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In Mid-City Electrical Corporation v. Peckar & Abramson, 2023 NY Slip Op 1085, the New York Appellate Division, Second Department affirmed the dismissal of legal malpractice claims against company attorneys.

First, the court ruled that the owners of Mid-City were not clients of Peckar & Abramson because they were not mentioned as clients in the engagement letter.

Second, the court held that Mid-City’s claim for legal malpractice did not state a claim because Mid-City was unable to allege that the outcome would have been different had the lawyers acted correctly. The lawyers allegedly failed to file an appeal from an adverse regulatory determination that Mid-City was not a disadvantaged business enterprise. The legal malpractice claim was dismissed because Mid-City did not allege that it would have won the appeal had the appeal been filed. Because there was no reason to believe the outcome would be different, there is no allegation of proximate causation and the case was dismissed. Proximate causation often rises up to defeat legal malpractice claims where the lawyer may have been negligent.

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One of the more obscure rules in the world of legal malpractice is that legal malpractice claims cannot be assigned. The lawyer-client relationship is one of “privity.” It is a direct relationship between the client and the lawyer. Sometimes in litigation, one party requests that the other party assign to it a legal malpractice claim against the other party’s lawyer. This is exactly what occurred in Thompson v. Harrie, No. 22-1058 (8th Circuit February 3, 2023). In this case, the claim against the lawyer was assigned by the defendant in the underlying lawsuit. Thompson had no attorney-client relationship with Harrie or the other defendants. Instead, the legal malpractice was assigned to her as part of a settlement. Courts frown on this behavior because it can leave the lawyer vulnerable to a claim from a party the lawyer never represented. In the underlying case Thompson sued Helgeson to recover for damages sustained in an automobile accident. Thompson won a judgment against Helgeson’s estate but decided not to collect. Instead, she obtained an assignment of any claim Helgeson could have made against his own attorney.

The court describes the procedural history of the case in this way:

In January 2018, Thompson sued the law firm and Nodak in South Dakota state court, alleging claims for the unauthorized practice of law, fraud and deceit, civil conspiracy, and barratry/abuse of process. The law firm removed the case to federal court, and the district court dismissed the entire suit for failure to state a claim. Following the dismissal, Thompson agreed with Helgeson’s estate that she would not execute the judgment if Helgeson’s estate assigned its potential claims against the law firm and Nodak to her. This agreement, which was reduced to writing, expressly included claims of malpractice, and directed that Thompson was entitled to all proceeds recovered from the assigned claims.

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In Julio Chicas v. Christopher J. Cassar, et al, No. 2023 NY Slip Op 00202, Appellate Division of the Supreme Court of New York, Second Department, the plaintiff sued for malpractice claiming that the lawyer defendants failed to sue a tortfeasor. The case was dismissed at the trial level, but the plaintiff successfully appealed. The reasoning:

Here, the defendants failed to establish, prima facie, that the plaintiff had no actual or ascertainable damages. “The defendant must affirmatively demonstrate the absence of one of the elements of legal malpractice” (EDJ Realty, Inc. v Siegel, 202 AD3d 1059, 1060). The complaint alleged that the damages included the failure to pursue SUM benefits, as well as the failure to pursue recovery against the alleged tortfeasor. Since it was alleged herein, inter alia, that the defendants’ legal malpractice prevented the plaintiff from obtaining a judgment against the alleged tortfeasor, the defendants had the burden of affirmatively demonstrating that the plaintiff would not have prevailed against the alleged tortfeasor or that the alleged tortfeasor did not have personal assets such that his motorist insurance policy limit that was recovered in the amount of $50,000, was the maximum judgment that could have been obtained from him (see id. at 1060). The defendants failed to do so. Accordingly, the Supreme Court should have denied that branch of the defendants’ motion which was for summary judgment dismissing the complaint.

Comment: the court is saying there may have been a possible recovery against the tortfeasor who was not pursued. This may or may not be true. The litigation is in its early stages and we cannot predict whether or not the plaintiff can prove this claim. (If the possible tortfeasor was bankrupt or insolvent, there is no possible recovery.).

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In Bei Yang v. Pagan Law Firm, PC, 2022 NY Slip Op 31007(U) Supreme Court, New York County, the plaintiff hired the lawyer for a medical malpractice case. That case settled for $1.3 million. Plaintiff then sued the lawyer for legal malpractice. Plaintiff alleged that the lawyer coerced him into accepting the settlement. The court dismissed the legal malpractice action because the plaintiff could not prove he would have recovered more than $1.3 million had he gone to trial.

The reasoning:

“Plaintiff’s own expert does not dispute Mr. Zuller’s opinion that the action would be risky to try and that a trial may have resulted in a defense verdict or a verdict lower than the settlement amount. In his affirmation, Mr. Bower states:

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In Kozal v. Snyder, 978 N.W.2d 174, the Nebraska Supreme Court held that an attorney did not commit legal malpractice because the purported error was a close call and the law was unsettled. in the underlying case, the attorney represented clients who wished to renew liquor licenses. The Nebraska Supreme Court held that the case he filed was insufficient because he failed to name as parties and serve the citizens who objected to the renewal of the liquor licenses.

Kozal then filed a claim against the lawyer, but the Nebraska Supreme Court affirmed the dismissal of that legal malpractice case as well. The court’s reasoning:

When Snyder filed the appeal underlying Kozal I, in which he did not name the citizen objectors as parties, the issue of naming citizen objectors in appeals from decisions of the NLCC was an unsettled issue of law. Additionally, Snyder did not have a duty to inform his clients regarding the unsettled area of law. We therefore find that the district court did not err when it concluded that, as a matter of law, appellees did not breach the applicable standard of care.

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We are often asked to evaluate potential malpractice claims. Here is what we need to know before we can take your case:

(a) What happened? How did things go bad? Why do you believe your lawyer was responsible? In your opinion what was the mistake of the lawyer?

(b) When did it happen? This is really important because the statute of limitations is usually two years from whenever you sustained damages from the alleged malpractice. The statute of limitations is complicated and can require extensive analysis. There are often no clear answers to this question.

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In Scully v. Novack & Macey, LLP, 2022 IL App (1st) 210319-U, the Illinois Appellate Court affirmed the dismissal of slander of title claims against the Defendant law firm. The law firm represented some of the parties to a family feud over inherited real estate. During the litigation, the law firm, under instructions from its client, placed a lis pendens on real property. The claims for slander of title against the law firm were dismissed under the absolute litigation privilege. A lis pendens is a public document filed with the Recorder of Deeds that gives notice to any purchaser that the property is subject to a claim in litigation.

As the court explained, “Illinois’s absolute litigation privilege derives from section 586 of the Restatement (Second) of Torts. That section provides, ‘An attorney at law is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding, or in the institution of, or during the course and as part of, a judicial proceeding in which he participates as counsel, if it has some relation to the proceeding.’ ¶ 42.

The absolute litigation privilege barred any claim against the law firm for its action in filing the lis pendens. The court also noted that the attorneys had a valid reason to file the lis pendens. ¶ 45. Because the lis pendens related to the pending litigation and served the interests of their clients, the law firm’s actions were absolutely privileged.

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The Second District of the Illinois Appellate Court recently decided Nutter v. Schiller DuCanto & Fleck, 2022 IL App (2d) 210376, in which it held that a legal malpractice claim was barred by res judicata because the lawyer and the client had previously engaged in litigation over the lawyer’s fee petition. The court summarizes the procedural history of the dispute as follows:

¶ 11 On December 18, 2020, defendants moved to dismiss plaintiff’s legal malpractice complaint. They alleged that res judicata barred plaintiff from bringing the action because (1) the legal malpractice case and the fee petition concerned the same parties, (2) the order awarding defendants fees and costs was final, and (3) the fee petition and malpractice action involved the same legal services. See 735 ILCS 5/2-619 (West 2020). In response, plaintiff asserted that res judicata did not bar his legal-malpractice action because he had a right to a jury trial in the legal-malpractice action and no such right in the marriage dissolution proceedings. Thus, application of res judicata would deprive him of his right to a jury trial.

¶ 12 Although the trial court held a hearing on the motion to dismiss, no transcript (or acceptable substitute) from that hearing was filed in this court. See Ill. S. Ct. Rule 323(c) (eff. July 1, 2017). Following that hearing, the trial court granted defendants’ motion to dismiss. In doing so, the court noted in its written order that “plaintiff recognized that the two competing claims could be consolidated and tried together, and even acknowledged that the court could try both cases together or bifurcated with plaintiff’s claim of legal malpractice tried to a jury and defendant’s petition for Section 508 fees tried in simultaneous or sequential bench trial.” The court continued that “[t]he divorce court judge had set a longer briefing schedule on the petition for fees, and yet there was no response filed by the plaintiff, only the last minute filing of the legal malpractice law case.” The court observed that plaintiff essentially sat on his hands, “pinning all hopes on the motion for continuance based on the recent filing of this [legal malpractice] case filed in the `Law’ division of the court.” This timely appeal followed.

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This is a case of litigation malpractice. In Best Choice Products, Inc. v. Hendrick, Bryant, Nerhod, Sanders & Otis, Ltd, No. COA21-163, the Court of Appeals of North Carolina reinstated a legal malpractice action. Law Firm had represented Best Choice in an underlying case. According to the Complaint, the Law Firm failed to produce certain documents in the underlying case and the case was dismissed. The opinion at paragraph 4 quotes the key allegations of the Complaint:

¶ 4 On 20 July 2020, Best Choice filed its complaint against Defendants for professional malpractice. Best Choice attached to its complaint as exhibits the summary judgment order entered 24 July 2017, and an order granting sanctions on 25 January 2018 from the Prior Lawsuit. Best Choice made several allegations in its complaint relating to Defendants’ negligent representation and listed specific instances in which Defendants failed to meet the standard of care in rendering legal services in the Prior Lawsuit, which it designated as “Defendants’ Failures.” Best Choice made the following allegations pertinent to our review:

33. Defendants’ Failures continued in the Prior Lawsuit through the Orders referenced below, prevent Best Choice from avoiding or mitigating the adverse consequences imposed by the Orders.

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A recent decision by the Ohio Court of Appeals, Meehan v. Smith, 2022 Ohio 2359 (8th Appellate Dist. 2022), is instructive on the difficulties that an expected beneficiary of a will or estate plan sues for legal malpractice. The expected beneficiary (daughter of the decedent) claimed that she was a client or intended beneficiary of the estate planning law firm that revised her mother’s estate plan.

{¶ 15} At the discovery deposition in this case, appellant testified that she never signed an engagement letter with appellees. She also testified that she personally never paid them any money (she only issued checks drawn from Teepee & Petunia’s accounts at her parents’ direction). However, appellant testified that when her parents initially sought estate planning services, and she and other family members met with appellee attorney Smith, “it was [her] assumption that he was representing the entire family.” Appellant testified that she had that assumption because Smith “would always say to [her] specifically if [she] had any questions to make sure [she] [s]hould give him a call.”

{¶ 16} Appellant further testified that she “felt [she] was being included” in the meetings with her parents and brothers, and Smith “represented the documents.” Donna’s estate planning also provided for the possibility that her 2018 trust funds could be used for appellant’s own estate planning — a point appellant relies on for her claim of the establishment of an attorney-client relationship. Appellant did admit that Smith never told her he was representing the entire family. She further admitted that Smith never told her he was representing her personally. She testified that Smith never told her in “those specific words” that he was her attorney, but she “felt like [she] was his client because [she] was included, as were [her] brothers that were there. It was [her] understanding that [Smith] was representing the family under the estate planning of [her] parents.” (Emphasis added.) The record demonstrates that appellant does not have any legal training.

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