Penn-Dutch Kitchens, Inc. v. Grady

651 A.2d 731, 1994 R.I. LEXIS 299, 1994 WL 712936
CourtSupreme Court of Rhode Island
DecidedDecember 22, 1994
Docket93-0243-M.P.
StatusPublished
Cited by5 cases

This text of 651 A.2d 731 (Penn-Dutch Kitchens, Inc. v. Grady) is published on Counsel Stack Legal Research, covering Supreme Court of Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Penn-Dutch Kitchens, Inc. v. Grady, 651 A.2d 731, 1994 R.I. LEXIS 299, 1994 WL 712936 (R.I. 1994).

Opinion

OPINION

MURRAY, Justice.

This case came before us on the petition of Thomas J. Grady (Grady) for writ of certio-rari. Grady requests this court reverse the trial justice’s denial of his motion for summary judgment and to dismiss this action. To the extent noted below, we grant Grady’s petition.

This case is a legal-malpractice action instituted against attorney Grady individually and as a general partner of the Rhode Island law firm Lenihan, Moone, Gallogly & Comolli (LMG & C) by Penn-Dutch Kitchens, Inc. (Penn-Dutch). Penn-Dutch is a Delaware corporation solely owned by its president, Richard Prindle. On or about May 26, 1988, Penn-Dutch hired LMG & C to collect a May 11, 1988 Connecticut money judgment Penn-Dutch had obtained against Leroy J. Bailey (Bailey). Over a year before Penn-Dutch obtained the Connecticut judgment, Bailey was a 50-percent owner of a valuable piece of real estate in Westerly, Rhode Island.

After being assigned the case, Grady immediately conducted a title search, finding that Bailey had transferred his one-half interest in the Westerly property to his wife, Marilyn Bailey, on April 14, 1987. This transfer occurred two months after Bailey appeared by counsel to contest Penn-Dutch’s Connecticut suit. On May 26, 1988, Grady filed a complaint on behalf of Penn-Dutch against Bailey and Marilyn to enforce the May 11, 1988 Connecticut judgment and to set aside the allegedly fraudulent conveyance of Bailey’s interest in the Westerly property to his wife. With the complaint, Grady filed a motion for a writ of attachment and recorded a lis pendens in the Land Evidence Records of Westerly. That same day Grady sought and received a temporary restraining order prohibiting any transfer or sale of the property. The matter was assigned for hearing on a preliminary injunction to June 3, 1988.

During the next four months the matter was repeatedly continued and transferred between the Washington County and the Providence County Superior Courts. From an *732 examination of the record, especially Grady’s affidavit, none of the transfers or continuances, except for one continuance, appear to have been at Grady’s request. That one continuance seems to have been made at the insistence of the president of Penn-Dutch, Richard Prindle, who was going to be out of the country during the first few weeks of September 1988. Our examination reveals that most of the continuances and transfers appear to have been made sua sponte by the trial justices. In fact many of them were made over Grady’s objection. Despite these delays a temporary restraining order governing the Westerly property remained in full force and effect throughout this period.

The matter was finally heard on September 26, 1988. The trial justice granted Grady’s motion for a preliminary injunction to enjoin any transfer or sale of the Westerly property and denied Bailey’s motion to dismiss. Because the trial justice failed to rule on the motion for writ of attachment which was before him, Grady filed a motion to clarify the trial justice’s decision on October 4, 1988. At a hearing on October 17, 1988 the writ of attachment was finally granted. The following day, the attachment was recorded in the Land Evidence Records for the Town of Westerly.

On November 28,1988, Bailey and his wife filed a voluntary petition in bankruptcy pursuant to chapter 7 of the Federal Bankruptcy Code in the United States Bankruptcy Court District of Connecticut. On January 26, 1989, the trustee in bankruptcy’s motion to sell the Westerly property free and clear of all encumbrances came before the bankruptcy court for a hearing. In order to safeguard its interests in the Westerly property throughout the Baileys’ bankruptcy proceedings, Penn-Dutch had retained the services of Connecticut attorney Richard Liebert (Liebert).

During the hearing, the trustee continually took the position that the Westerly attachment was a voidable preference under the bankruptcy code. Apparently realizing this fact, Liebert argued that the lis pendens filed by Grady six months before the petition for bankruptcy was essentially equivalent to a writ of attachment and therefore prevented the land from being sold. Liebert further argued that the injunction governing the land also prevented any sale. However, the bankruptcy court allowed the trustee to sell the property with the stipulation that the parties were free to litigate over the proceeds derived from the sale. Furthermore, on March 29,1989, Penn-Dutch filed a compliance with the bankruptcy court’s scheduling order and “coneed[ed] that if the Lis Pendens and/or Injunction do not act .as a lien or encumbrance against the Trustee, then the attachment which was filed within ninety (90) days of the filing of the voluntary petition is voidable as a preference.”

On August 11, 1989, the bankruptcy court issued its decision rejecting the argument that the lis pendens filed and the injunction obtained by Grady on behalf of Penn-Dutch constituted an equitable lien. The court further held that the writ of attachment recorded on October 18, 1988, was null and void because it constituted a voidable preference under the Federal Bankruptcy Code. As a result of the court’s adverse decision, Penn-Dutch brought this suit against Grady for negligence and breach of contract on August 11, 1992.

Five months later, on January 15, 1993, the trial justice denied Grady’s motion for summary judgment. The trial justice stated that on the basis of his examination of the evidence adduced at this point, Grady’s actions were reasonable. However, the trial justice reasoned that, sitting as a trial justice, he was not empowered to make such a determination without the “benefit of expert opinion.” The trial justice further explained that there were “sufficient facts in the affidavit by Mr. Prindle to raise some questions of fact that will have to be decided by a fact finder.” Therefore, the trial justice denied Grady’s motion.

Grady filed a petition for writ of certiorari, which we granted on December 16, 1993. He now asserts that the trial justice erred in denying his motion for summary judgment in numerous respects: there were no material facts disputing the reasonableness of Grady’s conduct, and as such, summary judgment in Grady’s favor was appropriate; Grady’s affidavit constituted expert opinion that his con *733 duct was reasonable, and therefore, there was no need for any further expert opinion; Grady could have done nothing to prevent the Baileys from voluntarily going into bankruptcy at any point; and the statute of limitations had tolled. Because this petition can be decided solely on the basis of the statute of limitations, we need not reach any of the other issues raised in this petition.

The statute of limitations governing legal-malpractice actions is of fairly recent origin having been enacted in 1988. See G.L.1956 (1985 Reenactment) § 9-1-14.3, as enacted by P.L.1988, ch. 212, § 1. Before this time legal-malpractice actions were governed by the ten-year statute of limitations regulating unspecified civil actions. See § 9-l-13(a). Because of its somewhat recent enactment, § 9-1-14.3 has never been the subject of litigation before this court. In relevant part § 9-1-14.3 provides that

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Bluebook (online)
651 A.2d 731, 1994 R.I. LEXIS 299, 1994 WL 712936, Counsel Stack Legal Research, https://law.counselstack.com/opinion/penn-dutch-kitchens-inc-v-grady-ri-1994.