Opinion ID: 2601898
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Heading Rank: 6

Heading: claim for breach of fiduciary duty arising from an attorney-client relationship is a legal malpractice claim subject to NRS 11.207(1)'s limitation period

Text: The district court granted summary judgment on Stalk and Urban Construction's claim for breach of fiduciary duty on the ground that the claim was barred by the two-year statute of limitations in NRS 11.190(4)(e), which applies to claims for damages based on the defendant's wrongful or negligent conduct. On appeal, pointing to this court's earlier decisions addressing breach of fiduciary duty claims, Urban Construction, Stalk, and Mushkin all maintain that NRS 11.190(3)(d)'s three-year statute of limitations, which governs fraud claims, should apply to Urban Construction and Stalk's breach of fiduciary duty claim. See Nevada State Bank v. Jamison Partnership, 106 Nev. 792, 799, 801 P.2d 1377, 1382 (1990); Golden Nugget, Inc. v. Ham, 98 Nev. 311, 313, 646 P.2d 1221, 1223 (1982); Shupe v. Ham, 98 Nev. 61, 64, 639 P.2d 540, 542 (1982). As explained above, however, we first must determine the true nature of the claim for breach of fiduciary duty before determining the applicable statute of limitations. See Hartford Ins. v. Statewide Appliances, 87 Nev. 195, 197, 484 P.2d 569, 571 (1971) (explaining that the object of the action, rather than the legal theory under which recovery is sought, governs when determining the type of action for statute of limitations purposes). In asserting a claim for breach of fiduciary duty, Stalk and Urban Construction claimed that Mushkin breached his fiduciary duty to them by disclosing information harmful to their interests while he was acting as their attorney and also representing RPSC in the employment discrimination action. In their complaint, Stalk and Urban Construction essentially alleged that Mushkin, as their attorney, owed them an undivided duty of loyalty and a duty of confidentiality. They claimed that Mushkin breached those duties when he revealed information that subjected them to tort liability during the employment action filed against Bird. Under the Restatement (Second) of Torts, a fiduciary relation exists between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation. Restatement (Second) of Torts § 874 cmt. a (1979). Thus, a breach of fiduciary duty claim seeks damages for injuries that result from the tortious conduct of one who owes a duty to another by virtue of the fiduciary relationship. Id. We previously have declared that Nevada Rule of Professional Conduct (RPC) 1.7 imposes a duty of loyalty on lawyers that prohibits representation of more than one client if the representation involves a concurrent conflict of interest or a significant risk that the dual representation will materially limit the lawyer's ability to represent one or both clients. [2] Ryan v. Dist. Ct., 123 Nev. ___, ___, 168 P.3d 703, 710 (2007). The duty of loyalty is based in the contractual relationship between attorney and client and correspondingly invokes the duty of confidentiality. See RPC 1.6; Warmbrodt v. Blanchard, 100 Nev. 703, 707, 692 P.2d 1282, 1285 (1984) (It is the `contractual relationship creating a duty of due care upon an attorney [which is] the primary essential to a recovery for legal malpractice.' (alteration in original) (quoting Ronnigen v. Hertogs, 294 Minn. 7, 199 N.W.2d 420, 421 (1972))), superseded in part by statute, NRS 42.001, as explained in Countrywide Home Loans v. Thitchener, 124 Nev. ___, ___, 192 P.3d 243, 253-55 (2008); Smith v. Mehaffy, 30 P.3d 727, 733 (Colo.Ct. App.2000). A cause of action for legal malpractice encompasses breaches of contractual as well as fiduciary duties because both concern[ ] the representation of a client and involve [ ] the fundamental aspects of an attorney-client relationship. 2 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 14:2 (2007). Thus, NRS 11.207, which sets forth the statute of limitations for [m]alpractice actions against attorneys, is applicable to legal malpractice claims, whether based on breach of contractual obligations or breach of fiduciary duties: An action against an attorney . . . to recover damages for malpractice, whether based on a 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. NRS 11.207(1) (emphasis added). Such claims are subject to the statute of limitations in NRS 11.207(1). Here, Stalk and Urban Construction's breach of fiduciary duty claim is, in essence, a legal malpractice claim, since it is grounded on allegations that Mushkin breached certain duties, namely, confidentiality and loyalty, that would not exist but for the attorney-client relationship. Accordingly, the district court's conclusion that NRS 11.190(4)(e) applied to Stalk's breach of fiduciary duty claim was in error. Based on our assessment of the true nature of Stalk and Urban Construction's claim, we likewise reject the parties' contention that NRS 11.190(3)(d) governs the breach of fiduciary duty claim at issue here. While the parties rely on a line of Nevada cases holding that claims for breach of fiduciary duty are akin to claims for fraud and are therefore subject to the three-year limitation on actions in NRS 11.190(3)(d), those cases do not control our analysis here because none involved an attorney-client relationship. Nevada State Bank v. Jamison Partnership, 106 Nev. 792, 799, 801 P.2d 1377, 1382 (1990); Golden Nugget, Inc. v. Ham, 98 Nev. 311, 313, 646 P.2d 1221, 1223 (1982); Shupe v. Ham, 98 Nev. 61, 64, 639 P.2d 540, 542 (1982). Accordingly, we clarify now that claims for breach of fiduciary duty arising out of an attorney-client relationship are legal malpractice claims subject to NRS 11.207(1)'s limitation period, and claims for breach of fiduciary duty based on fiduciary relationships other than attorney-client are akin to fraud claims, subject to the limitation period set forth under NRS 11.190(3)(d). [3] Although we have determined that Stalk and Urban Construction's breach of fiduciary duty claim asserts legal malpractice, the question remains whether summary judgment was appropriate under the statute of limitations that governs such claims. In the district court, the parties disputed what event triggered the running of the statute of limitations. Specifically, Stalk and Urban Construction argued that the limitations period began to run in May 2003, when Stalk learned of the motion filed by Mushkin naming Stalk and Urban Construction as indispensable parties in the wrongful termination action that was filed against RPSC. Mushkin, on the other hand, argued that various earlier events triggered the statute of limitations and that Stalk and Urban Construction's claim would be time-barred if any of these events marked the beginning of the statute of limitations period. Because genuine issues of material fact exist concerning the date on which the statute of limitations began to run, and thus whether Stalk and Urban Construction's claim for breach of fiduciary duty is time-barred, the district court erred by entering summary judgment on that claim.