McCullen v. O'Grady

• Court: Missouri Court of Appeals
• Writing for the Court: ROBERT M. CLAYTON III, Judge
• Citation: McCullen v. O'Grady, 670 S.W.3d 94 (Mo. App. 2023)
• Docket Number: ED 110811
• Decision Date: 11 April 2023
• Parties: Daniel MCCULLEN, Appellant, v. Matthew P. O'GRADY, et al., Respondents.

670 S.W.3d 94

Daniel MCCULLEN, Appellant,

v.Matthew P. O'GRADY, et al., Respondents.

No. ED 110811

Missouri Court of Appeals, Eastern District, DIVISION ONE.

Filed: April 11, 2023

Motion for Rehearing and/or Transfer to Supreme Court Denied May 15, 2023

Application for Transfer Denied July 20, 2023

FOR APPELLANT: Andrew B. Protzman, Rebecca J. Ledford, Benjamin A. Stelter-Embry, 4001 W. 114^th Street, Suite 110, Leawood, KS 66211.

FOR RESPONDENTS: Attorneys for Matthew P. O'Grady ; OnderLaw, LLC; and O'Grady Law Firm, LLC, Timothy C. Sansone, 120 S. Central Ave., Ste. 1600, Clayton, MO 63105, G. Keith Phoenix, Stephen W. Carman, 600 Washington Ave., 15^th Floor, St. Louis, MO 63101, Attorneys for James D. O'Leary and O'Leary, Shelton, Corrigan, Peterson, Dalton and Quillin, LLC, Gerard T. Carmody, Patrick G. Carmody, 120 South Central Ave., Ste. 1800, St. Louis, MO 63105.

ROBERT M. CLAYTON III, Judge

Daniel McCullen ("Plaintiff") appeals the judgment granting motions to dismiss filed by Matthew P. O'Grady, O'Grady Law Firm, LLC, OnderLaw, LLC, and James D. O'Leary ("Defendants"). The trial court granted Defendants’ motions to dismiss Plaintiff's petition alleging claims for legal malpractice (Counts I and II) on the grounds the claims are barred by the statute of limitations. We reverse the trial court's judgment granting Defendants’ motions to dismiss and remand for further proceedings consistent with this opinion.

I. BACKGROUND

Because this appeal involves a dismissal by the trial court on the grounds Plaintiff's claims are barred by the statute of limitations, we begin by setting out the general allegations of Plaintiff's petition.

In November 2013, Plaintiff hired Defendants for a personal injury claim. Plaintiff is a layperson. Defendant Matthew P. O'Grady ("O'Grady") and Defendant James D. O'Leary ("O'Leary") are licensed attorneys in the State of Missouri. Defendant O'Grady Law Firm, LLC ("O'Grady Law") and Defendant OnderLaw, LLC ("OnderLaw") are Missouri law firms. During all times relevant to this case, Defendant O'Grady was an employee or agent of Defendant O'Grady Law or Defendant OnderLaw, and Defendant O'Leary was an employee or agent of Defendant OnderLaw or O'Leary, Shelton, Corrigan, Peterson, Dalton, and Quillian, LLC ("OSCPDQ Law").¹

Plaintiff's petition alleges that in October 2006, Plaintiff was injured in a "low-speed accident," when Plaintiff was riding his Honda motorcycle and his "right foot was able to and did become entangled in the rear wheel, causing devastating and permanent injury to his leg and foot." Subsequently, in 2011, an action was filed by attorneys not involved in this case on behalf of Plaintiff and against authorized Honda dealer Shernaman Enterprises, Inc., Jo and Allen Shernaman,² and American Honda Motor Company, Inc. ("Honda") ("underlying 2011 action").³

Between November 2013 and July 2019, Defendants represented Plaintiff in complex litigation with numerous procedural steps, events, and decisions relating to the underlying 2011 action. The parties highlight several, notable events.

On November 15, 2013, Honda was dismissed from the underlying 2011 action. The dismissal occurred even though it would subsequently be revealed there was purportedly an agreement which provided Honda would indemnify its authorized dealer Shernaman Enterprises against loss and against liability for personal injury arising from a product defect. The petition does not allege the reason for Honda's dismissal from the underlying 2011 action. Subsequently, on January 22, 2014, the Shernaman defendants’ insurer, Federated Mutual Insurance Company ("Federated"), filed a reservation of rights letter⁴ in the underlying 2011 action. Defendants had notice of this letter.

On February 1, 2014, pursuant to the advice of Defendants, Plaintiff entered into a settlement agreement with the Shernaman defendants pursuant to section 537.065 RSMo 2016⁵ ("2014 settlement agreement" or "settlement agreement"). The 2014 settlement agreement provides, inter alia , that Plaintiff agrees to not hold the Shernaman defendants personally liable, and, in exchange, the Shernaman defendants agree to not present a defense against Plaintiff's personal injury claim.

Plaintiff proceeded to trial with his personal injury claim in the underlying 2011 action, and, per the 2014 settlement agreement, no defense was presented by the Shernaman defendants. On or about April 24, 2014, a trial court entered a judgment in favor of Plaintiff and against the Shernaman defendants in the amount of $11,031,096 ("the approximate $11 million judgment").

On or about May 28, 2014, Defendants filed an equitable garnishment action on Plaintiff's behalf, to seek recovery of the approximate $11 million judgment against the Shernaman defendants’ insurer, Federated ("2014 equitable garnishment action" or "equitable garnishment action"). Plaintiff subsequently had to take out a litigation loan in June 2014 "to keep from filing for bankruptcy and so that he could proceed with future litigation."

Between November 2015 and January 19, 2016, Defendants represented Plaintiff during settlement negotiations with Federated. During the negotiations, Defendants told Plaintiff Federated made a $480,000 offer, which Plaintiff wanted to accept, but Plaintiff ultimately did not accept the offer pursuant to Defendants’ advice. Plaintiff also signed a blank sheet of paper which was presented to him by Defendants during the settlement negotiations. Plaintiff's petition also alleges Federated made an offer to settle with Plaintiff for $1 million during the negotiations, an offer which, (1) Defendants purportedly did not communicate to Plaintiff; (2) Plaintiff did not learn about until after negotiations had ended; and (3) Plaintiff alleges he would have accepted. No settlement agreement was ever reached between Plaintiff and Federated.

On January 20, 2016, Federated was granted summary judgment on Plaintiff's 2014 equitable garnishment action, "on the grounds [Federated] had been prejudiced in the [underlying] 2011 [a]ction by being unaware of the ongoing litigation and when [it] [was] apprised of the matter[,] being unable to mount a defense pursuant to the [2014 settlement] [a]greement" ("January 20, 2016 grant of summary judgment" or "grant of summary judgment"). Defendants then advised Plaintiff that an appeal of the January 20, 2016 grant of summary judgment lacked merit.

Defendants continued to represent Plaintiff up until July 2019. Between November 2016 and August 2017, Defendants allegedly "represented to Plaintiff that serious discussions were being had with outside counsel regarding methods of recovery on the [approximate $11 million] judgment." Additionally, on August 17, 2017, Defendant O'Leary left Defendant OnderLaw and started OSCPDQ Law, a Missouri law firm. O'Leary purportedly did not communicate this information to Plaintiff and continued to represent Plaintiff.

On or about December 14, 2018, after Plaintiff made several attempts to speak with Defendants, Defendant O'Leary and Plaintiff had "an intense meeting’ at the office of OSCPDQ Law, during which "O'Leary expressed to Plaintiff of their perceived inability to collect on the [approximate $11 million] judgment after years of dragging out litigation and false indications of potential recovery avenues."

It is also alleged that on or about January 16, 2019, (1) Defendant O'Leary contacted Plaintiff and advised Plaintiff to allow Ryan Shernaman (the Shernamans’ son who is a licensed attorney in Missouri) to represent Plaintiff in a collection action against Honda on behalf of the Shernaman defendants; (2) "Defendants ... only allowed Plaintiff [four] hours to contemplate the possibility of another suit before stressing time was of the essence and a petition needed to be filed nearly immediately"; (3) "Plaintiff [ ] agreed to pursue Honda with Ryan Shernaman representing his interests against Honda on the condition that Defendants would still be zealously representing his interests"; (4) Defendants agreed with the aforementioned condition; and (5) a petition was filed by Ryan Shernaman on behalf of the Shernaman defendants and Plaintiff against Honda ("the 2019 case against Honda"). Finally, on July 10, 2019, the 2019 case against Honda was voluntarily dismissed, after Plaintiff was purportedly advised by Ryan Shernaman that the case "was outside of his area of practice and the case should be dismissed."

Plaintiff filed the petition at issue in the instant case on January 20, 2021, alleging two counts for legal malpractice. Plaintiff's petition alleges that, as a result of Defendants’ negligent legal representation of Plaintiff, Plaintiff never recovered any part of the approximate $11 million judgment, and Plaintiff suffered financial distress due to the costs of continued litigation.

Count I of Plaintiff's petition alleges Defendants negligently advised Plaintiff to enter into the purportedly deficient 2014 settlement agreement with the Shernaman defendants.⁶ Count II of Plaintiffs’ petition alleges Defendants negligently failed to investigate and identify Honda's purported duty to indemnify its authorized dealer Shernaman Enterprises.⁷

Defendants filed motions to dismiss Plaintiff's petition on the grounds Counts I and II are barred by the five-year statute of limitations applying to legal malpractice claims.⁸ Plaintiff then filed suggestions in opposition to Defendants’ motions to dismiss, and Defendants filed replies in support of their motions to dismiss.⁹

The trial court then entered a judgment granting Defendants’ motions to dismiss and dismissing Counts I and II of Plaintiff's petition with prejudice. The court's judgment does not state the reasons it granted Defendants’ motions to dismiss. This appeal followed.

II. DISCUSSION

Plaintiff raises one point on appeal alleging the trial court erred in granting Defendants’ motions to dismiss asserting Plaintiff's petition is barred by the statute of limitations...