An appeals court in Manhattan has thrown out a legal malpractice suit that had accused a group of prominent personal injury lawyers of mishandling a medical malpractice suit.

New York law firms Morelli Ratner and Schapiro & Reich had represented Victoria Kremen in a 2001 suit against two doctors she claimed misdiagnosed her with breast cancer in 1995, causing her to undergo an unnecessary double mastectomy.

The medical malpractice claim was dismissed based on the 21/2-year statute of limitations in such cases. Ms. Kremen’s legal malpractice case alleged that her lawyers could have, but failed to, preserve her case.

Manhattan Supreme Court Justice Emily Jane Goodman allowed the suit to proceed last year, ruling that Ms. Kremen’s medical malpractice case may have been timely based on a combination of the doctrine of equitable estoppel and provisions of the Bankruptcy Code triggered by Ms. Kremen’s October 1999 bankruptcy filing ( NYLJ, Oct. 30, 2007).

According to Justice Goodman, the estoppel theory might have tolled the statute until 1999 on the grounds that the doctors fraudulently concealed Ms. Kremen’s misdiagnosis until then. The Bankruptcy Code would have permitted her to toll the statute further, rendering her 2001 suit timely.

But in an unsigned opinion, the Appellate Division, First Department, rejected Justice Goodman’s findings in Kremen v. Morelli, 101739/06. The court said the doctrine of equitable estoppel required Ms. Kremen not only to show fraudulent concealment but also to demonstrate diligent pursuit of her claim.

The decision appears on page 36 of the print edition of today’s Law Journal.

“Simply filing a bankruptcy petition, in which plaintiffs did not even include the possible medical malpractice claim on their initial schedule of assets, does not demonstrate diligent pursuit of this claim,” said the panel of Justices Luis Gonzalez, John Buckley, Karla Moskowitz, Dianne Renwick and Leland DeGrasse.

The court also said Ms. Kremen’s bankruptcy filing negatively impacted her standing in the case. The claim was vested in the trustee of Ms. Kremens’ bankrupt estate, the court noted. When such a claim is abandoned by the trustee, the debtor may not invoke the benefit of the Bankruptcy Code.

The case involved some well-known names in the plaintiff’s bar.

Morelli Ratner is headed by Benedict P. Morelli, the former president of the New York State Trial Lawyers Association. The now-defunct Schapiro & Reich was the firm of Perry S. Reich, a noted appellate lawyer before he was convicted in 2005 of forging a federal magistrate judge’s signature.

Mr. Morelli, who appeared for his firm, said yesterday that justice was served by the First Department’s decision. He said a lawyer who sues doctors could not object on principle to legal malpractice suits but said the case in this instance was truly groundless.

Ms. Kremen was represented by Richard Frank of Manhattan, who did not return a call for comment.

Anthony.Lin@incisivemedia.com