IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
JORDACHE ENTERPRISES, INC. et al., B093126
(Super. Ct. No. BC021437)
Plaintiffs and Appellants,
v. Filed March 22, 1999
BROBECK, PHLEGER & HARRISON et al.
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los Angeles County. Aurelio Munoz, Judge. Reversed.
Conkle, Kremer & Engel, William C. Conkle, John A. Conkle, and Eric S. Engel for Plaintiffs and Appellants.
Keker & Van Nest, L.L.P., John W. Keker, Jeffrey R. Chanin, and Steven A. Hirsch, for Defendants and Respondents.
Plaintiffs Jordache Enterprises, Inc., Ditto of California, Inc., and Avi, Joe and Ralph Nakash (collectively “Jordache”) appeal the entry of summary judgment, based on the statute of limitations, on their professional malpractice complaint against their former lawyers Brobeck, Phleger & Harrison (“Brobeck”).(1) In an earlier appeal, we reversed the judgment, ruling that Jordache had suffered actual injury within the meaning of Code of Civil Procedure(2) section 340.6, subdivision (a)(1) within one year before the filing of this lawsuit. The California Supreme Court granted review and reversed this Court’s decision. (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739.) The Supreme Court remanded the matter to us for resolution of the issues not reached in our original opinion. (Id. at p. 765.) Again, we conclude that the statute of limitations is not a bar to this lawsuit since, within one year prior to the effective filing date of this action, Brobeck continued to represent Jordache regarding the specific subject matter within which the alleged wrongful omission occurred. Accordingly, we reverse the judgment.
We repeat the essential facts, which are undisputed, as set forth in our earlier opinion: In 1984, Jordache retained Brobeck to defend an action filed by the Marciano brothers and Guess, Inc.? in Los Angeles Superior Court (the “Marciano Action.”) That lawsuit alleged a variety of claims arising out of the efforts’ of the Nakash brothers, Jordache’s owners, to manufacture and market Jordache “knock-offs” of Guess apparel. Jordache did not request, and Brobeck did not offer, any advice concerning the availability of insurance coverage for the Marciano Action. Two weeks after the Marciano Action was filed, Jordache contacted its insurance broker, Advocate Brokerage, requesting advice concerning coverage of the Marciano Action. Jordache was informed that its insurance did not cover the Marcianos’ claims.
Jones Day Reavis & Pogue (“Jones Day”) was substituted in as Jordache’s litigation counsel in the Marciano Action in place of Brobeck in April 1987. Allyn Kreps, another of Jordache’s lawyers explained the reasons for the substitution as follows: “[T]he Brobeck firm at that time was not — didn’t have the best track record with Judge Epstein and … there were several sanction matters that had been handed down, and I don’t remember whether there were sanction motions pending at that time, but I think … the decision was made that in view of the sanctions and the problems with Judge Epstein that it was — . . . I decided and recommended that although Brobeck was obviously part of the team that they no longer be counsel of record before Judge Epstein because it was sort of a red flag and a credibility problem.” Brobeck nevertheless continued as “an indispensable part of the team.” Avi Nakash also considered Brobeck a member of Jordache’s Marciano team throughout the litigation, until the case concluded in May of 1990. And Brobeck apparently considered Jordache a client for some period of time after the substitution of Jones Day, since it billed Jordache $303,168.50 for legal services rendered in the Marciano Action after the filing of the substitution of attorney.
Jones Day advised Jordache that there was potential insurance coverage in the Marciano Action. In August 1987, Jordache instructed its counsel to ask each of its insurance brokers to forward a copy of the complaint in the Marciano Action to Jordache’s insurers. Brobeck was not advised about, and took no part in, these activities.
In December 1987, Jordache retained the law firm of Conkle, Kremer & Engel, giving it “exclusive authority” to make and prosecute any claims which Jordache might have against its liability insurers concerning the Marciano Action. Again, Brobeck was not advised of, nor was it aware of, Jordache’s exclusive retention of Conkle, Kremer & Engel for purposes of pursuing any insurance claims.
The Marciano Action settled in May 1990, while the insurance litigation settled in July of that year.
Jordache sued Brobeck for legal malpractice, filing the complaint effective August 15, 1990.(3) The gravamen of Jordache’s claim was that Brobeck was professionally negligent when it failed to tender the Marciano Action to Jordache’s insurance carriers, or otherwise to alert the company to the possibility that the claims in the Marciano Action might be covered by insurance. Brobeck sought summary judgment, arguing that section 340.6, the statute of limitations for legal malpractice, precluded Jordache’s prosecution of this lawsuit, since Jordache discovered the purported malpractice and sustained actual injury, in the form of defense costs, no later than 1987, well more than one year before filing this lawsuit. Jordache opposed the motion, contending that it did not suffer actual injury until it settled the insurance litigation in July 1990, and that Brobeck continued to represent Jordache until at least November 1989, less than one year before the critical date of August 15, 1990.
Brobeck prevailed on its motion for summary judgment when the trial court ruled that section 340.6 barred Jordache’s lawsuit. That ruling was based on the undisputed fact that Jordache “knew of the insurance issue as early as 1987,” and that Jordache had been injured by the purported malpractice, in the form of millions of dollars of alleged lost profits and insurance benefits, more than one year prior to the effective filing date of this lawsuit. As the Supreme Court stated: “[T]he trial court concluded the undisputed facts established that Jordache sustained actual injury after it discovered Brobeck’s alleged neglect and more than one year before its suit was deemed filed. The Court of Appeal reversed that decision. We conclude the Court of Appeal erred in holding Jordache did not sustain actual injury before settlement of the insurance coverage litigation. The injurious consequences for Jordache of Brobeck’s alleged omissions existed more than one year before Jordache sued.” (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison, supra, 18 Cal.4th at pp. 764-765.)
The trial court also concluded that Brobeck had ceased representing Jordache over the “subject matter” of the alleged malpractice no later than December of 1987, when Jordache gave exclusive authority over insurance coverage matters to Conkle, Kremer & Engel. It is this legal conclusion that we address on remand from the Supreme Court.(4)
Section 340.6, subdivision (a) provides that a legal malpractice action must be commenced within four years after the wrongful act or omission, or one year after the plaintiff discovers the facts constituting the wrongful act or omission, but “shall be tolled during the time that . . . (2) [t]he attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred.” The sole issue before us is whether Brobeck established as a matter of law that its representation of Jordache for purposes of section 340.6 ceased more than a year before filing the malpractice action. And that determination, in turn, depends on the meaning of the phrase “specific subject matter in which the alleged wrongful act or omission occurred.”
Jordache contends that section 340.6, subdivision (a)(2) (hereafter section 340.6(a)(2)) tolled the limitations period since Brobeck continued to represent it in the Marciano Action until November 1989. Brobeck counters with two arguments: First, it contends that it ceased to represent Jordache on the same subject matter in which the malpractice occurred no later than December 1987, when Conkle, Kremer & Engel undertook exclusive representation of Jordache with respect to any insurance issues in connection with the Marciano action. Brobeck further maintains that, even if the term “same subject matter” is more broadly defined to include the Marciano Action, the services rendered on Jordache’s behalf in the year prior to the effective filing date of this lawsuit consisted solely of providing historical information to successor counsel, and thus the representation was “de minimis.”
Initially, Brobeck notes that section 340.6(a)(2) is a statutory embodiment of the continuous representation” rule first developed under New York common law. Brobeck thus cites New York cases as persuasive authority of the proper interpretation of section 340.6(a)(2). However, “before we look to sister-state authorities construing common law continuous representation rules, we must first look to the statute itself. If the language of a statute is clear, its plain meaning should be followed. When a statute is unambiguous, there is no need for construction, and courts should not indulge in it. In construing statutory provisions, a court may not speculate that the Legislature meant something other than what it said or rewrite a statute to make it express an intention not expressed therein. (In re Jodi B. (1991) 227 Cal. App. 3d 1322, 1328.)” (Worthington v. Rusconi (1994) 29 Cal. App.4th 1488, 1497, internal citations omitted; accord O’Neill v. Tichy (1993) 19 Cal. App. 4th 114, 120 [where meaning of statute is clear, “it is function of this court to apply the statute as written”].)
The words chosen by the Legislature to specify the continuous representation which will toll the statute of limitations for attorney malpractice state that tolling applies when “[t]he attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred.” The specific subject matter in which Jordache alleges that Brobeck committed malpractice was in the latter’s defense of the Marciano Action. And the evidence presented in opposition to the summary judgment motion was that Brobeck continued to represent Jordache in the defense of the Marciano Action until November of 1989. Indeed, Jordache submitted Brobeck’s bill for services rendered in the Marciano Action in November 1989. This is compelling evidence that Brobeck continued to represent Jordache in the specific subject matter in which the alleged malpractice occurred until at least November of 1989.
Brobeck counters that the specific subject matter of its alleged negligence was insurance advice, and that it discontinued its representation of Jordache concerning insurance advice no later than December of 1987, when Conkle, Kremer & Engel was retained exclusively to pursue claims against Jordache’s insurance carriers in connection with the Marciano Action. This argument would be persuasive if Jordache had originally retained Brobeck to provide insurance advice, and Brobeck had allegedly provided faulty advice. That is not, however, the nature of the claim. Rather, Jordache retained Brobeck to defend a lawsuit filed by the Marcianos, and in the course of that defense, allegedly failed to inquire into the availability of insurance coverage which would pay for the defense of that very lawsuit.
Brobeck next relies on Foxborough v. Van Atta (1994) 26 Cal. App.4th 217 and Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509 to argue that Brobeck’s continuous representation of Jordache in the Marciano Action was, if anything, “only tangentially related to the subject matter of the alleged malpractice.” Brobeck maintains that Foxborough and Crouse require that, in order to qualify as the “same subject matter” for purposes of section 340.6(a)(2), the “[t]he activities allegedly constituting continuous representation must relate to the … particular undertaking in which the error occurred.” (Crouse v. Brobeck, Phleger & Harrison, supra, 67 Cal.App.4th at p.1530, quoting 2 Mallen & Smith, Legal Malpractice (4th ed. 1996) Statutes of Limitations, § 21.12, p. 824, fn. omitted.) Brobeck concludes that, because its continuing representation of Jordache in the Marciano Action was “de minimis” and unrelated to insurance issues, it does not toll the limitations period. Neither section 340.6(a)(2) nor the cases cited by Brobeck support this conclusion.
In Foxborough, the attorney’s negligence in a 1981 real estate transaction caused his client to lose annexation rights. In 1985 the client discovered the loss and the negligence and rehired the attorney to assist in recouping those rights. The attorney wrote letters in the spring of 1985 unsuccessfully seeking recoupment of the annexation rights. In late 1985 the client hired different counsel to prosecute a suit to recover the annexation rights. Two years later, the client hired the negligent attorney as an expert witness and consultant in the lawsuit. The lawsuit was unsuccessful and the malpractice action was filed in 1990. The Court of Appeal concluded the malpractice statute of limitations began running in 1985, and after a brief tolling in early 1985 when the letters were written, began running again because a different attorney was hired to recapture the lost annexation rights. The Court stated that the rehiring of the negligent attorney in 1987 in a different capacity and after the statute of limitations had otherwise run did not toll the running of the statute of limitations. (Id. at p. 229.)
“The continuous representation rule, as codified in section 340.6, subdivision (a), is not triggered by the mere existence of an attorney-client-client relationship. Instead, the statute’s tolling language addresses a particular phase of such a relationship representation regarding a specific subject matter. Moreover, the limitations period is not tolled when an attorney’s subsequent role is only tangentially related to the legal representation the attorney provided to the plaintiff. (Von Rott v. Johnson (1983) 148 Cal.App.3d 608, 609, 613; but see Gurkewitz v. Haberman (1982) 137 Cal.App.3d 328, 333 [attorney represents client so long as attorney assists client with unsettled matters incidental to case].) Therefore, ‘[t]he inquiry is not whether an attorney-client relationship still exists but when the representation of the specific matter terminated.’ (2 Mallen & Smith, Legal Malpractice, Statutes of Limitations, supra, § 18.12, at p. 119, fn. omitted.)” (Foxborough v. Van Atta, supra, 26 Cal.App.4th at pp. 228-229.)
Thus in Foxborough, the statute of limitations commenced to run when the attorney concluded his representation of the client in 1985, notwithstanding the fact that the attorney was subsequently rehired, after the statute of limitations had run, in a different capacity tangentially related to the subject matter of the malpractice. Those facts are not remotely analogous to those present here: The complaint alleged that Brobeck was retained to represent Jordache in the Marciano Action, committed malpractice in the course of that representation, and continued to represent Jordache in the Marciano Action until within one year of the filing of this malpractice lawsuit.
Similarly, Crouse v. Brobeck, Phleger & Harrison, supra, is wholly inapposite. In Crouse, it was undisputed that the law firm had ceased representing the client in any capacity more than one year before the malpractice cause of action accrued and the lawsuit was filed. The only question at issue was whether law firm’s former partner’s continuing representation of the law firm’s former client tolled the limitations period applicable to the law firm by reason of section 340.6(a)(2). That the Court of Appeal answered that question in the negative should provide no solace to Brobeck in this case.
Further, we decline Brobeck’s invitation to assess the substantiality of the legal services rendered and to create an exception to the continuous representation rule if we deem the services to be insubstantial or “de minimis.”
Brobeck further argues that the purpose of the continuous representation tolling provision would not be served here, because Jordache had already concluded that Brobeck had committed malpractice when, in December 1987, it gave Conkle, Kremer & Engel exclusive authority to pursue the insurance coverage litigation. However, our goal in interpreting a statute is not to implement the supposed policy of the Legislature in enacting the subject legislation, but to honor the plain meaning of the actual words chosen by the Legislature to implement that policy. (See, e.g., Kobzoff v. Los Angeles County Harbor/UCLA Medical Center (1998) 19 Cal.4th 851, 860-861.)
Moreover, as the court in O’Neill responded to a similar argument: “We are confronted with the situation of clients who suspect their attorney has committed malpractice, retain malpractice counsel to investigate such a claim, yet continue to utilize their attorney to perform services related to the matter in which the malpractice is suspected. While we agree with respondents that such action does not suggest an attorney-client relationship marked with trust and confidence, trust and confidence are not stated requirements of the continuous representation tolling provision of section 340.6, subdivision (a)(2).” (O’Neill v. Tichy, supra, 19 Cal.App4th at p. 120.)
Furthermore, a second purpose of the continuous representation tolling provision is fully implicated here. That purpose, as articulated by Brobeck, is “to prevent an attorney from taking advantage of the continuing representation relationship, so as to defeat or delay the client’s filing of a malpractice claim until the statute of limitations has run.” Brobeck would have succeeded in doing precisely that were we to adopt its “de minimis activities” argument.
It is undisputed that, in the two-and-a-half year period after Brobeck ceased being Jordache’s primary litigation counsel in the Marciano Action, Brobeck billed Jordache over $300,000 in legal fees. When did Brobeck cease representing Jordache in the Marciano Action? Brobeck argues that it provided only historical information to its successor counsel in the one-year period prior to the effective filing date of this lawsuit. However, Jordache never terminated Brobeck as its counsel. Brobeck never indicated to Jordache that it was no longer representing it in the Marciano Action. What event could have put Jordache on notice that the statute of limitations on its malpractice claim against Brobeck had commenced to run, when Brobeck continued to submit bills to Jordache for services rendered in the Marciano Action?
“The statutory price for the attorney’s availing himself of the continuing representation benefit is the tolling of the statute of limitations on a malpractice claim against him. The attorney may decline continued representation to preserve the defense, or he may waive the defense by continuing to represent the client.” (Crouse v. Brobeck, Phleger & Harrison, supra, 67 Cal.App.4th 1509, 1539.) Here, if Brobeck wished to preserve its statute of limitations defense, it could have discontinued its representation of Jordache so as to preclude the tolling of the limitations period. It chose not to do so. In short, the predicament of which Brobeck complains, that Jordache’s malpractice claim “was long stale when Jordache brought suit in 1990,” was the direct result of Brobeck’s decision to continue to represent Jordache in the Marciano Action.
Here, the record is devoid of any evidence that, prior to November 1989, either Jordache or Brobeck manifested to the other dissent to the continuance of Brobeck’s representation of Jordache in the Marciano Action. To the contrary, the uncontradicted evidence established that Brobeck continued to represent Jordache in the Marciano Action until November 1989. Because Brobeck bore the burden of establishing the defense of the statute of limitations, this failure of evidence requires reversal of the judgment.
The judgment is reversed. Brobeck is to bear the costs on appeal.
1. Jordache also sued 110 of Brobeck’s individual partners.
2. Further statutory references are to the Code of Civil Procedure.
3. By stipulation, the parties tolled the statute of limitations between August 15, 1990 and February 15, 1991. Consequently, the parties agree that Jordache’s lawsuit, filed on February 14, 1991, is deemed to have been filed on August 15, 1990.
4. By stipulation of the parties filed with this Court on January 15, 1999, Jordache has waived the additional claims of error set forth in its opening brief filed with the Court on July 18, 1995. Consequently, our review is limited to this single assignment of error.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS