Summarizing, explaining and commenting on legal developments impacting California Lawyers and Judges
The Supreme Court holds inadvertent disclosure of attorney-client privileged and work product protected documents pursuant to a Public Records Act request does not constitute waiver, and the claw back rules of inadvertently disclosed documents apply.
Plaintiff filed a class action lawsuit against Defendant City challenging the validity of a certain tax and seeking a refund. The trial court agreed when the City refused to produce certain documents as covered by the attorney-client privilege and work product protection. Several years later Plaintiff requested similar documents outside the litigation process utilizing the Public Records Act. After the City Administrative Officer provided documents the Plaintiff’s attorney notified the City’s attorney that she had acquired several documents that appeared to match those on the original privilege log.
The City responded that the documents were inadvertently disclosed, asked they be returned and that Plaintiff not rely on them. Plaintiff refused claiming waiver. The trial court denied City’s motion for return of the documents, concluding the City had waived any privilege. … Read full Post
The First District holds a bankruptcy trustee cannot assert claims against an attorney precluded by the doctrine of unclean hands.
MF’08 was a limited liability company whose sole managing member was another limited liability company dominated by Walter and Kelly Ng. Dennis Zentil represented MF’08. MF’08 promised investments in secured real estate loans, but in reality the funds were transferred to the Ngs. Zentil allegedly knew of MF’08’s fraudulent purpose and worked with the Ngs to conceal the true nature of its asset transfers.
MF’08’s liquidating bankruptcy trustee filed tort claims based on fraud against Zentil. The Court of Appeal affirmed the trial court’s sustaining of a demurrer without leave to amend based on the in pari delicto, or unclean hands, doctrine. … Read full Post
The Fourth District holds a successor trustee’s suit against counsel was timely because it was filed within one year of termination of the attorney-client relationship with the predecessor trustee.
James Kelly was the successor trustee of the Beverly Snodgrass Clark Intervivos Trust. He sued attorneys Barbara Orr, Joseph Holland, Gretchen Shaffer and the law firm DLA Piper LLP, attorneys for the predecessor trustee, Rebecca Clark. The attorneys demurred arguing the action was barred by the one year statute of limitations, Code of Civil Procedure § 340.6.
Clark had seized control of the trust from a prior trustee. To settle litigation over control of the trust, Clark resigned as trustee and Kelly replaced Clark. Kelly sued Clark’s attorneys less than a year later, alleging they negligently advised Clark about her authority as trustee and trust tax obligations. … Read full Post
The Fourth District holds a parent who would have lost custody of her child despite alleged errors and omissions by her counsel could not show causation in a legal malpractice claim
Johnneisha Kemper was represented by appointed county attorneys when she lost custody of her child. Another attorney from the same office believed prior attorneys had committed error by waiving Kemper’s right to appointment of a guardian ad litem for herself as a minor, and recommended outside counsel. However, the same office continued to represent plaintiff in a new petition to regain custody, which was denied. The court found Kemper should have had a guardian ad litem in the original proceeding, but that the best interests of the child dictated Kemper not regain custody.
Kemper appealed based on claims of ineffective assistance of counsel in the initial proceeding. The Court of Appeal agreed that the juvenile court should have appointed guardian ad litem, and this may have changed the outcome, but the trial court’s decision a change of custody was not in the child’s best interests was within its discretion. However, the Court found there was no evidence that the initial attorney had no rational tactical purpose for waiving a guardian ad litem, and Kemper could not establish ineffective assistance of counsel. Further, there was no evidence that had the initial attorneys handled the case differently the outcome would have been different. The Court observed that ultimately it was Kemper’s living circumstances and failure to reunify with her child that led to the custody decision. … Read full Post
The Sixth District holds a law firm’s open-ended agreement, evergreen retainer, and control over corporate records indicated a concurrent attorney-client relationship with a corporate client, and disqualification in a shareholder dispute was proper.
James M’Guinness, Steven Johnson, and Scott Stuart each owned one-third of the outstanding stock of TLC, and each was an officer and director of the corporation. In a shareholder dispute, the operative pleadings were a complaint filed by M’Guinness against Johnson, Stuart, and TLC; a cross-complaint filed by Johnson against M’Guinness and Stuart; a cross-complaint filed by Stuart against Johnson and TLC; and a cross-complaint filed by TLC against M’Guinness, Johnson, and Stuart for declaratory relief.
M’Guinness, Stuart, and TLC moved to disqualify Johnson’s attorneys, Casas, Riley & Simonian (Casas), because it concurrently represented TLC. Johnson asserted the representation terminated more than a year prior to the dispute, and was unrelated to the dispute. … Read full Post
The Second District holds threats of physical harm against opposing counsel justify terminating sanctions.
Douglas Crawford represented himself a dispute with Chase Bank about accounts held by his late mother. After numerous discovery skirmishes, he appeared for a deposition with a can of pepper spray and a stun gun, and threatened to physically harm opposing counsel.
Chase moved for terminating sanctions, arguing the threat of physical violence was the last straw in a string of discovery abuses. In his opposition, Crawford made extremely disrespectful statements about the judge’s obsequiousness to Chase’s counsel and other insulting characterizations. … Read full Post
The Ninth Circuit holds 28 U.S.C. § 1927 authorizes sanctions only against individual attorneys, not law firms.
Kaass Law attorney Armen Kiramijyan filed a complaint on behalf of Izabell Manukyan against 10 defendants, including Wells Fargo Bank, alleging improper reporting of adverse information to credit agencies. Kiramijyan responded to a motion to dismiss by moving to amend the initial complaint, but filed no opposition to the motion to dismiss.
The district court granted Wells Fargo’s motion to dismiss, and denied Manukyan’s motion to amend. The court ruled the complaint failed to differentiate between Defendants or allege acts by an individual Defendant. The proposed amended complaint did not rectify the deficiencies. … Read full Post
The Ninth Circuit holds factual probable cause can be established even if some evidence supporting a cause of action is fabricated, and legal probable cause can be established by even one supportive reported opinion.
Xcentric Ventures was sued for extortion by Lisa Borodkin’s clients based on its business of encouraging online third party negative reviews and other harmful online activities unless targets would pay high fees. When Xcentric prevailed, it sued Borodkin for malicious prosecution. The case was dismissed when the court found Xcentric could not establish the underlying claims were brought or continued without factual or legal probable cause. … Read full Post
The Supreme Court holds C.C.P. § 340.6’s one-year statute of limitations applies solely where the claim depends on proof an attorney violated a professional obligation.
Nancy Lee hired attorney William Hanley to represent her in litigation and advanced Hanley attorney fees. After the matter settled Hanley notified Lee she had a credit balance. Lee requested a refund but Hanley refused. Lee sued more than a year after Hanley’s refusal.
Lee’s operative complaint specified she was not injured by Hanley’s legal services, and that Hanley had refused to pay money he owed her. The trial court sustained Hanley’s demurrer reasoning C.C.P. § 340.6 applied to Lee’s claim, and the action was untimely. … Read full Post
The California Supreme Court allows an insurer to sue Cumis counsel to recover allegedly unreasonable and unnecessary defense fees and costs.
J.R. Marketing, Noble Locks, and several of their employees, (J.R. Marketing”) were sued for intentional misrepresentation, breach of fiduciary duty, unfair competition, and other counts in California and in other states. Hartford Casualty Insurance Company (“Hartford”), the liability insurer for J.R. Marketing, denied a duty to defend the actions. In a separate coverage action, the trial court entered an enforcement order finding Hartford had breached its defense obligation by refusing to provide independent (“Cumis”) counsel for the insured. The order also established Hartford waived its right to assert the attorney billing rate provisions of California Civil Code § 2860. The order explicitly permitted Hartford to challenge fees and costs in a separate reimbursement action after the underlying suits were resolved.
After the liability suits against J.R. Marketing were settled, Hartford filed an action against J.R. Marketing’s Cumis counsel, Squire Sanders, alleging it charged excessive fees and costs. The trial court sustained Squire Sanders’s demurrer to Hartford’s complaint, concluding the insurer had no legal or equitable claim against non-insureds, including independent counsel for an insured. The California Supreme Court reversed, holding, under the narrow facts of the case, that Hartford could pursue its right of reimbursement directly against Squire Sanders. … Read full Post