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Sharts v. Natelson6/30/1993
s under particular circumstances. See . To the extent that such threats put Sharts on notice of anything other than a potential dispute, on the facts of this case, are insufficient to begin the running of the limitation period as a matter of law.
B. Entry Date of Attorney Marlowe
Natelson next contends that Sharts' cause of action accrued, as a matter of law, the date attorney Marlowe entered an appearance on behalf of Sharts in the declaratory judgment action because Sharts should have known then that he was the victim of legal malpractice. We disagree. Natelson's Brief-in-Chief indicated that he believed the threatening letter satisfied the harm or loss in fact prong of the Jaramillo test and that the Marlowe entry date argument was offered to satisfy the discovery prong. See Jaramillo. However, as we noted above, we do not believe Sharts' threatening letter satisfied the first prong of the Jaramillo test. Therefore, because we resolve this appeal under the harm or loss in fact prong of analysis, reliance on the entry date of appearance of Attorney Marlowe is erroneous because it is meaningless to say that Sharts could have discovered a harm or loss in fact which had not yet accrued.
C. The Declaratory Judgment Action
In ), this Court affirmed the September 1986 trial court decision denying Sharts and Natelson their interpretation of the covenants. Sharts' complaint revealed that the declaratory judgment action and other attempts to clear the cloud from the title of the property caused Sharts to incur costs and legal fees more than four years prior to the July 10, 1989, commencement of the present action.
However, it is also clear that during that time it could not yet be determined that these costs were caused by the negligent drafting of the covenants by Natelson rather than a misapprehension on behalf of those asserting the legal rights of the owners in Tract One. Without the underlying ambiguity resolved by a court of competent jurisdiction, we are unwilling to find the challenges to the covenants and Sharts' attempts to resolve the difficulties arising from those challenges as constituting the necessary harm or loss in fact requirement as a matter of law. Moreover, we believe the prima facie causal connection requirement between the costs incurred and the alleged misdrafting of the covenants is inadequate to accrue a cause of action in malpractice in the present case. See ) (one element of a legal malpractice cause of action is for there to be a reasonable, close causal connection between the conduct and the resulting injury ), cert. denied, 95 N.M. 593, 624 P.2d 535 (1981).
We are so persuaded for several reasons. First, had Sharts prevailed on the declaratory judgment action, he would not ordinarily be in a position to claim that negligent drafting of the covenants by his attorney was the cause of his alleged costs and business losses and, in the absence of any other proof to the contrary, such losses may be transactional costs of doing business in real estate . See Restatement Second of Judgments 2d ยง 33, cmt. (a) at 332 (1982) (declaratory judgment permits parties to have their rights declared before a claim has accrued; before coercive remedy available).
A second reason why we decline to find this cause of action barred by the statute of limitations is because we do not wish to further encourage legal malpractice litigation when other possible remedies are available. For example, if Sharts had filed an action against Natelson immediately upon receiving the first letter from lot owners in Tract One challenging his interpretation of the covenants, he would have eliminated the opportunity to receive waivers and modificat
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