A Michigan appellate court has affirmed a summary judgment in favor of an attorney in a legal malpractice action. In Facchiano v. Gerds.doc, a husband and wife hired an attorney to draft an agreement to transfer a 40% interest in their second home to their daughter. The transaction was completed and the daughter subsequently obtained a mortgage on her interest in the property.
Over two years later, the daughter defaulted on the loan and filed for bankruptcy. The parents consulted another attorney to investigate their options. The second attorney advised the couple that there was nothing they could do to prevent the lender from foreclosing on the mortgage. However, the attorney did not inform the couple that they might have a negligence claim against the attorney who drafted the agreement.
Almost one year later, the parents filed a legal malpractice action against the first attorney. The attorney successfully moved to for summary judgment on the basis that the claim was barred by a statute of limitations. The parents appealed.
Under Michigan law, legal malpractice actions must be brought within two years of the act or omission of the attorney, which caused the clients’ damages. The statute is tolled for an additional six months from the date when the clients discovered or should have discovered the alleged injury.
The parents argued that their injury was their lost equity in the property and therefore the six month tolling provision didn’t begin to run until the foreclosure. The appellate court disagreed and affirmed the summary judgment. The court reasoned that the tolling provision began to run at the time of the consultation, because the parents were informed that they could not prevent the foreclosure, and would likely lose any equity. The court further explained that for the discovery rule to begin to run, the parents only needed to know of the injury, not all of the consequences.
Decision: Facchiano v. Gerds
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