Wins

Court re-affirms denial of arbitration of malpractice claims

Several years ago, in Rice v. Downs (2016) 248 Cal. App. 4th 175, the Court of Appeal vacated an arbitration award against GMSR’s client, finding that his claims for legal malpractice against his lawyer/business partner were not covered by the parties’ arbitration agreement.  These included a claim that the business’ LLC operating agreement must be rescinded as to the defendant lawyer because of his violations of former Rule of Professional Conduct 3-300 (conflicts of interest).  When GMSR’s client later added some claims to his complaint, the defendant attempted to compel the newly-added claims to arbitration, and sought to have the arbitration proceed simultaneously with trial on the client’s rescission claim.  The trial court rejected these efforts, reasoning that the new claims were non-arbitrable malpractice claims and, in any event, if GMSR’s client succeeded in rescinding the operating agreement, there would be no arbitration agreement at all.  On appeal, the defendant went even further, arguing that the rescission claim should be arbitrated.  The Court of Appeal affirmed, finding (1) that law of the case barred the defendant’s efforts to compel arbitration of claims based on alleged malpractice and (2) that the trial court correctly determined that the arbitrability of non-malpractice claims could not be determined before resolution of the rescission claim.