Stanley v. Richmond

• Decision Date: 14 June 1995
• Docket Number: No. A062468,A062468
• Citation: Stanley v. Richmond, 41 Cal.Rptr.2d 768, 35 Cal.App.4th 1070 (Cal. App. 1995)
• Court: California Court of Appeals
• Parties: Linda E. STANLEY, Plaintiff and Appellant, v. Diana RICHMOND et al., Defendants and Respondents.

Page 768

41 Cal.Rptr.2d 768

35 Cal.App.4th 1070

Linda E. STANLEY, Plaintiff and Appellant, v. Diana RICHMOND et al., Defendants and Respondents.

No. A062468.

Court of Appeal, First District, Division 2, California.

June 14, 1995.

Howard Moore, Jr., Moore & Moore, Oakland, for plaintiff and appellant.

Basil Plastiras, Plastiras & Forsblad, San Francisco, for defendants and respondents.

PHELAN, Associate Justice.

Linda E. Stanley (appellant) timely appeals from a judgment of nonsuit entered as to her claims for breach of fiduciary duty, legal malpractice, and breach of contract. These claims against respondents Diana Richmond (Richmond or respondent) and her law firm, Richmond & Chamberlin (collectively, hereinafter, respondents), arose out of a dissolution proceeding in which Richmond represented appellant, and C. Rick Chamberlin (Chamberlin), an attorney with whom Richmond was in the process of forming a new law firm, represented appellant's husband, Dr. John Stanley (Dr. Stanley). At the close of appellant's evidence in a jury trial, the court granted respondents' motion for nonsuit (Code Civ.Proc., § 581, subd. (c)), ruling that appellant was required--and failed--to present expert testimony on the applicable standard of care for family law attorneys, and that appellant failed to present evidence that, but for Richmond's alleged breach(es) of fiduciary duty, appellant would have obtained a better result in the dissolution proceedings.

We conclude that appellant established a prima facie case of breach of fiduciary duty, professional negligence, and breach of contract. Accordingly, we reverse the judgment of the trial court and remand for a new trial.

I. FACTUAL AND PROCEDURAL BACKGROUND

Viewed in the light most favorable to appellant, with all presumptions, inferences and doubts resolved in her favor (Carson v. Facilities Development Co. (1984) 36 Cal.3d 830, 838-840, 206 Cal.Rptr. 136, 686 P.2d 656), the evidence presented to the trier of fact was as follows:

Appellant and Dr. Stanley were married in 1958 and separated on January 6, 1986. When the couple separated, appellant moved out of the family home. Dr. Stanley petitioned for dissolution of the marriage in June 1986.

Appellant is a litigation attorney specializing in bankruptcy matters. She was a partner in the law firm of Dinkelspiel & Dinkelspiel until June 1986, when she left to start a new firm, Taylor & Stanley. On February 1, 1989, Taylor & Stanley was acquired by Nossaman, Gunther, Knox & Elliot (the Nossaman firm), a state-wide general service law firm with its main offices in Los Angeles and San Francisco.

In June 1987, appellant retained Richmond to represent her in the marital dissolution proceedings. At the time, Richmond's law offices were located at 100 Embarcadero Center in San Francisco, in space she subleased from the Nossaman firm. Richmond's written retainer agreement provided that, "We will exert our best efforts on your behalf consistent with the canons of ethics of the legal profession, to provide legal counsel, advice, and representation."

Dr. Stanley retained C. Rick Chamberlin as his attorney for the dissolution proceedings in or about February 1988. Chamberlin was at the time a partner with Stotter Chamberlin & Coats, whose offices were at 1735 Franklin Street in San Francisco.

A. June 1988 Trial re Division of Marital Property.

A three-day trial on the marital property issues was held in June 1988. Two of the issues at trial were the division of the family residence in Belvedere, which was valued at $825,000, and disposition of Dr. Stanley's University of California (UC), Veteran's Administration (VA), and "TIAA/CREF" retirement accounts. The retirement accounts were worth over $600,000 in the aggregate. Another asset subject to distribution at trial was appellant's Dinkelspiel & Dinkelspiel partnership withdrawal payments. Appellant and Dr. Stanley stipulated before trial that the community property interest in those payments was $37,600.

At the end of the trial, the court denied appellant's request to award her the family residence and ordered the home sold, but provided that either party could bid on the property. The court further ordered that the Dinkelspiel & Dinkelspiel payments be awarded to appellant, and that Dr. Stanley's retirement plans should be divided equally in kind. On June 21, 1988, the parties were directed to draft a proposed final judgment for the court's approval. Over the following eight months, the parties continued to dispute many specifics of the property division, and exchanged six drafts of the form of judgment before finally settling the matter. ¹

B. Post-trial Efforts to Finalize the Marital Property Division.

After the trial of the property issues was concluded, appellant began to complain that Richmond had become ineffectual in efforts to wind up the dissolution. For example, on December 9, 1988, appellant wrote to Richmond and expressed concern about Richmond's apparent unwillingness to challenge Chamberlin on key issues. Unknown to appellant, Richmond had met with Chamberlin in July or August of 1988 and invited him to join her in the practice of law. Richmond wanted Chamberlin to relocate with her when she moved her offices later in the year. At that time, Chamberlin declined the invitation and Richmond claimed she "abandoned that concept."

In or about October 1988, Dr. Stanley listed the Belvedere house for sale, at an asking price of $1,150,333. Dr. Stanley thereafter received several offers on the property, none of which was acceptable. At the time, appellant was unable to bid on the house because her law firm, Taylor & Stanley, was doing poorly.

Also in October 1988, however, appellant's financial situation began to change. That was when she began negotiating an employment agreement with the Nossaman firm, to begin working there on February 1, 1989. Her new salary would improve her financial condition considerably.

On January 12, 1989, an acceptable all-cash offer to purchase the Belvedere home for $1,008,000 was made by Paul and Elizabeth Wiser (the Wiser offer). At that time, appellant did not specify terms on which she would buy Dr. Stanley's interest in the house, but she did authorize respondent to convey to Dr. Stanley her intent to exercise her right of first refusal.

Less than two weeks later, on January 23, Richmond received a telephone call from Chamberlin in which he reportedly said Dr. Stanley was becoming impatient and had instructed him to bring a motion to compel acceptance of the Wiser offer unless appellant came up with specific, acceptable terms. When Richmond called to tell appellant of the threatened motion, appellant initially said she was too busy dealing with the Nossaman firm about her new employment arrangements. Later the same day, however, appellant called Richmond back to say she had struck a deal with the Nossaman firm and to propose paying Dr. Stanley "$250,000 via a loan." On January 24, Richmond wrote to appellant setting forth terms--specifically a $360,000 purchase price--under which Chamberlin had indicated Dr. Stanley would agree to appellant's purchase of his share of the house. Apparently, Chamberlin also informed Richmond that, if appellant obtained a $250,000 bank loan, Dr. Stanley might be willing to take a note from appellant for the $110,000 balance.

Appellant testified that the pressure Dr. Stanley and the two lawyers were applying to compel sale of the house in late January was inappropriate, unnecessarily intense, and contrary to the family court's orders. Under all versions of the proposed final judgment in the dissolution action, appellant had a fixed period of time--90 days--from acceptance of a third-party offer to purchase her husband's interest in the Belvedere house. The Wiser's offer was made on or about January 12, and appellant communicated her intent to exercise her rights of first refusal on the same date. Appellant thus had until at least April 12 to obtain financing to buy out Dr. Stanley.

A plausible reason for the intense pressure surfaced within two days after appellant learned about Chamberlin's plan to compel sale of the house. On or about January 25, Chamberlin called Richmond to inquire if she was still interested in having him join her in the practice of law. Richmond told Chamberlin that she was, indeed, still interested, and agreed to check if there was additional space in the building where she had leased offices to relocate her law practice.

Also on January 25, Richmond called Stanley to tell her that she and opposing counsel Chamberlin were "seriously discussing taking offices together within the next 60 days." Richmond confirmed their conversation in a letter dated January 26. Stanley testified about her reaction to Richmond's news: "My first impression was to laugh in disbelief. I was just amazed that here I was in a situation where the opposing counsel and my attorney were going to go [in]to practice or going to share offices together. But I said, well, that's all the more reason to get this judgment finished, which has languished all this time." Stanley further testified that she understood "taking offices together" to mean that Richmond and Chamberlin would be renting space in the same building--as Richmond had done with the Nossaman firm--but not that they would be starting a new law firm together. Apparently, Richmond's and Chamberlin's plan was to open the new law firm within 60 days of January 25, i.e., by March 26, when Richmond's sublease with the Nossaman firm expired. ² In a curious twist of the concept of attorney-client confidentiality, Richmond asked appellant to keep the information private as it was "not yet general knowledge." In her confirming letter of January 26, Richmond also noted that her plan to go into practice with Chamberlin was "yet another reason to conclude your dissolution as soon as we possibly can."

Contrary to Richmond's representations to...