Monthly Archives: September 2019

Doctrine of judicial estoppel in the context of legal malpractice actions

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In Borges v Placeres, 64 Misc 3d 92, 96 [App Term 2019], the court dealt with the doctrine of judicial estoppel in the context of legal malpractice actions.

We hold that the doctrine of judicial estoppel bars plaintiff from arguing such fundamentally inconsistent positions merely because his interests have now changed (see Molina v Faust Goetz Schenker & Blee, LLP, 230 F Supp 3d 279 [SD NY 2017] [under New York law, when a legal malpractice claim is assigned to a former litigation adversary, judicial estoppel precludes the assignee from taking a position in the legal malpractice case that contradicts the assignee’s position in the underlying case]). Courts in other jurisdictions have reached similar conclusions (see Alcman Servs. Corp. v Samuel H. Bullock, P.C., 925 F Supp 252 [D NJ 1996], affd 124 F3d 185 [3d Cir 1997]; Sandman v McGrath, 78 Mass App Ct 800, 943 NE2d 945 [2011]; see also Kracht v Perrin, Gartland & Doyle, 219 Cal App 3d 1019, 1024-1025, 268 Cal Rptr 637, 641 [1990] [“(A) malpractice suit filed by the former adversary is ‘fraught with illogic’ and unseemly arguments: In the former lawsuit (the plaintiff) judicially averred and proved she was entitled to recover against (the defendant); but in the (subsequent) malpractice lawsuit (the plaintiff) must judicially aver that, but for (the) attorney’s negligence, she was not entitled to have recovered against (the defendant). Reduced to its essence, (the plaintiff’s) argument in the malpractice action is ‘To the extent I was not entitled to recover, I am now entitled to recover’ ” (citation omitted)]).

Nor was Civil Court required to defer resolution of the judicial estoppel defense until the ensuing malpractice action. The doctrine of judicial estoppel is intended to prevent abuses of the judicial system (see D & L Holdings v Goldman Co., 287 AD2d 65, 71 [2001], lv denied 97 NY2d 611 [2002]), and is based on general considerations of the orderly administration of justice and regard for the dignity of judicial proceedings (see Environmental Concern v Larchwood Constr. Corp., 101 AD2d 591, 593 [1984]). Manifestly, to prevent an abuse of the judicial system, the doctrine may be invoked at this juncture to preclude plaintiff “from framing pleadings or adopting theories at war with a position taken in prior legal proceedings” (Kimco of N.Y. v Devon, 163 AD2d 573, 575 [1990], quoting Knight v Knight, 31 AD2d 267, 271 [1969], affd 25 NY2d 957 [1969]).

R. A. Klass
Your Court Street Lawyer

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Where former client sues for legal malpractice but previously filed for bankruptcy

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Where the former client sues for legal malpractice but has previously filed for bankruptcy, there must be an evaluation as to whether the legal malpractice claim is part of the bankruptcy estate or if the former client may pursue the action, as held in Gobindram v Ruskin Moscou Faltischek, P.C., 2019 NY Slip Op 06190 [2d Dept Aug. 21, 2019]:

We find unpersuasive the defendants’ additional alternative contention that the legal malpractice cause of action was properly dismissed pursuant to CPLR 3211(a)(3) because that cause of action belongs to the bankruptcy estate and the plaintiff lacked standing to assert it. “ On a defendant’s motion to dismiss the complaint based upon the plaintiff’s alleged lack of standing, the burden is on the moving defendant to establish, prima facie, the plaintiff’s lack of standing ” (BAC Home Loans Servicing, LP v. Rychik, 161 A.D.3d 924, 925, 77 N.Y.S.3d 522; see CPLR 3211[a][3]; MLB Sub I, LLC v. Bains, 148 A.D.3d 881, 881–882). “ [T]he motion will be defeated if the plaintiff’s submissions raise a question of fact as to its standing ” (U.S. Bank N.A. v. Clement, 163 A.D.3d 742, 743, 81 N.Y.S.3d 116 [internal quotation marks omitted]; see MLB Sub I, LLC v. Bains, 148 A.D.3d at 882, 50 N.Y.S.3d 410).

Here, in response to the defendants’ prima facie showing that the plaintiff’s legal malpractice cause of action was the property of the bankruptcy estate (see Wright v. Meyers & Spencer, LLP, 46 A.D.3d 805, 849 N.Y.S.2d 274; Williams v. Stein, 6 A.D.3d 197, 198, 775 N.Y.S.2d 255; In re Strada Design Assoc., Inc., 326 B.R. 229, 237–240 [S.D. N.Y.]), the plaintiff raised a question of fact as to whether the bankruptcy trustee had abandoned the cause of action in accordance with Bankruptcy Code (11 USC) § 554(a) and had authorized the plaintiff to pursue it. Accordingly, dismissal of the legal malpractice cause of action for lack of standing is not available at this juncture.

R. A. Klass
Your Court Street Lawyer

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