LICO v. PRIOSTE

No. A147533.

BETH ANN LICO, Plaintiff and Appellant, v. TANYA PRIOSTE et al., Defendants and Respondents.

Court of Appeals of California, First District, Division Three.


NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.115

SIGGINS, J.

Beth Ann Lico appeals summary judgment in favor of her former divorce attorneys Philip Silvestri and his law firm Silvestri, Silvestri & Mialocq (Silvestri) and Tanya Prioste and her firm Lakin Spears LLP (Prioste). Lico alleged Silvestri and Prioste failed to advise her to sue her former estate planning attorneys, Jennifer Cunneen and Hopkins & Carley, ALC (Cunneen), for legal malpractice before the statute of limitations expired. As a result, she contends, Cunneen obtained summary judgment on statute of limitations grounds. In the current action against Silvestri and Prioste, Lico seeks the value of her underlying malpractice claim against Cunneen and the attorneys' fees she incurred in attempting to prosecute it. But, again, Lico waited too long to file suit. Pursuant to Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739 (Jordache), the one-year limitations period for attorney malpractice against Silvestri and Prioste began to run no later than when Lico incurred attorney's fees to oppose Cunneen's summary judgment motion. Her suit was filed 13 months later, so it is time barred. We affirm.

BACKGROUND

I. Lico's Malpractice Action Against Cunneen

The relevant facts are undisputed. In 2002 Cunneen prepared a transmutation agreement between Lico and her then-husband Steven, intended to convert some of Steven's separate property to community property.

Lico later retained Prioste to represent her in divorce proceedings. Steven moved to nullify the transmutation agreement, and in January 2008 the court ruled the agreement was unenforceable. That same month Lico hired Silvestri to replace Prioste and her firm. Silvestri represented her in the divorce proceedings through 2009.

In September 2011, represented by new counsel Ansel Kinney, Lico sued Cunneen for malpractice based on the ineffective transmutation agreement. Cunneen moved for summary judgment on statute of limitations grounds, arguing that Lico's claim expired one year after she began incurring attorneys' fees in 2007 to litigate the validity of the transmutation agreement. In May 2013 Lico incurred attorney's fees and costs to oppose summary judgment in the Cunneen action.

The court granted summary judgment, ruling that "as a matter of law, Plaintiff Lico suffered actual injury when she incurred attorney's fees to defend against Steve's attack on the Transmutation Agreement." The court expressly rejected Lico's argument that her injury was merely potential or speculative until Cunneen prevailed in a final ruling on summary judgment, and therefore did not trigger the statute of limitations period: "It is not the amount of damages, but the fact of damage that determines whether an injury has occurred. (Jordache v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 754, 755.)" Division 5 of this court affirmed. (Lico v. Hopkins & Carley LLC et al. (Sept. 22, 2014, A140385)[nonpub. opn.].)

II. Lico's Malpractice Action Against Silvestri and Prioste

In June 2014 Lico sued Silvestri and Prioste for failing to timely advise her that "if she intended to file an attorney malpractice claim against [Cunneen], she needed to file that claim within one year of incurring attorney's fees and costs in the family law litigation and related to the validity of the transmutation agreement." Silvestri moved for summary judgment on statute of limitations grounds, arguing Lico's claim expired no later than May 2014, one year after she incurred attorneys' fees to oppose Cunneen's summary judgment motion. Prioste joined in Silvestri's motion.

The trial court granted summary judgment. It was undisputed that Lico incurred attorneys' fees to oppose Cunneen's summary judgment motion in May 2013. The court ruled that this expense incurred in defense of her claim constituted actual injury that triggered the statute of limitations period. Accordingly, Lico's claim against Silvestri and Prioste expired in May 2014, a month before she sued them for malpractice.

Lico filed this timely appeal from the judgment.

DISCUSSION

I. Legal Standards

"`To secure summary judgment, a moving defendant may prove an affirmative defense, disprove at least one essential element of the plaintiff's cause of action [citations] or show that an element of the cause of action cannot be established [citations]. [Citation.] The defendant "must show that under no possible hypothesis within the reasonable purview of the allegations of the complaint is there a material question of fact which requires examination by trial.'" (Ochoa v. Pacific Gas & Electric Co. (1998) 61 Cal.App.4th 1480, 1485.) "`Once the moving party has met its burden, the opposing party bears the burden of presenting evidence that there is any triable issue of fact.'" (Ibid.)

"In reviewing the propriety of a summary judgment, the appellate court must resolve all doubts in favor of the party opposing the judgment. [Citation.] The reviewing court conducts a de novo examination to see whether there are any genuine issues of material fact or whether the moving party is entitled to summary judgment as a matter of law. [Citation.]" (M.B. v. City of San Diego (1991) 233 Cal.App.3d 699, 703-704.) "We accept as true the facts alleged in the evidence of the party opposing summary judgment and the reasonable inferences that can be drawn from them. [Citation.] However, to defeat the motion for summary judgment, the plaintiff must show `"specific facts,"' and cannot rely upon the allegations of the pleadings. [Citations.]" (Horn v. Cushman & Wakefield Western, Inc. (1999) 72 Cal.App.4th 798, 805.) "While `[s]ummary judgment is a drastic procedure, should be used with caution [citation] and should be granted only if there is no issue of triable fact' [citation], it is also true `[j]ustice requires that a defendant be as much entitled to be rid of an unmeritorious lawsuit as a plaintiff is entitled to maintain a good one.'" (M.B. v. City of San Diego, supra, at p. 704.)

II. Analysis

A. Jordache Enterprises, Inc. v. Brobeck, Phleger and Harrison

Code of Civil Procedure section 340.6, subdivision (a) specifies the statute of limitations for attorney malpractice claims.1 An action must be filed "within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first." (§ 340.6, subd. (a).) But, the limitations period is tolled under specified circumstances, including, as relevant here, until the plaintiff has sustained an "actual injury." (§ 340.6, subd. (a)(1).)

"There is no bright-line rule to apply in determining when actual injury has occurred within the meaning of section 340.6. [Citation.] `Instead, actual injury issues require examination of the particular facts of each case in light of the alleged wrongful act or omission.'" (Truong v. Glasser (2009) 181 Cal.App.4th 102, 111 (Truong).) Determining when actual injury occurred is predominantly a factual inquiry, but when the material facts are undisputed, the determination may be resolved as a question of law in conformity with summary judgment principles. (Ibid; Jordache, supra, 18 Cal.4th at p. 751.)

The question here is whether, as defendants contend, Lico sustained actual injury in May 2013 when she incurred attorneys' fees to oppose Cunneen's summary judgment motion. If so, the limitations period ran a year later and Lico's June 2014 complaint was time-barred. Jordache, the leading Supreme Court decision on the analysis of actual injury in this context, compels that conclusion.

In Jordache, the defendant law firm (Brobeck) failed to investigate or advise Jordache that it had insurance coverage for the defense of a lawsuit. (Jordache, supra, 18 Cal.4th at p. 744-745.) After changing law firms, Jordache tendered the defense of the underlying action to its liability insurers and, when they declined the defense, sued them for $30 million in attorneys' fees and costs expended defending the underlying litigation and profits lost from diverting investment funds to pay for legal fees. (Id. at p. 745.) The coverage action ultimately settled for $12.5 million after the insurer obtained a ruling that Jordache failed to timely tender the coverage claim. (Id. at p. 746.)

Jordache then sued Brobeck for malpractice. It alleged the law firm failed to investigate or advise it about the potential insurance coverage or notify the liability carriers whose policies potentially covered the defense. (Jordache, supra, 18 Cal.4th at p. 746.) Brobeck asserted the malpractice claim was time barred, contending that Jordache sustained "actual injury" for purposes of section 340.6, subdivision (a)(1) when, among other things, it was required to pay defense costs in the underlying litigation. In opposition, Jordache argued it did not sustain actual injury until it settled the insurance coverage action for less than its full claim. (Ibid.)

The Supreme Court agreed with Brobeck that Jordache sustained actual injury prior to the settlement of the coverage litigation. (Jordache, supra, 18 Cal.4th at p. 743.) Specifically, the Court concluded that Brobeck, by allowing the insurer to interpose an objectively viable late-notice defense to coverage, caused actual injury to Jordache in the form of additional litigation costs in the coverage litigation and diminished settlement value of its claims. (Id. at pp. 752-753.) "Actual injury occurs when the client suffers any loss or injury legally cognizable as damages in a legal malpractice action based on the asserted errors or omissions. . . . [¶] Here, the attorneys' alleged neglect allowed the insurers to raise an objectively viable defense to coverage under the policies. The insurers' assertion of this defense necessarily increased the client's costs to litigate its coverage claims and reduced those claims' settlement value. . . . Those detrimental effects of the attorneys' alleged neglect were not contingent on the outcome of the coverage action." (Id. at pp. 743-744.) In so holding the Court reaffirmed the principle established in Budd v. Nixen (1971) 6 Cal.3d 195 (Budd), codified in section 340.6, that a plaintiff sustains actual injury when he or she incurs attorneys' fees to rectify the problem caused by the prior attorney's alleged negligence. Jordache, supra, 18 Cal.4th at pp. 750-751; see also Sindell v. Gibson, Dunn & Crutcher (1997) 54 Cal.App.4th 1457, 1470 ["It is a well-established principle that attorney fees incurred through instituting or defending an action as a direct result of the tort of another are recoverable damages]; Sirott v. Latts (1992) 6 Cal.App.4th 923, 928-929 (Sirott) ["A client suffers damage when he is compelled, as a result of the attorney's error, to incur or pay attorney fees"].)

In its holding the Court expressly rejected the view that Jordache's injury was merely speculative until the coverage action settled, reasoning that the harm it identified was immediate and the outcome of the coverage litigation would affect only its extent, not existence. (Jordache, supra, 18 Cal.4th at pp. 752-753, 744.) "[T]he result of Jordache's coverage litigation could only confirm, but not create, Jordache's actual injuries from the late tender of the [underlying] action's defense." (Id. at p. 753.) On this point Jordache expressly overruled ITT Small Business Finance Corp. v. Niles (1994) 9 Cal.4th 245, which held that in transactional legal malpractice cases an action "accrues on entry of adverse judgment, settlement, or dismissal of the underlying action" because "`[i]t is at this point that the former client has discovered the fact of damage and suffered "actual injury" due to the malpractice under section 340.6.'" (Jordache, supra, 18 Cal.4th at p. 763.)

B. Lico's Attempts to Avoid Application of Jordache Are Unpersuasive

Notwithstanding Jordache, Lico argues her malpractice claim against Silvestri and Prioste did not accrue until the trial court granted Cunneen's summary judgment motion because the ruling was necessary to establish proximate cause between defendants' alleged malpractice and her injury. But Jordache expressly rejects such a "proximate cause" rule. "Actual injury refers only to the legally cognizable damage necessary to assert the cause of action. There is no requirement that an adjudication or settlement must first confirm a causal nexus between the attorney's error and the asserted injury. The determination of actual injury requires only a factual analysis of the claimed error and its consequences. The inquiry necessarily is more qualitative than quantitative because the fact of damage, rather than the amount, is the critical factor." (Jordache, supra, 18 Cal.4th at p. 752; see also Truong, supra, 181 Cal.App.4th at p. 113.)

Jordache also directly refutes Lico's argument that, as we understand it, her injury was merely "contingent" rather than "actual" until she lost the Cunneen litigation. "Jordache's injuries were not speculative or contingent until the trial court ruled the insurers had a duty to defend Jordache and Jordache settled its coverage claims. . . . [S]peculative and contingent injuries are those that do not yet exist, as when an attorney's error creates only a potential for harm in the future. [Citations.] An existing injury is not contingent or speculative simply because future events may affect its permanency or the amount of monetary damages eventually incurred. [Citations.] Thus, we must distinguish between an actual, existing injury that might be remedied or reduced in the future, and a speculative or contingent injury that might or might not arise in the future." (18 Cal.App.4th at p. 754.) So too here. The result of the Cunneen litigation could have confirmed or increased the harm Lico sustained as a result of defendants' alleged negligence, but long before that happened Lico suffered actual injury of a time-barred malpractice claim against Cunneen and fees incurred to oppose Cunneen's summary judgment motion. (Id. at p. 753.)

Neither Baltins v. James (1995) 36 Cal.App.4th 1193 (Baltins) nor Sirott, supra, 6 Cal.App.4th 923, on which Lico relies, supports her contrary argument that her injury was merely "contingent" or "potential" until Cunneen prevailed on summary judgment. In Baltins an attorney incorrectly predicted how a court would resolve an issue in the future. In Sirott an attorney wrongly advised his physician client that he did not have to purchase professional liability "tail" coverage after his retirement. In both situations the alleged malpractice lay in an incorrect prediction about the result of future litigation. As Jordache notes, in those cases "the propriety of the legal advice, and hence the existence and effect of error, depended on the future resolution of the issue adversely to the client." (Jordache, supra, 18 Cal.4th at p. 761.) Jordache distinguishes such erroneous predictions from errors of omission, such as failures to investigate or advise about statutory time bars, which can become evident without judicial resolution of a claim by or against the client. (Id. at pp. 759-760.) Here, Lico admits her claim is one of negligent omission, as in Jordache, "which is the opposite of a prediction."2

Lico is also mistaken in asserting Village Nurseries, L.P. v. Greenbaum (2002) 101 Cal.App.4th 26 (Village Nurseries) supports her position that she did not sustain actual injury prior to the ruling on Cunneen's summary judgment motion. The defendant attorneys in that case failed to advise their client to perfect and maintain mechanic's liens. The court rejected the client's assertion that it sustained actual injury only when a court determined its liens were invalid. Rather, the client suffered actual injury for purposes of section 340.6 when a bankruptcy trustee asserted an objectively viable argument against their validity. "Following the reasoning in Jordache, the settlement value of Village Nurseries' claims for payment on its liens was reduced and thus impaired at the moment the Trustee questioned the validity of the liens on August 30. The Trustee's position was asserted as a result of defendants' failure to perfect Village Nurseries' mechanic's liens on Toyon Park. Therefore, Village Nurseries sustained actual injury as a result of that act or omission no later than August 30, 1996." (Id. at pp. 41-42.) Here, the settlement value of Lico's malpractice claim against Cunneen was just as impaired by Cunneen's assertion of a statute of limitations defense. Village Nurseries thus supports, rather than undermines, the summary judgment ruling here.

Lico argues that Cunneen's statute of limitations claim was not "objectively viable" within the meaning of Jordache prior to the summary judgment ruling, because, as we understand her argument, the trial court had previously overruled a demurrer brought in part on statute of limitations grounds. But the propriety of that ruling is not before us. More importantly, "depending on the particulars, actionable harm may occur at any one of several points in time subsequent to an attorney's negligence." (Adams v. Paul (1995) 11 Cal.4th 583, 588, citing Budd, supra, 6 Cal.3d at p. 202.) Under Jordache, Lico suffered actual injury no later than when she incurred attorneys' fees as a result of defendants' alleged failure to advise her about the time in which to sue Cunneen. Whether that first occurred when she opposed Cunneen's summary judgment motion or earlier at the demurrer stage does not change the outcome here.

Nor are we persuaded by Lico's contention that the trial court misinterpreted Jordache as creating a "bright-line rule" that a client always sustains actual injury as soon as attorneys' fees are incurred to rectify the results of a prior attorney's alleged malpractice. True, Jordache confirms that the determination of when attorney error has caused actual injury "cannot depend on facile, `bright line' rules. [Citation.] Instead, the particular facts of each case must be examined in light of the wrongful act or omission the plaintiff alleges against the attorney." (18 Cal.4th at p. 764.) The court here conducted that inquiry when it examined the specific undisputed facts presented on summary judgment and determined that Lico, like the client in Jordache, sustained actual injury no later than when she incurred fees opposing Cunneen's motion. Lico's observation that incurring attorneys' fees may not constitute actual injury for purposes of section 340.6, subdivision (a) in every case is beside the point.

The court correctly found the statute of limitations started to run no later than May 2013, when defendants' alleged failure to advise Lico about the statute of limitations for attorney malpractice had provided Cunneen with an objectively viable statute of limitations defense and Lico incurred attorneys' fees and costs to oppose it. Summary judgment was thus properly granted. In light of this determination we have no occasion to address Prioste's additional argument that undisputed facts show she properly advised Lico about the necessity of filing her potential malpractice claim against Cunneen in a timely fashion.

DISPOSITION

The judgment is affirmed.

Pollak, Acting P.J. and Jenkins, J., concurs.

FootNotes


1. Further statutory citations are to the Code of Civil Procedure.
2. Moreover, Jordache observes that "Sirott does not support a general rule that judicial determinations are necessary precursors to actual injury, First, the court properly found [] that the doctor sustained actual injury for purposes of section 340.6 when he incurred costs to defend the medical malpractice action because he had no malpractice insurance." (Id. at p. 759.)

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