GARRIS v. SEVERSON MERSON BERKE MELCHIOR (1988)

In this attorney malpractice action the trial court granted summary judgment for the attorneys and the client appeals.   We reverse.

The events leading up to this lawsuit began when plaintiff Garris, an electrical engineer, was sued by Adelaide Roach, an employee at the Los Angeles County Jail.   Ms. Roach alleged she received a shock when she plugged a radio into an electrical socket at work.   Ms. Roach further alleged her injuries were proximately caused by the negligence of Garris who had provided electrical consulting services during remodeling at the jail facility.   The complaint showed Ms. Roach sought damages in excess of $250,000, the limit of Garris' liability insurance policy.   The complaint was forwarded to Garris' insurer who ultimately chose the defendant attorneys in this case to represent Garris and the insurer in the Roach action.

During pre-trial discovery in the Roach action, Ms. Roach stated she was claiming damages in excess of $1 million.   Attorney Cathcart, one of the defendants in this action, testified that from the time he first evaluated the Roach case until the taking of expert depositions shortly before trial he believed his chances of successfully defending Garris were “better than even,” although he felt there was “a down side” due to Ms. Roach's condition and the extent of her claim for damages.   Before trial, Cathcart formed the opinion the potential verdict in Ms. Roach's case, assuming liability, could be as high as $1 million.

Initially, Garris told his attorneys he strongly believed there was no merit to Ms. Roach's allegations of negligence.   Later, after discussing the case with an attorney-friend, Garris claims he wrote to his attorneys suggesting they negotiate a settlement.   The attorneys deny receiving this letter.

Just before commencement of the Roach trial, Ms. Roach produced two expert electrical engineers.   Both of them testified at a deposition there were code violations in the design and/or construction of the electrical system at the jail facility for which Garris had provided consulting services.   This expert deposition testimony caused defendant Cathcart's opinion about potential liability exposure to “slightly” change, as this “was the first indication that there would be evidence from the plaintiff on liability that would be against any of the defendants.”   Peter Schaus, a claims supervisor with Garris' insurer who was assigned responsibility for the Roach file, testified he had no recollection of ever being informed of this deposition testimony before the commencement of trial.

A number of other defendants were included in the Roach action but were dismissed before trial or pursuant to motions for a directed verdict after trial.   Once all other defendants were dismissed, defendant Cathcart's opinion regarding liability exposure changed.   At that point, he felt his chances of successfully defending Garris were “less than even.”   He further believed Ms. Roach's case had been fairly strong and the potential verdict was $650,000–$850,000.

In fact, the jury rendered a verdict in favor of Ms. Roach against Garris in the amount $1.1 million, substantially in excess of Garris' $250,000 policy limit.

Neither Ms. Roach's attorneys nor Garris' attorneys ever made a firm offer to settle the litigation within policy limits.   Garris testified at his deposition in the instant case that if asked he would have authorized a settlement within the $250,000 policy limit.   No evidence was produced Ms. Roach would have rejected such a settlement offer.

DISCUSSION

I. TO SUCCEED, DEFENDANTS MUST NEGATE AN ESSENTIAL ELEMENT OF PLAINTIFF'S CAUSE OF ACTION FOR NEGLIGENCE

A summary judgment is only proper where the moving party establishes there are no triable issues of fact and it is entitled to judgment as a matter of law.   Where, as here, the moving party is the defendant, it must either negate a necessary element of the plaintiff's case or state a complete defense.   (Estate of Fisher (1988) 198 Cal.App.3d 418, 423, 244 Cal.Rptr. 5.)   Here, defendants have attempted to negate two elements of plaintiff's action for negligence:  breach of duty and causation.

 To put this dispute in perspective, the elements of a cause of action for attorney malpractice are:  (1) the duty of the attorney to use such skill, prudence, and diligence as other members of the profession commonly possess and exercise;  (2) a breach of that duty;  (3) a proximate causal connection between the negligent conduct and the resulting injury;  and (4) actual loss or damage resulting from the professional's negligence.  (Budd v. Nixen (1971) 6 Cal.3d 195, 200, 98 Cal.Rptr. 849, 491 P.2d 433.)

Defendants agree with plaintiff Garris' statement of the specific duty applicable here.   It is a duty requiring attorneys to advise and counsel a client as to all facts, circumstances and consequences which are necessary to enable the client to make an informed decision on matters such as the likelihood of an excess verdict and the desirability of attempting settlement within the policy limits.

Defendants also agree, or at least do not contest, Garris suffered financial harm as the result of the judgment in excess of his policy limits recovered in the underlying tort action brought by Ms. Roach and defended by the defendants in the present case.   Defendants' contentions are they were not negligent in representing Garris in the underlying tort action and, even if they were, their negligence was not the cause of Garris' financial harm.   That harm was caused by the failure of Garris' insurance company, also represented by defendants, to settle with Ms. Roach at or below the policy limits—an act outside the control of defendants.

II. BREACH OF DUTY IS NOT NEGATED

Defendants contend the undisputed facts presented at the summary judgment hearing established as a matter of law they breached no duty to Mr. Garris.   They rely on the following:  (1) Mr. Garris was aware from reading her complaint Ms. Roach was seeking damages in excess of his policy limits;  (2) Mr. Garris and the insurance company were adamantly opposed to settlement with Ms. Roach;  (3) no facts or circumstances developed during the course of litigation that ought to have been communicated to Mr. Garris;  (4) defendants did attempt to inform Mr. Garris all defendants except him had been dismissed from the Roach action but they were unable to reach him.

 The fact Mr. Garris knew Ms. Roach was seeking damages in excess of his policy limits did not excuse defendants from advising Mr. Garris of the legal consequences of this excess claim.   Although Ms. Roach was seeking damages in excess of his insurance coverage, there were at least four other defendants in that action.   Mr. Garris could have believed his coverage was sufficient to pay his share of the damages even if Ms. Roach received a million dollar verdict.   There is no showing in the record Mr. Garris had ever heard of, much less considered, the concept of joint and several liability or the possibility his co-defendants might settle out or be dismissed from the case leaving him the sole defendant.   Defendants have not negated the possibility testimony at trial may establish that where a plaintiff seeks damages four times the amount of the client's insurance coverage it is a breach of duty not to discuss the ramifications of this with the client and the advantages of a settlement.   The evidence presented so far shows the reason why defendants failed to point out to Mr. Garris that Ms. Roach was seeking damages four times the amount of his insurance coverage was not, as they suggest, because Mr. Garris already knew this.   The reason was that defendants did not know it.   They went through the entire trial never knowing the policy limits of their client's insurance.

 The fact the client is initially opposed to settlement does not excuse the duty to advise and counsel the client about settlement if such advice and counsel is otherwise appropriate.   After all, the lawyer's superior skill and knowledge is what the client is paying for.  (Lucas v. Hamm (1961) 56 Cal.2d 583, 591, 15 Cal.Rptr. 821, 364 P.2d 685.)   It is not uncommon for the client to have an unwarranted faith in the righteousness of his position.   The lawyer's job is to bring rationality, objectivity and experience to bear on the matter.

 The facts in this case show Mr. Garris was initially shocked by the Roach suit.   He characterized her suit as a “hoax” and “ridiculous” and explained to defendants why, in his opinion, the accident could not have happened in the manner claimed by Ms. Roach.   However, developments prior to trial may have required a re-evaluation of the question whether to explore settlement.   Despite Mr. Garris' insistence the electrical system had been properly installed, two experts for Ms. Roach testified in depositions there were code violations in the design and construction of the electrical system.   There is a dispute of fact whether defendants informed Mr. Garris and the insurer of these experts' opinions.   Mr. Garris claims he changed his mind about the desirability of settlement after discussing the case informally with an attorney-friend and wrote defendants several months before trial suggesting “it would be a good idea to negotiate and settle the suit.”   There is a dispute of fact whether defendants received this letter.

Prior to trial “a great number” of defendants were dismissed by Ms. Roach.   The remaining defendants in the Roach case, including such deep-pockets as the Luckman Group, were dismissed on motions at the end of trial.   The Roach case went to the jury with Mr. Garris the lone remaining defendant.   By then, his attorney concedes, his chances were “much less than even.”   Ms. Roach's case had been “fairly strong” and there was only one defendant, Mr. Garris.   At that point defendants tried to reach Mr. Garris by telephone without success.   Defendants had earlier decided not to call Mr. Garris as a witness.   Instead, there is evidence they allowed him to go deep sea fishing in Mexico while Ms. Roach took her million dollar lawsuit to trial.

Defendants failed to advise Mr. Garris of the possible consequences of an excess judgment and failed to ensure he would be available for consultation during trial.   There is a dispute over whether they ignored his request they attempt settlement and whether they failed to advise him two experts were prepared to testify his electrical construction violated applicable codes.   Whether these alleged errors and omissions, if proven at trial, constituted a breach of duty is a subject for expert opinion.  (Lysick v. Walcom (1968) 258 Cal.App.2d 136, 156, 65 Cal.Rptr. 406;  Lipscomb v. Krause (1978) 87 Cal.App.3d 970, 975, 151 Cal.Rptr. 465.)   Defendants offered no expert testimony in their motion for summary judgment.   In reversing a summary judgment for the attorney in Ishmael v. Millington (1966) 241 Cal.App.2d 520, 525, 50 Cal.Rptr. 592 the court observed, “Breach of duty is usually a fact issue for the jury;  if the circumstances permit a reasonable doubt whether the defendant's conduct violates the boundaries of ordinary care, the doubt must be resolved as an issue of fact by the jury rather than of law by the court.”   A reasonable doubt exists in the case at bar.

III. CAUSATION IS NOT NEGATED

 Defendants' principal argument is even if they had done all that Mr. Garris now claims they failed to do the end result would have been the same.   Mr. Garris could not effect a settlement on his own.   Any settlement would have required the participation of both his insurance company and Ms. Roach.   Defendants had no power to compel either of them to settle.  (Purdy v. Pacific Automobile Ins. Co. (1984) 157 Cal.App.3d 59, 78, 203 Cal.Rptr. 524.)   Thus, they argue, failing to advise Mr. Garris and his insurer to settle was not the cause of the harm to Mr. Garris.

Purdy is not applicable to the case before us.   The issue in Purdy was whether an attorney could be held liable to a non-client for failure to effectuate a settlement between the attorney's client and a third party that would have benefited the non-client.   It was in that context the court made the statement, “In our view, since a lawyer does not have the power to compel a client's acts, the lawyer cannot be held responsible to others for failing to advise the client to act in a particular manner․”  (157 Cal.App.3d at p. 78, 203 Cal.Rptr. 524, emphasis in original.)   The harm to Purdy was not caused by the attorney's neglect to properly advise its client, Purdy's insurer.   The cause of the harm was the refusal of the insurer to settle with the injured party after its attorneys made it “aware of (1) the accumulating evidence of Purdy's responsibility for the accident and (2) the potential for an excess verdict․”  (157 Cal.App.3d at p. 78, 203 Cal.Rptr. 524.)

The case before us is distinguishable from Purdy on several grounds.   First, Purdy was represented by his own counsel.   Here, the defendants represented Garris and his insurance company.   Second, in Purdy the insurance company chose not to settle despite being advised by its attorneys “of ․ the accumulating evidence of Purdy's responsibility for the accident and ․ the potential for an excess verdict․”  In the case before us, there is a triable issue of fact whether defendants told Garris or his insurer Ms. Roach had two expert witnesses who would testify to Garris' negligence.   It is undisputed defendants never advised Garris about the potential consequences of an excess verdict.   Third, Purdy attempted to base the attorney's liability on the “failure to effectuate a settlement” of the litigation.   The court properly refused to hold that an attorney who fails to obtain a settlement within policy limits is guilty of malpractice.   Here, Garris bases defendants' liability on the defendants' failure to apply the same degree of skill, prudence and diligence to settlement as they would be required to apply to any other aspect of their representation.

Garris does not seek to make any new rule of law.   It is already established an attorney's duty to a client includes “the obligation to attempt to effectuate a reasonable settlement of the ․ action where the general standards of professional care [require] that the most reasonable manner of disposing of the action was by settlement.”  (Lysick v. Walcom, supra, Cal.App.2d at p. 151, 65 Cal.Rptr. 406.)   Because the insurer and insured are wedded together for purposes of settlement, this obligation applies equally to both clients.  (Merritt v. Reserve Ins. Co. (1973) 34 Cal.App.3d 858, 871, 110 Cal.Rptr. 511.)

 It is further established an attorney who undertakes to represent both insurer and insured “owes the ‘highest duty’ to each to make a ‘full disclosure of all facts and circumstances which are necessary to enable the parties to make a fully informed decision regarding the subject matter of litigation․’ ”  (Betts v. Allstate Ins. Co. (1984) 154 Cal.App.3d 688, 716, 201 Cal.Rptr. 528.)   Garris can meet the causation requirement if he can prove but for defendants' breach of their duty of full disclosure he and his insurer would have authorized an amount of money in settlement that Ms. Roach would have accepted.  (Cf. Betts v. Allstate Ins. Co., supra, 154 Cal.App.3d at p. 715, 201 Cal.Rptr. 528;  Purdy v. Pacific Automobile Ins. Co., supra, 157 Cal.App.3d at p. 79, 203 Cal.Rptr. 524;  Fulton v. Woodford (1976) 26 Ariz.App. 17, 545 P.2d 979, 985–986.)

In Betts, the jury found the attorneys were negligent but their negligence was not the cause of the excess verdict.  (154 Cal.App.3d at p. 715, 201 Cal.Rptr. 528.)   In Purdy the trial court found the plaintiffs had failed to establish a prima facie case of attorney negligence.   In both cases the attorneys had fully and fairly disclosed the facts on liability and the insurers had unreasonably, in the face of those facts, refused to settle.   In Purdy, “no breach of professional duty due to lack of disclosure was pleaded or proved․”  (157 Cal.App.3d at p. 79, 203 Cal.Rptr. 524.)   Similarly, in Fulton the court found there was no evidence the attorney's breach of duty, had it not occurred, would have caused the insurer to authorize an amount in settlement the injured party would have accepted.  (545 P.2d at p. 986.)

In contrast, the case before us presents a question of fact whether defendants failed to fully and fairly disclose the facts on liability thereby depriving Garris and his insurer of the information necessary to make an informed decision about whether to settle.   Furthermore, the record before us does not negate the possibility evidence at trial may show that prior to the verdict Ms. Roach would have accepted a settlement offer in the range of $150,000 to $250,000, amounts within Garris' policy limits.   Garris may also be able to prove that had they been fully informed on the issue of liability, the insurer and he would have agreed to a settlement in that range or in some other amount less than the verdict the jury returned.

It was not Garris' responsibility to present evidence on causation at the hearing on defendants' summary judgment motion.   On a motion for summary judgment the moving party has the burden of negating the opposing party's claims.   A defendant who moves for summary judgment must prevail on the basis of its own affidavits and the admissions of the plaintiff.   Unless the defendants' showing would be sufficient to sustain a judgment in its favor there is no burden on the plaintiff to file counter affidavits even if at trial the plaintiff would have the burden of proof on the issue.  (Rowland v. Christian (1968) 69 Cal.2d 108, 111, 70 Cal.Rptr. 97, 443 P.2d 561;  Miller v. Metzinger (1979) 91 Cal.App.3d 31, 42, 154 Cal.Rptr. 22.)   Here, defendants presented no evidence that would negate the element of causation.

DISPOSITION

The judgment is reversed.   Appellant is to recover costs.

JOHNSON, Associate Justice.

LILLIE, P.J., and KOLTS, J.*, concur.