Friday, October 20, 2017

Bad Advice Established Malpractice

An attorney's erroneous advice that a client could receive retroactive child support if she waited to establish the father's paternity formed the basis of a legal malpractice action.

The attorney had persisted in the bad advice even after an associate expressed the contrary view to the client. 

The Vermont Supreme Court reversed a trial court and concluded that the plaintiff established both causation and damages from the advice. 

After negotiations over support with the father broke down

Given the father’s attorney’s stance, defendant finally researched the law governing child support arrears to confirm her position. At this point, defendant discovered that she had provided incorrect advice to plaintiff regarding retroactive child support. Instead, in a letter to plaintiff acknowledging her error, defendant explained that no definitive law authorized arrears back to a child’s birth and the date of retroactivity was generally at the trial court’s discretion. In practice, moreover, “courts use the date of filing as opposed to the date of birth.” After receiving this letter, plaintiff told her mother’s friend, “This is devastating news . . . . I can hardly see straight [sic] I’m so angry and upset.”

Subsequently, in a letter to the father’s attorney, defendant acknowledged that her research revealed that she had been mistaken about the date of retroactivity. In the same letter, defendant also wrote: “Without a doubt, had the rules on retroactivity of support been more clear, [plaintiff] would have filed a parentage action as soon as [her daughter] was born.”

When the client sued 

the [lower] court determined that plaintiff failed to prove the negligent representation was a “cause-in-fact” of plaintiff’s injury and that the evidence was“equivocal” as to whether plaintiff would have decided to file immediately had she been aware of the risk. It also found insufficient evidence for nonspeculative monetary damages.

The court on causation

Our case law demonstrates that the court’s factual findings easily establish, by a preponderance of the evidence, that defendant’s negligent advice was the cause-in-fact of plaintiff’s injury...

Defendant’s arguments to the contrary are based on an alternative theory of causation and are not persuasive. She suggests that plaintiff would have delayed filing even if she had been given the correct advice. For example, defendant speculates that the father would have become belligerent if the parentage action had been filed immediately and claims that, because defendant’s advice avoided the possibility of a contentious custody battle, plaintiff would have delayed filing. This argument is not supported by the findings, which indicate that, when plaintiff communicated her pregnancy to the father, he expressed his desire to avoid interactions with both plaintiff and their child. The only indication of contentious behavior was the father’s tangential statement that litigation could turn his mother into a “mad dog”—a statement he made after the parentage action was filed and child custody had been settled. These findings show indifference, rather than bellicosity. Similarly, the trial court’s conclusion that plaintiff’s primary goal was custody of her child is not supported by the findings; at most, the findings demonstrate equal goals of custody and child support. Finally, defendant claims, and the court found, that her letter to the father’s attorney reflected a negotiating strategy, “not an admission directly establishing that [defendant] would have deviated from her advice to delay litigation.” This may have been defendant’s hidden intent, but the language of the letter plainly states that plaintiff would have filed had she been given correct advice. And this conclusion is sufficiently supported by the other factual findings described above.

And damages

Despite this clear causal link between defendant’s negligence and the damages suffered, the trial court relied on two faulty assumptions when it found that the alleged damages were speculative. First, the court stated that plaintiff submitted no evidence to support an award of $1875 per month from the date of her child’s birth; that is, the evidence did not establish that the monthly payment for the first fifteen months would have been the same child support amount that the father and plaintiff stipulated to after negotiations between their attorneys. Instead, the court noted that the father submitted two financial affidavits that resulted in two different child support calculations under Vermont’s child support guidelines. One of the affidavits considered the father’s family gift income, while the other did not. Either with the gift income or without the income, the father’s child support obligation calculated from the affidavits would have been less than $1875 per month. Because these amounts were lower than the stipulated amount and because the father could have contested the inclusion of gift income, the court concluded that the father’s income could not be determined in the absence of the stipulation and that, as a result, any award was speculative.

Similarly, the trial court’s second assumption is flawed. The trial court determined that the damages were speculative because—summed up over the entire length of the child support obligation—the $1875 monthly payment effectively made up for the fifteen months of missing child support. In making this argument, the court again relied on the two hypothetical child support awards calculated from the father’s financial affidavits. In comparison to those amounts, the court concluded that, based on the $1875 monthly payment, plaintiff would receive more total child support over the length of the child support obligation than she would have received based on either amount calculated from the father’s financial affidavits, even if the child support payments would have begun at the child’s birth.

The court remanded for a calculation of damages.

We note that the court has several options for computing damages, including the stipulated child support order of $1875 per month, the two other child support orders based on the father’s financial affidavits (either with or without his family gift income), or the loan amount accrued from her mother and her mother’s friend. Of course, whatever total the trial court arrives at, it must be supported by the evidence and it must make defendant whole for the period she did not receive child support payments.

But rejected an award of legal fees

Here, no bad faith exists and plaintiff did not pursue this action against a third party, so we decline to award attorney’s fees.

Justice Carroll dissented

the trial court’s findings and the record as a whole support the conclusion that plaintiff failed to demonstrate that “but for” defendant’s negligence, she would have filed her parentage complaint sooner. The trial court’s application of a standard more deferential to plaintiff does not change, but supports, this result.

(Mike Frisch)

October 20, 2017 in Clients | Permalink | Comments (0)

Wednesday, October 11, 2017

Judicial Error And Legal Malpractice: Claim Against Law Firm Reinstated

The Massachusetts Supreme Judicial Court reversed a lower court summary judgment in favor of a law firm in a malpractice action

The issue on appeal is whether, in a legal malpractice action, a court's error of law constitutes a superseding cause that bars recovery to the plaintiff client even where the defendant attorney was negligent for failing to prevent or mitigate the legal error. The plaintiff, Kiribati Seafood Company, LLC (Kiribati), brought a legal malpractice claim against its former law firm, Dechert LLP (Dechert). Kiribati alleged that Dechert negligently failed to provide a French appellate court with the evidence the court deemed necessary for Kiribati to prevail on a claim, which resulted in the court's denial of the claim. A judge of the Superior Court granted summary judgment to Dechert and denied partial summary judgment to Kiribati. The judge determined that the French appellate court committed an error of law in requiring this evidence and that, even if Dechert were negligent in failing to provide the evidence to the court, Kiribati could not recover damages for Dechert's negligence because the court's legal error was a superseding cause of the adverse decision. We conclude that an error of law under these circumstances is a concurrent, not a superseding, proximate cause and that the judge therefore erred in granting summary judgment to Dechert and denying partial summary judgment to Kiribati.

(Mike Frisch)

October 11, 2017 in Clients | Permalink | Comments (0)

Thursday, September 21, 2017

Attorneys Not Liable For Distributing Settlement Proceeds To Client; Third Party Had No "Just Claim"

Attorneys were not liable for distributing settlement proceeds of a wrongful eviction claim to their client rather than a third party claiming entitlement per a decision of the District of Columbia Court of Appeals

Mr. Banks hired Mr. Zucker and Ms. Daus to represent him in the wrongful eviction case against ESB. Before any suit was filed, Mr. Banks signed a settlement with ESB that gave Mr. Banks $100,000 in exchange for a release of the wrongful eviction and other claims. Mr. Papageorge learned of the settlement two days later, and his lawyer told Mr. Zucker that Mr. Papageorge had a claim to the settlement money. The same day, Mr. Papageorge showed Ms. Daus a copy of his agreement with Mr. Banks and his cotenant along with documentation of $88,740.86 in costs and fees he claimed he was owed. Despite Mr. Papageorge‘s repeated demands, Mr. Zucker and Ms. Daus refused to pay him out of the settlement money, and instead disbursed the money to their client, Mr. Banks. Mr. Papageorge asked the lawyers to stop payment on a check they had already given Mr. Banks, warning that the money would soon be gone because Mr. Banks would spend it, but they rebuffed him.

The attorneys were sued for conversion and negligence in which the plaintiff

contends that an attorney also owes a duty of care to a nonclient third party who presents the attorney with a "just claim" against property in the attorney‘s possession.

He had no "just claim" under Rule 1.15 and the disciplinary rules did not form a basis for civil liability.

The "just claim" concept stems from Rule 1.15 of the District of Columbia Rules of Professional Conduct, which governs the ethical obligations of a lawyer who is in possession of property in which others claim an interest. In particular, the rule requires a lawyer to "promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive." Rule 1.15 (c). Comment 8 on Rule 1.15 states:

Third parties, such as a client‘s creditors, may have just claims against funds or other property in a lawyer‘s custody. A lawyer may have a duty under applicable law to protect such third-party claims against wrongful interference by the client, and accordingly may refuse to surrender the property to the client.

The rule does not create an obligation to the plaintiff enforceable in civil litigation

Mr. Papageorge identifies no source of "applicable law" under which Mr. Zucker and Ms. Daus owed him a duty of care other than Rule 1.15 itself and the case law interpreting that rule. Yet as Mr. Papageorge concedes, the Rules of Professional Conduct do not give rise to a private cause of action for their violation.

Here, Mr. Papageorge signed a contract with Mr. Banks and his cotenant that gave him a right to the proceeds from the tenants‘ wrongful eviction claims, but this right was a contractual right enforceable against Mr. Banks and the cotenant, not a property right enforceable against whomever might be in possession of those proceeds. As Mr. Papageorge‘s only entitlement to the settlement money stemmed from the as-yet-unperformed contract with Mr. Banks and his cotenant, he did not have any property rights in the settlement money when he made his demand, and his conversion claim therefore fails.

Associate Judge Beckwith authored the opinion. (Mike Frisch)

September 21, 2017 in Bar Discipline & Process, Clients | Permalink | Comments (0)

Wednesday, September 20, 2017

Judge Should Have Recused But Error Harmless

The South Dakota Supreme Court affirmed a fourth-degree rape conviction

Approximately one month before [defendant] Shelton’s trial, his attorney moved to withdraw from the case. Shelton’s former cellmate came forward with information that Shelton confessed to him that Shelton had committed the rape. The attorney represented both Shelton and the former cellmate. Due to the conflict, the court allowed the attorney to withdraw and appointed a new attorney to represent Shelton. A week later, the circuit judge overseeing the matter sent a letter to the new attorney disclosing that the judge’s ex-wife is a partner in the new attorney’s law firm and that this was a potential basis for disqualification. The judge stated:

You are now advised that I will disqualify myself from this proceeding, and another judge will be assigned to hear this case, unless you and your client agree in writing that I should not be disqualified, and that I may continue to preside over this action.


A written agreement waiving disqualification was not provided and there was no further mention of the issue in the record. Nevertheless, the same judge continued to preside over the trial.

The court concluded that the judge erred in failing to recuse but

In upholding the conviction in this case, there is little risk of injustice to the parties. Initially, Shelton does not argue that the judge was biased or prejudiced against him in any way. Instead, Shelton erroneously argues that the judge lacked jurisdiction to proceed in the case, and as a result, the judgment of conviction was void. A thorough review of the record does not reveal any evidence of partiality. Further, it is not alleged, and it does not appear from the record, that the judge’s ex-wife had any involvement in the matter. And while Shelton argues that in his experience, “an overwhelming majority of divorce cases have at least some level of animosity[,]” none was shown here...

There is also little risk that denial of relief would produce injustice in other cases. Unlike the situation presented in Liljeberg, where the judge failed to disclose the potential basis for disqualification to the parties, the judge in this case upheld his ethical obligations under the Code of Judicial Conduct and made a full disclosure. The judge sent a letter to Shelton’s counsel informing him of the potential basis for disqualification and filed the letter in the record. Although the judge erred by continuing to preside over the matter absent a waiver, Shelton compounded this error by failing to raise it.

The court held that the error was harmless. (Mike Frisch)

September 20, 2017 in Clients, Judicial Ethics and the Courts | Permalink | Comments (0)

Friday, September 1, 2017

Border Ethics Explored

Matt Kaiser (a former student of mine and present member of the D.C. Board on Professional Responsibility) has an article at Above the Law on a Bar Association of the City of New York Committee on Professional Ethics opinion  which is summarized below

Under the New York Rules of Professional Conduct (the “Rules”), a New York lawyer has certain ethical obligations when crossing the U.S. border with confidential client information. Before crossing the border, the Rules require a lawyer to take reasonable steps to avoid disclosing confidential information in the event a border agent seeks to search the attorney’s electronic device. The “reasonableness” standard does not imply that particular protective measures must invariably be adopted in all circumstances to safeguard clients’ confidential information; however, this opinion identifies measures that may satisfy the obligation to safeguard clients’ confidences in this situation. Additionally, Under Rule 1.6(b)(6), the lawyer may not disclose a client’s confidential information in response to a claim of lawful authority unless doing so is “reasonably necessary” to comply with a border agent’s claim of lawful authority. This includes first making reasonable efforts to assert the attorney-client privilege and to otherwise avert or limit the disclosure of confidential information. Finally, if the attorney discloses clients’ confidential information to a third party during a border search, the attorney must inform affected clients about such disclosures pursuant to Rule 1.4.

(Mike Frisch)

September 1, 2017 in Clients | Permalink | Comments (0)

Thursday, August 31, 2017

Wrongful Death Case Filed For Late Spouse Not Null And Void As Unauthorized Practice

A decision summarized on the web page of the Tennessee Supreme Court

The Tennessee Supreme Court has rejected a defendant hospital’s argument that a wrongful death lawsuit filed by a surviving spouse was null and void because the spouse was not represented by a lawyer when the lawsuit was filed.   

In September 2004, Ruth Hartley was admitted to Trinity Hospital in Erin, Houston County, Tennessee, for elective colon surgery.  She developed complications from the surgery and died.  After her death, Mrs. Hartley’s husband, Denver Hartley, filed a wrongful death lawsuit against several defendants, including Trinity Hospital, claiming that their negligent treatment caused Mrs. Hartley’s death.  Mr. Hartley was not represented by a lawyer when he filed the lawsuit.

The defendants filed motions to dismiss Mr. Hartley’s lawsuit.  They argued that, although a person can represent himself in his own lawsuit, no one can file a lawsuit on behalf of another person unless they have a law license.  The defendants claimed that, in filing the wrongful death lawsuit, Mr. Hartley was representing either Mrs. Hartley or their adult children, so he was practicing law without a license. For that reason, they argued, Mr. Hartley’s lawsuit must be dismissed.

Mr. Hartley soon hired an attorney, and he amended his lawsuit to show that he was represented by a lawyer.  By that time, though, the statute of limitations for the wrongful death claim had run.  The defendants argued that the first complaint was null and void because Mr. Hartley was not represented by a lawyer, and the legal time limit had passed by the time Mr. Hartley hired a lawyer and filed an amended complaint, so his lawsuit had to be dismissed.

The trial court held that the fact that Mr. Hartley was not represented by a lawyer when he filed the lawsuit did not make it null and void, so it refused to dismiss the lawsuit.  While the lawsuit was pending, Mr. Hartley died, and his daughter, Linda Beard, was substituted in his place as the plaintiff. The case went to trial, and the jury awarded damages to Ms. Beard. 

The hospital appealed, and the Court of Appeals reversed.  It held that the claim belonged to the decedent, Mrs. Hartley, and that Mr. Hartley could not file a lawsuit on behalf of his deceased wife without a lawyer.  The Court of Appeals held that the first wrongful death complaint was null and void, and Mr. Hartley hired a lawyer after the statute of limitations had run, so it dismissed the case.  The Tennessee Supreme Court granted Ms. Beard permission to appeal.

The Supreme Court reversed the Court of Appeals.  It held that the wrongful death claim did not actually belong to the decedent; under Tennessee law, upon Mrs. Hartley’s death, the claim passed to her surviving spouse, Mr. Hartley.  Because Mr. Hartley had the right to represent himself in his own lawsuit, the Court held, the original complaint, filed without a lawyer, was at least partially proper.  The Supreme Court agreed with the trial court that the lawsuit was timely, so it reversed the Court of Appeals’ dismissal of the lawsuit.     

To read the unanimous opinion in Linda Beard v. James William Branson and Trinity Hospital, L.L.C., authored by Justice Holly Kirby, go to the opinions section of

(Mike Frisch)

August 31, 2017 in Clients, Current Affairs | Permalink | Comments (0)

Monday, August 28, 2017

Legal Malpractice Claim Survives Where Firm Role In Dispute

The Massachusetts Supreme Judicial Court vacated and affirmed in part  the disposition of a legal malpractice case where the parties disagreed as to when the attorney - client relationship started and ended.

The case was assigned to attorney Quigley, who left the Todd firm. There was disagreement as to the firm's role post Quigley's departure but

There is no dispute that Cesso never communicated to Todd or the Probate and Family Court any objection to Todd's filing a notice of withdrawal in the divorce action. Cesso never objected to Todd's lack of response to any of the seven e-mails copied to Todd after July 28, 2008, and ceased communicating with Todd substantively about the case after August 21, 2008. Todd was not present in court for the first two days of trial, Septemeber 8 and 9, 2008. Cesso did not object to Todds absence.

Cesso sued Quigley and later added Todd as a defendant. 

The question at issue here is whether Todd's attorney client relationship with Cesso continued after July 28, 2008. The motion judge found that, as a matter of law, Todd ceased being Cesso's attorney in the divorce action on the date Todd signed the notice of withdrawal. We disagree. On this record, "reasonable persons could differ as to the existence of an attorney-client relationship," so "this issue must be resolved by the trier of fact."

 ...Todd expressly told Cesso that, after Todd's withdrawal as counsel of record, Todd and Quigley would "continue to work together and consult on [Cesso's] case." This was consistent with the established division of labor, with Todd settingstrategy and Quigley executing that strategy. Cesso took actions, such as copying Todd on e-mails, corroborating that Cesso thought Todd was still working on the case. Resolving all evidentiary inferences in favor of Cesso, Todd took no steps to disabuse Cesso of the notion that he (Todd) was still working on the case, albeit in a behind-the-scenes role. Instead, Todd sent a billing cover letter that a reasonable person could read to indicate that he would continue to work and bill on the case. The record, though thin, is enough to permit -- but not require-- the finder of fact to draw the inference that Cesso reasonably believed that Todd was continuing to consult in the background.

 The dismissal of a misrepresentation count was affirmed. (Mike Frisch)

August 28, 2017 in Clients | Permalink | Comments (0)

Tuesday, August 15, 2017

Bankruptcy Does Not Bar Legal Malpractice Claim

The Massachusetts Supreme Judicial Court reversed the dismissal of a legal malpractice claim

In September 2009, the plaintiff retained the defendants as personal injury counsel to represent her with respect to serious injuries she sustained when she slipped and fell on ice the year before. Approximately one month later, acting pro se, she filed for bankruptcy protection, and received a bankruptcy discharge in early 2010. Thereafter, in 2011, the defendants allowed the statute of limitations on the personal injury claim to expire without filing suit. This legal malpractice suit followed. The question on appeal is whether
the plaintiff's malpractice claims were properly dismissed on summary judgment on the ground that the bankruptcy action (or the position the plaintiff took in it) foreclosed them. We reverse.

Plaintiff did not disclose the claim on her pro se bankruptcy petition but referred to it in response to trustee questions at a meeting of creditors

The defendants argue that the plaintiff's malpractice claim is barred by the earlier bankruptcy and her failure to disclose the underlying personal injury suit.

The malpractice claim was never part of the bankruptcy estate but

There remains, however, the question whether the malpractice claim had any value or, put another way, whether the plaintiff would be able to show causation or harm, given her
failure to disclose the personal injury claim in the bankruptcy. We turn to that question now...

As soon as the plaintiff filed her bankruptcy petition, her personal injury claim became an asset of the bankruptcy estate, and the trustee was responsible for pursuing it for the benefit of the estate and its creditors...That interest did not terminate on the bankruptcy discharge; indeed, had the defendants filed suit on the plaintiff's behalf after the bankruptcy discharge, but before the statute of limitations had elapsed, the "usual remedy [would be] to substitute as the real party in interest the trustee of the bankruptcy estate in the place and stead of the former debtor."

...because the value of the malpractice claim (which was never an asset of the bankruptcy) is tied to the value of the underlying personal injury suit (which was), the trustee may have an interest in any recovery on the malpractice claim -- at least to the extent of the value of the claims discharged in bankruptcy. On remand, the judge and the parties should accordingly ensure that the trustee is notified of the existence of a potential interest in any recovery.

Nor did judicial estoppel prevent the malpractice suit. (Mike Frisch)

August 15, 2017 in Clients | Permalink | Comments (0)

Tuesday, August 8, 2017

No Malpractice Where Court Permits Withdrawal

The Washington State Supreme Court has held

In this case, former clients are suing their attorneys for legal malpractice based, in part, on the attorneys' withdrawal from a prior case. But the attorneys obtained that withdrawal by court order. In the original case, the former clients appealed the court's order approving withdrawal, and that appeal was rejected. The attorneys thus argue that collateral estoppel applies to bar a malpractice action based on their withdrawal. We agree. We hold that the fact of withdrawal by court order in an earlier proceeding is dispositive in a later malpractice suit against the attorney. Although  other malpractice complaints unrelated to the withdrawal would not be precluded, a client cannot relitigate whether the attorney's withdrawal was proper. If we are to have rules permitting attorney withdrawal, we must allow attorneys to have confidence in those rules. We, therefore, reverse the Court of Appeals...

In the prior proceeding, the Schibels had a full and fair opportunity to actually litigate their challenge to the trial court granting the Attorneys' motion to withdraw. The fact of withdrawal by court order is dispositive in a later malpractice suit. Collateral estoppel thus precludes any malpractice claim based on that withdrawal and summary judgment on those claims is appropriate. We therefore reverse the Court of Appeals as to those claims that involve withdrawal. Because the complaint alleges malpractice claims separate from the withdrawal, such as failing to prepare for trial, those claims are not precluded.

Justice McCloud dissented joined by two colleagues

This case presents a question of first impression for this court: whether a trial court order approving an attorney's withdrawal from representation, over the client's objection, has preclusive effect barring the client's later action for attorney malpractice arising from the withdrawal. Under traditional collateral estoppel analysis, as applied to the facts in this case, the answer is clearly no. The majority departs from traditional collateral estoppel analysis and adopts a new rule barring malpractice plaintiffs from asserting that a court-sanctioned withdrawal was, in fact, improper. The majority certainly asserts policy reasons for this departure. But the policy reasons can be addressed in the context of traditional collateral estoppel analysis, without adopting a new rule that will be difficult to apply. I therefore respectfully dissent...

I believe the majority's new rule will prove confusing and difficult to apply in practice. In this case, for example, the Schibels allege that the Attorneys failed to prepare adequately for trial and mishandled settlement negotiations. Majority at 2. The majority holds that they may pursue those claims since they are "separate from the withdrawal." Id. at 12. But in addition to proving that the Attorneys breached their professional and fiduciary duties, the Schibels must prove causation and damages—^they must prove that the Attorneys' breach caused them to lose money they would otherwise have recovered in a jury trial or settlement. Presumably, the Attorneys will defend against those allegations by arguing that any such loss had a very different cause: the Attorneys' proper withdrawal, necessitated by their "ethical obligations." CP at 73. If the Attorneys do raise that defense, will they be able to cite Judge Plese's withdrawal order, recognizing those "ethical obligations" as evidence? Will the Schibels be allowed to refute the allegation that their unethical conduct forced the Attorneys to withdraw?

The majority's new rule does not answer these questions. It assumes a clean distinction between malpractice claims "based on the withdrawal" and malpractice claims "separate from the withdrawal," but that distinction breaks down in practice. At best, this new rule will prove confusing to apply. At worst, it will shield attorneys who have not been candid about their true reasons for withdrawing from a case. Certainly, it is not justified by the policy concerns the majority cites.

(Mike Frisch)

August 8, 2017 in Clients | Permalink | Comments (0)

Wednesday, August 2, 2017

A Non-Consentable Conflict Leads To Loss Of Fee

The New York Appellate Division for the Second Judicial Department held that an agreement of a law firm to act as both counsel and broker to a sale violated ethics rules

Here, the plaintiffs established, prima facie, that the defendants acted as both attorney and broker in connection with the possible sale of the plaintiff company (see Byrnam Wood, LLC v Dechert LLP, 50 AD3d 455, 456), and that the retainer agreement provided for a contingency fee to compensate them in the event a sale of the company was completed. In opposition, the defendants failed to raise a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562). Accordingly, the Supreme Court properly determined that the retainer agreement is unenforceable because it created a nonconsentable conflict of interest under the Rules of Professional Conduct (see Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.7[a][2]; NY St Bar Assn Comm on Prof Ethics Op 1015 [2014]; Matter of Cooperman, 83 NY2d at 475; Law Off. of Howard M. File, Esq., P.C. v Ostashko, 60 AD3d 643, 644). The fact that the defendants are seeking to recover under the hourly fee provision of the retainer agreement, instead of the contingency fee provision, does not alter this result. The conflict created by the contingent fee existed during the representation, regardless of whether a sale of the business was ultimately completed. Accordingly, upon renewal, the Supreme Court properly awarded the plaintiffs summary judgment dismissing the defendants’ first counterclaim to recover fees under the retainer agreement.

An attorney who violates a disciplinary rule may be discharged for cause and is not entitled to fees for any services rendered...

(Mike Frisch)

August 2, 2017 in Clients | Permalink | Comments (0)

Tuesday, July 25, 2017

Fiduciary Breach Claim Survives Summary Judgment

Summary judgment in favor of Willkie Farr in defending a breach of fiduciary duty claim was modified by the New York Appellate Division for the First Judicial Department

In January 2001, nonparty Ramius Securities LLC hired plaintiff Dennis T. Palmeri, Jr. to serve as manager of its stock lending securities department. At some point in 2007, the Financial Industry Regulatory Authority (FINRA) began a regulatory investigation seeking information on the use of so-called finders in Ramius's stock lending business. In December 2007, after having received information from Ramius in response to its initial requests, FINRA served both Ramius and plaintiff with letter requests for additional information regarding transactions that had included a finder's fee.

In preparing his responses to the FINRA request, plaintiff conferred with Ramius's General Counsel and its Chief Operating Officer, both of whom were attorneys. Plaintiff alleged that the GC and the COO informed him they were "there as his counsel," allegedly leading plaintiff to believe that an attorney-client relationship was formed.

Plaintiff left Ramius's employ in 2008. In early 2009, plaintiff retained defendant Willkie Farr & Gallagher LLP to represent him in connection with the FINRA investigation. Before undertaking any representation of plaintiff, defendant informed plaintiff that Ramius, which was then a client of defendant, would not accept any situation in which defendant was adverse to Ramius. At the same time, defendant noted that it did not foresee any set of circumstances in which plaintiff would be adverse to Ramius. Defendant sent plaintiff an engagement letter dated January 14, 2009; the letter made no mention of any conflict of interest arising from defendant's representation of both plaintiff and Ramius, nor did it enumerate the rights plaintiff would have if he and Ramius were to become adverse. Approximately one month afterward, in connection with the same FINRA investigation, Ramius also retained defendant to represent it and certain of its current or former employees.

On or about January 27, 2009, defendant represented plaintiff during his investigative examination before FINRA. In June 2009, however, defendant informed plaintiff that defendant could no longer represent him because of a conflict of interest concerning defendant's concurrent representation of Ramius and its current and former employees, and unilaterally terminated its representation of him on June 25, 2009. By letter dated September 23, 2009 from defendant to FINRA, defendant appeared to shift to plaintiff all or most of the responsibility for any alleged violations of FINRA's rules.

In January 2010, Ramius entered into a letter of acceptance, waiver, and consent (AWC) with FINRA; defendant negotiated the letter on Ramius's behalf. The AWC absolved Ramius and its employees of further liability.

On or about December 1, 2010, FINRA commenced a disciplinary proceeding against plaintiff, alleging that he had made false and misleading statements to Ramius's chief compliance officer during the FINRA investigation, thus causing Ramius to give inaccurate responses to FINRA.

The hearing on the disciplinary proceeding was held on June 28 and 29, 2011. In the months leading up to the hearing, defendant communicated with FINRA about matters related to the hearing, such as testimony to be given by Ramius employees. Moreover, at the hearing, defendant was present on behalf of Ramius and Ramius employees who testified.

By decision dated on or about November 18, 2011, the hearing panel dismissed the complaint, finding that FINRA had failed to prove by a preponderance of the evidence that plaintiff had violated FINRA rules. The panel also determined that certain of the Ramius employees who testified were not credible. On February 15, 2013, upon FINRA's appeal, the National Adjudicatory Council for FINRA upheld the hearing panel's dismissal of the FINRA complaint against plaintiff.

In the complaint in this action, dated February 15, 2013, plaintiff asserted causes of action against defendant for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, gross negligence, professional negligence, breach of contract, and breach of the implied covenant of good faith and fair dealing. Plaintiff alleged that defendant, during its representation of Ramius in the FINRA investigation, shifted all responsibility for any alleged violations of FINRA's rules to him, suggesting that plaintiff undertook certain wrongful actions without Ramius's knowledge. Plaintiff further asserted that defendant disclosed to FINRA his internal, privileged communications with Ramius's counsel, thus causing FINRA to assert charges against Palmieri. Moreover, plaintiff alleged that defendant disclosed information that it had learned during the time it represented him. Plaintiff also alleged that the FINRA complaint was primarily based on privileged statements he had made to counsel at Ramius, and that these statements were also disclosed during the course of Willkie's representation of Ramius after it ceased representing him.

Defendant moved under CPLR 3212 to dismiss the complaint as time-barred and for failure to state a claim. Plaintiff cross-moved for summary judgment in his favor. In its decision, which it read into the record, the IAS court found that all six of plaintiff's claims were premised on the same operative facts and sought identical monetary damages. Accordingly, the IAS court "merged" plaintiff's claims for gross negligence, breach of contract and breach of the implied covenant of good faith and fair dealing into his legal malpractice claim, leaving for consideration only that claim and claims based on breach of fiduciary duty.

The IAS court then dismissed both claims as untimely. Because plaintiff sought purely monetary damages, the court applied the three-year statute of limitations to the breach of fiduciary duty claim, rather than the six-year period. The court held that the claim was time-barred, since plaintiff filed it in February 2013, more than three years after defendant represented him from January through June 2009.

To begin, the motion court properly dismissed plaintiff's claims for gross negligence, breach of contract, and breach of the implied covenant of good faith and fair dealing as duplicative of his legal malpractice claim, given that they are all based on the same facts and seek the same relief (Sun Graphics Corp. v Levy, Davis & Maher, LLP, 94 AD3d 669 [1st Dept 2012]).

Plaintiff's claim for legal malpractice, in turn, is untimely. Claims for legal malpractice are subject to a three-year statute of limitations and accrue when the malpractice is committed, not when the client learns of it (Lincoln Place, LLC v RVP Consulting, Inc., 70 AD3d 594 [1st Dept 2010], lv denied 15 NY3d 710 [2010]; CPLR 214[6]). Plaintiff's legal malpractice claim first accrued on or about June 25, 2009, when defendant terminated its legal representation of him, but continued to represent Ramius in the ongoing FINRA investigation. He did not, however, file his claim until February 15, 2013, more than three years later.

In addition, the motion court correctly dismissed the claim for aiding and abetting a breach of fiduciary duty, as plaintiff is collaterally estopped from relitigating the question of whether an attorney-client relationship existed between him and his employer's in-house counsel. The identical issue was decided in the FINRA proceeding and plaintiff had a full and fair opportunity to litigate it before FINRA (see Jeffreys v Griffin, 1 NY3d 34, 39 [2003]; Auqui v Seven Thirty One Ltd. Partnership, 22 NY3d 246, 255 [2013]).

However, the IAS court should have permitted the breach of fiduciary duty claim to proceed. The IAS court correctly noted that the claim was subject to a three-year statute of limitations. The court was mistaken, however, in finding that the allegedly wrongful conduct ended on June 25, 2009, when defendant unilaterally terminated its representation of plaintiff. On the contrary, defendant's conduct extended through at least June 29, 2011, during which time it represented Ramius and its employees in their participation at plaintiff's FINRA disciplinary hearing.

Here, plaintiff alleges not only that defendant breached its fiduciary duty when it terminated its professional relationship with him, but also when, until at least June 2011, it acted in a manner directly adverse to his interests. Where there is a series of continuing wrongs, the continuing wrong doctrine tolls the limitation period until the date of the commission of the last wrongful act (Harvey v Metropolitan Life Ins. Co., 34 AD3d 364 [1st Dept 2006]; see also Ring v AXA Fin., Inc., 2008 NY Slip Op 30637[U] [Sup Ct, NY County 2008] [applying continuing violations doctrine to General Business Law § 349 claim where initial payments occurred outside statute of limitations but "the insurer [] continued to bill, and ... [plaintiff] ... continued to pay" within three years of filing suit]).

Here, plaintiff has presented evidence of a "continuing wrong," which is "deemed to have accrued on the date of the last wrongful act" (Leonhard v United States, 633 F2d 599, 613 [2d Cir. 1980], cert denied 451 US 908 [1981]; Harvey, 34 AD3d at 364). Indeed, the record contains evidence sufficient to create an issue of fact as to whether defendant breached its fiduciary obligations to plaintiff after June 2009 and well into June 2011 during its ongoing representation of the Ramius parties.

For example, as noted, the record contains evidence that in the early portion of 2011, defendant helped Ramius identify witnesses who would testify against plaintiff at his FINRA disciplinary hearing. Similarly, defendant was present on behalf of Ramius and Ramius employees who testified at plaintiff's FINRA hearing on June 28 through 29, 2011 — a hearing at which the employees gave testimony that was generally adverse to plaintiff's interests. This evidence is sufficient for a fact-finder to determine that defendant breached its duty of loyalty to plaintiff, a former client (see Cooke v Laidlaw, Adams & Peck, 126 AD2d 453, 456 [1st Dept 1987] [ethical standards applying to the practice of law impose a continuing obligation upon lawyers to refuse employment in matters adversely affecting a client's interests, even if the client is a former client]).

(Mike Frisch) 

July 25, 2017 in Clients | Permalink | Comments (0)

Monday, June 19, 2017


The Idaho Supreme Court has affirmed the dismissal of a legal malpractice claim 

[Plaintiff] Greenfield hired Smith in September 2010 to represent her in a civil suit against her neighbors, Eric and Rosalynn Wurmlinger, for the alleged illegal operation of a bed and breakfast in their home. While the suit was pending, Greenfield was charged criminally with malicious injury to the Wurmlingers’ property. Greenfield retained Smith to represent her in the criminal matter as well.

Smith represented Greenfield for approximately eighteen months. During that time, Greenfield was acquitted of the criminal charges. The civil case was scheduled to go to trial in May 2012. In February 2012, Smith filed a motion to withdraw from representing Greenfield. Smith’s basis for the motion was that the attorney-client relationship had broken down to the point where he was no longer able to represent Greenfield. The district court granted the motion on March 8, 2012.

Following Smith’s withdrawal, the district court rescheduled the civil trial for November 26, 2012. Greenfield represented herself at trial, and the jury returned a verdict in favor of the neighbors on November 30, 2012. The jury awarded $52,000 in damages for negligent infliction of emotional distress and $17,000 in damages for timber trespass which were then trebled. The district court also awarded the neighbors’ attorney’s fees and costs. The total judgment entered by the district court was $168,755.37. Greenfield appealed to this Court, and we affirmed the judgment and awarded additional attorney’s fees and costs to the neighbors. Greenfield v. Wurmlinger, 158 Idaho 591, 349 P.3d 1182 (2015).

The legal malpractice suit was filed on December 1, 2014.

The court found that the lower court properly dismissed fraud claims that were not pled with sufficient particularity as well as claims not subject to the malpractice statute of limitations.

There is no dispute that Smith is a licensed attorney. All of Greenfield’s claims arise out of Smith’s alleged failure to perform services in connection with his representation of her. While Greenfield argues that this is really a breach of contract action, she has not pointed to any provision in her written agreement with Smith which he breached. We have reviewed the contract, and there are no provisions which guarantee the outcome of the representation or specify an elevated standard of care because we are unable to find a particular contractual provision that has been breached, we hold that the district court correctly treated all claims as being subject to the professional malpractice two-year statute of limitations.

Plaintiff just beat the statute

Based on the district court’s “some damage” finding, the statute of limitations would have run in this case on November 30, 2014—exactly two years from the date of the adverse verdict—except that it fell on a Sunday. The Idaho Code contains several provisions specifying how time is to be computed when construing statutes. Section 73-109 contains the well recognized rule that the time to perform a specific act is computed by excluding the first day, and including the last unless the last is a holiday...November 30, 2014 was a holiday so it was excluded from the two-year statute of limitations. This means that the last day for Greenfield to file a malpractice action for the civil claim matters was December 1, 2014. Thus, her complaint was timely, and the district court erred in finding otherwise. It is important to note that our conclusion does not apply to the criminal matter claims. Greenfield did not challenge the district court’s determination that the statute of limitations for the criminal matter claims started to run when she was acquitted on October 13, 2011. The district court correctly determined that the criminal matter claims were untimely.

But lost on the merits

These alleged deficiencies are not simple matters like an attorney allowing a statute of limitations to run. Take for example, the allegation that Smith’s performance was deficient because he did not file a motion for summary judgment on the neighbors’ counterclaims. Who controls the decision to file a motion for summary judgment? The attorney or the client? Under what circumstances is a motion for summary judgment appropriate? Would such a motion have been appropriate in Greenfield’s civil case? Did Greenfield have “some chance of success” of prevailing on such a motion? While Greenfield can certainly testify about the fact that Smith did not file a motion for summary judgment in the underlying civil case, she does not have the knowledge or expertise to answer the questions posed and neither does a jury. Greenfield needed an expert to address these types of questions in an affidavit when Smith filed his motion for summary judgment. Without expert testimony, Greenfield could not demonstrate that there were genuine issues of material fact as to whether Smith’s performance fell below the standard of care or proximately caused her damages. As such, the district court properly granted summary judgment in favor of Smith.

The Coeur d'Alene/Post Falls Press had the story of a dispute rooted in a tree-trimming issue. (Mike Frisch)

June 19, 2017 in Clients | Permalink | Comments (0)

Friday, June 16, 2017

Iowa Holds Sex with Client Does Not "By Itself" Give Rise To A Legal Malpractice Claim

The Iowa Supreme Court affirmed a legal malpractice award that in part involved sex with the client and had resulted in bar discipline.

A plaintiff brought claims against her former attorney for legal malpractice, assault and battery, and punitive damages. At the close of the plaintiff’s case, the district court granted the defendant’s motion for directed verdict on two legal malpractice claims: one regarding the preparation of a will and the other for breach of fiduciary duty. The district court submitted to the jury two claims of alleged legal malpractice: representation of the plaintiff in her divorce and representation of the plaintiff in pursuing a claim for assault against her former spouse. The jury returned verdicts for the defendant on the two submitted legal malpractice claims and returned verdicts for the plaintiff on the assault and battery claim and on the punitive damages claim. The jury awarded the plaintiff combined damages of $498,562.44. The plaintiff appeals the district court’s order granting the motion for directed verdict on the two additional claims of legal malpractice. The plaintiff also appeals various evidentiary rulings made by the district court. The defendant cross-appeals on the issue of damages. For the reasons discussed below, we affirm the district court. While we find that the defendant’s cross-appeal was untimely, we reject on the merits the defendant’s challenge to the amount of the jury award.

While representing the client in a divorce

After the meeting, Blessum called Stender and asked if she wanted to meet and catch up. She agreed, and they met at a local restaurant. During this meeting, Blessum told Stender he was unhappy in his marriage. At the end of the evening, Blessum kissed Stender. After Stender got in her car but before she left the parking lot, Blessum sent her a text message asking if they could meet again. Over the next two weeks, Blessum and Stender continued to meet and talk about intimate topics such as Stender’s childhood trauma and her marital and sexual abuse. Within two or three weeks, they began a sexual relationship.

While this sexual relationship continued, Blessum performed several other legal services for Stender. On June 28, Stender executed the will that Blessum had prepared. On August 9, Blessum sent a demand letter to Phillip. In the letter, Blessum demanded that [husband] Phillip agree to three changes in the divorce decree in exchange for Stender’s refraining from filing a civil suit against him for the physical and sexual assault Phillip committed against her in 2009. Blessum was aware the assaults occurred in 2009, and either knew or should have known the statute of limitations had run by the time he sent the letter to Phillip.3 On August 23, Blessum filed the QDRO formalizing Melissa’s interest in Phillip’s retirement account. In January 2012, while the relationship was still ongoing, Blessum assisted Stender with another legal matter.

But things got out of hand

On June 10, Stender went to Blessum’s house to confront him about rumors he was seeing other women. When she arrived, she went into the kitchen where she noticed a bottle of wine with two glasses set on the counter and a frying pan with food on the stove. She picked up the pan from the stove and confronted Blessum by asking if he was cooking for another woman. While Stender was holding the pan, Blessum was standing in front of her. At some point, the pan spilled onto Stender’s shoulder and hot grease caused burns on her back. Because the grease went through her clothing, Blessum began taking off Stender’s shirt.

Stender became anxious from the confrontation and the grease burn. Blessum went outside to retrieve Stender’s purse from her vehicle that contained her anxiety medication. When Blessum came back inside with Stender’s purse, she told him she was done with the relationship and bent down to get the pills out of her purse. While Stender was bent over, but before she could take the pills, Blessum began hitting her arm, forearm, head, and neck. After Blessum hit her, Stender grabbed some of the pills that had spilled on the floor and swallowed them. Stender tried to run out of the house, but Blessum caught her and dragged her back inside. Blessum threw her into the corner and started calling her a “subservient slave.” He pulled her through the living room onto the couch and threatened to sexually assault her. Blessum told Stender if she thought the “other men have hurt [her], . . . just wait and see what [he] do[es] to [her].” He told her he was going to make her vomit her pills so she would remember the entire assault.

It gets even worse

Later in June, Blessum began sending letters to Stender. In the letters, he acknowledged that he had dated other women at the same time as Stender and that he gave her a sexually transmitted disease. The letters also acknowledged the assault and included an apology for all of his misdeeds. Stender also received anonymous items in the mail during this time. On September 19, Stender filed a petition for relief from domestic abuse against Blessum. The district court granted a temporary restraining order that same date.

The majority

We...choose to adopt the majority approach and hold that a violation of one of our Iowa Rules of Professional Conduct cannot be used to establish a per se claim for legal malpractice. A violation may, however, be used as some evidence of negligence as provided in our prior caselaw.See, e.g., Crookham, 584 N.W.2d at 266. But before a violation of our rules of professional conduct can be used—even as some evidence of negligence—there must be an underlying actionable claim against the attorney arising out of how the attorney mishandled a legal matter. To find differently would mean that a violation of the rules themselves provides plaintiffs with an independent cause of action. This result is one that both our rules and our cases have specifically rejected. 

Here, Blessum’s sexual relationship in violation of our rules of professional conduct does not by itself give rise to a legal malpractice claim. In order to succeed on her claim for legal malpractice, Stender would need to demonstrate a duty that was violated and not just the sexual relationship alone.

The court majority's lengthy opinion deals with a host of interesting issues including the testimony of Blessum's spouse

Jan testified that Stender’s version of events was in contrast to her own experience. The testimony was offered to rebut Stender’s testimony that she encouraged Blessum to get back together with Jan. Jan testified that she felt the sexual relationship between Stender and Blessum adversely affected her marriage. Jan testified that Stender harassed her with nasty text messages and emails. She testified about sexually graphic emails and text messages that Stender sent to her. Jan testified that this contact impacted her job and her health and that she lost thirty pounds. Jan moved four times in 2011 and 2012.

Jan also testified that she believed Stender broke into her home on February 14, 2012. Jan testified she and Blessum were attempting to reconcile again around that time. Because their engagement anniversary was February 13, Blessum came to her home and left flowers and a Valentine’s Day card. The next day when Jan returned home, she found a card from Blessum to Stender torn up on the counter next to her own
card with a sign that read “fuck you” next to it.

Jan testified her housekeeper found Stender in Jan’s house in June 2012. Jan was supposed to go to a concert with Blessum that week, but chose not to attend after Stender was found in her house. While Blessum was at the concert, Stender sent Jan text messages stating that Stender was in the shower with Blessum and that Jan did not know how to sexually please her husband and needed Stender to show her. Jan also testified that Stender would send her daughter Facebook messages. Jan testified that she attempted to obtain a restraining order against Stender because of the emails and text messages, but was unsuccessful.

The court held that Jan's testimony was not unduly prejudicial.

Justice Hecht dissented and would remand on Stender's claims for further relief.

I find merit in Stender’s appeal. I would reverse the directed verdict on both the negligence and fiduciary duty issues and remand for a new trial...

Put simply, sexual relationships between lawyers and their clients are fraught with risk of financial and emotional injuries to clients. Because the risk of such injuries to clients is so grave, the rules of professional conduct for lawyers do not merely recommend avoidance of sexual relationships with clients—the rules categorically prohibit the commencement of such relationships during a lawyer–client professional relationship. Blessum clearly breached his professional duty to avoid a sexual relationship with Stender...

Again viewing the record in the light most favorable to Stender, I credit the substantial evidence tending to establish that even before Stender was severely beaten by Blessum, the relationship between the parties was tumultuous and marked by great emotional turmoil. A reasonable jury could find on this record that Stender was exquisitely vulnerable to emotional injury because she had an unfortunate preexisting history of sexual abuse and posttraumatic stress—a history of which Blessum was aware when he commenced the sexual relationship. I find substantial evidence in the record tending to prove Blessum expressly used his knowledge of that history in asserting power over Stender during the assault and that Stender suffered substantial emotional distress as a consequence of the sexual relationship before and after the severe beating. Accordingly, under the applicable standards of review, I believe the district court erred in concluding Stender failed to engender a jury question on damages arising from
Blessum’s breach of duty...

Because a reasonable juror could find that Blessum used information he acquired within the scope of the lawyer–client relationship to Stender’s disadvantage during the assault and that Blessum  dishonestly reinitiated the lawyer–client relationship as a pretext for beginning a sexual relationship, the theory of liability based on a breach of a fiduciary duty should have been submitted to the jury.

Two justices joined the dissent.

The ABA Journal reported on the trial verdict

A former client won a jury award of nearly $500,000 on Wednesday in a malpractice and domestic assault lawsuit against the Iowa lawyer who represented her in a divorce case.

The award against Anthony Zane Blessum, a West Des Moines practitioner who formerly served for 11 years as the top prosecutor in Madison County, includes $100,000 in punitive damages, reports the Des Moines Register.

Blessum earlier pleaded guilty to misdemeanor assault in a related criminal case concerning the attack on Melissa Stender. He was sentenced to seven days in jail and ordered to pay Stender $7,000, the Associated Press reported at the time. He also had his law license suspended for 18 months.

The Iowa Supreme Court imposed the discipline in a legal ethics case, based on findings that Blessum had a sexual relationship with Stender; withdrew unearned funds from a $1,000 retainer she had paid him from a trust account; and physically attacked her, the Des Moines Register reported when the court made its determination earlier this year.

Justia provides a copy of the court’s March 27, 2015 opinion in the ethics case.

The opinion explains that Blessum began representing Stender (referred to as Jane Doe) in a divorce case in 2008 and, in 2011, agreed to help her draw up a will. At that time, a relationship began which lasted more than a year. However, it ended in 2012 after an argument at Blessum’s house erupted into a physical attack.

“Doe was angry Blessum appeared to be fixing a romantic dinner for someone else and she picked up and threw the cooking pan he had been using,” the opinion says.

During the argument, Blessum struck her in the face; hit her multiple times; tried to prevent her from taking anti-anxiety medication; and physically restrained her from leaving his home, the court wrote. She called 911 when he briefly left her alone in the room, then hid the phone.

“Both were unaware the call had gone through and was being monitored and recorded,” the opinion says. Treated at a hospital emergency room after police arrived, Doe suffered a black eye; bruising on her face, neck, arm and abdomen; and other facial injuries.

Blessum apologized and she initially resumed their relationship. Within a few months, however, the two parted for good and he was eventually criminally charged in the attack.

Attorney Roxanne Conlin represented Stender in the civil suit. Conlin said it had been important to her client to hold Blessum accountable for his conduct, the Register reports. “Certainly half-a-million dollars does that. For that part, she’s happy,” Conlin said.

A lawyer for Blessum said he was disappointed by the verdict but declined to discuss the merits of the case with a reporter for the newspaper.

(Mike Frisch) 

June 16, 2017 in Bar Discipline & Process, Clients | Permalink | Comments (0)

Saturday, June 3, 2017

Malpractice Claim May Proceed

A legal malpractice claim may proceed per a decision of the New York Appellate Division for the First Judicial Department

The court properly declined to dismiss the corporate plaintiff's claim that it would not have accepted the landlord's buyout offer of the remaining six years on its commercial lease if it had been properly advised by W & S of a $400,000 New York City corporate tax obligation it would have to pay on the buyout figure. Deposition testimony and affidavits offered from the corporate plaintiff's principal assert that it was W & S's responsibility to ensure that the negotiated buyout covered all of plaintiff's anticipated relocation expenses and attendant tax obligations such that plaintiff would not be out of pocket financially when relocating to allow the nonparty landlord to undertake a major renovation of its building. Under the circumstances presented, triable issues exist as to whether, but for W & S's failure to inform plaintiff of the corporate tax obligation, plaintiff would have declined the buyout offer, remained in its existing leasehold and avoided any damages associated with having to pay, out of pocket, a corporate tax on the buyout sum (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438 [2007]; Miuccio v Straci, 129 AD3d 515 [1st Dept 2015]).

Another branch of the malpractice claim alleged that but for counsel's negligence in failing to raise the tax issue, the landlord would have offered a higher buyout figure to cover the New York City corporate tax obligation. This branch of the claim is also viable. Although the claim is founded upon a discretionary decision residing in another over whom the corporate plaintiff had no control, the circumstances support plaintiff's contention that the landlord would have agreed to satisfy the tax liability. As we opined in sustaining the malpractice cause of action in the complaint on defendant's motion to dismiss, plaintiff had a strong bargaining position because the amount of time left on the lease, as well as the importance of the leased space to the landlord's conversion plans, would have pressured the landlord to acquiesce to plaintiff's relatively minor request (see Leggiadro, Ltd. v Winston & Strawn, LLP, 119 AD3d 442, 442-443 [1st Dept 2014]; see also Campbell v Rogers & Wells, 218 AD2d 576, 580 [1st [*2]Dept 1995]; Khadem v Fischer & Kagan, 215 AD2d 441, 443 [2d Dept 1995]). W & S has not proffered any new probative evidence to counter this aspect of plaintiff's legal malpractice claim.

(Mike Frisch)

June 3, 2017 in Clients | Permalink | Comments (0)

Friday, May 26, 2017

Not Utterly Refuted

The New York Appellate Division for the Second Judicial Department held that a legal malpractice action should not have been dismissed in a case where the defendant attorney's alleged legal malpractice involved prosecution of a legal malpractice claim

In this action to recover damages for legal malpractice, the complaint alleges that the defendants, Anthony P. Gallo, P.C., and Anthony P. Gallo (hereinafter together Gallo), who represented the plaintiff in a prior legal malpractice action against the plaintiff’s former attorneys, Demartin & Rizzo, P.C., and Joseph N. Rizzo, Jr. (hereinafter together Rizzo), negligently failed to respond to certain discovery demands by Rizzo, which resulted in the Supreme Court (Gazzillo, J.) precluding the introduction of evidence in the plaintiff’s legal malpractice action against Rizzo (4777 Food Serv. Corp. v DeMartin & Rizzo, P.C., 2013 NY Slip Op 33007 [U] [Sup Ct, Nassau County]; hereinafter the Rizzo order). The complaint further alleges that, as a result of this evidence being precluded, the court which issued the Rizzo order found that the plaintiff had failed to meet its burden of proof as to the element of damages sustained as a result of Rizzo’s malpractice.

The trial court found damages were speculative but 

Here, the Rizzo order does not utterly refute the allegations in the complaint, nor does it establish a defense as a matter of law. The order concludes, in part, that there was no proof of actual damages presented by the plaintiff, due to the plaintiff’s failure to respond to at least two of Rizzo’s discovery demands, which resulted in the preclusion of the damages evidence. The Rizzo order then states, referring to the precluded evidence, “[m]oreover, even if, arguendo the [c]ourt were to overlook that deficiency, its probative value is highly suspect” (4777 Food Serv. Corp. v DeMartin & Rizzo, P.C., 2013 NY Slip Op 33007 [U], *9). Contrary to the Supreme Court’s conclusion, this alternate holding, which constitutes dicta, was not a finding on the merits and did not utterly refute the allegations in the complaint against Gallo (see O’Connor v G & R Packing Co., 53 NY2d 278; Malloy v Trombley, 50 NY2d 46, 50; Pollicino v Roemer & Featherstonhaugh, 277 AD2d 666, 667-668). Accordingly, the Supreme Court should have denied Gallo’s motion pursuant to CPLR 3211(a) to dismiss the complaint.

(Mike Frisch)

May 26, 2017 in Clients | Permalink | Comments (0)

Sunday, May 14, 2017

Not Illiterate, Blind Or A Non-English Speaker

A former client's legal malpractice claim founders on the shoals of the plain text of the agreement that she signed settling the underlying claim, affirmed the New York Appellate Division for the Second Judicial Department

In 2003, the plaintiff’s then husband, the defendant Yoni Anderson (hereinafter Yoni), retained the defendants Dinkes & Schwitzer, P.C. (hereinafter the Dinkes firm), William Schwitzer, and Michael Kimmelman to represent him in filing a personal injury action (hereinafter the prior action), in which a claim for loss of services was asserted on behalf of the plaintiff, allegedly without her knowledge. On June 10, 2009, following negotiations to settle the prior action, the plaintiff signed a document stating, inter alia, that she agreed to receive $200,000 from the settlement proceeds “as full and final compensation for her loss of services claim.” In February 2012, the plaintiff commenced the instant action against, among others, the Dinkes firm, Schwitzer, and Kimmelman, seeking, inter alia, to recover damages for legal malpractice and fraudulent concealment, based on the alleged failure to disclose her status as a plaintiff in the prior action and that she was accepting $200,000 in full settlement of her claim in that action. The plaintiff also asserted a cause of action alleging notarial misconduct against the defendant Alice Lin, a notary public who notarized documents including a general release that allegedly contained the plaintiff’s forged signature. Thereafter, the Dinkes firm, Schwitzer, and Lin (hereinafter collectively the Dinkes defendants) moved for summary judgment dismissing the complaint insofar as asserted against them, and the plaintiff cross-moved, among other things, to compel the Dinkes defendants and Kimmelman to appear for depositions. In an order dated February 3, 2015, the Supreme Court, inter alia, granted the Dinkes defendants’ motion for summary judgment and denied that branch of the plaintiff’s cross motion which was to compel depositions.

“‘A party is under an obligation to read a document before he or she signs it, and a party cannot generally avoid the effect of a [document] on the ground that he or she did not read it or know its contents’” (Fulton v Hankin & Mazel, PLLC, 132 AD3d 806, 808, quoting Martino v Kaschak, 208 AD2d 698, 698). Generally, a cause of action alleging that the plaintiff was induced to sign something different from what he or she thought was being signed only arises if the signer is illiterate, blind, or not a speaker of the language in which the document is written (see Ackerman v Ackerman, 120 AD3d 1279, 1280). Here, the Dinkes defendants established their prima facie entitlement to judgment as a matter of law dismissing the causes of action asserted against the Dinkes firm and Schwitzer by presenting evidence that the plaintiff could read and understand English, that she had the opportunity to read the document dated June 10, 2009, which expressly stated that she was accepting $200,000 “as full and final compensation for her loss of services claim,” and that she never expressed any difficulty understanding the terms of the document (see Matter of Augustine v BankUnited FSB, 75 AD3d 596, 597; Cash v Titan Fin. Servs., Inc., 58 AD3d 785, 788). In opposition, the plaintiff failed to raise a triable issue of fact as to whether she was incapable of understanding the document signed by her based on her conclusory testimony that “[n]o one . . . explained [it] to me.”

The court also affirmed dismissal of the notarial misconduct claim. (Mike Frisch)

May 14, 2017 in Clients | Permalink | Comments (0)

Friday, April 7, 2017

No Deal

The Iowa Supreme Court declined to enforce a settlement agreement in a legal malpractice matter, concluding that the evidence did not establish the mutual consent to the deal.

Because there was "no deal," the court did not address whether the disputed confidentiality provision violates ethics rules.

In this case, we are asked to determine whether the parties in a legal malpractice case entered into a binding settlement agreement, and if so, whether the settlement’s confidentiality provision would result in a violation of our rules of professional conduct. Here, following mediation, the parties agreed on what would be paid to settle the case. They also exchanged versions of a confidentiality provision to be included in the settlement agreement, although they never settled on the same version at the same time. The defendant law firm nonetheless asked the district court to enforce the settlement.

Following a hearing, the court concluded that the parties had reached a final settlement and dismissed the underlying malpractice case. Plaintiffs now appeal, arguing (1) there was no meeting of the minds on settlement; (2) the confidentiality provision in the settlement as approved by the district court restricts the right of plaintiffs’ counsel to practice law in violation of Iowa Rule of Professional Conduct 32:5.6(b); (3) the court had no authority to seal documents relating to the settlement; and (4) because the defendant law firm practices primarily in Black Hawk County, this case should have been heard by a judge from a different judicial district.

 For the reasons discussed below, we hold that the parties never mutually assented to the same settlement agreement. We therefore do not reach the question whether a confidentiality provision requiring the attorneys not to disclose the existence and terms of the settlement may violate Iowa Rule of Professional Conduct 32:5.6(b). We also conclude the district court did not abuse its discretion in sealing documents related to the parties’ mediation and follow-up negotiations or in declining to arrange for an out-of-state district judge to preside over the case.

Accordingly, we reverse the judgment enforcing the settlement, we affirm the court’s orders sealing portions of the file and declining to arrange for an out-of-district judge, and we remand for further proceedings.

 The underlying allegations of legal malpractice involved a prenuptial agreement. (Mike Frisch)

April 7, 2017 in Clients | Permalink | Comments (0)

Thursday, March 23, 2017

A Cavalier Attitude In The Bluegrass State

The Kentucky Supreme Court has denied relief to an incarcerated defendant who was convicted of biting off the ear of a fellow inmate.

The defendant was represented at trial by a public defender from the Pacudah Department of Public Advocacy.

Another attorney in the same office represented the victim in an unrelated criminal matter in which the representation concluded eight days prior to the trial of the defendant.

Defense counsel advised the court of the potential conflict on the morning of trial (with her erroneous belief that the representation of the victim was ongoing). The defendant refused to sign a waiver of the conflict of interest but the trial nonetheless went forward to conviction.

The court here found counsel was not burdened by an actual conflict of interest under these circumstances.

As to the ethics of the situation: "Attorneys ethical obligations under our Rules of Professional Conduct do not define the scope of [the defendant's] Sixth Amendment rights."

Translation: It may have been unethical, but the defendant gets no relief. 

Justice Hughes concurred and expressed concern about Pacadah DPA's "cavalier approach to shielding its clients from intra-office conflicts."

Justice Wright also concurred, opining that a public defender office need not be treated the same as a for-profit law firm for imputed conflict of interest purposes.  (Mike Frisch)

March 23, 2017 in Clients, Professional Responsibility | Permalink | Comments (0)

Tuesday, March 21, 2017

No Rule 3.7 Exception For Fee Collection Actions

An opinion of the North Carolina Court of Appeals affirms a disqualification order based on the witness-advocate rule. 

This case presents the question of whether a categorical exception to the applicability of Rule 3.7 of the North Carolina Rules of Professional Conduct exists in fee collection cases. Harris & Hilton, P.A. (“Harris & Hilton”) appeals from the trial court’s order disqualifying Nelson G. Harris (“Mr. Harris”) and David N. Hilton (“Mr. Hilton”) from appearing as trial counsel in this action based on their status as necessary witnesses. Because this Court lacks the authority to create a new exception to Rule 3.7, we affirm the trial court’s order.

The story

On 10 June 2015, Harris & Hilton filed the present action in Wake County District Court against James C. Rassette (“Defendant”) to recover attorneys’ fees for legal services the firm had allegedly provided to Defendant prior to that date. The complaint asserted that Harris & Hilton was entitled to recover $16,935.69 in unpaid legal fees. On 13 November 2015, Defendant filed an answer in which he asserted various defenses, including an assertion that no contract had ever existed between the parties.

On 10 June 2016, a pre-trial conference was held before the Honorable Debra S. Sasser. During the conference, Judge Sasser expressed a concern about the fact that Harris & Hilton’s trial attorneys — Mr. Harris and Mr. Hilton — were also listed as witnesses who would testify at trial on behalf of Harris & Hilton. After determining that Mr. Harris and Mr. Hilton were, in fact, necessary witnesses who would be testifying regarding disputed issues such as whether a contract had actually been formed, Judge Sasser entered an order on 20 June 2016 disqualifying the two attorneys from representing Harris & Hilton at trial pursuant to Rule 3.7. On 27 June 2016, Harris & Hilton filed a notice of appeal to this Court.

The issue

Harris & Hilton does not dispute the fact that (1) Mr. Harris and Mr. Hilton will both be necessary witnesses at trial; (2) their testimony will encompass material, disputed issues; and (3) none of the three above-quoted exceptions contained within Rule 3.7 are applicable. Nor does it contest the fact that a literal reading of Rule 3.7 supports the trial court’s ruling. Instead, it asks this Court to adopt a new exception based on its contention that Rule 3.7 should not be applied in fee collection actions to disqualify counsel from both representing their own firm and testifying on its behalf.

 Harris & Hilton argues that permitting a law firm’s attorney to serve both as trial counsel and as a witness in a fee collection case is no different than allowing litigants to represent themselves pro se. It is true that litigants are permitted under North Carolina law to appear pro se — regardless of whether the litigant is an attorney or a layperson. See N.C. Gen. Stat. § 1-11 (2015) (“A party may appear either in person or by attorney in actions or proceedings in which he is interested.”); N.C. Gen. Stat. § 84-4 (2015) (“[I]t shall be unlawful for any person or association of persons, except active members of the Bar . . . to practice as attorneys-at-law, to appear as attorney or counselor at law in any action or proceeding before any judicial body . . . except in his own behalf as a party thereto[.]” (emphasis added)). 

However, the present case does not involve the ability of Mr. Harris or Mr. Hilton to represent themselves on a pro se basis. Instead, they seek to represent their law firm — a professional corporation — in a suit against a third party while simultaneously serving as witnesses on their firm’s behalf as to disputed issues of fact. It is well established that an entity such as Harris & Hilton is treated differently under North Carolina law than a pro se litigant. See LexisNexis, Div. of Reed Elsevier, Inc. v. Travishan Corp., 155 N.C. App. 205, 209, 573 S.E.2d 547, 549 (2002) (holding that under North Carolina law, a corporation is not permitted to represent itself pro se).

Harris & Hilton also makes a policy argument, contending that the current version of Rule 3.7 is archaic and fails to take into account the disproportionate economic burden on small law firms that are forced to hire outside counsel to litigate fee collection cases. However, in making this argument, Harris & Hilton misunderstands the role of this Court given that it is asking us not to interpret Rule 3.7 but rather to rewrite it — a power that we simply do not possess.


we cannot say that the trial court abused its discretion by applying Rule 3.7 as written as opposed to creating a new exception that neither appears within the Rule itself nor has been recognized by North Carolina’s appellate courts. Accordingly, we affirm the trial court’s disqualification order.

(Mike Frisch)

March 21, 2017 in Clients, Current Affairs, Economics, Law & Business, Law Firms | Permalink | Comments (0)

Tuesday, March 14, 2017

Client Gets No Refund When Attorney Withdraws For Cause

The Tennessee Court of Appeals held that a former client was not entitled to a partial fee refund, reversing the holding of the trial court and allowing the law firm to keep the full retainer.

Xingkui Guo signed a contract, structured as an engagement letter, with the Law Offices of Woods & Woods (“the Firm”), on June 15, 2014, for the Firm to represent him in an ongoing lawsuit against two of his former employees. Allen Woods, an attorney with the Firm, had primary responsibility for Mr. Guo’s case.

The client paid a flat fee of $7,000 and agreed to an additional fee of 1/3 of any amounts recovered in the litigation minus the retainer.

The agreement further provided

The contract further states: “[The Firm] may terminate this representation at any time, for good cause . . . .” Upon signing the engagement letter, Mr. Guo paid the Firm $7,000, and the Firm began its representation of Mr. Guo.


A disagreement arose between Mr. Woods and Mr. Guo beginning in early October 2014. After Mr. Woods conducted phone interviews with two third-party witnesses, he strongly advised Mr. Guo against taking their depositions because he thought their testimony would hurt Mr. Guo’s case and because he thought it would be unethical to depose the witnesses under the circumstances. When Mr. Guo insisted that Mr. Woods depose these two witnesses, Mr. Woods withdrew as Mr. Guo’s attorney

Mr. Guo sued for breach of contract.

The trial court

 Defendant admits that it refused to take the depositions of these witnesses, but states that it refused to take the depositions because to do so would violate Rule of Professional Conduct 1.2(d) and would further the Plaintiff’s ulterior motive to take those depositions for a fraudulent purpose not related to the litigation. The Defendant requests that the Court rule it is entitled to the entirety of the $7,000.00 fee the Plaintiff previously paid it. In support of its argument, the Defendant offers evidence that its attorneys performed 20.4 hours of work on the Plaintiff’s lawsuit. Plaintiff requests $22,000.00 in damages for this alleged breach of contract. Based on the evidence presented at trial, the Court makes the following findings of fact: 

The Defendant had justifiable reasons to refuse to take the depositions of the third party witnesses because the Defendant reasonably believed that to do so would violate Rules of Professional Conduct; and 

The 20.4 hours of work the Defendant performed on the Plaintiff’s case is overblown.

Based on these findings of fact, the Court hereby rules that the Plaintiff is entitled to a judgment of $3,500 against the Defendant.

The court here

We next consider the Firm’s argument that the trial court erred in entering judgment in favor of Mr. Guo because it did not find that the Firm breached the contract. We agree. The trial court expressly found that Mr. Woods “had justifiable reasons to refuse to take the depositions of the third party witnesses because [Mr. Woods] reasonably believed that to do so would violate Rules of Professional Conduct.” The trial court’s order does not include a statement that the Firm breached the contract. Instead, the trial court’s finding that Mr. Woods had “justifiable reasons” for refusing to take the depositions suggests that the Firm did not breach the contract. Thus, the trial court erred in entering judgment in favor of Mr. Guo.

Rather, the winner is the law firm

We find that the evidence preponderates against the trial court’s finding that Mr. Woods’s hours spent on the case were “overblown.” Mr. Woods’s written summary and testimony support the hours he claims to have spent on the case. His set fee was reasonable in light of his qualifications and experience, Mr. Guo’s concerns about paying an hourly rate, the time and labor required, the likelihood of collecting on the judgment, and the fees typically charged in the local legal market for similar services.

We conclude that the trial court erred in awarding Mr. Guo $3,500 because he was not entitled to the return of any of the $7,000 he paid to the Firm.

(Mike Frisch)

March 14, 2017 in Clients | Permalink | Comments (0)