A California appellate court has affirmed a summary judgment in favor of an attorney in a legal malpractice case. In Schneider v. Blanchet, a client sued her attorney for negligently representing her in divorce proceedings.
The client’s former husband ran an investment firm and an issue arose over whether he had overpaid an employee in order to deflate the value of his business. The husband maintained that the payments were within the bounds of his commission agreement with the employee. However, the client wished to pursue the claim.
In a detailed letter to the client, the attorney explained that the client had to elect whether to agree to mediation or file suit. The letter outlined the costs and benefits of pursuing litigation, including the high unlikelihood of prevailing on a breach of fiduciary duty claim for the excess payments, and the possibility that the court might make a “finding of needs”, which would be substantially less than what the husband was then offering for support. The client agreed to go to mediation, but advised the attorney to “go after” the excess commission issue.
Several months later, the parties mediated the case, discussed the commission issue, and even heard statements of the husband to gauge his credibility on the issue. The mediation resulted in a settlement agreement. However, several weeks later the client was unhappy and wanted to pursue a more favorable agreement.
The attorney requested a modification of the agreement but the husband’s attorney rejected the changes. The attorney then successfully moved to withdraw as counsel for the client. The client moved to set aside the settlement agreement based on fraud and duress at the mediation, but the court denied her motion and enforced the settlement.
The client then sued her former attorney, alleging that the attorney had negligently failed to pursue the compensation issue at the mediation. The attorney counterclaimed for unpaid fees and moved for summary judgment on all claims. The trial court granted the motion. The client appealed.
The appellate court affirmed the judgment, finding that the client was unable to prove the attorney’s conduct proximately caused the client’s damages. The court reasoned that the client was unable to show that she would have obtained a more favorable settlement had the attorney investigated the claim further. The court also awarded the attorney her unpaid legal fees.
Decision: Schneider v. Blanchet