Andrew Lavoott Bluestone ()
Time is a recurring theme in litigation. How long will it take? When will the case be decided? How long do I have to sue? Is it too late?
The most important time limit in litigation is the date upon which your case becomes officially too old to commence. In some states there are statutes of repose, but in New York it is the statute of limitations that controls almost every aspect of litigation. Missed statutes of limitation are the subject matter of many legal malpractice cases. Ironically, late legal malpractice cases come up far more regularly than expected. The reason for the large number of statute of limitation motions in legal malpractice cases is both institutional and definitional.
Attorneys face episodic work on cases, both transactional and litigative. Months can go by between steps, and the industrious attorney seeks to fill up her time. To do so, attorneys take on more work than they can handle at any one time and may forget to take cases out of the filing cabinet to work on them. Definitionally, there are difficulties in determining when the statute of limitations commences, when the wrongful act occurred and whether there is continuous representation. Miscalculation of the last date to file has been the genesis of many a legal malpractice case, including legal malpractice claims that are themselves late.
Black Letter Rule
The statute of limitations in legal malpractice cases is often thought of as impervious. Plaintiffs are given three years to commence an action for legal malpractice under CPLR 214(6). It’s always three years and never six years, even for breach of contract, fraud or any other formulation.
The statute commences at the mistaken act or departure, not when it is discovered. It does not matter whether plaintiff knows of the malpractice; there is no “discovery” delay of its onset. “What is important is when the malpractice was committed, not when the client discovered it.” McCoy v. Feinman, 99 N.Y.2d 295,301 (2002). The only dispensation to the onset of the limitations period is continuous representation.
A digression is warranted into an alternative argument trotted out from time to time and which derives from certain language in McCoy and in Ackerman v. Price Waterhouse, 84 N.Y.2d 535, 541 (1994). This alternative argument is that a legal malpractice claim cannot accrue until “all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court” rather than on the day a mistake is made. How does this play out in real life?
Hahn v. The Dewey & LeBoeuf Liquidation Trust, 2016 NY Slip Op. 6782 (1st Dept. 2016) concerned tax advice given years earlier. Later, the IRS took a contrary position to plaintiff, which had relied on the advice. This was a very costly event. Plaintiff argued that the wrong tax advice was a legal malpractice claim which did not accrue until the IRS issued its ruling and penalized plaintiff.
The argument is reasonable. Until the IRS issued a ruling against the shelters, there was nothing to sue over, and certainly no damages. Until departure, proximate cause and damages were patent there could be no legal malpractice case. Nevertheless, plaintiff lost the statute of limitations argument. The black letter rule is that the clock starts running when the negligent act takes place. Glamm v. Allen, 57 N.Y.2d 87 (1982); Ruggiero v. Powers, 284 A.D.2d 593 (3d Dept. 2001)
Actionable Injury Requirement
But, 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; McCoy.
A Complex Calculation
These two principals 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, 30 A.D.3d 730, (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.
Observing that the statute is three years is just the beginning of the calculation. Determining the onset and length of the legal malpractice statute of limitations is enormously complex. It is not always clear when the clock starts to run. Several considerations govern that analysis. These include the date of the mistake, whether that mistake immediately causes problems, application of continuing representation tolling and the maturing of an actionable injury. To further complicate the question 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 A.D.3d 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 malpractice. McCoy; LaBarberra v. New York Eye and Ear, 91 N.Y.2d 207 (1998).
In legal malpractice, discovery of the departure may come long after the negligent act. A mistake in 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. In most cases the statute commences to run when the actionable injury occurs, not when the plaintiff discovers it. Shumsky. Confusingly, it is not always clear when the clock starts to run.
Even in litigation one must look to whether the action was ever started. Presume that plaintiff suffers an auto accident on day one, 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 for legal malpractice 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. Compare this to an action against a municipality in which the statute might start to run on the 91st day, after no notice of claim is filed or the one year and 91st day when no complaint is served.
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 366 day after marking off rather than on the marking-off day?
From plaintiff’s point of view, all of these principals extending the onset of the three-year statute are welcome. None, however, is as welcome or as significant as the principal of “continuous representation.” Born of medical malpractice, this principal is based on the equitable question of whether it is fair to require a litigant/patient to sue the attorney/doctor before representation/treatment is over, while trust still reposes. The rules for tolling of the three-year statute of limitations under CPLR 214(6) by continuous representation are very strict but somewhat obtuse, and require (1) an agreement on the need for more work, (2) actual continuing work on the case, as well as (3) a continuing relationship of trust and confidence between the attorney and client.
The principal 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. The benefit can be lost. The attorney might still represent the client, but not for the same action in which the negligence arose. McCoy. 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 A.D.2d 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 one, and the motion was returnable on day ten. On day nine 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 and was irretrievably broken.
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 one, not on day 20, when the order was filed relieving the attorneys, but on day nine, 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.
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, 38 A.D.3d 325 (1st Dept. 2007).
Defendants may be equitably estopped from raising a statute of limitations defense if they fraudulently induce 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 A.D.2d 113 (1st Dept. 2003).