In Jonns v Fischbarg  2019 NY Slip Op 31919(U) July 3, 2019 Supreme Court, New York County
Docket Number: 150729/2017 Judge Kathryn Freed gives a nice cogent explanation of two recurring legal malpractice principles.  One is how the statute of limitations is calculated and the other is whether multiple causes of action.  We’ll look at the statute of limitations today.

“In August of 2010, Jonns, together with a group of investors, sought to purchase the Charles Restaurant from Dorsia 8:30 LLC (“Dorsia”). (Id. at 2.) Jonns retained Fischbarg as the attorney on behalf of the investors to facilitate the transaction. (Id.) In doing so, Jonns sought to ensure that a limited liability company (“LLC”) would be formed absolving him and the investors of personal liability from their operation of the Charles Restaurant once the transaction was completed. (Id. at 2-3.) They also wanted Fischbarg to apply for sale-of-liquor licenses from the New York State Liquor Authority (“the SLA”). (Id. at 3.)
Unbeknownst to Jonns, Fischbarg also acted as the attorney for Dorsia. 1 (Id.) Nor did Fischbarg inform him that he should purchase Dorsia through an LLC if he wanted to shield his personal liability in maintaining the Charles Restaurant. (Id.) Thus, on August I l, 20 l 0, Jonns signed a purchase agreement for the Charles Restaurant in his personal capacity. (Id.) As a result, Jonns assumed up to $200,000 worth of Dorsia’s debt that existed on the date of the  signing, responsibility for Dorsia’s obligations under the lease, and the obligation to indemnify and hold Dorsia harmless for any claims arising from the Charles Restaurant’s operation. (Id.) Fischbarg
reassured Jonns that those obligations and liabilities would subsequently be assigned to an LLC
that would be owned by the investors. (Id.)”

“Once again, this Court sets forth the following analytical framework for when a legal malpractice action must be commenced: A legal malpractice action must be commenced within the three-year statute of limitations. (See McCoy v Feinman, 99 NY2d 295, 301 [2002).) In determining when the statute of limitations begins to run, courts have held that the “accrual time is measured from the day an actionable injury occurs … . “(McCoy, 99 NY2d at 301.) “What is important is when the malpractice was committed, not when the client discovered it.” (Id. (quotations omitted).) The limitations period, however, may be tolled where there is a continuing attorney-client relationship pertaining specifically to the matter in which the attorney committed the alleged malpractice (see Shumsky v Eisenstein, 96 NY2d 164, 168 [2001 ]), and where there was “a mutual understanding of need for further services in connection with that same subject matter” (Davis v Cohen & Gresser, LLP, 160 AD3d 484, 486 [1st Dept 2018)). ”

“Here, Jonns alleges in his complaint that there were inadequacies with how the transaction
was handled. Specifically, Jonns alleged that there were inadequacies relating to both his personal
liabilities as well as those of the other investors (Doc. 41 at 6-9), and he further alleged that
Fischbarg assured him, subsequent to the closing, that he would take necessary steps to transfer Jonns’ liabilities to Crazy Asylum3 (id. at 6-7.) Thus, this is a situation where the client was
“acutely aware of [the] need for further representati~:m on the specific subject matter underlying
the malpractice claim.” (Johnson, 129 AD3d at 69.) Further, Fischbarg’s continued representation
to transfer Jonns’ personal liabilities to an LLC was not merely a general continuing relationship
between lawyer and client, but rather pertained “specifically to the matter in which [he] committed
the alleged malpractice,” (Shumsky v Eisenstein, 96 NY2d 164, 168 [2001]), i.e., the handling of
the 201 O transaction. Since the complaint alleged4 that Fischbarg continued in his efforts to transfer
Jonns’ liabilities to Crazy Asylum until at least July of 2016 (Doc. 41 at 7), and since the instant
action was commenced in March of2017 (Doc. 46 at 5), this Court therefore adheres to its original
determination that Jonns’ claim for legal malpractice is timely. “