Related Litigation Did Not Forestall Suit for Legal Malpractice

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Joseph Mizrachi (“Mizrachi”) retained attorney Lawrence Ordower (“Ordower”) to represent him in connection with his plan to invest in an LLC. Mizrachi intended the transaction to give himself, Ordower, and Seymour Holtzman (“Holtzman”) equal ownership interests in the LLC. After the transaction, however, Mizrachi alleged that Ordower and Holtzman converted his ownership share for their own use. Mizrachi sued Ordower and his law firm for legal malpractice and breach of fiduciary duty. Id. at 1.

At the time, lawsuits involving the same underlying transaction were pending in Florida and California as well. Ordower moved to stay Mizrachi’s lawsuit. He explained that Mizrachi’s entitlement to damages for legal malpractice depended upon the outcome of one or both of the other two lawsuits and that Illinois law did not permit recovery for legal malpractice or breach of fiduciary duty without damages. Id. at 2. Mizrachi responded that he had already been injured when he paid $1.3 million for rights he did not receive. He added that Ordower was not even a party to the Florida case, and that the Florida case had been stalled by the inaction of another party. The motion was denied.

Ordower later renewed his motion to stay. His arguments were “largely the same as before,” except that he had become a party to the Florida matter and that it had progressed. Id. The Court rejected this distinction. As previously, “no case cited by Ordower holds or suggests that a client must prosecute a separate lawsuit against the lawyer or others before he can sue the lawyer for malpractice—let alone for breach of fiduciary duty.” Id. at 4. In addition, the Court considered ten factors as to whether exceptional circumstances warranted abstention. One of two factors favoring abstention was that “the Florida case […] could resolve the parties’ claims to the Brentwood LLC interests—though it might not definitively resolve everything […].” Id. at 5. However, eight factors weighed against abstention including that Ordower did not become a party to the Florida case until over a year after Mizrachi filed the present action and that the Florida case had languished for so long. The motion was therefore denied. Ordower later renewed his motion to stay. His arguments were “largely the same as before,” except that he had become a party to the Florida matter and that it had progressed. Id. The Court rejected this distinction. As previously, “no case cited by Ordower holds or suggests that a client must prosecute a separate lawsuit against the lawyer or others before he can sue the lawyer for malpractice—let alone for breach of fiduciary duty.” Id. at 4. In addition, the Court considered ten factors as to whether exceptional circumstances warranted abstention. One of two factors favoring abstention was that “the Florida case […] could resolve the parties’ claims to the Brentwood LLC interests—though it might not definitively resolve everything […].” Id. at 5. However, eight factors weighed against abstention including that Ordower did not become a party to the Florida case until over a year after Mizrachi filed the present action and that the Florida case had languished for so long. The motion was therefore denied.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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