Extendicare International v. James Anderson, III ( 2002 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
Assigned on Briefs May 14, 2002
EXTENDICARE INTERNATIONAL, INC., ET AL. v.
JAMES P. ANDERSON, III, ET AL.
Appeal from the Circuit Court for Davidson County
No. 01C-2086 Walter C. Kurtz, Judge
No. M2001-02265-COA-R3-CV - Filed December 5, 2002
Appellants filed a legal malpractice action against James P. Anderson, III on July 20, 1999.
Appellants filed an Amended Complaint against Anderson III on February 14, 2001 and, in such
Amended Complaint, asserted for the first time a claim against James B. Anderson, II and his law
firm, Anderson & Bridges. The trial court granted summary judgment to Anderson II and
Anderson & Bridges upon a finding, as a matter of law, that the statute of limitations as to them had
expired. We affirm the action of the trial judge.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed
WILLIAM B. CAIN , J., delivered the opinion of the court, in which BEN H. CANTRELL , P.J., and
WILLIAM C. KOCH , JR., J., joined.
Elliott Ozment, Nashville, Tennessee, for the appellants, Extendicare International, Inc., Extendicare
of Colorado, Inc., Extendicare of Texas, Inc., and Gerald Hunter.
Darrell G. Townsend and Neil M. McIntire, Nashville, Tennessee, for the appellees, James P.
Anderson, III, James P. Anderson, II, and Anderson & Bridges.
OPINION
Prior to February 16, 1996, Appellant, Gerald Hunter, was sole stockholder of
Plaintiff/Appellant corporations, Extendicare International, Inc., Extendicare of Colorado, Inc., and
Extendicare of Texas, Inc. At some time near January 1, 1996, Hunter employed James P.
Anderson, III (Anderson III) to represent him and his Extendicare corporations in an action for
breach of contract and tortiuous interference with business expectations against Ampro Financial
Partners, L.P. and certain related entities. On February 16, 1996, such a suit was filed by Anderson
III in the Circuit Court for Davidson County, Tennessee, but was dismissed for failure to prosecute
on July 23, 1998.
James P. Anderson, Jr. (Anderson II) is the father of Anderson III and, at all times pertinent
in this case, was a practicing lawyer in Chattanooga, Tennessee, either as a partner in the firm of
Anderson & Bridges or part of an association of attorneys under the same firm name. Anderson
III, beginning in January of 1996, was a solo practitioner with offices in Nashville, Tennessee.
On July 20, 1999, Gerald Hunter and his three corporate entities filed suit against Anderson
III for malpractice in handling the Ampro Financial Partners, L.P. litigation. On or about October
27, 2000, Anderson III responded to Plaintiffs’ interrogatory requesting the name of his
professional liability carrier, as follows: “My understanding is that from approximately January
1996 through August 1996, I was added as an additional insured to the Professional Liability
Insurance Policy of my father. . . . At the time of [sic] the alleged act of malpractice occurred, I had
no professional liability insurance coverage.”
On February 14, 2001, Plaintiffs filed their Amended Complaint adding Anderson II and
his law firm, Anderson & Bridges, as parties/defendants to this malpractice action. On May 3,
2001, Anderson II and Anderson & Bridges filed a Motion to Dismiss under Tennessee Rule of
Civil Procedure 12.02, attaching to such Motion the affidavits of both Anderson II and Anderson
III. On June 25, 2001, Plaintiffs filed their response to the Motion of Anderson II and Anderson
& Bridges asserting, correctly, that because of the affidavits filed with the Motion it would have
to be treated as a motion for summary judgment pursuant to Rule 56.02. Attached to this response
was the Affidavit of Gerald Hunter.
On August 17, 2001, the trial court entered an order treating the Motion as one for summary
judgment and granted the Motion, holding:
The Court specifically finds that there are no disputes as to material facts and
that those undisputed facts show the Defendants Anderson, II and Anderson &
Bridges to be entitled to judgment as a matter of law. It is uncontroverted that
Gerald Hunter knew, as of sometime late in 1995 and early in 1996, that James
Anderson, II and James Anderson, III had consulted concerning the underlying
litigation out of which the present attorney malpractice claim arises and that Hunter
himself discussed that litigation with James Anderson, II. Hunter’s affidavit
establishes that he knew that James Anderson, II and James Anderson, III were
collaborating with respect to the underlying litigation. The Plaintiffs’ Amended
Complaint asserts that the Plaintiffs contracted with James Anderson, II, and James
Anderson, III, and Anderson & Bridges late in 1995. Assuming these facts to be
true, and, construing all facts in the light most favorable to the Plaintiffs as the
Court must do at this stage of these proceedings, the Court is of the opinion that the
statute of limitations on any claim for attorney malpractice against James Anderson,
II and Anderson & Bridges ran well before February 14, 2000, i. e., one year before
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the February 14, 2001 filing of the Amended Complaint naming James Anderson,
II and Anderson & Bridges as Defendants in this lawsuit.
The Court further finds that the Plaintiffs, having been on notice of the
Motion to Dismiss by James P. Anderson, II and Anderson & Bridges since its filing
on May 3, 2001, have pursuant to Rule 56.06 made insufficient showing to convince
the Court that more time should be granted for discovery and that a ruling on this
motion should be postponed.
The Court further finds that there is no just reason for delay and that this
judgment should, pursuant to Rule 54.02, T.R.C.P., be designated a final judgment.
It is therefore ORDERED that the motion of Defendants James P. Anderson,
II and Anderson & Bridges to dismiss is hereby granted and that all claims against
these Defendants are dismissed.
So it is that the malpractice action against Anderson III is still pending in the trial court, and,
pursuant to the finality designation under Rule 54.02, Plaintiff has appealed the case as to
Defendants Anderson II and Anderson & Bridges.
Appellate review of trial court action on a motion for summary judgment involves a
question of law and is reviewed de novo with no presumption of correctness. Bain v. Wells, 936
S.W.2d 618, 622 (Tenn. 1997). The party seeking summary judgment has the burden of
demonstrating to the court that there are no disputed material facts creating a genuine issue for trial.
“Once it is shown by the moving party that there is no genuine issue of material fact, the
nonmoving party must then demonstrate, by affidavits or discovery materials, that there is a
genuine, material fact dispute to warrant a trial.” Byrd v. Hall, 847 S.W.2d 208, 211 (Tenn. 1993).
The “discovery rule,” originally implemented in Teeters v. Currey, 518 S.W.2d 512 (Tenn.
1974), applies in legal malpractice actions and runs from the time that Plaintiff discovers or
reasonably should discover that he has suffered “legally cognizable injury” or “actual injury.”
Carvell v. Bottoms, 900 S.W.2d 23, 30 (Tenn. 1995).
Unquestionably, Plaintiffs knew they had suffered a “legally cognizable injury” from the
conduct of Anderson III at the time they filed their original Complaint against him on July 20,
1999. The determinative question on this appeal is, when should they have discovered that
Anderson II and Anderson & Bridges were persons responsible for their “legally cognizable
injury.” Foster v. Harris, 633 S.W.2d 304 (Tenn. 1982).
Appellant is entitled, as the nonmoving party on motion for summary judgment, to have the
facts construed most strongly in his favor and to have all inferences to be drawn from those facts
construed in his favor. Hall, 847 S.W.2d at 210-11. Summary judgment may then be granted only
if there remains no genuine issue of material fact to be tried, and the moving party is, thus, entitled
to judgment as a matter of law on such undisputed facts. If there is a genuine issue as to material
facts or if there is doubt as to whether or not such issues exist, the motion must be denied. Evco
Corp. v. Ross, 528 S.W.2d 20 (Tenn. 1975).
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Appellants assert that they did not discover their cause of action against Anderson II and
Anderson & Bridges until Anderson III disclosed, in answers to interrogatories on October 27,
2000, that Anderson III was an additional insured under the malpractice insurance policy of
Anderson II and Anderson & Bridges. Assuming this to be true, it does not answer the controlling
question of when, by the exercise of reasonable diligence, Appellants should have discovered their
right of action against Anderson II and Anderson & Bridges.
In his Affidavit opposing the Motion for Summary Judgment, Gerald Hunter asserted:
1. In the fall of 1995, I was living in Memphis, Tennessee. In October,
1995, I began discussions with James Anderson III (hereafter, Anderson III) in his
office in Nashville to represent me and my companies in litigation initiated by the
Complaint previously referred to as Exhibit A in the original complaint in this
action (hereafter referred to as Exhibit A).
2. In or about December, 1995, in the middle of preparing Exhibit A, I was
visiting with Anderson III in his office in Nashville. Anderson III had just faxed a
draft of Exhibit A to Anderson II. While I was in the office, Anderson II called in
response to the fax and Anderson III gave me the phone. Anderson II said he had
read the faxed complaint and said it looked like a good lawsuit, especially on the
issue of usury. During this conversation about my case, we struck up a good
“telephone relationship” because we also talked at length about his upcoming
prostate surgery and I shared my experiences with him about the prostate surgery
I had just had in September, 1995.
3. In or about January, 1996, I was visiting Anderson III in his office in
Nashville again. Anderson III had made more changes to the complaint which he
faxed to Anderson II. While I was in the office, Anderson II called Anderson III to
go over changes that had been made to Exhibit A. Anderson II told Anderson III
that no monetary amount should be specified in the complaint and that the reference
to $13 million in damages should be deleted from the complaint.
4. The filing of Exhibit A was delayed four to five days while other changes
were contemplated and made by Anderson II.
5. Exhibit A was filed on February 17, 1996. Shortly after this, Anderson
III received notice from the attorneys representing the defendants in Exhibit A that
the defendants had filed for bankruptcy and that any damage claims should be
pursued in federal bankruptcy court rather than in state court through Exhibit A and
that filing Exhibit A was an act in contempt of a bankruptcy court order. I have
personal knowledge that Anderson III consulted with Anderson II relative to the
issues involved with disposing of this motion in federal bankruptcy court.
6. There was a Motion to Dismiss filed in the state court lawsuit. Anderson
III and Anderson II collaborated extensively in responding to the Motion to Dismiss
and worked together to file a Brief. The motion to dismiss was denied, thanks to the
successful work of Anderson III and Anderson II.
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As did the trial court, we can draw no other conclusion from the recitations in this Affidavit
but that Appellants knew or should have known, well before February 14, 2000, of their claim
against Anderson II and Anderson & Bridges. All of the information set forth in the first seven
paragraphs of the Affidavit of Gerald Hunter were clearly known to Appellants before the initial
malpractice claim was filed against Anderson III on July 20, 1999. Strongly indicative of the
necessary knowledge to trigger the discovery rule is paragraph six of the affidavit providing:
6. There was a Motion to Dismiss filed in the state court lawsuit. Anderson
III and Anderson II collaborated extensively in responding to the Motion to Dismiss
and worked together to file a Brief. The motion to dismiss was denied, thanks to the
successful work of Anderson III and Anderson II.
The record does not disclose when this motion to dismiss the underlying case was denied, but of
necessity, denial predated the dismissal of the underlying action for failure to prosecute on July 23,
1998.
Hunter asserts in the Affidavit that, when he filed the original Complaint, he was not aware
of the existence or nature of the legal relationship between Anderson III and Anderson II. He then
states, “I was frustrated in my discovery attempts to learn of this relationship . . . .” The record,
however, discloses no discovery attempts to learn of the relationship between Anderson III and
Anderson II. Neither set of interrogatories seeks discovery of anything other than legal malpractice
insurance covering Anderson III.
Legal malpractice actions are governed by the one year statute of limitations provided by
Tennessee Code Annotated section 28-3-104(a)(2). “It is not required that the plaintiff actually
know that the injury constitutes a breach of the appropriate legal standard in order to discover that
he has a ‘right of action’; 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 the result
of wrongful conduct.” Roe v. Jefferson, 875 S.W.2d 653, 657 (Tenn. 1994); see also Bottoms, 900
S.W.2d at 29.
Considering the Hunter Affidavit and all other matters set forth in the record in the light
most favorable to Appellants, the only reasonable conclusion to be drawn is that they knew or, with
the exercise of reasonable diligence, should have known more than a year before they filed the
Amended Complaint of February 14, 2001 that they had a cause of action against Anderson II and
Anderson & Bridges.
The action of the trial judge in granting summary judgment to Anderson II and Anderson
& Bridges is affirmed, and the case is remanded to the trial court for such further proceedings as
may be necessary.
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Costs on appeal are assessed against Appellants.
___________________________________
WILLIAM B. CAIN, JUDGE
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