allege that Richmond Hospitality did not receive notice of a default from Shaughnessy Capital, LLC, and [6] does not allege that Richmond Hospitality cured the defaults.

The First Amended Verified Complaint makes only the foregoing disjointed allegation that can be fairly characterized as vague, conclusory, and impermissibly speculative. There is no way to discern from this allegation how or on what factual basis, Richmond Hospitality would have prevailed in the underlying foreclosure action. Even given the First Amended Verified Complaint’s allegations the benefit of every favorable inference, there is still no way to know how Defendants claim they would have successfully defended the underlying foreclosure action, and the allegations of their default under the Loan Documents. The allegations that Richmond Hospitality had a meritorious defense to the underlying foreclosure action because “Shaughnessy Capital did not ‘account’ or released money without Richmond Hospitality’s “prior knowledge and approval” are too conclusory and speculative to state a cause of action for legal malpractice.”

Kaufman v Boies Schiller Flexner, LLP  2022 NY Slip Op 06883  Decided on December 06, 2022  Appellate Division, First Department is a terse decision which modifies Supreme Court’s complete dismissal of all claims.  Now, a breach of contract claim remains.  Judiciary Law § 487 is out.

“The complaint stated a limited cause of action for breach of contract against BSF. The complaint sufficiently alleged that BSF overbilled or billed for unnecessary expenses associated with attorneys not admitted to practice law in, or based out of, New York, and the documentary submissions do not utterly refute those allegations (e.g. Ullmann-Schneider v Lacher & Lovell-Taylor, P.C., 121 AD3d 415, 416 [1st Dept 2014]; Goldfarb v Hoffman, 139 AD3d 474, 475 [1st Dept 2016]; Cascardo v Dratel, 171 AD3d 561, 562 [1st Dept 2019]; see CPLR 3211[a][1], [7]). The complaint otherwise failed to state a cause of action for breach of contract or violation of Judiciary Law § 487(1) (see generally Second Source Funding, LLC v Yellowstone Capital, LLC, 144 AD3d 445, 445-446 [1st Dept 2016]; Brookwood Cos., Inc. v Alston & Bird, LLP, 146 AD3d 662, 669 [1st Dept 2017]; Facebook, Inc. v DLA Piper LLP [US], 134 AD3d 610, 615 [1st Dept 2015], lv denied 28 NY3d 903 [2016]; CPLR 3211[a][7]). We decline to modify the order for review to indicate that dismissal was without prejudice as plaintiff has not sought clarification or relief from Supreme Court in the first instance.”

Successfully pleaded Judiciary Law § 487 claims are not a given.  Default judgments are even rarer, but here is one example.  In Ezra Huber & Assoc., P.C. v Genevieve Lane Lopresti
2022 NY Slip Op 06910 Decided on December 7, 2022 Appellate Division, Second Department the default judgment was affirmed.

“The plaintiff commenced this action to recover damages for prima facie tort and violation of Judiciary Law § 487. After the defendant failed to timely answer the complaint, the plaintiff moved pursuant to CPLR 3215 for leave to enter a default judgment against the defendant upon her failure to answer the complaint or for a hearing on the issue of any reasonable excuse [*2]offered by the defendant. The defendant cross-moved, inter alia, to compel the plaintiff to accept her late answer. The defendant separately moved pursuant to CPLR 3211(a)(5) to dismiss the complaint as time-barred. In an order entered February 16, 2018, the Supreme Court denied the plaintiff’s motion, in effect, granted that branch of the defendant’s cross motion which was to compel the plaintiff to accept her late answer, and granted the defendant’s separate motion pursuant to CPLR 3211(a)(5) to dismiss the complaint.

Thereafter, the plaintiff moved for leave to renew and reargue its motion and its opposition to the defendant’s cross motion and separate motion. In an order entered March 25, 2019, the Supreme Court denied the plaintiff’s motion.

The plaintiff appeals from the orders entered February 16, 2018, and March 25, 2019, respectively.

“A defendant who has failed to timely answer a complaint and who seeks leave to file a late answer must provide a reasonable excuse for the delay and demonstrate a potentially meritorious defense to the action” (Bank of Am., N.A. v Viener, 172 AD3d 795, 796; see Jacobson v Val, 206 AD3d 803, 804). To avoid the entry of a default judgment upon the failure to answer the complaint, a defendant must make a similar showing (see Sadowski v Windsor Vil. Apts. Co., LLC, 200 AD3d 816, 817; Yuxi Li v Caruso, 161 AD3d 1132, 1133). “Whether a proffered excuse is reasonable is a sui generis determination to be made by the court based on all relevant factors, including the extent of the delay, whether there has been prejudice to the opposing party, whether there has been willfulness, and the strong public policy in favor of resolving cases on the merits” (Nowakowski v Stages, 179 AD3d 822, 823 [internal quotation marks omitted]; see Jinwu Yu v Hong Qin Jiang, 205 AD3d 1012, 1013).

Here, the defendant failed to provide a reasonable excuse for her delay in answering the complaint, as her claims that her and her counsel’s respective medical issues prevented her from timely answering the complaint were vague and unsupported by any medical documentation (see PennyMac Corp. v Sellitti, 193 AD3d 959; Dankenbrink v Dankenbrink, 154 AD3d 809, 810; Salatino v Pompa, 134 AD3d 692, 693). Since the Supreme Court should not have granted that branch of the defendant’s cross motion which was to compel the plaintiff to accept her late answer, the defendant’s separate motion pursuant to CPLR 3211(a)(5) to dismiss the complaint was untimely, as a defendant must make this motion before service of the responsive pleading is required (see id. § 3211[e]; Wan Li Situ v MTA Bus Co., 130 AD3d 807, 808). Accordingly, the court should have granted that branch of the plaintiff’s motion which was pursuant to CPLR 3215 for leave to enter a default judgment against the defendant upon her failure to answer the complaint, denied that branch of the defendant’s cross motion which was to compel the plaintiff to accept her late answer, and denied the defendant’s separate motion pursuant to CPLR 3211(a)(5) to dismiss the complaint.”