CA: Underlying Loan Transaction; Debtor Creditor
Facts: The plaintiffs hired the defendant attorneys to prepare a note and chattel mortgage in connection with a loan that the plaintiffs were making to a third party. The secretary for defendant delivered the completed papers to the plaintiff. No directions were given to the plaintiff in relation to the documents. The defendant never informed plaintiff that he must have the mortgage recorded. Sometime later the third party went into bankruptcy. Since the mortgage was not recorded the plaintiff was considered an unsecured creditor. As a result the plaintiff suffered damages. The defendant alleged that the plaintiff was contributorily negligent in not inquiring as to whether the mortgages were supposed to be recorded.
Issue: Is contributory negligence a defense in a legal malpractice case?
Ruling: Yes, contributory negligence is a defense. Where a client chooses to ignore the legal advice of his attorney the contributory negligence is available. The fact that the plaintiff never inquired into the documents is not enough to sustain the defense.
Lesson: An attorney should document all communications with his client so that the attorney can show what advice was given.
Posted in: California