Holland v. Thacher

• Decision Date: 23 March 1988
• Docket Number: No. A036062,A036062
• Citation: 199 Cal.App.3d 924,245 Cal.Rptr. 247
• Court: California Court of Appeals Court of Appeals
• Parties: Barbara J. HOLLAND, Plaintiff and Respondent, v. James F. THACHER, et al., Defendants and Appellants; Archibald M. Mull III et al., Cross-defendants and Respondents.

Page 247

245 Cal.Rptr. 247

199 Cal.App.3d 924

Barbara J. HOLLAND, Plaintiff and Respondent, v. James F. THACHER, et al., Defendants and Appellants;

Archibald M. Mull III et al., Cross-defendants and Respondents.

No. A036062.

Court of Appeal, First District, Division 2, California.

March 23, 1988.

Review Denied July 21, 1988.

Baron L. Miller, San Francisco, for defendant and appellant Alfred M. Miller

Archibald M. Mull, III, Old Sacramento, for plaintiff and respondent Barbara Holland.

Margaret C. Corrigan, San Francisco, for defendant and appellant James Thacher, et al.

Ronald E. Mallen and Mark S. Kannett, San Francisco, for respondent Archibald Mull, et al.

KLINE, Presiding Justice.

INTRODUCTION

The issue we confront in this case is whether predecessor attorneys sued for malpractice by a former client may cross-complain for equitable indemnity against a successor attorney hired to extricate the client from the condition created by the predecessor attorneys. We agree with the majority of appellate courts which have addressed the issue that sound policy reasons prohibit such cross-complaints.

STATEMENT OF THE CASE/FACTS

Defendant-attorneys and James F. Thacher, James E. Ratcliff, Jr. and their law firm, Thacher, Jones, Casey & Ratcliff (Thacher) and defendant-attorney Alfred M. Miller (Miller) appeal the order of the trial court sustaining without leave to amend demurrers to cross-complaints asserted by them against attorneys Archibald M. Mull, III, Edwin J. Bouillon, Edward L. McCarthy, and their law firm, Mull & McCarthy (Mull). ¹

Plaintiff Barbara J. Holland sued defendants Miller and Thacher for professional negligence and fraud in their representation of her in connection with the dissolution of her marriage. Holland engaged Thacher in 1977 to provide her with legal advice and assistance with respect to the breakup of her marriage. In mid-February 1978, Holland terminated Thacher and retained Miller and attorneys Charles Lane and the firm Schwartz & Lane to represent her in a dissolution proceeding which Miller filed on her behalf on February 21, 1978. Final judgment was entered in the dissolution in late 1978, but the issues related to division of the community property were bifurcated for later trial. During the ensuing three and one-half years, Miller and Lane continued to represent Holland in the dissolution proceeding and in four actions brought against her by creditors of the Hollands' community property companies on defaulted loans which Holland had personally guaranteed.

In August 1982, Holland substituted attorney Mull for Miller and Lane as counsel of record in the various pending lawsuits. In December 1983, with Mull's advice and assistance, Holland entered into a marital settlement agreement settling the dissolution action and compromising all property rights and interests disputed between and among Holland, her former husband, and Miller and Thacher filed cross-complaints against Mull for equitable indemnity in the legal malpractice action, contending that Mull failed to pursue assets allegedly secreted by Holland's former husband and that in settling, Mull caused or exacerbated the damages plaintiff seeks to recover in her malpractice complaint against Miller and Thacher. Mull demurred to Miller's cross-complaint and, by stipulation, did not respond to it pending hearing on Mull's demurrer to Miller's pleading. On April 14, 1986, Mull's demurrer was sustained with leave to amend within 20 days "to allege sufficient facts to attempt to bring case under the doctrine of Parker v. Morton [ (1981) 117 Cal.App.3d 751, 173 Cal.Rptr. 197]."

his new wife. This agreement contained no provision for division of subsequently discovered community assets. Concurrent with his representation of Holland in the dissolution proceeding, Mull filed the instant legal malpractice action on behalf of Holland against Thacher, Miller and Lane. By this action Holland seeks to recover damages for the alleged failures of her former attorneys to protect her interests in community property allegedly concealed and dissipated by her former husband.

Thereafter, both Miller and Thacher filed amended cross-complaints for indemnity against Mull. Mull demurred to both. On July 2, 1986, the demurrers were sustained without leave to amend, the court stating: "I've read both the Parker case and the Goldfisher [Goldfisher v. Superior Court (1982) 133 Cal.App.3d 12, 183 Cal.Rptr. 609] case. I'm aware of the fact that the previous ruling was inconsistent with the court's present finding because I propose to sustain the demurrer without leave to amend and let somebody else decide this; and based upon the cases, I think it's a question of public policy as to whether or not the cross-complaints should be allowed, and I'm going to go with the Goldfisher case."

DISCUSSION

I. Standard of Review

On appeal, the cross-complainant bears the burden of demonstrating either that the demurrer was sustained erroneously or that sustaining the demurrer without leave to amend was an abuse of discretion. (Pollack v. Lytle (1981) 120 Cal.App.3d 931, 939, 175 Cal.Rptr. 81; Stanson v. Brown (1975) 49 Cal.App.3d 812, 814, 122 Cal.Rptr. 862.) It is error to sustain a demurrer where a plaintiff has stated a cause of action under any possible legal theory. (See Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 103, 101 Cal.Rptr. 745, 496 P.2d 817; McDonald v. Superior Court (1986) 180 Cal.App.3d 297, 303, 225 Cal.Rptr. 394.) In assessing the sufficiency of a demurrer, all material facts pleaded in the complaint and those which arise by reasonable implication, must be deemed true. (See Buckaloo v. Johnson (1975) 14 Cal.3d 815, 828, 122 Cal.Rptr. 745, 537 P.2d 865; Pollack v. Lytle, supra, 120 Cal.App.3d 931, 939-940, 175 Cal.Rptr. 81.)

II. Whether Public Policy Considerations Preclude Cross-complaints for Indemnity Between Attorneys

Under ordinary principles of tort law, a tortfeasor who may be held liable for all injuries proximately caused by his or her negligence, including those which result from subsequent negligence, may cross-claim for indemnity against any subsequent tortfeasor whose negligence has exacerbated the original injury. (American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 591-598, 146 Cal.Rptr. 182, 578 P.2d 899; Parker v. Morton (1981) 117 Cal.App.3d 751, 756, 173 Cal.Rptr. 197.) "This rule derives from several well-recognized legal principles all of which foster the public policy of encouraging persons to conduct themselves with reasonable care: that every person should be responsible for the consequences of his negligent conduct [citations]; that as between tortfeasors who contribute to a loss each shall bear the loss in proportion to his fault [citations]; and that an injured person must himself take reasonable action to mitigate his damages [citations]." ( Parker v. Morton, supra, 117 Cal.App.3d at p. 756, 173 Cal.Rptr. 197.)

We must decide whether the same general principles apply where an attorney sued for malpractice by a former client cross-complains for indemnity against the successor attorney hired to assist the client in limiting the injury caused by the original attorney. We do not act in a vacuum. The problem is a recurring one. The clear weight of judicial authority prohibits the first attorney from cross-claiming for indemnity against the successor attorney. (Goldfisher v. Superior Court (1982) 133 Cal.App.3d 12, 15, 183 Cal.Rptr. 609; Gibson, Dunn & Crutcher v. Superior Court (1979) 94 Cal.App.3d 347, 156 Cal.Rptr. 326; Rowell v. TransPacific Life Ins. Co. (1979) 94 Cal.App.3d 818, 156 Cal.Rptr. 679; Commercial Standard Title Co. v. Superior Court (1979) 92 Cal.App.3d 934, 155 Cal.Rptr. 393; see Held v. Arant (1977) 67 Cal.App.3d 748, 134 Cal.Rptr. 422; but see Parker v. Morton, supra, 117 Cal.App.3d at p. 767, 173 Cal.Rptr. 197.) Although Courts of Appeal generally disfavor this type of action, they have differed between districts and among members of the same panel, on the conditions, if any, which might warrant such cross-complaints.

To begin with, it must be remembered that disallowing such actions imposes no burden on the predecessor attorney. Through the assertion of an affirmative defense the former attorney is still able to reduce his or her own exposure by the extent of the successor attorney's responsibility for the client's injury. As Thacher and Miller point out, principles of agency permit the successor attorney's negligence to be imputed to the client-plaintiff to reduce his or her recovery through application of comparative fault principles. (See Rowell v. TransPacific Life Ins. Co., supra, 94 Cal.App.3d 818, 821, 156 Cal.Rptr. 679; see also California Casualty Gen. Ins. Co. v. Superior Court (1985) 173 Cal.App.3d 274, 279, 281-282, 218 Cal.Rptr. 817.) However, because a successful affirmative defense would reduce the client-plaintiff's recovery, cross-complaints have a superficial appeal.

We are persuaded that the apparent benefit of allowing cross-complaints must give way to the sound public policy reasons enunciated in those cases supporting the majority rule forbidding them. Underlying the various formulations of the policy rationale is the concern that a cross-complaint for indemnity might adversely affect the relationship between the client and the successor attorney. Furthermore, as the predecessor attorney can seek protection from liability by asserting an affirmative defense, "inherent" in the additional cross-complaint option are "the seeds of irresponsible cross-lawsuits motivated by naught but spite and a desire to spread confusion, dissention [sic] in the opponent's camp." ( Commercial Standard Title Co. v. Superior Court, supra, 92 Cal.App.3d at p. 945, 155 Cal.Rptr. 393.)

The concern about the negative effects on the attorney-client relationship has been variously expressed. Lawsuits between the successive attorneys of a client may engender...