Cockey v. Mead ( 2023 )

526
Argued and submitted December 9, 2022, affirmed March 8, 2023
Scott COCKEY,
Plaintiff-Appellant,
v.
George MEAD,
an individual and
The Mead Law Firm, P.C.,
an Oregon professional corporation,
Defendants-Respondents.
Multnomah County Circuit Court
19CV25628; A177424
526 P3d 1201
In this legal malpractice case, plaintiff appeals from a judgment granting
summary judgment in favor of defendant on the ground that plaintiff’s claim is
time-barred. The parties dispute whether, under the statute-of-limitations dis-
covery rule, harm accrues before or after the conclusion of litigation that arises
from a professional’s negligent act. See ORS 12.110(1) (providing discovery rule).
Held: Where the outcome of litigation subsequent to an allegedly negligent act
could establish that the defendant was not negligent in the first instance, the
statute of limitations does not begin to run until the conclusion of that litigation.
But where the plaintiff knows, or should know, that the defendant was negligent,
and the subsequent litigation serves only to determine the extent of the harm,
the statute of limitations begins to run from the time that the plaintiff learns,
or should have learned, that the defendant’s act was negligent and that that neg-
ligence caused some harm. The record left no issue of material fact about when
the limitation period commenced; more than two years before plaintiff filed his
malpractice claim, plaintiff knew, or should have known, that defendant’s act
was negligent and that it caused some harm.
Affirmed.
Melvin Oden-Orr, Judge.
Matthew Whitman argued the cause and filed the briefs
for appellant.
Julie A. Smith argued the cause for respondents. Also on
the brief was Cosgrave Vergeer Kester LLP.
Before Aoyagi, Presiding Judge, and Joyce, Judge, and
Jacquot, Judge.*
______________
* Jacquot, J., vice James, J. pro tempore.
Cite as 324 Or App 526 (2023) 527
JOYCE, J.
Affirmed.
528 Cockey v. Mead
JOYCE, J.
In this legal malpractice case, plaintiff appeals from
a judgment granting summary judgment in favor of defen-
dant on the ground that plaintiff’s claim is time-barred.1
The question we must resolve is whether there is a genuine
issue of material fact as to whether plaintiff knew or should
have known of any harms caused by defendant’s alleged
tortious conduct more than two years before plaintiff filed
his legal malpractice claim in July 2019. See ORS 12.110(1);
U.S. Nat’l Bank v. Davies, 274 Or 663, 665, 548 P2d 966(1976) (applying two-year statute of limitations to legal mal-
practice claim pursuant to ORS 12.110(1)). We review a trial
court’s grant of summary judgment to determine whether
there are any issues of material fact and whether the mov-
ing party is entitled to judgment as a matter of law. ORCP
47 C; see generally Jones v. General Motors Corp., 325 Or
404, 939 P2d 608 (1997). After reviewing the record and all
reasonable inferences in the light most favorable to plaintiff,
Marshall v. PricewaterhouseCoopers, LLP, 316 Or App 610,
626, 504 P3d 1236 (2021), we affirm.
The statute of limitations begins to run at the time
a cause of action accrues. ORS 12.010. To determine when a
legal malpractice claim accrues, the discovery rule applies.
Kaseberg v. Davis Wright Tremaine, LLP, 351 Or 270, 277,
265 P3d 777 (2011) (construing discovery rule in legal mal-
practice case). Under that rule, the limitation period begins
to run on a plaintiff’s claim only when “the client knows or,
in the exercise of reasonable care, should know every fact
which it would be necessary for the client to prove * * * in
order to support his right to judgment.” Id. (internal quota-
tion marks and brackets omitted). To establish a legal mal-
practice claim, a plaintiff must prove that they (1) incurred
harm (2) that was caused by (3) their attorney’s tortious con-
duct. Id.; Marshall, 316 Or App at 629.
The parties agree that the single question on appeal
concerns when plaintiff knew or should have known that he
had incurred the appropriate kind of harm. As to that ques-
tion, the relevant events are as follows:
1
Though plaintiff filed his claim against both his former attorney and that
attorney’s employer, we refer to “defendant” in the singular.
Cite as 324 Or App 526 (2023) 529
• In 2016, concerned about his adult disabled daugh-
ter’s safety while in the guardianship of her mother,
plaintiff hired defendant to petition in probate
court for the mother’s removal as guardian, his own
appointment as guardian, and his daughter’s place-
ment in his home.
• In April 2016, while defendant was representing
plaintiff, the parties to the guardianship proceed-
ing entered into a settlement whereby an indepen-
dent guardian was appointed.
• In May 2016, plaintiff established a special needs
trust for his daughter.
• In September 2016, the independent guardian
informed plaintiff that his daughter would be placed
in a group home rather than plaintiff’s home.
• In October 2016, plaintiff, after hiring a new attor-
ney, petitioned to have the independent guardian
removed and have himself appointed.
• The independent guardian then moved for an
order compelling plaintiff to fund the special needs
trust to cover the guardian’s professional and legal
fees.
• In January 2017, the probate court issued an “order
on [plaintiff’s] objection to funding a special needs
trust,” which required plaintiff to fund the special
needs trust by “depositing a meaningful sum suf-
ficient to satisfy reasonable debts incurred in the
care of the Protected Person, including necessary
attorney fees” based on its finding that, in the set-
tlement agreement, plaintiff had stipulated to fund-
ing the trust.
• In March 2017, plaintiff filed a separate action in
circuit court asking the court to declare that (1) the
special needs trust could not be used to pay the
guardian’s legal fees or professional fiduciary
compensation and (2) the probate court could not
require plaintiff to make any particular distribu-
tions as trustee of the trust.
530 Cockey v. Mead
• In April 2017, plaintiff withdrew his October 2016
petition to remove the guardian and have himself
appointed.
• In March 2018, the circuit court concluded that
plaintiff had to fund the special needs trust to reim-
burse the independent guardian’s costs, including
any attorney fees.
Plaintiff filed his malpractice complaint in June
2019. In his complaint, plaintiff alleged that defendant
committed malpractice in April 2016, in the guardianship
proceeding settlement, by failing to ensure that the inde-
pendent guardianship was temporary and by binding him
to fund the special needs trust. Plaintiff alleged that defen-
dant’s conduct caused legally cognizable damage by result-
ing in plaintiff being “forced to pay * * * guardianship fees,
attorney’s fees, and other professional fees in attempts to
undo the consequences of [defendant’s] negligence.”
Plaintiff admitted that he knew that defendant’s
negligence had caused him harm when, in October 2016, he
decided to hire a new attorney to file a petition to remove
the independent guardian. He hired a new attorney at that
point because he had “learned that [defendant] had never
secured the agreement of [the independent guardian] to any
limitation of time or scope.” He also admitted that he knew
that “[d]efendants’ advice had begun to cost him money by
April 2017.”
The trial court granted defendant’s motion for sum-
mary judgment on the ground that plaintiff’s claim was
barred by the two-year statute of limitations.
As noted, the question before us is narrow: Did
a genuine issue of material fact exist as to when plaintiff
knew or should have known that he had been harmed by
defendant’s negligence? As to that question, both parties find
support, at least facially, in two lines of cases that involve a
professional’s negligent act that results in additional litiga-
tion for the plaintiff. Plaintiff relies on Davies, 274 Or 663,
and its progeny to argue that his claim did not accrue until
March 2018, when the circuit court construed the trust to
require plaintiff to cover the independent guardian’s legal
Cite as 324 Or App 526 (2023) 531
fees and compensation through the date of that circuit court
judgment. He asserts that he could have “prevailed outright
in [that later circuit court case], and the Court could have
determined that he had no financial obligation, either to fund
the Supplemental [sic] Needs Trust nor to pay the guard-
ian’s attorney fees. Had Plaintiff prevailed, he would never
have suffered legally cognizable harm at all.” (Emphasis in
plaintiff’s brief.)
Defendant relies on a different Supreme Court case,
Jaquith v. Ferris, 297 Or 783, 687 P2d 1083 (1984), and its
progeny to argue that plaintiff suffered actionable harm no
later than April 2017, when he incurred legal expenses to
try to undo the alleged malpractice.
As we explain, the distinction between the cases
on which plaintiff and defendant rely ultimately turns on
whether the plaintiff knew the defendant’s negligence was
the cause of their harm versus whether the plaintiff knew
that they had been harmed. Where the outcome in litiga-
tion subsequent to the negligent act could establish that the
defendant was not negligent in the first instance, the stat-
ute of limitations does not begin to run until the conclusion
of that litigation. But where the plaintiff knows or should
know that the defendant was negligent, and the litigation
subsequent to the negligent act serves only to determine to
what extent the plaintiff has been harmed, the statute of
limitations begins to run from the time that the plaintiff
learns or should have learned that the defendant’s act was
negligent and that it caused some harm.
We begin with Davies. Davies was an attorney
malpractice action where the defendant had advised the
plaintiff that the plaintiff could take a certain action with
respect to stock funds. 274 Or at 665. Four years after that
advice, the plaintiff was sued for return of the funds. The
plaintiff ultimately settled the action. A year after enter-
ing into the settlement agreement, the plaintiff sued the
defendant for malpractice, seeking both attorney fees and
recovery of the amount that he had paid in settlement. The
Supreme Court reversed dismissal of the case on statute-
of-limitations grounds. It first concluded that defending
an action—including the incurrence of attorney fees—that
532 Cockey v. Mead
arose out of an attorney’s negligent advice constituted harm.
Id. at 667-78. But it went on to hold that whether that harm
was caused by the defendant could not be known until the
lawsuit against the plaintiff had been resolved, because it
was only then that the plaintiff would know that the defen-
dant’s advice was negligent, thereby causing her harm.
Id. at 668-69.
In Jaquith, by contrast, the question was not
whether the plaintiff was aware of the cause of her harm
but rather when she had incurred the harm, a difference
that the court ultimately concluded required a result differ-
ent from that in Davies. Jaquith involved litigation brought
by a plaintiff against her realtor for undervaluing property
that the plaintiff then entered into a contract to sell. 297 Or
at 785. When the plaintiff discovered the undervaluation,
she refused to proceed with the sale; the prospective buyer
then sued her for specific performance. At the conclusion of
that action, the plaintiff was forced to convey the property.
The plaintiff then commenced a negligence action against
the realtor, more than two years after she discovered the
undervaluation of her property, but within two years of the
specific-performance lawsuit being fully resolved.
On appeal from a dismissal on statute-of-limitations
grounds, the plaintiff argued that “she sustained no harm
until the extent of her damage was ascertained” at the con-
clusion of the specific-performance action. Id. at 788. The
Supreme Court rejected that argument, concluding that the
plaintiff’s contractual obligation to sell at the undervalued
price, which arose from the defendant’s negligence and
which existed when she signed the agreement to sell the
property, had itself caused harm. Additionally, “[t]he legal
costs plaintiff assumed to resist her contractual duty to con-
vey likewise constituted harm.” Id. In short, more than two
years before filing the negligence action, the plaintiff knew
of the defendant’s negligence (undervaluing the property),
knew that she had incurred harm (the expenses of resist-
ing the specific-performance action and the contractual
obligation itself), and knew that defendant’s negligence had
caused that harm (the underpriced sales contract resulted
from defendant’s undervaluation); it was only the extent of
Cite as 324 Or App 526 (2023) 533
her damages that she did not ascertain until the conclusion
of the specific-performance action. Id.The Supreme Court further synthesized Davies and
Jaquith in Bollam v. Fireman’s Fund Ins. Co., 302 Or 343,
730 P2d 542 (1986). There, the plaintiffs brought a negli-
gence action against their car insurance company, alleging
that the company had improperly handled a claim in a way
that exposed the plaintiffs to excess liability. After a car
crash in which the plaintiffs were at fault, their insurance
company began making payments to the party injured in
the crash. The plaintiffs hired an attorney to evaluate the
claim. The party injured in the crash ultimately sued the
plaintiffs, resulting in the insurance company paying the
balance of the policy limits and the plaintiffs having to pay
an additional sum. Id. at 345-46. The plaintiffs then brought
an action against their insurance company for negligence,
more than two years after they hired an attorney to evalu-
ate the claim, but less than two years after they had to pay
the crash victim in the lawsuit. The question the court was
faced with was whether the plaintiffs’ claim accrued when
they incurred the attorney fees or when they had to pay the
crash victim.
In concluding that the claim accrued when the
plaintiffs had to hire an attorney, the court contrasted
Davies and Jaquith. On the one hand, in Davies, when the
plaintiff incurred attorney fees defending the stock-fund
action, she could not have known whether the cost of defend-
ing the action was caused by negligent advice, whereas, on
the other hand, in Jaquith, “no issue related to defendant’s
alleged negligence would be resolved in the litigation that
followed the respective defendant’s negligent conduct”; that
is, the fact that the property had been undervalued was
not at issue in the specific performance action. Bollam, 302
Or at 352-53. The court in Bollam distinguished the plain-
tiff’s case from Davies by noting that, in Davies, “the very
question whether the attorneys’ advice was correct would
be resolved in the ligation” brought against the plaintiff.
Id. at 352. “Only if the litigation precipitated by the stock
sale transaction was resolved against the [plaintiff] would
it become apparent that the cost of defending the suit was
534 Cockey v. Mead
caused by the attorneys’ advice and not a misapprehension
of rights” by the party that sued the plaintiff. Id. (emphasis
in original).
The court then concluded that the plaintiffs’ claim
in Bollam was more like Jaquith because the “result of the
litigation between the present plaintiffs and [the crash vic-
tim] would determine only the amount of plaintiffs’ liabil-
ity to [him],” and not whether the insurance company had
been negligent at all. Id. “Only the full extent of harm was
left to be determined” after the insurance company’s alleged
negligence, which occurred—and about which the plaintiffs
knew—more than two years prior to the filing of the law-
suit. Id. at 353.
In short, both Jaquith and Bollam involved facts
that left no doubt that the respective plaintiffs knew, more
than two years prior to filing negligence actions, that the
defendants had been negligent, that the plaintiffs had
incurred harm, and that the harm was the result of the
defendants’ negligence. Subsequent litigation may have
informed the plaintiffs’ knowledge of the extent of the harm
they incurred, but for statute-of-limitations purposes, the
proverbial clock began to run from when the harm accrued,
not when its full extent was discovered.
The same is true in the present matter. Like the
plaintiff in Jaquith (and unlike in Davies), plaintiff knew
that defendant’s negligent conduct had caused him harm
more than two years before filing his legal malpractice
claim. Plaintiff hired a new attorney both to petition to
remove the independent guardian and to object to paying on
the trust, the latter of which resulted in the probate court
ordering him to fund the trust in January 2017. And by his
own admissions, plaintiff knew that he had incurred harm
as a consequence of defendant’s conduct by that point. See
Jaquith, 297 Or at 788 (legal costs incurred because of the
attorney’s negligence can constitute a cognizable harm).
What is more, the subsequent trust case could not have
obviated defendant’s alleged negligence; at most, it would
have “determine[d] only the amount of plaintiff[’s] liability
to” the special needs trust. Bollam, 302 Or at 352. Framed
slightly differently, unlike in Davies, in this case, the trust
Cite as 324 Or App 526 (2023) 535
case litigation did not determine the culpability of defen-
dant’s conduct; at most, prevailing in it would have miti-
gated the extent of plaintiff’s damages.
In sum, on this record, no genuine issue of material
fact exists that plaintiff knew that defendant’s alleged neg-
ligence had caused him harm more than two years before he
filed the malpractice claim. Plaintiff’s concessions together
with the underlying procedural facts establishes that, by at
least April 2017, plaintiff knew that he had incurred com-
pensable harm that was caused by defendant’s purported
negligence. Accordingly, the trial court properly concluded
that the limitation period was triggered no later than April
2017, more than two years before plaintiff filed his legal
malpractice claim.
Affirmed.