[Cite as Flagstar Bank, F.S.B., v. Airline Union’s Mtge. Co., 128 Ohio St.3d 529, 2011-Ohio-
1961.]




     FLAGSTAR BANK, F.S.B., APPELLANT, v. AIRLINE UNION’S MORTGAGE
                      COMPANY ET AL.; REINHOLD, APPELLEE.
  [Cite as Flagstar Bank, F.S.B. v. Airline Union’s Mtge. Co., 128 Ohio St.3d
                                529, 2011-Ohio-1961.]
Statutes of limitations — R.C. 2305.09(D) — Professional negligence — Accrual
        — Delayed-damages rule.
   (Nos. 2010-0508 and 2010-0511 — Submitted February 1, 2011 — Decided
                                     April 27, 2011.)
    CERTIFIED by and APPEAL from the Court of Appeals for Hamilton County,
                                     No. C-090166.
                                 __________________
                               SYLLABUS OF THE COURT
 A cause of action for professional negligence against a property appraiser
        accrues on the date that the negligent act is committed, and the four-year
        statute of limitations commences on that date. (R.C. 2305.09(D) and
        Investors REIT One v. Jacobs (1989), 46 Ohio St.3d 176, 546 N.E.2d 206,
        followed.)
                                 __________________
        LANZINGER, J.
        {¶ 1} We have accepted a certified-conflict question asking when the
statute of limitations begins to run against a property appraiser in a case involving
professional negligence. We hold that the four-year statute of limitations for
professional negligence, R.C. 2305.09(D), starts to run on the date of the alleged
negligent act, the date of accrual of the cause of action against the appraiser.
                                 Factual Background
                                  SUPREME COURT OF OHIO




         {¶ 2} The relevant facts of this case are not disputed. Appellee, John
Reinhold, was an appraiser.1 In 2001 and 2002, he performed appraisals on three
properties that served as collateral for three separate mortgage loans made by
Airline Union’s Mortgage Company (“AUM”). The last of these appraisals was
completed on June 12, 2002.
         {¶ 3} In various transactions in 2001 and 2002, appellant, Flagstar Bank,
FSB (“Flagstar”), purchased the mortgage loans from AUM after having received
and reviewed Reinhold’s three appraisals. According to Flagstar, it sold on the
secondary market two of the mortgage loans on two of the properties that
Reinhold had appraised. These properties were later subjected to foreclosure after
the owners defaulted, leaving deficiency balances on both loans. The secondary
creditors sought reimbursement from Flagstar, which paid the deficiencies on the
two loans. Flagstar kept the mortgage loan on the third appraised property in its
portfolio.     After this property burned down, the owner defaulted, and the
insurance proceeds from the fire left a deficiency balance on the third loan.
         {¶ 4} On April 28, 2008, Flagstar filed a complaint against the initial
lender, AUM, and the appraiser, Reinhold, alleging that the three property
appraisals were materially inaccurate and that the actual fair market value of each
property was significantly less than the appraised value.2 Reinhold denied any
negligence and filed a motion for summary judgment. He argued that the bank’s
claims were barred by the statute of limitations in R.C. 2305.09 because the
complaint was filed more than four years after the appraisals were performed.
Flagstar responded that the statute of limitations did not begin to run until after
the bank sustained a compensable injury. The bank contended that it did not suffer
actual damages until the properties were sold at foreclosure and there was a

1. According to his affidavit, Reinhold has retired.

2. The complaint also alleged similar claims against seven other individuals who, along with
AUM, were later voluntarily dismissed and are not parties to this appeal.




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                                  January Term, 2011




deficiency balance or until the receipt of the insurance proceeds that were
insufficient to cover the balance of the loan. Because the complaint was filed
within four years of those dates, Flagstar maintained that the complaint was
timely.
          {¶ 5} The trial court determined that Flagstar was requesting that the
court adopt a discovery rule with regard to claims for professional negligence.
Citing cases in which courts had rejected a discovery rule for such claims, the trial
court granted summary judgment to Reinhold. Flagstar appealed, but the First
District Court of Appeals affirmed.
          {¶ 6} We accepted the certified-conflict question and ordered the parties
to brief the issue of whether under R.C. 2305.09(D) a cause of action for
professional negligence accrues on the date that the negligent act is committed or
on the date that the negligent act causes actual damages. 125 Ohio St.3d 1436,
2010-Ohio-2212, 927 N.E.2d 9. We also accepted Flagstar’s discretionary appeal
and consolidated it with the certified conflict. 125 Ohio St.3d 1437, 2010-Ohio-
2212, 927 N.E.2d 10.
                     Basic Principles for Statutes of Limitations
          {¶ 7} Before addressing the specific statute of limitations in this case, we
turn to basic principles that guide our analysis. Statutes of limitations serve a
gate-keeping function for courts by “ ‘(1) ensuring fairness to the defendant, (2)
encouraging prompt prosecution of causes of action, (3) suppressing stale and
fraudulent claims, and (4) avoiding the inconveniences engendered by delay—
specifically, the difficulties of proof present in older cases.’ ” Pratte v. Stewart,
125 Ohio St.3d 473, 2010-Ohio-1860, 929 N.E.2d 415, ¶ 42, quoting Doe v.
Archdiocese of Cincinnati, 109 Ohio St.3d 491, 2006-Ohio-2625, 849 N.E.2d
268, ¶ 10. That being said, statutes of limitations are remedial in nature and are to
be given a liberal construction to permit cases to be decided upon their merits,
after a court indulges every reasonable presumption and resolves all doubts in



                                           3
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favor of giving, rather than denying, the plaintiff an opportunity to litigate.
Draher v. Walters (1935), 130 Ohio St. 92, 94, 3 O.O. 121, 196 N.E. 884,
overruled on other grounds, Peters v. Moore (1950), 154 Ohio St. 177, 42 O.O.
254, 93 N.E.2d 683.
                   R.C. 2305.09(D)—Professional Negligence
       {¶ 8} The parties agree that the applicable statute of limitations for the
claim of professional negligence is R.C. 2305.09(D), which provides:
       {¶ 9} “Except as provided for in division (C) of this section, an action
for any of the following causes shall be brought within four years after the cause
thereof accrued:
       {¶ 10} “* * *
       {¶ 11} “(D) For an injury to the rights of the plaintiff not arising on
contract nor enumerated in sections 1304.35, 2305.10 to 2305.12, and 2305.14 of
the Revised Code.”
       {¶ 12} The parties disagree about when the statute of limitations in R.C.
2305.09(D) begins to run. The statute itself states only that an action must be
brought within four years “after the cause thereof accrued.”           Because the
legislature did not define “accrue,” we must determine when a cause of action
accrues. See O'Stricker v. Jim Walter Corp. (1983), 4 Ohio St.3d 84, 87, 4 OBR
335, 447 N.E.2d 727, citing Harig v. Johns-Manville Prods. Corp. (1978), 284
Md. 70, 75, 394 A.2d 299, 1 A.L.R.4th 105.
       {¶ 13} The general rule is that a cause of action exists from the time the
wrongful act is committed. Id.; see also Kerns v. Schoonmaker (1831), 4 Ohio
331, syllabus (“Statute of limitations commences to run so soon as the injurious
act complained of is perpetrated, although the actual injury is subsequent, and
could not immediately operate”). However, in certain circumstances this court
has determined that applying the general rule “ ‘would lead to the unconscionable
result that the injured party’s right to recovery can be barred by the statute of




                                        4
                                January Term, 2011




limitations before he is even aware of its existence.’ ” O’Stricker, 4 Ohio St.3d at
87, 4 OBR 335, 447 N.E.2d 727, quoting Wyler v. Tripi (1971), 25 Ohio St.2d
164, 168, 54 O.O.2d 283, 267 N.E.2d 419. As a result of these concerns, this
court created an exception to the general rule, commonly known as the discovery
rule.
                                   Discovery Rule
        {¶ 14} The discovery rule provides that a cause of action does not arise
until the plaintiff knows, or by the exercise of reasonable diligence should know,
that he or she has been injured by the conduct of the defendant. Collins v. Sotka
(1998), 81 Ohio St.3d 506, 507, 692 N.E.2d 581. The rule entails a two-pronged
test—i.e., actual knowledge not just that one has been injured but also that the
injury was caused by the conduct of the defendant. O'Stricker, 4 Ohio St.3d at 90,
4 OBR 335, 447 N.E.2d 727. A statute of limitations does not begin to run until
both prongs have been satisfied.
        {¶ 15} The discovery rule was first applied in Ohio in a case involving
medical malpractice. Melnyk v. Cleveland Clinic (1972), 32 Ohio St.2d 198, 61
O.O.2d 430, 290 N.E.2d 916. Since then, it has been employed in a number of
areas of the law. See, e.g., Skidmore & Hall v. Rottman (1983), 5 Ohio St.3d 210,
5 OBR 453, 450 N.E.2d 684 (legal malpractice); Oliver v. Kaiser Community
Health Found. (1983), 5 Ohio St.3d 111, 5 OBR 247, 449 N.E.2d 438 (medical
malpractice); O’Stricker (bodily injury caused by exposure to asbestos); Burgess
v. Eli Lilly & Co. (1993), 66 Ohio St.3d 59, 609 N.E.2d 140 (DES-related
injuries); Browning v. Burt (1993), 66 Ohio St.3d 544, 613 N.E.2d 993
(negligence of a hospital in credentialing a physician). The application of the
discovery rule, however, is not uniform. We have cautioned: “By its very nature,
the discovery rule (concept) must be specially tailored to the particular context in
which it is to be applied.” Id. at 559.




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                             SUPREME COURT OF OHIO




       {¶ 16} This court specifically addressed the application of the discovery
rule to a claim for professional negligence involving accountants in Investors
REIT One v. Jacobs (1989), 46 Ohio St.3d 176, 546 N.E.2d 206. We determined
that claims for accountant negligence were governed by R.C. 2305.09(D), the
statute generally granting four years to file an action for tort claims not
specifically covered in other sections of the Ohio Revised Code. Id. at 180. We
also noted that R.C. 2305.09 expressly includes its own limited discovery rule: “If
the action is for trespassing under ground or injury to mines, or for the wrongful
taking of personal property, the causes thereof shall not accrue until the
wrongdoer is discovered; nor, if it is for fraud, until the fraud is discovered.” Id.
at 181. Because the General Assembly had not included general negligence
claims within this limited discovery exception, we held that “[t]he discovery rule
is not available to claims of professional negligence brought against accountants.”
Id. at paragraph 2a of the syllabus. We later reaffirmed this holding in Grant
Thornton v. Windsor House (1991), 57 Ohio St.3d 158, 566 N.E.2d 1220.
       {¶ 17} The Hamilton County Court of Appeals noted that it had
previously held that Investors REIT One can be extended to claims of professional
negligence against brokers, dealers, and appraisers. Hater v. Gradison Div. of
McDonald & Co. Securities, Inc. (1995), 101 Ohio App.3d 99, 109, 655 N.E.2d
189. Because Flagstar’s complaint alleged negligence of an appraiser, a type of
professional negligence similar to these cases, the court of appeals relied on
Investors REIT One and Hater and held that the complaint was untimely, not
having been filed within four years of any of the appraisals performed by
Reinhold.
       {¶ 18} Flagstar, however, contends that Hater and Investors REIT One are
distinguishable as discovery cases, while its own case is governed by the “delayed
damages” rule.
                             Delayed-Damages Rule




                                         6
                                January Term, 2011




       {¶ 19} The delayed-damages rule concerns another timing issue: when all
elements of a cause of action have come into existence. “To establish actionable
negligence, one must show in addition to the existence of a duty, a breach of that
duty and injury resulting proximately therefrom.” Mussivand v. David (1989), 45
Ohio St.3d 314, 318, 544 N.E.2d 265. Under the delayed-damages rule, “where
the wrongful conduct complained of is not presently harmful, the cause of action
does not accrue until actual damage occurs.”             Velotta v. Leo Petronzio
Landscaping, Inc. (1982), 69 Ohio St.2d 376, 379, 23 O.O.3d 346, 433 N.E.2d
147. In other words, a cause of action for negligence is not complete, and the
statute of limitations does not begin to run, until there has been an injury.
       {¶ 20} The rule has been applied in a case involving home construction.
“When negligence does not immediately result in damages, a cause of action for
damages arising from negligent construction does not accrue until actual injury or
damage ensues.” Id. at paragraph two of the syllabus. We have also applied the
rule to a case involving the purchase of insurance coverage, stating: “ ‘The statute
of limitations as to torts does not usually begin to run until the tort is complete. A
tort is ordinarily not complete until there has been an invasion of a legally
protected interest of the plaintiff.’ ” Kunz v. Buckeye Union Ins. Co. (1982), 1
Ohio St.3d 79, 81, 1 OBR 117, 437 N.E.2d 1194, quoting Austin v. Fulton Ins.
Co. (Alaska 1968), 444 P.2d 536, 539.
       {¶ 21} Flagstar relies on these cases and argues that it did not suffer an
infringement or impairment of its interest immediately. The bank argues that it
was not damaged until it suffered a loss and thus that the statute did not begin to
run until the appraised properties were sold at foreclosure and there were
deficiency balances on the loans or until the receipt of the insurance proceeds left
a deficiency balance. Flagstar contends that because the properties served as
security for the loans, there might never have been any injury from Reinhold’s
alleged negligence if the owners had not defaulted on their loans. In other words,



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although Reinhold’s alleged negligent act occurred when the properties were
appraised in 2001 and 2002, the tort was not complete until Flagstar was required
to resort to insufficient collateral or to indemnify other creditors because of
insufficient collateral.
                                   Conflict Cases
        {¶ 22} Both the Fifth and Sixth District Courts of Appeals have applied
the delayed-damages rule to claims for professional negligence.         The Sixth
District Court of Appeals accepted the delayed-damages rule in a case involving a
certified public account who had failed to file certain forms with the Internal
Revenue Service, causing the plaintiff to incur a tax penalty. Gray v. Estate of
Barry (1995), 101 Ohio App.3d 764, 656 N.E.2d 729. In that case, the court of
appeals held that there was no injury until the IRS levied a penalty. The Sixth
District distinguished Investors REIT One on the basis of the case’s being “not
one of discovery” but rather “when a cause of action accrues.” Id. at 768. The
Fifth District Court of Appeals relied on Gray and held that a cause of action for
negligence in tax preparation did not accrue until the plaintiffs were assessed tax
deficiencies. Fritz v. Bruner Cox, L.L.P. (2001), 142 Ohio App.3d 664, 756
N.E.2d 740; see also JP Morgan Chase Bank NA v. Lanning, 5th Dist. No.
2007CA00223, 2008-Ohio-893, 2008 WL 588804 (a cause of action against a title
agency for altering and recording a mortgage did not accrue until the bank filed a
foreclosure action against the property owners, because the owners had not
suffered an actual injury until then).
        {¶ 23} In contrast, the First District Court of Appeals has declined to
apply the delayed-damages rule to claims for professional negligence. Hater, 101
Ohio App.3d 99, 655 N.E.2d 189. It held: “The controlling law on this issue is,
we believe, set forth in REIT One. By holding that the statute of limitations began
to run ‘when the allegedly negligent act was committed,’ the court in REIT One,
in our view, meant exactly that: the date upon which the tortfeasor committed the




                                         8
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tort, in other words, when the act or omission constituting the alleged professional
malpractice occurred. Regardless of its validity or support in the common law of
torts, the delayed-damage theory cannot, we believe, be used to circumvent the
clear holding of REIT One by resurrecting the discovery rule in a different
analytical guise.” Id. at 110-111.
       {¶ 24} This position has been adopted by other courts of appeals. See,
e.g., Riedel v. Houser (1992), 79 Ohio App.3d 546, 549, 607 N.E.2d 894 (an
attempted distinction between the discovery rule and the delayed-damages rule
was rejected as a distinction without a difference); Schnippel Constr. v. Profitt, 3d
Dist. No. 17-09-12, 2009-Ohio-5905, 2009 WL 3720585 (the delayed-damages
rule was inapplicable to a claim for negligent misrepresentation involving
adoption and execution of an employee benefit plan); Fronczak v. Arthur
Andersen, L.L.P. (1997), 124 Ohio App.3d 240, 244, 705 N.E.2d 1283 (the
delayed-damages theory was found to be implicitly rejected by the “broad
language in Investors REIT One”); Bell v. Holden Survey, Inc. (Sept. 29, 2000),
7th Dist. No. 729, 2000 WL 1506494 (the delayed-damages rule was not applied
to a claim for professional negligence against a surveyor); James v. Partin, 12th
Dist. No. CA2001-11-086, 2002-Ohio-2602, 2002 WL 1058152 (the discovery
rule and delayed-damages rule were inapplicable to claims of professional
negligence).
                         The Rule of Investors REIT One
       {¶ 25} Both the discovery rule and the delayed-damages rule relate to
when a cause of action for negligence accrues. Nevertheless, with regard to
claims for professional negligence governed by R.C. 2305.09, this court has
clearly stated that the cause of action accrues when the allegedly negligent act is
committed. Investors REIT One, 46 Ohio St.3d at 182, 546 N.E.2d 206; Grant
Thornton, 57 Ohio St.3d 158, 566 N.E.2d 1220. In Investors REIT One, we
explicitly rejected the application of the discovery rule for these causes of actions.



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Id. at paragraph two of the syllabus. We implicitly rejected the delayed-damages
rule in Grant Thornton.
       {¶ 26} In Grant Thornton, after repayment to the state of Ohio of $2.5
million was ordered against a nursing home, the nursing home counterclaimed
against auditors for professional negligence. 57 Ohio St.3d at 159, 566 N.E.2d
1220. An audit had been completed in 1980, and the state had notified the nursing
home of the state’s overpayment of reimbursements in 1982. The court of appeals
relied on Kunz to reverse the trial court’s summary judgment in favor of the
auditors and hold that the cause of action had not accrued until the state demanded
repayment of the amount overpaid, because there had been no harm to the nursing
home until then. Alexander Grant & Co. v. Windsor House, Inc. (Oct. 16, 1989),
7th Dist. No. 87 C.A. 187, 1989 WL 122538. We, however, determined that
Investors REIT One governs claims for professional negligence and malpractice,
and thus the four-year statute of limitations barred the claim. Grant Thornton at
160-161.
       {¶ 27} We continue to adhere to the rule of law established in Investors
REIT One. A cause of action for professional negligence accrues when the act is
committed. Just as accountants do, appraisers perform services that for four years
may subject them to negligence suits for the consequences of their professional
acts. In this case, accepting any suggestion that the statute of limitations be reset
for each purchase of a mortgage loan because the purchaser’s damages may be
delayed until some point in the future could lead to an unending statute of
limitations. Given the volatile nature of the housing market in recent years, we
believe that that position is inconsistent with the purposes of statutes of
limitations: “(1) ensuring fairness to the defendant, (2) encouraging prompt
prosecution of causes of action, (3) suppressing stale and fraudulent claims, and
(4) avoiding the inconveniences engendered by delay—specifically, the




                                         10
                               January Term, 2011




difficulties of proof present in older cases.” Doe v. Archdiocese of Cincinnati,
109 Ohio St.3d 491, 2006-Ohio-2625, 849 N.E.2d 268, ¶ 10.
       {¶ 28} As a final matter, Flagstar argues that affirming the First District’s
decision would render R.C. 2305.09 unconstitutional because it would preclude
recovery by injured parties before they suffer damages, thus violating Section 16,
Article I of the Ohio Constitution, which provides, “All courts shall be open, and
every person, for an injury done him in his land, goods, person, or reputation,
shall have remedy by due course of law, and shall have justice administered
without denial or delay.”
       {¶ 29} It is axiomatic that acts of the General Assembly are presumed
valid under Ohio law and in cases of doubt should be held constitutional. State v.
Williams, 126 Ohio St.3d 65, 2010-Ohio-2453, 930 N.E.2d 770, ¶ 20; State ex rel.
Dickman v. Defenbacher (1955), 164 Ohio St. 142, 57 O.O. 134, 128 N.E.2d 59,
paragraph one of the syllabus. The General Assembly exercised its authority to
establish a reasonable time in which to bring a professional-negligence claim by
providing four years to do so. R.C. 2305.09(D). The right-to-remedy clause
protects against laws that completely foreclose a cause of action for injured
plaintiffs or otherwise eliminate their ability to receive a meaningful remedy.
Arbino v. Johnson & Johnson, 116 Ohio St.3d 468, 2007-Ohio-6948, 880 N.E.2d
420, ¶ 44. This court also rejected similar concerns over the right-to-remedy
clause that were raised by the dissent in Investors REIT One, 46 Ohio St.3d at
183–184, 546 N.E.2d 206.
       {¶ 30} Any alleged negligence by Reinhold in his property appraisals
would have caused the loans to be less secure immediately. As acknowledged
during oral argument, but for the appraisal, the loan would not have been made on
the same terms that it was. Any cause of action for negligence accrued on the
date of the appraisal, and the four-year statute of limitations began to run then.




                                        11
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Because Flagstar’s complaint was not filed within four years of the completed
appraisals, its claims were barred by the statute of limitations in R.C. 2305.09.
                                    Conclusion
       {¶ 31} Based on the foregoing, we answer the certified question by
holding that a cause of action for professional negligence against a property
appraiser accrues on the date that the negligent act is committed and the four-year
statute of limitations commences on that date. The judgment of the Hamilton
County Court of Appeals is affirmed.
                                                                 Judgment affirmed.
       O’CONNOR, C.J., and LUNDBERG STRATTON, CUPP, and MCGEE BROWN,
JJ., concur.
       PFEIFER and O’DONNELL, JJ., concur in judgment only.
                               __________________
       Thompson Hine, L.L.P., Scott A. King, and Terry W. Posey Jr., for
appellant.
       Crabbe, Brown & James, L.L.P., Brian E. Hurley, and Robert J. Gehring,
for appellee.
       Amer Cunningham Co., L.P.A., and Thomas R. Houlihan, urging reversal
for amicus curiae Ohio Association for Justice.
       Baker & Hostetler, L.L.P., John H. Burtch, and Gregory R. Flax, urging
affirmance for amicus curiae Ohio Association of Realtors.
       Montgomery, Rennie & Jonson, Ralph E. Burnham, and Matthew E.
Stubbs, urging affirmance for amicus curiae Pamela J. Lawrentz.
                            ______________________




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