Daily Blast July 18, 2012

Division Three of the Fourth Appellate District Court of Appeal (Santa Ana) on July 18, 2012, published a helpful and well-written legal malpractice opinion in Croucier v. Chavos(July 18, 2012, G045323) ____ Cal.App.4th ____ thanks to the efforts of partners Lisa Cooney (SDO) and Ken Feldman (LAO) who successfully requested publication of the previously unpublished case. The court discussed the standards for equitable tolling and actual injury in a legal malpractice case holding that “‘actual injury’ for purposes of [Code of Civil Procedure] section 340.6 cannot depend on absolute proof as a matter of law that damages were suffered.” (Slip opn., p. 13.)

In the underlying business litigation action, the attorney defendant successfully obtained a default judgment in favor of the plaintiffs, but failed to successfully enforce the judgment. (Slip opn., p. 2.) In June 2008, the plaintiffs hired a new attorney to file a fraudulent conveyance action against the individual defendants from the business litigation. (Id. at p. 4.) Then, in August 2009, plaintiffs filed the present action against the attorney defendant and his law firm for professional negligence based upon the attorney’s failure to successfully enforce the judgment. (Id. at p. 5.) The trial court sustained a demurrer to the first amended complaint without leave to amend based upon the statute of limitations. (Id. at p. 6.) 

The Court of Appeal affirmed, holding that the plaintiffs discovered the wrongful acts by June 2008 when their new attorney took over representation in the underlying business litigation and filed the fraudulent conveyance action. (Slip opn., pp. 9-10.) The court rejected plaintiffs’ argument that they had not suffered actual injury in June 2008 since they did not have evidence that the judgment was collectible at that time. (Id. at pp. 10-11.) The court explained that “factual question of whether the judgment was actually collectible goes to the merits of the malpractice action, not the question of whether the statute of limitations tolled.” (Id. at p. 13.) According to the court, “340.6 pertains to the discovery of an alleged wrongful act or omission, and ‘actual injury’ that logically follows assuming the allegations of wrongful acts or omissions are correct.” (Id. at p. 13, emphasis in original.) Therefore, the plaintiffs suffered “actual injury” by June 2008 when the attorney defendant failed to enforce the judgment in the underlying business litigation. (Id. at pp. 12-13.) Under Jordache, the diminution of the plaintiffs’ ability to enforce the judgment represented an actual injury sufficient to support a legal malpractice cause of action. (Id. at p. 13.) 

Further, the court explained that the efforts of plaintiff’s new attorney to remedy the attorney defendant’s mistakes did not toll the statute of limitations. (Slip opn., p. 14.) Unlike the recent case of Shifren v. Spiro (May 24, 2012, B230631) ___ Cal.App.4th ___ [2012 Cal.App.Lexis 622], in the present case, the existence and effect of the attorney error did not depend upon a judicial resolution of a separate action. (Slip opn., p. 14.) According to the court, although further proceedings might reduce or remedy the plaintiffs’ damage, only the malpractice action could result in findings as to whether the attorney defendant actually committed malpractice and whether the judgment could have been enforced. (Id. at p. 15.)

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