Law Firm Cross-Complaint Against Another Law Firm In a Malpractice Case
In Kroll & Tract v. Paris & Paris (1999) 72 Cal. App. 4th 1537 [86 Cal. Rptr. 2d 78], a company sued for the sale of a defective product was represented by independently retained counsel (Paris & Paris) and by a law firm retained by the company's insurer subject to a reservation of rights (Kroll & Tract).
Both law firms actively participated in the defense of the company until 10 days before trial, at which point Paris & Paris asked Kroll & Tract to take full responsibility.
The company lost at trial and thereafter sued Kroll & Tract (but not Paris & Paris) for malpractice.
Kroll & Tract cross-complained against Paris & Paris for equitable indemnity.
Division Three of the Fourth District affirmed an order dismissing the cross-complaint, explaining the rules this way:
"In American Motorcycle . . ., the Supreme Court enunciated the principle that '. . . liability for an indivisible injury caused by concurrent tortfeasors will be borne by each individual tortfeasor "in direct proportion to [his] respective fault." ' . . . However, a well-recognized exception to the ordinary rules of implied equitable indemnity has been established:
A cross-complaint will not be permitted where an attorney sued for malpractice by a former client seeks indemnification from a successor attorney hired by the client to extricate him or her from the situation allegedly caused by the first attorney. . . .
"The various public policy reasons supporting this exception have been pointed out in several cases: 'Among them are:
(1) the threat of such a lawsuit by a client's adversary impinges upon the individual loyalty of the second attorney in advising his client . . .;
(2) one consequence of such a cross-complaint is to preclude the second attorney from trying the lawsuit, thus depriving the party of the attorney of his choice . . .;
(3) the threat of such a cross-complaint results in the injection of undesirable self-protective reservations into the [second] attorney's counseling role, thereby diminishing the quality of legal services received by the client . . .;
(4) such lawsuits jeopardize the policy of encouraging confidence and preserving inviolate the attorney-client relationship . . . .' . . . ." (Kroll & Tract v. Paris & Paris, supra, 72 Cal. App. 4th at pp. 1541-1542, citations omitted.)