Thursday, November 3, 2016

A Malpractice Hall of Mirrors

Gotek Energy Corp. v. SoCal IP Law Grp., No. B266684 (D2d6 Oct. 12, 2016)

Client hires “Law Firm #2” to bring a malpractice case against Law Firm #1—its prior patent counsel—for blowing a deadline for some patent applications. But Firm #2’s own complaint was filed after the one-year statute in Code of Civil Procedure § 340.6 had run. But that limit is tolled during the time an attorney-client relationship exists between the client/plaintiff and the attorney/defendant. So the issue in this case is when the relationship between Client and Firm #1 ended. Firm #1 claims the relationship ended when—a year and a week before this case was filed—it sent an email to Client informing Client that it needed to withdraw. The next day, Client replied by email to Firm #1, sting that it was terminating the relationship and demanding that Firm #1 immediately transfer the client file to new counsel. Client claims the date extended until the date its files were actually received by new counsel—364 days before the complaint in this case was filed.

The trial court sided with Firm #1, finding that the relationship ended when client said so. The fact that some ministerial work was done to transfer the files after Firm #1 was told it was terminated did not extend a confidential attorney client relationship until that work was complete. The trial court also awarded Firm #1 its fees under a fee provision in Client’s retainer agreement.

The Court of Appeal affirms. Tolling under § 340.6 stops when a client ceases to have any reasonable expectation that legal work will be performed. Given the unequivocal termination, the mere fact of the post-termination transfer of the client’s file did not provide a reasonable basis to believe that there was any kind of ongoing attorney-client relationship. The Court of Appeal further finds Client’s arguments against the fee award to be makeweight.

So the world inevitably await the malpractice case against the attorneys who blew the SOL on a malpractice case against some attorneys who blew the SOL on a patent filing. These guys really need to hire some counsel with a decent calendaring system.

Affirmed.

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