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Genesis Merchant Partners, L.P. v. Gilbride, Tusa, Last & Spellane

New York Appellate Division
157 A.D.3d 479 (2018)


Facts

Genesis Merchant Partners, L.P., and related venture capital firms (collectively, Genesis) (plaintiffs) made four loans to Progressive Capital Solutions LLC (Progressive) to purchase portfolios of life-insurance policies. Genesis retained partner Jonathan Wells and two other attorneys with Gilbride, Tusa, Last & Spellane, LLC (collectively, defendants) in connection with the loans, but no engagement letter defined the scope of representation. The insurance policies were supposed to secure the loans, but nobody obtained assignments transferring the benefits to Genesis or filed them with the carriers. Wells claimed Gilbride was retained only to prepare the documents and file the Uniform Commercial Code (UCC) financing statements, while Genesis claimed Gilbride was supposed to perfect the collateral. The assignment contracts Wells prepared clearly said Progressive had to deliver evidence of perfection to Genesis, including evidence that the insurers had accepted filing of the assignments. But emails between Wells, Genesis, and Progressive conflicted as to who was obtaining and filing assignments. When asked if everything needed regarding the assignments had been done, general counsel for Genesis’s investment manager replied “Done.” Gilbride did prepare and file four UCC financing statements, but the first three broadly declared a security interest in all Progressive’s assets, and only the fourth listed policy numbers for the policies pledged as collateral. When Progressive defaulted, Genesis tried to collect on policies worth over $84 million, but without any records of collateral assignments, the insurers refused to pay. Genesis sued Gilbride and the attorneys individually for legal malpractice, and Gilbride counterclaimed to collect its fees. The court entered summary judgment for Genesis and dismissed Gilbride’s counterclaims. Gilbride appealed.

Rule of Law

Issue

Holding and Reasoning

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