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Tuesday, November 19, 2019

Utah Supreme Court says legal malpractice suit filed against attorney who missed filing deadline was timely

State Supreme Court

By Mario Marroquin | Aug 23, 2019


SALT LAKE CITY (Legal Newsline) – The Supreme Court of Utah reversed a lower court's decision in a malpractice suit filed against an attorney by two clients who alleged they lost the opportunity to collect more than $700,000 in a bankruptcy proceeding because the attorney failed to file the claim in a timely manner.

Chief Justice Matthew Durrant, who authored the Aug. 13 opinion on behalf of the court, said Monty and Kelly Moshier’s claim of legal malpractice against Darwin Fisher, which was dismissed by the district court as untimely, did not begin to accrue until the bankruptcy court confirmed the final distribution plan and was therefore timely.

"A cause of action for legal malpractice accrues when a plaintiff’s harm is sufficiently final," Durrant wrote. "The Moshiers’ claim accrued when the bankruptcy court confirmed ... (Allen and Lauran Cottam’s) final bankruptcy plan. Their action was therefore timely when filed. Accordingly, we reverse."

The Moshiers’ claim against Fisher, their former attorney, stems from a 2010 bankruptcy proceeding against Allen and Lauran Cottam involving allegations of fraud, misrepresentation and breach of warranty. According to the chief justice, the Moshiers hired Fisher to represent them against the Cottams and obtained a judgment for $785,710.88, which included findings of fraud, misrepresentation and punitive damages. 

According to section 523 of the Bankruptcy Code, judgment for money obtained by fraud is exempt from discharge and requires independent action alleging nondischargeability, which Fisher filed almost one year after deadline on behalf of the Moshiers. The bankruptcy court dismissed the claim as untimely and in January 2012, confirmed the Cottams’ bankruptcy plan for distribution.

Fisher allegedly informed the Moshiers about missing the deadline for filing a nondischargeability claim in March 2012 and stated he filed a claim with his malpractice insurance.

The Moshiers did not file a malpractice claim until October 2015 when the claim was dismissed on grounds that the statute of limitations for malpractice had expired in December 2014. The court of appeals affirmed the district court’s ruling over the malpractice suit and the Moshiers were later granted a certiorari by the state’s Supreme Court.

“We conclude that the damages and harm were sufficiently final when the bankruptcy court confirmed the final bankruptcy plan, and that the claim therefore accrued on that date,” Durrant wrote. “Until that state of the bankruptcy concluded, the Moshiers could not be certain whether Mr. Fisher’s alleged malpractice had resulted in damages or whether they could expect them to be made whole despite his error. Mr. Fisher missed a filing deadline, which precluded the Moshiers from litigating their nondischareability claim. But the harm was not sufficiently final until the bankruptcy plan was finalized.”

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