457 Warburton Ave, LLC v Monna Lissa, LLC 2024 NY Slip Op 30423(U) February 7, 2024
Supreme Court, New York County Docket Number: Index No. 651358/2020 Judge: Louis L. Nock is quite unusual, and discusses a unique application of the statute of limitations to a legal malpractice (“attorney malpractice”) claim.

“This matter was initially brought on February 28, 2020, by plaintiffs’ motion for
summary judgment in lieu of complaint (NYSCEF Doc. Nos. 1, 2). In a decision and order dated December 7, 2020, the court denied the motion, on the grounds that plaintiff was not suing on a judgment or an instrument for the payment of money only (NYSCEF Doc. No. 27). The court then directed plaintiffs to file a formal complaint against defendants (id. at 2). Plaintiffs did so, prompting an answer and counterclaims from defendants. Relevant to the instant motion practice, defendants allege as a sixth affirmative defense that Monna Lisa is entitled to a set-off against plaintiffs. In addition, defendants allege that plaintiff Paul Sabaj, who acted as attorney for all of the parties in forming Monna Lissa and then plaintiff 457 Warburton Ave, LLC (“457”),1 committed malpractice through unlawful self-dealing, and failing to advise defendants Bindela and Pagliuca of their right to independent counsel before setting up 457. Defendants further assert that Sabaj is obligated to indemnify them for any of 457’s damages. Finally, defendants claim that Bindela, his company, and Pagliuca did substantial work renovating the property located at 457 Warburton Avenue, Hastings on Hudson, New York, for which they have not been compensated, and from which plaintiffs profited by the increased sale price garnered for the property.”

“Plaintiffs argue that this claim is time-barred, as Sabaj was terminated as of April 25,
2017, and a claim for attorney malpractice has a three-year statute of limitations (CPLR 214[6]), which expired on April 25, 2020.2 The COVID-19 toll in effect from March 20, 2020 (9 NYCRR 8.202.8), through November 3, 2020 (9 NYCRR 8.202.72), extended that time through December 9, 2020. Defendants did not assert their counterclaim for malpractice until January 12, 2021 – after the December 9, 2020, malpractice claim statute of limitations deadline had passed. Thus, Sabaj is correct in his assertion that any malpractice counterclaim against him in this lawsuit is time-barred.

The court observes two factors that might have saved defendants’ malpractice claim from the foregoing statute of limitations consequences: (i) the motion for summary judgment in lieu of complaint, which was the functional equivalent of a complaint, was filed February 28, 2020, within the defendants’ malpractice claim limitations period (ending December 9, 2020); and (ii) even though defendants’ malpractice claim would ordinarily have been barred by January 12, 2021 (the date their counterclaim was filed), as long as it was viable when the action commenced (February 28, 2020), it would have been deemed timely on January 12, 2021, by virtue of CPLR 203 (d) which provides that a “defense or counterclaim is not barred if it was not barred at the time the claims asserted in the complaint were interposed.” This would have been a way to reach
a conclusion that the January 12, 2021, malpractice counterclaim was timely even though, absent its nature as a counterclaim, it would have expired naturally, as a claim-in-chief, on December 9, However, defendants are unable to avail themselves of this procedural advantage for the following reason.

CPLR 3213 provides that “[i]f the motion [for summary judgment in lieu of complaint] is
denied, the moving and answering papers shall be deemed the complaint and answer, unless the court orders otherwise” (emphasis added). In this case, this court’s decision and order denying the motion (NYSCEF Doc. No. 27) expressly “order[ed] otherwise” (CPLR 3213) by directing plaintiffs to file a separate complaint (NYSCEF Doc. No. 27 at 2). The plaintiffs, in fact, did so on January 7, 2021, prompting defendants’ answer with counterclaims (including a malpractice counterclaim) on January 12, 2021. But in this instance, where this court did not convert the motion into a plenary action by deeming the motion papers as a complaint; but rather, directed the filing of a plenary complaint, defendants cannot take advantage of CPLR 203 (d)’s relation back provision because, as explained in the Practice Commentaries on CPLR 3213, the motion’s denial with direction to file a complaint effectively nullifies the initiatory effect of the motion
papers, and the complaint is viewed as a new initiatory filing bringing to bear all the risks of statute of limitations analysis anew. As the Practice Commentaries make clear, once a court opts for the filing of a plenary complaint as opposed to converting the motion to complaint status, any claim which would have naturally expired as of the time of the denial of the motion would remain so within the procedural context of the new complaint (see, David D. Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C3213:11 [“Effect of Denial; Conversion to Action; Dismissal”], C3213:19 [“Statute of Limitations Problems”] [2005 ed]). Thus, any relation-back benefit available to the defendants while the motion was pending, as such, pursuant to CPLR 203 (d), was lost once the motion was denied on December 7, 2020, and a new initiatory pleading by way of complaint was ordered to be filed. Although defendants still
had two days – till December 9, 2020 – to commence their own action for malpractice against Sabaj, they did not, and waited to pursue the claim by way of counterclaim in response to the January 7, 2021, complaint. The malpractice claim was stale by that point in time.3 Thus, the counterclaim for legal malpractice is dismissed.”