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Court of Appeal:
Civil Lawyer Might Be Liable Over Order in Criminal Case
Justices Revive Action Based on Alleged Failure of Counsel Provided by Insurer to Tell Man Sued for Negligence That in Settling Case for Policy Limits He Remained Potentially Subject to Penal Restitutionary Award
By a MetNews Staff Writer
Div. One of the Fourth District Court of Appeal has reinstated a legal malpractice action by a man against the lawyer who was provided to him by his insurer in a wrongful death action, holding that the plaintiff succeeded in alleging a breach of a duty to advise him that in agreeing to a settlement for policy limits, he remained potentially liable for payment out of his own pocket of any sum assessed as restitution in a criminal action.
The panel rejected the defense’s assertions that the lawyer in the civil case had no obligation to provide advice as to possible consequences in the concomitant criminal proceeding, being handled by another lawyer, or that the omission of the advisement could not have caused any detriment in the client because the potential of an order to pay restitution was inherent in the fact of the prosecution.
Justice Terry B. O’Rourke authored the unpublished opinion, filed Monday. It reverses a judgment in favor of Monrovia attorney Jay McClaugherty and his firm, McClaugherty and Associates, following the sustaining of a demurrer, without leave to amend, to the second amended complaint filed by Juanito Apao Go.
Go on Jan. 18, 2018, struck a pedestrian in a crosswalk, Zinaido Kryvetskaye, with his automobile, causing her death. The decedent’s daughter, Olga Silva, sued Go on May 10, 2018; his insurer, Allstate, hired McClaugherty to represent him; he was separately represented in a criminal action against him by Palm Desert attorney David Greenberg.
In a settlement, Allstate paid the policy limit of $1,250,000, out of which $740,330.02 went to Silva. A release was executed in January 2019.
Go changed his plea in the criminal case from not guilty to guilty and in November 2020, he was ordered to pay Silva $491,362.70, roughly the amount her attorneys received from the settlement.
McClaugherty, he asserted, should pay that sum to him, he asserted in his malpractice action.
Riverside Superior Court Judge Christopher B. Harmon found no merit to Go’s action, saying:
“It appears to the Court that the remedy for plaintiff is a motion in the criminal court for an order deeming the restitution order to have been satisfied by the settlement. Since the defendants were not representing the plaintiff in the criminal action, any adverse consequences flowing from the failure to bring such a motion was not caused by any breach of duty by the defendants.”
Appellant’s Opening Brief
In Go’s opening brief on appeal, Sacramento attorney Mark E. Ellis scoffed:
“[T]he court, in a rather strange ruling, seemed to believe that while damages existed, they were de minimis, and the matter could be resolved by reopening the criminal matter to belatedly somehow claim the right to setoff in the restitution matter against the civil settlement….How this was to be accomplished years after the closing of the civil and criminal matters was a mystery.”
Ellis argued that McClaugherty owed a duty not just to Allstate, but to Go, maintaining:
“[I]f Respondents had explained the true effect of the settlement agreement to Go, he would not have agreed to it. Respondents should have insisted, by working with Go’s criminal attorney, to attempt to have Silva agree to globally relinquish all further rights to restitution and, at a minimum, he could have insisted upon an apportionment of attorney’s fees between noneconomic versus economic damages, which would have reduced any future restitution obligation.”
McClaugherty’s Contention
Lawyers on appeal for McClaugherty—Lawrence Borys, Pascale Gagnon, and Anna Novruzyan of the downtown Los Angeles firm of Ropers Majeski PC contended in their brief:
“Nothing that McClaugherty did or did not do, could have prevented the criminal prosecution of Go, or the imposition of restitution in the criminal context. The law is clear that a civil lawsuit and a criminal action are separate and distinct matters, and even with Allstate’s agreement to pay the civil settlement of its full policy limit, the court in a criminal action could order the criminal defendant Go, to pay restitution.”
They went on to say:
“Appellant’s causes of action are legally defective because it is undisputed that McClaugherty was retained by Go’s insurer to defend him in the wrongful death civil lawsuit, not the criminal action from which the restitution order was issued. The duty of McClaugherty to Go resulting from Allstate’s retention was as to the civil wrongful lawsuit, the matter on which McClaugherty was retained and there is no allegation that McClaugherty was hired to do anything with respect to any criminal matter nor give any advice on any criminal matter. The terms of an attorney’s engagement broadly denote the scope of the duties undertaken.”
O’Rourke’s Opinion
O’Rourke responded:
“We reject the suggestion that an attorney cannot be sued for malpractice with respect to matters outside the scope of his or her client contract or retainer agreement….
“Here, Go’s allegations demonstrate his claims rely at least in part on an asserted duty within the scope of defendants representation: to competently draft the settlement and release in the civil wrongful death action. Liberally construing Go’s pleading as we must, which shows Go had pending criminal charges at the time of the settlement, we conclude the duty here extended to making efforts to preserve Go’s ability to offset some or all of the insurance payment against a potential criminal restitution award. Even if the criminal matter was technically outside the scope of defendants’ retainer, a question we cannot determine on the pleadings or this record, we would hold Go’s allegations are sufficient.” McClaugherty’s lawyers set forth in their brief:
“[T]here was no duty owed by Respondent to prevent a result that occurred in the criminal court some two years after Respondent’s representation in the civil matter ended. At the time that Allstate agreed to settle the case, there was no reasonable way to foresee what might or might not happen two years later in a criminal court. Go might or might not be convicted, he might or might not agree to a plea deal, he might or might not be required to pay restitution, and if so required, how the criminal court would determine issues of offset or restitution. There is no ‘closeness in connection’ to the settlement agreed to by Allstate, and the later decision of Judge Wells to decide that Go’s criminal counsel Greenberg had failed to provide sufficient evidence to satisfy the burden of proof as to the issue of the lack of economic damage to Silva. If the nexus between the conduct at issue, and the risk is too tenuous, there should be no duty imposed.”
O’Rourke declared:
“We cannot say in this instance, where Go’s criminal case was pending when defendants settled Silva’s civil action and the state of the law, the potential for a criminal restitution award was so speculative to eliminate their duty to structure the civil settlement to minimize it.”
The case is Go v. McClaugherty, D083772.
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