Lewis v. Purvin

• Decision Date: 22 March 1989
• Docket Number: No. D008323,D008323
• Citation: 256 Cal.Rptr. 827,208 Cal.App.3d 1208
• Court: California Court of Appeals Court of Appeals
• Parties: Don R. LEWIS et al., Plaintiffs, v. Robert L. PURVIN, Jr., Defendant, Cross-Complainant and Appellant; Richard W. Davis et al., Cross-Complainant and Respondent.

Page 827

256 Cal.Rptr. 827

208 Cal.App.3d 1208

Don R. LEWIS et al., Plaintiffs, v. Robert L. PURVIN, Jr., Defendant, Cross-Complainant and Appellant Richard W. Davis et al., Cross-Complainant and Respondent.

No. D008323.

Court of Appeal, Fourth District, Division 1, California.

March 22, 1989.

Greco & Traficante and Jon B. Miller, San Diego, for cross-complainant and appellant.

Richard W. Davis, San Diego, for cross-defendant and respondent.

HUFFMAN, Associate Justice.

Alleging a variety of theories, Don R. Lewis and Elinor J. Lewis sued Robert L. Purvin, Jr. for legal malpractice. Purvin in turn cross-complained against the Lewises' attorney of record, Richard W. Davis, seeking indemnification and declaratory relief arising out of the same transactions on which the Lewises based their complaint. After the trial court sustained without leave to amend Davis's demurrer to the cross-complaint, Purvin timely appealed.

Since the weight of authority precludes cross-complaints for indemnity by an attorney against successor counsel and malpractice actions by an attorney against opposing counsel, Purvin attempts to bring his pleading within a narrow exception to these rules. He alleges opposing counsel, Davis, represented the Lewises before, during, and after Purvin's alleged malpractice toward the Lewises. He further contends that due to his claim for implied indemnity, Davis has a duty to defend him upon demand under Code of Civil Procedure section 1021.6, ¹ and he is therefore entitled to seek attorney's fees by way of cross-complaint.

We hold that this cross-complaint, which would require the attorney for plaintiff in the main action to undertake the defense of the defendant and cross-complainant attorney, fails to state a cause of action. Such a pleading, however creatively worded, would constitute an unwarranted intrusion upon the existing attorney-client relationship. We therefore affirm the judgment dismissing the cross-complaint.

FACTUAL AND PROCEDURAL BACKGROUND

The Lewises, through their attorney Davis, sued Purvin, his partner Paul D. Hinton, and the law firm of Purvin & Hinton on theories of legal malpractice, actual and constructive fraud, breach of contract, breach of fiduciary duty, and conversion. According to the allegations of the first amended complaint (the complaint), Purvin represented Randall Walker and Diane Kassian Walker (the Walkers) in certain negotiations with the Lewises concerning the Lewises' investment in the Walkers' business. Although the facts pled in the cross-complaint reveal the Lewises had already retained Davis as their attorney, the complaint alleges Purvin orally undertook on July 8, 1986, at a particular Lewis-Walker meeting held in the course of their negotiations, to represent the Lewises, to protect their interests, and to advise them in the corporate and financial transactions between the Lewises and Walkers. After that meeting, the Lewises made a further investment in the business. They allege Purvin's conduct during and after the meeting constituted malpractice, such as his drafting of the promissory note and UCC-1 financing statement and his failure to carry out the incorporation of the Walkers' partnership, along with numerous other actions and inactions.

Purvin cross-complained against Davis and "Roes 1-10" for total equitable indemnity, comparative equitable indemnity, and declaratory relief. The cross-complaint alleges Davis was the attorney for the Lewises at all times during the events set forth in the cross-complaint, which incorporates by reference the complaint. Purvin goes on to allege Davis initially agreed to attend the critical July 8, 1986, meeting, then decided he could not do so, but told Purvin to go forward with the meeting with both sets of clients in his absence. Davis told Purvin he would advise his clients not to take any further action without his consultation and review, but allegedly failed to do so. Purvin relayed Davis's intended advice to the Lewises at the meeting, and thus alleges if any attorney is liable for breach of duty to the Lewises, it is Davis.

Accompanying his claim for indemnity, Purvin demands that Davis assume Purvin's defense of the main action. He also prays for attorney's fees pursuant to section 1021.6, to be assessed if the demand is refused and he prevails. ²

The trial court sustained Davis's demurrer to the cross-complaint without leave to amend on the grounds of failure to state sufficient facts to constitute a cause of action "in that on its face the action is barred by the public policy exception to the general principles of indemnity which prohibit a cross-complaint for indemnity against the attorney for an adversary." Judgment dismissing the cross-complaint was filed June 1, 1988.

DISCUSSION

I Standard of Review

On appeal, in assessing the sufficiency of a pleading upon demurrer, the court will deem true all material facts pleaded in the cross-complaint and those which arise by reasonable implication. (See Buckaloo v. Johnson (1975) 14 Cal.3d 815, 828, 122 Cal.Rptr. 745, 537 P.2d 865; Pollack v. Lytle (1981) 120 Cal.App.3d 931, 939-940, 175 Cal.Rptr. 81.) 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, supra, at p. 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 without leave to amend where the cross-complainant has alleged facts showing entitlement to relief under any possible legal theory. (McDonald v. Superior Court (1986) 180 Cal.App.3d 297, 303, 225 Cal.Rptr. 394; see Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 103, 101 Cal.Rptr. 745, 496 P.2d 817.)

II Public Policy Considerations Preclude Cross-Complaints For Indemnity Between Attorneys

Generally, an attorney's professional duty extends only to the intended beneficiary of his or her acts. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 342-344, 134 Cal.Rptr. 375, 556 P.2d 737.) Since Davis was at all times adversary to Purvin, Purvin cannot directly allege that malpractice by Davis injured him. However, by cross-complaining for indemnity, he attempts to accomplish indirectly what he cannot do directly, by alleging Davis had a duty to his clients to insure Purvin carried out his professional duties properly.

Since this particular set of facts does not appear in any of the published cases dealing with indemnity requests in malpractice actions, Purvin is required to argue by analogy to the line of cases discussing the limits on an attorney's right to indemnity from successor counsel who was retained to extricate the client from the problems created by the first attorney. Purvin recognizes, as he must, the courts have created an exception to the broad application of indemnity principles in such cases. The various public policy reasons giving rise to this exception were pointed out in a dissenting opinion in Parker v. Morton (1981) 117 Cal.App.3d 751, 767-768, 173 Cal.Rptr. 197:

"There are sound policy reasons supporting the rule that the first attorney has no right of indemnity from the second. Among them are: (1) the threat of such a lawsuit by a client's adversary impinges upon the individual loyalty of the second attorney in advising his client (Held v. Arant (1977) 67 Cal.App.3d 748, 752 ); (2) one consequence of such a cross-complaint is to preclude the second attorney from trying the lawsuit, thus depriving the party of the attorney of his choice (Gibson, Dunn & Crutcher v. Superior Court (1979) 94 Cal.App.3d 347, 352 ); (3) the threat of such a cross-complaint results in the injection of undesirable self-protective reservations into the attorney's counselling role, thereby diminishing the quality of legal services received by the client (see Goodman v. Kennedy (1976) 18 Cal.3d 335, 344 [134 Cal.Rptr. 375, 556 P.2d 737] ); and (4) such lawsuits jeopardize the policy of encouraging confidence and preserving inviolate the attorney-client relationship (Commercial Standard Title Co. v. Superior Court (1979) 92 Cal.App.3d 934, 944-995 [sic] )."

Purvin contends, however, these policies are inapplicable to his cross-complaint. He seeks to distinguish this case from earlier fact situations found not to support a claim of indemnity on the basis that Davis represented the Lewises before, during, and after the alleged malpractice, and thus is "entirely or jointly responsible" for the alleged malpractice of which they complain. He argues Davis is a sole or concurrent tortfeasor, and thus is not protected by the policies stated by courts earlier ruling in this field. (Ibid.) Instead, he contends the usual principles of equitable indemnity ought to apply, since the purpose behind the exception to such applicability would not be served by denying him relief. Therefore, he asserts his claim for total or comparative indemnity is not barred, and further, that he is entitled to pursue an award of attorney's fees by cross-complaint under section 1021.6. We will discuss these contentions separately.

A Claim for Indemnity

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-complain for indemnity against any subsequent tortfeasor whose negligence has exacerbated the original injury. (Herrero v. Atkinson (1964) 227 Cal.App.2d 69, 75, 38 Cal.Rptr. 490; Parker v. Morton, supra, 117 Cal.App.3d 751, 756, 173 Cal.Rptr. 197.) Writing for the Court of Appeal, Justice Kaufman observed in Parker v. Morton "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 [citatio...