The one-year statute of limitations for a legal malpractice claim began to run no later than when a representative for plaintiff reviewed the court file after the trial court had found in the other party’s favor, where the court file contained information sufficient to establish constructive notice of defendant attorney’s alleged wrongdoing in the underlying case.
In Coffee County v. Spining, No. M2020-01438-COA-R3-CV, 2022 WL 168145 (Tenn. Ct. App. Jan. 19, 2022), plaintiff county filed this legal malpractice suit against defendant attorney who had represented the county in an underlying action filed by a former county employee. In the underlying case, defendant and opposing counsel had attended a bench conference where they all agreed that the employee would seek emotional damages with the jury, and if the jury found that a PEPFA violation had occurred, the employee would then seek equitable damages through a bench trial. The attorneys agreed to a jury form that included only two questions, neither of which asked if the employee’s “termination actually resulted from the County’s PEPFA violation.” After the jury found for the employee, the county’s attorney moved for a new trial, arguing that the jury verdict did not support an award of damages from the termination. The trial court denied that motion and entered an award for the former employee on July 7, 2017.
After this award was entered, County Attorney Robert Husker “began reviewing the court file and investigating the decisions made by [defendant attorney] during the trial.” Based on this review, the county filed a notice of appeal in that case. On September 18, 2018, the Court of Appeals “issued an opinion in which [it] held that the County waived any objection it may have had to the jury verdict form by agreeing at the January 2017 bench conference to allow for a determination of equitable damages at a later bench trial.”
This legal malpractice claim was filed by the county on September 17, 2019, wherein plaintiff argued that “it was malpractice for [defendant] to fail to object to the form in conjunction with agreeing to bifurcate the issue of damages without first requiring the jury to determine whether the employee’s termination was an actual result of the PEPFA violation.” Defendant filed a motion to dismiss, asserting that this claim was time-barred, which the trial court granted, ruling that plaintiff’s injury “occurred no later than the entry of the final judgment on July 7, 2017.” The trial court noted that “the facts regarding [defendant attorney’s] agreement to bifurcate damages were referenced in various motions leading up to the entry of final judgment,” and accordingly dismissed the action based on the statute of limitations. On appeal, dismissal was affirmed.
The dispositive issue on appeal was whether the trial court correctly granted the motion to dismiss based on the statute of limitations. Legal malpractice claims are subject to a one-year statute of limitations, and the date on which the limitations period begins to run is determined by the discovery rule. (Tenn. Code Ann .§ 28-4-104(c)(1); citation omitted). Under the discovery rule, the limitations period will begin to run when “(1) the plaintiff suffers an ‘actual injury’ as a result of the defendant’s allegedly wrongful conduct, and (2) the plaintiff knew or in the exercise of reasonable diligence should have known that its injury was caused by the defendant’s alleged wrongful conduct.” (internal citation omitted). Here, the actual injury was the entry of the judgment in the former employee’s favor, but the question was when the knowledge component of the discovery rule had been met.
Plaintiff argued that it did not have actual or constructive knowledge of the alleged malpractice until the Court of Appeals issued its opinion in September 2018, but the Court of Appeals rejected this argument. The Court pointed out the trial court’s reasoning that defendant attorney had failed to object to the verdict form well before the trial court’s final judgment was entered, and that “the existence of the stipulation regarding the jury verdict form was evidenced in several post-trial motions all filed months before entry of final judgment.”
Even looking beyond the date of the trial court’s final order, the Court of Appeals ruled that plaintiff had notice no later than when it filed its appeal in the underlying action. The Court explained:
[S]hortly after the final judgment was entered, Mr. Huskey initiated an investigation into [defendant’s] actions, which included a review of the court files in the underlying PEPFA case. …[T]he same court files contained not only the jury verdict form but also numerous documents underscoring the existence of [defendant’s] stipulation regarding the jury verdict form, including the prejudgment motions. Thus, its investigation prior to deciding to appeal the PEPFA case provided the County with constructive notice of the stipulation [defendant] agreed to at the bench conference. …[E]ven applying the most liberal analysis concerning when the County should have become aware of a potential legal malpractice claim, the statute of limitations accrued, at the latest, before the County filed its Notice of Appeal in the PEPFA case on September 11, 2017.
Because the malpractice claim was filed well over a year from that date, dismissal was affirmed.
Applying the discovery rule to determine when a legal malpractice statute of limitations began to run can be complicated. As shown here, however, waiting until after an underlying case has been decided by the Court of Appeals will often lead to timeliness issues.
This opinion was released 2.5 months after oral arguments in this case.
Note: Chapter 64, Section 5 of Day on Torts: Leading Cases in Tennessee Tort Law has been updated to include this decision.
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