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May 17, 2010

Laclette v. Galindo (2010) 184 Cal.App.4th 919

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The Second District holds that the pendency of a settlement agreement that called for payments over time tolls the legal malpractice statute of limitations under the continuous representation exception absent express termination of the relationship.

Alexis Galindo defended Amaryllis Laclette in connection with a claim against her in connection with the sale of residential real property.  The settlement of the underlying lawsuit required Laclette to make monthly installment payments until the total settlement was paid.

More than a year after the settlement was finalized, Laclette sued Galindo for a conflict of interest in representing both her and her employer.

Galindo moved for summary judgment on the basis that the lawsuit was filed beyond the one-year statute of limitation as required by C.C.P.  § 340.6.  Galindo supported the motion with the argument that Laclette suffered actual damage at the time of the settlement; and admissions by Laclette that she knew she was injured at the time of the settlement, which occurred more than one year prior to the filing of the lawsuit.  Galindo asserted that the representation terminated with the settlement was finalized and this was not extended because the trial court retained jurisdiction over the payment of the settlement.  Galindo asserted that he had  no contact with Laclette after the settlement, which Laclette conceded.

Laclette countered that the trial court’s continuing jurisdiction over the settlement, and Galindo’s continued status as attorney of record, tolled the statute pursuant to the continuing representation tolling provision of section 340.6 (a)(2).  Laclette asserted that potential issues concerning the settlement would involve Galindo.

The trial court agreed with Galindo and found that his failure to withdraw and the trial court’s continuing jurisdiction were insufficient to constitute continuous representation when the attorney does not actually perform services for the client.

The Court of Appeal reversed the trial court’s grant of summary judgment.  The attorney legal malpractice statute of limitations is tolled while the attorney continues to represent the plaintiff regarding the same specific subject matter, even if the client is aware of the attorney’s negligence.  The continuous representation tolling provision avoids the disruption of an attorney-client relationship by a lawsuit while enabling the attorney to correct or minimize an apparent error, and prevents an attorney from defeating a malpractice cause of action by continuing to represent the client until the statutory period has expired.

Representation ordinarily 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.  Some authorities state that the representation also ends if the attorney withdraws unilaterally without the consent of either the client or a court, despite any breach of duty, if the client actually has or reasonably should have no expectation of further services.
Some California courts have endorsed the “New York rule,” that is, for purposes of the continuing representation rule, an attorney-client relationship exists only as long as there are clear indicia of an ongoing, continuous, developing and dependent relationship between the client and the attorney, and the relationship is marked with trust and confidence.  Other California courts have rejected that rule because those requirements are not stated in section 340.6.

In precedent the Second District concluded that for purposes of § 340.6 (a)(2), in 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.  That can occur when an attorney expressly notifies the client that the attorney will perform no further services, or may be inferred from the circumstances.  Absent notice or circumstances that a reasonable person would conclude signified the end of the attorney-client relationship, a client should be entitled to rely on an attorney to perform the agreed services and should not be required to interrupt the attorney-client relationship by filing a malpractice complaint.  Thus, the continuous representation should be viewed objectively from the client’s perspective.

There was a triable issue of material fact as to whether Galindo continued to represent Laclette during the pendency of the settlement agreement despite the lengthy hiatus when no legal services were required.  There was no express termination by client consent or court order.  Galindo did not show the representation of Laclette had been fulfilled and that all agreed tasks for which Laclette retained Galindo had been completed; he merely showed a lack of contact between himself and Laclette.
During the time there was no contact, the trial court retained jurisdiction over the settlement; the settlement obligated Laclette make ongoing payments, which Laclette was doing; and Galindo remained Laclette’s counsel of record.

Given the facts viewed objectively from the client’s perspective, it was not unreasonable for Laclette to expect Galindo represented her in the event issues arose concerning the performance of the settlement.  The two-year hiatus did not implicitly terminate Galindo’s representation.

Comment: This case reinforces the importance of a risk management tool: a written communication to the client expressly terminating the representation.


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