Tuesday, May 1, 2007
C.A.: Firm May Be Liable for Acts of Partner in ‘Private’ Capacity
By TINA BAY, Staff Writer
A law firm may potentially be liable for the conduct of a non-equity partner who directed the removal of cash from the home of a client in order to cover legal fees and bail, the Court of Appeal for this district ruled yesterday.
Reversing a summary judgment ruling by Los Angeles Superior Court Judge Victor H. Person—who is retiring today—Div. Five said it was possible for the Century City firm of Christensen, Glaser, Fink, Jacobs, Weil & Shapiro to be held vicariously liable for alleged acts by named partner and well-known criminal defense attorney Robert L. Shapiro.
He and Christensen Glaser—at the time called Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro—were sued by PCO, Inc. and Personal Choice Opportunities through their court-appointed receiver, Barry A. Fisher, who claimed Shapiro improperly obtained funds belonging to the receivership.
A non-equity partner in the firm, Shapiro allegedly converted the receivership’s monies during the course of representing David W. Laing, who was arrested for engaging in fraudulent activities with the PCO entities. Laing, operating through the entities, allegedly obtained over $89 millions in loans from investors by misleading them to believe the funds would be used to purchase viatical settlements.
In opposition to the firm’s summary judgment motion, the receiver presented evidence that following Laing’s bail hearing on April 4, 1997, Shapiro met with Laing’s associates at his request and told them the defendant wanted them to “secure” property from his Palm Springs residence. The property, which Shapiro knew to include over $1 million in cash, was allegedly to be used to post Laing’s $500,000 bail and pay Shapiro’s fees.
No retainer had been paid to Shapiro or the firm at the time.
At Shapiro’s direction, the receiver claims, Laing’s associates carried out the instructions, retrieving numerous duffel bags full of cash that was used in part to cover Laing’s bail and attorney fees.
Laing was ultimately convicted.
In their lawsuit, the PCO entities submitted evidence that Shapiro acted on behalf of Christensen Glaser in representing Laing and, specifically, directing the removal of money from his home.
Shapiro, however, asserted he maintained his criminal law practice separate and apart from Christensen Glaser, that he represented Laing in his “private” capacity, and that he deposited the funds received as part of representing Laing in his personal account.
He and Christensen Glaser brought a joint summary judgment/summary adjudication motion attacking the plaintiffs’ claims.
The firm also brought a separate summary judgment motion on the ground that it could not be held vicariously liable for Shapiro’s acts because they were committed outside the scope of his authority as a partner in the firm.
Person granted the first motion as to Christensen Glaser with regard to the plaintiffs’ conversion and breach of fiduciary duty claims, and also granted the firm’s second motion.
The Court of Appeal reversed Person’s second ruling, concluding there was enough evidence for a reasonable trier of fact to find Shapiro acted within his capacity as a member of the Christensen firm.
Writing for Div. Five, Justice Richard M. Mosk explained:
“The Christensen Firm’s Web site promotes Shapiro as the ‘head of the firm’s white-collar criminal defense practice.’ His name is in the firm name. There is a retainer agreement dated April 30, 1997 between Laing and the Christensen Firm relating to the federal criminal charges against Laing.”
Though signed by Shapiro, Mosk said, the retainer provided: “We are pleased that you have decided to retain Christensen, Miller, Fink Jacobs, Glaser, Weil and Shapiro, LLP (the ‘Firm’) as your counsel.”
Moreover, the justice wrote, when asked at his deposition whether he represented to the court at Laing’s first bail hearing that he was with the firm, Shapiro answered, “Yes, I always do.”
“Based on this evidence, a reasonable jury could conclude that Shapiro participated in removing the money from Laing’s residence in an effort to help a client of the Christensen Firm post bail and to ensure that the Christensen Firm’s fees were paid or at least indirectly to serve the interests of the Christensen Firm. Both are activities ‘typical of or broadly incidental’ to the practice of a white-collar criminal defense lawyer…and therefore sufficient to render the Christensen Firm liable under the doctrine of respondeat superior.”
Presiding Justice Paul Turner and Justice Orville A. Armstrong concurred in the opinion.
Counsel on appeal were La Jolla attorneys Normal G. Blumenthal and Kyle R. Nordrehaug and David R. Markham for the plaintiff, and Kerry Garvis Wright and Laura Premi of Christensen Glaser for the firm.
The case is PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, 07 S.O.S. 2277.
Copyright 2007, Metropolitan News Company