HLD, v. 28, n. 8 (August 2000)
U.S. Court in
Ohio Says Statute of Limitations for Legal Malpractice Runs from Conclusion of
Efforts to Recover Overpayment
In 1991, Dr. Unni P. K. Kumar approached Ralph Higgins, Esq.,
about incorporating his medical practice and setting up a pension plan. On June
7, 1991, Kumar signed the Unni P. K. Kumar, M.D., Inc., Pension Plan and Trust
("Plan"). Higgins' law firm, Higgins & Higgins Co., LPA ("Higgins &
Higgins"), was the Plan's sponsoring organization.
One of the participants in the Plan was Leonard Quallich. He
was married to Rita Williams, but the two divorced in 1992. The divorce decree
stated that Williams should receive two-thirds interest in Quallich's pension
plan. In November 1993, Kumar's accountant sent Higgins a statement detailing
the amount Williams was to receive. Higgins drafted the qualified domestic
relations order incorrectly, a mistake that resulted in an overpayment to
Williams in the amount of $63,425.75. By June 28, 1995, the accountant had
discovered the error and informed both Higgins and Kumar.
Kumar retained Higgins to recover the money. Kumar wrote to
inquire about Higgins' progress on December 18, 1995, and April 7, 1998.
Higgins assured Kumar he would take care of the matter and do whatever was
necessary to recover the money. Higgins was hospitalized in 1995, and Kumar was
one of his diagnosing physicians. Higgins returned to work on a limited basis
in June 1996, but was unable to work regularly until early 1997. On December
29, 1998, Kumar retained new counsel. On November 22, 1999, he filed a
complaint against Higgins and Higgins & Higgins ("Higgins defendants") in
state trial court, alleging negligence, malpractice, and breach of fiduciary
duty. At the same time, he filed a claim against Williams for conversion,
fraud, and breach of implied contract.
Williams removed the case to federal district court in Ohio,
asserting federal question jurisdiction under the Employee Retirement Income
Security Act ("ERISA"). On December 20, 1999, Williams filed her answer and two
counterclaims against Kumar. In the first counterclaim, Williams asserted that
Kumar had committed a breach of fiduciary duty under the Plan. In the second
counterclaim, Williams alleged that, after her requests for copies of the
summary plan descriptions, the summary annual reports, and the IRS Forms 550
for both the pension and the profit sharing plans for 1992, Kumar had refused
to provide Williams information regarding the pension plan and/or profit
sharing plan. As a result, Williams alleged that Kumar was liable for up to
$688,200 under 29 U.S.C. � 1132(c)(1), a provision that provides for damages of
up to $100 per day for such a refusal.
The Higgins defendants filed a cross-claim against Williams,
claiming that Williams had wrongfully retained the money and was therefore
primarily liable to Kumar. Williams then filed her own cross-claim against the
The Higgins defendants moved for summary judgment against
Kumar on the grounds that Kumar's claim of legal malpractice was barred by the
statute of limitations. Kumar moved to dismiss count two of Williams'
counterclaim on the grounds that the statute of limitations had passed.
Williams twice moved the court to stay its ruling on Kumar's motion to dismiss
because discovery had not yet commenced and she needed to take several
depositions in order to determine the date her cause of action had accrued.
The U.S. District Court for the Northern District of Ohio
denied the Higgins defendants' motion, granted Kumar's motion, and denied
Williams' motions to stay. First, the court denied the Higgins defendants'
motion, which was based on the statute of limitations. The court rejected the Higgins defendants'
argument that the circumstance that had given rise to Kumar's cause of action
was the one-time calculation of the distribution to Williams. The court held,
however, that the issue consisted of more than just a one-time calculation,
that it encompassed both the calculation and the Higgins defendants' promises
that they would handle the process of recovering the money from Williams. Thus,
the court found that summary judgment was not warranted because the overpayment
and the efforts to recover it had not ended until Kumar had terminated his
relationship with the Higgins defendants on December 29, 1998, and Kumar had
filed suit less than one year later, on November 22, 1999.
Second, the court granted Kumar's motion to dismiss Williams'
counterclaim that he had failed to respond to her requests about the Plan. The
court noted that ERISA contains no statute of limitations governing claims
under 29 U.S.C. � 1132(c)(1) and therefore looked to the most analogous state
statute of limitations. Williams argued that the court should look to Ohio's
fifteen-year statute of limitations for breach of contract. The court, however,
interpreted the purpose of � 1132(c)(1) as not to provide substantive
relief to plan participants, but to punish administrators who had failed to
comply with the section. The court also stated that the Sixth Circuit had
consistently referred to awards under � 1132(c)(1) as penalties and not as
contract remedies. The court found that the closest analogous state statute was
Ohio Rev. Code � 2305.11(A), which provides that an action for a penalty must
be commenced within one year after the cause of action accrues. Thus, the court
granted Kumar's motion to dismiss count two of Williams' counterclaim because
Williams had requested the information about the Plan on August 2, 1993, but
had filed the counterclaim more than six years later, on December 16, 1999.
Third, the court denied Williams' motions to stay its ruling
on Kumar's dismissal motion. The court rejected Williams' argument that
discovery had not commenced and that she needed to take several depositions in
order to determine the date her cause of action had accrued. The court found
that 29 U.S.C. � 1132(c)(1) clearly stated that the plan administrator must
comply with any request within thirty days and that Williams' own complaint
stated that she had made the request on August 2, 1993. Thus, the court stated
that Williams' cause of action had accrued thirty days after August 2, 1993.
Kumar v. Higgins, 91 F. Supp. 2d 1119 (N.D. Ohio Apr.
10, 2000) (12 pages).