Opinion
01 Civ. 10213 (JSM)
October 31, 2002
Sean F. O'Shea, Law Offices Sean F. O'Shea, New York, NY, for Plaintiff.
Mark E. Housman, Housman Hellman, New York, NY, for Defendant.
OPINION AND ORDER
Plaintiff Donald Adamson has commenced this action against his former attorney, Michael Bachner, alleging that Plaintiff suffered damages because of, inter alia, Defendant's failure to inform Plaintiff of Defendant's relationship with Todd Nejaime, Plaintiff's former securities broker, and Defendant's failure to join Nejaime as a third party defendant in a New York Stock Exchange ("NYSE") arbitration proceeding against Plaintiff. Plaintiff's Complaint alleges breach of fiduciary duty, fraud, breach of contract, professional malpractice, and a violation of New York Judiciary Law § 487. Defendant now moves for an order dismissing the Complaint on the grounds that (1) the statute of limitations has run on all claims; (2) principles of collateral estoppel and/or res judicata bar the instant claim; and (3) Plaintiff has suffered no damages due to the alleged negligence. Because the statute of limitations has run on the claims, Defendant's motion is granted and the Complaint is dismissed.
The facts of this case through May 31, 2000, are set forth in the Court's opinion in Adamson v. Bachner, 99 Civ. 3741, 2000 WL 702913, (S.D.N.Y. May 31, 2000) ("Adamson I"), and familiarity with that opinion is presumed. it is worth reiterating that Plaintiff instituted an arbitration proceeding against Nejaime and others before the National Association of Securities Dealers ("NASD"), on August 10, 1999. According to Plaintiff's Complaint, all of the allegations of which are taken as true for purposes of this motion, the arbitration panel awarded Plaintiff $500,000 plus interest in October 2000. However, on September 1, 2001, Nejaime filed a petition in bankruptcy in the United States Bankruptcy Court for the Southern District of Florida. After he was unable to collect his judgment from Nejaime, Plaintiff brought this action against Defendant. Except for the introduction of these additional facts, the Complaint in this action is effectively the same as the Complaint inAdamson I.
I. Statute of Limitations — Legal Malpractice, Contract, Fiduciary Duty, and § 487 Claims
The essence of Plaintiff's Complaint is the legal malpractice claim. Under New York C.P.L.R. § 214(6), the Statute of Limitations for legal malpractice claims is three years, regardless of whether the underlying claims are based in tort or contract.
The issue now before the Court is when Plaintiff's action accrued. According to Defendant, the legal malpractice claim accrued when the malpractice was committed. Because May 23, 1996, was the last day when Defendant provided Plaintiff with legal representation, Defendant argues that Plaintiff was required to bring an action no later than May 23, 1999. See Shumsky v. Einstein, 96 N.Y.2d 164 (2001); Glamm v. Allen, 57 N.Y.2d 87, 93 (1982) (malpractice claim accrues on the date of the error constituting malpractice).
Plaintiff, however, relies on the more general proposition that "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 N.Y.2d 535, 541 (1994) (citing Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 94 (1993) ("The Statute of Limitations does not run until there is a legal right to relief. Stated another way, accrual occurs when the claim becomes enforceable, i.e., when all elements of the tort can be truthfully alleged in a complaint.")). See also Britt v. Legal Aid Soc., Inc., 95 N.Y.2d 443, 446 (2000). In an attempt to distinguish the current scenario from the facts in Adamson I, Plaintiff argues that the statute of limitations began to run when he sustained an injury on account of Defendant's malpractice, i.e., no earlier than the date on which Nejaime filed for bankruptcy in 2001. Plaintiff identifies this as the injury because it was only after this date that Plaintiff sustained damages, i.e., the inability to collect on his judgment against Nejaime. (Complaint ¶ 51.) Plaintiff also relies on the Court's May 31, 2000, opinion in Adamson I, arguing that the "Court explicitly held that Plaintiff had not yet suffered any damages as a result of Bachner's conduct." (Pl.'s Mem. at 9.)
Plaintiff correctly relies on Ackerman v. Price Waterhouse, 84 N.Y.2d 535 (1994), for the proposition that the statute of limitations on a legal malpractice claim accrues when the injury occurs. However, Plaintiff incorrectly identifies the injury. In Ackerman, an action against an accounting firm, the Court of Appeals found that the claim accrued upon the client's receipt of and reliance on the deficient advice — not on the later date when the Internal Revenue Service determined that additional taxes were owed ( i.e., when the Plaintiff became aware of the firm's negligence). Ackerman, 84 N.Y.2d at 541-542. In so holding, the Court of Appeals noted that:
The policies underlying a Statute of Limitations — fairness to defendant and society's interest in adjudication of viable claims not subject to the vagaries of time and memory — demand a precise accrual date that can be uniformly applied, not one subject to debate or negotiation.
. . .
The utter lack of predictability inherent in a Statute of Limitations based on the date the IRS assesses a deficiency is apparent from the fact that defendant would remain liable for work performed a decade ago even though traditional principles governing negligence actions instruct that plaintiff was injured, and any claim accrued upon performance of the professional service."Id. at 542-43.
To hold that Plaintiff's claim accrued when the broker filed for bankruptcy, an event that could have happened years after Defendant stopped providing legal representation to Plaintiff, would run counter to the principle noted above. Accordingly, under the rule stated inAckerman, Plaintiff's claim accrued when Defendant failed to sue Nejaime during the NYSE arbitration. It was at this point that the malpractice occurred and that Plaintiff was injured. See McCoy v. Feinman, 737 N.Y.S.2d 481, 482-84 (4th Dep't 2002) (citing Ackerman for the same proposition, finding that the date of the injury was the date of the malpractice, and rejecting the dissent's position that "[i]f plaintiff had attempted to commence a legal malpractice action prior to [the date when actual damages accrued,] the court would have granted a motion seeking dismissal of the action because of [plaintiff's] inability to plead actual, ascertainable damages."). Thus, even if the continuous representation rule applied, the claim was time barred as of May 23, 1999. See Glamm, 57 N.Y.2d at 93. This analysis also applies to the breach of fiduciary duty claim, which also is governed by a three year statute of limitations, see Svenska Finans Int'l BV v. Scolaro, Shulman, Cohen, Lawler Burstein, P.C., 37 F. Supp.2d 178, 183 (N.D.N.Y. 1999), and the New York Judiciary Law § 487 claim, which is similarly governed by a three year statute of limitations that would have started to run no later than the last day on which Defendant represented Plaintiff in the arbitration proceeding ( i.e., May 23, 1996). See Lefkowitz v. Appelbaum, 685 N.Y.S.2d 460 (2d Dep't 1999).
Furthermore, Plaintiff's reliance on the Court's prior opinion is misplaced. In that opinion, the Court granted Defendant's motion to dismiss because "Plaintiff [had] not alleged any damages that were caused by the decision not to bring an action against Mr. Nejaime." Adamson I, 2000 WL 702913, at *2. In reaching this conclusion, the Court was not "explicitly holding" that Plaintiff had not yet suffered an injury as of May 31, 2000, but rather was focusing on the issue of whether he had suffered damages as of that time. Thus, that Opinion has no bearing on the date of the injury and the accrual of Plaintiff's cause of action.
II. Fraud
Plaintiff's fraud claim centers on Defendant's representation that he would zealously and faithfully advocate and represent Plaintiff's interests, coupled with Defendant's failure to disclose his relationship with Nejaime. This claim is dismissed because the damages sustained as a consequence of the alleged fraud are the same as those pled in the malpractice claim. "While a defendant's concealment or failure to disclose his own malpractice without more does not give rise to a cause of action for fraud or deceit separate and distinct from the customary malpractice action, a separate cause of action for fraud may be established where exposure to liability is not based on errors of professional judgment, but is predicated on proof of the commission of an intentional tort." La Brake v. Enzien, 562 N.Y.S.2d 1009, 1011 (3rd Dep't 1990) (citing Simcuski v. Saeli, 44 N.Y.2d 442, 452-453 (1978)). However, even if Plaintiff can prove that Defendant's statement about representing Plaintiff's interests was intentionally misleading, Plaintiff would still need to prove that the damages resulting from the fraud are different from or in addition to the damages in the malpractice claim. Id. at 1012. See also White of Lake George Inc. v. Bell, 674 N.Y.S.2d 162, 163-64 (3rd Dep't), app. dism., 92 N.Y.2d 947 (1998). Plaintiff has made no such showing.
Furthermore, the fraud claim is dismissed because it is "nothing more than an attempt to preserve [the] malpractice claim against [Defendant]."See De Carlo v. Ratner, 204 F. Supp.2d 630, 637 (S.D.N.Y. 2002). Plaintiff's fraud claim is in essence duplicative of the malpractice claim. Accordingly, Plaintiff should not be entitled to the longer statute of limitations for fraud claims simply because the Complaint couches the malpractice conduct in terms of fraud. See Brick v. Cohn-Hall-Marx Co., 276 N.Y. 259, 264 (1937).
Conclusion
In light of the foregoing, the Court need not reach the collateral estoppel, res judicata, or damages arguments. Defendant's motion is granted and Plaintiff's Complaint is dismissed.
SO ORDERED.