## Facts

- Plaintiffs (the landlord) owned a building in Manhattan and leased part of it to an art gallery (the tenant).
- The lease required the tenant to obtain property-damage insurance with $100,000 in coverage, naming both the tenant and the landlord as insureds.
- The tenant did not obtain the required insurance.
- During the lease term, water flowed into the tenant’s space and damaged artwork and other property.
- The tenant sued the landlord for negligence based on the water intrusion and resulting property damage.
- In defending the negligence action, the landlord’s attorneys did not assert, as a defense, that the tenant breached the lease by failing to procure the required insurance.
- During the negligence trial, the landlord’s attorneys also mistakenly obtained testimony suggesting that the landlord was insured for the tenant’s loss, even though the landlord was not insured for that loss.
- The tenant obtained a jury verdict, and judgment was entered against the landlord in the negligence action.
- The landlord then brought a legal malpractice action against its attorneys (and related defendants), alleging that counsel’s handling of the defense caused the adverse judgment.
- The court in the malpractice action granted dismissal/summary judgment, reasoning that the failure to raise the lease-based insurance defense could not have caused harm because, even if the tenant had purchased the required insurance, the insurer would have pursued subrogation against the landlord for the same loss.
- The landlord appealed.

## Issues

1. Whether the malpractice claim could be dismissed on summary judgment based on the assumption that, even if the tenant had obtained the lease-required insurance naming the landlord as an insured, the insurer would necessarily have been able to recover from the landlord by subrogation.
2. Whether the landlord raised triable issues of attorney negligence and “but for” causation based on counsel’s failure to assert the lease-breach/insurance-procurement defense and related trial errors (including eliciting incorrect testimony about insurance).

## Decision

- The Appellate Division reversed the order granting summary judgment/dismissal and reinstated the malpractice action.
- The court held that the lower court improperly treated subrogation as an automatic, outcome-determinative consequence that defeated causation as a matter of law.
- The court concluded that the record presented triable issues as to whether the omitted lease-based defense (and other alleged errors) could have changed the result in the underlying negligence action.

## Legal Principles

- To recover for legal malpractice, a plaintiff must show attorney negligence, that the negligence was a proximate cause of the loss (often framed as “but for” causation), and actual damages.
- An attorney’s failure to plead and pursue a potentially dispositive contractual defense can support malpractice liability if the omitted defense could have avoided or reduced the adverse outcome.
- On summary judgment, courts should not defeat malpractice causation by relying on a chain of hypothetical events (such as assumed insurance procurement and assumed subrogation) where those matters are not established as inevitable on the record.
- Subrogation is not treated as a foregone conclusion in a way that automatically eliminates causation in a malpractice case; whether an insurer could and would pursue subrogation may depend on the insurance terms and other facts.

## Conclusion

The Appellate Division reinstated the landlord’s legal malpractice claims because the lower court erred in dismissing them based on a presumed, automatic right of subrogation that would have left the landlord liable even if the tenant had procured the lease-required insurance. Since subrogation could not be treated as inevitable on this record, the landlord was entitled to try to prove that counsel’s failure to assert the lease-breach insurance defense and related trial missteps were negligent and caused the judgment entered against it in the underlying negligence action.


Duell v. Greater New York Mutual Insurance Co., 172 A.D.2d 270, 568 N.Y.S.2d 93 (1991)