Legal Malpractice

Tax Advice and Matrimonial Legal Malpractice

By (Andrew Lavoott Bluestone)

In Fielding v Kupferman ;2009 NY Slip Op 06151 ;Decided on August 11, 2009 ;Appellate Division, First Department  we see a reversal of a dismissal in Supreme Court.  The facts are uncomplicated.  Wife sues for divorce and husband hires target attorney.  A settlement is reached, and the couples funds are accurately set forth in the settlement agreement.  H's funds are mostly in a "Profit Sharing Keogh Account" which is characterized as "immediately available,"  The funds were not, and plaintiff suffered a significant tax burden in withdrawing the funds to satisfy the settlement of the divorce.

Defendant moved to dismiss, and Supreme Court granted the motion.  In reversing, the AD wrote:

"Here, not only are the allegations of the giving of incorrect advice sufficient and nonconclusory, as noted above, the documentary evidence provides significant support for plaintiff's claim. It clearly establishes that the overwhelming majority of plaintiff's funds, including the amount necessary to satisfy the obligation to his wife, were not, as characterized by the stipulation, "immediately available." Plaintiff alleges that he did not know that under the applicable tax laws the necessary funds were not "immediately available" — we must accept that allegation as true (see Leon v Martinez, 84 NY2d 83, 87 [1994]) —- and that a reasonably competent matrimonial attorney who read the stipulation would not have advised him to sign it. Given these allegations, the stipulation may constitute evidence of defendants' negligence and does not constitute a defense to the malpractice claim (see Mandel, Resnik & Kaiser, P.C. v E.I. Elecs., Inc., 41 AD3d 386 [2007]; IMO Industries Inc. v Anderson Kill & Olick, 267 AD2d 10 [1999]). "

"Defendants' documentary evidence not only fails to refute plaintiff's allegations [*3]conclusively, it supports plaintiff's claim of malpractice in a key respect. The stipulation identifies four accounts in plaintiff's name representing his financial assets and states that $894,530 of the total ($1,258,854) is in a "Profit Sharing Keogh Account," a retirement account that has specific rules regarding the withdrawal of funds and requires that significant taxes be paid upon preretirement withdrawal. Thus, the stipulation makes clear that the sum of money that plaintiff needed to comply with its requirements was not "immediately available," yet defendants advised plaintiff to sign it. Given that the ground for plaintiff's claim of malpractice is apparent from the face of the stipulation, the allegations contained in the complaint are not conclusory and plaintiff properly has pleaded a cause of action for legal malpractice. "

Full post as published by New York Attorney Malpractice Blog on August 12, 2009 (boomark / email).