VA: Underlying contract and tort actions
Facts: In June 1972, Joseph S. Goodstein and Sheldon Ruben, individually and trading as G & R Associates (G & R) entered into a contract to purchase a tract of land. G & R Associates hired attorneys Allen S. Buffenstein, Jay M. Weinberg and Hirschler & Fleischer to examine the title and to counsel G & R on the purchase of the property.
In 1974, Hirschler & Fleischer filed suit on behalf of G & R against Froehling & Robertson, a survey company, for negligence in its land survey. Then, on June 16, 1975, Hirschler & Fleischer withdrew as counsel for G & R. G & R then mended their motion for judgment and added Hirschler & Fleischer defendant, claiming tort damages against Hirschler and Froehling, and alleged fraud and professional negligence against Hirschler, seeking compensatory and punitive damages.
The trial court found a misjoinder of parties and misjoinder of actions, severed the lawsuits, and required G & R to decide whether to proceed with the action in tort or in contract. G & R opted to proceed in tort, and the contract action was dismissed without prejudice.
G & R then filed another amended motion for judgment against Hirschler based on tort liability, and Hirschler pleaded the statute of limitations. The trial court sustained Hirschler’s plea and G & R appealed.
Thereafter, in August 1977, Hirschler then sued G & R for attorneys’ fees for services rendered in the suit against Froehling. G & R filed a counterclaim seeking damages for breach of contract. Hirschler then filed a special plea in bar and plead the statute of limitations.
Meanwhile, the court affirmed the judgment in the tort action. The lower court sustained Hirschler’s two pleas and dismissed G & R’s counterclaim for breach of contract as barred by the doctrine of res judicata.
Issue: Did the trial court err in sustaining the special plea and the plea of the statute of limitations?
Ruling: No. The judgment regarding the tort statute of limitations was res judicata with respect to the contract action because it arose out of the same wrong as the first, tort action.
Lesson: In contract and tort suits for legal malpractice, if the contract remedy arises from the same wrong as the tort remedy, and, if the statute of limitations has not tolled as to one action, then it has is not tolled as to the other.