Winston & Strawn claims a clothing retailer’s malpractice suit should be dismissed because the firm represented the store and not its owners, who allege Winston lawyers failed to advise them they would owe certain taxes. Winston was retained to negotiate an early termination and buy-out of high-end retailer Leggiadro’s lease at its former location at 680 Madison Ave., according to Leggiadro v. Winston & Strawn, 154749-2012, filed in the Southern District in June and then transferred to Manhattan Supreme Court (NYLJ, July 10).
The plaintiffs claimed that in negotiating a settlement with the landlord, Winston advised Leggiadro and owners Brooks and Ann Ross that they would owe a federal long-term capital gains tax but failed to advise them of the remaining taxes, such as city tax on business income for Leggiadro and personal income taxes for the owners.
But Winston says in a motion to dismiss filed this week that the owners never retained the firm to represent them in the buy-out and only Leggiadro signed the firm’s retainer agreement. The 2010 agreement says firm attorneys responsible for the matter were Matthew Botica, at a $785 hourly rate, and Neil Underberg, at $685. Underberg is now a partner at Rosenberg & Estis. Thus, all claims relating to the Rosses should be dismissed, wrote the firm’s attorney, Arthur Handler, senior counsel at Mound Cotton Wollan & Greengrass. The firm also says the plaintiffs failed to allege the outcome would have been different if they had been advised that money they realized from the early surrender of the lease would give rise to the taxes.
Plaintiffs’ lawyers Ronald Goodman and John D’Ercole, of Robinson Brog Leinwand Greene Genovese & Gluck, said the motion has no substance. Winston had an obligation to represent the company and its individuals, and the firm should have taken into account all tax considerations, Goodman said in an interview.