Opinion
For Opinion on Hearing, see 98 Cal.Rptr. 837, 491 P.2d 421.
Opinion on pages 813 to 827 omitted
HEARING GRANTED
[92 Cal.Rptr. 815]Wagner & Scuderi, Los Angeles, for plaintiffs and appellants.
Jack Tenner, Los Angeles, for defendants and respondents.
KAUS, Presiding Justice.
This is an appeal from a summary judgment in an action for legal malpractice. The only possible justification for the judgment is the expiration of the two-year statute of limitations after the alleged negligent act. The action was promptly filed after discovery of defendants' negligence. Were the case one for the malpractice of a doctor (Huysman v. Kirsch, 6 Cal.2d 302, 312-313, 57 P.2d 908) , a certified public accountant (Moonie v. Lynch, 256 Cal.App.2d 361, 362, 64 Cal.Rptr. 55) , a title company (Cook v. Redwood Empire Title Co., 275 Cal.App.2d 452, 454-455, 79 Cal.Rptr. 888), a trustee (Cortelyou v. Imperial Land Co., 166 Cal. 14, 20, 134 P. 981), an escrow company (Amen v. Merced County Title Co., 58 Cal.2d 528, 534, 25 Cal.Rptr. 65, 375 P.2d 33), a stockbroker (Twomey v. Mitchum, Jones & Templeton, Inc., 262 Cal.App.2d 690, 725, 69 Cal.Rptr. 222) or of the agent of an insurance company (United States Liab. Ins. Co. v. Haidinger-Hayes, Inc., 1 Cal.3d 586, 595-597, 83 Cal.Rptr. 418, 463 P.2d 770), the filing of the complaint would have been timely. In its latest statement on the preferential treatment afforded lawyers by their brothers on the bench, the Supreme Court in Heyer v. Flaig, 70 Cal.2d 223, 233, footnote 7, 74 Cal.Rptr. 225, 232, 449 P.2d 161, 168, said that: '* * * The judicial rule against postponed accrual of the statute of limitations in legal malpractice actions rests upon a tenuous basis.' Even respondent's counsel, in oral argument before us, confessed: [92 Cal.Rptr. 816]'[I]t is my own candid observation that the rule for us ought to be precisely what it is as to doctors, that if we mishandle or mismanage a client's affairs * * *, we should not be able to hide behind a wall and say: 'well your two years are up and we don't care whether you kuew about it or not.''
It is noted that the 1970 Legislature added section 340.5 to the Code of Civil Procedure. It provides that as far as numerous members of the medical profession are concerned, the statute is either 'four years after the date of injury or one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the injury, whichever first occurs.' Significantly, however, the statute does not run at all if the defendant 'has failed to disclose any act, error, or omission upon which such action is based and which is known or through the use of reasonable diligence should have been known to him.' As will be seen, if section 340.5 were applicable to attorneys, it would not help defendants.
The inequity of the rule against postponed accrual of the statute of limitations in attorney malpractice actions is particularly highlighted by the fact that in several areas the type of service which attorneys and certified public accounts may render, overlap.
The facts of the case at bar cry out for a change in the rule. Normally, of course, it would not be appropriate for this court to question a rule recognized, if sometimes deplored , in several cases at all appellate levels. However, we consider the Supreme Court's pronouncement in Heyer v. Flaig, supra, albeit dictum, a clear invitation to change.
For a recent example of academic handwringing, see Wallach and Kelly, Attorney Malpractice in California: A Shaky Citadel, 10 Santa Clara Lawyer, page 257, at 260-262.
We hasten to say at the outset that we are not concerned with the length of the statutory period, but only with the moment at which it commences. The Supreme Court in Alter v. Michael, 64 Cal.2d 480, 50 Cal.Rptr. 553, 413 P.2d 153, conclusively reaffirmed that the applicable period is two years as provided by subdivision 1 of section 339 of the Code of Civil Procedure. There seems to be an undercurrent of thought in some cases that if the statute of limitations does not start to run until the client has discovered or should have discovered the facts, the new rule would have to be accompanied by a concomitant shortening of the period to one year. (Code Civ.Proc., § 340.) Nothing, however, compels such a conclusion. We point out that in Moonie v. Lynch, 256 Cal.App.2d 361, 64 Cal.Rptr. 55, the court had no trouble establishing postponed accrual in actions against accountants, while recognizing that the applicable statutory period was two years.
As far as the resolution of this case is concerned it is immaterial whether the period is one or two years, since plaintiffs' complaint was filed less than a year after they discovered the true facts.
FACTS
Plaintiffs' complaint, which was filed on August 13, 1968, is very simple. It alleges that on May 25, 1961, their son died while he was a patient at a county hospital in a neighboring county. Soon afterwards they got in touch with one Delaney, an attorney practicing in that county. Delaney agreed to prosecute a malpractice action against the county. Delaney then got in touch with respondents Raoul D. Magana, Daniel C. Olney, Mitchell Levy, Daniel C. Cathcart and Leo Gelfand, who are alleged in the complaint to have been law partners or associates. Respondents agreed to act as attorneys of record in plaintiffs' case against the county. They prepared a complaint and sent it to Delaney for filing. Delaney filed it on May 25, 1962. The summons was never served and in December 1965 the county procured a dismissal of the case. (Code Civ.Proc., § 581a.) Had the case come to trial plaintiffs would have prevailed. Further: '* * * [P]laintiffs had no knowledge of said dismissal until they consulted other competent counsel on or about December 21, 1967, who informed them on or about said date that Case No. 110389 had been dismissed for failure to serve and return summons within three years. Defendants, and each of them, wilfully and fraudulently concealed and failed to disclose their negligent actions with the intention of deceiving plaintiffs. Furthermore, at various times during the years 1966 and 1967, exact dates cannot be recalled, plaintiffs had oral conversations with defendants and inquired as to the progress of their case and defendants replied in substance that the case was still pending. Plaintiffs justifiably relied upon the statements of defendants and did not in any way suspect that their case was dismissed until so informed on or about December 21, 1967.'
The answer admits that at the time in question these defendants were engaged in the practice of law under the common firm name of Magana, Olney, Levy, Cathcart & Gelfand.
The complaint also reproduces a letter written by one of the defendants to Delaney on March 6, 1963, less than a year after [92 Cal.Rptr. 817]the complaint was filed. It reads as follows: 'Our records indicate that the Complaint in the above-captioned case was typed and given to you so that it might be filed by you in your home County before the expiration of the statute date. Since we have a copy of the Complaint in this office, and in view of the peculiar circumstances surrounding this action, we are filing this as an inactive case. If the Legislature should repeal the prohibition against suing the County and make that act retroactive, we may [have] something to work on with you.' (Emphasis added.)
The answer admits that, after contact with Delaney, respondents prepared the 1962 complaint and gave it to Delaney for filing. It also admits that the action was dismissed for failure to serve and return the summons. Section 339, subdivision 1 of the Code of Civil Procedure is pleaded as an affirmative defense.
The motion for summary judgment simply quotes portions of the deposition of the plaintiff, Gerald F. Neel, which are to the general effect that he had never heard of respondents until December, 1967. Between 1962 and 1967 Gerald F. Neel 'had a number of conversations' with Delaney during which he would ask him 'if the law had passed or didn't pass' to which Delaney would reply 'No it hasn't; I am not sure of your case yet.' Delaney never told Mr. Neel that he had associated respondents in the case.
This is an obvious reference to the unusual situation which existed during part of the period with which we are concerned, with respect to suits against public entities. Following the Supreme Court's decision in Muskopf v. Corning Hospital Dist., 55 Cal.2d 211, 11 Cal.Rptr. 89, 359 P.2d 457, the Legislature by chapter 1404 of the statutes of 1961 had given itself, in effect, until 1963 to write a new statute governing the tort liability of public entities. In Corning Hospital Dist. v. Superior Court, 57 Cal.2d 488, 20 Cal.Rptr. 621, 370 P.2d 325, the 1961 legislation was, with respect to causes of action arising between February 27, 1961 and the 91st day after the final adjournment of the 1963 Regular Session of the Legislature, interpreted to provide a 'temporary period of suspension.' The Corning case made it clear, however, that in the interim 'the parties may file pleadings' and take other measures to get cases ready for trial. (See also Thelander v. Superior Court, 58 Cal.2d 811, 26 Cal.Rptr. 643, 376 P.2d 571.)
At the end of the deposition it was stipulated that if Mrs. Neel's deposition were taken, her answers would be the same, to the extent that she had any knowledge of the subject matter.
In opposition to the motion for summary judgment plaintiffs filed certain portions of Delaney's deposition, which we summarize: Delaney recalled vaguely having told Mr. Neel that he 'would like to refer the case to the Magana office.' He personally filed a claim with the county. He had previously referred one other case to defendants who tried and won it. He considered that he and defendants were handling the Neel case 'as a joint enterprise, so to speak,' that 'they and [I] would work together on the case.' The reason why he did not cause the complaint to be served is that he 'goofed' or, to be technical, that he was negligent. He just forgot it because of 'this suspense business.' (See footnote 6, ante.) He was reminded of the case by the county's notice of motion to dismiss. Over the years both before and after the dismissal of the case he had a number of conversations with Mr. Neel. After the case was dismissed he 'dodged' informing Neel about the dismissal. He had realized that he had made a mistake and did not want to admit it. He implied to plaintiffs that the case had no merits. He thought it was correct to say he was 'intentionally trying to avoid telling [Mr. Neel] that it had been dismissed.
'Q In other words, yon tried to avoid telling him the reason why it was not pending anymore, you tried to imply to him that you could not sue a charitable hospital; not specifically saying it, but you tried to, at least in your own mind, get it across to him that he did not have a case and that was why he had no more case. Is that correct? A I think that's a little harsh. Q All right, in your own words. I do not want to put words in your mouth. Let's put it this way. All the way up to 1967, to use your own words, you were dodging telling him that it was dismissed because of your negligence? A I was dodging and at the same time telling him there was no case.'
[92 Cal.Rptr. 818]DISCUSSION
Defendants attempt to justify the granting of the motion for a summary judgment on two grounds: 1. that the Neels had not authorized Delaney to associate them in the action and that, therefore, no attorney-client relationship between plaintiffs and defendants had ever arisen; 2. that whatever may be said with respect to the running of the statute against Delaney, they were not bound by his fraudulent concealment of the Neels cause of action.
The first point hardly needs answering. All that really has to be said at this stage is that the mere fact that Delaney did not tell plaintiffs about his association of defendants, does not, as a matter of law, destroy the presumption that defendants were authorized to appear for plaintiffs. (Gagnon Co. Inc. v. Nevada Desert Inn, Inc., 45 Cal.2d 448, 459, 289 P.2d 466.) Even though the presumption is no longer evidence, (Evid.Code § 600 (a)), as the case just cited holds, authority for the association of defendants may arise from custom and usage or the association may have been ratified by plaintiffs. In any event, we note that the wrongful death complaint, admittedly prepared by defendants, bears the name of their firm and no other. Section 6104 of the Business and Professions Code reads as follows: 'Corruptly or wilfully and without authority appearing as attorney for a party to an action or proceeding constitutes a cause for disbarment or suspension.' Clearly defendants are estopped to rely on any lack of an attorney-client relationship with plaintiffs. (2 C.J.S. Agency § 29, b, (1).)
Defendants' second point clearly has merit if the statute of limitations started to run as soon as further prosecution of the wrongful death action became impossible by reason of the failure to serve and return summons within three years of May 25, 1962, and if the fraudulent concealment of plaintiffs' cause of action by Delaney did not toll the running of the statute against his former coventurers. The last negligent act clearly was committed on the last day on which valid service and return of summons could have been effected, May 25, 1965. The complaint in this case was not filed until August 1968.
This matter was twice orally argued. Before and during the first argument the parties, and indeed this court, assumed that the joint venture relationship which existed between defendants and Delaney would automatically toll the running of the statute against defendants, if Delaney's fraud tolled it against himself. Further research by the court indicated that such an assumption was not justified. No case has been found which holds that after a joint venture is terminated by complete frustration of the purpose for which it was formed (San Francisco Iron Etc. Co. v. American Milling Etc. Co., 115 Cal.App. 238, 248, 1 P.2d 1008), one joint venturer's fraudulent concealment of causes of action that arose during the venture, can toll the running of the statute against his former coventurers. While no California case has ever negatived the possibility of this being the law, cases in other jurisdictions indicate that it is not. (See cases collected in 54 C.J.S. Limitations of Actions § 207 and 51 Am.Jur.2d 'Limitations [92 Cal.Rptr. 819]of Actions' § 150.) It should be pointed out that there is no suggestion in the record and none is advanced by plaintiffs, that defendants aided, abetted or even knew of Delaney's fraud.
Although no California case has been found in which an attorney was held estopped to plead the statute of limitations because of fraudulent concealment, the parties assume, and quite properly so, that Delaney would have been estopped. (Cf. Eckert v. Schaal, 251 Cal.App.2d 1. 5, 58 Cal.Rptr. 817.)
It appears to be the general rule that before a defendant is estopped to plead the statute of limitations because of fraudulent concealment it must be he or someone in privity with him who has deceived the plaintiff. In some jurisdictions even an agent's fraud will not be imputed to the principal. (Bryan v. United States, 10 Cir., 99 F.2d 549, 552.) The California rule is to the contrary. (Pashley v. Pacific Elec. Ry. Co., 25 Cal.2d 226, 235-236, 153 P.2d 325; Lightner Mining Co. v. Lane, 161 Cal. 689, 703, 120 P. 771.) It seems, however, that in both cases the fraud was perpetrated by present, not former, agents of the defendant.
The record is not so clear on whether the negligence was all Delaney's The March 6, 1963 letter was patently wrong in suggesting that during the moratorium--see footnote 6 above--the defendant county could not even be sued. The letter may well have been one of the reasons why Delaney did absolutely nothing after the filing of the complaint.
In any event, we asked the parties to research the point and they came up as empty handed as we had.
The question whether defendants are tarred by Delaney's fraud becomes academic if the statute did not start to run until plaintiffs discovered, or in the exercise of reasonable care should have discovered the true facts. This is so because of an important difference between the rule which, in a proper case, estops a defendant from relying on the statute and the rule of delayed accrual applied in nonlegal cases of professional malpractice: the former looks to the conduct of the defendant, while the latter examines the plaintiff's lack of knowledge and his negligence in not acquiring it.
Since it is our conclusion that the statute of limitations did not start to run against plaintiffs until December 1967, when they discovered the true facts, we need not decide the effect of fraudulent concealment by a former coventurer.
Of course Delaney's fraud is material whether the theory why defendants cannot claim the benefit of the statute of limitations is that their former coventurer fraudulently concealed a cause of action (Pashley v. Pacific Elec. Ry. Co., 25 Cal.2d 226, 231, 153 P.2d 325; Kimball v. Pacific Gas & Elec. Co., 220 Cal. 203, 215, 30 P.2d 39), or whether it is that the statute did not start to run until plaintiffs discovered or, through the use of reasonable diligence should have discovered the dismissal of the action. The materiality, however, is merely a coincidence. It just so happens that in this case the reason why there is a triable issue on whether or not plaintiffs should have discovered the situation is Delaney's fraud. There can be many reasons other than the attorney's concealment of the truth which may cause a client to remain in the dark.
Before proceeding to state our holding, we should discuss whether it is proper for an intermediate court of appeal to change a rule of decision of some standing, under the circumstances in which we find ourselves today: where the highest court has, in well considered dicta, expressed serious doubt about the rule. It would be easy enough for us to do what several courts did before the decision in Heyer v. Flaig, supra, 70 Cal.2d 223, 74 Cal.Rptr. 225, 449 P.2d 161, to deplore the rule, but to declare ourselves powerless to change it. That, of course, was entirely proper at the time. It is, however, our duty to announce what we believe the law to be, not what it once [92 Cal.Rptr. 820]was, and if we reach the conclusion that the Supreme Court today would disapprove an earlier line of decisions, we must anticipate such a ruling. For this proposition we cite as authority not only our own Supreme Court, but also that of the United States.
Thus it seems somehow unfair for the author of a note in 15 UCLA Law Review, page 230, The Commencement Of The Statute Of Limitations In Legal Malpractice Actions--The Need for Re-Evaluation: Eckert v. Schaal, to say about that decision: '* * * What is remarkable is the unquestioning re-application of such a harsh rule--an 'absolute denial of any redress to innocent victims of undiscovered malpractice' * * *--without a thorough reanalysis of the law or reconsideration of the policy behind it.' Eckert was decided by a division of the court of appeal for the first district. Whether or not the court was bound by Griffith v. Zavlaris, 215 Cal.App.2d 826, 30 Cal.Rptr. 517, a case out of the same district and the first case applying the rule about which the Supreme Court later expressed its doubts, there are nevertheless many practical reasons why it is unwise to hold contra to precedent established by other divisions, particularly when they are in the same district.
The federal case is Nolan v. Transocean Air Lines, 365 U.S. 293, 81 S.Ct. 555, 5 L.Ed.2d 571. There, the judgment of the court of appeals was set aside because, in a New York diversity action in which California law applied, it had failed to consider a 'considered dictum' of the California Supreme Court which, the United States Supreme Court thought, might possibly affect the continued validity of several controlling precedents of California courts of appeal. This is a clear holding that an intermediate court of appeal not only may, but must, consider dicta of the highest court when reaching its decision; and unless it may follow those dicta if it deems them persuasive, there is little point in considering them.
Actually, under applicable conflicts rules the federal court of appeals did not have to decide directly what effect the dictum would have in California, but merely what effect it would have had on the New York Court of Appeal, had the case been brought in a state court. It is, however, inconceivable that the Supreme Court would have reached a different result if the case had been filed in a federal district court in California and a decision of the Ninth Circuit had been before it.
Closer to home we have Sei Fujii v. State of California, 38 Cal.2d 718, 242 P.2d 617, which held that the California Alien Land Law violated the Fourteenth Amendment. Since the ultimate authority on the question was the United States Supreme Court, the California court was in a position similar to the one in which we find ourselves today. Several decisions of the United States Supreme Court had upheld the law. Nevertheless our Supreme Court did not deem itself bound by those decisions, because its reading of several later cases persuaded it that the United States Supreme Court had invited further consideration of the constitutional issues.
Actually, in Sei Fujii, our Supreme Court came up with a holding directly contrary to that of a higher court. As we shall show the California Supreme Court has never held that in attorney malpractice cases the statute of limitations runs from the time of the negligent act, where the client did not know the facts and was not careless in failing to discover them.
Satisfied that we may reexamine the rule against delayed accrual in legal malpractice cases, we now proceed to inquire into its standing in the Supreme Court, its historical genesis, its present viability and, finally, its compatibility with the nature of the attorney-client relationship.
As far as the Supreme Court is concerned, it has never barred a justifiably ignorant client from recovery. Nevertheless, the rule under reexamination was mentioned by the court in two fairly recent cases. The first was Alter v. Michael, 64 Cal.2d 480, 50 Cal.Rptr. 553, 413 P.2d 153. The only question decided there was that the applicable period of limitations is two years, as prescribed by section 339, subdivision 1, of the Code of Civil Procedure. Meeting an argument that such a holding would discriminate against lawyers and favor doctors, the court did point out that the rule against postponed accrual in legal malpractice cases discriminated against doctors. For this proposition it cited Bustamante v. Haet, 222 Cal.App.2d 413, 414-415, 35 Cal.Rptr. 176 and Griffith v. Zavlaris, 215 Cal.App.2d 826, 830-831, 30 Cal.Rptr. 517.
Although this was dictum, not necessary to the decision, we would probably be bound to follow the referred to. (See 3 Witkin, Cal. Procedure, pp. 2436 [92 Cal.Rptr. 821]2438; and cases cited in 1967 Supp., pp. 1023-1025.) Alter, however, is not the end of the story. In Heyer v. Flaig, supra, 70 Cal.2d 223, 74 Cal.Rptr. 225, 449 P.2d 161, the question was when the statute of limitations started to run where the attorney's malpractice had consisted of negligently failing to advise a testatrix that her testamentary scheme would be partly invalidated if she remarried as indeed she did. For reasons which we need not set forth at length the court held that the statute did not start to run until the testatrix's death. The court, therefore, did not have to discuss the effect of the testatrix's ignorance of the defendant's negligence in her lifetime. Significantly, however, the court characterized as dicta the statement in Alter that '* * * the two-year period which governs a legal malpractice action runs from the time of the negligent acts.' (Heyer v. Flaig, supra, 70 Cal.2d at 231, 74 Cal.Rptr. at 232, 449 P.2d at 168.) Later, in footnote 7 of the opinion, the court makes the statement, quoted earlier, to the effect that '[t]he judicial rule against postponed accrual * * * rests upon a tenuous basis.'
It does indeed. We shall attempt to demonstrate that until 1963, no case had ever held that the accrual of the statute of limitations is not postponed until the wronged client can, with reasonable care and diligence, discover his cause of action. Indeed a contrary rule had been assumed. Further, as mentioned earlier to this day the Supreme Court has never so held and the rule has been necessary to the decision in only three cases, none of them from this district. All preceded Heyer.
In fairness it should be mentioned that Lattin v. Gillette, 95 Cal. 317, 30 P. 545, seems a clear holding that the two-year statute of limitations in an action against a title searcher was not tolled by the plaintiff's ignorance of the defendant's mistake. The case was made a dead letter by the 1913 amendment to section 339 of the Code of Civil Procedure, which postponed the accrual of such a cause of action 'until the discovery of the loss or damage.' Significantly, the last time the Supreme Court cited Lattin, was in Amen v. Merced County Title Co., 58 Cal.2d 528, 25 Cal.Rptr. 65, 375 P.2d 33, where the case was distinguished because, in Amen the contract involved was in writing and because the statute against the defendant escrow holder did not start to run until discovery. '* * * Cases in which the defendant stands in a fiduciary relationship to the plaintiff are frequently treated as if they involved fraudulent concealment of the cause of action by the defendant. * * *' (Amen v. Merced County Title Co., 58 Cal.2d 528 at 534, 25 Cal.Rptr. at 68, 475 P.2d at 36.) Both Lattin and the 1913 amendment to section 339 were quietly ignored in J. H. Trisdale, Inc. v. Shasta Etc. Title Co., 146 Cal.App.2d 831, 839, 304 P.2d 832, 837, where the court said with unanswerable logic: 'As we view the matter it would be strange, indeed, if prospective purchasers of real property could not rely upon title reports for which they are required to pay, but must search the records themselves. If such be the law a large part of the value of title companies would disappear. * * *'
In making this statement we assume as self-evident that judicial announcements to the effect that the statute starts to run at the time of the negligent act, made in cases where the client was or should have been fully aware of what had happened, cannot be considered as holdings applicable to situations where the client was justifiably ignorant. (Cf. Hess v. Whitsitt, 257 Cal.App.2d 552, 556, 65 Cal.Rptr. 45.)
The first California case dealing with the statute in malpractice actions against attorneys is Hays v. Ewing, 70 Cal. 127, 11 P. 602. There the complaint had been filed about two and a half years after the attorney had lost an action which he should have won. The court simply held that the two year statute applied. No question of delayed accrual was involved.
Actually no other statute of limitations could possibly apply at the time. Earlier, in Piller v. Southern Pac. R.R. Co., 52 Cal. 42, the court had held that subdivision 1 of section 339 applied to all actions of law 'not specifically mentioned in other portions of the statute.' Medical malpractice actions got shifted to section 340 and the one year statute, by virtue of the 1905 amendments to sections 339 and 340. It is questionable whether the language of section 340 could really cover actions for legal malpractice. In Alter v. Michael, supra, 64 Cal.2d 480, 50 Cal.Rptr. 553, 413 P.2d 153 the court, in denying the applicability of section 340 to such actions, preferred to rely on the rule of statutory contruction that the Legislature, when amending sections 339 and 340 on various occasions, presumably knew the state of our case law and demonstrated tacit approval by not decreeing a change. It therefore did not have to consider whether the language of section 340 would cover actions for legal malpractice.
[92 Cal.Rptr. 822]The next attorney malpractice case in which any question of the statute of limitations come up, was Lally v. Kuster, 177 Cal. 783, 791, 171 P. 961. We defer discussion of the facts in that case until later.
The first 'delayed accrual' case ever to arise in any California appellate court was Jensen v. Sprigg, 84 Cal.App. 519, 258 P. 683. In that case the plaintiff argued for a delayed accrual based on alleged concealment of his loss of a personal remedy against the debtor by the attorney's delay. The client lost because the facts demonstrated that he had known of his debtor's bankruptcy all along. Significantly, however, the case ends with this dictum: '* * * as appellant had knowledge of such adjudication in 1908, the statute had run before he began his action.
'Unquestionably, where confidential relationship, such as the relationship between attorney and client, exists, failure to discover the facts constituting fraud or misrepresentation may be excused, but we know of no authority holding that failure on the part of an attorney to notify his client of a fact already within his client's knowledge is fraudulent concealment.' (Jensen v. Sprigg, 84 Cal.App. at pp. 525-526, 258 P. at p. 686. Emphasis added.)
Jensen was followed by Wheaton v. Nolan, 3 Cal.App.2d 401, 39 P.2d 457 in which delayed accrual was denied for the same reason it had been denied in Jensen--the facts did not justify it. As in Jensen it seems to have been assumed as a matter of course that, in a proper case, the statute would not start to run at the time of the negligent act. After Wheaton came DeGarmo v. Luther T. Mayo, Inc., 4 Cal.App.2d 604, 41 P.2d 366, which simply reaffirmed the rule first announced in Hays v. Ewing, supra, that the statute starts to run at the time of the negligent act. Again, no question of delayed accrual because reasonable lack of knowledge was involved.
In Wheaton it was held that the client could have gained all necessary information by an inspection of public records. That, of course, is also true in the case at bar. The distinction is that in view of Delaney's stalling tactics and outright misrepresentations we cannot say at this state of the litigation that plaintiffs were negligent in not inspecting the superior court file in the wrongful death action.
After DeGarmo, taking questions concerning the statute of limitations in legal malpractice actions to appellate courts went out of style for almost thirty years, for the next time the problem came up was in Griffith v. Zavlaris, 215 Cal.App.2d 826, 30 Cal.Rptr. 517, the case that has given all the trouble.
In Griffith the attorney had advised the client that he could purchase an interest in a corporation although no permit for the issuance of stock had been obtained. Almost four years after plaintiff had paid for the stock, he found out by way of a superior court judgment, that he had been in pari delicto with the seller. The court held that the statute of limitations barred the malpractice action. It referred to the rule as harsh, but 'time-honored' and suggested that change could only come from the Legislature. We respectfully submit that until the Griffith case was decided, there was no need for any legislative action.
[92 Cal.Rptr. 823]The Griffith court relied chiefly on Lally v. Kuster, supra. In that case the alleged negligence had consisted of deliberate delay, over the client's objection, in the prosecution of a foreclosure action. The foreclosure action had been dismissed. An abortive appeal from the dismissal was abandoned when the attorney told the client that even if the judgment of dismissal were reversed, she would ultimately lose the case on the merits. In the malpractice case the trial court found for the defendant's attorney on the questions of negligence and damages. On appeal the Supreme Court states the facts at length and finds the trial court in error on both points. It also holds that the first trial court had properly dismissed the foreclosure action. It then addresses itself to a final contention of the defendant, namely that the plaintiff's cause of action never accrued at all, because she had not refiled the foreclosure action in the hope that the defendant in that action might fail to plead the applicable statute of limitations. In answer to that contention the Supreme Court said: '* * * In this connection it may be noted that the respondent in [sic] relying upon two entirely inconsistent defenses: One, the statute of limitations, on which he claims that appellant's right of action against him accrued at the time of the first disobedience of the orders of his client in 1907 or 1908; and the other, that it never accrued, as, he contends, appellant was bound to await the result of a second foreclosure suit. Neither question is free from difficulty, and yet where the disobedience complained of consists in delay only, the cause of action cannot be said to arise until such delay has resulted in some injury, as it did when the court dismissed the case because of the delay. * * *' (Lally v. Kuster, supra, 177 Cal. at 791, 171 P. at 964.) Remarkably, until that point in the Lally opinion, nothing had ever been mentioned about the attorney relying upon the statute of limitations as a defense to the malpractice action. In any event, it is obvious that whatever the Supreme Court said about the commencement of the statutory period, was said to refute an argument that it had never started at all and moreover, was said in a case in which there was absolutely no issue of delayed accrual because of lack of notice.
The Griffith court fastened onto the statement that the action accrued when the case was dismissed because of the attorney's negligence and considered Lally as a holding that it could not accrue later--this, apparently, on the assumption that if the client may sue immediately after the negligent act, he must do so, even if he does not know of it.
Griffith also seems to rely on Jensen v. Sprigg, supra. As we have shown, in that case the court went out of its way to demonstrate that the client had actual knowledge of the malpractice and suggested, by dictum, a rule diametrically opposite to Griffith.
Actually in only two cases, Eckert v. Schaal, 251 Cal.App.2d 1, 58 Cal.Rptr. 817, and Yandell v. Baker, 258 Cal.App.2d 308, 65 Cal.Rptr. 606, was the Griffith rule necessary to the decision. An additional three cases, Bustamante v. Haet, 222 Cal.App.2d 413, 35 Cal.Rptr. 176, Shelly v. Hansen, 244 Cal.App.2d 210, 53 Cal.Rptr. 20, and Fazio v. Hayhurst, 247 Cal.App.2d 200, 55 Cal.Rptr. 370, purported to rely on Griffith, but such reliance was not necessary. All these cases preceded Heyer.
In Bustamante the record clearly showed that the plaintiff had waited too long even after the discovery of the malpractice. In Shelly the defendant attorney had negligently failed to file a lis pendens in an action to foreclose a mechanics lien and had negligently failed to file a quantum meruit action, to which a two years statute of limitations was applicable. The client had, however, a written contract from the prospective defendant who, according to a later finding, was solvent. A few months before the running of the four-year statute on the written contract, the client changed attorneys. The new attorney failed to file suit on the written contract. The malpractice complaint was filed about five months after the four-year statute on that cause of action had run. The appellate court said that the causes of action for the first attorney's negligence with respect to the lis pendens and the quantum meruit action were barred by the two-year statute and that he was not responsible for the failure to file within four years, the matter having been taken out of his hands. There was, however, no need to rely on the two-year statute, since the client had lost nothing when he discharged the attorney. In Fazio the complaint alleged that the defendant attorney negligently advised the plaintiff to elect to take under the will of her deceased husband, rather than have her claim her community property rights. He never changed his advise although the client could have revoked her election for a considerable period of time. The appellate court held that the complaint was late with respect to the original negligent advice, but that the case should go to trial because of the attorney's continuing negligence.
[92 Cal.Rptr. 824]It thus appears that far from being 'time honored' the rule against delayed accrual dates from the day when Griffith was decided in 1963 and rests on a reading of prior law with which we must disagree.
In view of the dictum in Heyer and the doubtful parentage of Griffith we consider the question of postponed accrual of the statute in legal malpractice actions an open one. There can be no doubt concerning the correct answer. Unless, to protect themselves, clients are to be forced to hire a second attorney to discover the malpractice of the first, then a third to keep an eye on the second, and so on ad infinitum, the rule must be that the statute does not start to run until the client discovers the facts or, in the exercise of reasonable diligence, should have done so.
Further, we must point out that the rule of Griffith v. Zavlaris is not only 'harsh' but at odds with other aspects of the attorney-client relationship. 'It is of course well established in California that the relationship of attorney and client is one of trust and confidence and that the attorney owes to his client all the obligations of a trustee. Cox v. Delmas, 99 Cal. 104, 33 P. 836; Clark v. Millsap, 197 Cal. 765, 242 P. 918. Where there exists a trust relationship, any concealment of a material fact constitutes actual fraud. 12 Cal.Jur. 772, Sec. 43.' (Green v. MacAdam, 175 Cal.App.2d 481, 487, 346 P.2d 474, 478.) We see no way in which the imperative of full disclosure by a fiduciary can co-exist with a rule which rewards concealment. How can a rational legal system demand of an attorney 'to communicate to his client or principal whatever information he acquires in relation to the subject-matter involved in the transaction * * *' (Wittenbrock v. Parker, 102 Cal. 93, 101, 36 P. 374), but at the same time give him the benefit of a hair trigger start of the statute of limitations in an action for his own malpractice, if he manages to keep from the client that there is no longer a 'subject matter' on which he is acting for him? If the answer to that question is a tongue-in-cheek assertion that both policies of the law--the rule which commands complete disclosure by a fiduciary and the rule of Griffith v. Zavlaris--can be vindicated by allowing the client to sue the lawyer on the theory that his concealment of the facts caused the malpractice action to be barred by the statute of limitations, we can only reply that common sense does not demand such circuity for the only purpose of harmonizing good and bad law.
The judgment is reversed.
STEPHENS and AISO, JJ., concur.
Some cases, such as Tuck v. Thuesen, 10 Cal.App.3d 193, 88 Cal.Rptr. 759, mention the Griffith rule on facts which do not show any lack of knowledge of the facts on the part of the client. Others, such as Chavez v. Carter, 256 Cal.App.2d 577, 64 Cal.Rptr. 350; Benard v. Walkup, 272 Cal.App.2d 595, 77 Cal.Rptr. 544, and, of course, Heyer v. Flaig, 70 Cal.2d 223, 74 Cal.Rptr. 225, 449 P.2d 161, distinguish Griffith.