Moshier v. Fisher , 427 P.3d 486 ( 2018 )

2018 UT App 104THE UTAH COURT OF APPEALS
MONTY MOSHIER AND KELLY MOSHIER,
Appellants,
v.
DARWIN C. FISHER,
Appellee.
Opinion
No. 20160856-CA
Filed June 7, 2018
Fifth District Court, St. George Department
The Honorable G. Michael Westfall
No. 150500584
Russell S. Walker, David R. Williams, and Anthony
M. Grover, Attorneys for Appellants
Michael F. Skolnick and Sarah C. Vaughn, Attorneys
for Appellee
JUDGE DAVID N. MORTENSEN authored this Opinion, in which
JUDGES KATE A. TOOMEY and JILL M. POHLMAN concurred.
MORTENSEN, Judge:
¶1 Some people say time heals all wounds; 1 in the law, time
often forecloses recovery. Monty and Kelly Moshier lost their
chance to collect all $874,805.68 owed to them in a bankruptcy
proceeding when their attorney, Darwin C. Fisher, failed to file a
nondischargeability complaint by the statutory deadline,
December 29, 2010. Despite learning of Fisher’s malpractice by
no later than March 2012, the Moshiers waited until October
2015 to file a malpractice lawsuit against him. The district court
1. See Geoffrey Chaucer, Troilus and Criseyde 243 (1888) (“As
tyme hem hurt / a tyme doth hem cure.”).
Moshier v. Fisher
granted Fisher’s motion for summary judgment on the Moshiers’
malpractice claim on statute of limitations grounds. The
Moshiers appeal that decision. We affirm.
BACKGROUND
¶2 The Moshiers obtained a judgment against Allen and
Laura Cottam for fraud, misrepresentation, and punitive
damages in relation to the sale of a house. Thereafter, around
September 23, 2010, the Cottams filed for bankruptcy. At about
the same time, the Moshiers retained Fisher to represent them in
the Cottam bankruptcy case. Fisher did not file the Moshiers’
nondischargeability claim until November 2011. The parties do
not dispute that the deadline for filing such a claim was
December 29, 2010. The bankruptcy court dismissed the
Moshiers’ nondischargeability claim as untimely.
¶3 Fisher informed the Moshiers in March 2012 that he
missed the filing deadline for their nondischargeability
complaint and that the complaint had been dismissed. Fisher
also told the Moshiers that he had filed a claim with his
malpractice insurance on the Moshiers’ behalf and suggested
that they retain new counsel. The Moshiers assert that they were
under the impression that they did not need to initiate any legal
action against Fisher because he had filed an insurance claim.
They also assert that they believed they would still receive full
payment of their judgment against the Cottams through their
proof of claim in the bankruptcy proceeding 2 because they
thought their claim was fully secured. The Moshiers’ claim was
2. A proof of claim is “[a] creditor’s written statement that is
submitted [in a bankruptcy proceeding] to show the basis and
amount of the creditor’s claim.” Proof of claim, Black’s Law
Dictionary (10th ed. 2014).
20160856-CA 2 2018 UT App 104Moshier v. Fisher
eventually treated as only partially secured, and they collected
just $197,660.36 of their $874,805.68 judgment.
¶4 In the latter part of 2013, the Moshiers learned they would
not receive the full amount of their claim. 3 The Moshiers retained
new counsel on June 17, 2014, to pursue a malpractice claim
against Fisher, but they did not file a lawsuit against him until
October 6, 2015.
¶5 Fisher filed a motion styled as a motion to dismiss or, in
the alternative, for summary judgment, which the district court
granted. The Moshiers appeal.
ISSUES AND STANDARDS OF REVIEW
¶6 The Moshiers contend that the district court erred in
granting Fisher’s motion for summary judgment because (1) a
six-year, rather than a four-year, statute of limitations applies;
(2) the statute of limitations did not begin to run until it was
clear that they would not receive the full amount of their claim;
and (3) the discovery rule applies, which would delay triggering
the statute of limitations. Summary judgment is appropriate if
“there is no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter of law.” Utah R.
3. The Moshiers’ opening brief identifies both the latter part of
2013 and July 14, 2014, as dates at which they first learned that
they would not receive the full amount of their claim. We note,
however, that our analysis of the district court’s grant of
summary judgment is unaffected whether we use the earlier or
the latter date. Therefore, this factual distinction is immaterial.
See Alliant Techsystems, Inc. v. Salt Lake County Board of
Equalization, 2012 UT 4, ¶ 31, 270 P.3d 441 (“A disputed fact is
material if it affects the rights or liabilities of the parties.”
(cleaned up)).
20160856-CA 3 2018 UT App 104Moshier v. Fisher
Civ. P. 56(a). “This court reviews a [district] court’s legal
conclusions and ultimate grant or denial of summary judgment
for correctness, and views the facts and all reasonable inferences
drawn therefrom in the light most favorable to the nonmoving
party.” Forsberg v. Bovis Lend Lease, Inc., 2008 UT App 146, ¶ 7,
184 P.3d 610 (cleaned up). “The applicability of a statute of
limitations and the discovery rule are questions of law, which
we review for correctness.” Jensen v. Young, 2010 UT 67, ¶ 10, 245
P.3d 731 (cleaned up).
ANALYSIS
I. The Six-Year Statute of Limitations
¶7 We first address the Moshiers’ contention that the district
court erred in dismissing their breach of contract claim on the
basis that it is subject to a six-year statute of limitations period.
Because it is well settled that legal malpractice claims are subject
to a four-year statute of limitations, we disagree.
¶8 “The limitations period for a legal malpractice claim is
four years.” Jensen v. Young, 2010 UT 67, ¶ 15, 245 P.3d 731; see
also Utah Code Ann. § 78B-2-307(3) (LexisNexis Supp. 2017)
(imposing a catch-all, four-year limitations period where a more
specific period does not apply). “The general rule is that a
plaintiff will not be permitted to characterize a tort action as one
in contract in order to avoid the bar of the statute of limitations.”
DOIT, Inc. v. Touche, Ross & Co., 926 P.2d 835, 842 n.13 (Utah
1996) (cleaned up); see also Boyd v. Jones, 85 F. App’x 77, 80 (10th
Cir. 2003) (“Under Utah law, a plaintiff will not be permitted to
characterize a tort action as one in contract in order to avoid the
bar of the statute of limitations.” (cleaned up)).
¶9 The Moshiers’ complaint alleged (1) professional
misconduct, (2) breach of contract, and (3) breach of fiduciary
duty. In so doing, the Moshiers characterized Fisher’s legal
20160856-CA 4 2018 UT App 104Moshier v. Fisher
representation and malpractice as that of contractual breach, an
action that may be brought within six years. See Utah Code Ann.
§ 78B-2-309(2) (2012). But the Moshiers do not allege any
misconduct specific to their contract, and they instead “simply
claim that [Fisher] failed to exercise the reasonable care which
the law requires.” See DOIT, Inc., 926 P.2d at 842 n.13. Therefore,
the district court’s decision that “the substance of [the Moshiers’]
contract claim is [Fisher’s] professional negligence” was not
error, and the court correctly applied the four-year statute of
limitations.
II. The Trigger of the Statute of Limitations
¶10 Having established that a four-year statute of limitations
period applies to the Moshiers’ claim, we next analyze their
argument that the statute of limitations was not triggered until
long after Fisher missed the filing deadline—namely, that the
statute of limitations did not begin to run until their damages
were certain.
¶11 The Moshiers argue that the district court erred in
dismissing their legal malpractice claim on timeliness grounds
because they did not suffer damages until it was clear that their
underlying bankruptcy claim would not fully compensate them.
We disagree. The Moshiers were injured the moment they lost,
through their attorney’s failure to file, their right to recover
under a nondischargeability complaint on December 29, 2010—
the deadline for Fisher to file the nondischargeability claim.
Thus, the four-year statute of limitations for their malpractice
claim had run by the time they filed their complaint in the
district court on October 6, 2015.
¶12 Jensen v. Young, 2010 UT 67, 245 P.3d 731, is controlling
here. In Jensen, the Utah Supreme Court examined the
applicability of the statute of limitations in a legal malpractice
lawsuit. Id. ¶¶ 10–11. That case involved a defamation claim
based upon a news broadcast that implied that Jensen, a doctor,
20160856-CA 5 2018 UT App 104Moshier v. Fisher
had illegally prescribed drugs to patients. Id. ¶ 2. Jensen
subsequently filed a malpractice claim against his attorney who
had failed to timely file his defamation claim. Id. ¶ 6. The Jensen
court explained, “The last event required to form the elements of
a cause of action for legal malpractice occurs on the date the
limitations period runs on a client’s claim. Therefore, a client’s
claim for legal malpractice accrues on the date that the attorney
misses the statute of limitations.” Id. ¶ 13 (citation omitted). 4
¶13 Applying the general rule articulated in Jensen to this case,
the “last event” occurred on December 29, 2010, when Fisher
missed the deadline to file a nondischargeability complaint. The
Moshiers filed a complaint against him for legal malpractice on
October 6, 2015—more than four years later—and the claim
therefore was not timely.
¶14 The Moshiers nevertheless argue that the law articulated
in Jensen should be distinguished because they contend that they
were not injured until it was clear that they would not receive
the full amount owed in the still viable proof of claim action in
the bankruptcy court. Therefore, they argue, Fisher’s error did
not “foreclose the Moshiers’ right to recover in full and their
‘injury remain[ed] uncertain or inchoate.’” (Quoting Wagner v.
Sellinger, 847 A.2d 1151, 1156 (D.C. 2004).)
¶15 The argument is unpersuasive. A nondischargeability
action is an independent action commenced by way of a
complaint to obtain a determination of whether a debt is
dischargeable. See 11 U.S.C. § 523(c)(1) (2012) (“[T]he debtor
shall be discharged from a debt . . . unless, on request of the
creditor to whom such debt is owed, and after notice and a
4. The Jensen court also examined the application of the
discovery rule, an exception to the triggering date for the statute
of limitations, which we analyze in the next section. See infra Part
III.
20160856-CA 6 2018 UT App 104Moshier v. Fisher
hearing, the court determines such debt to be excepted from
discharge[.]”); Fed. R. Bankr. P. 4007. 5 On the other hand, a proof
of claim is simply a “creditor’s statement as to the amount and
character of the claim” and “the creditor has the ultimate burden
of persuasion as to the validity and amount of the claim.”
Agricredit Corp. v. Harrison (In re Harrison), 987 F.2d 677, 680 (10th
Cir. 1993) (cleaned up). In other words, a proof of claim is a
procedural mechanism available in a bankruptcy action, whereas
a nondischargeability claim is a distinct and separate cause of
action altogether.
¶16 Injury in a malpractice action is defined as “the loss or
impairment of a right, remedy, or interest that otherwise would
have been available but for the attorney’s negligence.” Jensen,
2010 UT 67, ¶ 19 (cleaned up). When the statute of limitations on
the nondischargeability complaint ran, the independent right to
pursue nondischargeable debt died. It is of no consequence that
the Moshiers were not certain as to the amount of damages.
Under our supreme court’s holding in Jensen, the moment the
Moshiers lost their right to pursue their claim under a
nondischargeability action, they were injured. Accordingly, the
statute of limitations period for their malpractice claim began to
5. Rule 4007 of the Federal Rules of Bankruptcy Procedure states,
“A debtor or any creditor may file a complaint to obtain a
determination of the dischargeability of any debt.” Fed. R.
Bankr. P. 4007(a). Thus, obtaining a determination of the
dischargeability of a debt involves a separately filed complaint.
Rule 4007 further provides the time by which a complaint to
determine dischargeability must be filed, which is “no later than
60 days after the first date set for the meeting of creditors under
§ 341(a).” Id. R. 4007(c). “Generally, therefore, a complaint to
determine dischargeability must be filed within 60 days of the
§ 341(a) meeting, or the debt is discharged.” Irons v. Santiago (In
re Santiago), 175 B.R. 48, 49 (B.A.P. 9th Cir. 1994).
20160856-CA 7 2018 UT App 104Moshier v. Fisher
run on the date when Fisher missed the deadline—December 29,
2010.
III. The Discovery Rule
¶17 Finally, the Moshiers argue that the district court erred in
not applying the discovery rule to delay triggering the statute of
limitations. This argument fails because the Moshiers have not
established circumstances warranting the application of the
discovery rule.
¶18 “The discovery rule is a judicially created doctrine under
which the statute of limitations does not begin to run until the
plaintiff learns of or in the exercise of reasonable diligence
should have learned of the facts which give rise to the cause of
action.” Jensen v. Young, 2010 UT 67, ¶ 17, 245 P.3d 731 (cleaned
up). The discovery rule applies in three circumstances:
(1) in situations where the discovery rule is
mandated by statute; (2) in situations where a
plaintiff does not become aware of the cause of
action because of the defendant’s concealment or
misleading conduct; and (3) in situations where the
case presents exceptional circumstances and the
application of the general rule would be irrational
or unjust, regardless of any showing that the
defendant has prevented the discovery of the cause
of action.
Id. (cleaned up).
¶19 None of the three circumstances apply in this case. First,
the rule is not mandated by statute. Next, for the discovery rule
to apply under either the second or third circumstance, the
Moshiers must show that they were unaware of the injury and
possible cause of action prior to the expiration of the statute of
limitations. See id. ¶¶ 17–18 (explaining that “under the
20160856-CA 8 2018 UT App 104Moshier v. Fisher
exceptional circumstances prong of the discovery rule,” parties
“must make a threshold showing that [they were] unaware of
[their] injuries or damages and a possible cause of action before
the statute of limitations expired” (cleaned up)). Here, the
Moshiers were aware of Fisher’s conduct—he told them that he
had committed malpractice and that he had filed a claim on their
behalf with his malpractice insurance carrier—within a few
months after missing the deadline. Further, the Moshiers were
represented by new counsel by June 2014, nearly six months
before the statute of limitations expired, for the specific purpose
of pursuing their malpractice claim. Thus, the Moshiers cannot
assert that they were unaware of their claim against Fisher
before the statute of limitations expired and, therefore, the
second and third circumstances of the discovery rule do not
apply.
¶20 The Moshiers also argue that the discovery rule should
apply because they were not damaged until their underlying
proof of claim failed to produce full recovery. For the same
reasons discussed above, see supra Part II, Jensen controls in this
case and the Moshiers were damaged the moment they lost their
ability to file a nondischargeability complaint. We therefore
reject their argument and conclude that the district court did not
err when it refused to apply the discovery rule.
CONCLUSION
¶21 The district court properly dismissed the Moshiers’
malpractice claim against Fisher. Under Jensen, the four-year
statute of limitations for the claim had run by the time the
Moshiers filed it. Further, under Jensen, the Moshiers were
damaged when they lost their ability to recover through a
nondischargeability complaint. Finally, none of the
circumstances here warrant the application of the discovery rule.
¶22 Affirmed.
20160856-CA 9 2018 UT App 104