Thursday, May 23, 2019
The Connecticut Appellate Court has held that a self-represented lawyer or law firm may not recover attorneys fees in litigation.
The attorney had received an award in arbitration
On March 3, 2014, the plaintiff petitioned the legal fee resolution board of the Connecticut Bar Association (board) to resolve a fee dispute that had arisen between the parties. On December 24, 2014, a panel of three arbitrators found that the plaintiff was owed $109,683 in fees for its representation of the defendant. The plaintiff subsequently filed an application to confirm the arbitration award in the Superior Court, which the court, Scholl, J., granted on March 17, 2015. The defendant appealed to this court, which affirmed the trial court’s judgment confirming the arbitration award, and our Supreme Court denied the defendant’s petition for certification to appeal. See Rosenthal Law Firm, LLC v. Cohen, 165 Conn. App. 467, 473, 139 A.3d 774, cert. denied, 322 Conn. 904, 138 A.3d 933 (2016). Attorney Edward Rosenthal, the sole member of the plaintiff, represented the plaintiff throughout the proceedings before the board and in the trial and appellate courts.
The attorney then sued for his fees relying on the retainer agreement
the plaintiff claimed that it had incurred $59,600 in ‘‘legal fees’’ in connection with the arbitration and related court proceedings, which reflected the time spent by Rosenthal on these matters.
The trial court relied on precedent
The plaintiff’s sole claim on appeal is that the trial court erred in determining that the law barring self represented non attorney litigants from recovering statutory attorney’s fees also precludes a self-represented law firm from recovering contractual attorney’s fees.
The court here rejected the suggestion that the precedent was dictum
The court intentionally took up and analyzed the issue and concluded that the general rule announced in Lev would bar the plaintiff attorneys in Jones from recovering attorney’s fees. Although the court discussed the issue only briefly, there is nothing in its opinion or the record to suggest that its conclusion was less carefully reasoned than it might otherwise have been. In sum, the court’s conclusion cannot reasonably be characterized as a merely casual, passing comment made without analysis or due consideration of conflicting authorities. It is clear that the court made a deliberate decision to resolve this issue and that it undeniably decided it. Accordingly, the court’s conclusion that self-represented attorney litigants cannot recover attorney’s fees constitutes an alternative holding, not dictum.
A firmly-held view
we need not determine whether the plaintiff’s status as a law firm litigant renders this case materially distinguishable from Jones, which involved attorney litigants. We note, however, that among the courts that have considered these issues in jurisdictions in which self represented attorney litigants are barred from recovering attorney’s fees, the majority agree that there is no meaningful distinction between solo practitioners who represent themselves and law firms that are represented by their own attorneys.
Wednesday, May 22, 2019
The Massachusetts Supreme Judicial Court vacated a judgment of dismissal of a legal malpractice claim
In the summer of 2008, after the plaintiff and Michelle Barnes decided to marry, they "collaboratively" drafted a "Google [d]oc" to "identify [their] premarital assets and debts and to define [their] mutual rights and obligations regarding property and finances after" marriage. The Google doc contained a section titled "Real Estate Bought for Cash," which provided that "[i]f one partner's savings are used to purchase real estate with no mortgage, the other partner will accrue a 2.5 percent ownership interest in the real estate every year after the purchase, assuming the marriage is intact, up to a maximum ownership interest of 50 percent." The plaintiff and Barnes clarified the intended operation of the provision with an example: "A house is purchased in 2010 . . . and paid for entirely from [the plaintiff's] money market funds. In the event of a divorce in 2020, [Barnes] would receive 25 percent of the value of the house. In the event of a divorce in 2030 or after, the house equity would be split 50/50."
In August 2008, Barnes hired attorney Karen Kearns to draft an antenuptial agreement based on the Google doc. The plaintiff hired the defendant Leon C. Boghossian, III, on September 8, 2008, and noted that Kearns was to "turn this Google document into a standard pre-nup." The plaintiff told "Boghossian that one of the most important terms in the Google doc was a section entitled on [sic] 'Real Estate Bought for Cash.'"
Several drafts of the antenuptial agreement thereafter circulated among Kearns, Barnes, the plaintiff, and Boghossian. The plaintiff reviewed the drafts and sent his feedback to both attorneys, but he relied on Boghossian "to create a document that implemented the terms of the Google [d]oc and protected [his] interests." On October 3, 2008, the plaintiff and Barnes executed the final version of the antenuptial agreement. Article III, paragraph 12 (paragraph 12) of the antenuptial agreement -- the relevant text of which is reproduced in the margin -- detailed the plaintiff's and Barnes's respective ownership interests in a principal residence acquired during the marriage in various factual circumstances.
The couple proceeded to marry, purchase a home, have a child and get divorced.
On October 5, 2008, the plaintiff and Barnes married. Two days later, on October 7, 2008, the plaintiff used his separate property to buy a house in Lincoln for $1.4 million (house), taking title in his name alone. The house became the plaintiff's and Barnes's principal residence during their marriage. The couple had a baby in August 2009. Barnes filed for divorce on September 29, 2011. During the divorce proceedings, Barnes challenged the validity of the antenuptial agreement. A Probate and Family Court judge (probate judge) found the antenuptial agreement valid, and determined that paragraph 12(c)(iv) (rather than paragraph 12[a]) applied to the couple's respective rights in the house, because the couple had a minor child and both the plaintiff and Barnes wished to retain the house. The probate judge ordered that Barnes could buy out the plaintiff's interest in the house for $727,500. Had the provisions of paragraph 12(a) (which incorporated the equity accrual provisions set forth in the Google doc) been applied, Barnes's interest in the house would have been only 7.5 percent, instead of fifty percent. Barnes completed her purchase of the plaintiff's interest in the house by making the $727,500 payment in July 2014.
Plaintiff sued for malpractice. The trial court held he needed a causation expert.
The court disagreed
We conclude that the motion judge erred in ruling that the plaintiff was required to present expert evidence on the issue of causation in the form of an opinion that the antenuptial agreement would have been determined valid if drafted in accordance with the equity accrual provisions set forth in the Google doc.11 We therefore vacate the judgment and remand for additional proceedings consistent with this opinion.
Tuesday, March 26, 2019
The Wisconsin Supreme Court rejected a call to expand malpractice liability in third party beneficiary cases.
We conclude that the narrow Auric exception to the rule of nonliability of an attorney to a non-client applies to the administration of an estate in addition to the drafting and execution of a will. That is, a non-client who is a named beneficiary in a will has standing to sue an attorney for malpractice if the beneficiary can demonstrate that the attorney's negligent administration of the estate thwarted the testator's clear intent.
Applying Auric to the facts of this case, we determine that Charles MacLeish's clear testamentary intent was not thwarted by any alleged negligence on the part of Boardman. As a result, we conclude that the MacLeish children's claim against Boardman for legal malpractice was properly dismissed.
MacLeish died in 1984 leaving a one-page will.
Attorney Forrest Hartmann, a former partner of the will's drafter, and subsequently a member of the Boardman firm, handled the administration of the estate. He advised Thelma MacLeish, Charles's wife, to claim full use of the federal estate tax marital deduction.
Thelma followed Attorney Hartmann's advice and treated all the assets of Charles's estate as though they passed directly to her. She also claimed a federal estate tax marital deduction for those assets.
The effect of this action was that Charles's estate was not subject to estate tax in 1984. Instead, the assets that had been in Charles's estate would be subject to estate tax at the time of Thelma's death.
Thelma followed Charles in 1988. The heirs were concerned about the tax advice.
The circuit court entered summary judgment to the defendants which was affirmed by the Court of Appeals
We are asked to review whether the MacLeish children have standing to bring this legal malpractice action against Boardman. A determination of standing presents a question of law reviewed independently of the determinations rendered by the circuit court and court of appeals.
The MacLeish children contend that the Restatement presents a better approach than the well-established general rule of nonliability and the Auric exception. They argue that broad immunity for attorneys from claims by non-clients is bad public policy. In their view, the Restatement provides a workable standard that narrows such immunity.
Adopting the Restatement as the MacLeish children urge would significantly change the general rule of attorney nonliability to non-clients. In the context of this case, adopting the MacLeish children's position would result in the elimination of the specific requirement that a third party beneficiary demonstrate that the testator's clear intent was thwarted in order to proceed with a legal malpractice claim.
The court squarely rejected this approach but
We therefore conclude that the narrow Auric exception to the rule of nonliability of an attorney to a non-client applies to the administration of an estate in addition to the drafting and execution of a will. That is, a non-client who is a named beneficiary in a will has standing to sue an attorney for malpractice if the beneficiary can demonstrate that the attorney's negligent administration of the estate thwarted the testator's clear intent.
The Auric exception
the Auric exception and cases interpreting it are grounded in the constitutional right to make a will and have it carried out according to the testator's intentions.
...when presented with the opportunity in the past, we have been reluctant to expand attorney liability to non-clients in the estate planning context. For example, in Tensfeldt we concluded that "[e]xtending the Auric exception to attorneys who give negligent advice stretches the exception too far." Tensfeldt, 319 Wis. 2d 329, ¶77. The court was explicit in its instruction that the Auric exception "is a narrow one."
The proof here was insufficient to establish a thwart. (Mike Frisch)
Sunday, March 3, 2019
The Connecticut Appellate Court has held that a client (here, an estate) does not have standing to appeal the resolution of a fee dispute between its former attorneys so long as the total fee is not affected.
On August 29, 2012, Connor Kusmit was riding a bicycle when he was struck by a vehicle operated by Christina Groumousas. He died as a result of the collision. On September 20, 2012, the plaintiffs signed a retainer agreement with the defendant’s law firm, which provided that the law firm was to represent them, on behalf of the estate, in connection with their claim for damages ‘‘resulting from an event which occurred on or about the 29th day of August, 2012 at Clintonville Rd. North Haven.’’ The plaintiffs agreed to pay the defendant’s law firm one third of the gross amount recovered. The defendant subsequently settled a wrongful death claim against Groumousas for $50,000, and the Probate Court approved the settlement on July 16, 2013.
New counsel then brought an uninsured motorist claim
the Probate Court also authorized [successor counsel] Mills’ settlement of the underinsured motorist claim for $200,000. Thereafter, the defendant notified the Probate Court that he was claiming a portion of the $66,666.67 in attorney’s fees that Mills sought from the $200,000 underinsured motorist claim settlement (disputed fees).
After a hearing held on May 4, 2015, at which only the defendant appeared, the Probate Court entered an order allocating $40,000 of the disputed fees to the defendant and the remaining $26,666.67 to Mills, from which the plaintiffs subsequently appealed to the Superior Court. Following a trial de novo held on January 20, 2017, the Superior Court awarded the defendant $40,000 in fees and ordered Mills, who was holding the disputed funds, to disburse that amount to the defendant and return to the estate $26,666.4 This appeal followed.
we conclude that the plaintiffs are not aggrieved by the judgment of the Superior Court, and, thus, the plaintiffs do not have standing to appeal from that judgment.
Thursday, February 14, 2019
A staff report on the web page of the Ohio Supreme Court
The Ohio Board of Professional Conduct has issued an advisory opinion concerning the representation of current or former clients in unrelated matters when the clients are directly opposed.
Advisory Opinion 2019-01 replaces a 1988 opinion concerning a lawyer’s representation of employers in workers’ compensation matters when the lawyer represents the claimant employee in unrelated matters.
The former opinion also addressed whether a lawyer may withdraw from the representation of the claimant employee in order to undertake the more profitable representation of the employer. The opinion analyzes the same questions previously posed to the board, but under the current Rules of Professional Conduct.
In the new opinion the board reiterates that absent informed written consent of the client, lawyers may not represent clients who will be directly adverse to another client the lawyer is representing in an unrelated matter.
The board finds that the situation creates a conflict of interest because there is a substantial risk that the lawyer’s duties to one client may be materially limited by the responsibilities to the adverse client or the lawyer’s own personal interests.
Ohio courts and other jurisdictions have historically declined to uphold a practice, known as the “hot potato” doctrine, in order that the lawyer or law firm may undertake the representation of a new client under a less-stringent conflict of interest analysis. The board consequently holds that a withdrawal from representation under the “hot potato” doctrine is not ethically appropriate and does not constitute “good cause” for withdrawal under the conduct rules.
The opinion also addresses questions concerning the representation of clients involving former clients in matters that are not substantially related and the ability of lawyers to recommend other lawyers to prospective clients when the lawyer is unable to undertake representation due to a conflict of interest.
Monday, February 4, 2019
A newly-released opinion of the District of Columbia Bar Legal Ethics Committee
Ethics Opinion 376
Mandatory Arbitration Provisions in Fee AgreementsFee agreements containing mandatory arbitration provisions are "ordinary fee arrangements," and the requirements of Rule 1.8 which addresses business transactions between lawyers and clients do not apply. The standard for obtaining client consent to fee agreements containing mandatory arbitration provisions is set forth in Comment  to Rule 1.8, and Legal Ethics Opinions 211 and 218 are superseded by Comment  and this opinion.
Wednesday, November 21, 2018
The New York Appellate Division for the Second Judicial Department reversed the grant of summary judgment to a defendant law firm in a legal malpractice action
On November 4, 2011, the plaintiff, a pedestrian, allegedly was injured when he was struck by a motor vehicle. Thereafter, the plaintiff retained the defendant law firm, Lozner & Mastropietro, P.C. (hereinafter the law firm), to represent him in connection with the accident, and the law firm commenced an action on behalf of the plaintiff against the operator of the vehicle. In January 2017, the plaintiff commenced this action against the law firm and two of its principals, inter alia, to recover damages for legal malpractice. The plaintiff alleged that the driver of the offending vehicle was working for Domino’s Pizza, LLC (hereinafter Domino’s), making a pizza delivery at the time of the subject accident, and that the defendants were negligent in failing to timely commence an action against Dominos. The defendants moved pursuant to CPLR 3211(a) to dismiss the complaint. In the order appealed from, the Supreme Court, inter alia, granted that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(7) to dismiss the first cause of action to recover damages for legal malpractice.
There is a claim properly alleged
The evidentiary submissions did not establish that a material fact alleged in the complaint is not a fact at all and that no significant dispute exists regarding it (see Bodden v Kean, 86 AD3d at 526). Contrary to the defendants’ contention, the plaintiff was entitled to commence this legal malpractice action even though the underlying personal injury action was still pending, as the legal malpractice action accrued, at the latest, in November 2014 (see Johnston v Raskin, 193 AD2d 786, 787).
Sunday, November 11, 2018
A disinherited son lost his legal malpractice case in the Idaho Supreme Court which affirmed the grant of summary judgment by the district court.
The court considered a matter of first impression: the problem of a "hypothetical appeal."
Thomas Lanham (Thomas) appeals from the district court’s dismissal of his legal malpractice action against his former attorney, Douglas Fleenor (Fleenor). Fleenor represented Thomas in a will contest regarding the will of Gordon Lanham (Gordon), Thomas’s father. After the magistrate court ruled against Thomas at the summary judgment stage, Fleenor filed an untimely appeal, which was rejected on that basis.
Because the appeal brought by Fleenor was untimely, Thomas brought a legal malpractice action against Fleenor in district court. Thomas alleged that the failure to timely appeal the magistrate’s ruling proximately caused him financial loss because he had a meritorious appeal that he never got to pursue due to Fleenor’s negligence.
The facts in this case are largely undisputed. On November 16, 2010, Gordon began dictating his Will via an audio recording device. Gordon recorded his Will intermittently on nine separate days, concluding on January 7, 2011. On January 19, 2011, the ten dictated paragraphs were transcribed into his written Will. On February 19, 2011, the Will was signed, witnessed, and notarized. Thomas has not contested the validity of the Will.
In his Will, Gordon explicitly limited the inheritance of Thomas and Thomas’s brother Keith Lanham to one dollar and one wooden bed each.
After Gordon died
Thomas later retained Fleenor to challenge certain portions of the Will. Fleenor filed a motion for summary judgment arguing that the Will failed to properly dispose of the residue of Gordon’s estate (including the subject properties); the effect of which would mean any property not specifically devised would pass to Thomas and Keith as Gordon’s intestate heirs. In response, Judd, acting on behalf of Gordon’s estate, filed a cross-motion for summary judgment arguing Thomas’s claim should be dismissed because Gordon’s intent to disinherit his sons was clear and the Will fully and properly disposed of all of Gordon’s property.
When Thomas lost
Fleenor filed a notice of appeal to the district court on August 13, 2014, forty-nine days after the magistrate’s written judgment was filed. (The time for filing an appeal is forty-two days. I.R.C.P. 83(b)(1)(A).) The district court dismissed the appeal as untimely and found that the June 20, 2014 motion to reconsider did not toll the period for appeal, because the magistrate’s written decision was filed after the motion for reconsideration was filed.
the district court ruled that a determination of whether an underlying, unperfected appeal would have been successful, if pursued in a timely way, was a question of law for the court to decide. (An unperfected appeal giving rise to a legal malpractice suit will be referred to in this decision as a “hypothetical appeal.”)
The court here found that the attorney was properly awarded summary judgment by the district court
Although this Court has decided many legal malpractice cases, it does not appear to have decided one in which the basis for the legal malpractice claim was an unperfected appeal. Consequently, we must decide, as a matter of first impression, if the potential success of a hypothetical appeal is an issue of fact to be decided by a jury, or rather is it a question of law for the court to decide. We conclude, as have twenty-eight other jurisdictions (twenty-seven states and the District of Columbia, 4 RONALD E. MALLEN, LEGAL MALPRACTICE § 33:118 at n.9 (2018 ed.)), that it is a question of law to be decided by the court.
An appeal would have lost
In reviewing the tripartite test set out in Krokowsky each component has been met. Gordon intended to create an unfettered power allowing Judd to distribute his estate “in any way he sees fit”; he granted the authority to his “friend and cousin” Judd Lanham; and he specified the property over which the power existed: “all my personal and real property” not bequeathed in the Will.
The fact that Gordon also clearly and unequivocally disinherited Thomas in the Will supports the conclusion that Gordon intended to convey a general power of appointment to Judd and that he did not want the residue go to Thomas. As Gordon wrote in his Will:
Thanksgiving is over and I just wanted to add to this program that my son, Thomas Everett Lanham, 48 years old, has already been given all he needs to have and that I am going to leave $1 more dollar [sic] against whatever is legal to him and then he is going to be on his own.
Giving Gordon’s Will the technical interpretation Thomas suggests would only frustrate Gordon’s intent.
Thomas is not obligated to pay attorney's fees
In this case, Thomas is not asking this Court to second-guess evidence or findings of fact. The core issue turns on an unsettled question of law. The issue before this Court is a matter of first impression. The Will did not include the phrase “power of appointment.” It was therefore reasonable for Thomas to appeal in order to have an unsettled question of law answered.
Consequently, Fleenor’s request for attorney’s fees is denied.
Shout out to Mike Oths and Concordia Law students who make up our Idaho readership. (Mike Frisch)
Monday, November 5, 2018
A lawsuit to collect unpaid legal fees was governed by Nevada rather than California law, according to a recent decision of the Nevada Supreme Court.
The client relied on a conflict to deny his obligation to pay
Edward Stolz owns several radio stations and other business interests. In 2012, Stolz approached Robert Schumacher, an attorney in Gordon Rees Scully Mansukhani LLP's (Gordon & Rees) Las Vegas office, about potentially representing him and some of his entities in pending litigation in Nevada. One of the matters they discussed was a lawsuit in California alleging Stolz's stations had not paid for the rights to the music it broadcasted. They additionally discussed whether Stolz could be indemnified by his insurance company. Stolz said that his insurer was The Hartford (Hartford), but that he did not have a policy that would indemnify him. Schumacher advised Stolz that Hartford was a Gordon & Rees client, and that the firm could not represent Stolz in any litigation against Hartford; however, Gordon & Rees could write Hartford a letter requesting that it assume Stolz's defense in that lawsuit. Gordon & Rees advised Stolz that if it wrote Hartford a letter, and Hartford denied the request, Stolz would have to seek other counsel if he wished to pursue Hartford further. When Hartford denied the request, Stolz hired an insurance coverage attorney recommended by Gordon & Rees, but never pursued litigation.
The client counterclaimed alleging malpractice but that claim was dismissed on statute of limitations grounds. The law firm prevailed in a jury trial.
On choice of law
We conclude that the district court correctly applied Nevada law. The incident in question—whether Gordon & Rees should have disclosed the Hartford conflict in writing before representing Stolz— occurred in Nevada. The fee agreement, in fact, was signed by the managing partner in Gordon & Rees's Las Vegas office. Additionally, Nevada has an interest in regulating Nevada attorneys and adjudicating disputes for Nevada businesses. Nevada and California have the same public policy interest here because the guidelines for the ethical conduct at issue are virtually the same in both states.
Moreover, Nevada did not adopt the ABA model rules choice of law provision, which would have required that conduct in connection with a matter pending before a tribunal be governed by the rules of the jurisdiction in which the tribunal sits, even though Nevada did adopt the ABA jurisdictional rule. Compare RPC 8.5, with Model Rules of Profl Conduct r. 8.5 (Am. Bar Ass'n 2017). The district court was correct in noting this when determining not to use the California Rules of Professional Conduct as jury instructions. Accordingly, we conclude the district court was correct in applying Nevada law.
The case is ROYCE INT'L BROAD. CORP. VS. GORDON & REES, LLP C/W 72148. (Mike Frisch)
Friday, September 7, 2018
The Louisiana Supreme Court has reversed a murder conviction, finding that defense counsel's concession of guilt over the defendant's objection amounted to ineffective assistance of counsel
During the trial, defense counsel conceded defendant killed [12 year old victim] Justin. However, defense counsel argued that the jury could not find defendant guilty of first-degree murder because the state failed to prove defendant had specific intent to kill and failed to prove defendant was engaged in an aggravated kidnapping or a second degree kidnapping when Justin died. The defense rested in the culpability phase of the trial without calling any witnesses.
A unanimous jury found defendant guilty of first-degree murder and determined defendant should be sentenced to death.
The court cited the recent United States Supreme Court decision in McCoy v. Louisiana, -- U.S. --, 138 S. Ct. 1500 (2018).
In this case, Mr. Horn argues his Sixth Amendment right to counsel was violated when his attorney conceded his guilt over his explicit objection. The record demonstrates that defendant’s attorney admitted that defendant killed Justin and also suggested to the jury that the evidence supported a finding that he molested, or attempted to molest Justin. Counsel specifically told the jury he was not asking them to find defendant “not guilty,” and further stated that the facts fit second-degree murder or manslaughter. The record further demonstrates that Mr. Horn disagreed with his counsel’s decision to concede guilt as part of the defense strategy and that defendant made the district court aware of the disagreement both before and during the trial...
In this court, defendant asserts the Supreme Court’s decision in McCoy is dispositive and requires a reversal of his conviction. By contrast, the state suggests McCoy is not controlling in this case because defendant did not claim outright innocence and instructed his attorneys to make an argument for accidental killing under the negligent homicide statute. After review of the record and considering the Court’s decision in McCoy, we reject the state’s argument and decline to restrict application of the holding in McCoy solely to those cases where a defendant maintains his absolute innocence to any crime. McCoy is broadly written and focuses on a defendant’s autonomy to choose the objective of his defense. Although Mr. McCoy’s objective was to pursue a defense of innocence by presenting an alibi defense, Mr. Horn’s objective was to assert a defense of innocence to the crime charged and the lesser-included offenses, i.e. asserting his innocence to any degree of murder. Mr. Horn was charged with first-degree murder. The only verdicts the jury was permitted to enter were “guilty,” “guilty of second degree murder,” “guilty of manslaughter,” or “not guilty.” See La. C.C.P. art. 814. The jury would not have been permitted to enter a plea relative to negligent homicide. The fact that defendant instructed his attorney to admit guilt to this different crime as part of his defense objective did not give defense counsel the authority to admit guilt to the crime charged or the lesser-included crimes, and does not cause us to disregard the holding of McCoy. While defense counsel may use his professional judgment to develop defense theories and trial strategies based on his assessment of the evidence, he cannot usurp the fundamental choices provided directly to a criminal defendant under the Constitution.
Chief Justice Johnson authored the opinion. Justice Weimer concurred and wrote on the sufficiency of evidence for first degree murder. (Mike Frisch)
Monday, July 30, 2018
The Utah Supreme Court took away significant damages awarded to a legal malpractice plaintiff
Erik Highberg, a personal injury attorney for Gregory & Swapp, PLLC, failed to bring a claim against two truck drivers who severely injured Mr. Highberg’s client, Jodi Kranendonk, before the statute of limitations ran on Ms. Kranendonk’s claim. Mr. Highberg then failed to disclose to Ms. Kranendonk for ten months the fact that he missed the statute of limitations. During that time, he sought other legal avenues to correct his mistake. Ms. Kranendonk ultimately sued Mr. Highberg and Gregory & Swapp (collectively, the Swapp Defendants) for legal malpractice, breach of contract, breach of fiduciary duty, and negligent hiring, training, and supervision.
At trial, Mr. Highberg testified that he withheld information from Ms. Kranendonk because he wanted to protect her from stress and worry. In response to this testimony, she sought to admit two statements in which he had written that she was becoming “a pain [in] the ass” and was “a moron.” The district court refused, under rule 403 of the Utah Rules of Evidence, to admit these statements and the trial went forward.
The four claims ultimately went to a jury, which found in favor of Ms. Kranendonk on each. The jury first awarded her $750,000, the amount the jurors believed she would have received if Mr. Highberg had timely brought her personal injury claim against the truck drivers. The jury also awarded her $2.75 million for non-economic damages, i.e., emotional distress she sustained as the result of Mr. Highberg’s malpractice in this case. This second award did not relate in any way to the emotional distress she sustained from the original personal injury. The jury did not award punitive damages.
After the jury’s decision, Ms. Kranendonk moved for attorney fees and litigation expenses on the ground that the Swapp Defendants had breached their fiduciary duties. The district court awarded her $1,166,666.67 in attorney fees—the amount she owed under her contingency fee agreement—but did not award her litigation expenses.
The court vacated both the non-economic damages and attorney fees.
Because the nature and language of the contract in this case do not show that emotional distress damages were explicitly contemplated by the parties, the district court erred in upholding the $2.75 million jury award for non-economic damages under a breach of contract theory.
...we hold that the jury had no evidence upon which to base its verdict that Ms. Kranendonk suffered emotional distress damages as a result of Mr. Highberg’s intentional concealment and, therefore, the district court erred in dismissing the Swapp Defendants’ motion for JNOV under a breach of fiduciary duty theory. And because the $2.75 million jury award for non-economic damages is not supported under either a breach of contract or breach of fiduciary claim in this case, we vacate it.
...We also vacate the district court’s award of $1.666,667.67 in attorney fees because Ms. Kranendonk’s breach of fiduciary duty claim—the only claim that could support this award—failed. And we hold that her claim on cross-appeal for litigation expenses also fails for the same reason.
The court rejected her claims based on exclusion of the "pain in the ass/moron" evidence
we decline to reach Ms. Kranendonk’s challenge of the district court’s decision to exclude Mr. Highberg’s two statements. Ms. Kranendonk seeks the admission of these statements in order to support her prayer for punitive damages. But because her breach of fiduciary duty claim fails, punitive damages cannot be awarded in this case regardless of our decision on this issue. So the issue is moot.
Friday, June 29, 2018
A legal malpractice claim failed due to the application of a shorter (Pennsylvania) rather than longer (New Jersey) statute of limitations, according to a decision of the New Jersey Appellate Division
Plaintiff MTK Food Services, Inc. alleges defendants, attorney Richard Grungo, Jr. and his former firm, Archer & Greiner, P.C. (Archer), committed legal malpractice regarding an insurance claim for fire damage at plaintiff's restaurant.
The fire occurred in the little town of Bethlehem Pennsylvania
We agree with appellants that the trial court erred in concluding the New Jersey statute of limitations applied to this case. The only pertinent connection to New Jersey – that Grungo, a New Jersey licensed attorney, worked in a New Jersey office – falls short of establishing a substantial interest for New Jersey to apply its statute of limitations here. All other relevant facts point to Pennsylvania: the fire and resulting loss occurred in Pennsylvania; plaintiff is incorporated in Pennsylvania; Robbins enlisted Grungo because he is licensed in Pennsylvania; and Grungo filed the underlying complaint in Pennsylvania...
Furthermore, as the New Jersey State Bar Association contends in its amicus brief, applying New Jersey's six-year statute of limitations here would frustrate the purpose of adopting the substantial-interest test and defy public policy. In McCarrell, the Court explained that the substantial-interest test: "places both this State's and out-of-state's citizens on an equal playing field, thus promoting principles of comity; advances predictability and uniformity in decision-making; and allows for greater certainty in the expectations of the parties." McCarrell, 227 N.J. at 593. If Robbins had obtained assistance from an attorney in Pennsylvania, the Pennsylvania statute of limitations would apply without question. That Robbins sought assistance from an attorney, who holds a New Jersey license and works in New Jersey, bears no relation to the malpractice allegation and therefore should not change the outcome here. To hold otherwise would subject New Jersey attorneys also practicing in other states to disparate, unfair treatment.
We would not want unfair treatment to New Jersey attorneys. (Mike Frisch)
Tuesday, June 26, 2018
A legal malpractice claim against two law firm survived summary judgment per the New York Appellate Division for the First Judicial Department
The complaint sufficiently alleges a claim for legal malpractice against both the Budin defendants and the Neimark defendants as plaintiff has sufficiently met the minimum pleading requirements (see Schwartz v Olshan Grundman Frome & Rosenzweig, 302 AD2d 193, 198 [1st Dept 2003]).
The Budin defendants, as successor counsel, had an opportunity to protect plaintiff's rights by seeking discretionary leave, pursuant to General Municipal Law § 50-e(5), to serve a late notice of claim. Whether the Budin defendants would have prevailed on such motion will have to be determined by the trier of fact (see Davis v Isaacson, Robustelli, Fox, Fine, Greco & Fogelgaren, 284 AD2d 104 [1st Dept 2001], lv denied 97 NY2d 613 ; F.P. v Herstic, 263 AD2d 393 [1st Dept 1999]). We do not find this determination to be speculative given that Supreme Court will weigh established factors in exercising its General Municipal Law § 50-e(5) discretion (see e.g. Rodriguez v City of New York, 144 AD3d 574 [1st Dept 2016]; Matter of Strohmeier v Metropolitan Transp. Auth., 121 AD3d 548 [1st Dept 2014]).
We agree with plaintiff's argument that the Neimark defendants' failure to serve a timely notice of claim, as of right, on the New York City Department of Education in the underlying personal injury action remains a potential proximate cause of his alleged damages. Plaintiff has a viable claim against the Neimark defendants despite the fact that the Budin defendants were substituted as counsel before the expiration of time to move to serve a late notice of claim. Thus, the Budin defendants' substitution can only be deemed a superseding and intervening act that severed any potential liability for legal malpractice on the part of the Neimark defendants if a determination is made that a motion for leave to serve a late notice of claim would have been successful in the underlying personal injury action (see Pyne v Block & Assoc., 305 AD2d 213 [1st Dept 2003]).
Thursday, June 7, 2018
The District of Columbia Court of Appeals has held that a law firm's fraud claim against a former client for alleged misrepresentations regarding fee payments survives the resolution of the unpaid fees awarded by the Bar's Attorney Client Arbitration Board ("ACAB").
Appellant Ludwig & Robinson PLLC ("L&R" or "the law firm") appeals from the Superior Court‘s dismissal of its claims alleging fraud and conspiracy by defendants/appellees BiotechPharma, LLC ("BTP"), BTP‘s wholly-owned subsidiary Converting Biophile Laboratories, Inc ('CBL"), BTP‘s principal Raouf Guirguis (together, the "BTP defendants"), and Martin Kalin (alleged to be a BTP lender "who has held himself out" as BTP‘s "Executive Vice President." For the reasons set out below, we reverse and remand.
L&R‘s complaint alleges that in 2011, BTP engaged the law firm‘s services to provide the company with "advice and representation regarding cross-border intellectual property claims." The engagement, which entailed extensive motions practice in the Eastern District of Virginia (the "Rocket Docket") and elsewhere as well as depositions and interviews "across the country and overseas," began after Kalin contacted L&R seeking representation for the company.
There were a series of retainer agreements as unpaid bills mounted.
On January 31, 2013, after attempts to collect payment proved unsuccessful, L&R brought suit in the Superior Court, suing BTP for breach of contract (Count I); CBL and Guirguis for breach of guarantee (Count II); each of the BTP defendants for "Failure to Pay Accounts Stated" (Count III); and all defendants for fraud (Count IV), and conspiracy (Count V). The complaint alleges that as of June 5, 2012, BTP had incurred but failed to pay hourly fees of $1,233,683.08, a "success fee' of $358,659.96, and expenses of $196,605.67, for a total of $1,788,948.71.
Here, the L&R-BTP relationship was an open-ended engagement; i.e., it had no fixed termination date. L&R‘s complaint alleges that the law firm reserved the right to "move to withdraw absent payment" and threatened to invoke that right when confronting Guirguis and Kalin about BTP‘s failure to pay billed amounts. The complaint further alleges that during those conversations, BTP (through Guirguis) and Kalin induced L&R to continue providing legal services to BTP under modified engagement letters, and thus not to withdraw, through false statements about payment sources available to pay the law firm‘s bills (e.g., CBL‘s purported credit line) and through omissions about "the fact and magnitude of liens" against BTP, loans by Kalin to BTP, and BTP‘s level of "indebtedness." In the context of these alleged transactions, the defendants/appellees had a duty independent of the subsequent modified engagement letters to "state truly"what "they told the law firm and also not to suppress or conceal any facts within [their] knowledge which would materially qualify those [representations] stated."
The scope of the ACAB authority
Under the rules of then ACAB, that body‘s jurisdiction is limited to disputes "about the fee paid, charged, or claimed for legal services." D.C. Bar Att‘y-Client Arb. Bd. R. 3 (b). In addition, the Superior Court did not find, and none of the parties has argued that, Kalin is a privy of any of the BTP defendants such that he could be bound by the ACAB decision to which the BTP defendants were subject. For those reasons, the ACAB arbitration decision did not have res judicata effect as to L&R‘s claims sounding in fraudulent inducement and civil conspiracy against the BTP defendants, and likewise is not a res judicata bar with respect to any claim against Kalin.
In this case, the amount L&R billed BTP for legal services under the second modified engagement letter is some measure of what the law firm could have earned if the lawyers involved had withdrawn from representing BTP and taken on work for another or other clients. As L&R has suggested, its damages (if any) in this regard were likely "up to" rather than equivalent to the billed $1.8 million, because that amount was billed for what L&R has asserted was "round-the-clock work" and also because it included a success fee ($358,659.96) that the law firm would not necessarily have earned through other engagements, as well as expenses ($196,605.67, for, inter alia, "depositions and interviews across the country and overseas") the law firm would not necessarily have incurred in representing other clients. Whatever L&R might be able to prove in the way of "damages . . . up to the claimed 1.8 million dollars," the point we make here is that L&R‘s inclusion of a prayer to recover such an amount as damages for alleged fraudulent inducement does not necessarily require a conclusion that the law firm is attempting to recharacterize a contract claim as a fraud claim, or is merely trying to obtain the benefit of its bargain under its contract with BTP. Though monetarily equivalent to L&R‘s claimed damages for breach of contract, the law firm‘s prayer in Counts IV and V for approximately $1.8 million in damages may have a different basis and may pertain to damages that are not compensable under contract principles.
Associate Judge Thompson authored the opinion. (Mike Frisch)
Saturday, June 2, 2018
The Nebraska Supreme Court reduced a legal malpractice damage award but ordered a fee disgorged for a conflict of interest
In November 2013, David LeRette, Jr., individually and as the owner of Master Blaster, Inc., filed a complaint against Steven H. Howard and his law firm, alleging, among other nthings, that Howard committed legal malpractice and breached his duty as LeRette’s attorney when he failed to advise LeRette of his conflicts of interest and when he acted adversely to LeRette’s interests. A jury trial was held on the matter in early 2017.
The case involved an unusual situation.
LeRette had secured a judgment against Anderson, who declared bankruptcy. LeRette's counsel suggested that Howard (a law school classmate) be retained through LeRette but on behalf of Anderson to sue Anderson's prior counsel for legal malpractice.
LeRette’s bankruptcy attorney thought Anderson’s bankruptcy attorneys may have been negligent in their representation of Anderson and suggested to LeRette that Anderson could pursue a legal malpractice claim against them in order to generate funds that could be used to satisfy his debt to Master Blaster. Based on this information, LeRette contacted [prior attorney] Maass, who told LeRette that she thought her former classmate, Howard, might be able to help.
With LeRette’s approval, Maass called Howard to discuss the matter. Howard indicated that he was interested in the case. Thereafter, Maass gave Howard’s contact information to LeRette, who then called Howard.
After talking to Howard, LeRette contacted Anderson and asked him if he was interested in pursuing a legal malpractice claim against his bankruptcy attorneys. Anderson indicated that he was, and LeRette and Anderson met at a fast food restaurant to discuss it. According to LeRette, he told Anderson that he would hire the attorney.
LeRette and Anderson agreed to the arrangement after meeting with Howard
At the meeting, Howard advised LeRette and Anderson that any proceeds from the suit would be used to satisfy the judgment against Anderson. Howard advised LeRette not to execute on the judgment against Anderson, because it would make the case more difficult for Howard. LeRette did not execute on the judgment. According to LeRette, Howard told him that he could not be named in the malpractice action, because malpractice suits cannot be assigned. But Howard represented that the suit would be successful and that LeRette would “get [his] money and get paid.”
But twas not to be
On July 23, 2012, without discussing the matter with LeRette, Howard settled the legal malpractice action for $350,000. Howard deposited the settlement proceeds into his firm’s trust account and dispersed $235,964.78 to Anderson, retaining the remaining $114,035.22 in payment of his fees and expenses. Anderson did not pay LeRette, and LeRette never received any of the settlement proceeds. According to LeRette, he stopped receiving information from Anderson and Howard after the mediation. When LeRette followed up with the malpractice case, he was told that the trial was to occur on October 29, 2012. Sometime later, LeRette learned about the settlement and the payment and filed the suit against Howard and his law firm.
At the trial
the jury was instructed on two theories: legal malpractice and fraudulent misrepresentation. After the case was submitted, the jury returned a general verdict for LeRette and Master Blaster with damages of $775,000.
LeRette and Master Blaster assert that the trial court erred in reducing the damages to $235,968.78, the amount Anderson received in the settlement. He argues that reasonable minds could have concluded that LeRette and Master Blaster were entitled to $775,000. We disagree.
The conflict had consequences
Because Howard violated the rule regarding representations involving conflicts of interest, we conclude that, as a matter of law, Howard is not entitled to compensation for his services in the settlement. Thus, we modify the jury award to include the $114,035.22 that he received for those services.
LeRette v. Howard can be found at this link. (Mike Frisch)
Tuesday, May 15, 2018
The dismissal of a legal malpractice claim has been affirmed by the North Carolina Court of Appeals
Carol D. Moore (“plaintiff”) appeals from the trial court’s order granting defendants’ motion for summary judgment on plaintiff’s claim for legal malpractice. After careful review, we conclude that plaintiff failed to forecast any evidence to prove that, but for defendants’ alleged negligence, plaintiff would have received a more favorable judgment in her prior equitable distribution action. Accordingly, we affirm the trial court’s order.
At issue was the end of a 25-year marriage
Plaintiff hired defendants due to their experience tracing marital assets in complex equitable distribution proceedings. Defendants were aware that plaintiff believed that Dr. Moore had hidden assets in anticipation of the parties’ divorce. In addition to defendants, plaintiff also retained certified public accountant Heather Linton and certified fraud examiner Carl Allen (“Allen”) to help locate the alleged missing assets.
During discovery, defendants conducted depositions; subpoenaed financial institutions; and reviewed tax returns and other documents for evidence of undisclosed earnings or accounts, including potential off-shore transactions. However, neither defendants nor plaintiff’s experts ever located any undisclosed assets. Jordan ultimately concluded that the Moores’ once-substantial marital estate had been depleted as a result of market factors and the parties’ extravagant lifestyle choices. Although Allen had “theories” that Dr. Moore might have mismanaged marital funds, Jordan determined that the evidence was speculative, unsubstantiated, and likely inadmissible. Therefore, when the trial commenced on 3 January 2011, Jordan notified Allen that he would not call him to testify. At trial, defendants did not present any expert witness evidence to support plaintiff’s theory that Dr. Moore hid marital assets prior to the parties’ divorce.
The plaintiff did not appeal the distribution of marital assets by the trial court; rather, she sued her lawyer
“The law is not an exact science but is, rather, a profession which involves the exercise of individual judgment.” Id. Contrary to plaintiff’s arguments, Jordan’s failure to present evidence that he, in his professional judgment, deemed “speculative” and “unsupported” is consistent both with the exercise of due care in representing plaintiff’s action, and with his duty of candor to the court.
Plaintiff failed to forecast sufficient evidence for the trial court to consider regarding any alleged marital asset. Without such evidence, the trial court could not determine whether plaintiff might have obtained a judgment in excess of the one that she actually received at equitable distribution. Furthermore, contrary to plaintiff’s arguments, there is no evidence that defendants failed to exercise due care and diligence in representing plaintiff’s action. Since plaintiff failed to establish that any alleged negligence on the part of defendants proximately caused damage to her, we affirm the trial court’s order granting defendants’ motion for summary judgment.
Friday, May 11, 2018
The Iowa Supreme Court reversed a court appeals decision and granted summary judgment to the defendant law firm in a legal malpractice case
A client appealed the district court’s grant of summary judgment in favor of her attorney and the attorney’s law firm in her legal negligence action. The client argued the court erred in finding the statute of limitations barred her action. She also contended the court erred in declining to apply the discovery rule, the continuous-representation rule, or the doctrine of fraudulent concealment.
We transferred the case to the court of appeals, which reversed the judgment of the district court. The attorney and his firm applied for further review, which we granted. On further review, we hold no genuine issue of material fact exists as to when the cause of action accrued and the statute of limitations bars the client’s action because the cause of action accrued more than five years before she filed suit. We also hold the client may not use the discovery rule, the continuous-representation rule, or the doctrine of fraudulent concealment to circumvent the limitations period. Accordingly, we vacate the decision of the court of appeals and affirm the judgment of the district court.
The alleged malpractice was advice to the client to pay estate bills from exempt funds (life insurance and 401k payments).
we find Skadburg sustained actual, nonspeculative injury when she paid the creditors with the exempt funds on Gately’s alleged advice in 2008. Therefore, her cause of action accrued in 2008 when she made those payments. Because Skadburg made these payments more than five years before she commenced this action on August 19, 2015, section 614.1(4) bars her action unless a legal doctrine tolls the limitations period or estops Gately from raising the statute of limitations as an affirmative defense.
Skadburg argues three exceptions to the strict commencement of the limitations period. These exceptions are the discovery rule, the continuous-representation rule, and the doctrine of fraudulent concealment. Although Gately has the burden of establishing the statute-of-limitations defense, Skadburg, as the party attempting to avoid the limitations period, has the burden of demonstrating any exception.
Communications between lawyer and client showed client knowledge
Viewing the record in the light most favorable to Skadburg, the latest date she had actual or imputed knowledge of the possible connection between Gately’s advice and the damages caused by that advice, i.e., the payment of the estate’s debts from exempt funds was March 26, 2010. Accordingly, we find there is no genuine issue of material fact that by March 26, 2010, Skadburg had the duty to investigate the possible connection between Gately’s bad legal advice and her damages once she knew of such a possibility. At that time, the statute of limitations began to run under the discovery rule. She filed her action more than five years after March 26, 2010.
The court rejects the continuous representation rule where the client knows of the alleged malpractice and as to fraudulent concealment
We conclude as a matter of law Skadburg failed to prove by a clear and convincing preponderance of the evidence elements (2) and (4) of fraudulent concealment because Skadburg knew or was on inquiry notice about the deficiencies in Gately’s advice at the time she sent her communications. Thus, her reliance upon the alleged concealment was unreasonable. Accordingly, no genuine issue of fact exists as to whether Gately fraudulently concealed Skadburg’s cause of action for legal negligence, and Gately is entitled to judgment.
Link to the briefs and oral argument here. (Mike Frisch)
Tuesday, May 8, 2018
The New York Appellate Division for the First Judicial Department affirmed the dismissal of a legal malpractice claim
Plaintiff failed to state a claim for legal malpractice against defendant Lori H. Goldstein (Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 10 [1st Dept 2008]). The documentary evidence conclusively establishes that she was not acting as plaintiff's attorney. Rather, the terms of the post-nuptial agreement which plaintiff now challenges, as well as numerous emails between plaintiff, his former wife, and Goldstein, reflect the parties' understanding and agreement that Goldstein would draft the post-nuptial agreement, and the spouses' separate counsel would review it before execution. Accordingly, plaintiff has not sufficiently alleged an attorney-client relationship between him and Goldstein, or that she was negligent and that her negligence was the "but for" cause of his alleged injuries (id.).
Neither has plaintiff stated a legal malpractice claim against the remaining defendants, who reviewed the post-nuptial agreement and/or served as his counsel in the divorce action. He cannot explain how their failure to challenge the terms of the post-nuptial agreement in the divorce action was the "but for" cause of his alleged damages, given that his subsequent counsel also did not challenge the terms of the agreement (id.). In any event, plaintiff concedes that he made a strategic decision not to challenge the terms of the agreement in the divorce action. The claims for fraud and breach of fiduciary duty are duplicative of the legal malpractice claim, since they all arose from identical facts and allege the same damages (Voutsas v Hochberg, 103 AD3d 445, 446 [1st Dept 2013], lv denied 22 NY3d 853 ).
Monday, April 30, 2018
Dane S, Ciolino at Louisiana Legal Ethics blog has an interesting post on the recent ABA opinion on disclosure of past malpractice
Recognizing that “[e]ven the best lawyers may err,” the ABA Standing Committee on Ethics and Professional Responsibility has issued a formal opinion addressing when a lawyer must inform a client or former client of a material error. See ABA Formal Op. No. 481 (Apr. 17, 2018). While the committee gets it right as to present clients, even the best committees may err when it comes to a lawyer’s obligation to disclose errors to former clients...
The committee got it right in concluding that “[g]ood business and risk management reasons may exist for lawyers to inform former clients of their material errors when they can do so in time to avoid or mitigate any potential harm or prejudice to the former client.” See ABA Formal Op. 481 at 2. But it was wrong in advising that such notification is a “personal decision” left to the lawyer. It’s not. Rule 1.16(d) requires it, at least when notification is practicable and reasonable to prevent, mitigate or rectify substantial injury to the financial interests or property of the former client.
I think Mr. Ciolino gets it right here. (Mike Frisch)
Thursday, April 19, 2018
A legal malpractice judgment has been affirmed by the New York Appellate Division for the Second Judicial Department.
23KT Gold Collectibles, Ltd. (hereinafter 23KT), andMerrickMint, Ltd. (hereinafter Merrick), are affiliated designers and manufacturers of memorabilia and collectible coins. In 2008,23KT entered into an agreement with Daily News, L.P. (hereinafter Daily News), in which the parties to the agreement agreed to develop and promote a coin club through which they would sell collectible coins and share profits. 23KT agreed to design and manufacture coins and coin sets, and Daily News agreed to provide 204 pages of advertising space to advertise the coins. The coins sold through the coin club would also be offered for sale on a website called “ecoins,” which would be operated by 23KT. The agreement included an exclusivity clause providing that coin club products could not be advertised, marketed, sold, or offered for sale by 23KT or its affiliates, including Merrick, in any forum or media other than Daily News advertisements or ecoins. Products which were substantially similar, but not identical, to a coin club product could not be sold by 23KT, but were permitted to be sold by its affiliates, such as Merrick. The agreement permitted either party to terminate the agreement via written notice if the other party materially breached the agreement “and the breach is not remedied within thirty (30) days of the breaching party’s receipt of written notice of the breach.” The agreement specified that it was the entire agreement, that it could not be modified except in writing, and that a failure to exercise any right under the agreement did not operate as a waiver of that right.
By letter dated January 29, 2009, Daily News notified 23KT that it had materially breached the exclusivity provision of the agreement by marketing coin club products and similar products in the New York Post and on certain websites. The notice stated that the breaches were not capable of being remedied, and that the agreement would terminate on March 1, 2009. 23KT responded with a letter in which it disputed that a breach had occurred, and asserted that, in any event, Daily News was required to permit it to cure the alleged breaches. No agreement was reached on the issue of a cure, and 23KT retained the defendant Lefkowicz & Gottfried, LLP (hereinafter the defendant law firm), to commence an action, inter alia, to recover damages for breach of contract against Daily News. Daily News obtained summary judgment dismissing the first complaint filed on behalf of 23KT, a finding in its favor on liability on its counterclaims against 23KT due to discovery failures, and dismissal of the second complaint filed on behalf of 23KT based on the doctrine of res judicata. 23KT then retained another attorney, who negotiated a settlement in which the parties discontinued their claims and 23KT paid Daily News the sum of $20,000.
23KT and others then commenced this legal malpractice action against the defendant law firm and its principals. In an order dated August 4, 2014, the Supreme Court granted the defendants’ motion for summary judgment dismissing the complaint. However, in an order dated April 1, 2015, the court granted the plaintiffs’ motion for leave to reargue the defendants’ motion and, upon reargument, denied the defendants’ motion. The matter proceeded to trial, after which the court determined that 23KT established its legal malpractice cause of action against the defendant law firm. Judgment was entered in favor of 23KT and against the defendant law firm in the principal sum of $1,675,000, representing the sum 23KT would have recovered from Daily News in the absence of the law firm’s negligence, the sum spent to settle the matter with Daily News, and a
return of the retainer paid to the defendant law firm. The defendant law firm appeals.
On the merits
Here, the Supreme Court determined that the defendant law firm was negligent in the underlying representation and that, but for such negligence, 23KT would have prevailed in the underlying litigation. On appeal, the defendant law firm challenges only the finding of but-for causation, arguing that 23KT was in breach of the exclusivity clause of the underlying agreement and therefore would not have prevailed in the underlying litigation, regardless of its alleged malpractice. The contention is without merit. The evidence at trial established that most of the alleged breaches listed in Daily News’ January 29, 2009, breach notice were actually sales by Merrick of similar, but not identical, coins, which did not violate the exclusivity clause of the agreement. While certain identical coins were simultaneously offered for sale on Merrick’s website and on ecoins, even if such duplication constituted a material breach of the agreement, giving due deference to the court’s credibility determinations (see Gomez v Eleni, LLC, 122 AD3d at 798), 23KT established that Daily News breached the agreement by failing to comply with its obligation to permit 23KT the opportunity to cure prior to termination of the agreement (see Kalus v Prime Care Physicians, P.C., 20 AD3d 452, 454; Rebh v Lake George Ventures, 223 AD2d at 986-987). Accordingly, the determination that 23KT established that it would have prevailed in the underlying litigation but for the defendant law firm’s negligence was warranted by the facts.