Boyd v. Jones , 85 F. App'x 77 ( 2003 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
DEC 18 2003
TENTH CIRCUIT
PATRICK FISHER
Clerk
SAMUEL L. BOYD,
Plaintiff - Appellant,
v.
No. 01-4248
JEFFREY M. JONES and DURHAM,
(D.C. No. 2:00-CV-472-K)
JONES, & PINEGAR, a Professional
(Dist. Utah)
Corporation (f/k/a Durham, Evans,
Jones & Pinegar),
Defendants - Appellees.
ORDER AND JUDGMENT *
Before EBEL, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and
ARMIJO, ** District Judge.
Plaintiff-Appellant, Samuel L. Boyd, appeals the dismissal of his case for
legal malpractice against the firm of Durham, Jones, & Pinegar, and its principal
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. This court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
The Honorable Christina M. Armijo, District Court Judge, District of
**
New Mexico, sitting by designation.
Jeffrey M. Jones (collectively “DJP” or “the firm”). DJP had represented Boyd in
an unrelated suit that had been dismissed from state court for failure to prosecute.
The federal district court found that Boyd’s complaint of legal malpractice
against DJP was time-barred. It first determined that his claim sounded in tort
under Utah law. It then found that the applicable four-year statute of limitations
for tort claims in Utah began to run when Boyd was initially notified of the
alleged malpractice by the dismissal of his state suit by the trial court for failure
to prosecute, not from when the dismissal became final by denial of relief from
the Utah Supreme Court.
Boyd appeals from the district court’s dismissal of his case as untimely, and
from the court’s denial of his various motions to amend his pleadings after
judgment, to alter or amend the judgment, or to relieve him from the judgment.
He further requests certification to the Utah Supreme Court of the question of
when the statute of limitations began to run.
We REVERSE the district court’s grant of summary judgment because the
newly decided Utah Supreme Court decision of Clark v. Deloitte & Touche, LLP,
34 P.3d 209 (Utah 2001), determines that the statute of limitations for tort actions
based on professional malpractice begins to run only after the damages from the
alleged malpractice become final, which in this case was after the appeal time had
expired. Boyd’s claim for legal malpractice against DJP was filed within four
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years of that date and so it was timely. Accordingly, we REMAND for further
examination of Boyd’s claim by the district court. We also DENY Boyd’s request
for certification of the question of when the statute of limitations begins to run in
light of Clark.
BACKGROUND
Samuel L. Boyd is an attorney in his own right who brought suit for alleged
malpractice against Jeffery M. Jones and the firm of Durham, Jones & Pinegar.
In the wake of a failed stock acquisition, Boyd filed a lawsuit in Utah state court
alleging breach of contract and fraud against the company that issued the stock.
In the middle of that suit, he fired his first attorney and hired DJP to represent
him. On June 1, 1995, the Utah courts dismissed Boyd’s stock acquisition suit for
failure to prosecute; on June 16, 1995, his motion for reconsideration was denied.
DJP unsuccessfully appealed the dismissal, and relief was denied by the
Utah Court of Appeals on September 26, 1996, and by the Utah Supreme Court on
February 7, 1997. DJP notified Boyd of the Utah Supreme Court’s denial of
certiorari by letter in November 1998, more than a year and a half later.
Boyd brought the instant action for malpractice against DJP in federal court
on June 9, 2000. His complaint alleged that DJP “failed to act with reasonable
skill, care and diligence to pursue the [lawsuit in state court].”
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The federal district court found that Boyd’s action for malpractice was
barred by the statute of limitations. It first determined that the case sounded in
tort rather than in contract. Next, the district court determined that the four-year
term of the statute of limitations for tort actions had run by the time Boyd filed
his claim. Under Utah law, the statute of limitations begins to run upon “the
occurrence of the last event required to form the elements of the cause of action.”
The district court reasoned that Boyd had notice of DJP’s alleged malpractice in
allowing his case to be dismissed for lack of prosecution by June 1, 1995, when
the Utah trial court first dismissed his suit, and certainly by June 16, 1995, when
his motion for reconsideration was denied. Boyd filed suit in federal court in
June of 2000, well beyond four years from these dates.
In a separate order, the district court also denied the motions Boyd made to
amend his pleadings under Fed. R. Civ. P. 15(b), to alter or amend judgment under
Fed. R. Civ. P. 59, and to be relieved from judgment under Fed. R. Civ. P. 60(b).
The district court explained that Boyd’s motion to amend his pleadings under Fed.
R. Civ. P. 15(b) was both untimely and futile. The amended pleading would be
untimely because judgment had already been rendered, and futile because any new
argument Boyd made from the facts of the case would similarly sound in tort and
similarly be barred by the statute of limitations. Boyd’s remaining motions under
Fed. R. Civ. P. 59 & 60(b) were rejected because he made no new arguments and
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motions for reconsideration were not appropriate vehicles for rehashing arguments
that had failed before.
On appeal, Boyd objects to both of the district court’s orders. Boyd initially
argues that the district court erred in dismissing his case at the summary judgment
stage for being barred by the statute of limitations. His arguments are (1) that not
all of his claims should have been construed as sounding in tort; (2) that the Utah
Supreme Court’s new decision in Clark signifies that the statute of limitation
should only run from when his appeals became final in state court, not from when
his case was first dismissed by the trial court for lack of prosecution; and (3) that
the statute of limitations should be equitably tolled. Boyd further argues that the
district court erred in denying his motions to amend his pleadings or to petition for
rehearing. He submits a motion to certify to the Utah Supreme Court the question
of when the statute of limitations began to run.
We agree with the district court that Boyd’s claim sounds in tort, but
REVERSE the district court on the question of when the four-year statute of
limitations began to run. We conclude that Boyd’s claim for malpractice was
timely and we REMAND for further consideration by the district court. We need
not reach the issue of whether the statute of limitations should be equitably tolled.
We DENY as moot Boyd’s motion for certification to the Utah Supreme Court of
when the statute of limitations began to run.
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DISCUSSION
The district court exercised diversity jurisdiction under 28 U.S.C. § 1332.
We hear Boyd’s appeal from its final judgment under 28 U.S.C. §§ 1291 and
1294(1), and review the district court’s interpretation of law de novo. Elder v.
Holloway, 510 U.S. 510, 516 (1994); Dang v. UNUM Life Ins. Co. of Am., 175
F.3d 1186,1189 (10th Cir. 1999).
I. WHETHER BOYD’S CLAIM SOUNDED IN TORT OR IN
CONTRACT
Under Utah law, “a plaintiff will not be permitted to characterize a tort
action as one in contract in order to avoid the bar of the statute of limitations.”
Doit, Inc. v. Touche, Ross & Co., 926 P.2d 835, 842 n.13 (Utah 1996) (quoting
Malone v. University of Kansas Med. Ctr., 552 P.2d 885, 889 (Kan. 1976)). Utah
courts characterize a cause of action by looking to the underlying nature of the
action and not to the labels chosen in pleadings. Doit, 926 P.2d at 842 n.13;
Records v. Briggs, 887 P.2d 864, 868 (Utah 1994). In determining whether the
underlying nature of an action sounds in tort or contract, the test is whether the
duties imposed are based on what is reasonable given the general standards of
conduct for a profession. See e.g., Doit, 926 P.2d at 842 n.13 (“The wrongs
plaintiffs allege are that the [professional service providers] failed to perform
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[their obligations] in accordance with the duties imposed upon them, not by the
specific terms of their contracts, but under Utah law and the professional standards
of [their] profession.”).
Boyd’s complaint labeled three causes of action: negligence, breach of
contract, and breach of fiduciary duty. In his claim for negligence, Boyd alleged
that DJP failed to represent him in the state suit “in accordance with the standard
of care expected of a reasonably competent attorney.” In his claim for breach of
contract, Boyd alleged that DJP failed to “perform the contract in good faith and
with skill, care, and diligence.” He did not cite any portion of a contract that
specified a particular contractual standard of skill, care, or diligence. Finally, in
his claim for breach of fiduciary duty, Boyd alleged that DJP owed him “fiduciary
duties with regard to [its] representation of [him] in the Lawsuit,” but similarly
failed to specify what those duties might be.
After reviewing Boyd’s complaint, we agree that the allegation that DJP
essentially “failed to exercise the reasonable care which the law requires” is at the
heart of each of Boyd’s claims. See Doit, 926 P.2d at 842 n.13. Applying “the
standard of care expected of a reasonably competent attorney” requires the
intervention of a court to determine and apply the standard of care relevant to the
legal profession from the background of the common law. Boyd’s complaint gives
no indication that the contract imposed any special standard of “skill, care, or
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diligence” for performance under the contract, nor does it allege any contractual
“fiduciary duty” above and beyond that understood in the common law as existing
between a professional services corporation and its client.
Accordingly, because the duty of care related by Boyd’s complaint is
imposed upon DJP by the common law and not more particularly specified, we
agree with the district court in finding under Utah law that his claim sounded in
tort.
II. WHEN THE STATUTE OF LIMITATIONS BEGINS TO RUN IN
TORT CLAIMS FOR MALPRACTICE UNDER UTAH LAW
The rule in Utah is that the statute of limitations begins to run upon “the
happening of the last event necessary to complete the cause of action.” Clark v.
Deloitte & Touche, LLP, 34 P.3d 209, 216 (Utah 2001) (internal quotation
omitted).
Boyd argues that the four-year statute of limitation for tort actions should
run only from when his case was no longer appealable – in this case when the
Supreme Court of Utah had denied certiorari – not from when he was initially
notified of the possible malpractice by the trial court’s dismissal of his case for
failure to prosecute. Boyd relies primarily on Clark for this assertion. We agree
that Clark controls.
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In Clark, an accountant had erroneously counseled his clients that they could
treat a particular asset as a capital gain, rather than as income. Deveaux and
Marjorie Clark, a married couple, had engaged Vernon Calder, of Deloitte &
Touche, LLP, to be their accountant. When the IRS pursued the Clarks for back
taxes and penalties, they relied on Calder’s advice, proceeding through the
administrative process ultimately to receive a final judgment from the U.S. Tax
Court. The Utah Supreme Court found that the clients’ claim of malpractice
against their accountant was timely because it was filed within four years of the
Tax Court’s final judgment. The Utah Supreme Court held that it was only after
the Tax Court had rendered final judgment that the clients could know they had
damages from the alleged malpractice and thus had a complete claim.
The federal district court here attempted to distinguish Clark on the ground
that Boyd knew of DJP’s alleged negligence in failing to prosecute his claim as of
the time his case was initially dismissed by the trial court. The district court
concluded that this notice of the failure to prosecute the case established the last
element of an entirely complete claim. It therefore held that the initial dismissal
of Boyd’s case constituted “the existence of a redressable harm or injury [such
that] . . . the injured party kn[ew] or should [have] know[n] of either the injury or
the negligent act.” See Clark, 34 P.3d at 215-216 (citation omitted). The district
court’s interpretation comported with prior Utah cases such as Williams v.
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Howard, 970 P.2d 1282, 1284 (Utah 1998), and Merkley v. Beaslin, 778 P.2d 16,
20 (Utah Ct. App. 1989), although neither case is controlling here because neither
case involved attorneys’ conduct in ongoing litigation, the effect of which could
not be known until the expiration of the appeals process.
The district court, in particular, failed to account for Clark’s discussion of
the finality of damages. In bringing suit against a professional services
corporation for malpractice when the underlying case is still pending in the court
system, the Utah Supreme Court explained that the problem of evaluating damages
is two-fold.
First, as in Clark, Boyd could not know if a redressable harm existed until
the exhaustion of litigation. The Utah Supreme Court in Clark found persuasive
the fact that, until the time that a non-appealable judgment is entered against them,
clients only know that their accountant, for example, “might have been negligent[:]
. . . if the tax court [had not upheld] the deficiency, [his clients] would not have
[had] a cause of action against [him] for . . . malpractice.” Clark, 34 P.3d at 216
(quoting Peat, Marwick, Mitchell & Co. v. Lane, 565 So.2d 1323, 1325 (Fla.
1990)) (emphasis added) (additional citation omitted). Forcing litigants to file
malpractice actions in this manner before knowing the ultimate result of an appeal
on the merits may also undermine the principle of mitigation of damages.
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Second, it would be “illogical and unjustified” for the legal system itself to
require a client to argue inconsistent positions in simultaneous litigation. Id. The
client would have to assert one position in the ongoing claim on the merits and the
opposite position against the professional services provider in the malpractice
action. The Clark Court used the tax court for illustration: “In the tax court,
[clients] would be asserting that the deduction [their accountant] advised them to
take was proper, while they would [have to] simultaneously argue in a circuit court
malpractice action that the deduction was unlawful and that [their accountant’s]
advice was malpractice.” Id. (quoting Peat, Marwick, 565 So.2d at 1326). Forcing
litigants to take contradictory positions in simultaneous litigation would not only
“contravene equity principles and good policy, but also create the risk of
inconsistent verdicts and raise problems regarding judicial admissions and
estoppel.” Id. at 217 (citation omitted).
In light of these considerations, the Clark Court clarified when the statute of
limitations begins to run in the situation involving a malpractice action against a
provider of professional services who had been involved in the underlying
litigation. The Utah Supreme Court focused on the moment when damages from
the alleged malpractice action became sufficiently final for the plaintiffs to know
that they could bring a malpractice claim. Id. at 215. In the words of the Utah
Supreme Court, the limitations period does not then begin to run until “the
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happening of the last event necessary to complete the cause of action,” which here
would be the finalization of damages that occurred only after the dismissal of the
underlying suit became final. See id. at 216 (quoting Berenda v. Langford, 914
P.2d 45, 50 (Utah 1996)) (emphasis omitted). Thus, in application to a claim
against an attorney for malpractice in a litigation proceeding, a party’s claims
would not accrue until the case in which the malpractice is alleged to be a factor
proceeded to a final decision in the last court to which appeal was made. See
generally id. at 218 (providing as an example that, “if the Clarks had received
erroneous advice from a tax attorney, as opposed to an accountant, their claim for
malpractice would not have accrued until the Tax Court’s final decision.”) (citing
Pizel v. Zuspann, 795 P.2d 42, 56 (Kan. 1990), and Amfac Distribution Corp. v.
Miller, 673 P.2d 792, 793 (Ariz. 1983) (en banc)).
CONCLUSION
We read the Utah Supreme Court’s recent decision in Clark to hold that the
four-year statute of limitations in Boyd’s case against DJP began to run only upon
entry of the last non-appealable decision in the underlying case in which the
malpractice is alleged to be a factor. This was the point at which the damages
from DJP’s alleged malpractice became final for purposes of filing his malpractice
claim. The Supreme Court of Utah denied relief in Boyd’s state court case on
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February 7, 1997. Boyd filed in federal court against DJP less than four years
later on June 9, 2000. His case against DJP is therefore timely.
Accordingly, we REVERSE the district court’s dismissal of the case and
REMAND for further proceedings. We DENY Boyd’s motion to certify to the
Utah Supreme Court the question of when the statute of limitations began to run.
ENTERED FOR THE COURT
David M. Ebel
Circuit Judge
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