California Law Update – April 2017

May 17, 2017Law Updates
  1. (Attorney Client Privilege) Disqualification of law firm appropriate following firm’s violation of ethical obligations regarding use of inadvertently disclosed privileged email. McDermott Will & Emery LLP v. Superior Court (Hausman). (No. G053623, Super. Ct. Nos. 30-2015-00785773 & 30-2015-00785872, California Courts of Appeal, Fourth Appellate District, Division Three, April 18, 2017)
  2. (Breach of Fiduciary Duty) Grant of nonsuit proper, where claim for breach of fiduciary duty duplicative of claim for profession negligence. Broadway Victoria, LLC. v. Norminton, Wiita & Fuster. (B266060, Los Angeles County Super. Ct. No. SC119091, California Courts of Appeal, Second Appellate District, Division Five, April 19, 2017)
  3. (Standing) Demurrer properly sustained without leave to amend, where plaintiff lacks standing to bring elder abuse action against her siblings on behalf of their mother. Tepper v. Wilkins. (No. B269900, Los Angeles County Super. Ct. No. BC511863, California Courts of Appeal, Second Appellate District, Division Seven, April 19, 2017)
  4. (Affordable Care Act) Refusal to allow evidence of plaintiff’s future health benefits results in new trial on amount of his future medical damages. Cuevas v. Contra Costa County. (Nos. A143440 & A144041, Contra Costa County Super. Ct. No. MSC09-D1786, California Courts of Appeal, First Appellate District, Division One, April 27, 2017)

The above referenced matters have come to our attention during the last month. Please find below a brief summary of these newly issued opinions.

  1. (Attorney Client Privilege) Disqualification of law firm appropriate following firm’s violation of ethical obligations regarding use of inadvertently disclosed privileged email. McDermott Will & Emery LLP v. Superior Court (Hausman). (No. G053623 (Superior. Ct. Nos. 30-2015-00785773 & 30-2015-00785872), California Courts of Appeal, Fourth Appellate District, Division Three, April 18, 2017)

This matter arose from a writ of mandate to challenge two orders of the trial court. The issues presented to the appellate court involved whether a client waived attorney client privilege by disclosing a communication to third parties, and whether the trial court erred in disqualifying the law firm that represented one of those third parties because its attorneys failed to notify the client or the client’s attorney that counsel had obtained a copy of the communication, reviewed and analyzed the communication, and used it in a lawsuit.

The trial court found that the plaintiff did not waive the attorney client privilege by forwarding a confidential e-mail he received from his personal attorney to his sister-in-law because the plaintiff inadvertently and unknowingly forwarded the e-mail from his iPhone, and therefore lacked the necessary intent to waive the privilege. The trial court also impliedly found that the plaintiff’s sister-in-law did not waive the privilege when she forwarded the e-mail to her husband, who then shared it with four other individuals because neither the plaintiff’s sister-in-law nor his brother-in-law could waive the plaintiff’s attorney client privilege, and plaintiff did not consent to these individuals’ disclosures because he did not know about either his initial disclosure or these additional disclosures until a year after they occurred.

In a separate order, the trial court disqualified the defendant’s law firm in the underlying lawsuits because the law firm failed to recognize the potentially privileged nature of the e-mail after receiving a copy from the defendant, and then analyzed and used the e-mail despite the plaintiff’s objection that the e-mail was inadvertently a disclosed privileged document. The trial court explained that the defense firm had an ethical obligation to return the privileged material and refrain from using it under State Comp. Ins. Fund v. WPS Inc. (1999) 70 Cal.App.4th (State Fund). The court found that the defense firm’s disqualification was necessary because there was a genuine likelihood that the defense firm’s improper use of the e-mail would affect the outcome of the lawsuit, the integrity of the judicial proceedings, and the public’s confidence in the proceedings.

The defendants filed a petition to the appellate division for a writ of mandate directing the court to vacate both its order finding the plaintiff did not waive the attorney client privilege and the order disqualifying the defense firm. The appeals courts denied the petition in its entirety. It found that substantial evidence supported the trial court’s orders and the court did not abuse its discretion in selecting disqualification as the appropriate remedy to address the defense firm’s violation of its State Fund duties.

The appeals court stated that regardless of how an attorney obtains the documents, whenever a reasonably competent attorney would conclude the documents obviously or clearly appear to be privileged and it is reasonably apparent they were inadvertently disclosed, the State Fund Rule required the attorney to review the documents no more than necessary to determine whether they are privileged, notify the privileged holder the attorney has documents that appear to be privileged, and refrain from using the documents until the parties or the court resolves any dispute about their privileged nature.

  1. (Breach of Fiduciary Duty) Grant of nonsuit proper, where claim for breach of fiduciary duty duplicative of claim for profession negligence. Broadway Victoria, LLC. v. Norminton, Wiita & Fuster. (B266060, Los Angeles County Super. Ct. No. SC119091, California Courts of Appeal, Second Appellate District, Division Five, April 19, 2017)

Plaintiff sued his former attorneys for legal malpractice and breach of fiduciary duty arising from defendant’s representation of plaintiff in an earlier breach of contract action. On appeal from a judgment in favor of defedants, plaintiff contended that the trial court erred when it granted defendant’s non-suit motions on one of the plaintiff’s malpractice claims and its breach of fiduciary duty claim.

The appeals court affirmed the grant of non-suit on plaintiff’s breach of fiduciary duty claim because plaintiff did not adduce any evidence in support of that claim beyond the evidence offered in support of its malpractice claim for professional negligence.

A claim for breach of fiduciary duty requires some further violation of the obligation of trust, confidence, and loyalty to the client beyond the allegations of professional negligence. As such, a breach of fiduciary duty claim that is duplicative of an attorney negligence claim for malpractice should be dismissed.

  1. (Standing) Demurrer properly sustained without leave to amend, where plaintiff lacks standing to bring elder abuse action against her siblings on behalf of their mother. Tepper v. Wilkins. (No. B269900, Los Angeles County Super. Ct. No. BC511863, California Courts of Appeal, Second Appellate District, Division Seven, April 19, 2017)

Plaintiff sued her three siblings on behalf of her elderly mother, claiming her siblings’ actions individually, and while serving as trustees of her mother, constituted financial abuse of an elder or dependent adult. Plaintiff’s siblings demurred to her first amended complaint asserting that the plaintiff lacked standing to pursue an action on the mother’s behalf. The plaintiff’s mother, separately represented by counsel, intervened in the action and joined the demurrer to plaintiff’s amended complaint. The court sustained the demurrer without leave to amend and dismiss the plaintiff’s elder abuse action on standing grounds.

The appeals court affirmed. Pursuant to the Elder Abuse and Dependent Adult Civil Protection Act (Act), an action may be brought “by the elder’s ‘personal representative’ when the elder is alive but ‘lacks capacity under Section 812 of the Probate Code, or is of unsound mind… Pursuant to [section 38] of the Civil Code…’” A personal representative is a conservator, trustee, or other representative of the elder’s estate, or one who has power of attorney. Here, the plaintiff argued that she was an interested person with standing to prosecute the action on her mother’s behalf pursuant to the Act and Probate Code Section 48. Neither statute, however, aided the plaintiff. The plaintiff believed her mother lacked capacity to manage her own affairs, she could have sought appointment as her conservator or guardian ad litem and then filed lawsuit. Thus, because the plaintiff lacked standing, the appeals court affirmed the trial court’s sustaining of the demurrer without leave to amend.

  1. (Affordable Care Act) Refusal to allow evidence of plaintiff’s future health benefits results in new trial on amount of his future medical damages. Cuevas v. Contra Costa County. (Nos. A143440 & A144041, Contra Costa County Super. Ct. No. MSC09-D1786, California Courts of Appeal, First Appellate District, Division One, April 27, 2017)

Plaintiff sued Defendant in a medical malpractice action for injuries he suffered at birth. The jury found for plaintiff and awarded millions for his future medical expenses. The Defendant appealed, arguing that the trial court erred by excluding evidence of collateral source benefits available to plaintiff for his future care, and by excluding evidence of lower rates plaintiff would pay for his future care under Medicaid or a private insurance policy secured under the Patient Protection and Affordable Care Act (ACA).

The appeals court reversed the judgment finding that MICRA statute applied (California Civil Code section 3333.1) which authorizes defendants to offer evidence of collateral source benefits not just for past medical benefits but also for future medical benefits.

The court also held that the Defendant should have been able to offer evidence regarding the market value of future medical services, including evidence of the lower negotiated rates that will be paid for future medical care under Medicaid and under privately negotiated health care agreements with insurers under the ACA. The appeals court concluded that future medical expense damages must be measured by the amount that providers are likely to accept as payment.

Should you have any questions concerning these court decisions or desire a copy of any of them, please do not hesitate to contact our office.

Sincerely,

DUMMIT, BUCHHOLZ & TRAPP

SCOTT D. BUCHHOLZ ESQ.