Opinion ID: 885086
Heading Depth: 1
Heading Rank: 6

Heading: Trust Claims

Text: ¶ 89 First, Clark alleges that the Accounting Defendants breached the applicable standards of care by failing to disclose the existence of the trust to Clark, giving legal advice as to the validity of the trust without Exhibit A attached, failing to recognize the conflict of interest in representing him, the trust, and the trustee, Joan, and at the same time agreeing to adhere to Joan's request not to tell Clark about the trust, failing to inform the attorney for the estate and the probate court of the existence of the trust, and failing to disclose the existence of the trust on the estate tax returns. ¶ 90 As stated above, we agree with the District Court that no valid trust was ever formed by Charles with respect to his partnership interest in the ranch or any other partnership assets. Clark claims that in the event that we were to find the trust invalid, his negligence claims against the Accounting Defendants would remain because his expert witnesses would testify that Malnaa had a duty to either tell Clark that the trust document existed, whether the trust was funded or not, and about its purported invalidity without Exhibit A, or withdraw from his accountant-client relationship with his current clients, Clark, the partnership, and the trust. Clark argues that because Malnaa did not do one or the other, he breached his professional duties. ¶ 91 The District Court discussed four separate grounds for granting the Accounting Defendants summary judgment and denying Clark's motion for partial summary judgment on the trust claims. First, the court determined that Malnaa, as Joan's alleged agent, had no duty to disclose the existence of the invalid trust because Joan, as the alleged principal, had no duty to disclose the invalid trust to Clark. Second, according to § 37-50-402, MCA, the court determined that Malnaa was precluded from discussing the trust agreement with Clark unless Malnaa received permission from Charles or Joan, his clients, or was ordered to disclose by a court subpoena. Third, the court ruled that Clark cannot demonstrate that Malnaa's failure to disclose the invalid trust agreement was the legal cause of a compensable injury. In other words, Clark cannot establish that the Accounting Defendants' conduct caused his alleged damage, the failure to receive the entire ranch upon Charles' death. Fourth, the court concluded that Clark's claim is barred by the applicable three-year statute of limitations pursuant to § 27-2-204(1), MCA. ¶ 92 The District Court's first basis for granting summary judgment in favor of the Accounting Defendants is that, Malnaa, as Joan's alleged agent, had no duty to disclose the existence of the invalid trust to Clark. This was consistent with the court's reasoning that, since Joan had no duty to disclose, certainly her agent had no duty. Closely related is the court's second basis, that the Privileged communications statute (Section 37-50-402, MCA) precluded Malnaa from disclosing the existence of the invalid trust from Clark. ¶ 93 Clark argues, however, that he had a professional relationship with Malnaa during this period and, therefore, Malnaa was immersed in a clear conflict of interest. Clark argues that once Malnaa decided to represent clients with competing interests, he had a similar duty of disclosure to all of them. ¶ 94 At the very least, our review of the record raises a question of whether Malnaa had a professional relationship with Clark during the time period he was advising Joan that the trust was invalid. The District Court concluded that simply preparing tax returns for Clark would not be sufficient to establish a professional relationship. However, Clark asserted that he considered Malnaa as his accountant from 1982 until 1994 and that essentially Malnaa was advising the entire family unit in handling the various ranching affairs. We conclude that the question of whether Malnaa had a professional relationship with Clark during the period in question should have been left for a jury to decide. Should the jury decide that such a relationship did exist, then Malnaa owed a duty to his competing clients to either withdraw from representing them or obtain their permission to proceed, making full disclosures to everyone. Therefore, the first two reasons cited by the District Court would not be sufficient to support summary judgment in favor of the Accounting Defendants. ¶ 95 The third reason the District Court cited as a basis for summary judgment against the Accounting Defendants is that Clark could not establish that the failure of Malnaa to advise him of the invalid trust was a legal cause of his injury. The court reasoned that Clark can only speculate that he could have convinced his father to remedy the invalid trust had he been informed of the invalid trust prior to his father's death. We do not disagree with the District Court that speculative statements or assertions are not sufficient to raise a material question of fact. However, given the entire circumstances and the relationship of the various parties involved, a jury may reasonably find, without regard to speculation, that Charles had fully intended to create a valid trust. Had Clark been given the opportunity to discuss the invalidity of the trust with his father, a jury may reasonably conclude that Charles would have remedied the matter before he died. Therefore, we conclude that the District Court erred in deciding the causation issue as a matter of law. ¶ 96 The court's final basis for granting summary judgment to the Accounting Defendants is that Clark's claims were barred by the applicable statute of limitations. The court stated that the three-year statute of limitations bars Clark's claim of professional negligence against the Accounting Defendants with regard to the trust agreement. ¶ 97 Clark's claims against the Accounting Defendants are based on a theory of negligence. Pursuant to § 27-2-204(1), MCA, the commencement of an action upon a liability not founded upon an instrument in writing is within 3 years. This Court has generally held that in tort actions the statute of limitations begins to run on the date of the plaintiff's injury. See Kerrigan v. O'Meara (1924), 71 Mont. 1, 7, 227 P. 819, 821; see also Yellowstone Conference of United Methodist Church v. D.A. Davidson, Inc.(1987), 228 Mont. 288, 294, 741 P.2d 794, 798. According to § 27-2-102(1)(a), MCA, the date of a plaintiff's injury is the date the cause of action accrues. Accrual is defined by that statute as: (a) a claim or cause of action accrues when all elements of the claim or cause exist or have occurred, the right to maintain an action on the claim or cause is complete, and a court or other agency is authorized to accept jurisdiction of the action.... Clark's alleged injury arises from his not receiving the entire ranch upon Charles' death. He claims that if he had been advised of the existence of the invalid trust agreement prior to the death of Charles, he may have been able to convince Charles to remedy the invalid trust to reflect his true intentions. Clark maintains he could have engineered a change in the disposition of Charles' interest in the ranch had he been advised of the invalid trust agreement. The District Court properly noted, however, that Clark would have only had the opportunity to do so before the death of Charles on October 28, 1982. Therefore, the statute of limitations began to run on the date of Charles' death, October 28, 1982. ¶ 98 Pursuant to the general tort rule, Clark had three years from October 28, 1982, in which to file an action against the Accounting Defendants alleging professional negligence with regard to the trust agreement. However, Clark did not commence his third-party action against the Accounting Defendants until June 30, 1995. Notwithstanding, Clark asserts that his action was still timely. ¶ 99 In Blackburn v. Blue Mountain Women's Clinic (1997), 286 Mont. 60, 951 P.2d 1, we addressed an issue similar to the issue presented here. In Blackburn, the appellant alleged, among other things, negligence on the part of the Clinic and one of its counselors, Jane Doe, for the counselor's failure to inform Blackburn that, because she was HIV negative, her baby would not be born HIV positive and, therefore, that an abortion was unnecessary. See Blackburn (1997), 286 Mont. at 78, 951 P.2d at 11-12. Because Blackburn was not given this information by the Clinic counselor, she chose to have an abortion based upon advice given to her by a previous caregiver that her baby would be HIV positive. It was not until five years later when Blackburn consulted an attorney, that she learned of the misinformation. We determined that the elements of Blackburn's claims for negligence were present once she had the abortion and that her right to maintain an action on those claims was complete pursuant to § 27-2-102(1), MCA. See Blackburn, 286 Mont. at 70, 951 P.2d at 7. Blackburn's alleged damages, including the loss of her unborn fetus as well as ensuing emotional difficulties, were manifest at the time of the abortion procedure. Blackburn maintained, however, that even if her injury and claim accrued earlier, the statute of limitations did not begin to run until five years later when she first consulted an attorney and learned that she had received erroneous medical information prior to her abortion. See Blackburn, 286 Mont. at 77, 951 P.2d at 11. ¶ 100 In Blackburn, we explained that § 27-2-102(3)(a), MCA, may toll the statute of limitations in a negligence case when the facts constituting the claim are self-concealing, thereby preventing their discovery by the plaintiff. See Blackburn, 286 Mont. at 78, 951 P.2d at 12. Section 27-2-102(3)(a), MCA, states: (3) The period of limitation does not begin on any claim or cause of action for an injury to person or property until the facts constituting the claim have been discovered or, in the exercise of due diligence, should have been discovered by the injured party if: (a) the facts constituting the claim are by their nature concealed or self-concealing; We noted that, in the past, self-concealing injuries were found in the context of medical malpractice claims. See Blackburn, 286 Mont. at 78, 951 P.2d at 12. In 1987, however, the Montana Legislature amended § 27-2-102, MCA, to address the unique problems presented by self-concealing injuries. See § 27-2-102(3), MCA. In doing so, the Legislature specifically exempted the application of § 27-2-102(3), MCA, to medical malpractice actions which are instead governed by the limitations period and tolling provisions codified at § 27-2-205, MCA. See Blackburn, 286 Mont. at 78, 951 P.2d at 12. Section 27-2-102(3)(a), MCA, protects plaintiffs against the harsh results of having their claims barred before they even know they exist. In Blackburn, we concluded that the negligent act alleged by Blackburn was the withholding of accurate medical information by the Clinic counselor, and that this alleged withholding of information, or nondisclosure of information, is by its nature, self-concealing. See Blackburn, 286 Mont. at 79, 951 P.2d at 12. We further concluded that the alleged facts upon which Blackburn's claim for negligence rested were, by their nature, self-concealing and, as a result, the very nature of her injury was self-concealing. We held that Blackburn could not have discovered that she underwent an unnecessary abortion until she learned that the counselor had withheld from her accurate medical information which Blackburn needed in order to make an informed decision regarding whether to obtain an abortion. See Blackburn, 286 Mont. at 79, 951 P.2d at 12. ¶ 101 Pursuant to our decision in Blackburn and the tolling provision in § 27-2-102(3)(a), MCA, we conclude that the facts constituting Clark's claim against Malnaa are self-concealing. Although Clark's injury accrued on October 28, 1982, the date of Charles' death, Clark could not have discovered that he should have received the entire ranch upon Charles' death until he learned that Malnaa, his accountant, had withheld from him accurate information regarding the existence of the invalid trust agreement. Malnaa admitted in his deposition that he and Joan agreed not tell Clark about the invalid trust agreement. Clark maintains that he first learned of the trust on March 4, 1995. Had Malnaa disclosed to Clark that the validity of the trust was questionable prior to Charles' death, Clark would have had the opportunity to remedy the faulty trust. ¶ 102 As we discussed in Blackburn, a determination must be made regarding whether Clark exercised due diligence in discovering his claim as required by the tolling provision in § 27-2-102(3)(a), MCA. See Blackburn, 286 Mont. at 79, 951 P.2d at 12. A trier of fact must determine when Clark, through due diligence, should have discovered that information withheld by Malnaa caused him to not be awarded the entire ranch upon Charles' death. ¶ 103 Based on the foregoing, we conclude that the facts constituting Clark's claim for negligence against Malnaa with regard to the existence of the trust were self-concealing as contemplated by the tolling provision of § 27-2-102(3)(a), MCA. At what point Clark discovered or should have discovered through due diligence the negligence of Malnaa is a question that must be submitted to a jury for determination. ¶ 104 Therefore, with regard to the trust claims we conclude that the District Court improperly granted summary judgment in favor of the Accounting Defendants.