Key Points

  • The Appellate Division, First Department, unanimously affirmed the denial of the defendants' CPLR 3211(a)(1) and (7) motion to dismiss the executors' legal malpractice claim against Falcon Rappaport & Berkman PLLC.
  • The complaint, supplemented by Evan Karsch's affidavit, adequately pleaded at this early stage an attorney-client relationship between the co-executors of the MK Estate and the law firm.
  • A formal engagement agreement signed by Evan Karsch for the limited liability company that owned the estate's commercial property did not conclusively establish the absence of an attorney-client relationship with the executors on tax advice.
  • The executors adequately alleged that, but for the firm's deficient tax advice, they would have taken another course and avoided undesired tax consequences from selling the properties.
  • Under CPLR 3211(a)(7), the executors needed to show only that damages attributable to the defendants' conduct might reasonably be inferred from their allegations.

A New York appeals court on Thursday refused to dismiss a legal malpractice suit accusing the law firm Falcon Rappaport & Berkman PLLC of giving the executors of an estate incorrect tax advice before they sold the estate's commercial real estate.

The Appellate Division, First Department, unanimously affirmed an order of Justice Paul A. Goetz of State Supreme Court, New York County, who had denied the firm's motion to dismiss. The unsigned decision came from a four-justice panel of Justices Webber, who presided, Friedman, Kapnick and Pitt-Burke.

The ruling lets the executors' malpractice claim go forward even though the firm produced a signed engagement agreement under which it was hired to work for a limited liability company. The panel held that the agreement "does not conclusively establish that no attorney-client relationship existed between plaintiffs and defendant law firm with respect to tax advice."

The plaintiffs, Evan Karsch and the other co-executors of the MK Estate, alleged that the estate owned commercial real estate properties through a limited liability company. According to the decision, the executors claimed the firm "provided them with incorrect legal advice regarding the tax consequences of potential sales of the commercial real estate properties," and they sold the properties based on that advice.

The firm and the other appealing defendants moved to dismiss under two provisions of New York's Civil Practice Law and Rules, CPLR 3211(a)(1) and (7). Justice Goetz denied the motion in an order entered on or about Jan. 23, 2025, and the defendants appealed the ruling on the first cause of action, the claim for legal malpractice.

The First Department's decision took up three questions in turn. The first was whether the executors had adequately pleaded that they were the firm's clients.

The panel read the complaint together with an affidavit Evan Karsch submitted in opposing the motion. That combined pleading, the court wrote, "details the alleged engagement of defendants by plaintiffs, the legal advice and work provided by defendants relating to the estate, and plaintiffs' sale of the properties based on that advice."

"These allegations are sufficient at this early stage of the proceeding to establish an attorney-client relationship between plaintiffs and defendant law firm such that the complaint survives a motion to dismiss," the panel held. The court cited Rushaid v. Pictet & Cie, a 2016 decision of the Court of Appeals, and Genesis REOC Co. v. Poppel, a 2022 First Department decision.

The second question concerned the firm's documentary evidence. The defendants submitted a formal agreement, signed by Evan Karsch, engaging the firm "to provide the same legal advice and work for the limited liability company that owned the commercial property and that became part of the MK Estate." The defendants argued that the agreement established that the firm had no attorney-client relationship with the executors.

The panel rejected that argument. An agreement covering work for the company, the court held, did not conclusively show the absence of an attorney-client relationship between the firm and the executors on tax advice. For that point the panel cited Hall v. Hobbick, a 2021 decision of the Appellate Division, Second Department.

The third question concerned causation and damages. The panel found the executors had adequately alleged that, but for the firm's "deficient tax advice, upon which they reasonably relied," they "would have taken another course of action and not have sustained actual and ascertainable damages in the form of undesired tax consequences from the sale of the properties." The court cited 83 Willow, LLC v. Apollo, a 2020 First Department decision.

The panel also stated the pleading burden the executors had to meet on damages. Under CPLR 3211(a)(7), the court wrote, "plaintiffs did not have to show that they actually sustained damages, but only that damages attributable to defendants' conduct might be reasonably inferred from the allegations of legal malpractice." The court drew that standard from Fielding v. Kupferman, a 2009 First Department decision.

The decision resolved only whether the malpractice claim could survive at the pleading stage. The panel did not decide whether the firm's tax advice was in fact wrong, whether the executors relied on it, or what tax consequences the sales produced. The decision does not state the amount of damages the executors seek, identify the properties, or name the limited liability company.

The caption lists Falcon Rappaport & Berkman PLLC and other defendants, identified only as "et al.," as appellants. Unnamed "Jane Does" are listed as additional defendants but not as appellants.

Lawyers for the firm and the other appellants included James D. Spithogiannis of L'Abbate, Balkan, Colavita & Contini, L.L.P., of Melville, New York. The executors were represented by Brian D. Ginsberg of Harris Beach Murtha Cullina PLLC in New York.

The case carries Index No. 655205/23 in State Supreme Court, New York County. The First Department's decision, 2026 NY Slip Op 06006, is marked as uncorrected and subject to revision before publication in the Official Reports.