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Michigan Retroactively Applies Legal Malpractice Six Year Repose Statute to Bar Claims Arising Prior to Enactment of Statute

Phil SeltzerNortley v. Hurst, — Mich App —-; — N.W.2d —- (2017)(Michigan Court of Appeals, issued October 10, 2017, Docket #333240)(2017 WL 4526679)

Phillip E. Seltzer, Esq. of Lipson Neilson P.C., Bloomfield Hills, Michigan
Phone: 248-593-5000

In Nortley v. Hurst, the Michigan Court of Appeals held that Michigan’s six-year repose statute for legal malpractice claims applies retroactively to include claims based on facts that occurred prior to enactment and that may not have accrued until after enactment. This is true regardless of whether a plaintiff could not have reasonably discovered the legal malpractice claim or the existence of injury until a time after the enactment of the repose statute.

Plaintiff, Sarah Lynn Nortley, retained Dennis Hurst, of the law firm Dennis Hurst & Associates, in August 2008 to represent her in a divorce proceeding. A judgment of divorce as entered on June 12, 2009 – just 11 days before the tenth anniversary of the marriage. Plaintiff claimed that over 6 years later, after a conversation with her mother, she discovered a person could claim social security benefits through a former spouse if the marriage lasted ten years or more.

Nortley brought a legal malpractice claim against defendants on January 15, 2016, asserting that the failure of defendants to advise her that social security benefits were only available to a former spouse if the marriage lasted ten years or more.

On January 2, 2013 — three and half years after Nortely’s divorce was concluded and over three years before Nortley filed her malpractice claim, the Michigan legislature adopted a six-year statute of repose for all legal malpractice claims. MCL 600.5838b.

Defendants file a dispositive motion seeking summary dismissal under the six-year statute of repose claiming that it barred her claim. The trial court agreed. Nortley appealed claiming the trial court wrongly applied that repose statute because it went into effect after her claim accrued and it did not apply retroactively, would deny her due process, and would deny her a vested right in her cause of action for malpractice.

The Michigan Court of Appeals Decision
In affirming, the Court of Appeals noted that the statute of repose “reflects the reasonable legislative purpose of protecting professionals from stale claims.” “Generally, a new or amended statute applies prospectively unless the Legislature clearly and unequivocally intends for the statute to have retroactive effect.” However, an exception to the general rule presuming prospective application is a statute that is remedial or procedural in nature and whose prospective application will not deny vested rights.

Nortley contended the repose statute should not apply retroactively to bar her malpractice claim because the Legislature enacted it after her claim accrued and did not provide for retroactive application. Nortley argued her malpractice complaint was timely because she filed it within six months of discovering the existence of the malpractice claim, per the statute of limitations in Michigan. Under the limitation statutes, a person can timely file a suit either within two years from accrual of the claim – namely, from the last day the lawyer stops serving the plaintiff in a professional capacity on the matter giving rise to the claim (MCL 600.5805[1] and [6]) or within six months of when a plaintiff discovered or should have discovered the claim, whichever period is later. MCL 600.5838(2).

However, under the six-year repose statute, MCL 600.5838b(1)(b), accrual is not linked to a date of injury or its discovery but, instead, precludes any recovery after a fixed period of time, namely, it bars a legal malpractice claim “six years after the date of the act or omission that is the basis for the claim.”

The Court of Appeals rejected the argument that retroactive application would deny Nortley a “vested right.” The new repose statute did not prevent the filing of a timely claim because of an immediate preclusive effect. Nortley’s malpractice claim accrued after entry of her divorce judgment in 2009. When the repose statute took effect in 2013, she had more than two years to bring a timely claim within the six-year repose period.

The Court also rejected the argument that Nortley’s subsequent discovery of the malpractice claim should change the result. Noting that a statute of limitation bars a claim after it accrues, a repose statute bars a claim after expiration of a specified time period from a designated triggering event – in this instance, the defendant’s negligent act or omission. Accordingly, it may prevent a claim from accruing even if the injury or its discovery happens after the statutory period has expired. In sum, the repose statute “makes clear that the six-year period of repose caps the time for bringing a claim within six months of discovery.”

Finally, the Court rejected Nortley’s due process claim, noting a statute comports with due process if it “bears a reasonable relation to a permissible legislative objective.” Because the repose statute “reflects the reasonable legislative purpose of protecting professionals from stale claims” and its enactment did not have an immediate preclusive effect on Nortley’s claim, no due process violation occurred.

Significance of Decision
The case is significant for lawyer defendants sued for conduct springing from any alleged negligent act or omission over six years from the alleged negligence – regardless of whether that negligence occurred before the enactment of the repose statute. By their very nature, statutes of limitation and statutes of repose are arbitrary and do not discriminate between the just and unjust claim or the avoidable and unavoidable delay.

However, they all recognize the basic notion that a defendant has the right to be free, at some point, from stale claims and the increasing jeopardy of fading memories and lost evidence. Repose statutes attempt to cap or otherwise set the outside time parameter when such claims are deemed expired regardless of knowledge of a claim or the existence of injury.

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