Rinek v. Salazar CA3 ( 2014 )

Filed 1/9/14 Rinek v. Salazar CA3
NOT TO BE PUBLISHED
COPY
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 This opinion has not been certified for publication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
THIRD APPELLATE DISTRICT
(Sacramento)
----
JEFFREY RINEK, C072036
Plaintiff and Appellant, (Super. Ct. No.
34201100097071CUPNGDS)
v.
ORDER MODIFYING OPINION
JOSEPH A. SALAZAR, JR., AND DENYING REHEARING
Defendant and Respondent. [NO CHANGE IN JUDGMENT]
THE COURT:
It is ordered that the opinion filed herein on December 12, 2013, be modified as
follows:
On page 2, in the fourth paragraph, delete the words “SMFD’s representative” and
replace it with “to the insurance carrier for SMFD” so the sentence reads:
After Rinek signed the consent form, Salazar wrote to the insurance carrier for
SMFD that he would confirm Rinek’s insurance coverage and thereafter tender the
defense of the pending wrongful termination action to Rinek’s insurance carrier.
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On page 3, in the second paragraph, insert the words “the insurance carrier for”
between the words “to” and “SMFD” so the sentence reads:
Salazar then wrote to the insurance carrier for SMFD, describing his discussion
with Rinek of the facts underlying the wrongful termination action, reporting that
Rinek had insurance coverage, and stating that he planned to tender the defense of
the wrongful termination action to Rinek’s carrier.
There is no change in the judgment.
Appellant’s petition for rehearing is denied.
HULL , Acting P. J.
MAURO , J.
DUARTE , J.
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Filed 12/12/13 (unmodified version)
NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
THIRD APPELLATE DISTRICT
(Sacramento)
----
JEFFREY RINEK, C072036
Plaintiff and Appellant, (Super. Ct. No.
34201100097071CUPNGDS)
v.
JOSEPH A. SALAZAR, JR.,
Defendant and Respondent.
Jeffrey Rinek sued Joseph A. Salazar, Jr., for alleged legal malpractice and fraud
committed during the brief period Salazar represented Rinek in a prior lawsuit. The trial
court sustained Salazar’s demurrer to the first amended complaint without leave to amend
and dismissed the action.
Rinek contends the trial court erred in concluding his claims for legal malpractice
and fraud are barred by the applicable statute of limitations. We disagree and affirm the
judgment.
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FACTS AND PROCEEDINGS
For purposes of setting forth the facts in this case, we rely on the initial complaint
and first amended complaint as sources of facts that must be assumed true for purposes of
this appeal, as well as matters properly judicially noticed. (See Code Civ. Proc.,
§ 430.30, subd. (a) (unless otherwise stated, statutory references that follow are to the
Code of Civil Procedure); Berg & Berg Enterprises, LLC v. Boyle (2009)
178 Cal. App. 4th 1020, 1034.)
In 2006, Rinek entered into a contract with the Sacramento Metropolitan Fire
District (SMFD) to perform an independent investigation into some of SMFD’s
employees. The contract contains an indemnity provision in favor of SMFD and provides
that Rinek shall maintain a professional liability errors and omissions (E&O) insurance
policy.
As part of his investigation, Rinek interviewed an SMFD employee who was
thereafter terminated by SMFD. The employee brought an action for wrongful
termination, naming Rinek and SMFD as defendants. SMFD reserved its right not to
indemnify Rinek and it retained Salazar to represent both itself and Rinek in the wrongful
termination action. Writing to Rinek to obtain his consent for the joint representation,
Salazar asked Rinek whether his insurance carrier had been notified of the wrongful
termination action and informed Rinek that, if a conflict with SMFD were later to
develop, Salazar would continue to represent SMFD. Rinek consented to the dual
representation in September 2007.
After Rinek signed the consent form, Salazar wrote SMFD’s representative that he
would confirm Rinek’s insurance coverage and thereafter tender the defense of the
pending wrongful termination action to Rinek’s insurance carrier.
Salazar met with Rinek for the first time on October 11 or 12, 2007. They
discussed the facts of the pending wrongful termination action. Salazar also asked Rinek
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to provide a copy of his E&O insurance policy and told Rinek he should inform his
professional liability insurance carrier of the pending action.
Salazar then wrote to SMFD, describing his discussion with Rinek of the facts
underlying the wrongful termination action, reporting that Rinek had insurance coverage,
and stating that he planned to tender the defense of the wrongful termination action to
Rinek’s carrier.
On October 29, 2007, Salazar tendered the defense of the wrongful termination
lawsuit to Rinek’s insurance carrier, without seeking Rinek’s consent or informing Rinek
he had done so. Thereafter, Salazar had no direct contact with Rinek. Salazar ceased
representing Rinek in connection with the wrongful termination action on January 16,
2008 when Rinek retained new counsel; Salazar continued to represent SMFD.
In December 2010, Rinek obtained his client file from SMFD’s representative and
discovered from reading Salazar’s October 2007 correspondence that Salazar planned in
advance of their first meeting to obtain Rinek’s insurance information so defense of the
wrongful termination action could be tendered to Rinek’s carrier, for the benefit of
SMFD.
On February 14, 2011, Rinek filed this action against Salazar, alleging (among
other things) causes of action for negligence, intentional tort, and fraud. Salazar
demurred, arguing the complaint failed to state a cause of action, was uncertain, and was
barred by the applicable statute of limitations. The trial court sustained the demurrer,
with leave to amend.
Rinek then filed the (operative) first amended complaint, which seeks damages
based on causes of action for intentional infliction of emotional distress (count 1), breach
of fiduciary duty and the duty of loyalty owed by an attorney (count 2), and fraud (count
3).
Rinek alleges Salazar promised to represent Rinek jointly with SMFD only so he
could gather information from Rinek about the wrongful termination case and other
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“private information” and obtain Rinek’s insurance information for the benefit of SMFD.
Rinek suffered emotional distress because he “was forced to retain new counsel to defend
him and he was cut off from communication with Mr. Salazar after he had already
established a relationship with him.” Rinek also alleges Salazar breached his duties to
Rinek by meeting with Rinek even though Salazar “ultimately intended to cease
representing him”; obtaining Rinek’s trust and confidence; fraudulently obtaining from
Rinek information concerning the wrongful termination case and his insurance coverage;
and dumping Rinek as a client by tendering the defense to Rinek’s insurance carrier
without Rinek’s knowledge. Finally, Rinek alleges Salazar entered into an attorney-
client relationship with him under false pretenses: Salazar falsely stated he would
“jointly and ethically represent Mr. Rinek” when he never intended to represent Rinek,
and Rinek relied on those misrepresentations by revealing “confidential medical and
personal information” to Salazar. Salazar concealed his intention in advance of their
October 2007 meeting, to tender Rinek’s defense to Rinek’s insurance carrier, and Rinek
only discovered Salazar’s duplicity when he obtained his file in December 2010.
Salazar demurred on the grounds all three causes of action fail to allege facts
sufficient to state a cause of action and, alternatively, are barred by the applicable statutes
of limitations. As relevant to this appeal, Salazar argued Rinek’s claim in count 2 for
attorney malpractice is governed by a one-year statute of limitations (§ 340.6) and rests
upon Rinek’s allegations he was damaged by Salazar’s actions prior to and immediately
following their October 2007 meeting; accordingly, the action filed in February 2011 is
time-barred. As to count 3, Salazar contends Rinek could not have suffered any
appreciable injury attributable to Salazar’s having fraudulently entered into an attorney-
client relationship with him after January 2008, when Salazar ceased representing Rinek;
the complaint was filed one month after the three-year statute of limitations for fraud
expired (§ 338, subd. (d)).
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The superior court sustained Salazar’s demurrer without leave to amend. It agreed
with Salazar that all of Rinek’s claims are barred by the applicable statutes of limitations
and fail to state a cause of action.
Rinek appeals from the ensuing judgment of dismissal.
DISCUSSION
Rinek contends on appeal the trial court erred in concluding that his claims for
legal malpractice and fraud (counts 2 and 3) are time-barred. For reasons we explain
below, we disagree.
We note that on appeal, Rinek does not challenge the court’s ruling sustaining
Salazar’s demurrer to the first cause of action for intentional infliction of emotional
distress nor does he argue the court erred in sustaining the demurrer without leave to
amend as to that count. We presume the trial court’s ruling was correct. (Denham v.
Superior Court (1970) 2 Cal. 3d 557, 564; Gutierrez v. Autowest, Inc. (2003)
114 Cal. App. 4th 77, 88.)
I
Standard and Scope of Review
The function of a demurrer is to test the sufficiency of the complaint by raising
questions of law. We give the complaint a reasonable interpretation and read it as a
whole with its parts considered in their context. A general demurrer admits the truth of
all material factual allegations. We are not concerned with the plaintiff’s ability to prove
the allegations or with any possible difficulties in making such proof. We are not bound
by the construction placed by the trial court on the pleadings; instead, we make our own
independent judgment. (Blank v. Kirwan (1985) 39 Cal. 3d 311, 318; People ex rel.
Gallegos v. Pacific Lumber Co. (2008) 158 Cal. App. 4th 950, 957.)
When the trial court sustains the demurrer without leave to amend, we must decide
whether there is a reasonable possibility the plaintiff can cure the defect with an
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amendment. If we find that an amendment could cure the defect, we must find the court
abused its discretion and reverse. If not, the court has not abused its discretion. The
plaintiff bears the burden of proving an amendment would cure the defect. (Gomes v.
Countrywide Home Loans, Inc. (2011) 192 Cal. App. 4th 1149, 1153.)
II
Rinek’s Legal Malpractice Claim is Time-Barred
The statute of limitations applicable to Rinek’s claim in count 2 for attorney
malpractice and/or breach of fiduciary duty is set forth in section 340.6, subdivision (a),
which provides in part that “[a]n action against an attorney for a wrongful act or omission
. . . 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. . . . [I]n no event shall the
time for commencement of legal action exceed four years except [where specified
circumstances give rise to tolling].” (See Quintilliani v. Mannerino (1998)
62 Cal. App. 4th 54, 68; Stoll v. Superior Court (1992) 9 Cal. App. 4th 1362, 1366-1369.)
Thus the limitations period is one year from actual or imputed discovery, or four years
(whichever is sooner), unless tolling applies. (Beal Bank, SSB v. Arter & Hadden, LLP
(2007) 42 Cal. 4th 503, 508, 511.)
It is well settled that the one-year limitations period of section 340.6 “is triggered
by the client’s discovery of ‘the facts constituting the wrongful act or omission,’ not by
his discovery that such facts constitute professional negligence, i.e., by discovery that a
particular legal theory is applicable based on the known facts.” (Worton v. Worton
(1991) 234 Cal. App. 3d 1638, 1650.) The complaint alleges Salazar breached his duty to
Rinek by meeting with him in early October 2007, although he knew the representation
would likely not continue, tendering the defense of the wrongful termination action to
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Rinek’s carrier, then dumping Rinek as a client. The trial court concluded that Rinek
failed to file this action within a year of the time he discovered “the facts constituting the
wrongful act or omission.” We agree. All of the wrongful acts Rinek alleges were
committed by Salazar occurred during October 2007: Rinek alleges Salazar met with
him while simultaneously contemplating tendering Rinek’s case to his insurance carrier;
Salazar failed to obtain Rinek’s consent before tendering Rinek’s defense to the carrier;
and, by tendering the case to Rinek’s carrier, Salazar failed to act in Rinek’s best
interests.
Although Rinek emphasizes on appeal he “was not aware of the ‘tender’ when it
was made,” a reasonable interpretation of the pleadings is that Rinek learned of it soon
after it occurred. (See Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) Rinek alleges he
learned of Salazar’s “plans . . . after they had been carried out,” although “[a]t the time
Mr. Salazar tendered the defense, Mr. Rinek did not appreciate how or why his defense
had been tendered to his own insurance company” and “was left to guess as to the reasons
his former attorney was no longer representing him.”
Even if Rinek did not immediately know his defense in the wrongful termination
action had been tendered to his insurance carrier, he should, through the use of reasonable
diligence, have discovered the cause of the break in his attorney-client relationship with
Salazar (§ 340.6, subd. (a)) at or about the time Salazar stopped communicating with him
in late October 2007. In any event, Rinek should have learned what happened no later
than January 2008, when he began to be represented by new counsel. The trial court thus
correctly concluded that Rinek’s cause of action for legal malpractice and/or breach of
fiduciary duty accrued no later than January 2008. Rinek’s action, filed in February
2011, was too late.
On appeal, Rinek argues the trial court should have concluded the statute of
limitations was tolled until December 2010. Section 340.6, subdivision (a) lists four
circumstances under which the limitations period of a legal malpractice action may be
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tolled: (1) while the plaintiff has not sustained actual injury; (2) while the attorney
continues to represent the plaintiff regarding the specific subject matter in which the
alleged wrongful act or omission occurred; (3) while the attorney willfully conceals the
facts constituting the wrongful act or omission when such facts are known to the attorney,
except that this subdivision shall toll only the four-year limitation; and (4) while the
plaintiff is under a legal or physical disability which restricts the plaintiff’s ability to
commence legal action. Although the language of the statute is ambiguous on the point,
“[t]he tolling provisions of section 340.6 apply to both the one-year and the four-year
provisions.” (Bennett v. McCall (1993) 19 Cal. App. 4th 122, 126.)
In the trial court, Rinek unsuccessfully argued the statute of limitations should be
tolled because Salazar concealed his wrongful acts. He does not renew this argument on
appeal. For the first time on appeal, however, Rinek attempts to invoke two of the other
statutory tolling provisions: he argues the statute of limitations was tolled until
December 2010 because he had not yet sustained actual injury (§ 340.6, subd. (a)(1)), and
because he was, until December 2010, under a legal or physical disability restricting his
ability to commence legal action against Salazar (§ 340.6, subd. (a)(4)). We agree with
Salazar that Rinek may not raise these arguments for the first time on appeal. (E.g.,
World Financial Group, Inc. v. HBW Ins. & Financial Services, Inc. (2009)
172 Cal. App. 4th 1561, 1569; Martinez v. Scott Specialty Gases, Inc. (2000)
83 Cal. App. 4th 1236, 1249.)
Even were he permitted to raise new arguments to justify tolling the statute of
limitations, they lack merit.
First, Rinek cannot show his claim for legal malpractice was tolled by lack of
actual injury within the meaning of section 340.6, subdivision (a)(1). This statutory
tolling provision is rooted in the required element of “actual loss or damage” in a
professional negligence action. (Croucier v. Chavos (2012) 207 Cal. App. 4th 1138,
1147.) Although Rinek claims the statute of limitations should have been tolled until
8
December 2010, when he learned that Salazar intended in October 2007 to tender the
defense to Rinek’s carrier, Rinek alleges he began to “suffer[] damages including the cost
of his defense” after Salazar ceased representing him in January 2008. Incurring the
costs of his defense constitutes actual damages, and Rinek does not allege he suffered
other actual damage after January 2008, when he was forced to retain new counsel and
was “cut off from communication” with Salazar.
Second, Rinek cannot show his claim for legal malpractice was tolled until
December 2010 because he was, until then, under a legal or physical disability restricting
his ability to commence legal action against Salazar (§ 340.6, subd. (a)(4)). The “legal
and physical” disabilities sufficient to toll a claim for legal malpractice are those
impediments to a plaintiff’s ability to institute a suit that otherwise act to toll statutes of
limitations, such as absence of the defendant from California (§ 351), his minority or
insanity (§ 352, subd. (a)), the existence of a state of war (§ 354), and the existence of a
prohibitive injunction (§ 356). (Jocer Enterprises, Inc. v. Price (2010) 183 Cal. App. 4th
559, 570; see Bledstein v. Superior Court (1984) 162 Cal. App. 3d 152, 161-166.) Rinek
neither alleges nor asserts on appeal the existence of any such impediment: he states
(without citation to the record) only that “there was no practical way to proceed against
Salazar or to obtain any discovery” until the wrongful termination action settled. The
lack of a “practical way to proceed” does not rise to the threshold of a legal or physical
impediment. (Cf. Jocer Enterprises, at p. 570.)
Rinek’s reliance on Johnson v. Haberman & Kassoy (1988) 201 Cal. App. 3d 1468
as support for his argument that his legal malpractice claim was tolled is misplaced. In
Johnson, the issue was whether the defendant attorneys owed a continuing duty to the
plaintiff’s limited partner, because there existed “continuing representation” within the
tolling provisions of section 340.6, subdivision (a)(2) (Johnson, at p. 1475), a provision
Rinek does not attempt to invoke. Moreover, in Johnson, the attorneys first represented
the plaintiff, then undertook to represent the general partners, but never formally
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withdrew from their representation of the limited partner or obtained a written waiver
from him authorizing their simultaneous representation of the general partners. (Id. at
pp. 1475-1476.) The Johnson court held that, under the circumstances of that case, the
attorneys were estopped from asserting their representation of the plaintiff did not
continue and, accordingly, the statute of limitations was tolled while the plaintiff
continued to believe during the tolling period that the defendant attorneys were
supposedly protecting his interests and the “plaintiff neither discovered nor should have
discovered the attorneys’ wrongdoing” years after he acted to his detriment on the
attorneys’ advice. (Id. at p. 1478; see id. at pp. 1471-1473, 1475.) Here, Salazar
formally withdrew from representing Rinek in January 2008. Rinek could not thereafter
have believed Salazar was acting to protect his interests, so as to toll the statute. Johnson
is inapposite.
III
Rinek’s Fraud Claim is Time-Barred
The limitations period for a cause of action for fraud is three years (§ 338, subd.
(d)). Rinek alleges Salazar entered into an attorney-client relationship with him under
false pretenses in September 2007. Salazar falsely stated he would “jointly and ethically
represent Rinek” when he never intended to do so, and concealed his intention in advance
of the parties’ October 2007 meeting to tender Rinek’s defense to Rinek’s insurance
carrier. The court found that Rinek’s complaint, filed three years and one month after
Salazar ceased to represent Rinek, was outside the statute of limitations.
Rinek argues on appeal that there “is no basis to conclude on demurrer that Rinek
was aware of the tender, what it meant or how it interrelated to the previously signed
joint representation agreement” until December 2010. As we explained above, the
allegations indicate strongly that Rinek learned of the tender soon after it had been made.
But even were that not the case, a plaintiff whose complaint for fraud shows on its face
10
that his claim is barred must specifically plead facts showing when and how he
discovered the facts underlying his claim, and his inability to have made discovery earlier
despite reasonable diligence. (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal. 4th 797,
807-808.) The plaintiff bears the burden of establishing diligence; conclusory allegations
will not suffice to withstand a demurrer. (Ibid.) Rinek fails in this. Specifically, he does
not allege why he could not have learned the reason Salazar no longer represented him in
October 2007 after Salazar tendered the defense to Rinek’s insurance carrier and, in any
event, why he could not have learned about the tender from the new attorney that began
representing him in January 2008.
Finally, Rinek makes no attempt to argue on appeal that the trial court abused its
discretion by not granting leave to amend or to identify on appeal any additional facts he
would plead were he given an opportunity to amend his operative complaint. (Total Call
Internat., Inc. v. Peerless Ins. Co. (2010) 181 Cal. App. 4th 161, 166 [to successfully argue
on appeal that the trial court abused its discretion by not granting leave to amend,
plaintiff has burden to enumerate new facts that would be pleaded in an amended
complaint].)
Accordingly, we conclude the trial court did not err in sustaining the demurrer
without leave to amend.
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DISPOSITION
The judgment is affirmed. Salazar shall recover costs on appeal. (Cal. Rules of
Court, rule 8.278(a)(1), (2).)
HULL , Acting P. J.
We concur:
MAURO , J.
DUARTE , J.
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