FKB’S ANDREW S. KOWLOWITZ AND JASON A. KAYNE SUCCESSFULLY OBTAIN DISMISSAL OF DECLARATORY JUDGMENT ACTION AGAINST ATTORNEY ALLEGING IMPROPER WITHHOLDING OF CLIENT FUNDS IN ESCROW

09/9/2019

FKB’s Andrew S. Kowlowitz and Jason A. Kayne obtained a favorable pre-answer dismissal from the New York County Supreme Court of a declaratory judgment action commenced against an attorney by his former client, seeking the disgorgement of sale proceeds from a 2005 real estate transaction that the plaintiff alleged were improperly withheld in his former attorney’s escrow account.

The underlying transaction involved the sale of a building in Manhattan for $2,000,000. FKB’s client represented the seller, an LLC owned by the plaintiff, in preparing the contract documents, appearing at the closing, and in the disbursement all sale proceeds held in escrow after the transaction closed.

Nearly fourteen (14) years later, the plaintiff commenced the instant action against FKB’s client, falsely alleging that that in excess of $1,000,000 were still improperly being withheld in escrow from the transaction, seeking both a judgment declaring Plaintiff owner of the funds, and asserting an account stated cause of action for the attorney escrow account maintained by FKB’s client.

FKB successfully argued in its motion that not only were all sale proceeds appropriately disbursed at the closing of the transaction as demonstrated by the documentary evidence, but that plaintiff’s declaratory judgment and account stated claims were asserted well past the expiration of any applicable statute of limitations. The plaintiff attempted to argue that the statute of limitations cannot begin to run where funds were alleged to be improperly held in escrow. However, the Court was unpersuaded, agreeing with FKB’s arguments in finding that Plaintiff’s Complaint was indisputably time-barred.

If you have any questions about this decision, or the defense of attorneys in general, please contact Andrew S. Kowlowitz or Jason A. Kayne.

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