Dempster v. Liotti
86 A.D.3d 169
N.Y. App. Div.2011Background
- Dempster hired Liotti to pursue a RICO action against the Shaw Firm and others; Liotti failed to timely oppose a motion to dismiss the amended RICO complaint and failed to timely appeal from the district court’s order granting that motion.
- The district court dismissed the amended RICO complaint as time-barred under the applicable statute of limitations.
- Second Circuit affirmed the district court’s dismissal for lack of timely opposition and absence of timely appeal, and Liotti sought further review.
- Plaintiff then sued Liotti in Nassau County Supreme Court for legal malpractice and breach of contract based on Liotti’s negligence.
- Supreme Court granted Liotti summary judgment on the breach of contract claim as duplicative and ruled that Liotti’s negligence did not causally affect the RICO outcome because the RICO claim was time-barred as a matter of law.
- Court analyzed whether the plaintiff could prove causation in legal malpractice given a legally time-barred underlying action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Liotti’s negligence proximately caused damages | Dempster claims Liotti’s failure to oppose and appeal caused the RICO action to be dismissed, depriving her of treble damages. | Liotti argues, as a matter of law, the RICO claim was time-barred regardless of his conduct. | No; the RICO claim was time-barred, so negligence could not proximately cause the damages. |
| Whether the RICO claim accrual allowed Liotti to save timely filing | Plaintiff contends separate accrual could have preserved timely filings. | Liotti contends no new, independent injury occurred to trigger separate accrual. | Separate accrual did not save the claim; injury accrued by 1997 and could not be tolled. |
| Whether breach-of-contract claim was duplicative | Breach-of-contract arose from the same facts as the legal malpractice claim. | Liotti argues cross-claim is duplicative and should be dismissed. | Cross-claim properly dismissed as duplicative of the legal malpractice claim. |
| Whether standard for legal malpractice causation was satisfied | If Liotti’s negligence occurred, plaintiff would have proven merit of RICO claim. | Even with negligence, underlying claim’s bar forecloses causation. | Negligence failed to prove causation due to time-barred underlying claim. |
Key Cases Cited
- Agency Holding Corp. v. Malley-Duff & Assoc., Inc., 483 U.S. 143 (Supreme Court, 1987) (establishes four-year RICO limitations but accrual undecided at that time)
- Rotella v. Wood, 528 U.S. 549 (Supreme Court, 2000) (discusses accrual for statute of limitations)
- In re Merrill Lynch Ltd. Partnerships Litig., 154 F.3d 56 (2d Cir., 1998) (separate accrual rule applies to independent injuries)
- Bankers Trust Co. v. Rhoades, 859 F.2d 1096 (2d Cir., 1988) (separate accrual may apply to new injuries)
- Klehr v. A.O. Smith Corp., 521 U.S. 179 (Supreme Court, 1997) (bootstrap risk in applying accrual rules)