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Moon v. McDonald, Carano & Wilson LLP

Supreme Court of Nevada

August 1, 2013

Joon S. MOON; and Patterson Laboratories, Inc., a Michigan Corporation, Appellants,
v.
McDONALD, CARANO & WILSON LLP, a Nevada Limited Liability Partnership, Respondent.

Page 407

Carl M. Hebert, Reno, for Appellants.

Piscevich & Fenner and Margo Piscevich and Mark J. Lenz, Reno, for Respondent.

Before PICKERING, C.J., HARDESTY and SAITTA, JJ.

OPINION

HARDESTY, J.:

The statute of limitations for a professional malpractice claim against an attorney commences on the date the plaintiff discovers, or through due diligence should have discovered, the material facts that constitute the cause of action. NRS 11.207(1). The statutory limitation period for a claim of legal malpractice involving the representation of a client during litigation does not commence until the underlying litigation is concluded. Hewitt v. Allen, 118 Nev. 216, 221, 43 P.3d 345, 348 (2002). In this appeal, we must determine whether an attorney's alleged negligence in representing a creditor in the non-adversarial parts of a bankruptcy proceeding constitutes litigation malpractice causing the so-called Hewitt litigation tolling rule to apply. We conclude that it does not.

FACTS AND PROCEDURAL HISTORY

Appellant Patterson Laboratories, Inc. (PLI), operated a manufacturing facility in Phoenix, Arizona, and expanded its operations with the purchase of land and a building in Goodyear, Arizona. PLI later conveyed the Goodyear building and real property to its president and principal shareholder, appellant Joon S. Moon. Patterson West, Inc. (West), purchased PLI's Goodyear operations; however, Moon retained ownership of the facility and real property, and West agreed to lease the Goodyear facility from Moon.

West executed a promissory note for $1,410,000, secured by certain equipment, inventory, and other personal property sold to West and located at the Goodyear facility. West, which changed its name to Sierra International, Inc. (Sierra), later defaulted on the promissory note and the lease with Moon. Sierra filed a Chapter 7 voluntary petition in bankruptcy court in 2001, and appellants hired respondent McDonald Carano Wilson LLP (MCW) in July 2002 to represent them in Sierra's bankruptcy action.

In the bankruptcy case, appellants instructed MCW to have the collateral removed from the Goodyear facility so that the facility and real property could be sold without

Page 408

the equipment on the premises. Allegedly, unbeknownst to appellants, MCW negotiated with the bankruptcy trustee and counsel for Sierra to permit PLI to take possession of the personal property secured as collateral. Later, in November 2002, pursuant to a stipulation by the attorneys and trustee, the lease of the Goodyear facility was terminated, and PLI was permitted to take possession of the collateral. MCW's representation of appellants ended in February 2003, and on October 21, 2008, the bankruptcy court entered its final decree and Sierra's bankruptcy case was closed.

Moon also filed a district court action seeking relief for breach of the promissory note executed by West and indemnity for an action filed by the City of Goodyear against Moon based on a chemical spill that occurred while Sierra was operating the Goodyear facility. Sierra and the other defendants in that action filed a motion for partial summary judgment, requesting that the amount owed on the promissory note and guarantee be offset by the value of the collateral located at the Goodyear facility that had been returned to PLI. Subsequently, on April 27, 2006, the district court issued an order stating that upon appellants' possession of the collateral, they were required to dispose of the collateral in a commercially reasonable manner, and all related proceeds were to offset the remainder of the debt owed on the note. The district court ultimately awarded damages to appellants, less the offset for the value of the collateral returned to PLI. Appellants appealed, and this court dismissed the matter pursuant to the parties' stipulation on February 17, 2009.

Meanwhile, on November 3, 2006, appellants filed an action against MCW, alleging professional negligence, breach of contract, and vicarious liability (first complaint) arising from its representation of appellants in Sierra's bankruptcy action. In 2008, the district court dismissed the lawsuit without prejudice because appellants had failed to comply with ...


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