Successor Counsel

Published on: April 16, 2020

Successor Counsel Defense Defeats Legal Malpractice Claim

In Moreton Binn v. Muchnick, Golieb and Golieb, P.C. 2020 NY Slip Op 02020, the plaintiffs sued their lawyers for allegedly poor advice causing them to lose majority control of a series of corporations they owned. The court rejected the claims for a variety of reasons. First, some claims were dismissed because the lead plaintiff clearly consented to the transaction. Second, additional claims were dismissed because the plaintiffs engaged successor counsel to advise them on the 2016 transaction. The relevant portion of the opinion states:

Plaintiffs allege that their long-time attorneys, defendants John Golieb, Esq. and Muchnick, Golieb & Golieb, P.C. (together, the Golieb defendants), gave poor advice in connection with a series of transactions in 2014, 2015 and 2016, resulting in the loss of plaintiffs’ majority interest and dilution of their interest in their airport spa business, XpresSpa Holdings, LLC (XpresSpa), as well as other damages. The motion court correctly concluded that documentary evidence, including emails and transaction documents, rendered it “essentially undeniable” that plaintiffs were advised of and/or otherwise understood the terms of the transactions they entered into in 2014 and 2015, as well as their alternative options, if any (see Amsterdam Hospitality Group, LLC v Marshall-Alan Assoc., Inc., 120 AD3d 431, 432 [1st Dept 2014] [internal quotation marks omitted]). Those documents “conclusively establish[] a defense to the asserted claims as a matter of law” (Leon v Martinez, 84 NY2d 83, 88 [1994]; see CPLR 3211[a][1]).

The court correctly concluded that plaintiffs failed to establish that the Golieb defendants were the proximate cause of any damages in connection with the 2016 vote on the merger of XpresSpa and its acquisition by Form Holdings Corp. Documents show that plaintiff Moreton Binn voted in favor of the merger “under protest,” that he felt “frozen. . . out” of the merger negotiations, and that he received inadequate information from Form Holdings — factors outside of the Golieb defendants’ control. Moreover, in connection with their execution of the Joinder Agreement relating to the merger, plaintiffs retained separate counsel to represent them and the minority shareholders in evaluating the voluminous merger and acquisition documents by reviewing the documents and summarizing their terms for the minority shareholders. Thus, separate counsel was an intervening and superseding cause of any damages (see Boye v Rubin & Bailin, LLP, 152 AD3d 1, 10 [1st Dept 2017]).

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Published on: November 16, 2019

In Unpublished Decision Ninth Circuit Reinstates Legal Malpractice Claim

By The Clinton Law Firm

The case, Nancy Setterquist v. Law Offices of Ted D. Billbe, P.C., N0. 18-35880, is an unpublished decision of the Ninth Circuit that raises important issues. The case is a divorce malpractice case. Setterquist alleged that her lawyer allowed the court to enter an erroneous order. Based on the text of that order, her ex-husband filed a post-decree claim against her for maintenance and was able to recover. The facts are not summarized well in the opinion, unfortunately, leaving me with questions about what happened and why it happened.

The defense strategy was to move to dismiss on the basis that Setterquist engaged a new lawyer post-decree. The defense argued in a motion to dismiss that successor counsel could have corrected the error made by Billbe and defeated ex-husband’s claims.

The district court dismissed the case on the basis that Setterquist could not allege proximate causation because she employed successor counsel.

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Published on: July 10, 2019

Violation of Refiling Rule Leads to Legal Malpractice Liability

By The Clinton Law Firm

Illinois has a rule that allows a plaintiff to dismiss a case once. The plaintiff can then refile the case. The rule does not allow multiple dismissals. In Webster Bank v. Pierce & Associates, P.C., No. 16 C 2522 (N.D. IL March 14, 2019), the court denied a defendant law firm’s motion for summary judgment because the law firm had violated the refiling rule.

The Illinois single refiling rule provides that if:

the action is voluntarily dismissed by the plaintiff, or the action is dismissed for want of prosecution, * * * the plaintiff, his or her heirs, executors or administrators may commence a new action within one year or within the remaining period of limitation, whichever is greater, after * * * the action is voluntarily dismissed by the plaintiff.735 Ill. Comp. Stat. Ann. 5/13-217. This provision is understood to “permit[] one, and only one, refiling of a claim.” Flesner v. Youngs Development Co., 145 Ill.2d 252, 254 (1991). The single refiling rule is considered to be an extension of res judicata. Carr v. Tillery, 591 F.3d 909, 915 (7th Cir. 2010) (“The one-refiling rule is thus the extension of the doctrine of res judicata to a class of cases in which the decision deemed to be res judicata is a dismissal without prejudice.”)

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Published on: July 21, 2018

Successor Counsel Had An Opportunity To Fix The Lawyer’s Error – So No Legal Malpractice Claim For Client

By The Clinton Law Firm

Sometimes things get missed or lost in the shuffle when clients change lawyers. It is often difficult to get the new lawyer up to speed in time to get a case ready for dispositive motions or trial. When I see that the client had numerous lawyers involved in a case, that is usually a good signal that the case cannot be won. Each lawyer will blame another lawyer and its tough for the plaintiff to recover. You can sue everybody, but you will be subject to motions to dismiss and separate defenses.

This is a legal malpractice case recognizing the successor counsel defense. Ryan was represented by the Simmons firm in certain litigation. It was undisputed that they withdrew before the statute of limitations on some of Ryan’s claims ran. Successor counsel appeared 13 weeks before the pleadings closed in the litigation. The court quotes the law, which is well-settled:

Our supreme court has acknowledged the rule that “[a]n attorney cannot be held liable for failing to file an action prior to the expiration of the statute of limitations if he ceased to represent the client and was replaced by other counsel before the statute ran on the client’s action.” Ruden v. Jenk, 543 N.W.2d 605, 612 (Iowa 1996) (quoting Steketee v. Lintz, Williams & Rothberg, 694 P.2d 1153, 1159 (Cal. 1985)). Other courts have further explained the effect of successor counsel in legal malpractice claims. See Norton v. Sperling Law Office, P.C., 437 F. Supp. 2d 398, 402-03 (D. Md. 2006). The actions of successor counsel may create “an intervening cause that breaks the chain of causation arising from the prior attorney’s negligence.” Id. at 402. In order to rely on this rule, the prior attorney must show “a sufficiently long time gap between the severing of the attorney-client relationship and the lapse of the statute of limitations.” Id. at 403. “Courts have not set a minimum baseline for what constitutes `sufficient time,’ although one court has deemed as little as thirty days sufficient.” Id. (citing Sherotov v. Capoccia, 555 N.Y.S.2d 918 (App. Div. 1990)); but see id. at 403 (finding ten weeks was not sufficient time for successor counsel to bring a personal injury case where the proper forum was not clear); Villarreal v. Cooper, 673 S.W.2d 631 (Tex. App. 1984)(finding seventy-seven days was not sufficient time for successor counsel to bring a tort case when prior counsel had the case for sixteen months and evidence and witnesses could no longer be located).

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