Sharts v. Natelson
| Decision Date | 30 June 1993 |
| Docket Number | No. 12121,12121 |
| Citation | 1993 NMCA 82,118 N.M. 330,881 P.2d 690 |
| Parties | Wallace G. SHARTS and Stakeout Properties, Inc., Plaintiffs-Appellees, v. Stephen NATELSON and Natelson & Ross, Defendants-Appellants. |
| Court | Court of Appeals of New Mexico |
Richard C. Bosson, Bosson & Canepa, P.A., Santa Fe, for plaintiffs-appellees.
Joseph J. Mullins, Charles K. Purcell, Rodey, Dickason, Sloan, Akin & Robb, P.A., Albuquerque, for defendants-appellants.
Wallace G. Sharts (hereinafter "Sharts") sued Stephen Natelson and Natelson and Ross (hereinafter "Natelson") for legal malpractice. Natelson moved for summary judgment on the basis that the action was barred by the four year statute of limitations, NMSA 1978, Secs. 37-1-1 and -4 (Repl.Pamp.1990). Relying on Jaramillo v. Hood, 93 N.M. 433, 601 P.2d 66 (1979), the trial court denied the motion, finding a genuine issue of fact existed as to whether harm or loss in fact sufficient to accrue a cause of action in legal malpractice existed at a time which would make Sharts' claim vulnerable to the statute of limitations. The trial court certified its ruling for interlocutory appeal and this court granted the application. The question of law presented by this appeal is when may a trial court rule, as a matter of law, that harm or loss in fact exists sufficient for a cause of action in legal malpractice to accrue and begin the running of the four year limitation period provided by Sections 37-1-1 and -4. We affirm.
The pleadings, depositions, and exhibits establish that this case involves restrictive covenants Natelson drafted for property owned by Sharts. The property in question is a sixty-acre tract of land located in Taos County. Sharts contends he asked Natelson to draft restrictive covenants for a thirty-acre portion (Tract One) of the sixty-acre tract. The relevant portion of the covenants purported to restrict the size of the individual lots on Tract One to a three-acre minimum. Several lots within Tract One were acquired by individual purchasers after the restrictive covenants were recorded.
After the sale of these lots, Sharts decided to develop the remaining thirty acres (Tract Two) into a residential subdivision. He planned to divide Tract Two into half-acre lots. However, in May 1981, Sharts received a letter from an attorney threatening to take legal action to enforce the restrictive covenants on Tract Two which Sharts contended only governed Tract One. During 1983, while preparing to close loans for purchasers in the planned subdivision, a title company involved in the transactions informed Sharts that it interpreted the restrictive covenants as applying to both Tract One and Tract Two. Because the proposed subdivision lots were smaller than permitted in the restrictive covenants, the title company considered the covenants an impermissible cloud on the title of lots within Tract Two. Without title insurance, the bank refused to fund the loans. In addition, on approximately April 14, 1983, Sharts received a letter from attorneys for owners of lots in Tract One threatening to take legal action to enforce the three-acre lot restriction on Tract Two.
Between 1983 and 1984, to cure the problem, Natelson suggested that waivers and modifications of the restrictive covenants be obtained from purchasers of lots in Tract One. However, Natelson was unable to obtain the necessary waivers or modifications. Natelson then suggested that Sharts seek a declaratory judgment action establishing that the restrictive covenants did not apply to Tract Two. Sharts authorized Natelson to proceed, and Sharts filed the action on December 17, 1984.
On April 3, 1985, while the declaratory judgment action was pending, Sharts wrote Natelson a letter complaining about the course of the litigation. In the letter, Sharts essentially made two admonitory statements. First, Sharts stated that even if he prevailed in the declaratory judgment action, he would sue Natelson for approximately $35,000. Sharts justified this figure as damages resulting from interest payments made while waiting for Natelson to cure "legal errors" he should have corrected two years earlier when he became aware of the problem. Sharts also threatened to sue Natelson for malpractice for approximately $800,000 to $2,000,000 if the declaratory judgment action was unsuccessful. Sharts characterized these damages as direct, provable, and caused by Natelson's carelessness. Sharts also warned that he was bringing to New Mexico very expensive and professional "family" attorneys who were interested in the case.
At his deposition, Sharts testified that he sent the letter to Natelson to "rattle Steve's cage" because he was frustrated with the slow pace of the litigation and perceived the problem as "foot dragging" on Natelson's part. Sharts also testified that, if he won the declaratory judgment action, he did not intend to sue Natelson for the $35,000. Sharts added that he never contacted the attorneys referred to in his letter.
Despite the threatening letter, Natelson continued to represent Sharts in the declaratory judgment action and in other matters. Sharts testified that he continued to rely on Natelson's counsel and believed that Natelson would ultimately succeed in lifting the cloud from the Tract Two titles. On June 20, 1985, the court entered an order disqualifying Natelson from representing Sharts in the declaratory judgment action because Natelson was a potential witness in the case. The court gave Sharts fifteen days to obtain new counsel.
On July 10, 1985, attorney Daniel Marlowe entered his appearance on behalf of Sharts in the declaratory judgment action. On September 22, 1986, the declaratory judgment action was decided against Sharts, and the three-acre lot restriction was held applicable to Tract Two. This Court affirmed the declaratory judgment in that case on June 14, 1988, in Sharts v. Walters, 107 N.M. 414, 759 P.2d 201 (Ct.App.1988). On July 10, 1989, exactly four years after Marlowe entered his formal appearance in the declaratory judgment action, Sharts filed the present legal malpractice action against Natelson.
We first note the trial court's decision in this case was made within the limitations of a summary judgment motion. See SCRA 1986, 1-056. In a motion for summary judgment, the trial court must view the evidence, and construe all reasonable inferences therefrom, in the light most favorable to the nonmoving party. State v. Integon Indem. Corp., 105 N.M. 611, 612, 735 P.2d 528, 529 (1987); Wheeler v. Board of County Comm'rs, 74 N.M. 165, 171, 391 P.2d 664, 670 (1964). On appeal, this Court must review the record in the light most favorable to support a trial on the merits. North v. Public Serv. Co., 97 N.M. 406, 408, 640 P.2d 512, 514 (Ct.App.1982); see also Gaston v. Hartzell, 89 N.M. 217, 549 P.2d 632 (Ct.App.1976).
For breaches of unwritten contracts and torts affecting property, inter alia, the relevant statutory sections prescribe a four-year period of limitation. See Secs. 37-1-1 and -4. Section 37-1-1 provides, "[t]he following suits or actions may be brought within the time hereinafter limited, respectively, after their causes accrue, and not afterwards, except when otherwise specially provided." Section 37-1-4 provides, "[t]hose founded upon accounts and unwritten contracts; those brought for injuries to property or for the conversion of personal property or for relief upon the ground of fraud, and all other actions not herein otherwise provided for an specified within four years." As noted above, the procedural limitation provided by Sections 37-1-1 and -4, as it relates to legal malpractice, was first discussed by our Supreme Court in Jaramillo.
In that case, the defendant attorney (hereinafter "Hood") was accused of negligently drafting and supervising the execution of a will. Shortly after the testatrix's death, the will was admitted to probate. Over the next four years, several different attorneys entered appearances on the plaintiff's behalf. During this time the order admitting the will to probate was set aside nunc pro tunc. Approximately five years after the will had been set aside, the will was finally denied probate, and three years after that, the malpractice action was filed.
Jaramillo followed California precedent, abandoned the traditional accrual rule, and adopted a general two-step approach to the question of when a cause of action accrues against an attorney for malpractice.1 Under the "discovery rule" analysis adopted by the Jaramillo Court, a legal malpractice cause of action accrues, for the purposes of the statute of limitations, when (1) the occurrence of harm or loss arises in fact, and (2) the act of negligence out of which the harm complained of is ascertainable and discoverable by the complaining party. Jaramillo, 93 N.M. at 434, 601 P.2d at 67 (); see Annotation, When Statute of Limitations Begins to Run upon Action Against Attorney for Malpractice, 32 A.L.R.4th 260 (1984).
The Jaramillo Court rejected the date the will was negligently drafted as the date the harm or loss occurred. Jaramillo, 93 N.M. at 434, 601 P.2d at 67. The date that the document was negligently drafted did not fix the date of loss because, had the error been detected prior to the death of the testatrix, reformation rather than a malpractice action would have been required. See 2 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice Sec. 18.18, at 145 (3rd ed. 1989). More importantly, the Jaramillo Court found, "[t]he harm or damage in this case arose at the time the testatrix died." Jaramillo, 93 N.M. at 434, 601 P.2d at 67; see also 2 Ronald E. Mallen & Jeffrey...
To continue reading
Request your trial
- State v. Ware
-
Sharts v. Natelson
...MONTGOMERY, Justice. The issue in this case, as framed by our Court of Appeals in one of its opinions below, Sharts v. Natelson, 118 N.M. 330, 881 P.2d 690 (Ct.App.1993), is: "[W]hen may a trial court rule, as a matter of law, that harm or loss in fact exists sufficient for a cause of actio......
-
1999 -NMCA- 29, Delta Automatic Systems, Inc. v. Bingham
...the standard of professional care, so long as the pertinent facts are available to the client." Sharts v. Natelson, 118 N.M. 330, 343, 881 P.2d 690, 703 (Ct.App.1993) (Hartz, J., dissenting), rev'd, 118 N.M. 721, 885 P.2d 642 (1994). "The key consideration under the discovery rule is the fa......