Waggoner v. Caruso, 2009 NY Slip Op 6739 (1st Dept. Sep. 29, 2009)
Underlying Commerical Matter
Facts: Plaintiff Waggoner retained Attorney Caruso to trace and attach the assets of Suisse Security Bank and Trust ("SSBT") and British Trade and Commerce Bank ("BTBC") in an effort to recover $10 million. Caruso attached SSBT’s property to the extent of $3 million. He asked Waggoner, however, to sign an affidavit stating that he had recovered approximately $7.7 million. In the meantime, BTBC’s chairman, Rodolfo Requena, pleaded guilty to federal money laundering charges and Caruso, allegedly, agreed to represent Requena without disclosure to Waggoner. Waggoner subsequently filed a suit for legal malpractice, fraud, breach of fiduciary duty, fraud, and conspiracy to commit fraud against Caruso, his firm, and his previous employer, Pillsbury Winthrop ("Pillsbury").
Pillsbury argued that Waggoner’s claim for legal malpractice was time-barred, since their representation had terminated more than three years prior to the date the malpractice suit was instituted.
Issue: Can a former client bring a suit for malpractice against a firm more than three years after the firm’s representation has been terminated, in the event the client continues to be represented in the same matter by an attorney previously employed at the firm?
Ruling: Yes. In New York, a legal malpractice action must be commenced within three years of accrual. Accrual occurs when the malpractice is committed. A client, however, "cannot be expected to jeopardize a pending case or relationship with an attorney during the period that the attorney continues to handle the case". Since "an attorney-client relationship would certainly be jeopardized by a client’s allegation that his or her attorney committed malpractice", the statute is tolled as to a malpractice claim against a law firm where the attorney who handled the case continues to represent the client in the same matter.
Lesson: Under the "doctrine of continuous representation", the statute of limitations is tolled while representation on the same matter is ongoing by the same attorney at a new law firm.