McCoy v. Feinman

• Decision Date: 19 November 2002
• Parties: SUSAN McCOY, Appellant, v. KENNETH I. FEINMAN et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

99 N.Y.2d 295

785 N.E.2d 714

755 N.Y.S.2d 693

SUSAN McCOY, Appellant, v. KENNETH I. FEINMAN et al., Respondents.

Court of Appeals of the State of New York.

Argued October 10, 2002.

Decided November 19, 2002.

Bouvier, O'Connor, LLP, Buffalo (Norman E.S. Greene of counsel), for appellant.

Sullivan Oliverio & Gioia LLP, Buffalo (Thomas M. Moll of counsel), for respondents.

Chief Judge KAYE and Judges SMITH, LEVINE, CIPARICK, WESLEY and GRAFFEO concur.

OPINION OF THE COURT

ROSENBLATT, J.

This appeal involves the statute of limitations in a legal malpractice action implicating a qualified domestic relations order (QDRO) under the Federal Employee Retirement Income Security Act of 1974 ([ERISA] 29 USC § 1001 et seq.). Plaintiff, the wife in an underlying divorce action, sued her former attorneys alleging that they negligently failed to secure preretirement death benefits under her ex-husband's employee benefit plan. The trial court and a divided Appellate Division concluded that the action was time-barred. Because neither plaintiff's stipulation of settlement in the divorce action nor the divorce judgment gave plaintiff a right to the survivor benefits she seeks, we conclude that the ensuing malpractice action accrued no later than the day the divorce judgment was entered. Measured from that day, this action is time-barred and we therefore affirm.

I.

Plaintiff and her former husband married in 1969. Under the husband's employee benefit plan, a surviving spouse or other designee would be eligible to receive either retirement benefits (if the employee-spouse retired) or survivorship benefits (if the employee-spouse died before retirement). The couple separated in 1985, after the husband's interest in the plan had vested. In January 1986, plaintiff hired defendant lawyer Kenneth Feinman of defendant law firm Siegel, Kelleher & Kahn to represent her in the divorce. On June 23, 1987, Feinman and the husband's attorney entered the following oral stipulation of settlement, which Feinman read into the record in open court:

"[I]t is agreed by the parties that [plaintiff] shall receive a portion of [the husband's] pension plan calculated with recourse pursuant to the formulas set forth in the cases of Majauskas and Szulgit, with the percentage being calculated as follows: [plaintiff] shall receive fifty per cent of a fraction calculated by dividing the number of months of marriage to the date of the action for divorce being commenced by the number of months that [the husband] has in the plan at the time of his retirement. * * *

"[T]he pension shall be divided pursuant to the figures I have just indicated by recourse to a Qualified Domestic Relations Order which my office shall prepare and submit to the Court either simultaneously with or shortly after the judgment of divorce."

Feinman also stated on the record that he would submit a proposed judgment of divorce. Defendants concede that Feinman never prepared the QDRO or the judgment. Instead, the husband's attorney prepared and filed the proposed judgment, which was entered in the county clerk's office on June 14, 1988. The stipulation of settlement was incorporated but not merged into the judgment of divorce. Plaintiff's ex-husband later remarried.

Feinman also represented plaintiff in a Family Court support action against her ex-husband that concluded on July 24, 1991. There is no record evidence that plaintiff had further contact with Feinman or his firm regarding the stipulation, divorce judgment, QDRO or employee benefit plan until September 1994, when plaintiff's ex-husband died before retirement. Plaintiff—still unaware that Feinman had never filed the QDRO—then informed Feinman of her ex-husband's death. Over the ensuing year, defendant firm sought unsuccessfully to obtain for plaintiff the preretirement death benefits payable under her ex-husband's employee benefit plan. The plan administrator ultimately determined that because there was no QDRO naming plaintiff as the surviving spouse under the plan, she was ineligible under ERISA to receive preretirement death benefits.

Unable to obtain those benefits for its client, Feinman's firm formally advised plaintiff on January 9, 1996 that it was closing her file. On June 12, 1996 (nine years after the settlement stipulation, eight years after the divorce judgment and five years after the Family Court proceeding), plaintiff brought the present legal malpractice claim, alleging that defendants negligently failed to secure preretirement death benefits under the ex-husband's employee benefit plan.

Supreme Court granted defendants' CPLR 3211 (a) (5) motion to dismiss on grounds that the three-year limitations period had run. A divided Appellate Division affirmed. The majority held that the malpractice claim accrued no later than June 14, 1988, when the divorce judgment was entered. They reasoned that on that day, plaintiff became ineligible to be considered the ex-husband's surviving spouse for purposes of receiving survivor benefits under his employee benefit plan. The dissenters would have held, and plaintiff argues before this Court, that the three-year limitations period did not begin to run until September 1, 1994, the date of her ex-husband's death. The dissenters reasoned that until the ex-husband's death, plaintiff could not have pleaded actual damages caused by defendants' negligence. The dissenters also contended, and plaintiff argues here, that this case qualifies for the continuous representation toll of Shumsky v Eisenstein (96 NY2d 164 [2001]).

Plaintiff appeals as of right based on the two-Justice dissent on a question of law (see CPLR 5601 [a]), and we now affirm. In addressing plaintiff's claims, we must examine not only the applicable limitations period for attorney malpractice claims, but also the statutory and decisional law governing stipulations, domestic relations orders and employee benefit plans. We take each in turn.

II.

Under the statute of limitations, the time within which a plaintiff must commence an action "shall be computed from the time the cause of action accrued to the time the claim is interposed" (CPLR 203 [a]). While courts have discretion to waive other time limits for good cause (see CPLR 2004), the Legislature has specifically enjoined that "[n]o court shall extend the time limited by law for the commencement of an action" (CPLR 201; see Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d 38, 43 [1985]; see generally Siegel, NY Prac § 33, at 40 [3d ed 1999]).¹

An action to recover damages arising from an attorney's malpractice must be commenced within three years from accrual (see CPLR 214 [6]). A legal malpractice claim accrues "when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court" (Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]). In most cases, this accrual time is measured from the day an actionable injury occurs, "even if the aggrieved party is then ignorant of the wrong or injury" (id.). "What is important is when the malpractice was committed, not when the client discovered it" (Shumsky, 96 NY2d at 166; Glamm v Allen, 57 NY2d 87, 95 [1982]).² Though we have recognized tolls on this three-year limitations period under the continuous representation doctrine (see Shumsky at 167-168), we have recognized no exception to measuring the accrual date from the date of injury caused by an attorney's malpractice. Thus, the key issue on this appeal is when plaintiff's actionable injury occurred.

In a legal malpractice action, a plaintiff must show that an attorney "failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession" (Darby & Darby v VSI Intl., 95 NY2d 308, 313 [2000] [citations and internal quotation marks omitted]). In addition, the plaintiff must show that the attorney's breach of this professional duty caused the plaintiff's actual damages (see Prudential Ins. Co. of Am. v Dewey, Ballantine, Bushby, Palmer & Wood, 170 AD2d 108, 114 [1st Dept 1991], affd 80 NY2d 377 [1992], rearg denied 81 NY2d 955 [1993]; see also 2 Dobbs, Torts § 485, at 1387 [2001]).

Feinman concedes he was negligent in representing plaintiff in her divorce. His concession, however, does not end the case. The parties dispute which negligent acts or omissions caused what injury, and, most critically, they disagree as to when plaintiff's actionable injury occurred so as to trigger accrual of the malpractice claim. To resolve these disputes, we must examine the statutory and decisional law governing stipulations of settlement and distributions under employee benefit plans.

III.

Stipulations not only provide litigants with predictability and assurance that courts will honor their prior agreements (see Kaplan v Kaplan, 82 NY2d 300, 307 [1993]), but also promote judicial economy by narrowing the scope of issues for trial (see Hallock v State of New York, 64 NY2d 224, 230 [1984]). To achieve these policy objectives, a stipulation is generally binding on parties that have legal capacity to negotiate, do in fact freely negotiate their agreement and either reduce their stipulation to a properly subscribed writing or enter the stipulation orally on the record in open court (see CPLR 2104; Siegel, NY Prac § 204, at 323; see also Hallock at 230; Covert v Covert, 50 AD2d 622, 623 [1975]).

When a stipulation meets these requirements, as it does here, courts should construe it as an independent contract subject to settled principles of contractual interpretation (see Keith v Keith, 241 AD2d 820, 822 [3d Dept 1997]; De Gaust v De Gaust, 237 AD2d 862, 862 [3d Dept 1997]). As with a contract, courts should not disturb a valid stipulation absent a showing of good cause such as fraud, collusion, mistake or duress (see e.g. Hallock, 64 NY2d at 230; Matter of Frutiger, 29 NY2d 143, 150 [1971]); or unless the agreement is unconscionable (see Christian v Christian, 42 NY2d 63,...