Bistricer v. Singer, Bienenstock, Zamansky, Ogele & Selengut, LLP

469 Order, Supreme Court, New York County (Rosalyn Richter, J.), entered July 13, 2004, which, in an action arising out of defendant attorneys’ erroneous advice that a contemplated securities transaction was legal, insofar as appealed from, denied defendants’ motion for summary judgment dismissing plaintiffs’ cause of action for legal malpractice, unanimously affirmed, with costs. The legality of the transaction for which plaintiffs sought defendants’ advice was uncertain and debatable, as demonstrated by the very litigation brought against plaintiffs challenging the transaction after it had been completed (Editek, Inc. v Morgan Capital, L.L.C., 974 F Supp 1229 [D Minn 1997], revd 150 F3d 830 [8th Cir 1998], on remand sub nom. Medtox Scientific, Inc. v Morgan Capital L.L.C., 50 F Supp 2d 896, 899 [1999], affd 258 F3d 763 [2001], cert denied 534 US 1128 [2002]). Accordingly, defendants cannot be held liable for what turned out to be erroneous advice that the transaction was legal (see Darby & Darby v VSI Intl., 95 NY2d 308, 314-315 [2000], citing, inter alia, MCEG Sterling v Phillips Nizer Benjamin Krim & Ballon, 169 Misc 2d 625, 629 [1996]). However, defendants can be held liable for negligently failing to advise that the legality of the transaction was uncertain (see National Enters. Corp. v Dechert Price & Rhoads, 246 AD2d 481 [1998]; Estate of Nevelson v Carro, Spanbock, Raster & Cuiffo, 259 AD2d 282, 284-285 [1999]). In that regard, issues of fact exist as to whether defendants’ opinion was unqualified; if so, whether the state of the law was such as to make legality uncertain (see National Enters. at 482); and, if so, whether defendants were negligent in failing to realize as much and to so advise the clients (cf. Darby, 95 NY2d at 314). We have considered defendants’ other arguments and find them unavailing. Concur—Andrias, J.P., Saxe, Ellerin, Sweeny and Catterson, JJ.