Pancake House, Inc. v. Redmond By and Through Redmond
| Decision Date | 28 March 1986 |
| Docket Number | No. 57908,57908 |
| Parties | PANCAKE HOUSE, INC. Appellant, v. Owen Joseph REDMOND, deceased, By and Through the Executrix of his estate, Josy A. REDMOND; Christopher J. Redmond; Christopher W. O'Brien; Edward J. Nazar; all as individuals and d/b/a Redmond, Redmond, O'Brien & Nazar, a legal partnership, Appellees. |
| Court | Kansas Supreme Court |
Syllabus by the Court
1. An action for liability of an attorney on the grounds of negligence for failure to discharge his professional duty to a client rests on the employment contract and therefore is contractual in nature. Where the act complained of is a breach of specific terms of the contract without any reference to the legal duties imposed by law upon the relationship created thereby, the action is contractual. Where the essential claim of the action is a breach of a duty imposed by law upon the relationship of attorney/client and not of the contract itself, the action is in tort.
2. In general, a cause of action accrues, so as to start the running of the statute of limitations, as soon as the right to maintain a legal action arises. The true test to determine when an action accrues is that point in time at which the plaintiff could first have filed and prosecuted his action to a successful conclusion.
3. It is held that the plaintiff's alleged cause of action was based upon the attorney-client relationship and was thus a breach of a duty imposed by law, a tort. Under the factual circumstances stated, the plaintiff's claim against its former attorney did not accrue until the plaintiff had suffered substantial injury.
John Terry Moore, of Moore & Rapp, P.A., Wichita, argued and on brief, for appellant.
Kurt A. Harper, Sherwood & Hensley, Wichita, argued and on brief, for appellee Christopher J. Redmond.
Greer Gsell, of Hershberger, Patterson, Jones & Roth, Wichita, on brief, for appellees Owen Joseph Redmond, deceased, by and through the Executrix of his estate, Josy A. Redmond, Christopher W. O'Brien and Edward J. Nazar.
Pancake House, Inc., (PHI), filed an action against the defendant attorneys for legal malpractice after the defendants, who had represented the plaintiff corporation for approximately twenty years, chose to represent the individual interests of certain stockholders of the corporation against the corporate client. The plaintiff contends that the defendants' filing of a lawsuit against Pancake House, Inc., was malicious in nature, negligent, a breach of a fiduciary duty and a breach of implied contract. A motion for judgment on the pleadings was granted to the defendants on the grounds that the action was barred by the statute of limitations. Plaintiff appeals.
Except for two years, from 1960 through 1979 the defendants' law firm, or its predecessor, prepared the corporate documents and drafted the corporate minutes and lease extensions for Pancake House, Inc.
Following the death in 1980 of one of the two principal stockholders, Jay Conover, the remaining shareholders of PHI were at odds with each other concerning the ownership of stock, the effect of a shareholders' agreement and the management of the corporation. On October 1, 1980, Sherman Sampson, the other principal stockholder and president of PHI, filed a suit against the estate of Jay L. Conover, seeking the enforcement of a buy-sell agreement which required PHI to buy Conover's stock in PHI.
On October 16, 1980, defendant Redmond filed a suit on behalf of the Conover family against Sampson and PHI, alleging that, as a result of the disputes between the families, the corporation was deadlocked. The suit asked that a custodian for the corporation be appointed and, in the event that matters were not resolved, the corporation be dissolved. The court issued a temporary restraining order enjoining Sampson "from performing any acts as President in violation of the Kansas Corporation Code; from issuing any further dividends; from increasing his salary; or from taking any acts as President which are at variance in which the corporation functioned prior to the death of Jay L. Conover."
On November 10, 1980, the court denied the injunction requested by the defendants' attorneys, but did find PHI was deadlocked. A restraining order was issued requiring PHI to pay all dividends owed to the Conover estate and other specified stockholders into the clerk of the district court.
On December 31, 1980, Christopher Redmond withdrew from representation of the Conovers in both the suit filed by Sampson against the estate and the suit filed by the Conovers against PHI. Another firm assumed representation for the Conovers.
The two cases were consolidated and heard on April 26, 1982. A journal entry filed on September 7, 1982, ordered PHI to purchase all of the Conover stock and awarded certain other damages for misappropriation of corporate vehicles by the Conovers to PHI.
On August 26, 1983, Sampson and PHI sent a demand letter to PHI's former law firm, claiming that the suit Redmond filed against PHI was without probable cause, was malicious, and was a breach of fiduciary duty. When Redmond failed to reply to the demand, the plaintiff filed the present suit on October 25, 1983. PHI's petition alleged: (1) a claim for malicious prosecution; (2) that the defendants' act in filing suit against plaintiff was "negligence by the defendant attorney" against PHI; (3) the defendants committed an intentional tort and breach of a fiduciary duty; and (4) the defendants breached an express or implied contract between PHI and the defendant attorneys. The defendants filed a motion to dismiss, claiming the statute of limitations had run for all claims. The district court sustained the motion and plaintiff appeals.
PHI argues that it has alleged a cause of action in contract for breach of an implied agreement and that the three-year statute of limitations applies. K.S.A. 60-512(1). The defendants contend that the cause of action is in tort, not in contract, and that the two-year statute of limitations has run. K.S.A. 60-513(a)(4).
A breach of contract may be said to be a material failure of performance of a duty arising under or imposed by agreement. A tort, on the other hand, is a violation of a duty imposed by law, a wrong independent of contract. Torts can, of course, be committed by parties to a contract. The question to be determined here is whether the actions or omissions complained of constitute a violation of duties imposed by law, or of duties arising by virtue of the alleged express agreement between the parties. Malone v. University of Kansas Medical Center, 220 Kan. 371, 552 P.2d 885 (1976).
Legal and medical malpractice generally constitute both a tort and a breach of contract. An action for liability of an attorney on the grounds of negligence for failure to discharge his professional duty to a client rests on the employment contract and therefore is contractual in nature. Where the act complained of is a breach of specific terms of the contract without any reference to the legal duties imposed by law upon the relationship created thereby, the action is contractual. Where the essential claim of the action is a breach of a duty imposed by law upon the relationship of attorney/client and not of the contract itself, the action is in tort. Bowman v. Doherty, 235 Kan. 870, 686 P.2d 112 (1984).
Not all malpractice actions in Kansas may be deemed tort actions, however. In Juhnke v. Hess, 211 Kan. 438, 506 P.2d 1142 (1973), the plaintiff sued his attorney for failure to file a timely appeal on behalf of his client in a condemnation proceeding. The court said this was a breach of a specific contract--failure to do that which the attorney expressly agreed to perform. The real basis of the claim for relief was financial loss resulting from failure to discharge a contractual obligation (proof of which contract, breach and loss is another matter). Consequently the claim for relief alleged was one founded on unwritten contract to be governed by the...
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