Kotval v. Gridley

• Citation: 698 F.2d 344
• Decision Date: 18 January 1983
• Docket Number: No. 82-1355,82-1355
• Parties: Roy KOTVAL, Appellant, v. John N. GRIDLEY, III, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 344

698 F.2d 344

Roy KOTVAL, Appellant, v. John N. GRIDLEY, III, Appellee.

No. 82-1355.

United States Court of Appeals Eighth Circuit.

Submitted Sept. 13, 1982.

Decided Jan. 18, 1983.

Michael E. Unke, Salem, S.D., for appellant.

Michael L. Luce, Carleton R. Hoy, Davenport, Evans, Hurwitz & Smith, Sioux Falls, S.D., for appellee.

Before LAY, Chief Judge, and BRIGHT and JOHN R. GIBSON, Circuit Judges.

LAY, Chief Judge.

This is an appeal from an order of dismissal of plaintiff's claim for professional malpractice against a South Dakota attorney. The United States District Court for the District of South Dakota, the Honorable John B. Jones presiding, held that the claim was barred by the state statute of limitations. We must respectfully disagree. We reverse and remand for further proceedings.

This malpractice action stems from a suit in state court in South Dakota for damages from injuries sustained by Roy Kotval in a motor vehicle accident. The state court jury returned a verdict for Kotval for $4,500. ¹ Judgment was thus entered for $4,500, and notice of entry of the judgment was given to Kotval's attorney on September 29, 1975. On December 11, 1975, Kotval, dissatisfied with the amount of the verdict, hired another attorney, John N. Gridley III, to appeal the case to the South Dakota Supreme Court. Kotval paid Gridley $500 for the cost of the appeal; unknown to Kotval, however, Gridley failed to perfect the appeal. In December 1976, after the time for appeal had lapsed, Kotval was notified by the clerk of the South Dakota Supreme Court that no appeal had been filed.

In October 1978 Kotval, at that time a resident of Wisconsin, sued Gridley, a resident of South Dakota, for malpractice in the United States District Court for the Western District of Wisconsin. The action was dismissed on jurisdictional grounds; the court found venue was improper because Gridley lacked sufficient contact with that district. ² The attorney handling the suit apparently made no motion under 28 U.S.C. Sec. 1406(a) (1977) to transfer the action to another district court. The United States Court of Appeals for the Seventh Circuit affirmed the dismissal on October 9, 1980. 639 F.2d 785 (7th Cir.1980).

On April 22, 1981, about six months after the dismissal was affirmed, Kotval filed this malpractice action against Gridley in the United States District Court for the District of South Dakota. In 1975, at the time Kotval's cause of action accrued, the limitations period in South Dakota applicable to legal malpractice actions was six years from accrual of the cause of action. S.D.Comp.Laws Ann. Sec. 15-2-13 (1967). The suit was timely filed under this limitations statute. ³

However, the district court applied a three-year statute of limitations that became effective July 1, 1977, and held that Kotval was barred from bringing his claim. The new statute of limitations, S.D.Comp.Laws Ann. Sec. 15-2-14.2 (Supp.1982), states: "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." (Emphasis added.) The district court judge stated:

It is my opinion that the language of [this] statute that it is "prospective" means that no malpractice period of limitation can be less than three years from the effective date of the statute. It is my opinion that the statute of limitations in this case expired three years after July 1, 1977 or July 1, 1980. ⁴

The fundamental issue on appeal is whether plaintiff's claim is controlled by the six-year statute, which was in effect at the time his claim accrued, or the three-year statute, which was in effect when he brought this suit.

Contrary to the district court's decision, we find that the six-year limitations period controls this action. The express language of the new statute of limitations, S.D.Comp.Laws Ann. Sec. 15-2-14.2 (Supp.1982), that "[t]his section shall be prospective in application" dispels any notion that the South Dakota state legislature may have intended retroactive operation of the new three-year period for bringing legal malpractice actions. ⁵

Nevertheless, ambiguity remains despite this express statement of legislative intent. There exists a division of authority as to the meaning of "prospective" application of a newly enacted statute of limitations. One view is represented by the district court's holding in this case. The new shortened limitations period under this interpretation is held applicable to a preexisting cause of action, but the new statutory period runs from the effective date of the new enactment, not the accrual date of the cause of action. This view, however, has received limited support. See Carscadden v. Territory of Alaska, 105 F.2d 377, 380 (9th Cir.1939); Greenhalgh v. Payson City, 530 P.2d 799, 803 (Utah 1975); ⁶ Torkelson v. Roerick, 24 Wash.App. 877, 604 P.2d 1310, 1311 (1979); ⁷ cf. James v. Home Construction Co., 621 F.2d 727, 728-29 (5th Cir.1980) (congressional intent was that Truth-In-Lending Act's statute of limitations, which did not replace any preexisting limitations period, was to be applied prospectively to preexisting causes of action running from the statute's effective date).

The greater weight of authority, however, construes the term "prospective" in this context much differently. Under this view a newly passed statute shortening the limitations period and designated by the legislature to be prospectively applied is found to govern only causes of action arising after the effective date of the new limitations period; claims accruing prior to the effective date but sued upon after such date are controlled by the limitations period in force on the date the cause of action accrued. Doran v. Compton, 645 F.2d 440, 451 (5th Cir.1981) (Texas law); Watkins v. Barber-Colman Co., Inc., 625 F.2d 714, 717 (5th Cir.1980) (Georgia law); Greene v. Green Acres Construction Co., 36 Colo.App. 439, 543 P.2d 108, 110 (1975); Valenzuela v. Mercy Hospital, 34 Colo.App. 5, 521 P.2d 1287, 1289 (1974); Foley v. Morris, 339 So.2d 215, 217 (Fla.1976); Martin v. Clements, 8 Idaho 906, 575 P.2d 885, 887 (1978); Miller v. Fallon, 134 Me. 145, 183 A. 416, 417-19 (1936); Weiss v. Bigman, 84 Mich.App. 487, 270 N.W.2d 5, 8 (1978); Penrod v. Hoskinson, 170 Mont. 277, 552 P.2d 325, 326-28 (1976); Mid-Continent Casualty Co. v. P & H Supply, Inc., 490 P.2d 1358, 1361 (Okl.1971); Bower Trucking and Warehouse Co. v. Multnomah County, 35 Or.App. 427, 582 P.2d 439, 442 (1978); Gutter v. Seamandel, 103 Wis.2d 1, 308 N.W.2d 403, 411 (1981).

Although we give great deference to a trial court's determination of state law, we are compelled to reverse when its reasoning does not comport with decisions of the state supreme court and does not follow what we regard as the better reasoned holdings. The district court's determination of state law is not binding on this court. Luke v. American Family Mutual Insurance Co., 476 F.2d 1015, 1019 & n. 6 (8th Cir.1973).

No South Dakota case has been found specifically detailing how a newly enacted, prospectively intended statute of limitations is to be applied. Other South Dakota decisions, however, have analyzed the prospective or retrospective application of other types of new statutory enactments. A study of these cases reveals cumulative support for the view held by the greater weight of authority that a cause of action arising before the effective date of a prospectively intended, shortened limitations period is entirely controlled by the earlier limitations statute regardless when suit is brought. We thus conclude that the six-year limitations period in effect on the accrual date governs this claim.

The South Dakota Supreme Court, in In re Estate of Scott, 81 S.D. 231, 133 N.W.2d 1, 3 (1965), quoted from an earlier South Dakota case a definition of a "prospective" law: " 'It is always to be presumed that a law was intended, as its legitimate office, to furnish a rule of future action to be applied to cases arising subsequent to its enactment.' " Although the phrase "cases arising subsequent to its enactment" could be construed to mean either causes of action accruing after the effective date of a new statute, or lawsuits filed subsequent to such date, it seems clear from the context of both the Scott decision and other South Dakota cases that the court was declaring that a prospective law is not to be applied to claims or causes of action accruing before the new statute's effective date.

In Scott, an amended statute allowed a state veterans' home to file maintenance claims against the estate of certain deceased members for $75 for each month the member stayed in the home. Before the effective date of the amendment, there was no provision for such claims. Despite the facts that the decedent Scott died after the effective date of the amendment and the Home filed its claim for him after such date, the court held that because the amendment was intended to have only prospective effect, all allowances were rejected for claims accruing prior to July 1, 1961, the effective date of the amendment. 133 N.W.2d at 1-3. The court discussed and relied upon three South Dakota cases concerning certain sales of real property; these cases each held that the applicable amended statute was prospective and thus did not apply to sales made before their effective date, although "[a]s a question of grammar, the phraseology of this law may include tax sales made prior to its passage...." 133 N.W.2d at 3.

In Brookings County v. Sayre, 53 S.D. 350, 220 N.W. 918, 920 (1928), the court indicated that because a new statutory provision concerning recovery of county petition costs was not intended to have retroactive effect, it would not be applied to causes of action arising before the effective date of...