“A Tough Knot to Crack” (photo by Jay Fanelli)
Update (January 11, 2018): Yesterday, the Minnesota Supreme Court heard argument in the Savoie case, described below. It was not very illuminating and so, to us, it was disappointing.
A key problem in the case is that the Court appears to be of the opinion that, under Minnesota law, a personal representative (“PR”) of a decedent can bring no claim that the decedent could not have brought when the decedent was alive (based on subpart C of this linked statute).
It seems to us, however, that this is an incorrect reading of the statute. It seems to us that the rule in the statute — that the PR has the same standing as the decedent had immediately prior to death — is a floor, not a ceiling to the PRs standing and authority. It provides that the PR has standing to bring decedent’s “in vivo” claims but it does not limit the PR or prohibit the PR from bringing all “posthumous” claims, as well (except for claims like defamation that do not survive death).
Take this situation: Doe dies on 1/1/2017. A PR/Trustee is appointed on 1/31/2017. On 2/15/2017, Jane Roe goes into Doe’s former home and simply removes personal property that she thinks she should inherit. Doesn’t the PR/Trustee have standing to bring a claim against Roe for conversion? Obviously, Doe did not have standing to sue Roe when he was alive. She hadn’t taken anything yet.
The statute provides: “a personal representative of a decedent…has the same standing to sue and be sued in the courts of this state…as the decedent had immediately prior to death.” We are not trust/estate experts. Maybe we are wrong. But we read this to mean that a personal representative can “stand in the shoes of the decedent” for all the same kinds of claims that the decedent could have brought when alive (and for like claims if they are allowed after death).
If our reading of the statute is correct, then it seems Savoie is much simpler. The Court can focus on the Antone v. Mirviss/”some damage” analysis for professional negligence cases. When did Mr. Savoie (or his estate, after his death) suffer some damage, sufficient to bring a malpractice claim? It was when the bad trust came into effect, at the moment when Mr. Savoie died or when (as Justice Lillhaug astutely pointed out) Mr. Savoie became incapacitated (and therefore unable to revise or revoke the faulty trust document).
If the Court adopts analysis along these lines, the PR/Trustee’s claim would be within the statute of limitation and would be able to proceed, the same outcome reached by the Court of Appeals but following a different route.
The Court of Appeals’ ruling, that payment for bad legal services was “some damage” sufficient to start the running of the six-year statute of limitations, must fail. As Savoie counsel argued and some on the Court seemed to realize, that would collapse the “some damage” and the “occurrence” rule, which the Minnesota Supreme Court expressly rejected in Antone v. Mirviss.
Update (August 16, 2017): It is not every day that one sees both sides appealing a Minnesota Court of Appeals decision, each agreeing that the Court of Appeals got it wrong on the same issue. We have it in the SB&T v. LHD&L case, discussed below. (See here, here, and here.)
This is sweet vindication of our post below critical of the Minnesota Court of Appeal’s SB&T decision.
Update (May 19, 2017): This week’s published Minnesota Court of Appeals decision, Security Bank & Trust Co. (“SB&T”) v. Larkin, Hoffman, Daly & Lindgren, Ltd. (“LHD&L”) is yet another thread in Minnesota’s knotty jurisprudence on the appropriate accrual date of a legal malpractice case.
Mr. Gordon Savoie got allegedly bad estate planning help from LHD&L in 2009. The papers drawn up by LHD&L failed to include a provision for a generation-skipping trust or other mechanism to avoid a generation-skipping tax. This lapse is alleged to have been legal malpractice.
Mr. Savoie died, SB&T became the personal representative and successor trustee to the estate, and, SB&T alleged that LHD&L’s negligence caused the estate a tax burden of $1.654 million.
So, the question before the court was when did the claim accrue? When LHD&L did the allegedly negligent work? When Savoie paid for it? When Mr. Savoie died? When the tax was imposed? When Mr. Savoie suffered “some damage” (or did he?)? When the trust suffered “some damage” (or did it?)? And when did Mr. Savoie suffer “some damages? When did the trust?
In an atypical twist, the malpractice plaintiff in SB&T argued for the earlier accrual date and the defendant the later one because the question was whether Mr. Savoie would have had a legal claim when he was alive. If he did not, then, under the law, the personal representative appointed after his death would not have a claim. Minn. Stat. 524.3-703(c).
The Court of Appeals held that he did. “Savoie sustained ‘some damages’ when he signed the will and trust after Larkin Hoffman allegedly failed to inform him that his estate would be subject to a generation-skipping tax and failed to provide him with alternatives for avoiding such a tax…We note that Savoie also incurred liability for attorney fees paid for services that, it may be argued, lessened the value of his estate.”
The problems with this analysis are: (1) this analysis collapses the “some damages” rule and the “occurrence rule,” which the Minnesota Supreme Court has expressly rejected; and/or (2) the upshot is that the malpractice statute of limitations starts when the client writes a check for the allegedly bad lawyering. Does that not seem crazily arbitrary? Is there any other form of negligence where the statute starts to run when the victim paid the tort-feasor? And what happens if the negligent lawyer never billed his client?
These issues pend before the Minnesota Supreme Court in Frederick v. Wallerich, which we’ve discussed at length previously. Unfortunately, the decision in Security Bank & Trust Co. v. Larkin, Hoffman, Daly & Lindgren, Ltd. does not help clarify this muddled area of Minnesota law.
Original post (March 31, 2017)(under the headline: Another Case Implicating (and Dooming?) Antone v. Mirviss): Regular readers of Minnesota Litigator know that we are rooting for the overruling of Antone v. Mirviss, now under review by the Minnesota Supreme Court. The holding in Antone was that the statute of limitations for a defective prenuptial agreement started to run on the client’s wedding day so, when the prenup later turned out to be useless, Antone’s claim against the negligent lawyer was time-barred.
In our view, simply stating the Antone holding should suffice to reveal its fundamental unsoundness.
U.S. Chief Judge John R. Tunheim (D. Minn.) recently held that an accounting malpractice lawsuit was not time-barred. His reasoning is consistent with a more sensible approach to the statute of limitation for professional negligence.
In our view, Judge Tunheim properly interpreted the issue. The statute of limitation starts when the plaintiff has suffered “some damage.” The damage suffered by Plaintiff Miksic was not in 2006 when he got the allegedly bad accounting advice. It was not when he paid for the 2006 bad accounting advice. It was not in 2007 when the faulty returns were filed with the IRS. It was in 2011 when the IRS first hammered Miksic (that is, “assessed penalties”) for his allegedly erroneous tax filings. Under the Antone rule, plaintiffs like Mr. Miksic, see their claims for professional negligence extinguished before any of them would have a realistic chance of holding the wrongdoers responsible. The status quo is undoubtedly desirable for negligent professionals and their insurers. For the rest of us Minnesotans, not so much.