Opinion
G044386 Super. Ct. No. 30-2009-00120437
11-01-2011
DEBORAH RESTAINO, Plaintiff and Appellant, v. ROBERT P. DES JARDINS et al., Defendants and Respondents.
Law Offices of J.R. Seashore, J.R. Seashore; Esner, Chang & Boyer and Stuart B. Esner for Plaintiff and Appellant. Nemecek & Cole, Jonathan B. Cole, Mark Schaeffer and Robert Scott Silver for Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
OPINION
Appeal from a judgment of the Superior Court of Orange County, Geoffrey T. Glass, Judge. Affirmed.
Law Offices of J.R. Seashore, J.R. Seashore; Esner, Chang & Boyer and Stuart B. Esner for Plaintiff and Appellant.
Nemecek & Cole, Jonathan B. Cole, Mark Schaeffer and Robert Scott Silver for Defendants and Respondents.
Plaintiff Deborah Restaino sued defendants Robert P. Des Jardins, Robert P. Des Jardins, Inc., Des Jardins & Haapala, ALC, and Michael J. Haapala for legal malpractice arising from their representation of her in a marital dissolution proceeding. The superior court entered judgment for defendants after sustaining their demurrer to the second amended complaint without leave to amend on the ground plaintiff failed to timely file the lawsuit. (Code Civ. Proc., § 340.6; all further statutory references are to the Code of Civil Procedure.) Plaintiff appeals, arguing the trial court erred by relying on the allegations of her prior pleadings to conclude she suffered actual injury from defendants' purported professional errors more than one year before filing this action. We shall affirm the judgment.
FACTS
On March 23, 2009, plaintiff filed her original complaint against defendants. It alleged she retained them to represent her in a pending marital dissolution action. She informed defendants of the length of the marriage, her husband's professional status and income, her medical condition and limited earning capacity, plus her need for financial security. Defendants' representation ended on October 12, 2007 when plaintiff substituted in new counsel. While defendants represented plaintiff, she allegedly paid them over $300,000 "in legal fees and costs."
According to the complaint, "[d]uring . . . representation of [p]laintiff," defendants committed several professional errors that caused her injury: (1) Plaintiff asked that a community "E-Trade account" be placed "in a trust," but when defendants sought access to the account, the "motion was deemed frivolous and [she] was sanctioned"; (2) defendants failed to promptly obtain financial information from plaintiff's husband and his law firm or trace his use of community assets, thereby allowing him to "obfuscate[] his income," "reduce[] [p]laintiff's financial assets" and cause the imposition of further "monetar[]y sanction[s]" for untimely and procedurally defective motions; (3) plaintiff hired a forensic accountant, paying him over $80,000, but defendants failed to provide the accountant with the "required additional information to perform his function" and "discovery was cut off" before they ceased representing her; (4) "[d]efendants insisted . . . [p]laintiff agree to the release" of disbursements from her husband's law firm, then held "in an interest bearing trust account," that the family court later determined to be the husband's separate property; (5) "[d]efendants filed unsuccessful pleadings that cost [p]laintiff . . . attorney[] fees and costs [and] exposed her to further . . . monetary sanctions"; and (6) defendants committed numerous errors in billing for their work, "charged unconscionable fees," and "repeatedly refused" plaintiff's requests they seek reimbursement from her husband.
Defendants demurred to the original complaint, primarily arguing it was untimely. Before the hearing, plaintiff voluntarily filed a first amended complaint.
The amended complaint alleged defendants "breached their standard of care" by failing to: (1) "secure, protect and have supervised the . . . E-Trade account"; (2) "obtain financial information from [p]laintiff's spouse and [his] law firm in order to appraise the value of the community interest in [the] practice"; (3) "obtain necessary financial information regarding [the] spouse's misuse, sequestering and diversion of community assets"; (4) "conduct necessary and proper discovery"; (5) "make use of [a] forensic accountant wasting [over] $80,000 . . . in fees"; (6) "maintain funds in an interest bearing account . . . prior to the [family] court's . . . characterization of the funds"; and (7) "make timely and necessary requests for attorney[] fees from [p]laintiff's spouse." The amended complaint also alleged defendants "billed [her] for services not rendered . . . ." As a result, plaintiff claimed she suffered "economic loss, including past and future earnings, community interest, fair and equitable distribution of community assets, [and] incurr[ed] unnecessary legal expenses and monetary sanctions," all of which "were not made known to [her] until the [family c]ourt issued its [s]tatement of [d]ecision" in January 2009, and subsequently entered a judgment based on its findings.
Defendants again demurred, arguing the first amended complaint was "barred by the statute of limitations codified in . . . § 340.6." This time the trial court sustained the demurrer, but granted leave to amend.
Plaintiff filed a second amended complaint stating causes of action for negligence, breach of fiduciary duty, and breach of contract. It alleged defendants failed to: (1) "secure, protect and have supervised the community property interest in e-trade accounts, various financial accounts and retirement plans"; (2) "obtain financial information from plaintiff's spouse and [his] law firm to adequately appraise the value of the community interest in [the firm]"; (3) "obtain necessary and sufficient financial information regarding [her] spouse's misuse, sequestering and diversion of community assets to his separate accounts"; and (4) "make necessary and timely requests for attorney fees from plaintiff's spouse." In addition, the second amended complaint repeated the allegation defendants' omissions resulted "the expenditure of forensic accounting fees" exceeding $80,000 "that subsequently could not be used [at] trial."
Based on these "errors," plaintiff claimed she suffered "economic loss," that was not ascertainable when she terminated defendants because: (1) "[t]he community property in the e-trade accounts, financial accounts and retirement plans were subsequently referred to a special master" and have not yet been determined; (2) "[t]he failure to obtain adequate financial information about the community interest in the spouse's law firm" and his "misuse, sequestering, [and] diversion of community assets . . . caused diminishment of plaintiff's interest in the community property that was determined" by the family court "after . . . trial"; and (3) "[o]ther damages caused . . . by [d]efendants' acts, omissions, and conduct in connection with the remaining, outstanding issues of community property distribution . . . have not been determined [or] are not known at this time."
Defendants again demurred based on section 340.6 and requested the court take judicial notice of plaintiff's prior pleadings. They argued plaintiff could not merely "omit[] without explanation" allegations contained in her prior pleadings that would "render[ the second amended complaint] vulnerable to demurrer . . . ." "[W]hen read in conjunction with the original [c]omplaint and [f]irst [a]mended [c]omplaint," the second amended complaint "makes plain that, more than one year before plaintiff commenced this action, she (1) was aware of the facts constituting the allegedly wrongful acts or omissions; (2) sustained actual injury, and (3) was no longer represented by" (bold omitted) defendants.
The trial court agreed with defendants. "The complaint and the amended complaint . . . clearly state that [plaintiff] knew of the negligence of the defendants during their representation of her, that she suffered substantial damage during the representation, and that she knew of the damage," and thus "the statute of limitations [began] when the representation end[ed]." It then sustained the demurrer without leave to amend and entered judgment for defendants.
DISCUSSION
1. Standard of Review
"A statute of limitations defense may be raised by demurrer . . . ." (Doyle v. Fenster (1996) 47 Cal.App.4th 1701, 1707.) But to succeed, "the defect must clearly and affirmatively appear on the face of the complaint . . . . [Citation.]" (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403.) Consequently, "[a] demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.]" (Ibid.)
"On appeal from a judgment after an order sustaining a demurrer, we review the order de novo, exercising our independent judgment on whether the complaint states a cause of action as a matter of law. [Citation.]" (McMahon v. Craig (2009) 176 Cal.App.4th 1502, 1508-1509.) "„We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.' [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff. [Citation.]" (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
2. Section 340.6
"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 . . . . Except for a claim for which the plaintiff is required to establish his or her factual innocence, in 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." (§ 340.6, subd. (a).)
Plaintiff filed her initial complaint more than 17 months after defendants ceased representing her in the marital dissolution action. She has not alleged any facts supporting application of the delayed discovery rule to this case. Although the second amended complaint contains causes of action for negligence, breach of fiduciary duty, and breach of contract, each count is based on defendants' allegedly "wrongful act[s] or omission[s] . . . arising in the performance of professional services . . . ." (§ 340.6, subd. (a).) "[W]hether the theory of liability is based on the breach of an oral or written contract, a tort, or a breach of a fiduciary duty, [section 340.6's] statutory period applies. [Citation.]" (Levin v. Graham & James (1995) 37 Cal.App.4th 798, 805.)
Consequently, the sole basis for extending the statute of limitations beyond one year after plaintiff terminated defendants' legal representation would be that she did not immediately suffer actual injury. "The test for actual injury under section 340.6 . . . is whether the plaintiff has sustained any damages compensable in an action, other than one for actual fraud, against an attorney for a wrongful act or omission arising in the performance of professional services." (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 751.) While "„[t]he 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'" (id. at p. 750), "[a]ny appreciable and actual harm flowing from the attorney's negligent conduct establishes a cause of action upon which the client may sue' [citation]" (ibid.). Thus, "„[t]he cause of action [can arise[] . . . before the client sustains all, or even the greater part, of the damages occasioned by [the] attorney's negligence. [Citations.]'" (Ibid.)
Generally, "determining when actual injury occurred is predominantly a factual inquiry. [Citation.]" (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison, supra, 18 Cal.4th at p. 751.) But "[w]hen the material facts are undisputed, the trial court can resolve the matter as a question of law . . . ." (Ibid.)
3. Analysis
Plaintiff argues the determination of "'actual injury'" caused by an attorney's professional errors is governed by the nature of the malpractice claim and "[i]n this case, unlike many of the malpractice actions . . ., there are allegations of a variety of wrongful acts each of which resulted in a very discrete harm to" her. She contends she is "entitled to amend her complaint to eliminate those claims where an 'actual injury' supposedly occurred more than one year before [the] action was filed and maintain those claims where the 'actual injury' did not even arguably occur until a later point." Thus, plaintiff asserts "[e]mploying a claim-by-claim analysis of the [s]econd [a]mended [c]omplaint it becomes evident that an actual injury was not suffered as to any of the claims alleged in that pleading more than one year before this action was filed."
Defendants argue plaintiff had a single "primary right—to competent legal representation . . . in her marital dissolution action" and could not "divvy up her case . . . into multiple claims for each alleged wrongdoing . . . ." Furthermore, they repeat the claim the allegations of the original and first amended complaints reflect "each of the actions or omissions" alleged in the second amended complaint "immediately caused" injury to plaintiff.
Plaintiff had only one primary right, but we agree section 340.6's application is determined by whether all of defendants' alleged professional errors resulted in actual injury more than one year before plaintiff filed suit. A "[p]laintiff[ may] allege[ her] attorneys breached" her "right to be free of negligence . . . in connection with the litigation for which they were retained" "in multiple ways, but it nevertheless remain[s] a single right." (Pointe San Diego Residential Community, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 274-275.) However, "to prevail on a demurrer based on the statute of limitations, a defendant must establish the entire cause of action is untimely. . . . Thus, where a plaintiff sues a defendant for legal malpractice alleging several distinct acts of malpractice with respect to a single representation, a demurrer is properly granted on the basis of the statute of limitations only if each alleged act of malpractice is time barred. [Citation.]" (Id. at p. 274.)
Nonetheless, defendants are correct in arguing we may consider the allegations of plaintiff's prior pleadings in determining the sufficiency of her second amended complaint. Although, as noted, it is "well established that, when reviewing a judgment entered following the sustaining of a demurrer without leave to amend, the appellate court must assume the truth of the factual allegations of the complaint[,] . . . an exception exists where a party files an amended complaint and seeks to avoid the defects of a prior complaint either by omitting the facts that rendered the complaint defective or by pleading facts inconsistent with the allegations of prior pleadings. [Citations.] In these circumstances, the policy against sham pleading permits the court to take judicial notice of the prior pleadings and requires that the pleader explain the inconsistency. If he [or she] fails to do so the court may disregard the inconsistent allegations and read into the amended complaint the allegations of the superseded complaint. [Citations.]" (Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 383-384; see also Hendy v. Losse (1991) 54 Cal.3d 723, 742-743; Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 946 ["'A pleader may not attempt to breathe life into a complaint by omitting relevant facts which made his previous complaint defective'"].)
Here, the second amended complaint rephrased the allegations of defendants' professional errors and claimed those acts and omissions resulted in only future harm. But a review of the earlier pleadings reflects plaintiff previously alleged each cited professional misstep caused her some immediate actual injury before she discharged defendants.
Plaintiff's second amended complaint alleges defendants "failed to secure, protect and have supervised the community property interest in e-trade accounts, various financial accounts and retirement plans," and since these matters "were subsequently referred to a special master," her resulting "damages . . . have not been ascertained." But the original complaint alleged that, at plaintiff's request, defendants sought to have the "E-Trade account [placed] in a trust" and their effort to do so resulted in the family court imposing sanctions on her. The original complaint also alleged defendants failed to timely "file[] a motion to compel financial records" from plaintiff's spouse, which again resulted in her being "monetarily sanctioned."
Next, the second amended complaint alleges defendants "failed to obtain financial information from [her] spouse and [his] law firm to adequately appraise the value of the community interest in [the firm]" or concerning her "spouse's misuse, sequestering and diversion of community assets to his separate accounts," which caused "diminishment of plaintiff's interested in the community property" only "after . . . trial." In addition, "the failure to obtain sufficient, adequate and proper financial information caused the expenditure of forensic accounting fees" exceeding $80,000 "that subsequently could not be used [at] trial."
But the original complaint alleged defendants' failure to "obtain information concerning the source and tracing of . . . funds" in husband's possession "reduced [p]laintiff's financial assets," and that when defendants belatedly sought to compel disclosure or exclude the admission of evidence her spouse had not previously produced, she again "was monetarily sanctioned." Plaintiff's earlier pleadings also acknowledged she suffered immediate injury from defendants' alleged failure to provide her forensic expert with the information he needed while they represented her because discovery was cut off before she terminated their representation of her.
Finally, the second amended complaint alleges "[d]efendants failed to make necessary and timely requests for attorney fees from plaintiff's spouse" and that "[o]ther damages caused . . . by [d]efendants' acts, omissions, and conduct . . . have not been determined [or] are not known at this time." Again, these allegations are contradicted by the earlier pleadings. Both the original and first amended complaint alleged plaintiff "paid [d]efendants" over $300,000 as attorney fees and costs during their representation of her and, although she asked them to "request attorney[]s fees from her husband, . . . they repeatedly refused to do so."
Thus, while the second amended complaint alleges the extent of plaintiff's injuries were not realized until after the family court issued its findings characterizing and valuing the parties assets and entered judgment in that action, her earlier pleadings acknowledged she immediately suffered actual injury during defendants' representation of her. Under Jordache, "[t]he inquiry" as to whether a plaintiff has suffered actual injury from an attorney's professional errors "necessarily is more qualitative than quantitative because the fact of damage, rather than the amount, is the critical factor," and "once the plaintiff suffers actual harm, neither difficulty in proving damages nor uncertainty as to their amount tolls the limitations period. [Citation.]" (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison, supra, 18 Cal.4th at p. 752.)
Furthermore, the second amended complaint fails to explain the omissions and inconsistencies between it and the prior pleadings. Consequently, the trial court properly relied on the allegations of the earlier complaints to conclude plaintiff suffered actual injury before defendants' representation of her ended.
Plaintiff relies on Baltins v. James (1995) 36 Cal.App.4th 1193, disapproved on another ground in Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison, supra, 18 Cal.4th at p. 761, fn. 9, to oppose consideration of the allegations in her earlier pleadings. That case is distinguishable because the initial malpractice complaint alleged the defendant had been negligent on several grounds, including his advice about managing property awarded to the husband in a marital dissolution judgment during an appeal from the order vacating that judgment. The trial court sustained a demurrer to the original complaint and plaintiffs filed an amended complaint relying only on the defendant's negligent advice as a basis for relief. Again the trial court sustained the demurrer and dismissed the action.
The Court of Appeal reversed. It concluded the defendant's negligent advice did not cause the plaintiffs any actual injury until the family court subsequently divided the community estate after the appellate court upheld the order setting aside the original judgment. It also rejected the defendant's attempt to rely on the original complaint's allegations to support a finding the action was time-barred. "[T]he Baltinses have not omitted facts without explanation or pleaded inconsistent facts to avoid the statute of limitations. Instead, they have dropped their time-barred claims for negligence related to the 1984 orders" and "reasserted only the claims that James negligently advised them about the prior appeal's effect . . . . The allegations in the amended complaint are consistent with those in the original complaint. . . . [T]he amended complaint alleges only the negligent advice and the damages related to that advice. Consequently, we do not concern ourselves with the superseded negligence claims." (Baltins v. James, supra, 36 Cal.App.4th at pp. 1205-1206.)
Here, the second amended complaint rephrased the acts and omissions of professional negligence previously alleged and merely asserted delay in the accrual of harm resulting from them. But the alleged professional errors are the same as those asserted in the prior pleadings where plaintiff acknowledged she suffered immediate actual harm while defendants still represented her. Plaintiff contends she could file an amended complaint that would "separately plead her claims as different causes of action," but she does not suggest how doing so would overcome the timeliness defect appearing on the face of the pleadings. Therefore, the trial court properly sustained defendants' demurrer to the second amended complaint without leave to amend.
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs on appeal.
RYLAARSDAM, ACTING P. J.
WE CONCUR:
O'LEARY, J.
IKOLA, J.