Carver Plumbing Company, Inc. appeals a trial court's summary judgment favoring its former attorney, Martha Cone Beck. The Court of Appeals of Tennessee reverses this judgment, citing the existence of a genuine issue of material fact regarding whether Carver Plumbing’s claim against Beck is barred by the one-year statute of limitations for legal malpractice.
In March 1993, Carver Plumbing hired Beck to collect unpaid funds from Premier Builders for work on the International Plaza renovation project. Carver Plumbing, a subcontractor, sought to file a mechanic’s lien against the property after Premier Builders failed to pay. Beck prepared and filed a “Notice for Furnisher’s Lien” on March 15, 1993, claiming a lien of $17,000. However, the notice incorrectly cited the Tennessee Code section governing mechanic’s liens.
Tensions arose between Carver Plumbing and Beck when Carver learned that other subcontractors were being paid. Following an argument regarding Beck's handling of the case, Carver briefly considered hiring another attorney but ultimately decided to remain with Beck. Beck maintained representation after this dispute. Under Tennessee law, Beck had 90 days from the lien notice to file suit to enforce it, which is relevant to the timeline of the case.
Beck did not file a suit to enforce a mechanic’s lien against Equitable Pacific Partners within the required 90-day period. In November 1993, she filed a lawsuit against the general contractor, Premier Builders, but did not include Equitable Pacific Partners as a defendant, nor did she inform Carver Plumbing of the potential claim against them. A default judgment was obtained against Premier Builders in May 1994, but it was uncollectible due to the contractor's bankruptcy. On January 19, 1995, Beck informed Robert Carver that he had not pursued a suit against Equitable Pacific Partners due to Carver's expressed desire not to sue them because a relative worked there. Carver later claimed this was the first he learned of a potential lawsuit against Equitable Pacific Partners, asserting he never instructed Beck not to pursue it. He believed Beck was handling the claim appropriately and relied on her expertise. Subsequently, on July 5, 1995, Carver Plumbing filed a legal malpractice action against Beck, alleging negligence for failing to file the suit within the statute of limitations. Beck responded with a motion for summary judgment, arguing that the malpractice claim was barred by the one-year statute of limitations and asserting that Carver had instructed her not to sue Equitable Pacific Partners. Carver refuted this, stating he had instructed Beck to sue whoever was necessary to collect the owed money.
The trial court granted Beck's motion for summary judgment, determining that Carver Plumbing's legal malpractice claim was time-barred. The court found that Robert Carver knew or should have known as early as 1993 that Beck failed to timely file a suit to enforce a lien against Equitable Pacific Partners. The appeal examines whether the trial court appropriately concluded that no genuine issue of material fact existed, following the guidelines of summary judgment under T.R.C.P. 56.04.
In assessing summary judgment, the court must view evidence in favor of the nonmoving party and consider the strongest legitimate interpretation. The Tennessee Supreme Court has established a “discovery rule” for legal malpractice cases, which consists of two elements: (1) the plaintiff must have suffered a legally cognizable injury due to the defendant's negligence, and (2) the plaintiff must have known, or reasonably should have known, about the injury caused by the negligence.
In this case, it is undisputed that Carver Plumbing sustained a legally cognizable injury in June 1993 when the time limit for filing the lien expired. The appeal focuses on whether Robert Carver had knowledge of this injury more than one year before filing the lawsuit. The court recognizes that actual or constructive knowledge can satisfy this requirement; thus, the statute of limitations for legal malpractice typically starts when a plaintiff has actual knowledge of the injury. However, constructive knowledge may apply if the plaintiff is aware of facts that would alert a reasonable person to the injury resulting from the defendant's actions. The issue of when the statute of limitations begins, particularly in cases of alleged attorney negligence for failing to file within the statute of limitations, is central to this appeal.
The plaintiff's attorneys failed to file a construction defect suit against an architectural firm within the three-year statute of limitations, as established by T.C.A. 28-3-105(1). The plaintiff was unaware of this deadline due to erroneous advice from one attorney, who incorrectly stated it was four years. The issue was first recognized when the architectural firm asserted the statute of limitations defense in its answer, leading to the federal district court granting summary judgment in favor of the firm based on this defense. Subsequently, the plaintiff filed a legal malpractice suit against the attorneys for their failure to file timely.
The court determined that the statute of limitations for the legal malpractice claim began when the architectural firm raised the statute of limitations defense. It concluded that the requirements for a legal malpractice claim were satisfied at that point: the attorneys' negligence occurred, the plaintiff was injured by this negligence, and the plaintiff should have discovered the negligence through reasonable diligence. The court referenced the precedent set in *Caledonia Leasing and Equipment Co. Inc. v. Armstrong*, which outlines that a legal malpractice cause of action accrues when negligence occurs, the client suffers injury, and the client discovers or should have discovered the relevant facts.
The evidence indicated a genuine issue regarding whether Robert Carver was aware of the negligence prior to filing the malpractice suit. Carver had instructed his attorney, Beck, to sue the necessary parties to collect a debt but failed to enforce a lien against Equitable Pacific Partners within the required 90-day period, instead only suing Premier Builders.
Carver was unaware that he could have filed a lawsuit against Equitable Pacific Partners to enforce a lien, as Beck did not inform him of this option. Consequently, Carver did not question Beck’s decision to only sue Premier Builders in 1993, trusting Beck’s expertise. It wasn’t until receiving Beck's letter on January 19, 1995, that Carver learned of the potential suit against Equitable Pacific Partners. This situation raises a genuine issue of material fact regarding whether Carver should have known, prior to that letter, about the potential lawsuit and the expiration of the statute of limitations for filing it.
The court distinguished this case from Banton v. Marks, where the plaintiff was aware of her legal options and the expiration of the statute of limitations for a medical malpractice claim. In Banton, the plaintiff had repeatedly urged her attorneys to pursue claims against the relevant parties, thus indicating she had constructive knowledge of the attorneys’ negligence. In contrast, Carver's knowledge of the statutory time limit would have been ineffective without understanding that he had a viable claim against Equitable Pacific Partners, which he claims he did not realize until the 1995 letter.
The court also dismissed Beck's argument that Carver had constructive knowledge of the alleged malpractice during 1993 due to his dissatisfaction with Beck's representation or the limited nature of the lawsuit filed. There is ambiguity regarding whether Carver's dissatisfaction preceded the expiration of the 90-day limitation for enforcing the lien, and Carver Plumbing did not suffer a legally cognizable injury until that period expired. Thus, any previous dissatisfaction does not necessarily indicate that Carver should have recognized Beck’s negligence, as he lacked the expertise to identify such issues without significant developments in the case. This creates a factual question regarding whether Carver should have been aware of the potential negligence by Beck.
Carver’s awareness of the lawsuit against Premier Builders in 1993 does not determine his knowledge of Beck's alleged negligence regarding a missed lawsuit against Equitable Pacific Partners. Carver claims he was unaware of his right to action before January 1995, suggesting the Premier Builders documents did not inform him of Beck’s negligence. The legal presumption that individuals are deemed to know the law, as established in Banton v. Marks, is acknowledged but noted as not particularly strong. This presumption was not applied in Gatlinburg Summit, where plaintiffs received incorrect advice on the statute of limitations. The court concludes that presumed knowledge of the limitations period does not protect Beck from liability. Additionally, Beck raised a question about limiting Carver Plumbing’s recovery to $2,000 for potential legal malpractice, but the court refrains from addressing this since the trial court did not rule on it. The trial court's summary judgment in favor of Beck is reversed, and the case is remanded for further proceedings, with costs taxed to Beck.
