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CONCLUSORY AND SPECULATIVE ALLEGATIONS PLAINTIFF WOULD NOT HAVE LOST ITS DISADVANTAGED BUSINESS ENTERPRISE (DBE) STATUS HAD DEFENDANT ATTORNEYS NOT FAILED TO FILE AN ADMINSTRATIVE APPEAL AND REQUEST A HEARING WERE NOT SUFFICIENT TO SURVIVE A MOTION TO DISMISS PURSUANT TO CPLR 3211 (A) (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the legal malpractice complaint should have been dismissed. Defendants allegedly did not pursue an administrative appeal and submitted a written response in lieu of a hearing. Plaintiff Mid City alleged the failures resulted in the termination of its status as a disadvantaged business enterprise (DBE). The Second Department held plaintiff did not demonstrate that but for the alleged legal malpractice the DBE status would not have been terminated:

… [E]ven accepting the facts alleged in the complaint as true, and according Mid City the benefit of every possible favorable inference … , the complaint failed to plead specific factual allegations demonstrating that, but for the defendants’ alleged negligence, there would have been a more favorable outcome regarding the termination of Mid City’s status as a DBE … . The allegation that Mid City lost the opportunity to pursue an administrative appeal, without any indication that the appeal would be successful, is insufficient to state a claim … . Similarly, the allegation that Mid City would have been recertified as a DBE had the defendants requested a hearing, rather than having filed a written response to the initial letter proposing termination of its status as a DBE, is speculative and conclusory … . Mid City Elec. Corp. v Peckar & Abramson, 2023 NY Slip Op 01085, Second Dept 3-1-23

Practice Point: To survive a motion to dismiss the complaint in a legal malpractice action, the plaintiff must make specific factual allegations demonstrating that but for the attorney’s negligence the outcome would have been more favorable. Conclusory or speculative “but for” allegations are not enough.

 

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PLAINTIFF IN THIS TRAFFIC ACCIDENT CASE ALLEGED DEFENDANT ATTORNEY NEGLIGENTLY FAILED TO PURSUE DAMAGES IN EXCESS OF THE POLICY LIMITS AGAINST THE TORTFEASOR PERSONALLY; DEFENDANT DID NOT DEMONSTRATE PLAINTIFF WOULD NOT HAVE PREVAILED AGAINST THE TORTFEASOR PERSONALLY; DEFENDANT’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the legal malpractice action should not have been dismissed. It was alleged the defendant attorney, in this traffic accident case, failed to pursue damages in excess of the insurance-policy limits against the tortfeasor personally. Defendant did not demonstrate plaintiff would not have prevailed in an action against the tortfeasor personally:

“In an action to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney’s breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages” … . “The plaintiff is required to plead actual, ascertainable damages that resulted from the attorneys’ negligence” … .

Here, the defendants failed to establish, prima facie, that the plaintiff had no actual or ascertainable damages. “The defendant must affirmatively demonstrate the absence of one of the elements of legal malpractice” … . The complaint alleged that the damages included the failure to pursue SUM benefits, as well as the failure to pursue recovery against the alleged tortfeasor. Since it was alleged … that the defendants’ legal malpractice prevented the plaintiff from obtaining a judgment against the alleged tortfeasor, the defendants had the burden of affirmatively demonstrating that the plaintiff would not have prevailed against the alleged tortfeasor or that the alleged tortfeasor did not have personal assets such that his motorist insurance policy limit that was recovered in the amount of $50,000, was the maximum judgment that could have been obtained from him … . The defendants failed to do so. Chicas v Cassar, 2023 NY Slip Op 00202, Second Dept 1-18-23

Practice Point: Defendant attorney in this legal malpractice case did not demonstrate plaintiff would not have prevailed in an action against the tortfeasor personally in the underlying traffic accident case. Plaintiff alleged defendant attorney negligently failed to seek damages over and above the policy limits from the tortfeasor. Therefore defendant’s motion for summary judgment should not have been granted.

 

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FAILURE TO ALLEGE THAT “BUT FOR” DEFENDANT ATTORNEY’S NEGLIGENCE PLAINTIFF WOULD HAVE PREVAILED REQUIRED DISMISSAL OF THE LEGAL MALPRACTICE COMPLAINT (FIRST DEPT).

The First Department determined plaintiff’s legal malpractice complaint was properly dismissed for failing to allege that “but for” the attorney’s negligence plaintiff would have prevailed:

Supreme Court properly dismissed plaintiff’s legal malpractice cause of action in the original complaint because he failed to allege that “but for” defendant’s negligent conduct, he would have prevailed in the underlying action … . Plaintiff’s citation to a ruling in the underlying action denying dismissal of his fraud claim, among others, did not, without more, show that he would have prevailed in the underlying action had defendant timely commenced it by naming the proper parties in the original complaint … . Markov v Barrows, 2022 NY Slip Op 04780, First Dept 8-2-22

Practice Point: To sufficiently allege legal malpractice, the complaint must allege that “but for” the attorney’s negligence plaintiff would have prevailed.

 

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QUESTIONS OF FACT ABOUT WHETHER THE INCAPACITATED PERSON (IP) WAS “INSANE” WITHIN THE MEANING OF THE CPLR WHEN HE WAS REPRESENTED BY THE DEFENDANT ATTORNEY MUST BE DETERMINED AT THE LEGAL MALPRACTICE TRIAL; IF THE IP WAS INSANE, THE MALPRACTICE STATUTE OF LIMITATIONS WILL BE TOLLED; IF NOT THE MALPRACTICE ACTION IS UNTIMELY (FIRST DEPT).

The First Department determined questions about the incapacitated person’s (IP’s) sanity should be part of the legal malpractice trial. If the IP is determined to have been “insane” at the time he was represented by defendant attorney, the statute of limitations for the legal malpractice action would have been tolled, if not, the action was not timely:

The parties do not dispute that [defendant attorney] established prima facie that this action asserting breach of fiduciary duty and related causes of action (the malpractice action) was commenced after the applicable statutes of limitations had expired. However, plaintiff raised an issue of fact whether the statutes of limitations were tolled for “insanity” (… CPLR 208[a]). Viewed in the light most favorable to plaintiff, the record presents issues of fact as to the IP’s ability to protect his legal rights and his overall ability to function in society at the time his claims against [defendant attorney] accrued … . Matter of Verdugo v Smiley & Smiley, LLP, 2022 NY Slip Op 04138, First Dept 6-28-22

Practice Point: There is an “insanity” statute-of -imitations toll in the CPLR. Here there a question of fact whether an incapacitated person was insane when he was represented by defendant attorney such that the legal malpractice statute of limitations was tolled.

 

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PLAINTIFF ALLEGED DEFENDANTS-ATTORNEYS DID NOT ADVISE IT OF AN AMENDMENT TO THE COMMERCIAL LEASE WHICH EFFECTIVELY ELIMINATED THE OPTION FOR PLAINTIFF TO PURCHASE THE PROPERTY FOR $11.4 MILLION IF THE LANDLORD RECEIVES A BONA FIDE PURCHASE OFFER; THE LANDLORD IN FACT RECEIVED SUCH AN OFFER AND PLAINITFF EXERCISED ITS OPTION, BUT PAID $14.5 MILLION (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined defendants-attorneys’ motion for summary judgment in this legal malpractice action should not have been granted. Plaintiff alleged defendants-attorneys did not advise it of an amendment to the commercial lease. The lease included an option to purchase the property for $11.4 million. The amendment extinguished the option to purchase for $11.4 million upon purchase of the property. The landlord received a bona fide purchase offer and plaintiff exercised its option, but paid $14.5 million:

Defendants’ email attaching a marked-up copy of the relevant lease section does not establish as a matter of law that defendants advised plaintiff as to the meaning of the amendment, and the parties dispute the oral advice that was provided by defendants. … [T]he fact that plaintiff’s agent read the amendment does not establish as a matter of law that defendants were not negligent … . Any evidence that plaintiff’s agent, a sophisticated businessman, knew or should have known that the amendment was substantive despite defendants’ advice that it was “housekeeping” does not disprove defendants’ negligence but is evidence that can be offered in mitigation of damages … .

… The fact that plaintiff sent the signed lease to the landlord without defendants’ knowledge does not as a matter of law refute causation. Alrose Steinway, LLC v Jaspan Schlesinger, LLP, 2022 NY Slip Op 03310, First Dept 5-19-22

Purchase Point: Here the attorneys’ alleged failure to advise the plaintiff of the significance of an amendment to a commercial lease raised a question of fact in this legal malpractice action. The amendment eliminated plaintiff’s option to purchase the property for $11.4 million if the landlord received a bona fide purchase offer. The landlord received such an offer and plaintiff exercised its option to purchase, but paid $14.5 million.

 

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PLAINTIFFS’ LEGAL MALPRACTICE ACTION SHOULD NOT HAVE BEEN DISMISSED; PLAINTIFFS’ 2010 BREACH OF A CONDOMINIUM-SALE CONTRACT ACTION WAS DISMISSED ON STATUTE OF FRAUDS GROUNDS; WHEN A WRITTEN CONTRACT SUBSEQUENTLY SURFACED, DEFENDANT ATTORNEYS DID NOT MOVE TO RENEW, VACATE OR APPEAL THE ORDER (FIRST DEPT).

The First Department, reversing Supreme Court, determined the legal malpractice action should not have been dismissed. Plaintiffs, apparently represented by defendant attorneys, brought a 2010 action for breach of a condominium-sale contract which was dismissed on statute of frauds grounds (no written contract). When the written contract for the condominium sale surfaced, the defendants did not move to renew, vacate or appeal the order:

Regardless of whether the dismissal on statute of frauds grounds was ultimately correct, defendants should have known that the condominium claims, which involved the sale of real property, would be subject to the statute of frauds and thus would require reference to a written contract (General Obligations Law § 5-703[2]); that the statute of frauds could be raised and adjudicated on a motion to dismiss under CPLR 3211(a)(5); and that a dismissal under the statute of frauds would be on the merits, thus precluding any future claim for damages on the sale of the condominium … . As a result, with respect to the condominium sale, it cannot be determined as a matter of law that plaintiffs failed to plead a claim for legal malpractice based upon defendants’ actions in litigating the breach of contract claim. Komolov v Popik, 2022 NY Slip Op 01966, First Dept 3-22-22

Practice Point: The defendant attorneys apparently represented plaintiffs in their 2010 action for breach of a condominium-sale contract. The 2010 action was dismissed on statute of frauds grounds. Subsequently a written contract surfaced and defendant attorneys did not move to renew, vacate or appeal the order. Plaintiffs’ legal malpractice complaint should not have been dismissed.

 

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PLAINTIFF DID NOT HAVE TO PROVE THE EXISTENCE OF A RETAINER AGREEMENT TO DEMONSTRATE AN ATTORNEY-CLIENT RELATIONSHIP WITH DEFENDANTS IN THIS LEGAL MALPRACTICE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the legal malpractice action should not have been dismissed on the ground plaintiff did not demonstrate the existence of an attorney-client relationship. Plaintiff did not have to produce a retainer agreement:

… [T]he Supreme Court erred in granting dismissal of the legal malpractice cause of action based upon the plaintiff’s failure to produce evidence of an attorney-client relationship. An attorney-client relationship does not depend on the existence of a formal retainer agreement … , and the plaintiff had no obligation to demonstrate evidentiary facts to support the allegations contained in the complaint … . Furthermore, the complaint sufficiently alleges the existence of an attorney-client relationship between the plaintiff and the … defendants … , as well as the other elements of legal malpractice, including damages, to support a legal malpractice cause of action … . Ripa v Petrosyants, 2022 NY Slip Op 01336, Second Dept 3-2-22

 

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IT WAS ALLEGED DEFENDANTS-ATTORNEYS DID NOT INSTRUCT THE DECEDENT TO REVOKE THE TOTTEN TRUSTS SO THE FUNDS WOULD BE DISTRIBUTED IN ACCORDANCE WITH HER WISHES AS SET OUT IN THE WILL AND TRUST DRAFTED BY DEFENDANTS; DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants-attorneys should not have been granted summary judgment in this legal malpractice action brought by the executor of the estate of attorneys’ client. It was alleged two bank accounts were Totten Trusts which passed outside of the will and therefore were not distributed as decedent wished (as was set out in the will and trust drafted by defendants). As a result one of decedent’s sons, whom decedent intended to disinherit, received half of the Totten Trusts:

The Supreme Court should have denied that branch of the defendants’ motion which was for summary judgment dismissing the amended complaint. The defendants failed to submit sufficient evidence establishing … that they exercised the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession. In addition, the court erred in determining that the defendants established, prima facie, that the decedent’s estate did not sustain actual and ascertainable damage as a result of the defendants’ alleged negligence in failing to advise the decedent to revoke the Totten Trusts prior to her death. Schmidt v Burner, 2022 NY Slip Op 01191, Second Dept 2-23-22

 

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BECAUSE PLAINTIFF’S DECEDENT COULD NOT COMMENCE A LEGAL MALPRACTICE ACTION WHILE THE DEFENDANTS-ATTORNEYS STILL REPRESENTED HIM, THERE WAS A QUESTION OF FACT WHETHER THE ACTION WAS TIMELY (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, in a decision addressing several issues not summarized here, determined there was a question of fact whether the continuous representation doctrine rendered the legal malpractice action timely:

… [T]he plaintiffs raised a question of fact as to whether the continuous representation doctrine tolled the running of the statute of limitations until June 24, 2013, when the Supreme Court … vacated the March 18, 2013 order, and … granted W & H’s [defendants-attorneys] motion for leave to withdraw as counsel. Inasmuch as W & H’s motion to withdraw as counsel, which was opposed by Michele [plaintiff’s decedent] , was initially denied, Michele could not be expected to commence an action to recover damages for legal malpractice against W & H while the representation continued … . Accordingly, the court erred in granting that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(5) to dismiss the legal malpractice cause of action as time-barred. Tulino v Hiller, P.C., 2022 NY Slip Op 01197, Second Dept 2-23-22

 

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PLAINTIFFS RAISED A QUESTION OF FACT WHETHER THE CONTINUOUS REPRESENTATION DOCTRINE RENDERED THE LEGAL MALPRACTICE ACTION TIMELY; REFERENCE TO THE “ENFORCEMENT” OF THE LOAN DOCUMENTS INDICATED THE POSSIBILITY OF REPRESENTATION AFTER THE DATE OF THE LOAN TRANSACTION (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined plaintiffs raised a question of fact whether the continuous representation doctrine rendered the legal malpractice action timely:

The continuous representation doctrine tolls the limitations period “where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim” … , and ” ‘where the continuing representation pertains specifically to [that] matter’ ” … . Here, plaintiffs submitted communication between the Florida attorney and defendants in which the Florida attorney indicated that defendants’ role as New York counsel included “enforcement” of the 2014 loan transaction documents. … [W]e conclude that questions of fact exist regarding the extent of defendants’ representation of plaintiffs and, more specifically, whether “enforcement” of the loan documents contemplated a continued representation until the loan was paid in full and the transaction completed. Ray-Roseman v Lippes Mathias Wexler Friedman, LLP, 2021 NY Slip Op 04841,, Fourth Dept 8-26-21

 

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