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New York Commercial Division Case Compendium A Searchable Database of Court Decisions Issued by New York’s Commercial Division

Rejection of Continuous Representation Doctrine Leads to Dismissal of Time-Barred Claims Against Accountants: Irvin v. Jones

Posted in Breach of Fiduciary Duty, Fiduciary Duty, Fraud, Malpractice, Motion to Dismiss, Statute of Limitations, Suffolk, Summary Judgment, Tolling, Whelan, Thomas

In a December 13, 2012 decision by Justice Whelan, the Court granted the accountant defendants’ motion for partial dismissal of the complaint based upon statute of limitations.  In so doing, the court rejected the application of the continuous representation doctrine to the facts at hand.

 The action involved a family limited partnership, formed to manage the financial affairs of the members.  The action arose out of alleged misdeeds of defendant accountants, engaged by the husband of the plaintiff, Barbara Irvin, to perform personal financial accounting services.  The complaint against the accountants alleged various claims of self-dealing, alleging three causes of action: breaches of fiduciary duty, professional malpractice and an accounting.  Defendants sought dismissal of all of the claims, except a portion of the claim for professional malpractice for the preparation of personal tax returns for 2006 and 2007.

 First, the court noted that the statute of limitations for nonmedical professional malpractice claims is three years under CPLR 214.   The court next considered the continuous representation doctrine which, if applicable, would operate to toll or suspend the statute of limitations for professional malpractice claims until the completion of the professional’s ongoing services concerning the matter out of which the malpractice claim arises.  Finally, the court distinguished the statute of limitations for breach of fiduciary duty claims based on the remedy sought:  3 years for damages claims; and 6 years for equitable or fraud claims.

 Applying these principles, the court concluded each of the claims challenged by defendants were indeed time-barred.  As to the continuous representation doctrine, the court held that it  “applies only where there has been continuous representation in the subject matter at issue by the defendant professional rather than a continuing general relationship”, which was the case here.

Irvin v. Jones, Sup Ct, Suffolk County, December 13, 2012, Whelan, J, Index No. 2942-12.