Legal Malpractice Claims Draw Appellate Rebuke

The New York Appellate Division for the First Judicial Department affirmed the dismissal of a legal malpractice claim and went further

After a careful review of the appellate record and the parties’ briefs, we draw the only conclusion such record permits — the bases for the legal malpractice claim have been without merit in law or fact since their inception. More concerning, however, is that despite it having been apparent from the record that successor counsel was the one who withdrew the conversion and breach of contract claims in the federal action and not defendants, and despite being alerted to this fact by the record of this case and Supreme Court on multiple occasions, counsel persists in repeating a materially false claim to this Court.

There can be no good faith basis for the repetition of this materially false claim on appeal, and we find that counsel’s behavior would satisfy any of the criteria necessary to deem conduct frivolous. In fact, the only fair conclusion is that the prosecution of this appeal and knowing pursuit of a materially false and meritless claim was meant to delay or prolong the litigation or to harass respondents.

“Among the factors we are directed to consider is whether the conduct was continued when it became apparent, or should have been apparent, that the conduct was frivolous, or when such was brought to the attention of the parties or to counsel (22 NYCRR 130-1.1 [c]), circumstances that are replete in this record as noted above” (Levy v Carol Mgt. Corp., 260 AD2d 27, 34 [1st Dept 1999]).

We also consider that sanctions serve to deter future frivolous conduct “not only by the particular parties, but also by the Bar at large” (id. at 34). The goals include preventing the waste of judicial resources, and deterring vexatious litigation and dilatory or malicious litigation tactics.

Here, counsel was ethically obligated to withdraw any baseless and false claims, if not upon his own review of the record, certainly by the time Supreme Court advised him of this fact. Instead, counsel continued to repeat a knowingly false claim in what could only be described as a purposeful attempt to mislead this Court, and pursued claims which were completely without merit in law or fact.

The appropriate remedy for maintaining a frivolous appeal is the award of sanctions in the amount of the reasonable expenses and costs including attorneys’ fees incurred in defending the appeal (see Matter of Levine, 82 AD3d 524, 527 [1st Dept 2011]). Thus, we remand the matter to Supreme Court for a determination of the amount of expenses and costs including attorneys’ fees incurred by defendants in defending this appeal, and for entry of an appropriate judgment as against plaintiff’s attorney.

The case

Plaintiff, a Danish citizen, owned or was the authorized agent for many works of fine art that he brought to New York to sell. He contracted with Jurdem Associates, Inc., a public relations firm, to facilitate the sales, and, on its recommendation, contracted with Jan Amory to display the art in her Manhattan apartment. In March 2003, plaintiff realized numerous works of art were missing from the apartment.

Plaintiff retained defendants to commence the underlying federal action. On March 20, 2006 — more than three years after plaintiff discovered the missing art — defendants filed a complaint (the federal complaint) on his behalf in the Southern District of New York against Jurdem Associates, its sole shareholder, Arnold Jurdem (collectively the Jurdem defendants), and Amory, in connection with approximately 47 works of art that were improperly taken or lost. The federal complaint alleged fraud, conversion, and breach of the “Amory Contract” against all the defendants, and an additional claim of breach of the “Jurdem Contract” against the Jurdem defendants.

On November 1, 2006, after their relationship with plaintiff had deteriorated, the firm moved to withdraw as his counsel in the federal action, and on November 14, 2006, the Southern District granted the motion…

On March 6, 2010, plaintiff, through his attorney, Andrew Lavoott Bluestone, who represents him on this appeal, commenced this action against defendants, alleging legal malpractice and breach of fiduciary duty. Significantly, the complaint alleges, inter alia, that defendants “negligently failed to render competent legal service when, they unilaterally, without notice and without consent, voluntarily withdrew all claims of conversion and breach of contract against [the Jurdem defendants].” It also alleges that they failed to file the federal complaint in a timely manner. The malpractice complaint alleges that, but for the withdrawal of the conversion and breach of contract claims, plaintiff would have prevailed in the federal action…

Notably, Mr. Bluestone did not address that it was well established by the record and Supreme Court’s prior order that it had been successor counsel who had withdrawn the conversion and breach of contract claims in the federal action. Nor did he make any efforts to correct the record or withdraw claims he most certainly knew were frivolous. Moreover, in plaintiff’s affidavit, plaintiff asserted that defendants were improperly asking for sanctions, and intimated that defendants might be subject to sanctions for “wrongfully asking over and over for sanctions.”

Supreme Court granted the motion for summary judgment and dismissed the remaining claims against defendants. The court noted that it had previously dismissed that portion of the legal malpractice claims alleging that defendants had withdrawn the federal conversion and breach of contract claims.

Regarding any alleged malpractice arising from the failure to timely commence the federal complaint or plead other claims, the court held that there was merit to the conversion and breach of contract claims against Amory and Jurdem Associates, and fraud against all the federal action defendants, and it cited the Southern District’s refusal to dismiss certain related claims against Jurdem Associates. The court reasoned that defendants’ failure to allege claims of negligence and breach of fiduciary duty, later asserted by successor counsel, was not legal malpractice. More important, the court found that even if the firm had acted negligently, plaintiff failed to raise a material issue of fact regarding proximate cause, since it was successor counsel’s withdrawal of the conversion and breach of contract claims, and his failure to seek a default judgment against the major tortfeasor, Amory, that led to the ultimate result in the federal case.

Thus, the motion court dismissed the legal malpractice claims against the firm. It also dismissed the breach of fiduciary duty claim as duplicative of the legal malpractice claim, and noted that plaintiff had not opposed its dismissal. The court acknowledged that it already had dismissed the complaint against defendant Vaughn-Flam on March 7, 2011.

The merits

Turning to the merits of plaintiff’s legal malpractice claim, as detailed above, the record clearly establishes that the allegation regarding the withdrawal of certain claims is inaccurate and false. The record is clear that successor counsel, not the defendant firm, withdrew the conversion and breach of contract claims against the Jurdem defendants. As for the allegation relating to additional potential claims, by plaintiff’s own admission in the complaint, plaintiff would have prevailed on the claims defendants initially pleaded in a timely manner, consisting of conversion, two counts of breach of contract, and fraud against all defendants in the underlying federal action.

Further, while the firm did not commence the suit sooner, which might have avoided the dismissal as time-barred of two claims added by successor counsel, it appears defendants were not formally retained to sue on plaintiff’s behalf until 2006. Indeed, record evidence demonstrates that defendants repeatedly advised plaintiff that they needed to be retained and paid before commencing a suit on plaintiff’s behalf. Thus, plaintiff’s claim that defendants somehow agreed to commence the action in 2003 or 2004, and failed to do so, is belied by the record evidence.

(Mike Frisch)