CALIFORNIA SUPREME COURT LIMITS CONTINUOUS REPRESENTATION TOLLING RULE FOR LEGAL MALPRACTICE ACTIONS

The statute of limitations within which a legal malpractice action must be filed is tolled if an attorney continues to represent the client. In Beal Bank v. Arter & Hadden, LLP (Case No. S141131, decided 9/27/07), the Supreme Court ruled held this "continuous representation" rule tolls the statute only as to the attorney or firm that continues to work for the client. The rule does not toll the statute as to claims against a firm that previously worked for the client in connection with the matter, but no longer does.

Beal Bank sued Arter & Hadden for alleged negligence almost four years after the attorney-client relationship between Beal and Arter & Hadden ended. Beal's case was handled by an attorney who worked on the case while at Arter & Hadden, but who left the firm and took the case with him. Beal argued that the statute of limitations was tolled not only as to the attorney who continued to work on the case, but also as to attorneys at Arter & Hadden who previously worked on the case.

The Supreme Court rejected Beal's arguments for three reasons. First, it ruled the applicable statute of limitations (Code Civ. Proc., § 340.6) unambiguously applies the continuous representation rule only to the attorney who continues to work on the case. "[T]he 'attorney' in subdivision (a)(2) [i.e., the attorney who continues to represent the client] refers back to the 'attorney' who is the target of the action in subdivision (a) [i.e., the attorney who is sued for malpractice]." Second, the Court reasoned that applying the tolling rule to attorneys and firms that no longer represent the client would introduce into the statutory scheme the very uncertainty about the statutory deadlines that section 340.6 was designed to eliminate. Third, the Court concluded that restricting the continuous representation rule in this fashion created minimal risk that the relationship between the client and the attorney would be disrupted by third party indemnity suits, and that any potential disruption such third party litigation would cause could be eliminated by stays and other procedural devices.

Horvitz & Levy LLP partner Frederic D. Cohen and co-counsel John Moscarino of Moscarino & Connolly LLP represented defendants Arter & Hadden and Dean in the Supreme Court. For more information about the case, contact Fred (818-995-0800, fcohen@horvitzlevy.com) or John Moscarino (310-471-4500, jmoscarino@mosconn.com).

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