Case Name:   Brooks Griffin v. Richard Schramm, et al.

 

Case No.:       1-13-CV-244673

 

Motion by Defendant Richard Schramm for Summary Judgment on Complaint of Plaintiff Brooks Griffin

 

Plaintiff asserts a single cause of action for malicious prosecution.

 

I.          Factual and Procedural Background

 

As alleged in the complaint, Plaintiff is one of the owners of Tax Reducers, Inc. (“TRI”).  In March 2005, Harold Bain, who had performed services for TRI, filed a claim with the California Division of Labor Standards Enforcement, asserting that he had been an employee of TRI and that TRI owed him $7,700 in unpaid wages. TRI disputed Bain had been an employee.  In May 2006, the DLSE issued a decision in favor of Bain and against TRI.

 

TRI filed a timely appeal in Santa Clara County Superior Court (“Underlying Action”).  Defendant represented Bain in the lawsuit.  As required by law, TRI posted a bond in court equal to the amount awarded by the DLSE.  In December 2006, Bain and TRI reached a settlement, read into the court record.  Pursuant to the settlement, the parties stipulated that the court could release the proceeds of the bond to TRI.  The settlement was never fully finalized due to disputes between the parties.

 

The court dismissed the Underlying Action on February 8, 2007.  In May 2008, Bain, again represented by Defendant, filed a second lawsuit against TRI in Santa Clara County Superior Court (“Second Underlying Action”).  On September 14, 2010, Defendant amended the complaint in the Second Underlying Action to bring in Plaintiff as a defendant. On January 21, 2011, Plaintiff filed a motion for summary judgment, which the court granted on April 13, 2011.  The Second Underlying Action proceeded to trial against TRI, and on August 15, 2011, the court entered judgment in favor of Bain and against TRI.  On October 13, 2011, TRI filed a notice of appeal. On October 14, 2011, Bain filed a notice of cross-appeal.

 

By motion pursuant to Code of Civil Procedure section 579, on January 9, 2012, Plaintiff obtained entry of a separate judgment against Bain based upon the summary judgment ruling.  On March 5, 2012, Bain filed a notice of appeal from that judgment.

 

On August 28, 2013, the Sixth District Court of Appeal, in a published opinion (later decertified), found Bain “failed to provide this court with an adequate record of the proceedings on [Plaintiff]’s summary judgment motion and provides no argument or authority regarding that motion. We therefore conclude that Bain has forfeited any claim of error related to the order on [Plaintiff]’s motion for summary judgment.” The appellate court further held “that [Plaintiff] was not an employer and could not be held personally liable for failing to pay Bain’s wages.” Remittitur issued on December 16, 2013.

 

Plaintiff alleges in this action that Defendant acted without probable cause in filing and prosecuting the Second Underlying Action against Plaintiff.  Plaintiff claims that Defendant knew that there were no grounds for alleging Plaintiff’s personal liability under the settlement agreement and for conversion of the bond money paid by the court to TRI.  Plaintiff further claims that Defendant acted maliciously in filing and prosecuting the Second Underlying Action against Plaintiff and that as a result of Defendant’s prosecution of the Second Underlying Action Plaintiff sustained damages.

 

On August 6, 2013, Defendant filed a demurrer and motion to strike portions of the complaint. On September 10, 2013, the court (Hon. Kirwan) overruled the demurrer and denied the motion to strike.  On April 9, 2014, Defendant filed his answer to the complaint. On May 15, 2014, Defendant filed this motion for summary judgment on Plaintiff’s complaint.

 

II.        Evidence

 

The requests by Defendant and by Plaintiff for judicial notice are GRANTED.  The court may take judicial notice of the existence of court records, but not necessarily the truth of any matters asserted therein.  (See Evid. Code, §452, subd. (d); People v. Woodell (1998) 17 Cal.4th 448, 455.)

 

III.       Analysis of the Statute of Limitations and Tolling

 

Defendant contends that since Plaintiff obtained judgment against Bain on January 9, 2012, but did not commence this action until April 12, 2013, more than one year later, Plaintiff’s claim is thus barred by the statute of limitations found at Code of Civil Procedure section 340.6:

 

(a)  An action against an attorney for a wrongful act or omission, other than for actual fraud, 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. In no event shall the time for commencement of legal action exceed four years except that the period shall be tolled during the time that any of the following exist:

(1)  The plaintiff has not sustained actual injury;

(2)  The attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred;

(3)  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)  The plaintiff is under a legal or physical disability which restricts the plaintiff’s ability to commence legal action.

 

[See also Quintilliani v. Mannerino (1998) 62 Cal.App.4th 54—where alleged breach of fiduciary duty arises out of attorney-client relationship, section 340.6 also applies; see also Vafi v. McCloskey (2011) 193 Cal.App.4th 874, 881—“Based on its plain language, section 340.6 applies to all actions, except those for actual fraud, brought against an attorney ‘for a wrongful act or omission’ which arise ‘in the performance of professional services.’ [Citations.] There is no language in the statute which exempts malicious prosecution claims from the limitations period.”]

 

“The cause of action [for malicious prosecution] accrues at the time of entry of judgment in the underlying action in the trial court.” (Rare Coin Galleries, Inc. v. A-Mark Coin Co., Inc. (1988) 202 Cal.App.3d 330, 334 – 335 (Rare Coin).)  However, “the pendency of an appeal from the judgment in the underlying action prevents the maintenance of a malicious prosecution action based on that judgment.  [Citation.]   Therefore, the statute of limitations runs from accrual upon entry of judgment until the date of filing of notice of appeal.  [Citation.]  The statute is then tolled until the conclusion of the appellate process, at which time it commences to run again. [Citation.]”  (Rare Coin, supra, 202 Cal.App.3d at p. 335.)

 

Defendant takes issue with the holding in Rare Coin and argues that the tolling provisions set forth in Code of Civil Procedure section 340.6 are exclusive and contain no provision expressly referring to tolling for appeals.  Defendant relies, in part, on Laird v. Blacker (1992) 2 Cal.4th 606, 618 (Laird), where the California Supreme Court wrote:

 

“Section 340.6, subdivision (a), states that ‘in no event’ shall the prescriptive period be        tolled except under those circumstances specified in the statute.  Thus, the Legislature      expressly intended to disallow tolling under any circumstances not enumerated in the       statute.”

 

Based on that statement, subsequent courts have refused to apply the doctrine of equitable tolling to claims against attorneys. (See Gordon v. Law Offices of Aguirre & Meyer (1999) 70 Cal.App.4th 972.)

 

In Bledstein v. Superior Court (1984) 162 Cal.App.3d 152, 162 (Bledstein), the appellate court determined that the tolling provisions in section 340.6 describe the exclusive circumstances under which the limitation periods in the section are tolled.  The court nonetheless concluded that the Legislature, in enacting the fourth tolling provision of section 340.6 concerning legal and physical impediments to a plaintiff’s ability to institute a suit, incorporated tolling provisions found elsewhere such as absence of the defendant from California (§ 351), minority and insanity (§ 352, subd. (a)), the existence of a state of war (§ 354), and the existence of a prohibitive injunction (§ 356). The court reasoned that the broad terms of the fourth tolling provision encompass the circumstances described in the general tolling provisions. (Bledstein, supra, 162 Cal.App.3d at p. 162; see also Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559—fourth tolling provision of section 340.6 tolls claim while defendant attorney absent from California (physical impediment).)

 

By its terms, the fourth tolling provision of section 340.6 tolls a claim where a “legal disability … restricts the plaintiff’s ability to commence legal action.”  The court in Drummond v. Desmarais (2009) 176 Cal.App.4th 439, 457, wrote, “ ‘[a] malicious prosecution action will not lie while an appeal from the judgment in the underlying action is pending.’  [Citation.]  So long as the appeal is pending, the plaintiff cannot truthfully allege a termination of the action, and a malicious prosecution action is ‘premature.’ [Citation.]”

 

The Drummond court follows the holding in Rare Coin: that an appeal tolls the statute of limitations on a malicious prosecution claim.  “The accrual of a cause of action presupposes that all of the elements necessary to that cause of action have come into existence. [Citations.]  The law thus necessarily views the plaintiff as able to plead and prove, at the moment judgment is entered, a favorable termination of the underlying action, despite the pendency, or potential pendency, of an appeal.  However, the filing of an appeal tolls the statute until the appeal is concluded. [Citation.]  This means that the time between entry of judgment and filing of the appeal counts against the limitations period.” (Drummond, supra, 176 Cal.App.4th at pp. 457 – 458.)

 

Thus, the rule tolling a malicious prosecution claim based on an appeal (Rare Coin) and the rule of exclusivity (Laird) are reconciled by treating the appeal as a legal disability restricting a plaintiff’s ability to commence and maintain a malicious prosecution action. Since the appeal acts as a legal impediment, a malicious prosecution claim is tolled under the express provisions of section 340.6.

 

The statute ran for only two months after it accrued with the January 9, 2012 judgment before it was tolled by the notice of appeal filed March 5, 2012. By the time the remittitur issued on December 16, 2013, Plaintiff had already filed the complaint.  Accordingly, Defendant’s motion for summary judgment is DENIED.

 

IV.       Plaintiff’s Request for Sanctions

 

Plaintiff asks the court to impose sanctions on Defendant pursuant to Code of Civil Procedure section 1008, subdivision (d) which states, “A violation of this section may be punished as a contempt and with sanctions as allowed by Section 128.7.”  Specifically, Plaintiff contends this motion is a veiled motion for reconsideration of this court’s ruling on demurrer because the arguments asserted in this motion for summary judgment are the same ones made by Defendant on demurrer and rejected by the court in overruling the demurrer. However, the sustaining of a demurrer is not the same as the granting of a motion for summary judgment, as shown by the authorities cited by Defendant.  Plaintiff’s request for sanctions is DENIED.