Attorney and law firm arrange a house sale from plaintiff to defendant in which the sale price is well below market, and plaintiff retains a life estate in the house.  At closing, everything starts to go wrong.  Seller is persuaded to take a mortgage, and the attorney agrees to file the mortgage as well as the life estate.  Neither is recorded.  Buyer then goes out and gets a mortgage almost three times the size of the sale price and defaults.  More than three years passes.  Has the statute of limitations passed?

In Lytell v Lorusso ;2010 NY Slip Op 04964 ;Decided on June 8, 2010 ;Appellate Division, Second Department we see a reversal of the dismissal of the legal malpractice case.
 

"Assuming that the legal malpractice causes of action accrued more than three years before this action was commenced (see McCoy v Feinman, 99 NY2d 295, 301; Ackerman v Price Waterhouse, 84 NY2d 535, 543; Melendez v Bernstein, 29 AD3d 872, 872; Alicanti v Bianco, 2 AD3d 373, 374), nevertheless, the complaint adequately alleged that the plaintiff was "left with the reasonable impression that [Levinson] was, in fact, actively addressing [his] legal needs" after the closing date (Shumsky v Eisenstein, 96 NY2d 164, 169). Thus the "pleading is sufficient to establish that the parties mutually contemplated that [Levinson’s] work and representation for [the transaction] would continue after [the closing date] and, therefore, the continuous representation doctrine applies," and the statute of limitations was tolled (Symbol Tech., Inc. v Deloitte & Touche, LLP, 69 AD3d 191, 195; see Carnevali v Herman, 293 AD2d 698, 699; Khan v Hart, 270 AD2d 231). Levinson failed to demonstrate that the plaintiff knew or should have known that Levinson had stopped representing him in the matter more than three years before the action was commenced (cf. Santulli v Englert, Reilly & McHugh, 78 NY2d 700, 709). Accordingly, the legal malpractice claims should not have been dismissed since Levinson failed to establish that they were time-barred (see Zorn v Gilbert, 8 NY3d 933, 934; 730 J & J, LLC v Polizzotto & Polizzotto, Esqs., 69 AD3d 704; Town of Wallkill v Rosenstein, 40 AD3d 972, 974). In any event, we further note that "the plaintiff adequately pleaded facts which, if proven, would establish the existence of an equitable estoppel" in this case (Doe v North Shore Univ. Hosp., 28 AD3d 603, 604; see Simcuski v Saeli, 44 NY2d 442; General Stencils v Chiappa, 18 NY2d 125).

The Supreme Court properly denied that branch of Levinson’s motion which was to dismiss the cause of action alleging fraud insofar as asserted against them, for failure to state a cause of action (see CPLR 3211[a][7]). "[T]he allegations in the complaint describe a case where a defendant has fraudulently and positively as with personal knowledge stated that something was to be done when he knew all the time it was not to be done and that his representations were false" (Channel Master Corp. v Aluminium Ltd. Sales, 4 NY2d 403, 407-408 [internal quotation marks omitted]; see Braddock v Braddock, 60 AD3d 84, 90; Romano v Key Bank of Cent. N.Y., 90 AD2d 679, 680). Moreover, the cause of action alleged in the complaint "is premised upon one or more [*3]affirmative, intentional misrepresentations . . . which have caused additional damages, separate and distinct from those generated by the alleged malpractice" (White of Lake George v Bell, 251 AD2d 777, 778; see Simcuski v Saeli, 44 NY2d 442, 451-452; Bernstein v Oppenheim & Co., 160 AD2d 428, 430). Additionally, the assertions in the complaint permit a reasonable inference of the alleged conduct (see Pludeman v Northern Leasing Sys., Inc., 10 NY3d 486, 492), and the complaint is otherwise "sufficient to advise [Levinson] of the incidents complained of" (Union State Bank v Weiss, 65 AD3d 584, 585; see CPLR 3116[b]). Thus the complaint adequately alleged fraud. "