Court Opinion

ID: 9947049
Source: CourtListenerOpinion
Date Created: 2024-03-01 21:09:16.11995+00
Date Added: 2024-06-11T14:25:45.854857
License: Public Domain

Open House Manhattan Inc. v de Visser
               2024 NY Slip Op 30606(U)
                   February 22, 2024
           Supreme Court, New York County
        Docket Number: Index No. 151931/2023
               Judge: Dakota D. Ramseur
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
 Op 30001(U), are republished from various New York
 State and local government sources, including the New
  York State Unified Court System's eCourts Service.
 This opinion is uncorrected and not selected for official
                       publication.
 [FILED: NEW YORK COUNTY CLERK 02/27/2024 04:51 P~                                                                   INDEX NO. 151931/2023
  NYSCEF DOC. NO. 16                                                                                        RECEIVED NYSCEF: 02/27/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. DAKOTA D. RAMSEUR                                     PART                                   34M
                                                                              Justice
            -------------------·---------------·-----------X
                                                                                            INDEX NO.                151931/2023
                OPEN HOUSE MANHATTAN INC.
                                                                                            MOTION DATE               10/06/2023
                                                       Plaintiff,
                                                                                            MOTION SEQ. NO.                  001
                                               - V -

                KEITH DE VISSER,                                                               DECISION + ORDER ON
                                                                                                      MOTION
                                                       Defendant.
                      ----------------------------------------------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 001) 5, 6, 7, 8, 9, 10, 12,
            14, 15
            were read on this motion to/for                                                    DISMISS

                   In February 2023, plaintiff Open House Manhattan Inc. (hereinafter, "plaintiff' or
           "OHM") commenced this action against defendant Keith de Visser to recover for liabilities it
           incurred due to defendant's alleged professional malpractice in failing to properly submit tax
           forms to the New York State Department of Finance between 2012 and 2015. 1 In this motion
           sequence (001), defendant moves for dismissal pursuant to CPLR 3211 (a)(l) where
           documentary evidence refutes plaintiffs claims, (a)( 4) due to the existence of a prior pending
           action, (a) (5) as being barred by the statute of limitations, and (a) (8) for lack of personal
           jurisdiction. Plaintiff opposes the motion in its entirety. For the following reasons, defendant's
           motion to dismiss pursuant to CPLR 3211 (a) (5) is granted, and the action is dismissed.

                                                                    BACKGROUND

                    Plaintiff alleges that it retained defendant as a professional accountant in October 2011 to
           render accounting, advisory, and tax support services. (NYSCEF doc. no. 1 at ,r 1.) In this
           capacity, defendant was responsible for maintaining plaintiff's books and preparing its tax
           filings. (Id. at ,r 2.) Plaintiff avers that, for 2012, defendant directed and advised it to close
           business and form a new company, which meant defendant was supposed to file the 2012 tax
           returns that indicated this change of status. (Id. at ,r 4.) Due to defendant's alleged failure to
           properly file the 2012 tax returns, however, plaintiff alleges that the New York State Department
           of Taxation has informed it that it has unpaid tax debt of $93,959.38. (Id. at ,r 7.) In paragraph
           eight, plaintiff alleges that "De Visser had filed taxes, corresponded with the State of New York
           and requested reinstatement of OHM in 2012 without authority or approval of plaintiff. .. The
           taxes for 2012-2015 were submitted in [sic] without Plaintiff's authority or approval." (Id. at ,r
           8.)

            1
                Although he is named "De Visser" in the caption, his affidavit indicates the proper spelling is de Visser.
                151931/2023 OPEN HOUSE MANHATTAN INC. vs. DE VISSER, KEITH                                            Page 1 of4
                Motion No. 001

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 [FILED: NEW YORK COUNTY CLERK 02/27/2024 04: 51 PM]                                            INDEX NO. 151931/2023
  NYSCEF DOC. NO. 16                                                                      RECEIVED NYSCEF: 02/27/2024

                   Plaintiff further alleges that (1) after inquiring how defendant was resolving this issue, he
           either explained that it was being worked on or ignored plaintiff altogether (id. at ,I 9), (2)
           defendant sent a letter to the Department of Taxation on September 24, 2018, explaining (and
           without taking further action), "[w]e are the accountants for Open House Manhattan. This
           company has not conducted business since December 2013, and as such has had their NYS
           charter revoked" (id. at ,I 10), and (3) the tax returns defendant filed in 2012 and 2015 tax returns
           were "not marked final" (id. at ,I 11.) Lastly, plaintiff alleges that, to date, defendant has not
           corrected or rectified the improperly filed tax returns and has since failed to respond to any
           written request for updates. (Id. at ,I 12, 16.)

                   On October 31, 2021 OHM' s President Theodore Liouliakis (and several other
           defendants) filed an Answer with Counterclaims in the Civil Court Action, Raich Ende Malter &
           Co., LLP v Open House Lofts Ny, Inc. (Civ. Ct. No. 018346-2021). Therein, Liouliakis alleges
           nearly identical facts and claims for professional malpractice against defendant's accounting
           firm. (See NYSCEF doc. no. 8, answer with counterclaims.)

                    On the present motion, de Visser contends that plaintiff's 2015 tax return (NYSCEF doc.
           no. 7), filed by his accounting firm on July 31, 2016, constitutes documentary evidence as to
           when plaintiff's alleged professional malpractice cause of action accrued. Given the three-year
           statute of limitations for professional malpractice, then, plaintiff was required, but failed, to
           commence its action by July 31, 2019. Alternatively, to the extent the Court is inclined to toll the
           limitation period under the "continuing representation" exception, de Visser contends that
           plaintiff's allegations do not run past September 2018 when he sent the letter to the Department
           of Taxation. Thus, even if the limitation period is tolled to September 2018, plaintiff's action is
           still untimely as plaintiff filed the complaint on February 28, 2023. The Court agrees; thus, it
           need not reach any further ground for dismissal.

                                                     DISCUSSION

           Dismissal Under CPLR 3211 (a) (1) and (a) (5)-Statute of Limitations

                   Causes of action alleging accountant malpractice have a three-year statute of limitation
           period. (Maya NY, LLC v Hagler, 106 AD3d 583, 586 [1st Dept 2013]; CPLR 214 (6) ["Actions
           to be commenced within three years: [6] an action to recover damages for malpractice (other
           than medical), regardless of whether the underlying theory is based in contract or tort"].) Such
           claims accrue from when the injury occurs----or "when all facts necessary to the cause of action
           have occurred." (Mitschele v Schultz, 36 AD3d 249, 252 [1st Dept 2006].) Thus, claims based on
           the failure to provide correct accounting information or advice typically accrue "upon the receipt
           of the negligently prepared tax documents." (Id., citing Ackerman v Price Waterhouse, 84 NY2d
           535, 541-542 [1994] ["[T]he claim [against an accountant] accrues upon the client's receipt of
           the accountant's work product since this is the point that a client reasonably relies on the
           accountant's skill and advice."]) Once the defendant has established, prima facie, that the time to
           commence an action has expired, "the burden then shifts to the plaintiff to raise questions of fact
           as to whether the statute of limitations [was] tolled." (See Spitzer v Newman, 163 AD3d 1026,
           1027 [2d Dept 2018] [citations omitted].)

            151931/2023 OPEN HOUSE MANHATTAN INC. vs. DE VISSER, KEITH                            Page 2 of 4
            Motion No. 001

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 [FILED: NEW YORK COUNTY CLERK 02/27/2024 04:51 Pij                                                               INDEX NO. 151931/2023
  NYSCEF DOC. NO. 16                                                                                    RECEIVED NYSCEF: 02/27/2024

                     Here, plaintiff acknowledges that it became aware of defendant's alleged malpractice in
           preparing 2012's tax return soon thereafter. 2 (In his Answer with Counterclaims in the Civil
           Court case, OHM's President admits that the company received such notice in May 2014 when
           the Department of Taxation first communicated about an unpaid tax bill-NYSCEF doc. no. 8 at
           ,-i 36). Further, plaintiff does not dispute the authenticity of the 2015 8879-s tax form that
           defendant attached to his motion. This document, which contains OHM's President's signature,
           establishes that plaintiff received the subject documents for that year (thus when the claim
           accrued) no later than July 31, 2016. Taken together, defendant has made its prima facie showing
           that plaintiff either had actual knowledge of the alleged malpractice or received the requisite tax
           documents by July 31, 2016 (the date OHM's president signed the 8879-s form). 3

                    Nonetheless, plaintiff contends that its professional malpractice claim related to its 2015
            tax returns is timely under the "continuing representation" doctrine. This doctrine tolls a claim's
            statute-of-limitation period and applies only "where there is a mutual understanding of the need
            for further representation on the specific subject matter underlying the malpractice." (Symbol
            Tech., Inc. v Deloitte & Touche, LLP, [69 AD3d 191, 195 [2d Dept 2009] (emphasis added);
            Williamson v PricewaterhouseCoopers, LLP, 9 NY3d 1, 10 [2007] [recognizing that where the
            plaintiffs and defendant were acutely aware of the need for further representation "(i.e., they had
            a mutual understanding to that effect)" and the plaintiffs were under the impression that
            defendant attorney was actively addressing their need, the continuous representation doctrine
            tolled the limitation period].) The First Department has made clear that, where an
            accountant/firm has been retained to prepare successive tax returns, each year's tax returns
            represent a "discrete and severable" transaction. (Booth v Kriegel, 36 AD3d at 315; Mitschele, 36
            AD3d at 252 [In circumstances where parties are engaged in a continuous relationship, the
            tolling of the limitations period "is only appropriate where the continuous representation was in
            connection with the particular transaction."] [emphasis original].)

                       In support of its position, plaintiff interprets the various allegations relating to measures
            deVisser did or did not take to resolve the 2012 tax issue as evidence of the parties' mutual
            understanding of ongoing representation. These allegations include: (1) defendant's
            communication that he "would take care of it" (NYSCEF doc. no. 1 at ,-i 6) and the issue "was
            being worked on" (id. at ,-r9); (2) defendant's negligence "related to OHM continues to-date" (id.
            at ,-rl2); (3) his refusal to provide any information about OHM's tax filings to its new
            accountants (id. at ,-i 14); and (4) that defendant "has failed to respond to any of the written
            requests for an update. This remains an unresolved issue and [defendant] refuses to cooperate."
            (Id. at ,-r 16.) Notwithstanding that some of these allegations are conclusory, viewed
            cumulatively, plaintiff's evidence fails to establish issues of fact as to whether there was a
            mutual understanding beyond 2018. This is because each post-2018 allegation relates to a.failure
            on defendant's part to continue the representation. Defendant "failed to respond to any of the
            written requests for an update" (id. at ,-i 16); "repeated requests were made for the files and
            2
             While the complaint leaves out specific dates for when it received notice from the Department of Taxation about
           an outstanding tax debt, it does describe plaintiffs "repeated attempts" to inquire into the matter. At the absolute
           very latest, its allegation that defendant sent a letter to the Department in 2018 serves as notice of defendant's
           alleged malpractice.
           3
             Although plaintiff states, "Defendant has failed to establish delivery of their work product" (NYSCEF doc. no. 14
           at 2), it does not reference the 8879-s form nor elaborate on how this form, signed by its president, does not establish
           delivery of the accounting work.
                151931/2023 OPEN HOUSE MANHATTAN INC. vs. DE VISSER, KEITH                                        Page 3 of 4
                Motion No. 001

                                                                  3 of 4
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 [FILED: NEW YORK COUNTY CLERK 02/27/2024 04:51 P~                                                     INDEX NO. 151931/2023
  NYSCEF DOC. NO. 16                                                                             RECEIVED NYSCEF: 02/27/2024

           de Visser has ignored all communications and requests" (id. at, 15); "deVisser has refused to
           provide any information about Plaintiff's tax filings to Plaintiff's new accountant" (id. at , 14)-
           none of these allegations (the only ones that address defendant's post-malpractice conduct)
           evince a continuing representation. Indeed, over the course of an approximately seven- or eight-
           year period, plaintiff only cites one instance, the 2018 letter, in which defendant took a single
           affirmative step towards recognizing its continuing obligation to represent plaintiff on this
           matter. Yet, even in this, plaintiff qualified, stating "no further action was taken thereafter."
           (NYSCEF doc. no. 1 at, 10.)

                   In sum, the statute of limitations on plaintiff's professional malpractice cause of action
           arising from tax returns for 2012 to 2015 accrued no later than July 31, 2016. And since
           plaintiff's allegations related to defendant's subsequent conduct do not create issues of fact as to
           the existence of defendant's continued representation, it was required to commence this action by
           July 31, 2019. Having only done so nearly four years later, dismissal of the cause of action is
           warranted under CPLR 3211 (a) (5).

                   Accordingly, for the foregoing reason, it is hereby

                 ORDERED that the branch of defendant Keith deVisser's motion to dismiss plaintiff
           Open House Manhattan Inc.'s complaint pursuant to CPLR 3211 (a) (5) is granted and the
           complaint is dismissed; and it is further

                    ORDERED that the branches of defendant's motion to dismiss pursuant to CPLR 3211
           (a) (4) and 3211 (a) (8) are deemed moot; and it is further

                   ORDERED that counsel for plaintiffs shall serve a copy of this order, along with notice
           of entry, on all parties within twenty (20) days of entry.

                   This constitutes the Decision and Order of the Court.

                   2/22/2023
                     DATE                                                                          EUR, J.S.C.

                                    ~
            CHECK ONE:                  CASE DISPOSED                    NON-FINAL DISPOSITION

                                        GRANTED         □ DENIED         GRANTED IN PART             □ OTHER
            APPLICATION:                SETTLE ORDER                     SUBMIT ORDER

            CHECK IF APPROPRIATE:       INCLUDES TRANSFER/REASSIGN       FIDUCIARY APPOINTMENT       □ REFERENCE

            151931/2023 OPEN HOUSE MANHATTAN INC. vs. DE VISSER, KEITH                                 Page 4 of 4
            Motion No. 001

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