Canavan v. LOVETT, SCHEFRIN AND HARNETT

• Decision Date: 16 December 2004
• Docket Number: No. 2003-0644-Appeal.,2003-0644-Appeal.
• Citation: 862 A.2d 778
• Parties: James CANAVAN v. LOVETT, SCHEFRIN AND HARNETT et al.
• Court: Rhode Island Supreme Court

862 A.2d 778

James CANAVAN v. LOVETT, SCHEFRIN AND HARNETT et al.

No. 2003-0644-Appeal.

Supreme Court of Rhode Island.

December 16, 2004.

Ronald J. Resmini, Esq., for Plaintiff.

Marco P. Uriati, Esq., for Defendant.

Present: WILLIAMS, C.J., GOLDBERG, FLAHERTY, SUTTELL, and ROBINSON, JJ.

OPINION

FLAHERTY, Justice.

This legal malpractice action was instituted against the Providence Law Firm of Lovett, Schefrin and Harnett (the firm) and several other named defendants arising out of a motor vehicle accident that occurred on January 27, 1988.¹ The Superior Court granted summary judgment in favor of the defendants, reasoning that the plaintiff's cause of action was barred by the applicable statute of limitations for legal malpractice actions as prescribed by G.L.1956 § 9-1-14.3. On appeal, the plaintiff contends that the motion justice erred in determining that the exercise of reasonable diligence would have revealed the alleged malpractice more than three years before the date on which the plaintiff filed suit against the defendants. Alternatively, the plaintiff asks this Court to adopt and apply the "continuous representation doctrine" to toll the statute of limitations for the plaintiff's legal malpractice claims. After reviewing the record in the light most favorable to the nonmoving plaintiff, we decline to fault a lay person under the circumstances presented by this case. For the reasons stated herein, we vacate the judgment of the Superior Court.

I Facts and Travel

On January 27, 1988, plaintiff James Canavan was driving a truck in the course of his employment with AAA Trucking (AAA) when he was involved in a serious motor vehicle collision with an individual named Karl Talabach. The plaintiff retained the law firm of Lovett, Schefrin and Harnett (later Lovett, Schefrin, Gallogly & Harnett) to prosecute a workers' compensation claim on his behalf. The firm also initiated a liability claim against Talabach, which it assigned to one of its attorneys.²

The attorney handling the matter immediately pursued plaintiff's liability claim against Talabach's insurer, Hanover Insurance Company (Hanover). On October 27, 1988, Hanover notified defendant firm that its policy limit with Talabach was $10,000. Believing this inadequate to satisfy Canavan's damages, the firm advised AAA and its insurance carrier that plaintiff would be making an underinsured motorist claim. After Liberty Mutual Insurance Company (Liberty) was identified as AAA's insurance carrier, the firm made a claim against that company for underinsured motorist benefits.³

The claim against Liberty was referred to Massachusetts attorney Debra Kohl. On December 18, 1990, Kohl informed the firm that Hanover had paid its $10,000 policy limit, which had been forwarded to AAA's workers' compensation insurance carrier in accordance with Rhode Island law. Attorney Kohl also indicated her intention to settle with Liberty for an additional $10,000, and she further notified the firm that Canavan had provided a copy of his Prudential Motor Vehicle insurance policy to her. Because Kohl was concerned about the existence or extent of underinsured coverage under plaintiff's Prudential policy, she requested that the attorney handling the matter on behalf of Lovett, Schefrin and Harnett review it.

On January 4, 1991, Kohl informed the firm that Liberty had offered $10,000 to settle the claim against it and that plaintiff's Prudential policy provided $300,000 coverage for underinsured motorist benefits. Kohl encouraged the firm to pursue the Prudential coverage and asked its advice on whether to accept the $10,000 from Liberty before the Prudential claim was pursued. On February 14, 1991, the attorney handling the matter for Lovett, Schefrin and Harnett made a claim for underinsured benefits against Prudential, notifying it that the earlier claim against Talabach and Hanover had been settled. At that time, the firm also requested Prudential's permission to settle with Liberty.

In response, Prudential wrote letters to Canavan on April 2, 1991, and May 13, 1991, informing him that it was reserving its right to deny coverage because it had received late notice of his claim. In accordance with the terms of his policy, plaintiff provided a written statement to Prudential on May 1, 1991. In that statement, Canavan made only a passing reference to the filing of his claim: "[a]ccording to my Attorney, * * * we first placed Prudential on notice for this claim on February 14, 1991, when we were notified by Hanover [Insurance Company] and Liberty Mutual Insurance [Company] that they only had minimal coverage in effect."

In a separate letter dated July 15, 1991, Prudential's counsel informed the firm that Prudential was not liable under its policy for Canavan's claim for three reasons. They were: (1) late notice of the claim; (2) lack of consent to the settlement with Talabach and Hanover; and (3) plaintiff was not entitled to recover under the underinsured motorist policy and Rhode Island law because the claim with Talabach and Hanover had been settled. Significantly, there is no evidence in the record that either Prudential or any defendant provided a copy of that correspondence to Canavan.

Through defendant law firm, Canavan initiated a breach of contract action against Prudential in Superior Court on October 8, 1991. In the course of that litigation, Canavan answered interrogatories and was deposed on both June 3, 1994, and October 15, 1994. In January 1996, while the lawsuit against Prudential still was pending, a named partner in defendant law firm advised Canavan that he should retain new counsel in light of the defenses raised by Prudential. The plaintiff retained new counsel as early as January 31, 1996, and the case against Prudential settled for $20,000 on June 15, 1997.

Canavan then filed this legal malpractice action on November 26, 1997, alleging that defendants were negligent in handling his liability claims with Hanover and Prudential.⁴ The defendants moved for summary judgment, contending that plaintiff's suit was barred by the three-year statute of limitations for legal malpractice actions as set forth in § 9-1-14.3.

The Superior Court heard arguments on defendants' motions on October 14, 2003. In contention at that hearing was the date on which the statute of limitations on plaintiff's malpractice claim began to run. The plaintiff's counsel argued that the statute of limitations was not triggered until January 1996, when a partner in the law firm informed Canavan of the potential conflict and encouraged him to seek another attorney. Counsel for defendants, on the other hand, argued that the statute of limitations on plaintiff's suit began to run, at the latest, on October 5, 1994, when plaintiff was deposed in the case against Prudential. The defendants' lawyers urged that by that date, Canavan's relationship with Prudential was clearly adversarial, considering that he had filed an action in Superior Court against the company, had given a statement under oath, had answered interrogatories, and had been deposed in the matter. By then, they stressed, the exercise of reasonable diligence should have revealed to him that legal malpractice may have occurred.

The motion justice agreed with defendants and awarded summary judgment in their favor. In a bench decision, the motion justice noted that "[i]t seems to the [c]ourt that when a client is put on notice from an insurance carrier that his claims were not filed timely, a red flag is raised as to whether that failure to timely file was a result of some negligence of his counsel or some other cause." The motion justice found that Canavan had been put on such notice in 1991 when his lawyers initiated the cause of action against Prudential: "[w]ith the knowledge that Mr. Canavan had back in 1991 and which I find not to be disputed, he certainly could have consulted other counsel to discharge his obligation under the statute of limitations to exercise reasonable diligence to discover if a cause of action existed." The plaintiff filed a timely appeal to this Court.

II Standard of Review

Summary judgment is an extreme remedy that must be cautiously applied. Johnston v. Poulin, 844 A.2d 707, 710 (R.I.2004). "This Court reviews a grant of summary judgment on a de novo basis." Johnson v. Newport County Chapter for Retarded Citizens, Inc., 799 A.2d 289, 291 (R.I.2002) (citing Marr Scaffolding Co. v. Fairground Forms, Inc., 682 A.2d 455, 457 (R.I.1996)). If our review of the evidence viewed in the light most favorable to the nonmoving party reveals no genuine issue of material fact, "and if we conclude that the moving party was entitled to judgment as a matter of law, we shall sustain the trial justice's granting of summary judgment." Id. (quoting Accent Store Design, Inc. v. Marathon House, Inc., 674 A.2d 1223, 1225 (R.I.1996)). On the other hand, if the record evinces a genuine issue of material fact, summary judgment is improper and we will accordingly reverse. Belanger v. Silva, 114 R.I. 266, 267-68, 331 A.2d 403, 405 (1975).

III Analysis and Discussion

The statute of limitations governing legal malpractice causes of action is set forth at § 9-1-14.3. Section 9-1-14.3, which codifies the "discovery rule" exception previously recognized by this Court in the context of medical malpractice, provides that:

"an action for legal malpractice shall be commenced within three (3) years of the occurrence of the incident which gave rise to the action; provided, however, that:

"* * *

"(2) In respect to those injuries due to acts of legal malpractice which could not in the exercise of reasonable diligence be discoverable at the time of the occurrence of the incident which gave rise to the action, suit shall be commenced within three (3) years of the time that the act or acts of legal malpractice should, in the exercise of reasonable diligence, have been discovered."

This Court has held that the rationale for...