Loube v. Loube

64 Cal. App. 4th 421
CourtCalifornia Court of Appeal
DecidedJune 1, 1998
DocketA076627
StatusPublished

This text of 64 Cal. App. 4th 421 (Loube v. Loube) 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
Loube v. Loube, 64 Cal. App. 4th 421 (Cal. Ct. App. 1998).

Opinion

64 Cal.App.4th 421 (1998)

ARTHUR A. LOUBE et al., Plaintiffs and Appellants,
v.
IRVING LOUBE et al., Defendants and Respondents.

Docket No. A076627.

Court of Appeals of California, First District, Division One.

June 1, 1998.

*424 COUNSEL

Daniel U. Smith, Bishop, Barry, Howe, Haney & Ryer and Nelson C. Barry for Plaintiffs and Appellants.

Alborg, Veiluva & Cannata, Thomas E. Alborg and Michael J. Veiluva for Defendants and Respondents.

[Opinion certified for partial publication.[*]]

OPINION

STEIN, J.

Appellants Arthur A. Loube and Janice Temple filed an action against their former attorneys, the law firm of Loube, Klein, Sacks & Associates. They appeal from a judgment that they take nothing by their complaint and that respondents be awarded attorney fees. We affirm the judgment but reverse the attorney fee award.

Background

Appellants were limited partners in a real estate partnership. They hired respondents to prosecute an action brought by them against general partners Paul Klapper and Robert Yick. Respondents filed a complaint on appellants' behalf, and ultimately took default against both Klapper and Yick. Following a prove-up hearing, each appellant was awarded $248,102 compensatory damages, $200,000 punitive damages and $7,431 attorney fees and costs. Klapper and Yick filed a motion for relief from default, asserting among other matters that the damages award was improper because no specific *425 amount of damages had been stated in the complaint. The trial court denied the motion, but amended the judgment to reduce the award of compensatory damages to the jurisdictional minimum of $25,000.

Appellants then instituted the present action against respondents, claiming professional negligence, constructive fraud, breach of fiduciary duty and breach of contract. By their action appellants sought to hold respondents liable for the reduction in the compensatory damages awards, and also sought recovery of what they alleged to be excessive attorney fees. The trial court ruled that appellants could recover for any attorney negligence only to the extent the earlier litigation had not made them whole. The court accordingly required appellants to conduct a "trial within a trial," to prove that had the matter gone to trial they would have received an award of damages exceeding their actual recovery. Concluding that, had the matter gone to trial each appellant would have been awarded no more than $12,850 compensatory damages and would have obtained no award of punitive damages, the court granted respondents' motion for judgment.[1] The court thereafter entered judgment that appellants take nothing by their complaint and that respondents, as the prevailing parties, be awarded their costs. The court later awarded respondents attorney fees in the amount of $117,993. This appeal followed.

Discussion

I.

The Claims for Professional Negligence

(1a) In order to recover on a theory of professional negligence, it is not enough to show that the defendant breached a duty owed to the client; the client also must demonstrate that the breach of that duty caused actual loss or damages. (Budd v. Nixen (1971) 6 Cal.3d 195, 200 [98 Cal. Rptr. 849, 491 P.2d 433].) (2a) The trial court here concluded appellants in fact suffered no damages because the damages awards they in fact received exceeded the value of their claims. Appellants do not dispute the finding that each in fact suffered compensatory damages in an amount no greater than $12,850 as a result of the actions of Klapper and Yick. It follows that by receiving an award of $25,000 compensatory damages and $200,000 punitive damages, each received an award vastly exceeding the loss incurred. Appellants contend, however, that but for the negligence of respondents each would have received an even greater windfall: the $248,102 awarded to each *426 appellant following the uncontested prove-up hearing. In a related argument appellants complain that the trial court failed simply to adopt the measure of damages awarded to them after the prove-up hearing, instead requiring them to conduct a "trial within a trial" to prove the extent of their actual loss and the damages they would have been awarded had the underlying matter been fully litigated.

There appears to be no case directly on point, but appellants' position is unpersuasive for several reasons. First, it is anything but certain that, absent the alleged negligence, appellants would have received a default judgment awarding each of them $248,102 compensatory damages. For that to have occurred respondents would have had to have stated sums in the complaint equal to or greater than $248,102, Klapper and Yick would have had to have failed to respond to the complaint notwithstanding the statement of such sums and, assuming default was taken, the court ruling on a motion for relief from default would have had to deny relief in its entirety. It thus is no more than speculation that appellants would have obtained a judgment of $248,102 but for the alleged negligence of respondents. Speculative damages are not damages supporting an action for professional negligence. (Budd v. Nixen, supra, 6 Cal.3d 195, 200.)

Second, an award of damages that exceeds actual loss runs afoul of the basic principle that damages are awarded to compensate for loss incurred. A client who has been made whole — from whatever source — thus may not maintain an action for professional negligence against her former attorney. (Arciniega v. Bank of San Bernadino (1997) 52 Cal. App.4th 213 [60 Cal. Rptr.2d 495], passim.) It is undisputed here that appellants were more than made whole by the award of $25,000 compensatory damages and $200,000 punitive damages.

Finally, we cannot endorse a rule that determines liability by measuring the amount that a client might have received in connection with a claim, rather than the actual value of the claim. (1b) It is well settled that "... an attorney is liable for malpractice when his negligent investigation, advice, or conduct of the client's affairs results in loss of the client's meritorious claim. [Citation.]" (Gutierrez v. Mofid (1985) 39 Cal.3d 892, 900 [218 Cal. Rptr. 313, 705 P.2d 886], italics added.) "[T]he general rule of damages [is] that when an attorney's negligence `lies in his failure to press a meritorious claim, the measure of damages is the value of the claim lost.' [Citation.] As noted by two leading commentators in the legal malpractice field: `If the injury occurred because of negligence in handling litigation, the measure of direct damage is the difference between the amount of the actual judgment obtained and the judgment which should have been recovered.' *427 [Citation.]" (Granquist v. Sandberg (1990) 219 Cal. App.3d 181, 187 [268 Cal. Rptr. 109].) The question is not what might or even what would have happened absent the alleged malpractice, but what should have happened. This distinction was addressed by the court in Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal. App.4th 820 [60 Cal. Rptr.2d 780]. In that case a client brought suit against a third party, and hired an accounting firm, Arthur Young & Co., to help prepare its case for litigation in the federal court.

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64 Cal. App. 4th 421, Counsel Stack Legal Research, https://law.counselstack.com/opinion/loube-v-loube-calctapp-1998.