FKB’s A. Michael Furman and Rachel Aghassi obtain dismissal of an action asserting legal malpractice based on New York’s “choice of law” rules, CPLR § 202

FKB successfully obtained a pre-answer dismissal on a motion to dismiss from Justice Arlene Bluth in Supreme Court, New York County.

In this matter, FKB’s client represented plaintiff as the buyer of several units in a luxury hotel development located in Toronto, Ontario.  After the purchase agreements 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 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.

FKB’s pre-answer motion to dismiss the complaint pursuant to CPLR §3211 argued that the complaint was filed beyond New York’s three (3) year statute of limitations for legal malpractice which FKB contended ran from the date FKB’s client ended its attorney -relationship with plaintiff.  FKB further argued that even if there was some “continuing duty” after termination, this matter is still time-barred because the last act of malpractice alleged in the complaint accrued in 2013, the last closing date offered by the seller, which was still over three years before the complaint was filed.

In opposing FKB’s motion, plaintiff that “choice of law” rules favor New Jersey, plaintiff’s home state, which, plaintiff argued, extends the statute of limitations to six (6) years as opposed to three (3).  Plaintiff further argued that since the notices of closing for the 2013 closing date were sent within six (6) years, this action was timely.

In reply, FKB pointed out that 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.  Therefore, even if the Court were to find that this matter was timely under New Jersey law, since the last date of the alleged malpractice asserted in the Complaint is outside of New York’s three (3) year statute of limitations for legal malpractice, this matter is still untimely.  See Global Fin. Corp. v Triarc Corp., 93 N.Y.2d 525, 528, (1999).

In the Court’s decision, Justice Bluth agreed that the borrowing statute requires the application of New York’s statute of limitations for legal malpractice rather than New Jersey’s.  Ackerman v. Price Waterhouse, 252 A.D.2d 179 (1st Dept. 1998) (“in actions brought by non-New York residents, the shorter of the New York Statute of Limitations or the limitations period of the jurisdiction where the cause of action accrued will apply”).  Because of this, the Court agreed 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 2013.  Therefore, “Plaintiff’s reliance on a theory of a continuing duty of representation does not compel a different result” because the “cause of action accrued at those closing dates” which were over three (3) years before the action was filed.

If you have any questions about this decision, or the defense of attorneys in general, please contact A. Michael Furman or Rachel Aghassi.