The Fourth District held the attorney-client conspiracy gatekeeper statute, CCP §1714.10, does not apply to an embezzlement claim.
Attorneys Raymond Novell, a longtime Stueve family friend, and Jay Wayne Allen were accused of siphoning the Stueve family fortune through a Pandora’s box of wrongdoing. The Stuvees alleged causes of action for intentional misrepresentation, concealment, negligent misrepresentation, constructive fraud, conversion, breach of fiduciary duty, professional negligence, and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). The trial court granted Berger Kahn’s motion to strike portions of the complaint because the Stueves failed to obtain a pre-filing order under Civil Code § 1714.10 applicable to claims of attorney-client conspiracy.
The Court of Appeal held § 1714.10 does not apply where allegations do not arise from an attempt to contest or compromise a claim or dispute. The claims arose from transactional activities which allegedly siphoned assets through fraudulent estate planning, by diverting assets to entities created and controlled by the defendants, including Berger Kahn’s other clients.
Berger Kahn argued that § 1714.10 has been employed to block claims outside the context of litigation. The Court found the cases to be distinguishable or lacked in-depth analysis, and would not ignore the plain language of the statute.
Comment: The Court limited the protection of Civil Code § 1714.10 to attorney-client conspiracy claims arising from an attempt to compromise a claim.