Fleet Factors Corp. v. Werblin

• Decision Date: 25 November 1985
• Citation: 114 A.D.2d 996,495 N.Y.S.2d 434
• Parties: FLEET FACTORS CORP., d/b/a Ambassador Factors, Appellant-Respondent, v. WERBLIN, et al., Respondents-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 434

495 N.Y.S.2d 434

114 A.D.2d 996

FLEET FACTORS CORP., d/b/a Ambassador Factors, Appellant-Respondent, v. WERBLIN, et al., Respondents-Appellants.

Supreme Court, Appellate Division,

Second Department.

Nov. 25, 1985.

Ruskin, Schlissel, Moscou & Evans, P.C., Mineola (Richard Guy Leland and Steven B. Aptheker, of counsel), for appellant-respondent.

Hart & Hume, New York City (Arthur Gang and Maureen Glynn Powers, of counsel), for respondents-appellants.

Before MANGANO, J.P., and O'CONNOR, NIEHOFF and KOOPER, JJ.

MEMORANDUM BY THE COURT.

In an action to recover damages for negligence and fraud in the preparation of certain financial reports, plaintiff appeals from so much of an order of the Supreme Court, Nassau County (Vitale, J.), entered May 25, 1984, as granted that branch of defendants' motion which sought the dismissal of the first, second and third causes of action alleged in the complaint, and defendants cross appeal from so much of the same order as denied that branch of their motion which sought dismissal of the fourth, fifth and sixth causes of action.

Order modified, on the law, by deleting so much thereof as denied that branch of defendants' motion which sought to dismiss the fourth, fifth, and sixth causes of action and substituting therefor a provision granting that branch of defendants' motion with leave to the plaintiff to serve an amended complaint. As so modified, order affirmed, without costs or disbursements.

In its first three causes of action, plaintiff alleged that defendants, certified public accountants, had prepared and issued three separate reports on the financial condition of one Barbara Lew on October 15, 1974, February 6, 1979, and February 28, 1980, with the knowledge that Lew would use the reports to induce plaintiff to advance money, on her guarantee, to a corporation wholly owned by her. Plaintiff further alleged that, in reliance upon those reports, it did advance money to the corporation from November 1975 through August 1983. On November 9, 1983, Lew filed a petition in bankruptcy which did not reflect that she owned, or had recently transferred, certain securities allegedly listed on all three of the financial statements as comprising a substantial part of her net worth. Plaintiff commenced the instant action against defendant accountants in or about December 1983. The first, second and third causes of action seek damages for the negligent preparation of each of the three financial statements. These causes of action were properly dismissed as time barred.

The Statute of Limitations for professional malpractice is three years, and in those cases where the plaintiff is the client of the professional the cause of action accrues upon the performance of the work by the professional (CPLR 214 Sosnow v. Paul, 43 A.D.2d 978, 352 N.Y.S.2d 502, affd. 36 N.Y.2d 780, 369 N.Y.S.2d 693, 330 N.E.2d 643; Cubito v. Kreisberg, 69 A.D.2d 738, 419 N.Y.S.2d 578, affd. 51 N.Y.2d 900, 434 N.Y.S.2d 991, 415 N.E.2d 979). However, where, as here, the action is brought by a third party who was not the client, the action is not, strictly speaking one for malpractice, but is one for simple negligence, and the statute begins to run, in such a case, from the date of the injury (see, Cubito v. Kreisberg, supra, 69 A.D.2d at pp. 742-743, 419 N.Y.S.2d 578). In the instant case, where defendant accountants knew that their reports would be used by plainti...