Summarizing, explaining and commenting on legal developments impacting California Lawyers and Judges
The Second District holds facts supporting a legal malpractice claim are insufficient to support a breach of fiduciary duty claim. Breach of fiduciary duty requires an additional showing the attorney breached a duty of confidence or loyalty.
Broadway Victoria, LLC, was a commercial real estate company owned by Anita Lorber. She also owned a textile manufacturing business, Lorber Industries of California, Inc. Lorber Industries leased a parcel of industrial land from Elixir Industries. The lease gave Lorber Industries a right to first refusal if a third party offered to buy the property during the lease term. Elixir sold the property without extending Lorber Industries its right of first refusal.
When Lorber Industries reorganized under Chapter 11, it asked the bankruptcy court to authorize it to assume the lease as debtor-in-possession, and to assign it to the highest bidder. Broadway Victoria submitted the highest bid, and the bankruptcy court authorized Lorber Industries to assume the lease and assign it to Broadway Victoria. … Read full Post
Yale v. Browne 2017 WL 947608 (Cal. Ct. App. February 9, 2017, as modified March 10, 2017)
The Second District holds under certain circumstances it may be proper to apply the concept of “comparative fault” in legal malpractice actions. While precedent had previously recognized that the concept of “contributory” negligence may apply in legal malpractice cases, this is the first opinion to approve the use of a “comparative” negligence defense in a legal malpractice action.
Valerie Yale sued her attorney, Robert Browne, II, for legal malpractice in connection with his preparation of family trust documents. Yale alleged Browne failed to accomplish her explicit goal of keeping her assets separate from marital property owned with her former husband.
Yale testified she had lost half of everything in a previous divorce, and when she married again she insisted on a prenuptial agreement to preserve her separate property. Years later Yale engaged Browne to update her trust. Although Yale read a paragraph declaring the trust included both separate and community property, she did not raise any concerns with Browne. … Read full Post
The Third District holds a client’s receipt of a motion to withdraw stating the attorney is no longer providing legal services terminates the attorney-client relationship for statute of limitations analysis.
Stanley Flake and others were represented by Neumiller & Beardslee (Neumiller) in unsuccessful real estate litigation. Neumiller moved to withdraw after trial based on successor counsel’s assumption of litigation duties. The unopposed motion was granted and Neumiller served the order on Flake.
One day short of the anniversary of the withdrawal order, Flake sued Neumiller for legal malpractice. Neumiller successfully argued on summary judgment the statute of limitations began to run on receipt of the motion to withdraw, when Flake understood that Neumiller no longer represented his interests. This was several weeks prior to the court’s order, rendering the malpractice suit, filed more than a year after receipt of the motion, untimely. … Read full Post
The First District holds a press release about a malicious prosecution action is privileged under C.C. §47(d), a fair and true report of an official proceeding, but not under C.C. § 47(b), the litigation privilege.
While a student at Harvard Mark Zukerberg answered an ad posted by Paul Ceglia to provide website development services. He signed a “Work for Hire” contract, received only partial payment, and later found Facebook. Years later Ceglia sued Facebook claiming the contract Zukerberg signed entitled Ceglia to 84% of Facebook’s shares.
Ceglia’s attorney Paul Argentieri recruited DLA Piper LLP (DLA Piper), Lippes Mathias Wexler Friedman LLP (Lippes), and Kasowitz Benson Torres & Friedman LLP (Kasowitz), to co-counsel with him in a lawsuit against Zuckerberg and Facebook. Kasowitz hired an expert who determined the Work For Hire contract had been altered, informed Argentieri, and withdrew from the case. Argentieri and the other law firms filed an amended pleading. After Kasowitz notified DLA Piper and Lippes of its findings, they too abandoned the case, although Argentieri remained. Eventually Ceglia’s fraud was uncovered and his case was dismissed. … Read full Post
The Second District holds statements to the media about the allegations in a complaint are privileged under C.C. §47(d), a fair and true report of an official proceeding.
Michael Drobot owned and operated Healthsmart Pacific Inc. which owned and operated Pacific Hospital, specializing in spinal surgeries. Drobot pled guilty to bribing a state senator for his support of regulations allowing workers to “pass through” the cost of hardware used in the spine surgeries to workers’ compensation insurance carriers. Drobot also admitted to paying kickbacks, which included cash, meals, and services, to doctors, chiropractors, marketers, and others for spinal surgery referrals.
A former patient, Mary Cavalieri, sued Drobot and Healthsmart, alleging they engaged in a bribery scheme, accusing them of using hardware from a “sham” distributor, and of paying kickbacks, including supplying prostitutes, for referrals. The complaint alleged surgeons used counterfeit, non-FDA approved, knock-off medical hardware produced by a local machine shop. … Read full Post
The Supreme Court, in a four to three decision, holds whether an attorney client communication is privileged depends on whether the communication bears some relationship to the attorney’s legal services. Invoices, transmitted to allow an attorney to collect a fee, may contain unprivileged information subject to disclosure under the Public Records Act, which requires government agencies to disclose non-privileged portions of public documents.
Under the Public Records Act (PRA), the ACLU of Southern California demanded the Los Angeles County Board of Supervisors and the Office of the Los Angeles County Counsel produce invoices from law firms who billed for services in nine lawsuits alleging excessive force against jail inmates. The County agreed to produce invoices related to three lawsuits no longer pending, redacting attorney-client privileged and work product information. The County refused to provide invoices for six pending lawsuits as exempt under the act.
The trial court granted the ACLU’s petition to compel disclosure, finding the County failed to show the invoices were attorney-client privileged communications. However, the court allowed the County to redact entries reflecting attorney legal opinions or advice, or attorney mental impressions or theories. The County filed a writ of mandate that made its way to the Supreme Court. … Read full Post
The Second District holds California’s legal malpractice statute of limitations, C.C.P. § 340.6, applies to all claims, including those based on non-legal functions, that are incident to the attorney-client relationship.
Christine Foxen and her husband hired John Carpenter and his firm to recover for Foxen’s personal injuries. After both claims were settled, Carpenter disbursed the settlement funds after deducting fees and costs.
Over three years after Foxen alleged she discovered Carpenter collected fraudulent and improper costs, she sued Carpenter under contract and fraud based theories. The trial court sustained a demurrer to all causes of action based on California’s statute of limitations for legal malpractice, C.C.P. § 340.6. … Read full Post
The Fourth District holds a law firm’s concurrent representation of a class representative and, in a separate action, an unnamed but identified class member with conflicting interests results in automatic disqualification.
Brandon Felczer, represented by Hogue & Belong, filed a wage-and-hour class action against Apple. The Felczer trial court certified six subclasses of non-exempt employees.
Stacy and Tyler Walker, also represented by Hogue & Belong, filed a putative class action against Apple in the same court alleging claims of former nonexempt employees of a store who allegedly did not receive final wage statements after termination. The Walkers claimed this was Apple’s policy and practice because it blocked online access to wage statements upon termination and prior to receipt of a final statement. Apple’s defense was store managers are directed to deliver final paychecks and wage statements in hard copy to terminated employees. … Read full Post
The First District holds due process requires individual attorneys from the same government agency not serve as both advocates and advisors. Agency attorneys acting in these roles must be screened from each other, and advocates from the decision makers, to avoid biasing an impartial decision maker. However, once the decision is final, and the agency itself becomes a party to litigation, the agency may rely on the advice of its advocacy staff to defend its position.
Drake’s Bay Oyster Company operated on federal land within the California Coastal Commission’s permitting jurisdiction. The Commission issued an order to the prior owner to cease unpermitted development on the site. After the Company took over, it addressed these development issues, but the Commission repeatedly found the Company’s applications incomplete.
The Commission held a hearing on unresolved development issues. Commission Enforcement Staff attorneys advocated for orders to prevent development they maintained violated the California Coastal Act. The Commission voted unanimously to issue the orders advocated by its Enforcement Staff. … Read full Post
The Second District holds a client has no reasonable expectation of further services when a law firm announces it must withdraw. Further ministerial acts transferring the file to new counsel do not constitute continuing representation to toll the statute of limitations.
When SoCal IP Law Group, LLP represented GoTek Energy, Inc. it admittedly negligently failed to file foreign patent applications. When GoTek’s legal malpractice counsel requested SoCal inform its carrier, SoCal immediately notified GoTek by email it had to withdraw as its counsel. The next day, GoTek replied, agreeing to the withdrawal and instructing SoCal to transfer its files to another attorney. One year and one week after SoCal notified GoTek it had to withdraw as counsel, GoTek filed its malpractice action.
SoCal asserted a statute of limitations defense, arguing GoTek’s email agreeing to the withdrawal and demanding transfer of the files signaled the end of the attorney-client relationship. GoTek’s officer testified he believed the relationship terminated later, when the file transfer to new counsel was complete. It asserted the action was timely because it was filed one day short of the one year anniversary of the completed file transfer. … Read full Post