Opinion
B228127
11-01-2011
CYNDI TEPPER et al., Plaintiffs and Appellants, v. ROSENTHAL AND SMITH, LLP et al., Defendants and Respondents.
Law Offices of Fredrick H. Stern and Fredrick H. Stern for Plaintiffs and Appellants. Gaglione, Dolan & Kaplan, Robert T. Dolan and Martina A. Silas for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BS117372)
APPEAL from a judgment of the Superior Court of Los Angeles County, David L. Minning, Judge. Affirmed.
Law Offices of Fredrick H. Stern and Fredrick H. Stern for Plaintiffs and Appellants.
Gaglione, Dolan & Kaplan, Robert T. Dolan and Martina A. Silas for Defendants and Respondents.
Appellants Cyndi and Bryan Tepper filed an action for legal malpractice against the attorneys that represented their father in his individual capacity and as administrator of their mother's estate. Attorneys Rosenthal and Smith, LLP, Richard M. Rosenthal, and Michael Abraham (collectively, attorneys) brought a motion for summary judgment, contending, among other things, that the one-year statute of limitations barred this action. The trial court granted attorneys' motion on the ground that, although the parties had an agreement to toll the statute of limitations, the causes of action alleged in the complaint accrued one year before the tolling agreement and were not timely filed pursuant to Code of Civil Procedure section 340.6. We affirm, concluding that attorneys have established a complete defense to this action and are entitled to judgment as a matter of law.
Unless otherwise indicated, all further statutory references are to the Code of Civil Procedure.
BACKGROUND
Cyndi and Bryan Tepper filed this legal malpractice action against attorneys after learning their father, Mark Tepper, engaged attorneys to represent him and their mother's estate. In the course of representing their mother's estate, attorneys prepared documents that improperly transferred assets in their mother's estate into their father's name and prepared a declaration that misrepresented the value of the estate to avoid probate. Attorneys also permitted Mark to control the assets in their mother's estate that should have been distributed to Cyndi and Bryan as their mother's only heirs. The complaint states causes of action against attorneys for fraud, civil conspiracy to defraud, breach of fiduciary duty, and legal malpractice. The following undisputed facts, supported by admissible evidence, were presented in support of and in opposition to the summary judgment motion.
Since these parties share the same last name, we refer to them by their first name for clarity and convenience, and we mean no disrespect. (Cruz v. Superior Court (2004) 120 Cal.App.4th 175, 188, fn. 13.)
1. Transfer of Family Residence to Mark L. Tepper Living Trust
Cyndi and Bryan were minors when their mother died in 1995. Before her death, their mother and father entered into a stipulated judgment for dissolution of their marriage, dividing the community real and personal property (stipulated judgment). The stipulated judgment became final on January 1, 1994. Based upon that stipulated judgment, their mother was entitled to one-half of the net proceeds from the sale of the family residence, one-half interest from the sale of another property in Cabo San Lucas, and a one-half interest in various IRA and mutual fund accounts. The stipulated judgment provided that until the sale of the family residence, title would be held as tenants in common. Title to the family residence was not transferred before their mother died.
In 1995, Cyndi's and Bryan's father hired attorneys to handle the administration of their mother's estate. Abraham, as a member of the Rosenthal & Smith firm, assisted Mark in filing the "Affidavit - Death of Joint Tenant" (affidavit), transferring title to the family residence to Mark. The affidavit states the recording is "[r]equested by . . . Michael A. Abraham, Rosenthal and Smith." Attorneys then recorded a quitclaim deed, transferring the family residence to Mark L. Tepper, Trustee of the Mark L. Tepper Living Trust. The quitclaim deed again listed Abraham's name and the Rosenthal and Smith law firm. Before transferring the property, Abraham prepared a declaration for Mark's signature, stating the gross value of the decedent's estate did not exceed $60,000, excluding the family residence (Prob. Code, § 13050), and Mark was authorized under section 13051 of the Probate Code to act as the decedent's successor on behalf of Cyndi and Bryan.
After 1995, attorneys did nothing further in connection with the estate, and their representation ended.
2. Discovery of the Transfer of the Family Residence, and the Probate Proceedings
Based upon conversations with her father, by 2002 Cyndi wondered whether she and her brother had an interest in the family residence. She obtained the stipulated judgment. Upon reading the stipulated judgment, Cyndi understood that her mother was entitled to one-half of the net proceeds from the sale of the family residence.
Cyndi had a friend obtain information regarding title to the family residence, which included the affidavit and quitclaim deed.
In 2006, Cyndi told Bryan that she was trying to determine if they had any interest in the family residence. Bryan recalled that Cyndi told him they were entitled to certain property that was not allotted to them, including the family residence. Cyndi also told him that their father took property belonging to their mother which was rightfully theirs.
In late 2006, Cyndi called Abraham to see if her mother had a will. Abraham said he could not help Cyndi because he was her father's attorney.
By January 2007, Cyndi met with her mother's divorce attorney who explained the significance of the stipulated judgment, the affidavit, and the quitclaim deed. Cyndi then consulted with legal counsel.
In February 2007, Cyndi and Bryan filed letters of administration in the Los Angeles Superior Court to initiate probate proceedings for the administration of their mother's estate. They were appointed co-administrators of their mother's estate on March 7, 2007.
3. March 14, 2007 Letter, and the Petition in the Probate Proceedings to Convey Interest in the Family Residence
On March 14, 2007, Cyndi and Bryan sent a letter to their father, stating "[i]t has recently come to our attention that a probate was never opened after our mother's death on behalf of her estate and therefore her assets were never transferred to us, her children." The letter lists the assets awarded in the stipulated judgment and states: "We have consulted with multiple attorneys on this matter and it has been explained to us that we are the beneficiaries of the assets awarded to our mother in your divorce settlement with her. It is clearly outlined in your divorce agreement that both parties relinquished all claims to the other parties assets in the event of death and given that the divorce was finalized prior to our mother's passing, there is no argument as to the beneficiaries of her estate; everything was to be left to us (her children) according to law." The letter further states: "[W]e have been advised that what you did in order to change the title and deed of the house into only your name after our mother died was an act of fraud." Cyndi and Bryan asked their father to cooperate in the transfer of their mother's assets to them.
Two weeks later, on March 28, 2007, Cyndi's and Bryan's lawyer sent a demand letter to their father seeking a conveyance of one-half interest of the family residence.
On May 24, 2007, Cyndi and Bryan, individually and as co-administrators of their mother's estate, filed a petition against their father in the probate proceedings for conveyance of property, and for money damages under Probate Code section 859.
4. Malpractice Action Against Attorneys
Both Cyndi and Bryan stated that they first learned attorneys were hired to represent their mother's estate on December 5, 2007, when Abraham's deposition was taken in connection with the probate proceedings. Abraham's estate file contained the documents transferring the family residence to their father, their father's declaration under section 13051 of the Probate Code, their mother's will, and the stipulated judgment. Rosenthal prepared their mother's will.
The parties entered into a tolling agreement. The agreement provided that, to the extent the limitations of actions had not yet expired, the parties would agree to toll the period from on and after May 23, 2008 (one year after the petition to convey the property was filed in the probate action) through January 25, 2009.
This action was filed on December 16, 2008, within the tolling period.
5. Summary Judgment Granted Based Upon Statute of Limitations Defense
Although attorneys also moved for summary judgment on the ground they owed no duty to Cyndi and Bryan, the trial court granted the motion based upon the undisputed facts that the complaint was time barred under the one-year limitations period in section 340.6, and the actual fraud exception in the statute did not apply because attorneys owed no duty to Cyndi and Bryan as beneficiaries of their mother's estate. The trial court reasoned that by March 14, 2007, when Cyndi and Bryan sent the letter to their father, they discovered, or through reasonable diligence should have discovered, attorneys' acts or omissions. Specifically, the letter indicated they (1) knew probate proceedings should have commenced for the purpose of administering their mother's estate, (2) they had a right to assets in their mother's estate based upon the stipulated judgment, and (3) they knew the transfer of the family residence to their father was "a fraud."
Judgment was entered and this timely appeal followed.
DISCUSSION
Appellants contend they have raised a triable issue of fact that defeats attorneys' statute of limitations defense based upon their statements that they did not discover attorneys' fraudulent involvement in the administration of their mother's estate until December 5, 2007. A trial court properly grants summary judgment when there are no triable issues of material fact and the moving party is entitled to judgment as a matter of law. (§ 437c, subd. (c).)
As noted, attorneys also moved on the ground that they owed no duty to Cyndi and Bryan as beneficiaries of their mother's estate. The trial court addressed duty only in the context of the actual fraud exception to section 340.6, which we discuss post. Since attorneys have established an affirmative defense as a matter of law, we affirm on that basis and do not address the alternative grounds in the motion. (See § 437c, subd. (m)(2).)
A moving party defendant is entitled to summary judgment if it establishes a cause of action has no merit because one or more of the elements cannot be separately established, or a defendant establishes a defense to the plaintiff's cause of action. (§ 437c, subd. (o)(1), (2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.) A moving party defendant bears the initial burden to make a prima facie showing that no triable issue of material fact exists. Once the initial burden of production is met, the burden shifts to the responding party plaintiff to demonstrate the existence of a triable issue of material fact. (§ 437c, subd. (p)(2).) From commencement to conclusion, the moving party bears the burden of persuasion that there is no triable issue of fact in the action. (Aguilar v. Atlantic Richfield Co., supra, at p. 850.) Summary judgment shall be granted if all the papers submitted show there is no triable issue of material fact, thereby entitling the moving party to judgment as a matter of law. (§ 437c, subd. (c).)
On appeal, we exercise an independent assessment, applying the same legal standard as the trial court in determining whether there are any triable issues of material fact. (Seo v. All-Makes Overhead Doors (2002) 97 Cal.App.4th 1193, 1201-1202.)
1. Statute of Limitations Bars the Legal Malpractice and Breach of Fiduciary Duty Causes of Action as a Matter of Law
The applicable statute of limitations, section 340.6, applies to both legal malpractice and breach of fiduciary duty claims against an attorney. (Stoll v. Superior Court (1992) 9 Cal.App.4th 1362, 1363, 1366-1369.) Section 340.6, subdivision (a) states: "An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced 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. . . . [I]n no event shall the time for commencement of legal action exceed four years except that the period shall be tolled during the time that any of the following exist: [¶] (1) The plaintiff has not sustained actual injury. [¶] . . . [¶] (3) The attorney willfully conceals the facts constituting the wrongful act or omission when such facts are known to the attorney, except that this subdivision shall toll only the four-year limitation."
"[T]he statute of limitations begins to run when the plaintiff suspects or should suspect that her [his] injury was caused by wrongdoing, that someone has done something wrong to her [him]. . . . Once the plaintiff has a suspicion of wrongdoing, and therefore an incentive to sue, she [he] must decide whether to file suit or sit on her [his] rights. So long as a suspicion exists, it is clear that the plaintiff must go find the facts; she [he] cannot wait for the facts to find her [him]." (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110-1111, fn. omitted.) A "plaintiff who actually or constructively discovered the attorney's error, but who has suffered no damage to support a legal malpractice cause of action, need not file suit . . . ." (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 757-758.) Thus, even upon discovery of wrongdoing, the limitations period does not begin to run until the plaintiff has sustained actual injury. (§ 340.6, subd. (a)(1).)
Here, appellants contend they did not discover attorneys' wrongdoing and conflict of interest arising from the dual representation of their father, individually, and as administrator of their mother's estate, until Abraham's deposition on December 5, 2007. The statute of limitations, however, starts to run when the injured party has a reasonable suspicion and through the use of reasonable diligence should have discovered the wrongdoing. By March 14, 2007, it is undisputed that appellants knew their father had committed what they described as an "act of fraud" in the transfer of the family residence, knew probate should have been opened on behalf of their mother's estate, and knew they were entitled to inherit their mother's assets as set forth in the stipulated judgment. Appellants also had in their possession a copy of the affidavit and quitclaim deed, transferring the family residence to their father, which listed Abraham and the Rosenthal and Smith law firm. These documents indicated attorneys recorded them on behalf of their father. Additionally, Cyndi presented the affidavit and quitclaim deed to legal counsel who advised Cyndi and Bryan that their father had fraudulently transferred the family residence, and they had an "extremely strong case" against him. At that point, it is undisputed that appellants knew of the wrongdoing, knew attorneys recorded the affidavit, and through reasonable diligence should have discovered attorneys' wrongful acts or omissions.
It is also undisputed that by March 28, 2007, appellants sustained actual injury by engaging legal counsel to seek conveyance of their interest in the family residence. Thus, the one-year limitation period began to run at the latest on March 28, 2007. This suit was filed on December 16, 2008, and these causes of action are barred as a matter of law by the applicable statute of limitations.
Appellants contend that the March 14, 2007 letter only refers to their father's wrongdoing and does not mention attorneys. But, the content of their letter refers to the fraudulent transfer of title to the family residence, which identified Abraham and his law firm on the affidavit and quitclaim deed. There is no dispute that appellants and their attorneys had a copy of the affidavit and quitclaim deed months before Abraham's deposition.
Appellants next contend there is a triable issue of fact as to when they discovered attorneys' wrongdoing because they were unaware that their mother had a will until December 5, 2007. The discovery of the will confirmed their suspicions as outlined in the March 14, 2007 letter. For these reasons, we find unpersuasive appellants' cases cited for the proposition that discovery of wrongdoing is a factual dispute. (See Brown v. Bleiberg (1982) 32 Cal.3d 426, 434 & fn. 4; McCann v. Welden (1984) 153 Cal.App.3d 814, 824.) Here, there is no dispute on the date of discovery. As of March 14, 2007, appellants had documents and other information presented to them by their legal counsel that their father had fraudulently taken title to the family residence, and attorneys recorded the necessary documents on his behalf. These causes of action were barred by the one-year limitations period in section 340.6.
There also is no factual dispute that attorneys willfully concealed the will. Cyndi stated in her declaration that she telephoned Abraham and asked him if her mother had a will. She states: "He told me that he could not discuss the matter with me because he was my dad's lawyer."
At oral argument, appellants appeared to contend that since they did not learn about their mother's will until December 5, 2007, they have a viable and timely claim for malpractice based upon a duty owed under Probate Code section 8200. Probate Code section 8200 provides that the custodian of a will shall within 30 days of death deliver the will to the superior court and mail a copy of the will to the executor, if the person's whereabouts is known, or if not, to a beneficiary. (Prob. Code, § 8200, subd. (a)(1), (2).) A custodian who fails to comply is liable for all damages sustained by any person injured by the failure. (Id., subd. (b).) The complaint does not allege a duty under this statute. On summary judgment, the issues are "framed by the pleadings since it is these allegations to which the motion must respond by establishing a complete defense or otherwise showing there is no factual basis for relief on any theory reasonably contemplated by the opponent's pleading." (AARTS Productions, Inc. v. Crocker National Bank (1986) 179 Cal.App.3d 1061, 1064.) Therefore, attorneys are not required at this late juncture to negate this new theory of liability. Moreover, appellants' belated attempt to raise this issue for the first time at oral argument in the Court of Appeal fails on waiver grounds. (See Interinsurance Exchange v. Collins (1994) 30 Cal.App.4th 1445, 1448.)
Probate Code section 8200 states in pertinent part: "(a) Unless a petition for probate of the will is earlier filed, the custodian of a will shall, within 30 days after having knowledge of the death of the testator, do both of the following: [¶] (1) Deliver the will to the clerk of the superior court of the county in which the estate of the decedent may be administered. . . . [¶] (2) Mail a copy of the will to the person named in the will as executor, if the person's whereabouts is known to the custodian, or if not, to a person named in the will as a beneficiary, if the person's whereabouts is known to the custodian. [¶] (b) A custodian of a will who fails to comply with the requirements of this section is liable for all damages sustained by any person injured by the failure."
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2. Statute of Limitations Is Not Tolled Based upon the Actual Fraud Exception Appellants attempt to fall within the actual fraud exception in section 340.6 by asserting causes of action for fraud and conspiracy to commit fraud. The actual fraud exception contemplates intentional fraud, not negligence. (Quintilliani v. Mannerino (1998) 62 Cal.App.4th 54, 69-70.) To support their claims, appellants contend the evidence establishes Abraham admitted wrongdoing in handling the estate: He admitted preparing the affidavit even though he had a copy of the stipulated judgment that severed the joint tenancy; he admitted preparing the declaration that Mark signed to avoid probate even though the stipulated judgment listed assets exceeding the amount listed in the declaration; and, he knew or should have known based upon the stipulated judgment that under Probate Code section 6122, Mark could not act as administrator of the decedent's estate.
Attorneys owed a duty to the administrator of the estate, and did not owe a duty to appellants as beneficiaries of their mother's estate. (Borissoff v. Taylor & Faust (2004) 33 Cal.4th 523, 529; see also Wells Fargo Bank v. Superior Court (2000) 22 Cal.4th 201, 212 [" 'The attorney for the trustee of a trust is not, by virtue of this relationship, also the attorney for the beneficiaries of the trust. The attorney represents only the trustee.' "]; Goldberg v. Frye (1990) 217 Cal.App.3d 1258, 1267 ["attorney for the administrator of an estate represents the administrator, and not the estate."].) Thus, appellants cannot establish an element of fraud because attorneys had no duty to disclose to the beneficiaries their father's conduct while acting as administrator of their mother's estate. (See Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 612-613 [stating elements of fraud].) Appellants' recourse for their father's fraudulent conduct to take control of the assets in their mother's estate was to file a petition against their father in the probate action, which they did. (Goldberg v. Frye, supra, at p. 1269.) Although in hindsight Abraham admitted making mistakes based upon Mark's representations to him, and perhaps was negligent in his representation of the estate, at most this constituted constructive fraud arising from attorneys' negligence. Constructive fraud is governed by the one-year limitation period in section 340.6. (Quintilliani v. Mannerino, supra, 62 Cal.App.4th at pp. 69-70.)
Relying on Borissoff v. Taylor & Faust, supra, 33 Cal.4th 523, appellants next contend attorneys owed them a duty as successor administrators of their mother's estate. In this action, however, appellants are not acting on behalf of the estate. They sued in their individual capacity as beneficiaries of their mother's estate. Moreover, we reject appellants' argument that they are successors under their mother's will; it is undisputed they are beneficiaries, not executors. Under these circumstances, Borissoff v. Taylor & Faust, which holds that the Probate Code gives successor fiduciaries, but not beneficiaries, the same rights as predecessor fiduciaries, does not advance their position. (Id. at pp. 530-531.)
Since civil conspiracy must be activated by the commission of an actual tort, this cause of action also fails. (Favila v. Katten Muchin Rosenman LLP (2010) 188 Cal.App.4th 189, 206.) Moreover, absent actual fraud, the agent's immunity rule set forth in Doctors' Co. v. Superior Court (1989) 49 Cal.3d 39, 45-46 applies. We find unpersuasive appellants attempt to fall within the exceptions to the agent's immunity rule. As stated, attorneys did not have an independent duty to appellants. (Id. at p. 46; see also Civ. Code, § 1714.10, subd. (c).) Moreover, attorneys' acts were not for their own financial gain simply because they were paid for their services. (Doctors' Co. v. Superior Court, supra, at p. 46; Civ. Code, § 1714.10, subd. (c).) As stated in Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802, the financial exception must be something more than the "professional fees earned as compensation for performance of the agency." (Id. at pp. 834-836.) Accordingly, the trial court properly applied the one-year limitations period in section 340.6 to the fraud and conspiracy causes of action and found both to be time barred. The trial court did not err in granting summary judgment.
DISPOSITION
The judgment is affirmed. Each party to bear their own costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
ALDRICH, J. We concur:
KLEIN, P. J.
CROSKEY, J.