Lavelle-Tomko v Aswad & Ingraham 2021 NY Slip Op 01112 Decided on February 18, 2021 Appellate Division, Third Department is a cautionary tale about ending an attorney-client relationship and the dangers of not keeping good records. Was there one representation or two? Was plaintiff too late in bringing a JL § 487 claim?
“After plaintiff was terminated by her former employer (hereinafter Century 21) from her position as a real estate agent in 2004, she allegedly used her access to Century 21’s voicemail to steal business, among other things. Century 21’s owners, Thomas A. Sbarra and Deborah J. Sbarra, discovered plaintiff’s activity in 2007 and commenced a civil action against her (hereinafter the first action). The Department of State’s Division of Licensing Services Enforcement Unit (hereinafter the Department) then began an investigation into plaintiff’s conduct. Plaintiff hired defendant Richard N. Aswad and his law firm, defendant Aswad & Ingraham (hereinafter A & I), to represent her in the first action, signing a letter of engagement on July 27, 2007 and providing A & I a retainer. Aswad represented plaintiff in the negotiation of a settlement agreement with Century 21 and the Sbarras, which was executed on August 19, 2007. The settlement agreement required plaintiff to, among other things, surrender her real estate license to the Department and cease working as a real estate agent or broker by September 1, 2007. Aswad timely delivered plaintiff’s license to the Department. Pursuant to plaintiff’s request to cancel her retainer agreements, on October 8, 2007, A & I sent plaintiff the balance of her retainer. In March 2008, after some negotiation involving Aswad and other attorneys, plaintiff’s license surrender was accepted by the Department.
In September 2009, plaintiff reapplied for and received her real estate license, and she resumed employment as a real estate broker in January 2010. On February 24, 2010, the attorney for Century 21 and the Sbarras wrote to Aswad asserting that plaintiff had violated the settlement agreement, as it had permanently barred plaintiff from reacquiring her license or resuming work as a broker or agent. Aswad responded that his representation of plaintiff had ended and he had not been retained on a continuing basis, and he forwarded the attorney’s letter to plaintiff. Plaintiff then asked Aswad to respond to the letter, which he did. When Century 21 and the Sbarras commenced an action for breach of the settlement agreement (hereinafter the second action), Aswad became attorney of record. Century 21 and the Sbarras prevailed at trial, obtaining a judgment requiring plaintiff to permanently surrender her real estate license, along with nominal damages (see Thomas A. Sbarra Real Estate, Inc. v Lavelle-Tomko, 117 AD3d 1210, 1210 , lv denied 26 NY3d 907 ). Aswad’s representation ended on September 24, 2015, after exhausting all appeals in the second action.”
“Defendants demonstrated, and plaintiff does not dispute, that her cause of action accrued on August 19, 2007, the date that she executed the settlement agreement in the first action. Plaintiff commenced this action on October 25, 2016, more than nine years after accrual and well beyond the three-year statute of limitations (see CPLR 214 ). Defendants thus met their initial burden on their motion for summary judgment based on that defense (see Haynes v Williams, 162 AD3d at 1378). The burden then shifted to plaintiff to demonstrate that the statute of limitations was tolled or otherwise inapplicable, or at least that there is a question of fact to prevent summary judgment to defendants on that issue. Similarly, on the portion of plaintiff’s cross motion seeking dismissal of defendants’ statute of limitations defense, plaintiff had to prove as a matter of law that her action is not time-barred (see Red Zone LLC v Cadwalader, Wickersham & Taft LLP, 27 NY3d 1048, 1049-1050 ).
To meet her burden, plaintiff primarily relies on the continuous representation doctrine. “This doctrine applies where there is continuing trust and confidence in the relationship between the parties and the attorney’s continuing representation pertains to the specific matter in which the attorney committed the [*3]alleged malpractice, not merely the continuity of a general professional relationship” (Deep v Boies, 53 AD3d 948, 950  [internal quotation marks and citations omitted]; see McCoy v Feinman, 99 NY2d at 306; Shumsky v Eisenstein, 96 NY2d 164, 168 ; Deep v Boies, 121 AD3d 1316, 1318 , lv denied 25 NY3d 903 ). “The continuous representation doctrine tolls the statute of limitations where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim” (Zorn v Gilbert, 8 NY3d at 934 [internal quotation marks, ellipsis and citations omitted]). “For the continuous representation doctrine to apply to an action sounding in legal malpractice, there must be clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the attorney, which often includes an attempt by the attorney to rectify an alleged act of malpractice” (International Electron Devices [USA] LLC v Menter, Rudin & Trivelpiece, P.C., 71 AD3d at 1512-1513 [internal quotation marks, ellipsis, brackets and citations omitted]; see Leeder v Antonucci, 174 AD3d 1469, 1471 ; see also Matter of Lawrence, 24 NY3d 320, 342-343 ; Creative Rest., Inc. v Dyckman Plumbing & Heating, Inc., 184 AD3d 803, 805 ).”
“In sum, some of the evidence suggests that defendants’ representation was continuous, that the first and second actions concerned the same matter, and that defendants were involved in the second action to rectify their alleged malpractice in the first action. However, other evidence indicates that defendants’ representation terminated after the first action, the parties had no communication for more than a year, and they agreed to commence a new representation related to the second action; this evidence is inconsistent with a mutual understanding by the parties of the need for further representation on the same matter. Also weighing against plaintiff’s argument is evidence of involvement by and consultation with other attorneys, including her husband and his law partner, raising the possibility that plaintiff did not repose her trust and confidence in defendants (compare Farage v Ehrenberg, 124 AD3d 159, 167-168 , lv denied 25 NY3d 906 ). Thus, although plaintiff raised questions of fact as to the defense, she failed to conclusively establish that the continuous representation doctrine tolled the statute of limitations (see Red Zone LLC v Cadwalader, Wickersham & Taft LLP, 27 NY3d at 1050; Town of Amherst v Weiss, 120 AD3d 1550, 1552-1553 ; Deep v Boies, 53 AD3d at 952; Gravel v Cicola, 297 AD2d 620, 621 ). Accordingly, although plaintiff was not entitled to summary judgment granting dismissal of the statute of limitations defense, we find that Supreme Court erred in granting summary judgment to defendants based on that defense.”
“We also deny the portion of plaintiff’s cross motion seeking to amend her amended complaint to add a cause of action under Judiciary Law § 487. “[I]n the absence of prejudice or surprise resulting directly from the delay in seeking leave [to amend a pleading], such applications are to be freely granted unless the proposed amendment is palpably insufficient or patently devoid of merit” (Lakeview Outlets Inc. v Town of Malta, 166 AD3d 1445, 1446  [internal quotation marks and citations omitted]). Judiciary Law § 487 permits recovery of treble damages in a civil action against an attorney who intentionally deceives the court or a party during the pendency of a judicial proceeding (see Beshara v Little, 215 AD2d 823, 823 ; see generally Amalfitano v Rosenberg, 12 NY3d 8, 14 ). The claim must be pleaded with particularity and allege “intentional deceit and damages proximately caused by the deceit” (Jean v Chinitz, 163 AD3d 497, 497 ). The proposed third amended complaint is palpably insufficient; it fails to plead the cause of action with particularity, as plaintiff pleaded no facts tending to prove [*6]that Aswad intended to deceive her. Moreover, plaintiff was aware of the facts allegedly supporting her proposed amendment before she filed the note of issue and certificate of readiness, yet she waited more than six months after such filing before seeking to add the Judiciary Law § 487 cause of action. Defendants plausibly assert prejudice related to this delay, as they intend to seek discovery on this new claim, but discovery is otherwise complete. Under the circumstances, plaintiff may not amend her amended complaint to add this new cause of action.”