A New York state appellate court ruled that a purchaser of corporate assets may proceed with a malpractice action against a law firm that the company alleges failed to properly perform environmental due diligence.
In this case, International Electron Devices (USA) LLC retained Menter Rudin & Trivelpiece in 2004 to purchase assets and property located in Cortland, New York on an “as is” basis. In 2006, EPA ordered IED to remediate the site at a cost of $8 million.
IED filed a professional malpractice action against the law firm in October 2008, the alleging, among other things, that it failed to recommend conducting a phase 2 prior to the closing. The law firm argued that the three-year statute of limitations for such a lawsuit expired in October 2007. The trial court dismissed the action but the appeals court reversed, concluding that the plaintiff has sufficiently pled that there had been had an ongoing relationship with the defendant firm in connection with the EPA investigation as late as the fall of 2006 so that the statute of limitations had not run
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