Friday, July 20, 2012
C.A. Says Malpractice Suit Barred by Statute of Limitations
Court Expounds on Meaning of ‘Actual Injury’
By a MetNews Staff Writer
A lawsuit charging a Santa Ana lawyer with having bungled the collection of a judgment for more than $ 1 million was untimely, the Fourth District Court of Appeal has ruled.
Div. Three concluded that the plaintiffs, who claim they paid for custom limousines that were never delivered by the defendants in the underlying suit, were on notice of whatever “actual injury” Anthony Chavos caused them by the time their new lawyer brought a fraudulent conveyance suit. Because that suit was brought more than a year before they sued Chavos, the statute of limitations bars the malpractice action, Justice Raymond Ikola wrote.
The opinion was filed June 18 and certified Wednesday for publication.
The plaintiffs, Jeff Croucier and David Moody, hired Cavos and his former firm Buckner, Alani, Khouri, Chavos & Mirkovich to represent them in a suit against Sun Limousines and its principals. They claimed that Sun not only failed to deliver the vehicles, it made false representations throughout the course of the transactions.
Chavos obtained a default judgment for $1.132 million, but collection efforts were unsuccessful. One vehicle was seized from Sun’s premises, but the registered owner of the car, Peter Goring, was not a judgment debtor in the case and the levy, which cost the plaintiffs $7,000, was released, the plaintiffs alleged in the malpractice complaint.
No substitution forms were filed when Chavos left the Buckner firm to start Chavos & Rau in 2006, but the plaintiffs claim he continued to represent them before they hired Michelle Strickland, who filed a substitution of counsel in June 2008.
A week after substituting in, Strickland filed a fraudulent conveyance complaint naming the Sun defendants, along with Goring and others. The complaint alleged that the Sun defendants conveyed the company’s assets to Goring and others “for little to no value” and that the new owners operated the business with the same employees, equipment, and vendors as Sun.
The malpractice complaint, naming Chavos and his old and new firms as defendants, was filed in August 2009. It alleged that the defendants committed malpractice by conducting inadequate discovery, failing to name indispensible parties, and failing to avail themselves of creditor’s remedies provided by law such as adversary proceedings in bankruptcy, so that the judgment had become uncollectable by the time the plaintiffs retained new counsel.
Chavos and Chavos & Rau demurred based on the statute of limitations. The Buckner firm, not a party to the plaintiffs’ appeal, filed a cross-complaint and continued to litigate with the plaintiffs after Orange Superior Court Judge Geoffrey T. Glass sustained the demurrer.
Ikola, writing for the Court of Appeal, explained that under Code of Civil Procedure Sec. 340.6, a legal malpractice action not involving actual fraud must be brought within a year of the actual or constructive discovery of the claim or within four years of the occurrence, whichever occurs first. The time is tolled, however, if “[t]he plaintiff has not sustained actual injury” or the defendant continues to represent the plaintiff in the particular matter.
Under the facts as pled, or as set forth in judicially noticed documents filed in the two earlier actions, the plaintiffs had to be aware of Chavos’ alleged omissions once Strickland took the steps that Chavos didn’t—suing for fraudulent conveyance and related torts and conducing postjudgment discovery, Ikola said.
Nor, the justice went on to say, can the plaintiffs—who alleged that they still held out hope of collecting until sometime less than a year before they sued Chavos—claim tolling on the basis of not having suffered actual injury. “
Noting that the judgment was two years old before Strickland substituted in, Ikola wrote:
“The lack of any recovery on this substantial money judgment represents an actual injury sufficient to support a legal malpractice cause of action….As a result of Chavos’s alleged professional negligence, Strickland filed a fraudulent conveyance action in June 2008 to try to recover assets that had allegedly been removed from the ownership of Sun Limousine. The alleged removal of these assets negatively affected the ability of Strickland to enforce (in whole or in part) the $1 million judgment against Sun Limousine in the underlying business litigation. The diminution of plaintiffs’ ability to enforce the judgment in the underlying business litigation represented ‘actual injury.’”
The case is Croucier v. Chavos, 12 S.O.S. 3591.
Copyright 2012, Metropolitan News Company