Opinion
In the underlying action, appellants Jocer Enterprises, Inc. (Jocer), Spencer Graffam, and Jodi Graffam sued respondents Ernest Price and Ropers, Majeski, Kohn & Bentley (Ropers) for legal malpractice and indemnity. The trial court sustained respondents’ demurrer to the second amended complaint without leave to amend on the ground that appellants’ claims were time-barred under Code of Civil Procedure section 340.6. 1 We affirm in part and reverse in part.
RELEVANT FACTUAL AND PROCEDURAL BACKGROUND 2
Spencer and Jodi Graffam (Graffams) control Jocer, which employed Laura Attig as a sales representative. In November 2002, after Jocer discharged
In March 2006, Attig initiated an action for malicious prosecution against appellants, who were initially represented by Price. 3 In April 2006, on behalf of appellants, Price filed a motion under section 425.16—the law designed to curtail the filing of strategic lawsuits against public participation, often called the “anti-SLAPP law.” On May 31, 2006, the trial court denied the antiSLAPP motion.
On June 19, 2006, Attig requested an award of attorney fees and costs under the anti-SLAPP law (§ 425.16, subd. (c)(1)), which authorizes awards pursuant to section 128.5 when an anti-SLAPP motion “is frivolous or is solely intended to cause unnecessary delay.” On July 3, 2006, while the motion was pending, respondents were substituted out of the action as appellants’ counsel, and appellants’ new counsel filed an opposition to Attig’s request. On July 17, 2006, the trial court directed appellants to pay an award of $7,645 to Attig.
Appellants noticed an appeal from the ruling on the anti-SLAPP motion and the award. In June 2007, the Fourth Appellate District affirmed the denial of the motion, but reversed the award for want of an adequate explanation for imposing it. (Attig v. Graffam (June 21, 2007, E041019) [nonpub. opn.].) The appellate court remanded the matter to permit the trial court to explain its reasons for the award.
On July 9, 2007, appellants filed their original complaint in the underlying action against respondents for legal malpractice and indemnity. Later, on December 20, 2007, the trial court in Attig’s malicious prosecution action issued an award of $7,645 in fees and costs to Attig, accompanied by an explanation for the award.
On February 9, 2009, appellants filed their second amended complaint in the underlying action. The complaint asserted a claim for legal malpractice
DISCUSSION
Appellants contend that the trial court incorrectly sustained the demurrer to the second amended complaint without leave to amend. They challenge the ruling solely with respect to the legal malpractice claim and the indemnity claim concerning the fee award in the malicious prosecution action; according to appellants, their other indemnity claim is “moot” because “the malicious prosecution action resulted in a defense judgment.” As appellants have forfeited any contention of error regarding the latter claim
(Tiernan
v.
Trustees of Cal. State University & Colleges
(1982)
A. Standard of Review
“Because a demurrer both tests the legal sufficiency of the complaint and involves the trial court’s discretion, an appellate court emplоys two separate standards of review on appeal. [Citation.] . . . Appellate courts first review the
“When [so] reviewing a demurrer on appeal, appellate courts generally assume that all facts pleaded in the complaint are true. [Citation.]”
(Cantu v. Resolution Trust Corp., supra, 4
Cal.App.4th at p. 877, fn. omitted.) However, “[t]he complaint should be read as containing the judicially noticeable facts, ‘even when the pleading contains an express allegation to the contrary’ ”
(ibid.,
quoting
Chavez v. Times-Mirror Co.
(1921)
“Second, if a trial court sustains a demurrer without leave to amend, appellate courts determine whether or not the plaintiff could amend the complaint to state a cause of action. [Citation.]” (Cantu v. Resolution Trust Corp., supra, 4 Cal.App.4th at p. 879, fn. 9.)
B. Section 340.6
The principal issues before us concern the application of section 340.6, which сonstitutes the statute of limitations for legal malpractice claims.
(Laird v. Blacker
(1992)
As our Supreme Court has explained, the first tolling provision ordinarily plays a crucial role in triggering the one-year period: “The legislative scheme . . . toll[s] the limitations period if the plaintiff has not sustained any actual injury. [Citation.] As a result, 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)
Generally, “[t]he test for actual injury ... is whether the plaintiff has sustained any damages comрensable 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, supra,
Also pertinent to our analysis are the second and fourth tolling prоvisions. Regarding the second provision, our Supreme Court has stated: “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
C. Legal Malpractice Claim
We begin by exаmining the demurrer to the legal malpractice claim against Price. As explained below (see pt. C.2. & 3., post), although we conclude that the trial court erred in determining that the claim was time-barred, the sustaining of the demurrer may be affirmed on an alternative ground. We nonetheless conclude that appellants should have an opportunity to cure the defect in their complaint (see pt. C.4., post).
1. Underlying Proceedings
The second amended complaint alleges that Price provided substandard legal representation in the trade secrets and malicious prosecution actions, that appellants suffered damages as a result, and that Price was absent from California during the year рreceding the filing date of the underlying action. Before the trial court, respondents maintained that the claim was time-barred under section 340.6. Specifically, they argued that appellants suffered actual injury in the trade secrets action no later than August 2004, when judgment was entered; that appellants suffered actual injury in the malicious prosecution action no later than May 2006, when the anti-SLAPP motion was denied; that appellants knew, or should have known, about Price’s malpractice before his representation was terminated; and that any purported tolling from Price’s continuous representation in the two actions ended on July 3, 2006, when he was substituted out of the malicious prosecution action. Because no other provision operated to toll the one-year limitations period after that date, appellants’ action, filed July 9, 2007, was time-barred.
Appellants responded that Price’s continuous representation tolled the limitations period through July 3, 2006, and that Price’s absence from California tolled the period after that date. Regarding the latter contention, they pointed to section 351, which states: “If, when the cause of action accrues against a person, he is out of the State, the action may be commenced within the term herein limited, after his return to the State, and if, after the cause of action accrues, he departs from the State, the time of his absence is
The trial court determined that section 351 was inapplicable to the legal malpractice claim. In concluding that the legal malpractice claim was time-barred, the trial court reasoned that the one-year limitations period began to run no later than July 3, 2006, when Price was substituted out of the malicious prosecution action, and that the complaint was filed more than one year after this date.
2. Tolling
Appellants concede on appeal that, absent tolling, their claim for legal malpractice is barred under section 340.6. They argue that section 351 tolled the limitations period while Price was outside California. Respondents counter that the tolling provisions set forth in section 340.6 are exclusive, and contain no provision expressly referring to a party’s absence from the state. As respondents note, our Supreme Court has held that the Legislature intended to disallow tolling under any circumstances not enumerated in section 340.6.
(Beal Bank, SSB v. Arter & Hadden, LLP
(2007)
We find dispositive guidance on the issue before us from
Bledstein
v.
Superior Court
(1984)
Respondents suggest that the legal malpractice claim is time-barred for another reason, notwithstanding the application of section 351. They argue
Generally, continuous representation requires “an ongoing relationship and activities in furtherance of the relationship.”
(Nielsen v. Beck
(2007)
In some circumstances, an attorney may also provide continuous representation to clients by acting in different, but related, actions. In
Nielsen,
a corporation hired an attorney to conduct its bankruptcy proceedings.
(Nielsen, supra,
Here, as in Nielsen, the trade secrets and malicious prosecution actions were intertwined and related: after Attig obtained a fee award in the trade secrets action by establishing that appellants had requested an injunction in bad faith, she sought similar—but greater—relief in the malicious prosecution action. Although the judgment in the first action became final in January 2006, two months before Attig commenced the second action, the second amended complaint alleges that Price assisted appellants with matters related to the fee award in the first action after January 2006. In view of Gurkewitz, this allegation is sufficient to avoid a demurrer.
For the first time, respondents contend on appeal that the legal malpractice claim is inadequately pleaded. We agree. Generally, “[t]o state a cause of action for legal malpractice, a plaintiff must plead ‘(1) the duty of the attorney to use such skill, prudence, and diligence as members of his or her profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the breаch and the resulting injury; and (4) actual loss or damage resulting from the attorney’s negligence.’ [Citation.] To show damages proximately caused by the breach, the plaintiff must allege facts establishing that,
‘but for
the alleged malpractice, it is more likely than not the plaintiff would have obtained a more favorable result.’ [Citations.]”
(Chamay v. Cobert
(2006)
Here, the second amended complaint asserts that Price provided substandard legal services in the trade secrets and malicious prosecution actions, but contains no allegation that appellants could have obtained more favorable results had Price’s performance met professional norms. The second amended complaint thus fails to assert a legal malpractice claim.
4. Leave to Amend
We turn to whether appellants should be granted leave to amend their legal malpractice claim to remedy its deficiencies. Generally, leave to amend is proper when “there is a reasonable possibility the plaintiff could cure the defect . . . .”
(Schifando
v.
City of Los Angeles
(2003)
D. Indemnity Claim
We turn to appellants’ claim for indemnity from respondents regarding the fee award in Attig’s malicious prosecution action. The trial court concluded that this claim amounted to a legal malpractice claim and, as such, was time-barred under section 340.6. We agree with the trial court that the indemnity claim is properly viewed as a claim for legal malpractice regarding the fee award. For the reasons explained below (see pt. D.3.,
post),
the second
1. Indemnity
Generally, “indemnity refers to ‘the obligation resting on one party to make good a loss or damage another party has incurred.’ ”
(Prince v. Pacific Gas & Electric Co.
(2009)
Because the second amended complaint alleges no basis for express indemnity, we limit our analysis to equitable indemnity. Traditional equitable indemnity is “rooted in principles of equity”
(Exxess Electronixx
v.
Heger Realty Corp.
(1998)
As our Supreme Court has recently explained, although implied contractual indemnity has long been regarded as distinct from both express and equitable indemnity, it is now to be viewed as a form of equitable indemnity.
(Prince, supra,
Both forms of equitable indemnity also share a second feature pertinent to our inquiry. Ordinarily, for purposes of limitations periods, claims for equitable indemnity and implied contractual indemnity accrue “at the time the indemnity claimant suffers loss or damage—that is, at the time of payment of the underlying claim. [Citations.]”
(Southern Pacific Transportation Co. v. Ohbayashi America Corp.
(1983)
2. Underlying Proceedings
Before the trial court, respondents contended that the indemnity сlaim was nothing other than a time-barred legal malpractice claim, as they were substituted out of the malicious prosecution action on July 3, 2006, more than one year before appellants commenced the underlying action on July 9, 2007. Respondents noted that the indemnity claim relied on the allegations supporting appellants’ malpractice claim against Price; in addition, they argued that the indemnity claim failed for several reasons, including the absence of shared liability to Attig.
In opposing the demurrer, appellants maintained that the indemnity claim fell outside the scope of section 340.6; in the alternative, they argued that even if the claim was subject to section 340.6, it accrued no earlier than July 17, 2006, when the trial court in Attig’s malicious prosecution action first ordered appellants to pay the fee award to Attig. The trial court concluded that the claim was time-barred under section 340.6, reasoning that it was simply a legal malpractice claim “labeled as [an] indemnity claim[].”
3. Analysis
In our view, the trial court correctly determined that the second amended complaint fails to state a claim for equitable indemnity against respondents. Generally, as equitable indemnity is founded on considerations of equity, a demurrer to a claim for equitable indemnity may be sustained when the plaintiff’s appropriate theory of reсovery is negligence.
(Woodward-Gizienski & Associates v. Geotechnical Exploration, Inc.
(1989)
Nothing in the second amended complaint suggests that the award implicated the breach of a tort-related duty to Attig jointly owed by appellants and respondents. Ordinarily, an attorney represеnting a client in litigation has
no
duty of this kind toward the client’s adversary, with the exception of the duty underlying the tort of malicious prosecution.
(Weaver
v.
Superior Court
(1979)
Nor do respondents share liability with appellants for the award under the anti-SLAPP law and section 128.5. Here, the trial court in the malicious рrosecution action issued the award only against appellants. Although Attig requested an award solely against appellants, section 128.5 authorized the trial court, upon its own motion, to impose the award upon appellants and respondents, and section 425.16 obliged the trial court to make an appropriate award. As the trial court did not direct respondents to pay the award, they have no liability for the award that will support an indemnity claim. 9
We also conclude that insofar as the purported indemnity claim attempts to assert a claim for legal malpractice against Ropers, it is time-barred under section 340.6. On the facts alleged in the complaint or subject to judicial notice, such a claim accmed no later than July 3, 2006, when Ropers was substituted out of the malicious prosecution action: at that time, appellants knew, or should have known, that their unsuccessful anti-SLAPP motion was meritless; they had suffered actual damages by incurring legal fees in connection with the anti-SLAPP motion and Attig’s June 2006 fee request; and they faced the prospect of additional damages in the form of a fee award.
(Laird, supra,
4. Leave to Amend
The remaining issue concerns leave to amend. Appellants have had two opportunities to cure the deficiencies in their indemnity claim, and they propose no new amendments on appeal. Leave to amend this cause of action was thus properly denied.
The order of dismissal is reversed sоlely with respect to appellants’ claim for legal malpractice against Price, and the matter is remanded to the trial court with directions to permit appellants to amend their complaint in accordance with this opinion. Appellants are awarded their costs on appeal.
Willhite, Acting P. J., and Suzukawa, J., concurred.
A petition for a rehearing was denied May 3, 2010, and respondents’ petition for review by the Supreme Court was denied June 9, 2010, SI82451.
Notes
All further statutory citations are to the Code of Civil Procedure.
The history of the litigation involving the parties stated below relies on the allegations in appellants’ second amended complaint and on court records of which respondents asked the trial court to take judicial notice. In ruling on respondents’ demurrer, the trial court apparently
Attig also pursued other litigation against appellants that is not relevant to the issues presented in this appeal.
The written order of dismissal is an appealable judgment, as it was executed by the trial court and filed in the action. (See
Etheridge v. Reins Internat, California, Inc.
(2009)
In 1994, the Legislature abrogated former subdivision (a)(3) of section 352 and enacted section 352.1, which constitutes a modified tolling provision for prisoners. (See Stats. 1994, ch. 1083, §§ 1-5, pp. 6465-6467.)
As the court in
Bledstein
noted, after the bill that became section 340.6 was amended to incorporate the fourth tolling provision, “the Senate Committee on Judiciary commented as follows: ‘The statutes of limitations [for legal mаlpractice] are also tolled by . . . [sections 351 (where the cause of action accrues against an out-of-state defendant) and 352 (where the plaintiff is a minor, is insane, or imprisoned). Q] [The bill]
would codify this existing case law
on the specific circumstances under which the basic one-year and the outer 4-year limitation periods are tolled.’ ”
(Bledstein, supra,
Respondents’ reliance on our Supreme Court’s decisions in
Beal Bank, Jordache,
and
Laird,
and on the appellate court opinions in
Leasequip, Inc.
v.
Dapeer
(2002)
Construed as a claim for legal malpractice against Price, it is duplicative of the cause of action that we have already discussed.
The duty imposed under the anti-SLAPP law and section 128.5 is not akin to tort-related duties, whose breach by joint tortfeasors may be adjudicated in separate actions involving the tortfeasors, taken individually. As the court explained in
Wright v. Ripley
(1998)
