Thursday, July 12, 2012

Bankruptcy Non-Disclosure Bars Malpractice Claim

The New York Appellate Division for the Second Judicial Department has affirmed the dismissal of a legal malpractice counterclaim under the following circumstances:

... it is undisputed that the defendant did not disclose, in a bankruptcy petition
that he filed in September 2007, the existence of the causes of action he now
asserts as counterclaims. The plaintiff showed, prima facie, that at the time of
the filing of that petition the defendant knew or should have known of the
existence of those causes of action, and the defendant failed to raise a triable
issue of fact in opposition to that prima facie showing. Further, under the
circumstances of this case, the fact that the defendant's bankruptcy petition
was later dismissed does not change this result. Moreover, although the defendant stated in his opposition to the plaintiff's motion that, in 2010, he filed a second bankruptcy
petition in which he did disclose his malpractice cause of action, in support of
that claim he submitted only a single page of the Schedule of Assets from that
petition. He also submitted no evidence as to the ultimate disposition of the
second bankruptcy petition. He therefore failed to raise a triable issue of fact
as to whether he regained his capacity to assert his legal malpractice claims
against the plaintiff by filing the second bankruptcy petition. (citations omitted)

(Mike Frisch)

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