FKB’s A. Michael Furman and Rachel Aghassi obtain dismissal of an action asserting legal malpractice relating an allegedly usurious mortgage.

FKB successfully obtained a pre-answer dismissal on a motion to dismiss from Justice Stephen A. Bucaria in the Commercial Division of the Supreme Court, Nassau County.

In this matter, FKB’s client represented plaintiff-lender with respect to a mortgage and note which closed in July 2010.   After the mortgagee defaulted on the loan, the lender sought to foreclose on the encumbered property.  In October 2015, the foreclosure court granted summary judgment in favor of the mortgagee finding that the note and mortgage are “void and unenforceable” because they exceeded the 16% interest rate allowed by law.

Here, Plaintiff filed this action asserting legal malpractice based on FKB’s client’s alleged failure to advise the plaintiff that the 2010 loan and mortgage violated New York General Business Obligation Law § 5-511(2) and that the effective interest rate on the transaction exceeded the legal limit.

FKB’s pre-answer motion to dismiss the 2016 complaint pursuant to CPLR §3211 was based on the argument that the complaint was filed beyond the relevant three (3) year statute of limitations for legal malpractice which FKB contended ran from the date of the closing on the mortgage and note, not the date in which the foreclosure court rendered its decision.

In opposing the motion, plaintiff asserted that the doctrine of continuous representation tolls the statute of limitations here because FKB’s client continued to generally represent plaintiff until 2016, including allegedly providing advice with respect to the foreclosure action.  In opposition, FKB pointed out that in order to apply the continuous representation doctrine, the attorney’s representation of the client in connection with the particular transaction in question must be ongoing.  Hasty Hills Stables, Inc. v. Dorfman, Lynch, Knoebel & Conway, 52 A.D.2d 566 (2d Dept. 2008).  An ongoing general relationship between an attorney and a client will not provide a basis for a client to invoke the continuous representation doctrine unless the representation on the date(s) at issue is related to the specific subject matter underlying the alleged malpractice.

In the Court’s decision, Justice Bucaria agreed that this case is barred by the statute of limitations because the alleged malpractice accrued as of the date the underlying promissory note was signed in July 2010 and therefore this action was untimely since it was not commenced within three (3) years, by July 2013.  In doing so, the court agreed with FKB’s argument that the doctrine of continuous representation did not act to toll the statute here because there was no “mutual understanding of the need for further representation on the subject of the promissory note.”

If you have any questions about this decision, or the defense of attorneys in general, please contact A. Michael Furman or Rachel Aghassi.