## Facts

- Genesis Merchant Partners, L.P. and Genesis Merchant Partners II, L.P. made four secured loans totaling about $4.425 million to Progressive Capital Solutions LLC between 2008 and 2011 to finance purchases of life insurance policy portfolios.
- The loans were intended to be secured in part by the life insurance policies, with some proceeds used to acquire policies to serve as collateral.
- Genesis retained the law firm Gilbride, Tusa, Last & Spellane, LLC and certain attorneys at the firm to represent Genesis in the loan transactions, including later loans dated December 22, 2008, July 31, 2009, and February 3, 2011.
- Gilbride drafted the loan documents, including collateral assignment forms and UCC-1 financing statements, and filed UCC-1s that broadly described collateral; the fourth-loan UCC-1 also listed policy numbers.
- Genesis alleged the transactions required properly perfected collateral assignments of specific insurance policies, but assignments transferring benefits to Genesis were not obtained and/or not filed with the insurance carriers.
- After Progressive defaulted, Genesis could not collect on the policies and sued Gilbride for legal malpractice, alleging Gilbride was retained to handle the transaction, including perfecting the security interests in the policies.
- Gilbride denied any duty to obtain/file collateral assignments with carriers, contending its role was limited to preparing documents and filing UCC-1s, and asserted counterclaims for approximately $112,000 in unpaid legal fees.
- The record included transaction documents and email communications that each side cited as supporting its view of who was responsible for completing and filing collateral assignments.

## Issues

1. Whether Genesis established entitlement to summary judgment on legal malpractice liability by proving, as a matter of law, that Gilbride undertook and breached a duty to perfect Genesis’s security interests in life insurance policies.
2. Whether material factual disputes regarding the scope of Gilbride’s engagement precluded summary judgment.
3. Whether Genesis was entitled to summary judgment dismissing Gilbride’s counterclaims for unpaid attorneys’ fees.

## Decision

- The Appellate Division, First Department unanimously reversed the trial court’s order.
- The court held that issues of fact existed, making summary judgment for Genesis improper.
- The court denied Genesis’s motion both as to malpractice liability and as to dismissal of Gilbride’s fee counterclaims.

## Legal Principles

- Summary judgment may be granted only when the movant establishes entitlement to judgment as a matter of law and no triable issue of material fact exists.
- In a legal malpractice claim, liability depends on proof of duty (including the agreed scope of representation), breach of the applicable standard of care, proximate causation, and actual damages.
- When evidence conflicts as to whether an attorney’s engagement included responsibility for a particular task (such as perfecting a security interest), the scope-of-engagement issue is generally for resolution on a full factual record rather than by summary disposition.

## Conclusion

The First Department concluded that conflicting evidence about what Gilbride was retained to do—particularly whether it was responsible for perfecting security interests in the insurance policies—created triable issues that required denial of Genesis’s summary judgment motion and reinstated Gilbride’s fee counterclaims for further proceedings.


Genesis Merchant Partners, L.P. v. Gilbride, Tusa, Last & Spellane, LLC, 157 A.D.3d 479 (N.Y. App. Div. 1st Dep’t 2018)