Chicago Legal Malpractice Lawyer BlogArticles Posted in Statute of Limitations Defense
The Statute of Limitations Starts To Run At the First Sign of Trouble
The Iowa court of appeals decided a case, P&C Sierra v. John M. Carroll, 18-0826, which illustrates a common problem in the legal malpractice jurisprudence. Here, the plaintiff sold real estate to a third party, Richard Brown. According to the plaintiffs, their lawyer Mr. Carroll allegedly forgot to record the real estate contract and the mortgage. The owner of the property then borrowed money from a bank which did record a mortgage. This meant that the interests of the plaintiffs were junior to the interest of the bank. The transaction occurred in 2008.
Plaintiff argued that they were injured in 2012 when Brown stopped paying on their installment note. The court disagreed and found that the plaintiffs were aware, as early as 2009, that there was a problem with their security interest in the property. Therefore, the lawsuit, filed in 2017, was untimely. Iowa has a five-year statute of limitations for legal malpractice claims.
This is a classic case where a plaintiff waited too long to file suit. Once the plaintiff realized that the lawyer may have made an error, the plaintiff discovered the injury and the statute of limitations began to run.
Carefully Drafted Engagement Letter Protects Law Firm From Claim That It Allowed SOL to Run
The case is Davis v. Cohen & Gresser, 2018 NY Slip Op 02542, a legal malpractice case filed against a law firm.
Davis alleged that the law firm allowed the statute of limitations to run on RICO claims by failing to name to key parties in a lawsuit. The court ultimately concluded that the statute of limitations had run on the claims. However, the law firm greatly strengthened its position by producing a copy of a carefully drafted engagement letter. The engagement letter demonstrated that the law firm was not retained to handle the RICO action. Further, the law firm never filed an appearance in that lawsuit.
New York allows the statute of limitations to be tolled where there is a continuous representation of the client by the law firm. Davis attempted to argue that the continuous representation doctrine applied to his case. However, as the court explains, the engagement letter and the court record demonstrated that there was no continuous representation:
New York District Court Holds That Plaintiff Adequately Alleged that Lawyer Missed Statute of Limitations on Employment Claims
The case is Alexander Prout v. Anne C. Vladeck & Vladeck, Raskin & Clark, P.C., 18 CV 260 (S.D. New York June 10, 2018). Prout alleged that he retained Vladeck to represent him in connection with claims against his former employer, Invesco. He further alleged that Vladeck advised him to reject Invesco’s settlement offer of $1.0 million and to instead file litigation. According to Prout, Vladeck failed to timely file his claims and some of those claims (Family Medical Leave Act and Sarbanes-Oxley Act) were barred by the statute of limitations. As a result, he was forced to accept a reduced settlement amount. The facts of the underlying employment law claims are complex and the opinion sets those facts out in some detail. The court concluded that the allegations stated a claim for legal malpractice under New York law because the lawyer allegedly allowed the statutes of limitations to run on the FMLA and Sarbanes-Oxley (Whistleblower) claims.
For further information on legal malpractice claims, please consult our webpage on legal malpractice. https://www.clintonlaw.net/legal-malpractice.html
Iowa Holds That Legal Malpractice Is Time-Barred
This is an opinion of the Iowa Supreme Court, holding that a legal malpractice case was time-barred. The case is Skadburg v. Gately, 17-0151. Skadburg was the administrator of an estate and alleged that she hired the defendant to give her legal advice. Skadburg claimed that she used funds from a life insurance policy to pay debts of the estate. Skadburg alleged that the lawyer failed to inform her that the life insurance proceeds were exempt from any claims and would pass directly to the beneficiary. Thus, in Skadburg’s view, the lawyer’s failure to advise her that the life insurance was exempt cost her the life insurance proceeds.
The case had one huge problem – the estate was closed on August 18, 2010. The malpractice case was filed more than five years later on August 19, 2015. The trial court held the case was time-barred but the appellate court reversed. The Iowa Supreme Court reversed that decision.
The Iowa Supreme Court found that Skadburg had notice of her cause of action in 2008 when she paid the creditors and that the case was filed after the five-year statute of limitations expired. The continuous representation exception to the statute of limitations did not apply because the plaintiff had actual or constructive notice of her claim before the attorney-client relationship ended. Further, there was no exception for fraudulent concealment of the cause of action.
Court Holds Real Estate Malpractice Claim Is Time-Barred
The plaintiff claimed that he missed the closing date on three real estate transactions because his lawyers did not give notice. The lawyers insisted that (a) the plaintiff fired them long before closing and (b) they notified plaintiff of the new closing dates.
The court held the case barred by the three-year statute of limitations in New Jersey. The explanation:
Here, plaintiff, a New Jersey resident, brings a legal malpractice claim against Kane and Berger. The applicable statute of limitations for a claim of legal malpractice is three years in New York (CPLR 214[6]) and six years in New Jersey (McGrogan v Till, 167 NJ 414, 426, 771 A2d 1187 [2001]). Therefore, New York’s three-year statute of limitations period applies.
Statute of Limitations Bars Claim Against Employment Law Firm
This case discusses the discovery rule in legal malpractice cases. Specifically, when should the plaintiff know that he had a claim against his employment lawyer?
The Facts:
In 2011, Nelson hired Padgitt, Padgitt & Peppey to negotiate an employment agreement with his new employer Launch Creative Marketing. Nelson signed the agreement in June 2011. Six months later, Launch terminated Nelson’s employment on the ground that the revenue collected from Nelson’s clients totaled less than $250,000 over the first six months of employment. The employment agreement permitted Launch to terminate Nelson for cause if the revenue collected from his old clients did not total $250,000 during the first six months of employment.
The Statute of Repose Defeats Claim of Terra Museum
The Terra Museum sued its former attorneys, DLA Piper, for legal malpractice arising out of a real estate deal gone bad. Terra claimed that, due to a drafting error, it was required to pay the other party to the real estate deal millions more than it should have had to pay. The Statute of Repose gives a client six years to sue the attorney for malpractice. The Statute of Repose starts to run when the attorney commits the negligent act, not when the client discovers the error. The court explained that Terra had opportunities to file suit during the
The court explained that Terra had opportunities to file suit during the six-year repose period. The court rejected an argument that the repose period does not begin to run until the transaction was completed.
¶ 33 We conclude that the event giving rise to Terra’s injuries occurred on May 29, 2007, when Terra and NM Project executed the first amendment and chose BOMA 96 as the method of measuring the retail parcel without the exclusionary language.Fricka v. Bauer, 309 Ill. App. 3d 82, 88 (1999) (“The plain language of the statute requires filing of the lawsuit within six years of the acts or omissions that form the basis for the complaint.”). The measurements of the rentable area under the BOMA 96 standards, without excluding the common space, resulted in the increases of the retail parcel space, which required Terra to engage in arbitrations to dispute the measurements, incur the related attorney fees and expenses and make the retail parcel credit payment at the closing. Terra’s asserted injuries directly flowed from DLA’s allegedly negligent omissions and acts as to the first amendment.
Alabama Court Holds Law Firm Liable Where Associate Concealed Facts From Client
This is a legal malpractice case in which the plaintiff, Juakeishia Pruitt retained the Cockrell & Cockrell firm to pursue employment claims against Spillman College and other claims against other parties. According to the opinion, the firm failed to file the claims in timely fashion and an associate concealed that fact from Pruitt. The associate, Byron House, made further false representations as to the status of those cases in an effort to conceal from Pruitt that the cases had not been filed in timely fashion. The associate told Pruitt that her cases had settled and made payments to her from the firm’s operating account. The opinion states:
Subsequently, Pruitt met with another attorney, Delaine Mountain. During that meeting, House called Pruitt on her cellular telephone, and Mountain listened to that conversation. On January 18, 2012, Mountain made two telephone calls to Cockrell to discuss Mountain’s concerns regarding House’s handling of Pruitt’s discrimination cases. Cockrell twice confronted House in light of the information he had received from Mountain. Eventually, House told Cockrell that he had missed the statute of limitations on both discrimination cases; that there was no structured settlement in the Stillman College case; and that he had taken money for the alleged settlement payments from the Cockrell law firm’s general business account and trust accounts. The Cockrell law firm immediately terminated his association with the firm.
When Pruitt learned that her claims had not been filed on time, she sued for legal malpractice. The law firm defended on the ground that the legal malpractice statute of limitations had run. The trial court denied the law firm’s motion for summary judgment on the ground that the law firm had made fraudulent representations to Ms. Pruitt. The Alabama Supreme Court upheld the denial of summary judgment on the ground that the fraudulent actions by the associate were a separate basis for liability under Alabama’s Legal Services Act.
Illinois Appellate Court Rules Claim Against Corporate Lawyers Is Time-Barred
This is another decision affirming, as time-barred, a legal malpractice case. Plaintiffs alleged that they hired Vedder Price to represent them in a commercial real estate transaction in 2003. Plaintiffs signed personal guarantees. The plaintiffs alleged that the lawyer defendants failed to advise them that one of other parties to the venture had signed a limited version of the personal guarantee. Plaintiffs claimed that had they known of the limited version of the guarantee they would not have signed the loan documents. Plaintiffs also alleged that the lawyer defendants failed to notify them that a transfer of a 10% interest in the project to Benjamin Nummy triggered a default under the loan documents.
It was undisputed that the lawyers gave the plaintiffs a complete copy of all the documents signed by all parties in 2003. In 2012, the bank notified the bank that the 2003 transfer to Nummy violated the loan documents and declared a default and sued for foreclosure.
Plaintiffs sued Vedder Price in 2014. The case was dismissed on statute of repose grounds (the alleged negligent act occurred more than 6 years before the lawsuit was filed). Plaintiffs alleged fraudulent concealment but this claim was rejected because the alleged fraudulent concealment consisted of the same allegations that supported the negligence claim. In other words there were no allegations that the lawyers took any action after the transaction to cover up their alleged mistake.