Legal malpractice is always an exercise in hindsight, since it is always a comparison of the actual outcome of attorney representation v. the hypothetical better outcome had the attorney not departed from good practice.  Nonetheless, Lisi v Lowenstein Sandler LLP  2017 NY Slip Op 32411(U)  November 16, 2017  Supreme Court, New York County  Docket Number: 160298/2016
Judge: Shirley Werner Kornreich is a good example of how the court treats a “hindsight” case.

“In May 2012, Lisi hired LS, a law firm with its principal office in New York City, to
negotiate the terms of his employment as a Senior Vice President with Avadel Pharmaceuticals
f/k/a as Flamel Technologies SA and Eclat Pharmaceuticals, LLC (Flamel). ” “On April 4, 2015, Lisi hired LS to negotiate the terms of his separation from Flamel. Lisi’s separation agreement, which was executed on April 7, 2015, accelerated the vesting of the 495,000 stock options granted to Lisi under his employment agreement and Flamel’s stock option plans, and extended the period in which Lisi could exercise his options.”

“Lisi’s malpractice claim nevertheless fails because his allegations are insufficient to show
that but for LS’s failure to give proper tax advice, his trading losses would have been avoided.
See Leder v Spiegel, 31 AD3d 266, 268 (I st Dept 2006) (“The failure to demonstrate proximate
cause mandates the dismissal of a legal malpractice action regardless of whether the attorney was negligent.”). Lisi does not (and cannot) allege that LS’s failure to advise him had any effect on
the nature of his tax liability-the exercise of his options was always going to be subject to
ordinary income tax. He does not allege that he would not have executed the separation
agreement had he been properly advised. Rather, Lisi’s theory of loss causation is that, absent
proper tax advice, he was unaware of the true amount of the tax liability incurred by the exercise
of his options, and was therefore unable to strategically manage his investment post-exercise in a
manner that minimized market risk and allowed him to realize “the optimal market value” of his
shares. AC iii! 68-71. He acknowledges that the exercise of his options exposed him to “market
fluctuations in the stock price of Flame!,” but asserts that, with proper advice, he would not have
been left vulnerable to such fluctuations because he “would have locked in his sales price for all
options exercised to allow and account for the fixed exercise price and tax basis,” and “would
have capitalized on the sale of the shares at a fixed and higher price.” iii! 74, 82-83.
Though vague, Lisi appears to allege that, properly advised, he would have: shorted more
Flame! stock, thereby eliminating market risk for a corresponding number of options by locking
in the price for those shares; only exercised options that he could hedge with a corresponding
short sale; and exercised his options and/or sold his shares at different, more opportune times.
Such speculative allegations of what Lisi might have done differently, made with the benefit of
hindsight, do not suffice to establish the causal link necessary to state a prima facia claim of legal
malpractice. See Heritage Partners, LLC v Stroock & Stroock & Lavan LLP, 133 AD3d 428,
429 (1st Dept 2015) (affirming dismissal of malpractice claim based on “allegations ‘couched in
terms of gross speculations on future events”‘), quoting Sherwood Group, Inc. v Dornbush,
Mensch, Mandelstam & Silverman, 191 AD2d 292, 294 (1st Dept 1993 ); Leff v Fulbright &
Jaworski, LLP, 78 AD3d 531, 533 (I st Dept 2010) (“[P]laintiff cannot recover damages that are  grossly speculative.”); Barbara King Family Trust v Voluto Ventures LLC, 46 AD3d 423, 424-25
(1st Dept 2007) (“mere speculation” insufficient to demonstrate proximate cause).
Lisi’s suggestion that he would have eliminated market risk by engaging in more short
sales is belied by his allegation that, when he exercised his shares, he had already shorted Flame)
stock “to his utmost capacity.” AC~ 56; Dkt. 50 (Lisi Aff.) ~ 11. He alleges no facts to suggest
that additional short sales were possible, but nevertheless speculates that he might have pursued
such a strategy. Equally speculative is Lisi’s suggestion that he might not have exercised option
shares that he could not hedge with a corresponding short sale. Such a course of action makes
sense only with hindsight knowledge that Flamel’s stock price was about to collapse. By not
exercising, Lisi would have potentially allowed more than half of his options to expire at a point
in time when the value of the associated shares well exceeded his tax liabilities. The
suggestion that Lisi would have left millions of dollars on the table to avoid exposure to market
risk is simply not credible. Lisi knowingly assumed the very market risk that he now, with the
benefit of hindsight, claims that he would have sought to avoid when he exercised all his options,
and not just those that were hedged by a corresponding short sale. “

Legal Malpractice claims accrue at the time a mistake is made.  The Statute of limitations  in legal malpractice, three years, is a difficult and high barrier to overcome.  Continuous representation may toll the running of the statute, but social policy has set a number of elements required for continuous representation to be permitted.  Stein Indus., Inc. v Certilman Balin Adler & Hyman, LLP  2017 NY Slip Op 02688 [149 AD3d 788]  April 5, 2017  Appellate Division, Second Department gives a cogent explanation.

“The statute of limitations for the cause of action alleging legal malpractice is three years (see CPLR 214 [6]; Alizio v Ruskin Moscou Faltischek, P.C., 126 AD3d 733, 735 [2015]). The cause of action to recover damages for professional negligence, which arose from the same facts as the legal malpractice claim and did not allege distinct damages, was likewise governed by the three-year statute of limitations (see Scott v Fields, 85 AD3d 756 [2011]; see also Farage v Ehrenberg, 124 AD3d 159, 159 [2014]). A claim to recover damages for legal malpractice accrues when the malpractice is committed (see Shumsky v Eisenstein, 96 NY2d 164, 166 [2001]; Aqua-Trol Corp. v Wilentz, Goldman & Spitzer, P.A., 144 AD3d 956, 957 [2016]). “However, pursuant to the doctrine of continuous representation, the time within which to sue on the claim is tolled until the attorney’s continuing representation of the client with regard to the particular matter terminates” (Aqua-Trol Corp. v Wilentz, Goldman & Spitzer, P.A., 144 AD3d at 957; see Shumsky v Eisenstein, 96 NY2d at 164; Pellati v Lite & Lite, 290 AD2d 544, 545 [2002]). For the continuous representation doctrine to apply, “there must be clear indicia of an ongoing, continuous, developing, and dependant relationship between the client and the attorney which often includes an attempt by the attorney to rectify an alleged act of malpractice” (Luk Lamellen U. Kupplungbau GmbH v Lerner, 166 AD2d 505, 506-507 [1990]; see Pellati v Lite & Lite, 290 AD2d at 545).

Here, the defendant satisfied its initial burden by demonstrating, prima facie, that the alleged legal malpractice occurred more than three years before this action was commenced in March 2015 (see Kennedy v H. Bruce Fischer, Esq., P.C., 78 AD3d 1016, 1017 [2010]). In opposition, however, the plaintiffs raised a question of fact as to whether the applicable statute of limitations was tolled by the continuous representation doctrine. The plaintiffs submitted Andrew Stein’s affidavit, in which he averred that he met with members of the defendant on July 26, 2012, to determine how to rectify the pension liability issue. Andrew indicated that he was not satisfied with their recommendations concerning how to rectify the issue and directed them to formulate another idea. Andrew’s affidavit was sufficient to raise a question of fact as to whether the defendant engaged in a course of continuous representation intended to rectify or mitigate the initial act of alleged malpractice (see Melnick v Farrell, 128 AD3d 1371, 1372 [2015]; DeStaso v Condon Resnick, LLP, 90 AD3d 809, 812-813 [2011]; Gravel v Cicola, 297 AD2d 620, 621 [2002]).”

What is discoverable and what is not discoverable in a professional negligence setting influences the viability of the claims.  Attorney-Client privilege, work-product privilege and burdensomeness are all considerations in whether the material is discoverable.  Judge Shulman gives a cogent explanation of the competing arguments in American Med. Alert Corp. v Evanston Ins. Co.
2018 NY Slip Op 30479(U)  March 23, 2018  Supreme Court, New York County  Docket Number: 655974/2016 .

“The question of whether insurance reserve information is discoverable is not easily answered. Preliminarily, Evanston never claimed that when it established a reserve (after AMAC notified insurer of the Lynch Action to which it was not a party in November 2015), insurer did so after consulting with coverage counsel which, in turn, would subject this information to attorney-client privilege. Rather, Evanston deems reserve information presumably referenced in the redacted claim notes not relevant to resolve the issue of coverage and not discoverable, because “the establishment of a reserve may merely reflect a prudent insurer’s recognition of the risks of inherent litigation rather than an admission of coverage or liability … ” National Union Fire Ins. Co. of Pittsburgh, Pa: v H&R Block, Inc., 2014 WL 4377845 at *3 (SONY, 2015).

As stated earlier, Evanston urges the court to simply presume the fact that every one of its adjusters’ claim note entries indisputably made on and after February 16, 2016 (retention of coverage counsel) and on and after April 27, 2016 (formal declination of defense coverage) is either protected as work product or by attorney-client privilege and/or prepared in anticipation of coverage litigation. Generally, there is case. law supporting this position and this court finds Bovis Lend Lease LMB, Inc. v Seasons Contracting Corp., 2002 WL 31729693 at *4 (SONY 2002) particularly instructive
(Exhibit B to Cohen Sur-Reply):

Insurance claim files may present difficult issues regarding where the line
should be drawn between documents prepared in the ordinary course of
the insurer’s business which, by its very nature, involves claim
investigation and analysis and documents prepared in anticipation of
litigation. As many courts have noted, it is often difficult to determine
whether documents prepared by an insurance company or its
representatives are entitled to work-product protection because the
insurers are in the business of investigating and adjusting claims. Where,
however, documents are generated after the insurer has declined
coverage of claim or after the insurer has referred the matter to counsel, it
can generally be said that insurer is fairly anticipating litigation and thus
product immunity will typically attach. Certainly, documents created after
litigation has already commenced, when the claims handlers’ work has
plainly shifted from investigating the initial claim to assisting in the defense
of the pending litigation and evaluating litigation exposure, are likely to be
covered by the work product doctrine (quotations, parentheses and
citations omitted).

However, Evanston’s adjusters’ unredacted claim notes for the period November 2015 through February 12, 2016, seemingly tell a different story prior to the formal declination of coverage under the Policy in April 2016. ”

“Evanston bears the burden of establishing that its claim note entries after these significant dates are subject to attorney-client privilege and/or protected as work product. Despite insurer choosing not to file any specific fact-based affidavit by its representative with personal knowledge of the relevant facts, this court can fairly conclude that claim note entries made after April 27, 2016 (when Evanston issued a formal letter to plaintiff declining coverage under the Policy) were made in anticipation of AMAC initiating coverage litigation for declaratory and related relief, are work product or privilege protected and not discoverable.

Despite retaining coverage counsel on February 16, 2016, the same cannot be said with presumptive certainty about Evanston’s adjusters’ claim note entries made between that date and April 27, 2016. Relying on insurer’s claim notes·entries made prior to February 16, 2016, AMAC has established a factual predicate for the court’s discretionary in camera review of Evanston’s adjusters’ claim notes made during this particular period to determine whether they are work product or protected by attorney client privilege. Spearin v Linmar, 129 AD3d 528 (1’1 Dept 2015); see generally, Forman
v Henkin, 134 AD3d 529, 533 (1’1 Dept 2015), Accordingly, this court grants the branch of AMAC’s order to show cause to deliver a copy of unredacted claim notes for this particular period to the courthouse at 60 Centre Street, Room 325, New York, New York 10007 within two business days after the issuance of this order. This court will then issue an order apprising the parties of its findings. “

There are a whole group of social policy roadblocks to legal malpractice litigation.  The additional element of “but for” causation is one; the requirement of privity is another; the exemption for strategic decisions is a third.  A very black and white limitation is that of legal malpractice by a criminal defense lawyer.  Put in short, it is required that the client be acquitted, have the conviction reversed on appeal or be exonerated before a legal malpractice suit may be brought.

This is the short lesson of Braxton v Segal  2018 NY Slip Op 50393(U)  Decided on March 26, 2018  Supreme Court, New York County  Reed, J. in which a pro-se claimant has the complaint dismissed.

“With regard to plaintiff’s motion for summary judgment as to Segal, “to state a cause of action for legal malpractice arising from negligent representation in a criminal proceeding, plaintiff must allege his innocence or a colorable claim of innocence of the underlying offense” (see Carmel v. Lunney, 70 NY2d 169). Plaintiff has not done so here. Instead, plaintiff alleges that Segal’s prior complaints, admonishments and suspensions from the practice are conclusive proof of malpractice in his case, entitling plaintiff to monetary relief. Such a clustering of unfortunate facts, however, does not translate into an articulable claim of legal malpractice. Segal was, it is true, suspended from the practice of law during the representation of plaintiff’s case. The Appellate Division of the First Judicial Department ordered Segal to transfer his cases to another attorney in good standing. While it certainly is an inconvenient and untimely disruption for any criminal defendant to receive a new attorney, this alone is not sufficient to sustain a cause of action for legal malpractice. Accordingly, plaintiff’s motion for summary judgment as against Segal is denied. Moreover, again searching the record pursuant to CPLR 3212(b), the court grants summary judgment to defendant Segal dismissing the complaint as against him — inasmuch as plaintiff fails to present anywhere in the record even a colorable claim of innocence in connection with the criminal matter for which defendant Segal provided him representation (see Carmel v. Lunney, supra; Merritt Hill Vineyards, supra).”

 

Court appoints a jewelry appraiser as a neutral, and the neutral then send retainer agreements to the parties.  Only one party signs the retainer agreement.  Appraiser then renders report which one party disputes.  Can there be a professional negligence claim?

Lintz v Aretz  2018 NY Slip Op 30455(U)  March 12, 2018  Supreme Court, New York County
Docket Number: 651766/2015  Judge: Barbara Jaffe says “no.”

“A party asserting a claim for professional malpractice or negligence must establish the
existence of a contractual .relationship or a bond between it and the professional that is the
functional equivalent of contractual privity. (Bullmore v Ernst & Young Cayman Is., 45 AD3d
461 [1st Dept 2007]). A relationship that constitutes the functional equivalent of contractual privity is one where there is: (1) awareness that information will be used for a particular purpose;
(2) reliance by a party in furtherance of that purpose; and (3) some conduct by the other party
linking them to the party and indicating their understanding of their reliance. (Ossining Union
Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417 [ 1989]).
Moreover, to the extent that a claim for negligent appraisal may be deemed one for
negligent misrepresentation, the party asserting the negligence must establish both reliance and
the existence of a special relationship between it and other party. (See e.g., Ravenna v Christie’s
Inc., 289 AD2d 15 [1st Dept 2001] [where plaintiff brought negligent misrepresentation claim
based on allegation that art specialist gave him wrong information about artwork’s origin,
causing damage, claim dismissed as no special relationship existed between them,
notwithstanding specialist’s awareness that plaintiff would rely on advice]).
Having inconsistently alleged that Aretz was both court-appointed and improperly
retained only by her husband and that only her husband was Aretz’s client, plaintiff thereby
demonstrates: 1) that there was no contractual relationship or its functional equivalent between
her and Aretz; and 2) that neither she nor her husband had either a special relationship or one ·
constituting the functional equivalent of privity with Aretz, as Aretz’s duty was to the court
rather than to either litigant. While she alleges that defendants failed to provide her with the
retainer agreement, thereby thwarting her from signing it and establishing a special relationship,
defendants prove that a copy of the agreement was faxed both to her and to her divorce attorney.
Thus, plaintiffs mere denial of receipt raises no triable issue of fact as to whether there was or
should have been a contractual relationship between her and defendants. To the extent she now
disputes the appointment, she does so in a fatally conclusory fashion, and fails to explain the
contrary allegation in her complaint.

There is also no evidence that plaintiff was unable to hire her own appraiser or that,
having received Aretz’s appraisal before the trial, she could not verify it before it was offered at
trial. And, while plaintiff alleges that Aretz’s retainer agreement with her husband violated his
ethical or expert duty to act as a neutral evaluator, that fact alone is insufficient to hold him
liable. (See e.g., Cohen v Kachroo, 115 AD3d 512 [l51 Dept 2014] [violation of rules of
professional conduct or ethical rules, in and of itself, does not constitute malpractice]).”

Judiciary Law §487 is an ancient part of the common law, so old that it was enacted merely 30 years after the Magna Carta.  That’s old!  Here, in Ehrenkranz v 58 MHR, LLC  2018 NY Slip Op 01902    Decided on March 21, 2018 Appellate Division, Second Department applied its version of JL 487 (which differs from the First Department’s version) and found that while there may have been some confusion, there was no intent to deceive.

“The Supreme Court properly granted that branch of LePatner’s motion which was to dismiss the 16th cause of action in the third-party complaint, although the dismissal should have been pursuant to CPLR 3211(a)(7) and not CPLR 3211(a)(1) (see Smalls v St. John’s Episcopal Hosp., 152 AD3d 629). Accepting the facts alleged in the third-party complaint as true, and according the third-party plaintiffs the benefit of every favorable inference (see Leon v Martinez, 84 NY2d 83, 88; Raach v SLSJET Mgt. Corp., 134 AD3d 792, 793), the third-party complaint failed to allege facts sufficient to find that LePatner acted “with intent to deceive the court or any party” (Judiciary Law § 487; see Klein v Rieff, 135 AD3d 910; Savitt v Greenberg Traurig, LLP, 126 AD3d 506; Fleyshman v Suckle & Schlesinger, PLLC, 91 AD3d 591, 592-593).”

We’ve discussed other statute of limitations cases this week, and Roubeni v Dechert, LLP  2018 NY Slip Op 01950  Decided on March 21, 2018
Appellate Division, Second Department is an excellent example of what is really the only way around the iron-clad rule that the statute of limitations in legal malpractice commences at the mistake and not when the damage is discovered.  It is the McCoy v. Feinman, 99 NY2d 295 (2002)  – Ackerman v. Price Waterhouse  84 NY2d 714 (2002)argument that “a legal malpractice claim accrues when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court.”  It works about 2% of the time.  Here it fails, with little commentary by the AD.

“Here, the defendants satisfied their initial burden by demonstrating that this legal malpractice action accrued, at the latest, when the bankruptcy proceeding was terminated in October 2006, which was more than three years before the commencement of this action (see Stein Indus., Inc. v Certilman Balin Adler & Hyman, LLP, 149 AD3d at 789; Tsafatinos v Law Off. of Sanford F. Young, P.C., 121 AD3d 969, 969). In opposition, the plaintiffs failed to raise a question of fact as to whether the continuous representation doctrine tolled the running of the statute of limitations (see Stein Indus., Inc. v Certilman Balin Adler & Hyman, LLP, 149 AD3d at 789; Quinn v McCabe, Collins, McGeough & Fowler, LLP, 138 AD3d 1085, 1087).”

Genet v Buzin  2018 NY Slip Op 01878  Decided on March 20, 2018  Appellate Division, First Department is an example of a pro-se legal malpractice case wiped off the board.  In a short decision, which gives few clues, the AD affirmed in about the shortest way possible.

“Order, same court and Justice, entered January 20, 2017, which, insofar as appealed from as limited by the briefs, denied plaintiffs’ motion to renew so much of defendants’ motion to dismiss as was based on lack of personal jurisdiction, and for leave to serve an amended complaint, unanimously affirmed, without costs.

Plaintiffs’ proposed amendment is “palpably insufficient” (MBIA Ins. Corp. v Greystone & Co., Inc., 74 AD3d 499, 499 [1st Dept 2010]). The allegations underlying the legal malpractice claim merely “reflect plaintiff[s’] dissatisfaction with defendants’ strategic choices and tactics; there is no showing that those choices and tactics were unreasonable” (Kassel v Donohue, 127 AD3d 674, 674 [1st Dept 2015], lv dismissed 26 NY3d 940 [2015]; see also Rosner v Paley, 65 NY2d 736, 738 [1985]).”

The statute of limitations, as we have commented recently, is a social policy which seeks to limit the backlog of potential claims now sitting in virtual warehouses around the nation.  You’ve been harmed, and that harm is actionable.  Society has decided that certainty of business and personal life requires that such claims be brought, or after a certain period, just abandoned.  So it is, and the statute is very powerful.  There are exceptions such as the “continuing wrong” doctrine discussed in Palmeri v Willkie Farr & Gallagher LLP   2017 NY Slip Op 05794 [152 AD3d 457]  July 25, 2017  Appellate Division, First Department.

“In the complaint in this action, dated February 15, 2013, plaintiff asserted causes of action against defendant for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, gross negligence, professional negligence, breach of contract, and breach of the implied covenant of good faith and fair dealing. Plaintiff alleged that defendant, during its representation of Ramius in the FINRA investigation, shifted all responsibility for any alleged violations of FINRA’s rules to him, suggesting that plaintiff undertook certain wrongful actions without Ramius’s knowledge. Plaintiff further asserted that defendant disclosed to FINRA his internal, privileged communications with Ramius’s counsel, thus causing FINRA to assert charges against Palmieri. Moreover, plaintiff alleged that defendant disclosed information that it had learned during the time it represented him. Plaintiff also alleged that the FINRA complaint was primarily based on privileged statements he had made to counsel at Ramius, and that these statements were also disclosed during the course of Willkie’s representation of Ramius after it ceased representing him.”

“To begin, the motion court properly dismissed plaintiff’s claims for gross negligence, breach of contract, and breach of the implied covenant of good faith and fair dealing as duplicative of his legal malpractice claim, given that they are all based on the same facts and seek the same relief (Sun Graphics Corp. v Levy, Davis & Maher, LLP, 94 AD3d 669 [1st Dept 2012]).

Plaintiff’s claim for legal malpractice, in turn, is untimely. Claims for legal malpractice are subject to a three-year statute of limitations and accrue when the malpractice is committed, not when the client learns of it (Lincoln Place, LLC v RVP Consulting, Inc., 70 AD3d 594 [1st Dept 2010], lv denied 15 NY3d 710 [2010]; CPLR 214 [6]). Plaintiff’s legal malpractice claim first accrued on or about June 25, 2009, when defendant terminated its legal representation of him, but continued to represent Ramius in the ongoing FINRA investigation. He did not, however, file his claim until February 15, 2013, more than three years later.”

“However, the IAS court should have permitted the breach of fiduciary duty claim to proceed. The IAS court correctly noted that the claim was subject to a three-year statute of limitations. The court was mistaken, however, in finding that the allegedly wrongful conduct ended on June 25, 2009, when defendant unilaterally terminated its representation of plaintiff. On the contrary, defendant’s conduct extended through at least June 29, 2011, during which time it represented Ramius and its employees in their participation at plaintiff’s FINRA disciplinary hearing.

Here, plaintiff alleges not only that defendant breached its fiduciary duty when it terminated its professional relationship with him, but also when, until at least June 2011, it acted in a manner directly adverse to his interests. Where there is a series of continuing wrongs, the continuing wrong doctrine tolls the limitation period until the date of the commission of the last wrongful act (Harvey v Metropolitan Life Ins. Co., 34 AD3d 364 [1st Dept 2006]; see also Ring v AXA Fin., Inc., 2008 NY Slip Op 30637[U], *8 [Sup Ct, NY County 2008] [applying continuing violations doctrine to General Business Law § 349 claim where initial payments occurred outside statute of limitations but “the insurer . . . continued to bill, and . . . (plaintiff) . . . continued to pay” within three years of filing suit]).

Here, plaintiff has presented evidence of a “continuing wrong,” which is “deemed to have accrued on the date of the last wrongful act” (Leonhard v United States, 633 F2d 599, 613 [2d Cir 1980], cert denied 451 US 908 [1981]; Harvey, 34 AD3d at 364). Indeed, the record contains evidence sufficient to create an issue of fact as to whether defendant breached its fiduciary obligations to plaintiff after June 2009 and well into June 2011 during its ongoing representation of the Ramius parties.

For example, as noted, the record contains evidence that in the early portion of 2011, defendant helped Ramius identify witnesses who would testify against plaintiff at his FINRA disciplinary hearing. Similarly, defendant was present on behalf of Ramius and Ramius employees who testified at plaintiff’s FINRA hearing on June 28 through 29, 2011—a hearing at which the employees gave testimony that was generally adverse to plaintiff’s interests. This evidence is sufficient for a fact-finder to determine that defendant breached its duty of loyalty to plaintiff, a former client (see Cooke v Laidlaw Adams & Peck, 126 AD2d 453, 456 [1st Dept 1987] [ethical standards applying to the practice of law impose a continuing obligation upon lawyers to refuse employment in matters adversely affecting a client’s interests, even if the client is a former client]). Concur—Sweeny, J.P., Mazzarelli, Moskowitz and Kahn, JJ.

The statute of limitations serves to freshen and re-freshen the litigation warehouse.  Claims and potential claims are warehoused, and then sometimes brought out.  Policy considerations require that there be limits on how long a claim can be stored.  When the sue-by date arrives, the question of a statute of limitations must be decided, as in Collins Bros. Moving Corp. v Pierleoni  2017 NY Slip Op 07586 [155 AD3d 601]  November 1, 2017  Appellate Division, Second  Department.  Here the question was how far back in tax years may the accounts be held responsible?

“In seeking to assert the statute of limitations as a bar to a claim, a moving defendant bears the initial burden of demonstrating, prima facie, that the time within which to commence the cause of action has expired (see Stein Indus., Inc. v Certilman Balin Adler & Hyman, LLP, 149 AD3d 788, 789 [2017]). If the moving defendant satisfies its burden, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations is tolled or is otherwise inapplicable (see id.; Barry v Cadman Towers, Inc., 136 AD3d 951, 952 [2016]). A plaintiff may in some cases rely on the “continuous representation” doctrine to toll the statute of limitations (see Symbol Tech., Inc. v Deloitte & Touche, LLP, 69 AD3d 191, 194-196 [2009]). A prerequisite for the application of the continuous representation doctrine is that the relationship be continuous with respect to the matter in which the malpractice was alleged; a general professional relationship involving only routine contact is not sufficient (see Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 9-10 [2007]; Shumsky v Eisenstein, 96 NY2d 164, 168 [2001]; Rodeo Family Enters., LLC v Matte, 99 AD3d 781, 784 [2012]). More specifically, the continuous representation doctrine “applies only where there is ‘a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim’ ” (Rodeo Family Enters., LLC v Matte, 99 AD3d at 784, quoting McCoy v Feinman, 99 NY2d 295, 306 [2002]).

Here, in opposition to the accounting defendants’ motion to bar arbitration of claims that were untimely under the three-year limitations period provided in the letter agreements, the plaintiffs did not contend that the accounting defendants had failed to meet their prima facie burden. Instead, the plaintiffs relied entirely on the continuous representation doctrine. In so doing, the plaintiffs alleged, in conclusory fashion, that “[t]he parties mutually contemplated ongoing representation following each annual review,” and that Anchin “had a continuing obligation to remedy defects in any consolidated financial statements.” The plaintiffs also submitted an affidavit of Webers, in which he averred, without any specificity, that “[r]evisions of prior years[‘] financial statements were routinely performed.” The plaintiffs’ evidence failed to raise a question of fact as to whether the limitations period contained in the letter agreements was tolled by the continuous representation doctrine (see Williamson v PricewaterhouseCoopers LLP, 9 NY3d at 9; Cusimano v Schnurr, 137 AD3d 527, 531 [2016]; cf. Stein Indus., Inc. v Certilman Balin Adler & Hyman, LLP, 149 AD3d at 790; Bronstein v Omega Constr. Group, Inc., 138 AD3d 906, 908 [2016]; Symbol Tech., Inc. v Deloitte & Touche, LLP, 69 AD3d at 196). Thus, the Supreme Court correctly determined that the continuous representation doctrine was inapplicable.

The accounting defendants failed, however, to submit any evidence that would have established which of the plaintiffs’ causes of action were untimely. The letter agreements provided [*3]for a three-year limitations period, as follows: “No action, regardless of form, arising out of the services under this agreement may be brought by either of us more than three years after the date of the last services for the year in dispute provided under this agreement.” Because the record before us does not establish the relevant “last services” dates, the determination of those dates and the consequent timeliness of the plaintiffs’ various causes of action must be made in further proceedings.”