Greene v. Morgan, Theeler, Cogley & Petersen, 20059

• Decision Date: 18 February 1998
• Docket Number: No. 20059,20059
• Citation: 1998 SD 16,575 N.W.2d 457
• Court: South Dakota Supreme Court
• Parties: Terry R. GREENE, Plaintiff and Appellant, v. MORGAN, THEELER, COGLEY & PETERSEN, Lawyers, and Jack Theeler, Defendants and Appellees.

Page 457

575 N.W.2d 457

1998 SD 16

Terry R. GREENE, Plaintiff and Appellant, v. MORGAN, THEELER, COGLEY & PETERSEN, Lawyers, and Jack Theeler, Defendants and Appellees.

No. 20059.

Supreme Court of South Dakota.

Argued Dec. 4, 1997.

Decided Feb. 18, 1998.

Timothy L. James of James & Associates, Yankton, for plaintiff and appellant.

William Fuller of Woods, Fuller, Schultz & Smith, Sioux Falls, for defendants and appellees.

MILLER, Chief Justice.

¶1 In 1988, attorney Jack Theeler prepared an antenuptial agreement for Terry Greene. The agreement, among other things, purported to waive any right that Greene's fiancee would have to alimony should the couple ever divorce. When the couple ultimately divorced in 1993, the trial court awarded alimony to Greene's wife, ruling that the part of the agreement waiving alimony was invalid under South Dakota law. Greene brought this legal malpractice action against Theeler and his law firm. The trial court granted summary judgment to Theeler and the law firm, holding that the three-year statute of limitations had run on the malpractice claim. Greene appeals. We affirm in part and reverse and remand in part.

FACTS

¶2 Terry Greene was the sole shareholder of Terry's Propane, Inc. of Mitchell, South Dakota. After the dissolution of his first marriage in 1985, he began to discuss marriage with his soon-to-be second wife, Pamela. They originally planned to marry in 1987, and met with attorney Theeler in the fall of 1987 to prepare an antenuptial agreement. Greene had told Pamela that he would not get married unless they executed such an agreement as a means of protecting his business and personal assets. Theeler had represented Greene previously when Greene was setting up his business. He also represented Greene during his divorce from his first wife and in other incidental legal matters. ¹ For undisclosed reasons, the marriage was postponed until June 25, 1988. Two days prior to the marriage, Greene and Pamela returned to Theeler to finalize the agreement. Among other things, it provided: "Each of the parties do hereby further waive and release all rights including, but not limited to, ... alimony, support or otherwise[.]"

¶3 Following the marriage, Theeler continued to represent Greene by providing estate planning and asset protection advice. In 1993 Pamela initiated a divorce action. Theeler initially represented Greene in that action, but withdrew when it became necessary for him to testify as a witness. The divorce court properly determined the portion of the agreement that waived alimony and support was invalid because it was violative of the public policy of our state as held in Connolly v. Connolly, 270 N.W.2d 44, 46 (S.D.1978). Theeler even later testified in his deposition that at the time the agreement was signed he knew the case law in South Dakota prohibited alimony waivers in antenuptial agreements. Thus, Pamela was awarded alimony payments of $1,000 per month for twenty-four months.

¶4 Greene then instituted an action for legal malpractice against Theeler and his law firm of Morgan, Theeler, Cogley & Peterson, Lawyers. Theeler and the firm made a motion for summary judgment, asserting the three-year statute of limitations had run on Greene's legal malpractice claim. The trial court granted summary judgment.

¶5 Greene appeals, claiming the granting of summary judgment was inappropriate because the statute of limitations was tolled either by the continuous representation doctrine, or fraudulent concealment.

STANDARD OF REVIEW

¶6 The standard under which we review summary judgment is well established:

"Summary judgment shall be granted 'if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.' We will affirm only when there are no genuine issues of material fact and the legal questions have been correctly decided. All reasonable inferences drawn from the facts must be viewed in favor of the nonmoving party. The burden is on the moving party to clearly show an absence of any genuine issue of material fact and an entitlement to judgment as a matter of law. On the other hand, '[t]he party opposing a motion for summary judgment must be diligent in resisting the motion, and mere general allegations and denials which do not set forth specific facts will not prevent issuance of a judgment.' "

Schultz v. Dew, 1997 SD 72, p 11, 564 N.W.2d 320, 322 (quoting Ward v. Lange, 1996 SD 113, p 10, 553 N.W.2d 246, 249). Normally, statute of limitations questions are to be resolved by the jury. Schoenrock v. Tappe, 419 N.W.2d 197, 200 (S.D.1988). Summary judgment is proper on statute of limitations issues only when application of the law is in question, and not when there are remaining issues of material fact. Kurylas, Inc. v. Bradsky, 452 N.W.2d 111, 113 (S.D.1990).

STATUTE OF LIMITATIONS FOR LEGAL MALPRACTICE

¶7 The statute of limitations for legal malpractice actions in South Dakota is found in SDCL 15-2-14.2, which provides:

An action against a licensed attorney, his agent or employee, for malpractice, error, mistake or omission, whether based upon contract or tort, can be commenced only within three years after the alleged malpractice, error, mistake or omission shall have occurred. This section shall be prospective in application.

We have often stated that, absent fraudulent concealment of an attorney's negligent advice, the statute of limitations begins to run from the "occurrence" of the alleged negligence, and not from when the negligence is discovered or the consequential damages are imposed. Keegan v. First Bank of Sioux Falls, 519 N.W.2d 607, 612 (S.D.1994); Kurylas, 452 N.W.2d at 114; Schoenrock, 419 N.W.2d at 199; Hoffman v. Johnson, 374 N.W.2d 117, 122 (S.D.1985).

¶8 Greene's cause of action against Theeler began to run in 1988 when the agreement was signed. Greene did not serve Theeler with the summons and complaint in his malpractice suit until 1996, well after the three-year statute of limitations had run. Since the statute of limitations had run, the granting of summary judgment is presumed correct, and the burden is thus on Greene to establish the existence of material facts to show the statute of limitations was somehow tolled. See Keegan, 519 N.W.2d at 615 (citing Kurylas, 452 N.W.2d at 117).

¶9 Under our "occurrence rule" for legal malpractice actions, the three-year statute of limitations "will be tolled until the cause of action is discovered or might have been discovered, if there is fraudulent concealment of the cause of action." Glad v. Gunderson, Farrar, Aldrich & DeMersseman, 378 N.W.2d 680, 682 (S.D.1985) (citing Holy Cross Parish v. Huether, 308 N.W.2d 575, 577 (S.D.1981); Hinkle v. Hargens, 76 S.D. 520, 524-25, 81 N.W.2d 888, 890-91 (1957)). We have stated the general rule as to fraudulent concealment and the statute of limitations as:

[I]n summary judgment proceedings where the defendant asserts the statute of limitations as a bar to the action, and presumptively establishes the defense by showing the case was instituted beyond the statutory period, the burden then shifts to the plaintiff to establish the existence of material facts in avoidance of the statute of limitations, e.g., fraudulent concealment of the cause of action.

Glad, 378 N.W.2d at 682 (citations omitted); see also Keegan, 519 N.W.2d at 615; Kurylas, 452 N.W.2d at 117.

¶10 We have also consistently held that the continuous representation doctrine, adopted from the continuous treatment doctrine in medical malpractice cases, can likewise serve to toll the statute of limitations for legal malpractice. Keegan, 519 N.W.2d at 613; Kurylas, 452 N.W.2d at 115; Schoenrock, 419 N.W.2d at 200.

DECISION

¶11 I. Continuous representation doctrine.

¶12 Greene argues the grant of summary judgment was improper because material issues of fact exist as to whether the statute of limitations was tolled under the continuous representation doctrine. We disagree.

¶13 The continuous representation doctrine in a legal malpractice action applies when there is a:

[C]lear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the attorney[.] This relationship is one which is not sporadic but developing and involves a continuity of the professional services from which the alleged malpractice stems. Furthermore, the application of this doctrine should only be applied where the professional's involvement after the alleged malpractice is for the performance of the same or related services and is not merely continuity of a general professional relationship.

Keegan, 519 N.W.2d at 613 (citations and internal quotations omitted) (emphasis added). The continuous representation itself must occur before the three-year statute of limitations has run, to effectively toll it. Id. (citing Schoenrock, 419 N.W.2d at 201-02).

¶14 Theeler does not really argue with the claim that, during the divorce proceedings in 1993, he represented Greene with respect to the agreement. Greene claims that during that time he was constantly reassured by Theeler that the agreement was enforceable and Theeler made attempts to enforce the agreement. Rather, Theeler argues that, even assuming the divorce proceedings in 1993 constituted continuous representation as to the agreement, such was too late to revive the cause of action. This assertion is correct. See Schoenrock, 419 N.W.2d at 201. Therefore, our analysis must focus on the time period between the signing of the agreement in 1988 and the subsequent divorce proceedings in 1993.

¶15 Greene points to instances in 1990 and 1991 in which he engaged in discussions with Theeler concerning estate planning and asset protection. He claims the agreement was a small part of his overall estate planning and asset protection scheme. Theeler, on...