The California Court of Appeals has ruled that a client’s legal malpractice claim against their attorney may be severed and arbitrated under a clause in their fee agreement, allowing claims against a second attorney without such a clause to proceed in the district court. A couple had hired an attorney to help them collect on a promissory note and for outstanding contractor services. They then fired him and hired a second attorney.
The couple claimed that the first attorney had counseled them to initiate non-judicial foreclosure proceedings on the note. The second attorney did the same, and referred them to a third attorney to proceed on the claim for services. However, because the note had already been paid, a court dismissed the foreclosure proceeding and the couple lost their quantum meruit claim for services performed.
In their engagement letter with the second attorney, the clients had agreed to arbitrate all disputes. The second attorney moved to compel arbitration. The trial court denied the motion because the first attorney was not a party to the arbitration agreement.
The Appeals Court reversed, finding that the claims should have been severed, permitting the action against the second attorney to go to arbitration, with the claims against the first attorney proceeding in district court. The court reasoned that it violated the second attorney’s right to a jury trial to force him to arbitrate the claim against him in the absence of any agreement to arbitrate.
Source: Kachlon v Dressler & Lavina.doc