JERI EMMET LAIRD, Plaintiff and Respondent, v. SIDNEY G. BLACKER, as Administrator, etc., et al., Defendants and Appellants.
No. S021074
Supreme Court of California
May 7, 1992
Respondent‘s petition for a rehearing was denied July 16, 1992
2 Cal. 4th 606
JERI EMMET LAIRD, Plaintiff and Respondent, v. SIDNEY G. BLACKER, as Administrator, etc., et al., Defendants and Appellants.
Horvitz & Levy, Ellis J. Horvitz, David S. Ettinger and Federic D. Cohen for Defendants and Appellants.
Francis C. Pizzulli and Charlotte E. Costan for Plaintiff and Respondent.
King & Seligsohn and Stephen Scott King as Amici Curiae on behalf of Plaintiff and Respondent.
OPINION
LUCAS, C. J.—We granted review to determine whether the one-year statute of limitations for attorney malpractice actions under
We conclude the limitations period of
I. BACKGROUND
Plaintiff, a television writer, retained the law firm of Berg & Spire to prosecute a lawsuit against Spelling-Goldberg, a television production company. She alleged that Spelling-Goldberg based its television series “Family” on a script she had submitted, but failed to acknowledge or credit her contribution. After serving the complaint, Berg & Spire failed to pursue the
On October 20, 1981, the suit was dismissed for lack of prosecution. (
Plaintiff settled with Berg & Spire for $50,000 and proceeded to trial against defendants. Defendants moved for a nonsuit, asserting the one-year limitation period of
The Court of Appeal reversed and remanded with directions to enter judgment in favor of defendants. It held that under
II. DISCUSSION
1. Background
Prior to 1977, the statute of limitations for legal malpractice actions was governed by
Both Budd, supra, 6 Cal.3d 195, and Neel, supra, 6 Cal.3d 176, addressed the former two-year legal malpractice statute of limitations (
The Budd court further explained that, “Ordinarily, the client has already suffered damage when he discovers his attorney‘s negligence, as occurred in Neel.... In other cases, the infliction of the damage will alert the client to the attorney‘s negligence and thus the statute of limitations will then begin to run on any malpractice action. Only in the unusual case will the client discover his attorney‘s negligence without having suffered any consequential damage.” (Budd, supra, 6 Cal.3d at p. 201.)
Nonetheless, Budd‘s reference to monetary damage has caused conflict in the courts. Taken at face value, the Budd language supports a conclusion that an appeal does not extend the period of limitations beyond adverse judgment. As the Court of Appeal herein observed, “Where, however, the malpractice occurs in the course of representing a plaintiff, there is no risk of execution and no need to post a bond. There may or may not be attorney‘s fees incurred, lost interest or other expenses.”
This uncertainty over when damage occurs has led to conflict in the Courts of Appeal. Some courts rely on Budd to support application of the earlier “irremediable damage” rule that the Legislature rejected when it codified
By contrast, several recent cases hold that when the client is a losing plaintiff in the underlying action, an appeal of the dismissal of the action does not affect the date of actual harm under
Thereafter, in October 1987, Turney moved for summary judgment asserting that
The Court of Appeal affirmed on the ground that as a matter of law, the latest time Troche had knowledge of the alleged malpractice was August 1984, when she discharged Daley as her counsel. The court concluded that the damage occurred in May 1984, when the district court dismissed the lawsuit, and that Troche‘s attempts to appeal the dismissal of the federal action did not toll the statute because it did not affect the date Troche suffered actual harm. (Troche, supra, 217 Cal.App.2d at p. 411.)
The court relied on Budd, supra, 6 Cal.3d at page 201, and Neel, supra, 6 Cal.3d at page 194, to hold that the client‘s discovery of the attorney‘s negligence, and his or her incurring damage from that negligence, marks the accrual of a cause of action for malpractice. (Troche, supra, 217 Cal.App.3d at pp. 410-411.) The Troche court observed that as in Neel, supra, and Hays, supra, 70 Cal. 127, a client suffers damage on the date the underlying action is dismissed, and that the conduct of a plaintiff in connection with subsequent proceedings seeking reversal of the dismissal on appeal does not affect the accrual of a cause of action under the statute. (Troche, supra, 217 Cal.App.3d at p. 411; see also Neel, supra, 6 Cal.3d at p. 183.)
...
The Court of Appeal below followed the Troche reasoning and observed that the “timeliness of a malpractice action should not turn on whether the client happened to be a plaintiff or defendant or happened to appeal.... To attempt to quantify damage or injury pending an appeal necessarily results in a distinction between plaintiffs and defendants and a contest about whether a particular expenditure is sufficient to trigger the limitations period.” As the court observed, the Legislature used the term “actual” to focus on the fact that damage occurred, and eliminated all qualifiers to prevent confusion that would arise by requiring courts to consider the total amount of damages.
Troche, supra, 217 Cal.App.3d 403, has been followed in the most recent cases interpreting
Justice Lillie relied on Budd, supra, 6 Cal.3d 195, and Troche, supra, 217 Cal.App.3d 403, to hold that a “client sustains actual injury when, as a result of the attorney‘s negligence, a judgment is entered against the client.” (Worton, supra, 234 Cal.App.3d at p. 1651.) The court rejected the wife‘s claim that the availability of an appeal should have tolled the limitations period, observing that the “availability of an appeal from a judgment in a civil action does not make ‘remediable’ the harm the client sustained upon entry of the judgment for purposes of tolling the statute of limitation for legal malpractice. [Citation.]” (Id. at pp. 1651-1652.) As the Worton court observed, tolling the statute during an appeal would place “the statute of limitations for legal malpractice... in the power of the client who could cause the statute to be tolled indefinitely” and, hence, thwart “the purpose of the statute of limitations which is ‘to require “diligent prosecution of known claims thereby providing necessary finality and predictability in legal affairs, and ensuring that claims will be resolved while the evidence bearing on the issues is reasonably available and fresh.” [Citations.]’ ” (Id. at p. 1652.)
The foregoing cases recognize that the focus of
We disagree with plaintiff that actual injury should be defined in terms of monetary amount and that a successful appeal negates the client‘s ability to file a malpractice action. To the contrary, although appellate review may correct judicial error, and thus reduce the client‘s damages, an appeal does not necessarily exonerate the attorney, nor does it extinguish the client‘s action against him for negligence in the conduct of trial. (See also 2 Mallen & Smith, Legal Malpractice (3d ed. 1989) § 18.11, p. 111.)
Under the foregoing authority, we hold that under
Nonetheless, plaintiff asserts that she did not suffer actual injury until her appeal of right was dismissed. Until that point, plaintiff maintains, her damages were only speculative. She contends that several Court of Appeal cases support her assertion that the negligence caused by the malpractice must be “irremediable” before the statute of limitations under
Her position is unpersuasive. Plaintiff confuses the distinction between the fact and knowledge of damage, and the amount of damage. (Budd, supra, 6 Cal.3d at pp. 200-201. As defendants observe, there are no California cases holding that a cause of action for legal malpractice is tolled on filing an appeal from the underlying judgment. Although there are several cases reasoning that a client must suffer “irremediable injury” before a claim for malpractice can be filed, as we explain, none holds that the statute of limitations is tolled simply because the client pursues an appeal.
For example, plaintiff relies on Heyer v. Flaig, supra, 70 Cal.2d 223, which holds that when an attorney is accused of malpractice in drafting a will for failing to follow the testamentary directives of a client, a cause of action for malpractice accrues on the date of the testatrix‘s death. Only then do the beneficiaries suffer “irremediable injury.” (Id. at p. 225.) Our holding was based on the rationale that an attorney owes the beneficiaries a continuing fiduciary duty throughout the representation of the client.
In Southland Mechanical Constructors Corp., supra, 119 Cal.App.3d 417, the Court of Appeal accepted the defendant attorney‘s contention that the malpractice action filed against him accrued on the date the plaintiff‘s right to appeal from an adverse agency decision expired. The court rejected the plaintiff‘s contention that no injury resulted from the dismissal of the agency proceeding as long as tort litigation seeking identical relief was still pending. As the Court of Appeal herein observed, the Southland court assumed erroneously that the term “irremediable,” as taken from the rule of Heyer, supra, 70 Cal.2d at page 230, must be read into the term “actual” in
In Robinson v. McGinn (1987) 195 Cal.App.3d 66 [240 Cal.Rptr. 423], a police officer was injured in the line of duty. He claimed his attorney‘s negligent representation in his personal injury claim caused him to lose his job and his disability pension. In the subsequent malpractice action, the court had to determine whether the statute of limitations accrued when he was denied reinstatement and pension benefits, or when the client lost his administrative appeal. The Court of Appeal held the statute was tolled until the city made its final administrative adjudication, reasoning that no irremediable harm had been suffered by the officer until the attorney‘s error could no longer be remedied.
Turley v. Wooldridge, supra, 230 Cal.App.3d 586, analyzed the Bell and Robinson decisions, and asserted that those cases simply misused the term
The Court of Appeal herein also criticized the above cases for relying on the “irremediable damage” rule rejected by the Legislature when it adopted
Finally, plaintiff relies on In re Blythe (1893) 99 Cal. 472 [34 P. 108], and Chambers v. Farnham (1918) 39 Cal.App. 17 [179 P. 423], to contend that before final resolution of the underlying case, a client may not introduce into evidence the adverse trial court judgment as evidence of the attorney‘s negligence. Both cases, however, are inapposite. They hold that in order for a separate judgment to be admissible in evidence in a new cause for the purpose of proving facts therein recited, the judgment must be a final judgment in the cause. (Blythe, supra, 99 Cal. at p. 475; Chambers, supra, 39 Cal.App. at pp. 20-21.) These cases simply reiterate the rule of
2. Legislative History
The policy behind the limited tolling periods in the statute is clear. If we nonetheless hold that the statute is tolled pending an appeal, we allow clients, with knowledge that they have suffered actual injury, unilaterally to control the commencement of the statute of limitations and hence undermine the legislative goal of resolving cases while the evidence is fresh, witnesses are available, and memories have not faded. Accordingly, we decline to adopt plaintiff‘s position.
3. Decisions in Other States
As defendants observe, our decision today is further supported by the majority of jurisdictions with statutes substantially identical to our own.
Plaintiff, in contrast, relies on out-of-state cases interpreting legal malpractice statutes of limitations that do not have the “continuous representation” exception codified in
Finally, no case in any jurisdiction supports tolling the statute until an appeal of right is resolved, without waiting until review is exhausted on final judgment. Indeed, our prior cases would reject this position outright. (See, e.g., Lambert v. Commonwealth Land Title Ins. Co. (1991) 53 Cal.3d 1072, 1079 [282 Cal.Rptr. 445, 811 P.2d 737].) In Lambert, the insured‘s cause of action against his title insurer for refusal to defend under
4. Retroactivity
Plaintiff requests that if we conclude the limitations period of
We reject plaintiff‘s request. The general rule is that judicial decisions are given retroactive effect. (Newman v. Emerson Radio Corp. (1989) 48 Cal.3d 973, 978 [258 Cal.Rptr. 592, 772 P.2d 1059].) Departure from that rule is limited to those narrow circumstances in which considerations of fairness and public policy preclude retroactivity. In sum, “A court may decline to follow the standard rule when retroactive application of a decision would raise substantial concerns about the effects of the new rule on the general administration of justice, or would unfairly undermine the reasonable reliance of parties on the previously existing state of the law. In other words, courts have looked to the ‘hardships’ imposed on parties by full retroactivity, permitting an exception only when the circumstances of a case draw it apart from the usual run of cases.” (Id. at p. 983.)
With this concept in mind, we reject plaintiff‘s claim. As explained above, our holding is based on the Legislature‘s rejection of the “irremediable damage” rule of Heyer v. Flaig, supra, 70 Cal.2d 223, and its subsequent adoption of the rule of Budd, supra, 6 Cal.3d 195, and Neel, supra, 6 Cal.3d 176. The majority of cases recently interpreting
III. CONCLUSION
We cannot rewrite
Panelli, J., Kennard, J., Arabian, J., Baxter, J., and George, J., concurred.
MOSK, J.—I dissent. For the reasons stated below, consistent with case law and legislative intent, I believe the requirement of “actual injury” in
The majority err in declaring (maj. opn., ante, p. 620) that
The first step in our analysis is to acknowledge that “actual injury” is not self-defining. Then we must look to the rest of the statute to ascertain the phrase‘s meaning contextually. Next, an examination of the legislative history and the case law is instructive. Finally, I would test the conclusion in the crucible of practicality.
Statutory Scheme
Insofar as relevant here, the statute prescribes that two elements must be met before the limitation period runs: first, the client must discover the malpractice; second, even after the malpractice is discovered, the period is tolled until there is “actual injury.” I emphasize this point because it is important: a client cannot reasonably be expected to commence a lawsuit against the attorney every time the attorney errs; thus, even after the error is discovered,
For the majority, this quotation from the Senate Judiciary Committee Report somehow leads to its unsupported conclusion that the Legislature “clearly intended the limitations period should not be extended beyond final judgment when continuous representation was not an issue.” (Maj. opn., ante, p. 618.) Nowhere in the legislative history is such an intention even hinted at, let alone made clear.
Legislative History
The majority contend that the legislative history of
As observed above:
The legislative record reveals that Assembly Bill No. 298 (1977-1978 Reg. Sess.), which led to
The Legislature recognized the importance of fairness to malpractice plaintiffs, both for its own merit and for the legal profession‘s integrity. The
Case Law
In direct contradiction to the majority‘s holding, California courts confronted with a client who has pursued an appeal of right from the underlying judgment have interpreted “actual injury” to toll the limitation period until the resolution of that appeal. Cases on which the majority rely are not on point, either because there was no appeal of right or because the appeal was not pursued.
The majority rely on a dictum in Budd v. Nixen, supra, 6 Cal.3d 195, a case preceding the adoption of
The case law interpreting
In the recent case of Troche v. Daley (1990) 217 Cal.App.3d 403 [266 Cal.Rptr. 34], on which the majority mistakenly rely, there was no appeal of right; thus under my proposed construction the limitation period would not have been tolled. There the client was apparently unable or unwilling to pay the requisite fees to appeal and could not get the appeal certified as nonfrivolous in order to appeal, under the governing federal law, in forma pauperis. The Court of Appeal held there was actual injury when the client‘s underlying federal lawsuit was dismissed because of the alleged negligence of her
Similarly, in Turley v. Wooldridge (1991) 230 Cal.App.3d 586 [281 Cal.Rptr. 441], although there was an appeal of right, the court refused to toll the limitation period because the client did not pursue that appeal. While not foreclosing the possibility that a pending appeal may prevent a finding of actual injury, the Court of Appeal refused to hold the limitation period was tolled when the litigant had not actually pursued her appeal. (Id. at p. 593.)1
Indeed, the majority‘s reliance on Turley v. Wooldridge, supra, 230 Cal.App.3d 586, is inexplicable, as that case strongly supports my position. Contrasting its situation with that of Robinson v. McGinn, supra, 195 Cal.App.3d 66, the Turley court reiterated that the statute was properly tolled in Robinson because the client there had pursued his administrative appeal of right. (230 Cal.App.3d at p. 593.) By contrast, the court stressed that “Turley did not pursue any of the legal or equitable remedies available to her to challenge the purportedly unfair Agreement terms.” (Ibid.) Thus, the Turley court construed “actual injury” precisely as I propose.
In the recent case of Worton v. Worton (1991) 234 Cal.App.3d 1638 [286 Cal.Rptr. 410], no postjudgment motion or appeal was actually filed, although the client had the right to do so. I fully agree that the statute should not be tolled unless an appeal is actually pursued. The majority in Worton held that “[t]he availability of an appeal from a judgment in a civil action does not make ‘remediable’ the harm the client sustained upon entry of the judgment for purposes of tolling the statute of limitation for legal malpractice.” (Id. at p. 1652.) Justice Johnson concurred in the judgment, but pointed out (citing Robinson v. McGinn, supra, 195 Cal.App.3d 66) that although the mere availability of an appeal should not preclude a finding of actual injury (234 Cal.App.3d at p. 1653), once an appeal is taken there is no actual injury until it is resolved.
Many of the out-of-state decisions upon which the majority rely construe statutes of limitation unlike our own. Again, the majority fail to realize that
That may be the law in Illinois as held by its intermediate appellate court, but it is only half the law in California; if we subsume the actual-injury inquiry into the separate question of when the client discovered or should have discovered the alleged negligence, we directly contradict the language of
Contrast the foregoing with our statute. A cause of action for legal malpractice, like any negligence action, requires negligence, causation, and damages. Yet the presence of those three elements alone does not cause the statute of limitations in
Other cases relied on by the majority also construe statutes distinguishable from our own. For example, in Hayden v. Green (1988) 431 Mich. 878 [429 N.W.2d 604], the statute began running when the attorney no longer represented the client or when the client discovered the claim. In Jankowski v. Taylor, Bishop & Lee (1980) 246 Ga. 804 [273 S.E.2d 16, 18], the statute began running at the earliest date on which the client could have brought the malpractice suit, i.e., when the elements of the tort had been met. Both these statutes lack the element essential to this California case: actual injury.
Further, contrary to the majority‘s contention, out-of-state cases interpreting statutes of limitation in the manner I propose do not rest their holding on continued representation of the client by the allegedly negligent attorney. For example, in Amfac Distribution Corp. v. Millar (1983) 138 Ariz. 155 [673 P.2d 795, 796-799], the court cited numerous reasons for holding that the limitation period did not start running until the pending appeal had been
Construing the Statute Consistently With Precedent and Policy
As we have seen, the plain language of the statute and its history provide guidance but do not authoritatively define “actual injury.” It is therefore appropriate to construe the statute to effect the ostensible legislative purpose (Lambert v. Commonwealth Land Title Ins. Co. (1991) 53 Cal.3d 1072, 1078-1079 [282 Cal.Rptr. 445, 811 P.2d 737]) of furthering the policies underlying statutes of limitations: i.e., judicial economy, avoiding stale claims, and fairness to the parties.
The separate requirements of discovery and actual injury found in
I apply this logic to the situation at hand. To force malpractice plaintiffs to file their actions before they know the outcome of the case upon which their claim is based does not promote judicial economy. The status of the malpractice claim is uncertain until the appeal in the underlying case is resolved, because if it is ultimately decided in the client‘s favor the malpractice suit may well become moot for lack of damages.2 The majority‘s analysis defies rationality with its fictional scenario of a client who files a malpractice action against an attorney after winning the underlying lawsuit; this would be a rare situation indeed.
My resolution of the conflict is consistent with the other policy considerations behind
The third policy consideration, fairness to malpractice plaintiffs, is also furthered by my construction of the statute. It is impractical to require a client simultaneously to pursue two lawsuits: a malpractice action and an appeal of right. The present case illustrates the dilemma. Here plaintiff pursued her appeal without the aid of counsel, requiring an enormous effort to understand the statutes and rules governing appeals. To compel her simultaneously to prosecute a malpractice suit would be unduly burdensome. The situation is different, however, if the client has an appeal of right but does not pursue it; then her decision not to appeal implies that she considers the judgment of the trial court final.
The majority‘s contentions fail to persuade otherwise. They parade their “horribles,” arguing that memories will fade and witnesses die while malpractice plaintiffs pursue appeals. However, the dangers associated with delay are greatly lessened by the very nature of legal malpractice cases. As one court declared in resolving the present issue: “Unlike medical malpractice or other forms of malpractice which do not occur in the course of litigation, [legal malpractice] generally is memorialized in court pleadings or in hearing transcripts. ... [T]he dangers associated with delay are lessened because a record will have been made of the actions which form the substance of the later malpractice action.” (Amfac Distribution Corp. v. Miller, supra, 673 P.2d at p. 798.)
The present case illustrates the validity of this observation: a client in Laird‘s position may rely on legal records to show when she engaged defendants as her attorneys and what they did to pursue the lawsuit. The client may then ask the trier of fact to compare this performance with expert testimony stating what a reasonably diligent attorney would have done. The attorneys may respond with their own expert witness, but the heart of the matter is the legal records that show, for example, when depositions were taken and motions were made. Such formal written evidence will not become stale pending resolution of an appeal in the underlying case.
Further, although the majority correctly point out that some harm is caused by the mere fact that an adverse judgment is entered regardless of
Nor is the reduced settlement value of a case decided adversely in the trial court enough to satisfy the actual injury requirement; if and when the case is actually settled, there is actual injury because the settlement represents the litigant‘s agreement to forgo further remedies. Finally, any added emotional distress caused by the adverse judgment, even if compensable in a malpractice suit when certain requirements are met, is not actual injury. A client may suffer emotional distress whenever the attorney makes a mistake; added distress cannot be the yardstick by which actual injury is measured.
Thus, based on the language of the statute, on legislative history, on case law, and on practicality, I am convinced the majority err in holding there is actual injury while the client yet awaits the resolution of an appeal of right she has actually pursued. Because Ms. Laird filed her malpractice action within one year of dismissing her appeal, I would hold that her malpractice action was timely.
Respondent‘s petition for a rehearing was denied July 16, 1992, and the opinion was modified to read as printed above. Mosk, J., was of the opinion that the petition should be granted.
Notes
“(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, or four years from the date of the wrongful act or omission, whichever occurs first. 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;
“(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; and
“(4) The plaintiff is under a legal or physical disability which restricts the plaintiff‘s ability to commence legal action.
“(b) In an action based upon an instrument in writing, the effective date of which depends upon some act or event of the future, the period of limitations provided for by this section shall commence to run upon the occurrence of such act or event.” In malicious prosecution actions a pending appeal is treated similarly: it tolls the limitation period only if actually pursued. (Korody-Colyer Corp. v. General Motors Corp. (1989) 208 Cal.App.3d 1148, 1151 [256 Cal.Rptr. 658]; Rare Coin Galleries, Inc. v. A-Mark Coin Co., Inc. (1988) 202 Cal.App.3d 330, 335 [248 Cal.Rptr. 341].) The majority‘s construction of