A high-end women’s apparel store can proceed with its malpractice claim against Winston & Strawn alleging the law firm failed to advise it of a corporation tax when negotiating a settlement, Manhattan Supreme Court Justice Shirley Kornreich (See Profile) has ruled. However, she dismissed with prejudice the individual owners’ claims over their tax consequences of the action.

Winston had been retained to negotiate an early termination and buy-out of the store’s lease at its former location at 680 Madison Ave. The store, Leggiadro, and its owners, Brooks and Ann Ross, claimed that in negotiating a settlement with the landlord, Winston failed to advise that Leggiadro would be subject to New York City general corporation tax and its owners would be subject to personal city and state taxes. "Assuming, for the purposes of this motion to dismiss, that [Winston] failed to account for city taxes and that such failure led to a lower settlement amount with the Landlord, [Winston] might be liable to Leggiadro for the difference between the settlement amount that Leggiadro obtained and the amount it would have received if the amount accounted for city taxes," the judge wrote in Leggiardro v. Winston & Strawn, 154749/2012. Contrary to Winston’s contentions, she said, the damage calculation is not speculative.

Plaintiffs’ attorney John D’Ercole, a partner of Robinson Brog Leinwand Greene Genovese & Gluck, said he plans to proceed with the surviving claim but he disagrees with the decision dismissing the owners’ claims. His clients might appeal, he said. Arthur Handler, who represents Winston & Strawn, said he also is considering an appeal.