Breach of Fiduciary Duty has two separate statutes of limitation, six and three years.  Which applies in a legal malpractice case?  Generally the rule is that the choice of six or three years depends on the substantive remedy sought.  If it is for money damages the limit is three years.  If for equitable remedy, then the limit is six years.  Which is disgorgement of attorney fees in a legal malpractice setting?

Access Point Med., LLC v Mandell   2013 NY Slip Op 02208   Decided on April 2, 2013  Appellate Division, First Department    Saxe, J.  says that it is an economic remedy at law, and the limit is three years, regardless of earlier cases which held to the contrary.
"Plaintiffs rely on this Court’s statement that "[d]isgorgement is an equitable remedy" (see J.P. Morgan Sec. Inc. v Vigilant Ins. Co., 91 AD3d 226, 230 [1st Dept 2011], lv granted 19 NY3d 806 (2012). However, the disgorgement remedy referred to in J.P. Morgan Sec. and the cases it discusses is a fundamentally different than the "disgorgement" plaintiff seeks here. Claims for disgorgement most commonly arise in actions brought by the Securities and Exchange Commission in which the agency seeks an order directing a party to disgorge its ill-gotten gains for the recompense of injured investors or some entity other than the prosecuting agency (see J.P. Morgan Sec. Inc. v Vigilant Ins. Co., 91 AD3d 226, 230 [1st Dept 2011], lv granted 19 NY3d 806 [2012] and cases discussed therein). Other types of government agencies or quasi-governmental entities also have sought the disgorgement of wrongfully obtained funds to third parties (see e.g. Morgan Stanley Capital Group Inc. v Pub. Util. Dist. No. 1 of Snohomish County, 554 US 527, 538 [2008]; Montana v Crow Tribe of Indians, 523 US 696 [1998]). Similarly, the equitable disgorgement relief sought by the plaintiff in IDT Corp. v Morgan Stanley (12 NY3d at 139) consisted of profits Morgan Stanley allegedly earned as investment banker for a third party through the third party’s allegedly improper financial dealings with IDT; consequently, the disgorgement of those profits could not necessarily be accomplished simply by awarding IDT a judgment against Morgan Stanley in the amount of funds that it had paid out.

In contrast, plaintiffs’ demand for the return of attorneys’ fees they paid to defendants is, essentially, a claim for monetary damages. The calculated use of the term "disgorgement" instead of other equally applicable terms such as repayment, recoupment, refund, or reimbursement, should not be permitted to distort the nature of the claim so as to expand the applicable limitations period from three years to six. We cannot allow a purely semantic distinction to control the application of the statute of limitations.

Nor do we accept plaintiffs’ alternative argument that the breach of fiduciary duty claim is essentially a fraud claim, to which the six-year statute would be applicable. The amended complaint is based on an alleged conflict of interest and allegedly impaired professional judgment, and it does not allege the elements of fraud (see Buller v Giorno, 57 AD3d 216 [1st Dept 2008]). The failure to disclose a conflict of interest does not transform a breach of fiduciary duty into a fraud.

Another new contention plaintiffs raise on appeal is that the statute of limitations must be treated as tolled, not only pursuant to the continuous representation doctrine, but also under the fiduciary tolling rule, also known as the open repudiation rule.

As the motion court found, no facts are alleged that would justify the application of the continuous representation doctrine to toll the statute of limitations.

Nor, we find, is the fiduciary tolling rule, or open repudiation rule, applicable to plaintiffs’ breach of fiduciary duty claims. Under that rule, the statute of limitations on claims against a fiduciary for breach of its duty is tolled until such time as the fiduciary openly repudiates the role (see Matter of Barabash, 31 NY2d 76, 80 [1972]). The cases in which this [*4]rule arose, and the cases applying it, reflect that the rule arose to protect beneficiaries in the event of breaches of duty by fiduciaries such as estate administrators (see Barabash, 31 NY2d at 80), trustees (see Matter of Ashheim, 111 App Div 176 [1906], affd 185 NY 609 [1st Dept 1906]), corporate officers (see Westchester Religious Inst. v Kamerman, 262 AD2d 131 [1st Dept 1999]), and receivers (see Golden Pac. Bancorp v Federal Deposit Ins. Corp., 273 F3d 509 [2d Cir 2001]), that is, in circumstances in which the beneficiaries would otherwise have no reason to know that the fiduciary was no longer acting in that capacity. In those circumstances, it is appropriate to toll the limitations period until the beneficiary has reason to know that the fiduciary relationship has unequivocally ended.

However, where one party’s fiduciary obligations to another arose out of their attorney-client relationship, and would not have existed without that relationship, there is no need for an open repudiation of the fiduciary’s role, because the attorney’s fiduciary duty to the client necessarily ends when the representation ends. Plaintiffs’ causes of action alleging breach of fiduciary duty specifically assert that defendants’ fiduciary duty to them arose out of their attorney-client relationship with them, thus, their fiduciary relationship ended when their attorney-client relationship ended, without any need for a declaration to that effect.

We recognize that in 212 Inv. Corp. v Kaplan (44 AD3d 332 [1st Dept 2007]), this Court accepted the premise, framed by the parties, that the open repudiation doctrine applies to equitable claims brought by clients against their attorneys, although not to claims for money damages. That decision states, without elaboration, that "the open repudiation’ doctrine tolls the statute of limitations on the [client’s] unjust enrichment claim [against the lawyer], which seeks equitable relief" (id. at 334, citing Matter of Kaszirer v Kaszirer, 286 AD2d 598, 599 [1st Dept 2001], and Westchester Religious Inst. v Kamerman, 262 AD2d 131 [1st Dept 1999]). However, we observe that neither of the cited cases concerned claims against attorneys for breach of their fiduciary duty to their clients arising out of the attorney-client relationship. Matter of Kaszirer concerned a claim by a trust beneficiary against a trustee, and Westchester Religious Inst. involved a claim by a nonprofit corporation against its officers for breach of their fiduciary duty; both of those claims form proper bases for application of the open repudiation rule. And unlike this case, in 212 Inv. Corp., neither party questioned the applicability of the fiduciary tolling rule to an attorney whose fiduciary duty arose out of the attorney-client relationship, so this Court was not required to decide that issue. Presented with the issue now, we reject the application of the fiduciary tolling rule to claims by a client against an attorney for breach of the fiduciary duty arising out of the attorney-client relationship, at least in the absence of a true entitlement to equitable relief. "