Appeal from the Superior Court in Maricopa County. No. CV2009-035805. The Honorable Arthur T. Anderson, Judge.
Leonard & Felker, P.L.C., Tucson, David J. Leonard, Counsel for Plaintiff/Appellant.
Dickinson Wright PLLC, Phoenix, Gary L. Birnbaum, David J. Ouimette, Counsel for Defendants/Appellees.
Presiding Judge Peter B. Swann delivered the opinion of the court, in which Judge Kenton D. Jones and Judge Michael J. Brown joined.
[¶1] In this case, we hold that a claim for legal malpractice arising out of the alleged failure to timely commence an action, or to join a party in an existing action, is subject to the accrual rule established by Amfac Distribution Corp. v. Miller (" Amfac I " ), 138 Ariz. 155, 673 P.2d 795 (App. 1983), and Amfac Distribution Corp. v. Miller (" Amfac II " ),
[236 Ariz. 540] 138 Ariz. 152, 673 P.2d 792 (1983). Such conduct occurs " during the course of litigation" under Amfac, and a malpractice claim based on that conduct does not accrue until the underlying litigation is finally resolved by completion or waiver of the appellate process.
FACTS AND PROCEDURAL HISTORY
[¶2] In 1997, Miriam Hayenga purchased a parcel of real property from Gosnell Builders Corporation of America (" Gosnell" ). According to Hayenga, both Gosnell and the City of Phoenix told her before the purchase that the property's zoning allowed for the development of 120 dwelling units. But when she attempted to sell the property to Hilton Grand Vacations Company (" Hilton" ) in 2000, the City informed her that development on the property was limited to far fewer than 120 units, and the sale negotiations ceased.
[¶3] In summer 2000, Hayenga spoke about the zoning issues with counsel from Beus Gilbert PLLC. According to Hayenga, Beus Gilbert advised her to retain different counsel to have the property rezoned and told her that the firm would thereafter pursue an action against Gosnell. Hayenga employed Withey Morris PLC to represent her in an application to amend the development restrictions on the property, and secured an amendment that allowed the development of 78 units on the property. In 2002, she sold the property to Paradigm Communities, Inc.
[¶4] In 2003, Hayenga (represented by Beus Gilbert) brought an action against Gosnell for fraud, negligent misrepresentation, and consumer fraud based on Gosnell's presale representations regarding the property's development restrictions. The matter proceeded to a jury trial, and on August 2, 2007, the jury returned a verdict in favor of Gosnell. Gosnell thereafter applied for an award of attorney's fees and costs.
[¶5] On October 11, 2007, Hayenga wrote a letter to Beus Gilbert expressing her dissatisfaction with the outcome of the trial. Explaining that she was " absolutely shocked" to have learned during the trial that City officials admitted to mistakes, she questioned " why The City was not named in our original complaint," posited that Beus Gilbert " had a conflict in pursing any action against The City of Phoenix," and stated that she was " quickly drawing the conclusion that Beus Gilbert was negligent." She demanded that Beus Gilbert pay the damages she had sought against Gosnell, reimburse her for her costs and time, and pay any attorney's fees and costs awarded to Gosnell. Not counting the prospective fee and cost award, Hayenga's demand totaled approximately $1,890,000. Hayenga stated that if Beus Gilbert did not respond to the demand, she would " have no option but to pursue th[e] matter legally." Beus Gilbert replied to Hayenga's letter on October 22, 2007, denying any negligence and informing Hayenga that the firm intended to withdraw from its representation of her in the posttrial proceedings. Hayenga agreed to the withdrawal, and shortly thereafter contacted the law firm of Leonard & Felker PLC to discuss possible claims against Beus Gilbert.
[¶6] The same day that Hayenga wrote to Beus Gilbert, she personally submitted a notice of claim to the City, alleging that she first learned that " the City, not Gosnell, made the mistakes" when City officials testified in the Gosnell litigation on July 26 and August 1, 2007. Hayenga demanded over $5,800,000 in damages from the City. The City responded by letter dated October 26, 2007, stating that it was ...