ELIZABETH BAUR WORTON, Plaintiff and Appellant, v. EUGENE W. WORTON et al., Defendants and Respondents.
No. B053533
Second Dist., Div. Seven
Oct. 10, 1991
234 Cal. App. 3d 1638
Keesal, Young & Logan, Michael M. Gless, Robert D. Feighner, Morgan, Wenzel & McNicholas and John P. McNicholas for Plaintiff and Appellant.
Antin, Litz & Gilbert, Ronald A. Litz, Michael L. Taylor, Wilson, Elser, Moskowitz, Edelman & Dicker and Martin K. Deniston for Defendants and Respondents.
OPINION
LILLIE, P. J.--Plaintiff appeals from summary judgment entered against her and in favor of defendants.
FACTS
Plaintiff sued her former husband, Eugene W. Worton, M.D. (Worton), for damages for fraud and conversion, and her former attorney, Robert Newell (Newell), for damages for legal malpractice.1
The complaint, filed January 24, 1989, contained four causes of action. The first cause of action (fraud and deceit) alleged: On May 17, 1984, plaintiff filed a petition for dissolution of marriage against defendant Worton. On August 22, 1986, following a trial, judgment of dissolution was entered. The judgment purported to divide equally all community assets of the parties, including the “Defined Benefit Pension Plan” (the plan) of Worton, and included the following provision: “The parties shall create and recognize as to [the plan] the existence of [plaintiff‘s] right to: [[] (1) An undivided one-half interest in the total value of accrued benefits of [Worton] plus any accrued and accumulated interest and earnings payable in accordance with the terms of [the plan]. As of September 30, 1985, the estimated distributable benefits payable thereunder were $501,061.27.” Worton represented to plaintiff and to the court in the dissolution proceeding that he had
The second cause of action (fraud and deceit--concealment) alleged that Worton, in violation of his fiduciary duty to plaintiff, concealed from her the sum of $162,000 in the benefits of the plan with the intent to defraud her.
The third cause of action (conversion) alleged that Worton is in wrongful possession of $81,000 belonging to plaintiff, refuses to deliver said sum to plaintiff despite repeated demands, and converted said sum to his own use.
The fourth cause of action (legal malpractice) alleged: Plaintiff retained defendant Newell to represent her in the dissolution proceeding. In the course of such representation Newell negligently failed to discover and obtain evidence of the existence of the excess assets of $162,000 as part of the accrued benefits of the plan. As a result of Newell‘s negligence plaintiff sustained damages of $81,000.
Worton moved for summary judgment in his favor on the ground that the action against him is barred by res judicata. Newell moved for summary judgment in his favor on the ground plaintiff‘s action for legal malpractice is barred by the statute of limitations contained in
In support of their motions for summary judgment defendants presented excerpts from the depositions of plaintiff and Newell, as well as Roger Halfhide and Michael Gless, attorneys retained by plaintiff after entry of the judgment of dissolution. The deposition testimony showed: Before commencement of trial in the dissolution proceeding Newell told plaintiff that he
Plaintiff discharged Newell in late August 1986. In October 1986 plaintiff retained Roger Halfhide, an attorney specializing in pension law, to determine whether the judgment of dissolution properly divided the plan benefits in accordance with California community property law. In January 1987 Halfhide learned: Worton made no contributions to the plan after the separation of the parties (June 1, 1984); as of September 30, 1985, the value of Worton‘s accrued benefits in the plan was $501,000; sometime between September 30, 1985, and September 30, 1986, the plan was terminated and any excess assets therein allocated to Worton; as of September 30, 1986, the fair market value of Worton‘s accrued benefits in the plan, including excess assets allocated to him, was $672,534.
After he learned that excess assets in the plan had been allocated to Worton, and before July 6, 1987, Halfhide reviewed the judgment to see if it covered the excess assets. He concluded (also before July 6, 1987) that the judgment was silent regarding excess assets and therefore was ambiguous. By May 1987 Halfhide estimated the excess assets to be $122,000 and he so informed Michael Gless, plaintiff‘s other attorney. Sometime in 1987 Gless told plaintiff that Halfhide believed there were excess assets in the plan which were not reported at the time of trial. On July 6, 1987, Halfhide wrote to plaintiff advising her that on September 30, 1985, Worton‘s accrued benefits in the plan were $501,000 and the judgment awarded plaintiff a half interest in that sum; however, sometime between September 30, 1985, and September 30, 1986, the plan was terminated and the excess assets distributed to the participants with the result that Worton‘s accrued benefits increased to about $670,000 as of the latter date. By the end of 1987 Halfhide suspected Newell may have been negligent regarding the plan, but he did not tell plaintiff of his suspicions. Plaintiff testified that before 1988 she had reason to believe the judgment of dissolution did not properly divide the
Plaintiff opposed both motions for summary judgment. The motions were granted and summary judgment was entered in favor of defendants. This appeal followed.
DISCUSSION
I
STANDARD OF REVIEW
Summary judgment is proper if the supporting papers are sufficient to sustain a judgment in favor of the moving party as a matter of law and the opposing party presents no evidence which gives rise to a triable issue as to any material fact. (
The evidence of the moving party is strictly construed and that of the opposing party liberally construed. (Coppola v. Superior Court (1989) 211 Cal.App.3d 848, 862 [259 Cal.Rptr. 811].) “But ‘where there is no material issue of fact to be tried and the sole question before the trial court is one of law as to whether the claim of the moving party is tenable on the undisputed facts, it is the duty of the trial court on a motion for summary judgment to hear and determine the issue of law.’ [Citation.]” (Rombalski v. City of Laguna Beach (1989) 213 Cal.App.3d 842, 848 [261 Cal.Rptr. 820].)
In reviewing a grant of summary judgment, an appellate court must make its own independent determination of the construction and effect of the papers submitted. (Preis v. American Indemnity Co. (1990) 220 Cal.App.3d 752, 757 [269 Cal.Rptr. 617].) Accordingly, we review the summary judgment granted below without deference to the trial court‘s determination.
II
SUMMARY JUDGMENT IN FAVOR OF WORTON
“The doctrine of res judicata is composed of two parts: claim preclusion and issue preclusion. Claim preclusion prohibits a party from relitigating a previously adjudicated cause of action; thus, a new lawsuit on the same cause of action is entirely barred. [Citation.] Issue preclusion, or collateral estoppel, applies to a subsequent suit between the parties on a different cause of action. Collateral estoppel prevents the parties from relitigating any issue which was actually litigated and finally decided in the earlier action. [Citation.] The issue decided in the earlier proceeding must be identical to the one presented in the subsequent action.” (Flynn v. Gorton (1989) 207 Cal.App.3d 1550, 1554 [255 Cal.Rptr. 768]; original italics.) “The most important criterion in determining that two suits concern the same controversy is whether they both arose from the same transactional nucleus of facts. [Citation.] If so, the judgment in the first action is deemed to adjudicate for purposes of the second action every matter which was urged, and every matter which might have been urged, in support of the cause of action or claim in litigation.” (Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1157 [267 Cal.Rptr. 523].)
In the dissolution proceeding the parties sought adjudication of their respective rights in the accrued benefits of the plan, which included the excess assets. In the causes of action asserted against Worton in the present action, plaintiff seeks recovery of half the excess assets. Both the earlier proceeding and the present action therefore concern the same claim or controversy, i.e., the division of the plan‘s benefits between the parties. Accordingly, the governing principle is claim preclusion which “prevents litigation of all grounds for, or defenses to, recovery that were previously available to the parties, regardless of whether they were asserted or determined in the prior proceeding.”3 (State Bd. of Equalization v. Superior Court (1985) 39 Cal.3d 633, 641 [217 Cal.Rptr. 238, 703 P.2d 1131]; internal quotation marks omitted.)
It does not follow, however, that res judicata applies to bar plaintiff‘s causes of action against Worton. “The doctrine of res judicata,
Plaintiff contends that failure of the dissolution judgment to dispose of the parties’ interests in the excess assets was caused by Worton‘s fraudulent concealment of the existence of the excess assets which prevented plaintiff from fully presenting her case. In considering this contention, “[i]t is necessary to examine the facts in the light of the policy that a party who failed to assemble all his evidence at the trial should not be privileged to relitigate a case, as well as the policy permitting a party to seek relief from a judgment entered in a proceeding in which he was deprived of a fair opportunity fully to present his case. [][] The latter policy applies where a party‘s adversary, in violation of a duty arising from a trust or confidential relation, has concealed from him facts essential to the protection of his rights, even though such facts concerned issues involved in the case in which the judgment was entered.” (Jorgensen v. Jorgensen (1948) 32 Cal.2d 13, 19 [193 P.2d 728].)
Because of the fiduciary relationship that exists between the spouses regarding the control of community property, each spouse has a duty to inform the other of the existence of community property assets. (In re Marriage of Modnick (1983) 33 Cal.3d 897, 905 [191 Cal.Rptr. 629, 663 P.2d 187].) This fiduciary relationship does not terminate upon separation of the spouses or the commencement of a dissolution proceeding and the duty of disclosure therefore continues until the marriage has been dissolved and the community property divided by the court. (Id., at p. 906.)
According to Worton‘s evidence in support of his motion for summary judgment, at the time of trial Worton informed plaintiff and her attorney, Newell, that he had made no contributions to the plan following separation of the parties because the plan was overfunded. Worton produced no facts showing that overfunding is synonymous with excess assets, or that either plaintiff or Newell saw the connection between overfunding and excess assets. On the contrary, plaintiff testified that she did not know what was meant by overfunding. Construing Worton‘s evidence strictly, as we must, Newell‘s lack of expertise in pension law indicates that he, too, was unaware of the significance of the overfunding.
Worton‘s evidence was directed to, and his arguments below were based on, the principle that there is no duty to disclose the value of a community
Worton‘s failure to reveal the existence of the excess assets to plaintiff constituted a violation of his fiduciary duty to account to her for the community property and deprived her of an opportunity fully to present her case in the dissolution proceeding. Accordingly, the instant action against Worton to recover plaintiff‘s share of the excess assets is not barred by res judicata and summary judgment in favor of Worton was improper.
III
SUMMARY JUDGMENT IN FAVOR OF NEWELL
Under
A
Discovery of Wrongful Conduct
The actual or constructive discovery of an act or omission the client alleges was wrongful commences the limitations period for an action based on that act or omission. (McCann v. Welden (1984) 153 Cal.App.3d 814, 819-821 [200 Cal.Rptr. 703].) Newell‘s alleged wrongful conduct was his failure to discover and obtain evidence of the excess assets as part of the accrued benefits in the plan.
The evidence in support of Newell‘s motion for summary judgment, which was uncontradicted, showed: Before trial of the dissolution proceeding began Newell told plaintiff that he knew little about pension
Plaintiff argues Newell did not present evidence that plaintiff discovered his conduct constituted negligence more than one year before January 24, 1989, when the present action was commenced; accordingly, her cause of action for legal malpractice is not barred by the statute of limitations. Under
More than one year before plaintiff commenced her legal malpractice action she learned facts which linked the judgment‘s failure to divide the excess assets in the plan to Newell‘s failure to discover and obtain evidence of the excess assets, the wrongful omission alleged. Accordingly, the action is barred unless plaintiff did not sustain actual injury as a result of that omission until a time within the one-year period.
B
Actual Injury
In Budd v. Nixen (1971) 6 Cal.3d 195 [98 Cal.Rptr. 849, 491 P.2d 433], our Supreme Court, in discussing the concept of actual injury, ex-
A client sustains actual injury when, as a result of the attorney‘s neligence, a judgment is entered against the client. (Troche v. Daley, supra, 217 Cal.App.3d 403, 410-411 [dismissal of civil action]; Goebel v. Lauderdale (1989) 214 Cal.App.3d 1502, 1506-1508 [263 Cal.Rptr. 275] [conviction in criminal action].) Plaintiff sustained actual injury as a result of Newell‘s alleged wrongful conduct upon entry of the judgment of dissolution which did not divide the excess assets as part of the accrued benefits in the plan.
Citing Robinson v. McGinn (1987) 195 Cal.App.3d 66 [240 Cal.Rptr. 423], plaintiff contends the statute of limitations in
In Robinson a former police officer for the City of Inglewood sued his former attorney for legal malpractice alleging that as a result of defendant‘s negligence plaintiff was denied a disability pension by the city. In reversing summary judgment in defendant‘s favor based on the statute of limitations, we noted that the harm suffered must be irremediable before the statute begins to run in a legal malpractice suit. We held that plaintiff‘s injuries did not become irremediable when individual city officials denied his right to a
Plaintiff‘s reliance on Robinson is misplaced. The administrative appeal discussed in that case resulted in a final administrative adjudication of plaintiff‘s right to receive a disability pension. The equivalent final adjudication in the present case occurred upon entry of the judgment of dissolution which determined the parties’ respective rights in the accrued benefits of the pension plan. Stated differently, the administrative appeal referred to in Robinson is not an appeal in the sense of a postjudgment remedy in a civil action, but is merely the last step in the administrative procedure necessary to secure a final adjudication at the administrative level. By analogy to Robinson, plaintiff suffered irremediable injury as a result of Newell‘s alleged malpractice when the judgment of dissolution was entered.
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. (Troche v. Daley, supra, 217 Cal.App.3d at pp. 410-411.) By the same token, the actual injury plaintiff sustained upon entry of the judgment of dissolution is irremediable despite availability of the postjudgment remedy specified in
To summarize: Plaintiff sustained actual injury upon entry of the judgment of dissolution on August 22, 1986, which was before she discovered the facts constituting the wrongful omission by Newell alleged to constitute professional negligence. (See Budd v. Nixen, supra, 6 Cal.3d at p. 201 [“Ordinarily, the client has already suffered damage when he discovers his attorney‘s negligence....“].) Because such discovery occurred before the end of 1987, plaintiff‘s action for legal malpractice, filed more than one year later
DISPOSITION
That portion of the judgment in favor of defendant Newell and against plaintiff is affirmed; that portion of the judgment in favor of defendant Worton and against plaintiff is reversed. Plaintiff shall pay Newell‘s costs on appeal; Worton shall pay plaintiff‘s costs on appeal and shall bear his own costs on appeal.
Woods (Fred), J., concurred.
JOHNSON, J., Concurring.--I concur wholeheartedly with the ruling and the rationale of that part of the majority‘s decision which reverses the summary judgment as to respondent Worton. I concur separately, however, to register a concern about the limited reading the majority gives to our earlier decision in Robinson v. McGinn (1987) 195 Cal.App.3d 66 [240 Cal.Rptr. 423] in the course of affirming the summary judgment as to respondent Newell.
I concur in the Newell judgment because I agree the harm was “irremediable” in the instant case even though appellant conceivably could file a future motion requesting the trial court to modify its award. In my opinion, the mere possibility the plaintiff might sometime file an independent legal action which might serve to mitigate the damages the defendant‘s malpractice caused does not make the plaintiff‘s harm “remediable.”
I depart from the majority opinion, however, when it implies the rationale of our Robinson opinion is limited to administrative appeals. True, that case happened to involve a situation where the plaintiff‘s harm did not become “irremedial” until he lost an administrative appeal of an administrative body‘s initial determination against him. The rationale of that opinion, however, extends to judicial appeals of judicial decisions as well. Indeed most of the decisions cited in Robinson related to trial court judgments and appeals from those judgments.
Under the Robinson rationale a trial court judgment which is adverse to a client because of his attorney‘s alleged malpractice does not cause “irremedial” harm until any appeal filed in that case likewise has been decided against the client. In Robinson we relied in part on Bowman v. Abramson (E.D.Pa. 1982) 545 F.Supp. 227 which affirmed the dismissal of a legal malpractice case because the two medical malpractice cases allegedly lost because of the lawyer‘s malpractice were still pending on appeal. ” “Until the underlying medical malpractice cases are decided adversely to the plaintiff [by the appellate court] the case against his former attorneys is hypothetical
As we pointed out in Robinson, to require clients to file legal malpractice actions against their lawyers while appeals are still pending in the underlying action “would further burden our existing overly crowded court calendars with the filing of potentially meritless lawsuits by plaintiffs waiting to learn whether they indeed will be suffering irremediable harm.” (Robinson v. McGinn, supra, 195 Cal.App.3d at p. 77.)
To the extent the majority opinion can be read to start the statute of limitations running in legal malpractice actions while the underlying cases are still on appeal I am compelled to dissent from its reasoning. I have reservations both about the logic and the policy of such a rule. We were on the right track in Robinson and should stay there.
Respondents’ petition for review by the Supreme Court was denied January 29, 1992.
