Court Denies Motion to Dismiss Malpractice Claim Relating to Settlement Despite Plaintiff's Allocution to the Settlement Terms

On March 7, 2019, Justice Borrok of the New York County Commercial Division issued a decision in Rosenberg Feldman Smith, LLP v. Ninety Five Madison Co., L.P., 2019 NY Slip Op. 30582(U), denying a motion to dismiss a legal malpractice claim, explaining:

To state a claim for legal malpractice, the movant must establish that an attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney's breach of this professional duty caused the plaintiffs actual damages.

The counterclaims raised by NFMC state a claim for legal malpractice. RPS argues that NFMC has failed to demonstrate that any of the alleged acts of malpractice proximately caused any damages to NFMC, i.e., that "but for" the alleged acts, NFMC would have achieved a more favorable outcome. The Court does not agree. NFMC alleges that RFS's failure to conduct discovery, failure to pursue counterclaims, failure to adequately inform Ms. Sklar regarding the settlement, putting NFMC in a position where it had to settle, agreeing to settlement terms not approved by NFMC, and waiving critical rights in arbitration including the right to appeal resulted in a highly unfavorable settlement and unsuccessful arbitration proceedings and caused NFMC to incur significant monetary damages.

RPS further argues that Ms. Sklar' s allocution in open court stating that she understood and agreed to the stipulation of settlement precludes an action for legal malpractice based on any alleged deficiencies in the settlement agreement or alleged failure to inform Ms. Sklar of any material changes to its terms. Simply put, the cases cited by RPS do not mandate this conclusion at this stage of the proceeding. Significantly, Ms. Sklar was not asked whether she was satisfied with her representation in the matter or whether she had an opportunity to discuss the proposed settlement and whether her attorneys satisfactorily answered all of her questions regarding the proposed settlement.

Finally, to the extent that RPS relies on an email dated December 7, 2017 sent by Ms. Sklar to RPS in which Ms. Sklar thanks RPS for working hard to reach a settlement and indicates that she believed this was a great result for both, this misses the point. This communication occurred prior to the arbitration proceedings and before Ms. Sklar and NFMC claim to have discovered the alleged deficiencies in the settlement agreement. Accordingly, NFMC has stated a claim for legal malpractice and the motion to dismiss is denied with respect to the first counterclaim.

(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.