Opinion
B228702
10-31-2011
RICHARD GUIDO, Plaintiff and Appellant, v. ANDERSON & ANDERSON, LLP, et al., Defendants and Respondents.
Furutani & Peters and John A. Furutani for Plaintiff and Appellant. Anderson & Anderson and Steven A. Micheli 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. BC432576)
APPEAL from an order of the Superior Court of Los Angeles County, Kenneth R. Freeman, Judge. Affirmed.
Furutani & Peters and John A. Furutani for Plaintiff and Appellant.
Anderson & Anderson and Steven A. Micheli for Defendants and Respondents.
This legal malpractice action was dismissed on demurrer as time-barred. We conclude that the client did not file suit within one year of discovering the facts giving rise to actual harm and therefore affirm.
I
BACKGROUND
This appeal is based on the allegations in the operative complaint and the exhibits that were judicially noticed in connection with the demurrer. We accept the allegations as true. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
A. Complaint
This suit was filed on February 25, 2010. The operative complaint alleged as follows. In a prior action, Associated Receivables Funding, Inc. (Associated Receivables), sued Richard Guido and others for alleged wrongdoing arising out of a factoring arrangement (Associated Receivables Funding, Inc. v. Multi Label, Inc. (Super. Ct. L.A. County, 2003, No. BC304501)) (Associated Receivables I). Guido was represented by Anderson & Anderson and one of its attorneys, Steven A. Micheli. Associated Receivables dismissed Guido without prejudice and obtained a default judgment against the other defendants.
Thereafter, on April 5, 2005, Associated Receivables filed a second action against Guido (Associated Receivables Funding, Inc. v. Guido (Super. Ct. L.A. County, 2005, No. BC331401)) (Associated Receivables II), raising the same allegations and relying on the same contract at issue in Associated Receivables I. The Anderson firm represented Guido again and, on May 27, 2005, filed an answer on his behalf. In doing so, the firm committed malpractice because it should have filed a demurrer and a notice of related cases, raised the defense of election of remedies, and used judicial admissions made in Associated Receivables I "to have Richard Guido dismissed as a defendant."
In August 2005, Associated Receivables served Guido with discovery, with the responses ultimately due on or before October 31, 2005. Guido was unable to pay the Anderson firm to work on the responses. In addition, he provided virtually no information to assist in drafting them: He said all of the source information was contained in materials he did not possess, and the discovery could not be answered without the materials. The firm successfully moved to withdraw as counsel of record, effective October 24, 2005 — the date the proof of service of the withdrawal order was filed with the trial court. The firm committed malpractice by not drafting and serving the discovery responses before it withdrew.
After the Anderson firm no longer represented Guido, he failed to respond to discovery and did not appear at several trial court hearings. Eventually, the trial court struck his answer (on February 6, 2006), entered his default (on February 8, 2006), and awarded Associated Receivables more than $3.8 million by way of a default judgment (originally entered on June 16, 2009, subsequently vacated on August 11, 2009, and reinstated on November 12, 2009). Guido appealed and lost (Apr. 26, 2011, B221486).
B. Demurrer
In the present case, Guido alleged a cause of action against the firm and Attorney Micheli (defendants) for legal malpractice and a cause of action against the firm alone for breach of contract. Defendants demurred on the ground the action was barred by the one-year statute of limitations for legal malpractice. (Code Civ. Proc., § 340.6, subd. (a); all undesignated section references are to that code.) Defendants argued that the limitations period commenced on May 27, 2005, when they filed an answer on Guido's behalf instead of a demurrer that allegedly would have resulted in his dismissal. Guido countered that he did not suffer an actual injury until the default judgment was entered on June 16, 2009, less than a year before he filed suit. The trial court sustained the demurrer without leave to amend and entered a signed order to that effect. Guido appealed.
II
DISCUSSION
In reviewing the ruling on a demurrer, "we are guided by long-settled rules. 'We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . We also consider matters which may be judicially noticed.' . . . When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action." (Blank v. Kirwan, supra, 39 Cal.3d at p. 318, citations omitted; accord, Gordon v. Law Offices of Aguirre & Meyer (1999) 70 Cal.App.4th 972, 975, fn. 2, 976.)
According to Guido, the limitations period began to run when the last act of legal malpractice occurred. We disagree. He had a cause of action, at the latest, when the trial court entered his default on February 8, 2006. Where, as here, the allegations of the complaint establish the date on which the client discovered the harm or injury caused by the attorney, the application of the statute of limitations can be resolved by demurrer. (See Lockton v. O'Rourke (2010) 184 Cal.App.4th 1051, 1065, 1069.)
The statute of limitations in this case provides: "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. [¶] (2) The attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred. [¶] (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. [¶] (4) The plaintiff is under a legal or physical disability which restricts the plaintiff's ability to commence legal action." (§ 340.6, subd. (a)(1)-(4).)
"'If the allegedly negligent conduct does not cause damage, it generates no cause of action in tort. . . . The mere breach of a professional duty, causing only nominal damages, speculative harm, or the threat of future harm — not yet realized — does not suffice to create a cause of action for negligence. . . . Hence, until the client suffers appreciable harm as a consequence of [the] attorney's negligence, the client cannot establish a cause of action for malpractice.' . . . 'The cause of action arises, however, before the client sustains all, or even the greater part, of the damages occasioned by [the] attorney's negligence. . . . Any appreciable and actual harm flowing from the attorney's negligent conduct establishes a cause of action upon which the client may sue.' . . .
". . . [T]he existence of appreciable actual injury does not depend on the plaintiff's ability to attribute a quantifiable sum of money to consequential damages. Similarly, [we] rejected the claims that actual injury should be defined by a monetary amount and that the limitations period should be tolled if the injury is, in some way, remediable. . . . [We have also] recognized that actual injury may consist of impairment or diminution, as well as the total loss or extinction, of a right or remedy. . . . '[W]hen malpractice results in the loss of a right, remedy, or interest, or in the imposition of a liability, there has been actual injury regardless of whether future events may affect the permanency of the injury or the amount of monetary damages eventually incurred.'" (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 749-750, citations omitted, italics added & omitted.) "Neither uncertainty of amount nor difficulty of proof renders that injury speculative or inchoate." (Id. at p. 744.) These principles and the same statute of limitations (§ 340.6, subd. (a)) apply to both the legal malpractice claim and the breach of contract claim. (See Southland Mechanical Constructors Corp. v. Nixen (1981) 119 Cal.App.3d 417, 425-431, disapproved on another point in Laird v. Blacker (1992) 2 Cal.4th 606, 617.) For simplicity, we will analyze only the legal malpractice claim.
Guido contends that, on May 27, 2005, defendants should have demurred, not answered, in response to the complaint, relying on the theory of election of remedies as well as judicial admissions made in Associated Receivables I. Had they done so, he would have been dismissed. Instead, the litigation continued, exposing him to possible liability, eventually leading to a default judgment against him exceeding $3.8 million. Because the legal malpractice claim was tolled until defendants withdrew as counsel, the limitations period on the failure to file a demurrer did not commence until October 24, 2005. (See § 340.6, subd. (a)(2).) Thus, the filing deadline expired on October 24, 2006 — almost three and one-half years before he filed suit. Guido also faults defendants for not preparing and serving discovery responses before they withdrew as counsel on October 24, 2005. The discovery due date was October 31, 2005. Assuming defendants owed Guido a duty to comply with the postwithdrawal discovery deadline, the limitations period would have run from October 24, 2005, the date of withdrawal. Using this alleged failure as the starting point of the limitations period, Guido had to file suit no later than October 24, 2006.
Further, even if the limitations period did not commence until the entry of default on February 8, 2006, Guido fares no better. In that event, the legal malpractice suit had to be filed on or before February 8, 2007. Instead, he filed this action on February 25, 2010, years too late. The entry of default definitely gave rise to harm or injury. "A defendant against whom a default has been entered is out of court and is not entitled to take any further steps in the cause affecting plaintiff's right of action . . . ." (Devlin v. Kearney Mesa AMC/Jeep/Renault Inc. (1984) 155 Cal.App.3d 381, 385-386.) "Procedurally, the entry of the default barred [defendant] from advancing contentions on the merits. . . . The entry of a default cuts off the right to file pleadings and motions, and the right to notices and the service of pleadings." (Steven M. Garber & Associates v. Eskandarian (2007) 150 Cal.App.4th 813, 823.)
Guido did not allege in the complaint or argue on appeal that he discovered the facts constituting legal malpractice after the dates it allegedly occurred. (See § 340.6, subd. (a); Grisham v. Philip Morris U.S.A., Inc. (2007) 40 Cal.4th 623, 638.) Consequently, the one-year limitations period, not the four-year period, applies.
Finally, in a nonsensical argument concerning equitable tolling and the relation back doctrine, Guido points out that Anderson & Anderson filed an action against him on October 15, 2009, seeking to recover legal fees and related costs incurred in representing him in the Associated Receivables cases. The complaint was never served and was dismissed on March 23, 2010, after Guido filed this malpractice suit. As Guido sees it, the period between October 15, 2009, and March 23, 2010, tolled the time within which he had to file this action. But the deadline for filing his legal malpractice suit had expired years before the Anderson firm filed its own action in 2009. Plainly, acts subsequent to the expiration of the statute of limitations do not toll the running of the limitations period.
Accordingly, the trial court properly sustained the demurrer without leave to amend and dismissed the case.
III
DISPOSITION
The order is affirmed.
NOT TO BE PUBLISHED.
MALLANO, P. J. We concur:
CHANEY, J.
JOHNSON, J.