IN THE SUPREME COURT OF IOWA

No. 13–1381

Filed February 13, 2015

AHMAD S. VOSSOUGHI and C, N, & A, INC., 

Appellants,

vs.

JOSEPH A. POLASCHEK and MICHAEL J. MELOY, 

Appellees.

Appeal from the Iowa District Court for Scott County, David H. 

Sivright Jr., Judge.

Plaintiffs appeal from an adverse summary judgment ruling 

dismissing legal malpractice claims against two attorneys. REVERSED 

AND REMANDED.

Steven E. Ballard and Michael J. Harris of Leff Law Firm, L.L.P, 

Iowa City, for appellant.

Robert V.P. Waterman Jr. and Joshua J. McIntyre of Lane & 

Waterman, LLP, Davenport, for appellee Polaschek.

John T. Flynn of Brubaker, Flynn & Darland, P.C., Davenport, for 

appellee Meloy.
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HECHT, Justice.

Vossoughi and a company owned by him brought this legal 

malpractice action against attorneys who prepared documents in 

connection with the sale of real and personal property. Vossoughi 

appeals from a district court ruling granting summary judgment to both 

attorneys. Because we conclude the summary judgment should not have 

been granted in favor of either attorney, we reverse and remand for 

further proceedings.

I. Factual Background and Proceedings.

A reasonable fact finder viewing the evidence in the light most 

favorable to Vossoughi and C, N, & A, Inc. could find the following facts 

from the summary judgment record. Ahmad Vossoughi was the sole 

owner of C, N, & A, Inc. The company owned and operated Cigarette 

Oasis, LLC (Oasis). Oasis was located on real estate Vossoughi owned in 

Davenport, Iowa. In September 2006, Vossoughi and C, N, & A, Inc. 

entered into a set of agreements with Mark Polaschek (Mark), who 

managed BVM Enterprises LLC (BVM) and PPM Properties, Inc. (PPM). 

The contracting parties were represented by counsel; Vossoughi and 

C, N, & A, Inc. were represented by Michael J. Meloy, and Mark was 

represented by his brother Joseph Polaschek (Polaschek). 

After five or six hours of negotiations, the parties executed three 

separate agreements on September 15, 2006: (1) an “Asset and Business 

Name Purchase Agreement,” setting out that BVM would pay C, N, & A, 

Inc. the sum of $261,281.98 to acquire Oasis; (2) a “Noncompetition 

Agreement,” requiring PPM to pay Vossoughi an additional $70,000; and 
3

(3) a “Real Estate Contract,” setting out that PPM would pay Vossoughi 

$40,000 for the real property.1

An “Addendum to the Real Estate Contract” contained language 

purporting to cross-collateralize the three agreements. Paragraph 3 of 

the addendum provided that any default under the Noncompetition 

Agreement or Asset and Business Name Purchase Agreement would also 

constitute default under the Real Estate Contract. Paragraph 5 of the 

addendum authorized PPM to prepay the balance due on the Real Estate 

Contract without penalty, but provided that the payment obligations 

under the other two agreements would remain secured by the real 

property until fully paid.2 Paragraph 6 of the addendum included the 

following language addressing the consequences of prepaying the real 

estate purchase price:

If Buyer elects to prepay under the terms of this real estate 

purchase contract, Seller shall convey the real property to 

Buyer subject to the full payment of said contract and 

expressly subject in the warranty deed for said conveyance 

stating that the Buyer is restricted and can sell said real 

estate only upon the full payment and completion of the 

terms of the Non-compete Agreement and the Asset Purchase 

Agreement.

If the Buyer is unable to re-convey the real property in 

the event of default by Buyer of either the Non-competition 

Contract or the Asset Purchase Agreement, then the Buyer 

and Seller agree that the value of damages would be difficult 

if not impossible to calculate at this time and as such, the 

Buyer shall be obligated to pay to Seller as liquidated 

1The contract called for a $10,000 down payment. The $30,000 balance was to 

be paid in monthly installments over the next twenty years.

2Paragraph 5 read, in part, as follows:

In the event that the Buyer sells, assigns or pays off this contract before 

the due date, Buyer shall remain responsible to re-convey the real 

property in the event there is any default on either the Non Competition 

Contract or on the Asset and Business Name Purchase Agreement.

 
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damages on the failure of the Buyer to re-convey the “market 

value” on the real property with any improvements.

Vossoughi believed the payments due on all three of the agreements were 

secured by a lien on the real property created by language in the 

addendum. However, the agreements and addendum did not provide for 

perfection of a security interest securing the sellers’ interests in the 

personal property, nor did they provide for a mortgage against the real 

estate securing the contractual right to receive payments under two of 

the agreements in the event PPM exercised its right to prepay the 

purchase price on the real estate contract.

The buyers took possession of Oasis and the real property, and 

began making installment payments to Vossoughi. Six months later, in 

March 2007, Mark contacted Meloy, stating he wanted to pay in full the 

balance owed on the real estate contract. On March 28, 2007, Meloy 

contacted Vossoughi and informed him of Mark’s offer to prepay the real 

estate contract obligation. When told there would be a fee for Meloy’s 

legal services in connection with the closing of the real estate 

transaction, Vossoughi terminated the attorney–client relationship. 

Meloy did no further work for Vossoughi or C, N, & A, Inc.

Vossoughi appeared the very next day at Polaschek’s office and 

executed a warranty deed transferring title to the real estate to PPM. 

Polaschek had prepared the deed, and he charged Vossoughi $500 for 

his legal services. Vossoughi told Polaschek he was concerned the 

warranty deed contained no reference to the cross-collateralizing 

language of the addendum and no mention of the buyers’ remaining 

payment obligations under the other two agreements. Polaschek assured 

Vossoughi that after he signed the warranty deed, an additional page 

incorporating the provisions of the addendum would be added to ensure 
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the remaining payment obligations would remain secured by the real 

property. Vossoughi signed the warranty deed, and despite Polaschek’s 

promises, the deed was later recorded without any additional language 

and without a second page referencing the cross-collateralized 

agreements.

In February 2008, the buyers stopped making payments on the 

two other contract obligations. Vossoughi’s investigation revealed the 

warranty deed he signed had been recorded on April 9, 2007, without the 

additional page incorporating the provisions of the addendum. Worse 

yet, Vossoughi discovered Mark had borrowed $184,000 from American 

Bank & Trust Company and secured the loan with a mortgage on the 

Oasis real estate. 

Vossoughi and C, N, & A, Inc. filed a breach of contract action 

against BVM, PPM, and Mark. The action produced no remedy for the 

plaintiffs, however, because BVM had already been involuntarily 

dissolved by the Illinois Secretary of State, and both PPM and Mark had 

filed for bankruptcy under Chapter 7 of the Bankruptcy Code, 11 U.S.C. 

§§ 701–84 (2006). American Bank & Trust foreclosed its mortgage. 

Vossoughi and C, N, & A, Inc. filed a petition in the bankruptcy 

court seeking a determination that the contract obligations of PPM and 

Mark arising from the Asset and Business Name Purchase Agreement 

and the Noncompetition Agreement were nondischargeable in 

bankruptcy. The bankruptcy court denied the requested relief, however, 

because it found no evidence the debtors had committed any malicious 

or fraudulent act within the meaning of 11 U.S.C. § 523(a)(2) or (6). 

Accordingly, the bankruptcy court ruled the debts arising from the two 

agreements were dischargeable. See Vossoughi v. Polaschek (In re 

Polaschek), No. 08–81311, 2012 WL 1569611, at *8 (Bankr. C.D. Ill. May 
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3, 2012). Vossoughi and C, N, & A, Inc. were left with $210,000 in 

unsecured, nonpriority, fully dischargeable claims—and took nothing 

from the bankruptcy. 

Vossoughi and C, N, & A, Inc. filed a petition alleging legal 

malpractice claims against both Meloy and Polaschek on June 16, 2010. 

The petition asserted the defendant attorneys were negligent in 

connection with the preparation of the warranty deed and conveyance in 

March 2007. After Meloy filed an affidavit disclaiming any involvement 

in the March 2007 transaction, Vossoughi dismissed the action against 

Meloy without prejudice on April 18, 2011. 

Vossoughi and C, N, & A, Inc. sued Meloy a second time, however, 

on June 26, 2012. In an amended petition filed in this action, the 

plaintiffs alleged Meloy negligently performed legal services in 

negotiating, drafting, and providing legal advice in connection with the 

three agreements executed in September 2006.3 Each of the defendants 

filed a motion for summary judgment. 

II. Summary Judgment on Claims Against Meloy. 

Meloy’s motion for summary judgment raised the statute of 

limitations as an affirmative defense. The district court found this 

defense meritorious and granted summary judgment. The district court 

noted the limitations period of five years for legal malpractice actions 

does not begin to run until the plaintiff discovers the injury. See Iowa 

Code § 614.1(4) (2005); Venard v. Winter, 524 N.W.2d 163, 166 (Iowa 

1994); Franzen v. Deere & Co., 377 N.W.2d 660, 662 (Iowa 1985).

However, the district court held the plaintiffs were deemed to have 

3Because Vossoughi filed the second petition against Meloy more than six 

months after dismissing the first petition, the present claim is not considered a 

continuation of the same action under Iowa Code section 614.10 (2005). 

 
7

discovered the injury on March 29, 2007, when Vossoughi signed the 

warranty deed. The discovery occurred on that date, the district court 

concluded, because Vossoughi’s signature on the deed imputes to him 

knowledge of the deed’s contents. See Huber v. Hovey, 501 N.W.2d 53, 

55 (Iowa 1993) (“[F]ailure to read a contract before signing it will not 

invalidate the contract. Absent fraud or mistake, ignorance of a written 

contract’s contents will not negate its effect.” (Citation omitted.)). 

The district court further held in the alternative that the plaintiffs 

discovered the injury when the warranty deed was recorded on April 9, 

2007. See Iowa Code § 558.55 (“[T]he filing and indexing [of deeds in the 

recorder’s office] shall constitute constructive notice to all persons of the 

rights of the grantees conferred by the instruments.”). Thus, the district 

court concluded the limitations period for filing the instant claim against 

Meloy expired on either March 29, 2012, or April 9, 2012, and granted 

summary judgment to Meloy because the plaintiffs’ petition asserting the 

instant claim against him was not filed until June 26, 2012.

The plaintiffs filed a motion to amend the court’s ruling, 

contending there was no injury as a result of Meloy’s actions in drafting 

the original agreement until Mark and PPM stopped making payments in 

February 2008. The motion asserted that although Meloy’s negligence 

may have left the contract payment obligations unsecured as early as 

September 2006, the failure to secure the sellers’ interests represented 

only a prospect of future harm at that point, and a mere prospect of 

harm could not have given rise to an actionable claim for legal 

malpractice. The district court considered this argument, but rejected it:

[T]he Iowa Supreme Court . . . has adopted the rule that the 

date of injury “coincides with the last possible date when the 

attorney’s negligence became irreversible.” Neylan v. Moser, 

400 N.W.2d 538, 542 (Iowa 1987). In Neylan, the Court was 
8

distinguishing between the date of an adverse trial court 

verdict and the date of its final appeal, deciding the statute 

of limitations was tolled until the later date. Id. Applying 

this rule here, any negligence by Meloy became “irreversible” 

when the deed was signed and recorded. At that point, 

plaintiffs became insecure and had no remedy in the event 

the buyers defaulted. Thus, based on the holding in Neylan, 

the statute of limitations commenced to run in April 2007.

III. Summary Judgment on Claims Against Polaschek. 

Polaschek’s motion for summary judgment asserted his acts and 

omissions could not have been the cause of any damages. Even if it is 

assumed he breached his duty by recording the warranty deed without 

incorporating the restrictive terms of the addendum, Polaschek posited 

the only consequence was the unavailability of the addendum’s 

liquidated damages remedy. The bankruptcy discharges of the plaintiffs’

contract claims were, Polaschek contended, independently sufficient 

causes of their inability to collect damages. 

The district court granted Polaschek’s motion, reasoning that a 

judgment in favor of Vossoughi and C, N, & A, Inc. would not have been 

collectible absent Polaschek’s alleged negligence. Because it determined 

any judgment entered against Mark or PPM would have been 

uncollectible as a consequence of their bankruptcy discharges, the 

district court concluded any breach of duty by Polaschek could not have 

been a “but for” cause of the claimed damages. 

Vossoughi and C, N, & A, Inc. appealed, and we retained the 

appeal.

IV. Standard of Review.

We review the district court’s summary judgment ruling to correct 

errors at law. Boelman v. Grinnell Mut. Reins. Co., 826 N.W.2d 494, 500 

(Iowa 2013); SDG Macerich Props., L.P. v. Stanek Inc., 648 N.W.2d 581, 

584 (Iowa 2002). Summary judgment is appropriate when the moving 
9

party demonstrates that no genuine issue of material fact exists and that 

the movant is entitled to judgment as a matter of law. Boelman, 826 

N.W.2d at 501; Murtha v. Cahalan, 745 N.W.2d 711, 713 (Iowa 2008). 

We afford the nonmoving party “every legitimate inference that can be 

reasonably deduced from the evidence”—and if the review of the evidence 

pertaining to a particular issue shows “reasonable minds can differ on 

how the issue should be resolved,” an order entering summary judgment 

on that issue must be vacated or reversed. Hills Bank & Trust Co. v. 

Converse, 772 N.W.2d 764, 771 (Iowa 2009).

V. Analysis.

A. Claims Against Meloy. We first turn to the question of 

whether the district court correctly ruled the claims of Vossoughi and 

C, N, & A, Inc. against Meloy are time-barred. To resolve this issue, we 

must determine when the injuries claimed by Vossoughi and C, N, & A, 

Inc. gave rise to a cause of action. If the cause of action accrued more 

than five years before the plaintiffs filed their amended petition against 

Meloy on June 26, 2012, we must then evaluate whether the discovery 

rule extended the limitations period.

1. Actual injury. Legal malpractice claims sound in negligence. 

Claims based on negligence do not accrue, and the statute of limitations 

does not begin to run, until the injured plaintiff “has actual or imputed 

knowledge of all the elements of the action.” Franzen, 377 N.W.2d at

662; accord Buechel v. Five Star Quality Care, Inc., 745 N.W.2d 732, 736 

(Iowa 2008); Stanley L. & Carolyn M. Watkins Trust v. Lacosta, 92 P.3d 

620, 628 (Mont. 2004) (“[T]he statute of limitations in a legal malpractice 

action does not begin to run until . . . all elements of the legal 

malpractice claim, including damages, have occurred.”). To establish a 

prima facie claim of legal malpractice, the plaintiff must produce 
10

evidence showing the attorney’s breach of duty caused “actual injury, 

loss, or damage.” Ruden v. Jenk, 543 N.W.2d 605, 610 (Iowa 1996). 

Until the attorney’s act or omission that breached the applicable duty 

“produces injury to claimant’s interest by way of loss or damage, no 

cause of action accrues.” Wolfswinkel v. Gesink, 180 N.W.2d 452, 456 

(Iowa 1970). The injury must be concrete; “an essential element to a 

legal malpractice cause of action is proof of actual loss rather than a 

breach of a professional duty causing . . . speculative harm, or the threat 

of future harm.” 7A C.J.S. Attorney & Client § 303, at 337 (2004). No 

matter what the plaintiffs knew or when they knew it, the statute of 

limitations could not have begun to run any earlier than the date an 

actual injury occurred.

The district court relied on Neylan in concluding the date of the 

plaintiffs’ injuries was either March 29, 2007 (the date the deed was 

executed), or April 9, 2007 (the date the deed was recorded), and in 

concluding this action against Meloy was time-barred. The plaintiffs in 

Neylan brought a legal malpractice action alleging their attorneys had 

“negligently failed to present adequate evidence to support [the plaintiffs’] 

claim of damages” at trial. Neylan, 400 N.W.2d at 542. In the 

malpractice action, the plaintiffs sued their attorneys for the damages 

they believed should have been recoverable. Id. The defendants asserted 

the district court’s decision entered against their former clients prior to 

appeal “should mark the time when a legal malpractice cause of action 

accrue[d], because the claimant [was] then formally advised of an adverse 

ruling and resulting damage.” Id. However, we adopted a different view 

and held the legal malpractice claim accrued when this court affirmed 

the trial court’s decision on appeal. Id. At that moment, when all 

avenues to recovery were exhausted and the underlying claims were 
11

extinguished, the injury caused by the alleged breach of duty became 

actual rather than potential. See id.

Our decision in Neylan was undergirded by the principle that each 

client “has a ‘right to rely upon the superior skill and knowledge of his 

attorney’ ” until that reliance results in actual injury. Id. (quoting 

Millwright v. Romer, 322 N.W.2d 30, 34 (Iowa 1982)). We also reasoned a 

litigant who believes she may have been injured through her attorney’s 

negligence should not be forced to choose between (a) sabotaging her 

relationship with her attorney during ongoing representation by filing a 

legal malpractice claim, and (b) waiving her opportunity to bring the 

claim before the statute of limitations extinguishes it. Id.; accord Dudden 

v. Goodman, 543 N.W.2d 624, 629 (Iowa Ct. App. 1995) (“[I]t would be 

palpably unjust and quite unreasonable to require a client of a lawyer to 

obtain a second opinion on every professional decision the lawyer 

makes.”); see also Amfac Distrib. Corp. v. Miller, 673 P.2d 795, 799 (Ariz. 

Ct. App.) (“Under our rule, a client will not have to challenge and 

question every decision made by his attorney or routinely double check 

his attorney’s conduct . . . . Thus, the client will have peace of mind to 

allow the legal process to work fully and finally in hopes that his position 

will ultimately be vindicated and will not be forced to disrupt his 

relationship with his lawyer to preserve what he thinks may be a valid 

malpractice claim.”), approved as supplemented, 673 P.2d 792 (Ariz. 

1983) (en banc).

We conclude Neylan does not justify summary judgment in Meloy’s 

favor under the circumstances presented here. The core teaching of 

Neylan is that speculative injury does not give rise to a legal malpractice 

claim. See Neylan, 400 N.W.2d at 542. An injury arising from legal 

malpractice is actionable when it is actual but not when it is merely 
12

potential. See, e.g., Huber v. Watson, 568 N.W.2d 787, 790 (Iowa 1997) 

(requiring as an element of legal malpractice that “the [client] sustained 

actual injury, loss, or damage” (emphasis added)); Ruden, 543 N.W.2d at 

610 (same); Vande Kop v. McGill, 528 N.W.2d 609, 611 (Iowa 1995) 

(same); Schmitz v. Crotty, 528 N.W.2d 112, 115 (Iowa 1995) (same); 

Dessel v. Dessel, 431 N.W.2d 359, 361 (Iowa 1988) (same); Burke v. 

Roberson, 417 N.W.2d 209, 211 (Iowa 1987) (same). To be sure, Neylan

did not establish that a legal malpractice claim accrues when a client has 

not yet suffered actual injury. See Neylan, 400 N.W.2d at 542.

Many other jurisdictions follow this rule. See, e.g., Greater Area 

Inc. v. Bookman, 657 P.2d 828, 829 n.3 (Alaska 1982) (“[I]f the client 

discovers his attorney’s negligence before he suffers consequential 

damages, the statute of limitations will not begin to run until the client 

suffers actual damages.”); Amfac Distrib. Corp., 673 P.2d at 798–99 

(adhering to “the time-honored principles of law which require that the 

plaintiff be damaged or injured in some way as a predicate to bringing an 

action for negligence”); Jordache Enters., Inc. v. Brobeck, Phleger & 

Harrison, 958 P.2d 1062, 1070 (Cal. 1998) (“The mere breach of a 

professional duty, causing only . . . speculative harm, or the threat of 

future harm—not yet realized—does not suffice to create a cause of 

action for negligence.”); Romano v. Morrisroe, 759 N.E.2d 611, 614 (Ill. 

App. Ct. 2001) (“No cause of action accrues without actual damages, and 

damages are only speculative if their existence itself is uncertain.”);

Pancake House, Inc. v. Redmond, 716 P.2d 575, 579 (Kan. 1986) 

(recognizing one theory of accrual is that “the client does not accrue a 

cause of action for malpractice until he suffers appreciable harm or 

actual damage as a consequence of his lawyer’s conduct”); Mass. Elec. 

Co. v. Fletcher, Tilton & Whipple, P.C., 475 N.E.2d 390, 391 (Mass. 1985) 
13

(“[T]he electric companies knew immediately of the alleged negligence of 

the defendant attorneys, but it was not then clear that the alleged 

negligence had caused or would cause the companies any appreciable 

harm.”); Watkins Trust, 92 P.3d at 630 (“[T]he mere threat of future harm 

does not constitute actual damages.”); Semenza v. Nev. Med. Liab. Ins. 

Co., 765 P.2d 184, 186 (Nev. 1988) (“[W]here damage has not been 

sustained or where it is too early to know whether damage has been 

sustained, a legal malpractice action is premature . . . . [I]t follows that a 

legal malpractice action does not accrue until the plaintiff’s damages are 

certain and not contingent.”); Grunwald v. Bronkesh, 621 A.2d 459, 464–

65 (N.J. 1993) (“[T]he statute of limitations begins to run only when the 

client suffers actual damage . . . . Actual damages are those that are real 

and substantial as opposed to speculative.”); Jaramillo v. Hood, 601 P.2d 

66, 67 (N.M. 1979) (“[T]he cause of action accrues when actual loss or 

damage results . . . .”); Kituskie v. Corbman, 714 A.2d 1027, 1030 (Pa. 

1998) (“An essential element to [legal malpractice] is proof of actual loss 

rather than a breach of a professional duty causing only . . . speculative 

harm or the threat of future harm.”); Ameraccount Club, Inc. v. Hill, 617 

S.W.2d 876, 878 (Tenn. 1981) (“The Court of Appeals erred in holding 

that the plaintiff's cause of action accrued and the statute of limitations 

began to run when the plaintiff became aware of the negligence of the 

defendant attorneys; still more was required, viz., damage or injury to the 

plaintiff resulting from that negligence.”); Hennekens v. Hoerl, 465 

N.W.2d 812, 816 (Wis. 1991) (“A tort claim is not ‘capable of present 

enforcement’ until the plaintiff has suffered actual damage. . . . Actual 

damage is not the mere possibility of future harm.”). 

We also find support for the principle that a legal malpractice claim 

does not arise until actual injury results in the Restatement (Third) of the 
14

Law Governing Lawyers, which focuses on pragmatic policy concerns like 

those we found persuasive in Neylan:

[T]he statute of limitations does not start to run until the 

lawyer’s alleged malpractice has inflicted significant injury.

For example, if a lawyer negligently drafts a contract so as to 

render it arguably unenforceable, the statute of limitations 

does not start to run until the other contracting party 

declines to perform or the client suffers comparable injury. 

Until then, it is unclear whether the lawyer’s malpractice will 

cause harm. Moreover, to require the client to file suit before 

then might injure both client and lawyer by attracting the 

attention of the other contracting party to the problem.

Restatement (Third) of the Law Governing Lawyers § 54 cmt. g, at 406 

(2000). 

The statute of limitations cannot require legal malpractice claims 

to be brought while “the record is uncertain and speculative whether a 

party has sustained damages.” Crookham v. Riley, 584 N.W.2d 258, 266 

(Iowa 1998). Put another way, the statute of limitations cannot sensibly 

be applied in a way that forces parties to file suit before an actual injury 

has been sustained on penalty of losing the opportunity to file a claim at 

all. See Cannon v. Sears, Roebuck & Co., 374 N.E.2d 582, 584 (Mass. 

1978). Accordingly, we reaffirm the statute of limitations does not begin 

to run on a legal malpractice claim until the cause of action accrues.

The cause of action accrues when the client sustains an actual, 

nonspeculative injury and has actual or imputed knowledge4 of the other 

elements of the claim. Franzen, 377 N.W.2d at 662 (“[T]he statute of 

limitations does not begin to run until the injured person has actual or 

4Knowledge could be imputed through the doctrine of inquiry notice. We have 

said “[t]he [limitations] period begins at the time the [plaintiff] is on inquiry notice.” 

Franzen, 377 N.W.2d at 662. “A party is placed on inquiry notice when a person gains 

sufficient knowledge of facts that would put that person on notice of the existence of a 

problem or potential problem.” Buechel, 745 N.W.2d at 736.

 
15

imputed knowledge of all the elements of the action.” (Emphasis added.));

see Watkins Trust, 92 P.3d at 628.

2. Whether insecurity constitutes an actual injury. The question 

remains, however, whether the plaintiffs’ insecurity arising from the 

absence of a mortgage lien against the real estate and a perfected 

security interest in the personal property constituted an actual injury. 

We hold insecurity alone does not constitute an actual injury. Until 

Mark and PPM stopped making payments in February 2008, it was 

entirely possible the plaintiffs would have continued collecting contract 

payments without disruption. Accordingly, it was entirely possible the 

decision to structure the transaction without the protection of a 

mortgage on the real estate or a perfected security interest in the 

personal property would cause the sellers no actual injury. See 16 

Gregory C. Sisk & Mark S. Cady, Iowa Practice Series: Lawyer and 

Judicial Ethics § 13:2(b)(2), at 1088 (2014) (“[U]ntil the final bell is rung 

and the match is truly over, the possibility persists that an 

unsatisfactory outcome could be avoided . . . because an opponent fails 

to take advantage of the error.”); see also David B. Lilly Co. v. Fisher, 18 

F.3d 1112, 1117–18 (3d Cir. 1994) (determining when an attorney 

negligently structured a business acquisition transaction by failing to 

preserve Lilly’s “small business eligibility,” a legal malpractice claim did 

not accrue until several years later when a competitor challenged Lilly’s 

small business status); Fritz v. Ehrmann, 39 Cal. Rptr. 3d 670, 676 (Ct. 

App. 2006) (finding a promissory note with negligently drafted 

prepayment and interest provisions created only speculative injury 

because the promisors “might never have had the funds or the 

inclination to prepay principal, and they might have paid . . . without 

regard to any ambiguity” in the document). In other words, until the 
16

payments stopped, the plaintiffs suffered only the prospect of future 

harm. See Rayne State Bank & Trust Co. v. Nat’l Union Fire Ins. Co., 483 

So. 2d 987, 995 (La. 1986) (“Damage was not sustained by the bank by 

virtue of the mere existence of defects in the mortgages. At this point, 

the possibility of damage to the bank was merely speculative, uncertain

and contingent on the possibility of an attack on the validity of the 

mortgages by a third party, or on the possibility that the debtors would 

declare bankruptcy. In the event that neither of these contingencies 

occurred, and the debtors continued payment of their indebtedness, no 

harm at all would have resulted to the bank.”); see also Dearborn Animal 

Clinic, P.A. v. Wilson, 806 P.2d 997, 1003 (Kan. 1991) (“[T]he alleged 

negligent act of Wilson occurred at the time he prepared the . . . 

agreement, and arguably the plaintiffs suffered injury at that time when 

they did not get the agreement that Dearborn hired Wilson to prepare. 

However, no actionable injury had occurred because [a third party] might 

have elected to exercise his option in which case the plaintiffs would have 

suffered no injury even though Wilson was negligent in preparing the 

agreement.” (Emphasis added.)); cf. Callahan v. Gibson, Dunn & Crutcher 

LLP, 125 Cal. Rptr. 3d 120, 133–34 (Ct. App. 2011) (finding no actual 

injury arose from an executed partnership agreement until its negligently 

drafted succession provisions became operative). 

An Idaho case provides an apt illustration. In Parsons Packing, Inc. 

v. Masingill, 95 P.3d 631, 632–33 (Idaho 2004), the plaintiff alleged its 

attorney had negligently failed to draft an effective security agreement 

and failed to file a financing statement to secure its interest in debtor 

Pro-Ag’s industrial onion bins. The Idaho Supreme Court determined the 

abstract and theoretical injury Parsons suffered from being placed in a 

weaker position by the attorney’s failure to secure its interest in the 
17

collateral was not the injury that truly gave rise to the legal malpractice 

claim, and thus was not the injury that controlled the applicable statute 

of limitations. See id. at 634. Rather, the requisite injury—which, under 

Idaho law, is “some damage”—only occurred when Pro-Ag defaulted and

recovery became impossible:

Parsons entered into the Agreement as part of a normal lease 

and sale transaction and had Pro–Ag not defaulted, each 

party would have received the intended benefit of the 

bargain. The onion bins were exchanged for a promise on 

the part of Pro–Ag to make the agreed payments, which they 

did until 1998. Although it is true that steps could have 

been taken to secure Parsons’ interest in the bins in the 

event of Pro–Ag’s insolvency, bankruptcy was not 

contemplated and would have been mere speculation in 

1992 when the Agreement was executed. Although they 

were subjected to a greater risk, the Parsons were not 

damaged by the lack of security in the bins until Pro–Ag’s 

bankruptcy. . . . For application of the statute of limitation 

some damage did not occur in 1992. Some damage occurred 

the date of default, April 14, 1998.

Id. 

A Kentucky Supreme Court decision provides another relevant 

illustration of the importance of actual injury in our analysis:

In April and again in October of 1990, appellee 

Wheatley conducted a title examination relating to certain 

real property upon which appellant proposed to make a first 

mortgage loan to its customers, the Pearmans. His opinion 

failed to disclose a recorded mortgage. Within a few months 

after the loan was made, the Pearmans defaulted and 

appellant commenced preparations to bring an action to 

enforce its mortgage lien. The prior mortgage lien was then 

discovered and appellant realized that its loan might be in 

jeopardy. 

. . . .

In the present case, the time allowed [for the filing of 

the legal malpractice action] began to run as of the date of 

the foreclosure sale. Prior to that date, Appellants had only 

a fear that they would suffer a loss on the property. Their 

fear was not realized as damages until the sale of the 

property in June of 1992. At that time, what was merely 
18

probable became fact, and thus commenced the running of 

the statute.

Meade Cnty. Bank v. Wheatley, 910 S.W.2d 233, 234–35 (Ky. 1995). 

Here, even after the deed from Vossoughi to PPM was recorded, the 

plaintiffs’ injuries were merely speculative because Mark and PPM 

continued to make payments, and may have continued to do so until 

their obligations under the Noncompetition Agreement and Asset and 

Business Name Purchase Agreement were satisfied. The plaintiffs’

injuries became actual and nonspeculative no earlier than February 

2008, when Mark and PPM stopped making payments.5 “At that time, 

what was merely probable became fact . . . .” Id.; see also Pioneer Nat’l 

Title Ins. Co. v. Sabo, 432 F. Supp. 76, 76–77, 79, 81–82 (D. Del. 1977) 

(finding an insurance company whose hired attorney negligently drafted 

a title insurance policy to expand the insurance company’s liability 

suffered injury not when the policy was initially issued, but later, when 

the overinclusive coverage was actually implicated); Jeansonne v. Att’y’s 

Liab. Assurance Soc’y, 891 So. 2d 721, 728 (La. Ct. App. 2004) 

(“Mr. Jeansonne did not sustain damages by the mere existence of the 

alleged defects in the Promissory Note and Stock Purchase Agreement 

. . . . The possibility of damage to Mr. Jeansonne was merely speculative, 

uncertain and contingent on the clause Mr. Jeansonne believed was 

incorporated into the promissory note and stock purchase agreement. In 

5Moreover, because Vossoughi could potentially have recovered the balance of 

the payment obligations on the remaining two agreements through his action against 

Mark and PPM for breach of contract, the actual injury might not have arisen until 

Mark and PPM filed for bankruptcy on May 15, 2008. But further analysis on this 

temporal question is unnecessary; whether the actual injury occurred in February 2008 

when the payments stopped, in May 2008 when Mark and PPM filed for bankruptcy, or 

even at some later time—perhaps when the bankruptcy court discharged Vossoughi’s 

contract claims—the amended petition against Meloy on June 26, 2012 was 

indisputably timely.

 
19

the event that this contingency did not occur, no harm at all would have 

resulted . . . .”).6

3. The discovery rule. The discovery rule can extend the applicable 

deadline for filing legal malpractice actions. It is “an ameliorative device 

favoring the right to bring suit” in situations where laypeople rely on 

professionals and later discover misplaced reliance caused injury. Poole 

v. Lowe, 615 A.2d 589, 592 (D.C. 1992)). “The rule is based on the 

theory that a statute of limitations should not bar the remedy of a person 

who has been excusably unaware of the existence of the cause of action.” 

Franzen, 377 N.W.2d at 662.

6We acknowledge a few courts have decided insecurity alone constitutes an 

actual injury for claim accrual purposes. See Ladner v. Inge, 603 So. 2d 1012, 1015

(Ala. 1992) (concluding the plaintiff suffered an actual injury “when she accepted . . . 

unsecured promissory notes” in exchange for real estate); Vision Mortg. Corp. v. Patricia 

J. Chiapperini, Inc., 722 A.2d 527, 530 (N.J. 1999) (per curiam) (“[T]he cause of action 

should accrue when the mortgagee knows or has reason to know that its collateral has 

been impaired or endangered by the negligen[ce] . . . .”). However, we do not find 

Ladner persuasive, and we choose instead to follow the numerous authorities we have 

cited above holding negligently-drafted documents must cause an actual injury more 

tangible than insecurity before a legal malpractice claim accrues. 

Further, our decision today is consistent with Vision Mortgage. The issue 

decided there was when the complete cause of action accrued, not merely when the 

element of actual injury occurred. See Vision Mortg. Corp., 722 A.2d at 529–30. The 

elements of any negligence claim are (1) existence of a duty, (2) breach of that duty, (3) 

causation, and (4) damages. Ruden, 543 N.W.2d at 610; see also, e.g., Raas v. State, 

729 N.W.2d 444, 447 (Iowa 2007); Yates v. Iowa W. Racing Ass’n, 721 N.W.2d 762, 774 

(Iowa 2006); Trobaugh v. Sondag, 668 N.W.2d 577, 580 n.1 (Iowa 2003). In Vision 

Mortgage, the court concluded a lender’s negligence claim accrued when a second 

appraisal revealed the possibility that a previous appraisal was negligently performed by 

the defendant. Vision Mortg. Corp., 722 A.2d at 530. It is crucial to note, however, that 

the second appraisal was obtained long after the borrowers defaulted and actual injury 

was suffered by the plaintiff. See id. at 528, 530 (noting the borrowers defaulted in 

1989, yet the claim did not accrue until 1991). In other words, the lender suffered 

actual injury (element 4) when the borrowers defaulted, but did not discover that injury 

was caused by negligence (elements 1 and 2) until much later. Thus, Vision Mortgage

stands for the proposition that a negligence claim accrues when all the elements of the 

negligence claim are provable. Id. at 530. We follow the same rule here.

 
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However, the discovery rule only lengthens the time to file. See 

Millwright, 322 N.W.2d at 33. Because the plaintiffs did not suffer a 

concrete injury before Mark and PPM stopped making payments in 

February 2008, the amended petition filed in June 2012 by Vossoughi 

and C, N, & A, Inc. asserting claims against Meloy was plainly not timebarred. Therefore, the timeliness of the plaintiffs’ action is clearly 

established, and the discovery rule is inapplicable in this case.

4. Disposition of claims against Meloy. Until at least February 

2008, Vossoughi and C, N, & A, Inc. had suffered only the prospect of 

potential future harm. When they actually suffered damage, their claims 

accrued and only then did the limitations period begin to run. Because 

they filed their amended petition against Meloy in June 2012, we 

conclude their claims are not time-barred. The district court erred in 

granting summary judgment to Meloy.

B. Claims Against Polaschek. Turning to the second issue 

before us, we are asked to determine whether the district court correctly 

ruled Polaschek’s failure to include in the deed the substance of the 

addendum and record the deed with those additions was, as a matter of 

law, not a factual cause of the plaintiffs’ damages. To satisfy the “proof 

of causation” requirement in legal malpractice cases, plaintiffs must 

often make a “showing of the money or rights that the plaintiff would 

have collected in the absence of the lawyer’s negligence, which we [have] 

referred to as proof of ‘collect[a]bility.’ ” Woods v. Schmitt, 439 N.W.2d 

855, 864 (Iowa 1989) (quoting Burke, 417 N.W.2d at 212). The district 

court granted Polaschek’s motion for summary judgment based on the 

conclusion that Mark and PPM’s bankruptcy would have prevented the 

plaintiffs from recovering anything from the buyers’ default even absent 

any alleged legal malpractice. Put another way, the district court 
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concluded the plaintiffs cannot show Polaschek’s acts or omissions 

caused any damage and therefore cannot state a claim for legal 

malpractice. 

In resolving this issue, we consider whether a reasonable fact 

finder could find on this record that if Polaschek had incorporated the 

substance of the addendum with the deed as he promised (and recorded 

it), American Bank & Trust might not have loaned money to Mark and 

taken a mortgage on the real estate. We further consider whether the 

fact finder could find that if the real estate had not been mortgaged to 

American Bank & Trust as a consequence of the recording, the contract 

forfeiture remedy could have been available to prevent or mitigate the

plaintiffs’ losses. 

Collectability need not be shown if a plaintiff alleges legal 

malpractice directly caused actual loss; but collectability is a critical 

element of any legal malpractice claim alleging legal malpractice 

prevented the plaintiff’s recovery. This distinction is illustrated best by 

Pickens, Barnes & Abernathy v. Heasley, 328 N.W.2d 524, 525 (Iowa 

1983), in which we addressed an appeal from a jury verdict awarding 

damages to Heasley for legal malpractice. Heasley claimed damages 

arising from the defendant lawyers’ legal malpractice during a prior trial. 

Id. at 525. In particular, Heasley alleged her former lawyers negligently 

prosecuted her underlying claim and caused her to fail to recover, and 

negligently defended against a counterclaim and caused her to pay 

damages on it. See id. The district court refused in the malpractice 

action to instruct the jury as to any collectability requirement, and 

Heasley “did not introduce substantial evidence from which a jury could 

reasonably find that a judgment [in her favor in the underlying action] 

would [have] be[en] collectible in full or in an ascertainable part.” Id. at 
22

526. We noted the district court’s failure to instruct the jury on 

collectability did not invalidate the jury verdict or the damages award on 

the counterclaim because actual loss from negligent defense against the 

counterclaim had been shown in the amount that Heasley had paid in 

damages. Id. at 526–27. But we reversed and granted the defendants’ 

motion for judgment notwithstanding the verdict as it pertained to lost 

recovery stemming from negligent handling of Heasley’s underlying claim 

because “when the loss arises from negligently prosecuting a prior case 

the client has the burden of proving not only the amount of the judgment 

he would have obtained but for the negligence, but also what he would 

have collected.” Id. at 525–27. 

Accordingly, under the rule stated in Pickens, Vossoughi and C, N, 

& A, Inc. have a burden at trial in this case to prove by a preponderance 

of the evidence that the negligence of Meloy, Polaschek, or both caused 

the plaintiffs’ inability to recover contract damages from Mark, PPM, or 

both. In other words, the plaintiffs in this case must produce evidence 

“affording a reasonable basis for ascertaining the loss.” Id. at 526. But 

to withstand the defendants’ motions for summary judgment, the 

plaintiffs need only engender a genuine dispute of material fact on the 

collectability issue. 

“[I]t is a rare case when an issue of collect[a]bility in a malpractice 

case is so clear that it can be decided as a matter of law.” Burke, 417 

N.W.2d at 213; see also Crookham, 584 N.W.2d at 265 (“It is well 

established the questions of negligence . . . and proximate cause are 

generally for the jury and only in exceptional cases can they be decided 

as a matter of law.”). We conclude the parties’ conflicting expert 

testimony bearing upon collectability engendered a genuine dispute of 

material fact on this issue. Vossoughi’s resistance to Polaschek’s motion 
23

for summary judgment relied in part on deposition testimony from expert 

witness Elaine Gray:

Q: . . . [I]ncluding the requested language from the 

contracts wouldn’t have been sufficient to create a lien on 

the Oasis property, correct? A: Correct, but it may also 

have deterred any other lien from being perfected on the 

Oasis property.

Q: And what do you mean by that? A: If I were 

examining an abstract for a bank who wished to take a first 

priority security interest in property and included in a 

warranty deed was language restricting the owner’s ability to 

sell, I don’t believe that if I set that information out, the bank 

would have believed themselves to be secure in the first 

priority and would therefore not likely have granted a

mortgage against the property, at least without further 

showing as to what was required to negate the ability or the 

restriction on sale.

Polaschek supported his motion for summary judgment in part 

with testimony of his own expert witness, Stephen T. Hunter. Hunter 

opined Polaschek’s failure to record the addendum caused no injury 

because even if it had been recorded, the addendum would not have 

prevented Mark from mortgaging the property. 

After reading Hunter’s opinion on causation, Gray responded that 

no matter the legal effect, the practical consequences of recording the 

addendum or its substance with the deed may have been different. 

Specifically, Gray opined recording would have created a practical 

impediment to a bank considering a loan based on the property as 

collateral:

Q: . . . [T]he final sentence [of Hunter’s report states], 

“The mortgage of the real estate by the buyer is not restricted 

by such omitted language by its terms as affirmed in the 

opinion.” A: From a legal standpoint, I think that’s true; but 

from a practical standpoint, I think a mortgage is restricted.

Q: And what do you mean by that? A: Again, my 

involvement with banks is that they are very conservative 
24

about lending money against collateral in which they may 

not have a clearly defined first priority security interest; and, 

in my opinion, had Mr. Polaschek or one of his companies 

obtained that real estate with that language in the deed, 

which would in turn have been included in the abstract, the 

proper opinion to a bank would not enable an attorney to 

pass on title . . . if what the bank wanted to do was obtain a 

clearly defined first priority security interest.

We conclude Gray’s deposition testimony engenders a genuine dispute of 

material fact on the issue of factual causation—collectability.

Polaschek contends the addendum did not create any legal limit on 

PPM’s right to mortgage the Oasis property, and that the plaintiffs cannot 

prove no mortgage lender would have acquired a lien on the Oasis 

property and foreclosed on it even if American Bank & Trust had not. 

We conclude this contention misconstrues the plaintiffs’ burden at the 

summary judgment stage. To defeat Polaschek’s motion for summary 

judgment, the plaintiffs need not prove as a matter of law that recording 

the substance of the addendum would have rendered title to the real 

estate unmerchantable, as Polaschek suggests. Rather, to prevail at the 

summary judgment stage, Polaschek must carry the burden of proving 

no genuine dispute of material fact on the collectability element is 

engendered from the evidence in the record. This he has failed to 

accomplish.7

The experts’ competing visions of the potential practical 

consequences of incorporating and recording the language from the 

addendum in the warranty deed requires a trial of the factual causation 

issue. Therefore, we reverse the district court’s order entering summary 

judgment for Polaschek.

7Polaschek may be able to persuade a fact finder at trial that a bold mortgage 

lender might not have been deterred from making a loan to Mark and PPM even if the 

substance of the addendum had been recorded with the deed. However, this is a fact 

question that cannot be resolved on this record at the summary judgment stage.

 
25

VI. Conclusion. 

Vossoughi and C, N, & A, Inc. did not suffer actual damage until at 

least February 2008 when the buyers defaulted on their contract 

payments. Accordingly, summary judgment in favor of Meloy should not 

have been granted. The district court also erred in granting summary 

judgment to Polaschek because a fact question remains for trial on the 

question whether the substance of the addendum, if recorded, may have 

deterred a risk-averse lender from extending credit to Mark and PPM and 

taking a mortgage on the subject real estate. Accordingly, we reverse the 

district court’s summary judgment order and remand for further 

proceedings.

REVERSED AND REMANDED.

All justices concur except Waterman, J., who takes no part.