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November 3, 2016

Foxen v. Carpenter (2016) 6 Cal.App.5th 284

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The Second District holds California’s legal malpractice statute of limitations, C.C.P. § 340.6, applies to all claims, including those based on non-legal functions, that are incident to the attorney-client relationship.    

Christine Foxen and her husband hired John Carpenter and his firm to recover for Foxen’s personal injuries.  After both claims were settled, Carpenter disbursed the settlement funds after deducting fees and costs.

Over three years after Foxen alleged she discovered Carpenter collected fraudulent and improper costs, she sued Carpenter under contract and fraud based theories.  The trial court sustained a demurrer to all causes of action based on California’s statute of limitations for legal malpractice, C.C.P. § 340.6. 

Foxen argued § 340.6 did not apply because her causes of action were not based on the quality of Carpenter’s legal services, but on the breach of non-professional contractual obligations.  The Court of Appeal noted the attorney client relationship often requires “non-legal” services such as accounting, bookkeeping, and holding property in trust.  These duties go beyond dispensing competent legal advice or advocating for clients in dispute resolution.  However, the broad term in § 340.6, “professional services,” encompasses non-legal work required by the attorney’s professional obligations.

The Court similarly rejected Foxen’s argument she could demonstrate her claims did not rely on breach of professional obligations.  Foxen’s contract based claims all arose because Carpenter allocated settlement funds in the personal injury action.  The accounting was incorrect or was in breach of fiduciary duties.  Foxen cannot prove her claims without demonstrating Carpenter breached either professional duties, or non-legal services closely associated with performing legal professional duties.

The conversion and fraud claims were also barred.  Foxen did not file her claim until over three years after she alleged she discovered the wrongful charges.   Fraud claims, excepted from § 340.6, are governed by a three-year limitation period under C.C.P. § 338.  Foxen’s conclusory allegation that Carpenter, within the three years, continued to deceitfully assert his accounting was correct was contradicted by her specifically pled admission she had discovered the wrongful charges over three years prior to filing the complaint.

The Court also rejected Foxen’s argument that California’s four-year Unfair Business Practices statute of limitations applied to those claims.  Where more than one statute might apply to a particular claim, a specific limitations provision, here, § 340.6, prevails over a more general provision.

Comment:  California’s attorney malpractice statute of limitations has only narrow exceptions that would extend its time limits.

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