Thursday, March 19, 2015
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Confidentiality Bars Suit Based on Bad Advice Allegedly Given at Mediation Session—Court of Appeal
By a MetNews Staff Writer
A legal malpractice suit cannot be based on erroneous advice by an attorney urging a client to settle, if the advice is given during the course of mediation, this district’s Court of Appeal ruled yesterday.
Div. Three affirmed Los Angeles Superior Court Judge Charles Palmer’s ruling in favor of Greenberg Traurig LLP, which was granted summary judgment in a suit by former client John Amis.
Amis is a former shareholder in an export-import company called Pacific Marketing Works that was embroiled in litigation several years ago when a Japanese firm, a Greenberg Traurig client, began exploring a purchase of the company’s assets. Because the Japanese company wanted the litigation settled before going forward with the deal, Amis and some of the other parties agreed to replace their previous counsel with Greenberg Traurig, at the Japanese firm’s expense, according to evidence presented in connection with the summary judgment motion.
The dispute went to mediation, culminating in an agreement by Amis and others to pay $2.4 million over time in settlement of all claims, and to stipulate to an accelerated judgment in the event of default. But the Japanese firm backed out of its deal with Pacific, leaving Amis and the others without funds with which to pay the installments under the settlement agreement.
When the plaintiff in the underlying litigation prevailed in its motion to enforce the settlement agreement, Amis filed for bankruptcy. He also sued Greenberg Traurig, claiming it should not have advised him to accept personal liability for a debt that should have been enforceable only against Pacific.
Palmer, however, ruled that because it was undisputed that all of the alleged malpractice occurred during mediation, application of mediation confidentiality meant there was no admissible evidence in support of the claim, nor any way Greenberg could defend itself, so the firm was entitled to have the suit thrown out.
Justice Patti Kitching, writing for the Court of Appeal, agreed.
“[W]e again acknowledge our Supreme Court’s near categorical prohibition against judicially crafted exceptions to the mediation confidentiality statutes and hold a malpractice plaintiff cannot circumvent mediation confidentiality by advancing inferences about his former attorney’s supposed acts or omissions during an underlying mediation,” the jurist wrote.
The justice cited In re Marriage of Woolsey (2013) 220 Cal.App.4th 881, rejecting a claim of undue influence in the formation of a marital settlement agreement, because the alleged undue influence occurred during mediation.
Rejecting Amis’ argument that the trial court could still consider inferences about what happened during mediation, the jurist wrote:
“…Amis contends the trier of fact should be permitted to draw the inference that the ‘oral advice he was given, or not given, by GT during the mediation’ caused him to execute the settlement agreement. But this, as in Woolsey, would turn mediation confidentiality into a sword by which Amis could claim he received negligent legal advice during mediation, while precluding GT from rebutting the inference by explaining the context and content of the advice that was actually given. Such a result cannot be squared with Woolsey.”
The case is Amis v. Greenberg Traurig LLP, 15 S.O.S. 1520.
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