New York State Workers’ Compensation Bd. v SGRisk, LLC   013 NY Slip Op 50338(U)   Decided on March 1, 2013   Supreme Court, Albany County   Platkin, J. is an accounting malpractice and fraud case, but it has implications for legal malpractice, and the Court explains how causes of action for fraud, breach of fiduciary duty and unjust enrichment can be converted into malpractice claims, with a three year statute rather than the longer 6 year statute which might otherwise obtain.

"The Court begins with UHY’s contention that the breach of contract claim is time barred. The statute of limitations for a breach of contract claim generally is six years (CPLR 213 [2]). Under New York law, "a breach of contract cause of action accrues at the time of the breach"(Ely-Cruikshank Co. v Bank of Montreal, 81 NY2d 399, 402 [1993];see CPLR 203 [a]). The date of the breach is controlling even where damages from the breach are not sustained until a later date and the injured party is "ignorant of the existence of the wrong or injury" (Ely-Cruikshank, 81 NY2d at 402-403 [internal quotation marks omitted]).

Notwithstanding the foregoing general principles, "[a] cause of action charging that [an accounting] professional failed to perform services with due care and in accordance with the recognized and accepted practices of the profession is governed by the three-year Statute of Limitations applicable to negligence actions" (Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]; see CPLR 214 [6]). Thus, the three-year statute of limitations of CPLR 214 (6) applies to claims that "arise out of the accounting services provided by the defendant pursuant to a contract . . . , and out of the accountant-client relationship which resulted therefrom" (Harris v Kahn, Hoffman, Nonenmacher, & Hochman, LLP, 59 AD3d 390, 391 [2d Dept 2009]; see Matter of R.M. Kliment & Frances Halsband, Architects [McKinsey & Co. Inc.], 3 NY3d 538, 542 [2004]). This is true even where the claimed breach of contract is based upon an express contractual promise, so long as the promise is of the sort that the professional would be expected to accomplish using due care even in the absence of a specific contractual provision (Kliment, 3 NY3d at 542; see Winegrad v Jacobs, 171 AD2d 525, 525 [1st Dept 1991]). Generally, "the [malpractice] claim accrues upon the client’s receipt of the accountant’s work product" (Ackerman, 84 NY2d at 541), but the accrual date is subject to tolling under the continuous representation doctrine (Giarratano v Silver, 46 AD3d 1053, 1055 [2d Dept 2007]).

To the extent that the WCB reads these cases, particularly Inter-Community, as holding that the accrual of a cause of action sounding in professional negligence is tolled until the plaintiff has knowledge of its damages, the Court must reject this reading as inconsistent with controlling precedent of the New York State Court of Appeals. Settled law hold that an accounting malpractice claim accrues upon the client’s receipt of the accountant’s work product since this is the point that a client reasonably relies on the accountant’s skill and advice and, as a consequence of such reliance, can become liable for tax deficiencies. This is the time when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court (Ackerman, 84 NY2d at 541).

Indeed, in Ackerman, the Court of Appeals rejected a discovery-based rule that would have tolled the statute of limitations until the accounting client receives a notice of tax deficiency, reasoning that "to base a limitations period on the potentiality of [a notice of tax deficiency] defies the essential premise of temporal finality embodied in Statutes of Limitation" (id. at 542). The Court of Appeals also emphasized the "utter lack of predictability" that would result from departing from "traditional principles governing negligence actions[, which] instruct that plaintiff was injured, and any claim accrued upon performance of the professional service" (id. at 542-543). A similar lack of predictability and temporal finality would be associated with measuring accrual from receipt of a forensic audit report.

Accordingly, except to the limited extent expressly indicated below in connection with plaintiff’s quasi-contract claim, the cause of action for breach of contract must be dismissed as time-barred."