Statute of Limitations for Legal Malpractice Action

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CPLR 214(6) provides that “ an action to recover damages for malpractice, other than medical, dental or podiatric malpractice, regardless of whether the underlying theory is based in contract or tort ” must be commenced within 3 years.
The cause of action for malpractice accrues at the time of the act, error or omission. See, Julian v. Carrol, 270 AD2d 457 [2d Dept. 2000]; Goicoechea v. Law Offices of Stephen Kihl, 234 AD2d 507 [2d Dept. 1996]; Shumsky v. Eisenstein, 96 NY2d 164 [2001].
The Court of Appeals has held that a cause of action for legal malpractice accrues against the attorney when the statute of limitations expires on the underlying action for which the attorney was retained. See, Shumsky v. Eisenstein, supra. In Burgess v. Long Island Railroad Authority, 79 NY2d 777 [1991], the Court of Appeals held:
The Continuous Representation Toll of a Legal Malpractice Action
The accrual of the three-year statute of limitations is tolled during the period of the lawyer’s continuous representation in the same matter out of which the malpractice arose under the theory that the client should not be expected to question the lawyer’s advice while he is still representing the client. See, Lamellen v. Kupplungbau GmbH v. Lerner, 166 AD2d 505 [2d Dept. 1990]; Shumsky v. Eisenstein, supra. Under the continuous representation doctrine, there must be clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the lawyer. See, Kanter v. Pieri, 11 AD3d 912 [4 Dept. 2004]; Lamellen v. Kupplungbau GmbH v. Lerner, supra; Clark v. Jacobsen, 202 AD2d 466 [2 Dept. 1994].

R. A. Klass
Your Court Street Lawyer

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What the Seller of a Cooperative Apartment Should Know

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The owner of an apartment (also referred to as a “unit”) in a cooperative apartment building (“co-op”) must be aware of several matters relating to the sale of the unit.

  1. Transferability
    Most unit owners are permitted to sell their unit to anyone they choose. However, the owner should be aware of any special rules relating to the sale of the unit to others such as restrictions on shares or rights of first refusal.
  2. Pay-off of mortgage
    If the unit owner has borrowed money, using the co-op unit as collateral, then a “pay-off” statement should be ordered from the lender. Also, unlike a mortgage upon real estate, the lender or its representative must be present at the closing (because the lender has typically taken the actual shares of stock and proprietary lease into its possession at the time of the loan).

  3. Liens/judgments
    If there are any liens against the unit owner, ranging from tax liens to judgments to home equity lines, those liens must be paid at or before the closing. The buyer’s attorney will send a judgment/lien search to the seller to identify any such liens to be cleared.
  4. Flip taxes
    Some co-ops impose a “flip tax” or transfer charge upon the seller of a unit. These flip taxes can be based upon a percentage of the sale price, flat amount, percentage based upon the difference between the original purchase price and the sale price, or some other computation. The unit owner should find out what those flip taxes will be before selling the unit in order to ensure that the sale price will cover the flip tax, along with any other charges or liens to be paid at the closing.
  5. Original documents
    Unless the unit owner has a lender, who is holding the shares of stock and proprietary lease in escrow, then the owner must locate and produce the originals. If they have been lost, duplicate originals can be drawn.

R. A. Klass
Your Court Street Lawyer

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Debt Collection Tips: Docketing the Judgment

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Once the creditor has obtained a Judgment from a court, the collection process has now begun. In the context of collecting the money due on the Judgment, it may be necessary to “docket” the Judgment in the County Clerk’s Office.

In each county of the State, there is a court of general jurisdiction called the “Supreme Court.” In some counties, towns, cities, and villages, there are lower courts (such as Civil Court, District Court, etc.). Judgments entered in those courts are not automatic liens upon any realty that the debtor may own in the county. Rather, a “Transcript of Judgment” must be obtained from the court and filed with the County Clerk to create the lien. Once docketed, the Transcript of Judgment will serve as notice to others that there is a lien upon any realty owned by the debtor; other parties are now aware that the lien must be paid according to its priority.

Judgments entered in a Supreme Court case are automatically docketed with the County Clerk.

Unlike New Jersey or some other states, which have state-wide recognition, the Judgment must be docketed by the filing of a Transcript of Judgment in each county in which the debtor has realty in order to create the lien.

The docketing of a Judgment is also essential when attempting to issue an Income Execution to a County Sheriff in another county (where, perhaps, the employer of a debtor is located). Another purpose of docketing a Judgment may be where the Judgment was entered in federal District Court and the creditor wants to use a Sheriff instead of a United States Marshall.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

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The benefits of filing a Chapter 13 bankruptcy

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In precarious times, when local economies are faltering, many people attempt to retain their homes despite mounting debts.

The Bankruptcy Code, under Chapter 13, provides an individual wage-earner with a mechanism of proposing a “plan” or reorganization, in which the “debtor” may retain the asset and make payments to creditors. The most common reason for a debtor to file a petition under Chapter 13 is to protect his primary residence from foreclosure sale.

As opposed to a bankruptcy petition under Chapter 7, where the debtor turns over to the trustee all non-exempt assets for distribution to creditors in proportion, the Chapter 13 debtor will make regular payments to the trustee pursuant to a plan (which may range in term from three to five years). For instance, if the debtor has a house worth $100,000, and wants to keep it, the debtor will propose a plan to pay creditors during the term of the plan that same value in order to retain the property. A basic tenet of Chapter 13 is that the proposed plan will pay creditors more than if the debtor had filed a Chapter 13 petition for liquidation.

One of the most important considerations in filing a Chapter 13 and, ultimately, confirming the plan is whether the debtor has the ability to make the requisite payments. Since the debtor must pay not only the scheduled plan payments to the trustee for the arrearages on the mortgage and other listed creditors, but also current mortgage payments, special consideration must be made of the debtor’s income and expenses to test affordability.

The greatest benefit of filing a Chapter 13 petition is the “automatic stay” under the Bankruptcy Code. This stay stops all actions on the part of creditors to collect their debts. In the typical case, the stay stops the upcoming mortgage foreclosure auction sale on the courthouse steps. It cannot be understated that the timing of the filing of the petition is significant; e.g., the filing of the petition after the foreclosure auction sale is generally fatal to attempting to retain the real property in the debtor’s bankruptcy estate. Another benefit of Chapter 13 is to file a plan that proposes to pay creditors less in percentage than that owed. Certain calculations to determine the appropriate reduced percentage are necessary.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

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A Day Late and a Dollar Short

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A comprehensive medical practice was opening up in an office building and needed extensive renovations in the space. The medical practice hired a construction company to handle the build-out of the office at a cost of over $250,000. The construction contract specified that the contractor would achieve “ substantial completion ” of the project within 3 months after work began in April 2012. Unfortunately, the project took a lot longer than anticipated (about 9 months). Finally, on January 16, 2013, the project was confirmed by the contractor as complete, and the work was approved by the county. There was even a confirming email from the contractor to the medical provider stating “ We Passed!!! ” An invoice marked “ Final Billing ” was rendered, and a Certificate of Compliance was issued by the Building Inspector on January 31, 2013.

Since the project took much longer to complete than anticipated and agreed-upon in the construction contract, the medical provider withheld final payment, claiming it suffered heavy losses including loss of business, substantial rent payments to the landlord for the unusable space and additional overhead expenses.

Mechanic’s Lien Filed

Instead of directly addressing the client’s concerns, on October 8, 2013, the contractor simply filed a “ Notice of Mechanic’s Lien ” with the County Clerk. New York’s Lien Law Section 10 provides a powerful collection tool to a home improvement or commercial contractor—the right to place a lien upon someone’s house or building:

§10(1) Notice of lien may be filed at any time during the progress of the work and the furnishing of the materials, or, within eight months after the completion of the contract, or the final performance of the work, or the final furnishing of the materials, dating from the last item of work performed or materials furnished; provided, however, that where the improvement is related to real property improved or to be improved with a single family dwelling, the notice of lien may be filed at any time during the progress of the work and the furnishing of the materials, or, within four months after the completion of the contract, or the final performance of the work, or the final furnishing of the materials, dating from the last item of work performed or materials furnished.

The “Eight Month” Rule

One of the fundamentals of the Lien Law is that its procedures are to be strictly followed by the lienor. Unlike other areas of law, in which harmless errors can be glossed over, the Lien Law requires punctilious compliance; otherwise, the lien will be invalid. This is mainly because the right to place a lien on someone’s house is such a harsh remedy.

After being directed by the landlord to remove the mechanic’s lien, the medical provider retained Richard A. Klass, Your Court Street Lawyer. The first step was to analyze the lien notice itself—and determine whether a proceeding could be brought to discharge the mechanic’s lien under Lien Law §19(6) for being “ facially invalid. ” This means that, from looking at the face of the notice of lien itself, it may be determined that the lienor does not have a valid lien.

In the lien notice, the contractor had stated that the last item of work was performed on “ February 13, 2013. ” However the court ruled that all work was completed by January 31, 2013. Thus, the October 8, 2013, lien notice was filed more than 8 months afterward (late filing). This late filing would make the mechanic’s lien invalid under the Lien Law. In Ren. Reh. Systems Co., Inc. v. Faulkner, 85 AD3d 752 [2 Dept. 2011], the court held that the failure of a mechanic’s lien to be timely filed pursuant to the Lien Law was fatal to the mechanic’s lien.

Extra Work Doesn’t Count

In response to the proceeding brought by the medical provider to discharge the mechanic’s lien, the contractor claimed that it sent a subcontractor to the premises to perform some work in March 2013; thus, its filing of the lien was timely. The medical provider challenged this claim by showing the court that the subcontractor only performed a normal service call for “ no heat. ” It was argued that the court should follow the rule in Nelson v. Schrank, 273 AD72 [2 Dept. 1947], that a mechanic’s lien is not timely filed when measured from the last date that extra work was performed when the extra work was not part of the original contract, anticipated when the original contract was made, or done in continuance of the work under the contract.

In discharging the mechanic’s lien, the court held that there was no proof that the extra work completed was part of the original contract, was anticipated when the original contract was made, or constituted work completed under the original contract. Accordingly, the court granted the petition to discharge the mechanic’s lien.

copyr. 2015 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-mail to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.

Credits: Photo of Richard Klass by Robert Matson, copyr. Richard A. Klass, 2011.
Marketing services by The Innovation Works, Inc. www.TheInnovationWorks.com.
Image at top: Felicitas, by Anton von Werner, 1872.

R. A. Klass
Your Court Street Lawyer

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