Keystone Distribution Park v. Kennerk, Dumas, Burke, Backs, Long, & Salin , 461 N.E.2d 749 ( 1984 )

GARRARD, Judge

(writing by designation).

Keystone Distribution Park, -Glen 0. Hamilton, Peter K. McDonough and David Peebles (a partnership and its three individual partners, collectively referred to as Keystone) are appealing from the summary judgment granted in favor of William Salin and the law firm of Kennerk, Dumas, Burke, Backs, Long & Salin (collectively referred to as Salin). Keystone brought this action in three legal paragraphs to recover damages allegedly caused by legal malpractice, breach of contract, and constructive fraud. The trial court, evidently agreeing with Salin’s argument that all three causes of action were in reality merely different labels affixed to a single charge of attorney malpractice, granted Sa-lin’s motion for summary judgment on the ground that the entire action was barred by the applicable two year statute of limitations. We affirm.

FACTS

In concert with our summary judgment standard of review, we look at the facts most favorable to Keystone, the nonmov-ant. It appears that in the spring of 1978, Salin agreed to assist in procuring an issue of Economic Development Bonds for Keystone in order that it would receive certain favorable tax benefits when financing the construction of two warehouses. The evidence is conflicting regarding certain facts, but it is clear that the bonds were issued only for one warehouse because the other was prematurely started. As a result, Keystone suffered monetary damages and sought to assign the responsibility therefor to Salin.

Keystone filed its original complaint on March 25, 1981, sounding solely in legal malpractice. It later amended its complaint by adding counts for breach of contract and constructive fraud. Salin filed its motion for summary judgment before Keystone’s complaint was amended and renewed it thereafter, asserting the action was barred by the two year statute of limitations applicable to attorney malpractice actions. It claimed Keystone’s action accrued on July 27, 1978, when the ill-timed construction began with Salin’s blessing, or at the very latest, on March 9, 1979, when one of Keystone’s partners was shown to have become aware of the problem. Thus, because the complaint was not filed until March 25, 1981, the claim was beyond the two year limitation. The trial court granted Salin’s motion.

DECISION

After our Supreme Court’s decision in Shideler v. Dwyer (1981), Ind., 417 N.E.2d 281, there seems to be no question but that Keystone’s count alleging attorney malpractice was properly dispensed with by summary judgment. Pursuant to Shideler it appears that Keystone’s claim occurred on June 27, 1978, when Keystone began construction pursuant to Salin’s approval. Thus, the claim was barred by the two year statute of limitations. IC 34-1-2-2.

Keystone asserts that, even so, its claim that Salin breached an oral contract should be permitted to stand as suits upon oral contracts are subject to a six year limitation. See IC 34-1-2-1. We disagree. The substance of the claim is surely malpractice. Pursuant to the analysis and holding in Shideler, this court was also subject to the two year limitation of IC 34-1-2-2 and summary judgment was properly entered. In so holding, we acknowledge the Second District’s decision in Whitehouse v. Quinn (1982), Ind.App., 443 N.E.2d 332 (transfer pending). In that case the court reversed a summary judgment upon the contention that a claim for breach of a written contract was arguably pleaded, and in that event the claim was subject to the twenty-year statute of limitations contained in IC 34-1-2-2(6). We express serious reservations about the White-house holding, in view of the court’s analysis in Shideler, but more to the point the Whitehouse court indicated that it was recognizing a narrowly drawn exception based upon an express promise set forth in the written contract. 443 N.E.2d at 337. We believe that Whitehouse should be restricted to its facts. In the instant case the “verbal contract” to employ the attorney and the attorney’s alleged failure to perform allege, in essence, the tort of legal malpractice. The claim was governed by the two year statute.

Keystone further contends that the statute of limitations was tolled by Salin’s fraudulent concealment of the problem with the bond issue vis-a-vis the early construction. See, e.g., Guy v. Schuldt (1956), 236 Ind. 101, 138 N.E.2d 891; Whitehouse v. Quinn, supra. However, even when indulging in our standard of review by viewing the testimony most favorable to the nonmovant in a summary judgment question, the burden of avoiding a statute of limitations ruling here is on Keystone. See Whitehouse v. Quinn, supra. One of those burdens is to show that it used reasonable care and diligence to discover the injury Salin’s alleged malpractice caused. See Morgan v. Koch (7th Cir. 1969), 419 F.2d 993; Guy v. Schuldt, supra; Colbert v. Waitt (1982), Ind.App., 445 N.E.2d 1000; Whitehouse v. Quinn, supra. We believe that as soon as one of Keystone’s partners was told by Salin, on or around March 9, 1979, there might be a problem, Keystone should have used due diligence to make further inquiries, especially when there is testimony Keystone contacted another well-known law firm to confirm the bond issue would be denied when Salin actually told it so in early April 1979. Failure to use due diligence and to so establish here forces us to conclude the statute of limitations commenced, at the very latest, on March 9, 1979. The action filed March 25,1981 was too late and therefore properly disposed of by ruling in Sa-lin’s favor on its motion for summary judgment.

According to Keystone’s appellate brief, its third and last count in the complaint alleges constructive fraud, an action typically governed by the six-year statute of limitations found in IC 34-1-2-1. Keystone contends it notified Salin in August 1978 that it had incurred $30,000 worth of construction expenses. By failing to notify Keystone at that time of the problems with the bond issue, Salin allowed Keystone to expend an additional $70,000 through September 1978 without knowledge that favorable financing was not forthcoming., However, we believe this allegation to actually be a claim of attorney malpractice falling within the applicable two year statute of limitations. The event precipitating the alleged fraud is the failure to perform properly within the attorney-client relationship. This falls within the prohibition set forth in Shideler v. Dwyer, supra, disallowing several actions which are nominally different yet substantively the same. Keystone has set forth in this count merely one example of the asserted attorney malpractice it alleged before. We disallowed that action as being beyond the statute of limitations and must do the same to this count as being of the same ilk.

We therefore affirm the trial court’s grant of summary judgment.

HOFFMAN, J., concurs. MILLER, J., dissents and files separate opinion.