John W. Grace v. Michael R. Law

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This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 165
John W. Grace,
Respondent,
v.
Michael R. Law, et al.,
Appellants.
Kevin E. Hulslander, for appellants Brenna et al.
Michael Hutter, for appellants Law et al.
Brian J. Bogner, for respondent.
ABDUS-SALAAM, J.:
We are presented with an issue of first impression for
this Court:
What effect does a client's failure to pursue an appeal
in an underlying action have on his or her ability to maintain a
legal malpractice lawsuit? We hold that the failure to appeal
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bars the legal malpractice action only where the client was
likely to have succeeded on appeal in the underlying action.
I.
In October 2002, plaintiff John W. Grace began
receiving treatment for an eye condition at the Veteran's
Administration Rochester Outpatient Clinic (VA Clinic) from
ophthalmologist Dr. Shoba Boghani. Plaintiff's July 2003
appointment with her, however, was cancelled and not rescheduled
for approximately one year. When plaintiff returned in August
2004, another VA ophthalmologist scheduled a consultation for
plaintiff with Rochester Eye Associates. During that
appointment, plaintiff was diagnosed with neovascular glaucoma,
which ultimately left him blind in his right eye. At some point,
plaintiff apparently learned that his blindness may have been
prevented had it been detected earlier.
In June 2006, plaintiff retained Robert L. Brenna, Jr.
and Brenna, Brenna & Boyce, PLLC (the Brenna defendants), to
bring an administrative proceeding against the Veteran's
Administration (the VA) for malpractice due to its alleged
failure to diagnose the eye condition and follow up with
plaintiff after the VA canceled his July 2003 appointment. When
delays occurred in the proceeding that the Brenna defendants
brought on plaintiff's behalf, they recommended that plaintiff
retain Michael R. Law and Phillips Lytle LLP (the Law defendants)
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to pursue a medical malpractice action against the VA.
In January 2008, plaintiff, represented by the Law
defendants, filed an action in federal court against the United
States and the VA under the Federal Tort Claims Act for medical
malpractice and negligence in cancelling his July 2003
appointment (hereinafter the underlying action). At some point,
the Law defendants learned that Dr. Boghani was not employed by
the VA but was instead an employee of the University of Rochester
(University), one of their existing clients. Because of this
conflict, they informed plaintiff that they could no longer
represent him. The Brenna defendants resumed representation of
plaintiff. On December 8, 2008, an order was signed by the
District Court, directing the substitution of counsel.
The VA was granted leave to commence a third-party
action against Dr. Boghani and the University. Plaintiff amended
his complaint to add Dr. Boghani and the University as
defendants. Dr. Boghani and the University moved for summary
judgment dismissing the claims against them as time-barred. The
VA also moved for summary judgment based upon lack of
jurisdiction, alleging that it was not liable to plaintiff
because Dr. Boghani was not its employee.
Holding that plaintiff's claims against Dr. Boghani and
the University were time-barred, the United States District Court
for the Western District of New York granted defendants' motion
for summary judgment (see Grace v United States, 754 F Supp 2d
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585, 602 [WD NY 2010]). The court determined that Dr. Bohgani
was an independent contractor, not an employee of the VA, and
thus, jurisdiction was lacking for plaintiff's claim that it was
liable for Dr. Boghani's actions. The court granted the VA's
motion for summary judgment to that extent (see id. at 597-598).
Plaintiff's remaining claim for malpractice based on the VA's
failure to reschedule his appointment, however, survived the VA's
motion.
Thereafter, Brenna sent plaintiff a letter which stated
that plaintiff was unlikely to succeed on the remaining claim
against the VA, and that a trial on that claim would be lengthy
and, due to expert costs, expensive. Plaintiff thus directed the
Brenna defendants to discontinue the underlying action.
Subsequently, plaintiff retained his current counsel to
sue the Brenna defendants and the Law defendants for legal
malpractice in failing to timely sue Dr. Boghani and the
University. The Law defendants answered that plaintiff was
estopped from commencing this action because he failed to appeal
the underlying action. They later moved for leave to amend their
answer to assert a statute of limitations defense, and upon
amendment, for summary judgment in their favor, dismissing the
complaint. The Brenna defendants also moved for summary
judgment. They argued that plaintiff voluntarily discontinued
the underlying action, thus forfeiting any right he may have had
to pursue this legal malpractice action, and that they were not
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responsible for the Law defendants' failure to initially sue Dr.
Boghani and the University because they did not initiate the
action.
Supreme Court granted the Law defendants' motion to
amend their answer, denied their motion for summary judgment, and
denied the Brenna defendants' motion for summary judgment. Both
defendants appealed.
The Appellate Division, with one justice dissenting,
affirmed the Supreme Court order (Grace v Law, 108 AD3d 1173 [4th
Dept 2013]). The court observed that while this is an issue of
first impression in New York, a per se rule that failure to
appeal in an underlying action bars a legal malpractice claim has
been rejected by several of our sister states. The court
concluded that "defendants failed to establish that plaintiff was
likely to succeed on appeal . . . and, therefore, that their
alleged negligence was not a proximate cause of his damages" (id.
at 1176). The court determined that the record was insufficient
to hold that defendants' "representation of plaintiff did not
preclude him from prevailing in the underlying lawsuit or upon
appeal" (id.). In denying the Law defendants' motion for summary
judgment, the court held that "the continuous representation
doctrine applied to toll the statute of limitations" (id. at
1177).1
1
The dissenting justice concluded that a nonfrivolous
appeal standard should be applied, and because plaintiff's claims
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The Appellate Division granted defendants' motions for
leave to appeal to this Court, and certified the question of
whether the order was properly made.
II.
While this Court has not had occasion to enunciate the
appropriate standard for bringing legal malpractice lawsuits in
the circumstances presented here, the Appellate Division
Departments have examined similar circumstances (see Rupert v
Gates & Adams, P.C., 83 AD3d 1393 [4th Dept 2011]; Rodriguez v
Fredericks, 213 AD2d 176 [1st Dept 1995]). Those decisions --
presented in the settlement context -- generally stand for the
proposition that an attorney should be given the opportunity to
vindicate him or herself on appeal of an underlying action prior
to being subjected to a legal malpractice suit.
Defendants contend that a plaintiff forfeits his or her
opportunity to commence a legal malpractice action when he or she
fails to pursue a nonfrivolous or meritorious appeal that a
reasonable lawyer would pursue (see Sands v State of New York, 49
AD3d 444, 444 [1st Dept 2008]; see also MB Indus., LLC v CNA Ins.
Co., 74 So 3d 1173 [LA 2011]; Rondeno v Law Office of William J.
Vincent, 111 So 3d 515, 524 [LA 4th CCA 2013]). In contrast,
plaintiff urges us to adopt a "likely to succeed" standard.
in the underlying action were not frivolous, he should be
required to appeal prior to bringing the legal malpractice suit.
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Courts applying the "likely to succeed" standard analyze whether
a client can commence a legal malpractice action without taking
an appeal in the underlying action based upon the likelihood of
success on that underlying appeal. In Hewitt v Allen (118 Nev
216 [Nev 2002]), the Supreme Court of Nevada held that the
voluntary dismissal of an underlying appeal does not constitute
abandonment where the appeal "would be fruitless or without
merit" (id. at 216). The United States District Court for the
District of Nevada interpreted Hewitt to mean that a defendant
would have to show that the pending appeal was "likely" to
succeed (U-Haul Co. of Nevada, Inc. v Gregory J. Kramer, Ltd.,
2013 WL 4505800, at *2 [D. Nev. 2013]). Florida courts have held
that "[w]here a party's loss results from judicial error
occasioned by the attorney's curable, nonprejudicial mistake in
the conduct of the litigation, and the error would most likely
have been corrected on appeal, the cause of action for legal
malpractice is abandoned if a final appellate decision is not
obtained" (Segall v Segall, 632 So 2d 76, 78 [Fla 2d DCA 1993];
see Technical Packaging, Inc. v Hanchett, 990 So 2d 309, 316 [Fla
2d DCA 2008]; Eastman v Flor-Ohio, Ltd., 744 So 2d 499, 504 [Fla
5th DCA 1999]).
Defendants argue that the "likely to succeed" standard
should not be adopted because it requires courts to speculate on
the outcome of the underlying appeal. They posit, nevertheless,
that even were we to adopt the "likely to succeed" standard,
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plaintiff could have succeeded on an appeal of the underlying
action and, thus, should not be allowed to sue them for legal
malpractice.
Here, the Appellate Division adopted the likely to
succeed standard employed by our sister states with a proximate
cause element.2 We agree that this is the proper standard, and
that prior to commencing a legal malpractice action, a party who
is likely to succeed on appeal of the underlying action should be
required to press an appeal. However, if the client is not
likely to succeed, he or she may bring a legal malpractice action
without first pursuing an appeal of the underlying action.
On balance, the likely to succeed standard is the most
efficient and fair for all parties. This standard will obviate
premature legal malpractice actions by allowing the appellate
courts to correct any trial court error and allow attorneys to
avoid unnecessary malpractice lawsuits by being given the
opportunity to rectify their clients' unfavorable result.
Contrary to defendants' assertion that this standard will require
courts to speculate on the success of an appeal, courts engage in
this type of analysis when deciding legal malpractice actions
generally (see Davis v Klein, 88 NY2d 1008, 1009-1010 [1996] ["In
order to establish a prima facie case of legal malpractice, a
plaintiff must demonstrate that the plaintiff would have
2
Utah courts too consider proximate cause in analyzing
this issue (see Crestwood Cove Apts. Bus. Trust v Turner, 164 P3d
1247 [Utah 2007]).
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succeeded on the merits of the underlying action but for the
attorney's negligence"]; see also Rudolf v Shayne, Dachs,
Stanisci, Corker & Sauer, 8 NY3d 438, 442-443 [2007]; McKenna v
Forsyth & Forsyth, 280 AD2d 79, 82 [4th Dept 2001]). We reject
the nonfrivolous/meritorious appeal standard proposed by
defendants as that would require virtually any client to pursue
an appeal prior to suing for legal malpractice.
III.
Applying the likely to succeed standard to the merits
of this case, the Appellate Division reached the correct result.
On this record, defendants failed to provide sufficient
evidence to determine that plaintiff would have been successful
on appeal in demonstrating that Dr. Boghani was a VA employee,
rather than an independent contractor counsel was required to
name as a defendant separate from the VA (see Lone v United
States, 910 F2d 46, 50 [2d Cir 1990], cert denied 499 U.S. 95
[1991]; see also United States v Orleans, 425 U.S. 807, 813
[1976]). As support, defendants submitted the contract between
the VA and the University, which indicates, among other things,
that Dr. Boghani was required to work at the VA Clinic six days
per month, was under the general direction of the VA, and the
University paid Dr. Boghani's salary but was reimbursed by the
VA. This information is insufficient to definitively determine
whether Dr. Boghani was a VA employee, and thus, the Appellate
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Division correctly held that defendants failed to meet their
summary judgment burden on this issue.
Regarding the Law defendants' motion for summary
judgment on the ground that plaintiff's claims against them are
time-barred, the statute of limitations in a legal malpractice
action is three years from the accrual of the claim (see CPLR §
214). Plaintiff commenced this action on December 5, 2011. The
Law defendants claim that plaintiff should have known as early as
September 26, 2008, that they would no longer be able to
represent him and that the Brenna defendants would be taking over
the case. Plaintiff, however, claims that he did not learn of
the substitution of counsel until December 8, 2008, when the
official stipulated order substituting counsel was issued by the
District Court.
"[T]he rule of continuous representation tolls the
running of the [s]tatute of [l]imitations on the malpractice
claim until the ongoing representation is completed" (Shumsky v
Eisenstein, 96 NY2d 164, 167-168 [2001]). Plaintiff has raised a
triable issue of fact as to whether the doctrine of continuous
representation tolled the statute of limitations because it is
unclear when the Law defendants' representation of plaintiff
ended. Therefore, the Appellate Division properly denied the Law
defendants' motion for summary judgment based on the statute of
limitations.
Accordingly, the Appellate Division order should be
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affirmed, with costs, and the certified question answered in the
affirmative.
* * * * * * * * * * * * * * * * *
Order affirmed, with costs, and certified question answered in
the affirmative. Opinion by Judge Abdus-Salaam. Chief Judge
Lippman and Judges Graffeo, Read, Smith and Rivera concur. Judge
Pigott took no part.
Decided October 21, 2014
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