Amis v. Greenberg Traurig, LLP ( 2015 )

Filed 3/18/15
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
JOHN AMIS, B248447
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC426815)
v.
GREENBERG TRAURIG LLP et al.,
Defendants and Respondents
APPEAL from judgment of the Superior Court of Los Angeles County,
Charles F. Palmer, Judge. Affirmed.
Roger L. Stanard for Plaintiff and Appellant.
Gaims Weil West, Alan Jay Weil and Steven S. Davis for Defendants and
Respondents.
_____________________
INTRODUCTION
In this opinion we again acknowledge our Supreme Court’s near categorical
prohibition against judicially crafted exceptions to the mediation confidentiality statutes
and hold a malpractice plaintiff cannot circumvent mediation confidentiality by
advancing inferences about his former attorney’s supposed acts or omissions during an
underlying mediation.
Plaintiff John Amis (Amis) appeals from a summary judgment in favor of his
former attorneys Greenberg Traurig, LLP, Naoki Kawada and John M. Gatti
(collectively, GT). Amis’s operative complaint alleges GT committed attorney
malpractice by “caus[ing]” him to execute a settlement agreement that converted his
company’s corporate obligations into Amis’s personal obligations without advising Amis
that he had little to no risk of personal liability in the underlying litigation. GT moved for
summary judgment citing Amis’s undisputed admission that all advice he received from
GT regarding the settlement agreement was given during a mediation. Based on this
undisputed fact, GT argued Amis could not obtain evidence to support his claims, and GT
could not produce evidence to defend itself, because the disclosure of such evidence was
barred by the mediation confidentiality statutes. The trial court agreed on both counts
and entered summary judgment for GT. We affirm.
FACTS1 AND PROCEDURAL BACKGROUND
1. The Path Litigation
Amis was a minority shareholder and officer of Pacific Marketing Works, Inc.
(Pacific), a company that exported woman’s clothing apparel to Japan. In 2006, Pacific
1
We draw the material facts largely from GT’s separate statement of undisputed
facts, which Amis either conceded or did not effectively counter with admissible
evidence. (See, e.g., Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins.
Co. (2001) 90 Cal. App. 4th 335, 340, fn. 1 (Chateau Chamberay); R. P. Richards, Inc. v.
Chartered Construction Corp. (2000) 83 Cal. App. 4th 146, 151, fn. 3.) To the extent
Amis offered additional or competing facts on a material issue, we state the evidence
admitted by the trial court in the light most favorable to Amis, as the nonmoving party, in
accordance with the standard of review applicable to summary judgments. (See Aguilar
v. Atlantic Richfield Co. (2001) 25 Cal. 4th 826, 843 (Aguilar).)
2
sued Path Productions, LLC and its principals (collectively, Path) alleging Path breached
a 2002 contract to design apparel for Pacific. Path responded with a cross-complaint
against Pacific, Amis and other Pacific shareholders, alleging, inter alia, breach of
contract, fraud and alter ego liability (the Path Litigation).
In June 2007, while the Path Litigation was pending, Pacific entered into a
proposal for acquisition with a Japanese entity, Sojitz Corporation, which had expressed
interest in purchasing Pacific’s assets. GT represented Sojitz in the proposed transaction.
One of the proposal’s terms required “favorable settlement or resolution” of the Path
Litigation.
Until September 2007, Amis and his co-cross defendants were represented in the
Path Litigation by two law firms—Miller Barondess and Radcliff & Saiki. When those
firms withdrew, Amis and company engaged GT to represent them in the Path Litigation,
and Sojitz agreed to pay GT’s fees for the representation. GT obtained a written conflict
waiver from all interested parties, which included a declaration that its “representation of
[Pacific] and its [shareholders] in the [Path Litigation] will not be compromised or
adversely affected by our representation of Sojitz in connection with [the Pacific
acquisition].”
2. The Path Litigation Is Settled at Mediation
Shortly after GT took over Amis’s representation in the Path Litigation, the parties
engaged in two separate rounds of mediation in October and November of 2007. Amis
attended both mediations. At the November 2007 mediation, the parties negotiated and
executed a written settlement agreement and mutual general release.
Under the settlement agreement, Amis and the other Pacific parties agreed, jointly
and severally, to pay $2.4 million to Path on an agreed payment schedule beginning on
December 26, 2007, in exchange for dismissals with prejudice of each side’s claims and
mutual releases. The parties further agreed to a stipulation for entry of judgment in the
amount of $2.4 million (less any payments made) in favor of Path if the Pacific parties
failed to make the agreed payments when due.
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3. Amis’s Complaint Against GT
Shortly after the parties executed the mediated settlement agreement in the Path
Litigation, Sojitz decided not to acquire Pacific’s assets, leaving Amis and the other
Pacific shareholders without sufficient funds to make the scheduled settlement payments.
In January 2008, Path declared a default and successfully moved for entry of the
stipulated judgment pursuant to the settlement agreement. When Path attempted to
enforce the judgment, Amis and the other Pacific parties declared bankruptcy.
In November 2009, Amis filed the instant action against GT. The operative first
amended complaint asserts three causes of action for breach of fiduciary duty, attorney
malpractice and breach of the conflict waiver. In support of the claims, Amis alleges GT
(1) “failed [to] advise [him] of the risks involved for his personal liability under the
proposed settlement agreement”; (2) “drafted, structured, and caused to be executed a
settlement agreement and stipulated judgment converting the corporate obligations of
[Pacific] into [Amis’s] personal obligations”; and (3) breached the conflict waiver by
“failing to negotiate a settlement that was contingent on Sojitz’s purchase of [Pacific’s]
assets in an amount sufficient to fund the settlement.”
4. GT’s Motion for Summary Judgment
GT deposed Amis in advance of its motion for summary judgment. At his
deposition, Amis admitted that all “discussions,” “explanations,” and “recommendations”
that he had with or received from GT regarding the settlement agreement occurred during
the mediation.2 Amis also admitted that all his claimed damages resulted from executing
the settlement agreement at the mediation.
2
In response to GT’s separate statement, Amis purported to dispute these facts on
the ground that “[t]his evidence [referring to his deposition testimony] is inadmissible
under the provisions of Evidence Code § 1119(c)”—i.e., the mediation confidentiality
statute. As section 1119 shields evidence of “anything said or any admission made” in
the course of a mediation—not evidence of whether a particular topic was ever discussed
outside of mediation—Amis’s objection was wholly unfounded. Further, inasmuch as
Amis merely quarreled with the admissibility of the evidence, but failed to offer any
competing evidence to rebut his deposition admission, these facts are properly regarded
as undisputed. (See, e.g., Chateau Chamberay, supra, 90 Cal.App.4th at p. 340, fn. 1.)
4
Based on the foregoing undisputed facts, GT moved for summary judgment.
Because Amis alleged GT caused him to execute the settlement agreement without
advising him of the implications for his personal liability, and all GT’s discussions with
Amis regarding the settlement agreement occurred during the mediation, GT argued
“[b]oth sides must necessarily rely on communications made in connection with that
mediation in order to prove or rebut [Amis’s] claims.” However, since the mediation
confidentiality statutes barred each side from offering evidence of such communications,
GT argued Amis could not prove an essential element of his claims, nor could it
effectively defend itself against his allegations. Under either circumstance, GT
maintained it was entitled to summary judgment.
Amis opposed the motion with his own declaration and declarations from other
attorneys in the Path Litigation, including Path’s attorney, Douglas Dal Cielo, and the
Pacific parties’ former attorney, Eric H. Saiki. With his declaration, Amis sought to
establish that he never would have attended the mediation, nor would he have agreed to
be jointly and severally liable for Pacific’s liabilities, had he been advised prior to
mediation that he had little to no risk of being held personally liable on Path’s claims.
Dal Cielo and Saiki each declared that if the Path Litigation had gone to trial, Amis
would not have been found personally liable.
Amis also submitted the declaration of his proffered legal malpractice expert,
Robert C. Baker. Baker opined that GT’s conduct fell below the standard of care and
there was “no advice [GT] could have given to John Amis during mediation that would
justify making John Amis personally liable for payment of $2,400,000.” Setting aside
any communications that might have occurred during the mediation, Amis argued all the
evidence, when taken together, permitted a reasonable inference that GT’s misconduct
caused him to execute the settlement agreement and incur personal liability that he
otherwise would have avoided had the Path Litigation gone to trial.
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5. The Summary Judgment Ruling
The trial court granted GT’s summary judgment motion. The court agreed that
Amis could not establish an essential element of his claims, because it was undisputed
that any act or omission by GT that purportedly caused Amis to execute the settlement
agreement occurred during the mediation. The court also refused to entertain an
inference that GT caused Amis to execute the settlement agreement during mediation,
because the mediation confidentiality statutes effectively barred GT from defending itself
against such an inference.
DISCUSSION
1. Standard of Review
“On appeal after a motion for summary judgment has been granted, we review the
record de novo, considering all the evidence set forth in the moving and opposition
papers except that to which objections have been made and sustained.” (Guz v. Bechtel
National, Inc. (2000) 24 Cal. 4th 317, 334.) We “ ‘consider all of the evidence’ and ‘all’
of the ‘inferences’ reasonably drawn therefrom [citation], and must view such evidence
[citations] and such inferences [citations], in the light most favorable to the opposing
party.” (Aguilar, supra, 25 Cal.4th at p. 843.) We make “an independent assessment of
the correctness of the trial court’s ruling, applying the same legal standard as the trial
court in determining whether there are any genuine issues of material fact or whether the
moving party is entitled to judgment as a matter of law.” (Iverson v. Muroc Unified
School Dist. (1995) 32 Cal. App. 4th 218, 222.)
A defendant is entitled to summary judgment upon a showing that the plaintiff’s
action has no merit. (Code Civ. Proc., § 437c, subd. (a).) The defendant meets this
burden with respect to each cause of action by establishing undisputed facts that negate
one or more elements of the claim or state a complete defense to the cause of action.
(Id., subd. (p)(2).) Alternatively, “a defendant may meet its burden of showing that an
essential element of the plaintiff’s claim cannot be established [by] present[ing] evidence
that the plaintiff ‘does not possess, and cannot reasonably obtain, needed evidence.’ ”
(Lona v. Citibank, N.A. (2011) 202 Cal. App. 4th 89, 110 (Lona), quoting Aguilar, supra,
6
25 Cal.4th at p. 854.) “Such evidence may consist of the deposition testimony of the
plaintiff’s witnesses, the plaintiff’s factually devoid discovery responses, or admissions
by the plaintiff in deposition or in response to requests for admission . . . .” (Lona, at
p. 110.)
Once the defendant has made the requisite initial showing, the burden shifts to the
plaintiff to show that a triable issue of material fact exists. (Aguilar, supra, 25 Cal.4th at
pp. 849.) “[F]rom commencement to conclusion, the party moving for summary
judgment bears the burden of persuasion that there is no triable issue of material fact and
that he is entitled to judgment as a matter of law.” (Id. at p. 850.)
2. The Mediation Confidentiality Statutes Preclude Amis from Obtaining and
Presenting Evidence of the Acts or Omissions by GT that Purportedly
Caused Him to Execute the Settlement Agreement
Amis admits that his alleged damages in this action stem entirely from entering
into the settlement agreement. He also admits that any communications he had with GT
regarding the settlement agreement occurred in the course of the mediation. Based on
these undisputed facts, the trial court concluded the mediation confidentiality statutes
preclude Amis from proving that GT’s acts or omissions caused his damages in this case.
We reach the same conclusion.
Mediation confidentiality is codified in Evidence Code section 1115 et seq.3
“With specified statutory exceptions, neither ‘evidence of anything said,’ nor any
‘writing,’ is discoverable or admissible ‘in any arbitration, administrative adjudication,
civil action, or other noncriminal proceeding in which . . . testimony can be compelled to
be given,’ if the statement was made, or the writing was prepared, ‘for the purpose of, in
the course of, or pursuant to, a mediation . . . .’ ” (Cassel v. Superior Court (2011)
51 Cal. 4th 113, 117 (Cassel), quoting § 1119, subds. (a), (b).) Even after mediation ends,
communications and writings protected by the statutes are to remain confidential.
(§ 1126.)
3
Unless otherwise designated, all statutory references are to the Evidence Code.
7
Our Supreme Court has broadly applied the mediation confidentiality statutes and
all but categorically prohibited judicially crafted exceptions, even in situations where
justice seems to call for a different result. (Cassel, supra, 51 Cal.4th at p. 118; see
Wimsatt v. Superior Court (2007) 152 Cal. App. 4th 137, 152 (Wimsatt).) “To carry out
the purpose of encouraging mediation by ensuring confidentiality, the statutory
scheme . . . unqualifiedly bars disclosure of communications made during mediation
absent an express statutory exception.” (Foxgate Homeowners’ Assn. v. Bramalea
California, Inc. (2001) 26 Cal. 4th 1, 15 (Foxgate); accord, Rojas v. Superior Court
(2004) 33 Cal. 4th 407, 416; Fair v. Bakhtiari (2006) 40 Cal. 4th 189, 194.) “Judicial
construction, and judicially crafted exceptions, are permitted only where due process is
implicated, or where literal construction would produce absurd results, thus clearly
violating the Legislature’s presumed intent. Otherwise, the mediation confidentiality
statutes must be applied in strict accordance with their plain terms. Where competing
policy concerns are present, it is for the Legislature to resolve them.” (Cassel, at p. 124;
Simmons v. Ghaderi (2008) 44 Cal. 4th 570, 582-583; Foxgate, at pp. 14-17.)
The Supreme Court’s holding in Cassel dictates the result we reach in this case.
The plaintiff in Cassel sued his attorneys for malpractice, alleging the attorneys “induced
him to settle” a business dispute for less than the case was worth by coercing him to enter
a settlement agreement during mediation. (Cassel, supra, 51 Cal.4th at p. 118.) The
Supreme Court upheld the trial court’s order precluding evidence related to the
mediation, including private discussions the plaintiff had with his attorneys about the
settlement. In doing so, the high court rejected the Court of Appeal majority’s view that
“[t]he mediation confidentiality statutes do not extend to communications between a
mediation participant and his or her own attorneys outside the presence of other
participants in the mediation.” (Id. at pp. 121-122, 129-134.)
The Cassel court recognized its holding may hinder the client’s ability to prove a
legal malpractice claim against his or her lawyers. (Cassel, supra, 51 Cal.4th at pp. 122,
133-134.) Nevertheless, the court emphasized the judiciary had no authority to craft its
own exceptions to the mediation confidentiality statutes, “even where the equities
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appeared to favor them.” (Id. at p. 133.) Quoting from our opinion in Wimsatt, the high
court acknowledged “ ‘[t]he stringent result we reach here means that when clients, such
as [the malpractice plaintiff in [Wimsatt]], participate in mediation they are, in effect,
relinquishing all claims for new and independent torts arising from mediation, including
legal malpractice causes of action against their own counsel.’ ” (Cassel, at p. 133,
quoting Wimsatt, supra, 152 Cal.App.4th at p. 163; see also Cassel, at p. 138 (conc. opn.
of Chen, J.) [“This holding will effectively shield an attorney’s actions during mediation,
including advising the client, from a malpractice action even if those actions are
incompetent or even deceptive.”].) Be that as it may, the court stated, “ ‘if an exception
is to be made for legal misconduct, it is for the Legislature to do, and not the courts.
[Citation.]’ ” (Cassel, at p. 133, quoting Wimsatt, at p. 163.)4
Applying Cassel to the undisputed facts of this case, we reach the same conclusion
as the trial court. Amis cannot prove that any act or omission by GT caused him to enter
the settlement agreement and, hence, to suffer his alleged injuries, because all
communications he had with GT regarding the settlement agreement occurred in the
context of mediation. (Cassel, supra, 51 Cal.4th at pp. 132, 136.) We sympathize with
Amis’s assertion that “[m]ediation confidentiality was never intended to protect attorneys
from malpractice claims”; however, as we recognized in Wimsatt, that seemingly
unintended consequence is for the Legislature, not the courts, to correct. (See Wimsatt,
supra, 152 Cal.App.4th at p. 164 [“Given the number of cases in which the fair and
equitable administration of justice has been thwarted, perhaps it is time for the
Legislature to reconsider California’s broad and expansive mediation confidentiality
statutes and to craft ones that would permit countervailing public policies be
4
In Wimsatt, we held that mediation briefs and attorney e-mails written and sent in
connection with mediation were protected by the mediation confidentiality statutes, even
when a mediation disputant sought these materials to support a legal malpractice action
against his own attorneys. (Wimsatt, supra, 152 Cal.App.4th at pp. 158-159.) In so
holding we recognized, as the Supreme Court confirmed in Cassel, that there is no
attorney malpractice exception to the mediation confidentiality statutes. (Wimsatt, at
pp. 162-164; Cassel, supra, 51 Cal.4th at p. 133.)
9
considered.”].) Because the mediation confidentiality statutes bar Amis from presenting
the critical evidence necessary to establish GT’s acts or omissions caused his alleged
injuries, the trial court properly granted summary judgment.
3. The Mediation Confidentiality Statutes Preclude Inferences Concerning
GT’s Supposed Acts or Omissions During the Mediation
On appeal, Amis does not dispute that “whatever advice he received regarding the
Settlement Agreement was given during mediation,” nor does he dispute that evidence of
such advice is inadmissible under the mediation confidentiality statutes. He nevertheless
contends “there is direct, admissible, and undisputed evidence that Amis consulted with
GT, and was advised by GT, during mediation before signing the agreement,” and that
“[w]hatever specific advice was given, or not given, resulted in a contract making Amis
personally liable.” Thus, he argues “[i]t is reasonable to infer from the fact that GT
advised Amis regarding the terms of the settlement documents, that GT consented to
Amis signing those documents” at mediation. Insofar as the trial court refused to draw
this inference to find a triable issue of fact on causation, Amis contends the court erred.
We disagree.
Amis’s proposed inference is fundamentally at odds with the mediation
confidentiality statutes’ directive. To permit such an inference would allow Amis to
attempt to accomplish indirectly what the statutes prohibit him from doing directly—
namely, proving GT advised him to execute the settlement agreement during the
mediation. Further, insofar as there is no statutory exception to mediation confidentiality
that permits GT to rebut the inference by showing what advice it actually gave Amis
during mediation, the relevant authorities all counsel against permitting the inference to
be drawn.
In re Marriage of Woolsey (2013) 220 Cal. App. 4th 881 (Woolsey) is instructive.
In that case, a husband challenged a mediated marital settlement agreement, claiming
“undue influence on [him] during the mediation render[ed] the agreement
unenforceable.” (Id. at p. 888.) The husband did not attempt to introduce direct evidence
showing the wife actually engaged in undue influence during the mediation; rather, he
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resorted to the rule that “[w]hen an interspousal transaction advantages one spouse, ‘[t]he
law, from considerations of public policy, presumes such transactions to have been
induced by undue influence.’ ” (In re Marriage of Haines (1995) 33 Cal. App. 4th 277,
293; Woolsey, at p. 901.) The Woolsey court rejected the proffered presumption,
concluding “the mediation confidentiality provisions of Evidence Code section 1119
protect the mediation process and preclude any claim of undue influence.” (Woolsey, at
p. 903.) Addressing the presumption directly, the court explained: “ ‘[T]o apply the
presumption of undue influence to mediated marital settlements would severely
undermine the practice of mediating such agreements. Application of the presumption
would turn the shield of mediation confidentiality into a sword by which any unequal
agreement could be invalidated. We do not believe that the Legislature could have
intended that result when it provided for spousal fiduciary duties on the one hand and for
mediation confidentiality on the other.’ ” (Id. at p. 902; accord In re Marriage of
Kieturakis (2006) 138 Cal. App. 4th 56, 86 [reasoning that if undue influence presumption
attached to mediated marital settlement agreement “the disadvantaged party could claim,
for example, to have acted under duress, refuse to waive the [mediation confidentiality]
privilege, and thereby prevent the other party from introducing the evidence required to
carry the burden of proving that no duress occurred”].)
The Woolsey court’s reasoning is apposite and compelling. Here, Amis does not
dispute that the mediation confidentiality statutes preclude him and GT from relying upon
mediation communications to support or rebut the causation element of his claims.
Nevertheless, even without direct “eye-witness evidence” of what occurred during
mediation, Amis contends the trier of fact should be permitted to draw the inference that
the “oral advice he was given, or not given, by GT during the mediation” caused him to
execute the settlement agreement. But this, as in Woolsey, would turn mediation
confidentiality into a sword by which Amis could claim he received negligent legal
advice during mediation, while precluding GT from rebutting the inference by explaining
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the context and content of the advice that was actually given.5 Such a result cannot be
squared with Woolsey or the Supreme Court’s holding in Cassel. (See Cassel, supra,
51 Cal.4th at p. 136 [“The Legislature also could rationally decide that it would not be
fair to allow a client to support a malpractice claim with excerpts from private
discussions with counsel concerning the mediation, while barring the attorneys from
placing such discussions in context by citing communications within the mediation
proceedings themselves.”].)
Along the same lines, permitting a jury to draw the inference Amis advances
would amount to an irregularity in proceedings mandating a new trial. Section 1128
provides, “Any reference to a mediation during any subsequent trial is an irregularity in
the proceedings of the trial for the purposes of Section 657 of the Code of Civil
Procedure.”6 The Law Revision Commission Comments to section 1128 explain that
“[a]n appropriate situation for invoking this section is where a party urges the trier of fact
to draw an adverse inference from an adversary’s refusal to disclose mediation
communications.” The inference Amis would have the jury draw—that GT’s advice
during mediation caused him to enter the settlement agreement—is tantamount to the
adverse inference that section 1128 prohibits, because GT is barred from disclosing
relevant mediation communications to rebut the charge. The trial court properly refused
to entertain Amis’s proffered inference in ruling on GT’s summary judgment motion.
5
Amis contends “GT can defend itself by providing a justification for why it was in
Amis’[s] interest to agree to the terms of the Settlement Agreement.” This assertion begs
the question, inasmuch as it assumes the truth of Amis’s proffered inference—namely,
that GT in fact advised Amis to enter the agreement. While GT might attempt to advance
a competing inference—for instance, that Amis made a business decision to accept the
settlement terms over GT’s contrary advice because the Sojitz deal hinged on settling the
Path Litigation—either inference would be improper, because neither Amis nor GT is
permitted to rebut the other’s competing inference by showing what communications
actually occurred during mediation.
6
Code of Civil Procedure section 657 specifies the grounds upon which the trial
court can order a new trial, including, under subdivision 1, an “[i]rregularity in the
proceedings of the court . . . by which either party was prevented from having a fair
trial.”
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DISPOSITION
The summary judgment is affirmed. Defendants Greenberg Traurig, LLP, Naoki
Kawada and John M. Gatti are entitled to their costs.
CERTIFIED FOR PUBLICATION
KITCHING, Acting P. J.
We concur:
ALDRICH, J.
LAVIN, J.*
*
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
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