Legal Malpractice

Shearman & Sterling Legal Malpractice Case Continues

By (Andrew Lavoott Bluestone)

An action agains tShearman & Sterling for failures in a loan transaction continues, after the First Department affirmed denial of a motion to dismiss.  In Garten v. Shearman & Sterling. 

"Plaintiff has stated a cause of action for legal malpractice by alleging that "but for" defendant's failure to prepare and procure documents necessary to provide him with a first-priority security interest, he would have been able to recover the amounts owed to him by the defaulting borrower (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]). The documentary evidence does not establish a defense as a matter of law (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326-327 [2002]). Under "Documentation relating to Security Agreement," defendant's closing documents checklist included "[e]vidence that all other action that the Lender may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Security Agreement has been taken (including, without limitation, UCC-3 termination statements)." Thus, defendant was obligated not only to prepare the loan documents, but also to protect plaintiff's expectation that the agreement that he would hold a senior security interest was effective. However, defendant allegedly neither attempted to obtain such documentation from the senior creditors nor advised plaintiff of the hazards of proceeding with the loan without it. "

Full post as published by New York Attorney Malpractice Blog on June 06, 2008 (boomark / email).