Fourth District Court of Appeal in West Palm Beach. Courtesy photo.

A legal malpractice lawsuit against New York firm Kasowitz Benson Torres will remain in limbo until the case in which its accused of wrongdoing is resolved, the Fourth District Court of Appeal has ruled.

Plaintiff Steven Mariano, who does business in South Florida, sued his former lawyers in Broward Circuit Court in 2017. He alleged the Kasowitz firm negligently drafted affirmative defenses that were stricken as legally insufficient in two cases in the Southern District of New York.

Mariano also claimed the firm failed to advise him about potential malpractice claims against international law firm Simpson Thacher & Bartlett, which represented his company in an earlier hedge fund transaction—the catalyst to his legal trouble.

The dispute stems from Mariano's sale of shares in his company, Patriot National Inc., to a group of investors in 2015. Simpson Thacher represented him in that transaction, which spawned the New York litigation.

Investors claimed Patriot National breached its obligations by refusing to hand over 250,000 shares in exchange for $13.5 million. But Mariano's complaint alleged the investors used predatory tactics to manipulate the market and send his company into a "death spiral" to capitalize on the crash of its stock prices.

Simpson Thacher recommended the Kasowitz firm to Mariano, who claimed in his legal malpractice complaint that the litigation "decimated" his business.

The lawsuit also points the finger at Simpson Thacher, alleging the firm was negligent in drafting transactional documents and failed to properly warn Mariano's company about the risks of the deal.

Kasowitz attorneys Kenneth R. David, Michael Joseph Bowe, Anthony Macdonald Caputo Jr. and Hershey Stern worked on the New York cases, according to online case files. They did not immediately respond to requests for comment.

Both firms have denied any wrongdoing. Both moved to stay the case, arguing the allegations were premature. Broward Circuit Judge John Bowman denied their petitions.

The Fourth DCA had a different take, though, ruling that the outcome of Kasowitz's case hinges on what happens with the claims against Simpson. If Simpson is found to have committed malpractice, for example, that would inform whether Mariano incurred damages by allegedly not being informed about viable claims against Kasowitz.

The order only applies to Kasowitz, which appealed the lower court's denial.

Simpson Thacher Bartlett's trial attorney Kelly Melchiondo of Stearns Weaver Miller in Miami and Kasowitz's Miami counsel Kelly Luther, Danielle Moriber and Giselle Manseur did not respond to requests for comment by deadline.

Kasowitz labeled the complaint baseless in its motion to dismiss, which sought to litigate in New York. Simpson Thacher also moved to dismiss for failure to state a claim.

"At its core, plaintiff has claimed that Simpson Thacher should have negotiated a different agreement," the Simpson Thacher motion argues. "However, the complaint is devoid of any allegation that the parties with whom Simpson Thacher negotiated would have ever agreed to the language plaintiff now says should have been drafted."

Counsel to Mariano, William Scherer of Conrad & Scherer in Fort Lauderdale was unavailable before deadline.

Read the opinion: [falcon-embed src="embed_1"]

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