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APRIL 29, 2005; 10:00 A.M. TO BE PUBLISHED

Commonwealth Of Kentucky Court of Appeals
NO. 2003-CA-002017-MR

GARDINER PARK DEVELOPMENT, LLC; GARDINER DESIGN & DEVELOPMENT, INC.; and GREGORY S. GARDINER

APPELLANTS

v.

APPEAL FROM JEFFERSON CIRCUIT COURT HONORABLE F. KENNETH CONLIFFE, JUDGE ACTION NOS. 01-CI-006541 and 02-CI-002907

MATHERLY LAND SURVEYING, INC.; ALVA L. MATHERLY; and CARL DOUGLAS COMER

APPELLEES

CONSOLIDATED WITH AND TO BE HEARD WITH: NO. 2003-CA-002048-MR

D. SEAN NILSEN and WOODWARD, HOBSON & FULTON

APPELLANTS

v.

APPEAL FROM JEFFERSON CIRCUIT COURT HON. F. KENNETH CONLIFFE, JUDGE ACTION NOS. 01-CI-006541 and 02-CI-002907

MATHERLY LAND SURVEYING, INC.; ALVA MATHERLY; CARL DOUGLAS COMER; GARDINER PARK DEVELOPMENT, LLC; GARDINER DESIGN & DEVELOPMENT, INC.; and GREGORY S. GARDINER

APPELLEES

OPINION VACATING AND REMANDING ** ** ** ** ** BEFORE: JUDGE.1 COMBS, CHIEF JUDGE; BARBER, JUDGE; MILLER, SENIOR

BARBER, JUDGE:

This case presents the difficult question of

determining which statute of limitations is applicable to the claims among the parties. The core issue in the case involves

how a professional and professional services are defined under KRS 413.245, the one-year professional malpractice statute. The

circuit court found that the services provided were performed by a professional engineer, and, thus, applied the one-year statute of limitations to bar all claims against Matherly Land Surveying, Inc., Alva L. Matherly, and Carl Douglas Comer. vacate and remand. In 1997 Matherly Land Surveying, Inc. (MLS) and Gardiner Design & Development, Inc. (GDD) entered into a contract whereby MLS agreed to perform engineering and survey work associated with the development of a subdivision in Jefferson County, Kentucky. During the relevant time period MLS We

employed three licensed professional engineers, at least part time, and also employed civil engineering technicians and survey technicians.
1

One of the part-time professional engineers

Senior Judge John D. Miller sitting as Special Judge by assignment of the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.

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employed by MLS was Carl Douglas Comer (Comer).

Alva L.

Matherly, the owner and president of MLS, is a land surveyor and was the primary contact for GDD with MLS along with Comer on the project. Sometime toward the end of 1997 and the beginning of 1998 GDD became dissatisfied with the work being performed by MLS. It is undisputed that MLS and GDD parted ways in August

1998 and that GDD hired two other firms to complete, and in some instances, re-do, the work called for by the contract between MLS and GDD. MLS and GDD could not resolve their differences over the project and both hired counsel. An agreement to conduct

mediation and arbitration of any unresolved issues remaining after mediation was entered into in October 1999. That

agreement specifically provided that a demand for arbitration would not be made after any applicable statute of limitations would bar the action. The agreement originally called for

mediation to be conducted on or before December 8, 1999, but no mediation was held until May and June 2001. Prior to the mediation both MLS and GDD made their positions known to the other. MLS claimed it was owed money for

work it had performed and GDD filed a "position statement" detailing the damages it had suffered due to the delays and incomplete/incorrect work by MLS. MLS also asserted that KRS

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413.245 was the applicable statute of limitations and that any action by GDD on its claims was barred. mediation was not successful. Until April 2001, just before the mediation, GDD had been represented by Woodward, Hobson & Fulton (WHF), specifically by D. Sean Nilsen (Nilsen). In April 2001 GDD Unsurprisingly the

retained other counsel, and, following the unsuccessful mediation, GDD, Gardiner Park Development, LLC (GPD), and, Gregory S. Gardiner (Gardiner)2 filed two separate cases in Jefferson Circuit Court. The first, filed originally against

WHF, Nilsen, and MLS, asked the court to declare what statute of limitations applied to the contract between MLS and GDD and also alleged legal malpractice against WHF and Nilsen. The petition

was amended to include Alva L. Matherly (Matherly) and Comer as well as assert a further count of legal negligence. The second

action filed involved the same parties and similar allegations and was consolidated with the first suit. The essential nature of the consolidated suits was that if the one-year statute of limitations in KRS 413.245 applied to GDD, GPD, and Gardiner's claims, as asserted by MLS, Matherly, and Comer, then any action against them was barred. If the court found this to be the case, then there would be no

2

According to the parties Gardiner Park Development, LLC and Gregory S. Gardiner also have an interest in the subdivision being developed: GPD as owner of the real property and Gardiner as the owner of GDD and GPD.

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point in pursuing arbitration and GDD, GPD, and Gardiner would pursue claims of legal malpractice against WHF. Some discovery

was taken and then all parties filed briefs on the subject of which statute of limitations applied. As noted above, the trial court found that KRS 413.245 was the correct statute of limitations, thus, all claims against MLS, Matherly, and Comer were barred. In its opinion the

circuit court declined to address whether land surveying services qualified as professional services under KRS 413.245. Instead it found that because engineers are considered to be professionals under the statute and Comer was indisputably an engineer, KRS 413.245 applied. It is undisputed that GDD, GPD, and Gardiner's claims against MLS, Matherly, and Comer are for services that were not timely completed and when completed were allegedly flawed. At the trial court level the parties apparently made a number of arguments regarding the statute of limitations issue in this case. However, on appeal the parties have presented one whether the one-year statute of limitations

issue for decision:

for professional malpractice applies or whether the fifteen-year statute of limitations on a written contract applies to all of the claims. Our standard of review on summary judgment is de novo. Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky.App. 1996).

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GDD, GPD, and Gardiner have taken the position that they believe the trial court's decision to be correct, but wish to preserve their rights against MLS, Matherly, and Comer if this Court reverses the trial court's determination. Thus, the

arguments are, in actuality, between WHF on the one hand and MLS, Matherly, and Comer on the other. WHF makes several arguments for why the fifteen-year statute of limitations in KRS 413.090(2) applicable to written contracts is the correct statute of limitations in this case. WHF maintains in its first two arguments that the type of damages claimed by GDD, GPD, and Gardiner are for purely economic losses. That is, the damages are for delay produced by

the failure of MLS, Matherly and Comer to perform their land surveying duties per the contract in a timely and acceptable manner. Because these claims are ones based strictly on breach

of contract, the one-year statute of limitations in KRS 413.245 is inappropriate. Next WHF argues that the trial court applied the oneyear professional malpractice statute of limitations simply because Comer is a professional engineer. WHF maintains that

this is an incorrect analysis for a number of reasons. First, it asserts that the bulk of the claims made by GDD, GPD, and Gardiner are not for negligence in performing engineering services, but for land surveying services. It

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argues that the trial court's decision would allow the application of the one-year statue of limitations to nonprofessionals working for a professional company enabling them to claim the benefit of KRS 413.245's shorter statute of limitations. Secondly, WHF makes clear that it is undisputed that MLS is a professional, licensed engineering firm that employs professionals but states that this is irrelevant to GDD, GPD, and Gardiner's claims since their cause of action is based on deficiencies in the land surveying services which are not professional services. As WHF notes, the circuit court declined

to make a finding on this issue, but it argues that such a finding is necessary because, even if land surveying is held to constitute professional services now (the statute relating to land surveying and engineering was amended in 1999), it did not qualify as such in 1997 and 1998 when the relevant circumstances of the dispute occurred. In response MLS, Matherly, and Comer argue that, by the terms of KRS 413.245, it is irrelevant whether the claims against them are ones sounding in contract or tort. They also

assert that the claims by GDD, GPD, and Gardiner are ones based on the engineering services that Comer was to provide through MLS under the contract and that, if there were a trial in this

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action, expert testimony would be needed to establish the appropriate duty, standard of care, and any breach. Further, MLS, Matherly, and Comer maintain that even if the services GDD, GPD, and Gardiner are complaining of are land surveying services, those services were provided incidental to the engineering services that Comer performed, and, thus, still fall under the ambit of "professional services" and in the purview of KRS 413.245. Finally, MLS, Matherly, and Comer contend that land surveying services are professional services and were considered to be professional services by the legislature prior to 1999 when the statute was amended. Therefore, under any view of the

case the statute of limitations in KRS 413.245 applies. At oral argument WHF raised the further argument that even if KRS 413.245 is the correct statute of limitations in this case, the cause of action has yet to accrue. It bases this

stance on Kentucky law such as Alagia, Day, Trautwein & Smith v. Broadbent, 882 S.W.2d 121, 125-126 (Ky. 1994), which essentially holds that the time for bringing a cause of action under KRS 413.245 does not begin to run until the damages are fixed and non-speculative. WHF maintains that, to date, the damages

incurred by GDD, GPD, and Gardiner remain uncertain and will continue to be so until the project, Gardiner Park Subdivision, is completed.

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In response MLS, Matherly, and Comer argue that the case law WHF relies on is only applicable to "litigation negligence" cases and points out that WHF wrote a position statement on behalf of GDD, GPD, and Gardiner for the anticipated mediation on December 2, 1999, that states in its opening that the full extent of damages had only become known within the past few months. KRS 413.245 provides as follows: Notwithstanding any other prescribed limitation of actions which might otherwise appear applicable, except those provided in KRS 413.140, a civil action, whether brought in tort or contract, arising out of any act or omission in rendering, or failing to render, professional services for others shall be brought within one (1) year from the date of the occurrence or from the date when the cause of action was, or reasonably should have been, discovered by the party injured. Time shall not commence against a party under legal disability until removal of the disability. "Professional services" is defined in KRS 413.243 as meaning, "any service rendered in a profession required to be licensed, administered and regulated as professions[.]" Obviously the definition of professional services in KRS 413.243 is only marginally helpful. However, KRS 413.245 is clear that actions based on professional services, whether those claims arise out of a tort or a contract, are subject to a one-year statute of limitations.

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Thus, to the extent that GDD, GPD, and Gardiner's claims against MLS, Matherly, and Comer are based on the rendering or failure to render professional services, KRS 413.245 is the correct statute of limitations. This is true even if one examines GDD, GPD, and Gardiner's claims based on the type of damages sought. WHF's

argument that the 15-year statute of limitations for breach of contract in KRS 413.090(2) is applicable because GDD, GPD, and Gardiner are seeking purely economic losses is not persuasive. KRS 413.245 makes no such distinction

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