asserting a fraudulent transfer claim on the basis of a prior court judgment against the debtor due to a lack of privity between the trustee and the pre-bankruptcy debtor. See, e.g., In re Southern Industrial Banking Corp., 66 Bankr. 349, 362 (Bankr. E.D. Tenn. 1986); In re Best Pack Seafoods, Inc., 29 Bankr. 23, 24-25 (Bankr. D. Me. 1983).
However, these cases clearly distinguish a trustee's effort to avoid a fraudulent transfer from a trustee's attempt to assert a personal action on behalf of the debtor; in the latter case, privity is present. See In re Southern Industrial Banking, Corp., 66 Bankr. at 362 ("[A] trustee's right to avoid a preference is clearly not a personal action, such as an action for breach of a contract to which the debtor is a party. Exercising an avoidance power . . . the trustee does not stand in the shoes of the debtor."); In re Best Pack Seafoods, Inc., 29 Bankr. at 24 ("When a trustee seeks to assert a debtor's cause of action against a third party the trustee stands in the debtor's shoes . . . . When seeking to avoid a preferential transfer, however, the trustee is not asserting a cause of action belonging to the debtor . . . ."); see also Miller v. New York Produce Exchange, 550 F.2d 762, 767-68 (2d Cir.), cert. denied, 434 U.S. 823, 54 L. Ed. 2d 80, 98 S. Ct. 68 (1977). In this case, plaintiff is not asserting a direct fraudulent transfer claim; plaintiff is asserting a malpractice action as ICA's successor-in-interest. Since a malpractice action is clearly a personal action of the debtor, and the trustee stands in the debtor shoes, plaintiff is barred by collateral estoppel if ICA would have been barred by collateral estoppel.
Accordingly, I conclude that plaintiff's Drexel malpractice claim, as it is currently alleged in plaintiff's complaint, fails to state a claim as a matter of law since the ICA settlement judgment released all claims against Drexel, and ICA had no claim to file against the Drexel estate. Although plaintiff may move this Court to amend his complaint to assert a Drexel malpractice claim based on the "fraudulent transfer" theory, any such motion must await the expiration of the stay discussed below.
III. Statute of Limitations
I concluded above that the New York statute of limitations applies to plaintiff's claims. It remains to consider the effect of that statute.
Defendants argue that plaintiff's claims are time-barred, due to a recent enactment by the New York State legislature which clarifies that a three-year statute of limitations applies to legal malpractice claims, regardless of the legal theory relied upon. Plaintiff contends that this recent legislative change is not merely a clarification, but a substantive change to prior law that should not be applied retroactively to bar his claims. Accordingly, plaintiff argues that a six-year statute of limitations applies to his claims, making all of his claims timely.
There is no dispute that plaintiff's claims would be time-barred under a three year statute of limitations and timely under a six-year statute of limitations. In addition, the parties agree that a six-year statute of limitations must be used if the New York Legislature's recent enactment is not applied to plaintiff's claims. The only issue in dispute is whether this recent enactment is an amendment or a clarification, and if it is an amendment, whether it can be applied retroactively to bar plaintiff's claims.
Pursuant to CPLR § 214(6), "an action to recover damages for malpractice, other than medical, dental or podiatric malpractice" must be commenced within three years. However, New York courts, including the New York Court of Appeals, have consistently applied the six-year statute of limitations for contract actions, CPLR § 213(2), to claims for legal malpractice, reasoning that "the choice of applicable Statute of Limitations is properly related to the remedy rather than to the theory of liability." Santulli v. Englert, Reilly & McHugh, 78 N.Y.2d 700, 579 N.Y.S.2d 324, 327, 586 N.E.2d 1014 (1992) (citations omitted). Accordingly, where a plaintiff's legal malpractice claim seeks recovery for damage to pecuniary or property interests, New York courts have applied a six-year, rather than three-year, statute of limitations. See Santulli, 579 N.Y.S.2d at 328; see also Barth v. Barth, Sullivan & Lancaster, 179 A.D.2d 1049, 579 N.Y.S.2d 283 (App. Div. 1992) (collecting cases); Schur v. Porter, 712 F. Supp. 1140, 1147-48 (S.D.N.Y. 1989); Cohen v. Goodfriend, 665 F. Supp. 152, 159 (E.D.N.Y. 1987).
In September 1996, the New York State Legislature passed "an act to amend the civil practice law and rules, in relation to the limitation of malpractice damages actions . . . ." 1996 N.Y. Laws 623. This act amended CPLR § 214(6), so that a three-year statute of limitations now applies to non-medical malpractice claims "regardless of whether the underlying theory is based in contract or tort." Id. (hereinafter referred to as "the 1996 amendment"). According to the legislative history accompanying the bill, the act was necessary to "reaffirm the legislative intent" that the statute of limitations for all non-medical malpractice actions should be three years, in light of recent court decisions which expanded the limitations period to six years under a contract theory, "thereby abrogating and circumventing the original legislative intent." New York Legislative Service, Inc., Bill Jacket, "Limitations of Malpractice Damage Action," 1996 Ch. 623. The amendment took effect immediately upon passage. 1996 N.Y. Laws 623.
Pointing to the legislative history, defendants argue that the 1996 amendment is merely a clarification of existing law, which would not raise retroactivity concerns if applied to plaintiff's claims. Although the legislative history may indicate that the 1996 amendment clarifies CPLR § 214(6), I do not agree that these statements alone are determinative of the Legislature's original intent in enacting the statute, particularly since several factors indicate that no such intent existed.
For example, as early as 1977, the New York Court of Appeals held that a six-year statute of limitations applied to a non-medical malpractice claim seeking contract damages. Sears, Roebuck & Co. v. Enco Assoc. Inc., 43 N.Y.2d 389, 401 N.Y.S.2d 767, 372 N.E.2d 555 (1977). In Sears, the Court acknowledged the existence of CPLR § 214(6), but held that the statute did not bar the application of the six-year statute of limitations to a non-medical malpractice claim arising out of the express or implied contractual relationship of the parties. Id. at 770. This analysis was reaffirmed by the New York Court of Appeals, see Video Corp. of America v. Frederick Flatto Assocs., 58 N.Y.2d 1026, 462 N.Y.S.2d 439, 439, 448 N.E.2d 1350 (1983), adopted by lower courts and applied specifically to legal malpractice claims, see, e.g., Sinopoli v. Cocozza, 105 A.D.2d 743, 481 N.Y.S.2d 177, 178 (App. Div. 1984); Santulli, 579 N.Y.S.2d at 328. Accordingly, this purportedly erroneous interpretation of CPLR § 214(6) has existed unchecked for the better part of two decades, despite the fact that CPLR § 214 has been amended at least once since Sears was decided, see N.Y. Civ. Prac. L. & R. 214, Historical and Statutory Notes. It is hard to believe that the Legislature would wait so long to "clarify" the statute if the 1996 amendment truly represented its "original intent."
This conclusion is confirmed by reference to the legislative history which accompanied the original passage of CPLR § 214(6). In Sears, the New York Court of Appeals noted that language including contract claims within the limitation on malpractice actions was suggested, but never adopted by the Legislature:
When CPLR 214 (subd. 6) was being drafted, it had been suggested that the limitations on malpractice actions should be extended to include contract claims (e.g., N.Y. Legis. Doc., 1961, No. 15; Advisory Committee on Practice and Procedure, Fifth Preliminary Report, S. 214, subd. 6, par. 55; N.Y. Legis. Doc., 1962, No. 8; Advisory Committee on Practice and Procedure, Sixth Preliminary Report, p. 93). Express wording to this effect was never enacted, however. The recommendation of the Law Revision Commission that the statute be explicitly worded to refer to "an action to recover damages for malpractice, whether based on tort, contract or any other theory " (emphasis added) was never adopted by the Legislature (1962 Report of N.Y. Law Rev. Comm., pp. 232, 233).