Legal Malpractice

Wilson Elser, Ulico Casualty Co. and Legal Malpractice

By (Andrew Lavoott Bluestone)

We reported this case months ago when Justice Marci Friedman in Supreme Court, New York County granted partial summary judgment and directed that Wilson Elser disgorge fees paid to it.  Her theory was that Wilson Elser beached its fiduciary duty while it represented Ulico and at the same time assisting Legion Insurance Company in a competing business.  Today, the Appellate Division reversed and wrote on the case in Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker ,2008 NY Slip Op 06894, Decided on September 16, 2008, Appellate Division, First epartment ,Tom, J. 
 

Today, in the New York Law Journal, Noeleen Walder writes  that that Tom Hyland  the managing partner of Wilson Elser in New York, said the decision "is an absolute and total vindication of the firm and the lawyers in the firm."

"The court directed that defendant forfeit the fees it received for the duration of the firm's breach and directed an assessment. While we agree that the complaint states viable grounds for recovery, our analysis proceeds on a different basis, and we conclude that defendant's liability is limited to the claim for legal malpractice"

"Supreme Court found the complaint meritorious. It declined to dismiss the malpractice cause of action on the basis of conflicting deposition testimony concerning whether defendant had preserved its notice and coverage defenses as to the three benefit fund claims before requesting authority to settle them for as much as $4 million. The court further declined to dismiss plaintiff's breach of fiduciary duty cause of action as duplicative of its malpractice cause of action. It reasoned that the two claims arose from different facts — the malpractice claim from defendant's dual representation of plaintiff and Legion as claims manager, and the breach of fiduciary duty claim from defendant's assistance to PIA in transferring plaintiff's business to [*4]Legion. The court denied dismissal of the claim for aiding and abetting PIA's breach of fiduciary duty, reasoning that defendant failed to demonstrate its lack of "'substantial assistance' to PIA in connection with the latter's breach." Finally, the court declined to dismiss plaintiff's claim for tortious interference with contractual relations, rejecting defendant's assertion that PIA's contract with plaintiff was nonexclusive and noting that a tortious interference claim can be based on even an at-will or a voidable contract. However, the court granted the cross motion to the extent of dismissing plaintiff's claim for tortious interference with prospective economic advantage, a ruling with which plaintiff does not take issue and the propriety of which is not before us. "

"We further agree that the cause of action asserted as breach of fiduciary duty is not redundant because it is based upon different facts than those underlying the cause of action alleging legal malpractice (see Estate of Nevelson v Carro, Spanbock, Kaster & Cuiffo, 290 AD2d 399, 400 [2002]). However, we do not agree that plaintiff may seek to recover damages for defendant's breach of fiduciary duty on legal grounds less rigorous than those required for recovery under a theory of legal malpractice. Nor do we perceive any reason to summarily decide the question of the forfeiture of defendant's legal fees on a preliminary record. "

Full post as published by New York Attorney Malpractice Blog on September 17, 2008 (boomark / email).