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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: May 22, 2020

Continuous Representation Doctrine Saves Malpractice Claim from Dismissal as Untimely

On May 2, 2020, Justice Masley of the New York County Commercial Division issued a decision in Rag & Bone Holdings LLC v. Hand Baldachin & Assoc. LLP, 2020 NY Slip Op. 31149(U), holding that the continuous representation doctrine saved a legal malpractice claim from dismissal, explaining:

Defendants contend that the legal malpractice claim must be dismissed because the alleged legal malpractice occurred in 2012, and this action was not commenced until 2019, far beyond the three year statute of limitations. Holdings asserts that its claim is timely because defendants continuously represented Holdings in connection with the matters at issue until at least January 2017.

CPLR 3211 (a)(5) provides that the cause of action may not be maintained because of statute of limitations. An action for legal malpractice, regardless of whether the underlying theory is based in contract or tort, must be commenced within three years.

A legal malpractice claim accrues when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court. In most cases, this accrual time is measured from the day an actionable injury occurs, even if the aggrieved party is then ignorant of the wrong or injury. What is important is when the malpractice was committed, not when the client discovered it.

However, the continuous representation doctrine recognizes that a person seeking professional assistance has a right to repose confidence in the professional’s ability and good faith, and realistically cannot be expected to question and assess the techniques employed or the manner in which the services are rendered. In the context of a legal malpractice action, the continuous representation doctrine tolls the Statute of Limitations only where the continuing representation pertains specifically to the matter in which the attorney committed the alleged malpractice.

Plaintiff has the burden of demonstrating that the continuous representation doctrine applied, or at least that there is an issue of fact with respect thereto. The pleading must assert more than simply an extended general relationship between the professional and client, and the facts are required to demonstrate continued representation in the specific matter directly under dispute.

As alleged in the complaint, defendants routinely advised Holdings relating to the MA and the calculation of T J PRP’s distributions pursuant to the operating agreement, which depended on the calculation of the management fee under the MA. These allegations are also supported by documentary evidence, including an email sent by defendant Hand to TJ PRP in November 2016 and defendants’ invoices.

While the court acknowledges that the allegations in the complaint involve references to the MA and its application, but do not involve specific action taken by defendants regarding the agreement, the references to the MA in the exhibits submitted by Holdings demonstrate a continued representation in connection with the MA. At this stage, the allegations, as supported by documentary evidence, are sufficient to deny the motion to dismiss on statute of limitations grounds. At the very least, the documentary evidence raises an issue of fact as to continuous representation.

(Internal quotations and citations omitted). The court went on to grant the motion to dismiss the legal malpractice claim for failure to state a claim.

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. Contact us if you have questions regarding such claims or appeals of such claims.

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