Docket No. 78-4734.
Decided August 11, 1980. Leave to appeal applied for.
McGinty, Halverson, Brown Jakubiak, P.C. (by James C. Halverson), for plaintiffs.
Smith, Haughey, Rice Roegge (by Ellen J. Eggers), for defendants Frederic A. Grimm; Landman, Grimm, Bradbury Laurin; and Landman, Hathaway, Latimer, Clink Robb.
Hillman, Baxter Hammond, for defendants Robert L. Forsythe and Parmenter, Forsythe Rude.
Before: M.J. KELLY, P.J., and D.F. WALSH and BEASLEY, JJ.
Plaintiffs claim damages from defendants, who are two lawfirms and certain named individual attorneys, for alleged legal malpractice. Defendant Grimm and his former lawfirm filed a motion for accelerated judgment based on the claim that the statute of limitations had run. The trial court denied this motion. Defendants-appellants, Grimm and his lawfirm, who will hereinafter be referred to as appellants, appeal by leave granted, and plaintiffs cross-appeal.
The certified, concise statement of facts indicates that plaintiffs retained appellants in June 1968, to represent them in connection with their interest in the so-called Sieradzki investments. Appellants provided legal services to plaintiffs until September 12, 1974, when appellant Grimm informed them that his appointment as a circuit judge prevented his representing them any longer. On that same day, September 12, 1974, plaintiffs retained defendant Forsythe and his lawfirm to represent them in connection with their various investments. On May 6, 1976, defendant Forsythe informed plaintiffs that the statute of limitations had run with respect to any claims arising out of their investment transactions. On April 25, 1978, plaintiffs filed the within case for damages, alleging legal malpractice.
On May 23, 1978, appellant Grimm filed his motion for accelerated judgment based on MCL 600.5838; MSA 27A.5838. This statute is an amended version which took effect on July 9, 1975. It provides that a malpractice action may be brought within two years after termination of professional services, or within six months after plaintiff discovers the existence of a claim, whichever is later. Plaintiffs' opposition to defendants' motion is essentially based on their position that their claim was governed by the statute as it was before the 1975 amendment.
Initially, we review the statute, before and after its amendment, and its effect as applied to the facts in this case. Prior to the 1975 amendment, the formerly constituted MCL 600.5838; MSA 27A.5838, which statute must be read together with MCL 600.5805; MSA 27A.5805, provided:
"Sec. 5805. No person may bring or maintain any action to recover damages for injuries to persons * * * unless, after the claim first accrued * * * he commences the action within the periods of time prescribed by this section. * * *
"(3) The period of limitations is 2 years for actions charging malpractice."
"Sec. 5838. A claim based on the malpractice of a person who is, or holds himself out to be, a member of a state licensed profession accrues at the time that person discontinues treating or otherwise serving the plaintiff in a professional or pseudoprofessional capacity as to the matters out of which the claim for malpractice arose."
In the 1973 case of Dyke v Richard, the Supreme Court construed the statute to provide that an action for malpractice must be brought within two years of the date professional services are discontinued or within two years of when plaintiff discovers or, in the exercise of reasonable diligence, should have discovered the alleged malpractice, whichever is later.
If this statute, as it read prior to its amendment, applies to plaintiffs' action, that action is not barred because, for purposes of this appeal, we accept as fact that the plaintiffs did not discover, until May 6, 1976, that the statute of limitations applicable to their investment transactions had run. Since plaintiffs brought suit against appellant Grimm on April 25, 1978, their claims against appellants would not be barred by expiration of the statute of limitations.
However, there would be a different result if the statute, as amended July 9, 1975, applied to plaintiffs' claim. That statute, MCL 600.5838; MSA 27A.5838, provides as follows:
"(1) A claim based on the malpractice of a person who is, or holds himself out to be, a member of a state licensed profession, * * * accrues at the time that person discontinues treating or otherwise serving the plaintiff in a professional or pseudoprofessional capacity as to the matters out of which the claim for malpractice arose, regardless of the time the plaintiff discovers or otherwise has knowledge of the claim.
"(2) An action involving a claim based on malpractice may be commenced at any time within the applicable period prescribed in sections 5805 or 5851 to 5856, or within 6 months after the plaintiff discovers or should have discovered the existence of the claim, whichever is later. * * * A malpractice action which is not commenced within the time prescribed by this sub-section is barred." (Footnote omitted.)
If this statute, as amended, applies to plaintiffs' action, it is barred, since defendant Grimm withdrew as plaintiffs' attorney on September 12, 1974, more than three years before suit was filed on April 25, 1978. Further, plaintiffs discovered the alleged malpractice on May 6, 1976, more than six months before filing suit.
In analyzing this question, we start with the general rule that the statute of limitations in effect at the time the plaintiffs' cause of action arose governs.
In this case, plaintiffs alleged that appellant Grimm failed to file a lawsuit as a result of the Sieradzki investment transactions within the time afforded under the applicable statute of limitations. Accordingly, plaintiffs' claim against appellant Grimm arose on the date that the statute of limitations expired for bringing the original action arising out of the Sieradzki transactions. Until that date, appellant Grimm or his firm could have filed suit on plaintiffs' behalf, and plaintiffs would have had no cause of action against them for permitting the statute of limitations to run.
Some will argue that plaintiffs' alleged malpractice claim against Grimm accrued, for purposes of measuring the running of the statute of limitations, either on the last date Grimm performed legal services for plaintiffs (9/12/74), or on the date plaintiffs learned that their claims against Sieradzki had been lost by running of the statute of limitations (5/4/76).
To adopt that reasoning is to create a dilemma because the answer as to which of those dates controls is the very question we are trying to decide. But, it is not only because a dilemma is created that we adopt different reasoning.
In general, the statute of limitations begins to run against a cause of action only after the right to prosecute such cause of action to a successful conclusion has accrued.
"In those cases where the negligence complained of is delay or inaction, which, unlike a positive negligent act where the time of commission may with some certainty be established, covers some space of time, some courts have stated that the statute of limitations against a cause of action for negligent malpractice starts to run when the attorney's delay or inaction has resulted in some injury, as distinguished from consequential damages, to the client, and thus, for example, if the delay results in a client's cause of action against another being barred by the statute of limitations, the injury referred to would be when the client's action is barred, and thus, at this time the statute of limitations against the client's cause of action against his attorney will start to run." (18 ALR3d 987).
In Biberstine, the alleged malpractice consisted of failing to include a debt in a bankruptcy schedule. There, the Supreme Court held:
"We hold that the statute of limitations starts to run at the time the plaintiff was discharged in bankruptcy. Until then, the defendant could have petitioned the bankruptcy court to amend the petition, and the plaintiff would not have had a claim for malpractice."
We believe that using the date when the malpractice cause of action in fact accrued best gives effect to the legislative intention. Thus, in this case, we adopt the date upon which plaintiffs lost their possible claims arising out of the Sieradzki investments by expiration of the statute of limitations as the key date in deciding which statute of limitations applies to plaintiffs' legal malpractice claim against appellants.
However, in this case, the record does not indicate when the statute of limitations ran and barred these original potential actions against the Sieradzki interests. We do know that plaintiffs were informed that the statute had run on May 6, 1976, but the exact date on which it ran is not known.
Applying these premises to this case, we find that if plaintiffs' cause of action against the Sieradzki interests was barred by running of the statute of limitations on or after July 9, 1975, then plaintiffs' malpractice claim against appellants is barred by the amended statute of limitations that became effective July 9, 1975. If, however, plaintiffs' cause of action against the Sieradzki interests was barred by running of the statute of limitations before July 9, 1975, then plaintiffs' malpractice claim against appellants is not barred, because the statute of limitations as it was constituted before the July 9, 1975, amendment controls.
The record before us does not make clear or contain a finding as to when the statute ran so as to bar plaintiffs from bringing a lawsuit against the Sieradzki interests. Consequently, we remand this case to the trial court for appropriate proceedings to establish that date; only in so doing can the issue of whether accelerated judgment in favor of appellants should properly be entered be decided.
We have considered the issues plaintiffs raise in their cross-appeal and find them to be without merit.