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Jordache Enterprises Inc. v. Brobeck7/30/1998
when it first paid its own defense costs. They determine that such payment constituted actual injury under Code of Civil Procedure section 340.6, subdivision (a)(1).
As the Court of Appeal persuasively concluded, however, actual injury , properly construed, means invasion of a legally protected right. (See Rest.2d Torts, ยง 7 ["The word `injury' is used throughout the Restatement of this Subject to denote the invasion of any legally protected interest of another."].) Under that definition, plaintiff did not suffer actual injury as a consequence of alleged malpractice until the Conclusion of the action against the insurers, which involved issues of coverage and notice and thus had a direct bearing on the question whether it suffered any compensable injury at all as a result of the lawyers' alleged omissions. The failure of defendant to investigate the insurance issues could not have been the legal cause of harm to plaintiff if, as the insurers contended, the claims were not covered under the policy, or if, as plaintiff contended, it gave adequate, timely notice of the action. In either case, no claim for malpractice would exist because the lawyers' omissions could not be deemed to have required plaintiff to pay defense costs. Although the lawyers' omission exposed plaintiff to the possibility that its insurers might have a viable defense, such defense was neither certain to be raised nor certain to succeed. The causal connection between the lawyers' omission and plaintiff's damages was established only when plaintiff settled its lawsuit with insurers.
The impracticality of the majority's approach is also apparent. In the absence of a bright line rule, clients will be constrained to bring actions against their lawyers even before they could prove any compensable injury - resulting in potentially unnecessary expense and hardship to the parties and a waste of judicial time and resources. Moreover, clients wishing to preserve their legal malpractice claims may be forced to litigate two suits simultaneously, thus raising obvious additional legal and practical problems.
For these reasons, I would adhere to the rule summarized by the Court of Appeal as follows: "Pinpointing the time when a client suffers actual injury within the meaning of Code of Civil Procedure section 340.6 requires a factual determination of what legally protected interest the client claims the attorney invaded, and when that invasion occurred. If a third party lawsuit is filed, the results of which will determine whether or not the client's legally protected interest has in fact been invaded, or if the malpractice occurs during the course of litigation which will determine that issue, the client will not sustain actual injury until Disposition of that third party lawsuit by settlement, dismissal, or adverse judgment. If, on the other hand, an underlying lawsuit has been filed but the outcome of that proceeding will have no bearing on the existence or effect of the lawyer's malpractice, or will only serve to mitigate damages, resolution of that action will not constitute `actual injury' within the meaning of section 340.6. Finally, in so-called `missed statute' cases in which the attorney fails to timely file a third party lawsuit and takes no further action, the client will suffer actual injury upon expiration of the statute of limitations applicable to the underlying action."
Applying the foregoing rule to the present facts, I conclude that the malpractice action should be resolved on the merits. Accordingly, I would affirm the judgment of the Court of Appeal.
MOSK, J.
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
[Edito
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