JOHN HOWARD STORY, ET AL.
NICHOLAS D. BUNSTINE, ET AL.
May 9, 2017
by Permission from the Court of Appeals Circuit Court for
Knox County No. 1-572-14 Kristi M. Davis, Judge
defendant attorneys in the instant legal malpractice case,
Nicholas D. Bunstine, Brent R. Watson, and Jerrold L. Becker,
individually and d/b/a Bunstine, Watson, McElroy &
Becker, represented the plaintiffs, John Howard Story and
David Bruce Coffey, in a lender liability lawsuit. In the
underlying lender liability lawsuit, the trial court
ultimately dismissed the case against two of the lender
defendants, and the claims against the remaining lender
defendant were later voluntarily dismissed. Thereafter, the
plaintiffs filed the instant lawsuit against the defendant
attorneys alleging legal malpractice. The trial court
partially dismissed the case based on the expiration of the
one-year statute of limitations for filing a complaint for
legal malpractice. See Tenn. Code Ann. §
28-3-104(c)(1). Later, in response to the defendant
attorneys' motion for summary judgment, the trial court
dismissed the plaintiffs' remaining claim, determining
that the claim was also barred by the statute of limitations.
The Court of Appeals affirmed. We granted this appeal to
address: (1) whether this Court's opinion in Carvell
v. Bottoms, 900 S.W.2d 23 (Tenn. 1995), in which we set
forth a discovery rule for when the statute of limitations
begins to run in a legal malpractice action, should be
overruled; (2) whether an interlocutory ruling in underlying
litigation constitutes a legally cognizable injury; (3)
whether this Court should adopt either the continuous
representation rule or the appeal-tolling doctrine for
tolling the statute of limitations in legal malpractice
actions; and (4) whether a subsequent action of an attorney
that renders an interlocutory order final amounts to a
separate and discrete act of malpractice such that the
statute of limitations for that action does not begin until
said action is taken. Following our review, we conclude that
Carvell v. Bottoms is the accurate analysis for
determining when a claim of legal malpractice accrues. In
addition, we decline to adopt the two tolling doctrines
proposed by the plaintiffs, and we further decline to hold
that the trial court's final judgment in the underlying
case is required before there is an actual injury for
purposes of the accrual of a claim for litigation
malpractice. Nevertheless, we conclude that, in the case
before us, the complaint fails to establish an actual injury
prior to the date of the trial court's final judgment in
the underlying case. Consequently, the trial court erred in
granting the motion to dismiss and in determining that the
plaintiffs' legal malpractice claims were time barred.
Finally, we conclude that the trial court also erred in
granting the defendants' motion for summary judgment. In
this case, the defendant attorneys' alleged negligence,
which purportedly rendered the interlocutory order in the
underlying case final, constituted a distinct act of
malpractice, and as such, the statute of limitations had not
run on that claim at the time the plaintiffs filed this legal
malpractice action. Therefore, we reverse the judgments of
the trial court and the Court of Appeals and remand this case
to the trial court for further proceedings consistent with
R. App. P. 11 Appeal by Permission; Judgments of the Trial
Court and the Court of Appeals Reversed; Remanded to Trial
A. Stuart, Clinton, Tennessee, and Mark N. Foster,
Madisonville, Kentucky, for the appellants, John Howard Story
and David Bruce Coffey.
G. Lowe, Knoxville, Tennessee, for the appellees, Nicholas D.
Bunstine, Brent R. Watson, and Jerrold Lance Becker.
A. Page, J., delivered the opinion of the court, in which
Jeffrey S. Bivins, C.J., and Cornelia A. Clark, Sharon G.
Lee, and Holly Kirby, JJ., joined.
A. PAGE, JUSTICE.
legal malpractice action, John Howard Story and David Bruce
Coffey (collectively, "Plaintiffs") appeal from the
intermediate appellate court's decision to affirm the
trial court's dismissal of their case against their
former attorneys Nicholas D. Bunstine, Brent R. Watson, and
Jerrold L. Becker, individually and d/b/a Bunstine, Watson,
McElroy & Becker (collectively, "Defendants").
The issue before us is whether the legal malpractice action
is barred by the applicable statute of limitations under the
facts of this case. For the following reasons, we reverse the
judgments of the Court of Appeals and the trial court and
remand for further proceedings.
Facts and Procedural History
2011 to 2013, Defendants represented Plaintiffs in their
lender liability suit against Scott Thompson, First National
Bank of Oneida, and People's Bank of the South. According
to Plaintiffs, prior to filing the underlying suit, one of
the defendant attorneys, Mr. Becker, represented that
Plaintiffs had a strong case with a high likelihood of a
six-figure settlement. Nevertheless, on May 7, 2013, the
Chancery Court of Scott County, Tennessee, granted summary
judgment in favor of two of the underlying defendants, Scott
Thompson and First National Bank of Oneida.
to trial on the claims against the remaining bank, Mr. Becker
advised that the damages evidence necessary to prosecute the
case was not ready and that Plaintiffs should, therefore,
voluntarily dismiss the case. According to Plaintiffs, Mr.
Becker advised that the case could be refiled within one year
but failed to inform Plaintiffs that the voluntary dismissal
would render the prior summary judgment order final. Thus,
the remaining claims were dismissed by Defendants, on
Plaintiffs' behalf, and the trial court entered an order
reflecting the voluntary dismissal on November 13, 2013.
failed to appeal the order granting summary judgment in favor
of Mr. Thompson and First National Bank of Oneida, and
therefore, Plaintiffs' claims against those underlying
defendants were permanently barred. Plaintiffs did not refile
their voluntarily dismissed claims against the remaining
than refiling their nonsuited claims in the underlying lender
liability suit, on September 3, 2014, Plaintiffs filed this
legal malpractice action against Defendants in the Circuit
Court for Knox County, Tennessee. In their legal malpractice
complaint, Plaintiffs alleged, in relevant part:
3. Prior to the filing of the lender's liability action .
. . [Mr.] Becker, represented to plaintiffs that they had a
strong case of liability and damages and that there was a
high likelihood the case would ultimately result in a
settlement in excess of six figures. He continued to
represent . . . that the case was strong . . . throughout the
entire time the case was pending, until the day he appeared
with [Mr.] Watson to explain that they had concluded that the
case needed to be voluntarily dismissed.
4. In reality, if plaintiffs had any valid claim at all, it
was their claim against Scott Thompson as an individual. The
claims against the banks were extremely weak and were subject
to a statutory defense . . . . The claims against the banks
were also virtually precluded [by] the express written terms
of the loan documents . . . and[, ] as to one of the bank[s],
barred by the statute of limitations.
5. Plaintiffs initially agreed to pay [Mr.] Becker $500.00
per hour . . ., but later, after becoming aware that such an
hourly rate was excessive, plaintiffs and [Mr.] Becker agreed
to reduce the hourly rate to $375.00. In reliance on the
representations . . . that they had a strong lender's
liability case, plaintiffs together paid [Mr.] Becker several
hundred thousand dollars in attorney fees and expenses.
6. During the course of the proceedings, the question arose
as to whether plaintiffs should continue to pay the
underlying indebtedness that gave rise to their lender's
liability claims. [Mr.] Becker, negligently, carelessly and
recklessly advised  plaintiffs that they should discontinue
making their payments, and as a result, plaintiffs were
declared in default and have incurred substantial penalties,
interest, attorney's fees, expenses, and injury to their
credit ratings and reputations.
7. Contrary to the representations of [Mr.] Becker, the
lender's liability case was not a strong case at all . .
. . After a hearing in which the judge agreed with the
contentions of the defendants in the lender's liability
action, [Mr.] Becker continued to assure plaintiffs that they
had a strong case which would ultimately settle and stated
that the judge did not know what he was talking about. [Mr.]
Becker assured plaintiffs that he would file motions to force
the chancery court to correct its erroneous rulings. After
one of the banks and the individual defendant, Scott
Thompson, were dismissed from the case, . . . [Mr.] Becker
did not inform plaintiffs that the dismissal purported to be
a final judgment as to those defendants, and indicated he
would file a motion to correct the error. Although such
motion was filed, it was never brought on for hearing, and
with the ultimate voluntary dismissal of the remaining
defendant occurring thereafter, any claims against those
defendants became forever barred. As a result, upon voluntary
dismissal of the action, [Mr.] Becker and [Mr.] Watson took
action which permanently precluded plaintiffs from
maintaining their claims against the only viable defendant .
. ., the individual defendant, Scott Thompson.
8. Plaintiffs allege that a reasonable attorney would have
warned them prior to filing the lender's liability case
that their chances of prevailing in such claims were slim to
none, especially against the banks . . . . Plaintiffs further
allege that a reasonable attorney would have advised them to
continue making payments on the indebtedness pending the
resolution of the lender's liability claims, and would
have explained that . . . defaulting on the indebtedness
would have devastating economic consequences and inflict
grievous harm upon the credit rating and reputations of
alleged that these and other actions of Defendants amounted
to violations of the standard of care of a licensed attorney
in the State of Tennessee. As a result, Plaintiffs claimed to
have suffered damages in excess of two million dollars.
Notably, paragraph 11 of Plaintiffs' complaint stated:
11. In explaining in November, 2013, that they had decided
plaintiffs' only option was to voluntarily dismiss their
lender's liability action, [Mr.] Watson and [Mr.] Becker,
acknowledged that [Mr.] Becker had mishandled the case and
was not prepared for trial[.] . . . [Mr.] Becker apologized
and stated that he had professional liability coverage if
plaintiffs decided to make a professional liability claim.
response to the instant legal malpractice claim, Defendants
filed a series of dispositive motions. On October 2, 2014,
Defendants filed a motion to dismiss pursuant to Rule 12.02
of the Tennessee Rules of Civil Procedure, asserting that the
complaint failed to allege facts sufficient to establish
Plaintiffs' causes of action and lacked sufficient
specificity and that Plaintiffs' claims were barred by
the applicable one-year statute of limitations. See
Tenn. Code Ann. § 28-3-104(c)(1) ("Actions and
suits against . . . attorneys for malpractice shall be
commenced within one (1) year after the cause of action
accrued, whether the action or suit is grounded or based in
contract or tort."). Defendants argued that the statute
of limitations began to run on May 7, 2013, the date a
judgment was entered dismissing one of the defendant banks
and the individual defendant in the underlying case.
however, argued in their response to Defendants' motion
that the statute of limitations did not begin to run until
November 13, 2013, the date on which the order was entered
reflecting Plaintiffs' voluntary dismissal as to the
remaining claims. In support of their argument, Plaintiffs
characterized the May 7, 2013 order granting summary judgment
in favor of two of the underlying defendants as an
"interlocutory" order, which did not constitute a
final judgment and, according to Plaintiffs, could not have
triggered the running of the statute.
circuit court, on December 10, 2014, partially granted
Defendants' motion to dismiss, holding that all of
Plaintiffs' claims, with the exception of one, accrued on
May 7, 2013, and were barred by the one-year statute of
limitations. However, the court further stated that
"Plaintiffs' allegations with respect to the
November 2013 voluntary dismissal of their remaining claim in
the underlying case is a discrete allegation of alleged legal
malpractice which is not barred by the statute of limitations
and which states a claim upon which relief may be
the court's order, Plaintiffs filed an amendment to their
complaint in which they alleged that "all of their
claims for litigation malpractice and fraud,
misrepresentation and deceit against the defendants in this
cause are timely filed for purposes of the one year statute
of limitations for legal malpractice actions." Seemingly
for clarification, Plaintiffs also alleged that on May 31,
2013, Defendants filed a motion to alter or amend the order
granting summary judgment in favor of two of the defendants
in the underlying lender liability suit but never set the
motion for a hearing. Plaintiffs further alleged a claim for
"breach of the confidential and fiduciary relationship
between plaintiffs and defendants."
Defendants filed a motion for judgment on the pleadings under
Tennessee Rule of Civil Procedure 12.03 with respect to
Plaintiffs' remaining claim. Defendants contended that
Plaintiffs had failed to allege that they suffered any
damages as a result of the November 2013 voluntary dismissal
and also requested that the circuit court dismiss the claim
for "breach of fiduciary duty and confidentiality"
because such claim relied on the same operative facts as
Plaintiffs' legal malpractice claims.
order entered February 20, 2015, the court denied
Defendants' Rule 12.03 motion in part and granted it in
part. Notably, the court reaffirmed its December 10, 2014
order dismissing all of Plaintiffs' claims "with the
exception of any cause of action which may exist related to
the Order of Voluntary Dismissal entered in the Underlying
Case on November 12, 2013." It denied Defendants'
motion with respect to Plaintiffs' remaining claim and
the alleged absence of pleaded damages, finding the matter
better suited to a motion for summary judgment. Conversely,
the court granted Defendants' motion as to the portion of
Plaintiffs' amended complaint asserting a claim for
breach of confidentiality and breach of fiduciary duty.
the direction of the circuit court, Defendants next filed a
motion for summary judgment in which they again contended
that Plaintiffs did not sustain any damages stemming from the
voluntary dismissal. On October 19, 2015, the court granted
Defendants' motion for summary judgment. The court
reasoned that Plaintiffs' assertion that Defendants had
misrepresented that the case could be re-filed, particularly
against Mr. Thompson, following the voluntary dismissal was a
newly asserted claim that had not previously been pleaded and
so was barred by the statute of limitations. The court also
determined that Plaintiffs' claim that the pending motion
to alter or amend the partial summary judgment in the
underlying case had been negligently abandoned or lost as a
consequence of the voluntary dismissal also was time-barred.
It explained that this claim actually arose from the initial
May 7, 2013 interlocutory partial summary judgment and so
accrued on that date.
legal malpractice case, Plaintiffs appealed the circuit
court's orders partially granting Defendants' motion
to dismiss, partially granting Defendants' motion for
judgment on the pleadings, and granting Defendants'
motion for summary judgment. The Court of Appeals affirmed
the circuit court's decision to grant Defendants'
motion to dismiss; however, it concluded that, upon
Defendants' October 2, 2014 motion to dismiss, the
circuit court should have dismissed the legal malpractice
complaint in its entirety. Story v. Bunstein, No.
E2015-02211-COA-R3-CV, 2016 WL 3344795, at *7 (Tenn. Ct. App.
June 9, 2016), perm. app. granted (Tenn. Nov. 17,
court explained that Plaintiffs "had sufficient
knowledge of an injury, which was likely based on some legal
malpractice, on May 7, 2013, when their claims against
National Bank of Oneida and Scott Thompson were
dismissed." Id. As such, the appellate court
held, the statute of limitations on the legal malpractice
claims began to run on that date. Id. Because the
Court of Appeals determined that Plaintiffs' complaint
should have been dismissed "in toto, upon the
running of the statute of limitations, " it found the
remaining issues to be pretermitted. Id.
granted Plaintiffs' application for permission to appeal.
Standard of Review
an appeal from both the circuit court's grant of a motion
to dismiss for failure to state a claim and its grant of a
motion for summary judgment. Our review of a dismissal for
failure to state a claim under Rule 12.02 of the Tennessee
Rules of Civil Procedure requires us to take the allegations
in the complaint as true. Crews v. Buckman Labs.
Int'l, Inc., 78 S.W.3d 852, 857 (Tenn. 2002). This
is because a motion filed under Rule 12.02(6) tests "the
legal sufficiency of the complaint, not the strength of the
plaintiff's proof or evidence." Webb v.
Nashville Area Habitat for Humanity, Inc., 346 S.W.3d
422, 426 (Tenn. 2011). By filing their motion to dismiss,
Defendants effectively "admit[ted] the truth of all of
the relevant and material allegations contained in the
complaint, but . . . assert[ed] that the allegations fail to
establish a cause of action." Freeman Indus., LLC v.
Eastman Chem. Co., 172 S.W.3d 512, 516 (Tenn. 2005). As
such, courts "should grant a motion to dismiss only when
it appears that the plaintiff can prove no set of facts in
support of the claim that would entitle the plaintiff to
relief." Crews, 78 S.W.3d at 857. On appeal, we
review the "trial court's decision to dismiss a
petition for failure to state a claim . . . de novo with no
presumption of correctness." Metro. Gov't of
Nashville v. Bd. of Zoning Appeals of Nashville, 477
S.W.3d 750, 754 (Tenn. 2015).
we review the grant of a motion for summary judgment de novo
with no presumption of correctness. Bain v. Wells,
936 S.W.2d 618, 622 (Tenn. 1997). Under Rule 56.04 of the
Tennessee Rules of Civil Procedure, summary judgment is
appropriate "if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law." Tenn. R. Civ. P. 56.04. On
appeal, we must determine whether the moving party satisfied
its burden of production "(1) by affirmatively negating
an essential element of the nonmoving party's claim or
(2) by demonstrating that the nonmoving party's evidence