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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: August 24, 2019

Malpractice Claim Partially Barred by In Pari Delicto Defense

On August 21, 2019, the Second Department issued a decision in Gobindram v. Ruskin Moscou Faltischek, P.C., 2019 NY Slip Op. 06190, affirming the partial dismissal of a legal malpractice claim on in pari delicto grounds, explaining:

The doctrine of in pari delicto mandates that the courts will not intercede to resolve a dispute between two wrongdoers. The principle that a wrongdoer should not profit from his own misconduct is so strong in New York that the defense applies even in difficult cases and should not be weakened by exceptions. The defense requires intentional conduct on the part of the plaintiff.

. . .

Here, the federal courts in the plaintiff’s bankruptcy proceeding finally adjudicated a mixed issue of law and fact identical to that raised by the in pari delicto defense asserted by the defendants in the current legal malpractice action, i.e., the plaintiff’s culpability in connection with the filing of the inaccurate bankruptcy petition. Those courts found that the plaintiff knowingly and intentionally made a false and fraudulent statement under oath by swearing that he had read the SOFA and that it was true and correct, and that the plaintiff’s alleged reliance on the defendants to accurately prepare the bankruptcy submissions did not negate his fraudulent intent. These findings established that the plaintiff was in pari delicto with the defendants to the extent that he alleges they acted negligently in preparing and filing the inaccurate bankruptcy petition. Accordingly, we agree with the Supreme Court’s determination granting that branch of the defendants’ motion which was to dismiss so much of the legal malpractice cause of action as sought to recover damages for the defendants’ preparation and filing of the inaccurate bankruptcy petition based on the doctrines of collateral estoppel and in pari delicto.

(Internal quotations and citations omitted).

We both bring and defend professional malpractice claims and other claims relating to the duties of professionals such as lawyers, accountants and architects to their clients. Contact Schlam Stone & Dolan partner Erik Groothuis at egroothuis@schlamstone.com if you have questions regarding such claims or appeals of such claims.

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