Foxen v. Carpenter
6 Cal. App. 5th 284
| Cal. Ct. App. | 2016Background
- Foxen hired Carpenter, Zuckerman & Rowley to handle a 2009 personal-injury case under a written one-page contingency fee agreement (40% fee) and a lien on recovery; the agreement did not comply with Bus. & Prof. Code § 6147.
- The PI case went to trial in January 2011; plaintiff rejected a $5M offer, jury awarded $2.3M, and subsequent settlement of plaintiff’s and spouse’s claims totaled $3M (written agreement dated Feb. 25, 2011).
- Settlement checks were delivered to the law firm; defendants disbursed fees and advanced costs from the settlement (firm took $840,000; Rowley $360,000) and produced a March/April 2011 proposed disbursement showing large costs and net recovery to client.
- Foxen later discovered allegedly inflated/fraudulent invoices and improper charges (e.g., expert fees, EDS lien, case-management charges); she alleges defendants wrongfully withheld/converted approximately $1.18M.
- Foxen filed suit March 25, 2015 asserting 10 causes of action (contract, conversion, UCL, accounting, declaratory relief, money had and received, breach of implied covenant, breach of fiduciary duty, fraud, etc.). Trial court sustained defendants’ demurrer as time‑barred under CCP § 340.6(a); Foxen did not amend and appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CCP § 340.6(a) (1‑year discovery/4‑year ultimate bar for attorney‑related claims) bars Foxen’s contract‑based claims (breach of contract, declaratory relief, money had and received, breach of implied covenant) | Foxen: claims are ordinary contract claims under CCP § 337 (four‑year) because they are about nonprofessional, garden‑variety breaches (withholding beyond contract entitlement) rather than attorney malpractice or professional obligations | Defendants: claims arise from attorney professional obligations and handling/disbursement of client trust funds, so § 340.6(a) is the controlling, more specific statute | Held: § 340.6(a) applies because plaintiff must prove breach of professional obligations (fiduciary/nonlegal services tied to practice of law) to prevail; claims were discovered by Dec 2011 and are time‑barred. |
| Whether Foxen’s accounting claim is governed by a longer statute or is exempt from § 340.6(a) | Foxen: accounting is ancillary to contract and thus governed by four‑year statute (CCP § 337) | Defendants: accounting alleges claims rooted in attorney professional obligations and thus § 340.6(a) applies | Held: argument inadequately raised and, on the merits, accounting is time‑barred for same reasons as contract claims. |
| Whether conversion and fraud claims avoid § 340.6(a) and are timely (conversion under CCP § 338(c) three‑year; fraud under CCP § 338(d) three‑year) | Foxen: conversion is like Lee v. Hanley — an identifiable sum withheld and thus governed by conversion statute with later accrual (she alleges continued misrepresentations through 2013) so suit filed in 2015 is timely | Defendants: conversion arises from conduct tied to professional obligations; Foxen expressly alleged discovery by Dec 2011, so accrual occurred then and three‑year period expired before filing | Held: conversion/fraud are time‑barred. Lee distinguished — here pleadings and exhibits show Foxen discovered the alleged wrongful charges by Dec 2011; later allegations of continued misrepresentations do not negate earlier discovery. |
| Whether UCL claim (Bus. & Prof. Code § 17200) is governed by § 340.6(a) or a different limitations period | Foxen: UCL claim governed by the four‑year period in B&P Code § 17208 (first raised on reply) | Defendants: § 340.6(a) is the more specific statute for claims against attorneys arising from professional services | Held: § 340.6(a) controls as the more specific limitations provision; UCL claim is time‑barred. |
Key Cases Cited
- Aryeh v. Canon Business Solutions, Inc., 55 Cal.4th 1185 (accept demurrer‑stage pleading standard; de novo review)
- Schifando v. City of Los Angeles, 31 Cal.4th 1074 (pleading‑stage treatment of factual allegations and reasonable inferences)
- Lee v. Hanley, 61 Cal.4th 1225 (section 340.6(a) broadly covers claims that necessarily depend on proof of breach of attorney professional obligations; conversion may survive at pleading stage if it alleges simple theft of an identifiable fund)
- Barnett v. Fireman’s Fund Ins. Co., 90 Cal.App.4th 500 (treatment of exhibits attached to complaints over conflicting allegations)
- Aubry v. Tri‑City Hospital Dist., 2 Cal.4th 962 (courts do not assume truth of legal conclusions)
- Prakashpalan v. Engstrom, Lipscomb & Lack, 223 Cal.App.4th 1105 (actual‑fraud claims against attorneys governed by three‑year statute)
- WA Southwest 2, LLC v. First American Title Ins. Co., 240 Cal.App.4th 148 (issues forfeited when not raised in opening brief)
- Reynolds v. Bement, 36 Cal.4th 1075 (plaintiff who declines to amend after leave forfeits later amendment claim)