Antone v. Mirviss, A04-1367.

• Decision Date: 17 August 2006
• Docket Number: No. A04-1367.,A04-1367.
• Citation: 720 N.W.2d 331
• Parties: Richard ANTONE, Respondent, v. Israel MIRVISS, Appellant.
• Court: Minnesota Supreme Court

Page 331

720 N.W.2d 331

Richard ANTONE, Respondent, v. Israel MIRVISS, Appellant.

No. A04-1367.

Supreme Court of Minnesota.

August 17, 2006.

Paul C. Peterson, William L. Davidson, Lind, Jensen, Sullivan & Peterson, P.A., Minneapolis, MN, for Appellant.

Jeffrey A. Olson, PLLC, Julia A. O'Brien, Edina, MN, for Respondent.

David F. Herr, Haley N. Schaffer, Maslon Edelman Borman & Brand, LLP, Minneapolis, MN, for MN Lawyers Mutual Ins. Co. Amicus Curiae.

Thomas J. Shroyer, Peter A. Koller, Moss & Barnett, P.A., Minneapolis, MN, for MN Society of Certified Public Accountants Amicus Curiae.

Mary C. Lauhead, St. Paul, MN, Michael Dittberner, Clugg, Linder & Dittberner & Edmiston, Ltd., Edina, MN, Donald L. Enockson, El-Ghazzawy Law Offices, Minneapolis, MN, for Family Law Section, MSBA Amicus Curiae.

Heard, considered, and decided by the court en banc.

OPINION

ANDERSON, PAUL H., Justice.

Richard Antone brought this legal malpractice action against his attorney, Israel Mirviss, alleging that Mirviss was negligent when he drafted an antenuptial agreement. Antone asserted that Mirviss failed to draft an agreement that protected his interest in any marital appreciation to his premarital property. The Hennepin County District Court dismissed Antone's complaint under the six-year statute of limitations for legal malpractice actions, concluding that Antone's cause of action accrued either when he signed the agreement and was married or when the premarital property thereafter appreciated, both of which events occurred more than six years before this action was commenced. The Minnesota Court of Appeals reversed, holding that Antone's cause of action did not accrue until the district court awarded a portion of the marital appreciation of Antone's premarital property to his wife in a marital dissolution proceeding, which event occurred less than six years before this action was commenced. We reverse the court of appeals.

In December 1986, respondent Richard Antone hired appellant Israel Mirviss as his attorney to draft an antenuptial agreement. He did so in anticipation of his marriage to Debra Schmidt. At that time, Antone owned several rental properties and he wanted to protect any appreciation in value of those properties from claims Schmidt could assert as his spouse. Antone alleges that he asked Mirviss to draft the antenuptial agreement to protect any appreciation from such claims by Schmidt. Schmidt at first refused to sign the agreement prepared by Mirviss, but changed her mind the next day after consulting with her own attorney and making some revisions to the agreement. Although the first draft of the agreement may have protected Antone's interest in any marital appreciation to his premarital properties, the final draft did not.¹ Antone alleges that Mirviss gave him only the signature page of the agreement and assured him that the agreement protected the marital appreciation of his premarital properties.²

Antone and Schmidt were married on December 21, 1986. In 1998, Antone petitioned for dissolution of the marriage. He stated in a deposition that when he petitioned for dissolution of the marriage, he discovered for the first time that the antenuptial agreement failed to protect his interest in the marital appreciation of his premarital properties. He also said he would not have married Schmidt if Mirviss had provided him with this information.

On November 9, 2000, the district court in the dissolution proceeding found that, although Antone's premarital properties appreciated in value during the marriage, the appreciation was attributable only to market forces, not marital efforts. Antone v. Antone, 645 N.W.2d 96, 99 (Minn.2002). As a result, the dissolution court awarded all of the marital appreciation to Antone as nonmarital property. Schmidt appealed, and the court of appeals affirmed. We then granted Schmidt's petition for review and on June 13, 2002, we reversed, holding that the district court erred by not apportioning the marital appreciation between Antone and Schmidt. Id. at 102-03. On January 3, 2003, the district court issued an amended dissolution judgment awarding Schmidt a portion of the marital appreciation of Antone's premarital property.

In September 2003, Antone commenced this legal malpractice action against Mirviss for negligence, breach of fiduciary duty, and breach of contract. As to damages Antone alleges in his complaint that Schmidt received more money from the property award in the dissolution proceeding than she would have received "had the antenuptial agreement been drafted properly and as contemplated and explained to Antone by Mirviss." Antone's prayer for relief does not itemize damages.

Without specifying the procedural rule relied on, Mirviss filed a "motion to dismiss," arguing that Antone's claims were "barred by the 6 year [legal malpractice] statute of limitations set out in Minn.Stat. § 541.05, subd. 1." In response, Antone filed a "memorandum of law opposing summary judgment." (Emphasis added.) The district court treated Mirviss's motion as a motion to dismiss for failure to state a claim upon which relief can be granted under Minn. R. Civ. P. 12.02(e). The court then granted the motion, concluding that Antone suffered damage, and thus the statute of limitations began to run, either (1) as soon as he was married because "[t]here was a risk of loss of part of the appreciation of [his] nonmarital property," or (2) as soon as his nonmarital property increased in value because "at that point, [he] lost rights to a portion of that increase in value."³

A divided court of appeals reversed, holding that the requisite damages for accrual of Antone's cause of action commenced when Antone "sustained the money damages that provide the object of his legal malpractice lawsuit." Antone v. Mirviss, 694 N.W.2d 564, 571 (Minn.App.2005). The court also said Antone's loss was only "potential," and that he had no actionable claim for malpractice "[u]ntil the contingencies of the appreciation in value, the dissolution, and the award of a portion of the appreciated value occurred." Id. The dissent concluded that Antone was damaged when he married Schmidt because the antenuptial agreement immediately deprived him of an exclusive interest in his nonmarital assets. Id. at 572 (Dietzen, J., dissenting). We granted Mirviss's petition for review.

I.

In reviewing a grant of summary judgment,⁴ we determine whether there are any genuine issues of material fact and whether the district court erred in its application of the law. Wallin v. Letourneau, 534 N.W.2d 712, 715 (Minn.1995). There are no material facts at issue on this appeal. Thus we need only determine "whether the court erred in applying the law regarding the accrual of the cause of action and the running of the statute of limitations." Weeks v. American Family Mut. Ins. Co., 580 N.W.2d 24, 26 (Minn. 1998). This is a question of law that we review de novo. Id.

The statute of limitations for legal malpractice is six years. Minn.Stat. § 541.05, subd. 1(5) (2004). The statute does not specify when the six-year period begins to run. We have consistently held that the statute begins to run when the cause of action accrues, that is, when the plaintiff can allege sufficient facts to survive a motion to dismiss for failure to state a claim upon which relief can be granted. Dalton v. Dow Chemical Co., 280 Minn. 147, 152-53, 158 N.W.2d 580, 584 (1968). To state a claim for legal malpractice upon which relief can be granted, a plaintiff must allege "(1) the existence of an attorney-client relationship; (2) acts constituting negligence or breach of contract; (3) that such acts were the proximate cause of the plaintiff's damages; (4) that but for [attorney-]defendant's conduct the plaintiff would have been successful in the prosecution or defense of the action." Blue Water Corp. v. O'Toole, 336 N.W.2d 279, 281 (Minn.1983). The only disputed element here is when damages accrued.

There are three types of accrual rules based on the damages element.⁵ The first rule is the traditional "occurrence" rule, which assumes that nominal damages occur, the cause of action accrues, and the statute of limitations begins to run, simultaneously with the performance of the negligent or wrongful act. See, e.g., Wilcox v. Executors of Plummer, 29 U.S. (4 Pet.) 172, 177, 7 L.Ed. 821 (1830); Greene v. Morgan, Theeler, Cogley & Petersen, 575 N.W.2d 457, 459 (S.D.1998). Under this rule, the statute of limitations begins to run as soon as the negligent act is committed even though there is no actual damage at that time. 575 N.W.2d at 459. Most jurisdictions have moved away from the occurrence rule. 3 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 22.10, at 303 (2006) (stating that, by requiring suit before actual damage has occurred, the occurrence rule "encourages speculative litigation that can involve the client, the attorney and the courts in wasteful economic behavior"). We likewise have rejected the occurrence rule. Dalton, 280 Minn. at 154, 158 N.W.2d at 585 ("[I]t is not the wrongful, i.e., negligent act, which gives rise to the claim. For there must be damage caused by it.") (quoting Brush Beryllium Co. v. Meckley, 284 F.2d 797, 800 (6th Cir.1960)).

At the other end of the spectrum is the "discovery" rule, under which the cause of action accrues and the statute of limitations begins to run only when the plaintiff knows or should know of the injury. See, e.g., Mumford v. Staton, Whaley & Price, 254 Md. 697, 255 A.2d 359, 365 (1969); Zimmie v. Calfee, Halter & Griswold, 43 Ohio St.3d 54, 538 N.E.2d 398, 401 (1989). Some legal commentators have noted that a significant disadvantage of the discovery rule is that it provides "open-ended liability." Mallen & Smith, supra, § 22.15, at 420. We have also rejected the discovery rule. Dalton, 280 Minn. at 153, 158 N.W.2d at 584 ("Under our statutes it has been determined that ignorance of a cause of...