In Will B. S* Disclaimer Trust v DMS, the Appellate Division, First Department, affirmed the dismissal of counterclaims brought by defendants against the plaintiffs, holding that the plaintiffs were not proper parties to those claims. The case arose from a long-standing business relationship between attorney Will B. S* and DMS*, who jointly invested in Manhattan real estate through an LLC. Will B., who also served as legal counsel in these ventures, held an 8.518% interest in the LLC.
Following Will B.’s death in 2015, his wife MS declined the bequest of his interest, which then passed to the Will B. S* Disclaimer Trust. M*, along with her two children, serves as trustee, and she is the sole beneficiary. The plaintiffs alleged that DMS and other defendants wrongfully withheld $3.5 million in proceeds from Will B.'s interest and concealed this from the Trust.
In response, defendants filed counterclaims for rescission and legal malpractice, arguing that the 2014 transaction involving the property was tainted by Will B.'s alleged breach of ethical and fiduciary duties, or alternatively, legal malpractice. However, the court found that these claims were improperly directed at the plaintiffs, who neither participated in the alleged misconduct nor owed any duty to the defendants.
The rescission claim failed because plaintiffs were not parties to the 2014 transaction, and rescission can only be sought against contractual parties. The legal malpractice claim also failed, as neither MS nor the Trust had represented the defendants in any legal capacity. The court emphasized that the counterclaims were based solely on Will B.’s conduct, not that of the plaintiffs.
The decision reinforces the principle that liability for professional misconduct does not automatically transfer to successors or beneficiaries unless they themselves engaged in the alleged wrongdoing or had a legal duty to the opposing party.
Trying to sue the widow for the lawyer’s work? Nice try ....
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DECISION