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PLAINTIFF COMMENCED A MALPRACTICE ACTION AGAINST DEFENDANT ATTORNEYS; THE ATTORNEYS COMMENCED AN ARBITRATION PROCEEDING AGAINST PLAINTIFF, BASED ON THE RETAINER AGREEMENT, FOR UNPAID ATTORNEY’S FEES; BOTH THE ARBITRABLE FEE DISPUTE AND THE NONARBITRABLE MALPRACTICE ACTION ARE SUBJECT TO ARBITRATION WHILE THE MALPRACTICE ACTION IS STAYED (FIRST DEPT).

The Frist Department, reversing Supreme Court, determined the retainer agreement which required arbitration of any attorney’s-fee dispute, which was entwined in the plaintiff’s malpractice action against the attorneys, required that both the arbitrable fee dispute and the nonarbitrable malpractice action be addressed in the arbitration:

There is no dispute that there is a valid agreement between the parties to arbitrate any dispute regarding unpaid fees. Thus, the court must compel arbitration of defendants’ claim for unpaid fees and stay this action pending completion of the arbitration (CPLR 7503[a]). Moreover, because plaintiff’s nonarbitrable malpractice claim is inextricably intertwined with the arbitrable claim for unpaid fees, the proper course is to stay the action pending completion of the arbitration … . …

To the extent plaintiff argues that it cannot be forced to arbitrate its malpractice claim because it did not explicitly agree to do so, both the First and Second Departments have clearly found that a nonarbitrable issue can be decided in an arbitration when it is inextricably intertwined with an arbitrable issue, particularly where, as here, the determination of the arbitrable unpaid fees claim may dispose of the nonarbitrable malpractice claim … . Protostorm, Inc. v Foley & Lardner LLP, 2021 NY Slip Op 02227, First Dept 4-8-21

 

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FAILURE TO FILE A NOTICE OF CLAIM AGAINST THE NEW YORK TRANSIT AUTHORITY (AS OPPOSED TO THE CITY OF NEW YORK) IN THIS SLIP AND FALL CASE, AND THE FAILURE TO APPLY FOR PERMISSION TO FILE A LATE NOTICE OF CLAIM, GAVE RISE TO THIS LEGAL MALPRACTICE AND JUDICIARY LAW 487 ACTION WHICH SHOULD NOT HAVE BEEN DISMISSED; THE DISTINCTION BETWEEN THE TWO CAUSES OF ACTION EXPLAINED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the legal malpractice and Judiciary Law 487 causes of action against one of two groups of attorney-defendants should not have been dismissed. The first group of attorneys (the Schneider defendants) failed to file a timely notice of claim against the New York Transit Authority (NYTA) in this slip and fall case. Then plaintiff retained the second group of attorneys (the Kletzkin defendants) and the action was dismissed with prejudice. Then plaintiff sued both groups of attorneys for legal malpractice and for violations of Judiciary Law 487. Supreme Court granted the Kletzkin defendants motion to dismiss and denied the Schneider defendants’ motion to dismiss. The facts were not discussed, but the court noted the difference between a legal malpractice and a Judiciary Law 487 cause of action:

… [T]he plaintiff adequately pleaded the cause of action alleging legal malpractice against the Kletzkin defendants and the Schneider defendants. Contrary to the contentions of those defendants, neither conclusively established that an application for leave to serve a late notice of claim or to deem the late notice of claim timely served upon the NYCTA nunc pro tunc would have been futile … .

Contrary to the Kletzkin defendants’ contention, the complaint adequately states a cause of action to recover damages for violation of Judiciary Law § 487. Contrary to the Schneider defendants’ contention, the cause of action alleging violation of Judiciary Law § 487 is not duplicative of the cause of action alleging legal malpractice. “A violation of Judiciary Law § 487 requires an intent to deceive (see Judiciary Law § 487), whereas a legal malpractice claim is based on negligent conduct” … . Bianco v Law Offs. of Yuri Prakhin, 2020 NY Slip Op 07849, Second Dept 12-23-20

 

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DEFENDANTS-ATTORNEYS’ MOTION TO DISMISS THE LEGAL MALPRACTICE ACTION BASED UPON UNDENIABLE DOCUMENTARY EVIDENCE, AS WELL AS OTHER GROUNDS, SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendants-attorneys’ motion to dismiss the legal malpractice complaint based upon documentary evidence should have been granted. The plaintiffs-insurers’ alleged the defendants negligently advised them to disclaim insurance coverage:

… [P]laintiffs allege that they sustained damages when they relied on defendants’ negligent advice that they could disclaim coverage of their insured in an underlying malpractice action. In support of their motion to dismiss, defendants properly relied on documentary evidence, including the challenged disclaimer letter and the relevant policy, since their authenticity is undisputed and their contents are “essentially undeniable” ( … CPLR 3211[a][1]). The disclaimer letter sets forth an analysis of plaintiffs’ right to refuse coverage to their insured on two independent bases. Plaintiffs’ failure to allege with specificity or argue that one of the two bases for defendants’ advice was incorrect, requires dismissal of this legal malpractice action.

Aside from this, defendants’ alleged malpractice concerning other issues is subject to the attorney-judgment rule … . Since plaintiffs failed to show that the issues were elementary or subject to settled authority, defendants could not be liable for malpractice based on their prediction of how a court would interpret the policy … .

Further, plaintiffs’ failure to explain how it was that any alleged error by defendants prejudiced their defense in the subsequent coverage action also mandates dismissal of the malpractice claim … . Lloyd’s Syndicate 2987 v Furman Kornfeld & Brennan, LLP, 2020 NY Slip Op 02365, First Dept 4-23-20

 

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PLAINTIFF ALLEGED THE FAILURE OF DEFENDANT ATTORNEYS TO PROPERLY PREPARE THE EYEWITNESS TO THE ACCIDENT RESULTED IN THE WITNESS’S INCONSISTENT TESTIMONY AT TRIAL AND A DEFENSE VERDICT; ARGUING THAT THERE WOULD HAVE BEEN A PLAINTIFF’S VERDICT ABSENT THE ATTORNEYS’ MALPRACTICE IS TOO SPECULATIVE TO SUPPORT A LEGAL MALPRACTICE ACTION (FIRST DEPT).

The First Department, reversing Supreme Court, determent defendant attorneys’ motion for summary judgment in this legal malpractice action should have been granted. Plaintiff was allegedly struck by a garbage truck and seriously injured. Plaintiff could not describe the truck and plaintiff’s case depended upon the testimony of an eyewitness, Arenas. Arenas’s descriptions of the truck were not consistent and there was a defense verdict. Plaintiff alleged defendant attorneys failed to properly prepare Arenas for his deposition, which resulted in Arenas’s inconsistent testimony at trial:

“[M]ere speculation of a loss resulting from an attorney’s alleged omissions . . . is insufficient to sustain a claim” for legal malpractice” … . Plaintiff’s assertion that, had Arenas been better prepared, the jury would have returned a favorable verdict is pure speculation … . Defendants met their burden of showing that plaintiff cannot establish causation, in that plaintiff cannot prove that it would have prevailed in the underlying action “but for” defendant’s alleged negligence in preparing Arenas for his deposition … .

Although there are issues of fact regarding whether defendants may have departed from the applicable standard of care, any claim that the jury would have reached a different result in the personal injury action is wholly speculative. First, it is wholly speculative that Arenas would have testified to a different description of the truck either at his deposition or at trial had he been shown the investigative reports. Although the investigative reports were read to him line by line at his deposition, his description of the truck did not change and he adhered to his belief, that the front of the truck he saw strike and run over plaintiff was bullnosed. Even if Arenas’s statement in support of plaintiff’s motion in this case is accurate, that he would have testified differently had he been differently prepared, this, at best, creates an issue of fact about what he would have said at trial. It does not eliminate speculation about what the jury’s verdict would have been, given that Arenas’s description of the truck otherwise lacked detail, and the absence of any additional proof identifying defendants’ truck and driver as being involved in underlying accident. Caso v Miranda Sambursky Slone Sklarin Verveniotis LLP, 2020 NY Slip Op 01384, First Dept 2-27-20

 

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THE TRANSCRIPT OF THE SETTLEMENT PROCEEDING UTTERLY REFUTED PLAINTIFF’S CLAIM TO HAVE BEEN COERCED INTO SETTLING, THE LEGAL MALPRACTICE COMPLAINT SHOULD HAVE BEEN DISMISSED (SECOND DEPT),

The Second Department, reversing Supreme Court, determined that defendants-attorneys’ motion to dismiss the complaint in this legal malpractice action should have been granted because the transcript of the settlement proceeding utterly refuted the allegations in the complaint. Plaintiff alleged it was coerced into settling the action:

A motion to dismiss a complaint pursuant to CPLR 3211(a)(1) “may be appropriately granted only where the documentary evidence utterly refutes plaintiff’s factual allegations, conclusively establishing a defense as a matter of law” … . …

A legal malpractice cause of action “is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel” … .

In support of their motion, the defendants submitted the transcript of the court proceeding setting forth the terms of the settlement of the underlying action, which conclusively established that the plaintiff was not coerced into settling … . The plaintiff’s allegations that it was coerced into settling the underlying action were utterly refuted by the admissions of its principals during the settlement proceeding that they had discussed the terms of the settlement with their attorneys, understood the settlement terms, and had no questions about them; that they were entering into the settlement freely, of their own volition, and without undue influence or coercion; and that they were satisfied with their legal representation … . Glenwayne Dev. Corp v James J. Corbett, P.C., 2019 NY Slip Op 06069, Second Dept 8-7-19

 

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QUESTION OF FACT WHETHER THE CONTINUOUS REPRESENTATION DOCTRINE TOLLED THE STATUTE OF LIMITATIONS IN THIS LEGAL MALPRACTICE ACTION; THE ATTORNEY HAD ATTEMPTED TO REMEDY THE FAILURE TO FILE OBJECTIONS IN AN ESTATE MATTER AFTER THE STATUTE HAD RUN; ABSENCE OF AN EXPERT’S REPORT FROM THE RECORD ON APPEAL PRECLUDED A RULING ON THE RELATED ISSUE (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined plaintiff had raised a question of fact whether the continuous representation doctrine tolled the statute of limitations in this legal malpractice action. The attorney had attempted to remedy the failure to file objections in an estate matter after the statute had run. The Fourth Department noted that plaintiff’s expert’s report was missing from the record on appeal and therefore plaintiff was unable to argue on appeal that he had raised a related question of fact (concerning damages) before Supreme Court. Defendant had argued the damages were speculative (requiring dismissal) and Supreme Court did not rule on the issue (because the case was dismissed as untimely). The matter was remitted for a ruling on the damages issue:

We are unable to review plaintiff’s contention that he raised a triable issue of fact with respect to … damages by submitting an expert report inasmuch as plaintiff failed to include that document in the record on appeal. Thus plaintiff, as the party raising this issue on his appeal, “submitted this appeal on an incomplete record and must suffer the consequences” … . …

Defendant met his burden … by establishing that the statute of limitations for legal malpractice is three years (see CPLR 214 [6]), that the estate cause of action accrued on November 1, 2010, the last date on which to file objections to the accounting …, and that the estate cause of action was therefore untimely when this malpractice action was commenced on November 15, 2013. “The burden then shifted to plaintiff[] to raise a triable issue of fact whether the statute of limitations was tolled by the continuous representation doctrine” … .

We agree with plaintiff that the court erred in determining that plaintiff failed to do so. It is well settled that, in order for the continuous representation doctrine to apply, “there must be clear indicia of an ongoing, continuous, developing, and dependant relationship between the client and the attorney which often includes an attempt by the attorney to rectify an alleged act of malpractice” … . Here, plaintiff submitted evidence that defendant made several unsuccessful attempts to file the objections within the weeks after the deadline and that he made preparations to appear at a scheduled conference on the objections on November 23, 2010. Those efforts could be viewed as “attempt[s] by the attorney to rectify an alleged act of malpractice” … , and thus plaintiff raised a triable issue of fact whether the statute of limitations was tolled by the continuous representation doctrine. Leeder v Antonucci, 2019 NY Slip Op 05898, Fourth Dept 7-31-19

 

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CONTINUOUS REPRESENTATION DOCTRINE DID NOT APPLY TO TWO DISTINCT AND SEPARATE ACTIONS, LEGAL MALPRACTICE ACTION TIME-BARRED (FIRST DEPT).

The First Department determined the continuous representation doctrine did not apply and the legal malpractice action was time-barred. Plaintiff was represented by defendant law firm in a 2005 divorce. Plaintiff’s ex-wife then sued plaintiff alleging he fraudulently concealed an asset in the divorce proceedings. Defendant law firm successfully defended the fraud action. 12 years after the divorce action ended, plaintiff sued the law firm for malpractice, asking to be relieved of the obligation to pay the law firm’s legal fees in the fraud action:

The motion court correctly found that this action, which was commenced 12 years after the divorce action ended, is barred by the applicable three-year statute of limitations … . Contrary to plaintiff’s contentions, the continuous representation doctrine is inapplicable, because defendants were retained under two separately executed retainer agreements in the divorce action and the fraud action … . The first retainer agreement expressly stated that it did not cover any services following the entry of a final judgment of divorce. Thus, there was no mutual understanding that further representation was necessary on the specific subject matter of the malpractice claim … . Moreover, the divorce action and the fraud action, although related, were two distinct and separate actions … . Etzion v Blank Rome, LLP2019 NY Slip Op 05468, First Dept 7-9-19

 

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THE COMPLAINT STATED A CAUSE OF ACTION TO DISGORGE LEGAL FEES PAID TO LAWFIRM WHICH IS ALLEGED TO HAVE REPRESENTED ADVERSE PARTIES IN THE SAME MATTER; THE ACTION TO DISGORGE FEES IS INDEPENDENT FROM ANY ACTION ALLEGING LEGAL MALPRACTICE OR BREACH OF A FIDUCIARY DUTY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the complaint stated a cause of action for forfeiture of legal fees on conflict of interest grounds:

The complaint alleged that the plaintiff’s decedent retained the defendant in 2005 to, among other things, analyze her ownership interest in Wilson [Corporation], including her right to certain retained earnings in the sum of $20 million. The complaint further alleged that, in January 2007, the defendant began acting as Wilson’s corporate counsel, and, beginning in 2008, performed legal services for Wilson regarding the decedent’s right to those retained earnings. * * *

“An attorney who violates a disciplinary rule may be discharged for cause and is not entitled to fees for any services rendered” … . A cause of action for forfeiture of legal fees based on an attorney’s discharge for cause due to ethical violations may be maintained independent of a cause of action alleging legal malpractice or breach of fiduciary duty, and does not require proof or allegations of damages … .

… [T]he complaint seeks forfeiture of legal fees paid to the defendant between January 2007 and August 2009 in connection with the plaintiff’s decedent’s claim against Wilson for retained earnings. The complaint alleges that the decedent retained the defendant in January 2007 to recoup the retained earnings from Wilson, that the defendant also represented and performed legal work for Wilson on that issue between 2008 and 2009, that the interests of the decedent and Wilson on that issue were adverse, and that the dual representation violated rule 1.7 of the Rules of Professional Conduct (22 NYCRR 1200.0). The complaint further alleged that, as a result of its previous dual representation, the defendant was disqualified from representing the decedent’s estate in a 2009 turnover proceeding against Wilson to collect the retained earnings. Contrary to the determination of the Supreme Court, these allegations are sufficient to state a viable cause of action to disgorge legal fees … . Baugher v Cullen & Dykman, LLP, 2019 NY Slip Op 04904, Second Dept 6-19-19

 

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PLAINTIFF SUED DEFENDANT ATTORNEYS ALLEGING INACCURATE ADVICE CAUSED HER TO FILE FOR BANKRUPTCY, BECAUSE THE LEGAL MALPRACTICE ACTION ACCRUED WHEN PLAINTIFF FILED FOR BANKRUPTCY, THE LAWSUIT BECAME PART OF THE BANKRUPTCY ESTATE AND PLAINTIFF WAS THEREBY STRIPPED OF THE CAPACITY TO SUE (SECOND DEPT).

The Second Department determined plaintiff did not have the capacity to sue the defendant attorneys for legal malpractice. The lawsuit alleged the attorneys gave inaccurate advice which caused plaintiff to file for bankruptcy on March 20, 2012. Because plaintiff’s legal malpractice action accrued on the day she filed for bankruptcy, and the lawsuit was not listed as an asset, the lawsuit became part of the bankruptcy estate:

The commencement of a bankruptcy proceeding creates an “estate” that is comprised of “all legal or equitable interests of the debtor in property as of the commencement of the case” (11 USC § 541[a][1]…). “Upon the filing of a voluntary bankruptcy petition, all property which a debtor owns, including a cause of action, vests in the bankruptcy estate” … . “Although federal law determines when a debtor’s interest in property is property of the bankruptcy estate, property interests are created and defined by state law”… . Causes of action that accrue under state law prior to the filing of a bankruptcy petition, as well as those that accrue as a result of the filing, are property of the estate … . “[A] debtor’s failure to list a legal claim as an asset in his or her bankruptcy proceeding causes the claim to remain the property of the bankruptcy estate and precludes the debtor from pursuing the claim on his or her own behalf” … . Burbacki v Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Wolf, LLP, 2019 NY Slip Op 04128, Second Dept 5-29-19

 

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LEGAL MALPRACTICE COUNTERCLAIM SHOULD HAVE BEEN DISMISSED, SPECULATION ABOUT THE RESULT OF A HEARING HAD THE LAW FIRM APPEARED IS NOT ENOUGH TO SUSTAIN A CLAIM FOR LEGAL MALPRACTICE (FIRST DEPT).

The First Department, reversing Supreme Court, determined that plaintiff law firm’s motion for summary judgment dismissing the legal malpractice counterclaim should have been granted. Apparently plaintiff failed to appear at a hearing on a temporary restraining order (TRO):

… [P]laintiff demonstrated prima facie entitlement to judgment in the legal malpractice counterclaim by showing that defendants could not prove that but for plaintiff’s failure to appear at the TRO hearing the hearing court would have denied the TRO or set a shorter return date … . Defendants speculate that had plaintiff appeared at the TRO hearing, injunctive relief may have been denied or the hearing court may have adjourned the case to an earlier date. Such speculation is insufficient to sustain a claim for legal malpractice … . Salans LLP v VBH Props. S.R.L., 2019 NY Slip Op 02611, First Dept 4-4-19

 

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