No. 87-143
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I N THE SUPREME COURT O THE STATE O MONTANA
F F
LAWRENCE SCHNEIDER,
P l a i n t i f f and A p p e l l a n t ,
-17s-
Defendant and Respondent.
APPEAL F O :
R M D i s t r i c t Court of t h e Twelfth J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f Chouteau,
The Honorable R.D. M c P h i l l i p s , Judge p r e s i d i n g .
COUNSEL O RECORD:
F
For Appellant:
Ralph T. Randono, Great F a l l s , Montana
F o r Respondent:
U g r i n , A l e x a n d e r , Zadick & S l o v a k ; Gary M. Zadick,
G r e a t F a l l s , Montana
S u b m i t t e d on B r i e f s : J u l y 23, 1987
Decided: O c t o b e r 6, 1987
Filed: ocr 6 - 19871
Clerk
Mr. Justice L.C. Gulbrandson delivered the Opinion of the
Court.
Plaintiff appeals from the order of the Ninth Judicial
District in and for Chouteau County, Montana, granting
defendant's motion for summary judgment. We affirm.
C.W. Leaphart is an attorney residing in Helena. In
1979, Dr. Lawrence Schneider, a Helena dentist, and his wife,
Lynne Schneider, approached Leaphart and asked that he
represent them in a joint petition for dissolution. Leaphart
agreed to the representation and recommended that the
Schneiders work out a suitable property settlement on their
own.
Dr. Schneiderls accountant recommended that he frame
part of the property settlement as maintenance for tax
purposes. Dr. Schneider gathered from his discussions with
the accountant and Leaphart that the maintenance payments
must extend over a period of ten years to be tax deductible.
Consequently, Dr. Schneider directed Leaphart to include a
provision in the property settlement whereby Lynne Schneider
would receive $1,000 a month in maintenance for ten years and
a month. Leaphart advised Dr. Schneider that he could
subsequently modify the property settlement agreement, but
that any such modification should be in writing.
Dr. Schneider then entered into discussions with Lynne
concerning a side agreement to terminate the maintenance
payments after twenty-six months. Dr. Schneider drafted an
agreement to limit maintenance to twenty-six months and told
Lynne that "it's not important to me whether you really sign
this or not, just so you understand and agree with me as to
the terms of the agreement we made." Lynne Schneider refused
to sign the side agreement.
The Schneiders agreed on the terms of the property
settlement as drafted by Leaphart. The dissolution decree
and property settlement agreement were entered in the
District Court of Lewis and Clark County on November 3, 1979.
In January of 1981, Dr. Schneider again attempted to obtain a
side agreement from Lynne to limit maintenance payments to
twenty-six months. Lynne again refused to sign such an
agreement. In July of 1981, after making twenty-two $1,000
maintenance payments, Dr. Schneider offered to pay in advance
what he believed to be the remaining four payments on the
condition that Lynne give him a release. Lynne did not
respond to this offer.
Approximately three months later, Dr. Schneider
solicited the opinion of an accountant as to the necessity of
the ten year maintenance provision in the property settlement
agreement. On December 4, 1981, Dr. Schneider received The
accountant's opinion that the ten year provision was
unnecessary and that maintenance payments were properly
deductible based on a twenty-six month term. That same day,
Dr. Schneider had Leaphart send the twenty-sixth monthly
maintenance payment to Lynne. Leaphart typed on the check
that this payment was "the final payment due you per the
understanding of [the date of the side agreement] ." On
December 15, 1981, Dr. Schneider again sent Lynne a release
for her signature. Lynne again ignored his correspondence.
Dr. Schneider made no further maintenance payments as
required by the property settlement.
Lynne's refusal to cooperate prompted Dr. Schneider to
suggest to Leaphart that litigation be instituted to resolve
the matter. However, Dr. Schneider did not believe that
Lynne would seek to enforce the maintenance provisions of the
property settlement. Leaphart counseled Dr. Schneider not to
sue Lynne because it appeared that Lynne would not demand the
remaining maintenance payments. At Dr. Schneider's request,
Leaphart provided an affidavit attesting to Lynne's having
agreed orally to the twenty-six month side agreement.
In January of 1984, Dr. Schneider attempted to sell two
pieces of rental property located in Helena and jointly owned
by Dr. Schneider and his dental partners. The title reports
on the properties characterized the maintenance (as ordered
in the decree of dissolution) as a lien. Lynne agreed to
quitclaim her interest in one of the properties because the
buyer was a friend. She refused to give the buyer of the
second property a quitclaim deed.
Dr. Schneider met with Lynne on three occasions during
the spring of 1984 in an attempt to obtain a release. Lynne
responded by filing suit in the District Court of Lewis and
Clark County to enforce the maintenance provisions of the
property settlement agreement. The Lewis and Clark County
District Court found that no side agreement existed and
ordered that the parties be held to the terms of the original
property settlement agreement. The case settled with Lynne
receiving approximately $50,000 in property and cash.
Dr. Schneider filed this action for professional
malpractice in Chouteau County District Court against
Leaphart on March 27, 1985, more than three years and three
months after the accountant's opinion. Dr. Schneider alleged
that Leaphart negligently drafted the property settlement
agreement to include an unnecessary provision for
maintenance. Leaphart answered and alleged, among other
defenses, that Dr. Schneider's claims were barred by the
statute of limitations.
Dr. Schneider was deposed on July 18, 1985. On October
22, 1985, Leaphart moved for summary judgment on the grounds
that Dr. Schneider failed to file the action within the
applicable statute of limitations for attorney malpractice as
set forth in S 27-2-206, MCA. The District Court granted
Leaphart's motion and Dr. Schneider appeals raising the
following issues:
(1) Was Dr. Schneider aware, as a matter of law, of
all facts essential to his cause of action, before the start
of the limitations period?
(2) Was the limitations period tolled by the doctrine
of "continuous representation?"
(3) Should Leaphart be estopped to raise the statute
of limitations in this action?
The statute of limitations for attorney malpractice,
S 27-2-206, MCA, provides as follows:
An action against an attorney licensed to
practice law in Montana or a para-legal
assistant or 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 three years after the
-
plaintiff discovers or through - - -of
the use
reasonable diligence should have
discovered - - error or omission,
the act,
whichever comes last, but in no case may
the action be commenced after ten years
from the date of the act, error, or
omission. (Emphasis added.)
The District Court found no genuine issue of material fact
and granted summary judgment to Leaphart as a matter of law
on the grounds that Dr. Schneider had not filed this action
within the three-year statute of limitations. Dr.
Schneider's burden on appeal is to establish that a genuine
issue of material fact exists. Pretty On Top v. Hardin
(1979), 182 Mont. 311, 315, 597 P.2d 58, 60.
Dr. Schneider first argues that the District Court
erred in concluding that he had "discovered" Leaphart's
negligent act more than three years before the filing of this
action. As his first issue implies, Dr. Schneider asserts
that he must discover all elements of a cause of action,
including his damages, before the statute of limitations
accrues. Dr. Schneider contends that he did not discover his
damages until he learned that the maintenance order was a
lien on his property in February of 1984. The date of
"discovery," he argues, is a genuine issue of material fact
and it was improper for the District Court to enter summary
judgment.
Dr. Schneider urges this Court to adopt a new rule
whereby the statute of limitations in a legal malpractice
action would not run until the plaintiff discovers his actual
and determinable damages. This relatively new rule,
otherwise know as the "damage rule," has been recognized in
several states. See, R. Mallen & V. Levit,
Legal Malpractice, $ 390 (2d ed. 1981).
3 However, Dr.
Schneider's "damage rule" argument fails for two reasons.
Initially, 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. Section 27-2-206, MCA.
Even if Montana recognized the "damage rule," which it
does not, Dr. Schneider's argument fails because he knew or
should have known the extent of his damages well within the
three year statute of limitations. The decree of dissolution
(including the maintenance provision) in this matter became
an enforceable judgment upon entry by the Clerk of the
District Court. Rule 54(a), M.R.Civ.P. At the time it was
docketed, the maintenance provision in the decree of
dissolution became a lien upon all of Dr. Schneider's real
property in Lewis and Clark County. Section 25-9-301(2),
MCA; Gaines v. Van Demark (1937), 106 Mont. 1, 74 P.2d 454.
Consequently, Dr. Schneider is charged with at least
constructive knowledge of the liens against his real property
as of the date the decree was entered in District Court;
November 3, 1979.
Dr. Schneider received the accountant's opinion and
became aware of Leaphart's alleged negligence on December 4,
1981. He was aware at that time that the maintenance
provision required monthly payments of $1,000 for ten years
and a month. Dr. Schneider also repeatedly attempted to get
Lynne to reduce his maintenance obligations. Given these
circumstances, the District Court was correct in concluding
that no genuine issue of material fact existed as to when Dr.
Schneider discovered Leaphart's alleged negligent act.
As to the second issue in this appeal, the material
facts are not in dispute. Accordingly, Dr. Schneider's
second issue presents this Court with a question of law. We
are then free to review the District Court's legal analysis
and draw our own conclusions. Sharp v. Hoerner Waldorf Corp.
(1978), 178 Mont. 419, 423, 584 P.2d 1298, 1300. Our
analysis leads us to agree with the District Court.
Dr. Schneider urges this Court to adopt the doctrine of
"continuous representation" in the context of legal
malpractice actions. His argument is that the three year
legal malpractice statute of limitations must be tolled until
such time as an attorney ceases to represent a plaintiff.
The District Court found that, as a matter of law, Montana
does not recognize the doctrine of continuous representation
in legal malpractice actions.
Dr. Schneider is correct in pointing out that this
Court has not directly addressed this issue in the past.
However, this Court has noted that "[slection 27-2-206, MCA
does not suspend accrual until the 'attorney-client'
relationship has been terminated." Burgett, 663 P.2d at 334,
40 St.Rep. at 751. Some states, like California, have seen
fit to codify the "continuous representation" doctrine into
their legal malpractice statutes of limitations. Compare
Cal.Code Civ.Proc. § 304.6(a)(2). The doctrine of continuous
representation is absent from the Montana legal malpractice
statute and we decline to judicially adopt such a provision.
Accordingly, the District Court was correct in refusing to
apply the doctrine of continuous representation to toll the
statue of limitations in this matter.
In his final issue, Dr. Schneider argues that Leaphart
should be estopped from pleading the statute of limitations.
Dr. Schneider contends that Leaphart's advice not to sue
Lynne Schneider prevented him from discovering his damages
and for this reason alone Leaphart should be estopped from
claiming that the statute of limitations had run. Regardless
of what Dr. Schneider knew or did not know about his damages,
we again emphasize that he needed only to discover Leaphart's
alleged negligent act for the statute of limitations to
commence.
The District Court applied the elements of estoppel to
the facts and ruled in Leaphart's favor. See Keneco v.
Cantrell (1977), 174 Mont. 130, 136, 568 P.2d 1225, 1228.
However, the District Court need not have addressed the
elements of estoppel because concealment of damages, as
argued by Dr. Schneider, is not material to an estoppel
argument under the specific circumstances of this case.
For a viable estoppel argument, Dr. Schneider must
first present evidence that "conduct, act, language or
silence amounting to a representation or a concealment of
material facts . .. " by Leaphart prevented discovery of
Leaphart's alleged negligent act. Keneco, supra. Dr.
Schneider fails to address this point and we are under no
duty to anticipate his argument to establish the existence of
a genuine issue of material fact. Larry C. Iverson, Inc. v.
Bouma (1981), 195 Mont. 351, 374, 639 P.2d 47, 59.
The first issue in this appeal is dispositive of the
last issue. Dr. Schneider became aware of Leaphart's alleged
negligence no later than the date he received the
accountant's opinion. His lcnowledge of the alleged faulty
maintenance provision, as drafted by Leaphart, was sufficient
to begin the running of the three-year statute of
limitations. Accordingly, no genuine issues of material fact
exist as to when Dr. Schneider discovered Leaphart's alleged
negligent act. We hold that the three-year statute of
limitations, as set forth in S 27-2-206, MCA, had run and
summary judgment was proper under the particular facts of
this case.
Affirmed. #
A
Justic
We concur: A