Carvell v. Bottoms
Decision Date | 30 May 1995 |
Citation | 900 S.W.2d 23 |
Parties | Kent CARVELL and Jane Gay Carvell, Plaintiffs-Appellees, v. Thomas M. BOTTOMS and Paul Plant, Defendants-Appellants. |
Court | Tennessee Supreme Court |
Phil C. Neal, Peter B. Newton, Bradley C. Twedt, Neal, Gerber & Eisenberg, Chicago, IL, William T. Ramsey, Neal & Harwell, Nashville, TN, for plaintiffs-appellees.
Douglas Fisher, Howell & Fisher, Larry D. Wilks and Gail Vaughn Ashworth, Amicus Curiae, Tennessee Bar Ass'n, Nashville, TN, for defendants-appellants.
In this legal malpractice case, defendants Thomas M. Bottoms and Paul Plant appeal from the Court of Appeals' reversal of the trial court's dismissal of the action. The issue for our determination is whether this action is barred by the statute of limitations applicable to legal malpractice actions, Tenn.Code Ann. § 28-3-104, 1 under the facts of this case. For the reasons stated hereinafter, we reverse the judgment of the Court of Appeals and dismiss the action.
In October 1981 Ms. Roaby Baxter contracted with Kent and Jane Gay Carvell, the plaintiffs in this action, for the purchase of one of the Carvell's "spec homes." The property Ms. Baxter selected was subject to a gas pipeline easement owned by Texas Eastern Transmission Corporation (Texas Eastern). Texas Eastern's pipeline lay along the edge of the property and was marked by orange and white markers.
The Carvells employed Thomas M. Bottoms, a partner in the firm of Harwell, Bottoms and Plant, to prepare the closing documents. The first document drafted by Bottoms, a preliminary title opinion dated December 10, 1981, stated that the property was subject to power line, gas line and existing roadway easements. The warranty deed prepared by Bottoms did not, however, specifically indicate the existence of the Texas Eastern easement. The closing occurred on December 11, 1981; and the property was conveyed via the warranty deed which did not mention the Texas Eastern easement.
In the summer of 1985, Texas Eastern moved its pipeline from the edge of Ms. Baxter's property to a location closer to her home. On February 18, 1986, Ms. Baxter brought an action against the Carvells, alleging that they had breached the warranty of good title because the deed did not disclose the Texas Eastern easement.
Soon after being served with the complaint, the Carvells informed Paul Plant, Bottoms's former partner, 2 that they had been sued for a "wrongly prepared deed"; and they asked him what should be done about it. Although Plant stated that he did not believe that Bottoms was negligent in failing to include the Texas Eastern easement on the deed, he also stated that "he couldn't represent [the Carvells] because if something happened that [the Carvells] would have a case against him, and that's why he had errors and omissions insurance." 3
Soon thereafter the Carvells enlisted another attorney, Travis Gobble, to assist them in handling the lawsuit. Gobble performed some legal services in connection with the case (although he did not charge the Carvells for this work); Gobble also told the Carvells that he did not believe that Baxter's claim was meritorious. Finally, the Carvells formally employed John Colley, an attorney who was handling another matter for them, to represent their interests in the litigation. Colley, who handled the matter both in the trial court and on appeal, likewise told the Carvells that he did not believe that the plaintiff's claim had any merit.
The action was tried in the Lawrence County Circuit Court in January 1989. At trial, the Carvells argued that the omission of the easement from the deed did not constitute a breach of warranty because the title opinion had mentioned the easement, and because Jane Carvell had informed Baxter, at the time of the sale, of the existence of the pipeline (although she did not inform Baxter of the existence of the easement). Thomas Bottoms testified for the Carvells, stating his belief that the title opinion was sufficient to provide notice to Baxter as to the easement's existence. The jury, however, found that the omission did constitute a breach of warranty, and assessed the damages at $25,000. The trial court, however, entered an order remitting the damages to $15,000. Both parties appealed from this judgment to the Court of Appeals, and in March 1990, that Court affirmed both the judgment and the trial court's decision to reduce the amount of damages. This Court denied the Carvells' Rule 11 application in June 1990, concurring in the results only.
After the judgment of the Court of Appeals was handed down, the Carvells contacted Paul Plant, told him of the outcome of the case, and asked him to assume responsibility for the payment of the judgment. Plant refused, and the Carvells brought this legal malpractice action against him and Thomas Bottoms in the Lawrence County Circuit Court on May 23, 1990.
Bottoms and Plant subsequently moved for summary judgment, arguing that the one year statutory period of limitations applicable to legal malpractice cases, Tenn.Code Ann. § 28-3-104(a)(2), had expired. In November 1993 the trial court granted defendants' motion. On appeal, however, the Court of Appeals vacated and remanded the judgment, holding that a genuine issue of material fact existed as to whether the Carvells knew or should have known of Bottoms's negligence before May 23, 1989--a year prior to the filing of the malpractice action. We granted defendants' Rule 11 application in order to clarify when a cause of action for legal malpractice accrues for statute of limitations purposes.
The standards governing an appellate court's review of a trial court's action on a motion for summary judgment are well settled. Since our inquiry involves purely a question of law, no presumption of correctness attaches to the trial court's judgment, and our task is confined to reviewing the record to determine whether the requirements of Tenn.R.Civ.P. 56 have been met. Cowden v. Sovran Bank/Central South, 816 S.W.2d 741, 744 (Tenn.1991). Tenn.R.Civ.P. 56.03 provides that summary judgment is only appropriate where: (1) there is no genuine issue with regard to the material facts relevant to the claim or defense contained in the motion, Byrd v. Hall, 847 S.W.2d 208, 210 (Tenn.1993); and (2) the moving party is entitled to a judgment as a matter of law on the undisputed facts. Anderson v. Standard Register Co., 857 S.W.2d 555, 559 (Tenn.1993). The moving party has the burden of proving that its motion satisfies these requirements. Downen v. Allstate Ins. Co., 811 S.W.2d 523, 524 (Tenn.1991).
The standards governing the assessment of evidence in the summary judgment context are also well established. Courts must view the evidence in the light most favorable to the nonmoving party and must also draw all reasonable inferences in the nonmoving party's favor. Byrd, 847 S.W.2d at 210-11. Courts should grant a summary judgment only when both the facts and the conclusions to be drawn from the facts permit a reasonable person to reach only one conclusion. Id.
The issue of when a legal malpractice action accrues for statute of limitations purposes is governed by a specific formulation of the "discovery rule" applicable to such actions. 4 This rule has been developed in a series of our decisions rendered in the 1980s--specifically Ameraccount Club, Inc. v. Hill, 617 S.W.2d 876 (Tenn.1981); Security Bank & Trust Company v. Fabricating, Inc., 673 S.W.2d 860 (Tenn.1983); and Chambers v. Dillow, 713 S.W.2d 896 (Tenn.1986). In order to determine if the Court of Appeals ruled correctly in this case, we must first examine these foundational decisions.
In Ameraccount, the plaintiff corporation hired the defendant attorneys to register a service mark with the United States Patent Office. Although the defendants submitted the plaintiff's application in December 1974, they learned on March 3, 1975, that the application was incomplete. On March 13, 1975, the defendants remedied the deficiencies of the application, and the Patent Office assigned March 13 as the registration date.
The defendants had, however, neglected to search the Patent Office records to determine if there were pending applications for service marks similar to the one submitted by the plaintiff. This proved to be disastrous, for on August 13, 1975, the Patent Office informed the defendants that an application for a similar mark had been filed on February 28, 1975, thereby conferring precedence on that application in the registration procedure. After receiving this information, the plaintiff's shareholders, at a meeting held in mid-August, concluded that the defendants had been negligent in handling the registration. On April 27, 1976, the Patent Office finally refused to register the plaintiff's mark; and on August 27, 1976, the plaintiff brought a malpractice action against the defendants.
The trial court dismissed the action, holding that since the plaintiff clearly knew of the defendants' negligence at the time it held the shareholders' meeting in mid-August 1975, the one year period of limitations had expired before the suit was filed in late August 1976. The Court of Appeals affirmed the judgment.
This Court, however, reversed the judgment. In our analysis, we first noted that the Court of Appeals was correct in determining that the plaintiff knew of the attorneys' negligence more than a year before the action was filed. However, we went on to say that The Court of Appeals erred in holding that the plaintiff's cause of action accrued and the statute of limitations began to run when the plaintiff became aware of the negligence of the defendant attorneys; still more was required, viz., damage or injury to the plaintiff resulting from that negligence.
Ameraccount, 617 S.W.2d at 878 (emphasis added).
Having determined that some injury was necessary, we reasoned that "although the plaintiff...
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