Overseas Shipholding Group, Inc. v. Proskauer Rose, LLP

130 A.D.3d 415, 13 N.Y.S.3d 39

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: July 2, 2015
• Docket: 650765/14 14412A 14412
• Status: Published

Opinions

Orders, Supreme Court, New York County (Jeffrey K. Oing, J.), entered September 16 and September 25, 2014, which, to the extent appealed from, denied defendants’ motion to dismiss the first cause of action alleging legal malpractice, affirmed, without costs.

The motion court correctly determined that the legal malpractice claim, based on allegedly deficient tax advice provided by defendants beginning in 2005 and continuing throughout the course of its ongoing representation of plaintiff, is not time-barred (see Shumsky v Eisenstein, 96 NY2d 164, 168 [2001]; Ackerman v Price Waterhouse, 252 AD2d 179, 205-206 [1st Dept 1998]; see also Zwecker v Kulberg, 209 AD2d 514, 515 [2d Dept 1994]). Further, plaintiff sufficiently pleaded that defendants’ advice was the proximate cause of its alleged damages.

Defendants argue that because the 2006 credit facility agreement was drafted by another law firm, it severed any causal chain between defendants’ work in 2005 and plaintiff’s increased tax liability. However, “[a]s a general rule, issues of proximate cause[, including superceding cause,] are for the trier of fact” (Hahn v Tops Mkts., LLC, 94 AD3d 1546, 1548 [4th Dept 2012] [alterations in original] [internal quotation marks omitted]) and defendants’ contention is unavailing at this procedural juncture (see Ableco Fin. LLC v Hilson, 81 AD3d 416, 417 [1st Dept 2011]). Plaintiff alleges, inter alia, that it continually relied on defendants’ advice for the purpose of shielding income from its off-shore subsidiary from federal income tax and that defendant improperly advised it to make the 2005 “check-the-box” election, which greatly enlarged the prospective pool of income on which plaintiff could be taxed. Plaintiff further alleges that the error in advising it to make the check-the-box election, which according to defendant could not be changed for the next five years, was compounded by the error of changing the language in the credit facility agreements from several liability to joint and several liability, effectively transferring the entire pool of off-shore subsidiaries’ income to plaintiff.

The motion court correctly determined that the complaint adequately pleads a valid claim of legal malpractice arising out of a 2011 memorandum. The documents submitted by defendants do not conclusively refute plaintiff’s claim (Amsterdam Hospitality Group, LLC v Marshall-Alan Assoc., Inc., 120 AD3d 431, 433 [1st Dept 2014]).

We have considered defendants’ remaining arguments and find them unavailing. Concur — Acosta, J.P., Andrias and DeGrasse, JJ.