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When does the 3-year statute of limitations to sue a Maryland attorney for legal malpractice begin to run?

The most common question that I’m asked is how long does a client have to sue his or her former attorney in Maryland for legal malpractice.  The general answer is that the 3-year time period to sue a former attorney for malpractice begins to run when the client discovered or should have discovered the malpractice by the exercise of reasonable diligence.

There are many situations in which a client will not discover the attorney’s legal malpractice until many years have passed.  In such situations, Maryland recognizes three doctrines that toll the statute of limitations: (a) the discovery rule; (b) the “continuation of events” theory; and (c) the “fraud exception” of Courts & Judicial Article § 5-203.

  1.    DISCOVERY RULE

After a legal malpractice cause of action arises, the “discovery rule tolls the accrual of the limitation period until the time the plaintiff discovers, or through the exercise of due diligence, should have discovered the injury”.  Frederick Road Limited Partnership v. Brown & Sturm 360 Md. 76, 95-96 (2000); Penwalt Corp. v. Nasios 314 Md. 433, 579 (1988) (holding that the statute of limitations does not begin to run until a plaintiff knows or reasonably should know the nature and cause of his or her harm); Litz v. Maryland Department of Environment 434 Md. 623, 641 (2013) (holding that the discovery rule “tolls the accrual of an action until the plaintiff knows or should have known of the injury giving rise to his or her claim”); Poffenberger v. Risser 290 Md. 631, 634-635 (1981) (“the cause of action accrues when the wrong is discovered or when with due diligence it should have been discovered”); O’Hara v. Kovens 305 Md. 280, 302 (1986) (holding that notice to trigger the statute of limitations “means having knowledge of circumstances which would cause a reasonable person in the position of the plaintiffs to undertake an investigation which, if pursued with reasonable diligence, would have led to knowledge of the alleged” claim).

Discovery or inquiry notice “is notice implied from ‘knowledge of circumstances which ought to have put a person of ordinary prudence on inquiry (thus, charging the individual) with notice of all facts which such an investigation would in all probability have disclosed if it had been properly pursued’”.  Windesheim v. La Rocca 443 Md. 312, 327 (2015) (quoting Poffenberger v. Risser 290 Md. 631, 637 (1981)). “Simply stated, inquiry notice is ‘circumstantial evidence from which notice may be inferred’”.  Id.

Maryland “has long applied [the discovery rule] in all manners of malpractice litigation”.  Frederick Road, 360 Md. at 97.  In such cases, the statute of limitations is tolled until the plaintiff has sufficient “knowledge of circumstances which would cause a reasonable person in the position of the plaintiffs to undertake an investigation which, if pursued with reasonable diligence, would have led to knowledge of the alleged cause of action”.  Round v. Maryland National Capital Park & Planning Comm. 441 Md. 621, 654-55 (2015) (internal quotations omitted).

Maryland was the first state to adopt the “discovery rule” in both medical and legal malpractice cases.  Hahn v. Claybrook 130 Md. 179 (1917); Poffenberger v. Risser 290 Md. 631, 634 (1981) (noting that a commentator claimed that Maryland was first to adopt the concept); Mumford v. Staton, Whaley & Price, 254 Md. 697 (1969); 3 Ronald E. Mallen, Legal Malpractice § 23.55 (2016 ed.) at  593.  California was the second state to adopt the “discovery rule”.  Id. at 594.  The adoption of the discovery rule did not alter the requirement that a cause of action would not accrue until the client suffers actual damages.  Id. at § 23:24 at p. 457; Budd v. Nixen 6 Cal.3rd 195, 198 (1971) (“We hold that a cause of action for legal malpractice does not accrue until the client suffers damage and that the determination of that date raises an issue of fact”).

  1.    “CONTINUATION OF EVENTS” THEORY

“Maryland has also recognized the ‘continuation of events’ theory, a corollary accrual doctrine, which serves to toll the statute of limitations where a continuous relationship exists between the parties”.  Frederick Road, Md. 360 at 97.

This tolling doctrine avoids the unnecessary disruption of the attorney-client relationship: “The continuous representation rule is consistent with the purpose of the statute of limitations, which is to prevent stale claims and enable the defendant to preserve evidence.  When the attorney continues to represent the client in the subject matter in which the error has occurred, all such objectives are achieved and preserved.  The attorney-client relationship is maintained and speculative malpractice litigation is avoided.”  3 Ronald E. Mallen, Legal Malpractice § 23.44 (2016 ed.) at 533.

The “continuation of events” theory is based on the equitable principal of detrimental reliance: “When a relationship develops between two parties, built on trust and confidence, the confiding party may rely upon the “good faith of the other party so long as the relationship continues to exist”.   This is especially true in fiduciary relationships such as the attorney-client relationship where a “client has the right to rely on his or her lawyers’ loyalty and to believe the accuracy and candor of the advice they give”.  Supik, 152 Md.App. at 714 (quoting Frederick Road, 360 Md. at 98 & 103).

The rationale for tolling the statute of limitations when there is a continuation of services by an attorney is that the attorney-client relationship is based upon “mutual trust and confidence” and the client “has the right to relax his or her guard and rely on the good faith of the other party so long as the relationship exists”.  Frederick Road, Md. 360 at 98 & 102.  The client’s right to rely upon an attorney’s advice is “founded upon public policy, because the confidential and fiduciary relationship enables an attorney to exercise a very strong influence over his client and often affords him opportunities to obtain undue advantage by availing himself of the client’s necessities, credulity, and liberality”.  Id., at 102 (quoting Hughes v. McDaniel 202 Md. 626, 633 (1953)).

It is “well settled that trust and confidence are basic to the attorney-client relationship”.  Frederick Road, Md. 360 at 101; Bar Association of Baltimore City v. Marshall 269 Md. 510 (1973) (“The relationship existing between an attorney and his client is one that of necessity requires mutual trust and confidence”).  Accordingly, “a client has the right to rely on his or her lawyer’s loyalty and to believe the accuracy and candor of the advice they give”.  Frederick Road, Md. 360 at 103.

As a result of their confidential relationship, the client “is under no duty to make inquiries about the quality or bona fides of the services received, unless and until something occurs to make him or her suspicious”.  Id. at 98; Desser v. Woods 266 Md. 696, 709 (1972) (“Nor is the confiding party under any duty to make inquiry to discover that the confidential relationship has been abused during the continuation of that relationship”).

Nevertheless, the statute of limitations will begin to run during an attorney-client relationship when “the confiding party knows, or reasonably should know, about a past injury”.  Supik, 152 Md.App. at 714-15.   However, it would normally take “extraordinary diligence”, not the required “ordinary diligence”, for client to discover an attorney’s legal malpractice during the representation, because the foundation of the attorney-client relationship is built upon trust and confidence in the attorney’s advice.  Frederick Road, 360 Md. at 105-06.

  1.    THE “FRAUD EXCEPTION”

When “the knowledge of a cause of action is kept from a party by the fraud of an adverse party, the cause of action shall be deemed to accrue at the time when the party discovered, or by the exercise of ordinary diligence should have discovered the fraud”.  Courts & Judicial Article § 5-203; Frederick Road, 360 Md. at 98-99.

When there is an attempt to fraudulently conceal a cause of action, “a person is said to be on inquiry notice when a reasonable person would have used due diligence to investigate the fraud or underlying injury”.  Supik, 152 Md.App. at 715; Frederick Road, 360 Md. at 98-99; Dashiell v. Meeks 396 Md. 149, 169 (2006) (holding whether the statute of limitations is tolled “is ordinarily a question of fact as to whether the plaintiff failed to discover the cause of action because he failed to exercise due diligence or whether he was unable to discover it and, as a result, unable to exercise due diligence, because the defendant concealed the wrong”).

The “fraud exception” begs the question that “if a party is perpetrating fraud in such a manner as to obfuscate the confiding party, would a reasonable person be otherwise attuned to the fraud”?  Supik, 152 Md.App. at 715.  The logical answer is that the discovery of an attorney’s fraud by the client would normally take “extraordinary diligence”, as opposed to the required “ordinary diligence”.  Frederick Road, 360 Md. at 105-06.

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