Virginia Supreme Court Announces Important New Rule Regarding Statute of Limitations for Malpractice Claims Against Attorneys

Written by W. Barry Montgomery, Esq.

Edited by William J. Pfund, Esq.

          The Virginia Supreme Court recently issued an opinion favorable to all persons insuring and defending attorney malpractice claims in Virginia.  In the case of Moonlight Enters., LLC v. Mroz, 293 Va. 224, 797 S.E.2d 536 (March 30, 2017), plaintiff Moonlight Enterprise, LLC (“Moonlight”) sued two attorneys, including defendant Mroz, for legal malpractice arising out of a condominium purchase transaction.  Mroz represented Moonlight in the condo purchase transaction. Two years after Moonlight bought the condo units, attorney Mroz filed a lawsuit on Moonlight’s behalf against the condo association wherein Moonlight disputed certain condo association fees.  The condo association filed a counter-claim against Moonlight. One of Mroz’ s partners, Zachary, filed a response to the counterclaim.  Soon thereafter, Zachary took over handling the litigation from Mroz but Mroz was still noted as a counsel of record in the lawsuit. The condo association prevailed on all issues in the lawsuit in January 2012 and won an award of $59,000.00 in attorney’s fees and costs. Moonlight hired new counsel to handle the appeal of the adverse judgment.

In 2013, Moonlight filed a legal malpractice lawsuit against Mroz and Zachary charging Mroz with malpractice in his handling of the 2008 condo purchase transaction and charging Zachary with malpractice in his handling of the 2010 litigation against the condo association.  The trial court dismissed the 2013 lawsuit based on a statute of limitations defense. Moonlight  filed a second legal malpractice lawsuit against Mroz and Zachary on February 20, 2015, exactly three years after the entry of the final order in the unsuccessful condo litigation.   Both Mroz and Zachary filed pleas of the statute of limitations, and the trial court granted the motion.[1]

On appeal, the attorney’s for Moonlight argued that the statute of limitations as to the alleged malpractice by Mroz did not begin to run until the date of the entry of the final Order in the condo litigation (February 20, 2012) since he was still an attorney of record for Moonlight in the lawsuit.  Moonlight argued that pursuant to Virginia’s “continuous representation” rule the statute of limitations does not begin to run until the attorney’s services rendered in connection with that particular undertaking or transaction have terminated. Moonlight further argued that Mroz continued to represent them in the litigation as he was still an attorney listed in the lawsuit.   The Virginia Supreme Court looked to its prior case law in medical malpractice cases and concluded that the burden was on the plaintiff (Moonlight) to prove that the statute of limitation should be tolled under the continuous representation rule. See Moonlight at 231.

The Court found, applying the continuous representation rule, that Zachary had continued to represent his client by calling the Court to discuss the terms of the final order even after the court hearings had concluded. The Supreme Court therefore concluded that the trial court erred in granting the statute of limitations plea with respect to attorney Zachary.

However, with respect to attorney Mroz, the court found that the continuous representation rule did not toll the statute of limitation for Moonlight’s malpractice claim. The evidence clearly showed that Mroz provided no actual legal services to Moonlight in the condo litigation after August 2011. Moonlight argued that, for purposes of applying the continuous-representation rule, the court should have treated Mroz as if he actually had provided legal service after August 2011 because he signed the original complaint 20 months earlier and technically remained counsel of record even after attorney Zachary took over sole responsibility for the condo litigation.

The Supreme Court squarely rejected this argument. The Court noted that under its prior application of the continuous-representation rule, the focus was not on whether a general attorney-client relationship has ended, but instead, “when the attorney’s work on the particular undertaking at issue had ceased.” Importantly, the Court also held that the attorney’s work must be “actual work” on a particular undertaking as opposed to “imputed” work. The tolling period ends — and thus the limitation period begins — when the attorney renders his “last professional services” related to the particular undertaking. The fact that the attorney might still technically be an attorney of record in an action is of no import.  Tolling the statute of limitations for Mroz would have required the Court to adopt an interpretation of the continuous representation rule that tolls all counsel of record, unless relieved by an order of withdrawal, until the last lawyer performs the last task necessary to bring the litigation to closure. The Court noted “We think it best not to press the continuous-representation rule so far.” The Court elaborated that “We have never held that the continuous-representation rule extends indefinitely the tolling period for all members of the litigation team, even those who have ceased working on the litigation, so long as any one of them continues to do so.” In reaching this conclusion, the Virginia Supreme Court noted with approval appellate decisions from New York, California, West Virginia and South Dakota.

             The Supreme Court’s decision in Moonlight should serve as an effective tool to argue against any future expansion of the continuous representation rule as applied to attorneys who have ceased actual work on a particular engagement. Lawsuits sometimes take several years to resolve. The Moonlight decision provides some repose to attorneys who leave their law firm or transfer a relatively young file to new counsel. Once the attorney ceases performing “actual work” on a file, the statute of limitations begins to run as to that attorney. This line of reasoning can also be applied to malpractice claims asserted against other professionals such as physicians, engineers, architects and accountants that leave firms or completely cease work on client engagements.

[1] The applicable statute of limitation for the legal malpractice claim was 3 years based on an oral contract.

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