Madera-Font v. Smilow

Filed 2/28/07 Madera-Font v. Smilow CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from a judgment of the Superior Court of Orange County, Peter J. Polos, Judge. Affirmed.

Lee A. Wood & Associates, Lee A. Wood, Jeffrey R. Salberg; Levine, Salberg & Jorgensen and Richard A. Jorgensen for Plaintiff and Appellant.

Reback, McAndrews & Kjar, James J. Kjar, Cindy A. Shapiro and Timothy J. Gonzales for Defendants and Respondents.

* * *

Introduction

Rene Madera-Font, M.D., was expelled from a general partnership, and sued for breach of the partnership agreement, breach of the implied covenant of good faith and fair dealing, and breach of fiduciary duty. A jury found in favor of the partnership and against Madera-Font on all causes of action.

Madera-Font then sued his attorney for legal malpractice, claiming his attorney should also have asserted a claim for wrongful termination of employment in violation of public policy in the underlying partnership action. The trial court granted the attorneys motion for summary judgment in the legal malpractice action because Madera‑Font could not prove the element of causation.

We affirm. If a claim of wrongful termination of employment in violation of public policy had been asserted, the same facts would have been alleged as those that were alleged in support of Madera-Fonts claims for breach of contract and breach of the implied covenant of good faith and fair dealing. The trial court correctly determined, as a matter of law, the issues had already been decided against Madera-Font, and he was therefore collaterally estopped from asserting them again in a legal malpractice action.

In any event, Madera-Font could not assert a claim for wrongful termination of employment, given that he was a partner, not an employee, of the partnership. Although Madera-Font claims he was a partner in name only, the undisputed evidence presented to the trial court the written partnership agreement, the supplement to the partnership agreement signed by Madera-Font, and Madera-Fonts tax documentation showed Madera-Font was a partner, not an employee. Therefore, a claim for wrongful termination of employment was not available to him, and his attorney in the underlying action could not have committed legal malpractice by failing to assert such a claim.

Statement of Facts

Madera-Font is a medical doctor, and was a class B partner in the Hemet Emergency Medical Group (the partnership). In December 2000, and again in November 2001, the partnership warned Madera-Font in writing that his conduct in the following respects needed improvement: (1) verbal abuse of the nursing staff; (2) taking personal phone calls while on duty and leaving the emergency room unattended; (3) failing to complete medical charts in a timely fashion; (4) failing to see patients in a timely manner, leading to long delays in the emergency room; and (5) leaving the emergency room unattended to participate in department meetings.

In January 2002, Madera-Font was expelled from the partnership under section 13 of the partnership agreement, which reads in relevant part: Upon the occurrence of any of the following events, a Partner shall be expelled from the Partnership by a majority vote of the Class A Partners . . . : [] . . . [] (c) Professional or personal conduct of a Partner . . . which prejudicially affects the Partnerships business, or is detrimental to the other Partners or the Partnership, or constitutes a willful breach of this Agreement. Madera-Font contended he was expelled from the partnership because he would not sign incomplete and inaccurate medical charts, which would be a violation of Health and Safety Code section 32128.

Madera-Font retained Edward Lister Smilow and the law firm of Wentworth, Paoli & Purdy to represent him in a lawsuit against the partnership. (We will collectively refer to the attorney and the law firm as Smilow.) Smilow filed a complaint on behalf of Madera-Font and against the partnership for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, and (3) breach of fiduciary duty. A jury found in favor of the partnership on all three causes of action, and judgment was entered. (Causes of action for breach of the common law right to fair procedure and intentional infliction of emotional distress were also alleged in the complaint. Those causes of action were not submitted to the jury, and the appellate record does not tell us how they were resolved.)

Madera-Font then sued Smilow for legal malpractice. Smilow moved for summary judgment; the trial court granted the motion and ruled, in pertinent part, as follows: While there may be a triable issue of fact as to whether defendants acted below the standard of care for failing to allege wrongful discharge in violation of pub[l]ic policy the Court finds no causation had that cause of action been alleged. . . . [] (Notes: Although there are some differences in the elements of the causes of action alleged in the underlying suit and the wrongful discharge cause of action that was not alleged, the primary issue is whether the jury decided that the alleged act in violation of public policy was a motivating reason for the discharge. That element, whether it was a motivating reason is the real difference between what was alleged and not alleged. The Court finds as a matter of law that the issue was decided by the jury against the plaintiff. The same facts as alleged here were raised in the breach of contract and the breach of covenant of good faith and fair dealing causes of action in the underlying suit. The jury was not persuaded by these facts and found no such violations of law. The gravamen of those claims in the underlying suit were essentially that he was fired in retaliation for failing to sign incomplete medical records and charts, the exact issues he is now raising. Judgment was entered, and Madera-Font timely appealed.

Discussion

I.

Standard of Review

A trial court properly grants summary judgment where no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law. [Citation.] We review the trial courts decision de novo, considering all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports. [Citation.] In the trial court, once a moving defendant has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, the burden shifts to the plaintiff to show the existence of a triable issue; to meet that burden, the plaintiff may not rely upon the mere allegations or denials of its pleadings . . . but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action . . . . [Citations.] (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476-477; see Code Civ. Proc., 437c, subd. (p)(2).)

II.

Collateral Estoppel

In a legal malpractice action arising from a civil proceeding, the elements are (1) the duty of the attorney to use such skill, prudence, and diligence as members of his or her profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the breach and the resulting injury; and (4) actual loss or damage resulting from the attorneys negligence. [Citations.] (Coscia v. McKenna & Cuneo (2001) 25 Cal.4th 1194, 1199-1200.) In this case, the trial court found summary judgment was proper because Madera-Font could not prove the element of causation. In other words, Smilows failure to plead a cause of action for wrongful termination of employment in violation of public policy did not, as a matter of law, cause Madera-Font to lose the underlying partnership case. We agree.

The jury in the underlying case found the partnership did not breach the partnership agreement with Madera-Font, did not breach the covenant of good faith and fair dealing, and did not breach any fiduciary duty owed to Madera-Font. To reach those findings, the jury must have found Madera-Fonts conduct prejudicially affect[ed] the Partnerships business, or [was] detrimental to the other Partners or the Partnership, or constitute[d] a willful breach of this Agreement and Madera-Font was not expelled from the partnership because he refused to violate Health and Safety Code section 32128. Given those implied findings, the jury could not have found the partnership wrongfully terminated Madera-Font in violation of public policy.

Madera-Font argues the doctrine of collateral estoppel is inapplicable in a legal malpractice action. In support of this argument, he cites three cases: Ruffalo v. Patterson (1991) 234 Cal.App.3d 341, Garcia v. Borelli (1982) 129 Cal.App.3d 24, and Pete v. Henderson (1954) 124 Cal.App.2d 487. As we will explain, however, the rule enunciated by those cases is not applicable here.

In Ruffalo v. Patterson, supra, 234 Cal.App.3d at page 342, the defendant attorney negligently advised the plaintiff wife to characterize certain property as community property rather than as the plaintiffs separate property. Because of that negligent advice, the trial court conclusively adjudged the property to be community property. (Id. at pp. 342‑343.) In a later legal malpractice action, the defendant argued collateral estoppel barred the plaintiff from relitigating the issue whether the property was separate or community. (Id. at p. 343.) The appellate court refused to allow collateral estoppel to be used to bar the malpractice action. To hold otherwise would be to rule that where an attorneys negligence has caused a court to make an erroneous adjudication of an issue, the fact that the court has made that adjudication absolves the attorney of all accountability and responsibility for his negligence. That cannot be and is not the rule. (Id. at p. 344.)

In Garcia v. Borelli, supra, 129 Cal.App.3d at page 29, the defendant attorney was sued for legal malpractice by the child and grandchildren of the defendants deceased client; the plaintiffs alleged the defendant had negligently advised the decedent regarding the distribution of his estate, and had represented the decedents wife in a way that caused harm to the decedents estate. The defendant argued the lawsuit was barred by collateral estoppel because the plaintiffs had settled their differences with the decedents wife as to the distribution of the decedents estate in a probate court proceeding. (Id. at pp. 29‑30.) The appellate court disagreed: It is settled that intended beneficiaries of a will who lose their testamentary rights because of failure of the attorney who drew the will to properly fulfill his obligations under his contract with the testator may recover damages as third party beneficiaries and also on a tort liability for breach of duty owed directly to the beneficiaries. [Citations.] [] This alleged misconduct on the part of respondent, giving rise, as the above cited authorities establish, to causes of action based on both contract and tort, could not possibly have been litigated in the probate court proceeding. (Id. at p. 32.)

In Pete v. Henderson, supra, 124 Cal.App.2d at page 489, the defendant attorney filed a notice of appeal from a judgment one day late. The plaintiff client sued the defendant for malpractice; the defendant conceded his negligence in failing to timely appeal, and admitted his liability for the fee advanced by the plaintiff to pursue the appeal. (Id. at pp. 488‑489.) The trial court refused to allow any evidence regarding the merits of the untimely appeal, on the ground the underlying judgment had become final and could not be collaterally challenged, and therefore granted a motion for nonsuit in favor of the defendant. (Id. at p. 489.) The appellate court reversed: The judgment in the first action, as between the parties to that action, is final. The purpose of the present action is not to reverse that judgment. It has been finally determined that the judgment creditor in the first action is entitled to that money. The appellant is not trying to gain recoupment from that judgment creditor. He is seeking to recover damages from his attorney, who was not a party to the first action, for his negligence in permitting the judgment to become final without taking an appeal. If he can prove that the judgment in that case was erroneous and would have been reversed, he should be permitted to do so. In that event he has proved damage proximately caused by the negligence. If this were not the rule, attorneys would be placed in a special class, in that they, unlike other persons, would be freed from liability for certain damages directly and proximately caused by their negligence. There is no reason for placing them in such a special class. (Id. at p. 490.)

The cases cited by Madera-Font are not applicable to the situation presented here. Smilows allegedly negligent conduct did not cause the result Smilow now claims collaterally estops Madera-Font. This case is to be distinguished from one where the attorneys negligent performance during trial, such as by failing to offer the key piece of evidence, leads directly to a result contrary to the client. In that situation, the rule set forth by the above cited cases would apply.[1] Collateral estoppel comes into play here because the legal malpractice complaint did not allege Smilow negligently tried the case; rather, it alleged another cause of action could have been raised, but was not. That supposed cause of action, however, is flawed because of the jurys implied findings that the partnership did not violate any of Madera‑Fonts rights under the partnership agreement and that he was not expelled for any refusal by him to violate the law. Thus, Madera‑Font raised those same claims at trial, but the jury rejected them.

III.

Employee vs. Partner

Even if collateral estoppel did not bar Madera‑Fonts claim for legal malpractice, we would still conclude the trial court correctly granted Smilows motion for summary judgment, because a claim for wrongful termination of employment in violation of public policy could not have been asserted on behalf of Madera-Font, given his status as a partner, not an employee.[2] In Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 178, our Supreme Court held an employee may pursue a tort action for wrongful discharge if the employer conditions employment upon the employees participation in unlawful conduct. In Sistare-Meyer v. Young Mens Christian Assn. (1997) 58 Cal.App.4th 10, 17-18, the appellate court reiterated the rule that a Tameny claim is available only to employees, and held an independent contractor cannot assert a claim for wrongful termination of employment in violation of public policy.

Madera-Font argues that despite being labeled a partner, he was actually an employee, and therefore could have asserted a cause of action for wrongful termination of employment in violation of public policy. Madera-Font relies, in part, on Labor Code section 3351, which defines an employee as every person in the service of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed, and includes: [] . . . [] . . . All working members of a partnership or limited liability company receiving wages irrespective of profits from the partnership or limited liability company. (Lab. Code,  3351, subd. (f).)

There are two significant problems with this argument. First, this definition applies only to the portions of the Labor Code dealing with workers compensation and insurance. (Lab. Code,  3350.) More importantly, though, Madera-Font did not receive wages irrespective of profits from the partnership. Quite to the contrary, the partnership agreement specifies that the managing partner shall receive a guaranteed payment for providing management and administrative services, and the class C partners shall receive guaranteed monthly payments which are to be determined without regard to the income of the partnership. Under section 5 of the agreement, income for class B partners, like Madera‑Font, comes from the Partnerships profits and losses . . . on the basis of each Partners proportionate hours worked during a month. Madera-Font specifically agreed in writing to share in the profits and losses of the Partnership as a Class B Partner as set forth in Section 5 of the Partnership Agreement. He also received a K‑1 form for tax purposes, and reported his income on his income tax returns as a partner.

Madera‑Font next argues that because the class A partners had the authority to manage and control his work, he was an employee, rather than a partner, of the partnership. Taken to its logical extreme, this argument would transform all nonmanaging partners of all partnerships into employees, an idea that would certainly surprise the partners of most law firms and accounting firms. Quite simply, the fact one or more partners in a partnership make decisions affecting the working life of other partners does not transform the nonmanagerial partners into employees.

The partnership agreement clearly specifies the partnership is a general partnership. Nothing in the agreement supports the argument the class A and class B partners are employees rather than partners. Madera-Font signed a supplement to the partnership agreement, confirming he had read the agreement and agreed to be bound by all of its terms and provisions. Madera‑Font received a K‑1 form from the partnership and reported his income as a partner. There are no disputed material facts regarding Madera‑Fonts status as a partner, and the trial court could have granted summary judgment on the ground a claim for wrongful termination of employment in violation of public policy could not have been asserted by Madera-Font, a partner.

Disposition

The judgment is affirmed. Respondents to recover costs on appeal.

FYBEL, J.

WE CONCUR:

SILLS, P. J.

MOORE, J.

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Analysis and review provided by La Mesa Property line attorney.

[1] Madera-Font claims Smilows conduct in the underlying case fell below the applicable standard of care because Smilow failed to communicate to Madera-Font a settlement offer made by the partnership, failed to engage in meaningful third party discovery, and failed to subpoena witnesses to testify at trial. These issues were not raised in the legal malpractice complaint, and were not mentioned in Madera-Fonts responses to discovery. The complaint did not specify any acts falling below the applicable standard of care. In response to an interrogatory asking Madera‑Font to state all facts supporting his contention that Smilow breached any duty owed to him, Madera-Font replied, Edward Smilow failed to perform any such duty and is, thus, negligent in that he failed to plead a cause of action for wrongful termination in violation of public policy. Further, Edward Smilow failed to move for leave to amend the complaint once he became aware of the fact that a cause of action of wrongful termination in violation of public policy was not pled. Madera‑Font also responded that the outcome of the underlying case would have been different if the wrongful termination cause of action had been alleged because he would have been able to present evidence with respect to the regulatory violations that [Madera‑Font] reported to defendants in the underlying action. Further, the court would have instructed the jury regarding the four elements to establish wrongful termination in violation of fundamental public policy.

[2] Although the trial court granted summary judgment on another ground, supplemental briefing is not required under Code of Civil Procedure section 437c, subdivision (m)(2), because the issue was fully briefed in the trial court and on appeal. (Syngenta Crop Protection, Inc. v. Helliker (2006) 138 Cal.App.4th 1135, 1175, fn. 16; Byars v. SCME Mortgage Bankers, Inc. (2003) 109 Cal.App.4th 1134, 1147, fn. 7.)