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Keywords

contractlawsuitdefendantattorneynegligenceliabilityappealverdictwrongful terminationcorporationpiracy

contractplaintiffdefendantattorneynegligenceliabilityappealmalpracticewillcorporation

Related Cases

Skarbrevik v. Cohen, England & Whitfield, 231 Cal.App.3d 692, 282 Cal.Rptr. 627

Facts

Gunnar Skarbrevik was a 25% shareholder in American Pacific Insurance Brokers, Inc. He filed a lawsuit against the corporation and its majority shareholders, alleging wrongful termination and other claims. After settling with the corporation, he pursued claims against the attorney defendants for conspiracy to defraud and professional negligence. The jury found in favor of Skarbrevik, but the Court of Appeal later reversed the decision, stating that the attorney owed no duty to the minority shareholder.

At one time, plaintiff Gunnar Skarbrevik was an officer, director, employee, and 25 percent shareholder of American Pacific Insurance Brokers, Inc. (“American Pacific” or “corporation”) together with Martin Erlich, Jerry Greenblatt, and Dale Potter, each of whom also was an officer, director, employee, and 25 percent shareholder of the corporation.

Issue

Did corporate counsel owe a legal duty to the minority shareholder, and could he be held liable for professional negligence or conspiracy to defraud?

The principal questions presented in this appeal concern the liability of counsel of a close corporation to a minority shareholder for professional negligence, and the liability of a corporate attorney for conspiring with majority shareholders to defraud the minority shareholder by wrongfully diluting his interest in the corporation.

Rule

An attorney generally does not owe a duty to a third party not in privity of contract with him, and liability may only arise under limited exceptions where the third party is an intended beneficiary of the attorney's services.

An attorney generally will not be held liable to a third person not in privity of contract with him since he owes no duty to anyone other than his client.

Analysis

The court determined that Comis, as corporate counsel, had no legal duty to Skarbrevik, as he was not in privity of contract with him. The court emphasized that the attorney's primary obligation was to the corporation, not to individual shareholders, and that the actions taken by Comis were intended to benefit the corporation rather than to harm Skarbrevik. Therefore, the claims of professional negligence and conspiracy were not valid.

We agree that the court erred in submitting the theory of professional negligence to the jury. A key element of any action for professional malpractice is the establishment of a duty by the professional to the claimant. Absent duty there can be no breach and no negligence.

Conclusion

The Court of Appeal reversed the jury's verdict in favor of Skarbrevik, concluding that the attorney defendants owed no legal duty to him and could not be held liable for the alleged misconduct.

For these reasons, we reverse the judgment.

Who won?

Stuart A. Comis and the law firm of Cohen, England & Whitfield prevailed in the case because the court found that they owed no legal duty to the minority shareholder, thus negating the claims of professional negligence and conspiracy.

We hold that defendant attorneys owed no legal duty to plaintiff, and thus conclude that the court erred in submitting the theory of professional negligence to the jury.

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