Alksom Realty LLC v Baranik   2015 NY Slip Op 50869(U)  Decided on June 9, 2015  Supreme Court, Kings County  Demarest, J. is a case that touches two of the most relevant issues to a New Yorker, especially a Manhattanite, real estate and taxes.  Looking at this story, one asks, how could this happen?

Plaintiff has an apartment at 25 Columbus Circle which is the uber-premiere Times-Warner building.  He has an apartment on the 58th floor that is up for sale for $ 4.1 Million.  He signs a sales contract and accepts not 10% but rather 1% ($ 41,000) and then goes to the closing and transfers the property without receiving his $4.06 million.  He waits 4 years to sue the buyer?  How can this happen?

“In or about May 2007, Alksom contracted to sell apartment 58G at 25 Columbus Circle, New York, New York (the “Contract” and the “Apartment”, respectively) to Artique Multinational, LLC (“Artique”) for the purchase price of $4.1 million. Upon execution of the Contract, Artique paid $41,000 as a down payment to Alksom. At the closing of title, Artique did not pay the balance of the purchase price. Nevertheless, Alksom transferred title to the Apartment on September 10, 2007 based on the managing member of Artique, David Segal’s (“Segal”), assurances that payment of the balance was forthcoming. Plaintiffs claim that they were never paid the full purchase price. This chain of events gave rise to an action in New York County styled Komolov v Segal, Index No. 651626/2011, in which plaintiffs seek a money judgment for conversion of the Apartment (the “Segal Action”).

Based on Roman’s deposition testimony in the Segal Action, plaintiffs claim that Roman and Rom Bar committed accounting malpractice by reporting receipt of full consideration for the sale of the Apartment on Alksom’s 2007 Federal tax return (the “Original Return”), even though Alksom had never received the balance of the $4.1 million purchase price. Plaintiffs claim that Roman and Rom Bar impermissibly relied on representations from Segal that full consideration was paid to Alksom, as well as a single page facsimile from Segal that contained Segal’s recollection of the amount paid by Alksom when it first purchased the Apartment from Segal in 2005. Plaintiffs claim that Roman failed to collect any supporting documentation and did not have “closing statements” from either Alskom’s 2005 purchase of the Apartment or the September 2007 sale of the Apartment. Plaintiffs further claim that Roman and Rom Bar knew that no consideration was received in plaintiffs’ bank accounts because Roman had full access to these accounts. Plaintiffs assert that Roman and Rom Bar relied on incomplete information and failed to verify this information with the client before filing the Original Return. Plaintiffs further assert that although Roman and Rom Bar knew that the Original Return was inaccurate by the fall of 2010, Roman and Rom Bar waited until 2012 to file an amended tax return, even though the deadline to amend the Original Return would have been April 2011. Based on these allegations, plaintiffs assert causes of action for accountant malpractice, negligence, and gross negligence.”

Defendants argue that plaintiffs’ thirteenth through eighteenth causes of action must be dismissed as time-barred. CPLR § 214(6) sets forth a three-year statute of limitations for accounting malpractice. “A claim accrues when the malpractice is committed, not when the client discovers it” (Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 7-8 [2007]). Defendants claim that because the Original Return was filed on April 14, 2008, plaintiffs’ claims for accounting malpractice, negligence, and gross negligence are time-barred because this action was commenced on December 1, 2014, over three years from when plaintiffs’ cause of action accrued. However, plaintiffs correctly argue that the statute of limitations here is tolled because of the continuous representation doctrine.

“[U]nder the continuous treatment doctrine, when the course of treatment which includes the wrongful acts or omissions has run continuously and is related to the same original condition or complaint,’ the limitations period does not begin to run until the end of the treatment” (id. at 8, quoting Borgia v City of New York, 12 NY2d 151, 155 [1962]). Although the continuous representation doctrine originally derived from the continuous treatment concept in medical malpractice cases, it has been applied to other professionals, such as accountants (see Zaref v Berk & Michaels, P.C., 192 AD2d 346 [1st Dept 1993]). For the continuous representation doctrine to apply, plaintiff must “assert more than simply an extended general relationship between the professional and the client in that the facts are required to demonstrate continued representation in the specific matter directly under dispute” (id. at 348). After filing the Original Return in 2008, Roman filed an amended return in 2012^[FN2] in order to correct the erroneous information in the Original Return. Here, plaintiff has demonstrated continuous representation by defendants relating to the specific matter of the inaccuracies reported by Roman and Rom Bar in the Original Return such that the statute of limitations is tolled. Accordingly, plaintiffs’ accounting malpractice claims are timely.”