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August 20, 2015

Lee v. Hanley (2015) 61 Cal.4th 1225

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The Supreme Court holds C.C.P. § 340.6’s one-year statute of limitations applies solely where the claim depends on proof an attorney violated a professional obligation.

Nancy Lee hired attorney William Hanley to represent her in litigation and advanced Hanley attorney fees. After the matter settled Hanley notified Lee she had a credit balance.  Lee requested a refund but Hanley refused.  Lee sued more than a year after Hanley’s refusal.

Lee’s operative complaint specified she was not injured by Hanley’s legal services, and that Hanley had refused to pay money he owed her. The trial court sustained Hanley’s demurrer reasoning C.C.P. § 340.6 applied to Lee’s claim, and the action was untimely. 

Lee argued C.C.P. § 340.6 applies only to claims arising from the attorney’s performance of services that require a license to practice law. Hanley asserted C.C.P. § 340.6 includes any conduct arising from the attorney-client relationship, other than claims for actual fraud.

The Supreme Court rejected both Lee’s narrow reading of C.C.P. § 340.6, and Hanley’s more expansive proposal. Instead, the Court found that the term “professional services” includes non-legal services governed by an attorney’s professional obligations, such as accounting, bookkeeping, and holding a client’s property in trust.  However, C.C.P. § 340.6 does not necessarily apply whenever a plaintiff alleges a violation of an attorney’s professional obligations.  C.C.P. § 340.6’s time bar applies only to claims whose merits depend on proof that an attorney violated a professional obligation while providing professional services.

It was not clear Lee’s claim depends on proving Hanley breached a professional obligation. She may be able to independently prove a claim for conversion.  If, however, discovery shows that Lee’s claim depends on proof Hanley violated a professional duty, then Lee’s claim could be time barred.

Comment: The Supreme Court held that C.C.P. § 340.6 is broader than a professional negligence statute, which might have the effect of extending the time to file some claims against attorneys.  Plaintiffs could conceivably avoid C.C.P. § 340.6’s one-year bar by pleading misconduct unrelated to the attorney’s professional services.

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