Fourth District, Division 1 Explores “Cross Over” Issue of How Fees Have Implications in Lawyer Malpractice Cases.
Remember when we all studied for the California Bar examination? (Probably most of you are glad those days are over.) Well, we were drilled about spotting “cross-over issues” or those issues that had implications for more than one area of substantive law. That is what we have in the next case—where payment of attorney’s fees will constitute “actual injury” so as to prevent tolling of the one-year California statute of limitations governing attorney malpractice actions (Code of Civil Procedure section 340.6).
Section 340.6 provides that a legal malpractice action must be commenced within one year after the plaintiff discovers or reasonably should have discovered the facts constituting the wrongful act or omission. Under this statute, the period is tolled during the time plaintiff has not sustained “actual injury.” So, what do attorney’s fees have to do with actual injury? The next case tells us.
In Hazewinkel v. Macgurn, Case No. D053432 (4th Dist., Div. 1 May 8, 2009) (unpublished), son/beneficiary of the trust of his deceased father retained an attorney and paid him fees to correct a scrivener’s error by a former attorney erroneously amending a trust in a way that gave father’s disinherited ex-wife a claim to the trust and certain assets in it. However, son did not move to sue for legal malpractice until a year after actually paying some fees to the nonsued attorney retained to correct the problem in probate proceedings. That was enough “actual injury” to trigger the running of the statute of limitations, a point established by the California Supreme Court in Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison, 18 Cal.4th 739, 750-751 (1998).) Paying a second attorney fees to untangle the first attorney’s error constitutes “actual injury.” (Id. at 751.)
However, based on language from some “tort of another” cases (a doctrine explored in contributors’ article “When the American Rule Doesn’t Apply: Attorney’s Fees As Damages in California Litigation” published in the Vol. 21, No. 3 2008 edition of the California Litigation [California State Bar publication discussed in our November 13, 2008 post]), son argued on appeal—after summary judgment was granted against him based on the one-year limitations period—that no “actual injury” occurred unless he was legally “required” or “compelled” to take actions to remedy the error.
The Court of Appeal did not buy the nuance advanced by son. Even under the tort-of-another doctrine, the incurring of fees by son to take actions addressing the malpractice was enough of an injury even though the malpractice action was commenced later. (See Prentice v. North American Title Guaranty Corp., 59 Cal.2d 618, 620-621 (1963).) Also, the decisions cited by son in support of his “legal compulsion” condition were found inapposite because they did not impose this additional element in the “actual injury” determination process. Beyond that, son’s cases did not involve a situation where the opposing party (father’s ex-wife here) had made a claim for benefits or challenged the plaintiff’s actions based on the alleged malpractice. (Contrast with Fritz v. Ehrmann, 136 Cal.App.4th 1374, 1383 (2006); Baltins v. James, 36 Cal.App.4th 1193, 1208 (1995); Horne v. Peckham, 97 Cal.App.3d 404, 417 (1979); Orrick, Herrington & Sutcliffe v. Superior Court, 107 Cal.App.4th 1052, 1057-1061 (2003).) “The critical point is that, unlike Fritz, Orrick, Horne, and Baltins, there was a claim asserted against the malpractice plaintiff arising from the alleged malpractice, and there was a clear nexus between the attorney’s alleged malpractice and the costs and fees incurred by the plaintiff.” (Slip Opn., at p. 17.) In the end, plaintiff did suffer “actual injury” and simply commenced his malpractice action too late in time—a cross-over issue where payment of fees does have an impact on a substantive element of a defense frequently used in legal malpractice actions.
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