Articles Posted in Legal Malpractice

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This is a legal malpractice action arising out of a real estate purchase. Viktoriya Bakcheva retained the Law Offices of Stein & Associates to represent her in the purchase of a condominium unit. She alleged that the lawyers did not properly investigate the transaction because the Unit at issue had a second floor above the first floor. The problem – the second floor was not as described in the condominium documents or the certificate of occupancy. (It would appear that a prior owner of the unit had added an additional floor to the unit without obtaining a permit or the permission of the condominium association. As one might imagine, the lawyers’ motion for summary judgment was denied. They appealed and did no better in the Appellate Division.

The explanation:

We agree with the Supreme Court that the defendants were not entitled to summary judgment dismissing the legal malpractice cause of action. Although the defendants established their prima facie entitlement to judgment as a matter of law, the plaintiff raised a triable issue of fact in opposition. Specifically, the plaintiff submitted evidence that she had informed the defendants, prior to the closing, that the main portion of the apartment was on the seventh floor of the building and that the apartment included a second level. According to the plaintiff, the defendants committed malpractice because they failed to recognize the illegality of the second level, since neither the certificate of occupancy nor the approved condominium offering plan authorized the existence of an eighth floor to the condominium (see id.).

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May an insurance company sue the defense firm that it hired where it alleges that the defense firm did not meet the standard of care? In Florida, according to Arch Insurance Company v. Kubicki Draper, 4-D17-2889, the insurance company may not file suit because it lacks privity with the law firm.  The insurance company alleged that it hired the firm to defend a case for one of its insureds. The law firm allegedly failed to raise the statute of limitations defense, which caused the insurance company to incur a loss.

The privity defense holds that a plaintiff cannot sue a defendant unless he was “in privity” with that defendant. Here, even though the insurance company hired the law firm to defend its insured, there was no privity because the law firm was responsible only to its client, the insured. The court rejected the insurance company’s public policy arguments:

The insurer nevertheless argues public policy and common sense dictate that an insurer should be able to pursue legal malpractice claims against defense counsel retained to represent its insureds. According to the insurer:

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I often receive phone calls and emails from people who believe that they have a legal malpractice claim against their current lawyer. Most of these claims are not malpractice claims, often because the underlying matter or lawsuit is not finished.

So, someone calls and says that her lawyer missed court dates, forgot to take a deposition and did not disclose an expert on time. My question is this: “How much money did you lose because of that alleged mistake by the lawyer?” Very often, the answer is (a) the case is still pending and I hired a new lawyer to fix the mistakes of the former lawyer or (b) I settled the case and received a settlement payment.

If the answer is “a”, there is no legal malpractice case as this time, although there may be a case in the future.

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The case is Davis v. Cohen & Gresser, 2018 NY Slip Op 02542, a legal malpractice case filed against a law firm.

Davis alleged that the law firm allowed the statute of limitations to run on RICO claims by failing to name to key parties in a lawsuit. The court ultimately concluded that the statute of limitations had run on the claims. However, the law firm greatly strengthened its position by producing a copy of a carefully drafted engagement letter. The engagement letter demonstrated that the law firm was not retained to handle the RICO action.  Further, the law firm never filed an appearance in that lawsuit.

New York allows the statute of limitations to be tolled where there is a continuous representation of the client by the law firm. Davis attempted to argue that the continuous representation doctrine applied to his case. However, as the court explains, the engagement letter and the court record demonstrated that there was no continuous representation:

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The case is Alexander Prout v. Anne C. Vladeck & Vladeck, Raskin & Clark, P.C., 18 CV 260 (S.D. New York June 10, 2018). Prout alleged that he retained Vladeck to represent him in connection with claims against his former employer, Invesco. He further alleged that Vladeck advised him to reject Invesco’s settlement offer of $1.0 million and to instead file litigation. According to Prout, Vladeck failed to timely file his claims and some of those claims (Family Medical Leave Act and Sarbanes-Oxley Act) were barred by the statute of limitations. As a result, he was forced to accept a reduced settlement amount. The facts of the underlying employment law claims are complex and the opinion sets those facts out in some detail. The court concluded that the allegations stated a claim for legal malpractice under New York law because the lawyer allegedly allowed the statutes of limitations to run on the FMLA and Sarbanes-Oxley (Whistleblower) claims.

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The case is Tebbens v. Levin & Conde, 2018 IL App (1st) 170777. Tebbens believed that his former divorce counsel made an error in drafting the marital settlement agreement and drafted an agreement that was not consistent with what the parties had verbally agreed to.  This is a tough case to win as Tebbens signed the agreement. The defense would ask why he did not read what he had signed. However, Tebbens made a further and fatal error to his malpractice claim.

The Divorce statute allows a lawyer to file a fee petition before the judge who heard the divorce. Here Levin & Conde filed such a fee petition. Tebbens made the mistake of alleging malpractice in his response to the fee petition. The court ruled against him and awarded fees. Then Tebben sued for malpractice. The problem is that the doctrine of res judicata barred his claim because the malpractice issue has already been heard and decided in the fee petition case.

This is a litigation blunder that I have personally witnessed on several occasions. As the Eminem song says “you get one shot, one opportunity” to allege legal malpractice. “Don’t let it slip.” You won’t get a second chance.

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This case, KLIGER-WEISS INFOSYSTEMS, INC., Respondent, v. RUSKIN MOSCOU FALTISCHEK, P.C., Appellant. 2015-06404, Index No. 606457/14., 2018 NY Slip Op 01456, was recently decided by the New York Appellate Division. KWI sued its former lawyers for legal malpractice for failing to include a so-called “evergreen” provision in a settlement agreement in an underlying software licensing dispute. The evergreen provision would have renewed the agreement every year. The explanation:

In 2001, the plaintiff, Kliger-Weiss Infosystems, Inc. (hereinafter KWI), entered into an agreement (hereinafter the 2001 agreement) to license and market certain software from STS Systems, LTD, a predecessor in interest to Epicor Retail Solutions Corporation (hereinafter Epicor). In relevant part, the 2001 agreement contained a provision providing for automatic one-year renewals of the 2001 agreement (hereinafter the evergreen provision). In 2004, Epicor’s predecessor in interest commenced an action against KWI and others in the United States District Court for the Eastern District of New York (hereinafter the federal action) seeking, inter alia, to terminate the 2001 agreement due to alleged breaches by KWI. In early 2007, KWI retained the defendant to negotiate a settlement of the federal action, which resulted in a settlement agreement (hereinafter the 2007 settlement agreement). KWI alleges that it instructed the defendant to incorporate the evergreen provision into the 2007 settlement agreement, but that the defendant, unbeknownst to KWI, failed to do so.

In 2011, Epicor commenced an arbitration proceeding against KWI seeking to terminate the 2007 settlement agreement due to KWI’s alleged uncured breaches. The defendant represented KWI in the arbitration, which resulted in a 2013 determination that the 2007 settlement agreement did not contain an evergreen provision.

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This issue comes up every now and then. An attorney files a collection lawsuit against a client and obtains a judgment against the client. (Here the client did not appear and a default judgment was entered). Later, the client reviews the attorney’s work and files a legal malpractice lawsuit. May the lawyer argue that the legal malpractice case is barred by the doctrine of res judicata? Here the answer is “No.”

The court includes a discussion of res judicata:

The purpose of this common law doctrine is to “relieve the parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and, by preventing inconsistent decisions, encourage reliance on adjudication.” Allen v McCurry, 449 US 90, 94; 101 S Ct 411; 66 L Ed 2d 308 (1980). “For the sake of repose, res judicata shields the fraud and cheat as well as the honest person. It therefore is to be invoked only after careful inquiry [as to whether foreclosing plaintiff’s case would protect] the interests served by res judicata.” Brown v Felsen, 442 US 127, 132; 99 S Ct 2205; 60 L Ed 2d 767 (1979). “The burden of establishing the applicability of res judicata is on the party asserting the doctrine.” Richards v Tibaldi, 272 Mich App 522, 531; 726 NW2d 770 (2006).

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In this case, the Minnesota Court of Appeals holds that a client’s executor has standing to pursue a legal malpractice claim against an estate planning attorney.

Gordon Savoie sought estate planning advice from a law firm. That law firm prepared an estate plan for him. Upon his death, a bank was appointed to be his executor. The bank, on behalf of the estate, sued the law firm for legal malpractice because the firm had failed to adequately plan for generation-skipping taxes. The law firm moved for judgment on the pleadings based on the formalistic argument that the law firm did not have an attorney-client relationship with the law firm. The district court accepted this argument, but the Court of Appeals reversed.

The argument that there was no attorney-client relationship with the bank and therefore no duty is poorly reasoned. If the argument were accepted, no victim of legal malpractice could ever sue if the victim passed away. No such rule applies in personal injury cases, medical malpractice cases, or even breach of contract cases. In all those cases the Estate steps into the shoes of the decedent.

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This is a rare patent malpractice case. According to the court, the plaintiff alleged that the lawyers failed to properly file and amend various patent claims and that the errors of the lawyers caused them economic damages. The lawyer defendants moved to dismiss on the ground that the plaintiff had not adequately alleged proximate causation. In particular, the defendants argued that the alleged errors did not cause plaintiff any economic damages. The court disagreed, holding that the plaintiff pleaded lost licensing revenue and royalties.

Source: ECONOMIC ALCHEMY LLC v. BYRNE POH LLP, 2017 NY Slip Op 31640 – NY: Supreme Court 2017 – Google Scholar