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Law Offices of Steven D. Smith v. Borg-Warner Security Corp.12/23/1999
state filed the Palmer II appeal.
In May 1992, after this court had held in Palmer I that " he estate failed to exercise 'reasonable diligence' when it neglected to promptly investigate the possibility of engine failure," and while Palmer II was pending, Smith and the estate settled the malpractice claim. In the agreement, Smith expressly waived any claim for fees under the contingent-fee contract.
This court issued Palmer II, and remanded the case, in November 1992. While the estate and Borg-Warner were litigating the estate's revived Rule 60(b) motion, Smith filed suit against Borg-Warner, Hunter, and Lane, Powell & Barker on May 18, 1994. Smith never served his original complaint. He has affied that, as of April or May 1994, he knew that the court would soon rule on the estate's Rule 60(b) motion, and that he did not intend to serve the complaint "unless or until [the court] reinstated Palmer's cause of action because [otherwise he] would have no economic loss." On June 10, 1994, the court granted the estate Rule 60(b) relief. In September 1994, Smith filed and served an amended complaint (and motion for extension of time for service).
Smith's amended complaint alleged that the defendants had, during the Palmer litigation, committed fraud and intentionally interfered with his contingent-fee contract by communicating to the estate that if Smith had diligently examined the public record, he could have timely seen the need to file the estate's suit against Borg-Warner. Smith claims that this was fraudulent because Borg-Warner and its attorneys had known, but not disclosed, that Borg-Warner had fraudulently distorted the public record.
It is important to remember that Smith's suit, unlike the estate's efforts to obtain relief from the dismissal of Palmer v. Borg-Warner, is predicated on what he calls "Phase 2" of the fraud. "Phase 1" consists of Borg-Warner's efforts, in the years before the crash, to fraudulently conceal evidence in order to distort the public record about the fact that manufacturing defects, not the use of auto gas, made its carburetors fail. That fraudulent concealment ultimately led the superior court to relieve the estate from the dismissal of its suit, and to equitably estop Borg-Warner from pleading the statute of limitations in that suit. The fraud that Smith claims harmed him is not the pre-accident fraudulent concealment, but Borg-Warner's alleged fraud in litigating Palmer I and Palmer II in 1989-91, i.e., in gaining the original dismissal, this court's affirmance, and the denial of the Rule 60(b) motion. The alleged Phase 2 fraud was to convince the court and the estate that Smith, not Borg-Warner, was to blame for the late filing because, had Smith investigated the public record, he would have timely realized the need to sue Borg-Warner. That argument allegedly constitutes fraud, and supports a piggybacked intentional interference with contract claim, because Borg-Warner knew that it had distorted the public record to hide evidence that would have led a reasonable attorney to sue Borg-Warner.
In April 1997 the court granted Borg-Warner and Lane, Powell & Barker summary judgment on the ground that Smith had not filed his suit within the applicable two-year tort period of limitation. The court reasoned that by April 1990, Smith had known of the acts giving rise to, and had suffered most of the injuries underlying his claim. The court denied Smith's motion to reconsider and entered a final judgment in July 1997. Smith appeals.
III. DISCUSSION
A. Summary of Issues and Standards of Review
This court reviews summary judgments de novo. Where there is no genuine dispute of mater
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