Drawing of Anger, made possible by Creative Commons, http://goo.gl/pYeceX

Here’s a hypothetical situation:

In, say, 2010, John Doe agreed to lend a Business Partner (“BP”) money and, in exchange,  BP agreed that John Doe could mine gravel on BP’s real property in years to come.

John Doe (“JD”) hired Lawyer to document this transaction in 2010.

Lawyer did not have a background in documenting these transactions and Lawyer made the “rookie error” of failing to record JD’s interest in BP’s property at the county recorder’s office. This is “Real Property Transaction Basics, 101.”

Two years later, BP took a loan out from Bank, secured by a mortgage in BP’s real property(without JD’s knowledge). BP quickly defaulted on the mortgage loan. Mortgage lender foreclosed on the property and took ownership of the property at the foreclosure sale (again, without JD’s knowledge) in 2017.

Because JD’s interest in the property was not “of record” (that is, never recorded in public records), JD’s interest in BP’s land was extinguished as a result of the foreclosure.

And BP has no money to pay back JD’s 2010 loan.

Under the “some damage” rule of Anton v. Mirviss, the statute of limitations ran on JD before he had any knowledge of any loss, even before he had any notice of the possibility of loss.

The whole point of JD’s engagement of Lawyer was so that the transaction would be enforceable against BP if BP defaulted on the loan to JD and did not have the money to make it right.

The obvious argument against the “some damage” rule in Antone v. Mirviss is that the premise — that JD in the hypothetical suffered “some damage” when he paid Lawyer for his bad work in 2010 and the six-year statute began to run then — is as silly as it is in the holding in Anton v. Mirviss — where the court held that the damage from a bad ante-nuptial agreement ran from the date of the wedding. It verges on nonsensical.

The arguments if favor of the “some damage” rule in Antone v. Mirviss seem to be: (1) Minnesota already has a six-year statute of limitation for professional negligence claims and this is a very generous statute relative to other states; (2) if the Court overrules Anton v. Mirviss in favor of some other rule, what, exactly, is the other rule? Can our courts fashion an alternative that doesn’t open the door to lawsuits several decades after a supposedly negligent act?

As to the first point, clients go to lawyers every day for some of the most important personal and financial advice of their lives. Much of it entails advice that everyone recognizes will be relied upon for many years and advice that may or may not be triggered by some future event (like divorce or loan default). Justice seems served by allowing tort victims a remedy. Lawyers, more than anyone, can be charged with evidence preservation, particular in regard to legal matters that have a high probability of “long tails.” Courts have always had the power to fashion narrow exceptions to statutes of limitation (for example, through the doctrine of “equitable tolling”).

As to the second point, consider this formulation:

The general rule in a legal malpractice case based on the attorney’s negligent exposure of the client to risk of future harm should be that the statute of limitations does not begin to run until the harm manifests in some form or the client otherwise suffers pecuniary loss — above and beyond the so-called “loss” of the attorney’s fees and costs charged and/or paid for the initial negligent work.
We believe that such a rule would protect Minnesotans, clients who otherwise have no realistic hope of any remedy for significant harm caused by others’ negligence and the increased risk faced by Minnesota lawyers would be negligible and easy to insure against.

 

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