Billiard Balls Mgt., LLC v Mintzer Sarowitz Zeris Ledva & Meyers, LLP  2016 NY Slip Op 26356  Decided on November 2, 2016  Supreme Court, New York County  Edmead, J.  is an application of a 200 year old case to a question of timeliness.  When does the statute of limitations commence for a legal malpractice case and are there suspensions, stays or tolling of the statute?

Put simply, a one-car motor vehicle accident is reported to the insurance carrier and an attorney is directed to seek an extension to “answer or move” (but not to appear).  Then the insurance carrier declined coverage and the attorney dropped out of the case without any further paper filings.

The case went unanswered until Plaintiff hired new attorneys.  The answer was rejected and supreme court determined it to be timely.  The Appellate Division reversed.  When does the statute of limitations begin to run?  It is suspended, stayed or tolled?

“Billiard alleges that the Firm committed legal malpractice by failing to file a timely Answer by January 11, 2013, failing to move for relief to prevent Billiard from defaulting in the underlying action, and in failing to move to withdraw as counsel. It is uncontested that pursuant to CPLR 321(b), an attorney of record may be changed by filing with the clerk a consent to the change signed by the retiring attorney and signed and acknowledged by the party. Pursuant to CPLR 321(c), “An attorney of record may withdraw or be changed by order of the court in which the action is pending, upon motion on such notice to the client of the withdrawing attorney, to the attorneys of all other parties in the action or, if a party appears without an attorney, to the party, and to any other person, as the court may direct.” (Emphasis added). And, the record clearly contains two stipulations signed by counsel at the Firm stating the Firm’s status as “Attorney” for “Defendants” to wit: Billiard. It is also noted that Billiard alleges that, when the Firm was notified by Capitol Insurance in December 2015 to refrain from further activity, the Firm failed to move to withdraw as counsel and seek a stay of the underlying matter pending said application. According to the underlying Appellate Division order, Gershman moved for a default judgment against Billiard nine months after the time for Billiard to submit an answer expired (on January 11, 2012). Although the Appellate Division found Billiard’s delay in answering at certain points of the underlying litigation unreasonable, the Decision does not address the alleged duty of, or actions by, the Firm during the period between December 28, 2012 (the issuance of Capitol Insurance’s disclaimer) and January 11, 2013 (the expiration of Billiard’s time to answer). Billiard’s time to answer had already expired by the time of Mr. Gash’s January 25, 2013 letter advising Billiard that the Firm “would not be representing” Billiard (Billiard member Aristotle Hatzigeorgiou affidavit, ¶9).

To the degree the Complaint alleges that the Firm was engaged to defend Billiard in the underlying action, and that the Stipulation bears the Firm’s (and its attorneys’) names as“Attorneys for Defendants” “Billiard Balls Management LLC d/b/a Slate,” and assuming such facts as true as this Court must, the Court finds that Billiard states a claim for legal malpractice (emphasis added).

The Firm’s reliance on Paine Lumber Co. v Galbraith, (38 AD 68 [1899]), a Second Department case decided in the 1800s, for the position that it never appeared on behalf of Billiard is misplaced. Paine addressed only the issue of whether an attorney is deemed to have “appeared” in an action on behalf of his client, and not whether an attorney-client relationship [*3]existed between counsel and a purported client. In Paine, one attorney initially appeared in the action on behalf of defendant, and had obtained from the plaintiff’s attorney four extensions of time for defendant to answer. Thereafter, a different attorney signed an answer on behalf of defendant, which answer was rejected by plaintiff on the ground that the defendant had previously appeared in the action by the first attorney, who had not been properly substituted as counsel for defendant. Plaintiff argued that by obtaining the extensions of time to answer, the first attorney appeared in the action and that the answer could not be signed by anyone else in the absence of a proper substitution. Defendant argued that everything done by the first attorney did not constitute an appearance, and that defendant was free to put in an answer and thus appear in the action by any other attorney he chose. Under the theory that “attorneys in behalf of a defendant in obtaining an extension of time to answer . . . does not constitute a general appearance by such attorney” the Court held that the first attorney, “in subscribing himself as attorney for defendants [,] may have sufficed to operate as a waiver by defendants of irregularities or even as an affirmative submission to the jurisdiction of the court, . . . it was not an appearance which prevented the service of an answer signed by another attorney without substitution” (citations omitted) (id. at 70). (Emphasis added). Therefore, defendant “had not appeared in the action until he served the answer signed by” the second attorney. Such case, involving an appearance in an action by counsel so as to effect the manner in which a purported client communicates with other parties, simply does not establish that there was no attorney- client relationship between the parties.

Therefore, the Firm failed to demonstrate the absence of an attorney-client relationship at the time of Billiard’s default on January 12, 2013.”

“While it is well established that a court may not extend a Statute of Limitations or invent tolling principles, some tolling provisions are based upon common-law, equitable doctrines (Brown v State, 250 AD2d 314, 681 NYS2d 170 [3d Dept 1998] citing Roldan v Allstate Ins. Co., 149 AD2d at 33); cf., Shared Communications Services of ESR, Inc. v Goldman, Sachs & Co., 38 AD3d 325, 832 NYS2d 32 [1st Dept 2007] (declining to apply the doctrine of equitable tolling as there was no showing that plaintiff was “actively misled” by defendant, or that it “in some extraordinary way had been prevented from complying with the limitations period”)). Whenever some paramount authority prevents a person from exercising his legal remedy, the [*5]time during which he is thus prevented is not to be counted against him in determining whether the statute of limitations has barred his right, even though the statute makes no specific exception in his favor in such cases” (51 Am. Jur. 2d, Limitation of Actions, § 140, at 711; see also, 54 C.J.S., Limitations of Actions, § 86, at 121—123).

For example, and contrary to the Firm’s contention, the Statute of Limitations may be tolled where the limitations would run against a person unable to bring an action based on a prior ruling (see Brown, 250 AD2d 314, 681 NYS2d 170 citing Roldan, 149 AD2d 20, 32, 544 NYS2d 359) (“the Statute of Limitations is tolled where a cause of action has accrued, but was ‘temporarily extinguished as a result of an erroneous court order, which was later reversed'”); Coyle v Lefkowitz, 89 AD3d 1054, 934 NYS2d 216 [2011] (finding that a constructive fraud claim based on a November 24, 2003 entry of an unsatisfied judgment was not time-barred under the 6-year statute of limitations; the November 24, 2003 judgment was vacated by an order dated October 2, 2006, which was later reversed on September 9, 2008; thus, the statute of limitations was tolled for a period of approximately 23 months); cf. Varo, Inc. v Alvis PLC, 261 AD2d 262, 691 NYS2d 51 [1st Dept 1999] (declining to extend the toll applied to cases where a plaintiff was prevented from bringing suit by court order, where nothing in the Federal False Claims Act (31 USC § 3729 et seq) prohibited plaintiffs from timely commencing this action).

Even assuming the earliest date of the alleged malpractice was December 28, 2012, when Capitol Insurance declined coverage and the Firm ceased all action and did not advise plaintiff of same, or when the attorney-client relationship ceased as of December 28, 2012 (which this court does not find), Billiard was subsequently foreclosed from exercising any legal remedy by virtue of the Trial Court order dated May 7, 2015. Such order excused Billiard’s default, thereby eliminating any actionable injury suffered by Billiard, the statute of limitations was suspended until such injury was revived when, on September 23, 2015, the Appellate Division reversed the Trial Court order finding Billiard in default. In other words, Billiard no longer had a claim for malpractice upon the date of the Trial Court order. The Trial Court compelled plaintiff to accept Billiard’s answer, thereby, nullifying Billiard’s default, and Billiard was restored to its pre-default position in the underlying action. As such time, and notwithstanding that the malpractice claim had already accrued (at the earliest) on January 12, 2013 (when Billiard had defaulted in the action), Billiard no longer had a complete cause of action. As the statute of limitations was tolled during the 504 days (or, 1 year, 4 months, 16 days) between the time Billiard’s ability to sue was extinguished and subsequently restored, the instant action filed on April 26, 2015 was timely filed.^[FN3]

The Firm failed to establish that Billiard was not prevented from maintaining a malpractice claim notwithstanding the Trial Court order, and its sole argument in reply, that Billiard failed to city legal authority demonstrating an applicable toll under the circumstances is insufficient.”