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Judgmental Immunity as a Defense to a Legal Malpractice Claim

This article is reprinted with permission from the Pennsylvania Bar News.

Jeffrey P. Lewis is a member in the West Chester office of the Pittsburgh-based law firm of Eckert Seamans Cherin & Mellott, LLC. He serves on the PBA Professional Liability Committee. He can be reached at 610.738.8850, and by email at jlewis@eckertseamans.com.

By: Jeffrey Lewis

A lawyer often is faced with a circumstance where an applicable point of law is murky at best, or undecided at worst, and he or she must make a decision as to what strategy to employ. Under these circumstances, there is always the risk that the rug may be pulled out from under such lawyers because an appellate court clearly decides the point of law as binding precedence while their case is still midcourse. Is it legal malpractice if the appellate court decided the point of law adverse to the position that the lawyer had chosen to take, thus ruining his or her strategy and leading to his or her client’s defeat? Whether it is or isn’t depends upon whether a principle of law, referred by some courts as the judgmental immunity doctrine, applies to determine whether an attorney breached the standard of care under the circumstances.

The judgmental immunity defense is not technically an immunity in that it is not an exemption from liability. Instead, it addresses the factual issue of whether an attorney had breached the standard of care. This principle excuses an attorney for an unfavorable result “if there was an ‘honest error in judgment concerning a doubtful or debatable point of law.’” Moreover, this doctrine recognizes that an “attorney does not ordinarily guarantee the soundness of his or her opinions.” As a result, an attorney is not liable for every mistake made. Instead, “an attorney must show that there were unsettled or debatable areas of the law that were the subject of the legal advice rendered and this advice was based upon ‘reasonable research in a effort to ascertain relevant legal principles and to make an informed decision as to a course of conduct based upon an intelligent assessment of the problem.’” “Because attorneys must ‘possess knowledge of those plain and elementary principles of law which are commonly known by well informed attorneys’ … as part of the analysis the attorney must demonstrate that he or she has taken steps to ‘discover those additional rules of law which, although not commonly known, may readily be found by standard research techniques.’” Exercise of an attorney’s best judgment is alone insufficient; he or she must exercise that judgment consistent with the standard of care.

The doctrine was recently revisited in a California appellate decision, Blanks v. Seyfarth Shaw, 171 Cal.App.4th 336, 89 Cal.Rptr.3d 710 (2009). In Blanks, a three-judge panel of the California Court of Appeals considered an appeal from a verdict of $10 million in compensatory damages and $15 million in punitive damages. The defendant lawyers were accused of legal malpractice, breach of fiduciary duty and fraudulent concealment arising out of their representation of the individual plaintiff, a celebrity client, in a suit against his talent agent. The trial court had precluded the defendants from offering evidence to the jury in the nature of expert testimony and testimony by the defendant lawyer to establish that he had made a reasoned choice when he allowed the statute of limitations to run on one claim.

Under California law, talent agents must be licensed under The Talent Agencies Act. If an agent is unlicensed, as was the situation in the underlying case, then the artist has one year after payment of any fee to that agent in which to petition the Labor Commissioner for disgorgement. The loser can take an appeal de novo to the state trial court. Discovery at the Commissioner level, however, is limited.

Instead of petitioning the Commissioner, the defendant lawyer filed suit on behalf of his client in state court. In addition to asserting a cause of action for disgorgement under the TAA, the complaint also alleged 16 other causes of action, including under California’s Unfair Competition Law. The defendant lawyer admitted that he knew that the Commissioner had exclusive jurisdiction for TAA claims, but he justified bringing that claim in state court so that he could depose the agent before any hearing on the TAA claim before the Commissioner. His stated concern was that, if he petitioned the Commissioner, the state action would be stayed until the Commissioner ruled on the petition, thus precluding his ability to depose the agent before the Commissioner’s hearing took place.

He later did petition the Commissioner, but more than one year after the last of the fees had been paid to the agent. He admitted knowledge of the applicable one-year statute. But he justified the lateness by arguing application of the discovery rule exception because the action was commence within one year of when the artist discovered that his agent was unlicensed. The Commissioner rejected this argument in disallowing an approximately $10.6 million disgorgement claim.

An evidentiary hearing occurred before trial in the malpractice action on plaintiff’s motion in limine to preclude any evidence germane to the judgmental immunity defense. There, the defendant lawyer offered the unrebutted testimony of an expert lawyer. This expert stated that the defendant lawyer had not breached the duty of care in believing that the discovery rule applies, as it does under present Pennsylvania case law, where discovery occurs before the original statutory period has expired. The trial court granted the motion, finding that the defendant lawyer had been negligent as a matter of law, notwithstanding that the plaintiff had not sought that relief, but sought only to exclude any testimony relevant to the judgmental immunity defense.

The appellate court reversed, finding that the defendant lawyer should have been given the opportunity to offer why his decision “to delay filing a TAA petition was based upon a rational, professional judgment, that would have been made by other reputable attorneys … under the same or substantially similar circumstances.”

Ironically, the defendant’s strategy did not work—he waited too long to notice the agent’s deposition before he was forced to petition the Commissioner when, in his view, time was running out. But if he had fully researched the relevant legal issues and especially if he had fully informed his client that he proposed a strategy involving murky legal territory, the attorney might enjoy the benefit of this doctrine. But the key is full advance disclosure to the client coupled with the client’s consent.

Jeffrey Lewis
Philadelphia, PA

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