Court: Appellate Division of the Supreme Court of the State of New York; June 19, 2014; New York; State Appellate Court
An amended order and judgment issued by the Supreme Court of New York County on May 5, 2014, awarded the plaintiff $17.2 million, with the decision unanimously affirmed without costs. Appeals from earlier orders dated May 24, 2013, September 3, 2013, and October 11, 2013, were dismissed as subsumed in the judgment appeal. The plaintiff initiated a legal malpractice claim against the defendant law firm, alleging negligent drafting of a side agreement with UBS Securities LLC, which was intended to cap UBS's fees at $2 million for financial advisory services related to acquiring control of Six Flags, Inc., unless the plaintiff secured over 51% of the voting shares. Previously, UBS successfully sued the plaintiff for $10 million in fees, with the court rejecting the plaintiff's claim that the side agreement capped fees at $2 million.
The defendant sought to amend its answer to include the defense of assumption of risk, supported by an affidavit from a partner claiming to have warned the plaintiff about the side agreement's ambiguity; however, this contradicted prior deposition testimony. The court denied the motion as the proposed amendment lacked merit and was not a previously raised defense. The defendant's motion to renew was also denied since it did not present new facts and failed to meet the interests of justice standard.
The court found that the continuous representation doctrine applied, tolling the statute of limitations on the malpractice claim. Despite the defendant drafting the side agreement in 2005, it provided legal advice during the UBS litigation from 2007 to late 2010, indicating an ongoing relationship. The absence of consultation between 2005 and 2007 did not terminate prior representation, as the defendant did not communicate any end to their services. Finally, the plaintiff's motion for summary judgment on the malpractice claim was granted, with the court noting that the defendant did not dispute the intent of the side agreement to cap UBS's fees at $2 million, and prior findings in the UBS litigation supported granting summary judgment.
No expert opinion evidence was required to grant the motion, as there were no triable issues regarding whether the defendant caused the plaintiffs' injuries, which were linked to the defendant’s drafting of a side agreement essential for UBS's success in its $10 million lawsuit. The court properly dismissed the defense of laches after determining the action was timely commenced. The plaintiffs did not waive their claims by defending the side agreement terms in the UBS litigation, leading to the dismissal of the waiver defense. The court also dismissed the failure to mitigate damages defense, rejecting the defendant’s argument that the plaintiff could have mitigated damages by avoiding control of Six Flags; the side agreement specifically aimed to limit the plaintiff's liability if it did acquire control. The defendant's suggestion that the plaintiff should have invested more in its UBS litigation defense lacked specificity and did not warrant further consideration. Other arguments from the defendant were found to be without merit or not properly presented.
