Viner v

Tort-Professional Negligence-Transactoinal-But for Rule -Essential Element
(Viner v. Sweet)

In our initial decision in this case (Viner v. Sweet (Sept. 28, 2001, B138149) [superseded by grant of review Dec. 19, 2001 (S101964)] (Viner I)), we held to establish causation in fact the plaintiffs in a transactional legal malpractice action are not required to prove the opposing side in contract negotiations would have given them a better deal than they actually obtained had their attorney not been negligent and affirmed most of the jury’s multimillion dollar damage award in favor of plaintiffs Michael Viner and Deborah Raffin Viner. The Supreme Court reversed, holding “just as in litigation malpractice actions, a plaintiff in a transactional malpractice action must show that but for the alleged malpractice, it is more likely than not that the plaintiff would have obtained a more favorable result.” (Viner v. Sweet (2003) 30 Cal.4th 1232, 1244 (Viner II).) The Court remanded the matter “for proceedings consistent with the views expressed here.” (Ibid.)

Having received supplemental briefing after remand and heard further oral argument from the parties, we now conclude the trial court erred in denying the defendant lawyers’ motion for judgment notwithstanding the verdict as to five of the seven claims of malpractice asserted against them. Accordingly, we modify the judgment by reducing the award of damages from $13,291,532 to $515,760 and, as so modified, affirm the judgment.

The Viners[1] sued their former attorneys, Charles A. Sweet and his law firm Williams & Connolly (collectively W&C), for negligently negotiating and drafting agreements for the sale of their ownership interest in Dove Audio, Inc. (Dove) to Media Equities International (MEI) and termination of their employment with Dove. Under the terms of the agreements as drafted, MEI purchased a significant portion of the Viners’ Dove stock for more than $3 million, and the Viners’ were to receive $1.5 million from Dove over five years in monthly installments. Dove’s series “E” preferred stock was to be held in escrow for distribution to the Viners if Dove defaulted on the monthly payments to them.[2]

The Viners’ professional negligence cause of action identified seven acts of malpractice: (1) W&C told the Viners the nonsolicitation clause in the employment termination agreement applied only to the book and audiobook segments of Dove’s business, but because the clause was ambiguous, Dove successfully asserted in arbitration that the clause also encompassed Dove’s television and motion picture projects; (2) W&C negligently agreed to a noncompetition provision, which violated Business and Professions Code section 16600’s restrictions on such provisions; (3) the employment termination agreement provided for attorney fees only in enforcing an arbitration award; (4) ambiguous language in the provision relating to producer credit caused Dove not to give Deborah Raffin Viner credit as a producer; (5) by virtue of the general release language in the employment termination agreement, the Viners lost their rights to accrued dividends on Dove’s series “A” preferred stock; (6) the employment termination agreement did not contain an indemnity provision providing the same level of protection as the Viners had in their employment agreement; and (7) the series “E” preferred stock afforded inadequate security to the Viners if Dove defaulted on the monthly payments due under the employment termination agreement.

Following a four-week trial, the jury returned a special verdict in favor of the Viners on each of the seven claims of negligence, awarding the Viners a total of $13,291,532 in damages. The trial court denied W&C’s motion for judgment notwithstanding the verdict in which W&C argued (among other grounds asserted) the Viners had failed to prove the requisite causal connection between W&C’s negligent conduct and the damages allegedly resulting from that negligence.

W&C appealed the judgment, arguing with respect to five of the seven claims for negligence that the Viners failed to present substantial evidence, as they were required to do, that a better result would have been obtained absent W&C’s claimed negligence. Alternatively, even if such proof had been presented, W&C argued a new trial would be required because the trial court failed to properly instruct the jury on the necessary proof of causation in a legal malpractice action ‑‑ that is, that the Viners were required to demonstrate that proper handling of their matter by W&C would have resulted in a more favorable outcome.[3]

We affirmed the judgment as modified, holding that the Viners were not required to prove they would have obtained a more favorable result in the transaction with MEI if W&C had not been negligent. Applying what we described as “ordinary negligence and causation principles,” we held the evidence at trial supported the jury’s finding that W&C’s negligence was a substantial factor in causing the Viners to suffer a loss or diminution of their rights and remedies with respect to each of seven separate claimed items of malpractice and affirmed $8,065,732 of the jury’s damage award.[4]

The Supreme Court granted review, limited to the issue “whether the plaintiff in a transactional legal malpractice action must prove a more favorable result would have been obtained but for the alleged negligence.” (Viner II, supra, 30 Cal.4th at pp. 1238-1239.) The Court answered that question “yes”: “The Court of Appeal here held that a plaintiff suing an attorney for transactional malpractice need not show that the harm would not have occurred in the absence of the attorney’s negligence. We disagree. We see nothing distinctive about transactional malpractice that would justify a relaxation of, or departure from, the well-established requirement in negligence cases that the plaintiff establish causation by showing either (1) but for the negligence, the harm would not have occurred, or (2) the negligence was a concurrent independent cause of the harm.” (Viner II, supra, 30 Cal.4th at pp. 1240-1241.) The Court explained, “In both litigation and transactional malpractice cases, the crucial causation inquiry is what would have happened if the defendant attorney had not been negligent. This is so because the very idea of causation necessarily involves comparing historical events to a hypothetical alternative. [Citations.]” (Id. at p. 1242.) The Court reversed our judgment and returned the case to us for further proceedings consistent with its opinion. (Id. at p. 1244.)

[1] The Viners pronounce their surname “Veé-ner,” to rhyme with “wiener.”

[2] The history of the Viners’ founding of Dove, their subsequent efforts to sell their interest in the company and the events that ultimately led to this litigation are described in greater detail in Viner I and Viner II, supra, 30 Cal.4th at pages 1235 to 1237.

[3] The trial court refused W&C’s special instruction No. 2, “Professional Negligence ‑‑ Causation,” which provided, “In order to recover damages from an attorney for negligence in transactional work where the plaintiff is complaining that an actual term of the agreement is not as plaintiff would have wanted it, the plaintiff must establish that, but for the attorney’s negligence, plaintiff would in fact have been successful either in obtaining the desired term in the agreement or in having the offensive term omitted from the agreement. Thus, a plaintiff cannot establish ‘but for’ causation if the plaintiff in any event could not have obtained a more favorable term or could not have obtained deletion of an unfavorable term.”

Judicial Council of California Civil Jury Instruction No. 601, “Damages for Negligent Handling of Legal Matter,” provides somewhat more succinctly and more accurately, “To recover damages from [name of defendant], [name of plaintiff] must prove that [he/she/it] would have obtained a better result if [name of defendant] had acted as a reasonably careful attorney.”

[4] We concluded the evidence did not support the jury’s award with respect to “nonsolicitation clause damages” attributable to a print and audiobook project with Frederick Forsyth and “noncompetition clause damages” attributable to two audiobook projects with Jack Higgins, which had a combined value of $5,205,800.