Wednesday, October 16, 2019
Court of Appeal:
Opinion Says One Year Statute of Limitation on Legal Malpractice Suits Does Not Apply Where a Declaration Is Sought That Lawyers Who Substituted Out in a Case Are Entitled to No Part of Settlement Proceeds
By a MetNews Staff Writer
An action seeking a declaration that a law firm is entitled to no share of settlement funds because it wrongfully abandoned the client is not subject to the one-year statute of limitation on attorney malpractice suits, Div. Four of the Court of Appeal for this district held yesterday.
The opinion, which was not certified for publication, orders reinstatement of two actions—one by Wealth Management International, Inc. (“WMI”) and the other by its principal, Steven Roth—against the Torrance law firm of Epps & Coulson, LLP (“E&C”). The law firm had represented WMI in a lawsuit for contractual fraud against Sheila Becker, but dropped out.
Roth is assignee of the settlement funds—to which E&C seeks a share, pursuant to an attorneys’ lien. Seeking a determination that E&C is entitled to nothing, Roth sued; E&C moved for judgment on the pleadings; Los Angeles Superior Court Judge Maureen Duffy-Lewis granted the motion, declaring that Roth lacked standing, explaining:
“Legal malpractice causes of action are not assignable no matter how they are pled.”
She denied leave to amend because, she said, the malpractice action was barred by the one-year statute, Code of Civil Procedure §340.6(a). The judge denied attorney fees to E&C because Roth was not a party to the retainer agreement containing a fee-shifting provision.
At the hearing on the motion, Duffy-Lewis, noting that she was not rendering advice, advised:
“Plaintiff, you might entertain in your toolbox a thought that WMI—that you could file a new lawsuit as to WMI. But I don’t think...that would work because at the very latest, WMI would know of the wrongdoing on the day that this action was filed. That would be June 9, 2016.
“As there is a one year statute of limitations, WMI would have had to file by June 9, 2017; right? That was three weeks ago.”
WMI brought its action, and Duffy-Lewis sustained a demurrer without leave to amend based on the action being untimely.
The Court of Appeal, in an opinion by Justice Audrey Collins, reversed the judgments against WMI and Roth, as to their respective causes of actiion for declaratory relief, but affirmed the order denying attorney fees to E&C because, as it stands, there is no prevailing party.
Collins reasoned that if E&C sued to garner its share of the settlement funds, the action would not be barred by §340.6(a), so an action to declare that it is entitled to no share should likewise not be barred.
“The case before us is unique in that instead of the attorney or law firm initiating the action to recover on the lien, a third party (Roth) and the client (WMI) initiated the action seeking a declaration of the parties’ rights. In so doing, Roth and WMI asserted what would have been an affirmative defense had E&C initiated the action: that E&C withdrew from the Becker action without justifiable cause, and therefore was not entitled to recover attorney fees.”
Not Malpractive Claim
The jurist went on to say:
“[A] cause of action for declaratory relief on an attorney lien—which itself is not a claim for legal malpractice, given that the same relief could be sought by the attorney—does not become a claim for legal malpractice simply because some of the same principles might be relevant in determining the parties’ respective rights.”
Roth did have standing, Collins said, setting forth:
“Here, because WMI had assigned its rights to Roth, the settlement agreement in the Becker action was between the Becker parties on one hand, and Roth on the other. The settlement agreement stated, ‘No funds to be released prior to obtaining a release of prior counsel’s lien.’ Thus, Roth’s entitlement to the settlement proceeds was directly affected by the lien, even though he was not E&C’s client and did not have standing to assert a malpractice claim. Roth therefore was a ‘person interested’ in the settlement agreement, and there was ‘an actual controversy relating to the legal rights and duties’ of Roth and E&C with respect to the settlement.”
The case is Roth v. Epps & Coulson, B285265.
Copyright 2019, Metropolitan News Company