Tullar v. Walter L. Henderson, P.C.

• Citation: 816 P.2d 234,168 Ariz. 577
• Decision Date: 21 February 1991
• Docket Number: CA-CV,No. 2,2
• Parties: Thomas E. TULLAR and Richard Shear, Executors of the Estate of Bayard C. Tullar, deceased, and Teresa H. Tullar, Plaintiffs/Appellants, v. WALTER L. HENDERSON, P.C., an Arizona corporation; Green Valley Investment and Management, Inc., an Arizona corporation, Defendants/Appellees. 90-0208.
• Court: Arizona Court of Appeals

Page 234

816 P.2d 234

168 Ariz. 577

Thomas E. TULLAR and Richard Shear, Executors of the Estate of Bayard C. Tullar, deceased, and Teresa H. Tullar, Plaintiffs/Appellants, v. WALTER L. HENDERSON, P.C., an Arizona corporation; Green Valley Investment and Management, Inc., an Arizona corporation, Defendants/Appellees.

No. 2 CA-CV 90-0208.

Court of Appeals of Arizona,

Division 2, Department A.

Feb. 21, 1991.

Reconsideration Denied April 3, 1991.

Review Denied Sept. 24, 1991.

[168 Ariz. 578] Haralson, Kinerk & Morey, P.C. by Carter Morey, and Gregory G. Wasley, Tucson, for plaintiffs/appellants.

Mesch, Clark & Rothschild, P.C. by Tom R. Clark and Scott H. Gan, Tucson, for defendant/appellee Henderson.

Bury, Moeller, Humphrey & O'Meara by Gerald R. O'Meara, Tucson, for defendant/appellee Green Valley Inv.

OPINION

LACAGNINA, Judge.

In this appeal from an adverse summary judgment dismissing their complaint for professional negligence, Thomas E. Tullar and Richard Shear, Executors of the Estate of Bayard C. Tullar, deceased, and Teresa H. Tullar (Tullars), argue that the trial court erroneously determined that the statute of limitations had expired prior to the filing of their complaint because even if they knew of the negligent conduct before the expiration of the statute, they suffered no actionable damages and, therefore, their cause of action had not accrued. Tullars argue that their complaint for professional negligence by their real estate broker and lawyer, filed within two years from the time Tullars suffered irrevocable damages, was timely. We agree and reverse the trial court judgment dismissing the complaint.

FACTS

In 1984, Bayard C. and Teresa H. Tullar, as sellers, entered into an agreement with Biltmore Development Corporation (Biltmore) for the sale of 40 acres of land in Tubac, Arizona. Green Valley Investment and Management, Inc. (Green Valley) was Tullars' exclusive real estate agent for this transaction. The sale agreement provided for the execution of a note as partial payment of the purchase price. Neither the sale agreement nor the note provided for any security in the event of nonpayment, such as a mortgage or deed of trust on the land sold. In April 1986, before the closing of the sale, Tullars hired attorney Walter Henderson to review the transaction and assist at the closing. The closing was extended to December 1986 and, in accordance with the sale agreement, Biltmore executed an unsecured promissory note for $204,047.70, payable in installments. The first installment due June 12, 1987, was not timely paid. Tullars accepted a late payment of the first installment in August 1987. Biltmore failed to make the second payment due in December 1987. In early 1988, Tullars engaged another attorney and through his efforts learned that Biltmore's financial status, which resulted in its insolvency, made collection of the note futile. Tullars sued Green Valley and Henderson in August 1989, alleging negligent conduct which caused them to accept an unsecured note as partial payment for the sale.

STATUTE OF LIMITATIONS

Based upon the record before it, the trial court concluded in part:

[T]he Court finds that, at the very latest, and giving the Plaintiffs every benefit of the doubt, there is no material fact issue that as of the June 12, 1987, default, Plaintiffs were injured by the lack of security and knew or should have known that they were unsecured.

We agree that the record supports this finding; however, before Tullars' cause of action for negligence could be brought, they had to suffer irrevocable damages. The Arizona Supreme Court's decision in Amfac Distribution Corporation v. Miller, 138 Ariz. 152, 673 P.2d 792 (1983), establishes this requirement.

Miller asserts that agents of Amfac knew or should have known of his alleged negligence at the time of the trial or at the time the judgment was entered. Thus, he concludes, the statute of limitations began to run at one of those times and the instant suit is barred. However, this argument ignores the fact that Amfac had sustained no irrevocable damages and could not have sued at either of those times. In both Morrison [v. Acton, 68 Ariz. 27, 198 P.2d 590 (1948) ] and Nielson [v. Arizona Title Insurance and Trust Co., 15 Ariz.App. 29, 485 P.2d 853 (1971) ], the cases this Court cited in Sato [v. Van Denburgh, 123 Ariz. 225, 599 P.2d 181 (1979) ] for the point that a cause of action accrues when the plaintiff knew or reasonably should have known of the defendant's negligent conduct, there was no question that damages did exist prior to the plaintiff's discovery of the defendant's negligence. In that circumstance, the cause of action accrues with the plaintiff's discovery. However, as noted above, even where a plaintiff has discovered actual negligence, if he has sustained no damages, he has no cause of action. Only when he has sustained damages is he able to sue. Our decision today is not inconsistent with Sato.

Id. 138 Ariz. at 154, 673 P.2d at 794 (emphasis added).

The reference to Sato, Morrison and Nielson by the Amfac court answers the argument raised by Green Valley and Henderson that the holding in Amfac is limited only to cases of malpractice during the pendency of litigation. Green Valley and Henderson argue the holding in Arizona Management...