Saunders v. Weissburg & Aronson

• Decision Date: 09 August 1999
• Docket Number: No. B117061,B117061
• Citation: 87 Cal.Rptr.2d 405,74 Cal.App.4th 869
• Court: California Court of Appeals Court of Appeals
• Parties: , 99 Cal. Daily Op. Serv. 6393, 1999 Daily Journal D.A.R. 8125 Joseph A. SAUNDERS, P.C., et al., Plaintiffs and Appellants, v. WEISSBURG & ARONSON et al., Defendants and Respondents.

Page 405

87 Cal.Rptr.2d 405

74 Cal.App.4th 869, 99 Cal. Daily Op. Serv. 6393,

1999 Daily Journal D.A.R. 8125

Joseph A. SAUNDERS, P.C., et al., Plaintiffs and Appellants, v. WEISSBURG & ARONSON et al., Defendants and Respondents.

No. B117061.

Court of Appeal, Second District, Division 5, California.

Aug. 9, 1999.

As Modified Aug. 24, 1999.

As Modified on Denial of Rehearing Sept. 8, 1999.

Groh, Carroll, Stern & Werner and David B. Carroll, Irvine, for Plaintiffs and Appellants.

Jeffer, Mangels, Butler & Marmaro, Marc Marmaro, and Stanley M. Gibson, Los Angeles, for Defendants and Respondents.

ARMSTRONG, J.

Plaintiffs Joseph A. Saunders and Joseph A. Saunders, P.C. ("Saunders") appeal the judgment entered following the grant of summary judgment in favor of Weissburg & Aronson ("Weissburg"), County of Los Angeles ("County"), and two hospitals. We affirm the judgment.

FACTS

Pursuant to a written agreement, Saunders and Weissburg jointly represented a large group of hospitals in contingency fee litigation against the Medicare Program. That litigation is referred to by the parties as "the Group Appeal." The Group Appeal was ultimately settled by the unanimous vote of its 9 member hospitals for $8 million. Saunders was paid both the contingency fee and a consulting fee contemplated in the agreement with Weissburg.

Saunders alleged that Weissburg made certain misrepresentations to Saunders and the Group Appeal members which affected their assessment of the settlement offer which the hospitals ultimately accepted. Specifically, Saunders contended that Weissburg manipulated the course of the litigation to obtain a greater recovery for the individual defendant hospitals and the hospitals owned by the County, to the detriment of the remaining hospital members of the Group Appeal. Because the hospitals allegedly favored by Weissburg were not subject to the contingency fee agreement between Saunders and Weissburg, this manipulation resulted in a greater fee recovery by Weissburg, at Saunders's expense.

The complaint alleged causes of action against Weissburg for breach of contract, breach of fiduciary duty, constructive fraud, fraudulent concealment, interference with the practice of a profession, defamation, negligence, and conversion, all premised on Saunders's argument that he was injured when, as a result of Weissburg's prevarications, the Group Appeal was settled for less than its true value. ¹ Saunders claimed as damages the contingency fee he would have received if the Group Appeal had not been settled for less than it was worth.

DISCUSSION

Each of Saunders's causes of action is based on the premise that Weissburg breached certain duties owed to co-counsel Saunders pursuant to a joint venture agreement between them, by misusing and mishandling a contingency fee case. The Court of Appeal considered one lawyer's duties to successor counsel in Mason v. Levy & Van Bourg (1978) 77 Cal.App.3d 60, 143 Cal.Rptr. 389. In that case, the defendants were substituted in the place of the plaintiff as attorney of record for the client in two pending lawsuits. Pursuant to a written contract, the plaintiff was to receive a percentage of the 50 percent contingency fee which the client had agreed to pay. Although offers of settlement approximating $300,000 were made by opposing counsel in the cases, the defendants failed either to settle the cases or to prosecute them diligently, resulting in the loss of plaintiff's portion of the contingency fee.

The Court of Appeal rejected the notion that the defendant attorneys owed a duty to the plaintiff under the facts of that case. The court stated: "It is fundamental to the attorney-client relationship that an attorney have an undivided loyalty to his clients. (See ABA Code of Prof. Responsibility, canon 5.) This loyalty should not be diluted by a duty owed to some other person, such as an earlier attorney. While, as a practical matter, both the client and the former attorney stand to benefit from any recovery in the client's action, their interests are not identical.... It would be inconsistent with an attorney's duty to exercise independent professional judgment on behalf of his client to impose upon him an obligation to take into account the interests of predecessor attorneys."

The appellate court considered the ramifications of recognizing a legally cognizable The Mason court concluded that "defendants owed no duty to plaintiff to prosecute the case in any particular manner; the duties in this regard are owed to the client...." (Ibid.)

duty on the part of one attorney to another attorney representing the same client: "If the law were to recognize duties, such as are suggested here, between successive attorneys representing the same client, a multitude of litigation could be spawned with an attendant adverse impact on attorney-client relationships. Every lawyer could blame his problems in a lawsuit on his predecessors. Every lawyer referring a case to another lawyer would be in a position to claim that the negligence of the second lawyer caused a meritorious claim to be lost or settled for an insufficient amount. Public confidence in the legal system may be eroded by the spectacle of lawyers squabbling over the could-have-beens of a concluded lawsuit, even when the client has indicated no dissatisfaction with the outcome. Considerations of public policy support the conclusion that an attorney's duty of undivided loyalty to his client should not be diluted by imposing upon him obligations to the client's former attorney, or at least obligations greater than the client himself owed to the former attorney.... And the contract between the two attorneys, whatever other obligations it may impose, cannot legally impose upon the successor attorney a duty to pursue the client's case according to the former attorney's interests...." (Mason v. Levy & Van Bourg, supra, 77 Cal.App.3d at pp. 66-67, 143 Cal.Rptr. 389.)

Another Court of Appeal considered a lawyer's duty to concurrent, as opposed to successor, counsel in Pollack v. Lytle (1981) 120 Cal.App.3d 931, 175 Cal.Rptr. 81. There, the plaintiff served as counsel to his client in a medical malpractice lawsuit; the plaintiff was to be paid 50 percent of any recovery realized by the client. Relying on the false representations of the defendant, the plaintiff associated the defendant as trial counsel, and agreed that he would receive one-third of the plaintiff's contingent fee. Unbeknownst to the plaintiff, the defendant did not properly prepare the case for trial. A $250,000 pre-trial settlement offer was rejected. Due to the defendant's conduct, the jury returned a defense verdict in the medical malpractice action. Not only did the defendant lose the underlying case, but he induced the client to sue the plaintiff for legal malpractice.

The plaintiff sued the defendant for breach of fiduciary duty, fraud, breach of contract, legal malpractice, and declaratory relief. The Court of Appeal, over a dissent, reversed the trial court's sustaining of a demurrer, ruling that simple agency principles govern the relationship of associate counsel. (Pollack v. Lytle, supra, 120 Cal.App.3d at pp. 940-943, 175 Cal.Rptr. 81.) The majority did not disagree with the rationale of Mason. It stated: "We are not unmindful of the growing body of law which holds, as a matter of public policy, that a successor attorney owes no duty to his predecessor. (See, e.g., Gibson, Dunn & Crutcher v. Superior Court (1979) 94 Cal.App.3d 347 ; Rowell v. TransPacific Life Ins. Co. (1979) 94 Cal.App.3d 818 ; Commercial Standard Title Co. v. Superior Court (1979) 92 Cal.App.3d 934 ; Held v. Arant (1977) 67 Cal.App.3d 748 .)" (Pollack v. Lytle, supra, 120 Cal.App.3d at p. 942, 175 Cal.Rptr....