Commercial Litigation and Arbitration

Legal Malpractice Claim Based on Bad Advice to Enter Stip Not Foreclosed by Earlier Court’s Refusal to Set Aside Stip

From Scartozzi v. Potruch, 2010 NY Slip Op 3102,; 2010 N.Y. App. Div. LEXIS 3068 (2d Dept. April 13, 2010):

Contrary to the defendants' contention, the Supreme Court erred in determining that collateral estoppel barred the plaintiff from challenging as legal malpractice the defendant's advice that she waive her right to seek prior counsel fees in the matrimonial action because she sought, unsuccessfully, to set aside the stipulation waiving the fees. In order to invoke the doctrine of collateral estoppel, (1) the identical issue must have necessarily been decided in the prior action and be decisive of the present action, and (2) the party to be precluded from relitigating the issue must have had a full and fair opportunity to contest the prior determination (see D'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659, 664; Franklin Dev. Co., Inc. v Atlantic Mut. Ins. Co., 60 AD3d 897, 899). Here, the issue of whether the stipulation could be set aside was not identical to the issue of whether the defendants were negligent in advising the plaintiff to waive the fees. Thus, the plaintiff is not precluded from asserting a cause of action alleging legal malpractice based on the defendants' allegedly negligent advice (see Bishop v Maurer, 9 NY3d 910, 911).

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