Gordon & Rees New York Team Prevails on Motion to Dismiss in Legal Malpractice Case

May 2023

Gordon Rees Scully Mansukhani Partner Joseph Salvo and Associate Thomas Fanizzi prevailed on a pre-answer motion to dismiss on behalf of their attorney-client and an insurer in an alleged legal malpractice case.

The plaintiff commenced an action ("the 2022 Malpractice Action") against the attorney-client and the plaintiff’s insurer alleging causes of action for breach of contract, legal malpractice, and breach of fiduciary duty in connection with the attorney-client and the insurer’s defense of a 2014 derivative law suit (“the 2014 Litigation”) commenced within the Commercial Division of the Supreme Court, New York County by the plaintiff’s then condominium board (“the Board”). The 2014 Litigation involved claims brought derivatively by the Board against the plaintiff regarding property damage allegedly caused by the plaintiff and a sub-tenant, who occupied commercial space in a six-story mixed-use condominium building located in Manhattan, New York (“the Premises”). The gravamen of the plaintiff’s allegations were that the attorney-client and the insurer did not secure a general and all-encompassing release following resolution of the 2014 Litigation, wherein in excess of 10 depositions were taken, multiple expert reports were secured and exchanged, and certain causes of action were tried and disposed of by the attorney-client.

After months of intense negotiations regarding the scope of the releases between the Board and the attorney-client, the attorney-client secured a release on behalf of the plaintiff for all causes of action brought within the 2014 Litigation. Implausibly, the plaintiff commenced the 2022 Malpractice Action, alleging that no release had been procured, and that the Board issued a capital assessment to the plaintiff subsequent to the settlement of the 2014 Litigation, thereby charging the plaintiff a second time for the amounts that were the subject of the 2014 Litigation settlement. Moreover, in 2021, the plaintiff commenced yet a third action seeking a declaration (“the Declaratory Judgment Action”) that it was not responsible for the capital assessment that was issued subsequent to adjudication and resolution of the 2014 Litigation. In the 2022 Malpractice Action, the plaintiff sought monetary damages for the litigation costs associated with the Declaratory Judgment Action and reimbursement for the plaintiff’s payment of the capital assessment with interest.

In a pre-answer application to dismiss the 2022 Malpractice Action, the attorney-client and the insurer moved to dismiss the plaintiff’s entire complaint, arguing that documentary evidence conclusively established a defense to the claims asserted by the plaintiff, that the claim was barred by collateral estoppel, and that the plaintiff failed to state a valid cause of action. The attorney-client argued that the plaintiff failed to sufficiently plead and could not prove that the attorney-client and the insurer breached a duty owed to the plaintiff because releases were secured on behalf of the plaintiff regarding the 2014 Litigation and because the Board’s capital assessment was not in any way related to the property damage claim therein. Moreover, after securing a transcript recording of settlement proceedings held in connection with the 2014 Litigation (“the Transcript”) wherein the court made rulings regarding the scope of the releases and presenting correspondence between the attorney-client and the plaintiff, the Gordon & Rees team unequivocally demonstrated that no duty was breached. In sum, it could not be contradicted that the 2014 Litigation release secured by the attorney-client on behalf of the plaintiff was consistent with the court’s ruling as recorded in the Transcript and that the release was consistent with the scope of the attorney-client’s retention.

After oral arguments presented to the Commercial Division of the Supreme Court, New York County by Partner Joseph Salvo, Esq., the Gordon & Rees team secured a complete dismissal of the claims alleged by the plaintiff in the 2022 Malpractice Action. The Commercial Division agreed with each and every one of the arguments advanced on behalf of the attorney-client and the insurer, finding that no duty was breached and no legal malpractice had been committed. The favorable result secured on behalf of the attorney-client and the insurer highlights the permissible use of client email and letters, as well as transcripts from prior proceedings, as documentary evidence in connection with legal malpractice claims.