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A malpractice verdict of nearly $1.8 million against a Manhattan lawyer has been reversed by the 2nd U.S. Circuit Court of Appeals. A lower court had granted summary judgment on the malpractice claim brought against attorney Thomas E. Stiles and his law firm, Stiles & Wright, on the grounds that Mr. Stiles failed to perfect an appeal concerning jurisdiction in a personal injury case. But the 2nd Circuit, reversing Southern District of New York Judge Richard C. Casey, found that the company that retained and then sued Stiles would have clearly lost the jurisdictional challenge in New York, and might have been subjected to even greater damages in the fallback jurisdiction of Texas. The controversy in Ocean Ships Inc. v. Stiles, 02-7936, began in 1996, shortly after Ocean Ships was ordered by a state court jury to pay nearly $1.1 million to employee Matthew Horan. As insurance against a lack of jurisdiction in New York, Horan had also filed a protective action against Ocean Ships in Texas. Following the New York verdict, Stiles was retained by Ocean Ships to work on post-trial motions and handle the appeal. The trial court denied a post-trial motion challenging personal jurisdiction, and Stiles filed a notice of appeal on June 21, 1996. But Stiles did not meet the requirement of New York’s Appellate Division, 2nd Department, that appeals be perfected within six months, and the case was dismissed in February 1997. Stiles argued before the 2nd Department that he did not perfect the initial appeal on the jurisdictional issue because he thought it would be considered along with a re-argument motion that was still pending before the trial judge until October 1996. The 2nd Department disagreed, finding that the dismissal of the initial appeal was an adjudication on the merits. Ocean Ships sued in the Southern District of New York for legal malpractice, and Judge Casey granted the company summary judgment, awarding it nearly $1.8 million, an amount that included the accumulation of interest since the initial verdict in the Horan case. On the appeal to the 2nd Circuit, Judge Dennis Jacobs said Stiles’ malpractice “is the proximate cause of Ocean Ships’ damages,” only if the 2nd Department would have “reversed the finding of personal jurisdiction over Ocean Ships.” Jacobs said that three other courts, in other cases, had already decided that personal jurisdiction over Ocean Ships could not be obtained in New York. Jacobs said, “We agree with these cases,” and conclude that, had the 2nd Department considered the issue, it “would have ordered dismissal of the Horan action.” Turning to damages, Judge Jacobs said Stiles had raised a “material issue as to whether dismissal of the New York suit would have defeated the claim so that Ocean Ships would have suffered no loss.” “And the only evidence on the merits — the New York jury award, which was affirmed on appeal — suggests that Ocean Ships was in fact responsible for Horan’s injury,” he said. It was even possible, Jacobs noted, that if Horan had proceeded in Texas, “Ocean Ships would have been hit with a judgment even larger than the one suffered in New York.” Therefore, the judge said, the district court should have tried to figure the potential damages Horan may have been awarded in Texas, and the 2nd Circuit was remanding the case for that inquiry. “In legal malpractice actions, courts are frequently required to value lost claims,” he said. “[A]nd we see no difference between that inquiry and the one mandated herein.” Senior Judge Wilfred Feinberg and Judge Rosemary S. Pooler joined in the opinion. Cheryl F. Korman, Evan H. Krinick, Merril S. Biscone, Daniel Hughes and Harris J. Zakarin of Uniondale, N.Y.-based Rivkin Radler represented Mr. Stiles and Stiles & Wright. Richard G. Menaker of New York’s Menaker & Herrmann represented Ocean Ships Inc.

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