Opinion
Rehearing Granted Oct 23, 1991.
Previously published at 234 Cal.App.3d 1294
Paul A. Frassetto, Martin & Frassetto, San Francisco, for petitioner.
No appearance, for respondent.
Jeanne M. Carroll, Law Office of Steven A. Lewis, Karen M. Goodman, Lynn Shapiro, Douglas L. Johnson, Murphy, Pearson, Bradley & Feeney, Sacramento, for real parties in interest.
PUGLIA, Presiding Justice.
Petitioner (plaintiff) seeks a writ of mandate compelling respondent superior court to vacate an order granting the motion for summary adjudication of issues of the real parties in interest (defendants), and to enter a new order denying that motion. This proceeding presents the question whether in a malpractice action against attorneys whose alleged negligence resulted in plaintiff's loss of a cause of action against a third party, plaintiff can recover as compensatory damages the amount she would have received as punitive damages in the failed action against the third party. We shall conclude that plaintiff may recover for lost punitive damages.
Plaintiff's complaint alleges she hired defendant attorneys to represent her in an action to recover damages from her former employer, William A. Brown, for Brown's sexual assault and battery of plaintiff. Brown filed a Chapter 7 petition for bankruptcy. (11 U.S.C.A. § 701 et seq.) Defendants subsequently undertook to represent plaintiff in her creditor's claim in the bankruptcy. Plaintiff's cause of action against Brown was not dischargeable in bankruptcy. Defendants failed to seek relief from the automatic stay effected by the bankruptcy case so that plaintiff could pursue her action for damages against Brown. Defendants also failed to file a timely adversarial action in the bankruptcy to allege plaintiff's claim was nondischargeable. As a result of these and other unspecified acts of malpractice, plaintiff's claim for damages against Brown was discharged in bankruptcy. Plaintiff alleges as a consequence of defendants' negligence she has suffered damages in the amount of $500,000, the value of the underlying case against Brown, plus $100,000 for severe emotional distress caused by defendants' negligence.
Defendants moved for summary adjudication of two issues: whether in an action for legal malpractice, plaintiff may recover (1) emotional distress damages resulting directly from the attorneys' negligence, and (2) compensatory damages in the amount of the punitive damages plaintiff would have obtained in the underlying case but for the attorneys' negligence. Defendants' statement of undisputed facts recited the facts pleaded in plaintiff's complaint as set forth above, and added the fact that a portion of the $500,000 sought by plaintiff for the lost recovery in the underlying action against Brown includes punitive damages plaintiff contends she would have recovered against Brown. Plaintiff opposed the motion, but agreed the facts are undisputed.
After a hearing, respondent court granted the motion for summary adjudication in part, ruling plaintiff may not recover compensatory damages in the amount of the punitive damages she allegedly would have recovered from Brown but for defendants' negligence. The court also treated defendants' motion for summary adjudication of the issue of plaintiff's entitlement to emotional distress damages as a motion for judgment on the pleadings and granted the motion.
Preliminarily, we address the procedural posture of defendants' motion in respondent court. Defendants characterized their motion as one for summary adjudication of issues, yet the motion did not attack the evidentiary basis of the allegations in plaintiff's complaint. Rather it assumed the truth of those allegations for purposes of the motion and attacked the legal sufficiency of the pleadings. Defendants' motion actually was a motion for judgment on the pleadings. (See generally 6 Witkin, Cal. Procedure (3d ed. 1985) Proceedings Without Trial, §§ 262-263, 280, pp. 563-565, 580-582.)
Like a general demurrer, a motion for judgment on the pleadings is generally confined to the face of the pleadings, and the plaintiff's allegations are accepted as true. (Barker v. Hull (1987) 191 Cal.App.3d 221, 224, 236 Cal.Rptr. 285.) "In addition to the facts alleged in the complaint, the court may consider matters which may be judicially noticed, including court records. [Citation.]" (Ibid. [judicial notice of court file in earlier case]; see also, Kachig v. Boothe (1971) 22 Cal.App.3d 626, 630, 99 Cal.Rptr. 393 [judicial notice of court records]; 6 Witkin, op. cit. supra, at p. 565.) Respondent court properly considered the additional fact that plaintiff's claim against Brown for $500,000 included a claim for punitive damages, because the court could take judicial notice of the admission of this fact in plaintiff's separate statement of undisputed facts.
"The standard of appellate review of a judgment on the pleadings is, therefore, identical to that on a judgment following the sustaining of a demurrer." (Barker v. Hull, supra, 191 Cal.App.3d at p. 224, 236 Cal.Rptr. 285.) That is, we accept the material facts pleaded in plaintiff's complaint, judicially notice that plaintiff's claim in the underlying action against Brown included punitive damages, and consider whether, on these facts, plaintiff's claims for damages are permissible as a matter of law. (See, e.g., Hughes v. Western MacArthur Co. (1987) 192 Cal.App.3d 951, 954-955, 237 Cal.Rptr. 738.)
Respondent court first concluded plaintiff may not recover compensatory damages for the emotional distress she allegedly suffered as a result of defendant attorneys' malpractice. We agree. As the court explained in Quezada v. Hart (1977) 67 Cal.App.3d 754, 761-763, 136 Cal.Rptr. 815, damages for emotional distress simply are not warranted in a negligent malpractice action absent allegations of intentional wrongdoing or physical injury.
However, we do not agree with respondent court's conclusion plaintiff may not recover as compensatory damages the punitive damages she would have obtained in the underlying action against Brown but for defendant attorneys' malpractice.
"Every person who suffers detriment from the unlawful act or omission of another, may recover from the person in fault a compensation therefor in money, which is called damages." (Civ.Code, § 3281.) "For the breach of an obligation not arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not." (Civ.Code, § 3333.) "Detriment is a loss or harm suffered in person or property." (Civ.Code, § 3282.)
"Few cases have considered what constitutes the proper measure of damages in a legal malpractice action. The general rule is that a plaintiff is entitled only to be made whole: i.e., when the attorney's negligence lies in his failure to press a meritorious claim, the measure of damages is the value of the claim lost. (Lally v. Kuster (1918) supra, 177 Cal. 783, 791 [171 P. 961].) Or, as stated by Justice Peters in Pete v. Henderson (1954) 124 Cal.App.2d 487, 489 [269 P.2d 78], an attorney's 'liability, as in other negligence cases, is for all damages directly and proximately caused by his negligence.' " (Smith v. Lewis (1975) 13 Cal.3d 349, 361, 118 Cal.Rptr. 621, 530 P.2d 589.)
In Granquist v. Sandberg (1990) 219 Cal.App.3d 181, 187, 268 Cal.Rptr. 109, we referred to the discussion in Smith v. Lewis, supra, 13 Cal.3d 349, 118 Cal.Rptr. 621, 530 P.2d 589, and explained, "As noted by two leading commentators in the legal malpractice field: 'If the injury occurred because of negligence in handling litigation, the measure of direct damage is the difference between the amount of the actual judgment obtained and the judgment which should have been recovered.' (Mallen and Smith, Legal Malpractice (3d ed. 1989) § 16.1, p. 890.)" We noted in a footnote the judgment in the underlying action could have included damages for pain and suffering, which are an appropriate item of damages in the legal malpractice action. (Granquist v. Sandberg, supra, 219 Cal.App.3d at p. 187, fn. 6, 268 Cal.Rptr. 109.)
Applying this general rule, plaintiff should be entitled to recover from defendants as compensatory damages the amount of punitive damages she proves she would have obtained from Brown in the underlying action. This amount is a portion of the difference between the amount of the actual recovery--nothing--and the amount which would have been recovered but for defendants' negligence.
The recovery as compensatory damages in the malpractice action of the amount of unrecovered punitive damages is no more speculative than would be the direct recovery of punitive damages in the underlying action against Brown. In the malpractice action plaintiff must still prove her "case within the case," i.e., her entitlement to punitive damages against Brown. That is, to recover punitive damages as compensatory damages from defendants herein, plaintiff must prove Brown's conduct was oppressive, fraudulent or malicious. (Civ.Code, § 3294, subd. (a).)
We are aware of no California decision on the issue whether punitive damages lost in the failed underlying action may be recovered as compensatory damages in the malpractice case. The leading commentators assert that they may: "An attorney may be liable for exemplary or punitive damages which were lost because of his negligence. If in the underlying action the client should have recovered exemplary damages but for the attorney's wrongful conduct, then such a loss should be recoverable in the malpractice action as direct damages. Whether such damages should have been recovered is an issue of fact to be resolved by the judge or jury at trial." (1 Mallen and Smith, Legal Malpractice, § 16.7, p. 901; fns. omitted.)
Decisional law from other states is to the same effect. In Elliott v. Videan (App.1989) 164 Ariz. 113, 791 P.2d 639, the trial court granted judgment notwithstanding the verdict, setting aside an $800,000 jury verdict against the defendant attorney which consisted of the value of punitive damages in the underlying case lost through the attorney's negligence. (Id. 791 P.2d at pp. 640-641.) The appellate court reversed, rejecting the attorney's contention he could not be held liable for punitive damages which are intended solely to punish and deter future wrongful conduct. The court explained, "[The attorney] misperceives the nature of a malpractice action. The jury award of punitive damages is not a finding that [the attorney's] conduct was motivated by an evil mind; it is a finding that [the underlying defendant's] conduct was. Although [the attorney's] conduct was only negligent, it nevertheless caused [plaintiff] to lose his entire underlying claim." (Id. at p. 645.)
In Hunt v. Dresie (1987) 241 Kan. 647, 740 P.2d 1046, the Kansas Supreme Court held the proper measure of damages in an attorney malpractice case includes the amount of any punitive damages assessed against the client as the result of the attorney's malpractice. The court quoted the decision of the Kansas Court of Appeals, explaining that although the damages the client had to pay were punitive damages, in the client's legal malpractice action, " '... all the damages are simply those which proximately resulted from his attorneys' negligence; they are no longer properly called punitive damages. If they were called punitive damages and the trial court's decision properly denied their recovery, then any attorney representing a client who might be assessed punitive damages in a lawsuit could rest easy, secure in the knowledge that any improper handling of the suit, even intentional actions, could not subject the attorney to any malpractice liability at all.' " (Id. 740 P.2d at p. 1057.)
The oldest known case considering this issue is Patterson & Wallace v. Frazer (Tex.Civ.App.1906) 93 S.W. 146, reversed on other grounds, 100 Tex. 103 [94 S.W. 324]. There, a verdict was returned against the defendant attorneys based on their negligent representation of the plaintiff in an underlying slander action; a portion of the verdict consisted of an amount which, but for the attorneys' negligence, would have been recovered as punitive damages in the underlying action. (Id. 93 S.W. at pp. 147-148.) In affirming the judgment, the court rejected the attorneys' contention punitive damages are too remote. "That the cases in which damages have been recovered against attorneys for negligently failing to prosecute suits of their clients are generally where the cause of action was a liquidated demand does not limit the right of the client's recovery of damages on account of the attorney's negligence to such cases. The law cannot, when holding all others liable for damages proximately caused by their negligence (though difficult of ascertainment), justly exempt attorneys from the operation of the rule by which it measures the damages consequent on the wrongs of others." (Id. at p. 148.)
Defendants contend the Patterson decision is distinguishable because Texas public policy regarding punitive damages is different from that of California in that Texas permits an insurance company to bear the burden of punitive damages awarded against its insured, while California does not, and a Texas plaintiff has to satisfy a lesser standard to recover an award of punitive damages. Defendants argue that whatever the purpose of punitive damages in Texas, their purpose in California is to punish and deter, and that purpose is not served by making attorneys liable for the oppressive, fraudulent or malicious conduct of others.
Defendants miss the point. Plaintiff does not seek punitive damages against defendants. Rather, she seeks the value of the recovery she lost through defendants' negligence. That value includes punitive damages she would have recovered against Brown. In the malpractice action, such damages are compensatory, not punitive.
Defendants cite numerous cases for the proposition that California decisional law prohibits an award of punitive damages as compensatory damages against anyone other than the evil wrongdoer. (City of Salinas v. Souza & McCue Construction Co. (1967) 66 Cal.2d 217, 228, 57 Cal.Rptr. 337, 424 P.2d 921 [punitive damages may not be imposed against a governmental agency]; Evans v. Gibson (1934) 220 Cal. 476, 489, 31 P.2d 389 [neither estate nor executors liable for decedent tortfeasor's punitive damages]; California State Auto. Assn. Inter-Ins. Bureau v. Carter (1985) 164 Cal.App.3d 257, 261-262, 210 Cal.Rptr. 140 [insurer not liable under uninsured motorist provisions of policy for punitive damages based on conduct of uninsured motorist]; City Products Corp. v. Globe Indemnity Co. (1979) 88 Cal.App.3d 31, 35, 151 Cal.Rptr. 494 [insurer not liable for punitive damages awarded against insured based on insured's conduct]; Merlo v. Standard Life & Acc. Ins. Co. (1976) 59 Cal.App.3d 5, 18, 130 Cal.Rptr. 416 [employer liable for employee's conduct resulting in punitive damages only if employer ratifies or authorizes the conduct, employee is a manager, or employer recklessly employs an unfit employee]; Ebaugh v. Rabkin (1972) 22 Cal.App.3d 891, 896, 99 Cal.Rptr. 706 [same].) These cases are distinguishable because in none of them did the defendants from whom punitive damages were sought do anything proximately to cause the plaintiff to lose a claim for . punitive damages against a third party wrongdoer.
After plaintiff filed this petition for extraordinary relief, we notified the parties the court was considering issuing a peremptory writ of mandate in the first instance and invited further opposition to the petition which defendants timely filed. Having complied with the procedural requirements set forth in Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 203 Cal.Rptr. 626, 681 P.2d 893, we are authorized to issue a peremptory writ in the first instance.
Let a peremptory writ of mandate issue directing respondent superior court to vacate its order granting defendants' motion for summary adjudication to the extent it determines that plaintiff is not entitled to recover, as compensatory damages, the damages she would have recovered as punitive damages in the failed underlying action against her former employer, and to enter a new order denying the same. In all other respects the petition is denied. The parties will bear their own costs.
BLEASE and NICHOLSON, JJ., concur.