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C.A. Reinstates $11 Million Fraud Action Against Buchalter
By a MetNews Staff Writer
The Court of Appeal for this district yesterday ordered reinstatement of an action for more than $11 million against Buchalter APC, holding that allegations of fraud on the part of the 90-year-old law firm are sufficient to overcome the one-year statute of limitations on actions for legal malpractice.
Suing Buchalter and one of its shareholders, Carol K. Lucas, is Wilbur Williams Jr., M.D., Inc.
It is alleged that on April 12, 2014, Wilbur Williams Jr., a medical doctor who was 77, accompanied by his accountant, met with Lucas and Sevana Petrosian; that Lucas purported to represent both Williams and Petrosian; and did not divulge that she had been Petrosian’s lawyer for more than a year. She allegedly told him it was necessary for the doctor to sign a “management services agreement” she presented in order to secure the services of Petrosian’s company to manage his corporation’s medical spas and he signed the document without reading it.
Allegations of Complaint
The complaint alleges that Lucas “knew of Petrosian’s intent to own the Practice, take all the profits and pay Dr. Williams some kind of salary and, upon termination of the agreement, Petrosian intended to take over the Practice,” and that the agreement was drafted “in a way to allow Petrosian to achieve her intended scheme.” It is contended that “Lucas has been paid dozens of thousands of dollars every year by the Practice of Dr Williams, at the same time Lucas was conspiring with Petrosian against Dr. Williams and his Practice.”
Lucas’s conduct facilitated the embezzlement by Petrosian and others of about $11.4 million, the complaint declares.
Los Angeles Superior Court Judge Barbara M. Scheper ruled that the action is time-barred under Code of Civil Procedure §340.6, subdivision (a) which provides:
“An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission....”
Justice Gail Ruderman Feuer authored the unpublished opinion reversing a judgment of dismissal of the medical corporation’s cause of action for conspiracy to commit fraud. However, Williams’s individual cause of action for conspiracy was properly disallowed, she said, because it was the corporation, not he personally, that suffered a financial loss and, for that same reason, his cause of action for financial elder abuse fails.
Feuer wrote:
“Contrary to the argument by the Buchalter defendants, the allegations that Lucas conspired with Petrosian to deceive and defraud Williams go beyond the performance of ordinary legal services.
“Certainly, Lucas’s alleged misconduct could constitute violations of her professional obligations…, and further, the misconduct occurred in the course of Lucas’s legal representation, which provided the opportunity to deceive Williams…. But the Williams plaintiffs do not need to prove any professional violation to prevail. Rather, they have alleged a garden-variety fraudulent scheme. Indeed, the complaint would be essentially unchanged if Lucas were simply an actor who came to the April 12 meeting pretending to be a lawyer who would protect Williams’s interests, while tricking Williams into signing the agreement. This would be consistent with the allegation in the complaint that Lucas’s statements and conduct during the meeting led the Williams plaintiffs to believe she drafted the management services agreement.”
Fraud Exception
Feuer added:
“Moreover…, the first cause of action for conspiracy to defraud adequately states a claim for intentional fraud; thus, even if the claim arose from the provision of legal services, the claim falls within the ‘actual fraud’ exception in section 340.6.…The Buchalter defendants do not cite, and we are not aware of any, case holding that an otherwise sufficient cause of action for intentional fraud by an attorney is subject to section 340.6’s one-year statute of limitations.”
The case is Williams v. Lucas, B327061.
Beverly Hills attorney Nick A. Alden represented the medical corporation. W. Allan Edmiston of Loeb & Loeb acted for Buchalter and Lucas.
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