Legal Malpractice

Multi-State Legal Malpractice and the Borrower Statute

By (Andrew Lavoott Bluestone)

California corporation retains New York law firm to process a trademark application, which fails.  California plaintiff sues New York defendant  for legal malpractice in Federal District Court, SDNY.  Case is dismissed on jurisdictional basis.  Case is later brought in State Court in New York.  Does California or New York statute of limitations apply?

In Kat House Productions v. Paul Hastings Janofsky & Walker, Justice York determines that California law applies, based upon CPLR 202.  The borrower statute's purpose is to prevent forum shopping between states and [as the Court of Appeals favors, have a "bright line rule".]

"CPLR 202 is designed "to prevent forum shopping by plaintiffs and to adhere to the generally accepted definition." Global Fin. Corp, v. Triarc Corp., 93 NY2d 525. 

"CPLR 202 is designed to add clarity to the law and provide the certainty of uniform application to litigants.  This goal is better served by a rule requiring the single determination of a plaintiff's residence than by a rule dependent on a litany of events relevant to the `center of gravity' of a contract dispute." Global  at 530.

Justice York then decided that since the "place where investors resided and sustained the economic impact of the loss" was the state for borrowing purposes, that the California one year statute of limitations applied.

Full post as published by New York Attorney Malpractice Blog on April 24, 2009 (boomark / email).