J EDWARD KLOIAN V MICHAEL ALAN SCHWARTZ
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STATE OF MICHIGAN
COURT OF APPEALS
J. EDWARD KLOIAN,
FOR PUBLICATION
September 12, 2006
9:00 a.m.
Plaintiff-Appellant,
v
MICHAEL ALAN SCHWARTZ and
SCHWARTZ, KELLY & OLTARZ-SCHWARTZ,
P.C.,
Defendants-Appellees.
No. 267033
Wayne Circuit Court
LC No. 05-514737-NM
Official Reported Version
Before: Saad, P.J., and Jansen and White, JJ.
WHITE, J. (concurring in part and dissenting in part).
I respectfully dissent from the majority's affirmance of the circuit court's grant of
summary disposition of the legal malpractice claim regarding the Wayne County case. In all
other respects, I concur.
The period of limitations governing a legal malpractice action is two years. MCL
600.5805(6). A legal malpractice claim accrues at the time that an attorney discontinues serving
a client with respect to matters out of which the claim for malpractice arose:
[A] claim based on the malpractice of a person who is, or holds himself or
herself out to be, a member of a state licensed profession accrues at the time that
person discontinues serving the plaintiff in a professional or pseudoprofessional
capacity as to the matters out of which the claim for malpractice arose, regardless
of the time the plaintiff discovers or otherwise has knowledge of the claim.
[MCL 600.5838(1).]
MCR 2.117(C) provides:
(1) Unless otherwise stated or ordered by the court, an attorney's
appearance applies only in the court in which it is made, or to which the action is
transferred, until a final judgment is entered disposing of all claims by or against
the party whom the attorney represents and the time for appeal of right has
passed. . . .
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(2) An attorney who has entered an appearance may withdraw from the
action or be substituted for only on order of the court. [Emphasis added.]
As the majority notes, defendants submitted a letter from defendant Schwartz to plaintiff
dated May 13, 2003 in support of their motion for summary disposition, which stated:
Dear Mr. Kloian:
Enclosed please find orders from the Wayne County Circuit Court
dismissing your malpractice cases against Fried, Gold, Findling and their law
firms. In dismissing these cases, Judge Gillis remarked that you have a history of
suing lawyers. He found that your claims were barred by the doctrine of res
judicata. He also made reference to his decision dismissing your malpractice case
against Howard Lederman. He incorporated the reasoning in his written opinion
in that case, which he issued in that case on October 21, 2002, into these cases.
You have twenty-one (21) days from today within which to file a claim of
appeal. That gives you until June 3, 2003. If you do not file a claim of appeal by
that time, you lose your right of appeal. After that, you could file an application
for leave to appeal, which is discretionary with the court. Accordingly, if you
intend to file an appeal of these orders of dismissal, you should do so no later than
June 3, 2003.
If you want to file an appeal, you should obtain another lawyer to do so, as
I shall not be representing you on any appeal of these dismissals. As I indicated
to you previously, I have concluded that you had virtually no chance of success in
these matters, given the orders and opinions of Judge Shapero in the United States
Bankruptcy Court. It is my belief that any appeal of these dismissals would be a
waste of time, money and effort. I do not foresee any basis upon which an
appellate court would reverse the dismissals. The principal [sic] of res judicata
which Judge Gillis used in dismissing your malpractice case against Lederman
was used by him in dismissing these cases. It is unlikely in the extreme that any
appellate court would overturn such a ruling.
Very truly yours,
Michael Alan Schwartz
"'A lawyer discontinues serving a client when relieved of the obligation by the client or
the court,[1] or upon completion of a specific legal service that the lawyer was retained to
1
See also Hooper v Hill Lewis, 191 Mich App 312, 315; 477 NW2d 114 (1991) (holding that the
plaintiff 's letter to the defendant attorneys stating that they had no authority to act on his behalf
"relieved defendants of their obligation to represent him" and noting that "[a]n attorney
discontinues serving a client, for purposes of the statute of limitations, when the attorney is
(continued…)
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perform.'" Balcom v Zambon, 254 Mich App 470, 484; 658 NW2d 156 (2002), quoting Maddox
v Burlingame, 205 Mich App 446, 450; 517 NW2d 816 (1994), which in turn cited Stroud v
Ward, 169 Mich App 1, 6; 425 NW2d 490 (1988), and Chapman v Sullivan, 161 Mich App 558,
561; 411 NW2d 754 (1987). In Chapman, supra at 561, the Court noted that the defendant
attorney had been retained to perform a "specific legal service, i.e., to advise and represent [the
plaintiff] in the sale of her business and draft certain documents in connection with the sale,"
versus having been retained "to represent [the] plaintiff in any pending or proposed litigation."
Chapman, which defendants cite on appeal, thus sheds light on the meaning of the phrase
"specific legal service." In the instant case, plaintiff retained defendants to represent him in the
consolidated Wayne County cases, i.e., pending litigation, as opposed to retaining defendants for
a specific legal service, such as the sale of a business.
In K73 Corp v Stancati, 174 Mich App 225; 435 NW2d 433 (1988), also cited by
defendants on appeal, the president of K73 Corporation filed suit against the defendant attorney
he had hired to represent him in the sale of his business. The circuit court dismissed the
plaintiff 's legal malpractice case on statute of limitations grounds. This Court affirmed. After
citing MCL 600.5805 and quoting 600.5838(1) and (2), this Court noted:
Reading the two sections in conjunction reveals that under § 5805 the
period of limitation is two years from the time the claim accrues at the time the
last service is rendered. Finally, § 5838 provides that the running of the statute is
tolled for six months after the plaintiff discovers or should have discovered the
existence of the claims. Thus, a legal malpractice action must be brought within
two years of the date the attorney discontinues serving the plaintiff or within six
months after the plaintiff discovers or should have discovered the existence of the
claim. The plaintiff may take advantage of whichever provision provides the
longer period within which to file. Chapman v Sullivan, 161 Mich App 558, 563;
411 NW2d 754 (1987).
Plaintiff first contends that defendant did not "discontinue treating or
otherwise serving" plaintiff as to the matters out of which the claim for
malpractice arose until within two years of the date the complaint was filed.
Plaintiff theorizes that defendant's retention of the corporate books and records
and preparation of the corporation's 1983 minutes constituted an ongoing service
and representation within two years of filing suit.
Defendant counters that these services did not specifically pertain to
matters out of which the claim for malpractice arose, i.e., the sale of the business
(…continued)
relieved of the obligation to serve by either the client or a court"), Maddox, supra at 450 (noting
that "[r]etention of an alternative attorney effectively terminates the attorney-client relationship
between the defendant and the client"), Bolster v Monroe Co Bd of Rd Comm'rs, 192 Mich App
394, 398-399; 482 NW2d 184 (1991) (holding that when attorney made no attempt to withdraw
as counsel for the plaintiffs, and pursued their interests, the trial court did not err in finding that
he continued to represent the plaintiffs and quoting MCR 2.117[C][2]).
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and the alleged failure of defendant to seek and obtain security for plaintiff 's
interest.
This Court has held that an attorney does not "discontinue treating or
otherwise servicing his client" for purposes of the malpractice statute of
limitations until his client or the court relieves him of the obligation. Chapman,
supra, p 561. In the present case, the record indicates that defendant discontinued
serving plaintiff regarding the sale of the business on February 4, 1982, the date
of the final billing submitted by defendant. After this date, defendant was not
involved in any matters associated with the sale of the business as plaintiff had
retained another attorney, Milton Marovich. Although defendant admitted that
after plaintiff was represented by Marovich he was approached by Drennan's
attorney and plaintiff in the courthouse hallway because he had knowledge of the
sale of the business, defendant did not believe that he gave plaintiff any advice,
opinions or comments on the sale of the business after February 4, 1982.
Defendant did not represent plaintiff in any pending or proposed litigation after
this date. Moreover, when deposed, plaintiff admitted that in April, 1982,
Marovich represented him in connection with the sale of the business and,
thereafter, he did not seek legal services from defendant regarding this matter.
Thus, we conclude that plaintiff relieved defendant of his obligation in April,
1982, which was well over two years before plaintiff filed this action [on
September 21, 1984].
Plaintiff must therefore show that he did not or could not have discovered
the existence of his claim until after March 21, 1984. [K73, supra at 228-229
(citations omitted).]
Anno: Attorney malpractice—Tolling or other exceptions to running of statute of limitations, 87
ALR5th 473, 496, discusses K73 Corp as follows:
It should be noted that most courts, when dealing with a former client's
argument that an attorney's "continuous representation" of the client serves to toll
the statute of limitations on the client's legal malpractice action, or serves to
trigger a later commencement date for the action, will look to the date on which
the subject attorney submitted a final bill for services to the client or the date on
which a formal termination of services occurred.
In the instant case, defendants presented no evidence below that they submitted a final
bill for services to plaintiff, or that their services were formally terminated,2 before May 27,
2003, the date on which plaintiff 's substitute counsel filed an appearance.
2
I do not agree with the majority and defendants that defendants' letter of May 13, 2003, quoted
earlier, affirmatively stated that they were terminating their representation of plaintiff. The letter
did not state that defendants were closing plaintiff 's file or moving to withdraw their
(continued…)
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Defendants did not move to withdraw before May 17, 2003 (two years before plaintiff
filed his complaint), nor did plaintiff terminate defendants' services before May 17, 2003. This
Court must accept as true the allegations in plaintiff 's complaint that plaintiff received
defendants' letter dated May 13, 2003, on May 17, 2003, and that substitute counsel for plaintiff
filed an appearance on May 27, 2003, because no contrary evidence was submitted below.
Pusakulich v Ironwood, 247 Mich App 80, 82; 635 NW2d 323 (2001).
I conclude that absent plaintiff 's retention of substitute counsel effective May 27, 2003,
under MCR 2.117(C)(1), defendants' appearance and obligation to represent plaintiff continued
"until a final judgment is entered disposing of all claims by or against the party whom the
attorney represents and the time for appeal of right has passed," i.e., until approximately June 3,
2003 (21 days after the final judgment was entered by the circuit court on May 13, 2003).
Plaintiff 's retention of another lawyer, who filed an appearance on May 27, 2003, relieved
defendants of their obligation to represent plaintiff on that date—May 27, 2003. Maddox, supra
at 450; K73 Corp, supra at 228-229. I conclude that defendants did not discontinue serving
plaintiff before May 17, 2003 (two years before plaintiff filed his complaint); rather, defendants'
obligation to represent plaintiff ended on May 27, 2003, when plaintiff 's substitute counsel
entered an appearance. Thus, I conclude that plaintiff 's complaint filed on May 17, 2005 was
timely filed within the two-year limitations period.3
(…continued)
representation of plaintiff. In the underlying legal malpractice case, had the defendants filed a
motion for costs following the circuit court's dismissal of plaintiff 's case, it would not be at all
clear that defendants in the instant case were not still representing plaintiff in the underlying
action, as defendants' letter dated May 13, 2003, states affirmatively only that defendants would
not represent plaintiff in an appeal. I conclude that under the authorities cited, defendants' letter
of May 13, 2003, did not, as a matter of law, constitute "formal termination of services" absent a
court order effecting their withdrawal or a substitution of counsel, MCR 2.117(C)(2), or a
termination by plaintiff of defendants' representation, such that defendants would be entitled to
summary disposition under MCR 2.116(C)(7) on the basis of that letter.
3
My conclusion is supported by the Supreme Court's decision in Grievance Administrator v
Fieger, 476 Mich 231; 719 NW2d 123 (2006), issued during the pendency of this appeal and the
subject of plaintiff 's supplemental authority brief. In Fieger, the Court considered whether a
case remains "pending" after the Court of Appeals issues a decision but before the time for filing
an application for leave to appeal in the Supreme Court expires and answered that question in the
affirmative:
Because the Court of Appeals decision had not yet become effective as of
the date of Mr. Fieger's comments, and because the Court of Appeals, by granting
a motion for reconsideration or rehearing, could still have affected the substantial
rights of his client, we conclude that the Badalamenti [v William Beaumont HospTroy, 237 Mich App 278; 602 NW2d 854 (1999),] case was "begun, but not yet
completed" and that Mr. Fieger's comments were made "during," "before the
conclusion of," and "prior to the completion of" that case. Moreover, the case
was "awaiting an occurrence or conclusion of action"—namely, the running of the
aforementioned periods for filing. During this interim, then, the case was in a
"period of continuance or indeterminancy." [Id. at 249-250.]
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I would reverse the circuit court's grant of summary disposition to defendants with
respect to the claim involving the Wayne County case.
/s/ Helene N. White
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