Grace v. Law is a Court of Appeals case which holds that a legal malpractice case cannot successfully be pursued unless an appeal of the underlying negative outcome is commenced when it is likely that the appeal will succeed.  In a novel argument, plaintiff in Colucci v Rzepka  2022 NY Slip Op 06043  Decided on October 27, 2022  Appellate Division, Third Department argues that it was not permitted, or was “forced” to delay the commencement of the legal malpractice case until its appeal of the underlying negative outcome was decided.  Because of the typical lag time for an appeal to be heard and decided, more than three years ensued from both the negative decision in the underling case as well as the end of representation.

“Plaintiff Lora Colucci, who was the owner of plaintiff Yar-Lo, Inc., entered into a lease in 1990 with Stuyvesant Plaza, a shopping center, to operate a cosmetics store. During the lease period, the leased premises experienced sewage system backup and overflows that purportedly exposed the store to mold and raw sewage. In 2005, plaintiffs terminated the lease and submitted a claim to Travelers Indemnity Company, their commercial insurer, for business interruption coverage, which was denied. They subsequently retained defendant Thomas J. Rzepka to commence litigation against Travelers, for the wrongful denial of the insurance claim, and against Stuyvesant Plaza, for breach of the lease. Rzepka initiated an action on behalf of Yar-Lo against Travelers in December 2006 that was dismissed by Supreme Court (Caruso, J.) upon summary judgment, which order this Court affirmed (Yar-Lo, Inc. v Travelers Indem. Co., 130 AD3d 1402, 1404 [3d Dept 2015]).

In 2007, Rzepka instituted an action on behalf of plaintiffs against Stuyvesant Plaza seeking damages stemming from Colucci’s personal injuries due to her exposure to the raw sewage and mold as well as the closure of her business. Following prolonged discovery, Supreme Court (Kramer, J.) directed plaintiffs and Stuyvesant Plaza to submit expert disclosure by May 2015 and all dispositive motions by August 2015. Stuyvesant Plaza timely filed expert disclosures pertaining to plumbing and medical experts as well as a motion for summary judgment seeking dismissal of the complaint based on plaintiffs’ failure to submit any expert proof that Colucci’s injuries and damages were caused by its actions. Rzepka did not comply with the deadlines but requested an adjournment of the return date for responsive papers to the summary judgment motion. The court granted the adjournment, which was conditioned upon Rzepka’s consent that the deadline for expert disclosure would not be similarly extended. Rzepka obtained another adjournment of the return date and, in the meantime, submitted a cross motion for summary judgment with incomplete supporting papers. On the day of the new return date, Rzepka moved to withdraw from his representation of plaintiffs, which he ceased by affirmation in December 2015.”

“In May 2020, plaintiffs commenced this legal malpractice action seeking, among other things, damages arising from Rzepka’s representation in plaintiffs’ action against Stuyvesant Plaza. Defendants Osborne Reed & Burke, LLP, Bressler & Kunze, Burke Albright Harter & Reddy, LLP and Moyer Russi & Randall, PC (hereinafter collectively referred to as the law firms) respectively moved pre-answer to dismiss the complaint against them as time-barred and for failure to state a cause of action (see CPLR 3211 [a] [5], [7]). Rzepka joined issue but did not submit any dispositive motions. In turn, plaintiffs opposed all of the motions to dismiss, except for the one by Burke Albright Harter & Reddy. Ultimately, Supreme Court (Corcoran, J.) determined, among other things, that the action was time-barred against the law firms and dismissed the complaint as against them. Plaintiffs appeal.

We affirm. “An action to recover damages arising from legal malpractice must be commenced within three years after accrual” (Zorn v Gilbert, 8 NY3d 933, 933-934 [2007] [citation omitted]; see CPLR 214 [6]). In the civil context, the claim “accrues when the malpractice is committed” (Ruggiero v Powers, 284 AD2d 593, 594 [3d Dept 2001], lv dismissed 97 NY2d 638 [2001]), “not at the time that the injury is discovered” (Lavelle-Tomko v Aswad & Ingraham, 191 AD3d 1142, 1143 [3d Dept 2021]; see McCoy v Feinman, 99 NY2d 295, 301 [2002]). ”

“Plaintiffs failed to meet their shifted burden. Specifically, plaintiffs erroneously rely upon Grace v Law (24 NY3d 203 [2014]) for the proposition that they were not permitted to commence this action until the appeal of the Stuyvesant Plaza action [*3]was resolved in January 2018. In Grace v Law, the Court of Appeals held “that prior to commencing a legal malpractice action, a party who is likely to succeed on appeal of the underlying action should be required to press an appeal. However, if the client is not likely to succeed, [the client] may bring a legal malpractice action without first pursuing an appeal of the underlying action” (id. at 210 [emphasis added]). Here, given Supreme Court’s “broad discretion in controlling discovery and disclosure” (Colucci v Stuyvesant Plaza, Inc., 157 AD3d at 1098 [internal quotation marks and citations omitted]), plaintiffs’ appeal from the Stuyvesant Plaza action was not “likely to succeed,” such that it was not necessary for them to file an appeal pursuant to the standard set forth in Grace v Law (24 NY3d at 210; see Florists’ Mut. Ins. Co., Inc. v Behman Hambelton, LLP, 160 AD3d 502, 502 [1st Dept 2018]).^[FN1] Thus, plaintiffs were not “forced” to file an appeal prior to commencing the legal malpractice action. If plaintiffs believed the best course of action was to also file an appeal, they were certainly free to, but this did not toll the statute of limitations.^[FN2] Rather, the preferable course of action would have been to both timely commence the legal malpractice action and pursue an appeal and then request a stay of the legal malpractice action until determination of the appeal (see Spitzer v Newman, 163 AD3d 1026, 1027-1028 [2d Dept 2018]). Accordingly, Supreme Court did not err in granting the law firms’ motions to dismiss the complaint as untimely. In light of this determination, plaintiffs’ remaining contentions have been rendered academic.”