Filed 10/8/19 Jaramillo v. Baruch CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION THREE

GEORGE JARAMILLO,

Plaintiff and Appellant,

v.

JOEL W. BARUCH et al.,

Defendants and Respondents.

G056411

(Super. Ct. No. 30-2017-00915916)

O P I N I O N
Appeal from a judgment of the Superior Court of Orange County, Melissa R. McCormick, Judge. Affirmed. Respondents’ Request for Judicial Notice. Granted.

Law Office of Edwin B. Brown and Edwin B. Brown for Plaintiff and Appellant.

Hollins & Associates, Byron S. Hollins and Natalie Lahiji for Defendants and Respondents.

* * *

INTRODUCTION

George Jaramillo sued his former attorneys, Joel W. Baruch and the Law Offices of Joel W. Baruch (together, Baruch), for legal malpractice. The question presented by this appeal is whether Jaramillo’s malpractice lawsuit is time barred on the face of the complaint under the one year statute of limitations of Code of Civil Procedure section 340.6 (section 340.6). The trial court concluded the lawsuit was time barred and sustained Baruch’s demurrer without leave to amend. Exercising de novo review (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415), we reach the same conclusion: Jaramillo filed the malpractice lawsuit more than one year after he sustained actual injury from, and had actual or constructive notice of, Baruch’s alleged errors and omissions. We therefore affirm the judgment.

ALLEGATIONS

We accept as true all of the material allegations of Jaramillo’s complaint. (King v. CompPartners, Inc. (2018) 5 Cal.5th 1039, 1049, fn. 2; Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) Jaramillo’s first amended malpractice complaint against Baruch alleged:

Starting in 2005, Jaramillo worked as an independent contractor for Edward P. Grech and his wholly owned limousine and bus manufacturing company, Krystal Enterprises (Krystal). In 2008, with the Great Recession, sales of limousines plummeted, Krystal began losing significant money, and Grech was fearful his company would go bankrupt. In an effort to save Krystal, Jaramillo, who is bilingual, offered to set up and run the assembly of Krystal’s buses and limousines in Mexico. This would save Krystal millions in assembly costs and American regulation compliance.

Grech accepted the offer and agreed to pay Jaramillo an annual base salary with a commission of $500 per limousine and $800 per bus produced in Mexico over the next seven years. Grech also agreed that in November 2011 Jaramillo would become Krystal’s chief executive officer. In reliance on receiving this promised compensation, Jaramillo traveled to Mexico in 2008, completed the legal work necessary to do business there, and “performed all other work needed for Krystal to start manufacturing buses and limousines in Mexico.”

Grech never performed the agreed upon obligations. Grech never intended to pay Jaramillo the promised commissions or to make him chief executive officer of Krystal. Once the Mexico factory was up and running, “Grech no longer needed Jaramillo and simply chose to discard him.”

In September or October of 2011, Jaramillo advised his attorney, Baruch, of Grech’s breach of contract and fraud. Jaramillo had a preexisting retainer agreement with Baruch. Jaramillo asked Baruch “to take all steps necessary to recover Jaramillo’s lost income due to Grech’s breach of contract and fraud.” Baruch agreed. At that time, Jaramillo gave Baruch all of the necessary facts and documents. Baruch determined that Grech had breached the oral contract and may have committed fraud.

Between October 2011 and October 2013, Jaramillo regularly asked Baruch about the status of the lawsuit, and Baruch assured him that he would timely file a complaint against Grech.

On October 1, 2013, Baruch sent a letter to Grech (the Baruch Letter) offering to settle Jaramillo’s claims against him for $650,000. The Baruch Letter pointed out to Grech that he was supposed to have “‘set aside [Jaramillo]’s per-vehicle commission and pa[id] him those proceeds in a lump sum upon his return [in November 2011].’” The Baruch Letter advised Grech that if he did not agree to settle, Baruch would file a complaint by October 29, 2013 “because of the impending statute of limitations.” (Underscoring omitted.) Grech did not respond to the Baruch Letter.

On October 29, 2013, Baruch filed a complaint for damages against Grech (the Grech Complaint). Among other things, the Grech Complaint asserted causes of action for fraud and breach of oral contract. The Grech Complaint alleged Grech had agreed to pay commissions to Jaramillo for limousines and buses manufactured in Mexico but did not allege the commissions were to be paid in a lump sum in November 2011. Jaramillo did not pay the filing fee and was not asked to reimburse Baruch for paying it.

In May 2014, Baruch was substituted out as attorney for Jaramillo and the Law Offices of Steven R. Young replaced them. Young, like Baruch, represented Jaramillo on a contingency basis. The Grech Complaint was amended twice.

Grech moved for summary judgment on the ground the Grech Complaint was time barred under Code of Civil Procedure sections 338, subdivision (d) and 339, subdivision (1). Jaramillo alleged in the malpractice complaint that Grech’s motion for summary judgment did not place him on notice that Baruch had filed the complaint too late because Jaramillo had reasonably relied on Baruch’s assurances that the complaint was timely. Jaramillo opposed Grech’s motion for summary judgment but personally incurred no costs or fees in doing so.

On April 20, 2016, the trial court granted Grech’s motion for summary judgment. The court concluded all of Jaramillo’s causes of action were time barred. The court found that Jaramillo knew of the alleged fraud and breach of contract in September 2009, when the first vehicle was produced in Mexico and he was paid no commission.

Jaramillo alleged two alternate theories of liability against Baruch. First, “[h]ad Baruch filed the Original [Grech] Complaint when Jaramillo retained him in September or October of 2011, but on or before September 2012, the Original [Grech] Complaint could have stated a viable cause of action for fraud that would not have been time-barred.” Second, “[h]ad Baruch pled in the Original [Grech] Complaint the correct date and terms pursuant to which Grech was required to pay the vehicle commissions to Jaramillo as he had done in his demand letter to Grech, namely, on or after November 1, 2011, the Underlying [Grech] Complaint for breach of oral contract and fraud would have been timely filed and Grech’s motion for summary judgment would have been denied.”

As to damages, Jaramillo alleged: “Jaramillo first incurred actual injury on April 20, 2016, the date the court in the Underlying [Grech] Action granted Grech’s summary judgment [motion.] Only then did Jaramillo sustain actual injury, because only then did he lose the right and ability to seek damages from Grech for breach of contract and fraud. Before April 20, 2016, Jaramillo had not incurred any damage as a result of Baruch’s negligence. When Baruch became aware of the decision he offered to appeal it, but ultimately never did.”

PROCEDURAL HISTORY

Jaramillo filed the malpractice complaint against Baruch on April 20, 2017, exactly one year to the day after the trial court granted Grech’s motion for summary judgment. Jaramillo filed the first amended malpractice complaint after the trial court sustained with leave to amend Baruch’s demurrer to the malpractice complaint. Baruch then demurred to the first amended malpractice complaint.

The trial court sustained without leave to amend Baruch’s demurrer to the first amended malpractice complaint on the ground the causes of action asserted in it were time barred under section 340.6. On the issue of discovery, the court found, “[Jaramillo] knew the facts constituting the wrongful act or omission when [Grech] filed his summary judgment motion based on the statute of limitations before April 20, 2016.” On the issue of actual injury, the court found: “[Jaramillo] suffered actual injury when the underlying complaint was not timely filed.” Judgment of dismissal was entered in favor of Baruch. Jaramillo appealed.

Baruch has filed a request that we take judicial notice of Jaramillo’s complaint, first amended complaint, and second amended complaint against Grech, and of the Register of Actions in Jaramillo v. Grech, Orange County Superior Court Case No. 30 2014 00735125. Jaramillo has not filed opposition to the request for judicial notice. We grant the request for judicial notice (Evid. Code, § 452, subd. (d)(1); Cal. Rules of Court, rule 8.252(a)) although we rely only on the Register of Actions in reaching our decision.

DISCUSSION

I.

Jaramillo Sustained Actual Injury When the Statute of Limitations Expired on His Claims Against Grech.

“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.” (§ 340.6, subd. (a).) The time for commencing a lawsuit “in no event shall . . . exceed four years.” (Ibid.) The time period for commencing a lawsuit “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.” (Ibid.)

Under section 340.6, discovery of the facts constituting the wrongful act or omission “initiates the statutory period,” which is thereupon tolled until the plaintiff sustains actual injury. (Adams v. Paul (1995) 11 Cal.4th 583, 589, fn. 2.) Put another way, the statutory period does not run until the plaintiff both discovers the facts and sustains actual injury. “‘Thus, the limitations period is one year from actual or imputed discovery, or four years (whichever is sooner), unless tolling applies.’” (Genisman v. Carley (2018) 29 Cal.App.5th 45, 50.)

The question presented here is when, according to the allegations of the first amended malpractice complaint, did Jaramillo sustain actual damage from the facts constituting the wrongful acts or omissions. Baruch argues, and the trial court found, Jaramillo sustained actual injury when the Grech Complaint was not timely filed, that is, on the day or days on which the causes of action asserted in it became time barred. Jaramillo argues he did not sustain actual injury until the day on which the trial court granted Grech’s motion for summary judgment.

In such “missed statute” cases, the determination of when actual injury occurs is a question of fact unless the facts are undisputed. (Adams v. Paul, supra, 11 Cal.4th at pp. 588 589.) “The number of potential variables, which do not necessarily follow a set pattern, precludes defining the point of harm as a fixed point or event because reasonable application becomes too problematic.” (Ibid.) As we are reviewing a judgment entered after a demurrer was sustained without leave to amend, the facts alleged in the complaint are, by definition, accepted as undisputed and true. (King v. CompPartners, Inc., supra, 5 Cal.5th at p. 1049, fn. 2; see Croucier v. Chavos (2012) 207 Cal.App.4th 1138, 1145 [“courts should sustain demurrers based on section 340.6 in appropriate circumstances”].) We can decide the issue of actual injury as a matter of law.

“The test for actual injury under section 340.6, . . . is whether the plaintiff has sustained any damages compensable in an action, other than one for actual fraud, against an attorney for a wrongful act or omission arising in the performance of professional services.” (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 751 (Jordache).) Specifically, “[i]n the ‘classic’ missed statute situation, in which the attorney negligently fails to file the underlying lawsuit within the applicable statutory period and does nothing further, the plaintiff suffers actual harm at the time the statutory period lapses because, assuming the claim was otherwise viable, the right and/or remedy of recovery on the action has been substantially impaired.” (Adams v. Paul, supra, 11 Cal.4th at p. 589, fn. omitted.)

Jaramillo sustained actual injury when his causes of action against Grech became time barred because, at that point, assuming the claims were otherwise viable, his right to recover was lost or substantially impaired. At that time, Jaramillo as a matter of law had suffered legally cognizable damage in the loss or impairment of a right to recover damages from Grech. Jaramillo could have sued Baruch for damages from the loss of the causes of action against Grech at the moment the statute of limitations elapsed. “Neither uncertainty of amount nor difficulty of proof renders that injury speculative or inchoate.” (Jordache, supra, 18 Cal.4th at pp. 744, 252.)

At the point in time when Jaramillo’s causes of action against Grech became time barred, Jaramillo’s injury was not speculative or contingent. “[S]peculative and contingent injuries are those that do not yet exist, as when an attorney’s error creates only a potential for harm in the future. [Citation.] An existing injury is not contingent or speculative simply because future events may affect its permanency or the amount of monetary damages eventually incurred. [Citations.] Thus, we must distinguish between an actual, existing injury that might be remedied or reduced in the future, and a speculative or contingent injury that might or might not arise in the future.” (Jordache, supra, 18 Cal.4th at p. 754.) Further, “[t]here is no requirement that an adjudication or settlement must first confirm a causal nexus between the attorney’s error and the asserted injury.” (Id. at p. 752.)

Thus, the fact the trial court might have denied Grech’s summary judgment motion, thereby remedying or ameliorating the loss of the causes of action, does not mean Jaramillo did not suffer an actual, existing injury when the limitations period elapsed on his causes of action against Grech. Jaramillo’s allegation that he did not incur actual injury until April 20, 2016, when Grech’s motion for summary judgment was granted, is legally insufficient to toll the statute of limitations.

II.

Grech’s Summary Judgment Motion Put Jaramillo on Notice of His Claims Against Baruch.

The one year time period in which to sue for legal malpractice begins when the plaintiff actually or constructively discovers the attorney’s error. (Samuels v. Mix (1999) 22 Cal.4th 1, 7 8; Jordache, supra, 18 Cal.4th at pp. 742-743; Genisman v. Carley, supra, at p. 49 [section 340.6 “requires legal malpractice claims be brought one year after actual or constructive discovery”].)

“Under the discovery rule, the statute of limitations begins to run when the plaintiff suspects or should suspect that her injury was caused by wrongdoing, that someone has done something wrong to her.” (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110.) The limitations period starts when the plaintiff has notice or information sufficient to place a reasonable person on inquiry. (Id. at pp. 1110-1111.) “Once the plaintiff has a suspicion of wrongdoing, and therefore an incentive to sue, she must decide whether to file suit or sit on her rights. So long as a suspicion exists, it is clear that the plaintiff must go find the facts; she cannot wait for the facts to find her.” (Id. at p. 1111.)

Jaramillo argues the malpractice complaint has no allegations of actual discovery. But Jaramillo alleged that Grech filed a motion for summary judgment arguing the Grech Complaint was time barred under Code of Civil Procedure sections 338, subdivision (d) and 339, subdivision (1). Grech’s summary judgment motion placed Jaramillo on inquiry notice that Baruch might have done something wrong. Jaramillo alleged “Grech’s motion for summary judgment did not place Jaramillo on notice that Baruch had negligently filed the complaint too late because, as a layperson, Jaramillo believed what Baruch had assured him—that the Original [Grech] Complaint was timely filed.” The test is whether Grech’s motion for summary judgment would have placed a reasonable person on inquiry. We conclude it did as a matter of law. Presented with a summary judgment motion asserting the Grech Complaint was not timely filed, Jaramillo could not reasonably rely on Baruch’s assurances but had an obligation to “go find the facts.” (Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at p. 1111.)

According to the Register of Actions (exhibit D to Baruch’s request for Judicial Notice), Grech’s motion for summary judgment was filed on January 15, 2016 and presumably was served on or about that date. By that time, Jaramillo had sustained an actual injury because the statutory periods for bringing his causes of action against Grech had expired. Generously allowing 10 days for service by mail of the summary judgment motion, the statute of limitations on Jaramillo’s malpractice claim against Baruch began to run by about January 25, 2016 and was not tolled. Jaramillo’s malpractice complaint against Baruch was filed on April 20, 2017, more than one year after the one year limitations period expired, and therefore was time barred under section 340.6. Jaramillo does not argue the trial court should have granted him leave to amend.

 

DISPOSITION

The judgment is affirmed. Respondents to recover costs on appeal.

FYBEL, J.

WE CONCUR:

MOORE, ACTING P. J.

GOETHALS, J.