FKB’s A. Michael Furman, Rachel Aghassi, and Spencer A. Richards successfully obtain a decision from the New York Supreme Court Appellate Division, First Judicial Department affirming a CPLR §3211 pre-answer dismissal in an action asserting legal malpractice related to a $1.5 million dollar real estate transaction for the purchase of hotel condominium units in Canada based upon choice of law principles applying New York and New Jersey law. In doing so, the First Department confirmed that New York’s ‘borrowing statute,’ CPLR § 202, requires that where choice of law favors the home state of foreign litigants, causes of action brought in New York must be timely under both the applicable foreign jurisdiction and in New York.
In this matter, FKB’s client represented plaintiff, a resident of New Jersey, as the buyer of several units in a luxury hotel development located in Toronto, Ontario. After the purchase agreements for the units were executed but before closing, plaintiff terminated his relationship with FKB’s client in 2006. Long after the relationship ended, the seller attempted to close on the properties in 2012 and 2013, erroneously sending “notices of closing” to FKB’s client who then forwarded them to plaintiff and plaintiff’s subsequent counsel. Plaintiff then failed to close on the property after which the seller initiated an action in Canada for breach of contract and to forfeit the down payments for the units.
In October 2016, over ten (10) years after terminating his relationship with FKB’s client and over three (3) years since the notices of closing were sent, plaintiff commenced the instant action alleging legal malpractice for FKB’s client’s supposed “failure” to forward the notices of the closing to plaintiff. Plaintiff asserted that had he received the notices of closing, he would have closed on the units and thereby avoided the Canadian litigation. As damages, plaintiff asserted the down payments for the units, his attorneys’ fees in the Canadian litigation, and other vague financial losses which he claimed amounted to $5,000,000 dollars.
On August 8, 2017, the Supreme Court of New York County granted FKB’s CPLR §3211 pre-answer motion to dismiss agreeing with FKB that the complaint was filed beyond New York’s three (3) year statute of limitations for legal malpractice (CPLR §214(6)) because Plaintiff’s claim accrued no later than February 2013, the last closing date offered by the seller, which was still over three (3) years before the complaint was filed. In doing so, the court rejected Plaintiff’s argument that “choice of law” rules favor New Jersey, plaintiff’s home state, which, plaintiff argued, extends the statute of limitations to six (6) years under N.J. Stat. Ann. 2A:14-1. The court adopted FKB’s argument that New York’s ‘borrowing statute,’ CPLR § 202, requires that causes of action be timely under both the applicable foreign jurisdiction and in New York. Because of this, the court found that even if there was some kind of “continuing duty” after FKB’s client was terminated, the malpractice asserted in the complaint accrued no later than the last closing date offered, in February 2013.
Plaintiff then appealed arguing that the policy consideration behind CPLR § 202 was to prohibit foreign plaintiffs from taking advantage New York’s statute of limitations provisions when New York’s statute was longer than their home state, thus prohibiting foreign plaintiffs from forum shopping in New York when a claim is time-barred in their home state.
On January 3, 2019, the Appellate Division of the Supreme Court, First Judicial Department unanimously affirmed the decision of the lower court decision finding that the lower court “correctly found the complaint time-barred under CPLR 202, New York’s “borrowing statute,” which requires a claim to be timely under both the New York limitations period and that of the jurisdiction where the claim is alleged to have arisen” (emphasis added) (citing Kat House Prods., LLC v Paul, Hastings, Janofsky & Walker, LLP, 71 AD3d 580 [1st Dept 2010]).
If you have any questions about this decision, or the defense of attorneys in general, please contact A. Michael Furman, Rachel Aghassi, or Spencer Richards.