Genesis Merchant Partners, LP v Gilbride, Tusa, Last & Spellane LLC 2015 NY Slip Op 31080(U) June 16, 2015 Supreme Court, New York County Docket Number: 653145/2014
Judge: Nancy M. Bannon is a textbook example of how the statute of limitations is applied to a legal malpractice transactional case. Defendant represented Plaintiff in series of loan transactions, where there were problems in collection. Were these a series of unrelated transactions, albeit of the same nature or were they one course of legal representation, which would allow for continuous representation tolling?
“In the instant motion, Gilbride seeks dismissal of so much of the legal malpractice claim as pertains to Loan 2 and Loan 3, on the grounds that the legal malpractice claim, as it relates to these Loans, is time-barred, pursuant to CPLR 3211 (a)(5). Gilbride argues that documentary evidence rebuts Genesis’ claim that Gilbride’s failure to record the mortgage in a timely manner proximately caused its losses. Gilbride also seeks dismissal of the remaining causes of action as duplicitive of the cause of action for legal malpractice. In opposition, Genesis argues that its claims are not time-barred and that the instant action was timely commenced in October 2014 because Gilbride continued its representation regarding Loan 2 and Loan 3 and represented it regarding Loan 4, which it contends is related, through December 2011. The Court notes that the day after Genesis’ opposition to the instant motion was submitted, Genesis filed an amended complaint, which, in addition to the existing four causes of action, asserted a fifth cause of action for breach of fiduciary duty against Gilbride. Gilbride’s reply addresses both the original and amended complaint and the parties subsequently stipulated that the instant motion would be applied to both the original and amended complaint. ”
“An action for legal malpractice must be commenced within three years of its accrual. See CPLR 214(6); McCoy v Feinman, 99 NY2d 295, 301 (2002). The 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, supra at 301, quoting Ackerman v Price Waterhouse, 84 NY2d 535, 541 (1994). That is, a claim accrues when the malpractice is committed, not when it is discovered. See McCoy v Feinman, supra; West Vil. Assoc. Ltd. Partnership v Balber Pickard Battistoni Maldonado & Ver Dan Tuin. PC, 49 AD3d 270 (1st Dept 2008). ”
“In the present matter, Gilbride fails to establish that the legal malpractice claim accrued more than three years prior to the commencement of this action and is, therefore, time-barred. Genesis alleges in the complaint, filed in 2014, that the parties always anticipated Gilbride’s continuing oversight of the Loans through their maturity dates in June 2012. Indeed, Gilbride performed legal work on behalf of Genesis relating to the Loans through, at least, 2011. Specifically, Gilbride completed amendments to the Loans in 2010 and 2011, “crosscollateralized” Loan 4 with the Loans, and consolidated the Loans with Loan 4 in August 2011. Gilbride was responsible for reviewing and revising the Loan documents to ensure the perfection of the collateral for the Loans and using the presumably perfected Loan collateral to “cross-collateralize” with Loan 4. In addition, Gilbride represented Genesis in a suit in Connecticut against Progressive with regard to the Loans. Genesis and Progressive entered into a conditional settlement, drafted by Gilbride, in which Progressive was to pay the aggregate outstanding value of the Loans by June 2012, plus interim monthly payments commencing in January 2012. Such work was done in connection with the Loans and was not merely the continuation of a general professional relationship between the parties. See Transport Workers Union of Am. Local 100 AFL-CIO v Schwartz, supra. Further, some of the work done during this period, including recording a $1 million mortgage on property included as collateral on Loan 3 eighteen months after the closing, was performed to rectify the alleged act of malpractice, i.e. failing to secure the Loans. See Red Zone LLC v Cadwalader. Wickersham & Taft LLP, 118 AD3d 581 (1st Dept. 2014). In support of its motion, Gilbride fails to demonstrate that its representation terminated at some time earlier than the maturity dates of the Loans. Gilbride avers that the Loans were nothing more than a series of distinct, unrelated transactions. However, Gilbride does not dispute that it completed amendments to the Loans, “cross-collateralized” them with Loan 4, consolidated them, and represented Genesis it a suit regarding the Loans, all after the closing dates of the loans in 2008 and 2009. It is notable that Gilbride does not submit or cite to the retainer agreement in support of its contention that its representation ceased with the closings. See Shumsky v Eisenstein, 96 NY2d 164 (2001 ). The complaint, therefore, is sufficient to establish that there was mutual understanding that Gilbride’s representation would continue after the closings of the Loans and the continuous representation doctrine applies. See Lytell v Lorusso, 74 AD3d 905 (2nd Dept. 2010); West Vil. Assoc. Ltd. Partnership v Balber Pickard Battistoni Maldonado & Ver Dan Tuin, PC, supra; cf. Scott v Fields, 85 AD3d 756 (2nd Dept. 2011 ). “