An attorney acts for the client. More than three years passes from those acts, and the client wants to sue. How does the statute of limitations apply, what acts by the attorney might extend the statute, and how does “fraud” play into the analysis?
Capone v LDH Mgt. Holdings LLC 2020 NY Slip Op 30013(U) January 2, 2020 Supreme Court, New York County Docket Number: 651794/2015
Judge: Jennifer G. Schecter discusses these issues.
“Defendants’ contentions that their counterclaims are grounded in fraud or that plaintiffs deceptively caused them to wait until after 2014 to assert such claims ate baseless. To be sure, the limitations period for fiduciary duty claims involving fraud is six years plus two years from when a reasonable person knew or should have known about the fraud (Kaufman v Cohen, 307 AD2d 113, 119 [1st Dept 2003], see Aozora Bank, Ltd. v Credit Suisse Group, 144 AD3d 437, 438 [1st Dept 2016]). The fraud, however, must not be incidental to the breach of fiduciary duty (see Romano.ff v
Romanoff, 148 AD3d 614, 616 [1st Dept 2017]; Access Point Med., LLC v Mandell, 106 AD3d 40, 44 [1st Dept 2013] [“failure to disclose a conflict of interest does not transform a breach of fiduciary duty into a fraud”]). Additionally, a failure to disclose one’s own alleged wrongdoing does not toll the statute of limitations (Ross v Louise Wise Servs., Inc., 8 NY3d 478, 491  [“a plaintiff may not rely on the same act that forms the basis for the claim” to obtain a toll and there must be “some conduct on the part of the defendant after the initial wrongdoing; mere silence or failure to disclose the wrongdoing is insufficient”] [emphasis added]). Here, the alleged fraud is Scheinman’s “concealment of his disloyal dealings” (Dkt. 135 at 13; Dkt. 141 at 20). It is incidental to the alleged breach of fiduciary duty and there is no basis for any toll.”