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Skadburg v. Gately

Supreme Court of Iowa

May 11, 2018

MICHELLE R. SKADBURG, Appellant,
v.
GARY GATELY and WHITFIELD & EDDY, P.L.C., Appellees.

         On review from the Iowa Court of Appeals.

          Appeal from the Iowa District Court for Cerro Gordo County, Rustin Davenport, Judge.

         A lawyer and his firm seek further review of a court of appeals decision finding a genuine issue of material fact as to when the cause of action accrued.

          Peter C. Riley of Tom Riley Law Firm, P.L.C., Cedar Rapids, for appellant.

          Lylea Dodson Critelli and Nick Critelli of Critelli Law, P.C., Des Moines, for appellees.

          WIGGINS, JUSTICE.

         A client appealed the district court's grant of summary judgment in favor of her attorney and the attorney's law firm in her legal negligence action. The client argued the court erred in finding the statute of limitations barred her action. She also contended the court erred in declining to apply the discovery rule, the continuous-representation rule, or the doctrine of fraudulent concealment.

         We transferred the case to the court of appeals, which reversed the judgment of the district court. The attorney and his firm applied for further review, which we granted. On further review, we hold no genuine issue of material fact exists as to when the cause of action accrued and the statute of limitations bars the client's action because the cause of action accrued more than five years before she filed suit. We also hold the client may not use the discovery rule, the continuous-representation rule, or the doctrine of fraudulent concealment to circumvent the limitations period. Accordingly, we vacate the decision of the court of appeals and affirm the judgment of the district court.

         I. Background Facts and Proceedings.

         Michelle Skadburg is the daughter and sole heir of Barbara Haffner, who passed away in August 2008. As the designated beneficiary of both Haffner's life insurance policy and 401k account, Skadburg received $20, 000 and $87, 054.65, respectively. The estate was insolvent because the debts exceeded the probate assets.

         On November 6, the court appointed Skadburg as the administrator of Haffner's estate. Skadburg designated Gary Gately of Whitfield & Eddy, P.L.C. as the administrator's attorney. The next day, Skadburg signed the notice of appointment and notice to creditors. Upon Gately's advice, Skadburg alleges, she used the funds from Haffner's life insurance policy and 401k account to pay the debts of Haffner's estate. Skadburg further alleges Gately failed to advise her that these funds were exempt from any claims against the estate.

         On August 18, 2010, the district court closed the estate and discharged the administrator. Gately forwarded this order to Skadburg in a letter dated August 31, informing her the court had closed the estate and had discharged her as the administrator.

         On August 19, 2015, Skadburg filed suit against Gately and Whitfield & Eddy, alleging Gately was negligent in his representation of her in connection with the probate of the estate and asserting Whitfield & Eddy was vicariously liable for Gately's negligence.[1] Gately answered, denying all claims and asserting the affirmative defense of the statute of limitations.

         On August 18, 2016, Gately filed a motion for summary judgment, arguing the statute of limitations barred Skadburg's action. Calculating the accrual date most favorably to Skadburg, Gately argued the latest date on which the cause of action accrued was August 18, 2010, and Skadburg filed suit on August 19, 2015, one day after the five-year limitations period. Skadburg resisted, arguing she submitted her petition at law on August 18, 2015, [2] and asserting Gately represented her as administrator of the estate until August 31, 2010, when he sent the letter informing her the court had closed the estate.

         In her supplemental response to Gately's motion for summary judgment, Skadburg alleged Gately never advised her that her ability to pay debts was very limited until four months after the second publication of the estate notice. Rather, Gately allegedly told her to pay all the debts and keep the leftover money. Skadburg further alleged Gately never told her the proceeds from the life insurance policy and the 401k account were exempt from any claims against the estate and she could keep those funds.

         At first glance, it appears Skadburg made two claims, but these claims make up her overall claim that Gately negligently gave her incorrect legal advice. "Our law does not allow the splitting of a cause of action, and any effort to do so to avoid the commencement of the statute of limitations would be inconsistent with the purpose of cutting off stale claims." Rathje v. Mercy Hosp., 745 N.W.2d 443, 458 (Iowa 2008). Thus, we will treat her allegations as one legal negligence claim.

         The court granted Gately's motion for summary judgment. First, based on emails sent by Skadburg to Gately, the court held under the discovery rule Skadburg had actual or imputed knowledge of her potential action no later than March 26, 2010. Thus, the limitations period began to run from that date. The court also found neither the continuous-representation rule nor the doctrine of fraudulent concealment applied. In sum, the court ruled the statute of limitations barred Skadburg's action. Skadburg filed a rule 1.904(2) motion for enlargement of findings, which the court denied.

         Skadburg appealed. We transferred the case to the court of appeals. The court of appeals reversed the judgment of the district court and remanded the case for further proceedings. It held there was a genuine issue of material fact as to when Skadburg attained knowledge regarding her cause of action. Thus, a genuine issue of material fact exists as to when the statute of limitations commenced. Alternatively, the court of appeals applied the continuous-representation rule and held the statute of limitations did not begin to run until August 31, 2010, when Gately sent Skadburg the letter informing her the court had closed the estate and had discharged her as the administrator.

         Gately applied for further review, which we granted. We lay out additional facts as necessary.

         II. Issue.

         The only issue we must decide is whether the statute of limitations precludes Skadburg's action.

         III. Scope of Review.

         We review the district court's grant or denial of a summary judgment motion for correction of errors of law. Hook v. Lippolt, 755 N.W.2d 514, 519 (Iowa 2008). If there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law, the district court should grant the motion for summary judgment. Nationwide Mut. Ins. v. Kelly, 687 N.W.2d 272, 274 (Iowa 2004); accord Iowa R. Civ. P. 1.981(3). The moving party has the burden of showing the absence of a genuine issue of material fact. Hlubek v. Pelecky, 701 N.W.2d 93, 95 (Iowa 2005). We view the facts contained in the record in the light most favorable to the nonmoving party. Nelson v. Lindaman, 867 N.W.2d 1, 6 (Iowa 2015). We also draw every legitimate inference in favor of the nonmoving party. Id. at 6-7.

         IV. Statute of Limitations.

         Skadburg contends the district court erred in dismissing her legal negligence action based on the statute of limitations. Skadburg is not claiming a written contract existed between her and Gately. Therefore, the five-year limitations period in Iowa Code section 614.1(4) (2015) is applicable to her legal negligence claim. See Vossoughi v. Polaschek, 859 N.W.2d 643, 648 (Iowa 2015) (applying section 614.1(4)'s five-year limitations period to a legal negligence claim). Iowa Code section 614.1(4) provides,

Actions may be brought within the times herein limited, respectively, after their causes accrue, and not afterwards, except when otherwise specially declared:
4. Unwritten contracts-injuries to property-fraud- other actions. Those founded on . . . all other actions not otherwise provided for in this respect, within five years . . . .

         Iowa Code § 614.1(4).

         Skadburg concedes Gately's negligence occurred from the time of her appointment as the administrator on November 6, 2008, through December of 2008. In her answers to interrogatories, Skadburg stated, "At the time the estate was opened, Mr. Gately told me to pay all bills and I could keep the remaining money." Skadburg further stated, "In December of 2008, he told me to pay the U.S. Bank credit card and that I could forward any other creditors to him[, ]" and "I told him all other bills had been paid."

         Skadburg also admits she filed her petition at law more than five years after the acts of negligence occurred. However, our inquiry does not focus on when Gately's negligence occurred. Rather, the question is when her cause of action accrued. See Vossoughi, 859 N.W.2d at 649-50. If the cause of action accrued more than five years before Skadburg filed her petition at law, we must then address whether the discovery rule or the continuous-representation rule tolls the limitations ...


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