Commercial Union Ins. Co. v. Lewis and Roca
In Commercial Union Ins. Co. v. Lewis and Roca, 183 Ariz. 250, 254, 902 P.2d 1354, 1358 (App. 1995), an insurance carrier filed a malpractice action against its former law firm based on faulty research and advice that had caused the carrier to deny coverage to its insured.
The denial of coverage, in turn, had resulted in a subsequent action against the carrier for breach of contract and bad faith.
In reversing a summary judgment for the defendant law firm, Division One of this court concluded that the carrier's malpractice action had not accrued until its motion for summary judgment in a separate coverage action had been denied.
The court stated:
We hold that a cause of action for legal malpractice accrues when the client both:
(1) has sustained appreciable, non-speculative harm or damage as a result of such malpractice and;
(2) knows, or in the exercise of reasonable diligence should know, that the harm or damage was a direct result of the attorney's negligence.
Thus, we hold that the discovery rule applies not only to the discovery of negligence, but also to discovery of causation and damage. Commercial Union, 183 Ariz. at 252-53, 902 P.2d at 1356-57.