Klinger v. Kightly
| Decision Date | 22 March 1990 |
| Docket Number | No. 880003,880003 |
| Parties | Robert B. KLINGER and Karol J. Klinger, Plaintiffs and Appellees, v. Eugene E. KIGHTLY, Helen L. Kightly, Harry D. Kreis, Peggy R. Kreis Barnett, United Farm Agency, Inc., and Gerald W. Wilkerson, Defendants and Appellants. Eugene E. KIGHTLY, Helen L. Kightly, Harry D. Kreis, Peggy R. Kreis Barnett, Third-Party Plaintiffs, v. Glen H. CALDER and John Doe Wilson, individually and dba Wilson & Calder, Third-Party Defendants and Appellees. |
| Court | Utah Supreme Court |
Ephraim H. Frankhauser, Salt Lake City, for defendants and appellants.
Rick J. Sutherland, Robert F. Babcock, Salt Lake City, for plaintiffs and appellees.
This case is on appeal from the Seventh District Court, Duchesne County. The trial court found for plaintiffs and rescinded a land purchase contract based upon mutual mistake. Defendants were allowed to bring a third-party complaint against the surveyor of the property, Glen H. Calder, John Doe Wilson, and Wilson & Calder (hereinafter "Calder"), who were eventually granted a summary judgment dismissal on the basis that the statute of limitation
had run for a claim against the surveyor of the land pursuant to Utah Code Ann. § 78-12-25(2) (1987). We reverse the trial court's ruling of summary judgment with regard to the Kightlys' third-party complaint against Calder.
In June 1971, defendants purchased a parcel of unimproved real property located in Duchesne County, Utah, from Strawberry River Estates (hereinafter "Strawberry") by uniform real estate contract. After the purchase, defendants hired Wilson & Calder to survey the property, and on May 15, 1972, defendants received a certificate of survey signed by Glen H. Calder, certifying the location and dimensions of the property and that there were no encroachments on it.
Defendants used the property for camping and other recreational purposes between 1971 and 1983. On July 23, 1983, they sold the property to the Klingers by a warranty deed containing the description in the warranty deed from Strawberry to defendants and confirmed in the certificate of survey obtained from Calder.
In February 1985, the Klingers discovered a discrepancy in the boundaries of the property. The Klingers brought suit against defendants for fraud and misrepresentation but later amended their complaint to a cause of action for mutual mistake. Defendants were granted leave from the trial court to file a third-party complaint against Calder for negligence in conducting the survey.
The trial court granted a rescission of the sale contract from defendants to the Klingers and a summary judgment dismissal to Calder on the basis that the statute of limitation had run against defendants' third-party cause of action pursuant to Utah Code Ann. § 78-12-25(2) (1987). Defendants obtained a settlement with the Klingers subsequent to trial and before appeal; therefore, the only issues on appeal are (1) whether the trial court properly used summary judgment to dismiss the third-party claim, and (2) whether the trial court should have applied the discovery rule to toll the statute of limitation with regard to defendants' third-party claim against Calder.
Defendants' first contention is that the trial court erroneously granted summary judgment to Calder because defendants' reliance upon the "discovery rule" raised an issue of fact that could not properly be disposed of through summary judgment. Summary judgment is appropriate only when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. 1 The issue is whether the application of the discovery rule is a question of law or of fact.
The discovery rule determines when a cause of action accrues in certain actions. Under the discovery rule, a cause of action does not accrue and the statute of limitation does not begin to run until the plaintiff learns of or in the exercise of reasonable diligence should have learned of the facts which give rise to the cause of action. 2 The discovery rule functions as an exception to the normal application of a statute of limitation. 3 Whether the discovery rule applies to a cause of action is, like the statute of limitation, a question of law, not of fact.
Defendants' third-party complaint states a cause of action for "negligence and failure of third-party defendants to properly survey and locate the subject property for survey." Defendants assert that their complaint states a cause of action in negligence, and yet they cite Utah Code Ann. § 78-12-26(3) (1987), which states, "Within three years: ... (3) an action for relief on the ground of fraud or mistake; except that the cause of action in such case does not accrue until the discovery by the aggrieved party of the facts constituting the fraud or mistake."
Section 78-12-26(3) and actions alleging fraud or mistake are usually based on a contract, not a negligence, cause of action. Indeed, Utah case law reveals that this section has been applied only to the reformation of contracts, 5 not to actions in negligence. We hold that section 78-12-26(3) is inapplicable to defendants' cause of action.
We note that Utah recognizes the theory of "negligent misrepresentation" with regard to surveyors. 6 No matter how the cause of action is characterized, whether in tort or contract, it would lapse under any other Utah statute of limitation without application of the discovery rule.
Defendants' second contention is that the trial court erred in refusing to apply the discovery rule to the statute of limitation applicable to their cause of action for surveyor negligence. 7 Because the issue of whether the discovery rule applies to toll the statute of limitation is a question of law, we need show no deference to the trial court's ruling on appeal, but we review it for correctness. 8
Observing how the discovery rule is applied nationally to the issue of surveyor negligence or breach of contract does not indicate any dispositive national trend. A number of jurisdictions have applied the discovery rule to surveyor negligence, 9 while others have rejected it. 10 Legislative enactments are even more widespread. 11
Some arguments in favor of applying the discovery rule to cases of surveyor negligence include the following: (1) an innocent reliant party should not carry the burden of a surveyor's professional mistakes; 12 (2) "recovery ... by a reliant user whose ultimate use was foreseeable will promote cautionary techiques [sic] among surveyors"; 13 (3) ; 14 (4) it is illogical to require the plaintiff to hire two or three surveyors to assure that the first survey is correct; 15 (5) strict application of the statute of limitation would be unjust; 16 and (6) the plaintiff lacks the means or ability to ascertain that a wrong has been committed. 17
Arguments in opposition to application of the discovery rule in surveyor negligence cases include (1) "the onerousness of potential liability continuing throughout one's professional life, the prejudice wrought by the passage of time not only in terms of defending against claims but also in factually ascertaining the true cause or causes of injuries"; 18 and (2) "mere ignorance of the existence of a cause of action does not prevent the running of the statute of limitations." 19
Because compelling arguments exist on both sides regarding the applicability or inapplicability of the discovery rule, we must seek a way to balance the interests of each party. In Myers, we listed three circumstances under which the discovery rule should be applied and we adopted a balancing test for application of the rule. The three circumstances set out in Myers whereby this Court will apply the discovery rule are where (1) the legislature has adopted the discovery rule by statute; (2) there is proof of concealment or misleading by the defendant; and (3) application of the general statute of limitation rule would be irrational or unjust. 20 Defendants do not assert either of the first two parts of the test, but they do seek an equitable ruling as to whether the application of the discovery rule would prevent an irrational or unjust result.
In Myers, we applied the balancing test to evaluate whether the application of the discovery rule would be irrational or unjust. The plaintiffs in Myers were guardians of a minor who was killed in an automobile accident. However, they were unable to discover that the victim was their ward until after the statute of limitation for wrongful death had run. We held that the discovery rule should be applied where "[t]he hardship the statute of limitations would impose on the plaintiff in the circumstances of [the] case outweighed any prejudice to the defendant from difficulties of proof caused by the passage of time." 21 This balancing test is a question of law. 22
Applying the balancing test to the present case, we find the obvious prejudice to defendants is that without application of the discovery rule, their cause of action is completely barred regardless of whether their complaint is in contract or in tort. This is so despite the fact...
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