4-5 Statute of Limitations

• Jurisdiction: United States

4-5 Statute of Limitations

A professional malpractice lawsuit against an attorney with whom the client was in privity must be commenced within two years from the time the cause of action is discovered or should have been discovered with the exercise of due diligence.⁷⁵ This is because Florida's statute provides:

Actions other than for recovery of real property shall be commenced as follows . . .
(4) WITHIN TWO YEARS—

(a) An action for professional malpractice, other than medical malpractice, whether founded on contract or tort; provided that the period of limitations shall run from the time the cause of action is discovered or should have been discovered with the exercise of due diligence. However, the limitation of actions herein for professional malpractice shall be limited to persons in privity with the professional.⁷⁶

Of course, other jurisdictions have different statutes of limitations for legal malpractice actions, and in an appropriate case a Florida court will apply them.⁷⁷

A statute of limitations defense commonly arises in the summary judgment context. The party attempting to establish the defense has the burden of proof, and the opposing party has no obligation to come forward with its own evidence until it is shown when the statute commenced and that it expired.⁷⁸

The defense is only available at the motion to dismiss stage if the facts supporting the defense affirmatively appear on the face of the complaint and conclusively establish that the statute of limitations bars the action as a matter of law.⁷⁹ Therefore, "[i]f the face of the complaint does not show the cause is time barred, but the defendant wishes to challenge the suit on that basis, the defendant must raise the affirmative defense of statute of limitations in his answer."⁸⁰

4-5:1 Accrual

Whenever a statute of limitations defense is raised, the chief task is to determine when the two-year period began to run.⁸¹ Ordinarily, this is not possible by means of summary judgment.⁸² However, in Howard v. Minnesota Muskies, Inc.,⁸³ the appellate court affirmed a grant of summary judgment because the client had inexcusably slept on his rights:

We affirm the summary final judgment entered in favor of the defendant Eugene E. Stearns on the attorney malpractice claim because it was time barred by the applicable two-year statute of limitations. The plaintiff Robert A. How-ard admittedly learned, no later than May 1978, of a prior judgment entered against him and, with the exercise of due diligence, should have learned shortly thereafter that this was a default judgment entered after his counsel, the defendant Stearns, had withdrawn; the alleged attorney malpractice was that Stearns withdrew without the plaintiff Howard's knowledge or consent. Without dispute, the plaintiff Howard made only one effort thereafter to contact the defendant Stearns, to wit: he telephoned Stearns' office only to discover that Stearns was no longer with the law firm where he previously had practiced. The plaintiff should have, at that point, been on notice that something was awry. Instead, he abandoned all inquiries in the matter, disregarded the judgment against him, and took no action whatever until several years later when serious collection efforts were made by the judgment creditor to collect on the judgment. By the time he filed the subject suit, well over two years had expired, as a matter of law, from the time he should have discovered his attorney's alleged professional negligence.⁸⁴

If a client incurs expense defending a lawsuit that should have settled but did not because of the attorney's malpractice, the accrual of the cause of action begins at the time the client learned of the botched settlement and not when the damages were paid to the claimant in the underlying lawsuit.⁸⁵

In Peat, Marwick, Mitchell & Co. v. Lane,⁸⁶ an accountant malpractice case, the Florida Supreme Court analogized the accrual of a cause of action for legal malpractice to the accrual of a cause of action against accountants: "A clear majority of the district courts have expressly held that a cause of action for legal malpractice does not accrue until the underlying legal proceeding has been completed on appellate review because, until that time, one cannot determine if there was any actionable error by the attorney."⁸⁷

As is obvious, the Court wanted to avoid requiring a party to file a malpractice proceeding against an attorney claiming negligence while taking a totally inconsistent position during an appeal by alleging that the attorney was correct and a lower court's ruling was incorrect. Thus, Peat, Marwick holds that the cause of action does not begin to accrue until the injured party knew or should have known of the "redressable harm or injury."⁸⁸

In the course of its opinion, the Court disapproved of Sawyer v. Earle⁸⁹ to the extent of any conflict.⁹⁰ In Sawyer, the Second District Court of Appeal held that the statute of limitations had been tolled because the claimant was unable to "determine his exact amount or full extent of damages"⁹¹ at the time the statute would have expired. The difference between the two cases turns on the fact that in Peat, Marwick, the client maintained that its legal position was correct until after the U.S. Tax Court had ruled otherwise, while in Sawyer the client believed his representation to be improper when he discharged his first lawyer, which was well within the two-year period.

The clients in Spivey v. Trader⁹² retained an attorney who advised them that transferring certain assets owned as tenants by the entireties to a corporation would place such assets beyond the reach of the plaintiff in a pending personal injury action. Contrary to this advice, a judgment was rendered in supplemental proceedings to the personal injury action finding such assets subject to attachment. Relying on Peat, Mar-wick, the Spivey court held that the two-year countdown began when the judgment on the supplemental proceedings was rendered, not when the client suspected that the attorney's advice was wrong.⁹³ This was because the client had "vigorously contested the fact that the real estate, or his interest therein, was subject to attachment in the personal injury action filed against him personally."⁹⁴

4-5:1.1 Transactional Malpractice Cases

Determining when the statute of limitations begins to run in a transactional malpractice case can be particularly challenging. Unlike in a litigated matter, there is no recognizable point at which the client should have realized that something was wrong.

In Throneburg v. Boose, Casey, Ciklin, Lubitz, Martens, McBane & O'Connell, P.A.,⁹⁵ the Fourth District Court of Appeal reversed a dismissal based on the statute of limitations having expired by writing:

We understand Peat Marwick to draw a distinction between knowledge of actual harm from legal malpractice and knowledge of potential harm. The former begins the limitations period; the latter does not. Legal services, like accounting services, are often subject to differing views among practitioners. Lawyers often disagree with one another on the same transaction. It seems clear to us that Peat Marwick, properly understood, means that the limitations period on claims of legal malpractice should not commence until it is reasonably clear that the client has actually suffered some damage from legal advice or services.⁹⁶

Thus, the filing of the lawsuit against the attorney in Throneburg more than two years after the real estate document in question was prepared, but less than two years after a decision holding the document to be invalid, was timely.⁹⁷

In Robbat v. Gordon,⁹⁸ the preparation of a Florida post-nuptial agreement was deemed transactional, with the court writing:

Read together, Peat, Marwick and Throneburg stand for the proposition that knowledge of an adverse decision by a lower tribunal is not sufficient to start the running of the statute of limitations in a transactional malpractice claim where the client chooses to defend the actions of the defendant on appeal, since to require the client to pursue the malpractice claim while at the same time defending the professional's actions on appeal would place the client "in the wholly untenable position of having to take directly contrary positions in two actions."⁹⁹

Glucksman v. Persol North America, Inc.¹⁰⁰ involved both transactional and litigation matters. The focus of the appellate court's analysis was the Florida Supreme Court's declaration in Blumberg v. USAA Casualty Insurance Co.,¹⁰¹ that "a negligence/malpractice cause of action accrues when the client incurs damages at the conclusion of the related or underlying judicial proceeding, or if there are no related or underlying judicial proceedings, when the client's right to sue in the related or underlying proceeding expires."¹⁰²

Persol North America ("PNA") and Persol Italy ("PI") had an eyewear distributorship agreement that PI terminated on April 18, 1995. The parties reached a settlement on June 1, 1995. PNA then hired Steven Glucksman to file a legal malpractice claim against George Lott, the attorney that had drawn up the distributorship agreement, because he had failed to delete a clause in the distributorship agreement that gave PI the unilateral right to terminate PNA.

Glucksman filed the lawsuit against Lott on May 9, 1997. Lott defended on the ground that PNA had decided to go ahead with the deal even though it had been told that PI was unwilling to delete the clause. In June 1998, PNA and Lott settled. One month later, PNA, apparently believing that it had received too little, filed a legal mal-practice action against Glucksman, claiming that he had failed to file the malpractice action against Lott before the statute of limitations ran out on April 18, 1997.

Glucksman moved for summary judgment, contending that the statute of limitations did not expire until June 1, 1997, thereby making the lawsuit against Lott timely. The trial court rejected this...