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Keywords

lawsuitsettlementplaintiffattorneydiscoverystatuteappealtrialfiduciarymalpracticestatute of limitationslegal malpracticefiduciary dutybreach of fiduciary duty

Related Cases

Prakashpalan v. Engstrom, Lipscomb & Lack, 223 Cal.App.4th 1105, 167 Cal.Rptr.3d 832, 14 Cal. Daily Op. Serv. 1459, 2014 Daily Journal D.A.R. 1672

Facts

Plaintiffs Muruganandan Prakashpalan and Navamalar Prakashpalan were clients of the law firm Engstrom, Lipscomb & Lack and its attorneys. They alleged that Engstrom represented them in multiple matters, including a significant settlement with State Farm after their home was damaged in the 1994 Northridge earthquake. Plaintiffs claimed that Engstrom withheld a portion of their settlement funds and failed to disclose conflicts of interest during subsequent legal matters involving their neighbors, the Perlmutters. The plaintiffs discovered potential misconduct in 2012, leading to their lawsuit against Engstrom.

Issue

Did the trial court err in sustaining the demurrer without leave to amend regarding the clients' claims of legal malpractice, breach of fiduciary duty, and fraud?

Rule

The statute of limitations for legal malpractice and breach of fiduciary duty claims begins when the client discovers or should have discovered the wrongful act, while fraud claims are governed by a discovery rule that allows for tolling until the fraud is discovered.

Analysis

The court found that the clients' claims of legal malpractice and breach of fiduciary duty were time-barred because the alleged wrongful withholding of settlement funds occurred in 1997, more than four years before the lawsuit was filed. However, the court applied the discovery rule to the fraud claims, determining that the clients did not discover the alleged fraud until 2012, which made their claims timely.

Conclusion

The Court of Appeal affirmed the trial court's decision in part, holding that the malpractice claims were barred by the statute of limitations, but reversed in part, allowing the fraud claims to proceed based on the discovery rule.

Who won?

Engstrom, Lipscomb & Lack prevailed in part because the court upheld the dismissal of the malpractice claims due to the statute of limitations.

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Keywords

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