Summary
The Appellate Division, Second Department affirmed a judgment awarding the plaintiff $1,856,699.36 in damages against an attorney for legal malpractice. Although the attorney was not in privity with the estate, the court held that his knowledge of the executor’s self-dealing and misconduct, continued disbursement of estate assets, and failure to alert the Surrogate’s Court or withdraw constituted special circumstances supporting liability to third parties. The court also concluded that the plaintiff established ascertainable damages and declined to consider the defendant’s remaining contention because it was raised for the first time on appeal.
Topics
Practice areas
Questions Presented
- Whether an attorney representing an executor may be held liable to the estate, despite lack of privity, when special circumstances such as fraud, collusion, malicious acts, or other misconduct are established.
- Whether the trial evidence established that Blatt's professional negligence caused actual, ascertainable damages to the estate.
- Whether the defendant's remaining appellate contention could be considered when it was raised for the first time on appeal.
Holdings
- Although an attorney representing an executor generally is not liable to estate beneficiaries or the estate because the attorney does not represent the estate itself, the attorney may be liable to third parties not in privity when fraud, collusion, malicious acts, or other special circumstances exist. Blatt's knowing failure to address the former executor's deficient accounting and self-dealing, together with his continued disbursement of estate assets, constituted such special circumstances.
- A legal malpractice plaintiff must establish actual, ascertainable damages resulting from the attorney's negligence; Betz presented sufficient evidence of both her damages and Blatt's contribution to them.
- The defendant's remaining contention was not reviewable because it was raised for the first time on appeal.
Key quotations
“The defendant's failure to notify the Surrogate's Court or withdraw as counsel upon discovering the self-dealing and misconduct of the former executor, together with the fact that the defendant fostered the former executor's self-dealing and misconduct by continuing to disburse estate assets to the former executor despite his knowledge that the former executor was engaging in self-dealing and looting, constitutes the type of "fraud, collusion, malicious acts or other special circumstances" for which an attorney may be held liable to third parties not in privity” (*2)
“Damages in a legal malpractice action are designed 'to make the injured client whole'” (*2)
Factual background
Blatt represented a former executor of the estate who was later removed for cause. Blatt admitted that he was not competent to perform accountings, recognized that the proposed accounting was deficient, and knew that the former executor was engaging in self-dealing by making payments to himself and his children. Despite that knowledge, Blatt did not arrange a professional accounting, notify the Surrogate's Court or opposing counsel, withdraw as counsel, or stop disbursing estate assets, including proceeds from the sale of the estate's primary asset.
Procedural history
Betz, acting as substitute executor of her father's estate, sued Blatt, who had represented a former executor removed for cause. After a nonjury trial, the Supreme Court, Westchester County, found that Blatt committed legal malpractice but did not establish a violation of Judiciary Law § 487, and awarded Betz $1,856,699.36. The Appellate Division affirmed the judgment with costs.