135 Nev., Advance Opinion W
IN THE SUPREME COURT OF THE STATE OF NEVADA
TAE-SI KIM, AN INDIVIDUAL; AND No. 74803
JIN-SUNG HONG, AN INDIVIDUAL,
Appellants,
vs.
DICKINSON WRIGHT, PLLC, A
NEVADA PROFESSIONAL LIMITED FILED
LIABILITY COMPANY; JODI
DONETTA LOWRY, ESQ., AN JUN 1 3 2019
INDIVIDUAL; JONATHAN M.A. EUZABETH A.
SALLS, ESQ., AN INDIVIDUAL; ERIC Adi
% 4,44E.
E
DOBBERSTEIN, ESQ., AN
INDIVIDUAL; AND MICHAEL G.
VARTANIAN, ESQ., AN INDIVIDUAL;
Respondents.
Appeal from a district court order granting a motion to dismiss
in a legal malpractice action. Eighth Judicial District Court, Clark County;
James Crockett, Judge.
Reversed and remanded.
Brandon L. Phillips, Attorney at Law, PLLC, and Brandon L. Phillips, Las
Vegas,
for Appellants.
Morris Law Group and Steve L. Morris and Ryan M. Lower, Las Vegas,
for Respondents.
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BEFORE THE COURT EN BANC. 1
OPINION
By the Court, SILVER, J.:
This case allows us to clarify the interplay between Nevada's
litigation malpractice tolling rule and 28 U.S.C. § 1367(d) (2012), a federal
tolling statute, on a legal malpractice claim. We first address the
application of § 1367(d), which tolls the statute of limitations for a state-law
claim joined with a federal claim under supplemental jurisdiction while the
state-law claim is pending in federal court, and for at least 30 days after the
state-law claim's dismissal from federal court. We clarify that § 1367(d)
distinguishes between an "action" and a "claim," and thus, the state-law
claim's dismissal is sufficient to end the federal tolling period. Finally, we
reaffirm our prior holdings that the litigation malpractice tolling rule 2 does
not apply to non-adversarial proceedings.
Because 28 U.S.C. § 1367(d) tolled claims brought by appellants
Tae-Si Kim and Jin-Sung Hong (collectively, Kim) only until the claims
were dismissed, we hold that the district court erred by finding that Kim's
claims against Charles M. Damus, Esq., were tolled until the remaining
claims in the federal action were also dismissed. Furthermore, because the
litigation malpractice tolling rule does not apply to the claims against
'The Honorable Kristina Pickering, Justice, did not participate in the
decision of this matter.
2While the parties refer to the tolling rule as the "litigation tolling
rule," our caselaw consistently calls it the "litigation malpractice tolling
rule." See Branch Banking & Tr. Co. v. Gerrard, 134 Nev., Adv. Op. 106,
432 P.3d 736, 738 (2018). Accordingly, we use the latter term throughout
this opinion.
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Damus, Kim's claims against Damus potentially became barred by the
statute of limitations during respondents' representation of Kim. Since the
litigation malpractice tolling rule does apply to the claims against
respondents, we further hold that the district court erred by finding that
Kim's claims against respondents were timed-barred by Nevada's statute of
limitations for legal malpractice claims.
FACTS AND PROCEDURAL HISTORY
Kim hired Damus to handle a real property dispute in
December 2008. Damus failed to file a complaint to protect Kim's interest
in the property, and the property was foreclosed on. Kim fired Damus in
September 2009. One month prior to firing Damus, Kim hired the law firm
of Gibson Lowry Burris LLP (the Gibson firm) to also pursue claims related
to the property dispute. Under the Gibson firm's representation, Kim filed
a complaint regarding the property in Nevada's federal district court. Kim
later amended the complaint on March 2, 2010, to include claims against
Damus for legal malpractice, negligent undertaking to perform services,
and unjust enrichment for his failure to file a complaint stopping the
foreclosure of the property. During this time, respondent Dickinson Wright,
PLLC, absorbed the Gibson firm. Damus filed a motion to dismiss the
claims against him for lack of subject matter jurisdiction, which the federal
court granted on December 6,2010.
Kim entered into an amended and restated legal services
agreement with Dickinson Wright, during which time Kim's federal action
was still ongoing. More than three years later, Kim emailed a Dickinson
Wright attorney asking whether the Gibson firm had previously filed Kim's
malpractice claims against Damus in state court. The attorney responded
that the Gibson firm had not filed a state action against Damus, that
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Dickinson Wright would not do so because it was terminating its
representation of Kim, and that Kim should contact other counsel if they
wished to pursue such claims. The federal district court dismissed the
remaining federal claims with prejudice on September 4, 2015.
Kim filed a malpractice complaint in state court against
Dickinson Wright on June 12, 2017. Kim argued that Dickinson Wright
failed to sue Damus in state court and thereafter allowed the statute of
limitations on those claims to run. Kim argued that 28 U.S.C. § 1367(d)
only tolled the claims against Damus until the federal court dismissed the
claims and, therefore, the statute ran during the firm's representation. Kim
also argued that Nevada's litigation malpractice tolling rule did not apply
to the claims against Damus, such that those claims are now barred, but it
did apply to toll the claim against Dickinson Wright during the federal
litigation, and therefore, the claim against Dickinson Wright was not time-barred. Conversely, Dickinson Wright argued that § 1367(d) and Nevada's
litigation malpractice tolling rule tolled Kim's claims against Damus until
the federal action ended and, therefore, Kim had plenty of time to sue the
attorney but let the statute of limitations run. Further, Dickinson Wright
argued that Kim's malpractice claim against it was time-barred.
The district court granted the motion to dismiss, finding that
(1) 28 U.S.0 § 1367(d) tolled the statute of limitations on any state action
against Damus until September 4, 2015, when the federal action was
dismissed, so Kim could have brought suit then as advised by Dickinson
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Wright;3 (2) under Nevada's litigation malpractice tolling rule, Kim's legal
malpractice claim against Damus did not accrue until the end of the federal
action when damages were certain; and (3) Kim's claim against Dickinson
Wright was time-barred under NRS 11.207. 4 Kim appealed.
DISCUSSION
We rigorously review an order granting an NRCP 12(b)(5)
motion to dismiss, recognizing all factual allegations in the complaint as
true and drawing all inferences in the plaintiffs' favor, and reviewing all
legal conclusions de novo. Buzz Stew, LLC v. City of N. Las Vegas, 124 Nev.
224, 227-28,
181 P.3d 670, 672 (2008). "A complaint should only be
dismissed for failure to state a claim if it appears beyond a doubt that it
could prove no set of facts, which, if true, would entitle it to relief."
3 The district court found that Dickinson Wright informed Kim of the
tolling statute in the July 2015 email, which Kim does not dispute on
appeal.
4 The district court also found that Dickinson Wright's exercise of
professional judgment was not actionable. We decline to address that
finding on appeal—except to note that Nevada does not currently recognize
the attorney judgment rule—as Kim did not oppose this argument in their
opposition to Dickinson Wright's motion to dismiss and because they do not
cogently argue it on appeal. Edwards v. Emperor's Garden Rest., 122 Nev.
317, 330 n.38,
130 P.3d 1280, 1288 n.38 (2006) (providing that this court
need not consider arguments not adequately briefed, supported by relevant
authority, or cogently argued); Old Aztec Mine, Inc. v. Brown, 97 Nev. 49,
52,
623 P.2d 981, 983 (1981) ("A point not urged in the trial court, unless it
goes to the jurisdiction of that court, is deemed to have been waived and will
not be considered on appeal."). Additionally, the district court also denied
reconsideration in this case; however, because we reverse and remand, we
need not reach this issue here.
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Szymborski v. Spring Mountain Treatment Ctr., 133 Nev. 638, 641,
403 P.3d
1280, 1283 (2017) (internal quotation marks omitted).
I.
Kim first argues that 28 U.S.C. § 1367(d) does not apply to the
claims against Damus, and thus, the statute of limitations ran on those
claims during Dickinson Wright's representation. 5 Conversely, Dickinson
Wright argues that § 1367(d) "stop [s] the clock," Artis v. District of
Columbia, 583 U.S. 138 S. Ct. 594, 598 (2018), on a state-law
claim's statute of limitations once it is filed in federal court, and that the
clock does not begin to run until the entire federal action is dismissed, even
if the state-law claim is dismissed earlier in the litigation.
We review statutory construction issues de novo. L Cox Constr.
Co., LLC v. CH2 Invs., LLC, 129 Nev. 139, 142,
296 P.3d 1202, 1203 (2013).
In doing so, we will apply a statute's plain language "and construe the
statute according to its fair meaning." Id.28 U.S.C. § 1367(d) states the following:
The period of limitations for any claim
asserted under [supplemental jurisdiction], and for
any other claim in the same action that is
voluntarily dismissed at the same time as or after
the dismissal of the claim under [supplemental
jurisdiction], shall be tolled while the claim is
pending and for a period of 30 days after it is
5While Kim focuses on the litigation malpractice tolling rule in the
opening brief and does not address the federal statute until the reply brief,
we analyze this issue "in the interests of justice," Powell v. Liberty Mitt. Fire
Ins. Co., 127 Nev. 156, 161 n.3,
252 P.3d 668, 672 n.3 (2011), and in
consideration of our policy of resolving cases on the merits whenever
possible, Huckabay Props., Inc. v. NC Auto Parts, LLC, 130 Nev. 196, 203,
322 P.3d 429, 433 (2014) (explaining that this court prefers to decide cases
on the merits).
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dismissed unless State law provides for a longer
tolling period.
The statute's plain language distinguishes between the word "claim" and
"action" in the phrase "any other claim in the same action." 28 U.S.C.
§ 1367(d). Thus, § 1367(d)'s language makes clear that it does not toll the
relevant statute of limitations while the action is pending, but instead only
tolls the relevant statute of limitations "while the [state-law] claim is
pending." Id. (emphasis added). A federal court's dismissal of a state-law
claim, rather than dismissal of an entire action, therefore, triggers the
running of the relevant statute of limitations. See 2A Norman J. Singer &
Shambie Singer, Statutes and Statutory Construction § 46:1 (7th ed. 2014)
(providing that courts consider a statute's "natural and ordinary
signification and if there is no ambiguity or obscurity in its language, there
will usually be no need to look elsewhere to ascertain intent" (internal
quotation marks omitted)).
Further, the United States Supreme Court has explained that
§ 1367(d) tolls the statute of limitations period while a supplemental claim
is pending in federal court, see Jinks v. Richland Cty., S.C., 538 U.S. 456,
459 (2003), and in another case that "it suspends the statute of limitations
[both] while the claim is pending in federal court and for 30 days
postdismissal," Artis, 583 U.S. at , 138 S. Ct. at 603 (emphasis added).
Neither case provides that the statute of limitations on a dismissed state-law claim is tolled while the entire action is pending. Therefore, we
conclude that, pursuant to § 1367(d), the statute of limitations for a state-law claim filed in federal court stops running only while the claim is pending
in federal court and for 30 days after the state-law claim's dismissal.
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Kim fired Damus in September 2009 and then filed the claims
in federal court against Damus under supplemental jurisdiction on
March 2, 2010, and the federal court dismissed these claims on
December 6, 2010. Pursuant to 28 U.S.C. § 1367(d), the statute of
limitations for Kim's claims against Damus was tolled only from March 2,
2010, until December 6, 2010, plus 30 days. Thereafter, the statute of
limitations began running again. Accordingly, the district court erred by
finding that the relevant statute of limitations was tolled until
September 4, 2015, the date the federal court dismissed the remainder of
Kim's federal action.
Next, Kim argues that the district court erred by finding that
the litigation malpractice tolling rule applied to the claims against Damus
because there was no underlying suit on which to base the tolling. Kim
further argues that the rule applies to the claim against Dickinson Wright,
and therefore, the district court erred in concluding that the claim was time-barred. Conversely, Dickinson Wright argues that, under Brady, Vorwerck,
Ryder & Caspino v. New Albertson's, Inc., 130 Nev. 632,
333 P.3d 229 (2014),
and Semenza v. Nevada Medical Liability Insurance Co., 104 Nev. 666,
765
P.2d 184 (1988), Kim's malpractice claim against Damus could not be filed
until damages were certain, which would occur when the federal action
ended. Furthermore, Dickinson Wright argues that Kim's legal malpractice
claim against it is time-barred under NRS 11.207(1).
NRS 11.207(1) provides the limitations period for legal
malpractice claims:
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An action against an attorney. . . to recover
damages for malpractice, whether based on a
breach of duty or contract, must be commenced
within 4 years after the plaintiff sustains damage
or within 2 years after the plaintiff discovers or
through the use of reasonable diligence should have
discovered the material facts which constitute the
cause of action, whichever occurs earlier.
Nevada has adopted a special tolling rule, however, for when the
malpractice is alleged to have occurred during an attorney's representation
of a client in active litigation, aptly named the litigation malpractice tolling
rule. Branch Banking, 134 Nev., Adv. Op. 106, 432 P.3d at 738 ("As its
name suggests, the litigation malpractice tolling rule applies to malpractice
committed by a lawyer while representing a client in a lawsuit."). Thus, the
tolling rule does not apply to non-adversarial or transactional
representation, and it does not apply before the attorney files a complaint.
See Moon v. McDonald, Carano & Wilson LLP, 129 Nev. 547, 552,
306 P.3d
406, 409-10 (2013). Instead, the litigation malpractice tolling rule applies
to the two-year discovery rule, serving to toll a malpractice claim's statute
of limitations until the underlying litigation is resolved and damages are
certain. Branch Banking, 134 Nev., Adv. Op. 106, 432 P.3d at 738-40
(discussing that the rule's purpose is to ensure that plaintiffs do not
prematurely file malpractice claims because, if a party appeals from the
final order of a case wherein the malpractice was alleged to occur, any
resulting damages may be reduced or resolved by the appellate court's
decision); Brady, 130 Nev. at 642, 333 P.3d at 235 ("When the litigation in
which the malpractice occurred continues to progress, the material facts
that pertain to the damages still evolve as the acts of the offending attorney
may increase, decrease, or eliminate the damages that the malpractice
caused.").
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Here, Kim fired Damus before they filed a complaint, and so
Damus did not represent Kim in an adversarial proceeding. Therefore, the
litigation malpractice tolling rule does not apply to Kim's claims against
Damus, and the district court erred in that conclusion. Because the district
court's dismissal order was based in part on this erroneous conclusion, we
must reverse and remand this case to the district court for it to determine
whether Kim's malpractice claims against Dickinson Wright are still
subject to dismissal in light of the fact that Kim's claims against Damus
possibly became time-barred under NRS 11.207(1) while Dickinson Wright
was representing Kim, unless the claim against Dickinson Wright itself is
time-barred.
The litigation malpractice tolling rule does apply to Kim's claim
against Dickinson Wright. The firm represented Kim in an adversarial
proceeding—the federal action—and allegedly committed legal malpractice
during those proceedings by failing to file in state court legal malpractice
claims against Damus before the statute of limitations expired. 6 Regardless
of when Kim discovered the alleged malpractice, the malpractice claim was
tolled until the end of those federal proceedings, pursuant to the litigation
malpractice tolling rule. See Branch Banking, 134 Nev., Adv. Op. 106, 432
P.3d at 738. Unlike the federal statute, which distinguishes between claims
and actions, the Nevada litigation malpractice tolling rule does not. The
federal action ended, and the statute of limitations began running, on
September 4, 2015, and, at the earliest, the statute of limitations would
have run two years later in September 2017. Kim filed the state claim
against Dickinson Wright on June 12, 2017, within either the two-year or
6 Dickinson Wright does not dispute that Kim had valid claims for
legal malpractice against Damus.
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four-year statutory period for legal malpractice claims. Therefore, we
conclude that Kim's district court case was not time-barred, and the district
court erred in dismissing the case on that basis.
CONCLUSION
28 U.S.C. § 1367(d) tolls the statute of limitations for a state-law claim filed in federal court under supplemental jurisdiction while the
state-law claim is pending in federal court and for at least 30 days after the
state-law claim's dismissal, regardless of the continuation or dismissal of
other claims in that action. Thus, the federal court's dismissal of Kim's
state-law claims against Damus is what triggered the relevant statute of
limitations to continue running, and the district court's conclusion that the
statute of limitations did not continue running until the entire federal
action was dismissed was erroneous. Furthermore, the district court erred
in concluding that the litigation malpractice tolling rule applied to Kim's
claims against Damus—Damus never represented Kim in an adversarial
proceeding, and the tolling rule therefore does not apply. Based on these
conclusions, the statute of limitations for Kim's claims against Damus may
have lapsed during Dickinson Wright's representation of Kim, supporting
Kim's malpractice claim against Dickinson Wright. Finally, we hold that
Nevada's litigation malpractice tolling rule applies to Kim's malpractice
claim against Dickinson Wright and, therefore, the district court erred in
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concluding that Kim's claim was time-barred by NRS 11.207(1).
Accordingly, we reverse the district court's order of dismissal and remand
for further proceedings on Kim's claim consistent with this opinion.
J.
Silver
We concur:
C.J.
Gibbons
Hardesty
1 &Loin
4.-A
J.
Parraguirre
J.
Stiglich
64/
Cadish
J.
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