By Joseph Ax 

NEW YORK, Jan 17 (Reuters) - A divided New York appeals court on Thursday threw out a $10 million lawsuit against law firm Greenberg Traurig and partner Leslie Corwin that alleged he lied about the authenticity of a key document that was eventually set on fire.

In a 3-2 decision, the Appellate Division, First Department, reversed Manhattan Supreme Court Justice Shirley Kornreich and granted the firm's request to have the case dismissed because it was filed after the three-year statute of limitations had expired.

"Plaintiff was aware of the basic facts relative to defendants' alleged deceit more than three years before this action was commenced," the majority wrote in an unsigned opinion.

Two justices dissented, saying the majority erred in determining when the three-year time limit should have commenced.

The plaintiff, James Melcher, sued Greenberg Traurig and Corwin in connection with a breach of contract case he is litigating against his former employer, Apollo Management, over a share of profits he claims he is owed. Corwin represents Apollo in that dispute.

According to Melcher's complaint, in 2004 Corwin told him and his lawyer, Jeffrey Jannuzzo, that his case against Apollo lacked merit because an amendment to Apollo's operating agreement had significantly reduced his profit share.

Corwin vouched for the authenticity of the document, claiming he had spoken with Jack Governale, the lawyer who allegedly drafted it. Melcher requested a copy of the amendment so that he could have it analyzed by an ink expert to determine whether it was authentic.

BURNED DOCUMENT

Within days, an Apollo executive told Corwin he had accidentally set fire to the two-page document while making tea, burning the top page and singeing the bottom of the second page, according to Melcher's lawsuit.

Corwin did not disclose the burning of the document to Melcher or the trial court, the lawsuit claims. In a letter dated March 20, 2004, Jannuzzo complained that Corwin had engaged in the "concealment of material facts and misleading representations."

The majority found that the three-year time frame should have commenced at the time of the letter, because it was clear Jannuzzo was aware of the alleged deceit. Since the lawsuit against Greenberg was filed on June 25, 2007, it exceeded the statute of limitations, the majority said.

But in his dissent, Justice Nelson Roman said the three-year limit should not have started until Jannuzzo could claim he was certain Corwin had lied explicitly, as opposed to simply had concealed information.

In the complaint, Jannuzzo said he did not realize Corwin's assertions were untrue until Dec. 7, 2005, when he deposed Governale, the lawyer who supposedly drafted the amendment, and learned that Governale had no record or memory of doing so.

"Specifically, it was on that date that the realization that plaintiff had been deceived by Corwin occurred," wrote Roman, who was joined in dissent by Justice Helen Freedman.

In a statement, Jannuzzo said he would appeal the ruling to the Court of Appeals and would argue that the statute of limitations for lawsuits against other attorneys should not begin until the underlying case has ended.

"The majority's rationale was that your time to sue opposing counsel starts running as soon as you even suspect he has committed deceit," Jannuzzo said.

In a statement, a Greenberg spokesman said the "allegations in the complaint have no merit" and the firm was pleased with the decision.

The majority panel included Presiding Justice Luis Gonzalez and Justices David Saxe and Leland DeGrasse.

The case is Melcher v. Greenberg Traurig, Appellate Division, First Department, No. 8207.

For Melcher: Jeffrey Jannuzzo.

For Greenberg Traurig: Roy Reardon of Simpson Thatcher & Bartlett.

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