Legal malpractice context…continuous representation doctrine…generally limited to…a specific legal matter…

In Goodman v Weiss, Zarett, Brofman, Sonnenklar & Levy, P.C., 199 AD3d 659, 661-62 [2d Dept 2021], court affirmed the dismissal the client’s malpractice action as time-barred, holding:

The plaintiff contends that the defendant’s malpractice consisted of improperly negotiating his separation from his previous employer and his new employment contract with the hospitals. However, an action alleging legal malpractice must be commenced within three years from the date of accrual (see CPLR 214 [6]). A claim accrues when the malpractice is committed, not when the client discovers it (see Shumsky v Eisenstein, 96 NY2d 164, 166 [2001]). “Causes of action alleging legal malpractice which would otherwise be time-barred are timely if the doctrine of continuous representation applies” (DeStaso v Condon Resnick, LLP, 90 AD3d 809, 812 [2011]). “In the legal malpractice context, the continuous representation doctrine tolls the statute of limitations where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim” (id. at 812). Application of the continuous representation doctrine is generally “limited to the course of representation concerning a specific legal matter . . . ; [t]he concern, of course, is whether there has been continuous [representation], and not merely a continuing relation” between the client and the lawyer (Shumsky v Eisenstein, 96 NY2d at 168 [internal quotation marks omitted]).

Contrary to the plaintiff’s contention, the legal malpractice cause of action at issue was time-barred under CPLR 214 (6), and the continuous representation doctrine did not toll the statute of limitations. That doctrine “tolls the running of the statute of limitations on a cause of action against a professional defendant only so long as the defendant continues to represent the plaintiff[s] in connection with the particular transaction which is the subject of the action and not merely during the continuation of a general professional relationship” (Maurice W. Pomfrey & Assoc., Ltd. v Hancock & Estabrook, LLP, 50 AD3d 1531, 1533 [2008] [internal quotation marks omitted]). Although the plaintiff alleges that the defendant continued to provide legal services to him between January 2011 and November 2013, he did not seek or obtain the defendant’s legal services at any time during that period and, when the plaintiff did subsequently engage the defendant’s legal services, that engagement was with regard to the performance of distinct services related to a different subject matter. Accordingly, the Supreme Court properly determined that the continuous representation toll was inapplicable and granted that branch of the defendant’s motion which was to dismiss the legal malpractice cause of action as time-barred.


Richard A. Klass, Esq.
Your Court Street Lawyer

#CourtStreetLawyer #continuous-representation

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.

Prior results do not guarantee a similar outcome.

© 2022 Richard A. Klass

Scales of justice

Court held that there were questions of fact regarding the continuous representation toll.

In Ray-Roseman v Lippes Mathias Wexler Friedman, LLP, 197 AD3d 944 [4th Dept 2021], the court held that there were questions of fact regarding the continuous representation toll of the statute of limitations, holding:

The statute of limitations for a legal malpractice claim is three years (see CPLR 214 [6]; McCoy v. Feinman, 99 N.Y.2d 295, 301, 755 N.Y.S.2d 693, 785 N.E.2d 714 [2002]). Here, plaintiffs correctly concede that defendants met their initial burden of establishing that the malpractice claim insofar as it related to the 2014 loan transaction was commenced beyond the three-year statute of limitations (see generally Rider v. Rainbow Mobile Home Park, LLP, 192 A.D.3d 1561, 1561-1562, 145 N.Y.S.3d 246 [4th Dept. 2021]; U.S. Bank N.A. v. Brown, 186 A.D.3d 1038, 1039, 130 N.Y.S.3d 146 [4th Dept. 2020]). Thus, the burden shifted to plaintiffs to raise a triable issue of fact whether “the statute of limitations was tolled or otherwise inapplicable, or whether … plaintiff[s] actually commenced the action within the applicable limitations period” (U.S. Bank N.A., 186 A.D.3d at 1039, 130 N.Y.S.3d 146 [internal quotation marks omitted]; see generally Rider, 192 A.D.3d at 1562, 145 N.Y.S.3d 246).

We conclude that plaintiffs, in opposition, raised a triable issue of fact whether the continuous representation doctrine applied to toll the statute of limitations with respect to the malpractice claim insofar as it related to the 2014 loan transaction (see generally Carbone v. Brenizer, 148 A.D.3d 1806, 1807, 50 N.Y.S.3d 783 [4th Dept. 2017]). The continuous representation doctrine tolls the limitations period “where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim” (McCoy, 99 N.Y.2d at 306, 755 N.Y.S.2d 693, 785 N.E.2d 714), and “ ‘where the continuing representation pertains specifically to [that] matter’ ” (International Electron Devices [USA] LLC v. Menter, Rudin & Trivelpiece, P.C., 71 A.D.3d 1512, 1513, 898 N.Y.S.2d 388 [4th Dept. 2010], quoting Shumsky v. Eisenstein, 96 N.Y.2d 164, 168, 726 N.Y.S.2d 365, 750 N.E.2d 67 [2001]). Here, plaintiffs submitted communication between the Florida attorney and defendants in which the Florida attorney indicated that defendants’ role as New York counsel included “enforcement” of the 2014 loan transaction documents. Moreover, the 2014 loan transaction and the foreclosure proceedings were close in time, as evidenced by plaintiffs’ submission of defendants’ supplemental billing invoices for legal services, which demonstrated a representation from the loan transaction to the foreclosure proceeding without a break. Thus, we conclude that questions of fact exist regarding the extent of defendants’ representation of plaintiffs and, more specifically, whether “enforcement” of the loan documents contemplated a continued representation until the loan was paid in full and the transaction completed.


Richard A. Klass, Esq.
Your Court Street Lawyer

#CourtStreetLawyer #legalmalpractice

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.

Prior results do not guarantee a similar outcome.

© 2021 Richard A. Klass

Scales of justice

Court denied dismissal of the client’s legal malpractice claim based on the statute of limitations.

In Golden Jubilee Realty, LLC v Castro, 196 AD3d 680 [2d Dept 2021], the court denied dismissal of the client’s legal malpractice claim based on the statute of limitations, holding:

“In moving to dismiss a cause of action pursuant to CPLR 3211(a)(5) as barred by the applicable statute of limitations, the moving defendant bears the initial burden of demonstrating, prima facie, that the time within which to commence the cause of action has expired. The burden then shifts to the plaintiff to raise a question of fact as to whether the statute of limitations is tolled or is otherwise inapplicable” (Stein Indus., Inc. v. Certilman Balin Adler & Hyman, LLP, 149 A.D.3d 788, 789, 51 N.Y.S.3d 183 [citations omitted]). “An action to recover damages for legal malpractice must be commenced within three years after the accrual of the cause of action” (Bullfrog, LLC v. Nolan, 102 A.D.3d 719, 719–720, 959 N.Y.S.2d 212; see CPLR 214[6]). “A legal malpractice claim accrues ‘when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court’ ” (McCoy v. Feinman, 99 N.Y.2d 295, 301, 755 N.Y.S.2d 693, 785 N.E.2d 714, quoting Ackerman v. Price Waterhouse, 84 N.Y.2d 535, 541, 620 N.Y.S.2d 318, 644 N.E.2d 1009).


Richard A. Klass, Esq.
Your Court Street Lawyer

#CourtStreetLawyer #legalmalpractice #statuteoflimitations

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.

Prior results do not guarantee a similar outcome.

© 2021 Richard A. Klass

Scales of justice

Continuous Representation Doctrine

Lavelle-Tomko v Aswad & Ingraham, 191 AD3d 1142 [3d Dept 2021] discusses the continuous representation doctrine, holding:

“An action to recover damages arising from legal malpractice must be commenced within three years after accrual” (Zorn v. Gilbert, 8 N.Y.3d 933, 933–934, 834 N.Y.S.2d 702, 866 N.E.2d 1030 [2007] [citation omitted]; see CPLR 214[6]), which occurs at the time of the injury and not at the time that the injury is discovered (see McCoy v. Feinman, 99 N.Y.2d 295, 301, 755 N.Y.S.2d 693, 785 N.E.2d 714 [2002]). In seeking to obtain dismissal of the action based on the statute of limitations, defendants bore the initial burden of demonstrating that the time within which to commence had expired, including establishing the date that the cause of action accrued (see Matter of Steinberg, 183 A.D.3d 1067, 1070, 124 N.Y.S.3d 98 [2020]; Haynes v. Williams, 162 A.D.3d 1377, 1378, 79 N.Y.S.3d 365 [2018], lv denied 32 N.Y.3d 906, 2018 WL 4997517 [2018]; Krog Corp. v. Vanner Group, Inc., 158 A.D.3d 914, 915, 72 N.Y.S.3d 178 [2018]). If defendants met that initial burden, “the burden then shift[ed] to … plaintiff to raise a question of fact as to whether the statute of limitations has been tolled or was otherwise inapplicable” (Krog Corp. v. Vanner Group, Inc., 158 A.D.3d at 916, 72 N.Y.S.3d 178 [internal quotation marks and citations omitted]; see International Electron Devices [USA] LLC v. Menter, Rudin & Trivelpiece, P.C., 71 A.D.3d 1512, 1512, 898 N.Y.S.2d 388 [2010]).

Defendants demonstrated, and plaintiff does not dispute, that her cause of action accrued on August 19, 2007, the date that she executed the settlement agreement in the first action. Plaintiff commenced this action on October 25, 2016, more than nine years after accrual and well beyond the three-year statute of limitations (see CPLR 214[6]). Defendants thus met their initial burden on their motion for summary judgment based on that defense (see Haynes v. Williams, 162 A.D.3d at 1378, 79 N.Y.S.3d 365). The burden then shifted to plaintiff to demonstrate that the statute of limitations was tolled or otherwise inapplicable, or at least that there is a question of fact to prevent summary judgment to defendants on that issue. Similarly, on the portion of plaintiff’s cross motion seeking dismissal of defendants’ statute of limitations defense, plaintiff had to prove as a matter of law that her action is not time-barred (see Red Zone LLC v. Cadwalader, Wickersham & Taft LLP, 27 N.Y.3d 1048, 1049–1050, 34 N.Y.S.3d 397, 54 N.E.3d 69 [2016]).

To meet her burden, plaintiff primarily relies on the continuous representation doctrine. “This doctrine applies where there is continuing trust and confidence *114 in the relationship between the parties and the attorney’s continuing representation pertains to the specific matter in which the attorney committed the alleged malpractice, not merely the continuity of a general professional relationship” (Deep v. Boies, 53 A.D.3d 948, 950, 863 N.Y.S.2d 269 [2008] [internal quotation marks and citations omitted]; see McCoy v. Feinman, 99 N.Y.2d at 306, 755 N.Y.S.2d 693, 785 N.E.2d 714; Shumsky v. Eisenstein, 96 N.Y.2d 164, 168, 726 N.Y.S.2d 365, 750 N.E.2d 67 [2001]; Deep v. Boies, 121 A.D.3d 1316, 1318, 995 N.Y.S.2d 298 [2014], lv denied 25 N.Y.3d 903, 2015 WL 1526052 [2015]). “The continuous representation doctrine tolls the statute of limitations where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim” (Zorn v. Gilbert, 8 N.Y.3d at 934, 834 N.Y.S.2d 702, 866 N.E.2d 1030 [internal quotation marks, ellipsis and citations omitted]). “For the continuous representation doctrine to apply to an action sounding in legal malpractice, there must be clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the attorney, which often includes an attempt by the attorney to rectify an alleged act of malpractice” (International Electron Devices [USA] LLC v. Menter, Rudin & Trivelpiece, P.C., 71 A.D.3d at 1512–1513, 898 N.Y.S.2d 388 [internal quotation marks, ellipsis, brackets and citations omitted]; see Leeder v. Antonucci, 174 A.D.3d 1469, 1471, 106 N.Y.S.3d 490 [2019]; see also Matter of Lawrence, 24 N.Y.3d 320, 342–343, 998 N.Y.S.2d 698, 23 N.E.3d 965 [2014]; Creative Rest., Inc. v. Dyckman Plumbing & Heating, Inc., 184 A.D.3d 803, 805, 126 N.Y.S.3d 498 [2020]).

R. A. Klass
Your Court Street Lawyer

Next post
Previous post

#CourtStreetLawyer #LegalMalpractice #litigation #continuous-representation-doctrine

Scales of justice

Statute of limitations: Court dismissed client’s legal malpractice action.

In Flintlock Constr. Services, LLC v Rubin, Fiorella & Friedman, LLP, 188 AD3d 530 [1st Dept 2020], the court dismissed the client’s legal malpractice action based on the statute of limitations, holding:

Plaintiff commenced this action on September 17, 2018, alleging that defendant committed legal malpractice by entering into the stipulations. Plaintiff alleges that entering into the 2007 stipulation, which shifted the responsibility for Well–Come’s defense from plaintiff’s insurer to plaintiff alone, was professional negligence. In December 2018 defendant moved to dismiss the complaint pursuant to CPLR 3211(a)(5). The motion court ruled that the complaint was time-barred because the statute of limitations had begun to run on July 29, 2013, the date on which the jury rendered its verdict, which was the date on which plaintiff’s damages were reasonably calculable. We affirm.

“On a motion to dismiss a cause of action pursuant to CPLR § 3211(a)(5) as barred by the statute of limitations, a defendant must establish, prima facie, that the time within which to sue has expired. Once that showing has been made, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations has been tolled, an exception to the limitations period is applicable, or the plaintiff actually commenced the action within the applicable limitations period.” (Quinn v. McCabe, Collins, McGeough & Fowler, LLP, 138 A.D.3d 1085, 30 N.Y.S.3d 288 [2d Dept. 2016] [internal quotation marks omitted] ).

“An action to recover damages for an attorney’s malpractice must be commenced within three years from accrual (see CPLR § 214[6]). A legal malpractice claim accrues when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court. In most cases, this accrual time is measured from the day an actionable injury occurs [or when the damages are sufficiently calculable], even if the aggrieved party is then ignorant of the wrong or injury.” (McCoy v v. Feinman, 99 N.Y.2d 295, 301, 755 N.Y.S.2d 693, 785 N.E.2d 714 [2002] [internal quotation marks and citation omitted]; King Tower Realty Corp. v. G & G Funding Corp., 163 A.D.3d 541, 79 N.Y.S.3d 289 [2d Dept..2018]).

Any damages arising from defendant’s alleged malpractice were sufficiently calculable for pleading purposes when the jury rendered its verdict on July 29, 2013, and the action commenced on September 17, 2018 is time-barred.

Plaintiff has not shown that the statute was tolled or that plaintiff was actively misled or prevented in some extraordinary way from timely commencing a malpractice action (see Yarbro v. Wells Fargo Bank, N.A., 140 A.D.3d 668, 668, 33 N.Y.S.3d 727 [1st Dept. 2016]; Jang Ho Choi v. Beautri Realty Corp., 135 A.D.3d 451, 22 N.Y.S.3d 431 [1st Dept. 2016]).

Scales of justice

A client must be cognizant of the strict bar under the statute of limitations for suing his attorney.

A client must be cognizant of the strict bar under the statute of limitations for suing his attorney. In Flintlock Constr. Services, LLC v Rubin, Fiorella & Friedman, LLP, 188 AD3d 530, 531 [1st Dept 2020], the court affirmed dismissal based on the statute of limitations, holding:

“On a motion to dismiss a cause of action pursuant to CPLR 3211 (a) (5) as barred by the applicable statute of limitations, a defendant must establish, prima facie, that the time within which to sue has expired. Once that showing has been made, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations has been tolled, an exception to the limitations period is applicable, or the plaintiff actually commenced the action within the applicable limitations period.” (Quinn v McCabe, Collins, McGeough & Fowler, LLP, 138 AD3d 1085, 1085-1086 [2d Dept 2016] [internal quotation marks omitted].)

“An action to recover damages for an attorney’s malpractice must be commenced within three years from accrual (see CPLR 214 [6]). A legal malpractice claim accrues when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court. In most cases, this accrual time is measured from the day an actionable injury occurs [or when the damages are sufficiently calculable], even if the aggrieved party is then ignorant of the wrong or injury.” (McCoy v Feinman, 99 NY2d 295, 301 [2002] [internal quotation marks and citation omitted]; King Tower Realty Corp. v G & G Funding Corp., 163 AD3d 541 [2d Dept 2018].) Any damages arising from defendant’s alleged malpractice were sufficiently calculable for pleading purposes when the jury rendered its verdict on July 29, 2013, and the action commenced on September 17, 2018 is time-barred.

R. A. Klass
Your Court Street Lawyer

Next post
Previous post

#CourtStreetLawyer #LegalMalpractice

Scales of justice

New video: Foundations of Bankruptcy

Video: Foundations of Bankruptcy

with Richard A. Klass, Esq. (October, 2020)

From the Brooklyn Bar Association Access to Justice Task Force‘s Webinar Series Know Your Rights!
from Jen Bryan on Vimeo.

Please visit Jen Bryan’s page on Vimeo to view the video.

R. A. Klass
Your Court Street Lawyer

Next post
Previous post

#CourtStreetLawyer #accesstojustice #BrooklynBar #Vimeo #JenBryan

Scales of justice

Rehabilitation Center: Arguing with a nursing home administrator is like wrestling with a pig in the mud: After a few minutes, you realize the pig likes it.

Woman with white hair and pink smock holding hands in front of face, illustrating article by Richard Klass about nursing homes and rehabilitation centers

She had to convalesce in a rehabilitation center for comprehensive (sub-acute) in-patient care following illness. Upon admission, the resident was presented with the facility’s admission agreement for her to sign. The agreement provided that, in exchange for payment through Medicaid, Medicare, insurance or direct pay, the facility would provide all of the patient’s basic and routine services, including lodging and boarding and professional nursing care.

The agreement specified that the resident anticipated paying the costs of care through her managed care organization (MCO) (which contracts through a network or group for the delivery of health care). However, the agreement left the section for private payment rates for daily charges blank.

Motion to Dismiss the Facility’s Case

Post-discharge, the rehabilitation facility brought an action against the former resident, alleging that she obligated herself to pay for the room, board, nursing and health care services but failed to made payment. To mount the best defense possible, the former resident retained Richard A. Klass, Esq., Your Court Street Lawyer, who immediately moved to dismiss the case.

In the Complaint, the facility alleged that it was a corporation duly organized and existing under and by virtue of the laws of the State of New York. Based upon a search of the New York State Department of State online records, there was no corporation with the plaintiff’s name registered to do business in New York State. Business Corporation Law § 301(a)(1) specifies that the name of a domestic or foreign corporation “shall contain the word ‘corporation’, ‘incorporated’ or ‘limited’, or an abbreviation of one of such words; or, in the case of a foreign corporation, it shall, for use in this state, add at the end of its name one of such words or an abbreviation thereof.” There was no such designation in its name in the Summons or Complaint. To the extent that the facility may have claimed it was suing under an assumed name, General Business Law § 130(1) provides that there are certain requirements to be met.

Consumer credit transaction

The pending motion to dismiss set up settlement discussions about the procedural and substantive defenses to the facility’s case. As to the procedural aspect, the next line of defense was to threaten dismissal of the lawsuit on jurisdictional grounds.

The Summons failed to prominently display at the top the words “Consumer Credit Transaction.” CPLR 305(a) specifies that the Summons must have those words on the top where the court held that the debt on an obligation of a consumer to pay money arising out of a transaction in which the services which are the subject of the transaction are primarily for personal, family or household purposes. In Jack Mailman & Leonard Flug DDS, PC v. Whaley, 2002 WL 31988623 [Civil Court, Richmond Co. 2002], the court held that medical debts were deemed consumer debts.

Residential Care Facilities – Residents’ Rights

Nursing facilities, including nursing homes and rehabilitation centers

Nursing facilities, including nursing homes and rehabilitation centers, that accept residents whose charges will be paid in whole or in part by Medicaid are governed by the federal Nursing Home Reform Act (42 USC §1396r) and federal and state regulations (42 CFR §483; and 10 NYCRR §415).

Through these enactments, there was the creation of a so-called residential care patient’s “Bill of Rights.” These “Rights” include the rights to freedom from abuse, mistreatment and neglect; privacy; accommodation for mental, physical, psychological and emotional needs; treatment with dignity; and being fully informed and participating in one’s care.

Financial obligation rights

Among residents’ rights are those relating to financial obligations to the facility, including informing the resident of those services and items that the facility offers for which the resident may be charged. 10 NYCRR §415(h). These laws and regulations govern nursing facility admission agreements. See, Prospect Park Nursing Home v. Goutier, 824 NYS2d 770 [Civil Court, Kings Co. 2006].

The resident did not read or write in the English language. The admission agreement was not translated for her. The resident alleged that when she asked what she was signing, she was told that her MCO would be paying the costs, not her. The “Anticipated Payor” section indicated that an insurer would be paying. The “Private Payment” section (including costs per day) was left blank. The resident alleged that she was never informed of the rates or charges. It was claimed that the facility’s representatives engaged in wrongful conduct and misrepresentation concerning the execution of the agreement. See, Nerey v. Greenpoint Mortgage Funding, Inc., 144 AD3d 646 (2d Dept. 2016).

Rehabilitation Center

Quality of Life: The right to adequate and appropriate care

The regulations emphasize that a resident has the right to receive from the facility “the necessary care and services to attain or maintain the highest practicable physical, mental, and psychosocial well-being, consistent with the resident’s comprehensive assessment and plan of care.” 42 CFR §483.24.

The resident alleged she received inadequate care at the facility, including that she had to wait many hours for the bedpan to be changed; lack of bathing; unavailability of staff when needed and for necessary help and activities. In light of the vigorous defense advocated by Your Court Street Lawyer, the facility agreed to significantly reduce the bill for rehabilitation services and settle the case with the former resident on very favorable terms.

R. A. Klass
Your Court Street Lawyer

Next post
Previous post

#CourtStreetLawyer #NYNHCARE #Rehabilitation
keywords: Nursing facility, nursing home, rehabilitation center

Scales of justice

Retainer agreements should set forth scope of lawyer’s representation.

Portus Singapore PTE LTD v Kenyon & Kenyon LLP, 449 F Supp 3d 402, 411-15 [SDNY 2020] serves as a reminder that the scope of the lawyer’s representation should be set forth in the retainer agreement. As the federal 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.” *412 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.

This case is substantially similar to Davis Polk and Milbank, Tweed. The parties do not point to any formal retainer or contract that spelled out the engagement between Kenyon and Portus. Rather, the “scope” of the engagement between Portus and Kenyon was set out in the communications between Kenyon and Portus’s agent, Mr. Treloar. Mr. Treloar’s communication, faxed to Kenyon on June 15, 2001, instructed Kenyon “to enter the National Phase in United States on behalf of our client and in accordance with the *413 details shown on the attached sheet.” McCoy Decl., Ex. A-14.7 Mr. Treloar instructed Kenyon to file the application by June 17, 2001 and alerted Kenyon that this due date was “URGENT.” Id. Mr. Treloar further stated that “[i]n the absence of our specific instructions please keep this application in force.” Id. (emphasis added).

The scope of Kenyon’s initial engagement in 2001 was thus limited to the narrow task of “enter[ing] the National Phase in United States” of the international patent application and to keep the application in place absent further instructions from Portus.8 Acting on these instructions, Kenyon then filed an application for the national stage of the international patent application under 35 U.S.C. § 371 on that same day, June 15, 2001, two days before the deadline to file an application with the USPTO in connection with Portus’s international patent.

Portus’s claim of malpractice against Kenyon fails because Kenyon did exactly what it was required to do in its engagement: Kenyon filed an application pursuant to 35 U.S.C. § 371 within two days and Kenyon kept the application in force and prosecuted the application until it was granted in December 2014.

Portus argues that Kenyon committed malpractice because Kenyon failed to advise Portus in June 2001 that Portus would benefit if Kenyon filed an application under 35 U.S.C. § 111 rather than under 35 U.S.C. § 371 in the event that the USPTO extensively delayed consideration of the application by more than three years. If such a delay occurred, Portus would then be eligible for a patent term adjustment under the AIPA. However, this advantage was entirely speculative and dependent on the subsequent extensive delay by the USPTO of more than three years between the filing of the application in June 2001 and the initial non-final action in January 2005. Nevertheless, Portus claims that Kenyon’s failure to advise Portus of the possible advantage of a 35 U.S.C. § 111 filing in June 2001 was malpractice.

The only advantage that Portus points to from filing a 35 U.S.C. § 111 application rather than a 35 U.S.C. § 371 application in June 2001 is the extended patent term if the USPTO delayed in approving the patent application by more than three years. But that advantage was entirely theoretical in June 2001 before any application had been filed. Portus points to no comparable case where an attorney was required to go beyond the limits of an engagement and advise a client about theoretical advantages of another course of action that were based on unknown future contingencies.

Portus’s argument fails because there was nothing about the June 2001 *414 engagement that required Kenyon to advise Portus about the theoretical advantages of another application, advantages that would accrue to Portus only in the event, which was entirely speculative in June 2001, that the USPTO delayed consideration of the patent application by more than three years. While it is true that a lawyer can be held liable for withholding facts that are “relevant to the client’s decision to pursue a given course of action,” Spector v. Mermelstein, 361 F. Supp. 30, 39-40 (S.D.N.Y. 1972), aff’d, 485 F.2d 474 (2d Cir. 1973), it is also true that “an attorney is not held to a standard of ‘infallibility’ and the ‘perfect vision of hindsight’ is an unreliable test for determining the past existence of legal malpractice.” Nomura Asset Capital Corp. v. Cadwalader, Wickersham & Taft LLP, 889 N.Y.S.2d 506 (Table), at *11 (Sup. Ct. 2009) (internal citations omitted).

Kenyon carried out its representation of Portus as requested by Portus and successfully prosecuted the patent after the non-final and final action by the USPTO until the USPTO eventually granted Portus a patent in December 2014. Just as in Davis Polk and Milbank, Tweed, the scope of the agreement between the parties in this case did not impose upon the defendant an obligation to advise the plaintiff about matters outside the scope of that representation. In particular, Kenyon had no free-standing obligation separate and apart from the scope of the engagement to advise Portus about the drawbacks and advantages associated with a continuation bypass application and a national stage application in June 2001 when Portus retained Kenyon. Portus retained Kenyon for the very narrow purpose of entering the national phase in the United States of Portus’s international application and keeping that application in force until instructed otherwise. See Davis Polk, 834 N.Y.S.2d 705, 866 N.E.2d at 1037 (“Thus, the issue whether plaintiff was primarily or secondarily liable for the subject tax liability was outside the scope of its representation.”).

The cases that Portus cites in support of its contention that Kenyon was negligent in failing to advise Portus adequately after being contacted on June 15, 2001 prior to filing a patent application with the USPTO are inapposite.

In French v. Hogan, 210 A.D.2d 658, 619 N.Y.S.2d 406, 407 (1994), the plaintiff had entered into a contract to purchase a residence and employed the defendant attorney to represent her in connection with the transaction. In affirming the denial of summary judgment to the defendant, the court noted that “there remains an unresolved factual issue as to whether, if timely advised of the existence of the restrictive covenant, plaintiff could have avoided at least a significant portion of her alleged damages” incurred when she converted the property from a residence to a bed and breakfast following her purchase. Id.

In French, the plaintiff did not receive everything that she sought under the engagement with her attorney because the building she purchased had a covenant preventing her from putting the building towards her intended use. In this case, unlike in French, it is undisputed that Portus received what it requested of Kenyon in June 2001, namely that Kenyon enter the national phase of Portus’s application by filing an application under 35 U.S.C. § 371 and that Kenyon keep the application in place unless Portus told Kenyon to do otherwise. Kenyon performed as requested, leading to the successful prosecution of the patent application when it was granted in December 2014.

In the other case cited by Portus, *415 Estate of Nevelson v. Carro, Spanbock, Kaster & Cuiffo, 259 A.D.2d 282, 686 N.Y.S.2d 404 (1999), the plaintiff corporation Sculptotek was created upon the advice of the defendant lawyer for the purposes of organizing the financial affairs of a famous sculptor, Louise Nevelson. After Nevelson’s death, the IRS determined that the corporation was a sham entity and that the corporate assets should be part of the sculptor’s estate. The determination was based in part on the lack of compensation to Nevelson for her artwork. The Appellate Division found that the attorney could be liable for malpractice for failing to advise their clients of the adverse consequences under the plan they recommended.

In Nevelson, the defendants failed to advise the plaintiffs on a central aspect of the plan that the defendants were retained to implement, namely the construction of a corporate structure that would survive an IRS audit. In this case, unlike in Nevelson, Kenyon did everything that Portus asked it to do in June 2001.

R. A. Klass
Your Court Street Lawyer

Next post
Previous post

#CourtStreetLawyer #legalmalpractice #retaineragreement

Scales of justice

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]).

R. A. Klass
Your Court Street Lawyer

Next post
Previous post

#CourtStreetLawyer #legalmalpractice

Scales of justice