Curtis Pearman v. Andrew Alexander Szakaly (mem. dec.)

MEMORANDUM DECISION FILED
May 24 2018, 6:13 am
Pursuant to Ind. Appellate Rule 65(D),
CLERK
this Memorandum Decision shall not be Indiana Supreme Court
Court of Appeals
regarded as precedent or cited before any and Tax Court
court except for the purpose of establishing
the defense of res judicata, collateral
estoppel, or the law of the case.
APPELLANT PRO SE ATTORNEYS FOR APPELLEE
Curtis Pearman Crystal G. Rowe
Naples, Florida Kightlinger & Gray, LLP
New Albany, Indiana
Michael E. Brown
R. Eric Sanders
Kightlinger & Gray, LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Curtis Pearman, May 24, 2018
Appellant-Plaintiff, Court of Appeals Case No.
41A01-1711-CC-2647
v. Appeal from the
Johnson Superior Court
Andrew Alexander Szakaly, The Honorable
Appellee-Defendant. Kevin M. Barton, Judge
Trial Court Cause No.
41D01-1612-CC-1165
Kirsch, Judge.
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[1] Curtis Pearman (“Pearman”) appeals the trial court’s order granting a motion
for judgment on the pleadings filed by Andrew Alexander Szakaly (“Szakaly”)
in Pearman’s action for legal malpractice against Szakaly. Pearman raises
several issues on appeal that we consolidate and rephrase as: whether the trial
court erred in granting the motion for judgment on the pleadings because
Pearman’s complaint was governed by the two-year statute of limitations and
was barred because it was untimely filed.
[2] We affirm.
Facts and Procedural History
[3] Pearman owned and operated a commercial office complex in Greenwood,
Indiana. Pearman signed a lease agreement, with an effective lease date of
January 1, 2008, with the Jacksons, a husband and wife team of dentists, for
one of Pearman’s Greenwood office suites. The lease was for a term of three
years and granted the Jacksons the right to three additional “option periods,”
each three years in length, as long as they paid a specified rent increase for each
option period. Appellant’s App. Vol. 2 at 13. If the Jacksons wished to exercise
the option to renew, the lease required them to give Pearman a six-month
written notice. Id.
[4] At some point during the initial lease period, the Jacksons indicated to Pearman
that they intended to remain in occupancy of the commercial suite into the first
option period. Id. at 13-14. At that time, however, they had already missed the
six-month written notice period. Nevertheless, Pearman orally granted the
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Jacksons a waiver of the notice requirement, and the parties agreed to continue
to discuss increasing the amount of square footage occupied by the Jacksons.
[5] On January 1, 2011, the first optional period for the lease began, and the
Jacksons remained in occupancy of the property. On February 12, 2011, the
Jacksons paid the “first option period rent increase.” Id. at 14. After several
increased option rental payments had been made, the Jacksons told Pearman
that they had purchased another office property and would be moving from his
office property. Id. Pearman informed the Jacksons that he would not release
them from their lease obligations, and after the parties failed to reach any
agreement, Pearman hired Szakaly for legal representation.
[6] On November 28, 2011, Szakaly filed a complaint against the Jacksons on
Pearman’s behalf in Johnson County. On November 12, 2013, the Jacksons
filed a motion for summary judgment in that case. Thirty-four days later, on
December 16, 2013, Pearman received by email “Szakaly’s first alert of the
pending Jackson Motion for summary judgment.” Id. at 18. On December 18,
2013, Szakaly filed a response to the summary judgment motion, without
designating any exhibits or affidavits. Id. Szakaly, by email, told Pearman that
there was no need for Pearman to prepare an affidavit. Id.
[7] When Pearman asked Szakaly why he had not conducted any discovery,
Szakaly responded that he was waiting for a ruling on the motion for summary
judgment and a trial setting. Id. The trial court subsequently granted summary
judgment in favor of the Jacksons and noted that Pearman had not designated
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any evidence, but, instead, relied solely upon the Jacksons’ designated
evidence. Id. at 16, 18. Szakaly filed a motion to correct error, which the trial
court construed as a motion to reconsider since the grant of summary judgment
was not a final judgment. The trial court denied the motion.
[8] Pearman hired replacement legal counsel and terminated Szakaly. Specifically,
in a certified letter dated June 12, 2014, Pearman terminated Szakaly’s
representation, stating in pertinent part:
As I have learned additional issues concerning your
representation of me, I have needed to update my June 13, 2014
[sic] emailed Termination Notices. Due to your misrepresentation of
the status of this case, gross negligence, failure to comply with our
agreements along with my written instructions and your ignoring my
right to discovery regarding Pearman v. Jackson, as well as your failure
to make the timely and appropriate pleadings to the Court, thereby
jeopardizing the outcome of this action, I have terminated your legal
representation of me in Pearman v. Jackson.
....
Naturally, I have no intention of compensating you for any
unpaid amounts that you may claim to be owed to you in this
matter. There has been substantial demonstrable damage caused to my
position in the Jackson matter by your actions and/or failures to act on
my behalf, as well as your apparent failure to forward missing
documents from this case to my current counsel.
Id. at 62 (emphasis added). In the Jackson matter, Pearman’s replacement
counsel filed another motion to reconsider, which included untimely evidence.
That motion was also denied by the trial court. The case was then appealed to
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this court, and the trial court’s decision was affirmed in a published opinion
that was decided on January 26, 2015. Id. at 68-84.
[9] On December 22, 2016, Pearman filed his pro se legal malpractice action
against Szakaly. Pearman alleged that Szakaly had failed to perform his
responsibilities, e.g., to keep the client advised of all pending motions and to
properly designate summary judgment materials, in a sufficient manner to meet
the appropriate standard of care. Id. at 21-23. Pearman also alleged a breach-
of-contract claim against Szakaly, arguing that Szakaly had breached a duty to
timely provide Pearman with all correspondence and filings and to preserve
alleged confidential information during settlement discussions. Id. at 23-24.
Finally, Pearman alleged that Szakaly engaged in negligent misrepresentation
by communicating false information to Pearman about the status of the case
against the Jacksons. Id. at 24-26.
[10] Pearman attached several exhibits to his complaint, including the termination
letter to Szakaly dated June 12, 2014. Id. at 62. In response, Szakaly filed a
motion for judgment on the pleadings under Indiana Trial Rule 12(C), arguing
that Pearman’s complaint was barred by the governing two-year statute of
limitations, which expired on June 12, 2016,1 which was several months before
1
Pearman argues that the termination letter was sent on July 24, 2014 and not June 12, 2014. Appellant’s Br.
at 16. However, the letter attached to the complaint in this matter was dated June 12, 2014, and that date
was used by the trial court in its order. Appellant’s App. Vol. 2 at 9-12. Moreover, Pearman’s December 22,
2016 complaint would be time barred even if the termination letter had been sent on July 24, 2014, and the
discrepancy in dates is irrelevant.
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Pearman’s complaint was filed on December 22, 2016. Appellant’s App. Vol. 3 at
2-9. Pearman responded to the Trial Rule 12(C) motion, arguing that his
complaint was saved by the discovery rule because he did not “sustain any final
and ‘ascertainable damage’” from Szakaly’s alleged malpractice until May 2015
when the opportunity to reverse the underlying negative summary judgment
expired. Id. at 10-11 (emphasis in original).
[11] On June 15, 2017, the trial court granted Szakaly’s motion for judgment on the
pleadings. The trial court determined that Pearman’s claims were governed by
the two-year statute of limitations under Indiana Code section 34-11-2-4 and
cited Biomet, Inc. v. Barnes & Thornburg, 791 N.E.2d 760 (Ind. Ct. App. 2003),
trans. denied. Appellant’s App. Vol. 2 at 10. The trial court acknowledged that
legal malpractice actions are subject to the discovery rule and then found that
Pearman’s termination letter demonstrated his knowledge that damage from the
alleged malpractice had occurred as of June 12, 2014. Id. at 10-11. The trial
court rejected Pearman’s contention that the statutory period did not commence
until conclusion of the underlying case. Id. at 11. Additionally, the trial court
concluded that Pearman’s negligent misrepresentation claim arose in tort and
was also barred by the governing two-year statute of limitations under section
34-11-2-4. Id. The trial court further noted that it was “apparent even to a
layman,” that Pearman’s claim of breach of contract was for legal malpractice
and was barred by the governing two-year limitations period. Id. at 11-12.
Pearman filed a motion to correct error, which the trial court denied. Pearman
now appeals.
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Discussion and Decision
[12] Pearman argues that the trial court erred when it granted Szakaly’s motion for
judgment on the pleadings. The standard of review for a ruling on a motion for
judgment on the pleadings under Indiana Trial Rule 12(C) is de novo. Celadon
Trucking Servs., Inc. v. Wilmoth, 70 N.E.3d 833, 839-40 (Ind. Ct. App. 2017),
trans. denied. A ruling on a Trial Rule 12(C) motion must be based solely on the
pleadings, as well as any facts of which judicial notice may be taken, and courts
must accept the properly-pleaded material facts alleged in the complaint as true.
Id. at 840. A motion for judgment on the pleadings may be granted only if it is
clear from the face of the complaint that relief could not be granted to the
plaintiff under any circumstances. Id.
[13] For purposes of a Trial Rule 12(C) motion, the pleadings consist of the
complaint and answer, as well as any reply to a counterclaim, answer to a cross-
claim, third-party complaint, and answer to a third-party complaint. Id.
Pleadings also consist of any written instrument attached to a pleading,
pursuant to Indiana Trial Rule 9.2. Id. “A copy of any written instrument
which is an exhibit to a pleading is a part thereof for all purposes.” Ind. Trial
Rule 10(C).
[14] Pearman contends that it was error for the trial court to grant judgment on the
pleadings because his complaint was timely filed and not time barred by the
statute of limitations. He first asserts that, contrary to the trial court’s order, his
cause of action against Szakaly did not accrue until the conclusion of his
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underlying action. Specifically, he maintains that his cause of action against
Szakaly was tolled until the date the appeal was handed down in his action
against the Jacksons because, until that time, he had not suffered any
compensable damage. Additionally, Pearman argues that the trial court applied
the incorrect statute of limitations and that his malpractice action against
Szakaly was not governed by a two-year statute of limitations. Instead,
Pearman claims that his complaint should have been governed by at least a six-
year statute of limitations because his breach of contract and negligent
misrepresentation were separate and distinct from his legal malpractice claim
and did not involve a personal property right.
[15] We turn first to Pearman’s claim that the trial court applied the wrong statute of
limitations to his complaint against Szakaly. The statute of limitations for a
claim of legal malpractice is two years. Ind. Code § 34-11-2-4. Pearman’s
complaint against Szakaly contained three counts; Count I was for legal
malpractice, and Counts II and III were characterized as breach of contract and
negligent misrepresentation, respectively. However, these labels are not
dispositive because the applicable statute of limitations is ascertained by
identifying the nature or substance of the cause of action, rather than by the
form of the pleadings. Stickdorn v. Zook, 957 N.E.2d 1014, 1021 (Ind. Ct. App.
2011) (citing Whitehouse v. Quinn, 477 N.E.2d 270, 273 (Ind. 1985)).
[16] Pearman’s complaint for legal malpractice alleged that Szakaly had failed to
perform his responsibilities, e.g., to keep the client advised of all pending
motions and to properly designate summary judgment materials, in a sufficient
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manner to meet the appropriate standard of care. Appellant’s App. Vol. 2 at 21-
23. Based on the nature of the harm, this count was governed by the two-year
statute of limitations under Indiana Code section 34-11-2-4.
[17] In Count II of his complaint, Pearman alleged a breach-of-contract claim
against Szakaly, contending that Szakaly had breached a duty to timely provide
Pearman with all correspondence and filings and to preserve alleged
confidential information during settlement discussions. Id. at 23-24. He further
claimed that “[a]s a result of Szakaly’s breach of his duties . . ., Pearman lost in
his Complaint against the Jacksons . . . .” Id. at 24. In Count III, Pearman
alleged that Szakaly engaged in negligent misrepresentation by communicating
false information to Pearman about the status of his case against the Jacksons.
Id. at 24-26. The substance of both of these allegations is based on the alleged
failures and breach of duties of Szakaly during the course of his representation
of Pearman in his action against the Jacksons. Therefore, the substance of these
claims is legal malpractice, notwithstanding Pearman’s characterizations of
them as breach of contract and negligent misrepresentation. Accordingly, the
two-year statute of limitations from Indiana Code section 34-11-2-4 applies.
[18] We next turn to Pearman’s argument that his complaint was timely filed
because his cause of action against Szakaly did not accrue until the conclusion
of his underlying action against the Jacksons. For a cause of action for legal
malpractice to accrue, it is not necessary that the full extent of damage be
known or even ascertainable, but only that some ascertainable damage has
occurred. Myers v. Maxson, 51 N.E.3d 1267, 1276-77 (Ind. Ct. App. 2016)
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(citing Doe v. United Methodist Church, 673 N.E.2d 839, 842 (Ind. Ct. App. 1996),
trans. denied), trans. denied. Legal malpractice actions are subject to the
discovery rule, which provides that the statute of limitations does not begin to
run until such time as the plaintiff knows, or in the exercise of ordinary
diligence could have discovered, that he had sustained an injury as the result of
the tortious act of another. Id. (citing Biomet Inc. v. Barnes & Thornburg, 791
N.E.2d 760, 765 (Ind. Ct. App. 2003), trans. denied). Under the continuous
representation doctrine, the statute of limitations does not commence until the
end of an attorney’s representation of a client in the same matter in which the
alleged malpractice occurred. Landmark Legacy, LP v. Runkle, 81 N.E.3d 1107,
1117 (Ind. Ct. App. 2017) (citing Biomet, 791 N.E.2d at 765).
[19] In the present case, based on the pleadings, the attorney-client relationship
between Pearman and Szakaly ended on June 12, 2014. This was evidenced in
the letter that Pearman sent to Szakaly, in which Pearman terminated Szakaly.
Appellant’s App. Vol. 2 at 62. Additionally, the June 12, 2014 letter shows that
Pearman possessed knowledge at that time that some ascertainable damage had
occurred due to Szakaly’s alleged malpractice. In the letter, Pearman states that
there has been “substantial demonstrable damage caused to [his] position in the
Jackson matter” because of Szakaly’s “actions and/or failures to act on
[Pearman’s] behalf.” Id. Therefore, as of June 12, 2014, the attorney-client
relationship between Pearman and Szakaly had ended and Pearman was aware
that he had sustained an injury as the result of the actions or failure to act of
Szakaly. The statute of limitations began to run on June 12, 2014, and
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Pearman had until June 12, 2016 to commence his legal malpractice action
against Szakaly. Pearman did not file his complaint until December 22, 2016,
and it was, consequently, time-barred.
[20] Pearman also contends that the two-year statute of limitations was tolled until
January 15, 2015 when this court decided the appeal in his action against the
Jacksons. Pearman asserts that under Biomet, the statute of limitations
governing his complaint was tolled until the conclusion of the underlying
action, which was the failure of his appeal in the Jackson matter. However, his
reliance on Biomet is misplaced. Biomet did not hold that the statute of
limitations is tolled until the underlying litigation is concluded. In Biomet, the
cause of action against the attorneys was tolled merely because they remained
involved in the ongoing litigation and thus continued their representation of the
client. The Biomet court adopted the continuous representation doctrine as an
exception to the discovery rule, stating, “In a situation where the attorney
continues to represent the client in the same matter in which the alleged
malpractice occurred, the date of accrual begins at the termination of an
attorney’s representation of a client in the same matter in which the alleged
malpractice occurred.” Biomet, 791 N.E.2d at 767.
[21] The Biomet court also specifically recognized that a client may terminate the
attorney-client relationship without giving the attorney an opportunity to
mitigate the damages and make a claim of legal malpractice within two years of
the date of termination. Id. at 766. However, “the continuous representation
doctrine does not apply to a client who retains new counsel on appeal.” Id. at
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766 n.2. Moreover, the continuous representation doctrine does not delay the
commencement of the statute of limitations until the end of the attorney-client
relationship generally, but only during the attorney’s representation of the client
in the same matter from which the malpractice claim arose. Id.
[22] The continuous representation doctrine as adopted in the Biomet case does not
apply to the present case. Pearman retained new counsel and terminated
Szakaly in the Jackson matter on June 12, 2014. The two-year statute of
limitations began to run on the date of Szakaly’s termination. Pearman clearly
knew of the alleged negligence by Szakaly when he wrote in the termination
letter that he was terminating Szakaly due to his “gross negligence” in the case.
Appellant’s App. Vol. 2 at 62. At that time, Pearman had already hired
replacement counsel and did not permit Szakaly to attempt to remedy his
alleged mistakes as is contemplated by the continuous representation doctrine.
See, e.g., Biomet, 791 N.E.2d at 766 (noting that the continuous representation
rule avoids disruption of the attorney-client relationship and gives attorneys the
chance to remedy mistakes before being sued and, at the same time, relieves
clients from having to second-guess the attorney and obtain other legal opinions
regarding the attorney’s handling of the case). Therefore, the tolling of the
statute of limitations set out in Biomet does not apply to save Pearman’s
untimely complaint.
[23] Pearman also claims the statute of limitations governing his complaint was
tolled, and did not begin to accrue, until he knew the actual extent of his
damages, which only occurred once the underlying case against the Jacksons
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had concluded. We disagree. Pearman’s complaint against Szakaly and the
attached exhibits establish that Pearman knew that he had suffered a loss from
Szakaly’s alleged actions or failures to act. Appellant’s App. Vol. 2 at 62.
“Indiana courts have held that the discovery rule does not mandate that
plaintiffs know with precision the legal injury that has been suffered, but merely
anticipates that a plaintiff be possessed of sufficient information to cause him to
inquire further in order to determine whether a legal wrong has occurred.”
Bambi’s Roofing, Inc. v. Moriarty, 859 N.E.2d 347, 356 (Ind. Ct. App. 2006).
[24] Here, Pearman’s termination letter to Szakaly shows that Pearman was aware
that he had sustained some ascertainable damage at least as of June 12, 2014.
That letter, which was included as part of the pleadings, provided, in relevant
part:
Due to your misrepresentation of the status of this case, gross
negligence, failure to comply with our agreements along with my
written instructions and your ignoring my right to discovery
regarding Pearman v. Jackson, as well as your failure to make the
timely and appropriate pleadings to the Court, thereby
jeopardizing the outcome of this action, I have terminated your
legal representation of me in Pearman v. Jackson.
....
Naturally, I have no intention of compensating you for any
unpaid amounts that you may claim to be owed to you in this
matter. There has been substantial demonstrable damage caused
to my position in the Jackson matter by your actions and/or
failures to act on my behalf, as well as your apparent failure to
forward missing documents from this case to my current counsel.
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Appellant’s App. Vol. 2 at 62. The termination letter clearly demonstrated that
Pearman was aware of Szakaly’s alleged “misrepresentation,” “gross
negligence,” and “failure to comply with [] agreements” involved in the
Jackson case and that he had discovered that there had been “substantial
demonstrable damage caused to [his] position.” Id. Additionally, Pearman was
aware of “damages” he had incurred by being required to hire replacement
counsel.
[25] Further, contrary to Pearman’s assertion, his statement in the June 12, 2014
letter that he had suffered substantial demonstrable damage was not merely
speculation. Pearman’s complaint against Szakaly was based on the premise
that if, in the underlying case, Szakaly had submitted evidence that the
Jacksons were paying the increased rent associated with their exercise of the
lease option, even though they had not given the written notice required by the
lease, the trial court would have denied the Jacksons’ motion for summary
judgment. See Appellant’s Br. at 19-20. Under his theory, Pearman was
damaged when Szakaly failed to timely file his response and designations to the
Jacksons’ summary judgment motion because, at that time, Pearman lost the
chance to submit any responsive designations to counter the Jackson’s claims.
Although Pearman may not have known the amount of his actual damages, the
June 12, 2014 termination letter indicated that he was aware that some
ascertainable damage had occurred. Therefore, the statute of limitations period
for Pearman’s legal malpractice action against Szakaly began to run on June 12,
2014 and expired on June 12, 2016. The trial court did not err in granting
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judgment on the pleadings in favor of Szakaly because Pearman’s complaint
filed on December 22, 2016 was time barred.
[26] Affirmed.
Baker, J., and Bradford, J., concur.
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