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Are Fraud and Legal Malpractice Claims Duplicative? NY Court Grants Motion To Dismiss Legal Malpractice Suit When Fraud Was Also Alleged*

Shutterstock_619085438It is well-settled that in order to adequately plead legal malpractice the complaint must allege negligence, but-for-causation and ascertainable damages1. These allegations must be supported with factual assertions. Bare legal conclusions devoid of factual specificity will not suffice. Yet under CPLR § 3211, the pleading standard is broad and lenient. Although factual specificity is required to support the allegations of face on the complaint, the standard is liberally applied. In contrast, when fraud is alleged there is a higher level of specificity and detail needed to survive a motion to dismiss. Fraud is one of the few causes of action singled out in the CPLR for a heightened standard of particularity in pleading. In contrast the pleading standard for other cases, such as legal malpractice, are generally governed by the more lenient principles of notice pleading2. If the facts alleged in the complaint are sufficient to put the defendant on notice of the allegations the cause of action will survive a motion to dismiss.

What happens when both fraud and legal malpractice are alleged and arise out of the same events that resulted in the claim? First, defendant attorneys would generally be well advised to argue, on a pre-answer motion to dismiss, that the claims are duplicative. A recent Court of Appeals decision also suggest that defendant attorneys would be well advised to argue that the allegations should also be held to the same, higher pleading standard.

Mid-Hudson Valley Credit Union v. Quartararo & Lois, PLLC - June 7, 2018

In Mid-Hudson Valley Credit Union v. Quartararo & Lois, PLLC, the NY Supreme Court, Appellate Division granted defendants’ motion to dismiss plaintiff’s legal malpractice and fraud claims3. The decision was recently upheld by New York’s Court of Appeals on June 7, 20184. While the Court rendered defendants’ contention that the claims were duplicative purely academic, the standard the court applied to the legal malpractice claim seems to have been affected by the fact that fraud was also alleged5.

Plaintiff commenced this action against defendants alleging causes of action for legal malpractice and fraud, claiming that, “but for defendants’ failure to provide timely and competent legal services, plaintiff would have succeeded in the underlying debt collection and mortgage foreclosure actions.”6 Plaintiff further alleged that “had [defendants] not failed to advise the cases in a timely and competent manner ..., [plaintiff] would not have incurred a loss in time and value in the debt on the collection and foreclosure cases assigned to defendant[s].”7 In addition, according to the fraud allegation in the amended complaint, defendants submitted invoices to plaintiff “contain[ing] false representations as to the time spent by [d]efendants and legal work done by [d]efendants for [plaintiff]” and that “legal time and legal work alleged to have been performed on behalf of [plaintiff] by [d]efendants was not performed.”8 

In light of the allegations made, the Court found that plaintiff failed to plead any specific facts that would establish either claim. The Court held, regarding the legal malpractice claim, that “merely alleging the elements of a legal malpractice claim in a general fashion without more does not satisfy the liberal pleading standard.9 Further, the absence of detailed facts sufficiently particular to allege legal malpractice required dismissal.10 The Court later succinctly explains that it dismissed the fraud claim because plaintiff “also failed to plead [] with the requisite specificity and detail.”11 

Although the Court decided each claim separately and applied each standard to each claim, the standard the court applied to the legal malpractice claim seems to have been affected by the fact that fraud was also alleged. The former is evidenced by J. Garry who concurred in part and dissented in part.12  J. Garry concurred regarding the dismissal of the fraud claim due to the allegation failing to meet the higher pleading standard.13  However, J. Garry dissented regarding the court dismissing the legal malpractice claim and found that the allegations sufficed to meet the liberal pleading standard afforded to such cases. 14  J. Garry believed that the court was mistaken in dismissing that claim and that they applied the same stringent standard for fraud to the legal malpractice allegation.

Conclusion

Attorney’s representing defendants in a legal malpractice suit with a fraud claim would be wise to argue on a motion to dismiss: (1) that the claims are duplicative; and (2) that the claims should be dismissed, not least due to the higher pleading standard required when alleging fraud. Fraud is a common allegation made in legal malpractice suits, and as in Mid-Hudson Valley Credit Union v. Quartararo & Lois, PLLC, usually involves issues with billing and misrepresentations by counsel of work completed. Hence, Attorneys would do well in arguing both claims are duplicative in order to dismiss both claims, and to encourage the legal malpractice claim to be held to the same pleading standard as the fraud claim.


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This article was prepared by Andrew Jones and Ahmed Khattab of the New York City-based law firm of Furman Kornfeld & Brennan LLP. Andrew and Ahmed Khattab work as part of a team of 15 lawyers and paralegals devoted to the defense of attorneys and other professionals in malpractice and disciplinary matters, as well as the defense of construction and personal-injury accidents. For more information about the above topic or the authors, please visit: www.fkblaw.com

We trust that the above article was useful and thought-provoking; however, please note that it is intended as a general guide and opinion only, not a complete analysis of the issues addressed, and readers should always seek specific legal guidance on particular matters.

For more information on LPL coverage generally, contact USI Affinity today.

 1. AmBase Corp, v. Davis Polk & Wardwell, 834 N.Y.S.2d 705 (2007).
2. CPLR § 3013.
3. 64 N.Y.S.3d 389, 392 (N.Y. App. Div. 2017).
4. 2018 NY Slip Op 04034 (June 7, 2018).
5. See Mid-Hudson Valley Credit Union, 64 N.Y.S.3d at 392.
6. Id. at 391.
7. Id.
8. Id. at 392.
9. Id. at 391.
10. Mid-Hudson Valley Credit Union, 64 N.Y.S.3d at 391.
11. Id. at 392.
12. Id. at 393.
13. Id.
14. Id.

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