Island Consol. v Grassi & Co., Certified Public Accountants PC 2025 NY Slip Op 30094(U) January 7, 2025 Supreme Court, New York County Docket Number: Index No. 451469/2023 Judge: Margaret A. Chan came as somewhat of a surprise to read. Not only did a statute of limitations defense in an accounting malpractice suit fail, but “gross negligence” and a fraud claim was found not duplicative of a malpractice claim.

Here are more of the holdings:

“Condition Precedent INDEX NO. 451469/2023 RECEIVED NYSCEF: 01/08/2025 Defendant argues that because plaintiffs failed to comply with the terms of the Engagement Letters by failing to give defendant requisite notice of claim within one year of completion of subject services and failing to seek mediation as a condition precedent to bring suit, the complaint should be dismissed (NYSCEF # 39 – Deft’s MOL at 5-9). Defendant contends that the Engagement Letters signed by both parties are binding and dispositive (id. at 5). Defendant states that plaintiffs agreed that written notice of the dispute was required to be provided within one year from the date of completion of the subject services and that mediation was a condition precedent to bringing suit (id. at 6-8). Defendant informs that while the alleged advice and services rendered occurred in 2015, plaintiffs’ notice of a potential claim came on June 6, 2022, and their request for mediation followed five months thereafter (id. at 8). Plaintiffs assert that the Engagement Letters attached as defendants’ exhibits C-M (NYSCEF #’s 61-71) do not apply to the 2014-2015 sales tax advice because other “written communications” sufficiently document the advice and the subject services are not covered by any Engagement Letters (Pltfs’ MOL at 6). The sales tax advice at issue is evidenced in written communications and in emails from April 2015 and 2020-2021 (id. at 7). Thus, plaintiff concludes that the condition precedent in the Engagement Letters do not apply to the 2014-2015 sales tax advice. In any event, plaintiffs address the required one-year notice of claims upon completion of services. Plaintiffs assert that in December 2021 they had asked defendants to let their insurer know to expect claims to be forthcoming, and in June 2022, defendant was put on notice of plaintiffs’ claim against it with the summons with notice for this suit (id. at 9; NYSCEF # 59, Exh A- Summons). Plaintiffs claim that the notice was timely because until at least October 28, 2021, defendant was working on the tax appeal on the 2015 sales tax advice. Hence, plaintiffs conclude that the “completion of services” was at the end of October 2021 (Pltfs’ MOL at 9). Contractual provisions that place a requirement on plaintiffs to file a notice of claim or to seek mediation before they can bring suit are commonly approved and upheld by New York courts as valid conditions precedent (see A.H.A. General Const., Inc. v New York City Housing Authority, 92 NY2d 20, 31-32 [1998] [holding a provision requiring plaintiffs to serve a timely notice of claim was a valid condition precedent, and not an exculpatory clause]). Failure to comply has often been found as a reason for dismissal of a plaintiffs’ complaint (see Archstone Dev. LLC v Renval Constr. LLC, 156 AD3d 432, 433 [1st Dept 2017] [holding lower court correctly dismissed breach of contract claim on the ground that plaintiff failed to satisfy a condition precedent of pursuing mediation prior to bringing suit]; see also Centennial Elevator Industries, Inc. v JRM Construction Management, LLC, 212 AD3d 457, 458 [1st Dept 2023] [same]. If a condition precedent operates to potentially waive a claim before the applicable statute of limitations has expired, it may be examined as to whether it serves to make the time for bringing suit “unreasonably short” (see Planet Constr. Corp. v Board of Educ. of City of N. Y., 7 NY2d 381, 385 [1960]). At the same time, CPLR § 201 itself allows for written agreements to prescribe a shorter time within which an action is to be commenced (see CPLR §201). New York courts have thus upheld contractual limitations waiving claims not brought within a period of time as short as one year or even 90 days (see Assured Guar. (UK) Ltd. v J.P. Morgan Inv. Mgt. Inc., 80 AD3d 293, 304 [1st Dept 2010] [holding a 90 day limit for asserting objections set forth in the parties’ investment management agreement was reasonable as a matter of law]; see also APR Energy Holdings Ltd. v Deloitte Tax LLP, 209 AD3d 402, 403 [1st Dept 2022] [upholding a provision in engagement letter that required suits to be commenced within 1 year of accrual]). Here, the Engagement Letters from 2012 to 2020 include provisions requiring plaintiffs to provide notice of claim within one year from the date of the completion of the subject services and to pursue mediation within 90 days after (see e.g. Exhs C through M). These provisions make it such that noncompliance renders a plaintiffs claim as waived (see David Fanara!, Inc. v Dember Const. Corp., 195 AD2d 346, 348 [1st Dept 1993]). However, none of these Engagement Letters cover the sales tax advice service. Thus, plaintiffs’ point that the condition precedent in the Engagement Letters does not cover the sales tax service is well taken. In any event, even if the condition precedent were to apply, dismissal is not appropriate at this point when the parties disagree over when “completion of subject services” occurred. Defendant argues that “completion of subject services” was limited and completed in 2015 and points to provisions within the Engagement Letters that caution plaintiffs that advice may change over time and not be applicable at a future date. However, plaintiffs point out that defendant continued services directly related to the advice at issue until 2021 when the subject services were completed. As such, despite plaintiffs request to exclude the Engagement Letters in defendant’s exhibits C through M, these exhibits raise a question of fact as to whether they apply to the sales tax advice and subsequent work thereon. Thus, defendants’ motion to dismiss the amended complaint for plaintiffs’ failure to comply with a condition precedent is denied.”

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Andrew Lavoott Bluestone

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened…

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened his private law office and took his first legal malpractice case.

Since 1989, Bluestone has become a leader in the New York Plaintiff’s Legal Malpractice bar, handling a wide array of plaintiff’s legal malpractice cases arising from catastrophic personal injury, contracts, patents, commercial litigation, securities, matrimonial and custody issues, medical malpractice, insurance, product liability, real estate, landlord-tenant, foreclosures and has defended attorneys in a limited number of legal malpractice cases.

Bluestone also took an academic role in field, publishing the New York Attorney Malpractice Report from 2002-2004.  He started the “New York Attorney Malpractice Blog” in 2004, where he has published more than 4500 entries.

Mr. Bluestone has written 38 scholarly peer-reviewed articles concerning legal malpractice, many in the Outside Counsel column of the New York Law Journal. He has appeared as an Expert witness in multiple legal malpractice litigations.

Mr. Bluestone is an adjunct professor of law at St. John’s University College of Law, teaching Legal Malpractice.  Mr. Bluestone has argued legal malpractice cases in the Second Circuit, in the New York State Court of Appeals, each of the four New York Appellate Divisions, in all four of  the U.S. District Courts of New York and in Supreme Courts all over the state.  He has also been admitted pro haec vice in the states of Connecticut, New Jersey and Florida and was formally admitted to the US District Court of Connecticut and to its Bankruptcy Court all for legal malpractice matters. He has been retained by U.S. Trustees in legal malpractice cases from Bankruptcy Courts, and has represented municipalities, insurance companies, hedge funds, communications companies and international manufacturing firms. Mr. Bluestone regularly lectures in CLEs on legal malpractice.

Based upon his professional experience Bluestone was named a Diplomate and was Board Certified by the American Board of Professional Liability Attorneys in 2008 in Legal Malpractice. He remains Board Certified.  He was admitted to The Best Lawyers in America from 2012-2019.  He has been featured in Who’s Who in Law since 1993.

In the last years, Mr. Bluestone has been featured for two particularly noteworthy legal malpractice cases.  The first was a settlement of an $11.9 million dollar default legal malpractice case of Yeo v. Kasowitz, Benson, Torres & Friedman which was reported in the NYLJ on August 15, 2016. Most recently, Mr. Bluestone obtained a rare plaintiff’s verdict in a legal malpractice case on behalf of the City of White Plains v. Joseph Maria, reported in the NYLJ on February 14, 2017. It was the sole legal malpractice jury verdict in the State of New York for 2017.

Bluestone has been at the forefront of the development of legal malpractice principles and has contributed case law decisions, writing and lecturing which have been recognized by his peers.  He is regularly mentioned in academic writing, and his past cases are often cited in current legal malpractice decisions. He is recognized for his ample writings on Judiciary Law § 487, a 850 year old statute deriving from England which relates to attorney deceit.