Opinion ID: 571337
Heading Depth: 2
Heading Rank: 4

Heading: Pendent California Professional Malpractice Claim

Text: 32 The district court dismissed the plaintiffs' pendent professional negligence claim as time barred. The parties agree that California Code of Civil Procedure § 339(1), the two-year statute of limitations for professional malpractice claims, governs this pendent claim. The dispute is over when the claim accrued. 33 In California, the statute of limitations for a professional malpractice claim begins to run upon the occurrence of the last fact essential to the cause of action. The harshness of this rule has been ameliorated in some cases where it is manifestly unjust to deprive the plaintiffs of a cause of action before they are aware that they have been injured. Leaf v. City of San Mateo, 104 Cal.App.3d 398, 406, 163 Cal.Rptr. 711, 715 (1980). This is generally known as the discovery rule. 34 Where the discovery rule applies, the accrual date of a cause of action is delayed until the plaintiff is aware of her injury and its negligent cause. A plaintiff is held to her actual knowledge as well as knowledge that could reasonably be discovered through investigation of sources open to her. Jolly v. Eli Lilly & Co., 44 Cal.3d 1103, 1109, 245 Cal.Rptr. 658, 661, 751 P.2d 923, 926-27 (1988) (citation and footnote omitted). California courts have applied the discovery rule to professional malpractice cases. See Neel v. Magana, Olney, Levy, Cathcart & Gelfand, 6 Cal.3d 176, 98 Cal.Rptr. 837, 491 P.2d 421 (1971) (attorney malpractice); Moonie v. Lynch, 256 Cal.App.2d 361, 64 Cal.Rptr. 55 (1967) (accountant malpractice). 35 Hewitt does not contest that the discovery rule applies here. Rather it argues that the plaintiffs should have discovered Hewitt's alleged wrongs in 1986, when the plan failed. 10 It argues that the plaintiffs had access to plan reports that would have alerted them to any actuarial improprieties. It asserts that certainly when the plan failed, the plaintiffs were on notice and should have obtained the reports that would have alerted them to the funding problems. 36 Hewitt's argument fails under California law. [T]he question of when there has been a belated discovery of the cause of action, especially in malpractice cases, is essentially a question of fact ... [and] [i]t is only where reasonable minds can draw but one conclusion from the evidence that the question becomes a matter of law. Brown v. Bleiberg, 32 Cal.3d 426, 436, 186 Cal.Rptr. 228, 233, 651 P.2d 815 (1982). 37 In Baright v. Willis, 151 Cal.App.3d 303, 198 Cal.Rptr. 510 (1984), the court refused to sustain a demurrer in a professional negligence case where the plaintiff's complaint did not show on its face that in the exercise of due diligence plaintiff should have earlier discovered respondent's alleged negligence and failed to do so. 151 Cal.App.3d at 311, 198 Cal.Rptr. at 514-15. A demurrer on statute of limitations grounds is improper where the complaint merely shows that the action may have been barred. It must appear affirmatively that, upon the facts stated, the right of action is necessarily barred. 151 Cal.App.3d, at 311, 198 Cal.Rptr. at 514, quoting Vassere v. Joerger, 10 Cal.2d 689, 693, 76 P.2d 656, 653 (1938). 38 In the present case, the complaint does not show on its face that the plaintiffs should have discovered Hewitt's alleged negligence when the PBGC determined the plan to be severely underfunded and incapable of paying its liabilities. The PBGC may terminate a plan for a variety of reasons not premised on wrongdoing by either the plan fiduciaries or the plan's enrolled actuary. See 29 U.S.C. § 1342(a). See also Pension Benefit Guaranty Corp. v. LTV Corp., --- U.S. ----, 110 S.Ct. 2668, 2672-73, 110 L.Ed.2d 579 (1990) (plan sponsor entering bankruptcy). Reasonable minds can draw more than one conclusion from the circumstance of underfunding. 39 Thus, we reverse the district court's dismissal of the pendent state claim as barred by the applicable statute of limitations. The complaint does not show on its face that the plaintiffs were placed on a discovery inquiry as to Hewitt's alleged professional malpractice more than two years before the complaint was filed. On remand, the district court has discretion to allow the plaintiffs to pursue the pendent claim or to dismiss it. United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).