Cal. Code Civ. Proc. § 340.6 (2022) sets out that the statute of limitations for an action against an attorney for a wrongful act or omission, other than for actual fraud, is 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. Except for a claim for which the plaintiff is required to establish the plaintiff's factual innocence, the time for commencement of legal action shall not exceed four years except that the period shall be tolled during the time that any of the following exist: the plaintiff has not sustained actual injury; the attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred; the attorney willfully conceals the facts constituting the wrongful act or omission when those facts are known to the attorney (this tolls only the four-year limitation); the plaintiff is under a legal or physical disability that restricts the plaintiff's ability to commence legal action; or, a dispute between the lawyer and client concerning fees, costs, or both is pending resolution. (Cal. Code Civ. Proc. § 340.6 (2022))
Cal. Code Civ. Proc. § 340.6(a) applies to claims whose merits necessarily depend on proof that an attorney violated a professional obligation in the course of providing professional services. (Lee v. Hanley, 191 Cal.Rptr.3d 536, 354 P.3d 334, 61 Cal.4th 1225 (Cal. 2015))
In this context, a “professional obligation” is an obligation that an attorney has by virtue of being an attorney, such as fiduciary obligations, the obligation to perform competently, the obligation to perform the services contemplated in a legal services contract into which an attorney has entered, and the obligations embodied in the Rules of Professional Conduct. (Lee v. Hanley, 191 Cal.Rptr.3d 536, 354 P.3d 334, 61 Cal.4th 1225 (Cal. 2015))
Where actual fraud is alleged, Cal. Code Civ. Proc. § 338(d) provides the applicable statute of limitations. (Stueve Bros. Farms, LLC v. Kahn, 166 Cal.Rptr.3d 116, 222 Cal.App.4th 303 (Cal. App. 2013))
Cal. Code Civ. Proc. § 338(d) sets out a three-year statute of limitations for fraud actions. The cause of action in such a case is not deemed to have accrued until the discovery of the fraud by the aggrieved party. (Cal. Code Civ. Proc. § 338 (2022))
For the purposes of applying the one-year-from-discovery limitation in Cal. Code Civ. Proc. § 340.6, the defendant bears the burden of proving when the plaintiff discovered, or through the use of reasonable diligence should have discovered, the facts constituting the defendant's alleged malpractice. (Samuels v. Mix, 22 Cal.4th 1, 91 Cal.Rptr.2d 273, 989 P.2d 701 (Cal. 1999))
Section 340.6 does not provide a standard for determining when an attorney's representation in a specific subject matter terminates. Ordinarily, an attorney's representation ends when the client discharges the attorney or consents to a withdrawal, the court consents to the attorney's withdrawal, or upon completion of the tasks for which the client retained the attorney. However, an attorney may withdraw from representation within the meaning of the statute, even without a client's consent. In such a case, the representation ends when the client actually has or reasonably should have no expectation that the attorney will provide further legal services. This is an objective test and focuses on the client's reasonable expectations in light of the particular facts of the attorney-client relationship. (Wang v. Nesse, H048669 (Cal. App. 2022))
Cal. Code Civ. Proc. § 340.6 (2022) sets out that the statute of limitations for an action against an attorney for a wrongful act or omission, other than for actual fraud, is 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. Except for a claim for which the plaintiff is required to establish the plaintiff's factual innocence, the time for commencement of legal action shall not exceed four years. However, if specified conditions exist, the period is tolled:
340.6. Attorney's wrongful act or omission in performance of professional services
(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. If the plaintiff is required to establish the plaintiff's factual innocence for an underlying criminal charge as an element of the plaintiff's claim, the action shall be commenced within two years after the plaintiff achieves postconviction exoneration in the form of a final judicial disposition of the criminal case. Except for a claim for which the plaintiff is required to establish the plaintiff's factual innocence, the time for commencement of legal action shall not 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 those facts are known to the attorney, except that this subdivision shall toll only the four-year limitation.
(4) The plaintiff is under a legal or physical disability that restricts the plaintiff's ability to commence legal action.
(5) A dispute between the lawyer and client concerning fees, costs, or both is pending resolution under Article 13 (commencing with Section 6200) of Chapter 4 of Division 3 of the Business and Professions Code. As used in this paragraph, "pending" means from the date a request for arbitration is filed until 30 days after receipt of notice of the award of the arbitrators, or receipt of notice that the arbitration is otherwise terminated, whichever occurs first.
(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 that act or event.
In Lee v. Hanley, 191 Cal.Rptr.3d 536, 354 P.3d 334, 61 Cal.4th 1225 (Cal. 2015), the California Supreme Court concluded that Cal. Code Civ. Proc. § 340.6(a) applies to claims whose merits necessarily depend on proof that an attorney violated a professional obligation in the course of providing professional services. In this context, a “professional obligation” is an obligation that an attorney has by virtue of being an attorney, such as fiduciary obligations; the obligation to perform competently; the obligation to perform the services contemplated in a legal services contract into which an attorney has entered; and the obligations embodied in the Rules of Professional Conduct (at 341-342):
In light of these observations, we conclude that section 340.6(a)'s time bar applies to claims whose merits necessarily depend on proof that an
[61 Cal.4th 1237]
attorney violated a professional obligation in the course of providing professional services. In this context, a “ professional obligation” is an obligation
[354 P.3d 342]
that an attorney has by virtue of being an attorney, such as fiduciary obligations, the obligation to perform competently, the obligation to perform the services contemplated in a legal services contract into which an attorney has entered, and the obligations embodied in the Rules of Professional Conduct. By contrast, as the Court of Appeal observed,
[191 Cal.Rptr.3d 546]
section 340.6(a) does not bar a claim for wrongdoing—for example, garden-variety theft—that does not require proof that the attorney has violated a professional obligation, even if the theft occurs while the attorney and the victim are discussing the victim's legal affairs. Section 340.6(a) also does not bar a claim arising from an attorney's performance of services that are not “professional services,” meaning “services performed by an attorney which can be judged against the skill, prudence and diligence commonly possessed by other attorneys.” (Quintilliani v. Mannerino (1998) 62 Cal.App.4th 54, 64, 72 Cal.Rptr.2d 359 (Quintilliani).)
The Court disapproved of previous appellate court decisions finding that another statute of limitations was applicable to causes of action based on a defendant's breach of their fiduciary duties (at 343-344):
Our holding today is in tension with statements in Roger Cleveland, supra, 225 Cal.App.4th 660, 677, 170 Cal.Rptr.3d 431 [reading section 340.6(a) “as a professional negligence statute”] and David Welch Co. v. Erskine & Tulley (1988) 203 Cal.App.3d 884, 893, 250 Cal.Rptr. 339 [“[W]here a cause of action is based on a defendant's breach of its fiduciary duties, the four-year catchall statute set
[354 P.3d 344]
forth in Code of Civil Procedure section 343 applies.”].) We disapprove those decisions to the extent they are inconsistent with this opinion.
In Samuels v. Mix, 22 Cal.4th 1, 91 Cal.Rptr.2d 273, 989 P.2d 701 (Cal. 1999), the California Supreme Court held (at 275):
For purposes of applying the one-year-from-discovery limitation on commencement of attorney malpractice actions in Code of Civil Procedure section 340.6, subdivision (a)(section 340.6(a)),1 who bears the burden of proving when the plaintiff discovered, or through the use of reasonable diligence should have discovered, the facts constituting the defendant's alleged malpractice? As explained below, we hold the defendant bears that burden.
The Court explained that a defendant must prove the facts necessary to enjoy the benefit of a statute of limitations. The alternate one-year-from-discovery limitation in section 340.6(a) is potentially available only to the defendant, and only to reduce the limitations period of four years down to as little as one. Accordingly, the defendant has the burden of proof on section 340.6(a)'s alternate limitations provision (at 278-279):
Defendant does not dispute he has the burden of proof on section 340.6(a)'s basic four-years-from-occurrence limitation on attorney malpractice actions. As previously explained, a defendant must prove the facts necessary to enjoy the benefit of a statute of limitations (Evid. Code, § 500; see, e.g., Kaiser Foundation Hospitals v. Workers' Comp. Appeals Bd. (1985) 39 Cal.3d 57, 67, fn. 8, 216 Cal.Rptr. 115, 702 P.2d 197; Colonial Ins. Co. v. Ind. Acc. Com. (1945) 27 Cal.2d 437, 440, 164 P.2d 490) and, indisputably, section 340.6(a)'s four-year provision is, as section 340.6(a) is generally, a statute of limitations.
For the same reason, defendant has the burden of proof on section 340.6(a)'s alternate one-year-from-discovery limitation on attorney malpractice actions. Simply stated, this one-year alternate provision also is a statute of limitations and, therefore, a defendant must prove the facts necessary to enjoy its benefit. That the alternate limitations provision happens to use verbal cognates of the noun "discovery" cannot be deemed to effect an incorporation of the "discovery rule," complete and in its entirety.
[91 Cal.Rptr.2d 279]
Unlike the discovery rule, which is "treated as an exception" to the statute of limitations (Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 437, 159 P.2d 958), section 340.6(a)'s alternate limitations provision is indeed a statute of limitations. And unlike the discovery rule, which runs in favor of the plaintiff by enlarging his or her time without a set limit, the alternate limitations provision of section 340.6(a) runs in favor of the defendant by cutting off the plaintiffs time definitively. (See Flowers v. Torrance Memorial Hospital Medical Center, supra, 8 Cal.4th at p. 999, 35 Cal.Rptr.2d 685, 884 P.2d 142.)
The alternate limitations provision, moreover, is potentially available only to the defendant, and only to reduce the limitations period of four years down to as little as one. Accordingly, whether or not the alternate limitations provision is actually available in any given case is for the defendant to prove. For, if the defendant has the burden of proof on the basic limitations provision, which can only prescribe a longer period, a fortiori he has the burden of proof on the alternate limitations provision, which can only prescribe a shorter one.
In Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison, 18 Cal.4th 739, 76 Cal.Rptr.2d 749, 958 P.2d 1062 (Cal. 1998), the California Supreme Court explained that the test for actual injury under Cal. Code Civ. Proc. § 340.6 is whether the plaintiff has sustained any damages compensable in an action, other than one for actual fraud, against an attorney for a wrongful act or omission arising in the performance of professional services. Determining when an actual injury occurred is predominantly a factual inquiry (at 751):
The test for actual injury under section 340.6, therefore, is whether the plaintiff has sustained any damages compensable in an action, other than one for actual fraud, against an attorney for a wrongful act or omission arising in the performance of professional services. This interpretation is consistent with the plain language of the statute and the Legislature's manifest intent in enacting section 340.6. As the lead and concurring opinions in Adams emphasized, determining when actual injury occurred is predominantly a factual inquiry. (Adams, supra, 11 Cal.4th at p. 588, 46 Cal.Rptr.2d 594, 904 P.2d 1205 (lead opn. of Arabian, J.); id. at p. 595, 46 Cal.Rptr.2d 594, 904 P.2d 1205 (conc. opn. of Kennard, J.).) When the material facts are undisputed, the trial court can resolve the matter as a question of law in conformity with summary judgment principles. (Id. at pp. 592, 46 Cal.Rptr.2d 594, 904 P.2d 1205 (lead opn. of Arabian, J.).)
The Court explained that the determination of actual injury requires a factual analysis of the claimed error and its consequences. The inquiry concerns whether events have developed to a point where the plaintiff is entitled to a legal remedy, not merely a symbolic judgment such as an award of nominal damages. Accordingly, the Court found that the plaintiff sustained actual injury no later than December 1987, at which point they had lost millions of dollars. These damages were sufficiently manifest, nonspeculative, and mature that the plaintiff tried to recover them as damages in its insurance coverage suits. The Court explained that speculative and contingent injuries are those that do not yet exist, as when an attorney's error creates only a potential for harm in the future. An existing injury is not contingent or speculative simply because future events may affect its permanency or the amount of monetary damages eventually incurred. Thus, the plaintiff's insurance coverage litigation resolution was relevant to the attorney's alleged negligence only insofar as it potentially affected the amount of damages the plaintiff might recover from the attorney. Therefore, the Court rejected the appellate court's determination that any injury the plaintiff sustained was only speculative until the settlement of the insurance coverage actions (at 752-754):
The Court of Appeal suggested that actual injury requires an established causal nexus between the attorney's negligent acts and an invasion of the client's legally protected interests. The court also suggested that establishing this nexus often will turn on the outcome of related litigation, and, therefore, actual injury does not occur until related litigation concludes.
However, this approach departs from Budd and Adams. Actual injury refers only to the legally cognizable damage necessary to assert the cause of action. There is no requirement that an adjudication or settlement must first confirm a causal nexus between the attorney's error and the asserted injury. The determination of actual injury requires only a factual analysis of the claimed error and its consequences. The inquiry necessarily is more qualitative than quantitative because the fact of damage, rather than the amount, is the critical factor. (Adams, supra, 11 Cal.4th at p. 589, 46 Cal.Rptr.2d 594, 904 P.2d 1205 (lead opn. of Arabian, J.); id. at p. 595, 46 Cal.Rptr.2d 594, 904 P.2d 1205 (conc. opn. of Kennard, J.); Laird, supra, 2 Cal.4th at pp. 612, 613, 7 Cal.Rptr.2d 550, 828 P.2d 691; Budd, supra, 6 Cal.3d at pp. 200-201, 98 Cal.Rptr. 849, 491 P.2d 433.)
Of course, nominal damages will not end the tolling of section 340.6's limitations period. Thus, there is no basis for Jordache's expressed concern that the statutory period will run once the plaintiff sustains the "first dollar" of injury. Instead, the inquiry concerns whether "events have developed to a point where plaintiff is entitled to a legal remedy, not merely a symbolic judgment such as an award of nominal damages." (Davies v. Krasna, supra, 14 Cal.3d at p. 513, 121 Cal.Rptr. 705, 535 P.2d 1161.) However, once the plaintiff suffers actual harm, neither difficulty in proving damages nor uncertainty as to their amount tolls the limitations period. (Id. at p. 514, 121 Cal.Rptr. 705, 535 P.2d 1161.)
Here, the undisputed facts established that Jordache sustained actual injury as a result of Brobeck's alleged neglect no later than December 1987. By then, Jordache had lost millions of dollars--both in unpaid insurance benefits for defense costs in the Marciano action and in lost profits from diversion of investment funds to pay these defense costs. As Brobeck asserts, these damages were sufficiently manifest, nonspeculative,
Page 759
and mature that Jordache tried to recover them as damages in its insurance coverage suits.
Brobeck also asserts that the years of delay in tendering defense of the Marciano action to the insurers gave them a defense to payment they would not have had if the tender had been made as Jordache's insurance policies required. Consequently, Brobeck's alleged neglect diminished Jordache's insurance contract rights. Because the insurers could and National Union did [18 Cal.4th 753] assert an objectively viable "late notice" defense to Jordache's claims, Jordache necessarily incurred additional litigation costs to meet that defense, and the settlement value of its claims decreased. (Cf. Laird, supra, 2 Cal.4th at p. 615, 7 Cal.Rptr.2d 550, 828 P.2d 691.)
Ultimately, however, Jordache's insurance coverage litigation could not determine the existence or effect of Brobeck's alleged negligence. As Brobeck notes, the alleged failure to advise Jordache on insurance matters was not at issue in the coverage lawsuits. Thus, the resolution of that litigation would not determine whether Brobeck breached its duty to Jordache. For the same reason, the coverage litigation could not determine the consequences resulting from Brobeck's alleged breach of duty. The coverage litigation's resolution was relevant to Brobeck's alleged negligence only insofar as it potentially affected the amount of damages Jordache might recover from Brobeck.
The Court of Appeal nonetheless stated that any injury Jordache sustained was only speculative until settlement of the coverage actions. The court reasoned that if Jordache had prevailed on its claim that notice to Advocate Brokerage was timely notice to the insurers, then Brobeck's omissions would have caused no injury. Similarly, the court said that if Jordache's policies were found to provide no potential coverage for the Marciano action, then Brobeck's failure to advise Jordache to tender the defense would not have affected Jordache's policy rights.
However, the result of Jordache's coverage litigation could only confirm, but not create, Jordache's actual injuries from the late tender of the Marciano action's defense. Jordache's right to an insurer-funded defense existed or not when that action first embroiled Jordache. The right to that insurance benefit, the impairment of that right, and Jordache's expenditures while that right was unavailable, did not arise for the first time when Jordache settled with the insurers. As Brobeck suggests, a finding in Jordache's coverage litigation that its policies provided no coverage could have given Brobeck at best a defense to some of Jordache's damage claims. Similarly, a determination that Jordache's contacts with Advocate Brokerage satisfied the policies' notice requirements would not preclude Brobeck's potential liability for not advising a more direct, certain, and timely method of obtaining an insurer-funded defense of the Marciano action. To paraphrase an observation from Laird: Although the outcome of the coverage litigation may have reduced Jordache's damages, that action could neither necessarily exonerate Brobeck, nor extinguish Jordache's action against Brobeck for failure to render timely advice on insurance issues. (Laird, supra, 2 Cal.4th at p. 614, 7 Cal.Rptr.2d 550, 828 P.2d 691.)
[18 Cal.4th 754] Jordache's injuries were not speculative or contingent until the trial court ruled the insurers had a duty to defend Jordache and Jordache settled its coverage claims. As Adams reiterated, speculative and contingent injuries are those that do not yet exist, as when an attorney's error creates only a potential for harm in the future. (Adams, supra, 11 Cal.4th at pp. 589-590, 46 Cal.Rptr.2d 594, 904 P.2d 1205 (lead opn. of Arabian, J.); id. at pp. 597-598, 46 Cal.Rptr.2d 594, 904 P.2d 1205 (conc. opn. of Kennard, J.).) An existing injury is not contingent or speculative simply because future events may affect its permanency or the amount of monetary damages eventually incurred. (Foxborough v. Van Atta, supra, 26 Cal.App.4th at p. 227, 31 Cal.Rptr.2d 525; see Safine v. Sinnott (1993) 15 Cal.App.4th 614, 617-618, 19 Cal.Rptr.2d 52; cf. Laird, supra, 2 Cal.4th at pp. 614-615, 7 Cal.Rptr.2d 550, 828 P.2d 691.) Thus, we must distinguish between an actual, existing injury that might be remedied or reduced in the future, and a speculative or contingent injury
Page 760
that might or might not arise in the future. Here, Jordache alleged it expended millions of dollars to defend the Marciano action and lost millions of dollars from profitable investments forgone to pay defense costs. These actual, existing injuries, and the diminution of Jordache's insurance policy rights the late tender occasioned, did not first arise when the coverage litigation was settled.
In Austin v. Medicis, 21 Cal.App.5th 577, 230 Cal.Rptr.3d 528 (Cal. App. 2018), the California Second District Court of Appeal found that the plaintiff's causes of action for breach of express and implied contract, unlawful rescission of contract, and constructive fraud were governed by the statute of limitations set out in Cal. Code Civ. Proc. § 340.6(a). The Court explained that while these claims encompassed more than attorney negligence, they depended on proof that an attorney violated a professional obligation in the course of providing professional services. The Court also clarified that while section 340.6(a), exempts claims of "actual fraud" from its limitations period, that exemption does not extend to claims of constructive fraud (at 587):
Austin's first, second, third, and fifth causes of action for breach of express and implied contract, unlawful rescission of contract, and constructive fraud plainly encompass more than attorney negligence. Nevertheless, we conclude they "depend on proof that an attorney violated a professional obligation in the course of providing professional services." (Lee, supra, 61 Cal.4th at pp. 1236–1237, 191 Cal.Rptr.3d 536, 354 P.3d 334.)
The gist of these causes of action is that Medicis did not provide the full range of professional services for which he was paid, and those he did perform were not of the quality or skill for which he was paid. Because this amounts to a fee dispute concerning Medicis's obligations as an attorney, these causes of action are governed by section 340.6, subdivision (a). (Lee, supra, 61 Cal.4th at pp. 1236–1237, 191 Cal.Rptr.3d 536, 354 P.3d 334.)
That conclusion extends to the fifth cause of action, for constructive fraud. To be sure, section 340.6, subdivision (a), exempts claims of "actual fraud" from its limitations period—but the exemption does not extend to claims of constructive fraud. (Quintilliani v. Mannerino (1998) 62 Cal.App.4th 54, 69–70, 72 Cal.Rptr.2d 359.) As such, the fifth cause of action is also governed by section 340.6.
In Stueve Bros. Farms, LLC v. Kahn, 166 Cal.Rptr.3d 116, 222 Cal.App.4th 303 (Cal. App. 2013), the California Fourth District Court of Appeal explained that where actual fraud is alleged, Cal. Code Civ. Proc. § 338(d) provides the applicable statute of limitations. Causes of action based on actual fraud include causes of action based on fraudulent concealment, which is a species of fraud or deceit (at 321-322):
Finally, as we recall, the Code of Civil Procedure section 340.6 statute of limitations does not apply to causes of action for actual fraud. “Section 338, subdivision (d) provides for a three-year statute for ‘[a]n action for relief on the ground of fraud or mistake.’ This statute applies to any action for conspiracy based upon fraud. [Citation.]” (Hatch v. Collins (1990) 225 Cal.App.3d 1104, 1110, 275 Cal.Rptr. 476; see also Fuller v. First Franklin Financial Corp. (2013) 216 Cal.App.4th 955, 963, 163 Cal.Rptr.3d 44.)
The Stueves argue that the three-year Code of Civil Procedure section 338, subdivision (d) statute of limitations applies with respect to their fraud-based causes of action. And, as they correctly observe, that statute provides that a cause of action based on fraud “is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud....” (Code Civ. Proc., § 338, subd. (d).) They contend that they did not discover any of the facts underlying Berger Kahn's fraud until January 2010, the same year that they filed their lawsuit, so their fraud-based causes of action are not time-barred.
Berger Kahn is little concerned with the Code of Civil Procedure section 338, subdivision (d) statute of limitations, because it contends that the Stueves have failed to allege facts sufficient to support a cause of action based on actual fraud. We are not convinced of that failure, however, for reasons we shall discuss below. The Stueves have alleged, at a minimum, that
[222 Cal.App.4th 322]
Attorney Allen and thus Berger Kahn conspired with Attorney Novell to commit fraud. Whether the facts will show that the section 338, subdivision (d) limitations period bars the causes of action for actual fraud is a matter to be addressed on remand.
To be clear, however, we note that causes of action for either constructive fraud or negligent misrepresentation are not governed by Code of Civil Procedure section 338, subdivision (d). Rather, those causes of action are governed by Code of Civil Procedure section 340.6. (Quintilliani v. Mannerino (1998) 62 Cal.App.4th 54, 69–70, 72 Cal.Rptr.2d 359.) Only causes of action based on actual fraud are governed by section 338, subdivision (d). This includes, contrary to Berger Kahn's assertion, causes of action based on fraudulent concealment, which “is a species of fraud or deceit. [Citations.]” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868, 76 Cal.Rptr.3d 325; accord, Vega v. Jones, Day, Reavis & Pogue (2004) 121 Cal.App.4th 282, 291–294, 17 Cal.Rptr.3d 26.)
Stoll v. Superior Court (1992) 9 Cal.App.4th 1362, 12 Cal.Rptr.2d 354 is inapposite. That case applied Code of Civil Procedure section 340.6 to a cause of action for breach of fiduciary duty based on the failure to comply with certain California Rules of Professional Conduct concerning the duty to make various disclosures. (Id. at pp. 1365–1366, 1369, 12 Cal.Rptr.2d 354.) This is not the same as a cause of action for fraudulent concealment, which requires an allegation that “the defendant ... intentionally concealed or suppressed [a] fact with the intent to defraud the plaintiff.” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, supra, 162 Cal.App.4th at p. 868, 76 Cal.Rptr.3d 325.) Where fraudulent concealment is properly alleged, we apply Code of Civil Procedure section 338, subdivision (d). (See Vega v. Jones, Day, Reavis & Pogue, supra, 121 Cal.App.4th at pp. 292, 298, 17 Cal.Rptr.3d 26.)
Subdivision (d) of Cal. Code Civ. Proc. § 338 (2022) sets out a three-year statute of limitations for fraud actions. The cause of action in such a case is not deemed to have accrued until the discovery of the fraud by the aggrieved party:
338. Liability created by statute; trespass or injury to real property; taking, detaining or injuring goods or chattels; fraud or mistake; bond of public official; notary's bond; slander of title; section 17536, Business and Professions Code; Water Quality Control Act; Section 19, Article 1, California Constitution; division 26, Health and Safety Code; sections 1603.1, 1615, 5650.1, Fish and Game Code; validity of special tax levy; violation of FPA or Forestry and Fire Protection rules and regulations
Within three years:
[...]
(d) An action for relief on the ground of fraud or mistake. The cause of action in that case is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.
[...]
In Wang v. Nesse, H048669 (Cal. App. 2022), cited at 81 Cal. App. 5th 428, the California Sixth District Court of Appeal explained that Cal. Code Civ. Proc. § 340.6 provides for tolling of the statute of limitations where the attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred. Section 340.6 does not provide a standard for determining when an attorney's representation in a specific subject matter terminates. Ordinarily, an attorney's representation ends when the client discharges the attorney or consents to a withdrawal, the court consents to the attorney's withdrawal, or upon completion of the tasks for which the client retained the attorney. However, an attorney may withdraw from representation within the meaning of the statute, even without a client's consent. In such a case, the representation ends when the client actually has or reasonably should have no expectation that the attorney will provide further legal services. This is an objective test and focuses on the client's reasonable expectations in light of the particular facts of the attorney-client relationship (at 10-12):
As exceptions to the one-year and four-year statutes of limitations, section 340.6 also provides various tolling provisions, including where "[t]he attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful
11
act or omission occurred."[7] (§ 340.6, subd. (a)(2).) This particular provision "is rooted in two considerations: it prevents the attorney from defeating a malpractice action by continuing to represent the client until the statute of limitations has run; and it avoids forcing the client to file a lawsuit that would disrupt the ongoing attorney-client relationship, which would prevent the negligent attorney from attempting to correct or minimize the error." (Truong v. Glasser (2009) 181 Cal.App.4th 102, 116.)
Section 340.6 "does not provide a standard for determining when an attorney's representation in a 'specific subject matter' terminates, thus ending the tolling period." (Nguyen, supra, 49 Cal.App.5th at p. 12, quoting Gonzalez v. Kalu (2006) 140 Cal.App.4th 21, 28 (Gonzalez).) Accordingly, courts "have developed a number of principles to direct the inquiry . . . [which] emphasize the particular details of the attorney's and client's interactions rather than bright-line rules." (Nguyen, supra, at p. 12.)
Ordinarily, an attorney's representation ends"' "when the client discharges the attorney or consents to a withdrawal, the court consents to the attorney's withdrawal, or upon completion of the tasks for which the client retained the attorney." '" (Nguyen, supra, 49 Cal.App.5th at p. 13, quoting GoTek Energy, Inc. v. SoCal IP Law Group, LLP (2016) 3 Cal.App.5th 1240, 1246 (GoTek Energy); Laclette v. Galindo (2010) 184 Cal.App.4th 919, 927 (Laclette).)
However, an attorney may withdraw from representation within the meaning of the statute, "even absent a client's consent." (Nguyen, supra, 49 Cal.App.5th at p. 13.) Such withdrawal "does not depend on whether the attorney has formally withdrawn from representation, such as by securing a court order granting permission to withdraw."
12
(Ibid.)"' "[I]n the event of an attorney's unilateral withdrawal or abandonment of the client, the representation ends when the client actually has or reasonably should have no expectation that the attorney will provide further legal services. [Citations.] That may occur upon the attorney's express notification to the client that the attorney will perform no further services." '" (Ibid., quoting GoTek Energy, supra, 3 Cal.App.5th at p. 1247.)
"[T]he inquiry into when representation has terminated does not focus on the client's subjective beliefs about whether the attorney continues to represent him or her in the matter. Instead, the test is objective and focuses on the client's reasonable expectations in light of the particular facts of the attorney-client relationship." (Nguyen, supra, 49 Cal.App.5th at p. 14; Worthington v. Rusconi (1994) 29 Cal.App.4th 1488, 1498 (Worthington).)
In determining whether an attorney continues to represent a client," 'we objectively examine" 'evidence of an ongoing mutual relationship and of activities in furtherance of the relationship.'" '" (Nguyen, supra, 49 Cal.App.5th at p. 14, quoting Shaoxing City Maolong Wuzhong Down Products, Ltd. v. Keehn &Associates, APC (2015) 238 Cal.App.4th 1031, 1038 (Shaoxing).) Representation ends"' "when the client actually has or reasonably should have no expectation that the attorney will provide further legal services." '" (Flake v. Neumiller &Beardslee (2017) 9 Cal.App.5th 223, 231, italics omitted (Flake).)
In this case, the Court found that the evidence created a triable issue of material fact as to whether the client had discharged the attorney or consented to his withdrawal, and whether the client could have had a reasonable expectation that the attorney would continue to provide further legal services as of that date. The Court noted that emails the attorney sent to the client could have constituted a withdrawal, but a reasonable trier of fact could instead find that the emails only indicated the attorney’s future intent to withdraw. Furthermore, the attorney’s subsequent execution of a stipulation on the client’s behalf and the absence of any subsequent actions on his part to withdraw as counsel before the substitution of counsel date created a triable issue of fact as to the date on which his representation ended. The Court also found that while the client took some actions on their own behalf, which could give rise to an inference that they had effectively discharged their attorney, these acts could also give rise to other inferences, including that the client simply sought to limit legal fees. The Court also rejected the attorney's argument that the client's failure to respond to his communications established as a matter of law that she had discharged him. The Court again noted that the attorney signed a stipulation on the client's behalf even after his emails went unanswered (at 12-17):
Applying these standards and exercising our independent review while viewing the evidence in the light most favorable to Wang, we determine that respondents failed to carry their burden of establishing that Nesse's representation of Wang ended before December 21, 2014, as a matter of law. In our view, the evidence creates a triable issue of material fact as to whether Wang had discharged Nesse or consented to his withdrawal, and whether Wang could have had a reasonable expectation that Nesse
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would continue to provide further legal services as of that date. (GoTek Energy, supra, 3 Cal.App.5th at p. 1246; Gonzalez, supra, 140 Cal.App.4th at pp. 30-31.)
First, the facts do not establish that Nesse withdrew from representing Wang prior to December 21, 2014, as a matter of law. Although it is conceivable that a trier of fact could determine that Nesse's e-mails to Wang between December 3 and 15, 2014, constituted withdrawal, another reasonable inference is that Nesse requested his client's response, threatened to withdraw, and indicated his future intention to withdraw.
On December 3, for instance, Nesse stated, "I must call upon you once again to contact me, and, if not, then I will have no other choice but to withdraw as your counsel.... [¶] . . . [¶] Please contact me forthwith." On December 10, Stratico e-mailed Wang about the ex parte application that had been served, and stated, "[w]e must hear from you, as we need to file a response within 24 hours. [¶] It is imperative that you contact our office immediately." Later on December 10, Stratico e-mailed again, attaching a substitution of attorney form but also stating, "[Nesse] will not be responding to the ex-parte served on our office this afternoon unless he is paid in full. Therefore, please either contact me to make payment arrangements or sign the attached Substitution of Attorney and return [it] to our office immediately."
On December 12, Stratico e-mailed Wang, informing her that Nesse "does not plan on attending the hearing." On December 15, Nesse e-mailed Amini and Martelle, with a copy to Wang, stating: "I will be withdrawing as Ms. Wang's attorney. Unless I receive a substitution of attorney forthwith, a Request for Order/Motion will be filed. As such, I will not be appearing at the hearing on December 18, 2014." Also on December 15, Nesse e-mailed Wang, stating: "Once again, please sign the Substitution of Attorney and return to me immediately. If not, I will be required to file a Request for Order or Motion wherein I must state the reason for the request for withdrawal. I would rather handle this between you and I than to have the other two attorneys involved. [¶] I look forward to hearing from you, but so far you have been non-responsive."
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A reasonable trier of fact could conclude that the correspondence from Nesse was equivocal about whether he had withdrawn. The language in the e-mails is conditional- for example, he would not be responding to the ex parte unless he was paid in full, and he did not plan on attending the hearing. The language is also prospective: "I will be withdrawing." We must draw all reasonable inferences in the light most favorable to the party opposing the motion. (Aguilar, supra, 25 Cal.4th at p. 843.)
Nesse also signed the travel stipulation on December 17, 2014, as "[a]ttorney for [p]etitioner [Wang]." The stipulation stated that Wang and Lawrence agreed to the terms, "together with their respective attorneys." Nesse claimed, as respondents do on appeal, that he signed it solely as an "accommodation" and a "courtesy," and that he did not provide any legal services by signing it. However, while a trier of fact could make that determination, it could also determine that the stipulation shows Nesse had not withdrawn his representation at that point, but instead still considered himself "attorney for petitioner." And, as summarized above, the test is objective from the client's perspective. The trier of fact assesses whether a client in Wang's position could reasonably believe, based on Nesse's signing the stipulation as her attorney, that he continued to represent her, and whether that act constitutes evidence of an ongoing mutual relationship. (Nguyen, supra, 49 Cal.App.5th at p. 14.)
Although an attorney-client relationship"' "may be ended unilaterally if the lawyer's communication is such that the client understood or reasonably should have understood that no further services would be rendered," '" the facts here do not establish that as a matter of law. (Laclette, supra, 184 Cal.App.4th at p. 927, fn. 3.) Accordingly, we cannot conclude that Nesse had withdrawn or that Wang "consented" to any such withdrawal.
Nor do the facts establish as a matter of law that Wang "discharged" Nesse. Respondents claimed Wang effectively terminated Nesse's representation by "acting in pro per." The evidence shows that Wang agreed to the stipulation for the minor children
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to travel and selected a mediator, without assistance from Nesse. Yet even if those acts could give rise to an inference that Wang effectively had discharged Nesse or consented to his withdrawal, they could also give rise to other reasonable inferences, including, for instance, that she simply sought to limit legal fees where possible. Other evidence in the record shows that legal fees were a concern for Wang.
Moreover, respondents have not cited any authority that where a client takes certain actions on her own behalf relating to existing litigation in which she is represented, it establishes as a matter of law that she has discharged her attorney or consented to his withdrawal. Instead, as the authority summarized above demonstrates, the question is whether"' "the client actually has or reasonably should have no expectation that the attorney will provide further legal services." '" (Flake, supra, 9 Cal.App.5th at p. 231, italics omitted.) We cannot say as a matter of law that agreeing to a stipulation for her children to travel and selecting a mediator without utilizing counsel means a client cannot reasonably expect that her attorney will provide further legal services.
Nor do we believe Wang's failure to respond to Nesse's communications establishes as a matter of law that she had discharged him. As set forth above, Nesse e-mailed Wang on October 30 and then seven times between December 3 and December 15 without receiving a response. However, while the evidence could give rise to an inference that her failure to respond constituted terminating the representation, it could also give rise to other reasonable inferences that do not include termination. As noted above, although the travel stipulation was prepared without Nesse's assistance, it included signature blocks for Wang, and for Nesse as "attorney for" Wang, which they both signed on December 17. A reasonable trier of fact could determine that constitutes evidence that Wang had not discharged Nesse as of that date.
Respondents also argued that Wang discharged Nesse by "deliberately keeping [him] out of the loop on relevant communications," including saying to Lawrence in her
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December 9 e-mail that he "[did] not need to cc: my attorney." Similar to the tasks Wang performed on her own, though, this could be construed as evidence that Wang sought to limit legal fees, or it could give rise to other reasonable inferences aside from termination. Wang's use of the phrase "my attorney" could also be construed as evidence that she still considered Nesse to be her attorney and had not discharged him.
Lastly, respondents argued that Wang discharged Nesse by not objecting to his e-mails communicating his intent to withdraw or his requests that she sign the substitution form, and "not indicating that she wanted Nesse to continue to represent her." As noted above, though, Wang's failure to respond to Nesse's e-mails could give rise to a number of reasonable inferences aside from a desire to terminate the representation, including the possibility that her failure to sign the substitution form before December 23 indicated a desire not to terminate. Respondents cite no authority for the proposition that a failure to object to an intent to withdraw, or a failure to affirmatively indicate a desire for continued representation, establishes as a matter of law that the client has discharged her attorney.
The facts here are similar to those in Worthington. In that case, the client and attorney finalized a substitution of attorney form in May 1991. (Worthington, supra, 29 Cal.App.4th at p. 1493.) After the plaintiff brought her malpractice suit on April 2, 1992, the attorney moved for summary judgment on the ground that his representation had actually ended in March 1991, when the plaintiff consulted new counsel whom she eventually hired. (Ibid.) The trial court granted the motion but the Court of Appeal reversed. It noted that the evidence included a letter from the attorney to the client on April 5, 1991-less than a year before the client filed suit-which included suggestions for how to proceed in the underlying probate action. (Ibid.) As the court explained, the letter was "evidence of the ongoing nature of her attorney-client relationship." (Id. at p. 1498.) While the court cautioned that "not every contact between an attorney and his or her client will amount to representation" (ibid.), it determined that the letter was
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sufficient to create "a triable issue of material fact regarding the date on which defendant's representation of plaintiff ended," so that summary judgment was improper. (Id. at p. 1491.)
The same is true here, where Nesse's execution of the stipulation on Wang's behalf on December 17, and the absence of any subsequent actions on his part to withdraw as counsel before December 23, at the very least create a triable issue of material fact as to the date on which his representation of Wang ended.