St. Paul Fire and Marine Ins. Co. v. Speerstra

JurisdictionOregon
PartiesST. PAUL FIRE AND MARINE INSURANCE COMPANY, a corporation, and Salem Hospital, an Oregon corporation, Appellants, v. Sam F. SPEERSTRA, Malcolm L. Brand, Keith J. Bauer, George A. Rhoten, J. Ray Rhoten, Ervin W. Potter, David A. Rhoten, Gary C. Jones and Arthur B. Cummins, Jr., Respondents. ; CA A23712.
Citation63 Or.App. 533,666 P.2d 255
Docket NumberNo. A7809-15242,A7809-15242
CourtOregon Court of Appeals
Decision Date16 September 1983

James M. Callahan, Portland, argued the cause for appellants. With him on the brief was Landis, Aebi & Bailey, P.C., Portland.

William L. Hallmark, Portland, argued the cause for respondents. With him on the brief were Stephen F. English, and Lang, Klein, Wolf, Smith, Griffith & Hallmark, Portland.

Before BUTTLER, P.J., JOSEPH, C.J., and WARREN, J.

JOSEPH, Chief Judge.

This is a legal malpractice case arising out of the defense of a medical malpractice case. In the latter case, defendant attorneys were retained by St. Paul Fire and Marine Insurance Company (St. Paul) in 1974 to represent its insured, Salem Hospital, in defense of consolidated medical malpractice actions brought by Ned and Opal Crippen against the hospital and five physicians. The Crippens settled with four of the doctors for $550,000, took a voluntary non-suit against the fifth doctor and proceeded to trial against the hospital as the sole defendant. The jury returned a verdict in favor of the Crippens, and judgments were entered against the hospital totalling in excess of $800,000. Defendant attorneys filed motions for judgment notwithstanding the verdict and a new trial. The motions were denied, and defendants filed a notice of appeal. The appeal was dismissed, because the notice was not timely filed.

On September 19, 1978, St. Paul and Salem Hospital filed a complaint against defendants for their alleged negligence in the handling of the Crippen case. They alleged that defendants were negligent in failing to convey a $75,000 settlement offer to the Crippens' attorney and in failing to file a timely notice of appeal. Both parties moved for partial summary judgment, raising the issue whether the appeal would have been successful had the notice been timely filed. The judge granted defendants' motion and denied plaintiffs'.

On August 7, 1980, defendants moved for summary judgment with respect to the remaining allegation of negligence--the failure to convey the $75,000 settlement offer--on the ground that the action was barred by the statute of limitations. That motion was denied. On February 5, 1981, plaintiffs filed an amended complaint based on the failure to convey the $75,000 offer and also on the failure to convey an earlier $50,000 offer and related allegations of negligence. Defendants moved to dismiss the new allegations in that complaint on the grounds that they did not relate back under ORCP 23 C and were barred by the statute of limitations. The motion was granted. Plaintiffs' motion for reconsideration of that order was denied, and they petitioned the Oregon Supreme Court for a writ of mandamus, which was also denied. They then moved for, and were granted, leave to file a second amended complaint based on the $50,000 offer, in which they substituted new allegations of negligence. Defendants again moved to dismiss the allegations on statute of limitations grounds. The motion was granted. Plaintiffs chose not to replead, and judgment was entered for defendants. Plaintiffs appeal.

The first three assignments of error deal with whether the allegations in the amended pleadings relate back to the time of the filing of the original complaint for purposes of the statute of limitations. 1 Defendants contend that, even if plaintiffs were to succeed on this issue, the judgment should nevertheless be sustained, because their August 7, 1980, summary judgment motion based on the statute of limitations against the original complaint should have been granted. Defendants raise this issue by "cross-assignment of error," rather than by cross-appeal. When a respondent seeks to sustain a judgment on a ground which the trial court allegedly erroneously rejected, he need not cross-appeal so long as he unequivocally makes the alleged error an issue on appeal. Artman v. Ray, 263 Or. 529, 532-534, 501 P.2d 63, 502 P.2d 1376 (1972). Defendants' "cross-assignment" serves that purpose.

The denial of a motion for summary judgment is not an appealable order. See, e.g., Hoy v. Jackson, 26 Or.App. 895, 554 P.2d 561, rev. den. (1976). Under same circumstances, however, a denial may be reviewable. See Cochran v. Connell, 53 Or.App. 933, 632 P.2d 1385 (1980). Final judgment was eventually entered in defendants' favor here, and they therefore had no reason or means to assert the denial of their summary judgment motion as error. A trial was never held, and so a motion for a directed verdict on the grounds now urged by defendants was precluded. Thus, because of the peculiar procedural posture of this case, we will review this alleged error.

The chronology of events relevant to the issue of whether plaintiffs' original complaint was filed within the two-year statute of limitations provided by ORS 12.110(1) follows: 2

The statute of limitations begins to run at the time the cause of action accrues. ORS 12.010. In a legal malpractice case, the statute starts running when the malpractice is discovered (or should have been discovered) and harm has occurred. U.S. Nat'l Bank v. Davies, 274 Or. 663, 548 P.2d 966 (1976). The issue is when plaintiffs' cause of action for defendants' failure to convey the $75,000 settlement offer accrued.

Defendants contend that the action was not timely brought, as a matter of law, because by September 19, 1978, more than two years had elapsed since plaintiffs suffered harm--that is, the July 15, 1976, judgment. Plaintiffs were aware prior to the jury verdict on July 9, 1976, of defendants' negligence--that is, that the $75,000 settlement offer had not been conveyed. Defendants argue that, because of that, July 15, 1976, is the latest starting point for the running of the statute of limitations. Plaintiffs argue that, under the "continuous treatment rule," it was not until dismissal of the appeal in the Crippen cases on November 9, 1976, and termination of the attorney-client relationship, that the damage caused by defendants' negligence became irremedial.

However, the time at which the extent of damages becomes certain is not the starting point for the running of the statute of limitations. In Brown v. Babcock, 273 Or. 351, 540 P.2d 1402 (1975), the plaintiffs sued the defendant attorneys for their alleged negligent defense of a suit to foreclose a land sale contract. The plaintiffs contended that the suit was timely brought as a matter of law, because it was filed within two years after the date of entry of the final decree of strict foreclosure. They maintained that it was not until that date, when they lost their equitable interest in the land they were purchasing, that they suffered any damage. The Supreme Court disagreed, saying that it was a question of fact whether the plaintiffs suffered any harm at the time of the entry of the interlocutory decree of foreclosure or at the expiration of the period of redemption, both of which occurred before the entry of the final decree. 5 Here, the fact that it was not until the time of the dismissal of the appeal in the Crippen cases that it was certain that plaintiffs had to pay an $800,000 judgment does not mean that plaintiffs suffered no harm prior to that time.

Neither party contends that the failure to convey the settlement offer could not constitute negligence, that there was no evidence of a causal connection between the alleged negligence and the harm or that, at the time of the entry of the judgment on July 15, 1976, plaintiffs could not have brought an action for legal malpractice against defendants. Even if the appeal had been successful and a more favorable verdict had been rendered in plaintiffs' behalf (as defendants or insurers in the medical malpractice case) on retrial, plaintiffs nevertheless suffered harm at the time of the entry of the judgment. At that time, they were required to pay the $800,000 judgment or the cost of an appeal (and the cost of a new trial if the appeal were successful). We conclude that, as a matter of law, plaintiffs had incurred actionable harm by the time of the entry of the judgment. 6 Thus, defendants' motion for summary judgment should have been granted. Because of our disposition of this question, plaintiffs' first three assignments of error are moot. 7

In plaintiffs' remaining assignment of error, they argue that, had an appeal been timely filed in the Crippen cases, it would have been successful and that therefore the judge erred in denying their summary judgment motion and in granting defendants'. 8 The issue is whether plaintiffs suffered any damages as a result of defendants' failure to file their notice of appeal on time. A legal malpractice action is like any other negligence action in that the plaintiffs must prove a duty, breach of that duty, causation and damages. Harding v. Bell, 265 Or. 202, 508 P.2d 216 (1973). When the alleged malpractice concerns a failure to appeal, damages can be recovered only if it is shown that the appeal would have been successful, see Bryant v. Seagraves, 270 Or. 16, 526 P.2d 1027 (1974), and that is a question of law. See Chocktoot v. Smith, 280 Or. 567, 574, 571 P.2d 1255 (1977).

In support of their partial summary judgment motions, both parties submitted arguments in the form of appellate briefs. Plaintiffs' brief contained what they claimed would have been the successful assignment of error and argument on appeal: the trial court's refusal, at the close of the evidence, to strike two allegations of negligence.

In their complaint, the Crippens had alleged:

"The defendant Salem Memorial Hospital was...

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