Baltins v. James

• Decision Date: 19 July 1995
• Docket Number: No. A066333,A066333
• Citation: 42 Cal.Rptr.2d 896,36 Cal.App.4th 1193
• Court: California Court of Appeals Court of Appeals
• Parties: , 95 Cal. Daily Op. Serv. 5657, 95 Daily Journal D.A.R. 9593 Aldis BALTINS et al., Plaintiffs and Appellants, v. Duncan M. JAMES, Defendant and Respondent.

Page 896

42 Cal.Rptr.2d 896

36 Cal.App.4th 1193, 95 Cal. Daily Op. Serv. 5657,

95 Daily Journal D.A.R. 9593

Aldis BALTINS et al., Plaintiffs and Appellants, v. Duncan M. JAMES, Defendant and Respondent.

No. A066333.

Court of Appeal, First District, Division 3, California.

July 19, 1995.

William S. Mailliard, Jr., Christopher R. Miller, Achor, Miller, Culver & Mailliard, Santa Rosa, for plaintiffs and appellants.

Robert A. Murray, Michael G. Dini, Boyd, Murray & Wick, Santa Rosa, for defendant and respondent.

CHIN, Presiding Justice.

This appeal raises the issue of when "actual injury" occurs for purposes of the four-year limitations period for legal malpractice actions. Code Civ.Proc., § 340.6, subd. (a)(1).) ¹ Appellants Aldis and Nancy Baltins sued their former attorney, respondent Duncan M. James, in August 1990. They asserted James negligently advised them in 1984 about transferring property while Aldis appealed an order setting aside his property settlement with his former wife, Deanna. ² That appeal was the subject of In re Marriage of Baltins (1989) 212 Cal.App.3d 66, 260 Cal.Rptr. 403, which affirmed the order. The Baltinses claim their first actual injury from James's advice occurred nine years after In this court, James offers two events as injuries that support the trial court's judgment: the 1984 order setting aside the original division of community property, and Aldis's 1984 transfer of his former residence with Deanna to his new wife, Nancy. However, under the governing standard of review, neither event satisfies the bright line test for actual injury our Supreme Court developed in three recent cases: Laird v. Blacker (1992) 2 Cal.4th 606, 7 Cal.Rptr.2d 550, 828 P.2d 691 (Laird ); ITT Small Business Finance Corp. v. Niles (1994) 9 Cal.4th 245, 36 Cal.Rptr.2d 552, 885 P.2d 965 (Niles ); and International Engine Parts, Inc. v. Feddersen & Co. (1995) 9 Cal.4th 606, 38 Cal.Rptr.2d 150, 888 P.2d 1279 (Feddersen ). If the existence or effect of a professional's error depends on a litigated or negotiated determination's outcome, these decisions find actual injury occurs only when that determination is made. The Baltinses' pleading fits squarely within this test for actual injury. Accordingly, we must reverse the judgment and remand the case for further proceedings.

the alleged malpractice, when the trial court finally divided Aldis and Deanna's community property. James demurred to the Baltinses' amended complaint, arguing that any actual injury must have occurred before the attorney-client relationship terminated in 1985. The trial court agreed and sustained the demurrer.

THE STANDARD OF REVIEW

When reviewing the sufficiency of a complaint against a demurrer, we must accept as true the complaint's well-pleaded material facts, but not contentions, deductions, or conclusions of law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.) We may consider judicially noticeable matters (ibid.), but a demurrer generally does not test the truth of the plaintiffs' allegations, or the accuracy with which they describe the defendant's conduct (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213, 197 Cal.Rptr. 783, 673 P.2d 660).

If an action appears time-barred on the face of the complaint, the plaintiffs must anticipate the defense and plead facts to negate the bar. (Union Carbide Corp. v. Superior Court (1984) 36 Cal.3d 15, 25, 201 Cal.Rptr. 580, 679 P.2d 14.) Even so, on an appeal following an order sustaining a demurrer, "... an appellate court is required to construe the complaint liberally to determine whether, assuming the facts pleaded to be true, a cause of action has been stated. [Citation.]" (Posey v. State of California (1986) 180 Cal.App.3d 836, 842, 225 Cal.Rptr. 830; see § 452.) In accord with these requirements, we draw our statement of facts primarily from the Baltinses' amended complaint and those matters subject to judicial notice. ³

FACTS

Aldis and Deanna separated in January 1982 and afterwards signed a marital settlement agreement, handwritten by Aldis, that covered child custody, support, and the division of their community property. Aldis, acting in propria persona, filed a petition for dissolution of the marriage in March 1983; an uncontested interlocutory judgment of dissolution was entered in April, with the final judgment following in October. The interlocutory judgment incorporated a typed and executed property settlement agreement that was substantially the same as the earlier handwritten agreement. In April 1984, Deanna filed a motion to set aside those portions of the interlocutory and final judgments that divided the community property and set the amount of spousal and child support.

Beginning in February 1983, Aldis consulted James for legal advice on the marital dissolution action and related property transfers. After dissolution of his marriage to Deanna, Aldis married Nancy. In April 1984, Aldis and Nancy retained James to The trial court heard Deanna's motion over a two-day period in June and, by order filed August 16, 1984, set aside the community property division. On James's advice, Aldis appealed the order on August 31, 1984, and five days later amended the notice of appeal to include the trial court's subsequent order granting Deanna's separate motion to increase child and spousal support. ⁴

oppose Deanna's motion to set aside the property division and support judgments in the dissolution action. James agreed to represent the Baltinses with respect to Deanna's motion and other matters.

James met with the Baltinses on September 12, 1984. He advised them that the appeal's pendency allowed them to dispose of and manage property as though the August 16, 1984, order did not exist. Relying on this advice, Aldis gave Nancy a quitclaim deed transferring his residence on Robinson Creek Road to her as her sole and separate property. The Robinson Creek Road property was a 30-acre ranch with a remodeled ranch house, a garage, barns, a swimming pool, and a vineyard. The ranch had been a substantial part of Aldis and Deanna's community assets.

Because James said the appeal stayed the trial court's order for increased support payments to Deanna, Aldis continued to make support payments under the prior agreement. Aldis also continued to pay the mortgages on investment properties he received under the former property settlement agreement. James said Aldis would get the title to those properties or would receive reimbursement credits for his expenditures pursuant to In re Marriage of Epstein (1979) 24 Cal.3d 76, 80, 154 Cal.Rptr. 413, 592 P.2d 1165. The Baltinses alleged that those expenditures totaled $508,614.31.

The Baltinses terminated their attorney-client relationship with James in November 1985. ⁵ On July 18, 1989, we affirmed the trial court's orders setting aside the property and support provisions of the interlocutory and final judgments and modifying Aldis's support obligations. (In re Marriage of Baltins, supra, 212 Cal.App.3d at p. 95, 260 Cal.Rptr. 403.) In so doing, we found sufficient evidence to support the express finding that fraud, mistake, and duress deprived Deanna of a fair adversary hearing, and the implied findings that her delay in seeking relief was reasonable and that the circumstances of the case overcame the strong policy favoring finality of judgments. (Id. at p. 93, 260 Cal.Rptr. 403.) We also indicated that Aldis's right to reimbursement credits was uncertain and that he might be assessed charges to reimburse the community for his use of community assets under In re Marriage of Watts (1985) 171 Cal.App.3d 366, 374, 217 Cal.Rptr. 301. (In re Marriage of Baltins, supra, 212 Cal.App.3d at p. 86, 260 Cal.Rptr. 403.) We also rejected Aldis's argument that his first notice of appeal divested the trial court of jurisdiction to make the support order. ⁶ (Id. at pp. 94-95, 260 Cal.Rptr. 403.) The remittitur issued on September 26, 1989.

The Baltinses' original, verified complaint alleged that they discovered James's negligent conduct after the case was remanded and they retained new counsel. In their amended complaint, they allege that they did not know, and could not have known, of In December 1989, Deanna filed a petition to add Nancy as a party in the dissolution action for the determination of property rights. The Baltinses' amended complaint alleges: "This joinder was a direct result of the transfer of title to the Robinson Creek property undertaken at the advice and direction of ... James. As a result of that action, substantial attorneys' fees have been incurred by [the Baltinses]."

James's negligence and the resulting damages until much later.

The Baltinses filed suit against James on August 16, 1990. By order filed November 8, 1991, the trial court abated the case against James until completion of the dissolution action. The trial court rendered a tentative decision in the dissolution action on October 3, 1992, and filed a statement of decision on May 18, 1993. It entered judgment in the dissolution action on July 14, 1993. ⁷ James was served with the summons and complaint on June 23, 1993. ⁸ On September 24, 1993, James filed a demurrer to the original complaint, asserting that the statute of limitations barred the action. ⁹ The trial court granted the demurrer with leave to amend. The Baltinses filed their amended complaint on December 22, 1993.

The amended complaint alleged that Aldis followed James's advice and was found to have violated fiduciary duties in managing community assets. As a result, the court denied Aldis a substantial portion of the reimbursement credits he claimed. The Baltinses asserted that until the dissolution action ruling, they did not discover, and could not have discovered, James's negligence and the resulting damage.

The amended complaint alleged that James failed to ascertain the law concerning an appeal's effect on existing orders...