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November 28, 2007

Panoutsopoulos v. Chambliss (2007) 157 Cal.App.4th 297

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The First District holds that allegations of attorney conduct that are consistent with the performance of proper legal services for a client do not state a valid cause of action for an attorney-client civil conspiracy.

Nicholas and Ekaterine Panoutsopoulos entered into a lease agreement with George and Mary Karsant to lease a portion of their building for a restaurant.  The Panoutsopouloses filed a case alleging that over the term of a lengthy lease Karsant’s son endeavored to harass them so that they would either vacate or pay double their rent.  Panoutsopoulos alleged that Karsant often and without cause claimed that the Panoutsopouloses were in breach of the lease agreement and threatened to terminate the lease.

Attorney Denise Chambliss and her firm represented Karsant and wrote a series of letters to the Panoutsopouloses asserting that they were in breach of the lease for a variety of reasons.  Chambliss also served two three-day notices to perform or quit.  The Panoutsopouloses also claimed that Karsant and Chambliss unsuccessfully sought to persuade a plumbing contractor to blame them for an exaggerated plumbing problem.

Panoutsopoulos filed a lawsuit against Karsant and later sought to amend to include Chambliss.  The trial court granted Panoutsopoulos’s petition under Civil Code § 1714.10, California’s attorney conspiracy gatekeeper statute, to amend the complaint to allege a claim against Chambliss premised on a civil conspiracy to defraud, willfully interfere with quiet possession of business premises, and intentional infliction of severe emotional distress.  The Court of Appeal reversed.

Section 1714.10 requires pre-filing approval of a claim against an attorney for civil conspiracy arising out of attorney conduct in contesting a claim arising out of the attorney’s representation of her client.  The court can only allow the filing if it determines there is a reasonable probability that the party will prevail in the action.  Excepted from the reach of the statute is a pleading alleging that the attorney has an independent legal duty to the plaintiff or that attorney’s acts go beyond the performance of a professional duty to serve the client and involve a conspiracy to violate a legal duty in furtherance of the attorney’s financial gain.  Prior case law concluded that the exceptions effectively exempt any viable attorney-client conspiracy claim from § 1714.10’s requirements, and only applied to attorney-client conspiracy claims that are not viable as a matter of law.  Thus a plaintiff who can plead a viable claim for conspiracy against an attorney need not file a petition.

A conspiracy cause of action cannot lie if the alleged conspirator has no duty to the plaintiff and is acting only as the agent or employee of a party who does have a duty.  Further, an agent is not liable for conspiring with the principal when the agent is acting in an official capacity on behalf of the principal.  Thus a valid conspiracy claim is limited to situations where an attorney conspires with a client and acts in furtherance of the attorney’s personal financial gain over and above the receipt of professional fees, or when the attorney has an independent duty to the plaintiff.

In the instant case there was no allegation or evidence that the attorneys were acting for their own benefit or that they sought to gain a financial advantage over receipt of legal fees.  Nor could the court determine that there was an independent duty owed by Chambliss to the Panoutsopouloses.  Chambliss was not a party to the lease and owed no duty under the lease.

An attorney may be held liable for conspiring with the client to commit actual fraud or for the intentional infliction of emotional distress if the attorneys’ actions go beyond the role of attorney acting on behalf of the client.  For example an attorney cannot make a misrepresentation he or she knows will be relied upon by a third party in service to the client, because attorneys owe an independent duty not to lie when making affirmative representations, which differs from advocating on behalf of the client.

An attorney, acting on behalf of a client, who enters plaintiff’s home, ousts a guest, and personally takes possession of plaintiff’s personal belongings goes far beyond the role of legal representative since self-help is not the practice of law.  An attorney representing an insurance company goes beyond the duties of counsel when he arranges for a false clinical psychologists’ report to deny a disability claim.  Such actions are not merely the acts of an agent, and attorneys therefore could be held liable.  Chambliss allegedly sent letters and served three-day notices in a representative capacity, conduct that is not actionable.

Plaintiffs did allege that Chambliss sought to induce the plumber to exaggerate the extent of plumbing problems and to put the blame on Plaintiffs, action which does extend beyond legal representation.  However, the plumber was not persuaded to go along with the request, and thus even if the allegations were true, Chambliss’s conduct did not cause any harm to Panoutsopoulos.

Comment: California courts have always protected attorneys when third parties seek to hold them responsible on a conspiracy theory for performing proper attorney services


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