Gackstter v. Frawley

Decision Date25 January 2006
Docket NumberNo. B173070.,B173070.
Citation38 Cal.Rptr.3d 333,135 Cal.App.4th 1257
CourtCalifornia Court of Appeals Court of Appeals
PartiesHenry C. GACKSTETTER, Plaintiff Appellant, v. Patrick FRAWLEY et al., Defendants and Appellants.

H. Clay Reavis, Jr., Newport Beach, Deborah J. Dewart, Irvine, for Plaintiff and Appellant.

Law Offices of Zilinskas & Woosley, Victor G. Zilinskas, Eric A. Woosley, Santa Barbara, for Defendants and Appellants.



Attorneys settled a malpractice and negligent misrepresentation action against them by trust beneficiaries and obtained a good faith settlement determination order pursuant to Code of Civil Procedure section 877.6.1 In a separate probate proceeding, the trust beneficiaries sought relief against the trustee of those trusts for certain derelictions of his trust duties. This dispute was settled. In the case before us, the attorneys were sued by the trustee, whom the attorneys had represented, for various torts related to the services provided the trustee in connection with the trusts. The trial court denied the attorneys' summary judgment and summary adjudication motions to bar claims based on the good faith determination order.

The attorneys cross-claimed against the trustee for equitable indemnity for monies paid by the attorneys to settle the beneficiaries' claims against them. The jury found for the trustee against the attorneys, but found that because the trustee was 50 percent at fault and the attorneys were entitled to equitable indemnification, the judgment should be reduced accordingly. The trial court refused to modify the jury's findings, and a judgment for damages was entered.

In the published portion of the opinion, we hold that the attorneys can appeal from the denial of the summary judgment and summary adjudication motions and that, because of the good faith determination, the trial court erred in not granting summary judgment in favor of the attorneys. We conclude that a good faith determination may bar the claims of an unnamed party; the trustee and the attorneys were joint tortfeasors; the trustee's claims were either for indemnification or in effect for indemnification; and therefore, under section 877.6, the good faith settlement barred the trustee's claims. Accordingly, we reverse the judgment on the trustee's First Amended Complaint.

In the unpublished portion of the opinion, we affirm the judgment on the attorney's cross-complaint against the trustee for equitable indemnity. The jury verdict on the cross-complaint is supported by substantial evidence. We remand the matter to the trial court to enter a judgment in conformity with this opinion.

A. General Allegations and Proceedings

In 1987, defendant, attorney Patrick Frawley (Frawley),2 prepared documents establishing two trusts for Agnes Gordon. One trust, the Agnes Gordon Trust (Sisters' Trust), was to benefit Ms. Gordon's sisters (Sisters) and to include a house (the Marlin Place Property) so that one of the Sisters would always have a home. The other trust, the Billy and Agnes Gordon Trust (Charitable Trust), was a residual charitable trust created to establish a program to train dogs to assist hearing-impaired persons. After the creation of the Sisters' Trust, Agnes Gordon allegedly revoked her will. That will provided for distributions comparable to those provided for by the trusts. Plaintiff Henry Gackstetter (Gackstetter), a close friend of Agnes Gordon and her late husband, was the trustee for both trusts. After Agnes Gordon died, Frawley represented her executor and niece, Patricia Murphy (Murphy), in the probate of the estate. According to Gackstetter, Frawley provided legal services to Gackstetter as trustee of the trusts and individually.

By mistake, before Agnes Gordon's death, Frawley had transferred the Marlin Place Property into the Charitable Trust instead of the Sisters' Trust. One of the Sisters continued to live in the house, and Gackstetter used funds in the Charitable Trust to maintain the residence. Gackstetter claimed to have made personal loans to the Charitable Trust and to have repaid himself out of trust funds. Gackstetter also mortgaged the Marlin Place Property to obtain $104,000 for himself. He said that money, or some of it, was later used to repay his loans. As trustee for the trusts, Gackstetter failed to prepare accountings, tax returns, and other necessary documents and otherwise failed to maintain proper records. It was necessary to open a probate proceeding for the Agnes Gordon estate because the Sisters' Trust was not funded, and assets had to be redistributed in view of Frawley's error. Various proceedings and actions ensued.

1. Sisters' Petition Against Gackstetter (Murphy Petition)

In the Agnes Gordon probate proceeding, on May 14, 1998, the Sisters filed a petition against Gackstetter alleging a breach of fiduciary duty in connection with the Marlin Place Property, the taking of money generated by placing a mortgage on that property, and for failure to provide accountings for the trusts. By their petition, the Sisters sought an accounting, appointment of successor trustee, return of trust assets, surcharge of the trustee, and to quiet title. Frawley initially represented Gackstetter in the Murphy Petition proceeding, and Gackstetter signed a retainer fee agreement with Frawley in connection with that representation. Frawley withdrew as counsel after it was disclosed that he caused the Marlin Place Property to be placed in the wrong trust. Gackstetter alleged he thereafter became aware of his own failures to file trust tax returns, prepare trust accountings, and maintain trust records properly. Because of these failures, when records were destroyed in an earthquake, hundreds of hours were required to make proper accountings and to defend the Murphy Petition. In 1999, the Attorney General made claims against Gackstetter in the probate proceeding in connection with alleged mishandling of the Charitable Trust.3 On July 13, 2000, Gackstetter settled the Murphy Petition claims against him. As part of the settlement, Gackstetter caused the transfer of the Marlin Place Property to the Sisters' Trust. Gackstetter, although attributing his acts and omissions to Frawley, also settled with the Attorney General on July 13, 2000, by, inter alia, waiving any claim for fees and reimbursement. The probate court approved the settlements.

2. Sisters' Action Against Frawley

On July 23, 1999, the Sisters sued Patrick Frawley and doe defendants for malpractice and negligent misrepresentation in connection with placing the Marlin Place Property in the wrong trust and failing to disclose this error. The Sisters also alleged in this action that Frawley represented Gackstetter as trustee, that Gackstetter made misrepresentations regarding the property and took money by placing a mortgage on it, and that claims against Gackstetter had been made by the Murphy Petition. The parties stipulated for the consolidation of discovery in the Murphy Petition proceeding against Gackstetter and in the Sisters' action against Frawley. On July 20, 2000, after the instant case by Gackstetter against Frawley had been filed, Frawley settled the Sister's action against him for $104,000, the amount of the encumbrance Gackstetter had placed on the Marlin Place Property.4 After giving notice to Gackstetter of an application for good faith settlement Frawley obtained from the trial court a September 1, 2000 order granting the application for good faith settlement.

3. Gackstetter's Action Against Frawley — The Instant Action

On May 5, 2000, Gackstetter, on behalf of himself, sued Frawley in the instant action for improperly advising Gackstetter of his duties and concealing the improper transfer of the Marlin Place Property. The Attorney General intervened in this case, making claims against Frawley that he "aided and abetted Gackstetter in breaching his trust." Frawley settled the Attorney General's claims.

Specifically, in his First Amended Complaint against Frawley, Gackstetter alleged Frawley concealed the incorrect conveyance of the Marlin Place Property, improperly advised him as to his duties and obligations as trustee, and committed other acts resulting in improper distributions that adversely affected the funding of the Charitable Trust. Gackstetter alleged that as a result of Frawley's actions, the trusts were damaged and that he was sued by the Sisters and the Attorney General in the Murphy Petition proceeding. Gackstetter explicitly sought indemnity in connection with his settlement with the Sisters arising out of the Murphy Petition against him, and he also claimed for breach of fiduciary duty, professional negligence misrepresentation, and breach of the attorney-client retainer agreement.

Frawley asserted as an affirmative defense the bar of section 877.6. Frawley had demurred, and later moved for summary judgment and summary adjudication on the basis of the good faith settlement, but the trial court rejected that contention.5 Frawley also cross-claimed for indemnity for the amount he paid to the Sisters in settling their action against him.

A jury found Patrick Frawley liable for professional negligence, breach of fiduciary duty, fraud, and breach of contract and assessed damages in the amount of $289,000 for economic damages and $3,000 for emotional distress. The jury found that Gackstetter was responsible, in part, for his own damages, requiring a 10 percent reduction in the economic damages. The jury also found that, as to Frawley's cross-claims for indemnity for his $104,000 payment for the benefit of the Sisters, Gackstetter was 50 percent at fault in connection with the Sisters' damages.

Gackstetter filed a post-trial motion for directed verdict on Frawley's cross-complaint as it pertained to contributory negligence and indemnity. The trial court denied the motion and entered judgment on special verdicts...

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