Alleged Legal Malpractice Failure to Name the Proper Party
In Amfac Distrib. Corp. v. Miller, an attorney represented a client in a civil action against a subcontractor. Amfac Distrib. Corp. v. Miller (Amfac I), 138 Ariz. 155, 155, 673 P.2d 795, 795 (App. 1983).
The alleged malpractice occurred when the attorney failed to name the proper party. Id.
The trial court dismissed the case. Id.
The client filed an appeal, but the ruling was affirmed by our supreme court. Id.; Amfac II, 138 Ariz. at 153, 673 P.2d at 793.
The client then filed a legal malpractice claim against the negligent attorney. Amfac I, 138 Ariz. at 155, 673 P.2d at 795.
The trial court in the malpractice action granted summary judgment in the attorney's favor, finding that the client's claim was barred by the statute of limitations because it was filed more than two years after the client's underlying lawsuit was dismissed in the trial court. Id. at 156, 673 P.2d at 796.
On appeal, we held that the malpractice action did not accrue until the underlying litigation was finally adjudicated on appeal because the client might nevertheless prevail on appeal and ultimately suffer no damages. Id. at 156-59, 673 P.2d at 796-99.
In Amfac II, our supreme court approved the holding in Amfac I that "a cause of action for legal malpractice occurring in the course of litigation accrues when the plaintiff knew or should reasonably have known of the malpractice and when the plaintiff's damages are certain and not contingent upon the outcome of an appeal." 138 Ariz. at 153, 673 P.2d at 793.
In Althaus v. Cornelio, 203 Ariz. 597, 58 P.3d 973 (App. 2002) the Court additionally interpreted Amfac in the context of lawsuit settlements.
In finding that genuine issues of material fact precluded summary judgment, we held that "Amfac's final judgment rule does not necessarily control a malpractice case . . . in which the underlying case has been settled." Id. at 600, P 14, 58 P.3d at 976.
The Court further stated:
When the underlying case is not settled, a malpractice plaintiff's injury or damages may not be fully "ascertainable until the appellate process is completed or is waived by a failure to appeal." But that concern evaporates when a settlement of the underlying case effectively waives any appeal therein and, thus, eliminates any possibility of the malpractice damages changing. In other words, when the underlying case is settled, there is no prospect of "successful prosecution of an appeal in that case and ultimate vindication of the attorney's conduct by an appellate court."
Moreover, in a nonsettlement context, it generally "is only when the litigation is terminated and the client's rights are 'fixed' that it can safely be said that the lawyer's misdeeds resulted in injury to the client." In a case such as this, however, a trier of fact might find that a binding and enforceable oral settlement of the underlying case "'fixed'" the client's rights and immediately "resulted in injury to the client," notwithstanding the need for future documents, filings, procedures, and even bankruptcy court approval to finalize the settlement. Id. at PP 11-12.