SAN FRANCISCO - The California First District Court of Appeal has affirmed trial courts judgment litigated for two years over consolidated million-dollar malpractice cases.
The court of appeals ruled July 13 that the plaintiff and respondents in a corporate battle that stems back to 2002 end the fight. ZF Micro Solutions, Inc. et al. v. Gordon & Rees (ZF/Feldman) and Ireland et al. v. Gordon & Rees (Ireland) were all defendants in a lawsuit involving individual shareholders of ZF Micro Devices Inc. (ZF Devices) and ZF Micro Solutions, Inc. (ZF Solutions). While appellant David Feldman was the CEO of both ZF companies, the Ireland appellants were individual ZF Solutions shareholders.
Respondents sued in the malpractice cases included defense counsel Gordon & Rees, LLP and Andrew D. Castricone (Gordon), two Illinois Union Insurance Company affiliates (Illinois Union), and appellant counsel Ropers Majeski Kohn & Bentley PC and Susan Handelman (Ropers).
“After these malpractice cases were consolidated, the trial court granted summary judgment to each group of defendants pursuant to unopposed motions that were predicated on evidentiary sanction orders imposed on plaintiffs due to multiple discovery violations,” the appeals court decision read.
Now “appellants contend the trial court erred by denying them relief from the sanction orders because they are the victims of extrinsic fraud committed by a disbarred attorney who represented them during the discovery phase of this case.”
Affirming the judgments, the court of appeal said in its decision “courts have inherent equitable powers to vacate or set aside judgement or orders entered because of extrinsic fraud or mistake.”
The shareholder litigation that stemmed back to 2002 became tangled throughout the years in allegations and suits of legal malpractice, fraudulent breach of fiduciary duty and breach of contract and insurance bad faith, all of which inevitably led to the three sets of defendants individually seeking discovery from each set of plaintiffs.
Following by several evidentiary sanction orders and arguments of relief by mandated sections, Feldman filed a motion for reconsideration in 2015. “Feldman failed to demonstrate that he had been diligent in his efforts to garner this information prior to the original hearing on the motion for relief from the sanction order,” according to the appeals court decision.
Noting that “when an attorney’s neglect is so extreme that it amounts to positive misconduct/abandonment,” the appeals court said in its decision that the party seeking relief must also be comparatively negligent free as well and, “in this case, appellants were not relatively free from negligence.”
“Failing to substantiate this contention, appellants have not demonstrated that the trial court abused its discretion by denying their request for equitable relief,” the court said.