Metropolitan News-Enterprise


Thursday, April 28, 2011


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Court Revives Malpractice Action Against Girardi | Keese

Panel Says Firm May Be Liable on Claim it Mishandled Lockheed Settlement Proceeds


By SHERRI M. OKAMOTO, Staff Writer


This district’s Court of Appeal yesterday revived a class malpractice action against Girardi | Keese and name partner Thomas V. Girardi for mishandling funds generated in a settlement obtained in a toxic tort suit.

Div. Three ruled that Los Angeles Superior Court Judge Carl J. West’s grant of summary judgment in favor of Girardi and his firm was based on an erroneous assumption that the expiation of the statute of limitations in the underlying action prevented the putative class members from established causation and damages in the malpractice suit.

Girardi | Keese has risen to prominence for its high-profile class action litigation and record of multi-million dollar judgments and settlements. The firm represented residents of Hinkley, a small community in San Bernardino County, in a lawsuit against Pacific Gas & Electric depicted in the 2000 film Erin Brockovich starring Julia Roberts.

The firm also garnered much publicity over its litigation on the effects of the pesticide Dibromochlorpropane on Nicaraguan banana plantation workers, but a district judge threw out its attempt to enforce a Nicaraguan judgment in litigation over use of the pesticide and last year, the Ninth U.S. Circuit Court of Appeals rebuked the firm for pursuing a frivolous effort to revive the case.

Toxic Settlement

Girardi | Keese was also successful in securing some $131 million in settlements from various parties on behalf of Luis Gutierrez and several other employees of the Lockheed Corporation to resolve claims that they had been injured by their exposure to toxic chemicals in the workplace. Three of the non-settling defendants in this case, however, obtained summary judgment in their favor in 2002, on the basis that the plaintiffs’ claims were time-barred.

In 2008, Gutierrez sued Girardi | Keese on behalf of himself and others who had been represented by the firm in the toxic tort case, asserting that the firm had misappropriated over $20 million from the settlement fund. West, however, found Gutierrez could not prevail as a matter of law because he could not have prevailed in the underlying case.

Writing for the appellate court, Justice Patti S. Kitching disagreed, explaining “whether Gutierrez’s claims against the settling defendants [in the underlying case] would have been barred by the statute of limitations is irrelevant to Gutierrez’s breach of fiduciary duty cause of action.”

Timing Issue

Since the firm’s alleged misconduct took place after the settlement agreements were executed, she reasoned that any misappropriations would have “caused Gutierrez to incur damages regardless of whether the settling defendants could have raised a statute of limitations defense prior to settling the case.”

She emphasized that once the settling defendants chose to pay the plaintiffs, “Gutierrez and the other plaintiff were entitled to their rightful share of the settlement proceeds” even if their claims against the settling defendants would have been barred by the statute of limitations had the settling defendants asserted them.

Adopting the position that the merits of Gutierrez’s underlying claims against the settling defendants had to be adjudicated “would create a rule of law that would lead to absurd and inequitable results,” Kitching said.

As an example, she suggested the a hypothetical wherein a plaintiff retains an attorney to represent him in an employment discrimination action on a contingency basis, and after the employer settles the case, the attorney absconds with the settlement proceeds.

“[I]f the plaintiff sued the attorney, the attorney could raise each of the employer’s defenses to the plaintiff’s settled claims and, if the attorney prevailed in this trial within a trial, he could keep the $100,000 with impunity,” Kitching said, insisting:

“That is not, should not be, and never has been the law in this state.”

Presiding Justice Joan D. Klein and Justice H. Walter Croskey joined Kitching in the opinion.

Robert W. Finnerty of Girardi | Keese represented the firm while Gutierrez was represented by Peter R. Dion-Kindem of Dion-Kindem & Crockett.

Dion-Kindem remarked yesterday that his client was “gratified that the Court of Appeal got it right” and ““the rule of law that was adopted is certainly consistent with existing law.”

He said a new trial date is pending since the remittitur had not yet been issued, and “we’re looking forward to obtaining a true and accurate accounting of Girardi’s handling of the Lockheed settlement fund.”

A message left for Finnerty was not returned.

The case is Gutierrez v. Girardi, B226614.


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