Hall v. Nichols

• Decision Date: 20 December 1990
• Docket Number: No. 19363,19363
• Citation: 400 S.E.2d 901,184 W.Va. 466
• Court: West Virginia Supreme Court
• Parties: Bruce E. HALL and Talheim Village, Inc. v. Pat A. NICHOLS.

Page 901

400 S.E.2d 901

184 W.Va. 466

Bruce E. HALL and Talheim Village, Inc. v. Pat A. NICHOLS.

No. 19363.

Supreme Court of Appeals of West Virginia.

Dec. 20, 1990.

Syllabus by the Court

1. "Unless a complaint in a malpractice action against an attorney sounds only in tort, such action may be brought on contract or in tort and the fact that the statute of limitations bars the tort action does not preclude an action on contract which is not barred by the applicable limitation statute." Syllabus, Harrison v. Casto, 165 W.Va. 787, 271 S.E.2d 774 (1980).

2. Where the act complained of in a legal malpractice action is a breach of specific terms of the contract without reference to the legal duties imposed by law on the attorney/client relationship, the action is contractual in nature. Where the essential claim of the action is a breach of duty imposed by law on the attorney/client relationship and not of the contract itself, the action lies in tort.

3. "Where, in a civil action against an attorney, the plaintiff alleges that he suffered damages by reason of the defendant's negligence in certifying as good and marketable the title to certain real property, the period of the applicable statute of limitations does not commence to run against the plaintiff's cause of action until he learns, or by the exercise of reasonable diligence should have learned, of the defect in the title." Syl. Pt. 2, Family Sav. and Loan, Inc. v. Ciccarello, 157 W.Va. 983, 207 S.E.2d 157 (1974).

Rudolph L. DiTrapano, Joshua I. Barrett, Lonnie C. Simmons, DiTrapano & Jackson, Charleston, for Bruce E. Hall and Talheim Village, Inc.

C. Lynn Oliver, Jackson & Kelly, Charleston, for Pat Nichols.

WORKMAN, Justice:

Appellants Bruce E. Hall and Talheim Village, Inc. ("Talheim") appeal from an adverse decision of the Circuit Court of Tucker County granting summary judgment to appellee Pat Nichols on the grounds that appellants' legal malpractice action was barred by the statute of limitations. Concluding that the circuit court correctly determined that a tort rather than a contract limitations period applied, we affirm the granting of summary judgment to appellee.

Talheim is a condominium complex located on 58.46 acres of property in Canaan Valley that is owned and managed by appellant Hall. In the summer and fall of 1984, Mr. Nichols was retained by appellant Hall to provide legal counsel concerning the development of the condominium complex. Mr. Nichols provided counsel to appellants in connection with several loan transactions involving the National Bank of Davis and the Shenandoah Bank.

To finance the construction of Building B, Talheimer obtained a loan from the National Bank of Davis. The security for this loan was supposed to be a lien on all of the condominium complex property as well as on additional property owned by appellant Hall, who was a guarantor of the note. Mr. Nichols prepared the certificate of title and deed of trust for Building B and represented Talheim at the closing of this loan. In January 1985, appellants discovered that Mr. Nichols' title search had failed to reveal a prior lien on the property that was held by the Shenandoah Bank. This prior lien allegedly created a controversy regarding the entitlement to the proceeds of sales from condominium units and caused certain delays in the sale of four condominium units.

In late January 1986, the National Bank of Davis prepared a complaint seeking an injunction against Talheim to prevent it from renting any of its condominium units. Mr. Nichols signed the complaint as counsel for the National Bank of Davis in the action seeking injunctive relief. Appellants dismissed Mr. Nichols as their counsel on February 4, 1986, after they were served with a copy of the complaint for injunctive relief. Mr. Nichols continued to represent the National Bank of Davis against Talheim until September or October, 1986. As a result of the suit instituted by the National Bank of Davis, Talheim initially filed for bankruptcy. Although Talheim later withdrew from bankruptcy, it ultimately suffered foreclosure which was instituted by the National Bank of Davis.

On April 15, 1988, appellant Hall filed a pro se complaint against Mr. Nichols alleging legal malpractice based on Mr. Nichols' representation of the National Bank of Davis in an action which was directed against Hall--another one of Mr. Nichols' clients. An amended complaint was filed on behalf of both of the appellants in July 1988. The amended complaint alleged that Mr. Nichols negligently failed to have a survey performed in connection with the title search for Building B and that Mr. Nichols improperly represented the National Bank of Davis in the injunctive suit against the appellants. Appellants contend that additional language included in the amended complaint set forth a contractual claim in addition to the previously stated tort cause of action. The circuit court determined that appellants' complaint sounded only in tort and was therefore barred by the applicable statute of limitations.

The sole issue on appeal in this case is whether the trial court erred in granting summary judgment against appellants on the theory that the legal malpractice action sounded only in tort and not in contract. This Court has previously recognized that legal malpractice actions may sound either in tort or in contract. See Harrison v. Casto, 165 W.Va. 787, 789, 271 S.E.2d 774, 775 (1980). In Casto, the alleged malpractice was the attorney's failure to file a malpractice claim against another attorney before the applicable statute of limitations expired. Since the second count in the Casto complaint alleged "that the inaction of the defendant 'constitutes also a breach of the contract of professional employment entered into between the plaintiff and the defendant,' " and because the action would have been barred by the statute of limitations had it been construed as grounded solely in tort, we ruled that:

[u]nless a complaint in a malpractice action against an attorney sounds only in tort, such action may be brought on contract or in tort and the fact that the statute of limitations bars the tort action does not preclude an action on contract which is not barred by the applicable limitation statute.

Id., 165 W.Va. at 789, 271 S.E.2d at 776 and Syllabus.

Appellants cite the fact that paragraph thirteen of the amended complaint includes a reference to a contractual breach as support for their theory that the contract rather than the tort statute of limitations controls this case. See W.Va.Code §§ 55-2-6 (1981) and 55-2-12 (1981). Paragraph thirteen of the complaint reads as follows: "The foregoing conduct of the defendant, Patrick A. Nichols, was willful, wanton, and gross negligence, in reckless disregard of the rights of the plaintiffs and in violation of his contractual, fiduciary and ethical obligations to the plaintiffs as his clients...." Appellants argue that the use of the word "contractual" in paragraph thirteen combined with our decision in Family Sav. and Loan, Inc. v. Ciccarello, 157 W.Va. 983, 207 S.E.2d 157 (1974) required the trial court to apply a contract statute of limitations. The Ciccarello case does indicate that a malpractice action "could have been brought in contract, alleging that the defendant breached the obligations of his employment...." Id., 157 W.Va. at 988, 207 S.E.2d at 160. That case also states, however, that

an examination of the complaint leads us to believe that the plaintiff sought recovery in tort. A contract may have been implied in the complaint when the plaintiff alleged that he engaged the services of the defendant, however, there was no express charge of breach of contract or any further reference to the contract in the complaint. Rather, the plaintiff used words and charges in his complaint that sounded exclusively in tort. He charged that the defendant 'negligently, carelessly, and unskillfully conducted his title examination * * * and did not use proper diligence.' These words connote charges of tort liability. The very basis for the action was the charge of negligence against the defendant.

Id. (emphasis supplied).

Instructive on the issue at hand is the apposite case of Pancake House, Inc. v. Redmond, 239 Kan. 83, 716 P.2d 575 (1986). In that case, Pancake House, a corporation, filed a malpractice action against...