Viner v. Sweet, 2004 WL 869671 (Cal. App. 2 Dist.)
Brief SummaryThe Viners sued their former attorneys, Charles A. Sweet and his firm, Williams & Connolly ("firm" or "law firm"), for negligently representing them in the sale of their ownership interest in Dove Audio, Inc. ("Dove"), to Media Equities International ("MEI") and termination of their employment with Dove. The jury found in the Viners’ favor on each of seven malpractice claims and awarded them $13,291,532 in damages. The law firm appealed and the California Supreme Court held that a plaintiff in a transactional malpractice action is required to show that, but for the alleged malpractice, plaintiff would have more likely than not obtained a more favorable result. Since this standard was more pro-defendant than the one that the trial court had used, the Supreme Court reversed the decision and remanded the case for further proceedings.
On remand, the appellate court ruled that the Viners had only provided sufficient evidence on two of the seven claims, determined that the trial court erred in denying the firm's motion for judgment notwithstanding the verdict as to the other five claims, and reduced the damage award to $515,760.
Complete SummaryThe Viners' seven claims were as follows:
At trial, the court had instructed the jury that in a claim for professional negligence, the plaintiff must establish that the defendants were negligent and that this negligence caused plaintiffs to suffer damage, loss or harm. To define "cause," the court instructed according to BAJI no. 3.76: "[t]he law defines cause in its own particular way. A cause of damage, loss or harm is something that is a substantial factor in bringing about [ ] damage, loss or harm." The jury found in favor of the Viners as to all seven claims and awarded damages of $13,291,532.
In light of the Supreme Court's opinion, the appellate court held that this causation instruction was insufficient, in that it did not require the Viners to prove that they would have achieved a more favorable result absent the firm's negligence. The firm conceded the two claims regarding producer credit and series "E:" preferred stock. As to the other five claims, the court reviewed the testimony of MEI's principal, Ronald Lightstone, who testified that he considered the broadest possible non-competition clause to be essential to the transaction. He would not have given it up, and he was unwilling to increase the basic economic value of the transaction to the Viners. Considering this unrefuted evidence, the court ruled that it was at least "reasonably probable" that the verdict was affected by the omission of a "more favorable result" instruction and that the jury would not have awarded the amount of damages it did had it been properly instructed.
Along these same lines, the court held that the trial court erred in denying the firm's motion for judgment notwithstanding the verdict as to the five claims the firm did not concede. The Viners presented no evidence indicating that, but for the firm's negligence, they would have more likely than not obtained a more favorable result in their negotiations. Had the Viners chosen to walk away from the transaction because the agreement did not assure them the right to work with business contacts in film and television, they would have remained the principal owners and key employees of Dove. They failed to present any evidence that they would have been better off in that position than under the deal negotiated by the firm. Moreover, had the Viners not terminated their employment, the projects described by their expert witness in her damage analysis would have been opportunities pursued by Dove itself, not the Viners personally. There was no evidence that the Viners would have received increased compensation or enhanced corporate stock value had the transaction with MEI been aborted. As a result, the court modified the judgment as if the firm's motion had been granted as to those five damage claims and affirmed the judgment as modified, awarding the Viners damages of $515,760.
Finally, the court commented as to the Viners' full and fair opportunity to prove their case at trial. The Viners insisted it was unnecessary to prove they would have obtained a more favorable result had the firm not been negligent. They were aware of the fact that the requirement of proof of "but-for" causation in legal malpractice cases was relatively settled at the time of trial. They were on notice of the potential importance of evidence relating to "but-for" causation. Moreover, in their briefs following remand from the Supreme Court, they argued that whether or not they had proven "but-for" causation could and should be answered on the record before the court without a retrial. Accordingly, the Viners were given every opportunity to try their case and produce the required evidence, but they failed to do so.
Significance of the CaseThis opinion cements the rule established by the California Supreme Court that a plaintiff in transactional malpractice cases must establish that but for the attorney's alleged malpractice, the plaintiff would have achieved a more favorable result in his transaction or would, presumably, have been better off with no transaction at all. Both the Supreme Court and Court of Appeals' decisions are likely to be widely discussed as other jurisdictions confront these issues.
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