Opinion ID: 2229827
Heading Depth: 1
Heading Rank: 9

Heading: Timeliness of Negligence Theory

Text: The question at this point, then, is whether St. Paul seasonably pled its negligence allegations. Neb.Rev.Stat. § 25-222 (Reissue 1989) provides, in pertinent part: Any action to recover damages based on alleged professional negligence ... shall be commenced within two years next after the alleged act or omission in rendering or failure to render professional services providing the basis for such action; Provided, if the cause of action is not discovered and could not be reasonably discovered within such two-year period, then the action may be commenced within one year from the date of such discovery or from the date of discovery of facts which would reasonably lead to such discovery, whichever is earlier.... In Lincoln Grain v. Coopers & Lybrand, 215 Neb. 289, 338 N.W.2d 594 (1983), we held that the 2-year period of limitations specified in § 25-222 applied to a firm of accountants which were alleged to have been negligent in the preparation of certain audits. The task thus becomes one of resolving whether the negligence allegations became effective when St. Paul first pled them in its operative petition, which was filed on August 17, 1990, or when St. Paul filed its original petition on July 14, 1987. The general rule is that for limitations purposes, an amended pleading in the same cause of action ordinarily relates back to the original pleading. See, West Omaha Inv. v. S.I.D. No. 48, 227 Neb. 785, 420 N.W.2d 291 (1988); Abbott v. Abbott, 185 Neb. 177, 174 N.W.2d 335 (1970), appeal after remand 188 Neb. 61, 195 N.W.2d 204 (1972). While traditionally a statute of limitations begins to run as soon as the action accrues, and a cause of action in tort accrues as soon as the act or omission occurs, Rosnick v. Marks, 218 Neb. 499, 357 N.W.2d 186 (1984), § 25-222 permits commencement of the action within 1 year from discovery if discovery could not reasonably have occurred sooner. Discovery, as applied to the statute of limitations, occurs when one knows of the existence of an injury or damage and not when he or she has a legal right to seek redress in court. Norfolk Iron & Metal v. Behnke, 230 Neb. 414, 432 N.W.2d 18 (1988); Georgetowne Ltd. Part. v. Geotechnical Servs., 230 Neb. 22, 430 N.W.2d 34 (1988). Under the discovery principle, discovery occurs when there has been discovery of facts constituting the basis of the cause of action or the existence of facts sufficient to put a person of ordinary intelligence and prudence on inquiry which, if pursued, would lead to the discovery. Board of Regents v. Lueder Constr. Co., 230 Neb. 686, 433 N.W.2d 485 (1988); Norfolk Iron & Metal v. Behnke, supra . In this regard Touche contends, in essence, that St. Paul, in alleging it did not know and could not have known of Commonwealth's true condition until it received another accounting firm's report, had pled a mere conclusion rather than facts excusing its failure to discover the true situation despite the exercise of diligence. But the cases it cites in support of that position are factually dissimilar from the situation before us. See, League v. Vanice, 221 Neb. 34, 374 N.W.2d 849 (1985) (record replete with facts negating plaintiff's assertion that statute of limitations should be tolled because he lacked knowledge or transactions were fraudulently concealed); Mangan v. Landen, 219 Neb. 643, 365 N.W.2d 453 (1985) (indemnitee's cause of action against indemnitor on basis of allegation that indemnity agreement should have included indemnity provision accrued as of date of execution; statute of limitations not tolled where indemnitee could have discovered at once upon reading that contract did not include indemnity provision); S.I.D. No. 145 v. Nye, 216 Neb. 354, 343 N.W.2d 753 (1984) (legal malpractice action against attorney for failure to file annexation certificate for certain real estate owned by plaintiff barred by statute of limitations because petition did not show excuse for failure to commence action for 17 years); George P. Rose Sodding & Grading Co. v. Dennis, 195 Neb. 221, 237 N.W.2d 418 (1976) (statute of limitations not tolled by plaintiff's allegations it submitted bills for partial payment to defendant governmental subdivision and was advised there were no funds in treasury for payment but would later be tax levy and assessment to raise such funds). In Lee v. Brodbeck, 196 Neb. 393, 243 N.W.2d 331 (1976), the plaintiffs alleged that at the time they were considering the purchase of a farm through the defendant broker, the defendant promised and assured them there would be no difficulty in selling their own farm for $63,000. The plaintiffs then brought an action against the defendant for fraud after the statute of limitations had run when their farm sold for $34,000. The court held that the plaintiffs' allegation that the fraud was not discovered until the sale of the farm was confirmed by a court was sufficient to toll the statute of limitations, subject to later proof at trial. Here, in addition to alleging that it did not and could not have earlier known of Commonwealth's true condition, St. Paul also alleges that Touche prepared documents other than in accordance with generally accepted auditing standards, that Touche overrecognized the margins from contracts in progress, that Touche grossly overstated the net worth and net quick positions of Commonwealth, and that St. Paul accepted Touche's false certifications that Commonwealth's financial statements were prepared in accordance with generally accepted auditing standards and accounting principles and that the statements fairly and accurately represented Commonwealth's financial condition. Under those circumstances, it was reasonable for St. Paul not to have discovered Touche's alleged negligence until the former received the other accounting firm's report. It therefore follows that except as to the fiscal year ending March 31, 1981, about which no mention was made until the filing of the operative petition, the issue of discovery was properly pled and is to be determined by whatever facts may be established by the evidence.