TX: Underlying personal injury and wrongful death action; conflicts of interest; statute of limitations
Student Contributor: Rudolfo Santos, Jr.*
FACTS: On June 8, 1984, Carlos Sanchez, husband of Graciela Sanchez, was killed on the job, when a portable crane mounted on his employer’s, Cedar Creek Fabrications, Inc., truck came into contact with electrical wires.
Soon thereafter, Steve Hastings, on behalf of the law firm Allison & Huerta, P.C., (the Firm), contacted Mrs. Sanchez and offered to represent her as well as the Estate of Carlos Sanchez, and their minor child Gina Sanchez, in a wrongful death and survival action stemming from the job accident. Mrs. Sanchez agreed to allow the firm to handle the matter, but unbeknownst to her the firm also represented Reliance Insurance Company, Cedar Creek Fabrications, Inc.’s workers compensation insurance carrier, in its subrogation action against the defendants for reimbursement of the death benefits paid to Carlos Sanchez’s family.
The Firm filed a wrongful death and survival suit naming various parties as defendants, but the suit did not include any action against Cedar Creek Fabrications, Inc. When the case proceeded to trial the court appointed an ad litem to represent Gina Sanchez. The ad litem had filed a claim against Cedar Creek Fabricators, Inc., alleging gross negligence, but by that time Graciela Sanchez was barred from bringing a similar claim due to expiration of the limitations period. The trial court rendered a final judgment against the defendants on August 29, 1990.
Approximately two months after final judgment was entered, Graciela Sanchez contacted the ad litem; it was at that time the ad litem informed Mrs. Sanchez about prospective malpractice claims against the Firm. On August 29, 1990, Graciela Sanchez filed a malpractice claim against the Firm and three of its attorneys individually. The defendants moved for summary judgment on the ground that Sanchez’s claim was barred by statute of limitations. The trial court granted defendants’ summary judgment on the ground that the two-year statute of limitations precluded the suit. The court of appeals affirmed.
ISSUE: Whether the running of the statute limitations is tolled in a legal malpractice case where the underlying litigation has not concluded?
RULING: The court held that the limitations period was tolled until the conclusion of the underlying litigation. The court considered its previous decision in Hughes v. Mahaney & Higgins, 821 S.W.2d 154 (Tex. 1991), where it held :
“when an attorney commits malpractice in prosecution or defense of a claim that results in litigation, the statute of limitations on the malpractice claim against the attorney is tolled until all appeals on the underlying claims are exhausted.” Id. at 157.
The Court determined that Hughes necessarily extended to trial court proceedings. Therefore, limitations, on malpractice claims, are tolled until a final judgment is entered on all underlying claims.
LESSON: 1) Attorneys should avoid fundamental conflicts of interest, or at the very least be candid to clients by disclosing all potential conflicts of interest. 2) In Texas, the statute of limitations does not begin to run until a final judgment has been entered on all claims stemming from the underlying litigation.
*Rodolfo “Rudy” Santos, Jr. is a third year law student at the Texas Tech School of Law, and will be receiving his J.D. in May 2010. His main area of study has been devoted to trial and appellate practice. He will be joining the litigation department of Person, Whitworth, Borchers & Morales, LLP in August 2010.