No. 136436

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Background
The statutory limitations period for a breach of contract action is six years. MCL 600.5807(8). A claim for breach of contract accrues when the promisor fails to perform under the contract. But in a lawsuit to recover the balance due on a mutual and open account, the statute of limitations begins to run “at the time of the last item proved in the account.” MCL 600.5831. One of the questions in this case is whether MCL 600.5831 applies in an attorney’s lawsuit to recover unpaid fees from a client and, if so, when the “last item proved in the account” occurred.

In November 1989, Kirit Bakshi retained the law firm of Seyburn, Kahn, Ginn, Bess, Deitch and Serlin, P.C., to represent him and his companies in several matters. Bakshi paid for the Seyburn firm’s legal services until November 1992, after which he refused to pay the remaining fees of $50,603.00. At that time, Seyburn was representing Bakshi in a case that was pending in the Michigan Court of Appeals; on Seyburn’s motion, the Court of Appeals, in an order dated September 30, 1993, allowed the firm to withdraw as Bakshi’s counsel.

After the attorney-client relationship was terminated, Bakshi asked Seyburn for his litigation files. In early October 1993, Seyburn reviewed the files to determine what documents needed to be copied and sent to Bakshi. On November 12, 1993, Seyburn sent Bakshi its final invoice showing a total unpaid balance of $55,723.36. Seyburn charged Bakshi $460.50 in costs and fees related to the return of Bakshi’s files, including fees for services provided from October 3, 1993 through October 12, 1993. Bakshi never paid the final invoice.

On June 30, 1995, Bakshi sued Seyburn for malpractice. The trial court rejected Seyburn’s claim that the malpractice complaint was not filed within the two-year statute of limitations, holding that Seyburn last performed legal services for Bakshi in October 1993. The trial court eventually dismissed the lawsuit on other grounds; the Court of Appeals affirmed the lower court.

Seyburn then sued Bakshi on October 8, 1999, seeking $62,763.49 in unpaid legal fees. Bakshi asked the court to dismiss the case on the basis that the statute of limitations had expired. Seyburn’s breach of contract claim accrued in November 1992 when Bakshi stopped paying Seyburn’s invoices, Bakshi argued, so the the six-year statute of limitations for breach of contract claims expired in November 1998. Bakshi argued in the alternative that, to the extent Seyburn was proceeding under an open account theory, the claim accrued in March 1993, because that was the last date Seyburn performed any legal services for Bakshi’s benefit. Bakshi contended that he received no benefit from Seyburn’s April 1993 motion to withdraw as counsel in the Court of Appeals or from Seyburn’s October 1993 review of his files, so accordingly, the six-year limitations period for an open account claim expired in March 1999. Seyburn countered that it last performed legal services for Bakshi on October 12, 1993 and that, as a result, the limitations period did not expire until October 12, 1999, four days after Seyburn filed the complaint. Moreover, since the trial court in the malpractice case held that Seyburn last performed legal services for Bakshi in October 1993, Bakshi was barred from relitigating that issue, Seyburn maintained. The trial judge granted Bakshi’s motion for summary disposition. Ultimately, the trial court ruled in Seyburn’s favor, finding that the work that Seyburn performed in October 1993 was at Bakshi’s request and for his benefit, and that the limitations period therefore did not begin to run until October 12, 1993, meaning that Seyburn’s complaint was filed within the six-year statute of limitations. With interest on the original amount of unpaid fees, the judgment in Seyburn’s favor came to $573,168.07. But in a published opinion, the Court of Appeals reversed the trial court’s judgment and remanded the case for entry of judgment in Bakshi’s favor. Seyburn’s claim accrued on September 30, 1993, the date on which the parties’ attorney-client relationship was terminated by the Court of Appeals order allowing Seyburn to withdraw as Bakshi’s counsel, the Court of Appeals held, so the statute of limitations had expired before the firm filed its lawsuit. Seyburn appeals.

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