Flatt v. Superior Court

885 P.2d 950, 9 Cal. 4th 275, 36 Cal. Rptr. 2d 537, 94 Daily Journal DAR 18189, 94 Cal. Daily Op. Serv. 9809, 1994 Cal. LEXIS 6585
CourtCalifornia Supreme Court
DecidedDecember 28, 1994
DocketS031687
StatusPublished
Cited by247 cases

This text of 885 P.2d 950 (Flatt v. Superior Court) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Flatt v. Superior Court, 885 P.2d 950, 9 Cal. 4th 275, 36 Cal. Rptr. 2d 537, 94 Daily Journal DAR 18189, 94 Cal. Daily Op. Serv. 9809, 1994 Cal. LEXIS 6585 (Cal. 1994).

Opinions

Opinion

ARABIAN, J.

We granted review in this legal malpractice action to consider the scope of an attorney’s duty to give advice when severing a relationship with a new or prospective client after learning that the representation—involving the filing of a lawsuit—would conflict irreconcilably with the duty of loyalty owed to an existing client, the target of the contemplated litigation. We conclude that the requirement of undivided loyalty to the first client negates any duty on the part of the attorney to inform the second client [279]*279of the statute of limitations applicable to the proposed lawsuit or even of the advisability of seeking alternative counsel, the two purported advisory duties that form the basis for this action for damages against the attorney by the second client.

Our holding is narrow, confined to the circumstances typified by this case —one in which the attorney is confronted with a mandatory and unwaivable duty not to represent the second client in light of an irremediable conflict with the existing client and acts promptly to terminate the relationship after learning of the conflict. We caution the bar that, in the absence of such an irreducible conflict and mandatory duty to withdraw, an attorney’s duty to advise a new or even a “prospective” client, once the nonengagement decision has been taken, may well be more extensive; that, however, is a separate question, one not implicated by the principle of attorney loyalty that is the focus of our concern in this case.

I

Our account of the facts is taken from the record before the superior court in ruling on defendants’ motion for summary judgment; that is, we review the trial court’s decision de novo, applying the rule that “[a] defendant is entitled to summary judgment if the record establishes as a matter of law that none of the plaintiff’s asserted causes of action can prevail. [Citation.] To succeed, the defendant must . . . demonstrate that under no hypothesis is there a material issue of fact that requires the process of a trial.” (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107 [252 Cal.Rptr. 122, 762 P.2d 46].)

William Daniel owned a two-thirds interest in a steel business and related assets acquired in a 1980 transaction structured by his then attorney, Donald Hinkle. On June 20, 1989, in the course of a marital dissolution proceeding, a superior court judge ruled that Daniel’s wife had a community interest in the steel business and entered an interlocutory order to that effect. Unhappy with that result and believing it was the outcome of faulty lawyering by Hinkle in devising the 1980 acquisition, Daniel telephoned defendant Gail Flatt, an attorney with the defendant O’Brien law partnership, on July 20, 1989, one month after the decree was filed, and discussed his grievance. He arranged to meet personally with Flatt on July 27.

During an hour-long meeting on July 27, Daniel disclosed confidential information to Flatt concerning the conduct of Hinkle in structuring the 1980 transaction and turned over several documents bearing on that event. According to Daniel’s subsequent declaration, filed in opposition to defendants’ [280]*280motion for summary judgment, Flatt told him that he “definitely” had a claim for legal malpractice against Hinkle arising out of the dissolution proceeding and the antecedent purchase of the steel business.

In a letter dated August 3, a week after the July 27 meeting, Flatt returned Daniel’s documents and advised him she could not represent him “in an action against [Hinkle]” because her firm “has a conflict ... in that we represent [Hinkle’s firm] in an unrelated matter.” At his deposition, Daniel later recalled that he understood Flatt's firm had declined to represent him and that he would need to continue his search for counsel (“[They said,] ‘Hey, we can’t represent you. We’ve got a conflict of interest.’ Fine. . . . you can’t represent me. So I’ve got to find somebody else”). He put off that search for a year and a half, however, because of other matters.

On June 3, 1991, almost two years after the July 27 meeting, Daniel filed this suit against the Hinkle firm (with respect to matters arising out of the 1980 business acquisition and the 1987 interlocutory decree) and Flatt and the other partners of her firm (collectively, Flatt). The latter claim alleged that Flatt had breached a duty to Daniel to advise him of the statute of limitations governing his claims against Hinkle and to seek other counsel in order to avoid having those claims time-barred; Daniel sought damages for legal malpractice against Flatt and her firm in the event that the court determined that the claims against Hinkle were barred by the statute of limitations.

Following discovery, Flatt moved for summary judgment on the ground that she owned no duty to advise Daniel as alleged in the complaint, because any advice concerning the statute of limitations governing the claim against Hinkle or to seek other counsel with respect to that matter would have been contrary to Hinkle’s interests. The trial court declined to grant defendants’ motion for summary judgment, reasoning that there were triable issues of fact material to the issue of whether an attorney-client relationship had arisen between Flatt and Daniel; Flatt then sought a writ of mandate from the Court of Appeal.

After that court refused to intervene, Flatt pursued relief here. We granted her petition for review and transferred the cause to the Court of Appeal for issuance of an alternative writ. The ensuing decision by a divided court affirmed the ruling of the trial court. The majority’s reasoning was confined entirely to the question of whether, as a result of the July 27 meeting and surrounding circumstances, Daniel had become a client of Flatt and her firm, and specifically whether issues of fact material to a resolution of that question remained for trial. After sifting through the record made by the [281]*281parties in the trial court and reviewing the case law governing the formation of the attorney-client relationship, the majority concluded that a professional relationship could have been formed under the version of the meeting alleged by Daniel; it therefore declined to disturb the trial court’s ruling denying defendants’ motion for summary judgment on the ground that facts material to that issue remained in dispute.

The dissenting justice reasoned that the dispositive issue was not whether Daniel had become a client of Flatt as a result of the July 27 meeting, but assuming he had, whether Flatt thereby owed a duty to advise him of the statute of limitations governing his contemplated malpractice claim against Hinkle and the advisability of retaining other counsel to pursue it. As will appear, we agree in part with the reasoning of the dissenting Court of Appeal justice. In our view, assuming that the circumstances of the July 27 meeting were sufficient to make Daniel a client of Flatt, her duty of loyalty to Hinkle, the firm’s existing client, required her both to sever any professional relation with Daniel promptly upon learning of the conflict and, as a legal complement to that obligation, absolved her of a duty to provide any

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Cite This Page — Counsel Stack

Bluebook (online)
885 P.2d 950, 9 Cal. 4th 275, 36 Cal. Rptr. 2d 537, 94 Daily Journal DAR 18189, 94 Cal. Daily Op. Serv. 9809, 1994 Cal. LEXIS 6585, Counsel Stack Legal Research, https://law.counselstack.com/opinion/flatt-v-superior-court-cal-1994.