FKB’s Andrew S. Kowlowitz and Rachel Aghassi obtain summary dismissal of legal malpractice claim due to plaintiff’s failure to establish proximate causation

02/28/2018

FKB successfully obtained CPLR § 3212 summary judgment dismissal from Justice R. Bruce Cozzens, Jr. in the Supreme Court, Nassau County.

In this action, Plaintiff claimed he was convinced by a non-party “con artist” to take out a series of three (3) “hard money” collateralized loans. After the loans were completed, and without representation from counsel, plaintiff provided the proceeds of the loan to the “con artist,” who promised to invest the money and provide plaintiff a 5% return on his investment. After the “con artist” failed to return the funds to plaintiff (or provide the promised interest on the loans), plaintiff defaulted on the loans.

This legal malpractice action arose from representation by FKB’s client’s law partner (“Partner”) of plaintiff in one (1) of the loan transactions which used plaintiff’s residential property, commercial property, and stock of plaintiff’s corporation as collateral. After fully negotiating the terms of the loan with the lender, plaintiff hired the Partner to represent him at closing. At the time, FKB’s client was unaware that her partner agreed to this representation and was not involved in the transaction. After executing the loan documents, plaintiff subsequently defaulted on the loan allegedly causing him to lose the collateral properties. Plaintiff thereafter claimed the Partner failed to properly advise him on the ramifications of the loan and that plaintiff never agreed to post the commercial property or corporate stock as collateral. Plaintiff further alleged that the transaction was somehow “fraudulent” and that the Partner conspired with the mortgage brokers, lender, and the “con artist” to whom Pandolfi gave the loan proceeds.

After discovery, FKB moved for summary judgment dismissal arguing that the Partner did not breach the standard of care necessary to establish legal malpractice and that the Partner’s actions could not be the proximate cause of plaintiff’s alleged damages as a matter of law. In the motion, FKB argued that: (a) the Partner was not retained to perform due diligence into the loan agreement which plaintiff negotiated prior to retention; (b) evidence demonstrates that the Partner properly explained the loan documents to plaintiff at closing; (c) plaintiff’s own default on his loan obligations negates the requisite element of “but for” proximate causation as does plaintiff’s independent agreement to provide the “con artist” with the loan proceeds; (d) plaintiff is judicially estopped from arguing that his damages were proximately caused by FKB’s client because he previously argued that the same damages were caused by the mortgage broker and lender in a related action (which was previously dismissed); and (e) plaintiff lost his residential property because of his default on a subsequent loan with respect to which the Partner was not involved.

On January 10, 2018, Justice Cozzens granted summary judgment dismissal agreeing with FKB’s argument that plaintiff could not establish that the Partner proximately caused any of plaintiff’s alleged damages (and by extension, FKB’s client could not be held responsible for the alleged damages). Specifically, Justice Cozzens found that plaintiff “failed to demonstrate that he would have prevailed in the underlying action or would have not sustained damages but for the attorney’s negligence” (citing Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 N.Y.3d 438 (2007)).

If you have any questions about this decision, or the defense of attorneys in general, please contact Andrew S. Kowlowitz or Rachel Aghassi.

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