Defense attorneys in legal malpractice cases often try to use a Notice to Admit [CPLR 3123] to get over the hump of some point within their burden of proof.  A notice to admit is really for use with non-controversial factual situations, for example, whether a documents is genuine, or to avoid proofs of an underlying, but not controversal fact.

Here the Syracuse defense attorneys went beyond the pale, and not only mixed law and facts in their notice to admit, but pushed on with its use after plaintiff’s attorney, in effect, denied the notice by letter.  The AD held that SupCt should have denied the defense use of the notice to admit.

Williams v Kublick
2007 NY Slip Op 05844
Decided on July 6, 2007
Appellate Division, Fourth Department

"Memorandum: In this legal malpractice action, Jan S. Kublick and Davoli, McMahon and Kublick, P.C. (collectively, defendants) served a notice to admit facts concerning the underlying lawsuits (see CPLR 3123). We previously affirmed an order denying the motion of defendants for summary judgment dismissing the complaint against them (Williams v Kublick, 30 AD3d 1032), and we thereafter determined that Supreme Court erred in granting defendants’ subsequent motion seeking that same relief (Williams v Kublick, ___ AD3d ___ [June 8, 2007]).

The court erred in granting the motion of defendants seeking an order deeming the facts in their notice to admit as having been admitted by plaintiff and in denying plaintiff’s cross motion seeking an order permitting plaintiff to respond to the notice to admit "as though [the response was] timely interposed." Although plaintiff failed to comply with CPLR 3123 (a) by responding to the notice in a sworn statement in which he either denied the facts therein or explained why the facts could not be truthfully admitted or denied, it is undisputed that counsel for the parties corresponded with respect to the notice to admit. Defendants’ counsel and plaintiff’s counsel exchanged correspondence with respect to plaintiff’s position that the facts sought to be admitted involved mixed questions of law and fact and therefore required resolution at trial (see generally DeSilva v Rosenberg, 236 AD2d 508). Defendants thus were aware of the basis for plaintiff’s failure to respond to the notice to admit. We note in addition that there was [*2]extensive discovery with respect to the issues in the underlying lawsuits. We therefore conclude that the court abused its discretion in denying plaintiff’s cross motion (see generally Kowalski v Knox, 293 AD2d 892, 893). "

Majority shareholders, minority shareholders and the company’s attorney.  Who has the right to sue if things go wrong?  The answer depends on who has privity with the attorney.  Here is an Ohio case on the issue.

Reported by Legal Newsline: "Attorneys for majority owners of close corporations — ones allowed by law to act more informally than a normal corporation — may be sued for malpractice by minority owners, the Ohio Supreme Court recently decided.

The appeal in the case LeRoy, et al. v. Allen, Yurasek & Merklin asked the Court to decide if plaintiffs outside the attorney-client relationship can make a valid malpractice claim against the attorney. In a unanimous decision delivered Wednesday, the Court decided that a bad faith or collusion charge is appropriate.

However, the Court decided that minority owners could not proceed on the basis of being in privity with the majority owner — having virtually the same legal interests"

Oregon has a state sponsored legal malpractice program.  Here is an idiosyncratic view of the program and its imminent demise?

"My little law office was thriving. We did so many revocable trusts that my paralegal could turn them out in her spare time and I stopped paying attention. My lapse in this particular instance meant that my dead client’s stuff went to a near’do-well step-child rather than to her intended second husband–also my client. My survivor-husband-client was not happy, but for some reason continued to trust me, who knows why. I turned the matter over to the Professional Liability Fund (PLF) who assigned it to an able staff claims attorney.It took a united effort with the husband (my client) and the others working together for a reasonable resolution and settlement that made all parties happy. The PLF did not have to hire an outside defense attorney for me because the PLF staff attorney did such an able job.

The upshot was the husband-client and I got to know each other better through these negotiations. When I asked about the odd symbol on his business card he advised me that he was a mountain climbing guide. Before long I was enrolled and the next year he guided me to the top of Mt. Hood. He remains a friend. "

"The PLF was established in 1978 after a two year study by members of the Oregon State Bar and was approved by the Oregon legislature in 1977. Initially headed by Lester Rawls, the former Oregon Insurance Commissioner and past manager of a Portland insurance company, the PLF thrived until 2000. A series of unnecessary misjudgments and minor scandals lead to an able CEO’s departure and his replacement by Ira R. Zarov. A lawyer since 1974, Mr. Zarov’s career was primarily with Legal Aid before becoming the Chief Executive Officer of the PLF in 2000.

The PLF’s annual insurance premium was raised from $3,000 to $3,200 in 2007. There are 6,658 Oregon attorneys covered by the PLF. The PLF has 44 employees. During the last two years the PLF "….has seen dramatic increases in the amounts paid to outside legal counsel…" (PLF 2007 Budget Report Page 3) Surprise, Surprise. Past ‘bulletinsfromaloha’ articles have warned about the unholy alliance between the Oregon State Bar and Portland lawyers. Well, guess who are the "…outside legal counsel…" that are getting these "…dramatic increases…" Loss of innocence is a lifetime pursuit. "

An interesting article in today’s NYLJ discusses General Counsel and in-house attorney issues.  True Tales From the Law Department by Susan F. Friedman talks about the problems recently surfacing for these attorneys.  One caught our interest:

"Health Care Entity

In an action against a health care entity in the U.S. District Court for the Southern District of New York, the plaintiffs were hospitals and doctors who sought payment for the services they provided to participating members of the health care entity. The action named the health care entity and certain board directors and officers, including the general counsel, as defendants. The plaintiffs alleged breach of contract, fraud, misrepresentation, negligence, conflict of interest, deceit, conversion, and related allegations. In addition, the state insurance department commenced a simultaneous action making similar allegations including breach of fiduciary duty.

The general counsel was accused of legal malpractice and breaching his fiduciary duties by making misrepresentations to all of the plaintiffs including the regulatory body. He was also accused of negligently rendering legal opinions with regard to the business affairs of the health care entity.

All of the outstanding actions were eventually consolidated after a two-year period. Approximately four years after the initial action was commenced, and following substantial negotiations with all parties, a global settlement was effectuated and the claims were resolved in their entirety for $30 million. The entity and its directors and officers liability insurer both contributed to the settlement. In addition, the employed lawyers professional liability insurer paid for the claims alleging legal malpractice against the general counsel. "

Zibell v. County of Westchester, 10866/06 ;Decided: June 20, 2007 ;Justice William J. Giacomo
WESTCHESTER COUNTY Supreme Court .

Here, the attorney but not the client was sanctioned.  Will further problems follow?

From the decision: "If the credibility of court orders and the integrity of our judicial system are to be maintained, a litigant cannot ignore court orders with impunity." (Kihl v. Pfeffer, 94 N.Y.2d 118,123 [1999]).

In this personal injury action in which plaintiffs’ counsel has chosen to ignore a court order and has continually and wilfully refused to ensure that his clients’ pretrial discovery and pleading obligations are fully satisfied, the Court concludes that in addition to granting conditional relief as against plaintiffs, their counsel should be sanctioned by ordering his firm to pay counsel fees and motion costs to defendant County of Westchester (the County).

Having determined that Gertel has engaged in frivolous conduct with respect to the positions taken by him as to the Two Disputes, the only remaining question is what is an appropriate sanction. Here, as a direct result of Gertel’s frivolous conduct, the County has had to incur costs in the nature of the time spent by their counsel in attending conferences to determine the status of discovery in the lawsuit, at two of which the issue of Gertel’s frivolous positions was raised, and in filing the instant motion. Likewise, this Court has endured a waste of its limited resources in having to address a motion made necessary because Gertel simply refuses to acknowledge the complete absence of legal support for his views as to the Two Disputes, when the Court’s time and effort could be put to better use resolving the meritorious legal disputes of other litigants. And adverse consequences such as these are precisely the type that are intended to be addressed by Section 130-1.1(a) (see Levy v. Carol Management Corp., 260 A.D.2d 27,34 [1st Dept. 1999] ["The goals [of the sanction rules] include preventing the waste of judicial resources, and deterring vexatious litigation and dilatory or malicious litigation tactics"]). Under these circumstances, an appropriate sanction is warranted (see Drummond v. Drummond, 305 A.D.2d 450,451-452 [2d Dept. 2003], lv. denied 1 N.Y.3d 504 [2003] [Affirming imposition of sanction upon "finding that ‘(1) the attorney has abused the judicial process; (2) the attorney has caused the unnecessary expense of the court’s resources to respond to a wholly frivolous motion, one that is completely without merit in law and which cannot be supported by any reasonable argument; [and] (3) there is a need to prevent the attorney from engaging in further frivolous motion practice in this or any future matter.’"]).

Upon that determination, the Court grants the County’s motion to the extent that the law firm of Kagan & Gertel shall pay an award of counsel fees and motion filing costs to the County of Westchester in an amount to be determined upon the consideration of further written submissions (see Curcio v. J.P. Hogan Coring & Sawing Corp., supra, 303 A.D.2d, at 359 [Law Firm ordered to pay sanctions and costs where one of its attorneys had engaged in frivolous conduct]). By no later than July 3, 2007, the County shall submit a detailed billing statement reflecting the hours expended at the conferences on December 13, 2006 and January 31, 2007, and in the preparation of this motion, and the hourly pay rate of its counsel. Plaintiffs shall then have until July 13, 2007 to submit papers in response to the County’s submission. After considering the papers submitted by the parties, the Court shall determine the amount of the award to be paid by law firm of Kagan & Gerstel, which shall be set forth in a further order."

This case was widely reported, and we discussed it yesterday.  From the Decision in Ideal Steel Supply Corp. v. Beil, 20519/06 ,Decided: July 3, 2007 Justice Peter J. Kelly QUEENS COUNTY
Supreme Court

"On or about December 11, 2001, plaintiff Ideal Steel Supply Corp. retained defendant the law firm of Ross and Hardies, LLP (R&H), in contemplation of legal action against National Steel Supply, Inc., a competitor. Both Ideal and National operate stores in Queens and the Bronx, and Ideal asserts that wrongful action by its competitor cost it approximately $10,000,000. Ideal signed a retainer agreement with defendant R&H, the predecessor of defendant McGuire Woods LLP (MW) which stated, inter alia, that defendant Marshall Beil (Beil) would provide representation at the rate of $400.00 per hour. Ideal allegedly paid the defendants approximately $1,000,000 in legal fees.

Plaintiff began this action for, inter alia, legal malpractice on September 19, 2006, alleging that the defendants (1) "[u]nilaterally chose to pursue unique and novel claims in their litigation of the matter, when an expedited recovery could have been obtained pursuant to other causes of action . . . ", (2) "[f]ailed and refused to pursue other bona fide claims, by ignoring relevant case law and Facts", (3) failed to prevent costs and expenses from rising above a reasonable level, (4) made decisions that resulted in unnecessarily high fees, costs, and expenses, (5) increased hourly fees without the prior consent of the client, (6) engaged in dilatory and wasteful litigation conduct, (7) mismanaged the work of experts and litigation support consultants, (8) charged the plaintiff for resources not actually needed, and (9) violated the attorney client relationship, by, for example, revealing strategy to the adversary. The plaintiff’s attorney asserts that "[e]ssentially, the mismanagement of the federal litigation and pursuit of inappropriate claims under the civil RICO Act were part of a scheme by the defendants to bill exorbitant legal fees and costs and exclusively pursue those claims that defendant Beil found intellectually novel

Turning to the third cause of action for legal malpractice, two distinct prongs are discernable. The first pertains to the selection of only a RICO cause of action for prosecution and the second pertains to mismanagement of the RICO cause of action itself. Regarding the selection of only a RICO cause of action for prosecution, plaintiff Ideal did not adequately plead that the defendants failed to exercise the degree of skill and care commonly possessed by a member of the legal community (See, Hwang v. Bierman, 206 AD2d 360). "An attorney has broad discretion concerning . . . the theories to plead . . . " (4 Mallen & Smith, Legal Malpractice [2007 Ed], §30.8; see, Patterson v. Powell, 31 Misc 250 [AT], affd 56 App Div 624), and he is not subject to a "rule of infallibility, but is responsible to his client only for those mistakes as a pleader which indicate a lack on his part of the attainments and diligence commonly possessed and exercised by legal practitioners". (Rapuzzi v. Stetson, 160 App Div 150, 157). Although there may be several alternatives, the selection of one of many reasonable defenses or causes of action does not constitute malpractice (See, Hwang v. Bierman, supra).

In view of the history of the Anza litigation, particularly the decision rendered by the Second Circuit Court of Appeals, plaintiff Ideal cannot adequately establish that the selection of a RICO cause of action for prosecution against National was unreasonable. The "selection of one among several reasonable courses of action does not constitute malpractice". (Rosner v. Paley, 65 NY2d 736, 738; see, Dimond v. Kazmierczuk & McGrath, 15 AD3d 526; Holschauer v. Fisher, 5 AD3d 553). The court also notes that plaintiff Ideal’s complaint and opposition papers only conclusively allege that other causes of action were available; conclusory and speculative allegations do not support a cause of action for legal malpractice (See, Holschauer v. Fisher, supra; Pellegrino v. File, 291 AD2d 60).

Additionally, even if the selection of a RICO claim involved an error in judgment, such an error does not amount to legal malpractice (See, Rosner v. Paley, supra; Hand v. Silberman, 15 AD3d 167; Alter & Alter v. Cannella, 284 AD2d 138). The Anza litigation presented novel issues from its inception that ultimately had to be decided by the United States Supreme Court. Attorneys "cannot be held liable for exercising their professional judgment on a question that was not elementary or conclusively settled by authority . . . " (Town of North Hempstead v. Winston & Strawn, LLP, 28 AD3d 746, 748; see, Parksville Mobile Modular, Inc. v. Fabricant, 73 AD2d 595; Byrnes v. Palmer, 18 App Div 1, affd 160 NY 699). In sum, the recommendation by the defendants that plaintiff Ideal pursue certain litigation against National did not, under all of the circumstances, rise to the level of malpractice (See, Boulanger, Hicks, Stein & Churchill, P.C. v. Jacobs, 235 AD2d 353).

In the case at bar, the plaintiff’s allegations regarding increased expenses resulting from the defendants’ alleged mismanagement of the RICO claim are sufficient to survive a mere CPLR 3211(a) (7) motion. Whether the plaintiff’s case can withstand a motion for summary judgment is a matter not taken into consideration here (See, Shaya B. Pacific, LLC v. Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, supra)."
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Here is a cross-border story about a Walgreen store, the Mass Land Court, legal malpractice, and discipline of attorneys.

"The state agency that oversees lawyers has concluded that there is insufficient evidence to discipline James P. Killoran for advice he offered and an emphatic promise he made during a 1999 Town Meeting, actions that paved the way for a controversial Walgreens drug store at Buffinton and West County streets.
The company developing the Walgreens store, the Richmond Company, has sued Killoran for legal malpractice.

Richmond alleges that when it hired Killoran, he failed to inform the company of two issues surrounding that land, issues that have sent the case to Massachusetts Land Court for a lengthy — and expensive — trial.

Richmond alleges that the omissions have cost it in excess of $250,000 in development expenses. "

Plaintiff attorney was retained by defendant Chemipal Company, and [unsuccessfully ?] tried a case for them.  Fredericks sued Chemipal Company, who then brought in appellate attorney Nathan Dershowitz. Result?  Lawyer loses, Chemipal Company wins, third-party legal malpractice case against Dershowitz  dismissed.   Fredericks v. Chemipal Ltd., 06 Civ. 966
Decided: July 6, 2007 District Judge Gerard E. Lynch U.S. DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

This three-party litigation began when plaintiff trial attorney Barry I. Fredericks ("Fredericks") sued for non-payment of what he claimed was a contingent fee owed to him by his former client, defendant Chemipal, Ltd. ("Chemipal"). Chemipal, in turn, impled its appellate attorney, Nathan Z. Dershowitz ("Dershowitz"), and his firm, Dershowitz, Eiger, & Adelson, P.C. ("DEA"), charging them with malpractice and breach of contract. In an Opinion and Order dated May 3, 2007, the Court granted Chemipal’s motion for summary judgment on the grounds that the ambiguous fee agreement was to be construed in favor of the client. This rendered the third-party action moot.

Fredericks now moves for reconsideration of the May 3 Opinion and Order, and for leave to amend his complaint to add a claim for quantum meruit recovery for services allegedly performed after the period covered by the fee agreement. The motions will be denied. "
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