Epstein case is overruled
A car dealership case against a law firm provided the South Carolina Supreme Court the opportunity to reverse its prior ruling on the point in time the three-year statute of limitations begins to run in a legal malpractice case. Interestingly, retired Chief Justice Toal’s dissent in the earlier case was adopted. The new bright-line rule in South Carolina is that the statute of limitations does not begin to run in a legal malpractice case that is appealed until the appellate court disposes of the action by sending a remittitur to the trial court.
The current case, Stokes-Craven Holding Corp. v. Robinson*, involved a negligence suit against a law firm that was dismissed at summary judgment based on the expiration of the three-year statute of limitations. The automobile dealership had been sued by a consumer who discovered the vehicle he purchased had sustained extensive undisclosed damage prior to his purchase. After an adverse jury verdict which was affirmed on appeal, the dealership sued its lawyer, arguing that the lawyer, among other matters, failed to adequately investigate the facts in the case, failed to conduct adequate discovery, and failed to settle the case despite the admission by the dealership that it had “done something wrong”.
The lower court, following precedent, found that the dealership knew or should have known it had a legal malpractice claim against its trial counsel on the date of the adverse jury verdict. A 2005 South Carolina Supreme Court case, Epstein v. Brown **, had held just that, despite the fact that the claimant in the earlier case, like the current case, had filed an appeal.
Epstein represented a minority position in the country, according to the current case. A majority of states have adopted the “continuous-representation rule”, which permits the statute of limitations to be tolled during the period an attorney continues to represent the client on the matter out of which the alleged legal malpractice arose. In Stokes-Craven, our Court continued to reject the continuous-representation rule, finding that rule to be problematic because its application may be unclear under some factual scenarios. Our Court looked to existing appellate court rules to the effect that an appeal acts as an automatic stay as to the judgment in the lower court. In other words, if the claimant appeals the matter in which the alleged malpractice occurred, any basis for the legal malpractice cause of action is stayed while the appeal is pending.
The Court stated that its new bright-line rule is consistent with the discovery rule which states that an action must be commenced within three years of the time a person knew or by the exercise of reasonable diligence should have known that he or she had a cause of action. A client either knows or should know that a cause of action arises out of the attorney’s alleged malpractice if an appeal is unsuccessful.
Chief Justice Pleicones dissented, stating he would adhere to the discovery rule adopted in Epstein and reverse the trial court’s order granting summary judgment because there are unresolved genuine issues of material fact making that relief inappropriate.
* South Carolina Supreme Court Opinion 27572 (May 24, 2016)
** 363 S.C. 381, 610 S.E.2d 816 (2005)
E-mail services, even those with the tightest security possible, can be hacked. We have heard local stories, as close as Rock Hill and Charleston, of funds being misdirected by cybercriminals through intercepting e-mails and sending out fraudulent wiring instructions.
Director Cordray stated in his comments last Thursday that this rule is a benefit to consumers because it will discontinue the practice of entities inserting arbitration clauses into contracts for consumer financial products and services and literally “with the stroke of a pen”, blocking any group of consumers from filing class actions. He said the CFPB’s research indicates that these “gotcha” clauses force consumers to litigate over small amounts ($35 – $100) acting alone against some of the largest financial companies in the world.
In an April 28 letter addressed to several industry trade groups and their members, Director Richard Cordray of the Consumer Financial Protection Bureau, said his agency has begun drafting a notice intended to provide “greater certainty and clarity” in the Know Before you Owe Rule.
In news that will be well received by South Carolina residential closing attorneys, ALTA reported on April 8 that CFPB Director Richard Cordray stated that lenders may not unilaterally shift liability for errors on TRID mortgage disclosures to third parties.
We have heard from closing attorneys across South Carolina that lenders are taking varying approaches in their attempts to shift or share TRID liability with closing attorneys. We caution closing attorneys to read letters and closing instructions carefully and to negotiate or strike objectionable provisions. Pay particular attention to provisions that would violate attorney ethical obligations. Don’t agree, for example, that client confidences will be revealed to creditors.
The statute, §30-9-30, allows a recorder to refuse to accept or to remove any document believed to be materially false or fraudulent or a sham legal process. MERS and the lenders argued the statute does not provide the counties authority to bring the lawsuit, and the counties argued that the statute allows them to bring the suit by implication. They suggest that the statute provides, by implication, the power to commence litigation to remediate the public records and to seek guidance from the Court. The Supreme Court declined to imply language into deliberate legislative silence.
We’re all crystal clear that the borrower must be provided with the new CFPB compliant Closing Disclosure. We’re clear that there are very specific rules about when that document must be delivered to facilitate the scheduled closing. We know that most of the large national lenders are preparing and delivering the Closing Disclosure themselves while many of the local and regional lenders are still relying on closing attorneys to prepare and deliver this document.
