IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
March 6, 2012 Session
CARDIAC ANESTHESIA SERVICES, PLLC v. JON JONES
Direct Appeal from the Circuit Court for Putnam County
No. 10J0294 Larry B. Stanley, Jr., Judge
No. M2011-01715-COA-R3-CV - Filed March 30, 2012
This case involves the application of the statute of limitations to a legal malpractice action.
Appellee attorney drafted a contract for Appellant medical provider; the contract contained
a fee-split clause in contravention of Tennessee Code Annotated Section 63-6-225. When the
other party to the contract, a hospital, allegedly breached the contract and sued the medical
provider, the medical provider counterclaimed for breach of contract. The hospital answered
the complaint and filed a motion for summary judgment, asserting that the contract was
illegal and unenforceable. The trial court ruled that Tennessee Code Annotated Section 63-6-
225 did not apply to the contract at issue. A jury returned a verdict in favor of the medical
provider for more than one million dollars. The Court of Appeals reversed, holding that
Tennessee Code Annotated Section 63-6-225 invalidated the contract, and remanded the case
for dismissal. Within one year of the Court of Appeals opinion, the medical provider filed
this legal malpractice case against the drafting attorney. The trial court dismissed the case as
beyond the one-year legal malpractice statute of limitations. We affirm.
Tenn. R. App. P. 3. Appeal as of Right; Judgment of the Circuit Court Affirmed
J. S TEVEN S TAFFORD, J., delivered the opinion of the Court, in which D AVID R. F ARMER, J.,
and H OLLY M. K IRBY, J., joined.
C. J. Gideon, Jr., J. Blake Carter, and Brian P. Manookian, Nashville, Tennessee, for the
appellant, Cardiac Anesthesia Services.
Daniel H. Rader, III and Daniel H. Rader, IV, Cookeville, Tennessee, for the appellee, Jon
Jones.
OPINION
I. Background
Plaintiff/Appellant Cardiac Anesthesia Services, P.L.L.C. ("CAS") entered into a
contract with Cookeville Regional Medical Center Authority ("Cookeville"); the contract was
negotiated and drafted by CAS’ attorney Defendant/Appellee Jon Jones. The contract
provided a fee-split for services performed by CAS. The fee-split arrangement was suggested
by Cookeville and was integrated into the contract by Mr. Jones. However, Tennessee law
provides that a physician may not agree to divide any fee received without the knowledge and
consent of the individual paying the fee.1
After the term of the first contract expired, CAS and Cookeville entered into another
contract, which was essentially identical to the previous one. The new contract contained the
same fee-splitting agreement, as well as an indemnification clause that was designed to
survive the termination of the agreement; the indemnification clause provided that, in the
event of litigation, the losing party would pay the other party's legal fees. According to CAS,
Cookeville breached the contract, and then filed suit against CAS on February 1, 2006.
Cookeville then filed an amended complaint on June 27, 2006, alleging that the contract
between CAS and Cookeville was illegal due to the fee-splitting arrangement. On July 31,
2006, CAS filed an answer and counter-complaint against Cookeville, alleging that
Cookeville breached the contract and asserting that the contract was enforceable. Shortly
thereafter, CAS hired an expert who opined that the fee-splitting arrangement was
appropriate. According to later testimony from a CAS representative, CAS expended more
than $120,000.00 in legal and expert witness fees in the trial court to defend the contract
negotiated by Mr. Jones. However, according to a witness for CAS, the fees expended were
1
Tennessee Code Annotated Section 63-6-225 provides:
(a) It is an offense for any licensed physician or surgeon to divide or to
agree to divide any fee or compensation of any sort received or charged in
the practice of medicine or surgery with any person without the knowledge
and consent of the person paying the fee or compensation or against whom
the fee may be charged.
(b) The provisions of this section do not prohibit a physician from
compensating any independent contractor that provides goods or services
to the physician on the basis of a percentage of the physician's fees
generated in the practice of medicine. The percentage paid must be
reasonably related to the value of the goods or services provided. Payments
by physicians in return for referrals are prohibited.
(c) A violation of this section is a Class B misdemeanor.
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paid by unpaid funds owed to Cookeville under the contract, rather than from any funds
owned by CAS.
CAS moved for summary judgment on the issue of whether it had breached the
contract. By order of October 6, 2006, the trial court granted summary judgment in favor of
CAS, ruling that CAS had not breached the contract. Cookeville moved for summary
judgment on the fee-splitting issue on November 22, 2006. After a hearing on January 9,
2007, the trial court ruled that the arrangement was not illegal. Cookeville requested
permission to file an interlocutory appeal, which was denied by the trial court.
On October 9, 2007, a jury trial was held on the issue of Cookeville’s alleged breach
of contract. At the close of evidence, the trial court granted a directed verdict in favor of
CAS. The jury then awarded CAS $1,396,730.00 in damages. Cookeville appealed, arguing
that the underlying contract was unenforceable due to the fee-splitting arrangement. This
Court agreed in Cookeville Regional Medical Center Authority v. Cardiac Anesthesia
Services, P.L.L.C., No. M2007-02561-COA-R3-CV, 2009 WL 4113586 (Tenn. Ct. App.
Nov. 24, 2009). Therein, we held that the fee-splitting arrangement was illegal and
remanded the case for dismissal. Id. CAS’ application for permission to appeal to the
Tennessee Supreme Court was denied on May 20, 2010.
On October 27, 2010, CAS filed a separate complaint against Mr. Jones for his alleged
legal malpractice arising from the negotiation and drafting of the illegal contract. CAS
propounded written discovery against Mr. Jones, to which he never responded. Instead, on
January 4, 2011, Mr. Jones filed a “Rule 12 Motion to Dismiss/Rule 56 Motion for Summary
Judgment.” In his motion, he argued that the statute of limitations on the legal malpractice
claim had expired and that the suit should be dismissed. Attached to the motion, Mr. Jones
filed a Statement of Undisputed Facts, stating:
1. [CAS] was on notice that Cookeville [] claimed its
contract was unenforceable when it received the
amended answer of Cookeville [] on June 27, 2006,
asserting the contract’s unenforceability in that response,
and then [CAS] incurred legal fees and expenses in
preparing to answer the amended complaint claiming
unenforceability of the contract. . . .
2. [CAS] was put on notice that Cookeville [] claimed the
unenforceability of the contract based on the motion for
summary judgment filed by Cookeville [] on November
22, 2006. . . .
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3. [CAS] incurred legal fees and expenses in defending the
motion for summary judgment filed by Cookeville []
asserting the unenforceability of the contract in 2006 and
2007.
* * *
6. [CAS’] owner/representative, Robert Cerza, testified that
as of October 1, 2007, he had incurred $122,000.00 in
legal fees and expenses in defending the enforceability of
the contract and asserting its breach. . . .
7. Gideon & Wiseman, PLC and Attorney C.J. Gideon, Jr.
charged and received legal fees from [CAS] in 2006,
2007, and 2008 for defending the enforceability of the
contract. . . .
8. [CAS] retained Nancy Jones as an expert to give a formal
opinion with respect to the enforceability of the contract
in November 2006 incurring legal fees and expenses with
respect to defending the enforceability of the contract . .
..
9. Gideon & Wiseman, PLC and Attorney C.J. Gideon
charged and received legal fees from [CAS] in 2006,
2007, and 2008 defending [CAS] from the legal position
asserted by Cookeville [], to wit, that the contract was
unenforceable pursuant to Tennessee Code Annotated
§63-6-225(a).
CAS did not file a response to Mr. Jones’ statement of undisputed facts. Mr. Jones also filed
a motion to stay discovery and for a protective order excusing him from responding to CAS’
discovery requests. CAS subsequently filed a motion to compel Mr. Jones’ discovery
responses.
On July 1, 2011, the court heard the motion for summary judgment, the motion to stay
discovery and for a protective order and the motion to compel. The attorney for Mr. Jones
requested that the motion for summary judgment be heard first, noting that, if the motion was
granted, the court would not be required to consider any discovery issues. The trial court
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asked the attorney for CAS if that would be acceptable, and he agreed, though he emphasized
that Mr. Jones had failed to respond to any discovery requests. Mr. Jones responded that,
because the summary judgment motion was based entirely on the record of what occurred in
Cookeville, discovery was not necessary to defend the motion. The trial court then asked the
attorney for CAS, “Do you feel that there are other issues that need to be discovered before
you can defend that motion [for summary judgment based on the statute of limitations]?” The
attorney for CAS responded:
No, I can argue this morning based on what they’ve relied upon,
but what I disagree with is [Mr. Jones’ attorney’s] suggestion
that because defense counsel has decided that the only thing that
is important is the technical record that precludes [CAS] from
conducting any discovery at all. I don’t agree with that and I
don’t think that’s consistent with the law.
The trial court ruled that the statute of limitations began running on either June 27,
2006, when the amended complaint was filed asserting the unenforceability of the contract,
or on January 9, 2007, when the motion for summary judgment on the issue of enforceability
was argued. Accordingly, the trial court found that the case was time-barred. By order of July
11, 2011, the trial court granted summary judgment in favor of Mr. Jones and dismissed the
case, holding that the expiration of the statute of limitations barred the claim. Because of the
dismissal, the court did not consider CAS’ motion to compel discovery. CAS timely
appealed.
II. Issues Presented
CAS raises the following issues, which are taken from its brief:
1. Was the trial court’s grant of summary judgment in error
in the absence of adequate time for discovery,
particularly when [Mr. Jones] refused to respond to the
initial discovery request?
2. Whether the trial court’s determination that the statute of
limitations for [the] legal malpractice action was
triggered prior to the Court of Appeals’ decision
invalidating the underlying contract was improper under
Tennessee Rule of Civil Procedure 56? 2
2
As a point of practice, we note that Tennessee Rule of Appellate Procedure 24(a) provides, in
(continued...)
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III. Standard of Review
Because this case was adjudicated by summary judgment, we first note that a trial
court's decision on a motion for summary judgment presents a question of law. Our review
is, therefore, de novo with no presumption of correctness afforded to the trial court's
determination. Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997). “This Court must make a
fresh determination that the requirements of Tennessee Rule of Civil Procedure 56 have been
satisfied.” Mathews Partners, L.L.C. v. Lemme, No. M2008-01036-COA-R3-CV, 2009 WL
3172134, at *3 (Tenn. Ct. App. Oct. 2, 2009) (citing Hunter v. Brown, 955 S.W.2d 49,
50–51 (Tenn. 1977)).
When a motion for summary judgment is made, the moving party has the burden of
showing that “there is no genuine issue as to any material fact and the moving party is
entitled to judgment as a matter of law.” Tenn. R. Civ. P. 56.04. The moving party may
accomplish this by either: (1) affirmatively negating an essential element of the non-moving
2
(...continued)
relevant part, that:
The following papers filed in the trial court are excluded from the record:
(1) subpoenas or summonses for any witness or for any defendant when
there is an appearance for such defendant; (2) all papers relating to
discovery, including depositions, interrogatories and answers thereto,
reports of physical or mental examinations, requests to admit, and all
notices, motions or orders relating thereto; (3) any list from which jurors
are selected; and (4) trial briefs; and (5) minutes of opening and closing of
court. Any paper relating to discovery and offered in evidence for any
purpose shall be clearly identified and treated as an exhibit. No paper need
be included in the record more than once.
Id. (emphasis added).
This record contains several volumes, in large part due to the same papers being filed numerous times. In
fact, the underlying contract between CAS and Cookeville is provided no less than four times in the record.
It is too often the case that an Appellant includes all filings made in the trial court and every portion of the
transcript of the hearing (including arguments of counsel) in contravention of the foregoing Rule of Appellate
Procedure. The problem with inclusion of extraneous filings that are clearly excluded from the appellate
record is that it places upon this Court a duty that falls to the Appellant—to prepare a correct and complete
record on appeal. Tenn. R. App. P. 24(b). In making that record, the Appellant should adhere to the
mandates contained in Tennessee Rule of Appellant Procedure 24(a). This Court endeavors to file its
opinions in a timely manner; however, when placed in the position of having to review volumes of
extraneous, unnecessary, and irrelevant filings, our goal is hindered and the interests of judicial economy are
stymied.
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party's claim; or (2) showing that the non-moving party will not be able to prove an essential
element at trial. Hannan v. Alltel Publ'g Co., 270 S.W.3d 1, 8–9 (Tenn. 2008). However,
“[i]t is not enough for the moving party to challenge the nonmoving party to ‘put up or
shutup’ or even to cast doubt on a party's ability to prove an element at trial.” Id. at 8. If the
moving party's motion is properly supported, “[t]he burden of production then shifts to the
nonmoving party to show that a genuine issue of material fact exists.” Id. at 5 (citing Byrd
v. Hall, 847 S.W.2d 208, 215 (Tenn. 1993)). The non-moving party may accomplish this by:
“(1) pointing to evidence establishing material factual disputes that were overlooked or
ignored by the moving party; (2) rehabilitating the evidence attacked by the moving party;
(3) producing additional evidence establishing the existence of a genuine issue for the trial;
or (4) submitting an affidavit explaining the necessity for further discovery pursuant to Tenn.
R. Civ. P. 56.06.” Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76, 84 (Tenn. 2008) (citations
omitted).
When reviewing the evidence, we must determine whether factual disputes exist. In
evaluating the trial court's decision, we review the evidence in the light most favorable to the
non-moving party and draw all reasonable inferences in the non-moving party's favor. Stovall
v. Clarke, 113 S.W.3d 715, 721 (Tenn. 2003). If we find a disputed fact, we must “determine
whether the fact is material to the claim or defense upon which summary judgment is
predicated and whether the disputed fact creates a genuine issue for trial.” Mathews
Partners, 2009 WL 3172134, at *3 (citing Byrd, 847 S.W.2d at 214). “A disputed fact is
material if it must be decided in order to resolve the substantive claim or defense at which
the motion is directed.” Byrd, 847 S.W.2d at 215. A genuine issue exists if “a reasonable jury
could legitimately resolve the fact in favor of one side or the other.” Id. “Summary
[j]udgment is only appropriate when the facts and the legal conclusions drawn from the facts
reasonably permit only one conclusion.” Landry v. South Cumberland Amoco, et al., No.
E2009-01354-COA-R3-CV, 2010 WL 845390, at *3 (Tenn. Ct. App. March 10, 2010) (citing
Carvell v. Bottoms, 900 S.W.2d 23 (Tenn. 1995)). However, if there is any uncertainty
concerning a material fact, then summary judgment is not the appropriate disposition. As
stated by our Supreme Court in Evco Corp. v. Ross, 528 S.W.2d 20 (Tenn. 1975):
The summary judgment procedure was designed to provide a
quick, inexpensive means of concluding cases, in whole or in
part, upon issues as to which there is no dispute regarding the
material facts. Where there does exist a dispute as to facts which
are deemed material by the trial court, however, or where there
is uncertainty as to whether there may be such a dispute, the
duty of the trial court is clear. He [or she] is to overrule any
motion for summary judgment in such cases, because summary
judgment proceedings are not in any sense to be viewed as a
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substitute for a trial of disputed factual issues.
Id. at 24–25.
IV. Analysis
A. Adequate Time for Discovery
CAS first argues that summary judgment was improper because adequate time for
discovery was not provided. Indeed, our Supreme Court has stated:
Where there is [the] slightest possibility that [the] party
opposing [a] motion for summary judgment has been denied
[an] opportunity to file affidavits, take discovery depositions or
amend, by disposition of motion for summary judgment without
30 day interval following filing of motion, it will be necessary
to remand case to cure such error.
Craven v. Lawson, 534 S.W.2d 653 (Tenn. 1976). Further, this Court has stated that one
method of defeating a properly supported motion for summary judgment is through a request
for more discovery:
[Nonmoving] parties may deflect a summary judgment motion
challenging their ability to prove an essential element of their
case by (1) pointing to evidence either overlooked or ignored by
the moving party that creates a factual dispute, (2) rehabilitating
evidence challenged by the moving party, (3) producing
additional evidence that creates a material factual dispute, or (4)
submitting an affidavit in accordance with Tenn. R. Civ. P.
56.07 requesting additional time for discovery. Rains v. Bend
of the River, 124 S.W.3d 580, 587–88 (Tenn. Ct. App. 2003)
(citing Staples v. CBL & Assoc., Inc., 15 S.W.3d 83, 88–89
(Tenn. 2000); McCarley v. West Quality Food Serv., 960
S.W.2d 585, 588 (Tenn. 1998)).
Regions Financial Corp. v. Marsh USA, Inc., 310 S.W.3d 382, 401 (Tenn. Ct. App. 2009)
(emphasis added). The interest in full discovery, however, must be balanced against the
purpose of summary judgment: “[to] provide[] a quick, inexpensive way to conclude cases
when there exists no dispute regarding the material facts.” Hannan v. Alltel Publishing Co.,
270 S.W.3d 1, 13 (Tenn. 2008). Indeed, “[t]he philosophy of summary judgment is to avoid
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a needless trial in a case where, although the pleadings may indicate disputes over factual
issues, facts outside the pleadings if known would clearly show that there is “no genuine
issue as to any material fact.” Id. at 12 (quoting Donald F. Paine, Recent Developments in
Tennessee Procedure: The New Tennessee Rules of Civil Procedure, 37 Tenn. L. Rev. 501,
516 (1970)).
Mr. Jones argues that CAS neither filed an affidavit requesting additional discovery
in response to Mr. Jones’ motion for summary judgment, nor objected to arguing the
summary judgment motion on July 1, 2011; consequently, Mr. Jones contends that CAS has
waived any argument that the trial court failed to allow adequate time for discovery in this
Court. It is well-settled that the failure to object during trial constitutes a waiver of the issue
on appeal. See Tenn. R. App. P. 36(a) (“Nothing in this rule shall be construed as requiring
relief be granted to a party responsible for an error or who failed to take whatever action was
reasonably available to prevent or nullify the harmful effect of an error.”). The transcript of
the hearing on the motion for summary judgment supports Mr. Jones’ argument that the issue
was waived. When asked if he could proceed to argue the motion for summary judgment,
without having received any discovery responses, CAS’ attorney stated, “No, I can argue this
morning based on what they’ve relied upon . . . .”
Even assuming that CAS did not waive this issue in the trial court, its argument in
favor of additional time for discovery fails. Although CAS’ attorney stated that he believed
summary judgment was inappropriate without the benefit of discovery, CAS did not put forth
any argument that the discovery responses would assist CAS in arguing the summary
judgment motion. However, this Court has previously held that a trial court’s decision to
deny additional time for discovery, in order for the non-moving party to meet summary
judgment, “must be viewed in the context of the issues being tried and the posture of the case
at the time the request for discovery is made.” Regions, 310 S.W.3d at 401 (citing Price v.
Mercury Supply Co., 682 S.W.2d 924, 935 (Tenn. Ct. App. 1984)). Accordingly, a trial
court only errs in refusing to grant additional time for discovery prior to the hearing on a
motion for summary judgment when the non-moving party can show that “the requested
discovery would have assisted [the non-moving party] in responding to [the moving party’s]
motion for summary judgment.” Regions, 310 S.W.3d at 401 (citing Simmons v. State Farm
Gen. Ins. Co., No. W2003-02643-COA-R3-CV, 2004 WL 2715341, at *5 (Tenn. Ct. App.
Nov. 24, 2004)).
In CAS’ brief, it asserts that discovery would have “identif[ied] the date upon which
Mr. Jones first became aware of Tenn. Code Ann. §63-6-225 and whether Mr. Jones made
any representations to CAS regarding the legality of the contract.” Specifically, CAS states
that “if [Mr. Jones] first became aware of Tenn. Code Ann. §63-6-225 at the time of the
Court of Appeals’ opinion, this information would suggest that it was plausible that [CAS]
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also did not have knowledge of the statute’s existence.” This argument is without merit. The
record clearly shows that Cookeville filed a motion for summary judgment on November 22,
2006, specifically citing Tennessee Code Annotated Section 63-6-225; the motion was served
on CAS’ attorneys.3 “It is well settled that “[k]nowledge of facts learned by an attorney in
the course of his [or her] employment will be imputed to his client.” Boote v. Shivers, 198
S.W.3d 732, 742 (Tenn. Ct. App. 2005) (quoting Bellar v. Baptist Hosp., Inc., 559 S .W.2d
788, 789 (Tenn. 1978)). “Once it has been established that the attorney obtained the relevant
knowledge during the course of representing the client, ‘the constructive notice thereof to the
client is conclusive, and cannot be rebutted by showing that the attorney did not in fact
impart the information so acquired.’” Boote, 198 S.W.3d at 742 (quoting Smith v. Petkoff,
919 S.W.2d 595, 597–98 (Tenn. Ct. App. 1995)). Accordingly, CAS can be held to have
knowledge of Tennessee Code Annotated Section 63-6-225 nearly four years prior to the
commencement of this action, regardless of Mr. Jones’ knowledge of the prevailing law.
CAS also argues that “whether Mr. Jones made any representations to CAS regarding
the legality of the contract [] goes directly to [CAS’] knowledge of the injury, and potential
claim for concealment.” It is well-settled that “an attorney's purposeful concealment from a
client of facts that prevents the client from learning of an injury can toll the statute of
limitations on legal malpractice.” Cherry v. Williams, 36 S.W.3d 78, 85 (Tenn. Ct. App.
2000) (citing Nobes v. Earhart, 769 S.W.2d 868, 872–73 (Tenn. Ct. App. 1988)). However,
“[a] lawyer's rosy characterization of an order adverse to the client does not amount to
fraudulent concealment of malpractice.” Cherry, 36 S.W.3d at 86 (citing Riddle v. Driebe,
153 Ga.App. 276, 265 S.E.2d 92, 95 (1980)). Further, this Court has previously stated, “[W]e
do not believe that reliance upon erroneous legal advice can operate to toll the statute of
limitations.” Spar Gas, Inc. v. McCune, 908 S.W.2d 400, 404 (Tenn. Ct. App. 1995). We
must point out, however, from our review of the record in this case, CAS was not represented
by Mr. Jones in the prior proceeding; instead, CAS had already retained new representation
at the time Cookeville filed its motion for summary judgment and throughout the Cookeville
case. Accordingly, CAS had independent legal counsel throughout the proceedings and was
not forced to rely on any assurances as to the enforceability of the contract that may have
been offered by Mr. Jones. Further, there is no evidence in the record stating that Mr. Jones
gave CAS assurances as to the enforceability of the contract, nor are there any affidavits
supporting that argument on behalf of CAS. Although CAS argues that the lack of this
evidence supports the argument in favor of additional discovery, it is clear that information
regarding any assurances made to CAS would have been in the custody and control of CAS
and, as such, CAS would not have been prevented from uncovering that information by Mr.
Jones’ failure to respond to written interrogatories. Accordingly, CAS’ failure to put forth
any affidavits or evidence to support this assertion is wholly attributable to CAS, rather than
3
Mr. Jones did not represent CAS in the prior proceeding.
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to the lack of formal discovery in this case.
CAS goes on to state that the above “examples barely scratch the surface of the
evidence that might have been developed had the trial court allowed adequate time for
discovery to occur.” However, this Court has previously held that “bare allegations” are
insufficient to defeat a properly supported motion for summary judgment. See Daugherty v.
Sony Electronics, Inc., No. E2004-02627-COA-R3-CV, 2006 WL 197090, at *4 (Tenn. Ct.
App. Jan. 26, 2006). Federal courts, applying a substantially similar summary judgment rule,
have held that “conclusory allegations, improbable inferences, and unsupported speculation
are insufficient to defeat summary judgment.”4 Poulis-Minott v. Smith, 388 F.3d 354,
366–67 (1st Cir. 2004) (quoting Leblanc v. Great American Ins. Co., 6 F.3d 836, 842 (1st
Cir.1993)); see also Tracy Bateman Farrell et al., Federal Procedure, 27A Fed. Proc., L. Ed.
§ 62:611 (“[A] bare assertion that evidence to support a fanciful allegation lies within the
exclusive control of the defendants, and can be obtained only through discovery, is not
sufficient to defeat a motion for summary judgment.”).
Further, this Court has previously held that:
Defenses based on a statute of limitations are particularly
amenable to summary judgment motions. See Creed v.
Valentine, 967 S.W.2d 325, 327 (Tenn. Ct. App. 1997); Allied
Sound, Inc. v. Neely, 909 S.W.2d 815, 820 (Tenn. Ct. App.
1995). Most often the facts material to a statute of limitations
defense are not in dispute. When the facts and the inferences
reasonably drawn from the facts are not disputed, the courts
themselves can bring to bear the applicable legal principles to
determine whether the moving party is entitled to a judgment as
a matter of law.
Cherry, 36 S.W.3d at 83. In this case, there are no disputed facts because CAS did not object
to Mr. Jones’ statement of undisputed facts. It is well-settled that, when a non-moving party
fails to respond to the moving party’s statement of undisputed facts, the court may consider
the facts admitted. Holland v. City of Memphis, 125 S.W.3d 425, 428–29 (Tenn. Ct. App.
2003) (“Thus the material facts set forth in the statement of the moving party may be deemed
4
The Tennessee Supreme Court has previously held that while this Court is not bound by the
interpretations federal courts give to their rules of procedure, those interpretations are persuasive authority
for purposes of construing a similar Tennessee rule. See Webb v. Nashville Area Habitat for Humanity,
Inc., 346 S.W.3d 422, 430 (Tenn. 2011) (citing Harris v. Chern, 33 S.W.3d 741, 745 n.2 (Tenn. 2000)).
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admitted in the absence of a statement controverting them by the opposing party.”); see also
Waters v. Tenn. Dep't of Corr., No. M2002–00917–COA–R3–CV, 2003 WL 21713421, at
*4 (Tenn. Ct. App. July 24, 2003) (holding that the complete failure to respond to motion for
summary judgment and statement of undisputed facts can amount to a conclusive admission
that the facts contained in the statement are undisputed); Simmons v. Harris, No.
M2000–00227–COA–R3–CV, 2000 WL 1586451, at *3 (Tenn. Ct. App. Oct. 25, 2000)
(holding that as consequence of non-moving party's failure to comply with Rule 56.03, the
moving party's alleged facts were deemed admitted). Accordingly, the bare assertions
contained in CAS’ brief, coupled with CAS’ failure to file any affidavits in the trial court or
to object to Mr. Jones statement of undisputed facts, are insufficient to delay the motion for
summary judgment in order to allow additional time for discovery.
B. Statute of Limitations
CAS next argues that the trial court erred in finding that CAS’ complaint was filed
beyond the one-year statute of limitations for legal malpractice actions. Our Supreme Court
has previously explained the statute of limitations in malpractice actions:
The statute of limitations for legal malpractice is one year from
the time the cause of action accrues. Tenn. Code Ann. §28-3-
104(a)(2). When the cause of action accrues is determined by
applying the discovery rule. Under this rule, a cause of action
accrues when the plaintiff knows or in the exercise of reasonable
care and diligence should know that an injury has been sustained
as a result of wrongful or tortious conduct by the defendant.
Shadrick v. Coker, 963 S.W.2d 726, 733 (Tenn. 1998);
Stanbury v. Bacardi, 953 S.W.2d 671, 677 (Tenn. 1997).
John Kohl & Co., P.C. v. Dearborn & Ewing, 977 S.W.2d 528, 532 (Tenn. 1998).
CAS argues that, under the discovery rule, it did not “know[] or in the exercise of
reasonable care and diligence should [have] know[n] that an injury ha[d] been sustained as
a result of wrongful or tortious conduct by the defendant” prior to the Court of Appeals
decision filed on November 24, 2009. Kohl, 977 S.W.2d at 532. According to this
argument, CAS asserts that its legal malpractice action was timely filed. Mr. Jones argues,
however, that the malpractice action was not timely filed because CAS was on notice of the
injury prior to the Court of Appeals decision. Our Supreme Court has explained the discovery
rule in malpractice actions:
In legal malpractice cases, the discovery rule is composed
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of two distinct elements: (1) the plaintiff must suffer legally
cognizable damage—an actual injury—as a result of the
defendant's wrongful or negligent conduct, and (2) the plaintiff
must have known or in the exercise of reasonable diligence
should have known that this injury was caused by the
defendant's wrongful or negligent conduct.
Kohl, 977 S.W.2d at 532 (citing Carvell v. Bottoms, 900 S.W.2d 23, 28–30 (Tenn. 1995)).
Accordingly, to prevail on its motion for summary judgment, considering the facts in
the light most favorable to CAS, Stovall v. Clarke, 113 S.W.3d 715, 721 (Tenn. 2003), Mr.
Jones must show that CAS was injured and either knew or should have known that the injury
was caused by Mr. Jones’ conduct more than one year prior to the filing of this malpractice
action.
1. Injury
First, we consider whether CAS “suffer[ed] legally cognizable damage” more than
one year prior to the filing of this malpractice action. Regarding the injury prong of the
discovery rule, our Supreme Court has explained:
An actual injury occurs when there is the loss of a legal right,
remedy or interest, or the imposition of a liability. See LaMure
v. Peters, 122 N.M. 367, 924 P.2d 1379, 1382 (1996). An actual
injury may also take the form of the plaintiff being forced to
take some action or otherwise suffer “some actual
inconvenience,” such as incurring an expense, as a result of the
defendant's negligent or wrongful act. See State v. McClellan,
113 Tenn. 616, 85 S.W. 267, 270 (1905) (“[A negligent act] may
not inflict any immediate wrong on an individual, but . . . his
right to a remedy . . . will [not] commence until he has suffered
some actual inconvenience . . . . It may be stated as an invariable
rule that when the injury, however slight, is complete at the time
of the act, the statutory period then commences, but, when the
act is not legally injurious until certain consequences occur, the
time commences to run from the consequential damage . . . .”).
However, the injury element is not met if it is contingent upon
a third party's actions or amounts to a mere possibility. See
Caledonia Leasing v. Armstrong, Allen, 865 S.W.2d 10, 17
(Tenn. Ct. App. 1992).
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Kohl, 977 S.W.2d at 532.
In John Kohl & Co., P.C. v. Dearborn & Ewing, the Tennessee Supreme Court
applied the above rule to determine that the legal malpractice complaint in that case was
barred by the statute of limitations. In Kohl, the plaintiffs sued the defendant law firm for
malpractice based on allegedly negligent tax advice regarding the plaintiff’s business. Id.
at 531–32. In 1984, the plaintiffs sought the legal advice of the Dearborn & Ewing law firm
regarding their business. Id. An associate for the firm recommended a profit-sharing plan for
the benefit of the plaintiffs, which the attorney assisted the plaintiffs in implementing. Id.
However, in September of 1988 the Internal Revenue Service (“IRS”) sent a letter to the
plaintiffs questioning their income reporting. Id. at 531. The plaintiff’s accountant
responded to the IRS’ requests in October 1988. Id. Shortly thereafter, the plaintiffs
terminated the defendant law firm and retained new counsel. Id.
In May of 1990, the plaintiffs filed a legal malpractice action against the Dearborn
& Ewing law firm, alleging, inter alia, that the law firm negligently recommended and
drafted the profit-sharing plan. Id. The law firm argued that the action was barred by the
statute of limitations. The trial court disagreed, awarding damages to the plaintiffs. Id. at
531–32. The Court of Appeals subsequently affirmed. Id. at 532. In a unanimous decision,
the Tennessee Supreme Court reversed, holding that the statute of limitations barred the
claim. Id. at 533. According to the Supreme Court, the plaintiffs had suffered “an actual
injury” when they terminated the attorney-client relationship with the law firm and retained
new counsel to represent them with regard to the IRS. Id. The Supreme Court stated: “The
plaintiffs suffered an actual injury for purposes of the discovery rule when they began to
incur expenses, or at least had to take some action, as a result of the defendants' negligent
advice,” despite the fact that the IRS had not taken formal action against the plaintiffs. Id.
In addition, the Supreme Court held that the plaintiffs were aware of a “potential problem”
with the law firm’s representation when the plaintiffs retained new counsel to represent them.
Id. Accordingly, the Supreme Court reversed the trial court and the Court of Appeals and
dismissed the case. Id. at 533–34.
CAS argues that prior to the Court of Appeals decision becoming final, CAS suffered
no injury, which is required to trigger the running of the statute of limitations. Both CAS and
Mr. Jones cite unreported cases from this Court applying the foregoing law in Kohl to
support their arguments. CAS cites Davidson v. Baydoun, No. M2008-02746-COA-R3-CV,
2009 WL 2365563 (Tenn. Ct. App. July 31, 2009), which involved an attorney’s alleged
negligence during trial. In Davidson, the plaintiff’s attorney was allegedly inebriated during
the trial and failed to argue the full amount of damages sought by his client. Id. at *1. The
trial court orally awarded damages to the plaintiff, but significantly less than anticipated due
to the attorney’s failure to present evidence on additional damages. Id. at *2. For
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unexplained reasons, the order reflecting the oral ruling was entered nearly a year later. Id.
The plaintiff filed a legal malpractice claim against the attorney within one year of the filing
of the order, but beyond one year from the oral ruling. Id. The trial court dismissed the action
as barred by the statute of limitations. Id. The Court of Appeals reversed, holding that the
plaintiff was not injured by the attorney’s alleged negligence until the entry of the final order
in the case. Id. at *6. This Court reasoned that “because a legally cognizable injury occurs
when a party loses a right or remedy, and it is a court's ‘judgment that decrees the loss of a
right or remedy,’” then the injury could not occur until entry of the final judgment. Id. at *6
(quoting Cherry v. Williams, 36 S.W.3d 78, 84–85 (Tenn. Ct. App. 2000)).
In contrast, Mr. Jones cites Honeycutt v. Wilkes, W2007-00185-COA-R3-CV, 2007
WL 2200285 (Tenn. Ct. App. Aug. 2, 2007), which involved an attorney’s alleged negligent
advice regarding the application of a marital dissolution agreement. In Honeycutt, the marital
dissolution agreement contained a clause terminating Wife’s alimony if she remarried or
cohabited. Id. at *1. Wife maintained her home in Tennessee, but due to her job in Florida,
also lived two-thirds of the year in Florida, where she resided with a man. Id. at *1. When
Husband sought to terminate his alimony payments due to the cohabitation, Wife faxed a
request to the attorney who represented her in the divorce that the attorney handle the matter.
However, the attorney never responded and took no action on the case. Id. at *1. Wife
retained new counsel to defend the action to terminate her alimony payments, noting in the
letter terminating the prior attorney that, “You advised me it was permissible to have [sic]
relationship with a male and stay at his house, as long as I had a Tennessee residence and
driver’s license.” Id. at *2. The trial court found that Wife was not cohabiting with the man
in Florida because Wife was financially independent. Id. The Court of Appeals reversed,
holding that the marital dissolution agreement required only proof of cohabitation, not
financial support, to terminate alimony payments. Id.
Within one year of the Court of Appeals decision, Wife filed a legal malpractice
action against her first attorney. Id. The attorney moved for summary judgment, arguing that
the claim was barred by the statute of limitations. Id. at *3. The trial court held that the claim
was barred because the statute began to run when Wife was forced to defend Husband’s
petition to terminate her alimony, nearly three years prior to the filing of the legal malpractice
claim. Id. This Court agreed, explaining:
In this case, [Wife] began to incur additional attorney's fees
when [Husband] filed the petition to terminate alimony, and
those fees eventually exceeded $56,000 over the course of the
proceedings. This constituted an actual injury that triggered the
accrual of her legal malpractice action. When we reversed the
trial court, her loss of alimony payments was additional damage,
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but it was not necessary for [Wife] to have suffered all the
injurious effects or consequences of the alleged negligence in
order for the statute to begin running. See Kohl, 977 S.W.2d at
533. When [Wife] suffered an actual injury, she could not delay
filing her malpractice action until an adverse judgment was
entered against her.
Id. at *7.
Based on the foregoing, we conclude that the time and expense of defending
Cookeville’s motion for summary judgment, argued on January 9, 2007, constituted an actual
injury for purposes of the discovery rule. As discussed above, the Tennessee Supreme Court
has held that damage need not be the entry of an order adverse to the client, but may consist
of the “plaintiff being forced to take some action or otherwise suffer ‘some actual
inconvenience,’ such as incurring an expense, as a result of the defendant's negligent or
wrongful act.” Kohl, 977 S.W.2d at 532–33. Unlike in Davidson, CAS suffered damage, in
the form of expense and inconvenience, prior to the entry of the final adverse order in this
case. The client in Davidson had not expended any time or money directly as a result of his
attorney’s negligence during the trial or at the time of the oral ruling; instead his time and
effort were spent solely prosecuting his claim for damages. In Honeycutt, however, the time
and expense of the litigation were a direct result of the attorney’s alleged negligent advice.
Honeycutt, 2007 WL 2200285, at *6. Accordingly, this Court, in Honeycutt, held that Wife
was injured when she was “forced to defend against [Husband’s] petition.” Honeycutt, 2007
WL 2200285, at *6. Similarly to Wife in Honeycutt, CAS incurred expenses and
inconvenience when it was forced to defend against Cookeville’s motion for summary
judgment on January 9, 2007. The decision of the Court of Appeals ultimately invalidating
the contract was “additional damage, but it was not necessary for [CAS] to have suffered all
the injurious effects or consequences of the alleged negligence in order for the statute to
begin running. Id. at *7 (citing Kohl, 977 S.W.2d at 533).
CAS argues, however, that unlike Honeycutt, where the only issue involved Wife’s
cohabitation, the expense of the litigation in Cookeville was primarily to prosecute CAS’
breach of contract claim, rather than to defend against Cookeville’s illegality argument and
that the expenses cannot be separated. To support this argument, CAS relies on Caledonia
Leasing and Equipment Co., Inc. v. Armstrong, Allen, 865 S.W.2d 10 (Tenn. Ct. App.
1992), which reversed the trial court’s determination that the case was barred by the statute
of limitations, in part because the attorney fees incurred by the plaintiff in the case were too
“uncertain” and “speculative” to trigger the statute of limitations because the fees were
“related to bankruptcy matters other than or in addition to” the injury caused by the attorney.
Id. at 17–18. However, the record, as well as the statement of undisputed facts, shows that
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CAS hired an expert witness for the sole purpose of defending the legality of the contract at
the summary judgment hearing. The purpose behind this expense is not uncertain or
speculative; it is wholly attributable to a determination of the legality of the fee-splitting
arrangement contained in the underlying contract. In addition, the Court of Appeals, in
Caledonia, ultimately held that the plaintiff in the case was injured by the attorney’s conduct
“when it was forced to defend the validity of the deeds against the Trustee's attack.” Id. at
17. Accordingly, the holding in Caledonia supports our conclusion that CAS was likewise
injured when it was forced to defend the validity of the contract at the hearing on
Cookeville’s motion for summary judgment on January 9, 2007.
CAS also argues that all legal expenses at trial were paid from funds owed to
Cookeville under the contract, or in the alternative, that the expenses were recoverable from
Cookeville under the indemnity clause contained in the contract until the Court of Appeals
invalidated the contract. Accordingly, CAS argues that summary judgment was improper
without a trial on these issues. These arguments are without merit. First, as discussed above,
because of CAS’ failure to respond to Mr. Jones’ statement of undisputed fact, we deemed
those facts admitted. In those facts, CAS admits to having incurred legal fees in order to
defend the motion for summary judgment. Second, because the contract as a whole was
invalidated, no money was owed under the contract to Cookeville; accordingly, the money
expended was owned by CAS. Finally, the Supreme Court in Kohl required only an “actual
inconvenience” and mentioned incurring an expense as merely an example. Kohl, 977
S.W.2d at 532–33; see also Burns v. U.S., 274 U.S. 328, 47 S.Ct. 650, 71 L.Ed. 1077 (1927)
(“As the use of the term “such as” confirms, the list is illustrative, not exhaustive.”). CAS
was injured when they were hailed into court to defend the enforceability of the contract on
January 9, 2007. See Caledonia, 865 S.W.2d at 17 (holding that the plaintiff was injured
when it was forced to defend the validity of the documents at issue). Accordingly, CAS
suffered some “actual inconvenience” in having to defend the contract in court, regardless
of whether CAS incurred an actual expense in doing so.
2. Knowledge
Having determined that the injury prong of the discovery rule has been satisfied, CAS
must also have had knowledge of its injury more than one year prior to the filing of this
malpractice action. The Tennessee Supreme Court has explained the knowledge prong of the
discovery rule:
The knowledge component of the discovery rule may be
established by evidence of actual or constructive knowledge of
the injury. Carvell, 900 S.W.2d at 29. Accordingly, the statute
of limitations begins to run when the plaintiff has actual
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knowledge of the injury as where, for example, the defendant
admits to having committed malpractice or the plaintiff is
informed by another attorney of the malpractice. Under the
theory of constructive knowledge, however, the statute may
begin to run at an earlier date—whenever the plaintiff becomes
aware or reasonably should have become aware of facts
sufficient to put a reasonable person on notice that an injury has
been sustained as a result of the defendant's negligent or
wrongful conduct. Id. We have stressed, however, that there is
no requirement that the plaintiff actually know the specific type
of legal claim he or she has, or that the injury constituted a
breach of the appropriate legal standard. Shadrick, 963 S.W.2d
at 733. Rather, “the plaintiff is deemed to have discovered the
right of action if he is aware of facts sufficient to put a
reasonable person on notice that he has suffered an injury as a
result of wrongful conduct.” Carvell, 900 S.W.2d at 29 (quoting
Roe v. Jefferson, 875 S.W.2d 653, 657 (Tenn. 1994)). “It is
knowledge of facts sufficient to put a plaintiff on notice that an
injury has been sustained which is crucial.” Stanbury, 953
S.W.2d at 678. A plaintiff may not, of course, delay filing suit
until all the injurious effects or consequences of the alleged
wrong are actually known to the plaintiff. Shadrick, 963 S.W.2d
at 733; Wyatt v. A-Best Company, 910 S.W.2d 851, 855 (Tenn.
1995). Allowing suit to be filed once all the injurious effects and
consequences are known would defeat the rationale for the
existence of statutes of limitations, which is to avoid the
uncertainties and burdens inherent in pursuing and defending
stale claims. Wyatt, 910 S.W.2d at 855.
Kohl, 977 S.W.2d at 532–33.
CAS argues that this case does not involve an action on the part of CAS that evidences
their knowledge of a legal claim against Mr. Jones. To support this argument, CAS
distinguishes its case from Honeycutt, wherein this Court held that Wife became aware of
her injury when she expressed distrust in her attorney’s representation and terminated her
employment. Honeycutt, 2007 WL 2200285, at *10. Because Mr. Jones did not represent
CAS at trial and, therefore, was not terminated once the alleged unenforceability of the
contract came to light, CAS argues that there is no evidence that it knew that Mr. Jones had
negligently drafted the contract. The Supreme Court has “stressed, however, that there is no
requirement that the plaintiff actually know the specific type of legal claim he or she has, or
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that the injury constituted a breach of the appropriate legal standard.” Kohl, 977 S.W.2d at
533. In addition, actual knowledge is not required in order for the statute of limitations to
begin to run. As discussed above, the statute will begin to run when the plaintiff has
constructive knowledge of the malpractice—“whenever the plaintiff becomes aware or
reasonably should have become aware of facts sufficient to put a reasonable person on notice
that an injury has been sustained as a result of the defendant's negligent or wrongful
conduct.” Id. Accordingly, CAS may be found to have knowledge of the injury when facts
were discovered or brought to its attention that would put a reasonable person on notice of
Mr. Jones’ wrongful conduct, regardless of whether CAS had actual knowledge that Mr.
Jones’ conduct was a breach of his duty as an attorney.
In this case, Cookeville’s motion for summary judgment, filed on November 22,
2006, specifically alleges that the fee-splitting provision of the contract was illegal; this
allegation would have put a reasonable person on notice that they had sustained an injury as
a result of Mr. Jones’ alleged negligence. In a similar case, Lufkin v. Conner, 338 S.W.3d
499 (Tenn. Ct. App. 2010), this Court held that the filing of a motion to suppress was
sufficient to put the plaintiff on notice that his former attorney committed malpractice. In
Lufkin, David A. Lufkin, an attorney, was sued by a former client for legal malpractice. An
attorney from Mr. Lufkin’s firm represented him at trial, where it came to light that Mr.
Lufkin had engaged in certain inappropriate behavior. Accordingly, Mr. Lufkin settled the
case and hired a separate criminal defense attorney. A Presentment was subsequently
returned against Mr. Lufkin. After learning that Mr. Lufkin’s prior attorney, who had never
withdrawn as his counsel, had “provided substantial information against his very own client,”
to prosecutors, Mr. Lufkin’s criminal defense attorney filed a Motion to Dismiss and/or
Motion to Suppress any and all Evidence obtained through Mr. Lufkin’s civil defense
attorney. Mr. Lufkin never read the motion to suppress. When Mr. Lufkin filed a legal
malpractice claim against his first attorney more than a year after the filing of the motion to
suppress, the trial court dismissed the claim as being beyond the one-year statute of
limitations. This Court affirmed, holding that the motion to suppress was sufficient to put Mr.
Lufkin on notice that he had suffered an injury as a result of his former attorney’s conduct,
even though Mr. Lufkin had no actual knowledge of the motion to suppress. Id. at 504–05.
Similarly, the motion for summary judgment in this case was sufficient to put CAS
“on notice that an injury has been sustained as a result of the defendant's negligent or
wrongful conduct.” Kohl, 977 S.W.2d at 532–33. At the time of the summary judgment
motion, CAS was put on notice of Tennessee law, which could invalidate the contract drafted
by Mr. Jones. Unlike in Wilson v. Meares, 15 S.W.3d 865 (Tenn. Ct. App. 1999), at the time
of the first litigation, CAS was represented by independent counsel, rather than Mr. Jones.
In Wilson, this Court held that genuine issues of material fact existed as to whether the
plaintiff knew that his injury was caused by his attorney’s wrongful conduct because the
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attorney continued to represent the plaintiff, did not advise the plaintiff to seek independent
counsel and continuously assured the plaintiff that the attorney’s actions were “carefully
researched” and proper. Id. at 872. In contrast, the record in this case shows that CAS was
represented by a different attorney throughout the litigation in Cookeville. In addition, due
to the serious allegation that the contract was unenforceable, CAS, through its attorney, took
affirmative action in retaining an expert in November of 2006, whose sole purpose was to
defend the contract. This action shows that CAS was reasonably put on notice of a “potential
problem” with their contract, which was undisputedly drafted by Mr. Jones. Despite CAS’
argument that they were only aware of potential wrongful conduct on the part of Mr. Jones
at the time of the Court of Appeals decision, the knowledge prong does not require an
adverse court order, but merely “knowledge of facts sufficient to put a plaintiff on notice that
an injury has been sustained.” Kohl, 977 S.W.2d at 532–33 (citing Stanbury, 953 S.W.2d at
678). Other decisions have specifically held that events other than a court order may put the
plaintiff on notice of an injury due to an attorney’s conduct. See Kohl, 977 S.W.2d at 532–33
(holding that letter from IRS and action in terminating attorney showed that client was on
notice of potential injury); Carvell, 900 S.W.2d at 29 (holding that the knowledge
requirement was met when the clients were sued regarding a deed that their attorney
prepared); Lufkin 338 S.W.3d at 499 (holding that motion to suppress put the client on notice
of potential injury); Honeycutt, 2007 WL 2200285, at *10 (holding that a petition to
terminate alimony which caused client to terminate attorney evidenced that the client was on
notice of potential injury); Wilkins v. Dodson, Parker, Shipley, Behm & Seaborg, 995
S.W.2d 575, 583 (Tenn. Ct. App. 1998) (holding that client was put on notice of potential
problem with representation when client’s adversary raised issue of statute of limitations in
its answer); Memphis Aero Corp. V. Swain, 732 S.W.2d 608, 612 (Tenn. Ct. App. 1986)
(holding that client was put on notice of potential problem with representation when he was
sued). Therefore, a motion that specifically attacks the legality and enforceability of a
contract drafted by an attorney puts a reasonable party on notice that the party has been
injured by the drafting attorney’s conduct. Accordingly, CAS was not entitled to “delay
filing suit until all the injurious effects or consequences of the alleged wrong are actually
known.” Kohl, 977 S.W.2d at 532–33 (citing Shadrick, 963 S.W.2d at 733). Instead, CAS
was required to file its legal malpractice suit within one year of being put on notice of a
“potential problem” with Mr. Jones’ representation. Kohl, 977 S.W.2d at 533.
At latest, we conclude that CAS was on notice of a “potential problem” with Mr.
Jones’ representation on November 22, 2006, when Cookeville filed its motion for summary
judgment asserting the illegality of the contract. In addition, CAS suffered an actual injury
on January 9, 2007, at the latest, when it was forced to defend Cookeville’s motion for
summary judgment. As such, the statute of limitations on CAS’ malpractice claim began to
run when both components were met, i.e., January 9, 2007. CAS commenced this legal
malpractice action on October 27, 2010. Accordingly, CAS’ legal malpractice suit was
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commenced beyond the one-year time period set by the statute of limitations. Therefore, the
grant of summary judgment dismissing this case was proper.
V. Conclusion
The judgment of the Circuit Court is affirmed. Costs of this appeal are assessed to
Appellant, Cardiac Anesthesia Services, P.L.L.C., and its surety.
_________________________________
J. STEVEN STAFFORD, JUDGE
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