Thursday, August 23, 2018
Court of Appeal:
Suit Against Lawyer Alleged Conspiracy, Required Judge’s Approval
By a MetNews Staff Writer
A woman who sued her deceased billionaire stepfather’s lawyer for third-party liability for his client’s alleged breach of trust was required to seek leave from the trial judge before bringing her suit because the allegation implied a civil conspiracy, the First District Court of Appeal has held.
The opinion reversing the order overruling San Francisco attorney John M. Sherwood’s demurrer was written by Presiding Justice Barbara J.R. Jones of Div. Five and certified for publication Tuesday, after an initial filing July 31.
San Francisco Superior Court Judge John K. Stewart sustained Sherwood’s demurrer to Christina Cortese’s first petition, but found that her amended petition did not “facially bring an action under Civil Code §1714.10” and so she need not have asked his permission to file it.
Sec. 1714.10(a) reads in applicable part:
“No cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute, and which is based upon the attorney’s representation of the client, shall be included in a complaint or other pleading unless the court enters an order allowing the pleading that includes the claim for civil conspiracy to be filed after the court determines that the party seeking to file the pleading has established that there is a reasonable probability that the party will prevail in the action.…”
Cortese alleged that Sherwood, as attorney for her stepfather Robert A. Naify, had helped his client deceive her into thinking that Naify planned to “treat her equally as his other children in his estate plan when he died, which would, in turn, make her a wealthy woman.”
Naify, best known for owning the United Artists Theatres cinema chain for much of the mid-twentieth century and as an owner and breeder of thoroughbreds, was the executor of Cortese’s mother’s estate when she died. Sherwood had written the woman’s will.
The mother’s trust was funded with only a small portion of her share of the Naify coffers, and was valued at less than $20 million when it was terminated in 2009. Cortese alleges that she inquired about the low initial funding of the trust, but was told by Sherwood that it was for tax reasons and that she would be getting a much larger inheritance when Naify died.
Cortese claims she relied on these promises and did not press the issue when Sherwood and Naify terminated her mother’s trust.
When Naify died in 2016, Cortese learned that she was not entitled to any inheritance at all from his estate.
Factual Allegations Considered
“Cortese does not expressly allege Sherwood conspired with Robert, but a cause of action can still fall ‘within the initial scope of section 1714.10...without regard to the labels attached to the cause[ ] of action or whether the word ‘conspiracy’—having no talismanic significance—appears in them.’…We review the factual allegations underlying Cortese’s second cause of action to determine whether it alleges a conspiracy, no matter what labels are used…
“Considering Cortese’s allegations, we cannot conceive how Sherwood could have participated in Robert’s alleged breaches of fiduciary duty without an implied agreement to do so….Cortese alleges, for example, that Sherwood ‘participated in Robert’s breaches by knowingly and intentionally assisting in Robert’s underfunding of Francesca’s Estate and Trust and by structuring the termination of Francesca’s Trust’ in a manner that benefited Robert. Accepting the truth of these allegations, then there must have been an agreement between Robert and Sherwood to effectuate this ‘common plan’ or design.”
The jurist noted that the statute’s applicability to causes of action arising from an “attempt to contest of compromise a claim” does not mean that a dispute needs to have been brought in court for the requirement to apply.
She explained that Sherwood’s alleged statements to Cortese, which the petitioner claimed to have relied upon in not challenging Naify’s actions as executor, were an attempt to compromise a claim before it reached litigation.
Nor did the two exceptions set forth in §1714.10(c) apply here, she said. A plaintiff need not seek permission to file a cause of action where the lawyer owed her an independent duty, or where he acted for his own financial gain.
Third party liability for breach of trust is predicated on the trustee’s duty to the beneficiary, Jones noted, and Cortese had not alleged any plausible gain Sherwood could have had from his alleged malfeasances.
The case is Cortese v. Sherwood, 2018 S.O.S. 4116.
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