Legal Malpractice

20 Years and Counting in Legal Malpractice

By (Andrew Lavoott Bluestone)

This intriguing story from New Jersey has several unique aspects to it.  The first is an idea alien to New York litigation and legal malpractice. This attorney was still in practice, and still representing buyers and sellers of the same residential property in the same neighborhood twenty years after the first transaction.  More unique is that he represented buyer in the first transaction and the next door seller in the second transaction, and was adverse to his own early client in the next door house. 

From Law.Com: "Tuckerton, N.J., solo Howard Butensky represented Stanley Shu in the purchase of a parcel at 113 West Main St. in Tuckerton from Earl and Maria Peterson. The Nov. 10, 1986, contract gave Shu a 30-day right of first refusal on the adjoining lot, also owned by the Petersons, and stated "[t]hese terms shall survive the passage of time."

Earl Peterson died, and Maria Peterson transferred the adjoining lot to her children, Lawrence Peterson and Donna Marie Jones.

When Peterson and Jones went to sell the lot in 2005 to Robert Gaudiosi, they hired Butensky to represent them.

Gaudiosi's lawyer, Alphonse DeSimone, learned that a structure on Shu's West Main Street property encroached on the lot and told Butensky that Gaudiosi would go ahead only if $10,000 of the purchase price was held in escrow to reimburse him for any legal fees he might incur in getting the encroachment removed.

Butensky wrote to Shu and told him of the impending sale and the encroachment problem on May 20, 2005.

A second letter from Butensky to Shu on May 27, 2005, warned of possible legal action if Shu did not remove the encroachment. Taking note of his past representation of Shu, Butensky said if a lawsuit was needed, some other lawyer would handle it.

Shu refused to remove the encroachment. Gaudiosi went ahead and bought the parcel.

In March 2006, Gaudiosi sued Shu in Camden County's Chancery Division. Shu counterclaimed for trespass. In his pleading he made no mention of the right of first refusal or Butensky, but in a letter dated June 16, 2006, Shu's lawyer, David Anderson, told Butensky that Shu intended to enforce that right.

Butensky responded on June 20 that when the Peterson children sold the property to Gaudiosi, neither side was aware of Shu's right of first refusal and he had not recalled it and thus did not intend to interfere with Shu's exercise of his rights. Shu, however, was aware of it and should have addressed it when the encroachment issue arose, he said.

Shu settled the encroachment case for an undisclosed amount in July 2006 and on May 4, 2007, sued Butensky for malpractice. He claimed Butensky was negligent in failing to record the right of first refusal provision and had a conflict of interest when he represented the Petersons in selling the adjoining lot. He also alleged that when Butensky informed him about the sale of the neighboring lot in May 2005, he told Butensky at that time that he intended to enforce his right of first refusal.

Full post as published by New York Attorney Malpractice Blog on February 26, 2009 (boomark / email).