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A unanimous California Supreme Court ruled Monday that lawyers cannot be held liable for punitive damages allegedly lost because of their own negligence or incompetence. Three of the justices issued a separate opinion in which they concurred with the majority, but said they would have preferred that the ruling be limited to malpractice cases filed in regard to class actions. In Ferguson v. Lieff, Cabraser, Heimann & Bernstein, 03 C.D.O.S. 4870, Brent Ferguson and Florencia Prieto, who now live in Mendocino County, sued Lieff Cabraser Heimann & Bernstein and other class counsel for agreeing to drop punitive damage claims in order to seal an $80 million global settlement with the Union Oil Co. of California. Ferguson and Prieto got a total of $225,000 in compensatory damages, but had wanted to pursue punitive damages to punish Unocal for a 1994 accident that released 100 tons of toxic chemicals from a facility near Crockett for 16 days. The two, who lived nearby at the time, were among only eight of about 12,000 plaintiffs who opposed the settlement. Lieff Cabraser and co-lead class counsel Casper, Meadows & Schwartz of Walnut Creek proceeded with the settlement, after getting a trial court judge’s blessing. Ferguson and Prieto’s suit alleged nine causes of action — including negligence and legal malpractice — and sought recovery of the punitive damages they felt might have been awarded “but for” their lawyers’ actions. Both the San Francisco trial court and the First District Court of Appeal ruled against the couple, and the Supreme Court agreed, making clear that allowing lawyers to be sued for lost punitive damages would violate public policy by punishing the wrong party. “Making a negligent attorney liable for lost punitive damages would not serve a societal interest,” Justice Janice Rogers Brown wrote, “because the attorney did not commit and had no control over the intentional misconduct justifying the punitive damages award.” She also held that lost punitive damages are “too speculative” to support a malpractice suit and that they would bear no relation to the gravity of the attorney’s misconduct. “Indeed,” she wrote, “where, as here, the intentional wrongdoer is a wealthy corporation whose alleged misconduct was especially reprehensible, any award of lost punitive damages is likely to be ‘disproportionate to the [attorney's] ability to pay’ � and may financially destroy the attorney. Such a result would undoubtedly contravene the purpose of punitive damages, which ‘is to deter, not destroy.’” In a concurring and dissenting opinion, Justice Joyce Kennard said she would have preferred a narrower ruling, “leaving for another day” whether lawyers could be held liable for lost punitive damages outside the class action context. “By denying recovery for lost punitive damages in every legal malpractice action, instead of limiting today’s holding to the confines of a class action settlement,” she wrote, “the majority effectively denies such injured clients anything but a nominal recovery of compensatory damages, insulating the attorneys while failing to fully compensate the clients for the loss caused by the malpractice.” Justices Kathryn Mickle Werdegar and Carlos Moreno concurred with Kennard. Ferguson and Prieto’s attorney, David Becht, a partner at Adams Nye Sinunu Bruni Becht, couldn’t be reached for comment Monday. Jerome Falk Jr., who represented Lieff Cabraser, said he was “thrilled” by the ruling and called it very important because if the court had ruled otherwise, “settling cases with punitive damages in them would be very, very difficult and very, very risky. “How would you ever settle a case like this,” the Howard, Rice, Nemerovski, Canady, Falk & Rabkin partner asked, “if the client could turn around and sue the lawyer? “It’s very, very important that these things not turn into little games where you try to get more money from the lawyers.”

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