GACKSTETTER v. Frawley

38 Cal. Rptr. 3d 333, 135 Cal. App. 4th 1257, 2006 Daily Journal DAR 1014, 2006 Cal. Daily Op. Serv. 786, 2006 Cal. App. LEXIS 75
CourtCalifornia Court of Appeal
DecidedJanuary 25, 2006
DocketB173070
StatusPublished
Cited by33 cases

This text of 38 Cal. Rptr. 3d 333 (GACKSTETTER v. Frawley) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
GACKSTETTER v. Frawley, 38 Cal. Rptr. 3d 333, 135 Cal. App. 4th 1257, 2006 Daily Journal DAR 1014, 2006 Cal. Daily Op. Serv. 786, 2006 Cal. App. LEXIS 75 (Cal. Ct. App. 2006).

Opinion

Opinion

MOSK, J.

I. INTRODUCTION

Attorneys settled a malpractice and negligent misrepresentation action against them by trust beneficiaries and obtained a good faith settlement determination order pursuant to Code of Civil Procedure section 877.6. 1 In a separate probate proceeding, the trust beneficiaries sought relief against the trustee of those trusts for certain derelictions of his trust duties. This dispute was settled. In the case before us, the attorneys were sued by the trustee, whom the attorneys had represented, for various torts related to the services provided the trustee in connection with the trusts. The trial court denied the attorneys’ summary judgment and summary adjudication motions to bar claims based on the good faith determination order.

The attorneys cross-claimed against the trustee for equitable indemnity for monies paid by the attorneys to settle the beneficiaries’ claims against them. The jury found for the trustee against the attorneys, but found that because the trustee was 50 percent at fault and the attorneys were entitled to equitable indemnification, the judgment should be reduced accordingly. The trial court refused to modify the jury’s findings, and a judgment in favor of the trustee for damages was entered.

In the published portion of the opinion, we hold that the attorneys can appeal from the denial of the summary judgment and summary adjudication motions and that, because of the good faith determination, the trial court erred in not granting summary judgment in favor of the attorneys. We conclude that a good faith determination may bar the claims of an unnamed party; the trustee and the attorneys were joint tortfeasors; the trustee’s claims were either for indemnification or in effect for indemnification; and therefore, under section 877.6, the good faith settlement barred the trustee’s claims. Accordingly, we reverse the judgment on the trustee’s first amended complaint.

*1261 In the unpublished portion of the opinion, we affirm the judgment on the attorney’s cross-complaint against the trustee for equitable indemnity. The jury verdict on the cross-complaint is supported by substantial evidence. We remand the matter to the trial court to enter a judgment in conformity with this opinion.

II. BACKGROUND

A. General Allegations and Proceedings

In 1987, defendant, Attorney Patrick Frawley (Frawley), 2 prepared documents establishing two trusts for Agnes Gordon. One trust, the Agnes Gordon Trust (Sisters’ Trust), was to benefit Ms. Gordon’s sisters (Sisters) and to include a house (the Marlin Place Property) so that one of the Sisters would •always have a home. The other trust, the Billy and Agnes Gordon Trust (Charitable Trust), was a residual charitable trust created to establish a program to train dogs to assist hearing-impaired persons. After the creation of the Sisters’ Trust, Agnes Gordon allegedly revoked her will. That will provided for distributions comparable to those provided for by the trusts. Plaintiff Henry C. Gackstetter (Gackstetter), a close friend of Agnes Gordon and her late husband, was the trustee for both trusts. After Agnes Gordon died, Frawley represented her executor and niece, Patricia Murphy (Murphy), in the probate of the estate. According to Gackstetter, Frawley provided legal services to Gackstetter as trustee of the trusts and individually.

By mistake, before Agnes Gordon’s death, Frawley had transferred the Marlin Place Property into the Charitable Trust instead of the Sisters’ Trust. One of the Sisters continued to live in the house, and Gackstetter used funds in the Charitable Trust to maintain the residence. Gackstetter claimed to have made personal loans to the Charitable Trust and to have repaid himself out of trust funds. Gackstetter also mortgaged the Marlin Place Property to obtain $104,000 for himself. He said that money, or some of it, was later used to repay his loans. As trustee for the trusts, Gackstetter failed to prepare accountings, tax returns, and other necessary documents and otherwise failed to maintain proper records. It was necessary to open a probate proceeding for the Agnes Gordon estate because the Sisters’ Trust was not funded, and assets had to be redistributed in view of Frawley’s error. Various proceedings and actions ensued.

1. Sisters’ Petition Against Gackstetter

In the Agnes Gordon probate proceeding, on May 14, 1998, the Sisters filed a petition (Murphy Petition) against Gackstetter alleging a breach *1262 of fiduciary duty in connection with the Marlin Place Property, the taking of money generated by placing a mortgage on that property, and for failure to provide accountings for the trusts. By their petition, the Sisters sought an accounting, appointment of successor trustee, return of trust assets, surcharge of the trustee, and to quiet title. Frawley initially represented Gackstetter in the Murphy Petition proceeding, and Gackstetter signed a retainer fee agreement with Frawley in connection with that representation. Frawley withdrew as counsel after it was disclosed that he caused the Marlin Place Property to be placed in the wrong trust. Gackstetter alleged he thereafter became aware of his own failures to file trust tax returns, prepare trust accountings, and maintain trust records properly. Because of these failures, when records were destroyed in an earthquake, hundreds of hours were required to make proper accountings and to defend the Murphy Petition. In 1999, the Attorney General made claims against Gackstetter in the probate proceeding in connection with alleged mishandling of the Charitable Trust. 3 On July 13, 2000, Gackstetter settled the Murphy Petition claims against him. As part of the settlement, Gackstetter caused the transfer of the Marlin Place Property to the Sisters’ Trust. Gackstetter, although attributing his acts and omissions to Frawley, also settled with the Attorney General on July 13, 2000, by, inter alia, waiving any claim for fees and reimbursement. The probate court approved the settlements.

2. Sisters’ Action Against Frawley

On July 23, 1999, the Sisters sued Patrick Frawley and Doe defendants for malpractice and negligent misrepresentation in connection with placing the Marlin Place Property in the wrong trust and failing to disclose this error. The Sisters also alleged in this action that Frawley represented Gackstetter as trustee, that Gackstetter made misrepresentations regarding the property and took money by placing a mortgage on it, and that claims against Gackstetter had been made by the Murphy Petition. The parties stipulated for the consolidation of discovery in the Murphy Petition proceeding against Gackstetter and in the Sisters’ action against Frawley. On July 20, 2000, after the instant case by Gackstetter against Frawley had been filed, Frawley settled the Sister’s action against him for $104,000, the amount of the encumbrance Gackstetter had placed on the Marlin Place Property. 4

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Bluebook (online)
38 Cal. Rptr. 3d 333, 135 Cal. App. 4th 1257, 2006 Daily Journal DAR 1014, 2006 Cal. Daily Op. Serv. 786, 2006 Cal. App. LEXIS 75, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gackstetter-v-frawley-calctapp-2006.