Terri Block v. The Law Offices Of Ben F. Barcus & Associates, Pllc ( 2015 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
TERRI BLOCK, as guardian of SARAH No. 71742-1-1
BLOCK,
DIVISION ONE
Appellant,
v.
THE LAW OFFICES OF BEN F. UNPUBLISHED
BARCUS & ASSOCIATES, PLLC, a
Washington professional limited liability FILED: July 27, 2015
company; BEN F. BARCUS and JANE
DOE BARCUS, individually and the
marital community comprised thereof;
LEGGETT & KRAM, a Washington
partnership; PETER KRAM and JANE
DOE KRAM, individually and the marital
community comprised thereof,
Respondents.
Cox, J. — Terri Block appeals the summary judgment dismissal of her
claims for breach of fiduciary duty and legal malpractice against Ben F. Barcus,
Peter Kram, their respective marital communities, and the respective law firms
with which each lawyer is associated. Her claims accrued more than three years
before she commenced this action. The applicable statutes of limitations were
not tolled. And there are no genuine issues of material fact regarding her
equitable tolling and estoppel claims. We affirm.
No. 71742-1-1/2
Terri Block brought this action as the guardian of her daughter Sarah
Block. Sarah1 was severely injured in a September 12, 2005 car accident. That
same month, Terri entered into a fee agreement with Ben Barcus and his law firm
(collectively "Barcus") to represent Sarah in litigation related to her car accident.
Later that same month, Terri also entered into a fee agreement with Peter Kram
and his law firm (collectively "Kram") to serve as the attorney for Sarah's
guardianship. Barcus introduced Kram to Block.
By December 2005, Barcus obtained substantial settlements on Sarah's
behalf from uninsured motorist claims against an insurer. In March 2006, the trial
court entered an order approving a petition for disbursement of fees from the
settlement fund. Early the following month, fees were disbursed to counsel
based on this order.
Over seven years later, on May 3, 2013, Block commenced this action.
She alleged four main claims. First, she sought to void the 2005 fee agreement
with Barcus on the basis that he allegedly breached fiduciary duties to Sarah.
Second, she sought a determination of the reasonableness of the attorney fees
paid to Barcus in 2006. Third, she sought forfeiture or disgorgement of fees
based on alleged misconduct of Barcus and Kram. Fourth, she claimed legal
malpractice based on Kram's alleged negligence in representation.
Both Barcus and Kram moved for summary judgment dismissal on statute
of limitations grounds. The court granted their motions and dismissed Block's
claims in their entirety. The court also denied Block's motion for reconsideration.
Block appeals.
1 Due to the similarity in names, we use first names for clarity.
2
No. 71742-1-1/3
STATUTES OF LIMITATIONS
Block argues that the trial court applied the wrong statutes of limitations to
her claims. We disagree.
Summary judgment is appropriate when no genuine issue of material fact
exists and the moving party is entitled to judgment as a matter of law.2 When
reviewing a summary judgment decision, the court looks at the facts in the light
most favorable to the non-moving party.3
This court reviews de novo a grant of summary judgment.4 This court also
reviews de novo whether a statute of limitations bars a claim.5
Block's First and Third Claims
Block argues that a six-year statute of limitations applies to her first and
third claims. She is wrong.
Claims against an attorney for breach of fiduciary duty fall under RCW
4.16.080's three-year statute of limitations.6
Block's first and third claims are for breach of fiduciary duty.
2 Camicia v. Howard S. Wright Constr. Co., 179 Wn.2d 684, 693, 317 P.3d
987(2014).
3 Ruvalcaba v. Kwanq Ho Baek. 175Wn.2d 1, 6, 282 P.3d 1083 (2012).
4 Camicia, 179 Wn.2d at 693.
5 Bennett v. Computer Task Grp.. Inc.. 112 Wn. App. 102, 106, 47 P.3d 594(2002).
6 Mervhew v. Gillinqham. 77 Wn. App. 752, 755, 893 P.2d 692 (1995).
No. 71742-1-1/4
Block's complaint labels her first claim as a claim for "voiding the
contingency fee agreement" entered into with Barcus.7 Her complaint alleges
that Barcus and Kram owed her fiduciary duties, including duties to disclose
conflicts of interests. She alleges that Barcus and Kram violated their "duties of
disclosure to [Block] as required by RPC [Rules of Professional Conduct] 1.4 and
1.5."8 She also alleges that Barcus and Kram violated RPCs 1.7 and 1.8. Based
on these violations, Block seeks to void her fee agreement with Barcus.
Because Block's claim is based on alleged violations of fiduciary and
ethical duties, it is a claim for breach of fiduciary duty. This court has recognized
that a trial court may "properly consider[] the RPCs to determine whether [an
attorney] breached his fiduciary duty."9 But the relevant cause of action is for
breach of fiduciary duty, not for violation of the RPCs. The fact that Block seeks
voiding of the fee agreement as a remedy does not transform her breach of
fiduciary duty claim into something else. Accordingly, the three-year statute of
limitations for breach of fiduciary duty applies to this claim.
Block's complaint labels her third claim as one for disgorgement of fees.
She alleges that Barcus and Kram violated multiple RPCs, and seeks
disgorgement of fees on that basis.
This claim, like Block's first claim, is for a breach of fiduciary duties.
"Under Washington law, disgorgement of fees is a remedy"—not a cause of
7 Clerk's Papers at 11.
8 id, at 12.
9 Cotton v. Kronenberq. 111 Wn. App. 258, 266, 44 P.3d 878 (2002).
No. 71742-1-1/5
action.10 And it is clear that her cause of action sounds in the alleged breach of
fiduciary duties under the RPCs. Thus, Block's characterization of this claim as
something other than a remedy is unpersuasive. Because Block seeks
disgorgement as "sanctions for breaches of fiduciary duty," the three-year statute
of limitations for breach of fiduciary duty applies.
Here, the order approving the disbursement of funds to pay fees was
entered in March 2006. That is when these claims accrued for purposes of the
three-year statute. Yet, she did not commence this action until May 2013. Thus,
Block's claims are barred as untimely.
Block argues that a six-year statute of limitations applies to her first and
third claims because they are based on the breach of a written contract. Under
RCW 4.16.040(1), parties have six years to commence "[a]n action upon a
contract in writing, or liability express or implied arising out of a written
agreement." But this statute does not apply to Block's claims.
This court has stated that RCW 4.16.040 applies to "liabilities which are
either expressly stated in a written agreement or which follow by natural and
reasonable implication from the promissory language of the agreement, as
distinguished from liabilities created by fictional processes of the law or imported
into the agreement from some external source."11
10 Bertelsen v. Harris, 537 F.3d 1047, 1057 (9th Cir. 2008) (emphasis added).
11 Davis v. Davis Wright Tremaine. LLP, 103 Wn. App. 638, 651, 14 P.3d 146(2000) (quoting Bicknell v. Garrett, 1 Wn.2d 564, 570-71, 96 P.2d. 592 (1939)).
No. 71742-1-1/6
In this case, the "contractual terms" that Barcus allegedly violated do not
come from the terms of the fee agreement. Rather, as pleaded, they come from
an external source—the RPCs.
Block argues that RPC 1.5's prohibition on charging an unreasonable fee
is "implied in literally every attorney's fee agreement in Washington."12 But even
if we believed that Block is correct, which we do not, the RPCs would be terms
"imported into the agreement from some external source."13 Thus, a claim for the
violations of the RPCs would not fall under the six-year statute of limitations.
Additionally, the RPCs apply to all attorney-client relationships, regardless
of whether the attorney and client have a written contract.14 RCW 4.16.040
applies specifically to claims arising from written agreements.15 For these
reasons, this argument is unpersuasive.
Block also argues that her claims were timely under the continuous
representation rule. Under this rule, clients' claims against their attorneys are
tolled "during the lawyer's representation of the client in the same matter from
which the malpractice claim arose."16 But even if Block's argument were correct,
which it is not, her claims would still be untimely under a three-year statute of
limitations because more than three years passed between the end of Barcus's
12BriefofAppellantat26.
13 Davis. 103 Wn. App. at 651.
14 See RPC Scope [17].
15 RCW 4.16.040.
16 Janicki Logging & Const. Co. v. Schwabe. Williamson & Wvatt. P.C.. 109
Wn. App. 655, 664, 37 P.3d 309 (2001).
6
No. 71742-1-1/7
representation and when Block commenced her suit. Barcus sent Block a letter
withdrawing from her representation on July 29, 2008. Block did not commence
her suit until May 2013. Thus, we do not consider this argument any further.
Block's Second Claim
Block's second claim is for a "determination of reasonableness of attorney
fees under quantum meruit."17 This claim is dependent upon the voiding of the
fee agreement under the Block's first claim. Block alleges that "[w]ith the voiding
of the Barcus contingency fee agreement, Barcus' remedy for compensation is
under the doctrine of quantum meruit."18 Because Block's first claim is time-
barred, we need not address her request for a determination of reasonable
attorney fees.
Additionally, to the extent that Block challenges the reasonableness of
Barcus's fees, RCW 4.24.005 bars her claim.
Under RCW 4.24.005, a party has 45 days to challenge the
reasonableness of attorney fees in a tort case. That statute reads: "Any party
charged with the payment of attorney's fees in any tort action may petition the
court not later than forty-five days of receipt of a final billing or accounting for a
determination of the reasonableness of that party's attorneys' fees."19 This court
17 Clerk's Papers at 13.
18 id,
19 RCW 4.24.005.
No. 71742-1-1/8
has held that this statute functions as a 45 day statute of limitations on claims
that an attorney charged an unreasonable fee.20
In this case, the guardianship court approved the fees Barcus and Kram
received in an order entered March 31, 2006. At this time, Barcus presented an
accounting of the fees and costs it charged, and the fees it paid to others,
including Kram. But Block did not commence this action until May 2013, over
seven years later. Thus, she failed to timely challenge the reasonableness of the
fees.
Block's Fourth Claim
Block argues that the court incorrectly determined that her legal
malpractice claim against Kram was barred by the three-year statute of
limitations for legal malpractice. We disagree.
"In Washington, the statute of limitations period for a legal malpractice
claim is three years."21 This period begins to run "when the plaintiff has a right to
seek legal relief," meaning that the plaintiff "know[s] the facts that give rise to that
cause of action."22
One element of legal malpractice is an attorney-client relationship.23
20 Barrett v. Freise. 119 Wn. App. 823, 848-50, 82 P.3d 1179 (2003).
21 Cawdrev v. Hanson Baker Ludlow Drumheller. P.S.. 129 Wn. App. 810,
816, 120 P.3d 605 (2005).
22 id, at 816-17.
23 Schmidt v.Coogan. 181 Wn.2d 661, 665, 335 P.3d 424 (2014).
8
No. 71742-1-1/9
Generally, the attorney-client relationship ends if the client hires a new attorney.24
Here, Block's fourth claim for relief expressly states that it is for legal
malpractice. She acknowledges that this claim is subject to a three-year statute
of limitations.
It is undisputed that Block replaced Kram with another attorney in 2008.
After that point, Kram no longer had an attorney-client relationship with Block.
Thus, after that point, Kram could no longer commit legal malpractice.
Accordingly, the statute of limitations began to run in November 2008, at the
latest. Because Block did not commence this action until 2013, she failed to
timely bring this malpractice claim.
Block argues that her claim against Kram was timely for two reasons.
First, Block argues that the statute of limitations began to run in February 2012,
when Kram filed a declaration in court opposing Block's suit against Barcus. In
the alternative, Block argues that the statute of limitations began to run in
November 2011, when Kram provided a copy of Block's file to Block's new
attorney. Neither argument is persuasive.
Block relies on RPC 1.9 to argue that Kram committed malpractice in
2012. That rule sets forth the duties that lawyers owe to former clients.25 This
argument fails for two reasons.
2416 David K. DeWolf & Keller W. Allen, Washington Practice: Tort Law
And Practice § 16:29 at 719 (4th ed. 2013).
25 RPC 1.9.
No. 71742-1-1/10
First, Washington's RPCs state that "principles of substantive law external
to these Rules determine whether a client-lawyer relationship exists."26 Thus,
Block cannot use an RPC to establish that she still had an attorney-client
relationship with Kram. Accordingly, her attorney-client relationship with Kram
ended in 2008, when she hired substitute counsel.
Second, our RPCs state that a "[violation of a [RPC] should not itself give
rise to a cause of action against a lawyer nor should it create any presumption in
such a case that a legal duty has been breached."27 Thus, Block also cannot rely
on a violation of the RPCs as a cause of action against Kram.
Block also argues that the statute of limitations on her claim did not begin
to run until November 2011. Block argues that Kram refused to provide Block his
file on her case until that date. But Block's citation to the record demonstrates
only that he refused to provide her a copy at his expenses, under the terms of
their retainer agreement. He offered to allow her to look over the case file or to
make a copy at her expenses. Thus, this argument is unpersuasive.
TOLLING
Block next argues that the statutes of limitations on all of her claims were
tolled under various doctrines. We disagree with all of her arguments.
RCW 4.16.190
Block argues that RCW 4.16.190 indefinitely tolled all four of her claims.
We disagree.
26 RPC Scope [17].
27 id, at [20].
10
No. 71742-1-1/11
RCW 4.16.190 tolls statutes of limitations for a person who is "disabled to
such a degree that he or she cannot understand the nature of the proceedings."
This tolling applies even ifthe person has a guardian.28
But this statute does not apply to actions under TEDRA (the Trust and
Estate Dispute Resolution Act) if the person has a guardian. Under TEDRA:
The tolling provisions of RCW 4.16.190 apply to this chapter
[TEDRA] except that the running of a statute of limitations under
subsection (1) or (2) of this section, or any other applicable statute
of limitations for any matter that is the subject of dispute under this
chapter, is not tolled as to an individual who had a guardian ad
litem, limited or general guardian of the estate, or a special
representative to represent the person during the probate or
dispute resolution proceeding.1291
Thus, when a person has a guardian ad litem or general guardian, his or
her claims are not tolled for matters that are the subject of dispute under
TEDRA.
It is undisputed that Sarah is severely disabled. It is also
undisputed that a guardian represented her. Thus, if this case is a "matter
that is the subject of dispute under" TEDRA, Block's claims, brought on
behalf of Sarah, were not tolled. But if the claims did not fall under
TEDRA, her claims were tolled, and she timely filed this action, regardless
of the statute of limitations. Thus, the dispositive question is whether this
matter falls under TEDRA.
28 Young v. Key Pharmaceuticals. Inc.. 112 Wn.2d 216, 220, 770 P.2d. 182
(1989).
29 RCW 11.96A.070(4) (emphasis added).
11
No. 71742-1-1/12
The purpose of TEDRA "is to set forth generally applicable statutory
provisions for the resolution of disputes and other matters involving trusts
and estates."30
RCW 11.96A.030(2) states that under TEDRA, "'Matter' includes
any issue, question, or dispute involving: . . . (c) The determination of any
question arising in the administration of an estate or trust." This court has
held that "[t]he plain words of this definition of 'matter' make clear the
broad scope of this term."31
Here, we note that Block's complaint cites TEDRA. She expressly
alleges that subject matter jurisdiction exists "under the statutes . . .
including but not limited to, RCW 11.96A.020 and 11.96A.040."32 And we
conclude that Block's claims fall under TEDRA's broad definition of
"matter."
This case involves the administration of Sarah Block's guardianship
estate and special needs trust. Block's complaint alleges that the
guardianship court did not properly approve Barcus's fee agreement. It
also alleges that the guardian ad litem failed to properly evaluate Barcus's
fees. Similarly, the complaint alleges that the guardianship court failed to
determine whether Barcus's fees were reasonable. The complaint also
30RCW11.96A.010.
31 In re Estate of Bernard. 182 Wn. App. 692, 722, 332 P.3d 480, review
denied. 339 P.3d 634 (2014).
32 Clerk's Papers at 3.
12
No. 71742-1-1/13
alleges that Barcus improperly paid himself fees directly from a settlement
instead of first placing the funds in Sarah's trust.
Thus, this case involves "questions] arising in the administration of
Sarah Block's guardianship estate and special needs trust. Accordingly, it
is a "matter" under TEDRA's broad definition of that term.
Additionally, Block's complaint cites TEDRA several times. She
cites TEDRA as one ground for jurisdiction and venue. And her complaint
seeks attorney fees under TEDRA. Thus, while Block now claims that
TEDRA does not apply to this case, that claim is inconsistent with her own
assertions when she commenced this action.
Block argues that TEDRA's exception to RCW 4.16.190 does not apply to
her case for several reasons.
First, Block argues that her case does not fall under TEDRA because she
did not allege a cause of action contained in TEDRA's RCW chapter. But as
explained earlier, TEDRA has a broad scope, and this case falls within it.
Second, Block argues that no statute of limitations contained in TEDRA
controls in this case. Thus, Block argues that TEDRA's tolling exemption does
not apply to her case.
But the exemption—RCW 11.96A.070(4)—tolls "any other applicable
statute of limitations."33 This plain language does not limit its application to
statutes of limitation contained in TEDRA. Instead, if "any matter" is disputed
33RCW11.96A.070(4).
13
No. 71742-1-1/14
under TEDRA, the tolling exception applies to any applicable statute of
limitations.
Third, Block argues that Sarah was not represented during a probate or
dispute resolution proceeding, thus RCW 11.96A.070(4) does not apply. But
RCW 11.96A.070(4) applies to "individual[s] who had a guardian ad litem, limited
or general guardian of the estate, or a special representative to represent the
person during the probate or dispute resolution proceeding."34 Because
there is no comma after "special representative," the phrase "to represent the
person during the probate or dispute resolution proceeding" modifies only that
term.35 Thus, the tolling exception applies whenever an individual is represented
by a guardian ad litem or a general guardian—it is not necessary that the
guardian represent the individual in a probate or dispute resolution proceeding.
Block also argues that if TEDRA prevents the tolling of her claims under
RCW 4.16.190, then it is unconstitutional. She is mistaken.
Block argues that not tolling her claims would be unconstitutional under
article I, section 12 of the Washington constitution. That section prohibits
granting "any citizen, class of citizens, or corporation other than municipal,
privileges or immunities which upon the same terms shall not equally belong to
34 jd, (emphasis added).
35 Id.14
No. 71742-1-1/15
all citizens, or corporations."36 To support this claim, she relies on Schroeder v.
Weiqhall.37
In that case, the supreme court held that an exception to RCW4.16.190's
tolling was unconstitutional. Under the exception at issue, medical malpractice
claims were not tolled under RCW 4.16.190.38 The supreme court held that this
tolling exemption "place[d] a disproportionate burden on the child whose parent
or guardian lacks the knowledge or incentive to pursue a claim on his or her
behalf."39 The court also noted that it unconstitutionally granted a benefit—
limited liability—to medical malpractice defendants.40
The present case is distinguishable. First, TEDRA's tolling exception only
applies to those "who had a guardian ad litem, limited or general guardian of the
estate, or a special representative."41 Thus, it only applies to those whose
interests were represented. Accordingly, unlike Schroeder. the tolling exception
does not burden a "particularly vulnerable population."42
Second, TEDRA's tolling exception does not benefit any particular class of
defendants. In Schroeder, the exception singled out medical malpractice claims,
36 Const, art. I, § 12.
37179 Wn.2d 566, 316 P.3d 482 (2014).
38 RCW 4.16.190(2).
39 Schroeder. 179 Wn.2d at 578-79.
40 id, at 573-74.
41 RCW11.96A.070(4).
42 Schroeder. 179 Wn.2d at 577.
15
No. 71742-1-1/16
while tolling all other claims.43 Here, in contrast, the tolling exemption applies to
all causes of action.
Thus, because TEDRA's tolling exception does not burden a vulnerable
population or confer a benefit to a particular group, Block's argument is not
persuasive.
In sum, we conclude that TEDRA applies to Block's claims.
Accordingly, Block's claims were not tolled under RCW 4.16.190, and the
statutes of limitations for her claims have run.
Equitable Doctrines
Block argues that she raised genuine questions of material fact whether
equitable doctrines tolled her claims. Specifically, she argues that equitable
tolling or equitable estoppel may apply in her case, depending on contested
facts. We disagree.
"Estoppel is appropriate to prohibit a defendant from raising a statute of
limitations defense when a defendant has 'fraudulently or inequitably invited a
plaintiff to delay commencing suit until the applicable statute of limitation has
expired.'"44 The three elements of equitable estoppel are: First, "an admission,
statement, or act inconsistent with a claim afterward asserted; second, action by
another in reasonable reliance on that act, statement, or admission; and third,
43 id, at 570.
44 Robinson v. City of Seattle. 119 Wn.2d 34, 82, 830 P.2d 318 (1992)
(quoting Del Guzzi Constr. Co. v. Global Northwest. Ltd.. 105 Wn.2d 878, 885, 719
P.2d 120 (1986)).
16
No. 71742-1-1/17
injury to the party who relied ifthe court allows the first party to contradict or
repudiate the prior act, statement, or admission."45
Block's allegations fail to establish that she is entitled to equitable
estoppel. She does not identify any "admission, statement, or act" of the
defendants' that is inconsistent with their current defenses. Additionally, she has
not shown reasonable reliance on her part. Accordingly, there are no genuine
issues of material fact whether Block is entitled to equitable estoppel.
Block also fails to allege facts indicating that equitable tolling applies in
this case. "Equitable tolling is a remedy that permits a court to allow an action to
proceed when justice requires it, even though a statutory time period has
elapsed."46 This doctrine applies only in "narrow circumstances."47 Equitable
tolling requires "bad faith, deception, or false assurances by the defendant and
the exercise of diligence by the plaintiff."48
Here, Block alleges that Barcus and Kram acted in bad faith by being
"instrumental in getting court orders prohibiting her from [filing suit]." Block refers
to a January 2009 order that denied Block's request for the trust to hire an
attorney. In December 2008, Block sought to have the trust pay a $10,000
retainer for an attorney to investigate the reasonableness of Barcus's fees. The
trustee denied this request. In January 2009, the guardianship court then denied
45 id,
46 In re Pers. Restraint of Bonds, 165Wn.2d 135, 141, 196 P.3d 672 (2008).
47 id,
48 id,
17
No. 71742-1-1/18
Block's request to overrule the trustee's decision. Barcus appeared at the
January 2009 hearing to oppose the trust funding the litigation.
Here, even assuming that the defendants acted in bad faith, Block did not
act diligently. Block was aware of the potential issue with Barcus's fees since
2006. In that year, she wrote a letter to Barcus stating that she "w[ould] probably
never be at peace with the huge fees [Barcus] require[d]." Block also contacted
an attorney about investigating the reasonableness of Barcus's fees in 2008. Yet
Block did not commence this action until 2013.
Additionally, although the guardianship court denied Block's request for
the trust to fund the litigation against Barcus, the court noted that Block could
proceed if she retained counsel without using the trust's funds. Block ultimately
did retain counsel at her own expense but not until July 2011. Thus, part of
Block's delay in filing the case was her delay in retaining counsel, at her
expense. Accordingly, Block did not act with reasonable diligence and is not
entitled to equitable tolling of her claims.
We affirm the trial court's summary judgment dismissal of Block's claims.
fox J
WE CONCUR:
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18