By Joan C. Rogers
A trial court in Brooklyn, N.Y., Jan. 3 threw out a malpractice complaint
against a law firm in which a personal injury client claimed that his lawyers
failed to warn him that the litigation financing agreements he made with third
parties might consume almost all of his recovery (Francis v. Mirman,
Markovits & Landau PC, N.Y. Sup. Ct. Kings Cnty., No. 29993/10,
Justice Bernadette Bayne of the New York Supreme Court, Kings County, pointed
out that the lawyers neither referred the client to a funding company nor
recommended that he use one, and did not agree to represent the client in
connection with the loans. The client did not and could not plead a viable
malpractice claim against the defendants who played no role in the lending
arrangements beyond simply acknowledging the lenders' lien on the settlement,
the court concluded.
While Mirman, Markovits & Landau PC was representing Elwin Francis in a
personal injury matter, Francis secured cash from litigation funding companies
through loans that would be repaid only if he obtained a recovery.
Francis reportedly ended up with only $111 out of the $150,000 settlement the
Mirman firm recovered for him; funding companies received nearly two-thirds of
the settlement, and the rest went to legal fees and expenses.
Francis sued the Mirman firm and its three principals, Michele S. Mirman,
Thomas P. Markovits, and Ronald J. Landau. The complaint asserted that the
defendants departed from “good and accepted practices in the field of personal
injury law” by allegedly:
to know the lien amount and to confirm it with Francis when they settled the
to negotiate a reduction in the lien held by one of the lenders, Law Bucks;
representing to Francis and another funding company, Law Cash, that Francis would net $100,000
from the gross settlement amount and that there were no other liens, despite the
fact that Law Bucks had a lien of approximately $96,000.
The defendants moved to dismiss the complaint. Francis moved to amend his
complaint to add claims of intentional wrongdoing.
The court dismissed the complaint, finding that it contained only conclusory
allegations and did not allege specific facts indicating that the defendants
acted negligently. The plaintiff “has failed to satisfactorily plead any actual
or ascertainable damages as a result of the alleged malpractice of the
defendants,” Bayne wrote.
Bayne refused to let Francis amend his complaint, concluding that the
proposed allegations were insufficient to state a claim. The proposed causes of
action for fraud and duress were duplicative of the plaintiff's malpractice
claim, and the proposed claim for breach of fiduciary duty failed to state in
detail the circumstances constituting the wrong as required for causes of action
based on breach of trust, the court found.
Moreover, Bayne held that documentary evidence offered by the defendants--the
loan agreements, the settlement closing statement, the retainer agreement, and
deposition testimony--strongly supported dismissal of the complaint.
Regarding the loan agreements, Bayne found from reviewing the contracts that
“the plaintiff entered into each and every loan agreement involved in this case
of his own free will and accord.”
The contracts unambiguously stated the amount borrowed and how much Francis
would have to pay upon resolution of the personal injury case, and he was
required to initial each page to show that he had read it and understood it,
Bayne observed. The plaintiff's understanding of his actions was also evidenced,
she said, by the fact that Francis entered into yet another loan contract after
the case was settled.
Discussing the settlement closing statement, the court found that it refuted
the plaintiff's claim that the lawyers made no effort to reduce the amount of
the lien. The statement clearly indicated that the lawyers successfully
negotiated a reduction in the amount of one company's lien by almost $2,500,
Bayne also relied on deposition testimony by a witness for the defendants,
who stated: “We made every effort to reduce the Law Bucks lien and they would
not--we don't know who these people are. We did not ever do business with them
before. I don't believe they were willing to negotiate at all other than a very,
very minor amount.”
Furthermore, the court pointed out that even though the retainer agreement
for the underlying personal injury matter did not address loans from third
parties, it clearly confined the firm's representation to the plaintiff's
personal injury claim.
Bayne was unswayed by the fact that the law firm signed off on one of the
loan agreement contracts. That constituted nothing more than an acknowledgement
that the lender was holding a lien against the proceeds of the plaintiff's
recovery, and “it was not an agreement to represent the plaintiff for any
purposes in connection with the loan agreements,” the court said.
The deposition testimony demonstrated, the court added, that the plaintiff
entered into these contracts on his own and that the defendants never referred
their client to a funding company or recommended that he use one. Other than the
acknowledgment of the lien, no evidence indicated that the defendants had any
knowledge of the loan contracts or participated in their execution, Bayne
“Based upon the documentary evidence, which clearly demonstrates that the
plaintiff was fully aware of his actions when he entered into the various loan
agreements that resulted in large liens being placed against the proceeds of his
underlying personal injury case, this Court is of the opinion that no amendments
to the plaintiff's complaint will enable him to successfully plead a case of
legal malpractice against these defendants,” the court said.
Adam D. White, New York, represented Francis. The defendants were represented
by Lewis, Brisbois, Bisgaard & Smith, New York.
Full text at http://op.bna.com/mopc.nsf/r?Open=kswn-949rb9.
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