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Americare Systems, Inc. v. Pinckney

United States District Court, E.D. Tennessee, Chattanooga

April 2, 2015

AMERICARE SYSTEMS, INC., Plaintiff,
v.
THOMAS M. PINCKNEY, JR., and HOWELL & FISHER, PLLC, Defendants.

MEMORANDUM

CURTIS L. COLLIER, District Judge.

Before the Court are cross motions for summary judgment filed by Plaintiff Americare Systems, Inc. ("Plaintiff") (Court File No. 55) and Defendants Thomas M. Pinckney, Jr. and Howell & Fisher, PLLC ("Defendants") (Court File No. 51). Both responded to the respective motions (Court File Nos. 57, 58). For the following reasons, the Court will GRANT Defendants' motion for summary judgment (Court File No. 51) and DENY Plaintiff's motion for summary judgment (Court File No. 55).

I. FACTUAL BACKGROUND

Plaintiff retained Defendants to defend Americare, Shelbyville Residential, and two nurses in a lawsuit against Plaintiff in Bedford County, Tennessee ("Bedford Litigation"). After a trial, the jury awarded compensatory damages and the trial judge moved into the second phase to consider punitive damages in accordance with Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 901 (Tenn. 1992). During this second phase, the Bedford plaintiffs offered into evidence an article from the St. Louis Business Journal with a portion highlighted stating that Americare had had gross revenues of $47 million in 1998. Despite recognizing the article as hearsay, Defendant Pinckney failed to object to the article because he feared that the damage had already been done because the jury had seen the article and heard opposing counsel's statement before he had the opportunity to object. He worried that any objection would only compound the problem by emphasizing the significance of the article and making his client appear as if it had something to hide. The jury awarded $5 million in punitive damages on April 30, 2010.

Following the verdict, Plaintiff retained Miller & Martin and Moore & Lee to handle the post-trial matters. Between May 9, 2010 and September 29, 2010, these two firms reviewed the Bedford Plaintiffs proposed judgment and findings of fact and communicated and revised this proposed judgment. On October 1, 2010 the trial court issued written findings addressing the punitive damages award. The trial judge specifically stated that "to the great surprise of this trial judge, there was no hearsay objection to the introduction of this evidence" (Court File No. 51-11, Order Approving Verdict, at p. 7). On February 28, 2014, the Court of Appeals affirmed the judgment of the trial court but reduced the damages award to $2, 985, 000 pursuant to an ad damnum clause. Plaintiff filed this action alleging malpractice based on the failure to object to the introduction to the article.

II. STANDARD OF REVIEW

Summary judgment is proper when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The moving party bears the burden of demonstrating no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Leary v. Daeschner, 349 F.3d 888, 897 (6th Cir. 2003). The Court should view the evidence, including all reasonable inferences, in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Nat'l Satellite Sports, Inc. v. Eliadis Inc., 253 F.3d 900, 907 (6th Cir. 2001).

To survive a motion for summary judgment, "the non-moving party must go beyond the pleadings and come forward with specific facts to demonstrate that there is a genuine issue for trial." Chao v. Hall Holding Co., Inc., 285 F.3d 415, 424 (6th Cir. 2002). Indeed, a "[plaintiff] is not entitled to a trial on the basis of mere allegations." Smith v. City of Chattanooga, No. 1:08-cv-63, 2009 WL 3762961, at *2-3 (E.D. Tenn. Nov. 4, 2009) (explaining the court must determine whether "the record contains sufficient facts and admissible evidence from which a rational jury could reasonably find in favor of [the] plaintiff"). In addition, should the non-moving party fail to provide evidence to support an essential element of its case, the movant can meet its burden of demonstrating no genuine issue of material fact exists by pointing out such failure to the court. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir. 1989).

At summary judgment, the Court's role is limited to determining whether the case contains sufficient evidence from which a jury could reasonably find for the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). If the Court concludes a fair-minded jury could not return a verdict in favor of the non-movant based on the record, the Court should grant summary judgment. Id. at 251-52; Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994).

III. DISCUSSION

A legal malpractice claim is subject to a one-year statute of limitations. Tenn. Code Ann. ยง 28-3-104. Legal malpractice claims are governed by the discovery rule and thus accrue when the plaintiff knows or reasonably should have known that the injury has been sustained. John Kohl & Co. P.C. v. Dearborn & Ewing, 977 S.W.2d 528, 532 (Tenn. 1998). "In legal malpractice cases, the discovery rule is composed of two distinct elements: (1) the plaintiff must suffer legally cognizable damage-an actual injury-as a result of the defendant's wrongful or negligent conduct, and (2) the plaintiff must have known or in the exercise of reasonable diligence should have known that this injury was caused by the defendant's wrongful or negligent conduct." Id.

An actual injury may be "the loss of a legal right, remedy or interest, or the imposition of a liability" or such an injury could "take the form of the plaintiff being forced to take some action or otherwise suffer some actual inconvenience, ' such as incurring an expense, as a result of the defendant's negligent or wrongful act." Id. (quoting State to Use of Cardin v. McClellan, 85 S.W. 267, 270 (1905)). Tennessee courts have repeatedly held that incurring legal fees to address the consequences of alleged malpractice constitutes such an actual injury. See, e.g., Rich v. Warlick, No. M201301150-COA-R3CV, 2014 WL 1512821, at *8 (Tenn. Ct. App. Apr. 15, 2014) (holding that the plaintiff suffered actual injury when he "incurred additional expenses by his decision to hire another attorney" after he became unsatisfied with his trial counsel's performance despite the fact that he continued to retain his original defendant attorney); Cardiac Anesthesia Servs., PLLC v. Jones, 385 S.W.3d 530, 543 (Tenn. Ct. App. 2012) (holding that the time and expense of defending against a motion for summary judgment as a result of the defendant attorney's malpractice constituted an actual injury before judgment was entered); Honeycutt v. Wilkes, McCullough & Wagner, No. W2007-00185-COA-R3CV, 2007 WL 2200285, at *6 (Tenn. Ct. App. Aug. 2, 2007) (holding that the plaintiff's actual injury occurred when she was forced to incur attorney's fees to defend her alimony award rather than when the Court order terminated the award).

Here, Plaintiff acknowledges that "Americare would not have appealed the Farrar Litigation trial verdict, but for the trial court's award of punitive damages against Americare" (Court File No. 56, Pl. Summary Judgment Br. 4). And, Plaintiff's central theory of the case is that such damages could not have been awarded had Defendant Pinckney objected ( id.). Plaintiff thus suffered actual injury when it retained post judgment and appellate counsel to address the award of punitive damages, because this constitutes "incurring an expense" as a result of defendant's alleged negligent act. John Kohl, 977 S.W.2d at 532. And a "plaintiff may not... delay filing suit until all the injurious effects and consequences of the alleged wrong are actually known to the plaintiff." Shadrick v. Coker, 963 S.W.2d 726, 733 (Tenn. 1998).

The knowledge component may be satisfied by constructive knowledge, and thus, the statute of limitations may begin to run before the plaintiff has actual knowledge of the malpractice if "the plaintiff becomes aware or reasonably should have become aware of facts sufficient to put a reasonable person on notice that an injury has been sustained as a result of the defendant's negligent or wrongful conduct." John Kohl, 977 S.W.2d at 532. Importantly, "there is no requirement that the plaintiff actually know the specific type of legal claim he or she has, or that the injury constituted a breach of the appropriate legal standard, " id. at 533, nor is there a requirement that "a client must have been advised by a professional that malpractice has occurred, Honeycutt, 2007 WL 2200285, at *8. "Where some injury has occurred and is known to ...


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