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BENCH BLOG: Accrual of a legal malpractice claim

By: Jean DiMotto//May 22, 2017//

BENCH BLOG: Accrual of a legal malpractice claim

By: Jean DiMotto//May 22, 2017//

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Judge Jean DiMotto retired in 2013 after 16 years on the Milwaukee County Circuit bench and now serves as a reserve judge. She also is of counsel with Nistler Law office SC. She can be reached at jeandimotto@gmail.com
Judge Jean DiMotto retired in 2013 after
16 years on the Milwaukee County Circuit bench and now serves as a reserve judge. She also is of counsel with Nistler Law office SC. She can be reached at [email protected]

The Court of Appeals took the opportunity to again offer instruction regarding when a tort claim accrues for purposes of the statute of limitations.

A claim for legal malpractice was filed by the landowner Lee Bleecker against attorney Terence Cahill in 2014. The claim revolved around a lease that Aurora Medical Group prepared in 2003 to allow a clinic to be built on Bleecker’s land.

The lease

The lease provided for an initial 10-year term followed by three possible five-year extensions. Bleecker was to bear all the construction costs and Aurora was to repay him according to an amortization schedule.

Bleecker submitted the proposed lease to Cahill in 2003 for review and advice. He emphasized to Cahill that he needed to recoup all his construction costs.

Although the lease had a proviso allowing for possible termination in just 10 years, the amortized payments were based on a 15-year repayment period. Thus, if the lease was terminated at the 10-year point, Bleecker would not be repaid all his construction costs.

Nonetheless, Cahill approved the lease with this proviso in it, faxing the final version to Bleecker, who signed it in October 2003 without reading it.

Ten years later, in 2013, Aurora in fact terminated the lease. Bleecker asserted it was then that he first learned the lease had permitted Aurora to terminate it at the end of 10 years without being obligated to make the remaining amortization payments.

Summary judgment motion

Bleecker sued Cahill for malpractice in 2014.

Cahill brought a motion for summary judgment, claiming that the statute of limitations on Bleecker’s negligence claim expired in 2006.

Now-retired Judge David Wambach, sitting in Waukesha County, granted the motion, saying the clock on the statute began running in 2003, “before the ink was even dry.”

Bleecker’s appellate argument

The question to be debated by the Court of Appeals was: When did Bleecker’s claim of legal malpractice accrue – in 2003 when he signed the lease or in 2013 when Aurora terminated the lease before it had finished making its amortization payments?

Bleecker argued that he had not suffered any actual damage from the alleged malpractice when he signed the lease. He also contended that he would not have suffered any damage if Aurora had chosen in 2013 to extend the term of the lease for another five years that covered the full amortization period.

Bleecker insisted that for a claim to accrue, damage has to have already occurred or be “reasonably certain” to occur. Here, there was no damage until Aurora notified him in 2013 that it would not extend the term of the lease for five more years. Until then, any damage resulting from Cahill’s alleged malpractice in 2003 was speculative, a “mere possibility.”

Court of Appeals

District 2 Court of Appeals Judge Mark Gundrum wrote the unanimous opinion of the court, agreeing with Bleecker.

“For a claim to accrue, it must be capable of present enforcement, which does not occur until the plaintiff has suffered actual damage.”

Further, “actual damage is harm that has already occurred or is reasonably certain to occur in the future.” It is not the mere possibility of future harm.

The court then revisited two of its previous cases, Meracle v. Children’s Serv. Soc’y and General Accident Ins. Co. v. Schoendorf & Sorgi. The latter was affirmed by the Supreme Court and involved legal malpractice.

Because actual harm was not suffered until later, both cases involved accrual of the claim years after the alleged breach of duty.

Here, even if Bleecker had read and understood the terms of the lease when he signed it in 2003, it would have alerted him only to the possibility of future harm in the event Aurora terminated the lease after only 10 years.

“He incurred actual damage when Aurora notified him in 2013 that it would not extend the term of the lease and he thus would lose five years of amortization payments.”

The court also observed that Bleecker had no claim capable of enforcement in 2003. “If Aurora had exercised its option after the first 10 years to extend the term of the lease, Bleecker would have suffered no harm.”

Since actual harm was not suffered until Aurora’s notification of lease nonrenewal in 2013, the clock on the statute of limitations did not begin to run until then, and Bleecker’s 2014 lawsuit was filed in time.

Accordingly, the summary judgment ruling was reversed and the case remanded.

Commentary

This is a case of an alleged tortious breach of duty being separated by years from the harm it caused, thus delaying accrual of the cause of action.

It should not be confused with delayed accrual because the discovery of harm is not reasonably made until sometime later, even though in both of these scenarios, the statute of limitations does not begin running until some length of time after the negligence.

In this opinion, the court provides good instruction to the bench and bar in evaluating cases of late accrual when the harm suffered is neither reasonably certain nor presently enforceable at the time of the negligent act.

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