Bankruptcy, Statutes of Limitation and Legal Malpractice

Plaintiff is injured on a cruise ship, and comes back to NY looking for an attorney. Right now we should be thinking, venue, long-arm jurisdiction, state or federal court.  However, in Palmer v Mulvehill  2012 NY Slip Op 33046(U)  December 19, 2012  Sup Ct, Suffolk County  Docket Number: 11-17748  Judge: Daniel Martin  things take off in a totally different direction.  Here, the problem is a contractual one year statute of limitations, delay in bringing the case, and eventual bankruptcy. 

"A CPLR 3211(a) (1) motion to dismiss a complaint on the ground that a defense is founded on
documentary evidence may be appropriately granted where the documentary evidence utterly refutes the plaintiff's allegations, conclusively establishing a defense as a matter of law (see Peter Williams Enterprises, Inc.. v New York State Urban Dev. Corp., 90 AD3d 1007, 935 NYS2d 624 [2d Dept 2011); Turkat v Lalezarian Developers, Inc.., 52 AD3d 595, 506, 860 NYS2d 153 [2d Dept 2008). In order to sustain a claim for legal malpractice, the plaintiff must establish that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to her (McCoy v Feinman, 99 NY2d 295, 301, 302, 755 NYS2d 693 [2002). A cause of action sounding in legal malpractice accrues on the date the alleged malpractice was committed, not on the date it was discovered (St. Stephens Baptist Church v Salzman, 37 AD3d 589, 830 NYS2d 248 [2d Dept 2007). Here, the time to file a complaint as a result of damages plaintiff allegedly sustained in the cruise ship accident expired on December 21, 2007, thus the plaintiffs claim for legal malpractice accrued on December 22, 2007 Since the retainer agreement with defendant Mulvehill was not signed until December 5, 2008, after the statute of limitations had expired with regard to plaintiffs underlying claim against the cruise ship, he cannot be liable for malpractice in failing to file the claim in a timely manner. Consequently, defendant Mulvehill has established a defense to plaintiffs claim of legal malpractice as a matter of law in allegedly failing to bring a timely action against the cruise liner..

On a motion to dismiss a complaint pursuant to CPLR 3211 (a) ( 3 ) , the defendant must show that the plaintiff does not have legal capacity to sue. Where a party fails to schedule an asset in a bankruptcy proceeding, she is thereafter deprived of standing to raise it in a subsequent legal proceeding as the asset becomes the property of the bankrupt plaintiffs estate, and, thus if her claim accrued while her bankruptcy proceeding was still pending, she would not be permitted to institute a proceeding involving the said asset (Barranco v Cabrini Med. Ctr., 50 AD3d 281, 855 NYS2d 431 [lst Dept 2008). A lawsuit that is initiated prior to the bankruptcy petition or that could have been initiated by the debtor prior to the bankruptcy petition, “becomes[s] part of the bankruptcy estate subject to the sole direction and control of the trustee, unless exempted or abandoned or otherwise revested in the debtor” (Dennis v Bank United, , 2011 U.S. Dist Lexis 102292 [Dist of MD 2011 ). Thus, the question to be determined is whether the plaintiffs claims accrued before she filed her bankruptcy petition.

Plaintiff alleges in her opposition, and annexes portions of her bankruptcy petition (the original petition was filed on December 22, 2008) which indicate, that the underlying action against the cruise line was added to the bankruptcy petition, in or about October 2010. (Therefore, the issue with regard to standing as it relates the cruise line action must be denied as moot. It should be noted that the bankruptcy trustee was authorized to retain defendants Richard E. Miller, Esq. and John H. Mulvehill, Esq. as co-counsel to prosecute and conclude the cruise line lawsuit.) Insofar as defendants maintain that the within action for legal malpractice must have been alleged in the bankruptcy petition, plaintiff was not aware that she possessed that cause of action until on or after October 2, 2010, when her cruise ship action was dismissed by the Federal District Court as the result of a statute of limitations violation.


The bankruptcy case was closed and a final decree issued on October 12,2010. Thus, the legal
malpractice action could not have been included in the bankruptcy petition as originally filed, or thereafter amended to include the cruise line action. Accordingly, as plaintiffs legal malpractice lawsuit was not initiated, nor could it have been initiated, prior to her bankruptcy filing in December 2008, i:he motions by the co-defendants Panzini and Miller to dismiss plaintiffs complaint on the grounds that she lacked<s standing to sue are denied."

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