Court Opinion

ID: 74274
Source: CourtListenerOpinion
Date Created: 2010-04-26 08:43:34+00
Date Added: 2024-06-11T09:41:22.117158
License: Public Domain

PUBLISH

                 IN THE UNITED STATES COURT OF APPEALS
                                                                          FILED
                          FOR THE ELEVENTH CIRCUIT
                                                                 U.S. COURT OF APPEALS
                                                                   ELEVENTH CIRCUIT
                                                                        12/06/99
                                                                     THOMAS K. KAHN
                                       No. 98-5447                       CLERK

                             D. C. Docket No. 97-CV-414

FREMONT INDEMNITY COMPANY,

                                                               Plaintiff-Appellant,

                                          versus

CAREY DWYER ECKHART MASON &
SPRING, P.A. (f.k.a. CAREY, DWYER, COLE
ECKHART, MASON & SPRING, P.A.) and
MICHAEL C. SPRING,
                                                                Defendants-Appellees.

                     Appeal from the United States District Court
                         for the Southern District of Florida

                                   (December 6, 1999)

Before COX, Circuit Judge, KRAVITCH, Senior Circuit Judge, and PROPST*,
Senior District Judge.
___________________
*Honorable Robert B. Propst, Senior U.S. District Judge for the Northern District of Alabama,
sitting by designation.
PER CURIAM

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR
THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF FLORIDA.

TO THE SUPREME COURT OF FLORIDA AND THE HONORABLE
JUSTICES THEREOF:

      It appears to the United States Court of Appeals for the Eleventh Circuit that

this case presents an important issue of Florida law that has not been directly

addressed by the Supreme Court of Florida. Accordingly, we believe the issue is

appropriate for resolution by Florida’s highest court and defer our decision in this

case pending certification of the issue to the Supreme Court of Florida. To frame

this issue for that Court’s review, we offer the following.

                             STATEMENT OF ISSUE

      Whether the plaintiff Fremont Indemnity Company’s (Fremont) action for

legal malpractice against the attorney defendants Carey, Dwyer, et al. (Carey,

Dwyer) and a Carey, Dwyer attorney, Michael C. Spring (Spring), (sometimes

collectively Carey, Dwyer), is barred by the two-year limitation period imposed by

Fla. Stat. Ann. § 95.11(4)(a), where (1) the alleged malpractice complained of

consists of alleged errors and omissions in the handling of the defense of claims

against Fremont’s insured, after Carey, Dwyer was retained by Fremont to defend

its insured, before and after a Florida state court legal action against Fremont’s

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insured; (2) Fremont’s specific claim of malpractice in this case is that, both prior

to and after the filing of the said state court action against its insured, Carey,

Dwyer failed to advise Fremont of settlement offers made by the claimant to

Spring which Fremont could have accepted and held down its payments and costs;

(3) Fremont incurred additional costs of defense after it had notice of the alleged

malpractice and had terminated the services of Carey, Dwyer all occurring more

than two years before this action was filed; (4) the litigation in the said state court

action was still pending at the time the action in this case was filed; and (5)

Fremont’s total additional costs of defense had not reached its policy limits, for

which the case could have arguably been settled, at the time this action was filed.

                   COURSE OF PROCEEDINGS IN THIS CASE

      The parties have agreed to the following. On February 14, 1997, Fremont, a

liability insurer, filed a complaint in this action against Carey, Dwyer and Spring.

Counts I-III were for legal malpractice in the handling of the defense of claims

against Fremont’s insured, phrased in the state court action as breach of contract,

professional negligence and breach of fiduciary duty claims. Count IV was for

indemnity. The basis of jurisdiction is diversity of citizenship and Florida law

applies. The indemnity claim was dismissed by the trial court. Fremont’s notice of

appeal covered that ruling as an additional ground of appeal. Fremont does not,

                                           3
however, proceed further as to the propriety of the ruling on Count IV. Carey,

Dwyer and Spring answered Counts I-III of the complaint on April 8, 1997, and

on September 12, 1997 moved for summary judgment on those three counts,

claiming that Florida’s two-year statute of limitations on the malpractice claims

had elapsed prior to the institution of this action. The district court granted the

motion.

                              SUMMARY OF FACTS1

      Fremont hired Spring and Carey, Dwyer to represent itself and its insured

architectural firm against a claim for damages by Interdevco, the developer of a

construction project on which Fremont’s insured served as an architect. The

parties have agreed, for the purposes of the motion for summary judgment, that

Spring was negligent in rejecting settlement offers, both before and after

Interdevco filed suit in state court against Fremont’s insured in May 1986, without

advising or consulting either client.

      In 1985, Fremont discovered the negligence. It retained new counsel and

terminated the Carey, Dwyer representation. Interdevco thereafter refused

      1
        The parties have agreed to the more completely stated factual assertions in the
trial court’s opinion
                                           4
Fremont’s settlement offers. By 1987, Fremont had incurred costs of litigation over

and above what it had paid Carey, Dwyer.

      In June 1991, the Resolution Trust Corporation (RTC) which had taken over

loan(s) of the construction lender on the project, entered into a settlement

agreement with Interdevco which included a judgment for $8,936,911.00 against

Interdevco and an assignment of Interdevco’s cause(s) of action against Fremont’s

insured and Fremont. On February 21, 1995, Fremont paid RTC $4.5 million and

received RTC’s said judgment and assignment. In March 1995, Fremont agreed

with its insured to pay any judgment which might be obtained against its insured

by Interdevco Co. in the state court action. Fremont was unsuccessful in collateral

litigation in which it attempted to establish that it had authority to direct Interdevco

Co. to dismiss the state court action against its insured. On February 14, 1997,

Fremont filed the instant action against Carey, Dwyer and Spring.

      The underlying litigation which Carey, Dwyer was retained by Fremont to

defend was still pending as of September 27, 1999, but at oral argument before the

Eleventh Circuit Court of Appeals on September 30, 1999, Fremont announced

that the case had been settled by its paying an additional amount.

             CONCLUSION OF THE TRIAL COURT IN THIS CASE

                                           5
             “The present case falls within the category of cases ... where
      damages, although speculative as to final amount, are actually sustained.
      The facts before this Court show that the Plaintiff had knowledge of the
      negligence as early as 1987, and that some damages related to the
      malpractice, which are sought as recoverable, were incurred at least by
      1989. The Plaintiff’s reliance on the payment to RTC or the possible
      outcome of other actions is misplaced where there is no dispute that the
      failure by counsel (the malpractice) clearly resulted in some damage to
      the Plaintiff prior to February, 1995. ..........

             This Court finds that the evidence presented shows that the
      Plaintiff first
      incurred damage from the malpractice well before 2 years prior to the
      filing of the Complaint. Since the applicable 2 year limitations period
      was not met, the relief sought in the complaint should be barred.”

                          CONTENTIONS OF PARTIES

                                      Fremont

      Fremont contends that at the time the district court granted summary

judgment in this case, the law in Florida as to when the statute of limitations begins

to run in “litigation-related” malpractice cases was in doubt, but that the weight of

Florida opinion was that the statute of limitations period did not begin to run until

the underlying case involving the alleged malpractice had been fully adjudicated.

Fremont further argues that the recent case of Silvestrone v. Edell, 721 So.2d 1173

(Fla. 1998) is decisive. Silvestrone announced a “bright-line rule” for the

commencement of the statute of limitations in litigation-related malpractice cases:

namely, the resolution of the case out of which the alleged malpractice arises.

                                          6
Fremont argues that the action in this case was not time-barred, but was actually

filed prematurely.

      Fremont further argues that under Florida law even prior to Silvestrone it is

clear that the statute of limitations period would not begin to run until it had

incurred additional costs

exceeding the two million dollars policy limits for which the case could have

arguably been settled.

                                     Carey, Dwyer

      Carey, Dwyer argues that the action in the case is time barred because (1)

Fremont had notice of the alleged malpractice in 1987; and (2) began sustaining

damages because of the alleged malpractice at least by 1989 in the form of attorney

fees and costs that it paid because it lost the opportunity to settle the state court

claim within policy limits. Carey, Dwyer argues that the “bright-line” rule

announced in Silvestrone does not apply here because there is nothing any party or

court could do that would cure the malpractice or redressable harm sustained by

Fremont by 1989 because it could not be cured or changed by a trial court

judgment or on appeal. Carey, Dwyer and Spring admit, for the purposes of the

                                            7
motion for summary judgment in this case only, that there is sufficient evidence of

malpractice by them.

                                   DISCUSSION

      In Silvestrone, the plaintiff Silvestrone filed a legal malpractice claim

against Edell based on alleged deficiencies in Edell’s performance during the

course of representing him in an antitrust action. The malpractice action was filed

less than one year after final judgment in the antitrust case, but more than two

years after the jury verdict in the antitrust case. The District Court of Appeal of

Florida, Fifth District, held that the legal malpractice claim was barred by the two

year limitation period because Silvestrone knew about the alleged malpractice

when the jury returned an unsatisfactory verdict, and Silvestrone had instructed his

attorney to take no action regarding it. Entry of judgment was delayed by attorney

fee requests and the post-verdict motions of other parties.

      The Supreme Court of Florida agreed with a holding in Zakak v. Broida

and Napier, P.A., 545 So.2d 380 (Fla. 2d DCA 1989) and reversed the District

Court of Appeal Silvestrone decision. The Court stated:

                   ...[W]e agree with the reasoning of the Second
                   District Court of Appeal that when a
                   malpractice action is predicated on errors or
                   omissions committed in the course of

                                          8
                     litigation, and that litigation proceeds to
                     judgment, the statute of limitations does not
                     commence to run until the litigation is
                     concluded by final judgment. To be specific,
                     we hold that the statute of limitations does not
                     commence to run until the final judgment
                     becomes final.

721 So.2d at 1175.

      The Court further noted,

                      For instance, a judgment becomes final either
                     upon the expiration of the time for filing an
                     appeal or post-judgment motions, or, if an
                     appeal is taken, upon the appeal being
                     affirmed and either the expiration of the time
                     for filing motions for rehearing or a denial of
                     the motions for rehearing.

Id. at 1175 n.2.

      The Court continued:

                     To be liable for malpractice arising out of
                     litigation, the attorney must be the proximate
                     cause of the adverse outcome of the
                     underlying action which results in damage to
                     the client. See Sure Snap Corp. v. Baena, 705
                     So.2d 46, 48 (Fla. 3d DCA 1997). Since
                     redressable harm is not established until final
                     judgment is rendered, see Chapman v. Garcia,
                     463 So.2d 528, 529 (Fla. 3d DCA 1985)
                     (holding that plaintiffs could not sue attorneys
                     for legal malpractice so long as underlying
                     medical malpractice action, out of which legal
                     malpractice claim arose, was still pending in
                     trial court or on appeal); Abbott v. Friedsam,

                                            9
                   682 So.2d 597, 600 n.1 (Fla. 2d DCA 1996)
                   (stating in dicta that statute of limitations for
                   legal malpractice generally does not begin to
                   run until legal proceedings underlying
                   malpractice claim have been finalized, by
                   appeal if necessary), a malpractice claim is
                   hypothetical and damages are speculative until
                   the underlying action is concluded with an
                   adverse outcome to the client.

Id. at 1175.

      The Court added:

                   This bright-line rule will provide certainty and
                   reduce litigation over when the statute starts to
                   run. Without such a rule, the courts would be
                   required to make a factual determination on a
                   case by case basis as to when all the
                   information necessary to establish the
                   enforceable right was discovered or should
                   have been discovered.

Id. at 1176.

      The instant case involves threatened litigation and actual litigation and the

action in this case was clearly not filed more than two years after a final judgment

in the underlying litigation. Carey, Dwyer argues that the facts here, however, are

arguably distinguishable from those in Silvestrone in that in Silvestrone there were

no apparent damages which resulted from any alleged malpractice other than that

manifested by a complained of verdict and judgment. Here, the plaintiff Fremont

arguably began to have “redressable harm” through additional costs incurred by it

                                          10
after it was denied an opportunity to settle the case for policy limits. Carey, Dwyer

relies on language in Breakers of Fort Lauderdale, Ltd. v. Cassel, 528 So.2d 985,

986-87 (Fla. 3d DCA 1988), a case not mentioned in Silvestrone. There the court

stated:

             We note, however, that the trial court was correct in
             rejecting the alternative argument of Breakers of Fort
             Lauderdale, Ltd., [Breakers] that the statute of limitations
             did not begin to run until May 23, 1996, when the lawsuit
             which Cassel allegedly improperly failed to settle was
             concluded with Breakers having to pay a substantially
             greater amount than the amount contained in the earlier
             agreed upon, but unconsummated, settlement. Damage to
             Breakers occurred the moment it was called upon to incur
             the expense of having to continue to defend against a
             lawsuit that should have been settled but for its attorney’s
             alleged malpractice. That moment–and the accrual of the
             cause of action for legal malpractice–occurred when
             Breakers learned that the lawsuit against it had been
             revived, not, as Breakers urges, when it paid damages to the
             claimant. The court’s opinion in Diaz v. Piquette, 496
             So.2d 239 (Fla. 3d DCA 1986), review denied, 506 So.2d
             1042 (Fla. 1987), upon which Breakers relies, addresses the
             question of when a cause of action for legal malpractice
             accrues against an attorney who has lost a case at trial, not
             the question of when a cause of action for legal malpractice
             accrues against an attorney who has allegedly improperly
             failed to consummate the settlement of a case. In the
             former situation, as Diaz correctly holds, there can be no
             claim of malpractice until the loss determined at trial is
             made final on appeal; in the latter and present situation, one
             need not await the eventual result of the lawsuit that should
             have been settled to determine that the failure to complete
             the settlement is malpractice and that damage from that
             failure, although not then completely ascertainable, is

                                          11
             immediate. See City of Miami v. Brooks, 70 So.2d 306
             (Fla. 1954).

      Carey, Dwyer argues, “similarly, in this case, Fremont’s cause of action

accrued the moment it was called upon to incur the expense of having to continue

to defend against a lawsuit that should have been settled but for its attorney’s

malpractice (1987) and its attorney committed malpractice which caused those

damages (1989).”

      Carey, Dwyer also argues that the statute of limitations attaches as soon as

an injury is sustained and that the running of the limitation period “is not

postponed by the fact that the actual or substantial damages do not occur until a

later date,” citing Keeler Meyer v. Miller, 427 So.2d 343, 346 (Fla. lst DCA 1983)

and City of Miami v. Brooks, 70 So.2d 306 (Fla. 1954). The district court in this

action distinguished cases where the plaintiff has knowledge of actual harm from

those cases where the plaintiff only has knowledge of potential harm, further citing

Throneburg v. Boose, Casey et al., 659 So.2d 1134 (Fla. 4th DCA 1995), review

dismissed, 664 So.2d 248 (Fla. 1995), and Edwards v. Ford, 279 So.2d 851 (Fla.

1973). The district court also relied upon Peat, Marwick, Mitchell & Co. v. Lane,

565 So.2d 1323 (Fla. 1990) which Silvestrone has styled a “transactional

malpractice” case.

                                          12
      Carey, Dwyer argues that, unlike Silvestrone, this is not a “litigation-related

malpractice” case. This argument is apparently premised on such language as in

Eldred v.Reber, 639 So.2d 1086, 1087 n.1 (Fla. 5th DCA 1994), and Roger Zitrin,

M.D., P.A. v. Glaser, 621 So.2d 748, 749 (Fla. 4th DCA 1993) to the effect that

“litigational malpractice refers to error committed in the course of litigation which

might be changed on appeal.” Carey, Dwyer argues that the issues relating to

additional costs incurred by Fremont cannot “be changed on appeal,” thus this is

not a “litigational malpractice” action.

       Zitrin may be distinguishable in that the alleged negligence did not, itself,

arise out of litigation. The alleged negligence arose out of the preparation of an

employment agreement. Here, the alleged negligence arises out of the handling of

litigation. Here, the total damages would have been finally determined by the very

litigation out of which the malpractice claim arises.

      With regard to Fremont’s argument that the alleged damages resulting from

the additional costs incurred after notice of the malpractice did not, more than two

years prior to the filing of this action, exceed its two million dollar policy limits,

we note that while the district court found that Fremont had incurred some

“damage from the malpractice well before 2 years prior to the

                                           13
filing of the complaint” in this action, it did not find that said damage equaled or

exceeded Fremont’s policy limits. No such determination can be made from the

record.

                                 CERTIFICATION

      We are unable to totally resolve the possible conflicts in Florida law resulting

from a consideration of Breakers and other cases and Silvestrone. Thus, this court

certifies the following question to the Supreme Court of Florida:

      WHEN DID THE STATUTE OF LIMITATIONS BEGIN TO RUN IN THIS

CASE?

      The phrasing of this question is not intended to limit the Supreme Court in

considering the issue presented or the manner in which it gives its answer. The entire

record in this case and the briefs of the parties will be transmitted to the Supreme

Court of Florida for assistance in answering this question.

                              QUESTION CERTIFIED

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