(J. Albert Diaz/ALM)

A Manhattan judge has dismissed claims against Stroock & Stroock & Lavan brought by Brown Rudnick related to a legal malpractice dispute, trimming a defendant from a 5-year-old case that entangled three law firms and investment firm Stonebridge Capital.

A group of investors initially sued Morrison Cohen and a firm partner, Brian Snarr, in 2012, alleging $45 million in damages. The investors, who had retained the firm for a 2007 transaction designed by Stonebridge, claimed Morrison Cohen was negligent in failing to address a new provision in the transaction documents, leading to significant capital gains taxes and other damages.

In 2015 Morrison Cohen brought third-party claims against Stonebridge and its counsel, Brown Rudnick, including for indemnification and contribution. Morrison Cohen claims Brown Rudnick was the primary drafter of the transaction documents and also issued a tax opinion to the plaintiff investors. While the court dismissed claims against Stonebridge, it continued one contribution claim against Brown Rudnick.

Brown Rudnick then sued Stroock, asserting that Stroock also advised Stonebridge, when a partner on the deal, Boris Ziser, moved from Brown Rudnick to Stroock in 2007. (Ziser later moved to Schulte Roth & Zabel in 2015.)

Stroock, in moving to dismiss Brown Rudnick’s contribution claim, argued it was released from all claims after it settled with Stonebridge in arbitration.

Brown Rudnick argued the injuries alleged in the suit are different from those in arbitration, but Manhattan Supreme Court Justice Anil Singh found they stem from the same transaction, opinion letter and losses. “Both Brown Rudnick and Stroock may be held jointly or severally culpable to the plaintiff investors for the same injury,” so the settlement release bars Brown Rudnick from seeking contribution from Stroock, Singh wrote in a June 8 decision.

Singh’s decision did not resolve the continuing malpractice claim against Morrison Cohen and its contribution claim against Brown Rudnick.

Stroock partner Bruce Schneider, who represented his firm, declined to comment. Lewis Brisbois Bisgaard & Smith partner Jamie Wozman, who represents Brown Rudnick, declined to comment.

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