Court Opinion

ID: 2684872
Source: CourtListenerOpinion
Date Created: 2014-07-18 23:01:09.169927+00
Date Added: 2024-06-11T13:14:33.267886
License: Public Domain

Filed 7/18/14 Barna v. Block CA2/3
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                DIVISION THREE

KAREN BARNA et al.,                                                   B246065

         Plaintiffs and Appellants,                                   (Los Angeles County
                                                                      Super. Ct. No. LC096817)
         v.

DENNIS P. BLOCK et al.,

         Defendants and Respondents.

         APPEAL from judgment of the Superior Court of Los Angeles County,
James A. Steele, Judge. Affirmed.

         Karen Barna, in pro. per., for Plaintiff and Appellant Karen Barna.

         Sean Thomas, in pro. per., for Plaintiff and Appellant Sean Thomas.

         Leo A. Schwarz for Defendants and Respondents.
                                            _____________________
                                    INTRODUCTION
       Plaintiffs Karen Barna and Sean Thomas (Plaintiffs) appeal from a judgment of
dismissal following an order sustaining the demurrer of their former attorney, Defendant
Dennis Block (Block). The trial court ruled Plaintiffs’ action was barred by res judicata
and the one-year statute of limitations for attorney malpractice claims. We affirm on the
statute of limitations ground and do not address res judicata.
                   FACTS1 AND PROCEDURAL BACKGROUND
       In November 2007, Plaintiffs purchased an apartment building in Van Nuys,
California, comprised of four 1-bedroom rental units of approximately 530 square feet
each. At the time of purchase, one of the units had five occupants—three adult tenants
who were listed in the rental agreement (the Tenants), and a 16-year-old boy and infant
girl, who were believed to be two of the Tenants’ minor children. In March 2008,
Plaintiffs learned that a sixth person had moved into the unit—an 11-year-old boy who
also was the son of one of the Tenants.
       Upon learning of the sixth occupant, Plaintiffs became concerned about
overcrowding, and sought legal advice from Block. Block advised Plaintiffs that the
unauthorized occupants violated the rental agreement, the overcrowding violated state
and county housing laws, and these violations were grounds for termination of the
tenancy and eviction.

1
        Because this matter comes to us on demurrer, our statement of facts is based upon
the allegations of the operative first amended complaint. (Stevenson v. Superior Court
(1997) 16 Cal. 4th 880, 885.) “[W]e treat as true all material facts properly pleaded, but
not contentions, deductions or conclusions of fact or law. [Citation.] However, we
disregard allegations that are contrary to law or to facts that may be judicially noticed
[citation] or are contradicted by the express terms of an exhibit incorporated into the
complaint. [Citation.]” (Freeman v. San Diego Assn. of Realtors (1999) 77 Cal. App. 4th
171, 178, fn. 3.)

                                             2
        On March 31, 2008, Plaintiffs retained Block to represent them with respect to
termination of the tenancy and any necessary unlawful detainer proceedings. Among
other things, the retainer agreement provides: “The Client herewith retains [Block] in this
Unlawful Detainer Proceeding. Client acknowledges and agrees that attorney’s
representation of client shall not include any obligation to settle, negotiate, obtain a
waiver of or represent Client in regard to any claims that Client’s tenant(s) may have or
may hereafter raise against Client in any affirmative action by the tenant.” Plaintiffs
allege Block did not explain the meaning or import of the sentence referring to “any
affirmative action by the tenant.”
        On March 31, 2008, Block prepared and served a “Notice to Perform Conditions
And Covenants Or Quit” (Notice to Quit), demanding the unauthorized occupants vacate
the unit within three days. On April 7, 2008, Plaintiffs received a letter from the Los
Angeles Department of Housing (LADH). The LADH letter stated the Notice to Quit
was defective and in violation of the Los Angeles Rent Stabilization Ordinance, which
prohibits a landlord from bringing an action to limit occupancy when a “first or second
minor dependent child has been added to the tenancy.” In response to their inquiry about
the letter, Block assured Plaintiffs that the Notice to Quit was not defective.
        On April 18, 2008, Block filed an unlawful detainer action on behalf of Plaintiffs,
alleging the Tenants had failed to remove the unauthorized occupants from the unit in
violation of the rental agreement. Block advised Plaintiffs that the complaint stated a
viable cause of action and Plaintiffs had sufficient evidence to prevail at trial.
        On June 4, 2008, just prior to trial, Block advised Plaintiffs not to go forward and
to settle the unlawful detainer action. Initially, Plaintiffs objected to the settlement, citing
Block’s prior advice about the viability of their claim and the possibility of obtaining a
judgment for unpaid rent if they went to trial. Block nevertheless insisted, and Plaintiffs
ultimately agreed to settle the action by entering into a stipulated judgment that required
the Tenants to vacate the unit in exchange for a release of Plaintiffs’ claims for unpaid
rent.

                                               3
       On September 26, 2008, the Tenants filed a complaint against Plaintiffs, alleging
multiple violations of federal and state fair housing and civil rights laws arising from the
termination of their tenancy and subsequent eviction (the Tenant Action).
       On December 7, 2010, Plaintiffs filed a cross-complaint against Block in the
Tenant Action, seeking equitable indemnity under federal and state housing statutes for
aiding and abetting Plaintiffs’ alleged housing discrimination.
       On February 3, 2012, Block filed a motion for summary judgment in the Tenant
Action, asserting Plaintiffs’ cross-complaint amounted to a legal malpractice action,
which was barred by the applicable statute of limitations. In his moving papers, Block’s
attorney argued, “Once the Tenants appeared in the U.D. Action, Block had only one of
two options to accomplish Barna’s directive to evict the tenants, i.e., he could proceed to
trial and take the risk that his client might lose, or he could help negotiate a settlement
that would take the risk of further litigation out of play and would restore possession of
the premises back to Barna.” Block also submitted a supporting declaration, wherein he
asserted the “primary goal” of evicting the Tenants and restoring possession to Barna was
achieved by the stipulated judgment in the unlawful detainer action. Block’s declaration
did not discuss the risk of losing at trial; however, both the moving papers and the
declaration referred to the clause in the retainer agreement that excluded from the scope
of Block’s representation “any obligation to settle negotiate, [or] obtain a waiver of . . .
any claims that Client’s tenant(s) may have or may hereafter raise against Client in any
affirmative action by the tenant.”
       On April 13, 2012, the court granted Block’s motion and entered judgment for
Block on Plaintiffs’ cross-complaint in the Tenant Action. The court found that
Plaintiffs’ cross-complaint sought indemnification for the alleged discriminatory eviction,
but Block’s purported wrongful acts amounted to providing Plaintiffs with bad legal
advice. The court concluded Block’s alleged professional negligence was distinct from
Plaintiffs’ alleged discriminatory eviction and, consequently, Block could not be held
liable for indemnification as a joint tortfeasor.

                                               4
       On March 30, 2012, while Block’s motion for summary judgment in the Tenant
Action was pending, Plaintiffs filed the instant action against Block. In their operative
complaint, Plaintiffs alleged Block knew (1) the Notice to Quit was defective in that it
violated the Los Angeles Rent Stabilization Ordinance, and (2) the unlawful detainer
action could expose Plaintiffs to a lawsuit by the Tenants for housing discrimination and
unlawful termination of tenancy. Despite such knowledge, Plaintiffs alleged Block failed
to advise them of the potential liability and intentionally concealed the fact that they
could be exposed to subsequent litigation by the Tenants based on the unlawful detainer
action. Further, Plaintiffs alleged they were unable to discover the purported
concealment until they were served with Block’s declaration in the Tenant Action. Based
on these allegations, Plaintiffs asserted three causes of action for breach of fiduciary duty,
legal malpractice and fraud against Block. With respect to each cause of action, Plaintiffs
claimed damages in the form of emotional distress and legal expenses incurred to defend
the Tenant Action.
       On August 29, 2012, Block demurred to the complaint on res judicata and statute
of limitations grounds. With respect to res judicata, Block argued Plaintiffs’ claims in the
instant action were based on the same core set of facts alleged in their cross-complaint
and, therefore, the judgment in the Tenant Action should be given preclusive effect. As
for the statute of limitations, Block argued Plaintiffs necessarily discovered his alleged
malpractice when they were sued by the Tenants in September 2008, and Plaintiffs’
claims accrued when they began incurring legal fees to defend the Tenant Action shortly
thereafter. Even if the Tenants’ complaint was not enough to put Plaintiffs on inquiry
notice, Block argued Plaintiffs were undeniably aware of the alleged malpractice when
they filed their cross-complaint against him in December 2010. In either event, Block
argued Plaintiffs’ claims were barred by the one-year statute of limitations for attorney
malpractice actions.

                                              5
       In their opposition, Plaintiffs argued their cross-complaint was for indemnity and
had been dismissed on the ground that Block was not a joint tortfeasor with respect to the
Tenants’ housing discrimination claims. As such, they contended the prior judgment did
not resolve an “identical” issue or claim and should not be given preclusive effect. With
respect to the statute of limitations, Plaintiffs argued they were unaware of Block’s
alleged concealment until he purportedly admitted in his summary judgment motion that
Plaintiffs “fac[ed] the option of losing at trial.” Additionally, Plaintiffs claimed they
“only became aware of BLOCK’S concealment of [Plaintiffs] exposure to a subsequent
derivative action by [the Tenants] in February 2012 when they received a declaration
signed by BLOCK stating that the Retainer Agreement expressly limited BLOCK’S
responsibility for actions taken by tenants against Plaintiffs.” Because Block had not
“explained the nature of the limitation in the scope of representation,” Plaintiffs argued
they were unable to reasonably discover the risk of being sued by the Tenants.
       On September 27, 2012, the trial court sustained Block’s demurrer without leave
to amend. In its written order, the court found the claims asserted in the instant action
and Plaintiffs’ cross-complaint in the Tenant Action involved the same primary right and,
therefore, the prior judgment should be given preclusive effect. The court also ruled the
claims were barred by the applicable statute of limitations because Plaintiffs were
necessarily aware of the facts giving rise to their claims when they were served with the
complaint in the Tenant Action in 2008. In that regard, the court rejected Plaintiffs’
contention that Block’s declaration disclosed new information that Plaintiffs could not
have previously discovered through the exercise of reasonable diligence.
       On October 17, 2012, Plaintiffs filed a motion for reconsideration of the ruling
sustaining Block’s demurrer. The motion sought leave to amend to “allege defendant’s
fraudulent concealment of potential tenant claims.” The trial court denied the motion as
untimely, and also found Plaintiffs failed to present new facts or law in support of the
motion. Plaintiffs appealed.

                                              6
                                       DISCUSSION
       1.     Standard of Review
       On an appeal following the sustaining of a demurrer, application of the statute of
limitations is purely a legal question; accordingly, we review the lower court’s ruling
de novo. (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal. 4th 1185, 1191.) We
must take the allegations of the operative complaint as true and consider whether the facts
alleged establish Plaintiffs’ claims are barred as a matter of law. (Ibid.; see also Fox v.
Ethicon Endo-Surgery, Inc. (2005) 35 Cal. 4th 797, 810–811.) However, we “do not
assume the truth of contentions, deductions, or conclusions of fact or law and may
disregard allegations that are contrary to the law or to a fact which may be judicially
noticed.” (Dutra v. Eagleson (2006) 146 Cal. App. 4th 216, 221.)
       “When determining which statute of limitations applies to a particular action, a
court considers what the principal purpose or ‘gravamen’ of the action is, rather than the
form of action or the relief demanded.” (Yee v. Cheung (2013) 220 Cal. App. 4th 184,
194; Day v. Greene (1963) 59 Cal. 2d 404, 411; Pointe San Diego Residential
Community, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal. App. 4th
265, 274.) “Which statute of limitations governs in this situation is a legal issue subject
to our de novo review.” (Vafi v. McCloskey (2011) 193 Cal. App. 4th 874, 880.)
       2.     Plaintiffs’ Action Is Barred by Section 340.6’s One-Year Limitations Period
       Under Code of Civil Procedure2 section 340.6, subdivision (a), “[a]n action against
an attorney for a wrongful act or omission, other than for actual fraud, arising in the
performance of professional services shall be commenced within one year after the
plaintiff discovers, or through the use of reasonable diligence should have discovered, the
facts constituting the wrongful act or omission, or four years from the date of the
wrongful act or omission, whichever occurs first.” The limitations period is tolled until
the plaintiff suffers actual loss or damage resulting from the alleged misconduct; while
the attorney continues to represent the client in the same matter; or if the plaintiff is under

2
       Further statutory references are to the Code of Civil Procedure.

                                              7
a legal or physical disability that restricts the plaintiff’s ability to commence legal action.
(§ 340.6, subds. (a)(1), (2) & (4).) Additionally, section 340.6, subdivision (a)(3) tolls
the four-year repose period during the time when “[t]he attorney willfully conceals the
facts constituting the wrongful act or omission when such facts are known to the
attorney.”
       As a predicate matter, we conclude section 340.6 supplies the applicable
limitations period for all three causes of action asserted in the complaint—breach of
fiduciary duty, legal malpractice, and fraud. This is because the gravamen of each claim
is Block’s alleged failure to advise Plaintiffs of the risk that the Tenants would bring a
legal action based on the eviction proceedings—in other words, an omission arising in the
performance of Block’s professional services. (§ 340.6, subd. (a).) For their part,
Plaintiffs do not dispute that their breach of fiduciary duty and fraud claims are subject to
section 340.6. Indeed, Plaintiffs acknowledge that their “action for breach of fiduciary
duties and intentional concealment [fraud] arises from the language of the retainer
agreement and the failure of defendant attorney to advise plaintiffs of the risk of adverse
consequences arising from attorney defendant’s recommended course of action.”3
(Italics added.)
       Plaintiffs concede they discovered Block failed to advise them of their potential
liability when the Tenants sued them in September 2008. Nevertheless, Plaintiffs
contend the statute of limitations did not begin to run at that time because they were
unaware of Block’s alleged “intentional concealment” of such liability until they received
his summary judgment declaration in February 2012. As Plaintiffs put it, we should “find
a distinction between defendant’s failure to protect plaintiffs from a derivative cause of

3
        Additionally, in their reply brief, Plaintiffs characterize their third cause of action
as a claim for “Constructive Fraud” and assert the claim alleges “each of the elements
required to state a cause of action for legal malpractice based on a theory of constructive
fraud.” (Italics added.) “The actual fraud exception to the one-year statute of limitations
under Code of Civil Procedure section 340.6, subdivision (a) does not apply to causes of
action for constructive fraud.” (Lockton v. O’Rourke (2010) 184 Cal. App. 4th 1051,
1065, fn. 6.)

                                               8
action, a fact which plaintiffs were aware at the time [the Tenants] brought [their]
discrimination action[,] and defendant’s intentional concealment of plaintiffs’ exposure to
a derivative action, [of] which plaintiff[s] [were] not aware until February of 2012, when
defendant raised the obscure language in defendant’s retainer agreement” in his summary
judgment declaration. (Italics added.) Assuming this is a genuine distinction, it is not
one that makes any difference for the accrual of Plaintiffs’ claims.
       Under section 340.6, “ ‘a cause of action for legal malpractice accrues when the
client discovers or should discover the facts essential to the malpractice claim, and suffers
appreciable and actual harm from the malpractice. Discovery of any appreciable and
actual harm from the attorney’s negligent conduct establishes a cause of action and
begins the running of the limitations period.’ ”4 (Samuels v. Mix (1999) 22 Cal. 4th 1, 11
(Samuels).) “[I]n a professional malpractice context, accrual does not await ‘[plaintiff’s]
discovery [that the facts constituting the wrongful act or omission] constitute professional
negligence, i.e., [his] discovery that a particular legal theory is applicable based on the
known facts.’ [Citation.] ‘ “It is irrelevant that the plaintiff is ignorant of his legal
remedy or the legal theories underlying his cause of action . . . if one has suffered
appreciable harm and knows or suspects that professional blundering is its cause, the fact
that an attorney has not yet advised him does not postpone commencement of the
limitations period.” [Citations.]’ ” (Curtis v. Kellogg & Andelson (1999) 73 Cal. App. 4th
492, 501 (Curtis); Gutierrez v. Mofid (1985) 39 Cal. 3d 892, 898.)

4
        For purposes of the tolling provision in section 340.6, subdivision (a)(1), “[t]he
test for actual injury . . . is whether the plaintiff has sustained any damages compensable
in an action . . . .” (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998)
18 Cal. 4th 739, 751.) Under this standard, “the fact of damage, rather than the amount, is
the critical factor.” (Id. at p. 752.) Thus, a plaintiff sustains “actual injury” when he or
she incurs attorney fees to rectify the problem caused by the prior attorney’s alleged
negligence. (Id. at pp. 750-752.) “[O]nce the plaintiff suffers actual harm, neither
difficulty in proving damages nor uncertainty as to their amount tolls the limitations
period.” (Id. at p. 752.) Here, the complaint concedes Plaintiffs suffered appreciable
harm when they began incurring “legal expenses in defense of [the Tenant Action]” in
September 2008.

                                               9
       Returning to Plaintiffs’ proffered distinction, in the instant case, it makes no
difference whether Block failed to recognize the risk of the Tenant Action and neglected
to advise Plaintiffs, or that he recognized the risk and intentionally concealed it from
Plaintiffs. For purposes of accrual, Plaintiffs knew Block committed the alleged
professional misconduct—i.e., not advising Plaintiffs of their potential liability to the
Tenants—in September 2008, when Plaintiffs were served with the Tenants’ complaint
and began incurring legal fees to defend the action.
       Indeed, assuming the truth of Plaintiffs’ allegation that Block intentionally
concealed a known risk, once Plaintiffs were sued, they certainly were on notice of the
need to investigate the circumstances of Block’s alleged professional misconduct.5 At
that point, a reasonably diligent person in Plaintiffs’ position would have reviewed the
retainer agreement and discovered the purportedly “obscure language” that Plaintiffs
claim prompted them to file the instant action.6 In any event, regardless of whether the
retainer agreement shed any more light on the nature of Block’s alleged misconduct,
there can be no dispute about when Plaintiffs’ claims accrued. Once Plaintiffs were
served in the Tenant Action, they were undeniably aware that Block had failed to advise
them of the risk they could be sued. That Plaintiffs may not have known all the
circumstances surrounding Block’s omission makes no difference for the accrual of their

5
         Insofar as Plaintiffs hope to invoke section 340.6, subdivision (a)(3)’s tolling
provision for the time during which the attorney “willfully conceals the facts constituting
the wrongful act or omission when such facts are known to the attorney,” we note that
provision applies only to section 340.6’s repose period—that is, the four-year period that
runs from the date of the wrongful act or omission, regardless of whether the plaintiff has
discovered the attorney’s misconduct. (See § 340.6, subd. (a)(3) [“this subdivision shall
toll only the four-year limitation”].) Subdivision (a)(3) does not apply to the one-year
period that runs from the date the plaintiff discovers, or through the use of reasonable
diligence should have discovered, the facts constituting the wrongful act or omission.
It is the one-year period that bars Plaintiffs’ claims here.
6
       We agree with the trial court’s observation concerning the dubiousness of the
charge that Block concealed something disclosed in a retainer agreement that Plaintiff
Barna presumably read before signing. Be that as it may, insofar as the claim is barred
by the statute of limitations, we need not address the sufficiency of Plaintiffs’ allegations.

                                             10
claims. (See Samuels, supra, 22 Cal.4th at p. 11; Curtis, supra, 73 Cal.App.4th at
p. 501.)
       Because Plaintiffs’ claims accrued as a matter of law when they were served with
the Tenants’ complaint and began incurring legal defense fees in 2008, the trial court
properly concluded their lawsuit against Block—filed four years later—was barred by
section 340.6’s one-year limitation period.
       3.     Plaintiffs’ Motion for Reconsideration Fails to Demonstrate the Complaint
              Can Be Amended
       On September 27, 2012, the trial court served notice of the order sustaining
Block’s demurrer. On October 17, 2012, Plaintiffs filed a motion for reconsideration
seeking leave to amend to “allege defendant’s fraudulent concealment of potential tenant
claims.” We agree with the trial court’s conclusion that the motion was untimely. (See
§ 1008 [a motion for reconsideration must be made “within 10 days after service upon the
party of written notice of entry of the order”].)
       But even if we consider the motion in assessing whether the complaint could be
amended (see Hendy v. Losse (1991) 54 Cal. 3d 723, 742), we still must conclude that the
action is barred by the statute of limitations. To begin, we agree with the trial court that
Plaintiffs failed to present new facts. (See § 1008 [a motion for reconsideration must be
“based upon new or different facts, circumstances, or law”].) Notwithstanding this
requirement, Plaintiffs’ motion simply reiterated the same allegations about their
purported discovery of Block’s intentional concealment when Block “served his
declaration stating that he had no liability for exposing plaintiffs to tenant’s ruinous
litigation.” As we have discussed, even if Block intentionally concealed Plaintiffs’
potential liability, Plaintiffs necessarily learned they had been harmed by this misconduct
when they were sued by the Tenants. Nothing that Plaintiffs have alleged or could allege
can overcome this critical fact concerning the accrual of their claims. The trial court
properly denied leave to amend. (See id., at p. 742.)

                                              11
                                 DISPOSITION
     The judgment is affirmed. Defendant Dennis Block is awarded costs on appeal.

     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                             KITCHING, J.

We concur:

                  KLEIN, P. J.

                  ALDRICH, J.

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