Metropolitan News-Enterprise


Thursday, October 18, 2012


Page 1


S.C. Declines to Revive Action Against Cochran Firm

C.A. Said Privilege Barred Action Based on Alleged Unauthorized Settlement


By a MetNews Staff Writer


The California Supreme Court yesterday declined to review a ruling by this district’s Court of Appeal in an action against The Cochran Firm and two of its members.

The justices, at their weekly conference in San Francisco, unanimously voted not to hear an appeal by seven erstwhile clients who sued the law firm and attorneys Daniel H. Cargnelutti and Brian Dunn.

Div. Eight, in its Aug. 3 ruling in Hadley v. The Cochran Firm, B233093, affirmed the dismissal of the suit. The plaintiffs claimed their case against their employer was settled without their consent.

The complaint alleged negligence, breach of fiduciary duties, and fraud. It recited that they sued their employer for racial discrimination, went to mediation, and signed a confidentiality agreement—and that a signature page was, without their authorization, later attached to a settlement agreement.

Los Angeles Superior Court Judge Rolf M. Treu granted a motion in limine to exclude all of the evidence because it stemmed from mediation, and Evidence Code Sec. 1119 renders confidential whatever occurs in that setting. He then dismissed the action.

The clients insisted that the unauthorized settlement was not “mediation related” because the mediation did not produce the purported settlement.

Div. Eight, in an unpublished opinion by Justice Elizabeth Grimes, rejected the distinction. Grimes cited the California Supreme Court’s opinion in Cassel v. Superior Court (2011) 51 Cal.4th 113 for the proposition that confidentiality provisions of Sec. 1119 are “clear and absolute” and that “[e]xcept in rare circumstances, they must be strictly applied and do not permit judicially crafted exceptions or limitations, even where competing public policies may be affected.”

The plaintiffs argued that they, unlike the plaintiff in Cassel, were not seeking disclosure of anything said during mediation, but were seeking to establish that they had not assented to a settlement of their case.

Grimes responded:

“[P]laintiffs cannot establish their claims without delving into the circumstances under which they were allegedly fraudulently induced to sign a document at the mediation that their counsel later represented to be a settlement agreement. The trier of fact must necessarily consider the circumstances under which the purported settlement agreement came to exist. To the extent counsel’s alleged deception occurred at the mediation, it was ‘in the course of, or pursuant to, a mediation’ under the expansive interpretation given to those terms.”

Grimes said that Sec. 1119 renders the evidence inadmissible “even if it would ‘unfairly’ shield an attorney from liability.”

In other conference action, the Supreme Court ordered the disbarment of former Santa Fe Springs attorney J. Jack Artz. Artz has been ineligible to practice since being suspended two years ago.

In recommending his disbarment, the State Bar Court’s Review Department said Artz was a month late in filing his declaration of compliance with the State Bar rule requiring that he notify courts and co-counsel and opposing counsel of his suspension.

The suspension was based on a stipulation that he had failed to perform services for several clients and that he had commingled funds.

The review panel rejected Artz’s claim that the Supreme Court failed to notify him of his obligations under Rule 9.210. The judges said Artz failed to rebut the presumption that the clerk performed his duty of mailing the notice, and noted his admission that he received a letter from the Office of Probation informing him of the requirement—although he claimed not to have read it.

In addition, the panel said, Artz knew of the Rule 9.210 requirement because it was part of his stipulation. He also admitted that he was reminded of the requirement when he called the State Bar to discuss his fee bill on Dec. 9, 2010—15 days after the compliance deadline—but waited another 11 days to file the affidavit.

The court explained that belated filing of a compliance declaration will not always result in disbarment. But it cited several aggravating factors in Artz’s case—his previous record of discipline, his lack of candor at his discipline hearing, his having made a court appearance while under suspension, and “indifference to his professional responsibilities.”

That last finding was based on Artz’s testimony that he did not read the disciplinary stipulation when he signed it and was still “hardly aware” of its terms, and his unsupported claims that he was being persecuted because the State Bar was looking for “coerced guilty pleas” and orders to pay disciplinary costs because it needed the money to pay the judges’ salaries.


Copyright 2012, Metropolitan News Company