Coscia v. McKenna & Cuneo

• Decision Date: 02 July 2001
• Docket Number: No. S089226.,S089226.
• Citation: Coscia v. McKenna & Cuneo, 108 Cal.Rptr.2d 471, 25 Cal.4th 1194, 25 P.3d 670 (Cal. 2001)
• Court: California Supreme Court
• Parties: Nicholas F. COSCIA, Plaintiff and Appellant, v. McKENNA & CUNEO et al. Defendants and Respondents.

108 Cal.Rptr.2d 471

25 Cal.4th 1194

25 P.3d 670

Nicholas F. COSCIA, Plaintiff and Appellant, v. McKENNA & CUNEO et al. Defendants and Respondents.

No. S089226.

Supreme Court of California.

July 2, 2001.

Nicholas F. Coscia, in pro. per.; Milberg & De Phillips, Russell M. De Phillips and Roy L. Carlson, Jr., Cardiff By The Sea, for Plaintiff and Appellant.

Gene Moran as Amicus Curiae, on behalf of Plaintiff and Appellant.

Hinshaw & Culbertson, Ronald E. Mallen, San Francisco, Paul E. Vallone; McKenna & Cuneo, Michael H. Fish, and Ross H. Hyslop, San Diego, for Defendants and Respondents.

Hartley & Hartley, Joseph M. Hartley and Mary Kathleen Hartley, Santa Moni-Amici Curiae, on behalf of Defendants and Respondents.

Cooley Godward, Jeffrey G. Randall, Palo Alto, Patrick C. Pope and Andrew C. Temkin as Amici Curiae, on behalf of Defendants and Respondents.

GEORGE, C.J.

In Wiley v. County of San Diego (1998) 19 Cal.4th 532, 79 Cal.Rptr.2d 672, 966 P.2d 983, this court held that when a former criminal defendant sues his or her attorney for legal malpractice, the former client's actual innocence of the underlying criminal charges is a necessary element of the malpractice cause of action. We granted review in this matter to address a distinct, but related, question—whether a former criminal defendant must obtain exoneration by postconviction relief as a prerequisite to obtaining relief for legal malpractice. As we shall explain, we conclude that postconviction exoneration is a prerequisite to prevailing on a legal malpractice claim in this context.

I

In October 1993, plaintiff Nicholas F. Coscia, an attorney, was indicted by the federal government for securities fraud and related offenses. He retained defendants McKenna & Cuneo, L.L.P, and Juanita R. Brooks (hereafter sometimes McKenna & Cuneo) to represent him.

In December 1994, Coscia pleaded guilty in the United States District Court for the District of Nevada to one felony count of conspiracy to violate federal securities laws. He admitted his guilt under oath and confirmed that his plea and his waiver of certain constitutional rights were made freely and voluntarily. He answered affirmatively in response to the court's question whether he "in fact knowingly participate[d] in the conspiracy charged." At the court's request, he summarized his role with regard to the conspiracy by admitting that, with the intent of obtaining financial profit, he purchased securities of the subject corporation knowing that there would be a corporate reorganization of that entity. He also signed a statement of offense acknowledging his criminal conduct.

In March 1996, Coscia was sentenced to two years' probation and a $5,000 fine.

In March 1997, Coscia commenced the present malpractice action against McKenna & Cuneo, alleging that he was injured by the firm's negligent legal advice. McKenna & Cuneo demurred on the grounds that the action was barred by the statute of limitations and by collateral estoppel. The superior court sustained the demurrer without leave to amend, concluding that Coscia's criminal conviction precluded relief in the present action under principles of collateral estoppel. The court entered judgment in favor of McKenna & Cuneo.

Coscia appealed from the judgment. He contended that the trial court should have permitted him to amend the complaint to allege that he had entered into a plea agreement despite his innocence of the criminal charges. Coscia asserted that he would allege the following facts. During the plea negotiations, he approached Attorney Brooks and informed her that he possessed information regarding another ongoing securities fraud, and that he would like to "trade" this information to the government in exchange for the prosecutor's agreement to a misdemeanor plea. Brooks advised Coscia not to do so, stating that in her opinion it would not be "worth her time" to present such facts to the federal prosecutor. Relying upon that advice, Coscia accepted the felony plea offer. As a consequence of the plea, he suffered economic and emotional damage, including suspension of his license to practice law in California. Coscia subsequently was informed, in meetings with a United States Attorney and an FBI agent, that it was a mistake for his attorney not to have presented the offer of information in the plea negotiations, and that favorable deals are struck "all the time" on that basis.

The Court of Appeal reversed the judgment of the superior court. It noted that a majority of out-of-state courts addressing the point have held that, in addition to proof of innocence, a further requirement in a criminal malpractice action is that the conviction have been set aside through appeal or other postconviction proceeding. The Court of Appeal determined, however, that it was precluded from adopting the majority rule, regardless of its substantive merits, because in California the application of such a rule would render most criminal malpractice actions untimely under Code of Civil Procedure section 340.6. Because of the effect of the statute of limitations, the Court of Appeal suggested that the propriety of a postconviction relief requirement in criminal malpractice actions may be determined only by this court or the Legislature. Citing Teitelbaum Furs, Inc. v. Dominion Ins. Co. (1962) 58 Cal.2d 601, 25 Cal.Rptr. 559, 375 P.2d 439, the court concluded that a plaintiff in a criminal malpractice action who pleaded guilty to the underlying offense is not collaterally estopped from proving actual innocence. Because there was a reasonable possibility that Coscia could have cured the defects in his complaint, the Court of Appeal concluded that the superior court should have granted him leave to amend. Accordingly, it reversed the judgment of the superior court and remanded the matter for further proceedings consistent with its opinion.

We granted review. As will appear, we determine, contrary to the Court of Appeal, that exoneration by postconviction relief is a prerequisite to recovery for legal malpractice arising out of a criminal proceeding, but we nonetheless conclude that the matter should be remanded to the trial court for further proceedings consistent with this opinion.

II

The failure to provide competent representation in a civil or criminal case may be the basis for civil liability under a theory of professional negligence. In a legal malpractice action arising from a civil proceeding, the elements are (1) the duty of the attorney to use such skill, prudence, and diligence as members of his or her profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the breach and the resulting injury; and (4) actual loss or damage resulting from the attorney's negligence. (Budd v. Nixen (1971) 6 Cal.3d 195, 200, 98 Cal.Rptr. 849, 491 P.2d 433; Schultz v. Harney (1994) 27 Cal.App.4th 1611, 1621, 33 Cal.Rptr.2d 276.) In a legal malpractice case arising out of a criminal proceeding, California, like most jurisdictions, also requires proof of actual innocence. (Wiley v. County of San Diego, supra, 19 Cal.4th at p. 545, 79 Cal.Rptr.2d 672, 966 P.2d 983.)

Our decision in Wiley explained that the addition of an actual innocence requirement was required by several public policy considerations. (Wiley v. County of San Diego, supra, 19 Cal.4th 532, 79 Cal. Rptr.2d 672, 966 P.2d 983.) First, "`"[permitting a convicted criminal to pursue a legal malpractice claim without requiring proof of innocence would allow the criminal to profit by his own fraud, or to take advantage of his own wrong, or to found [a] claim upon his iniquity, or to acquire property by his own crime."'" (Id. at p. 537, 79 Cal.Rptr.2d 672, 966 P.2d 983.)

Second, "`allowing civil recovery for convicts impermissibly shifts responsibility for the crime away from the convict.'" (Wiley v. County of San Diego, supra, 19 Cal.4th at p. 537, 79 Cal.Rptr.2d 672, 966 P.2d 983.) A plaintiff convicted of an offense should bear sole responsibility for the consequences of his or her criminal acts; "`[a]ny subsequent negligent conduct by a plaintiffs attorney is superseded by the greater culpability of the plaintiffs criminal conduct. [Citation.]' [Citation.]" (Id. at p. 538, 79 Cal.Rptr.2d 672, 966 P.2d 983.) "The fact that nonnegligent counsel 'could have done better' may warrant postconviction relief, but it does not translate into civil damages, which are intended to make the plaintiff whole." (Id. at p. 539, 79 Cal.Rptr.2d 672, 966 P.2d 983.) "Only an innocent person wrongly convicted due to inadequate representation has suffered a compensable injury because in that situation the nexus between the malpractice and palpable harm is sufficient to warrant a civil action, however inadequate, to redress the loss. [Citation.]" (Ibid.)

Third, guilty defendants, have an adequate remedy in the form of postconviction relief for ineffective assistance of counsel. (Wiley v. County of San Diego, supra, 19 Cal.4th at pp. 542-543, 79 Cal.Rptr.2d 672, 966 P.2d 983.) "Not only does the [United States] Constitution guarantee this right [under the Sixth Amendment], any lapse can be rectified through an array of postconviction remedies, including appeal and habeas corpus." (Id. at p. 542, 79 Cal. Rptr.2d 672, 966 P.2d 983.) Moreover, avoiding a procedure that would involve retrying criminal prosecutions in tort actions for malpractice is consistent with "`"a strong judicial policy against the creation of two conflicting resolutions arising out of the same or identical transaction." [Citation.]' [Citation.]" (Id. at p. 544, 79 Cal.Rptr.2d 672, 966 P.2d 983.)

Wiley noted that many jurisdictions that require proof of actual innocence as an element of criminal malpractice also require that "`the person's conviction has been reversed, ... on appeal or through post-conviction relief, or the person has otherwise been exonerated.' [Citations.]" (Wiley v. County of San Diego, sup...