Adams v. Paul

In Adams v. Paul (1995) 11 Cal.4th 583, a probate law firm failed to advise the decedent's widow the statute of limitations would expire on her wrongful death action one year after the issuance of letters of administration. Relying on advice the lawyer did provide regarding when she could file an action as to claims against the estate itself, she waited too long to file her wrongful death action. The estate filed a summary judgment motion based on the statute of limitations in the wrongful death action. Another attorney represented the widow and opposed summary judgment, claiming the estate was estopped from raising this defense. The trial court denied summary judgment on other grounds and over a year later the parties settled the wrongful death suit. Less than a year after the settlement of the wrongful death action, the widow-client filed a legal malpractice action against the probate lawyer. This was almost six years after she belatedly filed the wrongful death action, almost seven years after the statute of limitations expired on the wrongful death action, and over two years after the probate lawyer filed a document in the summary judgment motion conceding his malpractice. The trial court sustained the probate attorney's demurrer, holding the client had suffered "actual injury" when the statute of limitations expired on her wrongful death lawsuit, nearly seven years before she filed her legal malpractice action.The appellate court affirmed, but picked a different time of "actual injury" - the date when the client engaged counsel to oppose the summary judgment motion. The Supreme Court accepted the case, in part to resolve a conflict in appellate decisions - Finlayson v. Sanbrook having decided actual injury occurred at the time the statute expired in the underlying action and Pleasant v. Celli finding the injury was not actual until the trial court dismissed the underlying action on grounds the statute had expired. The appellate court in Adams having selected yet a third date, the high court stepped in. The Supreme Court first discussed the "classic" missed statute situation, which it defined as one "in which the attorney negligently fails to file the underlying lawsuit within the applicable statutory period and does nothing further." That is, neither the malpracticing attorney nor the client seeks to file the lawsuit or challenge the demise of the claim. In that instance, the client has suffered "actual injury" at the moment the statute expired because he or she has lost the benefit he or she could have gained through the lawsuit. As the Supreme Court explains it, "the right and/or remedy of recovery on the action has been substantially impaired." In other words, the client has a complete legal malpractice cause of action at that moment, including the damages element of that claim, e.g., the lost opportunity to recover damages in the law suit the lawyer's malpractice now bars the client from pursuing. The Supreme Court then turned to the many variations and permutations on the theme of the "classic" missed statute scenario and explained why oftentimes those more complex fact situations could result in "actual" not just threatened future harm first occurring after the statute expired but before a final judgment or settlement occurs in the underlying action. Accordingly, it rejected the "bright line" rule announced in Pleasant v. Celli requiring a final resolution of the underlying action where the client attempts to rectify the lawyer's malpractice and pursue that underlying action anyway. Ultimately, the high court remanded the case before it to the trial court with the admonition neither Finlayson nor the Court of Appeal's decision in Adams comported with "the rule we reaffirm that actual injury is generally a question of fact." Among other possible points of "actual injury" the Supreme Court instructed the appellate court to consider whether such injury occurred when the underlying statutory period expired, or when the client first opposed the limitations defense, or not until the date of the settlement. "The court may . . . determine . . . the point at which the fact of damage became palpable and definite even if the amount remained uncertain, taking into consideration all relevant circumstances." (Adams v. Paul, supra, 11 Cal.4th at p. 593.)