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Court Holds That Client Has Stated Claim for Legal Malpractice Against Bankruptcy Firm

Horvath v. Budin, Reisman, Kupferberg & Bernstein, LLP, 2021 NY Slip Op 30105 is a legal malpractice claim arising out of a bankruptcy matter. In particular, the claim was that the bankruptcy firm failed to list Horvath’s personal injury case in the bankruptcy schedules, resulting in the loss of that claim. The Law Firm moved to dismiss. The trial court denied the motion to dismiss. The reasoning:

The pertinent facts:

Plaintiff filed an amended complaint on May 19, 2020 alleging, inter alia, that:

From March 12, 2012 until February 18, 2014, when the Amended Schedule of Assets identifying plaintiff’s personal injury matter filed in Supreme Court State of New York, Bronx County under Index No. 310013/2010 was identified as an asset of the estate, defendant, BUDIN, REISMAN, KUPFERBERG & BERNSTEIN, LLP, took no steps to protect plaintiff’s interests as they related to the Bankruptcy Matter.

Doc. 21 at par. 42 (emphasis in original).

Specifically, plaintiff alleged that defendant failed to timely amend the schedule of assets in Bankruptcy Court to include the Bronx County action, and that this resulted in the dismissal of that action. Doc. 21. Plaintiff also alleged that defendant “failed to timely commence, or recommence, an action against the defendants in the Bronx County action with the knowledge, consent or permission of the Bankruptcy Trustee” or the Bankruptcy Court. Doc. 21 at pars. 44-45, 47. Further, plaintiff claimed that defendant “failed to timely advise plaintiff that his personal injury claims must be identified in the Bankruptcy Matter or his personal injury action could or would be dismissed.” Doc. 21 at par. 50. Additionally, plaintiff alleged that defendant committed legal malpractice by failing to commence a timely legal malpractice action against Lamonsoff. Doc. 21 at par. 74.


The reasoning:

A claim for legal malpractice requires that a plaintiff allege facts that, if proven at trial, would 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 plaintiff to sustain actual and ascertainable damages” (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007] [internal quotation marks and citation omitted]; see Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc.,10 AD3d 267, 271-272 [1st Dept 2004]).

(Kaplan v Conway & Conway, 173 AD3d 452, 452 [1st Dept 2019]).

Here, as noted above, plaintiff claims that defendant’s actions, or inaction, regarding his bankruptcy resulted in the dismissal of the Bronx County action. Specifically, he alleges that:

Defendant BUDIN, REISMAN, KUPFERBERG & BERNSTEIN, LLP committed legal malpractice by failing to exercise that degree of care, skill and diligence commonly possessed by a member of the legal community.

Doc. 21 at par. 60.

Plaintiff also alleges that he would have succeeded on his claim in the Bronx County action “but for the defendant’s negligence and legal malpractice.” Doc. 21 at pars. 62, 78. Further, plaintiff alleges that he sustained damages as a result of defendant’s negligence. Docs. 69, 82. Since the complaint, viewed in the light most favorable to plaintiff, pleads a viable claim sounding in legal malpractice, that branch of defendant’s motion seeking dismissal pursuant to CPLR 3211(a)(7) is denied.

The branch of defendant’s motion seeking dismissal pursuant to CPLR 3211(a)(1) is denied as well. Pursuant to CPLR 3211(a)(1), a party may move to dismiss a complaint asserted against it if “a defense is founded upon documentary evidence.” “A motion to dismiss founded upon documentary evidence may be granted `only where the documentary evidence utterly refutes [the complaint’s] factual allegations, conclusively establishing a defense as a matter of law'” (Stem v Farney Daniels, P.C., 2018 NY Slip Op 32768[U], 2018 NY Misc LEXIS 4955, *13 [Sup Ct, NY County 2018], quoting Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]).

In asserting that it is entitled to dismissal pursuant to CPLR 3211(a)(1), defendant relies on its retainer agreement with plaintiff. Doc. 10. That agreement provided, as noted above, that defendant had “the exclusive right to take all legal steps to enforce the [Bronx County action].” Doc. 10. Since the language of the retainer agreement is extremely broad, it does not resolve as a matter of law the factual issue of whether defendant had an obligation to take any action on plaintiff’s behalf related to the bankruptcy proceeding or make any representations to the Supreme Court, Bronx County regarding his bankruptcy. Thus, this branch of the motion must also be denied.

Comment: note that the broad language of the engagement letter, giving the Law Firm the “exclusive right to take all legal steps to enforce the [personal injury action].” The engagement letter did not provide any help for the defense of the lawyers.

Note that this is a decision denying a motion to dismiss. The allegations have not been proven.

If you have a question about a legal malpractice case, do not hesitate to call us.

Ed Clinton, Jr.

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