New Statute of Repose for Legal Malpractice Actions in Tennessee

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The Tennessee General Assembly, which recently ended its legislative session, implemented a new statute of repose for legal malpractice actions.  Professional malpractice suits against licensed public accountants, certified public accountants, and attorneys must be filed within one (1) year after the accrual of the cause of action.  Tenn. Code Ann. § 28-3-104(a)(2).[i]

After July 1, 2014, these professional malpractice suits will also be subject to a five (5) year repose period, which begins to run “after the date on which the act or omission occurred.” 2014 Tenn. Pub. Ch. No. 618.  Consequently, if a plaintiff discovers that a cause of action exists after five years from the date on which the act or omission giving rising to the claim occurred, the plaintiff will be barred from bringing her cause of action. The statute of repose, however, will not apply in situations where the defendant engages in fraudulent concealment. Id.  When a plaintiff establishes fraudulent concealment, the suit shall commence “within one (1) year after discovery that the cause of action exists.”  Id.

Because the new statute at issue does not clarify what constitutes fraudulent concealment, the issue will have to be resolved by the courts.  When analyzing the issue, Tennessee courts will likely turn to case law concerning another profession such as health care providers.  See Shadrick v. Coker, 963 S.W.2d 726, 736 (Tenn. 1998).  If Tennessee courts choose to adopt the fraudulent concealment test from Shadrick for professional malpractice actions against licensed public accountants, certified public accountants, and attorneys, a plaintiff will have to establish the following elements to toll the five (5) year statute of repose:

(1) The defendant took affirmative action to conceal the wrongdoing or remained silent and failed to disclose material facts despite a duty to do so;

(2) The plaintiff could not have discovered the wrong despite exercising reasonable care and diligence;

(3) The defendant knew of the facts giving rise to the cause of action; and

(4) A concealment, which may consist of the defendant withholding material information, making use of some device to mislead the plaintiff, or simply remaining silent and failing to disclose material facts when there was a duty to speak.

 Counsel practicing in the area of professional malpractice should be cognizant of the five (5) year statue of repose for acts and omissions occurring after July 1, 2014.


[i] Because the accrual date can be difficult to ascertain in professional malpractice cases, Tennessee courts apply the discovery rule to determine when the statute of limitation begins to run.  See Kohl v. Dearborn & Ewing, 977 S.W.2d 528, 532 (Tenn. 1998) (under the discovery rule “(1) the plaintiff must suffer legally cognizable damage – an actual injury – as a result of the defendant’s wrongful or negligent conduct, and (2) the plaintiff must have known or in the exercise of reasonable diligence should have known that this injury was caused by the defendant’s wrongful or negligent conduct”).

 

Topics:  Accountant Malpractice, Attorney Malpractice, New Legislation, Statute of Repose

Published In: Civil Procedure Updates, Professional Malpractice Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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