Judgment Does Not Revive Malpractice Limitations Period

• Pages: 9-9
• Date: 01 January 2025
• Published date: 01 January 2025
• Author: William H. Newman
• Subject Matter: Administrative & Public Law

he legal malpractice statute

of limitations for counsel’s

failure to timely f‌ile an insur-

ance claim commences when

the claim is denied, not when

the carrier later prevails in a declara-

tory judgment action about cover-

age. In Concepts Design Furniture v.

FisherBroyles, LLP, the U.S. Court of

Appeals for the Seventh Circuit held

that the statute of limitations for the

insured’s malpractice claim began to

run when it learned that its insurer

had denied coverage, well before later

declaratory judgment litigation over

the coverage. ABA Litigation Section

leaders believe the decision correctly

identif‌ies when a malpractice plainti

suers an injury.

After a Hong Kong furniture com-

pany sued a Canadian competitor in

2014 for intellectual property infringe-

ment, the Canadian defendant retained

an attorney to represent it and notif‌ied

the attorney that it had an insurance

policy that might apply to the legal

fees and damages sought. Despite this

notice, the attorney did not advise the

defendant to submit a claim to the

insurer, and no claim was submitted at

the time.

After the defendant lost the under-

lying litigation in 2018, it notif‌ied its

insurer, which denied coverage in

September 2019. Shortly thereafter,

the insurer sued seeking a declaratory

judgment that it did not need to pay

the claim. The insurer prevailed in May

2021. Six months later, the defendant

sued its lawyer for malpractice argu-

ing that the insurer would have covered

millions of dollars’ worth of costs if the

attorney had advised it to timely notify

the insurer.

The lawyer moved to dismiss the

claim as untimely. He argued that the

company knew about its injury no

later than September 2019, when the

insurance company denied coverage

because the claim was noticed too late.

Because the applicable the statute of

Judgment Does Not Revive

Malpractice Limitations Period

limitations for legal malpractice claims

was two years, the attorney contended

that the claim had expired in September

2021, two months before the lawsuit

against him began. The U.S. District

Court for the Northern District of Illinois

agreed.

On appeal, the company claimed

that the limitations period began run-

ning only when the court decided the

declaratory judgment action. It argued

that it suered an injury, or should

have discovered its injury, only upon

the “resolution of disputed facts” that

came with the decision on the declara-

tory judgment claim. The company

further contended that malpractice

claims accrue only upon the entry of

an adverse judgment in a lawsuit in

which “the plainti has become entan-

gled due to the purportedly negligent

advice.” The company claimed that it

therefore suered damages only when

it lost the lawsuit that the lawyer’s mal-

practice invited.

The court of appeals rejected the

claim on the grounds that an injury

occurs when a plainti suers “a loss

for which monetary damages may be

sought.” It held that the company’s

loss occurred well before the entry of

the declaratory judgment. It cited the

2019 letter from the insurer denying the

claim for lateness as evidence that the

company was on notice of the loss as

of that date. And it distinguished the

principle about malpractice claims aris-

ing after adverse judgements because

the claim in this case did not concern

mishandled litigation, but rather the

failure of the attorney to advise his cli-

ent to f‌ile an insurance claim.

Litigation Section leaders believe

this decision accurately identif‌ies when

a malpractice plainti suers an injury.

“The court got it right here,” states

Tiany A. Rowe, Washington, DC,

Co-Chair of the Section’s Professional

Liability Litigation Committee. “The

declaratory judgment litigation is com-

pletely separate from the cause of

By William H. Newman , Litigation News Team Editor

action in which the malpractice is

alleged to have occurred,” Rowe notes.

“The result on appeal here is unsur-

prising,” adds Jerey Gross, New York,

NY, Vice-Chair of the Section’s Trial

Practice Committee. “While the plainti

here argued that the injury was not def-

inite enough until there was a declara-

tory judgment denying coverage, many

legal malpractice claims accrue in situ-

ations where there never was a declara-

tory judgment or other judicial f‌inding

about the harm that ensued,” Gross

observes.

This decision reminds practitioners

to be careful in determining when a

limitations period starts. “This is an

aggressive approach to determination

of injury triggers and puts the onus on

defense lawyers to conservatively eval-

uate limitations issues,” advises George

F. Ritchie, Baltimore, MD, Vice-Chair of

the Section’s Business Torts & Unfair

Competition Committee.

Section leaders also note that the

issues underlying this dispute could

have been addressed through bet-

ter communication between counsel

and client. “The client and attorney

share responsibility for the inaccu-

rate or incomplete initial disclosures

that should have identif‌ied a relevant

insurance policy,” counsels Rowe. But

that communication may have been

impeded because the client did not hire

the lawyer until a year after the lawsuit

began. “At that point, even if the lawyer

had said go tell your carrier immedi-

ately, the carrier still would have denied

coverage because a year-late notice is

far too late,” notes Gross.

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Published in Litigation News Volu me 50, Number 2, Wint er 2025. © 2025 by t he American Bar A ssociation. Re produced with per mission. All righ ts reserved. Th is information or an y portion there of may not be copied or

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