Posted on

San Francisco’s Continuing Efforts to Subvert Owners’ Rights Under the Ellis Act Struck Down

Coyne v. City and County of San Francisco, 3/21/17, 1DCA/5

Some historical background to this case — Back in the 1980s, a property owner called Nash was tired of rent control and wanted to go out of the business of renting property.  The City of Santa Monica refused to let him take his property off the rental market unless he could show he couldn’t make a “reasonable” return on the property.  He couldn’t make that showing, and so he sued.  In 1984, the California Supreme Court upheld Santa Monica’s decision.  In 1985, the California legislature enacted the Ellis Act, which was intended to overturn the court’s decision in the Nash case. The Act prohibits a city or county from “compel[ling] the owner of any residential real property to offer, or to continue to offer, accommodations in the property for rent or lease . . . .” Gov. Code, § 7060(a).   Since that time cities like San Francisco have been trying to find a way to defeat the Act.  And so enter the Coyne case.

From 1994 to 2014, San Francisco enacted a series of ordinances that required owners who exercise their rights under the Ellis Act to make relocation/mitigation payments.  These payments were initially set at about $1500, they increased to $4500, were adjusted for inflation to about $5500, and are subject to caps that eventually grew to approximately $16,000 per unit.  Owners had to make additional payments of about $4000 to elderly and disabled tenants. In 2014, SF was feeling it so it upped the ante. 

SF enacted a rule that landlords had to pay for “the difference between the tenant’s current rent and the prevailing rent for a comparable apartment in San Francisco over a two year period.” The law had no cap, and tenants could use these ransom payments for anything they liked – a fancy car or to increase their stock portfolio.  Courts struck down the ordinance.

The People’s Republic was not done.  In response, it enacted a similar ordinance, this time capping the mitigation/relocation payment at $50,000 and requiring tenants to promise they would use the ransom payments on relocation expenses.  SF also created a “hardship” process for owners who were willing to expose their entire financial picture to city bureaucrats, even though there were no objective standards concerning how bureaucrats would had to evaluate hardship petitions.  In addition, the ordinance allowed owners to ask for receipts from former tenants to ensure that the ransom payments were used for relocation, over a period of three years.  A provision designed for owners who have nothing else going on. 

Coyne filed suit to challenge this ordinance.

Again the court struck down the new ordinance.  The ordinance caused a head-on collision with California’s Constitution , which allows cities and counties to enact and enforce police powers so long as they don’t conflict with general state laws.  In determining whether there is a conflict between the ordinance and the Ellis Act, the court adopted a test used by many other courts: Whether the city placed a prohibitive price on owners who wish to exercise their rights under the Ellis Act.  A prohibitive price compels landlords to remain in the residential business, and would therefore defeat the Act. As one court has said: “The Ellis Act does not permit the City to condition plaintiff’s departure upon the payment of ransom. [¶] To allow the City to so enlarge the concept of mitigation that it prevents plaintiff from exercising his right to go out of business would make the Ellis Act a dead letter except for those owners fortunate enough to have no tenants to displace.” 

The court surveyed cases where cities had improperly imposed a “prohibitive price” on landlords who wished to take their property off the rental market, including ordinances requiring landlords 1) to obtain a permit before taking their property off the market; 2) to replace the housing stock or pay a fee in lieu; 3) to pay relocation assistance to all evicted tenants; and, 4) to provide notice to affected tenants of relocation assistance due when the property is taken off the market.

The court had no problem finding that SF’s ordinance was in conflict with the Act. The court could find no other ordinance where a city tried to force a massive payment as a condition of exercising rights under the Ellis Act.  And, allowing cities to ransom owners would defeat the law.

The court rejected the SF’s reliance on Government Code section 7060.1(c), a savings clause in the Ellis Act which preserves local authority to mitigate “any adverse impact on persons displaced by reason of the withdrawal from rent or lease of any accommodations.”  SF argued that increased rent was an “adverse impact” of eviction that the savings clause allowed them to regulate with the ordinance in question.  The Court disagreed: An increase in rent was not an adverse impact of the eviction but an impact that stemmed from the City’s rent control itself.  Rent prices are a function of the market (not of an eviction) and the increase in rent faced by a tenant is a result of the fact that rent control keeps rent at an artificially low rate.  Finally, the court noted that a savings clause must be strictly construed, and not be interpreted in a way that would defeat the purposes of the statute itself.  That’s statutory construction 101.  

Posted on

In Legal Malpractice Case, Comparative Fault of Client May Apply and Can Result in Reduction of Damage Award Against Attorney

Yale v. Bowne, 3/10/17 2DCA/2

Yale is well-to-do.  She married Knight subject to a prenup to protect her separate property.  Many years later, she hired Bowne to update her trust. She wanted to maintain the status of her separate property. Bowne drew up the trust documents, but the underlying property transfer documents (e.g., the deeds) designated her property as community property.  And this is where it gets strange: She testified that she actually saw the “community property” designation in the deeds that Bowne had prepared.  And stranger still — Seeing that the deeds said “community property,” she said nothing to Bowne and executed them.  (Make sense of that if you can!)  Knight subsequently did some bad things to Yale (read the case), and their marriage fell apart. With the help of another attorney, Yale was able to transfer her property back to her name and protect it.  Knight then filed for divorce.  On advice of counsel, Yale paid Knight $260,000 (in cash and assumed obligations) rather than risk a court finding that her entire estate (perhaps $2M) was community property.  She then sued her former attorney Bowne for legal malpractice.  The trial court agreed to give the comparative fault instruction to the jury.  The jury awarded damages but attributed 10% of the fault to Yale.  She appealed.  Held: Affirmed
The court said that the comparative fault principles set out in Li v. Yellow Cab Co. (1975) 13 Cal.3d 804 (Li) apply to negligence actions. Legal malpractice claims are a subset of negligence, ergo . . . .  Of course, a comparative fault instruction is not automatic: There must be substantial evidence to warrant giving the comparative fault instruction to the jury.  The court had little trouble find that substantial evidence supported the instruction given by the trial court. 

Yale was a self-taught investor.  She was also very aware of the difference between the label separate property and community property; in fact, in her first marriage she had been hammered in the divorce because she allowed her separate property to transmute to community property status.  Moreover, before executing Bowne’s trust documents, she had recently entered a different real estate transaction where those designations were crucial, and she was careful to make sure the document designations were correct. Finally, she read and executed the property deeds that re-characterized her property as “community property.”  Frankly, under these facts, the fact that Yale spent money to appeal that issue is surprising:  The jury could have been a lot less forgiving and attributed much more than 10% of the fault to her.  

Finally, the court distinguished legal malpractice cases where the trial court had refused to give a comparative fault instruction, because those cases involved things like civil procedure, about which the normal client knows nothing.

Posted on

Discharging Juror for “Failing to Deliberate” Impacts Right to Jury Trial and Must Be Done with Extreme Caution

Shanks v. Dept. of Transportation, 3/9/17, 2DCA/6

In coming around a sharp blind curve on Highway 33, a motorcyclist failed to slow down.  He veered into oncoming traffic and struck another motorcycle, killing its driver.  The victim’s family filed a wrongful death action, also naming the State for failing to post a sign reducing speeds around the curve.  During plaintiffs’ closing argument, some people reported that Juror 7 appeared to fall asleep, something the judge was unable to confirm because his view was blocked.  Later, after only about 90 minutes of deliberations, Juror 2 reported to the Court that Juror 7 immediately sided with the State and refused to deliberate (“expressed a fixed conclusion at the beginning of deliberations”).  The judge interviewed Juror 1, who confirmed this.  The Court then excused Juror 7 without further investigation and denied the defense counsel’s request that the trial judge also interview the jury foreperson.  The jury found for Plaintiffs (over $12MM total) against the other driver (12-0), against the State (11-1) and apportioned 90% of the fault to the State (9-3).   The trial court denied the State’s motion for new trial on allocation of fault.  Held: Reversed on the issue of apportionment only, and new trial granted on that issue.

The right to a jury is fundamental right.  The fact that jurors will have different views and strong disagreements is all part of having a jury and their deliberations.  The right to and meaning of a jury would be undermined and tarnished if jurors could easily cause the removal of jurors who didn’t agree with their perspective.  Think of the movie 12 Angry Men if the other jurors had kicked Henry Fonda off the jury – A very short movie! (although that would have been okay with me because I was never a Henry Fonda fan.)

The excusal of a juror is governed by statute.  Code Civ. Pro. 223.  While the standard for excusal is based on whether the trial court had “good cause,” which is reviewed under the abuse of discretion standard, this particular area of trial court decision-making gets special scrutiny:  “Although the trial court’s ruling will be upheld if there is substantial evidence to support it, the juror’s inability to perform as a juror must appear in the record as a demonstrable reality.”  Therefore, to excuse a juror, there must be a manifest showing of misconduct.  Here, the appellate court found that “the record lacks sufficient evidence to show as a demonstrable reality that Juror No. 7 was unable to perform her duty as a juror.”

Discharging a juror for misconduct is therefore fraught with peril.  A few things to consider:
  • In its motion for new trial, the State presented a declaration from Juror 7 that denied all charges made against her.  She said that in the initial vote, 3 jurors had sided with the State, and also said that Jurors 1 and 2 had become friends during the trial and carpooled to court.
  • In Cleveland, 25 Cal.4th 466, the Supreme Court upheld the reversal of a criminal conviction where a juror had been excused.  The trial court had excused a juror after 10 of 11 of the other jurors said that one of the jurors was not functionally deliberating.  The problem : The “discharge of the holdout juror violated the defendant’s constitutional right to a unanimous jury verdict.”  
  • Here, the trial court could have allowed the deliberations to proceed for more time (90 minutes was not very long), and then revisited the subject, and done more investigation, as needed.

             

Posted on

Ninth Cir. Holds that Dodd-Frank Act Also Grants Whistleblower Protection to Those Who Make Internal Complaints

Somers v. Digital Realty Trust, 3/8/17, 9th Cir

Does the Dodd-Frank Act (DFA) protect whistleblowers who report potential illegal behavior internally and not to the SEC?  District and circuit courts are divided on this issue — for example, the Fifth Cir. says, No; and the Second says, Yes.  Plaintiff was fired after he complained internally to his employer that it was engaging in possible securities violations. He sued his former employer for wrongful termination, claiming the company had violated the anti-retaliation section of the Dodd-Frank Act. The company filed a motion to dismiss.  The district court denied the motion and certified the issue for interlocutory appeal.  Held: Affirmed.

Congress enacted the Sarbanes-Oxley Act in 2002 to curb securities abuses (think Enron).  As part of that, Sarbanes-Oxley grants whistleblower protection to those who lawfully provide information to federal agencies, Congress, or “a person with supervisory authority over the employee.”  Dodd-Frank was enacted six years later after the 2008 economic meltdown, and is meant to “protect consumers from abusive financial services practices.”  The DFA added additional whistleblower protection to the Securities Exchange Act, in what is called section 21F.  

And so to the nub: In the definitions contained in section 21F, the DFA defines a whistleblower and someone who complains to the SEC.  Because making a complaint with the SEC is integral to the DFA’s definition of “whistleblower,” courts like the Fifth Cir. hold that a mere internal complaint is not enough to create a private right of action for people who are terminated after making an internal complaint.

But later in section 21F, protection is not only given to those who provide information to the SEC, but to those who make disclosures that are protected under Sarbanes-Oxley.  Sarbanes-Oxley protects people who make internal complaints as well as those who complain to the SEC.  It is hard to discount this explicit reference to Sarbanes-Oxley.  And as Ninth Cir. says, the approach adopted by Fifth would read the later section out of the statute.  

Where does the SEC — the agency charged with enforcing securities laws — stand?  It adopted a rule in 2011 that supports the broader construction, and therefore sides with Second and Ninth Cir.

Posted on

Plaintiff Who Camouflages Wage and Hour Claims in PAGA Cause of Action Able to Defeat Motion to Compel Arbitration — For Now

Betancourt v. Prudential Overall Supply 3/7/17, 4DCA/2

This case exalts form over substance.  Plaintiff filed a wage/hour representative action purporting to contain a single cause of action under PAGA.  However – and this is a big however – he alleged various Labor Code violations (the usual slew, including unpaid minimum wages, overtime, meal/rest, wage statements) AND prayed not just for penalties under PAGA, but also for recovery of minimum wages, overtime, Labor Code 226 damages, etc.  There was an arbitration agreement.  As we all know, normal wage/hour claims are subject to arbitration while PAGA claims (per Iskanian) are not. The issue wasn’t lost on counsel for Prudential, who filed a motion to compel arbitration and argued that the relief plaintiff was seeking was relief that was in fact subject to arbitration.  The trial court denied Prudential’s motion to compel arbitration.  Held: Affirmed.

At the hearing, the trial court explained that a motion to compel arbitration was not the proper vehicle to challenge plaintiff’s pleading; instead, the trial court invited defendant to file a motion to strike. 

Two issues with that  – First, the essence of a complaint is determined by the allegations. The courts of this state have long since departed from holding a plaintiff strictly to the ‘form of action’ he has pleaded and instead have adopted the more flexible approach of examining the facts alleged (to determine if a demurrer should be sustained.)  And so, if plaintiff alleged wage/hour violations and sought wage/hour remedies in addition to PAGA penalties, it shouldn’t really matter that plaintiff is trying to camouflage his wage/hour claims as a PAGA case.  

Therefore, the second problem – To the extent plaintiff’s complaint is for wage/hour claims, why can’t the trial court send those claims  — regardless of the label or lack thereof — to arbitration? The answer is, It can do exactly that and could have entered an order that says: “All wage and hour claims/causes of action are sent to arbitration except the PAGA cause of action, which is stayed pending the outcome of arbitration.”


Posted on

California Supreme Court Interprets and Clarifies Safe Harbor Limits Under California Tort Claims Act Where Minor Tries to File A Late Claim

J.M. v. Huntington Beach Union High School Dist., 3/6/17 SC 

This case involves the California’s Government Claims Act (GCA), an injury to a football player suffered during high school football game, and made it all the way to the California Supreme Court. In the game, the player suffered a possible concussion; even though the coach knew this he allowed the player to subsequently participate in full-contact practice (ridiculous, if true). The player was later diagnosed with double concussion syndrome. The GCA has a six month statute of limitations for claims brought against governmental entities, like school districts.  But the GCA also has some flexible safe harbors when the injured party is a minor.  The injury occurred on October 31, 2011; but the minor did not file a claim against the School District within six months.  The minor subsequently retained counsel, and, on October 24, 2012, counsel timely applied with the School District for permission to file a late claim.  The District took no action.  Over a year later, on October 28, 2013, counsel filed a petition with the superior court for relief of the obligation on filing a claim before bringing suit. The trial court rejected minor’s late petition, which was affirmed by the appellate court.  The Supreme Court granted cert, and also affirmed.

The GCA claims statutes impose time limits but also provide safe harbors. Once a cause of action accrues, a claim must be filed within six months. (Gov’t Code § 911.2, subd. (a).) If that deadline is missed, a minor has a year to apply to the entity for leave to file a late claim. (§ 911.4, subd. (b).) The entity must act promptly — But if it fails to respond within 45 days, the application is deemed denied (§ 911.6(c)), which gives the claimant an opportunity to petition the court for relief (§ 946.6, subd. (a)). The Legislature allowed six months for such a petition. (§ 946.6(b).) If the petition is denied, the claimant may seek relief in the trial court or on appeal. Here, because the School District took no action on minor’s application to file a late claim, it was deemed denied on December 8, 2012.  Instead of filing the petition within six months (June 9, 2013) – which would have been granted – counsel for minor waited almost a year to file a petition with the superior court.  The Court found that there is a limit to the safe harbor — If claimant fails to file a timely petition, the Legislature did not contemplate yet another extension of time for the pursuit of a belated claim. 

The Supreme Court also disapproved E.M. v. Los Angeles Unified School Dist. (2011) 194 Cal.App.4th 736, which is probably why it granted cert in the first place.   In that case, contrary to the statutory scheme, an appellate court had excused the minor’s failure to file a timely petition with the superior court within six months after LA Unified denied minor’s application to file a late claim.

Posted on

Court Holds That Employer’s Traditional Commissions Pay Plan Does Not Compensate for Rest Breaks, In Violation of California Labor Code

Vaquero v. Stoneledge Furniture, 2/28/17, 2DCA/7

This is a wage and hour class action that concerns whether a traditional commission pay plan compensates employees for their rest breaks.  Two fundamental provisions of California labor law: 1) All hours worked by the employee must be paid, and 2) the 10-minute rest periods mandated by California law are counted as hours worked and must be paid as such.  Here, company compensated its furniture sales associates under a straight commission plan, where commissions were based on the amount of furniture sold multiplied by the commission rate.  In compliance with other labor laws, sales associates recorded the time they worked, including rest time, even though wages were not paid by the hour.  Sometimes commissions divided by hours worked equaled at least $12/hour; but when commissions fell below that, the company paid the employee a draw to bring wages up to the $12/hour level. Company would then deduct these draws from future commissions earned.  But again, no part of the company’s compensation plan accounted for rest breaks. The trial court granted summary judgment in favor of company.  Held: Reversed.

In addition to the plain language of Wage Order 7 (the Wage Order governing the mercantile industry in California), the court relied to Bluford v. Safeway Stores, Inc. (2013) 216 Cal.App.4th 864.  In Bluford, the court interpreted Wage Order 7 to require employers to “separately compensate[ ]” employees for rest periods where the employer uses an “activity based compensation system” that does not directly compensate for rest periods.  In Bluford, grocery drivers were paid based on miles driven the time the trips were made and the locations where the trips began and ended.  No part of the compensation plan in Bluford provided for payment for rest breaks. Relying on this authority, the court in this case held that Wage Order No. 7, required Stoneledge to separately compensate its sales associates for rest periods.  

Two key takeaways — First, employers should look at their compensation plans closely to make sure the pay plan compensates for rest breaks.  Second, the fact that the total commissions paid divided by hours worked equal at least the minimum hourly wage does not mean that rest periods are being paid for.  Still, conceptually you can see where the defendant and the trial court who found in favor of the company were coming from — If total commissions can be divided by hours worked to ensure that the hourly minimum wage requirements are being met, why can’t the same exercise be done to determine whether rest breaks are also being paid?  The contrary answer arrived at by the appellate court probably lies in the fact that wage and hour laws are interpreted to maximize employee protection.

Posted on

City and Its Officials Cannot Evade Disclosure Obligations Under CPRA By Transacting Public Business On Personal Email and Text Accounts

City of San Jose v. Super. Ct., 3/2/17, SC

Last week the Supreme Court weighed in on an important California Public Records Act (CPRA) issue – Can city officials evade the disclosure obligations of the CPRA by using personal email and text accounts to transact public business? Here, Ted Smith requested information from the City of San Jose, targeting information about its redevelopment activities.  His requests includes emails and texts “sent or received on private electronic devices used by” the mayor, two city council members, and their staffs.  The City refused to produce documents from staff members’ private accounts, claiming that those materials were not “public records” and therefore were not subject to the CPRA.  Smith sued and won in the trial court, but the appellate court reversed.  Held: Reversed.

The court concluded that “a city employee’s writings about public business are not excluded from CPRA simply because they have been sent, received, or stored in a personal account.”  This strikes me as self-evident and how this got to the Supreme Court is really a mystery.  The policy of the CPRA is promote democracy, which is premised on disclosure and transparency.  The idea that government could circumvent the CPRA and conduct its business in secret by the use of personal accounts is anathema.

The principles underlying the CPRA all support the Court’s conclusion: The CPRA is supposed to be interpreted broadly and creates a presumptive right of access to any record created or maintained by a public agency that relates in any way to the business of the public agency.” It contains an exemption to maintain individual privacy rights and a catchall exemption. California citizens felt so strongly about this issue that they passed Proposition 59, which amended the California Constitution to ensure that the CPRA is applied broadly.

The CPRA applies to “public records,” which are defined as (1) a writing, (2) with content relating to the conduct of the public’s business, which is (3) prepared by, or (4) owned, used, or retained by any state or local agency.  The CPRA defines writing to include transmitting by electronic mail and “every other means of recording upon any tangible thing any form of communication.”  So it covers electronic communications. 

Prong two differentiates between the public official’s public business and private affairs, a line that can admittedly be murky. The court attempted to fashion a guideline when applying prong 2: “Communications that are primarily personal, containing no more than incidental mentions of agency business, generally will not constitute public records. For example, the public might be titillated to learn that not all agency workers enjoy the company of their colleagues, or hold them in high regard.”

As to prongs 3 and 4, the Court felt that a broad construction of the CPRA supported finding that those elements had been met: “If an agency employee prepares a writing that substantively relates to the conduct of public business, that writing would appear to satisfy the Act’s definition of a public record.” The Court rejected the City’s argument that emails and texts in the possession of its officials on their private accounts is “beyond” their reach (not owned, used or retained by the agency).  As a practical matter, that argument simply seems untrue. Moreover, precedent supports the disclosure of public records that are in the government’s constructive possession.  The court cited a case where the City had to disclose a third party consultant’s field survey because the City had a contractual right to own and possess that material.  

The court said that writing retained by a public employee conducting agency business has also been “retained by” the agency within the meaning of section 6252, subdivision (e), even if the writing is retained in the employee’s personal account.
The City’s suggestion to the contrary would not only put an “increasing amount of information beyond the public’s grasp but also encourage government officials to conduct the public’s business in private.”

The City’s various arguments concerning the privacy rights of public officials are non-sequitur – private information can be redacted from disclosure (obviously).  The City’s concerns that it would have to intrude into the personal matters of its employees were also weak: The government does not have to search all of the employee’s personal records and may reasonably rely on these employees to search their own personal files, accounts, and devices for responsive material.  The court cited federal authorities applying FOIA (the federal version of the same law and upon which the CPRA was based) that have approved of individual employees conducting their own searches and segregating public records from personal records, so long as the employees have been properly trained in how to distinguish between the two. 

One moral of this story: City officials should keep their private accounts private – and use only certain public email or phone/text accounts for public business if possible.

Posted on

In Matter for First Impression, Court Finds that Discovery Is Allowed In California Public Records Act Cases

City of L.A. v. Super. Ct., 3/2/17, 2DCA/7
The California Public Records Act (CPRA) was passed in 1968, two years after U.S. Congress enacted the Freedom of Information Act (FOIA).  The CPRA gives members of the public the right to request and access information in the possession of California’s public agencies. Here, the requesting party sought information from the LAPD about vehicle impounding practices, but the LAPD was not forthcoming.  The requesting party’s attorney, Donald Cook, has represented various parties seeking information from various law enforcement agencies in California on the same issue. The LAPD, like other police departments in other cities, argued that they didn’t own the information in question, which was held by “official police garages,” viz., private third party vendors. According to the LAPD, the information did not qualify as “public records” and therefore did not have to be disclosed under the CPRA. In such cases, the CPRA grants the requesting person the right to file a petition to the Superior Court to compel disclosure (which is a special proceeding, not a civil action), and Cook’s client did that.  Cook served various forms of discovery under the California’s discovery act to determine whether the LAPD’s claim of non-ownership was bona-fide.  The LAPD inserted one objection only (all eggs, one basket!!) – that there was no right to discovery in CPRA cases.  Cook filed a motion to compel.  The trial court found that discovery was allowed in special proceedings, granted the motion to compel and awarded over $5,000 in sanctions, finding there was no substantial justification for the LAPD’s refusal to provide responses.  Held: Affirmed as to finding that discovery is allowed in CPRA special proceedings; otherwise reversed.

A CPRA matter is by definition a “special proceeding,” and other courts have so held.  A special proceeding is a creature of statute that wasn’t recognized under the common law or equity practice. The discovery act expressly applies to “civil actions” and “special proceedings of a civil nature.”  Thus, discovery is allowed in CPRA matters.

The City’s arguments to the contrary were all very weak.  For example, the City argued that even though the CPRA was admittedly a special proceeding, discovery should not be allowed because the CPRA statutory scheme was silent on the issue of discovery. As the court noted, the big problem with that argument: “Our courts have repeatedly concluded, however, that the discovery act applies to statutorily-enacted special proceedings that are silent with respect to discovery.”  The court nevertheless reversed the sanctions award — The matter was one of first impression, and the underlying issue – whether and how much discovery a governmental agency might have to endure in CPRA cases — presents a very important question for public agencies.  

2DCA gave the the City a huge break.  It even ordered the trial court to allow the LAPD to assert additional objections to the discovery, and to further weigh whether the discovery should be allowed under an assortment of factors listed in the opinion. Usually the failure to assert objections means they are waived!!
Posted on

Tolling of the 1-Year Statute of Limitations for Legal Malpractice Ends When Client Reasonably Should Have No Expectation That Attorney Will Provide Further Legal Services

Flake v. Neumiller & Beardslee, 1/31/17 CA3

This case concerns allegations of legal malpractice.  With certain tolling exceptions, legal malpractice cases must be filed within one year of when the client discovered or should have discovered the wrongful conduct. Code of Civ. Proc 340.6.  Flake sued his attorney, Neumiller, more than one year after the attorney had filed a motion to withdraw as counsel, but less than one year after the court granted that motion.  Section 340.6 also provides that the statute of limitations is tolled while the attorney continues to represented the client.  While a motion to withdraw is pending, Attorneys must continue representing their clients to avoid prejudice.  Nonetheless, Neumiller filed a motion for summary judgment because a substitution of attorney form had been circulated and executed by all concerned; the new attorney had simply failed to file it with the trial court.  Moreover, the new attorney was already actively engaged in representing Flake in the matter, including handling the three then-pending post-trial motions.  The court granted attorney’s summary judgment.  Held: Affirmed.

The end of an attorney-client relationship is not always signaled by a bright line, and “the failure to formally withdraw as attorney of record, standing alone, will not toll the statute of limitations under the rubric of continued representation.”  Based on the undisputed facts, the court accepted Neumiller’s theory on appeal, namely that no reasonable client could objectively believe Neumiller was still providing legal services after receiving the motion to withdraw alleging that the case had been handed off to successor counsel.