Two Legal Malpractice Claims Against Former Stonewall Attorney Dismissed

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Stonewall Corp. v. Conestoga Title Ins. Co. et al

(Southern District of New York, January 7, 2010) 

 

Stonewall Corporation commenced a third-party action against its former attorney alleging he committed legal malpractice while providing it representation with respect to property rights in New Jersey.  Stonewall claims that its attorney (1) failed to pursue certain legal actions, as well as failed to provide proper advice regarding related proceedings; (2) failed to convey a settlement offer; and, (3) failed to produce documents.  The court dismissed the first and third claims, but found an issue of fact existed with respect to the attorney’s failure to convey a settlement.

 

The background to the legal malpractice claims stems from Stonewall’s purported purchase of a property located in New Jersey.  Stonewall contacted a title insurer, who allegedly failed to discover a lis pendens on the property.  Shortly before Stonewall purchased the property, a bankruptcy receiver brought a lawsuit in the SDNY against officers of a separate insurance company alleging it used stolen money to purchase the property.   Those officers were later indicted in a Florida district court.  Thereafter, Stonewall sought to demonstrate its legal title to the property and was provided legal representation by the title insurer.  Stonewall’s attorney made a series of legal decisions, which were not ultimately successful and a Florida court entered an order of forfeiture on the property.  The instant action was commenced against the title insurer for full coverage with respect to the title under the policy.  The insurer filed counter-claims seeking to void the policy based on allegedly fraudulent representations with respect to Stonewall’s ownership interest in the property.  Stonewall then filed a third-party complaint alleging legal malpractice against its attorney.

 

The court held that Stonewall failed to demonstrate the attorney commitment legal malpractice with respect to how he handled the underlying matter, stating that the attorney legal decisions were  reasonable.  In addition, the court rejected Stonewall’s argument that there was an alleged conflict of interest between the insurer and the attorney.  The district court did not grant summary judgment on the claims that the attorney failed to disclosure a settlement offer, because there were conflicting affidavits between the parties.  Finally, the court held that Stonewall’s remedy regarding undisclosed documents is in the form of a motion to compel and not a legal malpractice claim.

 

For a copy of the decision, click here

 

Kim Whistler and Richard Cohen

 

https://www.goldbergsegalla.com/attorneys/Whistler.html

https://www.goldbergsegalla.com/attorneys/Cohen.html