Minnesota Supreme Court, 1988 The Minnesota Supreme Court reversed the court of appeals for improperly considering an alternative statute of limitations accrual date not litigated in trial court, affirming summary judgment for attorney Stich in a legal malpractice action.

The Minnesota Supreme Court reversed the court of appeals for improperly considering an alternative statute of limitations accrual date not litigated in trial court, affirming summary judgment for attorney Stich in a legal malpractice action.

Thiele v. Stich
Minnesota Supreme Court · Decided July 1, 1988 · Popovich
425 N.W.2d 580; 1988 Minn. LEXIS 138; 1988 WL 66502 (North Western Reporter, Second Series)

Outcome: Reversed for appellee.

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Thiele v. Stich

What happened

The facts of the case, in plain language.

The dissolution decree was filed on July 29, 1980, establishing the date Thiele's cause of action accrued.

The initial service on July 17, 1986, was ineffective because the summons was left with Stich's receptionist at his law office, not delivered personally or at his residence.

Stich was effectively served on August 14, 1986, more than six years after the cause of action accrued.

In trial court, Thiele did not dispute that her cause of action accrued on July 29, 1980, and did not raise an alternative accrual date.

What the court decided

DeVee Thiele sued attorney Robert Stich for legal malpractice in 1986 related to a 1980 dissolution decree. Stich moved for summary judgment, arguing the six-year statute of limitations had expired because the cause of action accrued in 1980, and Thiele's initial service in 1986 was ineffective. The trial court granted summary judgment. The court of appeals reversed, finding the first service defective but holding the cause of action did not accrue until 1986 when Thiele's ex-husband filed a partition action. The Minnesota Supreme Court reversed the court of appeals, holding that the appellate court improperly considered an alternative accrual date theory that was never litigated in trial court. The Supreme Court affirmed summary judgment for Stich because the cause of action accrued in 1980, the statute of limitations period had expired, and Stich was not effectively served within that period.

  1. An appellate court may not consider a new statute of limitations accrual theory raised for the first time on appeal; the prohibition applies even where the general statute of limitations issue was litigated below, and a court will not consider limitations questions not passed upon by the trial court.
  2. Service of process on an individual by leaving a copy with a receptionist at the defendant's place of business does not comply with Minn.R.Civ.P. 4.03(a), and the defendant's actual notice of the lawsuit does not cure the defect absent substantial compliance with the rule.
  3. A legal malpractice cause of action accrues when damage from the attorney's alleged negligence occurs; under Minn.Stat. § 541.05, subd. 1(5), the six-year limitations period runs from that accrual date, and failure to effectuate proper service within that period bars the claim. (*584)
  4. Once the party asserting a statute of limitations defense establishes a prima facie case, the burden of producing facts raising a genuine issue of material fact shifts to the opposing party; the moving party need not anticipate every alternative accrual theory the opponent might raise.

How the court reached its decision

The court's reasoning, step by step.

Whether the court of appeals properly considered a new statute of limitations accrual theory that Thiele raised for the first time on appeal. Thiele did not dispute in trial court that her cause of action accrued on July 29, 1980, and did not put the accrual issue before the court of appeals in her statement of the case. The sole contested point in trial court was whether the July 17, 1986 service was effective. Thiele raised the alternative accrual date theory for the first time in her appellate brief, and the key facts purportedly supporting it—that she believed the second mortgage was paid off before dissolution and suffered no damage until Moore's partition action—appeared nowhere in the complaint, answer, dissolution decree, or Stich's affidavit, nor in the approved amended statement of proceedings. The court of appeals erroneously considered and decided a new accrual theory never litigated below and impermissibly drew its supporting facts from Thiele's appellate brief rather than the trial record; the Supreme Court reversed the court of appeals' judgment on that basis.

Whether service of process left with a receptionist at the defendant's law office was effective to commence the action under Minn.R.Civ.P. 4.03(a). Stich was initially served when the process-server left the documents with his receptionist at his law office while he was not present—neither personal delivery nor service at his usual place of abode. Thiele argued that Stich's actual notice of the suit and referral of the complaint to his insurers cured the defect, but that exception has been recognized only where substitute service was made at the defendant's residence, not at a place of business. The July 17, 1986 service was ineffective because it violated Rule 4.03(a) in every respect; Stich was not effectively served until August 14, 1986.

Whether Stich's summary judgment showing was sufficient to establish the statute of limitations defense and shift the burden to Thiele to raise a genuine factual dispute. Stich submitted five exhibits and an affidavit establishing the filing date of the dissolution decree and the dates of service, and expressly argued the cause of action accrued on July 29, 1980—a point Thiele did not refute in trial court. Thiele's argument that summary judgment was inappropriate because the record was insufficient to establish any accrual date was unavailing because neither party asked the court to find a date other than July 29, 1980, and the moving party had no duty to anticipate every alternative theory the opponent might later raise. Stich established a prima facie limitations defense; Thiele failed to raise a genuine factual dispute on the accrual date actually litigated, and the trial court correctly granted summary judgment.

Key quotes from the opinion

Notable passages from the opinion, in the court's own words.

“A reviewing court must generally consider "only those issues that the record shows were presented and considered by the trial court in deciding the matter before it."”
Standard for appellate review of issues —
“Under the rules of civil procedure, service of process can be effected on an individual only "by delivering a copy to him personally or by leaving a copy at his usual place of abode with some person of suitable age and discretion then residing therein."”
Standard for service of process —
“As Stich was not effectively served within six years of that date, the malpractice claim was time-barred under Minn.Stat. § 541.05, subd. 1(5).”
Application of statute of limitations to bar malpractice claim — *584

Cases the court relied on

Earlier decisions the court cited as authority for its ruling.

  • Thayer v. American Financial Advisers, Inc. (322 N.W.2d 599 (Minn. 1982)) — States the foundational rule that a reviewing court must consider only those issues that the record shows were presented and considered by the trial court, which the court applies to bar consideration of Thiele's new accrual theory.
  • Rehberger v. Project Plumbing Co., Inc. (295 Minn. 577, 205 N.W.2d 126 (1973)) — Establishes the specific corollary that the court will not consider the applicability of the statute of limitations on appeal if the question was not passed on by the trial court, particularly when the underlying facts are in dispute.
  • Mattson v. Underwriters at Lloyds of London (414 N.W.2d 717 (Minn. 1987)) — Applied the preservation-of-theories rule to hold that even prevailing parties must preserve alternative theories or risk being barred from raising them on appeal as improperly shifted or abandoned arguments.
  • Celotex Corp. v. Catrett (477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)) — Cited for the summary judgment burden-shifting framework, particularly the principle that once the moving party establishes a prima facie case, the burden shifts to the non-moving party to produce facts raising a genuine issue.
  • Dalton v. Dow Chemical Co. (280 Minn. 147, 158 N.W.2d 580 (1968)) — Cited as authority for the accrual rule applied to the malpractice claim—that the cause of action accrues when damage from the alleged negligence occurs.

Full opinion

The complete text of the court's opinion as published.

Opinion

POPOVICH, Justice.

DeVee Thiele sued attorney Robert Stich in 1986 for legal malpractice in connection with her 1980 dissolution proceeding. Stich answered alleging insufficient service of process and Thiele re-served the summons and complaint. The trial court granted summary judgment for Stich on the ground that the six-year statute of limitations had run by the time of the second, proper service. The court of appeals reversed, holding the first service was ineffective, but the limitation period did not begin to run until 1986. Thiele v. Stich, 416 N.W.2d 827, 829-30 (Minn.App. 1987). We agree the initial service was inadequate, but find the court of appeals erroneously considered the alternative accrual date for plaintiffs action, an issue neither raised in the trial court nor decidable on that record. We therefore reverse.

I.

In 1979, DeVee Thiele hired attorney Robert Stich to handle her divorce from Gary Moore. It is not clear whether Stich represented both parties, or whether Moore had his own counsel. Stich learned the parties were not legally married, as Gary Moore was married to another woman at the time he attempted marriage with Thiele in 1969. On July 29,1980, the court filed a decree dissolving the purported marriage and dividing property the couple had acquired. The division included real estate purchased in joint tenancy, which was awarded to the parties equally as tenants in common.

Gary Moore subsequently sought partition of the real property and enforcement of a second mortgage against it, though the record does not indicate when his action began or what form it took. Thiele in turn filed this malpractice action against Stich, claiming that due to his negligence the 1980 decree failed to account for the parties’ then-existing debts, protect Thiele’s continued enjoyment of the property, or provide for payment of the second mortgage, real estate taxes, and improvements.

Stich was initially served with Thiele’s summons and complaint on July 17, 1986, but the process-server simply left the document with the receptionist in Stich’s law office when he was not there. He alleged insufficient service of process in his answer, and was then personally handed the identical summons and complaint at his office on August 14, 1986.

Stich filed a motion for summary judgment, alleging Thiele’s action was time-barred under Minn.Stat. § 541.05, subd. 1(5) (1986). He contended Thiele’s cause of action accrued on the date of the dissolution decree, July 29, 1980, and the six-year limitation period therefore expired on July 29, 1986. Stich said the July 17, 1986, service was ineffective to commence the action because the summons was neither delivered personally nor left at his usual place of abode, as required under Minn.R. *582 Civ.P., 4.03. Thiele responded that her cause “arguably” accrued in 1980, but claimed the first service on Stich properly commenced the action because he had actual notice of the suit within the limitation period. The court held service at defendant’s place of business could not be so liberally construed, and granted summary judgment for Stich.

Thiele appealed, and in her statement of the case framed the issue as whether the July 17, 1986, service in Stich’s office was proper, and whether Stich had sufficient notice of the suit given the fact that he referred the complaint to his insurers and retained counsel. However, Thiele additionally argued in her court of appeals brief that the August 14, 1987, service on Stich was well within the six-year limitation period because her cause of action did not accrue until she became aware of Stich’s neglect in 1986. The court of appeals found the July 17,1986, service ineffective, but agreed Thiele’s cause of action did not accrue until her ex-husband filed his partition action in May, 1986. The court therefore reversed the judgment for Stich on the statute of limitations issue, remanding the case for trial. Thiele, 416 N.W.2d at 830.

II.

Stich contends the court of appeals improperly considered a statute of limitations question never litigated below. We agree. A reviewing court must generally consider “only those issues that the record shows were presented and considered by the trial court in deciding the matter before it.” Thayer v. American Financial Advisers, Inc., 322 N.W.2d 599, 604 (Minn. 1982); see also Thompson v. Barnes, 294 Minn. 528, 200 N.W.2d 921, 927 (1972). More specifically, this court “will not consider the applicability of the statute of limitations on appeal, even though the question was raised below, if it was not passed on by the trial court.” Rehberger v. Project Plumbing Co. Inc., 295 Minn. 577, 578, 205 N.W.2d 126, 127 (1973); accord Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686, 694 (Minn. 1980). This principle especially applies when facts on which the limitations issue rests are in dispute. Rehberger, 205 N.W.2d at 127.

Nor may a party obtain review by raising the same general issue litigated below but under a different theory. Pomush v. McGroarty, 285 N.W.2d 91, 93 (Minn. 1979) (cannot raise new negligence theory on appeal); Security Bank of Pine Island v. Holst, 298 Minn. 563, 564, 215 N.W.2d 61, 62 (1974) (elementary that party cannot shift his position on appeal). We recently applied this rule in a slightly different context, holding plaintiffs who won their case at trial but later lost on appeal “were under an obligation to preserve their alternative theories for standing to sue.” Mattson v. Underwriters at Lloyds of London, 414 N.W.2d 717, 721 (Minn. 1987). Failure to do so leaves that party vulnerable to the claim it is shifting theories on appeal or reviving an abandoned theory. Id. at 721-22.

The parties here obviously litigated the statute of limitations question in trial court, but the sole point of controversy was whether the July 17, 1986, service on Stich was effective to commence the action. Thiele never contended her action accrued on any date other than July 29, 1980, and she failed to even put that issue before the court of appeals in her statement of the case. Her position in trial court was that “[ajrguably, the facts suggest that Plaintiffs cause of action came into being on July 29,1980.” That statement may not be an express concession, but it does not dispute Stich’s express argument in his trial memorandum that plaintiffs cause came into being on the date of her dissolution degree. Having lost on the theory under which she argued the case, Thiele plainly raised an alternative theory for the first time on appeal. The court of appeals nevertheless addressed and decided this new issue, without acknowledging or defending its deviation from the rule proscribing such appellate review.

Even if the court of appeals acted within its discretion to consider Thiele’s new statute of limitations theory, it was still bound to the trial court record. An appellate court may not base its decision on *583 matters outside the record on appeal, and may not consider matters not produced and received in evidence below. Plowman v. Copeland, Buhl & Co., Ltd., 261 N.W.2d 581, 583 (Minn. 1977); Minn.R.Civ.App.P.110. Not surprisingly, the key facts supporting Thiele’s accrual claim were never presented to the trial court, being largely irrelevant to the question litigated there.

The court of appeals found Thiele’s cause of action commenced in 1986 because “[she] believed the second mortgage on the property had been paid off before the dissolution proceeding began”; she had “no expectation that the decree would contain any reference to the mortgage”; and she suffered “no damage until [Gary] Moore filed his action in May 1986.” Thiele, 416 N.W.2d at 829-30. None of these “facts” appear in the complaint, answer, dissolution decree, or Stich’s affidavit — which make up the record before the trial court. Indeed, the record does not even indicate whether Moore actually filed a partition action or, if so, when. Moreover, the amended statement of proceedings filed in the court of appeals, which was approved by both parties and the trial court, failed to mention these allegations. As Stich points out, the court must have drawn this information from Thiele’s appellate brief, which contains these new factual allegations. It clearly erred in so reaching beyond the trial court record.

Thiele apparently takes Stich’s argument one step further, claiming the record was inadequate to establish any date on which the cause of action accrued. She contends Stich, as the moving party on a claim for which he bears the burden of proof at trial, was obligated to show the absence of any factual issue material to the statute of limitations. In her view, summary judgment was inappropriate because the materials accompanying Stich’s motion were insufficient to establish when the limitation period began to run.

Thiele overstates Stich’s burden. The party moving for summary judgment under Rule 56, Minn.R.Civ.P., must demonstrate no genuine issue of material fact exists. 1 2A D. Herr and R. Haydock, Minnesota Practice, § 56.18 at 69 (2d ed. 1985); 10A C. Wright, A. Miller, M. Kane, Federal Practice and Procedure, § 2727 at 121 (2d ed. 1983). One asserting the statute of limitations also has the burden of proving all the elements of that affirmative defense. Golden v. Lerch Bros., 203 Minn. 211, 220, 281 N.W. 249, 253 (1938). However, when the moving party makes out a prima facie case, the burden of producing facts that raise a genuine issue shifts to the opposing party. Wright & Miller, § 2727 at 143-44; Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2556-57, 91 L.Ed.2d 265 (Brennan, J., dissenting, but not on this point). This principle is reflected in our frequent holdings that summary judgment is proper when the nonmov-ing party fails to provide the court with specific indications that there is a genuine issue of fact. See Hunt v. IBM Mid America Employees Federal Credit Union, 384 N.W.2d 853, 855 (Minn. 1986); Erickson v. Gen’l United Life Ins. Co., 256 N.W.2d 255, 259 (Minn. 1977).

Stich submitted five exhibits and an affidavit that demonstrate when the dissolution decree was filed and when he was served. He specifically argued the cause accrued on the date of the dissolution decree, a point Thiele did not refute. Stich, then, surely offered enough support for his claim to shift onto Thiele the burden of producing contrary facts. He did not have a duty, as Thiele practically implies, to anticipate every argument she might make. Though Thiele failed to raise what could be a genuine issue of fact and law, there was no factual dispute on the single issue properly before the court.

*584 Thiele s reliance on Rossman v. 740 River Drive, 308 Minn. 134, 241 N.W.2d 91 (1976), is similarly misplaced. In Ross-man, a landlord sought summary judgment on the enforceability of an exculpatory clause in a lease. The enforceability issue turned on the precise nature of the landlord’s negligence, which could not be determined from facts on the record. Summary judgment is improper, we held, unless “the material facts which affect the result or outcome of the case are both disclosed and undisputed.” 241 N.W.2d at 93. Here, though, the trial court could easily decide whether the limitations period had run based on the facts before it, particularly when the parties did not dispute the accrual date. To be sure, the facts are insufficient to find some accrual date other than July 29, 1980, but neither party asked the court to do so. Thiele’s argument, again, seems an attempt to sidestep her own failure to raise the accrual issue in trial court.

III.

Perhaps anticipating our acceptance of Stich’s threshold argument, Thiele renews her trial court position that service on July 17, 1986, was effective to commence the action within six years after July 29, 1980. The court of appeals, however, properly rejected that claim.

Under the rules of civil procedure, service of process can be effected on an individual only “by delivering a copy to him personally or by leaving a copy at his usual place of abode with some person of suitable age and discretion then residing therein.” Minn.R.Civ.P. 4.03(a). Limited exceptions are inapplicable here. See id. The July 17, 1986, summons was left with Stich’s receptionist at his law office, clearly violating the rule.

Thiele relies on Larson v. Hendrickson, 394 N.W.2d 524, 526 (Minn.App. 1986), for the proposition that rules governing service are liberally construed when the intended recipient had actual notice of the lawsuit. Larson involved service on a tenant in defendant’s house while defendant was out of state; the issue was whether the house was defendant’s “usual place of abode.” In that context, defendant’s actual notice of the suit contributed to the finding that service was effective under Rule 4.03. Id.

This “actual notice” exception, however, has been recognized only in cases involving substitute service at defendant’s residence. See, e.g., Minnesota Mining & Manufacturing Co. v. Kirkevold, 87 F.R.D. 317 (D.Minn. 1980). One reason for this approach is that there may be no place significantly more desirable for the papers to be left. Wright & Miller, Federal Practice and Procedure, § 1096 at 79 (2d ed. 1987). Rule 4 is otherwise taken literally, and cannot be satisfied by service on defendant’s place of work or business. Thompson v. Kerr, 555 F.Supp. 1090, 1093 (D. Ohio 1982); Wright & Miller § 1096 at 74. Actual notice will not subject defendants to personal jurisdiction absent substantial compliance with Rule 4. See Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986); Jackson v. Hayakawa, 682 F.2d 1344, 1347 (9th Cir. 1982).

No attempt was made here to serve a summons at Stich’s residence. Leaving the papers with Stich’s receptionist did not comply with the rule in any way. The court of appeals correctly found the first attempted service was ineffective, and Stich was not effectively served until August 14, 1986.

IV.

There was no dispute in trial court that Thiele’s malpractice action accrued on July 29,1980, when damage from Stich’s alleged negligence occurred. See Dalton v. Dow Chemical Co., 280 Minn. 147, 153, 158 N.W.2d 580, 584 (1968). As Stich was not effectively served within six years of that date, the malpractice claim was time-barred under Minn.Stat. § 541.05, subd. 1(5). The trial court correctly granted summary judgment, for Stich. We reverse the court of appeals insofar as it considered and decided an issue never litigated below, the merits of which we need not reach.

Reversed.

1

. The United States Supreme Court has recently interpreted this burden, when the party also bears the burden of persuasion on the merits, as a duty to produce “credible evidence — using any of the materials specified in Rule 56(c) — that would entitle it to a directed verdict if not controverted at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2557, 91 L.Ed.2d 265 (1986) (Brennan J., writing in dissent but laying out majority position with which he agrees). Celotex, however, speaks more directly to the issue of the moving party’s burden on summary judgment when the nonmoving party carries the burden of persuasion at trial. Id. 106 S.Ct. at 2554-55.

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