Statute of limitations and doctrine of continuous representation.

In Keshner v Hein Waters & Klein, 185 AD3d 808, 808-09 [2d Dept 2020], the court considered whether, on a motion to dismiss, the client was able to prove that there was a toll on the statute of limitations for legal malpractice based upon continuous representation, holding:

The statute of limitations for a cause of action alleging legal malpractice is three years (see CPLR 214 [6]). “However, ‘[c]auses of action alleging legal malpractice which would otherwise be barred by the statute of limitations are timely if the doctrine of continuous representation applies’ ” (Farage v Ehrenberg, 124 AD3d 159, 164 [2014], quoting *809 Macaluso v Del Col, 95 AD3d 959, 960 [2012]; see Glamm v Allen, 57 NY2d 87, 94 [1982]). “[T]he rule of continuous representation tolls the running of the Statute of Limitations on the malpractice claim until the ongoing representation is completed” (Glamm v Allen, 57 NY2d at 94; see Farage v Ehrenberg, 124 AD3d at 164). “The two prerequisites for continuous representation tolling are a claim of misconduct concerning the manner in which professional services were performed, and the ongoing provision of professional services with respect to the contested matter or transaction” (Matter of Lawrence, 24 NY3d 320, 341 [2014]; see Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 9, 11 [2007]; McCoy v Feinman, 99 NY2d 295, 306 [2002]).

Here, the defendants met their initial burden of establishing, prima facie, that the legal malpractice cause of action was untimely (see CPLR 214 [6]). In opposition, however, the plaintiff raised a question of fact as to whether the statute of limitations was tolled by the doctrine of continuous representation (see Kitty Jie Yuan v 2368 W. 12th St., LLC, 119 AD3d 674, 674 [2014]; Macaluso v Del Col, 95 AD3d at 960; Kennedy v H. Bruce Fischer, Esq., P.C., 78 AD3d 1016, 1017-1018 [2010]).

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Dude, Where’s My Lawyer?: attorney illness

Man sitting on a suitcase and looking through binoculars, illustrating an article about attorney illness by Richard Klass

She obtained a money judgment against a property owner for personal injuries she sustained. To collect the judgment, the injured plaintiff’s counsel retained Richard A. Klass, Your Court Street Lawyer as special collection counsel.

Proceeding to declare there’s no homestead exemption:

Once a judgment has been entered, there are various enforcement measures available to the creditor to collect the money due on the judgment from the debtor. One of the most effective means of enforcing a Judgment is through a Sheriff’s auction sale of a debtor’s real property.

Prior to the Sheriff conducting an auction sale of real estate, there is a requirement under CPLR 5206 that the judgment creditor file a proceeding to determine whether there is sufficient equity in the real property over and above both the liens and mortgages on the property and, if applicable, the debtor’s “homestead exemption” from which the judgment may be satisfied. The homestead exemption represents a certain monetary amount of equity in a debtor’s principal residence protected from creditors.1 If the court determines that there is sufficient net equity, then an order may be entered authorizing the Sheriff to levy on the real property and conduct the auction sale.

Discovery on the issue of the homestead exemption:

In the proceeding to determine that the debtor’s house could be sold at Sheriff’s auction, the debtor claimed that the subject house was his principal residence. In response, the creditor was granted leave of court to conduct discovery proceedings on the issue of the debtor’s homestead exemption claim. Discovery demands, including interrogatories and document demands, were served upon the debtor’s attorney.

Despite having been served with the discovery demands, the debtor failed to respond to them. The debtor’s failure to respond to the interrogatories and produce documents continued even after the direction of the court in the preliminary conference order and a subsequent order. The creditor filed a motion to strike the debtor’s answer and preclude him from asserting the homestead exemption claim. Once again, the debtor failed to respond or comply. The court gave the debtor one last chance to respond. Needless to say, the debtor did not respond despite all of the chances afforded to him, and the court struck his answer and his defenses, including the claimed homestead exemption.

Debtor claims default was due to his attorney’s illnesses:

The debtor’s new attorney filed a motion with the court requesting that the order striking his answer be vacated because his prior attorney was suffering from physical and mental illnesses. The prior attorney submitted an affirmation stating that he was diagnosed with idiopathic pulmonary fibrosis and was also suffering from mental illness, and that he has had to withdraw his representation in other cases.

In opposing the request to vacate the debtor’s default, the creditor argued (a) that the prior attorney failed to provide proof of mental illness; (b) from reviewing court calendars, there was no proof that the prior attorney withdrew from other cases; (c) the debtor failed to respond to discovery demands long before the default; and (d) the debtor still failed to sustain his burden of proving his claimed homestead exemption.

An attorney’s illness must be corroborated by medical documentation:

The judge laid out the criteria necessary to determine the debtor’s motion to vacate his default based upon the claim of his attorney’s illness, stating as follows:

“The illness of a party’s attorney, when corroborated by medical documentation, including the affirmation of a physician, suffices as a reasonable excuse for vacatur of a default. (Pierot v. Leonard, 154 AD3d 791 [2d Dept. 2017]; Weitzenberg v. Nassau County Dept. of Recreation & Parks, 29 AD3d 683 [2d Dept. 2006]; Norowitz v. Ponconco, Inc., 96 AD2d 581 [2d Dept. 1983]. [The attorney’s] alleged physical and mental health issues are not established by a doctor’s affirmation and therefore do not serve as a reasonable excuse to vacate the default. Nonetheless, [the attorney’s] initial default occurred prior to the alleged June 20th date of diagnosis, and [the attorney] fails to submit detailed submissions explaining the respondent’s delays in responding to the petitioner’s discovery demands, in complying with the court’s February 27th order mandating discovery, as well as his failure to oppose the petitioner’s April 16th motion to strike (compare with Hageman v. Home Depot U.S.A., Inc., 25 AD3d 760 [2d Dept. 2006].

Finally, the Court notes that respondent’s Answer was stricken and judgment entered after a history of noncompliance with orders to produce discovery essential to this litigation. . . . The Court finds that given the history of this litigation, the explanation proferred by respondent and his former counsel is vague, unsubstantiated and incredible, and does not constitute a reasonable excuse for respondent’s default (see Herrera v. MTA Bus Co., 100 AD3d 962 [2d Dept. 2012]); Wells Fargo Bank, NA v. Cervini, 84 AD3d 789 [2d Dept. 2011]. Given the Court of Appeals’ guidance in Gibbs v. St. Barnabas Hospital, 16 NY3d 74 [2010], as well as Second Department case law cited above, the Court finds it would be an improvident use of its discretion to vacate the default judgment in light of respondent’s history of default and noncompliance. Further, prior counsel’s alleged illness, which constituted the excuse for the default, only accounted for a small period of time in which respondent was to have provided discovery.”

The judge found that the petition was entitled to judgment as a matter of law and granted the petition directing the sale of the debtor’s 100% interest in the real property.

Footnotes:
1 Currently, a judgment debtor’s “homestead exemption” amount depends on which county the property is located, which is as follows:

  • $170,825 if the property is in the counties of Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, or Putnam.
  • $142,350 if the property is in the counties of Dutchess, Albany, Columbia, Orange, Saratoga or Ulster.
  • $85,400 if the property is in any other county.

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Attorney not liable to client for testimony of a witness at a deposition

In Caso v Miranda Sambursky Slone Sklarin Verveniotis LLP, 180 AD3d 611, 612-13 [1st Dept 2020], the court held that the attorney was not liable to his client for testimony of a witness at a deposition:

Plaintiff’s contention in this legal malpractice action is that Arenas should have been better “prepared” for his deposition in the underlying personal injury action, so he could “remember” the statements he made to the detective. Plaintiff claims that, had defendants not been negligent, there would have been a plaintiff’s verdict. He claims that Arenas’s testimony damaged his case and prevented him from prevailing.

“[M]ere speculation of a loss resulting from an attorney’s alleged omissions … is insufficient to sustain a claim” for legal malpractice” (Gallet, Dreyer & Berkey, LLP v. Basile, 141 A.D.3d 405, 405–406, 35 N.Y.S.3d 56 [1st Dept. 2016] [internal quotation marks omitted]; Geller v. Harris, 258 A.D.2d 421, 685 N.Y.S.2d 734 [1st Dept. 1999] ). Plaintiff’s assertion that, had Arenas been better prepared, the jury would have returned a favorable verdict is pure speculation (Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 N.Y.3d 438, 443, 835 N.Y.S.2d 534, 867 N.E.2d 385 [2007]; Brookwood v. Alston & Bird, LLC, 146 A.D.3d 662, 49 N.Y.S.3d 10 [1st Dept. 2017]. Defendants met their burden of showing that plaintiff cannot establish causation, in that plaintiff cannot prove that it would have prevailed in the underlying action “but for” defendant’s alleged negligence in preparing Arenas for his deposition (see Rudolf v. Shayne, 8 N.Y.3d 438 at 442, 835 N.Y.S.2d 534, 867 N.E.2d 385).

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Brooklyn Bar Association helps attorneys improve their resumes during COVID-19

Richard Klass in white shirt speaking at Brooklyn Bar Association, helping attorneys dealing with unemployment during COVID-19 pandemic.
Richard Klass (pictured), second vice president of the Brooklyn Bar Association, moderated the panel, which included attorney Andrea Bonina and retired attorney David Sarnoff. Screenshots via Zoom

Reported by Rob Abruzzese, Legal Editor
opens in a new windowBrooklyn Daily Eagle
May 26, 2020

“More than two million New Yorkers have filed for unemployment since the COVID-19 pandemic started, and lawyers are not immune. To help laid-off attorneys and people who are simply looking for a new job, the Brooklyn Bar Association held a continuing legal education seminar to help ensure that lawyers are putting their best foot forward.

“On Monday, May 18, Richard Klass, second vice president of the Brooklyn Bar Association, moderated a two-hour CLE entitled, “Resume Building and Interview Skills” along with panelists Andrea Bonina and David Sarnoff….”

#COVID19 #BklynEagle #BrooklynBarAssoc #CourtStreetLawyer


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When Clients Don’t Pay Their Lawyers

Red text reading "Always the Last to Know" with blue text "Be Paid" superimposed over the word "know" illustrating article about legal fees.

The crisis has been averted. The lawyer did a great job for his client. The lawyer sent his client the final bill for services rendered. Unfortunately, the client now had other bills to pay and the legal problem the lawyer dealt with was starting to appear very small in the rearview mirror.

The lawyer came to Richard A. KlassYour Court Street Lawyer, to sue the client to collect on the outstanding bill.

Complaint for Legal Fees Filed against Client

The lawyer commenced an action against his client alleging several causes of action in the complaint, including:

Breach of contract: A written retainer agreement with an attorney is an enforceable contract. As held in Jacobson v Sassower, 66 NY2d 991, 993 [1985], “as a matter of public policy, courts pay particular attention to fee arrangements between attorneys and their clients. An attorney has the burden of showing that a fee contract is fair, reasonable, and fully known and understood by the client.”

Assuming that the fee arrangements were fair to the client, the lawyer may establish his prima facie entitlement to judgment as a matter of law against the client on the cause of action alleging breach of contract by submitting evidence of the existence of a contract, the lawyer’s performance under the contract, the client’s breach of the contract, and resulting damages. SeeJoseph W. Ryan, Jr., P.C. v Faibish, 136 AD3d 984 [2d Dept 2016].

Account Stated: Many times, an attorney is able to prove that he sent his client monthly invoices and the client never said one word about fees; then, when the bill comes due, the client ‘wakes up’ and starts objecting to all of the attorney’s charges.

An attorney can make out a prima facie showing of his entitlement to summary judgment on an “account stated” claim by providing documentary evidence of the invoices, and an affidavit stating that he sent the invoices on a monthly basis to defendant, and that defendant received the invoices and failed to object to the invoices until this litigation. SeeGlassman v Weinberg, 154 AD3d 407 [1st Dept 2017].

Quantum Meruit: This Latin phrase basically means that one should be paid the reasonable value of services rendered on behalf of another.

If the terms of a retainer agreement are not established, or if a client discharges an attorney without cause, the attorney may recover only in quantum meruit to the extent that the fair and reasonable value of legal services can be established. SeeSeth Rubenstein, P.C. v Ganea, 41 AD3d 54 [2d Dept 2007]. A cause of action for quantum meruit requires a showing of “a plaintiff’s performance of services in good faith, acceptance of those services by a defendant, an expectation of compensation and proof of the reasonable value of the services provided.” SeeHyman v Schwartz, 127 AD3d 1281, 1282 [3d Dept 2015].

Pre-litigation Considerations

Before an attorney files a lawsuit to recover legal fees, there are a number of considerations as to whether it is worth doing. The commencement of a lawsuit by an attorney against his client ought to be the last resort after an attempt to resolve nonpayment. While not exhaustive, some questions to ask before suing a client may be:

  • Did the attorney achieve a favorable result? While not necessarily a defense, the client in unsuccessful litigation may perceive that the attorney provided no value.
  • Is the client judgment-proof? Will any judgment actually be collectible?
  • Is there a written retainer agreement? It may be required by Uniform Rules of Court Part 1215.
  • Were contemporaneous time records kept?
  • Was the client sent detailed bills at regular intervals?
  • Has the client threatened to sue for legal malpractice? An estimated 40% to 50% of legal malpractice cases emanate from an attorney’s collection case.
  • Is the amount of unpaid fees large enough to justify bringing an action?
  • Is there a requirement for service of a notice of the availability of fee dispute arbitration under Uniform Rules of Court Part 137.
  • Is there the possibility of pursuing a charging lien on the case, or a retaining lien on the file?
  • How long has the clock been ticking on the dispute? The statutes of limitations are three years for the client to sue for legal malpractice and six years for the attorney to sue the client to collect his fees.

– Richard A. Klass, Esq.


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.com with any questions.

Prior results do not guarantee a similar outcome.

© 2020 Richard A. Klass
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Liable for failing to take actions outside the scope of representation?

In Portus Singapore PTE LTD v Kenyon & Kenyon LLP, 16CV6865 (JGK), 2020 WL 1501886, at *5-6 [SDNY Mar. 30, 2020], the court dealt with the issue of whether the attorney can be held liable to his client for failing to take actions outside the scope of his representation. The court held:

In order to demonstrate that a lawyer was negligent “a plaintiff must show that an attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession” and that “the attorney’s breach of this professional duty caused the plaintiff’s actual damages.” McCoy v. Feinman, 99 N.Y.2d 295, 755 N.Y.S.2d 693, 785 N.E.2d 714, 718-19 (2002) (internal quotation marks and citations omitted). “What constitutes ordinary and reasonable skill and knowledge cannot be fixed with precision, but should be measured at the time of representation.” Darby & Darby, P.C. v. VSI Intern., Inc., 95 N.Y.2d 308, 716 N.Y.S.2d 378, 739 N.E.2d 744, 747 (2000). Generally, “ordinary and reasonable skill” is determined by looking to standards of legal practice in the State of New York. See, e.g., Sokol, 468 F. Supp. 2d at 637 (discussing New York law practice commentary). Moreover, “[a]n attorney may not be held liable for failing to act outside the scope of a retainer.” Attallah v. Milbank, Tweed, Hadley & McCloy, LLP, 168 A.D.3d 1026, 93 N.Y.S.3d 353, 356 (2019).

In AmBase Corp. v. Davis Polk & Wardwell, 8 N.Y.3d 428, 834 N.Y.S.2d 705, 866 N.E.2d 1033, 1035 (2007), following the liquidation of its parent company, the plaintiff corporation AmBase assumed primary liability for the parent corporation’s federal income taxes and secondary liability for all other liabilities. Following liquidation, the Internal Revenue Service (“IRS”) found the parent company liable for six years’ worth of withholding taxes, which would be imputed to AmBase under the liquidation agreement. Id. AmBase retained Davis Polk “to represent [it] as agent for [the parent corporation] to resolve the tax issues currently before” the IRS. Id., 834 N.Y.S.2d 705, 866 N.E.2d at 1037. Davis Polk then successfully challenged in the Tax Court the IRS’s determination that AmBase was liable. Id., 834 N.Y.S.2d 705, 866 N.E.2d at 1035. AmBase then turned around and sued Davis Polk for legal malpractice on the ground that Davis Polk had failed to advise AmBase that AmBase was only secondarily liable for payment of taxes. Id. AmBase alleged that although it ultimately prevailed in the Tax Court, Davis Polk’s negligence forced AmBase to maintain a multi-million-dollar loss on its books, thereby creating an appearance of insolvency that resulted in lost business opportunities. Id., 834 N.Y.S.2d 705, 866 N.E.2d at 1036.

The New York Court of Appeals noted that the plain language of the retainer agreement “indicates that Davis Polk was retained to litigate the amount of tax liability and not to determine whether the tax liability could be allocated to another entity.” Id., 834 N.Y.S.2d 705, 866 N.E.2d at 1037. Noting that “the issue whether plaintiff was primarily or secondarily liable for the subject tax liability was outside the scope of its representation,” the court held that the “defendants exercised the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession when they focused their efforts on the controversy between AmBase and the IRS – the subject of the retainer agreement – resulting in a most favorable outcome, which was publicly praised by AmBase principals.” Id.

Similarly, in Milbank, Tweed, the law firm agreed in its engagement letter to represent the plaintiff “to investigate and consider options that may be available to urge administrative reconsideration” of the plaintiff’s expulsion from the New York College of Osteopathic Medicine. 93 N.Y.S.3d at 355. The Appellate Division of the Supreme Court affirmed the dismissal of the plaintiff’s complaint that had alleged malpractice on the ground that Milbank, Tweed did not actually negotiate the plaintiff’s readmission to the school. Id. at 356. The court reasoned that an attorney cannot be held liable for failing to act outside the scope of a retainer and that negotiation with the school went beyond the stated scope of the agreement letter. Id.

Davis Polk and Milbank, Tweed stand for the proposition that the failure by a lawyer to take actions outside the scope of that lawyer’s representation of a client cannot form the basis of a legal malpractice suit.

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Breach of contract action against an attorney

The court in Judd Burstein, P.C. v Long, 797 Fed Appx 585, 587-88 [2d Cir 2019] recited the law regarding certain damages in the context of a breach of contract action against an attorney: Under New York law, it is well established that where “[a]ttorney’s services” are “the substance of the action alleging a breach of the retainer agreement,” such as here, “the costs of obtaining substituted services [are] … consequential damages.” Hinman, Straub, Pigors & Manning, P.C. v. Broder, 89 A.D.2d 278, 456 N.Y.S.2d 834, 836 (1982); accord *588 Affiliated Credit Adjustors, Inc. v. Carlucci & Legum, 139 A.D.2d 611, 527 N.Y.S.2d 426, 428 (1988) (stating, in the context of an action for legal malpractice, that legal fees “allegedly incurred in retaining alternate counsel to perform the services for which the defendants were originally retained … [are] not merely an incident of litigation but, instead, constitute[ ] consequential damages which may be recoverable”). Such damages “may include litigation expenses incurred in an attempt to avoid, minimize, or reduce the damage caused by the attorney’s wrongful conduct.” Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 N.Y.3d 438, 443, 835 N.Y.S.2d 534, 867 N.E.2d 385 (2007) (internal quotation marks and citations omitted).

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Plaintiffs’ Judiciary Law Section 487 cause of action was properly dismissed.

In dismissing the plaintiff’s claim against an attorney for violating Judiciary Law Section 487, the New York State Court of Appeals held:

Here, viewing the facts in the light most favorable to plaintiffs (see De Lourdes Torres v Jones, 26 NY3d 742, 763 [2016]), defendants established prima facie entitlement to judgment as a matter of law on the Judiciary Law Section 487 (1) claim by demonstrating that plaintiffs failed to allege that defendants engaged in deceit or collusion during the course of the underlying federal intellectual property lawsuit against GM and EMI [FN2]. In response, plaintiffs failed to satisfy their burden to establish material, triable issues of fact (id.). The affidavits plaintiffs submitted in opposition to summary judgment did not allege that defendants committed any acts of deceit or collusion during the pendency of the underlying federal lawsuit. To the extent defendants were alleged to have made deceitful statements, plaintiffs’ allegation that defendants induced them to file a meritless lawsuit based on misleading legal advice preceding commencement of the lawsuit is not meaningfully distinguishable from the conduct we deemed insufficient to state a viable attorney deceit claim in Looff (97 NY at 482). The statute does not encompass the filing of a pleading or brief containing nonmeritorious legal arguments, as such statements cannot support a claim under the statute [FN3]. Similarly, even assuming it constituted deceit or collusion, defendants’ alleged months-long delay in informing plaintiffs that their federal lawsuit had been dismissed occurred after the litigation had ended and therefore falls outside the scope of Judiciary Law Section 487 (1). Thus, plaintiffs’ Judiciary Law Section 487 cause of action was properly dismissed.

Bill Birds, Inc. v Stein Law Firm, P.C. 2020 NY Slip Op 02125 Decided on March 31, 2020 Court of Appeals DiFiore, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law Section 431. This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on March 31, 2020
No. 19

[*1]Bill Birds, Inc. et al., Appellants,
v
Stein Law Firm, P.C. et al., Respondents.

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The meaning and coverage of a general release depends on the controversy being settled.

“…does not necessarily mean that the release covered all matters…”

While a party may negotiate for a general release when settling a party’s claim, it does not necessarily mean that the release covered all matters which were not envisioned when the release was given. As stated in Gorunkati v Baker Sanders, LLC, 179 AD3d 904, 906 [2d Dept 2020]:

Generally, “a valid release constitutes a complete bar to an action on a claim which is the subject of the release” (Centro Empresarial Cempresa S.A. v América Móvil, S.A.B. de C.V., 17 NY3d 269, 276 [2011] [internal quotation marks omitted]). However, “ ‘[t]he meaning and coverage of a general release depends on the controversy being settled and upon the purpose for which the release was actually given . . . . A release may not be read to cover matters which the parties did not desire or intend to dispose of’ ” (Wechsler v Diamond Sugar Co., Inc., 29 AD3d 681, 682 [2006], quoting Lefrak SBN Assoc. v Kennedy Galleries, 203 AD2d 256, 257 [1994]; see Demaria v Brenhouse, 277 AD2d 344 [2000]). A defendant bears the initial burden of establishing that it has been released from any claims (see Burgos v New York Presbyt. Hosp., 155 AD3d 598, 600 [2017]).

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Statute of limitations tolled by reason of disability or insanity?

“…statute of limitations for the client to bring a legal malpractice…”

In Jemima O. v Schwartzapfel, P.C., 178 AD3d 474, 475 [1st Dept 2019], the court held that the statute of limitations for the client to bring a legal malpractice was not tolled. The court held:

Plaintiff’s argument that the statute of limitations was tolled by reason of disability or insanity pursuant to CPLR 208 was properly rejected by the motion court, without a hearing. Plaintiff failed to put forth any evidence that would support a finding of disability or insanity sufficient to show that plaintiff was unable to function in society (see Santo B. v Roman Catholic Archdiocese of N.Y., 51 AD3d 956, 958 [2d Dept 2008]). In particular, she did not submit any doctors’ affidavits or medical records documenting the severity of her condition (see Matter of Brigade v Olatoye, 167 AD3d 462 [1st Dept 2018]; Santana v Union Hosp. of Bronx, 300 AD2d 56 [1st Dept 2002]). Moreover, the record does not show that plaintiff was incapable of protecting her legal rights despite her mental health diagnosis (see Burgos v City of New York, 294 AD2d 177, 178 [1st Dept 2002]).

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