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Birnbaum v. Misiano, 52 A.D.3d 632, 861 N.Y.S.2d 711

Birnbaum v. Misiano, 52 A.D.3d 632, 861 N.Y.S.2d 711

NY: Underlying loan; uncollectiblility

Student Contributor: Michael H. Park

Facts: Attorney represented plaintiff in a series of loans made to a third party whom the attorney knew socially. The third party provided watches as collateral on the loans. At no time over the course of the 21 months in which the loans were issued did the attorney recommend that plaintiff get an appraisal as to the value of the watches. Eventually, it was discovered that the watches were worthless, and the plaintiff brought a legal malpractice action against the attorney for failing to ensure that the loans were adequately collateralized. The attorney moved to dismiss on the grounds that the plaintiff failed to prove that the attorney’s actions were the proximate cause of his damages because the plaintiff could not show that a judgment was obtained against the third party that could not be collected. The trial court dismissed the complaint and the plaintiff appealed.

Issue: Does the lack of an uncollectable judgment against a party in an underlying action preclude a plaintiff from going after their attorney for legal malpractice?

Ruling: No. In reversing the Supreme Court, Nassau County, the Appellate Division, Second Department held that the complaint was improperly dismissed for the following reasons:
1) The burden of the plaintiff is to show that the attorney did not “exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and that the attorney’s breach of that duty proximately caused the plaintiff to sustain actual and ascertainable damages”.
2) There is nothing to suggest that because the plaintiff has not pursued an action against the third party to whom money was loaned and that a judgment obtained against the third party would be uncollectable, Plaintiff will be unable to prove that the attorney’s conduct was the proximate cause of their damages.

Lesson: Even if a plaintiff does not pursue a cause of action against the party in the underlying action, they can still bring a legal malpractice claim against the attorney who represented them. Just because there exists the possibility of recovering money against another party does not eliminate the attorney as a proximate cause of the plaintiff’s damages.

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Posted in: New York