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Court News for 03/08/2016

Supreme Court Reverses Dismissal of Professional Negligence Lawsuit, Holds that Attorneys must Explicitly Contract Around Savings Statute

Posted on Mar 07, 2016 03:01 pm

03/07/16

The Tennessee Supreme Court has reversed a trial court’s dismissal of a professional negligence lawsuit against a law firm, concluding that the claim was timely filed under Tennessee’s savings statute.

In 2010, Circle C Construction, LLC, hired the Louisville, Kentucky law firm of Furman, Nilsen & Lomond, PLLC, to defend it in federal court. In a case brought by the United States under the False Claims Act, the federal court found Circle C liable for $1.6 million. Circle C appealed the decision to the United States Court of Appeals for the Sixth Circuit. Circle C also informed the law firm, as well as the specific attorneys that had worked on its case, that it planned to sue them for professional negligence.

The firm and its attorneys entered into an agreement with Circle C. Under the agreement, the deadline to file a lawsuit against the firm would be extended until 120 days after the Sixth Circuit issued a decision on the appeal of the federal case. Circle C sued its former law firm and lawyers for professional negligence in September 2011 and voluntarily dismissed the suit on April 16, 2012. On October 1, 2012, the Sixth Circuit Court of Appeals issued its decision, and Circle C refiled its professional negligence lawsuit on April 8, 2013. The defendant-attorneys claimed that Circle C’s case was filed too late, and they moved to dismiss the lawsuit. Circle C argued that it refiled the lawsuit under the savings statute, which provides an additional one-year period to refile claims that are voluntarily dismissed. The trial court granted summary judgment and dismissed the case. The Court of Appeals affirmed the dismissal. Circle C appealed to the Tennessee Supreme Court, which agreed to hear the case.

In an opinion authored by Chief Justice Sharon G. Lee, the Supreme Court held that the savings statute applies to the claim because the lawsuit was filed within the extended deadline set by the parties’ agreement, was voluntarily dismissed, and was refiled within one year under the savings statute. The Court found that nothing in the parties’ tolling agreement precluded the application of the savings statute. Circle C complied with the parties’ agreement, and thus it could refile under the savings statute. The Court noted that if parties wish to foreclose application of the savings statute, they could do so by including explicit language in a tolling agreement to that effect. However, the Court found that the parties did not do that here.

Justice Holly Kirby, in an opinion concurring in part and dissenting in part, agreed with the Court that parties wishing to avoid the savings statute must make their intent clear in their agreement. However, Justice Kirby found that the parties’ agreement here created a contractual time limitation, and the savings statute did not apply to save Circle C’s claim. 

To read the majority opinion in Circle C Construction, LLC v. D. Sean Nilsen et al., authored by Chief Justice Lee, and the separate opinion of Justice Kirby, visit the opinions section of TNCourts.gov.



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