When Does the Engagement End?
It’s easy enough to determine the statute of limitations for a malpractice claim. It’s not as easy to determine when the limitations clock begins to click. In New York, for example, the limitations period is three years but courts have grappled with questions regarding when a relationship between attorney and client ends. Courts have more recently employed what’s become known as the continuous representation doctrine in order to extend the accrual time. However, a recent decision in the Southern District of New York highlights an about-face of sorts.
In Rohe, the plaintiff’s father died in 2004, leaving him as the sole beneficiary of his father’s Trust. Plaintiff employed a financial firm and one of its employees to serve as a co-trustee and investment manager of the Trust. In 2008 and 2009, the employee invested nearly $450,000 of the Trust’s funds in a startup which eventually became defunct at which point he lost the entire investment. Plaintiff claimed that the employee made a series of other investments which also resulted in complete losses and that he did not find out about the investment losses until the employee’s death in 2013.
Following the employee’s death, Plaintiff turned his attention to his former attorney (“Attorney”) and alleged legal malpractice and breach of fiduciary duty in light of the investment losses.
Plaintiff alleged that Attorney was Plaintiff’s personal attorney, who first represented Plaintiff in a traffic stop in the 1970’s, and then in a number of other matters thereafter, many of which involved the family’s trust and estates work. He represented Plaintiff during the preparation of the Trust agreement in 2004 and provided several revisions thereafter, including drafting a trust agreement for Plaintiff’s daughter in 2008. His work on that trust agreement culminated in 2009.
Attorney allegedly received annual account statements for the Trust every year from 2004-2014. Plaintiff produced several documents “relevant to the existence and scope” of a legal relationship between them after 2008. Plaintiff testified during his deposition that Attorney invoiced him for “discrete legal tasks” through August 2013. However, the parties had never entered into a retainer agreement.
Plaintiff filed a lawsuit seeking damages for legal malpractice and breach of fiduciary duty alleging Attorney failed to protect the Trust. Attorney moved for summary judgment, arguing that such claims were time-barred because the last work he did was on his daughter’s trust in 2008/2009. Plaintiff argued in opposition that the claim was saved by the continuous representation doctrine.
The Court agreed with Attorney, finding the three-year statute of limitations applicable and that the continuous representation doctrine did not apply. In its decision, the Court noted that in cases without a retainer agreement that explicitly anticipated further tasks, New York courts have generally found the continuous representation doctrine inapplicable. Further, the Court also found that one of the two prerequisites for continuous representation was lacking, the ongoing provision of professional services with respect to the contested matter or transaction. With no retainer agreement and only sporadic legal work done for the Plaintiff, the Court found that the last legal work done with respect to the contested matter occurred in 2009, at the latest. Perhaps most interestingly, the Court refused to credit the letters and accounting statements on which Attorney was copied as “indicia” of continuing legal work, noting that Attorney and his firm were nothing more than “passive recipients” of same. Even telephone calls after 2009 were not credited with tolling the claim, because the Court found that no legal tasks or services were provided in conjunction with those calls. As such, the case was dismissed.
In the end, what does the case teach us? Well, the Court, as it were, summed it up best. “The continuous representation doctrine tolls the time to file an action during the time when a potential plaintiff would otherwise face a dilemma of endangering his underlying claim or losing the time to file his claim for malpractice.” If there’s only passive, sporadic contact between an attorney and his client over a number of years, this case stands for the proposition that such a dilemma does not exist, nor will the Court act to create a dilemma where none exists, either.