Lawyer Loses Bid to Dismiss Late Malpractice Claim Seeking $25M
On January 8, 2018, Justice Lynn Kotler of the New York County Supreme Court denied an attorney's motion to dismiss a legal malpractice claim arising out of a divorce action involving "assets worth tens of millions of dollars". Noreen and Peter Roth married in 1996 and had two children. The husband founded a highly successful global skin care company (Peter Thomas Roth Labs) in 1993 and both husband and wife were employed in furtherance of the business. The wife claims that in December 2012 her husband hired the defendant law firm, Rubinstein & Rubinstein (RR) for "urgent" estate planning and asset protection work that needed to be completed immediately to take advantage of a tax law that was expiring. She claimed her husband and RR advised her that they "urgently needed to place all of their assets" into irrevocable trusts for the benefit of their children. The wife contends that she agreed to the plan and transferred 98% of all her marital and separate property to the children's trusts but that her husband secretly failed to do likewise.
In February 2016, the husband filed for divorce claiming that his wife has no right to equitable distribution because they no longer owned anything except a 1% interest in a general partnership with an interest in the family limited partnerships. The wife filed a legal malpractice claim against RR in June 2016 claiming negligence, conflict of interest and breach of fiduciary duty. RR moved to dismiss stating that their estate planning work was substantially completed in December 2012 and that any legal malpractice claim had to be filed by December 2015. The Court denied the motion finding that the statute of limitations had been tolled based on the doctrine of continuous representation. The defendant law firm undertook to prepare a deed for the transfer of a property in Water Mill, New York in March 2013 that wasn't recorded until April 2014. Justice Kotler explained that defendant RR's preparation and filing of a deed to real estate in 2013 and 2014 constituted "the same or related services as those that are at the heart of this action." The suit seeks $25,000,000 for both the legal malpractice and breach of fiduciary claims; and, $150,000,000 in punitive damages. Roth v Rubinstein,2018 NYSUM 118914
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