Opinion
NOT TO BE PUBLISHED
Contra Costa County Super. Ct. No. 06-02529
Jenkins, J.
On December 13, 2006 real party Concord Christian Center (CCC) sued the Reverend Lloyd Mashore, and the attorneys he had retained, petitioner Morgan Miller Blair (MMB), for breach of fiduciary duty, conversion, unjust enrichment and violation of Professional Rule of Conduct 3-310; Reverend Mashore is the former pastor of CCC. Due to the superior court’s ruling on the summary judgment/adjudication motion and to CCC’s voluntary dismissal of the breach of fiduciary duty claim, the only surviving claims against MMB are for conversion and unjust enrichment. The matter is currently set for trial on July 28, 2008. Petitioner challenges the superior court’s denial of its summary judgment/adjudication motion, brought on grounds that the suit was untimely.
This litigation follows an earlier lawsuit in which CCC sought declaratory and injunctive relief affirming its right to terminate its affiliation with Open Bible Standard Churches (Open Bible), an evangelical denomination with 1600 churches worldwide; it also sought to prevent Open Bible from asserting any control over CCC’s assets. As a result of that earlier litigation, however, the Pacific Region of Open Bible obtained control of CCC. In the present litigation, CCC, now under the control of Open Bible’s Pacific Region, seeks the return of approximately $700,000 in fees and costs (including interest) it paid MMB for legal services in the earlier action, when Reverend Mashore served as CCC’s pastor.
Petitioner, in its motion for summary judgment/adjudication, argued inter alia that the applicable statute of limitations, as set out in the Code of Civil Procedure section 340.6, is one year and, therefore, the suit was barred as untimely. The superior court, however, disagreed, stating: “The claims against defendant Morgan Miller Blair to recover the legal fees paid to it in the prior action, are governed by the 3-year statute of limitations in CCP § 338(d), for an action to recover property acquired through fraud or mistake. The one-year statute of limitations in CCP § 340.6 does not apply because there are no claims that the legal services rendered were negligent or deficient.”
§ 340.6. Attorneys; wrongful professional act or omission; tolling of period
Without citation, the superior court asserts that section 340.6 is inapplicable absent claims of negligent or deficient performance. It does go on, however, to cite Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1159 for the proposition that the three-year statute, pursuant to Code of Civil Procedure section 338, subdivision (c) (an action for taking goods or chattels) is applicable. The citation to Hydro-Mill, however, is confusing. Hydro-Mill involved claims against an insurance broker and determined that the two-year statute limitation of section 339 was applicable in that case. Because the allegations of professional negligence there subsumed the allegations of breach of fiduciary duty, the court applied the shorter statue of limitations for professional negligence, rather than the one which otherwise would have been applicable to claims of fiduciary breach. The case does not stand for the proposition, however, that here the three-year limitations period of section 338, subdivision (c) governs.
Petitioner filed its timely petition for a writ of mandate, pursuant to Code of Civil Procedure section 437(c)(m)(l), challenging the superior court’s summary judgment ruling, on the grounds that the one-year statute of limitations generally applicable to attorneys, governed the claims brought in the lawsuit. On May 23, 2008 this court requested informal briefing and notified the parties that it might issue a peremptory writ in the first instance, pursuant to Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 177-180.
Although the petition’s timeliness was initially uncertain, the court is persuaded that it was timely after having been provided a copy of the superior court’s April 30, 2008 nunc pro tunc order, clarifying that on March 28, 2008 it had given the parties four additional days to file a writ petition, due to the late mailing of the superior court’s decision.
CCC opposes the petition, but does not dispute petitioner’s claim that if the one-year statute of limitations is applicable, then the suit against MMB is barred. The record paints a picture of the following undisputed facts: As a result of the prior litigation, effective October 3, 2005, Gary Emery, the Regional Superintendent of the Open Bible Pacific Region, gained control of CCC as its President. Emery testified that, as of approximately February 2002, he believed that Reverend Mashore was improperly spending CCC funds to litigate the prior litigation. Thus, he was aware of the situation when he assumed control of CCC. CCC made its last payment to MMB on August 31, 2005; MMB deposited CCC’s check on September 6, 2005. The current complaint was filed on December 13, 2006. Thus, as of October 2005, when Emery took control of CCC, he knew that CCC funds had been used to pay MMB and that payments to MMB had ceased. Nonetheless, the lawsuit to recover those payments was not filed for more than a year. Therefore the suit cannot be timely if a one-year statute of limitations applies.
In its papers below, CCC does argue that if section 340.6 applies, the running of the statute would be tolled due to MMB’s alleged concealment of a conflict interest which purportedly arose from its dual representation of Reverend Mashore and CCC. This alleged concealment, however, is arguably relevant to the breach of fiduciary duty claim, which CCC voluntarily dismissed. It has no bearing on the remaining conversion and unjust enrichment claims. Regardless, CCC does not raise this issue in its opposition to the writ petition.
CCC’s argument is that the applicability of section 340.6 depends on the existence of an attorney/client relationship and the assertion of a claim involving legal malpractice by the client. It accurately points out that all the cases relied on by petitioner for the proposition that claims against an attorney are subject to a one-year statute of limitations involve litigation between a client (or former client) and the attorney. This is hardly surprising: one would expect that the bulk of litigation against attorneys arising from acts or omissions during the practice of law to involve clients or former clients. That, however, does not mean that the reach of section 340.6 is necessarily limited to suits brought by clients (or former clients) against their attorneys. Nor does CCC point us to any authority that suggests that 340.6 applies only to cases of professional negligence. To the contrary, the statutory language indicates the statute has a much broader sweep.
Carving out an exception for cases of actual fraud (which is not relevant here), the statute indicates it applies to suits brought against attorneys for a wrongful act or omission “arising in the performance of professional services.” Contrary to CCC’s assertions, the statute includes no language suggesting that it is only applicable to suits brought by clients or former clients. Rather the application of the statute turns on two points: (1) whether the suit against the attorney is for “a wrongful act or omission” and (2) whether it arises “in the performance of professional services.” Thus, the existence of an attorney/client relationship is not dispositive.
In denying petitioner’s summary judgment motion, the superior court ruled that section 340.6 was inapplicable in this case because the complaint makes no allegation of negligence or deficient legal services. The statutory language concerning wrongful acts or omissions in the course of performing professional services, however, is far broader than negligent acts that occur in the practice of law. A review of case law is helpful in discerning the scope of conduct that falls within 340.6’s ambit. In Stoll v. Superior Court (1992) 9 Cal.App.4th 1362, the Court of Appeal, First District, Division 5, issued a peremptory writ of mandate directing the superior court to sustain a demurrer to a complaint alleging both legal malpractice and breach of fiduciary duty. In Stoll the allegations included the attorney’s failure to disclose a conflict of interest and his charging an “unconscionable fee,” a $100,000 salary, while expecting to receive a lucrative finder’s fee from an adverse party. (Id. at p. 1366.) The Stoll court held that the one-year statute of limitations applicable to the practice of law also applied to a breach of fiduciary duty claim, where the facts of the alleged breach were tethered to the practice of law. The court reviewed the legislative history of section 340.6, including, the discussion in a scholarly article, Mallen, Panacea or Pandora’s Box? A Statute of Limitations for Lawyers (1977) 52 State Bar Journal 22, which was considered by Assembly Committee in drafting section 340.6. The court ultimately concluded that the phrase “wrongful act or omission . . . arising in the performance of professional services” more precisely conveyed the scope of claims which the legislature intended to be covered by the statute than the phrase “legal malpractice.” (Stoll, supra, 9 Cal.App.4th at p. 1368.) Significant to our discussion here, the court concluded, “The Legislature intended to enact a comprehensive, more restrictive statue of limitations for practicing attorneys facing malpractice claims.” (Ibid.) It went on to conclude that the one-year limitations period was intended to counteract “the potential of lengthy periods of potential liability” and “thereby reduce the costs of malpractice insurance.” (Ibid.) Thus, Stoll stands for the proposition that section 340.6: (1) applies to claims for breach of fiduciary duty, and (2) was intended to be a comprehensive and restrictive statute covering the breadth of acts and omissions arising out of the practice of law. Stoll, however, arose in the general context of claimed legal malpractice and is, thus, not entirely dispositive since, in this case, there are no claims of negligent or deficient practice.
CCC dismissed the breach of fiduciary duty claim during the pendency of this petition, a tactical move which petitioner asserts is a “transparent effort to avoid the statute of limitations.” Thus, Stoll’s holding that breach of fiduciary duty claims arising out of the practice of law is not directly on point with the instant case. Nonetheless, a close reading of Stoll shows that it clearly applied the statute to wrongs such as the alleged charging of an unconscionable fee. (See Stoll, supra, 9 Cal.App.4th at p. 1366.) Stoll’s focus was on whether there was a nexus between the allegedly wrongful acts and providing professional legal services.
Quintilliani v. Mannerino (1998) 62 Cal.App.4th 54 (hereafter, Quintilliani) is helpful in elucidating the scope of “professional services” referenced in the statute. In Quintilliani, rock concert promoters brought an action for negligent performance of administrative consulting services, breach of an independent contractor agreement, breach of fiduciary duty, and negligent representation against an attorney who was providing, pursuant to contract, both legal and administrative consulting services. The court dismissed all the claims under section 340.6, other than the claim for the negligent performance of administrative services, which, it held, did not arise while providing legal services. That is, the administrative services contracted for did not necessarily have to be provided by a lawyer and they were separate from the legal services that attorney was contractually obligated to provide.
We acknowledge that Quintilliani, supra, 62 Cal.App.4th 54, too, involves some claims of negligence.
Regarding the causes of action for legal malpractice and breach of fiduciary duty, the court held these claims were barred by section 340.6, as the duty allegedly breached occurred during the provision of legal services. (Quintilliani, supra, 62 Cal.App.4that p. 67.) Alternatively, with respect to the breach of contract claim, the court determined that the contract contemplated both legal and nonlegal services. Because the legal and nonlegal services complained of in the breach of contract claim were “inextricably intertwined,” the court applied Section 340.6. The court applied the same analysis to the causes of action for negligent misrepresentation, which also inextricably mixed legal and nonlegal matters. (Id. at p. 67 and p. 69.)
Citing Davis & Cox v. Summa Corp (9th Cir. 1985) 751 F.2d 1507, 1520 and Day v. Greene (1963) 59 Cal.2d 404, 411, the court reasoned that the “‘gravamen of a complaint and the nature of the right sued on, rather than the form of the action or relief demanded, determines which statute of limitation applies.’” (Quintilliani, supra, 62 Cal.App.4that p. 66.) It then held, in discussing why section 340.6 applied to both legal and nonlegal matters, that where such claims are intermingled, 340.6 is applicable. The application of 340.6 to causes of action involving a mixture of legal and nonlegal services was consistent with the legislative intent that the statute have a comprehensive and restrictive reach covering acts and omissions arising out of the practice of law. Quintilliani distinguishes between attorneys’ acts or omissions committed in the course of their providing legal services, regardless of whether those acts or omissions involved the special legal functioning reserved to attorneys by law and lawyers’ acts or omissions that are unrelated to providing legal services. Section 340.6 is applicable to the former; it is inapplicable to the latter.
In attempting to discern the parameters of the phrase “professional services” in this statute, it is also instructive to consider David Welch Co. v. Erskine & Tulley (1988) 203 Cal.App.3d 884, 893 where the Court of Appeal, First District, Division Four, without discussion, applied the four-year catchall statute of limitations of the Code of Civil Procedure, section 343 to an attorney’s alleged breach of fiduciary duty, despite the defendant’s claim that section 340.6 was applicable. There Erskine & Tulley allegedly breached its fiduciary relationship to its client, David Welch, by accepting employment adverse to the client without obtaining proper consent. (Id. at p. 891.) Erksine & Tulley provided no legal services to Welch after the end of 1980. (Id. at p. 889.) The earliest any breach allegedly occurred was July, 1981—when legal services were no longer being provided. (Id. at p. 893.) Thus, we understand the David Welch court to have held that the one-year statute of limitations of section 340.6 did not apply because the allegedly wrongful act — competing with a client without first providing notice or obtaining consent — did not arise “in the performance of professional services,” but after those services had been provided.
Here MMB’s alleged wrongs are for billing and accepting payment for legal services rendered. The billing and accepting payment were integral to the legal services MMB provided. They are not analogous to the nonlegal administrative services at issue in Quintilliani or to the alleged breach that occurred in David Welch after the attorneys had stopped providing legal services. Rather, the billing and payment were inextricably intertwined with the legal services MMB was providing in that MMB billed and accepted payment for its legal services. Thus, the instant claims asserted by petitioner are similar to the Quintilliani mixed claims, involving both legal and nonlegal acts, and, accordingly, these claims are covered by section 340.6. Real party’s argument that these services were rendered without legal authority does not change the outcome. Although CCC’s claims are for conversion and unjust enrichment, at bottom, CCC is seeking remuneration for fees paid to MMB arising out of MMB’s having provided professional services to CCC. Thus, these claims fall within the ambit of section 340.6. MMB’s motion for summary adjudication on the conversion and unjust enrichment claims should, therefore, have been granted.
This court may employ the accelerated Palma procedure “when petitioner’s entitlement to relief is so obvious that no purpose could reasonably be served by plenary consideration of the issue.” (Ng v. Superior Court (1992) 4 Cal.4th 29, 35; see also Lewis v. Superior Court (1999) 19 Cal.4th 1232, 1236-1237, and 1240-1241.) Here the briefing has adequately addressed the sole legal issue presented, there are no disputed facts, and no purpose would be served by further briefing and argument. Consequently, let a peremptory writ of mandate issue commanding respondent superior court to vacate its Final Decision, filed March 14, 2008, with respect to petitioner MMB only, and to enter a new and different order granting summary adjudication on the conversion and unjust enrichment claims. Pending issuance of the remittitur, the trial below, currently set for July 28, 2008, is stayed with respect to petitioner only. MMB shall recover its costs on appeal as the prevailing party.
We concur: McGuiness, P. J., Pollak, J.
(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.