First Natl. Group, LLC v Birbach

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First Natl. Group, LLC v Birbach 2012 NY Slip Op 33243(U) July 19, 2012 Supreme Court, New York County Docket Number: 11147/11 Judge: Manuel J. Mendez Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. SCANNED ON 7/23/2012 [* 1] . SUPREME COURT OF THE STATE OF NEW YORK PRESENT: HON. MANUEL J, MENDEZ NEW YORK COUNTY PART ____,_,13"----_ Justice FIRST NATIONAL GROUP, LLC, COSCIA REAL TY CORP., LANDGROWTH CORPORATION, AND ANDREW COSCIA Plalntlff(s), ¢V ¢ 111471111 INDEX NO. MOTION DATE FILE rlOTION SEQ. NO. 15-16~2012 001 '-toTION CAL NO. _ _ _ __ STUART BIRBACH, Defendant( ¢) ¢ JUL 23 2012 The followlng papere, numbered 1 to Diam lea: lcou~~~~~~tlon and cross-motion tot for E PAPERS NUMBERED Notice of Motion( Order to Show Cause - Affidavits - Exhibits ... en z 0 ~~ i= 0::: z "' (,!) :::> ~~ ..... 0 c ...J w ...J 0::: 0 0::: u. WW tt i= 0::: 0::: >O ...Ju. ...J :::> ~ w ll. rn u w 0::: ~ w rn <( u z 0 i= 0 :I: Answering Affidavits - Exhibits _ _ _cross motion 2 Replylng Affidavits ------------------------L--- Cross-Motion: Yes X No Upon a reading of the foregoing cited papers, it Is Ordered that Defendant, 1 Stuart Birbach's CBlrbach"). motion to dismiss allegations as time barred pursuant to CPLR 3211 (a)(5) Is denied. According to Plalntlffs, Blrbach represented Plalntlffs In numerous real estate and corporate transactions. Plaintiffs assert that Birbach was responsible for performing due diligence, negotiating favorable terms and drafting effective agreements for the transactions, which were loans from the Plaintiffs to various counter parties. Plalntlffs assert that Blrbach negligently failed to perform due diligence and falled to meet the duty of care In negotiating, structuring and drafting documents for the transactions. Plalntlffs allege that none of the transactions would have been entered Into If Blrbach had preformed proper due diligence and informed Plaintiffs of the specifics of the transactions. Plaintiffs also allege that Blrbach's failure to exercise due care In negotiating, structuring, and drafting transaction documents exposed Plaintiffs to additional harms and denied Plalntlffs adequate protections In the transactions. A claim for attorney malpractice accrues when the malpractice Is committed, and must be interposed within three years thereafter. Shumsky v Eisenstein, 96 N.Y.2d 164, 750 N.E.2d 67, 726 N.Y.S.2d 365 (2001). The date at which the client discovers the malpractlce Is Irrelevant. Ackerman v. Price Waterhouse, 84 N.Y.2d 535, 620 N.Y.S.2d 318, (1994). In this motion, Blrbach [* 2] asserts that since the transactions In question all closed more than three years prior to the Initiation of this case, that the statute of limitations has expired and Plaintiffs' clalms are time barred. The transactions In question closed In July/August 2005, September 2005, August 2006, and September 2007. The Summons and Verified Complaint In the Instant case was filed In October 2011. ·eirbach Is seeking to dismiss all clalms under CPLR 3211 (a)(5). On a motion to dismiss an action as time-barred, the moving party bears the lnltlal burden of establlshlng prima facie that the time In which to sue has expired. On a motion to dismiss, a complaint's factual allegatlons are presumed to be true and are accorded every favorable inference. The statute of limitations on Plalntlffs' clalms of legal malpractice against Birbach for failure to conduct due diligence and fallure to exercise adequate care In negotiating, structuring, and drafting the transaction documents would therefore have expired, three years after the closlng of each of the transactions, speclflcally July/August 2008, September 2008, August 2009, and September 2010 respectlvely. The burden then shifts to the Plaintiffs to establlsh that the statute of limitations was tolled. Cox v. Kingsboro Medical Group, 88 N.Y.2d 904, 646 N.Y.S.2d 659, (1996). The Plalntlffs assert the statute of !Imitations was tolled under the doctrine of continuous representation. The doctrine of continuous representation "recognizes that a person seeking professlonal assistance has a right to repose confidence in the professional's ablllty and good faith, and reallstlcally cannot be expected to question and assess the techniques employed or the manner in which the services are rendered. The doctrine also appreciated the cllent's dilemma if required to sue the attorney while the latter's representation on the matter at issue is ongoing." Shumsky v. Elsentsteln, 96 N.Y.2d 164, 726 N.Y.S.2d 365, (2001). The doctrine of continuous representation therefore tolls the statute of !imitations for wrongful acts or omissions related to the specific subject matter underlying the malpractice claim untll the ongoing representation is completed. Williamson ex rel. Lipper Convertibles, L.P. v. Prlcewaterhouse Coopers LLP, 9 N.Y.3d 1, 872 N.E.2d 842, (2007). Plaintiffs assert that there was a mutual understanding that Blrbach would represent Plaintiffs until each of the loans was repaid and that Blrbach would take whatever actions necessary to. have the loans repaid. "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." McCoy v. Feinman, 99 N.Y.2d 295, 785 N.E.2d 714 (2002). Courts have repeatedly found that the mere continuation of an attorney-client relationship was not enough to Invoke the doctrine of continuous representatlon. [* 3] "[T]he nature and scope of the parties' retainer agreement (engagement) play a key role In determining whether 'continuous representation' was contemplated by the parties. Shumsky v. Eisenstein, supra. In the instant case neither party submitted or even mentioned any sort of retainer agreement. Plalntlffs assert that there was a mutual understanding that representation would continue until the loans were repaid, and Birbach Is sllent as to the scope or duration of representation agreed to by the parties. Plaintiffs support the assertion of a mutual understanding of continued representation by submitting two Verified Complaints served on behalf of the Plaintiffs against defaultlng counter parties from two of the transactions that are the subject of the Instant suit. The Verified Complalnts were dated December 31, 2008 and March 19, 2009. Both Verified Complalnts were signed by Birbach. Neither party In the instant action describes the circumstances under which Blrbach drafted and signed the Verified Complalnts on behalf of the Plalntlffs. Plalntlffs assert that Birbach and Plaintiffs were In continuous communication with each other regarding the status of the transactions and that Blrbach represented to Plalntlffs that he was In continuous communication with the counter parties regarding the transactions and possible remedies following the default In each transaction. In deciding this Motion to Dismiss, the Court assumes the factual allegatlons of the Complalnt are true and accords every favorable Inference to the non-moving party, in this case, the Plalntlffs. It seems reasonable to this Court that the parties could have foreseen the possibility that there would be a need for legal action If a counter party falled to meet Its obligations under the loans. Given Plalntlffs' factual allegations of a mutual understanding at the outset that representation would continue untll the loans were fully repaid and the objective proof of the Verified Complalnts signed by Birbach, this Court finds that Plalntlffs have met their "burden of demonstrating that the continuous representation doctrine [applles], or at least that there [is] an issue of fact with respect thereto." CLP Leasing Co., LP v. Nessen, 12 A.D.3d 226, 784 N.Y.S.2d 535 (N.Y.A.D. 1 ¢t Dept. 2004). Even though the objective proof supports continuous representation In only the two transactions In which the Verified Complaints were filed, the favorable Inference that there was the same mutual understanding of continuous representation In all four transactions Is accorded the Plaintiffs. The continuous representation would apply untll the loans are re-paid, which according to the papers submitted still has not occurred. Birbach argues that according to the holdlng In Wei Cheng Chang v. Pl, 288 A.D.2d 378, 733 N.Y.S.2d 471 (N.Y.A.D. 2"d Dept. 2001), a client's unilateral understanding as to the nature of the attorney client relationship does not create such a relationship. This argument fails to persuade this Court for two reasons. [* 4] First, the holding In Chang v. Pl relates to the formation of an attorney client relationship, not the scope of such a relatlonshlp, and both parties to the Instant action admit to the existence of an attorney cllent relationship. Second, Plalntlffs did not assert that it was their understanding as to the scope of the representation, but that It was a mutual understanding. Birbach argues that because Plaintiffs failed to offer specifics as to the nature of the communications between Birbach and Plalntlffs following the closing of the transactions, Plalntlffs have not provided sufficient proof to establish more than a continued general relatlonshlp. Birbach relies on the hold Ing In Zaref v. Berk & Michaels, P.C., 192 A.D.2d 346 N.Y.S.2d 772 (N.Y.A.D. 1 ¢t Dept. 1993) to support his claim that this undermines Plalntlffs' assertion of a mutual understanding of continuous representation. Blrbach's reliance on Zaref Is misplaced. The Court In Zaref made it clear that an assertion of a general professlonal relatlonshlp supported by "papers [that] are almost devoid of factual statements [Is] Insufficient to support the application of the doctrine of continuous representation." Id. In the Instant case, because the Court assumes facts alleged In the Complaint to be true and accords the Plalntlffs the benefit of every favorable Inference, the very specific acts of drafting and signing the Verified Complaints, "are certainly sufficient to, at the very least, avoid dismlssal pursuant to CPLR 3211." Lavin v. Kaufman, Greenhut, Lebowitz & Forman, 226 A.D.2d 107, 640 N.Y.S.2d 57 {N.Y.A.D. 1 ¢t Dept. 1996) Accordingly, It Is ORDERED that Defendant Birbach's motion to dismiss Is denied. This constitutes the decision and order of this court. FILED Dated: July 19, 2012 JUL 23 2012 ENTER: NEW YORK COUNTY CLEAK1S OFFICE MANUELJ.MENDEZ J.S.C. MANUEL J. MeNDEZ' J.a~C. D FINAL DISPOSITION X NON-FINAL DISPOSITION Check if appropriate: D DO NOT POST D REFERENCE Check one:

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