Genis v. Schainbaum
66 Cal.App.5th 1007
| Cal. Ct. App. | 2021Background:
- Genis (an attorney) retained Schainbaum for a federal tax investigation; they negotiated a plea where Genis would plead guilty to misdemeanors, pay restitution (~$679,958), cooperate with the IRS, and sign IRS "closing agreements" that could impose civil penalties.
- The closing agreements, signed by Genis before sentencing, imposed 75% civil tax fraud penalties for certain years; at sentencing Genis admitted guilt and expressed remorse; he was sentenced to prison and ordered restitution.
- Genis filed a 28 U.S.C. §2255 motion alleging ineffective assistance, including failure to review/advise on the closing agreements; the district court found a misunderstanding about fraud penalties and that counsel’s performance was deficient but denied the requested remedy (striking fraud penalties); the Ninth Circuit affirmed.
- Genis then sued Schainbaum in California state court for legal malpractice seeking damages for the civil fraud penalties, alleging counsel negligently failed to prevent those penalties.
- Schainbaum demurred, arguing that malpractice claims arising from criminal representation require proof of actual innocence; the trial court sustained the demurrer without leave to amend, and the Court of Appeal affirmed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an actual-innocence requirement applies to a legal-malpractice claim challenging civil tax penalties obtained as part of a criminal plea | Genis: the civil penalties arose from a separate civil matter, so he need not plead actual innocence to sue for malpractice as to the civil portion | Schainbaum: the penalties were part of the criminal disposition; under Wiley and Coscia malpractice claims arising from criminal proceedings require proof of actual innocence | Actual-innocence rule applies; demurrer properly sustained for failure to plead actual innocence |
| Whether there was a simultaneous, separate civil proceeding that makes the penalties independent of the criminal case | Genis: the caption of the postconviction order (civil case number) and the IRS closing agreements show a separate civil matter | Schainbaum: the civil-number caption reflects a §2255 postconviction civil filing, not a distinct civil tax action; penalties were negotiated as part of the criminal disposition | There was no separate civil prosecution; the penalties were part of the criminal plea bargain |
| Whether cases like Bird and Lynch permit malpractice claims without proving innocence when the complaint attacks costs/fees or out-of-pocket expenses | Genis relied on Bird/Lynch to distinguish Wiley | Schainbaum: Bird/Lynch are limited to billing or out-of-pocket claims that do not attack guilt or case outcome | Bird/Lynch are distinguishable; here Genis challenges the competence of plea negotiation and a less favorable outcome, so Wiley governs |
Key Cases Cited
- Wiley v. County of San Diego, 19 Cal.4th 534 (establishes actual-innocence requirement for malpractice claims arising out of criminal proceedings)
- Coscia v. McKenna & Cuneo, 25 Cal.4th 1194 (reaffirms Wiley; requires exoneration as prerequisite to malpractice recovery for criminal defense work)
- Bird, Marella, Boxer & Wolpert v. Superior Court, 106 Cal.App.4th 419 (allows claims against criminal counsel for billing/retainer disputes that do not attack guilt)
- Lynch v. Warwick, 95 Cal.App.4th 267 (requires actual innocence where claim seeks recovery for out-of-pocket costs tied to substandard criminal representation)