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Posted: November 8, 2016

Legal Malpractice Claims Arising in Oregon Untimely Under New York Borrowing Statute

On October 21, 2016, Justice Ostrager of the New York County Commercial Division issued a decision in Centre Lane Partners, LLC v. Skadden, Arps, Slate, Meagher & Flom Llp, 2016 NY Slip Op. 32136(U), dismissing legal malpractice claims as untimely under New York’s borrowing statute, explaining:

[W]here, as here, the claim accrued outside of New York and the plaintiffs here are indisputably non-residents, CPLR §202 provides for borrowing the statute of limitations of the jurisdiction where the claim arose (Oregon) if the Oregon statute of limitations is shorter than New York’s. It is undisputed that every claim in this case accrued in Oregon, that every transaction at issue was consummated in Oregon, and that the only relationship this case has to New York is that the defendant law firm is headquartered in New York and the defendant partner is based here. Consequently, Oregon’s two-year statute of limitations applies to the plaintiffs’ claims, rather than the longer three-year statute of limitations applicable in New York.

In this regard, in Ontario, supra, the First Department made clear that: The borrowing statute is considered a statute of limitations provision and not a choice-of-law provision. Consequently, it is irrelevant whether an Oregon court would or should apply New York substantive law to the attorney malpractice and breach of duty claims. All that is relevant is whether plaintiff’s claims are barred by the two-year Oregon statute of limitations. As the claim accrued at the latest on December 31, 2013, when the Delaware Bankruptcy began and Skadden’s representation ended, the March 31, 2016 commencement of this suit more than two years later was untimely.

. . .

Nor would application of the two-year Oregon statute of limitations produce an “absurd” result that would warrant departure from the well-settled and routine application of CPLR §202. As noted above, earlier this month the First Department in Ontario, supra, citing, inter alia, Norex, 23 NY3d at 678, emphasized that New York’s borrowing statute is designed to prevent forum shopping by nonresident plaintiffs who come to New York, seeking to take advantage of a more favorable statute of limitations than that which is available to them elsewhere. The derivative plaintiffs are attempting to do precisely what CPLR §202 precludes them from doing. Moreover, the attempted end run around CPLR §202 is particularly egregious here as both the debtor and the derivative plaintiffs have been parties for years to a Delaware bankruptcy proceeding in which actions presumably could have been taken to preserve these claims.

(Internal quotations and citations omitted).

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