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Legal Malpractice Statute of Limitations not extended even if damages caused by lawyer resulted in a smaller settlement after one year.

by | Jun 10, 2016 | Civil Procedure |

lawyer-cartoonA legal malpractice action time-barred where filed more than one year after attorney’s act of negligence but less than one year after plaintiff negotiated a settlement with third parties that was reduced in value due to the attorney’s negligence. Shaoxing City Maolong Wuzhong Down Products, Ltd. v. Keehn & Associates, APC (2015) 238 Cal.App.4th 1031.
A creditor’s challenge to another creditor’s lien was adversely effected when the  debtor declared bankruptcy the creditor’s lawyer missed the deadline to investigate and attack the lien leaving the first creditor with a diminished ability to collect on its own lien.  After counsel hired a settlement was made with the debtor but for less than the full amount of its debt. The creditor sued the first attorneys for malpractice, and filed suit less than one year afer the settlement but more than one year after the missed deadline. The trial court granted summary judgment to the attorneys, concluding it was untimely as a matter of law.

The Court of Appeal (Second Dist., Div. Two) affirmed and rejected plaintiffs’ argument that the statute of limitations was tolled during the period before the settlement, which plaintiff argued was the date of actual injury. What matters is discovery of the fact of damage, not the amount; uncertainty as to the amount of damages does not the toll limitations period; actual injury exists even if the client has yet to sustain all, or even the greater part, of the damages occasioned by his attorney’s negligence, even if the client will encounter difficulty in proving damages and even if that damage might be mitigated or entirely eliminated in the future.  Plaintiffs were actually injured when they lost their right to challenge the second creditor’s lien, not when they later settled for less than the full amount of their debt. “A litigant that seeks to enforce a lien in bankruptcy court suffers actual injury when its negotiating position is weakened by a bankruptcy trustee’s comment that the lien may not be enforceable.”