Coffee County, Tennessee v. Carl Spining et al.

Nashville, TN - Legal Malpractice lawyer represented appellees with dismissal of a legal malpractice action.

In September 2013, Melinda Keeling, a former Coffee County employee,

commenced a PEPFA action against the County, seeking both equitable and emotional

damages. See Keeling v. Coffee Cty., No. M2017-01809-COA-R3-CV, 2018 WL 4468401

(Tenn. Ct. App. Sept. 18, 2018). Ms. Keeling alleged that she had verbal and written

communications with the County mayor about complaints she received from the public

concerning her supervisor's lack of availability. Id. at *1. When Ms. Keeling's supervisor

learned of her statement, he allegedly retaliated by, inter alia, eliminating some of the

duties that provided Ms. Keeling with compensatory time off and placing an adverse

employment report in her personnel folder. Id. In May 2010, the supervisor eliminated Ms.

Keeling's position, ostensibly due to a lack of funds. Id. In her Complaint, Ms. Keeling

sought front pay and back pay associated with her termination. Shortly thereafter, the

County retained attorney Carl Spining and his law firm, Ortale, Kelley, Herbert &

Crawford (collectively, "Ortale Kelley”), to defend the action.

During a bench conference in the PEPFA action on January 11, 2017, Mr. Spining

and Ms. Keeling's counsel, Jerry Gonzalez, discussed how damages would be determined

if the jury returned a verdict on the issue of the County's liability. At the conference, Mr.

Gonzalez informed the court of his intent to seek only emotional damages during the jury

trial and to pursue equitable damages with the court at a later date. Mr. Spining agreed that

Ms. Keeling would be permitted to seek equitable damages upon the jury "finding a PEPFA

violation.” Based on the agreement of the parties, the trial court reserved the issue of

equitable damages for a potential bench trial, depending on the jury's verdict. More

specifically, the parties agreed to reserve the issues of back pay and benefits to be decided

by the trial court after the liability phase. For this reason, and upon the agreement of the

parties, the jury form posed only two questions:

1. Has the Plaintiff proven by a preponderance of the evidence all of the

elements of the claim for Public Employee Political Freedom Act?

Yes ___ No ___

If your answer is "No,” go to the end, sign and return the jury verdict form

to the Court. If your answer is "Yes,” go to the next question.

2. Decide the amount of any damages sustained by Ms. Keeling for pain and

suffering, humiliation and/or embarrassment. $ _______________

The case proceeded to trial, and after finding that the County committed a PEPFA

violation, the jury awarded Ms. Keeling $10,000 in emotional damages. Acting pursuant

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to Tennessee Code Annotated § 8-50-603, the trial court increased the award of damages

to $30,000. See Tenn. Code Ann. § 8-50-603(b) ("If the court of competent jurisdiction

determines that a public employer has disciplined, threatened to discipline or otherwise

discriminated against an employee because such employee exercised the rights provided

by this part, such employee shall be entitled to treble damages plus reasonable attorney

fees.”).

Following the jury trial, Ms. Keeling moved for various equitable remedies resulting

from her termination, including back pay, front pay, and loss of benefits. The County

opposed the motion arguing that, because the jury form permitted the jury to award

emotional damages without requiring it to determine that Ms. Keeling's termination

actually resulted from the County's PEPFA violation, awarding equitable damages based

on the jury's determination was inappropriate. For this reason, the County moved for a new

trial, contending that the jury verdict, finding only that some PEPFA violation occurred,

could not support an award of equitable damages by the court. On May 1, 2017, the court

entered an order noting that Ms. Keeling's termination was "a continued act of

discrimination” and that, as such, equitable remedies were appropriate. On July 7, 2017,

the court awarded Ms. Keeling over $150,000. Later, the court denied the County's Motion

for New Trial.

At this point, Robert Huskey, the County Attorney, began reviewing the court file

and investigating the decisions made by Mr. Spining during the trial. Specifically, Mr.

Huskey went to the clerk's office and obtained a copy of the jury verdict form. After

reviewing the jury verdict form, Mr. Huskey concluded that the form reflected exactly what

Mr. Spining had represented to him. Shortly thereafter, Mr. Huskey, acting in his capacity

as the County Attorney, authorized Mr. Spining to appeal the PEPFA case. Acting on

behalf of the County, Mr. Spining filed a timely notice of appeal. The record on appeal was

filed with the Court of Appeals on December 5, 2017, and the County filed its brief on

February 5, 2018. Ms. Keeling filed her brief on April 6, 2018, in which she cross-appealed

the amount of damages awarded. Significantly, the transcript of the bench conference in

which Mr. Spining agreed to the stipulation at issue was filed as part of the trial court record

on appeal.

On September 18, 2018, this court issued an opinion in which we held that the

County waived any objection it may have had to the jury verdict form by agreeing at the

January 2017 bench conference to allow for a determination of equitable damages at a later

bench trial. See Keeling, 2018 WL 4468401, at *15. For this and other reasons, we

determined that the trial court did not err in awarding the employee equitable damages. Id.

We also modified and increased the monetary judgment against the County to $994,000.

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THE LEGAL MALPRACTICE ACTION

On September 17, 2019, the County filed the present malpractice action against Mr.

Spining and his firm. In its Complaint, the County contended in pertinent part:

Mr. Spining and his firm had represented Coffee County a number of times

prior to the Keeling case and the County had no reason to question his

effective professional handling of their litigations. The circumstances of his

representation in this case which prompts the County to bring this action are

based on their sound belief that his representation of the County in the trial

court breached an appropriate Standard of Care resulting in a very bad trial

court verdict and that further his failure to apprise the County of pertinent

information when [deciding] whether or not to appeal the case compounded

the County's damage. His failure to meet the Standard of Care in not

objecting to a jury verdict form combined with a stipulation or agreement

that Mr. Spining made with the plaintiff's counsel that the County was not

aware of, ended up resulting in a huge verdict of nearly half a million dollars

($500,000.00) in the trial court; and further when the County then had to

decide whether or not to appeal, Mr. Spining still did not apprise the County

of a stipulation he had made with opposing counsel which, in turn, prompted

the County to appeal and in turn resulted in the appellate court denying our

relief sought and sending the case back for awarding additional damage and

ultimately resulting in a payout to Ms. Keeling of nearly a million dollars

($1,000,000.00).

In sum, the County alleged that, when deciding to appeal the July 2017 judgment,

it believed that Mr. Spining chose not to object to the jury form as a trial tactic. After this

court issued its September 2018 opinion, however, the County contends that it learned, for

the first time, about the January 2017 conference in which Mr. Spining agreed to reserve

equitable remedies for after the jury verdict. Coffee County did not allege that failure to

object to the jury verdict form, by itself, breached the standard of care. Instead, it claimed

that it was malpractice for Mr. Spining to fail to object to the form in conjunction with

agreeing to bifurcate the issue of damages without first requiring the jury to determine

whether the employee's termination was an actual result of the PEPFA violation.

According to the County, it would not have appealed had it known of the January 2017

conference stipulation.

Ortale Kelley responded to the Complaint by filing a Tennessee Rule of Civil

Procedure 12.02(6) motion to dismiss for failure to state a claim, arguing that the one-year

statute of limitations for legal malpractice actions accrued on July 7, 2017, when the trial

court entered its judgment against the County. Specifically, Ortale Kelley explained that,

under the discovery rule, the statute of limitations accrued when (1) the County suffered a

legally cognizable, actual injury as a result of Mr. Spining's wrongful conduct, and (2) the

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County knew, or in the exercise of reasonable diligence should have known, that the injury

was caused by Mr. Spining's wrongful conduct. Ortale Kelley argued that, because the

County suffered an actual injury when the judgment was entered in July 2017, and because

Mr. Huskey investigated Mr. Spining upon entry of the July 2017 judgment, the County

should have known, after due diligence, about the January 2017 bench conference. More

specifically, Ortale Kelly contended:

First, the facts alleged in the Complaint show that the claims for legal

malpractice are barred by the one-year statute of limitations because these

claims were filed more than two and a half years after the adverse judgment,

when the cause of action accrued. Second, the agreement to bifurcate

damages was based on both a legal requirement as well as professional

judgment, neither of which can serve as a basis for liability.

Following a hearing on the motion, the trial court agreed with Ortale Kelley,

concluding that the injury occurred no later than the entry of the final judgment on July 7,

2017. More specifically, the trial court ruled: "In the case at bar[,] if the injury occurred, it

accrued no later than the entry of the final judgment on July 7, 2017. Accordingly, the oneyear statute of limitation bars the County's claims for relief.”

Following the entry of the order granting Ortale Kelley's Motion to Dismiss, the

County filed a Motion to Alter, Amend, or Vacate, arguing that, while it knew it had

suffered an injury on July 7, 2017, it did not know, nor should it have known, that the injury

was a result of Mr. Spining's conduct. Instead, the County contended that, though it

exercised reasonable diligence, the County still could not have known that the injury was

caused by Mr. Spining before September 2018 because Mr. Spining had concealed facts.

This was the first time that the County raised a fraudulent concealment argument. The trial

court, however, denied the County's motion. In its conclusion, the court noted that the facts

regarding Mr. Spining's agreement to bifurcate damages were referenced in various

motions leading up to the entry of final judgment and that the court file contained "all

arguments back and forth about whether Mr. Spining had agreed to the verdict form such

that he could not object to it after trial.” 1 For these reasons, the trial court concluded:

The Complaint shows that the County had sufficient knowledge to put it on

notice of the potential claim against Spining when the County was deciding

whether to appeal. Therefore, the County's legal malpractice claim accrued



1 The trial court's order granting Ortale Kelley's Motion to Dismiss and the subsequent order

denying the County's Motion to Alter, Amend, or Vacate address distinct issues regarding the discovery

rule. Specifically, in the order granting the Motion to Dismiss, the trial court concluded that the County's

injury occurred when the final judgment was entered in the underlying PEPFA case. By contrast, the order

denying the Motion to Alter, Amend, or Vacate, clarifies the trial court's reasoning regarding when the

County knew, or should have known, of the stipulation. For this reason, we refer to both orders collectively

throughout this opinion as the trial court's "decision.”

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on or before July 7, 2017. This matter was not filed until September 17, 2019.

Accordingly, the one-year statute of limitations bars the County's claims for

relief. The Motion to Alter, Amend, and Vacate is denied.

This appeal followed.

STANDARD OF REVIEW

The purpose of a Tennessee Rule of Civil Procedure 12.02(6) motion to dismiss is

to determine whether the pleadings state a claim upon which relief can be granted. As our

Supreme Court explained in Webb v. Nashville Area Habitat for Humanity, Inc., 346

S.W.3d 422 (Tenn. 2011):

A Rule 12.02(6) motion challenges only the legal sufficiency of the

complaint, not the strength of the plaintiff's proof or evidence. The resolution

of a 12.02(6) motion to dismiss is determined by an examination of the

pleadings alone. A defendant who files a motion to dismiss "'admits the truth

of all of the relevant and material allegations contained in the complaint,

but . . . asserts that the allegations fail to establish a cause of action.'”

In considering a motion to dismiss, courts "'must construe the complaint

liberally, presuming all factual allegations to be true and giving the plaintiff

the benefit of all reasonable inferences.'” A trial court should grant a motion

to dismiss "only when it appears that the plaintiff can prove no set of facts in

support of the claim that would entitle the plaintiff to relief.” We review the

trial court's legal conclusions regarding the adequacy of the complaint de

novo.

Id. at 426 (citations omitted).

"Whether a claim is barred by an applicable statute of limitations is a question of

law.” Brown v. Erachem Comilog, Inc., 231 S.W.3d 918, 921 (Tenn. 2007). "We review

questions of law de novo with no presumption of correctness.” Burns v. State, 601 S.W.3d

601, 606 (Tenn. Ct. App. 2019).

ISSUES

Both parties identify issues on appeal.2 We have determined the dispositive issue is



2 The County presented the following issues:

I. What is the Standard of Review at the trial and appellate level in regard to a Motion to

Dismiss a suit under Rule 12.02 (6) of the Tennessee Rules of Civil Procedure?

II. What is the Tennessee law in regard to the accrual of a cause of action in cases of legal

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whether the trial court erred in granting Ortale Kelley's Rule 12.02(6) Motion to Dismiss

on the basis of the statute of limitations.

ANALYSIS

An action for legal malpractice must be brought within one year from the date the

cause of action accrues. See Tenn. Code Ann. § 28-4-104(c)(1). "The concept of accrual

relates to the date on which the applicable statute of limitations begins to run.” Redwing v.

Catholic Bishop for Diocese of Memphis, 363 S.W.3d 436, 457 (Tenn. 2012). In legal

malpractice actions, the date on which a statute of limitations will "begin to run” is

determined by the discovery rule. See Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn. 1995).

Pursuant to the discovery rule, a statute of limitations will accrue once two conditions are

met: (1) the plaintiff suffers an "actual injury” as a result of the defendant's allegedly

wrongful conduct, and (2) the plaintiff knew "or in the exercise of reasonable diligence

should have known that” its injury was caused by the defendant's alleged wrongful

conduct. John Kohl & Co., P.C. v. Dearborn & Ewing, 977 S.W.2d 528, 532 (Tenn. 1998).

In the context of litigation, the entry of a judgment effectively acts as the default point of

actual injury. Story v. Bunstine, 538 S.W.3d 455, 470–71 (Tenn. 2017).

"The knowledge component of the discovery rule may be established by evidence

of actual or constructive knowledge of the injury.” PNC Multifamily Capital Institutional

Fund XXVI Ltd. P'ship v. Bluff City Cmty. Dev. Corp., 387 S.W.3d 525, 545 (Tenn. Ct.

App. 2012) (citing Carvell, 900 S.W.2d at 29). Thus, our Supreme Court has emphasized

that this component does not require the plaintiff to "actually know the specific type of

legal claim he or she has, or that the injury constituted a breach of the appropriate legal

standard.” Id. (citing Shadrick v. Coker, 963 S.W.2d 726, 733 (Tenn. 1998)). Instead, a

plaintiff is deemed to have constructive knowledge of the conduct when he "reasonably

should have become aware of facts sufficient to put a reasonable person on notice that an

injury has been sustained as a result of the defendant's negligent or wrongful conduct.”

John Kohl & Co., P.C., 977 S.W.2d at 532. Though the party asserting a statute-oflimitations defense bears the burden of proving that the statute of limitations has lapsed,

Sherrill v. Souder, 325 S.W.3d 584, 596 (Tenn. 2010), the burden will shift to a plaintiff

asserting lack of constructive knowledge to prove that, despite exercising reasonable

diligence, it could not have discovered facts giving rise to a cause of action, Coffey v.

Coffey, 578 S.W.3d 10, 22 (Tenn. Ct. App. 2018) (citing Vance v. Schulder, 547 S.W.2d

927, 930 (Tenn. 1977)).

Ortale Kelley asserts, and the County does not dispute, that the County suffered an



malpractice?

III. Did the Honorable Trial Judge correctly apply the law in regard to the above legal issues?

IV. Did the Honorable Trial Judge commit reversible error in granting [Defendants'] Motion

to Dismiss under Rule 12.02 (6) on the basis of the Statute of Limitations?

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actual injury on July 7, 2017, when the final judgment was entered in the PEPFA case. The

County, however, argues that it did not have actual or constructive knowledge of facts

regarding Mr. Spining's alleged wrongful conduct until this court entered its opinion in the

PEPFA case on September 18, 2018. Specifically, the County contends that it exercised

reasonable diligence and that, even so, it had no reason to know of Mr. Spining's alleged

wrongful conduct.3 We respectfully disagree.

In making its decision to grant Ortale Kelley's Motion to Dismiss, the trial court

specifically found that "the heart of the issue at both the trial and appellate levels was [Mr.

Spining's] failure to object to the jury verdict form, which occurred long before entry of

the final judgment on July 7, 2017.” The trial court also found it significant that the

existence of the stipulation regarding the jury verdict form was evident in "several posttrial motions,” all filed months before the entry of final judgment. Furthermore, the County

contends in its Complaint that it acted with reasonable diligence by obtaining a copy of the

jury verdict form shortly after the entry of final judgment on July 7, 2017, yet, as the trial

court correctly noted, the same court file contained "all the arguments back and forth about

whether Mr. Spining had agreed to the verdict form such that he could not object to it after

trial.”4 For these reasons, the trial court concluded:

The Complaint shows that the County had sufficient knowledge to put it on

notice of the potential claim against Spining when the County was deciding



3 On appeal, the County also alleges that Mr. Spining concealed facts necessary to put the County

on notice of a cause of action for legal malpractice. In the trial court, however, the County did not raise the

issue of concealment until it filed its Tenn. R. Civ. P. 59.04 Motion. For this reason, the County has waived

consideration of the issue on appeal. See Irvin v. Green Wise Homes, LLC, No. M2019-02232-COA-R3-

CV, 2021 WL 709782, at *11 (Tenn. Ct. App. Feb. 24, 2021) (concluding that an issue raised for the first

time in a motion to alter or amend waived the argument when the defendant asserted new legal theories);

see also Cent. Parking Sys. of Tenn., Inc. v. Nashville Downtown Platinum, LLC, No. M2010-01990-COAR3-CV, 2011 WL 1344633, at *4 (Tenn. Ct. App. Apr. 7, 2011) ("A Rule 59 motion should not be used to

raise or present new, previously untried or unasserted legal theories or arguments.” (quoting In re M.L.D.,

182 S.W.3d 890, 895 (Tenn. Ct. App. 2005))).

4

In making its decision, the trial court considered facts outside of those contained in the Complaint.

Although a court typically converts a motion to dismiss into a motion for summary judgment when it

considers facts outside of the complaint, that is not necessary here because the trial court impliedly took

judicial notice of such facts from its own court records. See Stephens v. Home Depot U.S.A., Inc., 529

S.W.3d 63, 74 (Tenn. Ct. App. 2016) (explaining that a court "may consider 'items subject to judicial

notice . . . without converting the motion into one for summary judgment.'” (quoting Haynes v. Bass, No.

W2015-01192-COA-R3-CV, 2016 WL 3351365, at *4 (Tenn. Ct. App. June 9, 2016))). Specifically, the

trial court took notice of two facts from the PEPFA action: (1) the arguments contained in various

prejudgment motions, and (2) the contents of the underlying case record. Tennessee Rule of Evidence 201

"governs . . . judicial notice of adjudicative facts.” In interpreting Rule 201, this court has held that a trial

judge may take judicial notice of those facts capable of "accurate and ready determination by referencing

the court's files.” Counts v. Bryan, 182 S.W.3d 288, 293 (Tenn. Ct. App. 2005). Significantly, this court

has also recognized that it is appropriate to consider not only the record of the present proceeding, but those

of earlier proceedings and judgments. See id. at 291, 293.

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whether to appeal. Therefore, the County's legal malpractice claim accrued

on or before July 7, 2017. This matter was not filed until September 17, 2019.

Accordingly, the one-year statute of limitations bars the County's claims for

relief.

As noted above, a statute of limitations will accrue once two conditions are met: (1)

the plaintiff suffers an "actual injury” as a result of the defendant's allegedly wrongful

conduct, and (2) the plaintiff knew "or in the exercise of reasonable diligence should have

known that” its injury was caused by the defendant's alleged wrongful conduct. John Kohl

& Co., P.C., 977 S.W.2d at 532. As for the first factor, the County had actual notice that it

suffered an actual injury when the final judgment was entered on July 7, 2017. See Story,

538 S.W.3d at 471 (explaining that the discovery rule "allows the trial court's entry of a

final judgment to essentially act as a default point of actual injury”).

Furthermore, shortly after the final judgment was entered, Mr. Huskey initiated an

investigation into Mr. Spining's actions, which included a review of the court files in the

underlying PEPFA case. As the trial court noted, the same court files contained not only

the jury verdict form but also numerous documents "underscoring” the existence of Mr.

Spining's stipulation regarding the jury verdict form, including the prejudgment motions.

Thus, its investigation prior to deciding to appeal the PEPFA case provided the County

with constructive notice of the stipulation Mr. Spining agreed to at the bench conference.

Although the County does not provide the specific date on which Mr. Huskey began the

investigation, the Complaint states that the investigation began shortly after the entry of

final judgment on July 7, 2017, but before filing its appeal on September 11, 2017. For this

reason, even applying the most liberal analysis concerning when the County should have

become aware of a potential legal malpractice claim, the statute of limitations accrued, at

the latest, before the County filed its Notice of Appeal in the PEPFA case on September

11, 2017. Accordingly, the County "in the exercise of reasonable diligence should have

known that” its injury was caused by Mr. Spining's alleged wrongful conduct more than a

year before they commenced this action. See John Kohl & Co., P.C., 977 S.W.2d at 532.

Thus, because the County knew "or in the exercise of reasonable diligence should

have known that” its injury was caused by Mr. Spining's alleged wrongful conduct more

than a year before it commenced this action, we affirm the trial court's decision in all

respects.

The judgment of the trial court is affirmed, and this matter is remanded with costs

of appeal assessed against Coffee County.