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STATUTE OF LIMITATIONS UNDER ALSLA - COILPLUS-ALABAMA, INC. V. JOHNNIE F. VANN AND SIROTE & PERMUTT, P.C.

In Coilplus-Alabama, Inc. v. Johnnie F. Vann and Sirote & Permutt, P.C., [Ms. 1080618, Apr. 16, 2010] __ So. 3d. __ (Ala. 2010), the Alabama Supreme Court held that a legal malpractice action against the defendants was barred by the statute of limitations. In that case, an attorney for Sirote & Permutt recommended that Coilplus issue $8,000,000 in bonds ("1999 bonds") and assured Coilplus that the bonds would qualify as tax-exempt. For reasons that should have been known to the attorney at the time of his recommendation, the bonds were not, in fact, tax-exempt. Coilplus sued the attorney and Sirote & Permutt for legal malpractice. With respect to Coilplus's negligence, wantonness, and breach of fiduciary duty claims, the Court discussed the two different approaches for determining when the statute of limitations under the Alabama Legal Services Liability Act ("ALSLA") begins to run - the "occurrence" rule and the "damage" rule. Under the occurrence rule, the statute of limitations begins to run on the date the act or omission giving rise to the claim occurred and not when damage is first suffered. Under the damage rule, the statute of limitations begins to run on the date that the client in the legal-malpractice action sustains an injury or damage. The Alabama Supreme Court declined to elect between the occurrence approach and the damage approach because it found that Coilplus's claims were untimely under both. As to Coilplus's fraud claim, the Court assumed, but did not decide, that it came within the applicable tolling provision, but held that Coilplus failed to meet the elements of fraudulent suppression because it did not prove the defendant's act was intentional.

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