No. 87-143 

# - INTHE SUPREME COURT OF THE STATE OF MONTANA

LAWRENCE SCHNEIDER,

Plaintiff and Appellant,-17sDefendant and Respondent.

APPEAL FROM: DistrictCourt of theTwelfth JudicialDistrict, In and forthe County of Chouteau, The Honorable R.D. McPhillips, Judge presiding.

COUNSEL OF RECORD:

For Appellant: Ralph T. Randono, Great Falls, Montana

For Respondent: Ugrin, Alexander, Zadick & Slovak; Gary M. Zadick, Great Falls, Montana

Submitted on Briefs: July 23, 1987

Decided: October 6, 1987

Filed:

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ClerkMr. Justice L.C. Gulbrandson delivered the Opinion of the Court.

Plaintiff appeals from the order of theNinth Judicial District in and for Chouteau County, Montana, granting defendant's motion for summary judgment. We affirm. C.W. Leaphart is an attorney residing in Helena. In 1979,Dr. Lawrence Schneider,aHelenadentist,and hiswife, Lynne Schneider, approached Leaphart and asked that he represent them in a jointpetition fordissolution. Leaphart agreed to the representation and recommended that the Schneiders work out a suitable property settlement on their

own. Dr. Schneiderlsaccountant recommended that he frame part of the property settlement as maintenance for tax purposes. Dr. Schneider gathered from his discussions with the accountant and Leaphart that the maintenance payments must extend over a period of ten years to be tax deductible. Consequently, Dr. Schneider directed Leaphart to include a provision in the property settlement whereby Lynne Schneider would receive $1,000amonth inmaintenance for tenyears and

a month. Leaphart advised Dr. Schneider that he could subsequently modify the property settlement agreement, but that any suchmodification shouldbe inwriting. Dr. Schneider then entered into discussionswith Lynne concerning a side agreement to terminate the maintenance payments after twenty-six months. Dr. Schneider drafted an agreement to limitmaintenance to twenty-six months and told Lynne that "it'snot important tome whether you really sign this or not, just so you understand and agree with me as to the terms of the agreementwemade." Lynne Schneiderrefused to sign the side agreement.The Schneiders agreed on the terms of the property settlement as drafted by Leaphart. The dissolution decree and property settlement agreement were entered in the District Court ofLewisand Clark County onNovember 

### 3, 1979. InJanuary of 1981,Dr. Schneider again attempted to obtaina side agreement from Lynne to limit maintenance payments to twenty-six months. Lynne again refused to sign such an agreement. In July of 1981, after making twenty-two $1,000 maintenance payments,Dr. Schneideroffered topay in advance what he believed to be the remaining four payments on the condition that Lynne give him a release. Lynne did not respond to this offer. Approximately three months later, Dr. Schneider solicited the opinion of an accountantas to the necessity of the tenyearmaintenance provision in theproperty settlement agreement. On December 

### 4, 1981, Dr. Schneider received The accountant's opinion that the ten year provision was unnecessary and that maintenance payments were properly deductible based on a twenty-sixmonth term. That same day, Dr. Schneider had Leaphart send the twenty-sixth monthly maintenance payment to Lynne. Leaphart typed on the check that this payment was "the final payment due you per the understanding of [the date of the side agreement]

# ." On December 15, 1981,Dr. Schneider again sent Lynne a release for her signature. Lynne again ignored his correspondence. Dr. Schneider made no further maintenance payments as requiredby the property settlement. Lynne's refusal to cooperateprompted Dr. Schneider to suggest to Leaphart that litigation be instituted to resolve the matter. However, Dr. Schneider did not believe that Lynnewould seek to enforce themaintenanceprovisions of the property settlement. Leaphart counseled Dr. Schneidernot to sue Lynnebecause 

### it appeared that Lynne would notdemand theremaining maintenance payments. At Dr. Schneider's request, Leaphart provided an affidavit attesting to Lynne's having agreed orally to the twenty-six month sideagreement. InJanuary of 1984,Dr. Schneider attempted to sell two pieces of rentalproperty located in Helena and jointly owned by Dr. Schneider and his dentalpartners. The title reports

on the properties characterized the maintenance (asordered in the decree of dissolution) as a lien. Lynne agreed to quitclaim her interest in one of the properties because the buyer was a friend. She refused to give the buyer of the second property aquitclaimdeed. Dr. Schneider met with Lynne on three occasions during the spring of 1984 in an attempt to obtain a release. Lynne responded by filing suit in the District Court of Lewis and Clark County to enforce the maintenance provisions of the property settlement agreement. The Lewis and Clark County District Court found that no side agreement existed and ordered that thepartiesbe held to the terms of the original property settlement agreement. The case settled with Lynne receiving approximately $50,000 inproperty and cash. Dr. Schneider filed this action for professional malpractice in Chouteau County District Court against Leaphart on March 27, 1985,more than three years and three months after the accountant'sopinion. Dr. Schneider alleged that Leaphart negligently drafted the property settlement agreement to include an unnecessary provision for maintenance. Leaphart answered and alleged, among other defenses, that Dr. Schneider's claims were barred by the statuteof limitations. Dr. Schneiderwas deposed onJuly 18, 1985. On October 22, 1985,Leaphartmoved for summary judgmenton the grounds that Dr. Schneider failed to file the action within the applicable statuteof limitations for attorneymalpractice asset forth in S 27-2-206, MCA. The District Court granted Leaphart's motion and Dr. Schneider appeals raising the following issues: (1) Was Dr. Schneider aware, as a matter of law, of all facts essential to his cause of action,before the start of the limitationsperiod? (2) Was the limitations period tolled by the doctrine of "continuous representation?" (3) Should Leaphart be estopped to raise the statute of limitations in this action? The statute of limitations for attorney malpractice, S 27-2-206, MCA, provides as follows: An action against an attorney licensed to practice law in Montana or a para-legal assistant or legal intern employed by an attorney based upon the person's alleged professional negligent act or for error or omission in theperson's practicemust be commenced within three years after the 

### - plaintiff discoversor through the use of 

## --- reasonable diligence should have discovered the act, error or omission, 

### -- whichever comes last,but in no casemay the action be commenced after ten years from the date of the act, error, or omission. (Emphasisadded.) The District Court found no genuine issue of material fact and granted summary judgment to Leaphart as amatter of law

on the grounds that Dr. Schneiderhad not filed this action within the three-year statute of limitations. Dr. Schneider's burden on appeal is to establish that a genuine issue of material fact exists. Pretty On Top v. Hardin (1979),182Mont. 311, 315, 597 P.2d 58, 60. Dr. Schneider first argues that the District Court erred in concluding that he had "discovered" Leaphart's negligent actmore than three years before the filing of this action. As his first issue implies, Dr. Schneider assertsthat he must discover all elements of a cause of action, including his damages, before the statute of limitations

accrues. Dr. Schneider contends thathe did not discoverhis damages until he learned that the maintenance order was a lien on his property in February of 1984. The date of "discovery,"he argues, is a genuine issue ofmaterial fact and it was improper for the District Court to enter summary judgment. Dr. Schneider urges this Court to adopt a new rule whereby the statute of limitations in a legal malpractice action would not rununtil the plaintiff discovers his actual and determinable damages. This relatively new rule, otherwise know as the "damage rule," has been recognized in several states. See, R. Mallen & 

### V. Levit, Legal Malpractice, $3 390 (2d ed. 1981). However, Dr. Schneider's "damage rule" argument fails for two reasons. Initially, the Montana legal malpractice statute of limitations,

### 5 27-2-206,MCA, only allows the tolling of the statute of limitations until such time as the attorney's negligent act is discovered or through the use of reasonable diligence should have been discovered. Burgett v. Flaherty

(Mont. 1983), 663 P.2d 332, 334, 40 St.Rep. 748, 

### 751. There is no statutory requirement that the legal malpractice statute of limitations be tolled until a party discovers his or her damages. Section 27-2-206,MCA. Even if Montana recognized the "damagerule,"which it does not, Dr. Schneider's argument fails because he knew or should have known the extent of his damages well within the threeyear statute of limitations. The decreeofdissolution

(including the maintenance provision) in this matter became an enforceable judgment upon entry by the Clerk of the District Court. Rule 54(a), M.R.Civ.P. At the time itwas docketed, the maintenance provision in the decree ofdissolution became a lien upon all of Dr. Schneider's real property in Lewis and Clark County. Section 25-9-301(2), MCA; Gaines v. Van Demark (1937), 106 Mont. 1, 74 P.2d 454. Consequently, Dr. Schneider is charged with at least constructive knowledgeof the liens againsthis realproperty

as of the date the decree was entered in District Court; November 3, 1979. Dr. Schneider received the accountant's opinion and became aware of Leaphart's alleged negligence on December 4, 1981. He was aware at that time that the maintenance provision required monthly payments of $1,000 for ten years and a month. Dr. Schneider also repeatedly attempted to get Lynne to reduce his maintenance obligations. Given these circumstances, the District Court was correct in concluding that no genuine issueofmaterial factexisted as towhenDr. Schneider discoveredLeaphart's alleged negligent act. As to the second issue in this appeal, the material facts are not in dispute. Accordingly, Dr. Schneider's second issuepresents this Court with a question of law. We are then free to review the District Court's legal analysis and draw our own conclusions. Sharpv. Hoerner Waldorf Corp.

(1978), 178 Mont. 419, 423, 584 P.2d 1298, 1300. Our analysis leadsus to agree with the DistrictCourt. Dr. Schneiderurges thisCourt to adopt thedoctrine of "continuous representation" in the context of legal malpractice actions. His argument is that the three year legalmalpractice statute of limitations must be tolled until such time as an attorney ceases to represent a plaintiff. The District Court found that, as a matter of law, Montana does not recognize the doctrine of continuous representation in legal malpractice actions. Dr. Schneider is correct in pointing out that this Court 

### has not directly addressed this issue in the past.However, this Court has noted that "[slection 27-2-206, MCA does not suspend accrual until the 'attorney-client' relationshiphas been terminated." Burgett, 663P.2d at 334, 40 St.Rep. at 751. Some states, like California,have seen fit to codify the "continuous representation" doctrine into their legal malpractice statutes of limitations. Compare Cal.Code Civ.Proc. § 304.6(a)(2). Thedoctrineof continuous representation is absent from the Montana legal malpractice statute and we decline to judicially adopt such a provision. Accordingly, the District Court was correct in refusing to apply the doctrine of continuous representation to toll the statue of limitations in thismatter. In his final issue,Dr. Schneider argues that Leaphart should be estopped from pleading the statute of limitations. Dr. Schneider contends that Leaphart's advice not to sue Lynne Schneider prevented him from discovering his damages and for this reason alone Leaphart should be estopped from claiming that the statute of limitationshad run. Regardless ofwhat Dr. Schneiderknewordid not know abouthis damages,

we again emphasize thathe needed only to discoverLeaphart's alleged negligent act for the statute of limitations to

commence. The District Court applied the elements of estoppel to the facts and ruled in Leaphart's favor. See Keneco v. Cantrell (1977), 174 Mont. 130, 136, 568 P.2d 1225, 1228. However, the District Court need not have addressed the elements of estoppel because concealment of damages, as argued by Dr. Schneider, is not material to an estoppel argument under the specific circumstances of this case. For a viable estoppel argument, Dr. Schneider must first present evidence that "conduct, act, language or silence amounting to a representation or a concealment of material facts 

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# . . " by Leaphart prevented discovery ofLeaphart's alleged negligent act. Keneco, supra. Dr. Schneider fails to address this point and we are under no duty to anticipatehis argument to establish the existenceof

a genuine issue ofmaterial fact. Larry C. Iverson, Inc. v. Bouma (1981),195 Mont. 351, 374, 639P.2d 47, 59. The first issue in this appeal is dispositive of the last issue. Dr. Schneiderbecame aware ofLeaphart's alleged negligence no later than the date he received the accountant's opinion. His lcnowledge of the alleged faulty maintenance provision,asdrafted by Leaphart,was sufficient to begin the running of the three-year statute of limitations. Accordingly, no genuine issues of material fact exist as to when Dr. Schneider discovered Leaphart's alleged negligent act. We hold that the three-year statute of limitations, as set forth in S 27-2-206, MCA, had run and summary judgment was proper under the particular facts of this case. Affirmed. 

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We concur: 

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