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CA Court of Appeal Opinion re Causation in Legal Malpractice Action

Recently the California Court of Appeal, Second Appellate District, Division One (Los Angeles), issued an opinion in Kumaraperu v. Feldsted (2015) 237 Cal.App.4th 60, analyzing whether the attorney defendants’ actions in advising plaintiff to sign another person’s name to a check for a business account plaintiff owned caused plaintiff’s ensuing criminal prosecution for forgery. The Court of Appeal held it did not because plaintiff pled that she owned the bank accounts the check was drawn from and deposited to. Thus, it was not foreseeable that plaintiff would be prosecuted for forgery. 

Plaintiff owned a private daycare center and school. The school maintained a checking account and an operating account. Plaintiff’s husband, deceased, and two previous interest holders, were the only signatories on the checking account. After plaintiff discovered money had been inadvertently deposited into the checking account rather than the operating account, she sought legal advice from defendants as to how to move the money into the operating account. Defendants advised plaintiff to draw a check on the checking account payable to herself, sign it with the name of one of the previous interest holder, and deposit the check in the operating account. Plaintiff was later charged with forgery. Plaintiff sued defendants for professional negligence, breach of contract and fraud. The trial court sustained defendants’ demurrer based on unclean hands and because plaintiff had been found innocent of the forgery charge. Plaintiff appealed.

The Court of Appeal affirmed, but on different grounds. The Court held plaintiff failed to allege causation because signing another’s name on a check drawn on one’s own account would not subject the owner to liability absent intent to defraud. The Court stated that “[a]n event that enables harm ultimately to occur need not necessarily be a substantial factor in bringing about the harm.” For a defendant to be liable, his wrongful act must be the immediate cause and not merely the necessary antecedent. According to the court, “an attorney could not reasonably foresee that the district attorney would prosecute a depositor for manipulating her own accounts containing her own money to which no one else had any claim. Such a result would be highly extraordinary under the circumstances plaintiff alleges because a key element to the crime of forgery is intent to defraud, and a depositor cannot intend to defraud herself.” Thus, the Court of Appeal held plaintiff failed to allege defendants’ conduct was a substantial factor in bringing about her injury. 

Related Practices

• Professional Liability
• Legal Malpractice Defense

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