Plaintiff v. Defendant Law Firm

Synopsis:

A steel fabrication company was hired to handle the fabrication and erection of steel at the 6 North Michigan construction project in 2002. When the project encountered financial problems, the defendant law firm was hired to prepare and file a mechanic’s lien. The value of the lien was stated as equaling $3.1 million. The defendant law firm did not give notice of this lien to one of the banks that was holding a mortgage on the project. The lack of notice to this particular bank could have rendered the lien defective, resulting in the client’s inability to establish priority over the bank’s mortgage.

Eventually, the client and law firm parted ways following a dispute over fees owed to the firm.

The plaintiff company subsequently hired new counsel to continue to represent its interests in litigation relative to the failed project, and specifically, to achieve priority of the company’s mechanic’s lien. Eventually, in late 2007, the plaintiff company and the bank settled plaintiff’s $3.1 million lien claim for $1.8 million. In January 2009, plaintiff filed a legal malpractice lawsuit against the law firm, looking to recover the difference between the stated lien value and the settlement, claiming that company’s lien priority was never established in litigation over the project.

Donohue Brown presented evidence that the plaintiff’s subsequent counsel became aware of the defect in the lien in 2005, and began billing the plaintiff to undo the alleged defective lien early that year. Because the plaintiff and its attorney were both aware of the issue of the bank not having notice, and attorneys’ fees incurred to address the lack of notice, more than two years before filing the complaint, Donohue Brown obtained summary judgement based on the two-year statute of limitations.