Link Motion Inc. v. DLA Piper LLP

Background

Link Motion Inc. sued DLA Piper LLP (US) and Caryn G. Schechtman for legal malpractice. DLA Piper had advised Link Motion about a Class B shares transaction and later made a limited appearance for Link Motion in a related shareholder action, Baliga v. Link Motion Inc.

In that related action, Wayne Baliga sought emergency relief, including a temporary restraining order, a preliminary injunction, and appointment of a receiver. Link Motion alleged that Baliga was not a registered shareholder under Cayman Islands law and therefore lacked authority to bring a derivative action for the company. Link Motion claimed that DLA Piper failed to advise it about this and other defenses, did not adequately oppose Baliga’s requests, and signed a January 21, 2019 stipulation stating that Link Motion did not oppose the preliminary injunction. The court later entered the preliminary injunction and appointed a receiver. DLA Piper withdrew from representing Link Motion on March 1, 2019.

Link Motion alleged that the receiver’s actions caused it financial harm, including litigation and receivership expenses, lost business benefits, and other losses. It filed this malpractice action on September 12, 2022. DLA Piper removed the case from New York state court and moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The parties agreed that the court could decide the motion based on their pre-motion letters.

Statute of Limitations

The court held that New York law gives a legal-malpractice claim a three-year limitations period. Such a claim generally accrues on the date of the allegedly improper act, not when the plaintiff discovers the alleged malpractice.

The court determined that the claim accrued no later than January 21, 2019, when DLA Piper signed the stipulation. It rejected Link Motion’s argument that the continuous-representation doctrine delayed accrual until March 1, 2019. That doctrine can delay the limitations period while an attorney continues representing a client on the specific matter, but the court found that DLA Piper’s representation was limited, effectively ended within days of the stipulation, and lacked an ongoing relationship of trust and confidence.

The court stated that, under ordinary circumstances, the three-year period expired on January 21, 2022. Even assuming that New York Executive Order 202.8 extended the period by 228 days, the deadline would have been September 5, 2022—one week before Link Motion filed suit. The court also said it was not persuaded that the executive order applied to these claims.

Equitable Tolling

Link Motion alternatively argued that equitable tolling should apply because the receiver repeatedly refused to bring the malpractice claim while controlling the company. Equitable tolling can prevent a limitations period from expiring when a plaintiff diligently pursues its rights but an extraordinary circumstance prevents a timely filing.

The court assumed, without deciding, that Link Motion had pursued its rights diligently. It nevertheless found no qualifying extraordinary circumstance. The alleged obstruction came from the receiver, who was not a defendant in this case, and Link Motion did not allege that DLA Piper prevented it from learning the relevant facts or filing suit.

The court also rejected applying adverse domination, a theory that can toll a limitations period when people who allegedly harmed an entity completely control it and make a lawsuit impossible. The court concluded that the theory generally applies against the controlling wrongdoers, not a nonparty such as the receiver. It further found that the receiver’s refusal to bring the action reflected a disagreement about whether the claim should be pursued, rather than the kind of fraudulent wrongdoing covered by the theory.

Disposition

The court held that Link Motion’s malpractice action was time-barred. It expressly decided the motion on statute-of-limitations grounds alone and did not otherwise address whether the complaint adequately stated a malpractice claim. Judge Victor Marrero granted DLA Piper and Schechtman’s motion to dismiss the complaint with prejudice and directed the Clerk of Court to close the action.