SAN DIEGO, CA – Klinedinst attorneys Heather L. Rosing, Dan Lawton, and David M. Majchrzak filed an amicus brief today in the California Supreme Court in the matter of Masellis v. Law Office of Leslie F. Jensen, et. al., 50 Cal.App.5th 1077 (2020) on behalf of legal malpractice insurer AXA XL. The team’s brief argues that the Court of Appeal’s recent application of law in this “settle-and-sue” case merits review by the highest court in the State. Specifically, the amicus curiae letter asks the Court to settle questions raised by Masellis that could have a significant impact on all lawyers, their clients, and their insurers across California.
The Masellis case concerns the rules of proof that apply in California “settle-and-sue” actions. In such cases, the plaintiff challenges a prior settlement as an act of lawyer malpractice and argues the lawyer-defendant could have negotiated a better deal.
Existing law requires plaintiffs to prove causation and damages to a legal certainty. They must demonstrate that, if not for the lawyer-defendant’s malpractice, the plaintiff would certainly have received more money in a settlement or after a trial. The law also forbade juries from speculating about whether the lawyer-defendant might have gotten her former client a better deal. It required plaintiffs to prove to a legal certainty that a challenged settlement was so unreasonably low (or high) as to fall below the standard of care.
In the amicus letter, the Klinedinst team argues that the Court of Appeal’s decision in Masellis wrongly rewrites or at least muddles these rules.
In the Masellis case, Masellis had obtained a divorce settlement which included $1.2 million in cash and $20,000 per month in spousal support. After securing the settlement, she discharged her lawyer (Jensen) and sued her, alleging the defendant could have secured a better deal.
When the case was heard, the jury agreed and awarded Masellis damages. Jensen appealed, arguing that Masellis should have had to prove that she certainly would have done better had she rejected the settlement. However, the Court of Appeal affirmed the judgment in Masellis’ favor.
With its published decision, the Court of Appeal effectively weakened the legal certainty standard that the original trial judge rightfully should have applied. In their filing, Klinedinst lawyers point out that the decision exposes thousands of settlements to speculative second-guessing by juries and paid expert witnesses. The decision harms lawyers’ ability to negotiate and advise their clients about out-of-court settlements. It also threatens increased liability insurance premiums for lawyers and law firms, raising the cost of law practice and threatening clients with higher fees boosted to cover that increased cost. California’s strong policy favoring out-of-court settlements, the letter argues, will suffer unless the Supreme Court intervenes and reverses Masellis.
The Supreme Court is expected to decide whether to grant or deny review in Masellis by the end of September. If the court should grant review, then the parties and other amici would have the chance to file comprehensive briefs on the matter and ask the court for a decision on the merits of the case.
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