Broten v. Carter

• Decision Date: 20 November 2019
• Docket Number: No. 20190098,20190098
• Citation: 935 N.W.2d 654
• Parties: James BROTEN, Plaintiff and Appellant v. Ralph CARTER; Carter, McDonagh & Sandberg, PLLP; and Carter Law Firm, Defendants and Appellees
• Court: North Dakota Supreme Court

935 N.W.2d 654

James BROTEN, Plaintiff and Appellant

v.Ralph CARTER; Carter, McDonagh & Sandberg, PLLP; and Carter Law Firm, Defendants and Appellees

No. 20190098

Supreme Court of North Dakota.

Filed November 20, 2019

Lee M.Grossman (argued) and Nathan D. Severson (on brief), Fargo, ND, for plaintiff and appellant.

Ronald H. McLean (argued) and Ian R. McLean (on brief), Fargo, ND, for defendants and appellees.

Jensen, Justice.

[¶1] James Broten appeals the dismissal of his attorney malpractice claim. Broten argues the district court erred in granting summary judgment after finding his claim was barred by the applicable statute of limitations. He also challenges the inclusion of expert witness fees within the expenses awarded by the district court for experts who were unnecessary for resolution of the statute of limitations issue. We affirm.

I

[¶2] Broten was appointed to serve as the personal representative of his father’s estate. Broten was subsequently sued by his sisters who claimed Broten had breached his fiduciary duties as personal representative by transferring land held in the trust to himself. In 2011, attorney Ralph Carter was retained by Broten to defend him against his sisters' claims.

[¶3] During Carter’s representation, Broten showed Carter approximately sixty boxes of records Broten believed documented payments to his parents and provided a defense to his sisters' claims. Broten repeatedly inquired with Carter about his review of the records. The records were not disclosed to the opposing party during discovery but disclosed after Carter was replaced as Broten’s counsel in March of 2013.

[¶4] On August 15, 2013, the district court entered findings of fact, conclusions of law, and an order finding Broten had breached his fiduciary duties as personal representative of his father’s estate. The court reserved its findings on damages and ordered an evidentiary hearing to determine the amount of damages. On January 21, 2014, following the evidentiary hearing, the court issued a memorandum opinion and order for judgment requiring Broten to pay damages to his sisters in an amount of $1,300,054.

[¶5] On January 14, 2016, Broten commenced this action for legal malpractice claiming Carter failed to review the records Broten had provided to Carter to support Broten’s defense to the breach of fiduciary duty claim asserted by his sisters. Broten alleges Carter’s failure to review and disclose the documents prevented all of the records from being introduced as evidence and resulted in the liability to his sisters. Carter moved for summary judgment, arguing the applicable two year statute of limitations barred Broten’s claim. The district court granted summary judgment in favor of Carter and awarded to Carter the recovery of costs and fees, including the costs expended for expert witnesses who were unnecessary for resolution of the statute of limitations issue. On February 25, 2019, the district court entered a judgment dismissing Broten’s claims in their entirety, with prejudice.

[¶6] Broten argues the district court erred in granting summary judgment because the statute of limitations had not run on his malpractice claim against Carter.

He also argues the district court erred in granting expert witness fees for experts who were unnecessary for Carter to prevail on the summary judgment motion.

II

[¶7] Broten contends the district court erred in granting Carter summary judgment after finding the statute of limitations for asserting his malpractice claim had expired before he initiated this action. This Court’s standard of review for summary judgment is well established:

Summary judgment is a procedural device under N.D.R.Civ.P. 56(c) for promptly resolving a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. The party seeking summary judgment must demonstrate there are no genuine issues of material fact and the case is appropriate for judgment as a matter of law. In deciding whether the district court appropriately granted summary judgment, we view the evidence in the light most favorable to the opposing party, giving that party the benefit of all favorable inferences which can reasonably be drawn from the record. A party opposing a motion for summary judgment cannot simply rely on the pleadings or on unsupported conclusory allegations. Rather, a party opposing a summary judgment motion must present competent admissible evidence by affidavit or other comparable means that raises an issue of material fact and must, if appropriate, draw the court’s attention to relevant evidence in the record raising an issue of material fact. When reasonable persons can reach only one conclusion from the evidence, a question of fact may become a matter of law for the court to decide. A district court’s decision on summary judgment is a question of law that we review de novo on the record.

Pettinger v. Carroll , 2018 ND 140, ¶ 7, 912 N.W.2d 305 (quoting A.R. Audit Servs., Inc. v. Tuttle , 2017 ND 68, ¶ 5, 891 N.W.2d 757 (internal citations omitted)).

[¶8] The parties agree an action for legal malpractice is governed by the two year statute of limitations provided by N.D.C.C. § 28-01-18(3). Under N.D.C.C. § 28-01-18(3), a client must commence a malpractice suit within two years after the claim for relief has accrued. Larson v. Norkot Mfg., Inc. , 2001 ND 103, ¶ 9, 627 N.W.2d 386. "A cause of action for legal malpractice does not accrue, and the statute of limitations does not commence to run, until the client has incurred some damage." Id. (quoting Wall v. Lewis , 366 N.W.2d 471, 473 (N.D. 1985) ). The action accrues when there is a conjunction of damage and wrongful act. Jacobsen v. Haugen , 529 N.W.2d 882, 885 (N.D. 1995).

[¶9] The district court concluded the only reasonable conclusion that can be drawn from the undisputed facts is Broten’s action accrued on August 15, 2013, the date of the order finding Broten breached his fiduciary duty to his sisters and reserving the determination of damages arising from the breach. Broten argues there is a material question of fact precluding summary judgment because August 15, 2013, is not the only date that can be reasonably considered as the date he was placed on notice of his potential malpractice claim against Carter. Broten argues the August 15, 2013, order finding he breached his fiduciary duty allowed him to prove an offset to potentially all the damages, and it was not until the January 21, 2014, order awarding damages for the breach of his fiduciary duty he actually became aware he would have an obligation to his sisters. Broten contends the uncertainty of whether the offsets would eliminate any potential obligation to his sisters creates a question of fact of whether the statute of limitations was tolled until a damage award became a certainty following the January 21, 2014, order.

[¶10] This Court has adopted the application of the discovery rule to potentially toll the statute of limitations in legal malpractice actions. Wall v. Lewis , 393 N.W.2d 758, 761 (N.D. 1986). The discovery rule delays the start of the statute of limitations until the plaintiff "knows, or with reasonable diligence should know, of the injury, its cause, and the defendant’s possible negligence." Wall , at 761. "The discovery rule focuses on whether the plaintiff has been apprised of facts which would place a reasonable person on notice that a potential claim exists, and it prevents the injustice of barring a claim before the plaintiff reasonably could be aware of its existence." Riemers v. Omdahl , 2004 ND 188, ¶ 6, 687 N.W.2d 445. We have recognized the discovery rule employs an objective standard of knowledge, and it is not necessary that a plaintiff be subjectively convinced of the injury and that the injury was caused by the defendant’s negligence. Id.

[¶11] In Riemers , this Court considered the extent to which a Plaintiff is required to appreciate the injury caused by the attorney’s malpractice. Id. at ¶ 7. In Riemers , this Court noted the following:

Under the discovery rule, the statute of limitations does not begin to run until the plaintiff has incurred some injury or damage. Larson v. Norkot Mfg., Inc. , 2002 ND 175, ¶ 10, 653 N.W.2d 33 (citing Wall v. Lewis , 366 N.W.2d 471, 473 (N.D. 1985) ). It is not necessary for the plaintiff to fully appreciate the potential liability, or even be convinced of an injury; the objective standard requires only that the plaintiff be aware of facts that would place a reasonable person on notice that a potential claim exists. Larson v. Norkot Mfg., Inc. , 2001 ND 103, ¶ 13, 627 N.W.2d 386. In Wall , 366 N.W.2d at 473 (quoting Budd v. Nixen , 6 Cal. 3d 195, 491 P.2d 433, 436-37, 98 Cal. Rptr. 849 (Cal. 1971) ), we explained:

"... until the client suffers appreciable harm as a consequence of his attorney’s negligence, the client cannot establish a cause of action for malpractice. Prosser states the proposition succinctly, ‘It follows that the statute of limitations does not begin to run against a negligence action until some damage has occurred.’ (Prosser, Law of Torts (4th ed. 1971), § 30 at p. 144.)

The cause of action arises, however, before the client sustains all, or even the greater part, of the damages occasioned by his attorney’s negligence.... Any appreciable and actual harm flowing from the attorney’s negligent conduct establishes a cause of action upon which the client may sue.

Indeed, once having discovered his attorney’s negligence and having suffered some damage, the client must institute his action within the time prescribed in the statute of limitations or he will be barred from thereafter complaining of his attorney’s conduct."

Id.

[¶12] Ordinarily, when the discovery rule is applied, knowledge of when the plaintiff should have discovered there was a potential malpractice claim is a question of...