Summarizing, explaining and commenting on legal developments impacting California Lawyers and Judges
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
The Second District holds claims of concealment under the guise of attorney-client privilege are protected petitioning activity under California’s Anti-SLAPP statute.
Rafael Suarez consulted with Trigg Laboratories and its owner Michael Trygstad to increase company profit and growth, prepare Trigg for an eventual sale, and raise capital under an oral agreement. After Suarez partially performed and deferred payment, Trygstad complained Suarez’s compensation was excessive and refused to reduce their agreement to writing. Suarez sued Trysgstad for quantum meruit.
Trygstad engaged other consultants to help sell the company. He instructed these consultants not to send a letter of intent by an interested investor to him directly, but through an attorney to keep the contents privileged. Suarez agreed to settle his claim unaware of the interested investor. … Read full Post
The Ninth Circuit holds a claims about post-settlement failure to disburse settlement funds and to report information to a carrier as mandated by California’s independent counsel statute do not involve protected petitioning activity and are not barred by the litigation privilege.
Robert Hirsh was retained to represent Travelers’s insured as independent counsel. When Travelers sued him for failing to release settlement funds received in the litigation, he filed a motion under California’s anti-SLAPP statute, C.C.P. § 425.16.
The Ninth Circuit affirmed the District Court’s denial of the motion. Anti-SLAPP motions involve a two-step process. The court decides whether the defendant has made a threshold showing the challenged cause of action is one arising from activity to further the constitutional right of petition or free speech. If so, the court then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. … Read full Post
The Ninth Circuit holds an attorney can be liable under securities laws and common law torts if he goes beyond his proper role, and actively participates in the client’s fraud.
ESG Capital Partners, L.P. (“ESG”) was a group of investors formed to purchase pre-Initial Public Offering Facebook shares. Timothy Burns, ESG‘s managing agent, negotiated a purchase with “Ken Dennis,” an alias for Troy Stratos. When the purchase turned out to be a fraud, ESG sued Stratos and his attorneys, David Meyer and Venable LLP.
ESG alleged Meyer helped Stratos form Soumaya Securities, LLC which allowed Stratos to conduct business without detection. Soumaya was never authorized to do business in California, had no bank accounts, and filed no tax returns. Stratos masqueraded as “Dennis” for all Soumaya transactions. Its operating documents, which Meyer prepared, listed Stratos as Soumaya’s manager and sole member and the fictional “Dennis” as its CEO. … Read full Post
The Second District holds an attorney cannot benefit from a client’s estate plan presumed to result from undue influence.
John A Patton had been a client of John F. LeBouef. Patton suffered from depression, alcohol abuse, and many health problems. After Patton’s partner died, LeBouef befriended him. When Patton died, LeBouef proffered an estate plan that benefitted him. This was a radical change in Patton’s prior estate plan, which benefitted his nieces and a long-time friend.
In affirming the trial court’s decision to invalidate the trust, the Court of Appeal upheld the trial court’s admission of evidence the inferences it drew. There was ample evidence LeBouef had manipulated Patton, and engaged in other dishonest acts. … Read full Post
The First District holds an attorney’s factual investigation conducted on behalf of a client is protected by the attorney-client privilege and the work product doctrine, regardless of whether the attorney rendered legal advice.
Andrea Waters was the first firefighter and paramedic for the City of Petaluma (City). Claiming harassment, discrimination and retaliation, she went on leave. After the City received a notice of charge of discrimination from the U.S. Equal Employment Opportunity Commission (EEOC), Waters resigned. The City Attorney retained attorney Amy Oppenheimer to investigate the EEOC charge, and to assist in preparing a defense in an anticipated lawsuit.
Oppenheimer was to impartially investigate the EEOC charge. The retention agreement specified the investigation would be subject to the attorney-client privilege until the City waived the privilege, or a court determined that some or the investigation was not privileged. The agreement excluded Oppenheimer’s advice on how to respond to the EEOC complaint, leaving that to the City Attorney. Oppenheimer transmitted her report to the City in confidence. … Read full Post
The First District refuses to overturn an arbitration award on the grounds an arbitrator failed to make sufficient disclosures to reveal bias. The Court held there was no basis to award attorney’s fees for the work of a female attorney at a rate lower than that of a male attorney with similar credentials.
Baxter filed a request for Mandatory Fee Arbitration (MFAA) against his former clients, Michael and Lorie Bock. The parties stipulated to a binding award. Baxter appealed an award in the Bocks’ favor asserting, the arbitrator was biased.
Baxter asserted Schratz told the parties only that he had worked for an insurance company in the past, and had previously served as an arbitrator. He did not reveal he had built his reputation as a legal fee auditor. The Court of Appeal concluded Baxter’s evidence, which comprised articles Schratz wrote about billing practices; profiles written about Schratz’s work; and a declaration of an attorney who claimed Schratz targeted attorneys, did not demonstrate disqualifying bias. … Read full Post