Monday, August 12, 2002
Court Rejects Judgmental Immunity Claim in Malpractice Case
By ROBERT GREENE, Staff Writer
An appeals court on Friday rejected the assertion of several Orange County attorneys that the doctrine of “judgmental immunity” protected them from a malpractice action, but instead let most of them off the hook because the statute of limitations had run.
In a case that centered on advice two different firms and a solo practitioner gave a landscaping contractor, Fourth District Court of Appeal Justice Richard D. Fybel of Div. Three said the lawyers failed to show they did any research before advising the client that it did not have to follow a Bankruptcy Code procedure to perfect its security interest in accounts receivable owed by a bankrupt customer.
It was a supplier, and not legal counsel, that first mentioned to Village Nurseries that its mechanics liens against the bankrupt customer might not be enough to protect its $1.1 million interests, and that there was a special procedure under the Bankruptcy Code that might do the job.
Village Nurseries then asked Newport Beach lawyer Raymond King about the procedure—under Bankruptcy Code Sec. 546—but King told the company that the only way to perfect a mechanics lien is to file suit in state court.
The company then hired other counsel—Martin Greenbaum and Dennis Ferentz—to file the suits to foreclose on the liens. Meanwhile, the company rehired King as its bankruptcy lawyer, at about the same time King was leaving the firm of Coulombe, Kottke & King. The remaining lawyers became the Coulombe Law Firm.
But it turned out that the company’s supplier had been right and King wrong about protecting the security interests. Because of the bankruptcy stay, the complaint Greenbaum and Ferentz prepared and filed could not be served, and it was too late for the company to file under Sec. 546.
King told the company it might want to get another lawyer, and “might want to look into the possibility of malpractice.”
Village Nurseries did just that.
Greenbaum and Ferentz moved for summary judgment on the ground of judgmental immunity—that the lawyers’ decisions were made in an area in which there was no clear law, and that they had done their homework and given it their best shot. King moved for joinder in the motion. The Coulombe Law Firm moved for summary judgment based on the statute of limitations and vicarious liability.
The motions were granted and Village Nurseries appealed.
Fybel agreed with the company that regardless of whether the first prong of the judgmental immunity doctrine was satisfied—that the state of the law was unsettled at the time the advice was rendered—the lawyers failed to satisfy the second—that the advice was based on the exercise of informed judgment.
The record was silent, the justice said, on the question of whether the lawyers had any background in the field or did any research into the question before advising that filing suit was the way to go.
But Fybel said Village Nurseries filed several months too late. The statute began running, he said, at a bankruptcy hearing at which the trustee said the company had no chance if it had failed to file under Sec. 546.
King was not as lucky as the other lawyers. Fybel said his motion for joinder in Greenbaum’s and Ferentz’s summary judgment motion was not an adequate substitute for his own motion.
“We do not decide whether King would prevail on a motion for summary judgment were he to file one,” Fybel said.
The case is Village Nurseries v. Greenberg, G028121.
Copyright 2002, Metropolitan News Company