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Brady, Vorwerck, Ryder & Caspino v. New Albertson’s, Inc.

In legal malpractice actions, jurisdictions have adopted differing approaches when applying the discovery rule to determine when a legal malpractice action accrues. In some jurisdictions, the statute of limitations for a legal malpractice action is deemed to begin to run when a claimant sustains some, but not necessarily all, damages. See, e.g., Laird v. Blacker, 2 Cal.4th 606, 7 Cal. Rptr.2d 550, 828 P.2d 691, 693-96 (1992) (noting that the discovery of appreciable harm may trigger the statute of limitations for a legal malpractice action to run and, therefore, the resolution of an appeal is unnecessary to the determination); Riemers v. Omdahl, 687 N.W.2d 445, 449 (N.D. 2004) (noting that plaintiff must have incurred some, but not all, damages for the statute of limitations to start under the discovery rule); Fritzeen v. Gravel, 175 Vt. 537, 830 A.2d 49, 52, 54 (2003) (providing that the discovery of an injury triggers the statute of limitations, even though the extent of the damages is unsettled).

Other jurisdictions take a different approach, focusing instead on the end of the underlying representation in which the alleged legal malpractice occurred. In these jurisdictions, for example, a legal malpractice action is deemed to begin to run when there as has been a final adjudication of the underlying litigation. See, e.g., Amfac Distribution Corp. v. Miller, 138 Ariz 155, 673 P.2d 795, 796 (App. 1983) (an action for legal malpractice remained premature so long as there was no final adjudication of the underlying of the client’s case); Silvestrone v. Edell, 721 So.2d 1173, 1175 & n.2 (Fla. 1998) (the statute of limitations for a legal malpractice claim would not begin to run until the underlying appeal had been resolved).

Historically, Nevada had adopted the latter approach, holding that the statute of limitations for a legal malpractice action would not begin to run until the underlying litigation has been concluded. See, Clark v. Robison, 113 Nev. 949, 951, 944 P.2d 788, 789-90 (1997). In 1997, however, the Nevada Legislature amended the statute of limitations for legal malpractice actions in Nevada. The new statute provided as follows:

An action against an attorney … to recover damages for malpractice, whether based on breach of duty or contract, must be commenced within 4 years after the plaintiff sustains damage or within 2 years after the plaintiff discovers or through the use of reasonable diligence should have discovered the material facts which constitute the cause of action, whichever occurs earlier.

See, NRS 11.207(1). Thus, under the new statute, a question arose as to whether legal malpractice actions would continue to accrue when there was a final adjudication of the underlying action or, alternatively, whether the action could accrue at a later date when the client discovered the underlying damages, even if those damages remained unsettled.

The above ambiguity in Nevada law was recently clarified in the case of Brady, Vorwerck, Ryder & Caspino v. New Albertson’s, Inc., 130 Nev. Adv. Op. 68, 333 P.3d 229 (2014) (“Brady”), when the Nevada Supreme Court conclusively reaffirmed Nevada’s adherence to the rule that the statute of limitations for a legal malpractice action would not begin to run until the underlying lawsuit had been concluded. In Brady, the Nevada Supreme Court was asked to answer a certified question from the United States District Court in Nevada, which asked, “[w]hether the statute of limitations in NRS 11.207, as revised by the Nevada [L]egislature in 1997, is tolled against a cause of action for attorney malpractice pending the outcome of the underlying lawsuit in which the malpractice allegedly occurred.” The case involved a husband and wife who had filed a legal malpractice action against their attorneys more than two years after they settled their claims against the defendant in the underlying lawsuit, but less than two years after a cross-claim between the defendant and a third party in the case was resolved on appeal. Accordingly, a question arose as to whether the statute of limitations for the husband and wife’s legal malpractice claim began to run at the time of their settlement with the defendant or at the time the defendant’s cross-claim was resolved on appeal.

The Nevada Supreme Court answered the certified question in the affirmative, holding that the statute of limitations would be tolled pending the outcome of the underlying lawsuit in which the underlying malpractice occurred. In reaching this conclusion, the Brady Court reasoned:

The material facts for an attorney malpractice action include those facts that pertain to the presence and causation of damages on which the action is premised. When the litigation in which the malpractice occurred continues to progress, the material facts that pertain to the damages still evolve as the acts of the offending attorney may increase, decrease, or eliminate the damages that the malpractice caused. Hence, the need for the litigation malpractice tolling rule remains, as it permits the litigation to end and the damages to become certain before judicial resources are invested in entertaining the malpractice action.

130 Nev. Adv. Op. 68, 333 P.3d at 235. The Brady Court subsequently denied reconsideration of its decision and, as of the date of this article, the parties are still in the midst of briefing the attorneys’ motion to dismiss in the District Court. (Brady, Vorwerck, Ryder & Caspino v. New Albertson’s, Inc., Case No. 2:10-cv-00284).

Through its decision in Brady, the Nevada Supreme Court has placed the litigation malpractice tolling rule on solid footing in Nevada. Moving forward, the decision will render the accrual date of litigation malpractice claims more certain under Nevada law. The decision could also have other consequences. For instance, in cases where there are other unresolved cross-claims on appeal, the decision could serve to encourage the underlying client and attorney to reach an early settlement, rather than waiting a year or more for the other claims to be resolved.

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• Professional Liability