Adams v. Paul, S041623

• Decision Date: 22 November 1995
• Docket Number: No. S041623,S041623
• Court: California Supreme Court
• Parties: , 904 P.2d 1205, 95 Cal. Daily Op. Serv. 8913, 95 Daily Journal D.A.R. 15,457 Katherine ADAMS, Plaintiff and Appellant, v. Aaron PAUL, Defendant and Respondent.

Page 594

46 Cal.Rptr.2d 594

11 Cal.4th 583, 904 P.2d 1205, 95 Cal. Daily Op. Serv. 8913,

95 Daily Journal D.A.R. 15,457

Katherine ADAMS, Plaintiff and Appellant, v. Aaron PAUL, Defendant and Respondent.

No. S041623.

Supreme Court of California.

Nov. 22, 1995.

[11 Cal.4th 585] [904 P.2d 1206] Barry Balamuth, Orinda, for Appellant.

Kevin Culhane, Hansen, Boyd, Culhane and Watson, Sacramento, for Respondent.

ARABIAN, Associate Justice.

"The most common error of the attorney engaged in litigation is the failure to file the client's claim or cause of action within the time required by a statute of limitations." (2 Mallen & Smith, Legal Malpractice (3d ed. 1989) § 24.13, p. 481, fn. omitted.)

We granted review in this matter to determine when, in the event of such a failure or misadvice as to the applicable limitations period, the plaintiff sustains "actual injury" for purposes of tolling the statute of limitations in a subsequent suit for professional negligence. In light of the numerous variables arising in "missed statute" cases, we conclude, consistent with the general rule, that "the determination of the time when plaintiff suffered damage raises a question of fact." (Budd v. Nixen (1971) 6 Cal.3d 195, 202, 98 Cal.Rptr. 849, 491 P.2d 433.) If the material facts are undisputed, the court may, however,

[904 P.2d 1207] resolve the issue of when the plaintiff suffered manifest and palpable injury as a matter of law. (Id. at p. 202, 98 Cal.Rptr. 849, 491 P.2d 433.)

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Katherine Adams brought this legal malpractice action in October 1992 against her former attorney Aaron Paul, claiming he negligently provided incorrect advice regarding the time period within which she should file an underlying wrongful death action. Since we are reviewing the case following the trial court's sustaining of defendant Paul's demurrer, we draw the relevant facts from Adams's pleadings.

On April 17, 1983, Adams's former husband, Warren Standeven, shot and killed their son. Later that same day, he died in a fire at the family home. In late 1983, Adams contacted attorney Steven Kazan for general advice concerning her rights surrounding her son's death. Kazan, whose legal practice primarily involved personal injury law, referred Adams to defendant Paul, an experienced probate attorney, for purposes of setting up a probate estate, representing the administrator, and advising Adams and the Kazan office about pursuing claims and lawsuits.

On April 6, 1984, Paul received telephone calls from Adams and the Kazan office informing him Adams intended to file against the estate of her late husband. Paul agreed to represent the estate and to inform Adams and the Kazan office of the time limits for bringing claims and related actions. Several days later, Paul advised Adams the time for filing against the estate would not begin to run until letters of administration were issued. If the claim were rejected, a legal action should be filed 90 days after formal written notification.

Letters of administration were issued on October 16, 1984. On January 21, 1985, Paul told Adams the deadline for filing a claim against the estate was February 16, 1985, but failed to indicate the one-year statute of limitations on any wrongful death action had commenced when letters of administration were issued. Nor did he inform her of alternative procedures for seeking recovery limited to the estate's insurance proceeds.

Adams filed a claim against the estate on February 12, 1985, which the administrator formally rejected in September 1986. Within 90 days thereof, on December 8, 1986, Adams filed a wrongful death action. In March 1990, the estate moved for summary judgment contending the complaint was barred by the statute of limitations.

Represented by the Kazan office, Adams opposed the motion on the ground the estate was estopped from asserting the statute of limitations defense. In support of this position, on April 3, 1990, Paul executed a declaration acknowledging his failure to advise Adams correctly on the deadline for filing the wrongful death action. Following this declaration Paul did nothing further on Adams's behalf.

On June 1, 1990, the trial court denied the motion for summary judgment, finding triable issues of fact as to whether Paul, while acting in the capacity of attorney for the estate, made material representations to Adams or Kazan regarding the time for filing a complaint against it, and whether Adams and Kazan reasonably relied upon such representations.

On October 21, 1991, the parties to the wrongful death action settled the lawsuit. Kazan continued to represent Adams until March 1992, when she retained new counsel to investigate a potential legal malpractice action against Paul. On October 1, 1992, Adams filed the original complaint in this case. In her second amended complaint, she alleged Paul's negligent advice and conduct resulted in her having to settle and dismiss the wrongful death action, and thereby receiving substantially less than she should have obtained had the statute of limitations defense not been raised. She sought damages in excess of $200,000.

Paul demurred on the ground the action was time-barred under Code of Civil Procedure section 340.6, subdivision (a), because it had been filed more than one year after Paul had executed his declaration admitting he gave erroneous advice. The trial court sustained The Court of Appeal affirmed but applied a different rationale as to when Adams had suffered actual injury, finding it occurred when she was forced to oppose the motion for summary judgment in April 1990. At that point, the integrity of her lawsuit had been compromised, and she was required to engage an attorney to handle Paul's alleged error. Since she discovered the negligence no later than that time in view of Paul's declaration, the applicable statutory period began then. Thus, the malpractice action filed more than two-and-one-half years later was time-barred.

[904 P.2d 1208] the demurrer without leave to amend and dismissed the complaint. Following the reasoning of Finlayson v. Sanbrook (1992) 10 Cal.App.4th 1436, 13 Cal.Rptr.2d 406, the court determined Adams had suffered actual injury when the statute of limitations expired in her wrongful death action; and therefore her malpractice claim was untimely.

DISCUSSION

Recently in ITT Small Business Finance Corp. v. Niles (1994) 9 Cal.4th 245, 36 Cal.Rptr.2d 552, 885 P.2d 965 and International Engine Parts, Inc. v. Feddersen & Co. (1995) 9 Cal.4th 606, 38 Cal.Rptr.2d 150, 888 P.2d 1279, a majority of this court concluded in those very narrowly drawn circumstances that adverse judgment, settlement, dismissal, or the like constituted actual injury within the meaning of Code of Civil Procedure section 340.6, subdivision (a)(1) (section 340.6(a)(1)). ¹ Those decisions were not paradigms, however, and did not articulate a "rule for all seasons." As this court recognized almost 25 years ago in Budd v. Nixen, supra, 6 Cal.3d at pages 201-202, 98 Cal.Rptr. 849, 491 P.2d 433, depending upon the particulars, actionable harm may occur at any one of several points in time subsequent to an attorney's negligence. Hence, as with other causes of action, the determination is generally a question of fact. (Id. at p. 202, 98 Cal.Rptr. 849, 491 P.2d 433; see e.g., McCann v. Welden (1984) 153 Cal.App.3d 814, 824, 200 Cal.Rptr. 703; cf. Brown v. Bleiberg (1982) 32 Cal.3d 426, 436, 186 Cal.Rptr. 228, 651 P.2d 815 [medical malpractice injury]; Oakes v. McCarthy Co. (1968) 267 Cal.App.2d 231, 255, 73 Cal.Rptr. 127 [injury from negligent construction].)

Moreover, we find nothing in the language or history of section 340.6(a)(1) indicating the Legislature intended, in codifying decisional law, to alter the well-settled principle that in legal malpractice actions statute of limitations issues, including injury, are at base factual inquiries. That established standard is reiterated or alluded to at least four times in Budd v. Nixen, supra, 6 Cal.3d at pages 198, 202, 203-204, 98 Cal.Rptr. 849, 491 P.2d 433, from which the "actual injury" tolling provision of the statute derives. (Laird v. Blacker (1992) 2 Cal.4th 606, 612, 7 Cal.Rptr.2d 550, 828 P.2d 691.) Had the Legislature meant to significantly modify the law, it surely would have made that intention explicit.

The myriad of circumstances under which statute of limitations issues may arise in missed statute cases sharply illustrates the practicality of applying the prevailing "question-of-fact" rule to the determination of when actual injury occurs. The number of potential variables, which do not necessarily follow a set pattern, precludes defining the point of harm as a fixed point or event because reasonable application becomes too problematic. (See post, fn. 4.) The issue may be resolved "as a matter of law" only if the facts are undisputed. (Budd v. Nixen, supra, 6 Cal.3d at p. 202, 98 Cal.Rptr. 849, 491 P.2d 433.)

Although affirming this central precept, the task remains nevertheless to give In the "classic" missed statute situation, in which the attorney negligently fails to file the underlying lawsuit within the applicable statutory period and does nothing further, the plaintiff suffers actual harm at the time the statutory period lapses because, assuming the claim was otherwise viable, the right and/or remedy of recovery on the action has been substantially impaired. ³ (See, e.g., Finlayson v. Sanbrook, supra, 10 Cal.App.4th at p. 1442, 13 Cal.Rptr.2d 406; see Davies v. Krasna, supra, 14 Cal.3d at p. 514, 121 Cal.Rptr. 705, 535 P.2d 1161 [defendant's breach of confidence " 'substantially destroyed marketability' " of plaintiff's story causing "actual harm" within the meaning of Budd ]; Basinger v. Sullivan Ind.Ct.App.1989) 540 N.E.2d 91, cited with approval in Laird v. Blacker, supra, 2 Cal.4th at p. 629, 7 Cal.Rptr.2d 550, 828 P.2d 691; see also Rest.2d Torts, § 7, subd. ...