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Court of Appeal:
Jayne’s Company Did Not Assist Breach of Duty by Girardi
Lawyer, Now Disbarred and Imprisoned, Was Not Obligated to Safeguard Interests of Onetime Cocounsel, Opinion Says, Affirming Reasoning of Trial Judge That There’s No ‘Aiding, Abetting’ of That Which Is Not Wrongful
By a MetNews Staff Writer
A company owned by Erika Jayne, wife of disbarred lawyer Tom Girardi, cannot be held liable for aiding and abetting breaches of fiduciary duty by her husband and by Giardi|Keese because neither the estranged spouse, currently residing in a federal prison, nor his now-defunct law firm had any obligation to safeguard financial interests of the plaintiffs who claim they were cheated out of attorney fees, the Court of Appeal has held.
Friday’s unpublished opinion from this district’s Div. Five affirms a judgment on the pleadings awarded to Jayne’s “EJ Global, LLC” by Los Angeles Superior Court Judge Richard L. Fruin, as well as upholding that jurist’s grant of summary adjudication to Girardi’s son-in-law, David Lira, on a claim of financial elder abuse.
Appealing the judgment in favor of EJ global were Long Beach attorney Robert P. Finn and his firm. Seeking reversal of the judgment for Lira were Irvine practitioner Philip R. Sheldon and his professional corporation.
Chemical-Exposure Suit
Finn represented a group of plaintiffs in an action based on claims of harm to workers exposed to toxic chemicals at the defendant-cement manufacturers’ plants. A sole practitioner, he brought Girardi and Giardi|Keese into the picture as co-counsel but, despite a $31 million settlement of the action, no portion was paid to him or the firm, with funds diverted, it is alleged, to EJ.
The plaintiffs assert that they were deprived of a $3.94 million share in attorney fees. Their theory is that Jayne—the surname used professionally by singer and television’s “Real Housewives of Beverly Hills” cast member Erika Girardi—was showered with jewelry and other recompence for serving as the aging Tom Girardi’s trophy wife using funds that should have gone to them.
Fruin dealt Finn and his firm one-two punches in 2022. On Sept. 16, he granted a motion for summary judgment filed by Jayne, who was sued as an individual, basing that ruling largely on the California Supreme Court’s 2002 opinion in Beck v. Wecht, and accompanied his decision with a tentative ruling on a separate motion by EJ, slated to be considered at an upcoming hearing, for judgment on the pleadings.
The provisional determination in favor of EJ, mirroring reasoning in the Sept. 16 order as to the applicability of Beck, was solidified as a judgment against Finn and his firm on Sept. 29.
Fruin’s judgment in favor of Jayne, as an individual, was affirmed on Jan. 28 by Div. Five on the basis of the judge’s secondary finding that there had been no showing of actual knowledge on her part that funds that should have gone to Finn and to the Law Offices of Robert P. Finn were used to subsidize gifts to her.
Beck Decision
In Beck, there was an action and a cross-action by co-counsel against each other based on an alleged failure to protect an interest in a prospective contingency fee. Then-Justice Janet Rogers Brown (now retired) wrote for a unanimous court in saying that the issue of whether “cocounsel owe one another a fiduciary duty to conduct their joint representation in a manner that does not diminish or eliminate the fees each expects to collect” should not “be decided on a case-by-case basis,” declaring:
“The better approach, we conclude, is a bright-line rule refusing to recognize such a fiduciary duty.”
Potential detriment to the client from such scrapes was cited as the reason it would be contrary to public policy to allow actions of that sort.
Finn and his firm argued in the trial court—as they later did on appeal—that Beck is distinguishable as it dealt with prospective fees while the present case is concerned with disposition of funds that had been received from a settlement and were being held in an account.
Fruin’s Ruling
That view, Fruin held, “cannot be squared with” Brown’s opinion, explaining:
“Our Supreme Court in Beck expressly rejected a case-by-case approach to the question of whether co-counsel owe a fiduciary duty to each other and established a ‘bright-line rule’ that they do not….That means that judgment for EJ Global was warranted because the company cannot have aided and abetted the breach of a nonexistent fiduciary duty.”
In Friday’s opinion, Justice Lamar Baker echoed Fruin’s reasoning. He said the appellants’ brief sets forth “the sort of ‘case-by-case’ analysis that Beck itself forecloses,” declaring:
“We must follow Beck’s ‘bright-line rule,’ and under that rule, the trial court’s ruling was correct.”
Financial Elder Abuse
Sheldon and his firm contended in the trial court that “because Mr. Sheldon and Mr. Finn are both seniors,” that “creates additional statutory liability and enhanced remedies for financial elder abuse.”
Fruin summarily adjudicated that issue in favor of Lira; Sheldon and his LLP dismissed their cause of action for aiding and abetting breaches of fiduciary duty; they appealed on the basis of the rejection of the financial elder abuse claim.
Baker said that financial dealings of Girardi and Giardi|Keese were with the Sheldon firm, not Sheldon personally, so that Sheldon was not a victim of elder abuse. He wrote:
“In view of the absence of any evidence showing Sheldon’s firm functioned as [Sheldon’s] ‘representative,’ Lira was entitled to judgment as a matter of law on the financial elder abuse cause of action.”
The case is Law Offices of Philip R. Sheldon v. Lira, B325921.
James W. Spertus, and Ezra D. Landes of the West Los Angeles firm of Spertus, Landes & Josephs represented Sheldon, Finn, and their respective firms.
Evan C. Borges of the Costa Mesa office of Greenberg Gross and Heejin H. Hwang of its downtown Los Angeles office acted for EJ Global, LLC.
Walter J. Lack and Rachel M. Lannen of the Century City firm of Engstrom, Lipscomb & Lack, were appellate counsel for Lira. Lack often served as co-counsel with Girardi in court and Lira is employed by the Engstrom firm.
Girardi, 86, was sentenced to more than seven years in prison after being found guilty in the U.S. District Court for the Central District of California on four counts of wire fraud.
Lira, 65, on June 5 pled guilty in the U.S. District Court for the Northern District of Illinois to a contempt of court based on defying a court order to disburse settlement funds to survivors of passengers killed in the 2018 crash of Lion Air Flight 610. Sentencing is slated for Oct. 8.
An interim suspension from practicing law in California is slated to go into effect on Set. 15.
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