Precedent reversed & hybrid rule adopted
2016 Case Notes: Professional Malpractice
December 8, 2016
The South Carolina Supreme Court, in the case of Stokes-Craven Holding Corp. v. Robinson, Op. No. 27572 (S.C.Sup.Ct. filed May 25, 2016)(Shearouse Adv.Sh. No. 21 at 17), reversed precedent and adopted a hybrid rule for the statute of limitations defense involving legal malpractice claims. Stokes-Craven, an automobile dealership, was sued in an automobile fraud case. Stokes-Craven hired Robinson to defend it in the lawsuit. Id. at 19.
The jury, after a three-day trial, awarded actual damages of over $26,000 and punitive damages in the amount of $216,000 against Stokes-Craven. Stokes-Craven appealed the judgment and lost. Id. After the judgment was affirmed on appeal, Stokes-Craven initiated the legal malpractice action against Robinson. Stokes-Craven filed its malpractice claim four months after the appeal was final, but more than 3 years after the adverse jury verdict. Id. at 20.
The trial court granted Robinson’s motion for summary judgment on the grounds that Stokes-Craven’s claim was barred by South Carolina’s 3-year statute of limitations for legal malpractice actions. Id. at 21. The trial court ruled that Stokes-Craven was on notice of the malpractice claim when the jury rendered the adverse verdict following trial. Arguing against precedent, Stokes-Craven urged the Supreme Court to adopt a “bright-line rule that the statute of limitations in a legal malpractice case does not commence until the remittitur has been issued in the underlying lawsuit.” Id. at 22. Under South Carolina’s discovery rule prior to this opinion, a legal malpractice plaintiff would have to file a malpractice action against his lawyer within three-years of the adverse jury verdict, as a reasonable person “clearly knew, or should have known he might have had some claim against [his lawyer] at the conclusion of his trial”. Id. at 25.
Following a lengthy discussion of precedent, as well as the criticisms of that precedent, the Supreme Court then focused on the accrual date for legal malpractice claims. Id. at 28. The Court noted “the limitation period cannot start until the client has a cause of action that has accrued”. Id. That prompted the Court to question “when the client’s cause of action accrues to trigger” the statute of limitations. Id. at 29. The Court recognized at least two complexities existed that affected the answer to that question: (1) the “endless factual scenarios” involved in the attorney-client relationship, and (2) the need to preserve the attorney-client relationship. Id.
In adopting a bright-line test, the Supreme Court referenced South Carolina’s appellate court rules which stay a judgment pending appeal. The Supreme Court explained that an appellate stay means “any basis for the legal malpractice cause of action” is similarly stayed while the appeal is pending. Id. at 31. The Supreme Court then held that a cause of action for legal malpractice “predicated on an injury or damage caused by the failure of an underlying suit due to an attorney’s alleged malpractice” accrues upon resolution of the appeal, thus triggering the statute of limitations. Id. In overruling the Court’s prior decision on the statute of limitations, the Supreme Court found that prior decision failed to consider that there “was no damage or harm to claimant for which to establish a claim” without the affirmation of the adverse verdict on appeal. Id. at 32.
By allowing the appeal of the underlying judgment to proceed, the Supreme Court felt that the attorney-client relationship would be preserved while allowing the claimant to contest the propriety of the underlying verdict, and perhaps avoid any damage whatsoever.
Bruce Wallace practices in the business and consumer litigation group. He represents a variety of banking and financial institutions in real estate litigation, commercial litigation, and mortgage foreclosures. He also represents insurers and corporate clients in bad faith and coverage issues, professional liability, business litigation (including disputes involving partnerships, limited liability companies, and closely held companies), and probate litigation matters (including trusts and estates).