Eastwood Ranch v. Dyess



























Filed 2/4/13 Eastwood Ranch v. Dyess CA4/3













NOT TO BE PUBLISHED IN OFFICIAL REPORTS





California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.



IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA



FOURTH APPELLATE
DISTRICT



DIVISION THREE




>

EASTWOOD RANCH, LP, et al., Plaintiffs and Appellants, v. ROBERT W. DYESS, JR., et al., Defendants and Respondents.

G046526 (Super. Ct. No. 30-2010-00418687) ORDER MODIFYING OPINION; NO CHANGE IN JUDGMENT

It is ordered that the
opinion filed herein on January 16,
2013, be modified as
follows: On the first page, delete
attorney:

“Sedgwick LLP and
Federick B. Hayes for Defendants and Respondents.”

And in its place insert
the following correctly spelled attorney name:

“Sedgwick LLP and
Frederick B. Hayes for Defendants and Respondents.”







There is no change in
the judgment.







O’LEARY,
P. J.



WE CONCUR:







MOORE, J.







FYBEL, J.

Filed 1/16/13 Eastwood Ranch
v. Dyess CA4/3 (unmodified version)













NOT TO BE PUBLISHED IN OFFICIAL REPORTS






IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA



FOURTH APPELLATE
DISTRICT



DIVISION THREE




>

EASTWOOD RANCH, LP, et al., Plaintiffs and Appellants, v. ROBERT W. DYESS, JR., et al., Defendants and Respondents.

G046526 (Super. Ct. No. 30-2010-00418687) O P I N I O N

Appeal from a judgment
of the Superior Court
of Orange County,
Jamoa A. Moberly, Judge. Affirmed.

Sayre & Levitt,
Federico Castelan Sayre and Mahadhi Corzano for Plaintiffs and Appellants.

Sedgwick LLP and
Federick B. Hayes for Defendants and Respondents.







Samuel Ayoub (Ayoub) a
licensed realtor and real estate investor hired Robert W. Dyess, Jr., (Dyess)
and his law firm, Good Wildman Hegness & Walley (the Law Firm), to prepare
documentation to form a limited partnership, and a limited liability company,
and an agreement for the purchase of an apartment building with several other
investors as tenants in common. Dyess
prepared documents to create The Eastwood Ranch, LP, (hereafter the Eastwood
Partnership), a Delaware limited
partnership to act as owner of the property, and The Eastwood Ranch GP, LLC,
(hereafter Eastwood GP) to act as the general partner of the Eastwood
Partnership. Ayoub was named the
managing member of Eastwood GP. Dyess
drafted the tenancy in common agreement (TIC Agreement), executed by the
Eastwood Partnership and several other investors purchasing the apartment
building together.

After the building was
purchased, Ayoub discovered problems with Dyess’s drafting of the TIC
agreement. Ayoub, Eastwood Partnership,
and Eastwood GP (hereafter referred to collectively as Plaintiffs, unless
otherwise required to avoid confusion), filed a legal malpractice lawsuit
against Dyess and the Law Firm. The sole
issue raised on appeal is whether the trial court erred in awarding summary
judgment and denying a motion for new trial on the grounds Plaintiffs’
malpractice action was barred by the one-year statute of limitations. (Code Civ. Proc., § 340.6.)href="#_ftn1" name="_ftnref1" title="">[1] We affirm the judgment.

I

Ayoub and several other
investors wished to purchase an apartment building in Texas. Because some of the parties were investing in
the property as Internal Revenue Code section 1031 (hereafter section 1031)
exchanges,href="#_ftn2" name="_ftnref2" title="">[2]
Ayoub consulted with Dyess, a tax attorney and partner at the Law Firm.

In 2005, Dyess prepared
the documentation to form Eastwood Partnership to act as owner of the
property. He designated Ayoub as the
managing member of Eastwood GP, formed to act as the general partner of
Eastwood Partnership. To take advantage
of section 1031, Dyess recommended the building be purchased and held as a
tenancy in common. The advantages of
section 1031 would be lost if the investors were treated as a partnership.

In 2005, the investors
purchased the property for $11,845,000 and then assigned their interests in the
property to the tenancy in common. Dyess
drafted the

TIC
Agreement for the investors to sign. It
provided the Eastwood Partnership owned

55
percent of the property as a tenant in common with three sets of individual
investors, who owned the other 45 percent.
As required by section 1031, the TIC Agreement required all the tenants
in common to have unanimous consent for all significant decisions affecting the
property, including renting, refinancing, or selling the property. Thereafter, Dyess did not perform any further
legal services for Ayoub.

In the TIC Agreement,
Dyess did not include a “‘call provision,’” which would have specified a
procedure under which the majority owners would have the right to purchase the
ownership interest of the minority owners at fair market value at the time the
option was exercised. This omission is
the basis for the Plaintiffs’ legal malpractice action because this provision
was needed several years later (in 2007), when the investors disagreed about
leasing the property.

Specifically, in
September 2007 Ayoub was approached by a gas company wanting to lease the
property’s mineral and subsurface rights.
During the lease negotiations, Ayoub learned for the first time the TIC
Agreement required unanimous consent for all significant property decisions, including
a lease of the mineral rights. As it
turned out, four of the investors (the Shalabys and the Mansours) refused to
give their consent to the lease.href="#_ftn3"
name="_ftnref3" title="">[3]

Unable to lease the
property, Ayoub began consulting with a Texas law firm, Cantey & Hanger, in
November 2007, about selling the property.
At the time, the property was worth 12.4 million dollars. In January 2008, the Texas law firm informed
Ayoub it could not represent him and the other investors with respect to a
potential sale because their fees would be a flat rate based on the proceeds of
the escrow or a signing bonus. The firm
declined representation on the grounds the unanimous consent clause in the TIC
Agreement would complicate the sale transaction. It was deemed too risky for the law firm to
prepare the deal and have it fall through in the event a single investor
objected to the terms of the sale.

In February 2008, Ayoub
sent an e-mail to some of the other investors explaining the difficulty in
finding a law firm to represent the group in selling the property. He wrote Cantey & Hanger’s “main concern
was, as in the case of other law firms, is that [sic] ‘All [that] it takes is that one of the [t]enants-[i]n-[c]ommon refusing to sign any of the
documents needed to close the transaction; [sic]
to bring the whole deal to a complete stop.’
The concern of the lawyers is that they will not be able to close
escrow and get paid.” Ayoub also
disclosed to the others, “I am wondering now:
why the attorney who put together this [t]enancy-[i]n-[c]ommon back in
2005, moved quickly without these concerns?”

Ayoub was referring to
Dyess, the drafting attorney. Shortly
thereafter, Ayoub contacted Dyess to ask about the unanimous consent
provision. Dyess informed Ayoub that
inclusion of a provision permitting a majority rather than unanimous decision
would have violated the IRS’s rules governing section 1031 exchanges, and the
investors would have been required to pay capital gain taxes. Ayoub recalled Dyess represented he had given
the investors the best possible TIC Agreement under the IRS rules.

Although Dyess did not
perform further legal services for Plaintiffs, in

May
2009 he sent Ayoub an e-mail regarding a possible buyer to purchase the
property. In November 2009, Ayoub
visited a friend in California who also used a TIC Agreement to purchase
property. The friend had not encountered
the same problems as Ayoub because his agreement contained a “call
provision.” Ayoub learned this provision
would have permitted him to have purchased the ownership interests of the
dissenting investors for fair market value and, thereafter, he would have been
free to lease or sell the property.

In February or March of
2010, Ayoub consulted with another attorney, Eugene Trowbridge in
California. Trowbridge explained “call
provisions” in

TIC
Agreements were standard as of 2002 and qualified for section 1031 tax deferred
status. A few months later, on October
21, 2010, Plaintiffs filed their legal malpractice action against Dyess and the
Law Firm. Plaintiffs claimed they could
have sold the property for $12.4 million dollars in 2007 if the TIC Agreement
contained the “call provision.” In
addition, Plaintiffs alleged they had to invest additional capital to prevent
the property from going into default because rents from the property had
declined along with the overall real estate market. Ayoub alleged he personally loaned the
investment $230,000, and he had not received his agreed upon management fees or
out of pocket expenses, totaling $300,000.

Dyess and the Law Firm
moved for summary judgment, alleging the statute of limitations started to run
no later than February 7, 2008, when Plaintiffs first suffered actual injury
and had discovered facts relating to Dyess’s alleged negligence in drafting the
TIC Agreement. (§ 340.6) They referred to Ayoub’s February 7, 2008,
e-mail as evidence Ayoub had a strong suspicion Dyess’s drafting skills were
lacking. Plaintiffs filed an opposition,
presenting evidence the statute of limitations did not commence until November
2009, when Ayoub learned from a friend about the missing “call provision.” Plaintiffs also argued Dyess and the Law Firm
were equitably stopped from asserting the statute of limitations defense
because Dyess told Ayoub the agreement was not negligently drafted.

On November 22, 2011,
the court granted the motion. In its
minute order, the court stated, “Ayoub was aware in 2007 and 2008 of facts
giving rise to his claim for malpractice, i.e., that the [TIC Agreement]
required unanimous consent of [the] member[s] for major sales, and that
minority members refused to give consent to the sale of the Property and
mineral rights. . . . At that time, he was on notice to inquire. The only thing Ayoub learned in 2009 was the
legal theory behind his malpractice action.”
(Citing Village Nurseries v.
Greenbaum (2002) 101 Cal.App.4th 26, 42-43.) In addition, the court ruled Plaintiffs had
failed to “plead or present admissible evidence supporting equitable estoppel.
. . . There is no evidence that . . . Dyess knew at any relevant time that a
call provision could have been included in the TIC Agreement.”

Plaintiffs filed a
motion for a new trial asserting fraudulent intent was not required to prove
equitable estoppel, and based on this error of law, the court should grant a
new trial. On January 20, 2012, the
court denied the motion. In the minute
order the court stated, “Equitable estoppel cannot apply until the statute of
limitations begins to run. . . . Plaintiffs admitted that [Dyess and the Law
Firm] provided no legal advice and representation in 2009 and 2010. . . . The
one-year statute of limitations ran prior to filing of the complaint on October
21, 2010.”

II

Plaintiffs contend the
trial court erred in concluding their malpractice action was barred by the
one-year statute of limitations, and thus the trial court should not have
granted summary judgment. They assert
the court misinterpreted the alleged wrongful acts, because Dyess’s mistake did
not relate to the unanimous consent provision, but rather to his failure to
include the “call provision.” Plaintiffs
allege there is a triable issue of material fact as to whether they had
constructive knowledge of this related, but separate wrongful act. We disagree.

>A.
Summary Judgment Standard of Review

“Summary judgment is
appropriate only if there is no triable issue of material fact and the moving
party is entitled to judgment in its favor as a matter of law. [Citation.] . . . A defendant moving for
summary judgment . . . must show that one or more elements of the plaintiff’s
cause of action cannot be established or that there is a complete defense. [Citation.]
The defendant can satisfy its burden by presenting evidence that negates
an element of the cause of action or evidence that the plaintiff does not
possess and cannot reasonably expect to obtain evidence needed to support an
element of the cause of action.
[Citation.] If the defendant
meets this burden, the burden shifts to the plaintiff to set forth ‘specific
facts’ showing that a triable issue of material fact exists. [Citation.]
[¶] We review the trial court’s
ruling de novo, liberally construe the evidence in favor of the party opposing
the motion, and resolve all doubts concerning the evidence in favor of the
opposing party. [Citation.] We will affirm an order granting summary
judgment . . . if it is correct on any ground that the parties had an adequate
opportunity to address in the trial court, regardless of the trial court’s
stated reasons. [Citations.]” (Securitas
Security Services USA, Inc. v. Superior Court (2011)

197
Cal.App.4th 115, 119 120.)

>B.
Statute of Limitations for Legal Malpractice

To prove professional
negligence against an attorney, the former client must satisfy these
elements: (1) the professional had a
duty to use such skill, prudence, and diligence as other members of the
profession commonly exercise; (2) the defendant breached the duty, failing to
meet this standard of conduct; (3) there was causation between negligence and
claimed loss or injury; and (4) actual loss or damage resulted from
professional negligence. (>Budd v. Nixen (1971) 6 Cal.3d 195, 200,
superseded in irrelevant part by § 340.6, as stated in >Laird v. Blacker (1992) 2 Cal.4th 606.)

A plaintiff’s discovery
(actual or constructive) of a defendant’s alleged wrongful conduct is not an
element of a cause of action for legal malpractice, but an untimely discovery
of injury can be pleaded as an affirmative defense to a claim of
malpractice. (Samuels v. Mix (1999) 22 Cal.4th 1, 7-8.) Although section 340.6 specifies the
limitations period begins to run upon the plaintiff’s discovery of such facts
as will show the defending attorney acted wrongfully (or ability to discover),
the section further provides for tolling of that time period until actual injury
is sustained. (§ 340.6, subd. (a)(1).)

Specifically, section
340.6 provides, in relevant part, “An action against an attorney for a wrongful
act or omission, other than for actual fraud, arising in the performance of
professional services shall be commenced within one year after the plaintiff
discovers, or through the use of reasonable diligence should have discovered,
the facts constituting the wrongful act or omission, or four years from the
date of the wrongful act or omission, whichever occurs first. . . . [I]n no
event shall the time for commencement of legal action exceed four years except
that the period shall be tolled during the time that any of the following
exist: [¶] (1)
The plaintiff has not sustained actual injury. [¶]
(2) The attorney continues to represent the plaintiff regarding the
specific subject matter in which the alleged wrongful act or omission
occurred. [¶]

(3)
The attorney willfully conceals the facts constituting the wrongful act or
omission when such facts are known to the attorney, except that this
subdivision shall toll only the four-year limitation. . . .” (§ 340.6, subd. (a).)

“‘Thus, the limitations
period is one year from actual or imputed discovery, or four years (whichever
is sooner), unless tolling applies.’
[Citation.] Although the language
of the statute is ambiguous on the point, ‘[t]he tolling provisions of

section
340.6 apply to both the one-year and the four-year provisions.’ [Citations.]”
(Croucier v. Chavos (2012) 207
Cal.App.4th 1138, 1145-1146.)

“The
question of when a malpractice plaintiff actually discovered or through the use
of reasonable diligence should have discovered a wrongful act or omission and
suffered injury is generally one of fact.
[Citation.]” (>McCann v. Welden (1984) 153 Cal.App.3d
814, 824, fn. omitted (McCann).) “The question becomes a matter of law only
where reasonable minds can draw but one conclusion from the evidence. [Citation.]”
(Ibid, fn. 13; >Jolly v. Eli Lilly & Co. (1988) 44
Cal.3d 1103, 1112 (Jolly) [“While
resolution of the statute of limitations issue is normally a question of fact,
where the uncontradicted facts established through discovery are susceptible of
only one legitimate inference, summary judgment is proper”].)

In this case, the record
clearly reveals when Plaintiffs
sustained actual injury from the manner in which Dyess prepared the
transactional documents. The complaint
acknowledges that by 2008 Plaintiffs learned they could not lease or sell the
property without unanimous consent of all the tenants in common, law firms
refused to represent them in selling the property, and there was no remedy
written in the agreement to address this contingency. The issue we must decide is whether there was
also evidence Plaintiffs had sufficient suspicion of wrongdoing to trigger the
statute of limitations. (§ 340.6,
subd. (a).)

>C.
Knowledge and Constructive Knowledge Criteria

“It
is well settled that the one-year limitations period of section 340.6 ‘“is
triggered by the client’s discovery of ‘the facts constituting the wrongful act
or omission,’ not by his discovery that such facts constitute professional
negligence, i.e., by discovery that a particular legal theory is applicable
based on the known facts. ‘It is irrelevant that the plaintiff is ignorant of
his legal remedy or the legal theories underlying his cause of action.’” [Citation.]’
[Citations.]” (>Peregrine Funding, Inc. v. Sheppard Mullin
Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 685 (>Peregrine).)

“The
statute of limitations is not tolled by belated discovery of >legal theories, as distinguished from
belated discovery of facts. In legal and medical malpractice cases, the
courts are often confronted with such claims that the statute of limitations
has been tolled. However, the Supreme
Court repeatedly has explained that it is the knowledge of facts rather than
discovery of legal theory, that is the test.
The test is whether the plaintiff has information of circumstances
sufficient to put a reasonable person on inquiry, or has the opportunity to
obtain knowledge from sources open to his or her investigation. [Citation.]
If the plaintiff believes that someone has done something wrong because
of the damages suffered by [him or] her, such a fact is sufficient to alert a
plaintiff ‘to the necessity for investigation and pursuit of her
remedies.’ [Citation.]” (McGee
v. Weinberg (1979) 97 Cal.App.3d 798, 803; see Jolly, supra, 44 Cal.3d at

p. 1110; Sanchez v. South Hoover Hospital (1976) 18 Cal.3d 93, 101.)

Plaintiffs
claim Dyess negligently drafted the TIC Agreement by failing to include a
remedy in the event the tenants in common could not unanimously agree about
matters involving the property.
Specifically, Dyess could have included a “call provision,” which would
have permitted Plaintiffs to purchase the interests of the dissenting
investors. Plaintiffs correctly assert
having knowledge of the unanimity provision cannot be deemed the same thing as
having knowledge Dyess omitted the call provision. And Plaintiffs established they first learned
about the possibility of including a call provision in 2010, when Ayoub read
his friend’s TIC Agreement.

Nevertheless,
we agree with the trial court’s determination the statute of limitations began
to run in 2007 when Plaintiffs should have discovered the facts supporting
liability. It is undisputed Plaintiffs
suffered actual injury in September 2007 when they were unable to lease the
mineral rights, and in November 2007 when the Texas law firm and other law
firms refused to represent Plaintiffs in the sale of the property. Ayoub’s e-mail to his fellow investors
reflected Plaintiffs suspected the harm was caused by poor drafting of the TIC
Agreement. Although they may not have
known Dyess omitted a specific kind of provision that could have easily
remedied the impasse between investors, the facts underlying the harm plus
Ayoub’s stated suspicious would have alerted a reasonable person “‘to the
necessity for investigation and pursuit of [his or] her remedies.’ [Citation.]”
(McGee v. Weinberg (1979) 97
Cal.App.3d 798, 803.) In other words,
Plaintiffs were not ignorant of the need for a remedy to address the damage,
they were only unaware of the name or type of provision that should be added to
their TIC Agreement.

The
above conclusion is what sets this case apart from McCann, supra,

153 Cal.App.3d 814, relied upon
by Plaintiffs. In that case, the court
concluded separate acts of malpractice led to separate actionable
injuries. The plaintiff in >McCann learned shortly after dissolution
of his marriage that his attorney drafted a stipulation that inadequately
provided for distribution of the marital assets. (McCann,
supra,

153 Cal.App.3d at pp.
817-818.) He decided not to sue. However, the following year, he learned the
stipulation contained a second deficiency in that it failed to provide for a
termination of his spousal support obligations when he purchased a house. (Id.
at p. 818.) The appellate court
concluded the claim for negligence regarding the spousal support stipulation was
timely even though the plaintiff had earlier discovered he had a possible
malpractice action against the defendant based on a different drafting
mistake. (Id. at

pp. 820-821.)

In
contrast, here there was only one injury as a result of Dyess’s failure to
include the “call provision,” i.e., Plaintiffs could not sell or lease the
property without unanimous consent of all the tenants in common. The two provisions are separate but certainly
related. Plaintiffs’ knowledge of the
harm caused by one would put a reasonable person on constructive notice there
may be something that could be added or changed to help remedy the investors’
deadlock over what to do with their property.
We are not suggesting Plaintiffs were required to have expert knowledge
of the types of remedies available under the IRS rules for section 1031 tax
deferred exchanges. The test for
triggering the statute of limitations is not the point at which a Plaintiff has
technical knowledge of the standard or care in drafting a TIC Agreement. But as seen in Ayoub’s e-mail to the other
investors, he clearly suspected the TIC Agreement was not properly
drafted. Given these facts, a reasonable
person would investigate the matter further by seeking different legal advice,
i.e., get a second opinion.

We
agree with the trial court’s conclusion the disputed facts established, as a
matter of law, Plaintiffs were on notice of a potential legal malpractice claim
in 2007. The statute of limitations are
“‘practical and pragmatic devices to spare the courts from litigation of stale
claims, and the citizen from being put to his defense after memories have
faded, witnesses have died or disappeared, and the evidence has been
lost.’ [Citation.]” (Adams
v. Paul (1995) 11 Cal.4th 583, 603.)
As aptly noted by Dyess and the Law Firm, if we were to accept
Plaintiffs’ theory they needed actual knowledge of the name of the missing
remedy provision, they would have unilateral control over the limitations
period. It should not take years of
missed leasing opportunities, multiple rejections of legal representation, or
lack of purchase offers to put a reasonable person on inquiry notice and the
need to seek an expert’s opinion. We
conclude that in this case the nature of the Plaintiffs’ damages in 2007 were
sufficient to cause a reasonable person to suspect the TIC Agreement was
negligently drafted. In short, when
Plaintiffs found it impossible to lease or sell the property, or find a law
firm to represent them, the statute of limitations to file a legal malpractice
action was triggered.

E. Equitable Estoppel

Plaintiffs argue the
trial court erred in finding (1) they were required to plead fraudulent intent
to claim equitable estoppel, and (2) equitable estoppel does not apply until
the statute of limitations begins to run.
Applying our de novo standard of review, we need not decide if the trial
court was mistaken. Based on our review
of the record, we conclude equitable estoppel does not apply in this case.

Plaintiffs seek to
“invoke the venerable principle that ‘“[o]ne cannot justly or equitably lull
his adversary into a false sense of security, and thereby cause his adversary
to subject his claim to the bar of the statute of limitations, and then be
permitted to plead the very delay caused by his course of conduct as a defense
to the action when brought.’”
[Citations.] [¶] Equitable tolling and equitable estoppel are
distinct doctrines. ‘“Tolling, strictly
speaking, is concerned with the point at which the limitations period begins to
run and with the circumstances in which the running of the limitations period
may be suspended. . . . Equitable estoppel, however, . . . comes into play only
after the limitations period has run and addresses . . . the circumstances in
which a party will be estopped from asserting the statute of limitations as a
defense to an admittedly untimely action because his conduct has induced
another into forbearing suit within the applicable limitations period. [Equitable estoppel] is wholly independent of
the limitations period itself and takes its life . . . from the equitable
principle that no man [may] profit from his own wrongdoing in a court of
justice.’” [Citation.]” (Lantzy
v. Centex Homes (2003) 31 Cal.4th 363, 383 (Lantzy).)

“One aspect of equitable
estoppel is codified in Evidence Code section 623, which provides that
‘[w]henever a party has, by his own statement or conduct, intentionally and
deliberately led another to believe a particular thing true and to act upon
such belief, he is not, in any litigation arising out of such statement or
conduct, permitted to contradict it.’
[Citation.] But ‘“[a]n estoppel
may arise although there was no designed fraud on the part of the person sought
to be estopped. [Citation.] To create an equitable estoppel, ‘it is
enough if the party has been induced to refrain from using such means or taking
such action as lay in his power, by which he might have retrieved his position
and saved himself from loss.’ . . . “. . . Where the delay in commencing action
is induced by the conduct of the defendant it cannot be availed of by him as a
defense.’”’ [Citations.]” (Lantzy,
supra, 31 Cal.4th at p. 384.)

To invoke the doctrine
of equitable estoppel, Plaintiffs rely on evidence Dyess knew Plaintiffs were
having difficulty selling the property and that he advised Ayoub there was no
way around the unanimous consent provision.
If true, this would be considered faulty legal advice. Relying on Leasequip, Inc. v. Dapeer (2002)

103
Cal.App.4th 394 (Leasequip),
Plaintiffs argue that in legal malpractice cases any erroneously rendered legal
opinion can serve as a basis for applying equitable estoppel. Not so.
In the Leasequip case,
plaintiff corporation was prevented from filing a timely legal malpractice
action against its attorney because, during the statutory period, its corporate
powers were suspended. (>Id. at p. 404.) Plaintiff’s status as a suspended corporation
resulted directly from the attorney’s erroneous advice that compliance with
corporate formalities was not necessary and would not affect the company’s
legal claims. (Ibid.) The appellate court,
applying the doctrine of equitable estoppel, ruled the attorney could not raise
a statute of limitations defense when plaintiff’s reliance upon his erroneous
legal advice was the very thing that led to the statute expiring. (Id.
at p. 405.)

Other courts have
factually distinguished this case and interpreted the Leasequip opinion as holding an attorney’s misconduct will not
invoke equitable estoppels unless there is specific conduct that induced the
plaintiff from filing suit.

(See
Peregrine, supra, 133 Cal.App.4th at
p. 686.) Indeed, it has long been the
rule that equitable estoppel must be based on conduct inducing the plaintiff to
refrain from filing suit. (See >Battuello v. Battuello (1998) 64
Cal.App.4th 842, 848 [promise made during settlement negotiations induced
plaintiff not to file suit or objection to probate petition]; >Union Oil Co. of California v. Greka Energy
Corp. (2008) 165 Cal.App.4th 129, 138 [defendant “urged the bonding company
and Unocal to suspend legal actions” with a “promise to amend the contracts”]; >Shaffer v. Debbas (1993) 17 Cal.App.4th
33, 43-44 [suit delayed by representations of repair]; cf. Peregrine, supra, 133 Cal.App.4th at p. 686 [no facts alleged showing
defendants “‘actually and reasonably
induced’ the investors to forbear filing suit . . .’’].)

There
is no evidence in the record showing Dyess or his Law Firm induced Plaintiffs
from filing a lawsuit against him or the Law Firm. Plaintiffs do not allege Dyess discouraged
them from filing a legal malpractice action.
Dyess simply represented to the Plaintiffs he thought the TIC Agreement
was properly drafted. However, when Plaintiffs
asked Dyess about the TIC Agreement, they already suspected this was not the
case. At the time, Plaintiffs were on
notice of the need to inquire about Dyess’s drafting skills. A reasonable person would seek the legal
opinion of someone other than Dyess, to review the agreement he prepared for
error. It would not be reasonable to ask
the doctor who operated on the wrong leg if he thinks he did a good job. Dyess’s favorable opinion about his own
drafting skills was no justification for Plaintiffs to forbear filing a
malpractice suit within the limitations period.
Despite having suspicion of wrongdoing, Plaintiffs sat on their rights
to file suit.

III

The
judgment is affirmed. Respondents shall
recover their costs on appeal.







O’LEARY,
P. J.



WE CONCUR:







MOORE, J.







FYBEL, J.