DEFENSES: Statute of limitations applied to legal negligence claim, date of discovery vs. date of occurrence (BDT Products vs. Higgs, Fletcher & Mack, COA NPO 12/13/2013)

Legal Malpractice. Statute of Limitations.
BDT Products, Inc. vs. Higgs, Fletcher & Mack
12/13/2013 COA NPO
Following a careful review, we find the circuit court erred when it concluded that BDT’s legal negligence complaint was timely filed within the applicable one- year statute of limitations. Accordingly, we reverse that portion of the circuit court’s May 24, 2011 order and remand for entry of an order consistent with this opinion (2011-CA-001131). Likewise, we affirm the circuit court’s August 1, 2011 order on statute-of-limitations grounds (2011-CA-001475). Because resolving the cross-appeal is dispositive of all other issues, BDT’s remaining direct appeal, 2011-CA-001088, is denied as moot.

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We first address the statute-of-limitations argument raised by Higgs on cross-appeal, and adopted by Herron in its response,8 because it is dispositive of BDT’s direct appeals. Higgs and Herron assert that BDT’s malpractice action is time-barred because BDT filed its complaint outside the one-year statute of limitations for professional negligence claims prescribed by KRS 413.245. Under this statute: [A] civil action, whether brought in tort or contract, arising out of any act or omission in rendering, or failing to render, professional services for others shall be brought within one (1) year from the date of the occurrence or from the date when the cause of action was, or reasonably should have been, discovered by the party injured. Id. Construing KRS 413.245, our Supreme Court has explained that it encompasses two separate statutes of limitation: “The first is the date of the occurrence, and the second is the date of discovery, if it is later in time.” Pedigo v. Breen, 169 S.W.3d 831, 833 (Ky. 2004). BDT fittingly concedes “[t]his case is an ‘occurrence’ case.” (Consolidated Cross-Appellee/Appellant Reply Brief at 5). “Occurrence,” as used in KRS 413.245, is synonymous with “cause of action[.]” Doe v. Golden & Walters, PLLC, 173 S.W.3d 260, 271 (Ky. App. 2005). An “occurrence” legal malpractice claim is ripe, and a cause of action has accrued, when both negligence and “reasonably ascertainable” damages have occurred. Pedigo, 169 S.W.3d at 833; Michels v. Sklavos, 869 S.W.2d 728, 730 (Ky. 1994). “[T]he use of the word ‘occurrence’ in KRS 413.245 indicates a legislative policy that there should be some definable, readily ascertainable event which triggers the statute.” Michels, 869 S.W.2d at 730. The so-called “triggering event” is “the date of ‘irrevocable non-speculative injury.'” Id. (citation omitted).

When, then, is an injury fixed and non-speculative? Our Supreme Court has answered this question. When, as alleged in this case, the legal malpractice claim is based on “litigation negligence,”9 our Supreme Court has held “that the injury becomes definite and non-speculative when the underlying case is final” and nonappealable. Pedigo, 169 S.W.3d at 833; Michels, 869 S.W.2d at 730 (“[W]hether the attorney’s negligence has caused injury necessarily must await the final outcome of the underlying case.”). The premise underlying this rule of finality is that there is a theoretical possibility that the injured party may “be fully restored” by virtue of the appeals process “to the position that he occupied before the negligent act or omission.” Doe, 173 S.W.3d at 272. The Kentucky Supreme Court’s reasoning in Hibbard v. Taylor, 837 S.W.2d 500 (Ky. 1992), is particularly enlightening.

In Hibbard, our Supreme Court explained that a client’s legal malpractice

claim accrues:when the result of the appeal became final and the trial court’s judgment became the unalterable law of the case. Only then [is the client] put on notice that the principal damage (the adverse judgment) was real; but more importantly, only then could he justifiably claim that the entire damage was proximately caused by counsel’s failure, for which he might seek a remedy, and not by thetrial court’s error, for which he would have none.

Id. at 502.