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Financial Downturn and Fraud Coupled with Legal Malpractice

The question of whether legal malpractice litigation is tied to [and affected by] downturns in the financial and economic worlds is often asked.  Our answer is that legal malpractice litigation is apt to come up in every situation where attorneys are present.

The Drier episode, punctuated by fraud, crimes and large money numbers is a prime example.  In this NYLJ article by Nate Raymond we see that opinion letters assuring some aspect of a transaction, issued by attorneys, are now the subject of a legal malpractice case.  From the article:

"Fortress Investment Group LLC filed suit against Ruskin Moscou Faltischek on Tuesday for allegedly issuing "utterly false" legal opinion letters used by ex-lawyer Marc S. Dreier, who is now in prison for his role in a massive Ponzi scheme.

In a complaint filed in Manhattan Supreme Court, Fortress claims the Uniondale-based law firm issued three letters that Mr. Dreier used to defraud the investment firm out of $50 million. The suit against Ruskin Moscou follows one filed by Fortress in December against Dechert that made similar allegations.

Legal Malpractice Claims Reinstated Against Boies Schiller

Yesterday, the Appellate Division, First Department, reversed Supreme Court and reinstated the negligence causes of action on behalf of Mary Anne Fletcher against Boies Schiller in Fletcher v Boies, Schiller & Flexner, LLP; 2010 NY Slip Op 06140 ;Decided on July 20, 2010 .

From the Decision:  "Plaintiff, a fashion model, pleaded that a prominent agency mismanaged her and lost or withheld her crucial portfolio; that she had evidence of a scheme involving bogus expenses charged by that agency against other models; that images of her were profitably used by a large retail chain, wrongfully and without her authorization, via a subsidiary; and that a second agency had interfered with bookings that would have earned her $275,000, and instead booked another model for those jobs.

Plaintiff further pleaded that, when she consulted the Boies Schiller law firm and met with defendant Hayes, she was persuaded to turn over a large body of self-gathered evidence and told that her claims were worth large, specified amounts, and that the firm, and defendant Hayes concealed a conflict of interest between her and existing classes in state and federal actions; excluded her from the federal class action; subordinated her interests to those of other class members; participated lackadaisically in settlement discussions; and failed to timely file a claim in a crucial bankruptcy proceeding while successfully prosecuting the claim of the federal class.

Sometimes It Just Wasn't the Attorney in Legal Malpractice

One theme that we have considered over the years is whether attorneys get preferential treatment in legal malpractice litigation.  Are motions to dismiss granted on too little evidence?  Do the attorneys get the benefit of the doubt?  Is the fact that legal malpractice law is written mostly by attorneys, is decided upon by attorneys and affects attorneys sometimes dispositive of the outcome?

Well, all that aside, sometimes the client just can't help themselves.  Here is an example from today's NYLJ:  Uzamere v. Uzamere;  KINGS COUNTY;  Justice Schack;

"Pro se plaintiff CHERYL D. UZAMERE (UZAMERE) moves by order to show cause for: summary judgment, pursuant to CPLR Rule 3212; and, upon the failure of all defendants to answer, pursuant to CPLR §3215, for a default judgment of $100,000,000.00 plus interest against defendants SENATOR EHIGIE EDOBOR UZAMERE a/k/a "GODWIN E. UZAMERE" (SENATOR UZAMERE), ALLEN E. KAYE, P.C., ALLEN E. KAYE, ESQ., HARVEY SHAPIRO, ESQ. (SHAPIRO), BERNARD J. ROSTANSKI (ROSTANSKI), and JACK GLADSTEIN, ESQ. (GLADSTEIN), in an action arising from defendants' alleged misdeeds and misconduct related to plaintiff UZAMERE's 1979 marriage and subsequent abandonment by SENATOR UZAMERE. Defendants ALLEN E. KAYE, P.C. and ALLEN E. KAYE, ESQ. will be collectively referred to as "KAYE."

9/11 and Judicary Law 487 in Legal Malpractice

9/11 is almost 10 years behind us.  Its direct effects may have passed, but the indirect effects still resonate.  Here is a fraud, foreclosure scam and legal malpractice case which arises out of the post 9/11 world.

Cullen v. Steinberg, 2010 U.S. Dist. LEXIS 62138 is a case in which plaintiff was the surviving widow of a murdered victim of 9/11.  She invested her compensation in real estate, and then fell prey to a variant of a scheme.  "In 2004, plaintiff received $ 1.9 million in compensation for her husband's murder in the 9/11 attacks on the World Trade Center. She invested some of the money in [*4] real estate, buying residential property at 653 Jacey Drive in Fort Lee, New Jersey in 2004, and at 1400 Outlook Avenue in the Bronx in 2006."
 
"At a party in December 2006, plaintiff met Maximo (Max) Almonte, who had gone to grammar school with her. Almonte initially told plaintiff he was a stock broker; plaintiff learned in May 2007 that he was actually a felon who had been convicted of real estate fraud. Almonte moved in with plaintiff at 653 Jacey Drive two days after meeting her at the party.

 

Experts, Summary Judgment and Legal Malpractice

It is an anachronism in New York practice that there is no specific time in which to name an expert.  While the 3d and 4th departments have rules that derive from case law [and not specifically, the CPLR], the 1st and 2d Departments are much looser.  In general, a "reasonable time" period obtains.  There are some courts which will require that the expert be named 30 days or 15 days prior to trial,  there is no unanimity of what day that might be.  Is it the first day of jury selection?  is it the first day of testimony?

On a finer level of analysis is the relationship of naming an expert pursuant to CPLR 3101 and motions for summary judgment.  In the 2d Department, especially Kings County, a body of law has arisen which holds that one must name an expert and serve a CPLR 3101 notice prior to the note of issue.  Here is an excerpt from Sierra v. D'Apuzzo, 6321/08;Decided: April 21, 2010;Judge Robert J. Miller;KINGS COUNTY;Supreme Court.

"Before the Court considers whether the landlord caused or created the condition or had actual or constructive notice of the condition, the Court must first address the threshold issue of whether the plaintiff's expert's affidavit should be considered in opposition to the defendant's motion. The defendant in reply to the plaintiff's opposition asserts that the Court should reject the plaintiff's expert's report pursuant to Construction by Singletree, Inc. v. Lowe, 55 AD3d 861 [2d Dept 2008]. The Appellate Division, in Singletree rejected a plaintiff's expert affidavit in opposition to the defendant's motion for summary judgement because the plaintiff's expert was not identified until after the note of issue and certificate of readiness were filed and the plaintiff offered no valid excuse for failure to give notice of the expert.

An Everyday Application of Fiduciary Breach and Deceit

Here is a short decision with deep reaching consequences.  In Kurman v Schnapp ;2010 NY Slip Op 03786 ;Decided on May 4, 2010 ;Appellate Division, First Department we see the deceitful act of an attorney, and the Appellate Division substituting its finding for that of Supreme Court.  We have commented on the natural inclination of attorneys, applying rules of attorney behavior to other attorneys, to minimize and overlook.  How, one asks, could Supreme Court have come to such a different conclusion from the Appellate Division?
 
"Plaintiff stated a cause of action under Judiciary Law § 487 by alleging that defendant deceived or attempted to deceive the court with a fictitious letter addressed to him from the former licensing director of the City's Taxi and Limousine Commission (TLC) that stated, inter alia, that plaintiff was under a lifetime ban on owning any licenses with the TLC (see Amalfitano v Rosenberg, 12 NY3d 8, 14 [2009]). Plaintiff further sufficiently alleged specific damages that could not have occurred in the absence of defendant's conduct (see id. at 15). The 2008 affidavit by the TLC's former licensing director offered by defendant in support of his motion fails to demonstrate conclusively that plaintiff has no cause of action (see Lawrence v Graubard Miller, 11 NY3d 588, 595 [2008]).

Famous Songwriter, the Pullman Financing and Legal Malpractice

Lamont Dozier, author of "Baby I need your Loving" [the Four Tops], "Baby Love", "Back in my Arms Again", "Come See about Me" [The Supremes] and many many others, got snagged in the Pullman financing scheme. the Pullman Bonds.  Before him, David Bowie was the recipient of the financing arrangement.

In LAMONT DOZIER, Plaintiff, - against - WILLKIE FARR & GALLAGHER LLP, DEUTSCHE BANK TRUST COMPANY AMERICAS;  09 Civ. 9865 (LMM); UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2010 U.S. Dist. LEXIS 42321; April 26, 2010, Decided  we see a simple discussion of amendment of pleadings.

The motion for leave to amend is denied, first, because it contravenes the November 9, 2009 stipulation and, second, because amendment as to Willkie (against whom, alone, the new claim is asserted) would be futile as time-barred.
 

Arbitration Clauses in Retainers and Legal Malpractice

A trend in legal malpractice retainer agreements, especially in the Intellectual Property field is the all encompassing Arbitration clause.  Beyond the statutory required arbitration in attorney fee disputes below a certain dollar figure, these arbitration clauses require arbitration of all disputes, whether in tort, contract or other claims.

Arbitration has long been said to be quick and economic, but recent experience has led to a different take.  In a $1 million dollar legal malpractice case, the fees to the arbitration company and to the arbitrator may approach $ 75-$100,000.  Of course to bring the same action in Supreme Court costs about $ 385.

Matter of Brady v Williams Capital Group, L.P. ;2010 NY Slip Op 02434 ;Decided on March 25, 2010 ;Court of Appeals ;Jones, J. investigates the situation in which a litigant can't afford arbitration, and the consequences.  Without deciding the case [it requires further fact finding in Supreme Court] the Court of Appeals reviewed Federal law in pursuit of an answer.

How Widespread is Legal Malpractice Litigation?

Legal malpractice sometimes seems to be the language franca in law news. It can show up in any setting. Here is a most unusual story from Law.com [link unavailable]:

"A legal malpractice lawsuit against Baker, Donelson, Bearman Caldwell & Berkowitz stemming from a case involving a 6-ton marble sculpture of Jesus Christ's face may proceed to trial.

The Court of Appeals of Tennessee ruled Aug. 15 that the lower court erred when it threw out two of the former client's theories for malpractice and granted a final judgment to the plaintiff on a third theory. The decision remanded the case back to the lower court for trial.

The former client is Christus Gardens, a tourist attraction and gift shop in Gatlinburg, Tenn. It sued Baker Donelson for its alleged failure to file an appeal on time in a copyright infringement lawsuit that Christus Gardens was defending.

Narrow Retainer Leads to Dismissal in Legal Malpractice

Sometimes its obvious what responsibilities the attorney will take on in a new representation.  If it's a motor vehicle accident, then the attorney is hired to prosecute the personal injury action, up to and including trial.  Here, in  Hallman v Kantor ;2010 NY Slip Op 03280 ;Decided on April 20, 2010 ;Appellate Division, Second Department  the attorneys took on a more limited role.
 
From the decision:  "The defendants submitted a retainer agreement reflecting that the plaintiff "understood, accepted and agreed" that the "scope of" their "engagement" was "to represent" her as a co-executor of her deceased father's estate. This documentary evidence conclusively established a defense to the plaintiff's claims of malpractice. The plaintiff alleged that she was the subject of a pending lawsuit, in effect, to recover sums of money due under certain notes she executed before her father died, and that the defendants committed legal malpractice by, inter alia, failing to speak with her "about the circumstances surrounding [her] signing of [those] notes," and failing to "question[ ]" their "validity." However, the documentary evidence demonstrated that the plaintiff's individual liability on the notes was a matter outside of the scope of the defendants' representation of the plaintiff in her capacity as co-executor of the estate (see CPLR 3211[a][1]; AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435; DeNatale v Santangelo, 65 AD3d 1006, 1007; Turner v Irving Finkelstein & Meirowitz, LLP, 61 AD3d 849, 850). [*2]" 

Andrew Bluestone discusses when he first knew that he wanted to be an attorney. He also reveals his surefire motto for success for attorneys. I'll give you a hint.... it involves some very early mornings. To see Andrew Bluestone's exclusive Lawline CLE course go to Lawline.com.

When a tort is committed outside of New York and a non-resident sues within the State of New York, courts apply the borrowing statute, especially with regard to the statute of limitations.  As an example, Kat House Prods., LLC v Paul, Hastings, Janofsky & Walker, LLP ; 2010 NY Slip Op 02489 ; Decided on March 25, 2010 ; Appellate Division, First Department  reminds us that although the NY statute of limitations is 3 years, the California statute of limitations for legal malpractice is only 1 year.  In this case, the Court applied the California time limits.

"When a nonresident sues in New York's courts on a cause of action accruing outside the state, our "borrowing statute" (CPLR 202) requires that the cause of action be timely under the limitation periods of both New York and the jurisdiction where the claim arose (see Global Fin. Corp. v Triarc Corp., 93 NY2d 525, 528 [1999]). Generally, a tort action accrues "at the time and in the place of the injury," and "[w]hen an alleged injury is purely economic, the place of injury usually is where the plaintiff resides and sustains the economic impact of the loss" (id. at 529).

Applying these principles, it is clear that plaintiffs' legal malpractice claim accrued in California, where their residences and principal place of business were located and the alleged economic injury was sustained, at the latest, in March 2006. Under that state's applicable one-year statute of limitations (Cal Civ Proc Code § 340.6), this action, commenced in November 2007, was time-barred. "
 

Actually we're a little shocked at the facts of this matrimonial action involving Thomas Liotti.  in Coccia v Liotti ;2010 NY Slip Op 00917 ; Decided on February 9, 2010 ; Appellate Division, Second Department  we see some very unusual language from the Appellate Division.  Beyond reinstating [or more correctly put, modifying] the legal malpractice claims, the AD basically granted summary judgment wiping out attorney fees by Liotti on the almost unheard of use of a disbarred attorney and misleading the client into thinking that the attorney was in good standing.

Rather than explain, here is the decisional language:

However, the Supreme Court erred by, in effect, upon renewal, vacating the determination in the order entered September 13, 2007, denying that branch of the initial cross motion which was for summary judgment dismissing the sixth cause of action to recover damages for fraudulent inducement, based upon the defendant's alleged misrepresentation that the person who would be substantially responsible for her case was an attorney. The plaintiff alleged that she later learned that such person was a disbarred attorney, prohibited from practicing law, and that the defendant fraudulently concealed this information. Contrary to the Supreme Court's conclusion, we find that the defendant failed in his initial submissions to establish, as a matter of law, that the plaintiff did not justifiably rely upon his representation of this individual's status as an attorney in good standing.

The Supreme Court erred in denying those branches of the plaintiff's cross motion which were for summary judgment dismissing the first, second, and third counterclaims seeking to recover outstanding counsel fees.

Liability of Subsequent Attorneys in Legal Malpractice

Macaluso v Pollack, 2010 NYSlipOp 30276(U) , Justice Diamond, Nassau County presents an interesting story of how a case can get dismissed. Beyond the storyline, the case presents analysis of liability of predecessor/subsequent attorneys, how the dissolution of a partnership affects legal malpractice litigation, what subsequent attorneys  can accomplish in the Second Circuit, and potential liability of associate attorneys.
The original attorneys were to represent plaintiff in an employment discrimination case, but negligently failed to follow court orders in US District Court.  Eventually, the case was dismissed by the US District Judge, on one particular day in which the attorneys did not appear for a conference.  This was apparently the last straw, as there had been many previous late filings, etc.  So case is dismissed.  Attorneys for plaintiff at that point were a partnership of two attorneys.  These attorneys then file an appeal to the Second Circuit, but leave out several essential filings which dooms the appeal.

Employment Discrimination and Legal Malpractice

Carboni v Ginsberg; 02/02/2010 2010 NYSlipOp 30256(U) Maltese, J. is an illustration of how a potential legal malpractice case underlays almost all activity within the realm of attorney representation, which is to say, everything.

Here, the question is whether plaintiff lost his employment in a wrongful manner, and after that determination, whether he has sued the attorneys within the appropriate statute of limitations time.
In a meticulous, fact specific decision, Justice Maltese writes that under CPLR 3211(a)(1) "the movant is required to demonstrate that the `documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law.'"

No Right to Arbitrate Fee Dispute Despite Retainer Language

In Edelman v Poster;  2010 NY Slip Op 00788 ;  Decided on February 4, 2010 ;  Appellate Division, First Department  we see a situation in which a matrimonial retainer agreement boldly stated a right to arbitrate, yet the Appellate Division, First Department, determined that client has no right to arbitrate

Here is the retainer language:  "While I seek to avoid any disputes concerning the payment of our fee, in the event such a dispute does arise, you have the right, at your election, to seek arbitration, the results of which are binding on both parties. I shall advise you in writing by certified mail that you have 30 days from receipt of such notice in which to elect to resolve the dispute by arbitration, and I shall enclose a copy of the arbitration rules and a form for requesting arbitration. If no action is pending and if you do not timely enforce your rights to enter into fee arbitration, I may commence legal proceedings against you to recover any unpaid fee "
 

The Intersection of Judiciary Law and Collateral Estoppel
Izko Sportswear Co., Inc. v Flaum ; 2009 NY Slip Op 04387 [63 AD3d 687] ; June 2, 2009 ; Appellate Division, Second Department  is a somewhat famous case in Legal Malpractice.  In earlier decisions, the Appellate Division determined that plaintiff stated a cause of action in Judiciary Law 487.  Now, the case has ended with a dismissal;   The Court of Appeals then denied leave to appeal.  Two lessons are to be learned here:
 
1.  Violation of Judiciary Law 487 may be demonstrated either by deceit or by chronic extreme pattern of delinquency; and

2.  Judicial determinations of attorney fees act as collateral estoppel to a later legal malpractice or Judiciary Law 487 determination.

Reviewing the findings of the Appellate Division, we see:
"A violation of Judiciary Law § 487 may be established "either by the defendant's alleged deceit or by an alleged chronic, extreme pattern of legal delinquency by the defendant" (emphasis supplied) (Knecht v Tusa, 15 AD3d 626, 627 [2005]; see O'Connell v Kerson, 291 AD2d 386, 387 [2002]; see also Bridges v 725 Riverside Dr., 119 AD2d 789 [1986]; Trepel v Dippold,2005 WL 1107010, 2005 US Dist LEXIS 8541 [May 9, 2005]). "

A Short Personal Note
The folks over at Attorney.org recently contacted me about an interview for their website. If you don't know who they are, check them out.  . In addition to legal news, they also highlight noteworthy attorneys from around the country. One of their upcoming features is a highlight of local Attorney Generals and District Attorneys. They interviewed me for an article about how to decide if you need a Legal Malpractice Attorney and whether or not you have a case. You can view the article here: Attorney.org
 
Exclusions and Recission in Legal Malpractice Insurance
A prime worry for the legal malpractice practitioner, on either side of the aisle, is whether there is legal malpractice insurance.  For the defendant, it is paramount; for the plaintiff it is significant.  Much thought has gone into how to determine whether the target defendant has adequate [or indeed, any] insurance, and planning has to go into the target's application for insurance."
One prime weapon that the insurer has is the "prior acts" doctrine.  It says in essence that you must report all past prior acts that one might reasonably believe could lead to a law suit for legal malpractice, whether it has been started or not.  We remember one managing attorney who shouted at least once a week: "Put the Carrier on Notice!"  Sometimes he was right.
Here, in Executive Risk Indemnity v, Pepper Hamilton, LLP, we see Justice Jone's decision on this issue:

The Outer Reaches of Breach of Fiduciary Duty and Legal Malpractice
In    PETER GIANOUKAS, DORIS GIANOUKAS and NICHOLAS TARSIA, Plaintiffs, - against - PETER CAMPITIELLO, ESQ., LEVY & BOONSHOFT P.C., DAVID M. LEVY, ESQ., STEPHEN BOONSHOFT, ESQ. and EAST WEST ACQUISITIONS, LLC, Defendants.;09 Civ. 1266 (PAC);UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 95354;October 13, 2009   we see the outer reaches of a breach of fiduciary duty and of legal malpractice in a well written and reasoned decision by Judge Paul Crotty of Southern District of New York. The facts and allegations are simple:
"The Amended Complaint alleges five separate fraudulent transactions: (1) Codine(x), (id. PP 41-68); (2) Pay Pad, (id. PP 69-87); (3) LIMPE, (id. PP 88-106); (4) Acellus, (id. PP 107-16); [*3] and (5) UTTI, (id. PP 117-34). Throughout the Amended Complaint, Campitiello is portrayed as the architect of the fraudulent transactions which bilked Plaintiffs out of in excess of $ 400,000. He did this as an employee of L&B, and used L&B's escrow account to receive funds from the Plaintiffs and thereafter funds were disbursed from the account to consummate the fraud. The Amended Complaint does not allege that Levy and Boonshoft were involved in, or knew of, the fraud"

Mixed Result in Landlord-tenant Legal Malpractice Case

Landlord hires big-time Landlord-Tenant attorneys in New York City, and expect that the attorneys are in fact bringing a series of eviction proceedings.  This case alleges that they did not, yet charged fees, and misled the client.  What is a client to do?  In this instance they sued for legal malpractice, breach of fiduciary duty, fraud, breach of contract, etc.  Justice Joan Madden of Supreme Court, New York County decided a CPLR 3211 motion to dismiss in Cayuga Capital Mgt. LLC v, Borah Goldstein.

The fraudulent inducement, fraudulent misrepresentation and negligence claims were all trimmed as duplicitive of a potential legal malpractice case. Justice Madden reasoned that they were based upon the same facts, and sought the same damages, and thus were duplicates of the potential legal malpractice.

More interesting was plaintiff's invocation of Ulico v. Wilson Elser, 56 AD1 (1st Dept, 2008),  That case has been the center of a growing number of "breach of fiduciary duty" cases, and supports a claim for such a breach.  Here, in a footnote, Justice Madden disposes of reliance upon Ulico.

A Particularly Shocking Judiciary Law 487 and Legal Malpractice Case
Were one to read each of the 150+ legal malpractice cases decisions filed each year, one would see a wide range of attorney-client problems.  Some are frivolous and some very serious.  This case, DAVID GOLDSTEIN, Plaintiffs, - against - ALLEN S. GOLD and LAW OFFICES OF ALLEN S. GOLD, Defendants;No. 06 CV 6707 (ERK)(VVP); UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 78822; September 1, 2009 is remarkable for the "brazen" behavior by the attorney.  Judge Korman disposes of a motion for summary judgment in this decision.

"Plaintiff further alleges that, in early 2001, defendant informed him that he filed a complaint against Mass Mutual ("2001 action"), "seeking the relief [plaintiff] had requested." (Id. P 8). This was not true - defendant never filed the 2001 action. (Id. P 9.) Nevertheless, from 2001 to 2005, in response to plaintiff's repeated inquires as to the status of the 2001 action (id. PP 10-12), defendant led plaintiff to believe that he was vigorously litigating the 2001 action against Mass Mutual (id. PP 8, 13-22).

Whose Case is It in Legal Malpractice and Bankruptcy ?
When one files a petition in bankruptcy, ownership of assets is upended.  Some if not all assets of the debtor become part of the estate, and will be used to pay creditors.  A current cause of action in legal malpractice, even if not reduced to a law suit is one such asset.  What happens if the negligence is unearthed in the bankruptcy proceedings?  Is it the property of the estate or that of the debtors; is is pre-petition or post-petition.

In IN RE: ANNE DE HERTOGH and PETER DE HERTOGH, DEBTOR;  CASE NO. 04-22006 (ASD), CHAPTER 7; UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF CONNECTICUT;2009 Bankr. LEXIS 2466;August 28, 2009 we see the following:

"The major point of contention in the present proceeding concerns whether the Malpractice Action is property of the estate or of the Debtors. Courts have taken several approaches to this question. Some, relying on Butner v. United States, 440 U.S. 48, 99 S.Ct. 914, 59 L. Ed. 2d 136 (1979), and the language of Section 541, have looked to whether, as of the petition date, a cause of action had accrued under applicable state law. See, e.g. Swift v. Seidler (In re Swift), 198 B.R. 927 (Bankr. W.D.Tex. 1996) (under Texas law, cause of action for legal malpractice causing loss of an exemption could only accrue post-petition and was therefore not property of the estate);

One Case With Several Lessons in Legal Malpractice

Sometimes a court's decision will simply tell how the case came out.  Sometimes a decision can teach a lesson; in this case one decision teaches several lessons in Legal Malpractice.  KIRK , -against-  HEPPT,   05 Civ. 9977;UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 80989;September 1, 2009, Decided  by Judge Sweet is one such case. We will look at this case today and tomorrow.

"The Kirks, pro se, filed their complaint against Heppt, Kirk's former attorney, on November 28, 2005, alleging claims for, inter alia, breach of contract, fraudulent misrepresentation, and breach of fiduciary duty arising out of Heppt's representation of Kirk in an action brought by Kirk against his former employer. On October 2, 2003, Kirk filed suit against Schindler in New York State Supreme Court, New York County, asserting causes of action for breach of contract and defamation and seeking a declaratory judgment that Kirk had been constructively discharged by Schindler.

How Close is Privity in Legal Malpractice and Elsewhere?
Sometimes we find a stimulating discussion of a principal of legal malpractice in decisions concerning other professions.  In this case Sykes v RFD Third Ave. 1 Assoc., LLC ;2009 NY Slip Op 06387 ;Decided on September 8, 2009 ;Appellate Division, First Department ;Moskowitz, J.  we find a discussion of privity and third-party beneficiary law which informs legal malpractice issues.
 
"Plaintiffs' negligent misrepresentation claim fails to allege a "special relationship," i.e., "a relationship so close
as to approach that of privity" (Parrott v Coopers & Lybrand, 95 NY2d 479, 484 [2000]). The New York Court of Appeals takes a rather cautious approach to determining whether a relationship necessary to support a claim for negligent misrepresentation exists (see Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417, 424 [1989]

Failure to Communicate a Settlement Offer and Legal Malpractice
In "Boglia,  v  Greenberg, et al., ; SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT;2009 NY Slip Op 5278; 63 A.D.3d 973; 882 N.Y.S.2d 215; 2009 N.Y. App. Div. LEXIS 5183  the court writes:
 
"The client retained the attorneys to represent her in a matrimonial action. After terminating the attorneys' representation, the client settled the underlying action and received a settlement in the amount of $ 200,000. Thereafter, the client sued the attorneys alleging, inter alia, that they negligently advised her of her rights to equitable distribution of the residence, and failed to communicate an offer of settlement to her in the amount of $ 250,000. She also sought to recover

Tolling or Abatement of Statutes in Legal Malpractice
Plaintiff has a right to sue target attorney, and then, for strategic reasons, agrees to put the case aside for the time being.  Plaintiff and target attorney reach a stand-still agreement, but the question of tolling or abatement of  the statute of limitations remains.  How is the statute of limitations calculated in this situation?

In  CMI Capital Mkt. Inv., LLC v Buchanan Ingersoll & Rooney P.C., 2009 NY Slip Op 31708(u) we see Justice Tolub's definitions and answer.  In that case, the statute of limitations was tolled, not abated.  Tolling is the suspension of the running of a statute for a period of time.  Abatement is the ending of the statute, allowing for it to start running again, from the beginning.

An Unexpected Recovery and Legal Malpractice
Defendant hired plaintiff to represent him in a Federal Court law suit over NYC placard holders parking on sidewalks and curbs in front of his commercial establishments, depriving defendant of use of his properties.  He retained plaintiff who started the Federal law suit, and was attorney until a settlement conference.  Defendant's story is that he was so taken aback by the negligence of plaintiff, that he settled the case for $ 2,125,000 against the City.
 
More Definitions and Legal Malpractice
In MICHAEL S. JOHNSON, DONNA DYMKOWSKI, PATRICIA LONG-CORREA, , -against- NEXTEL COMMUNICATIONS, INC.,  LEEDS, MORELLI & BROWN, P.C.,  , which ws reviewed on Friday we see more of a clutch of definitions which are quite useful:

Breach of Contract:  To state a claim of breach of contract, the plaintiff must establish 1) the formation of a contract between the plaintiff and defendant, 2) performance by the plaintiff, 3) failure by the defendant to perform, and 4) resulting damages. Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004) (citing Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996); Furia v. Furia, 116 A.D.2d 694, 498 N.Y.S.2d 12, 13 (2nd Dep't 1986).
To state a claim of breach of contract, the plaintiff must establish 1) the formation of a contract between the plaintiff and defendant, 2) performance by the plaintiff, 3) failure by the defendant to perform, and 4) resulting damages. Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004) (citing Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996); Furia v. Furia, 116 A.D.2d 694, 498 N.Y.S.2d 12, 13 (2nd Dep't 1986). 

Avoiding Legal Malpractice:

A Settlement is a Settlement is a Settlement
Actions have consequences, and in legal representation it may be malpractice,   Here is an example.  Say, for example that you have a robust asbestos practice, and in one of your many pending actions, you have one of many defendants file a motion for summary judgment.  You may not be sure whether there is any evidence against that particular defendant and sign a stipulation of discontinuance.  Is the stipulation binding, when a couple of months later you determine that there was evidence against that defendant?  Can you vacate?  The short answer is NO.  The longer answer is found in Hallock v. State of New York and in Charlop v A.O. Smith Water Prods.
2009 NY Slip Op 05911 ; Decided on July 21, 2009 ; Appellate Division, First Department

Forgery Claims in a Legal Malpractice Setting
Plaintiff loses a commercial law case, and sues his attorneys for legal malpractice.  During discovery, while preparing responses to interrogatories, he discovers, and then sues over what he claims is a forged affidavit said to be prepared by the attorneys and unsuccessfully used in his case.  Worse he says, the affidavit contained inaccurate information which was the cause of the loss, and hence a sort of double malpractice.  Defendants say, its too late, and what kind of a cause of action is this, anyway?

It's Today's Law, Not Yesterday's in Legal Malpractice
Attorney takes on case for client, and the job is to check whether client can erect a Walgreens in Brooklyn.  Attorney does research, and determines that the building and parking lot will be legal in that zoning.  Attorney, however, fails to check if any new laws have been passed by the NYC Council on zoning recently. Two weeks prior to the report, the Council had passed a law which made the parking lot illegal, and those changes were certified.

Legal Malpractice and the Failure to File a Letter
Legal representation in even simple matters can lead to unintended consequences.  As an Example H & J Restaurant v, A & J Grand Enterprises and Leigh, 2009 Slip OP 21544, authored by Justice Edmead, demonstrates how a simple ministerial mistake can end up with a potential $ 400,000 loss, with later judgment against the attorney.
It's a simple transaction, A buys a restaurant from B.  As might be expected, Seller exaggerates the sales, or hides underpayment of taxes.  Since these commercial transactions have taken place since time immemorial, there are safeguards and protections. 

The Texas Version of Privity in Legal Malpractice

One of the beautiful things about the US is that every state has its own law.  It was shocking to learn in Law School that events a few miles away, across a state border could be handled differently.  Sure, other countries, but Connecticut?

Here is a story  from Law.Com about how Texas handles executor-estate attorney legal malpractice cases.

"In a 5-2 decision, the Texas Supreme Court held on June 26 that the executor of an estate may sue a decedent's attorneys for alleged malpractice committed outside the realm of estate planning.
"We hold that the executor should not be prevented from bringing the decedent's survivable claims on behalf of the estate," Justice Harriet O'Neill wrote for the majority in Smith, et al. v. O'Donnell.

Criminal Law and Legal Malpractice Law Intersect
Criminal law and legal malpractice law seldom intersect.  One reason is an almost complete ban on criminal defendants suing their defense attorneys.  In order to sue, one must show "actual innocence" which is customarily demonstrated by reversal upon appeal or exoneration.  Since that is a rare occurrence, there is little vitality to criminal defense legal malpractice.

Here, the view is obverse, and a real estate broker [perhaps an investor ?] sues an attorney involved in the real estate transaction for legal malpractice.  The kicker is that the attorney has been arrested upon a felony complaint, and now awaits the action of the Grand Jury.
In  THE CORCORAN LAW GROUP, L.L.C. et ano., -against- JANE Y. POSNER, ESQ. ;09 Civ. 1861 (WHP)UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 we see that the Court grants a stay of legal malpractice proceedings to see what happens to the felony complaint. 

Not Plaintiff's Attorney, But Still Owes a Duty in Legal Malpractice
Privity of contract is an important element of legal malpractice.  For policy reasons [and to avoid infinite and endless litigation] courts enforce a rather strict requirement that one may sue their own attorney, but not the opponent's in legal malpractice. There are exceptions.

In LYDIAN PRIVATE BANK d/b/a VIRTUALBANK, -v- RICHARD A. LEFF, UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 48756
June 8, 2009, we see a well enunciated set of rules for the combination of breach of fiduciary duty and legal malpractice by Judge Laura Taylor Swain.
"
"An action for legal malpractice requires proof of three essential elements: (1) the negligence of the attorney; (2) that the negligence was the proximate cause of the loss sustained; and (3) proof of actual damages." Mendoza v. Schlossman, 87 A.D.2d 606, 606-7, 448 N.Y.S.2d 45 (2d Dep't 1982). In some cases, a lawyer may owe duties to a nonclient that are actionable in a legal malpractice claim if his client has a fiduciary relationship with the nonclient, to the extent that action necessary to prevent or rectify the [*9] breach of a fiduciary duty owed by the client to the nonclient falls within the scope of his representation. 4 In order to state a claim for negligence, a plaintiff must demonstrate "(1) a duty owed by the defendant to Plaintiff, (2) a breach thereof, and (3) injury proximately resulting there from." Solomon by Solomon v. City of New York, 66 N.Y.2d 1026, 1027, 489 N.E.2d 1294, 499 N.Y.S.2d 392 (N.Y. 1985).

Plaintiff Continues with Legal Malpractice and Unjust Enrichment and Fiduciary Duty Claims

In a well-reasoned opinion from the SDNY, Judge Koeltl determined that plaintiff may continue with three claims against the attorneys.  In SMARTIX INTERNATIONAL CORPORATION, a.k.a. SMARTIX INTERNATIONAL, LLC,  - against - GARRUBBO, ROMANKOW & CAPESE, P.C. AND ANTHONY RINALDO, 6 Civ. 1501 (JGK); UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; 2009 U.S. Dist. LEXIS 29114;March 30, 2009, Decided
 
In this case, Smartix, a corporation with certain ticketing intellectual property, was in the business of selling and licensing that technology, and wanted to enter into a contract with Mastercard.  They retained the defendant law firm to advise them on the contract negotiation, to engage in corporate governance, and put one of the attorneys on the board.

Things went wrong with the MC contract and then Smartix was sued by plaintiffs named Metzger.  Plaintiffs retained defendants to defend that suit.  In this blog entry we'll look at the legal malpractice claims, and in tomorrow's we'll look at the unjust enrichment claim.

Plaintiffs complained that defendants failed to advise them correctly on the Mastercard contract negotiation and left them open to Mastercard's exploitation.  Beyond that, they claim malpractice when defendant attorney failed to attend a court ordered mediation session, [as well as the other attorneys] and was open to a sanctions hearing for which they billed plaintiffs.

Judge Koeltl denied summary judgment on both counts. "The plaintiff's first legal malpractice claim is based on the defendants' representation of the plaintiff in the course of the Metzger litigation. The plaintiff alleges that it was billed for the defendants' attendance at a sanctions hearing resulting from Mr. Rinaldo's failure to attend a court-ordered mediation. The defendants [*11] point out that both Metzger parties failed to attend the court-ordered mediation and that no sanctions were ultimately imposed.

The allegation regarding the sanctions hearing raises an issue of material fact with respect to the plaintiff's first legal malpractice claim. The plaintiff has provided evidence that it was billed in connection with a sanctions hearing resulting in part from Mr. Rinaldo's failure to attend a court-ordered mediation.  [T]he failure to follow direct orders from the court would fall below any standard of care. Cf. Logalbo v. Plishkin, Rubano & Baum, 163 A.D.2d 511, 558 N.Y.S.2d 185, 187-88 (App. Div. 1990) (finding in the absence of expert testimony or expert report that attorney who disregarded "clearly defined and firmly imbedded" obligation failed to meet any permissible standard of due care).

Moreover, although the defendants point out that the trial judge in the Metzger litigation did not ultimately [*12] impose sanctions on the defendants, they do not argue that this decision by the trial judge precludes a finding of legal malpractice against the defendants, and there is no reason that would be so. Plainly claims for legal malpractice may exist even where attorneys have not been sanctioned for their conduct."
 
"The plaintiff has produced evidence in the form of deposition testimony that the MasterCard Agreement was drafted to the disadvantage of the plaintiff and contained certain vagaries that MasterCard was able to exploit at the expense of the plaintiff. (Katz Dep. at 47-49 ("[The Agreement] was very vague . . . . It did not protect Smartix from MasterCard's efforts to secure [*19] use of the software outside the contract."), 101 ("The MasterCard Agreement was vague enough so that MasterCard felt that they would roll the dice and try to do these businesses without us, which they subsequently did . . . ."); Huber Dep. at 72 ("It sounds as if MasterCard can do pretty much anything they want with this in one part of the contract . . . . There's also penalty clauses in here that would cause Smartix enormous damages if they wanted to market this outside of MasterCard . . . “

What Creates an Attorney-Client Relationship for Legal Malpractice Purposes?

Privity of contract is an essential in legal malpractice litigation.  One may not sue the opponent's attorney; only one's own.  What makes for privity of contract?  As all know, no writing is necessary to create a contract.  So, can there be privity of contract without a retainer agreement.  Putting aside Rule 137 questions about the attorney's obligation to provide a writing, in Denise Terio,  v Lance Roger Spodek, Reich Reich & Reich, P.C., 2008-03594, 2008-04435;  SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT; 2009 NY Slip Op 4412; 2009 N.Y. App. Div. LEXIS 4411June 2, 2009, Decided we see a short answer:
 
"To recover damages for legal malpractice, a plaintiff [**4] must prove, inter alia, the existence of an attorney-client relationship (see Velasquez v Katz, 42 AD3d 566, 567, 840 N.Y.S.2d 410; Moran v Hurst, 32 AD3d 909, 822 N.Y.S.2d 564; Wei Cheng Chang v Pi, 288 AD2d 378, 380, 733 N.Y.S.2d 471; Volpe v Canfield, 237 AD2d 282, 283, 654 N.Y.S.2d 160). While a plaintiff's unilateral belief does not confer upon him or her the status of client (see Volpe v Canfield, 237 AD2d at 283), an attorney-client relationship may exist in the absence of a formal retainer agreement (see e.g. Swalg Dev. Corp. v Gaines, 274 AD2d 385, 386, 710 N.Y.S.2d 619). To establish an attorney-client relationship there must be an explicit undertaking to perform a specific task (see Wei Cheng Chang v Pi, 288 AD2d 378, 733 N.Y.S.2d 471; Volpe v Canfield, 237 AD2d at 283)."
 
Attorney and Client Battle over Fees and Legal Malpractice

So often, the practice of law seems to have devolved into an attorney v. client battle over the work and fees.  Here in Morelli & Gold  LLP v. Altman, NY Slip Op 31492(U) we see a large scale battle over a child support/custody case in which there has been litigation, fees, fee dispute, trial de novo, counterclaims and appeals. All this, and the case has not yet left the pleadings stage.

In her 32 page decision, Justice Edmead goes through a complete primer on:

a.  Rule 137 fee disputes, trial de novo, the pleading requirements for a trial de novo, and the forms used;
b.  Defenses and counterclaims after a fee dispute;
c.  Proper pleadings in legal malpractice counterclaims;
d.  The role of res judicata and collateral estoppel in legal malpractice fee disputes.

It's a long decision,,,look to the link and read through it for a good discussion on these issues.

RCM Technologies and Buchanan Ingersoll Legal Malpractice Case

Henry Gottlieb at Law.Com reports this $10.6 million Legal Malpractice settlement between Buchanan Ingersoll and RCM Technologies over a stock registration agreement, today.  Here is the news article:

" A lawyer and two Philadelphia firms have agreed to pay $10.6 million to settle a claim that they botched work on a New Jersey company's stock transactions and failed to alert the company to the errors.

Buchanan Ingersoll & Rooney, the wind-down committee of defunct Clark, Ladner, Fortenbaugh & Young, and a former partner of both firms, Stephen Cohen, agreed to settlements of a malpractice complaint by computer and engineering consultant RCM Technologies of Pennsauken, N.J.

RCM accused Cohen of preparing a stock registration agreement that failed to memorialize a plan to restrict the rights of two key shareholders to sell their RCM holdings. That drafting, plus an alleged failure to alert RCM in time for remedial action, cost the company millions of dollars, according to the Morris County, N.J., suit.
How much the defendants paid was not included in stipulations of dismissal filed with the court. But RCM did disclose the sums in its March 27 annual report filed with the Securities and Exchange Commission.

A comparison of the dates of the stipulations of dismissal and the SEC filing shows that the Clark Lardner settlement in 2007 was worth $800,000 to RCM and that the company recovered $9.8 million -- $5.9 million after taxes -- in a March 16 settlement with Buchanan Ingersoll."
 
Real Estate Sales and Legal Malpractice

Real Estate sales and the plummeting economic scene have dominated the news cycles for months now.  Legal Malpractice litigation often follows economic disturbances, and this case, Walker v. Berman, 2009 NY Slip Op 50887(U) ; Decided on May 4, 2009 ; Supreme Court, New York County ; Stallman, J. is an example.  In this case plaintiff wanted to buy an apartment house, but got something different.

Unsophisticated buyer purchases a building at 151 West 76th Street, and relies on broker and attorney to guide buyer through what would turn out to be a difficult process.  In the end, buyer bought a "Class "B" Multiple Dwelling. Ex. G. A Class "B" Multiple Dwelling is a dwelling that is intended for use as the temporary abode of individuals and families; the classification includes hotels, lodging houses, rooming houses, boarding houses, boarding schools, furnished room houses, lodgings, club houses, colleges, and dwellings designated as private dwellings but occupied by one or two families with five or more transient boarders, roomers or lodgers in one household. Multiple Dwelling Law § 4. The Class "B" Multiple Dwelling designation also appears on the certificate of occupancy search ordered by plaintiff prior to agreeing to the purchase (Ex. N), and on the listing notice provided to plaintiff by defendant ."

Plaintiff sues attorney who defaults. [A quick look at the Lawyer's Diary shows no entry for this attorney.  A search of the OCA attorney directory shows that Ira L. Berman is disbarred.]  Plaintiff now tries to go after the broker, with negative results.

"After the contract was signed, but prior to closing, plaintiff informed Robin that there were some problems with the Certificate of Occupancy, and, allegedly, Robin advised plaintiff to confer with her attorney regarding the legal ramifications associated with the Certificate of Occupancy.

After the closing, plaintiff discovered that the Class "B" Multiple Dwelling classification is used for buildings operated as a Single Room Occupancy (SRO) dwelling, not a regular apartment building (i.e., a Class A multiple dwelling). Consequently, plaintiff asserts that she paid far more for the building that it is worth, believing it to be an apartment building, not an SRO. "

Result?  Plaintiff seems to lose all the way around.  Attorney defaults, has been disbarred, has no insurance defense, and broker is not liable.
 
Can This Happen in New York and is it Legal Malpractice

Questions of attorney billing, expenses and disbursements often surface in the guise of a legal malpractice defense.  Did the attorneys over bill ?  Did they over-charge for expenses?  May a law firm use Lexis or WestLaw as a profit center?  For example, if the law firm is paying a flat fee for legal research, may it charge hourly legal research rates to the client [not the attorney's time...legal research fees]

Here is a case from California, which arose after a NY legal malpractice case.  From the National Law Journal:

"A California plaintiffs' attorney has filed a lawsuit against a New York-based law firm on a behalf of a former client of the firm for what she claims is a hidden but widespread practice within the legal profession: law firms secretly profiting off legal research fees by overcharging clients.

Consumer protection attorney Patricia Meyer filed a suit against New York's Chadbourne & Parke on March 2 for allegedly overcharging J. Virgil Waggoner, a Texas businessman, by several thousands of dollars for computerized legal research. His bill was roughly $20,000 for the research, she said, but it should have been closer to $5,000. Waggoner v. Chadbourne & Parke, No. BC408693 (Los Angeles Co., Calif., Super. Ct.).

She did not serve the firm until May 1 because, she said, she did not want to compromise other investigations alleging similar claims.
Meyer of San Diego's Patricia Meyer & Associates said that many similar lawsuits are in the pipeline, noting that she has amassed evidence that shows at least a dozen other law firms are overcharging clients for legal research, but not telling them.
 
According to Meyer, profiting off fees, such as computerized legal research fees, without the clients' knowledge violates rules of professional conduct set forth by both the California and American bar associations, which limit the recovery of legal fees. She said that law firms can charge clients more for services than what they actually cost — they just have to let the client know upfront. "

Insanity and Legal Malpractice

Is an attorney required to perform more work that set forth in a retainer agreement?  If the attorney does not perform more work, will the statute of limitations be tolled by the client's insanity?  These two questions are partially answered in Turner v Irving Finkelstein & Meirowitz, LLP ;2009 NY Slip Op 03158 ;Decided on April 21, 2009 ;Appellate Division, Second Department .

 "The plaintiff allegedly was assaulted by a coworker at his place of employment in 1997. The defendant law firm represented the plaintiff in the ensuing claim before the Workers' Compensation Board (hereinafter the Board). The claim was disallowed, the Board affirmed that decision, and full Board review was denied. No later than May 2002, the defendant informed the plaintiff that its representation was complete."

Plaintiff unsuccessfully appealed, and then years later, sued the attorneys.  "In November 2006, the plaintiff, pro se, commenced the instant action, alleging that after he was [*2]denied full Board review, the defendant failed to advise him of "any other legal remedies" relating to the workplace incident. The defendant moved to dismiss the complaint ....In opposition, the plaintiff asserted that he suffered from a mental illness for which he had been hospitalized several times and, thus, he was entitled to a tolling of the statute of limitations pursuant to CPLR 208. The Supreme Court rejected the plaintiff's claim because the medical records he relied on were not in admissible form.
Although the evidentiary facts alleged by the plaintiff reveal the existence of an issue of fact as to applicability of the insanity toll, we nevertheless affirm on other grounds. "
 
When the Damages are Huge, Look for Legal Malpractice to Follow

This story from Law.Com by Zusha Elinson tells of the aftermath of a $ 82 million Sony Patent case, with its reports of witness buying, false testimony and unreliable evidence.  From the Legal Malpractice perspective here is the nugget:

"Craig Thorner was the key witness in the Sony legal team's effort to overturn an $82 million patent infringement verdict in a case against Immersion Corp. over vibrating video game controllers. Sony claimed that Immersion paid Thorner to keep quiet about inventions of his that could have invalidated Immersion's patents.

But U.S. District Judge Claudia Wilken wouldn't retry the case, concluding in 2006 that Thorner was an unreliable witness and that there was strong evidence -- supported by testimony and internal Sony documents -- that Sony paid $150,000 for Thorner's testimony.
The patent fight between Silicon Valley's Immersion and Sony, and its salacious post-trial motions, were followed closely by local lawyers.
In a wide-ranging suit filed Tuesday in New Jersey District Court, Thorner accuses Sony's outside and in-house lawyers of snookering him into the $150,000 deal, which came in the form of convoluted agreement to license his patents. He also accuses Sony's outside counsel -- Gregory Gewirtz of New Jersey firm Lerner David Littenberg Krumholz & Mentlik -- of malpractice for allegedly acting as his lawyer in the deal, but for Sony's benefit.

The lawsuit claims that the lawyers "contrived to take advantage of Thorner's inexperience and lack of resources in order to (i) obtain a patent license from Thorner on extremely favorable terms, and (ii) induce Thorner to testify against Immersion."

Reached Thursday afternoon, Gewirtz denied the allegations.
"In my view, all the allegations against me and my firm are reckless and false and all, of course, denied," he said. "We will very vigorously defend against all the claims."

The way the deal at issue worked, according to the lawsuit, was this: Electro Source -- a video game company also being sued by Immersion -- would pay Thorner $150,000 to license his patents. The deal, however, was actually being funded by Sony, which in turn got a license from Electro Source according to the lawsuit and court hearing transcripts.

Thorner claims that Gewirtz agreed to be his lawyer in the negotiations with Electro Source, but was actually looking out for Sony's interest
 
Multi-State Legal Malpractice and the Borrower Statute
 
California corporation retains New York law firm to process a trademark application, which fails.  California plaintiff sues New York defendant  for legal malpractice in Federal District Court, SDNY.  Case is dismissed on jurisdictional basis.  Case is later brought in State Court in New York.  Does California or New York statute of limitations apply?

In Kat House Productions v. Paul Hastings Janofsky & Walker, Justice York determines that California law applies, based upon CPLR 202.  The borrower statute's purpose is to prevent forum shopping between states and [as the Court of Appeals favors, have a "bright line rule".]

"CPLR 202 is designed "to prevent forum shopping by plaintiffs and to adhere to the generally accepted definition." Global Fin. Corp, v. Triarc Corp., 93 NY2d 525.

"CPLR 202 is designed to add clarity to the law and provide the certainty of uniform application to litigants.  This goal is better served by a rule requiring the single determination of a plaintiff's residence than by a rule dependent on a litany of events relevant to the `center of gravity' of a contract dispute." Global  at 530.

Justice York then decided that since the "place where investors resided and sustained the economic impact of the loss" was the state for borrowing purposes, that the California one year statute of limitations applied.

Cruise Ship Negligence and Legal Malpractice

Cruise Ship Season comes and goes, and even in poor economic times, the ships carry many people to their vacations.  As in all events human, there will be accidents and injury.  The very nature of cruise ships, their location and the mere fact that they travel on water, complicates the legal horizon.  Nautical law is different from terrestrial law, and many times [for legal advantage] the ships themselves are registered in other countries.

All this leads to mistakes when a passenger is physically injured.  Whom does one sue, the travel agent or the cruise ship line?  Where does one sue?  How does one effect service of process?  These are just some of the smaller questions.  How do you line up the witnesses, now back in their many different homes?  How do you get the medical testimony, which was taken far, far away?

Here is a legal malpractice case from such an occurrence.  Engler v Kalmanowitz ;2009 NY Slip Op 02237   Decided on March 24, 2009   Appellate Division, First Department .  Here, the legal malpractice claim is not set forth.  Was it service of process?  Was it failure to bring the action in a timely fashion?  We do not know.  What we do know is that Supreme Court determined that there were questions of fact still existing and that the Appellate Division found, as a matter of law, that the cruise ship, who was not a party to the legal malpractice action, had no notice of the defective carpet.
 
An Attorney's Mistake with No Remedy in Legal Malpractice

Nature abhors a vacuum, they told us in high school and the law abhors a wrong without a remedy. One particular area of legal malpractice where this occurs is criminal defense, in which no legal malpractice action might be brought by a convicted defendant, no matter whether the attorney's mistakes contributed, or caused the conviction.

Another area is the estates-peri-death area.  One example is the will beneficiary who does not receive a legacy or bequest because of attorney mistakes, but has no privity.  The attorney's mistake may not be litigated by the will beneficiary.  Here is another example:

Estate of Saul Schneider v Finmann ;  2009

NY Slip Op 02319  Decided on March 24, 2009

Appellate Division, Second Department .  Assume here for this example that the attorney mishandled the insurance transfer.  Money is lost to the estate because of it.  May the estate successfully sue?  No.
""The well-established rule in New York with respect to attorney malpractice is that absent fraud, collusion, malicious acts or other special circumstances, an attorney is not liable to third [*2]parties, not in privity, for harm caused by professional negligence" (Estate of Spivey v Pulley, 138 AD2d 563, 564). Inasmuch as the estate was not in privity with Finmann, and there is no allegation that one of the exceptions to the privity requirement is applicable here, the estate may not maintain an action for legal malpractice against Finmann in its own right (see Deeb v Johnson, 170 AD2d 865; cf. Estate of Nevelson v Carro, Spanbock, Kaster & Cuiffo, 259 AD2d 282, 285). Moreover, Schneider himself did not have a claim during his lifetime against Finmann for legal malpractice, since the only alleged damage suffered from the malpractice was the increase in estate tax liability, which could not have been incurred while Schneider was alive. Consequently, the estate may not maintain this action under EPTL 11-3.2(b) (see EPTL 11-3.2[b]; Deeb v Johnson, 170 AD2d at 866; Rutter v Jones, Blechman, Woltz & Kelly, P.C., 264 Va 310, 314; cf. Nembach v Giaimo & Vreeburg, 209 AD2d 222, 222-223). "
 
Fee Suits and Legal Malpractice Counterclaims - A Constant Duo

"The best defense is a strong offense"..."Tyranny shall not go unopposed!"  which of these two opposing story lines will succeed in a legal fee / legal malpractice case.  Here is one example where the fee side wins out.    Duane Morris LLP v Astor Holdings Inc. ,  2009 NY Slip Op 02544

Decided on April 2, 2009   Appellate Division, First Department  permits the attorneys to collect their fee, and the malpractice claims to die. 

"The record shows that in December 2003, each defendant signed an agreement with plaintiff, acknowledging that it owed plaintiff a certain sum of money for their legal representation and agreeing to pay it within a certain amount of time. Although defendants contend that there is a triable issue of fact as to whether these agreements were signed under duress, "[r]epudiation of an agreement on the ground that it was procured by duress requires a showing of both (1) a wrongful threat, and (2) the preclusion of the exercise of free will" (Fred Ehrlich, P.C. v Tullo, 274 AD2d 303, 304 [2000]).  The affidavit of defendants' principal, which claimed that he orally protested plaintiff's services, does not serve to defeat plaintiff's motion. A client's "self-serving, bald allegations of oral protests [a]re insufficient to raise a triable issue of fact as to the existence of an account stated" (Darby & Darby v VSI Intl., 95 NY2d 308, 315 [2000])

The part of defendants' malpractice counterclaim that dealt with the action against Edward Roski III was properly dismissed. "A legal malpractice action is unlikely to succeed when the attorney erred because an issue of law was unsettled or debatable" (Darby, 95 NY2d at 315 [internal quotation marks and citation omitted]). When the Southern District of New York found that some of Astor's claims in the Roski Action were barred, it noted that "there appears to be no federal authority directly on point" (Astor Holdings, Inc. v Roski, 325 F Supp 2d 251, 262 [SD NY 2003]), and relied on a California state case that was decided in 2002 (see id.), which was after the Roski action was filed...."

Bankruptcy Fee Awards and Legal Malpractice

We've written in the past on the collateral estoppel trap in legal malpractice.  While fee arbitrations in State Court proceedings probably have the greatest absolute number of applications, bankruptcy court fee awards may well cover a greater dollar figure.  Here, in In re D. A. ELIA CONSTRUCTION CORP., Debtor.  07-CV-754,08-CV-103  UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK  2009 U.S. Dist. LEXIS 20443   March 14, 2009, Decided we see a result.  Law firm handles a 10 year bankruptcy for debtor, and is awarded several interim fees.  Law firm then applies for final fee award, and for the first time, debtor raises issue of legal malpractice.  Court considers the fee application, and awards fees.
 
When debtor later sues in State Court, result is: dismissed on the basis of collateral estoppel/res judicata.

"Upon finding that no merit to Elia's claims of malpractice, this Court observed:

As is readily apparent from this Decision and Order, the Court finds Elia's arguments in favor [of] remand and against the motion for summary judgment to be completely without merit. In opposing the motion to dismiss on res judicata grounds, Elia did not even attempt to [*5] distinguish the most obviously relevant case law against it -the First, Fourth and Fifth Circuit rulings holding that a bankruptcy court's grant of fees under 11 U.S.C. § 330 bars any subsequent malpractice claims premised upon those same services. See Grausz v. Englander, 321 F.3d 467 (4th Cir. 2003); In re Iannochino, 242 F.3d 36 (1st Cir. 2001); In re Intelogic Trace, Inc., 200 F.3d 382 (5th Cir. 2000). Instead, Elia attempts to mischaracterize the record by suggesting that the bankruptcy court never considered its claims of malpractice and attorney misconduct. Both this Court and the Second Circuit have expressly rejected that argument and have found that the bankruptcy court gave adequate consideration to Elia's claims of postpetition malpractice. See In re D. A. Elia Constr. Corp., 04-CV-975, Dkt. No. 21, at 20 (this Court's Decision and Order stating that "[t]he bankruptcy court fully considered [Elia's] allegations of misconduct but found them to be without merit"); and id. at Dkt. No. 33, at 3 and 4 (Second Circuit Summary Order stating that the bankruptcy court gave Elia "more than ample opportunity to present its arguments" regarding its claims of "conflicted and negligent [*6] representation").

In light of those express findings, it is difficult to believe that the state court action was filed by Elia in good faith. Even if Elia did have some good faith basis for initially filing its state court claims, it should have been clear that its position was meritless upon reviewing the cases cited in Damon & Morey's motion to dismiss. This is particularly true where, as here, Elia's principal is also an attorney and therefore presumably understood the res judicata arguments being raised. Nevertheless, Elia chose to oppose the motion and filed its own motion to remand.

The foregoing certainly provides sufficient evidence for this Court to conclude that the instant action was brought in bad faith and for the purpose of harassment and delay."

Legal Malpractice in the Real and Cinematic Worlds

Burt Pugach and Linda Riss are a staple of the blogosphere and the Page Six world.  He was a lawyer who was convicted in 1959 for blinding Linda Riss by use of lye, went to jail ,came out of jail to marry her ,and then was disbarred.  He was determined to have practiced law through the use of a front man-lawyer in 2008.  But that is all part of the Page 6 portion of their lives.

Here, the two sold their life story to HBO for use in a film called "Crazy Love" and this is where the legal malpractice portion of their life comes in.  Was the deal fair, and did HBO owe them more money?

In Pugach v. HBO Pictures Inc., Slip Op. 2009 30489U we see that their legal malpractice action fails. Judge Kitzes of Supreme Court, Queens County writes:

"This action arises out of an agreement between plaintiffs and defendant Shoot the Moon, dated May 11, 2004, whereby, in consideration of the payment of the sum of $ 2,000, plaintiffs granted Shoot the Moon an option to purchase all rights to their life stories...."  Plaintiff's argument that Linda Pucach could not read the contract because of her blindnes was disallowed on the basis that "if the party could not read it, "not to procure it to be read was equally negligent."
The legal malpractice action was dismissed as the attorney defendants represented Shoot the Moon and not plaintiffs, thus lacking privity.
 
 
Legal Malpractice in One of Its Many Guises

Our meme on this blog is that Legal Malpractice litigation is ubiquitous and omnipresent.  All right, what exactly does that mean?  It's not just blown statutes in personal injury, and it's not just unanswered questions in matrimonial suits, and it's not even just bankruptcy trustees and ponzi schemes.  It's the basis commercial transactional world too.  Here in an article from Law.Com, by Brian Katkin, we see:
"Hogan & Hartson is being sued for malpractice by a client who alleges the firm used attorney-client information to boost a competitor.

In the complaint, filed in Washington, D.C., Superior Court last month, Prestige Brands Inc., makers of household products like Comet and Compound W, claims lawyers at Hogan & Hartson breached their retainer agreement and committed legal malpractice by helping another company get a competing product on the market.

Hogan has yet to respond to the allegations, but the firm has hired Mark Foster, a partner at Zuckerman Spaeder, to defend the action. Last year, Foster successfully battled malpractice allegations against Wiley Rein when the firm was sued by former client Blackwater Security Consulting. Foster and J. Warren Gorrell Jr., Hogan's chairman, declined to comment.

Prestige is using Marianne Roach Casserly, a partner in the D.C. office of Alston & Bird, along with lawyers from the firm's Atlanta and New York offices. Casserly did not return calls seeking comment.
Charles Jolly, Prestige's general counsel, says he found out Hogan was working for a competitor from the Food and Drug Administration's Web site. "I've been practicing for 40 years, and I can think of only one time when I've gotten in a dispute with a firm that I hired for outside counsel," Jolly says.

"9 to 5" and Legal Malpractice

Legal Malpractice in Hollywood should come as no surprise.  We've commented on the widespread omnipresence of legal malpractice litigation, but had no idea we would be quoting Variety on the subject.  Here is their report on legal malpractice and the "9 to 5" screen, stage and trust saga as well as the cult classic Harold and Maude.

"The trust representing the late writer-director Colin Higgins has sued attorney Barry Hirsch for failing to properly represent his interests in the "9 to 5" stage musical.

Colin Higgins Prods. filed suit on Jan. 14 against Hirsch and his law firm in L.A. County Superior Court, accusing Hirsch of legal malpractice and breach of fiduciary duty. The trust seeks damages to be determined in a jury trial.

Among the many charges in the filing: Hirsch failed to adequately secure Higgins' rights to a live stage show from Patricia Resnick, the original scribe for the movie, and failed to advise the trustee in 2006 that the firm was representing Resnick at the time she was writing the book for "9 to 5: The Musical."

When the trustee asked how such a musical could be mounted without stage rights from Higgins Prods., Hirsch supposedly stated, "It may not be ethical, but it is legal."

According to the suit, Higgins, best known for penning "Harold and Maude," inked his deal with Fox to rewrite Resnick's "9 to 5" screenplay in 1979. Hirsch represented the writer-director and his shingle on various entertainment matters, including that contract.
 
Harbinger of Legal Malpractice Cases to Come?

As the economy has sunk, it is expected that legal malpractice cases will increase.  One reason is that cases previously thought to be unworthy will garner new luster; another is that in commercial circumstances there will be opportunities for cases.  Here is one example which did not work out for plaintiff.  As more sub-prime lending practices surface, we may expect to see further examples of this litigation, both in bankruptcy court and in district courts.

Law.Com reports the Dorsey saga.  "What started off as a run-of-the-mill loan arrangement turned into a decade of litigation for Dorsey & Whitney that could have cost the firm up to $4 million in malpractice verdicts -- until the 8th U.S. Circuit Court of Appeals tossed out the entire case Thursday.In 1999, a now-defunct investment bank in Minneapolis, Miller & Schroeder, packaged about $12 million in bonds and sold them to 32 banks. The banks then became the direct lenders to a Mohawk tribe in upstate New York which used the money to open a casino.

There was a problem, though. Miller & Schroeder hadn't gotten the go-ahead on the loan for the casino project from the National Indian Gaming Commission. Internal documents showed Dorsey lawyers knew this could jeopardize the entire project. They told Miller & Schroeder to go ahead with the financing anyway.

The casino was a huge failure and its management defaulted on the loans starting in 2000. The banks sued, but the casino administrators said they didn't have to repay the loans. Why? Because without the gaming commission's approval, the casino project itself wasn't valid -- and neither were the loans.

Litigation ensued. Miller & Schroeder, Dorsey's client, sued the casino management and the Mohawk tribe in bankruptcy court. Dorsey advised Miller & Schroeder to drop the tribe from the lawsuit, a strange decision. A federal district court in 2007 concluded that Dorsey made that decision only to prevent the disclosure of its mistake in advising Miller to proceed with the loans without getting the gaming commission's approval.

There was more: One of the banks involved, Bremer Business Finance Corp., sued Miller & Schroeder. Dorsey lawyers badly wanted to keep representing Miller, especially because a rival firm was pushing for the business, court records show. But could they ethically do so if their own error would be at the heart of Bremer's claim? Dorsey decided they could, and continued on the case. Finally, Bremer sued Dorsey, claiming that, in effect, Dorsey, by representing the arranger of the loan, also indirectly represented all the banks who eventually bought those loans.

Two federal courts -- a bankruptcy court and a federal district court -- basically agreed and ruled against Dorsey in judgments that added up to $900,000, according to stories in The National Law Journal. Those judgments also kept the door open for larger judgments in the future. But the Minnesota Supreme Court went the opposite way in a parallel case brought against Dorsey by the banks. That court ruled that Dorsey's conduct didn't amount to malpractice, and it discredited the idea that the banks, as third parties, were Dorsey clients all along. "
 
Thoroughbred Legal Malpractice Case

This case illustrates the difference between legal malpractice and all other litigation, the "case within a case."  Defendant attorneys admitted that they allowed a case to go into default, yet were successful in avoiding liability.  Their defense?  Even if we made the mistake, plaintiff could not have won the case after all.

From NY Lawyer comes this story:

"The 6th U.S. Circuit Court of Appeals dismissed a legal malpractice suit against a Cincinnati law firm that acknowledged its error for failure to prosecute a civil suit over the sale of a race horse, but argued that its client's suit would have failed on the merits anyway.

The 6th Circuit agreed on Jan. 12 that White, Getgey & Meyer Co., though it stipulated to legal malpractice, showed that the underlying suit by its client, Leonard Pivnick, would not have succeeded on the merits.

Pivnick purchased a one-year-old thoroughbred horse for $410,000 in a 1997 New York auction but failed to pay the auction house for the horse despite repeated demands, according to the ruling. Pivnick v. White, Getgey & Meyer Co., No. 07-4304 (6th Cir.).

The auction house, Fasig-Tipton Co., subsequently recovered the horse and sold it privately for $375,000. Eventually, the horse sold, after training as a racehorse, for $800,000, according to the court.

Pivnick sued the auction house, arguing that demand notices from Fasig-Tipton regarding the default did not make clear that it planned to sell the horse, and violated Kentucky's commercial code.

Attorney Fee Denied in Multi-Million Dollar Medical Malpractice Settlement

The matter of Chen v. Mt. Sinai was handled by attorney Steven F. Goldman, and settled just after depositions for $ 2.4 million.  Mt. Sinai was represented by Martin Clearwater & Bell, a premiere NY med-mal defense firm.  One would think that was good news for Mr. Goldman.  However, he ends up, after a Second Circuit decision, with no fee at all.  Legal Malpractice litigation might follow had he garnered a fee.  It might still if one scrutinizes the question of whether sufficient provision was made for a severely injured child. From the opinion: "The circuit noted that Mr. Goldman provided no real assistance to Judge Korman in his effort to determine whether the settlement was reasonable."Equally disturbing, the record suggests that Goldman himself had made only limited inquiries into David's condition and the nature and extent of David's future medical needs,"

Law.Com writes: "A federal judge acted within his authority when he denied all fees to a lawyer who won a $2.4 million medical malpractice case but who failed to investigate the future needs of a child disabled at birth and overcharged his client, a federal appeals court has ruled.
The U.S. Court of Appeals for the Second Circuit on Monday upheld the discretion of Eastern District Judge Edward Korman to refuse Steven F. Goldman's application for $388,000 in fees.
 
Mr. Goldman obtained a settlement with the Mt. Sinai-NYU Medical Center Health Systems, NYU Downtown Hospital and the doctors involved. He then filed a stipulation of settlement and infant compromise order directing that he be paid $408,000 in fees and $20,000 in expenses, and that Ms. Chen be paid $250,000 for her loss of services claim, and $1.7 million as trustee for her son's special needs trust.

But Judge Korman said he was unable to analyze the reasonableness of the settlement because Mr. Goldman failed to provide documentation for his fees and for David's current medical condition and a projection of his expenses for future medical care.

Saying the attorney's information was "totally unhelpful," the judge appointed a special master, attorney Steven North, who was told by Mr. Goldman that he had applied the sliding scale fee system set forth in New York Judiciary Law §474-a for medical malpractice compensation.
When Mr. North inquired as to the fee, Mr. Goldman claimed he had miscalculated it under the sliding scale, and it was actually $388,000."
 
Death in Iraq, Blackwater and Legal Malpractice

Law.Com reports [as does the BLT Blog] that a legal malpractice case by Blackwater Security Consulting has been dismissed, now for the second time against Wiley Rein.   The legal malpractice case arises from the horrible death of Blackwater employees in Falugia, Iraq.
The fact of deaths in Iraq ending in US litigation brings to mind a recent speech which attributed the idea to Alexis de Tocqueville that all serious issues in the US ultimately end in courts.  If it ends in court, look for legal malpractice litigation to follow.

"On Dec. 29, Judge Jennifer Anderson of D.C. Superior Court dismissed the $30 million malpractice suit brought against the firm by Blackwater Security Consulting on summary judgment. She's the second judge to throw out the case since it was filed last January.
"They have the right to ask more judges to look at it," says Zuckerman Spaeder partner Mark Foster, who represents Wiley Rein in the matter. But if Blackwater's lawyer, Barry Nace of Paulson & Nace, chooses to do so, Foster says, "I think he'd be wasting his time." (Nace is on overseas travel and could not immediately be reached for comment.)
Blackwater alleged that Wiley botched its defense of the security contractor in a wrongful death case brought on behalf of four Blackwater guards killed in Iraq in 2004. Blackwater claimed the suit would have been dismissed if it had been heard in federal court, instead of in a North Carolina trial court. Blackwater said the Wiley lawyers failed to get a venue change because they didn't invoke the federal officer removal statute, which grants federal jurisdiction to claims involving federal officers."

THIS WEEK’S LEGAL MALPRACTICE CASES

Recusal, Political Donations and Legal Malpractice

During the campaign season, news reports ouline the amounts of money individuals donate to candidates, and there are websites which track donations by name.  Recently in West Virginia, a legal malpractice case involving the Massey Coal company there made news when the US Supreme Court decided to hear the question of whether campaign contributions required recusal of a State Supreme Court justice.

Here, different state, same issue. Debra Cassens Weiss reports in the ABA Journal. "A motion filed in a legal malpractice appeal contends that four of Illinois’ seven Supreme Court justices should recuse themselves because of campaign contributions by the defendant law firm, Corboy & Demetrio.

If the motion is granted, the court would not have enough votes to issue an official ruling, the Chicago Sun-Times reports. The Illinois Constitution has no provision for temporary judicial appointments.
The motion says Corboy & Demetrio has made donations ranging from $1,500 to $52,000 to campaigns of the four justices, according to the Sun-Times.""The underlying malpractice suit resulted in a $100,000 judgment against Corboy & Demetrio, the story says. The suit contends the well-known plaintiffs firm botched a suit filed on behalf of a Georgia woman killed in a 1995 car crash. The suit names former Corboy lawyer G. Grant Dixon III and managing partner Robert Bingle, the story says. The firm has admitted the suit was dismissed because it failed to follow a court order, but denies other allegations, according to the Sun-Times."

Plaintiff's Partial Success does not Rule out Legal Malpractice Case

Plaintiff claimed pay and benefits from the Board of Education.  Apparently there is a two part process for such claims.  The first thing to do is to request a hearing.  Later, one may bring an Article 78 proceeding.

In Leticia Abreu v Jose A. Quesada,4489, 6884/05; SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT; 2008 NY Slip Op 8420; 866 N.Y.S.2d 571; 2008 N.Y. App. Div. LEXIS 8251  Defendant attorneys failed to serve notice for a hearing.  "The record contains no dispute that defendant failed to file a proper request for a hearing pursuant to Education Law 3020-a(2)(c) and that this failure resulted in the loss to plaintiff of pay and benefits to which she otherwise would have been entitled, pending a hearing, before termination"

Plaintiff then started an Article 78 proceeding, with some success.  This success did not rule out a legal malpractice case against the attorneys who did not notice the hearing.  "The partial grant of plaintiff's article 78 petition against the Board of Education does not collaterally estop plaintiff from asserting defendant's legal malpractice (see Weiss v Manfredi, 83 NY2d 974, 976-977, 639 N.E.2d 1122, 616 N.Y.S.2d 325 [1994]; Savattere v Subin Assocs., 261 AD2d 236, 236, 690 N.Y.S.2d 229 [1999])."
 
Appellate Legal Malpractice

In STEPHEN F. BRUMMER, , v THE BARNES FIRM, P.C., CELLINO & BARNES, P.C., STEPHEN E. BARNES, ROSS M. CELLINO, AND RICHARD J. BARNES, SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FOURTH DEPARTMENT;2008 NY Slip Op 8831; 2008 N.Y. App. Div. LEXIS 8924 we see a discussion of legal malpractice cases centering on a failed appeal.  The rules are fundamentally different for legal malpractice cases centering on appeals and those centering on the underlying case.  One thing that is not mentioned by the court is that it remains a question of law and not a question of fact whether an appeal would succeed. Experts may not opine and no jury will be asked to answer this question; only the judge will answer it.

Here, plaintiffs were defendants in the underlying case, and they sue their attorney for a failed appeal.  "Plaintiff commenced this action alleging that defendants committed legal malpractice by failing to take an appeal from an order granting the cross motion of the Town of Tonawanda (Town) for summary judgment dismissing the complaint against it in plaintiff's underlying Labor Law action. We conclude that Supreme Court properly granted defendants' motion for summary judgment dismissing the complaint in this legal malpractice action. ""Plaintiff failed to raise a triable issue of fact inasmuch as he "did not set forth the requisite factual allegations demonstrating that, but for defendants' alleged negligence, there would have been a more favorable outcome in the underlying action" (Ellsworth v Foley, 24 AD3d 1239, lv denied 6 NY3d 712; see generally Williams v Kublick, 302 AD2d 961), i.e., he failed to raise an issue of fact whether he would have prevailed on an appeal with respect to the dismissal of the complaint in the underlying action against the Town (see Lagana v Willner, 267 AD2d 210; see also Senise v Mackasek, 227 AD2d 184, 185). Indeed, the record establishes that the Town was not liable under the Labor Law because it was not the owner of the property where plaintiff was working, nor was it an agent of the owner because it did [**3] not have the authority to supervise and control the work.

The "Sophisticated" Client in Legal Malpractice

There is no lack of irony in legal malpractice litigation.  Because of the structure of the "case within a case" defendant attorney often takes on the defenses available in the underlying case.  So, plaintiff's attorney sees defendant attorney loudly and heatedly making the very same arguments that were made in the underlying action with absolutely no cognitive dissonance.

Here is an example in SF Holdings Group, Inc. v Kramer Levin Naftalis & Frankel LLP ;2008 NY Slip Op 08520 ; Decided on November 13, 2008 ; Appellate Division, First Department .
 
This was a fairly complicated transaction in which a plant in St. Thomas was left off the table.  Legal malpractice litigation ensued, and one defense was that plaintiff, a sophisticated business, knew that the plant was not part of the transaction.

Here is the interesting part.  The court held that being sophisticated, yet relying on the attorney is proper, and will not amount to a full defense to legal malpractice.  The attorney would argue that there can be no legal malpractice when the client understands the risks and the nature of the transaction.

The court held that such argument amounts to potential mitigation only. "Given the procedural context, the motion court correctly rejected Kramer Levin's argument that plaintiffs, as a matter of law, were aware that St. Thomas was not working capital based on the merger agreement itself. Kramer Levin did not conclusively establish, for the purposes of plaintiffs' alleged awareness, that the merger agreement on its face discloses that the St. Thomas facility was not included under the definition of working capital (see Held v Kaufman, 91 NY2d 425, 431-432 [1998]). Further, to the extent that Mehiel, a sophisticated businessman, executed the merger agreement on behalf of plaintiffs with full knowledge of its terms, "[a]ny negligence on the part of [the client] in reviewing the agreement is merely a factor to be assessed in mitigation of damages" (Mandel, Resnik & Kaiser, P.C. v E.I. Electronics, Inc., 41 AD3d 386, 388 [2007]
 
Prior Knowledge and Legal Malpractice Insurance

Whether attorney for Plaintiff or for defendant, each practitioner in the Legal Malpractice field has either a professional or personal interest in legal malpractice insurance.  No one, whether prosecuting or defending legal malpractice cases wants to lose or have coverage excluded, and attorneys do not want to have coverage lost for the defendants in a legal malpractice case.

Here is a blurb from McGuire Woods on prior knowledge exclusions in legal malpractice insurance:

"Professional liability and D&O insurers regularly rely on "prior knowledge exclusions" to restrict coverage. These exclusions apply if the insured knew, prior to commencement of the policy period, that the activity in which it was involved would result in a claim against it. Typically, cases involving prior knowledge exclusions turn on the extent of the insured's knowledge of the risk of a claim and whether that knowledge is sufficient to bar coverage.

Recently, in Executive Risk Indemnity Inc. v. Pepper Hamilton LLP, 865 N.Y.S.2d 25, 2008 N.Y. App. Div. Lexis 6885 (N.Y. App. Div. Sep. 23, 2008), the New York Supreme Court, Appellate Division construed a "prior knowledge" exclusion very narrowly in a declaratory judgment action involving a dispute over coverage for alleged legal malpractice. The court held that in order to apply the exclusion to claims against a law firm based on the wrongful conduct of the firm's client, the insurer must prove not only that the law firm had knowledge of its client's misconduct, but also that the firm participated in the client's wrongful conduct in such a way that it believed that it might be subject to liability for that conduct.

The coverage dispute arose from Pepper Hamilton's representation of Student Finance Corporation, which financed student loans and then securitized and resold them to investors. In March 2002, Student Finance's principal told a partner in the law firm that the company had been using its own reserve accounts to make forbearance payments for overdue loans. By covering up defaults, Student Finance allegedly made its securities more attractive to investors.
 
Recovering Workers' Compensation Liens in Legal Malpractice

Worker is injured on the job by a paving machine.  Worker collects WC benefits from his employment.  Worker sues paving machine manufacturer in products liability, and his attorney blows the statute.  Worker succeeds in legal malpractice.  May WC carrier recoup benefits?

Had the case been tried as a products liability case [not legal malpractice] in NY, the answer would be yes, recoupment.  Here, in this Florida case, the answer is no. Here is the blurb from Risk & Insurance.com.

"Case name:Columbia v. Brewer, No. 1D07-5658 (Fla. Dist. Ct. App. 10/22/08).

What it means: An injury suffered as a result of legal malpractice does not occur in the course of a claimant's employment, and the defendants in a legal malpractice case are not third-party tortfeasors under Florida law. As a result, the claimant's employer is not entitled to recoup the workers' compensation benefits it has paid from the proceeds of the legal malpractice settlement. Instead, it may sue the third party that caused the claimant's injuries if the claimant fails to do so within one year after the cause of action accrues. "

Receiver or Trustee in Legal Malpractice Case?

Law.com reports on a legal malpractice case involving Smith, Gambrell & Russell which may well turn on whether the plaintiff in the action is simply a trustee or a receiver of the plaintiff company.  As one reads this scandal filled case, which includes the suicide of the plaintiff company's former CEO,Kirk S. Wright,who was awaiting sentencing on Federal Charges the importance of this distinction comes to light:
"Smith, Gambrell & Russell's answer to an $80 million malpractice action filed against the firm by the bankruptcy trustee for one of its former clients takes an unusual, philosophical tack, starting with an excerpt from a recent decision from the 7th U.S. Circuit Court of Appeals.. Lamar "Mickey" Mixson at Bondurant, Mixson & Elmore, who represents Smith Gambrell and co-defendant C. Gladwyn Goins, a former counsel in the firm's Washington, D.C., office, said in an interview that Perkins is only a trustee. While with the firm, Goins served as outside general counsel to IMA.

By being the trustee, Mixson said, Perkins "stands in the shoes of the corporation" -- a corporation that, according to the trustee, ran a Ponzi scheme. The law doesn't allow lawbreakers to recover financially, Mixson noted, adding, "He can't recover any more than the corporation can."

Not so, countered Robert E. Shields, Perkins' lawyer at Doffermyre, Shields, Canfield & Knowles. Shields pointed to the wrongful conduct of IMA principal Kirk S. Wright, who killed himself while awaiting sentencing for his federal fraud and money laundering convictions.
Shields said Wright's actions can't be attributed to the company or Perkins because other IMA officers and directors were not aware of and did not participate in Wright's crimes.

"He was not the alter ego for the company in these circumstances," Shields said.

Shields added that Perkins isn't just the trustee -- he's also the receiver, which means he can recover.

"It was in his role as a receiver that he filed this suit," Shields said, explaining that Perkins first was appointed receiver when the case was initiated in Fulton County Superior Court, and again in the federal action filed by the Securities and Exchange Commission. "The receiver represents the creditors" and doesn't stand in the shoes of the company, he said.

ConnectU, Facebook and Collateral Estoppel in Legal Malpractice

Legal Pad Blog Reports that the ConnectU people who successfully sued Facebook are in a dispute with Quinn Emanuel over fees.  We wonder if anyone has considered the collateral estoppel effect of fee arbitrations on legal malpractice cases. The teaser from Legal Pad is:
"San Jose Federal Judge James Ware ruled that the settlement should be enforced and appointed special master George Fisher to do the enforcing. In his report, Fisher writes that the “ConnectU shareholders have threatened a malpractice action against Quinn Emanuel” without explaining much more. Fisher also relates that there is currently an arbitration in New York State Supreme Court between the firm and ConnectU over the fee dispute. "

Legal Pad reports the dispute between ConnectU and Facebook is:
"A quick refresher: ConnectU founders Tyler and Cameron Winklevoss sued Facebook founder and Harvard pal Mark Zuckerberg, accusing him of stealing their ideas to start his hotter-than-hot social networking site. After reaching a settlement earlier this year, ConnectU said it had been hoodwinked by Facebook about the value of the company’s stock and so got gypped out of big payout. The company tried to back out of the deal and fired its lawyers at Quinn Emanuel, the high-profile L.A. trial firm that advised on the settlement. Then Quinn filed a lien against any money ConnectU would recover from Facebook. "

The Mintz Legal Malpractice Case

Anthony Lin wrote yesterday in the NYLJ about the Shelly v. Bodian case, Index No. 602254/05, currently being litigated in Supreme Court, New York County.

The case highlights some interesting principals of legal malpractice which warrant examination.  We'll take a further look at the motion to dismiss in this case, which was decided last year.

Is it legal malpractice to represent both a small company [closely held] and one of its originators, while suing another?  Need the attorney advise, and perhaps remind the originator that the company and not he may be liable for legal fees?  This is a secondary problem discussed by Justice Goodman.  She writes:  "The fifth cause of action alleges that defendants failed to advise plaintiff Joseph P. Shelly, Jr. that he was not personally liable for the legal fees that the defendants were entitled to receive as a result of their defense of an entity in which Shelly had an interest."

Attorney-Defendants in the case argued that partial payment of their fees and an equivocal letter provided a defense to this cause of action.  The court found that evidence offered in a motion to dismiss must "conclusively establish a defense as a matter of law before a court may dismiss a claim pursuant to CPLR 3211(a)(1).  Equivocal letters are insufficient, and the court denied a motion to dismiss.

Self-Aggrandizement and Legal Malpractice

Anthony Lin writes today in the NYLJ about the Shelly v. Bodian case, Index No. 602254/05, currently being litigated in Supreme Court, New York County, and discusses a recent decision of Justice Emily Jane Goodman.  Justice Goodman has a fair number of legal malpractice cases on her docket.

Lin's article highlights a well known meme in legal professional circles;  lateral movement between biglaw firms.  One publication, NY Lawyer is highly sensitive to movement of attorneys between large law firms.  "NY Lawyers on the Move" or "The Problem of Poached Lawyers" is a staple of this particular magazine.

Is Shelly "A legal malpractice suit against the current New York managing partner of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo claiming he was too preoccupied with his lateral movement among firms to timely file a lawsuit " as Lin writes?  Perhaps.
 
The case highlights some interesting principals of legal malpractice which warrant examination.  We'll take a look at the motion to dismiss in this case, which was decided last year.

Is it legal malpractice to allow amendment of an answer which then leads to dismissal of a cause of action because the original answer failed to allege statute of limitations and the amended answer successfully alleged statute of limitations?  Justice Goodman held that it was not legal malpractice, because she, and the majority of courts permit amendment of answers absent prejudice, which she describes as "investment of time/expense in engaging in substantial discovery, motion practice or trial preparation."  If there is no investment, there is no prejudice, and a reasonable [if hypothetical] court would have allowed amendment.  Ergo, no malpractice.

THIS WEEKS CASES IN LEGAL MALPRACTICE

A World Wide Conspiracy and Legal Malpractice

Reading this case, in which there is an ancillary legal malpractice case, reminded us of the ubiquitous nature of legal malpractice.  This case, ELIOT I. BERNSTEIN, et al., Plaintiffs, - against - STATE OF NEW YORK, et al., Defendants.07 Civ. 11196 (SAS);  UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK  2008 U.S. Dist. LEXIS 61269August 8, 2008, Decided   August 8, 2008, Filed  makes for fascinating reading.  Just look how it starts:
 
Plaintiff: "This action presents a dramatic story of intrigue, car bombing, conspiracy, video technology, and murder. In short, plaintiffs allege that hundreds of defendants engaged in a massive conspiracy to violate their civil rights and, in the process, contributed to the Enron bankruptcy and the presidency of George W. Bush. In plaintiffs' words:
Plaintiffs depict a conspiratorial pattern of fraud, deceit, and misrepresentation, that runs so wide and so deep, that it tears at the very fabric, and becomes the litmus test, of what has come to be known as free commerce through inventors' rights and due process in this country, and in that the circumstances involve inventors' rights tears at the very fabric of the Democracy protected under the Constitution of the United States."

Defendants: " For many years, pro se Plaintiffs Eliot I. Bernstein and Plaintiff Stephen Lamont have engaged in a defamatory and harassing campaign . . . alleging an immense global conspiracy . . . . Although largely unintelligible, the  [*3] [Amended Complaint] purports to describe a fantastic conspiracy among members of the legal profession, judges and government officials and private individuals and businesses to deprive plaintiffs of what they describe as their "holy grail" technologies"

Whistleblower Legal Malpractice?

We often remark that legal malpractice may be found everywhere, and in many an unusual circumstance.  The "Big Dig?"  Sure.  Here is a story from NY Lawyer about a whistle blower whose case was overlooked:

"A would-be whistle blower is suing Washington-based firm Phillips & Cohen in the U.S. Court for the District of Massachusetts for allegedly failing to pursue his false claims case against a contractor to the state's massive "Big Dig" highway project.

According to the lawsuit for legal malpractice and breach of contract, the plaintiff claimed that he entered into a contract with Phillips & Cohen and attorney Peter W. Chatfield around June 2000. The plaintiff alleged that the firm failed to pursue his case for several years, also that he "did not discover that he had suffered any damages or losses resulting" from Phillips & Cohen's lack of action until September 2006. Johnston v. Chatfield, No. 1:08-cv-11219-WGY (D. Mass.)
The plaintiff is a former employee of asphalt and concrete supply company Aggregate Industries Northeast Region Inc.

In July 2007, the company pleaded guilty and agreed to pay $50 million to settle criminal and civil charges related to a fraudulent scheme involving concrete. Aggregate agreed to provide up to $75 million in insurance coverage for maintenance problems related to the scheme. "
 
Legal Malpractice and Compelled Settlements

Matrimonial law is rife with questions of legal malpractice.  As in most spheres of the law, settlements take place in the majority of cases.  The general rule in legal malpractice is that one may sue the attorney after a settlement if the settlement was "effectively compelled" by the actions of the attorney.  Here is a case which seem to have arisen after the attorney sued for fees.Steven L. Levitt & Assoc., P.C. v Balkin ;2008 NY Slip Op 06640 Decided on August 19, 2008 Appellate Division, Second Department .
 
"The Supreme Court should have denied that branch of the motion of the plaintiff/counterclaim defendant and the additional counterclaim defendant (hereinafter together the respondents) which was for summary judgment dismissing the appellants' first counterclaim alleging legal malpractice, based upon allegations that the respondents misrepresented the scope of the oral stipulation of settlement in the related civil action, and that the settlement of the related civil action was not knowingly and voluntarily made. The respondents made a prima facie showing of entitlement to judgment as a matter of law by submitting evidentiary proof, in the form of the transcript of the aforementioned oral stipulation (see Pacella v Whiteman Osterman & Hanna, 14 AD3d 545; Malarkey v Piel, 7 AD3d 681; Laruccia v Forchelli, Curto, Schwartz, Mineo, Carlino & Cohn, 295 AD2d 321). In response, the appellants raised a triable issue of fact as to whether or not they in fact voluntarily and knowingly entered into the terms of the stipulation, specifically with respect to Ronald's receipt of a credit in the sum of only $500,000, rather than in the sum of $937,000, from Karen's share of her equitable distribution award. The appellants raised a triable issue of fact by showing that Ronald, in response to a question posed by the court during the proceeding in which the stipulation was placed on the record, changed his response from "no" to "yes," when asked by the court if he understood that it would "not entertain any setting aside of the [settlement] without a showing of extreme circumstances." Ronald explained, in an affidavit, that he changed his answer at the explicit instruction of his attorney, Steven L. Levitt, the plaintiff's principal. This change in his answer was allegedly based upon statements in the record that the settlement of the related civil action would "be effective as of the date of execution of the documents," and not the date of the court appearance. Ronald averred that he understood that "[t]he formal stipulation of settlement" would reflect his attorney's representation to him that the misstated sum of $500,000 was to be corrected to $937,000, that the correction would be worked out when the stipulation was put on paper, and that "[i]t would all be fixed' later."

Judiciary Law 487 in the Second Circuit and the Court of Appeals

Judiciary Law 487 is a statute which defines a misdemeanor and creates a private cause of action, with treble damages, §487. Misconduct by attorneys.

An attorney or counselor who:
1. Is guilty of any deceit or collusion, or consents to any
deceit or collusion, with intent to deceive the court or any party; or,
2. Wilfully delays his client's suit with a view to his own
gain; or, wilfully receives any money or allowance for or on account
of any money which he has not laid out, or becomes answerable for,
Is guilty of a misdemeanor, and in addition to the punishment
prescribed therefor by the penal law, he forfeits to the party injured
treble damages, to be recovered in a civil action.

In Amalfitano v. Rosenberg the Second Circuit has certified several questions to the New York Court of Appeals.  The case is well worth reading, not only for the telenovela aspects of brother v. brother, and the unraveling of a family fortune through corruption and self-dealing, but for the discussion of Judiciary Law 487 litigation in New York.  

For the most part, liability under this statue is nor covered by insurance, and while pro missing significant awards, has been the stepchild of legal malpractice here.  

The two questions are "Can a successful lawsuit for treble damages brought under N.Y. Jud. Law 487 be based on an attempted but unsuccessful deceit upon a court by the defendant?" and
"In the course of such a lawsuit, may the costs of defending litigation instituted by a complaint containing a material misrepresentation of fact be treated as the proximate result of the misrepresentation if the court upon which the deceit was attempted at no time acted on the belief that the misrepresentation was true?"

An Amusing Way out of Legal Malpractice Litigation

The California Blog of Appeal discusses this amusing attempt by a target attorney to get out from under a legal malpractice case. Styles v. Mumbert is a California case in which...well, let Greg May describe it:
"You represent the defendant in a lawsuit. You don’t have time to handle his case — indeed, you admit as much on the record — and the court imposes terminating sanctions against your client for failing to respond to discovery. Because of your admission, your client is allowed to obtain new counsel, but new counsel is unsuccessful in getting the sanctions order vacated, and a default judgment of $730,000 is entered aganist your client, who then promptly sues you for malpractice and, while that suit is pending, appeals the default judgment. What do you do, besides give notice to your malpractice carrier? 

If you’re the defendant’s first attorney in Styles v. Mumbert, you get the plaintiff in the original case (Styles) to assign her default judgment to you (for some undisclosed consideration), then, represented by another lawyer in your firm, you move the court of appeal to substitute you in as respondent in your former client’s (Mumbert’s) appeal from that judgment. The court of appeal resists the invitation, concluding the opening paragraph of its opinion thus: ”Finding that the proposed substitution violates multiple rules of Professional Conduct as well as the Business and Professions Code, we will deny the motion.” 

The absurdity of the possible outcomes! The court says it much better than I could: 

If we allowed [attorney] Pagkas to substitute himself as respondent, in place of Styles, on appeal Pakgas would have to argue that the default judgment, for which he may be professionally responsible, should be reversed. He would argue that the appeal should fail, so that he could collect on the default judgment. This is directly contrary to Mumbert’s interest. While a reversal here would be to Pagkas’s absolute benefit in the legal malpractice action, reducing any potential damages for professional negligence owed to Mumbert, Pagkas appears to prefer the prospect of collecting the large default judgment from Mumbert. In fact, if the substitution were allowed, it is conceivable that Pagkas could prevail in both the malpractice action and in this appeal, leaving him with huge windfall at the expense of his former client. Pagkas’s disregard for his ongoing fiduciary duties to his former client in favor of his own personal gain is without precedent. 

Unsurprisingly, Mumbert asked for sanctions for having to oppose the motion, and got them.

Ethical Violations Doom Attorney's Fee in Legal Malpractice

Plaintiff retained a big name matrimonial firm to represent her.  Then she hired a legal malpractice firm to sue the matrimonial firm.  The legal malpractice case was dismissed.  Apparently she did not want to pay the legal malpractice firm who moved for a quantum meruit fee hearing.

In 2008 NY Slip Op 5647,  Eileen DeGregorio, appellant, v Joel C. Bender, et al., defendants; Curtis & Associates, P.C., nonparty-respondent. (Index No. 993/02) 

"Plaintiff client appealed a judgment by the Westchester County Supreme Court (New York) that awarded nonparty law firm an attorney's fee based on quantum meruit. 

In an action to recover damages for legal malpractice, the plaintiff appeals from a judgment of the Supreme Court, Westchester County (Friedman, J.H.O.), entered October 20, 2006, which, after a hearing, and upon a decision of the same court dated September 28, 2006, awarding the nonparty, Curtis & Associates, P.C., an attorney's fee based on quantum meruit, is in favor of Curtis & Associates, P.C., and against her in the total sum of $ 94,017.70. 

ORDERED that the judgment is reversed, on the law, with costs, and the matter is remitted to the Supreme Court, Westchester County, for further proceedings consistent herewith, including a new hearing and determination before a different Judicial Hearing Officer. 

In December 2001 the appellant retained the nonparty, Curtis & Associates, P.C. (hereinafter Curtis), to represent her in the instant legal malpractice action against her former matrimonial [**2] attorney. In February 2004 the underlying complaint in the legal malpractice action was dismissed by decision and order of this Court (see DeGregorio v Bender, 4 AD3d 384, 772 N.Y.S.2d 89). Thereafter, the Supreme Court granted Curtis' motion for a quantum meruit hearing to determine the fair and reasonable value of the legal services rendered to the appellant. Following the hearing, the court awarded Curtis legal fees in the sum of $ 94,017.70. We reverse. 

HN1In fixing an award of legal fees in quantum meruit, the court should consider "evidence of [*2] the time and skill required in that case, the complexity of the matter, the attorney's experience, ability, and reputation, the client's benefit from the services, and the fee usually charged by other attorneys for similar services" (Rosenzweig v Gomez, 250 AD2d 664, 672 N.Y.S.2d 907; see DR 2-106[B] [22 NYCRR 1200.11(b)]). HN2An award in quantum meruit should be made after weighing all the relevant factors (see Padilla v Sansivieri, 31 AD3d 64, 65, 815 N.Y.S.2d 173). Here, the hearing court failed to consider and give appropriate weight to all the relevant factors involved in valuing legal services, including the court's own finding of ethical violations committed by Curtis. "

More Conflict of Interest in a Penn Legal Malpractice Case

The Times Leader reports on a $ 3.4 Million legal malpractice action taking place there, now, post verdict.  The twist is that the winner of the case, executor of an estate had asked the trial judge to recuse himself because of financial conflict of interest.

"Attorneys for the Slusser family have asked Luzerne County Court to deny a petition filed by attorneys for Laputka, Bayless, Ecker and Cohn that seeks to overturn a $3.4 million legal malpractice judgment against the law firm.

In court papers filed Monday, attorneys Stephen Seach and Jonathan Lang of the Robert Powell law firm said that state law orders the judgment should stand.

Because the petition “lacks merit” court papers said, the judgment should be final and “not be subject to reconsideration,” according to state law.

The case has since been sent to the state Supreme Court, which will assign a judge outside Luzerne County to hear any further matters in the case. Court Administrator William Sharkey filed papers last week asking for the move.

A spokesman for the state Supreme Court said a judge has not yet been assigned.

The Slusser family sued the Laputka firm in 2000, alleging the firm was negligent in its handling of its estate.

In February, a jury awarded Bernadette Slusser, executor of the estate of Thomas Slusser, $3.4 million.

The ongoing civil case has received much attention since Philadelphia attorney Jeffrey B. McCarron of Philadelphia accused Luzerne County Court of Common Pleas Judge Mark Ciavarella of having a conflict of interest in the case.

McCarron said Ciavarella’s financial relationship with a company partly owned by Luzerne County Prothonotary Jill Moran, an attorney with the Powell law firm, calls into question his ability to impartially rule on the case.

Ciavarella has since recused himself from the case.

Sometimes An Expert is Not Necessary in Legal Malpractice

This case from New Jersey illustrates the border line between behavior that is so bad that an expert is not needed at trial to testify on whether there was a deviation, and behavior that is bad, but still requires an expert. The NJ court found in TARUTIS, v. ALAN ACKERMAN and GREGORY WISOTSKY, that:

"No expert is needed "where the questioned conduct presents such an obvious breach of an equally obvious professional norm that the fact-finder could resolve the dispute based on its own ordinary knowledge and experience and without resort to technical or esoteric information." Brach Eichler, supra, 345 N.J. Super. at 12. For example, no expert testimony was required when the attorney entirely failed to submit a legal argument in his client's defense, Sommers v. McKinney, 287 N.J. Super. 1, 8-12 (App. Div. 1996), or where the attorney failed to comply with the controlling statute of limitations, Brizak v. Needle, 239 N.J. Super. 415, 429, 431-33 (App. Div.), certif. denied, 122 N.J. 164 (1990). "

But, where the defendant attorney "did not retain an expert to testify to the coefficient of friction of the floor, nor did he propound interrogatories, depose any witnesses, request documents, or request admissions from Resorts" the legal malpractice client still needs an expert to testify that the attorney was negligent.

Waiving Arbitration in Legal Malpractice

Arbitration clauses in attorney-client retainer agreements is a trend.  Law firms, who presumably know the costs and efficiencies of litigation choose arbitration in the belief that most cases they are involved in will be a fee dispute.  Legal malpractice, either as a counterclaim to a fee demand or on its own does sometimes intrude, however.

Here is a case from the Illinois Appellate Lawyer  Blog which shows how to waive the advantage obtained by an arbitration clause:
"Jeffrey Woods and three associated parties had a dispute with the Patterson Law firm. The law firm claimed Woods et al. owed $47,000 for legal fees; Woods claimed the law firm committed legal malpractice. The law firm sued for the fees, but voluntarily dismissed its case. Woods then sued for malpractice.

In the malpractice case, the law firm raised an affirmative defense that its agreement with Woods required arbitration of “[a]ny controversy, dispute or claim arising out of or relating to our fees, charges, performance of legal services …” But the firm also made two motions to dismiss the case, filed a demand for a bill of particulars, served interrogatories on plaintiff, and issued a subpoena for documents to a third-party.

After all that, the firm asked the court to compel arbitration of the dispute. The trial court ruled that the law firm waived its right to compel arbitration because it participated so heavily in Woods’s lawsuit. The law firm appealed the denial of its attempt to compel the arbitration.
The appeal was pursuant to Illinois Supreme Court Rule 307(a), which permits interlocutory appeals as of right from an order granting, modifying, refusing, dissolving, or refusing to dissolve or modify an injunction. The First District Illinois Appellate Court ruled that “a motion to compel arbitration is analogous to a motion for injunctive relief," and that the standard of review is “abuse of discretion.”

Legal Malpractice Suit After a Release

Plaintiff wanted to sue his opponent's attorneys. While the ability to sue your opponent's attorney is very restricted, [see: lack of privity}, in certain circumstances it is possible. This case:

Blum v Perlstein
2008 NY Slip Op 00439
Decided on January 22, 2008
Appellate Division, Second Department

appears to stand for the proposition that plaintiff had no legal malpractice case against the defendants, who were not his attorneys. Supreme Court dismissed that aspect of the case, and the Appellate Division agreed. However, the AD went on to dismiss the non-legal malpractice portions, which included breach of fiduciary duty, on the basis that a release of the original defendant in the case, and his "agents" included a release of the attorneys.

"the defendants demonstrated that the allegedly improper conduct that they engaged in, which predated a general release that the plaintiff executed before he commenced the instant action, came within the ambit of that release. The defendants also demonstrated that the release applied to them, as they represented the releasee, and the plaintiff discharged the releasee and its "agents" from liability (see Berkowitz v Fischbein, Badillo, Wagner & Harding, 7 AD3d 385, 387; Argyle Capital Mgt. Corp. v Lowenthal, Landau, Fischer & Brings, P.C., 261 AD2d 282)."

Morris J. Eisen Legal Malpractice Case Proceeds

He was one of the best known, and feared plaintiff's attorneys in New York.  He had entire floors of offices at the Woolworth building in lower Manhattan, and early every morning a large number of trial attorneys would gather for breakfast and pick up their day's work.  The Eisen and Napoli firm won gazillions of dollars in verdicts until it all ended.
Eisen has been pursuing a legal malpractice case against his own former attorneys for years, and yesterday the Court of Appeals gave it a green light to continue. 

The NYLJ reports:  "The Court of Appeals yesterday revived a legal malpractice suit against law firm Larossa, Mitchell & Ross over its representation of a personal injury lawyer found to have defrauded New York City by fabricating evidence in tort cases.

The suit, which was previously dismissed because Larossa's ex-client was in dissolution, cannot now be barred on res judicata grounds against a successor firm, the court ruled.

The case stems from the travails of the law firm Morris J. Eisen PC. Once one of the New York's top personal injury firms, the firm was accused by the city of falsifying evidence in a 1986 civil suit. Seven lawyers and investigators for the firm, including Morris J. Eisen, were subsequently targeted by federal prosecutors in Brooklyn and convicted on Racketeer Influenced and Corrupt Organizations Act charges in 1991.

Mr. Eisen had been represented in the criminal case by James M. Larossa, and the Larossa firm also represented the Eisen firm in the civil suit by the city. Eisen first tried to bring a legal malpractice suit against Larossa after a court granted partial summary judgment to the city on its fraud claims. The city was awarded $2.1 million.

The suit claimed Larossa did not adequately oppose the city's summary judgment motion, failing to present evidence that would have shown that, notwithstanding any false testimony, the city was actually responsible for the injuries in the cases at issue.

Pennsylvania Legal Malpractice and Ballard Spahr

Law.Com reports that the law firm of Ballard Spahr won a jury trial yesterday.  Beyond the usual legal malpractice issues and testimony, there was plenty of star power [in a law sort of way] as " famed Florida litigator Roy Black of Black Srebnick Kornspan & Stumpf represented Epstein along with Boca Raton-based Lance W. Shinder and local counsel Marc R. Steinberg, managing partner of Rubin Glickman Steinberg & Gifford in Lansdale, Pa.

His attorneys said in court documents that Crusader was never mentioned at the meeting with Epstein and Kaplinsky and that Epstein met with Crusader, and its then-executive -- now gubernatorial candidate -- Tom Knox, on his own in February 1999. "

"A Montgomery County jury vindicated Ballard Spahr Andrews & Ingersoll on Monday in a breach of fiduciary duty suit brought against the firm by a man seeking between $17 million to $30 million in lost profits plus interest and punitive damages.

Plaintiff Saul R. Epstein originally claimed the firm and Alan S. Kaplinsky, the firm's consumer financial services group chairman, committed legal malpractice, breached their fiduciary duty and interfered with a prospective contractual relationship, according to court documents. In Epstein v. Kaplinsky, Epstein claimed the firm shared his prospective business interests with another firm client involved in similar work, according to court documents.

An 11-to-1 jury found that Ballard Spahr owed a duty to Epstein but found by the same margin that neither Kaplinsky nor the firm breached that duty, according to Ballard Spahr partner Darryl May who acted as in-house counsel for the firm during the case. "

Right to Independent Counsel in Malpractice Cases

This case, Elacqua v. Physicians Reciprocal Insurers is a medical malpractice matter, in which the doctors had both covered and non-covered claims against them  Naturally, the insurance company had coverage for certain of the claims.  Although this case is in the medical malpractice area, it is fully applicable to legal malpractice.

The insurer was under an obligation to inform the doctors that they could have independent counsel, at the insurer's cost, to represent them.  The failure to inform the doctors could amount to deceptive business practices under Business Law 349. 

The NYLJ reports: "Drs. Mary S. Elacqua and William Hennessey alleged deceptive business practices because they were not told they were entitled to choose independent counsels, at the insurance company's expense, to represent them when a conflict of interest arose between covered and uncovered claims in the malpractice case against them. They were each represented by lawyers assigned by their insurance company.

The state Court of Appeals recognized the obligation by an insurer to provide independent representation to insureds in Public Serv. Mut. Ins. Co. v. Goldfarb, 53 NY2d 392 (1981), the Third Department panel said.
Yet, according to last week's ruling, a lawyer for Physicians' Reciprocal Insurers and the company's general counsel both acknowledged that its "practice is not to inform its insureds with whom it has conflicts that they have the right to select independent counsel at defendant's expense." In fact, the Third Department noted that in a 2005 ruling in the same case, Elacqua v. Physicians' Reciprocal Insurers, 21 AD3d 707, it confirmed that insurers have an "affirmative obligation" to inform insureds of their rights.

"Here, the partial disclaimer letters sent by defendant to its insureds - including plaintiffs - failed to inform them that they had the right to select independent counsel at defendant's expense, instead misadvising that plaintiffs could retain counsel to protest their uninsured interests 'at [their] own expense,'" Justice Karen K. Peters wrote for the panel. "Equally disturbing is the fact that defendant continued to send similar letters to its insureds, failing to inform them of their rights, even after this Court's pronouncement in Elacqua I."

Bankruptcy Trustee's Action in Legal Malpractice against Alston & Bird

Law.Com reports that "Alston & Bird and and the bankruptcy trustee for one of its former clients, the beleaguered Friedman's Jewelers Inc., are on the verge of settling a suit over allegations that the firm committed legal malpractice. "

"Alston & Bird, which served as Friedman's outside general counsel from the 1990s until the company terminated their relationship in 2004, contributed to some of those troubles, according to Alan Cohen, Friedman's bankruptcy trustee. He filed a complicated adversary complaint on behalf of the Friedman's Creditor Trust against the law firm and five other defendants in the U.S. Bankruptcy Court for the Southern District of Georgia in January 2007.

The first claim is that Alston & Bird committed legal malpractice by failing to disclose material facts related to Friedman's $85 million investment in Crescent Jewelers Inc., which became irrecoverable when Crescent declared bankruptcy in 2004.

In the second claim, the trustee complains about the fees Alston charged Friedman's. He claims that Alston took $5 million in legal fees but did not give an equivalent value of services. In the third claim, the trustee alleges that Friedman's -- while it was insolvent -- paid Alston almost $700,000. That's more than the company should have paid, given its financial posture, under the Bankruptcy Code, according to the trustee.

Now, more than a year later, the parties are close to striking a deal to resolve those disputes. "

Legal Malpractice, Judiciary Law 487 and Frivolous Conduct

The case of Rozen v. Nite Rider Group, Inc. seems to be going on in three different venues.  There was the original case, based on loans and property noldings, there is a legal malpractice case, and apparently there is also a Judiciary Law 487 case too. "This motion by former defense counsel, Russ & Russ, P.C., Jay Edmond Russ, Daniel P. Rosenthal, Kenneth J. Lauri and Ira Levine, (the Russ attorneys), for an order dismissing the parties' motions for sanctions on the moving parties for engaging in frivolous conduct as defined in 22 NYCRR 130-1.1, or, in the alternative, staying a hearing on the aforesaid motions, dated March 18, 2008, and March 24, 2008, until a decision is rendered on the Russ attorneys' motions to dismiss the complaint in an action brought against them by Rozen for breach of section 487 of the Judiciary Law (pending under Index Number 19442/2007), and another action brought against them for malpractice (pending under Index Number 01462/2008)"

Here, "After the trial concluded, the plaintiffs became aware that a certain parcel of real property situate in Mattituck, New York, which had been the subject of financial transactions between the parties, and on which it was understood at the time of trial that defendant Sally Omar held an option, was no longer subject to that option. The option had, on May 12, 2007, been assigned by Omar to her attorneys, seemingly in lieu of payment of fees. Plaintiffs assert that settlement offers extended to the Omar defendants, and their business entities, were not transmitted to them by defense counsel insofar as the offers involved the Mattituck property to which the defendants no longer held any interest."

Now, sanctions are sought against the attorneys, even though they are no longer in the case. "In March of 2008 both the plaintiffs and the defendants moved for a hearing to impose sanctions on Russ & Russ, P.C., and those professionals affiliated with them, for engaging in [*2]litigation conduct which satisfies the definition of frivolous conduct as set forth in 22 NYCRR § 130-1.1. (Motion Sequence No. 008 and No. 009.). It is alleged that the conduct of the moving parties undermined the integrity of the judicial process and increased the legal fees of the plaintiffs. Specifically that : "It was the intention of the Russ & Russ Attorneys to take the option to the Mattituck property from the Omars and then cause the Rozens to incur extensive delays and expense so that they would relinquish their rights to the Mattituck property without the knowledge that the Russ & Russ Attorneys sought to develop and profiteer from the property." Rosen OSC dated March 18, 2008, ¶ 11. "

Wiley Rein and Blackwater Legal Malpractice Case Ends

Law.Com reports that the Wiley Rein legal malpractice case has been dismissed. This was a case with major players: "The Wiley team that defended Blackwater in the underlying case consisted of Fred Fielding, now White House counsel; Barbara Van Gelder, now a partner at Morgan, Lewis & Bockius; Scott McCaleb, still a partner at Wiley; and Margaret Ryan, now a judge for the U.S. Court of Appeals for the Armed Forces. Blackwater's malpractice suit named Ryan as a separate defendant because, according to the complaint, she led the defense team."

Blackwater is a major player in the Iraq war, and this case involved a wrongful death in Fallujah.  Images of Blackwater contract employees being dragged behind trucks through the streets was a strong and sickening sight.

"Blackwater sued the Washington law firm in January, alleging that Wiley lawyers neglected critical case law and statutes while defending it in a 2005 wrongful death case brought on behalf of four Blackwater guards brutally killed in Fallujah, Iraq, in 2004. "

In the malpractice complaint, Blackwater argued the wrongful death suit would have been dismissed if it were heard in federal court, where the defense could have relied on similar cases where claims against battlefield contractors were thrown out. But the 2005 case was kept in Wake County Superior Court in North Carolina, despite a motion filed by the Wiley team to get it moved to the U.S. District Court for the Eastern District of North Carolina. The malpractice complaint alleged the motion failed predominantly because the Wiley lawyers didn't invoke the federal officer removal statute, which gives federal jurisdiction to claims involving federal officers.

Wiley's motion to dismiss the malpractice suit argued that Blackwater could not have been considered a "federal officer" in the underlying case because the guards who were murdered did not contract directly with the U.S. government, were not providing security for U.S. military personnel, and were not overseen by the U.S. military.
In her five-page order, Retchin said Blackwater's claim that it was entitled to remove the wrongful death case to federal court under the federal officer removal statute where "dismissal was the only appropriate remedy" were "legal conclusion[s] couched as factual allegation[s]."

"I would not have signed it" defeats Legal Malpractice Case

A frequent defense in legal malpractice is that while a mistake has been made, plaintiff is not hury anyway.  Here is one example of that defense in a New Jersey Case.  THE MAKE UP BAR, Inc.Plaintiff-Appellant, vs. COOPER, LEVENSON, APRIL, NIEDELMAN & WAGENHEIM, P.A., and ROBERT E. SALAD, ESQ.,

A hair stylist is hired by plaintiff, and plaintiff asks its attorney to prepare a "no-hire" agreement.  Instead, a "no-solicitation" agreement is prepared.  Is there a difference?

"Severino, a hairdresser, claims that she retained attorney Salad to draft a "no-hire" agreement for execution by Scerati, a hairdresser whom she had agreed to employ for a short period until his own salon, Blink Spa, was opened. Instead, she claims Salad drafted a "non-solicitation" agreement, which proved effectively unenforceable when, in an injunctive action filed by The Make-up Bar against Scerati in the Chancery Division after four of The Make-up Bar's employees had found employment at Scerati's salon, each certified that he or she had not been solicited by Scerati. Scerati corroborated the employees' position in his own certification, and he stated additionally that he would not have signed a no-hire agreement if it had been presented to him. The action filed against Scerati was dismissed without prejudice with Severino's consent.

In its complaint, plaintiff simply alleged that it "suffered damages" and "substantial business losses" as a result of defendants' failure to draft an appropriate agreement that would enjoin Scerati from hiring plaintiff's employees for a certain period of time. In support of its claim, plaintiff provided a single-page submission of handwritten calculations that purported to identify the revenue generated by the four employees during 2001 and 2002. Plaintiff's only expert, attorney Barry E. Levine, provided a report completely devoid of any assessment of damages. Levine testified that he was unaware of the attrition rate of beauty salon employees and that he had performed no investigation into the matter, formal or otherwise. Further, neither Severino nor Levine, as lay and expert witnesses, produced evidence of the specific business diverted to the other salon by its hiring of plaintiff's four former employees. Plaintiff failed to identify which customers, if any, followed the employees to the other salon and which customers continued to patronize it. Moreover, plaintiff did not commission any analysis or comparison of profits generated or clients lost before and after the employees left plaintiff salon. In opposition to defendants' motion, plaintiff merely set forth that it was damaged in the amount noted in Severino's handwritten exhibit.
Plaintiff filed its complaint for legal malpractice on February 13, 2004. Following the reversal of the first summary judgment and remand to the trial court, defendants renewed their motion for summary judgment after additional discovery. As in its first motion for summary judgment, defendants conceded for purposes of the motion that they failed to prepare the agreement that Severino requested. In support of their motion, Scerati certified that he would not have signed a more restrictive agreement. "

Texas and Disclosure of Legal Malpractice Insurance

This article from the Southeast Texas Record amplifies the current debate there over mandatory disclosure of legal malpractice coverage.  "There's a movement in Austin to change this. Last week, a state Supreme Court task force voted down a measure to require Texas lawyers who don't carry malpractice insurance to tell potential clients beforehand. Supporters plan to keep trying; next month they'll take their idea to the Texas Bar's Board of Directors."

"Predictably, lawyers are crying foul. In a lawyer poll--80,000 are licensed to practice law in Texas--70 percent opposed the idea, using arguments that wreak of irony if not hilarity.

Some lawyers contend letting clients know they are insured will prompt clients to--get this--sue them. "It's.. like painting a target on your back," complained Plano attorney Charles Awalt, as quoted in the Austin American-Statesman. Then there's the cost. Paying a few hundred to a few thousand dollars per year in premiums, many solo practitioners say they cannot afford to insure themselves and stay in business. "

CASES THIS WEEK IN LEGAL MALPRACTICE

Jusuf Becovic, et al., Plaintiffs-Respondents-Appellants, v Poisson & Hackett, et al., Defendants-Appellants-Respondents.

3142, 118056/04

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT

2008 NY Slip Op 2644; 2008 N.Y. App. Div. LEXIS 2594

March 20, 2008, Decided
March 20, 2008, Entered

Plaintiffs were physically injured, and the placement and maintenance of a garage sign was an important element of the personal injury case.  They lost and sued the attorneys.  The legal malpractice case was dismissed on summary judgment.  Note the parting comment on discovery.

“In this legal malpractice action, plaintiffs are unable to demonstrate that they would have succeeded in the underlying personal injury action "but for" defendants' conduct (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434, 866 N.E.2d 1033, 834 N.Y.S.2d 705 [2007]). Contrary to the motion court's conclusion, plaintiffs cannot show that the defendants in the underlying action created the allegedly dangerous condition by an affirmative act of misfeasance (see Mercer v City of New York, 88 NY2d 955, 670 N.E.2d 443, 647 N.Y.S.2d 159 [1996]; Kelly v Berberich, 36 AD3d 475, 476-477, 828 N.Y.S.2d 332 [2007]),  [**2] and the claim that said defendants failed to maintain the garage sign that was purportedly the instrumentality that resulted in the injury is not sufficient for this purpose. Plaintiffs also failed to raise an issue of fact regarding notice of the condition, since their sole opposition was hearsay (see Wertheimer v New York Prop. Ins. Underwriting Assn., 85 AD2d 540, 541, 444 N.Y.S.2d 668 [1981]). In view of the dismissal of the instant action, we need not address the arguments on plaintiffs' cross appeal for spoliation sanctions. We note, however, that plaintiffs' position is lacking given the long period of inaction  [*2]  by their attorneys in this action in failing to avail themselves of the opportunity to seek third-party discovery.”

Naida I. Velazquez, etc., appellant, v Bruno Decaudin, et al., defendants, Arnold Streisfeld, etc., et al., respondents. (Index No. 3191/06)

2006-10455, 2007-05614

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT

2008 NY Slip Op 2575; 2008 N.Y. App. Div. LEXIS 2514

March 18, 2008, Decided

As the Appellate Division notes, this is a strange and disturbing real estate deal for the beneficiaries of their mother’s estate.

“The complaint alleges, insofar as is relevant here, that Jose, believing, on the basis of misrepresentations by certain of the defendants, that he was refinancing to save his mother's property from foreclosure, entered into a contract to convey the property to Decaudin for $ 390,000. The property allegedly was worth $ 600,000 at the time. When the closing was scheduled, Jose  [**5] allegedly was advised that only he had to attend the closing, but that he should bring with him his mother's social security card and driver's license. At the closing he allegedly was introduced to Streisfeld, and was told that Streisfeld was his attorney.

 [*3]  The complaint alleges that, prior to the closing, Streisfeld had been provided with a copy of the power of attorney by which Jose was purporting to act in connection with the closing. The power of attorney, which had been executed by Jose's mother, appointed Jose and his sister, the plaintiff, Naida I. Velazquez, acting jointly, as attorneys-in-fact for their mother. Despite the requirement that Jose and the plaintiff act together, however, the complaint alleges that Jose acted alone in connection with the conveyance of the property and that the plaintiff was unaware of his actions in that regard.

According to the complaint, the closing proceeded only after a lengthy meeting, from which Jose was excluded, between Streisfeld, the representative of the defendant Old Town Abstract Company, LLC (hereinafter Old Town), which was the agent of UGT, and the mortgage brokers, financial advisors, and other attorneys involved in the transaction.  [**6] When the closing did proceed, Jose was taken into a room separate from the other participants, where he was advised that he was required to execute a deed, as well as a use and occupancy agreement and an option to purchase agreement. The use and occupancy agreement provided that Jose, who resided elsewhere, could continue to reside in the premises for a period of 12 months as long as he paid Decaudin's mortgage payments in a timely fashion during that period. The option-to-purchase agreement provided that as long as he did not default in his obligations under the use and occupancy agreement, Jose could purchase the property during that year for $ 370,500, which was the total amount of the two mortgages that Decaudin executed in favor of the defendant Sunset Mortgage Company at the closing.

The complaint further alleges that, at the closing, Jose, Decaudin, Streisfeld, and the attorney for the lender executed an escrow agreement, pursuant to which no funds were to be disbursed, no documents were to be recorded, and no title insurance was to be issued until an original power of attorney in favor of Jose had been delivered to Old Town. The escrow agreement further provided that if the  [**7] power of attorney were not delivered, the closing documents were to be returned to the respective parties. The complaint alleges that even though the power of attorney was never delivered to Old Town, the funds were disbursed and the closing documents were not returned, but were recorded, and UGT issued a policy of title insurance. The complaint alleges that the closing documents reflect that Decaudin paid approximately $ 295,000 to satisfy the outstanding mortgage indebtedness on the property and that the remaining $ 95,000 that had been borrowed from Sunset was disbursed to the defendants, rather than to the owner of the property, the plaintiff's decedent.

Several months later, Jose defaulted in his obligations under the use and occupancy agreement that was executed at closing and DeCaudin initiated a summary dispossess proceeding, in which he was represented by the defendants Ira S. Clair, an attorney, and Clair and Gjertsen (hereinafter collectively Clair). The proceeding resulted in the issuance of a judgment in favor of Decaudin and a warrant of eviction. The complaint alleges that in a motion to vacate the judgment and warrant, Clair was made aware of the alleged defect in Decaudin's  [**8] title but negligently failed to examine the relevant documents or do anything else to ascertain the true state of Decaudin's title.”

Another Big Law Bankruptcy Legal Malpractice Case

Bankruptcy Legal Malpractice cases are on the rise.  Trustees have greater powers than do regular plaintiffs, there are longer statutes of limitation in Bankruptcy situations, and the numbers are really big.  Here is a case from the NY Lawyer site.

"Gibson, Dunn & Crutcher is the latest law firm to be named in a suit stemming from the breakdown of the commodities firm Refco, Inc. The action, filed by liquidators and the trustee for Sphinx Funds, a family of funds that collapsed after doing business with Refco, was filed March 8 in New York trial court; a notice of removal to federal district court in Manhattan was filed by one of the defendants March 28. 

Refco filed for bankruptcy in October 2005. Several lawsuits and criminal proceedings have followed. This latest action claims the funds lost $263 million as a result of Refco¹s meltdown; Gibson, Dunn's representation of various Sphinx entities also contributed to the loss, the suit claims. 

Gibson, Dunn represented Sphinx Funds and its investment manager, PlusFunds, Inc., as well as fund directors and entities controlled by those directors. 

Work for those entities was a conflict of interest that the firm never disclosed, the complaint says. The plaintiffs also charge Gibson, Dunn with helping to conceal the nature of numerous loans made by Refco to Sphinx directors that were in fact payments to those directors in exchange for Sphinx's business with Refco. "

Patent Law, Legal Malpractice, State Court and Wisconsin

Here , in AccuWeb, Inc., Raymond Buisker, v.  Foley & Lardner, Harry C. Engstrom, Quarles & Brady LLP and Nicholas Seay, we find one of the rare state court patent legal malpractice cases.  Generally, as patent law is a federal question, one of the parties either brings the action in Federal District Court or removes it there.  Here is the decision on a motion for summary judgment:

"This case centers on whether AccuWeb, at the summary judgment stage, put forth sufficient evidence to raise a genuine issue of material fact on the question of whether the alleged failure of the Respondents to prevent the premature expiration of AccuWeb's 5,072,414 patent (the 414 patent) was a substantial factor in causing AccuWeb actionable damages, thus preventing summary judgment. The second issue is whether AccuWeb presented sufficient evidence to allow a fair and reasonable estimate of the amount of such damages, so that there was a genuine issue of material fact, thus preventing summary judgment as to the amount of those damages. We address the second issue because it was addressed by the circuit court. This case involves the interpretation and application of Wis. Stat. § 802.08 (2003-04),[2] the Wisconsin summary judgment statute. "

$ 3.7 Million Verdict is "Too Small" in Legal Malpractice Case
We've been following this case.  Bank is scammed by person running a structured settlement company, and clients' structured settlement funds are lost.  Bank sues the attorney who recommended the structure guy, and on Friday, a jury awarded the bank $ 3.7 million in damages.

Here is the story of the verdict in Magna v. Coburn.

"The day after he won $3.7 million in a legal malpractice case, East St. Louis lawyer Rex Carr said he would ask that part of the case be retried because he believes the jury should have awarded his client more money. 

Carr had asked the jury for more than $11 million for his client, Regions Bank, then named Magna Bank. The bank had sued the St. Louis law firm of Thompson Coburn, alleging that bad legal advice opened the bank to liability in the meltdown of financial scam artist James Gibson in the 1990s. 

Gibson's scheme involved the establishment of trusts for people, mostly accident victims, who had won large civil suit awards or settlements. Gibson initially invested the money with various banks, including Magna, but eventually took direct control of the money through a series complicated court cases. 

Gibson then lavishly spent the money on himself and his family and squandered most of it on a failed attempt to resurrect the National supermarket chain. In the end, 155 investors lost some or all of their funds, more than $60 million at the time and more than $150 million in promised payments over time. Gibson was sent to prison for 40 years. "

NEW JERSEY TRAP 

NJ has some traps for the unwary in legal malpractice, and this case showcases several of them. In CELESTE GUIA PINTO, v.MCGOVERN, PROVOST & COLRICK, SUPERIOR COURT OF NEW JERSEY, APPELLATE DIVISION DOCKET NO. A-3186-06T53186-06T5 we see the Puder rule on settlements, the rule on certificates of merit, and an application of the Sheridan v. Sheridan rule on reporting fraud.
Points of interest:  mother, an immigrant, accumulates a significant estate, including 5 properties.  She wants to reward son, and asks him to get an attorney to draw up a will which will give him some of the funds and part of some of the properties.  She signs what eventually turns out to be deeds making them joint owners of all the properties.

SPECIALISTS and GENERALISTS

Attorneys are generalists, no attorneys are specialists, no they can handle anything?  The profession is of two minds on this question.  Any attorney, duly admitted, etc. may offer opinion evidence on the behavior of another attorney, and any attorney might simply step up to the counsel table and give an appearance.  Once that happens, the trial is on.

However,  it's quite obvious that experience is not only nice, it's a necessity. Here is an article about defending the DUI case.  Somewhat long, and a little argumentative, it makes a very good point.  Is the person writing this article more likely to obtain a solid professional result, or will the friendly generalist do better for the criminal defendant?
"Almost every attorney is at one time or another confronted with a client, friend, or family member charged with drunk driving. Because accused drunk drivers are immediately charged with a crime, drunk-driving cases represent the single largest category of criminal infractions of all reported cases, with about 200,000 more cases processed each year than all theft and larceny offenses combined. Even attorneys who do not generally handle criminal matters are routinely asked how an accused person should proceed in a drunk-driving case. In the 1960s, driving under the influence of alcohol was considered a minor offense, leading to modest fines; in the 1990s, it is considered the most serious misdemeanor offense. In several states, repeat offenders are considered felons."

DROPPING THE “F” BOMB AT A DEPOSITION

Depositions in New York used to be a variant of the Wild West rodeo.  Bucking broncos, trying to stay up on the horse, pick your metaphor.  New attorneys soon learned the usual tricks, "I'll take that under advisement", "I direct the witness not to answer" and all that.  With Administrative orders things have changed here.  Ever have a really really bad deposition experience?

A gross example of bad deposition behavior is found here  Of interest is the fact that attorney Ziccardi is being sanctioned along with his client.  We won't repeat the vulgarities here, but read the entire story for a look at a bad situation.

"A federal judge has levied sanctions of more than $29,000 on a lawyer and his client after finding that a deposition was a "spectacular failure" because of the client's constant use of vulgar language and insults and dodging or refusing to answer questions, and his lawyer's failure to rein him in. 

In his 44-page opinion in GMAC Bank v. HTFC Corp., U.S. District Judge Eduardo C. Robreno found that Aaron Wider, the CEO of HTFC, engaged in "hostile, uncivil, and vulgar conduct, which persisted throughout the nearly 12 hours of deposition testimony." 

Robreno noted that Wider used the "F word" or variations of it 73 times during the deposition and that the video shows that his lawyer, Joseph R. Ziccardi of Chicago, at one point "snickered" at his client's conduct.
"In the final section of the opinion, Robreno explained why Ziccardi, too, must be sanctioned for Wider's misconduct. 

"Throughout the deposition, notwithstanding the severe and repeated nature of Wider's misconduct, Ziccardi persistently failed to intercede and correct Wider's violations of the Federal Rules," Robreno wrote.
"Instead, Ziccardi sat idly by as a mere spectator to Wider's abusive, obstructive, and evasive behavior; and when he did speak, he either incorrectly directed the witness not to answer, dared opposing counsel to file a motion to compel, or even joined in Wider's offensive conduct," Robreno wrote. 

In a footnote, Robreno said the video showed Ziccardi "chuckling at Wider's abusive behavior" and Bodzin's comment that "'your snickering counsel is not appropriate either, because all you're doing is encouraging the behavior of your client.'" 

In court papers, Ziccardi argued that he believed he had tried to curb his client's behavior, but that most of his efforts to do so occurred off the record. "

CASES THIS WEEK IN LEGAL MALPRACTICE

Fred W. Nelson, etc., respondent, v Stanley Kalathara, defendant, Claude Simpson, appellant. (Index No. 3167/07)
2006-09551
SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT
2008 NY Slip Op 1313
February 13, 2008, Decided

Here, plaintiff is the guardian of an incapacitated seller of real property, and defendants were the attorneys for purchaser.  Purchase funds went astray, going to incapacitated sellers former guardian [and a relative.]  Seller’s Guardian unsuccessfully sued purchaser’s attorneys with whom he had no privity, and  was unable to convince the court that there was fraud, or independent malicious acts necessary to bring an action against purchaser’s attorneys. 

Plaintiff may not sue opponent’s attorneys, or attorneys who were not acting for plaintiff in the absence of independent fraud or malicious acts.

Tsvi Dallal, respondent, v Kantrowitz, Goldhamer & Graifman, P.C., appellant. (Index No. 99/2003)
2007-06135
SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT
2008 NY Slip Op 1295
February 13, 2008, Decided

Defendant attorney waited too long to bring a motion for summary judgment, which had to be brought within 60 days. Court cites two Court of Appeals cases on issue, Miceli and Brill.

SECOND CIRCUIT LEGAL MALPRACTICE CASES THIS MONTH

CELEBRITY CRUISES INC., and FANTASIA CRUISING INC., Plaintiffs, - against - ESSEF CORP., PAC-FAB, INC., and STRUCTURAL EUROPE N.V. (f/n/a SFC), Defendants.

96 Civ. 3135 (JCF)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
2008 U.S. Dist. LEXIS 568
January 4, 2008, Decided

This is a cruise line injury action. “After passengers sued plaintiff cruise line for injuries from an illness suffered while on a trip, the cruise line sued defendant manufacturer, which had designed, manufactured, and distributed the water filter in the whirlpool spa where the illness originated. After two damages trials, which resulted in an award of $ 15 million lost profits award for the cruise line, the parties filed various motions regarding damages.”

“This case has been litigated in installments. Having agreed to proceed before me for all purposes pursuant to 28 U.S.C. § 636(c), the parties stipulated to determination of all liability issues--those arising out of Celebrity's claims as well as those related to the passengers' claims--in a single bellwether trial. That trial took place in May 2000. The jury returned a verdict in favor of the passenger plaintiffs and against both Celebrity and Essef. The jury also found in favor of Celebrity on its claims against Essef, and a damages trial based  [*4] on that determination was conducted in the spring of 2006. When the jury in the 2006 damages trial returned a verdict in favor of Celebrity for approximately $ 190 million, Essef moved for judgment as a matter of law or, in the alternative, for a new trial. I granted that motion in part, awarding judgment to Essef on one category of damage claims and ordering the retrial of another. Celebrity Cruises Inc. v. Essef Corp., 478 F. Supp. 2d 440 (S.D.N.Y. 2007) ("Celebrity IV"). A second trial on damages was held in June 2007, and this time the jury found Essef liable to Celebrity for approximately $ 15 million in lost profits.

“Second, Celebrity points out that in a legal malpractice action brought by Essef against its former counsel, Squire, Sanders and Dempsey LLP, Essef has argued  [*21] that it was injured by the firm's failure to seek a jury determination of comparative fault with respect to Celebrity's claims against Essef. This, according to Celebrity, estops Essef from contending that it did not waive the right to avail itself of principles of comparative negligence. (Celebrity Memo. at 10). But nothing prevents Essef from pleading in the alternative by, as in this instance, asserting a contingent or hypothetical claim: if Essef is found to have waived comparative negligence, only then does it have a malpractice claim arising out of that failure. See Lawser v. Poudre School District R-1, 171 F. Supp. 2d 1155, 1158 (D. Colo. 2001) (finding that HN3 contingent claim is permissible hypothetical pleading). The predicate pled for that contingent claim, however, does not operate as a binding admission. See Henry v. Daytop Village, Inc., 42 F.3d 89, 95-96 (2d Cir. 1994); Ascher v. Target Corp., No. 05-CV-4826, 522 F. Supp. 2d 452, 2007 U.S. Dist. LEXIS 84015, 2007 WL 3287441, at *5 (E.D.N.Y. Oct. 16, 2007).”

CITAK & CITAK et al., Plaintiffs, -against- THE ST. PAUL TRAVELERS COS., INC., Defendant.

07 Civ. 5459 (WHP)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
2007 U.S. Dist. LEXIS 94040
December 26, 2007, Decided

This is a diversity jurisdiction case in which the law firm has asked for a declaratory judgment that it is covered by a subject legal malpractice insurance policy..

The Citak Firm “claims that St. Paul's refused to provide counsel and indemnify them for a malpractice claim tiled against them on November 3, 2006 in New York State Supreme Court (New York County) by Stuart and Carina Marton (the "Marton Action"). The Martons allege that the Citaks' legal malpractice damaged them in their pursuit of an arbitration award against a contractor. (Harwood Decl. Ex. C: Complaint, Marton v. Citak & Citak, No. 116472-06 (N.Y. Sup. Ct. Nov. 3, 2006.) The Martons seek "at least $ 60,000 in damages, with interest from November 29, 2000, together with plaintiffs' costs and disbursements in [the] action." (Harwood Decl. Ex. C at 9.) After an arbitrator awarded the Martons $ 62,367.32 against their contractor, the Citaks moved  [*3] to dismiss the Marton Action arguing that, having won the arbitration, the Martons could not demonstrate that the Citaks' alleged malpractice had caused them any harm. On October 11, 2007, the New York State Supreme Court denied the Citaks' motion to dismiss because (1) "but for defendants' negligence, [the Martons] would have procured a judgment against [the contractor] while that entity had assets sufficient to satisfy the judgment;" and (2) the arbitrator denied the Martons' request for $ 36,632.11 in pre-judgment interest, finding that the Citaks, and not the contractor, were responsible for the nearly seven year delay in bringing the arbitration. (Decision and Order, Marton v. Citak & Citak, No. 116472-06 (N.Y. Sup. Ct. Oct. 11, 2007) at 4.)”

For more information please visit Andrew Bluestone's Attorney Malpractice Blog.

CASES THIS WEEK IN LEGAL MALPRACTICE

An Illustrative Example of Legal Malpractice

On some occasions, the dissection of a case yields interesting insights.  Here is a Second Department Case: Petersen v Lysaght, Lysaght & Kramer, P.C. ,  2008 NY Slip Op 00472

Decided on January 22, 2008 ,Appellate Division, Second Department  which illustrates several points:

1.  Some cases are a problem from beginning to end.  In this case there have been three appeals, and the case ends when plaintiff fails to file a note of issue, and cannot explain why, or show a meritorious case.

2.  Nassau and Suffolk notes of issue dates are sacrosanct.  "The certification order of the Supreme Court dated February 3, 2006, directing the plaintiff to file a note of issue within 90 days and warning that the action would be deemed dismissed without further order of the court if the plaintiff failed to comply with that directive, had the same effect as a valid 90-day notice pursuant to CPLR 3216 (see Louis v MTA Long Is. Bus Co., 44 AD3d 628; Hoffman v Kessler, 28 AD3d 718). 

3.  Louis is more often cited for the proposition that the order of court [Kings, for example] did not have the same effect as a CPLR 3216 notice.

4.  It is usually a bad sign when the plaintiff-Appellant's attorney is not listed on the appellate decision.  Generally, it means that the attorney did not ask for, or attend for oral argument.  Often a bad choice, it tells the court that appellant is not really interested in the outcome.

5.  This court determined that everyone here made mistakes:
"Moreover, the plaintiff's motion papers failed to establish the existence of a meritorious cause of action. Contrary to the plaintiff's contention, we have not previously decided this issue in his favor. On a prior appeal, we held that the Supreme Court should have denied those branches of a motion by the defendants Lysaght, Lysaght & Kramer, P.C., Peter Kramer, and Michael Balducci (hereinafter the defendants) which were to dismiss certain of the plaintiff's causes of action insofar as asserted against them as barred by the doctrine of collateral estoppel (see Petersen v Lysaght, Lysaght & Kramer, 250 AD2d 581). On a second prior appeal, we held that the Supreme Court should have denied a motion by the defendants for summary judgment dismissing the same causes of action, on the ground that they failed to establish their prima facie entitlement to judgment as a matter of law (see Petersen v Lysaght, Lysaght & Kramer, 288 AD2d 281). Finally, on a third prior appeal, we reversed so much of an order of the Supreme Court as granted a motion by the defendants for leave to renew their prior summary judgment motion, on the ground that they failed to meet the requirements of CPLR 2221(e)(3)(see Petersen v Lysaght, Lysaght & Kramer, P.C., 19 AD3d 391). Thus, we have never previously held that the subject causes of action are, in fact, meritorious. 

6.  One really should put everything into demonstrating a meritorious cause of action.  "To establish the merit of his claims, the plaintiff tendered a copy of his verified complaint, which, in relevant part, stated that "[t]he defendants made no efforts to secure a default judgment" against a defendant in an underlying personal injury action, thereby committing legal malpractice. Without even a modicum of proof that a default judgment properly could have been obtained against that defendant in the underlying action (see Woodson v Mendon Leasing Corp., 100 NY2d 62, 70-71; CPLR 3215[f]), we cannot conclude that the plaintiff established the existence of a meritorious cause of action to recover damages for legal malpractice. 

Litigating Against Other States

Many legal malpractice cases arise from failures to file a notice of claim against a municipality or against the state.  The case law is rife with General Municipal Law mistakes, as well as Court of Claims Act errors.  This case, which involves not New York but Louisiana, shocks the conscience.

Boudreaux v. State of Louisaina Department of Transportation, decided in the Appellate Division 1st Department reminds us that no matter how difficult it is to litigate against the City or State, Louisiana is a whole 'nuther place.  

"The Court of Appeals of Louisiana, Second Circuit, recently opined that "[a] judgment creditor of a political subdivision of the state has no way to collect its judgment except by appropriation ... Appropriation of funds is discretionary and not ministerial, and mandamus will not lie to compel payment of a judgment by a political subdivision" (The Newman Marchive Partnership, Inc. v City of Shreveport, 962 So2d 1075, 1077 1078 [La 2007], see also Cooper v Orleans Parish School Bd., 742 So2d 55, 64 [La 1999], writ denied 751 So2d 858 [La 1999]).
Plaintiffs herein have registered their judgment in 18 Louisiana parishes but, to date, the Louisiana Legislature has declined to appropriate the funds necessary to pay that judgment. As a result, plaintiffs now seek, in our view, to do an end run around their own legislature, and the laws of their home state, by attempting to enforce the judgment in the New York courts. 

To read more about Attorney Malpractice news, visit the New York Legal Malpractice Blog.

MITIGATION IN LEGAL MALPRACTICE

A blackletter rule of law is that plaintiffs are required to mitigate their damages to the extent reasonably possible.  This two-decision set of cases illustrates permutations in legal malpractice. First, Minchew, Santner & Brenner, LLP v Somoza (2008 NY Slip Op 50112(U)). Ultimately, when an attorney is retained to prosecute a legal malpractice case he is not required to try to fix the underlying action which led to the legal malpractice case.  This is different from a situation in which the new attorney is a successor to the predecessor, and must of course try to fix things.

Here, plaintiff hired attorney A to bring an action in the NY Court of Claims.  Attorney A is alleged to have failed timely to file the notice of claim.  Plaintiff hired attorney B, the Minchew firm, to sue attorney A.  A most important fact is that while the notice of claim was not timely filed, the statute of limitations has not yet passed, and plaintiff may still file a motion seeking leave to file a late notice of claim.  No one has moved for leave.

Attorney A, who is now a legal malpractice defendant, asks the Minchew firm to mitigate damages by filing a motion seeking leave to file a late notice of claim.  The do not, and will not.  So Attorney A third-parties the Minchew firm into the case.  This sets the stage for mayhem.

The Minchew firm then sues the insurance defense attorneys who brought the third-party action.  Justice McMahon writes this decision: “As a result, all causes of action alleged by the plaintiff in their complaint are dismissed. All other requested relief is denied or academic. Finally, this Court will again strongly urge the attorneys involved in these matters to cooperate and set aside these vindictive and unnecessary actions in an effort to resolve  [**9]  this case.”

The companion case is Cacho v Law Offs. of Louis Venezia (2008 NY Slip Op 50111(U)).  This part of the case deals with the Minchew law firms motion to dismiss the third-party action.  Here, the judge deals with the law firm’s obligation to mitigate damages:
“With respect to the motion at hand, generally, where a law firm is retained for the limited and express purpose of representing a client in a legal malpractice action, they do not have a duty to prosecute the underlying claim, if one still lies (see Northrop v. Thorsen, ___ AD3d ___, [2d Dept., Dec. 18, 2007][finding that an attorney retained "in a separate matter, before a separate tribunal, and for a different purpose" does not require him to mitigate damages in the underlying claims); Johnson v. Berger, 193 AD2d 784, 786 [2d Dept., 1993][holding that a law firm's failure to preserve an estate's assets, when retained for the limited purpose of prosecuting a legal malpractice action "did not contribute to or aggravate the plaintiffs' damages arising from the former attorneys' alleged legal malpractice]"
Here, third-party defendant's have established entitlement to judgment in accordance with CPLR § 3211(a)(1) and (a)(7). The retainer agreement is clear and specific, detailing that the representation by the third-party defendants is for "damages arising from personal injuries sustained by Eugene Cacho as a result of legal malpractice." Further, the cases cited by the defendant/third-party plaintiff's are distinguishable from the instant matter in that here, the third-party defendant Minchew was not hired as successor counsel to prosecute the personal injury claim, but rather on a different matter, in front of a different Judge and for a different purpose (Northrop v. Thorsen, ___ AD3d ___ [2d Dept., Dec. 18, 2007]). As a result, defendant Minchew is under no obligation to file a late notice of claim and therefore, dismissal of the third-party complaint is warranted (see CPLR § 3211 [a][1],[a][7]; Northrop v. Thorsen,”

NEWS IN LEGAL MALPRACTICE THIS WEEK

Adrift and pro-se in Federal District Court is a lonely place to be.  Any attorney who has practiced in State and Federal Courts knows the differences between them.  This week brings a case in which both sides of a legal malpractice-fiduciary breach case are pro-se. DANIEL KIRK and LINDA KIRK, v. JOSEPH M. HEPPT, ESQ., 05 Civ. 9977 (RWS),UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, 2008 U.S. Dist. LEXIS 3805 is an illustration of how things can go wrong there.

Plaintiff’s causes of action are dissected, and for the most part are found wanting.  Defendant’s counterclaims are, for the most part, gutted.  No one walks away from this case intact.
 
“The Kirks initiated this action against Heppt, Daniel's former lawyer, on November 28, 2005. The complaint alleged breach of contract, fraudulent misrepresentation, breach of fiduciary duties, mail fraud, and violation of N.Y. General Business Law § 349 arising  [*2] out of the representation by Heppt of Daniel in an action brought on behalf of Daniel against Daniel's former employer (Compl. P 1). The Honorable Sidney H. Stein dismissed Daniel's action on August 31, 2004. Kirk v. Schindler Elevator Corp., No. 03 Civ. 8688 (SHS), 2004 WL 1933584 (S.D.N.Y. Aug. 31, 2004). The Kirks' motion to amend their Complaint in the instant action pursuant to Fed. R. Civ. P. 15(a) was denied by this Court on March 20, 2006. Kirk v. Heppt, 423 F. Supp. 2d 147, 151 (2006).

Plaintiff’s fraud claims are dismissed, plaintiff’s NY General Business Law § 349 Cause of Action are Dismissed, The Claim for Breach of Fiduciary Duty is Dismissed in Part, The Treble Damages Claim Under Judiciary Law § 487 Is Dismissed and on defendant’s side, the defamation claims are dismissed.

For more information visit the New York Attorney Malpractice Blog.

CASES THIS WEEK IN LEGAL MALPRACTICE

CHICAGO TITLE INSURANCE COMPANY, Plaintiff, v BARBARA J. MAZULA, Defendant and Third-Party Plaintiff-Appellant; JAMES E. KEABLE, Third-Party Defendant-Respondent.

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, THIRD DEPARTMENT
2008 NY Slip Op 27
January 3, 2008

This is a case in which the question becomes whether an individual or an estate hired the attorney. In order for plaintiff to prevail, the court must determine that the estate hired the attorney, and each of the mistakes took place while the attorney represented the estate, not the individual. 

“Defendant argues that the toll applies because the sale of the property was not an isolated transaction, but an estate matter during which Keable continued [**4] to represent defendant's husband's estate long after the malpractice accrued. We disagree. The first deed attempted to convey what was believed to be the estate's interest in the property whereas the second deed conveyed defendant's personal interest. Regardless of how the first deed was executed, defendant, as a surviving tenant by the entirety, solely conveyed her personal interest (see Matter of Mischler, 30 AD3d 859, 860, 819 N.Y.S.2d 118 [2006]). Hence, as to both deeds, Supreme Court correctly determined that Keable was always acting for defendant in her individual capacity, not in her capacity as the executor of her husband's estate 2. Since Keable performed no further work for [*3] defendant, either personally or in her capacity as executor of the estate after January 2000 in regard to this transaction, the commencement of this third-party action for legal malpractice was not timely.”

Gerald Goldman, et al., Plaintiffs-Appellants, v Akin Gump Strauss Hauer & Feld, LLP, et al., Defendants-Respondents. 

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT 

2007 NY Slip Op 10492
December 27, 2007

In many legal malpractice cases, we find that the attorneys played several roles. Sometimes, they start as transactional attorneys, and morph into litigation attorneys. 

Here the “documentary evidence [that] effectively precludes plaintiffs from arguing that defendants' representation in the arbitrations was continuous with their representation in the sale. Such documentary evidence consists of the affidavit submitted by plaintiffs in a prior litigation that involved an unsuccessful attempt by a limited partner to disqualify defendants from representing plaintiffs in one of the arbitrations. Therein, one of the plaintiffs stated that while defendants were retained to advise plaintiffs and, if need be, serve as their litigation counsel, in connection with litigation then being threatened by the limited partners, as to the sale itself, defendants were retained only to draw the documents necessary to consummate a deal that had already been negotiated and agreed to. Holding plaintiffs to this position (see D & L Holdings v Goldman Co., 287 AD2d 65, 71-72, 734 N.Y.S.2d 25 [2001], lv denied 97 NY2d 611, 742 N.Y.S.2d 604, 769 N.E.2d 351 [2002]), defendants' [**3] representation in the arbitrations, which involved the merits of the litigation that was being threatened by the limited partners at the time plaintiffs retained [*2] defendants, was distinct from their representation in "papering" the sale, which did not involve negotiating the terms of the sale or advising whether or not to proceed with it.”

WHEN IS AN EXPERT NOT NECESSARY?

There are many formulations set forth describing when an expert is necessary or not, in legal malpractice.  “Expert testimony is normally needed to establish that an attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, unless the ordinary experience of the fact-finder provides sufficient basis for judging the adequacy of the professional service, or the attorney’s conduct falls below any standard of due care.”

This quote, from Northrop v. Thorsen, 2007 Slip Op 10125 [2d Dept, 2007] described a not uncommon mistake.  Attorney represents plaintiff in a personal injury action, and, in effect, settles the case without the consent of the Worker’s Compensation Carrier.  Here, he agreed to binding arbitration, and when advised of the error, failed to rectify the problem.

Here in a case of not leaving well enough alone, the attorney made a motion for summary judgment, and instead, the court granted summary judgment to the plaintiff.

This case is interesting on two other points.  By persevering, plaintiff won the case even after he was precluded from offering expert testimony!

The second interesting point is that the attorney tried to plead comparative fault or “failure to mitigate damages” by arguing that plaintiff himself could have moved for a nunc pro tunc order.  The court responded: “The defendant, however, may not shift to the client the legal responsibility [he] was specifically hired to undertake because of his superior knowledge.”

THIS WEEK’S CASES IN LEGAL MALPRACTICE

1. Gerald Goldman, et al., Plaintiffs-Appellants, v Akin Gump Strauss Hauer & Feld, LLP, et al., Defendants-Respondents.

SUPREME COURT OF NEW YORK, APPELLATE DIVISION,
FIRST DEPARTMENT, 2007 NY Slip Op 10492

Statute of limitations question in a transactional and litigation case in which defendant attorneys were determined to have worked in the litigation end of the case only, and not in the transactional part..  Dismissal was granted on the basis of prior affidavits.

2.  The Barbara King Family Trust, etc., et al., Plaintiffs-Respondents-Appellants, v Voluto Ventures LLC, et al., Defendants, Kurzman Eisenberg Corbin Lever & Goodman LLP, et al., Defendants-Appellants
 
SUPREME COURT OF NEW YORK, APPELLATE DIVISION,
FIRST DEPARTMENT, 2007 NY Slip Op 10072

This is a convoluted real-estate purchase, mortgage foreclosure, improvident securities purchase and investment case.  The defendant attorneys represented both King and Voluto, but their representation of  King  was limited to advising her, correctly, in a real estate purchase bid.  She profited from their advice, and then invested the profit unsuccessfully in Voluto.  Case dismissed against the attorneys.

3. Frances Northrop, respondent, v Eric Ole Thorsen, appellant.
2007-00973

SUPREME COURT OF NEW YORK, APPELLATE DIVISION,
SECOND DEPARTMENT, 2007 NY Slip Op 10124

Here is a prime example of when to quit.  Defendant attorney moves for summary judgment and loses the motion.  Not satisfied, he appeals, and the Second Department searches the record, entering summary judgment for Plaintiff-Respondent instead.

Attorney represented Plaintiff in a personal injury third party action in which she had obtained Workers Compensation awards.  He entered binding arbitration without obtaining the WC carrier’s consent, and thus doomed her future WC benefits, forever.  When given a chance to fix the problem, he failed to do so. 

4. Richard Gladstone, et al., Plaintiffs-Appellants, v Scott Ziegler, Defendant, Steven Altman, et al., Defendants-Respondents.

SUPREME COURT OF NEW YORK, APPELLATE DIVISION,
FIRST DEPARTMENT, 2007 NY Slip Op 9938;

Plaintiff proved that defendant attorney made mistakes in filing a UCC1 but did not demonstrate that its damages could be collected; it also waited too long to move to amend the complaint to add a former version of the law firm.

5. Voluto Ventures, LLC, derivatively on behalf of Harbour Entertainment, Inc., Plaintiff-Appellant, v Jenkens & Gilchrist Parker Chapin LLP, Defendant-Respondent, Harbour Entertainment, Inc., Defendant.

SUPREME COURT OF NEW YORK, APPELLATE DIVISION,
FIRST DEPARTMENT, 2007 NY Slip Op 9920

What are the chances of a corporation being on both ends of unrelated legal malpractice cases in the same week?  Here, Voluto wins a motion to dismiss in which it tried to enter into a long term lease for a movie studio on Staten Island.  The law firm is alleged to have botched the transaction.  The case continues.

For more on legal malpractice check out the New York Attorney Malpractice Blog.

THIS WEEK’S CASE IN LEGAL MALPRACTICE

We continue to discuss Barnett v. Schwartz, 2007 NY Slip Op 09712, Appellate Division, Second Department, Decided 12/11/07.  Last week we talked about the definition of “but for” and how it related to “a” or “the” proximate cause.

The case also stands for a somewhat novel principal.  Prejudgment interest appears to be permitted in legal malpractice, whether it would have been permitted in the underlying case or not. This wide sweeping pronouncement appears to apply not only to recognized breach of contract causes of action, but to personal injury legal malpractice damages, too.

“CPLR 5001 operates to permit an award of prejudgment interest from the date of the accrual of the malpractice action in actions seeking damages for attorney malpractice”, citing Horstmann v, Grasso PC, 210 AD2d 671; Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 444 (2007)

THIS WEEK’S STORY IN LEGAL MALPRACTICE

States continue to discuss whether there should be mandatory legal malpractice insurance, or in the alternative, mandatory insurance disclosure.  From a public policy point of view, each proposal has the effect of creating greater protection for the public.

In California, an original proposal to require disclosure has been watered down to situations in which “it is reasonably foreseeable that the attorney will represent a client for more than 4 hours.”

Right now, the California State Bar Committee on Regulation, Admissions and Discipline is worried about the reaction of small firms and solos.  State Bar Governor John Dutton said: “They know this is going to do very little but adversely affect them.”

For more on legal malpractice check out the New York Attorney Malpractice Blog.

THIS WEEK’S LEGAL MALPRACTICE CASE

The most important case of this week is Barnett v. Schwartz, 2007 NY Slip Op. 09712, 2d Dept, December 11, 2007.  It is important for three reasons.  We’ll discuss the first today:

“But for” causation is not as difficult as had previously been believed.

Does the failure to exercise "that degree of care, skill and diligence commonly possessed and exercised by members of the legal community.” have to be “the” proximate cause of damages?  Must it be “a” proximate cause of damages? 

The Appellate Division says that it must be nether “the” or “a” proximate cause of action, but simply requires proof that “but for” the negligence of the defendant-attorney, the plaintiff-client would have prevailed in the underlying action.”

This formulation does not require a greater, more direct degree of causation, and the Appellate Division did not find a “substantive import to the variations in the formulations discussed above, holding that a plaintiff-client in a legal malpractice action need prove only that the defendant-attorney’s negligence was a proximate cause of damages.”

“But for” causation is not synonymous with sole proximate cause, and it is not required that the degree of causation in legal malpractice be any greater than “proximate cause. i.e., greater than that which must be typically proved as against any other professional or lay defendant in a negligence action.  There is no case which singles out attorneys for “special treatment on causation.”

THIS WEEKS LEGAL MALPRACTICE STORY

Disgorgement of fees is this year’s flavor de jour.  More and more legal malpractice cases, especially involving very large law firms are coming from Bankruptcy Court. 

The connection between these two concepts is seen in the recent Pillsbury Winthrop Shaw Pittman disgorgement case involving $4 million.  The Chapter 11 Trustee for SonicBlue, Inc. is asking for the fees to be returned.  The firm was removed from the case in March because it failed to disclose a 2002 letter in which it promised some SonicBlue investors that they would be repaid in full even if the company went into bankruptcy.  The Trustee argued that this letter biased the firm towards a plan which actually did repay those investors.

For more on legal malpractice check out the New York Attorney Malpractice Blog.

LEGAL MALPRACTICE CASES IN
FEDERAL COURT THIS MONTH

1. WESTPORT INSURANCE CORP. v. GOLDBERGER & DUBLIN, P.C.
United States Court of Appeals for the Second Circuit   2007 US App Lexis 27612

Law firm was sued by former clients, and insurance company disclaimed coverage because law firm did not give reasonable notice of potential suit.  Law firm defended by arguing that it had no basis to expect a suit by its client, who had assured them that she did not intend to sue.  She, however, did.  Court noted that no court in New York “has addressed the question” of the objective inquiry into a client’s assurances “in deciding what an attorney in the insured’s position could reasonably have foreseen.”

2. SMARTIX INTERNATIONAL LLC  v. GARRUBBO, ROMANKOW & CAPESE PC, United States District Court for the Southern District of New York, 2007 US Dist Lexis 85807

Discussion of post-end of discovery subpoenas, as well as whether non-party subpoenas are permissible in what might be called a fishing expedition.  These personal records are “not relevant to the claim or defense of any party.”

3. KING v. FOX
United States District Court for the Southern District of New York, 2007 US Dist Lexis 85396

This case has “occupied this court, the magistrate judge, the Court of Appeals on two occasions and the New York Court of Appeals over the past ten years.  Presently at issue is Fox’s motion to strike King’s demand for a jury trial.”

Judge Sweet discusses the equitable/law nature of the legal malpractice claims, and gives a short historical tour of the right to a jury trial.”

4. BRITESTARR HOMES INC. v. PIPER RUDNICK LLP
United States Court of Appeals for the Second Circuit   2007 US App Lexis 27935

Piper Rudnick wins motion for summary judgment, finding that client “failed to establish the required proof of damages for any of its claims.”  “In particular, as to the difference between the value of the client’s property in bankruptcy and outside of bankruptcy, the client failed to show that any damage to the property was” the result of the bankruptcy proceeding. 

THIS WEEK’S NEWS IN LEGAL MALPRACTICE

Shocking incivility in a deposition?  Gender sarcasm during an EBT?  Older attorney condescending to a younger attorney?  Is this uncommon, or more nearly the norm in New York?

Anthony Lin of the New York Law Journal reported a Justice Edmead decision in which she castigated the male attorney for speaking uncivilly and with gender bias to the female attorney, calling her “hon” and “girl.”  The attorney strongly denied using those words. He asked her why she was not wearing a wedding ring, and commented on her having a “cute thing going on.”   This brings up the errata sheet theory of deposition testimony.  He says that he was using the term “Hun” [as in Attila] which might have been complementary. 

An interesting sideline to this story is that the female attorney was taking the deposition and had the only copy of the transcript, which she did not supply to the accused male attorney.  How was he to defend?

Moral?  What you are saying is being taken down.

Legal malpractice accusations are reaching billboards and the internet, and may prove to be more irksome there, and certainly more long-lived.  A former client of Damon & Morey LLP has taken out a billboard to complain about them, and has used the internet to post the story.  While a lawsuit may bring damages, the billboard certainly reaches a bigger audience and the internet posting will be there forever.

Cases This Week in Legal Malpractice

1. Duffy-Duncan v. Berns & Castro,2007 NY Slip Op 9493, 1st Dept, 11/29/07
Summary judgment denied and affirmed.  Attorney had failed to serve a notice of claim on a Transit Authority ice patch slip and fall.  Summary judgment denied for failure to demonstrate that the TA had a lack of notice of defense or a storm in progress defense.  This case is notable for the Appellate Division not taking the defenses at face value.

2. Asher v. Shimbaum, 2007 Slip Op 9351, 2d Dept, 11/27/07
Plaintiff’s underlying action was commenced to enforce an oral contract between brother and sister to convey real property.  Legal malpractice case is dismissed on the inability to prove the “but for” case: that plaintiff would have succeeded in the underlying action.

3. 3-Mar Service Center, Inc. v. Mahoney, Connor & Hussey, 2007 Slip Op 9363, 2d Dept, 2007
Motion to dismiss granted in Supreme Court but reversed in Appellate Division.  The decision does not give facts, but this was a successive [or even a third] motion to dismiss, after an earlier appeal.

4. Olaiya v. Golden, 2007 Slip Op 9377, 2d Dept, 2007
Plaintiff loses his job at the NYC Department of Juvenile Justice, but cannot demonstrate that the attorney’s conduct was the proximate cause of his job loss.

Stories This Week in Legal Malpractice

Legal malpractice, the First Amendment and a blogger got tangled up in a New Jersey case.  The underlying case concerns the Town of Manalapan and a land deal.  Legal malpractice litigation ensued.  Of interest here, an anonymous blogger has started writing about the case, and his internet provider is now being pursued for information about the blogger.  Electronic Frontier Foundation is now defending its subscriber. “da truth squad.”

The law firm of  Dorsey & Whitney and Judge Harold Baer of US District Court are in a battle over “declining civility in the legal profession.”  Judge Baer recently wrote a 129 page decision with a discussion of “naked competition and singular economic focus of the marketplace have begun to infiltrate the practice of law, subordinating the high standards of service, collegiality and professionalism as a result.”  So far, not so unusual.  The story takes a new turn with the attorney’s response.  Kristan L. Peters said: “It is hard to take seriously Judge Baer’s alleged concern for professional courtesy when he continues to treat women litigators like second class citizens in his court room, requires attorneys to physically oversee the return of documents in another country within a matter of hours when they are oversees on their anniversary, and sets depositions on Sunday mornings.  Indeed, when a Catholic lawyer asks for the opportunity to attend church before the Sunday deposition, he mocked the attorney for Catholic observance.”

Finally, the Dicky Scruggs story.  Bribery?  Big Tobacco litigation?  Legal malpractice?  This story is still unfolding.

For more on legal malpractice check out the New York Attorney Malpractice Blog.

Cases this Week in Legal Malpractice

1. Rechberger v. Scolaro, 2007 NY Slip Op 9277, FOURTH DEPARTMENT

This case points out the principal of privity between individuals, corporations and the attorneys.  Defendant met its burden by establishing as a matter of law that it had no attorney-client relationship with plaintiffs. Contrary to the contention of plaintiffs, their unilateral belief that they had an attorney-client relationship with defendant does not by itself confer upon them the status of clients. Also contrary to plaintiffs' contention, defendant's representation of a corporation of which plaintiffs were shareholders does not establish that defendant had an attorney-client relationship with plaintiffs, in the absence of documentary evidence to the contrary.

2.   Resnick v Zurich North America, 2007 NY Slip Op 9218, SECOND DEPARTMENT

This case is about notifying the legal malpractice carrier of a potential case.  Carriers have increasingly been able to avoid or disclaim coverage on the basis of lack of notice.

“Plaintiffs in the underlying case moved to vacate a default saying that they had been prevented from serving and filing a note of issue by a stay issued in a bankruptcy proceeding However, in opposition to the motion, it was revealed that, in fact, the bankruptcy proceeding was not filed until June 2000, more than two years after the order directing the service and filing of a note of issue, and approximately a year-and-a-half after the Sapir action had been dismissed. In July 2003 the Supreme Court denied the plaintiffs' motion to vacate the The defendants disclaimed coverage based on the plaintiffs' failure to have provided timely notice. The defendants contended that the plaintiffs were or should have been aware of a potential malpractice claim no later than July 2003when their motion to vacate the default in serving and filing a note of issue in the Sapir action and to restore the case to the calendar was denied.”

3.. Wallenstein v. Cohen,2007 NY Slip Op. 9023, SECOND DEPARTMENT

This case illustrated the collateral estoppel or res judicata effect of an attorney fee dispute ruling on a later legal malpractice case.  In short, any award of a fee to the attorney [whether 100% or $1] follows this rule: “The determination fixing the value of the defendants' services necessarily determined that there was no malpractice.”

4. TVGA Engineering Surveying Inc. v. Gallick, 2007 NY Slip Op, 8491, 4th Department

“A cause of action for legal malpractice must be based on "the existence of an attorney-client relationship at the time of the alleged malpractice"; while a cause of action for breach of the fiduciary duty of an attorney extends both to current and former clients and thus is broader in scope than a cause of action for legal malpractice. As a result of an attorney's fiduciary duty, the attorney may not represent parties whose interests are adverse to the attorney's former clients in matters that are substantially related.

Legal Malpractice News This Week

The NYLJ reported a Court of Appeals case today which permitted a law firm to charge hourly rates followed by a contingent fee.  Not so remarkable, perhaps, but the numbers are staggering.

In Lawrence v. Miller, the law firm billed $ 18 million in hourly rates, asked for and received $ 5 million in “gifts.”  After that they negotiated a 40% contingent fee from the elderly widow.  Their contingent fee promises to be in the $ 40 million range.

Ex parte interviews of non-party physicians can now be required by the court.  This effectively means that when a plaintiff starts a medical malpractice case, all of his non-defendant treating physicians not only have to give up their records, but plaintiff may be required to sign HIPPA releases allowing the defense attorney to speak privately to the non-party treating physicians.  No notes need be given to plaintiff.

We wonder how long before attorneys do the same thing to prior and subsequent attorneys in legal malpractice cases.

Milberg Weiss is a defendant in a $40 million legal malpractice law suit brought by Sam Wiley, who himself is described as a “colorful Texas billionaire”  The action comes after a class action case which never reached court, and was settled, prematurely says the plaintiff.

Finally, the US Supreme Court seems ready to defer to criminal defense attorneys and state court determinations of ineffective assistance of counsel.  In the case of Arave v. Hoffman, the Supreme Court will weigh the obligation of lawyers to explain to their clients the consequences of not accepting a plea agreement.

For more on legal malpractice check out the New York Attorney Malpractice Blog.

Cases This Week in Legal Malpractice

1.  GML v. Cinque, 2007 NY Slip Op 7912, Court of Appeals Question of Tennessee or NY statute of limitations in a legal malpractice case.  CPLR 202 did not allow the Tennessee statute to toll the claim.  Borrowing a sister state’s statute of limitations is the province of “choice of law” which is a rather esoteric law school subject.  For our purposes, which state’s law should be applied depends, mostly, on where the action is brought.

2.  Maxon v. Woods, 2007 Slip Op 8614 [4th Dept., 11/9/07].  Plaintiff asked to disqualify defendant law firm from representing a non-party witness.  Sup. Ct. held that the witness had a right to select his own attorney.

3.  TVGA Engineering PC v. Gallick, 2007 Slip Op 8491 [4th Dept,11/9/07]. Plaintiff sues law firm for “providing legal advice to a third party that conflicted with and was detrimental to plaintiffs.”  Court discusses difference between legal malpractice tort [more restricted] and legal malpractice breach of contract [less restricted], and how they play out with regard to current and formed clients.  “A cause of action for breach of fiduciary duty of an attorney extends to both current and former clients, and thus is broader in scope than a cause of action for legal malpractice.”

4.  Federal Ins. Co v. North Am. Specialty Ins. Co., 2007 Slip Op 8391.   Appellate Division reverses and determines that there is no privity between re-insurer and law firm defending underlying construction accident.  Good discussion of the relationship between trial counsel and insurers/re-insurers.

5.  Cooper v. Kelner & Kelner, 2007 Slip Op 8381.  Attorneys demonstrated that there was no “but for” aspect to the case.  They sued Carnival Cruise Lines for a trip and fall over loose carpet.  This was, the AD said, mere speculation, and when the underlying case failed, it was not legal malpractice.

News this Week in Legal Malpractice

The attorney judgment rule generally allows lawyers a wide range of decision making power.  The general rule is that an attorney may not be held liable for a strategic decision which was objectively and subjectively reasonable.  This does not mean that the decision had to be correct, merely reasonable.

In a Michigan case, Bowman v.Gruel Mills Nims & Pylman, 2007 WL 1203580 (W.D.Mich, 2007] the court discussed this general principal, adding that when the attorney violates ethical rules, his defense is no longer good.  The ethical violation was failing to inform the client of events.

A legal malpractice case against Kaye Scholer was dismissed.  With an all Long Island case of attorneys, Kaye Scholer correctly contended that they were never retained by the plaintiffs, and had no attorney-client relationship with them - Case dismissed.

Finally, in New York a family tragedy - One brother is a partner, the other brother now a criminal defendant.  The accusation is that one brother stole large sums from the escrow funds by forgery.  In this case, he created false bank statements, and over the years, brought these art duplications to firm meetings, fooling everyone.  Now, he awaits trial, and the partner-brother looks for an explanation.  The law firm is Galasso Langione & Botter.

For more on legal malpractice check out the New York Attorney Malpractice Blog.