Judge Upholds $5 Million Legal Malpractice Award

Judge Upholds $5 Million Legal Malpractice Award
The New York Law Journal by Brendan Pierson  -  June 13, 2011

New York Supreme Court Justice Jaffe

A state judge has upheld a $5.1 million verdict against Bryan Cave and one of its former attorneys in a nearly decade-long malpractice case over a botched deal between partners in a women's apparel company.  In the June 3 decision in Feinberg v. Boros, 108498/03, Manhattan Supreme Court Justice Barbara Jaffe refused to set aside the verdict, which was handed down by a jury last fall against Bryan Cave and retired attorney Jerome C. Boros. Justice Jaffe also awarded pre-verdict interest, meaning that the final judgment is likely to be more than $10 million, according to Thomas M. Monahan of Storch Amini Munves, an attorney for plaintiff Herbert Feinberg.

The malpractice suit has its roots in a dispute between Mr. Feinberg and Norman Katz, his partner in a now-defunct women's apparel business called I. Appel Corp. that they ran in the 1990s. In 1996, Mr. Feinberg bought out Mr. Katz's share of the partnership. Mr. Feinberg maintains that he relied on a 1995 statement of the company's finances prepared by I. Appel's accounting firm, Mahoney Cohen & Co.  I. Appel turned out to be worth much less than Mahoney Cohen had said, causing Mr. Feinberg significant losses. He sought to recover his losses in an arbitration proceeding against Mr. Katz. However, the arbitration panel did not award Mr. Feinberg any money, and also ruled that he had not relied on Mahoney Cohen's statement.  In 2000, after the arbitration was complete, Mr. Feinberg sued Mahoney Cohen for accounting malpractice in the Supreme Court. In 2001, Justice Marilyn Shafer (See Profile) dismissed the complaint insofar as it pertained to the 1995 statement, ruling that the claims were estopped by the arbitration panel's decision. A panel of the Appellate Division, First Department, affirmed in 2002. I. Appel Corp. v. Mahoney Cohen & Co., 294 AD 2d 196.  In 2003, Mr. Feinberg filed a malpractice suit in the Supreme Court against Mr. Boros, the attorney who represented him in the arbitration, who was at Robinson Silverman Pearce Arenson & Berman, which later merged into Bryan Cave. Mr. Boros has since retired. Mr. Feinberg said that Mr. Boros failed to advise him that he could preserve his right to sue Mahoney Cohen by signing an agreement with Mr. Katz limiting the estoppel effect of the arbitration decision.  Justice Rosalyn H. Richter (See Profile), who presided over the case before Justice Jaffe, initially dismissed the case on the grounds that Mr. Feinberg's complaint failed to allege that Mr. Katz would have been willing to enter into such an agreement or that such an agreement would have allowed Mr. Feinberg's claims against Mahoney Cohen to go forward. However, Justice Richter later vacated that decision to allow Mr. Feinberg to amend his complaint to cure these deficiencies. The defendants then moved for summary judgment, arguing, among other things, that an estoppel-limiting agreement would not have saved Mr. Feinberg's claims against Mahoney Cohen anyway.  Justice Richter denied that motion, and an Appellate Division panel affirmed in Feinberg v. Boros, 17 AD 3d 275. The case went to trial in October 2010, and the jury delivered its $5 million verdict.  The defendants then asked the court to enter judgment in their favor notwithstanding the verdict or, alternatively, grant a new trial, again arguing that, as a matter of law, an estoppel-limiting agreement could not have allowed Mr. Feinberg's claims against Mahoney Cohen to proceed. But Justice Jaffe said that she could not consider that argument because the court had already rejected it on summary judgment.  The defendants also argued that there had not been enough evidence for the jury to conclude that Mr. Katz would have signed an estoppel-limiting agreement. Justice Jaffe said that, while testimony on that point had been ambiguous, the defendants had "failed to demonstrate that there is no valid line of reasoning and permissible inferences that could have led the jury to conclude that Katz would have entered into a limiting agreement with plaintiff."  Finally, Justice Jaffe turned to Mr. Feinberg's request for pre-verdict interest. Mr. Feinberg argued that interest should begin accruing on May 15, 2000, when his representation by Mr. Boros ended—the earliest date on which he could have filed the malpractice suit. The defendants, on the other hand, argued that, if interest was awarded at all, it should begin accruing on Jan. 23, 2003, when Mr. Feinberg's lawsuit against Mahoney Cohen was dismissed, because that was when his injury occurred. Justice Jaffe agreed with Mr. Feinberg's argument and awarded interest going back to 2000.  Edward A. Friedman of Friedman Kaplan Seiler & Adelman, who represented the defendants, said Friday that he would appeal the ruling. A spokesman for Bryan Cave also could not be reached.  Steven G. Storch of Storch Amini Munves, another attorney for Mr. Feinberg, said he was pleased to win the case after "nearly a decade" of litigation.  Brendan Pierson can be reached at bpierson@alm.com.