Page v. Ellenoff Grossman & Schole LLP

Background

Joseph Page sued Ellenoff Grossman & Schole LLP concerning legal services allegedly provided in connection with a 2018 merger involving Rocketfuel Blockchain Company. In his amended complaint, Page asserted claims for negligence, legal malpractice, breach of contract, and breach of fiduciary duty. He alleged that the firm failed to make adequate disclosures, conduct adequate due diligence, and properly draft a contribution agreement before the merger was finalized on June 27, 2018. Page filed the action on May 27, 2022.

The firm moved to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a claim. The firm argued that Page had not alleged an attorney-client relationship, that his claims were barred by the three-year statute of limitations for legal-malpractice claims, and that his other claims duplicated the malpractice claim. Magistrate Judge James L. Cott recommended dismissing the action with prejudice.

Page’s Objections

Page objected to the recommendation. He argued that his claims arose within three years of filing, that the deadline should be extended under New York’s continuing-representation doctrine, and that he should be allowed to amend because he was proceeding without a lawyer and the case was complex. He also argued that his claims accrued when he resigned from Rocketfuel on May 29, 2019, or when he allegedly learned of the firm’s mistake around August 19, 2020. Page requested an opportunity to develop the record through discovery.

Court’s Analysis

Judge Caproni stated that she agreed with Judge Cott that Page had not adequately alleged an attorney-client relationship with the firm, but she assumed for purposes of the opinion that such a relationship existed. Under New York law, a legal-malpractice claim generally accrues when the alleged malpractice is committed, not when the client discovers it. Claims for negligence, breach of contract, and breach of fiduciary duty based on the same conduct are subject to the same limitations period.

The court concluded that Page’s claims were based on conduct occurring before the merger was completed on June 27, 2018. Because Page filed suit on May 27, 2022, more than three years later, the court held that the claims were untimely.

The court also rejected reliance on the continuing-representation doctrine. That doctrine can extend the limitations period when the attorney continues representing the client on the same matter in which the alleged malpractice occurred. The court found that Page had not alleged facts showing that the firm was expected to perform services concerning the merger after the merger was complete. A continuing attorney-client relationship or representation concerning unrelated matters was not enough.

The court further held that amendment would be futile because, even assuming the facts described in Page’s proposed second amended complaint and briefing, the claims would still be barred by the three-year limitations period.

Disposition

The court overruled Page’s objections and adopted Judge Cott’s Report and Recommendation in part. It granted the defendant’s motion to dismiss because Page’s claims were untimely, denied Page’s motion to amend the amended complaint, and dismissed the case with prejudice. The Clerk of Court was directed to close the motions and the case.