Tuesday, December 11, 2007
Court of Appeal Revives Malpractice Suit Against Los Angeles Firm
Formal Substitution of Counsel Does Not Necessarily Terminate Representation, Justices Say
By KENNETH OFGANG, Staff Writer
The signing and filing of a substitution-of-counsel form does not necessarily terminate an attorney’s representation for purposes of the statute of limitations, the Court of Appeal for this district ruled yesterday.
Div. Three reinstated a suit by businessmen Robert and William Nielsen against the downtown Los Angeles firm of Ben-Zvi and Beck. The Nielsens claim the firm was unprepared for, and poorly handled, litigation regarding a building the Nielsens were leasing in Rancho Cucamonga, resulting in the loss of their lease and a judgment against them for damages of close to $400,000.
Los Angeles Superior Court Judge granted summary judgment in favor of the law firm, finding that the plaintiffs filed suit more than a year after the firm ceased to represent them in connection with the matter. But Justice Richard Aldrich, writing for the court, said there was a triable issue as to when the representation actually ended.
The Nielsens retained the firm in 2003 after another lawyer referred them to partner Paul Beck to discuss the potential bankruptcy of PrimePapers, Inc., a cutter and seller of paper for commercial use owned by the Nielsens. The retainer agreement said the firm would represent the PrimePapers and an affiliated company “in connection with a number of pending legal issues,” including claims by creditors that might be resolved by a workout or in a bankruptcy proceeding.
A short time later, the firm began representing PrimePapers, an affiliated company, and the Nielsens—as guarantors—in an unlawful detainer action regarding the building, which was leased from a company called ProLogis.
The landlord claimed that the Nielsens had defaulted in rent, and were in breach of a provision by which the landlord waived a large amount of rent, but would be entitled to recover those amounts in the event of default. With the bankruptcy ongoing, the firm continued to represent the defendants in post-judgment matters, but later turned its files over to the law firm of Ronald Slates.
The malpractice suit was filed on September 2, 2005. Beck and Ben-Zvi moved for summary judgment based on the one-year statute of limitations; the Nielsens responded that the statute was tolled under Code of Civil Procedure Sec. 340.6(a)(2) because the firm “continue[d] to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred.”
The defendants responded that their representation ended on Aug. 26, 2004 when the Nielsens and Beck executed a substitution form designating Slates as the Nielsens’ new attorney in the litigation. The plaintiffs argued that the statute was tolled until Sept. 3, when the substitution was filed with the court, or until later that month when they consulted Beck with regard to the unlawful detainer for the last time.
Highberger sided with the law firm, but Aldrich said the Nielsens had the better argument.
He cited evidence that while the Nielsens were dissatisfied with Beck, they continued to rely him for assistance in resolving the ProLogis claims, and that Robert Nielsen called Beck three times between Sept. 9 and Sept. 18 and was billed $350 for his services in connection with those calls.
Beck explained in his deposition that while he had been substituted out and “was a bit surprised to hear from” Nielsen, his erstwhile client called him because he was “kind of checking up on his new lawyers with me, the way he would check upon on me with” the referring attorney.
Aldrich, writing for the Court of Appeal, reasoned that “a trier of fact could conclude that the relationship between Beck and the Nielsens had not been severed at the time the substitution of attorney form was signed, but rather, the statute was tolled through September 18, 2004.”
The justice added:
“Beck states that he was simply being cordial when he discussed the pending litigation with Robert Nielsen and that the three conversations do not evidence a continuing relationship. This may be the conclusion that a trier of fact reaches. However, the fact that Robert Nielsen continued to ask Beck for advice even after the substitution of attorney form was signed, and Beck apparently provided advice, creates sufficient evidence that may convince a trier of fact to the contrary.”
The trier of fact will also have to determine whether the ProLogis litigation and the bankruptcy matter were so intertwined that the statute was tolled as to the latter as well, the justice said, even though the proceedings closed in March 2004.
The case is Nielsen v. Beck, 07 S.O.S. 7205.
Copyright 2007, Metropolitan News Company