Third Circuit Court of Appeals Applies “Discovery Rule” to Claims of Legal Malpractice

In Knopick v. Connelly, an attorney’s assurances to the client that a hearing went well and there was “nothing to worry about” were found to toll the statute of limitations for a claim of malpractice, where the claim is based upon the attorney’s failure to call key witnesses at the hearing.

The Knopick case actually involves two instances of alleged legal malpractice: one stemming from a divorce proceeding (of which the above-referenced hearing was a part) and one stemming from another attorney’s failure to file a legal malpractice case against the divorce attorneys.  Judge Rambo of the Middle District had held no malpractice case against the attorney retained to pursue a malpractice claim against the divorce attorneys was feasible, as the statute of limitations had run prior to his retention.

In reversing, the Third Circuit Court of Appeals held that Judge Rambo was wrong to focus on the date of the divorce hearing (i.e. the date of the alleged malpractice), but should have instead focused on when the client knew he was injured by the attorney’s failure to call the witnesses at the divorce hearing.  It was undisputed that the client knew that no witnesses were called on the date of the hearing.  However, it was unclear whether the client knew he was injured as a result.

In the divorce proceedings, the client’s ex-wife moved to set aside an agreement regarding distribution of retirement plan proceeds, claiming the client had hidden over $2 million in stock. The client advised the divorce attorney of the identity of four witnesses (the couple’s accountant, the accountant’s wife, and the two attorneys representing the couple in the original divorce proceedings) who could testify that the ex-wife was aware of the stock holdings. The attorney failed to call them at the hearing, instead advising the client they were not necessary.  In the period between the hearing and the eventual court order setting aside the original distribution agreement, the attorney continually advised the client that the hearing had gone well and the motion to set aside the agreement would be denied.  However, eleven months later, the court granted the wife’s motion. The Third Circuit found that a jury could disagree about whether the client reasonably knew or should have known of his injury before the court entered its order granting the wife’s motion. Accordingly, the Third Circuit reversed the Middle District’s grant of summary judgment based upon the statute of limitations.