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Preblich v. Zorea (3/10/00) sp-5249
Preblich v. Zorea (3/10/00) sp-5249
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
EVALYN PREBLICH, )
) Supreme Court No. S-8635
Appellant, )
) Superior Court No.
v. ) 3AN-96-2378 CI
)
MOSHE ZOREA, ) O P I N I O N
)
Appellee. ) [No. 5249 - March 10, 2000]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Dan A. Hensley, Judge.
Appearances: Evalyn Preblich, pro se,
Anchorage. Moshe Zorea, pro se, Anchorage.
Before: Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.
CARPENETI, Justice.
I. INTRODUCTION
Evalyn Preblich appeals from the summary dismissal of her
attorney malpractice action against Moshe Zorea. The superior
court granted summary judgment because the statute of limitations
had run. Because we conclude that Preblich had sufficient
information to alert her that she had a cause of action more than
six years before she filed suit, we affirm.
II. FACTS & PROCEEDINGS [Fn. 1]
Preblich retained Zorea in October 1987 to represent her
in a bankruptcy proceeding. After a 1988 conversion of Preblich's
case from Chapter 11 to Chapter 7 of the Bankruptcy Code, Preblich
and Zorea attended a meeting with Preblich's creditors. At this
meeting, Preblich learned that her bankruptcy trustee was entitled
to her escrow accounts and to administer her properties. Upon
learning this, Preblich experienced "total surprise and dismay
. . . ."
Following the meeting, Preblich discussed her financial
situation with Zorea. When Preblich expressed concern about how
she would pay her bills, Preblich recalled that Zorea stated that
she should look into receiving energy assistance from the state and
"consider signing up for welfare."
By 1989 Preblich became increasingly dissatisfied with
Zorea's representation. She stated that for a period of over two
months, she left "continuous messages" for Zorea to call her, and
that he never returned her calls. In August 1989 Preblich wrote a
letter to the bankruptcy court in which she tried to inform the
judge of her "distinct impression" that she "no longer had a lawyer
. . . ."
During the latter months of 1989, Preblich received a
number of papers from the bankruptcy court. Preblich recalled that
when she asked Zorea about these papers, he replied that they did
"not make any difference" to her, or that they were "not important"
to her bankruptcy action. Preblich, however, felt that the papers
did have "significant meaning," and she consulted with other
attorneys between August and September of 1989. These other
attorneys told Preblich that she "should take some kind of
immediate action."
On September 12, 1989 the bankruptcy court entered an
order that denied Preblich a debtor's discharge. In 1989 the
trustee in bankruptcy moved for summary judgment that Preblich was
not entitled to a debtor's discharge. Preblich met with Zorea
about a week later. When Preblich asked Zorea if he was still her
lawyer, Zorea responded that he was still her attorney of record.
Preblich stated that Zorea did not discuss the consequences of the
denial of discharge with her, and that he said that "[i]t was too
late to do anything about the bankruptcy . . . ." On October 3,
1989 the bankruptcy court entered a final judgment that denied
Preblich's discharge. [Fn. 2]
On October 23 Preblich again met with Zorea and received
the impression that he was through with her case. After the
meeting, Preblich tried to find someone else to represent her.
On December 12, 1989 Preblich discovered that a hearing
regarding the foreclosure of her home was scheduled for the next
day. Zorea did not attend the hearing, nor had he informed
Preblich that it was taking place. Preblich did attend and managed
to delay the foreclosure. On December 27 Preblich attended a
different hearing that involved other tracts of her real property.
Once again, Zorea failed to attend the hearing. Preblich, however,
did attend the hearing and submitted documents to the court that
she prepared with the assistance of new counsel. This lawyer
became Preblich's attorney of record in January 1990, remaining as
her attorney until June 1990. Preblich found it "apparent" that
Zorea "had absolutely no qualms or problems with this substitution,
as he had not been available or . . . of any help to [her] for
months."
In June 1990 Preblich, acting pro se, filed a grievance
against Zorea with the Alaska Bar Association. Zorea admitted to
misconduct and stipulated to a public reprimand from the Bar
Association in December 1995. On March 28, 1996 Preblich filed
this lawsuit for professional malpractice.
Preblich's complaint makes numerous allegations. Among
other things, it alleges that Zorea: (1) fraudulently
misrepresented that he had expertise in bankruptcy and breached his
contractual duty when he failed to file a Chapter 11 reorganization
plan, thus forcing her into Chapter 7 liquidation; (2) failed to
adequately represent her in the bankruptcy proceedings, causing the
loss of valuable property; (3) failed to inform her of a judicial
foreclosure on her property; (4) failed to answer the trustee's
opposition to her discharge from bankruptcy; and (5) failed to
return her calls or otherwise communicate with her. [Fn. 3] In his
answer, Zorea denied these allegations. For the purposes of
appeal, these allegations are taken as true. [Fn. 4]
In January 1998 Zorea moved for summary judgment on the
grounds that the action was barred by the statute of limitations.
Preblich opposed the motion. The superior court granted it on
February 27, 1998. [Fn. 5]
Preblich then filed a motion for reconsideration, arguing
that the statute of limitations was tolled because she had not
discovered the wrongful actions until June 1990. Because Preblich
was pro se, the court allowed her to submit additional facts in
opposition to summary judgment; the court also allowed Zorea to
respond. Zorea opposed Preblich's motion and submitted two
affidavits prepared and signed by Preblich in 1990. These
affidavits are discussed below.
The superior court denied Preblich's motion for
reconsideration. In its order, the court stated that Preblich's
"allegations, if true, raise serious lawyer malpractice issues."
Nevertheless, it found that Preblich's affidavit[s] established
that by August or September 1989, Preblich was unhappy with Zorea's
representation, felt he had abandoned her, informed the bankruptcy
court that Zorea no longer represented her, and began to consult
other attorneys. The court found that Preblich had learned by
December 1989 that she had nearly lost her home as a result of
Zorea's inattention. Based on these facts, the court ruled that
"reasonable minds could not differ on whether Preblich had
sufficient information to alert her to a malpractice claim against
Zorea prior to March 28, 1990."
Following the superior court's denial of her motion for
reconsideration, Preblich moved for oral argument and an
evidentiary hearing regarding the discovery issue. The court
treated the motion as one for reconsideration of the order denying
reconsideration, and denied it. The court noted that the new
affidavit submitted by Preblich asserted that she did not actually
know that she had a malpractice claim until she was within the
limitations period; however, it found that the affidavit did not
set forth facts material to the court's earlier holding that she
should have discovered the claim earlier.
Preblich then filed this appeal.
III. DISCUSSION
A. Standard of Review
Summary judgment is appropriate if the "pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, show that there is no genuine issue
as to any material fact and that any party is entitled to a
judgment as a matter of law." [Fn. 6] This court reviews a summary
judgment de novo. [Fn. 7] "Drawing all reasonable inferences in
favor of the non-movant, we determine whether the parties genuinely
dispute any facts material to a viable legal theory and, if not,
whether the undisputed facts entitle the movant to judgment as a
matter of law." [Fn. 8] The moving party bears the initial burden
of proving, through admissible evidence, the absence of genuine
factual disputes and its entitlement to judgment as a matter of
law. [Fn. 9] Once the moving party has established a prima facie
case, "the non-movant is 'required, in order to prevent entry of
summary judgment, to set forth specific facts showing that he could
produce admissible evidence reasonably tending to dispute or
contradict the movant's evidence, and thus demonstrate that a
material issue of fact exists.'" [Fn. 10]
B. The Superior Court Did Not Err in Granting Zorea's Motion
for Summary Judgment.
The six-year statute of limitations applies to this
professional malpractice action. [Fn. 11] Ordinarily, the statute
of limitations begins to run on the date the plaintiff is injured.
[Fn. 12] However, we have consistently held that the discovery
rule applies to professional malpractice actions. [Fn. 13]
Under the discovery rule, the cause of
action accrues when the plaintiff has information sufficient to
alert a reasonable person to the fact that he has a potential cause
of action. At that point, he should begin an inquiry to protect
his . . . rights and he is "deemed to have notice of all facts
which reasonable inquiry would disclose." [Fn. 14]
Accordingly, Preblich was required to bring suit within six years
of the time she knew or reasonably should have known of all the
elements of her cause of action.
The trial court held that Preblich had failed to bring
suit within six years of the time she should have discovered she
had an action against Zorea, and thus her suit was time barred.
1. Zorea established a prima facie case for summary
judgment.
Zorea submitted two affidavits signed by Preblich to
support his motion for summary judgment. In these affidavits,
Preblich states that she first became "extremely concerned" and
"dismayed" in November 1988 when she was ordered to surrender her
bank accounts and management of her property to the bankruptcy
trustee. She found it "most disturbing" and was "total[ly]
surprise[d]" to find that the trustee was entitled to her escrow
accounts and to manage her properties. Significantly, these events
occurred over one year before the trial court found the statute of
limitations had begun to run.
One of Preblich's affidavits states that in June 1989,
after the trustee moved for summary judgment on his complaint to
deny Preblich's discharge in bankruptcy due to an alleged
fraudulent transfer of stock, Preblich again became very concerned
and left numerous messages for Zorea. However, according to her
affidavit, Zorea did not return a single call between June 22, 1989
and September 14, 1989. Preblich then consulted other attorneys
who advised her to take immediate action.
Preblich stated that she wrote a letter in August 1989 to
the bankruptcy court to inform the judge that she no longer had an
attorney, and did not understand the documents she was receiving.
Then, she stated that in September she finally met with Zorea and
asked him if he was still her attorney. She testified that he
responded that he was still her attorney of record. However, he
had failed to oppose the trustee's motion, and summary judgment was
granted against her by the bankruptcy court on September 12, 1989.
She was served with this order. At a meeting with Zorea two days
after her first September meeting, Preblich recalled Zorea stating
that "[i]t was too late to do anything about the bankruptcy." She
left the meeting with the distinct impression that Zorea was
"finished" with her. On October 3 final judgment was entered
against Preblich on summary judgment by default. [Fn. 15] The
discharge of her debts that she sought was lost to her. She
received notice of the final judgment.
Nevertheless, Preblich met with Zorea again in late
October. Again she left with the impression that Zorea was done
representing her. At this point, according to Preblich's
affidavit, she began to look for another attorney.
Then, by mere chance, Preblich discovered two hearings
had been scheduled in December to determine whether her residence
and two tracts of land could be judicially foreclosed. She
attended both hearings; Zorea did not attend either. At the first
hearing, Preblich avoided foreclosure of her residence by obtaining
additional time to address the court. At the second hearing,
Preblich again represented herself, this time filing an objection,
prepared by an attorney, to the sale of two tracts of her land.
She had by then obtained the advice of a new attorney. This
attorney substituted in as counsel of record in January 1990 and
represented Preblich through June 1990.
Preblich stated that her new attorney reviewed her
financial documents, including bank statements, stock statements,
and tax returns. Preblich admitted that her new attorney then
informed her that certain transfers of property were improper, and
told her that her previous attorney should have discussed the
improper transfers with her before filing for protection under
Chapter 11.
This evidence shows that Preblich was aware no later than
December 1989 that Zorea failed both to communicate with her and to
represent her interests in several proceedings, which resulted in
significant harmful consequences to her. By November 1988 she had
lost control of management of her property and her bank accounts,
including escrow accounts that were an important source of funds to
her. Zorea had failed to warn her of this possibility. By August
1989 she was told by other attorneys she consulted to take
immediate action to avoid further adverse consequences. When she
questioned Zorea about it in September 1989, he told her it was too
late to do anything about the bankruptcy. By September 1989 she
had lost her discharge in bankruptcy because Zorea failed to take
any action. Then, in December, she discovered by chance that two
hearings had been scheduled concerning her home and two other
properties. Zorea had failed to notify her of these hearings, and
he did not attend them himself. As she later stated, had she not
attended the hearings she would have lost her house and two
properties. She obtained the services of a new attorney in
December 1989. Counsel reviewed her case and informed her of
significant failings in Zorea's representation. These facts are
sufficient to establish Zorea's prima facie case that Preblich was
on notice by the end of 1989 that Zorea's neglectful behavior and
the damage it had already caused her could potentially constitute
professional malpractice.
2. Preblich did not rebut Zorea's prima facie case.
In order to prevent entry of summary judgment, Preblich
was required to set forth specific facts showing that she could
produce admissible evidence reasonably tending to dispute or
contradict Zorea's evidence, and thus demonstrate that a material
issue of fact existed as to the date of discovery. [Fn. 16] She
failed to do this.
In response to Zorea's factual assertions, Preblich
merely stated that her case had merit. Then, in an affidavit
accompanying her motion for reconsideration, Preblich made the
conclusory statement that the date of discovery was June 1990, and
indicated a witness could be provided if necessary. Again, she did
not submit any evidence calling into question Zorea's assertions.
Her opposition was insufficient to overcome Zorea's prima facie
case that Preblich knew or should have known that she had a claim
sooner.
In sum, based on the evidence before the superior court,
Zorea established that Preblich had sufficient information by
December 1989 -- well before March 28, 1990 -- to alert a
reasonable person to the fact that Zorea's representation
potentially constituted malpractice. Therefore, summary judgment
was properly granted.
3. Preblich's additional arguments
Preblich makes two additional arguments on appeal. Each
argument fails.
First, Preblich argues that the limitations period should
be tolled pending final resolution of her bankruptcy action because
the extent of her damages cannot be determined until that case is
finally resolved. [Fn. 17] However, we have consistently held that
"a statute of limitations begins running when a party suffers
actual damages, without regard to whether the full extent of the
damages is known at the time." [Fn. 18] The above analysis shows
that Preblich suffered actual damage well before six years before
she filed suit in this case.
Second, Preblich argues that as a lay person she lacked
the legal sophistication to initially realize that her injuries
were caused by Zorea, and that it was not until June 1990 that she
realized that Zorea was even partly responsible. This argument
lacks plausibility.
The question of when Preblich should have reasonably
discovered that she had a cause of action "depends upon all of the
surrounding circumstances[,]" [Fn. 19] and includes consideration
of her sophistication in the particular area of knowledge. [Fn. 20]
Preblich is not an attorney and could not be expected to
immediately recognize the inadequacy or consequences of Zorea's
poor representation or lack of action. However, as previously
discussed, by the end of 1989, Preblich knew that she had lost
control of her funds without prior knowledge that this would
happen, had been denied discharge from bankruptcy on summary
judgment by default, and had nearly lost her residence and two
tracts of land by default. Preblich had consulted with numerous
attorneys in the fall of 1989, and her new attorney began advising
her in December 1989. Preblich knew she needed to take action, and
should have known that Zorea's inaction had caused, at least in
part, her injury. At this point, Preblich had been injured and
should have been aware of the injury. The statute of limitations
"begins running at the earliest point there is knowledge of
injury." [Fn. 21]
Moreover, in her brief before this court, Preblich states
that her new lawyer "tried to undo some of the harm that had been
done[,]" but quit the practice of law in June 1990. Thus, it is
reasonable to conclude that her new attorney had or should have had
knowledge of Preblich's potential malpractice action against Zorea
prior to March 1990. The new attorney reviewed financial
statements and documents submitted to the court, and informed
Preblich of failings in Zorea's representation. Whatever knowledge
Preblich's new attorney had is imputed to Preblich, [Fn. 22] and
because her new attorney should have discovered Preblich's cause of
action against Zorea prior to March 28, 1990, Preblich is charged
with constructive discovery prior to March 28, 1990. [Fn. 23] This
constitutes an additional basis to uphold the superior court's
decision.
IV. CONCLUSION
Because Preblich failed to raise any material factual
dispute regarding the date she knew of or should have discovered
her cause of action against Zorea, and because the evidence before
the superior court would lead reasonable minds only to the
conclusion that Preblich should have discovered the elements of the
cause of action before March 1990, rendering the March 28, 1996
complaint untimely, we AFFIRM the superior court.
FOOTNOTES
Footnote 1:
Because this case was dismissed on summary judgment, the
description of the facts draws permissible inferences in favor of
the non-movant, Preblich, from testimony contained in her two
affidavits. See Arctic Tug & Barge, Inc. v. Raleigh, Schwarz &
Powell, 956 P.2d 1199, 1200 (Alaska 1998) (citations omitted).
Footnote 2:
In June 1991, however, the bankruptcy court entered an order
that released Preblich "from all dischargeable debts."
Footnote 3:
In affidavits submitted to the superior court, Preblich also
alleges that Zorea: (1) failed to explain the ramifications of her
transfers of real property to members of her family made within one
year of the bankruptcy filing; (2) failed to explain the
ramifications of her use of various escrow accounts; (3) failed to
submit complete information on her assets and finances to the
court; (4) failed to give her accurate advice; and (5) advised her
not to reveal that she was the administrator and heir to her
deceased mother's estate.
Footnote 4:
See Wettanen v. Cowper, 749 P.2d 362, 363 (Alaska 1988).
Footnote 5:
Preblich filed a second "objection to motion for summary
judgment" on March 5, arguing that her failure to discover the
cause of action until June 1990 tolled the statute of limitations.
She also filed a motion to compel discovery on March 10, seeking
Zorea's file on her bankruptcy case. She states that she had not
yet received the February 27 court order, which was mailed on
March 2.
Footnote 6:
Alaska R. Civ. P. 56(c).
Footnote 7:
See Arctic Tug & Barge, Inc. v. Raleigh, Schwarz & Powell, 956
P.2d 1199, 1200 (Alaska 1998).
Footnote 8:
Id. (citation omitted).
Footnote 9:
See Shade v. Co & Anglo Alaska Serv. Corp., 901 P.2d 434, 437
(Alaska 1995) (citations omitted).
Footnote 10:
Jennings v. State, 566 P.2d 1304, 1309 (Alaska 1977) (internal
brackets omitted) (quoting Howarth v. First Nat'l Bank of
Anchorage, 540 P.2d 486, 489-90 (Alaska 1975)).
Footnote 11:
See Breck v. Moore, 910 P.2d 599, 603 (Alaska 1996) (holding
six-year statute of limitations applies to professional malpractice
actions claiming economic loss (citing Lee Houston & Assocs., Ltd.
v. Racine, 806 P.2d 848, 855 (Alaska 1991))); see also former AS
09.10.050. The legislature amended the statute of limitations in
1997, providing for a three-year limitations period for an action
brought on contract which accrues after August 7, 1997. See AS
09.10.053.
Footnote 12:
See Gudenau & Co., Inc. v. Sweeney Ins., Inc., 736 P.2d 763,
766 (Alaska 1987) (citing W. Keeton et al., Prosser and Keeton on
the Law of Torts sec. 30, at 165 (5th ed. 1984)).
Footnote 13:
See Breck, 910 P.2d at 603-04 (citing Lee Houston, 806 P.2d at
851 (malpractice by real estate agents); Gudenau, 736 P.2d at 766
(malpractice by insurance agents); Sharrow v. Archer, 658 P.2d
1331, 1334 (Alaska 1983) (malpractice by physician); Greater Area
Inc. v. Bookman, 657 P.2d 828, 829-30 (Alaska 1982) (malpractice by
attorney)).
Footnote 14:
Pedersen v. Zielski, 822 P.2d 903, 908 (Alaska 1991) (quoting
Mine Safety Appliances Co. v. Stiles, 756 P.2d 288, 292 (Alaska
1988)); see also State, Dep't of Corrections v. Welch, 805 P.2d
979, 982 (Alaska 1991).
Footnote 15:
According to the Stipulation for Discipline by Consent, ABA
File No. 19903114, at 5, Zorea did not answer the complaint, file
an opposition brief, or otherwise oppose the summary judgment
motion. The stipulation further indicates that in September 1989
the bankruptcy court granted the trustee summary judgment and
denied Preblich's discharge.
Footnote 16:
See Jennings v. State, 566 P.2d 1304, 1309 (Alaska 1977)
(quoting Howarth v. First Nat'l Bank of Anchorage, 540 P.2d 486,
489-90 (Alaska 1975)).
Footnote 17:
Preblich did not raise this argument below. "Ordinarily an
issue which was not raised in the trial court will not be treated
on appeal." [Fn. 24] Padgett v. Theus, 484 P.2d 697, 700 (Alaska
1971). However, we have in the past relaxed procedural
requirements for pro se litigants. [Fn. 25] See Breck v. Ulmer,
745 P.2d 66, 75 (Alaska 1987). Accordingly, we address this issue
briefly.
Footnote 18:
Beesley v. Van Doren, 873 P.2d 1280, 1282 (Alaska 1994)
(citing Wettanen v. Cowper, 749 P.2d 362, 365 (Alaska 1988)).
Footnote 19:
Breck v. Moore, 910 P.2d 599, 604 (Alaska 1996).
Footnote 20:
See id. at 605 (citing Pedersen v. Zielski, 822 P.2d 903, 907
(Alaska 1991) (medical terminology); Long v. Abbott Mortgage Corp.,
459 F. Supp. 108, 116-17 & n.6 (D. Conn. 1978) (sophisticated
investor); Johnson v. Haberman & Kassoy, 247 Cal. Rptr. 614, 619
(App. 1988) (complicated lease)).
Footnote 21:
Beesley, 873 P.2d at 1282 n.2 (citing Hunt v. Bittman, 482 F.
Supp. 1017, 1021-22 & n.22 (D.D.C. 1980), aff'd 652 F.2d 196 (D.C.
Cir. 1981)).
Footnote 22:
See Breck, 910 P.2d at 604-05 (citing Pedersen, 822 P.2d at
907 n.5).
Footnote 23:
See id.
Footnote 24:
Padgett v. Theus, 484 P.2d 697, 700 (Alaska 1971).
Footnote 25:
See Breck v. Ulmer, 745 P.2d 66, 75 (Alaska 1987).
