Siobhán A. Mueller

Richard W. Boone Jr. (Partner-New York, NY), Siobhán A. Mueller (Of Counsel-New York, NY), and Kieren R. Lang (Associate-New York, NY) secured a complete victory in the Supreme Court of the State of New York, New York County, obtaining dismissal of all claims against their client, a respected law firm. The court held that the client firm could not be held liable for malpractice because it never represented the plaintiff, and because a lawyer’s past conduct cannot be imputed to a new firm joined after the alleged wrongdoing occurred. The plaintiff had named the client firm solely because his former attorneys later joined it – long after their representation had ended.  

In support of the motion to dismiss, Rich, Siobhán, and Kieran argued that all claims against the client firm must fail because it had no involvement in the underlying dispute and, as such, the plaintiff never had an attorney-client relationship with the firm. The team further maintained that the plaintiff’s claims were based on speculation, conclusory allegations, and impermissible second-guessing of the attorneys’ legal strategies, and therefore did not rise to the level of actionable malpractice, fraud, or a violation of the Judiciary Act, as alleged. The court agreed with Wilson Elser’s arguments, granting the motion to dismiss.

Richard W. Boone Jr. (Partner-New York, NY) and Siobhán A. Mueller (Of Counsel-New York, NY) recently prevailed on a CPLR 3211 motion to dismiss in New York Supreme Court in a legal malpractice case brought by a union member against the attorney retained by the union to represent the plaintiff in an arbitration hearing conducted pursuant to a collective bargaining agreement (CBA). In their motion to dismiss, Rich and Siobhán argued that all claims against the attorney must be dismissed as barred under well-settled precedent holding union lawyers immune from malpractice suits brought by union members. They also argued that plaintiff’s claims should be dismissed because (1) their client had no attorney-client relationship with the plaintiff, (2) the plaintiff did not allege facts sufficient to establish any breach of the standard of care, and (3) the plaintiff’s claim was untimely under the applicable statute of limitations. The court agreed and dismissed the case against our client, holding a “cause of action for malpractice cannot be maintained as against an individual attorney hired by the plaintiff’s union to handle a disciplinary proceeding under the union’s CBA.” Rather, “a plaintiff is limited to bringing an action against the union for breach of the duty of fair representation because, in that instance, the plaintiff's malpractice claims are preempted by federal labor law, as those claims arise out of defendant attorney’s representation of the union during the plaintiff's disciplinary proceedings under the union’s CBA.”

Richard W. Boone Jr. (Partner-New York, NY) and Siobhán A. Mueller (Associate-New York, NY), recently prevailed on a CPLR 3211 motion to dismiss in Westchester Supreme Court in a case involving alleged violation of Judiciary Law § 487, fraud and declaratory judgment against our client lawyer and his firm. The clients served as legal expert in an underlying divorce proceeding, and the plaintiff alleged that they made false representations in an affidavit filed with the court as part of an imagined scheme to disparage the plaintiff before the court in connection with a custody hearing. The court agreed with Richard and Siobhán’s arguments, and dismissed the Judiciary Law § 487 claim because “the alleged representations and conduct complained of were well within the bounds of the adversarial proceeding and do not appear to be outrageous or egregious” and, therefore, the plaintiff’s factual allegations did not support a cause of action under the statute. The court further reasoned that “an attorney’s assertion of unfounded allegations, even if made for an improper purpose, does not provide a basis for liability under Judiciary Law 487.” The court also dismissed the fraud claim because the plaintiff failed to allege details “indicating that defendants made a misrepresentation for the purpose of inducing the plaintiff's reliance thereon or that the plaintiff justifiably relied on the misrepresentation to his detriment.” The plaintiff, instead, made “conclusory assertion[s] that he reasonably relied on the defendants’ alleged misrepresentations.” Lastly, the court dismissed the declaratory judgment claim because the plaintiff failed to allege facts showing the existence of a justiciable controversy. The matter is presently on appeal in the Second Department.

Richard W. Boone Jr. (Partner-New York, NY), David Sheiffer (Partner-New York, NY), and Siobhán A. Mueller (Associate-New York, NY), recently prevailed on a Rule 12(b)(6) motion in the U.S.D.C. for the Southern District of New York, where the Court again strictly enforced the insured versus insured exclusion (“IvI Exclusion”) in the at-issue policy (the “Policy”), despite an allocation clause requiring defense costs to be paid when covered and uncovered claims are made.  

That decision, which applied Kentucky law, stemmed from the same underlying lawsuit and Policy that was at issue in a prior case where Boone and Sheiffer, with the assistance of Lynsie Rust (Partner-Louisville, KY), prevailed on the same issue in the U.S.D.C. for the Eastern District of Kentucky, which was affirmed by the United States Court of Appeals for the Sixth Circuit.

As in the prior suit, several underlying lawsuits asserting direct and derivative claims had been filed by certain shareholders against certain directors and officers of the insured, a family-owned global agricultural fencing and equipment supplier, charging violations of RICO and price gauging in the sale of products by the insured and affiliated companies to companies controlled by the defendant directors and officers.  In the underlying litigation, the court had described the corporate structure of the family-controlled companies as “exceedingly complex.”

In response to the prior suit, our client, despite having issued a duty to defend, declined coverage on the basis that, among other things, one of the individual plaintiffs qualified as an insured under the terms of the Policy, thereby triggering the IvI Exclusion.  The Kentucky District Court agreed, dismissing the coverage action in its entirety, and was later affirmed by the Sixth Circuit.  Notwithstanding, a second insured defendant named in the underlying actions later sought coverage, which our client declined for the same reasons.  This insured then filed a second coverage action, this time hoping for a different result in the Southern District of New York.

In so doing, while noting the result in the prior Kentucky case, the insured argued that the Policy’s IvI Exclusion was inapplicable because “the purpose of an [IvI] Exclusion is in no way served by excluding coverage for [the insured], who is neither a family member, director, or officer of the [insured company].”  Notwithstanding, as before, the insured argued that because the Policy contained an allocation clause which required a defense when both covered and uncovered claims were present and because the plaintiffs in the underlying actions included entities that were not within the IvI Exclusion, the carrier was obligated to defend.  However, Judge Valerie Caproni disagreed, holding that the IvI Exclusion barred coverage for the underlying actions, in their entirety.

Before reaching the insured’s allocation clause arguments, however, the Court first addressed the “assistance exception” in the IvI Exclusion, which preserves coverage for a “Claim” otherwise excluded from coverage by the IvI Exclusion if it was “brought by any security holder of the Company” and the security holder “is acting totally independently of, and without the solicitation, assistance, active participation or intervention of, the Company or any Insured Person.”  The Court noted that this provision did not preserve coverage because “it is undisputed that Ms. Tarter Smith (an insured) spearheaded the litigation from its inception.”  

The Court then considered the Policy’s allocation clause, which the Court concluded “does not change this analysis.”  Under the Policy’s allocation clause, the insurer was specifically required to provide a full defense if a “Claim” includes “both covered and uncovered matters” or if it is made “against any Insured and others.”  However, as the Court noted, the allocation clause “does not expressly address claims brought by an insured and others.”  Rather, “[s]uch claims are expressly governed by the IvI Exclusion, which bars coverage for the underlying litigation as a whole unless the Assistance Exception applies.” Accordingly, the Court held that the IvI Exclusion barred coverage for the Claim in its entirety.

Significantly, in so holding, the Court did not entirely rely on the holdings in the prior Kentucky litigation.  Instead, the Court reviewed decisions involving similar IvI Exclusions throughout the United States.  Accordingly, although decided under Kentucky law, this decision arguably has broader significance for the interpretation of similar IvI Exclusions in the Southern District of New York and perhaps beyond.  

In this regard, we note that the matter is also presently on appeal to the United States Court of Appeals for the Second Circuit, Case No. 23-17.