Thursday, November 21, 2013

Too Late To Sue For Tax Advice

A legal malpractice claim for allegedly negligent tax advice was time-barred, according to a decision of the New York Appellate Division for the Second Judicial Department:

On March 5, 2003, the defendants, Richard Reichler, Snow Becker Krauss, P.C., and Meltzer, Lippe, Goldstein, and Breitsone, LLP, allegedly advised the plaintiff in an opinion letter that his proposed sale of certain property would not result in the loss of his tax deferment status. In 2007, the Internal Revenue Service (hereinafter the IRS) notified the plaintiff that its determination was to the contrary, and directed him to remit back taxes, along with penalties and interest, totaling approximately $5 million. The plaintiff allegedly retained the services of the defendants to represent him against the IRS. On March 31, 2009, the IRS concluded that its determination was correct. One month later, on April 30, 2009, the plaintiff discharged counsel and retained new counsel. He filed a petition in the United States Tax Court challenging the IRS's determination, but, ultimately, on July 25, 2011, the court concluded that the IRS's determination was correct. On December 29, 2011, the plaintiff commenced this action alleging, inter alia, legal malpractice against the defendants, and they moved, inter alia, to dismiss that cause of action as time-barred.

The court affirmed the Supreme Court's dismissal

The plaintiff, in opposition to the defendants' showing, relies on the continuous representation doctrine as a toll of the three-year statute of limitations; however, he failed to raise a question of fact in this regard. As evidenced by, inter alia, the more than four-year period of time between the issuance of the opinion letter and the plaintiff's alleged retention of the defendants in July 2007, during which no further legal representation was undertaken with respect to the subject matter of the opinion letter, the parties did not contemplate that any further representation was needed.

(Mike Frisch)

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