Lawyers Journal

Time-barred malpractice claims relating to prenuptial agreements

A judge of the Probate and Family Court ruled in December 2004 that a premarital agreement (made in November 1998, when the parties to it were in their 70s!) was invalid. Disgruntled about that, the former husband filed in 2006 a Superior Court malpractice claim against the lawyer who represented him in the agreement's creation. The claim against the lawyer was filed within three years of the Probate and Family Court's invalidation of the agreement. G.L. c. 260, sec. 4 (three year statute of limitations applicable to legal malpractice actions sounding in either contract or tort). Was the claim timely filed?

No -- at least not in the case of Allenby v. DeWitt, 82 Mass. App. Ct. 1117 (Oct. 17, 2012) (Unpublished disposition pursuant to App. Ct. Rule 1:28). The statute of limitations in a case such as this "begins to run at the point when the plaintiff knows or has reason to know that he has suffered appreciable harm" (i.e. "'injury, loss or detriment' that is capable of being measured or perceived."). Id., quoting from Kennedy v. Goffstein, 62 Mass. App. Ct. 230, 232-233 (2004). Harm occurred when the wife acquired in 1998 a title interest in one of the husband's properties that was greater than the limited interest (i.e. contingent life estate only) that he intended for her to have under the premarital agreement. The husband knew (or should have known) of the harm when the real estate tax bills he received for 1998 showed his wife as the property's owner.

As for the premarital agreement itself, the court's decision was that the husband-plaintiff "was on notice, at the outset, after speaking with the [lawyer]-defendant, that the agreement was defective and unenforceable." The wife had shown the husband a letter written to her by her lawyer in April 1999, which stated that the agreement was unenforceable. The husband's own divorce lawyer, in 2002 (four years before the malpractice claim was filed), cautioned him "in no uncertain terms" that he "was not covered from A-Z" under the agreement. In effect, therefore, the actual "harm" occurred on the date of the marriage, when the defectiveness of the agreement allowed the wife to acquire rights under G.L. c. 208, sec. 34.

MARRIAGE = 'SOME DAMAGE'

Family lawyers who know about it like the case of Antone v. Mirviss, 720 N.W.2d 331 (Minn. 2006). In it, the Minnesota Supreme Court decided that a legal malpractice action against the lawyer who drafted a prenuptial agreement accrued on the date of the husband-plaintiff's marriage, and not when, almost seventeen years later, a portion of the husband's supposedly protected premarital property was assigned to his spouse by a divorce judgment.

"As soon as [husband] was married, in the absence of an effective [premarital] agreement, the appreciation [of his premarital property] was no longer protected from [wife's] claims and [husband] lost the right to unilaterally change this consequence." Id. at 337. The "immediate and irremediable" consequence of the marriage -- "a point of no return" -- was that husband "was left without the nonmarital property protections he sought to obtain through the antenuptial agreement drafted by Mirviss." Id.

This exposure "was an injury that resulted in some damage sufficient" to begin the running of the statute of limitations on a claim of negligence relating to Mirviss's work on the agreement. Id. 337-338. "[T]he inability to calculate the precise damage at the time of the marriage does not preclude the running of the statute of limitations." Id. The husband's legal malpractice claim was time-barred -- it was not filed within six-years (the limitation period applicable in Minnesota) of the date of marriage.

A similar result was reached in Radovich v. Locke-Padden, 41 Cal.Rptr.2d 573 (Cal. 6th C.A. 1995). When the husband sued the lawyer who drafted a 1957 prenuptial agreement in which the husband waived all community property interests, the Court held that "actual and immediate injury" occurred upon execution of the agreement, and not when the wife died in 1991, as the husband alleged. Id. at 589-590. Because the agreement was effective upon execution and acted immediately to deprive the husband of any community property interests from the start of the marriage, the husband's execution of the agreement in 1957 "was sufficient empirical certainty of actual injury" to trigger the running of the applicable limitations period. "[A]s an abstract proposition the search for the first 'actual injury' should be easy: The first injury of any kind to the plaintiff, attributable to the defendant attorney's malfeasance or nonfeasance, should suffice." Radovich, supra at 587.

ONLY 'POTENTIAL HARM'

In Allenby, the court rejected the husband-plaintiff's argument that the statute of limitations did not begin to run until December 2004, when the Probate and Family Court invalidated the premarital agreement. Unlikely as it may be that the Supreme Judicial Court would adopt a rule so clear as the one adopted by Minnesota in Antone, the Allenby case does show that a variety of events occurring upon or after the date of a marriage may render a malpractice claim arising out of a premarital agreement time-barred before the agreement is ever the subject of litigation at the time of a divorce.

Referencing those earlier points in time at which Allenby was actually alerted to the defectiveness of the agreement, the court reasoned that Allenby's was "not [a] situation" like the one in Eck v. Kellem, 51 Mass. App. Ct. 850, 853 (2001). In Eck, the lawyer drafted a real estate purchase and sale agreement and assured his client (the seller) that it would protect him from liability on any future Chapter 21E claims by the buyer, but that buyer later sued and successfully obtained a judgment against the client on just such a claim. The court held legal malpractice action did not accrue until the judgment entered in the buyer's favor -- "Whether, in fact, Kellem was negligent in the preparation of the sale agreement had to await the outcome of the [buyer's] suit: until that time it could not be said that Eck suffered any cognizable harm." (emphasis added) See Spilios v. Cohen, 38 Mass. App. Ct. 338, 339-340 (plaintiff's attorney in a divorce case refused to accept a settlement offer the plaintiff said should be accepted: held, because it was not possible to determine whether there was legal malpractice until the judge's decision was announced, the statute of limitations did not begin to run until that time) (emphasis added).

In hindsight, according to the way the Allenby decision reads, for the malpractice action to have been timely, Allenby had to file it within three years of the point in 1998 (long before the divorce action) at which real estate tax bills made him aware of his wife's claim of ownership to the property in question; or within three years of the point in 1999 that the wife showed him her attorney's letter stating that the agreement was unenforceable. This is good news for DeWitt, the draftsman, but what damages would Allenby have sought to recover from DeWitt in an action filed in 1999 before it could be known what disposition would be made of property in a divorce action that had not yet been filed?

Complications of this sort are what the courts processed in the matter of Robbat v. Gordon, 771 So.2d 631, 636 (Fla. 4th DCA 2000). A marked distinction was drawn between "knowledge of actual harm from legal malpractice and knowledge of potential harm. The former begins the limitations period; the later does not." This "means that the limitations period on claims of legal malpractice should not commence until it is reasonably clear that the client has actually suffered some damage from legal advice or services." Id.

Attorney Gordon advised the husband, Robbat, in 1986 that his 1978 prenuptial agreement (executed in Massachusetts), and the postnuptial agreement that he and his wife signed in 1986, both would be enforceable to protect the husband's then new home in Florida from claims by the wife. In 1991, in the parties' divorce proceeding, a judge found that both agreements were unenforceable, and the value of the husband's home was equally divided. On the husband's appeal, the Court of Appeal (in 1994) agreed that the Massachusetts prenuptial agreement was enforceable and that it, regardless of the later postnuptial agreement, governed claims relating the Florida home purchased in 1986.

In 1996, within two years of the appellate decision vacating the 1991 divorce judgment, the husband sued Gordon for legal malpractice. He claimed that he was damaged by improper preparation of the 1986 postnuptial agreement and by the fact that the wife had placed "beyond his reach" the substantial sums that had been awarded to her in the original divorce judgment. Id. at 633. Gordon argued that the statute of limitations began to run at the time of the 1991 divorce judgment, and a trial judge granted his motion for summary judgment on the grounds that the husband's 1996 legal malpractice action was barred by Florida's two-year statute of limitations. Id. at 634.

Reversing, the Court of Appeal reasoned that "knowledge of an adverse decision by a lower tribunal is not sufficient to start the running of the statute of limitations in a transactional malpractice claim where the client chooses to defend the actions of the [attorney] defendant on appeal, since to require the client to pursue the malpractice claim while the at the same time defending the professional's actions on appeal would place the client 'in the wholly untenable position of having to take directly contrary positions in [the] two actions.'" Id. at 636-637, quoting Peat, Marwick, Mitchell & Co. v. Lane, 565 So.2d 1323, 1326 (Fla. 1990). Because Robbat defended Gordon's advice -- that the Massachusetts prenuptial agreement was valid -- throughout his appeal from the divorce judgment, "the statute of limitations did not begin to run until after this court rendered its decision on appeal; until that time, there was no redressable harm." Id. at 637. Robbat's 1996 malpractice action was determined to be timely filed.

CONCLUSION

The conclusion that can be drawn from the above is that there is no definitive conclusion that be drawn. The purpose of a statute of limitations is to provide a potential "defendant" (like Attorney DeWitt) some repose after the mere passage of time. Koe v. Mercer, 450 Mass. 97 (2007)("'[Statutes of limitations are] "vital to the welfare of society . . . They promote repose by giving security and stability to human affairs."'"), quoting Franklin v. Albert, 381 Mass. 611, 618 (1980), quoting Wood v. Carpenter, 101 U.S. 135, 139 (1897). The Allenby case, like Minnesota's Antone, suggests that Massachusetts courts are open to declaring time-barred malpractice claims that that arise out the drafting of a premarital agreement many, many years (even decades) earlier. Cases like Florida's Robbat, however, suggest that the safest course for lawyers that spent some portions of their careers drafting premarital agreements is to have done so in Minnesota rather than Florida!KEVIN M. CORR is a partner at Lee, Rivers & Corr LLP, where his practice is predominantly family law. He has a particular interest in litigation involving contested premarital and marital agreements. He is chairing an MCLE program on the subject in Jan. 2013.

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