FKB's Joshua Sandberg wins motion to dismiss legal malpractice claim in New York County concerning underlying arbitration proceeding.10/5/2010

Hon. Charles E. Ramos, J.S.C. of New York County Supreme Court granted FKB's motion to dismiss a legal malpractice action against our clients in connection with their representation of the plaintiff in an arbitration of plaintiff's employment-related claims.

Plaintiff filed her claim against her former employer in February 2003, claiming that she was abruptly terminated with no prior notice or review by any supervisory body, in violations of preconditions for termination under her employment contract and that her former employer wrongfully invoked a provision of the employment contract that permitted the employer to deny plaintiff of over $2 million in contract benefits by claiming, without justification, that plaintiff's performance was "unsatisfactory". In December 2005, after a lengthy and complex arbitration during which plaintiff was represented by our clients, the arbitrator rejected all of plaintiff's claims and ordered her to reimburse her former employer its legal fees and expenses, totaling over $600,000, pursuant to the terms of her employment contract.

The plaintiff subsequently brought a legal malpractice action in 2007, alleging that her former attorneys negligently represented and counseled her from February 2003 through December 2005, alleging causes of action for legal malpractice, breach of fiduciary duty and violation of Section 487 of the New York Judiciary Law. FKB moved to dismiss the 2007 Complaint on the ground that plaintiff did not obtain personal jurisdiction over our clients as she failed to serve them with the Complaint. While our motion to dismiss was pending, plaintiff served another essentially identical Complaint in 2009 for the purpose of preserving her claims against our clients. In February 2010, Hon. Milton Tingling, J.S.C. dismissed plaintiff's 2007 action for failure to obtain personal service, and her 2009 Complaint was dismissed on the ground that the 2007 action, which was identical to the 2009 action, was pending. However, plaintiff was granted a 30-day extension to serve a new complaint, which she served in March 2010.

FKB then moved to dismiss the 2010 Complaint (which was properly served) on the grounds that it was time-barred by the applicable three-year statute of limitations, and that plaintiff failed to allege and could not prove that "but for" our clients' alleged negligence, she would have prevailed in the underlying arbitration hearing. In the opposition papers and during oral argument before Justice Ramos, plaintiff's counsel argued that the instant action is timely due to the application of the "savings statute", CPLR §205(a), which provides that "if an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff...may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action." Plaintiff's counsel argued that because the 2007 action was timely commenced but was not dismissed on the merits, the saving statute applied to toll the statute of limitations for six months after the February 2010 dismissal.

In opposition, we argued that the savings statute could not possibly apply because plaintiff failed to obtain personal jurisdiction over the defendants when she failed to serve them with the 2007 Complaint. While plaintiff's counsel claimed that Justice Tingling somehow extended the statute of limitations by extending plaintiff's time to serve a new complaint, we argued that Justice Tingling did not extend the statute of limitations, but merely extended the time for service, as Justice Tingling made no mention of the statute of limitations in his prior decision.

Justice Ramos agreed with our arguments and made a ruling from the bench that plaintiff's Complaint is time-barred and therefore dismissed.

FKB's clients were represented by Joshua Sandberg.

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