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New York Court Uses Judgment Call Rule to Dismiss Legal Malpractice Claim

The opinion in Lloyd’s Syndicate 2987 v. Furman, Kornfeld & Brennan, LLP, 2020 NY Slip Op 02365 is pithy but worth considering.  Apparently the law firm advised an insurance company that it could deny coverage to a policyholder. That decision proved to be in error and the insurance company sued the law firm. Result: case dismissed.

The pertinent part of this pithy opinion is quoted here:

In this legal malpractice action, plaintiffs allege that they sustained damages when they relied on defendants’ negligent advice that they could disclaim coverage of their insured in an underlying malpractice action. In support of their motion to dismiss, defendants properly relied on documentary evidence, including the challenged disclaimer letter and the relevant policy, since their authenticity is undisputed and their contents are “essentially undeniable” (see DSA Realty Servs., LLC v Marcus & Millichap Real Estate Inc. Servs. of N.Y., Inc., 128 AD3d 587 [1st Dept 2015]; see also Kaplan v Conway & Conway, 173 AD3d 452, 453 [1st Dept 2019]; CPLR 3211[a][1]). The disclaimer letter sets forth an analysis of plaintiffs’ right to refuse coverage to their insured on two independent bases. Plaintiffs’ failure to allege with specificity or argue that one of the two bases for defendants’ advice was incorrect, requires dismissal of this legal malpractice action.

Aside from this, defendants’ alleged malpractice concerning other issues is subject to the attorney-judgment rule (see Rosner v Paley, 65 NY2d 736 [1995]). Since plaintiffs failed to show that the issues were elementary or subject to settled authority, defendants could not be liable for malpractice based on their prediction of how a court would interpret the policy (see id.; Byrnes v Palmer, 18 AD 1 [2d Dept 1897], affd 160 NY 699 [1899]).

Further, plaintiffs’ failure to explain how it was that any alleged error by defendants prejudiced their defense in the subsequent coverage action also mandates dismissal of the malpractice claim (see Brookwood Cos., Inc. v Alston & Bird LLP, 146 AD3d 662, 667 [1st Dept 2017]).

Lloyd’s Syndicate 2987 v. Furman Kornfeld & Brennan, LLP, 2020 NY Slip Op 2365 (N.Y. App. Div. 2020).

Comment: should you have a question concerting a legal malpractice or ethics issue, do not hesitate to call me at (312) 357-1515.

Ed Clinton, Jr.

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