Keonjian v. Olcott – 10/18/2007

October 23, 2007

Arizona Court of Appeals Division Two Holds That Legal Malpractice Claims Are Generally Tort Claims; in the Non-Litigation Context, Such Claims Accrue When the Client Knows or Should Know That the Negligence Caused the Client Harm.

Plaintiff Keonjian relied on her lawyer, Defendant Olcott, to draft a deed for property she bought with a third party and advise her regarding a gift letter related to the property. Plaintiff learned about errors in the deed and problems with the gift letter in July 2002 and filed suit against Defendant in September 2005. The trial court granted summary judgment in Defendant’s favor, ruling that the two-year statute of limitations for tort actions barred Plaintiff’s malpractice claim, and that Plaintiff had no claim for breach of contract.

The Arizona Appeals Court affirmed, noting that legal malpractice claims are generally governed by the statute of limitations for tort claims in A.R.S. § 12-542. In determining when the statute of limitations accrued, the court distinguished malpractice claims that arise in the course of litigation because such cases involve an injury that is not ascertainable until the appellate process is complete. In contrast, this case involved various transactions that resulted in immediate injury. The court found that under ordinary accrual principles the statute of limitations accrued in July 2002 when Plaintiff knew or should have known that Defendant caused her harm.

The Court further rejected Plaintiff’s argument that her malpractice claim involved a breach of contract. The court distinguished between a tort malpractice claim, which involves malfeasance (i.e., violation of a duty to represent a client in accordance with an applicable standard of care), and a breach of contract malpractice claim, which involves nonfeasance (i.e., nonperformance of a specific promise). The underlying facts, in this case, involved malfeasance, and thus Plaintiff’s claim sounded in tort, not contract.

Judge Vásquez authored the opinion; Judges Eckerstrom and Espinosa concurred.