Americare Systems, Inc. v. ) on Appeal From the ) District Court of the Thomas M. Pinckney, Jr.

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File Name: 16a0009n.06
No. 15-5380
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
AMERICARE SYSTEMS, INC., )
)
Plaintiff -Appellant, )
)
v. ) ON APPEAL FROM THE
) DISTRICT COURT OF THE
THOMAS M. PINCKNEY, JR.; ) EASTERN DISTRICT OF
HOWELL & FISHER, PLLC, ) TENNESSEE
)
Defendants-Appellees. )
BEFORE: KEITH, ROGERS, and GRIFFIN, Circuit Judges.
DAMON J. KEITH, Circuit Judge. Plaintiff-appellant Americare Systems, Inc.
(“Americare”) appeals from the district court’s order granting summary judgment in
favor of Defendant-appellees Mr. Thomas Pinckney and, his law firm, Howell & Fisher,
PLLC (collectively “Defendants”) and denying Americare’s cross motion for summary
judgment. The district court concluded that Americare’s malpractice lawsuit was filed
after the one-year statute of limitations had expired. For the following reasons, we agree
and AFFIRM the district court’s order.
I. BACKGROUND
In November 2004, Americare hired Mr. Thomas Pinckney, of the law firm
Howell & Fisher, PLLC, to represent the company and other parties in a lawsuit initiated
in Bedford County, Tennessee. (Appellant’s Br. 3.) The plaintiffs in that suit (“Bedford
Plaintiffs”) sued Americare for negligence that allegedly caused the death of a relative.

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(Id.) During the first phase of the trial, the jury found in favor of the Bedford Plaintiffs
and awarded compensatory damages. (Id. at 4.) The jury also found that Americare and
its co-defendant should be held liable for punitive damages. (Id.)
The trial then moved into its second phase where the jury determined the amount
of the punitive damages award. (Id.) During this phase of the trial, the Bedford Plaintiffs
offered into evidence a highlighted article from the St. Louis Business Journal, which
stated that in 1998 Americare’s gross sales were about $47 million (hereinafter “hearsay
article”). (Id. at 5.) Even though he recognized the article as inadmissible hearsay, not
subject to any exception, Mr. Pinckney did not object to its admission. (Id.) On April 30,
2010, the jury found Americare and its co-defendant liable for $5 million in punitive
damages. (Id. at 6.)
The punitive damages award was subject to review by the trial judge before it
became final. Nevertheless, immediately after the trial, Americare’s Chairman, Mr.
Richard Montgomery, and Mr. Pinckney began discussing possible grounds for appeal.
(Id.) According to Americare, Mr. Pinckney told Mr. Montgomery that he “didn’t really
represent Americare, but he represented the nurses.” (Id. at 7.) Mr. Montgomery
recognized that was a “problem,” so he met with Americare’s corporate counsel.
(Richard Montgomery’s Dep. 4:1–5:9 ECF No. 51-5.) Because of the adverse judgment
and punitive damages award, Americare decided to hire new attorneys to handle the post-
trial matters. (Id. at 6:10–12.)
Americare retained the law firms Miller & Martin, PLLP and Moore & Lee,
PLLC. (Appellant’s Br. 7–8.) Between July and September of 2010, the firms for both
parties reviewed and revised the Bedford Plaintiffs’ proposed judgment affirming the trial

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court’s punitive damages award and the court’s findings of fact. (Id. at 8.) The firms
also reviewed the trial transcripts and researched various issues, including due process
concerns related to the punitive damages award. (Id.) On October 1, 2010, the trial judge
affirmed the jury’s punitive damages award. (Order Approving Verdict 21, ECF No. 51-
11.) The trial judge’s findings directly addressed the hearsay article, noting that “[t]o the
great surprise of this trial judge, there was no hearsay objection to the introduction of this
evidence.” (Id. at 7.)
On January 17, 2011, Americare sent a letter to Mr. Pinckney notifying him of the
company’s intent to pursue a legal malpractice claim against him and his firm.
(Appellees Br. 15.) It also appealed the trial court’s punitive damages ruling.
(Appellant’s Br. 10) On September 29, 2011, Americare filed this legal malpractice
action against Mr. Pinckney and Howell & Fisher in the U.S. District Court for the
Eastern District of Tennessee. (Id.) The district court stayed this action pending the
outcome of the appeal against the Bedford Plaintiffs. (Id.) The Tennessee Court of
Appeals affirmed the trial court’s judgment for the Bedford Plaintiffs, but reduced the
punitive damages award against Americare from $5,000,000 to $2,985,000. (Id. at 10.)
On June 11, 2014, the stay in this malpractice suit was lifted. (Id.) And on April 2, 2015,
the district court granted summary judgment in favor of Mr. Pinckney and Howell &
Fisher, holding that Americare’s legal malpractice claim is barred by the one-year statute
of limitations. Americare Sys, Inc. v. Pinckney, No. 4:11-cv-53 (E.D. Tenn. Apr. 2,
2015). Americare now appeals.

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II. STANDARD OF REVIEW
We review a district court’s grant of summary judgment de novo. Davis v.
Sodexho, 157 F.3d 460, 462 (6th Cir. 1998). “The court shall grant summary judgment if
the movant shows that there is no genuine issue as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “The burden is generally
on the moving party to show that no genuine issue of material fact exists.” Cen Tra, Inc.
v. Estrin, 538 F.3d 402, 412 (6th Cir. 2008) (quoting Celotex Corp. v. Catrett, 477 U.S.
317, 325 (1986)). And the evidence is viewed in the light most favorable to the non-
moving party. Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)).
III. DISCUSSION
Americare’s malpractice action against Mr. Pinckney stems from his failure to
object to the hearsay article at trial, which resulted in a large punitive damage award.
Americare’s central theory is that had it not been for Mr. Pinckney’s mistake, the
company would not have been liable for the punitive damages, and it would not have
needed to retain new counsel to contest the award.
Mr. Pinckney argues that this legal malpractice action is barred by the one-year
statute of limitations. In response, Americare argues that it had not suffered a “legally
cognizable injury” sufficient to trigger the accrual of the statute of limitations before the
trial court had affirmed the jury’s punitive damages award on October 1, 2010.
Therefore, according to Americare, its September 29, 2011 Complaint fell within the one-
year statute of limitations. The district court held that Americare’s claim was time-
barred. We agree.

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To establish a legal malpractice claim under Tennessee law, Americare must
prove:
(1) that the accused owed a duty to the plaintiff, (2) that the attorney
breached that duty, (3) that the plaintiff suffered damages, (4) that the
breach was the cause in fact of the plaintiff’s damages, and (5) that the
attorney’s negligence was the proximate, or legal, cause of the plaintiff’s
damages.
Dorrough v. Tarpy, 260 F. App’x 862, 863 (6th Cir. 2008) (quoting Gibson v. Trant,
58 S.W.3d 103, 108 (Tenn. 2001)). In Tennessee, legal malpractice claims must be
commenced within one year after the cause of action accrues. Tenn. Code. Ann § 28-3-
104(c)(1) (2014).
Tennessee follows the oft-recited discovery rule as it pertains to accrual. John
Kohl & Co. P.C. v. Dearborn & Ewing, 977 S.W.2d 528, 532 (Tenn. 1998). “[A] cause
of action accrues when the plaintiff knows or in the exercise of reasonable care and
diligence should know that an injury has been sustained as a result of wrongful or tortious
conduct by the defendant.” Id. The plaintiff (1) “must suffer legally cognizable damage-
—an actual injury—as a result of the defendant’s wrongful or negligent conduct,” and
(2) “must have known or in the exercise of reasonable diligence should have known that
this injury was caused by the defendant’s wrongful or negligent conduct.” Id. We
address each element in turn below.
A. Injury
For the purposes of the discovery rule, an actual injury occurs when there is the
loss of a legal right, remedy or interest, or the imposition of liability. Id. But a plaintiff
may also suffer an actual injury if he or she suffers “some actual inconvenience”—such
as incurring an expense, as a result of the defendant’s negligent or wrongful act. Id. In a
legal malpractice action, incurring legal fees and expenses may constitute an actual

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injury, even though no adverse judgment or order has been entered. Cardiac Anesthesia
Servs., PLLC v. Jones, 385 S.W.3d 530, 543 (Tenn. Ct. App. 2012) (holding that the
plaintiff suffered damage in the form of the inconvenience and expense of defending a
motion for summary judgment as a result of the attorney’s negligence); see also
Honeycutt v. Wilkes, No. W2007-00185-COA-R3-CV, 2007 WL 2200285, at *7 (Tenn.
Ct. App. Aug. 2, 2007) (holding that a wife suffered an actual injury—prior to the entry
of final judgment—in a legal malpractice claim, when she was forced to defend against
her ex-husband’s petition to terminate her alimony because of her divorce attorney’s
advice regarding a cohabitation clause in the marital dissolution agreement). “A plaintiff
may not . . . delay filing suit until all the injurious effects or consequences of the alleged
wrong are actually known to the plaintiff.” Kohl, 977 S.W.2d at 532.
The inconvenience, time, and expense that Americare incurred by retaining new
counsel constituted an “actual injury” under the discovery rule. See Cardiac Anesthesia
Services, 385 S.W.3d at 544. But for the $5 million punitive damages award it would not
have hired new counsel; like the plaintiff in Honeycutt, who was forced to hire a new
attorney to defend against her ex-husband’s attempt to terminate his alimony payments.
Moreover, the fees that Americare incurred through the newly-retained counsel are the
same type of expenses that Cardiac Anesthesia Services identifies as causing plaintiffs an
“actual inconvenience” sufficient to constitute an accrual-triggering injury. See Cardiac
Anesthesia Servs., 385 S.W.3d at 541–44. In Cardiac Anesthesia Services, legal fees
were incurred defending against a motion for summary judgment. Id. at 543. Here,
Americare incurred fees when it retained counsel to contest the punitive damages award
and prepare for the appeal. See id. at 541 (citing Kohl, 977 S.W.2d at 533).

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The October 1, 2010 decision that affirmed the jury’s award of punitive damages
was “additional damage,” but it was “not necessary for [Americare] to have suffered all
the injurious effects or consequences of the alleged negligence in order for the statute to
begin running.” Cardiac Anesthesia Servs., 385 S.W.3d at 543 (quoting Honeycutt v.
Wilkes, 2007 WL 2200285, at *7 (citing Kohl, 977 S.W.2d at 533)).
Americare cites Cherry v. Williams, 36 S.W.3d 78, 84–85 (Tenn. Ct. App. 2000),
for the proposition that “entry of an adverse judgment [is] the starter pistol for the
running of the statute of limitations on litigation malpractice.” See id. (citing Laird v.
Blacker, 828 P.2d 691, 696 (Cal. 1992); Jason v. Brown, 637 So.2d 749, 752 (La. Ct.
App. 1994)). Therefore, according to Americare, the “only point at which [it] can be said
to have sustained an injury is once the trial court entered judgment on October 1, 2010.”
But Cherry merely recognizes that the entry of judgment is the “most easily
identifiable time” that a court could use to determine when an actual injury has occurred,
not the only time. Id. at 84–85. By no means should it be read as holding that an actual
injury cannot occur until adverse judgment has been entered. See id. As we read Cherry
and other cases, a court’s entry of judgment might always be considered an actual injury;
however, that does not foreclose the possibility that an injury sufficient to warrant accrual
of the statute of limitations occurred before the entry of that judgment. See id.; Cardiac
Anesthesia Servs., 385 S.W.3d at 543 (“[The] damage need not be the entry of an order
adverse to the client . . . .”); see also Kohl, 977 S.W.2d at 533 (“[I]t [is] unnecessary for
the plaintiffs to have suffered all the injurious effects or consequences of the defendants’
negligence in order for the statute to begin running.”).

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Americare also asserts that if the claim had been filed before the entry of
judgment, a court would have dismissed it as not being ripe for review. Americare
argues that the jury’s punitive damages award was merely speculative at that point, and
was not final until affirmed by the trial court. Americare’s argument seems to be that it
had not suffered any real harm until the jury’s punitive damages award had been
affirmed.
But, as mentioned above, the negligent conduct was the attorney’s malpractice,
and the harm suffered was the fees that Americare incurred by retaining new counsel.
Therefore, whether the punitive damages award had been affirmed or not, Americare had
a ripe legal malpractice claim well before the jury’s award was affirmed when it had
suffered damages by incurring the expense of retaining new counsel as a result of the
alleged malpractice.1
Despite having suffered an injury, in the form of the inconvenience, time, and
expense of retaining new counsel, the statute of limitations could not begin to accrue until
Americare had suffered the injury and was also aware of Mr. Pinckney’s tortious or
negligent conduct. Therefore, we must next determine when Americare became aware of
Mr. Pinckney’s malpractice.
B. Notice of the Facts Giving Rise to the Injury
Under Tennessee law, a plaintiff must have actual or constructive knowledge that
his injury was sustained as a result of wrongful or tortious conduct by the defendant-
attorney.2 Kohl, 977 S.W.2d at 532. Not only must the plaintiff know that he has
1 Accordingly, we need not address the question of whether a jury’s punitive damages award, which has not
been affirmed by a trial court, is an injury sufficient to trigger the statute of limitations.

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suffered an injury, but he must also know of the defendant’s wrongful or tortious conduct
that gave rise to the injury. Id.
The plaintiff can have either actual or constructive knowledge of the wrongful or
tortious conduct. Id. Actual knowledge of conduct could occur where the attorney
admits committing malpractice or where the plaintiff has been informed by another
attorney that malpractice has occurred. Id. A plaintiff has constructive knowledge of the
conduct when “[he or she] 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 defendant’s
negligent or wrongful conduct.” Id.
The new attorneys that Americare hired knew or should have known of
Mr. Pinckney’s alleged negligent conduct. And that knowledge, whether actual or
constructive, is imputed to Americare.3 See Wilkins v. Dodson, Parker, Shipley, Behm
& Seaborg, 995 S.W.2d 575, 584 (Tenn. Ct. App. 1998) (“[A] client is implied to have
notice of facts transmitted to his attorney in the matter and course of his employment for
such client.”) (internal quotation marks and citation omitted). The district court
analogized the facts of this case to Cardiac Anesthesia Services. We agree that these
2 Some confusion may arise when precise language is not used to identify the injury suffered and the
suspect conduct. See Kohl, 977 S.W.2d at 532–33 (explaining that a plaintiff would have “actual
knowledge of an injury” if he has been told that the attorney committed malpractice, but, ultimately
concluding that the injury occurred when the plaintiff began incurring expenses, and had to take action, as a
result of the malpractice) (emphasis added). To eliminate confusion, this may be viewed as knowledge of
two different things. First, knowledge of the injury. Second, knowledge of the negligent or wrongful
conduct. Identifying the conduct and the injury is especially important in cases such as this one, where the
two events may have happened at different times. Here, Americare suffered the injury in May 2010, when
it retained new counsel, and had constructive knowledge of the facts giving rise to the injury in July 2010.
3 Americare’s counsel has also argued that an attorney’s actual knowledge can be imputed to a client, but
their constructive knowledge cannot. There is no support for this proposition, and Tennessee case law
suggests that an attorney’s constructive knowledge can, in fact, be imputed to a client. See Cardiac
Anesthesia Servs., 385 S.W.3d at 538 (“Once it has been established that the attorney obtained the relevant
knowledge during the course of representing the client, ‘the constructive notice thereof to the client is
conclusive, and cannot be rebutted by showing that the attorney did not in fact impart the
information . . . .’”) (quoting Boote v. Shivers, 198 S.W.3d 732, 742 (Tenn. Ct. App. 2005)).

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cases are similar. In both cases the plaintiffs had retained a new, independent counsel.
And both cases also involve filings that required the plaintiffs to take some affirmative
action. In Cardiac Anesthesia Services, the plaintiffs defended against a motion for
summary judgment, and, here, Americare drafted a revised proposed judgment following
the jury’s verdict and punitive damages award.
Billing records show that between July and September 2010, the firms for both
parties reviewed and communicated about the Bedford Plaintiff’s proposed judgment
affirming the jury’s punitive damages award. That proposed judgment, revised by
Americare’s newly-retained counsel, specifically referred to the hearsay article that was
the basis for the punitive damages award. Further, billing records show that Americare’s
new counsel reviewed the trial transcript and researched the punitive damages issues.
The crux of Americare’s malpractice case against Mr. Pinckney is that any
reasonably prudent attorney would have identified the article as hearsay and objected to
its admission at trial. Assuming that the newly-retained counsel are reasonably prudent,
the attorneys necessarily would have identified the article as hearsay when they reviewed
the trial records and the proposed judgment, and prepared to contest the punitive damages
award. We agree with the district court that the newly retained counsel either knew or
should have known that Mr. Pinckney’s failure to object to the hearsay article was
negligent conduct. We also agree that their knowledge is imputed to their client.
Wilkins, 995 S.W.2d at 584. Therefore, Americare, through its new attorneys, had actual
or constructive knowledge of the facts giving rise to the injury, on or before, July 2010—
the time it revised the Bedford Plaintiff’s proposed judgment that specifically referenced
the hearsay article.

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Americare claims that it would be bad policy to require an appellate counsel to
“squeal” on trial counsel by requiring that they notify the client of trial counsel’s
malpractice. This court does not set Tennessee policy. We hold only that, on these facts,
appellate counsel either knew or should have known of Mr. Pinckney’s alleged negligent
or wrongful conduct, and Tennessee law imputes this to Americare.
Finally, we recognize Americare’s point that under Tennessee law, the question as
to “whether the plaintiff exercised reasonable care and diligence in discovering the injury
or wrong is usually a question of fact.” Sherrill v. Souder, 325 S.W.3d 584, 596 (Tenn.
2010). However, this is not always the case. “If the evidence is undisputed and only one
conclusion can be drawn therefrom, the time of accrual of the cause of action is a
question of law to be determined by the Court.” Osborne Enter., Inc. v. City of
Chattanooga, 561 S.W.2d 160, 165 (Tenn. Ct. App. 1977). Only one conclusion can be
drawn from this record. Given the relationship between the article, the punitive damages
award, and Americare’s injury, Americare reasonably should have become aware of facts
sufficient to put a reasonable person on notice that Pinckney’s failure to object to the
article caused injury, in July 2010, well before October 1, 2010.
IV. CONCLUSION
Americare suffered an actual injury when it retained new counsel in May 2010.
The company knew or should have known of the facts that gave rise to the injury—
Mr. Pinckney’s negligent representation at trial—when the new counsel knew or should
have known of the alleged wrongful conduct. Accordingly, Americare’s malpractice
claim accrued no later than July 2010, and is, therefore, time-barred.
For the foregoing reasons, we AFFIRM the district court’s decision.

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