Articles Posted in Legal Malpractice

In Athena of S.C., LLC v. Macri, No. E2016-00224-COA-R3-CV (Tenn. Ct. App. Oct. 14, 2016), the Court of Appeals affirmed the dismissal of a Tennessee  legal malpractice claim on the basis that the claim was barred by the one-year statute of limitations.

In the underlying matter, plaintiffs had purchased promissory notes from an individual and a business, and defendant attorney represented the sellers of the notes during the transaction. Thereafter, plaintiffs hired the same attorney to help them collect on the notes they purchased. Defendant attorney drafted two complaints and two agreed judgments against the debtors on the notes, which were entered in circuit court in November 2011. During the same time period, the debtor on the notes was involved in litigation in federal court, where his former business partner had sued him.

In May 2012, plaintiffs published a notice of foreclosure for condominiums that secured the notes, but the former business partner filed a motion in federal court to enjoin the sale. Finding that the transfer of the notes was likely fraudulent, the district court entered an order in May 2012 enjoining the sale. In July 2012, plaintiffs published a notice of foreclosure for lots that secured the note, and the same scenario played out, with the federal court enjoining the sale in August 2012.

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In a recent legal malpractice case, the Tennessee Court of Appeals held that the one-year statute of limitations had run and that the case should accordingly be dismissed in total.

In Story v. Bunstein, No. E2015-02211-COA-R3-CV (Tenn. Ct. App. June 9, 2016), plaintiffs had previously been represented by defendant lawyers in a lender liability suit against three defendants. The timeline of the underlying litigation included the following:

  • On May 7, 2013, the trial court granted summary judgment to two defendants.
  • Lawyer “allegedly advised [plaintiffs] that he would fie a motion to correct what he perceived was the erroneous grant of the motion for summary judgment.”
  • Layer filed a motion to alter or amend, but no hearing was ever set for that motion.
  • “Shortly before trial on the remaining claims, [lawyer] allegedly informed [plaintiffs] that their damages evidence was not ready for trial” and recommended voluntary dismissal.
  • Underlying suit was voluntarily dismissed on November 13, 2013, and was not re-filed.

This legal malpractice claim was filed on September 3, 2014.

Defendants filed a motion to dismiss based on the statute of limitations. In response, plaintiffs argued that “the statute of limitations did not begin to run until the order of dismissal as to [plaintiff’s] remaining claims was entered on November 13, 2013.” The trial court held that the statute of limitations barred some of plaintiffs’ malpractice claims, but that plaintiffs’ “allegations with respect to the November 2013 voluntary dismissal of their remaining claim in the underlying case is a discrete allegation of alleged legal malpractice which is not barred by the statute of limitations.” The Court of Appeals disagreed, holding that the entire case was in fact time-barred.

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In Credential Leasing Corp. of Tenn., Inc. v. White, No. E2015-01129-COA-R3-CV (Tenn. Ct. App. May 17, 2016), plaintiff lender brought various claims against defendant lawyer, including claims for professional negligence and fraudulent misrepresentation, related to the drafting of a deed of trust. Defendant attorney prepared a 2010 deed of trust in favor of plaintiff, conveying title to a parcel of land owned in part by defendant’s brother. Defendant stated that he would do the title work, prepare the deed of trust, and issue title insurance for the property at issue, though he never actually issued any title insurance.

The property was actually owned by the brother and another man as tenants in common. In 2007 a deed of trust had been executed on the same property to secure a loan from another bank, and defendant attorney had notarized the signatures of the grantors (and correct property owners) on that deed. Despite the fact that the brother only owned a half interest in the property, the 2010 deed of trust did not mention the other owner’s interest. Instead, it listed the brother and the brother’s wife as grantors, even though the wife had no interest in the property. Further, while the warranty deed and previous deed of trust used a “lot and block” description of the property, the 2010 deed of trust described the property by metes and bounds.

In 2011, the brother declared bankruptcy. Plaintiff received a notice of the bankruptcy filing, which showed the other creditor having a first lien, which plaintiff was already aware of. Almost two years later, however, plaintiff learned that the property had been sold at foreclosure, and plaintiff had not received notice. Only after learning of this sale did plaintiff find out that the brother had only owned a one-half interest in the property, and that their deed of trust thus had not covered the entire property.

In Roberts v. Ray, No. E2015-01522-COA-R3-CV (Tenn. Ct. App. April 13, 2016), the Court of Appeals reversed summary judgment on a legal malpractice claim, finding that there were genuine issues of material fact in the case.

Plaintiff’s attorney (now the defendant in a legal malpractice claim) drafted a prenuptial agreement for defendant husband and his estranged wife in 2006. Attorney used a standard form from 1993, and this was the first prenuptial agreement he had drafted. Husband, wife and plaintiff attorney were all in agreement that there had been no “full and fair disclosure” of husband’s assets before the agreement was signed. The agreement, however, did state that “[e]ach party acknowledges that he or she knows and understands the value of the property…”

During the divorce proceeding, wife sought to invalidate the prenuptial agreement. Evidence in the divorce case suggested that husband and wife had never really talked about the value of husband’s assets, that husband kept financial information in a cabinet to which wife had access, though she testified that she had not looked at it, and that both husband and wife thought that defendant attorney were representing them both during the drafting and signing of the prenuptial agreement. After a hearing, the trial court set aside the prenuptial agreement, and plaintiff husband eventually entered into a marital dissolution agreement with wife which included a financial settlement.

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The statute of limitations for legal malpractice claims in Tennessee is one year from the date the action accrues.  Tenn. Code Ann. § 28-3-104(a)(2).  The “discovery rule” determines when the action accrues in most legal malpractice cases.  Tennessee’s discovery rule says that a plaintiff’s time limit to file suit does not start to run until the plaintiff knows or in the exercise of reasonable diligence should know that he or she has an injury as a result of wrongful conduct by a defendant. 

Recently, in Aleo v. Weyant, the Tennessee Court of Appeals examined a case involving a legal malpractice claim against a family law Attorney for failing to include a provision in a marital dissolution agreement and final decree of divorce specifying that the Wife would receive 50% of the Husband’s military pension and that she would be named as beneficiary of the pension.  Attorney raised a statute of limitations defense and the trial court granted summary judgment.

The record showed that Wife went to a Staff Judge Advocate more than a year before she filed suit against Attorney and was advised by the Staff Judge Advocate that she would not get part of Husband’s pension benefits because the divorce decree was silent about that asset.  Since the malpractice lawsuit was not filed within one year of Wife learning that she would not receive pension benefits, the Court of Appeals agreed with the Trial Court and upheld summary judgment.

I am fortunate to receive many calls on many types of cases, some of which fall outside of my normal practice area.  i decided I would seek out a lawyer to whom I could associate on a particular type of case – this lawyer enjoyed a good reputation on cases of this type.  I called him and had a general discussion about the type of calls I was getting and inquired whether he was interested in receiving some referrals.

He said he was, and we had a discussion about how we could work together to assist future clients.  I had a good feeling about the potential of working together.

Then, I asked him to confirm that he carried legal malpractice insurance.  He said he did not,  I told him I could not sleep at night if I did not have legal malpractice insurance for our firm.  He said that if he got sued and put in a position of probable financial loss he would  file bankruptcy and avoid the loss.

The defendant and his law firm was hired to bring a wrongful death action for decendent’s (Anderson’s) estate and to assert loss of consortium action by Anderson’s wife. The case was dismissed, arguably after the experts in the case were thrown out after a Daubert challenge..  Lawyer did not timely appeal the dismissal of the case. Several years later, Anderson’s two children – one still a minor – sued Atty for malpractice. They asserted the statute of limitations for malpractice was tolled by their infancy. Atty resisted discovery and quickly moved for summary judgment, asserting he had no attorney-client relationship with the children. 

Notably, Pete had not asserted a claim for damages for the children  

The trial judge dismissed the case, saying that   did not have privity with Pete, and thus did not enjoy an attorney-client relationship with Pete and lacked standing to sue for professional negligence.

I serve on the Standards Committee of the National Board of Trial Advocacy, a division of the National Board of Legal Specialty Certification.  Our members have a duty to report legal malpractice claims that have been filed against them, so from time to time I see claims filed by liability  insurance companies against defense counsel that the companies hired to defend insureds.

So, when I saw this article in the Spring 2011 edition of the Federation of Defense and Insurance Counsel Quarterly, I thought it deserved to be seen by a broader audience. 

The article explains that

A plaintiff in a car accident lawsuit has become a legal malpractice plaintiff.

Sharon Langford has sued a law firm with office in Kentucky and Florida and made some very serious allegations.   Basically, she was alleged to seek health care for her injuries from a specific provider and  that there was a business relationship between the provider and the lawyers.  She also alleges that the provider and the law firm advised her not to submit the bills to her health insurer and that she did not receive documentation of the charges made by the health care provider.

She alleges that the undisclosed relationship between the health care provider and the lawyers resulted in financial and other losses.   Here is a copy of the complaint.

 Legal Malpractice Law Review brought to my attention an interesting legal malpractice case from 1979 in Pennsylvania, Schenkel v. Monheit, 226 Pa. Super. 396 (Pa. Super. Ct. 1979). 

The plaintiff’s lawyer in the underlying case (and now the defendant) failed to sue the original defendant’s employer in an auto accident case.  Plaintiff received a jury verdict of $10,000 in the original case, but said he would have received more had the employer, a corporation, been sued.  So, he sued his lawyer seeking the "extra" money.

The appellate court in the malpractice action disagreed, saying that the corporate employer’s liability was vicarious only and that joining the employer would have only enhanced collectability of the judgment.  The failure to add the employer did not cause damage to the plaintiff because the original judgment was collected in full.