Monday, February 23, 2009
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Court Throws Out $30 Million Legal Malpractice Award
By STEVEN M. ELLIS, Staff Writer
This district’s Court of Appeal yesterday threw out a $30 million malpractice award against law firm Seyfarth Shaw for its representation of “Tae Bo” fitness routine promoter Billy Blanks in a suit against his unlicensed former agent.
Ruling that Los Angeles Superior Court Judge Susan Bryant-Deason erred by failing to distinguish between Jeffrey Greenfield’s illegal work as an agent and his other services, and by holding the firm negligent as a matter of law on an unrelated in limine motion, Div. Three remanded for a determination whether the firm met its standard of care.
Blanks sued Seyfarth after the firm failed to timely file a petition before the Labor Commissioner, which resulted in Blanks’ inability to recover all of the approximately $10.6 million he had paid to Greenfield as his agent while the latter acted without a license.
Greenfield convinced Blanks to hire him to manage the celebrity’s business affairs in 1998 after serving as Blanks’ accountant for six years, but allegedly mishandled negotiations relating to television projects and other business opportunities.
California’s Talent Agencies Act requires all agents—those who procure work for an artist, as opposed to other services—to be licensed, and permits the Labor Commissioner to void all contracts with unlicensed agents and order disgorgement of funds earned for those services.
Such requests must first be made by filing a claim with the commissioner, who has original jurisdiction over TAA claims within one year of payment to an unlicensed agent.
However, Blanks’ attorney, William H. Lancaster, instead filed suit against Greenfield in the Superior Court under the Unfair Competition Law in order to conduct civil discovery and depose Greenfield, and missed the Aug. 2, 2000 deadline to file a petition despite the Court of Appeal’s prominent discussion of the commissioner’s exclusive original jurisdiction and the one-year statute of limitations in a case earlier that year.
The Court of Appeals in 2003 rejected Blanks’ argument that filing a complaint in the Superior Court tolled the limitations period, and Blanks settled with Greenfield for $225,000 and a $25,000 charitable contribution after firing Seyfarth Shaw and obtaining other counsel.
Blanks then filed suit alleging Seyfarth Shaw and Lancaster consciously deferred filing the petition in order to inflate legal fees. As the case involved legal malpractice, Blanks had to prove not only that counsel was negligent, but that he would have been successful in the underlying case and would have recovered more but for counsel’s negligence.
Bryant-Deason held on a motion in limine that Seyfarth Shaw and Lancaster were negligent as a matter of law and precluded most of Lancaster’s testimony with regard to his trial strategy rationale, and the court awarded Blanks $25.5 million in damages, and $5.6 million in costs.
Seyfarth Shaw and Lancaster appealed, contending Blanks could not prove causation and damages because the Unfair Competition Law cause of action they filed provided an alternate means of relief, but Justice Richard D. Aldrich rejected any attempt to use the UCL to make an “end run” around the TAA’s limitations period.
“[T]he superior court is foreclosed from awarding any relief unless the Commissioner has first considered the issue because to do otherwise would usurp the Commissioner’s original jurisdiction,” he explained.
Nevertheless, Aldrich agreed with the defendants’ argument that Bryant-Deason erred by failing to instruct the jury to determine what portion of the funds paid to Greenfield were attributable to his illegal actions.
He similarly agreed that the trial court erred when it held the defendants negligent as a matter of law in connection with a motion in limine on which she ruled that the discovery rule did not extend the TAA’s statute of limitations period under the circumstances, but added that Bryant-Deason’s ruling on the motion itself was correct.
Justices H. Walter Croskey and Patti S. Kitching joined Aldrich in his opinion.
The case is Blanks v. Seyfarth Shaw, 09 S.O.S. 983.
Copyright 2009, Metropolitan News Company