Counsel Concerns

Knowledge of Royalty Settlement Starts Malpractice Limitations Period

The California Court of Appeal, Second District, affirmed that a suit over legal representation regarding TV program royalties was barred by the one-year statute of limitations for malpractice claims in Calif. Code of Civil Procedure '340.6(a). Worldwide Subsidy Group v. Bogert (WSG), B213979. WSG is a collection company for royalties from retransmissions of TV programs on cable and satellite. Though a WSG principal had asked him to stop serving as counsel to the company, Jeffrey C. Bogert purported to represent WSG (d/b/a Independent Producers Group) in a 2004 settlement of a proceeding before the Library of Congress's Copyright Arbitration Royalty Panel (CARP). Later in 2004, WSG's then-current counsel Brian Boydston obtained an unsigned copy of the settlement agreement, which he believed hurt WSG's interest. WSG filed a professional negligence complaint against Bogert in Los Angeles Superior Court in November 2006. Section 340.6(a) states that an “action against an attorney for a wrongful act or omission ' 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 ' whichever occurs first.” The trial court granted Bogert's motion for summary judgment in finding that the evidence clearly demonstrated WSG “sustained actual and appreciable harm no later than December 2004 or January 2005, and thus, that [appellant] knew or should have known of Defendant's alleged negligence as of that date.”

The California Court of Appeal noted in its unpublished affirmance:

Here, the undisputed evidence showed not only that appellant [WSG] had discovered the settlement agreement in the CARP matter negatively affected the amount of money it would receive over the next several years, but also that appellant knew or suspected that Bogert's representation was the cause of its damages. In connection with an earlier motion seeking a preliminary injunction in Galaz v. Oshita [in which WSG principal Lisa Galaz had sued an investor in WSG], Galaz declared: 'An attorney, skilled in administrative hearings, and telecommunications and copyright law, is of critical importance in championing WSG-TX's [IPG's] methodology in the Copyright Appeal. ' If the Copyright Office rejects this methodology, adopts a slightly modified version of same, or fails to adequately defend its rejection of the competing methodology, enormous losses to the [WSG] LLCs, the LLCs' clients, and Plaintiff will result.' While general dissatisfaction with an attorney's performance is insufficient to trigger the ['340.6(a)] limitations period ' the undisputed evidence here showed that Galaz never believed Bogert possessed the skill necessary to represent appellant in the CARP matter and, specifically, to advocate its royalty methodology in that action; in December 2004 Boydston received the settlement agreement which failed to adopt IPG's methodology; and also in December 2004 Boydston expressed his realization of the ramifications of that failure, stating that the settlement agreement would serve to decrease the amount of money to which appellant was entitled. The undisputed evidence established that the one-year limitations period commenced to run in December 2004.”

WSG nevertheless argued that the statute of limitations had been tolled. But the court of appeal found in part that “through Boydston appellant conceded that the settlement agreement had impaired and compromised its right to collect royalties over the next several years. Contrary to appellant's contention [that the amount of future affected royalties wasn't yet known in December 2004], quantification of those lost royalties would merely confirm, not create, the actual injury that appellant had suffered by reason of the settlement agreement.” The court of appeals added: “Given evidence that appellant terminated its attorney-client relationship with Bogert more than one year before filing suit, coupled with the absence of evidence Bogert conducted any activities in furtherance of the relationship beyond his remaining as counsel of record, we agree with the trial court that appellant failed to show the statute of limitations should be tolled by reason of Bogert's asserted continued representation.”