Metropolitan News-Enterprise

 

Monday, August 13, 2018

 

Page 1

 

Court of Appeal:

Law Firm’s Alleged Malpractice No Defense to Fee Settlement

 

By a MetNews Staff Writer

 

The First District Court of Appeal has held that even if a law firm committed malpractice and would not have been able to ultimately collect its fees, it still gave its clients valuable consideration when it settled with them for a reduced amount.

Contra Costa Superior Court Judge Judith Craddick granted the firm’s motion for summary judgment against its former clients, Robin and Kris Leamy, after they failed to pay the fee that was agreed upon in the settlement, which was less than half of what they the firm contended was owed.

The Leamys claimed that the firm, Morgan Miller Blair (“MMB”), committed “gross malpractice” and would not have been entitled to collect on the fees if it sued, so it had not given consideration for the settlement between the parties. They also argued that MMB had violated the California Rules of Professional Conduct (“CRPC”), and that Craddick had improperly excluded their expert’s declaration.

Justice Robert L. Dondero of Div. One wrote the opinion, filed Thursday, affirming Craddick’s judgment.

Previous Case

The case arose from an earlier action the Leamys had brought against J.T. Holmes, with whom they entered a contract to purchase a house in Lafayette. That deal fell through, and attorney David J. Bowie negotiated an agreement on behalf of the Leamys to recover half of their deposit.

The Leamys rejected that agreement, preferring to sue Holmes with an aggressive litigation strategy. They fired Bowie and retained MMB, which has since dissolved.

MMB conducted two lawsuits against Holmes, which resulted in legal fees of more than $431,000. The Leamys, with the apparent assistance of Bowie, were able to negotiate a final settlement amount of $150,000 in attorney fees.

MMB’s assignee, Property California SCJLW One Corporation, brought the suit against the Leamys for the unpaid fees.

Gross Malpractice

Dondero wrote:

“Defendants argue that ‘[c]ompromise of a wholly invalid claim is inadequate consideration to support a contract.’ (Italics added.) The argument is based on the claim that MMB breached the standard of care and committed legal malpractice during its representation, such that, at a minimum, ‘a question of fact exists as to whether MMB’s representation fell so far below the standard of care such that no consideration could exist for the compromise of any claim for additional attorneys fees.’ Essentially, defendants argue that MMB gave them nothing in exchange for their promise to pay $150,000 because the law firm was not entitled to any additional fees due to its commission of gross malpractice.”

The jurist declined to determine whether MMB had in fact committed malpractice, noting that “even if MMB’s claim for attorney fees was meritless, there is no evidence that MMB pursued its fees in bad faith or that it lacked a ‘colorable claim’ to the fees.” Absent such evidence, he explained, the Leamys had failed to present a triable issue of fact regarding a lack of consideration.

Expert Declaration Excluded

The Leamys relied on the declaration of attorney Charles A. Koss as an expert to support their allegation of MMB’s malpractice. Craddick excluded the declaration because she found Koss’s opinions to lack adequate foundation and analysis.

Dondero noted that Craddick “specifically mentioned two ‘startling gaps’ in Koss’s opinion: (1) his ‘failure to review MMB’s invoices and (2) failure to seek out any information concerning defendants’ reasons for rejecting the $58,000 settlement offer negotiated by Mr. Bowie, before defendants fired Mr. Bowie and hired MMB to pursue their claims more aggressively.’ ”

The Leamys claimed that MMB had violated CRPC rule 3-400, which prohibits attorneys from settling a malpractice claim without advising a client in writing of their right to consult with an independent lawyer.

Dondero pointed out that the defendants failed to point to any authority holding that rescission is appropriate in such a case, and that CRPC violations are a matter for the State Bar, not the courts. At any rate, the fee settlement agreement itself referenced the consultation of outside counsel, and the record contained ample evidence that Bowie, who represented the defendants in their underlying case and on appeal, had actually assisted in the negotiation and drafting of the final document.

The case is Property California SCJLW One Corporation v. Leamy, 2018 S.O.S. 3890.

 

Copyright 2018, Metropolitan News Company