Oasis West Realty, LLC v. Kenneth A. Goldman, Supreme Court of California, May 16, 2011
Facts: Goldman, and his law firm Reed Smith, represented Plaintiff Oasis in a redevelopment plan involving a nine-acre parcel in Beverly Hills on which Oasis was to build a hotel and luxury condominiums. After two and one-half years, Defendants ended their attorney-client relationship with Oasis, and thereafter, Goldman participated in a referendum that would allow voters to overturn the city council’s approval of the project. Oasis asked Goldman to withdraw from this activity, and ultimately sued Goldman and Reed Smith for, allegedly, violating their duties of loyalty and confidentiality.
Issue: Did Goldman violate any duties to his former client by participating in a civic organization to promote his personal beliefs and interests?
Ruling: According to the Supreme Court of California– Yes.
The Court first explained that an "attorney may not do anything which will injuriously affect the former client in any matter in which the attorney formerly represented the client nor may the attorney at any time use against the former client knowledge or information acquired by virtue of the previous relationship."
The Court held that "a lawyer’s right to freedom of expression is modified by the lawyer’s duties to clients…The requirement that a lawyer not misuse a client’s confidential information [] applies to discussion of public issues."
This, in spite of the California Anti-SLAPP statute which protects attorneys (and others) from "lawsuits against public participation…freedom of speech and petition for the redress of grievances."
In support of its holding, the Court reasoned that Oasis had presented a prima facie case that Goldman did use confidential information. The Court didn’t answer how, but presented this analysis:
For example, an attorney may discover, in the course of the representation of a real
estate developer, that city officials are particularly concerned about the parking
and traffic impacts of a proposed development, or that an identifiable population
demographic is especially disposed to oppose the proposed development. Under
the interpretation proposed by defendants and adopted by the Court of Appeal, the
attorney would be free to terminate the representation of the developer and use this
information to campaign (quite effectively, one would imagine) against the precise
project the attorney had previously been paid to promote.
Lesson: Until and unless the United State Supreme Court hears and overturns this case, a California lawyer may be at risk for a malpractice/breach of fiduciary duty suit for exercising his right to freedom of speech in support of his personal civic interests if it is in conflict with the interests of his former client.
Tagged with: breach, breach of fiduciary duty, California, confidentiality, duty, fiduciary, Fiduciary Duty, freedom, freedom of speech, loyalty, speech
Posted in: California, Fiduciary Duty