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The
Practical
Practitioner
Bill Daniels
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29
Advocate 16 (June/July
2002)
Asking for Whom the
Statute Tolls:
Continuing
Representation and the
Statute of Limitations
A. Continuing
Representation
and Tolling.
As a general
rule, the
statute of
limitations for
legal
malpractice
claims is tolled
during the time
that an attorney
continues to
represent a
client. A recent
Court of Appeal
decision,
Lockley v. Law
Office of
Cantrell, Green,
Pekich, Cruz &
McCort, 91 Cal.
App. 4th 875,
110 Cal. Rptr.
2d 877 (2001),
demonstrates
that where there
is objective
evidence of a
continuing
attorney-client
relationship,
tolling becomes
an indefinite
proposition.
Lockley involved
plaintiff Kim
David Lockley, a
former City of
Seal Beach
police officer
of Korean
descent who was
subjected to
racial taunts
and harassment
at work. When
his brother
became involved
in legal
problems out of
state, the City
targeted Lockley
in an April 1988
internal affairs
investigation
and terminated
him. Lockley
appealed the
firing to the
civil service
board, filed a
workers’
compensation
claim and filed
an Equal
Employment
Opportunity
Commission
complaint
alleging racial
discrimination.
Cantrell, Green,
Pekich, Cruz &
McCort
(“Cantrell”)
represented
Lockley on his
workers
compensation
claim. The City
and Lockley
entered into a
compromise and
release
agreement
(“C&R”) under
which Lockley
agreed to
relinquish all
claims against
the City. For
its part, the
City agreed to
process an
application for
retirement
benefits for
Lockley,
treating him as
having a
non-work related
disability and
to notify the
Public Employees
Retirement
System (“PERS”)
that Lockley was
entitled to
retirement
benefits. With
the C&R in hand,
Lockley resigned
from the force
and dropped all
his claims.
The City reneged
on its
agreement. It
notified PERS
that Lockley was
terminated for
misconduct and
delayed
notifying PERS
of Lockley’s
entitlement to
retirement
benefits for
four months,
long enough to
disqualify him.
Lockley revived
his workers’
compensation
claim. After a
long episode of
legal wrangling,
the matter
worked its way
up to the Fourth
District Court
of Appeal, where
Justice
Sonenshine’s
concurring
opinion wondered
aloud why
Lockley’s
attorney had not
pursued a breach
of contract
claim after the
City breached
the C&R
agreement.
Cantrell filed a
petition for
rehearing,
asking that
Justice
Sonenshine’s
remarks be
deleted or
clarified. The
Court of Appeal
ordered a
modification of
the opinion to
add a footnote
stating:
“Lockley’s
attorney on this
appeal did not
represent him at
the time.”
Lockley sued
Cantrell for
legal
malpractice on
February 8,
2000. The trial
court sustained
a demurrer
without leave to
amend based on
the statute of
limitations
after taking
judicial notice
of the modified
opinion. The
Second District
Court of Appeal
reversed.
B. The
Statute of
Limitations.
The statute of
limitations for
legal
malpractice is
found at Code of
Civil Procedure
section 340.6,
which 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 shall
be commenced
within one year
after the
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 exist:
(1) The
plaintiff has
not sustained
actual injury;
(2) The attorney
continues to
represent the
plaintiff
regarding the
specific subject
matter in which
the alleged
wrongful act or
omission
occurred;
(3) The attorney
willfully
conceals the
facts
constituting the
wrongful act or
omission when
such facts are
known to the
attorney, except
that this
subdivision
shall toll only
the four year
limitation; and
(4) The
plaintiff is
under a legal or
physical
disability which
restricts the
plaintiff's
ability to
commence legal
action.
(b) In an action
based upon an
instrument in
writing, the
effective date
of which depends
upon some act or
event of the
future, the
period of
limitations
provided for by
this section
shall commence
to run upon the
occurrence of
such act or
event.
The statute was
adopted in 1997
as the
Legislature’s
response to the
companion cases
of Neel v.
Magana, Olney,
Levy, Catchcart
& Gelfand, 6
Cal. 3d 176, 98
Cal. Rptr. 837
(1971) and Budd
v. Nixen, 6 Cal.
3d 195, 98 Cal.
Rptr. 849
(1971), which
established that
delayed
discovery and
lack of actual
(called
“appreciable”)
harm both acted
to toll the
statute of
limitations.
In Neel, the
Supreme Court
acknowledged
that introducing
tolling into the
limitations
equation came
with a cost.
We recognize
that the instant
ruling will
impose an
increased burden
upon the legal
profession. An
attorney’s error
may not work
damage or
achieve
discovery for
many years after
the act, and the
extension of
liability into
the future poses
a disturbing
prospect. On the
other hand, when
an attorney
raises the
statute of
limitations to
occlude a
client’s action
before that
client has had a
reasonable
opportunity to
bring suit, the
resulting band
of the action
not only starkly
works an
injustice upon
the client but
partially
impugns the very
integrity of the
legal
profession.
The solution,
the high court
suggested, was
for the
Legislature to
provide a
limitation
period for legal
malpractice
similar to that
found in Section
340.5, the
medical
malpractice
statute, which
has a one year
from date of
discovery, four
year absolute
limit.
Section 340.6
adopted the one
year/four year
scheme as
suggested in
Neel. However,
along with the
notion of
defined time
limits are
specific tolling
mechanisms
designed to
extend the time
frames in (1)
absence of
actual damage,
(2) during
continuing
representation,
(3) where there
is
misrepresentation
by the attorney
and (4) where
physical or
legal disability
restricts the
client.
An attorney’s
special fiducial
relationship
with the client,
combined with
the reality that
defective legal
work will not
always cause
appreciable harm
for sometime are
the primary
reasons why
tolling is
specifically
incorporated in
Section 340.6.
C. Continuing
Representation
is Interpreted
Broadly
The purpose of
the “continuous
representation”
rule is to avoid
disrupting the
attorney-client
relationship by
a lawsuit and to
enable an
attorney to
correct or
minimize an
apparent error,
while at the
same time
preventing
lawyers from
defeating
malpractice
claims by
continuing to
represent the
client until the
statute has run.
Laird v.
Blacker, 2 Cal.
4th 606, 618, 7
Cal. Rptr. 2d
550 (1992).
The Court of
Appeal in
Lockley applied
an objective
standard in
analyzing
whether
Cantrell’s
representation
of Lockley met
the standard for
tolling.
“Continuity of
representation
ultimately
depends, not on
the client’s
subjective
beliefs, but
rather on
evidence of an
ongoing mutual
relationship and
of activities in
furtherance of
the
relationship.”
The general rule
is that the
attorney’s
representation
does not end
“until the
agreed tasks or
events have
occurred, the
client consents
to termination
or a court
grants an
application by
counsel for
withdrawal.”
[Emphasis in
original.]
Lockley, supra,
91 Cal. App. 4th
at 887-888, 110
Cal. Rptr. 2d
877.
Using the
objective
standard, the
Court held that
Lockley’s
complaint stated
a claim that
avoided the
statute of
limitations by
virtue of its
allegations that
Cantrell had
continued to
represent him
until within one
year of filing.
“On appeal,
Lockley contends
that statute of
limitations
governing
attorney
malpractice
claims was
tolled while
[Cantrell]
continued to
represent him.
This is a
correct
statement of the
law.” 91 Cal.
App. 4th at 887.
In reaching its
holding, the
Second District
panel decided it
was not bound by
the Fourth
District’s
earlier footnote
implying that
Cantrell’s
representation
of Lockley was
not continuous.
In a lengthy
discussion of
judicial notice
doctrine, the
Second District
concluded that
the additional
footnote added
to Justice
Sonenshine’s
concurring
opinion did not
meet the
standard of
being based on
an adversary
proceeding
adjudicating a
fact question
and found no
substantial
evidence in the
record to
support the
conclusion. The
question of
whether or not
Cantrell’s
representation
was continuous,
the Second
District
determined,
remained in
dispute.
Cantrell, for
its part, argued
that during the
relevant period,
it represented
Lockley only on
his workers’
compensation
claim, not the
C&R agreement.
Since the two
items were not
the same
specific subject
matter, the
continuing
representation
doctrine did not
apply.
The Court of
Appeal rejected
that argument
without
difficulty.
Distinguishing
Foxborough v.
Van Atta, 26
Cal. App. 4th
217, 229, 31
Cal. Rptr. 2d
525 (1994) (“the
limitations
period is not
tolled when an
attorney’s
subsequent role
is only
tangentially
related to the
legal
representation
the attorney
provided to the
plaintiff”), in
which a
continuing
representation
was held as not
occurring where
the attorney was
discharged, then
rehired as an
expert witness,
the court found
that Cantrell’s
argument
attempted to
draw too fine a
line in defining
the limits of
representation.
On its face,
Lockley’s
complaint
alleges
[Cantrell]
continuously
represented
appellant’s
legal interests
on the same
specific matter
of “claim for
worker’s
compensation
from 1988 until
March 1999.” We
may reasonably
infer from the
amended
complaint that
Lockley hired
[Cantrell] in
only one
capacity, that
of legal
representative.
[Emphasis in
original.]
Lockley, supra,
91 Cal. App. 4th
at 889, 110 Cal.
Rptr. 2d 877.
D. Applying
Lockley’s Lesson
The moral of the
story is that in
analyzing
whether there is
a continuing
representation
that will toll
the statute of
limitations,
look to see if
the attorney has
continued to
represent the
client without
interruption in
the same
capacity
throughout the
relationship.
As a practical
matter, Lockley
means that as
long as there
are objective
facts pointing
to the
continuation of
an
attorney-client
relationship
past what would
otherwise be a
time barred by
the statute of
limitations,
there will be an
argument that
the Section
340.6(a)(2)
tolling
provision
applies and a
claim is timely.
In your own
practice,
Lockley
underlines the
importance of
documenting
precisely the
outlines of the
attorney-client
relationship in
a fee agreement
and the
termination of
that
relationship in
writing.
As
counselors-at-law
who are
privileged to
represent people
in California’s
legal system, we
carry great
responsibility.
Section 340.6
and decisional
law such as
Lockley
underline that a
breach of that
responsibility
carries with it
a consequence
that the prudent
lawyer should
not ignore.
29
Advocate 16
(June/July 2002)
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