The court discussed the issue re “near privity” concerning the attorney/client relationship

Posted on December 19, 2022 by Richard Klass

In Curtis v Berutti, 77 Misc 3d 327 [Sup Ct 2022], the court discussed the issue re “near privity” concerning the attorney/client relationship.

In New York, absent fraud, collusion, malicious acts or other special circumstances, an attorney is not liable for professional negligence to third parties who are not in privity with the attorney; however, where the relationship is so close as to touch the bounds of privity, an action for legal malpractice may be maintained. Allianz Underwriters Ins. Co. v. Landmark Ins. Co., 13 A.D.3d 172, 787 N.Y.S.2d 15 (1st Dept. 2004).

“In order for a relationship to approach ‘near’ privity’s borders, for the purpose of maintaining a professional negligence claim, the professional must be aware that its services will be used for a specific purpose, the plaintiff must rely upon those services, and the professional must engage in some conduct evincing some understanding of the plaintiff’s reliance.” Allianz, 13 A.D.3d at 175, 787 N.Y.S.2d 15.

Although New York’s “near privity” exception is infrequently applied, sufficient “near privity” has been found under certain circumstances. See, e.g., Minsky v. Haber, 74 A.D.3d 763, 764, 903 N.Y.S.2d 441 (2d Dept. 2010) (near privity exception applied where attorneys represented daughter’s “personal interests” where she was deemed to be a “third-party beneficiary” of the attorney’s prior representation of her father); Baer v. Broder, 86 A.D.2d 881, 882, 447 N.Y.S.2d 538 (2d Dept. 1982) (near privity exception applied where widow, who, as executrix of her husband’s estate, hired attorney to prosecute a wrongful death action, was permitted to maintain an action against the attorney, in her individual capacity, for malpractice even though she had no privity of contract with the attorney in her individual capacity, since the widow and the attorney had a “face-to-face” relationship in the underlying wrongful death action and the widow was the “real party in interest” in the wrongful death action); Good Old Days Tavern, Inc. v. Zwirn, 259 A.D.2d 300, 300, 686 N.Y.S.2d 414 (1st Dept. 1999) (near privity exception applied where plaintiff, as president and sole shareholder of corporate client, was a foreseeable third-party beneficiary of the contract pursuant to which he retained the defendant/attorney to represent his corporation, which was tantamount to a relationship of contractual privity).

The precise question of whether an attorney who represents a guardian also represents the guardian’s ward (under a “near privity” exception or otherwise) has not been answered in New York. Other states, however, have answered the question in the affirmative. Such states have recognized that an exception to the privity requirement for legal malpractice liability must exist when a guardian hires an attorney specifically the benefit their ward. For example, in Illinois, courts have recognized that an attorney-client relationship extended from the attorney to the ward where the attorney, although hired by the ward’s guardian, was acting for the primary benefit or best interests of the ward. See Schwartz v. Cortelloni, 177 Ill. 2d 166, 174–75, 226 Ill.Dec. 416, 685 N.E.2d 871 (1997) (stating that the key factor to be considered is whether the attorney acted at the direction of or on behalf of the client for the benefit of the ward). Similarly, in Florida, it has been held that the attorney for guardian owes a duty to the ward where the ward is the intended third-party beneficiary of the attorney’s services. See Saadeh v. Connors, 166 So. 3d 959 (Fla. Dist. Ct. App. 2015) (reinstating the ward’s legal malpractice claim against the guardian’s attorney and noting that the relationship between the guardian and the ward is such that the ward must be considered to be the primary or intended beneficiary and cannot be considered an “incidental” beneficiary). Further, Arizona courts have held that when an attorney undertakes to represent the guardian of an incompetent ward, the attorney assumes a relationship not only with the guardian but also with the ward as the intended beneficiary, whose interests overshadow those of the guardian and, thus, an attorney cannot escape liability for wrongful conduct on the ground of lack of privity. See In re Guardianship of Sleeth, 226 Ariz. 171, 244 P.3d 1169 (Ct. App. 2010); see also Fickett v. Superior Court, 27 Ariz. App. 793, 558 P.2d 988 (1976).

Richard A. Klass, Esq.
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Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn, New York. He may be reached at (718) COURT●ST or RichKlass@courtstreetlaw.comcreate new email with any questions.

Prior results do not guarantee a similar outcome.

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…negligent in not objecting to the judgment debtor’s bankruptcy proceeding…

Posted on December 5, 2022 by Richard Klass

In Basile v Law Offices of Neal Brickman, P.C., 2022 NY Slip Op 06079 [1st Dept Nov. 1, 2022], the court affirmed the denial of the law firm’s motion to dismiss, holding:

The legal malpractice claim may not be barred by the three-year statute of limitations (CPLR 214[6]). Plaintiff contends that the claim was tolled by the continuous representation doctrine based on alleged emails and telephone conversations about collecting on plaintiff’s money judgment against the judgment debtor following its entry in 2010, at which time the judgment debtor did not have sufficient assets to satisfy the judgment. Defendants, however, assert that there was no continuous representation because plaintiff had no communication with them concerning collecting on the unsatisfied judgment until August 2019, when the limitations period on the instant claim had expired. These factual contentions concerning whether defendant continued to represent plaintiff during the relevant time period so as to toll the limitations period give rise to factual issues that cannot be resolved in this pre-answer motion to dismiss (see Boesky v. Levine, 193 A.D.3d 403, 147 N.Y.S.3d 2 [1st Dept. 2021]; Johnson v. Law Off. of Kenneth B. Schwartz, 145 A.D.3d 608, 612, 46 N.Y.S.3d 1 [1st Dept. 2016]).

Furthermore, the complaint’s allegations are sufficient to state a cause of action for legal malpractice. Plaintiff alleges that defendants were negligent in not objecting to the judgment debtor’s bankruptcy proceeding in 2015, which resulted in a discharge order that barred plaintiff from collecting on his money judgment against her. Defendants argue that they did not breach their duty to plaintiff by not intervening in the bankruptcy proceeding because they did not receive notice of the proceeding. Defendants submit the bankruptcy petition, which, in naming plaintiff as a creditor, included an outdated address for defendants and omitted the name of defendants’ law firm or a suite number. These undisputed facts, however, are not sufficient to find as a matter of law that defendants did not breach their duty to plaintiff. Defendants relocated to their new office in September 2014 and the judgment debtor filed her bankruptcy petition in January 2015, three months later. The bankruptcy petition included the name of the attorney who had assisted in plaintiff’s underlying action against the judgment debtor. At the very least, a factual issue exists as to whether the notice of the bankruptcy proceeding to object on plaintiff’s behalf was forwarded to defendants, which cannot be resolved at this juncture. As to proximate cause, contrary to defendants’ contention, proof of the collectability on a judgment is not an essential element of the legal malpractice claim, and arises after the “case within the case” has been proven (Lindenman v. Kreitzer, 7 A.D.3d 30, 35, 775 N.Y.S.2d 4 [1st Dept. 2004]).

Richard A. Klass, Esq.
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Prior results do not guarantee a similar outcome.

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Richard A. Klass Selected for the Seventh Time for the New York Metro Super Lawyers List

Posted on November 30, 2022 by Richard Klass

We are pleased to announce that Richard Klass, has been selected to the 2022 New York Metro Super Lawyers list. This is an exclusive list, recognizing no more than five percent of attorneys in the New York Metro area.

Super Lawyers, part of Thomson Reuters, is a research-driven, peer influenced rating service of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. Attorneys are selected from more than 70 practice areas and all firm sizes, assuring a credible and relevant annual list.

The annual selections are made using a patented multiphase process that includes:

Peer nominations
Independent research by Super Lawyers
Evaluations from a highly credentialed panel of attorneys

The objective of the Super Lawyers lists is to create a credible, comprehensive and diverse listing of outstanding attorneys to be used as a resource for both referring attorneys and consumers seeking legal counsel.

For more information about Super Lawyers, go to SuperLawyers.com. Super Lawyers is a registered trademark of Thomson Reuters.

Richard A. Klass, Esq.
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Prior results do not guarantee a similar outcome.

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Your Court Street Lawyer

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Plaintiffs failed to meet their shifted burden.

Posted on November 29, 2022 by Richard Klass

In Colucci v Rzepka, 209 AD3d 1205, 1207-08 [3d Dept 2022], the court held:

“An action to recover damages arising from legal malpractice must be commenced within three years after accrual” (Zorn v. Gilbert, 8 N.Y.3d 933, 933–934, 834 N.Y.S.2d 702, 866 N.E.2d 1030 [2007] [citation omitted]; see CPLR 214[6]). In the civil context, the claim “accrues when the malpractice is committed” (Ruggiero v. Powers, 284 A.D.2d 593, 594, 725 N.Y.S.2d 759 [3d Dept. 2001], lv dismissed 97 N.Y.2d 638, 735 N.Y.S.2d 495, 760 N.E.2d 1291 [2001]), “not at the time that the injury is discovered” (Lavelle–Tomko v. Aswad & Ingraham, 191 A.D.3d 1142, 1143, 143 N.Y.S.3d 109 [3d Dept. 2021]; see McCoy v. Feinman, 99 N.Y.2d 295, 301, 755 N.Y.S.2d 693, 785 N.E.2d 714 [2002]). As the moving parties, the law firms bear the “the initial burden of demonstrating, prima facie, that the time within which to commence the action has expired” (Krog Corp. v. Vanner Group, Inc., 158 A.D.3d 914, 915, 72 N.Y.S.3d 178 [3d Dept. 2018] [internal quotation marks and citations omitted]; see Lavelle–Tomko v. Aswad & Ingraham, 191 A.D.3d at 1143–1144, 143 N.Y.S.3d 109). To that end, the law firms established that this action was brought after the three-year statute of limitations accrued inasmuch as Rzepka ceased representation of plaintiffs in December 2015 and this action was not commenced until May 2020. Thus, the burden shifted to plaintiffs “to raise a question of fact as to whether the statute of limitations has been tolled or was otherwise inapplicable, or whether the action was actually commenced within the period propounded by … defendant[s]” (State of N.Y. Workers’ Compensation Bd. v. Wang, 147 A.D.3d 104, 110, 46 N.Y.S.3d 230 [3d Dept. 2017] [internal quotation marks and citations omitted]; see Bank of Am., N.A. v. Gulnick, 170 A.D.3d 1365, 1367, 95 N.Y.S.3d 639 [3d Dept. 2019], lv denied 34 N.Y.3d 908, 2020 WL 728411 [2020]).

Plaintiffs failed to meet their shifted burden. Specifically, plaintiffs erroneously rely upon Grace v. Law, 24 N.Y.3d 203, 997 N.Y.S.2d 334, 21 N.E.3d 995 (2014) for the proposition that they were not permitted to commence this action until the appeal of the Stuyvesant Plaza action was resolved in January 2018. In Grace v. Law, the Court of Appeals held “that prior to commencing a legal malpractice action, a party who is likely to succeed on appeal of the underlying action should be required to press an appeal. However, if the client is not likely to succeed, [the client] may bring a legal malpractice action without first pursuing an appeal of the underlying action” (id. at 210, 997 N.Y.S.2d 334, 21 N.E.3d 995 [emphasis added]). Here, given Supreme Court’s “broad discretion in controlling discovery and disclosure” (Colucci v. Stuyvesant Plaza, Inc., 157 A.D.3d at 1098, 69 N.Y.S.3d 410 [internal quotation marks and citations omitted]), plaintiffs’ appeal from the Stuyvesant Plaza action was not “likely to succeed,” such that it was not necessary for them to file an appeal pursuant to the standard set forth in (Grace v. Law, 24 N.Y.3d at 210, 997 N.Y.S.2d 334, 21 N.E.3d 995; see Florists’ Mut. Ins. Co., Inc. v. Behman Hambelton, LLP, 160 A.D.3d 502, 502, 71 N.Y.S.3d 357 [1st Dept. 2018]). Thus, plaintiffs were not “forced” to file an appeal prior to commencing the legal malpractice action. If plaintiffs believed the best course of action was to also file an appeal, they were certainly free to, but this did not toll the statute of limitations. Rather, the preferable course of action would have been to both timely commence the legal malpractice action and pursue an appeal and then request a stay of the legal malpractice action until determination of the appeal (see Spitzer v. Newman, 163 A.D.3d 1026, 1027–1028, 82 N.Y.S.3d 595 [2d Dept. 2018]). Accordingly, Supreme Court did not err in granting the law firms’ motions to dismiss the complaint as untimely. In light of this determination, plaintiffs’ remaining contentions have been rendered academic.

Richard A. Klass, Esq.
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Prior results do not guarantee a similar outcome.

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Sometimes, Litigation Is Like Playing Whac-A-Mole®

Posted on October 7, 2022 by Richard Klass

We pick up and “play it again” where our Spring issue of Law Currents, “Don’t Play it Again, Sam,” left off.

To remind you, here were the facts in that article, concerning actions in 2012 and 2021.

2012 Action

In July 2012 (the “2012 Action”), the plaintiff filed suit in the Civil Court against Defendants. In the 2012 Action, the plaintiff sued for the following: “Action to recover the sum of $18,000, with interest thereon from January 1, 2009, based upon a) mistaken charge to [Plaintiff’s] credit card account by Defendants in the amount of $18,000.00, and Defendants’ failure and refusal to credit said charge back to Plaintiff; b) breach of contract; and c) unjust enrichment.”

In January 2020, after court orders marking the trial date “final,” the Civil Court Judge entered an Order dismissing the 2012 Action. At the hearing, the Court found that the plaintiff “had notice of [the] trial date since November of 2019” and thereafter denied the application for an adjournment of the trial.

2021: Second Action Filed

In March 2021, the plaintiff commenced a new action in the Supreme Court (the “2021 Action”), asserting claims against the defendants relating to a dispute regarding specific charges on his account. He also asserted claims for unjust enrichment, conversion, breach of contract, breach of implied covenant of good faith, injunctive relief, intentional infliction of emotional distress, and declaratory relief. The plaintiff specifically asserted in the complaint that two sets of credit-card charges were erroneously paid, totaling approximately $18,000. In the 2021 Action, the plaintiff’s additional causes of action arose from a nucleus of operative facts that were identical to the ones adjudicated through judgment in the 2012 Action.

Move for Dismissal of the 2021 Action Based on the Doctrine of Res Judicata

The defendants retained Richard A. Klass, Esq., Your Court Street Lawyer, to move for dismissal of the 2021 Action based on the doctrine of res judicata. Pursuant to CPLR 3211(a)(5), a cause of action should be dismissed when it “may not be maintained” due to the doctrine of res judicata (also known as “claim preclusion”). In the 2021 Action, the complaint asserted claims for the transactions that had already been adjudicated in the 2012 Action. Under New York’s “transactional analysis approach to res judicata, ‘once a claim is brought to its final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy.”’ In re Hunter, 4 N.Y.3d 260, 269 (2005).

2021 Action Dismissed

The Supreme Court Justice granted the motion to dismiss the 2021 Action. In his decision, the judge held: “The Court observes that the doctrine [of res judicata] ‘precludes litigation of matters that could or should have been raised in a prior proceeding between the parties arising from the same factual grouping, transactions or series of transactions.’ (see, DeSanto Construction Corporation v. Royal Insurance Company, 278 AD2d 357 [2nd Dept. 2000].”

Like in Whac-A-Mole, the Matter Pops Up Again.
Notice of Appeal of Civil Court Order Filed February, 2020.

As mentioned above, the Civil Court Judge dismissed the plaintiff’s 2012 Action. The plaintiff served and filed a Notice of Appeal to the Appellate Term[1], First Department. More than two years had elapsed since the plaintiff filed the Notice of Appeal and he had taken no steps to perfect his appeal.

Motion Made to Dismiss the Appeal

A motion was made to dismiss the appeal since it had not been perfected within the time prescribed by court rule; see, 22 NYCRR 640.6.[2] It was pointed out that relevant case law had held that the appeal “shall” be dismissed. Zetlin v. Hanson Holdings, Inc., 63 A.D.2d 878, 405 N.Y.S.2d 472 (1st Dept 1978) (“[U]ndue delay is presumed if the perfecting of the appeal goes beyond one year”).

The Appeal Dismissed

In the motion papers, it was urged that the appeal be dismissed because more than two years had passed. The appellate court agreed and dismissed the appeal.

Motion Brought to Renew and Reargue (Whac-A-Mole)

After the 2021 Action in the Supreme Court was dismissed, the plaintiff brought a motion to “renew and reargue” the judge’s decision, claiming that the judge was wrong for dismissing the action and should restore the case.

Motion Denied to Renew and Reargue

In denying the plaintiff’s motion, the Supreme Court Justice cited from the well-known case of Foley v. Roche, 68 A.D.2d 558 (1^st Dept. 1979), which held as to:

1) Reargument:

A motion for reargument, addressed to the discretion of the court, is designed to afford a party an opportunity to establish that the court overlooked or misapprehended the relevant facts, or misapplied any controlling principle of law. Its purpose is not to serve as a vehicle to permit the unsuccessful party to argue once again the very questions previously decided (Fosdick v Town of Hempstead, 126 N.Y. 651; American Trading Co. v Fish, 87 Misc 2d 193). Nor does reargument serve to provide a party an opportunity to advance arguments different from those tendered on the original application. It may not be employed as a device for the unsuccessful party to assume a different position inconsistent with that taken on the original motion. As was observed by the Court of Appeals in Simpson v Loehmann (21 N.Y.2d 990), “A motion for reargument is not an appropriate vehicle for raising new questions.” Moreover, were we to consider the present motion as one for reargument, it was clearly untimely, since such a motion may not be made after the time to appeal from the original order has expired (Matter of Huie [Furman], 20 N.Y.2d 568, 572; Fitzpatrick v Cook, 58 AD2d 642; Prude v County of Erie, 47 AD2d 111). To hold otherwise would permit circumvention of the prohibition against extending the time to take an appeal from the original order (see 2A Weinstein-Korn-Miller, NY Civ Prac, par 2221.03).

2) Renewal:

An application for leave to renew must be based upon additional material facts which existed at the time the prior motion was made but were not then known to the party seeking leave to renew, and, therefore, not made known to the court. Renewal should be denied where the party fails to offer a valid excuse for not submitting the additional facts upon the original application. (Ecco High Frequency Corp. v Amtorg Trading Corp., 81 NYS2d 897, affd 274 App Div 982, rearg and app den 274 App Div 1056; Matter of Holad v MVAIC, 53 Misc 2d 952; American Trading Co. v Fish, supra.) Nor should the remedy be available where a party has proceeded on one legal theory on the assumption that what has been submitted is sufficient, and thereafter sought to move again on a different legal argument merely because he was unsuccessful upon the original application.

The Supreme Court Justice held that: “The plaintiff has not established that the Court misunderstood any issue of fact or misapplied any principal of law.”

_____

Endnotes

[1] Appeals of New York City Civil Court orders and judgments are made to the Appellate Term of the Supreme Court. The First Department covers those appeals emanating from the Civil Courts for the Bronx and New York Counties.

[2] 22 NYCRR 640.6.

(a) Appeals from the Civil Court.

(1) Appellant shall procure the clerk’s return pursuant to section 1704 of the New York City Civil Court Act to be filed within 30 days after the filing of the notice of appeal.

(2) Fifteen days before the first day of each term, the clerk of the Appellate Term shall cause a calendar to be published in the New York Law Journal of all appeals in which the clerk’s return has been filed since the last publication of such a calendar. The appeals shall be listed in the order that the returns are received and the date each return was filed shall be stated. The publication of the calendar shall serve as notice to the parties of the filing of the return.

(3) Within 60 days after the filing of the return either party may notice the appeal for argument:

(i) If noticed by appellant, the appellant shall file a notice of argument at least 53 days before the first day of the term for which the appeal shall have been noticed, together with the following: proof of service thereof; five copies of the record or appendix with proof of service of one copy, if the appeal is to be heard on copies of the record or appendix; five copies of appellant’s brief with proof of service of one copy; and such exhibits or copies thereof as are not included in the record or return, unless such exhibits are in the possession of the respondent. At least 31 days before the beginning of the term, respondent shall file five copies of the answering brief with proof of service of one copy and such exhibits or copies thereof not required to be filed by appellant. Five copies of a reply brief with proof of service of one copy may be filed at least 24 days before the first day of the term for which the appeal shall have been noticed.

(ii) The respondent may notice the appeal for argument by serving and filing a notice of argument at least 68 days before the first day of the term for which respondent shall notice the appeal with proof of service. At least 53 days before the first day of the term, unless the court otherwise directs, appellant shall file five copies of appellant’s brief with proof of service of one copy of the brief. Where appellant so files, respondent may serve and file an answering brief at least 31 days before the first day of the term. If appellant fails to serve and file the brief and fails to appear on the call of the calendar, the court may affirm the judgment or order appealed from or, in its discretion, dismiss the appeal with costs upon the call of the calendar. Five copies of a reply brief with proof of service of one copy may be filed 24 days before the first day of such term.

(iii) If neither party notices the appeal for argument within the time prescribed by this section, the appeal shall be dismissed unless for good cause shown an enlargement of time is granted by the court.

Richard A. Klass, Esq.
Your Court Street Lawyer

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Prior results do not guarantee a similar outcome.

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