NO. 87-371
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
WALTER ADAM SCHWEITZER,
Plaintiff and Counter-defendant,
ESTATE OF ANDREW C. HALKO,
Defendant and Counter-Plaintiff,
ESTATE OF ANDREW C. HALXO,
Third Party Plaintiff and Appellant
-vs-
CLARKE M. DAWSON,
Third Party Defendant and Respondent.
APPEAL FROM: District Court of the Tenth Judicial District,
In and for the County of Judith Basin,
The Honorable Peter L. Rapkoch, Judge presiding.
COUNSEL OF RECORD:
For Plaintiff and Counter-Defendant,
Defendant and Counter-Plaintiff:
Howard F. Strause, Great Falls, Montana
For Third Party Plaintiff and Appellant,
Third Party Defendant and Respondent:
William Conklin, (Dawson), Great Falls, Montana
Bradley Parrish, (Schweitzer), Lewistown, Montana
Submitted on Briefs: January 7, 1988
Decided: March 2 5 , 1988
Clerk
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
The Estate of Andrew Halko appeals from an order of the
District Court, Tenth Judicial District, Judith Basin County,
dismissing their claims against the defendant Clarke Dawson
on the grounds that the applicable statute of limitations had
run. We affirm.
The Halko estate presents two issues on appeal. They
are :
1. Did the trial court err in granting summary judgment
on the basis of the statute of limitations having run?
2. Did the trial court err in granting summary judgment
on the basis of the - pari delicto doctrine?
in
Andrew and Mary Halko were an elderly couple with
significant land holdings. In 1977, the Halkos executed
reciprocal mutual Wills. The Wills devised a segment of the
Halko's property to Mary's sister and niece, Genevieve
Schultz and Emily Hastings. Each Will provided that the
testator would not change the Will once the other spouse was
deceased. Mary Halko died in 1980 and was survived by her
husband, Andrew. At the time of Mary's death, neither of the
mutual and reciprocal Wills had been revoked or modified.
After Mary's death, Andrew became displeased with Mary's
relatives and decided to disregard the Will and sell that
segment of property which under the terms of the Will would
pass to Schultz and Hastings.
Andrew sold the land to Walter Schweitzer, a neighboring
farmer who had previously expressed an interest in purchasing
the property. In October, 1980, Halko and Schweitzer entered
into a lease agreement with an option to purchase. The
agreement was a standard form document which Halko and
Schweitzer filled out without the benefit of legal
assistance. The document entitled "Earnest Money Receipt"
granted Schweitzer a 12 month lease on the property with an
option to purchase. The evidence indicates both parties
believed that the agreement which they entered into was not a
binding contract.
After executing the document, Halko expressed a desire
to have his attorney draw up "a legal contract" as he
believed the document which he and Schweitzer had signed was
"not binding enough." Schweitzer believed the "Earnest Money
Receipt" agreement was a temporary agreement that would be
finalized later.
Halko consulted Clarke Dawson, a Great Falls attorney
regarding the sale of the property to Schweitzer. Dawson had
already been retained by Halko to handle the probate of Mary
Halko's estate. As such, Dawson had knowledge of the
reciprocal Will including the devise of the property (which
was the object of the sale) to Hastings and Schultz.
Dawson prepared an option agreement for Halko and
Schweitzer which was executed in November, 1980. Subsequent
to the execution of the option agreement, Halko requested
Dawson to draft a new Will for him omitting the devises to
Hastings and Schultz. Andrew Halko executed this Will in
March, 1981.
In April, 1981, Hastings and Schultz filed suit against
Halko claiming Halko breached a contract with his wife made
for their benefit. The District Court enjoined Halko from
selling or disposing of the land.
In October, 1981, Schweitzer attempted to exercise his
option agreement with Halko. Halko refused as the temporary
restraining order precluded any conveyance of the land which
was the subject of the option agreement. Schweitzer sued
Halko as a result of this breach.
The lawsuit brought by Hastings and Schultz was
eventually settled in March, 1984. An order was entered by
stipulation of parties concluding the action. The order
provided that all Wills executed by Andrew Halko subsequent
to 1977 were legally void, the order further provided that
the disputed land would pass to Schultz and Hastings
following Halko's death.
Halko died in July, 1984, and his estate succeeded him
as the defendant in the suit initiated by Schweitzer.
In 1985, the Estate of Halko filed a third party
complaint (which it later amended) against Clarke Dawson
alleging malpractice, breach of contract, and breach of
indemnity in this matter. Halko's estate contended that
Dawson exposed Halko to liability either to Schweitzer or to
Schultz and Hastings when he drafted the option agreement.
The Estate further contends that Dawson committed malpractice
in: drafting the March 9, 1981 Will and omitting the devise
to Schultz and Hastings, and allowing Halko to exercise the
revised Will.
Dawson moved for summary judgment claiming that the
estate's claims were barred by the statute of limitations.
The court received briefs from both parties as well as
affidavits and other materials.
In June, 1987, the District Court filed an order
granting the motion for summary judgment. The court held
that the claims were barred by the statute of limitations
finding, as a matter of law, that Andrew Halko had knowledge
of Dawson's acts more than three years before the third party
complaint was filed by his estate. In the alternative, the
District Court found that Halko had been - pari delicto with
in
Dawson, as to all matters at issue. The court held that
Halko's estate is charged with Halko's knowledge and as such
the claims are barred on grounds of - pari delicto. From
in
this order, plaintiffs appeal.
In pursuing a third party complaint against Dawson, the
estate stands in the shoes of the decedent Halko. Section
27-1-501, MCA. As such, Halko's knowledge concerning the
alleged malpractice on the part of Dawson is imputed to his
estate.
As the District Court correctly noted all of the counts
of the original and amended complaint, regardless of how they
are described sound in legal malpractice. The specific
statute of limitations for legal malpractice is 5 37-2-206,
MCA, which provides:
27-2-206. Actions for legal malpractice. An
action against an attorney licensed to practice law
in Montana or a paralegal assistant or a legal
intern employed by an attorney based upon the
person's alleged professional negligent act or for
error or omission in the person's practice must be
commenced within 3 years after the plaintiff
discovers or through the use of reasonable
diligence should have discovered the act, error, or
omission, whichever occurs last, but in no case may
the action be commenced after 10 years from the
date of the act, error, or omission.
Recently, this Court construed 5 27-2-206, MCA, in
Schneider v. Leaphart (Mont. 1987), 743 P.2d 613, 616, 44
St.Rep. 1699, 1702, where we stated:
... the Montana legal malpractice statute of
limitations, 5 27-2-206, MCA, only allows the
tolling of the statute of limitations until such
time as the attorney's negligent act is discovered
or through the use of reasonable diligence should
have been discovered. Burgett v. Flaherty (Mont.
1983), 663 P.2d 332, 334, 40 St.Rep. 748, 751.
There is no statutory requirement that the legal
malpractice statute of limitations be tolled until
a party discovers his or her damages 27-2-206, MCA.
It is the knowledge of facts essential to the cause of
action for legal malpractice, not knowledge of legal theories
upon which an action is based that determines when a cause of
action for legal malpractice accrues. Burgett, 663 P.2d at
334, 40 St.Rep. at 751.
In the immediate case, the acts complained of were
committed by Dawson considerably more than three years prior
to the bringing of this action. Dawson drafted and had Halko
execute a "formal" option agreement with Schweitzer on
November 15, 1980. Clearly, Halko was cognizant of the facts
constituting the alleged wrong as he was an active
participant in those acts. For purposes of the summary
judgment motion, any claim based on this allegedly wrongful
act expired in November, 1983.
The second alleged wrongful act occurred when Dawson at
Halko's request drafted the subsequent Will which Halko
executed March 9, 1981, deleting the devises to Emily
Hastings and Genevieve Schultz. Again, Halko almost
certainly had knowledge of the facts that eventually gave
rise to his estate's cause of action, at the very least he
had sufficient information to allow him to discover the facts
through the use of reasonable diligence. The very latest
Halko became aware of Dawson's alleged act of malpractice in
redrafting the Will was April 21, 1981, when Halko was sued
as a result of this new Will by Hastings and Schultz. For
the purposes of the summary judgment, any claim resulting
from the allegedly wrongful act of redrafting Halko's Will
expired long before Halko's estate brought the immediate
action.
As we have found, the plaintiffs' action is barred by
the statute of limitations (5 27-2-206, MCA) we need not
address the - pari delicto issue.
in
Affirmed.
We Concur: