Jay Swatzburg v. John Golieb, Esq., Supreme Court, New York County, November 4, 2010

Attorneys retained by transactional counsel solely to ghost write a memorandum of law in opposition to a motion to dismiss a petition for dissolution of a corporation could not be liable to the petitioner for damages incurred when the dissolution was delayed for nine months. This was the holding of a Manhattan court in a malpractice action defended by Abrams Gorelick member Barry Jacobs and associate Shari Sckolnick.

In the underlying dissolution proceedings, transactional counsel filed a petition on behalf of one shareholder and the other shareholder sought to dismiss the petition on procedural and substantive grounds, namely certain service defects. The transactional attorneys retained Abrams Gorelick’s client solely to write the brief in Opposition. Shortly thereafter, the plaintiff substituted new counsel in place of the transactional counsel as attorney of record. The new attorney represented the petitioner in all subsequent hearings and made all strategic decisions, including not to accept the respondent’s offer to waive the alleged defects and to proceed with the Petition in its current form. The substitute attorney chose to initiate a new proceeding.

After the corporation was dissolved, the petitioner commenced a malpractice action, seeking to recover over $800,000 in damages allegedly incurred due to the delay of the dissolution proceeding. The plaintiff alleged that had the defendant law firm advised plaintiff to withdraw the petition at an earlier date, the duration of the dissolution proceeding would have been shorter and petitioner would not have had to incur additional business expenses from the corporation.

The Court found that the defendant law firm met the initial burden of establishing, as a matter of law, that plaintiff is unable to prove that the defendants’ alleged negligence was a proximate cause of plaintiff’s asserted damages. The Court agreed with Abrams Gorelick’s argument that the proximate cause of the damages asserted by plaintiff was not the alleged malpractice of the defendant law firm, but rather the intervening and superseding conduct of plaintiff’s successor counsel. The Court found that it was successor counsel’s decision to refuse to accept the waiver of the defense of improper service and to instead discontinue the initial proceeding placed upon her the responsibility for the ensuing costs imposed by the court upon plaintiff for pursuing that strategy.

Further, the Court found that plaintiff failed to present any evidence, for instance an expert’s statement, to support a determination that but for the defendant law firm’s purported failure to properly advise the plaintiff to withdraw the initial petition, the initial proceeding would have resulted in a more expeditious dissolution of the corporation. The Court found that plaintiff’s claim regarding the duration of the underlying dissolution proceeding was entirely speculative.

The Court found that in opposition to defendant’s motion, the plaintiff failed to demonstrate the existence of a triable issue of fact.