634 Prospect Avenue LLC v. Loren Phillips & Associates

Filed 11/28/05 634 Prospect Avenue LLC v. Loren Phillips & Associates CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

634 PROSPECT AVENUE LLC, Plaintiff and Appellant, v. LOREN PHILLIPS & ASSOCIATES, INC., et al., Defendants and Respondents.

B178982 (Los Angeles County Super. Ct. No. GC030694)

APPEAL from a judgment of the Superior Court of Los Angeles County.

Jan A. Pluim, Judge. Reversed and remanded.

Cooper, Phillips & Peterson, Thomas M. Phillips, Mitchell F. Ducey, Pauliana Nadjarians, John Tishbi for Plaintiff and Appellant.

No appearance for Defendants and Respondents.

___________________________________________________

Appellant, 634 Prospect Avenue LLC, sued its law firm, respondent Loren Phillips & Associates, Inc. (and individual attorney respondents Loren Phillips and Joe Leyva) for legal malpractice.^[1] The trial court granted summary judgment in favor of respondents on the ground that the action was barred by the one-year statute of limitations. We reverse, since there was a triable issue of material fact as to whether respondents continued to represent appellant, and thus as to whether the statute of limitations was tolled during that period of continuous representation. (Code Civ. Proc., § 340.6, subd. (a).)^[2]

FACTUAL AND PROCEDURAL SUMMARY

Appellant purchased a single-story residence in South Pasadena intending to convert the property into five condominium units and sell each unit individually. In 1997, appellant retained the legal services of respondents for the purpose of processing, completing and filing the necessary paperwork to undertake and complete the construction of the units. The legal representation included obtaining a so-called “white slip,” a document which was a prerequisite for listing the property for sale.

As alleged by appellant, respondents failed to perform the required legal work in a timely manner. Specifically, respondents failed to timely prepare and record a final tract map for the property and to obtain a final subdivision report from the California Department of Real Estate. Appellant thus was unable to proceed with the construction and sale of the condominiums units as planned. Further, respondents’ failure to obtain the white slip on time eventually led to a foreclosure sale of appellant’s property in November of 2001.

On November 6, 2002, appellant filed its lawsuit alleging, in pertinent part, a cause of action for legal malpractice. Respondents moved for summary judgment, or alternatively summary adjudication, on the grounds that (1) appellant’s legal malpractice claim was time barred by the statute of limitations, and (2) appellant alleged only speculative damages with no proximate cause between the demise of the project and the conduct of respondents.

Regarding the statute of limitations, respondents argued that it began to run on August 8, 2001, when appellant sustained actual injury with the filing of a bankruptcy petition, which revealed it was unable to make payments to continue with the construction and development of the condominium. A subsequent schedule of bankruptcy property filed on February 6, 2002, listed a “potential” legal malpractice claim as an asset. The bankruptcy petition was discharged on March 25, 2002, leaving appellant with the right to bring its action for legal malpractice.

Respondents also noted in their motion for summary judgment that appellant was additionally and significantly harmed with the loss of property in a foreclosure sale in November of 2001. Respondents, however, then relied upon an erroneous date for the filing of the present action--December 11, 2002, the date the amended complaint was filed, rather than the proper date of November 6, 2002, when the original complaint was filed--and argued that the present action was barred by the one-year statute of limitations.

In opposing the motion for summary judgment, appellant argued that triable issues of material fact existed. Regarding damages, appellant argued that respondents’ negligence directly and foreseeably prevented the sale of a completed unit and resulted in the property’s foreclosure. Appellant also correctly pointed out that its lawsuit was filed on November 6, 2002.

Appellant thus urged that because it did not sustain actual injury until the November 2001 foreclosure sale of one of the units and that because respondents continued to represent appellant through November of 2001, the original complaint was timely filed on November 6, 2002. Appellant’s evidence that respondents continued to represent appellant through November of 2001 was based on the deposition testimony of respondent Joe Leyva and the declaration of John Isen, the managing agent for the property, who stated that respondents were counsel for appellant from 1998 “through at least November 21, 2001.” Attorney Leyva admitted in his testimony that as of November of 2001 he “still consider[ed] 634 Prospect Avenue to be [respondents’] client” because there were “still some tasks to be performed on behalf of that company” and “still some work to be done before the white slip was issued.” Leyva also acknowledged that on occasion his legal representation of a client could continue for months although no billable work would occur for a time.

Appellant also pointed to the declaration of Tommy Jue, a lessee of the property. Jue stated that he continued to remain in contact with Leyva, who indicated in October of 2001 that he was still working for appellant and who thereafter and through November never even suggested respondents were not still counsel for appellant. Jue attached to his declaration phone bills indicating numerous phone calls from him to respondent’s law office business number from August through October 23, 2001.

On September 13, 2004, the trial court ruled on the summary judgment motion and found that appellant’s action was barred by the statute of limitations. The trial court stated that appellant “failed to show that any [legal] work was performed after August 2001 or that any attorney-client communications occurred after this time.” The trial court further observed that respondents presented evidence that the attorney-client relationship ended in August of 2001 when appellant filed for Chapter 7 bankruptcy, with the potential claim for legal malpractice listed as a bankruptcy asset on an amended schedule filed on February 6, 2002. The court reasoned that after the August 2001 bankruptcy “only the bankruptcy trustee could have acted on behalf of [appellant] including to authorize the expenditure of any moneys for legal work,” and that no trustee ever contacted respondents after bankruptcy. It thus granted summary judgment in favor of respondents.

DISCUSSION

I. The standard of review

We review the record and determine this appeal in accordance with the customary rules of appellate review following a summary judgment. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843-857.) The general rule is, of course, that summary judgment is appropriate where “all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. . . .” (Code Civ. Proc., § 437c, subd. (c).) But summary judgment is a drastic measure which should be used with caution so that it does not become a substitute for trial. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107.)

We review de novo the trial court’s decision to grant summary judgment and “consider all of the evidence set forth in the papers, except that to which objections have been made and sustained by the court, and all [uncontradicted] inferences reasonably deducible from the evidence . . . .” (Code Civ. Proc., § 437c, subd. (c).) We view such evidence and inferences in the light most favorable to the opposing party (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 843), liberally construing the declarations of the opposing party to determine the existence of triable issues of fact (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1556), while strictly scrutinizing the moving party’s papers. (Chevron U.S.A., Inc. v. Superior Court (1992) 4 Cal.App.4th 544, 549.) All doubts as to whether any material, triable issues of fact exist are to be resolved in favor of the party opposing summary judgment. (Id. at p. 553.)

As here, the defendant moving for summary judgment “bears the burden of persuasion that ‘one or more elements of’ the ‘cause of action’ in question ‘cannot be established,’ or that ‘there is a complete defense’ thereto.” (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.) The party opposing summary judgment must make an independent showing by a proper declaration or by reference to a deposition or another discovery product that there is sufficient proof of the matters alleged to raise a triable question of fact if the moving party’s evidence, standing alone, is sufficient to entitle the party to judgment. (See Sebastian International, Inc. v. Peck (1987) 195 Cal.App.3d 803, 807; Hoffman v. Sports Car Club of America (1986) 180 Cal.App.3d 119, 126.)

Exercising our independent judgment to determine as a matter of law the construction and effect of the facts presented (Spitler v. Children’s Institute International (1992) 11 Cal.App.4th 432, 439), we find the trial court erred in granting summary judgment.

II. The one-year statute of limitations for legal malpractice was tolled by respondents’ continuous representation of appellant through November of 2001.

Section 340.6, the applicable statute of limitations, provides that an action against an attorney for legal malpractice must 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 . . . .” (§ 340.6, subd. (a).) However, the one-year “period shall be tolled during the time that . . . [t]he attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred.” (§ 340.6, subd. (a)(2).) The purpose of the continuous representation rule is to “‘avoid the disruption of an attorney-client relationship by a lawsuit while enabling the attorney to correct or minimize an apparent error, and to prevent an attorney from defeating a malpractice cause of action by continuing to represent the client until the statutory period has expired.’” (Laird v. Blacker (1992) 2 Cal.4th 606, 618.)

“An attorney continues to represent a client ‘on the same specific subject matter until the agreed tasks have been completed or events inherent in the representation have occurred.’” (Gold v. Weissman (2004) 114 Cal.App.4th 1195, 1200.) “‘[S]o long as there are unsettled matters tangential to a case, and the attorney assists the client with these matters, he is acting as his representative,’ and the statute of limitations is tolled.” (O’Neill v. Tichy (1993) 19 Cal.App.4th 114, 121.) Accordingly, “[t]he 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.’” (Lockley v. Law Office of Contrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 887-888.)

In the present case, one of the respondents, Attorney Joe Leyva, unequivocally indicated under oath during his deposition that respondents continued to represent appellant through November of 2001, which is less than one year prior to the filing of appellant’s complaint on November 6, 2002.^[3] It is well settled that “[o]n a motion for summary judgment, ‘the credibility of the [deposition] admissions are valued so highly that the controverting affidavits may be disregarded as irrelevant, inadmissible or evasive.’” (Wilkins v. National Broadcasting Co. (1999) 71 Cal.App.4th 1066, 1082.) Thus, substantial deference must be accorded any admission made by a party that would establish a material fact.

The conclusion that respondents’ representation of appellant continued through November of 2001, is also supported by other evidence. John Isen, the managing agent for the property in question, declared that respondents were counsel for appellant from 1998 “through at least November 21, 2001.” And Tommy Jue, a lessee of the property, stated in a declaration that he continued to remain in contact with Leyva, that Leyva indicated in October of 2001 that he was still working for appellant to finish work on the condominium project, and that Leyva thereafter and through November of 2001 never even suggested respondents were not still counsel for appellant.

Although the trial court opined, in granting summary judgment, that appellant “failed to show that any [legal] work was performed after August 2001 or that any attorney-client communications occurred after this time,” such facts are not dispositive. Nor is the trial court’s observation determinative that after appellant filed for bankruptcy on August 8, 2001, only a bankruptcy trustee could have acted on behalf of appellant and authorized the expenditure of any money for legal work.

Respondent Leyva considered the attorney-client relationship continuing through November of 2001 and explained, for example, that a month or two could pass with no billable work because of the pending nature of other related matters. Also, although the specific details regarding each of the brief phone calls is unknown, Jue attached to his declaration his phone bills indicating numerous phone calls to respondents’ law office phone number from August through October 23, 2001, and asserted generally that the conversations concerned the status of the white slip and the need for a bond. Such phone calls further support the conclusion that respondents’ representation of appellant continued well past August of 2001.

Moreover, the absence of any billing by respondents for several months is explained by respondent Leyva’s deposition testimony, which indicated that months could go by without any billing while waiting for relevant events to occur. Indeed, Leyva admitted the representation continued through November of 2001 because “there was still some work to be done before the white slip was issued.” Similarly, Leyva’s August 16, 2001, letter to appellant expressly stated that it would take at least another 30 to 60 days for respondents to obtain the white slip in question.

Accordingly, a triable issue of material fact existed as to whether respondents continually represented appellant through November of 2001. Such continued representation effectively tolled the controlling statute of limitations and rendered appellant’s lawsuit timely filed. The trial court thus erred in granting summary judgment in favor of respondents based on the statute of limitations.

III. Respondents’ alternative basis for summary judgment is also without merit.

Respondents also moved for summary judgment on the grounds of the purported lack of actual injury proximately caused by the alleged negligence. The trial court, however, did not discuss respondents’ alternative ground for summary judgment. Since the judgment must be affirmed if proper on any grounds (see West Pico Furniture Co. v. Superior Court (1961) 56 Cal.2d 407, 413-414; Constance B. v. State of California (1986) 178 Cal.App.3d 200, 211), we therefore address respondents’ alternative theory.

Respondents urged that appellant’s damages were only “speculative,” and the failure of the condominium project was due to “financial and construction delays” and not legal malpractice. However, we find the foreclosure of the property constituted sufficient “appreciable and actual harm” (Thompson v. Halvonik (1995) 36 Cal.App.4th 657, 661), and that respondents’ argument as to lack of proximate cause was essentially conclusionary, argumentative and based on conjecture rather than any factual predicate in the record. (See Joseph E. Di Loreto, Inc. v. O’Neill (1991) 1 Cal.App.4th 149, 161; Baron v. Mare (1975) 47 Cal.App.3d 304, 309, 311.)

Thus, the alternative ground respondents alleged for summary judgment was also without merit, and the trial court erred in granting summary judgment.

DISPOSITION

The judgment is reversed, and the matter is remanded to the trial court for further proceedings. Appellant is entitled to costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS.

BOREN, P.J.

We concur:

DOI TODD, J.

ASHMANN-GERST, J.

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^[1] Appellant also sued Attorneys Rhonda Walker and Tommy Jue for different but related claims. Appellant has settled its claims against those two parties.

^[2] Unless otherwise indicated, all statutory references are to the Code of Civil Procedure.

Section 340.6, subdivision (a) provides, in pertinent part, that the time for commencement of a legal malpractice action “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] Specifically, the following colloquy ensued during his Leyva’s deposition: “Q. Did you still consider 634 Prospect Avenue to be your client in September of 2001? [¶] A. Yes. [¶] Q. And October of 2001? [¶] A. Yes. [¶] Q. And November of 2001? [¶] A. Yes. [¶] That’s because there was still some tasks to be performed on behalf of that company, correct.? [¶] A. Correct. [¶] Q. And there was still some work to be done before the white slip was issued, correct? [¶] A. Correct. [¶] Q. Has it been your experience that on occasion you represent a client over a span of more than a few months, say up to a year and there might be as much as 30 or 60 days when you do no billable work while you’re waiting for other things to occur? [¶] A. Yes. [¶] Q. In that regard it would be true that you still represent the client, correct? [¶] A. Correct. [¶] And it would be true that you still would have some work to be done generally speaking. You’re just waiting for some other matters to take place? [¶] A. Correct.”