New York requires someone who thinks they have a claim for malpractice against their lawyer to sue within three years of when “all facts necessary” to the claim have occurred. In most cases, that time runs from the date when there's an actual injury or when damages are "sufficiently calculable.” McCoy v. Feinman, 99 N.Y.2d 295, 301 (2002). But what does that really mean? When are damages “sufficiently calculable?” Is it when the damages are likely, but don't exist yet? Or when a jury reaches a verdict? Or later when a money judgment is formally entered?
A November 17, 2020 decision of a New York appellate court answers these questions, and it isn't happy news for the plaintiff. The case dramatically highlights the dilemma for those who believe they are malpractice victims, but who haven’t yet suffered the harm they foresee. If they file right away to make sure they’re timely under the statute, they may face a motion to dismiss because damages are speculative. Alternatively, if they wait until the foreseen damages crystallize, they may be time-barred if the process takes more than three years after the underlying wrongdoing. Here, the plaintiff suffered both fates.
In Flintlock Construction Services, LLC v. Rubin, Fiorella & Friedman, LLP, 2020 NY Slip Op. 06711 (1st Dep’t 2020), the plaintiff (a general contractor) performed construction and excavation work on property owned by Well-Come in 2004. An adjacent property owner sued Flintlock and Well-Come for damaging its premises, and Flintlock retained the Rubin law firm to represent it. The alleged malpractice occurred in 2006 and 2007 when, unbeknownst to Flintlock, the Rubin firm agreed with Well-Come that Flintlock alone was responsible for all damages in the case.
Fearing future liability, before the property damage trial Flintlock sued the Rubin firm in 2011 for malpractice. In 2013, the appellate court dismissed the case as premature: “At this juncture, plaintiff's allegations of proximate cause and damages are premature or speculative, as it is unable to prove that any such damages are directly traceable to defendant's conduct … Accordingly, we dismiss without prejudice to raising the malpractice claims upon resolution of the underlying action.” (emphasis supplied). Flintlock Construction Services v. Rubin, Fiorella & Friedman, LLP, 110 A.D.3d 426 (1st Dep’t 2013). This result is not uncommon. See Miami Capital, LLC v Hurwitz, 101 N.Y.S.3d 598 (1st Dep’ 2019) (Although “plaintiff anticipates that it could be subject to a rescission claim at some point in the future,” the damages are “purely speculative and not yet ripe.”)
On July 29, 2013, a jury found against Flintlock and Well-Come, and awarded damages. Five years of post-trial proceedings ensued before a money judgment was finally entered on September 5, 2018. Two weeks later, Flintlock sued the Rubin firm again for malpractice.
The Rubin firm again moved to dismiss the case, this time arguing it was time-barred because the July 2013 verdict was the date when “all necessary facts” had occurred and when damages were sufficiently established. In turn, Flintlock argued that it relied on the 2013 decision in believing that it could wait until “the resolution of the underlying action,” which wasn’t until the entry of the final judgment in 2018, and that damages weren’t actually ascertained until then.
The appellate court sided with the law firm. Affirming the trial court's dismissal of the case, the First Department’s November 17 decision found that the jury verdict in July 2013 rendered “any damages arising from defendant’s alleged malpractice … sufficiently calculable for pleading purposes.” The statute therefore expired in July 2016, more than 18 months before Flintlock sued.
The court further rejected Flintlock’s purported reliance on the “resolution of the underlying action” language, noting that plaintiff was not “actively misled or prevented in some extraordinary way” from suing before July 2016 and could not claim a toll based on equitable estoppel. Nor was the 2013 appeal law of the case.
The lesson here is a harsh one for Flintlock inasmuch as it was faulted for both acting prematurely by filing its suit in 2011 and for being dilatory by waiting until 2018 to re-file. One might argue (as did the Rubin firm in its brief) that Flintlock could have protected itself by either: (a) filing a lawsuit within three years of the jury verdict and then seeking a stay pending final assessment of damages; or (b) seeking a tolling agreement from the firm to preserve its rights.
As a matter of practice, a plaintiff who wishes to avoid the kind of unhappy result suffered by Flintlock would be well-advised to seek a tolling agreement if there is doubt as to whether “all necessary facts” – including damages – have been sufficiently established. This uncertainty may be most common where an award of damages is on appeal, and a possibility exists that the damage award will be overturned at some uncertain future date -- possibly outside the limitations period. Many would-be defendants are amenable to such agreements in order to defer (or possibly avoid) public litigation, especially where the amount of damages remains to be determined.
The case dramatically highlights the dilemma for those who believe they are malpractice victims, but who haven’t yet suffered the harm they foresee. If they file right away ... they may face a motion to dismiss because damages are speculative. Alternatively, if they wait until the damages crystallize, they may be time-barred if the process takes more than three years after the underlying wrongdoing.