Friday, January 22, 2010
Court of Appeal Clarifies Legal Malpractice Statute of Limitations
By SHERRI M. OKAMOTO, Staff Writer
The Fourth District Court of Appeal has upheld a grant of summary judgment in favor of a 30-year veteran San Diego attorney who had been sued for malpractice by his former clients for his alleged negligence in advising them about a commercial lease.
In a Dec. 29 decision ordered published yesterday, Div. One explained that the one-year statute of limitations had not been tolled until Vision Manufacturing Inc. and its president, Steven Truong, lost the underlying action, but rather began to run when the plaintiffs had hired a different attorney in an attempt to avoid the consequences of their signing a lease and addendum.
The plaintiffs signed a lease for a manufacturing facility in Vista, Calif. in the fall of 2005, but less than two weeks after taking possession of the property, learned that a large portion of the facility could not be used due to building code violations.
In December 2005, the landlord presented plaintiffs with a “Lease Addendum” designed to resolve their outstanding disputes over who would pay for various improvements needed in order for plaintiffs’ business to operate on the property.
The plaintiffs said they provided a copy of the proposed addendum to their attorney, Bruce Glasser, for his review.
Truong averred that Glasser told him to sign it and never counseled him on other options available to him, but the attorney testified that he had instructed Truong not to sign the document and advised his client that they could sue for damages. VMI’s unofficial chief financial officer corroborated Glasser’s version of events.
After Truong signed the addendum, plaintiffs apparently were dissatisfied with the landlord’s performance and filed suit in 2006. Plaintiffs retained Brad Nakase to represent them in this action, which contained claims for breach of contract, fraud, negligence and unfair business practices.
The complaint acknowledged that the lease addendum purportedly waived the plaintiffs’ claims for damages but contended that the claims were not barred because the addendum was unenforceable due to fraudulent inducement, lack of consideration, economic duress and unconscionability.
Judgment for Landlord
In August 2007, judgment was entered in favor of the landlord, who was awarded over $220,000 in attorney fees. Truong later signed a settlement agreement with the landlord, agreeing to pay over $300,000.
About a month later, plaintiffs filed suit against Glasser, alleging that he had been negligent and breached his fiduciary duty to plaintiffs. They sought recovery of their attorney fees, costs and other losses arising from their attempt to rescind the addendum as well as damages for their inability to use the property.
Glasser moved for summary judgment, contending that the malpractice claim was time-barred by Code of Civil Procedure Sec. 340.6. Plaintiffs argued that the one-year statute of limitations for malpractice actions had been tolled since they had not suffered any actual injury from Glasser’s misconduct until they lost the suit against their landlord and that Glasser had provided them with continuous representation until less than one year before they filed suit against him.
San Diego Superior Court Judge Richard E. L. Strauss granted summary judgment in favor of Glasser, finding that the plaintiffs had suffered actual injury when they retained Nakase to file a lawsuit challenging the lease and addendum 18 months prior.
Writing for the appellate court, Justice Alex C. McDonald noted that there is “no bright-line rule to apply in determining when actual injury has occurred within the meaning of section 340.6,” and that the issue requires examination of the particular facts of a case.
McDonald said he was convinced that the trial court had correctly found that plaintiffs first sustained actual injury when they obtained and paid new counsel to file the lawsuit against their landlord more than one year before the malpractice action was filed, based on Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, Foxborough v. Van Atta (1994) 26 Cal.App.4th 217, and Village Nurseries v. Greenbaum (2002) 101 Cal.App.4th 26, which each had rejected the argument that actual injury did not occur in a malpractice case until the underlying case involving the alleged negligence was lost.
As for the plaintiffs’ alternate argument that the statute of limitations was tolled under the continuous representation exception, McDonald explained that Glasser’s failure to file a formal withdrawal or termination of counsel was not a basis for tolling.
Absent any evidence that Glasser aided, consulted with, or advised plaintiffs in connection with the litigation with the landlord, or provided any services with respect to the lease and addendum after December 2005, McDonald concluded that Glasser’s representation of the plaintiffs had ended over one year before the malpractice suit was filed.
Joined by Presiding Justice Judith McConnell and Justice Cynthia Aaron, McDonald also rejected the plaintiffs’ procedural and evidentiary challenges to the trial court’s grant of summary judgment.
The case is Truong v. Glasser, 10 S.O.S. 260.
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