FKB's Andrew Kowlowitz and Anna Rusanov obtain dismissal of a legal malpractice action against a real estate attorney involving the release of escrow funds. 11/25/09

FKB's client, a real estate attorney, was retained to represent the seller of residential real estate in Ulster County. The defendant attorney also acted as an escrow agent in connection with the transaction and held the purchaser's down-payment in escrow. After the purchaser failed to appear at closing on two separate occasions in violation of the contract of sale, the defendant attorney released purchaser's down-payment to the sellers as “liquidated damages” under the contract. After the seller refused to refund the down-payment, the purchaser commenced an action against all parties involved, including the seller's attorney/escrow agent.

In lieu of proceeding with discovery, FKB filed a pre-answer motion to dismiss the Complaint pursuant to CPLR 3211 (a) (1) and (a) (7). FKB argued that the documentary evidence conclusively demonstrated that the plaintiff/purchaser breached the contract of sale and, therefore, forfeited her right to the down-payment. FKB also argued that the attorney defendant complied with all aspects of the contract of sale and, therefore, could not be held liable as escrow agent.

On November 17, 2009, Hon. Arthur F. Engoron (New York County Civil Court) granted the motion to dismiss, finding that the documentary evidence conclusively demonstrated that the plaintiff/purchaser was in violation of the contract of sale and that the defendant attorney/escrow agent acted in compliance with the contract of sale. Judge Engoron found that all claims against the defendant attorney were, therefore, unsustainable and granted the pre-answer motion to dismiss the Complaint, with prejudice. FKB was able to extricate their client from the litigation without the need for costly, time consuming discovery.

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