Thursday, May 28, 2015
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Bad Advice Not Sufficient for Attorney Malpractice—C.A.
Justice Cheney Says That If Lawyers Told Client to Sign Someone Else’s Name on a Check, They Erred, but Forgery Prosecution Was Unforeseeable Where She Owned the Funds
By a MetNews Staff Writer
The Court of Appeal for this district has held that even if lawyers gave their client bad advice in telling her to sign someone else’s name on a check, where she owned the funds but was not a signatory on the account, they were not liable based on the forgery prosecution to which she was subjected.
“Transferring one’s own funds from one account to another cannot be the basis of a forgery prosecution absent intent to defraud, even if the transfer is effected by means of a false signature,” Acting Presiding Justice Victoria Cheney of Div. One said in an opinion filed Tuesday. “Therefore, plaintiff’s criminal prosecution could not reasonably have been foreseen by defendants, and any damages she incurred defending against it were not caused by them.”
The opinion affirms a judgment of dismissal following the sustaining of a demurrer without leave to amend by Los Angeles Superior Court Judge Susan Bryant-Deason. The trial judge’s reasoning differed from that of the appeal’s court; Bryant-Deason found that plaintiff Sondra Wise Kumaraperu had unclean hands and failed to plead factual innocence.
(Bryant-Deason’s ruling was made on Oct. 18, 2013. On Jan. 8, 2015, following a preliminary hearing, Los Angeles Superior Court Judge Patrick J. Hegarty found there was insufficient evidence to bind Kumaraperu over for trial.)
Plaintiff’s Allegations
Kumaraperu brought her action against Beverly Hills attorney John Feldsted and the law firm of Feldsted & Scolney. She alleged that following the death of her husband, she became sole owner of Pennsylvania Avenue Montessori Infant Care and Preschool in Montrose; that an employee inadvertently deposited about $36,500 into the checking account, on which she was not a signatory, rather than the than the operating account, to which she did have access; that she consulted Feldsted who told her to write a check to herself on the checking account and sign the name of someone who was a signatory.
Her late husband was a signatory on the checking account, as were Ananda and Ranjini Niyarapola, who once had an interest in the school, but no longer did and, according to the complaint, made no claim to ownership of the funds. She signed the name of Ranjini Niyarapola.
(Cheney said in a footnote that the facts in the complaint were taken as true for purposes of determining whether the demurrer was properly sustained, but related that Ananda Niyarapola testified at the preliminary hearing that he owned about $150,000 of the funds in the checking account. She remarked that this “would hint at an explanation why the district attorney prosecuted an otherwise inexplicable forgery complaint.”)
Causation Missing
The jurist wrote:
“Plaintiff adequately alleges negligent conduct by defendants, because when a signatory on a financial ac-count dies, the proper course is for the account owner to update the account card, not to pose as another signatory. But plaintiff fails to allege causation because signing another’s name on a check drawn on one’s own account would not subject the owner to criminal or civil liability absent intent to defraud.”
She went on to say:
“To make imposture a crime requires intent to defraud….But plaintiff alleges she owned the school, which means she owned the funds in its checking account. Transfer of funds that one exclusively owns, without obligation to third parties, from one account to another does not by itself constitute fraud, even if the transfer is effected by an imposture that violates the account agreement.”
Cheney’s Reasoning
Cheney provided this analysis:
“We recognize that plaintiff faced an impossible task. On the one hand she was required to allege lack of intent to defraud so as to deny criminal liability and avoid an unclean hands defense, but at the same time allege a reasonably foreseeable risk of criminal liability, which could only be predicated on her intent to defraud. (The trial court’s dismissal of the action based on the doctrines of unclean hands and in pari delicto rested on the latter allegation—prosecution for fraud—but ignored the former—absence of intent to defraud.) Plaintiff’s simultaneous allegation of necessary but mutually exclusive facts created a logical impossibility that led to the legal impossibility of defendants being liable in negligence for damages caused by an unforeseeable event.”
The case is Kumaraperu v. Feldsted, 15 S.O.S. 2628.
David A. Seeley and Richard D. Oppenheim Jr. of the Encino law firm of Sylvester, Oppenheim & Linde represented Kumaraperu. Bradley W. Jacks and Russell W. Clampitt of the downtown Los Angeles office of Jacks & Maybaum were attorneys for Feldsted and his firm.
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