Commercial Litigation and Arbitration

Legal Malpractice — Continuous Representation Doctrine — Post-Handoff Availability for Background Briefing of Successor Counsel by Predecessor Firm ≠ Continuous Representation

Perkins v. Am. Transit Ins. Co., 2013 U.S. Dist. LEXIS 6703 (S.D.N.Y. Jan. 15, 2013):

This case is about a massive personal judgment arising out of a car accident in the Bronx that occurred well over a decade ago. The judgment debtor, Jae Jung Park ("Park"), was forced into bankruptcy as a result of the judgment, which far exceeded his insurance policy limits. Plaintiff Eric Perkins, the trustee of Park's bankruptcy estate, now claims that Park's insurer and the three law firms that were involved at various times in Park's defense (the "Law Firm Defendants") did Park wrong. Specifically, Plaintiff brings breach of contract/duty to make reasonable efforts at settlement and breach of fiduciary duty claims against Defendant American Transit Insurance Company ("ATIC"). Plaintiff also brings breach of fiduciary duty and legal malpractice claims against each of the Law Firm Defendants. Plaintiff has moved for summary judgment on the two counts against ATIC.

Defendant Norman Volk & Associates, P.C. ("NVA") is a New York law firm and domestic professional corporation.

Defendant Baker, McEvoy, Morrissey & Moskovitz, P.C. ("BMM&M") is a New York law firm and domestic professional corporation that formed in August 2005 to assume the defense of ATIC insureds who were then represented by NVA. The named partners of BMM&M -- Stephen Baker, John McEvoy, Colin Morrissey, and Ronit Moskovits -- are former employees of NVA, but were never officers or directors of NVA. ***

On September 30, 2001, Park was involved in an automobile accident with another vehicle in Bronx County, New York. ***

Park's vehicle was insured under an insurance policy issued by ATIC, with liability coverage in the amount of $100,000 per person and $300,000 per accident.

ATIC assigned the Moreira suit to Leroy Piper ("Piper"), an ATIC claims representative; he was the only such representative to work on the case. ***

On August 6, 2002, Piper sent a letter to Park acknowledging receipt of the summons and complaint in the Moreira suit and advising him that the matter would be defended by NVA. ***

It is not disputed that ATIC retained NVA to handle pre-trial proceedings in the Moreira suit, including answering the complaint and managing fact discovery. NVA asserts that ATIC planned to use a different law firm for the trial of the Moreira suit, because NVA did not handle ATIC's trial work at that time. *** Plaintiff (who has no particular reason to know, since Park did not retain counsel) insists that NVA handled pre-trial proceedings until the firm "ceased to exist" at "some point before October 2005" ***, whereupon BMM&M took over for NVA in the Moreira suit. ***

C. The Substitution of Counsel

On July 7, 2005, ATIC substituted RKT for NVA as the attorney of record in the Moreira suit. The substitution form filed with the Bronx County Supreme Court is attached to the declaration of Andrew S. Kowlowitz ("Kowlowitz Decl."), one of NVA's attorneys, at Exhibit E. Exhibit F to the Kowlowitz declaration is a form, dated July 6, 2005 and signed by ATIC, approving of the substitution of RKT.

Plaintiff and NVA disagree over whether this substitution formally terminated NVA's representation of Park -- i.e., whether NVA's attorney-client relationship with Park came to an end as of July 7, 2005. ***

***Plaintiff also maintains that, at some point prior to the substitution of RKT for NVA, BMM&M took over Park's defense, because NVA ceased to exist. ***BMM&M, for its part, denies that it ever had anything to do with the Moreira suit; indeed, that is the crux of its defense. ***

F. The Trial

On October 7, 2005, the Moreira suit went to trial before a jury in the Bronx Country Supreme Court, Justice Sallie Manzanet presiding. On October 18, the jury rendered a verdict in favor of the Moreiras, finding that they had sustained a "permanent consequential limitation" of a body organ or member and awarding them $1.5 million in damages.

G. Post-Trial Proceedings

On September 8, 2006, following a post-trial motion made by RKT, Justice Manzanet reduced the damages award to $944,335.00, plus interest, and entered judgment against Park. ***

3. Plaintiff's Claims Against NVA Are Dismissed Plaintiff sues NVA for legal malpractice. NVA argues that this claim is barred by New York's three-year statute of limitations for legal malpractice. NVA contends that its representation of Park came to an end on July 7, 2005, when RKT took over the defense of the Moreira suit. Plaintiff commenced this action on July 26, 2010, more than five years after NVA's attorney-client relationship with Park allegedly terminated. Thus, NVA argues, Plaintiff's legal malpractice claim is time-barred.

NVA also argues that Plaintiff's breach of fiduciary duty claim is duplicative of his legal malpractice claim.

I agree with NVA on both counts. Accordingly, NVA's motion for summary judgment dismissing the legal malpractice claim is GRANTED. ***

A. Plaintiff's Legal Malpractice Claim Against NVA is Time-Barred

Under New York law, the statute of limitations for a legal malpractice claim is three years. N.Y. C.P.L.R. § 214(6). "An action to recover damages for legal malpractice accrues when the malpractice is committed," not when it is discovered by the client. Shumsky v. Eisenstein, 96 N.Y.2d 164, 166, 750 N.E.2d 67, 726 N.Y.S.2d 365 (2001); accord Scantek Medical, Inc. v. Sabella, 583 F. Supp. 2d 477, 489 (S.D.N.Y. 2008). "[T]he key issue is when plaintiff's actionable injury occurred." McCoy v. Feinman, 99 N.Y.2d 295, 301, 785 N.E.2d 714, 755 N.Y.S.2d 693 (2002).

New York's three-year statute of limitations for legal malpractice claims may be tolled under the continuous representation doctrine. "To invoke the continuous representation doctrine, a plaintiff must establish; (1) ongoing representation connected to the specific matter at issue in the malpractice action, and (2) clear indicia of an ongoing, continuous, developing and dependent relationship between the client and the attorney." De Carlo v. Ratner, 204 F. Supp. 2d 630, 636 (S.D.N.Y. 2002); see also Daniels v. Lebit, 299 A.D.2d 310, 749 N.Y.S.2d 149 (2d Dep't 2002) ("The continuous representation doctrine . . . appl[ies where] there is . . . evidence of [an] ongoing, continuous, developing, and dependent relationship between the [client] and the [attorney].").

Citing McCoy, Plaintiff argues that his claim was filed well within the three-year statute of limitations for legal malpractice, because Park did not suffer actionable injury until the Moreiras' judgment became enforceable against him -- i.e., in August 2009, when the judgment was domesticated to New Jersey. But that is not when NVA allegedly committed malpractice.

The Court notes that "accrual is not delayed until the damages develop or become quantifiable or certain." Woodson v. Am. Transit Ins. Co., 9 Misc. 3d 1117A, 808 N.Y.S.2d 921 (N.Y. Sup. Ct. 2005). Accordingly, that the judgment in the underlying suit only became enforceable against Park when it was domesticated to New Jersey is irrelevant to the question of when Plaintiff's legal malpractice claim accrued against NVA; McCoy does not hold differently. Thus, the only inquiry is whether Plaintiff has rebutted in any way the July 7, 2005 substitution of counsel form (Kowlowitz Deck, Ex. E) that plainly replaced NVA with RKT. See Shivers v. Siegel, 11 A.D.3d 447, 782 N.Y.S.2d 752 (2d Dep't 2004) ("[T]he plaintiff's legal malpractice claim accrued no later than November 1998, when she discharged the defendant as her attorney."). The answer is no.

In the alternative, Plaintiff argues that there is a genuine issue of material fact as to whether NVA's representation of Park was "continuous" (and thus tolled the statute of limitations) or terminated upon the appointment of RKT as trial counsel on July 7, 2005. In support of this argument, Plaintiff relies primarily on purported testimony from Baker (initially of NVA, now of BMM&M) "that in cases that RKT took over, [Baker's] firm would 'be available' and would review RKT's bills." (Plaintiff's Memorandum of Law in Opposition to the Law Firm Defendants' Motions for Summary Judgment ("Pl's Opp'n to Law Firm Defendants") at 12) (citing Halperin Deck, Ex. U at 26-27.) Citing Frenchman v. Queller, Fisher, Dienst, Serrins, Washor & Kool, LLP, 24 Misc. 3d 486, 884 N.Y.S.2d 596 (N.Y. Sup. Ct. 2009), Plaintiff also contends that NVA could not have withdrawn as Park's counsel because it never notified him that it was withdrawing or provided him with reasonable notice of RKT's substitution.

The most that can be said of the Baker testimony upon which Plaintiff relies is that, generally speaking, (1) NVA would make itself available for "lay of the land" questions from RKT about ATIC cases after they were handed off for trial (in the rare event such questions arose) and (2) NVA would review RKT's bills "to make sure that the amount charged was appropriate and that there was some record of activity in the court system that day." (Halperin Deck, Ex. U at 26-27.) Indeed, Baker testified that, after the handoff, "We wouldn't stay involved with the case because we're no longer the attorneys in it. We didn't have a right to be involved." (Id. at 27.) It is clear from the context of Baker's testimony that he is not speaking specifically about the Moreira suit. However, even assuming that RKT reached out to NVA in this fashion in connection with that suit, and NVA obliged, this does not suggest that NVA's representation of Park continued beyond the July 7, 2005 substitution. (See Kowlowitz Deck, Exs. E, F.)

The attorney-client relationship is marked by an individual "contact[ing] an attorney in his capacity as such for the purpose of obtaining legal advice or services." Priest v. Hennessy, 51 N.Y.2d 62, 68-69, 409 N.E.2d 983, 431 N.Y.S.2d 511 (1980). It is commonplace for law firms to have contact with each other for background purposes when a case is being transitioned from one to another; that does not rekindle the attorney-client relationship between the former firm and the client after it has been terminated. Nor does reviewing the bills of another law firm carry the hallmarks of legal advice or services to the original client. Indeed, in this instance, it appears that NVA would have reviewed RKT's bills as a service to ATIC, not to Park, because ATIC was apparently NVA's only client. (See Halperin Deck, Ex. U at 11.) Even viewing the record in the light most favorable to Plaintiff and drawing all reasonable inferences in his favor, Plaintiff has not presented evidence at all sufficient to undermine what is a crystal clear substitution of counsel. (See Kowlowitz Deck, Exs. E, F.)

Equally unavailing is Plaintiff's argument that a successful substitution of counsel never occurred because Park received no notice of it. Attached to the affidavit of Ronald W. Weiner, one of BMM&M's attorneys, at Exhibit D is a July 12, 2005 letter to Park from RKT informing him that RKT had taken over his defense in the Moreira suit. Even assuming that Park did not receive this letter, Plaintiff concedes that, "There is no dispute that ATIC controlled the defense of the case against Mr. Park." (Pl's Opp'n to Law Firm Defendants at 11.) Plaintiff also concedes that "Mr. Park looked to [ATIC] to provide a defense." (Id. at 11-12.) Under these circumstances, "The policyholder[] . . . impliedly authorize[s] the insurance compan[y] to act as [his] agent[] in obtaining a lawyer or lawyers for [the policyholder] as attorney or attorneys of record in the litigation[]. Such implied authority include[s] the power to change lawyers for the policyholder[], and, in the absence of revocation of the authority to retain or change [his] attorneys, the. . . insurance compan[y is] empowered to maintain legal proceedings for removal and substitution of attorneys without additional formal or specific consent of the policyholder[] to the substitution." Matter of Preferred Acc. Ins. Co. of N.Y. (Roesch), 273 A.D. 993, 78 N.Y.S.2d 674 (1st Dep't 1948).

Accordingly, it is irrelevant that Park, as the insured, may have been unaware of the substitution of RKT for NVA in the Moreira suit; Frenchman does not hold otherwise.

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