Three Year Statute of Limitations for Professional Malpractice Cannot be Extended by Re-characterizing Claims as Contract Claims

On December 26, 2019, the Third Department issued a decision in WSA Group, PE-PC v. DKI Eng'g & Consulting USA PC, 2019 NY Slip Op. 09339, holding that the three-year statute of limitations for professional malpractice cannot be extended by re-characterizing claims as contract claims, explaining:

A three-year statute of limitations governs actions to recover damages for malpractice, other than medical, dental or podiatric malpractice, regardless of whether the underlying theory is based in contract or tort. Although a six-year limitations period ordinarily applies to breach of contract claims, such a cause of action will be construed as a professional malpractice claim subject to the three-year limitations period to the extent that the allegations are that the defendant failed to perform its contractual services in a professional, non-negligent manner. In determining whether a cause of action denominated in tort or contract should be so construed, the pertinent inquiry is thus whether the claim is essentially a malpractice claim.

Here, Supreme Court determined that plaintiff's claim for negligent supervision and also its claim for breach of contract — to the extent that it is based upon defendant's failure to properly perform the bridge inspection — sound in the nature of professional malpractice, and are therefore subject to a three-year limitations period. Plaintiff does not directly challenge that finding, but rather challenges Supreme Court's determination that these claims are untimely. Relying on precedent addressing negligence and breach of contract claims that do not involve professional malpractice, plaintiff asserts that neither claim accrued until all elements of each cause of action, including damages, could be alleged. Plaintiff asserts that the claims are timely because they could not be pleaded until the damages resulting from Ahmad's actions in 2017 were in fact incurred, and that the payments of those costs, fees, and expenses were made less than three years before commencement of this action in 2018.

We reject this argument, as it disregards the well-established rule that a claim for professional malpractice against an engineer or architect accrues upon the completion of performance under the contract and the consequent termination of the parties' professional relationship. The operation of this principle is not altered by the fact that the extent of damages resulting from professional malpractice may not be known at the time of the termination of the professional relationship between the parties. We are constrained to find that a contrary rule would vitiate the purposes of the 1996 amendments to CPLR 214 (6). The amendments altered the former rule in nonmedical professional malpractice actions that had relied upon the proposed remedy rather than the theory of liability in determining the statute of limitations. These amendments were intended to reduce potential liability of insurers and corresponding malpractice premiums, and to restore a reasonable symmetry to the period in which all professionals would remain exposed to a malpractice suit. Thus, to the extent that plaintiff's claims sound in professional malpractice, they are deemed to accrue when such a claim would accrue. Here, the subcontract specified a completion date in May 2014 and did not contemplate any continuing professional responsibilities beyond that date. Thus, Supreme Court correctly determined that the parties' professional relationship terminated in May 2014, that the negligent supervision cause of action and the aspect of the breach of contract cause of action that sounds in professional malpractice accrued at that time, and that these claims are time-barred because the action was not commenced within three years thereafter.

(Internal quotations and citations omitted).

It is not unusual for the statute of limitations to be an issue in complex commercial litigation. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding whether a claim is barred by the statute of limitations.