Background
Michael Blum, managing partner of PBM Partners, LLC, owned the Pitt Building in downtown Pittsburgh and leased commercial space to FVP Smithfield, an entity affiliated with Feenix Payment Systems. After FVP Smithfield defaulted on rent in early 2020, Blum was terminated from his role at Feenix and signed a separation agreement that included non-disparagement and confidentiality provisions. A UCC sale of FVP Smithfield’s assets followed, with PBM Partners claiming a disputed first-priority security interest in those assets.
Blum engaged attorney Jacob Frenkel of Dickinson Wright in December 2020. Frenkel sent a December 18, 2020 letter to counsel for Atalaya Capital Management — which had financed Feenix and conducted the UCC sale — accusing Atalaya of orchestrating a “sham” transaction to defraud PBM Partners. Dickinson Wright’s representation ended on January 21, 2021. In May 2021, Keith Lee and Feenix sued Blum in Delaware Superior Court, alleging that the Frenkel letter was defamatory and breached the separation agreement’s non-disparagement clause. By May 2021, Blum and his mother (also listed as a contact under the engagement letter) were communicating with Frenkel expressly linking the Delaware lawsuit to his legal work.
After years of Delaware litigation, a bench trial resulted in a May 29, 2024 judgment finding Blum breached the separation agreement and awarding $11,212.50 in damages to Atalaya. Blum was denied fee-shifting recovery. On November 12, 2024, plaintiffs filed the present legal malpractice action in Wayne Circuit Court, arguing Frenkel negligently drafted the letter without reviewing the separation agreement and without advising Blum of its restrictions. Defendants moved for summary disposition under MCR 2.116(C)(7), asserting the action was time-barred. The trial court granted the motion, and plaintiffs appealed.
The Court’s Holding
The Court of Appeals affirmed, holding that plaintiffs’ legal malpractice claim was barred by Michigan’s two-year statute of limitations and the six-month discovery rule under MCL 600.5805(8) and MCL 600.5838. Under MCL 600.5838(1), the two-year limitations period began running on January 21, 2021 — the last day Dickinson Wright provided legal services — making the filing deadline January 21, 2023. Plaintiffs filed nearly four years after that date. The court further held that even under the six-month discovery rule in MCL 600.5838(2), the claim was untimely, because plaintiffs knew or reasonably should have known of a possible malpractice claim no later than May 2021, when the Delaware lawsuit was filed and plaintiffs explicitly communicated to Frenkel that the Delaware action arose from his letter.
Applying Gebhardt v. O’Rourke, 444 Mich 535 (1994), the court rejected plaintiffs’ argument that they could not have discovered the malpractice claim until the Delaware court issued its final judgment in May 2024. Michigan law does not require finality of damages to trigger the discovery rule — harm is established by the occurrence of an identifiable and appreciable loss, not its quantification. By May 2021, plaintiffs could identify all four elements of a malpractice claim: an attorney-client relationship, Frenkel’s allegedly negligent drafting, proximate causation (the Delaware suit arose directly from the letter), and an appreciable injury (the burden of defending the Delaware litigation). The six-month window expired at the latest by November 2022, nearly two years before plaintiffs filed suit.
The court also rejected plaintiffs’ equitable estoppel argument. Plaintiffs contended that Dickinson Wright’s May 2022 letter — stating that indemnification was premature under Delaware law before final disposition of the underlying action — induced them to delay filing. The court found this argument legally insufficient. Michigan estoppel in the limitations context requires a false representation or concealment of a material fact concerning the plaintiff’s rights, such as a settlement offer, a misrepresentation about the limitations period, or partial payment of a claim. Defendants’ statements addressed Delaware indemnification procedures, not the Michigan statute of limitations, and did not constitute the kind of conduct calculated to induce forbearance from timely filing.
Key Takeaways
- Under Michigan law, the two-year malpractice limitations period begins on the attorney’s last day of professional service, regardless of when the client discovers or suffers final damages — Gebhardt remains controlling.
- The six-month discovery rule is triggered when a plaintiff knows or should know of a possible malpractice claim, meaning all four elements are identifiable; it does not require awaiting a final adverse judgment in related litigation.
- Clients who suspect malpractice while still embroiled in related litigation should file suit promptly and, if necessary, seek a stay of the malpractice action pending resolution of the underlying matter — not wait for that resolution before filing.
- An adversary attorney’s statements that a malpractice-based indemnification demand is premature under foreign law do not constitute a false representation about the Michigan limitations period sufficient to support equitable estoppel.
Why It Matters
This decision is a sharp reminder that Michigan’s malpractice clock runs from the end of representation — not from the conclusion of downstream litigation caused by the alleged error. Clients harmed by attorney conduct in connection with ongoing disputes face a difficult choice: they must commence a malpractice action even while the underlying dispute remains unresolved, or risk losing the right to sue entirely. The court reaffirms the Gebhardt mechanism: file the malpractice case, then seek a stay pending the other proceeding’s outcome.
The equitable estoppel holding is also significant. Defense counsel’s strategic communications — declining to assume a client’s defense, disputing liability, or noting that indemnification demands are premature — will not toll the limitations period absent an affirmative misrepresentation about the limitations deadline itself. Plaintiffs’ counsel should be cautious about treating adversarial denials of liability as any form of tolling agreement.