COURT OF APPEAL TOLLS LEGAL MALPRACTICE STATUTE OF LIMITATIONS FOR DEPARTING ATTORNEY'S CONTINUED REPRESENTATION

On January 10, 2006, the California Court of Appeal decided Beal Bank v. Arter & Hadden, Case No. B179383. Arter & Hadden and Mr. Dean represented Beal Bank until December 31,1998. On December 31, 1998, Steven Gubner, an associate of Arter & Hadden, left the firm, started his own firm, and substituted his new firm as counsel for Beal in place of Arter & Hadden and Dean. The trial court dismissed Beal’s malpractice case against Arter & Hadden and Mr. Dean, finding that the one year statute of limitations for an attorney malpractice cause of action expired on December 31, 1999. The Court of Appeal reversed, finding that Gubner’s continuing representation of Beal through his new law firm vicariously tolled the statute of limitations for both Arter & Hadden and Mr. Dean.

Of particular note is the following passage from the Court of Appeal’s decision:

“Arter & Hadden and Dean argue that applying the tolling provision to former attorneys would extend ad infinitum the time for filing legal malpractice cases, ‘thereby causing an enormous increase in malpractice insurance, rendering policies virtually unavailable for many lawyers.’ We agree that this is a serious concern."

Despite these concerns, the Court of Appeal tolled the statute of limitations, thereby reviving Beal's malpractice action. Click here to read the full text of the court's opinion.

Arter & Hadden will be petitioning the California Supreme Court and seeks amicus support for their petition in the form of short letters. If you are interested in supporting Supreme Court review of this case, please contact David Axelrad at (818) 995-0800 or by e-mail to daxelrad@horvitzlevy.com or David's assistant, Jodi Paul, at jpaul@horvitzlevy.com.

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