Wise v. DLA Piper CA4/1
220 Cal. App. 4th 1180
| Cal. Ct. App. | 2013Background
- Dennis Wise and Joan Macfarlane (the Wises) retained DLA Piper (successor to their prior firm) in bankruptcy and collection matters against William Cheng arising from unpaid promissory notes; a state-court judgment for $605,184.50 was entered in 1994.
- DLA pursued limited collection, obtained small bankruptcy distributions in 1996–1998, then administratively closed the file but did not notify the Wises it had ceased representing them or calendar the 10‑year renewal deadline.
- The Wises did not renew the judgment; it expired by operation of law in 2004. The Wises discovered the lapse in 2009 and sued DLA for legal malpractice within one year of discovery.
- At trial DLA stipulated breach of the standard of care (failing to advise or calendar renewal), but the parties disputed whether the Wises proved the lost judgment would have been collectable (a required element of damages in malpractice claims based on loss of a judgment).
- Plaintiff’s expert (Selik) opined past and future collectability based largely on (1) reverse‑piercing corporate entities to reach investor funds, (2) possible ownership interest in Cheng’s residence, and (3) pressuring Cheng’s investors via third‑party examinations; defendant’s expert (Grant) conducted asset searches and concluded Cheng had lacked assets since 1991 and reverse‑piercing was unavailable.
- The trial court found for the Wises; on appeal the Court of Appeal reversed, holding there was no substantial evidence the judgment would have been collectable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wises proved underlying judgment would have been collectable (required for malpractice damages) | Selik: judgment was collectable in past and likely in future — investors/corporate funds could be reached (reverse‑piercing), investor pressure would produce loans, Cheng had or hid assets | Grant/DLA: asset searches show Cheng had no assets since 1991; reverse‑piercing to reach third‑party investor funds is legally impermissible and speculative; investor subpoenas and payments speculative | Reversed: no substantial evidence of collectability; key expert relied on incorrect legal theory and speculation so verdict cannot stand |
| Whether statute of limitations was tolled by continuous representation | Wises: continuous representation tolled limitations until 2009 discovery | DLA: representation had ended earlier; limitations not tolled | Not reached on appeal (court resolved case on collectability) |
| Whether special verdict form was defective for not submitting continuous‑representation issue to jury | Wises: form adequate / jury implicitly decided tolling | DLA: form fatally flawed | Not reached on appeal (court resolved case on collectability) |
| Whether attorney fees award against DLA had legal basis | Wises: fees appropriate as part of malpractice remedy | DLA: no legal basis for fee award | Not reached on appeal (court resolved case on collectability) |
Key Cases Cited
- Budd v. Nixen, 6 Cal.3d 195 (Cal. 1971) (elements of professional negligence and duty standard)
- DiPalma v. Seldman, 27 Cal.App.4th 1499 (Cal. Ct. App. 1994) (lost‑judgment malpractice requires showing judgment would have been collected)
- Hecht, Solberg, Robinson, Goldberg & Bagley, LLP v. Superior Court, 137 Cal.App.4th 579 (Cal. Ct. App. 2006) (collectibility is fact‑intensive; plaintiff must present admissible evidence of likely collectability)
- Garretson v. Harold I. Miller, 99 Cal.App.4th 563 (Cal. Ct. App. 2002) (affirming JNOV where no evidence of collectability)
- Filbin v. Fitzgerald, 211 Cal.App.4th 154 (Cal. Ct. App. 2012) (insufficient evidence of collectibility requires reversal)
- Sargon Enters., Inc. v. Univ. of S. Cal., 55 Cal.4th 747 (Cal. 2012) (gatekeeping on speculative expert testimony predicting future profits)
- Pacific Gas & Elec. Co. v. Zuckerman, 189 Cal.App.3d 1113 (Cal. Ct. App. 1987) (expert opinion based on speculative assumptions cannot be substantial evidence)
- Corrales v. Corrales, 198 Cal.App.4th 221 (Cal. Ct. App. 2011) (expert opinion premised on incorrect legal theory is not substantial evidence)
- Greenwich S.F., LLC v. Wong, 190 Cal.App.4th 739 (Cal. Ct. App. 2010) (lost‑profits projections for speculative ventures insufficiently certain)
- Jackson v. Johnson, 5 Cal.App.4th 1350 (Cal. Ct. App. 1992) (loss of a collectible judgment is legal damage)