595 N.Y.S.2d 772 | N.Y. App. Div. | 1993
—Order of the Supreme Court, New York County (Joan Lobis, J.), entered on December 4, 1991, which denied defendants’ motion to dismiss the complaint, is unanimously modified on the law, the facts and in the exercise of discretion, and the motion granted to the extent of dismissing the cause of action for fraud and dismissing the causes of action for breach of fiduciary duty and professional malpractice with leave to plaintiffs to apply to the trial court for permission to replead, without costs or disbursements.
This action arises out of investment services provided to plaintiffs by defendants. The professional relationship between the parties herein, involving tax, accounting and investment advice, began in 1979 when, according to plaintiffs, Dr. Michael H. Zaref, a lifelong friend of defendants Sidney Berk and Norman Michaels, retained them to manage his financial and tax strategy. Plaintiffs further contend that although Dr.
The only issues presented in connection with the present appeal are, first, whether plaintiffs have asserted sufficient facts to show the necessary continuous representation to toll the statute of limitations applicable to the breach of fiduciary duty and professional negligence claims as to certain transactions which took place more than three years before the commencement of this litigation and, second, whether all of the elements of fraud have been pleaded with the required particularity. In that regard, the Supreme Court upheld the fraud cause of action as to three 1985 investments, ruling that the earlier transactions are time-barred by the six year limitations period, and denied dismissal of the breach of fiduciary duty and professional negligence claims notwithstanding that "[t]he papers are almost devoid of factual statements which would allow a fact finder to conclude that the continuous representation doctrine should be applied. The complaint alleges that the last investment was in 1985 and the last investor meeting plaintiffs attended was 1987. But plaintiffs do allege a connection between the earlier investments to later tax advice and investment planning. On a motion to dismiss, this complaint allegation is sufficient to raise a jury issue regarding continuous representation.”
The continuous representation doctrine, although originally derived from the continuous treatment concept in medical malpractice cases, has also been held applicable to professionals other than physicians (Greene v Greene, 56 NY2d 86, 93-94; see also, Glamm v Allen, 57 NY2d 87). As the Court of Appeals explained in Greene v Greene (supra), a client cannot reasonably be expected to assess the quality of the professional service while it is still in progress. However, the contin
In their complaint, plaintiffs allege that "[t]he continuous representation of plaintiffs by defendants was inordinately seamless. Not only did defendants exclusively prepare tax returns for plaintiffs, make investment decisions and choices for plaintiffs, and undertake to monitor investments for plaintiffs, but they also obtained mortgages where necessary, obtained insurance where necessary, and even recommended estate attorneys to draft plaintiffs’ wills.” Clearly, plaintiffs failed to describe any specific acts performed, representations made and/or omissions by defendants concerning the particular transactions which are challenged herein. Indeed, even the Supreme Court, despite declining to dismiss the causes of action relating to breach of fiduciary duty and professional negligence, acknowledged that plaintiffs’ "papers are almost devoid of factual statements” to support application of the continuous representation doctrine. Since plaintiffs have offered nothing more than defendants’ general and unfettered control of their financial, tax and investment affairs, the pleadings are insufficient to sustain the timeliness of any transactions completed more than three years prior to the commencement of this lawsuit insofar as professional malpractice is alleged (CPLR 214 [6]) and six years where the claim for breach of fiduciary duty is involved (see, Lamontagne v Board of Trustees, 183 AD2d 424, lv denied 80 NY2d 759).
A cause of action for fraud must assert "that a representation of a material fact was made; that such representation was false, and known to be false by the party making it, or was recklessly made; that such representation was made to deceive and to induce the other party to act upon it; and that the party to whom the representation was made relied upon it to its injury or damage” (Orbit Holding Corp. v Anthony Hotel Corp., 121 AD2d 311, 314). An examination of plaintiffs’ pleadings fails to reveal sufficiently particularized allegations of all
