Draft Report Did Not Trigger Running Of Limitations Period

Posted: December 5, 2025 / Written by: Samuel L. Butt, Channing J. Turner, Thomas A. Kissane, Joshua Wurtzel, Jeffrey M. Eilender / Categories Commercial, Negligence, Statute of Limitations/Laches

Draft Report Did Not Trigger Running Of Limitations Period

On November 3, 2025, Justice Joel M. Cohen denied defendants’ motion to dismiss several claims in Sirius XM Radio LLC v. Adeptus Parnters, LLC, Index No. 654079/2024. Plaintiff alleged claims of fraud, breach of contract, and negligence arising out of a royalty audit conducted by defendants. Defendants moved to dismiss the claims and the Court denied the motion. With respect to plaintiff’s negligence claim, defendants argued the claim was time-barred. The Court disagreed, explaining:

As an initial matter, Defendants argue that Plaintiff’s negligence claim is untimely. The statute of limitations for accountant malpractice, whether the underlying theory is in contract or tort, is three years (CPLR 214[6]). “A malpractice cause of action sounds in tort and, therefore, absent fraud, accrues when an injury occurs, even if the aggrieved party is then ignorant of the wrong or injury” (Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]). “In the context of a malpractice action against an accountant, the claim accrues upon the client's receipt of the accountant's work product since this is the point that a client reasonably relies on the accountant’s skill and advice and, as a consequence of such reliance, can become liable for tax deficiencies” (id.).

Here, the statute of limitations began to run in September 2022 when Defendants issued their final “royalty examination” (see Levin v PricewaterhouseCoopers, LLP. (302 AD2d 287, 288 [1st Dept 2003] [limitation “period began to run, at the latest, on the date respondent delivered its last report to the companies”]). This action was initiated within three years of that date and is therefore timely. Defendants’ suggestion that the limitations began when Plaintiff received the draft report—which was subject to change—on April 6, 2021 is unavailing.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning statutes of limitations.