Daily Blast May 24, 2012

This new opinion is not overly helpful, but one you should be aware of nevertheless. On May 24, 2012, Division Three of the Second Appellate District Court of Appeal (LA) filed an opinion in Shifren v. Spiro (May 24, 2012, B230631) ____ Cal.App.4th ____, holding that the attorneys’ alleged negligence in drafting a 2001 trust had no effect until the subsequent adjudication in the marital dissolution action and therefore the plaintiff’s legal malpractice action was not barred by the statute of limitations set forth in Code of Civil Procedure section 340.6. (Slip opn., p. 9.)

Plaintiff, Ken Shifren, filed a legal malpractice action in 2009 against defendants Randy Spiro and the law firm Altshuler & Spiro (“attorneys”) after a court determined in Shifren’s marriage dissolution action that the trust documents the attorneys prepared failed to ensure that Shifren’s mother’s gift of real property would be characterized as his separate property. (Slip opn., p. 2.) In the marriage dissolution action, the court found that the trust documents did not revoke a transmutation agreement between Shifren and his wife stating that all property acquired during the marriage would be characterized as community property. (Ibid.) The attorneys argued that Shifren suffered actual injury for purposes of accrual of the statute of limitations as early as 2001 when the trust documents were prepared. (Ibid.) Alternatively, they argued that he suffered actual injury in 2007 when Shifren incurred attorney fees in the marriage dissolution action to resolve the dispute over the validity of the trust documents. (Id. at p. 4.) The trial court granted the attorneys’ summary judgment motion finding that Shifren’s complaint was barred by the statute of limitations. (Id. at p. 2.) 

The Court of Appeal reversed, however, noting that the attorneys misread Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 743, which holds that a client sustains actual injury when the client suffers legally cognizable damages compensable in a legal malpractice action. (Slip opn., p. 6.) The court rejected the attorneys argument that incurring attorney fees constituted actual injury for purposes of accrual of a legal malpractice action. (Ibid.) Applying the actual injury analysis laid out in Jordache, the court concluded that Shifren did not suffer actual injury in 2007. (Id. at p. 5.) Rather, Shifren suffered actual injury in 2009 upon the judicial determination in the marital dissolution action that the 2001 trust did not revoke and terminate the transmutation agreement. (Ibid.) According to the court, the allegations of attorney error arising from the preparation of the trust documents required a resolution of the marriage dissolution action to establish that the attorneys breached a duty of care owed to Shifren and to establish the consequences of the attorneys’ error. (Id. at p. 2.) As a result, the facts did not demonstrate that the statute began to run on Shifren’s claim before a judicial determination in the marriage dissolution action. (Id. at pp. 2-3.)

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