## Facts

- William Barnes, Jr. sold his auto-parts business to James and Rhonda Lipp for $220,000, receiving $40,000 at closing and a 10-year promissory note for $180,000.
- The note was secured by a blanket lien on the Lipps’ assets, and attorney David Turner, Jr. represented Barnes in the transaction.
- Turner filed UCC financing statements on October 30, 1996, perfecting Barnes’s security interest.
- Under Georgia’s UCC, a financing statement is effective for five years and may be continued by filing a continuation statement within the final six months of the five-year period.
- At the motion-to-dismiss stage, the court assumed Turner did not inform Barnes that continuation filings were required to keep the lien perfected.
- No continuation statements were filed, and Barnes’s financing statements lapsed on October 30, 2001.
- The Lipps later granted security interests in the same collateral to other creditors, which filed financing statements and became senior to Barnes once Barnes’s filings lapsed.
- Barnes was still owed more than $142,792.09 when James Lipp filed Chapter 7 bankruptcy.
- Barnes sued Turner for legal malpractice on October 18, 2002; the trial court dismissed as time-barred under the four-year limitations period, and the court of appeals affirmed.

## Issues

1. Whether an attorney who perfects a client’s security interest but fails to advise the client of the statutory continuation requirement may be found to have undertaken a duty to file the continuation statement.
2. If such a duty exists, whether the alleged breach occurred when the financing statement lapsed in 2001, making a 2002 malpractice action timely under Georgia’s four-year statute of limitations.

## Decision

- The Supreme Court of Georgia reversed the dismissal and remanded.
- The court held that, if Turner failed to inform Barnes of the renewal requirement, Turner undertook a duty to renew the security interest himself.
- On that theory, the alleged negligent act occurred when the financing statement lapsed on October 30, 2001, not at the 1996 closing.
- Because Barnes filed suit on October 18, 2002, the action was not barred by the four-year statute of limitations.
- The court did not decide the remaining malpractice elements (breach, causation, and damages) beyond the limitations question.

## Legal Principles

- In Georgia legal-malpractice actions, the statute of limitations generally runs from the date of the alleged negligent or wrongful act, not from the client’s discovery of the error.
- The scope of an attorney’s duty may extend beyond a discrete transaction when the representation and client reliance support an implied continuing obligation.
- If an attorney fails to inform a client of a required future step necessary to protect the client’s legal interest, a factfinder may treat the attorney as having assumed responsibility for completing that step.
- When the alleged duty includes a later required act, the limitations period may run from the time the later act was required and not performed.

## Conclusion

The Georgia Supreme Court held that an attorney’s failure to advise a client about the need to continue a UCC financing statement can support a continuing duty to file the continuation, so the malpractice limitations period may begin when the financing statement later lapses rather than when the transaction originally closed.


Barnes v. Turner, 606 S.E.2d 849 (Ga. 2004)