Procedural Posture

Plaintiff appealed a summary judgment from the Superior Court of Los Angeles County (California) holding plaintiff’s settlement and dismissal with prejudice of a legal malpractice action against his former attorneys arising from their representation of him constituted a retraxit barring plaintiff’s suit against defendant business associates.

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Overview

Plaintiff filed malpractice action against defendant attorneys. The matter was settled and voluntarily dismissed with prejudice. The court of appeal found the trial court erred by holding an attorney-defendant in a legal malpractice action stepped into the shoes of the original offending defendant (by virtue of the case-within-a-case doctrine). Dismissal with prejudice of the malpractice action thus did not operate as a retraxit barring suit against the original offending defendants. Since defendant business associates were not parties to the malpractice action against a prior attorney, nor in privity with them, defendants could not invoke res judicata on their behalf. Since the malpractice action was settled and not tried, collateral estoppel did not bar litigating any issue in the underlying action. The court held the settlement and dismissal of the legal malpractice action did not bar plaintiff’s action against defendant business associates.

Outcome

Judgment reversed and remanded because plaintiff’s settlement and dismissal of a legal malpractice action against his former attorneys arising from their representation of him earlier in the proceedings did not constitute a retraxit barring plaintiff’s action against defendants, plaintiff’s former business associates.