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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: February 15, 2018

Professional Malpractice Claims Time-Barred

On February 1, 2018, Justice Scarpulla of the New York County Commercial Division issued a decision in Schembre v. Saggese, 2018 NY Slip Op. 30191(U), dismissing professional malpractice claims as time-barred, explaining:

Non-medical professional malpractice claims are governed by a three-year statute of limitations. A claim for professional malpractice accrues when the malpractice is committed, not when the client discovers it. The continuous representation doctrine tolls the statute of limitations only where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim.

Here, the last act of malpractice and/or misrepresentation concerning the loan that is alleged in the complaint is the February 14, 2013 email between Saggese and Kerry, and plaintiffs were aware, by March 2013 at the latest, that the loan. had not been repaid in accordance with its terms. Accordingly, the statute of limitations for professional malpractice expired in March 2016, almost nine months before plaintiffs filed their complaint. Because malpractice claims accrue at .the time that advice was given, rather than upon discovery, it is irrelevant that plaintiffs allegedly learned that the transaction was a scam in June 2015.

Plaintiffs’ attempt to establish continuous representation by .Saggese and, by extension, GAF, is unavailing. Plaintiffs submit an affidavit from Frank, as well as various documents, purporting to establish that Saggese continued to service the loan through 2015. However, plaintiffs’ malpractice claim is predicated on Saggese’s alleged professional failure to conduct appropriate due diligence before recommending that plaintiffs’ make the loan in 2012, not upon any alleged continuing professional failures concerning subsequent loan servicing. Also, upon a review of the documents submitted, none of the documents dated after the March 2013 loan due date refer to the loan at all. For these reasons, the continuous representation toll does not apply and plaintiffs have failed to raise an issue of fact on the issue. Accordingly, that branch of GAF’s motion to dismiss the fifth cause of action for professional malpractice is granted.

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

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