No single statute of limitations for causes of action alleging breach of fiduciary duty

Posted on January 20, 2023 by Richard Klass

In Jadidian v Goldstein, 210 AD3d 969, 969-70 [2d Dept 2022], the court affirmed the dismissal of a claim against an attorney based on the statute of limitations, holding:

Contrary to the plaintiffs’ contention, the Supreme Court properly granted that branch of the defendants’ motion which was to dismiss the cause of action alleging breach of fiduciary duty. There is no single statute of limitations for causes of action alleging breach of fiduciary duty (see IDT Corp. v Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132, 139, 879 N.Y.S.2d 355, 907 N.E.2d 268; Matter of Hersh, 198 A.D.3d 766, 769, 156 N.Y.S.3d 243). “Where the relief sought is equitable in nature, the statute of limitations is six years, and where the relief sought is purely monetary, the statute of limitations is generally three years” (Matter of Hersh, 198 A.D.3d at 769, 156 N.Y.S.3d 243). However, “regardless of the relief sought, ‘where an allegation of fraud is essential to a breach of fiduciary duty claim, courts have applied a six-year statute of limitations under CPLR 213(8)’ ” (id., quoting IDT Corp. v Morgan Stanley Dean Witter & Co., 12 N.Y.3d at 139, 879 N.Y.S.2d 355, 907 N.E.2d 268; see McDonnell v. Bradley, 109 A.D.3d 592, 594, 970 N.Y.S.2d 612). A cause of action alleging breach of fiduciary duty “accrues at the time of the [alleged] breach, even though the injured party may not know of the existence of the wrong or injury” (Matter of Hersh, 198 A.D.3d at 769, 156 N.Y.S.3d 243 [internal quotation marks omitted]; see Sternberg v Continuum Health Partners, Inc., 186 A.D.3d 1554, 1557, 131 N.Y.S.3d 356).

Here, the cause of action alleging breach of fiduciary duty was subject to a three-year statute of limitations since the relief sought was monetary in nature and the complaint failed to allege all the requisite elements of fraud, including justifiable reliance (see Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553, 562, 883 N.Y.S.2d 147, 910 N.E.2d 976; IDT Corp. v Morgan Stanley Dean Witter & Co., 12 N.Y.3d at 140, 879 N.Y.S.2d 355, 907 N.E.2d 268; Oppedisano v. D’Agostino, 196 A.D.3d 497, 499, 151 N.Y.S.3d 150). As the plaintiffs maintain, the cause of action alleging breach of fiduciary duty began to run, at the latest, on January 11, 2016, when the defendants allegedly commenced the prior legal malpractice action “to cover up their … negligence.” Thus, since the plaintiffs did not commence the instant action until March 24, 2021, more than three years later, the cause of action alleging breach of fiduciary duty was time-barred.

Richard A. Klass, Esq.
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Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn, New York. He may be reached at (718) COURT●ST or RichKlass@courtstreetlaw.comcreate new email with any questions.

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…negligent in not objecting to the judgment debtor’s bankruptcy proceeding…

Posted on December 5, 2022 by Richard Klass

In Basile v Law Offices of Neal Brickman, P.C., 2022 NY Slip Op 06079 [1st Dept Nov. 1, 2022], the court affirmed the denial of the law firm’s motion to dismiss, holding:

The legal malpractice claim may not be barred by the three-year statute of limitations (CPLR 214[6]). Plaintiff contends that the claim was tolled by the continuous representation doctrine based on alleged emails and telephone conversations about collecting on plaintiff’s money judgment against the judgment debtor following its entry in 2010, at which time the judgment debtor did not have sufficient assets to satisfy the judgment. Defendants, however, assert that there was no continuous representation because plaintiff had no communication with them concerning collecting on the unsatisfied judgment until August 2019, when the limitations period on the instant claim had expired. These factual contentions concerning whether defendant continued to represent plaintiff during the relevant time period so as to toll the limitations period give rise to factual issues that cannot be resolved in this pre-answer motion to dismiss (see Boesky v. Levine, 193 A.D.3d 403, 147 N.Y.S.3d 2 [1st Dept. 2021]; Johnson v. Law Off. of Kenneth B. Schwartz, 145 A.D.3d 608, 612, 46 N.Y.S.3d 1 [1st Dept. 2016]).

Furthermore, the complaint’s allegations are sufficient to state a cause of action for legal malpractice. Plaintiff alleges that defendants were negligent in not objecting to the judgment debtor’s bankruptcy proceeding in 2015, which resulted in a discharge order that barred plaintiff from collecting on his money judgment against her. Defendants argue that they did not breach their duty to plaintiff by not intervening in the bankruptcy proceeding because they did not receive notice of the proceeding. Defendants submit the bankruptcy petition, which, in naming plaintiff as a creditor, included an outdated address for defendants and omitted the name of defendants’ law firm or a suite number. These undisputed facts, however, are not sufficient to find as a matter of law that defendants did not breach their duty to plaintiff. Defendants relocated to their new office in September 2014 and the judgment debtor filed her bankruptcy petition in January 2015, three months later. The bankruptcy petition included the name of the attorney who had assisted in plaintiff’s underlying action against the judgment debtor. At the very least, a factual issue exists as to whether the notice of the bankruptcy proceeding to object on plaintiff’s behalf was forwarded to defendants, which cannot be resolved at this juncture. As to proximate cause, contrary to defendants’ contention, proof of the collectability on a judgment is not an essential element of the legal malpractice claim, and arises after the “case within the case” has been proven (Lindenman v. Kreitzer, 7 A.D.3d 30, 35, 775 N.Y.S.2d 4 [1st Dept. 2004]).

Richard A. Klass, Esq.
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Plaintiff failed to allege that “but for” defendant’s negligent conduct, he would have prevailed.

Posted on September 13, 2022 by Richard Klass

In Markov v Barrows, 172 NYS3d 434, 435 [1st Dept 2022], the court dismissed the legal malpractice action as follows:

Supreme Court properly dismissed plaintiff’s legal malpractice cause of action in the original complaint because he failed to allege that “but for” defendant’s negligent conduct, he would have prevailed in the underlying action (Weil, Gotshal & Manges, LLP v. Fashion Boutique of Short Hills, Inc., 10 A.D.3d 267, 272, 780 N.Y.S.2d 593 [1st Dept. 2004]; see Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 N.Y.3d 438, 442, 835 N.Y.S.2d 534, 867 N.E.2d 385 [2007]). Plaintiff’s citation to a ruling in the underlying action denying dismissal of his fraud claim, among others, did not, without more, show that he would have prevailed in the underlying action had defendant timely commenced it by naming the proper parties in the original complaint (see Sonnenschine v. Giacomo, 295 A.D.2d 287, 287, 744 N.Y.S.2d 396 [1st Dept. 2002]).

Further, Supreme Court providently exercised its discretion in denying plaintiff’s motion for leave to amend the complaint because the claims asserted in the proposed amended complaint are devoid of merit (see Lewis v. Pierce Bainbridge Beck Price & Hecht, LLP, 205 A.D.3d 618, 166 N.Y.S.3d 864 [1st Dept. 2022])

Richard A. Klass, Esq.
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[Don’t] Play It Again, Sam

Posted on May 12, 2022 by Richard Klass

In July 2012 (the “2012 Action”), the plaintiff filed suit in the Civil Court against Defendants. In the 2012 Action, the plaintiff sued for the following: “Action to recover the sum of $18,000, with interest thereon from January 1, 2009, based upon a) mistaken charge to [Plaintiff’s] credit card account by Defendants in the amount of $18,000.00, and Defendants’ failure and refusal to credit said charge back to Plaintiff; b) breach of contract; and c) unjust enrichment.”

In January 2020, after court orders marking the trial date “final,” the Civil Court Judge entered an Order dismissing the 2012 Action. At the hearing, the Court found that the plaintiff “had notice of [the] trial date since November of 2019” and thereafter denied the application for an adjournment of the trial.

Second Action Filed

In March 2021, the plaintiff commenced a new action in the Supreme Court (the “2021 Action”), asserting claims against the defendants relating to a dispute regarding specific charges on his account. He also asserted claims for unjust enrichment, conversion, breach of contract, breach of implied covenant of good faith, injunctive relief, intentional infliction of emotional distress, and declaratory relief. The plaintiff specifically asserted in the complaint that two sets of credit-card charges were erroneously paid, totaling approximately $18,000. In the 2021 Action, the plaintiff’s additional causes of action arose from a nucleus of operative facts that were identical to the ones adjudicated through judgment in the 2012 Action.

Doctrine of Res Judicata

The defendants retained Richard A. Klass, Esq., Your Court Street Lawyer, to move for dismissal of the 2021 Action based on the doctrine of res judicata. Pursuant to CPLR 3211(a)(5), a cause of action should be dismissed when it “may not be maintained” due to the doctrine of res judicata (also known as “claim preclusion”). In the 2021 Action, the complaint asserted claims for the transactions that had already been adjudicated in the 2012 Action. Under New York’s “transactional analysis approach to res judicata, ‘once a claim is brought to its final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy.”’ In re Hunter, 4 N.Y.3d 260, 269 (2005).

It was pointed out that New York courts regularly dismiss actions under CPLR 3211(a)(5) based on the doctrine of res judicata. See, e.g., Board of Managers of the 129 Condominium, v. 129 Lafayette Street, LLC, 2012 N.Y. Slip Op 33349 at p. 11 (NY Sup. 2012) (granting motion to dismiss action under res judicata because the claims in both actions arose out of the “same transaction or series of transactions”); Douglas Elliman LLC v. Bergere, 98 A.D.3d 642, 642 (2nd Dept. 2012) (dismissing action pursuant to CPLR 3211(a)(5) based on the doctrine of res judicata); Corto v. Lefrak, 203 A.D.2d 94, 95 (1st Dept. 1994) (affirming dismissal of action based on res judicata and collateral estoppel); Paar v. Bay Crest Assoc., 35 N.Y.S.3 190 (2nd Dept. 2016) (doctrine of res judicata barred subsequent breach of contract action); Plaza PH2001 LLC v. Plaza Residential Owner LP, 947 N.Y.S.2d 498 (1st Dept. 2014).

Court looks at “Factual Grouping” of Claims

The fact that the plaintiff, in the 2021 Action, alleged additional causes of action — relative to the 2012 Action — did not alter the res judicata analysis: “When alternative theories are available to recover what is essentially the same relief for harm arising out of the same or related facts such as would constitute a single ‘factual grouping’…, the circumstances that the theories involve materially different elements of proof will not justify presenting the claim by two different actions.” SSJ Development of Sheepshead Bay I, LLC v. Amalgamated Bank, 2014 N.Y. Slip Op. 30913 at p. 5 (NY Sup. 2014). Additionally, “[i]f the party against whom res judicata is invoked had a full and fair opportunity to litigate the claim in a prior proceeding based on the same transaction, but did not raise it therein, he will be barred from raising it in a subsequent action.” Schwartzreich v. E.P. Carting Co., 688 N.Y.S.2d 370, 441 (1st Dept. 1998). The rule applies not only to claims actually litigated, but also to claims that could have been raised in the prior litigation. O’Brien v. City of Syracuse, 54 N.Y.2d 353, 357-58 (1981).

Second Action Dismissed

The Supreme Court Justice granted the motion to dismiss the 2021 Action. In his decision, the judge held: “The Court observes that the doctrine [of res judicata] ‘precludes litigation of matters that could or should have been raised in a prior proceeding between the parties arising from the same factual grouping, transactions or series of transactions.’ (see, DeSanto Construction Corporation v. Royal Insurance Company, 278 AD2d 357 [2^nd Dept. 2000].”

Richard A. Klass, Esq.
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Documents submitted by the defendants do not utterly refute the factual allegations.

Posted on February 18, 2022 by Richard Klass

In Singh v Pliskin, Rubano, Baum & Vitulli, 200 AD3d 927, 929 [2d Dept 2021]. The court denied the law firm’s motion to dismiss, holding:

The complaint, as augmented by the affidavit of Singh submitted in opposition to the defendants’ motion to dismiss, sufficiently stated a cause of action for legal malpractice (see CPLR 3211 [a] [7]; Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Doe v Ascend Charter Schs., 181 AD3d 648, 649-650 [2020]). Contrary to the defendants’ contention, at this preliminary stage of the litigation, they failed to conclusively demonstrate that the plaintiffs’ subsequent attorney had a sufficient opportunity to correct the defendants’ alleged negligence, such that they did not proximately cause any damages flowing from that negligence (see Gobindram v Ruskin Moscou Faltischek, P.C., 175 AD3d 586, 591 [2019]). The defendants also failed to demonstrate that their actions were protected by the attorney judgment rule (see generally Rosner v Paley, 65 NY2d 736, 738 [1985]; Katsoris v Bodnar & Milone, LLP, 186 AD3d at 1505).

The documents submitted by the defendants do not utterly refute the factual allegations of the complaint and do not conclusively establish a defense to the plaintiffs’ legal malpractice claim as a matter of law (see CPLR 3211 [a] [1]; Cali v Maio, 189 AD3d 1337, 1338 [2020]; Gorunkati v Baker Sanders, LLC, 179 AD3d 904, 906 [2020]).

Richard A. Klass, Esq.
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Prior results do not guarantee a similar outcome.

R. A. Klass
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