Filed: Dec. 06, 1999
Latest Update: Feb. 21, 2020
Summary: 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, Cir
Summary: 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, Circ..
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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,
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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
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The parties have agreed to the more completely stated factual assertions in the
trial court’s opinion
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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
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“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.
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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
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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
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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,
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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.
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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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