In Bakcheva v Law Offs. of Stein & Assoc.  2019 NY Slip Op 00844  Decided on February 6, 2019  the Second Department gives an example of what must be demonstrated by plaintiff to avoid summary judgment on a claim of legal malpractice.

“In January 2012, the plaintiff purchased a penthouse apartment on the seventh floor of a condominium located at 390 Kings Highway in Brooklyn. The plaintiff was represented in that transaction by the defendants Law Offices of Stein & Associates (hereinafter the law firm) and Irene Stein (hereinafter together the defendants). A few months after the closing, the plaintiff became aware that the apartment’s second floor was not as described in the certificate of occupancy or the condominium’s plan documents. The plaintiff commenced this action against, among others, the defendants, to recover damages for legal malpractice and fraud. After discovery, the defendants moved for summary judgment dismissing the complaint insofar as asserted against them. The Supreme Court granted that branch of the defendants’ motion which was for summary judgment dismissing the fraud cause of action, but denied that branch of the defendants’ motion which was for summary judgment dismissing the legal malpractice cause of action. The defendants appeal from so much of the order as denied that branch of their motion.

A plaintiff seeking to recover damages for legal malpractice must prove that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and that the breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages (see McCoy v Feinman, 99 NY2d 295, 301-302; Biberaj v Acocella, 120 AD3d 1285, 1286). A defendant seeking summary judgment dismissing a legal malpractice cause of action has the burden of establishing prima facie that he or she did not fail to exercise such skill and knowledge, or that the claimed departure did not proximately cause the plaintiff to sustain damages (see Iannucci v Kucker & Bruh, LLP, 161 AD3d [*2]959, 960; Betz v Blatt, 160 AD3d 696, 698). The defendant must affirmatively demonstrate the merits of a defense, rather than merely pointing out gaps in the plaintiff’s proof (see Iannucci v Kucker & Bruh, LLP, 161 AD3d at 960).

We agree with the Supreme Court that the defendants were not entitled to summary judgment dismissing the legal malpractice cause of action. Although the defendants established their prima facie entitlement to judgment as a matter of law, the plaintiff raised a triable issue of fact in opposition. Specifically, the plaintiff submitted evidence that she had informed the defendants, prior to the closing, that the main portion of the apartment was on the seventh floor of the building and that the apartment included a second level. According to the plaintiff, the defendants committed malpractice because they failed to recognize the illegality of the second level, since neither the certificate of occupancy nor the approved condominium offering plan authorized the existence of an eighth floor to the condominium (see id.).”

Epiphany Community Nursery Sch. v Levey  2019 NY Slip Op 00842  Decided on February 5, 2019  Appellate Division, First Department  Singh, J., J. is not primarily about accounting malpractice.  That nugget is merely part of a much larger fraud which seemed to swamp a NYC private school.  The intra-familial fraud is stunning.

“In 1973 Wendy Levey (Wendy) married defendant Hugh Levey (Hugh). Two years later Wendy founded Epiphany, a not-for-profit corporation that operates a kindergarten and nursery school on the Upper East Side of Manhattan.

Hugh is an investment banker with an undergraduate degree from Yale University and a M.B.A. from Harvard. Hugh and defendant Claire Gruppo co-founded defendant Gruppo Levey & Co. (GLC), a small investment banking firm that provides strategic advice and private capital raising services to businesses, financial sponsors and management teams throughout the United States. Defendant Gruppo, Levey Holdings Inc. (GLH) is GLC’s parent company, and defendant Frog Pond Partners L.P. (Frog Pond) is a limited partnership owned indirectly by Hugh and Gruppo. Of this group, all but Hugh are the “collateral defendants.” Defendant Davie Kaplan CPA, P.C. (Davie Kaplan) was an outside auditor for Epiphany from 2010 to 2012.

The complaint alleges two sets of fraudulent acts. These acts were allegedly uncovered in a matrimonial action between Wendy and Hugh that was settled in October 2016. Wendy and Hugh are now divorced.

The first series of fraudulent acts occurred between 2002 and 2003 when Hugh induced Epiphany to sell its extracurricular programs to nonparty Magic Management LLC (Magic) for an unreasonably low price. At that time, Hugh had a 100% ownership interest in defendant January Management, Inc., general partner of nonparty January Partners, L.P., which was the sole member of Magic.

Pursuant to an asset purchase agreement dated February 12, 2003, Epiphany sold its extracurricular programs to Magic for $300,000, $30,000 of which was paid in cash and the remaining $270,000 was to be paid pursuant to a promissory note payable over 10 years in installments of $27,000, plus interest. Magic also agreed to pay monthly rent to use Epiphany’s facilities. Hugh claimed that although Magic occupied less than 10% of Epiphany’s space, Magic’s rent would be $481,026. Magic’s rent was represented to be more than $100,000 above Epiphany’s rent for the building.

Wendy, Epiphany’s Executive Director, did not have a financial background. She believed it was in the school’s best interest to have someone with Hugh’s financial expertise to assist with Epiphany’s financial affairs. Wendy signed the asset purchase agreement on Epiphany’s behalf without obtaining her own appraisal or verifying whether Magic paid the school what it owed.

The complaint alleges that the $300,000 purchase price was based on a fraudulent valuation commissioned by Hugh, which was “substantially inaccurate.” By applying false figures, Hugh allegedly reduced the purchase price by $1.5 million. The complaint further alleges that if the valuation had been properly calculated the purchase price would have exceeded $1.8 million.

In addition, Magic failed to pay rent or the amount owed on the promissory note. The complaint alleges that Hugh manipulated Epiphany’s corporate and financial records to hide Magic’s failure to pay.

The second set of fraudulent acts allegedly took place between 2007 and 2013. Hugh made unauthorized transfers of over $5.9 million from Epiphany’s bank accounts to himself and some of the collateral defendants by linking the bank accounts to his private banking portfolio. Hugh, with the assistance of Davie Kaplan, falsely recorded these transfers in Epiphany’s general ledgers as “loans.” However, there were no documents to memorialize these “loans.” Nor were [*2]any loan payments ever made. The “loans” were subsequently characterized as “other receivables.” At the end of each year, the other receivables were offset by fake charges Epiphany owed GLC or GLH for “consulting fees” and “lease commissions.”

In September 2010, Hugh allegedly arranged for his long-time personal accountant, David Pitcher, who was employed by defendant Davie Kaplan to serve as Epiphany’s outside auditor. Davie Kaplan delivered 2010, 2011, and 2012 audit reports. Davie Kaplan also performed an audit for fiscal year 2013 but it did not issue a 2013 audit report.

Epiphany commenced this action on August 31, 2016. It alleges 13 causes of action, including: (1) fraud by Hugh and Davie Kaplan; (2) aiding and abetting fraud by collateral defendants and Davie Kaplan; (3) breach of fiduciary duty by Hugh; and (4) aiding and abetting breach of fiduciary duty by the collateral defendants and Davie Kaplan.”

“Finally, we affirm Supreme Court’s dismissal of the fraud, aiding and abetting fraud and breach of fiduciary claims against Davie Kaplan as duplicative of Epiphany’s untimely accounting malpractice claim (see Murray Hill Invs. v Parker Chapin Flattau & Klimpl, LLP, 305 AD2d 228 [1st Dept 2003] [affirming dismissal of fraud claim as duplicative of the untimely legal malpractice claim, and noting that it was asserted in an attempt to circumvent the legal malpractice limitations period])”

It’s the oldest law in anglo-american jurisprudence; it’s rarely applied and even more rarely applied successfully.  Here is a swing and miss in Matter of B. (Anonymous), also known as L. (Anonymous)  Motion No: 2016-10028  Slip Opinion No: 2019 NY Slip Op 62045(U)  Decided on February 1, 2019 Appellate Division, Second Department, Motion Decision.

“Motion by Sebastian B. for leave to intervene on an appeal from an order of the Supreme Court, Richmond County, dated August 29, 2016, and pursuant to Judiciary Law § 487 to impose a sanction upon the attorney for the petitioner-respondent for statements made during oral argument of the appeal.

Upon the papers filed in support of the motion and the papers filed in opposition thereto, it is

ORDERED that the motion is denied.”

Clients rightfully expect the retainer lawyer to engage zealously on their behalf.  What are the limits of such representation?  How does the lawfirm correctly limit its obligations to the client.  It starts by following the rules for a retainer agreement or a letter of engagement set forth in 22 NYCRR § 1215.

Attallah v Milbank, Tweed, Hadley & McCloy, LLP  2019 NY Slip Op 00583  Decided on January 30, 2019 Appellate Division, Second Department describes how the letter might be written.

“In 2011, the defendant agreed to assist the plaintiff on a pro bono basis, in a very limited fashion, regarding the plaintiff’s expulsion in 2010 from the New York College of Osteopathic Medicine. To that end, the parties executed a letter of engagement dated July 7, 2011. The letter of engagement provided, in relevant part, that: “Our services will include all activities necessary and appropriate in our judgment to investigate and consider options that may be available to urge administrative reconsideration of your dismissal from the New York College of Osteopathic Medicine (the College’). This engagement does not, however, encompass any form of litigation or, to the extent ethically prohibited in this circumstance, the threat of litigation, to resolve this matter. This engagement will end upon your re-admittance to the College or upon a determination by the attorneys working on this matter that no non-litigation mechanisms are available to assist you. The scope of the engagement may not be expanded orally or by conduct; it may only be expanded by a writing signed by our Director of Public Service.”

Despite the defendant’s non-litigation efforts, the College refused to reconsider the plaintiff’s dismissal. Thereafter, the plaintiff commenced this action against the defendant to recover damages for breach of fiduciary duty, legal malpractice, and violations of Executive Law § 296, the New York Administrative Code, and the New York Corrections Law. The defendant moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint. The Supreme Court granted the defendant’s motion, and the plaintiff appeals.”

“We agree with the Supreme Court’s determination granting the defendant’s motion to dismiss the amended complaint. Contrary to the plaintiff’s contention, according to the parties’ undisputed letter of engagement, the defendant did not promise to negotiate administrative reconsideration on the plaintiff’s behalf but, rather, that it would “investigate and consider options that may be available to urge administrative reconsideration of your dismissal from the New York College of Osteopathic Medicine.” The letter of engagement conclusively demonstrated that there was no promise to negotiate. There was only a promise to investigate and consider whether there were any options possibly available to urge the school to reconsider the plaintiff’s expulsion. Anything else, including the defendant’s failure to commence litigation against the school and the defendant’s alleged rendering of legal advice regarding the efficacy of the plaintiff’s commencing a defamation action against others, was outside the scope of the letter of engagement.

An attorney may not be held liable for failing to act outside the scope of a retainer (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428). Therefore, since the defendant’s alleged failure to negotiate with the school, its alleged failure to commence litigation against the school, and its alleged failure to properly advise the plaintiff on the efficacy of a defamation action against nonschool parties fell outside the scope of the parties’ letter of engagement, dismissal of the cause of action alleging legal malpractice was warranted, pursuant to CPLR 3211(a)(1), on documentary evidence grounds.”

It’s seen from time to time, but rarely. Pro-se plaintiffs are deprived of the right to file a lawsuit or to file motions because the Court becomes so irritated by their filings. Strujan v Kaufman & Kahn, LLP  2019 NY Slip Op 00630  Decided on January 30, 2019 Appellate Division, Second Department is an example.

“The plaintiff commenced this action, inter alia, to recover damages for legal malpractice against the defendants Kaufman & Kahn, LLP (hereinafter Kaufman), and Fiden & Norris, LLP (hereinafter Fiden; hereinafter together the defendants), firms that represented the plaintiff’s adversaries in a prior action. The defendants separately moved pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against each of them, and the plaintiff moved, inter alia, for leave to enter a default judgment against the defendants and to disqualify Fiden’s attorneys. Fiden also cross-moved to preclude the plaintiff from filing any further motions except by order to show cause. The Supreme Court, inter alia, denied the plaintiff’s motions, granted the defendants’ separate motions to dismiss the complaint insofar as asserted against each of them, and directed the plaintiff to make all further applications for relief by order to show cause. The plaintiff appeals.”

“Since the defendants represented the plaintiff’s adversaries in a prior action, the causes of action alleging legal malpractice and negligence are unsupported by any duty running from the defendants to the plaintiff (see Betz v Blatt, 160 AD3d 696, 698; Betz v Blatt, 116 AD3d 813, 815; Gorbatov v Tsirelman, 155 AD3d 836, 840; DeMartino v Golden, 150 AD3d 1200, 1201; Pasternack v Laboratory Corp. of Am. Holdings, 27 NY3d 817, 825).

The plaintiff’s allegations of “intentional harm,” which the Supreme Court properly interpreted as stating a cause of action alleging prima facie tort, were unsupported by facts demonstrating that the defendants acted with “malicious intent or disinterested malevolence” in the prior action (Ahmed Elkoulily, M.D., P.C. v New York State Catholic Healthplan, Inc., 153 AD3d 768, 772; see Dorce v Gluck, 140 AD3d 1111, 1112; Wiggins & Kopko, LLP v Masson, 116 AD3d 1130, 1131; Smallwood v Lupoli, 107 AD3d 782, 785; Lisi v Kanca, 105 AD3d 714; Shields v Carbone, 78 AD3d 1440, 1442-1443). Likewise, the allegations of defamation failed to state a cause of action. The law provides absolute immunity from liability for defamation based on oral or written statements made by attorneys in connection with a proceeding before a court ” when such words and writings are material and pertinent to the questions involved'” (Front, Inc. v Khalil, 24 NY3d 713, 718, quoting Youmans v Smith, 153 NY 214, 219; see Weinstock v Sanders, 144 AD3d 1019, 1020; see also Stega v New York Downtown Hosp., 31 NY3d 661).

The plaintiff’s remaining causes of action are not recognized in New York or are inadequately pleaded (see Chanko v American Broadcasting Cos. Inc., 27 NY3d 46, 56; Scialdone v Stepping Stones Assoc., L.P., 148 AD3d 953, 954-955; Klein v Metropolitan Child Servs., Inc., 100 AD3d 708, 711; 42 USC § 1983; CPLR article 14-A).

“Public policy generally mandates free access to the courts” (Vogelgesang v Vogelgesang, 71 AD3d 1132, 1134; see Sassower v Signorelli, 99 AD2d 358, 359). Although a pro se litigant is afforded ” some latitude,'” he or she is not entitled to rights greater than any other litigant and may not disregard court rules or deprive an adversary of rights normally enjoyed by an opposing party (Strujan v Glencord Bldg. Corp., 137 AD3d 1252, 1254, quoting Mirzoeff v Nagar, 52 AD3d 789, 789; see Matter of Chana J.A. v Barry S., 135 AD3d 743, 744; Walter v Jones, Sledzik, Garneau & Nardone, LLP, 67 AD3d 671, 672). Accordingly, “when a litigant is abusing the judicial process by harassing individuals solely out of ill will or spite, equity may enjoin such [*2]vexatious litigation” (Breytman v Pinnacle Group, 110 AD3d 754, 755; see Breytman v Schechter, 101 AD3d 783, 785; Vogelgesang v Vogelgesang, 71 AD3d at 1134; Matter of Simpson v Ptaszynska, 41 AD3d 607, 608; Duffy v Holt-Harris, 260 AD2d 595; Matter of Shreve v Shreve, 229 AD2d 1005). Here, the plaintiff’s pattern of vexatious and duplicative motion practice warranted the modest limitation of directing the plaintiff to bring future motions via order to show cause (see Strujan v Glencord Bldg. Corp., 137 AD3d at 1254).”

Louis F. Burke PC v Aezah  2019 NY Slip Op 00557  Decided on January 29, 2019  Appellate Division, First Department may be the shortest AD1 opinion of recent memory.

Here is the entirety:  “Order, Supreme Court, New York County (David Benjamin Cohen, J.), entered January 3, 2018, which, to the extent appealed from as limited by the briefs, granted plaintiff’s motion to dismiss defendants’ counterclaims for breach of contract, breach of fiduciary duty, legal malpractice, and violation of Judiciary Law § 487, unanimously affirmed, without costs.

We find that the motion court’s dismissal of the counterclaims was proper and that defendants have not articulated any basis to disturb the motion court’s ruling (Leon v Martinez , 84 NY2d 83, 87-88 [1994]). We have considered the remaining arguments and find them unavailing.”

Supreme Court’s order was not much longer.  Here is the portion on legal malpractice:

“The facts alleged by defendant do not give rise to any claims that the attorney was negligent or that defendants would have prevailed in the underlying action or would not have incurred any damages but for the lawyer’s negligence.  Therefore, the fourth cause of action is dismissed.”