Hewitt v. Allen

• Decision Date: 10 April 2002
• Docket Number: No. 35965.,35965.
• Citation: 118 Nev. 216,43 P.3d 345
• Parties: Margret E. HEWITT, Personal Representative of the Estate of Nancy Billhartz, Deceased, Appellant, v. David ALLEN, A Nevada Professional Corporation, D/B/A David Allen and Associates; and David M. Jones, Respondents.
• Court: Nevada Supreme Court

43 P.3d 345

118 Nev. 216

Margret E. HEWITT, Personal Representative of the Estate of Nancy Billhartz, Deceased, Appellant, v. David ALLEN, A Nevada Professional Corporation, D/B/A David Allen and Associates; and David M. Jones, Respondents.

No. 35965.

Supreme Court of Nevada.

April 10, 2002.

Carl M. Hebert and David Hamilton, Reno, for Appellant.

Raleigh Hunt McGarry & Drizin and Bert E. Wuester Jr., Las Vegas, for Respondents.

BEFORE THE COURT EN BANC.

OPINION

By the Court, BECKER, J.:

This appeal asks whether an action for litigation legal malpractice is automatically deemed abandoned when the plaintiff voluntarily dismisses the appeal taken from the underlying civil action where the legal malpractice is alleged to have occurred. We conclude that a party does not always abandon his or her right to pursue a claim for litigation legal malpractice when he or she voluntarily dismisses a civil appeal. When the appeal of the underlying action would be fruitless or without merit, the voluntary dismissal of the appeal does not constitute abandonment of the litigation legal malpractice action. We therefore conclude that the district court erred in granting summary judgment on behalf of David Allen and Associates.¹ Accordingly, we reverse the order of the district court and remand for further proceedings consistent with this opinion.

FACTS

On May 9, 1995, a stolen vehicle operated by a minor without a license sped away from a gas station in Utah. The Utah State Highway Patrol (USHP) set up a roadblock to apprehend the speeding felon. With the stolen vehicle in sight, USHP allowed Nancy Billhartz² to pass through the roadblock. The road was closed behind Billhartz. The stolen vehicle hit the roadblock at a speed in excess of 100 miles per hour, causing the driver to lose control and strike Billhartz's vehicle from the rear. Billhartz suffered multiple injuries as a result of the accident.

Billhartz retained respondent David Allen and Associates (DAA) to represent her in the personal injury action. In turn, DAA retained local counsel in Cedar City, Utah (Utah Counsel), to file a complaint for personal injuries. Utah Counsel filed a complaint that named the following government entities as defendants: (1) the State of Utah, Department of Public Safety (DPS); (2) Millard County, Utah; (3) Utah County, Utah; and (4) Beaver County, Utah.

DPS moved to dismiss Billhartz's complaint for failure to comply with the Utah notice of claim statutes. Under the Utah Governmental Immunity Act, Billhartz was required to file notice of her claim with DPS.³ The notice needed to contain certain information.⁴ The Utah trial court granted the motion, finding that the notices sent to DPS did not contain all of the required information. Subsequently, the remaining governmental entities were also dismissed for the same reason. Billhartz appealed.

While the Utah appeal was pending, Billhartz filed a complaint in Nevada for legal malpractice against DAA, alleging professional negligence and breach of contract. Billhartz asserted that the notices DAA sent to the governmental agencies were fatally deficient, resulting in the dismissal of her Utah causes of action. Billhartz maintained that Utah courts require strict compliance with the notice requirements, even in instances where the government has actual notice.⁵ Billhartz contends that the Utah trial court had no choice and was required to dismiss the claims against the governmental entities as a result of DAA's malpractice.

On November 23, 1999, Billhartz and Utah counsel attended mandatory mediation. The State of Utah offered to release its claims for costs and attorney fees in return for a full dismissal of the Utah appeal, with prejudice. Utah counsel recommended accepting this offer and communicated his recommendation to DAA and Billhartz. Utah counsel opined that there was no basis, under Utah law, for pursuing an appeal. Based upon this recommendation, Billhartz voluntarily dismissed the appeal, as it would have been futile under Utah law.⁶

When Billhartz dismissed the Utah appeal, DAA filed a motion to dismiss the malpractice action, alleging that Billhartz was required to prosecute her appeal in the Utah Court of Appeals to a conclusion prior to filing a legal malpractice claim. According to DAA, because she had voluntarily dismissed the Utah appeal, Billhartz had abandoned her malpractice claim. The district court granted DAA's motion to dismiss, treating the motion as one for summary judgment. In its decision, the district court stated:

Unfortunately, [Billhartz] deprived the Utah appellate court of the opportunity to rule on the matter and effectively abandoned her cause of action when she stipulated to the dismissal of the Utah appeal. The Court finds no genuine issue of material fact on such point.

The district court also found that the opinion of Utah counsel was insufficient to establish that pursuing the appeal would have been futile.

Billhartz timely appealed, asserting that the district court erred by ruling, as a matter of law, that she abandoned her malpractice claim by voluntarily dismissing the appeal in her underlying Utah action.

DISCUSSION

Summary judgment should be entered where there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.⁷ A genuine issue of material fact exists where the evidence is such that "a reasonable jury could return a verdict for the non-moving party."⁸ The proof offered to the lower court must be construed in a light most favorable to the non-moving party.⁹ This court conducts a de novo review of an order granting summary judgment.¹⁰ On appeal, this court must determine whether the district court erred in concluding that an absence of genuine issues of material fact justified the granting of summary judgment.¹¹

This court has concluded that legal malpractice is "premised upon an attorney-client relationship, a duty owed to the client by the attorney, breach of that duty, and the breach as proximate cause of the client's damages."¹² As a general rule, a legal malpractice action does not accrue until the plaintiff knows, or should know, all the facts relevant to the foregoing elements and damage has been sustained.¹³ In the context of litigation malpractice, that is, legal malpractice committed in the representation of a party to a lawsuit, damages do not begin to accrue until the underlying legal action has been resolved.¹⁴ Thus, when the malpractice is alleged to have caused an adverse ruling in an underlying action, the malpractice action does not accrue while an appeal from the adverse ruling is pending. The general rule regarding legal malpractice actions and appeals is based on the rationale that "[a]pparent damage may vanish with successful prosecution of an appeal and ultimate vindication of an attorney's conduct by an appellate court."¹⁵

Billhartz argues that the general rule should not apply when litigants voluntarily dismiss their appeals after determining that appeal is futile. Billhartz contends that Semenza v. Nevada Medical Liability Insurance Co.¹⁶ does not apply to cases involving the voluntary dismissal of a futile appeal. We agree. In Semenza, we concluded that when malpractice is predicated upon actions involving the handling of litigation, a cause of action for malpractice could not accrue until the "underlying cause of action has been finally resolved."¹⁷ A voluntary dismissal is a final resolution. Thus, Semenza is not controlling.

DAA argues that we should establish a bright-line rule requiring litigants who file appeals in the underlying action to pursue those appeals to their conclusion before proceeding with a legal malpractice action. DAA asserts that this rule will promote judicial economy and prevent the remote or speculative litigation discussed in Semenza. DAA contends that once an appeal is filed, a court should make the final determination about the validity of the appeal, thus alleviating the speculation that the damages were proximately caused by judicial error rather than attorney misconduct.

Billhartz contends that we should treat a decision to voluntarily dismiss an appeal in the same way as a decision not to pursue an appeal. If an appeal would be a futile gesture, that is, the appeal would most likely be denied, then litigants should be able to forgo an appeal, or dismiss a pending appeal, without abandoning their legal malpractice actions. We agree.

In cases where no appeal from an adverse ruling was filed, the defendants in the legal malpractice action are able to assert, as an affirmative defense, that the proximate cause of the damages was not the attorney's negligence, but judicial error that could have been corrected on appeal. This issue is commonly raised under theories of abandonment or failure to mitigate damages, but can also be asserted as part of a claim that the malpractice action is premature.¹⁸ Moreover, because the issue is raised in the context of an affirmative defense, the attorney defendant has the burden of proof to establish that an appeal would have been successful.¹⁹ Finally, whether an appeal is likely to succeed is a question of law to be determined by the trial court.²⁰ We believe the same reasoning should apply to the voluntary dismissal of an appeal.

We concur with the analysis of this issue set forth by the Florida Court of Appeals in Eastman v. Flor-Ohio, Ltd.²¹ That court concluded, as a matter of law, that a voluntary dismissal of a pending appeal, following a settlement agreement, did not bar the plaintiff's right to pursue a legal malpractice action.

The facts of Eastman are very similar to the facts of the case at hand. In Eastman, a mobile home park owner hired a law firm to effectuate rental rate increases to the homeowners on its lots.²² However, the notices sent by the firm failed to comply with Florida law.²³ The homeowners brought suit, and the court entered summary judgment in...