Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County, Super. Ct. No. GIC786149 Yuri Hofmann, Judge.
HUFFMAN, Acting P. J.
This appeal is the latest chapter in a series of cases in which plaintiff/cross-defendant James P. Panther seeks legal malpractice damages from several of his former attorneys, individually and as law firms, for alleged lost opportunities stemming from the disappointing outcome of certain underlying actions concerning a real estate development project which never came to fruition. (E.g., Panther v. Park (July 16, 2003, D038066 [nonpub. opn.]) (our prior opinion); Panther v. Micheli (May 15, 2007, D048047 [nonpub. opn.]) (our prior Micheli opinion).)
In this case, the trial court granted a motion for summary adjudication filed on behalf of defendants/cross-complainants Mark Mazzarella and Mazzarella, Dunwoody & Caldarelli, LLP (sometimes collectively "MDC") as to the first and second causes of action in Panther's fourth amended complaint ("FAC"). A related ruling was also issued concerning an affirmative defense in Panther's answer to MDC's cross-complaint, and some cross-complaint issues remained for trial. However, summary judgment was entered for the individual defendant Mark Mazzarella only and plaintiff appeals.
For our purposes here, we will examine only the issues regarding Mazzarella, who was granted summary judgment based on his arguments and showing that plaintiff was unable to demonstrate that any triable issues of fact remained concerning any causation of any damages, as to the legal representation provided by Mazzarella in the underlying transactions and litigation. (Code Civ. Proc., § 437c.) We are required to consider the arguments concerning the causation and damages issues on a de novo basis. (Orrick Herrington & Sutcliffe v. Superior Court (2003) 107 Cal.App.4th 1052, 1056-1057 (Orrick).) We will find that the trial court correctly determined Mazzarella was entitled to judgment as a matter of law, in the absence of any triable issues of material fact. We affirm the summary judgment and adjudication.
FACTUAL AND PROCEDURAL BACKGROUND
We have freely adapted parts A, B, C of the factual and procedural background from our prior Micheli opinion (D048047). Portions of the discussion will be adapted as well.
A. Introduction
Beginning in 1995, plaintiff and other participants (investors) were actively seeking to pursue a Carlsbad real estate project (referred to as the project or the real estate matter), through a real estate development financing transaction, involving security interests. Plaintiff alleges that he lost his multimillion dollar interest in the project when the Canadian defendants wrongfully foreclosed upon him. In February 1999, represented by his former attorney, Steven Micheli and others, plaintiff obtained a preliminary injunction against the foreclosure, but it was set aside in July 1999. The foreclosure was completed and plaintiff lost his 25 percent interest in the project.
By "Canadian defendants," the parties are referring to the adversaries that Mazzarella, as a former attorney for plaintiff, was pursuing in the main underlying action (but allegedly unsuccessfully enough, as will be described). Chiefly, they are a Canadian trust known as Financial Asset Management Foundation (FAMF), a secured party which foreclosed upon land jointly owned by plaintiff and others, a related investment vehicle, Grain Development, LLC (Grain), and also individuals who participated in FAMF's management (William K. Park and Ken Tremblett).
In August 2000, Mazzarella and MDC joined plaintiff's legal team about four months before trial and participated in that November 2000 trial, as well as conducting extensive collection efforts once judgment was obtained. Micheli left his previous firm and joined MDC in December 2000. The November 2000 trial resulted in some success for plaintiff, but also some defeats, as will be described in part B, post, in which we will denote it the "first underlying action."
In addition to bringing attorney malpractice claims against Mazzarella and others based on the first underlying action, Panther also claims malpractice damages arising from the second and third underlying actions, as will later be explained. In order to more fully identify the roles of the various parties, we now quote from our prior unpublished opinion issued by this court in the first underlying action, Panther v. Park, supra (D038066):
Plaintiff contends part of his damage arose from the manner in which the then-legal advisers to the project (the firm Hecht, Solberg, Robinson, Goldberg & Bagley, LLP (legal advisers or Hecht Solberg)) had originally structured and pursued it, as will be further outlined regarding the second underlying action. The third underlying action sought damages on defamation and related theories against Park. (Panther v. Park (dism. Jan. 30, 2003, D039601).)
"At issue in Panther's appeal are issues involving the financing of a contemplated development of Carlsbad real property (the Property) owned initially by Panther and Russell Grosse (Grosse).
"Wanting to develop their Property, Panther/Grosse obtained funds from business trust FAMF in return for a promissory note favoring FAMF secured by the Property (the FAMF note). Eventually, Panther and FAMF's trustees agreed to a joint venture and created CanAm Developments, LLC (CanAm) to receive the Property. Panther and Grosse each received a 25 percent membership interest in CanAm. The remaining 50 percent ownership interest in CanAm was held by Grain, an entity created by FAMF's trustees to become a member of CanAm. As part of that transaction, Grain executed a promissory note to FAMF (the Grain note) secured by the membership interests in CanAm held by Grain and Panther/Grosse.
"Later, Park and Tremblett assumed management of FAMF and Grain. When Grain did not make interest payments to FAMF under the Grain note, FAMF noticed a default on the note. After FAMF gave Panther notice of its intent to sell his CanAm membership interest, Park and Tremblett began foreclosure proceedings on that interest." (Fns. omitted.)
Panther's underlying complaint also named his former co-investors Grosse and CanAm as defendants. Grosse settled the case and allowed the Canadians to buy out his 25 percent interest, leaving Panther as a minority owner. However, those defendants were not parties in our prior opinion (No. D038066).
A multitude of actions resulted, as we next describe.
B. Underlying Actions
We next outline the three underlying actions which gave rise to this legal malpractice lawsuit against Mazzarella because, as alleged in the FAC, plaintiff believes they constituted inadequate recoveries on his underlying claims. Although he also sued other attorney defendants on similar theories, only the summary judgment motion granted as to Mazzarella is before us now.
The full names of the other attorney defendants in the subject complaint (as well as MDC) are Steven Micheli, and Chapin, Fleming, McNitt, Shea & Carter. Chapin obtained summary judgment. Cross-complaints seeking additional attorney fees due from Panther were filed, and there was a trial scheduled on the MDC cross-complaint in the fall of 2006 (although some $300,000 has been paid to MDC to date). The record does not reveal the result.
1. Real property matter (first underlying action):
Plaintiff claims in these negligence and breach of fiduciary claims that he suffered damages due to numerous acts of legal malpractice by Mazzarella and others in the pretrial, trial, and post trial phases of the litigation of the first underlying action. Specifically, plaintiff alleges he sustained monetary losses from allegedly inadequate legal representation as follows: (1) Micheli's representation in the foreclosure; (2) Mazzarella and others' representation in the subsequent trial proceedings, which resulted in a judgment against the chief Canadian defendant (FAMF) that was allegedly too small, did not include all the necessary defendants and theories, and was too difficult to collect, therefore resulting in an inadequate global settlement in January 2004. (Panther v. Park, supra, D038066, our prior opinion).
In the first underlying action, plaintiff alleged that his ownership interest in CanAm was wrongfully foreclosed upon by FAMF, a Canadian business trust, as creditor of CanAm. FAMF borrowed all the funds it loaned to CanAm from its parent Canadian company, FAMS, and FAMS held a security interest in assets of FAMF. Panther also brought breach of contract and related claims, alleging the defendants had conspired to eliminate him as a member of CanAm by wrongfully foreclosing on the encumbrance against his 25 percent ownership interest in CanAm and appropriating that ownership interest to the other owners' benefit. Plaintiff also alleged defendants breached the implied covenant in certain contracts (CanAm's operating agreement, the Grain note, and the security agreement).
Represented by Micheli and others, plaintiff obtained a preliminary injunction against the foreclosure. However, it was set aside in July 1999, when the court that issued it found that Panther, as a minority owner, was misusing the injunctive relief in his negotiating efforts to buy out the Canadians. The court decided relief in damages would be adequate and set aside the injunction. While awaiting trial, Micheli and his co-counsel amended the pleadings to further pursue damages theories. Complex securities issues were presented about the relationship between FAMF (and its parent, FAMS, not a named party) and the other Canadians. Eventually, the superior court granted summary adjudication favoring Park, Tremblett and Grain on Panther's claim for wrongful foreclosure, as they were not the secured parties (only FAMF).
By November 2000, Mazzarella had been on plaintiff's legal team for four months and the matter went to trial on the wrongful foreclosure theory against FAMF. Plaintiff presented expert evidence that his interest in the project would have been worth $8-$9 million at that time, if he had not lost it. As summarized in our prior opinion, the jury verdict awarded a lesser amount, finding that as a result of the wrongful foreclosure, Panther suffered loss or damage in the amount of $2,464,142 for the loss of his membership interest. Judgment favoring plaintiff against FAMF was entered for $2,464,142 plus 10 percent annual interest. Although plaintiff, represented by Mazzarella and others, attempted to have FAMS added as a judgment debtor on the basis that it was an alter ego of FAMF, his request was denied.
Additionally, the jury found FAMF breached the implied covenant of good faith and fair dealing and, as a result of that breach, Panther suffered loss or damage in the amount of $372,551, but the court ruled these damages were already included in the verdict. Plaintiff now contends Mazzarella participated in preparing inadequate jury instructions that led to this result, and greater effort should have been made to obtain these sums against Park and Tremblett. Also, the jury found FAMF breached fiduciary duties it owed to plaintiff and constructively defrauded him (through the actions of Park and Tremblett), but without causing any resulting loss or damages to plaintiff.
Plaintiff appealed that judgment, seeking more prejudgment interest, and FAMF cross-appealed on unrelated matters. The judgment was upheld on appeal as modified to add a further prejudgment interest award to Panther. (Prior opinion, D038066.) The ruling granting summary adjudication to Park and Tremblett individually (and Grain), regarding the claim of wrongful foreclosure, was also upheld on appeal, and this court observed that due to the manner in which the case was presented at trial (by Mazzarella and Micheli), effectively, Panther had been allowed to present tort and/or conversion-type theories against those individuals. (Prior opinion, D038066.)
Also, those prevailing parties, defendants Park, Tremblett and Grain (non parties to the contracts) brought and won post trial motions for attorney fees as the prevailing parties on Panther's contract-related claims (for $76,475), and those rulings were upheld on appeal. (Prior opinion, D038066.) They pursued vigorous collection efforts against Panther's assets, which he resisted.
Further, in a separate appeal, FAMF sought to set aside the judgment on the ground Panther had obtained it by fraud, but the order denying its motion to vacate the judgment was affirmed. (Panther v. FAMF (Dec. 18, 2003, D041126) [nonpub. opn.].)
Even though Panther had obtained this judgment in his favor against FAMF, he encountered significant problems trying to collect it, because FAMF was in bankruptcy in California and in Canada, claiming that its assets were completely encumbered by obligations to FAMS, the parent company. Panther's Canadian bankruptcy attorney, Robert Millar, is an expert witness in the current case. It is not disputed that the difficulty in pursuing this bankruptcy litigation was a major factor in plaintiff's decision to enter into the allegedly inadequate global settlement with the Canadian defendants for $2.15 million, and plaintiff characterizes that settlement amount as one source of his current malpractice claim. Plaintiff now describes Mazzarella as the supervising attorney of record throughout the California proceedings concerning collection efforts against those defendants in bankruptcy. We will further outline those events in the discussion portion of this opinion.
2. Legal malpractice (second underlying action):
Next, in February 2000, Panther sued the legal advisers who had structured the underlying real estate transaction, Hecht Solberg. He alleged that they committed legal malpractice against him, by failing to obtain waivers of potential conflicts of interest among the various participants, and they otherwise breached their fiduciary duty obligations. (Panther v. Hecht Solberg (Super. Ct. San Diego County, 2000, No. GIC743628) (second underlying action).) Plaintiff asserted that he was damaged in the amount of approximately $4.5 million through the loss of the property, which had increased in value over the years. Plaintiff also contended that the San Diego real estate market could have again increased the value of the real property in the real estate matter, such that his lost opportunities would have been of greater financial magnitude.
Eventually, these legal advisers filed a motion for summary judgment in the second underlying action, raising the bar of the statute of limitations. Plaintiff contends that Micheli gave him bad advice about when the statute of limitations would run, and Mazzarella was otherwise negligent, and the result was that this particular malpractice action was filed too late by another attorney, Dan Stanford. Plaintiff made a settlement offer of $695,000. Hecht Solberg was interested in settling as long as the amount was less than seven figures, due to a risk of duplicative recovery by plaintiff in this case-within-a-case context.
After mediation and between March and May 2001, plaintiff settled this second underlying action for $950,000. In his FAC, he alleges this was inadequate, because of the great value of his interest in the project that had been foreclosed upon (either 25 percent or 33 percent, if there had been an enforceable right of refusal from Grosse).
On appeal, plaintiff disputes whether this portion of the settlements (with the legal advisers) may properly be considered in connection with his current negligence allegations against Mazzarella, that he recovered insufficient sums in the underlying actions. This court considered a similar argument in our prior Micheli opinion and found that the two settlements and the two underlying actions could properly be considered together to measure the adequacy of the legal representation provided to achieve plaintiff's overall recovery, and we adhere to that approach. (D048047.)
3. Park action (third underlying action):
Third, plaintiff brought a related action for defamation/interference with contract or prospective economic advantage (the defamation lawsuit) against Park individually and CanAm (regarding an unrelated proposed commercial transaction with a non party). (Panther v. Park, supra (D039601).) Plaintiff claims in his FAC that he recovered inadequate amounts on it, which should be attributable to legal malpractice by Mazzarella. Such alleged malpractice led to a hard fought attorney disqualification battle causing many attorney fee obligations on both sides. In February 2002, MDC was disqualified from representing Panther in the defamation lawsuit on the ground that it had retained a contract attorney who had previously represented Panther's former partner. This court reversed that order on August 12, 2002 upon Panther's petition for writ of mandate. However, the California Supreme Court granted CanAm's petition for review on October 23, 2002. While that case was pending in the California Supreme Court, Panther withdrew his writ petition, resulting in the Supreme Court dismissing the case in January 2003 such that the trial court's disqualification order became final.
In this defamation action, another attorney, Thomas Laube, took over as Panther's counsel, but lost part of the case on motions for nonsuit (defamation, interference with contract and negligent interference with prospective economic advantage). At jury trial, Panther's claim for intentional interference with prospective economic advantage was rejected, as the subject economic relationship (with the third party) was not found to have been "actually interfered with or disrupted." Thus, Panther now claims the case was lost in part due to the disqualification problems and delays, which allowed Park to discover a valuable new witness who could have contributed to the unfavorable result for Panther (although the new trial ruling found other grounds to uphold the defense verdict).
4. Settlements reached:
As already described, the legal advisers settled with plaintiff in May 2001 for $950,000. Next, although the damages judgment in the first underlying case against FAMF was upheld on appeal in July 2003, and interest was accruing, Panther was still litigating the collectibility of the judgment in California and Canadian bankruptcy courts. Eventually, in January 2004, all pending actions arising out of the real estate matter were resolved in a global settlement. The parties agreed to "settle fully and finally all existing and potential litigation, [c]laims and [c]osts, . . . and to provide for mutual general releases." As part of the settlement, FAMF, Park, CanAm and related individuals and entities agreed to pay Panther $2.15 million in full satisfaction of all claims by Panther, and Panther agreed to abandon his appeal in the related defamation case. The parties further agreed to dismiss several additional pending litigation matters and to release collateral that Panther had encumbered to secure the injunction that was eventually set aside. This settlement was reached in part because of the bankruptcy litigation concerning FAMF, and in part because plaintiff received advice from other attorneys that the settlement was prudent (i.e., Millar and Laube). Panther did not want to pay attorney fees owed to Park and Tremblett. Also, at that time, Panther and family wanted an end to the litigation.
C
Current Action
In April 2002, plaintiff sued Mazzarella, Micheli and other attorney defendants in the current action, on the basis that the legal representation he received from 1999-on was negligent, with respect to the first underlying action in the real estate matter. As amended, plaintiff's complaint against Mazzarella is pled in terms of negligence and breach of fiduciary duty. There are also breach of contract causes of action against the law firms, including MDC. The Chapin firm obtained summary adjudication, which is not before us. MDC responded with its own cross-complaint for fees.
Allegations are also made that the legal representation in the second and third underlying cases caused him to incur damages. Mazzarella and other attorney defendants (including Micheli) were sued for their participation in obtaining the separate settlement for Panther in the legal advisers' malpractice action. The third underlying action (defamation) is also alleged to have caused Panther to incur additional attorney fees and damages, due to other malpractice (e.g., the disqualification problem that led to delays and probable loss of the case).
According to the FAC, the settlements plaintiff reached through Mazzarella's conduct were inadequate, and damaged him in the following ways. As to underlying action number one, plaintiff alleged: "As a legal consequence of these and other negligent acts, Plaintiff was precluded from maintaining his ownership and investment interests, pursuing claims which would have increased his recovery, was precluded from an opportunity to be made whole for the acts committed against him by FAMF and FAMS, preventing him from collecting on the damages awarded to him through the courts, was forced to incur legal and other expenses far in excess of what was fair and appropriate, incurred liability by way of judgment to other parties, and was required to ultimately resolve his dispute with the FAM entities at a severe discount from its original value. Plaintiff has thus incurred loss and damage to his personal savings, anticipated profits, expenditure of attorney's fees, expenses and equity value in CanAm, other business ventures and investments, and his personal income in an amount which shall be proven at trial."
Although plaintiff states in his opening brief that the issues are more narrow regarding Mazzarella than Micheli, and he is not pursuing any claim against Mazzarella that he lost his $20 million interest in a percentage of the original real estate project (e.g., the lost injunction), he nevertheless seems to make arguments about damages from the underlying project interest loss. This may be because MDC (also a moving party for summary adjudication) became the employer of Micheli in December 2000. In any case, Panther's main focus regarding Mazzarella is the conduct of the trial and the post judgment collection efforts in the first underlying case (as well as the second and third underlying actions).
Additionally, plaintiff claims that it was Mazzarella's legal malpractice that caused him to lose potentially meritorious causes of action or theories against the Canadians (conversion or agency), thereby substantially lessening the potential damages award that plaintiff otherwise deserved. Plaintiff further alleges that Mazzarella should have sued additional parties in the underlying action, including FAMS and Hecht Solberg. He also contended the third underlying action was unsuccessful mainly because of the disqualification problems and delay, caused by Mazzarella's hiring of a contract, but conflicted, attorney.
As against Micheli, plaintiff alleged his legal malpractice caused him to lose his injunctive relief, which would have preserved his minority ownership interest. As to Mazzarella, who entered the action after that and shortly before trial, plaintiff mainly alleges his malpractice lay in failing to pursue amendments to add certain causes of action and certain defendants, and in pursuing the collection phase of the action, as well as his activities in connection with the legal advisers' settlement and the defamation action.
With respect to underlying action number two, plaintiff contends that his 2001 settlement with those legal advisers, on Mazzarella's and others' advice, was "premature, insufficient and ill-advised" and was for an amount smaller than the actual value of the case would have been, but for the deficiency caused by the statute of limitations defense. Accordingly, plaintiff claims that he was substantially damaged as the result of the premature settlement, and that Mazzarella caused this damage (much more than the $950,000 received in settlement). This would allegedly have included "damages for attorney's fees, lost profits, lost investment opportunities and other damages, irrespective of the lack of legal responsibility of the Canadians for such losses."
D
Summary Judgment Motion, Opposition
Mazzarella and MDC filed a motion for summary adjudication on the ground that they were entitled to prevail because plaintiff could not show that any actions or inactions by Mazzarella/MDC were a causative factor of any of the alleged losses. Mazzarella/MDC addressed, as the potential causes of loss, the outcomes of the three underlying actions, including their settlements and dismissal, in light of other relevant factors. Specifically, they argued that plaintiff's claims in the FAC about lost profits and also lost opportunities to recover more in damages were based only on speculation. For example, plaintiff had previously admitted that he thought the Canadians were dishonest and he did not want to work with them, but rather to buy them out, so the success of the underlying development project was by no means assured, even if the injunction had remained in place. The project was financially distressed at various times, and undeveloped through 2000, and the real estate market was unpredictable.
Mazzarella and MDC also filed a related summary adjudication motion to prevail on the 30th affirmative defense in Panther's answer to MDC's cross-complaint for attorney fees due (denied pending trial and not before us here).
Mazzarella/MDC therefore contended that even if the trial court assumed some breaches of the applicable standard of care had taken place in their professional actions, it was nevertheless too speculative to assume that Panther would have obtained any better results than were represented by the settlements with the Canadian defendants, or with the legal advisers. In support, they provided declarations that authenticated extensive documents from the underlying litigation (97), both in state court and in bankruptcy courts. For example, judicial notice of various court documents was requested, largely consisting of the pleadings, declarations and minutes in the underlying cases, together with a history of the difficulties in collecting the judgment against FAMF. Extensive evidence was provided about the relationship of FAMS and FAMF. Although Mazzarella applied to the trial court in the first underlying action to add FAMS as a judgment debtor, he and MDC learned in 2002 that FAMS planned to join FAMF in bankruptcy, if that occurred.
With respect to plaintiff's entry into the global settlement agreement for $2.15 million, this was done partially on the advice of two attorneys other than Micheli or Mazzarella (including Canadian bankruptcy attorney Robert Millar and Thomas Laube, who had represented Panther in the third underlying action), that settling was the prudent course, because the Canadians were not thought to be likely to pay more to settle the various claims, and prevailing in the Canadian bankruptcy matter was uncertain. Also, substantial attorney fees had been assessed against plaintiff, leading to collection efforts against him, so the settlement also was entered into so he could avoid losing his assets in that manner.
Likewise, the moving papers and supporting documents showed that plaintiff had been motivated to settle with the legal advisers in 2001 for $950,000, not only because of the statute of limitations issue, but also because his then-attorney, Dan Stanford, thought it was a good settlement in light of what the legal advisers would pay (less than seven figures), and in light of plaintiff's previous offer to settle the case for $695,000; no issues regarding Hecht Solberg were left on the table. (Code Civ. Proc., § 998.)
In opposition, plaintiff contended numerous triable issues of fact remained, as identified in his own and in his two legal experts' declarations. Extensive lodged documents were also provided. The first expert declaration, by Canadian attorney Millar who participated as attorney for plaintiff in the Canadian bankruptcy matters, stated that Canadian and American trusts and securities laws were different, and Panther might have been able to collect against FAMS if it had been a named party. Millar's opinion was that Park and Tremblett would have been able to satisfy a judgment in their capacities as agents or trustees of FAMF, based on Canadian law and the bankruptcy proceedings, if correctly pursued for personal liability, and these factors could have improved the chances of collecting the judgment as a whole. Millar stated it was unclear whether the creditors of FAMS would have had priority over Panther, if he had obtained a judgment against it, since there was a delay in their registration of their interests with governmental authorities. Although the FAMS bondholders had a limited security interest, according to the offering circular, it was not clear whether that security interest was separately documented.
Plaintiff also supplied an attorney expert declaration by William N. Kammer, pointing out his conclusions about why Panther had settled the different cases, which he believed was done directly in response to various acts of attorney malpractice, including those of Mazzarella, and represented an inadequate recovery. Specifically, he believed that Panther would have achieved a better result in the judgment and collection efforts, or in maintaining an interest in the project, if tort claims such as conversion, or equitable remedies such as constructive trust, had been pursued in the first underlying action, and if FAMS, Park, and Tremblett had been pursued as named defendants or on individualized theories. Also, Panther would likely not have been held liable for attorney fees to Park and Tremblett (since they were not parties to the contract but prevailed on those claims against them), if enough viable alternative theories of recovery against the correct defendants had been pursued.
In reply, Mazzarella/MDC continued to contend that only speculative evidence had been provided, and plaintiff's alleged losses and any deficits in the settlement amounts could not properly be attributed to any attorney error.
E
Ruling
Following oral argument, the court took the matter under submission. On June 19, 2006, the court issued orders granting Mazzarella's/MDC's motion for summary adjudication and ruling upon both sides' evidentiary objections. The court also granted the parties' respective requests for judicial notice about the extensive documentary record in the three underlying actions. (Evid. Code, § 452, subd. (d).) However, the court noted that the proper scope of judicial notice of the court documents allowed it to recognize that they exist and what results were reached, while not relying upon statements of the facts stated therein as establishing their truthfulness.
In granting summary adjudication, the court cited to authorities and explained its reasoning that plaintiff had failed to raise any triable issues of fact about whether there was "a causal relationship between the legal malpractice and some 'actual loss or damage' to prevail. [Citation.] In order to make such a showing, where the result achieved was settlement of the plaintiff's claims prior to trial, the plaintiff must show that he or she 'could have done better if she hadn't accepted the settlement.' [Citation.] Without such a showing, 'there is no causal relationship between [the plaintiff's] acceptance of the settlement and any pecuniary loss,' and thus, there can be no showing of malpractice. [Citations.] The showing that the result would have been better must be based on more than the 'mere probability that a certain event would have happened.' [Citations.]"
In the ruling, the court reviewed the voluminous evidence presented in support of and against the summary adjudication motion, and found the evidence submitted by Mazzarella/MDC was adequate to meet its initial burden to show a lack of triable issues of material fact regarding causation or damages. Specifically, this included evidence in the first underlying action that "the possibility of Panther maintaining any interest in the LLC was undesirable and unlikely [citation]; (2) the judgment debtor, FAMF, was in bankruptcy [citation]; and (3) FAMS, which had its own secured creditors, owed money to its bondholders and threatened bankruptcy [citation]."
The court therefore concluded that MDC/Mazzarella adequately demonstrated for purposes of summary adjudication "that Panther would not have obtained a 'better' result had he opted against continuing to pursue (instead of settling) any of his underlying claims." Instead, MDC had provided evidence regarding the global settlement that showed: "(1) several attorneys advised Panther to enter into the settlement [citation]; (2) Panther's decision to settle his claims was influenced by his desire and his family's desire to end the litigation and Panther's desire to avoid the risk of not recovering anything on his judgment due to the pending Canadian bankruptcy proceedings [citation]; (3) the Canadians would not have paid Panther more to settle their claims [citation]; and (4) the settlement reached was in the range discussed between the parties for years [citation]."
Regarding the second underlying action, Mazzarella/MDC produced evidence adequate to shift the burden to plaintiff to provide opposing evidence, because "(1) Hecht [Solberg] was not willing to pay a 'seven figure' settlement [citation]; (2) Panther's counsel believed the settlement entered into was an excellent outcome for Panther [citation]; and (3) prior to the date of settlement, Panther was willing to accept $695,000, much less than the $950,000 received [citation]."
With regard to the third underlying action, the court found the defense showing had met its burden regarding the lack of causation and damages from the alleged malpractice, because after the disqualification events, the matter was tried and then settled: "(1) Panther himself recognized that the case had been tried by competent counsel [Laube; citation]; and (2) as noted above, Panther and his family were looking for an end to the litigation [citation]."
Plaintiff's showing in opposition was deemed in the ruling not to have brought forward any triable issue of material fact to show that, "but for MDC's negligence, the underlying actions would have had 'better' outcomes, either by a higher settlement or at trial." Rather, only a mere probability had been shown, through only speculative evidence regarding causation and damages. The court concluded, "Indeed, these claims rely on layer upon layer of speculation. The evidence demonstrates that Panther's settlement of the underlying claims was based on a 'myriad of variables that affect settlements of . . . malpractice actions.' [Citation.]" The ruling stated that there are no triable issues of material fact to support the claim that the handling of Panther's underlying actions by Mazzarella individually, or MDC as a whole, was a "but for" cause of any damage Panther may have suffered. The motion was granted (while an affirmative defense regarding the cross-complaint was not summarily adjudicated, but left for trial on the cross-complaint as to the remaining defendant MDC).
F
Further Proceedings
1. June 26, 2006 order of clarification; judicial notice requests:
Due to confusion about whether plaintiff's original supporting expert declaration by Canadian attorney Millar had been actually filed and was in the record at the time of the ruling, the court allowed it to be considered, but then stated that it did not change the court's ruling to grant the Mazzarella/MDC motions for summary adjudication. Judgment was entered accordingly for Mazzarella alone and plaintiff appeals.
Pending appeal, plaintiff submitted two judicial notice requests to this court. The first of these, regarding a recent additional declaration from his Canadian attorney Millar on potential indemnity rights that Park may have had, based on Canadian trust and corporate law, has been withdrawn, as stated in the reply brief. The second request, for judicial notice of a published federal district court memorandum opinion, is denied, as that material may be considered without judicial notice. (Smith v. Haden (D.D.C. 1994) 872 F.Supp. 1040, aff'd. by 69 F.3d 606 (C.A.D.C. Cir. 1995).)
2. Related Micheli appeal and prior opinion (D048047):
This court denied an application to consolidate this appeal with that of the summary judgment granted to attorney Steven Micheli on many of the same theories as are presented here, regarding causation and damages. In May 2007, this court affirmed summary judgment for Micheli in our unpublished prior opinion.
DISCUSSION
We first set forth applicable standards of review, then the principles we must consider in reviewing this record on causation and damages. Although Mazzarella did not argue the threshold issues of duty and breach in his motion, the remaining negligence issues concerning causation and damage remained hotly disputed. We are mindful that the issues regarding Mazzarella are overlapping to some extent with those raised and resolved in the prior Micheli opinion. Mazzarella began his work for Panther in August 2000, when Micheli was already on the case, and Micheli later joined the MDC firm during trial. Plaintiff takes the position in his opening brief that Mazzarella entered the dispute after Micheli had made "some rather significant errors," and Mazzarella therefore is said to have assumed "control over a case which called on his special expertise in handling partnership disputes and which demanded aggressive corrective measures." Logically, we note that if Micheli's assumed breaches of the standard of care were not found to be causative factors in plaintiff's damages in these three underlying actions (as stated in our previous opinion), then Mazzarella's assumed breaches of the standard of care in not fixing those same mistakes would likewise lack any causative effect.
In any event, we agree with the approach of the trial court in its ruling, expressly noting the close interrelationship between the two sets of allegations but deciding this case on its own merits. Although we will incorporate portions of the legal discussion from our prior opinion concerning Micheli, we will likewise confine our analysis to the record facts regarding the parties before this court in this case.
I
STANDARDS OF REVIEW
To prevail in a motion for summary judgment, a defendant must bear a burden of persuasion "that 'one or more elements of' the 'cause of action' in question 'cannot be established,' or that 'there is a complete defense' thereto. [Citation.] . . . [¶] [T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact. . . . A prima facie showing is one that is sufficient to support the position of the party in question. [Citation.]" (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851.)
On review of the order granting summary judgment, the appellate court follows the same procedure as did the trial court: "We identify the issues framed by the pleadings, determine whether the moving party has negated the non moving party's claims, and determine whether the opposition has demonstrated the existence of a triable issue of material fact. [Citation.]" (Orrick, supra, 107 Cal.App.4th 1052, 1056-1057.) Summary judgment is proper if no triable issue of fact is shown by all the papers submitted, such that the moving party is entitled to judgment as a matter of law. (Ibid.)
Several evidentiary questions are argued in the briefs. In Carnes v. Superior Court (2005) 126 Cal.App.4th 688, 694 (Carnes), the appellate court noted that even though ordinarily, an appellate court reviews a summary judgment motion "de novo," a different analysis will apply for review of a trial court's rulings on evidentiary objections. Thus, "an appellate court reviews a court's final rulings on evidentiary objections by applying an abuse of discretion standard. [Citations.]" (Ibid.) Even where an appellant disagrees with the rulings made, reversal is not required if they are not shown to be incorrect. " 'Anyone who seeks on appeal to predicate a reversal of [a judgment] on error must show that it was prejudicial. [Citation.]' [Citation.]" (Ibid.)
We will further address plaintiff's evidentiary contentions in discussing the merits of the parties' respective showings, under this prejudice analysis. (Pt. III, post.) We are aware that each party complains that the other did not make an accurate or complete summary of the facts on appeal (e.g., utilizing evidence to which objections were sustained), and that such arguments should therefore be deemed waived for lack of proper briefing. (Pringle v. La Chappelle (1999) 73 Cal.App.4th 1000, 1003.) However, much more than plaintiff's own complaint and discovery responses is in the record, and the de novo nature of our review of this summary judgment weighs in favor of an approach in which we consider the merits of the respective positions, and the arguments and issues are adequately presented for those purposes. We next turn to the comprehensive record to determine whether the summary adjudication and judgment represents an appropriate resolution of the causation and damages issues regarding Mazzarella.
II
CAUSATION AND DAMAGES PRINCIPLES
A. Introduction
To recover against Mazzarella, plaintiff must prove each of the elements of his causes of action for professional negligence: "(1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional's negligence." (Budd v. Nixen (1971) 6 Cal.3d 195, 200.)
Based on the approach taken by the parties on appeal, we will assume arguendo that triable issues may exist concerning whether Mazzarella's legal representation met the applicable professional standard of care. Our focus must be upon the remaining elements of a negligence claim, causation and damage, particularly with reference to this settlement context.
B. Guidelines
Although a plaintiff alleging legal malpractice is not required to offer proof that establishes causation "with absolute certainty," the plaintiff must " ' "introduce evidence which affords a reasonable basis for the conclusion that it is more likely than not that the conduct of the defendant was a cause in fact of the result." ' [Citations.] In any event, difficulties of proof cannot justify imposing liability for injuries that the attorney could not have prevented by performing according to the required standard of care. [Citation.]" (Viner v. Sweet (2003) 30 Cal.4th 1232, 1242-1243 (Viner).) "In the legal malpractice context, the elements of causation and damage are particularly closely linked. . . . The plaintiff has to show both that the loss of a valid claim was proximately caused by defendant attorney's negligence, and that such a loss was measurable in damages." (Hecht Solberg et al. v. Superior Court (2006) 137 Cal.App.4th 579, 591.)
In Viner, the court applied the same causation standards to both litigation and transactional malpractice actions. Here, plaintiff is alleging negligence as to both the litigation of the underlying case and the transactional aspects of the settlements. In either case, he must "establish that but for the alleged negligence of the defendant attorney, the plaintiff would have obtained a more favorable judgment or settlement in the action in which the malpractice allegedly occurred. The purpose of this requirement, which has been in use for more than 120 years, is to safeguard against speculative and conjectural claims. [Citation.] It serves the essential purpose of ensuring that damages awarded for the attorney's malpractice actually have been caused by the malpractice." (Viner, supra, 30 Cal.4th 1232, 1241.)
In Piscitelli v. Friedenberg (2001) 87 Cal.App.4th 953, 972 (Piscitelli), this court outlined the proper parameters of expert opinion in a legal malpractice case. The Evidence Code provides that an expert's opinion testimony, if otherwise admissible, will not be objectionable where it embraces an ultimate issue to be decided by the trier of fact. (Id. at p. 972; Evid. Code, § 805.) The expert may not, however, take over the function of the fact finder by resolving and directing the resolution of an ultimate issue in a case. (Piscitelli, supra, at pp. 972-974.) The fact finder in a legal malpractice case should, in determining the merits of the underlying case within the case, act independently, not only as directed by an expert witness, and jury instructions should reflect this approach. (Ibid.)
By extension of the logic in Piscitelli, supra, 87 Cal.App.4th 953, in this summary judgment context regarding legal malpractice, expert opinion may serve to identify triable issues of fact regarding causation and damages, although it may not be utilized to resolve them. (See 1 Witkin, Cal. Evidence (4th ed. 2000) Opinion Evidence, § 86, pp. 631-632 [expert testimony may be admissible regarding the standard of due care for attorneys that is prevailing in the community]; also see id. § 97, pp. 644-646 [suggesting that a complete prohibition of expert testimony on ultimate issues may be eroding ("it has been suggested that courts should develop a functional approach of discretionary admissibility to take account of the difference between jury and court trials, and to recognize that much testimony legal in nature is now admitted either openly or in the guise of testimony on mixed questions of law and fact. [Citations.]")].) In any event, this expert testimony is offered on causation and damages.
Especially when settlements are involved, courts have recognized the difficulty of proof in showing more than speculative harm from the nature of legal representation, due to "the myriad of variables that affect settlements . . . ." (Thompson v. Halvonik (1995) 36 Cal.App.4th 657, 663.) In that case, the court found the plaintiff had failed to demonstrate that but for the attorney defendants' delay in processing the case, the plaintiff's underlying case "would have settled at all, let alone at an earlier date, for the same amount, or with the same structure." (Ibid.) The court applied the standard that " '[d]amage to be subject to a proper award must be such as follows the act complained of as a legal certainty . . . .' [Citation.]" (Ibid.) Further: " '[T]he mere probability that a certain event would have happened, upon which a claim for damages is predicated, will not support the claim or furnish the foundation of an action for such damages. [Citations.]' [Citations.]" (Ibid.)
In Jalali v. Root (2003) 109 Cal.App.4th 1768 (Jalali) the court identified some of the various uncertainties avoided when a case is settled: rulings by a trial judge that might set aside a verdict or grant new trial, or rulings by an appellate court that the judgment was unsupported, and in addition, the general avoidance of problems encountered in collecting on the judgment, such as a defendant's bankruptcy. (Id. at p. 1771.) (Of course, this plaintiff was trying to avoid the latter problem as to defendant FAMF.) The court in that case reversed a jury verdict for plaintiff in a malpractice action against her former counsel, who had settled her case. She failed to prove damages were caused by counsel's inaccurate advice, or that she could have received a greater jury award, or that she would have sought a larger or a different settlement if she had received different advice. (Id. at pp. 1777-1778; see 1 Witkin, Cal. Procedure (4th ed. 1996) Attorneys, § 334, pp. 116-120.)
Likewise, in Barnard v. Langer (2003)109 Cal.App.4th 1453(Barnard), the court analyzed a plaintiff's claim that his attorney's negligence had caused him to settle for too little money or on different terms. The court found a grant of nonsuit was appropriate, because the plaintiff had only submitted evidence of speculative harm and could not show that, but for defendant counsel's negligence, the underlying action would have resulted in a better outcome than was represented by a negotiated settlement. The court characterized this as a "settle and sue" case (id. at p. 1461, fn. 12), and required that the plaintiffs present more than "a wish list of damages, unsupported by evidence that the [defense] would have settled for more, or by expert testimony to show that Barnard's amounts could have been recovered had the case been tried, or by evidence (even from Barnard's own mouth) to say that he would have gone through with the trial (which would require him to do more than just say that, in spite of his serious financial problems, he could have paid the costs involved in a trial). In short, there is no evidence to even suggest that, had Barnard gone to trial or insisted on a different settlement, he would have recovered more than he received in settlement." (Id. at p. 1463, fn. omitted.)
In Barnard, supra, 109 Cal.App.4th 1453, the court included a footnote that discussed the views of specialists in the legal malpractice field, and pointed out that hindsight challenges to recommended settlements can be speculative. Such settlement recommendations " 'often are protected as judgment calls. In evaluating and recommending a settlement, the attorney has broad discretion and is not liable for a mere error of judgment. The standard should be whether the settlement is within the realm of reasonable conclusions, not whether the client could have received more or paid less. No lawyer has the ability to obtain for each client the best possible compromise but only a reasonable one.' " (Id. at p. 1463, fn. 13.)
In Viner, the court clarified that circumstantial evidence may be provided to satisfy the burden of showing a better result should have been obtained, but for the claimed negligence: "An express concession by the other parties to the negotiation that they would have accepted other or additional terms is not necessary." (Viner, supra, 30 Cal.4th 1232, 1242-1243.)
In some cases, damages for legal malpractice may include payments for attorney fees that were incurred because of the defendant attorney's malpractice. In Orrick, supra, 107 Cal.App.4th 1052, the court allowed a plaintiff to proceed in an action for legal malpractice against former counsel, but only on contract claims, since no evidence of tort damages had been produced that resulted from the alleged malpractice in reaching a marital settlement (no showing that but for the negligence of the attorney, a better result could have been obtained). The plaintiff did not provide any evidence that his adversary (former wife) would have settled for less nor that a trial would have resulted in a more favorable judgment than the settlement, if the attorney had not been allegedly negligent in settling the case. The court recognized that fees paid to a second attorney to correct the first attorney's error may sometimes be characterized as tort damages, on a "tort of another" theory. (Id. at p. 1061, fn. 5.) However, the "tort of another" theory was not properly presented in the Orrick case, because that client was not required to take affirmative and costly action to protect his interests because of the alleged malpractice (such as bringing or defending an action against a third person). (Id. at pp. 1060-1061.)
In light of these criteria, we next analyze whether plaintiff is correct that the trial court erroneously failed to recognize that triable issues of fact remained regarding causation of his losses from the alleged legal malpractice, and the claimed damages that arose in various categories.
III
APPLICATION
A. Introduction
We address the causation of damages questions separately as to the three underlying actions, in light of the evidentiary arguments made on appeal. In order to defeat the summary adjudication/judgment motion, plaintiff was not required to offer proof that would establish causation of his claimed losses "with absolute certainty." (Viner, supra, 30 Cal.4th 1232, 1242-1243.) However, the plaintiff must " ' "introduce evidence which affords a reasonable basis for the conclusion that it is more likely than not that the conduct of the defendant was a cause in fact of the result." ' [Citations.] In any event, difficulties of proof cannot justify imposing liability for injuries that the attorney could not have prevented by performing according to the required standard of care. [Citation.]" (Ibid.) More than a focus on the alleged breaches is required; we must examine the evidence supporting any conclusion that but for certain breaches of duty, a more favorable result would have been obtained, thus completing Panther's causation and damages showing. (Id. at p. 1241.)
As already noted (fn. 9, ante), plaintiff states in his opening brief that the issues pled are more narrow regarding Mazzarella than Micheli, and he is not now pursuing as against Mazzarella any claim that he lost his $20 million interest in a percentage of the original real estate project (e.g., the lost injunction); however, he nevertheless seems to make arguments about various alternative forms of damage from the underlying loss of the project interest. Although Mazzarella was not on the case when the injunction was obtained and then vacated in 1999, the issues regarding Mazzarella and Micheli's representation remain overlapping, and many of the same arguments are made about all the underlying actions and will be addressed.
Although plaintiff does not believe that the Hecht Solberg $950,000 settlement should be credited toward his ultimate recovery, for purposes of analyzing his potential malpractice damages, we have already decided that Mazzarella is entitled to argue that these matters were inextricably interrelated, based on the pleadings and the evidence. We therefore inquire whether plaintiff has demonstrated he is entitled to go to trial to recover additional amounts over the $3.1 million aggregate total of those settlements, in the form of malpractice damages from Mazzarella.
B. Issues Regarding Losses in First Underlying Action
Plaintiff seeks to show that Mazzarella caused his losses in several categories in the first underlying case, mainly regarding the conduct of the trial in 2000 and the post-judgment collection efforts and related settlement issues (2001-2004).
1. Trial issues, including Loss of Damages Entitlements Against Various Defendants: Conversion/Constructive Trust Claim?
Plaintiff claims it was Mazzarella's legal malpractice that caused him to lose a chance of recovering damages or other compensation for his lost interest in the project (e.g., no conversion or constructive trust remedies were adequately pursued, or against the proper parties). He contends he has shown it is more likely than not that the result would have been better (a judgment larger than $2.4 million, plus interest) if those theories, and those additional defendants, had been differently prosecuted at trial, which would possibly have increased his bargaining power at the later settlement stage.
In support, plaintiff submitted a declaration from his legal expert, Kammer, opining that better representation or different legal theories could have prevented this loss. Specifically, he believed that Panther would have achieved a better result in the judgment and collection efforts, or in maintaining an interest in the project, if tort claims such as conversion, or equitable remedies such as constructive trust, had been pursued in the first underlying action, and if FAMS, Park, and Tremblett had been pursued as named defendants. Likewise, plaintiff's Canadian legal expert, Millar's, declaration stated that individualized recovery against Park and Tremblett should have been available since they were trust and corporate officials for FAMS and FAMF. Such expert opinion on causation questions, on ultimate issues, may suggest the presence of triable issues of fact, even if not admissible at trial. (See Piscitelli, supra, 87 Cal.App.4th 953, 971-974.)
First, with regard to Mazzarella's alleged failure to sue on the correct or additional theories, this court has already rejected the argument that certain theories were not impliedly presented in the underlying first trial. In the Micheli prior opinion, we quoted from our prior opinion, D038066, in which this court concluded that effectively, Panther had been allowed to present such tort and/or conversion-type theories against the individuals Park and Tremblett, as officials of FAMF, in connection with a breach of fiduciary duty cause of action.
Specifically, as outlined in the previous Micheli opinion, and restated here: "First, with regard to the conversion proposal, our prior opinion in the underlying case, D038066, considered that issue and rejected plaintiff's request to set aside the ruling that only FAMF should be liable for wrongful foreclosure. We concluded that based on the manner in which plaintiff sought to prove tort damages against the Canadian defendants, effectively, he had already argued tort theories against the other Canadian defendants, such as Park, Tremblett, and Grain, and the judgment in their favor was upheld. We explained: 'In sum, the record indicates the court effectively permitted Panther to proceed to trial against the moving defendants [Park, Tremblett, and Grain] on his theories that they tortuously foreclosed his ownership interest in CanAm and conspired to deprive him of such interest. Later, Panther's claims against those defendants for breach of fiduciary duty and constructive fraud were, in fact, litigated to the jury. By special verdict the jury found Grain did not breach fiduciary duties it owed to Panther or constructively defraud Panther. Further, although finding Park and Tremblett breached fiduciary duties they owed to Panther and constructively defrauded Panther, the jury also found Panther did not suffer any loss or damages as a result of those defendants' breach of fiduciary duties or constructive fraud. Hence, on this record Panther cannot show a reasonable likelihood that a result more favorable to Panther on his wrongful foreclosure claim against the moving defendants would have ultimately resulted absent the court's assertedly erroneous grant of summary adjudication favoring those defendants on such claim.' (Prior opinion, D038066.) [¶] We are obligated to adhere to that reasoning and can find no reasonable probability that any foreseeable likely recovery was denied to plaintiff because of the manner in which Micheli [or Mazzarella] litigated the tort theories." (Prior Micheli opinion, italics added.)
In the alternative, plaintiff continues to argue that because of defects in the trial proceedings, he was unable to preserve his claims to a larger 33 1/3 percent share in the project (based on a right of first refusal to purchase Grosse's interest), and this reduced the amount of the judgment and therefore his bargaining power at settlement. However, the above analysis subsumes such a theory as well. Moreover, Mazzarella made a threshold showing of lack of causation on this point, to the effect that any possibility of Panther maintaining any interest in the original LLC was undesirable and unlikely. There was evidence that plaintiff did not want to work with his adversaries, the Canadians, but rather wanted to buy their majority interest, which would have been difficult to value or accomplish, and the project was financially distressed on an ongoing basis, so any claim his interest should have been more valuable is only hypothetical. As already noted in our Micheli opinion: "Property development projects are subject to many variables and uncertainties from start to finish, and when they are subject to financial difficulties and infighting among stakeholders at early stages of the development, their prospects for financial success can only be described as speculative. [There were] major difficulties inherent in this development project. . . ." Thus, the record does not support plaintiff's claims that this interest was predominantly lost through legal malpractice, rather than through other business factors in operation over the years 1995-2000.
Plaintiff theorizes that he should have been entitled to obtain Grosse's interest, due to a right of first refusal in the operating agreement for CanAm. This claim was presented in the first underlying action, but rejected on the basis that the security agreement between Grosse and FAMF was more senior, and plaintiff could not pursue the Grosse interest. (D038066.)
Next, plaintiff contends not enough defendants were added to the trial proceedings, or at the collection stage. This includes the legal advisers as additional defendants in the first underlying action, on the grounds that they allowed or assisted in the wrongful foreclosure proceedings by FAMF. Mainly, however, plaintiff focuses on the decision not to name FAMS as a defendant, but only its subsidiary FAMF. Specifically, he contends that FAMS could potentially have provided indemnity for the wrongful actions of Park and Tremblett (as trust and corporate officials for FAMS and FAMF), such that more damages would have been available or collectible, despite the FAMF bankruptcy problems. Plaintiff also contends that FAMF and Park acted as direct agents for FAMS and FAMS could probably be held liable for their acts.
These arguments must be evaluated against all other relevant factors. Mazzarella joined the case four months before trial, and plaintiff therefore must be arguing that he should have immediately amended the pleadings to add FAMS, assuming there was jurisdiction over that Canadian company and that leave of court would have been granted. It must then be assumed the jury would have found FAMS liable, such as on an alter ego theory (which Judge Amos in the underlying action denied at the collection stage). Another factor is that Park and Tremblett were in charge of FAMS, and they presumably would have resisted collection equally as effectively as they did with FAMF. The bankruptcy court denied plaintiff's request to hold FAMS responsible for the debts of FAMF. All of these factors undermine any showing by plaintiff that any attorney decisions not to include FAMS as a party in the underlying action were actual causes of any loss or damage.
Nor has plaintiff raised triable issues of fact that the conduct of the trial, such as in the jury instructions regarding duplicative damages (as between wrongful foreclosure and breach of the covenant of good faith and fair dealing), caused him to lose otherwise assured recovery. He cannot show those damages were not in fact duplicative. He is also contending that he incurred liability for attorney fees to Park and Tremblett, because he was not able to recover against them on his contract theory, and therefore they became entitled to fees, which thus should be considered to be malpractice damages. To prevail, he would have to show his contract theory was meritorious but lost chiefly because of malpractice, but the record does not support such a conclusion. Plaintiff cannot demonstrate that the original judgment, as affirmed on appeal, could have, would have, or should have been significantly larger, if correctly pursued by his then-attorneys against the same or additional defendants on any different theories.
2. Problems With Collection Efforts; Named Defendants
In its ruling, the trial court found Mazzarella/ MDC had met its initial burden to show that no triable issue of material fact existed as to causation or damages, regarding whether Panther would most likely have obtained a "better" result if he had opted to pursue additional collection efforts (instead of settling) any of his underlying claims. The factors leading to his settlement decision included evidence showing that the judgment debtor, FAMF, was in bankruptcy; and that its parent FAMS, which had its own secured creditors, owed money to its bondholders and threatened bankruptcy. To analyze those portions of the ruling, we must discuss the evidence showing the likelihood of successful collection of the actual judgment instead of settlement proceeds, together with the evidence of Panther's motivation for settling, separate from any alleged malpractice.
With respect to the monetary adequacy of the global settlement with the Canadians, the trial court found Mazzarella had adequately shown that "(1) several attorneys advised Panther to enter into the settlement [citation]; (2) Panther's decision to settle his claims was influenced by his desire and his family's desire to end the litigation and Panther's desire to avoid the risk of not recovering anything on his judgment due to the pending Canadian bankruptcy proceedings [citation]; (3) the Canadians would not have paid Panther more to settle their claims [citation]; and (4) the settlement reached was in the range discussed between the parties for years [citation]." The undisputed evidence was that collection efforts were unsuccessful, despite the expenditure of much money and effort, largely because FAMF was in bankruptcy in California and in Canada, and FAMF claimed that its assets were wholly encumbered by obligations to FAMS (which had investors who were believed to be secured creditors).
To challenge those findings, Panther mainly contends on appeal that the trial court erroneously considered and misinterpreted certain deposition testimony by Mazzarella about his understanding of the respective priority of claims against FAMS, as between Panther's judgment, and the position of the Canadian investors who may have had a security interest in FAMS's assets. In his deposition, Mazzarella said that at the time of the collection efforts, he spoke to Panther's bankruptcy attorney, David Osias, and they were not concerned that FAMS would likely file bankruptcy, and also, FAMS probably would have been able to respond to a judgment, in case FAMF could not. At the time, Mazzarella believed that Panther's judgment would probably be senior to any interest held by FAMS bondholders/investors.
Plaintiff now contends that the trial court's ruling was error, because it failed to account for the probative effect of a party's admission (in this case, that FAMS would have been an appropriate judgment debtor). Mazzarella responds that he was not admitting anything, but rather, has consistently argued that Panther could not have obtained a California judgment against FAMS, a Canadian entity restricted by Canadian law from engaging in investment activities in the United States, and even if a judgment had been obtained, there would be other obstacles to collecting it, such as the existence of senior secured creditors (Canadian retirees who invested before any Panther judgment was obtained). Also, alter ego theories were being presented in several forums at around the same time, which might have affected Mazzarella's beliefs as expressed at deposition (although such alter ego theories were ultimately unsuccessful).
The expert declaration presented by Panther's Canadian attorney suggests that some of the Canadian creditors might have been less protected than others, with regard to the timing of their governmental registration of their investment in FAMS. Other portions of the record show it was undisputed that FAMS had creditors with secured claims to its assets. Another potential type of recourse to FAMS money would have been as indemnity to Park for any personal liability plaintiff could have proven against him, and such indemnity could potentially be senior to the bondholder's interests. However, it is only speculation at this point to contend that a collectible judgment could have been obtained from FAMS, or FAMS on behalf of Park, in light of FAMS's close relationship to FAMF, and the bankruptcy problems. Plaintiff has not shown that the information available at the time was anything other than that the FAMS creditors with security interests would be protected from any execution of any judgment that Panther might obtain. It is conjecture to say that collecting that judgment would have been more feasible if FAMS had been added as a party.
Another theory of liability pursued by plaintiff on appeal is that fees paid to a second attorney to correct a first attorney's error may be characterized as tort damages, on a "tort of another" theory. (Orrick, supra, 107 Cal.App.4th 1052, 1061, fn. 5.) This could include fees paid to his own attorneys to pursue the Canadian defendants in bankruptcy court, since he believes the bankruptcy claim was unnecessary, if FAMS had been brought in earlier, instead of FAMF. Also, plaintiff expended attorney fees on the post judgment efforts to collect, and also on his own efforts to avoid paying Park's/Tremblett's attorney fees in the underlying action (assessed because he did not prevail on his contract theories against them). All those theories assume that the bankruptcy problems could have been avoided if different litigation decisions had been made, and the other reasons for settlement would not have existed, but there is little support for such assumptions in light of all the other relevant circumstances about the difficulty in including FAMS in the litigation.
Panther argues that Mazzarella has failed to discuss this theory on appeal (attorney fees as damages), but Mazzarella relies on Orrick to argue that there is no basis for a "tort of another" entitlement to attorney fees damages, when the main harm claimed is an unfavorable settlement. Here, Panther has not shown that he was required, merely because of the attorney's errors, to file an action against a third person or to defend against such litigation, in order to protect his own interests. (Orrick, supra, 107 Cal.App.4th at p. 1060.) Instead, many other factors made the bankruptcy and collection efforts necessary, and ultimately went into the settlement decision, so that the necessary "but for" causation has not been shown regarding this assumed malpractice. The fees incurred in the bankruptcy litigation in Canada regarding FAMF had many causative factors, not shown primarily to be malpractice.
Overall, the record does not support a conclusion that if Mazzarella had earlier pursued any potential theory against FAMS, the parent of FAMF, FAMS would likely have been good for a large portion of the judgment. At the end of the underlying case, such alter ego claims were alleged but rejected, and then alter ego issues were litigated in the bankruptcy court. The record is consistent that FAMF and FAMS maintained their separate identities and plaintiff can show only speculation that FAMS could have been successfully pursued in this action, on an agency theory or otherwise. Panther and his counsel were told FAMS was threatening to join FAMF in bankruptcy if added to the judgment, and this factored into the settlement decision. Even though Panther admittedly incurred attorney fees in bankruptcy court in Canada and California, attempting to collect the judgment, the evidence is such that these difficulties would most likely have been encountered regardless of whether Mazzarella's legal decisions regarding FAMS were different at different phases of the action. Plaintiff has not shown the settlement was entered into because of attorney malpractice, or that his claimed losses were caused by the same.
3. Settlements
In Thompson v. Halvonik, supra, 36 Cal.App.4th 657 at page 663, the court discussed the many variables involved in a decision to settle an underlying case, in light of ordinary causation rules, and found that particular plaintiff was only able to claim a mere probability that a different result would have occurred if the then-attorney had acted differently in the settlement process: " 'Damage to be subject to a proper award must be such as follows the act complained of as a legal certainty . . . .' [Citation.]" (Ibid.) Further: " '[T]he mere probability that a certain event would have happened, upon which a claim for damages is predicated, will not support the claim or furnish the foundation of an action for such damages. [Citations.]' " (Ibid.) In Thompson, such a showing was found to be insufficient to support the malpractice claim. (Id. at p. 664.)
Thus, the appropriateness of a settlement should be analyzed in hindsight with due respect for the variables that went into it, such as unpredictable trial or appellate court rulings, availability of evidence, or potential success at trial, or cost-benefit analysis of going to trial as opposed to settling. (Barnard, supra, 109 Cal.App.4th at pp. 1461-1463; Jalali, supra, 109 Cal.App.4th at p. 1771.) We disagree with plaintiff's efforts to distinguish Barnard, by saying that the reasoning of that case disfavors settlements because the term "settle and sue" implies that he could not properly seek to mitigate his damages from the underlying malpractice, by deciding to settle. Nor is Barnard distinguishable merely because there was a relatively small difference between Barnard's $700,000 settlement amount and the $935,000 potential verdict amount (whereas here, several million dollars were supposedly lost through settling). Instead, the proper considerations should be whether the malpractice plaintiff can bring forward evidence to show a strong enough likelihood that the defense would have settled for significantly more, and that the alternative, going through with trial (or collection), would likely have been both feasible and more successful than the settlement. Further, in evaluating the attorney's advice to settle, "[t]he standard should be whether the settlement is within the realm of reasonable conclusions . . . ." (Id. at pp. 1462-1463, fn. 13.) Barnard therefore only assesses in a comprehensive way all the factors that go into settlements, without criticizing them unfairly as plaintiff argues.
Although circumstantial evidence may be enough in some cases to satisfy the burden of showing a better result should have been obtained by an attorney in an underlying case (but for negligence), the circumstantial evidence of the conditions existing at the time of this litigation and settlement does not support a conclusion that more money was most likely available to plaintiff, from any of the alleged sources, or that other reasons for settlement did not exist. (Viner, supra, 30 Cal.4th at pp. 1242-1243.) The underlying trial was fraught with difficulty at every turn, not all of it caused by attorney representation. Mazzarella made a prima facie showing that any of plaintiff's losses in this respect were not caused by his professional actions or inactions. The hindsight claim by plaintiff that the $2.15 million global settlement was entered into only because the true judgment was inadequate and uncollectible due to malpractice (even though it would theoretically have been worth $4.5 million with interest), is not supported by the record.
In conclusion, plaintiff's showing in opposition to the motion does not establish that, but for Mazzarella's negligence, the first underlying action would have resulted in a better outcome than was represented by the negotiated global settlement, especially when it is considered together with the Hecht Solberg settlement. " 'The standard should be whether the settlement is within the realm of reasonable conclusions, not whether the client could have received more or paid less. No lawyer has the ability to obtain for each client the best possible compromise but only a reasonable one.' " (Barnard, supra, 109 Cal.App.4th at pp. 1462-1463, fn. 13.) This settlement was reached after lengthy litigation in several forums about the respective roles of FAMF, FAMS, Park, and others, and this record does not justify or compel a reevaluation of those settlement variables now, on a causation theory.
C. Issues Regarding Losses in Second Underlying Action
The trial court's ruling with respect to the second underlying action was that Mazzarella had made an adequate showing against causation of loss, in these ways: "(1) Hecht was not willing to pay a "seven figure" settlement [citation]; (2) Panther's counsel believed the settlement entered into was an excellent outcome for Panther [citation]; and (3) prior to the date of settlement, Panther was willing to accept $695,000, much less than the $950,000 received [citation]."
To oppose Mazzarella's initial showing, plaintiff filed evidentiary objections to defendant's showing about the May 2001 Dan Stanford letter, which referred to communications from Attorney Craig Higgs to the effect that the legal advisers' insurer had paid as much as it was going to pay. Micheli's declaration was provided to authenticate that letter as one he received while representing Panther in the settlement negotiations. This objection was overruled, and plaintiff contends this ruling was error, because the statements by Attorney Higgs within the Dan Stanford letter were hearsay. However, plaintiff does not show how those factual contentions were essential to his case, such that this evidentiary error, if any, could be considered to be prejudicial in light of the entire record. For example, plaintiff's previous settlement offer of $695,000 in June 2000 could reasonably be considered to put the settlement in perspective, so that the May 2001 settlement after mediation for a larger amount was not shown to be inadequate on its face. Any evidentiary error was therefore harmless in admitting the Stanford letter. (Carnes, supra, 126 Cal.App.4th at p. 694.)
To the extent that plaintiff still contends that he could have recovered more from the legal advisers, Hecht Solberg, on the grounds that they allowed or assisted in the wrongful foreclosure proceedings by FAMF, that question must be viewed in light of all the circumstances about the settlement reached after mediation, as above. In these summary judgment proceedings, the trial court properly determined that Mazzarella, as the moving party, had brought forward sufficient evidence to make a prima facie showing that there was no evidence to suggest that plaintiff would have recovered more than he received in settlement, if this legal representation had been different. Further, there is no basis to conclude that Mazzarella should have insisted upon staying this action against the legal advisers, to await the outcome of the collection efforts, rather than settling it after mediation, or for us to conclude that the timing of the settlement caused any form of loss.
Viewed in the proper light, it is clear that this settlement was reached through negotiation, mediation, and before any ruling had been made on the statute of limitations defense, and in light of the progress of posttrial proceedings in the underlying case. All those variables, as identified in case law, tend to support a conclusion that the legal advisers' settlement was an accurate assessment of potential liability, such that no remaining questions exist on causation of injury based on the part that Mazzarella played in it. (Barnard, supra, 109 Cal.App.4th at pp. 1461-1463; Jalali, supra, 109 Cal.App.4th at p. 1771.)
D. Issues Regarding Losses in Third Underlying Action
The global settlement included a dismissal of an appeal in this unsuccessful defamation/interference with economic advantage action against Park. In its ruling, the trial court stated Mazzarella had adequately demonstrated an entitlement to summary adjudication that there was no causation of loss from the defamation action outcome, because " (1) Panther himself recognized that the case had been tried by competent counsel [citation]; and (2) as noted above, Panther and his family were looking for an end to the litigation [citation]."
In his opposition to the motion, plaintiff contended that triable issues existed about this variety of Mazzarella's malpractice, mainly because of the series of events leading to the disqualification of the MDC firm, due to its hiring of contract counsel who had previously worked for one of Panther's adversaries. That led to extensive litigation and appeals and attorney fees expended on those disqualification issues. It also allowed Park time to find a new witness who persuasively testified at trial, where Panther lost. He apparently believes that it was mainly the delay that caused this loss. However, Mazzarella made a showing that Panther's new trial motion was denied in that matter, on the basis that there was other independent evidence to support the defense verdict. This circumstance strongly suggests that the third underlying case was not a winning case, regardless of the delay caused by the disqualification problems.
In response, plaintiff was required to demonstrate the existence of triable issues of material fact on causation and resulting damage. (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th 826, 850-851.) His theory is that there was at least $1 million of available insurance to Park for the alleged defamation and interference claims, but he was unable to prevail because of the delay and the additional investigation time that it allowed the Canadians. Plaintiff also argues that merely because he testified he did not see any flaws in the presentation of his case by Tom Laube, that does not mean that serious damage to the case had not already occurred before, such as reducing the amount of trial preparation time and evidence that were available. He contends that he should be able to go to trial on this "case within a case."
We disagree. This portion of the global settlement is equally subject to the causation rules outlined in Barnard, supra, 109 Cal.App.4th 1453 and Viner, supra, 30 Cal.4th 1232, that the appropriateness of a settlement can be analyzed in hindsight, but only in light of all its uncertainties: unpredictable appellate court rulings on the remaining disqualification writ, future availability of evidence to each side, or the cost-benefit analysis of pursuing appellate proceedings that might lead to a different trial upon remand, as opposed to settling and waiving costs. (Barnard, supra, at pp. 1461-1463; Jalali, supra, 109 Cal.App.4th at p. 1771.) It is only speculative to assume that the difficulties with obtaining recovery from Park on defamation and business torts claims were due to any erroneous legal decision making in the conduct of the litigation.
Plaintiff did not successfully carry his burden to show that the summary adjudication/judgment motion and its showing regarding causation were faulty, as to Mazzarella. Rather, we agree with the trial court that plaintiff did not produce evidence to justify a finding of triable issues of fact about whether, without any legal malpractice occurring, plaintiff would have recovered more at trial or in collection than he received in settlement of any of his claims. Nor does the record as a whole support a conclusion that any factual issues remain about damages, based on any argument these settlements were inadequate in light of all the variables and circumstances.
On appeal of summary judgment, " 'we review the record de novo, considering all the evidence set forth in the moving and opposition papers except that to which objections have been made and sustained. [Citations.]' [Citations.]" (Smith v. Wells Fargo Bank, N.A. (2005)135 Cal.App.4th 1463, 1472, citing Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.) The comprehensive and analytical nature of this order, and the clarification order, show that the trial court appropriately considered and reached the merits of the respective showings. It reached the correct conclusions and did not abuse its discretion nor prejudicially misapply the law in rendering its rulings.
DISPOSITION
Summary judgment for Mazzarella is affirmed. The request for judicial notice is denied. Costs are awarded to respondent.
WE CONCUR: McDONALD, J., McINTYRE, J.