The Alabama Supreme Court has ruled in a significant legal malpractice case involving Maynard Nexsen, PC, and Cadence Bank. In a decision released on November 6, 2026, the court reversed a lower court's ruling that had denied Maynard's motion to dismiss Cadence's claims. This ruling is important as it clarifies when the statute of limitations begins for legal malpractice claims in Alabama, affecting how future cases may be handled.

Cadence Bank had filed a legal malpractice suit against Maynard Nexsen, claiming that the law firm failed to advise it to seek necessary regulatory approvals for a loan to Assure Holding Company (AHC). The court's decision impacts not only the parties involved but also sets a precedent for how similar cases will be evaluated in the future.

Background

The dispute began when Cadence Bank engaged Maynard Nexsen in October 2020 to provide legal services related to an $8 million loan to AHC. The loan closing occurred on November 18, 2020. To secure repayment, AHC and its subsidiaries granted Cadence a security interest in their assets, including those of American Insurance Company (AIC), a property and casualty insurer.

In August 2021, a hurricane caused significant damage in Louisiana, leading the Louisiana Insurance Commissioner (LIC) to seek receivership for AIC. The LIC argued that AIC did not have the capital to pay insurance claims and sought to enjoin Cadence from enforcing its liens on AIC's assets. Cadence learned of the LIC's position regarding its security interest in March 2022, prompting it to intervene in the receivership action.

Cadence filed its legal malpractice action against Maynard Nexsen on July 16, 2024, alleging that the firm should have advised it to seek regulatory approval for the loan and the security interest. The trial court denied Maynard's motion to dismiss or for summary judgment, leading to this appeal.

The Ruling

The Alabama Supreme Court ruled that Cadence's claims were barred by the statute of limitations as outlined in the Alabama Legal Services Liability Act (ALSLA). The court clarified that the limitations period for a legal malpractice claim begins when the act or omission that gives rise to the claim occurs, not when the client first suffers damage.

The court stated, "The limitations period for a cause of action under the ALSLA begins to run upon the occurrence of 'the act or omission or failure giving rise to the claim.'"

Justice Jay Sellers authored the opinion, emphasizing that Cadence's claims stemmed from Maynard's alleged failure to advise on regulatory approval, which occurred at the time of the loan closing in November 2020. Cadence did not file its lawsuit until July 2024, exceeding the two-year limitations period.

The court also addressed Cadence's argument regarding the six-month ameliorative period for claims that could not be discovered within the two-year timeframe. The court found that Cadence had sufficient knowledge of its claims within the two-year period, thus the six-month extension did not apply.

Impact

This ruling has significant implications for legal malpractice claims in Alabama. By affirming the occurrence rule, the court has set a clear standard for when the statute of limitations begins to run. This decision may lead to a stricter interpretation of legal malpractice claims, potentially limiting the time frame in which clients can seek redress against their attorneys.

Future plaintiffs will need to be vigilant in understanding when their claims accrue and ensure they file within the designated time frames. This ruling could impact not only legal malpractice cases but also how attorneys advise clients on regulatory matters moving forward.

What's Next

Cadence Bank may consider its options for appeal, but the Alabama Supreme Court's ruling is typically final unless there are grounds for reconsideration or new evidence arises. There are no related cases pending that could affect this ruling.