Opinion ID: 1441566
Heading Depth: 3
Heading Rank: 1

Heading: The Nature of the Professional Malpractice Action

Text: An action against a real estate attorney and a title agency for negligent title research and disclosure is a professional negligence or malpractice action. A professional malpractice action involves a professional's alleged breach of a duty of due care which was implied by law as a result of a contractual undertaking. Lee Houston & Assocs., Ltd. v. Racine, 806 P.2d 848, 853 (Alaska 1991). Like other professionals, real estate attorneys and title agencies must use due care to discover and disclose to their clients significant restrictions on real title. See Bank of California v. First Am. Title Ins. Co., 826 P.2d 1126, 1129 (Alaska 1992). The hybrid nature of a professional malpractice action has led to some confusion about whether common law contract or tort rules apply. This case raises questions about the statute of limitations, the discovery rule, and the measure of damages. We address all three questions at the outset. First, the statute of limitations on the claims in this case is six years. AS 09.10.050. In Van Horn Lodge, Inc. v. White, 627 P.2d 641, 643 (Alaska 1981), we held that the limitation period depends on whether the gravamen of the plaintiff's complaint lies in contract or tort. Application of this analysis proved difficult over the next decade. See Jones v. Wadsworth, 791 P.2d 1013, 1016-17 (Alaska 1990); Bibo v. Jeffrey's Restaurant, 770 P.2d 290 (Alaska 1989). We have recently modified the Van Horn `gravamen' analysis. Rather than attempting to characterize the source of the plaintiff's rights in terms of the common law distinctions between tort and contract, we now look to the nature of the injury. The six-year statute of limitations generally applies to professional malpractice actions claiming economic loss. Lee Houston, 806 P.2d at 855. The two-year statute of limitations applies to malpractice causing personal or reputational injury. Pedersen v. Flannery, 863 P.2d 856, 858 (Alaska 1993); AS 09.10.070. Because the Moores have suffered principally economic injuries, the six-year statute of limitations applies. Second, the discovery rule applies to the claims in this case. We have consistently held that the discovery rule applies to professional malpractice. Lee Houston, 806 P.2d at 851 (malpractice by real estate agents); Gudenau & Co. v. Sweeney Ins. Inc., 736 P.2d 763, 766 (Alaska 1987) (malpractice by insurance agents); Sharrow v. Archer, 658 P.2d 1331, 1334 (Alaska 1983) (malpractice by physician); Greater Area Inc. v. Bookman, 657 P.2d 828, 829-30 (Alaska 1982) (malpractice by attorney). This is true even in professional malpractice actions where the contract elements of the action appear to predominate over the tort elements. See Gudenau, 736 P.2d at 766 n. 4, 767. The discovery rule has been applied to actions relating to title research in other jurisdictions by decision and by statute. See Zurick v. First Am. Title Ins. Co., 833 F.2d 233 (10th Cir.1987) (applying Colorado law); Pioneer Nat'l Ins. Co. v. Sabo, 382 A.2d 265 (Del.Super. 1978); Cal. Civ.Proc.Code § 339(1) (West 1982). As in other malpractice actions, the fact of negligent title research and the resulting harm are difficult for a lay person to discover. See Bookman, 657 P.2d at 830. Nevertheless, Safeco characterizes the claim against it as a contract action and argues that the discovery rule should not apply. We recently held that the discovery rule does apply to some contract actions. Bauman v. Day, 892 P.2d 817, 828 (Alaska 1995). Even were that not so, we reaffirm the principle that the discovery rule applies to professional malpractice actions. Third, the tort measure of damages applies to this case. Like those of any other action for negligence, the elements of a cause of action in tort for professional negligence are: (1) the duty of the professional to use such skill, prudence, and diligence as other members of the profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional's negligence. Linck v. Barokas & Martin, 667 P.2d 171, 174 n. 4 (Alaska 1983). Because the Moores sued for malpractice under both contract and tort theories, the trial court analyzed damages under both contract and tort measures. While the professional services contract gives rise to the duty of due care, the professional's negligence gives rise to the damage. The damage generally should be measured according to traditional tort principles. [3]