Supik v. Bodie, Nagle, Dolina, Smith & Hobbs, P.A.

⁷⁰³ SHARER, Judge. In this legal malpractice case, the Circuit Court for Baltimore County granted summary judgment in favor of appel-lees, ruling that the negligence claim of appellants, Jeffrey Supik and Shirley Supik, was time-barred by Maryland’s three-year statute of limitations. On March 31, 2000, the Supiks filed a legal malpractice action against their former attorneys, Thomas Dolina, Michael Smith, and Kelly Koermer, and the law firm by which they were employed, Bodie, Nagle, Dolina, Smith & Hobbs, P.A. 1 The Supiks had retained Bodie, Nagle in 1993 to represent them in a toxic tort action against several pest control companies, and in an action against their homeowners’ insurer regarding the terms of coverage related to the damages caused by the toxic tort. On the recommendation of Bodie, Nagle, the Supiks settled with all of the defendants in that case.

The crux of the legal malpractice case is that, after the settlements, the Supiks came to believe that they had settled the toxic tort case against the pest control companies for less than full value. The Supiks filed a claim against appellees alleging, among other things, professional negligence, breach of fiduciary duty, negligent misrepresentation, and fraudulent misrepresentation. Following the completion of discovery, Bodie, Nagle moved for summary judgment on the basis that appellants knew, or reasonably should have known, about the negligent representation prior to March 31, 1997. Therefore, appellees argued that Maryland’s three-year statute of limitations on legal malpractice barred the action.

The trial court agreed. 2 Appellants have presented us with one question: ⁷⁰⁴ Did the trial court err in granting the motion for summary judgment on the grounds that the statute of limitations accrued more than three years prior to the filing of appellants’ complaint? We answer “Yes,” because a legal cause of action did not arise until the Supiks settled the underlying tort case, as that event fixed the date of their injury. Moreover, to the extent that a cause of action might have arisen prior to the date of settlement, the question of limitations in this case is one of fact; thus, it was error for the court to grant summary judgment. FACTUAL and PROCEDURAL BACKGROUND Jeffrey and Shirley Supik, appellants, own property at 3523 and 3525 North Rolling Road in Baltimore.

On March 17, 1993, the Supiks retained Bodie, Nagle to represent them in toxic tort litigation stemming from their alleged exposure to chlordane 3 that was applied on their property in 1980 and 1981. The toxic tort litigation, filed August 5, 1994, involved claims against two companies, B & B Exterminators, Inc. and its successor in interest, Home Paramount Pest Control Company. The Supiks also sued their homeowners’ insurer, American Insurance Company (a subsidiary of Fireman’s Fund Insurance Company), as a result of a dispute about the extent of coverage provided by their policy. Most of Bodie, Nagle’s representation of the Supiks occurred in 1995, 1996, and early 1997.

Throughout the representation, the Supiks relied on the advice of Bodie, Nagle pursuant to the fiduciary attorney-client relationship. There is no dispute that the Supiks often questioned certain advice given by Bodie, Nagle, but they nonetheless agreed to follow the advice, because they presumed that the lawyers knew best, as discussed infra. Among the more significant contro ⁷⁰⁵ versies between the Supiks and Bodie, Nagle were (1) the attorneys’ several attempts to settle the ease without informing the Supiks, misinforming the Supiks regarding settlement, and/or botched settlement efforts, and (2) Bodie, Nagle’s waiver of the Supiks’ right to trial by jury over their objection and without their consent. 4 An array of events occurred which the parties have addressed in their briefs, highlighting the imperfect attorney-client relationship. The Supiks assert: (a) that the Appellees requested that Appellants keep a journal describing what had happened to them during the time they were exposed to Chlordane and that, despite representations by the Appellees that the journal would be kept confidential, the journal was turned over to defense ' counsel [and ultimately used to cross-examine appellants during depositions]; (b) [in regard to appellants’ likelihood of prevailing against their homeowner insurer] a dispute between the Appellees and the Appellants arose in connection with the extent of coverage for property loss under their homeowners’ policy for compensation related to Chlordane exposure.

Appellants believed they had full replacement value whereas Appellees believed the policy provided for fair market compensation for property loss. [Appellants were never able to convince appellees, and they felt as though they should have been able to settle for more than $22,000.] (c) that one of the Appellees, Kelly Koermer, represented to Appellants that a demand could be made upon the homeowner[s’] insurer in the amount of $450,000.00 [in 1995], when later [in 1996] it was learned by Appellants that the settlement demand had actually been made as to all the defendants in the Toxic Tort Case, and not just simply the homeowner[s’] insurer defendant, American Insurance Company. ⁷⁰⁶ (d) that in the latter part of 1996, Appellee, Thomas Dolina, advised Appellants that he did not believe they would prevail on the multiple chemical sensitivity claims they were asserting. Although Appellants did not agree with Mr. Dolina’s assessment, they agreed to drop their multiple chemical sensitivity claim. (e) that Mr. Dolina advised Appellants he was concerned they would lose their psychological claim for damages in the case if it were to proceed to trial. This upset Mr. Supik who was concerned that the Appellants were adopting the defense spin that the Appellants suffered pre-existing psychological conditions. [Appellants felt that Dolina was not giving accurate information in this regard.] (f) that Mr. Dolina made a demand on behalf of the Appellants in the amount of $550,000.00 [in December 1996] which they had not authorized and which upset them when they learned about it.

(g) that Mr. Dolina advised Appellants that, in his opinion, Appellants’ case had an approximate settlement value of $300,000.00 Mr. Supik disagreed with that assessment but did not discuss the issue with any of the Appellees. [Although, appellee Kelly Koermer had “often said don’t worry about it, that’s Tom, he always deals with the case as a devil’s advocate.”] (h) that as of January 2, 1997, Appellants did not believe they had sufficient information to consider the possibility of any settlement discussions, despite Mr. Dolina’s desire to discuss settlement with the homeowners’ insurer. (i) that on January 6, 1997, Mr. Dolina wrote to Appellants advising that he was considering converting the case from a jury trial to a bench trial. Appellants were unhappy with Mr. Dolina’s recommendation to convert their case [as] is reflected in a letter dated January 14,1997. (j) that Appellants later learned that Mr. Dolina had, despite their objection, converted the case to non-jury.

This angered Appellants, who demanded that Mr. Dolina reverse his actions and change the case back to a jury trial because ⁷⁰⁷ they believed they had a better chance of success if the case were heard by a jury. (k) that Appellees represented to Appellants that they had received an estimate from someone willing to demolish or dispose of one of the two contaminated properties for $9,500.00. The Appellees, however, did not provide Appellants with copies of that estimate despite repeated written and oral requests for same. (l) that on March 7,1997, the Appellants reluctantly agreed to settle their claim with the homeowner[s’] insurer for $22,000.00 despite their strong desire not to settle the claim.

Appellants depict their decision to settle the Homeowners’ Case as being made under duress. (m) that following their settlement of the Homeowners’ Case, Appellants and the Appellees continued their efforts to prepare for the Toxic Tort Case against B & B and Home Paramount [scheduled for April 1, 1997]. The Appellants expressed concerns as to the method by which they were being prepared [in a March 19, 1997, letter to Mr. Dolina]. (n) that throughout the years 1996 and 1997, Appellants made numerous requests for copies of the reports and depositions generated in their case so they would be able to evaluate any settlement offers conveyed and have a better understanding as to the extent of their health conditions and the extent of any contamination to their persons and property.

Such requests were made verbally and in writing, although Appellants did not receive all the requested documents until sometime after December of 2000. The essence of the Supik’s malpractice action is that they settled the toxic tort case against the pest control companies for less than full value. 5 Unknown to the Supiks, the attor ⁷⁰⁸ neys had relied on remediation estimates from the pest control companies without seeking an independent estimate from an expert of their own choosing. The settlement with B & B Exterminators, Inc. and Home Paramount Pest Control Company occurred on April 1, 1997, and was placed on the record in open court on April 3, 1997. 6 In early May 1997, the Supiks spoke with one of the experts who had planned to testify on their behalf had their case gone to trial. They learned from him that they had made a “major mistake” by settling the toxic tort case for $175,000 because, in the expert’s view, the claim had a much higher value. 7 As a result of this information, the Supiks sent a letter to Bodie, Nagle on May 6, 1997, seeking to repudiate the agreement.

Bodie, Nagle informed the Supiks that they could not repudiate the settlement agreement, but the Supiks insisted otherwise. Bodie, Nagle then moved to strike their appearance as counsel for the Supiks, which the court granted on July 8, 1997. The Supiks persisted in their efforts to repudiate the settlement agreement by filing, pro se, motions in the circuit court. They were unsuccessful and appealed the circuit court’s denial of their motion to vacate the judgment to this Court in 1998.

In an unreported opinion, we held that the trial court had properly enforced the settlement agreement. Supik v. B & B Exterminators, Inc., No. 72, Sept. Term, 1988 (Md.Ct. Spec.App., Oct. 22, 1998), cert. denied, 352 Md. 619 , 724 A.2d 21 (1999). On March 31, 2000, the Supiks, again acting pro se, filed a sixteen-count legal malpractice complaint against Bodie, Na- ⁷⁰⁹ gle, which answered on May 2, 2001, raising an affirmative defense of statute of limitations, in addition to other defenses, and a general denial of the facts alleged. A trial date was set for September 9, 2002.

After the conclusion of discovery, Bodie, Nagle moved for summary judgment on the grounds that the Supiks knew, or reasonably should have known, about their negligent representation prior to March 31, 1997. The trial court, although expressing some reluctance, granted summary judgment, ruling that the Supiks were legally put on inquiry notice prior to March 31, 1997 (the day prior to the effect of the settlement agreement with the tort defendants). In finding that the Supiks had been put on notice (or that a reasonable person in their position would have been put on notice), the circuit court relied primarily on the fact that they felt under “duress” to settle the claim against their homeowners’ insurer for $22,000, as of March 7, 1997; in essence missing the three-year statute of limitations deadline by twenty-four days. The court opined that it was that event, not the later settlement with the tort defendants, that put the Supiks on notice.

The Supiks subsequently retained counsel and have noted a timely appeal to this Court. STANDARD of REVIEW At the summary judgment stage, a trial court’s function “is to determine whether there is a [genuine] dispute as to any material fact sufficient to require an issue to be tried.” Frederick Rd. Ltd. P’ship v. Brown & Sturm, 360 Md. 76, 93 , 756 A.2d 963 (2000) (citations omitted); see also Md. Rule 2-501 (e) (2003); Murphy v. Merzbacher, 346 Md. 525 , 697 A.2d 861 (1997). Accordingly, our review on appeal requires us to determine whether a genuine dispute of material fact existed, and if the trial court was legally correct.

Frederick Rd., supra, 360 Md. at 93 , 756 A.2d 963 . Summary judgment is not a substitute for trial; rather it is applied to dispose of cases when no genuine dispute of material fact exists. Okwa ⁷¹⁰ v. Harper, 360 Md. 161, 178 , 757 A.2d 118 (2000). A trial court, in granting a motion for summary judgment, is limited to ruling on matters of law, and may not resolve factual disputes.

Id. (citation omitted). As such, all facts, and reasonable inferences therefrom, must be viewed in a light most favorable to the non-moving party, here the Supiks. Id.

(citation omitted). Yet, at the same time, Maryland’s appellate courts have repeatedly stated that the determination of when a cause of action “accrues” under § 5-101 of the Courts and Judicial Proceedings Article is one left to the court for judicial determination. Frederick Rd., supra, 360 Md. at 95, 756 A.2d 963 . “This determination may be based solely on law, solely on fact, or on a combination of law and fact, and is reached after careful consideration of the purpose of the statute and the facts to which it is applied.” Id. at 95, 756 A.2d 963 (citing Poffenberger v. Risser, 290 Md. 631, 634 , 431 A.2d 677 (1981)). Indeed, several cases seem to suggest that the factual determination may be made by the court.

Judge Rodowsky, however, speaking for the Court of Appeals in O’Hara v. Kovens, 305 Md. 280, 295-97 , 503 A.2d 1313 (1986), put to rest any contemplation that a judge determines issues of fact at the summary judgment stage. In dispelling that concept, he wrote, “[t]he notion that all aspects of a limitations defense, including the resolution of conflicting facts and inferences, is a function of the court alone can be traced to misinterpretations in certain opinions by the Court of Special Appeals of decisions by this Court concerning the discovery rule in the era prior to Poffenberger, 290 Md. 631 , 431 A.2d 677 .” Id. at 297, 431 A.2d 677 . In so doing, the O’Hara court confirmed that “ordinary principles governing summary judgment ... continue to apply when the issue on summary judgment is limitations____” Id. at 304 , 503 A.2d 1313 (citations omitted). We read O’Hara and Frederick Road directing that only when there is no genuine dispute of material fact as to when the action accrued, should a trial court grant summary judgment ⁷¹¹ on the basis of limitations; otherwise, the question is one of fact for the trier of fact. 8 In the case sub judice, the question of accrual also focuses on whether appellants were put on inquiry notice at ⁷¹² some time before March 31, 1997 (assuming the prior existence of a cause of action as we will discuss, infra).

In other words, Bodie, Nagle argued that their representation was so careless that an objective person would have been put on notice about their negligent actions at a much earlier time, certainly earlier than May, 1997, when the Supiks basically conceded that they knew they were harmed. In this regard, a determination must be made as to whether a reasonable person would have been put on notice, which necessarily involves the “assessment of the credibility or believability of the evidence!)]” Frederick Rd., supra, 360 Md. at 96, 756 A.2d 963 . To this, the Court of Appeals has stated: “whether or not the plaintiffs failure to discover his cause of action was due to failure on his part to use due diligence, or to the fact that defendant so concealed the wrong that plaintiff was unable to discover it by the exercise of due diligence, is ordinarily a question of fact for the jury.” Id. at 96, 756 A.2d 963 (quoting O’Hara, supra, 305 Md. at 294-95 , 503 A.2d 1313 (citations and internal quotations omitted)); see also Doe v. Archdiocese of Wash., 114 Md.App. 169, 176 , 689 A.2d 634 (1997) (“When the viability of a statute of limitations defense hinges on a question of fact ... the factual question is ordinarily resolved by the jury, rather than by the court.”). DISCUSSION Statute of Limitations In Maryland, a three-year statute of limitations applies to legal malpractice actions pursuant to § 5-101 of the Courts and Judicial Proceedings Article.

(“C.J.”) Fairfax Savings, F.S.B. v. Weinberg & Green, 112 Md.App. 587, 612 , 685 A.2d 1189 (1996). Section 5-101 states that “A civil action at law shall be filed within three years from the date it accrues....” Md.Code Ann., C.J. §5-101 (Repl.Vol.2002). Statutes of limitations serve to “ ‘provide adequate time for a diligent plaintiff to bring suit as well as to ensure fairness to defendants by encouraging prompt filing of claims.’ ” Fairfax ⁷¹³ Savings, supra, 112 Md.App. at 612 , 685 A.2d 1189 (quoting Hecht v. Resolution Trust Corp., 333 Md. 324, 338 , 635 A.2d 394 (1994)). Such statutes are, in short, a reflection of public policy established by the General Assembly regarding a reasonable time in which to file suit.

Murphy, supra, 346 Md. at 531 , 697 A.2d 861 ; Doe, supra, 114 Md.App. at 176 , 689 A.2d 634 . Historically, a cause of action accrued on the date the wrong occurred. Doe, supra, 114 Md.App. at 176 , 689 A.2d 634 . Over time, however, Maryland courts and the Legislature recognized the harshness of the rule, and both have tempered the “date of the wrong” rule for accrual purposes in situations where it was impossible or unreasonable for a plaintiff to have sufficient notice of the nature and cause of the injury.

Id. at 177 , 689 A.2d 634 . Such cases involve factual scenarios where the plaintiff had not learned about the injury because of fraud, stealth, subterfuge, or other difficulties (such as latent injuries), or when the plaintiff had relied upon a continuing relationship with another party, or when the plaintiff was under a disability at the time of the injury. Presently, there are at least four situations in which the accrual date is not the “date of the wrong,” but some point later in time after the injury has already occurred, three of which were recently discussed in some detail by the Court of Appeals in Frederick Rd., 360 Md. at 95-99, 756 A.2d 963 , in the context of legal malpractice. Discovery Rule First, and perhaps most often discussed, is the “discovery rule.” Under the discovery rule an “action is deemed to accrue on the date when the plaintiff knew or, with due diligence, reasonably should have known of the wrong.” Doe, supra, 114 Md.App. at 177 , 689 A.2d 634 .

The discovery rule “is not so much an exception to the statute of limitations, as it is a recognition that the Legislature, in employing the word ‘accrues’ in § 5-101, never intended to close our courts to plaintiffs inculpably unaware of their injuries.” Murphy, supra, 346 Md. at 532 , 697 A.2d 861 (citations omitted). As we ⁷¹⁴ noted previously, the date when a particular plaintiff knows or, with due diligence, objectively should have known of the wrong, is generally a factual determination for a jury, and not the court. Frederick Rd., supra, 360 Md. at 96, 756 A.2d 963 ; Doe, supra, 114 Md.App. at 178 , 689 A.2d 634 . Continuation of Events Theory A corollary accrual doctrine recognized by Maryland courts is the “continuation of events” theory.

Frederick Rd., supra, 360 Md. at 97, 756 A.2d 963 . “[I]n cases where there is an undertaking which requires a continuation of services, or the party’s right depends upon the happening of an event in the future, the statute begins to run only from the time the services can be completed or from the time the event happens.” Id. at 97, 756 A.2d 963 (quoting W., B. & A. Elec. R.R. Co. v. Moss, 130 Md. 198, 204-05 , 100 A. 86 (1917)). The continuation of events theory is based on the equitable principle of detrimental reliance. When a relationship develops between two parties, built on trust and confidence, the confiding party may rely upon the “good faith of the other party so long as the relationship continues to exist.” Id. at 98, 756 A.2d 963 .

This is especially true in fiduciary relationships such as the attorney-client relationship where “a client has the right to rely on his or her lawyers’ loyalty and to believe the accuracy and candor of the advice they give.” Id. at 103 , 756 A.2d 963 . [A] client’s right to rely upon his or her attorney’s advice is “founded upon public policy, because the confidential and fiduciary relationship enables an attorney to exercise a very strong influence over his client and often affords him opportunities to obtain undue advantage by availing himself of the client’s necessities, credulity and liberality.” Id. at 102 , 756 A.2d 963 (quoting Hughes v. McDaniel, 202 Md. 626, 633 , 98 A.2d 1 (1953)). Notwithstanding the confidential relationship, if the confiding party knows, or reasonably should know, about a ⁷¹⁵ past injury, accrual for statute of limitations purposes will begin on the date of inquiry notice, and not the completion of services. “The confiding party, in other words, is under no duty to make inquiries about the quality or bona fides of the services received, unless and until something occurs to make him or her suspicious.” Id. at 98, 756 A.2d 963 . Fraud A third category that will postpone an accrual date is fraud, as governed by § 5-203 of the Courts and Judicial Proceedings Article. The fraud exception is essentially a tangent of the discovery rule.

If an adverse party fraudulently conceals knowledge of a cause of action, “the cause of action shall be deemed to accrue at the time when the party discovered, or by the exercise of ordinary diligence should have discovered the fraud.” C.J. § 5-203 (Repl.Vol.2002). Much like the discovery rule, a person is said to be on inquiry notice when a reasonable person would have used due diligence to investigate the fraud or the underlying injury. See Frederick Rd., supra, 360 Md. at 98-99, 756 A.2d 963 . Of course, this scenario often begs the question: if a party is perpetrating fraud in such a manner as to obfuscate the confiding party, would a reasonable person be otherwise attuned to the fraud?

Additionally, a plaintiff wishing to invoke C.J. § 5-203 must plead fraud with particularity. Doe, supra, 114 Md.App. at 187 , 689 A.2d 634 . Plaintiff Under a Disability A fourth situation that may postpone the date for accrual occurs when a plaintiff is under a “disability” at the time of the injury. Under § 5-201 a “minor or mental incompetent ... shall file his action within the lesser of three years of the applicable period of limitations after the date the disability is removed.” C.J. § 5-201 (Repl.Vol.2002); Murphy, supra, 346 Md. 525 , 697 A.2d 861 .

Date of the Injury/Harm—Existence of a Cause of Action While we have noted four situations in which the accrual date is tolled or postponed to a point later in time from ⁷¹⁶ when the injury actually occurred, or the “date of the wrong,” we highlight the fact that none of these tolling concepts is even relevant until a plaintiff has sustained a legal injury, and a cause of action has “arisen.” It is the real, but subtle, difference between the date when a cause of action is said to “arise” and the date when a cause of action is said to “accrue.” 9 Simply stated, while it may be that a reasonable person might be able to foresee a future injury, the date of accrual for an independent cause of action can not be any earlier than the date(s) of the actual injury. On this point, this Court has previously stated: A cause of action does not accrue ... until all elements are present, including damages. Baker, Watts & Co. v. Miles