Cadwalader offices in Washington, D.C. Photo: Diego M. Radzinschi/ALM

A Manhattan Supreme Court decision denying certain defense arguments by Cadwalader, Wickersham & Taft has helped pave the way for a legal malpractice trial that could feature testimony from the owner of the Washington Redskins and M&A dealmaker Dennis Block.

The legal malpractice case against Cadwalader is in its seventh year. It was brought by Red Zone, a now-inactive investment vehicle run by Washington Redskins owner Daniel Snyder, alleging negligent legal advice.

Cravath, Swaine & Moore partner David Marriott has been longtime counsel to Cadwalader in the malpractice case, while Red Zone is represented by solo practitioner Jeffrey Jannuzzo.

In a statement, Jannuzzo said that he expects that the case will go to trial and that Snyder will testify. With interest, alleged damages have grown to $21 million from $13 million, Jannuzzo said, and “that's not counting whatever they've paid Cravath these last seven years.”

He added: “Patrick Quinn [Cadwalader's managing partner] should never have let the case get this far.”

A Cadwalader spokesman said, “Red Zone's allegations are without merit, as the firm has consistently stated. We look forward to presenting our case in court.”

Cadwalader had represented Red Zone on its dealings with Six Flags in 2005, with then-partner Block was advising Snyder. Red Zone also hired UBS Securities as a financial adviser. Red Zone alleged that Cadwalader was negligent in drafting an August 2005 amendment that was supposed to limit UBS' fees to $2 million, and that as a result, UBS ended up winning a $10 million judgment against Red Zone for fees.

Red Zone filed suit against Cadwalader for malpractice in 2011, and a judge granted summary judgment to Red Zone against Cadwalader. That ruling was affirmed by the Appellate Division, First Department, but the New York Court of Appeals in 2016 modified the decision and reinstated Cadwalader's statute of limitations defense.

Moving for summary judgment last year, Cadwalader argued Red Zone's claims are barred by a three-year statute of limitations.

Cadwalader argued that it sent Red Zone its final bill in April 2006, and it subsequently represented Six Flags in unrelated matters. Even if Cadwalader did represent Red Zone in its litigation with UBS over the fee, the firm argued, that was not part of a continuous representation.

Cadwalader also argued that there was no mutual understanding as to the need for continued representation. “The parties here did not even discuss—let alone agree—that [Cadwalader] would represent Red Zone in any litigation between UBS and Red Zone for breach of the supplement. Indeed, like many New York firms, [Cadwalader] had a policy of not suing big banks, which it viewed as prospective clients,” the firm argued.

But in a Feb. 8 decision, Justice O. Peter Sherwood said, except for deposition testimony and a “self-interested affidavit of Block,” the firm failed to show new evidence sufficient to justify summary judgment in favor of the firm.

“Here, the facts are in dispute and conflicting inferences may be drawn from the evidence,” requiring denial of Cadwalader's summary judgment motion, Sherwood said.

The judge ordered the parties to appear at a pretrial conference on March 7.

Jannuzzo, the plaintiff's attorney, said he expects a trial to last about two or three days. However, not everything is geared up for trial. Red Zone has pending motions to preclude all of Cadwalader's experts, Jannuzzo said.

According to court documents, Cadwalader has lined up several expert witnesses to argue it acted reasonably and did not commit malpractice. They include Howard A. Levine, a retired judge of the New York Court of Appeals; Debevoise & Plimpton partner Jeffrey Rosen; Jack Nusbaum, former chairman of Willkie Farr & Gallagher; and accountant Robert Rock.

The trial is expected to examine Block's advice on the August 2005 amendment, when Red Zone sought to limit UBS' fee. Cadwalader worked on the agreement, but the extent of its involvement appears to be in dispute, Sherwood said in his ruling.

In an affidavit, Block claimed he explained to Snyder that the August 2005 amendment could not be read to cap UBS' fee. “I recommended that Snyder not accept the UBS draft,” Block wrote. “After some further discussion, during which I reiterated my concerns about UBS's language to Snyder, Snyder made the decision to sign the draft as proposed by UBS and executed the amendment letter.”

In his statement, Jannuzzo said “the case depends on whether Dennis Block is telling the truth when he swears that he warned Dan Snyder not to sign the letter amendment that Block had just handed him. Mr. Snyder and all the witnesses except the one who still works for Cadwalader have sworn that no such 'warning' ever happened.”

Block, who is now senior chairman of Greenberg Traurig's mergers and acquisitions practice, is not a named party in the suit but is a potential witness at trial. When reached by a reporter, he said he had no comment on the case and referred any questions to Cadwalader's counsel at Cravath.