Legal Malpractice Claim Based on Later-Reversed Ruling Upheld

On August 12, 2016, Justice Bransten of the New York County Commercial Division issued a decision in Shenzhen Kehuaxing Industrial Ltd. v. Curtis, Mallet-Prevost, Colt & Mosle LLP, 2016 NY Slip Op. 31593(U), sustaining a legal malpractice claim based on a later-reversed administrative decision.

In Shenzhen Kehuaxing Industrial, the defendant law firm submitted a questionnaire relating to an anti-dumping investigation involving plaintiffs a day late, resulting in its rejection and the rejection of a subsequent submission. Even though the decision to reject the submissions ultimately was reversed, the court upheld legal malpractice claims relating to the late submission, explaining:

The parties do not dispute that defendants failed to timely file the Q&V questionnaire, which is the primary basis of plaintiffs' malpractice claim, and which, generally, sufficiently alleges professional negligence. Instead, defendants maintain that plaintiffs have failed to plead the requisite elements of proximate cause and damages.

. . .

For the purpose of this motion, plaintiffs have sufficiently alleged proximate cause, i.e., but for defendants' untimely filing of the Q&V questionnaire, what would have been a favorable outcome was an unfavorable outcome. While defendants contend that Commerce's rejection of the separate rate application was the actual, intervening cause of plaintiffs' alleged damages, such an argument is unavailing on this motion. Defendants do not establish that Commerce's decision, even if ultimately overturned, was an independent, unforeseeable or extraordinary act far removed from the defendants' conduct, so as to sever the causal link between defendants' untimely filing and the denial of separate rate status to plaintiffs. The general rule is that an intervening act which is a normal consequence of the situation created by a defendant cannot constitute a superseding cause absolving the defendant from liability. Courts further have cautioned that whether an act is foreseeable and the course of events normal are questions generally presenting issues for the fact finder to resolve.

(Internal quotations and citations omitted).

We both bring and defend professional malpractice claims and other claims relating to the duties of professionals such as lawyers, accountants and architects to their clients. Contact Schlam Stone & Dolan partner Erik Groothuis at egroothuis@schlamstone.com if you have questions regarding such claims or appeals of such claims.