Court stayed the client’s action for legal malpractice pending arbitration.

Posted on August 25, 2021 by Richard Klass

In Protostorm, Inc. v Foley & Lardner LLP, 193 AD3d 486 [1st Dept 2021], the court stayed the client’s action for legal malpractice pending arbitration between the client and attorney:

“Where there is no substantial question whether a valid agreement [to arbitrate] was made or complied with, … the court shall direct the parties to arbitrate” and its order “shall operate to stay a pending … action” (CPLR 7503[a] [emphasis added]). Once a valid arbitration agreement is identified, an arbitration should only be stayed “when the sole matter sought to be submitted to arbitration is clearly beyond the arbitrator’s power” (Silverman v. Benmor Coats, Inc., 61 N.Y.2d 299, 309, 473 N.Y.S.2d 774, 461 N.E.2d 1261 [1984] [emphasis added]). Further, where “arbitrable and nonarbitrable claims are inextricably interwoven, the proper course is to stay judicial proceedings pending completion of the arbitration, particularly where … the determination of issues in arbitration may well dispose of nonarbitrable matters” (Cohen v. Ark Asset Holdings, Inc., 268 A.D.2d 285, 286, 701 N.Y.S.2d 385 [1st Dept. 2000]; see also Lake Harbor Advisors, LLC v. Settlement Servs. Arbitration and Mediation, Inc., 175 A.D.3d 479, 105 N.Y.S.3d 520 [2d Dept. 2019]; Monotube Pile Corp. v. Pile Foundation Constr. Corp., 269 A.D.2d 531, 703 N.Y.S.2d 234 [2d Dept. 2000]).

There is no dispute that there is a valid agreement between the parties to arbitrate any dispute regarding unpaid fees. Thus, the court must compel arbitration of defendants’ claim for unpaid fees and stay this action pending completion of the arbitration (CPLR 7503[a]). Moreover, because plaintiff’s nonarbitrable malpractice claim is inextricably intertwined with the arbitrable claim for unpaid fees, the proper course is to stay the action pending completion of the arbitration (see Cohen, 268 A.D.2d at 286, 701 N.Y.S.2d 385; Lake Harbor Advisors, LLC, 175 A.D.3d at 479, 105 N.Y.S.3d 520; Monotube Pile Corp., 269 A.D.2d at 531, 703 N.Y.S.2d 234).

To the extent plaintiff argues that it cannot be forced to arbitrate its malpractice claim because it did not explicitly agree to do so, both the First and Second Departments have clearly found that a nonarbitrable issue can be decided in an arbitration when it is inextricably intertwined with an arbitrable issue, particularly where, as here, the determination of the arbitrable unpaid fees claim may dispose of the nonarbitrable malpractice claim (see Cohen, 268 A.D.2d at 286, 701 N.Y.S.2d 385; Lake Harbor Advisors, LLC, 175 A.D.3d at 480, 105 N.Y.S.3d 520; Monotube Pile Corp., 269 A.D.2d at 531–532, 703 N.Y.S.2d 234).

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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Plaintiff/client failed to plead factual allegations sufficient to show the claims were not merely speculative and conclusory.

Posted on August 11, 2021 by Richard Klass

The court in Denisco v Uysal, 195 AD3d 989, 990-91 [2d Dept 2021] found that the plaintiff/client failed to plead factual allegations sufficient to show the claims were not merely speculative and conclusory, holding:

On a motion to dismiss pursuant to CPLR 3211 (a) (7), the court must afford the complaint a liberal construction, accept the facts as alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]).

“A cause of action to recover damages for legal malpractice requires proof of three elements: (1) that the defendant failed to exercise that degree of care, skill, and diligence commonly possessed and exercised by an ordinary member of the legal community, (2) that such negligence was the proximate cause of the actual damages sustained by the plaintiff, and (3) that, but for the defendant’s negligence, the plaintiff would have been successful in the underlying action” (4777 Food Servs. Corp. v Anthony P. Gallo, P.C., 150 AD3d 1054, 1055 [2017]; see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]). “To establish causation in a legal malpractice action, ‘a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer’s negligence’ ” (Katsoris v Bodnar & Milone, LLP, 186 AD3d 1504, 1505 [2020], quoting Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442). “Conclusory allegations of damages or injuries predicated on speculation cannot suffice for a malpractice action, and dismissal is warranted where the allegations in the complaint are merely conclusory and speculative” (Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 848 [2012] [citations omitted]; see Janker v Silver, Forrester & Lesser, P.C., 135 AD3d 908, 909-910 [2016]).

Here, even accepting the facts alleged in the complaint, as amplified by the plaintiff’s affidavit, as true, and according the plaintiff the benefit of every possible favorable inference (see Leon v Martinez, 84 NY2d at 87), the plaintiff failed to plead specific factual allegations demonstrating that, but for the defendants’ alleged negligence, there would have been a more favorable outcome on his workers’ compensation claim (see Katsoris v Bodnar & Milone, LLP, 186 AD3d 1504 [2020]; Janker v Silver, Forrester & Lesser, P.C., 135 AD3d at 910). The plaintiff’s allegations that the Judge who denied his workers’ compensation claim and/or the Workers’ Compensation Board would have credited certain evidence, including the testimony of alleged eyewitnesses, if such evidence had been presented by the defendants were speculative and conclusory (see Janker v Silver, Forrester & Lesser, P.C., 135 AD3d at 910; Cusimano v Wilson, Elser, Moskowitz, Edelman & Dicker LLP, 118 AD3d 542 [2014]).

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Reminder to Attorneys: explicitly confirm when representation of the client has terminated.

Posted on August 3, 2021 by Richard Klass

Schwenger v Weitz, Kleinick & Weitz, LLP, 192 AD3d 606, 607 [1st Dept 2021] serves as a good reminder to attorneys to confirm that representation of the client has terminated in explicit terms:

Where, as here, defendants were retained in writing to represent plaintiff in all proceedings before the Workers’ Compensation Board related to his claim, plaintiff made a sufficient showing of a continuing relationship with regard to that proceeding to support his contention of continuous representation (Shumsky v. Eisenstein, 96 N.Y.2d 164, 168, 726 N.Y.S.2d 365, 750 N.E.2d 67 [2001]). Defendants’ statement in an email that they would not pursue an appeal to the Third Department after having lost before the Workers’ Compensation appellate panel on the issue of whether plaintiff was an employee, did not “unequivocally” terminate the representation in the workers’ compensation matter, which remained pending following the administrative review (Riley v. Segan, Nemerov & Singer, P.C., 82 A.D.3d 572, 572, 918 N.Y.S.2d 488 [1st Dept. 2011]).

Richard A. Klass, Esq.
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[Her] deposition testimony in the underlying case was contrary to her opposition to the law firm’s motion for summary judgment.

Posted on July 13, 2021 by Richard Klass

In Walker v Shaevitz & Shaevitz, Esqs., 192 AD3d 1062 [2d Dept 2021], the court dismissed the client’s legal malpractice action because her deposition testimony in the underlying case was contrary to her opposition to the law firm’s motion for summary judgment. The court held:

The Supreme Court, upon reargument, properly granted the law firm’s motion for summary judgment dismissing the complaint. “ ‘In moving for summary judgment dismissing a complaint alleging legal malpractice, a defendant must present evidence establishing, prima facie, that it did not breach the duty to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, or that the plaintiff did not sustain actual and ascertainable damages as a result of such deviation’ ” (Dominguez v. Mirman, Markovits & Landau, P.C., 180 A.D.3d 646, 647, 119 N.Y.S.3d 136, quoting Mazzurco v. Gordon, 173 A.D.3d 1003, 1003, 100 N.Y.S.3d 894). Here, the law firm established its prima facie entitlement to judgment as a matter of law through the submission of the transcript of Walker’s deposition testimony in the underlying action which showed that she could not identify the cause of her fall (see Colini v. Stino, Inc., 186 A.D.3d 1610, 1611, 129 N.Y.S.3d 826; Ash v. City of New York, 109 A.D.3d 854, 856, 972 N.Y.S.2d 594) and that, even if the law firm had breached its duty to the plaintiffs, they would not have prevailed in the underlying action because Walker was unable to identify the cause of her fall without engaging in speculation (see Hamoudeh v. Mandel, 62 A.D.3d 948, 949, 880 N.Y.S.2d 674; see also Markowitz v. Kurzman Eisenberg Corbin Lever & Goodman, LLP, 82 A.D.3d 719, 719, 917 N.Y.S.2d 683).

In opposition, the plaintiffs failed to raise a triable issue of fact. Walker’s deposition testimony and affidavit in this action are contrary to her deposition testimony in the underlying action and merely raised a feigned issue of fact insufficient to defeat summary judgment (see Mallen v. Dekalb Corp., 181 A.D.3d 669, 670, 121 N.Y.S.3d 331; Dominguez v. Mirman, Markovits & Landau, P.C., 180 A.D.3d at 648, 119 N.Y.S.3d 136).

The Supreme Court also properly denied the plaintiffs’ cross motion pursuant to CPLR 3126 to impose sanctions on the law firm for spoliation. A party seeking sanctions for spoliation of evidence must demonstrate “that the party having control over the evidence possessed an obligation to preserve it at the time of its destruction, that the evidence was destroyed with a culpable state of mind, and that the destroyed evidence was relevant to the party’s claim … such that the trier of fact could find that the evidence would support that claim” (Pegasus Aviation I, Inc. v. Varig Logistica S.A., 26 N.Y.3d 543, 547, 26 N.Y.S.3d 218, 46 N.E.3d 601 [internal quotation marks omitted]). Here, the plaintiffs’ reliance on the doctrine of spoliation is misplaced as the law firm was never in possession or control of the restaurant, its lighting system, or its renovation (see Burbige v. Siben & Ferber, 115 A.D.3d 632, 633, 981 N.Y.S.2d 537). Moreover, to the extent that the plaintiffs assert an independent cause of action for negligent spoliation, it is without merit as no such tort is recognized in New York law (see Vargas v. Crown Container Co., Inc., 114 A.D.3d 762, 764, 980 N.Y.S.2d 500; Hillman v. Sinha, 77 A.D.3d 887, 888, 910 N.Y.S.2d 116).

Richard A. Klass, Esq.
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Non-arbitrable issue inextricably intertwined with an arbitrable issue

Posted on June 10, 2021 by Richard Klass

The First Department, in Protostorm, Inc. v Foley & Lardner LLP, 193 AD3d 486, 487 [1st Dept 2021], held that a non-arbitrable issue can be decided in an arbitration when the issue is inextricably intertwined with the arbitrable issue. The court held:

Where there is no substantial question whether a valid agreement [to arbitrate] was made or complied with, . . . the court shall direct the parties to arbitrate” and its order “shall operate to stay a pending . . . action” (CPLR 7503 [a] [emphasis added]). Once a valid arbitration agreement is identified, an arbitration should only be stayed “when the sole matter sought to be submitted to arbitration is clearly beyond the arbitrator’s power” (Matter of Silverman [Benmor Coats], 61 NY2d 299, 309 [1984] [emphasis added]). Further, where “arbitrable and nonarbitrable claims are inextricably interwoven, the proper course is to stay judicial proceedings pending completion of the arbitration, particularly where . . . the determination of issues in arbitration may well dispose of nonarbitrable matters” (Cohen v Ark Asset Holdings, 268 AD2d 285, 286 [1st Dept 2000]; see also Lake Harbor Advisors, LLC v Settlement Servs. Arbitration & Mediation, Inc., 175 AD3d 479 [2d Dept 2019]; Matter of Monotube Pile Corp. v Pile Found. Constr. Corp., 269 AD2d 531 [2d Dept 2000]).

There is no dispute that there is a valid agreement between the parties to arbitrate any dispute regarding unpaid fees. Thus, the court must compel arbitration of defendants’ claim for unpaid fees and stay this action pending completion of the arbitration (CPLR 7503 [a]). Moreover, because plaintiff’s nonarbitrable malpractice claim is inextricably intertwined with the arbitrable claim for unpaid fees, the proper course is to stay the action pending completion of the arbitration (see Cohen, 268 AD2d at 286 **2 ; Lake Harbor Advisors, LLC, 175 AD3d at 479; Monotube Pile Corp., 269 AD2d at 531).

To the extent plaintiff argues that it cannot be forced to arbitrate its malpractice claim because it did not explicitly agree to do so, both the First and Second Departments have clearly found that a nonarbitrable issue can be decided in an arbitration when it is inextricably intertwined with an arbitrable issue, particularly where, as here, the determination of the arbitrable unpaid fees claim may dispose of the nonarbitrable malpractice claim (see Cohen, 268 AD2d at 286; Lake Harbor Advisors, LLC, 175 AD3d at 480; Monotube Pile Corp., 269 AD2d at 531-532).

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