There is a not-well known exception to the statute of limitations found in CPLR 203(d) which is explained by the Appellate Division, Second Department in Getzel Schiff & Pesce, LLP v Shtayner 2024 NY Slip Op 06186 Decided on December 11, 2024.

“In November 2021, the plaintiff, Getzel Schiff & Pesce, LLP (hereinafter GSP), commenced this action against the defendants, Semyon Shtayner, Yasya Shtayner, AAMJ, LLC, Unifern, LLC, and Chicago Medallion Management Corp. (hereinafter collectively the defendants), alleging, among other things, breach of contract and unjust enrichment. In February 2022, the defendants interposed their answer with counterclaims alleging fraud in the inducement and professional malpractice. The defendants filed a third-party complaint against the third-party defendant, Jeffrey A. Getzel, alleging fraud in the inducement and professional malpractice. GSP moved pursuant to CPLR 3211(a) to dismiss the defendants’ counterclaims. Getzel separately moved pursuant to CPLR 3211(a) to dismiss the third-party complaint. In an order entered September 18, 2023, the Supreme Court granted the separate motions. The defendants appeal.

The Supreme Court properly granted that branch of GSP’s motion which was to dismiss the first counterclaim, alleging fraud in the inducement, and properly granted that branch of Getzel’s motion which was to dismiss the first cause of action of the third-party complaint, alleging fraud in the inducement. “Under CPLR 3211(a)(1), a dismissal is warranted only if the documentary evidence utterly refutes [a party’s] factual allegations, conclusively establishing a defense as a matter of law” (Yan Ping Xu v Van Zwienen, 212 AD3d 872, 874 [internal quotation marks omitted]; see [*2]Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326; Leon v Martinez, 84 NY2d 83, 88). Here, the documentary evidence, consisting of engagement letters (see Attallah v Milbank, Tweed, Hadley & McCloy, LLP, 168 AD3d 1026, 1028), utterly refuted the defendants’ factual allegations and conclusively established a defense to those claims as a matter of law.

The Supreme Court properly granted that branch of Getzel’s motion which was to dismiss the second cause of action of the third-party complaint, alleging professional malpractice. “A defendant who seeks dismissal of a complaint on the ground that it is barred by the statute of limitations bears the initial burden of proving, prima facie, that the time in which to commence an action has expired” (Mello v Long Is. Vitreo-Retinal Consultant, P.C., 172 AD3d 849, 850; see CPLR 3211[a][5]). “If the defendant satisfies this burden, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or otherwise inapplicable, or whether the plaintiff actually commenced the action within the applicable limitations period” (Barry v Cadman Towers, Inc., 136 AD3d 951, 952).

An action to recover damages for accounting malpractice must be commenced within three years (see CPLR 214[6]; Schwartz v Leaf, Salzman, Manganelli, Pfiel & Tendler, LLP, 155 AD3d 803, 803). “A cause of action alleging professional malpractice against an accountant accrues upon the client’s receipt of the accountant’s work product” (Schwartz v Leaf, Salzman, Manganelli, Pfiel & Tendler, LLP, 155 AD3d at 803; see Ackerman v Price Waterhouse, 84 NY2d 535, 541). Here, Getzel established that the malpractice claim against him accrued more than three years before the defendants filed their third-party complaint. In opposition, the defendants failed to raise a question of fact as to whether the statute of limitations was tolled by the doctrine of continuous representation (see CRC Litig. Trust v Marcum, LLP, 132 AD3d 938, 939; Weiss v Deloitte & Touche, LLP, 63 AD3d 1045, 1047).

However, the Supreme Court erred in granting that branch of GSP’s motion which was to dismiss the second counterclaim, alleging professional malpractice, to the extent that counterclaim seeks to offset any award of fees to GSP. Even crediting the court’s determination that this claim accrued on February 4, 2019, rendering time-barred the counterclaim alleging professional malpractice asserted on February 15, 2022, the defendants are permitted, pursuant to CPLR 203(d), to seek equitable recoupment in a counterclaim. CPLR 203(d) provides, “[a] defense or counterclaim is interposed when a pleading containing it is served. A defense or counterclaim is not barred if it was not barred at the time the claims asserted in the complaint were interposed, except that if the defense or counterclaim arose from the transactions, occurrences, or series of transactions or occurrences, upon which a claim asserted in the complaint depends, it is not barred to the extent of the demand in the complaint notwithstanding that it was barred at the time the claims asserted in the complaint were interposed.” “This provision allows a defendant to assert an otherwise untimely claim which arose out of the same transactions alleged in the complaint, but only as a shield for recoupment purposes, and does not permit the defendant to obtain affirmative relief” (Balanoff v Doscher, 140 AD3d 995, 996). This counterclaim alleging professional malpractice relates to GSP’s performance of accounting services pursuant to which GSP would recover, and, thus, the counterclaim falls within the scope of CPLR 203(d), permitting the counterclaim to the extent it seeks to offset any award of fees to GSP, but not to the extent it seeks affirmative relief beyond an offset. Further, and contrary to GSP’s contention, the second counterclaim adequately states a cause of action for professional malpractice (see CPLR 3211[a][7]; see generally Nonnon v City of New York, 9 NY3d 825, 827).”

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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.