Saecker v. Thorie et al

• Decision Date: 12 December 2000
• Docket Number: No. 00-2257,00-2257
• Citation: 234 F.3d 1010
• Parties: (7th Cir. 2000) Fredric Karl Saecker, Plaintiff-Appellant, v. William H. Thorie and Doar, Drill & Skow, S.C., Defendants-Appellees
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1010

234 F.3d 1010 (7th Cir. 2000)

Fredric Karl Saecker, Plaintiff-Appellant, v. William H. Thorie and Doar, Drill & Skow, S.C., Defendants-Appellees.

No. 00-2257

In the United States Court of Appeals For the Seventh Circuit

Argued November 15, 2000

Decided December 12, 2000

Appeal from the United States District Court for the Western District of Wisconsin. No. 99-C-671-S--John C. Shabaz, Chief Judge.

Before Posner, Easterbrook, and Kanne, Circuit Judges.

Posner, Circuit Judge.

This is a diversity suit for legal malpractice, and at once we confront an issue of federal subject-matter jurisdiction. The plaintiff's jurisdictional statement, in violation of 7th Cir. R. 28(a)(1), does not indicate the state of citizenship of either the plaintiff or the defendants, who compound the error in their jurisdictional statement by failing both to point out the error and to supply the missing information. From the record it is apparent that the plaintiff is a citizen of Minnesota and the individual defendant a citizen of Wisconsin; but what of the law-firm defendant? The name of the firm is followed by "S.C.," and while its counsel informs us that this means "service corporation" and that the firm is incorporated and has its principal place of business in Wisconsin, he confessed to being unacquainted with the nature of a Wisconsin service corporation either generally or in reference to its status for purposes of the diversity jurisdiction. If the service corporation is assimilated to a regular business corporation, then jurisdiction is of course secure; but if it is assimilated to a partnership, including a limited partnership, or to an L.L.C. (limited-liability company), the existence of diversity would depend on the citizenship of the partners, Carden v. Arkoma Associates, 494 U.S. 185, 195-96 (1990); Northern Trust Co. v. Bunge Corp., 899 F.2d 591, 594 (7th Cir. 1990); Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998), which the record does not disclose.

The answer is given by our decision in Cot v. Wadel, 796 F.2d 981, 983 (7th Cir. 1986), where we held, primarily to avoid multiplying confusing distinctions within the category of corporations, that a professional corporation is to be treated the same as a regular business corporation, even if the professional corporation does not protect its principals from personal liability or serve to raise capital from passive investors. See also Saxe, Bacon & Bolan, P.C. v. Martindale, Hubbell, Inc., 710 F.2d 87, 89 (2d Cir. 1983); cf. CCC Information Services, Inc. v. American Salvage Pool Ass'n, 230 F.3d 342, 346 (7th Cir. 2000); National Ass'n of Realtors v. National Real Estate Ass'n, Inc., 894 F.2d 937, 939 (7th Cir. 1990); Mutual Service Casualty Ins. Co. v. Country Life Ins. Co., 859 F.2d 548, 550-51 (7th Cir. 1988). "Service corporation" is Wisconsin's name for professional corporation, see Wis. Stat. sec.sec. 180.901-.921; Wausau Medical Center, S.C. v. Asplund, 514 N.W.2d 34, 37, 44 (Wis. App. 1994), and so comes within the rule of the Cot case.

Cot was a "first generation" professional- corporation case. The original impetus for the formation of professional corporations was to obtain tax benefits, not to limit liability. Even today, some professional-corporation statutes do not limit the personal liability of the principals of such a corporation, corresponding to partners in the traditional law-firm partnership. But many do. (See the useful discussions in Christopher C. Wang, "Breaking Up Is Hard to Do: Allocation of Fees From the Unfinished Business of a Professional Corporation," 64 U. Chi. L. Rev. 1367 (1997), and Debra L. Thill, "The Inherent Powers Doctrine and Regulation of the Practice of Law: Will Minnesota Attorneys Practicing in Professional Corporations or Limited Liability Companies Be Denied the Benefit of Statutory Liability Shields?" 20 Wm. Mitchell L. Rev. 1143 (1994).) Wisconsin's service-corporation statute is one of them. It protects the shareholders of such a corporation from vicarious liability for the negligence or other misconduct either of the corporation itself or of the other shareholders. Wis. Stat. sec. 180.1915. The statute does not shield the lawyer or other professional from unlimited liability for acts of the corporation in which he is personally complicit; and that means that if a lawyer practicing by himself incorporates as a service corporation, he obtains no limitation of his personal liability at all. But that is equally true of the limited liability of shareholders of ordinary business corporations: they are not insulated from unlimited personal liability for acts on behalf of the corporation for which they could be sued personally.

There is thus no tension with National Ass'n of Realtors v. National Real Estate Ass'n, Inc., supra, 894 F.2d at 940, which carved an exception to the rule of Cot v. Wadel for cases in which the shareholders of a corporation rather than the corporation itself are the real parties in interest; in that case it is their citizenship, not that of the corporation, that counts. See also CCC Information Services, Inc. v. American Salvage Pool Ass'n, supra, 230 F.3d at 347; Northern Trust Co. v. Bunge Corp., supra, 899 F.2d at 594. The exception is inapplicable to this case. Apart from Thorie himself, the personal assets of the shareholders of Doar, Drill & Skrow, S.C., are not at risk.

Any tension between Cot and later cases derives not from National Ass'n of Realtors v. National Real Estate Ass'n but from the limited partnership and L.L.C. cases, since, functionally, they are even closer to standard business corporations than are professional (or service) corporations yet they are treated as ordinary partnerships for purposes of determining whether there is diversity jurisdiction. But as neither party has asked us to reexamine Cot , and no case has questioned its rule, and the Wisconsin service-corporation goes far to assimilate professional to standard business corporations, we shall adhere to the rule of that case at least for now.

On the merits, the district judge granted summary judgment for the defendants on the ground that Wisconsin's six-year statute of limitations for legal malpractice, Wis. Stat. sec. 893.53, had run. In January of 1990, the plaintiff, Saecker, represented by the individual defendant, Thorie (a member of the defendant firm), had been convicted in a Wisconsin state court of rape and other crimes and sentenced to 15 years in prison. Saecker's family had wanted DNA testing of bodily fluids and hair found on the victim of the rape, but Thorie had advised against this on the erroneous ground that the results of DNA testing would not be admissible at Saecker's trial. Saecker's appellate remedies were exhausted on April 2, 1991, but in subsequent postconviction proceedings in which he was represented by new counsel he successfully moved for the DNA testing, which exonerated him. In October of 1996, after a new trial was ordered, all charges against him were dropped. He brought this suit in May of 1999. The district court ruled that the statute of limitations had begun to run on April 2, 1991, when the Wisconsin Supreme Court denied Saecker's petition to review the affirmance of his conviction, and so expired before he brought his suit.

Under Wisconsin law a statute of limitations begins to run when the plaintiff discovers or should have discovered both his injury and the person who, and the act that, were the probable cause of the injury. See Borello v. U.S. Oil Co., 388 N.W.2d 140, 146 (Wis. 1986); Smith v. Herrling, Myse, Swain & Dyer, Ltd., 565 N.W.2d 809, 811 (Wis. App. 1997); Wiskunas v. Birnbaum, 23 F.3d 1264, 1266 (7th Cir. 1994). He needn't know that he has a claim against that person for that act; he has the statutory period to determine whether he has a claim and if so to prepare and file his suit, and that is time enough given that he knows that he has been injured and knows also who injured him and by what conduct.

The parties agree that the date of injury was April 2, 1991, and in view of their agreement we need not speculate on alternative possibilities, such as the date of his conviction. Cf. Smith v. Herrling, Myse, Swain & Dyer, Ltd., supra, 565 N.W.2d at 811-12. The quarrel is over the date on which Saecker discovered or should have discovered that the likely cause of the injury was Thorie's failure to obtain a DNA test that would have averted the conviction. April 2, 1991, the date selected by the district court, is too early. Saecker had no reason to believe that Thorie was giving him erroneous advice about the admissibility of DNA evidence. He had no reason to believe, therefore, that his conviction had been caused by a decision...