FKB’s Andrew S. Kowlowitz obtains a dismissal of legal malpractice action against a New York based solo practitioner in connection with legal representation he provided to a seller (“Plaintiff-seller”) of commercial business assets (the “underlying transaction”). The terms of the sale agreement included a sale price, a down payment and a promissory note for the remaining balance of the purchase. The promissory note was personally guaranteed by the buyers. After the close of the transaction, the buyers defaulted on the terms of the sale. The Plaintiff-seller did not attempt to enforce the terms of the sale agreement or the promissory note. Instead, the Plaintiff-seller brought an action for legal malpractice, wherein it was alleged that the sale agreement, which was prepared by FKB’s client, was unenforceable due to the negligent manner in which it had been prepared, and that as a result, Plaintiff-seller had been damaged in an amount over $3 million.

FKB moved to dismiss the complaint pursuant to CPLR 3211 based upon the Plaintiff-seller’s failure to allege that FKB’s client was the “but for” proximate cause of their alleged damages, as documentary evidence established that both the Plaintiff-seller and the buyers had independently decided to undertake and negotiate the sale of the subject commercial business assets. In addition, the documentary evidence clearly demonstrated that FKB’s client took no part in the negotiations. FKB also argued that the Plaintiff-seller had failed to allege that he had sustained any “actual and ascertainable” damages due to the absence of any allegation that the Plaintiff-seller had attempted to enforce the sale agreement or promissory note against the buyers/defaulting parties.

On March 15, 2013, the Hon. Eileen A. Rakower, New York Supreme Court, New York County, issued an order granting FKB’s motion to dismiss and dismissed all claims against FKB’s client. In so holding, Justice Rakower ruled that the Plaintiff-seller had failed to set forth allegations sufficient to allege that FKB’s client was the “but for” proximate cause of the Plaintiff-seller’s alleged damages. Specifically, the Court ruled that due to the Plaintiff-seller’s failure to plead that he had attempted to enforce the subject agreements against the breaching parties, Plaintiff-seller could not allege that the Sale Agreement and Promissory Note were unenforceable. Accordingly, the Court also ruled that any alleged claim of damages were “speculative” and insufficient to plead a cause of action for legal malpractice.

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