Lockton v. O'Rourke
| Decision Date | 01 September 2010 |
| Docket Number | Nos. B208440, B212435.,s. B208440, B212435. |
| Citation | 109 Cal.Rptr.3d 392,184 Cal.App.4th 1051 |
| Court | California Court of Appeals Court of Appeals |
| Parties | David B. LOCKTON, Plaintiff and Appellant, v. Michael O'ROURKE et al., Defendants and Respondents. David B. Lockton, Plaintiff and Respondent, v. Quinn Emanuel Urquhart Oliver & Hedges, LLP et al., Defendants and Appellants. |
Stephen W. Steelman for Plaintiff, Appellant and Respondent David B. Lockton.
Quinn Emanuel Urquhart Oliver & Hedges, Eric J. Emanuel and Roxanna A. Manuel, Los Angeles, for Defendants and Appellants Quinn Emanuel Urquhart Oliver & Hedges and Richard A. Schirtzer.
Hinshaw & Culbertson, Daniel Sanchez-Behar and John W. Sheller, Los Angeles, for Defendants and Respondents Michael O'Rourke and O'Rourke McCloskey & Moody.
Quinn Emanuel Urquhart Oliver & Hedges, Roxanna A. Manuel, Los Angeles; Greines, Martin, Stein & Richland, Robin Meadow and Kent J. Bullard, Los Angeles, for Defendants and Respondents Quinn
Emanuel Urquhart Oliver & Hedges and Richard A. Schirtzer.
David B. Lockton appeals from a judgment of dismissal entered after demurrers by defendants and respondents Quinn Emanuel Urquhart Oliver & Hedges and Richard A. Schirtzer and Michael O'Rourke and O'Rourke McCloskey & Moody (collectively respondents) to the fifth amended complaint for legal malpractice. The demurrers were sustained without leave to amend on the ground the action was barred by the statute of limitations. He claims the trial court improperly based its ruling on facts that do not appear on the face of the fifth amended complaint and that the ruling was contrary to the purposes underlying the continuous representation tolling rule.
The trial court's ruling was based on facts alleged in previous verified versions of Lockton's complaint. This was proper under established pleading doctrine. The allegations of the fifth amended complaint were sufficient to establish that respondents represented Lockton's interests in the subject matter of this malpractice action only until new counsel was retained to pursue those claims in a separate state court action. Since Lockton learned that his underlying state court claims were barred more than one year before he filed this action, the trial court did not err in sustaining the demurrers without leave to amend on that ground. This result is not contrary to the purposes underlying the continuous representation tolling rule.
Quinn Emanuel Urquhart Oliver & Hedges (Quinn Emanuel) and Richard Schirtzer of that firm, both respondents, cross-appeal to challenge thetrial court's denial of their requests for attorney fees. We conclude that the trial court erred in ruling that Schirtzer and Quinn Emanuel were not entitled to fees. We reverse that order and remand to the trial court for a determination of the amount of fees to be awarded.
Since this is an appeal from judgment entered after the trial court sustained the defendants' demurrers without leave to amend, we "accept as true all well-pleaded facts in the complaint and give a reasonable construction to the complaint as a whole." ( Animal Legal Defense Fund v. Mendes (2008) 160 Cal.App.4th 136, 140, 72 Cal.Rptr.3d 553, citing Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.) In addition, we may consider matters which are properly the subject of judicial notice. ( Buesa v. City of Los Angeles (2009) 177 Cal.App.4th 1537, 1543, 100 Cal.Rptr.3d 86.) In conformity with these principles, we take our factual summary from the charging pleading, the fifth amended complaint, and the exhibits incorporated by reference in that pleading. ( Holland v. Morse Diesel Internat., Inc. (2001) 86 Cal.App.4th 1443, 1447, 104 Cal.Rptr.2d 239.)
Lockton is an attorney and entrepreneur with a record of successful business ventures. In 1987, he founded Interactive Network, Inc. (Interactive) to exploit his patent for a new technology "that allowed television viewers of sporting events and game-shows to compete with one another in games of skill while simultaneously interacting with the television programming where the event was taking place." Lockton was president, chief executive officer and a major shareholder in Interactive. Various media companies, including Tele-Communications, Inc. (TCI), invested inInteractive.1 Interactive went public through an initial public offering in the fall of 1991. In May 1993, TCI became its largest single shareholder.
In 1994, TCI began an attempted takeover of Interactive. In January 1995, Lockton and Interactive's board of directors retained the Morrison & Foerster law firm, including partners Marshall Small and Adam Lewis (collectively Morrison defendants), to represent Interactive's interests in remaining independent and thwarting TCI's takeover efforts. In July 1995, Lockton wasdirected by Interactive's board of directors to hire Joseph Cotchett and his firm to sue TCI in the Alameda County Superior Court. ( Interactive Network, Inc. v. Tele-Communications, Inc., case No. 754933-7 (hereafter TCI litigation).) That was done, and Lockton managed the TCI litigation on behalf of Interactive on a full-time basis. The case was settled in February 1998.
In March 1998, Lockton retained Bruce Prescott of Trump, Alioto & Prescott to represent his interests and those of other Interactive equity shareholders in, among other matters, a Chapter 11 bankruptcy proceeding filed in 1998 on behalf of Interactive by Morrison & Foerster. (United States Bankruptcy Court, Northern Dist. of Cal., case No. 98-340555.) He followed Prescott's advice and also hired Daniel O'Rourke, of Vedder, Price, Kaufman & Kammholz in Chicago, an attorney experienced in Securities and Exchange Commission matters. On March 14, 1999, Prescott wrote a detailed eight-page letter to Small and Lewis of Morrison & Foerster charging them with various acts of wrongdoing, including defamation. The letter warned that if the Morrison defendants did not settle, an action would be filed.
Lockton received a copy of the Prescott letter and was advised by Prescott and Daniel O'Rourke to retain counsel to commence separate litigation against TCI, members of Interactive's board of directors, and the Morrison defendants. Allegedly, Daniel O'Rourke felt so strongly about the wrongs perpetrated against Lockton by the Morrison defendants that he referred Lockton to his brother, Michael O'Rourke, as possible counsel to represent Lockton in an action against the Morrison defendants.
In June 1998, Lockton was removed from his positions as president and chief executive officer by the Interactive board of directors. He remained on the board until March 1999.
Lockton first met with Michael O'Rourke of O'Rourke, McCloskey & Moody, and Richard Schirtzer of Quinn Emanuel, in July 1998.2 He told both men at the initial meeting that "he saw the Morrison defendants as the prime defendants in the proposed lawsuit." Lockton acknowledges that O'Rourke and Schirtzer were reluctant to name Morrison & Foerster at that point. It was agreed that the complaint would be drafted as if "the Morrison & Foerster defendants were formally named, but to not specifically include themin thecaption of the complaint, using instead the charging allegations in the body of the complaint combined with 'Doe' allegations to preserve the right to sue Morrison & [Foerster]...."
Michael O'Rourke and his firm were retained in June 1999. Schirtzer and his firm were retained in August 1999. (We refer to these firms and individual defendants collectively as respondents.) Copies of the retainer agreements, which Lockton alleges were incomplete, were attached as exhibits to the fifth amended complaint. The retainer agreements listed entities and individuals against whom the firms would prosecute Lockton's claims, but did not include the Morrison defendants in this list.
In August 1999, Quinn Emanuel filed an action against AT & T Broadband, 3 Joseph Cotchett, and members of the Interactive board. This action originally was filed in the Los Angeles Superior Court, and was subsequently removed to the United States District Court for the Northern District of California. ( Lockton v. AT & T Broadband, case No. CV05462TEH.) (We adopt the practice of the parties in referring to this matter as the "federal action.") The federal action was actively litigated until resolved on August 20, 2003, when it was settled and dismissed.
In June 2002, Lockton retained attorney Guy Kornblum to sue the Morrison defendants in Santa Clara Superior Court (case No. CV810963). Lockton alleged that he did so because of O'Rourke's advice that he should retain separate counsel to sue the Morrison defendants in state court. The complaint alleged causes of action for libel per se, libel per quod, slander, and violations of the California Labor Code based on statements made in 1998 and 1999 by the Morrison defendants to the Securities and Exchange Commission, in connection with the Interactive bankruptcy, and in press releases and shareholder reports. We refer to this as the Morrison & Foerster malpractice case. As we next discuss, this action was ultimately dismissed after the California Court of Appeal for the Sixth District held that the Morrison defendants' special motion to strike (Code Civ. Proc., § 425.16) should have been granted as to all causes of action. The basis of that ruling was the court's conclusion that Lockton could not demonstrate a probability of success on the merits since his claims were barred by the statute of limitations.
As we have noted, respondents in this action are Quinn Emanuel Urquhart...
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