Harassment defense attorney

Defendant attorney sought review of the decision of the Superior Court of Butte County (California), which entered judgment on a jury verdict awarding damages to plaintiff clients, in connection with the drafting of a Clifford Trust.

Plaintiff clients filed a legal malpractice action against defendant attorney in connection with the drafting of a Clifford Trust, which was later challenged by the Internal Revenue Service (IRS) as invalid. A jury awarded plaintiffs damages, and defendant appealed. On appeal, the court affirmed, holding that the trust documents were invalid, and that the invalidity was obvious from research of pertinent case law and IRS regulations. The Harassment defense attorney also found that defendant had a duty to research the legal issues involved in the case, as well as a duty to refer plaintiffs to a specialist based on his acknowledged unfamiliarity with taxation. Also, the court held that plaintiffs' action was not barred because under Cal. Civ. Proc. Code § 339(1), the statute of limitations started to run when the trust was challenged and plaintiffs were forced to pay legal fees to defend the trust documents. The court also found that plaintiffs did not have to mitigate their damages by taking unreasonable, impractical, and expensive measures. The court sustained defendant's contention that the trial court gave erroneous jury instructions, but found that the error was not prejudicial.

The court affirmed the judgment awarding malpractice damages to plaintiff clients. The court found that the Clifford Trust documents that defendant drafted for plaintiffs were invalid for their intended purpose, and the invalidity was obvious from research of pertinent case law and Internal Revenue Service regulations.

The trial court did not abuse its discretion by imputing income to appellant from a business he had transferred to his current wife upon retirement; It was undisputed that appellant transferred to his wife an asset that had generated $220,000 in business income the previous year; It was also undisputed that there was no consideration for the transfer of this apparently valuable asset; The trial court was not considering appellant's wife's income in awarding spousal support to respondent; it was declining to recognize a bad faith transfer and instead treating the income as if it were still appellant's; In the absence of credible evidence as to how the business earned revenue and what part appellant's participation played in those earnings, the trial court did not abuse its discretion in looking to the business's past earnings as a guide to future earnings.

Orders affirmed.