New York : Legal Malpractice Law Review

Phillips v. Moran & Kufta, P.C., 53 A.D.3d 1044, 862 N.Y.S.2d 875 (2008)

Facts: Plaintiff filed a legal malpractice action against Fischer & Yanowitz, and Jeffery Yanowitz. Plaintiff filed a motion to join Patricia Fischer and Jeffery Yanowitz as partners based upon partnership law and the doctrine of partnership by estoppel. The Supreme Court, Kings County granted plaintiff’s motion to consolidate, and denied a motion by Yanowitz for summary judgment dismissing the complaint insofar as asserted against him.

Issue: Does a partnership exist between parties who do not agree to share in the profits or losses of a business?

Ruling: A partnership did not exist between Fischer and Yanowitz, as there was no mutual promise or undertaking to share in the profits in the business or to submit to the burden of making good the losses. The doctrine of partnership by estoppel was inapplicable because Yanowitz never represented that him and Fischer were partners, there was no evidence that he consented to Fischer representing him as a partner, nor was there any indication that plaintiff relied on Fischer and Yanowitz being partners in retaining Fischer as counsel.

Lesson: If there is no written agreement between the parties, a court will look to the conduct, intention, and relationship of the parties to determine if a partnership exists. A partnership does not exist if there is no “mutual promise or undertaking of the parties to share in the profits of the business and submit to the burden of making good the losses.”

A court will impose a partnership under the doctrine of partnership by estoppel, Partnership Law §27, when

“a person, by words spoken or written or by conduct, represents himself, or consents to another representing him to any one, as a partner in an existing partnership or with one or more persons not actual partners, he is liable to any such person to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he has made such representation or consented to its being made in a public manner he is liable to such person, whether the representation has or has not been made or communicated to such person so giving credit by or with the knowledge of the apparent partner making the representation or consenting to its being made.”

Tags: New York, Vicarious Liability, partnership by estoppel, partnerships

NY: Motions for Summary Judgment by Defense Creates a Question of Fact

Posted on October 6, 2010 by Ben Wasserman

NY: Underlying personal injury claim against municipality

Student Contributor: Michael Park

Facts: The plaintiff retained attorney in an underlying personal injury claim which occurred on municipal property. Attorney failed to commence an action against the municipality and also failed to make an application for leave to serve a late notice of claim against the municipality. Attorney made a motion for summary judgment and the trial court denied it. The attorney then appealed.

Issue: Was the motion for summary judgment properly denied?

Ruling: Yes. In affirming the decision by the Supreme Court, Monroe County, the Supreme Court, Appellate Division, Fourth Department held for the plaintiff for the following reasons:
1) The Court relied on the decision in Ippolito v. McCormack, Damiani, Lowe & Mellon, 265 A.D.2d 303, 696 N.Y.S.2d 203 and ruled that it is the burden of the defendant in bringing the motion for summary judgment to show that the plaintiff is unable to prove at least one of the elements of their legal malpractice claim, of which elements are:
1. the defendant attorney failed to exercise that degree of care, skill, and diligence commonly possessed by a member of the legal community
2. proximate cause
3. damages
4. the plaintiff would have been successful in the underlying action had the attorney exercised due care

2) Defendant failed to meet their burden and actually raised a triable issue of fact on “whether discretionary leave to file a late notice of claim...would have been available”.

Lesson: The defendant in a legal malpractice case needn't disprove every element of the plaintiff's case. Rather, they just need to establish that at least one of the elements cannot be proven by the plaintiff. In creating a triable issue of fact, the defendant actually helped the plaintiff by showing that a trial would be required to see if the plaintiff could have been successful in the underlying action.

Tags: New York, Torts/Personal Injury, defense, municipality, notice of claim, summary judgment

NY: Attorney Negligence as Intervening Cause

Posted on September 24, 2010 by Ben Wasserman

Silberman v. Reisman, Abramson, P.C. 55 A.D.3d 402, 866 N.Y.S.2d 42 (2008)

NY: Underlying Workers Compensation proceeding

Student Contributor: Josh Aronson

Facts: Plaintiff brought a malpractice action against the defendant arising out of the defendant’s representation of the plaintiff in a worker’s compensation proceeding. The plaintiff is claiming that the defendant was negligent in failing to obtain the plaintiffs medical records for an intervening accident that occurred 7 years after the original accident to show that the intervening accident had no effect on her present claim that she was unable to work. Furthermore, the plaintiff claims that because of the defendant’s failure to obtain these medical records, the Worker’s compensation Board rejected a reopening of her original claim.

Issue: Did the plaintiff sufficiently prove that the content of the medical records would have shown that the intervening accident had no effect on her claimed present inability to work?

Ruling: No. The plaintiff failed to demonstrate an issue of fact as to proximate cause of the Worker’s Compensation Board failing to reopen the original case. The plaintiffs claim is dismissed due to her failure to show that “but for” the defendants negligence, the original Worker’s Compensation claim would have been reopened.

Lesson: Failure to demonstrate an issue of fact as to proximate cause requires dismissal of a legal malpractice action regardless of whether the attorney was negligent.

Tags: New York, Administrative Law, Torts/Personal Injury, intervening cause

NY: Puffing, One Step too far, leads to Malpractice Action

Posted on September 20, 2010 by Ben Wasserman

In re Dorfman, 304 A.D.2d 273; 760 N.Y.S. 2d 413 (2003)

NY Underlying Tort Action

Nason v. Fisher, 36 A.D.3d 486; 828 N.Y.S.2d 51 (2007)

Facts: A client hired the attorney to bring an action against the New York City Department of Health for emotional distress arising from its testing error that resulted in a report incorrectly indicating that he was HIV positive. The attorney filed a notice of claim but he was mistaken as to the filing deadline, and failed to seek leave to file a late notice of claim, which resulted in the dismissal of the action. The client brought a legal malpractice and fraud action against the attorney. The court found that the attorney had convinced his client to retain him by providing a resume that was “filled with patent falsehoods and misrepresentations designed to portray him as an experienced litigator,” and further found that the dismissal of the client’s state court action resulted solely from the attorney’s negligence. The jury found for the client. The disciplinary committee brought a proceeding against the attorney, seeking an order finding him guilty of professional misconduct. The issue of sanctions was referred to a referee, who recommended public censure.

Issue: Is public censure an appropriate sanction when an attorney has made misrepresentations in his resume to induce a client to hire him and has negligently filed a notice of claim for the client’s case?

Ruling: Yes, given the totality of the circumstances, a public censure sufficed to demonstrate to the legal profession to take the lawyer's misconduct seriously.

Lesson: The court takes into account the nature of the misconduct, and the various mitigating factors when sanctioning attorneys who are guilty of professional misconduct. Here, the duty of candor that a lawyer owes to a prospective client was surely at issue.

Tags: New York, duty of candor

NY: No Liability to Third-Parties Absent Bad Faith

Posted on September 17, 2010 by Krishna Shah

Ramirez v. 164 W 146 Street, LLC et al., 2010 NY Slip Op 32323, Supreme Court, New York County, August 27, 2010.

Facts: A temporary receiver commenced a nonpayment proceeding against Plaintiff, a rent-stabilized tenant. After the temporary receiver obtained a money judgment against Plaintiff and executed its eviction warrant, Plaintiff brought an action to invalidate the warrant on the basis that it was not in the name of the new owner of the apartment building. The Court agreed and held that the warrant was invalid because the new owner's attorney, Cornicello, had failed to seek a new warrant in his client's name or substitute his client 's name in place of the temporary receiver.

Plaintiff subsequently commenced an action against the new owner's attorney seeking damages associated with her illegal lockout.

Issue: Was Cornicello liable for damages sustained by his client's adversary as a result of his alleged negligence?

Ruling: No.

In this State, the general rule is that absent fraud, collusion, malicious acts, or other special circumstances, an attorney is not liable to third parties, not in privity, for harm caused by professional negligence. In order to state a valid cause of action for legal malpractice with an attorney or law firm one is not in privity with, one must allege that the attorney committed more than a mistake; an allegation of bad faith is necessary in that situation. Ramirez was never a client of or in privity with Cornicello. Thus, In order to survive the instant motion to dismiss, Ramirez's complaint must have alleged that Cornicello acted in bad faith or acted fraudulently. Plaintiffs' complaint only alleges that Cornicello helped procure the eviction and that Cornicello is liable for [the] illegal lockout. Plaintiffs' complaint does not allege that Cornicello acted in bad faith.

Note, however, that the showing of "bad-faith" has not been difficult to fulfill in similar matters. In another case, Mayes v. UVI Holding, Inc., the Court found bad faith where the law firm admitted to a "major screw-up" in handling an eviction proceeding. Since Cornicello "believed" he was executing a valid warrant, the Court did not label his actions as tortious or malicious. The Court indicated that the result would have been different had he known the warrant was invalid before the eviction took place.

Lesson: Attorneys will not be liable to non-clients in New York for alleged professional negligence absent knowing misconduct, fraud, bad faith, collusion, or other malicious act.

Tags: New York, Privity, bad faith, non clients, third parties

'Settle and Sue' New York Style

Posted on September 13, 2010 by Krishna Shah

Ambra v. Awad, 2010 NY Slip Op, Supreme Court of New York, Nassau County, April 13, 2010.

Facts: Plaintiff filed suit against the defendant attorneys after entering into a settlement in the underlying personal injury action. In the course of discovery in the underlying matter, defendant disclosed that it had liability insurance of $1 million, but did not disclose its' excess policy limit of $5 million. The jury awarded damages in the sum of of $2,020,000. Defendant's excess carrier, however, disclaimed coverage on the basis of late notice. Plaintiff eventually agreed to settle for $1,000,000 and then brought the instant action against his former attorneys.

Specifically, plaintiff argued that his attorneys committed malpractice by (1) incorrectly advising that the defendant's resources were insufficient to cover the jury verdict in the underlying matter; and (2) coercing him into accepting an inadequate settlement.

The defendant attorneys argued that (1) plaintiff was barred from pursuing his suit because he implicitly ratified the underlying settlement by waiting over two years to challenge it; (2) was not coerced to accept the settlement; (3) was provided with correct information with regard to defendant's ability to pay in the underlying action; and (4) the recommendation to settle represented one of several reasonable courses of action.

The defendant attorneys filed a motion for summary judgment, and plaintiff argued that it must be denied because the attorneys' contentions were not supported by expert opinion.

Issue: Can plaintiff enter into a settlement in the underlying action and then sue his former attorneys for malpractice?

Ruling: Yes. Initially, the Court noted that the absence of expert opinion does not preclude summary judgment for the defendant attorneys. With respect to the issue of whether plaintiffs' decision to settle the underlying matter bars the present action, the Court reasoned:

To the extent that [plaintiff's] implicit ratification of the settlement, if any, is inconsistent with his present position that the settlement was detrimental to him, that inconsistency is not a bar to the present action, but rather a factor to be considered in connection with the other evidence. Insofar as this action was timely commenced in accordance with the applicable statute of limitations...any purported delay in seeking relief on the part of plaintiff is not a basis for dismissal.

The Court then noted that the defendant attorneys' advice could only be considered to be "reasonable" if it was based on sufficient and accurate information, and if plaintiff was afforded the opportunity to choose among fairly presented alternatives. In that regard, the Court took into account one of the attorney's affidavits to the effect that plaintiff was advised of all potential options including post-trial motions, excess coverage litigation, and collection of the judgment.

In rendering its decision, the Court further noted that plaintiff had been under no time pressure to accept the settlement in the underlying litigation, and that plaintiff's prior refusal of a $750,000 settlement offer recommended by his attorneys suggested generally that he was not unduly influenced by counsel.

Nevertheless, the Court allowed the action to proceed and ordered an evidentiary hearing to determine exactly what information was known or communicated to plaintiff to warrant settlement on the basis that the defendant in the underlying action was a collection risk. The Court specifically noted plaintiff's right to recover from his former attorneys in the event their failure to investigate or communicate material information with regard to collecting on the underlying judgment influenced plaintiff's decision to enter into the settlement.

Lesson: A settlement in the underlying action is not necessarily a bar to a subsequent professional negligence suit in New York.

Tags: New York, settle and sue

NY: Disciplinary Violations Without More Don't Add up to "But For" Causation

Posted on August 27, 2010 by Ben Wasserman

NY: Underlying Commercial Transaction

Student Contributor: Colleen Gaedcke

Facts: The plaintiff retained the defendant attorneys based on one of the defendant attorneys representation that he was experienced in handling commercial partnership cases. The plaintiff brought a cause of action against the defendant for false representation in violation of NY Judiciary Law section 487, but the court dismissed the action for the plaintiff’s failure to establish the statutory requirement of “chronic and extreme pattern of legal delinquency.” Additionally, the plaintiff also brought a legal malpractice claim against the defendants. The plaintiff’s claimed that the defendant’s alleged violation of Disciplinary Rules are evidence of malpractice.

Issue: Whether the court properly granted the defendant’s motion for summary judgment, dismissing the legal malpractice claim?

Ruling: Yes.

Lesson: Allegations of violations of Disciplinary Rules may be evidence of malpractice, however such a violation alone will not establish that the attorney’s conduct was the “but for” cause of the plaintiff’s loss.

Tags: New York, But for-Proximate Cause, Commercial, Ethics violations, NY Judiciary Law §487, Rules of Professional Conduct (RPCs)

NY But for: Shifting the Burden to Defendant

Posted on August 25, 2010 by Ben Wasserman

Gamer v. Ross, 2008 NY Slip Op. 2107 (App Div. 2d Dept)

NY: Underlying personal injury action; missing discovery causes summary judgment dismissing complain

Student Contributor: Josh Aronson

Facts: In the underlying case, the plaintiff was injured when he tripped and fell over wires and debris while roller skating on a public sidewalk adjacent to a construction site. The plaintiffs retained the defendants to commence a negligence action against the owner of the construction site as well as a contractor who had performed construction work on the site. Both of the plaintiff’s complaints were dismissed on summary judgment and motion to dismiss respectively. The plaintiff then brought action against the defendant to recover damages for legal malpractice, alleging that the defendants were negligent in their handling of the two underlying actions by failing to conduct proper discover that would have enabled them to successfully oppose the summary judgment and motion to dismiss. The defendant claims that the plaintiffs could not have succeeded in the underlying actions because the wires and construction debris over which the plaintiff tripped were open and obvious conditions that were not inherently dangerous. Furthermore, the defendant contends that the plaintiffs could not have succeeded in the underlying actions because they failed to adduce any evidence showing that the landowner of the construction site or its contractor caused or created the alleged dangerous condition.

Issue: Must the defendant in a legal malpractice action establish that their negligence would not have prevented the dismissal of the plaintiffs underlying actions?

Ruling: Yes. The court found that the landowner and its contractor would have had sufficient notice of the dangerous condition and therefore would have been liable for injuries resulting from its failure to correct the danger. As a result, the Court found that the burden was on the defendants in the malpractice action to establish that the missing discovery—which they failed to do, would not have prevented the dismissal of underlying actions.

Lesson: The defendant in a legal malpractice action must establish that “but for” the negligence claimed by the plaintiff, the outcome of the underlying action would not have changed.

Tags: New York, But for-Proximate Cause, Litigation, Torts/Personal Injury, burden shifting, summary judgment

Tolling the Statute of Limitations: Continuous Representation Doctrine

Posted on August 18, 2010 by Krishna Shah

730 J&J, LLC v. Polizzotto & Polizzotto, Esqs., Supreme Court of New York, Appellate Division, Second Department, January 12, 2010

Facts: Plaintiff commenced a legal malpractice action to recover damages for the defendant attorneys' alleged failure to secure a deficiency judgment. Defendants argued the action was time barred under New York's three year statute of limitations. Plaintiff argued that the statute of limitations was tolled during the time Defendants continued to represent them in the underlying matter.

Issue: Is the statute of limitations for legal malpractice matters tolled during the time the allegedly negligent attorney continues his representation?

Ruling: Yes. A cause of action for legal malpractice accrues on the date the malpractice was committed. Nevertheless, under the doctrine of "continuous representation," the statute of limitations is tolled while the attorney continues to represent the client in the same matter in which the malpractice allegedly occurred:

The parties have a mutual understanding that further representation is needed with respect to the matter underlying the malpractice claim.

Lesson: In New York, the three year statute of limitations in legal malpractice actions will be tolled where the purportedly negligent attorney continued his representation in the underlying matter after the malpractice was committed.

Tags: New York, Statute of Limitations, continuous representation doctrine, toll

NY: Claims Made Coverage for Law Firm's "of Counsel"

Posted on August 11, 2010 by Ben Wasserman

Senate Ins. Co. v. Tamarack Am. 14 A.D.3d 922; 788 N.Y.S.2d 481 (2005)

NY Underlying Real Estate Transaction

Sitar v. Sitar, 50 A.D.3d 667, 854 N.Y.S.2d 536 (2008)

Facts: The attorney, who was employed full time by the Lawrence Group, Inc. as its general counsel, represented the plaintiff when it purchased some real estate property for $2,600,000. The Lawrence Group was a holding company for various insurance underwriting and agency components, which included the plaintiff. The Lawrence Group and the seller of the land later filed for bankruptcy. The plaintiff argued that because of the lien on the property it was out $2,600,000. The attorney then left the Lawrence Group and affiliated with a firm on an “of counsel” basis.
The plaintiff brought this legal malpractice action against the attorney. The attorney provided notice of the action to the defendant insurance company, which had issued a “claims made” policy to the firm. The defendant insurance company denied the coverage because it was provided “only to the extent such lawyer performs services on behalf of the named insurance,” and since the attorney rendered services as an employee of a corporation separate from the named insured, his acts fell within an exclusion contained in the policy. The defendant moved for summary judgment and the lower court granted the motion based on the policy language with respect to an attorney acting “of counsel.” The plaintiff appealed.

Issue: Does a policy issued to the law firm provide coverage for legal malpractice of an attorney who is affiliated with the law firm on an “of counsel” basis?

Ruling: Not when the policy at issue defined an “insured” to include, among others, “each lawyer acting as ‘of counsel,’ but only to the extent such lawyer performs services on behalf of the firm.” Id. at 923.

Lesson: New York’s Code of Professional Responsibility provides that the term “of counsel” nay be used “if there is a continuing relationship with a lawyer or law firm, other than as a partner or associate.”

Tags: New York, Code of Professional Responsibility, Insurance, Of Counsel, Real Estate, claims made policy

NY: Intra-Family Business Transactions:The Perils of Multiple Representation

Posted on August 9, 2010 by Ben Wasserman

NY Underlying Commercial Transaction: Conflicts of Interest

Student Contributor: Maninder (Meena) Saini

Facts: Client (plaintiff) brought an action against attorney and attorney's law firm (defendants), alleging legal malpractice. This action arose out of attorneys' representation of plaintiff in the sale of the plaintiff’s business to his son and daughter-in law. The attorney was a member of the plaintiff’s board of directors and acted as an attorney for both the plaintiff and his son in the transaction. The purchase price of the business was to be determined according to the profits made while under the control of the plaintiff’s son and daughter-in-law. The complaint alleged that the attorney was aware and did not disclose to the plaintiff that the new owners had engaged in unauthorized behavior that lowered the value of the business. The court granted the defendant’s motion to dismiss complaint for failure to state cause of action insofar as asserted against him and his law firm. The plaintiff then appealed.

Issue: Were the plaintiff’s allegations sufficient to state a cause of action to recover damages for legal malpractice?

Ruling: The appellate court held that the complaint asserted valid causes of actions for legal malpractice and breach of fiduciary duty because there was a conflict of interest since the attorney represented both sides of the underlying transaction and he was aware of important information that should have been disclosed to his client-plaintiff. A legal malpractice action requires proof that the attorney “failed to exercise the ordinary and reasonable skill and knowledge commonly possessed by a member of the legal profession.”

Lesson: It is commonly known within the legal profession that a lawyer is considered to be a fiduciary to each client. A lawyer must consider carefully whether it is appropriate to represent parties on both sides of a single transaction since potential conflict of interests may materialize. Unless the conflict is knowingly an voluntarily waived by all sides, it may be impossible for the attorney to proceed with representation. In this case, the attorney had a duty to communicate to the plaintiff the information that adversely affected the plaintiff’s business.

Tags: New York, Commercial, Conflicts of Interest, Corporate Law, close corporation

NY: The Delicate Balance Between Proximate Cause and Collateral Estoppel

Posted on August 9, 2010 by Ben Wasserman

Pechko v. Gendelman, 20 A.D.3d 404; 799 N.Y.S.2d 80 (2nd Dept. 2005)

NY Underlying Medical Malpractice Action

Kahn v. Hart, 270 A.D.2d 231 (N.Y. App. Div. 2d Dep't 2000)

Facts: The plaintiff underwent a mammogram while a patient with Doctor #1, who, she claimed, told her that the mammogram was normal. Later that year she underwent a mammogram with Doctor #2 and was diagnosed with cancer. The surgeon recalled seeing in the first mammogram certain “micro-calcifications” that were “suspicious of cancer.” The plaintiff sued Doctor #1 for medical malpractice. During the course of representation, the attorney who was representing her forwarded the mammogram films to a radiologist for evaluation, who before the evaluation misplaced them. The plaintiff then retained an appellate law firm to represent her in the medical malpractice action. Doctor #1 moved for summary judgment arguing that the films constituted key evidence, and that the loss of that evidence irreparably prejudiced his ability to defend the action. The lower court granted the doctor’s summary judgment because the plaintiff failed to counter the motion with expert affidavits sufficient to create issues of fact. The plaintiff then brought this action against the law firm to recover damages for legal malpractice for failing to properly defend her against the summary judgment motion in the medical malpractice action. The law firm argued that because it was not responsible for the loss of the mammogram film, which occurred before it was retained, its negligence was not the proximate cause of the plaintiff’s damages. The law firm moved for a motion to dismiss for failure to state a claim. The lower court denied it and the law firm appealed.

Issue: Was the law firm negligent in its representation of the plaintiffs in a medical malpractice action?

Ruling: Yes. The court found that the motion was properly denied because the absence of the mammogram films did not require the conclusion that the plaintiff would be unable to establish the law firm’s negligence. Here the firm did not rebut the plaintiff’s claim that they were negligent in failing to obtain secondary evidence concerning the films.

Lesson: Even when a court’s determination in an underlying medical malpractice action may be read as holding that the plaintiff will be unable to establish the merits of the medical malpractice action, that determination should not be given collateral estoppel effect against the plaintiff when he or she has alleged that the determination in the underlying action was the result of his or her attorney’s negligence.

Tags: New York, But for-Proximate Cause, Proximate Cause, Torts/Personal Injury, collateral estoppel, summary judgment

NY: Change of Heart Is Not Enough To Settle and Sue

Posted on August 5, 2010 by Krishna Shah

Boone v. Bender, Supreme Court of New York, Appellate Division, June 22, 2010

Facts: Defendant attorneys represented the plaintiff in a matrimonial action which ended in a settlement. Subsequently, the plaintiff commenced this malpractice action alleging that defendants compromised their level of advocacy and coerced her into entering into the settlement. The defendants moved for summary judgment dismissing the complaint, and the Supreme Court denied the motion. Defendants appealed.

Issue: Can Plaintiff pursue a malpractice action after consenting to a settlement in the underlying matter?

Ruling: No.

A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel.

Applying that standard to the instant case, however, the Court found that:

[T]he plaintiff was satisfied with the defendants' representation of her, that she had discussed the terms of the settlement with the defendants, that she understood that she would have the right to a trial if she did not wish to enter into the stipulation, that she had not been threatened or forced into entering into the stipulation, that she was entering into the stipulation voluntarily and of her own free will, that she had not taken any medications that would hamper her ability to understand the court proceedings, and that she had no additional questions for the defendants.

Accordingly, the Court concluded that plaintiff's subsequent "unhappiness" with the settlement did not rise to the level of legal malpractice. Further, the Court found that the attorneys' reasonable exercise of judgment in pursuing settlement did not constitute malpractice, and the plaintiff's allegation that defendants did not pursue her claims "zealously" was mere speculation.

Lesson: Conjecture, conclusory allegations of malpractice, and mere dissatisfaction concerning a settlement that was entered into voluntarily, do not constitute the necessary factual or legal basis upon which to pursue a subsequent action for professional negligence.

Tags: New York, Proximate Cause, settle and sue

NY: Statute of Limitations CPLR 214 (6) 3 years!

Posted on July 30, 2010 by Ben Wasserman

NY: Underlying loan transaction

Middleton v. Kenny,286 A.D.2d 957;731 N.Y.S.2d 425 (4th Dept.2001)

Facts: The Plaintiff commenced this action against Defendants alleging legal malpractice arising from representation on two loan transactions. The Plaintiff alleged that he did not learn until ten years later, after defaults on the loans, that Defendants failed to record two mortgages executed to secure the loans.

Issue: Was this action barred by the statute of limitations?

Result: the Plaintiff's claims of legal malpractice should have been dismissed as time-barred.
1) Pursuant to CPLR 214 (6), an action to recover damages for legal malpractice must be commenced within three years of the accrual of the claim;
2) A claim to recover damages for legal malpractice accrues when the malpractice is committed, not when it is discovered;
3) The legal malpractice complained of occurred more than three years before the commencement of this action, and the Statute of Limitations.

Lesson: This is a harsh rule for Plaintiffs. It does not matter when a Plaintiff learns of a potential legal malpractice action. It only matters when the malpractice occurs.

Tags: New York, Commercial, Statute of Limitations

NY: Summary Judgment and the Underlying Case

Posted on July 29, 2010 by Ben Wasserman

NY:Underlying Personal Injury Action

Pollicino v. Roemer & Featherstonhaugh, 277 A.D.2d 666; 716 N.Y.S.2d 416 (3rd Dept. 2000)

Facts: The plaintiff in the underlying action sued the architects, engineers and HVAC contractors for the alleged exposure to fumes and chemicals at their workplace. The appellate division dismissed the underlying action holding that the lower court abused its discretion in granting the plaintiff’s motion for an extension of time to file a note of issue after having been served with a 90-day demand pursuant to CPLR 3216. The defendant attorneys argued that the court erred in denying their cross motion seeking summary judgment because the plaintiff’s employer, not them, was the one responsible for the ventilation problem.

Issue: Did the attorneys submit evidence establishing as a matter of law that plaintiff would have been successful in the underlying action?

Ruling: No. The court found that the conflicting opinions of the experts presented issues of credibility to be determined by a trier of fact. The court held that the defendants were negligent in failing to respond to the 90-day demand and ordered a trial on the issues of proximate cause and damages.

Lesson: Even if the attorney can substantiate that someone else, here the employer, was liable for the plaintiff’s injuries, the attorneys still need to establish as a matter of law that the plaintiff would have been unsuccessful in the underlying action.

Tags: New York, Litigation, Proximate Cause

NY: Collateral Estoppel in Legal Malpractice Suit

Posted on July 28, 2010 by Ben Wasserman

NY Underlying Personal Injury Action; Notice of Claim vs. municipality

Estate of Nevelson v. Carro, Spanbock, Kaster et al. 259 A.D.2d 282; 686 N.Y.S.2d 404 (1st Dept.1999)

Facts: Plaintiff retained defendant law firm to represent him in a personal injury action against the New York City Transit Authority when he lost sight in his eye after a bus ran over a glass bottle causing a shard of glass to strike him in the eye. The notice of claim that the law firm actually served incorrectly listed the date of the accident, which was also repeated in the summons and complaint. About a month later the law firm amended the pleadings correcting the accident date but it made no motion to similarly amend the notice of claim until some three years after service of the erroneous notice of claim. The Transit Authority cross-moved to dismiss the complaint on the ground that the plaintiff’s notice of claim was defective and the action should be dismissed. The lower court denied the law firm’s motion to amend the notice of claim on the ground that the 4 ½-year delay in seeking to amend the notice of claim was prejudicial to the Transit Authority.
The plaintiff then commenced this malpractice suit against the law firm. The lower court granted the defendant law firm’s motion for summary judgment on the ground that the underlying decision holding that the plaintiff’s negligence action would have been dismissed regardless of the alleged malpractice, was entitled to preclusive effect. The plaintiff appealed.

Issue: Does collateral estoppel preclude the malpractice action?

Ruling: Here the court found that the lower court’s comment that the plaintiff’s action would have been dismissed was not entitled to preclusive effect because it was dicta and not necessary to resolve the issue. The court found that the law firm’s failure to serve a proper notice of claim was the error that required dismissal, and that the complaint was dismissed on that ground.

Lesson: To invoke the doctrine of collateral estoppel it must be shown that there is an identity of issue that has necessarily been decided in the prior litigation and which is decisive of the present action, and that the party sought to be estopped had a full and fair opportunity to contest the decision that is now claimed to be controlling.

Tags: New York, Defenses, Litigation, Torts/Personal Injury

NY: The Essential Defense Expert

Posted on July 26, 2010 by Ben Wasserman

NY Underlying Estate Tax Matter

Alaimo v. McGeorge, 893 N.Y.S.2d 331 (3rd Dept. 2010)

Facts: Plaintiff corporation was created upon the advice of defendant law firm for the purpose of organizing the financial affairs of Louise Nevelson, a deceased sculptor, and in an attempt to cause her artwork and the income from it to pass outside of her taxable estate. Nevelson’s son, who was also the executor of her estate, owned the corporation. This malpractice action arose after the IRS assessed millions of dollars in estate taxes against Nevelson’s estate and gift taxes against her son. After Nevelson’s death, the IRS determined that the corporation was a sham used to gift the decedent’s income and assets to her son, and that all the assets of the corporation should have been included in the sculptor’s gross estate. The plaintiffs claimed that the law firm never advised them of any risks of potential gift or estate tax liability that could arise based on the level of compensation that the corporation paid Nevelson.

Issue: Did the law firm depart from the requisite standard of care when they failed to adequately advise the plaintiffs that their failure to substantially compensate the decedent could result in adverse tax consequences under the plan that they recommended?

Ruling: Yes. The court found that here the defendants offered only conclusory, self-serving statements with no expert or other evidence that would establish that they did not depart from the requisite standard of care. The defendants had an obligation to do so.

Lesson: The requirement that a plaintiff come forward with expert evidence on the professional’s duty of care may be dispensed with where ordinary experience of the fact finder provides sufficient basis for judging the adequacy of the professional service. Id. at 283; Kulak v. Nationwide Mut. Ins. Co., 40 NY2d 140, 148.

Tags: New York, Expert Witnesses, Wills Trusts & Estates

NY: In House Counsel is Fiduciary First, Employee Later

Posted on July 21, 2010 by Krishna Shah

Keller v. Loews Corp., 895 NYS 2d 376 (2nd Dept. 2010)

Facts: In house counsel sued for religious discrimination after the termination of his employment. The defendant counterclaimed for breach of fiduciary duty. More specifically, the defendant alleged that counsel disclosed confidential information in his discrimination complaint. The trial court dismissed the counterclaim on the ground that there is no fiduciary relationship between an employer and an at-will employee.

Issue: Does in house counsel owe any fiduciary upon the termination of his at-will employment?

Ruling: Yes.

[A] lawyer, as one in a confidential relationship and as any fiduciary, is charged with a high degree of undivided loyalty to his client. Indeed, the duty to preserve client confidences and secrets continues even after representation ends. Thus, we conclude that an in-house attorney, his status as an at-will employee notwithstanding, owes his employer client a fiduciary duty.

Lesson: In house counsel owes his client a fiduciary duty irrespective of his status as an "at-will employee". The fiduciary duty continues even after termination of counsel's employment.

Tags: New York, Fiduciary Duty, at-will employee, in house counsel, termination

NY: Fee Dispute, Malpractice, and Res Judicata

Posted on July 20, 2010 by Krishna Shah

Liberty Associates v. Etkin, 2010 NY Slip Op 225 (2nd Dept. Jan. 10, 2010)

Facts: In March, 2002, the plaintiff, Liberty Associates, commenced an action to recover damages for legal malpractice against their former attorney. In January, 2003, the attorney's firm commenced an action against Liberty Associates in the Superior Court of New Jersey to recover fees for the legal services rendered. In 2004, during the pendency of the malpractice action, Liberty Associates and the attorney's firm settled the New Jersey fee dispute action, which was dismissed with prejudice. Upon learning of the settlement, the attorney moved for summary judgment dismissing the complaint in the malpractice action. The Supreme Court granted the attorney's motion.

Issue: Was Liberty Associates' pending malpractice claim against its former attorney barred by the doctrine of res judicata because of the dismissal of a separate action by the former attorney's firm to collect attorney's fees?

Ruling: Yes.

[T]he plaintiff's claim is barred by the doctrine of res judicata, which "precludes a party from litigating a claim where a judgment on the merits exists from a prior action between the same parties involving the same subject matter. A valid final judgment bars future actions between the same parties on the same cause of action, which includes "all other claims arising out of the same transaction or series of transactions . . . even if based upon different theories or if seeking a different remedy."

The Court further noted that a stipulation of discontinuance with prejudice without reservation of right or limitation of the claims disposed of is entitled to preclusive effect under the doctrine of res judicata.

Lesson: Dismissal of one action involving the underlying matter, without an adequate reservation of rights, will preclude the client from pursing malpractice claims as to the same matter in a separately filed action.

Tags: New York, Entire Controversy Doctrine, res judicata

NY: Collateral Estoppel No Defense to Legal Malpractice Action

Posted on July 19, 2010 by Krishna Shah

Underlying Personal Injury Action

Facts: Plaintiffs initiated a pro-se personal injury action in 1999. In May, 2004, Plaintiffs retained the defendant attorneys to prosecute their claims. Approximately one month later, Plaintiffs' action was struck for failure to present a medical expert. Plaintiffs were given one year to restore the case, but failed to timely comply. Defendants subsequently refunded the retainer and terminated representation.

Shortly thereafter, Plaintiffs moved to restore their complaint pro-se. The Supreme Court denied the motion and dismissed the case with prejudice for failure to present a reasonable excuse for not refiling the personal injury action within the one year time limit. The Court further noted that the reports from Plaintiffs' medical providers with the motion to reinstate "failed to establish any causal connection between any allegedly improper conduct [and the injuries complained of]."

Plaintiffs subsequently sued the defendant attorneys for legal malpractice.

Issue: Is Plaintiffs' legal malpractice action barred by the doctrine of collateral estoppel, since the Court had already made a determination as to the Plaintiffs' inability to succeed in the underlying personal injury matter? Did Plaintiffs state a cause of action for legal malpractice in light of the Supreme Court's finding that they failed to establish proximate cause?

Ruling: Plaintiffs stated a cause of action for legal malpractice and the doctrine of collateral estoppel did not apply.

The Appellate Division explained the elements of collateral estoppel:

An identical issue decided in the prior action that is decisive of the instant action; and
The party to be precluded from relitigating the issue had a full and fair opportunity to contest the prior determination.

The Court ruled that collateral estoppel did not apply, since Plaintiffs' motion to reinstate the case required a showing of merit sufficient to establish a triable issue of fact, and that in that setting conclusory allegations are insufficient. In contrast, on defendants' motion to dismiss, even conclusory allegations with respect to the medical evidence are deemed to be true. Accordingly, defendants failed to establish that the showing of proximate cause as to Plaintiffs' alleged injuries was identical in the underlying action and the malpractice action.

Similarly, although the medical evidence may not have been sufficient for purposes of the motion to reinstate the underlying matter, it was entitled to the benefit of every reasonable inference on a motion to dismiss for failure to state a claim.

Lesson: Where the plaintiff's burden of proof is heavier in the underlying action than in a preliminary motion in the malpractice action, plaintiff's claims will not be barred based upon its failure to meet a heavier burden in the underlying matter.

Tags: New York, Entire Controversy Doctrine, Torts/Personal Injury, burden of proof, collateral estoppel, failure to state a claim, motion to dismiss

NY: Labor Union or Union Member--Who Is My Client?

Posted on July 16, 2010 by Ben Wasserman

Mamorella v. Derkasch, 716 N.Y.S.2d 211(2000).

NY: Underlying employment law

Student Contributor: Jason Zemsky

Facts: Plaintiff Mamorella was appointed to a three-year probationary appointment as principal of the Auburn West Middle School. One year into her employment the Superintendent of Schools sent plaintiff a letter notifying her of his intention to terminate her probationary appointment. Plaintiff contacted Empire State Supervisors and Administrators Association (ESSAA), an association of local bargaining units of public school administrators and supervisors across the State, which represents the bargaining unit to which plaintiff belonged to represent her. Derkasch was assigned to her case and filed a grievance against the school, which was denied. The plaintiff commenced the instant action against Derkasch for legal malpractice and against ESSAA for the negligence of Derkasch under the doctrine of respondeat superior, based upon the alleged status of Derkasch as an employee of ESSAA. The court dismissed the plaintiff’s claims finding that Derkasch was an independent contractor and that ESSAA cannot be held liable for negligent acts of an independent contractor. The plaintiff appealed.

Issue: Can an attorney who performs services on behalf of a union be held liable to individual members of the union where the services at issue constitute a part of the collective bargaining process?

Ruling: No. the plaintiff's legal malpractice claim is preempted by Federal labor law, and that attorneys who perform services for and on behalf of a union may not be held liable for malpractice to individuals where the services performed constitute part of the collective bargaining process.

Lesson: An attorney who is handling a labor grievance on behalf of a union as part of the collective bargaining process has not entered into an ‘attorney-client’ relationship in the ordinary sense with the particular union member who is asserting the underlying grievance.

Tags: New York, Engagement, Privity, collective bargaining agreement, employment law, labor union

NY: Statute of Limitations--3 years or 6 years?

Posted on July 8, 2010 by Ben Wasserman

Proskauer Rose Goetz & Mendelsohn LLP v. Munao, 270 A.D.2d 150 (N.Y. App. Div. 1st Dep't 2000)

NY Underlying business transaction

Oster v. Kirschner, et al 2010 NY Slip Op. 05981 (App Div, 1st Dept. 7-6-2010)

Facts: In April 1991, Plaintiff allegedly gave Defendants negligent advice that they could shelter income through a certain joint venture. Plaintiff filed a summons with notice in October 1996, and served a complaint in December 1996, to which Defendants responded, in January 1997, with an answer containing counterclaims alleging the negligent advice. October 8, 1996 therefore marks the timeliness of the claims.

Issue: Which Statute of Limitations applied to this cause of action?

Result: Claims subject to six-year statute of limitations. The newly enacted three years statute does not bar it.

“While amended CPLR 214 (6), which reduced what would have been a six-year Statute of Limitations in this case to three years, applies to claims, such as these, interposed after its effective date of September 4, 1996, due process requires that such claims be entertained if brought within a reasonable time after September 4, 1996--clearly the case here, where the claims were presumably interposed only one month, and actually interposed only four months, after September 4, 1996.”

Lesson: The Statute of Limitations in New York is now three years.

Tags: New York, NY CPLR 214 (6), Statute of Limitations

NY: NJ Law Firm Gets Snagged as "Aiding and Abetting" a Ponzi Scheme

Posted on July 7, 2010 by Ben Wasserman

NY: Underlying Private investment

FACTS: A NJ law firm, Lum, Danzis, Drasco & Positan,LLC lost its bid to stay out of a NY law suit brought by investors in a private investment plan named Cobalt, which turned out to be a Ponzi scheme operated by a convicted felon with the help of an admitted criminal with numerous convictions for securities violations and who was banned from the securities industry. Investors lost over $22 million. As Cobalt's attorneys, the law firm is accused of preparing the private placement memorandum (PPM) which failed to disclose the criminal histories of the investment's managers, although the Firm's attorneys were aware of it. Also, the PPM allegedly contained other affirmative misrepresentations to which plaintiffs pointed in their "aiding and abetting" , fraud and breach of fiduciary duty Complaint. The Law Firm also served as the escrow agent for the investment transactions. The Law Firm "did not seriously dispute that they had knowledge of [their clients'] criminal backgrounds." It just claimed that knowledge and the knowledge of misrepresentations in the PPMs--"the admitted vehicle by which investment in the Ponzi scheme was carried out--does not sufficiently allege actual knowledge..."

ISSUE: Does the Complaint adequately plead fraud, or should the trial court's dismissal of the Complaint be reversed?

HELD: Order dismissing Complaint reversed. Complaint re-instsated.

1. A plaintiff alleging an aiding and abetting fraud claim must allege the existence of he underlying fraud, actual knowledge and substantial assistance. Actual knowledge of fraud can be "discerned from surrounding circumstances."

2. The Law Firm's preparation of the PPM, including, significantly, a backdated amendment to it that showed the investment managers criminal past which it had not previously disclosed, constitutes "substantial assistance."

The PPMs authored by defendant attorneys were the means by which the Cobalt...entities were able to solicit funds for ...[the] Ponzi scheme. The PPM is the very mechanism by which investments such as Cobalt are placed in the marketplace, and the admitted "but for" cause of plaintiff's investment losses. Yet defendants assert that "loss causation" is lacking because it has not been adequately pleaded that defendant attorneys had actual knowledge that their clients--whom they admittedly knew to be criminals, banned from the securities industry for engaging in fraudulent investment schemes--would operate...Cobalt...as a Ponzi scheme. If the facts and circumstances herein do not support an inference of actual knowledge, then it is doubtful that any action for aiding-and-abetting fraud could be sustained against any attorney, who, like defendant attorneys, consciously chose to look the other way when their clients asked them to prepare the PPM...To say that defendant attorneys merely furnished legal services to help solicit investments in...Cobalt..., and did not have knowledge of the fraud they helped perpetrate...[is] simply not tenable. The Court cannot and will not endorse what is essentially a "see no evil, hear no evil" approach.

LESSON: Is the NY Court expanding the duty of vigilance of the lawyer regarding disclosure of information that non-clients should be entitled to know? Will there be an appeal from this ruling? Let's wait and see.

For an interesting NJ case involving a different NJ law firm also involved in composing a "defective" PPM, see Profit Sharing Trust v. Lampf Lipkind, 630 A.2d 1191 (1993).

Tags: New York, Commercial, Fiduciary Duty, Fraud, PPM, Ponzi scheme, actual knowledge, private placement memorandum

NY: Increased Liability for Estate Planning Attorneys

Posted on June 30, 2010 by Krishna Shah

Estate of Schneider v. Finmann, Court of Appeals of New York, June 17, 2010

Facts: The defendant attorney represented decedent Saul Schneider from April 2000 to his death in October 2006. In April 2000, the decedent purchased a $1 million life insurance policy. Over several years, he transferred ownership of that property from himself to an entity of which he was principal owner, then to another entity of which he was principal owner and then, in 2005, back to himself. At his death in October 2006, the proceeds of the insurance policy were included as part of his gross taxable estate.

The decedent's estate commenced this malpractice action in 2007, alleging that defendant negligently advised the decedent to transfer, or failed to advise the decedent not to transfer, the policy which resulted in an increased estate tax liability.

The New York Supreme Court granted defendant's motion to dismiss the complaint for failure to state a cause of action. The Appellate Division affirmed, holding that, in the absence of privity, an estate may not maintain an action for legal malpractice. The estate appealed.

Issue: Whether the estate can hold the decedent's estate planning attorney liable for damages resulting from negligent representation that causes enhanced estate tax liability?

Ruling: Yes.

Privity, or a relationship sufficiently approaching privity, exists between the personal representative of an estate and the estate planning attorney. We agree with the Texas Supreme Court that the estate essentially stands in the shoes of a decedent and, therefore, has the capacity to maintain the malpractice claim on the estate's behalf. The personal representative of an estate should not be prevented from raising a negligent estate planning claim against the attorney who caused harm to the estate. The attorney estate planner surely knows that minimizing the tax burden of the estate is one of the central tasks entrusted to the professional.

The Court did note, however, that strict privity remains a bar against beneficiaries' and other third-party individuals' estate planning malpractice claims absent fraud or other circumstances, since such claims would lead to "uncertainty and limitless liability".

Lesson: Privity is not a bar to an estate's legal malpractice lawsuit against the decedent's purportedly negligent attorney.

Tags: New York, Privity, Wills Trusts & Estates

NY: Illusion of "Factual Issues" No Bar to Summary Judgment

Posted on June 28, 2010 by Krishna Shah

Benaquista v. Burke, Supreme Court of New York, Appellate Division, Third Department, June 10, 2010

Facts: Plaintiff and his mother co-owned various corporations and the Defendant attorney represented the corporation in various matters. In December 2002, Plaintiff's mother and corporate entities commenced a suit against Plaintiff for misappropriation of corporate funds. Defendant represented the mother and corporate entities against the Plaintiff in this underlying litigation. Plaintiff subsequently commenced this legal malpractice action alleging that he had utilized the Defendant's services concerning business issues with his mother, and in doing so, had revealed confidential information. Plaintiff further alleged that he had suffered damages as a result of the Defendant's decision to utilize the confidential information to institute the underlying lawsuit.
Defendant moved for summary judgment prior to the end of discovery, and argued that Plaintiff's complaint failed to state a cause of action for legal malpractice.

Issue: Is summary judgment for failure to state a claim appropriate in legal malpractice actions prior to the close of discovery?

Ruling: Yes. Defendant met this burden by proffering a sworn affidavit, alleging that his firm had represented plaintiff's mother and the corporations prior to his representation of plaintiff — which consisted only of the incorporation of a business owned by plaintiff — and that no conflict of interest existed. In addition, the plaintiff's bill of particulars failed to specifically identify any personal or confidential information used by the defendant against plaintiff or any damages suffered by plaintiff. Plaintiff's only opposition to defendant's cross motion was an attorney affirmation and various documents which consisted primarily of billing records:

Inasmuch as plaintiff failed to proffer any sworn allegations of an individual with personal knowledge of the relevant facts and the documents submitted were not in admissible form, his opposition was insufficient to sustain his burden of raising a triable issue of fact to defeat defendant's entitlement to judgment as a matter of law.

Accordingly, Supreme Court of New York, Appellate Division, affirmed the trial court's summary judgment dismissing Plaintiff's legal malpractice complaint.

Lesson: In New York, a plaintiff will not be able to defeat a motion for summary judgment, or obtain discovery on a claim for legal malpractice, without pointing to a concrete issue of fact that remains undecided after consideration of the parties' affidavits and other documentary evidence.

Tags: New York, Conflicts of Interest, Corporate Law, judgment, summary

NY: Case Within the Case: The Great Excuser for Lawyer Carelessness?

Posted on June 21, 2010 by Ben Wasserman

Yousian v. Eisenberg, 34 A.D.3d 228 (2006)

NY Underlying Medical Malpractice Action

Student Contributor: Ally Shuster

Facts: Plaintiff went to hospital complaining of gastrointestinal pain. Over the next few months, Plaintiff underwent a series of tests in order to diagnose his condition. He underwent a sonogram, the results of which showed that he had stones in his gallbladder. Subsequently, he underwent surgery and was left with debilitating pain that he alleges to be a result of the surgery. Plaintiff retained Defendants and sued for medical malpractice. The Defendant attorneys failed to timely re-calendar the case, which is the basis for this legal malpractice claim.

Issue: Is there a valid legal malpractice claim?

Ruling: No. There is no issue of fact as to whether the treatment Plaintiff received at the Hospital constituted medical malpractice.

Lesson: In order to win a legal malpractice claim, a Plaintiff MUST prove that he could win the underlying case. Although it was troubling that Defendant attorneys failed to timely re-calendar the case, Plaintiff did not prove that he would have been successful in the underlying case but for the Defendant attorneys’ negligence.

“In order to prevail in a legal malpractice suit, the clients must prove that their former attorneys were negligent and that they could have prevailed and recovered a judgment but for that negligence.” Tanel v. Kreitzer & Vogelman, 293 A.D.2d 420

Tags: New York, But for-Proximate Cause, Case Within a Case, Torts/Personal Injury

NY Proximate Cause; Faulty Assessment of Chance of Winning at Trial: Should I have Settled Instead?

Posted on June 17, 2010 by Ben Wasserman

Leder v. Spiegel 31 AD3d 266, aff'd 9 N.Y.3d 836, 872 N.E.2d 1194 N.Y., 2007

NY Underlying probate

Thompson v. Seligman 53 A.D.3d 1019, 863 N.Y.S.2d 285 (A.D. 3 Dept., 2008).

Facts: Defendant represented plaintiff in an underlying probate matter. Rather than accept a settlement offer, plaintiff decided to continue at trial, where they were unsuccessful in challenging the will. The plaintiff bases his malpractice claim on defendant’s advice on the prospect of success in the underlying case, and that he would have accepted the settlement were it not for his attorney’s advice. There was no documentary evidence that shows that plaintiff refused to settle strictly based on defendant’s advice.

Issue: Is an attorney liable for legal malpractice if he was not the proximate cause of the client’s damages, even if he negligently represented his client?

Ruling: No.

"In order to sustain a claim for legal malpractice, a plaintiff must establish both that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff, and that the plaintiff would have succeeded on the merits of the underlying action 'but for' the attorney's negligence"

The failure to demonstrate proximate cause mandates the dismissal of a legal malpractice action regardless of whether the attorney was negligent. Since there was no evidence that the defendant’s advice was the sole basis for refusing the settlement, the defendant was not the proximate cause of the plaintiff’s loss, the defendant attorney was not liable for malpractice.

The Lesson: Even an attorney who negligently represents his client will not be liable for malpractice if he is not the “but for” cause of the client’s damages. To establish liability based on the loss of a settlement opportunity, the plaintiff must prove that but for the attorney’s negligence he would have accepted the settlement offer. A court will not rely on bare allegations of fact by a plaintiff without documentary evidence to prove proximate cause.

Tags: New York, Wills Trusts & Estates, settle and sue

NY Duty to Investigate

Posted on June 17, 2010 by Ben Wasserman

NY: Litigation, Duty to Investigate

Erdman v. Dell 50 A.D.3d 627, 854 N.Y.S.2d 755 N.Y.A.D. 2 Dept., 2008.

Facts: Plaintiff was employed by AMFAC Recreational Services, Inc. AMFAC regularly provided cleaning services to the Gideon Putnam Hotel. While performing her duties cleaning at the Gideon, plaintiff suffered injuries and retained defendant attorney to represent her in a workman’s compensation claim. When plaintiff inquired about a possible claim for pain and suffering against the Gideon, defendant advised her that she could not pursue a claim, based on his mistaken belief that plaintiff was employed by the hotel. Plaintiff then consulted with a different attorney who advised her that she did have a claim against the Gideon, except for that the statute of limitations had expired.

Issue: Can a mistaken assumption by an attorney give rise to a legal malpractice claim?

Ruling: Yes.

“An attorney has the responsibility to investigate and prepare every phase of his or her client’s case.”

There was sufficient documentation that stated plaintiff’s employer was AMFAC, not the Gideon. Had defendant made the appropriate inquiry he would have known that plaintiff was not employed by the Gideon, and that plaintiff could have a third party claim against the Gideon for pain and suffering. The defendant’s failure to investigate the availability of a third party claim by plaintiff raises a question of fact whether the defendant exercised an appropriate duty of care to the client.

The Lesson: As an attorney, you have the responsibility to investigate and prepare every phase of your client’s case. If there is information that will further the interests of your client that is easily ascertainable, and you fail to use such information, you have breached your duty of care to your client. Unless the client actively misrepresents information to you, you can be liable for malpractice if your mistaken assumption would have been corrected by further inquiry.

Tags: New York, Duties: Investigate

NY: Blown Statute? No prob. Argue No Proximate Cause!

Posted on June 16, 2010 by Ben Wasserman

NY Undelrying personal injury; worksite accident; scaffolding

Facts: Client filed a legal malpractice suit against attorney arising out of the attorney’s representation of client in an underlying NY Labor Law § 240 (1) action. Plaintiff was injured while working on a scaffold doing pipe work in a building at 100 Broadway. Defendant’s mistaken brought an action against the owners of the building at 100 Pine street. By the time the mistake was realized, the statute of limitations had already expired. There was some questions as to whether the plaintiff had followed certain safety precautions that may have helped avoid the accident, and whether plaintiff had secured safety locks on the wheels of the scaffolding that may have prevented the accident.

Issue: Is an attorney liable for malpractice if he is not the proximate cause of the plaintiff’s damages, even if the attorney negligently allowed for the statute of limitations to expire?

Ruling: No. "In an action to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney 'failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession' and that the attorney's breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages" An attorney is not liable for damages to his client if he was not the proximate cause of those damages. Since there were questionable issues of fact as to what the proximate cause of the accident was, the defendant’s conduct was not a proximate cause of plaintiff’s damages.

Lesson: Summary judgment for legal malpractice liability is precluded if there is a genuine issue of material facts of proximate cause in the underlying action. But even if an attorney fails to name a proper party as a defendant and the statute of limitations expires, the attorney is not liable for malpractice if a plaintiff can not prove that but for the attorney’s failure to file a timely suit the client would have succeeded in the underlying cause of action.

Tags: New York, Defenses, NY Labor Law §240, Proximate Cause

NY: Malpractice in the Surrogate Court

Posted on June 11, 2010 by Ben Wasserman

In re Estate of Remsen, 99 Misc. 2d 92 (N.Y. Sur. Ct. 1979)

NY Underlying Will Transaction

Student Contributor: John Anzalone

Facts: Decedent died leaving a last will and testament in which she distributed her residuary estate in equal shares to her two sisters, the Plaintiffs and to eight nieces and nephews and one relative by marriage. Plaintiffs retained an attorney whose firm had represented the decedent's family for a long period. His duties were to represent them in the administration of this estate, including probate of decedent's will, preparing and filing tax proceedings and terminating the estate by formal or informal means, depending upon the agreement of the parties. For more than eight months, no action was taken to probate the decedent's will. The present proceeding to determine the fee of the former attorney, after his dismissal by Plaintiffs as their attorney, when he apparently refused or was otherwise unable to represent them at the scheduled title closing in the sale of the decedent's residence. Plaintiffs claimed that their former attorney unduly delayed the probate of the decedent's will, delayed the payment of the funeral expenses and other debts, and taxes and caused the loss of interest income.

Issue: Were the Plaintiffs correct in raising the issue of their former attorney’s ability to provide prompt legal services in a proceeded to fix and determine attorney fees within Surrogate’s Court?

The Result: Plaintiffs of an estate acted properly in raising the issue of their former attorney's inability to provide prompt legal services in a proceeding to fix and determine the attorney's fees as their failure to raise the issue at this proceeding might bar a subsequent malpractice claim.

The Lesson: The jurisdiction of the Surrogate’s Court is not so limited that it cannot determine the issues of malpractice of an attorney whose services and competence are relied upon by a lay fiduciary in the administration of an estate.

Tags: New York, Wills Trusts & Estates, duty of diligence

NY The Continuous Representation Doctrine

Posted on June 9, 2010 by Ben Wasserman

Montes v. Rosenzweig, 21 A.D.3d 460, 800 N.Y.S.2d 444 (N.Y. App. Div. 2005)

NY Underlying Litigation: Wrongful Death and Negligence

Facts: Decedent retained Defendant Attorney to represent her in her claim against a building owner after she was injured by a faulty elevator. Decedent shortly thereafter died from complications from her injuries before an action was commenced against the building owner. Defendant brought suit on her estate's behalf, but failed to get letters of administration. Consequently, the suit was dismissed for lack of standing. After failing in his attempts to obtain letters of administration, Defendant told Plaintiffs that he was withdrawing and that the action had been dismissed. However, Defendant continued to represent the Plaintiffs in their attempts to get letters of administration so that they could sue the building owner. Defendant later told Plaintiffs that a suit against the building owner had become practically impossible to maintain because the statute of limitations that had run several years earlier. Plaintiffs sued Defendant Attorney. The case was dismissed based on time bar and failure to state a cause of action.

Issue: Was the statute of limitations tolled by the "continuous representation doctrine?"

The Ruling: In reversing the lower court, the Appellate Division held that the "continuous representation doctrine" tolled the statute of limitations, based on the following considerations:
1) The "continuous representation doctrine" tolls the three year statue of limitations doctrine period in the matter in which the alleged malpractice occurred.
2) The doctrine is triggered when there is a "continuing attorney-client relationship" after the malpractice occurs.
3) Here, the defendant continued to represent the Plaintiffs after first failing to obtains letters of administration to bring the negligence and wrongful death suits,
4) The alleged malpractice occurred because Defendant failed to obtain letters of administration before both statue of limitations expired.
5) After the malpractice occurred, Defendant allegedly led the plaintiffs to believe that a suit could still be filed against building owner if the letters of administration were obtained.
6) The Defendant did not inform the plaintiffs until well after the statute of limitations against the attorney had run that it was practically impossible from the Plaintiffs to sue the building owner.

The Lesson: Although the statute of limitations may have run for a malpractice claim against an attorney, that period may be tolled if the Attorney continually represents the plaintiff during the period after the cause of action accrues.

Tags: New York, Statute of Limitations, Torts/Personal Injury

NY: Suing the Criminal Defense Attorney, in a Nutshell

Posted on June 8, 2010 by Ben Wasserman

Boomer v. Gross, 34 A.D.3d 1096, 825 N.Y.S.2d 171 (N.Y. App. Div. 2006)

NY Underlying Criminal Defense

Student Contributor: John Anzalone

Facts: Defendant attorney was paid by Plaintiff's stepfather to help file a motion on behalf of criminal defendant Plaintiff. Defendant concluded that the motion he was asked to help file would be frivolous and offered to refund "some or all" of the payments made to him. Plaintiff was convicted of several crimes including attempted murder. Plaintiff' brought a legal malpractice suit against Defendant that was dismissed.

Issue: Can the Plaintiff sue an Attorney who did not represent him at trial for legal malpractice in a criminal case if his conviction has not been overturned?

The Ruling: In affirming the lower courts grant of summary judgment for Defendant, the Court held that Plaintiff could not sue the attorney, based on the following considerations:
1) It is a "well-settled principle" that criminal defendants cannot sue attorneys for legal malpractice in their criminal cases if they were found guilty and that determination was not subsequently disturbed.
2) This principle is applicable to attorneys who represent the defendants at the criminal trial and those that represent the defendants solely outside of the court room.

The Lesson: The undisturbed determination of the plaintiff's guilt is a complete defense to a claim for legal malpractice in a criminal case. These plaintiffs cannot sue their attorneys for malpractice. This applies to all attorneys who do work for criminal defendants and is not limited to their trial attorneys.

Tags: New York, criminal defense

NY: The Continuous Representation Doctrine

Posted on June 7, 2010 by Krishna Shah

Waggoner v. Caruso, 2009 NY Slip Op 6739 (1st Dept. Sep. 29, 2009)

Underlying Commerical Matter

Facts: Plaintiff Waggoner retained Attorney Caruso to trace and attach the assets of Suisse Security Bank and Trust ("SSBT") and British Trade and Commerce Bank ("BTBC") in an effort to recover $10 million. Caruso attached SSBT's property to the extent of $3 million. He asked Waggoner, however, to sign an affidavit stating that he had recovered approximately $7.7 million. In the meantime, BTBC's chairman, Rodolfo Requena, pleaded guilty to federal money laundering charges and Caruso, allegedly, agreed to represent Requena without disclosure to Waggoner. Waggoner subsequently filed a suit for legal malpractice, fraud, breach of fiduciary duty, fraud, and conspiracy to commit fraud against Caruso, his firm, and his previous employer, Pillsbury Winthrop ("Pillsbury").

Pillsbury argued that Waggoner's claim for legal malpractice was time-barred, since their representation had terminated more than three years prior to the date the malpractice suit was instituted.

Issue: Can a former client bring a suit for malpractice against a firm more than three years after the firm's representation has been terminated, in the event the client continues to be represented in the same matter by an attorney previously employed at the firm?

Ruling: Yes. In New York, a legal malpractice action must be commenced within three years of accrual. Accrual occurs when the malpractice is committed. A client, however, "cannot be expected to jeopardize a pending case or relationship with an attorney during the period that the attorney continues to handle the case". Since "an attorney-client relationship would certainly be jeopardized by a client's allegation that his or her attorney committed malpractice", the statute is tolled as to a malpractice claim against a law firm where the attorney who handled the case continues to represent the client in the same matter.

Lesson: Under the "doctrine of continuous representation", the statute of limitations is tolled while representation on the same matter is ongoing by the same attorney at a new law firm.

Tags: New York, Commercial, Statute of Limitations, continuous representation doctrine

The Co-Counsel Relationship: Friend or Foe?

Posted on June 3, 2010 by Krishna Shah

Steinberg v. Schnapp, 2010 NY Slip Op 02991 (1st Dept. April 13, 2010)

Underlying Probate Matter

Facts: Steinberg and Schnapp, both attorneys practicing independently, undertook the representation of another attorney, Borstein. Borstein had retained Steinberg and Schnapp to represent him with respect to “all legal proceedings and asset administration concerning the wills, assets and estate of the late Isi Fischzang”. More specifically, Borstein’s retainer agreement provided that Steinberg was “the general counsel…with respect to all litigation proceedings concerning the wills, assets, and estate”.

Soon after the commencement of the representation, however, Steinberg instituted an action against Schnapp for quantum meruit and interference with an advantageous economic relationship. Essentially, Steinberg alleged that Schnapp fired him to shift the blame for delays in the probate action that upset Borstein.

Issue: Where two attorneys are retained by an executor, one as trial counsel and the other as “Of Counsel”, should “Of Counsel” be permitted to seek his fees from trial counsel?

Ruling: No. The Court resorted to principles of contract law to resolve Steinberg’s claim, and held that the written documents evidenced that Steinberg’s client was the estate, not Schnapp:

In this case Steinberg has sought to recover compensation for his services from a party who did not have any obligation to compensate him – his co-counsel – with whom he was clearly not in privity. There is not even a suggestion that the estate is an undisclosed principal, in which case liability might attach to Schnapp, under time-honored principles.

The Court further held that Steinberg’s claims would fail in any event, since “[a]s a general rule, where there is a contractual relationship between a lawyer and client, the client has the right to terminate the attorney-client relationship at any time with or without cause”:

At best, Steinberg is suggesting that Schnapp made an inaccurate statement about the quality of Steinberg’s work, which statement led Borstein to terminate the attorney relation, a relationship that is terminable at will, in any event. Such statements would be neither tortious nor criminal.

Lesson: An attorney cannot seek compensation for services rendered from co-counsel, even where co-counsel’s representations allegedly led the client to terminate the representation. A client can terminate the attorney-client relationship at will. The attorney can seek to recover compensation for his services only from his former client.

Tags: New York, Local & Co-Counsel, Wills Trusts & Estates, attorney, co-counsel, fees', s

NY: No Privity, No Liability

Posted on June 2, 2010 by Krishna Shah

Sayeh v. 66 Madison Ave. Apt. Corp., 2010 NY Slip Op 03844 (1st Dept. May 6, 2010)

Underlying Commercial Transaction

Facts: Plaintiff, an owner of seven apartments in a coop, sought to purchase an eighth unit. Plaintiff’s application to purchase the eight unit was disapproved by the coop board members, despite an exclusion in the proprietary lease for a stockholder-to-stockholder exemption from the requirements of board approval for assignment of shares. Plaintiff, subsequently, commenced an action for legal malpractice and intentional tort against the coop’s attorney, Silberman.

Issue: Was Silberman liable to Sayeh for alleged damages sustained by the coop’s wrongful disapproval of his application to purchase an additional unit?

Ruling: No. The Court dismissed Sayeh’s claim for legal malpractice against Silberman, since “there [was] no evidence of privity or near privity to support the imposition of [such] a claim”. The Court also dismissed the claim for intentional tort, since there was no evidence of “collusion, malice, or fraud to warrant the imposition of liability”.

Lesson: An attorney will not be held liable to a third-party with whom he has no attorney-client relationship, nor any reason to suspect that the third-party is relying on him for advice.

Tags: New York, Commercial, Privity, third-party

Defenses: The Uncooperative Client

Posted on June 1, 2010 by Krishna Shah

Ryan v. Powers & Santola, LLP, 2010 NY Slip Op 03827 (3^rd Dept. May 6, 2010)

Underlying Personal Injury Action

Facts: Plaintiff Ryan was struck on the head by highchair while dining at a restaurant. He then retained Powers & Santola to represent him in a negligence action against the restaurant.

In response to the defendants’ motion to compel production of a verified bill of particulars and responses to outstanding discovery demands, the trial court issued an order in the underlying action providing that the matter would be dismissed if Ryan failed to provide the outstanding discovery. Although Ryan eventually served discovery responses, a number of responses required more specific answers. The trial court, thereafter, extended the discovery schedule twice with a conditional order that the action would be dismissed if plaintiff continued to fail to provide responses. Ryan failed to comply and the matter was in fact dismissed.

Subsequently, Ryan commenced a legal malpractice action against Powers & Santola for “failing to follow court orders…consenting to conditional orders…and failing to move to vacate the dismissal order”. Ryan moved for partial summary judgment on the issue of liability.

Issue: Is Ryan’s alleged failure to cooperate with counsel in preparing discovery responses a viable defense to his action for legal malpractice?

Ruling: Yes. The Court held that:

A claim of legal malpractice will be sustained if the plaintiff establishes…that [he] would have succeeded on the merits of the underlying action but for the attorney’s negligence…We agree…that the plaintiff’s conclusory assertions – that ‘but for’ defendants’ alleged negligence, they ‘would have been able to prosecute all causes of action to a successful outcome’ – failed to establish their prima facie entitlement to summary judgment…There are questions of fact as to whether plaintiff failed to cooperate with defendants in providing them with information and documents necessary for motion practice after the underlying action was dismissed.

Lesson: A former client’s failure to cooperate is a question of fact in assessing the liability of the attorney in a malpractice action. Failure to cooperate, more likely than not, would prevent plaintiff from establishing that “but for” his former counsel’s malpractice, he would have prevailed in the underlying action.

Tags: New York, But for-Proximate Cause, Proximate Cause, Torts/Personal Injury, defense, failure to cooperate

Underlying Bankruptcy and Standing to Sue

Posted on May 24, 2010 by Ben Wasserman

Wright v. Meyers & Spencer, LLP, 849 N.Y.S.2d 274 (N.Y. App. Div. 2d Dep't 2007)

NY Underlying Bankruptcy Action