By an unanimous decision on April 1, 2014, the New York State Court of Appeals ruled that claims for attorney deceit are subject to the six-year statute of limitations, rather than the three-year period provided by CPLR 214(2). Melcher v. Greenberg Taurig, LLP, et al., __ N.Y.3d __ (April 1, 2014).
Plaintiff James Melcher brought an action alleging attorney deceit under Judiciary Law § 487. The defendants, Greenberg Traurig, LLP and Leslie D. Corwin, had represented parties sued by Melcher in a prior action to recover his share of profits under the operating agreement of hedge fund Apollo Management. At issue was the authenticity of a document alleged to have amended the operating agreement that diminished Melcher's rights. In his suit brought under the Judiciary Law, Melcher alleged that the defendants concealed material facts and made misleading representations in the prior action concerning the document.
Defendants moved to dismiss based on the three-year statute of limitations in CPLR 214(2) which governs "an action to recover upon a liability "¦ created or imposed by statute". Melcher countered that the limitations period should be six years under CPLR 213(1) which acts as a residual or "catch-all" provision for "action(s) for which no limitation is specifically prescribed by law".
While the trial court agreed with defendants that the applicable limitations period was three years, the court found that the defendants were equitably estopped from asserting the statute of limitations defense and ultimately denied their motion to dismiss. Defendants appealed and the Appellate Division reversed, finding that the doctrine of equitable estoppel did not apply and the claims were barred by the three-year statute of limitations.
The Court of Appeals reversed. The Court cited its opinion in Amalfitano v. Rosenberg, 12 N.Y.3d 8 (2009). Although Judiciary Law § 487 was descended from the first Statute of Westminster adopted by the English Parliament in 1275, the Court found that a cause of action for attorney deceit existed as part of New York's common law prior to being enacted into statute in 1787 and was therefore subject to the six-year statute of limitations in CPLR 213(1). The Court did not address the equitable tolling issues, having found that the claim was timely.
Although the elements of a claim under Judiciary Law § 487 are different from those of a common law fraud cause of action, it is not surprising that the Court of Appeals has ruled that the same statute of limitations applies to both causes of action. The Court's opinion will likely result in more claims being pursued against attorneys under the statute, not only due to the longer statute of limitations, but also because, unlike common fraud, the plaintiff need only prove an attempted deceit, need not prove reliance, and can obtain an award of treble damages.
If you require further information regarding the content of this alert, please contact David B. Cabaniss, Chair of our Professional Liability Practice Area, at (518) 429-4279 or dcabaniss@hblaw.com.