Orrick v. Superior Court
| Decision Date | 11 April 2003 |
| Docket Number | No. A101737.,A101737. |
| Citation | 132 Cal.Rptr.2d 658,107 Cal.App.4th 1052 |
| Court | California Court of Appeals Court of Appeals |
| Parties | ORRICK HERRINGTON & SUTCLIFFE LLP, et al., Petitioners, v. The SUPERIOR COURT for the City and County of San Francisco, Respondent; Michael A. Malcolm, Real Party in Interest. |
Keker & Van Nest, Robert A. Van Nest, Christa M. Anderson and Steven A. Hirsch, San Francisco, for Petitioners.
No appearance for Respondent.
Holme Roberts & Owen, James Wesley Kinnear and Adria Y. LaRose, San Francisco, for Real Party in Interest.
The law in California is well established that when legal malpractice involves negligence in the prosecution or defense of a legal claim, the case-within-a-case methodology must be used. More specifically, for purposes of this case, which involved settlement of litigation, the plaintiff must prove his opponent in the underlying litigation would have settled for less, or that following a trial, plaintiff would have obtained a judgment more favorable than the settlement.
Real party in interest Michael A. Malcolm sued petitioners for malpractice, alleging they omitted critical terms from a marital settlement agreement. In response to a summary judgment motion, Malcolm did not produce evidence showing that his former wife would have settled for less, or that he would have obtained a judgment more favorable than the settlement. Instead he claimed as damages the legal fees he spent in an unsuccessful attempt to overturn the settlement. Contrary to the conclusion reached by the trial court, those fees do not represent possible tort damages. As there is no evidence of any other recognized tort damages, this case is simply a fee dispute. The action should go forward, but only on the contract causes of action alleged in the complaint.
Malcolm hired several lawyers to represent him in the dissolution of his marriage. Among the lawyers he hired were petitioners, the law firm of Orrick Herrington & Sutcliffe LLP and one of its partners, Christopher Ottenweller (collectively, hereafter, Orrick, unless otherwise noted).
During a mediation session on March 13 and 14, 2000, Malcolm and his former wife signed a "Property Settlement Agreement" that divided their substantial assets. According to Malcolm, however, he was advised by Ottenweller that the agreement was a "term sheet," and that it did not contain all the terms required for a final, binding agreement.
The attorneys for Malcolm's former wife took the position that the agreement was fully enforceable as written. On March 31, 2000, Malcolm moved to set aside the settlement agreement. The trial court denied the motion, finding no reasonable basis for it. On July 11, 2000, the court entered a judgment in the dissolution action that incorporated the terms of the settlement agreement. When Malcolm persisted in efforts to set aside that judgment, the court imposed monetary sanctions in the amount of $100,000. The court also found a motion by Malcolm's new wife to intervene in the matter was frivolous and made for the purpose of bolstering Malcolm's attempt to set aside the settlement. Ultimately, Malcolm paid hundreds of thousands of dollars in attorney fees in his futile quest to overturn the settlement.1
Malcolm sued Orrick, the law firm of Kaufman & Young, P.C., and Robert S. Kaufman for professional negligence, breach of contract, and breach of fiduciary duty. Malcolm alleged his lawyers had failed to provide competent services, leading him to enter into a "horribly defective `settlement' agreement." He cited the agreement's failure to include a release from his former wife, and its inclusion of provisions that could expose him to adverse tax consequences or securities law violations. He also cited his lawyers' failure to obtain his current wife's consent to the settlement.
Orrick responded with a cross-complaint, which alleged Malcolm owed over $400,000 in fees.
Orrick moved for summary judgment on all causes of action, or, in the alternative, summary adjudication on the individual causes of action. Orrick asserted Malcolm could not prove actual damages, an essential element of each of his causes of action. Orrick submitted discovery responses that showed neither Malcolm's former wife nor his current wife had filed any claims against him in connection with the settlement, that Malcolm had not been accused of any securities law violations, and that Malcolm could not identify any adverse tax consequences.
In opposition, Malcolm identified as damages the fees he had paid to Orrick, the fees he had paid to attempt to remedy Orrick's errors, and his payment of over $500 million to his former wife to settle claims worth approximately $30 million at the time of separation. Malcolm submitted, among other things, his legal bills and a declaration from an expert, who stated Orrick's conduct in negotiating the settlement agreement, fell below the pertinent standard of care. Malcolm also submitted a declaration by Ottenweller from the dissolution action, dated October 6, 2000, in which Ottenweller stated it was his understanding that a final stipulated judgment would contain additional language and terms to "flesh out" the property settlement agreement, including a mutual release between the parties. In his separate statement of facts, Malcolm noted that although it was undisputed that his wives (former and current) had not filed any claims against him and that there were no securities or tax claims against him, he was exposed to future claims.
The trial court denied Orrick's motion for summary judgment, finding there were triable issues of fact regarding "damages created by evidence of attorneys' fees expended in connection with attempts to correct errors committed in the negotiation, preparation and execution of a settlement agreement enforceable under Code of Civil Procedure section 664.6, entered on or about March 14, 2000, including, without limitation, motions to vacate the judgment and subsequent appeals."
Orrick timely filed a petition for peremptory writ of mandate and/or prohibition or other appropriate relief in this court. We asked for opposition from Malcolm and notified him that we were considering the issuance of a peremptory writ in the first instance. (Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 180, 203 Cal.Rptr. 626, 681 P.2d 893.) Malcolm has filed his opposition, and after reviewing it, we conclude the issuance of a peremptory writ in the first instance is appropriate, as the applicable principles of law are well established and the relevant facts are undisputed. (See Lewis v. Superior Court (1999) 19 Cal.4th 1232, 1259-1260, 82 Cal.Rptr.2d 85, 970 P.2d 872.)
"The grant and denial of summary judgment or summary adjudication motions are subject to de novo review." (Nakamura v. Superior Court (2000) 83 Cal. App.4th 825, 832, 100 Cal.Rptr.2d 97.) This court applies the same analysis as the trial court. We identify the issues framed by the pleadings, determine whether the moving party has negated the nonmoving party's claims, and determine whether the opposition has demonstrated the existence of a triable issue of material fact. (Yanowitz v. L'Oreal USA, Inc. (2003) 106 Cal.App.4th 1036, 1050, 131 Cal. Rptr.2d 575.) Summary judgment is appropriate if all the papers submitted show there is no triable issue of fact and that the moving party is entitled to judgment as a matter of law. (Code Civ. Proc, § 437c, subd. (c).)
The only issue raised by this petition is whether Malcolm submitted any evidence of cognizable damages.
A plaintiff alleging legal malpractice in the prosecution or defense of a legal claim must prove that, but for the negligence of the attorney, a better result could have been obtained in the underlying action. (California State Auto. Assn. Inter-Ins. Bureau v. Parichan, Renberg, Crossman & Harvey (2000) 84 Cal.App.4th 702, 710, 101 Cal.Rptr.2d 72 (Parichan).) The purpose of this methodology is to avoid damages based on pure speculation and conjecture. (Ibid.) "Although no bright line rule tells us when this methodology must be used, it is quite clear that, when the malpractice involves negligence in the prosecution or defense of a legal claim, the case-within-a-case method is appropriately employed." (Ibid., italics added.)
In Marshak v. Ballesteros (1999) 72 Cal.App.4th 1514, 86 Cal.Rptr.2d 1 (Marshak), the case-within-in-a-case method was applied to a legal malpractice claim arising from the settlement of a marital dissolution action. As in the instant case, the plaintiff in Marshak unsuccessfully attempted to set aside the settlement. He then sued his attorney, alleging she negligently failed to object to the valuation of certain assets, resulting in a loss of $337,000. In response to a summary judgment motion, the plaintiff proffered evidence as to the value of the assets, but not as to the value of his case. Both the trial and appellate courts concluded he had failed to offer evidence of damages: (Id. at p. 1518, 86 Cal.Rptr.2d 1.) Simply showing the attorney erred is not enough. The plaintiff "must also prove that his ex-wife would have settled for less than she did, or that, following trial, a judge would have entered judgment more favorable than that to which he stipulated." (Id. at p. 1519, 86 Cal.Rptr.2d 1; see also Thompson v. Halvonik (1995) 36 Cal.App.4th 657, 662-664, 43 Cal.Rptr.2d 142 [].)
Malcolm's showing in opposition to Orrick's ...
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