Court Opinion

ID: 9523307
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:38:49.1151+00
Date Added: 2024-06-11T13:04:52.321839
License: Public Domain

DISSENT
HANSON, Justice,
(dissenting).
I agree with the majority’s conclusion that a cause of action for legal malpractice accrues, and the statute of limitations begins to run, on the occurrence of some compensable damage, even damage not specifically alleged in the complaint. But I disagree with the conclusion that Antone suffered some compensable damage when he married, more than six years prior to the commencement of this action. Instead, I would' follow Minnesota’s established rule that, where liability is contingent on a future event that is not certain to occur, no compensable damage occurs unless and until that future event occurs. Because any liability that Antone might have incurred to Schmidt by reason of their marriage was contingent, Antone could not have suffered any compensable damage until the contingency occurred; that is, when Antone,filed for marital dissolution and either (1) the antenuptial *339agreement became operative by the issuance of the decree of marital dissolution, or (2) Antone incurred expenses to defend against a potential liability that should have been prevented by the antenuptial agreement, whichever first occurred. Because there was no evidence that either event occurred more than six years prior to the commencement of this legal malpractice action, I would affirm the court of appeals decision that Antone’s claim is not barred by the statute of limitations.
I agree that our decision in Hermann v. McMenomy & Severson, 590 N.W.2d 641 (Minn.1999), is instructive, but I take completely different lessons from it than those extracted by the majority. In Herr-mann the facts presented four discrete events: (1) the negligent performance of legal services and the payment of legal fees for those services in 1986; (2) the creation of tax liability by engaging in prohibited transactions in 1987; (8) the expenditure of funds to attempt to remedy the problem in 1993; and (4) the IRS assessment of the tax liability in 1996. We did not regard the performance of legal services or the payment of legal fees for those services in 1986 as causing the malpractice claim to accrue, presumably because those acts would only be relevant to an occurrence rule, which we had already rejected. Instead, we held that “some damage” occurred in 1987 when the clients became “immediately liable” for the tax. Id. at 643-44. We concluded that at that time the clients could have commenced an action for attorney malpractice that would have survived a motion to dismiss for failure to state a claim. Id. We did not separate the damages that the clients suffered in 1987 from that suffered in 1993 or 1996 or allow the claim to proceed for those later damages.
Accordingly, I take this general guidance from Herrmann: (1) because Minnesota does not follow the occurrence rule of accrual, the negligent performance of legal services and the essentially simultaneous payment of legal fees for those services are not sufficient for a cause of action to accrue; (2) the “some damage” rule of accrual looks to the first occurrence of any compensable damages sufficient to allow the plaintiff to survive a motion to dismiss; (3) the “some damage” rule does not focus only on the damages alleged in the complaint; and (4) to the extent that the client’s claim is for indemnity for a liability incurred by the client as a result of the attorney’s negligent advice or performance, some damage only occurs when that liability becomes “immediate,” which I take to mean fixed and certain.
These general principles lead me to reject the majority’s damage arguments. Also, I would reject the additional damage arguments made by Mirviss but not addressed by the majority. The majority concludes that Antone suffered some com-pensable damage on December 21, 1986, more than six years prior to the commencement of this action, when he and Schmidt married, because Antone “was no longer protected from Schmidt’s claims and Antone lost the right to unilaterally change this consequence.” Mirviss suggests that two other events that occurred more than six years prior to the commencement of this action caused some compensable damage: when Antone’s legal status changed from single to married when he married Schmidt in reliance on Mirviss’ representations; and Antone’s payment of legal fees to Mirviss.

1. Lost legal rights associated with marriage

It is true, as the majority asserts, that at the time Antone married, the antenup-tial agreement became effective, in the sense that Antone lost the right to unilat*340erally revoke it. But Antone’s loss of his right to revoke did not cause any actual damage because his risk of losing some part of the marital appreciation of his premarital property was not fixed or certain at that time. This is because the antenup-tial agreement would not become operative unless and until there was a dissolution of the marriage. Until then, Antone’s liability to Schmidt for a portion of the marital appreciation of Antone’s premarital property was contingent and it did not become fixed and certain until the decree of dissolution was entered. Thus, unlike Herr-mann, where the clients’ liability was immediately fixed by the completion of the prohibited transaction, Antone’s liability for a portion of the appreciation of his premarital property did not become immediately fixed on completion of his marriage, or even on the appreciation of the property. See id. at 642. Although the seeds of Antone’s liability were planted when the marriage occurred and the property appreciated, those seeds did not ripen into compensable damage until Antone’s liability became fixed by the dissolution of the marriage.
We have long recognized that where liability is contingent on the occurrence of an uncertain future event, the action is not sufficiently ripe to present a justifiable controversy and the statute of limitations does not accrue until the occurrence of that contingency. Bachertz v. Hayes-Lucas Lumber Co., 201 Minn. 171, 176, 275 N.W. 694, 697 (Minn.1937); accord Rayne State Bank & Trust, Co. v. Nat’l Union Fire Ins. Co., 483 So.2d 987, 995-96 (La. 1986); Poole v. Lowe, 615 A.2d 589, 593 (D.C.1992). Two modern cases from this court illustrate this point.
In Grothe v. Shaffer, 305 Minn. 17, 23-24, 232 N.W.2d 227, 232 (1975), this court held that a claim for contribution by a joint tortfeasor “does not accrue or mature until the person entitled to the contribution has sustained damage by paying more than his fair share of the joint obligation.” The resolution of the underlying tort action is a condition precedent to the transformation of a contingent liability to a fixed one. Without a fixed liability, there can be no damage that would trigger the commencement of the statute of limitations on a contribution claim by a joint tortfeasor. Id.
Similarly, in Oanes v. Allstate Ins. Co., 617 N.W.2d 401, 404 (Minn.2000), we were asked to determine when the statute of limitations commences against an insurer for recovery of underinsured motorist benefits. We previously held that an underin-sured motorist claim is -not ripe until the motorist’s contingent liability is fixed by the resolution in the underlying tort action against the motorist. Employers Mut. Cos. v. Nordstrom, 495 N.W.2d 855, 857 (Minn.1993). In Oanes we concluded that the injured motorist is not “damaged” for purposes of an underinsured motorist lawsuit until his liability is fixed in the underlying tort action. Oanes, 617 N.W.2d at 407.
The damages suffered by the plaintiffs in Oanes and Grothe were entirely contingent on the occurrence of uncertain events; the establishment of fixed liability by the resolution of the underlying tort actions. Oanes, 617 N.W.2d at 402-03, Grothe, 305 Minn, at 18-19, 232 N.W.2d at 229. Similarly, Antone’s liability to Schmidt for a part of the marital appreciation of his premarital property was entirely contingent on the dissolution of his marriage, an event that was not certain to occur. During the marriage the alleged defect in the ante-nuptial agreement did not give Schmidt any greater or different rights to a portion of the marital appreciation of Antone’s property than she would have had if the defect in the agreement did not exist. The key point is this: If Antone had sued *341Mirviss as soon as he was married or when the rental property appreciated in value, merely because he now risked losing a part of the marital appreciation in the event of a dissolution, the suit would not have survived a motion to dismiss because Antone’s liability would still be contingent and he would not yet have sustained any actual, compensable damage.
I recognize that the existence of some damage does not depend, under Herr-mann, on the ability to calculate the exact amount of damages. Herrmann, 590 N.W.2d at 643. But this principle has no application here because Antone’s liability did not become fixed until within six years from the commencement of the action. In other words, where liability is contingent, neither the fact of liability nor the amount of damage can be determined until the contingency occurs. It is the inability to determine the fact of liability, not the inability to determine the amount of damages that precludes the accrual of a cause of action under the some damage rule.
Mirviss relies on an unpublished court of appeals decision to support his view that Antone was damaged when the antenuptial agreement became irrevocable on his marriage. In Harmeyer v. Gustafson, the court of appeals held the cause of action for attorney malpractice accrued when the client signed an irrevocable trust agreement that he claimed was negligently drawn by his attorney. No. C8-00-1191, 2001 WL 122141 (Minn-App. Feb.5, 2001). But Harmeyer can be distinguished on two grounds. First, the trust was immediately funded and thus the client immediately lost an interest in the trust funds when they were made subject to the trust. Second, although the client’s future loss of the intended tax benefits from the trust was contingent, it was contingent only on his death. Thus, while Antone’s future loss was contingent on a marital dissolution that was not certain to occur, Harmeyer’s future loss was contingent on a death that was certain to occur.

2. Marriage in reliance

Mirviss argues that Antone suffered damage as soon as he was married because Antone acknowledged in his deposition that he would not have agreed to marry had he known that the martial appreciation of his premarital property was not protected. He argues that a marriage can constitute damages because as soon as Antone married he (1) lost “the legal right to claim an unfettered ownership interest in his non-marital assets;” (2) was subjected to a presumption that everything he gained thereafter became marital property, see Minn.Stat. § 518.54, subd. 5 (2004); (3) lost the right to convey his homestead without the signature of Schmidt, see MinmStat. § 507.02 (2004); and (4) became jointly and severally liable for certain household and family medical expenses, see Minn.Stat. § 519.05(a) (2004). Mirviss cites no authority to support the argument that the act of marriage can constitute damage.
Like the risk of losing the marital appreciation of Antone’s premarital properties, all of these potentially negative consequences of marriage were contingent on the occurrence of future events that were not certain to occur. The first two were contingent on a marital dissolution. The second two were contingent on Antone’s attempting unilaterally to convey his homestead or on Schmidt defaulting on household or family medical debts during the marriage, neither of which was shown to have occurred.
Further, to conclude that the disadvantages of marriage outweigh the benefits so as to cause compensable damages would run contrary to public policy. It would also inject subjectivity into Minnesota’s *342otherwise objective damage approach to accrual, presenting fact questions on reliance and causation. It would require speculation about whether the alleged defect in the agreement was sufficiently material, given a particular plaintiffs pre and post-marriage financial situations, to support the subjective claim that the client would not have married. I do not find this to be an appropriate basis for applying the statute of limitations.

3. Payment of attorneys fees to Mir-viss

Finally, Mirviss argues that Antone suffered some damage as soon as he paid Mirviss’ fees for preparing an antenuptial agreement. It is not clear in our law whether a client in an attorney malpractice action can state a claim for a refund of attorney fees paid. I note that one legal malpractice treatise, in listing direct and consequential damages recoverable in an attorney malpractice action, does not include recovery of the fees paid to the defendant attorney. 3 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice, § 20.1-20.16, at 1-56 (2006). More typically, the fees of the malpractice defendant are viewed as an offset to the other damages for which the professional may be liable. See, e.g., id. § 20.18 at 56-61; Moores v. Greenberg, 834 F.2d 1105 (1st Cir.1987); Saffer v. Willoughby, 143 N.J. 256, 670 A.2d 527 (1996). In other words, an attorney may be able to recover fees even though there was some malpractice. This would suggest that the client would not be able to seek a refund of the fees as a compensable damage in the malpractice action.
In Minnesota, we have approached this issue under the concept of forfeiture. Thus, in Perl v. St. Paul Fire & Marine Ins. Go., we observed that generally an attorney does not forfeit his or her right to compensation for mere negligence, but only for a breach of a fiduciary duty. 345 N.W.2d 209, 212 (Minn.1984). And, as to forfeiture for breach of a fiduciary duty, we recognized that it was not dependent on any actual loss to the client, but was awarded as “nominal damages” because the client was “deemed injured” as a result of the breach of fiduciary duty. Id. Here, Antone only alleges negligence, not breach of fiduciary duty.
Of course, Mirviss’ argument also presents causation issues because Mirviss’ alleged malpractice did not cause Antone to pay his legal fees. And, as noted earlier, we find support in Herrmann for the conclusion that the payment of attorney fees for the services that are claimed to be defective does not trigger the accrual of the malpractice cause of action. 590 N.W.2d at 643^44. In Herrmann, the legal services were performed, and the professional fees were presumably paid, in 1986, but the client did not engage in a prohibited transaction, and thus did not incur liability as a result of the attorney’s negligent advice, until 1987. 590 N.W.2d at 642. We determined that the cause of action did not accrue until 1987, when the client incurred a fixed and certain liability as a result of the attorney’s advice.1 Id.
*343Finally, I note that any holding that the action accrues on the payment of Mirviss’ attorney fees would conflict with the public policy considerations that underlie our rejection of the historic occurrence rule. Many other jurisdictions have also moved away from the occurrence rule because it was unreasonably harsh to clients and did not serve the interests of judicial economy.
The -occurrence rule was harsh to clients because it often would force the client to commence an action for an insignificant part of his potential loss, and then face the prospect that he may be precluded by res judicata from later pursuing a claim for the significant loss.2 As applied to the facts here, the occurrence rale would have required Antone to sue Mirviss for about $1,400 before December 22, 1992, (within 6 years from the date the antenuptial agreement was drawn and fees were paid), while he was still married, and any judgment for those fees may have precluded Antone from later suing Mirviss for the litigation costs incurred after 19983 or for indemnification of his liability for a portion of the marital appreciation of his premarital property, which only became fixed and certain when the marriage was dissolved in 2000.4
The occurrence rule also did not serve the interests of judicial economy because it required a client to sue while he is still married, bringing unhelpful stress to the marriage, and before the potentially significant damage has occurred. Because the payment of attorney fees for legal services is generally simultaneous with the performance of the services, the conclusion that the cause of action accrued on the payment of those fees would effectively reinstate the occurrence rule of accrual for *344attorney malpractice claims. I would reject that conclusion for the same reasons that we rejected the occurrence rule of accrual.
Because Antone’s legal malpractice action was commenced within six years of the filing of the dissolution proceeding, it is not necessary to precisely determine whether Antone’s cause of action accrued in 1998, when he incurred attorney fees to defend against his liability for the marital appreciation of his premarital property, or in 2000, when the decree of dissolution was entered. In either case, Antone’s legal malpractice action was commenced before the limitations period expired. Accordingly, I would affirm the result reached by the court of appeals and remand the case to the district court for further proceedings.

. Similarly, the cases from other jurisdictions that apply a damage accrual rule similar to Minnesota’s do not generally hold that the cause of action for attorney malpractice accrues on the payment of attorney fees for the allegedly defective legal services. See, e.g., Rayne State Bank & Trust Co. v. Nat’l Union Fire Ins. Co., 483 So.2d 987, 996-97 (La. 1986) (holding statute of limitations began to run in 1981, when client initiated foreclosure proceedings on fatally defective mortgages; not in 1979, when mortgages were drafted and attorney fees presumably paid).

. We have held that "a plaintiff may not split his cause of action and bring successive suits involving the same set of factual circumstances.” Hauser v. Mealey, 263 N.W.2d 803, 807 (Minn.1978). A claim or cause of action is "[a] group of operative facts giving rise to one or more bases for suing.” Martin ex rel. Hoff v. City of Rochester, 642 N.W.2d 1, 9 (Minn.2002). Where the same evidence will sustain both actions, the former judgment is a bar to subsequent action. McMenomy v. Ryden, 276 Minn. 55, 58, 148 N.W.2d 804, 807 (1967). But see Care Institute, Inc.-Roseville v. County of Ramsey, 612 N.W.2d 443, 447 (Minn.2000) (holding that claims cannot be considered the same cause of action if “the right to assert the second claim did not arise at the same time as the right to assert the first claim”).

. Antone incurred legal expenses in the dissolution proceeding defending against Schmidt’s claims to a part of the marital appreciation of his premarital property. But for Mirviss’ alleged negligence, Schmidt would not have had legal grounds to make those claims and Antone would not have incurred these expenses. Therefore, Antone suffered damages as soon as he paid legal fees to defend against an action caused by Mirviss' alleged negligence. Consistent with our holding that a cause- of action accrues upon the occurrence of any compensable damages, the statute of limitations began at the latest when Antone incurred these legal expenses. See Hill v. Okay Constr. Co., 312 Minn. 324, 347, 252 N.W.2d 107, 121 (Minn.1977) (attorney fees are recoverable “when the attorneys fees and expenses claimed are incurred in other litigation which is necessitated by the act of the party sought to be charged”); Sirott v. Lotts, 6 Cal.App.4th 923, 8 Cal.Rptr.2d 206, 209 (1992) ("A client suffers damage when he is compelled, as a result of the attorney’s error, to incur or pay attorney fees.”); Lucey v. Law Offices of Pretzel & Stouffer, Chartered, 301 Ill.App.3d 349, 234 Ill.Dec. 612, 703 N.E.2d 473, 478 (1998) (same); Larson v. Norkot Mfg., Inc., 653 N.W.2d 33, 36 (N.D. 2002) (same).

.The antenuptial agreement became operative when the decree of dissolution was entered in 2000. Although issues concerning property division were appealed, the dissolution of the marriage was not appealed and became final in 2000. Thus, the legal basis for Antone’s liability under the antenuptial agreement became fixed and certain in 2000, even though it was not judicially determined and the amount was not awarded until 2003.