Opinion ID: 2570772
Heading Depth: 2
Heading Rank: 2

Heading: Statute of Limitations Governing Legal Malpractice

Text: In dismissing the Appellants' cause of action against Ing, the circuit court concluded that, even if the Appellants had stated a claim for which relief could be granted, the claim would be barred by the applicable six-year statute of limitations, HRS § 657-1(1) (1993). [12] The circuit court's ruling, which was based upon its conclusion that the statute of limitations began to accrue when the trust was drafted, appears to have followed the traditional occurrence rule, under which the accrual of the statute of limitations begins when the negligent act occurs or the contract is breached, which, in this case, would have been when the Hughes Trust was drafted. [13] The Appellants urge this court to apply the discovery rule to their legal malpractice claim. Under the discovery rule, a cause of action does not `accrue,' and the limitations period therefore does not begin to run, until the plaintiff knew or should have known of the defendant's negligence. Hays v. City and County of Honolulu, 81 Hawai`i 391, 393, 917 P.2d 718, 720 (1996). Arguing in favor of the application of the discovery rule, the Appellants contend that their malpractice claim against Ing is not time-barred under HRS § 657-1(1) because accrual did not begin until Lloyd Hughes' estate incurred the adverse tax liability, i.e., the date of death. If this court were to hold that the discovery rule applies to a legal malpractice claim arising in the estate planning context, Ing argues that Appellants should have discovered his alleged errors on either July 15, 1988, or February 17, 1989, when the Hugheses executed two amendments to their trust. Although several approaches exist to determine when a statute of limitations governing legal malpractice accrues, [14] the application of the discovery rule in the context of estate planning would be consistent with current Hawaii law governing medical malpractice.
In Yoshizaki v. Hilo Hospital, 50 Haw. 150, 151, 433 P.2d 220, 221 (1967), this court addressed when the statute of limitation begin[s] to run against a [medical] malpractice claim where the plaintiff did not know, nor acting reasonably could have been expected to know, that the defendant had negligently diagnosed an ailment[.] After noting the varying approaches, such as the discovery rule, fraudulent concealment rule, continuous physician-patient relationship, and occurrence rule, the court concluded that the proper result would be to adopt the discovery rule to medical malpractice in Hawaii. Id. at 152-54, 433 P.2d at 222-23. We conclude that the statute does not begin to run until the plaintiff knew or should have known of the defendant's negligence. This conclusion is consistent with the legislative prescription to avoid constructions which would lead to absurd results. The injustice of barring the plaintiff's action before she could reasonably have been aware that she had a claim is patent. A basic reason underlying statutes of limitation is nonexistent; the plaintiff has not delayed voluntarily in asserting her claim. We realize that added burdens are placed on defendants by forcing them to defend claims with evidence that may be stale. We should not overlook the fact that the plaintiff must produce evidence sufficient to establish a prima facie case before the defendant is obliged to produce any evidence. . . . . We conclude that the conflicting policies are best reconciled by permitting the plaintiff the opportunity to prove that she neither knew or could reasonably have been expected to know of the defendant's alleged negligence until the date alleged in her complaint. If the legislature deems our reconciliation of these conflicting policies incorrect or wishes to place an outside limit on the time for bringing a malpractice action, it is free to do so. Until that time, however, we will not deny a plaintiff access to our courts for failure to assert such a claim if he asserts it within [the statute of limitations period] after he actually or constructively discovered it. Id. at 154-55, 433 P.2d at 223-24 (footnotes omitted). Although Yoshizaki was decided in the context of medical malpractice, the court's analysis and application of the discovery rule apply equally to legal malpractice. See 2 Legal Malpractice § 21.14 at 836 (noting that the discovery rule in legal malpractice is a relatively modern doctrine employed to conform the rules of attorney liability with other professions) (citing Mumford v. Staton, Whaley and Price, 254 Md. 697, 255 A.2d 359 (1969) (adopting the discovery rule to malpractice claims against attorneys)).
In Higa v. Mirikitani, 55 Haw. 167, 517 P.2d 1 (1973), this court was presented with the issue whether the discovery rule, as announced in Yoshizaki, applied to the legal malpractice; however, we declined to address the issue, having held the case to have been brought within the six-year limitations period under either rule. Higa, 55 Haw. at 174, 517 P.2d at 6. Since Higa, this court has not revisited the issue of when the statute of limitations begins to accrue in the context of legal malpractice, or more specifically, in a claim arising from the alleged negligent drafting of an inter vivos trust. We, therefore, look to other jurisdictions for guidance. In Neel v. Magana, Olney, Levy, Cathcart and Gelfand, 6 Cal.3d 176, 98 Cal.Rptr. 837, 491 P.2d 421 (1971) (superceded by statute Cal. Civ. Proc.Code § 340.6 (West 1982), as recognized by, Laird v. Blacker, 2 Cal.4th 606, 7 Cal.Rptr.2d 550, 828 P.2d 691, 693 (1992)), the California Supreme Court denounced the occurrence rule's applicability to professional negligence. The court noted that professionals, including attorneys, possess specialized skills and knowledge not possessed by most clients, and thus, their clients cannot be expected to recognize an error. Id. 98 Cal.Rptr. 837, 491 P.2d at 431. The court further acknowledged the implications of its holding: We recognize that the instant ruling will impose an increased burden upon the legal profession. An attorney's error may not work damage or achieve discovery for many years after the act, and the extension of liability into the future poses a disturbing prospect. On the other hand, when an attorney raises the statute of limitations to occlude a client's action before that client has had a reasonable opportunity to bring suit, the resulting ban of the action not only starkly works an injustice upon the client but partially impugns the very integrity of the legal profession. Id. The California legislature subsequently amended the decision in Neel by statute. See Cal.Civ.Proc.Code § 340.6 (West 1982). [15] Florida, likewise, rejected the occurrence rule in legal malpractice actions and adopted the discovery rule. A careful examination of the decisions which adopt the [occurrence] rule . . . fails to disclose the rationale which gives credence to and justifies the rule. The effect of the rule is to hold that an injured client must commence the action against his attorney for malpractice within the period of limitations after the negligent act is committed, even though the client is totally unaware of the fact that the negligent act giving rise to the cause of action had occurred. We find it impossible to rationalize how an injured client can be required to institute an action within a limited time after his cause of action accrues if he has no means of knowing by the exercise of reasonable diligence that the cause of action exists. It occurs to us that one should be held in fault for failing to timely exercise a right only if he knows, or by the exercise of reasonable diligence should have known, that such right existed. It is our view that the [occurrence] rule . . . casts upon a client an unfair burden of knowing as much about the intricacies of the law as does the attorney whom he employs to protect his legal rights. In order to comply with the rule, the injured client would have to be sufficiently versed in the law to know exactly how and on which date his attorney committed an act of negligence in the prosecution or maintenance of the legal matters entrusted to his care in order that an action against the attorney might be instituted before being barred by the statute of limitations. We cannot agree with legal philosophy which adheres to such an unreasonable principle of law. Downing v. Vaine, 228 So.2d 622, 625 (Fla. Dist.Ct.App.1969). California and Florida are joined by a majority of jurisdictions in applying the discovery rule to legal malpractice actions, either statutorily or judicially. See 2 Legal Malpractice § 21.14 at 839 n.24 (4th ed. 1996 & Supp.1999) (citing the Federal Tort Claims Act and the following jurisdictions as having adopted the discovery rule: Alaska, Arizona, Arkansas, California, Colorado, Delaware, D.C., Florida, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming). [16] In deciding whether to apply the discovery rule in the context of estate planning, we consider the basic underlying policy of statutes of limitation, which is the prompt assertion of claims. See Shibuya v. Architects Hawaii, Ltd., 65 Haw. 26, 39, 647 P.2d 276, 285 (1982). In this context, the discovery rule carries the onerous potential of protracted exposure to liability when viewed in conjunction with the six-year limitation period governing legal malpractice. See HRS § 657-1(1). However, the legal profession may be relieved from such exposure through appropriate legislative action. [17] Cf. Yoshizaki, 50 Haw. at 155, 433 P.2d at 224 (stating that the legislature was free to amend the statute of limitation governing medical malpractice following the court's adoption of the discovery rule). Based upon the foregoing, we hold that the statute of limitations in a legal malpractice claim is governed by HRS § 657-1(1), the accrual of which is determined by application of the discovery rule. Accordingly, if the Appellants succeed in proving that Ing owed a duty of care to them, as previously discussed, the trier of fact must determine the date by which the Appellants knew or should have known of their legal malpractice claim. See, e.g., Dunlea v. Dappen, 83 Hawai`i 28, 36, 924 P.2d 196, 204 (1996) (holding that the determination of when a woman discovered, or reasonably should have discovered, for statute of limitations purposes, that she was psychologically injured by childhood sexual assaults was a question of fact for the jury).