Alleged Lawyer Malpractice In the Sale of Limited Partnership Interest

In Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal. App. 4th 1509, the plaintiff hired an attorney to advise and assist her in the sale of her limited partnership interest. In consideration for her interest, the plaintiff received a promissory note. the attorney neither delivered the note to the plaintiff nor kept it in a secure location. Three years later, the note obligors indicated they wished to renegotiate the terms of the note. the attorney advised the plaintiff about negotiating a restructuring of the note. The restructuring agreement, however, was aborted because the attorney was unable to produce the note to the obligors. Several days later, a new note-restructuring agreement was negotiated which did not require the surrender of the note to the obligors. The attorney continued to represent the plaintiff for the next three years by collecting the proceeds from the restructured-note transactions and the amounts due under the new note. The plaintiff eventually sued the attorney for legal malpractice, alleging negligence with respect to the original note. On appeal, the attorney contended the new-restructured agreement extinguished the original note. the attorney argued his representation of the plaintiff in the new-restructured agreement did not involve the same specific subject matter. The court disagreed, concluding that the attorney's representation during the restructuring negotiations "related to the objectives of the original retention, and involved efforts to protect the interests the plaintiff had acquired in the original transaction." The attorney's representation in both the original note transaction and the restructuring agreement centered on the same specific subject matter--the plaintiff's legal rights with respect to the sale of her limited partnership interest.