Court Opinion

ID: 9726393
Source: CourtListenerOpinion
Date Created: 2023-08-26 12:47:37.146857+00
Date Added: 2024-06-11T18:25:26.745643
License: Public Domain

STANIFORTH, J.
I respectfully dissent.
I
The sole issue presented by Mrs. Ruchti’s appeal is the legal propriety of the trial court’s sustaining of a general demurrer to Mr. Ruchti’s second and third cause of action without leave to amend and consequent judgment of dismissal. The issues tended by the first and fourth causes of action are not before this court; they remain yet unresolved in the trial court.
This case comes to us after partial resolution at the pleading stage. We must therefore assume all the well pleaded allegations of counts two and three can be established if plaintiff is given her day in court. However, because the principal inquiry on this appeal is the propriety of the trial court’s sustaining the demurrer without leave to amend, we must examine the facts in light of plaintiff’s declaration or representation upon the premise the complaint is amendable to allege those facts. (Mobaldi v. Regents of University of California (1976) 55 Cal.App.3d 573, 577 [127 Cal.Rptr. 720]; Miller v. R. K. A. Management Corp. (1979) 99 Cal.App.3d 460, 463, fn. 1 [160 Cal.Rptr. 164].)
In counts two and three Ruchti alleged actual damage occurring at the time of the lawyer’s negligent act, to wit, “Had [the lawyer] exercised proper care and skill in the foregoing matter, plaintiff would have been awarded at least a one-fourth interest in [defendant’s] pension. . .. ”
However, Ruchti’s opening brief states: “Appellant will not sustain any damage until defendant Ruchti retires.” Thus the counts are *937amendable to allege the vesting of the military pension (Ruchti has now completed 20 years of service) but that the pension has not yet matured, for Ruchti is still in active military service. Until Mr. Ruchti’s retirement, Mrs. Ruchti has not, will not, sustain any actual damages or injury. Only then would she, had her rights been protected, be entitled to receive her proportionate share of the pension.
Code of Civil Procedure section 340.6 provides in pertinent part: “(a) An 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. In no event shall the time for commencement of legal action exceed four years except that the period shall be tolled during the time that any of the following exist:
“(l) The plaintiff has not sustained actual injury;...” (Italics added.)
The rule was firmly established in. California that the lawyer’s client cannot establish a cause of action for legal malpractice “until the client suffers appreciable harm as a consequence of his attorney’s negligence. ...” (Budd v. Nixen (1971) 6 Cal.3d 195, 200 [98 Cal.Rptr. 849, 491 P.2d 433]; see Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 184-187 [98 Cal.Rptr. 837, 491 P.2d 421], for review of the checkered legal history of the rule re accrual of legal malpractice causes of action.)
In Budd, the Supreme Court explained: “If the allegedly negligent conduct does not cause damage, it generates no cause of action in tort. [Citation.] The mere breach of a professional duty, causing only nominal damages, speculative harm; or the threat of future harm—not yet realized—does not suffice to create a cause of action for negligence. [Citations.] Hence, until the client suffers appreciable harm as a consequence of his attorney’s negligence, the client cannot establish a cause of action for malpractice. [Fn. omitted.] Prosser states the proposition succinctly, 'It follows that the statute of limitations does not begin to run against a negligence action until some damage has occurred.’ (Prosser, Law of Torts (4th ed. 1971) § 30 at p. 144.)
*938“The cause of action arises, however, before the client sustains all, or even the greater part, of the damages occasioned by his attorney’s negligence. [Citations.] Any appreciable and actual harm flowing from the attorney’s negligent conduct establishes a cause of action upon which the client may sue.
“Indeed, once having discovered his attorney’s negligence and having suffered some damage, the client must institute his action within the time prescribed in the statute of limitations or he will be barred from thereafter complaining of his attorney’s conduct. [Citations.] Ordinarily, the client has already suffered damage when he discovers his attorney’s negligence, as occurred in Neel v. Magana, Olney, Levy, Cathcart & Gelfand, ante, pages 183-187.. . In other cases, the infliction of the damage will alert the client to the attorney’s negligence and thus the statute of limitations will then begin to run on any malpractice action. Only in the unusual case will the client discover his attorney’s negligence without having suffered any consequential damage.” (6 Cal.3d pp. 200-201; italics added.)
In Budd v. Nixen, supra, Budd “suffered damage when... he was compelled to ‘incur and pay attorney’s fees and legal costs’” (6 Cal.3d p. 201) to correct the wrong accomplished by the lawyer’s negligent acts.
The Supreme Court reversed a summary judgment, concluding: “We hold that a cause of action for legal malpractice does not accrue until the client suffers damage and that the determination of that date raises an issue of fact.” (Id., at p. 198.) The Budd case was governed by the two-year statute of limitation contained in Code of Civil Procedure section 339. The Legislature later adopted section 340.6 and changed the “appreciable and actual harm” rule but slightly. A four-year limitation period was tolled if the client “has not sustained actual injury.” (Italics added.)
R. E. Mallen in An Examination of a Statute of Limitations for Lawyers (1978) 53 State Bar J. 166, 167, points out: “Both limitation periods of section 340.6 are tolled if a plaintiff has not sustained ‘actual’ injury. Intended to provide a more certain test of damages, the statute’s use of ‘actual’ injury deviates both from the proposal’s ‘significant’ injury standard and from the prior court-adopted criterion. In 1971, in Budd v. Nixen [supra], the California Supreme Court determined that the statute of limitations did not commence to run until the *939client sustained ‘any appreciable and actual’ harm. The inquiry concerned the extent rather than the fact of damage. Section 340.6 focuses instead on whether the plaintiff sustained any detectable damage. As before, the plaintiffs assisted by this tolling provision will be primarily the beneficiaries of wills who may first be damaged years or decades after from the time of the attorney’s negligence.” (Italics added; fns. omitted.)
The recent case of McGee v. Weinberg (1979) 97 Cal.App.3d 798 [159 Cal.Rptr. 86], sheds further light on the critical statutory language. Mrs. McGee in 1976 sued the attorney who represented her in a 1963 divorce action. The claimed malpractice was a failure on the attorney’s part to require the husband to maintain Mrs. McGee as irrevocable beneficiary on his life insurance policy. The husband died in 1973 and Mrs. McGee received no insurance proceeds. She did not bring suit until three years later (the two-year statute of limitations was then in effect). The Court of Appeal pointed to this fact. Mrs. McGee “knew that she had been damaged. She received no money from any insurance proceeds on [her] husband’s death in 1973.” (P. 802.) No similar facts show any damage to Mrs. Ruchti in these pleadings. Her legal conclusion of damage (“would have been awarded at least one-fourth interest in defendant’s person”) is pure speculation based upon a false assumption of law. Nor, according to her pleading, was she aware of her claim until consulting with her present attorney. Thus no well pleaded fact appears on the face of these pleadings that would trigger the running of the statute, either under the rule of Budd v. Nixen, supra, or Code of Civil Procedure section 340.6. Mrs. Ruchti’s tender of facts would indicate a possible future harm, not present actual detectable damage as is required to generate a cause of action. (Budd v. Nixen, supra, 6 Cal.3d p. 200.) Such state of facts—if properly pleaded —would warrant dismissal without prejudice, but not with prejudice.
If, on the other hand, Mrs. Ruchti did sustain an actual detectable damage when she retained her present attorney (see Budd v. Nixen, supra, 6 Cal.3d pp. 201-202) thus triggering a cause of action for malpractice, then she should be allowed to amend her pleading to so allege.
II
The majority opinion finds, as a matter of law, no cause of action pleaded by Mrs. Ruchti. The reasoning and conclusions tendered are di*940rectly contrary to the Supreme Court decision in Smith v. Lewis (1975) 13 Cal.3d 349, 356-358 [118 Cal.Rptr. 621, 530 P.2d 589, 78 A.L.R.3d 231].
Not “clairvoyance” but mere routine consultation of relevant authorities and case law was required of lawyers as early as 1967 to perceive that the general statutory presumption that all property acquired by either spouse during marriage belongs to the community “applies to retirement benefits.” {Id., at p. 357.)
Concerning the 1967 state of the law defining the community character of a federal military pension, the Supreme Court in Smith v. Lewis, supra, stated (pp. 357-358): “[Substantial uncertainty may have existed in 1967 with regard to the community character of General Smith’s federal pension. The above-discussed treatises reveal a debate which lingered among members of the legal community at that time concerning the point at which retirement benefits actually vest. [Fn. omitted.] [Citations.] Because the federal payments were contingent upon General Smith’s survival to age 60, 17 years subsequent to the divorce, it could have been argued with some force that plaintiff and General Smith shared a mere expectancy interest in the future benefits. [Citations.] Alternatively, a reasonable contention could have been advanced in 1967 that federal retirement benefits were the personal entitlement of the employee spouse and were not subject to community division upon divorce in the absence of express congressional approval. In fact, such was the conclusion reached in 1973 by Judge B. Abbott Goldberg in his scholarly article Is Armed Services Retired Pay Really Community Property? (1973) 48 State Bar Journal 12. Although we rejected Judge Goldberg’s analysis in In re Marriage of Fithian (1974) supra, 10 Cal.3d 592, 597, footnote, 2, the issue was clearly an arguable one upon which reasonable lawyers could differ. [Citation.]
“Of course, the fact that in 1967 a reasonable argument could have been offered to support the characterization of General Smith’s federal benefits as separate property does not indicate the trial court erred in submitting the issue of defendant’s malpractice to the jury. . .. ” (Italics added.)
The majority opinion here has determined as a matter of law Mrs. Ruchti had no cause of action for malpractice. Smith v. Lewis, supra, indicates it is not error to submit such issue to a jury. The growth of *941law on the point since 1967 suggests that today it would be error not to submit this issue to the jury.
I would reverse the judgment of dismissal and remand with direction to grant leave to amend.
Appellant’s petition for a hearing by the Supreme Court was denied February 18, 1981.