Ward v Klein 2022 NY Slip Op 02154 Decided on March 30, 2022 Appellate Division, Second Department gives an explanation of how and when a CPLR 205 recommencement of an action is viable and when it is not.

“The plaintiff hired the defendants to represent her in connection with certain disciplinary charges brought against her by the New York City Department of Buildings. After the defendants’ representation of the plaintiff terminated, the plaintiff commenced an action against them, inter alia, to recover damages for breach of contract, legal malpractice, breach of fiduciary duty, and fraud (hereinafter the prior action). The Supreme Court issued an order in the prior action granting the defendants’ motion pursuant to CPLR 3211(a) to dismiss the complaint (see Ward v Klein, ___ AD3d ___ [Appellate Division Docket No. 2019-04894; decided herewith]). Among other things, the court concluded that the complaint in the prior action failed to state any legally cognizable cause of action (see id.).

The plaintiff then commenced this action by filing a complaint identical to the complaint in the prior action. The plaintiff subsequently filed an amended complaint to reflect a name change of one of the parties. The defendants moved, inter alia, pursuant to CPLR 3211(a) to dismiss the amended complaint. The Supreme Court granted that branch of the motion on the ground that this action was barred by the doctrine of res judicata. The plaintiff appeals.

“Under the doctrine of res judicata, a disposition on the merits bars litigation between the same parties, or those in privity with them, of a cause of action arising out of the same transaction or series of transactions as a cause of action that either was raised or could have been raised in the prior proceeding” (Bravo v Atlas Capital Group, LLC, 196 AD3d 627, 628 [internal quotation marks omitted]). A dismissal pursuant to CPLR 3211(a)(7) for failure to state a cause of action “has preclusive effect only as to a new complaint for the same cause of action which fails to correct the defect or supply the omission determined to exist in the earlier complaint” (175 E. 74th Corp. v Hartford Acc. & Indem. Co., 51 NY2d 585, 590 n 1; see Furia v Furia, 116 AD2d 694, 695).

Here, the dismissal of the complaint in the prior action had preclusive effect in this action, since the plaintiff filed an amended complaint which, apart from the name change, was identical to the deficient complaint filed in the prior action (cf. Rapp v Lauer, 200 AD2d 726, 728; Furia v Furia, 116 AD2d at 695).”

In Platt v Berkowitz  2022 NY Slip Op 01405 Decided on March 03, 2022  the Appellate Division, First Department wiped out two separate Judiciary Law § 487 claims, on on collateral estoppel and the other for lack of standing.

“The doctrine of collateral estoppel precludes plaintiff’s Judiciary Law § 487 claim against defendant Morrell Berkowitz, Esq. (see Buechel v Bain, 97 NY2d 295, 303 [2001], cert denied 535 US 1096 [2002]). Plaintiff’s claim is premised on alleged misrepresentations or mischaracterizations of evidence Berkowitz made to the courts while representing the Board of Directors of Windsor Owners Corp. in an action brought against plaintiff for her conduct while she was a member of the Board. Plaintiff had a full and fair opportunity to raise her Judiciary Law § 487 claim in her motion for sanctions in that prior action, which was denied (Board of Directors of Windsor Owners Corp. v Platt, Sup Ct, NY County, March 28, 2018, Schecter, J., index No. 155985/14; see Doscher v Mannatt, Phelps & Phillips, LLP, 148 AD3d 523, 523-24 [1st Dept 2017]).

In any event, plaintiff failed to state a cause of action under Judiciary Law § 487 against Berkowitz. Specifically, she failed to allege any actual deceit, and the misconduct that she alleges is not “egregious or a chronic and extreme pattern of behavior” (Doscher, 148 AD3d at 524 [internal quotation marks omitted]).

The claim against defendant Deborah Koplovitz, Esq., for a violation of Judiciary Law § 487(1) was properly dismissed, because the complaint does not allege that Koplovitz was counsel of record in any pending proceeding to which plaintiff was a party (Mazzocchi v Gilbert, 185 AD3d 438, 438 [1st Dept 2020], lv denied 37 NY3d 908 [2021]; Sun Graphics Corp. v Levy, Davis & Maher, LLP, 94 AD3d 669 [1st Dept 2012]).”

For a plaintiff’s legal malpractice attorney, the idea of an uncollectable trial verdict is abhorrent.  The balance of this decision in Matter of Heller, 2022 NY Slip Op 01877, Decided on March 17, 2022, Appellate Division, First Department is similarly a disgrace.

“Respondent Mark J. Heller was admitted to the practice of law in the State of New York by the Second Judicial Department on December 22, 1969, under the name Mark Jay Heller. At all times relevant to this proceeding, he has maintained a registered business address within the First Department.

In 1994, this Court suspended respondent from the practice of law for a period of five years for a pattern of misconduct committed in connection with 12 separate client matters which included dishonesty, neglect, and failure to return unearned fees (195 AD2d 134 [1st Dept 1994]). He was reinstated on July 15, 1999 (263 AD2d 401 [1st Dept 1999]).

Respondent now seeks an order, pursuant to the Rules for Attorney Disciplinary Matters (22 NYCRR) 1240.10, accepting his resignation as an attorney and counselor-at- law licensed to practice in the State of New York.

In support of the application, respondent has submitted his affidavit of resignation, which conforms to the format set forth in Appendix A to 22 NYCRR 1240.10.[FN1] Respondent attests that he is also admitted to practice before the U.S. District Courts for the Southern and Eastern Districts of New York.

Respondent acknowledges that he is currently the subject of an investigation by the Attorney Grievance Committee (AGC) concerning four matters. In a matrimonial matter respondent acknowledges that he engaged in multiple acts of professional misconduct that include, charging an excessive fee, failure to submit timely invoices, and neglecting the matter by failing to finalize the judgment of divorce. He further acknowledges that the client in the matrimonial matter sued him for malpractice and breach of contract and obtained a judgment against him after trial in the amount of $523,536.00 with interest that he has not paid.

As to the three other matters under investigation, respondent acknowledges that he engaged in at least the following acts of professional misconduct: he failed to communicate with a client in a criminal matter; he failed to provide a retainer agreement to a client in a criminal matter; and he neglected a client matter in a criminal case. Respondent attests that he cannot successfully defend against the allegations based upon the facts and circumstances of his professional conduct as described herein. Respondent attests that his resignation is freely and voluntarily rendered, without coercion or duress by anyone, and with full awareness of the consequences, including that the Court’s acceptance and approval shall result in the entry of an order of disbarment striking his name from the roll of attorneys and counselors-at-law.”

 

When the attorneys represented the client, it prosecuted a condominium sale claim which was dismissed on statute of frauds grounds.  However, in  Komolov v Popik  2022 NY Slip Op 01966, Decided on March 22, 2022,  the Appellate Division, First Department held that:

“Defendants failed to establish a prima facie case that they were not negligent, that any negligence was not the proximate cause of plaintiffs’ alleged damages, or that plaintiffs suffered no compensable damages (see generally Excelsior Capitol LLC v K&L Gates LLP, 138 AD3d 492, 492 [1st Dept 2016]). In a 2010 action involving sale of the condominium unit, among other things, Supreme Court issued an order dismissing, on statute of frauds grounds, a breach of contract claim regarding the sale. It later developed that there was, in fact, a written contract for the sale, and therefore, that the breach of contract action with respect to the sale was not barred by the statute of frauds. Nevertheless, defendants never moved to renew, vacate, or appeal the order.

Regardless of whether the dismissal on statute of frauds grounds was ultimately correct, defendants should have known that the condominium claims, which involved the sale of real property, would be subject to the statute of frauds and thus would require reference to a written contract (General Obligations Law § 5-703[2]); that the statute of frauds could be raised and adjudicated on a motion to dismiss under CPLR 3211(a)(5); and that a dismissal under the statute of frauds would be on the merits, thus precluding any future claim for damages on the sale of the condominium (see Apostolos v R.D.T. Brokerage Corp., 180 AD2d 569, 570 [1st Dept 1992]). As a result, with respect to the condominium sale, it cannot be determined as a matter of law that plaintiffs failed to plead a claim for legal malpractice based upon defendants’ actions in litigating the breach of contract claim.”

 

Is an attorney liable for any departure from good practice in representing a client?  No.  Courts very often scrutinize the retainer agreement to see if it limits the representation in any way.  National Air Cargo, Inc. v Jenner & Block, LLP  2022 NY Slip Op 01900 Decided on March 18, 2022 Appellate Division, Fourth Department is a good example.

“Memorandum: Plaintiff National Air Cargo, Inc. (NAC) is a freight forwarding company, and plaintiff National Air Cargo Holdings (NACH) owns NAC. Plaintiff Chris Alf is the principal shareholder of NAC and NACH and, at all relevant times, was the chair, chief executive officer, and president of NAC. NAC was found liable on a breach of contract claim in an underlying action against it in the United States District Court for the Central District of California. Plaintiffs commenced this action alleging, inter alia, professional negligence/legal malpractice and seeking damages purportedly arising from the representation of NAC by defendant Jenner & Block, LLP (JB) in the underlying action and the representation of NAC by defendant Harter, Secrest & Emery, LLP (HSE) in NAC’s subsequent bankruptcy proceeding. Plaintiffs alleged that JB and HSE negligently failed to review whether the judgment rendered against NAC in the underlying action was covered by the directors’ and officers’ liability insurance policies issued to NAC and to advise NAC accordingly. JB and HSE thereafter each moved pursuant to CPLR 3211 to dismiss plaintiffs’ complaint against them. In appeal No. 1, plaintiffs appeal from an order of Supreme Court that granted both motions. In appeal No. 2, plaintiffs appeal from a subsequent order of the same court that granted HSE’s motion. In appeal No. 3, plaintiffs appeal from an order and judgment of the same court that granted JB’s motion.”

“In appeal No. 2, we conclude that the court properly dismissed on the ground of documentary evidence the professional negligence/legal malpractice cause of action against HSE insofar as asserted by NAC (see CPLR 3211 [a] [1]). A motion to dismiss a complaint based on documentary evidence “may be appropriately granted only where the documentary evidence utterly refutes [the] plaintiff’s factual allegations, conclusively establishing a defense as a matter of law” (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]). In support of its motion, HSE submitted the engagement letter between HSE and NAC. “An attorney may not be held liable for failing to act outside the scope of a retainer” (Attallah v Milbank, Tweed, Hadley & McCloy, LLP, 168 AD3d 1026, 1028 [2d Dept 2019]; see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435 [2007]). Here, HSE met its burden of establishing by documentary evidence that the scope of its legal representation did not include a review of the insurance policies for possible coverage of the judgment in the underlying action. The engagement letter stated that HSE’s engagement did “not include responsibility either for review of [NAC’s] insurance policies to determine the possibility of coverage for any . . . claims that have [been] or may be asserted against [NAC] or for notification of [NAC’s] insurance carriers concerning the matter.” Because review of NAC’s liability insurance policies to determine their potential applicability to the judgment in the underlying action fell outside the scope of HSE’s engagement, the court properly granted HSE’s motion with respect to the professional negligence/legal malpractice cause of action against HSE insofar as asserted by NAC (see Turner v Irving Finkelstein & Meirowitz, LLP, 61 AD3d 849, 850 [2d Dept 2009]).”

Privity of Contract is a doctrine which applies to legal malpractice representations even while it withers as a general principle in product liability cases and elsewhere.  Loss of standing in Bankruptcy often comes up as well.  In National Air Cargo, Inc. v Jenner & Block, LLP
2022 NY Slip Op 01900 Appellate Division, Fourth Department, both come up.

“In appeal No. 3, we conclude that the court properly dismissed the professional negligence/legal malpractice cause of action against JB, insofar as asserted by NAC, on the ground of judicial estoppel. The “doctrine of judicial estoppel may bar a party from pursuing claims which were not listed in a previous bankruptcy proceeding” (Moran Enters., Inc. v Hurst, 160 AD3d 638, 640 [2d Dept 2018], lv denied 32 NY3d 908 [2018], rearg denied 32 NY3d 1195 [2019]; see Popadyn v Clark Constr. & Prop. Maintenance Servs., Inc., 49 AD3d 1335, 1336 [4th Dept 2008]). Here, at the time NAC filed for bankruptcy, it failed to list a potential legal malpractice claim against JB as an asset and obtained a bankruptcy discharge. We conclude that “[t]he failure of . . . [NAC] to disclose a cause of action as an asset in a prior bankruptcy proceeding, the existence of which [NAC] knew or should have known existed at the time, deprive[s] [NAC] of the legal capacity to sue subsequently on that cause of action” (Green v Associated Med. Professionals of NY, PLLC, 111 AD3d 1430, 1432 [4th Dept 2013] [internal quotation marks omitted]). Contrary to the court’s determination, however, JB failed to establish that the doctrine of judicial estoppel applies with respect to NACH or Alf, because JB failed to establish as a matter of law that NACH or Alf, as non-debtors, were in privity with NAC (see In re Avaya Inc., 573 BR 93, 103-104 [SD NY 2017]).

Nonetheless, with respect to appeal No. 3, we conclude that JB is entitled to dismissal of the professional negligence/legal malpractice cause of action against it, insofar as asserted by NACH and Alf, for failure to state a cause of action (see CPLR 3211 [a] [7]). Plaintiffs’ complaint does not allege the existence of an attorney-client relationship between JB and NACH or Alf (see Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d 812, 813 [2d Dept 2013]) and, instead, alleges only that JB gave negligent advice to NAC. While NACH and Alf submitted an affidavit of Alf attempting to remedy that deficiency, the affidavit does not specifically address JB’s representation of NACH or Alf in the matter giving rise to this lawsuit (cf. Leon v Martinez, 84 NY2d 83, 87-88 [1994]). In light of our determination, we do not reach the issue whether JB provided documentary evidence that ” ‘utterly refute[d] [NACH’s and Alf’s] factual allegations, conclusively establishing a defense as a matter of law’ ” (Matter of Mixon v Wickett, 196 AD3d 1094, 1095 [4th Dept 2021], quoting Goshen, 98 NY2d at 326).”

Legal malpractice cases are dismissed at a statistically higher rate in legal malpractice cases than in other tort or contract cases.  We believe that the reason is institutional.  Subconsciously, attorney-judges give greater scrutiny to legal malpractice claims than they do to other claims, and because of this, attorneys are granted a higher bar to suit.

In Menkes v Solomon & Cramer LLP  2022 NY Slip Op 01740 Decided on March 15, 2022 Appellate Division, First Department resolved an attorney v. attorney legal malpractice case against Plaintiff.  “Plaintiff’s legal malpractice claim was correctly dismissed in accordance with CPLR 3211(a)(7) for failure to state a cause of action. Even accepting plaintiff’s allegations as true, the complaint contains only conclusory allegations that any negligence by defendants in not raising an affirmative claim for interest in a fee dispute between plaintiff and two attorneys was the “but for” cause of plaintiff’s alleged damages (AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]; Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 50 [2015]). Plaintiff’s contention that the motion court in the fee dispute would have awarded her predecision interest pursuant to CPLR 5001 is at best speculative (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442, 443 [2007]; see also Manufacturer’s & Traders Trust Co. v Reliance Ins. Co., 8 NY3d 583, 589-590 [2007]).

Nor does the fact that defendants signed a stipulation on plaintiff’s behalf, releasing the holder of the escrow account from liability, constitute malpractice. Plaintiff, an experienced personal injury attorney, executed an affirmation in which she agreed to most of the terms proffered by the escrow counsel, one of which released him from any liability once the amounts in the account were distributed. As a result, defendants’ execution of a stipulation containing largely the same language was consistent with plaintiff’s express representations and not the “but for” cause of any alleged loss. “

Generally speaking, a parent has little ability to sue a court appointed attorney for the children for two reasons.  First, there is a lack of privity and second, court permission is often required before a court appointed attorney is subject to legal malpractice lawsuit.

Swerdloff v Swerdloff  2022 NY Slip Op 01279 Decided on March 01, 2022
Appellate Division, First Department is an opaque decision which seems to set the bar on whether a parent is permitted to sue at whether the Court specifically prohibits the suit.

“Order, Supreme Court, New York County (Michael L. Katz, J.), entered December 7, 2020, which to the extent appealed from as limited by the briefs, granted the cross motion of the attorney for the children, Dawn M. Cardi, Esq. (the AFC), for an order directing defendant mother to pay her pro rata share of the AFC’s outstanding invoices by December 28, 2020, unanimously affirmed, with costs.

The court properly directed both parties to pay their pro rata shares of any outstanding invoices to the attorney representing the children in these divorce proceedings (see Matter of Donna Marie C. v Kuni C., 134 AD3d 430, 431-432 [1st Dept 2015]). Further, the order did not expressly or otherwise prohibit the mother from challenging the amount of the AFC’s invoiced fees or asserting a defense of legal malpractice, and therefore was not improper on the basis that it deprived the mother of those rights (see generally Venecia V. v August V., 113 AD3d 122 [1st Dept 2013]).”

Switching it all around, in Blank v Petrosyants  2022 NY Slip Op 01283
Decided on March 2, 2022 , the Appellate Division, Second Department reinstated the legal malpractice claims and dismissed the Breach of Contract claims, aligning the case structure to what is most often left after a CPLR 3211 motion:  a good legal malpractice claim and a dismissed breach of contract claim.

Not much guidance is given to explain why the legal malpractice claim, but not a Judiciary Law 487 claim survives.

“The plaintiffs, Emil Blank, Vadim Shubaderov, and Oleg Egorov, allege that beginning in late 2013, at the behest of the defendants Zhan Petrosyants and Robert Petrosyants, they invested monies in a catering venture, but the monies were improperly diverted to other sources in which the plaintiffs had no interest. The plaintiffs commenced this action against, among others, the defendants Akiva Ofshtein, Akiva Ofshtein, P.C., and Ofshtein Law Firm, P.C. (hereinafter collectively the Ofshtein defendants), inter alia, to recover damages for breach of contract and legal malpractice. The Ofshtein defendants moved jointly with the defendants Prime Four, Inc., 242 Wood Food, Inc., and Prime Six, Inc. (hereinafter collectively the moving defendants), pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against them. In an order dated December 19, 2019, the Supreme Court, inter alia, granted that branch of the motion which was to dismiss the legal malpractice cause of action and denied that branch of the motion which was to dismiss the breach of contract cause of action insofar as asserted against Ofshtein by Shubaderov and Egorov. The plaintiffs appeal, and the Ofshtein defendants cross-appeal.

“A motion pursuant to CPLR 3211(a)(1) to dismiss the complaint on the ground that the action is barred by documentary evidence may be granted only where the documentary evidence utterly refutes the plaintiff’s factual allegations, thereby conclusively establishing a defense as a matter of law” (Mawere v Landau, 130 AD3d 986, 987 [internal quotation marks omitted]; see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326; Hall v Hobbick, 192 AD3d 776, 777). In considering a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), “the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory” (Mawere v Landau, 130 AD3d at 988 [internal quotation marks omitted]; see Hall v Hobbick, 192 AD3d at 777-778).

Here, the Supreme Court erred in granting that branch of the moving defendants’ motion which was to dismiss the legal malpractice cause of action insofar as asserted by Shubaderov and Egorov. Granting all favorable inferences to the plaintiffs, the allegations in the complaint are sufficient to plead the existence of an attorney-client relationship between the Ofshtein defendants and Shubaderov and Egorov, and that the Ofshtein defendants committed legal malpractice and breached their fiduciary duties to those plaintiffs (see Mawere v Landau, 130 AD3d at 990; Sitar v Sitar, 50 AD3d 667, 669-670). However, to the extent Shubaderov and Egorov seek an award of treble damages in the context of the legal malpractice cause of action, it fails to state a cause of action pursuant to Judiciary Law § 487 (see Pszeniczny v Horn, 193 AD3d 1091; Gorbatov v Tsirelman, 155 AD3d 836, 840). Accordingly, the court should have granted that branch of the motion which was to dismiss the legal malpractice cause of action insofar as asserted by Shubaderov and Egorov only to the extent of directing dismissal of so much of that cause of action insofar as asserted by those plaintiffs as sought to recover treble damages pursuant to Judiciary Law § 487 and otherwise should have denied that branch of the motion.

Moreover, the Supreme Court should have granted that branch of the moving defendants’ motion which was to dismiss the breach of contract cause of action insofar as asserted against Ofshtein by Egorov. The essential elements of a breach of contract cause of action are “the existence of a contract, the plaintiff’s performance under the contract, the defendant’s breach of that contract, and resulting damages” (Liberty Equity Restoration Corp. v Maeng-Soon Yun, 160 AD3d 623, 626 [internal quotation marks omitted]; see Stewart v Berger, 192 AD3d 940, 941). Here, Egorov was not a party to or intended beneficiary of the escrow agreement that the plaintiffs allege Ofshtein breached, and thus, Egorov cannot recover for an alleged breach of this agreement.”

 

Ripa v Petrosyants  2022 NY Slip Op 01336 Decided on March 2, 2022
Appellate Division, Second Department can be difficult to follow  The AD decision basically reverses Supreme Court on almost all of its findings, and yet leaves a case more or less intact.  There are two lessons to be taken from this decision.

The first is: “Here, the Supreme Court erred in granting dismissal of the legal malpractice cause of action based upon the plaintiff’s failure to produce evidence of an attorney-client relationship. An attorney-client relationship does not depend on the existence of a formal retainer agreement (see Hall v Hobbick, 192 AD3d at 778), and the plaintiff had no obligation to demonstrate evidentiary facts to support the allegations contained in the complaint (see Doe v Ascend Charter Schs., 181 AD3d 648, 650; Stuart Realty Co. v Rye Country Store, 296 AD2d 455, 456). Furthermore, the complaint sufficiently alleges the existence of an attorney-client relationship between the plaintiff and the Ofshtein defendants (see McLenithan v McLenithan, 273 AD2d 757, 759-760), as well as the other elements of legal malpractice, including damages, to support a legal malpractice cause of action (see Mawere v Landau, 130 AD3d at 990; Sitar v Sitar, 50 AD3d 667, 669-670). However, to the extent the plaintiff seeks an award of treble damages in the context of the legal malpractice cause of action, it fails to state a cause of action pursuant to Judiciary Law § 487 (see Pszeniczny v Horn, 193 AD3d 1091; Gorbatov v Tsirelman, 155 AD3d 836, 840). Accordingly, the court should have granted that branch of the Ofshtein defendants’ motion which was to dismiss the legal malpractice cause of action only to the extent of directing dismissal of so much of that cause of action as sought to recover treble damages pursuant to Judiciary Law § 487 and otherwise should have denied that branch of the motion.”

The second is: “The Supreme Court properly denied that branch of the Ofshtein defendants’ motion which was to dismiss the breach of contract cause of action insofar as asserted against Ofshtein. Contrary to the Ofshtein defendants’ contention, the plaintiff did not have a burden to provide extrinsic evidence to support his allegations regarding an alleged oral contract or its terms (see Doe v Ascend Charter Schs., 181 AD3d at 650; Stuart Realty Co. v Rye Country Store, 296 AD2d at 456). Further, to the extent certain checks may constitute documentary evidence (see Big Blue Prods., Inc. [*3]v Arlia, 187 AD3d 1118, 1119), they did not utterly refute the plaintiff’s factual allegations. Payments to a third party can be used to show performance in a breach of contract action (see Shah v Exxis, Inc., 138 AD3d 970, 972-973).”