What is the statute of limitations for a legal malpractice claim in Maryland?

A civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period of time within which an action shall be commenced.

In Maryland, a three-year statute of limitations applies to legal malpractice actions pursuant to § 5-101 of the Courts and Judicial Proceedings Article. ("C.J.") Fairfax Savings, F.S.B. v. Weinberg & Green, 112 Md.App. 587, 612, 685 A.2d 1189 (1996). Section 5-101 states that "A civil action at law shall be filed within three years from the date it accrues...." Md.Code Ann., C.J. § 5-101 (Repl.Vol.2002). Statutes of limitations serve to "`provide adequate time for a diligent plaintiff to bring suit as well as to ensure fairness to defendants by encouraging prompt filing of claims.'" Fairfax Savings, supra, 112 Md.App. at 612, 685 A.2d 1189 (quoting Hecht v. Resolution Trust Corp., 333 Md. 324, 338, 635 A.2d 394 (1994)). Such statutes are, in short, a reflection of public policy established by the General Assembly regarding a reasonable time in which to file suit. Murphy, supra, 346 Md. at 531, 697 A.2d 861; Doe, supra, 114 Md.App. at 176, 689 A.2d 634.

In order to determine whether a legally cognizable cause of action existed, we must look to the elements of legal malpractice. "[A] former client may have an action against a lawyer if the client can prove (1) the attorney's employment, (2) the attorney's neglect of a reasonable duty, and (3) loss to the client proximately caused by that neglect of duty." Thomas v. Bethea, 351 Md. 513, 528-29, 718 A.2d 1187 (1998) (citing Flaherty v. Weinberg, 303 Md. 116, 128, 492 A.2d 618 (1985)).¹¹ A legal malpractice action, therefore, is similar to any other negligence claim which requires that a plaintiff prove duty, breach, causation, and damage. The absence of any one of those elements will defeat a cause of action in tort. See Flaherty, supra, 303 Md. at 134, 492 A.2d 618. As such, a cause of action arises "`when facts exist to support each element.'" Owens-Illinois v. Armstrong, 326 Md. 107, 121, 604 A.2d 47 (1992) (quoting Owens-Illinois v. Armstrong, 87 Md.App. 699, 724-25, 591 A.2d 544 (1991)), cert. denied, 506 U.S. 871, 113 S.Ct. 204, 121 L.Ed.2d 145 (1992).¹²

Historically, a cause of action accrued on the date the wrong occurred. Doe, supra, 114 Md.App. at 176, 689 A.2d 634. Over time, however, Maryland courts and the Legislature recognized the harshness of the rule, and both have tempered the "date of the wrong" rule for accrual purposes in situations where it was impossible or unreasonable for a plaintiff to have sufficient notice of the nature and cause of the injury. Id. at 177, 689 A.2d 634. Such cases involve factual scenarios where the plaintiff had not learned about the injury because of fraud, stealth, subterfuge, or other difficulties (such as latent injuries), or when the plaintiff had relied upon a continuing relationship with another party, or when the plaintiff was under a disability at the time of the injury.

Presently, there are at least four situations in which the accrual date is not the "date of the wrong," but some point later in time after the injury has already occurred, three of which were recently discussed in some detail by the Court of Appeals in Frederick Rd., 360 Md. at 95-99, 756 A.2d 963, in the context of legal malpractice.

Recognizing the harshness of this rule, however, the Court of Appeals replaced the "date of wrong" rule with the "discovery rule" in civil cases, by which the action is deemed to accrue on the date when the plaintiff knew or, with due diligence, reasonably should have known of the wrong. Maskell, 342 Md. at 690, 679 A.2d 1087. Nevertheless, the cause of action does not accrue until all elements are present, including damages, however trivial. Mattingly v. Hopkins, 254 Md. 88, 95, 253 A.2d 904 (1969); Baker, Watts & Co. v. Miles & Stockbridge, 95 Md.App. 145, 187, 620 A.2d 356 (1993); American Home Assurance v. Osbourn, 47 Md.App. 73, 86, 422 A.2d 8 (1980).

The discovery rule, applied first to medical malpractice cases, was later expanded to apply to other forms of professional malpractice. Maskell, 342 Md. at 690, 679 A.2d 1087 (collecting cases). In Poffenberger v. Risser, 290 Md. 631, 431 A.2d 677 (1981), the Court of Appeals expanded the applicability of the discovery rule generally to all civil cases, in order to "prevent ... injustice." Poffenberger, 290 Md. at 636, 431 A.2d 677. Under the discovery rule, the statute of limitations is activated based on

actual knowledge--that is express cognition, or awareness implied from "knowledge of circumstances which ought to have [689 A.2d 639] put a person of ordinary prudence on inquiry [thus, charging the individual] with notice of all facts which such an investigation would in all probability have disclosed if it had been properly pursued. In other words, a [person] cannot fail to investigate when the propriety of the investigation is naturally suggested by circumstances known to him; and if he neglects to make such inquiry, he ... must suffer from his neglect."

Page 178

Id. at 637, 431 A.2d 677 (quoting Fertitta v. Bay Shore Dev. Corp., 252 Md. 393, 250 A.2d 69 (1969)) (internal citations omitted); see also Pennwalt Corp., 314 Md. at 448-49, 550 A.2d 1155; Baker, Watts & Co., 95 Md.App. 145, 620 A.2d 356.

The general rule seems also settled that in the computation of the statutory period, in cases where there is an undertaking which requires a continuation of services, or the party's right depends upon the happening of an event in the future, the statute begins to run only from the time the services can be completed or from the time the event happens. Angell on Limitations, sec. 120; Wood on Limitations, 325-330.

A corollary accrual doctrine recognized by Maryland courts is the "continuation of events" theory. Frederick Rd., supra, 360 Md. at 97, 756 A.2d 963.

"[I]n cases where there is an undertaking which requires a continuation of services, or the party's right depends upon the happening of an event in the future, the statute begins to run only from the time the services can be completed or from the time the event happens."

Id. at 97, 756 A.2d 963 (quoting W., B. & A. Elec. R.R. Co. v. Moss, 130 Md. 198, 204-05, 100 A. 86 (1917)). The continuation of events theory is based on the equitable principle of detrimental reliance. When a relationship develops between two parties, built on trust and confidence, the confiding party may rely upon the "good faith of the other party so long as the relationship continues to exist." Id. at 98, 756 A.2d 963. This is especially true in fiduciary relationships such as the attorney-client relationship where "a client has the right to rely on his or her lawyers' loyalty and to believe the accuracy and candor of the advice they give." Id. at 103, 756 A.2d 963.

[A] client's right to rely upon his or her attorney's advice is "founded upon public policy, because the confidential and fiduciary relationship enables an attorney to exercise a very strong influence over his client and often affords him opportunities to obtain undue advantage by availing himself of the client's necessities, credulity and liberality."

Id. at 102, 756 A.2d 963 (quoting Hughes v. McDaniel, 202 Md. 626, 633, 98 A.2d 1 (1953)).

Notwithstanding the confidential relationship, if the confiding party knows, or reasonably should know, about a past injury, accrual for statute of limitations purposes will begin on the date of inquiry notice, and not the completion of services. "The confiding party, in other words, is under no duty to make inquiries about the quality or bona fides of the services received, unless and until something occurs to make him or her suspicious." Id. at 98, 756 A.2d 963.

A third category that will postpone an accrual date is fraud, as governed by § 5-203 of the Courts and Judicial Proceedings Article. The fraud exception is essentially a tangent of the discovery rule. If an adverse party fraudulently conceals knowledge of a cause of action, "the cause of action shall be deemed to accrue at the time when the party discovered, or by the exercise of ordinary diligence should have discovered the fraud." C.J. § 5-203 (Repl. Vol. 2002). Much like the discovery rule, a person is said to be on inquiry notice when a reasonable person would have used due diligence to investigate the fraud or the underlying injury. See Frederick Rd., supra, 360 Md. at 98-99. Of course, this scenario often begs the question: if a party is perpetrating fraud in such a manner as to obfuscate the confiding party, would a reasonable person be otherwise attuned to the fraud? Additionally, a plaintiff wishing to invoke C.J. § 5-203 must plead fraud with particularity. Doe, supra, 114 Md. App. at 187.

A fourth situation that may postpone the date for accrual occurs when a plaintiff is under a "disability" at the time of the injury. Under § 5-201 a "minor or mental incompetent … shall file his action within the lesser of three years of the applicable period of limitations after the date the disability is removed." C.J. § 5-201 (Repl. Vol. 2002); Murphy, supra, 346 Md. 525.