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$100 Million Lawsuit Gets Tossed Over Statute of Limitations

A recent case from an appeals court involved two heavyweight (i.e., "expensive") law firms, White & Case and Arnold & Porter, fighting over the statute of limitations of a malpractice lawsuit. (The plaintiff originally used another firm.) 

In the case, EB Brands Holdings sued its accountants for malpractice for, among other things, over-stating asset accounts (accounts receivable and inventories), which EB claims harmed and mislead its Board of Directors in making decisions. The agreement said that any lawsuits against the accountants had to be brought within two years of the subject audit report. The lawsuit sought damages of $100 million.

EB first brought suit in New York County, but the lawsuit was dismissed "without prejudice"--meaning EB could've fixed the problems in the complaint and re-filed it. Instead, EB brought a new lawsuit in Westchester County and abandoned its New York County case. But by then the two-year statute of limitations had ended. 

In the Westchester case, the defendant accountants made a motion to dismiss based on the two-year statute of limitations and won. EB appealed the decision, but the appeals court said nope, the two years was up, and no exceptions were applicable. Considering the firepower of their lawyers, I'm sure they argued everything possible. 

Sounds like EB should've stuck with the New York County case!

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