Walsh v. Swapp Law, PLLC

• Decision Date: 22 April 2020
• Docket Number: Docket No. 46885
• Citation: 166 Idaho 629,462 P.3d 607
• Parties: Sharon WALSH, Plaintiff-Appellant, v. SWAPP LAW, PLLC, a foreign business entity, dba Craig Swapp & Associates; and Stephen Redd, an individual attorney, Defendants-Respondents, and Does I-X, Defendants.
• Court: Idaho Supreme Court

166 Idaho 629

462 P.3d 607

Sharon WALSH, Plaintiff-Appellant,

v.SWAPP LAW, PLLC, a foreign business entity, dba Craig Swapp & Associates; and Stephen Redd, an individual attorney, Defendants-Respondents,andDoes I-X, Defendants.

Docket No. 46885

Supreme Court of Idaho, Boise, February 2020 Term.

Opinion Filed: April 22, 2020

Beckett Law Firm, for Appellant. Kristian S. Beckett argued.

Powers Farley, PC, for Respondents. James S. Thomson, II, argued.

BURDICK, Chief Justice.

This appeal arises from a legal malpractice action in which the district court awarded summary judgment in favor of Swapp Law, PLLC, d/b/a Craig Swapp & Associates, and Stephen Redd, an employee of the firm (collectively, "CS&A"). Sharon Walsh retained CS&A after she was involved in two car accidents in 2013. In the negligence action stemming from the first accident, Walsh followed Redd's advice and settled the case. Walsh then changed representation and, with her new counsel, settled the second case. On March 2, 2017, Walsh filed this action alleging, among other things, that CS&A was negligent in advising her to settle the first case while the second case was still pending and by failing to advise her of an underlying subrogation responsibility in the first case. CS&A moved for summary judgment. It argued that Walsh's claim was time-barred under Idaho Code section 5-219(4) ’s two-year statute of limitations because her malpractice claim began to accrue when she released the first claim. The district court agreed and granted the motion. Walsh timely appeals.

I. FACTUAL AND PROCEDURAL BACKGROUND

On February 8, 2013, Sharon Walsh was rear-ended by Jake Hanson (the "First Collision"). Her vehicle was damaged and Walsh sustained injuries for which she sought medical treatment, including regular chiropractic care for neck pain at Jon Gray Chiropractic. Three months later, on May 7, 2013, Walsh was involved in a second motor-vehicle collision with Donald LaMott (the "Second Collision"). She was injured again and experienced what she described as "new or different pain," starting in her neck. She later underwent surgical correction for a damaged disc in her cervical spine and sustained a permanent partial disability.

After the Second Collision, Walsh retained Craig Swapp & Associates to represent her on both collisions. CS&A assigned Walsh's case to a pre-litigation "pod" where Paul Swainstrom acted as the supervising attorney and Stephen Redd acted as the "settlement negotiator." On April 30, 2014, Redd sent a statement of claim to Hanson's insurer, American National Property and Casualty Insurance Company ("American National Insurance") offering to settle the First Collision claim for $16,500. In September 2014, CS&A reorganized personnel and Craig Swapp took over as the supervising attorney for Walsh's case. Around the same time, CS&A obtained an apportionment opinion from Dr. Jon Gray that Walsh's injuries could be apportioned 15% to the First Collision and 85% to the Second Collision. In January 2015, American National Insurance offered to settle the case for $8,000 plus an agreement to pay a $5,000 outstanding medical lien.

On February 2, 2015, Blue Cross Blue Shield of Idaho wrote CS&A to assert a subrogation interest of $60,572.08 against the proceeds from the First Collision and $3,980.31 for the Second Collision. It is unclear when CS&A received this letter, but Redd testified that he thought he received it after the First Collision case had settled. He also testified that, upon receiving the letter, he contacted Blue Cross to dispute their apportionment. CS&A never informed Walsh of this letter nor the asserted subrogation interest while the firm represented her. She only learned of its existence via discovery in the instant action. On the morning of February 4, 2015, Redd discussed American National Insurance's offer with Walsh and told her that it was likely the "best offer [she] was going to get for the [First Collision]." Based on Redd's recommendation, Walsh authorized the settlement and signed a release of claims on February 5, 2015. American National Insurance remitted payment a day later. On February 10, 2015, Blue Cross sent another letter to CS&A after receiving Redd's. It reads:

Thank you for advising us that you are in the process of settling Sharon Walsh's claim arising out of [the First Collision]. She also has a claim for injuries as a result of [the Second Collision]. Blue Cross of Idaho has a subrogation claim for medical bills Ms. Walsh incurred from both accidents. The total subrogation interest is $61,304.21. Apparently there is confusion over which medical bills are attributable to which collision. Until the confusion is resolved, we ask that you keep $61,304.21 in trust pursuant to Utah Rule of Professional Conduct 1.15, or the Idaho Rules of Professional conduct 1.15, whichever is applicable.

On April 29, 2015, CS&A filed a lawsuit against LaMott on Walsh's behalf. In June 2015, because the case had not yet settled, CS&A assigned Walsh's case to a new litigation associate in the firm, Kristian Beckett. Beckett is also Walsh's attorney in this malpractice case and appeal. In his first meeting with Walsh, Beckett asked why she settled the First Collision case. After she explained that Redd advised her to settle, Beckett told her that "it was not a good idea to settle one of two claims where the claim is still pending in litigation where there is an overlapping injury." He also said that "there would be an ‘empty chair’ that would be difficult to deal with." Shortly after receiving Walsh's case, Beckett informed Swapp that he believed that the firm might have committed malpractice by advising Walsh to settle the First Collision case before the Second Collision case was resolved.

On February 22, 2016, Dr. Tyler Frizzell, a Boise neurosurgeon, produced an independent-medical-exam opinion for CS&A. In it, Dr. Frizzell attributed 15% of Walsh's medical care and total expenses to the First Collision and the remaining 85% to the Second Collision.

In late March 2016, LaMott's attorney deposed Walsh during discovery for the Second Collision litigation. Based on that deposition, Beckett believed that LaMott would argue that Walsh's damages were caused by something other than the Second Collision. After the deposition, Beckett informed Walsh that he believed that the firm had committed malpractice when it advised her to settle the First Collision claim. On April 1, 2016, Beckett sent an email to Swapp, detailing his belief that "malpractice was committed with regard to settling [the First Collision case]" and that CS&A "need[ed] to withdraw from representing [Walsh] on the second claim." He explained that when he received Walsh's file, his "first inclination" was that malpractice had occurred and that he had expressed that concern at that time. The email further detailed Beckett's belief that "[t]he full measure of the malpractice was realized" on February 22, 2016, when Dr. Frizzell opined that Walsh sustained a permanent disability rating of 19%, of which he apportioned 16% to the Second Collision, and that 15% of the medical-care costs following the Second Collision should be apportioned to the First Collision. Beckett also wrote that he had "change[d] [his] original opinion" that the firm should continue to represent Walsh on the Second Collision case. He explained that he now believed that CS&A should disclose the malpractice, surrender her file, and advise her to seek legal representation.

Shortly after this email, in April 2016, Beckett terminated his employment with CS&A. Though CS&A assigned another litigator to her case, Walsh decided to continue with Beckett as her attorney independent of CS&A.

On March 2, 2017, Walsh, with Beckett acting as her attorney, filed a complaint against CS&A alleging legal malpractice. In a later amended complaint, Walsh alleged that the CS&A and Redd were negligent in advising her to settle the first case, failing to appropriately investigate her injuries to determine which were attributable to which collision, and by failing to inform her that Blue Cross had asserted a subrogation interest in her case. On July 31, 2017, CS&A filed an answer in which they asserted, among other defenses, that Walsh's claim was barred by Idaho Code section 5-219(4) ’s two-year statute of limitations.

Around August 28, 2017, LaMott agreed to settle the Second Collision litigation for the policy limits. This included the full amount of LaMott's liability policy limit ($100,000) and the full amount of the underinsured-motorist policy limit under Walsh's own policy ($100,000). LaMott and Walsh signed a settlement release on September 21, 2017. On October 12, 2017, the Second Collision case was dismissed with prejudice based upon the parties’ stipulation. Meanwhile, CS&A moved to disqualify Beckett on grounds that he would become a material witness if Walsh's case were to go to trial. In December 2017, the district court denied the motion to disqualify Beckett, ruling that he could continue as counsel for purposes of pre-trial litigation, but expressly told the parties it would consider a renewed motion 90 days before trial.¹

After additional discovery, CS&A filed a motion for summary judgment arguing Walsh's claim was time-barred under Idaho Code section 5-219(4) ’s two-year statute of limitations. CS&A pinpointed February 5, 2015—the date Walsh released the First Collision claim—as the moment Walsh's malpractice claim began to accrue.

On September 6, 2018, Walsh lodged two filings. First, Walsh filed a motion for leave to file a second amended complaint to add James Craig Swapp as an additional defendant, "clarify the issues," and seek punitive damages. Second, Walsh filed her response to CS&A's motion for summary judgment. She offered two principal arguments against the motion along with a supporting affidavit and exhibits. Walsh argued that CS&A disregarded Idaho's recognition of the completed-tort theory, which...