Queensway Financial Holdings Ltd. v. Cotton & Allen, P.S.C.

Summary

The Supreme Court of Kentucky held that Queensway Financial Holdings Ltd.’s professional malpractice claims against its auditor were barred by the one-year limitations period in KRS 413.245. The court concluded that any damages accrued when Queensway purchased Paradigm Insurance Company, because the alleged under-reserving made the purchase price excessive, and that Queensway should have discovered the claim no later than December 1997. The court affirmed summary judgment for Cotton & Allen, P.S.C.

Holdings

1. Under KRS 413.245, a professional malpractice cause of action accrues when negligence and damages have both occurred, and damages are fixed and non-speculative. Queensway's damages became fixed when it purchased Paradigm because the company was either overpriced at that time or it was not; the later Indiana reserve adjustment did not create the injury or delay accrual.
2. Queensway knew or, through reasonable diligence, should have known of its cause of action no later than October 1998, and the evidence established notice as early as December 1997. The discovery rule does not toll the statute while an injured plaintiff investigates the identity of the wrongdoer, absent fraudulent concealment or misrepresentation by the defendant.
3. Summary judgment for Cotton & Allen was proper because the record contained no genuine issue of material fact concerning the relevant documents, Queensway's receipt of them, or the date by which Queensway should have discovered its injury and possible malpractice.

Questions Presented

1. When did Queensway's professional malpractice cause of action accrue under KRS 413.245?
2. When did Queensway know or reasonably should have known of the cause of action under the discovery rule in KRS 413.245?
3. Whether summary judgment was proper because Queensway filed suit more than one year after accrual and discovery of its professional malpractice claim.

Disposition

affirmed