Ex parte Panell

• Decision Date: 30 December 1999
• Docket Number: No. 1962076.,1962076.
• Citation: 756 So.2d 862
• Parties: Ex parte David R. PANELL. (Re David R. Panell v. R. Kent Henslee).
• Court: Alabama Supreme Court

756 So.2d 862

Ex parte David R. PANELL.

(Re David R. Panell v. R. Kent Henslee).

No. 1962076.

Supreme Court of Alabama.

December 30, 1999.

Ralph E. Coleman of Coleman & Friday, Birmingham, for petitioner.

Larry W. Harper and W. Perry Webb of Porterfield, Harper & Mills, P.A., Birmingham, for respondent.

On Application for Rehearing

SEE, Justice.

The opinion of August 6, 1999, is withdrawn, and the following opinion is substituted therefor.

David Panell filed this legal-malpractice action under the Alabama Legal Services Liability Act ("ALSLA"), Ala.Code 1975, § 6-5-571 through § 6-5-581, against Kent Henslee, an attorney who had represented Panell in a lawsuit arising out of a dispute concerning the operation of a business. Panell alleges that Henslee acted negligently in the course of the lawsuit by agreeing to a settlement without Panell's consent and by failing initially to file a claim and later to file a counterclaim on Panell's behalf. Henslee moved for a summary judgment, arguing that Panell's claims were barred by the two-year statute of limitations in the ALSLA, § 6-5-574. The trial court granted Henslee's motion, on the ground that Panell's claims were barred by that statute. The Court of Civil Appeals, on July 25, 1997, affirmed Henslee's summary judgment, without an opinion. Panell v. Henslee, 723 So.2d 117 (Ala. Civ.App.1997) (table). This Court granted Panell's petition for the writ of certiorari to review the narrow issue of when Panell's legal-malpractice cause of action accrued and when the statute-of-limitations period provided by the ALSLA began to run. We agree that Panell's legal-malpractice action was barred by the statute of limitations, § 6-5-574. Therefore, we affirm.

I.

Viewed in the light most favorable to the nonmovant, Panell, the evidence indicates the following facts. Panell and Dr. Dan Sparks were shareholders of Village Enterprises, Inc. Panell alleges that in March 1993 he hired Henslee to file against Sparks an action concerning the corporation. In June 1993, before Henslee filed Panell's action, Sparks filed an action against Panell. Sparks claimed a breach of contract and sought the dissolution of Village Enterprises, Inc. Panell alleges that after the action was filed against him, he instructed Henslee to file an answer and a counterclaim asserting the claims that he had originally asked Henslee to file. Henslee did not file either an answer or a counterclaim, but he did file a motion to dismiss Sparks's complaint. On September 22, 1993, the trial court held a hearing on the motion to dismiss. During that hearing, Henslee discussed settlement with Sparks's attorney. Panell alleges that Henslee would not let him enter the courtroom during the hearing and that on September 22, 1993, without Panell's consent, Henslee agreed to a settlement that allowed Sparks to receive all the assets of Village Enterprises, Inc. Panell never signed any settlement-agreement documents. On October 5, 1993, in accordance with the terms of the alleged settlement agreement, Panell, under protest he says, executed warranty deeds conveying his interest in certain real property to Sparks. On January 31, 1994, the trial court noted on the case action summary sheet that the case had been settled. On August 18, 1994, the trial court dismissed the case.

On January 30, 1996, Panell filed this legal-malpractice action against Henslee. He claims that Henslee committed legal malpractice by failing to file the counterclaim against Sparks and by agreeing to the settlement without Panell's authorization.

II.

This Court reviews a summary judgment by the same standard the trial court uses in determining whether to grant a summary-judgment motion. See Pryor v. Brown & Root USA, Inc., 674 So.2d 45, 47 (Ala.1995). The summary judgment was properly entered in this case if there was no genuine issue of material fact and if Henslee was entitled to a judgment as a matter of law. See Rule 56(c)(3), Ala. R. Civ. P. Henslee had the burden of making a prima facie showing that there was no genuine issue of material fact and that he was entitled to a judgment as a matter of law. See Berner v. Caldwell, 543 So.2d 686, 688 (Ala.1989). If Henslee made that prima facie showing, then the burden shifted to Panell to present substantial evidence creating a genuine issue of material fact in order to avoid the entry of a judgment against him. See Pryor, 674 So.2d at 47; see also Ala.Code 1975, § 12-21-12. In determining whether there was a genuine issue of material fact, this Court must review the record in the light most favorable to Panell and must resolve all reasonable doubts against Henslee. See Pryor, 674 So.2d at 47. Evidence is "substantial" if it is of "such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989). Panell contends that the Court of Civil Appeals erred in affirming the summary judgment in favor of Henslee because, he argues, the two-year statute-of-limitations period had not yet expired as of January 30, 1996, when he filed this action. Although Henslee's specific act of alleged misconduct occurred on September 22, 1993, when he agreed to the settlement on behalf of Panell, Panell contends that his cause of action against Henslee did not accrue until January 31, 1994, the date the trial court entered the notation on the case action summary sheet stating that the case had been settled, or until August 18, 1994, the date on which the trial court entered its judgment of dismissal. Panell argues that he suffered no legal injury until the trial court entered its judgment. Henslee responds by arguing that Panell's cause of action accrued on September 22, 1993, when Henslee agreed to settle the case, or on October 5, 1993, when Panell signed the warranty deeds transferring the property to Sparks.

Before 1987, the time within which a plaintiff could file a legal-malpractice action was governed by Ala.Code 1975, § 6-2-30 and § 6-2-34. Section 6-2-30 provides in pertinent part:

"(a) All civil actions must be commenced after the cause of action has accrued within the period prescribed in this article [Article 2, `Time Provisions'] and not afterwards, unless otherwise specifically provided for in this code."

Section 6-2-34 (also appearing in Article 2) provides in pertinent part:

"The following must be commenced within six years:

". . . .

"(8) Motions and other actions against attorneys-at-law for failure to pay over money of their clients or for neglect or omission of duty...."

In Cofield v. Smith, 495 So.2d 61, 62 (Ala. 1986), this Court held that under § 6-2-30 and § 6-2-34 the statute-of-limitations period for a legal-malpractice cause of action begins to run from the "time that the plaintiff would have first suffered a legal injury for which he would have been entitled to commence an action for damages against the [attorney]." In Cofield, this Court relied on and quoted Payne v. Alabama Cemetery Ass'n, Inc., 413 So.2d 1067 (Ala.1982), which analyzed Alabama caselaw relating generally to the accrual of a cause of action:

"`[T]he statute of limitations begins to run in favor of the party liable from the time the cause of action accrues, and the cause of action accrues as soon as the party in whose favor it arises is entitled to maintain an action thereon. The plaintiff's ignorance of a tort or injury does not postpone the running of the statute of limitations until that tort is discovered....

"`The statute, however, will not begin to run until some injury occurs which gives rise to a maintainable cause of action.... In [legal-malpractice actions], the act complained of does not itself inflict a legal injury at the time it is done, but plaintiff's injury only follows as a result and a subsequent development of the defendant's act. "In such cases, the cause of action `accrues,' and the statute of limitation[s] begins to run, `when and only when, the damages are sustained.'"'"

495 So.2d at 62 (quoting Payne, 413 So.2d at 1072 (quoting Garrett v. Raytheon Co., 368 So.2d 516, 519 (Ala.1979))) (internal citations omitted).

In 1987, the year after this Court decided Cofield, the Legislature enacted the ALSLA. Section 6-5-574 of the ALSLA establishes a two-year limitations period for a legal-malpractice cause of action and specifies when that period begins to run:

"(a) All legal service liability actions against a legal service provider must be commenced within two years after the act or omission or failure giving rise to the claim, and not afterwards; provided, that if the cause of action is not discovered and could not reasonably have been discovered within such period, then the action may be commenced within six months from the date of such discovery or the date of discovery of facts which would reasonably lead to such discovery, whichever is earlier; provided, further, that in no event may the action be commenced more than four years after such act or omission or failure...."

Ala.Code 1975, § 6-5-574(a) (emphasis added). Thus, in the ALSLA the Legislature changed both the limitations period— from six years to two years—and the starting point of the limitations period allowed for a legal-malpractice cause of action—from the time the client first suffers actual damage (the rule under Cofield) to the time of "the act or omission or failure giving rise to the claim." Despite the clear language of § 6-5-574(a), this Court in Michael v. Beasley, 583 So.2d 245, 252 (Ala.1991), held that the statute-of-limitations period established by § 6-5-574(a) begins to run "from the date of the accrual of a cause of action and not from the date of the occurrence of the act or omission." (Emphasis added.) In reaching this conclusion, the Court relied on Cofield and its interpretation of the statute of limitations applicable before 1987 and not on...