Facts

This is a legal malpractice action brought by plaintiff, Rachel Harari, against defendants Mark L. Russakow, Russakow, Ryan and Johnson, a Professional Corporation, and Christopher Johnson (hereinafter collectively "RRJ"), for allowing the hereafter mentioned trust be depleted of assets by the mishandling of the trustee, and thus the plaintiff being deprived of her fair one-half share of the original value of trust estate of her father.

On Dec. 24, 2002, the plaintiff retained RRJ to handle trust matters following the death of her father. This involving a trust, the First Amended and Restated Hecht Family Trust (hereinafter "Hecht Trust"), created by her deceased father, Harry Hecht. The plaintiff wished to obtain her one-half share of the Hecht Trust and remove her brother, Abe Hecht, as trustee of the Hecht Trust. The trust contained a "no contest clause," but also contained an exclusion which stated, in essence, that commencement of any proceeding described in California Probate Code sections 21305 (b) (1)-(8), did not constitute a violation of this no contest clause. (Probate Code Section 21305(b) (7) refers to removal of a trust fiduciary, eg. trustee).

As part of RRJ's representation of plaintiff, a "Safe Harbor Application" was filed seeking court interpretation of the no contest clause. The intent of the application was to insure that plaintiff would not be disinherited by seeking removal of Abe Hecht as trustee. In filing this application, however, RRJ neglected to site any authorities regarding the requested opinion, including no citation of the exemption in the trust or the appropriate Probate Code section. As a result, what should have been an automatic favorable opinion was not given, and Abe Hecht remained as trustee.

The Hecht Trust also provided that should a dispute, controversy, claim, or demand arise, the involved parties shall first engage in good faith negotiations. If the dispute is not resolved by negotiations, the parties shall attempt to settle the dispute by mediation. Finally, if the dispute is not resolved by negotiations or mediation, any interested party may initiate binding arbitration. Failure to follow the foregoing would result in a violation of the no contest clause of the Hecht Trust, and would result in disinheritance.

Christopher Johnson on the behalf of the plaintiff negotiated several issues for her and then participated in two mediations. Not having resolved all of plaintiff's outstanding issues, on Nov. 16, 2004, all parties submitted to what was initially another mediation with retired Judge Edward M. Ross. During the mediation, Judge Ross suggested that the proceeding be binding, and RRJ agreed.

Among other allegations of negligence, plaintiff asserted that the standard of care was breached by defendants' failure to adequately inform the plaintiff that the proceeding, which was to take place Nov. 16, 2004 was binding, and that no appeal or other recourse from any decision made by Judge Ross would be available.

The plaintiff alleged that the defendants were not prepared for a binding procedure because they failed to hire experts, including an accountant or a real estate appraiser to evaluate the estate, have exhibits/documents, cross-examine witness, etc. Instead, RRJ agreed to allow the mediator to compute the value of plaintiff's one-half share of the estate, even though the only documents and testimony he possessed were provided by Abe Hecht, the plaintiff's opponent in the now binding proceeding. The defendants also passed up an opportunity given to them by the mediator to hire an accountant, despite the fact that the mediation was now binding. Therefore, the plaintiff's portion of the trust was significantly undervalued.

Additionally, the plaintiff alleged that the defendants breached the standard of practice by not reciting the requisite authority to obtain a favorable ruling regarding removal of the trustee as an exclusion to the no contest clause of the her father's trust. If RRJ would have done so, Hecht would have been removed as trustee, and no depletion of the trust would have occurred, and plaintiff would have obtained her fair one-half share of the estate. Furthermore, none of the subsequent legal proceeding would have been necessary or would have occurred.

Settlement Discussions

The plaintiff demanded $299,990 pursuant to C.C.P. Section 998. The defendant offered $49,990 pursuant to C.C.P. Section 998.

Result

On May 16, 2007, the jury returned a verdict in the sum of $615,966.

Other Information

The defendants have moved for a new trial and judgment notwithstanding the verdict.

Deliberation

2.5 hours

Poll

10-2 (liability), 11-1 damages)

Length

six days