Church v. Jamison

50 Cal.Rptr.3d 166

143 Cal.App.4th 1568

John CHURCH, Plaintiff and Appellant, v. Daniel O. JAMISON et al., Defendants and Respondents.

No. F048224.

Court of Appeal, Fifth District.

October 23, 2006.

Certified for Partial Publication.^*

Motschiedler, Michaelides & Wishon and Russell K. Ryan, Fresno, for Plaintiff and Appellant.

McCormick, Barstow, Sheppard, Wayte & Carruth, Scott Harkless, Anil Pai and Marshall C. Whitney, Fresno, for Defendants and Respondents.

Baker, Manock & Jensen and Glenn J. Holder, Fresno, on behalf of Wilcox, Hokokian & Jackson and Keith Wilcox, Fresno, as Amici Curiae.

OPINION

DAWSON, J.

John Church sued his former employer for breach of contract, misrepresentation, and various Labor Code violations. We will call that lawsuit, which is not on appeal here, the "employment case." The superior court in that case sustained a demurrer to the Labor Code claims on the ground they were barred by the applicable statute of limitations.

Subsequently, Church brought a second action, which is the subject of the current appeal and which we will call the "malpractice case." It is a suit for legal malpractice against the attorney who filed the lawsuit in the employment case, respondents Daniel O. Jamison and the Law Offices of Daniel O. Jamison.¹ Church alleged Jamison's failure to file the complaint in the employment case sooner resulted in Labor Code claims being time-barred. Jamison filed a motion for judgment on the pleadings in the malpractice case on the ground that he did not commit malpractice in the employment case because the Labor Code claims were either time-barred before he was retained or, alternatively, were not time-barred when he filed the complaint in that case. The latter of these alternate arguments directly contradicts the superior court's order sustaining the employer's demurrer to the Labor Code claims in the employment case.

In the malpractice case, the superior court granted Jamison's motion for judgment on the pleadings based on its conclusion that Jamison could not be held liable for legal malpractice because he had timely filed the complaint in the employment case. Thus, the superior court judge in the malpractice case disagreed with the superior court judge in the employment case. Church appeals the judgment in favor of Jamison in the malpractice case. The employment case is still pending, on the remaining claims of breach of contract and misrepresentation. The defendants in that case, Keith Wilcox and Wilcox, Hokokian & Jackson, have appeared here as amici curiae.

The judgment is reversed. We publish that portion of this opinion that addresses vested vacation because our analysis conflicts with the analysis adopted in Sequeira v. Rincon-Vitova Insectaries, Inc. (1995) 32 Cal.App.4th 632, 38 Cal.Rptr.2d 264 (Sequeira) and the position taken by California's Division of Labor Standards Enforcement (DLSE) regarding a "look-back" application of the statute of limitations.

SUMMARY OF ISSUES AND CONCLUSIONS^**

FACTS AND PROCEEDINGS

The facts stated here were taken from the pleadings in the malpractice case and documents subject to judicial notice, such as the pleadings and other documents filed in the employment case.

Church discussed the prospects of working for Wilcox, Hokokian & Jackson (WHJ), an accountancy corporation that maintains its principal place of business in Fresno County. Church alleges that Keith Wilcox and Rick Jackson represented to him that, if he moved from South Carolina to Fresno, he would be employed by WHJ on the following terms: (1) compensation at a rate of $8,500 per month, (2) termination only for good cause, (3) merit-based bonuses based on production, and (4) at the conclusion of one year of employment he would unconditionally become a shareholder in the corporation and share in its profits. In addition, Church and the corporation agreed that his compensation for the first year of employment would be deferred and considered his buy-in into WHJ, which would be considered paid at the end of his first year of employment. If Church did not want to purchase an ownership interest at the end of his first year, he would then be paid an amount equal to his salary for the first year.

Based on these and other terms, Church was employed by WHJ from May 1, 1998, through May 1, 2001, to provide auditing and health care consultancy services. In May 1999, Church and WHJ failed to reach an agreement for his purchase of an ownership interest in the corporation. Instead, they made a second oral agreement. This second agreement provided that (1) the deferred compensation from the first year would be treated as Church's purchase of an ownership interest in WHJ in May 2000, (2) the parties would agree to the final terms of Church's buy-in by the end of May 2000 with the deferred compensation being applied to the purchase price, (3) Church would immediately be paid the deferred compensation if no agreement was then reached on his purchase of an ownership interest in WHJ, and (4) Church's salary for his second year would be paid on a monthly basis.

In May 2000, the parties again failed to reach an agreement on the terms of Church's purchase of an ownership interest and they agreed the deferred compensation would be paid in June 2000. Church demanded payment in June, but WHJ did not pay him. Church alleges that WHJ has still not paid him for his first year of work.

On August 13, 2001, Church retained Jamison to act as his lawyer and represent his interests in his dispute with WHJ. On April 30, 2002, Jamison filed a complaint for Church and against WHJ in the Fresno Superior Court. Slightly more than two months later, Jamison executed a substitution of attorney form which ended his representation of Church in the employment case against WHJ.

On July 3, 2002, new attorneys representing Church filed a first amended complaint in the employment case. They filed a second amended complaint two months later, and the superior court sustained a demurrer to the second amended complaint with leave to amend. The attorneys filed a third amended complaint against WHJ — for breach of contract, intentional misrepresentation, negligent misrepresentation, Labor Code violations, and unjust enrichment — in December 2002. WHJ filed another demurrer and the hearing was set for April 4, 2003.

The tentative ruling stated that the general demurrer to the Labor Code claims on the grounds they were untimely would be overruled because Church's allegations were sufficient to raise the possibility that WHJ was estopped from raising the statute of limitations as a defense. In addition, the tentative ruling stated that the general demurrer to the count containing the Labor Code violations would be sustained with leave to amend so that Church could allege whether he resigned or was discharged. (See Lab.Code, §§ 201 [discharged employee shall be paid final wages within 72 hours], 202 [when final wages are due to employee who resigns].)

After hearing argument, however, the superior court changed its tentative ruling and on April 30, 2003, sustained the general demurrer to the claims included in the fourth and fifth counts of the third amended complaint "without leave to amend on the basis that the cause of action is barred by the applicable statute of limitations."

On April 27, 2004, less than one year after the general demurrer to Church's claims under the Labor Code in the employment case was sustained, Church filed a complaint for legal malpractice against Jamison. The malpractice complaint alleged that, had Jamison exercised proper care and skill in the lawsuit against WHJ, Church "would have been able to recover from Wilcox for violations of the Labor Code including, but not necessarily limited to, reimbursement for business expenses required by Labor Code § 2802, failure and refusal to pay [Church] when his wages became due and payable under Labor Code § 202, interest on all due and unpayable [sic] wages under Labor Code § 218.6, waiting time penalties under Labor Code § 203 and attorney fees pursuant to Labor Code § 218.5."

Jamison responded to the malpractice complaint by filing a demurrer on the ground that the action against him was not brought within the one-year period of limitations contained in Code of Civil Procedure section 340.6. Specifically, Jamison argued that Church should have discovered Jamison's malpractice, allegedly based on the failure to timely file the Labor Code claims, when WHJ filed any one of its three demurrers that raised the statute of limitations defense. Jamison also argued that Church suffered actual injury, for purposes of Church's legal malpractice claim, as soon as Church incurred attorney fees contesting the demurrers of WHJ that raised the statute of limitations defense in the employment case.

In October 2004, the superior court overruled the demurrer filed by Jamison to the malpractice complaint and stated, "It is simply too early to decide that [Church]'s claims are time-barred." The superior court was unwilling to draw factual inferences about what Church knew or should have known and when he actually incurred attorney fees.

Jamison answered Church's first amended complaint for malpractice and breach of contract. On December 29, 2004, Jamison filed a motion for judgment on the pleadings in which he asserted that he could not have committed malpractice because the statute of limitations applicable to Church's Labor Code claims had either expired before his representation started or, alternatively, had not yet expired before he filed the complaint against WHJ. Expressly disagreeing with the rulings made in WHJ's favor on WHJ's demurrer in the employment case, the superior court in the malpractice case granted Jamison's motion for judgment on the pleadings.

Church appealed in the malpractice case, which appeal we currently consider. Trial of the remaining claims by Church against WHJ, in the employment case, remains pending.

DISCUSSION

I...