Story v. Bunstine

• Decision Date: 11 December 2017
• Docket Number: No. E2015-02211-SC-R11-CV,E2015-02211-SC-R11-CV
• Citation: 538 S.W.3d 455
• Parties: John Howard STORY, et al. v. Nicholas D. BUNSTINE, et al.
• Court: Tennessee Supreme Court

538 S.W.3d 455

John Howard STORY, et al.

v.Nicholas D. BUNSTINE, et al.

No. E2015-02211-SC-R11-CV

Supreme Court of Tennessee, AT KNOXVILLE.

May 9, 2017 Session

FILED December 11, 2017

David A. Stuart, Clinton, Tennessee, and Mark N. Foster, Madisonville, Kentucky, for the appellants, John Howard Story and David Bruce Coffey.

Darryl G. Lowe, Knoxville, Tennessee, for the appellees, Nicholas D. Bunstine, Brent R. Watson, and Jerrold Lance Becker.

Unpublished Text Follows End of Unpublished Text

Roger A. Page, J., delivered the opinion of the court, in which Jeffrey S. Bivins, C.J., and Cornelia A. Clark, Sharon G. Lee, and Holly Kirby, JJ., joined.

Roger A. Page, J.

The defendant attorneys in the instant legal malpractice case, Nicholas D. Bunstine, Brent R. Watson, and Jerrold L. Becker, individually and d/b/a Bunstine, Watson, McElroy & Becker, represented the plaintiffs, John Howard Story and David Bruce Coffey, in a lender liability lawsuit. In the underlying lender liability lawsuit, the trial court ultimately dismissed the case against two of the lender defendants, and the claims against the remaining lender defendant were later voluntarily dismissed. Thereafter, the plaintiffs filed the instant lawsuit against the defendant attorneys alleging legal malpractice. The trial court partially dismissed the case based on the expiration of the one-year statute of limitations for filing a complaint for legal malpractice. See Tenn. Code Ann. § 28-3-104(c)(1). Later, in response to the defendant attorneys' motion for summary judgment, the trial court dismissed the plaintiffs' remaining claim, determining that the claim was also barred by the statute of limitations. The Court of Appeals affirmed. We granted this appeal to address: (1) whether this Court's opinion in Carvell v. Bottoms , 900 S.W.2d 23 (Tenn. 1995), in which we set forth a discovery rule for when the statute of limitations begins to run in a legal malpractice action, should be overruled; (2) whether an interlocutory ruling in underlying litigation constitutes a legally cognizable injury; (3) whether this Court should adopt either the continuous representation rule or the appeal-tolling doctrine for tolling the statute of limitations in legal malpractice actions; and (4) whether a subsequent action of an attorney that renders an interlocutory order final amounts to a separate and discrete act of malpractice such that the statute of limitations for that action does not begin until said action is taken. Following our review, we conclude that Carvell v. Bottoms is the accurate analysis for determining when a claim of legal malpractice accrues. In addition, we decline to adopt the two tolling doctrines proposed by the plaintiffs, and we further decline to hold that the trial court's final judgment in the underlying case is required before there is an actual injury for purposes of the accrual of a claim for litigation malpractice. Nevertheless, we conclude that, in the case before us, the complaint fails to establish an actual injury prior to the date of the trial court's final judgment in the underlying case. Consequently, the trial court erred in granting the motion to dismiss and in determining that the plaintiffs' legal malpractice claims were time barred. Finally, we conclude that the trial court also erred in granting the defendants' motion for summary judgment. In this case, the defendant attorneys' alleged negligence, which purportedly rendered the interlocutory order in the underlying case final, constituted a distinct act of malpractice, and as such, the statute of limitations had not run on that claim at the time the plaintiffs filed this legal malpractice action. Therefore, we reverse the judgments of the trial court and the Court of Appeals and remand this case to the trial court for further proceedings consistent with this opinion.

In this legal malpractice action, John Howard Story and David Bruce Coffey (collectively, "Plaintiffs") appeal from the intermediate appellate court's decision to affirm the trial court's dismissal of their case against their former attorneys Nicholas D. Bunstine, Brent R. Watson, and Jerrold L. Becker, individually and d/b/a Bunstine, Watson, McElroy & Becker (collectively, "Defendants"). The issue before us is whether the legal malpractice action is barred by the applicable statute of limitations under the facts of this case. For the following reasons, we reverse the judgments of the Court of Appeals and the trial court and remand for further proceedings.

I. FACTS AND PROCEDURAL HISTORY

A.

From 2011 to 2013, Defendants represented Plaintiffs in their lender liability suit against Scott Thompson, First National Bank of Oneida, and People's Bank of the South. According to Plaintiffs, prior to filing the underlying suit, one of the defendant attorneys, Mr. Becker, represented that Plaintiffs had a strong case with a high likelihood of a six-figure settlement. Nevertheless, on May 7, 2013, the ChanceryCourt of Scott County, Tennessee, granted summary judgment in favor of two of the underlying defendants, Scott Thompson and First National Bank of Oneida.

Prior to trial on the claims against the remaining bank, Mr. Becker advised that the damages evidence necessary to prosecute the case was not ready and that Plaintiffs should, therefore, voluntarily dismiss the case. According to Plaintiffs, Mr. Becker advised that the case could be refiled within one year but failed to inform Plaintiffs that the voluntary dismissal would render the prior summary judgment order final. Thus, the remaining claims were dismissed by Defendants, on Plaintiffs' behalf, and the trial court entered an order reflecting the voluntary dismissal on November 13, 2013.

Plaintiffs failed to appeal the order granting summary judgment in favor of Mr. Thompson and First National Bank of Oneida, and therefore, Plaintiffs' claims against those underlying defendants were permanently barred.¹ Plaintiffs did not refile their voluntarily dismissed claims against the remaining bank.

B.

Rather than refiling their nonsuited claims in the underlying lender liability suit, on September 3, 2014, Plaintiffs filed this legal malpractice action against Defendants in the Circuit Court for Knox County, Tennessee. In their legal malpractice complaint, Plaintiffs alleged, in relevant part:

3. Prior to the filing of the lender's liability action ... [Mr.] Becker, represented to plaintiffs that they had a strong case of liability and damages and that there was a high likelihood the case would ultimately result in a settlement in excess of six figures. He continued to represent ... that the case was strong ... throughout the entire time the case was pending, until the day he appeared with [Mr.] Watson to explain that they had concluded that the case needed to be voluntarily dismissed.

4. In reality, if plaintiffs had any valid claim at all, it was their claim against Scott Thompson as an individual. The claims against the banks were extremely weak and were subject to a statutory defense.... The claims against the banks were also virtually precluded [by] the express written terms of the loan documents ... and[,] as to one of the bank[s], barred by the statute of limitations.

5. Plaintiffs initially agreed to pay [Mr.] Becker $500.00 per hour ..., but later, after becoming aware that such an hourly rate was excessive, plaintiffs and [Mr.] Becker agreed to reduce the hourly rate to $375.00. In reliance on the representations ... that they had a strong lender's liability case, plaintiffs together paid [Mr.] Becker several hundred thousand dollars in attorney fees and expenses.

6. During the course of the proceedings, the question arose as to whether plaintiffs should continue to pay the underlying indebtedness that gave rise to their lender's liability claims. [Mr.] Becker, negligently, carelessly and recklessly advised [ ] plaintiffs that they should discontinue making their payments, and as a result, plaintiffs were declared in default and have incurred substantial penalties, interest, attorney's fees, expenses, and injury to their credit ratings and reputations.

7. Contrary to the representations of [Mr.] Becker, the lender's liability case was not a strong case at all.... After a hearing in which the judge agreed with the contentions of the defendants in the lender's liability action, [Mr.] Becker continued to assure plaintiffs that they had a strong case which would ultimately settle and stated that the judge did not know what he was talking about. [Mr.] Becker assured plaintiffs that he would file motions to force the chancery court to correct its erroneous rulings. After one of the banks and the individual defendant, Scott Thompson, were dismissed from the case, ... [Mr.] Becker did not inform plaintiffs that the dismissal purported to be a final judgment as to those defendants, and indicated he would file a motion to correct the error. Although such motion was filed, it was never brought on for hearing, and with the ultimate voluntary dismissal of the remaining defendant occurring thereafter, any claims against those defendants became forever barred. As a result, upon voluntary dismissal of the action, [Mr.] Becker and [Mr.] Watson took action which permanently precluded plaintiffs from maintaining their claims against the only viable defendant ..., the individual defendant, Scott Thompson.

8. Plaintiffs allege that a reasonable attorney would have warned them prior to filing the lender's liability case that their chances of prevailing in such claims were slim to none, especially against the banks.... Plaintiffs further allege that a reasonable attorney would have advised them to continue making payments on the indebtedness pending the resolution of the lender's liability claims, and would have explained that ... defaulting on the indebtedness would have devastating economic consequences and inflict grievous harm upon the credit rating and reputations of plaintiffs.

Plaintiffs alleged...