26th Jul 2011

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One year period tolled where client has not sustained ‘actual injury’

Code of Civil Procedure § 340.6 states: “(a) an action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services must be commenced within one year after 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 exists: (1) the plaintiff has not sustained actual injury, (2) the attorney continues to represent the plaintiff the specific subject matter in which the alleged wrongful act or omission occurred.” [CCP § 340.6(a)(1)(2)]

Where the alleged attorney malpractice results in the client suing a third party, actual injury occurs when the client learned of the attorney’s negligence and not at some future time when the third party trial is lost. [Truong v. Glasser (2009) 181 Cal.App.4th 102, 112, 103 Cal.Rptr.3d 811] Actual injury refers only to the legally cognizable damage necessary to assert the cause of action. There is no requirement that an adjudication or settlement must first confirm a causal nexus between the attorney’s error and the asserted injury. The determination of actual injury requires only a factual analysis of the claimed error and its consequences. An attorney’s negligence that allows a third party to interpose an objectively viable defense causes immediate injury to the clients in the form of additional litigation costs in the third party litigation as well as reducing the value of the claim. [Jordache Enterprises v. Brobeck (1998) 18 Cal.4th 739, 752, 76 Cal.Rptr.2d 749, cited in Truong v. Glasser (2009) 181 Cal.App.4th 102, 113,103 Cal.Rptr.3d 811] In Jordache, the attorney failed to advise plaintiffs to file a claim with his liability insurers covering the underlying action. Over 2 years after the attorney’s negligence, plaintiff retained another law firm that recognized the original attorney should have told the plaintiff to tender claims to the liability insurers. The Jordache court concluded that the attorney’s negligence allowing the insurers to interpose a viable defense of delay in making a claim, caused injury to the clients well before the litigation with the insurer was concluded. [Troung v. Glasser (2009) 181 Cal.App.4th 102,113, 103 Cal.Rptr.3d 811]

Continuous representation

The application of the continuing-representation tolling provision is rooted in two considerations: (1) it prevents the attorney from defeating a malpractice action by continuing to represent the client until the statute of limitations has run; and (2) it avoids forcing the client to file a lawsuit that would disrupt the ongoing attorney-client relationship, which would prevent the negligent attorney from attempting to correct or minimize the error. [Troung v. Glasser (2009) 181 Cal.App.4th 102, 116, 103 Cal.Rptr.3d 811]

The attorney’s representation is completed when the agreed tasks or events have occurred, the client consents to termination or (in the context of litigation) when a court grants an application by counsel for withdrawal. [Troung v. Glasser, supra.] For purposes of the statute of limitations the attorney’s representation is concluded as to the specific matter when the parties agree, and does not depend on a formal termination like withdrawing as counsel of record. The failure to formally withdraw as attorney of record, standing alone, will not toll the statute of limitations under the rubric of continued representation. The continuous representation tolling provisions depend, not on the client’s subjective beliefs, but rather on evidence of an ongoing mutual relationship and of activities in furtherance of the relationship. [Troung v. Glasser (2009) 181 Cal.App.4th 102, 116, 103 Cal.Rptr.3d 811] Where there is no dispute that the client hires a different attorney to sue a third party, and the attorney was only retained as a transactional attorney, the relationship was terminated upon change of counsel. [Troung v. Glasser (2009) 181 Cal.App.4th 102, 116-117, 103 Cal.Rptr.3d 811]

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