Daily Blast August 20, 2015

The California Supreme Court published its opinion in Lee v. Hanley (Aug. 20, 2015, S220775) __ Cal.4th __, analyzing whether “an attorney’s refusal to return a former client’s money after the client terminated the representation was ‘a wrongful act or omission . . . arising in the performance of professional services’ under section 340.6(a).” (Slip opn., p. 1.) The Supreme Court held that section 340.6(a) “applies to claims that necessarily depend on proof that an attorney violated a professional obligation in the course of providing professional services unless the claim is for actual fraud.” (Ibid.)

The court explained that “the statutory text [of section 340.6(a)] does not by itself make clear whether the phrase ‘arising in the performance of professional services’ limits the scope of section 3406(a) to legal malpractice claims or covers a broader range of wrongful acts or omission that might arise during the attorney-client relationship.” (Slip opn., pp. 6-7.) Because the language of the statute was ambiguous, the court reviewed the statute’s purpose and legislative intent. (Id.at pp. 7-10.)

The court drew two conclusions from the legislative history: (1) “the Legislature enacted the statute so that the applicable limitations period for such claims would turn on the conduct alleged and ultimately proven, not on the way the complaint was styled,” and (2) “while section 340.6(a) applies to claims other than strictly professional negligence claims, it does not apply to claims that do not depend on proof that the attorney violated a professional obligation.” (Slip opn., pp. 10-11, italics in original.) Thus, the court concluded that “section 340.6(a)’s time bar applies to claims whose merits necessarily depend on proof that an attorney violated a professional obligation in the course of providing services.” (Id. at p. 12.)

In this case, the court determined that plaintiff’s allegations may fall under conversion or may establish that the attorney violated certain professional obligations. (Slip opn., pp. 16-17.) Thus, because the plaintiff’s claim of conversion did not necessarily depend on proof that the attorney violated a professional obligation, the plaintiff’s suit was not barred by section 340.6(a) at the demurrer stage. (Id. at p. 17.) Thus, the Supreme Court affirmed the Court of Appeal’s reversal of the trial court’s judgment sustaining the demurrer. (Id. at p. 18.)

It is important to note that the Supreme Court disapproved of statements in Roger Cleveland Golf Co., Inc. v. Krane & Smith, APC (2014) 225 Cal.App.4th 660, 677, and David Welch Co. v. Erkine & Tulley (1988) 203 Cal.App.3d 884, 893, to the extent they are inconsistent with this opinion. (Slip opn., p. 16.)

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