Three entities sued their former attorneys alleging professional negligence and related claims.
Plaintiffs' malpractice action against Procopio involves Procopio's legal representation of plaintiffs in a complex, multiparty real estate litigation that spawned numerous appeals in this court. Plaintiffs filed their original complaint against Procopio while the underlying litigation was ongoing and within one year after they substituted a new counsel. Plaintiffs then filed several amended malpractice complaints. The trial court found the fourth amended complaint was untimely. Plaintiffs challenge this conclusion on appeal.
To properly resolve the appellate issues, it is necessary to summarize the history of the underlying litigation and its relationship to the complaint and amended complaints filed in the malpractice action. Because we are reviewing a judgment on the pleadings and on a demurrer, we base this factual description on the allegations of the complaint and documents that were properly the subject of judicial notice. (See Buesa v. City of Los Angeles (2009) 177 Cal.App.4th 1537, 1543 [100 Cal.Rptr.3d 86].)
This action arises from the development of a 1,000-acre master-planned community in Spring Valley, consisting of a residential community, a commercial business park, and a golf course and resort. The property planned for the residential development was initially held by plaintiff Pointe Residential, a limited partnership affiliated with plaintiff Gosnell Builders. In the mid-1990's, Pointe Residential and Gosnell Builders entered into a complex series of transactions with Palomba Weingarten and related entities in which Weingarten agreed to provide needed financing for the project. One of the Weingarten-related entities, W.W.I. Properties, LLC (WWI), acquired ownership of the residential property. Plaintiff Pointe SDMU, a limited partnership affiliated with Gosnell Builders, was formed to own and develop the "mixed use" portion of the property.
By 1997, the Gosnell and Weingarten parties were engaged in numerous disputes pertaining to the residential and mixed-use developments. In about August 1998, the three plaintiffs (Pointe Residential, Pointe SDMU, and Gosnell Builders) retained the Procopio law firm, which filed two lawsuits on behalf of these plaintiffs.
In the first case (known as the residential litigation), Gosnell Builders and Pointe Residential sued Weingarten, WWI, and Astra Management Corporation (Astra), a Weingarten-controlled corporation of which Pointe
In the second case (known as the mixed-use case), Pointe SDMU sued Atlas Homes, LLC (Atlas), an entity formed by Weingarten. Atlas filed a cross-complaint against various parties, including Pointe SDMU, Pointe Residential and Gosnell Builders.
The two cases were assigned to Superior Court Judge Robert May. In November 2001, Judge May conducted a court trial on certain equitable issues in the residential action. At the trial, the plaintiffs (Pointe Residential and Gosnell Builders) were represented by Procopio. In March 2002, the court issued a statement of decision, finding Weingarten liable for breach of fiduciary duty on a shareholder derivative claim asserted by Pointe Residential on behalf of Astra. The court deferred ruling on several accounting and punitive damage issues.
Shortly thereafter, Judge May consolidated the mixed-use case with the residential case for purposes of the next phase of the trial. The entire consolidated action (the residential and mixed-use cases) will be referred to as the "Pointe I litigation."
In November 2002, the nonjury trial in the Pointe I litigation began, and encompassed all remaining causes of action and certain issues on punitive damages. During the trial, the three plaintiffs continued to be represented by Procopio. Pointe SDMU additionally retained a second attorney, Michael Vivoli, to serve as cocounsel for Pointe SDMU. At the trial, the parties raised numerous legal and factual issues involving their complicated business relationships, and the trial took place over the next two months.
On February 7, 2003, Vivoli was associated as cocounsel also for Pointe Residential and Gosnell Builders.
On February 25, 2003, Judge May issued a tentative decision in the Pointe I trial, finding in plaintiffs' favor on some of their claims and finding for defendants on others. On April 1, 2003, the court confirmed the tentative decision in all respects. The court then ordered an accounting and appointed a referee to submit recommendations to the court.
On about April 18, 2003, Vivoli filed a new and independent action on behalf of the three plaintiffs (Pointe Residential, Gosnell Builders, and Pointe SDMU) against Weingarten and related entities. This action, known as the Pointe II case, was filed primarily to recover certain damages resulting from
On May 21, 2003, plaintiffs substituted Vivoli as their sole counsel in the Pointe I litigation (the residential and mixed-use cases). During the next year, Judge May conducted several hearings and issued additional written rulings pertaining to various unresolved issues from the Pointe I trial.
While this Pointe I litigation activity was ongoing, and 11 months after terminating their relationship with Procopio, on April 9, 2004, plaintiffs (Pointe Residential, Pointe SDMU, and Gosnell Builders) filed a legal malpractice action against Procopio. The malpractice complaint lists each of the three parties as plaintiffs and names Procopio and attorney Steven Strauss as defendants. The complaint contains a single cause of action, "General Negligence," and alleges "within the last year" that "Defendants, as Plaintiffs' attorneys, failed to use due care in the handling of
Less than four months later, in July 2004, plaintiffs filed a first amended complaint in the legal malpractice action, providing substantially more detail with respect to the nature of the malpractice claims as to each plaintiff. Those allegations essentially concerned Procopio's failure to assert specific claims and seek certain remedies in the Pointe I consolidated litigation.
Procopio filed an answer and a cross-complaint in September 2004.
On September 22, 2004, Judge May entered a final judgment in the Pointe I case. In the final judgment, the court reconfirmed its earlier findings that each plaintiff prevailed on certain claims, but were unsuccessful on other claims.
Each set of parties appealed. While the cross-appeals were pending, in December 2005, plaintiffs filed a second amended complaint in the legal malpractice action, reorganizing the causes of action and adding several additional grounds for the malpractice claim arising from Procopio's representation of the plaintiffs in the Pointe I litigation. Procopio filed an answer to this complaint.
Nineteen months later, in July 2007, this court issued its decision on the Pointe I litigation appeals, affirming the judgment in some respects, reversing the judgment in other respects, and reversing the order granting a partial new trial. (Pointe San Diego Residential Community, L.P. v. W.W.I. Properties, L.L.C. (July 11, 2007, D044695) [nonpub. opn.].) We shall refer to this decision as the July 2007 Pointe I appellate decision. Of relevance
Eleven months later, on June 12, 2008, plaintiffs filed a third amended complaint in the legal malpractice action, containing eight causes of action, each of which was based on Procopio's representation of plaintiffs in the Pointe I litigation. The first seven causes of action identified specific acts or omissions alleged to constitute legal malpractice in the Pointe I litigation, several of which were based on our determinations in the July 2007 Pointe I appellate decision. The eighth cause of action alleged breach of contract based on the negligence allegations.
Procopio demurred to the first cause of action (pertaining to Procopio's failure to allege and recover damages for breach of the set-aside agreement), contending primarily that the claim was untimely. Plaintiffs opposed the demurrer, arguing that the claim was valid and timely as to Pointe Residential and Gosnell Builders because they sustained no injuries until this court filed its July 2007 Pointe I appellate decision, and in any event, the claim related back to the original April 2004 malpractice complaint. The court rejected these arguments, but provided plaintiffs leave to amend the complaint.
Plaintiffs then filed their fourth amended complaint, essentially alleging the same causes of action, with certain modifications and clarifications. The first cause of action sought damages for Procopio's failure to recover relief for breach of the set-aside agreement on behalf of Pointe Residential and Gosnell Builders. The second cause of action alleged on behalf of Pointe SDMU that Procopio failed to timely plead a permanent trespass claim. The third cause of action alleged on behalf of Pointe Residential that Procopio failed to claim half of the $4,187,465 tax benefits that Weingarten appropriated to herself. The fourth cause of action pertained to interests in the diversion of fill dirt and unauthorized grading. The fifth cause of action was for failure to recover all damages for breach of a development management agreement. The sixth cause of action was for failure to name Weingarten as a defendant in the Pointe SDMU action (the complaint named only Atlas which is insolvent). The eighth and ninth causes of action were for breach of contract and breach of fiduciary duty based on the prior allegations.
The complaint also included additional allegations pertaining to the dates plaintiffs sustained injuries from each alleged act of malpractice and allegations concerning the relation-back issue. With respect to the relation-back
Procopio demurred to the first and fourth through sixth causes of action. The court sustained the demurrer without leave to amend on the basis the claims were time-barred. The court found plaintiffs suffered injuries from the claimed malpractice no later than April 2003. The court also found the relation-back doctrine was inapplicable because the original complaint did not contain sufficient factual allegations. Relying on Davaloo v. State Farm Ins. Co. (2005) 135 Cal.App.4th 409 [37 Cal.Rptr.3d 528] (Davaloo), the court stated that although plaintiffs filed the original April 2004 complaint within one year of the accrual of the cause of action, the complaint was "wholly defective" because it was "void of operative facts" and thus the subsequent complaints could not relate back to the complaint.
The court then granted Procopio's demurrer and motion for judgment on the pleadings with respect to the remaining causes of action (second, third, eighth and ninth). The court found the second and third causes of action accrued more than one year before plaintiffs asserted the allegations in a complaint, and that these claims did not relate back to the original complaint. The court also concluded that Pointe SDMU could not recover under the second cause of action because Atlas, the sole underlying defendant, was insolvent and could not have paid a judgment.
Procopio thereafter dismissed its cross-complaint with prejudice based on an agreement of the parties to submit the matter to binding arbitration following the appeal.
"`On appeal from an order of dismissal after an order sustaining a demurrer, our standard of review is de novo, i.e., we exercise our independent judgment about whether the complaint states a cause of action as a matter of law.'" (Los Altos El Granada Investors v. City of Capitola (2006) 139 Cal.App.4th 629, 650 [43 Cal.Rptr.3d 434].) In reviewing the complaint, we must assume the truth of all facts properly pleaded by the plaintiff and matters properly judicially noticed. (Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 814 [107 Cal.Rptr.2d 369, 23 P.3d 601].) 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 [52 Cal.Rptr.3d 788].)
"`A motion for judgment on the pleadings performs the same function as a general demurrer, and [thus] attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed. [Citations.]' [Citation.]" (Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1064 [20 Cal.Rptr.3d 562].) As with our review of an order sustaining a demurrer, we review de novo the court's judgment on the pleadings. (Id. at pp. 1064-1065.)
Further, to prevail on a demurrer based on the statute of limitations, a defendant must establish the entire cause of action is untimely. A demurrer challenges a cause of action and cannot be used to attack a portion of a cause of action. (Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 365, 384-385 [36 Cal.Rptr.3d 31].) Thus, where a plaintiff sues a defendant for legal malpractice alleging several distinct acts of malpractice with respect to a single representation, a demurrer is properly granted on the basis of the statute of limitations only if each alleged act of malpractice is time-barred. (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682 [40 Cal.Rptr.2d 169] [reversing demurrer sustained to legal malpractice cause of action because plaintiff timely alleged at least one negligent act].)
In sustaining the demurrer and granting the motion for judgment on the pleadings, the court found plaintiffs' claims in the fourth amended complaint were untimely because the complaint was filed more than one year after plaintiffs discovered the facts constituting the wrongful omissions and suffered injury, and more than one year after plaintiffs discontinued their relationship with Procopio and began paying fees for their new attorney's services. The court further found the relation-back doctrine inapplicable based on Davaloo, supra, 135 Cal.App.4th 409.
On appeal, plaintiffs argue primarily that the claims were timely because they related back to the original complaint. They alternatively argue that even if the relation-back doctrine is inapplicable, they timely filed the complaint pertaining to three factual grounds for their malpractice claim because the fees paid to their second attorney were unrelated to these alleged acts of malpractice. They essentially contend they did not suffer injury with respect to these acts of malpractice until this court filed its opinion on the appeal from the underlying judgment.
We conclude the relation-back doctrine applies in this case. We thus need not analyze whether the court properly found the record establishes plaintiffs sustained injury with respect to each discrete act of alleged malpractice more than one year before they filed their complaint.
Under these principles, the third and fourth amended complaints related back to the original complaint. The original complaint named plaintiffs Pointe Residential, Gosnell Builders, and Pointe SDMU, and defendants Procopio and attorney Strauss. The complaint was a form complaint, and the plaintiffs checked the box marked "General Negligence" on the form. Pursuant to the instructions on the form, plaintiffs also included an attachment alleging defendants were the "legal (proximate) cause of damages to plaintiff[s]" and "[b]y the following acts or omissions to act, defendant negligently caused the damage to plaintiff." In the "description of reasons for liability" section, plaintiffs stated: "Defendants, as Plaintiffs' attorneys, failed to use due care in the handling of
Moreover, under rules applicable to legal malpractice cases, plaintiffs were required to file an action within one year after suffering damages, even if those damages were merely in the nature of attorney fees paid to a new attorney to take action to correct potential malpractice. (See Jordache, supra, 18 Cal.4th at p. 751.) In May 2003, plaintiffs terminated their relationship with Procopio and substituted Vivoli as their sole counsel. During the next year, plaintiffs and the Weingarten parties actively continued their adversarial litigation in the underlying matter, and Judge May continued to issue statements of decisions, rather than a final judgment. Thus, although the underlying dispute was actively proceeding in a parallel fashion, plaintiffs filed a protective complaint to guard against any claim that the statute had run because of their substitution of counsel. However, because the precise nature of the alleged malpractice and the injuries caused by the alleged malpractice
On this record, it would defeat this state's liberal pleading rules and statutory and judicial policies requiring prompt filing of malpractice complaints to hold the relation-back doctrine inapplicable here merely because plaintiffs' original complaint did not contain detailed allegations of the precise nature of the alleged legal malpractice. If Procopio had required additional information about the claim at that point, it could have filed a demurrer on the basis of uncertainty or engaged in discovery to seek information about the exact factual basis for the malpractice claim.
"The criterion of relation back is whether the original complaint gave the defendant enough notice of the nature and scope of the plaintiff's claim that he shouldn't have been surprised by the amplification of the allegations of the original complaint in the amended one." (Santamarina v. Sears, Roebuck & Co., supra, 466 F.3d at p. 573.) Based on the original complaint's specific reference to Procopio's alleged negligent handling of the Pointe I litigation and Procopio's role as plaintiffs' attorney during this litigation, the record supports that Procopio had adequate notice to begin to prepare a defense, and could have reasonably foreseen the later allegations detailing the more specific acts of malpractice alleged in the later amended complaints.
In responding to the appeal, Procopio does not suggest it was unaware that the original malpractice complaint pertained to its representation of plaintiffs in the Pointe I litigation, or that the complaint gave it inadequate notice to permit it to preserve the relevant evidence and notify its malpractice carrier of the claim. Instead, it argues the trial court properly found the relation-back doctrine to be inapplicable based on Davaloo, supra, 135 Cal.App.4th 409. However, Davaloo is factually and legally distinguishable from the circumstances here.
In Davaloo, two plaintiffs filed identically worded complaints against State Farm, alleging breach of contract and bad faith causes of action relating to property damage from the Northridge earthquake. (Davaloo, supra, 135 Cal.App.4th at p. 412.) Plaintiffs filed these complaints on December 31, 2001, the last day of a "revival" statute, which gave insureds an extra year to file insurance claims related to the Northridge earthquake. (Ibid.) The complaints stated in general terms that the plaintiffs had "`suffered insured losses as a result of the earthquake'" and had "`timely'" contacted State Farm regarding damages. (Ibid.) Aside from the caption, the complaints did not mention the defendants or plaintiffs by name, and did not provide any information about the insurance policies or the claims being made by the plaintiffs. (Ibid.) The complaints were among at least 10 identically worded complaints filed on the same date by the same law firm. (Id. at p. 411, fn. 3.)
The Davaloo court agreed that the relation-back doctrine was inapplicable. (Davaloo, supra, 135 Cal.App.4th at pp. 416-420.) The court found that because the original complaint had a "complete lack of factual allegations," it was "impossible to conclude the first amended complaints are based on the same general set of facts as the original complaints." (Id. at p. 417.) The court explained that even when liberally construing the pleadings, "the body of each of the original complaints at bottom alleges nothing more than the Northridge earthquake caused harm to a resident or residents of Los Angeles County. Such an allegation falls far short of apprising State Farm of the factual basis of the claim. [Citations.]" (Ibid.)
The Davaloo court made clear that it was basing its holding on the "totality" of the circumstances and was not intending to establish a "bright-line rule as to when a complaint is so deficient to preclude relation back." (Davaloo, supra, 135 Cal.App.4th at p. 417.) The court also stressed that its decision to strictly enforce the statutory time limits was supported by the policy underlying the Northridge earthquake revival statute: "To allow an insured to file a complaint [on the last day of the] revival period lacking any factual allegations specific to the dispute with his or her insurer and then use the relation-back doctrine to make amendments to the wholly deficient complaint `would contravene the Legislature's express directive that [the revival statute] operate to revive certain earthquake claims for a period of one year only." (Id. at p. 420, italics added.)
We fully agree with the holding and reasoning of Davaloo under the particular circumstances of the case. A primary purpose of the statute of limitations is to provide the defendant with sufficient notice to allow the defendant to gather and preserve evidence in a timely fashion. (McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 102 [84 Cal.Rptr.3d 734, 194 P.3d 1026].) If an original complaint lacks facts sufficient to provide notice to the defendant of the essential nature of the claim, it would defeat this policy to permit the plaintiff to remedy this error by filing a new amended complaint beyond the limitations period. In Davaloo, State Farm could not have known what facts it needed to gather and preserve during the one-year limitations period. State Farm had no information about the insureds, their property, the claimed damages, the nature of their bad faith
This case is different. The complaint placed Procopio on notice of the identity of the plaintiffs and the nature of their claims. The complaint referred to the specific litigation in which Procopio had represented plaintiffs and alleged that Procopio had failed to use due care in the handling of that litigation. Although the complaint did not detail the specifics of the claim, Procopio had superior knowledge of its conduct and the manner in which it may have breached the standard of care. Procopio had sufficient information to be apprised of the factual basis for the claim—its acts and omissions during its representation of plaintiffs in the Pointe I litigation—and to take steps to preserve the necessary relevant information for defense of this claim and timely notify its malpractice carrier of the claim.
In this regard, we agree that the "bare bones" nature of plaintiffs' original complaint may not have withstood a demurrer on grounds of uncertainty. (See § 425.10, subd. (a)(1).) However, the applicability of the relation-back doctrine does not depend on whether Procopio would have prevailed on a challenge to the complaint on the basis of uncertainty. If Procopio had brought this challenge, the remedy would not have been a dismissal of the
We also find Procopio's reliance on Kim v. Regents of University of California (2000) 80 Cal.App.4th 160 [95 Cal.Rptr.2d 10] to be misplaced. In Kim, the court held an employee's wrongful termination claim (age discrimination) did not relate back to a contractual overtime pay claim because the facts underlying the claims were logically separate and distinct. (Id. at pp. 168-169.) The court further found the plaintiff had engaged in actions leading the defendants to reasonably believe she had abandoned her wrongful termination claim. (Id. at p. 169.)
Unlike in Kim, the new detailed allegations in the third and fourth amended complaints were directly related to the original alleged facts. The difference between the original complaint and the fourth amended complaint is that plaintiffs added substantial more detail with respect to how defendants breached the standard of care and the nature of plaintiff's injuries (the loss of several claims based on the rulings of the Court of Appeal). Moreover, there are no similar facts here showing plaintiffs intended to abandon their malpractice claims.
Coronet Manufacturing Co. v. Superior Court (1979) 90 Cal.App.3d 342 [153 Cal.Rptr. 366] (Coronet), relied upon by Procopio, is also distinguishable. In Coronet, the original complaint alleged that the decedent was electrocuted while using a defective hair dryer and sued the manufacturer of the hair dryer; the amended complaint filed two years later identified the instrumentality as a lamp socket and switch and named, for the first time, the manufacturer of these items. (Id. at pp. 344-345.) The reviewing court held the relation-back doctrine inapplicable because the pleadings alleged different accidents and different instrumentalities. (Id. at p. 347.) The court explained: "The difference between being electrocuted by a hair dryer and being electrocuted by a table lamp is as great as being electrocuted by the hair dryer and being poisoned by some improperly processed food found on the kitchen shelf. Although they relate to a single death at a single location they are different `accidents' and involve different instrumentalities."
The distinction is illustrated by the facts in Foxborough v. Van Atta (1994) 26 Cal.App.4th 217 [31 Cal.Rptr.2d 525] (Foxborough), in which the court found the relation-back theory inapplicable in a legal malpractice case. In that case, an attorney (Van Atta) represented the plaintiff in a transactional matter. (Id. at p. 222.) That representation ended in 1981. Several years later, the plaintiff was involved in litigation resulting, in part, from Van Atta's alleged negligent advice in the transactional matter. (Id. at pp. 223-224.) During the trial in this litigation, the plaintiff's new counsel retained Van Atta as a consultant and expert witness. (Id. at p. 223.) Several years later, the plaintiff brought an action against Van Atta, alleging the attorney failed to properly advise him on the transactional matter in 1979 and 1980. When the trial court found that claim untimely, the plaintiff sought to amend to add the allegations about plaintiff's work as a consultant and expert witness, and argued that the amendment was timely because it related back to the original filed complaint. (Id. at p. 230.)
The Foxborough court held the motion to amend was properly denied. (Foxborough, supra, 26 Cal.App.4th at pp. 230-231.) The court reasoned that the amendment did not relate back to the original complaint because two separate incidents were involved. (Ibid.) The original complaint alleged negligent transactional advice between 1978 and 1981, while the new cause of action alleged negligence in denying responsibility for the oversight and in the attorney's subsequent consultation and trial testimony. Because the latter was a separate incident that arose from a new contractual relationship between the parties, the amendment did not relate back and the new claims were barred by the statute of limitations. (Ibid.)
Here, unlike Foxborough, the amended pleadings are based on the same representation. Both the original complaint and the amended complaints claimed negligence in the handling of the Pointe I litigation. Thus, the amended allegations pertaining to specific acts of negligence occurring in Procopio's representation of plaintiffs in the Pointe I litigation related back to the original complaint's general allegation of negligence occurring in that same engagement.
Judgment reversed. Respondents to pay appellants' costs on appeal.
Huffman, Acting P. J., and Nares, J., concurred.