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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Jones v. Westbrook (9/23/2016) sp-7127

Jones v. Westbrook (9/23/2016) sp-7127

           Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  REPORTER.  

           Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

                                                                                                                         

           303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  

                                                                                                                            

           corrections@akcourts.us.  



                       THE SUPREME COURT OF THE STATE OF ALASKA                                       



TIMOTHY  JONES,                                                  )  

                                                                 )          Supreme  Court  No.  S-15951  

                                Appellant,                       )  

                                                                                                                                       

                                                                 )          Superior Court No. 3PA-14-01350 CI  

                      v.                                         )  

                                                                                                 

                                                                 )          O P I N I O N  

                     

RANDALL WESTBROOK,                                               )  

                                                                                                                        

                                                                 )          No. 7127 - September 23, 2016  

                                Appellee.                        )  

                                                                 )  



                                                                                                               

                      A            

                         ppeal from the Superior Court of the State of Alaska, Third  

                                                                                          

                      Judicial District, Palmer, Gregory Heath, Judge.  



                                                                                                     

                      Appearances: Paul D. Kelly, Kelly & Patterson, Anchorage,  

                                                                                                      

                      for Appellant.  Patricia R. Hefferan, Wasilla, for Appellee.  



                                                                                                                 

                      Before:         Stowers,  Chief  Justice,  Winfree,  Maassen,  and  

                                                                                 

                      Bolger, Justices. [Fabe, Justice, not participating.]  



                                            

                      MAASSEN, Justice.  



I.         INTRODUCTION  



                                                                                                                                       

                      A client personally financed the sale of his business corporation.   His  



                                                                                                                                          

attorney drafted documents that secured the buyer's debt with corporate stock and an  



                                                                                                                                      

interest in the buyer's home.  Over seven years later the government imposed tax liens  



                                                                                                                                         

on the corporation's assets; according to the client, it was only then he learned for the  



                                                                                                                                               

first time that his attorney  had  not provided  for  a recorded security  interest in  the  


----------------------- Page 2-----------------------

physical assets.  The client sued the attorney for legal malpractice and violation of the  

                                                                                                                              



Alaska Unfair Trade Practice and Consumer Protection Act (UTPA).  

                                                                                                           



                    The superior court held that the statute of limitations barred the client's  

                                                                                                                       



claims and granted summary judgment to the attorney.  But we conclude that it was not  

                                                                                                                              



until the tax liens were filed that the client suffered the actual damage necessary for his  

                                                                                                                              



cause of action to be complete.  We therefore reverse the judgment of the superior court  

                                                                                                                           



and remand the case for further proceedings.  

                                                 



II.       FACTS AND PROCEEDINGS  

                                 



          A.        Facts  



                    Timothy Jones owned Northern Heating & Air Conditioning, Inc., which  

                                                                                                                          



did business under that name. In 2003 he retained attorney Randall Westbrook, who had  

                                                                                                                              



done work for him in the past, to represent him in the sale of the corporation. According  

                                                                                                                   



to  Jones,  Westbrook  told  him  that  he  had  been  involved  in  a  number  of  similar  

                                                                                                                        



transactions and was confident he could handle this one.  

                                                                               



                    Jones  decided  to  sell  Northern  Heating  to  his  service  manager,  Mike  

                                                                                                                          



Grunwald.   Grunwald was unable to secure outside financing, so Jones decided to  

                                                                                                                               



finance the sale himself. Westbrook prepared a stock purchase agreement, deed of trust,  

                                                                                                                           



promissory  note,  and  security  agreement.  The  stock  purchase  agreement  conveyed  

                                                                                                                    



Northern Heating's 1,000 shares of issued stock to Grunwald for $280,000.  Grunwald  

                                                                                                                    



gave Jones a $10,000 down payment and executed a promissory note for the remaining  

                                                                                                                    



$270,000 at 8% interest with monthly payments of $3,816.90.  The security agreement  

                                                                                                                   



secured Grunwald's payment of the promissory note with the "1,000 shares of common  

                                                                                                                      



stock," while the deed of trust gave Jones additional security in the home owned by  

                                                                                                                               



Grunwald and his wife.  Jones and the Grunwalds signed the documents on July 13,  

                                                                                                                              



2004.  



                                                               -2-                                                        7127
  


----------------------- Page 3-----------------------

                    Jones and Westbrook both agree that they discussed "the perils of owner  

                                                                                      



financing," but they remember the conversation differently.   According to Jones, he  

                                                                                                                                



believed Westbrook would ensure that "the business assets [were] tied up in the sale" and  

                                                                                                                               



that he would have "everything tied up, the stock, inventory, equipment, the assets of  

                                                                                                                                 



Northern Heating" as security.  But according to Westbrook, Jones instructed him not  

                                                                                                                               



to take a security interest in the physical assets because another creditor already had an  

                                                                                                                                



interest in them.  Westbrook also testified that he "would have encouraged [Jones] to  

                                                                                                                                 



take a security interest in those assets" if he had known that in fact no other security  

                                                                                                                       



interest existed.  

             



                    Grunwald made payments on his debt to Jones, but he "was short" on some  

                                                                                                                            



payments  and requested extensions on others.   Jones testified that when Grunwald  

                                                                                                                    



missed payments the two men would meet, talk about the business, and work out a partial  

                                                                                                                          



payment.  Jones testified that the first time Grunwald came up short, in "mid[-]2005,"  

                                                                                                              



Jones  "walked  through  the  warehouse  and  offices,  and  noted  the  inventory  and  

                                                                                                                             



equipment, and knowing that the assets were secure, [he] felt comfortable with [the  

                                                                                                                              



parties'] agreement." On October 18, 2005, the manager of the escrow account through  

                                                                                                                        



which Grunwald made his payments sent Jones his first official notice that Grunwald had  

                                                                                                                               



missed one.  But Grunwald continued to make payments of varying amounts through  

                                                                                                          



February 2012.  

                



                    In  August  2008  the  Internal  Revenue  Service  filed  a  tax  lien  against  

                                                                                                                        



Northern  Heating,  but  it  released  the  lien  in  October  of  that  year.                                According  to  

                                                                                                                                



Grunwald, he learned in 2009 that his bookkeeper had not been paying withholding  

                                                                                                                 



taxes.  He negotiated with the IRS and eventually thought he was "making . . . good  

                                                                                                                            



headway  on  paying  the  back  taxes,"  but  the  IRS  placed  two  more  liens  on  the  

                                                                                                                              



corporation's assets in October and November 2011. In February 2012 the IRS notified  

                                                                                                                        



                                                               -3-                                                         7127
  


----------------------- Page 4-----------------------

 Grunwald it was closing Northern Heating and selling its assets. Grunwald informed                                                                                                                                                                                                                                                                                                                        



Jones, who later attested that this "was the first time I heard that Northern Heating had                                                                                                                                                                                                                                                                                                                                               



 any tax problems."                                                                                 



                                                                     According to Jones, he met with Grunwald's accountant the next day, and                                                                                                                                                                                                                                                                                             



the two of them called the IRS.                                                                                                                                            The IRS told Jones the amount of the tax lien and                                                                                                                                                                                                           



informed him it had no record that he had a security interest in Northern Heating's                                                                                                                                                                                                                                                                                                                    



physical assets.                                                                  Jones contacted Westbrook, who confirmed the absence of a security                                                                                                                                                                                                                                                        



interest.   Jones asserts that this was when he first learned that Grunwald's debt was not                                                                                                                                                                                                                                                                                                                                                 



 secured by the corporation's physical assets.                                                                                                                                                                                           In August 2012, after Northern Heating                                                                                                                                   



was liquidated by the IRS, Jones terminated the escrow account.                                                                                                                                                                                                                                                                               Grunwald still owed   



him $330,316.69, including interest.                                                                                                                                                         



                                                                     After Jones filed a complaint against Westbrook for legal malpractice,                                                                                                                                                                                                                                               



Westbrook   admitted   that   he   probably   did   not   have   malpractice   insurance   while  



representing Jones.                                                                                  Jones asserted that he would have found a different lawyer had he                                                                                                                                                                                                                                                                         



known Westbrook was uninsured but that Westbrook never gave him notice of that fact.                                                                                                                                                                                                                                                                                                                                                                          



Westbrook testified in a deposition that he could not find a written fee agreement signed                                                                                                                                                                                                                                                                                                                                 



by Jones and that he could not say whether he had provided his client with written notice                                                                                                                                                                                                                                                                                                                                   



                                                                                                                                                                                                                                                                                                                                                                                                            1  

that he lacked malpractice insurance, as required by the attorney ethics rules.                                                                                                                                                                                                                                                                                                                                  



                                   B.                                Proceedings  



                                                                                                                                                                                                                                                                                                                                                                                                                           

                                                                     Jones  filed  his  complaint  against  Westbrook  on  December  19,  2013,  



                                                                                                                                                                                                                                                                                                                                                                                                       

 alleging: (1) legal malpractice and violation of the Unfair Trade Practices and Consumer  



                                   1                                 Alaska R. Prof. Conduct 1.4(c) (providing that "[a] lawyer shall inform an                                                                                                                                                                                                                                                                                                 



 existing client in writing if the lawyer does not have malpractice insurance of at least                                                                                                                                                                                                                                                                                                                                          

 $100,000 per claim and $300,000 annual aggregate" and "shall maintain a record of                                                                                                                                                                                                                                                                                                                                                             

these disclosures for six years from the termination of the client's representation").                                                                                                                                                                                                                                                             



                                                                                                                                                                                                                       -4-                                                                                                                                                                                                         7127
  


----------------------- Page 5-----------------------

Protection Act (UTPA) based on Westbrook's alleged failure to properly document the                                                                                                                                                                                                       



 sale of Northern Heating; and (2) violation of the UTPA based on Westbrook's alleged                                                                                                                                                                                       



 deception in holding himself out as experienced in selling businesses. Westbrook raised                                                                                                                                                                                         



the statute of limitations as a defense.  Jones later amended his complaint to claim that                                                                                                                                                                                               



Westbrook also violated the UTPA when he failed to disclose his lack of malpractice                                                                                                                                                                          



 insurance.     The   parties   cross-moved   for   summary   judgment;  Jones  requested   an  



                                                                                                                                                                   2  

 evidentiary hearing on the statute of limitations.                                                                                                                    



                                                                                                                                                                                                                                                                                            

                                              The superior  court conducted  an  evidentiary hearing on  the  statute of  



                                                                                                                                                                                                                                                              

 limitations over two days in February and March 2015; both Jones and Westbrook  



                                                                                                                                                                                                                                                                           

testified.  The court then granted Westbrook's motion for summary judgment, holding  



                                                                                                                                                                                                                                                                                           

that Jones's claims had been filed too late.  The court found that the date of injury for  



                                                                                                                                                                                                                                                                    

Jones's UTPA and legal malpractice claims was July 13, 2004, the date he and Grunwald  



                                                                                                                                                                                                                                                                    

 signed the sale documents.  The court further found that the discovery rule tolled the  



                                                                                                                                                                                                                                                                           

 statute of limitations until October 18, 2005 - the date the escrow manager first notified  



                                                                                                                                                                                                                                                                                              

Jones of a late payment.  At that point, the court reasoned, a "prudent businessman . . .  



                                                                                                                                                                                                                                                                                      

would have reread the terms of the transaction to assure the assets were secured" and,  



                                                                                                                                                                                                                                                                                        

 finding that they were not, would have contacted his attorney.  The court concluded that  



                                                                                                                                                                                                                                                  

Jones's claims accrued once he was on inquiry notice that Grunwald's payments were  



                                                                                                                                                                                                                                                             

not secured by the corporation's physical assets.  The court therefore held that Jones's  



                                                                                                                                                                                                                                                                 

UTPA claim expired on October 18, 2007 (because of the two-year statute of limitations  



                       2                     See Richardson v. Municipality of Anchorage                                                                                                                    , 360 P.3d 79, 91 (Alaska                                     



2015) (explaining that "when a factual dispute precludes entry of summary judgment [on                                                                                                                                                                                                    

 a statute of limitations defense,] the dispute must ordinarily be resolved by the court at                                                                                                                                                                                                    

 a preliminary evidentiary hearing in advance of trial" (quoting                                                                                                                                                    Cikan v. ARCO Alaska,                                   

Inc., 125 P.3d 335, 339 (Alaska 2005))).                                                                      



                                                                                                                                              -5-                                                                                                                                   7127
  


----------------------- Page 6-----------------------

for UTPA claims                       3) and his legal malpractice claimexpired on October 18, 2008 (because                                                                    



of the three-year statute of limitations for professional malpractice claims                                                                                          4).  



                                                                                                                                                                           

                              Jones  appeals  from  the  superior  court's  grant  of  summary  judgment,  



                                                                                                                                                                                           

arguing that his claims did not accrue until he learned in February 2012 that the IRS was  



                                                                                                                                                      

asserting a security interest in Northern Heating's assets.  He also appeals the superior  



                                                                                                  

court's denial of summary judgment in his favor.  



                                                             

III.           STANDARDS OF REVIEW  



                                                                                                                                             5  

                                                                                                                                                                                          

                              We review a grant of summary judgment de novo.                                                                     A claim's accrual date  



                                                                                                                          6  

                                                                                                                                                                                       

"is a factual question, which we review for clear error."                                                                    "When the superior court holds  



                                                                                                                                                                           

an evidentiary hearing to resolve factual disputes about when a statute of limitations  



                                                                                                                               7  

                                                                                                                   

began to run," we review those findings for clear error.                                                                                                                                    

                                                                                                                                    Clear error exists when the  



                                                                                                                                                                                         

record as a whole "leaves us with 'a definite and firm conviction that a mistake has been  



               3              AS45.50.531(f)("Apersonmaynotcommenceanactionunder this section                                                                                       



more than two years after the person discovers or reasonably should have                                                                                         discovered that   

the loss resulted from an act or practice declared unlawful by AS 45.50.471.").                                                                     



               4              Christianson v. Conrad-Houston Ins., 318 P.3d 390, 396 (Alaska 2014)  

                                                                                                                                                                                      

(explaining  that  "Alaska  applies  a  three-year  statute  of  limitations  for  professional  

                                                                                                                                                                       

malpractice actions" and citing AS 09.10.053).  

                                                                                



               5              Christensen v. Alaska Sales &Serv., Inc., 335 P.3d 514, 516 (Alaska 2014)  

                                                                                                                                                                                      

(citing Hurn v. Greenway, 293 P.3d 480, 483 (Alaska 2013)).  

                                                                                                                           



               6              Gefre v. Davis Wright Tremaine, LLP, 306 P.3d 1264, 1271 (Alaska 2013)  

                                                                                                                                                                                      

(citing Sengupta v. Wickwire, 124 P.3d 748, 752 (Alaska 2005)).  

                                                                                                                                  



               7              Christianson, 318 P.3d at 396 (citing Williams v. Williams, 129 P.3d 428,  

                                                                                                                                                                                         

431 (Alaska 2006)).  

                              



                                                                                              -6-                                                                                       7127
  


----------------------- Page 7-----------------------

              8                                                                                                                          9  

made.' "         But "we review de novo the legal standard used to determine accrual dates."                                                 



IV.	       DISCUSSION  



                                                                                                                                       

           A.	        Jones's LegalMalpracticeClaimDidNot AccrueUntil HeSufferedAn  

                                            

                     Appreciable Injury.  



                                                                                                                                      

                     A legal malpractice claim has four elements:  duty, breach, causation, and  



               10  

damages.                                                                                      

                    A plaintiff bringing such a claim must show:  



                                                                                                       

                      (1) that the defendant has a duty "to use such skill, prudence,  

                                                                                                     

                      and diligence as other members of the profession commonly  

                                                                                                                

                     possess and exercise," (2) that the defendant breached that  

                                                                                                                

                      duty, (3) that the breach proximately caused the injury, and  

                                                                                                                  [11]  

                                                                                                

                      (4) that actual loss or damage resulted fromthe negligence. 

The  cause  of  action  does  not  accrue  until  all  four  elements  are  satisfied.12                                          Thus,  

                                                                                                                                  



regardless of when the duty is breached, the cause of action does not accrue and the  

                                                                                                                                      



statute of limitations ordinarily does not begin to run until "the date on  which  the  

                                                                                                                          



                                     13  

plaintiff incurs injury."                 

                          



           8         Jarvill  v.  Porky's  Equip.,  Inc.,   189  P.3d  335,  338  (Alaska  2008)  (quoting  



John's  Heating  Serv.  v.  Lamb,   129  P.3d  919,  922  (Alaska  2006)).  



           9          Gefre,  306  P.3d  at   1271.  



           10        Stewart  v.  Elliott,  239  P.3d   1236,   1240  (Alaska  2010).  



           11        Id.  (quoting  Shaw  v.  State,  Dep't  of  Admin.,  Pub.  Def.  Agency ,  816  P.2d  



 1358,  1361  n.5  (Alaska  1991));  see  also  Linck  v.  Barokas  &  Martin,  667  P.2d  171,  173  

n.4  (Alaska   1983).  



           12        See Jarvill, 189 P.3d at 340 ("The essence of [defendant's] argument  . . .  

                                                                                                                                             

is that [plaintiff's] cause of action accrued before all of its essential elements had ripened.  

                                                                                                                                             

But our previous decisions do not suggest such a rule.").  

                                                                                 



           13        Id. at 338 (quoting Russell v. Municipality ofAnchorage , 743 P.2d 372, 375  

                                                                                                                                      

(Alaska 1987)).  

               



                                                                   -7-	                                                            7127
  


----------------------- Page 8-----------------------

                                     In this case the superior court concluded that Jones's injury occurred on                                                                                                                        



July 13, 2004, when Jones and Grunwald signed the sale documents that Westbrook                                                                                                                               



prepared. The court then applied the discovery rule, which tolls the statute of limitations                                                                                                                     



until "the plaintiff has information sufficient to alert a reasonable person to the fact that                                                                                                                                      



                                                                                                                                                                                                                            14  

he has a potential cause of action" or should begin to inquire about that possibility.                                                                                                                                            The  



                                                                                                                                                                                      

court found that Jones was on inquiry notice that the sale was not properly secured on  



                                                                                                                                                                                                                           

October 18, 2005, when the escrow manager first notified himthat Grunwald had missed  



                                                                                                                                                                                                           

a payment.   Applying the three-year statute of limitations applicable to professional  



                                                       15  

                                                                                                                                                                                                                

malpractice claims,                                          the court concluded that Jones's complaint, filed in December  



                                                                                                                                                                  

2013, failed to meet the filing deadline by over five years.  



                                                                                                                                                                                                                                     

                                     Jones contends on appeal that his cause of action did not accrue until the  



                                                                                                                                                                                                                                 

IRS asserted its lien in late 2011 because "[a]t any time up to that point, Jones could have  



                                                                                                                                                                                                                                     

 secured the assets and maintained a priority position"; he argues that he suffered no  



                                                                                                                                                                                                                        

appreciable injury until "he lost that option to the IRS lien."  Our prior cases support  



                      

Jones's position.  



                   14                Preblich v. Zorea                               , 996 P.2d 730, 734 (Alaska 2000) (quoting                                                                             Pedersen v.   



Zielski, 822 P.2d 903, 908 (Alaska 1991));                                                                           see also Ranes & Shine, LLC v. MacDonald                                               

Miller   Alaska,   Inc.,   355   P.3d   503,   509   (Alaska   2015)   (explaining   that   under   the  

discovery rule, "the relevant inquiry is the date when the claimant reasonably should                                                                                                                                     

have known of the facts supporting her cause of action" (quoting                                                                                                                         Gefre, 306 P.3d at                             

 1275)).  



                   15                Christianson v. Conrad-Houston Ins., 318 P.3d 390, 396 (Alaska 2014)  

                                                                                                                                                                                                                             

 (citing  AS  09.10.053);  see  also  Gefre,  306  P.3d  at  1272-73  (applying  statute  of  

                                                                                                                                                                                                                                      

limitations for contract claims to legal malpractice claims); Lee Houston &Assocs., Ltd.  

                                                                                                                                                                                                                                   

v. Racine, 806 P.2d 848, 855 (Alaska 1991) (applying contract statute of limitations to  

                                                                                                                                                                                                                                        

professional malpractice claims involving economic loss).  

                                                                                                                                                 



                                                                                                                   -8-                                                                                                          7127
  


----------------------- Page 9-----------------------

                         The plaintiff in             Austin v. Fulton Insurance Co.                             sought coverage in 1961               



against "all risk of loss" but received an insurance policy that did not cover earthquake                                                   



                16  

                                                                                                                                                          

damage.               After the 1964 earthquake the plaintiff sued the insurance company for  



                                                                                                                                                  

misrepresenting the policy; the company responded that his cause of action had accrued  



                                                                                                                                          17  

                                                                                                                                                      

in 1961 when he received the policy with less coverage than he asked for.                                                                      As basic  



                                                                                                                                                            

principles we noted that "[t]he statute of limitation as to torts does not usually begin to  



                                                                                                                                                          

run until the tort is complete" and that "[a] tort is ordinarily not complete until there has  



                                                                                                                         18  

                                                                                                                                                          

been an invasion of a legally protected interest of the plaintiff."                                                           We identified the  



                                                                                                                                           

plaintiff's legally protected interest in Austin  as "being protected against earthquake  



                                                                                                                                           

loss"; we concluded that "[t]here was no invasion, or infringement upon or impairment  



                                                                                                                                                     

of such interest until there had  been a loss by earthquake, because until that event  



                                                                                                         19  

                                                                                                                                                          

                                                                                                              We therefore held that the  

occurred such protection could avail appellant nothing." 



                                                                                                                                                            

statute of limitations did not begin to run until 1964, when the plaintiff suffered loss as  



                                                                                                      20  

                                                                                                            

                                                                                  

a result of the insurance company's alleged negligence. 



                                                                                                                                         

                         In Thomas v. Cleary the plaintiffs sued their accountants for mishandling  



                                                                                                                                                            21  

                                                                                                                                                                  

the sale of their corporation and potentially exposing themto tax liability in the process. 



                                                                                                                                                       

We held  that the malpractice action  was premature because the plaintiffs had  "not  



                                                                                                                                                         

suffered the required injury or harm as a result of the defendants' negligence" - the IRS  



            16           444 P.2d 536, 537, 539 (Alaska 1968).
                      



            17          Id. at 539.
  

                                    



            18          Id.
  



            19          Id.
  



            20  

                                    

                        Id. at 539-40.  



            21           768 P.2d 1090, 1091 (Alaska 1989).  

                                                                                 



                                                                             -9-                                                                      7127
  


----------------------- Page 10-----------------------

                                                                                                                                                                                                                                   22  

had not yet determined whether the plaintiffs were actually liable for the taxes at issue.                                                                                                                                               



                                                                                                                                                                                                                               

We held that "nominal damages, speculative harm, or the threat of future harm" was not  



                                                                                                    23  

                                                                                  

enough to establish a cause of action. 



                                                                                                                                                                              

                                    We  addressed  the  issue  again  in   Christianson  v.  Conrad-Houston  



                                                                                                                                                                            24  

                                                                                                                                                                                                                   

Insurance, in which an insured was sued by an injured employee.                                                                                                                    The insurer notified  



                                                                                                                                                                                                                              

the insured that it was investigating whether the claim was covered by his policy and that  



                                                                                                                                     25  

                                                                                                                                            

in the meantime he must pay for his own defense.                                                                                            The insured hired an attorney and  



                                                                                                                                                                                                           26  

                                                                                                                                                                                                                 

began incurring legal fees; eighteen months later the insurer denied coverage.                                                                                                                                   Another  



                                                                                                                                                                                                                   

two years later the insured sued his insurance broker for allegedly failing to acquire  



                                                                                                                                                                                                                  

adequate coverage, but the superior court held that the statute of limitations had expired,  



                                                                                                                                                                                          27  

                                                                                                                                                                                                              

having begun to run when the insured first incurred legal expenses.                                                                                                                                We affirmed,  



                                                                                                                                                                                                                             

holding that the insured's payment of the legal fees - an out-of-pocket loss that he was  



                  22                Id.  at 1093.                    



                  23                Id.  at 1092 (quoting                                 Budd v. Nixen                          , 491 P.2d 433, 436 (Cal. 1971)).  The                               



Restatement (Third) of the Law Governing Lawyers likewise concludes that "the statute  

                                                                                                                                                                                                                      

of limitations does not start to run until the lawyer's alleged malpractice has inflicted                                                                                                                        

 significant injury."    RESTATEMENT   (THIRD)   OF   THE   LAW   GOVERNING   LAWYERS    54   

cmt. g (A                 M. L       AW  INST . 2000).                            According to the Restatement, a client is not injured by                                                                                       

an arguably unenforceable contract "until the other contracting party declines to perform                                                                                                                         

or the client suffers comparable injury" because "[u]ntil then, it is unclear whether the                                                                                                                                      

lawyer's malpractice will cause harm."                                                                    Id.  



                  24                318 P.3d 390, 393 (Alaska 2014).  

                                                                                                             



                  25                Id. at 394.  

                                                   



                  26                Id.  

                                             



                  27                Id. at 395-96.  

                                                   



                                                                                                              -10-                                                                                                        7127
  


----------------------- Page 11-----------------------

aware might not be reimbursed - satisfied the damage element of his malpractice cause                                                                                         



                    28  

of action.                



                                                                                                                                                                                 

                             In this case the superior court found that Jones was injured when he and  



                                                                                                                                                                       

Grunwald signed a sale document that failed to secure Jones's interest in the business  



                                                                                                                                                                        

assets.  The court reasoned that once Jones had contracted for an inadequate security  



                                                                                                                                      

interest, the attorney's alleged failure to meet his professional duty of care had injured  



                                                                      

Jones and the malpractice claim accrued.  



                                                                                                                                                                                

                             But  Jones  did  not  suffer  any  appreciable  injury  at  the  time  the  sale  



                                                                                                                                                                        

documents were signed in 2004.  Like the plaintiffs in Austin , Jones received a contract  



                                                                                                                                                                       

that was less than he allegedly expected it to be, since it failed to give him a security  



                                                                                                                                                              

interest in the corporation's physical assets.   But as long as Grunwald substantially  



                                                                                                                                                                        

abided by his contractual obligations, Jones had no reason to execute on a security  



                                                                                                                                                                29  

                                                                                                                                                          

interest and therefore suffered no actual injury from being unable to do so. 



                                                                                                                                                                                  

                             Nor did Jones suffer an appreciable injury in October 2005, when the  



                                                                                                                                                                           

escrow manager first notified him that Grunwald had missed a payment.  Jones agreed  



                                                                                                                                                               

to extend Grunwald's payments at that time and to work out an alternative arrangement  



                                                                                                                                                                                 

rather than foreclose on the debt.  Because the stock purchase agreement allowed this  



              28            Id.  at 398-400.   



              29  

                                                                                                                                                                               

                             The Iowa Supreme Court recently analyzed a similar case to reach the same  

                                                                                                                                                                               

legal conclusion.  In Vossoughi v. Polaschek, the plaintiffs sued their attorney for legal  

malpractice after a buyer defaulted on a sale that was not properly secured. 859 N.W.2d                                                                                  

                                                                                                                                                                                 

643, 646-647 (Iowa 2015).  The court held that until the buyer stopped paying, "it was  

                                                                                                                                                                    

entirely  possible  the  plaintiffs  would  have  continued  collecting  contract  payments  

without disruption" and that the defect "would cause the sellers no actual injury"; as long                                                                                     

as the buyer made payments, "the plaintiffs suffered only the prospect of future harm."                                                                                                    

                                                                                                                                                                                  

Id. at 652-53.  The court found that the earliest "plaintiffs' injuries became actual and  

                                                                                                                     

nonspeculative" was when the buyer defaulted.  Id. at 654.  



                                                                                        -11-                                                                                  7127
  


----------------------- Page 12-----------------------

forbearance without waiving "any obligation of Debtor or right of Secured Party," Jones                                                                                                 



again suffered no injury.                                    And Grunwald continued to make at least partial or late                                                                       



payments through February 2012. Jones was satisfied with the parties' arrangement and                                                                                                       



did not attempt to use any remedies he would have had as a secured party; he therefore                                                                                          

continued to suffer no harm from his lack of a security interest.                                                                              30  



                                                                                                                                                                                          

                              Jones did suffer an appreciable injury in late 2011. The IRS recorded liens  



                                                                                                                                                                                                

on Northern Heating's physical assets on October 31 and November 14 of that year; at  



                                                                                                                                                                                                      

that time Jones lost his ability to acquire anything greater than junior lienholder status.  



                                                                                                                                                                                           

Since  the  legally  protected  interest  at  issue  was  Jones's  ability  to  recover  the  



                                                                                                                                                                                             

corporation's  physical  assets  in  case  of  the  buyer's  default,  this  was  clearly  an  



                                                                                                                                                                                               

appreciable injury. We conclude that Jones's professional malpractice claim accrued on  



                                         31  

                             

October 31, 2011. 



                                                                                                                                                                               

                              The three-year statute of limitations for the malpractice claim therefore  



                                                                                                                                                                                       

expired on October 31, 2014.  Because Jones filed his complaint in December 2013,  



                                                                                                                                                                                               

within the time allowed, it was clear error to find the action barred by the statute of  

limitations.32  



               30              Cf. id.       at 652.   



               31  

                                                                                                                                                                                    

                              The IRS also recorded a lien on August 8, 2008, but released it two months  

                                                                                                                                                                                             

later.  Westbrook does not argue that Jones was aware of the 2008 lien, and it did not  

alter Grunwald's payment habits.                                              It therefore caused Jones no appreciable injury.                                             



               32             Jones contends that he did not have notice of the 2011 IRS liens until  

                                                                                                                                                                                         

February  2012,  when  Grunwald  informed  him of  the  impending  liquidation  of  the  

                                                                                                                                                                                            

business. Because we decide that Jones's malpractice claimaccrued less than three years  

                                                                                                                                                                                         

before he filed suit, we need not address whether the discovery rule could have extended  

                                                                                                                                                                                

the limitations period in this context. We address it below in the context of the two-year  

                                                                                                                                                                                

statute of limitations on UTPA claims, where it could make a difference to the result.  

                                                                                                                                                                                   



                                                                                             -12-                                                                                        7127
  


----------------------- Page 13-----------------------

                 B.	              Jones's UTPA Claims Accrued When He Suffered Ascertainable Loss                                                                                                                  

                                  Of Property Or Money, But The Limitations Period May Be Extended                                                                                                   

                                  By The Discovery Rule.                             



                                  The   Unfair   Trade   Practices   and   Consumer   Protection   Act   (UTPA),  



AS 45.50.471-.561, regulates deceptive acts or unfair practices in the conduct of trade.                                                                                                                                        



Attorneys are not exempt from liability under the UTPA; its regulatory system coexists                                                                                                                    



with the mandates of the Alaska Rules of Civil Procedure and Rules of Professional                                                                                                            

Conduct.33  



                                                                                                                                                                          

                                  The UTPA provides that "[a] person who suffers an ascertainable loss of  



                                                                                                                                                                                                                 

money or property" as a result of an unlawful act as defined by AS 45.50.471 may bring  



                                                                         34  

                                                                                                                                                                                                                        

                                                                                   Such  actions  are  governed  by  a  two-year  statute  of  

a  civil  action  for  recovery. 



                                                                          

limitations, which begins to run "after the person discovers or reasonably should have  



                                                                                                                                                                                                                      

discovered  that  the  loss  resulted  from  an  act  or  practice  declared  unlawful  by  



                                        35  

                                                                                                                                                                                                   

AS 45.50.471."                                 The statute of limitations begins to run once the injury is discovered  



                                                                                                                                                                                                  

or reasonably discoverable, regardlessofwhether theplaintiffknowsthat thedefendant's  



                                                   36  

                                                                                                                                                                                                                

conduct was illegal.                                     However, as noted above, the statute of limitations may be tolled  



                                                                                                                                                                                                  

by the discovery rule until "the plaintiff has information sufficient to alert a reasonable  



                 33	              Pepper v. Routh Crabtree, APC                                                     , 219 P.3d 1017, 1023-25 (Alaska 2009).                                                  



                 34               AS 45.50.531(a); see also State v. O'Neill Investigations, Inc., 609 P.2d  

                                                                                                                                                                                         

520, 524 (Alaska1980) (noting that "[t]heAttorney General is charged with enforcement  

                                                                                                                                                                                               

of the Act" but that private actions are authorized "for recovery of actual damages").  

                                                                                                                                                                                             



                 35               AS 45.50.531(f).  

                                            



                 36                Weimer v. Cont'l Car & Truck, LLC, 237 P.3d 610, 614 (Alaska 2010).  

                                                                                                                                                                                                         



                                                                                                          -13-	                                                                                                   7127
  


----------------------- Page 14-----------------------

                                                                                                                                          37  

person to the fact that he has a potential cause of action."                                                                                     "[T]he discovery rule                     

operates only to lengthen - and never to shorten - the limitations period."                                                                                                   38  



                                                                                                                                                                          

                               Jones  alleges  three  violations  of  the  UTPA:                                                                     (1)  that  Westbrook  



                                                                                                                                                                         

misrepresented himself "as an attorney with legal expertise in the sales of businesses";  



                                                                                                                                                                              

(2) that Westbrook failed to informJones in writing that he lacked malpractice insurance;  



                                                                                                                                                                                

and (3) that Westbrook failed to properly advise and document the sale of Northern  



                                                                                                                                                                                           

Heating.  As it did in its analysis of Jones's malpractice claim, the superior court held  



                                                                                                                                                                                                

that any injury Jones suffered for purposes of the UTPA occurred in July 2004, when he  



                                                                                                                                                                               

signed the sale documents, but that the limitations period was extended by the discovery  



                                                                                                                                                                                           

rule  to  October  2005,  when  Jones  was  first  notified  by  the  escrow  manager  that  



                                                                              

Grunwald had missed a payment.  



                                                                                                                                                                                              

                               Consistent with our discussion above, however, we conclude that Jones did  



                                                                                                                                                                        

not suffer an "ascertainable loss of money or property" for purposes of AS 45.50.531(a)  



                                                                                                                                                                             

in either July 2004 or October 2005.  When Jones became bound by the sale documents  



                                                                                                                                                                       

in 2004 he suffered only the threat of future damage; and he suffered no ascertainable  



                                                                                                                                                                            

loss in 2005 because he never sought to employ the lienholder remedies he mistakenly  



                                                                                                                                                                                         

thought had been reserved for his use.  Jones's first "ascertainable loss" occurred when  



                                                                                                                                                                                   

the IRS recorded its security interest in Northern Heating's physical assets in October  



               37             Preblich v. Zorea                       , 996 P.2d 730, 734 (Alaska 2000) (quoting                                                          Pedersen v.   



Zielski, 822 P.2d 903, 908 (Alaska 1991));                                                          see also Christianson v. Conrad-Houston                   

Ins., 318 P.3d 390, 397 (Alaska 2014) ("[A] person reasonably should know of his cause                                                                                                   

of action when he has sufficient information to prompt an inquiry into the cause of                                                                                                             

action." (quoting                       Cameron v. State                        , 822 P.2d 1362, 1366 (Alaska 1991))).                                 



               38              Gefre v. Davis Wright Tremaine, LLP, 306 P.3d 1264, 1274 (Alaska 2013)  

                                                                                                                                                                                        

(citing Jarvill v. Porky's Equip., Inc., 189 P.3d 335, 339 (Alaska 2008)).  

                                                                                                                                                     



                                                                                              -14-                                                                                        7127
  


----------------------- Page 15-----------------------

2011, preempting Jones's ability to fix the alleged mistake in the sale documents and                                                                                                                                             

properly secure Grunwald's payments on the promissory note.                                                                                                                39  



                                                                                                                                                                                                                   

                                    Jones contends that he was not aware of Northern Heating's tax problems  



                                                                                                                                                                                                                         

or that the IRS had asserted liens on the corporation's assets until February 2012, several  



                                                                                                                                                                                                                       

months after the liens were recorded. We have held that a plaintiff should not be charged  



                                                                                                                                                                                                                                  

"with constructive notice of publicly recorded facts absent a finding that the plaintiff was  



                                                                         40  

                                                                                                                                                                                                                            

already on inquiry notice."                                                    Because the superior court's findings about inquiry notice  



                                                                                                                                                                                                                                       

focused on Grunwald's missed payment in 2005, the factual record is undeveloped as to  



                                                                                                                                                                                                                               

whether Jones had inquiry notice of the IRS liens before Grunwald told him about them  



                                                                                                                                                                                                                       

in February  2012.   But absent a finding that he had earlier inquiry notice, Jones's  



                                                                                                                                                                                                                                    

complaint filed in December 2013 was within the two-year statute of limitations for  



                                          

UTPA claims.  



                                                                                                                                                                                                                              

                                    Finally, we note that even Jones's notice of the IRS liens would not seem  



                                                                                                                                                                                                                      

sufficient to put him on inquiry notice as to one of his claims:  that Westbrook violated  



                                                                                                                                                                                                                                               

the UTPA by failing to inform his client in writing that he lacked malpractice insurance.  



                  39                We recognize that there                                                may  well be a difference in                                                      value between                              a  



secured promissory noteand an unsecured promissory notefor thesameamount,                                                                                                                                              and that  

this difference in value may sometimes be "ascertainable" - albeit nominal or largely                                                                                                                                                          

speculative - before the debtor has defaulted and the unsecured creditor suffers the                                                                                                                                               

appreciable  loss necessary to a cause of action for professional negligence.                                                                                                                                There is no             

evidence of the documents' intrinsic value in this case.  And even if Jones suffered an   

"ascertainable" loss when the loan documents were signed in 2004, the discovery rule                                                                                                                 

would toll the limitations period until Jones had reason to know of Grunwald's IRS liens.                                                                                                                                                      

See Weimer                       , 237 P.3d at 615 (holding that "the UTPA's statute of limitations begins to                                                                                                                          

run   when   a   consumer   discovers   or   reasonably   should   have   discovered   [that]   the  

prohibited conduct caused a loss").                                          



                  40                Ranes & Shine, LLC v. MacDonald Miller Alaska, Inc., 355 P.3d 503, 510  

                                                                                                                                                                                                                                  

(Alaska 2015).  

                       



                                                                                                                 -15-                                                                                                          7127
  


----------------------- Page 16-----------------------

Absent evidence not apparent from the record, the earliest Jones could reasonably have  

                                                                                                                          



discovered  this  claim  was  after  he  filed  the  complaint  and  requested  insurance  

                                                                                                                  



information from Westbrook; until then, having received no written disclaimer, Jones  

                                                                                                                        



could reasonably assume that Westbrook was insured against malpractice claims.  

                                                                                                                                  



          C.	       We Decline To Reach The Merits Of Jones's Motion For Summary  

                                                                                                                 

                    Judgment Against Westbrook.  

                                                   



                    Jones also appeals the superior court's denial of his motion for summary  

                                                                                                  



judgment on his claims against Westbrook, in which he sought to establish as a matter  

                                                                                                                 



of law both Westbrook's liability and the amount of his own damages. From the context  

                                                                                                                      



of the summary judgment order, we conclude that the superior court simply denied  

                                                                                                                       



Jones's motion as moot without considering its substance, having decided the case in  

                                                                                                                              



Westbrook's favor on statute of limitations grounds.   We decline to address Jones's  

                                                                                                                      



motion before the superior court has done so, and we express no view on its merits.  

                                                                                                                  



V.	       CONCLUSION  

                                     



                    We  REVERSE  the  superior  court's  grant  of  summary  judgment  and  

                                                                                                                           



REMAND for further proceedings consistent with this opinion.  

                                                                                   



                                                             -16-	                                                       7127
  

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