Hennekens v. Hoerl

• Decision Date: 20 February 1991
• Docket Number: No. 89-1508,89-1508
• Citation: 465 N.W.2d 812,160 Wis.2d 144
• Parties: Loren HENNEKENS, Plaintiff-Appellant, v. Donald R. HOERL and St. Paul Fire & Marine Insurance Company, Defendants-Respondents.
• Court: Wisconsin Supreme Court

Page 812

465 N.W.2d 812

160 Wis.2d 144

Loren HENNEKENS, Plaintiff-Appellant, v. Donald R. HOERL and St. Paul Fire & Marine Insurance Company, Defendants-Respondents.

No. 89-1508.

Supreme Court of Wisconsin.

Argued Oct. 5, 1990.

Decided Feb. 20, 1991.

David W. Neeb (argued), and Davis & Kuelthau, S.C., Milwaukee, for plaintiff-appellant.

Douglas J. Klingberg (argued), Steven M. Anderson and Ruder, Ware & Michler, S.C., Wausau, for defendants-respondents.

CECI, Justice.

This case is before the court on certification from the court of appeals, pursuant to sec. (Rule) 809.61, Stats. The plaintiff, Loren Hennekens (Hennekens), commenced an action for legal malpractice against the defendant, Donald R. Hoerl (Hoerl), and his malpractice insurer, St. Paul Fire & Marine Insurance Company (St. Paul), alleging that Hoerl negligently failed to insert a financing contingency clause in a land purchase agreement.

Hennekens appeals from a judgment of the circuit court for Wood County, John V. Finn, Circuit Judge. The circuit court granted summary judgment in favor of Hoerl and St. Paul (collectively "the defendants"), dismissing the complaint filed against them. In granting summary judgment, the court ruled that the statute of limitations applicable to the claim Hennekens made against the defendants had run prior to the time Hennekens commenced the action. The court further held that the second ground advanced by the defendants for summary judgment, that Hennekens had suffered no actual damage, was without merit. ¹

There are two issues raised by this appeal. The first issue is when Hennekens suffered actual damage. The second issue is whether Hennekens knew or, in the exercise of reasonable diligence, should have known of his actual damage more than six years prior to the time he commenced this action. ²

We hold that Hennekens suffered actual damage to his legal rights and interests on August 16, 1981, when he remained liable on the promissory note even though he could not receive the land. We also hold that Hennekens had sufficient notice as a matter of law of the damage to his legal rights and interests on October 13, 1981, when the seller's attorney threatened foreclosure on the note and mortgage by letter. We further hold that Hennekens' claim is barred by the statute of limitations as a matter of law because it was not commenced within six years of when it accrued: October 13, 1981. Accordingly, we affirm the judgment of the circuit court.

The facts of this case follow. The facts relevant to this appeal are not in dispute. ³ On July 17, 1981, Hennekens entered into a land purchase agreement. Hoerl represented Hennekens in the transaction. Under the agreement, Hennekens agreed to buy the land from one Gene Crotteau (Crotteau), free and clear of all encumbrances, for $225,000.00 and other consideration. Hennekens signed a promissory note for that amount due on or before August 16, 1981, and received a warranty deed subject to existing mortgages, judgments, and unpaid taxes. The note was secured by a mortgage on the property in question.

On the same date, Hennekens signed a separate agreement under which, upon closing of the land transaction, he would make a $14,500.00 payment to Crotteau on both the first and second anniversaries of the date of the agreement. These payments were additional consideration to compensate Crotteau for conducting preliminary studies to determine the suitability of the land in question for use as a sanitary landfill. That agreement stated: "In the event that the sale is not consummated, the property reverts to Crotteau, and this Agreement shall be null and void."

Hennekens did not satisfy the promissory note. On October 13, 1981, Attorney Timothy Doyle wrote to Hennekens on behalf of Crotteau. In that letter, Attorney Doyle stated that Hennekens had not satisfied the note. He further stated:

This payment is now almost two months past due, and you have done nothing to satisfy this obligation. As you well know, Mr. Crotteau's situation with regard to this particular real estate is really delicate. Unless you can pay this obligation in full within the next ten days or two weeks, it is very doubtful that this real estate will be available for your use at all.

In order to protect his own position in this matter, I must recommend that Mr. Crotteau commence a foreclosure action against you on the note and mortgage which you signed. This we will proceed to do if we have not received payment from you by October 27.

The record shows that Attorney Doyle's reference to Crotteau's "really delicate" situation refers to Hennekens' knowledge that there were liens on the property he was buying which Crotteau intended to satisfy with the money Hennekens owed Crotteau.

Hennekens did not satisfy the note by October 27, 1981. However, Crotteau did not immediately commence a foreclosure action against Hennekens. It was not until August 19, 1985, that Crotteau filed an action on the promissory note. In the interim, Thorp Financing Corporation (Thorp) foreclosed on Crotteau's interest in the property in question.

In 1982, Hennekens purchased the property in question from Thorp for $68,700.00. On December 16, 1987, Crotteau obtained a judgment against Hennekens for $210,481.98. That was the amount Hennekens owed on the note, plus pre-judgment interest, and less a credit for what he paid Thorp for the land.

The record shows that Hennekens incurred substantial attorney's fees in defending the action Crotteau brought against him on the promissory note. On August 5, 1988, Hennekens commenced this action against the defendants.

The defendants subsequently brought a motion for summary judgment against Hennekens, arguing that his claim was barred by the statute of limitations and that he did not have a claim for relief because he had not suffered any actual damage. ⁴

The circuit court heard the motion for summary judgment on April 27, 1989. By order entered June 14, 1989, the circuit court granted summary judgment to the defendants, dismissing the complaint filed against them. In granting the motion, the court ruled that Hennekens' claim was barred by the statute of limitations. Hennekens appealed from the judgment of the circuit court, and the court of appeals certified the appeal to this court.

In reviewing the grant of a motion for summary judgment, this court applies the standards set forth in sec. 802.08(2), Stats., in the same manner as the circuit court. Green Spring Farms v. Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816 (1987). When evaluating the propriety of a motion for summary judgment, the court employs a two-step procedure. First, the court examines the pleadings to determine whether a claim for relief has been stated. Second, if a claim for relief has been stated, the court then determines whether there are material issues of fact which preclude the grant of summary judgment. Id. at 314-15, 401 N.W.2d 816. If there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law, a motion for summary judgment should be granted. Section 802.08(2).

The first issue presented by this case is when Hennekens suffered actual damage as a result of Hoerl's alleged negligence. The facts relevant to this issue are undisputed. Furthermore, the parties do not draw competing inferences from the facts relevant to this issue. Accordingly, we must decide whether the defendants were entitled to judgment as a matter of law. Section 802.08(2), Stats.

A claim for relief accrues when "there exists a claim capable of present enforcement, a suable party against whom it may be enforced, and a party who has a present right to enforce it." Barry v. Minahan, 127 Wis. 570, 573, 107 N.W. 488 (1906). ⁵ A tort claim is not "capable of present enforcement" until the plaintiff has suffered actual damage. ⁶ Actual damage is harm ⁷ that has already occurred or is reasonably certain to occur in the future. Actual damage is not the mere possibility of future harm. Meracle v. Children's Serv. Soc., 149 Wis.2d 19, 26-27, 437 N.W.2d 532 (1989).

The trial court found that Hennekens suffered an injury as a result of Hoerl's alleged negligence when he remained liable on the promissory note for $225,000.00 and did not receive the land he bargained for in exchange for the $225,000.00. The defendants agree with the trial court's finding and its conclusion that Hennekens suffered that damage prior to the date of Attorney Doyle's letter: October 13, 1981.

Hennekens contends that he did not suffer actual damage until August 19, 1985, when Crotteau filed suit against him on the promissory note and he incurred attorney's fees in defending against the suit. Hennekens reasons that he was not damaged prior to August 19, 1985, because he had suffered no monetary loss as of that date.

We disagree. Monetary loss is not the only form of actual damage. One form of actual damage is injury to a legal interest or loss of a legal right. Injury to a legal interest or loss of a legal right often occurs without a contemporaneous monetary loss. However, we have held that injury to a legal interest or loss of a legal right constitutes actual damage before such an injury or loss produces monetary loss. See Boehm v. Wheeler, 65 Wis.2d 668, 223 N.W.2d 536 (1974) ⁸.

In Boehm, the plaintiffs brought two claims for legal malpractice against their attorneys. The first claim was for failing to file a patent application within one year after they were advised that the plaintiffs had sold a patentable good and placed it in public use. It was undisputed that such a failure precluded the plaintiffs from obtaining a patent on the good in question. Boehm, 65 Wis.2d at 671-72, 223 N.W.2d 536.

The second claim was for incorrectly advising the plaintiffs that they could allow a third party to inspect an invention they developed without losing any common law trade secret rights in the invention. It was undisputed...