Security for Costs: When I Say Freeze, Please Don’t Move

Posted on July 7, 2025 by Richard Klass

Security for Costs may be requested by a defendant being sued by an out-of-state litigant to ensure that, in the event the defendant is successful in the lawsuit, he will recover the costs of the action. The defendant’s motion for posting security can stop a plaintiff’s lawsuit dead in its tracks.

National Bank May Be Considered a Non-Resident Plaintiff.

A New York State consumer was sued for defaulting on a credit card account. In the complaint, the plaintiff stated it is a National Bank located in Utah. The defendant retained Richard A. Klass, Esq., Your Court Street Lawyer, who filed an Order to Show Cause under CPLR 8501, requesting that the judge direct the plaintiff post security for costs, pointing to the fact that it may be considered an out-of-state litigant.

Security Directed “as of Right” or in the Court’s Discretion.

In response to a defendant’s motion, a judge can order the plaintiff to deposit money or a bond with the court clerk to cover the defendant’s costs, depending on the status of the plaintiff and the circumstances of the lawsuit. CPLR 8501 provides:

(a) As of right. Except where the plaintiff has been granted permission to proceed as a poor person or is the petitioner in a habeas corpus proceeding, upon motion by the defendant without notice, the court or a judge thereof shall order security for costs to be given by the plaintiffs where none of them is a domestic corporation, a foreign corporation licensed to do business in the state or a resident of the state when the motion is made.

(b) In court’s discretion. Upon motion by the defendant with notice, or upon its own initiative, the court may order the plaintiff to give security for costs in an action by or against an assignee or trustee for the benefit of creditors, a trustee, a receiver or debtor in possession in bankruptcy, an official trustee or committee of a person imprisoned in this state, an executor or administrator, the committee of a person judicially declared to be incompetent, the conservator of a conservatee, a guardian ad litem, or a receiver.

The motion can be made by the defendant at any point during the litigation. See, Cie Noga, S.A. v Heather Fin. Corp., 130 Misc 2d 1086, 1088 [Sup Ct 1986] (“The rule is that there is ‘no time limitation placed upon the defendants’ right to seek security’ (Green v. Roosevelt Hotel, 47 Misc.2d 177, 261 N.Y.S.2d 942 (Sup.Ct.N.Y.Co.1965); Siegel, N.Y. Practice § 414, Costs (West 1978) and a defendant’s motion for costs may be made and must be granted ‘at any stage of the action’. Gilbert v. 503–507 West 177th St. Corp., 186 Misc. 78, 58 N.Y.S.2d 690 (Sup.Ct.NY Co.1945); Snyder v. Griswold, 140 Misc. 82, 250 N.Y.S. 26 (Sup.Ct.Chautauqua Co.1931).”)

In Citibank (S. Dakota), N. A. v Gonzalez, 114 Misc 2d 1007 [Civ Ct 1982], the court held that the plaintiff, a national banking association based in South Dakota not licensed to do business in New York, was required to post security for costs as a non-resident plaintiff pursuant to CPLR 8501(a) upon defendant’s motion, since national banks are subject to State law unless the State law expressly conflicts with Federal law or infringes upon national banking laws or imposes an undue burden upon the performance of the national banks’ functions, factors which were not presented; specifically, that provision of the National Bank Act which empowers a national bank to sue in the state courts as fully as a natural person could (US Code, Title 12 § 24), does not exempt plaintiff from the requirement that it post security for costs under CPLR 8501(a), and the mandatory provisions of said State statute do not constitute an undue restraint on interstate commerce.

Lawsuit Stayed [Frozen] Pending Security for Costs.

As part of the request for security for costs, CPLR 8502 provides for entry of an Order directing that all proceedings in the lawsuit are stayed pending the posting of security for costs. [See footnote 1] In the credit card lawsuit, the judge signed the Order to Show Cause with an interim stay of proceedings pending the plaintiff’s posting of an undertaking. [See footnote 2] A further request for the costs of the action under CPLR 8101 [See footnote 3] and 8201 [See footnote 4] was made to the court as well.

Constitutionality of Article 85 Upheld.

In the past, out-of-state plaintiffs have had a hard time accepting that their lawsuits can be stayed while they are forced to post money or a bond with a New York court clerk. In a recent New York State Court of Appeals case, Clement v Durban, 32 NY3d 337, 346-47 [2018], in which there was a challenge to the constitutionality of CPLR Article 85, New York State’s highest court upheld the statute, holding:

For these reasons, we conclude that sections 8501(a) and 8503 do not unduly burden nonresidents’ fundamental right to access the courts because they impose marginal, recoverable security for costs on only those nonresident plaintiffs who do not qualify for poor persons’ status pursuant to CPLR 1101, or fit any other statutory exemption. Where these nonresident plaintiffs do not prevail in their litigation, they must pay the same costs required of non-prevailing residents, but are simply required to post the security applied to those costs at an earlier date. Conversely, should nonresident plaintiffs prevail, their security is refunded, with any accrued interest (see Smith, 245 N.Y. at 493, 157 N.E. 753 [“the effect of the apparent discrimination is not to cast upon the non-resident a burden heavier in its ultimate operation than the one falling upon residents, but to restore the equilibrium by withdrawing an unfair advantage”]; see also CPLR 2601, 2605, 2607). Even if, as plaintiff contends, this provides resident litigants with “some detectable litigation advantage” (McBurney, 569 U.S. at 231, 133 S.Ct. 1709), imposing a “relatively minor hardship” (Landise, 141 A.3d at 1076) on a limited class of nonresident plaintiffs is not enough to constitute an impermissible burden, such that nonresident plaintiffs do not have reasonable and adequate access to the courts.

Footnotes

[1]
§ 8502. Stay and dismissal on failure to give security.

Until security for costs is given pursuant to the order of the court, all proceedings other than to review or vacate such order shall be stayed. If the plaintiff shall not have given security for costs at the expiration of thirty days from the date of the order, the court may dismiss the complaint upon motion by the defendant, and award costs in his favor.

[2]
§ 8503. Undertaking.

Security for costs shall be given by an undertaking in an amount of five hundred dollars in counties within the city of New York, and two hundred fifty dollars in all other counties, or such greater amount as shall be fixed by the court that the plaintiff shall pay all legal costs awarded to the defendant.

[3]
§ 8101. Costs in an action.

The party in whose favor a judgment is entered is entitled to costs in the action, unless otherwise provided by statute or unless the court determines that to so allow costs would not be equitable, under all of the circumstances.

[4]
§ 8201. Amount of costs in an action.

Costs awarded in an action shall be in the amount of:

1. two hundred dollars for all proceedings before a note of issue is filed; plus

2. two hundred dollars for all proceedings after a note of issue is filed and before trial; plus

3. three hundred dollars for each trial, inquest or assessment of damages.

Richard A. Klass, Esq.
Your Court Street Lawyer

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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.com with any questions.

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Court affirmed the denial of the law firm’s motion to dismiss

Posted on January 16, 2025 by Richard Klass

In Berger v Lewis Johs Avallone Aviles, LLP, 232 AD3d 840, 841-42 [2d Dept 2024], the court affirmed the denial of the law firm’s motion to dismiss the client’s malpractice lawsuit, holding:

“To succeed on a motion to dismiss based upon documentary evidence pursuant to CPLR 3211(a)(1), the documentary evidence must utterly refute the plaintiff’s factual allegations, conclusively establishing a defense as a matter of law” (Georgica Bldrs., Ltd. v. 136 Bishops Lane, LLC, 175 A.D.3d 610, 611, 106 N.Y.S.3d 345 [internal quotation marks omitted]; see Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511). Further, “[o]n a motion pursuant to CPLR 3211(a)(7) to dismiss for failure to state a cause of action, the court must accept the facts 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” (Georgica Bldrs., Ltd. v. 136 Bishops Lane, LLC, 175 A.D.3d at 611, 106 N.Y.S.3d 345; see Leon v. Martinez, 84 N.Y.2d at 87, 614 N.Y.S.2d 972, 638 N.E.2d 511).

Here, accepting the allegations in the complaint as true and according the plaintiff the benefit of every possible favorable inference (see Leon v. Martinez, 84 N.Y.2d at 87, 614 N.Y.S.2d 972, 638 N.E.2d 511), the complaint sufficiently stated a cause of action to recover damages for legal malpractice. Contrary to Wohlgemuth’s contention, “ ‘a legal malpractice plaintiff need not, in order to assert a viable cause of action, specifically plead that the alleged malpractice fell within the agreed scope of the defendant’s representation’ ” (Shan Yun Lin v. Lau, 210 A.D.3d 817, 818, 178 N.Y.S.3d 538, quoting Shaya B. Pac., LLC v. Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 A.D.3d 34, 39, 827 N.Y.S.2d 231). Further, “ ‘a legal malpractice defendant seeking dismissal pursuant to CPLR 3211(a)(1) must tender documentary evidence conclusively establishing that the scope of its representation did not include matters relating to the alleged malpractice’ ” (id., quoting Shaya B. Pac., LLC v. Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 A.D.3d at 39, 827 N.Y.S.2d 231). Here, Wohlgemuth failed to submit documentary evidence sufficient to make that showing or to otherwise submit documentary evidence utterly refuting the plaintiff’s allegations or conclusively establishing a defense as a matter of law (see Zi Kuo Zhang v. Lau, 210 A.D.3d 829, 831, 178 N.Y.S.3d 545; Shan Yun Lin v. Lau, 210 A.D.3d at 818, 178 N.Y.S.3d 538).

Richard A. Klass, Esq.
Your Court Street Lawyer

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Court granted the lawyer’s counterclaim for fees

Posted on February 1, 2024 by Richard Klass

In Lang v DiPaolo, 222 AD3d 856 [2d Dept 2023], the court not only upheld the dismissal of the client’s malpractice case but also granted the lawyer’s counterclaim for fees, holding:

A plaintiff seeking to recover damages for legal malpractice must prove that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and that the breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages (see McCoy v. Feinman, 99 N.Y.2d 295, 301–302, 755 N.Y.S.2d 693, 785 N.E.2d 714). “To establish causation, 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” (Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 N.Y.3d 438, 442, 835 N.Y.S.2d 534, 867 N.E.2d 385; see Valley Ventures, LLC v. Joseph J. Haspel, PLLC, 102 A.D.3d 955, 956, 958 N.Y.S.2d 604). A defendant moving for summary judgment dismissing a legal malpractice cause of action has the burden of establishing prima facie that he or she did not fail to exercise such skill and knowledge, or that the claimed departure did not proximately cause the plaintiff to sustain damages (see EDJ Realty, Inc. v. Siegel, 202 A.D.3d 1059, 1060, 159 N.Y.S.3d 868). Once a defendant makes this prima facie showing, the burden shifts to the plaintiff to raise a triable issue of fact (see id. at 1061, 159 N.Y.S.3d 868; Valley Ventures, LLC v. Joseph J. Haspel, PLLC, 102 A.D.3d at 956, 958 N.Y.S.2d 604).

Here, former counsel established their prima facie entitlement to judgment as a matter of law dismissing the complaint by demonstrating that their actions did not proximately cause the plaintiff’s alleged damages, and that subsequent counsel had a sufficient opportunity to protect the plaintiff’s rights (see Parklex Assoc. v. Flemming Zulack Williamson Zauderer, LLP, 118 A.D.3d 968, 970, 989 N.Y.S.2d 60; Katz v. Herzfeld & Rubin, P.C., 48 A.D.3d 640, 641, 853 N.Y.S.2d 104). In opposition, the plaintiff failed to raise a triable issue of fact as the plaintiff failed to address the issue of proximate cause (see Givens v. De Moya, 193 A.D.3d 691, 693, 146 N.Y.S.3d 291).

The Supreme Court also should have granted the branch of motion by former counsel which was for summary judgment on their counterclaim to recover on an account stated in the total sum of $1,610. “An account stated is an agreement between parties, based upon their prior transactions, with respect to the correctness of the account items and the specific balance due” (Citibank [South Dakota], N.A. v. Abraham, 138 A.D.3d 1053, 1056, 31 N.Y.S.3d 517; see Michael B. Shulman & Assoc., P.C. v. Canzona, 201 A.D.3d 716, 717, 161 N.Y.S.3d 291). Here, former counsel demonstrated their prima facie establishment to judgment as a matter of law on their counterclaim to recover legal fees on an account stated in the total sum of $1,610 (see Givens v. De Moya, 193 A.D.3d at 693–694, 146 N.Y.S.3d 291; Joseph W. Ryan, Jr., P.C. v. Faibish, 136 A.D.3d 984, 985, 27 N.Y.S.3d 159). In opposition, the plaintiff failed to raise a triable issue of fact.

Richard A. Klass, Esq.
Your Court Street Lawyer

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The court affirmed the motion to dismiss the client’s claims.

Posted on January 23, 2024 by Richard Klass

In Guliyev v Banilov & Assoc., P.C., 221 AD3d 589, 590-91 [2d Dept 2023], the court affirmed the motion to dismiss the client’s claims, holding:

“On a motion to dismiss pursuant to CPLR 3211 (a) (7), the complaint must be afforded a liberal construction, the facts therein must be accepted as true, and the plaintiff must be accorded the benefit of every possible favorable inference” (Angeli v Barket, 211 AD3d 896, 897 [2022]; see Leon v Martinez, 84 NY2d 83, 87 [1994]). “Where evidentiary material is submitted and considered on a motion to dismiss a complaint pursuant to CPLR 3211 (a) (7), and the motion is not converted into one for summary judgment, the question becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one, and unless it has been shown that a material fact as claimed by the plaintiff to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it, dismissal should not eventuate” (Rabos v R&R Bagels & Bakery, Inc., 100 AD3d 849, 851-852 [2012]; see Nassau Operating Co., LLC v DeSimone, 206 AD3d 920, 925-926 [2022]).

“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” (Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 845 [2012]; see Marinelli v Sullivan Papain Block McGrath & Cannavo, P.C., 205 AD3d 714, 716 [2022]). “The plaintiff is required to plead actual, ascertainable damages that resulted from the attorneys’ negligence” (Bua v Purcell & Ingrao, P.C., 99 AD3d at 847; see Marinelli v Sullivan Papain Block McGrath & Cannavo, P.C., 205 AD3d at 716). “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 at 848 [citations omitted]; see Marinelli v Sullivan Papain Block McGrath & Cannavo, P.C., 205 AD3d at 716). Here, the complaint failed to plead specific factual allegations demonstrating that, but for the defendants’ alleged negligence, there would have been a more favorable outcome in the underlying action or that the plaintiff would not have incurred any damages (see Williams v Silverstone, 215 AD3d 787, 789 [2023]; Katsoris v Bodnar & Milone, LLP, 186 AD3d 1504, 1506 [2020]). In addition, the plaintiff is precluded by the doctrine of collateral estoppel from relitigating the issue of whether the defendants had the authority to settle the underlying action (see CPLR 3211 [a] [5]; Reid v Reid, 198 AD3d 993, 994 [2021]; Shifer v Shifer, 165 AD3d 721, 723 [2018]).

Pursuant to Judiciary Law Section 487, an attorney who is “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 (see Cordell Marble Falls, LLC v Kelly, 191 AD3d 760, 762 [2021]). “A violation of Judiciary Law § 487 requires an intent to deceive” (Moormann v Perini & Hoerger, 65 AD3d 1106, 1108 [2009]; see Cordell Marble Falls, LLC v Kelly, 191 AD3d at 762). “Allegations regarding an act of deceit or intent to deceive must be stated with particularity” (Bill Birds, Inc. v Stein Law Firm, P.C., 164 AD3d 635, 637 [2018], affd 35 NY3d 173 [2020]; see CPLR 3016 [b]; Palmieri v Perry, Van Etten, Rozanski & Primavera, LLP, 200 AD3d 785, 787 [2021]). Here, the plaintiff’s allegations that the defendants hid true facts and acted to benefit themselves are conclusory and factually insufficient (see Palmieri v Perry, Van Etten, Rozanski & Primavera, LLP, 200 AD3d at 787; Cordell Marble Falls, LLC v Kelly, 191 AD3d at 762).

Richard A. Klass, Esq.
Your Court Street Lawyer

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On a motion to dismiss a complaint pursuant to CPLR 3211(a)(7)…

Posted on December 19, 2023 by Richard Klass

In Alexim Holdings, LLC v McAuliffe, 2023 NY Slip Op 05581 [2d Dept Nov. 8, 2023], the court affirmed the dismissal of a client’s legal malpractice case, holding:

On a motion to dismiss a complaint pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the court must accept the facts alleged in the pleading as true, accord the plaintiff the benefit of every favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511; Marinelli v. Sullivan Papain Block McGrath & Cannavo, P.C., 205 A.D.3d 714, 715, 169 N.Y.S.3d 90).

Here, the Supreme Court properly granted those branches of McAuliffe Law’s motion which were pursuant to CPLR 3211(a)(7) to dismiss the causes of action alleging legal malpractice, breach of contract, and breach of fiduciary duty insofar as asserted against it. The complaint failed to allege the existence of an attorney-client relationship, contractual relationship, or fiduciary relationship between the plaintiff and McAuliffe Law, which was not a party to the subject legal services agreement and did not even exist at the time of the misconduct alleged in the complaint. Thus, the complaint failed to state a cause of action sounding in, inter alia, legal malpractice or breach of fiduciary duty insofar as asserted against McAuliffe Law (see Keness v. Feldman, Kramer & Monaco, P.C., 105 A.D.3d 812, 813, 963 N.Y.S.2d 313).

The Supreme Court also properly granted those branches of the Tarbet defendants’ motion which were pursuant to CPLR 3211(a)(7) to dismiss the causes of action alleging legal malpractice, breach of fiduciary duty, and breach of contract insofar as asserted against them. “To state a cause of action to recover damages for legal malpractice, a plaintiff must allege: (1) that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession; and (2) that the attorney’s breach of the duty proximately caused the plaintiff actual and ascertainable damages” (Dempster v. Liotti, 86 A.D.3d 169, 176, 924 N.Y.S.2d 484 [internal quotation marks omitted]; see Keness v. Feldman, Kramer & Monaco, P.C., 105 A.D.3d at 812, 963 N.Y.S.2d 313). “A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel” (Katsoris v. Bodnar & Milone, LLP, 186 A.D.3d 1504, 1505, 131 N.Y.S.3d 89 [internal quotation marks omitted]). “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, 952 N.Y.S.2d 592; see Marinelli v. Sullivan Papain Block McGrath & Cannavo, P.C., 205 A.D.3d at 716, 169 N.Y.S.3d 90; Katsoris v. Bodnar & Milone, LLP, 186 A.D.3d at 1506, 131 N.Y.S.3d 89). “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 A.D.3d at 848, 952 N.Y.S.2d 592 [citations omitted]; see Marinelli v. Sullivan Papain Block McGrath & Cannavo, P.C., 205 A.D.3d at 716, 169 N.Y.S.3d 90).

Here, the complaint failed to adequately allege that the Tarbet defendants’ breach of their professional duty proximately caused the plaintiff to sustain actual and ascertainable damages (see Marinelli v. Sullivan Papain Block McGrath & Cannavo, P.C., 205 A.D.3d at 716, 169 N.Y.S.3d 90; Bua v. Purcell & Ingrao, P.C., 99 A.D.3d at 848, 952 N.Y.S.2d 592; Wald v. Berwitz, 62 A.D.3d 786, 787, 880 N.Y.S.2d 293). The plaintiff’s allegations that, but for the Tarbet defendants’ alleged negligence, the plaintiff would have received a more favorable settlement offer or outcome in the underlying action were conclusory and speculative (see Katsoris v. Bodnar & Milone, LLP, 186 A.D.3d at 1506, 131 N.Y.S.3d 89; Janker v. Silver, Forrester & Lesser, P.C., 135 A.D.3d 908, 910, 24 N.Y.S.3d 182). Accordingly, the complaint failed to state a cause of action to recover damages for legal malpractice insofar as asserted against the Tarbet defendants. Further, since the causes of action alleging breach of fiduciary duty and breach of contract insofar as asserted against the Tarbet defendants arose from the same operative facts as the legal malpractice cause of action and did not allege distinct damages, they were duplicative of the legal malpractice cause of action and thus, also subject to dismissal (see Cali v. Maio, 189 A.D.3d 1337, 1339, 134 N.Y.S.3d 806; Keness v. Feldman, Kramer & Monaco, P.C., 105 A.D.3d at 813, 963 N.Y.S.2d 313).

Richard A. Klass, Esq.
Your Court Street Lawyer

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Prior results do not guarantee a similar outcome.

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