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Delta Automatic Systems12/10/1998
{1} Diane and Paul J. Quintana were the sole shareholders and officers of Delta Automatic Systems, Inc. (Delta), when Delta hired attorney Wayne E. Bingham to help it terminate its contract with Road Sprinkler Fitters Local Union No. 669 (the Union). Delta and the Quintanas (Plaintiffs) later sued Bingham and his law firm-Crider, Calvert & Bingham, P.C. (the Bingham Firm)-claiming that Bingham failed to take the action necessary to terminate the union contract. Before trial the district court dismissed the Quintanas' individual claims on the ground that only Delta had a cause of action. After Delta rested its case at trial, the district court granted Bingham and the Bingham Firm (Defendants) a directed verdict based on the statute of limitations. Plaintiffs appeal. We affirm.
{2} The district court properly dismissed the Quintanas' claim because they do not come within any exception to the general rule that shareholders have no cause of action against third parties for injury to their corporation. Our affirmance of the directed verdict against Delta rests on the proposition that the limitations period for professional malpractice commences when the client knew or should have known the facts that form the basis for the claim, regardless of whether the client appreciated that the professional's conduct constituted malpractice.
BACKGROUND
{3} In 1985 Delta, a fire sprinkler installation business, signed a three-year contract with the Union. The following year, however, the Quintanas decided that Delta was not competitive with other sprinkler companies because it was one of only two union shops left in the area. On April 4, 1986, Delta retained Bingham to help it terminate its union contract. Bingham was an experienced labor lawyer, with special expertise in the construction trades. He represented a number of construction companies, including a sprinkler company that competed with Delta. This other company had previously retained Bingham to help it terminate its union contract.
{4} There was conflicting evidence at trial regarding what Bingham told the Quintanas at the April 4 meeting, at a follow-up meeting on April 7, and during the next twelve months. The Quintanas' version was as follows: Bingham merely asked for background information at the two initial meetings and said that he would have to research the matter. During the following year Bingham never called the Quintanas with the results of his research. Instead, whenever they called for an update, Bingham said that he was still researching the matter. Bingham told the Quintanas that he was working with another sprinkler company on the same problem and wanted to wait to see how that came out. The Quintanas did not remember being told about any courses of action open to Delta.
{5} Bingham, on the other hand, asserted that he laid out three options for Delta at their first meetings: (1) wait until the expiration of the current contract and then take action, (2) reopen the negotiations on the current contract to try to obtain more favorable terms, or (3) take steps to repudiate the current contract immediately. Bingham gave the Quintanas a sample of a letter he would need from each of Delta's union employees as a first step in repudiating the contract, if Delta chose the third option. Bingham called the Quintanas three times during the year, each time asking for a decision on the three options. When he did not receive an answer, he assumed that Delta "was happy in the union."
{6} The parties agree that on April 6, 1987, a year after the initial meeting, Bingham called Paul Quintana to tell him that a recent decision of the National Labor Relations Board, John Deklewa & Son
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