The statute of limitations sets the maximum time during which an action for damages may be commenced. It is of ancient heritage. Its first appearance in Anglo-American law is as early as 1237. In New York the statute of limitations applies to all actions in law and in equity. CPLR Article 2 sets time limitations in every enumerated action or special proceeding. However, not all actions are specifically enumerated. Those which are not enumerated are subject to a six-year statute pursuant to CPLR 213. In general, separate treatment is afforded to commencement of actions based upon contract (CPLR 213) and tort (CPLR 214(6)).
Legal malpractice is different. It is often described as both a tort and a breach of retainer contract. Shumsky v. Eisenstein, 96 NY2d 164 (2001). Whether it is a “tort” or a “contract” is generally decided by the nature of the damages sought, Sears Roebuck & Co. v. Enco Assocs., 43 NY2d 389 (1977); Santulli v. Englert, 78 NY2d 700 (1992). Tort damages are those which compensate a plaintiff for all of the “reasonably foreseeable injury suffered.” PJI 2:277. Contract damages are to “indemnify plaintiff for the gains prevented and the losses sustained by the breach of the retainer contract.” PJI 4:20.
Initially different periods of limitation were applied to legal malpractice claims in tort and in contract, Santulli, supra. In reaction to Santulli, the Legislature shortened the statute of limitations to three years for breach of contract claims in 1996. Now, legal malpractice is enumerated in Article 2 and is subject solely to a three-year statute of limitations under CPLR 214 no matter how the claim is denominated. This three-year statute is applicable whether the claim is called tort or contract, and applies all other descriptions. Whether it is “fraud,” “breach of fiduciary duty,” or any other claim, should the allegations arise from professional representation of the client by the attorney it is subject to a three-year statute, Ulico Cas. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1 (1st Dept. 2008); Melendez v. Bernstein, 29 AD3d 872 (2d Dept. 2006).
Calculating the onset and length of the legal malpractice statute of limitations is enormously complex. To begin, it is not always clear when the clock starts to run. Several considerations govern that calculation. These include the date of the mistake, whether that mistake immediately causes problems, continuing representation, and the maturing of an actionable injury, To further complicate the analysis there is equitable tolling and equitable estoppel.
On the one hand, a cause of action accrues for legal malpractice when the negligent act occurs, Pace v. Raisman & Assoc., 95 AD3d 1185 (2d Dept. 2012); Hoffenberg v. Hoffman & Pollok, 288 F.Supp.2d 527 (S.D.N.Y. 2003). As happens in medical malpractice, the statute of limitations may well pass even before plaintiff finds out that he has suffered an injury, McCoy v. Feinman, 99 NY2d 295 (2002).
In legal malpractice, discovery of the departure may come long after the negligent act. Determining that the trusts and estates attorney made a mistake with the creation of a trust will not allow successful suit five years later when plaintiff is audited by the IRS and discovers the problem, Pace, supra; Ackerman v. Price Waterhouse, 84 NY2d 535 (1994). In most cases the statute commences to run when the actionable injury occurs, not when the plaintiff discovers it, Shumsky v. Eisenstein, 96 NY2d 164 (2001). However, even with a specific three-year statute it is not always clear when the clock starts to run.
Two principles intersect here. The black letter rule is that the clock starts running when the negligent act takes place, Glamm v. Allen, 57 NY2d 87 (1982); Ruggiero v. Powers, 284 AD2d 593 (3d Dept. 2001). Nevertheless, another traditional concept holds that no cause of action accrues until all its elements are in existence. Plaintiff must suffer an “actionable injury” before the statute starts to run. A cause of action accrues “when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court,” Ackerman, supra; McCoy v. Feinman, supra.
These two principles yield different results. Example: An attorney gives negligent advice to a personal injury client regarding Workers’ Compensation rights. The statute should start to run on that day. However, in Kerbein v. Hutchison, 816 NYS2d 91 (3d Dept. 2006), it was held not to accrue until an option to withdraw the settlement agreement ended, some months later. There was no actionable injury until then.
Further complicating the analysis is whether the representation is in a transaction or a litigation. In transactional settings there are fewer specific time limits or filing dates which provide an ending point. If attorney represents client in the sale of a home, and makes a mistake in the due diligence investigation, all elements necessary for the cause of action may not be complete until the closing. There could be a very significant period of time between the mistake and the closing. A mistake in review of a lease may take place months prior to the signing, but no “actionable injury” exists until the contract is signed.
Even in litigation one must look to whether the action was ever started. Presume that plaintiff suffers an auto accident on day 1, and retains an attorney on day 30. The statute of limitations for motor vehicle operator’s negligence is three years. Further presume that defendant attorney does absolutely nothing after being retained. When does the statute start to run? It starts to run three years from the date of the accident which is the last day plaintiff could sue the other driver.
In a second example, presume that defendant attorney is representing plaintiff in a commercial action, and withdraws the case from the trial calendar, eventually allowing it to be dismissed for having been marked off for more than one year, Does the statute start to run on the 366th day after marking off rather than on the marking off day? It does.
From plaintiff’s point of view, all of these principles extending the onset of the three-year statute are welcome. None, however, is as welcome or as significant as the principle of “continuous representation.” Born of medical malpractice, this principle is based on the equitable question of whether it is fair to require a litigant or patient to sue the attorney/doctor before representation/treatment is over, while trust still reposes.
The principle of continuous representation holds that the statute of limitations which starts to run on the date of the malpractice is tolled until the end of representation. As an example, presume that a specific witness is necessary to make out a cause of action, and that witness is precluded from testifying by the negligent failure to serve a discovery response or notice. The notice was due prior to the note of issue, the trial takes place several years after the note of issue, and the attorney continues to represent plaintiff through two rounds of unsuccessful appeals. The last date of representation may well be four or more years after the failure to file a notice.
Based upon the principle of continuous representation, plaintiff has three years from at least the date of last representation to sue the attorney. That time may even be further extended through service of the decision, or perhaps service of a copy with notice of entry. Based upon “continued trust and confidence” in the attorney, and depending whether the attorney has continued to represent plaintiff for the action in which the negligence arose, plaintiff will have the benefit of this continuous representation.
The benefit can be lost. The attorney might still represent the client, but not for the same action in which the negligence arose, McCoy v. Feinman, supra. More interestingly, plaintiff may forfeit the continuous representation tolling by acts which show that there is no longer continuing trust and confidence between plaintiff and his former attorney. A classic illustration arises in the matter of Aaron v. Roemer, 272 AD2d 752 (3d Dept. 2000). Plaintiff was represented by defendant attorney in Northern District of New York. Plaintiff claimed that his attorneys failed to use an applicable affirmative defense which would have ended the case. After post-trial motions, defendant attorneys moved to be relieved from representing plaintiff. They moved by order to show cause on day 1, and the motion was returnable on Day 10. On Day 9 plaintiff wrote to the court that he no longer thought that the attorneys were representing him, accused them of wrongful behavior, and stated that he no longer had any trust in them.
On Day 20 the court signed an order relieving the attorneys. On what day did the statute of limitations start to run for legal malpractice? Not on day 1, even though the attorneys themselves told the court that there was no longer an adequate attorney-client relationship. Not on day 20, when the order was filed relieving the attorneys [or even later, on the day the order was served with notice of entry]. It started to run on day 9, when the plaintiff wrote his note. Plaintiff commenced his action three years and one day after writing the letter, but less than three years after the attorneys were actually relieved. His legal malpractice case was dismissed upon the statute of limitations.
Beyond these issues one must calculate stays or tolls of the underlying action (infancy, death, incapacity) under CPLR 208.
Pleading Other Claims
It is generally understood that under CPLR 214 all causes of action against an attorney must be (or are deemed to be) stated in terms of legal malpractice. Claims of breach of fiduciary duty, conflict of interest, contractual fraud or violations of legal ethics, all have to be subsumed or made part of a tort cause of action, captioned as “legal malpractice” unless they arise from separate transactions and are based upon different theories of damage. In part the reason for this was the bar’s imaginative pleading which attempted to being old actions under the six-year statute. It was probably this effort which led to the Legislature’s version of CPLR 214.
However, there is an interesting line of cases which holds that a cause of action for fraud may be brought against one’s attorney, need not be stated in legal malpractice, and earns a six-year statute of limitations. A fraud claim may be asserted within the context of a legal malpractice action to the extent that it is premised upon one or more separate, individual affirmative, intentional misrepresentations, Kaiser v. Van Houten, 12 AD3d 1012 (3d Dept. 2004). In addition to establishing each element of fraud, a plaintiff has the burden of proving that the alleged fraud caused additional damages, separate and distinct from those generated by the malpractice, id.; White of Lake George v. Bell 251 AD2d 777 (3d Dept. 1998).
This serves as an escape from the iron-bound rule. Here, an attorney being sued for acts in representation of plaintiff-client may be held for other than straight legal malpractice. Fraud, breach of fiduciary duty, and perhaps other common-law torts may be possible, either for acts undertaken prior to retention, or premised upon one or more affirmative, intentional misrepresentations.
To round out the analysis, equitable tolling of the statute is rare and exceptional, for egregious conduct by defendant, or an unexpected event over which plaintiff has no control, Johnson v. Nyack, 86 F.3d 8 (2d Cir. 1996); Shared Communications Services of ESR v. Goldman, Sachs & Co., 38 AD3d 325 (1st Dept. 2007).
Defendants may be equitably estopped from raising a statute of limitations defense if it fraudulently induces plaintiff to refrain from filing suit in a timely manner, by false statement, or a deliberate concealment of facts where there is a duty to disclose, Kaufman v. Cohen, 307 AD2d 113 (1st Dept. 2003).
The general statute of limitations in legal malpractice cases is three years from the last date the attorney represented the client or the date of the malpractice, whichever is later.
Calculating the last day the attorney represented plaintiff is affected by how the relationship ended. It may be different depending whether a transaction or litigation was undertaken. It will be different depending on whether the mistake immediately had effect, or whether there was a subsequent event which had to take place for the mistake to mature into an actionable wrong. It will be different depending on whether plaintiff gets the benefit of tolling or estoppel or continuous representation.
The running of the legal malpractice statute of limitations is subject to tolls and stays both in the underlying action and in the legal malpractice case.
Andrew Lavoott Bluestone is a sole practitioner in Manhattan. He is board certified in legal malpractice by the American Board of Professional Liability Attorneys.