Judiciary Law § 487 cases are unique, even odd.  Izmirligil v Steven J. Baum, P.C.  J2020 NY Slip Op 01052 Decided on February 13, 2020 Appellate Division, Second Department is even more so.  Here, plaintiff borrowed $ 1.1M to buy a house.  The mortgage was passed between banks.  Plaintiff defaulted on the foreclosure case.  Now, he sues the banks, the paper prep guys and the attorneys on the theory that the assignment was forged.  The bank and the papers prep guys get out.  The attorneys, no.

“With regard to the first cause of action, Izmirligil failed to state a cause of action under Real Property Law § 329 against the BNYM defendants and Chase (see CPLR 3211[a][7]; Leon v Martinez, 84 NY2d 83, 87-88). 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 the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d at 87). However, “allegations consisting of bare legal conclusions as well as factual claims flatly contradicted by documentary evidence are not entitled to any such consideration” (Maas v Cornell Univ., 94 NY2d 87, 91 [internal quotation marks omitted]; see Myers v Schneiderman, 30 NY3d 1, 11). Bank of New York Mellon was not a party to the assignment, and thus, Izmirligil failed to state a cause of action pursuant to Real Property Law § 329 against it. Further, under the circumstances presented, Izmirligil’s conclusory allegations that the assignment was forged and fabricated were insufficient to state a cause of action under Real Property Law § 329 against BNYM as trustee and Chase (see generally Moffett v Gerardi, 75 AD3d 496, 498; Son Fong Lum v Antonelli, 102 AD2d 258, 260-261, affd 64 NY2d 1158).

Similarly, we agree with the Supreme Court’s determination to grant that branch of the motion of the BNYM defendants which was pursuant to CPLR 3211(a)(7) to dismiss the second cause of action against BNYM as trustee (see Wood v Villanueva, 175 AD3d 1465; Zuniga v BAC Home Loans Servicing, L.P., 147 AD3d 882; Acocella v Wells Fargo Bank, N.A., 139 AD3d 647, 649; Jahan v U.S.Bank N.A., 127 AD3d 926, 927).

Further, contrary to Izmirligil’s contention, the Supreme Court did not err in granting those branches of the separate motions which were to dismiss the RICO cause of action insofar as asserted against each of the moving defendants as time-barred. “The statute of limitations for civil RICO claims is four years” and “is deemed to have accrued when the plaintiff knew or should have known of his or her injury, regardless of when he or she discovered the underlying fraud'” (House of Spices [India], Inc. v SMJ Servs., Inc., 103 AD3d 848, 849-850, quoting Dempster v Liotti, 86 AD3d 169, 178; see Mitchell v Diji, 134 AD3d 779, 781). This cause of action accrued on November 30, 2009, when the foreclosure action was commenced. Accordingly, as Izmirligil did not commence the instant action until 2015, the RICO cause of action was time-barred (see Dempster v Liotti, 86 AD3d at 179).

However, we disagree with the Supreme Court’s determination with regard to the third, fourth, fifth, and sixth causes of action, alleging violations of Judiciary Law § 487 by the Baum defendants. Under Judiciary Law § 487, 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. “[V]iolation of Judiciary Law § 487 requires an intent to deceive, whereas a legal malpractice claim is based on negligent conduct” (Moormann v Perini & Hoerger, 65 AD3d 1106, 1108 [citation omitted]). Here, Izmirligil alleged that the Baum defendants violated Judiciary Law § 487 by, inter alia, colluding with others to forge an assignment and file a foreclosure action using a complaint containing false allegations to deceive the court and others. The evidentiary submissions of the Baum defendants did not show that the material facts claimed by Izmirligil to be facts were not facts at all and that no significant dispute exists regarding them (see Guggenheimer v Ginzburg, 43 NY2d 268, 275). Accordingly, the court should have denied that branch of the Baum defendants’ motion which was pursuant to CPLR 3211(a)(7) to dismiss the causes of action alleging violations of Judiciary Law § 487 by them.”

Oleg Cassini was wildly successful as a fashion designer.  When he divorced, back in the 1950’s he agreed that his estate would (50%) go to his two daughters.  Fast forward to the 21st century.  As you might guess, the daughters were disinherited.  As you might further guess, this led to litigation.  It led to legal malpractice litigation, but only as the tail to the dog.  Matter of Cassini  2020 NY Slip Op 01056 Decided on February 13, 2020 Appellate Division, Second Department Scheinkman, P.J., J. and two other simultaneous decisions were reported just before Valentine’s day.

Well beyond the space limits of this blog, the history of the fight between second wife and two daughters of the first marriage, the Oleg Cassini estate, consisting of  clothing, perfumes and other products was worth upwards of $ 50 million.  The daughters both died during the litigation and the Nassau County Public Administrator has been prosecuting the case for many years.

At issue here was how CPLR 321 is applied when an attorney simultaneously seeks to be relieved and tells the court that he is too ill to continue.  The stays, adjournments and process are fully discussed by Presiding Judge Scheinkman.

“The decedent was survived by his wife, Marianne Nestor Cassini (hereinafter Marianne), and his two daughters from a previous marriage, Christina Cassini (hereinafter Christina) and Daria Cassini (hereinafter Daria). The decedent’s last will and testament was admitted to probate in August 2007, and, pursuant to its terms, Marianne was appointed executor of the decedent’s estate. Christina subsequently petitioned to remove Marianne as executor and, in 2014, pursuant to a stipulation entered into between the parties, Marianne resigned as executor and the Public Administrator of Nassau County (hereinafter the Public Administrator) was appointed to administer the decedent’s estate.

During the course of this litigation, Marianne was represented by J. Vincent Reppert, of the law firm of Reppert Kelly, LLC (hereinafter RK), as well as by Charles H. Kaplan, of the law firm of Sills Cummis & Gross P.C. (Sills Cummis), in three proceedings. The three proceedings consisted of: (1) a proceeding to judicially settle the intermediate account of the estate (hereinafter the Accounting Proceeding); (2) a proceeding for the turnover of certain assets allegedly belonging [*2]to the estate (hereinafter the Turnover Proceeding); and (3) a proceeding to settle the account of a supplemental needs trust established for the benefit of Daria (hereinafter the SNT Proceeding).

In July 2015, Reppert notified the Surrogate’s Court that he had a “medical condition” that required surgery and requested an adjournment of the trial in the Accounting Proceeding, which was scheduled to commence in August 2015. The court granted the request, largely, but not entirely, because of Reppert’s health condition. A subsidiary reason for the adjournment was the need for the court to determine certain motions, which were not decided until October 9, 2015.

In December 2015, RK and Sills Cummis each filed separate motions for leave to withdraw as counsel of record for Marianne in each of the three pending proceedings. In a supporting affirmation, Reppert advised the court that “Marianne specifically requested [him] to work on this action based on a pre-existing work relationship” and that “[f]or medical reasons, [he has] not been able to fully return to the practice of law full-time since July of 2015.” Reppert stated that both he and his partner, Christopher Kelly, advised Marianne that RK “would have to move to withdraw as counsel” and that RK “will provide all records in [its] possession and will attempt to assist as much as reasonably possible with any transition.” The motions, which were returnable on January 13, 2016, were unopposed.

By two orders dated February 16, 2016, the Surrogate’s Court granted RK’s motions for leave to withdraw as counsel for Marianne in the Turnover Proceeding and the SNT Proceeding, respectively, finding that Reppert was “unable to continue to represent [Marianne] due to health reasons.” According to Kelly of RK, RK did not receive copies of those orders until March 14, 2016. The court also granted Sills Cummis’s motions for leave to withdraw as counsel in all three proceedings. After several inquiries by Kelly as to the status of his firm’s motion for leave to withdraw from the Accounting Proceeding, court personnel, on May 23, 2016, transmitted to RK a copy of an order dated March 14, 2016, granting its motion for leave to withdraw as counsel for Marianne in the Accounting Proceeding. This order contained a finding by the court that Reppert was unable to continue to represent Marianne due to health reasons. It also contained a provision staying all proceedings in the Accounting Proceeding for a period of 30 days from its date.

A court conference was held on June 8, 2016, at which Marianne appeared with an attorney, Robert McKay. The proceedings on June 8, 2016, were not transcribed. However, according to an order dated June 9, 2016, issued by the Surrogate’s Court for the purpose of memorializing the conference, the court directed that the trial of the Accounting Proceeding would commence on July 25, 2016, that the trial dates could not be adjourned without court approval, and that “[t]he trial shall proceed whether the parties are represented by counsel or not.” While not mentioned in the June 9, 2016, order, it is undisputed that McKay decided against undertaking Marianne’s representation and declined to file a notice of appearance.”

RIVERHEAD, NY    The question of whether the attorneys departed from good practice, allowing Plaintiff to be jailed for contempt in not paying child and spousal support was determined in the summary judgment decision in Rivera v Kerr  2019 NY Slip Op 33047(U) October 11, 2019
Supreme Court, Suffolk County Docket Number: 17736/2015 Judge: Sanford Neil Berland.

” The current action alleges legal malpractice in connection with, among other things. the handling of a prior action concerning and a contempt proceeding arising from the Settlement Agreement and Amendment to Separation Agreement (individually, the “‘Settlement Agreement”
and the ··Amendment”; together. the ‘”Amended Settlement  Agreement”) and the Judgment of Divorce that resolved the matrimonial action between plaintiff and his Conner wife . Plaintiff alleges that he retained the defendants to bring and prosecute a plenary action challenging the Amended Settlement Agreement as defective and unenforceable and to defend him in the contempt proceedings that were brought against him for allegedly violating the Amended Settlement Agreement. The result of those contempt proceedings, which were conducted in Family Court. was that plaintiff was found to have \\illfully failed to pay court-ordered child support and maintenance to his ex-wife and was sentenced to serve six months of incarceration. and plaintiff now claims that the defendants committed legal malpractice by failing to challenge the validity of the Amended Settlement Agreement. For their part. defendants maintain that the Amended Settlement Agreement was not defective; that even if it was. plaintiff, as a matter of law. could not have been saved from being held in contempt: and that the complaint is otherwise without merit.”

“The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case. Before summary judgment may be granted, it must clearly
appear that no material and triable issue of fact is presented (Sillman v Twentieth Century-Fox Film Corp .. 3 NY2d 395, 165 NYS2d 498 [ 1957]). The movant has the initial burden of proving entitlement to summary judgment (Winegrad v New York Univ. Med. Ctr .. 64 NY2d 851, 487
NYS2d 316 [ 1985]). Failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (Winegrad v New York Univ. Med. Ctr .. supra). Once such proof has been offered, the burden then shifts to the opposing party. who, in order to defeat the motion for sununary judgment, must proffer evidence in admissible form … and must ‘·show fac ts sufficient to require a trial of any issue of facf’ (CPLR 3212 [b ]; see Zuckerman v City of New York, 49 NY2d 557, 427 NYS2d 595 [1980]). As the court’s function on such a motion is to determine whether issues of fact exist. not to resolve issues of fact or to determine matters of credibility. the facts alleged by the opposing party and all inferences that may be drawn from them are to be accepted as true (See Rot/I v Barreto, 289 AD2d 557. 735 NYS2d 197 [2d Dept 2001 ]: O’Neill v Fishkill, 134 AD2d 487. 521 NYS2d 272 [2d Dept 1987]).”

In the high-stakes corporate world, the money can get quite large and a large number of big-law firms can get involved.  What happens when operating agreements between highly sophisticated parties, each of which are represented by law firms alter the landscape.  Which law firms represented which parties, how did that change and is there privity are the questions raised and answered in Binn v Muchnick, Golieb & Golieb, P.C. 2019 NY Slip Op 30568(U)  March 5, 2019 Supreme Court, New York County Docket Number: 158105/2017.

Judge O. Peter Sherwood marshals the evidence and discusses a wide swath of causes of action, their elements and how the representation swirled and changed over time.  What seems most relevant in this recitation is how the new operating agreement released all from prior claims.  The details of this case are too fulsome to edit for a blog.  It is highly worthwhile reading the entire case.

Damage from legal malpractice can arise years after the event, and sometimes it is just too bad for plaintiff as we see in Sclafani v Kahn
2019 NY Slip Op 01115 [169 AD3d 846] February 13, 2019 Appellate Division, Second Department where a problem at closing did not manifest itself immediately.

“In January 2015, the plaintiffs commenced this action, inter alia, to recover damages for legal malpractice allegedly committed by the defendants at the closing of a loan on June 24, 2009. The defendants represented the plaintiffs at the closing, and the plaintiffs alleged that, as part of that transaction, the defendants were supposed to, but did not, negotiate security from the borrower for the loan by obtaining a mortgage against certain real property located in Orangeburg.

The defendants Paul B. Kahn and Kahn & Licker, LLP, moved, and the defendant Diversified Land Services, Ltd., separately moved, pursuant to CPLR 3211 (a) to dismiss the complaint insofar as asserted against each of them. The defendants argued, inter alia, that the complaint was barred by the applicable statute of limitations. In opposition, the plaintiffs argued that the continuous representation doctrine applied to toll the applicable statute of limitations. The Supreme Court granted the defendants’ respective motions, and the plaintiffs appeal.

“ ’On a motion to dismiss a cause of action pursuant to CPLR 3211 (a) (5) as barred by the applicable statute of limitations, a defendant must establish, prima facie, that the time within which to sue has expired. Once that showing has been made, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations has been tolled, an exception to the limitations period is applicable, or the plaintiff actually commenced the action within the applicable limitations period’ ” (Quinn v McCabe, Collins, McGeough & Fowler, LLP, 138 AD3d 1085, 1085-1086 [2016], quoting Tsafatinos v Law Off. of Sanford F. Young, P.C., 121 AD3d 969, 969 [2014]; see Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d 733, 734-735 [2015]; Landow v Snow Becker Krauss, P.C., 111 AD3d 795, 796 [2013]). An action to recover damages for legal malpractice must be commenced within three years of accrual, “regardless of whether the underlying theory is based in contract or tort” (CPLR 214 [6]; see McCoy v Feinman, 99 NY2d 295, 301 [2002]; Chase Scientific Research v NIA Group, 96 NY2d 20 [2001]; Quinn v McCabe, Collins, McGeough & Fowler, LLP, 138 AD3d at 1086; Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 735; Farage v Ehrenberg, 124 AD3d 159, 163 [2014]; Landow v Snow Becker Krauss, P.C., 111 AD3d at 796). “A cause of action to recover damages for legal malpractice accrues when the malpractice is committed, not when it is discovered” (Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 735; see McCoy v Feinman, 99 NY2d at 301; Quinn v McCabe, Collins, McGeough & Fowler, LLP, 138 AD3d at 1086; Farage v Ehrenberg, 124 AD3d at 164; Landow v Snow Becker Krauss, P.C., 111 AD3d at 796).

However, “[t]he continuous representation doctrine serves to toll the statute of limitations and render timely an otherwise time-barred cause of action for legal malpractice, but ‘only where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim’ ” (King Tower Realty Corp. v G & G Funding Corp., 163 AD3d 541, 543 [2018], quoting McCoy v Feinman, 99 NY2d at 306; see Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 735). For the doctrine to apply, “there must be clear indicia of ‘an ongoing, continuous, developing, and dependent relationship between the client and the attorney’ ” (Farage v Ehrenberg, 124 AD3d at 164, quoting Aseel v Jonathan E. Kroll & Assoc., PLLC, 106 AD3d 1037, 1038 [2013]; see Quinn v McCabe, Collins, McGeough & Fowler, LLP, 138 AD3d at 1086).

Here, the defendants established that the plaintiffs’ legal malpractice cause of action was time-barred, as it accrued on June 24, 2009, at the conclusion of the closing (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]). In opposition to the defendants’ respective motions, the plaintiffs failed to raise a question of fact as to whether the continuous representation doctrine tolled the applicable statute of limitations. Indeed, the communications between the parties upon which the plaintiffs rely, which occurred after the statute of limitations had run, demonstrated that the attorney-client relationship in this matter had ceased at the conclusion of the closing, and was not continued.”

Dominguez v Mirman, Markovits & Landau, P.C.  2020 NY Slip Op 00845
Decided on February 5, 2020 Appellate Division, Second Department is not entirely clear on how the underlying case ended.  Plaintiff pro-se might have settled the case and then discontinued, or he might have discontinued in mere pique.  However, neither situation implicates the defendants here.

“The plaintiff was injured in a construction accident on October 3, 2007, when the bucket of an excavator machine struck his leg. The plaintiff hired the defendants as his attorneys and commenced an action to recover damages for personal injuries, alleging common-law negligence and violations of Labor Law §§ 200, 240(1), and 241(6).

The property owner moved for summary judgment dismissing the complaint insofar as asserted against him, and the plaintiff cross-moved for summary judgment on the issue of liability on the Labor Law §§ 240(1) and 241(6) causes of action. In an order dated May 6, 2011, the Supreme Court granted those branches of the owner’s motion which were for summary judgment dismissing the Labor Law §§ 240(1) and 241(6) causes of action insofar as asserted against him, denied those branches of the owner’s motion which were for summary judgment dismissing the common-law negligence and Labor Law § 200 causes of action insofar as asserted against him, and denied the plaintiff’s cross motion.

Thereafter, in November 2011, the defendants moved in the personal injury action to be relieved as counsel for the plaintiff. The Supreme Court granted that motion in an order dated January 5, 2012, and in February 2012, the plaintiff, acting pro se, discontinued the personal injury action.

On April 17, 2013, the plaintiff commenced this action against the defendants to recover damages for legal malpractice. The defendants moved for summary judgment dismissing the complaint, arguing that the plaintiff could not demonstrate that “he would have obtained a more favorable outcome but for’ [the defendants’] alleged negligence.” In an order dated April 27, 2017, the Supreme Court granted the defendants’ motion. The plaintiff appeals.

“In moving for summary judgment dismissing a complaint alleging legal malpractice, a defendant must present evidence establishing, prima facie, that it did not breach the duty to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, or that the plaintiff did not sustain actual and ascertainable damages as a result of such deviation” (Mazzurco v Gordon, 173 AD3d 1003, 1003; see Panos v Eisen, 160 AD3d 759). Here, the defendants met that burden.”

In the legal malpractice setting, continuous representation is well understood.  In the medical setting, continuous treatment is well understood.  The rationale is that it is better for a client/patient to stay with the professional and try to fix the mistakes/problems rather than litigate.  So it is with professionals such as architects.

Jeffrey Berman Architect v Kodsi  2019 NY Slip Op 01398 [169 AD3d 1019]
February 27, 2019 Appellate Division, Second Department is a good example.

“This breach of contract action arises from an architectural contract in which the plaintiff agreed to provide architectural services for the construction of an ambulatory surgery center in Brooklyn. The defendant Robert Kodsi (hereinafter the defendant) asserted two counterclaims against the plaintiff. The first counterclaim alleged professional malpractice based, inter alia, on the failure of the constructed ambulatory surgery center to obtain accreditation from the Accreditation Association for Ambulatory Health Care because the center did not comply with applicable design and construction standards. The plaintiff moved for summary judgment dismissing the defendant’s first counterclaim, arguing that it fell outside of the one-year statute of limitations provided for in the contract. The Supreme Court denied the motion, finding that a triable issue of fact existed as to whether the continuous representation doctrine tolled the statute of limitations based on work the plaintiff had done within the limitations period in an attempt to remedy the accreditation problem. The plaintiff appeals.

In opposition to the plaintiff’s prima facie showing that the defendant’s counterclaim alleging professional malpractice was commenced outside of the applicable one-year statute of limitations, the defendant raised a triable issue of fact as to whether the continuous representation doctrine applied to toll the running of the limitations period. “The law recognizes that the supposed completion of the contemplated work does not preclude application of the continuous representation toll if inadequacies or other problems with the contemplated work timely manifest themselves after that date and the parties continue the professional relationship to remedy those problems” (Regency Club at Wallkill, LLC v Appel Design Group, P.A., 112 AD3d 603, 607 [2013]). Under the circumstances, the evidence of continuing communications between the parties and evidence of the plaintiff’s efforts to remedy the alleged errors or deficiencies in the architectural plans supported the denial of the plaintiff’s motion for summary judgment dismissing the defendant’s counterclaim alleging professional malpractice (see Bronstein v Omega Constr. Group, Inc., 138 AD3d 906, 908 [2016]; Regency Club at Wallkill, LLC v Appel Design Group, P.A., 112 AD3d at 607).”

It is not a big surprise that Ortiz v Joel J. Turney, LLC  2019 NY Slip Op 03917 [172 AD3d 553] May 21, 2019 Appellate Division, First Department is defended pro-se.  It is surprising that this case went to an appeal.  Here is the short and sweet decision:

“Defendants’ letter to plaintiff, in which they admit that plaintiff’s underlying property damage action was not timely commenced and state that they will “willingly compensate [him] for all actual damages subject to proof and interest since the time of the loss,” constitutes an admission of defendants’ negligence and that it was the proximate cause of plaintiff’s loss (see Marchi Jaffe Cohen Crystal Rosner & Katz v All-Star Video Corp., 107 AD2d 597 [1st Dept 1985]; see generally Leder v Spiegel, 31 AD3d 266, 267-268 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008]). Contrary to defendants’ contentions, the language of the letter cannot be interpreted in any other manner.”

Leak v RBI Assoc., Ltd  2020 NY Slip Op 50072(U) Decided on January 14, 2020 Supreme Court, Kings County Fisher, J. is the story of cupidity, stupidity and criminality.  The attorneys, however, are not held liable.

“In this action plaintiff Ernest Leak alleges causes of action primarily premised on negligence arising out of defendants’ actions regarding a loan fraudulently obtained by nonparty Salvatore Lauria in plaintiff’s name. According to plaintiff’s deposition testimony and the amended verified complaint, plaintiff, who was the owner of neighboring houses located at 212 and 214 Skillman Street in Brooklyn, contacted defendant Consumer Management Services, Inc., (Consumer) in the fall of 2010 about obtaining a reverse mortgage, but, upon learning how a reverse mortgage worked, decided he did not wish to obtain such a mortgage. Plaintiff alleged that, based on information obtained from Consumer, Lauria, who worked as a cold caller in an office operated by defendant RBI Associates, LTD, (RBI),[FN1] a mortgage broker, appeared at plaintiff’s property and tried to interest plaintiff in obtaining a reverse mortgage. Plaintiff, however, declined to proceed with a reverse mortgage, but, after meeting Lauria several times, expressed an interest in refinancing the mortgage encumbering 212 Skillman Street. Believing that Lauria would assist him in such a refinancing, plaintiff gave Lauria his driver’s license and Social Security card.

Rather than applying for a loan refinancing the mortgage on 212 Skillman Street, Lauria, through RBI, proceeded to use plaintiff’s information to apply for a reverse mortgage loan from nonparty Live Well Financial, Inc., (Live Well) that would encumber 214 Skillman Street. Plaintiff specifically denied giving Lauria permission to apply for a reverse mortgage loan, and added that he had no interest in obtaining any loan with respect to 214 Skillman Street, which had no encumbrances on it other than liens relating to unpaid taxes and unpaid parking tickets. Live Well ultimately approved the reverse mortgage loan, and defendant Rhodora Pacis, who processed loans for RBI, and who handled the processing of the reverse mortgage loan at issue with Live Well, arranged for Grover & Fensterstock to act as Live Well’s attorney and settlement agent for the loan closing.

The closing was scheduled for January 24, 2011, at RBI’s offices, but was set at a time David Fensterstock, one of Grover & Fensterstock’s partners, could not be present. Fensterstock, who asserted that he did not always attend closings for reverse mortgages because no funds are to be disbursed at closings for such loans, arranged for Rhodora Pacis, who was a notary, to witness the signatures at the closing. Plaintiff denied being present at the closing, but someone appeared at the closing with Lauria, and presented an original driver’s license and an original Social Security card in plaintiff’s name to Pacis and signed the reverse mortgage and note using plaintiff’s name.[FN2] Based on the testimony of plaintiff, Pacis, and Fensterstock, Fensterstock had no actual contact with plaintiff, whether by telephone or personal contact. Although Pacis, at her deposition, was never specifically asked if she knew about Lauria’s scheme, the entire tenor of Pacis’ testimony makes clear that she did not know about Lauria’s scheme, and was unaware that the person purporting to be Ernest Leak, with whom she spoke with by telephone during the loan application process and at the closing, was not the plaintiff.

Among other things, the loan closing instructions provided to Fensterstock by Live Well required that “[s]ettlement proceeds may not be wired to the borrower if the borrower’s bank account includes the name of any individuals who are not borrowers. In these situations, the proceeds must be mailed in the form of a check.” In his deposition testimony, Fensterstock asserted that, at or around the time of the closing, Pacis or another RBI employee provided him with a void check from Amalgamated in the name of “No Leak Plumbing.” Given the closing instructions, Fensterstock informed Pacis or another RBI employee, that the borrower was required to provide a void check that was solely in his name. Fensterstock thereafter received an Amalgamated check from Pacis, or the other RBI employee, that had no account name on it along with a letter purportedly signed by Ralph Scherillo, an Amalgamated assistant vice-president, indicating that Ernest Leak had a personal account with Amalgamated and was an [*2]authorized signatory on the account. Upon receiving this check and letter, Fensterstock asserted that he called Amalgamated and spoke with Ralph Scherillo, who told him that Ernest Leak was the sole signatory on the account. Based on these representations, Fensterstock, after paying the closing fees and costs paying off the liens relating to the parking tickets and unpaid taxes, wired the remainder of the loan proceeds into the account that purportedly belonged to Ernest Leak. Lauria, however, was also a signatory on the account, and he ended up transferring the loan proceeds out of the account for his own use.”

“With respect to the portion of Grover & Fensterstock’s motion addressed to the amended complaint, Grover & Fensterstock alleges that it did not owe a duty to plaintiff under the circumstances of this case. Grover & Fensterstock, which was acting as Live Well’s attorney, did not owe plaintiff a duty in that role, since, “[i]n New York, a third party, without privity, cannot maintain a claim against an attorney in professional negligence, ‘absent fraud, collusion, malicious acts or other special circumstances'” (Estate of Schneider v Finmann, 15 NY3d 306, 308-309 [2010], quoting Estate of Spivey v Pulley, 138 AD2d 563, 564 [2d Dept 1988]; Breen v Law Off. of Bruce A. Barket, P.C., 52 AD3d 635, 636 [2d Dept 2008]). As there is no evidence suggesting that Grover & Fensterstock was aware of or part of Lauria’s fraudulent scheme, none of the exceptions to the privity requirement are applicable here (see Mauro v Countrywide Home Loans, Inc., 116 AD3d 930, 933 [2d Dept 2014]; Chemical Bank v Bowers, 228 AD2d 407, 408 [2d Dept 1996]; see also Hinnant v Carrington Mtge. Servs., LLC, 172 AD3d 827, 829 [2d Dept 2019]). Moreover, in view of the general rule that a lender, absent a special relationship with a borrower, does not owe a duty to verify the identity of an imposter who obtains a loan in a plaintiff’s name (see Landino v Bank of Am., 52 AD3d 571, 574-575 [2d Dept 2008]; Beckford v Northeastern Mtge. Inv. Corp., 262 AD2d 436, 436 [2d Dept 1999]; Polzer v TRW, Inc., 256 AD2d 248, 248 [1st Dept 1998]; Banque Nationale de Paris v 1567 Broadway Ownership Assocs., 214 AD2d 359, 360 [1st Dept 1995]; see also Sullivan v MERS, Inc., 139 AD3d 419, 420 [1st Dept 2016]; Burger v Singh, 28 AD3d 695, 697-698 [2d Dept 2006]), there is no basis for imposing such a duty on Grover & Fensterstock based on its acting as Live Well’s attorney (Chemical Bank v Bowers, 228 AD2d at 408).

Grover & Fensterstock, however, also acted as the settlement agent for Live Well. With respect to the disbursement of loan proceeds placed in its hands, a settlement agent acts as an escrow agent (see Mauro, 116 AD3d at 933; Cash v Titan Fin. Servs., Inc., 58 AD3d 785, 789 [2d Dept 2009]). “An escrow agent . . . becomes a trustee of anyone with a beneficial interest in the trust with the duty not to deliver the escrow to anyone except upon strict compliance with the conditions imposed. Thus, an escrow agent can be held liable for . . . breach of fiduciary duty as escrowee” (Takayama v Schaefer, 240 AD2d 21, 25 [1998] [internal quotation marks and [*4]citations omitted]).[FN4] “

“Without any connection to plaintiff, Grover & Fensterstock had no special relationship with plaintiff that would impose a duty on it to exercise due care with respect to protecting plaintiff from an imposter. Indeed, it would be anomalous to find that Grover & Fensterstock owed such a duty in the face of the above noted case law finding that a lender itself owes no such duty under like circumstances (Iglesias, 206 Md App at 660, 51 A3d at 72; see Landino, 52 AD3d at 574-575; Beckford, 262 AD2d at 436; Polzer, 256 AD2d at 248; Banque Nationale de [*5]Paris, 214 AD2d at 360; see also Sullivan, 139 AD3d at 420; Burger, 28 AD3d at 697-698).[FN6] As Grover & Fensterstock has submitted evidentiary proof showing that it did not owe a duty to plaintiff arising out of plaintiff being the beneficiary of the funds being disbursed or owe a duty to plaintiff based on a special relationship, Grover & Fensterstock has demonstrated its prima facie entitlement to dismissal of any claim based on negligence or the violation of a fiduciary duty arising out of its role as settlement agent (see M.E.W.N., Inc., 78 AD2d at 637; Iglesias, 206 Md App at 659-660, 51 A3d at 71-72; see also Saul v Cahan, 153 AD3d 947, 949 [2d Dept 2017]; Palmetto Partners, L.P. v AJW Qualified Partners, LLC, 83 AD3d 804, 807 [2d Dept 2011])”

Aside from the normal, every-day problem of attorney fees in litigation and how they tend to stack up, in Quadracci v Klein  2019 NY Slip Op 33837(U) December 24, 2019 Supreme Court, New York County Docket Number: 650913/2016 Judge: Nancy M. Bannon there was a multiplication effect as attorney fees upon attorney fees had to be considered.

Starting off, this was a discovery dispute in which defendants were required to pay attorney fees to plaintiffs.  However, defendants’ attorneys had some other issues on their mind.

“In this action to recover a security deposit paid pursuant to a lease agreement, the court,by order dated December 11, 2017, struck the defendants’ answer and counterclaims due to their repeated failure to comply with court-ordered discovery, found the defendants in default,
awarded the plaintiffs judgment in the sum of $82,500.00, plus statutory interest, and referred the issue of the amount due to the plaintiffs for attorneys’ fees and costs to a referee to hear and report. The referee conducted a hearing on April 11, 2018, and thereafter issued a report on December 24, 2018. Based on the documents and presentations at the hearing, the referee recommended that the plaintiff be awarded $143,836.65 in attorneys’ fees, and $9,266.29 in disbursements. The plaintiffs now move to confirm the referee’s report, and the defendants cross-move to reject the referee’s report (MOT SEQ 008). Non-parties Green & Cohen, P.C. and Michael Cohen move pursuant to CPLR 1012 and 1013 to intervene for the purpose of objecting to the confirmation of the referee’s report, and pursuant to CPLR 4403 to reject the referee’s report (MOT SEQ 009). The non-parties’ motion is denied. The referee’s report is confirmed. ”

“Non-parties claim that because of an ongoing legal malpractice action between the defendants in this case and the non-parties, seeking to hold the non-parties liable for the damages and fees incurred in the instant action, they should be allowed to intervene. Nonparties do not dispute the outcome of the underlying action to recover the security deposit or seek to assert any claims or affirmative defenses of their own in the instant action, they only object to the reasonableness of the attorneys’ fees recommended in the referee’s report, as they may be found responsible for said fees depending upon the outcome of the malpractice litigation. Indeed, non-parties recognize in their motion to intervene that it is “perhaps more appropriate to view [their] motion as one to proceed as amicus curiae since [the non-parties] do not really assert any claims or defenses against any party, and vice versa.””

“Inasmuch as the non-parties do not have a claim or defense they wish to assert with a common question of law or fact in the main action (see CPLR 1013) and the defendants and the non-parties share an interest in persuading the court to reject the referee’s report (see CPLR 1012) intervention is not proper. Nor is amicus curiae relief proper. Such a motion would require a showing that: 1) the parties are not capable of a full and adequate presentation and that movants could remedy that deficiency; 2) that movants would invite the court’s attention to law
or arguments that might otherwise escape its consideration; or 3) that movants would otherwise be of special assistance to the court. See 22 NYCRR 500.23.”