Thursday, February 21, 2019

Letter Of The Law (Of Legal Malpractice Statute Of Limitations)

The South Carolina Court of Appeals has affirmed the dismissal of a legal malpractice action

In this appeal, Personal Care, Inc., argues the circuit court erred in denying its motion to restore a legal malpractice action against its former attorneys based upon a finding the statute of limitations had expired. Personal Care also contends the circuit court applied an incorrect standard when failing to find the statute of limitations begins to run in a legal malpractice context when the underlying case is resolved against the client. We affirm.

The client had retained the attorney to sue a former employee who alleged misappropriated trade secrets

[Attorney defendant] Theos filed the underlying action against Askew in Charleston County on behalf of Personal Care (the Askew lawsuit), asserting claims related to Askew's alleged use of Personal Care's propriety and confidential information. Askew filed her answer on March 9, 2010, asserting various defenses as well as a claim of improper venue. In addition, Askew asserted a counterclaim for defamation stemming directly from the publication of Theos's September 14, 2009 letter to [third party service provider] Low Country Dialysis.

The client did not cooperate in the counterclaim discovery

In August 2012, Theos moved to be relieved as Personal Care's counsel, citing a conflict of interest under Rules 1.7 and 3.7, SCRCP. The motion was based on the belief that Theos could no longer represent Personal Care in the Askew lawsuit given the likelihood he would have to testify regarding the defamation claim precipitated by the September 14, 2009 letter. The circuit court granted the motion in November 2012 but allowed Personal Care sixty days to find new counsel, which they did.

And thereafter the lawyers were sued.

Statute of limitations

Personal Care contends the circuit court applied the improper standard in finding the statute of limitations began to run when Askew filed her counterclaim in March 2010. Citing Stokes-Craven, Personal Care argues a malpractice claim accrues on the date an "adverse verdict, judgment, or ruling" is entered against the client in the underlying lawsuit. Finally, Personal Care asserts there is still a question of fact as to the date it knew or should have known it had a claim against Respondents...

In this case, Personal Care's cause of action is predicated not on an adverse judgment or the failure of the underlying suit, but on the September 14, 2009 letter that precipitated the defamation counterclaim. This is evident from the face of the complaint itself as well as the fact Personal Care filed its complaint before the Askew lawsuit settled. Moreover, Personal Care alleges it first suffered a financial injury when "it was forced to spend additional funds and commit time and other resources to mitigate the damages caused as a direct and proximate result of [Respondents'] errors." Accordingly, we believe the circuit court correctly found the cause of action accrued on the date Personal Care reasonably ought to have discovered it was injured by Theos's letter, not when the lawsuit settled.

(Mike Frisch)

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Point of Order: If the "statute of limitations has expired", it means that the statute is no longer in force. Then no action is time-barred.

Posted by: George Fleming | Feb 22, 2019 10:57:39 AM

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