In this case, for the statute of limitations it makes a great deal of difference whether the work being performed by professionals (accountants) was by the month or by the tax year.  Calculation of the statute of limitations is strongly affected by this determination.

Lobel Chem. Corp. v Petitto   2016 NY Slip Op 30273(U)  February 16, 2016  Supreme Court, New York County  Docket Number: 653226/14  Judge: Kelly A. O’Neill Levy delves into how to calculate the statute.

“The first amended complaint (complaint) alleges that, in 1991, pursuant to an oral agreement, plaintiff, Lobel Chemical Corporation (Lobel or the Company) retained RSSMC to: 1) supervise Lobel’ s bookkeeper; 2) oversee the bookkeeping and accounting issues concerning its business and finances; and 3) prepare Lobel’s tax returns and represent the Company at tax audits. Petitto, a certified public accountant employed by RSSMC, provided accounting services for Lobel from the inception of the parties’ relationship (Anesh aff, exhibit A,~ 7). In 2004, Lobel’s longtime bookkeeper retired and Petitto recommended that the Company hire nonparty Meredith Conyers (Conyers), Lobel’s assistant bookkeeper, to fill the vacant position. Petitto also recommended that the Company install specialized accounting software (Peachtree) to assist Conyers in the preparation of reports for general accounting and tax preparation purposes (id., ~~ 13-15). According to plaintiff, it was Petitto’s responsibility to train Conyers in the use of Peachtree and to review the income and expense statements, bank statements, and bank reconciliations that Conyers provided (id.,~ 16). However, the complaint alleges that Petitto allowed Conyers to create a non-Peachtree methodology for listing uncleared checks and performing cash reconciliations, despite the fact that Peachtree had a built-in cash reconciliation report (id., ~ 17). Lobel contends that Petitto failed to address obvious discrepancies between Conyers’s monthly reconciliations and monthly bank statements and he failed to detect that Conyers’s monthly bank reconciliations did not balance (id., ~~ 18, 19). Because Conyers realized that Petitto was not reviewing her monthly reports, in November and December 2005, she forged the Company’s signature on three checks made payable to herself. After the checks cleared, they were either omitted or deleted from Peachtree (id.,~ 21 ). These omissions were not detected and, thereafter, between 2006 and 2013 Conyers forged checks, payable to herself, for more than $500,000. ”

“In 2011, Steven Lobel, the Company president, began questioning discrepancies between his own estimates of the Company’s gross profits and documents that Petitto was reviewing to determine operating expenses. Petitto explained that the discrepancies could be easily explained by simple adjustments between payables and receivables for a few items (Steven Lobel aff, ,-i 14). However, in 2012, when the Company reported a large, unexpected loss, Steven Lobel asked his sister, Rhona Lobel, the Company’s vice president, to look into the finances. Rhona Lobel began to monitor the Company’s cash flow more closely and in January 2014, she discovered Conyers’s embezzlement (id., ,-i 16, 17). In May 2014, Conyers was indicted on two counts of grand larceny and 43 counts of forgery. She pied guilty in April 2015. Lobel commenced this action in 2014 alleging accounting malpractice (first cause of action), fraud (second cause of action), unjust enrichment (third cause of action), breach of contract (fourth cause of action) and gross negligence (fifth cause of action).’ Lobel seeks to recoup the embezzled funds and the accounting fees paid to RSSMC. In addition, the Company seeks exemplary damages. ”

“The relevant statute of limitations is CPLR 214 (6), which provides that an action for non-medical professional malpractice must be commenced within three years of the date of accrual. “A claim accrues when the malpractice is committed, not when the client discovers it” (Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 7-8 [2007]). However, the continuous representation doctrine tolls the statute of limitations in circumstances where the continuous representation is “in connection with the specific matter directly in dispute, and not merely the continuation of a general professional relationship” (Ackerman v Price Waterhouse, 252 AD2d 179, 205 [1st Dept 1998]). “The continuous representation … doctrine[] recognize[s] that a person seeking professional assistance has a right to repose confidence in the professional’s ability and good faith, and realistically cannot be expected to question and assess the techniques employed or the manner in which the services are rendered” (Williamson, 9 NY3d at 9 [internal citation and quotation marks omitted]). “[P]laintiffs [have] the burden of demonstrating that the continuous representation doctrine applie[ s ], or at least there [is] an issue of fact with respect thereto” (CLP Leasing Co., LP v Nessen, 12 AD3d 226, 227 [I5t Dept 2004]). Here, defendants contend that plaintiff used RSSMC’s services for annual tax preparation and auditing services, which constitute separate and discrete services for each year, and thus the application of the continuous representation doctrine is precluded (see Booth v Kriegel, 36 AD3d 312, 315 [1st Dept 2006] [where a professional advises a client in a series of discrete and severable transactions, the performance of services in each successive transaction does not toll the running of the statute of limitations]). According to defendants, all of Lobel’s claims that accrued prior to October 2011 are time-barred . However, in this case, Lobel has alleged evident.”

“Since the facts alleged in the complaint are accepted as true on a motion to dismiss and are viewed in a light most favorable to plaintiff, Lobel’s pleading is sufficient to establish that the parties mutually contemplated that RSSMC’s work would continue on a monthly basis and that Petitto’s work was not limited to annual tax preparation and audit review. The complaint alleges that from 2004 through 2013, Petitto advised Lobel regarding hiring a bookkeeper and installing the Peachtree software, and that the parties contemplated that Petitto would supervise the bookkeeper, perform monthly reconciliations and internal audits, and advise Steven Lobel on ongoing financial concerns and decisions facing the business enterprise (Anesh aff, exhibit A, ~~ 7, 16, 26, 27). Here, there was no written agreement that outlined the services to be provided. Rather, the parties appear to have contemplated an ongoing relationship that was based on trust and good faith. Accordingly, based on the pleadings and affidavits submitted on the motion to dismiss, the continuous representation doctrine applies and plaintiffs accounting malpractice claims for the years 2004 through October 11, 2011 are not time-barred.”

 

 

 

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Andrew Lavoott Bluestone

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened…

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened his private law office and took his first legal malpractice case.

Since 1989, Bluestone has become a leader in the New York Plaintiff’s Legal Malpractice bar, handling a wide array of plaintiff’s legal malpractice cases arising from catastrophic personal injury, contracts, patents, commercial litigation, securities, matrimonial and custody issues, medical malpractice, insurance, product liability, real estate, landlord-tenant, foreclosures and has defended attorneys in a limited number of legal malpractice cases.

Bluestone also took an academic role in field, publishing the New York Attorney Malpractice Report from 2002-2004.  He started the “New York Attorney Malpractice Blog” in 2004, where he has published more than 4500 entries.

Mr. Bluestone has written 38 scholarly peer-reviewed articles concerning legal malpractice, many in the Outside Counsel column of the New York Law Journal. He has appeared as an Expert witness in multiple legal malpractice litigations.

Mr. Bluestone is an adjunct professor of law at St. John’s University College of Law, teaching Legal Malpractice.  Mr. Bluestone has argued legal malpractice cases in the Second Circuit, in the New York State Court of Appeals, each of the four New York Appellate Divisions, in all four of  the U.S. District Courts of New York and in Supreme Courts all over the state.  He has also been admitted pro haec vice in the states of Connecticut, New Jersey and Florida and was formally admitted to the US District Court of Connecticut and to its Bankruptcy Court all for legal malpractice matters. He has been retained by U.S. Trustees in legal malpractice cases from Bankruptcy Courts, and has represented municipalities, insurance companies, hedge funds, communications companies and international manufacturing firms. Mr. Bluestone regularly lectures in CLEs on legal malpractice.

Based upon his professional experience Bluestone was named a Diplomate and was Board Certified by the American Board of Professional Liability Attorneys in 2008 in Legal Malpractice. He remains Board Certified.  He was admitted to The Best Lawyers in America from 2012-2019.  He has been featured in Who’s Who in Law since 1993.

In the last years, Mr. Bluestone has been featured for two particularly noteworthy legal malpractice cases.  The first was a settlement of an $11.9 million dollar default legal malpractice case of Yeo v. Kasowitz, Benson, Torres & Friedman which was reported in the NYLJ on August 15, 2016. Most recently, Mr. Bluestone obtained a rare plaintiff’s verdict in a legal malpractice case on behalf of the City of White Plains v. Joseph Maria, reported in the NYLJ on February 14, 2017. It was the sole legal malpractice jury verdict in the State of New York for 2017.

Bluestone has been at the forefront of the development of legal malpractice principles and has contributed case law decisions, writing and lecturing which have been recognized by his peers.  He is regularly mentioned in academic writing, and his past cases are often cited in current legal malpractice decisions. He is recognized for his ample writings on Judiciary Law § 487, a 850 year old statute deriving from England which relates to attorney deceit.