Davis v Farrell Fritz, P.C. 2022 NY Slip Op 00399 Decided on January 26, 2022 Appellate Division, Second Department deals with fraud in very big numbers. Dismissal under CPLR 3211 was reversed. Here are the facts:
“n 2009, the plaintiffs’ decedent, Charles Robert Allen III (hereinafter Allen) through his son Luke Allen, as guardian for the property management of his father, commenced an action in federal district court against Christopher Devine, alleging, inter alia, that Devine fraudulently induced Allen to invest $70 million in a certain broadcast company and that Devine diverted such sum for his own personal use (hereinafter the Devine action). Following Allen’s death on March 9, 2011, Grace Allen was appointed executrix of his estate and substituted as the plaintiff in the action. The executrix then retained the defendants Farrell Fritz, P.C., and John R. Morken (hereinafter together the Farrell Fritz defendants) and the defendants Campolo, Middleton & McCormick, LLP, Joseph N. Campolo, and Patrick McCormick (hereinafter collectively the CMM defendants), and substituted them as counsel in the action in place of Cohen & Gresser LLP (hereinafter C & G). The Devine action later settled for $750,000. The settlement agreement also encompassed a related action against Devine commenced in the Supreme Court, New York County, by Excelsior Capital, LLC (hereinafter Excelsior), a commercial lender controlled by Richard Davis (hereinafter the Excelsior action), which had been awarded damages in excess of $20 million on its breach of contract cause of action against Devine.
Thereafter, Davis and Thaddeus Mack Allen (hereinafter Thaddeus), as co-administrators of Allen’s estate under limited letters of administration issued April 10, 2017, commenced the instant action against the Farrell Fritz defendants and the CMM defendants. The complaint alleged, inter alia, that the defendants committed legal malpractice by failing to assert causes of action against Devine’s alleged co-conspirator, attorney Robert E. Neiman, and Neiman’s law firm, Greenberg Traurig, LLP (hereinafter collectively the Neiman defendants), and against C & G for its failure to assert causes of action against Neiman. The Farrell Fritz defendants moved pursuant to CPLR 3211(a)(1), (5), and (7) to dismiss the amended complaint insofar as asserted against it, and the CMM defendants separately moved to dismiss the amended complaint insofar as asserted against it on similar grounds. In an order dated November 20, 2017, the Supreme Court granted the motions. Clerk’s judgments were later entered upon the order dismissing the amended complaint. The plaintiffs appeal from the clerk’s judgments.”
“The Supreme Court erred in concluding that the statute of limitations on the causes of action that the plaintiffs allege should have been asserted against Neiman expired prior to the defendants’ retention. A cause of action based upon fraud must be commenced within six years from the time of the fraud, or within two years from the time the fraud was discovered, or with reasonable diligence could have been discovered, whichever is longer (see CPLR 203[g]; 213; Coleman v Wells Fargo & Co., 125 AD3d 716, 716). Although the complaint alleges that Devine and Neiman induced Allen to lend money beginning in 2000, the continuing wrong doctrine (see Selkirk v State of New York, 249 AD2d 818, 819; Barash v Estate of Sperlin, 271 AD2d 558) applies such that the six-year statute of limitations “began to run from the commission of the last wrongful act” (Community Network Serv., Inc. v Verizon NY, Inc., 39 AD3d 300, 301). The amended complaint, supplemented by Thaddeus’s affidavit (see Perlov v Port Auth. of N.Y. & N.J., 189 AD3d 1624, 1626; Sokol v Leader, 74 AD3d 1180, 1181), alleges that the last wrongful act was in December [*2]2006, when Allen, having exhausted all of his liquid assets, and at the urging of Devine and his cohorts, borrowed more than $20 million against a bond portfolio and wired the proceeds to the alleged shell entity. Inasmuch as the defendants were retained prior to the expiration of the limitations period for asserting causes of action against Neiman alleging fraud, the first and third causes of action of the instant amended complaint, alleging legal malpractice premised on the defendants’ failure to assert causes of action against Neiman, are not time-barred (cf. Dempster v Liotti, 86 AD3d 169, 181).”