Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court No. BC380567 of Los Angeles County, Ramona G. See, Judge.
Ernest J. Franceschi, Jr., a Law Corporation, and Ernest J. Franceschi, Jr., for Plaintiff and Appellant.
Gibson, Dunn & Crutcher, Joel A. Feuer, Rachel N. Perahia and Andrew J. Demko for Defendants and Respondents.
WILLHITE, Acting P. J.
INTRODUCTION
Plaintiff and appellant Francella Petaccia (Petaccia) sued defendants and respondents Andrew Bogen (Bogen) and the law firm Gibson, Dunn & Crutcher LLP (collectively, defendants), alleging claims for legal malpractice and breach of fiduciary duty. Petaccia’s lawsuit is based on Bogen’s role in drafting a settlement agreement (Settlement Agreement) between Petaccia and Michael Joly (Joly) that purported to resolve a dispute regarding the disposition of property belonging to Petaccia’s deceased husband, Perry Petaccia (Perry). Defendants moved for summary judgment on the ground that Petaccia’s claims were barred by the one-year statute of limitations for legal malpractice actions. Petaccia opposed the motion, arguing that the statute of limitations was tolled because (1) she did not suffer “actual injury” until Joly sued her to enforce the Settlement Agreement or (2) defendants had continued to represent her after the Settlement Agreement was signed. The trial court granted summary judgment, concluding that Petaccia failed to present evidence sufficient to create a triable issue as to the tolling arguments. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Petaccia brought the instant suit against defendants on November 13, 2007, alleging claims for professional negligence and breach of fiduciary duty. Petaccia alleged that when Bogen drafted the Settlement Agreement, defendants engaged in a joint legal representation of Petaccia and Joly, despite a conflict of interest between them. She amended her complaint once, apparently in an attempt to plead facts that would establish that her action was not time-barred.
I. Defendants’ Summary Judgment Motion
Defendants moved for summary judgment, contending that Petaccia’s claims were barred by the one-year statute of limitations under Code of Civil Procedure section 340.6. As here relevant, evidence submitted in support of defendants’ summary judgment motion shows the following:
Defendants also moved for summary judgment on the ground that defendants were absolutely immune from suit based on quasi-judicial immunity because Bogen was acting as a mediator. The trial court did not reach this issue, and we similarly need not consider it given our affirmance of the grant of summary judgment on statute of limitations grounds.
Petaccia’s husband, Perry, owned several drug and alcohol rehabilitation homes in southern California, including the New Life Sober Living House (New Life), located at 2803, 2809 and 2815 Artesia Boulevard in Torrance. In 2002, Michael Joly began managing the rehabilitation businesses.
In 2005, Perry was diagnosed with liver failure. In January 2006, Perry traveled to Shanghai, China to get a liver transplant, but he died after the surgery. According to Petaccia, after Perry’s death, Joly advised her that Perry had devised a will, leaving Joly $100,000 in cash, the business interests in the rehabilitation facilities, and a 25 percent interest in the property at 2803 Artesia Boulevard.
Petaccia later would contend that Perry was on heavy doses of morphine at the time he purportedly executed the will on December 9, 2005, and that Perry had subsequently told her while in Shanghai that he did not have a will. She alleged that Joly tricked Perry into signing the will, and duped her and her mother into signing the will as witnesses, when they believed they were executing a power of attorney permitting Petaccia’s mother to make decisions about the children while Perry and Petaccia were in China awaiting the liver transplant.
Petaccia filed a petition for probate, stating that Perry had died intestate and requesting that she be appointed the administrator of the estate. Petaccia was represented by independent counsel in that probate proceeding. Joly, represented by his own counsel, subsequently filed a petition for probate of the purported will executed by Perry, and requested that he, not Petaccia, be designated the administrator of the estate.
While the matter of Perry’s estate was pending before the probate court, Petaccia and Joly determined they would try to resolve the dispute between them informally. They turned to Bogen, a long-time friend of Perry’s whom they both knew and who was a lawyer at Gibson, Dunn & Crutcher. Petaccia trusted Bogen and viewed him as neutral in the matter. Bogen prepared a Settlement Agreement purporting to resolve the dispute between Petaccia and Joly and told Petaccia that the agreement was fair and she should sign it. Although the Settlement Agreement bore the date of May 1, 2006, Petaccia and Joly executed it in April 2006.
In signing the Settlement Agreement, Petaccia relinquished any interest in the New Life rehabilitation program that had been owned by Perry. The agreement provided that Joly would take over the business and retain all the amounts received by New Life residents, except that he would pay Petaccia rent for the property at 2803, 2809 and 2815 Artesia Boulevard in the amount of $13,000 per month. In addition, the agreement reacknowledged the existing lease to Joly of Perry’s property at 743 South Cloverdale Avenue, where Joly operated the Miracle House rehabilitation program. The agreement also provided that Joly would receive $100,000 in cash at such time as Petaccia completed the first sale or refinancing of any of the real properties in Perry’s estate. Finally, the agreement gave Joly a 25 percent interest in the 2803 Artesia Boulevard property, and a separate Co-Tenancy Agreement executed at the same time as the Settlement Agreement memorialized the arrangement with respect to this property.
At the time Petaccia signed the Settlement Agreement, she believed that the terms providing for rental payments of $13,000 a month for the Artesia Boulevard properties were unfair to her, and that the rent Joly paid for the Miracle House property should have been increased under the Settlement Agreement. Beginning in May 2006, every month Petaccia received rent for the three properties at Artesia Boulevard pursuant to the terms of the Settlement Agreement.
On November 2, 2006, Joly’s attorney sent a letter to Petaccia requesting that she execute a quitclaim deed memorializing Joly’s 25 percent interest in the property at 2803 Artesia Boulevard, as required by the Co-Tenancy Agreement. Petaccia hired a lawyer after receiving the letter. She did not call Bogen regarding the letter, and had no contact at all with Bogen after she signed the Settlement Agreement except on one occasion, when she called to ask him to recommend a financial advisor to provide general financial advice. She testified that she called Bogen because he was a friend and she thought he might know someone. In the conversation, she also complained about the amount of rent that she was receiving as a result of the Settlement Agreement. She could not remember whether this conversation took place in 2006 or 2007.
In early January 2007, Joly sued Petaccia seeking damages and other relief based on the Settlement Agreement. On January 23, 2007, Petaccia sued Joly, seeking to rescind the Settlement Agreement.
II. The Opposition
In her opposition to the summary judgment motion, Petaccia did not dispute any of the above facts. While she alleged that Petaccia sustained actual injury as a result of defendants’ alleged misconduct only when Joly sued her on January 9, 2007 to enforce the Settlement Agreement, she submitted no evidence with respect to the time at which she suffered actual damage, and no evidence that Bogen continued to represent her after the execution of the Settlement Agreement. Instead, Petaccia contended that defendants failed to satisfy their initial burden to show she suffered actual injury more than one year before filing suit or to show that her alleged attorney-client relationship with defendants ended more than one year before she brought the lawsuit against them.
III. Ruling
In ruling on defendants’ summary judgment motion, the trial court found that defendants had met their initial burden to show that Petaccia had sustained actual injury more than one year before the suit was filed, and that any attorney-client relationship had ended more than a year before. It found that Petaccia had presented no credible evidence to support her contentions that the statute of limitations was tolled. The court granted defendants’ motion for summary judgment and entered judgment in their favor, from which judgment Petaccia has timely appealed.
DISCUSSION
I. Summary Judgment Standards
“We review the trial court’s summary judgment rulings de novo, viewing the evidence in a light favorable to the plaintiff as the losing party, liberally construing the plaintiff’s evidentiary submission while strictly scrutinizing the defendant’s own showing, and resolving any evidentiary doubts or ambiguities in the plaintiff’s favor.” (Weber v. John Crane, Inc. (2006) 143 Cal.App.4th 1433, 1438.)
A motion for summary judgment must be granted if all of the papers submitted show “there is no triable issue as to any material fact and... the moving party is entitled to a judgment as a matter of law. In determining whether the papers show that there is no triable issue as to any material fact the court shall consider all of the evidence set forth in the papers, ... and all inferences reasonably deducible from the evidence.” (Code Civ. Proc., § 437c, subd. (c).)
“A defendant moving for summary judgment based on an affirmative defense has the initial burden to show that undisputed facts support each element of the affirmative defense.” (Vahle v. Barwick (2001) 93 Cal.App.4th 1323, 1328.) Once the defendant has met that burden, the burden shifts to the plaintiff to show a triable issue of one or more material facts exists as to an element of that affirmative defense. (Code Civ. Proc., § 437c, subd. (p)(2); Jessen v. Mentor Corp. (2008) 158 Cal.App.4th 1480, 1484.)
Questions concerning whether an action is barred by the applicable statute of limitations are typically questions of fact. (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1112; In re Marriage of Klug (2005) 130 Cal.App.4th 1389, 1400.) However, “[w]hen the material facts are undisputed, the trial court can resolve the matter as a question of law in conformity with summary judgment principles.” Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 751 (Jordache).)
II. Undisputed Facts Demonstrate That The Statute of Limitations Bars Petaccia’s Claims
Code of Civil Procedure section 340.6 sets forth the statute of limitations applicable to Petaccia’s claims, providing, in relevant part: “(a) 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.... [T]he 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.” (Code Civ. Proc., § 340.6, subd. (a).) Petaccia asserts that her claims are timely under either the “actual injury” or the “continuous representation” tolling provisions.
A. Actual Injury
The one-year limitations period under section 340.6 is tolled until the plaintiff suffers actual injury. (Code Civ. Proc., § 340.6, subd. (a); Jordache, supra, 18 Cal.4th at p. 751.) “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.” (Jordache, supra, 18 Cal.4th at p. 743.) “[A]ctual injury may consist of impairment or diminution... of a right or remedy.” (Id. at p. 750.) “As determining actual injury ‘require[s] examination of the particular facts of each case in light of the alleged wrongful act or omission, ’ there are no bright line rules regarding the occurrence of actual injury. [Citation.]” (Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 567 (Jocer).)
Speculative harm or the threat of future harm do not amount to actual injury. (Jordache, supra, 18 Cal.4th at p. 743.) However, “[a]n 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.” (Id. at p. 754.)
Defendants’ first theory is that Petaccia first suffered actual injury when she entered into the Settlement Agreement in May 2006. Defendants cite Hensley v. Caietti (1993) 13 Cal.App.4th 1165 (Hensley) for the general proposition that in a suit alleging negligent advice with respect to a contract, actual injury occurs at the time the client executes the agreement. In Hensley, the plaintiff contended that her divorce attorney committed malpractice by inducing her to execute an unfavorable marital settlement agreement. (Id. at pp. 1167-1168.) The plaintiff argued that she sustained actual injury when the judgment in the divorce action became effective, not when she signed the settlement agreement. (Id. at pp. 1173-1174.) The Hensley court disagreed: “Negligent legal advice which induces a client to enter into a binding contract resolving marital property and support issues results in actual injury at the point of entry. Entering a contract is a jural act which alters the legal relations of the parties and creates an obligation. [Citation.] The tortious inducement to enter into a contract which imposes noncontingent obligations is actionable at the time of contracting.” (Id. at p. 1175; see also Pompilio v. Kosmo, Cho & Brown (1995) 39 Cal.App.4th 1324, 1329 [plaintiffs in malpractice suit suffered actual injury when they signed settlement agreement in underlying action].)
Petaccia contends that it is inconceivable that entering the Settlement Agreement triggered the statute of limitations in this case because, apparently unbeknownst to the parties at the time they executed the agreement, probate court approval of the Settlement Agreement was required by law. Petaccia cites to a string of Probate Code provisions that appear to require that the Settlement Agreement be approved by the probate court, and defendants do not attempt to argue otherwise. For instance, Probate Code section 9833 provides that “[a]uthorization by order of court is required for a compromise or settlement of a matter when the transaction requires the transfer or encumbrance of property of the estate... in an amount or value in excess of twenty-five thousand dollars.” (Prob. Code, § 9833.) Section 9832 similarly provides that court authorization is generally required for a settlement that affects title to or an interest in real property. (Prob. Code, § 9832.) Given that the Settlement Agreement provides for a $100,000 cash payment, a substantial transfer of Perry’s business interests, and the transfer of a 25 percent interest in the estate property located at 2803 Artesia Boulevard, the parties should have sought its approval by the court overseeing the then-pending probate proceedings. Petaccia contends that the Settlement Agreement was legally inoperative until such time as it was approved by the probate court.
Arguably, Petaccia did not suffer actual injury merely through the act of entering a settlement agreement that has no force unless and until approved by the probate court. In that sense, Hensley, supra, is distinguishable, because there the settlement agreement was effective and enforceable immediately upon its execution, and needed no further approval of a court. (Hensley, supra, 13 Cal.App.4th at p. 1175.) Defendants suggest that the fact that the Settlement Agreement may have required approval of the probate court did not render it void, but rather only voidable, and thus they contend it was legally enforceable until such time as it was challenged. However, we need not resolve these issues, because we agree with defendants’ alternative theory: Petaccia sustained actual injury more than one year before she filed suit when she began receiving allegedly unfair rental payments pursuant to the terms of the Settlement Agreement.
Petaccia admitted at her deposition that as of April 2006, she believed that the rental amounts that Joly would pay her under the Settlement Agreement were not fair, and that she began receiving rent in May 2006 in the amounts proscribed by the agreement. In interrogatory responses, she alleged that the Settlement Agreement “significantly, if not completely, favors Joly” by transferring to him assets to which he had no lawful right, including extensive real property interests, a cash payment, and “outright ownership of the decedent’s rehab businesses, despite that Joly paid no consideration therefor.” Asked to describe how she had suffered damages as a result of defendants’ conduct, Petaccia responded that the Settlement Agreement had caused “great financial harm” to her in part because she “has been and remains deprived of income and other revenues from her late husband’s rehab businesses and property holdings.” Given Petaccia’s allegations of financial harm as a result of inadequate rental payments she began receiving in May 2006 after signing the Settlement Agreement, we reject Petaccia’s contention that defendants presented insufficient evidence regarding the inadequacy of such payments so as to shift the burden of summary judgment to her.
We note the inconsistency between Petaccia’s allegation on the one hand that she is entitled to recover damages because she suffered “great financial harm” as a result of the provisions of the Settlement Agreement, and her contention on the other hand that entering the legally inoperative agreement did not cause her any “actual injury” for purposes of the statute of limitations.
Nor is the determination of when Petaccia sustained actual injury affected by the fact that the probate court eventually could have refused to approve the Settlement Agreement and potentially ordered the parties restored to their original positions. It is well-established that “a party’s alteration of its legal position in reliance on its counsel can constitute actual injury even though the party may be able to avoid or reduce the injury through subsequent legal action.” (Apple Valley Unified School Dist. v. Vavrinek, Trine, Day & Co. (2002) 98 Cal.App.4th 934, 951; see Jordache, supra, 18 Cal.4th at p. 750 [“‘[W]hen malpractice results in the loss of a right, remedy, or interest... 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.’ [Citation.]”]; Hensley, supra, 13 Cal.App.4th at p. 1176; cf. Baltins v. James (1995) 36 Cal.App.4th 1193, 1207-1208 [execution of voidable quitclaim deed did not result in actual injury where it resulted only in potential for adverse consequences if challenged, but did not lead to any immediate injury].)
In sum, the trial court correctly concluded based on undisputed facts that Petaccia suffered actual injury more than one year before she filed her suit against defendants.
While Plaintiffs contend that the trial court mistakenly referred to non-existent November 2, 2006 deposition testimony by Petaccia in formulating its ruling, the trial court plainly was referring to Petaccia’s later deposition testimony discussing a November 2, 2006 letter received by Petaccia which again led her to conclude that the Settlement Agreement was unfair.
B. Continuous Attorney-Client Relationship
Defendants contend that even if one assumes that Bogen was acting as Petaccia’s counsel rather than as a neutral mediator at the time he drafted the Settlement Agreement, defendants did not continue afterwards to act as her counsel “regarding the specific subject matter in which the alleged wrongful act or omission occurred, ” such that the statute of limitations would be tolled until the representation ended. (Code Civ. Proc., § 340.6, subd. (a)(2).)
“Generally, continuous representation requires ‘an ongoing relationship and activities in furtherance of the relationship.’ [Citation.]” (Jocer, supra, 183 Cal.App.4th at p. 571.) “The attorney’s representation is completed when the agreed tasks or events have occurred, the client consents to termination, or (in the context of litigation) when a court grants an application by counsel for withdrawal.” (Truong v. Glasser (2009) 181 Cal.App.4th 102, 116 (Truong); see Lockton v. O’Rourke (2010) 184 Cal.App.4th 1051 [representation continues on specified subject matter “‘until the agreed tasks have been completed or events inherent in the representation have occurred’ [Citation.]”]; Gonzalez v. Kalu (2006) 140 Cal.App.4th 21, 28 (Gonzalez).) In assisting a client with “‘unsettled matters tangential to a case, ’” an attorney continues to represent the client. (Jocer, supra, 183 Cal.App.4th at p. 571.) However, the limitations period is not tolled by virtue of a continuing relationship between the attorney and client “involving only unrelated matters.” (Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509, 1528.)
“This ‘continuous representation’ rule was adopted in order to ‘avoid the disruption of an attorney-client relationship by a lawsuit while enabling the attorney to correct or minimize an apparent error, and to prevent an attorney from defeating a malpractice cause of action by continuing to represent the client until the statutory period has expired.’ [Citation.]” (Laird v. Blacker (1992) 2 Cal.4th 606, 618; see Truong, supra, 181 Cal.App.4th at p. 116.) “After a client has no reasonable expectation that the attorney will provide further legal services, however, the client is no longer hindered by a potential disruption of the attorney-client relationship and no longer relies on the attorney’s continuing representation, so the tolling should end.” (Gonzalez, supra, 140 Cal.App.4th at p. 31.)
Petaccia’s complaint alleges that defendants “provided legal services to [Petaccia] consisting of the drafting of a ‘Settlement Agreement’ ‘intended to completely settle’ litigation and disagreements between [Petaccia] and one Michael Joly.” The drafting of this agreement is, therefore, the “specific subject matter” of defendants’ allegedly negligent representation. (Code Civ. Proc., § 340.6, subd. (a)(2).)
We agree with the trial court that Petaccia failed to present any evidence suggesting that defendants continued to represent Petaccia after drafting the Settlement Agreement which was executed by Petaccia in April 2006. Nevertheless, we must address Petaccia’s contention that in moving for summary judgment, defendants failed to satisfy their initial burden of production by submitting affirmative evidence that defendants did not continue to represent Petaccia.
In moving for summary judgment, defendants alleged that, assuming defendants had represented Petaccia at the time Bogen drafted the Settlement Agreement, the representation ended more than a year before she filed her lawsuit. The execution of the final Settlement Agreement in April 2006 presumptively marked the end of the representation. (Truong, supra, 181 Cal.App.4th at p. 116 [“[t]he attorney’s representation is completed when the agreed tasks or events have occurred”].) Moreover, defendants submitted evidence demonstrating that Petaccia had contact with Bogen on only one occasion after signing the Settlement Agreement, when she reached out to him as a friend to ask him to recommend a financial advisor with respect to matters unrelated to the settlement. This contact did not suggest an on-going attorney-client relationship with respect to the Settlement Agreement.
It is true that in that same conversation, Petaccia also complained about the amount of rent that she was receiving as a result of the Settlement Agreement. Although she could not remember whether this telephone conversation took place in 2006 or 2007, even if we assume it occurred less than a year before Petaccia filed her lawsuit, this complaint alone is not sufficient to suggest an on-going attorney-client relationship with respect to the Settlement Agreement. Notably, Petaccia did not ask Bogen to give her any advice or to take any action with respect to the allegedly inadequate rental payments. The fact that she may have vented her frustration to Bogen, after having contacted him for an unrelated purpose, does not suggest that there was a continuous representation. It is also telling that when Petaccia received the November 2006 letter from Joly’s counsel asking her to execute a quitclaim deed consistent with the Co-Tenancy Agreement, she did not contact Bogen with respect to the matter, but rather hired another lawyer. All the available evidence demonstrates that the execution of the Settlement Agreement ended the alleged joint representation by Bogen.
Finally, we reject Petaccia’s unsupported contention that Petaccia reasonably believed that Bogen’s representation did not end with the drafting of the Settlement Agreement because probate court approval of the Settlement Agreement was still required. Petaccia presented no evidence that she, Bogen or Joly were even aware of the need for approval by the probate court. We will not presume that this unknown fact could have influenced anyone’s view of whether Bogen continued to represent Petaccia. The trial court properly concluded that the “continuous representation” tolling provision was inapplicable.
DISPOSITION
The judgment is affirmed. Appellants to bear costs on appeal.
We concur: MANELLA, J., SUZUKAWA, J.