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).

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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.

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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]).

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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.

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Conclusory allegations of damages or injuries predicated on speculation cannot suffice for a malpractice action.

Posted on July 28, 2022 by Richard Klass

In Marinelli v Sullivan Papain Block McGrath & Cannavo, P.C., 205 AD3d 714, 716 [2d Dept 2022], the court held:

In an action to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney’s breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages (see Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 N.Y.3d 438, 442, 835 N.Y.S.2d 534, 867 N.E.2d 385; Bells v. Foster, 83 A.D.3d 876, 877, 922 N.Y.S.2d 124). Damages in a legal malpractice action are designed “to make the injured client whole” (Campagnola v. Mulholland, Minion & Roe, 76 N.Y.2d 38, 42, 556 N.Y.S.2d 239, 555 N.E.2d 611). “The plaintiff is required to plead actual, ascertainable damages that resulted from the attorneys’ negligence” (Bua v. Purcell & Ingrao, P.C., 99 A.D.3d 843, 847–848, 952 N.Y.S.2d 592; see Dempster v. Liotti, 86 A.D.3d 169, 176, 924 N.Y.S.2d 484). “Conclusory allegations of damages or injuries predicated on speculation cannot suffice for a malpractice action” (Bua v. Purcell & Ingrao, P.C., 99 A.D.3d at 848, 952 N.Y.S.2d 592; see Wald v. Berwitz, 62 A.D.3d 786, 787, 880 N.Y.S.2d 293; Holschauer v. Fisher, 5 A.D.3d 553, 554, 772 N.Y.S.2d 836), and “dismissal is warranted where the allegations in the complaint are merely conclusory and speculative” (Bua v. Purcell & Ingrao, P.C., 99 A.D.3d at 848, 952 N.Y.S.2d 592; see Hashmi v. Messiha, 65 A.D.3d 1193, 1195, 886 N.Y.S.2d 712; Riback v. Margulis, 43 A.D.3d 1023, 1023, 842 N.Y.S.2d 54).

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Defendants did not act in their capacities as attorneys when they allegedly made deceitful statements.

Posted on July 12, 2022 by Richard Klass

In Altman v DiPreta, 204 AD3d 965, 968-69 [2d Dept 2022], the court dismissed the cause of action brought under Judiciary Law Section 487, holding:

Under Judiciary Law Section 487(1), an attorney who “[i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party” is liable to the injured party for treble damages. “Judiciary Law Section 487 ‘applies to an attorney acting in his or her capacity as an attorney, not to a party who is represented by counsel and who, incidentally, is an attorney’ ” (Pinkesz Mut. Holdings, LLC v. Pinkesz, 198 A.D.3d 693, 698, 156 N.Y.S.3d 216, quoting Oakes v. Muka, 56 A.D.3d 1057, 1058, 868 N.Y.S.2d 796). Here, the parties’ evidentiary submissions demonstrated that the DiPreta defendants did not act in their capacities as attorneys when they allegedly made deceitful statements. Accordingly, the Supreme Court properly granted that branch of the DiPreta defendants’ motion which was pursuant to CPLR 3211(a)(7) to dismiss the cause of action alleging violation of Judiciary Law Section 487 insofar as asserted against them by Charles (see Smallwood v. Lupoli, 107 A.D.3d 782, 784, 968 N.Y.S.2d 515; Crown Assoc., Inc. v. Zot, LLC, 83 A.D.3d 765, 768, 921 N.Y.S.2d 268; Oakes v. Muka, 56 A.D.3d at 1058, 868 N.Y.S.2d 796).

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