On March 24, 2021, GVK obtained dismissal of plaintiffs’ complaint asserting causes of action for legal malpractice, breach of contract and a violation of Judiciary Law § 487 against GVK’s attorney client. Plaintiffs alleged that they would have obtained a more favorable outcome in an underlying foreclosure action had GVK’s client asserted a statute of limitations defense in the foreclosure action. It was Plaintiffs position that the legal malpractice claim was not premature because the entry of a Judgment of Foreclosure and Sale was “final” and disposed of the case.
GVK successfully argued that plaintiffs could not meet the “case within-a-case” standard based on the fact that the foreclosure sale had not yet occurred, and thus there were no actual ascertainable damages. In addition, there was still an open Order to Show Cause filed on behalf of plaintiffs seeking to vacate the Judgement of Foreclosure and
Sale, which could render all or at least some of the malpractice claims moot.
Justice Porzio, in Supreme Court, Richmond County rejected plaintiffs’ arguments and agreed that the elements of causation and damages in Plaintiffs’ legal malpractice cause of action are dependent on the outcome of the Order to Show Cause, and as such, dismissed the malpractice cause of action as premature. The court also agreed that GVK demonstrated the breach of contract and violation of Judiciary Law § 487 claims were duplicative of the malpractice claims and not adequately plead and dismissed both causes of action.
Parenthetically, while plaintiff was granted leave to replead the malpractice claim, the ultimate success of such claim is now far less likely due to the recent New York Court of Appeals holding in Freedom Mortgage Corp. v. Engel which reversed the Second Department’s decision and held that acceleration of a mortgage loan may be revoked by the voluntary discontinuance of a prior foreclosure action. This holding, which came down while the motion practice was pending, renders it far less likely that a meritorious statute of limitations defense to the foreclosure action ever existed.