Moix-Mcnutt v. Brown

• Decision Date: 09 May 2002
• Docket Number: No. 01-283.,01-283.
• Citation: 348 Ark. 518,74 S.W.3d 612
• Parties: Ramona MOIX-McNUTT v. Robert J. BROWN.
• Court: Arkansas Supreme Court

74 S.W.3d 612

348 Ark. 518

Ramona MOIX-McNUTT v. Robert J. BROWN.

No. 01-283.

Supreme Court of Arkansas.

May 9, 2002.

McNutt Law Firm, by Mona J. McNutt, Conway, for appellant.

Cross, Gunter, Witherspoon and Galchus, P.C., by M. Stephen Bingham, Little Rock, for appellee.

TOM GLAZE, Justice.

This case involves the application of the statute of limitations in legal malpractice cases. We take jurisdiction under Ark. Sup.Ct. R. 1-2(a)(5), as the appeal involves the discipline of attorneys-at-law.

Ramona Moix-McNutt originally hired the law firm of Crockett and Brown, PLLC,¹ in December of 1996 to represent her and her husband in a real estate transaction, and on January 2, 1997, Crockett and Brown filed a Chapter 13 Bankruptcy petition for Moix-McNutt. After a hearing in June of 1997, the bankruptcy court found that Moix-McNutt did not have enough income to meet the statutory requirements for a Chapter 13 bankruptcy. On July 17, 1997, the bankruptcy court ordered Moix-McNutt and her husband, Mark McNutt, to enter Chapter 11 bankruptcy or to consolidate and join in one Chapter 11 bankruptcy petition within twenty days; otherwise, Moix-McNutt's Chapter 13 bankruptcy case would be involuntarily converted to a Chapter 7 bankruptcy proceeding without notice or hearing at some future time.

On July 25, 1997, Brown filed a notice of appeal from the July 17 order, and on August 5, 1997, Brown filed a motion requesting a stay of the July 17 order pending the appeal. The bankruptcy court held a hearing on September 5, 1997, at which time the motion for stay pending appeal was denied. Brown did not file a motion to convert Moix-McNutt's Chapter 13 petition to a Chapter 11 petition or join Mark McNutt in the proceedings. On December 3, 1997, the bankruptcy court filed an order that involuntarily converted Moix-McNutt's Chapter 13 petition into a Chapter 7 proceeding, noting that Moix-McNutt was clearly ineligible for Chapter 13.

On August 14, 2000, Moix-McNutt filed this malpractice action against Brown. In her complaint, she alleged that, as a result of Brown's "incompetent legal advice," she suffered an involuntary conversion of her bankruptcy petition to a Chapter 7 proceeding, which resulted in a loss of an enormous sum of money. She further asserted that Brown knew or should have known that the conversion would take place if he took no further action following the bankruptcy court's July 17, 1997, order directing Moix-McNutt to convert her petition to a Chapter 11 petition.

Brown filed a motion to dismiss Moix-McNutt's complaint, asserting that the three-year statute of limitations for bringing legal malpractice actions had expired. After a hearing on November 2, 2000, the trial court granted Brown's motion. From that order, Moix-McNutt brings this appeal, arguing that her cause of action did not accrue until the bankruptcy court's December 3, 1997, order. Moix-McNutt contends that she was not harmed or did not suffer any loss until this December 3 bankruptcy court order that converted her Chapter 13 petition into a Chapter 7 proceeding. It was this involuntary conversion, she asserts, that was the last essential element to her cause of action. Thus, because the statute of limitations commenced from the December 3, 1997, date, she claims the filing of her malpractice action on August 14, 2000, was well within the three-year statute of limitations.

Arkansas Code Annotated section 16-56-105 (1987) provides a three-year statute of limitations for malpractice actions against attorneys. See also O'Mara v. Dykema, 328 Ark. 310, 942 S.W.2d 854 (1997) (three-year statute of limitations applies to all tort actions not otherwise limited by law). For over one hundred years, Arkansas has followed the "occurrence rule" with respect to the commencement of the statute of limitations in legal malpractice cases. See White v. Reagan, 32 Ark. 281 (1877). This rule provides that the statute of limitations applicable to a malpractice action begins to run, in the absence of concealment of the wrong, when the negligence occurs, and not when it is discovered. See Ragar v. Brown, 332 Ark. 214, 964 S.W.2d 372 (1998) (where this court listed three common approaches used to determine when a cause of action for malpractice accrues: 1) the occurrence rule; 2) the "damage rule" or "date of injury rule," with a variation called the "discovery rule"; and 3) the "termination-of-employment rule," also named the "continuing representation rule"; the Ragar court, however, adhered to the occurrence rule); Goldsby v. Fairley, 309 Ark. 380, 831 S.W.2d 142 (1992); Chapman v. Alexander, 307 Ark. 87, 817 S.W.2d 425 (1991).

Notwithstanding this court's consistent refusal to retreat from the occurrence rule, Moix-McNutt continues, as mentioned above, to argue that the last essential element to her cause of action did not fall into place until the bankruptcy court's December 3, 1997, order involuntarily converting her bankruptcy proceeding to Chapter 7. She asserts that, but for the bankruptcy court's entry of that order, which forced her to enter a Chapter 7 bankruptcy and culminated in the liquidation of her assets, she would have had no complaint against anyone.

To accept this argument, however, Arkansas would have to abandon the occurrence rule and adopt the so-called "date of injury" rule; this latter rule provides that the statute of limitations begins to run, not from the occurrence of the negligent act, but rather from the time injury results from the negligent act. See Chapman, supra. This court has held time and time again that "if such a marked change is to...