Kurylas, Inc. v. Bradsky

• Citation: 452 N.W.2d 111
• Decision Date: 02 April 1990
• Docket Number: No. 16594,16594
• Parties: KURYLAS, INC., Plaintiff-Appellant, v. Walter J. BRADSKY, Defendant-Appellee.
• Court: Supreme Court of South Dakota

Page 111

452 N.W.2d 111

KURYLAS, INC., Plaintiff-Appellant, v. Walter J. BRADSKY, Defendant-Appellee.

No. 16594.

Supreme Court of South Dakota.

Argued Oct. 17, 1989.

Decided Feb. 21, 1990.

Rehearing Denied April 2, 1990.

J.M. Grossenburg, Day & Grossenburg, Winner, Gale Fisher of Fisher & Hughes, Sioux Falls, for plaintiff-appellant.

Paul T. Barnett of Siegel, Barnett & Schutz, Aberdeen, for defendant-appellee.

DOBBERPUHL, Circuit Judge.

Kurylas, Inc. (Kurylas) appeals from a summary judgment entered against it in its action for damages allegedly arising from an attorney/client relationship with Walter J. Bradsky (Bradsky). We affirm.

Kurylas' complaint in this case alleged damage from a conversion suit brought against it by Rushmore State Bank. See Rushmore State Bank v. Kurylas, Inc., 424 N.W.2d 649 (S.D.1988). A $83,711.58 judgment was entered against Kurylas and in favor of Rushmore State Bank. Kurylas also incurred a large amount of attorney's fees due to the conversion suit and other matters. Kurylas alleged that Bradsky negligently failed to possess and exercise that degree of knowledge and skill ordinarily possessed and exercised by lawyers engaged in the legal profession in the same or similar locality.

Kurylas and Bradsky agree that an attorney/client relationship existed between them. Roman Kurylas, president and primary owner of Kurylas, is married to Bradsky's sister Wilma. Due to this relationship, Bradsky worked with Kurylas on many matters. The relationship pertinent to this appeal is one which grew out of transactions involving the sale of a motel complex.

Kurylas owned a motel which was being offered for sale to Darrell Kiser (Kiser). Kurylas negotiated the sale with Kiser. Kurylas asked Bradsky to draw up documents relevant to the sale of the motel. The document relevant to this appeal contained a clause in which Kurylas was granted a security interest in the personal property of the motel. In addition, a financing statement was to be filed at the time of the execution of the sale agreement. The financing statement was not filed until over a year later. A chronological sequence of events follows setting out the dates and transactions or events that occurred:

June 11, 1983: Kurylas transfers an interest in realty, inventory, equipment and liquor licenses in a motel to Kiser by an exchange agreement and contract for deed. A part of this agreement provided Kurylas with a security interest in the personal property. Bradsky acted as the attorney for Kurylas and prepared the above-named documents.

June 23, 1983: Rapid City Motel Company (Motel Company) is incorporated.

July 1, 1983: Kiser transfers his interest in the real property of the motel into the newly formed corporation. Sometime later, Kiser, doing business as Motel Corporation, failed to make payment as contemplated in the June 11, 1983, agreement.

November 1983 to January 1984 inclusive: Bradsky becomes concerned about the time the corporation's problems consume and relates this to Kurylas. At that point, Bradsky escorts his sister and brother-in-law to the Rapid City law firm of Costello, Porter, Hill, Heisterkamp & Bushnell (Costello, Porter).

February 4, 1984: Kiser and Motel Company execute an exchange agreement and contract for deed transferring their interest in the motel complex to Neil P. Lewis (Lewis) and others as trustees for Ceasar's, a corporation to be formed.

February 9, 1984: Kurylas, Kiser and Motel Company execute a consent to transfer of the property to Ceasar's.

October or November 1984: Kurylas, disappointed with representation of the Costello, Porter firm, contacts attorney Joseph Butler (Butler) of Bangs, McCullen, Butler, Foye & Simmons to assume the corporation's representation.

November 7, 1984: Butler, realizing that no financing statement has been filed concerning the June 11, 1983, transaction, contacts Bradsky who subsequently mails the financing statement naming Kiser as debtor to the Secretary of State and Pennington County Register of Deeds.

December 11, 1984: Ceasar's executes a security agreement in favor of Rushmore State Bank (Bank) in all inventory, accounts, equipment and general intangibles.

December 13, 1984: Bank files a financing statement identifying Ceasar's as its debtor.

April 15, 1985: Kurylas files a financing statement identifying Lewis as debtor.

October 30, 1987: Pennington County Sheriff's Office receives the complaint for this action for service upon Bradsky.

November 9, 1987: Summons and complaint are served upon Bradsky.

The trial court considered these facts in making its determination. Applying the statute of limitations found in SDCL 15-2-14.2 the trial court entered summary judgment in favor of Bradsky. Further, the trial court announced that the continuous representation doctrine did not apply in this case to toll the statute of limitations.

Kurylas raises two issues:

1. Whether the trial court erred in applying the statute of limitations.

2. Whether the trial court erred in its application of the "continuous representation" doctrine.

The scope of review from an order granting summary judgment is:

[O]ur scope of review on appeal is not under the 'clearly erroneous' doctrine, but rather under the strict standards attendant upon entry of summary judgment as delineated in Wilson [v. Great Northern Railway Co., 83 S.D. 207, 157 N.W.2d 19 (1968) ]:

(1) Evidence must be viewed most favorable to the nonmoving party;

(2) The burden of proof is on the movant to show clearly that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law:

(3) Summary judgment is not a substitute for a court trial or for trial by jury where any genuine issue of material fact exists;

(4) Surmise that a party will not prevail upon trial is not sufficient basis to grant summary judgment on issues which are not shown to be sham, frivolous or so unsubstantial that it is obvious that it would be futile to try them;

(5) Summary judgment is an extreme remedy which should be awarded only when the truth is clear and reasonable doubts touching the existence of a genuine issue as to material fact should be resolved against the movant;

(6) When no genuine issue of fact exists, summary judgment is looked upon with favor and is particularly adaptable to expose sham claims and defenses.

Lunstra v. Century 21 GKR-Lammers, 442 N.W.2d 448 (S.D.1989); Nizielski v. Tvinnereim, 429 N.W.2d 483, 485 (S.D.1988), quoting Time Out, Inc. v. Karras, 392 N.W.2d 434, 436-37 (S.D.1986). From our review of the record, there are no material issues of fact. The issues raised are questions of law.

Kurylas states in a third issue that summary judgment should not have been granted. This claim is actually incorporated in the other two issues. However, a brief note on summary judgment is warranted. Kurylas claims that a summary judgment is not proper for a statute of limitations question citing Schoenrock v. Tappe, 419 N.W.2d 197 (S.D.1988), for the proposition that statute of limitation questions are normally for the jury. Kurylas fails to recognize that the Schoenrock court allowed dismissal of the action on the statute of limitations issue. If the facts were in dispute, then there would be a material issue of fact invalidating the summary judgment. In the case at bar the facts are not in issue, only the application of law. This is the same scenario recognized in Schoenrock.

THE OCCURRENCE RULE

SDCL 15-2-14.2 reads:

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).

Kurylas' claim is very similar to the claims made in the Schoenrock case, supra. ¹ In Schoenrock the client commenced an action against his attorney for rendering an inaccurate title opinion. The attorney rendered a title opinion on February 20, 1981. The title opinion failed to mention a certain wildlife easement which contained various restrictions on the land. This court found:

Under the "occurrence rule" as expressed by our statute, a cause of action for negligently examining a title accrues at the time the attorney provides the client with the erroneous information, in effect, when the omission occurs.

Schoenrock, supra, at 199. The action was barred after February 20, 1984. Hence, summary judgment was appropriate because Schoenrock's attorney did not sign the summons and complaint until November 25, 1985. ²

Here, as in Schoenrock, Kurylas urges the court to follow a date of damage or injury rule to determine when the statute begins to run for attorney malpractice actions. This type of theory is also referred to as the discovery rule. South Dakota has chosen not to follow the discovery or date of damage rule. The legislature has specifically set up an "occurrence" rule. This court has previously stated:

The general rule is that in the absence of an attorney's fraudulent concealment of his negligent advice, the statute of limitations on a claim of attorney malpractice begins to run at the time of the alleged negligence and not from the time when the negligence is discovered or the consequential damages are imposed. (emphasis added).

Schoenrock, supra, at 199; Hoffman v. Johnson, 374 N.W.2d 117 (S.D.1985).

The injury is the late filing of the financing statements. The motel property in question changed hands from Kurylas to Kiser, then to Kiser's corporation. After Kiser's corporation defaulted, the motel was transferred to Ceasar's, another corporation. The exchange agreements between all these parties contemplated the filing of financing statements.

Kurylas did have a financing statement filed listing Kiser as a debtor on November 13, 1984. However, Kiser no longer had any interest in the property after July 1, 1983. See ...