Plaintiffs’ Judiciary Law Section 487 cause of action was properly dismissed.

In dismissing the plaintiff’s claim against an attorney for violating Judiciary Law Section 487, the New York State Court of Appeals held:

Here, viewing the facts in the light most favorable to plaintiffs (see De Lourdes Torres v Jones, 26 NY3d 742, 763 [2016]), defendants established prima facie entitlement to judgment as a matter of law on the Judiciary Law Section 487 (1) claim by demonstrating that plaintiffs failed to allege that defendants engaged in deceit or collusion during the course of the underlying federal intellectual property lawsuit against GM and EMI [FN2]. In response, plaintiffs failed to satisfy their burden to establish material, triable issues of fact (id.). The affidavits plaintiffs submitted in opposition to summary judgment did not allege that defendants committed any acts of deceit or collusion during the pendency of the underlying federal lawsuit. To the extent defendants were alleged to have made deceitful statements, plaintiffs’ allegation that defendants induced them to file a meritless lawsuit based on misleading legal advice preceding commencement of the lawsuit is not meaningfully distinguishable from the conduct we deemed insufficient to state a viable attorney deceit claim in Looff (97 NY at 482). The statute does not encompass the filing of a pleading or brief containing nonmeritorious legal arguments, as such statements cannot support a claim under the statute [FN3]. Similarly, even assuming it constituted deceit or collusion, defendants’ alleged months-long delay in informing plaintiffs that their federal lawsuit had been dismissed occurred after the litigation had ended and therefore falls outside the scope of Judiciary Law Section 487 (1). Thus, plaintiffs’ Judiciary Law Section 487 cause of action was properly dismissed.

Bill Birds, Inc. v Stein Law Firm, P.C. 2020 NY Slip Op 02125 Decided on March 31, 2020 Court of Appeals DiFiore, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law Section 431. This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on March 31, 2020
No. 19

[*1]Bill Birds, Inc. et al., Appellants,
v
Stein Law Firm, P.C. et al., Respondents.

R. A. Klass
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The meaning and coverage of a general release depends on the controversy being settled.

“…does not necessarily mean that the release covered all matters…”

While a party may negotiate for a general release when settling a party’s claim, it does not necessarily mean that the release covered all matters which were not envisioned when the release was given. As stated in Gorunkati v Baker Sanders, LLC, 179 AD3d 904, 906 [2d Dept 2020]:

Generally, “a valid release constitutes a complete bar to an action on a claim which is the subject of the release” (Centro Empresarial Cempresa S.A. v América Móvil, S.A.B. de C.V., 17 NY3d 269, 276 [2011] [internal quotation marks omitted]). However, “ ‘[t]he meaning and coverage of a general release depends on the controversy being settled and upon the purpose for which the release was actually given . . . . A release may not be read to cover matters which the parties did not desire or intend to dispose of’ ” (Wechsler v Diamond Sugar Co., Inc., 29 AD3d 681, 682 [2006], quoting Lefrak SBN Assoc. v Kennedy Galleries, 203 AD2d 256, 257 [1994]; see Demaria v Brenhouse, 277 AD2d 344 [2000]). A defendant bears the initial burden of establishing that it has been released from any claims (see Burgos v New York Presbyt. Hosp., 155 AD3d 598, 600 [2017]).

R. A. Klass
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Appeals court reverses dismissal of action in personal injury case. Proposal to install elevator gate was the smoking “gate”.

Scan of redacted proposal, with words in bold saying, about an elevator that lacked a gate on the inside of the elevator platform, "this is extremely dangerous, someone could get hurt." This image illustrates an article by Richard Klass discussing a personal injury case.

The company’s porter was operating a manually-controlled freight elevator in a large Manhattan industrial building owned by the defendants. The porter, who was employed by a tenant of the building, was in the process of bringing the elevator up to the eighth floor at the time of the accident. According to him, the heel of his left foot became caught between the fourth floor landing and the moving elevator. The elevator did not have a gate separating the interior side of the elevator cab from the elevator shaft. The porter allegedly sustained severe injuries to his left foot and ankle as a result of the accident, which, unfortunately, may later lead to the amputation of his foot.

The porter came to Richard A. Klass, Your Court Street Lawyer, to sue the building’s owners for his severe personal injuries. Mr. Klass brought in the preeminent personal injury firm, Stefano A. Filippazzo, P.C., to pursue and litigate the porter’s case.

Elevator in compliance – when installed over 80 years ago!

This industrial building was built pre-war. The freight elevator was installed a very long time ago yet remained in operation through at least the time of the porter’s accident in 2009. It was undisputed that the elevator was in compliance with all applicable rules, regulations, and codes at the time of its installation. The building owners moved for summary judgment dismissing the complaint against them on this basis.

Proposal: “This is extremely dangerous”

Two years before this terrible accident, the building’s owners received a proposal from their elevator service company to install a new manual gate with guide tracks and chains, which would allow for the smooth operation of the elevator with minimal risk of injury to its operator. The proposal stated: “Presently there are no gates on inside of elevator platform, building personnel are leaning over platform, this is extremely dangerous, someone could get hurt” (bold added for emphasis).

Appeals court reverses dismissal of action.

Shockingly, the trial court dismissed the porter’s lawsuit, relying on the building owners’ argument that, since the elevator was in code compliance when it was installed (despite that being a very long time ago), there could be no liability for there being no gate installed. Stefano A. Filippazzo could not give up on the case, believing that the judge got it 100% wrong! The porter appealed the dismissal, arguing that the owners’ failure to install a gate on the interior side of the freight elevator constituted a serious, defective condition.

In reversing the dismissal, the appellate court held that:

“[T]he plaintiff raised a triable issue of fact as to whether the defendants were negligent. The plaintiff submitted evidence demonstrating that prior to the accident, the defendants were on notice of the dangerous condition of the elevator when they were provided with proposals from their own elevator service company, which proposals stated that because there was no gate on the inside of the elevator platform, an extremely dangerous condition existed (see DeCarlo v Vacchio, 147 AD3d at 725).”

No proof of code violations does not doom negligence claim.

Recognizing that the elevator was in code compliance, the appellate court was unwilling to come to the same conclusion as the trial court that there could be no personal injury claim. Rather, the court held that a trial court consider the absence of code violations in the context of the overall situation. In Romero v Waterfront N.Y., 168 AD3d 1012 [2d Dept 2019], the court opined:

However, “the absence of a violation of a specific code or ordinance is not dispositive of a plaintiff’s allegations based on common-law negligence principles” (Alexis v Motel Oasis, 143 AD3d 926, 927 [2016]; see DeCarlo v Vacchio, 147 AD3d 724, 725 [2017]; Zebzda v Hudson St., LLC, 72 AD3d 679, 680-681 [2010]). Accordingly, a defendant may be held negligent for departing from generally accepted customs and practices even when the allegedly defective condition is in compliance with the relevant codes and ordinances (see Zebzda v Hudson St., LLC, 72 AD3d at 680-681).

Based upon the appellate court’s reversal, the personal injury claim was remanded back to the trial court. When faced with both the porter’s substantial, lifetime injuries and the actual notice received from the elevator service company of the existence of a dangerous, defective condition, the building owners settled the personal injury lawsuit.

R. A. Klass
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Sanctions against attorneys for failing to notify the court that an appeal has been withdrawn

“The Appellate Division made a decision regarding the request for sanctions against attorneys…”

The Appellate Division made a decision regarding the request for sanctions against attorneys for failing to notify the court that an appeal has been withdrawn as moot. The court reminded counsel of the obligation to monitor the status of cases and keep the Appellate Division informed of developments in cases that may affect a pending appeal. In Guo-Bang Chen v Caesar and Napoli, P.C., 179 AD3d 46, 49-52 [2d Dept 2019], the court held:

This subdivision, by its plain language, imposes a continuing obligation on counsel to monitor the status of the case and to apprise the Appellate Division of certain developments that might affect a pending appeal (see 22 NYCRR 1250.2[c] ). Although, pursuant to this section, only one attorney needs to notify the Court of the relevant developments, all of the attorneys are independently responsible for ensuring that a timely notification actually takes place (see 22 NYCRR 1250.2[c] ). Where, as here, a timely notification is not given by any of the attorneys, they may each be held independently responsible and, absent a showing of good cause for the failure to ensure a timely notification, sanctioned for their respective conduct (see id.Bank of N.Y. Mellon v. Smith, 176 A.D.3d 83, 108 N.Y.S.3d 193).

Here, the record demonstrates that the underlying action was settled on March 1, 2019, as confirmed in an email exchange between the Fixler firm, representing the appellants, and the Sim firm, representing the respondent. In one of those emails, an attorney from the Sim firm expressed his understanding that the Fixler firm would, among other things, withdraw the appeal pending in this Court. By email of March 5, 2019, to the Sim firm, an attorney with the Fixler firm stated that he would advise the appellants and their appellate counsel of the settlement and direct them to withdraw the appeal. However, the Fixler firm did not advise the appellants’ appellate counsel, the Mischel firm, of the settlement until March 26, 2019, at 4:55 p.m.

The Mischel firm, relying at the time exclusively upon its appellate printer for notification of the calendaring of the appeal, was unaware, on March 26, 2019, when notice of the settlement of the action was received, that the appeal had actually been calendared. The appellate printer concedes that, due to an error in entering information into its computerized court calendar tracking system, it failed to notify the Mischel firm that the appeal had been calendared. The appellate printer represents that this was the first time such an error had occurred in relation to the multitude of cases it has worked on with the Mischel firm since 1999. The Mischel firm likewise represents that this was the first time it had missed a calendar date in two decades of appellate practice.

Acting on the erroneous assumption that the appeal had not yet been calendared, the Mischel firm mailed a letter to this Court on Tuesday, April 2, 2019, advising this Court of the settlement and requesting withdrawal of the appeal. By letter dated April 9, 2019, this Court advised counsel that, because the appeal had already been on the calendar, a stipulation withdrawing the appeal and the approval of this Court would be required (see 22 NYCRR 670.2[a][3] ).

When counsel in the underlying action reached a settlement on March 1, 2019, the settlement triggered their mutual obligations to “immediately notify” this Court (22 NYCRR 1250.2[c] ). However, neither the Fixler firm nor the Sim firm ever notified this Court.

The Fixler firm, in its capacity as the appellants’ trial counsel during the pendency of this appeal, had a continuing obligation either to advise this Court directly of the settlement or to ensure that its clients’ appellate counsel, the Mischel firm, advised this Court of the settlement. It is undisputed that, on the very day of the settlement, the Sim firm expressed its understanding that the Fixler firm would take responsibility for securing the withdrawal of the appeal. Within a few days, the Fixler firm confirmed that it would notify its clients’ appellate counsel of the settlement. However, despite this representation, the Fixler firm did not notify the Mischel firm of the settlement until three weeks later.

The Fixler firm asserts that it filed a stipulation of discontinuance with the Supreme Court, on March 29, 2019, after the settlement funds had cleared, and that this Court was notified of the settlement within two business days thereafter. The Fixler firm’s contention that it could await the clearance of the settlement payment and the finalization of other paperwork before notifying this Court of the settlement is unavailing for several reasons.

We note that the Fixler firm committed in its March 5, 2019, email to notify the appellants’ appellate counsel without expressing an intent to delay notification for any period of time or for any reason. More important, 22 NYCRR 1250.2(c) of the statewide Practice Rules of the Appellate Division requires that this Court be notified “immediately” when there has been a settlement of the matter. One of the primary purposes of section 1250.2(c) is to protect the Appellate Courts from spending time reviewing and analyzing matters that have been rendered academic (see Bank of N.Y. Mellon v. Smith, 176 A.D.3d 83, 108 N.Y.S.3d 193). Delayed notification defeats that purpose; providing notification benefits the Court, the Bar, and the public generally by enabling the Court to suspend its review of an appeal that will become academic. There is no adverse impact to the parties and counsel on such an appeal as consideration of the appeal may be readily resumed should the settlement not be implemented.

Precisely in order to alert counsel that their obligation to give immediate notification of a settlement may not be postponed or delayed, this Court adopted its own local rule of practice which states that, for purposes of 22 NYCRR 1250.2(c), settlement includes “any oral or written agreement or understanding which may, once memorialized, render a determination of the cause unnecessary” (22 NYCRR 670.2[b] ). This local rule took effect March 4, 2019, and is thus applicable to the case at hand.

In this case, members of this Court were caused to devote hours of preparation and deliberation on an appeal which, unbeknown to them, had been settled nearly one month earlier. Had this Court been timely advised of the settlement in this case, it could have avoided wasting judicial resources on a settled case and could have redirected those resources to one of the many actual controversies that fill its docket. Since the Fixler firm had an independent obligation to give this Court notice of the settlement and assured the Sim Firm that, as between the attorneys, the Fixler firm would assume responsibility for notification, the imposition of sanctions upon the Fixler firm in the sum of $250 is warranted.

While the Sim firm had its own independent obligation to immediately notify this Court of the settlement, we conclude, under the circumstances, that the Sim firm reasonably relied upon the Fixler firm’s written commitment that the Fixler firm would discharge this obligation on behalf of all counsel. Also, while the Mischel firm did not notify this Court immediately of the settlement, it did act with sufficient promptness that, under the circumstances, renders the imposition of sanctions unwarranted. Accordingly, no sanctions are imposed as against the Sim firm and the Mischel firm.

R. A. Klass
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New book by Richard Klass about RPAPL Section 993: Uniform Partition of Heirs Property Act

Cover of book by Richard Klass called Hug Of War instead of Tug of War: RPAPL Section 993: Uniform Partition of Heirs Property Act. Features photo of a young mother, father and daughter in front of a beautiful house.

Richard Klass has written a new book in his “Your Court Street Lawyer’s Quick Reference Guide” series. It is called Hug of War Instead of Tug of War: RPAPL Section 993: Uniform Partition of Heirs Property Act.

View and download Hug of War Instead of Tug of War: RPAPL Section 993: Uniform Partition of Heirs Property Act as a free E-book in PDF format by clicking this link.
12 pages/236 KB


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Jan. 28 Klass presents “RPAPL Section 993: Uniform Partition of Heirs Property Act” for the General Practice Section and Committee on Professional Discipline CLE program

Man and woman arm in arm, with a young child, standing in front of a beautiful house.

Richard A. Klass will be presenting a lecture on “RPAPL Section 993: Uniform Partition of Heirs Property Act” for the General Practice Section and Committee on Professional Discipline CLE program in New York City.

The program will be held on Tuesday, January 28, 2020 from 9:00 am – 1:00 pm with registration beginning at 8:30 am This program will take place during the 143rd NYSBA Annual Meeting and Exposition.

Registration for the program is available at www.nysba.org/AM2020GEN. Please feel free to tell your networks about this program.

In addition, Richard Klass has written a new book in his series “Your Court Street Lawyer’s Quick Reference Guide” on this subject. It is called Hug of War Instead of Tug of War: RPAPL Section 993: Uniform Partition of Heirs Property Act. It will soon be available for download from his website at https://courtstreetlaw.com/publications/books/.

R. A. Klass
Your Court Street Lawyer

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Brandeis Society hosts annual luncheon for Chanukah

Published in the Brooklyn Daily Eagle
December 18, 2019

by Rob Abruzzese

Men and women in business attire posing for photo. From left: Hon. Katherine Levine, Hon. Ellen Spodek, Richard Klass, Hon. Jeffrey Sunshine, Hon. Anne Swern, Hon. Miriam Cyrulnik, Doron Leiby, Jeffrey Miller and Hon. Esther Morgenstern. Photo by Rob Abruzzese.
From left: Hon. Katherine Levine, Hon. Ellen Spodek, Richard Klass, Hon. Jeffrey Sunshine, Hon. Anne Swern, Hon. Miriam Cyrulnik, Doron Leiby, Jeffrey Miller and Hon. Esther Morgenstern.
Photo by Rob Abruzzese.

“The Brooklyn Brandeis Society held its annual Chanukah luncheon and membership party in Brooklyn Heights on Monday as members gathered together to share latkes and donuts while a pair of rabbis shared stories of their common history….

Two men in business attire, posing for photo. Todd Sandler, director of the Brooklyn Jewish National Fund, on left, and Richard Klass on the right. Photo by Rob Abruzzese.
Todd Sandler, director of the Brooklyn Jewish National Fund, on left, and Richard Klass on the right.
Photo by Rob Abruzzese.

R. A. Klass
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Client may claim that the statute of limitations for legal malpractice has not been triggered

It is important for an attorney to withdraw from an action once the attorney has terminated the attorney-client relationship. If not, then the client may claim that the statute of limitations for legal malpractice has not been triggered, as decided in Courtney v McDonald, 176 AD3d 645 [1st Dept 2019]:

Scales of justice illustrating article about legal malpractice.

The first cause of action in plaintiffs’ complaint alleges legal malpractice with respect to defendants representation of plaintiffs in two underlying actions—the 304 W 18th Street matter and the 175 W 12th Street matter. Contrary to defendants’ argument, the malpractice cause of action with respect to the 175 W 12th Street matter is not time-barred by the three-year statute of limitations applicable to legal malpractice claims (CPLR 214 [6]). Defendants failed to demonstrate that the attorney-client relationship ceased to exist within three years of August 28, 2017, the date plaintiffs filed this action. Although defendants sent a letter, dated August 7, 2014, unilaterally terminating their representation of plaintiffs, they failed to move to withdraw from representation in the foreclosure action (see CPLR 321 [b]) until more than a year after sending the subject letter. Accordingly, to the extent plaintiffs’ first cause of action concerns alleged legal malpractice by defendants in their representation of plaintiffs in the matter concerning 175 W 12th Street, the motion to dismiss that cause of action was properly denied.

R. A. Klass
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Legal malpractice action dismissed based upon doctrines of res judicata and collateral estoppel

The Appellate Division, in Kleinman v Weisman Law Group, P.C., 176 AD3d 1046 [2d Dept 2019], dismissed a former client’s legal malpractice action based upon the doctrines of res judicata and collateral estoppel. The court stated as follows:

In 2013, the defendant Weisman Law Group, P.C. (hereinafter the defendant firm), commenced an action against the plaintiff to recover unpaid legal fees in the Nassau County District Court. The plaintiff asserted a counterclaim, alleging that he was overbilled by the defendant firm. A judgment was entered in favor of the defendant firm and against the plaintiff. The plaintiff appealed the judgment of the Nassau County District Court to the Appellate Term of the Supreme Court for the Ninth and Tenth Judicial Districts, which affirmed the judgment (see Weisman Law Group, P.C. v. Kleinman, 60 Misc.3d 133[A], 2018 N.Y. Slip Op. 51042[U], 2018 WL 3309514 [App Term, 2d Dept, 9th & 10th Jud Dists 2018] ). In 2016, the plaintiff commenced the instant action against the defendants asserting causes of action alleging, inter alia, breach of contract and legal malpractice.

Scales of justice illustrating article about legal malpractice.

The plaintiff contends that the doctrines of res judicata and collateral estoppel do not apply in the instant case, as the Nassau County District Court lacked subject matter jurisdiction over his counterclaim in the prior action. Contrary to the plaintiff’s contention, the Nassau County District Court did have jurisdiction over his counterclaim pursuant to Uniform District Court Act Section 208(b), as the counterclaim was for money only. The doctrine of res judicata precludes the plaintiff from litigating the claims set forth in his complaint, as a judgment on the merits exists in the prior action between the same parties involving the same subject matter (see Matter of Josey v. Goord, 9 N.Y.3d 386, 389, 849 N.Y.S.2d 497, 880 N.E.2d 18; Matter of Hunter, 4 N.Y.3d 260, 269, 794 N.Y.S.2d 286, 827 N.E.2d 269). New York has adopted the transactional analysis approach to res judicata, so that once a claim is brought to a final conclusion, all other claims between the same parties or those in privity with them arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy (see Matter of Josey v. Goord, 9 N.Y.3d at 389–390, 849 N.Y.S.2d 497, 880 N.E.2d 18; Matter of Hunter, 4 N.Y.3d at 269, 794 N.Y.S.2d 286, 827 N.E.2d 269; *124 O’Brien v. City of Syracuse, 54 N.Y.2d 353, 357, 445 N.Y.S.2d 687, 429 N.E.2d 1158; Greenstone/Fontana Corp. v. Feldstein, 72 A.D.3d 890, 893, 901 N.Y.S.2d 643).

Furthermore, the plaintiff’s causes of action are barred by the doctrine of collateral estoppel, which precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same (see Ryan v. New York Tel. Co., 62 N.Y.2d 494, 500, 478 N.Y.S.2d 823, 467 N.E.2d 487; Williams v. New York City Tr. Auth., 171 A.D.3d 990, 97 N.Y.S.3d 692). The doctrine of collateral estoppel applies here, as the issues in both actions are identical, the issue in the prior action was actually litigated and decided, there was a full and fair opportunity to litigate the action, the issue previously litigated was necessary to support a valid and final judgment on the merits, and the defendant Rachel J. Weisman was in privity with the defendant firm (see Conason v. Megan Holding, LLC, 25 N.Y.3d 1, 17, 6 N.Y.S.3d 206, 29 N.E.3d 215; Williams v. New York City Tr. Auth., 171 A.D.3d at 991–992, 97 N.Y.S.3d 692; Karimian v. Time Equities, Inc., 164 A.D.3d 486, 83 N.Y.S.3d 227).

R. A. Klass
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…issue of collateral estoppel concerning a matter previously litigated…

In Gobindram v Ruskin Moscou Faltischek, P.C., 175 AD3d 586, 589-91 [2d Dept 2019], the state court considered the issue of collateral estoppel concerning a matter previously litigated in the federal bankruptcy court. The court held:

Scales of justice

“The doctrine of in pari delicto mandates that the courts will not intercede to resolve a dispute between two wrongdoers” (Kirschner v. KPMG LLP, 15 N.Y.3d 446, 464, 912 N.Y.S.2d 508, 938 N.E.2d 941). “[T]he principle that a wrongdoer should not profit from his own misconduct is so strong in New York that … the defense applies even in difficult cases and should not be weakened by exceptions” (id. at 464, 912 N.Y.S.2d 508, 938 N.E.2d 941 [internal quotation marks omitted] ). “The defense requires intentional conduct on the part of the plaintiff” (Sacher v. Beacon Assoc. Mgt. Corp., 114 A.D.3d 655, 657, 980 N.Y.S.2d 121; see Kirschner v. KPMG LLP, 15 N.Y.3d at 474, 912 N.Y.S.2d 508, 938 N.E.2d 941).

Collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party, whether or not the tribunals or causes of action are the same (see Buechel v. Bain, 97 N.Y.2d 295, 303, 740 N.Y.S.2d 252, 766 N.E.2d 914; Shifer v. Shifer, 165 A.D.3d 721, 723, 85 N.Y.S.3d 92). There must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and there must have been a full and fair opportunity to contest the decision now said to be controlling (see Buechel v. Bain, 97 N.Y.2d at 303–304, 740 N.Y.S.2d 252, 766 N.E.2d 914; Shifer v. Shifer, 165 A.D.3d at 723, 85 N.Y.S.3d 92).

Here, the federal courts in the plaintiff’s bankruptcy proceeding finally adjudicated a mixed issue of law and fact identical to that raised by the in pari delicto defense asserted by the defendants in the current legal malpractice action, i.e., the plaintiff’s culpability in connection with the filing of the inaccurate bankruptcy petition. Those courts found that the plaintiff knowingly and intentionally made a false and fraudulent statement under oath by swearing that he had read the SOFA and that it was true and correct, and that the plaintiff’s alleged reliance on the defendants to accurately prepare the bankruptcy submissions did not negate his fraudulent intent. These findings established that the plaintiff was in pari delicto with the defendants to the extent that he alleges they acted negligently in preparing and filing the inaccurate bankruptcy petition. Accordingly, we agree with the Supreme Court’s determination granting that branch of the defendants’ motion which was to dismiss so much of the legal malpractice cause of action as sought to recover damages for the defendants’ preparation and filing of the inaccurate bankruptcy petition based on the doctrines of collateral estoppel and in pari delicto.

However, we disagree with the Supreme Court’s determination granting that branch of the defendants’ motion which was to dismiss so much of the legal malpractice cause of action as sought to recover damages for the defendants’ failure to amend the bankruptcy petition. The findings of the federal courts regarding the knowing and fraudulent conduct on the plaintiff’s part related solely to the initial filing; they made no determination that the plaintiff acted knowingly and fraudulently in failing to file an amended petition. Accordingly, that part of the plaintiff’s legal malpractice cause of action is not subject to dismissal on the grounds of collateral estoppel and in pari delicto.

As an alternative ground for affirmance (see Parochial Bus Sys. v. Board of Educ. of City of N.Y., 60 N.Y.2d 539, 545–546, 470 N.Y.S.2d 564, 458 N.E.2d 1241), the defendants contend that the legal malpractice cause of action should have been dismissed in its entirety pursuant to CPLR 3211(a)(7), since the parties’ evidentiary submissions on the motion established that the plaintiff hired subsequent counsel who had ample opportunity to rectify their alleged error in this regard (see e.g. Perks v. Lauto & Garabedian, 306 A.D.2d 261, 262, 760 N.Y.S.2d 231). This contention lacks merit.

On a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the court must “accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory” (Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511; see Nonnon v. City of New York, 9 N.Y.3d 825, 827, 842 N.Y.S.2d 756, 874 N.E.2d 720). “When evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether [she or] he has stated one, and, unless it has been shown that a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it, … dismissal should not eventuate” (Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275, 401 N.Y.S.2d 182, 372 N.E.2d 17).

Here, the record reveals that the plaintiff did not retain the services of new counsel until December 2011. By that time, the bankruptcy trustee had already noted inconsistencies in the petition and requested an accounting relating to the omitted tax refund transfers, and the plaintiff’s creditors had commenced the adversary proceeding. Giving the plaintiff the benefit of every favorable inference (see Leon v. Martinez, 84 N.Y.2d at 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511), this time line suggests that the defendants, not the subsequent attorney, represented the plaintiff at the time when a voluntary amendment to the petition could have significantly reduced the prospect of a finding that the plaintiff made a false and fraudulent statement in the bankruptcy petition (see In re Tully, 818 F.2d 106, 111 [1st Cir.]; Matter of Kilson, 83 B.R. 198, 203 [D. Conn.]). Accordingly, at this preliminary stage of the litigation, the defendants have failed to conclusively demonstrate that the plaintiff’s subsequent attorney had a sufficient opportunity to correct their alleged error in failing to amend the petition, such that they did not proximately cause any damages flowing from that error (see generally Tooma v. Grossbarth, 121 A.D.3d 1093, 1096, 995 N.Y.S.2d 593; Grant v. LaTrace, 119 A.D.3d 646, 647, 990 N.Y.S.2d 227).

We find unpersuasive the defendants’ additional alternative contention that the legal malpractice cause of action was properly dismissed pursuant to CPLR 3211(a)(3) because that cause of action belongs to the bankruptcy estate and the plaintiff lacked standing to assert it. “On a defendant’s motion to dismiss the complaint based upon the plaintiff’s alleged lack of standing, the burden is on the moving defendant to establish, prima facie, the plaintiff’s lack of standing” (BAC Home Loans Servicing, LP v. Rychik, 161 A.D.3d 924, 925, 77 N.Y.S.3d 522; see CPLR 3211[a][3]; MLB Sub I, LLC v. Bains, 148 A.D.3d 881, 881–882). “[T]he motion will be defeated if the plaintiff’s submissions raise a question of fact as to its standing” (U.S. Bank N.A. v. Clement, 163 A.D.3d 742, 743, 81 N.Y.S.3d 116 [internal quotation marks omitted]; see MLB Sub I, LLC v. Bains, 148 A.D.3d at 882, 50 N.Y.S.3d 410).

Here, in response to the defendants’ prima facie showing that the plaintiff’s legal malpractice cause of action was the property of the bankruptcy estate (see Wright v. Meyers & Spencer, LLP, 46 A.D.3d 805, 849 N.Y.S.2d 274; Williams v. Stein, 6 A.D.3d 197, 198, 775 N.Y.S.2d 255; In re Strada Design Assoc., Inc., 326 B.R. 229, 237–240 [S.D. N.Y.]), the plaintiff raised a question of fact as to whether the bankruptcy trustee had abandoned the cause of action in accordance with Bankruptcy Code (11 USC) § 554(a) and had authorized the plaintiff to pursue it. Accordingly, dismissal of the legal malpractice cause of action for lack of standing is not available at this juncture.

R. A. Klass
Your Court Street Lawyer

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