Zevnik v. Superior Court (Rayonier, Inc.)

In Zevnik v. Superior Court (Rayonier, Inc.) (2008) 159 Cal.App.4th 76, a legal malpractice suit brought by Rayonier and Southern Wood (collectively Rayonier) against their attorneys (collectively Zevnik) arose from Zevnik's concurrent representation of Rayonier and certain other plaintiffs (ITT and ITT Fluid) in an underlying insurance coverage litigation. In the underlying litigation, the trial court denied Rayonier's motion to disqualify Zevnik as counsel for ITT and ITT Fluid on two alternative grounds: (1) Rayonier failed to establish a basis for disqualification; and (2) the motion was barred by the doctrine of laches. (Zevnik, supra, 159 Cal.App.4th at p. 80.) The Court of Appeal "affirmed the denial of the motion to disqualify based on laches alone and expressly declined to reach the parties' contentions concerning other grounds asserted by the trial court in support of its ruling." (Ibid.) Thereafter, in the legal malpractice action, Zevnik attempted to use this prior ruling as a shield, arguing that "facts determined by the trial court in the order denying the motion to disqualify counsel in the insurance coverage action were conclusively established, and that those facts precluded any finding that Zevnik had breached a duty owed to Rayonier and Southern Wood and defeated each of the counts alleged in the legal malpractice action." (Id. at p. 81.) The trial court disagreed, ruling that only the ground relied on by the Court of Appeal in its decision, i.e., laches, had collateral estoppel effect. (Ibid.) The Court of Appeal agreed, reasoning that "after review by an appellate court, the final decision and the issues 'necessarily decided' for purposes of collateral estoppel encompass only the grounds relied on by the appellate court." (Id. at p. 84.)