Leighton Ave. Office Plaza, Ltd. v. Campbell

• Decision Date: 14 June 1991
• Citation: 584 So.2d 1340
• Parties: LEIGHTON AVENUE OFFICE PLAZA, LTD., and Julian Jenkins v. James M. CAMPBELL. William J. DAVIS v. James M. CAMPBELL. Gerald G. WOODRUFF, Jr., and Jack S. Wallach v. James M. CAMPBELL. 1900410, 1900418 and 1900429.
• Court: Alabama Supreme Court

Page 1340

584 So.2d 1340

LEIGHTON AVENUE OFFICE PLAZA, LTD., and Julian Jenkins v. James M. CAMPBELL.

William J. DAVIS v. James M. CAMPBELL.

Gerald G. WOODRUFF, Jr., and Jack S. Wallach v. James M. CAMPBELL.

1900410, 1900418 and 1900429.

Supreme Court of Alabama.

June 14, 1991.

Rehearing Denied Aug. 9, 1991.

Jack W. Torbert of Torbert and Torbert, Gadsden, for appellants Leighton Ave. Office Plaza, Ltd. and Julian Jenkins.

Clarence L. McDorman of Yearout, Myers & Traylor, Birmingham, for appellant William J. Davis.

Cleophus Thomas, Jr., Anniston, for appellants Gerald G. Woodruff, Jr., and Jack S. Wallach.

Ralph D. Gaines, Jr. of Gaines, Gaines & Gaines, P.C., Talladega, for appellee James M. Campbell.

HOUSTON, Justice.

On June 23, 1988, Gerald Woodruff and Jack Wallach sued Leighton Avenue Office Plaza, Ltd., an Alabama limited partnership ("the partnership"), Julian Jenkins, William Davis, and Ian McKenzie, seeking to recover damages for breach of contract, breach of fiduciary duty, fraud, and conversion. Jenkins, Davis, and the partnership were served with the complaint on June 29, 1988. Woodruff and Wallach alleged that the partnership had been formed by Gulf General Corporation, as the general partner, and McKenzie, as the sole limited partner; that Davis was the president of Gulf General Corporation when the partnership was formed; that Jenkins and Davis had later become limited partners in the partnership; that they (Woodruff and Wallach) had purchased limited partnership interests in the partnership, but that the certificate of limited partnership recorded in the probate court had never been amended to reflect their interests; and that on June 30, 1986, the sole asset of the partnership, an office building in Anniston, Alabama, known as "The Landmark," had been sold without their consent, in violation of the terms set out in the certificate of limited partnership. These allegations appear to be supported by the record.

On May 11, 1989, Davis filed a third-party complaint against James Campbell, the partnership's attorney, alleging negligence in connection with his handling of the partnership's business (i.e., in closing the sale of the office building in violation of the terms set out in the certificate of limited partnership). On December 28, 1989, Woodruff and Wallach amended their complaint to state claims against Campbell alleging negligence, breach of fiduciary duty, and fraud, in connection with his handling of the sale of the office building, and to state conspiracy to defraud claims against Campbell, Jenkins, Davis, and McKenzie. On February 20, 1990, the partnership and Jenkins filed a "third-party" complaint against Campbell, alleging negligence and breach of contract in connection with his handling of the sale of the office building. On September 4, 1990, the partnership and Jenkins filed a cross-claim against Campbell, making substantially the same allegations therein that they had made in their February 20 "third-party" complaint.

The trial court entered a summary judgment for Campbell on the ground that all of the claims against him were barred by the statute of limitations set out in Ala. Code 1975, § 6-5-574 (part of the Alabama Legal Services Liability Act, § 6-5-570 et seq.). The judgment was made final under Rule 54(b), A.R.Civ.P., and Woodruff, Wallach, Jenkins, Davis, and the partnership appealed. ¹ We affirm in part, reverse in part, and remand.

Summary judgment was proper in this case if there was no genuine issue of material fact and Campbell was entitled to a judgment as a matter of law. Rule 56, A.R.Civ.P. The burden was on Campbell to make a prima facie showing that no genuine issue of material fact existed and that he was entitled to a judgment as a matter of law. If that showing was made, then the burden shifted to Woodruff, Wallach, Jenkins, Davis, and the partnership to present evidence creating a genuine issue of material fact, so as to avoid the entry of a judgment against them. In determining whether there was a genuine issue of material fact, we must view the evidence in the light most favorable to Woodruff, Wallach, Jenkins, Davis, and the partnership and must resolve all reasonable doubts against Campbell. Knight v. Alabama Power Co., 580 So.2d 576 (Ala.1991). Because this case was not pending on June 11, 1987, the applicable standard of review is the "substantial evidence" rule. Ala. Code 1975, § 12-21-12. "Substantial evidence" has been defined as "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989).

The applicable statute of limitations in this case is § 6-5-574, supra. See Michael v. Beasley, 583 So.2d 245 (Ala.1991). See, also, Pearce v. Schrimsher, 583 So.2d 253 (Ala.1991). It provides as follows:

"(a) All legal service liability actions against a legal service provider must be commenced within two years after the act or omission or failure giving rise to the claim, and not afterwards; provided, that if the cause of action is not discovered and could not reasonably have been discovered within such period, then the action may be commenced within six months from the date of such discovery or the date of discovery of facts which would reasonably lead to such discovery, whichever is earlier; provided, further, that in no event may the action be commenced more than four years after such act or omission or failure; except, that an act or omission or failure giving rise to a claim which occurred before August 1, 1987, shall not in any event be barred until the expiration of one year from such date.

"(b) Subsection (a) of this section shall be subject to all existing provisions of law relating to the computation of statutory periods of limitations for the commencement of actions, namely, sections 6-2-1, 6-2-2, 6-2-3, 6-2-5, 6-2-6, 6-2-8, 6-2-9, 6-2-10, 6-2-13, 6-2-15, 6-2-16, 6-2-17, 6-2-30 and 6-2-39; provided, that notwithstanding any provisions of such sections, no action shall be commenced more than four years after the act, omission or failure complained of; except, that in the case of a minor under four years of age, such minor shall have until his or her eighth birthday to commence such action."

Unless tolled by the existence of an undiscovered cause of action, the two-year limitations period set out in § 6-5-574(a) begins to run on the date the cause of action accrues (i.e., when a person sustains damages upon which an action can be maintained). Michael v. Beasley, supra. The record shows that the office building in question was sold on June 30, 1986. Thus, it was on that date that Woodruff and Wallach's causes of action against Campbell accrued, for it was on that date that they first incurred damages upon which they could base legal claims against Campbell. Likewise, the record shows that Woodruff and Wallach filed their complaint against Jenkins, Davis, and the partnership on June 23, 1988. Thus, it was on that date that causes of action for Jenkins, Davis, and the partnership accrued against Campbell, for it was on that date that Woodruff and Wallach's claims against them, which included claims for fraud, were filed for public record in the county courthouse. Although they were not aware of Woodruff and Wallach's claims and, therefore, were not legally obligated to defend against them until June 29, 1988, when they were served with the complaint, Jenkins, Davis, and the partnership were damaged, at least nominally, upon the filing of the complaint against them.

Therefore, because Woodruff and Wallach filed their claims against Campbell on December 28, 1989, more than two years after their causes of action against him had accrued, Woodruff and Wallach's claims were barred as a matter of law unless, as they contend, a fact question existed as to whether the running of the statutory period of limitations was tolled. Specifically, they argue that it was tolled by a lack of knowledge on their part that Campbell was aware of their interests in the partnership at the time he closed the sale of the office building, and they claim that they timely filed their suit upon discovering Campbell's role in the sale. Jenkins, Davis, and the partnership also argue that their claims against Campbell were timely filed.

Woodruff and Wallach sought to recover damages from Campbell under theories of negligence, breach of fiduciary duty, fraud, and conspiracy to defraud. The record shows that on January 18, 1989, Woodruff and Wallach filed a motion for partial summary judgment against Jenkins, Davis, McKenzie, and the partnership and that on March 14, 1989, they filed the following exhibit, which purports to be an unsigned letter from Campbell to Jenkins dated June 19, 1986, in support of that motion:

...