Court Opinion

ID: 7806922
Source: CourtListenerOpinion
Date Created: 2022-09-07 15:02:09.160804+00
Date Added: 2024-06-11T16:30:20.874762
License: Public Domain

Third District Court of Appeal
                               State of Florida

                      Opinion filed September 7, 2022.
       Not final until disposition of timely filed motion for rehearing.

                            ________________

                             No. 3D20-1627
                        Lower Tribunal No. 20-2762
                           ________________

                         Igor Mikhaylov, et al.,
                                 Appellants,

                                     vs.

           Bilzin Sumberg Baena Price & Axelrod LLP,
                                  Appellee.

    An Appeal from the Circuit Court for Miami-Dade County, Michael A.
Hanzman, Judge.

      Ratzan Weissman & Boldt, and Kimberly L. Boldt and Ryan C. Tyler
(Boca Raton); William Petros Law, and William L. Petros and Brett J. Novick,
for appellants.

      Podhurst Orseck, P.A., and Peter Prieto and Matthew P. Weinshall, for
appellee.

Before FERNANDEZ, C.J., and LOGUE and BOKOR, JJ.

     BOKOR, J.
        Igor Mikhaylov appeals the trial court’s final judgment of dismissal in

favor of Bilzin Sumberg Baena Price & Axelrod LLP. 1 The trial court granted

Bilzin’s motion to dismiss concluding that the action was barred by the

applicable statute of limitations. As explained below, we agree with the trial

court’s extensive and well-reasoned analysis.

                                BACKGROUND

        In 2010, Mikhaylov, a Russian national residing in Russia, and Anatoly

Zinoviev, a Russian national residing in Florida, met and formed a business

relationship. A few years later, Mikhaylov and Zinoviev embarked on a real

estate development project in Broward County (the Seneca Project)

overseen by Zinoviev as managing partner. Mikhaylov invested more than

$16 million in purchasing the land and developing a retail center on the land.

Mikhaylov hired Bilzin to provide legal advice and prepare the agreements

necessary to protect his financial interests, including a trust agreement, a

partnership agreement, and a secured promissory note.

        Eventually, the Mikhaylov-Zinoviev relationship soured.     Mikhaylov

raises claims of conspiracy, fraud, and theft due to Zinoviev’s alleged

diversion of funds from the Seneca Project to himself and Genna Demircan,

Zinoviev’s domestic partner. Mikhaylov claims that, between 2015 and 2017,

1
    We have jurisdiction. Fla. R. App. P. 9.030(b)(1)(A).

                                        2
aided by Bilzin, 2 Zinoviev and Demircan manipulated him into signing

documents removing him from the partnership and the trust and divesting

him of the profits of the venture. As a result of their purported scheme,

Zinoviev and Demircan assumed corporate control over the finances of both

the lender and the borrower in the Seneca Project.

      Mikhailov claims that upon uncovering the alleged scheme, he initiated

a probate action to remove Zinioviev and Demircan from the trust and a civil

action alleging fraud against Zinoviev and his co-conspirators.3

2
  As shown by the trial court’s examination of the operative complaint,
Mikhaylov was aware of Bilzin’s alleged malpractice or negligence as early
as November 2017:

      These allegations clearly demonstrate that as of November
      2017, Mikhaylov was aware of the fact that: (a) Zinoviev and
      Demircan had stolen his 1% GPI; (b) Zinoviev and Demircan had
      improperly issued a substantial capital call; and (c) Zinoviev and
      Demircan had used the authority provided by the documents
      Bilzin allegedly prepared to defraud him. He also was aware that
      due to Bilzin's alleged negligence the Trust had no collateral
      securing its debt. Recognizing that he had been severely injured
      as a result of these actions, and that Bilzin had failed to protect
      his interests, in November 2017 Mikhaylov attempted to remove
      "Demircan as trustee."
3
  As part of the civil action, the court appointed a receiver who conducted a
forensic accounting of the Seneca Project. As a result, on August 6, 2019,
the receiver filed a voluntary petition for relief under chapter 11 of the United
States Bankruptcy Code on behalf of East Coast Invest, an entity funded by
Mikhaylov to purchase property for the Seneca Project. On motion from the
chapter 11 trustee, the bankruptcy court entered an order converting the
case to a chapter 7 proceeding and later entered an order granting the

                                       3
      In February 2020, Mikhaylov instituted the instant action against Bilzin

for malpractice and breach of fiduciary duty alleging that Bilzin, as counsel

for Mikhaylov and the trust, failed to protect Mikhaylov and the trust’s

interests by “failing to properly counsel [their] clients with respect to various

agreements/transactions at issue, and failing to properly draft those

agreements in a manner consistent with the clients’ best interest[s].” In

response, Bilzin filed a motion to dismiss based upon the expiration of the

applicable statute of limitations. The trial court granted Bilzin’s motion and

dismissed the cause with prejudice. This appeal followed.

                                  ANALYSIS

      “We review an order granting a motion to dismiss de novo.” Fed.

Deposit Ins. Co. v. Nationwide Equities Corp., 304 So. 3d 1240, 1243 (Fla.

3d DCA 2020) (citing Williams Island Ventures, LLC v. de la Mora, 246 So.

3d 471, 475 (Fla. 3d DCA 2018)). Accordingly, we examine when the

applicable statute of limitations began to run on Mikhaylov’s legal

malpractice claims.4 “A legal malpractice action has three elements: 1) the

trustee’s application to list and sell the subject real property. Mikhaylov
argues that despite being aware of Bizlin’s alleged malpractice as early as
November 2017, the claim in the underlying malpractice action won’t finally
accrue until resolution of the bankruptcy petition.
4
  Per section 95.031, Florida Statutes, “the time within which an action shall
be begun under any statute of limitations runs from the time the cause of
action accrues.” Subsection (1) states, “[a] cause of action accrues when

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attorney’s employment; 2) the attorney’s neglect of a reasonable duty; and

3) the attorney’s negligence as the proximate cause of loss to the client.”

Law Office of David J. Stern, P.A. v. Sec. Nat’l Servicing Corp., 969 So. 2d

962, 966 (Fla. 2007) (citing Kates v. Robinson, 786 So. 2d 61, 64 (Fla. 4th

DCA 2001)). The question here hinges on when the losses occurred, and

therefore, when the clock starts ticking for statute of limitations purposes.

The parties disagree as to whether this question should be determined by

applying the “finality accrual rule” or the “first-injury rule.”

             The general rule, of course, is that where an injury,
             although slight, is sustained in consequence of the
             wrongful act of another, and the law affords a remedy
             therefor, the statute of limitations attaches at once. It
             is not material that all the damages resulting from
             the act shall have been sustained at that time and
             the running of the statute is not postponed by the
             fact that the actual or substantial damages do not
             occur until a later date. Lower courts have labeled
             this the “first injury” rule. However, a special rule
             applies when the plaintiff’s damages exist by virtue
             of an enforceable court judgment.              In these
             circumstances, the statute of limitations begins to run
             when the underlying judgment becomes final. We
             now label this the “finality accrual rule.”

the last element constituting the cause of action occurs.” Neither party
disputes that Mikhaylov’s claim is governed by the two-year statute of
limitations set forth in section 95.11(4)(a), Florida Statutes, which applies to
a professional malpractice claim.

                                          5
Kipnis v. Bayerische Hypo-Und Vereinsbank, AG, 202 So. 3d 859, 862 (Fla.

2016) (emphasis added) (internal quotations and citations omitted).

      Mikhaylov argues that the trial court erred by applying the first-injury

rule to his transactional legal malpractice case and relies on several Florida

Supreme Court cases. See Larson & Larson, P.A. v. TSI Indus., Inc., 22 So.

3d 36, 41 n.4 (Fla. 2009) (explaining the application of the finality accrual

rule to transactional malpractice cases); see also Perez-Abreu, Zamora &

De La Fe, P.A. v. Taracido, 790 So. 2d 1051 (Fla. 2001); Law Office of David

Stern, P.A., 969 So. 2d 962 (Fla. 2007). While the cases cited support the

application of the finality accrual rule to transactional malpractice cases in

circumstances where the existence of possible malpractice hasn’t been

established, we agree with the trial court that such cases don’t apply to the

facts present here. See Kipnis, 202 So. 3d at 862 (“To determine whether

to apply the [finality accrual] rule in any particular case, we have considered

a series of factors and applied the finality accrual rule where those factors

favored the rule’s application.”).

      The finality accrual rule explains that “a cause of action for legal

malpractice does not accrue until the underlying legal proceeding has been

completed on appellate review because, until that time, one cannot

determine if there was any actionable error by the attorney.” Peat,

                                      6
Marwick, Mitchell & Co. v. Lane, 565 So. 2d 1323, 1325 (Fla. 1990)

(emphasis added). Therefore, in Burgess v. Lippman, 929 So. 2d 1097 (Fla.

4th DCA 2006), our sister court quashed a trial court’s order denying a

motion to abate a legal malpractice action where “[r]esolution of those

[underlying] claims will determine whether the damages claimed by

Lippman are causally related to the malpractice claims.” Id. at 1099

(emphasis added). The court reasoned that “[t]his is necessarily so because

if Asper did not convert Lippman’s funds, then there would be no damages

suffered by Lippman caused by the alleged failure to warn by Burgess.” Id.

     Here, unlike in Lippman, the trial court properly concluded that the

resolution of the bankruptcy case would not determine whether Bilzin

committed malpractice. As the trial court noted, “[t]he alleged malpractice

occurred, and damages were undeniably suffered as a proximate cause of

that alleged malpractice. The only thing the related [bankruptcy] litigation

may do is reduce, or possibly eliminate, the damages already suffered by

Plaintiffs.” Unlike cases relying upon the final accrual rule, the bankruptcy

case provides, at best, mitigation of the loss that already occurred. But it

wouldn’t change whether the alleged malpractice occurred, or when the

action accrued. As explained by the trial court, the case accrued when

Mikhaylov suffered damage from the claimed malpractice:

                                     7
Plaintiffs suffered economic loss due to Bilzin's alleged
negligence more than two years before commencing this case.
And the fact that they may (or may not) recover some (or all) of
those losses via third party litigation does not alter an analysis of
when this malpractice claim accrued. It accrued when Plaintiffs
first suffered a concrete loss (i.e., injury) as a proximate cause of
Bilzin's malpractice. Not a day later.

Affirmed.

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