On March 11, 2020, Justice Scarpulla of the New York County Commercial Division issued a decision in Condor Capital Corp. v. CALS Invs., LLC, 2020 NY Slip Op. 30765(U), holding that auto loan servicers are not professionals subject to professional malpractice claims, explaining:
Condor Capital’s cause of action for professional malpractice alleges that First Associates is a loan servicing agent that failed to comply with acceptable practice standards of the auto loan servicing industry which, in turn, caused CALS to spend millions of dollars to settle the Class Actions, which, in turn, harmed Condor Capital by reducing the funds to be distributed under the Earnout Payments. First Associates argues that, like the negligence cause of action, the professional malpractice cause of action against it must be dismissed because it owes no duty of care to Condor Capital and there is no privity between Condor Capital and First Associates. First Associates further argues that the professional malpractice cause of action is duplicative of the negligence cause of action, and that First Associates is not a professional as a matter of law.
To maintain a cause of action for professional malpractice, the defendant must be a professional, a term which courts have found to include doctors, attorneys, engineers, architects and accountants. Qualities of professionals liable for professional malpractice include extensive formal learning and training, licensure and regulation indicating a qualification to practice, a code of conduct imposing standards beyond those accepted in the marketplace and a system of discipline for violation of those standards. In cases alleging professional malpractice, courts have been reluctant to extend the definition of professional to professions other than the aforementioned.
There are no New York cases holding that loan servicers are the type of professionals against whom a professional malpractice cause of action may be maintained. Loan servicers are more akin to the professions (cited above) that courts have found outside the ambit of professional malpractice. Because loan servicing is not the type of profession for which a professional malpractice cause of action may be maintained, I dismiss the professional malpractice cause of action against First Associates.
(Internal quotations and citations omitted).
We both bring and defend professional malpractice claims and other claims relating to the duties of professionals such as lawyers, accountants and architects to their clients. This decision is about a rule–the continuous representation doctrine–that sometimes can extend the statute of limitations to bring a malpractice claim. Contact us if you have questions regarding whether a legal malpractice claim is timely.
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