Opinion
B226786
08-17-2011
SOPHIA COHEN, Plaintiff and Appellant, v. FREID & GOLDSMAN, et al., Defendants and Respondents.
Sands & Associates, Leonard S. Sands, Heleni E. Suydam and Diallo K. Scott for Plaintiff and Appellant. Haight Brown & Bonesteel, Jennifer K. Saunders and Rita Gunasekaran for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC343328)
APPEAL from a judgment of the Superior Court of Los Angeles County, Jane L. Johnson, Judge. Reversed.
Sands & Associates, Leonard S. Sands, Heleni E. Suydam and Diallo K. Scott for Plaintiff and Appellant.
Haight Brown & Bonesteel, Jennifer K. Saunders and Rita Gunasekaran for Defendants and Respondents.
Plaintiff and appellant Sophia Cohen filed a claim for legal malpractice against the attorneys who represented her in her marriage dissolution proceedings, Manley Freid (Freid) and the law corporation of Freid & Goldsman (collectively respondents). The superior court granted respondents' motion for summary judgment on the basis that the action was barred by the statute of limitations set forth in section 340.6. We conclude that appellant has raised a triable issue of fact as to when the statute of limitations commenced running and so reverse the judgment.
All statutory references are to the Code of Civil Procedure.
FACTUAL AND PROCEDURAL BACKGROUND
On September 4, 1998, appellant filed a petition for dissolution of her marriage of 8 years 7 months to Ronald Braverman. Appellant married Braverman in November 1989, following seven years of cohabitation. The list of community assets attached to the petition named several business interests, including Health Devices Corporation, dba Doc Johnson Enterprises (Doc Johnson).
Appellant retained respondents to represent her on October 7, 1998. Appellant agreed to respondents' use of an accountancy firm, Taylor and Lieberman, to perform services such as the valuation of Braverman's businesses.
In 1996, Braverman pled guilty to tax fraud charges based on his actions as president of Doc Johnson and on a business agreement with Reuben Sturman. Under the plea agreement, Braverman agreed to enter a guilty plea to one count of conspiracy to defraud the United States, pay the Internal Revenue Service $980,000, and serve a sentence of 10 months.
A stipulation for judgment in favor of the United States was entered against Braverman and Doc Johnson in 1996. According to the stipulation, the Internal Revenue Service had levied property owned by Braverman and Doc Johnson in an attempt to collect over $28 million in taxes owed by Sturman, based on the theory that Braverman and Doc Johnson were Sturman's nominees or alter egos. Braverman and Doc Johnson agreed to pay $980,000 in exchange for Sturman's interest in Doc Johnson. Appellant stated in a deposition that she had not seen the plea agreement or stipulation for judgment until her current attorney took a deposition of Edward Lieberman, the accountant hired by respondents, during arbitration proceedings with the accountancy firm.
On October 31, 2002, judgment was entered in appellant's divorce with Braverman. The Marital Settlement Agreement (Agreement) awarded Braverman "100% ownership interest in and all of the issued outstanding stock in, Health Devices Corporation, a Delaware Corporation, dba 'Doc Johnson'."
On November 21, 2005, appellant filed a complaint against respondents alleging legal malpractice and breach of fiduciary duty. She alleged, in part, that respondents were negligent and breached their fiduciary duty by failing to investigate Braverman's criminal background and the effect on his alleged separate property. As pertinent to this appeal, she alleged that respondents failed to investigate the circumstances regarding Braverman's acquisition of Doc Johnson, which was the primary asset in dispute during the dissolution proceedings.
Respondents filed a cross-complaint for, inter alia, breach of contract. Trial court proceedings on the cross complaint have been stayed pending the disposition of this appeal.
The trial court ordered the cause of action for breach of fiduciary duty to be dismissed without leave to amend after appellant voluntarily withdrew it.
Respondents filed a motion for summary judgment, arguing that appellant's action was barred by the one-year statute of limitations set forth in section 340.6.Respondents stated in their motion that the judgment in the divorce was filed on October 31, 2002, respondents filed and served a Notice of Withdrawal of Attorney of Record on June 18, 2004, and appellant's legal malpractice complaint was filed more than a year later, on November 21, 2005.
The statute provides that an action for legal malpractice "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. . . . [T]he period shall be tolled during the time that any of the following exist: [¶] . . . [¶] (2) The attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred." (§ 340.6, subd. (a).)
On September 26, 2007, appellant filed a declaration in support of her opposition to the summary judgment motion and objections to respondents' evidence. Appellant also filed exhibits in support of her opposition to summary judgment. Respondents filed evidentiary objections to appellant's declaration.
On October 5, 2007, the superior court granted respondents' summary judgment motion and ruled on the evidentiary objections of both parties. The court found that appellant's claims arose on or before October 31, 2002, the date on which she signed the Agreement, and that she had not raised a triable issue of material fact as to whether she learned of the facts giving rise to her claims within the limitations period. The court further found that appellant had not raised a triable issue of material fact as to whether respondents continued to represent her within the limitations period. The court granted respondents' summary judgment motion, sustained 17 of their 19 evidentiary objections, and overruled appellant's four evidentiary objections. The trial court entered judgment in favor of respondents on the basis that the complaint was barred by the statute of limitations.
Appellant moved to set aside the decision on the summary judgment motion and requested a new trial. Appellant also filed an ex parte application for an order shortening the time to hear her motion for a stay of the judgment in order for her to amend her complaint to include a claim for breach of contract. The court denied appellant any relief from its grant of respondents' summary judgment motion and denied her motion for leave to amend the complaint. Appellant filed a notice of appeal from the order granting summary judgment and from the denial of her new trial motion.
We dismissed the appeal on the ground that the judgment was not appealable in light of the pendency of the cross-appeal. The trial court subsequently certified for appeal the judgment granting summary judgment in favor of respondents and the denial of appellant's new trial motion. Appellant filed a new notice of appeal.
DISCUSSION
Respondents' summary judgment motion was based on section 340.6's one-year statute of limitations for legal malpractice claims. The trial court granted the motion because it found that appellant failed to raise a triable issue of material fact with respect to her discovery of facts giving rise to the malpractice claim or with respect to an ongoing attorney-client relationship with respondents. (See Nielsen v. Beck (2007) 157 Cal.App.4th 1041, 1048 (Nielsen)[stating that summary judgment is proper when there are no triable issues of fact and the moving party is entitled to judgment as a matter of law].) We conclude that appellant has raised triable issues of fact as to when she discovered the facts constituting respondents' alleged wrongful acts and that summary judgment accordingly was improvidently granted.
I. Evidentiary Objections
Respondents argue that appellant erroneously relies on the declaration she submitted in opposition to summary judgment because the trial court sustained most of respondents' objections to the declaration, and appellant did not timely challenge the trial court's rulings. We agree that appellant has forfeited her challenges to the evidentiary rulings by failing to raise the issues until her reply brief. (Inyo Citizens for Better Planning v. Inyo County Bd. of Supervisors (2009) 180 Cal.App.4th 1, 14, fn. 2; see Villanueva v. City of Colton (2008) 160 Cal.App.4th 1188, 1196 [explaining that when a plaintiff does not challenge the superior court's ruling sustaining the moving defendant's objections to evidence offered in opposition to summary judgment, issues of the evidentiary rulings are waived and all such evidence is considered properly excluded]; Christoff v. Union Pacific Railroad Co. (2005) 134 Cal.App.4th 118, 125 ["Though summary judgment review is de novo, review is limited to issues adequately raised and supported in the appellant's brief."].) We therefore do not examine the evidence to which the trial court sustained objections in determining whether appellant has raised a triable issue of fact - that is, we do not rely on her declaration filed in opposition to summary judgment.
However, respondents are incorrect in asserting that appellant relied solely on her declaration in opposing summary judgment. She filed a compendium of exhibits in support of her opposition to summary judgment in the trial court, and on appeal she cites to this evidence, as she did below in the Plaintiff's Undisputed Material Facts on Motion for Summary Judgment, in arguing that the statute of limitations does not bar her claim. We therefore examine this evidence to determine whether she has raised triable issues of fact.
II. Summary Judgment Motion
"Summary judgment is properly granted where there are no triable issues of fact and the moving party is entitled to judgment as a matter of law. [Citation.]" (Nielsen, supra, 157 Cal.App.4th at p. 1048.) The moving party "bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)
"'"[T]he trial court in ruling on a motion for summary judgment is merely to determine whether such issues of fact exist, and not to decide the merits of the issues themselves." [Citation.] The trial judge determines whether triable issues of fact exist by reviewing the affidavits and evidence before him or her and the reasonable inferences which may be drawn from those facts.' [Citation.] However, a material issue of fact may not be resolved based on inferences if contradicted by other inferences or evidence. [Citation.]" (Truong v. Glasser (2009) 181 Cal.App.4th 102, 109 (Truong).)
"We review a grant of summary judgment de novo and decide independently whether the facts not subject to triable dispute warrant judgment for the moving party as a matter of law. [Citation.] We view the evidence in the light most favorable to the opposing party, liberally construing the opposing party's evidence and strictly scrutinizing the moving party's. [Citation.]" (Callahan v. Gibson, Dunn & Crutcher LLP (2011) 194 Cal.App.4th 557, 566 (Callahan).)
Section 340.6 sets forth the statute of limitations for legal malpractice claims. The statute provides that "[a]n 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." (§ 340.6, subd. (a).) "Thus, 'section 340.6(a) states "two distinct and alternative limitation periods: one year after actual or constructive discovery, or four years after occurrence (the date of the wrongful act or omission), whichever occurs first."' [Citation.]" (Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 566.) The statute also incorporates four tolling provisions, including a provision when the attorney continues to represent the client. (§ 340.6, subd. (a)(2).)
Appellant contends that the trial court erred in finding her claim barred by the statute of limitations for two reasons. First, appellant contends that the one-year limitations period did not commence until May 2005, when she first discovered that respondents failed to investigate Braverman's acquisition of Doc Johnson. Second, appellant argues that the limitations period was tolled because respondents continued to advise her on matters related to the Agreement through 2004 and into 2005. We find that appellant has raised a triable issue of fact as to her discovery of the facts giving rise to her claim. We therefore need not address the continuous representation tolling provision.
"Absent tolling, a legal malpractice action accrues, and the one-year limitations period commences running, when the plaintiff discovers or through the use of reasonable diligence should have discovered the facts constituting the wrongful act. [Citation.] The one-year period is triggered when the client discovers, or should have discovered, the facts constituting the wrongful act or omission and 'not by his discovery that such facts constitute professional negligence, i.e., by discovery that a particular legal theory is applicable based on the known facts. "It is irrelevant that the plaintiff is ignorant of his legal remedy or the legal theories underlying his cause of action."' [Citation.]" (Truong, supra, 181 Cal.App.4th at p. 110.)
In determining whether appellant has raised a triable issue of fact, it is important to frame appellant's claim correctly. Appellant contends that she was injured by respondents' failure to investigate when Braverman acquired an interest in Doc Johnson so as to determine whether or not his interest was community property, and she did not learn of this failure until Lieberman's deposition in May 2005. Respondents argue that appellant knew that Doc Johnson was community property when she signed the Agreement in 2002. However, the issue is not whether appellant knew that Doc Johnson was community property when she signed the Agreement. Appellant's argument is that she relied on her attorneys to determine whether Doc Johnson was community property and that, when she signed the Agreement, she assumed they had investigated the nature of the property and so trusted their determination that it was not community property.
A. Respondents' Evidence
Respondents contend that appellant knew Doc Johnson was community property when she first consulted respondents in 1998 because she knew all the relevant facts about the criminal charges against Braverman. The evidence does not, however, establish as a matter of law that appellant knew, or through the use of reasonable diligence should have discovered, that respondents did not thoroughly investigate when Braverman acquired his interest in Doc Johnson.
In support of their argument that appellant was aware that Doc Johnson was community property, respondents relied below on appellant's deposition testimony, Braverman's plea agreement, and his stipulation with the government.
Appellant testified at her deposition that, although she knew about the tax evasion charges and the payment at the time they occurred, she knew only that the payment was for tax evasion and that it related to Braverman's method of "funneling" money to Sturman. She had not seen the plea agreement or stipulation for judgment until 2005, when her current attorney took Lieberman's deposition.
Appellant also testified that she told Freid that Braverman was incarcerated for tax evasion in 1994 and paid $1 million to the government. However, when asked if she told Freid the reason for the payment, appellant stated that she knew only that it was for tax evasion. When asked what she specifically told Freid regarding the payment, she replied, "[Braverman] had to pay the government a million dollars because this was - this was the way he funneled money to Sturman." Her testimony thus tends to prove she was aware of the payment, but unaware that Braverman acquired his interest in Doc Johnson as a result of the payment.
Respondents also relied below on Braverman's receipt of all the interest in Doc Johnson under the divorce judgment to argue that the statute of limitations barred appellant's claim. However, the fact that appellant knew in 2002 that Braverman received all the interest in Doc Johnson under the Agreement does not establish as a matter of law that appellant knew at the time of any reason to doubt respondents' determination that Doc Johnson was Braverman's separate property.
Respondents' evidence thus is insufficient to meet their burden of making a prima facie showing of the nonexistence of any triable issue of material fact. Even if their evidence was sufficient to shift the burden to appellant, she has met her burden to make a prima facie showing of the existence of a triable issue of fact.
B. Appellant's Evidence
The evidence cited by appellant tends to prove that, although she may have thought Doc Johnson was community property when she first consulted respondents, she relied on their determination that it was not community property when she signed the Agreement in 2002. This evidence therefore raises a triable issue of material fact as to whether she discovered, or through the use of reasonable diligence should have discovered, the facts constituting the alleged malpractice at the time of the Agreement. In support of her argument that she did not discover respondents' failure to investigate the nature of Doc Johnson until May 2005, appellant cited the following evidence below and on appeal.
Appellant's compendium of exhibits also contains evidence supporting her claim that the statute of limitations was tolled under the continuous representation provision, but we need not consider that evidence.
First, a facsimile sent by Taylor and Lieberman to Freid on February 12, 2001, states, "Per our discussion, enclosed is copy [sic] of the information regarding Mr. Braverman obtained on the internet." The facsimile contains three pages of news articles about Braverman, and someone has circled dates in one article stating that Braverman bought Doc Johnson from Sturman between 1985 and 1988, which was prior to appellant's marriage to Braverman.
Second, in an April 18, 2007 deposition, appellant stated that she knew Braverman was running Sturman's businesses during her cohabitation with Braverman, but she did not remember him doing so after they married. Her understanding of the business arrangement was that "Mr. Sturman had tax problems and so a number of different businesses were put into Mr. Braverman's name. And he was fronting them and taking care of them." She also stated that she told Freid and the accountancy firm to investigate Braverman's businesses "because they were a source of income," but she did not realize until speaking with her current attorney that they did not investigate sufficiently to learn that Doc Johnson was community property. She stated that she assumed respondents had investigated Braverman's businesses before the October 2002 Agreement.
Third, in a June 27, 2007 deposition, appellant stated that Braverman was incarcerated for tax evasion in 1994 "for trying to give Reuben Sturman money under some false pretenses." As discussed above, appellant knew that Braverman paid the government $1 million, but she knew only that it was for tax evasion and that it related to Braverman's method of "funneling" money to Sturman. In a June 29, 2007 deposition, appellant testified that she was not aware of and had not seen the plea agreement or stipulation for judgment until her current attorney took a deposition of Lieberman.
Fourth, in an April 12, 2007 deposition, appellant stated that, before she signed the Agreement in October 2002, she asked Freid if that was all she was going to receive in the judgment, and he told her that she was not entitled to any more. In another deposition, appellant recounted a conversation with Freid in which she told him she did not understand why she did not receive more in the Agreement, but Freid told her that the amount she received was the best she could do.
Fifth, in a September 11, 2007 deposition, Freid testified that he examined "the books, minutes, bylaws, articles, whatever was available by way of corporate documentation that would reflect upon the ownership and date of acquisition of the property of [Doc Johnson]," but he found no evidence that it was acquired during marriage. He stated that all he learned about Braverman was "that he was convicted and/or imprisoned for, I believe, tax evasion, perjury and/or jury tampering or obstruction of justice. I'm not sure of the exact of the last two. But I believe it was perjury - I believe it was perjury and tax evasion, but in the back of my mind I think there was also an issue or questions of whether there was jury tampering and/or obstruction of justice. And I'm not sure what he was incarcerated for." He did not know about "information circulating around, such as through the Internet and other publications, that Sturman was the true owner of the business known as Doc Johnson and that Ron Braverman was a front man."
Viewing the evidence in the light most favorable to appellant and liberally construing her evidence, we conclude that appellant has raised a triable issue of fact as to when she discovered the facts constituting the wrongful act or omission. (Callahan, supra, 194 Cal.App.4th at p. 566.) Although appellant thought Doc Johnson was community property when she first consulted respondents, she has raised a triable issue as to whether she knew or should have known when she signed the Agreement that she had reason to doubt respondents' determination of the nature of the property.
For example, appellant's deposition testimony indicates that she had a general understanding that Sturman's businesses were put in Braverman's name because of Sturman's tax problems, but there is a triable issue as to whether she knew if the businesses were community property or separate property. Her testimony also tends to prove that she knew the general nature of the charges against Braverman and his $1 million payment to the government, but she did not understand the specifics of the payment until her current attorney discovered the documents related to Braverman's agreement with the government.
Moreover, Freid's deposition testimony that he did not find any evidence that Doc Johnson was community property, and the 2001 facsimile sent by Taylor and Lieberman to respondents tend to prove that Freid believed respondents sufficiently investigated Doc Johnson and properly concluded it was Braverman's separate property. This evidence, in conjunction with appellant's deposition testimony that Freid told her she was not entitled to any more property under the Agreement, raises the inference that Freid told appellant when she signed the Agreement that respondents' investigation revealed that Doc Johnson was Braverman's separate property, not community property.
It is true that the list of community property attached to the petition for dissolution included Doc Johnson and four other businesses, showing that appellant thought those interests might constitute community property. Her belief does not, however, establish that she independently knew the businesses were community property. She was not awarded any business interests in the Agreement. Braverman received 100 percent ownership interest in Doc Johnson, and interests in three other businesses. The fact that she signed the Agreement does not necessarily indicate that she knew whether respondents had thoroughly investigated Braverman's acquisition of Doc Johnson. Instead, it raises the inference that she trusted her attorneys' determination that she was not entitled to an interest in Doc Johnson. Thus, the evidence raises a triable issue as to when she discovered the facts constituting the alleged malpractice.
"When the issue is accrual, belated discovery is usually a question of fact, but may be decided as a matter of law when reasonable minds cannot differ. [Citation.]" (Blanks v. Seyfarth Shaw LLP (2009) 171 Cal.App.4th 336, 375; see also Adams v. Paul (1995) 11 Cal.4th 583, 588 [stating that "we find nothing in the language or history of section 340.6(a)(1) indicating the Legislature intended, in codifying decisional law, to alter the well-settled principle that in legal malpractice actions statute of limitations issues, including injury, are at base factual inquiries."].) Here, the evidence is such that the question may not be decided as a matter of law.
Because appellant has raised a triable issue of fact as to when she discovered the facts constituting the alleged wrongful act or omission, there is a triable issue as to whether the statute of limitations had expired by the time she filed her claim. Summary judgment therefore was not properly granted. In light of our conclusion regarding the accrual of appellant's legal malpractice claim, we need not consider whether the limitations period was tolled by respondents' continuous representation of appellant.
We also need not address appellant's challenge to the denial of her motion for a new trial or her argument that the trial court judgment is inconsistent with the court's ruling.
DISPOSITION
The judgment of the superior court granting summary judgment in favor of respondents is reversed. Appellant shall recover her costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
WILLHITE, Acting P. J.
We concur:
MANELLA, J.
SUZUKAWA, J.