McDowell v. Waldron

• Decision Date: 05 March 1996
• Docket Number: No. 67511,67511
• Citation: 920 S.W.2d 555
• Parties: David and Donna McDOWELL, Appellants, v. Kenneth WALDRON and Scott Walter, Respondents.
• Court: Missouri Court of Appeals

Page 555

920 S.W.2d 555

David and Donna McDOWELL, Appellants, v. Kenneth WALDRON and Scott Walter, Respondents.

No. 67511.

Missouri Court of Appeals,

Eastern District,

Division Five.

March 5, 1996.

Motion for Rehearing and/or Transfer to

Supreme Court Denied April 24, 1996.

Appeal from Circuit Court of Cape Girardeau County, Hon. Randy Schuller, Judge.

Ilona S. Leavitt, Chesterfield, Burton H. Shostak, Moline & Shostak, Clayton, for appellants.

Brent W. Baldwin, Hinshaw & Culbertson, St. Louis, John P. Heisserer, Dickerson, Rice, Spaeth, Heisserer & Summers, Cape Girardeau, for respondents.

SIMON, Judge.

David and Donna McDowell, appellants, appeal the granting of summary judgment in favor of Kenneth Waldron (Waldron) and Scott Walter (Walter), respondents, in a legal malpractice action brought pursuant to § 516.120 RSMo.1992 (all further references shall be to RSMo.1992 unless otherwise noted).

On appeal, appellants contend that the trial court erred in granting summary judgment because: 1) the statute of limitations for bringing the current legal malpractice action had not expired; 2) respondents' fraudulent concealment of their legal malpractice tolled the running of the statute of limitations; 3) appellants did not have actual knowledge of respondents' malpractice; 4) disputed facts exist concerning witness credibility; 5) the final order granting summary judgment was deficient; 6) appellants had a valid underlying claim under the Fair Credit Reporting Act which respondents did not timely file; 7) respondents' motion for summary judgment is barred by the doctrine of waiver or an admission against interest; 8) respondents' motion for summary judgment is barred by collateral estoppel; 9) respondents' motion for summary judgment is barred by res judicata; and 10) respondents should not profit by their own wrongdoing. We affirm.

Respondents filed motions to strike appellants' statement of facts and jurisdictional statement. These motions were ordered taken with the case and we deny same.

When considering appeals from summary judgments, we review the record in the light most favorable to the party against whom judgment was entered. ITT Commercial Finance v. Mid-Am. Marine, 854 S.W.2d 371, 376[1-3] (Mo. banc 1993). However, summary judgment is proper where the movant demonstrates that there is no genuine dispute as to a material fact and that the movant is entitled to judgment as a matter of law. Id. at 380-381. Furthermore, where the movant is a "defending party" and does not bear the burden of persuasion at trial, that party need not controvert each element of the non-movant's claim in order to establish a right to summary judgment. Id. at . Rather, a "defending party" may establish a right to judgment by showing facts that negate any one of the elements facts of claimant's claim. Id. If the movant meets this burden, the non-movant may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in Rule 74.04, shall set forth specific facts showing that there is a genuine issue for trial. Id.; Rule 74.04(e).

In their action for legal malpractice appellants allege that attorney Waldron allowed the two-year statute of limitations to run on their Fair Credit Reporting Act (FCRA) claim against the Credit Bureau of Southeast Missouri, Inc. (Credit Bureau), and they were subsequently damaged by the continuing concealment of said malpractice by both Waldron and his partner Walter. Appellants' FCRA claim is based on a report dated April 6, 1982, in which Credit Bureau falsely reported the McDowells as having jointly filed bankruptcy. The report was based upon the bankruptcy of a woman with a similar name.

The facts are as follows. In November, 1991, John and Shelby Gilmore entered into a contract with appellants for the purchase of a home built by appellants in one of the subdivisions they developed. In order to secure the purchase of the house, the Gilmores sought financing from Colonial Federal Savings and Loan Association (Colonial). Colonial then contacted Credit Bureau to perform a credit check to ensure that appellants' title to the house was free and clear of all encumbrances so that clear title could be conveyed to the Gilmores. Responding on April 6, 1982, Credit Bureau issued the report to Colonial, which erroneously indicated that appellants had filed for bankruptcy in March, 1982.

Appellants, through another attorney, filed an action in federal court against Credit Bureau alleging common law defamation and violation of the FCRA. Later, appellants changed attorneys and hired Waldron. On May 23, 1984, Waldron voluntarily dismissed the FCRA claim against Credit Bureau. The two-year FCRA statute of limitations had run. Thereafter, on May 31, 1984, the action was re-filed in state court and was pursued on the common law basis of defamation, libel, and violation of the FCRA. The claim was submitted to the jury only upon the theories of defamation and libel. Waldron did not submit the FCRA claim to the jury because he learned during trial that the federal dismissal had, in effect, extinguished the FCRA claim. There is no savings statute for FCRA claims. The jury returned a verdict in favor of Credit Bureau. The judgment was affirmed in McDowell v. Credit Bureaus of S.E. Mo., 747 S.W.2d 630 (Mo. banc 1988). Appellants then hired another attorney, John Oliver (Oliver), to petition for a writ of certiorari to the United States Supreme Court. In August of 1988, opposing counsel filed a brief in opposition to the writ petition, including a paragraph stating that appellants' previously dismissed FCRA claim was time-barred. Respondents contend that this paragraph put appellants on notice as to Waldron's and Walter's alleged malpractice, since Oliver received a copy of the brief in opposition. Appellants claim that they were not told about the brief and/or did not receive a copy of the brief until January 12, 1991. On February 28, 1992, appellants filed the present action against Waldron and on January 10, 1994, appellants joined Walter as a defendant.

Waldron filed a motion for summary judgment alleging that appellants' claim should be dismissed because they never had a valid FCRA claim in the underlying action since the false Credit Bureau report was a "business report" and not a "consumer report"; therefore, it was not covered by the FCRA. In support of his motion, Waldron made specific references to the pleadings and transcript. Walter joined in this motion. Appellants responded to the motion for summary judgment and in support filed the affidavit of an employee of Credit Bureau stating that the credit report concerning appellants is a "consumer report," and the affidavit of trial counsel stating what evidence would be adduced at trial. Walter also filed a motion to dismiss claiming that the statute of limitations had expired with respect to appellants' claim against him. Appellants responded to the motion to dismiss by contending: a) Walter's alleged malpractice was not capable of ascertainment until January 12, 1991 when they received copies of opposing counsel's brief in opposition to their petition for writ of certiorari; b) the statute of limitations was tolled until appellants had actual knowledge of Walter's alleged malpractice because Walter and Waldron were both fiduciaries of appellants and had fostered a layman/expert relationship; and c) respondents' fraudulent concealment of their malpractice tolled the running of the statute of limitations. In support, appellants attached their affidavits alleging that they did not receive a copy of the brief in opposition until January 12, 1991. The motion for summary judgment and the motion to dismiss were granted.

Initially, we shall address appellants' sixth point wherein appellants contend that the trial court erred in granting respondents' motions for summary judgment because appellants had a valid FCRA claim which was dismissed in federal court by Waldron after the statute of limitations had run, and despite that there was no savings statute to permit its subsequent filing in state court. Furthermore, they assert Waldron and Walter concealed this fact from appellants.

To prevail in a legal malpractice action, four elements must be pled and proven: (1) that an attorney/client relationship existed; (2) that the attorney acted negligently or in breach of contract; (3) that such acts were the proximate cause of plaintiff's damages; and (4) but for attorney's conduct, the plaintiff would have been successful in the prosecution of his underlying claim. Boatright v. Shaw, 804 S.W.2d 795, 796[1, 2] (Mo.App.1990).

Respondents' motion for summary judgment contends that appellants failed to show they have a valid FCRA claim because the false credit report was issued regarding the Gilmore/Colonial transaction, and therefore, was a "business report" and is not covered by the provisions of the FCRA. Appellants agree that the false report was issued to Colonial regarding their business transaction with the Gilmores, but that the information in the report was collected to report on the personal credit worthiness of the individual misidentified as appellant Donna McDowell; therefore, the report is a "consumer report" covered by the FCRA and can not be converted into a "business report" by its subsequent use in the Gilmore/Colonial Federal transaction. Responding, appellant's counsel filed her affidavit stating various issues and evidence which would be presented at trial, and an affidavit of an employee of Credit Bureau stating the report is a "consumer report."

State law controls matters of practice and procedure, but substantive rights created by the FCRA are controlled by federal law and are not subject to 50 different rules of interpretation. Thornton v. Equifax, Inc., 619 F.2d 700, 705[4, 5] (8th Cir.1980).

The FCRA became effective in 1971. Its provisions provide for the protection of the...