American Equity Ins. Co. v. Beck
| Decision Date | 26 June 2001 |
| Docket Number | No. A092636.,No. A092221.,A092221.,A092636. |
| Citation | 108 Cal.Rptr.2d 728,90 Cal.App.4th 162 |
| Court | California Court of Appeals Court of Appeals |
| Parties | AMERICAN EQUITY INSURANCE COMPANY, Plaintiff and Appellant, v. Daniel BECK, Defendant and Respondent. Daniel Beck, Plaintiff and Appellant, v. Ronald H. Wecht et al., Defendants and Respondents. |
Drath, Clifford, Murphy, Wennerholm & Hagen, John M. Drath, Oakland, Raymond Z. Bacerdo, for defendants and respondents Wecht and Walkup, Melodia, Kelly & Echeverria.
In these consolidated appeals we consider whether counsel who associate to concurrently represent clients owe each other a fiduciary duty, or only owe a duty of loyalty to the clients. In a related matter, we consider whether such counsel can be considered to have entered into a joint venture, allowing one to seek indemnity from the other under the Uniform Partnership Act. The trial court answered each of these questions in the negative, and granted summary judgment motions for the defendants in each action. We affirm.
In 1992 Michael and Robert Stephens hired Attorney Daniel Beck to represent them in a lawsuit against General Motors, to recover for serious injuries the Stephenses sustained when the pick-up truck they were riding in rolled over and burst into flames. With the Stephenses' consent, Beck associated Texas Attorney L.L. McBee into the case, because McBee had experience prosecuting what was known as "side-saddle" gas tank cases against General Motors. Again with agreement of the clients, McBee and Beck associated Attorney Ronald Wecht and his law firm, Walkup, Melodia, Kelly & Escheverria (collectively Wecht), as local trial counsel. By separate written agreements, it was agreed that McBee would advance all costs, and Beck's contingent fee would be split 53 percent for McBee and 47 percent for Beck. Wecht was to receive 10 percent of the contingent fee, to be shared pro rata from the shares of McBee and Beck.
Despite attempts at pretrial settlement, no settlement was reached, and the case proceeded to jury trial in April 1997. During the course of the trial, General Motors offered to settle the case for $6 million. On the night before closing arguments, the Stephenses met with Wecht and McBee and told them they wanted to settle the case. McBee was to contact General Motors and discuss settlement, but never did so. In late June of 1997, the jury returned a defense verdict.
In the months leading up to trial, the relationship between Beck and the other attorneys, particularly McBee, eroded. McBee accused Beck of undermining settlement negotiations, and Beck accused McBee of alienating him from his clients. By the time of trial Beck was an observer, not a participant.
After trial, the Stephenses brought a legal malpractice action against McBee and Wecht for failing to carry out their settlement instructions. In addition, they claimed that Wecht was vicariously liable for McBee's misconduct based upon joint venture principles. The Stephenses brought no action against Beck. McBee settled with the Stephenses for a confidential sum. As a condition of settlement, Beck was paid $224,000 out of this sum, in exchange for a release of his claims against McBee. Thereafter, Wecht admitted that McBee was negligent in his handling of the Stephenses' case. Although Wecht denied that a joint venture existed, his malpractice insurance carrier, American Equity Insurance Company (American Equity) paid $1.4 million to settle the Stephenses' claims against Wecht.
In December 1998, Beck filed a complaint against Wecht for breach of fiduciary duty to recover the fee he would have received had McBee and Wecht followed the Stephenses' instructions and settled the case against General Motors for $6 million. In July 1999, Wecht filed a cross-complaint for indemnity, breach of fiduciary duty, comparative fault and breach of contract. Thereafter, American Equity intervened and sued Beck in subrogation, seeking contribution from Beck toward the settlement amount it paid on Wecht's behalf. Each party successfully moved for summary judgment of the other's claims. Both parties timely appealed from the orders granting summary judgment, and we have consolidated the appeals for oral argument and decision.
In reviewing a trial court's order granting summary judgment, we are limited to the facts shown in the supporting and opposing affidavits and declarations, as well as those in admissions, answers to interrogatories, depositions, and matters of which judicial notice may be taken. Because of strong public policy favoring a trial on the merits, we are bound by the same principles governing the trial court's determination on summary judgment. We therefore strictly construe the moving party's papers and liberally construe the opposing party's papers. All doubts as to the propriety of granting the motion are to be resolved in favor of the party opposing the motion. (AARTS Productions, Inc. v. Crocker National Bank (1986) 179 Cal. App.3d 1061, 1064-1065, 225 Cal.Rptr. 203; Code Civ. Proc, § 437c, subd. (b).) While we review a summary judgment ruling under the same general principles applicable to the trial court, we do so de novo, independently determining whether, under the facts as presented, there exists a triable issue of material fact. (Buss v. Superior Court (1997) 16 Cal.4th 35, 60, 65 Cal. Rptr.2d 366, 939 P.2d 766; Saldana v. Globe-Weis Systems Co. (1991) 233 Cal. App.3d 1505, 1511-1515, 285 Cal.Rptr. 385.) Upon our independent review, we may affirm a summary judgment for reasons different from the trial court's reasons for granting it. (Bunnell v. Department of Corrections (1998) 64 Cal.App.4th 1360,1367, 76 Cal.Rptr.2d 58.)
In moving for summary judgment, the defendant has the initial burden of showing that, as to each cause of action alleged in the complaint, the plaintiff cannot establish one or more of the elements of the cause of action. (Code Civ. Proc, § 437c, subd. (o).) If such a showing is made, the burden shifts to the plaintiff, who must respond by presenting admissible evidence in the form of specific facts that create a triable issue of material fact as to the attacked element. (Ibid.) Summary judgment is warranted if no triable issue is established. (Id., subd. (c).)
Beck's Appeal (No. A092636)
Wecht moved for summary judgment on Beck's complaint for breach of fiduciary duty, in which Beck sought to recover the contingent fee he claimed to have lost as a result of Wecht's inappropriate handling of the Stephenses' action. The trial court granted summary judgment, finding that, as a matter of law, Wecht owed Beck no fiduciary duty. We agree.
Two cases have squarely addressed the question of the duties owed by one attorney to another attorney jointly representing the same client. The trial court initially relied on the first of these cases, Pollack v. Lytle (1981) 120 Cal.App.3d 931, 175 Cal.Rptr. 81 (Pollack), and overruled Wecht's demurrer to Beck's claim of breach of fiduciary duty on the ground that such a cause of action could be stated. Subsequently, the second case, Joseph A. Saunders, P.C. v. Weissburg & Aronson (1999) 74 Cal.App.4th 869, 87 Cal.Rptr.2d 405 (Saunders) was published. Saunders held that no such duty could exist between cocounsel. Relying on Saunders, the trial court granted Wecht's motion for summary judgment. We consider each case, and conclude that Saunders rests upon sounder policy considerations than does Pollack. Accordingly, we agree with the trial court's conclusion that Beck presented no triable issue of any material fact, and properly granted summary judgment in favor of Wecht.
In Pollack, Attorney Pollack sued Attorney Lytle for breach of fiduciary duty, fraud, breach of contract, legal malpractice and declaratory relief arising out of their joint representation of a client in a medical malpractice action. Pollack alleged in his complaint that he and the client had agreed that he would be paid 50 percent of any recovery obtained by the client. Relying on Lytle's false representations, Pollack associated Lytle as trial counsel, and agreed that he would receive one-third of Pollack's 50 percent contingent fee. Unbeknownst to Pollack, Lytle did not properly prepare the case for trial. Because of Lytle's continued misrepresentations, Pollack advised the client to reject a $250,000 pretrial settlement offer. The case went to trial, and due to Lytle's improper handling of the case, the jury returned a defense verdict in the medical malpractice action. Adding insult to injury, Lytle convinced the client to sue Pollack for legal malpractice. (Pollack, supra, 120 Cal. App.3d at pp. 936-939, 175 Cal.Rptr. 81.)
The Court of Appeal, over a strongly worded dissent, reversed the trial court's order sustaining Lytle's demurrer, holding that simple agency principles governed the relationship of associate counsel. (Pollack, supra, 120 Cal.App.3d at pp. 940-943, 175 Cal.Rptr. 81.) Although it acknowledged "the growing body of law which holds, as a matter of public policy, that a successor attorney owes no duty to his predecessor [citations]" (id. at p. 942, 175 Cal.Rptr. 81), the majority found the policy rationale of these cases inapplicable to cases involving associate, or concurrent counsel. It reasoned: ...
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Am. Equity Ins. Co. v. Beck
... 108 Cal.Rptr.2d 728 (Cal.App. 1 Dist. 2001) ... AMERICAN EQUITY INSURANCE COMPANY, Plaintiff and Appellant, ... DANIEL BECK, Defendant and Respondent ... DANIEL BECK, Plaintiff and Appellant, ... RONALD H. WECHT et al., Defendants and Respondents ... A092221, A092636 ... IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA ... FIRST APPELLATE ... ...