Von Rott v. Johnson

Plaintiff appeals from a summary judgment granted on defendant’s motion.

In this case we consider whether an attorney responsible for drafting legal documents relating to the sale/purchase of a business, who becomes a pledgeholder for stock involved in the transaction, becomes subject to the statute of limitations continuous representation tolling provision in an action for professional negligence, where the attorney’s sole involvement with the former client within one year of the filing of the action was that of a pledge-holder.

Defendant, a licensed practicing attorney, was contacted by plaintiff in July 1977 regarding the sale of plaintiff’s business (Sacramento Valley Enterprises, Inc., a Nevada corporation) to Patricia Keller. At that time, plaintiff and Keller had decided on a price of $750,000 for the sale of the business.

Defendant met with plaintiff and Keller on two occasions; he provided legal advice on the method by which the purchase and sale could be accomplished with favorable tax consequences to all parties. Defendant determined the appropriate structure for the purchase and sale was a “bootstrap” procedure pursuant to Internal Revenue Code section 332…