SHERRY TAHERI v. DAVID YADIDI

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Court of Appeal, Second District, California.

SHERRY TAHERI, Plaintiff and Appellant, v. P. DAVID YADIDI et al., Defendants and Respondents.

B226819

Decided: October 28, 2011

Law Offices of William J. Houser and William J. Houser for Plaintiff and Appellant. Reback, McAndrews, Kjar, Warford & Stockalper, James J. Kjar and Cindy A. Shapiro for Defendants and Respondents P. David Yadidi and The Yadidi Law Firm. Yee & Belilove, Steven R. Yee, Steve R. Belilove and Christopher D. Chaplin for Defendants and Respondents Monica A. Mihell and Law Offices of Monica A. Mihell.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

Plaintiff Sherry Taheri was represented in prior litigation by two attorneys whose alleged negligence resulted in the dismissal of her complaint and the striking of her answer to a cross-complaint.   She filed the instant lawsuit against the attorneys more than a year later but less than a year after final judgment was entered in the underlying action.   The trial court sustained the attorneys' demurrers without leave to amend on the ground that the action was barred by the one-year limitations period prescribed by Code of Civil Procedure section 340.6, subdivision (a) (section 340.6(a)).   The issue on appeal is whether the limitations period began to run when the underlying complaint was dismissed and answer stricken, or when final judgment was entered.   We conclude the limitations period began when plaintiff suffered the adverse orders, not when judgment was entered, and the instant action is time barred.   Accordingly, we affirm.

BACKGROUND

Plaintiff appeals from a judgment of dismissal entered after the sustaining of general demurrers.   Accordingly we assume the truth of facts properly pleaded in the complaint, “but not contentions, deductions, or conclusions of fact or law.  [Citation.]  We also consider matters which may be judicially noticed.   [Citation.]”  (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)

Plaintiff owned several homes that she purchased as an owner-occupier, though she never resided in them.   When the sale of one of the properties was delayed, Jeffrey B. Endler, plaintiff's first attorney, advised her to cancel escrow and sue the buyers and their agents for interference with the property.   She canceled escrow but was informed by Endler that he would not represent her in the proposed lawsuit.   Plaintiff then retained defendant P. David Yadidi.

Yadidi agreed to file a complaint against the buyers and their agents on plaintiff's behalf even though, plaintiff alleged, “there legally was no case against them, and without advising plaintiff ․ of the likely downside of a cross-complaint that would be filed against her and the thousands of dollars it could and did cost․”  Yadidi also failed to advise plaintiff that discovery would reveal the irregularities surrounding her purchase of the properties and that “possible civil and criminal actions” and sanctions could result.

On July 11, 2007, Yadidi filed the underlying lawsuit on plaintiff's behalf against the buyers and their agents, “making claims that could not be proven and which gave rise to discovery.”   The defendants cross-complained.   Yadidi then propounded little or no discovery, failed to respond adequately to discovery propounded by defendants, failed to disclose Endler's malpractice, and refused to appear at defendants' deposition of plaintiff.   Yadidi substituted out as counsel of record 30 days before trial, on May 21, 2008.

Monica Mihell substituted in on June 19, 2008.   Plaintiff alleged Mihell then failed to (1) respond to discovery;  (2) move to set aside admissions;  (3) assist with document production;  (4) oppose motions to strike the complaint;  (5) oppose a motion to strike plaintiff's answer to a cross-complaint;  or (6) disclose Endler's and Yadidi's malpractice.

On July 11, 2008, the trial court dismissed plaintiff's complaint.1  On August 14, 2008, the court ordered that her answer to the cross-complaint be stricken due to her failure to comply with discovery requests.   Mihell substituted out as counsel on that date.

Plaintiff retained her fourth attorney, Shahrokh Mokhtarzadeh, on August 25, 2008.   He substituted out in October 2008.

Judgment on the cross-complaint was entered on September 3, 2008.   The instant lawsuit was filed on September 1, 2009.

In the instant complaint, plaintiff alleged that as a result of Yadidi's negligence in the underlying action she was left in a situation where she would be unable to prove any element of her case against any defendant because she had admitted under oath in discovery responses that she “did not know anything about any allegation she has made in her complaint or any damage arising therefrom.   In effect this legal malpractice ruined

any chance [p]laintiff ․ had to win her case on any legal theory.”   Plaintiff alleged Mihell's failure to comply with the defendants' discovery requests caused her complaint to be dismissed and “seriously ended any opportunity of plaintiff ․ to proceed further with her law suit.”   Plaintiff alleged she “suffered crippling, devastating, unrecoverable damage in the prosecution of her case and the defense of Cross–Complainant[']s case” and incurred attorney fees and costs “to secure other counsel to represent her interests” in the underlying action.

Yadidi and Mihell demurred to plaintiff's second amended complaint, arguing plaintiff suffered injury when her underlying complaint was dismissed on July 11, 2008 and when her answer to the cross-complaint was stricken on August 14, 2008.   Defendants argued the one-year limitations period set forth in section 340.6 began to run then, and because the instant complaint was filed more than one year later, on September 1, 2009, it was time barred.   Plaintiff opposed the motion, arguing that the limitations period set forth in section 340.6 did not begin to run until judgment was entered against her on September 3, 2008.   The trial court agreed with defendants and sustained the demurrers without leave to amend.

The only issue on appeal is whether the limitations period set forth in section 340.6 began to run when plaintiff suffered debilitating adverse orders on July 11 and August 14, 2008, or when final judgment was entered on September 3, 2008.

DISCUSSION

“[W]e give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.  [Citation.]  When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action.  [Citation.]  And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment:  if it can be, the trial court has abused its discretion and we reverse;  if not, there has been no abuse of discretion and we affirm.”   (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.)

“The function of a demurrer is to test the legal sufficiency of the challenged pleading by raising questions of law.   The demurrer tests the pleading alone and not the evidence or other extrinsic matters.   The demurrer lies only where the defects appear on the face of the pleading.”  (Hayter Trucking, Inc. v. Shell Western E & P, Inc. (1993) 18 Cal.App.4th 1, 17.)   A pleading that on its face is barred by the applicable statute of limitations does not state a viable cause of action.  (McMahon v. Republic Van & Storage Co. (1963) 59 Cal.2d 871, 874;  Hunt v. County of Shasta (1990) 225 Cal.App.3d 432, 440.)

A cause of action for legal malpractice must be filed “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(a).)

It is undisputed that the latest date Yadidi breached any duty owed to plaintiff was May 21, 2008, when he withdrew as counsel of record in the underlying litigation.   It is similarly undisputed Mihell could not have committed malpractice after August 14, 2008, when she withdrew.   It is further undisputed that plaintiff became aware of the facts constituting defendants' wrongful acts or omissions on July 11 and August 14, 2008, as she was present when the trial court ordered her complaint dismissed and answer to the cross-complaint stricken.   This lawsuit, filed on September 1, 2009, is therefore untimely unless the one-year limitations period was tolled.

Section 340.6(a) contains four tolling provisions, only the first of which is pertinent here:  The limitations period is tolled until the plaintiff has sustained “actual injury.”

“Actual injury occurs when the client suffers any loss or injury legally cognizable as damages in a legal malpractice action based on the asserted errors or omissions․  [S]ection 340.6, subdivision (a)(1), will not toll the limitations period once the client can plead damages that could establish a cause of action for legal malpractice.”  (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 743 (Jordache ).)  “The determination of actual injury requires only a factual analysis of the claimed error and its consequences․  [¶] ․ [T]he inquiry concerns whether ‘events have developed to a point where plaintiff is entitled to a legal remedy․’  [Citation.]”  (Id. at p. 752.)  “[T]here are no short cut ‘bright line’ rules for determining actual injury under section 340.6.  [Citations.]  Instead, actual injury issues require examination of the particular facts of each case in light of the alleged wrongful act or omission.”  (Id. at p. 761, fn. 9.) “When the material facts are undisputed, the trial court can resolve the matter as a question of law․”  (Id. at p. 751.)

A cause of action for legal malpractice may arise “before the client sustains all, or even the greater part, of the damages occasioned by his attorney's negligence.  [Citations.]  Any appreciable and actual harm flowing from the attorney's negligent conduct establishes a cause of action upon which the client may sue.”  (Budd v. Nixen (1971) 6 Cal.3d 195, 201, italics added.)

Here, the undisputed facts establish that plaintiff sustained actual injury as a result of defendants' alleged neglect on July 11, 2008, when her complaint in the underlying action was dismissed, and on August 14, 2008, when her answer to the defendants' cross-complaint was stricken.   These adverse orders caused plaintiff to incur additional legal costs and expenditures, decreased the settlement value of her claims, and increased the settlement value of the cross-complainant's claims.  (See Laird v. Blacker (1992) 2 Cal.4th 606, 609 [actual injury sustained when court orders resulted in lost settlement value and compelled plaintiff to incur legal costs and expenditures in pursuing an appeal].)

Citing Troche v. Daley (1990) 217 Cal.App.3d 403, plaintiff argues a client does not sustain actual injury until, as a result of the attorney's negligence, an adverse judgment is entered in the underlying litigation.   Plaintiff is incorrect.   In Troche v. Daley, the plaintiff's underlying lawsuit was dismissed on May 15, 1984, for failure to timely serve the defendant.  (Id. at p. 406.)   Plaintiff's subsequent appeal was effectively terminated on March 18, 1985, when her request to appeal in forma pauperis was denied.   The issue in the resulting malpractice action was whether Troche first suffered actual harm when the case was dismissed or when the appeal was terminated.  (Id. at p. 410.)   The court held “the harm occurred ․ when the district court dismissed the lawsuit.”  (Ibid.) Similarly here, plaintiff's harm occurred on July 11, 2008, when the trial court in the underlying lawsuit dismissed her complaint.

Plaintiff argues she suffered no actual injury until final judgment was entered because a judgment is not “effectual for any purpose until entered.”   (Code Civ. Proc., § 664.)   The argument is without merit because as we are not concerned here with the effectuality of the underlying judgment, only with the extent to which the court's orders—whether or not judgments 2 —constituted actual injury for purposes of section 340.6.

As stated by our Supreme Court in ITT Small Business Finance Corp. v. Niles (1994) 9 Cal.4th 245 (ITT ), “an action for attorney malpractice accrues on entry of adverse judgment, settlement, or dismissal of the underlying action.”  (Id. at p. 258, italics added.)   And even that is “not ․ a ‘rule for all seasons.’  ․ [D]epending upon the particulars, actionable harm may occur at any one of several points in time subsequent to an attorney's negligence.”  (Adams v. Paul (1995) 11 Cal.4th 583, 588 (lead opn. of Arabian, J.).)  “The myriad of circumstances under which statute of limitations issues may arise in missed statute cases sharply illustrates the practicality of applying the prevailing ‘question-of-fact’ rule to the determination of when actual injury occurs.   The number of potential variables, which do not necessarily follow a set pattern, precludes defining the point of harm as a fixed point or event because reasonable application becomes too problematic.”  (Id. at pp. 588–589.)

Citing Robinson v. McGinn (1987) 195 Cal.App.3d 66, plaintiff argues the limitations period set forth in section 340.6 does not begin to run until a client suffers “irremediable” damage in the underlying lawsuit.   Even after the trial court dismissed her underlying complaint and ordered her answer to the cross-complaint stricken, plaintiff argues, she could have mitigated the impact of those orders by moving to set aside the dismissal pursuant to Code of Civil Procedure section 473 or by seeking other relief.

The “irremediable damage” rule proposed by Robinson v. McGinn was rejected by the Legislature when it adopted Code of Civil Procedure section 340.6.   (Laird v. Blacker, supra, 2 Cal.4th at p. 617.)   No authority or principle makes the tolling provisions of section 340.6(a) contingent upon the availability of avenues of mitigation.   On the contrary, the Supreme Court has repeatedly observed that the cost of pursuing such avenues constitutes actual injury.  (See Jordache, 18 Cal.4th at p. 743;  Laird v. Blacker, supra, at p. 609;  Budd v. Nixen, supra, 6 Cal.3d at p. 201.)   Further, the rule plaintiff proposes would admit of no reasonable limitation on a malpractice action—a person suffering an adverse order or judgment could always attempt to mitigate its impact, up to and beyond appeal.

Plaintiff ultimately argues that a case must be finally and adversely concluded in the trial court before a client suffers actual injury due to her attorney's neglect.   That is not the law.  “[T]he determination of actual injury does not necessarily depend upon or require some form of final adjudication, as by judgment or settlement.”  (Adams v. Paul, supra, 11 Cal.4th at p. 591 (lead opn. of Arabian, J.).)  “[A]ctionable harm may occur at any one of several points in time subsequent to an attorney's negligence.”   (Id. at p. 588.)  “ ‘[A]n injury does not disappear or become suspended because a more final adjudication of the result is sought.’ ”  (Laird v. Blacker, supra, 2 Cal.4th at p. 615, citation omitted.)

Plaintiff alleged the orders dismissing her underlying complaint and striking her answer to the cross-complaint caused her to incur and pay attorney fees.   The orders also necessarily decreased the settlement value of her claims and increased the settlement value of the underlying defendants' claims.   Plaintiff thus suffered actual injury on July 11, 2008 and August 14, 2008.   She filed the instant lawsuit more than one year later, on September 1, 2009.   It is time barred.

DISPOSITION

The judgments are affirmed.

NOT TO BE PUBLISHED.

CHANEY, J.

We concur:

ROTHSCHILD, Acting P. J.

JOHNSON, J.

FOOTNOTES

FN1. On our own motion we take judicial notice of the superior court file in Taheri v. Mejia (Super.Ct.L.A.County, 2007, No. LC078210), particularly the July 11 and July 15, 2008 minute orders.  (Evid.Code, § 452, subd. (d) [judicial notice may be taken of court records];  see People v. Wiley (1995) 9 Cal.4th 580, 594.)   The July 11, 2008 order of dismissal was stayed.   On July 15, 2008, the stay was lifted..  FN1. On our own motion we take judicial notice of the superior court file in Taheri v. Mejia (Super.Ct.L.A.County, 2007, No. LC078210), particularly the July 11 and July 15, 2008 minute orders.  (Evid.Code, § 452, subd. (d) [judicial notice may be taken of court records];  see People v. Wiley (1995) 9 Cal.4th 580, 594.)   The July 11, 2008 order of dismissal was stayed.   On July 15, 2008, the stay was lifted.

FN2. The dismissal entered on July 11, 2008, was a judgment.  (Code Civ. Proc., § 581d [an entry of dismissal constitutes a judgment].).  FN2. The dismissal entered on July 11, 2008, was a judgment.  (Code Civ. Proc., § 581d [an entry of dismissal constitutes a judgment].)