Ferrellgas, Inc. v. Edward A. Smith, P.C.
| Decision Date | 09 May 2006 |
| Docket Number | No. WD 65554.,WD 65554. |
| Citation | 190 S.W.3d 615 |
| Parties | FERRELLGAS, INC., Appellant, v. EDWARD A. SMITH, P.C., et al., Respondent. |
| Court | Missouri Court of Appeals |
Hugh Lawrence Marshall, Kansas City, MO, for Appellant.
Michael Patrick Joyce, Kansas City, MO, for Respondent.
Before JAMES M. SMART, JR., ROBERT G. ULRICH, and LISA WHITE HARDWICK, JJ.
The trial court granted summary judgment in favor of Respondents Edward A. Smith, P.C., et al., because the claims brought against them by Appellant Ferrellgas, Inc. were barred by the applicable statute of limitations. Ferrellgas appeals. The judgment is affirmed.
This appeal arises from a lawsuit filed by Ferrellgas, Inc. against Edward A. Smith, P.C. and Smith, Gill, Fisher & Butts, P.C., ("Smith, Gill"), alleging legal malpractice. The allegations relate to Smith, Gill's representation of Ferrellgas in a California lawsuit, Hightower v. Buckeye Gas Products, case no. Indio 54099, Riverside County Superior Court.
The plaintiff in that lawsuit, Allan Hightower, was injured in a propane gas explosion in Blythe, California, in 1985. In October 1985, Hightower filed suit against Buckeye Gas Products, LP, and Buckeye Gas Products Management Company (collectively, Buckeye). Ferrellgas became a party to the lawsuit when it purchased Buckeye from American Premier Underwriters, Inc. (APU) in 1986. Ferrellgas retained Smith, Gill, along with a California law firm, to represent it in the Hightower lawsuit. Prior to trial, plaintiff Hightower offered to settle his claim for $275,000. Smith, Gill advised Ferrellgas not to accept the offer. Ferrellgas declined the offer. After a trial, the jury found in favor of Hightower on October 12, 1990, awarding him $2,000,000. The verdict was upheld on appeal. Ferrellgas eventually paid over $3,000,000, including interest, to satisfy the Hightower judgment.
Exactly five years after the Hightower verdict, on October 12, 1995, Ferrellgas brought suit against Smith, Gill in Jackson County Circuit Court, alleging negligence and breach of contract. Those allegations were based, in part, on Ferrellgas' assertion that Smith, Gill failed to make itself aware and to inform Ferrellgas that if it were assessed just one percent of fault in the Hightower case, it would be responsible for the entire judgment. The malpractice case was dismissed without prejudice at Ferrellgas' request after the parties entered into a tolling agreement, effective October 25, 1996.
In October 2001, when the tolling agreement was not renewed, Ferrellgas refiled the lawsuit against Smith, Gill and its successor, Edward A. Smith, P.C. (collectively, the "Smith Firms"). This time, it alleged misrepresentation in addition to negligence and breach of contract. The Smith Firms' defendants asserted as an affirmative defense "that Plaintiff's claims are barred by all applicable statutes of limitations, including, but not limited to those of the States of California and Missouri."
The Smith Firms moved for summary judgment in March 2004, arguing, inter alia, that all the claims are barred by the applicable statutes of limitations. The Smith Firms explained in their suggestions in support that all three counts were barred by California's one-year statute of limitations for legal malpractice claims, CAL.CIV.PROC.CODE § 340.6, made applicable by Missouri's borrowing statute, section 516.190, RSMo.1
The motion referred to a federal case in which APU (the predecessor of Ferrellgas) had brought claims of legal malpractice against Smith, Gill for its handling of the Hightower lawsuit, APU v. Smith, Gill, Fisher & Butts, P.C., case no. 95-0828-CV-W1. The federal court granted summary judgment in that case based on the identical statute of limitations defense raised by the Smith Firms in this case, citing § 516.190, RSMo, and CAL.CIV.PROC. CODE § 340.6(a). The motion for summary judgment in this case, which involved the Ferrellgas claim, mentioned that the Smith Firms informed Ferrellgas of that summary judgment ruling prior to the refiling of this lawsuit in 2001 by Ferrellgas.
Ferrellgas argued, in response to the summary judgment motion, that the Smith Firms waived the statute of limitations defense by failing to plead it with particularity in their answers. It also argued that the defense was meritless because the causes of action accrued in Missouri, not California.
The Smith Firms then moved for leave to amend their answers, pursuant to Rule 55.33(a), to include citations to the specific statutes of limitations they were relying on. The court granted leave to file amended answers. The amended answers included citations to the specific statutes of limitations.
The trial court entered summary judgment in favor of the Smith Firms on the basis of the one-year California statute of limitations for actions against attorneys.
Ferrellgas appeals.
Whether summary judgment is appropriate is a question of law, and, therefore, reviewed de novo. ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). We view the record in the light most favorable to the party against whom judgment was entered and accord that party the benefit of all reasonable inferences. Id. Summary judgment is proper where the movant establishes that there is no genuine dispute as to any material fact and that it is entitled to judgment as a matter of law. Id. at 380; Rule 74.04.
Ferrellgas argues in its first point that the trial court abused its discretion in granting the Smith Firms leave to amend their answers to include citations to the specific statutes of limitations.
In granting leave to amend, the trial court reasoned that Pursuant to Rule 55.33(a), "leave [to amend] shall be freely given when justice so requires." Whether to allow the amendment of a pleading is discretionary with the trial court and its decision will not be disturbed absent an "obvious and palpable abuse of discretion." Kenley v. J.E. Jones Constr. Co., 870 S.W.2d 494, 498 (Mo.App.1994). On review, we look to see whether justice is furthered or subverted by the decision. Id.
Ferrellgas says that justice did not require that leave be granted to amend the pleadings in this case and that doing so actually subverted justice by depriving it of the opportunity to proceed on the merits of its claim. Ferrellgas argues, in essence, that justice does not require leave to amend an answer to include a statute of limitations defense. Ferrellgas argues that it subverts justice to preclude a decision on the merits, and that doing so advances no relevant public policy.
In granting leave to amend a pleading, the court is to consider the hardships to the moving party if the request is denied, the reasons for failure to include the matter in a designated pleading, and the injustice caused the opposing party when the request is granted. Rose v. City of Riverside, 827 S.W.2d 737, 739 (Mo.App. 1992). Ferrellgas contends that it suffers the more severe hardship, because Smith, Gill's mishandling of the Hightower lawsuit caused it to lose over three million dollars. Permitting the amendment effectively allows the wrongdoer to avoid any responsibility for that loss, it says.
We find no "obvious and palpable abuse of discretion" in the trial court's granting leave to amend. Trial courts are not to be stingy in granting leave to amend. See Bohrmann v. Schremp, 666 S.W.2d 30, 32 (Mo.App.1984). The trial court has broad discretion to grant a party leave to amend his answer; it is an abuse of discretion not to grant such leave when justice requires. Rose, 827 S.W.2d at 739. Prejudice is not measured by whether one party or the other would stand to suffer financial loss as a result of the court ruling. Instead, prejudice is measured by whether a party is deprived of a legitimate claim or defense because the motion for leave to amend caught that party by surprise after it had developed its strategy. See Id. In Rose, the court noted that the appellants were well aware of the statute of limitations defense sought to be added by amendment because the respondent raised it in the motion for summary judgment. Id. The court concluded that "[i]t would be an abuse of discretion to refuse to allow the respondent to amend its answer to include a statute of limitations defense" where the plaintiffs were "well aware the defense existed." Id.
The same is true here. As noted by the trial court, Ferrellgas knew from the outset the statute of limitations theory and the applicable statutes. The Smith Firms alleged in their answers that Ferrellgas' cause of action was barred by the applicable statute of limitations of California and Missouri. Prior to refiling its petition, Ferrellgas was aware of the federal district court's ruling granting summary judgment in favor of APU based on the same statutes of limitations that Smith, Gill included in its amendment. There was no surprise and, thus, no prejudice or harm to Ferrellgas in granting leave to amend.
The circuit court did not abuse its discretion in granting leave to amend. Point denied.
Ferrellgas argues, in Point II, that the trial court erred in granting summary judgment on its tort claims based on California's one-year statute of limitations because those claims accrued in Missouri. Thus, Missouri's five-year statute of limitations applies, and the petition was not untimely. Ferrellgas also says the court erred in its finding as to when the claims accrued.
The trial court held that all of Ferrellgas' claims were barred by California's one-year statute of limitations for claims of legal malpractice, section 340.6 of the...
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