An appellate court in New York recently dismissed a client’s legal malpractice action against her former attorney because the attorney’s negligence did not affect the result of the underlying case. The client alleged that her former attorney failed to pursue an action against her insurance company after it mistakenly cited the wrong policy when denying her claim.
Margaret Schorsch, the client, owned M.R.S. Antiques with her brother David and her mother Marjorie. On September 23, 1995 someone robbed the store of nearly $2 million worth of inventory. Margaret reported the theft to the police and filed a claim with the store’s insurer, Utica Mutual Insurance Company. Margaret believed that it was her brother David who stole the merchandise. She subsequently hired the law firm Moses & Singer LLP to represent her in her claim against her brother and in a separate action regarding the insurance claim.
In 1997, Utica denied M.R.S. Antiques’ claims under the “dishonest acts exclusion” contained in the policy, which bars recovery if the loss is caused by the “dishonest acts” of a person with an interest in the entity. It turned out that Utica mistakenly quoted the wrong insurance policy when it denied the store’s claim. Subsequently, Margaret brought an action against Moses & Singer LLP claiming that it erred by not pursuing further action against Utica after it referenced the wrong policy.
The appellate court affirmed the trial court’s ruling that Margaret’s claim against the law firm should be dismissed because the outcome of the insurance matter would not have changed even without the law firm’s mistake. The store’s actual policy was materially similar to the misquoted policy and the dishonest acts exclusion would still apply because David had an interest in the store. Thus the claim was properly denied. Generally in legal malpractice actions, the claim will fail if the attorney’s negligence does not ultimately affect the outcome of the underlying case.
Schorsch v Moses & Singer LLP.doc