Cherry v. Williams

• Decision Date: 11 December 2000
• Parties: Larry CHERRY, et al., v. John E. WILLIAMS, Jr., et al.
• Court: Tennessee Court of Appeals

36 S.W.3d 78

Larry CHERRY, et al., v. John E. WILLIAMS, Jr., et al.

Court of Appeals of Tennessee, Middle Section, at Nashville.

April 17, 2000.

Certiorari Denied December 11, 2000.

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John T. Milburn Rogers, Greeneville, TN, for the appellants, Larry Cherry and Money Management Services, Inc.

Winston S. Evans, Nashville, TN, for the appellee, John E. Williams, Jr.

Thomas C. Corts, Nashville, TN, for the appellee, L. Anthony Deas.

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OPINION

KOCH, J., delivered the opinion of the court, in which CANTRELL, J. and BUSSART, J. joined.

This appeal involves a dispute between a client and his two lawyers regarding their recommendations against accepting a plaintiff's settlement offer in a chancery court proceeding. After the chancellor and this court awarded his adversary damages far in excess of the settlement offers, the client filed a legal malpractice action against his lawyers in the Circuit Court for Davidson County. The two lawyers moved to dismiss the complaint based on the one-year statute of limitations, and the trial court, treating the motion as one for summary judgment, dismissed the complaint. The client asserts on this appeal that the limitations period did not begin to run until this court affirmed the judgment in the underlying case and that the running of the statute of limitations should have been tolled because the lawyers fraudulently concealed his cause of action against them while they continued to represent him. We have determined that the complaint is time barred and, therefore, affirm the summary judgment.

In the early 1990s, Larry Cherry operated Money Management Services, Inc., a financial consulting business in Nashville. After experiencing some financial reversals, Darlene Pridemore engaged Mr. Cherry to assist her with her problems. Under the guise of helping Ms. Pridemore, Mr. Cherry effectively placed her in economic slavery by taking total control over her income. He also inveigled her out of her house at a price below market value.

Ultimately, Mr. Cherry's handling of her affairs prompted Ms. Pridemore to sue Mr. Cherry and Money Management Services, Inc. in the Chancery Court for Davidson County for breach of fiduciary duty. Mr. Cherry retained John E. Williams, Jr. and L. Anthony Deas to represent him in the litigation. As the trial date approached, Ms. Pridemore offered to settle her suit for progressively smaller amounts ranging from $25,000 to $15,000. Messrs. Williams and Deas estimated that Mr. Cherry's and Money Management's maximum exposure was between $20,000 and $25,000 and, accordingly, recommended against accepting the settlement offers. Mr. Cherry followed his lawyer's advice and rebuffed Ms. Pridemore's efforts to settle the case before trial.

The chancery court heard the proof in September 1993, and in October 1993 entered a $75,000 judgment for Ms. Pridemore, representing $50,000 in compensatory and $25,000 in punitive damages. Stunned by the outcome, Mr. Cherry directed Messrs. Williams and Deas to appeal the judgment to this court. On March 17, 1995, this court filed an opinion finding that Mr. Cherry had violated his fiduciary duties to Ms. Pridemore "in every way possible." Pridemore v. Cherry, 903 S.W.2d 705, 707 (Tenn.Ct.App.1995). Accordingly, we affirmed the award of $50,000 in compensatory damages. We also found that the chancery court had set the punitive damages too low and increased the punitive damage award to $100,000. On July 3, 1993, the Tennessee Supreme Court denied Mr. Cherry's application for permission to appeal.

Mr. Cherry blamed Messrs. Williams and Deas for saddling him with an unanticipated $150,000 judgment. On March 15, 1996, he¹ filed a legal malpractice action against Messrs. Williams and Deas in the Circuit Court for Davidson County. Mr. Cherry's complaint alleged that Messrs. Williams and Deas had been negligent because they failed to recognize and communicate the extent of his exposure to damages both in the trial court and in this court. He also alleged that Messrs. Williams and Deas had negligently failed to recommend settling the case when a settlement was possible and that they had otherwise breached the standard of care in the chancery court litigation and on appeal.

Both Mr. Williams and Mr. Deas denied that they had negligently represented Mr. Cherry and his company in the litigation with Ms. Pridemore. Eventually, in March 1997, Mr. Deas, joined later by Mr. Williams, moved for a Tenn.R.Civ.P. 12.03 motion for a judgment on the pleadings. They argued that any alleged negligence with regard to recommending against a settlement, failing to appreciate or communicate the risk of a substantial damage award, or conducting the trial occurred more than one year before Mr. Cherry filed his malpractice action and were, therefore, barred by the one-year statute of limitations in Tenn.Code Ann. § 28-3-104(a)(2) (Supp.1999). After considering the materials supporting and opposing the motions, the trial court treated the motions as ones for a partial summary judgment and dismissed the claims dealing with the alleged negligence before and during the trial of the Pridemore case in the chancery court. Mr. Cherry voluntarily nonsuited the remainder of his claims and appealed to this court.

I. THE STANDARD OF REVIEW

The trial court appropriately converted the Tenn.R.Civ.P. 12.03 motion for judgment on the pleadings to a motion for summary judgment because it considered matters outside the pleadings themselves. Accordingly, we begin by restating the principles for reviewing summary judgments on appeal.

Summary judgments enjoy no presumption of correctness on appeal. See City of Tullahoma v. Bedford County, 938 S.W.2d 408, 412 (Tenn.1997); McClung v. Delta Square Ltd. Partnership, 937 S.W.2d 891, 894 (Tenn.1996). Accordingly, reviewing courts must make a fresh determination concerning whether the requirements of Tenn.R.Civ.P. 56 have been satisfied. See Hunter v. Brown, 955 S.W.2d 49, 50-51 (Tenn.1997); Mason v. Seaton, 942 S.W.2d 470, 472 (Tenn.1997). Summary judgments are appropriate only when there are no genuine factual disputes with regard to the claim or defense embodied in the motion and when the moving party is entitled to a judgment as a matter of law. See Tenn.R.Civ.P. 56.04; Bain v. Wells, 936 S.W.2d 618, 622 (Tenn.1997); Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn.1995).

Courts reviewing summary judgments 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. See Robinson v. Omer, 952 S.W.2d 423, 426 (Tenn.1997); Mike v. Po Group, Inc., 937 S.W.2d 790, 792 (Tenn.1996). Thus, a summary judgment should be granted only when the undisputed facts reasonably support one conclusion—that the moving party is entitled to a judgment as a matter of law. See McCall v. Wilder, 913 S.W.2d 150, 153 (Tenn.1995); Carvell v. Bottoms, 900 S.W.2d at 26. A party may obtain a summary judgment either by affirmatively negating an essential element of the nonmoving party's claim or by conclusively establishing an affirmative defense that defeats the nonmoving party's claim. See Byrd v. Hall, 847 S.W.2d 208, 215 n. 5 (Tenn.1993).

Defenses based on a statute of limitations are particularly amenable to summary judgment motions. See Creed v. Valentine, 967 S.W.2d 325, 327 (Tenn.Ct.App.1997); Allied Sound, Inc. v. Neely, 909 S.W.2d 815, 820 (Tenn.Ct.App.1995). Most often the facts material to a statute of limitations defense are not in dispute. When the facts and the inferences reasonably drawn from the facts are not disputed, the courts themselves can bring to bear the applicable legal principles to determine whether the moving party is entitled to a judgment as a matter of law.

II. THE LAWYERS' STATUTE OF LIMITATIONS DEFENSE

Mr. Cherry now attacks his former lawyers' statute of limitations defense on three fronts. First, he argues that his malpractice complaint was timely because he did not suffer a legally cognizable or actual injury until this court filed its opinion on March 17, 1995. Second, he argues that Messrs. Williams and Deas fraudulently concealed their negligence from him. Third, he argues that the statute of limitations should be tolled as long as Messrs. Williams and Deas continued to represent him.

A. ACCRUAL OF MR. CHERRY'S CAUSE OF ACTION

We begin by recognizing that statutes limiting the time for bringing lawsuits are enacted for the repose of society and are not disfavored. See Applewhite v. Memphis State Univ., 495 S.W.2d 190, 195 (Tenn.1973). As the Tennessee Supreme Court observed long ago, "The peace of society requires that rights shall be enforced in a reasonable time, and that they shall be barred if they are not." Peck v. Bullard, 21 Tenn. (2 Hum.) 41, 45 (1840).

Professional malpractice actions, like other suits, are subject to a bar of limitations. Legal malpractice actions, whether grounded in contract or tort, must be commenced within one year after the cause of action's accrual. See Tenn.Code Ann. § 28-3-104(a)(2). The question then becomes, when does the cause of action accrue. As a general rule, a cause of action for an injury accrues when the injury occurs, see Whaley v. Catlett, 103 Tenn. 347, 355, 53 S.W. 131, 133 (1899), an "injury" being understood as any wrong or damage done to another's person, rights, reputation, or property. See Vance v. Schulder, 547 S.W.2d 927, 932 (Tenn.1977). Once an injury occurs, a cause of action accrues to the person injured, and, subject to several well-known exceptions, the time for filing a lawsuit to redress that injury starts running right then.

In legal malpractice actions, the one-year statute of limitations starts to run when the client suffers a legally cognizable injury resulting from an attorney's negligence or other wrongdoing, and the client knows or should know the facts...