November 15, 2006
Case Law Development: Malpractice for Delay in Transferring Pension Funds
A cautionary tale: In any area of law, missed deadlines and delay are a common cause of malpractice. In divorce practice, a common area for delay to cause harm is in the follow through required after a dissolution.
The New York Court of Appeals reversed a trial court’s dismissal of a malpractice action premised on delay in transferring funds from a pension. The trial court had held that the plaintiff’s damages were speculative as they were based on her argument that the pension investment had declined in value during the delay and if she had received the funds sooner, she could have made wiser investments and avoided that loss. The court of appeals found that “the complaint sufficiently asserts that defendants' inordinate delay in effecting the stipulated transfer of funds resulted in a loss of principal attributable to defendants' lack of professional diligence. For purposes of this appeal, we reject the intimation that plaintiff must be treated as an investor who implicitly assumed the market risk inherent in an investment vehicle such as the Plan… Plaintiff agreed to accept the proceeds of the Plan, not the investments it represented. Moreover, it is clear that the stipulated agreement contemplated a prompt transfer and distribution of funds. Finally, at this stage of the proceedings, we are not prepared to rule that defendants' failure to fix the value of the Plan in the stipulated agreement or otherwise insulate plaintiff from the market risk attendant upon a delay in transfer and distribution of the proceeds cannot be deemed a lapse in the exercise of professional diligence.”
Lappin v Greenberg, 2006 NY Slip Op 8168 (November 14, 2006)
Opinion on web (last visited November 15, 2006 bgf)
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