In summary, this blog addresses when “actual injury” occurs to satisfy the damages element of professional negligence lawsuits against attorneys, brokers, accountants, and other professionals and analyze the divergent views as to when the statute of limitations (known as the time-barred defense) begins to “run” or whether it could be deemed extended or “tolled” until damages are sustained.
For context, let us begin by identifying what is required in terms of alleging and proving the elements of a legal malpractice case against a negligent attorney. First, a duty of care must be established. Second, there must be a breach of a duty by the attorney. Third, causation must be established which requires showing a nexus between the act or omission and the resulting damages. Finally, damages of some appreciable amount must arise due to the attorney’s negligent act or omission. These four elements are generally required to establish a professional negligence claim but are not intended to be exhaustive since the nuances vary for each profession.
II. WHEN DOES THE STATUTE OF LIMITATIONS (“SOL”) COMMENCE?
Whether the negligence was committed by an attorney, broker, accountant, or other professional, the issue of when the SOL may time bar a claim commonly arises when, for example, a former client might not become aware of the negligent act until long after termination of the engagement or not until damages are sustained which may not be apparent until many years down the road. That is when the former client could argue the limitations period should be tolled as a result of not experiencing “actual injury.”
There are various SOL deadlines depending upon the professional that is being sued. For example, claims against a negligent attorney must generally be filed within 1-year whereas for claims against a negligent broker must be brought within 2-years. In 1998, the California Supreme Court addressed the actual injury analysis in the legal malpractice context which has since then been applied to determine the accrual or tolling of damages of various professional malpractice cases.
In 1998, the California Supreme Court in a case entitled Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal. 4th 739, 958 addressed the issue of when all of the elements were met to commence the running of the limitations period and in doing so developed the “actual injury” analysis to determine the time period wherein a claim is tolled and thereby when the damages element is met.
III. WHAT DETERMINES WHEN ACTUAL INJURY HAS BEEN SUSTAINED?
According to Jordache, the Court held determining whether actual injury has occurred is primarily a factual inquiry since actual injury may occur without a judgment or settlement, nominal damages, or a mere threat of harm. The Court further provided there is no “bright line rule” meaning the specific facts and circumstances of each case should be considered based on the evidence presented.
Evaluating whether actual injury has been sustained is an emerging and evolving issue within California’s court system. For example, Jordache notes that while some courts have ruled that once a client expends attorney’s fees to remedy the negligent attorney’s wrong that could begin the accrual of the limitations period. Conversely, there are other instances where actual injury did not arise merely due to expending attorney’s fees but was tolled until another court ruled upon the evidence or making upon a final determination regarding the matter. (Jordache citing Shifren v. Spiro (2012) 206 Cal. App. 4th 481).
Professional negligence claims are complex and require a competent attorney to thoroughly evaluate your potential matter and to determine whether a viable claim might exist and the deadline it should be filed by. We implore you to seek the advice of legal counsel immediately to avoid the waiver of any rights or remedies.
PLEASE BE ADVISED: Views expressed are not intended to be legal advice and does not create an attorney-client relationship. Please note this blog is not intended to address the unique issues pertaining to medical malpractice and for any such potential matter you must immediately seek the advice of appropriate counsel.