BOLIN, Justice.
Coilplus-Alabama, Inc., appeals from a summary judgment in favor of Johnnie F. Vann and Sirote & Permutt, P.C., in this legal-malpractice action. We affirm.
In 1998, Coilplus retained Johnnie F. Vann and the law firm at which he then worked, Sirote & Permutt, to advise it about the issuance of $8,000,000 in bonds (hereinafter referred to as the "1999 bonds") for the expansion of its Athens steel-manufacturing plant. Vann recommended that the 1999 bonds be issued through the Industrial Development Board of Athens, and he advised Coilplus that the 1999 bonds would qualify as tax-exempt bonds under the rules of the Internal Revenue Service ("the IRS"). At the time the issuance of the 1999 bonds was being discussed, Vann was aware that a tax-exempt-bond issue in the face amount of $5,000,000 had been issued in 1984 for a Coilplus project (hereinafter referred to as the "1984 bonds") and that the 1984 bonds had not been retired. According to the parties, for small-issue bonds to qualify as tax exempt, the total capital expenditures for the three years before the bonds were issued and the three years after the bonds were issued, combined with the amount of any outstanding bonds and including the bonds to be issued, may not exceed $10,000,000. See 26 U.S.C. § 144. On February 16, 1999, an attorney with another law firm sent Vann a letter stating that Coilplus had outstanding bonds that had not been retired—i.e., the 1984 bonds. On February 19, 1999, an employee with The Bank of New York, the trustee for the 1984 bonds, sent Vann documents regarding the 1984 bonds. On March 25, 1999, the 1999 bonds were sold to purchasers.
Later in 1999, the IRS questioned whether Coilplus's prior capital expenditures as represented in the documents and schedules that accompanied the 1999 bonds, when added to the face amount of the 1999 bonds, exceeded the small-issue amount allowed under 26 U.S.C. § 144. The investigation apparently concerned only whether certain capital expenditures would be counted toward the $10,000,000 cap and was not focused on the 1984 bonds or the effect of the 1984 bonds on the $10,000,000 cap allowed by 26 U.S.C. § 144. Coilplus received a favorable private-letter ruling from the IRS. Vann
Apparently the IRS continued investigating the 1999 bonds and shifted its focus to whether the issuance of the 1999 bonds in light of the outstanding 1984 bonds violated the $10,000,000 cap, irrespective of the capital expenditures. On July 16, 2001, an IRS employee sent the following e-mail to the accounting supervisor at Coilplus, which stated, in pertinent part:
(Capitalization in original.)
On July 19, 2001, the president of Coilplus forwarded and copied the IRS e-mail to several persons and added the following:
On August 9, 2001, the president of Coilplus, Larry Doss, sent an e-mail regarding the 1984 bonds and the 1999 bonds to its parent company, Mitsubishi International Corporation:
On September 20, 2001, the 1999 bonds were retired and refunded, effective as of the date of the issuance. On March 25, 2002, the president of Coilplus sent Sirote & Permutt a letter, stating:
On June 24, 2002, the chief operating officer of Sirote & Permutt responded to the letter, stating as follows:
On October 31, 2002, Coilplus sued Vann and Sirote & Permutt under the Alabama Legal Services Liability Act, § 6-5-570 et seq., Ala.Code 1975 ("the ALSLA"), alleging negligence, wantonness, breach of contract, breach of a fiduciary duty, and suppression of material facts. Coilplus later amended its complaint to include the fact that it could have redeemed the 1984 bonds before the 1999 bonds were issued, thus ensuring the tax-exempt status of the 1999 bonds, if Vann and Sirote & Permutt had given it correct legal advice.
On December 2, 2002, Vann and Sirote & Permutt (hereinafter collectively referred to as "the defendants") filed an answer in which they raised several affirmative defenses, including an assertion that Coilplus's claims were barred by the two-year statute of limitations set out in § 6-5-574, Ala.Code 1975. The case was placed on the trial court's administrative docket because Vann was recovering from a serious illness. In March 2007, the parties filed a joint motion to remove the case from the administrative docket, which the trial court granted, and the parties proceeded with discovery.
On April 29, 2008, the defendants filed a summary-judgment motion based on the ground that all Coilplus's claims were barred by the statutory limitations period in the ALSLA. Coilplus filed a memorandum in opposition to the motion. The trial court held a hearing on the motion and accepted additional briefs from the parties. On January 7, 2009, the trial court entered a summary judgment in favor of the defendants.
The issue presented for review in this case is whether Coilplus's action brought under the ALSLA was timely filed. The resolution of this issue depends on a determination of when the statute of limitations on Coilplus's claims began to run. Coilplus submits that it brought multiple claims under the ALSLA (negligence, wantonness, breach of contract, breach of a fiduciary duty, and suppression of material facts) and that § 6-5-570, Ala.Code 1975, a part of the ALSLA, incorporates into the ALSLA all common-law and statutory causes of action against a legal-services provider. Coilplus argues that this Court in System Dynamics International, Inc. v. Boykin, 683 So.2d 419 (Ala.1996), held that a cause of action for breach of a fiduciary duty arising out of an IRS liability accrues only when the IRS first sends notice of a disallowance of a deduction. Coilplus further argues that the trial court in the present case erroneously concluded that the statute of limitations began to run in February 1999 when the bonds were issued, not on July 16, 2001, when the IRS sent notice of the possible disallowance of the tax-exempt status of the 1999 bonds and that the only difference between the breach alleged in the present case and the breach of fiduciary duty alleged in System Dynamics is that the defendants in the present case are lawyers.
Coilplus argues that its claims of negligence and wantonness did not accrue until there was a "manifest, present injury" under Griffin v. Unocal Corp., 990 So.2d 291 (Ala.2008). With regard to its fraud claim brought under the ALSLA, Coilplus argues that § 6-5-574 of the ALSLA sets out the specific statutory period for the commencement of actions and exceptions to that period and that § 6-2-3, which provides that in actions seeking relief on the ground of fraud the claim must not be considered as accrued until the discovery of the fraud, after which the aggrieved party has two years to prosecute, is one of the exceptions found in § 6-5-574(b).
The defendants argue that all Coilplus's claims brought under the ALSLA are barred by the two-year statute of limitations in § 6-5-574(a) and that the act or omission giving rise to Coilplus's claims occurred on February 25, 1999, when the 1999 bonds were issued. They argue that under the caselaw interpreting the limitations period imposed by § 6-5-574(a), either as set out in Ex parte Panell, 756 So.2d 862 (Ala. 1999) (holding that the statutory limitations period begins to run from the date of the occurrence of the tortious act or omission), or as set out in Michael v. Beasley, 583 So.2d 245 (Ala.1991) (holding that the statutory limitations period begins to run from the date of the accrual of the action and not from the date of the occurrence of the act or omission), Coilplus's action is untimely. The defendants further argue that even assuming that the six-month savings provision set forth in § 6-5-574(a) applies, Coilplus's action is likewise untimely.
The defendants argue that Coilplus attempts to escape § 6-5-574 and caselaw addressing when a cause of action accrues in a legal-malpractice case by relying on cases that are inapplicable or distinguishable. Specifically, they argue that System
There is only "one form and cause of action" that may be brought in Alabama against a legal-service provider, and that is a legal-service-liability action. § 6-5-573, Ala.Code 1975. Section 6-5-572, Ala.Code 1975, provides that
This includes the multiple claims brought by Coilplus under the ALSLA.
Section 6-5-574, Ala.Code 1975, provides:
In short, § 6-5-574(a) requires that a plaintiff commence a legal-malpractice action within two years after the act or omission or failure giving rise to the action. Section 6-5-574(b) subjects the two-year limitations period to other law relating to the computation of the statutory periods of limitations. Section 6-5-574(a) also provides for an ameliorative discovery period of six months from the date of discovery of the cause of action or the date of the discovery of facts that would reasonably lead to such discovery if the cause of action was not known to the plaintiff during the two-year period. Under § 6-5-574(a), there is a four-year absolute bar on all claims occurring on or after August 1, 1987.
In Denbo v. DeBray, 968 So.2d 983 (Ala. 2006), this Court discussed the caselaw applying the "occurrence" test and the "damage" test in determining when the two-year statute of limitations in § 6-5-574 begins to run. In Denbo, a former client filed a legal-malpractice action against his attorney and the law firm that employed the attorney following litigation involving the client and the Environmental Protection Agency arising out of the client's activities in disposing of hazardous waste. From the beginning of the litigation, the client provided the attorney with copies of certificates of insurance covering the challenged activities at the site and asked that the attorney notify the insurance companies of the litigation. From 1993 to 2000, the attorney and the law firm were actively engaged in the litigation and periodically billed the client for attorney fees and costs, which the client paid. The client repeatedly asked the attorney and the employees of the law firm if the insurance companies had been notified regarding the pending claims. The attorney assured the client that the insurance companies had been notified. In August 2000, the client agreed to settle the case based on advice from the attorney. In March 2002, the client was informed that the insurance companies had not been notified of the litigation in a timely manner and were not responsible for costs and attorney fees that had been incurred by the client without their consent. Because the insurance companies had not been notified of the claims at the commencement of the litigation, the companies refused to reimburse the client for the cost of the settlement or for the costs of litigation. The client filed a legal-malpractice claim based on the attorney's failure to notify the insurance companies, which was deemed to have been filed on October 1, 2002.
In Denbo, this Court discussed the two different approaches for determining when the statute of limitations begins to run, i.e., when a cause of action "accrues." The Court discussed the "damage" rule in Floyd v. Massey & Stotser, P.C., 807 So.2d 508 (Ala.2001),
Under the "occurrence" rule, the Court in Denbo determined that the complaint was barred by the two-year statute of limitations because the attorney's act or omission (i.e., the failure to timely notify the insurance companies) occurred more than two years before the filing of the action. The Court concluded that even though § 6-5-574(a) allows for a six-month grace period from the time of discovery if the cause of action is not, or could not reasonably be, discovered within the two-year period, the client was notified by the insurance companies in March 2002 that they had not been notified of the claims. Accordingly, the action, filed on October 1, 2002, was outside the six-month extension of time afforded by § 6-5-574(a). Under the "damage" approach, the Court concluded likewise that the claim was time-barred. The client's damage, including the legal fees he had paid the attorney, in addition to the settlement amount, which the client contended would have been paid by the insurance companies if the companies had been properly notified of the claims, occurred more that two years before the filing of the legal-malpractice action.
The Denbo Court also held that the legal-malpractice claims were precluded by the absolute four-year bar of § 6-5-574(b) because both the attorney's omission and the payment of legal fees occurred more than four years before the filing of the legal-malpractice action. The Court went on to discuss the client's attempt to escape the time bar of the ALSLA by invoking the protection of § 6-2-3 as made available by § 6-5-574(b). The Court determined that, to the extent that § 6-2-3 was applicable, the client's fraud claim was without merit because there had been no reasonable reliance.
As was the case in Denbo, there is no need in the present case for this Court to elect between the occurrence approach and the damage approach: Coilplus's claims are untimely under either scenario. Under the occurrence approach discussed in Panell and Ex parte Seabol, the act or omission giving rise to the Coilplus's claim was Vann's opinion that the 1999 bonds qualified for tax-exempt status when they did not. That act occurred no later than February 25, 1999, the date the 1999 bonds were issued. Coilplus filed its complaint on October 30, 2002, after the two-year statute of limitations had run. Assuming that the six-month savings provision of § 6-5-574(a) applies, Coilplus first had knowledge that the tax-exempt status of the 1999 bonds was questionable on July 16, 2001, when the IRS employee sent the e-mail addressing the tax-exempt status of the 1999 bonds or, at the latest, when Doss met with IRS employees, new counsel, and the bond trustee, among others, on August 2, 2001, to discuss the issue. Coilplus filed its complaint more than 6 months after August 2, 2001.
Coilplus's claims are likewise time-barred under the damage approach recognized in Michael v. Beasley. In Michael, the Court held that a cause of action under the ALSLA accrues at the time the plaintiff first suffers legal injury or damage. In this case, Coilplus first suffered legal injury or damage when the 1999 bonds were sold as tax-exempt bonds on February
Coilplus argues that its legal injury occurred in 2001 when the IRS notified Coilplus that the 1999 bonds were not tax exempt, but its reliance on System Dynamics, supra, is misplaced. In System Dynamics, the chief executive officer ("the CEO") of the corporation caused the corporation to make certain payments to him. The IRS later assessed a penalty against the corporation based on some of those payments, and the corporation sued the CEO. This Court held that there had been no completed wrong until the IRS assessed a penalty and that the statute of limitations did not begin to run until the IRS's assessment. First, System Dynamics did not involve the ALSLA and the statutory requirements, including the statute of limitations, enacted by the legislature for legal-malpractice claims. Second, System Dynamics is factually distinguishable from the present case. In System Dynamics, this Court relied on the fact that the corporation did not know whether the IRS would allow the payments to the CEO as business deductions, would allow a portion of the payments, or would disallow all the payments. At best, there existed a potential tax liability and consequences when the payments were made to the CEO, and, in the end, the IRS disallowed only a portion of the payments. In other words, the payments were not improper because the corporation suffered no immediate harm as a result of the payments; it was only a later attempt to deduct those payments that resulted in a disallowance of some of the payments as business deductions. In the present case, Coilplus is alleging that the incorrect legal advice resulted in the issuance of bonds that were improper from their issuance and that the 1999 bonds would not have been issued but for Vann's incorrect legal advice that the 1999 bonds were tax exempt.
Coilplus also relies on a toxic-tort case to support its argument that its cause of action did not accrue until a "manifest, present injury" had occurred and that Coilplus did not have a manifest, present injury until the IRS notified Coilplus that the 1999 bonds were not tax exempt. In Griffin v. Unocal Corp., supra, this Court held that in a toxic-substance-exposure case, a plaintiff's cause of action accrues only when there has occurred a manifest, present injury. It is clear that Griffin is factually distinguishable from this case because Griffin involved a claim that the plaintiff's decedent developed leukemia as a result of, but subsequent to, exposure to a certain toxic chemical while he was employed by the defendant; it did not involve a legal-malpractice claim. Also, in an appendix to Griffin,
990 So.2d at 310-11 (emphasis added).
With regard to Coilplus's fraud claim, § 6-5-574(a) is "subject to all existing provisions of law relating to the computation of statutory periods of limitations for the commencement of actions," including § 6-2-3. § 6-5-574(b). Section 6-2-3 is an accrual provision applicable to fraud claims and provides as follows:
Coilplus states that the e-mail from the IRS employee dated July 16, 2001, first put Coilplus on notice that the 1999 bonds may not have been tax exempt and that its action was filed on October 30, 2002. Coilplus argues that this was well within the two-year limit for a fraudulent-suppression claim as set out in § 6-2-3 and within the four-year bar applicable to all claims brought under § 6-5-574(b). The defendants argue that Coilplus's fraudulent-suppression claim is without merit.
Coilplus alleged in its complaint that the defendants suppressed material facts that they were under an obligation to communicate to Coilplus as its counsel; the facts allegedly suppressed were that the defendants:
Coilplus has the burden of proving that its fraud claim comes within the tolling provision of § 6-2-3. See Ex parte Seabol, 782 So.2d at 215 ("[U]nder § 6-5-574(b), a legal malpractice action based on allegations of fraud must be commenced within two years after the discovery by the aggrieved party of the fact constituting the fraud; provided, however, that no action may be commenced more than four years after the act or acts constituting fraud. The burden is on the plaintiff to show that he comes within the § 6-2-3 tolling provision.").
Assuming that Coilplus met its burden of showing that its fraud claim came within the tolling provision, it has not met the elements of fraudulent suppression, which are: (1) the defendant had a duty to disclose an existing material fact; (2) the defendant concealed or suppressed that material fact; (3) the defendant's suppression induced the plaintiff to act or refrain from acting; and (4) the plaintiff suffered actual damage as a proximate result. Freightliner, LLC v. Whatley Contract Carriers, LLC, 932 So.2d 883, 891 (Ala.2005). "`[A]n action for suppression will lie only if the defendant actually knows the fact alleged to be suppressed.'" Cook's Pest Control, Inc. v. Rebar, 28 So.3d 716, 726 (Ala.2009) (quoting McGarry v. Flournoy, 624 So.2d 1359, 1362 (Ala. 1993)). In the present case, nothing in Coilplus's complaint alleges that Vann, at the time the 1999 bonds were issued, knew that the bonds were taxable, yet intentionally issued a legal opinion stating that the 1999 bonds were tax exempt. There has been no allegation that Vann knew that the 1999 bonds were taxable when he advised Coilplus that the bonds would be tax exempt. Therefore, Coilplus's suppression claim fails.
Because Coilplus's legal-malpractice action is time-barred under all applicable provisions of § 6-5-574, regardless of whether the "occurrence" approach or the "damage" approach is used to determine when that action accrued, and because Coilplus failed to present any evidence to support a claim of fraudulent suppression, we affirm the trial court's summary judgment in favor of the defendants.
AFFIRMED.
COBB, C.J., and LYONS, STUART, and MURDOCK, JJ., concur.
