Jul 12th, 2013

FKB’s Andrew S. Kowlowitz obtains dismissal of a legal malpractice action brought against FKB’s client in the Southern District of New York.

FKB’s Andrew S. Kowlowitz obtains a dismissal of legal malpractice action against a New York law firm, including a partner and associate of the firm, in connection with its legal representation of a condominium board and the individual unit owners in an action against the builder and developer of the condominium building. During the underlying litigation, the Plaintiff—one of the individual unit owners—discharged FKB’s client and retained new counsel to represent her in connection with her claims for property damage in her penthouse apartment. FKB’s client continued to represent the condominium board and the remaining unit owners. The Board and other unit owners eventually voted to approve a settlement of the underlying litigation against the builder and developer. A condition of the settlement required the Board to indemnify the developer against any further claims by the unit owners. The Plaintiff, unhappy with the settlement, opted out of the settlement and elected to pursue her individual claims against the developer. As such, the Board and all unit owners, including the Plaintiff, were required to indemnify the developer and pay its defense costs. The Plaintiff brought suit against FKB’s client alleging that it breached its duty to Plaintiff, as a former client, and negotiated a settlement that was against her interests.

FKB moved to dismiss the complaint pursuant to Rule 12(b)(6) on the grounds that Plaintiff failed to sufficiently plead that FKB’s client breached a duty to Plaintiff, that the alleged negligence was the “but for” proximate cause of Plaintiff’s alleged damages and that Plaintiff did not sustain actual and ascertainable damages. Specifically, FKB argued that the retention of successor counsel and the vote by the unit owners and Board to approve the settlement were intervening acts that severed the chain of causation. Further, FKB argued that Plaintiff could not demonstrate actual and ascertainable damages, as the underlying litigation, as well as a separate lawsuit against the Board, were still ongoing.

Following a lengthy oral argument, on July 3, 2013, the Hon. Paul A. Engelmayer, Southern District of New York, issued an order granting FKB’s motion to dismiss and dismissed all claims against FKB’s client. In so holding, Judge Engelmayer ruled that the Plaintiff’s Complaint failed to sufficiently plead any of the elements of a legal malpractice claim. Specifically, Judge Engelmayer ruled that the Plaintiff had failed to set forth allegations sufficient to allege that FKB’s client breached a duty to the Plaintiff or was the “but for” proximate cause of the Plaintiff’s alleged damages. The Court adopted FKB’s reasoning and held that the retention of successor counsel as well as the vote of the unit owners to approve the settlement precluded Plaintiff from demonstrating proximate causation.

Should you have any questions concerning this decision, or the defense of legal professionals in general, please contact Andrew S. Kowlowitz.