Nevada formally recognizes litigation malpractice tolling rule

Brady, Vorwerck, Ryder & Caspino v. New Albertson’s Inc., 130 Nev. Adv. Op. 68, 333 P.3d 229 (August 7, 2014), rehearing denied.
By Joseph P. Garin and Kaleb D. Anderson, Lipson, Neilson, Cole, Seltzer & Garin, P.C., Las Vegas, Nevada jgarin@lipsonneilson.com, kanderson@lipsonneilson.com

A recent Nevada Supreme Court Decision clears up the question of the applicability of the Litigation Malpractice Tolling rule following a 1997 amendment to the legal malpractice statute of limitations.

New Albertson’s had a maintenance agreement with Farm Road Retail, which provided that Farm Road Retail would indemnify New Albertson’s for certain incident occurring on the property covered by the agreement. A woman fell on a flight of stairs at the New Albertson’s location to which the agreement applied. She filed suit and New Albertson’s hired Brady Vorwerck to handle the case. New Albertson’s denied all liability in an answer to the complaint. It also filed a cross–claim against Farm Road based on Farm Road’s initial refusal to indemnify New Albertson’s.

Due to perceived malpractice by Brady Vorwerck, New Albertson’s fired Brady Vorwerck, substituted in new counsel, and settled the case against Plaintiff on January 5, 2008. Following that settlement agreement, New Albertson’s cross–claim against Farm Road remained. The cross claim against Farm road was ultimately settled and a pending appeal on the cross claim was dismissed in May 2009.

On January 22, 2010—over two years after New Albertson’s firing of Brady Vorwerck and settlement with the claimants and, but less than two years after New Albertson’s settlement with Farm Road and the dismissal of the appeal—New Albertson’s filed an attorney malpractice suit against Brady Vorwerck.

After answering the complaint, Brady Vorwerck filed a motion for summary judgment, arguing that the malpractice action was untimely filed after the expiration of NRS 11.207’s two–year statute of limitations for attorney malpractice actions. BVRC asserted that, at the latest, NRS 11.207’s two–year limitation period commenced on January 5, 2008, the date of New Albertson’s settlement with the claimants. Accordingly, it contended that New Albertson’s attorney malpractice action was untimely because it was filed over two years after that settlement. The Federal Court ultimately certified the question to the Nevada Supreme Court.

The Nevada Supreme Court addressed the interpretation of NRS 11.207, and stated that in cases involving legal malpractice Nevada has adopted the discovery rule, which starts the statute of limitations when the claimant discovers, or reasonably should have discovered, the material facts for the action, including the damages. The Court also formally adopted the “litigation malpractice tolling” rule, which provides that the damages for a malpractice claim do not accrue until the underlying litigation is complete and, thus, a malpractice claim does not accrue and its statute of limitations does not begin to run during a pending appeal of an adverse ruling from the underlying litigation. The Brady Court further stated that so long as the litigation in which the malpractice occurred continues, the damages on which the attorney malpractice action is based remain uncertain. The Court acknowledged the possibility of adopting the continuing representation tolling rule, but did not address it because it was not asked to in the Federal Court’s Certification Order. (Note: NRS 11.207 does not list “litigation malpractice tolling” as a basis for tolling the legal malpractice statute of limitations. So, the Court’s decision in Brady, contradicts an earlier published decision in Libby v Dist. Ct., 130 Nev. __, 325 P.3d 1276 (2014), which held that a court should not read tolling language into a statute of limitation when the Legislature specifically omitted such language.)

Practice Note. This opinion formally expands the time to file a legal malpractice case in Nevada. It also opens the door to arguments that the continuous representation rule might be applicable under the right set of facts (it has not previously been addressed in a published opinion in Nevada).