Pco, Inc. v. Christensen, Miller, Fink

• Decision Date: 30 April 2007
• Docket Number: No. B189856.,B189856.
• Citation: 58 Cal.Rptr.3d 516,150 Cal.App.4th 384
• Parties: PCO, INC., et al., Plaintiffs and Appellants, v. CHRISTENSEN, MILLER, FINK, JACOBS, GLASER, WEIL & SHAPIRO, LLP, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

58 Cal.Rptr.3d 516

150 Cal.App.4th 384

PCO, INC., et al., Plaintiffs and Appellants, v. CHRISTENSEN, MILLER, FINK, JACOBS, GLASER, WEIL & SHAPIRO, LLP, Defendant and Respondent.

No. B189856.

Court of Appeal, Second District, Division 5.

April 30, 2007.

Blumenthal & Markham, Norman B. Blumenthal and Kyle R. Nordrehaug, La Jolla; Clark & Markham and David R. Markham, for Plaintiffs and Appellants.

Christensen, Glaser, Fink, Jacobs, Weil & Shapiro, Kerry Garvis Wright and Laura Premi, Los Angeles, for Defendant and Respondent.

MOSK, J.

INTRODUCTION

Plaintiffs PCO, Inc. and Personal Choice Opportunities, by and through their duly appointed receiver, Barry A. Fisher (plaintiffs), filed an action against Robert L. Shapiro (Shapiro) and his law firm, Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (Christensen Firm) alleging that Shapiro improperly obtained monies that belonged to the receivership. Shapiro, a named partner in the Christensen Firm, was the attorney for David W. Laing (Laing), who was arrested and ultimately convicted for engaging in fraudulent activities with PCO, Inc. and Personal Choice Opportunities (collectively PCO).

The trial court granted the Christensen Firm's motion for summary judgment on the ground that the Christensen Firm cannot be held vicariously liable for Shapiro's alleged acts. We reverse the summary judgment, holding that plaintiffs have raised triable issues of fact with respect to whether Shapiro committed his alleged acts within the scope of his authority as a partner of the Christensen Firm. We affirm, however, the trial court's order granting summary adjudication in favor of the Christensen Firm on plaintiffs' causes of action for conversion and breach of fiduciary duty.

BACKGROUND¹

Plaintiffs alleged in their Third Amended Complaint that PCO purported to be in the business of investing in viatical settlements,² but that, in fact, PCO never purchased any viatical settlements even though Laing, operating through PCO, obtained over $89 million in loans from investors for that purpose. Plaintiffs alleged that Laing was arrested and charged with various federal offenses in connection with PCO and ultimately pleaded guilty to certain charges. Plaintiffs further alleged that Shapiro and the Christensen Firm³ appeared as Laing's counsel of record in federal criminal proceedings; Shapiro, acting for himself and as the agent of the Christensen Firm, directed a group of those associated with Laing to go to Laing's residence in Palm Springs, California, and there to obtain 12 duffel bags, each containing $500,000 in cash that Shapiro knew or should have known had been unlawfully obtained; Laing's associates converted 10 of those bags of money; and some of that money was used to post bail for Laing and to pay the fees of Shapiro and the Christensen Firm. Plaintiffs alleged that the money belonged to the receivership and asserted causes of action for conversion, breach of fiduciary duty, money had and received, violation of Business and Professions Code section 17200 et seq. (fraudulent practice), violation of Government Code section 13975.1 (receiver recovery of monies unlawfully obtained), and violation of Civil Code section 3439.04 et seq. (fraudulent transfers).

Shapiro was a non-equity partner in the Christensen Firm. He did not share in the profits or losses of the Christensen Firm. (See Rosenman v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro (2001) 91 Cal.App.4th 859, 862, 110 Cal. Rptr.2d 903 [reference to non-equity partners in that firm].)⁴ He asserted that he maintained his criminal law practice separate and apart from the Christensen Firm, and that he received the monies as part of his representation of Laing and deposited the monies in his personal account—not the account of the Christensen Firm. Plaintiffs submitted evidence, including correspondence and records of court appearances, indicating that Shapiro acted on behalf of the Christensen Firm in representing Laing.

Shapiro and the Christensen Firm brought a joint motion for summary judgment or, in the alternative, summary adjudication, attacking each of plaintiffs' claims. The Christensen Firm also brought a second motion for summary judgment, arguing, inter alia, that the

Christensen Firm cannot be held vicariously liable for Shaprio's conduct.

On the first motion, the trial court granted summary adjudication in favor of the Christensen Firm as to plaintiffs' claims for conversion and breach of fiduciary duty. On the second motion, the trial court granted summary judgment in favor of the Christensen Firm. The trial court entered judgment in favor of the Christensen Firm. Plaintiffs timely appealed.⁵

DISCUSSION

A. Standard of Review

We review the grant of summary judgment de novo and therefore make an independent assessment of the correctness of the trial court's ruling, applying the same legal standard as the trial court in determining whether there are any genuine issues of material fact or whether the moving party is entitled to judgment as a matter of law. A defendant moving for summary judgment meets its burden of showing that there is no merit to a cause of action by showing that one or more elements of the cause of action cannot be established or that there is a complete defense to that cause of action. Once the defendant has made such a showing, the burden shifts back to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or as to a defense to the cause of action. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849, 853-854, 860, 107 Cal.Rptr.2d 841, 24 P.3d 493 (Aguilar); Interinsurance Exchange of Automobile Club v. Superior Court (2007) 148 Cal.App.4th 1218, 1226-1228, 56 Cal.Rptr.3d 421; Moser v. Ratinoff (2003) 105 Cal.App.4th 1211, 1216-1217, 130 Cal.Rptr.2d 198.)

B. Plaintiffs Raised a Triable Issue of Fact Regarding the Christensen Firm's Vicarious Liability for Shapiro's Alleged Acts

The trial court granted the Christensen Firm's motion for summary judgment on the ground that Shapiro acted outside the scope of his authority as a partner of the Christensen Firm when he participated in the removal and use of cash from Laing's residence. The trial court erred in doing so. Based on the evidence presented, a "reasonable trier of fact" (Aguilar, supra, 25 Cal.4th at p. 856, 107 Cal.Rptr.2d 841, 24 P.3d 493) could find that Shapiro acted in his capacity as a member of the Christensen Firm and at a client's request to protect the funds from which the client's bail and the Christensen Firm's legal fees would be paid. Helping a client arrange bail and ensuring the payment of his firm's fees is within the scope of a law partner's authority.

A law partnership, as any partnership, is vicariously liable "for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act or omission, or other actionable conduct, of a partner acting in the ordinary course of business of the partnership or with authority of the partnership." (Corp.Code, § 16305, subd. (a); Blackmon v. Hale (1970) 1 Cal.3d 548, 557, 83 Cal.Rptr. 194, 463 P.2d 418; Black v. Sullivan (1975) 48 Cal.App.3d 557, 569, 122 Cal.Rptr. 119; 1 Mallen & Smith, Legal Malpractice (2007 ed.) Vicarious Liability, § 5.8, p. 609 ["A law firm, of course, is liable for the conduct of its principals and employees"].) "The principle upon which the liability of a partnership for injuries to a third person rests is the same as that applicable to principal and agent and master and servant." (Cahill Bros., Inc. v. Clementina Co. (1962) 208 Cal.App.2d 367, 388, 25 Cal.Rptr. 301, disapproved on another ground in Bay Development, Ltd. v. Superior Court (1990) 50 Cal.3d 1012, 1029-1030, fn. 10, 269 Cal. Rptr. 720, 791 P.2d 290; see Madsen v. Cawthorne (1938) 30 Cal.App.2d 124, 126, 85 P.2d 909.) "The rule is based on the policy that losses caused by the torts of employees, which as a practical matter are certain to occur in the conduct of the employer's enterprise, should be placed on the enterprise as a cost of doing business." (Kephart v. Genuity, Inc. (2006) 136 Cal. App.4th 280, 291, 38 Cal.Rptr.3d 845.)

"There is no requirement that an employee's act benefit an employer for respondeat superior to apply. In fact, an employer can be liable for his employee's unauthorized intentional torts committed within the scope of employment despite lack of benefit to the employer." (Perez v. Van Groningen & Sons, Inc. (1986) 41 Cal.3d 962, 969, 227 Cal.Rptr. 106, 719 P.2d 676.) Accordingly, "employees' `willful, malicious and even criminal torts' may be committed within the scope of employment, thus rendering their employers liable under respondeat superior. [Citations.] To be within the scope of employment, the incident giving rise to the injury must be an outgrowth of the employment, the risk of injury must be inherent in the workplace, or typical of or broadly incidental to the employer's enterprise. [Citation.]" (Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995, 1008-1009, 111 Cal.Rptr.2d 564, 30 P.3d 57; see Blackmon v. Hale, supra, 1 Cal.3d at p. 558, 83 Cal.Rptr. 194, 463 P.2d 418 [misappropriation of funds from client trust account by attorney].)

The tortious conduct "must be `a generally foreseeable consequence of the [employer's] activity.' In this usage, foreseeability `merely means that in the context of the particular enterprise an employee's conduct is not so unusual or startling that it would seem unfair to include the loss resulting from it among other costs of the employer's business.' [Citations.]" (Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291, 299, 48 Cal.Rptr.2d 510, 907 P.2d 358.) Whether a partner's actions were within the scope of his authority is ordinarily a question of fact. (Ibid.; Hartline v. Kaiser Foundation Hospitals (2005) 132 Cal.App.4th...