This is an Appellate Division 1st Department case, in accountant malpractice, not legal, but the lesson is similar.  No continuous representation, as each tax year was different, staute of limitations lost on the malpractice, but fraud causes of action still permitted.

Mitschele, plaintiff-appellant v. Schultz, defendants-respondents


"However, the fraud cause of action should not have been dismissed. Plaintiff alleges that in addition to committing malpractice by arranging her compensation and her declaration of earnings on her tax returns in a certain fashion, defendants committed fraud by falsely telling her this arrangement was "the absolute best way to do it" and "the way it’s got to be." It is asserted that this misrepresentation was made to her not in an effort to serve her interests, but for the sole benefit of Triad Corp., so as to allow the corporation to avoid certain payroll taxes and other taxes and expenses. Plaintiff asserts she relied on Schultz’s false assurances that her compensation had to be paid in this manner, and that she did not seek the advice of another accountant until March of 2001, when Schultz told her he could no longer handle her accounting or tax matters in view of her termination from Triad, and only upon consulting another accountant did she become aware of the falsity of their statements and of their malfeasance.

We reject the contention that plaintiff’s fraud claim must be dismissed as untimely because it is not "separate and distinct from the customary cause of action for malpractice" (see LaBrake v. Enzien, 167 AD2d 709, 711 [1990]). The La Brake case discussed the type of scenario in which an attorney commits legal malpractice by failing to properly commence a lawsuit, and then lies to the client with assurances that the matter is underway, and claims for both malpractice and fraud are interposed. The court there reiterated that "a defendant’s concealment or failure to disclose his own malpractice without more does not give rise to a cause of action for fraud or deceit separate and distinct from the customary malpractice action" (167 AD2d at 711). It looked to the case of Simcuski v. Saeli (supra), a case of physician malpractice followed by the physician’s concealment of the malpractice, with regard to the elements that must be established to prove a cause of action for fraud separate from the malpractice claim, concluding that without damages separate from those arising from the malpractice, a fraud claim is not made out (167 AD2d at 711-712).

Here, however, defendants’ alleged fraud is not simply the failure to disclose the malpractice based upon accounting errors. Rather, defendants are alleged to have perpetrated a fraud on plaintiff from the time they were retained to provide accounting services, in failing to disclose their concern with protecting the interests of another entity, namely, plaintiff’s employer.

The elements of a fraudulent concealment claim – concealment of a material fact which defendant was duty-bound to disclose, scienter, justifiable reliance, and injury (see Kaufman v. Cohen, 307 AD2d 113, 119 [2003]; and see Ozelkan v. Tyree Bros. Envtl. Servs., Inc., 29 AD3d 877 [2006]) – are all sufficiently pleaded by the claims which may be properly gleaned from the complaint: that defendants failed to inform plaintiff of their conflicted interests, despite their professional obligation to make such disclosure, inducing plaintiff to retain them and rely on their advice in the belief that defendants had undertaken to provide professional advice in her best interests. The incorrect advice and improper income declarations, which form the substance of the malpractice claim, constitute merely a portion of the factual predicate for the fraud claim. The fraud claim depends primarily on defendants’ failure to disclose their divided loyalties, and plaintiff’s justifiable reliance on their ability conscientiously to give her advice serving her own best interest, while the improprieties in the tax returns merely help to establish that plaintiff was injured and assess the extent of her injury.

As this Court said in Serio v. PricewaterhouseCoopers LLP (9 AD3d 330, 331 [2004]), when reinstating a fraud claim despite the prior dismissal, as time-barred, of accounting malpractice and related claims based upon the same professional relationship, fraud may still be "viable irrespective of whether some of the alleged acts and misrepresentations were mentioned in connection with the untimely causes of action sounding in professional malpractice."

Since plaintiff’s fraud cause of action is not merely a malpractice claim with a claim for concealment of malpractice superimposed on it, the parallel nature of the damages is not determinative of whether the fraud claim is governed by the shorter statute of limitations.

We are cognizant of the Court’s concern, expressed in Simcuski v. Saeli (supra), that we guard against permitting a fraud claim which is actually "subjecting [a professional] to greater exposure to liability [than the Legislature intended] in consequence of errors of professional judgment" (44 NY2d at 453). Here, however, since the fraud claim is not based simply upon errors in professional judgment, but is also "predicated on proof of the commission of an intentional tort" (id.), reinstating plaintiff’s claim of fraud is not contrary to legislative intention. "

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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.