Red Zone LLC v Cadwalader, Wickersham & Taft, LLP, ___ NY3d ___, 2016 NY Slip Op 04249
When we reported on this legal malpractice case in 2015, the Appellate Division had invalidated the limitations defense as a matter of law. The Court of Appeals has now found factual issues that require a trial of the defense.
In 2005, Cadwalader had drafted an agreement with one of Red Zone’s advisers which was supposed to cap fees at $2 million, but proved ineffective. The litigation between Red Zone and the adviser, in which Cadwalader consulted but did not actually represent Red Zone, played out over a period of years, including a period from 2005 to 2007 in which there was no contact between them at all. The Appellate Division found a continuous course of representation notwithstanding the gap between contacts.
The point we made at the time was that the lapse of time between contacts, by itself, did not rule out continuous representation where the relationship itself continued. The Appellate Division concluded that there had simply been nothing to talk about during that time.
The Court of Appeals held to the contrary, finding that the “significant gap in time” was one of several factors indicating that Red Zone had not sustained its burden on summary judgment of showing that the limitations defense was meritless as a matter of law. That is, the gap doesn’t rule out the application of the continuous representation doctrine, but it provides an obstacle that cannot be leaped over without specific proof.