Thursday, November 21, 2002
High Court Won’t Review Malpractice Ruling Against Valley Lawyer
By KENNETH OFGANG, Staff Writer/Appellate Courts
A Court of Appeal ruling that a client victimized by legal malpractice did not have to mitigate damages by appealing the unfavorable result of counsel’s negligence was left standing yesterday by the state Supreme Court.
No justice voted to review the unpublished July 30 ruling of this district’s Div. Seven in Rosen v. Davis & Drum, B147804.
A divided panel in Div. Seven upheld a Los Angeles Superior Court jury’s award of $146,000 in damages to Judy and Susan Rosen and Sol Munn and Carol Solomon against Sherman Oaks practitioner Joel Drum and the firm of Davis & Drum.
An award of $80,000 in punitive damages was overturned, however, as the court found that the malpractice did not amount to fraud, malice, or oppression. Justice Dennis Perluss authored the opinion.
The plaintiffs, owners of a piece of commercial property, sued Drum and his firm after they lost a suit resulting from damage caused by their tenant. Among other things, Drum argued in his defense that the landlords would not have suffered damages had they joined what turned out to be a successful appeal by their co-plaintiff.
The underlying suit was on a guarantee by the tenant’s parents, which the landlords pursued after the tenant declared bankruptcy. The landlords claimed that the tenant demolished a garage on the property without their consent.
The landlords had a policy with Northbrook Property & Casualty Company, which paid about $21,000 for the loss and sued the tenant and guarantors on the basis of subrogation. The landlords, however, claimed that the payment was inadequate to cover the costs of repair, and the tenant agreed to pay part of the additional costs in exchange for a release of claims.
The landlords, according to testimony in the malpractice action, asked Northbrook if they could settle with the tenant without forfeiting the $21,000. They were referred to Northbrook’s attorney, Drum, who told them they could not, they said.
Drum, they said, advised them to join the subrogation action, and offered to represent them on a contingency basis. He also advised them to bring a separate suit for breach of the lease, which they did, with him as their attorney.
The suit against the guarantors resulted in a nonsuit after the judge excluded the guarantee on the ground that it was not on the exhibit list. The guarantors moved for attorney fees, arguing that they stood in the shoes of the tenant and were entitled to rely on the attorney fee clause of the lease, and were awarded $116,000.
The landlords discharged Drum after the nonsuit and hired David Pettit as their lawyer.
Abuse of Discretion
Northbrook appealed and won a reversal on the ground that the judge committed an abuse of discretion by excluding critical evidence of which the opposing parties were obviously aware even if it was not on the exhibit list.The landlords, on Pettit’s advice, did not join the appeal.
While the appeal was pending, the landlords sued Drum. They said he should have told them his dual representation of their interests and Northbrook’s was an actual or potential conflict, should have included the guarantee on the exhibit list, and should have laid a foundation for the introduction of the guarantee into evidence.
At trial, the defense called appellate specialist Robert Gerstein as an expert witness. He testified that while a full-blown appeal would have cost about $30,000, the landlords could have joined Northbrook’s appeal for about $200, that there was no downside” to doing so, since a loss would have left them no worse off than not appealing at all, and that at a minimum, Pettit should have preserved their right of appeal until Northbrook’s opening brief could be completed and reviewed.
Pettit testified that he advised against the appeal because of the cost, the likelihood of defeat, the cost of trying the case on remand if they won, and the clients’ lack of faith in Drum. He did not tell the clients that another lawyer might handle the appeal, or that they could join the insurer’s appeal for a small sum of money.
Perluss, writing for the Court of Appeal, said the landlords’ decision not to appeal the underlying judgment did not preclude their malpractice claim as a matter of state law.
“The rationale for the California rule is plain,” he said. “Although reversal of an unfavorable trial court judgment will likely reduce the client’s damages, if the adverse judgment would not have occurred without attorney negligence (such as the failure to list a critical document on the trial exhibit list), the lawyer is properly held responsible for any remaining damages caused by that error.”
The late Presiding Justice Mildred Lillie concurred in the opinion, but Justice Earl Johnson Jr. dissented. The cause of the clients’ damages, he argued, was “judicial error,” not legal malpractice.
As a matter of public policy, he said, a client should not be permitted to recover for attorney malpractice if the attorney establishes, as an affirmative defense, that the claimed malpractice would have been cured by a correct judicial ruling.
Copyright 2002, Metropolitan News Company