Blain v. Doctor's Co.

• Decision Date: 10 August 1990
• Docket Number: No. C004782,C004782
• Citation: 222 Cal.App.3d 1048,272 Cal.Rptr. 250
• Court: California Court of Appeals Court of Appeals
• Parties: Raymond L. BLAIN, et al., Plaintiffs and Appellants, v. THE DOCTOR'S COMPANY, et al., Defendants and Respondents.

Page 250

272 Cal.Rptr. 250

222 Cal.App.3d 1048

Raymond L. BLAIN, et al., Plaintiffs and Appellants, v. THE DOCTOR'S COMPANY, et al., Defendants and Respondents.

No. C004782.

Court of Appeal, Third District, California.

Aug. 10, 1990.

Wilcoxen, Callahan, Montgomery & Harbison, Daniel E. Wilcoxen and Roger V. Jaffe, Sacramento, for plaintiffs and appellants.

Donahue and Callaham, Stephen J. Mackey, Sacramento, Greines, Martin, Stein & Richland and Alan G. Martin, Beverly Hills, Bonne, Jones, Bridges, Mueller, O'Keefe & Hunt, H. Gilbert Jones, Los Angeles, Crosby, Heafey, Roach & May, Chris G. Gasparich, James C. Martin and Joseph P. Mascovich, Oakland, for defendants and respondents.

BLEASE, Acting Presiding Justice.

This appeal tenders the question whether the doctrine of unclean hands precludes an action for legal malpractice predicated upon injuries caused when Raymond Blain, a physician-defendant in a medical malpractice action, followed the advice of his lawyer to lie at a deposition. We shall conclude that it does.

The appeal arises from a judgment of dismissal following the sustaining of general demurrers to Blain's complaint. The complaint is founded upon the claim that insurance defense counsel advised Blain, the insured, to lie at his deposition in the medical malpractice action, which advice Blain followed. This resulted in the filing of an amended complaint against Blain seeking punitive damages. That action was later settled. The insurance company, The Doctor's Company (Doctor's), paid the policy limits and Blain paid nothing. Blain contends that in these circumstances he has stated a cause of action on the theory that defense counsel's improper strategy exposed him to greater liability, caused him emotional distress, and precluded his further work as a physician.

We will affirm the judgment.

FACTS AND PROCEDURAL BACKGROUND

A. The First Amended Complaint

This case arises upon an order granting a demurrer to Blain's first amended complaint. For that reason the facts under review are those alleged in the plaintiff's pleadings, viewed favorably to him, and facts judicially noticed. (See Blank v The first amended complaint is organized into five counts styled as causes of action. We set forth the essential allegations by reference to count.

Kirwan (1985) 39 Cal.3d 311, 216 Cal.Rptr. 718, 703 P.2d 58.) ¹

1. First Count

Blain was an insured under a policy of insurance obliging Doctor's to defend him and to indemnify him for damages (to $1,000,000) recovered in any medical malpractice action brought against him. In April 1983 a medical malpractice action was filed on behalf of Stacy Marchand against Blain, Robert Achtel (another physician), and others. Doctor's retained a law firm for Blain's defense. In that role defense counsel "fail[ed] to exercise reasonable care and skill and/or negligently advis[ed] plaintiff...."

The core allegations concerning this malpractice are contained in paragraph 14, which alleges that counsel erred in the following respects.

"1. failing to advise [Blain] that [defense counsel] had a dual responsibility to [Doctor's] and to [Blain] so that [Blain] could understand the relationship of the parties and employ personal counsel if necessary, 2. failing to represent the interests of [Blain] in deference to the interests of [Doctor's], 3. giving improper legal advise [sic ] to [Blain] regarding [his] testimony and conduct at [his] deposition in the [Marchand] action, with the intent of benefiting the insurer and/or other defendants, as opposed to the insured, 4. giving improper advise [sic ] regarding the defenseability [sic ] of [Blain's] position in the [Marchand] action subsequent to [his] deposition in said action, 5. improperly advising [Blain] to sue attorneys for plaintiffs MARCHAND in the [Marchand] action for abuse of process and/or malicious prosecution for suing BLAIN for punitive damages, 6. failing to advise [Blain] as to his rights to demand settlement of the underlying action, 7. failure to advise [Blain] of his rights to independent and/or Cumis counsel in the [Marchand] action subsequent to, [Blain] being sued for punitive damages in the [Marchand] action, and/or demands for settlement within policy limits, 8. failing to cross-complain against co-defendant ACHTEL in the [Marchand] action, 9. failing to advise [Blain ] that a failure to disclose, in his deposition in the [Marchand] action, all facts known to him concerning the conduct of DR. ACHTEL would increase the liability as against [Blain] in the [Marchand] action and other actions, unknown representations and conduct not set forth herein consistent with the allegations hereinabove set forth and in addition thereto, unknown conduct of [defense counsel]."

It is further alleged that Blain relied on or followed this advice or acted in the absence of advice and consequently suffered injuries of the following kind. He was exposed to greater liability in the Marchand action. He suffered severe emotional distress requiring medical treatment. "[He] will be prevented from attending to his usual occupation, indefin[i]tely into the future...."

Doctor's, defense counsel, and the other defendants "acted in concert and/or civilly conspired for profit motive to engage in the conduct hereinabove set forth. Said conduct was engaged in with the intent to reduce the likelihood of success of plaintiffs MARCHAND recovering in the [Marchand] action."

2. Second through Fifth Counts

The plaintiff follows a reiterative style of pleading. The allegations of the first count are incorporated by reference into the succeeding count. The allegations of the second count including the incorporated allegations of the first count are incorporated into the subsequent counts, and so on for each succeeding count. The additional allegations are as follows.

In the second count it is alleged that the conduct alleged in the first count was "intentional, outrageous, reckless, oppressive, malicious, [and] despicable" and Blain is entitled to punitive damages.

In the third count it is alleged that such conduct breached the duties of good faith and fair dealing owed by all defendants to Blain and was a breach of fiduciary duties owed by all defendants to Blain. On this ground Blain is entitled to punitive damages.

In the fourth count the defendants, in violation of contractual and fiduciary duty to Blain, are alleged to have engaged in the following course of conduct: "(1) failure to pay, in a timely manner, insurance benefits to a third party, when the third party was entitled to said benefits under the terms and conditions of said insurance policy; (2) unreasonably delaying payment to a third party knowing that said delay would cause [Blain] to incur personal damage and/or greater liability; (3) unreasonably withholding [sic] payments from third party knowing requests for payments and settlement under [Blain's] policy were reasonable and valid; (4) providing legal counsel for [Blain] who did negligently represent [him] and cause him to incur greater liability and refusing to provide independent counsel or pay independent counsel for [Blain]; and continuing to date; to refuse to provide independent counsel and/or pay independent counsel for [Blain]; (5) not attempting in good faith to effectuate a prompt, fair and equitable settlement of third party claims against [Blain]; (6) failure to provide a reasonable explanation of [the] basis relied on the insurance policy, in relation to applicable facts, for the denial of third party claims against [Blain]." By engaging in these acts the defendants "have violated their statutory duties contained within California Insurance Code section 790.03."

The fifth count alleges that the wrongful conduct of defendants caused Blain's wife to suffer loss of consortium.

B. Facts Judicially Noticed

The trial court also had before it certain facts by way of judicial notice.

On July 25, 1985, the plaintiffs in the Marchand action filed an amended complaint containing two counts under which punitive damages of $15,000,000 were sought against Blain. The first of these counts alleges that Blain misrepresented the medical condition of Stacy Marchand to her parents in order to induce them to consent to her transfer to a different hospital and that her injuries were attributable to the ill-advised transfer. The second count alleges that Blain made a similar misrepresentation to Achtel to obtain his consent to transportation and to assume responsibility for Stacy's care, causing similar deleterious consequences.

On December 1, 1986, the Marchand action as to Blain was settled by agreement. The agreement provides for immediate payments totaling $450,000, future lump sum payments totaling $300,000, and ongoing monthly payments beginning at $2,500 and increasing in stages to $4,500 for the shorter of ten years or the life of Stacy Marchand. At the time of the settlement agreement Blain was represented in the Marchand action by (personally) retained counsel who filed this malpractice action for Blain.

Blain's original complaint in this action contained the following allegation.

"Defendants, and each of them, did negligently and carelessly perform their duties and responsibilities as [Blain's] insurers, insurers agents and attorneys, including but not limited to the following acts and/or omissions: (1) said defendants instructed [Blain], in his deposition, to not tell the truth regarding certain matters; (2) said defendants instructed Blain's original complaint also contained the following allegations. "[Blain] relied on said defendants' representations, advice, and counseling, and being ignorant of insurance and legal matters, agreed to conduct himself as advised by said defendants, and continued to be represented by defendants and each of them." "As a [result of the defendants' alleged wrongdoing, Blain] will be prevented from attending to his usual occupation indefinitely into the future. Because of...