Attorney gives advice to sign a certain tax document, and the result is additional or unnecessary tax liability.  When does the statute of limitations commence and under what circumstances might it be tolled?

Tantleff v Kestenbaum & Mark  2015 NY Slip Op 06720  Decided on September 2, 2015  Appellate Division, Second Department gives an answer to this question.

“A legal malpractice claim accrues when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court. In most cases, this accrual time is measured from the day an actionable injury occurs, even if the aggrieved party is then ignorant of the wrong or injury. What is important is when the malpractice was committed, not when the client discovered it” (McCoy v Feinman, 99 NY2d 295, 301 [internal quotation marks and citations omitted]).

The three-year limitations period applicable to causes of action to recover damages for legal malpractice (see CPLR 214[6]) may be tolled by the continuous representation doctrine where ” there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim'” (Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d 733, 735, quoting McCoy v Feinman, 99 NY2d at 306). “For the doctrine to apply, there must be clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the attorney. One of the predicates for the application of the doctrine is continuing trust and confidence in the relationship between the parties” (Beroza v Sallah Law Firm, P.C., 126 AD3d 742, 743 [internal quotation marks and citations omitted]; see Zorn v Gilbert, 8 NY3d 933, 934; Singh v Edelstein, 103 AD3d 873, 874). “It requires more than a continuing, general, professional relationship; it tolls the [s]tatute of [l]imitations only where the continuing representation pertains specifically to the matter in which the attorney committed the alleged malpractice'” (Deep v Boies, 121 AD3d 1316, 1318-1319, quoting Shumsky v Eisenstein, 96 NY2d 164, 168). “The essence of a continuous representation toll is the client’s confidence in the attorney’s ability and good faith, such that the client cannot be expected to question and assess the techniques employed or the manner in which the services are rendered” (Farage v Ehrenberg, 124 AD3d 159, 167-168, citing Shumsky v Eisenstein, 96 NY2d at 167; Glamm v Allen, 57 NY2d 87, 93-94; Greene v Greene, 56 NY2d 86, 94). “What constitutes a loss of client confidence is fact specific, varying from case to case, but may be demonstrated by relevant documentary evidence involving the parties, or by the client’s actions” (Farage v Ehrenberg, 124 AD3d at 167-168).

Here, the cause of action to recover damages for legal malpractice accrued on October 3, 2001, when the plaintiffs, upon the defendants’ recommendation, executed IRS Form 4549-CG consenting to an assessment of over $1.5 million in tax liability as well as civil fraud and negligence penalties (hereinafter the consent agreement) (see Landow v Snow Becker Krauss, P.C., 111 AD3d 795; Weiss v Deloitte & Touche, LLP, 63 AD3d 1045). Based on that accrual date, the applicable three-year statute of limitations would have expired on October 3, 2004, approximately two years prior to the commencement of this action on September 15, 2006. However, it is undisputed that, pursuant to the doctrine of continuous representation, the three-year statute of limitations pertaining to the defendants’ alleged legal malpractice in October 2001 was tolled during the time period when the defendants continued to represent the plaintiffs before the IRS on the specific subject matter underlying the malpractice claim. Consequently, at issue is when that representation and tolling ceased and the three-year statute of limitations period began (see Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 735).

The defendants established their prima facie entitlement to judgment as a matter of law dismissing this action as time-barred upon proof demonstrating that the representation and the tolling stopped, and the three-year statute of limitations period began, on August 25, 2003, following which no further legal representation was undertaken by the defendants with respect to the consent agreement (see Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 736; Farage v Ehrenberg, 124 AD3d at 166; Landow v Snow Becker Krauss, P.C., 111 AD3d at 796-797). Upon that showing, the burden then shifted to the plaintiffs to raise a triable issue of fact as to whether the tolling ceased on or after September 15, 2003, such that this action alleging legal malpractice was timely commenced (see Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 736). However, even when viewing the evidence submitted in opposition in a light most favorable to the plaintiffs, it was insufficient to raise a triable issue of fact (see Beroza v Sallah Law Firm, P.C., 126 AD3d at 743; Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d at 736; Farage v Ehrenberg, 124 AD3d at 167; Landow v Snow Becker Krauss, P.C., 111 AD3d at 797; cf. Ortiz v Allyn, Hausner & Montanile, LLP, 18 Misc 3d 34).”