Case Law Summaries

Barish v. Dilworth Paxson LLP

• Opinion Date: November 3, 2000
• Real Property Law
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ATTORNEYS; MALPRACTICE—An attorney’s unexpected and unexplained failure to appear at a closing or otherwise acting to save a client from a bad real estate deal constitutes legal malpractice.

A property owner agreed to sell its land. The owner thought that it was selling its property for $600,000 and would receive $400,000 in cash at closing and take back a purchase money mortgage for the balance. The owner consulted with an attorney and it was agreed that no contract of sale would be used for the transaction. Rather, the buyer’s attorney sent the seller’s attorney a draft of the proposed closing papers two weeks prior to the scheduled closing date. Those papers were predicated on a cash payment of only $175,000, with the balance in the form of a purchase money mortgage subordinated to an existing, very large mortgage. The seller and the attorney met before closing and the seller testified that its attorney failed to explain the significance of this change in the transaction. The attorney testified that he did explain it and advised his client that it was a “bad deal.” In any event, the seller went to the closing but the seller’s attorney never appeared. The seller, however, repeatedly called the attorney from the closing. The seller testified that “he felt under duress to close on [the buyer’s] terms because of threats made to him by the fifteen or so people at the closing, that he didn’t really understand the import of the transaction, and that if he had understood that he was subordinating so large a percentage of the purchase price to so large an indebtedness, he would have walked away from the closing despite his eagerness to sell the property.” The defendant law firm did not “really contest the proposition that [their individual attorney’s] unexplained and unexpected failure to attend the closing and at least to attempt at that time to save his client from an admittedly bad deal constituted legal malpractice.” The law firm, however, argued that the malpractice did not cause the Seller to accept the deal and thus was not the proximate cause of the ensuing loss. The Appellate Division held that it was for the jury to determine whether the testimony adduced at trial was credible and if it chose to find the facts in favor of the plaintiff, “as it evidently did, the causative link between the malpractice and the loss would have been thereby established.” As to damages, the Court upheld the jury’s award of the $225,000 difference between the cash that the buyer expected to receive at closing and the cash that was actually paid at closing.

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