This is a legal malpractice case arising out of a divorce case. Plaintiff alleged that her ex-husband concealed assets during the divorce case and that her lawyers were negligent in failing to discover those assets. The lawyer defendants moved to dismiss the case, but the Appellate Division of the Supreme Court of New York reversed and ordered that the case be dismissed.
Reasoning: The court recited the elements for a legal malpractice case (a) duty; (b) breach of duty; (c) proximate causation (that the plaintiff suffered a loss caused by the lawyer’s conduct) and (d) ascertainable damages. In the case of a settlement of the underlying case, the plaintiff must prove that the settlement of the action was effectively compelled by the lawyer’s action.
In this case, the court held that there was no proof that the plaintiff was compelled to enter into the settlement by the lawyer’s actions because the plaintiff was aware, before she settled, that her husband had concealed assets. The court explained: “Here, to the extent that the complaint asserted that the appellants were negligent in failing to ascertain the full extent of the assets of the plaintiff’s former husband, it failed to sufficiently allege that the stipulation of settlement entered into was effectively compelled by the mistakes of counsel, since the plaintiff acknowledged that she elected to enter into the settlement agreement even though she was aware that her former husband had not fully disclosed his assets.”
Further, the transcript of the prove-up hearing proved that the plaintiff was aware of certain things she claimed that she was not aware of. The court explained: “In addition, to the extent that the complaint alleged that the plaintiff was not advised about certain aspects of the stipulation of settlement pertaining to the marital residence, the transcript of the court proceedings submitted by the appellants, wherein the attorneys set forth the terms of the stipulation, utterly refuted those factual allegations.”
In sum, the defense proved that the plaintiff’s decision to enter the settlement was made of her own free will and not compelled by the lawyer’s conduct.