The Appellate Division reversed the grant of summary judgment to defendants in Alrose Steinway, LLC v Jaspan Schlesinger, LLP  2022 NY Slip Op 03310 Decided on May 19, 2022 Appellate Division, First Department, knocking out each of the underpinnings.

“Plaintiff claims that defendants negligently failed to advise it that an amendment to a commercial lease would extinguish its purchase option upon sale of the premises and that, but for defendants’ negligence, it would not have signed the amendment but would have exercised its purchase option as of right between 2023 and 2024, acquiring the premises for no more than $11.4 million. It is undisputed that after the amendment was executed, the landlord received a bona fide third-party purchase offer and plaintiff exercised its right of first refusal, purchasing the premises for $14.5 million in 2016.

Issues of fact exist as to each element of plaintiff’s legal malpractice cause of action (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]). Defendants’ email attaching a marked-up copy of the relevant lease section does not establish as a matter of law that defendants advised plaintiff as to the meaning of the amendment, and the parties dispute the oral advice that was provided by defendants. Contrary to defendants’ contention, the fact that plaintiff’s agent read the amendment does not establish as a matter of law that defendants were not negligent (see Bishop v Maurer, 9 NY3d 910 [2007]; see e.g. Kram Knarf, LLC v Djonovic, 74 AD3d 628, 628 [1st Dept 2010]; Fielding v Kupferman, 65 AD3d 437 [1st Dept 2009]). Any evidence that plaintiff’s agent, a sophisticated businessman, knew or should have known that the amendment was substantive despite defendants’ advice that it was “housekeeping” does not disprove defendants’ negligence but is evidence that can be offered in mitigation of damages (see e.g. SF Holdings Group, Inc. v Kramer Levin Naftalis & Frankel LLP, 56 AD3d 281, 282 [1st Dept 2008]; Mandel, Resnik & Kaiser, P.C. v. E.I. Elecs., Inc., 41 AD3d 386, 388 [1st Dept 2007]).

Plaintiff’s theory of proximate cause is not impermissibly based on gross speculation as to future events (see e.g. VPC Projects, LLC v Golenbock Eiseman Assor Bell & Peskoe, LLP, 191 AD3d 623 [1st Dept 2021], lv denied 37 NY3d 909 [2021]). The fact that plaintiff sent the signed lease to the landlord without defendants’ knowledge does not as a matter of law refute causation. Defendants also failed to establish as a matter of law that plaintiff would not have been able to exercise its purchase option in 2023-2024. They also failed to establish as a matter of law that plaintiff was not actually damaged as a result of their negligence or that those damages were not ascertainable. To the extent defendants argue that plaintiff lacks standing, they waived that argument by failing to assert lack of standing in their answer or their pre-[*2]answer motion to dismiss (see CPLR 3211[a][3], [e]).”

A child dies and a claim of medical malpractice ensues.  The parents consent to an autopsy and certain of the child’s organs are not returned.  Apparently the medical malpractice claim founders in the absence of examination of the organs, besides which, the parents want to bury them.  They sue their personal injury law firm in Marinelli v Sullivan Papain Block McGrath & Cannavo, P.C.  2022 NY Slip Op 02994 Decided on May 4, 2022 Appellate Division, Second Department.

“The plaintiffs commenced this action against the defendant law firm, which had represented the plaintiffs in connection with a prior action to recover damages for medical malpractice in connection with the birth of their child (hereinafter the decedent). The plaintiffs alleged that they “retained the defendant to recover all of the organs removed” during an autopsy of the decedent which was conducted by New York Methodist Hospital (see Marinelli v New York Methodist Hosp., ___ AD3d ___ [decided herewith]), and “to pursue an action for medical malpractice.” In the first cause of action in the complaint, the plaintiffs alleged that the defendant failed to take certain steps to recover the subject organs, and that “had the defendant timely pursued recovery of the [subject] organs, the organs would have been available for return and burial and in fact, New York Methodist Hospital would have returned the organs to the plaintiffs for such burial.”

“Here, the complaint failed to adequately allege that the defendant’s breach of its professional duty proximately caused the plaintiffs to sustain actual damages. The plaintiffs alleged that New York Methodist Hospital (hereinafter the hospital) would have agreed to return the subject organs to the plaintiffs if the defendant had taken certain steps after it was retained. However, the plaintiffs’ contention “rests on speculation as to how [the hospital] would have responded to these [steps]” (Bua v Purcell & Ingrao, P.C., 99 AD3d at 848).

In support of its motion to dismiss the first cause of action in the complaint, the defendant submitted, among other things, a consent form (hereinafter the consent form), which was executed by the plaintiff Vito Marinelli. As we have determined in a related appeal (see Marinelli v New York Methodist Hosp., ___ AD3d ___ [decided herewith]), the consent form explicitly granted the hospital the authority to retain and dispose of the subject organs so long as the hospital considered such actions “appropriate” for the stated purpose of the autopsy, which included the general goal of “furthering medical knowledge.” The consent form thereby conferred “discretionary” authority on the hospital to determine “whether to remove and retain an organ for further [*2]examination and testing” (Cansev v City of New York, 185 AD3d at 896; see Shipley v City of New York, 25 NY3d 645, 654; cf. Zhuangzi Li v New York Hosp. Med. Ctr. of Queens, 147 AD3d 1115, 1117). The plaintiffs do not allege that they retained the defendant before the hospital exercised its discretion in this matter pursuant to the terms agreed upon in the consent form. In light of the discretion imparted by the consent form, “the plaintiff[s’] contention that the alleged malpractice resulted in legally cognizable damages is conclusory and speculative inasmuch as it is premised on decisions that were within the sole discretion of the [hospital]” (Bua v Purcell & Ingrao, P.C., 99 AD3d at 848; see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 436; Dempster v Liotti, 86 AD3d at 180; Hashmi v Messiha, 65 AD3d at 1195; Wald v Berwitz, 62 AD3d at 787; Holschauer v Fisher, 5 AD3d at 554; Giambrone v Bank of NY, 253 AD2d 786, 787; see also Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 443; Dupree v Voorhees, 68 AD3d 810, 812-813). Under the circumstances, the Supreme Court properly granted the defendant’s motion pursuant to CPLR 3211(a) to dismiss the first cause of action in the complaint. Accordingly, we affirm the first order appealed from, dated July 13, 2017.”

In a very short decision, Supreme Court’s denial of dismissal was affirmed.  TF Lending, LLC v Mavrides, Moyal, Packman & Sadkin, LLP  2022 NY Slip Op 02946  Decided on May 03, 2022  Appellate Division, First Department stands for the proposition that an attorney working in a firm can be personally liable as well as the firm.

“Defendants do not dispute that the complaint, which asserts a cause of action for legal malpractice, sufficiently alleges that Weinberger, an associate attorney, acted negligently while performing legal services on behalf of defendant law firm. Thus, dismissal of the complaint as against Weinberger is not warranted under the Partnership Law (Partnership Law § 26[c][i]; see e.g. Scarborough v Napoli, Kaiser & Bern, LLP, 63 AD3d 1531, 1532 [4th Dept 2009]) or the common-law doctrine of respondeat superior (see Reliance Ins. Co. v Morris Assoc., 200 AD2d 728, 730 [2d Dept 1994]; Jones v Archibald, 45 AD2d 532, 535 [4th Dept 1974]; accord Restatement [Third] of Agency § 7.01 [2006]). “

Genesis REOC Co., LLC v Poppel  2022 NY Slip Op 02947 Decided on May 03, 2022 Appellate Division, First Department is a case in which Plaintiff’s affidavit was prominently relied upon by the Court in determining that there was  scheme in place rather than an error of judgment.  The affidavit also demonstrated negligent representation.

“Defendants’ argument that the amended complaint does not allege facts sufficient to establish an attorney/client relationship is unavailing, given the affidavits by plaintiffs’ principal, Andrew Stone, submitted in opposition to defendants’ motions, describing the parties’ relationship and defendants’ agreement to represent plaintiffs (see Rushaid v Pictet & Cie, 28 NY3d 316, 327 [2016]). Nor is it dispositive that plaintiffs and the Williams Defendants did not have a retainer agreement with respect to the engagement, given Stone’s explanation of the agreement he had with the Williams Defendants, the advice they gave him, the acts he undertook as part of the Williams Defendants’ engagement, and his reliance on their advice (see Pellegrino v Oppenheimer & Co. Inc., 49 AD3d 94, 99 [1st Dept 2008]).

The amended complaint and the affidavits sufficiently allege negligent representation. Plaintiffs allege that defendants had an undisclosed scheme to advance the interests of nonparty Karim Hutson and his wholly owned entities over plaintiffs’ interests, that they structured their investments in the relevant real estate projects so that the economic benefits of those projects were diverted to Hutson, and that they failed to disclose their conflict of interest while assuring plaintiffs that their financial interests would be protected (see e.g. Yuko Ito v Suzuki, 57 AD3d 205, 207-208 [1st Dept 2008]).

The amended complaint and the affidavits sufficiently allege proximate cause. Plaintiffs allege not simply that defendants made an error in judgment but that they actively and surreptitiously assisted Hutson in diverting funds away from plaintiffs (see Lappin v Greenberg, 34 AD3d 277, 279 [1st Dept 2006]). To the extent defendants rely upon evidence that other factors contributed to the loss, that simply raises an issue of fact not to be determined on the pleadings (Voluto Ventures, LLC v Jenkens & Gilchrist Parker Chapin, LLC, 46 AD3d 354, 355 [1st Dept 2007]).”

Weis v Rheem, Bell & Freeman, LLP  2022 NY Slip Op 31203(U) April 12, 2022  Supreme Court, New York County Docket Number: Index No. 160796/2020 Judge: Barbara Jaffe is a example of how courts burrow into the “but for” portion of the legal malpractice claim.

“Plaintiffs allege that in or about April 2015, plaintiff Weis was contacted by non-parties Zoltan Kovacs and Peter Kovacs (the Kovacses) who sought investors for the development of
two Manhattan properties. The Kovacses introduced Weis to non-parties Erin Wincomb and Joseph Ferrigno, the principals and/or members of the developer Mavrix Equity Group, Inc.
(Mavrix parties). Over several weeks of negotiations, the Mavrix parties and the Kovacses (the co-investors) agreed with Weis that Weis would provide $5 million in interim financing to
acquire and develop the properties, one at 9 Minetta Street and the other at 30 Thompson Street. Plaintiffs allege that in or about April 2015 and thereafter, defendants were retained by Weis for legal advice and counsel regarding the real estate loans and transactions, and that defendants agreed to represent Weis by, inter alia, structuring the transaction and conducting due diligence concerning the potential investments, borrowers, and/or other parties to the transactions. It is thus alleged that defendants owed Weis a duty to provide reasonable care to protect his interests in connection with the contemplated transactions.

In April and/or May 2015, the co-investors represented to plaintiffs and defendants that they had a net worth of $18 million, including Kovacs-owned real properties in Kings County
and Suffolk County worth more than several million dollars. Plaintiffs complain that defendants failed to conduct due diligence to validate these and other representations made by the coinvestors.

In May 2015, Weis loaned the co-investors $1 million for the Minetta property and $4  million for the Thompson property, at an annual interest rate of 18 percent, in exchange for
equity in the projects, a security interest in the membership interests in the co-investors’ future limited liability companies, their personal guarantees, and affidavits of confessions of judgment signed by them.

The co-investors did not close on the Minetta property transaction and the $1 million loaned was thus forfeited to the seller. Although the Thompson property transaction closed on or
about May 20, 2015, shortly thereafter, the co-investors defaulted on the related loans and payment obligations to plaintiffs. Consequently, in January 2016, plaintiffs invested an
additional $240,000 in the Thompson property. Absent sufficient funds in the operating account that had been controlled by the co-investors, plaintiffs were unable to maintain the loan payments for the Thompson property transaction. ”

“Due allegedly to defendants’ structuring of the Minetta property investment and/or transaction and the Thompson property investment and/or transaction, and defendants’
representation relating to the two actions, Zoltan was able to transfer title of a property in Southampton that was owned by him into a corporate entity, thereby avoiding the enforcement and/or effect of any judgment entered against the co-investors. Defendants told Weis that they were arranging a sheriff’s sale of the Southampton
property which had allegedly been pledged as collateral. Plaintiffs then learned that the  Southampton property had not been pledged as collateral, that defendants had not properly
arranged for a sheriffs sale, and that it was too late to do so. To date, none of the enforcement actions undertaken by defendants have resulted in a recovery.

On or about February 12, 2018, plaintiffs discharged defendants. In January 2019, Wicomb and Ferrigno were convicted of second-degree grand larceny for embezzling plaintiffs’
loan proceeds for these transactions; the convictions were affirmed on appeal. Plaintiffs maintain that due to defendants’ failure to advise, counsel, and represent plaintiffs properly, plaintiffs lost all of the money invested in the two properties and incurred significant additional interest costs, legal fees, and other related expenses arising from enforcement proceedings, interest costs, legal fees. ”

“Here, even if plaintiffs succeed in demonstrating that defendants were negligent and that their negligence was the proximate cause of the loss sustained, defendants offer undisputed documentary evidence of the judgments they obtained for plaintiffs in New York and California (NYSCEF 25, 29), thereby utterly refuting the element pleaded by plaintiffs of actual ascertainable damages. That the judgments have not been satisfied does not render them uncollectible, nor does the present inability to locate collateral foreclose future success. (See Noel ex rel. Deegas v L. Off of Mark E. Feinberg, 43 Misc 3d 1207[A] [Sup Ct, Kings County 2014] [ as plaintiffs time to enforce judgment not yet expired and cause of action premised on alleged fraudulent transfer still viable for time within which to collect judgment plaintiff has not yet sustained ascertainable damages]). Kish v Bd. of Educ. Of the City of New York, 76 NY3d 3 79 (1990) and CPLR 4545 are inapposite.”

 

Anecdotally, we often receive calls in which the potential client tells us that the target attorneys “forced” them into settling.  It seems that the proper question to the potential client is probably whether the “force” was of a “gun to the head” variety, or merely overbearing talk.  Bei Yang v Pagan Law Firm, P.C.  2022 NY Slip Op 22130 Decided on April 25, 2022 Supreme Court, New York County Kraus, J. seems to be of the overbearing talk variety.

“In this action and in her pleadings, Plaintiff originally alleged many aspects of Defendants’ representation in the prosecution of the personal injury case constituted malpractice. In opposition to Defendants’ motion, Plaintiff has essentially narrowed her allegations to a single claim, that defendants forced her to settle the case by pressuring her, threatening to withdraw as her attorneys if the case did not settle and demanding that she front $30,000.00 in trial costs in [*4]order to move ahead with the trial. Plaintiff asserts these actions essentially forced her to accept the settlement, because she was unable to find new counsel so late in the litigation, and she felt it was clear Defendants did not want to proceed to trial.

Defendants have failed to submit affidavits on the motion denying these claims of coercion. Defendants submit an expert affirmation from Michael Zuller Esq., that incorrectly alleges that there is no claim or allegation that Plaintiff was coerced into accepting the settlement offer. Mr. Zuller opines that Defendants did not depart from the applicable standard of care in prosecuting the underlying action, and that Plaintiff can not show the “but for” proximate causation element in establishing actual non-speculative damages. Mr. Zuller further opines that the underlying action would have been risky to try and cites a significant percentage of medical malpractice trial result in a defense verdict.

Plaintiff’s unopposed allegations regarding the coerced settlement, including the threat by defendants to withdraw from representation and the demand that plaintiff front trial costs in contravention of the parties’ retainer agreement do indeed suggest ethical breaches on the part of defendants.

However, the violation of a disciplinary rule or ethical obligations does not, without more, generate a cause of action for legal malpractice (Guiles v Sismer 35 AD3d 1054, 1056; Weintraub v Phillips, Nizer, Benjamin, Krim & Ballon 172 AD2d 254). To succeed on her legal malpractice claim, Plaintiff would be required to prove that Defendants were negligent in their legal representation, that their negligence was a proximate cause of her loss and that she sustained actual and ascertainable damages (see Ehlinger v Ruberti, Girvin & Ferlazzo, 304 AD2d 925, 926 [2003]).

Plaintiff’s own expert does not dispute Mr. Zuller’s opinion that the action would be risky to try and that a trial may have resulted in a defense verdict or a verdict lower than the settlement amount. In his affirmation, Mr. Bower states:

As such, the issue is not whether the settlement was adequate or reasonable, a fair amount or not, but simply whether the client’s assent was properly obtained. Whether accepting the offer was wise or foolish, and whether the settlement amount is fair or not, is entirely besides the point. In this case, the client’s consent was not voluntarily or freely given. Her assent was only obtained “under the gun.”

… 

Predictably, the defense contends that the settlement amount herein was very favorable to the plaintiff, perhaps more than would be recovered at trial, and certainly more than if the trial went badly. All of that may be true, but all of that is totally irrelevant, nonetheless. The wisdom of the client’s choice is not the legal test that matters herein. All that matters is whether the consent to settle was freely given. If freely given, the settlement is valid and binding, regardless of the amount. If not freely given, the settlement was improperly obtained, regardless of the amount. (Emphasis added). 

While the issue of whether plaintiff would have received a greater amount of money if she went to trial may be “irrelevant” to ethical considerations, it is not irrelevant to the pending malpractice claim. The concession of Plaintiff’s own expert that it is possible that Plaintiff would not have recovered more money or even that Plaintiff may have recovered less money if she proceeded to trial, underscores that Plaintiff will be unable at trial to establish that but for the settlement a trial would have resulted in a verdict in excess of 1.3 million dollars. [See eg Gallet, Dreyer & Berkey, LLP v. Basile, 141 AD3d 405 (2016)(holding summary judgment dismissing [*5]the legal malpractice claim appropriately granted where the asserted damages are vague, unclear, or speculative); Bellinson Law, LLC v Iannucci, 102 AD3d 563 (1st Dept 2013)].

While plaintiff cites to cases where a legal malpractice claim was held viable despite a settlement in the underlying action [Cohen v. Lipsig, 92 A.D.2nd 536 (Second Dept., 1983); Lattimore v. Bergman, 224 A.D.2nd 497 (Second Dept., 1996); Mazzei v. Pokorny, Schrenzel & Pokorny, 125 AD2d 374], these cases are distinguishable as none relate to a claim where the attorneys pressured a client to enter into a settlement, rather the cases cited involve circumstances where the settlement was required due to an error committed by counsel in representation in the underlying action.

Thus even if the ethical breach alleged constituted malpractice, the inability of plaintiff to establish actual and ascertainable damages requires dismissal of the action.”

How deceitful must deceit be to qualify for Judiciary Law § 487 application?  AmTrust N. Am., Inc. v Pavloff  2022 NY Slip Op 02862 Decided on April 28, 2022 Appellate Division, First Department gives us some idea.

“The amended complaint states a cause of action for legal malpractice and the documents submitted do not utterly refute the factual allegations underlying that cause of action (see generally Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; CPLR 3211[a][1], [7]). Dismissal of the cause of action for violation of Judiciary Law § 487(1) is, however, warranted. The amended complaint does not allege, and the documents submitted do not indicate, that defendant Sherri Pavloff’s statement at the August 2017 proceeding in the underlying motor vehicle accident action was untrue. Even assuming Pavloff’s statement was deceitful, it is not sufficiently egregious to support a § 487(1) cause of action (e.g. Mazzocchi v Gilbert, 185 AD3d 438, 438 [1st Dept 2020], lv denied 37 NY3d 908 [2021]; Shawe v Elting, 161 AD3d 585, 588 [1st Dept 2018], lv denied 32 NY3d 907 [2018]).”

The vast number of sibling v. sibling cases involving parental estates should not be surprising, but Altman v DiPreta  2022 NY Slip Op 02774 Decided on April 27, 2022 Appellate Division, Second Department is an interesting case which alleged deceit over the location of a ward of a Court Appointed conservatee.

“In 2010, Jeanne Altman (hereinafter Jeanne) executed a durable power of attorney in favor of her two sons, Charles Altman (hereinafter Charles) and Edwin Altman (hereinafter Edwin). Following the deterioration of Jeanne’s mental faculties, Charles and Edwin had disagreements about her care. Charles retained the defendant Richard Slagle, a Connecticut attorney, to represent Jeanne. Charles then commenced a conservatorship proceeding in Connecticut, where Jeanne was then residing. By decree dated December 4, 2012, the Probate Court of Greenwich, Connecticut (hereinafter the Probate Court), appointed the defendant Richard S. DiPreta, a Connecticut attorney, as conservator of Jeanne’s estate, and appointed Charles as conservator of her person.

DiPreta subsequently petitioned the Probate Court for the removal of Charles as conservator of Jeanne’s person. By decree dated August 2, 2013, the Probate Court removed Charles as conservator, finding, inter alia, that Charles had improperly brought Jeanne from Connecticut to New York without court approval, and that Charles failed to act in Jeanne’s best interests.

In February 2014, Charles and Jeanne (hereinafter together the plaintiffs) commenced this action in New York against, among others, DiPreta and DiPreta Law Firm LLC (hereinafter together the DiPreta defendants), and Slagle, inter alia, to recover damages for legal malpractice, tortious interference with contractual relations, and violation of Judiciary Law § 487. In an amended complaint, the plaintiffs alleged, among other things, that the DiPreta defendants and Slagle engaged in “deceit and collusion” as part of a plan to retain control over Jeanne’s assets and withhold payments to Charles. The DiPreta defendants moved, among other things, pursuant to CPLR 3211(a)(7) to dismiss the causes of action alleging tortious interference with contractual relations and violation of Judiciary Law § 487 insofar as asserted against them. Slagle separately moved, inter alia, pursuant to CPLR 3211(a)(8) to dismiss the amended complaint insofar as asserted against him for lack of personal jurisdiction, and pursuant to CPLR 3211(a)(7) to dismiss the cause of action alleging violation of Judiciary Law § 487 insofar as asserted against him. In an order dated March 24, 2015, the Supreme Court, among other things, granted those branches of the separate motions. Charles appeals.”

“Under Judiciary Law § 487(1), an attorney who “[i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party” is liable to the injured party for treble damages. “Judiciary Law § 487 ‘applies to an attorney acting in his or her capacity as an attorney, not to a party who is represented by counsel and who, incidentally, is an attorney'” (Pinkesz Mut. Holdings, LLC v Pinkesz, 198 AD3d 693, 698, quoting Oakes v Muka, 56 AD3d 1057, 1058). Here, the parties’ evidentiary submissions demonstrated that the DiPreta defendants did not act in their capacities as attorneys when they allegedly made deceitful statements. Accordingly, the Supreme Court properly granted that branch of the DiPreta defendants’ motion which was pursuant to CPLR 3211(a)(7) to dismiss the cause of action alleging violation of Judiciary Law § 487 insofar as asserted against them by Charles (see Smallwood v Lupoli, 107 AD3d 782, 784; Crown Assoc., Inc. v Zot, LLC, 83 AD3d 765, 768; Oakes v Muka, 56 AD3d at 1058).”

Dial Car Inc. v Kordonsky  2022 NY Slip Op 31067(U) March 31, 2022 Supreme Court, Kings County Docket Number: Index No. 521900/2021 Judge: Leon Ruchelsman is a case which has been brought previously and is now in its second amended complaint.  Supreme Court dismissed the claims against the attorneys as too old.

“The Tuch and Cohen defendants have moved pursuant to CPLR §3211 seeking to dismiss the plaintiff’s complaint on the grounds essentially that it does allege any cause of •action and that many of the claims are barred by the applicable statute of limitations.

The plaintiff is a black car livery service catering to high end clients in Brooklyn. The amended complaint alleges that the four members of the board of directors, Michael Kordortsky,
Jeffrey Goldberg, Alex Sulava and Michael Levin as well as their counsel defendant Tuch and Cohen essentially defrauded Dial and its shareholders and committed corporate waste. Specifically, the amended omplaint alleges the defendants looted a voucher savings program design eel as a retirement funds for shareholders. The amended complaint alleges nine causes of action, for fraud, waste and mismanagement; aiding and abetting fraud, conversion, unjust enrichment, compensation recovery, malpractice, disgorgement, breach of fiduciary duty and aiding and abetting a breach of fiduciary duty. A similar lawsuit was filed in 2015 seeking similar reliefs. These motions have now been filed.”

“Concerning the Tuch and Cohen defendants, the amended complaint does not allege any improper conduct engaged in by them at all. Paragraph 73 of the amended complaint states that “on July 6, 2010, GOLDBERG with the assistance of KORDONSKY, ATTORNEYS and specifically, defendant, Roberta Pike, LEVIN and SULAVA, was granted an amendment to his March 31, 2003, employment contract which, included a salary increase, retirement benefits and other various additional pecuniary benefit’ (id) and that such amemdment was done without majority shareholder approval pursuant to the by-laws (see, Amended Complaint, I74). The amended complaint argues that the Tuch and Cohen defendants drafted the by-laws in 2010 and were surely aware of the shareholder approval requirement. However, even if the allegations are true and constitute wrongdoing such wrongs occurred in 2010. It is well settled that legal malpractice causes of actions have a three year statute of limitations (CPLR §214 (6), Schrull v. Weis, 166 AD3d 829, 87 NYS3d 228 [2d Dept., 2018}). The events which give rise to any malpractice claims accrued more than three years before the filing of this action. Further, the remaining causes of action are only directed toward
corporate .officers and directors. There are no allegations the Tuch and Cohen defendants were corporate officers at all.”

 

The facts in Hellman v Jacob  2022 NY Slip Op 31018(U)  March 29, 2022  Supreme Court, New York County  Docket Number: Index No. 156860/2021 Judge: Barbara Jaffe are just too astounding to try to encapsulate.

“Plaintiff alleges that from January of 2008 to December of 2010, a group of investors placed approximately $112 million with a nonparty fraudster and with legal entities owned and
controlled by him. From January 2008 to March 2013, the fraudster ran Ponzi scheme, thereby stealing more than $100 million from various people and entities. A committee of creditors (committee) was thus formed from the group of investors with the goal of recovering the assets from the fraudster and his entities. Defendant Belsky was nominated as the sole member of the committee.

On or about December 21, 2010, the committee engaged lawyer-movants as legal counsel in connection with the Ponzi scheme and recovery of the stolen funds, and a “committee
agreement” was entered into between plaintiff and the other committee members on the one hand, and defendant Shalom Jacob on the other. The December 2010 agreement also provides as follows:
You agree that our sole client will be the Committee and that our representation of the
Committee shall not constitute or include the representation of any member of the
Committee with respect to his, her or its individual interests.

In addition to representing the committee and plaintiff, all three movants represented defendant Cortland Realty Investments, LLC, the investor with the largest stake in the invested funds. Plaintiffs claim is reflected therein as $1,375,000. Approximately $61,458,853 was recovered by lawyer-movants from the entities controlled by the fraudster. Plaintiff alleges that defendants were aware of his claim, that the amount due him included funds invested by others, and that the committee represented by movants “may have also included liabilities of other third-parties as part of the amount associated with each member’s respective liability.” Over the course of almost ten years, plaintiff claims, defendants took many actions on his behalf and on behalf of those who had invested with him, referencing in a footnote eight lawsuits commenced in various jurisdictions by the committee, using his
position to recover funds. Once the funds were recovered, defendants refused to distribute to him the share that he was and is entitled to, which has caused and continues to cause him significant and irreparable harm.

According to plaintiff, the committee has “purportedly” collected and recovered approximately $22,893,674.10, plus non-monetary assets, and on March 25, 2013, “purportedly” entered a judgment against the fraudster and some of his entities in the amount of $66,609,424.74, plus post-judgment interest.

On or about August 31, 2017, defendants notified plaintiff that due to certain adverse proceedings brought against the committee in bankruptcy court, they sought to make interim
distributions or, as an alternative, they proposed a buy-out by Cortland, a committee member and their client. In the buy-out agreement prepared by defendants on Cortland’s behalf, plaintiffs share of the recovery is listed as $697,801.62 with interest at 1.384 percent, whereas the buy-out amount is listed as $290,561. Defendants also indicated in the letter that the committee “had possible exposure” in the bankruptcy proceeding “because of monies it may have received from [the fraudster] as part of an allegedly unlawful and/or fraudulent transfer, which may require [the committee] to reimburse such monies.”

Plaintiff alleges that defendants counseled him to accept the buy-out proposal even though it would bring him a fraction of his share, and informed him that they were unable to
represent him, the committee, and/or Cortland in connection with the proposed buy-out. They thus arranged for another law firm to act as plaintiffs counsel in connection with the buy-out. Unaware that defendants had developed “this furtive scheme” to secure plaintiffs position for pennies on the dollar and in reliance on their advice given their role as trusted counsel, plaintiff agreed to the proposed buy-out.”

“Plaintiff’s characterization of the buy-out agreement as a “farce” that was knowingly designed to conceal the reason for Cortland’s proposal to purchase plaintiff’s claims, which was
to induce plaintiff fraudulently to convey his ownership interest in the recovery to the committee, is bereft of facts supporting such assertions. Thus, the allegations in support of the cause of action for fraud/fraudulent inducement as against lawyer-movants are too conclusory to satisfy the statutory requirement that the circumstances constituting the wrong be stated in detail (CPLR 3016[b ]).

Moreover, plaintiff acknowledges in his complaint that on December 21, 2010, lawyer movants specifically advised him that neither he nor his investors were represented by them, and
that the actions commenced by lawyer-movants were brought on behalf of the committee and not plaintiff. He also fails to dispute that the August 2017 letter and buy-out agreement clearly reflect that by signing the option for the buy-out, plaintiff conveyed his interest in any recovery to Cortland.

Plaintiff nonetheless claims to have justifiably relied on defendants’ alleged deception based on the buy-out agreement, asserting that the agreement was conveyed to him through
lawyer-movants who served as his counsel. Thus, he claims to have reasonably relied on them to his detriment which resulted in injury. Again, having acknowledged that he was informed by movants on December 21, 2010 that they did not represent him, and on August 31, 2017 that they would not represent him individually with respect to the buy-out agreement and that the other law firm would represent him, plaintiff demonstrates that he was not justified in relying on their alleged advice to enter into the buy-out agreement. “