Best Choice Fund, LLC v. Low & Childers, P.C.
228 Ariz. 502
| Ariz. Ct. App. | 2012Background
- NT is an Arizona mutual risk insurance/captive insurer formed to insure taxi services; NT retained L & C for formation, licensing, and regulatory compliance.
- DOI issued NT a license in Sept 2005 with a Conditions Addendum requiring USA to be a signatory on checks and to report capital/surplus issues.
- USA served as NT's captive manager starting Sept 2005; after suspension of NT's license in Feb 2006, NT amended its business plan and proceeded to wind down.
- March 2006 settlements: NT and USA executed a mutual release; NT and L & C executed a separate mutual release; L & C continued to assist during run-off.
- In 2009 NT sued L & C for legal malpractice and breach of contract and USA for breach of contract; the trial court granted summary judgment for L & C and for USA on certain theories, prompting appeal.
- Arizona Court of Appeals affirmed L & C’s summary judgment on NT’s legal malpractice claim and reversed USA's accord-and-satisfaction defense, remanding for further proceedings on that issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Accrual date for NT’s legal malpractice claim | NT contends accrual occurred in June 2008, supporting timely filing within two years. | L & C argues accrual occurred in February 2006 when suspension issued, outside the two-year limit. | Accrual occurred in February 2006; June 2008 not controlling. |
| Continuous representation tolling applicability | NT seeks tolling under continuous representation through run-off to extend accrual date. | L & C contends doctrine not applicable or no viable tolling under Arizona law. | Even assuming applicability, tolling ends by March 2006, more than two years before suit; no effect on judgment. |
| Accord-and-satisfaction defense to NT’s breach claim against USA | NT disputes validity of USA Release as accord and satisfaction due to questions of authority and consideration. | USA asserts the Release was a valid accord and satisfaction supported by consideration and authority. | Summary judgment improper; material issues exist regarding Gill's authority to bind NT. |
| Authority to bind principal via release (Gill’s actual/apparent authority) | NT contends Gill lacked actual authority; NT argues apparent authority is also in dispute. | USA asserts Gill’s authority to bind NT to the Release, relying on bylaws and conduct. | Material issues of fact exist regarding Gill's actual/apparent authority; remand warranted. |
Key Cases Cited
- Glaze v. Larsen, 207 Ariz. 26 (Ariz. 2004) (accrual when negligent conduct known and damages ascertainable)
- Amfac Dist. Corp. v. Miller (Amfac I), 138 Ariz. 155 (Ariz. App. 1983) (litigation-based malpractice accrual deferred until litigation concluded)
- Amfac Dist. Corp. v. Miller (Amfac II), 138 Ariz. 152 (Ariz. App. 1983) (damages considered irremediable after decision in appeal)
- Commercial Union Ins. Co. v. Lewis & Roca, 183 Ariz. 250 (Ariz. App. 1995) (accrual and damages concepts in malpractice contexts)
- Lois Grunow Mem'l Clinic v. Davis, 49 Ariz. 277 (Ariz. 1937) (non-litigation malpractice accrual based on negligent advice and harm)
- Keonjian v. Olcott, 216 Ariz. 563 (Ariz. App. 2007) (two-year statute for legal malpractice claims)
- Ruesga v. Kindred Nursing Ctrs., L.L.C., 215 Ariz. 589 (Ariz. App. 2007) (agency authority concepts relevant to binding principal)
- Shumsky v. Eisenstein, 96 N.Y.2d 164 (N.Y. 2001) (continuous representation doctrine in some jurisdictions)