According to the New York Law Journal, Pryor Cashman was ordered to pay over $21,000 in legal fees for filing a ‘frivolous’ motion in a legal malpractice lawsuit that was filed by trustees of employee benefit funds. The lawsuit accused the firm of failing to offer advice that could have prevented the third–party administrator of the fund from embezzling over $42 million.
The order was issued on November 13 from the Appellate Division, First Department’s panel consisting of Presiding Justice Luis Gonzalez. The remaining justices on the panel included James Catterson, Peter Tom, Nelson Roman and Rosalyn Richter.
The exact same panel confirmed the order from Manhattan Supreme Court Justice Barbara Kapnick that denied Pryor Cashman’s motion to dismiss just one year ago. That permitted the lawsuit to continue and for the firm to file two attempts to have the Court of Appeals hear the case.
Plaintiffs in the lawsuit, which was filed in August of 2010, include trustees of three benefit funds for Construction Workers Local 147. The lawsuit claims that malpractice from Pryor Cashman permitted Melissa King to embezzle $42 million. King is the former administrator of the funds. She was taken into custody in December of 2009 and received a six-year prison sentence in June of 2012.
The funds were being counseled by Pryor Cashman for at least a decade when the embezzlement was discovered. This led the trustees to claim that the firm should have realized the administrator fees were too high and then counseled the trustees to investigate by hiring an auditor. A memorandum was written by Pryor Cashman in an effort to have the case dismissed and it argued that the trustees’ “allegations do not deal with failing to perform legal services as such—they are a litany of failures that fall within the province of financial auditors, accountants, perhaps forensic and security accountants and, lastly, business managers.”
Pryor Cashman filed a motion for leave to appeal the First Department’s rejection of its original motion with the Court of Appeals. In March of 2012, that second motion was denied by the First Department. The First Department said that the trustees did not have to plead “specific scope of defendants’ legal representation” when pleading their case.
The First Department wrote the following:
“The motion by defendants-appellants for leave to appeal to the Court of Appeals was their second motion seeking identical relief, and insofar as the denial of the first motion made it clear that their arguments were without merit and unavailing, the second motion, raising substantially identical arguments, was therefore completely without merit in law, could not be supported by a reasonable argument for an extension, modification or reversal of existing law, and was thus frivolous.”