As you may be aware, different types of claims have amounts of times that they may be sued upon under New York law. This is commonly referred to as a “statute of limitations.” Some of the more common examples of this include a breach of contract claim (6 years) and negligence (3 years). (Note:  malpractice is professional negligence, and therefore is also usually governed by a 3-year statute of limitations, although there are some categories of malpractice, such as medical, podiatric and dental malpractice, that have shorter limitations periods.)

But there are a few important exceptions to this rule, such as where the plaintiff is an infant, or under a disability. Another important exception to this rule is the continuous representation doctrine, which states, in essence, that the time on the statute of limitations does not start to  run so long as there is “a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim” (McCoy v Feinman, 99 NY2d 295, 306; see Zorn v Gilbert, 8 NY3d 933, 934).

In a recent case, New York’s Appellate Division, Second Department held that a Forbes 500 company’s accounting malpractice claims against the firm that had been hired to perform their audits would be allowed to continue even though some of the audits had been performed more than 3 years before the malpractice claims were brought (and therefore appeared to be time-barred). The reason?

Because “[w]hen undertaking the [plaintiff's] audits for the fiscal years 1998 through 2001, [the defendant audit firm] contemplated that its work and representation on each audit year would continue beyond the issuance of the audit opinion” and that “[t]his contemplation is evidenced by [the defendant's] opinions on prior years’ financial statements, income statements and cash flow contained in each audit opinion.” In other words, since the defendant audit firm was still representing the plaintiff company with respect to those prior audits, the statute of limitations did not begin to run.

Clearly, the plaintiff in this case acted wisely by assuring that their underlying agreement with the audit firm reflected the defendant’s ongoing obligation to correct prior audits, and thereby saved their claim from a rapid defeat.

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