Legal Malpractice Statutes of Limitation – Tort and Contract

Interesting legal malpractice case from Division Two, Keonjian v. Olcott, dealing with the issue of when the statute of limitations begins to run and whether the tort or contract limitation period applies.

The essence of the alleged malpractice was that the plaintiff got bad advice from her attorney concerning the deeding of some land that she co-owned with another party. The trial court had granted summary judgment to the defendants, holding that the two-year tort limitation period applied and that the suit was time-barred.

The Court first examined, based upon the “discovery rule,” when the plaintiff knew or should have known about her potential legal malpractice claim. The Court noted that “‘[t]he discovery rule applies not only to the discovery of negligence, but also to discovery of causation and damage.’ . . . Thus, for legal malpractice claims, the limitations period starts to run when the client has suffered harm and knows or should have known that the harm was a direct result of the attorney’s negligence.”

While the Court stated that, “[i]n the majority of malpractice cases, ‘the damage or injury occurs contemporaneously with the malpractice,'” the Court also observed the limitations period can being to run at different times depending upon the circumstances. For example, cases show that the time period may be different where the negligence occurs “in the course of litigation” versus malpractice that occurs in a “transactional” context. Anyway, this was a “transactional” type case and the Court concluded that the damage or injury occurred “contemporaneously with the malpractice.”

In this regard, it was quite obvious that the plaintiff actually knew of her legal malpractice claim well-before she elected to file her malpractice lawsuit when, in a deposition, she testified:

Q. Ms. Keonjian, are you aware, if you didn’t think the lawyer did his job, you have the right to sue the lawyer for malpractice?

A. Yes, I probably will. You have no idea how many people are complaining about him.

Ouch.

The Court next addressed the argument that a longer contract limitations period ought to apply because, according to the plaintiff, the defendant breached his promise “to draft a deed that reflected her wishes and capital contributions and . . . to advise her as to the significance and potential effect of the Gift Letter.” This is where, in my view, the case was most interesting.

As many practitioners know, very few legal malpractice actions fall under contract – i.e., in general, there has to be a “specific promise” that the lawyer breaches for there to be a legal malpractice action sounding in contract. The Court, however, highlighted the fact that, not only must there be a specific promise, but that the action only sounds in contract to the extent of nonperformance of the specific promise.

“The key word is ‘nonperformance,’ and the distinction to be drawn is that between nonfeasance and malfeasance.” That is, legal malpractice subject to contract law is limited to situations were the attorney fails to perform specific promise, and not those situations where the attorneys does not “properly perform” a specific task. Accordingly, the Court of Appeals affirmed the trial court.