02
Jun
11

What Was Newell Is Now Old Again?

Recycling: turning trash into ... garbage.

As discussed here, a recent professional negligence case against an engineering firm threatened to affect the previously (apparently) settled law that a legal malpractice claim was always subject to the four-year statute of limitations applicable to oral contracts.  See, Newell Recycling of Atlanta, Inc. v. Jordon Jones & Goulding, 288 Ga.  (2010).  On June 1, 2011, the Court of Appeals remanded the case to the trial court to apply the holding of Newell Recycling.  The langauge of the remand order, however, indicated that the change in the law appeared to be, in most cases, semantics. 

The remand order begins with a quote of the language that proponents of a longer statute of limitation liked:

As our Supreme Court explained, “[w]here a complete written contract exists and an action for breach of contract is pursued, the Legislature and this Court have made clear that the six-year statute of limitations of OCGA 9-3-24 applies, regardless of whether the alleged breach stems from the express terms of the agreement or duties that are implied in the agreement as a matter of law.”

The Court then noted what Attorney Defender noted when the case came out:  the Supreme Court’s citation with approval of Jankowski suggests that the change in the law was not that sweeping.

On the other hand, “[w]here the agreement is incomplete, such that the writing does not form a contract or the promise allegedly broken stems from a purely oral agreement, the four-year state of limitations of OCGA 9-3-25 applied.”  As an example of a case in which the written contact or the promise allegedly broken stems from a purely oral agreement, the Supreme Court cited our decision in Jankowski v. Taylor, Bishop & Lee, 154 Ga.App. 752 (269 S.E.2d 871) (1980).  [citation omitted] In Jankowski, we held that a retainer letter did not constitute the entire contract between a law firm and its client because it addressed only two aspects of the relationship between the firm and the client, and we applied the statute of limitations for hte breach of oral promises because the remainder of the contract was in parol.  154 Ga. App. at 754-755(2).

As a breach of contract claim, there were two potential statutes of limitations: four years under OCGA 9-3-25 for express oral promises or implied promises, or six years under OCGA 9-3-24 for simple written contracts.  Prior to Newell Recycling, the Court of Appeals consistently held that legal malpractice claims were always subject to the four-year limitations period as no written attorney-client retainer or representation agreement was ever deemed to be subject to the simple written contract period of OCGA 9-3-24.  As numerous legal malpractice and other professional negligence cases reasoned, the four-year statute applied to professional negligence claims because the contractual duty allegedly breached, i.e., failing to meet the professional standard of care, was not one specified within the written contract itself. Rather, that obligation was imposed by law and therefore implied in the parties’ contract. Thus, cases like Jankowski v. Taylor, Bishop & Lee, 154 Ga. App. 752 (269 S.E.2d 871) (1980), in which a written retainer agreement was admitted, held that a legal malpractice claim was subject to a four-year statute of limitations as there were many implied duties and obligations not contained within the written agreement between the parties.

 When the Court of Appeals held in Jordan Jones and Goulding v. Newell Recycling of Atlanta, 299 Ga. App. 294, 682 S.E.2d 666 (2009), reversed, 288 Ga. 236, 703 S.E.2d 323 (2010), that a professional negligence claim was always subject to a four-year statute of limitation, it was following its own well established precedent. The Supreme Court of Georgia however reversed the Court of Appeals in Newell Recycling of Atlanta v. Jordan Jones and Goulding, 288 Ga. 236, 703 S.E.2d 323 (2010). The holding of the Supreme Court made clear that a professional negligence claim could be subject to the six-year limitations period of OCGA 9-3-24 if the contract.  The more important question for those pursuing and defending legal malpractice claims was under what circumstances the holding in Newell Recycling would result in a longer limitations period.  There is reason to think, especially after the focus of the remand order, not very often.

The remand order and focus on Jankowski is hard to ignore. It appears that absent a merger clause in the attorney client agreement, which is less common than in some other professional services agreements, it is unlikely that the Supreme Court’s opinion will change the outcome of most attorney-client limitation periods.  Jankowski was a holding that applied the four-year limitations period to what would be typical of most attorney-client fee agreements. The Supreme Court, even in its announcement of the possibility of a six-year period, left in place the jurisprudence that lead to the Court of Appeal’s now overly broad four-year rule. The application of the new rule, however, approved of and left in place the ability to reach the same result in nearly all cases.

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