A unanimous panel of the Appellate Division, First Department has reinstated a legal malpractice case accusing Manhattan attorney Edward M. Fogarty of depriving a client, construction company Phoenix Erectors, of a $194,000 judgment through a procedural error. Phoenix retained Mr. Fogarty, originally a partner at White & McSpedon and later at Litchfield Cavo, in 2002 to represent it in a legal dispute with Hera Construction, for which Phoenix was a subcontractor. Hera filed a suit against Phoenix for breach of contract, and Phoenix filed a suit to recover payments due under the contract against Hera and a surety from which Hera had obtained a $1.6 million bond to cover Phoenix’s labor and material costs.
In order to consolidate the two suits, Mr. Fogarty and colleagues stipulated to the dismissal of the New Jersey action and filed their claims in the New York action, with the surety as a third-party defendant. Phoenix won a $194,000 judgment, but the case was dismissed against the surety because, under New York law, third-party claims can only be made for contribution and indemnity, which were not applicable to the case. Hera proved judgment-proof, and Phoenix sued Mr. Fogarty and his firm for malpractice.
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