This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The Plaintiff purchased 60 acres of land in 1975, later dividing it into two tracts. Restrictive covenants drafted by the Defendant attorney in 1978 limited development on Tract One to single-family residences on lots no smaller than three acres. Disputes arose when the Plaintiff attempted to develop Tract Two into smaller lots, as property owners in Tract One claimed the covenants applied to both tracts. This led to legal and financial complications for the Plaintiff, including a declaratory judgment action to resolve the issue (paras 3-5).
Procedural History
- Trial Court: Denied the Defendants' motion for summary judgment, finding a genuine issue of material fact regarding when damages sufficient to accrue a legal malpractice claim first existed (para 1).
- Sharts v. Natelson, 118 N.M. 330, 881 P.2d 690 (Ct. App. 1993): The Court of Appeals affirmed the trial court's decision in a split opinion, with differing views on when harm sufficient to trigger the statute of limitations occurred (para 1).
Parties' Submissions
- Plaintiffs-Respondents: Argued that the statute of limitations for their legal malpractice claim did not begin to run until the adverse declaratory judgment was entered, as this fixed their legal rights and established harm (paras 1, 14).
- Defendants-Petitioners: Contended that the statute of limitations began to run earlier, as the Plaintiff knew or should have known of the alleged malpractice and resulting harm by 1985 at the latest (paras 9, 16-17).
Legal Issues
- When does the statute of limitations for a legal malpractice claim begin to run under New Mexico law?
- Does the "continuous representation" doctrine apply to toll the statute of limitations in this case?
Disposition
- The Supreme Court of New Mexico reversed the Court of Appeals' decision and remanded the case to the trial court with instructions to enter summary judgment in favor of the Defendants (para 20).
Reasons
Per Montgomery J. (Baca C.J. and Franchini J. concurring):
The Court held that the statute of limitations for legal malpractice begins to run when the client sustains actual injury and discovers, or should discover, the facts essential to the claim. The Plaintiff suffered actual injury when he lost his legal right to subdivide Tract Two into smaller lots, which occurred as early as 1978 when the restrictive covenants were drafted and enforced. Additionally, the Plaintiff knew or should have known of the alleged malpractice by 1985, as evidenced by his legal actions and correspondence accusing the Defendant of negligence (paras 10-17).
The Court rejected the Plaintiff's argument that harm was not established until the adverse declaratory judgment in 1986, emphasizing that legal injury occurs when a right or interest is lost, not when a court declares it (paras 13-14). The Court also declined to adopt the "continuous representation" doctrine but noted that even if it applied, the statute of limitations would not have been tolled beyond June 20, 1985, when the Defendant's representation was terminated by court order (paras 18-19).