Commercial Litigation and Arbitration

Legal Malpractice — Continuing Representation Must Relate to the Specific Matter and Is Not Satisfied by Merely a “Continuing Relation”

From MIG, Inc. v. Paul Weiss Rifkin Wharton & Garrison, LLP, 2010 U.S. Dist. LEXIS 29548 (S.D.N.Y. Mar. 29, 2010):

New York's statute of limitations for legal malpractice is three years. See N.Y. C.P.L.R. § 214(6). The claim accrues when the malpractice is committed. Shumsky v. Eisenstein, 96 N.Y.2d 164, 166 (2001). Accordingly, the three years begins to run "when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court." Williamson ex rel. Lipper Convertibles, L.P. v. PricewaterhouseCoopers LLP, 9 N.Y.3d 1, 8 (2007) (quotation omitted); accord McCoy v. Feinman, 99 N.Y.2d 295, 301 (2002). "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." McCoy, 99 N.Y.2d at 301 (quotation omitted).

New York does, however, recognize a limited exception to the three-year bar. The continuing 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 manner in which the services are rendered."' Shumsky, 96 N.Y.2d at 167 (quoting Greene v. Greene, 56 N.Y.2d 86, 94 (1992)). In such cases, the three-year statute of limitations will not begin to run until the representation ends. See Glamm v. Allen, 57 N.Y.2d 87, 94 (1982).

The continuing representation doctrine is an exception, however, and not the rule. "Application of the [continuing representation doctrine is] . . . generally limited to the course of representation concerning a specific legal matter," Shumsky, 96 N.Y.2d at 168, and courts must determine "'whether there has been continuous treatment, and not merely a continuing relation'" between the attorney and client. Id. at 168 (quoting McDermott v. Torre, 56 N.Y.2d 399, 405 (1982)) (borrowing rationale from medical malpractice cases). Thus, "the doctrine is not applicable to a client's or patient's continuing general relationship with a lawyer or physician involving only routine contact for miscellaneous legal representation or medical care, unrelated to the matter upon which the allegations of malpractice are predicated." Id.; accord Williamson ex rel. Lipper Convertibles, L.P, 9 N.Y.3d at 9 ("The [continuing representation doctrine] does not apply to a continuing general relationship between patient and physician or to situations where the patient initiates routine, periodic examinations to check a condition."). Rather, the continuing representation doctrine is only applicable "where the continuous representation pertains specifically to the matter in which the attorney committed the alleged malpractice." Id.; cf. W. Vill. Assocs. Ltd. P'ship v. Balber Pickard Battistoni Maldonado & Ver Dun Tuin, PC, 854 N.Y.S.2d 340, 341 (1st Dep't 2008) ("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.")***

Plaintiff contends that its claim is adequately supported by cases finding "a mutual understanding of the need for further representation." (Pl.'s Opp. 5-11 (citing Shumsky, 96 N.Y.2d at 169 and Schlanger v. Flaton, 631 N.Y.S.2d 293 (1st Dep't 1995)). Those cases, however, are entirely distinguishable. In Shumsky, for example, the Court of Appeals found that an attorney who had failed to file a timely lawsuit was still engaged in representing his client, for purposes of the continuing representation doctrine, even after he had let the statute of limitations in the underlying action pass. Shumsky, 96 N.Y.2d at 169-70. The court noted that even after the attorney had missed the filing deadline, the "plaintiffs were left with the reasonable impression that defendant was, in fact, actively addressing their legal needs." Id. at 169. Therefore, the court analogized the case to McDermott v. Torre, a medical malpractice case in which the plaintiff had, after the medical malpractice occurred, continued to seek treatment for pain related to the very condition giving rise to the malpractice claim. See McDermott, 56 N.Y.2d at 405; see also Shumsky, 96 N.Y.2d at 169-70.

Similarly, in Schlanger v. Flaton, the court applied the continuing representation doctrine to allow a client to seek rescission of a business agreement entered into with his attorney, where the attorney had failed to disclose potential conflicts of interest, advise his client to seek outside counsel, and adequately counsel him about potential problems in the organizational structure. See Schlanger, 631 N.Y.S.2d at 295-97. Because the attorney continuously "exploit[ed] his own client through a lack of disclosure and also pursu[ed] affirmative steps to benefit himself at the expense of that client," the court determined that the statute of limitations for malpractice, ostensibly committed when the business was formed, did not run until the representation procured by that malpractice, the business venture, had ended. Id. at 296-97.

Neither Shumsky nor Schlanger provide support for Plaintiff's first cause of action. Unlike Shumsky, there was no reasonable belief by Plaintiff that Defendant was continuing to press a claim or attempt to resolve an ongoing, identified legal problem. Nor did PW's malpractice result in a business relationship between the parties, such that the entire relationship was tainted by that malpractice, as was the situation in Schlanger. See 631 N.Y.S.2d at 295.

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Because Plaintiff has alleged only a continuing general relationship, and not a continuing representation specifically related to the Preferred Stock, the continuing representation doctrine is inapplicable. Accordingly, the Court finds the drafting malpractice claim to be time barred.

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