Opinion
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92 Cal.App.4th 15a GURSEY, SCHNEIDER & CO. et al., Plaintiffs and Appellants, v. WASSER, ROSENSON & CARTER et al., Defendants and Respondents. B142728. California Court of Appeal, Second District, Seventh Division August 23, 2001[REVIEW GRANTED BY CAL. SUPREME COURT]
[Modification of opinion (90 Cal.App.4th 1367, 109 Cal.Rptr.2d 678) on denial of petition for rehearing.]
OPINION
THE COURT.
It is ordered that the opinion filed herein on July 25, 2001, be modified as follows:
1. On page 8, the first three sentences of the second paragraph (beginning on page 8 and continuing to page 9 [90 Cal.App.4th 1374, advance report, last par., and p. 1375, lines 1-6]) should be modified to read as follows, including footnotes (which should be renumbered as necessary):
In Kroll & Tract v. Paris & Paris, the Court of Appeal held the attorney public policy exception was properly extended to bar an indemnity cross-complaint between two law firms who had concurrently represented the dissatisfied client, Firm I as independent Cumis counsel pursuant to a reservation of rights by the client’s insurer, and Firm II as insurance defense counsel. The two firms represented the client concurrently, until Firm I asked Firm II to take on the full defense just 10 days before trial. The client lost the lawsuit and sued Firm II for malpractice.
Kroll & Tract, supra, 72 Cal.App.4that pp. 1540-1541.
Kroll & Tract, supra, 72 Cal.App.4that p. 1541.
2. On page 14, the two paragraphs under the heading “ 2. Gursey’s Indemnity Action Is Not Barred By Considerations of Conflict of Interest” should be modified [90 Cal.App.4th 1378-1379, advance report] to read as follows, including footnotes (which should be renumbered as necessary):
The cases relied on by Wasser, the trial court, and the dissent placed great emphasis on the lawyer’s duty of undivided loyalty to the client, which in
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those cases would be impinged upon by permitting an indemnity action to go forward. In Rowell, the indemnity defendant was the client’s lawyer in the malpractice action, Thus the indemnity suit against the client’s current lawyer raised policy concerns regarding that law firm’s undivided loyalty in its present representation of the client in the malpractice action. In Kroll & Tract, the Court of Appeal found a potential for divided loyalties based on the unique tripartite relationship between the client, its personal counsel, and defense counsel retained by its insurance carrier.
Rowell, supra, 94 Cal.App.3d818.
Kroll & Tract, supra, 72 Cal.App.4th1537.
Kroll & Tract, supra, 72 Cal.App.4that p. 1542-1543.
In the case before this court, however, the public policy concerns raised by the facts of cases like Kroll & Tract, Rowell, and Goldfisher are not present. Thus, they do not bar the cross-complaint for equitable indemnity. First, the indemnity plaintiff and indemnity defendant were involved in joint representation – not successive representation – of the client. That representation occurred at the same time in the same case. Second, there could be no impairment of either’s ongoing loyalty to the client because this case presents no issue of conflicting loyalties between personal counsel and insurance defense counsel, and neither the lawyer nor the accountant was still representing the client at the time of the indemnity action. Third, the client sued both for their joint malpractice, and thus waived whatever remaining conflicts or duties of loyalty that may have existed between either the law firm or the accounting firm and their former joint client. Indeed, the client’s action would have proceeded to trial on the merits against both malpractice defendants but for the shorter statute of limitations for attorney malpractice. Permitting Gursey’s indemnity action to proceed does not raise any new conflict issues beyond those the client waived by filing the malpractice action against both the law firm and the accounting firm.
The two entities who were providing a joint representation at the same time in the same case were not two lawyers, but a lawyer and a forensic accountant, but that does not seem critical.
A suit for equitable indemnity is not precluded by the fact it has the effect of resurrecting liability which would otherwise be barred by the statute of limitations. (Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th1509, 1547 [80 Cal.Rptr.2d 94] (hereinafter “Crouse”).)
3. On page 16, footnote 41 [90 Cal.App.4th 1380, advance report] should be modified to read as follows:
Pollack, supra, 120 Cal.App.3dat pp. 942.943. We note several opinions following Pollack have discussed at some length the dissenting opinion therein, which expressed a view directly contrary to the decision we reach
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today. While those opinions refer the author of the Pollack dissent as “Justice Johnson,” in fact the author of the dissent was the Hon. Barbara Jean Johnson, then of the Municipal Court, who was assigned to the case by the Chairperson of the Judicial Counsel. (See Pollack, supra, 120 Cal.App.3dat p. 932, fn. *.) Thus the Pollack dissent was not written by the author of the present opinion. (See Joseph A. Saunders P.C. v. Weissburg & Aronson (1999) 74 Cal.App.4th869, 872 [87 Cal.Rptr.2d 405] [referring to dissent in Pollack by “Justice Johnson”]; Copenbarger v. International Ins. Co. (1996) 46 Cal.App.4th961, 966 [54 Cal.Rptr.2d 1] [“Justice Johnson dissented in Pollack v. Lytle”].)
4. On page 17, footnote 43 [90 Cal.App.4th 1381, advance report] should be modified to read as follows: Musser, supra, 90 Cal.App.4th545.
5. On page 19, footnote 52 [90 Cal.App.4th 1382, advance report] should be modified to read as follows:
Goodman v. Kennedy (1976) 18 Cal.3d335, 339 [134 Cal.Rptr. 375] (where lawyer gave negligent advice to clients regarding sale of stock, lawyer “had no relationship to [non-client] plaintiffs that would give rise to his owing plaintiffs any duty of care in advising his clients that they could sell the stock without adverse consequences”); Fox v. Pollack (1986) 181 Cal.App.3d 954, 960 [226 Cal.Rptr. 532] (in general, an attorney is not liable to a non-client for the consequences of professional negligence); Burger v. Pond (1990) 224 Cal.App.3d 597, 604-605 [273 Cal.Rptr. 709] (lawyer owes no duty to non-client who is not intended beneficiary of lawyer’s services). Along with the dissent, we agree the trial court did not err in concluding Gursey was not an intended beneficiary of the legal services agreement between Wasser and Pratt.
6. On page 21, footnote 61 [90 Cal.App.4th 1384, advance report] should be modified to read as follows:
The Major Clients scenario is much more analogous to a situation where Law Firm A and Law Firm B provide joint representation in a contingency fee case, and agree to split the contingency fee if the case is successful. If Law Firm A commits malpractice and loses the case, and Law Firm B sues Firm A for the contingency fee it would have earned had the suit been won, such a suit would be clearly improper. We would not allow such a suit because, as in Major Clients, both firms only had a duty to the client -- not to each other. (American Equity Insurance Company v. Beck, supra, 90 Cal.App.4th162 [108 Cal.Rptr.2d 728] [co-counsel in contingency fee matter owe no fiduciary duty to one another; each owes duty of loyalty solely to client].)
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7. All footnotes should be renumbered as necessary.
The petition for rehearing is denied. This modification does not effect a change in the judgment.
WOODS, J. - I would grant the petition.