27 N.Y.3d 384 (2016)

When an attorney is suspended from practice, CPLR 321(c) automatically stays the action, and any subsequent proceedings against the represented party are invalid unless the opposing party serves a 30-day notice to appoint new counsel or obtains leave of the court.

Summary

Plaintiff Joseph Moray sued defendant Koven & Krause for legal malpractice. After Moray’s attorney was suspended, the defendant moved to dismiss for failure to serve a complaint. The Supreme Court granted the motion. The Appellate Division affirmed, noting that the plaintiff raised the automatic stay provision of CPLR 321(c) for the first time on appeal. The Court of Appeals reversed, holding that CPLR 321(c) created an automatic stay upon the attorney’s suspension, making the subsequent dismissal invalid because the defendant never served the required 30-day notice to appoint new counsel. The Court emphasized the protective purpose of the statute for litigants unexpectedly losing counsel.

Facts

Joseph Moray commenced a legal malpractice action against Koven & Krause on December 31, 2007. Moray’s attorney, Warren Goodman, was suspended from practicing law on January 24, 2008. Defendant served a demand for a complaint on February 25, 2008, but no complaint was filed. On April 22, 2008, Defendant moved to dismiss the action for failure to serve the complaint. Moray’s new attorney contacted the defendant’s insurance carrier regarding settlement. Goodman submitted an affidavit, disclosing his suspension and advising he had told Moray to seek new counsel. A draft complaint prepared prior to the suspension was also submitted.

Procedural History

The Supreme Court granted the defendant’s motion to dismiss for failure to serve a complaint, finding no reasonable excuse for the default or affidavit of merit. The Appellate Division affirmed, holding that the plaintiff’s CPLR 321(c) argument was raised for the first time on appeal, and thus was not properly before them. The Court of Appeals granted plaintiff’s motion for leave to appeal.

Issue(s)

Whether the automatic stay provision of CPLR 321(c) applies when an attorney is suspended from practice, thereby invalidating subsequent proceedings absent the opposing party’s compliance with the statute’s notice requirements or leave of court?

Holding

Yes, because CPLR 321(c) mandates an automatic stay when an attorney is suspended, and further proceedings without either serving a 30-day notice to appoint new counsel or obtaining leave of the court are invalid.

Court’s Reasoning

The Court of Appeals held that CPLR 321(c) imposes a straightforward command: “[I]f an attorney…is removed, suspended or otherwise becomes disabled…no further proceeding shall be taken…without leave of the court, until thirty days after notice to appoint another attorney has been served.” The court noted this creates “an automatic stay of the action.” Because the defendant never served a notice on the plaintiff to appoint new counsel after Goodman’s suspension, the Supreme Court’s order dismissing the action was improper and must be vacated. The Court rejected the defendant’s argument that the Supreme Court acted with “leave of court,” noting the statute is intended to apply when delaying the action would cause “undue hardship,” like when the time to take an appeal is running or when a provisional remedy is sought. The Court also addressed the argument that plaintiff should be foreclosed from raising CPLR 321(c) for the first time on appeal. The Court distinguished this case from situations where litigants actively participate pro se for an extended period before invoking the statute, emphasizing that unrepresented litigants should not be penalized for failing to invoke a rule designed to protect them. As the court stated, “As a general rule, unrepresented litigants should not be penalized for failing to alert a trial court to the existence of an automatic stay created for the very purpose of safeguarding them against adverse consequences while they are unrepresented.” The Court highlighted that the opposing party can easily end the stay by serving the required 30-day notice.