Van Horn Lodge, Inc. v. White, 4447

• Decision Date: 01 May 1981
• Docket Number: No. 4447,4447
• Citation: 627 P.2d 641
• Parties: VAN HORN LODGE, INC., an Alaska Corporation; Daniel Barnett and Howard Groff, Appellants, v. Hugh WHITE, Paul Jones and White and Jones, a Professional Corporation, Appellees.
• Court: Alaska Supreme Court

Page 641

627 P.2d 641

VAN HORN LODGE, INC., an Alaska Corporation; Daniel Barnett and Howard Groff, Appellants, v. Hugh WHITE, Paul Jones and White and Jones, a Professional

Corporation, Appellees.

No. 4447.

Supreme Court of Alaska.

May 1, 1981.

Timothy H. Stearns, Anchorage, for appellants.

Robert L. Eastaugh, Delaney, Wiles, Moore, Hayes & Reitman, Inc., Anchorage, for appellees.

Before RABINOWITZ, C. J., CONNOR and BURKE, JJ., and EBEN H. LEWIS, Superior Court Judge.

OPINION

BURKE, Justice.

The issue in this appeal is whether the superior court erred in ruling that a legal malpractice action was barred by Alaska's two year statute of limitations, AS 09.10.070. ¹

Van Horn Lodge, Inc., and two of its officers, Daniel Barnett and Howard Groff (hereinafter referred to collectively as Van Horn) began an action in the superior court against Hugh White and Paul Jones, Van Horn's former attorneys. The complaint alleged professional malpractice on the part of White and Jones. The superior court concluded that Van Horn's action was barred by AS 09.10.070, since the complaint was filed more than two years after the cause of action arose. Summary judgment was granted in favor of the defendants, White and Jones. ² This appeal followed.

I

In July, 1975, White and Jones were hired to represent Van Horn in a dispute between Van Horn and Donna and Gerald Ahearn, the purported lessees of a hotel owned by Van Horn. At that time, three separate lawsuits were already pending between Van Horn and the Ahearns. White and Jones entered their appearance in each of those actions and, on December 5, 1975, filed another complaint against the Ahearns for forcible entry and detainer. ³ On December 31, 1975, the superior court ordered the four cases consolidated. ⁴ In its order of consolidation, the court ordered Van Horn to file an amended complaint by January 23, 1976, repleading Van Horn's various claims for relief.

Shortly after the court's December 31 order, White and Jones advised Van Horn that they were concerned about Van Horn's failure to pay for their services. According to White and Jones, they had already advanced more than $3,000 in litigation costs and were owed attorney's fees in excess of $20,000. In discussions that began on January 5, 1976, White and Jones advised Van Horn that they could not afford to provide further legal services without payment. When told by Van Horn that there was not sufficient money available to make a satisfactory payment on the amount allegedly owed to them, White and Jones asked Van Horn to allow them to withdraw. On January 20, 1976, Van Horn consented to the withdrawal in writing. The withdrawal was formally approved by the superior court on February 2, 1976. ⁵

During the period that they represented Van Horn, White and Jones were co-counsel with attorney Thomas Keever. Prior to their withdrawal, White and Jones advised Van Horn of the January 23 deadline for the filing of Van Horn's amended complaint, as well as other deadlines, and urged Van Horn to contact Mr. Keever immediately.

On February 11, 1976, Mr. Keever moved for an extension of time for the filing of Van Horn's amended complaint. The motion was granted, but the superior court imposed certain "sanctions" for Van Horn's failure to meet the January 23 pleading deadline. The sanctions were announced orally on February 11, 1976, and set forth in a written order entered several days later, on February 19, 1976. The "sanctions" required Van Horn to return a liquor license to the Ahearns or forego receipt of monthly rent in the amount of $3,500 per month.

On February 14, 1978, Van Horn sued White and Jones for professional malpractice. Van Horn's complaint consisted of two "claims for relief." ⁶ The first alleged that the sanctions imposed "on or about February 11, 1976," had been proximately caused by the "negligence and nonfeasance" of White and Jones, resulting in damages exceeding $30,000 "by loss of rents from approximately February 11, 1976." The second claim for relief alleged that White and Jones "negligently delayed institution of a forcible entry and detainer action against (the Ahearns) until on or about December, 1975," and that "Said negligence and misfeasance ... was the proximate cause of damages to plaintiffs, in a sum in excess of $35,000.00."

White and Jones answered the complaint, denying Van Horn's allegations of negligence and proximate cause. White and Jones affirmatively alleged that they had advised Van Horn of their desire to withdraw some weeks before January 20, 1976; that Van Horn had executed a formal consent to their withdrawal on January 20, 1976; that Van Horn was aware of the January 23 pleading deadline prior to their withdrawal; and that Thomas Keever continued to represent Van Horn. As one of several affirmative defenses, White and Jones alleged that Van Horn's action was barred by the two-year statute of limitations, AS 09.10.070. ⁷

White and Jones thereafter moved for summary judgment, partly in reliance on their affirmative defense of the statute of limitations. On October 9, 1978, the superior court granted the motion, after concluding that the action was barred by AS 09.10.070, since it was not filed within two years after the cause of action arose. Upon entry of a final judgment in favor of White and Jones, Van Horn filed a notice of appeal.

II

Van Horn's first contention is that the superior court erred in ruling that the action was barred by AS 09.10.070. That section requires an action sounding in tort to be commenced within two years after the cause of action accrues. Silverton v. Marler, 389 P.2d 3 (Alaska 1964). Van Horn argues that its action, although alleging negligence on the part of White and Jones, actually arose out of a contract between the parties and that, therefore, AS 09.10.050 ⁸ is the applicable statute of limitations. Under AS 09.10.050 an action upon a contract may be commenced within six years from the time the cause of action arises. Under the latter section, Van Horn's complaint against White and Jones was timely.

We hold that the superior court was correct in ruling that AS 09.10.070 provides the applicable period of limitation in the case at bar. Van Horn's complaint sounded in tort, rather than contract. The duty that White and Jones allegedly breached was a duty of reasonable care imposed by law. The contract only gave rise to the duty; the claim that White and Jones breached an implied term of their contract of employment, to render competent and diligent legal services, is only a claim that they failed to exercise due care. There is no evidence of an agreement to obtain a particular result or to do a particular thing. Thus, we believe the essence of Van Horn's complaint was negligence, and the gravamen thereof lies in tort. Accordingly, the period of limitation found in AS 09.10.070, rather than AS 09.10.050, applies. Silverton v. Marler, 389 P.2d at 3-4. See Austin v. Fulton Ins. Co., 444 P.2d 536 (Alaska 1968); Pepsi Cola Bottling Co. v. Superior Burner Service Co., 427 P.2d 833 (Alaska 1967).

III

The next issue is whether the applicable statute of limitations, AS 09.10.070, barred Van Horn's action in the instant case.

The superior court ruled that the two year period allowed by that section began to run on February 11, 1976, the date upon which the court orally announced the sanctions being imposed for Van Horn's failure to file an amended complaint by January 23, 1976. Van Horn contends that such period of limitation began to run at some later date. As to its first claim for relief, Van Horn argues that the two year period began to run on the date it first learned that the sanctions had been imposed, in any event no sooner than February 19, 1976, when the written order formally imposing those sanctions was entered. As to its second claim for relief, Van Horn argues that the period began to run in October, 1976, when it first learned the full extent of the loss of rent money allegedly caused by White and Jones' delay in filing an action for forcible entry and detainer against the Ahearns.

White and Jones' duty to represent Van Horn terminated when Van Horn consented to their withdrawal on January 20, 1976. Thereafter, they were under no obligation to file the amended complaint or otherwise represent Van Horn in Van Horn's dispute with the Ahearns. The only duty that might have remained was the duty to advise Van Horn of the pending deadline and the need to take timely action to protect its interests. Since Van Horn makes no contention that this duty was breached, we conclude that no liability could attach for White and Jones' failure to file the amended complaint. Thus, wholly apart from the question of whether Van Horn's first claim for relief was barred by AS 09.10.070, we conclude that White and Jones were entitled to judgment, as a matter of law, on Van Horn's first claim for relief. Having reached this conclusion on the merits of Van Horn's first claim for relief, we need not reach the question of precisely when the period of limitations on this claim began to run.

As to Van Horn's second claim for relief, we conclude that the action was barred by AS 09.10.070. White and Jones' failure to file an action for forcible entry and detainer until December, 1975, was clearly known to Van Horn more than two years prior to the date upon which it filed its complaint for malpractice. Also known to Van Horn was the fact that it was not receiving rent from the Ahearns during the period preceding the filing of the complaint for forcible entry and detainer. While the full extent of the loss allegedly attributable to such acts or omissions on the part of White and Jones may not have been known, Van Horn was certainly aware of all of the essential facts forming the basis for its second claim for relief more than two years prior to the time it filed its complaint against White and Jones. Such being the case, its second claim for relief was barred...