Flynt v. Brownfield, Bowen & Bally

• Decision Date: 14 August 1989
• Docket Number: No. 88-3597,88-3597
• Citation: 882 F.2d 1048
• Parties: Larry C. FLYNT; Hustler Magazine, Inc.; L.F.P., Inc., Plaintiffs-Appellants, v. BROWNFIELD, BOWEN & BALLY; C.W. Brownfield; Laurence E. Sturtz, Defendants-Appellees, v. David L. KAHN, Third-Party Defendant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1048

882 F.2d 1048

58 USLW 2209

Larry C. FLYNT; Hustler Magazine, Inc.; L.F.P., Inc., Plaintiffs-Appellants, v. BROWNFIELD, BOWEN & BALLY; C.W. Brownfield; Laurence E.

Sturtz, Defendants-Appellees, v. David L. KAHN, Third-Party Defendant.

No. 88-3597.

United States Court of Appeals, Sixth Circuit.

Argued March 23, 1989.

Decided Aug. 14, 1989.

Lynn L. Moore, Burt Fulton (argued), Virginia L. Reichard, Gallagher, Sharp, Fulton & Norman, Cleveland, Ohio, for plaintiffs-appellants and third-party defendant.

David J. Young, Murphy, Young & Smith, Columbus, Ohio, James S. Savage, III (argued), Columbus, Ohio, for defendants-appellees.

Before MARTIN, KRUPANSKY, and MILBURN, Circuit Judges.

BOYCE F. MARTIN, Jr., Circuit Judge.

Larry Flynt, Hustler Magazine, Inc. and L.F.P., Inc. brought this diversity action for legal malpractice against the law firm of Brownfield, Bowen & Bally and two of the firm's attorneys, C. William Brownfield and Laurence E. Sturtz. The district court granted the defendants' motion for summary judgment on the ground that the plaintiffs' claims were barred by the applicable Ohio statute of limitations. We affirm the decision of the district court.

I.

In May 1983, Flynt, Hustler and L.F.P. filed this legal malpractice diversity action against the Brownfield firm, Brownfield and Sturtz in federal district court for the Southern District of Ohio. The current action arose from an earlier lawsuit, Guccione v. Hustler Magazine, Inc., No. 77CV-04-1692 (C.P. Franklin Co. 1980), in which the Brownfield firm and its attorneys, Brownfield and Sturtz, represented Flynt and Hustler Magazine, who were defendants in Guccione. Following a jury trial in February 1980, the plaintiffs in Guccione obtained a $40 million award against Flynt and Hustler for libel and invasion of privacy. The plaintiffs accepted a remittitur and the amount of damages was subsequently reduced to approximately $4 million. On October 8, 1981, the Franklin County Court of Appeals affirmed the trial court's finding of liability in Guccione but reversed the award of damages. Guccione v. Hustler Magazine, Inc., No. 80AP-375, 1981 WL 3516 (10th Dist.Ct.App.1981). The Guccione case was remanded to the Franklin County Court of Common Pleas for a retrial on the issue of damages; the retrial has not yet taken place.

Beginning in October 1981, David L. Kahn was employed by Hustler and L.F.P. as General Counsel, and he became dissatisfied with the legal representation provided to Hustler and L.F.P. by the Brownfield firm in the Guccione case. From November 1981 through January 1982, Kahn analyzed the Ohio appellate court opinion in Guccione, reviewed relevant documents in the case, did a significant amount of independent legal research, and discussed the case and the quality of representation provided by the Brownfield firm with several outside attorneys. In his deposition, Kahn stated that, during the period from November 1981 through February 1982, he had "pretty much" concluded that the Brownfield firm had committed malpractice in the Guccione case, although he did not reach the "final conclusion" that the Brownfield firm had committed malpractice until he had discussions with another attorney, John Duffey, in November or December of 1982.

Defendant Laurence Sturtz, a partner with the Brownfield firm, left the firm on January 22, 1982. Sturtz also notified Flynt and Hustler that he would not perform legal services for them after January 22.

On February 16, 1982, the Brownfield firm advised Flynt in a letter signed by C. William Brownfield that the firm would no longer represent L.F.P. or Flynt personally from that day forward. Brownfield did state in the letter that the firm would file the notices and applications for certiorari in the pending Guccione case. On February 23, 1982, Brownfield also notified the Ohio state court personnel that the Brownfield firm would no longer represent L.F.P. or Hustler in the Guccione case, but indicated that he would not file a formal entry of withdrawal until new counsel had been designated.

In response to these actions by the Brownfield firm, Kahn declared in a letter to Brownfield, dated February 23, 1982, that legal action would be commenced against the firm for any damages suffered by L.F.P. as a result of the firm's withdrawal from the Guccione case. In a letter agreement dated March 12, 1982, the Brownfield firm entered into a limited employment relationship with L.F.P., Hustler and Flynt. The firm agreed that it would file the certiorari petition and the appellate briefs in an appeal of a denial of two specific motions and would complete the appellate process in Guccione. The firm also agreed to provide "whatever other reasonable legal services" that L.F.P.'s new counsel might request during any retrial of the Guccione case. The Brownfield firm performed the services for L.F.P. specified in the letter agreement from February 1982 through September 1982.

In June 1982, Kahn met again with John Duffey. On September 20, 1982, L.F.P. notified Brownfield and the Brownfield firm that Duffey and Alan Isaacman and their respective law firms had been retained as L.F.P.'s counsel of record in the Guccione case.

II.

On May 24, 1983, Flynt, Hustler and L.F.P. filed this diversity action for legal malpractice against the Brownfield firm, Brownfield and Sturtz, alleging that the firm and the individual attorneys provided negligent representation in the Guccione trial and appeal in 1980 and 1981. The defendants subsequently moved for summary judgment on the ground that the action was barred by the applicable Ohio law, which provides a one-year statute of limitations for malpractice claims. Ohio Revised Code Sec. 2305.11(A). According to Ohio law controlling at the time the defendants' motion for summary judgment was filed, a cause of action for legal malpractice accrued and the statute of limitations began to run when the client discovered, or, in the exercise of reasonable care and diligence should have discovered, the resulting injury. Skidmore & Hall v. Rottman, 5 Ohio St.3d 210, 450 N.E.2d 684 (1983). In their motion, the defendants argued that the plaintiffs did discover or should have discovered the alleged malpractice by late 1981, well over one year before the malpractice action was filed in May 1983.

In its order of December 5, 1984, the district court concluded that the "discovery rule" announced in Skidmore on June 29, 1983 did not apply retroactively to bar the plaintiffs' malpractice action, which had been filed in May 1983. Instead, the district court found this action to be controlled by Keaton Co. v. Kolby, 27 Ohio St.2d 234, 271 N.E.2d 772 (1971), which was in effect at the time this action was filed but was later specifically overruled by Skidmore. Under Keaton, a cause of action for malpractice accrued, at the latest, when the attorney-client relationship terminated. Applying Keaton to this case, the district court assumed that the attorney-client relationship between the parties terminated on September 20, 1982, when L.F.P. informed the Brownfield firm by letter that other attorneys had been retained as L.F.P.'s counsel of record. The district court accordingly concluded that the plaintiffs' malpractice claims were not barred by the one-year statute of limitations.

In 1987, the defendants filed two separate motions for summary judgment, again contending that the malpractice action was barred by the one-year statute of limitations. In its March 29, 1988 order, the district court refused to reconsider the retroactive application of the Skidmore discovery rule, but did conclude that its prior assumption regarding the date of the termination of the parties' attorney-client relationship was not supported by the newly-substantiated record. Specifically, the district court found that: (1) by leaving the Brownfield firm on January 22, 1982, Sturtz terminated his professional relationship with the plaintiffs as of that date, over one year before this action was filed; (2) Brownfield and the Brownfield firm terminated their attorney-client relationship with the plaintiffs by letter on February 16, 1982, over one year before this action was filed; and (3) the parties' relationship arising out of the March 12, 1982 letter agreement was separate and distinct from the parties' attorney-client relationship existing prior to February 16, and all of the malpractice claims against defendants arose from the defendants' handling of the Guccione trial and appeal, which occurred during the parties' attorney-client relationship before February 16, 1982. Accordingly, the district court concluded that, for purposes of the statute of limitations, all of the plaintiffs' claims accrued on February 16, 1982, when the attorney-client relationship terminated. Because the plaintiffs' malpractice claims were not asserted until May 1983, the district court held the claims barred by the one-year statute of limitations and granted summary judgment to defendants.

III.

On appeal, the parties agree that Ohio law governs the resolution of this case. Based upon our interpretation of the applicable Ohio law and our review of the findings of the district court, we conclude that the district court did not err in granting summary judgment to defendants.

In their appeal, the plaintiffs argue that, under Ohio law in effect when this action was filed in May 1983, the district court erred by granting summary judgment to defendants on the ground that the statute of limitations had run because there is a genuine issue of material fact as to when the parties' attorney-client relationship terminated. Specifically, the plaintiffs contend that, pursuant to the letter agreement of March 12, 1982, the defendants continued to perform legal services for plaintiffs until September 20, 1982, when defendants were replaced as counsel of record. According to plaintiffs, the attorney-client relationship between the parties did not...