FKB’s Rachel Aghassi and Salvatore Lapetina obtain a pre-answer dismissal of a cyber-security breach complaint seeking legal malpractice against an attorney where funds were wired to an incorrect bank account as the result of a cyber-scam.

During a real estate transaction where FKB’s client represented the seller, a cyber-criminal infiltrated the transaction by impersonating FKB’s client and forwarded incorrect wire instructions from a false but similar email address. The attorneys for the plaintiff, a mortgage lender, acted on the fraudulent instructions and wired the balance for the sale to the cyber-criminal’s account. Plaintiff mortgage lender commenced this action against all those involved in the transaction, including its closing agent, attorney, title insurer, and FKB’s client and its paralegal for negligence and legal malpractice.

In a CPLR 3211(a)(7) motion to dismiss, FKB successfully argued that plaintiff could not assert a legal malpractice claim against FKB’s client as there was no privity. The Court agreed that plaintiff failed to satisfy the elements required for a cause of action of legal malpractice, namely that there was no attorney-client relationship between FKB’s client and plaintiff, and the allegations failed to satisfy the narrow exceptions of fraud, collusion, malicious acts, or other special circumstances under which a legal malpractice claim may be asserted without privity. The Court also agreed with FKB that the documentary evidence utterly refuted the allegations that FKB’s client forwarded the fraudulent wire instructions on the morning of the closing, and that plaintiff cannot plead and prove that any alleged conduct on the part of FKB’s firm proximately caused plaintiff’s damages because plaintiff’s own closing attorney had the last clear chance to avoid the damages. Moreover, the Court found that the complaint did not contain the specific allegations required to sustain a cause of action for fraud, and agreed that FKB’s client’s paralegal was improperly served and thus dismissed the complaint as to the paralegal.

If you have any questions about this decision, or the defense of legal malpractice actions in general, please contact Rachel Aghassi or Salvatore Lapetina.